FIYTA Precision Technology Co. Ltd.Independent Auditor’s Report
D.H.S.Z. [2024]0011000766-EN
Da Hua Certified Public Accountants（Special General Partnership）FIYTA Precision Technology Co. Ltd.Independent Auditor’s Report and Financial Statements
(1 January 2023 to 31 December 2023)
Content Page
I. Independent Auditor’s Report 1-7
II. Audited Financial Statements
Consolidated Balance Sheet 1-2
Consolidated Statement of Comprehensive 3
Income
Consolidated Cash Flow Statement 4
Consolidated Statement of Changes in Equity 5-6
Parent Company’s Balance Sheet 7-8
Parent Company’s Statement of Comprehensive 9
Income
Parent Company’s Cash Flow Statement 10
Parent Company’s Statement of Changes in 11-12
Equity
Notes to Financial Statements 13-121Da Hua Certified Public Accountants (Special General Partnership)
12th Floor Building 7 No. 16 Xisihuan Middle Road Haidian District Beijing [100039]
Tel: 86 (10) 5835 0011 Fax: 86 (10) 5835 0006
www.dahua-cpa.com
I n d e p e n d e n t A u d i t o r ’ s R e p o r t
D.H.S.Z.[2024] 0011000766-EN
To the Shareholders of FIYTA Precision Technology Co. Ltd.:
I.Audit Opinion
We have audited the accompanying financial statements of FIYTA Precision
Technology Co. Ltd. (herein after “FIYTA Ltd.” or the Company) which comprise
the consolidated and the parent company’s balance sheet as at 31 December 2023 the
consolidated and the parent company’s statement of comprehensive income the
consolidated and the parent company’s cash flow statements and the consolidated and
the parent company’s statement of changes in equity for the year then ended and notes
to the financial statements.In our opinion the accompanying financial statements present in all material
respects in accordance with the requirements of Accounting Standards for Business
Enterprises and fairly reflect FIYTA Ltd.’s financial position at 31 December 2023 and
the financial performance and cash flows for the year then ended.II.Basis for Audit Opinion
We conducted our audit in accordance with CICPA Standards on Auditing
(“CSAs”) . In ‘Certified Public Accountant’s Responsibilities for the Audit of
Financial Statements’ of this report our responsibilities under these standards are
described. Those standards require that we comply with CICPA professional ethical
requirements that we are independent from FIYTA Ltd. and have fulfilled all other
ethical obligations. We believe that we have obtained sufficient and appropriate audit
evidence as basis of for our opinion.III.Key Audit Matters
Independent Auditor’s Report - Page 1D.H.S.Z.[2024]0011000766-EN
Key audit matters are those matters that in our professional judgment were of
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.We have determined the following key audit matters that need to be communicated
in audit report.(I) Existence of inventory and its net realizable value
1. Description
As at 31 December 2023 the book balance provision for decline in value and
carrying amount of inventory were RMB2172.58 million RMB71.91 million and
RMB2100.67 million respectively. The carrying amount of inventory accounts for
49.97% of the total assets of the Company.
(i) As the main business of FIYTA Ltd is selling FIYTA brand watches and other
branded watches the main inventory of FIYTA Ltd are finished watches and watch
components. The inventories are distributed in stores regional warehouses resellers’
warehouses and the Company’s warehouses which caused difficulty in inventory
physical observation;
(ii) The management of FIYTA Ltd measures inventory at lower of cost and net
realizable value (NRV) at balance sheet date. Where the cost of an inventory exceeds
its NRV the difference is recognized as provision for decline in value. The
determination of NRV involves significant judgment and estimates by the Management.Inventory value is significant to the Company’s assets and it requires significant
judgement by the Management as a result we identified existence of inventory and its
net realizable value as key audit matters.
2. How our audit addressed the key audit matter
Major audit procedures we have conducted include:
(i) Understanding evaluating and testing the design and operating effectiveness of
internal controls of procurement and payment production and storage and the
provision for decline in value of inventory;
(ii) Using the work of experts to conduct IT audit to information system and
evaluating the authenticity and accuracy of business data which related to financial
statements.Independent Auditor’s Report - Page 2D.H.S.Z.[2024]0011000766-EN
(iii) Understanding and evaluating the appropriateness of the Company’s policy in
provision for decline in value;
(iv) Understanding and inquiring the locations of inventory storage measurement
method of inventory so as to determining the scope of inventory physical observation;
(v) Discussing physical inventory count status with the Management and attending
the physical inventory count and conducting observation and test count on site to check
the quantity of the inventories and observe their condition.(vi) Obtaining the ageing report of inventory and taking into consideration of
inventory condition in order to perform analytical review on the ageing as well as
analyze the reasonableness of provision for decline in value;
(vii) Reviewing and evaluating the appropriateness of significant estimates made
by the Management in determining the NRV of inventory;
(viii) Obtaining the calculation of provision for decline in value of inventory
reviewing whether the provision was made in compliance with relevant accounting
policies and performing recalculation of provision. Checking the movements of prior
year’s provision and analyzing whether the provision was adequately accrued in prior
period.(ix) Tracing samples of large purchases in current period to their corresponding
contracts and tax invoices and inspecting their purchase requisition form and goods
receipt notes.Based on audit work conducted above we believe that the inventory exists and the
measurement is reasonable stated according to the Company’s policies.(II) Revenue recognition
1. Description
In 2023 the Company’s income from main business was RMB4553.71 million.The Company’s revenue mainly comes from sales of FIYTA brand watches and
distribution of other branded watches. Except for small amount of sales by direct sales
and consignment sales of FIYTA brand watches most of the sales of FIYTA brand
watches and other branded watches are sold through shops in department store and on-
line shops. Refer to Note III 32 for accounting policy relating to revenue recognition.Operating revenue represents major line item in income statement and is main
source of profit the accuracy and completeness of revenue recognition have significant
impact to the Company’s profit as a result we identified revenue recognition as a key
Independent Auditor’s Report - Page 3D.H.S.Z.[2024]0011000766-EN
audit matter.
2. How our audit addressed the key audit matter
Major audit procedures we have conducted include:
(i) Understanding evaluating and testing the design and operating effectiveness
of internal controls relating to revenue recognition;
(ii) Using the work of experts to conduct IT audit to information system and
evaluating the authenticity and accuracy of business data which related to financial
statements.(iii) Obtaining and understanding accounting policies relating to revenue
recognition and reviewing and evaluating whether the point in time of control right
transfer measurement of transaction price and accounting for special transactions are
complied with the accounting standards;
(iv) Selecting samples from current year’s transaction records and tracing them
to supporting documents such as contract tax invoice and goods dispatch note (if
applicable) and courier waybill (if applicable) ;
(v) In connection with audit of accounts receivable selecting major customers and
confirming corresponding sales in current year and year-end balance and procedures
were implemented to check for post-dated returns;
(vi) Conducting cut-off test to revenue recognized before and after the balance
sheet date by selecting samples to check supporting documents such as contract tax
invoice and goods dispatch note (if applicable) and courier waybill (if applicable) to
evaluate whether the revenue was recorded in appropriate accounting period.Based on audit work conducted above we believe that the Company’s revenue
recognition is in conformity to its revenue recognition policy.IV.Other Information
The management of FIYTA Ltd (the “Management”) are responsible for the Other
Information. The Other Information comprises all of the information included in the
Company’s annual report other than the financial statements and our auditors’ report
thereon.Our opinion expressed 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
Independent Auditor’s Report - Page 4D.H.S.Z.[2024]0011000766-EN
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.V.Responsibilities of the Management and those Charged with
Governance for the Financial Statements
The Management of the Company is responsible for the preparation of the
financial statements that give a fair view in accordance with Accounting Standards for
Business Enterprises and for the design implementation and maintenance of such
internal controls as the Management determine 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 the 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 the
Management either intend to liquidate the Company or to cease operations or have no
realistic alternative but to do so.Those who charged with governance is responsible for overseeing the Company’s
financial reporting process.VI.Auditors’ 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 auditors’ report that includes our opinion. Reasonable assurance is a
high level of assurance but is not a guarantee that an audit conducted in accordance
with China Standards on Auditing 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 China Standards on Auditing we exercise
professional judgment and maintain professional skepticism throughout the audit. We
Independent Auditor’s Report - Page 5D.H.S.Z.[2024]0011000766-EN
also:
1. 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.
2. Obtain an understanding of internal control relevant to the audit in order to
design audit procedures that are appropriate in the circumstances.
3. Evaluate the appropriateness of accounting policies used and the reasonableness
of accounting estimates and related disclosures made by the Management.
4. Conclude on the appropriateness of the 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 according to China Standards on Auditing to draw
attention in our auditors’ 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 auditors’ report. However future
events or conditions may cause the Company to cease to continue as a going concern.
5. Evaluate the overall presentation structure and content of the financial
statements including the disclosures and whether the financial statements represent
the underlying transactions and events in a manner that achieves fair presentation.
6. Obtain sufficient appropriate audit evidence regarding the financial information
of the entities or business activities within FIYTA Ltd 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
Independent Auditor’s Report - Page 6D.H.S.Z.[2024]0011000766-EN
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.Da Hua Certified Public Accountants
CICPA:
(Special General Partnership)
Engagement partner Long Jiao
Beijing China CICPA:
Wang Dong
12 March 2024
Independent Auditor’s Report - Page 7Consolidated Balance Sheet
As at 31 December 2023
Prepared by: FIYTA Precision Technology Co. Ltd. (Unless otherwise indicated the currency is expressed in RMB)
Closing Balance of
Assets Note V Closing Balance
prior period
Current assets:
Monetary funds note 1 504629153.71 313747463.64
Financial assets held for trading
Derivative financial assets
Notes receivable note 2 18268972.37 32214912.10
Accounts receivable note 3 323142761.64 305290959.68
Accounts receivable financing
Prepayments note 4 6571239.98 8039794.97
Other receivables note 5 57725792.00 56918019.48
Inventories note 6 2100666175.28 2141320373.67
Contract assets
Held-for-sale assets
Current portion of non-current assets
Other current assets note 7 72249391.81 66339505.32
Total current assets 3083253486.79 2923871028.86
Non-current assets:
Debt investments
Other debt investments
Long-term receivables
Long-term equity investments note 8 51862607.30 58182086.90
Investment in other equity instruments note 9 85000.00
Other non-current financial assets
Investment properties note 10 360255832.14 374979494.71
Fixed assets note 11 355785354.68 364628765.17
Construction in progress
Productive biological assets
Oil and gas assets
Right-of-use assets note 12 109452481.64 110330512.03
Intangible assets note 13 31664380.77 33200218.63
Development expenditure
Goodwill
Long-term deferred expenses note 14 122324355.13 144488452.18
Deferred tax assets note 15 80227771.46 95784611.94
Other non-current assets note 16 9434627.17 11593741.57
Total non-current assets 1121007410.29 1193272883.13
Total assets 4204260897.08 4117143911.99
(Attached notes to statements are part of the consolidated financial statements)
Legal Representative: Finance Officer (CFO): Financial Manager:
1Consolidated Balance Sheet (Continued)
As at 31 December 2023
Prepared by: FIYTA Precision Technology Co. Ltd. (Unless otherwise indicated the currency is expressed in RMB)
Closing Balance of
Liability and Equity Note V Closing Balance
prior period
Current liabilities:
Short-term borrowings note 17 250187763.87 290237111.11
Financial liabilities held for trading
Derivative financial liabilities
Notes payable note 18 2000600.00
Accounts payable note 19 173825907.71 170589456.67
Payments received in advance note 20 10267758.31 16960128.83
Contract liabilities note 21 12286243.62 16844437.47
Employee benefits payable note 22 120084810.60 136587939.38
Tax payables note 23 64188161.31 60770168.30
Other payables note 24 121937801.07 165060122.58
Held-for-sale liabilities
Current portion of non-current liabilities note 25 66399004.20 71546316.16
Other current liabilities note 26 1589635.30 1686806.01
Total current liabilities 820767085.99 932283086.51
Non-current liabilities:
Long-term borrowings
Bonds payable
Including: Preferred stock
Including: Perpetual debt
Lease liabilities note 27 43526352.52 41642561.58
Long-term payables
Long-term employee benefits payable
Provisions
Deferred income note 28 952785.69 1295926.80
Deferred tax liabilities note 15 5208920.69 5498844.95
Other non-current liabilities
Total non-current liabilities 49688058.90 48437333.33
Total liabilities 870455144.89 980720419.84
Equity:
Share capital note 29 415219970.00 417627960.00
Other equity instruments
Including: Preferred stock
Including: Perpetual debt
Capital reserves note 30 990159033.17 1007086643.48
Less: Treasury stock note 31 78645532.23 50759806.16
Other comprehensive income note 32 19325335.93 5739589.89
Special reserves note 33 3223158.06 2012064.91
Surplus reserve note 34 275010401.50 275010401.50
Retained earnings note 35 1709513385.76 1479706638.53
Equity attributable to parent company 3333805752.19 3136423492.15
Non-controlling interests
Total shareholders' equity 3333805752.19 3136423492.15
Total liabilities and shareholders' equity 4204260897.08 4117143911.99
(Attached notes to statements are part of the consolidated financial statements)
Legal Representative: Finance Officer (CFO): Financial Manager:
2Consolidated Statement of Comprehensive
Income
For the year ended 31 December 2023
Prepared by: FIYTA Precision Technology Co. Ltd. (Unless otherwise indicated the currency is expressed in RMB)
Items Note V Current Period Prior Period
1. Operating revenue note 36 4569690002.99 4354096880.36
Less: Operating costs note 36 2905463474.81 2738972791.11
Taxes and surcharges note 37 36193846.10 30800199.73
Selling expenses note 38 924009179.32 931832830.40
Administrative expenses note 39 205359277.24 219014508.52
Research and development expenses note 40 57802244.08 61088585.61
Finance expenses note 41 21469772.77 21188742.11
Including: Interest expenses 12824222.06 16846749.14
Interest income 5722586.39 3923999.48
Add: Other income note 42 11435373.78 18648210.06
Income from investments note 43 -5819479.60 3026481.59
Including: Investment income from associates and joint ventures -5819479.60 3026481.59
Derecognition of financial assets at amortized cost
Gains or losses from net exposure hedging
Gains or losses from changes in fair values
Credit impairment losses note 44 6827575.82 4845379.45
Impairment losses note 45 571980.37 -37625482.96
Gains or losses from asset disposals note 46 685868.57 91925.06
2. Operating profit 433093527.61 340185736.08
Add: Non-operating income note 47 4770506.80 1287202.08
Less: Non-operating expenses note 48 859770.10 2351266.31
3. Profit before tax 437004264.31 339121671.85
Less: Income tax note 49 103826161.94 72440220.01
4. Net profit 333178102.37 266681451.84
Including: Net profit realized before business combinations under common control
I. Net profit classified by going concernNet profit from continuing operations（"-" for net loss) 333178102.37 266681451.84Net profit from discontinuing operations（"-" for net loss)II. Net profit classified by ownership
Net profit attributable to parent company 333178102.37 266681451.84
Net profit attributable to non-controlling interests
5. Other comprehensive income after tax 13585746.04 13397936.29
Other comprehensive income after tax attributable to parent 13585746.04 13397936.29
I. Items of other comprehensive income that will not be reclassified
i. Changes in remeasurement of defined benefit plans
Other comprehensive income that cannot be transferred to profit or
ii.loss under the equity method
iii. Changes in fair value of investments in equity instruments
iv. Changes in fair value of the Company's own credit risk
II. Items of other comprehensive income that will be reclassified to
13585746.0413397936.29
profit or loss
Other comprehensive income that can be transferred to profit or loss
i.under the equity method
ii. Changes in fair value of other debt investments
Amount of financial assets reclassified into other comprehensive
iii.income
iv. Provisions for credit impairment of other debt investments
The effective portion of gains or losses arising from cash flow
v.hTeradngsinlagtion differences arising from financial statements in foreign
vi. 13585746.04 13397936.29
currencies
Other comprehensive income attributable to non-controlling
interests after tax
6. Total comprehensive income 346763848.41 280079388.13
Total comprehensive income attributable to parent company 346763848.41 280079388.13
Total comprehensive income attributable to non-controlling interests
7. Earnings per share
I. Basic earnings per share 0.8082 0.6398
II. Diluted earnings per share 0.8075 0.6398
(Attached notes to statements are part of the consolidated financial statements)
Legal Representative: Finance Officer (CFO): Financial Manager:
3Consolidated Cash Flows Statement
For the year ended 31 December 2023
Prepared by: FIYTA Precision Technology Co. Ltd. (Unless otherwise indicated the currency is expressed in RMB)
Items Note V Current Period Prior Period
1. Cash flows from operating activities
Cash received from sales and services 5025883440.00 4910473741.41
Tax and surcharge refunds 1937203.71 7793409.24
Other cash receipts related to operating activities note 50 68179211.21 79656853.28
Total cash inflows from operating activities 5095999854.92 4997924003.93
Cash paid for goods and services 3155385386.12 3266497299.47
Cash paid to and for employees 624495756.20 659058385.84
Taxes and surcharges paid 296079135.93 272103882.56
Other cash payments related to operating activities note 50 387638088.69 324035659.54
Total cash outflows from operating activities 4463598366.94 4521695227.41
Net cash flows from operating activities 632401487.98 476228776.52
2. Cash flows from investing activities
Cash received from withdrawal of investments
Cash received from investment income 500000.00
Net proceeds from disposals of fixed assets intangible assets and
1278284.57138721.29
other long-term assets
Net proceeds from disposal of subsidiaries and other business units
Other cash receipts related to investing activities
Total cash inflows from investing activities 1778284.57 138721.29
Cash paid for fixed assets intangible assets and other long-term assets 91104776.03 114090573.97
Cash paid for investments
Net cash paid for acquiring subsidiaries and other business units
Other cash payments related to investing activities
Total cash outflows from investing activities 91104776.03 114090573.97
Net cash flows from investing activities -89326491.46 -113951852.68
3. Cash flows from financing activities
Cash received from investments by others
Including: Cash received by subsidiaries from non-controlling investors
Cash received from borrowings 250000000.00 845155704.29
Other cash receipts related to other financing activities
Total cash inflows from financing activities 250000000.00 845155704.29
Cash repayments for debts 290000000.00 794083975.00
Cash paid for distribution of dividends and profit and for interest expenses 114106711.75 134519807.76
Including: Dividends or profit paid by subsidiaries to non-controlling
investors
Other cash payments related to financing activities note 50 198056975.77 177477740.46
Total cash outflows from financing activities 602163687.52 1106081523.22
Net cash flows from financing activities -352163687.52 -260925818.93
4. Effect of changes in foreign exchange rates on cash and cash -20544.93 2132547.59
equivalents
5. Net increase in cash and cash equivalents 190890764.07 103483652.50
Add: Opening balance of cash and cash equivalents 313738389.64 210254737.14
6. Closing balance of cash and cash equivalents note 51 504629153.71 313738389.64
(Attached notes to statements are part of the consolidated financial statements)
Legal Representative: Finance Officer (CFO): Financial Manager:
4Consolidated Statement of Changes in Equity
For the year ended 31 December 2023
Prepared by: FIYTA Precision Technology Co. Ltd. (Unless otherwise indicated the currency is expressed in RMB)
Items Current Period
Equity attributable to parent company
Non-controlling Total shareholders'
Other comprehensive
Share capital Capital reserves Less: Treasury stock Special reserves Surplus reserves Retained earnings interests equity
income
1. Closing balance of prior year 417627960.00 1007086643.48 50759806.16 5739589.89 2012064.91 275010401.50 1479706638.53 3136423492.15
Add: Increase/decrease due to changes in
accounting policies
Increase/decrease due to corrections of
errors in prior period
Business combination under common control
Others
2. Opening balance of current year 417627960.00 1007086643.48 50759806.16 5739589.89 2012064.91 275010401.50 1479706638.53 3136423492.15
3. Increase/decrease for current year -2407990.00 -16927610.31 27885726.07 13585746.04 1211093.15 229806747.23 197382260.04
I. Total comprehensive income 13585746.04 333178102.37 346763848.41
II. Owner's contributions to and withdrawals of
-2407990.00-16927610.3127885726.07-47221326.38
capital
i. Common stock contributed/paid-in capital by
64340669.42-64340669.42
shareholders/owners
ii. Capital contributed by other equity
instruments holders
iii. Share-based payments to owners' equity -2407990.00 -16915253.76 -36454943.35 17131699.59
iv. Others -12356.55 -12356.55
III. Profits distribution -103371355.14 -103371355.14
i. Appropriation of surplus reserve
ii. Distribution to owners -103371355.14 -103371355.14
iii. Others
IV. Transfers within owners' equity
i. Capital reserves transferred to paid-in capital
ii. Surplus reserve transferred to paid-in capital
iii. Use of surplus reserve to cover previous
losses
iv. Changes in remeasurement of defined
benefit plans transferred to retained earnings
v. Other comprehensive income transferred to
retained earnings
vi. Others
V. Special reserves 1211093.15 1211093.15
i. Appropriated during current year 1537825.22 1537825.22
ii. Used during current year -326732.07 -326732.07
VI. Others
4. Closing balance of current year 415219970.00 990159033.17 78645532.23 19325335.93 3223158.06 275010401.50 1709513385.76 3333805752.19
(Attached notes to statements are part of the consolidated financial statements)
Legal Representative: Finance Officer (CFO): Financial Manager:
5ConsolidaCteodn Sstoaltidematendt S otfa Ctehmaenngte osf i nC hEaqnugiteys in Equity
For the year ended 31F Doer ctheem ybear r2 e0n2d3ed 31 December 2023
(Unless otherPwriespea inreddic bayte: dFI YthTeA c Purreecnisciyo nis Teexcphrensosloegdy i nC oR.M LBtd) . (Unless otherwise indicated the currency is expressed in RMB)
Items Prior Period
Equity attributable to parent company
Non-controlling Total shareholders'
Other comprehensive
Share capital Capital reserves Less: Treasury stock Special reserves Surplus reserves Retained earnings interests equity
income
1. Closing balance of prior year 426051015.00 1040908194.13 60585678.92 -7658346.40 1062731.13 275010401.50 1338444326.09 3013232642.53
Add: Increase/decrease due to changes in
accounting policies
Increase/decrease due to corrections of
errors in prior period
Business combination under common control
Others
2. Opening balance of current year 426051015.00 1040908194.13 60585678.92 -7658346.40 1062731.13 275010401.50 1338444326.09 3013232642.53
3. Increase/decrease for current year -8423055.00 -33821550.65 -9825872.76 13397936.29 949333.78 141262312.44 123190849.62
I. Total comprehensive income 13397936.29 266681451.84 280079388.13
II. Owner's contributions to and withdrawals of
-8423055.00-33821550.65-9825872.76-32418732.89
capital
i. Common stock contributed/paid-in capital by
-7987217.00-42265614.88-50252831.88
shareholders/owners
ii. Capital contributed by other equity
instruments holders
iii. Share-based payments to owners' equity -435838.00 8459107.40 -9825872.76 17849142.16
iv. Others -15043.17 -15043.17
III. Profits distribution -125419139.40 -125419139.40
i. Appropriation of surplus reserve
ii. Distribution to owners -125419139.40 -125419139.40
iii. Others
IV. Transfers within owners' equity
i. Capital reserves transferred to paid-in capital
ii. Surplus reserve transferred to paid-in capital
iii. Use of surplus reserve to cover previous
losses
iv. Changes in remeasurement of defined
benefit plans transferred to retained earnings
v. Other comprehensive income transferred to
retained earnings
vi. Others
V. Special reserves 949333.78 949333.78
i. Appropriated during current year 1246390.69 1246390.69
ii. Used during current year -297056.91 -297056.91
VI. Others
4. Closing balance of current year 417627960.00 1007086643.48 50759806.16 5739589.89 2012064.91 275010401.50 1479706638.53 3136423492.15
(Attached notes to statements are part of the consolidated financial statements)
Legal Representative: Finance Officer (CFO): Financial Manager:
6Parent Company's Balance Sheet
As at 31 December 2023
Prepared by: FIYTA Precision Technology Co. Ltd. (Unless otherwise indicated the currency is expressed in RMB)
Assets Note XVI Closing Balance Closing Balance of prior period
Current assets:
Monetary funds 308230255.35 274691023.16
Financial assets held for trading
Derivative financial assets
Notes receivable
Accounts receivable note 1 1822916.61 603216.03
Accounts receivable financing
Prepayments
Other receivables note 2 696328419.85 839782543.07
Inventories
Contract assets
Held-for-sale assets
Current portion of non-current assets
Other current assets 15886769.82 14107604.63
Total current assets 1022268361.63 1129184386.89
Non-current assets:
Debt investments
Other debt investments
Long-term receivables
Long-term equity investments note 3 1633041716.11 1552310486.50
Investment in other equity instruments 85000.00
Other non-current financial assets
Investment properties 293695692.68 305676084.09
Fixed assets 207209890.94 209495642.59
Construction in progress
Productive biological assets
Oil and gas assets
Right-of-use assets
Intangible assets 23460211.70 23522355.93
Development expenditure
Goodwill
Long-term deferred expenses 4795846.73 8240653.62
Deferred tax assets 640783.05 1904597.73
Other non-current assets 710807.49 2051932.75
Total non-current assets 2163554948.70 2103286753.21
Total assets 3185823310.33 3232471140.10
(Attached notes to statements are part of the consolidated financial statements)
Legal Representative: Finance Officer (CFO): Financial Manager:
7Parent Company's Balance Sheet (Continued)
As at 31 December 2023
Prepared by: FIYTA Precision Technology Co. Ltd. (Unless otherwise indicated the currency is expressed in RMB)
Liability and Equity Note XVI Closing Balance Closing Balance of prior period
Current liabilities:
Short-term borrowings 250187763.87 290237111.11
Financial liabilities held for trading
Derivative financial liabilities
Notes payable
Accounts payable 2285657.88 1048201.41
Payments received in advance 10267758.31 16960128.83
Contract liabilities
Employee benefits payable 25886702.67 27139007.97
Tax payables 3322241.54 778299.01
Other payables 224668548.77 299198966.56
Held-for-sale liabilities
Current portion of non-current liabilities
Other current liabilities
Total current liabilities 516618673.04 635361714.89
Non-current liabilities:
Long-term borrowings
Bonds payable
Including: Preferred stock
Including: Perpetual debt
Lease liabilities
Long-term payables
Long-term employee benefits payable
Provisions
Deferred income 952785.69 1295926.80
Deferred tax liabilities
Other non-current liabilities
Total non-current liabilities 952785.69 1295926.80
Total liabilities 517571458.73 636657641.69
Equity:
Share capital 415219970.00 417627960.00
Other equity instruments
Including: Preferred stock
Including: Perpetual debt
Capital reserves 993037528.98 1010917776.19
Less: Treasury stock 78645532.23 50759806.16
Other comprehensive income
Special reserves
Surplus reserve 275010401.50 275010401.50
Retained earnings 1063629483.35 943017166.88
Total owners' equity 2668251851.60 2595813498.41
Total liabilities and owners' equity 3185823310.33 3232471140.10
(Attached notes to statements are part of the consolidated financial statements)
Legal Representative: Finance Officer (CFO): Financial Manager:
8Parent Company's Statement of Comprehensive Income
For the year ended 31 December 2023
Prepared by: FIYTA Precision Technology Co. Ltd. (Unless otherwise indicated the currency is expressed in RMB)
Items Note XVI Current Period Prior Period
1. Operating revenue note 4 180874926.74 155284801.05
Less: Operating costs note 4 49729440.87 41765441.70
Taxes and surcharges 7815174.54 5984017.16
Selling expenses 16395826.35 4340253.59
Administrative expenses 53755060.51 64698540.45
Research and development expenses 12959491.24 16464924.76
Finance expenses -947061.34 -1030335.57
Including: Interest expenses 2405575.67 3264769.63
Interest income 4460371.04 3699364.22
Add: Other income 1097603.80 1221085.39
Income from investments note 5 192180520.40 243622178.29
Including: Investment income from associates and joint ventures -5819479.60 3026481.59
Derecognition of financial assets at amortized cost
Gains or losses from net exposure hedging
Gains or losses from changes in fair values
Credit impairment losses -104859.73 108040.61
Impairment losses
Gains or losses from asset disposals 635033.80 -14615.44
2. Operating profit 234975292.84 267998647.81
Add: Non-operating income 8037.20 191981.02
Less: Non-operating expenses 312375.33 21262.34
3. Profit before tax 234670954.71 268169366.49
Less: Income tax 10687283.10 6174714.67
4. Net profit 223983671.61 261994651.82Net profit from continuing operations（"-" for net loss) 223983671.61 261994651.82Net profit from discontinuing operations（"-" for net loss)
5. Other comprehensive income after tax
I. Items of other comprehensive income that will not be reclassified to profit
oi.r loCshsanges in remeasurement of defined benefit plans
Other comprehensive income that cannot be transferred to profit or loss under
ii.the equity method
iii. Changes in fair value of investments in equity instruments
iv. Changes in fair value of the Company's own credit risk
II. Items of other comprehensive income that will be reclassified to profit or
lossOther comprehensive income that can be transferred to profit or loss under
i.the equity method
ii. Changes in fair value of other debt investments
iii. Amount of financial assets reclassified into other comprehensive income
iv. Provisions for credit impairment of other debt investments
v. The effective portion of gains or losses arising from cash flow hedging
vi. Translation differences arising from financial statements in foreign currencies
6. Total comprehensive income 223983671.61 261994651.82
(Attached notes to statements are part of the consolidated financial statements)
Legal Representative: Finance Officer (CFO): Financial Manager:
9Parent Company's Cash Flows Statement
For the year ended 31 December 2023
Prepared by: FIYTA Precision Technology Co. Ltd. (Unless otherwise indicated the currency is expressed in RMB)
Items Note XVI Current Period Prior Period
1. Cash flows from operating activities
Cash received from sales and services 189464980.58 166402067.64
Tax and surcharge refunds 7647.56
Other cash receipts related to operating activities 4225525553.06 4309971160.78
Total cash inflows from operating activities 4414990533.64 4476380875.98
Cash paid for goods and services 9573850.00
Cash paid to and for employees 61402333.15 59513788.17
Taxes and surcharges paid 20428198.75 20686403.89
Other cash payments related to operating activities 4154707540.94 4383872472.45
Total cash outflows from operating activities 4246111922.84 4464072664.51
Net cash flows from operating activities 168878610.80 12308211.47
2. Cash flows from investing activities
Cash received from withdrawal of investments
Cash received from investment income 198500000.00 240595696.70
Net proceeds from disposals of fixed assets intangible assets and other long-term assets 1146737.46 3973887.69
Net proceeds from disposal of subsidiaries and other business units
Other cash receipts related to investing activities
Total cash inflows from investing activities 199646737.46 244569584.39
Cash paid for fixed assets intangible assets and other long-term assets 7686801.71 5810205.37
Cash paid for investments 90000000.00
Net cash paid for acquiring subsidiaries and other business units
Other cash payments related to investing activities
Total cash outflows from investing activities 97686801.71 5810205.37
Net cash flows from investing activities 101959935.75 238759379.02
3. Cash flows from financing activities
Cash received from investments by others
Cash received from borrowings 250000000.00 830000000.00
Other cash receipts related to other financing activities
Total cash inflows from financing activities 250000000.00 830000000.00
Cash repayments for debts 290000000.00 790000000.00
Cash paid for distribution of dividends and profit and for interest expenses 114106711.75 134389016.01
Other cash payments related to financing activities 83148230.83 53390338.09
Total cash outflows from financing activities 487254942.58 977779354.10
Net cash flows from financing activities -237254942.58 -147779354.10
4. Effect of changes in foreign exchange rates on cash and cash equivalents -44371.78 380393.85
5. Net increase in cash and cash equivalents 33539232.19 103668630.24
Add: Opening balance of cash and cash equivalents 274691023.16 171022392.92
6. Closing balance of cash and cash equivalents 308230255.35 274691023.16
(Attached notes to statements are part of the consolidated financial statements)
Legal Representative: Finance Officer (CFO): Financial Manager:
10Parent Company's Statement of Changes in Equity
For the year ended 31 December 2023
Prepared by: FIYTA Precision Technology Co. Ltd. (Unless otherwise indicated the currency is expressed in RMB)
Items Current Period
Other comprehensive Total shareholders'
Share capital Capital reserves Less: Treasury stock Special reserves Surplus reserves Retained earnings
income equity
1. Closing balance of last year 417627960.00 1010917776.19 50759806.16 275010401.50 943017166.88 2595813498.41
Add: Increase/decrease due to changes in
accounting policies
Increase/decrease due to corrections of
errors in prior period
Others
2. Opening balance of current year 417627960.00 1010917776.19 50759806.16 275010401.50 943017166.88 2595813498.41
3. Increase/decrease for current year -2407990.00 -17880247.21 27885726.07 120612316.47 72438353.19
I. Total comprehensive income 223983671.61 223983671.61
II. Owner's contributions to and withdrawals of
-2407990.00-17880247.2127885726.07-48173963.28
capital
i. Common stock contributed/paid-in capital by
64340669.42-64340669.42
shareholders/owners
ii. Capital contributed by other equity
instruments holders
iii. Share-based payments to owners' equity -2407990.00 -17867890.66 -36454943.35 16179062.69
iv. Others -12356.55 -12356.55
III. Profits distribution -103371355.14 -103371355.14
i. Appropriation of surplus reserve
ii. Distribution to owners -103371355.14 -103371355.14
iii. Others
IV. Transfers within owners' equity
i. Capital reserves transferred to paid-in
capital
ii. Surplus reserve transferred to paid-in
capital
iii. Use of surplus reserve to cover previous
losses
iv. Changes in remeasurement of defined
benefit plans transferred to retained earnings
v. Other comprehensive income transferred to
retained earnings
vi. Others
V. Special reserves
i. Appropriated during current year
ii. Used during current year
VI. Others
4. Closing balance of current year 415219970.00 993037528.98 78645532.23 275010401.50 1063629483.35 2668251851.60
(Attached notes to statements are part of the consolidated financial statements)
Legal Representative: Finance Officer (CFO): Financial Manager:
11PPaarerennt tC Coommppaannyy's's S Statatetemmeennt to of fC Chhaannggeess i nin E Eqquuitiyty
For the year ended 31 FDoer ctehme byear r2 e0n2d3ed 31 December 2023
(Unless otherwPisre pinadreicda bteyd: F tIhYeT cAu Prrerenccisyi oisn e Txepcrehsnsoelodg iyn CRoM.B L)td. (Unless otherwise indicated the currency is expressed in RMB)
Items Prior Period
Other comprehensive Total shareholders'
Share capital Capital reserves Less: Treasury stock Special reserves Surplus reserves Retained earnings
income equity
1. Closing balance of last year 426051015.00 1045449410.67 60585678.92 275010401.50 806441654.46 2492366802.71
Add: Increase/decrease due to changes in
accounting policies
Increase/decrease due to corrections of
errors in prior period
Others
2. Opening balance of current year 426051015.00 1045449410.67 60585678.92 275010401.50 806441654.46 2492366802.71
3. Increase/decrease for current year -8423055.00 -34531634.48 -9825872.76 136575512.42 103446695.70
I. Total comprehensive income 261994651.82 261994651.82
II. Owner's contributions to and withdrawals of
-8423055.00-34531634.48-9825872.76-33128816.72
capital
i. Common stock contributed/paid-in capital by
-7987217.00-42265614.88-50252831.88
shareholders/owners
ii. Capital contributed by other equity
instruments holders
iii. Share-based payments to owners' equity -435838.00 7749023.57 -9825872.76 17139058.33
iv. Others -15043.17 -15043.17
III. Profits distribution -125419139.40 -125419139.40
i. Appropriation of surplus reserve
ii. Distribution to owners -125419139.40 -125419139.40
iii. Others
IV. Transfers within owners' equity
i. Capital reserves transferred to paid-in
capital
ii. Surplus reserve transferred to paid-in
capital
iii. Use of surplus reserve to cover previous
losses
iv. Changes in remeasurement of defined
benefit plans transferred to retained earnings
v. Other comprehensive income transferred to
retained earnings
vi. Others
V. Special reserves
i. Appropriated during current year
ii. Used during current year
VI. Others
4. Closing balance of current year 417627960.00 1010917776.19 50759806.16 275010401.50 943017166.88 2595813498.41
(Attached notes to statements are part of the consolidated financial statements)
Legal Representative: Finance Officer (CFO): Financial Manager:
12FIYTA Precision Technology Co. Ltd.
Notes to the Financial Statements
For the year ended 31 December 2023
FIYTA Precision Technology Co. Ltd.Notes to the Financial Statements
For the year ended 31 December 2023
I. Company status
1. Registered place organization and address of headquarters
FIYTA Precision Technology Co. Ltd. (the “Company”) was founded under the approval of
Shen Fu Ban Fu (1992) 1259 issued by the General Office of Shenzhen Municipal Government
through the restructuring of former Shenzhen FIYTA Time Industrial Company by the promoter of
China National Aero-Technology Import and Export Shenzhen Industry & Trade Center (name
changed to “China National Aero-Technology Shenzhen Co. Ltd” lately) on 25 December 1992.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 2023 the outstanding shares issued by the Company was 415.22 million
shares and the registered capital was RMB415.22 million after a series of share dividend right
offering share capital conversion from retained earnings 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) .
2. Nature of the Company’s business and main operating activities
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; Property Management; Non-residential Real Estate Leasing;
Professional Design Services; Import and Export of Goods; Sales of Household Electrical
Appliances; Sales of Satellite Mobile Communication Terminals; Import and Export Business
(according to Shen Mao Jin Zhun Zi No.2001-2204) .
3. Scope of consolidation
There were 12 subsidiaries that are included in the Company’s scope of consolidation for year
2023 see Note VI for details. The scope of consolidation was the same as last year.
4. Authorization for issue
The financial statements have been approved and authorized for issue by the Board of Directors
on 12 March 2024.II. Basis of preparation
Notes to the financial statements - Page 13FIYTA Precision Technology Co. Ltd.Notes to the Financial Statements
For the year ended 31 December 2023
1. Basis of preparation
The financial statement is prepared in accordance with the requirements of Accounting
Standards for Business Enterprises and associated application guidance illustrations to thestandards and related pronouncements (collectively known as “Accounting Standards for BusinessEnterprises” or “CAS”) . These financial statements also comply with the disclosure requirementsof “Regulation on the Preparation of Information Disclosure of Companies Issuing Public SharesNo. 15: General Requirements for Financial Reports” (revised in 2023) issued by China Securities
Regulatory Commission (CSRC) .
2. Going concern
The Company assesses the going concern ability to the extent of 12 month after the balance
sheet date. No issues that would result in significant doubt about the Company’s going concern is
noted. As a result the financial statements of the Company have been prepared on going concern
basis.
3. Basis and principles of accounting
Accrual basis is adopted for the Group’s accounting activity. Except for some financial
instruments the financial statements are measured using historical cost. In case of impairment
occurred on assets provisions for impairment are provided for in accordance with related
regulations.III. Significant accounting policies and accounting estimates
1. Highlight to specific accounting policies and estimates
(1) The Company make specific accounting policies and estimates according to its nature of
business. Accounting policies and estimates mainly includes: method of estimated credit loss
accrual (Note III. 13 Note III. 14 and Note III. 15) measurement of inventory (Note III. 16)
depreciation of investment property and fixed asset and amortization of intangible asset (Note III.
19 Note III. 20 and Note III. 24) revenue (Note III 32) etc.
(2) Based on historical experience and other factors including reasonable estimation to future
events the Company continues to evaluate significant accounting estimates and key assumptions.If material changes to following accounting estimate and key assumption incurred material impact
would happened to the carrying value of the Company’s assets and liabilities in coming accounting
year.
1) Measurement of Expected Credit Loss of accounts receivable and other receivables
The management estimates impairment loss provision to accounts receivable and other
receivables based on the judgments to estimated credit loss of accounts receivable and other
receivables. If any events occurred that indicated the Company may not be able to recover the
balance amount estimation is needed in provision accrual. If the expected number is different with
Notes to the financial statements - Page 14FIYTA Precision Technology Co. Ltd.Notes to the Financial Statements
For the year ended 31 December 2023
the estimated figure the difference will affect the carrying value of accounts receivable and other
receivables and the impairment loss expenses in corresponding accounting period.
2) Impairment to inventory. The Company recognizes provision for obsolete inventories based
on the excess of the cost of inventory over its net realizable value. In determining the net realizable
value of inventories the management uses significant judgments to estimate the selling price cost
to finish manufacturing and selling expenses and associated taxes. If the management revises
estimated selling price and cost to finish manufacturing and selling expenses the NAV estimation
would be affected and the difference would have an effect to the inventory provision.
3) Estimation of long-term asset impairment. When evaluating whether there is impairment to
long-term asset the management mainly considers the following: (a) whether the events affect the
asset impairment have already incurred; (b) whether the discounted cash flow from continue usage
of the asset or disposal is lower than its carrying amount; and (c) whether major assumption used in
estimating the future cash flow is appropriate.Changes to related assumption adopted in determining impairment such as profitability
discounting rate and growth rate may have material impact to the present value used in impairment
test and result in impairment to above mentioned long-term assets.(a) Depreciation and amortization. The estimated residual value and useful life of investment
property fixed asset and intangible asset that used by the Company are based on historical actual
useful life and actual residual value of assets with similar nature or functions. In the process of using
such assets estimated useful life and residual value may vary depending on the economic
environment technological environment and other environment that the assets located. If there is
difference between the expectation and previous estimation proper adjustments will be made by the
management.(b) Share-based payments. The management makes best estimation based on up-to-date
number of employees who have exercisable shares and adjusting the number of exercisable equity
instrument on each balance sheet date in the vesting period. If there is difference between current
year exercisable employee and previous estimation proper adjustments will be made by the
management.(c) Deferred tax asset. Deferred tax asset of taxable losses shall be recognized to the extent that
there will have sufficient taxable income to offset. This involves significant judgments to estimate
the timing and amount of future taxable profit and taking into consideration of tax planning so as to
determine the amount of deferred tax asset.(d) Corporate income tax. The final tax treatment of many transaction and events are with
uncertainty in the normal course of operation. Significant judgments involves in accrual of corporate
income tax. If there is difference between the final discretion and the amount recorded in books the
difference will affect the amount of tax in the period of final discretion.Notes to the financial statements - Page 15FIYTA Precision Technology Co. Ltd.Notes to the Financial Statements
For the year ended 31 December 2023
2. Statement of compliance with Accounting Standards for Business Enterprises
The financial statements of the Company have been prepared in accordance with the
requirements of Accounting Standards for Business Enterprises. These financial statements present
truly and completely the financial position as at 31 December 2023 the results of operations and
the cash flows for the year then ended of the Company.
3. Accounting period
The accounting period of the Company is the calendar year i.e. from 1 January to 31 December
of each year.
4. Operating cycle
The operating cycle refer to the period from purchasing assets for process to realizing cash or
cash equivalent. The Company’s operating cycle is 12 months which is also used as standard to
determine the liquidity of asset and liabilities.
5. Recording currency
The Company and its domestic subsidiaries adopt Renminbi (“RMB”) as the recording
currency. FIYTA (Hong Kong) Limited (“FIYTA Hong Kong”) a subsidiary of the Company
outside mainland China and Station 68 Limited (“Station 68”) a subsidiary of FIYTA Hong Kong
use Hong Kong Dollar (“HKD”) as the recording currency according to the main economic
environment where the companies operated in. Montres Chouriet SA a subsidiary of FIYTA Hong
Kong (“Swiss Company”) uses Swiss Franc as the recording currency according to the main
economic environment where the Swiss Company operated in. The recording currencies mentioned
above will be translated to Renminbi when preparing financial statements. The currency used in
preparing the Group’s financial statements is Renminbi.
6. Methodology for determining materiality criteria and basis for selection
Item Materiality criteria
Accounts receivable with significant amount of bad
Individual closing balance of 0.50
debt provision reversed or recovered during the
million or more
period
Individual closing balance of 1.00
Significant other accounts payable aged over one year
million or more
7. Accounting treatment for business combinations involving entities under common
control and not under common control
(1) If a business combination is achieved through multiple steps of which the terms
condition and economical effect is in line with one or more criteria as followed the multiple
transactions shall be dealt with as one-basket transaction.
1) the transactions were entered into at the same time or by considering each other’s influence;
2) a complete business result can only be achieved by combining all these transactions together;
3) the performing of one transaction is depended on at least one other transaction;
Notes to the financial statements - Page 16FIYTA Precision Technology Co. Ltd.Notes to the Financial Statements
For the year ended 31 December 2023
4) a transaction is not economical if it is considered stand along but it will become economical
if it is considered in combination with other transactions.
(2) Business combination involving entities under common control
For a business combination involving enterprises under common control the assets acquired
and liabilities assumed are measured based on their carrying amounts in the consolidated financial
statements of the ultimate controlling party at the combination date except for adjustments due to
different accounting policies. The difference between the carrying amount of the net assets acquired
and the consideration paid for the combination (or the total par value of shares issued) is adjusted
against share premium in the capital reserve with any excess adjusted against retained earnings.If there is contingent consideration and provision or assets are required to be recognized the
difference between the provision or assets and the contingent consideration shall adjust the capital
reserve with any excess adjusted against retained earnings.If business combinations involving entities under common control achieved in stages that
involves multiple transactions belongs to one-basket transaction all transactions shall be dealt with
as one transaction. If not the accounting treatment is as follows: Initial investment cost is the
acquirer’s share of the carrying amount of the net assets of the acquiree in the consolidated financial
statements of the ultimate controlling party at the combination date. The difference between the
initial investment cost and the sum of carrying amount of investment prior to combination date and
carrying amount of new considerations paid for the combination at the combination date is adjusted
to capital reserve (share premium) . If the capital reserve is not sufficient to absorb the difference
any excess is adjusted against retained earnings. he difference between the carrying amount of the
net assets acquired and the sum of carrying amount of investment prior to combination date and
carrying amount of new considerations paid for the combination at the combination date is adjusted
to capital reserve (share premium) . If the capital reserve is not sufficient to absorb the difference
any excess is adjusted against retained earnings. The profit or loss other comprehensive income and
changes in other owner’s equity recognized by the acquirer during the period from the later of initial
investment date and the date that the acquirer and acquiree both under common ultimate control to
the combination date are offset the opening retained earnings or profit for loss for the current period
in the comparative statements.
(3) Business combinations involving entities not under common control
The purchase date refers to the date that the Company actually acquired control over the acquire
i.e. the date when the control over the acquiree’s net assets or decision of business operation has
been transferred to the Company. If the Company fulfills the following conditions at the same time
it is considered that the control has been transferred:
* the contract or agreement of business combination has been approved by internal power
department;
Notes to the financial statements - Page 17FIYTA Precision Technology Co. Ltd.Notes to the Financial Statements
For the year ended 31 December 2023
* related matters has been approved by state supervisory authorities if needed;
* procedures of asset transfer has been completed;
* the Company has been made majority of payments and has the ability and plan to make the
residual payments;
* the Company is in substances acquired the business and operating policies and enjoyed
corresponding interests and undertaking risks of the acquire.On the purchase date assets transferred liabilities incurred or assumed as the consideration
paid shall be measured at fair value. The difference between the fair value and carrying amount
shall be charged to current period profit or loss.Where the combination cost exceeds the acquirer’s interest in the fair value of the acquiree’s
identifiable net assets the difference is recognized as goodwill and subsequently measured on the
basis of its cost less accumulated impairment provisions. Where the combination cost is less than
the acquirer’s interest in the fair value of the acquiree’s identifiable net assets the difference is
recognized in profit or loss for the current period after reassessment.If business combinations involving entities not under common control achieved in stages that
involves multiple transactions belong to one-basket transaction all the transactions shall be treated
as one. Otherwise it shall be treated as follows: In the separate financial statements the initial
investment cost is the sum of the carrying amount of equity investment of the acquiree held prior to
the acquisition date and additional investment cost at the acquisition date. When the previously-
held equity investment which was accounted for under the e Accounting treatment for business
combinations involving entities under common control and not under common control equity
method before the acquisition date any other comprehensive income previously recognized is not
adjusted on acquisition date. When the investment is disposed of in later date the amount that was
recognized in other comprehensive income is recognized on the same basis as would be required if
the investee had disposed directly of the related assets or liabilities. The owners’ equity recognized
as the changes of the investee’s other owners’ equity except for net profit or loss other
comprehensive income and profit distribution are transferred to profit or loss for the current period
when disposing the investment. When the previously-held equity investment which was measured
at fair value before the acquisition date the accumulated changes in fair value included in other
comprehensive income is transferred to profit or loss for the current period upon commencement of
the cost method.
(4) Transaction costs for business combination
The overhead for the business combination including the expenses for audit legal services
valuation advisory and other administrative expenses are recorded in profit or loss for the current
period when incurred. The transaction costs of equity or debt securities issued as the considerations
of business combination are included in the initial recognition amount of the equity or debt securities.Notes to the financial statements - Page 18FIYTA Precision Technology Co. Ltd.Notes to the Financial Statements
For the year ended 31 December 2023
8. Criteria for judging control and the preparation of consolidated financial statements
(1) Criteria for determining control
Control means that the investor has power over the investee enjoys variable returns through
participation in the investee's relevant activities and has the ability to use its power over the investee
to influence the amount of its returns.The Company makes a judgment on whether or not to control an investee based on a
comprehensive consideration of all relevant facts and circumstances. The Company re-evaluates its
judgment once changes in relevant facts and circumstances result in a change in the relevant
elements involved in the definition of control. Relevant facts and circumstances mainly include：
* the purpose for which the investee was established;
* relevant activities of the investee and how decisions are made about relevant activities;
* whether the investor enjoys rights that currently give it the ability to dominate the investee's
relevant activities;
* whether the investor enjoys a variable return through participation in the investee's relevant
activities;
* the ability of the investor to use its power over the investee to influence the amount of its
return;
* relationships between investors and other parties.
(2)
The scope of consolidated financial statements is based on control. All subsidiaries (including
standalone entity that controlled by the Company) are all included in the scope of consolidation.
(3) Procedures of consolidation
The consolidated financial statements are prepared by the Company based on the financial
statements of the Company and its subsidiaries and other relevant information. The whole enterprise
is considered as one accounting body when preparing consolidated financial statement and reflect
the whole group’s financial position performance and cash flow according to unified accounting
policies based on accounting standards.All subsidiaries that are included in the scope of consolidation adopt same accounting policies
and accounting period. If there are differences the subsidiaries shall adjust its policies and
accounting period accordingly.When preparing consolidated financial statements the accounting policies and accounting
periods of the subsidiaries should be consistent with those established by the Company and all
significant intra-group balances and transactions are eliminated. If the treatment based on enterprise
group angle is different with the angle from subsidiaries’ it shall be treated based on enterprise
Notes to the financial statements - Page 19FIYTA Precision Technology Co. Ltd.Notes to the Financial Statements
For the year ended 31 December 2023
group angle.The portion of a subsidiary’s equity that is not attributable to the parent is treated as non-
controlling interests and presented separately in the consolidated balance sheet within shareholders’
equity. The portion of net profit or loss of subsidiaries for the period attributable to non-controlling
interests is presented separately in the consolidated income statement below the “net profit” line
item. When the amount of loss for the current period attributable to the non-controlling shareholders
of a subsidiary exceeds the non-controlling shareholders’ share of the opening owners’ equity of the
subsidiary the excess is still allocated against the non-controlling interests.Where a subsidiary or business has been acquired through a business combination involving
enterprises under common control in the reporting period the subsidiary or business is deemed to
be included in the consolidated financial statements from the date they are controlled by the ultimate
controlling party. Their operating results and cash flows are included in the consolidated income
statement and consolidated cash flow statement respectively from the date they are controlled by
the ultimate controlling party.Where a subsidiary or business has been acquired through a business combination not
involving enterprises under common control in the reporting period the financial statements of
subsidiaries shall be adjusted on the basis of fair value of identifiable net assets on purchase date.
1) Addition of subsidiaries or business operation
Where a subsidiary or business has been acquired through a business combination involving
enterprises under common control in the reporting period the subsidiary or business is deemed to
be included in the consolidated financial statements from the date they are controlled by the ultimate
controlling party. Their operating results and cash flows are included in the consolidated income
statement and consolidated cash flow statement respectively from the date they are controlled by
the ultimate controlling party.If the Company can exert control over the investee under common control because of addition
of investment adjustments shall be made as if all the combining party are at the current condition
in the angle of ultimate controlled party. Equity investment held before acquired control profit or
loss other comprehensive income and other net asset changes that have already recognized between
the later of acquiring original equity and the date under common control and combination date shall
offset opening retained earnings or current period profit or loss respectively.In the reporting period if there is subsidiary or business addition involving entities not under
common control no adjustments shall be made to the consolidated balance sheet. The revenue
expenses and profit from the purchasing date to period end shall be included in consolidated income
statement. The cash flows from the purchasing date to period end shall be included in consolidated
cash flow statement.Where a subsidiary or business has been acquired through a business combination not
Notes to the financial statements - Page 20FIYTA Precision Technology Co. Ltd.Notes to the Financial Statements
For the year ended 31 December 2023
involving enterprises under common control by means of investment addition in the reporting period
equity held before the purchase date shall be re-measured at fair value. Difference between the fair
value and the carrying amount shall be charged to current period investment gain. Changes related
to equity method such as other comprehensive income and other equity changes beside net profit
other comprehensive income and profit distribution shall be transferred to current period investment
gain.
2) Disposal subsidiary or business
a) General principal
In the reporting period if the Company dispose of subsidiary or business the subsidiary’s
revenue expenses profit and cash flows from the beginning of the period to the disposal date shall
be included in consolidated financial statements.When the Company loses control over a subsidiary because of disposing part of equity
investment or other reasons the remaining part of the equity investment is re-measured at fair value
at the date when the control is lost. A gain or loss is recognized in the current period and is calculated
by the aggregate of consideration received in disposal and the fair value of remaining part of the
equity investment deducting the share of net assets in proportion to previous shareholding
percentage in the former subsidiary since acquisition date and the goodwill.b) Disposal of subsidiary through multiple steps
In the event that the Company losses control over a subsidiary through multiple transactions
if one or more conditions below are fulfilled it shall be treated as one-basket transaction:
i) the transactions were entered into at the same time or by considering each other’s influence;
ii) a complete business result can only be achieved by combining all these transactions together;
iii) the performing of one transaction is depended on at least one other transaction;
iv) a transaction is not economical if it is considered stand along but it will become economical
if it is considered in combination with other transactions.If the disposal was categorized as one-basket transaction the Company dealt with all
transactions as one transaction that resulted in lost control over subsidiary. But before losing control
the difference between disposal consideration and the portion of net asset of the disposal part shall
be recognized in other comprehensive income each time of disposal and charged to income
statement in whole in the period loss control.If the disposal does not belong to one-basket transaction the accounting treatment before lost
control shall be in accordance with policies of disposal equity but not losing control. At the time
control lost deal with as normal subsidiary disposal.
3) Acquiring non-controlling interests of subsidiary
Where the Company acquires a non-controlling interest from a subsidiary’s non-controlling
shareholders the book value of shareholder’s equity attributed to the Company and to the non-
Notes to the financial statements - Page 21FIYTA Precision Technology Co. Ltd.Notes to the Financial Statements
For the year ended 31 December 2023
controlling interest is adjusted to reflect the change in the Company’s interest in the subsidiaries.The difference between the proportion interests of the subsidiary’s net assets being acquired or
disposed and the amount of the consideration paid or received is adjusted to the capital reserve in
the consolidated balance sheet with any excess adjusted to retained earnings.
4) Partially disposal subsidiary equity without losing control
The difference between the consideration received from partial disposal of the long-term equity
investment in the subsidiary without losing control and the share of net assets of the subsidiary that
is continuously calculated from the purchase date or the merger date corresponding to the disposal
of the long-term equity investment to adjust the share premium in the capital reserve in the
consolidated balance sheet if the share premium in the capital reserve is insufficient to offset adjust
the retained earnings.
9. Joint arrangement classification and accounting treatment for joint operation
(1) Classification
The Company classifies joint arrangements into joint operations and joint ventures based on
the structure legal form terms and conditions in the arrangement and other related facts.Joint operations means joint arrangement that does not realized through independent entity.Joint arrangement that realized through independent entity is normally recognized as joint venture
but it also can be classified as joint operation if clear evidence showed that one of the following
condition is met:
1) The legal form of an joint arrangement showed that the joint parties enjoyed rights over
related assets and undertake liability respectively;
2) The contract showed that the joint parties enjoyed rights over related assets and undertake
liability respectively;
3) Other facts and situation indicated that the joint parties enjoyed rights over related assets
and undertake liability respectively;
(2) Accounting treatment to joint operation
The Company recognizes the following items relating to its interest in a joint operation and
account for them in accordance with relevant accounting standards:
1) its solely-held assets and its share of any assets held jointly;
2) its solely-assumed liabilities and its share of any liabilities assumed jointly;
3) its revenue from the sale of its share of the output arising from the joint operation;
4) its share of the revenue from the sale of the output by the joint operation; and
5) its solely-incurred expenses and its share of any expenses incurred jointly.
The Company contribute or disposal of assets (except that asset constitute business) . Before
these assets are sold to third party the Company only recognizes the portion of profit or losses that
attributes to the other party. If the assets incurred impairment (meets the requirements of the
Notes to the financial statements - Page 22FIYTA Precision Technology Co. Ltd.Notes to the Financial Statements
For the year ended 31 December 2023
"Accounting Standards for Business Enterprises No. 8 - Impairment of Assets") the Company
recognizes losses in full.For the assets purchased from joint operation (except that constitutes business) before it is
sold to third party only the portion that attributable to the other parties. If assets incurred impairment
(meets the requirements of the "Accounting Standards for Business Enterprises No. 8 - Impairment
of Assets") the Company recognizes losses based on its share.The Company does not enjoy joint control to joint operation. If the Company enjoys joint
operation’s asset and undertaking related liabilities the accounting treatment is the same. Otherwise
it shall be accounted for based on accounting standards.
10. Cash and cash equivalents
When preparing cash flow statement the Company recognizes cash in hand and bank deposit
that available for payment as cash. Cash equivalents include short-term (generally expires within
three months from the date of purchase)highly liquid investments that are readily convertible to
known amounts of cash and are subject to an insignificant risk of change in value.
11. Foreign currency transactions and translation of foreign currency financial
statements
(1) Foreign currency transactions
Foreign currency transactions are translated into the functional currency of the Company using
the exchange rates prevailing at the dates of the transactions.Monetary items denominated in foreign currencies are translated to Renminbi at the spot
exchange rate at the balance sheet date. The resulting exchange differences between the spot
exchange rate on balance sheet date and the spot exchange rate on initial recognition or on the
previous balance sheet date are recognized in profit or loss. Non-monetary items that are measured
at historical cost in foreign currencies are translated to Renminbi using the exchange rate at the
transaction date.Non-monetary items that are measured at fair value in foreign currencies are translated using
the exchange rate at the date the fair value is determined. The resulting exchange differences are
recognized in profit or loss or other comprehensive income.
(2) Translation of foreign currency financial statements
When translating the foreign currency financial statements of overseas subsidiaries assets and
liabilities of foreign operation are translated to Renminbi at the spot exchange rate at the balance
sheet date. Equity items excluding “retained earnings” are translated to Renminbi at the spot
exchange rates at the transaction dates.When disposing overseas operations foreign translation difference that related to the overseas
Notes to the financial statements - Page 23FIYTA Precision Technology Co. Ltd.Notes to the Financial Statements
For the year ended 31 December 2023
business shall be charged to current period profit or losses from other comprehensive income. If
the disposal resulted in decrease in shareholding but still maintain control the translation
difference will be included in non-controlling interest. If the disposal related to associate entity or
joint venture entities the translation difference will be included in current period profit or loss.
12. Financial instruments
The Company recognizes financial assets or financial liabilities when the Company become a
party of the financial instruments.Effective interest rate method refer to calculating the amortized cost of financial assets or
liabilities and amortizes interest income or expenses into corresponding accounting period
accordingly.Effective interest rate refers to the interest that is used to discount the estimated future cash
flows of existing financial assets or financial liabilities to its amortized cost. When determining the
effective interest rate the cash flow is estimated taking consideration of all contractual terms of
financial assets or financial liabilities but does not including estimated credit loss.Amortized cost of financial assets or financial liabilities is the initial recognition amount deduct
principal and add or less accumulated amortization to the difference between initial recognition and
the amount at maturity and less accumulated loss provision (for financial assets only) .
(1) Recognition and derecognition of financial instruments
Financial assets are classified into the following three categories depends on the Company’s
business mode of managing financial assets and cash flow characteristics of financial assets
1) Financial assets measured at amortized cost
2) Financial assets at fair value through other comprehensive income
3) Financial assets at fair value through profit or loss
Financial assets are measured at fair value at initial recognition. But it is recognized using
trading price for accounts receivable or notes receivable arose from sale of goods or providing of
service that does not including material financing component or does not consider financing
component within one year.For financial assets at fair value through profit or loss the related transaction costs are directly
recognized through profit or loss and the related transaction costs of other types of financial assets
are included in the initial recognition amounts.Only when the Company changes its business model of managing financial assets all the
financial assets affected shall be reclassified on the first day of the first reporting period after the
business model changes.
1) Financial assets measured at amortized cost
The Company shall classify financial assets that meet the following conditions and are not
designated as financial assets at fair value through profit or loss as financial assets measured at
Notes to the financial statements - Page 24FIYTA Precision Technology Co. Ltd.Notes to the Financial Statements
For the year ended 31 December 2023
amortized cost: The Company’s business model for managing the financial assets is to collect
contractual cash flows; The terms of the financial asset contract stipulate that cash flows generated
on a specific date are only payments of principal and interest based on the amount of outstanding
principal. Financial assets measured at amortized cost of the Company includes cash and bank
balances notes receivable accounts receivables and other receivables.After initial recognition the effective interest rate method is used to measure the amortized
cost of such financial assets. Profits or losses arising from financial assets measured at amortized
costs and not part of any hedging relationship are included in current profit or loss when the
recognition is terminated amortized or impaired according to the effective interest rate.a) for financial assets that already impaired when it is acquired the Company determines its
interest income using adjusted effective interest rate based on its amortized cost.b) for financial assets that does not impaired when it is acquired but impaired latterly the
Company determines its interest income using adjusted effective interest rate based on its amortized
cost. If there is no credit impairment in later period due to changes to risk factors the Company uses
effective interest rate times of carrying amount of the financial asset to determine interest income.
2) Financial assets at fair value through other comprehensive income
The Company shall classify financial assets that meet the following conditions and are not
designated as financial assets measured at fair value and whose changes are recorded in current
profit or loss as financial assets measured at fair value through other comprehensive income: The
Group’s business model for managing the financial assets is both to collect contractual cash flows
and to sell the financial assets and the terms of the financial asset contract stipulate that cash flows
generated on a specific date are only payments of principal and interest based on the amount of
outstanding principal.After initial recognition financial assets are subsequently measured at fair value. Interest
impairment losses or gains and exchange gains calculated by the effective interest rate method are
recognized in profit or loss while other gains or losses are recognized in other comprehensive
income. When derecognized the accumulated gains or losses previously recognized in other
comprehensive income are transferred from other comprehensive income and recorded in current
profit or loss.Notes receivable and accounts receivable measured at fair value through other comprehensive
income are listed as receivables financing and other such financial assets are listed as other debt
investments of which: one year from the balance sheet date Other debt investments due within one
year are listed as non-current assets due within one year and other debt investments with an original
maturity date within one year are listed as other current assets.
3) Financial assets designated as fair value through other comprehensive income
At initial recognition the Company may designate non-trading equity instrument investments
Notes to the financial statements - Page 25FIYTA Precision Technology Co. Ltd.Notes to the Financial Statements
For the year ended 31 December 2023
as financial assets at fair value through other comprehensive income presented as other equity
instrument investment and recognize dividend income when the conditions are met (the designation
cannot be revoked once it is made) .The fair value changes of this kind of financial asset shall be included in other comprehensive
income and no impairment provision is needed. When de-recognizing the financial asset
accumulated gain or loss in other comprehensive income shall be transferred out of other
comprehensive income and charged to retained earnings. During the investing period when the
Company holds equity instruments the Company recognizes dividends in current period profit or
loss when the right of receiving dividends is confirmed and the associated economic benefit is
probable to flow into the Company and that the amount can be measured reliably. The Company
treated this kind of financial instrument under other equity investment.The designated equity instrument investment does not belong to the following: the purpose of
obtaining the financial asset is mainly for the recent sale; it is part of the identifiable financial asset
instrument combination under centralized management at initial recognition and there is objective
evidence that the short-term gain actually exists in the near future; it is a derivative (except for
derivatives that meet the definition of a financial guarantee contract and are designated as effective
hedging instruments) .
4) Financial assets at fair value through profit or loss
The financial assets other than financial assets measured at amortized cost and financial assets
at fair value through other comprehensive income are classified as financial assets at fair value
through profit or loss.After initial recognition the financial assets are subsequently measured at fair value and the
profits or losses generated from which are recognized in profit or loss.The Company present the financial assets as financial asset held for trade other non-current
financial assets.
5) Financial assets designated at fair value through profit or loss.
At initial recognition if the accounting mismatch can be eliminated or significantly reduced
the financial assets can be designated as financial assets at fair value through profit or loss.If the hybrid contract includes one or more embedded derivatives and the main contract does
not belong to the above financial assets the Company may designate the whole as a financial
instrument that is measured at fair value through profit or loss except in the following cases:
a) Embedded derivatives do not materially change the cash flow of a hybrid contract
b) When it is first determined whether a similar hybrid contract requires a spin-off there is
little need for analysis to make it clear that the embedded derivatives it contains should not be split.If the prepayment right of the embedded loan allows the holder to repay the loan in advance with an
amount close to the amortized cost the prepayment right does not need to be split.Notes to the financial statements - Page 26FIYTA Precision Technology Co. Ltd.Notes to the Financial Statements
For the year ended 31 December 2023
After initial recognition the financial assets are subsequently measured at fair value and the
profits or losses generated from which are recognized in profit or loss.The Company present the financial assets as financial asset held for trade other non-current
financial assets.
(2) Classification and measurement of financial liabilities
The Company categorizes financial liabilities into financial liabilities and equity instrument
based on the contract terms and economical nature rather than solely on its legal form. Financial
liabilities initially recognized as financial liabilities at fair value through profit or loss other
financial liabilities and derivative instrument designated as effective hedging instrument.The financial liabilities of the Company are initially measured at fair value. The related
transaction costs of financial liabilities at fair value through profit or loss are directly recognized in
profit or loss. The related transaction costs of other categories of financial liabilities are included in
the initial recognition amount.Subsequent measurement of financial liabilities depends on its category:
1) Financial liabilities at fair value through profit or loss
This category includes financial liabilities held for trade (including derivatives that are
financial liabilities) and financial liabilities designated at fair value through profit or loss.At initial recognition in order to provide more relevant accounting information the Company
classifies financial liabilities that meet one of the following conditions as financial liabilities at fair
value through profit or loss (the designation cannot be revoked once it is made) : the aim of
undertaking related financial liabilities is to sell or repurchase in the short run; it is part of
identifiable financial instruments and there is objective evidence indicated that the enterprise adopts
short-term profitability mode; belong to derivative instrument except for derivative instrument
designated as effective hedging instrument and financial guarantee contract. Financial liabilities
held for trade are measured at fair value subsequently and all fair value changes except for hedging
accounting shall be included in current period profit or loss.At initial recognition in order to provide more relevant accounting information the Company
classifies financial liabilities that meet one of the following conditions as financial liabilities
designated at fair value through profit or loss (the designation cannot be revoked once it is made) :
a) accounting mismatches can be eliminated or significantly reduced.b) management and performance evaluation of financial liability portfolios or combinations of
financial assets and financial liabilities based on fair value according to corporate risk management
or investment strategies as stated in formal written documents and report to key management
personnel on this basis.When the Company initially recognizes a financial liability and designates it at fair value
through profit or loss according to stipulations of standards the changes in the fair value of the
financial liability arising from changes in the company’s own credit risk are included in other
Notes to the financial statements - Page 27FIYTA Precision Technology Co. Ltd.Notes to the Financial Statements
For the year ended 31 December 2023
comprehensive income and other changes in fair value are recognized in profit or loss for the period.However if the accounting causes or expands the accounting mismatch in profit or loss the entire
gain or loss of the financial liability (including the affected amount from changes in the company’s
own credit risk) is included in the current profit or loss.
2）Other financial liabilities
Except for the following items the Company classifies financial liabilities as financial
liabilities measured at amortized cost:
a) Financial liabilities at fair value through profit or loss.b) The transfer of financial assets does not meet the conditions for derecognition or financial
liabilities arising from the continued involvement in the transferred financial assets.c) Financial guarantee contracts that are not in the first two categories of this article and loan
commitments granted at a rate lower than market interest rates and that are not in the first category
of this article
Financial guarantee contracts that are not designated as financial liabilities measured at fair
value through profit or loss are initially recognized at fair value. Subsequent to initial recognition
the subsequent measurement is determined according to the higher loss allowance of contingent
liabilities under expected credit loss model and the initial recognition amount deducting by the
accumulated amortization.
(3) Derecognition of financial instruments
1）If a financial asset meets one of the following conditions it shall be derecognized:
a) The contractual right to receive the cash flow of the financial asset is terminated.b) The financial asset has been transferred and the transfer meets the requirements of the
“Accounting Standards for Business Enterprises No. 23 – Transfer of Financial Assets” regarding
derecognition of financial assets.
2) Conditions of derecognition of financial liabilities
If the current obligation of a financial liability (or a part thereof) has been discharged the
financial liability (or such part of financial liability) is derecognized.When the Company and the lender sign an agreement to replace the original financial liability
with a new financial liability and the new financial liability is substantially different from the
original financial liability the original financial liability is derecognized and a new financial liability
is recognized. The difference between the carrying amount and the consideration paid (including
the transferred non-cash assets or liabilities assumed) is recognized in profit or loss
If the Company repurchases part of the financial liabilities the carrying amount of the financial
liabilities as a whole is allocated based on the proportion of the fair value of the continuing
recognition portion and the derecognition portion on the repurchase date. The difference between
the carrying amount assigned to the derecognition portion and the consideration paid (including the
Notes to the financial statements - Page 28FIYTA Precision Technology Co. Ltd.Notes to the Financial Statements
For the year ended 31 December 2023
transferred non-cash assets or liabilities assumed) shall be included in the current profit or loss.
(4) Recognition basis and measurement for transfer of financial assets
In the event of transfer of financial assets the Company assesses the extent to which it retains
the risks and rewards of ownership of the financial assets and treats them in the following cases:
1) If almost all risks and rewards of ownership of financial assets are transferred the financial
assets are derecognized and the rights and obligations arising from or retained in the transfer are
separately recognized as assets or liabilities.
2) If almost all the risks and rewards of ownership of financial assets are retained the financial
assets shall continue to be recognized
3) If there is neither transfer nor retention of almost all risks and rewards of ownership of
financial assets (i.e. other than (1) and (2) of this article) then depending on whether or not they
retain control over financial assets
a) If control over the financial asset is not retained the financial asset shall be derecognized
and the rights and obligations arising or retained during the transfer shall be separately recognized
as assets or liabilities.b) If the control over the financial asset is retained the relevant financial asset shall be
continuously recognized according to the degree of its continuous involvement in the transferred
financial asset and the relevant liabilities shall be recognized accordingly. The degree of continued
involvement in the transferred financial assets refers to the degree to which the company bears the
risk or reward of the value change of the transferred financial assets
When judging whether the transfer of financial assets satisfies the conditions for derecognition
above the principle of substance over form is adopted. The Company divides the transfer of
financial assets into the overall transfer and partial transfer of financial assets:
1) If the overall transfer of financial assets meets the conditions for derecognition the
difference between the following is included in the current profit or loss:
a) The carrying amount of the transferred financial assets on the date of derecognition.b) The sum of the consideration received in respect of the transfer of financial assets and the
amount corresponding to the derecognized portion in the accumulated changes in the fair value
originally and directly recognized in other comprehensive income (the financial assets involved in
the transfer are measured at fair value through other comprehensive income)
If the transfer of a financial asset does not meet the conditions for derecognition the financial
asset will continue to be recognized and the consideration received is recognized as a financial
liability
(5) Method for determining the fair value of financial assets and financial liabilities
The fair value of financial assets or financial liabilities with active market is determined by
active market quotations; active market quotations include quotations that are readily and regularly
Notes to the financial statements - Page 29FIYTA Precision Technology Co. Ltd.Notes to the Financial Statements
For the year ended 31 December 2023
available from exchanges dealers brokers industry groups pricing agencies or regulatory
authorities for related assets or liabilities and represent actual and frequently occurring market
transactions on a fair trade basis.The fair value of financial assets initially acquired or derived or financial liabilities assumed
shall be determined on the basis of the market transaction price.The fair value of financial assets or financial liabilities without active market is determined
using valuation techniques. In valuation the Company adopts valuation techniques that are
applicable under current circumstances and that are supported by adequate available data and other
information selects inputs with consistent asset or liability characteristics considered by market
participants in trading related asset or liability and uses relevant observable inputs where possible.Unobservable inputs are used where the relevant observable inputs are not available or are
impracticable.
(6) Provision for impairment of financial assets
Based on the expected credit losses the Company assesses the expected credit losses of the
financial assets measured at amortized cost and financial assets at fair value through other
comprehensive income lease receivables contract assets loan commitment and financial liabilities
that are not measured at fair value through profit or loss and financial guarantee contract etc. and
makes impairment accounting and recognizes loss provisions.The expected credit loss refers to the weighted average of the credit losses of financial
instruments that are weighted by the risk of default. Credit loss refers to the difference between all
contractual cash flows discounted at the original effective interest rate and receivable from the
contract and all cash flows expected to be received by the Company and the present value of all
cash shortages. For financial assets that have been purchased or generated with credit impairment
loss provision is recognized only for the cumulative changes in lifetime expected credit losses after
the initial recognition on the balance sheet date.For accounts receivable contract assets and lease receivables the Company shall always
measure the loss allowance for them at an amount equal to the lifetime expected credit losses.For financial assets that have been purchased or generated with credit impairment loss
provision is recognized only for the cumulative changes in lifetime expected credit losses after the
initial recognition on the balance sheet date. On each balance sheet date the amount of changes in
lifetime expected credit losses is included in profit or loss as an impairment loss or gain. Even if
the lifetime expected credit loss determined on the balance sheet date is less than the expected
credit loss reflected in the estimated cash flow at the initial recognition the positive change in
expected credit loss is also recognized as an impairment gain
Except for the above-mentioned simplified measurement methods and purchased or originated
Notes to the financial statements - Page 30FIYTA Precision Technology Co. Ltd.Notes to the Financial Statements
For the year ended 31 December 2023
credit-impaired assets the Company assesses whether the credit risk of the other financial assets has
increased significantly since the initial recognition on each balance sheet date and separately
measures its loss provision recognizes expected credit loss and its changes based on the following
circumstances：
a) If the credit risk of the financial instruments has not increased significantly since the initial
recognition the loss provision is measured at the amount equivalent to the expected credit loss of
the financial instruments in the next 12 months regardless of whether the basis the Company
assesses the credit loss is on individual financial instrument or the combination of financial
instruments and the increase or reversal of the loss provision resulting therefrom shall be included
in the current profit or loss as an impairment loss or gain.b) If the credit risk of the financial instruments has increased significantly since the initial
recognition but no impairment has occurred the loss provision is measured at the amount equivalent
to the lifetime expected credit loss of the financial instruments regardless of whether the basis the
Company assesses the credit losses is on individual financial instrument or a combination of
financial instruments and the increase or reversal of the loss provision resulting therefrom should
be included in the current profit or loss as an impairment loss or gain.c) For financial instruments in the third stage which the financial instrument has been impaired
since initial recognition the Company measures loss provision on the basis of life-time expected
credit loss and calculating interest income according to their book balance minus the impairment
provision and the actual interest rate.Incremental or reversal of credit loss provision shall be included in current profit or loss as
impairment loss or gain. Except for financial asset at fair value through other comprehensive
income credit loss provision is to offset the carrying amount of financial assets. For financial assets
at fair value through other comprehensive income the credit loss provision is recognized in other
comprehensive income and will not offset the financial asset’s carrying amount in balance sheet.If the Company recognized credit loss provision in prior accounting period in terms of life-
time credit loss but on current period balance sheet date the associated financial asset does not
belong to the situation of risk increased after the initial recognition the Company shall accrue
credit loss provision for this financial asset based on the next 12 month expected credit loss.Difference arose from above changes shall be included in current period profit or loss as
impairment gain.
1) Assessment of significant increase of credit risk
By comparing the default risk of financial instruments on balance sheet day with that on initial
recognition day the Company determines the relative change of default risk of financial instruments
during the expected life of financial instruments to evaluate whether the credit risk of financial
Notes to the financial statements - Page 31FIYTA Precision Technology Co. Ltd.Notes to the Financial Statements
For the year ended 31 December 2023
instruments has increased significantly since the initial recognition.To determine whether credit risk has increased significantly since the initial recognition factors
considered by the Company includes:
a) Whether there is serious deterioration of the debtor’s operating results that have occurred or
are expected to occur;
b) Changes in the existing or anticipated technological market economic or legal environment
will have a significant negative impact on the debtor’s repayment capacity.c) Serious deterioration of external or internal credit ratings (if any) of financial instruments
that have occurred or are expected to occur;
d) Whether the expected performance and repayment of debtor changes significantly.e) Whether the Company changed the way of managing financial assets.On the balance sheet date if the Company assesses that the financial instrument only has lower
level of credit risk the Company assumes that the credit risk associated with the financial
instrument does not increased after the initial recognition. If the default rate of a financial
instrument is low and the debtor’s ability to fulfill its cash flow liability is strong the financial
instrument will be regarded with lower credit risk even if there will be adverse changed in
economic and operating environment in long-term which may not necessarily decrease the debtor’s
ability of fulfilling its cash flow liabilities.
2) Provision for impairment of financial assets
When one or more events that adversely affect the expected future cash flows of a financial
asset occur the financial asset becomes a financial asset that has suffered credit impairment.Evidence that credit impairment has occurred in a financial asset includes the following observable
information:
a) significant financial difficulties of the issuer or debtor;
b) the debtor breaches the contract such as failure to pay or delay in the payment of interest or
principal;
c) the creditor gives the debtor a concession which would not have been made under any other
circumstances for economic or contractual considerations relating to the financial difficulties of the
debtor;
d) the debtor is likely to go bankrupt or carry out other financial restructurings;
e) the financial difficulties of the issuer or the debtor cause the active market of the financial
asset to disappear;
f) purchase or source a financial asset at a substantial discount that reflects the fact that credit
losses have occurred.The credit impairment of financial assets may be caused by the joint action of multiple events
and may not be caused by separately identifiable event
Notes to the financial statements - Page 32FIYTA Precision Technology Co. Ltd.Notes to the Financial Statements
For the year ended 31 December 2023
3) Determining expected credit loss (ECL)
The Company evaluates ECL based on single or portfolio of financial instrument. When
evaluating ECL the Company considers past events current situation and future economic
condition.The Company categorizes financial instrument into different portfolios based on common
credit risk characteristics. Common credit risk characteristics includes: types of financial
instruments aging portfolio settlement period debtor’s industries etc… Refer to accounting
policies of financial instruments for standard for single evaluation and credit risk characteristics.The Company uses the following way to determine the ECL of financial instruments:
a) For financial assets credit loss is the present value of difference between all contractual cash
flows receivable from the contract and all cash flows expected to be received by the Company.b) For lease receivable credit loss is the present value of difference between all contractual
cash flows receivable from the contract and all cash flows expected to be received by the Company.c) For financial guarantee contract credit loss is the present value of expected payment amount
due to credit losses happened to the owner of the contract and less any amount that the Company
expected to receive from the contract owner debtor or other parties.d) For financial assets that already impaired on balance sheet date but not impaired when
purchasing the credit loss is the difference of carrying amount and present value of future cash
flows discounted at original effective interest rate.Factors that the Company measures ECL of financial instrument includes: assessing a series of
possible results and to determine a weighted average amount without bias; time value of money;
information of past event current situation and future economic condition forecast that can be
obtained without paying extra cost or efforts on balance sheet date.
4) Write off
If the Company no longer reasonably expects that the financial assets contract cash flow can
be recovered fully or partially the financial assets book balance will be reduced directly. Such
reduction constitutes the derecognition of the financial assets.
(7) Offset of financial assets and financial liabilities
Financial assets and financial liabilities are presented separately in the balance sheet and are
not offset. However if all of the following conditions are met the net amount offset by each other
is presented in the balance sheet:
1) The Company has a statutory right to offset the recognized amount and such legal right is
currently enforceable;
2) The Company plans to settle in net amount or to realize the financial assets and settle the
financial liabilities at the same time.Notes to the financial statements - Page 33FIYTA Precision Technology Co. Ltd.Notes to the Financial Statements
For the year ended 31 December 2023
13. Bill receivables
Refer to Note XII. 6 Financial instrument impairment for details of ECL determination and
accounting method to bill receivable.If the Company has sufficient evidence to evaluate the ECL of bill receivable on single basis
it will be assessed on single basis.If there is not sufficient evidence to evaluate the ECL on single basis the Company will make
judgment based on historical loss experience current situation and future economic situation and
classifying the bill receivable into different portfolios. The basis for portfolios is determined as
follows:
Portfolio Basis method
Risk-free
The issuer has higher level of credit rating and Referencing historical impairment experience
banker’s
no default in past and has strong ability to and taking into consideration of current
acceptance
fulfil its contractual cash follow obligation situation and estimation of future conditions
note
Business
Bill receivables with same aging have similar
acceptance Based on aging analysis
credit risk characteristics
note
14. Accounts receivables
Refer to Note XII. 6 Financial instrument impairment for details of ECL determination and
accounting method to accounts receivable.If the Company has sufficient evidence to evaluate the ECL of account receivable on single
basis it will be assessed on single basis.If there is not sufficient evidence to evaluate the ECL on single basis the Company will make
judgment based on historical loss experience current situation and future economic situation and
classifying the account receivable into different portfolios. The basis for portfolios is determined
as follows:
Portfolio Basis method
Referencing historical impairment
Receivables for related Account receivables for related parties in
experience and taking into
parties in scope of scope of consolidation have similar credit
consideration of current situation and
consolidation risk characteristics
estimation of future conditions
Accounts receivables Account receivables with same aging have
Based on aging analysis
from other parties similar credit risk characteristics
15. Other receivables
Refer to Note XII. 6 Financial instrument impairment for details of ECL determination and
accounting method to other receivables.If the Company has sufficient evidence to evaluate the ECL of other receivables on single basis
it will be assessed on single basis.If there is not sufficient evidence to evaluate the ECL on single basis the Company will make
judgment based on historical loss experience current situation and future economic situation and
Notes to the financial statements - Page 34FIYTA Precision Technology Co. Ltd.Notes to the Financial Statements
For the year ended 31 December 2023
classifying the other receivable into different portfolios. The basis for portfolios is determined as
follows:
Portfolio Basis method
Receivables of down payment The portfolio has similar
Based on aging and ECL rate
and guarantee credit risk characteristics
The portfolio has similar Referencing historical impairment experience
Petty cash for employees credit risk characteristics and taking into consideration of current
situation and estimation of future conditions
The portfolio has similar Referencing historical impairment experience
Social security payment paid
credit risk characteristics and taking into consideration of current
on-behalf of employees
situation and estimation of future conditions
Receivables from related The portfolio has similar Referencing historical impairment experience
parties within scope of credit risk characteristics and taking into consideration of current
consolidation situation and estimation of future conditions
The portfolio has similar
Others Based on aging and ECL rate
credit risk characteristics
16. Inventory
(1) Inventory categories issue valuation method inventory system amortization method
for low value consumables and packages.
1)Classification
Inventory refers to the finished products or commodities that the Company holds for sale in its
daily activities semi-products in the production process materials and consumables used in the
production process or the provision of labour services. Inventories include raw materials work in
progress and finished goods.
2)Valuation method of inventory
When inventory is acquired it is initially measured at cost including procurement costs
processing costs and other costs. When the inventory is issued it is measured by the weighted
average method (except for branded watches) and specific identification method (for branded
watches) .
3) Inventory count system
The Company maintains a perpetual inventory system.
4) Amortization methods of low-value consumables and packaging materials
Low-value consumables and packaging materials are charged to profit or loss when they are
used.
(2) Basis for determining and method for provision for obsolete inventories
After the inventory is thoroughly inspected at the end of the period the provision shall be
provided or adjusted at the lower of the cost of the inventory and its net realizable value. The net
realizable value of inventory of goods directly used for sale such as finished goods stocked goods
and materials for sale in the normal production and operation process is determined by the estimated
selling price of the inventory minus the estimated selling expenses and related taxes; net realizable
Notes to the financial statements - Page 35FIYTA Precision Technology Co. Ltd.Notes to the Financial Statements
For the year ended 31 December 2023
value of inventory of materials that need to be processed is determined based on the estimated selling
price of the finished products produced minus the estimated cost till completion estimated selling
expenses and related taxes and fees in the normal production and operation process; the net
realizable value of the inventory held for the execution of a sales contract or labour contract is
calculated on the basis of the contract price. If the quantity of the inventory held exceeds the quantity
ordered by the sales contract the net realizable value of the excess inventory is calculated based on
the general sales price.The provision is accrued according to the individual inventory project at the end of the period;
but for a large number of inventories with lower unit price the provision is accrued according to the
category of inventory; for those related to the product series produced and sold in the same region
have the same or similar end use or purpose and that are difficult to measure separately from other
projects they are combined for provision for inventory depreciation
If the influencing factors of the write-down of inventory value have disappeared the amount
of write down will be restored and will be reversed within the amount of the provision for decline
in value of the inventory that has been accrued. The amount of the reversal is included in the current
profit or loss.Provision for decline in value of inventories by portfolio is as follows:
Basis for determining net realizable
categories Basis for category determination
value for this category
New products launched in the
Inventory ageing portfolio No provision for decline in value
current year under our own brand
17. Contract assets
The Company has the right to receive the consideration for the transfer of goods to the
customers. If the right depends on factors other than the passage of time it is recognized as a
contract asset. If the Company has the right (only depends on passage of time) to receive
consideration from client accounts receivable shall be recognized.Refer to Note XII 6 for impairment to contract asset.
18. Long-term Equity Investment
(1) Determination of investment cost
1) For the long-term equity investment formed by business combination the specific
accounting policies are detailed in the accounting treatment of business combination under common
control and not under common control as set out in this Note VII.
2) Long-term equity investment obtained by other means
The initial investment cost of the long-term equity investment obtained by cash payment is the
actual purchase price. The initial investment cost includes expenses directly related to the
acquisition of long-term equity investments taxes and other necessary expenses
Notes to the financial statements - Page 36FIYTA Precision Technology Co. Ltd.Notes to the Financial Statements
For the year ended 31 December 2023
The initial investment cost of the long-term equity investment obtained by issuing equity
securities is the fair value of the issued equity securities; the transaction cost incurred in the
issuance or acquisition of its own equity instruments is deducted from equity if it is directly
attributable to equity transactions.Under the premise that the non-monetary asset exchange has the commercial substance and the
fair value of the assets received or surrendered can be reliably measured the initial investment cost
of the long-term equity investment exchanged for non-monetary assets is determined based on the
fair value of the assets exchanged and relevant taxes payable unless there is conclusive evidence
that the fair value of the assets transferred is more reliable; for the exchange of non-monetary asset
that does not meet the above premise the initial investment cost of long-term equity investment is
the carrying amount of the assets exchanged and the related taxes and fees payable.The initial investment cost of a long-term equity investment obtained through debt
restructuring includes the fair value of the waived debt taxes that can be directly attributable to
the asset and other costs
(2) Subsequent measurement and profit and loss recognition
1) Cost method
The long-term equity investment that the Company can control over the investee is accounted
for using the cost method and the cost of the long-term equity investment is adjusted by adding or
recovering the investment according to the initial investment cost. Except for the actual payment
or the cash dividends or profits included in the consideration that have been announced but not yet
paid at the time of acquiring the investment the Company recognizes the current investment
income according to its share of cash dividends or profits declared to be distributed by the investee.
2) Equity method
The Company’s long-term equity investments in associates and joint ventures are accounted
for using the equity method and some of the equity investments in associates that are indirectly
held by venture capital institutions mutual funds trust companies or similar entities including
investment-linked insurance funds are measured at fair value through profit or loss.When the initial investment cost of a long-term equity investment is greater than the investment
the initial investment cost of the long-term equity investment shall not be adjusted by the difference
between the fair value of the identifiable net assets of the investee; if the initial investment cost is
less than the investment the difference between the fair value of the identifiable net assets of the
investee should be included in the current profit or loss
After obtaining the long-term equity investment the Company shall recognize the investment
income and other comprehensive income according to the share of net profit and loss and other
comprehensive income realized by the investee that is entitled or should be shared respectively
and adjust the carrying amount of the long-term equity investment; and reduces the carrying
Notes to the financial statements - Page 37FIYTA Precision Technology Co. Ltd.Notes to the Financial Statements
For the year ended 31 December 2023
amount of the long-term equity investment based on portion of the profit or cash dividend declared
to be distributed by the investee; and for other changes in the owners’ equity other than the net
profit or loss other comprehensive income and profit distribution of the investee the carrying
amount of the long-term equity investment is adjusted and included in the owners’ equity.When recognizing the share of the net profit or loss of the investee the Company shall adjust
and recognize the net profit of the investee based on the fair value of the identifiable assets of the
investee at the time of obtaining the investment. The unrealized internal transaction gains and
losses between the Company and the associates and joint ventures shall be offset against the portion
attributable to the Company in accordance with the proportion to be enjoyed on the basis of which
the investment gains and losses are recognized.When the Company recognizes the losses incurred by the investee that it should bear it shall
deal with it in the following order: Firstly offset the carrying amount of the long-term equity
investment. Secondly if the carrying amount of the long-term equity investment is not enough to be
offset the investment loss will continue to be recognized to the extent of carrying amount of other
long-term equity that virtually constitutes a net investment in the investee and the carrying amount
of the long-term receivables is offset. Finally after the above-mentioned treatment if the enterprise
still bears additional obligations in accordance with the investment contract or agreement the
projected liabilities are recognized according to the estimated obligations and included in the current
investment losses.If the investee realizes profit in the future period after deducting the unrecognized loss share
and the reduction of book balance of the recognized projected liabilities and recovery of other long-
term equity that virtually constitutes a net investment in the investee and carrying amount of long-
term equity investment as opposite to the order above the Company shall restore the investment
income.
(3) Conversion of accounting methods for long-term equity investment
1) Fair value measurement to equity method accounting
If the equity investment originally held by the Company that does not have control joint control
or significant influence on the investee which is accounted for according to the recognition and
measurement criteria of financial instruments can exert significant influence on the investee or
jointly control but does not constitute control over it due to additional investment and otherwise its
initial investment cost shall be the sum of the fair value of the equity investment originally held inaccordance with the “Accounting Standards for Business Enterprises No. 22 – Recognition andMeasurement of Financial Instruments” and new investment cost after being accounted for under
the equity method.If the initial investment cost accounted for under the equity method is less than the fair value
share of the identifiable net assets of the investee on the additional investment date determined by
Notes to the financial statements - Page 38FIYTA Precision Technology Co. Ltd.Notes to the Financial Statements
For the year ended 31 December 2023
the new shareholding ratio after the additional investment the carrying amount of the long-term
equity investment is adjusted and included in the current non-operating income.
2) Fair value measurement or equity method accounting to cost method accounting
If the equity investment originally held by the Company that does not have control joint
control or significant influence on the investee and which is accounted for in accordance with the
financial instrument recognition and measurement criteria or the long-term equity investment
originally held in associates or joint venture can exercise control over the investee not under
common control due to additional investment or otherwise in the preparation of individual financial
statements the sum of the carrying amount of the equity investment originally held plus the new
investment cost shall be regarded as the initial investment cost after being accounted for under the
cost method.The other comprehensive income recognized by the equity method in respect of the equity
investment originally held before the purchase date is accounted for on the same basis as the investee
directly disposes of the relevant assets or liabilities when the investment is disposed of.If the equity investment held before the purchase date is accounted for in accordance with therelevant provisions of the “Accounting Standards for Business Enterprises No. 22 – Recognitionand Measurement of Financial Instruments” the cumulative fair value changes originally included
in other comprehensive income are transferred to current profit or loss when the cost method is
adopted.
3) Equity method accounting to fair value measurement
If the Company loses joint control or significant influence on the investee due to the disposal
of part of the equity investment or otherwise the remaining equity after disposal shall be accountedfor according to the “Accounting Standards for Business Enterprises No. 22 – Recognition andMeasurement of Financial Instruments”. The difference between the fair value and the carrying
amount on the date of losing joint control or significant impact is recognized in profit or loss.The other comprehensive income recognized in respect of the original equity investment using
the equity method is accounted for on the same basis as the investee directly disposes of the relevant
asset
4) Cost method to equity method
Where the Company loses control over the investee due to the disposal of part of the equity
investment etc. in the preparation of individual financial statements if the remaining equity after
disposal can exercise joint control or significant influence on the investee the equity method is
adopted for accounting and the remaining equity is deemed to be adjusted under the equity method
when it is acquired.
5) Cost method to fair value measurement
Where the Company loses control over the investee due to the disposal of part of the equity
Notes to the financial statements - Page 39FIYTA Precision Technology Co. Ltd.Notes to the Financial Statements
For the year ended 31 December 2023
investment etc. in the preparation of individual financial statements if the remaining equity after
disposal cannot jointly control or exert significant influence on the investee the relevant provisionsof the “Accounting Standards for Business Enterprises No. 22 – Recognition and Measurement ofFinancial Instruments” are adopted. The difference between the fair value and the carrying amount
on the date of loss of control is recognized in profit or loss for the current period.
(4) Disposal of long-term equity investment
For the disposal of long-term equity investment the difference between the carrying amount
and the actual purchase price shall be included in the current profit or loss. For the long-term equity
investment accounted for using the equity method when the investment is disposed of the part that
is originally included in the other comprehensive income is accounted for in the same proportion
based on the same basis as the investee directly disposes of the relevant assets or liabilities.If the terms conditions and economic impact of each transaction on disposal of the equity
investment in a subsidiary satisfy one or more of the following cases the multiple transactions are
treated as a package transaction:
1) The transactions are made simultaneously or with consideration of each other’s influence;
2) The transactions as a whole can achieve a complete business outcome;
3) The occurrence of a transaction depends on the occurrence of at least one other transaction;
4) A transaction is uneconomic alone but it is economic when considered together with other
transactions
Where the loss of control over the original subsidiary due to disposal of part of the equity
investment or otherwise which is not a package transaction the individual financial statements and
consolidated financial statements shall be classified for relevant accounting treatment:
a) In the individual financial statements the difference between the carrying amount of the
disposed equity and the actual purchase price is included in the current profit or loss. If the remaining
equity after disposal can exert joint control or significant influence on the investee it shall be
accounted for under the equity method and the residual equity shall be deemed to be adjusted by
equity method when it is acquired; if the remaining equity after disposal cannot exert joint control
or significant influence over the investee it shall be accounted for by the relevant provisions of the“Accounting Standards for Business Enterprises No. 22 – Recognition and Measurement ofFinancial Instruments” and the difference between the fair value and the carrying amount on the
date of loss of control is included in the current profit or loss.b) In the consolidated financial statements for each transaction before the loss of control over
the subsidiary capital reserve (share premium) is adjusted for the difference between the disposal
price and the share of the net assets corresponding to the disposed long-term equity investment that
the subsidiary has continuously calculated from the date of purchase or the merger date; if the capital
reserve is insufficient to offset the retained earnings will be adjusted; when the control of the
Notes to the financial statements - Page 40FIYTA Precision Technology Co. Ltd.Notes to the Financial Statements
For the year ended 31 December 2023
subsidiary is lost the remaining equity shall be re-measured according to its fair value on the date
of loss of control. The sum of the consideration for the disposal of the equity and the fair value of
the remaining equity less the share of the net assets that that the original subsidiary has continuously
calculated from the date of purchase calculated based on the original shareholding is included in
the investment income for the period of loss of control while reducing goodwill. Other
comprehensive income related to the original subsidiary’s equity investment will be converted into
current investment income when control is lost.If each transaction on disposal of the equity investment in a subsidiary until the loss of control
is a package transaction each transaction is accounted for as a transaction to dispose of the equity
investment in the subsidiary with loss of control which is distinguished between individual financial
statements and consolidated financial statements:
a) In the individual financial statements the difference between each disposal price and the
carrying amount of the long-term equity investment corresponding to the disposed equity before the
loss of control is recognized as other comprehensive income and when the control is lost it is
transferred to profit or loss for the period of the loss of control.b) In the consolidated financial statements the difference between each disposal price and the
disposal investment that has the share of the net assets of the subsidiary before the loss of control is
recognized as other comprehensive income and transferred to profit or loss for the period of the
loss of control.
(5) Judging criteria for joint control and significant influence
If the Company collectively controls an arrangement with other parties in accordance with the
relevant agreement and the activity decision that has a significant impact on the return of the
arrangement needs to be unanimously agreed upon by the parties sharing the control it is considered
that the Company and other parties jointly control an arrangement which is a joint arrangement.If the joint arrangement is reached through a separate entity and it determines that the Company
has rights to the net assets of the separate entity in accordance with the relevant agreement the
separate entity is regarded as a joint venture and is accounted for using the equity method. If it is
judged according to the relevant agreement that the Company does not have rights to the net assets
of the separate entity the separate entity acts as a joint operation and the Company recognizes the
items related to the share of the interests of the joint operation and conducts accounting treatment
in accordance with the relevant ASBEs.Significant influence refers to the investor’s power to participate in the decision-making of the
financial and operating policies of the investee but it cannot control or jointly control the
formulation of these policies with other parties. The Company has a significant influence on the
investee under one or more of the following situations and taking into account all facts and
circumstances: (1) it is represented on the board of directors or similar authorities of the investee;
Notes to the financial statements - Page 41FIYTA Precision Technology Co. Ltd.Notes to the Financial Statements
For the year ended 31 December 2023
(2) it involves in the formulation of financial and operating policy of the investee; (3) it has
important transactions with the investee; (4) it dispatches management personnel to the investee; (5)
it provides key technical information to the investee.
19. Investment Property
Investment property refers to property held for the purpose of earning rent or capital
appreciation or both including leased land use rights land use rights held and prepared for transfer
after appreciation and leased buildings. Besides for empty constructions that the Company held
for rent lately but with the written resolution from the board stated that it will be used as operating
lease and that intention will not be changed in short-term it can be treated as investment property.The Company’s investment property is recorded at its cost and the cost of purchased
investment property includes the purchase price related taxes and other expenses directly
attributable to the asset; the cost of self-built investment property is composed of the necessary
expenses incurred before the asset is ready for expected use.The Company adopts the cost model for subsequent measurement of investment property and
depreciates or amortizes buildings and land use rights according to their estimated service life and
net residual value. Expected useful life residual value and annual depreciation rate are as follows:
Estimated useful life
Category Residual value rate % Depreciation rate %
(years)
Property 20-35 5.00 2.71-4.85
When the use of investment property is changed to self-use the Company converts the
investment property into fixed assets or intangible assets from the date of change. When the use of
self-use property changes to rental earning or capital appreciation the Company converts fixed
assets or intangible assets into investment property from the date of change. When a conversion
occurs the carrying amount before conversion is used as the converted value
The investment property is derecognized when the investment property is disposed of or
permanently withdrawn from use and is not expected to obtain economic benefits from its disposal.The amount of disposal income from the sale transfer retirement or damage of the investment
property after deducting its carrying amount and related taxes and expenses is recognized in profit
or loss for the current period.
20. Fixed assets
(1) Recognition conditions of fixed assets
Fixed assets refer to tangible assets held for the purpose of producing goods providing labour
services renting or operating management and having a useful life of more than one fiscal year.Fixed assets are recognized when they meet all of the following conditions:
1) the economic benefits associated with the fixed assets are likely to flow into the enterprise;
2) the cost of the fixed assets can be reliably measured.
(2) Initial measurement of fixed assets
Notes to the financial statements - Page 42FIYTA Precision Technology Co. Ltd.Notes to the Financial Statements
For the year ended 31 December 2023
The fixed assets of the Company are initially measured at cost.
1) The cost of outsourcing fixed assets includes the purchase price import duties and other
related taxes and fees as well as other expenses that can be directly attributed to the assets before
they reach their intended usable state.
2) The cost of self-built fixed assets is determined by the necessary expenditures incurred
before the assets reach their expected usable state.
3) For fixed assets invested by investors the value agreed in the investment contract or
agreement is regarded as the book value but the value agreed in the contract or agreement is not
accounted for at fair value.
4) If the payment for the purchase of fixed assets is delayed beyond the normal credit conditions
and is of a financing nature in essence the cost of fixed assets is determined on the basis of the
present value of the purchase price. The difference between the actual payment and the present value
of the purchase price is recorded in the current profit or loss during the credit period except where
it should be capitalized.
(3) Subsequent measurement and disposal of fixed assets
1) Depreciation of fixed assets
Depreciation of fixed assets is accrued over the estimated useful life based on its recorded value
less the estimated net residual value. The fixed assets that have been provided for impairment
losses are depreciated in the future period based on the carrying amount after deducting the
impairment provision and the remaining useful life.The Company determines the service life and estimated net residual value of fixed assets based
on the nature and use of fixed assets. At the end of the year the service life the estimated net
residual value and the depreciation method of the fixed assets are reviewed. If there is a difference
from the original estimate corresponding adjustments will be made.The depreciation method depreciation period and annual depreciation rate of various fixed
assets are as follows.Estimated useful
Residual value Depreciation
Class Method of depreciation life
rate % rate %
(years)
Property and plant Straight-line 20-35 5.00 2.71-4.85
Machinery and Straight-line
105.00-10.009.00-9.50
equipment
Electronic equipment Straight-line 5 5.00 19.00
Motor vehicles Straight-line 5 5.00 19.00
Others Straight-line 5 5.00 19.00
2) Subsequent expenditures on fixed assets
Notes to the financial statements - Page 43FIYTA Precision Technology Co. Ltd.Notes to the Financial Statements
For the year ended 31 December 2023
Subsequent expenditures related to fixed assets that meet the conditions for recognition of fixed
assets are included in the cost of fixed assets; those that do not meet the conditions for recognition
of fixed assets are included in the current profit or loss when they occur.
3) Disposal of fixed assets
When a fixed asset is disposed of or no economic benefit is expected to result from its use or
disposal the fixed asset is derecognized. The amount of disposal income from sale transfer
retirement or damage of the fixed asset after deducting its book value and related taxes is included
into the current profit or loss.
21. Construction in Progress
(1) Initial measurement of construction in progress
The self-built construction in progress of the Company is measured at the actual cost which is
determined by the necessary expenses incurred before the construction of the asset reaches the
intended usable condition including the cost of engineering materials labour costs and relevant
taxes payable capitalized borrowing costs and indirect costs that should be apportioned. The
Company’s construction in progress is classified into projects when in accounting
(2) Criteria for and time point of construction in progress to convert into fixed asset
The total expenditure incurred before the construction in progress project is constructed to
reach the intended usable condition shall be recorded as the book value of the fixed assets. For the
construction in progress built which has reached the intended usable condition but has not yet
completed the final accounts since the date of reaching expected use condition according to the
project budget cost or actual project costs it shall be converted into fixed assets at the estimated
value and fixed assets shall be depreciated in accordance with the depreciation policy of the
Company for fixed assets. After the completion of the final accounts the original estimated value
shall be adjusted according to the actual cost but the original depreciation amount shall not be
adjusted.
22. Borrowing Costs
(1) Recognition principle for capitalization of borrowing costs
If the borrowing costs of the Company can be directly attributable to the acquisition and
construction or production of assets eligible for capitalization it shall start capitalization and be
included in the cost of relevant assets in the case of eligible for capitalization; other borrowing
costs shall be recognized as expenses at the time of occurrence and shall be included in the current
profit or loss.Assets that are eligible for capitalization are assets that require a long period of time to purchase
or produce activities to achieve fixed assets investment property and inventory that are available
for intended use or sale.Borrowing costs begin to capitalize when all of the following conditions are met:
Notes to the financial statements - Page 44FIYTA Precision Technology Co. Ltd.Notes to the Financial Statements
For the year ended 31 December 2023
1) Assets expenditure has occurred including expenditure incurred in the form of cash payment
transfer of non-cash assets or assuming of interest-bearing debt for the acquisition and construction
or production of assets eligible for capitalization;
2) Borrowing costs have already occurred;
3) The purchase and construction or production activities necessary for the assets to reach the
intended use or saleable status have started.
(2) Capitalization period of borrowing costs
The period of capitalization refers to the period from the point of time when the borrowing
costs are capitalized to the point of time where the capitalization is stopped excluding the period
during which the borrowing costs are suspended from capitalization.The borrowing costs shall cease to be capitalized when the assets acquired or produced that
meet the conditions for capitalization are ready for intended use or sale.When a part of the assets purchased or produced that meet the capitalization conditions are
completed and can be used alone such part of the assets shall stop capitalization of borrowing costs.Where each part of the assets purchased or produced is completed separately but must wait
until the whole is completed or can be sold externally the capitalization of the borrowing costs shall
be stopped when the assets are completed as a whole.
(3) Suspension of capitalization period
If the assets that meet the capitalization conditions are interrupted abnormally during the
construction or production process and the interruption time lasts for more than 3 months the
capitalization of borrowing costs shall be suspended; the borrowing costs shall continue to be
capitalized if the acquisition or production of assets eligible for capitalization is necessary to meet
the required usable status or the availability of sales. The borrowing costs incurred during the
interruption are recognized as profit or loss for the current period and the borrowing costs continue
to be capitalized until the acquisition or production of assets is resumed.
(4) Calculation for capitalization amount of borrowing costs
Interest charges on special borrowings (excluding interest income on unused borrowings
deposited in the bank or investment income on temporary investment) and their ancillary expenses
shall be capitalized before the assets purchased or produced that meet the capitalization conditions
are ready for intended use or sale.The amount of capitalized interest on general borrowings is calculated by the weighted average
of the excess portion of the accumulative asset expenditures over the special borrowings multiplied
by the capitalization rate of general borrowings. The capitalization rate is determined based on the
weighted average interest rate of general borrowings.Where there is a discount or premium in the borrowings the interest amount shall be adjusted
in accordance with the effective interest rate method to determine the discount or premium amount
Notes to the financial statements - Page 45FIYTA Precision Technology Co. Ltd.Notes to the Financial Statements
For the year ended 31 December 2023
that shall be amortized during each accounting period.
23. Right-of-use Assets
The Company initially measures the right-to-use assets at cost which includes:
(1) initial measurement amount of lease liabilities;
(2) lease payments made before or at the beginning of the lease term and deduction of the
relevant amount of rental incentives if any;
(3) initial direct expenses incurred by the Company;
(4) expected costs to be incurred by the Company for dismantling and removing leased assets
restoring the site of leased assets or restoring leased assets to the state agreed in the lease terms
(excluding costs incurred for the production of inventory)
After the beginning of the lease term the Company adopts the cost model for subsequent
measurement of the right-of-use assets
If it is reasonably certain to obtain the ownership of the leased assets at the expiration of the
lease term the Company shall depreciate the leased assets within the remaining useful life of the
leased assets. If it is not reasonably certain to obtain the ownership of the leased assets at the
expiration of the lease term the Company shall depreciate the leased assets within the shorter of
the lease term and the remaining useful life of the leased assets. For the right-of-use assets with
impairment provision depreciation shall be calculated based on the book value after deduction of
impairment provision in according with the above principles in future periods.
24. Intangible Assets and Development Expenditure
Intangible assets refer to the identifiable non-monetary assets owned or controlled by the
Company which have no physical form including land use rights software and trademark use rights.
(1) Initial measurement of intangible assets
The cost of externally purchased intangible assets includes the purchase price relevant taxation
and other expenses directly attributable to bringing the assets to expected usage. If payment for the
purchase price of intangible assets is delayed beyond normal credit conditions and is in fact
financing in nature the cost of the intangible assets is determined based on the present value of the
purchase price.For intangible asset obtained through debt restructuring for offsetting the debt of the debtor its
initial measurement cost includes the fair value of the waived creditor’s rights and taxes and other
costs directly attributable to bringing the asset to expected usage. The difference between the fair
value of the waived creditor’s rights and the carrying amount shall be recognized in profit or loss
for the period.The book value of intangible asset received in exchange for non-monetary asset is based on the
fair value of the asset surrendered and relevant taxes payable provided that the exchange of
nonmonetary asset has a commercial substance and the fair value of both the asset received and the
Notes to the financial statements - Page 46FIYTA Precision Technology Co. Ltd.Notes to the Financial Statements
For the year ended 31 December 2023
asset surrendered can be reliably measured except there is definite evidence that the fair value of
the asset received is more reliable; for exchange of non-monetary asset that cannot satisfy the above
conditions the cost of the intangible asset received is based on the carrying amount of the asset
surrendered and relevant taxes payable and no profit or loss is recognized.For intangible asset obtained through business absorption or combination under common
control its book value is determined by the carrying amount of the combined party; for intangible
asset obtained through business absorption or merger not under common control its book value is
determined by the fair value of the intangible asset.The cost of an internally developed intangible asset includes the materials consumed in
developing the intangible asset labour costs registration fees amortization of other patented rights
and licensed rights used during the development process interest expenses meeting capitalization
conditions and other direct costs for bringing the intangible asset to expected usage.
(2) Subsequent measurement of intangible assets
The Company determines the useful life of intangible assets on acquisition which are classified
as intangible assets with limited useful life and indefinite useful life.
1) Intangible assets with a limited useful life
Intangible assets with a limited useful life are depreciated using straight line method over the
term during which they bring economic benefits to the Company. The estimated life and basis for
the intangible assets with a limited useful life are as follows:
Item Estimated useful life Amortization method
Land use right 50 Straight-line
Software systems 5 Straight-line
Right to use the trademark 5-10 Straight-line
The useful life and depreciation method of intangible assets with a limited useful life are
reassessed at the end of each period. If there is a difference from the original estimate corresponding
adjustments will be made.Upon re-assessment there was no difference in the useful life and depreciation method of
intangible assets from the previous estimates at the end of the period.
(3) Specific basis for determining the research stage and development stage of internal
research and development projects of the Company
Research stage: a stage of scheduled innovative investigations and research activities for the
acquisition and understanding of new scientific or technical knowledge.Development stage: before the commercial production or use the research results or other
knowledge will be applied to a plan or design to produce new or substantial improvements in
materials devices products and other activities.The expenditure of the research stage of the internal research and development project is
Notes to the financial statements - Page 47FIYTA Precision Technology Co. Ltd.Notes to the Financial Statements
For the year ended 31 December 2023
included in the current profit or loss at the time of occurrence
(4) Specific standard for capitalization of expenditure in the development stage
The expenditure of an internal research and development project in the development stage is
recognized as an intangible asset when meeting all of the following conditions:
1) It is technically feasible to complete the intangible asset so that it can be used or sold;
2) With an intention to complete the intangible asset and to use or sell it;
3) The way the intangible asset generates economic benefits can prove the existence of a market
for the products produced using the intangible asset or a market for the intangible asset itself and if
the intangible asset will be used internally its usefulness can be proven;
4) Having sufficient technical financial resources and other resource support to complete the
development of the intangible asset and having the ability to use or sell the intangible asset;
5) Expenditure attributable to the development stage of the intangible asset can be reliably
measured.Expenditures incurred in the development stage that do not meet the above conditions shall be
included in the current profit or loss at the time of occurrence. The development expenditures which
have been included in the profit or loss in the previous periods will not be recognized as an asset in
the future period. The capitalized expenditures in the development phase are shown in the balance
sheet as development expenditures and are converted into intangible assets from the date of the
project’s intended use.
25. Impairment on Long-term Assets
On the balance sheet date the Company determines whether there may be a sign of impairment
on long-term assets. If there is a sign of impairment on long-term assets the recoverable amount is
estimated on the basis of a single asset. If it is difficult to estimate the recoverable amount of a single
asset then determine the recoverable amount of the asset group on the basis of the asset group to
which the asset belongs.The estimated recoverable amount of an asset is the higher of its fair value less the cost of
disposal and the present value of the expected future cash flow of the asset.The measurement results of recoverable amount show that when the recoverable amount of an
long-term asset is lower than its book value the book value of the long-term asset is reduced to its
recoverable amount. The reduced amount is recognized as an impairment loss on the asset and
included in the current profit or loss at the same time asset impairment provision will be made
accordingly. Asset impairment loss shall not be reversed during the subsequent accounting period
once recognized.After the asset impairment loss is recognized the depreciation or amortization expenses of the
impaired assets will be adjusted accordingly in the future period so that the assets’ book value after
adjustment (deducting the estimated net residual value) will be systematically apportioned over the
Notes to the financial statements - Page 48FIYTA Precision Technology Co. Ltd.Notes to the Financial Statements
For the year ended 31 December 2023
remaining useful life of the assets.No matter whether there is any sign of impairment or not the impairment test is carried out
every year for goodwill and intangible assets with an indefinite useful life arising from an enterprise
merger.In the impairment test of goodwill the book value of goodwill would be apportioned to asset
group or portfolio of asset group expected to benefit from the synergy effect of an enterprise merger.When taking an impairment test on the relevant asset group or portfolio of asset group containing
goodwill if there is a sign of impairment on the asset group or portfolio of asset group related to the
goodwill the Company first calculates the recoverable amount after testing the asset group or
portfolio of asset group which does not contain the goodwill for impairment and then compares it
with the related book value to recognize the corresponding impairment loss. Next the Company
conducts an impairment test on the asset group or portfolio of asset group which contains the
goodwill and compares the book value of the related asset group or portfolio of asset group (book
value includes the share of goodwill) with the recoverable amount. If the recoverable amount of the
related asset group or portfolio of asset group is lower than the book value the Company will
recognize the impairment loss of goodwill.
26. Long-term Deferred Expenses
(1) Amortization method
Long-term deferred expenses refer to expenses that have already been spent by the Company
but shall be apportioned in the current period and the future periods and the benefit period is over 1
year. Long-term deferred expenses are amortized in benefit period
(2) Amortization period
Category Amortization period Note
Counter fabrication expenses 2-3
Decoration expenses 3-5
Others 2-3
27. Contract liabilities
The obligation to transfer goods to a customer for which consideration has been received or
receivable is recognized in part as a contract liability
28. Employee Remuneration
Employee remuneration refers to the various forms of remuneration or compensation given by
the Company to obtain the services provided by the employees or to terminate the labour relationship.Employee remuneration includes short-term remuneration post-employment benefits termination
benefits and other long-term employee benefits.
(1) Short-term remuneration
Short-term remuneration refers to the employee compensation other than post-employment
Notes to the financial statements - Page 49FIYTA Precision Technology Co. Ltd.Notes to the Financial Statements
For the year ended 31 December 2023
benefits and termination benefits required to be fully paid by the Company within 12 months after
the end of the annual reporting period in which the employees render relevant services. During the
accounting period in which the employees render services the Company recognizes the short-term
remuneration payable as liabilities and includes the same in related asset costs or expenses according
to the object which benefits from the services rendered by employees.
(2) Post-employment benefits
Post-employment benefits refer to various forms of remuneration and benefits other than short-
term remuneration and termination benefits provided by the Company after the retirement of
employees or termination of labour relationship with the Company in exchange for the services
rendered by employees.The Company’s post-employment benefits is defined contribution plan.Defined contribution plan of the post-employment benefits mainly refers to the social basic
endowment insurance unemployment insurance etc. organized and implemented by local labour
and social security institutions; During the accounting period when employees render services to
the Company amount payable calculated by the defined contribution plan is recognized as a liability
and included in the current profit or loss or related asset costs.The Company will no longer have any other payment obligations after making the above-
mentioned payments on a regular basis in accordance with the standards and annuity plans
prescribed by the State.
(3) Termination benefits
Termination benefits refer to the compensation paid to an employee when the Company
terminates the employment relationship with the employee before the expiry of the employment
contract or provides compensation as an offer to encourage the employee to accept voluntary
redundancy. The Company recognizes the liabilities arising from the compensation paid to terminate
the employment relationship with employees and includes the same in the current profit or loss at
the earlier date of the following: 1) when the Company cannot reverse the termination benefits due
to the plan of cancelling the labour relationship or the termination benefits provided by the advice
of reducing staff; and 2) the Company recognizes the cost or expense relative to the payment of
termination benefits of restructuring into the current profit or loss.The Company provides internal retirement benefits to employees who accept internal
retirement arrangements. The internal retirement benefits refer to the remuneration and the social
insurance premiums paid to the employees who have not reached the retirement age set by the State
and voluntarily withdrew from the job after approval of the Company’s management. The Company
pays internal retired benefits to an internal retired employee from the day when the internal
retirement arrangement begins till the employee reaches the normal retirement age. For internal
retirement benefits the Company conducts accounting treatment in contrast to the termination
Notes to the financial statements - Page 50FIYTA Precision Technology Co. Ltd.Notes to the Financial Statements
For the year ended 31 December 2023
benefits. When the related recognition conditions of termination benefits are met the Company will
recognize the remuneration and the social insurance premiums of the internal retired employee to
be paid during the period between the employee’s termination of service and normal retirement date
as liabilities and include the same in the current profit or loss in one time. Changes in actuarial
assumptions of internal retirement benefits and differences arising from the adjustment of welfare
standards are included in current profit or loss when incurred.
(4) Other long-term employee benefits
Other long-term employee benefits refer to all employee benefits except for short-term
remuneration post-employment benefits and termination benefits. For other long-term employee
benefits that meet the conditions of the defined contribution plan during the accounting period in
which the employees provide services for the Company the amount that should be paid is
recognized as a liability and is included in the current profit or loss or related asset costs. In addition
to the above situations other long-term employee benefits are actuarially calculated by the
independent actuary using the expected cumulative welfare unit method on the balance sheet date
and the welfare obligations arising from the defined benefit plans are attributed to the period during
which the employees provide services and are included in the current profit or loss or related asset
costs.
29. Projected liabilities
(1) Basis for recognition of projected liabilities
The Company will recognize projected liabilities if the obligation relating to contingent matters
meets all of the following conditions:
This obligation is a present obligation assumed by the Company;
The fulfillment of this obligation will probably cause the outflow of economic benefits from
the Company;
The amount of this obligation can be measured reliably.
(2) Measurement method of projected liabilities
The initial measurement of projected liabilities of the Company is based on the best estimate
of the expenditure required for the performance of the related present obligations.When determining the best estimate the Company comprehensively considers the risks
uncertainties relating to the contingent matters and time value of currency. If the time value of
currency has a great influence the Company determines the best estimate by discounting the related
future cash outflows.The best estimate is determined in different situations as follow:
If there is a continuous range (or interval) of the required expenditure and the probability of
the occurrence of all the results in the range is the same the best estimate is determined according
to the median value of the range which is the average of the upper and lower limit.Notes to the financial statements - Page 51FIYTA Precision Technology Co. Ltd.Notes to the Financial Statements
For the year ended 31 December 2023
Where there is not a continuous range (or interval) of the required expenditure or there is a
continuous range but the probability of the occurrence of all the results in the range is different if
the contingencies involve a single project the best estimate is determined by the amount which is
most likely to occur; if the contingencies involve a number of projects the best estimate is
determined based on various possible results and related probability calculation.If all or part of the expenses of the Company required to settle projected liabilities are expected
to be compensated by a third party and it is basically certain to receive the amount of compensation
it is independently recognized as an asset. The amount of compensation recognized will not exceed
the book value of the projected liabilities.
30. Lease liabilities
The Company initially measures the lease liabilities according to the present value of the
unpaid lease payments at the beginning of the lease term. In calculating the present value of lease
payments the Company adopts the interest rate implicit in the lease as the discount rate. If it is
impossible to determine the interest rate implicit in the lease the incremental borrowing rate of the
Company shall be used as the discount rate. Lease payments include:
(1) Fixed payments and substantive fixed payments after deducting the relevant amount of
lease incentives;
(2) Variable lease payments depending on an index or rate;
(3) Where the Company reasonably determines that the option will be exercised the amount
of the lease payment includes the exercise price of purchase option;
(4) Where the lease term reflects that the Company will exercise the option to terminate the
lease the amount of the lease payment includes the amount to be paid for the exercise of the
option to terminate the lease;
(5) Expected payments based on the guaranteed residual value provided by the Company.
The Company calculates the interest charges of the lease liabilities for each period of the
lease term at a fixed discount rate and includes the same in the profit or loss of the current period
or the related asset costs.Variable lease payments not included in the measurement of lease liabilities shall be included
in the current profit or loss or the related asset costs when they actually occur.
31. Share-based payment
(1) Category of share-based payment
The Company’s share-based payments include equity-settled share-based payments and cash
settled share-based payments.
(2) Recognition method of fair value of equity instrument
For options and other equity instruments granted by the Company with an active market the
fair value is determined at the active market quotations. For options and other equity instruments
Notes to the financial statements - Page 52FIYTA Precision Technology Co. Ltd.Notes to the Financial Statements
For the year ended 31 December 2023
granted by the Company with no active market option pricing model shall be used to estimate the
fair value of the equity instruments. Factors as follows shall be taken into account using option
pricing models: 1) the exercise price of the option 2) the validity of the option 3) the current price
of the target share 4) the expected volatility of the share price 5) predicted dividend of the share
6) risk-free rate of the option within the validity period.
In determining the fair value of the equity instruments at the date of grant the Company shall
consider the impact of market conditions in the vesting conditions and non-vesting conditions stated
in the share-based payment agreement. If there are no vesting conditions in the share-based
payments as long as the employees or other parties satisfy the non-market conditions in all of the
vesting conditions (such as term of service) the Company shall recognize the services rendered as
an expense accordingly.
(3) Recognition basis for the best estimate of exercisable equity instruments
On each balance sheet date within the vesting period the estimated number of exercisable
equity instruments is amended based on the best estimate made by the Company according to the
latest available subsequent information as to changes in the number of employees with exercisable
rights. As at the exercise date the final estimated number of exercisable equity instruments should
equal the actual number of exercisable equity instruments.
(4) Accounting treatment
Equity-settled share-based payments are measured at the fair value of the equity instruments
granted to employees. For those exercisable immediately after the grant they shall be included in
the relevant costs or expenses at the fair value of equity instruments at the grant date with an increase
in capital reserve accordingly. For those exercisable only after provision of services or satisfaction
of prescribed performance conditions within the vesting period on each balance sheet date within
the vesting period the Company will recognize the services received in the current period in related
costs or expenses and capital reserves at the fair value of equity instruments on the grant date based
on the best estimate of the number of exercisable equity instruments. After the vesting period
relevant costs or expenses and total owners’ equity which have been recognized will not be adjusted.Cash-settled share-based payments are calculated by the fair value of liabilities assumed in
accordance with the Company’s shares or other equity instruments. For those exercisable
immediately after the grant they shall be included in the relevant costs or expenses at the fair value
of the liabilities assumed by the Company at the grant date with an increase in liabilities accordingly.For cash-settled share-based payments exercisable only after provision of services or satisfaction of
prescribed performance conditions within the vesting period on each balance sheet date within the
vesting period the Company will recognize the services received in the current period in costs or
expenses and corresponding liabilities at the amount of fair value of the liabilities assumed by the
Notes to the financial statements - Page 53FIYTA Precision Technology Co. Ltd.Notes to the Financial Statements
For the year ended 31 December 2023
Company based on the best estimate of the number of exercisable equity instruments. At each
balance sheet date and the settlement date prior to the settlement of relevant liabilities the fair value
of the liabilities is re-measured through profit or loss.During the vesting period if the equity instruments granted are cancelled the Company will
treat the cancelled equity instruments granted as accelerated vesting and the amount within the
remaining period should be recognized immediately in profit or loss while recognizing the capital
reverse. If employees or other parties can meet non-vesting conditions but do not meet within the
vesting period the Company will treat it as cancelled equity instruments granted.
32. Revenue
The Company’s revenue mainly come from:
1) Sales of watch
2) Precision manufacturing
3) Property leasing
(1) General principal of revenue recognition
The Group recognizes revenue when the contract performance obligations have been fulfilled
i.e. the customer has gained control over the relevant goods or services.Performance obligations means the Company’s commitment to transfer identifiable goods or
service to clients.Obtaining control of the relevant goods means that it is able to dominate the use of the goods
and derive almost all economic benefits therefrom.The Company assesses contracts at the beginning date of a contract to identify each
performance obligations contained in a contract and to determine whether each performance
obligation is to be finished over a period of time or at a point of time. The Company satisfies a
performance obligation over time if one of the following criteria is met; or otherwise a
performance obligation is satisfied at a certain point in time: 1) the customer simultaneously
receives and consumes the benefits provided by the Company’s performance as the Company
performs; 2) the customer can control the goods under construction during the Company’s
performance; 3) the Company’s performance does not create goods with an alternative use to it
and the Company has a right to payment for performance completed to date throughout the contract
term. Otherwise the Company recognizes revenue at the point of time.For performance obligation satisfied over time the Company recognizes revenue over time by
measuring the progress towards complete satisfaction of that performance obligation. When the
outcome of that performance obligation cannot be measured reasonably but the Company expects
to recover the costs incurred in satisfying the performance obligation the Company recognizes
revenue only to the extent of the amount of costs incurred until it can reasonably measure the
outcome of the performance obligation
Notes to the financial statements - Page 54FIYTA Precision Technology Co. Ltd.Notes to the Financial Statements
For the year ended 31 December 2023
(2) Detailed method for revenue recognition
The Company has three main business sectors: sales of watch precision manufacturing and
property leasing. Based on the Company’s business mode and terms of settlement the Company set
detailed method of revenue recognition method as follows:
1) Sales of watch
Sale of watch belongs to fulfilling performance obligations at a point of time.* Online sales
Revenue shall be recognized at the point that the goods are dispatched and the customer
confirmed received the goods.* Offline sales
Revenue shall be recognized at the point when the goods are delivered and payment by
customer is collected.* Consignment sale
The Company recognizes revenue when the Company receives the detail of the sales list from
distributors and confirms that the control over goods ownership were transferred to the purchaser.* Sale of consigned goods from others
Under Sale of consigned goods from others the Group recognizes revenue in net amount when
it delivered consigned sale goods to customer and confirms that control over the ownership of goods
were transferred to the purchaser.
2) 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.
3) Property leasing
Refer to Note III 36. (4) for details.
(3) Revenue treatment principles for specific transactions
1) Contracts with sales return provisions
When the customer obtains control of the relevant goods revenue is recognized based on the
amount of consideration expected to be received due to the transfer of goods to the customers
(exclusive of the amount expected to be refunded due to the return of sales) while liability is
recognized based on the amount expected to be refunded due to the return of sales.The carrying amount of goods expected to be returned at sales of goods after deduction of
costs expected to incur for recovery of such goods (including impairment of value of the returned
Notes to the financial statements - Page 55FIYTA Precision Technology Co. Ltd.Notes to the Financial Statements
For the year ended 31 December 2023
goods) will be accounted for under the item of “Right of return assets”.
2) Contracts with quality assurance provisions
The Company assesses whether a separate service is rendered in respect of the quality
assurance besides guaranteeing the sales of goods to customers are in line with the designated
standards. When additional service is provided by the Company it is considered as a single
performance obligation and under accounting treatment according to the standards on revenue;
otherwise quality assurance obligations will be under accounting treatment according to the
accounting standards on contingent matters
33. Contract costs
(1) Contract performance cost
The Company recognizes the cost of contract performance as an asset for the cost of performing
the contract as meeting all of the following conditions:
1) The cost is directly related to a current or expected contract including direct labour direct
materials manufacturing expenses (or similar expenses) costs clearly to be borne by the customer
and other costs incurred solely for the contract;
2) This cost increases the resources that the company will use to fulfill its performance
obligations in the future.
3) The cost is expected to be recovered
The asset will be presented under inventory or other non-current assets based on the length of
its amortization period.
(2) Contract obtainment cost
If the incremental cost of the Company is expected to be recovered the contract acquisition
cost is recognized as an asset. Incremental cost refers to the cost that the Company will not occur
without obtaining a contract such as sales commission. For the amortization period not exceeding
one year it is included in the current profit or loss when it occurs.
(3) Amortization of contract costs
The Company recognizes the contract performance cost and the contract acquisition cost on
the same basis as the commodity income related to the contract cost asset and amortizes it at the
time when the performance obligation is performed or in accordance with the performance of the
performance obligation and is included in the current profit or loss.
(4) Contract cost impairment
For assets related to contract costs if the book value is higher than the difference between the
remaining consideration expected to be received by the Company for transfer of the goods related
to the assets and the estimated cost of transferring the relevant goods the excess should be
depreciated and confirmed as an asset impairment loss
If the factors caused impairment changed after impairment provision is accrued impairment
Notes to the financial statements - Page 56FIYTA Precision Technology Co. Ltd.Notes to the Financial Statements
For the year ended 31 December 2023
provision shall be reversed and included in current period profit or loss but the carrying amount of
asset after the reversal shall not exceed the carrying amount at the reversal date as if there was no
impair.
34. Government Subsidies
(1) Classification
Government subsidies refer to monetary and non-monetary assets received from the
government without compensation however excluding the capital invested by the government as a
corporate owner. According to the subsidy objects stipulated in the documents of relevant
government government subsidies are divided into subsidies related to assets and subsidies related
to income.Government subsidies related to assets are obtained by the Company for the purposes of
acquiring constructing or otherwise forming long-term assets. Government subsidies related to
income refer to the government subsidies other than those related to assets
(2) Recognition of government subsidies
Where evidence shows that the Company complies with relevant conditions of policies for
financial supports and is expected to receive the financial support funds at the end of the period the
amount receivable is recognized as government subsidies. Otherwise the government subsidy is
recognized upon actual receipt.Government subsidies in the form of monetary assets are stated at the amount received or
receivable. Government subsidies in the form of non-monetary assets are measured at fair value; if
fair value cannot be reliably obtained a nominal amount (RMB1) is used. Government subsidies
that are measured at nominal amount shall be recognized in the current profit or loss directly.
(3) Accounting treatment
The Company determines whether a government subsidy shall use gross method or net method
based on its economical substance. In general only one method is used for one category or similar
government subsidy and it shall be used in a consistent way.Government subsidies related to assets are recognized as deferred income and are recognized
under reasonable and systematic approach in profit and loss in each period over the useful life of
the constructed or purchased assets;
Government subsidies related to income aiming at compensating for relevant expenses or
losses to be incurred by the enterprise in subsequent periods are recognized as deferred income and
are recognized in current profit or loss when relevant expenses or losses are recognized. Government
subsidies aiming at compensating for relevant expenses or losses of the enterprise that are already
incurred are charged to current profit or loss once received.Government subsidies related to daily activities of enterprises are included in other income;
government subsidies that are not related to daily activities of enterprises are included in non-
Notes to the financial statements - Page 57FIYTA Precision Technology Co. Ltd.Notes to the Financial Statements
For the year ended 31 December 2023
operating income and expense.Government subsidies related to the discount interest received from policy-related preferential
loans offset the relevant borrowing costs; if the policy-based preferential interest rate loan provided
by the lending bank is obtained the borrowing amount actually received shall be taken as the
recording value of the borrowings and borrowing cost should be calculated using the preferential
interest rate according to the loan principal and the policy.When it is required to return recognized government subsidy if such subsidy is used to write
down the carrying value of relevant assets on initial recognition the carrying value of the relevant
assets shall be adjusted; if there is balance of relevant deferred income it shall be written down to
the book balance of relevant deferred income and the excess is included in the current profit or loss;
where there is no relevant deferred income it shall be directly included in the current profit or loss
35. Deferred Income Tax Assets and Deferred Income Tax Liabilities
Deferred income tax assets and deferred income tax liabilities are measured and recognized
based on the difference (temporary difference) between the taxable base of assets and liabilities and
book value. On balance sheet date the deferred income tax assets and deferred income tax liabilities
are measured at the applicable tax rate during the period when it is expected to recover such assets
or settle such liabilities.
(1) Criteria for recognition of deferred income tax assets
The Company recognizes deferred income tax assets arising from deductible temporary
difference to the extent it is probably that future taxable amount will be available against which the
deductible temporary difference can be utilized and deductible losses and taxes can be carried
forward to subsequent years. However the deferred income tax assets arising from the initial
recognition of assets or liabilities in a transaction with the following features are not recognized: 1)
the transaction is not a business combination; 2) neither the accounting profit or the taxable income
or deductible losses will be affected when the transaction occurs.For deductible temporary difference in relation to investment in the associates corresponding
deferred income tax assets are recognized in the following conditions: the temporary difference is
probably reversed in a foreseeable future and it is likely that taxable income is obtained for
deduction of the deductible temporary difference in the future.
(2) Criteria for recognition of deferred income tax liabilities
The Company recognizes deferred income tax liabilities on the temporary difference between
the taxable but not yet paid taxation in the current and previous periods excluding:
1) temporary difference arising from the initial recognition of goodwill;
2) a transaction or event arising from non-business combination and neither the accounting
profit or the taxable income (or deductible losses) will be affected when the transaction or event
occurs;
Notes to the financial statements - Page 58FIYTA Precision Technology Co. Ltd.Notes to the Financial Statements
For the year ended 31 December 2023
3) for taxable temporary difference in relation to investment in subsidiaries or associates the
time for reversal of the temporary difference can be controlled and the temporary difference is
probably not reversed in a foreseeable future
(3) When all of the following conditions are satisfied deferred income tax assets and
deferred income tax liabilities shall be presented on a net basis
1) An enterprise has the statutory right to settle the current income tax assets and current
income tax liabilities at their net amounts;
2) The deferred income tax assets and deferred income 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 income tax assets and current income tax liabilities on a net
basis or to realize the assets and settle the liabilities simultaneously in each future period in which
significant amounts of deferred tax assets or liabilities are expected to be recovered or settled.
36. Lease
On the commencement date of the contract the Company evaluates whether the contract is a
lease or contains a lease. If one party to a contract gives up the right to control the use of one or
more identifiable assets for a period of time in exchange for consideration the contract is a lease or
contains a lease.
(1) Splitting a lease contract
When the contract contains a number of separate leases the Company will split the contract
into separate leases for accounting individually.When the contract contains both leasing and non-leasing parts the Company will split the
leasing and non-leasing parts. The leasing part shall be accounted for in accordance with the lease
standards and the non-leasing part shall be accounted for in accordance with other applicable
accounting standards for business enterprises.
(2) Combination of lease contracts
When two or more lease-containing contracts concluded by the Company with the same trader
or its related parties at the same time or at a similar time meet one of the following conditions the
Company shall merge them into one contract for accounting:
1) Such two or more contracts are concluded for general commercial purposes and constitute a
package of transactions. If these are not considered as a whole these overall commercial purposes
cannot be recognized.
2) The amount of consideration for a contract in such two or more contracts depends on the
pricing or performance of other contracts.
3) The right-of-use assets transferred by such two or more contracts together constitute a
separate lease.
(3) Accounting treatment for the Company as a lessee
Notes to the financial statements - Page 59FIYTA Precision Technology Co. Ltd.Notes to the Financial Statements
For the year ended 31 December 2023
On the commencement date of lease term the Company recognizes right-of-use assets and
lease liabilities for leases in addition to short-term leases and low-value asset leases with
simplified treatment.
1) Short-term lease and low value lease
Short-term lease refers to a lease that does not include purchase options and has a lease term
not exceeding 12 months. Low-value asset lease refers to the lease with lower value when a single
leased asset is a new asset.The Company does not recognize right-of-use assets and lease liabilities for short-term lease
and low value lease. The payment of such leases shall be charged to profit or loss using straight-
line method or other systematic method.
2) Refer to Note III. 23 and Note III. 30 for accounting policies for right-of-use assets and lease
liabilities.
(4) Accounting treatment for the Company as a lessor
1) Classification of leases
The Company divides leases into financial leases and operating leases on the start date of the
lease. Financial lease refers to a lease that essentially transfers almost all of the risks and rewards
related to the ownership of leased assets. Its ownership may or may not be transferred eventually.Operating leases refer to leases other than financial leases.If a lease has one or more of the following characteristics the Company usually classifies it as
a financial lease:
* At the expiry of the lease term the ownership of the leased assets is transferred to the lessee.* The lessee has the option to purchase the leased assets and the purchase price set by the
lessee is low enough compared with the expected fair value of the leased assets when exercising the
option. Therefore it can be reasonably determined on the lease start date that the lessee will exercise
the option.* Although the ownership of the assets is not transferred the lease term accounts for the
majority of the life of the leased assets.* On the commencement date of the lease the present value of the lease receipts is almost
equal to the fair value of the leased assets.* The nature of leased assets is special. If there is no major transformation only the lessee
can use them.If one or more of the following conditions exist in a lease it may also be classified as a financial
lease:
* If the lessee stops the lease the lessee shall bear the losses caused by the termination of the
lease to the lessor.Notes to the financial statements - Page 60FIYTA Precision Technology Co. Ltd.Notes to the Financial Statements
For the year ended 31 December 2023
* The profits or losses caused by the fluctuation of the fair value of the balance of assets
belong to the lessee.* The lessee can continue to lease far below the market level for the next period.
2) Accounting treatment for financial leases
On the commencement date of lease term the Company recognizes the financial lease
receivable on the financial leases and derecognizes the financial lease assets.When the initial measurement of the financial lease receivable is made the book value of the
financial lease receivable is the sum of the unsecured balance and the present value of lease receipts
that have not yet been received at the beginning of the lease term discounted at the interest rate
implicit in the lease. The lease receipts include:
* Fixed payments and substantive fixed payments after deducting the relevant amount of lease
incentives;
* Variable lease payments depending on an index or rate;
* In the case of reasonably determining that the lessee will exercise the purchase option the
lease receipts include the exercise price of purchase option;
* If the lease term reflects that the lessee will exercise the option to terminate the lease the
lease receipts include the amount to be paid by the lessee in exercising the option to terminate the
lease;
* Guarantee residual value provided to the lessor by the lessee the party concerned with the
lessee and an independent third party with financial capacity to fulfill the guarantee obligation.The Company calculates and recognizes the interest income for each period of the lease term
based on the fixed interest rate implicit in the lease and the variable lease payments which are
obtained and not included in the net rental investment amount are included in the profit or loss of
the period when they actually occur.
3) Accounting treatment for operating leases
The Company adopts the straight line method or other systematic and reasonable method to
recognize the lease receipts from operating leases as rental income during each period of the lease
term. Capitalization of the initial direct expenses incurred in connection with operating leases shall
be apportioned on the same basis as the recognition of rental income during the lease term and shall
be recorded in the profit or loss of the current period. Variable lease payments obtained in connection
with operating leases that are not incorporated in the lease receipts shall be incorporated in the profit
or loss of the period when they actually occur.
37. Termination of business
The Company recognizes components as termination of business components if one of the
following condition is met and that the component has already been disposed or classified as held-
Notes to the financial statements - Page 61FIYTA Precision Technology Co. Ltd.Notes to the Financial Statements
For the year ended 31 December 2023
for-sale assets and identifiable.
(1) The component represents a stand along major business or a stand along major area in
conducting business.
(2) The component is part of plan connecting to disposal of a stand along major business or
major area of conducting business.
(3) The component is a subsidiary that obtained specifically for resale.
Operating profit or loss such as the impairment loss and the amount of reversal shall be
presented in income statement as profit or loss from terminated business.
38. Re-purchase of shares
Before written-off or transfer the shares that the Company re-purchased are dealt as treasury
shares. All expenses incurred for the re-purchase are charged in the cost of treasury shares.Consideration and transaction expenses paid during the share re-purchase shall decrease
shareholder’s equity. No gain or losses shall be recognized during re-purchase transfer or written-
off of the Company’s shares.If the treasury shares is transferred the difference between amount actually received and the
share’s carrying amount shall be charged to capital reserve if the capital reserve is not sufficient to
offset surplus reserve and retained earing shall be offset. If the treasury share is to written-off the
share capital shall be decreased based on the face value of shares and the difference between the
carrying amount and its face value shall offset the capital reserve. If the capital reserve is not
sufficient to offset deducting surplus reserve and retained earnings.
39. Safety production fee
The safety production fee is accrued by the Company in accordance with national regulations
and is included in the cost of related products or current profit or loss and is also recorded in the
"specific reserve" item. When using the safety production fee if it is an expense expenditure it shall
be directly offset against the special reserve. If the fixed assets are formed the expenses incurred
through the collection of "construction in progress" will be recognized as fixed assets when the
safety project is completed and reach the intended usable state; at the same time the cost of forming
fixed assets will be offset against the special reserve and recognize the accumulated depreciation
of the same amount. The fixed assets will not be depreciated in the subsequent period.
40. Significant changes in accounting policies and estimates
(1) Changes in accounting policies
There were no significant changes in accounting policies during the year.
(2)Significant changes in accounting estimates
There were no significant changes in accounting estimates during the year.Notes to the financial statements - Page 62FIYTA Precision Technology Co. Ltd.Notes to the Financial Statements
For the year ended 31 December 2023
IV. Taxes
1. Main types of taxes and corresponding tax rates
Tax type Basis Tax rate note
Domestic sales providing manufacturing
13%
and repairing services
VAT Property leasing 9%
Other taxable services 6%
Simplified method 5%
Consumption tax Luxury watches 20%
Urban
maintenance and Turnover tax payable 7%、5%
construction tax
Corporate income
Taxable income See below table
tax
70% or 80% of the original cost of property
Property tax 1.2%、12%
or rental income
Corporate income tax of different entities:
Name of entities CIT rate
Shenzhen HARMONY World Watch Center Co.
25%
Ltd.(* )
FIYTA Sales Co. Ltd.(* ) 25%
Shenzhen FIYTA Precision Technology Co.
15%
Ltd.(* )
Shenzhen FIYTA Technology Development Co.
15%
Ltd.(* )
HARMONY World Watch Center(Hainan) Co.
20%
Ltd.(* )
Shenzhen Xunhang Precision Technology Co. Ltd. 25%
Emile Choureit Timing (Shenzhen) Ltd. 25%
Liaoning Hengdarui Commercial & Trade Co. Ltd. 25%
EMPORAL (Shenzhen) Co. Ltd. 25%
Shenzhen Harmony E-commerce Co. Ltd.(* ) 20%
FIYTA (Hong Kong) Ltd.(* ) 16.5%
Montres Chouriet SA(* ) 30%Note * :According to the regulations stated in “Interim Administration Method for Levy ofCorporate Income Tax to Enterprise that Operates Cross-regionally” the head office of the
Company and its branch offices the head office of HARMONY Company and its branch offices
and the head office of Sales Company and its branch offices adopt tax submission method of“unified calculation managing by classes pre-paid in its registered place settlement in total andadjustment by finance authorities”. Branch offices mentioned above share 50% of the enterprise
income tax and prepay locally; and 50% will be prepaid by the head offices mentioned above.Notes to the financial statements - Page 63FIYTA Precision Technology Co. Ltd.Notes to the Financial Statements
For the year ended 31 December 2023Note * :The Company enjoyed for “Reduction and Exemption in Corporate Income Tax Ratefor High and New Technology Enterprises that Require Key Support from the State”.Note * : These companies are registered in Hong Kong and the income tax rate of Hong Kong
applicable is 16.50% this year.Note * : The comprehensive tax rate of 30% is applicable for Swiss Company as it registered
in Switzerland.Note * : These companies are small and low-profit enterprises which enjoy 20% tax rate.
2. Preferential treatment and corresponding approvalAccording to “Proclamation of Ministry of Finance and State Administration of Taxation inPreferential Tax Rate to Small and Low Profit Enterprises and Sole-proprietors” (Caishui (2023) No.6)
small low-profit enterprises will be included in taxable income at 25% and to be taxed at a rate of 20%.According to “Notice of Ministry of Finance and State Administration of Taxation in ExtendingExpiration Period of Utilizing Losses for High-Tech Enterprises and Scientific Oriented Medium andSmall Enterprises” (Cai Shui [2018] No. 76) starting from January 1 2018.，unutilized losses incurredin prior 5 years before obtaining the status of High and New Tech Enterprise can be carried forward and
utilized in future years. The longest period was extended from 5 years to 10 years.According to the Announcement of the Ministry of Finance and the State Administration of Taxation
on Further Improving the Policy of Pre-tax Deduction of Research and Development Expenses (Cai Shui
[2023] No. 7) the research and development expenses actually incurred by enterprises in carrying out
research and development activities which have not been formed into intangible assets and recognized
as profit and loss for the current period shall be deducted on the basis of actual deduction in accordance
with the regulations and then deducted in accordance with 100% of the actual amount incurred before
tax starting from 1 January 2023; and if they are formed into If the intangible assets are formed starting
from January 1 2023 the intangible assets will be amortized at 200% of the cost of the intangible assets
before tax.A two-tier profits tax system will be implemented in Hong Kong from 2019 providing that the
profits tax rate for Hong Kong companies will be reduced to 8.25% for the first HK2000000.00
with profits thereafter continuing to be taxed at 16.5%.V. Notes to main items of the consolidated financial statements
(Unless otherwise indicated the currency unit is Renminbi Yuan the end of the period refers to
December 312023the beginning of the period refers to January 1 2023 and the end of the last period
refers to December 31 2022)
Note 1. Monetary funds
Item Closing balance Opening balance
Cash on hand 178996.87 173368.68
Notes to the financial statements - Page 64FIYTA Precision Technology Co. Ltd.Notes to the Financial Statements
For the year ended 31 December 2023
Item Closing balance Opening balance
Cash at bank 35443378.12 41106861.46
Other monetary funds 1262979.96 1140201.67
Deposit in finance company 467743798.76 271327031.83
Total 504629153.71 313747463.64
Including: Total overseas deposits 1202601.86 716733.44
Deposit in finance company mainly deposited with AVIC Finance Co. Ltd.As of December 31 2023 The Company has no amounts pledged frozen or at potential risk
of recovery.Cash with restricted usage is as follows
Item Closing balance Opening balance
Overseas deposit with restrictions remitting
1202601.86716733.44
back
Note 2. Bill receivable
1． Presented by category
Item Closing balance Opening balance
Bank acceptance bills 10363449.00 10690221.03
Commercial acceptance bills 7905523.37 21524691.07
Total 18268972.37 32214912.10
2． Presented by ECL types
Closing balance
Type Carrying amount Provision
Percentage Percentage Book value
Amount Amount
(%)(%)
Notes receivable that
provided expected credit
losses on single basis
Notes receivable that
provided expected credit 18685052.55 100.00 416080.18 2.23 18268972.37
losses on single basis
Including: Commercial
8321603.5544.54416080.185.007905523.37
acceptance bills
Risk-free Bank
10363449.0055.4610363449.00
acceptance bills
Total 18685052.55 100.00 416080.18 2.23 18268972.37
Continued：
Notes to the financial statements - Page 65FIYTA Precision Technology Co. Ltd.Notes to the Financial Statements
For the year ended 31 December 2023
Opening balance
Type Carrying amount Provision
Percentage Percentage Book value
Amount Amount
(%)(%)
Notes receivable that
provided expected credit
losses on single basis
Notes receivable that
provided expected credit 33347790.58 100.00 1132878.48 3.40 32214912.10
losses on single basis
Including: Commercial
22657569.5567.941132878.485.0021524691.07
acceptance bills
Risk-free Bank
10690221.0332.0610690221.03
acceptance bills
Total 33347790.58 100.00 1132878.48 3.40 32214912.10
3． Notes receivable with expected credit loss provided based on credit risk
characteristic portfolio
Closing balance
Portfolio
Carrying amount Provision Percentage (%)
Bank acceptance bills 8321603.55 416080.18 5.00
Commercial acceptance bills 10363449.00
Total 18685052.55 416080.18
4． Bad debt movements in current period
Movements
Opening Closing
Types
balance Received or Other Accrual Written-off balance
reversal changes
Notes receivable
that provided
expected credit
losses on single
basis
Notes receivable
that provided
expected credit 1132878.48 716798.30 416080.18
losses on single
basis
Including:
Commercial 1132878.48 716798.30 416080.18
acceptance bills
Risk-free
Bank acceptance
bills
Total 1132878.48 716798.30 416080.18
5． Bills have been endorsed but not yet due at the end of the period.
Item Amount de-recognized Amount not de-recognized
Bank acceptance bills 47646674.86
Notes to the financial statements - Page 66FIYTA Precision Technology Co. Ltd.Notes to the Financial Statements
For the year ended 31 December 2023
Note 3. Accounts receivable
1．Presentation by aging
Aging Closing balance Opening balance
Within 1 year 333204160.07 311934503.90
1-2 years 2123874.00 14972671.61
2-3 years 4200458.08 2781542.85
Over 3 years 18005255.95 16064539.96
Subtotal 357533748.10 345753258.32
Less: provision for bad debt 34390986.46 40462298.64
Total 323142761.64 305290959.68
2．Presentation by method of providing bad debt
Closing balance
Category Carrying amount Bad debt provision
Percentage ECL rate Book value
Amount Amount
(%)(%)
Accounts receivable that
provided expected credit 24708541.73 6.91 23148792.25 93.69 1559749.48
losses on single basis
Accounts receivable that
provided expected credit 332825206.37 93.09 11242194.21 3.38 321583012.16
losses on portfolio basis
Including: Receivable from
332825206.3793.0911242194.213.38321583012.16
other customers
Total 357533748.10 100.00 34390986.46 323142761.64
Continued：
Opening balance
Category Carrying amount Bad debt provision
Percentage ECL rate Book value
Amount Amount
(%)(%)
Accounts receivable that
provided expected credit 34982967.68 10.12 29705797.13 84.92 5277170.55
losses on single basis
Accounts receivable that
provided expected credit 310770290.64 89.88 10756501.51 3.46 300013789.13
losses on portfolio basis`
Including: Receivable from
310770290.6489.8810756501.513.46300013789.13
other customers
Total 345753258.32 100.00 40462298.64 11.70 305290959.68
3．Accounts receivable that provided expected credit losses on single basis included in
the closing balance
Notes to the financial statements - Page 67FIYTA Precision Technology Co. Ltd.Notes to the Financial Statements
For the year ended 31 December 2023
Closing balance
Name Bad debt ECL rate
Carrying amount Reasons
provision (%)
Existence of disputes
Receivable from other
24708541.73 23148792.25 93.69 customer
customers
mismanagement etc.
4．In the portfolio accounts receivable with expected credit loss provided based on credit
risk characteristic portfolio
Portfolio of receivable from other customers
Closing balance
Aging
Carrying amount Bad debt provision ECL rate (%)
Within 1 year 330569799.62 9694581.78 2.93
1-2 years 786438.13 78643.81 10.00
2-3 years
Over 3 years 1468968.62 1468968.62 100.00
Total 332825206.37 11242194.21
5．Movements of provision during the period
Movements during the period
Opening Closing
Types
balance Recovered or Other Accrual Written-off balance
reversed movements
Accounts
receivable that
provided
29705797.131013478.977508493.5485000.00-23009.6923148792.25
expected credit
losses on single
basis
Accounts
receivable that
provided
10756501.511052151.99751246.27-184786.9811242194.21
expected credit
losses on
portfolio basis`
Including:
Receivable from 10756501.51 1052151.99 751246.27 -184786.98 11242194.21
other customers
Total 40462298.64 2065630.96 8259739.81 85000.00 -207796.67 34390986.46
Including：main recovery of bad debt provision in current period:
Name Amount Way of recovery Note
Fuzhou Cangshan Suning e-buy Plaza
4547371.89 Bank transfer
Co. Ltd.Shanghai Pudong Suning e-buy Business
791000.00 Bank transfer
Management Co. Ltd.Fuzhou Suning e-buy Plaza Co. Ltd. 706157.30 Bank transfer
6．Accounts receivable actually written off during the period
Notes to the financial statements - Page 68FIYTA Precision Technology Co. Ltd.Notes to the Financial Statements
For the year ended 31 December 2023
Item Amount written off
Accounts receivable actually written off 85000.00
Including：main accounts receivable write-offs:
Whether
arising
Write-off from
Name Nature Amount Reasons for write-offs procedures connecte
performed d
transacti
ons
General
Xi’an Tangcheng Payment for
85000.00 Too old to take back manager's Clogged
Limited goods
office
Total 85000.00
7．Top 5 receivable accounts
Proportion in total
closing balance of
Name Closing balance Bad debt provision
accounts
receivable (%)
Top 5 receivables accounts in total 76589281.00 21.42 3829464.05
Note 4. Prepayments
1． Presentation of prepayments by aging
Closing balance Opening balance
Aging Percentage Percentage
Amount Amount
(%)(%)
Within one year 6564760.64 99.90 8039794.97 100.00
1-2 years 6479.34 0.10
2-3 years
Total 6571239.98 100.00 8039794.97 100.00
2．Top 5 prepayments
Proportion in total closing
Name Closing balance
balance of prepayments (%)
Top 5 prepayments in total 2884693.00 43.90
Note 5. Other receivable
1．Presentation of other receivables by aging
Aging Closing balance Opening balance
Within one year 22481619.93 59711314.91
1 - 2 years 38313327.26 216120.00
2- 3 years 119250.00 649029.90
Over 3 years 1159704.90 606105.00
Notes to the financial statements - Page 69FIYTA Precision Technology Co. Ltd.Notes to the Financial Statements
For the year ended 31 December 2023
Aging Closing balance Opening balance
Subtotal 62073902.09 61182569.81
Less: bad debt provision 4348110.09 4264550.33
Total 57725792.00 56918019.48
2．Presented by nature
Nature Closing balance Opening balance
Security deposit 51775226.86 49430408.24
Petty cash 1549821.50 2841915.70
Others 8748853.73 8910245.87
Subtotal 62073902.09 61182569.81
Less: bad debt provision 4348110.09 4264550.33
Total 57725792.00 56918019.48
3．Presented according to three stages of financial assets impairment
Closing balance Opening balance
Item Carrying Bad debt Carrying Bad debt
Book value Book value
amount provision amount provision
First stage 60655587.19 2980723.19 57674864.00 59703389.91 2850206.43 56853183.48
Second stage
Third stage 1418314.90 1367386.90 50928.00 1479179.90 1414343.90 64836.00
Total 62073902.09 4348110.09 57725792.00 61182569.81 4264550.33 56918019.48
4．Presented by bad debt provision method
Closing balance
category Carrying amount Bad debt provision
Percentage ECL rate Book value
Amount Amount
(%)(%)
Other receivables that provided
expected credit losses on single 1418314.90 2.28 1367386.90 96.41 50928.00
basis
Other receivables that provided
expected credit losses on 60655587.19 97.72 2980723.19 4.91 57674864.00
portfolio basis
Including: Security deposit
51304601.8682.652603277.665.0748701324.20
portfolio
Petty cash portfolio 1549821.50 2.50 1549821.50
Social security payment
284862.550.46284862.55
on-behalf portfolio
Portfolio of others 7516301.28 12.11 377445.53 5.02 7138855.75
Total 62073902.09 100.00 4348110.09 57725792.00
Continued
Notes to the financial statements - Page 70FIYTA Precision Technology Co. Ltd.Notes to the Financial Statements
For the year ended 31 December 2023
Opening balance
Category Carrying amount Bad debt provision
Percentage ECL rate Book value
Amount Amount
(%)(%)
Other receivables that provided
expected credit losses on single 1479179.90 2.42 1414343.90 95.62 64836.00
basis
Other receivables that provided
expected credit losses on 59703389.91 97.58 2850206.43 4.77 56853183.48
portfolio basis
Including: Security deposit
48600258.2479.432476810.045.1046123448.20
portfolio
Petty cash portfolio 2841915.70 4.64 2841915.70
Social security payment
279769.980.46279769.98
on-behalf portfolio
Portfolio of others 7981445.99 13.05 373396.39 4.68 7608049.60
Total 61182569.81 100.00 4264550.33 6.97 56918019.48
5． Other receivables that provided expected credit losses on single basis included in the
closing balance
Closing balance
Name Bad debt ECL rate
Carrying amount Reason
provision (%)
Receivable from others 1418314.90 1367386.90 96.41 Commercial disputes
6．In the portfolio other receivables with expected credit loss provided based on credit
risk characteristic portfolio
（1）Security deposit portfolio
Closing balance
Aging
Carrying amount Bad debt provision ECL rate (%)
Within 1 year 28136399.98 1406820.01 5.00
1 - 2 years 23028151.88 1151407.65 5.00
2- 3 years 100000.00 5000.00 5.00
Over 3 years 40050.00 40050.00 100.00
Total 51304601.86 2603277.66
（2）Petty cash portfolio
Closing balance
Aging
Carrying amount Bad debt provision ECL rate (%)
Within 1 year 1511048.50
1 - 2 years 19523.00
2- 3 years 19250.00
Total 1549821.50
Notes to the financial statements - Page 71FIYTA Precision Technology Co. Ltd.Notes to the Financial Statements
For the year ended 31 December 2023
（3）Social security payment on-behalf portfolio
Closing balance
Aging
Carrying amount Bad debt provision ECL rate (%)
Within 1 year 284862.55
（4）Portfolio of others
Closing balance
Aging
Carrying amount Bad debt provision ECL rate (%)
Within 1 year 7516301.28 377445.53 5.02
7．Provision for bad debts of other receivables
First stage Second stage Third stage
Lifetime expected Lifetime expected
Bad debt provision Expected credit credit losses (no credit losses (credit Total
losses over the
credit impairment impairment
next 12 months
occurred) occurred)
Opening balance 2850206.43 1414343.90 4264550.33
Opening balance
movements in current
period
—Transfer into the
second stage
—Transfer into the
third stage
—Reverse back to
the second stage
—Reverse back to
the first stage
Accrual during the
188362.2815525.00203887.28
period
Reversed during the
-58073.95-62482.00-120555.95
period
Recovered during the
period
Written-off during the
period
Other movements 228.43 228.43
Closing balance 2980723.19 1367386.90 4348110.09
8．No other receivables were written-off during the period.
9．Top 5 other receivable accounts
Proportion to
Closing balance
closing balance of
Name Closing balance of bad debts
other receivables
provision
(%)
Top 5 other receivables in total 7763649.48 12.51 388182.48
Note 6. Inventory
Notes to the financial statements - Page 72FIYTA Precision Technology Co. Ltd.Notes to the Financial Statements
For the year ended 31 December 2023
1．Classification
Closing balance Opening balance
Item Carrying
Provision Book value Carrying amount Provision Book value
amount
Raw
167281491.845290855.71161990636.13162338704.6517241512.65145097192.00
material
WIP 12060525.88 12060525.88 7204699.11 7204699.11
Stored
1993236975.3666621962.091926615013.272085640712.3796622229.811989018482.56
goods
Total 2172578993.08 71912817.80 2100666175.28 2255184116.13 113863742.46 2141320373.67
2．Provision for inventory
Opening Increase in current period Decrease in current period Closing
Item
balance Accrual Other Reversed Realized Others balance
Raw
17241512.651767804.67198541.6813917003.295290855.71
material
Stored
96622229.8111782189.7716398.1614121974.8127676880.8466621962.09
goods
Total 113863742.46 13549994.44 214939.84 14121974.81 41593884.13 71912817.80
Notes to provision for inventory
Evidence of determine NRV and future selling
Item Reason for reversal or realized
cost
Estimated selling price less estimated cost to Factors that caused impairment has been
Raw
complete and selling and distribution expenses disappeared and the NAV is higher than its
material
and associated taxes carrying amount
Stored Estimated selling price less estimated selling and Inventory that already provided for was sold
goods distributing expenses and associated taxes or used in current period.
3．The provision is accrued by portfolio of assets
Closing balance
Provision for inventory
Portfolio Carrying Criteria for accrued
Book value
amount Amount Percentage (%) benefits
New products of own
Inventory
brands launched in the
ageing 42498540.45 42498540.45
year are not subject to
portfolio
write-downs.Total 42498540.45 42498540.45
Continued：
Portfolio Opening balance
Notes to the financial statements - Page 73FIYTA Precision Technology Co. Ltd.Notes to the Financial Statements
For the year ended 31 December 2023
Provision for inventory
Carrying Criteria for accrued
Amount Percentage Book value
amount benefits
(%)
New products of own
Inventory
brands launched in the
ageing 40147783.30 40147783.30
year are not subject to
portfolio
write-downs.Total 40147783.30 40147783.30
Note 7. Other current assets
Item Closing balance Opening balance
Input VAT 21032239.30 12967188.47
Input VAT not yet certified 31717607.91 39454283.19
Prepaid corporate income tax 1364632.40 3419026.38
Others 18134912.20 10499007.28
Total 72249391.81 66339505.32
Note 8. Long-term equity investment
Movements during the period
Opening Investment gains Adjustment of
Investee Addition/new
balance and losses other investment Withdrawn
recognized by comprehensive
equity method income
Associate
Shanghai Watch Co. Ltd.
58182086.90-5819479.60
(Shanghai Watch)
Continued
Movements during the period Closing
balance of
Investee Cash Changes in Impairmen Closing balance
dividend Others impairmen
other equity t provision
declared t provision
Associate
Shanghai Watch -500000.00 51862607.30
Note 9. Other equity instrument investments
Item Closing balance Opening balance
Xi’an Tangcheng Limited 85000.00
Note 10. Investment property
1. Details of investment property
Item Property
I. Original cost
Notes to the financial statements - Page 74FIYTA Precision Technology Co. Ltd.Notes to the Financial Statements
For the year ended 31 December 2023
Item Property
1．Opening balance 619762618.36
2．Addition 572405.53
Purchase
Transferred from fixed assets 572405.53
Other reasons
3．Decrease
Disposal
Other reasons
4．Closing balance 620335023.89
II. Accumulated depreciation
1．Opening balance 244783123.65
2．Increased in current period 15296068.10
Accrual 15044992.22
Transferred from fixed assets 251075.88
Other reasons
3．Decreased in current period
Disposal
Other reasons
4．Closing balance 260079191.75
III. Impairment provision
1．Opening balance
2．Increased in current period
Accrual
Transferred from fixed assets
Other reasons
3．Decreased in current period
Disposal
Other reasons
4．Closing balance
IV. Book value
1．Carrying amount at end of the period 360255832.14
2．Carrying amount at opening of the period 374979494.71
2. Notes to investment property
During the reporting period certain self-use property of the Company were changed to lease
out and they were transferred from fixed assets to investment properties measured at cost model.Notes to the financial statements - Page 75FIYTA Precision Technology Co. Ltd.Notes to the Financial Statements
For the year ended 31 December 2023
Note 11. Fixed assets
1. Status of fixed assets
Property and Transportation Electronic Other
Item Machinery Total
buildings vehicles devices equipment
I.Original cost
1. Opening
436320947.20117552809.3814472510.3847600350.6545458802.97661405420.58
balance
2. Increased in
6274155.6613247259.2522133.505638594.911095999.3026278142.62
current period
Re-classification
Purchased 914818.16 9069828.71 22133.50 5638411.80 1095999.30 16741191.47
Translation
5359337.504177430.54183.119536951.15
difference
Other
increase
3. Decrease in
1005470.23132279.421217550.052581726.492460547.927397574.11
current period
Disposal or
433064.70132279.421217550.052260776.401552373.545596044.11
retired
Transferred to
investment 572405.53 572405.53
property
Translation
309957.34908174.381218131.72
difference
Other
10992.7510992.75
decrease
4. Closing
441589632.63130667789.2113277093.8350657219.0744094254.35680285989.09
balance
II. Accumulated
depreciation
1. Opening
135388740.9871466324.7412901120.8937167150.6039853318.20296776655.41
balance
2. Increased in
17371592.7811708223.48334169.252754128.081490096.2733658209.86
current period
Re-classification
Accrual 13829319.29 8286484.22 334169.25 2673316.21 1490096.27 26613385.24
Translation
3542273.493421739.2680811.877044824.62
difference
Other
increase
3. Decrease in
553306.3540954.901156620.741964736.592218612.285934230.86
current period
Disposal or
302230.4740954.901156620.741964736.591281465.834746008.53
retired
Transferred to
investment 251075.88 251075.88
property
Translation
937146.45937146.45
difference
Other
decrease
4. Closing
152207027.4183133593.3212078669.4037956542.0939124802.19324500634.41
balance
III. Impairment
provision
1. Opening
balance
Notes to the financial statements - Page 76FIYTA Precision Technology Co. Ltd.Notes to the Financial Statements
For the year ended 31 December 2023
Property and Transportation Electronic Other
Item Machinery Total
buildings vehicles devices equipment
2. Increase in
current period
Re-classification
Accrual
Translation
difference
Other
increase
3. Decrease in
current period
Disposal or
retired
Transferred
into
investment
property
Translation
difference
Other
decrease
4. Closing
balance
IV. Book value
1. Carrying
amount at end of 289382605.22 47534195.89 1198424.43 12700676.98 4969452.16 355785354.68
period
2. Carrying
amount at
300932206.2246086484.641571389.4910433200.055605484.77364628765.17
beginning of
period
2. Fixed assets that do not have certificate for property right
Item Book value Reason for not having certificate for property rights
Property 190716.25 Issues relating to property right
Note 12. Right-of-use assets
Item Property
I. Original cost
1．Opening balance 362417078.85
2．Increase in current period 103612246.80
Re-classification
Lease 100802964.10
Translation difference 3116.50
Other increase 2806166.20
3．Decrease in current period 312819427.84
Maturity of lease term 304816556.54
Translation difference
Notes to the financial statements - Page 77FIYTA Precision Technology Co. Ltd.Notes to the Financial Statements
For the year ended 31 December 2023
Item Property
Other decrease 8002871.30
4．Closing balance 153209897.81
II. Accumulated depreciation
1．Opening balance 252086566.82
2．Increase in the period 103960161.59
Reclassification
Accrual 103958386.94
Translation difference 1774.65
Other increase
3．Decrease in the period 312289312.24
Maturity of lease term 304816556.54
Translation difference
Other decrease 7472755.70
4．Closing balance 43757416.17
III. Impairment provision
1．Opening balance
2．Increase in the period
Reclassification
Accrual
Translation difference
Other increase
3．Decrease in the period
Maturity of lease term
Translation difference
Other decrease
4．Closing balance
IV. Book value
1．Carrying amount at end of period 109452481.64
2．Carrying amount at beginning of period 110330512.03
Note 13. Intangible asset
1．Status
Right to use
Item Land-use right Software system Total
trademarks
I. Original cost
1．Opening
34933822.4033197692.5116518590.2984650105.20
balance
2．Increase in the
2072450.4280894.932153345.35
period
Notes to the financial statements - Page 78FIYTA Precision Technology Co. Ltd.Notes to the Financial Statements
For the year ended 31 December 2023
Right to use
Item Land-use right Software system Total
trademarks
Purchase 2072450.42 80894.93 2153345.35
Internal R&D
Other source
3．Decrease in the
27470.3827470.38
period
Disposal 27470.38 27470.38
Other reasons
4．Closing balance 34933822.40 35242672.55 16599485.22 86775980.17
II. Accumulated
amortization
1．Opening
16515922.0125903908.159030056.4151449886.57
balance
2．Increase in the
733553.291717415.911238214.013689183.21
period
Accrual 733553.29 1717415.91 1238214.01 3689183.21
Other reasons
3．Decrease in the
27470.3827470.38
period
Disposal 27470.38 27470.38
Other reasons
4．Closing balance 17249475.30 27593853.68 10268270.42 55111599.40
III. Impairment
provision
1．Opening
balance
2．Increase in the
period
Accrual
Other reasons
3．Decrease in the
period
Transfer
Other reasons
Other transfer
4．Closing balance
IV. Book value
1．Book value at
17684347.107648818.876331214.8031664380.77
end of the period
2．Book value at
beginning of the 18417900.39 7293784.36 7488533.88 33200218.63
period
Note 14. Long-term deferred expenses
Item Opening balance Increase Amortized Other decrease Closing balance
Counter fabrication
22247070.1722066842.0723175000.622130567.7819008343.84
expenses
Notes to the financial statements - Page 79FIYTA Precision Technology Co. Ltd.Notes to the Financial Statements
For the year ended 31 December 2023
Item Opening balance Increase Amortized Other decrease Closing balance
Renovation expenses 116030323.61 39047795.69 58272039.86 509069.24 96297010.20
Others 6211058.40 7760754.71 6952812.02 7019001.09
Total 144488452.18 68875392.47 88399852.50 2639637.02 122324355.13
Note 15. Deferred tax assets and deferred tax liabilities
1．Detail of deferred tax assets before offsetting
Closing balance Opening balance
Item Deductible temporary Deductible temporary
Deferred tax assets Deferred tax assets
difference difference
Impairment provision 107672653.16 24371732.35 143503292.94 30225885.07
Unrealized profit for related
83620908.6020855280.6275781866.0918681772.44
party transactions
Deductible losses 126562143.51 31197892.87 157860317.75 37779977.71
Restricted shares 6263007.85 1449733.06 23141270.85 5411762.47
Advertisement expenses that
515068.99128767.25
allowed to deduct in future years
Lease liabilities 109682960.95 27420740.27 113136916.00 28284229.00
Others 5168527.80 1292131.95 7295926.80 1823981.80
Total 438970201.87 106587511.12 521234659.42 122336375.74
2．Detail of deferred tax liabilities before offsetting
Closing balance Opening balance
Item taxable temporary Deferred tax Taxable temporary Deferred tax
difference liabilities difference liabilities
One-off deduction of fixed asset
28437227.074265584.0629872344.914480851.74
before Corporate income tax
Right-of-use asset 109212305.15 27303076.29 110279028.02 27569757.01
Total 137649532.22 31568660.35 140151372.93 32050608.75
3．Net-off of deferred tax asset or liabilities
Closing balance of Opening balance of
Amount off-set at Amount off-set at
Item deferred tax asset or deferred tax asset or
current period prior period
liability after off-set liability after off-set
deferred tax asset 26359739.66 80227771.46 26551763.80 95784611.94
deferred tax liabilities 26359739.66 5208920.69 26551763.80 5498844.95
4．Details of deductible temporary difference and deductible losses that does not recognize
as deferred income tax asset
Item Closing balance Opening balance
Impairment provision 3395341.37 16220176.97
Deductible losses 52523345.89 50761915.00
Notes to the financial statements - Page 80FIYTA Precision Technology Co. Ltd.Notes to the Financial Statements
For the year ended 31 December 2023
Item Closing balance Opening balance
Total 55918687.26 66982091.97
Deductible losses of Montres Chouriet SA which are sub-subsidiary of the Company is not
recognized as deferred income tax asset as it’s uncertain that the companies can get sufficient taxable
income in future. FIYTA（Hong Kong）Ltd a subsidiary of the Company does not need to recognize
the deferred income tax assets for impairment provision according to the local tax policy.
5．Deductible losses that are not recognized as deferred tax asset will due in the following
years：
Year Closing balance Opening balance Note
20238456818.95
202423049503.3718449678.50
202529473842.5223855417.55
Total 52523345.89 50761915.00
Note 16. Other non-current assets
Closing balance Opening balance
Item Carrying
Provision Book value Carrying amount Provision Book value
amount
Prepayment for
construction and 9434627.17 9434627.17 11593741.57 11593741.57
equipment
Total 9434627.17 9434627.17 11593741.57 11593741.57
Note 17. Short-term loan
Item Closing balance Opening balance
Credit loans 250000000.00 290000000.00
Accrued interest payable 187763.87 237111.11
Total 250187763.87 290237111.11
Note 18. Notes payable
Types Closing balance Opening balance
Commercial bills payable 2000600.00
Note 19. Account payables
Item Closing balance Opening balance
Trade payables 148281377.41 149811781.06
Payables for material purchased 23371455.42 19729474.20
Payables for project 2173074.88 1048201.41
Total 173825907.71 170589456.67
Notes to the financial statements - Page 81FIYTA Precision Technology Co. Ltd.Notes to the Financial Statements
For the year ended 31 December 2023
Note 20. Advances from customer
Item Closing balance Opening balance
Rental received in advance 10267758.31 16960128.83
Total 10267758.31 16960128.83
Note 21. Contract liabilities
Item Closing balance Opening balance
Advances for goods received 12286243.62 16844437.47
Total 12286243.62 16844437.47
Note 22. Employee remuneration payable
1．Status
Item Opening balance Increase Decrease Closing balance
Short-term employee benefits 122389603.47 573249889.40 581435441.84 114204051.03
Post-employment benefits -
9282692.0045699776.3449401016.985581451.36
defined contribution plans
Termination benefits 4915643.91 3561468.21 8177803.91 299308.21
Total 136587939.38 622511133.95 639014262.73 120084810.60
2．Short-term employee benefits
Item Opening balance Increase Decrease Closing balance
Salaries bonus allowances 121169046.53 514306267.70 522193272.18 113282042.05
Staff welfare 10643.28 9991313.96 9839862.22 162095.02
Social insurances 404028.29 22623655.78 23027605.75 78.32
Including:1.Medical
404028.2920961272.1121365300.40
insurance
2. Supplementary
medical insurance
3.Work-related injury
894581.96894503.6478.32
insurance
4.Maternity insurance 767801.71 767801.71
Housing Fund 169121.00 19257855.90 19413425.90 13551.00
Labor union fees and
636764.377070796.066961275.79746284.64
education fee
Total 122389603.47 573249889.40 581435441.84 114204051.03
3．Defined contribution plans
Item Opening balance Increase Decrease Closing balance
Basic pension insurance 290781.95 40649553.03 40732129.01 208205.97
Unemployment insurance 581.68 1203467.38 1203669.18 379.88
Annuity 8991328.37 3846755.93 7465218.79 5372865.51
Total 9282692.00 45699776.34 49401016.98 5581451.36
Notes to the financial statements - Page 82FIYTA Precision Technology Co. Ltd.Notes to the Financial Statements
For the year ended 31 December 2023
Note 23. Taxes payable
Item Closing balance Opening balance
VAT 38997243.97 39086878.23
Corporate income tax 21276050.77 16751872.66
Individual income tax 1101633.76 1070872.15
Urban maintenance and
1047680.771353097.21
construction tax
Educational surcharges 748598.11 966809.02
Others 1016953.93 1540639.03
Total 64188161.31 60770168.30
Note 24. Other payables
Item Closing balance Opening balance
Dividends payable 2058352.24 6324013.97
Other payables 119879448.83 158736108.61
Total 121937801.07 165060122.58
Note: Other payables in above table refers to other payables excluding interest payable and
dividends payable.
1. Dividends payable
Reasons for not being
Item Closing balance Opening balance
paid
Dividends for ordinary shares 2058352.24 6324013.97 unlock
Total 2058352.24 6324013.97
2. Other payables
(1) Other payables by nature
Nature Closing balance Opening balance
Security deposit 34075198.63 38319837.05
Shop activity fund 17335559.49 16105216.84
Decoration expenses 10214019.04 12827532.03
Repurchase liability for restricted shares 14304862.81 50759806.16
Other 43949808.86 40723716.53
Total 119879448.83 158736108.61
(2) Material other receivables with aging over 1 year
Name Closing balance Reasons for not being paid
Company A 4614077.01 Undue
Notes to the financial statements - Page 83FIYTA Precision Technology Co. Ltd.Notes to the Financial Statements
For the year ended 31 December 2023
Name Closing balance Reasons for not being paid
Company B 2032676.76 Undue
Company C 2020950.20 Undue
Company D 1807296.80 Undue
Company E 1442275.27 Undue
Company F 1060132.00 Undue
Total 12977408.04
Note 25. Non-current liabilities due within one year
Item Closing balance Opening balance
Lease liabilities due in one year 66399004.20 71546316.16
Total 66399004.20 71546316.16
Note 26. Other current liabilities
Item Closing balance Opening balance
Output VAT not yet realized 1589635.30 1686806.01
Total 1589635.30 1686806.01
Note 27. Lease liabilities
Item Closing balance Opening balance
Buildings and Structures 113786386.87 113365689.55
Less: unrecognised finance costs 3861030.15 176811.81
Subtotal present value of lease
109925356.72113188877.74
receipts
Less: lease liabilities due in one
66399004.2071546316.16
year
Total 43526352.52 41642561.58
Interest expenses for lease liabilities recognized in current period was RMB4583361.68.Note 28. Deferred income
Opening Closing
Item Increase Decrease Reason
balance balance
Asset related
1295926.80343141.11952785.69
government subsidy
Revenue related
government subsidy
Total 1295926.80 343141.11 952785.69
Deferred income related to government subsidy
The Company's government subsidy are detailed in Note VIII Government subsidy.1 for
liability items involving government grants.Notes to the financial statements - Page 84FIYTA Precision Technology Co. Ltd.Notes to the Financial Statements
For the year ended 31 December 2023
Note 29. Share capital
Movements: increase(+) decrease(－)
Capitalizati
Item Opening balance Newly Bonus on of Closing balance
Others Subtotal
issued share capital
reserves
Total shares 417627960.00 -2407990.00 -2407990.00 415219970.00
Total 417627960.00 -2407990.00 -2407990.00 415219970.00
Notes to movements：
1. Pursuant to the "Proposal on the Repurchase and Cancellation of Certain Restricted Shares
under the 2018 A-share Restricted Share Incentive Plan (Phase II)" considered and approved by
the Board of Directors and the general meeting of the Company 206860 A-share restricted shares
held by seven departing former incentive recipients which had been granted but not yet released
from restriction on sale were repurchased and cancelled.
2. Pursuant to the ''Proposal on the Failure to Achieve the Conditions for Release of Restricted
Shares during the Second Release Period of the 2018 A-share Restricted Share Incentive Plan
(Phase II) and the Repurchase and Cancellation of Certain Restricted Shares'' considered and
approved by the Board of Directors and the General Meeting of Shareholders of the Company
2201130 restricted shares of A-shares held by 120 incentive recipients for whom the conditions
for release of restricted shares have not been fulfilled are to be repurchased and cancelled.Note 30. Capital reserve
Opening
Item Item Increase Decrease
balance
Share premium 969665728.36 12799265.10 14207807.55 968257185.91
Other capital reserve 37420915.12 3184288.69 18703356.55 21901847.26
Total 1007086643.48 15983553.79 32911164.10 990159033.17
Notes to capital reserve:
1. Pursuant to the ''Resolution on the fulfillment of the conditions for the release of restricted
shares during the first release period of the 2018 A-share Restricted Stock Incentive Plan (Phase
II)'' and the ''Resolution on the fulfillment of the conditions for the release of restricted shares
during the third release period of the 2018 A-share Restricted Stock Incentive Plan (Phase I)''
considered and approved by the Board of Directors and the General Meeting of Shareholders of
the Company in the year of 2023 RMB3436710000 A-share restricted shares which met the
conditions for release from restricted sale were released from restricted sale and the capital surplus
of RMB12799265.10 corresponding to the restricted shares of the above incentive recipients was
transferred from "Other capital surplus" to "Share premium".
2. As described in Note V. 29 the Company repurchased restricted shares and the equity
Notes to the financial statements - Page 85FIYTA Precision Technology Co. Ltd.Notes to the Financial Statements
For the year ended 31 December 2023
premium was reduced by RMB14195451.00 accordingly.
3. Pursuant to the "Program on the Repurchase of Certain Domestically Listed Foreign Shares
(B Shares)" considered and approved at the Eleventh Meeting of the Tenth Session of the Board of
Directors and the General Meeting of Shareholders of the Company in 2023 the transaction costs
incurred by the Company for the repurchase of the Company's shares through the repurchase of
the special securities account amounted to RMB12356.55 which was offset against the equity
premium of RMB12356.55.
4. Pursuant to the Proposal on the Grant of Restricted Shares to the Incentive Recipients under
the Company's 2018 A-Share Restricted Stock Incentive Plan (Phase II) which was considered
and approved by the Board of Directors and the General Meeting of Shareholders of the Company.In 2023 the services obtained by the Company from the above incentive recipients were included
in the relevant costs or expenses and increased the other capital surplus by RMB1825092.95
accordingly.
5. Pursuant to the ''Proposal on the Failure to Achieve the Conditions for Release of Restricted
Shares during the Second Release Period of the 2018 A-Share Restricted Stock Incentive Plan
(Phase II) and the Repurchase and Cancellation of Certain Restricted Shares'' considered and
approved by the Board of Directors and the General Meeting of Shareholders of the Company in
the year 2023 2201130 A-share restricted shares held by 120 incentive recipients for whom the
conditions for release of restricted shares have not been reached were repurchased and cancelled.Eliminate the services of the above incentive recipients charged to the relevant costs or expenses
and reduce the other capital surplus by RMB5904091.45 accordingly.
6. The amount of income tax effect of the difference between the amount deducted before
income tax for the current year and the amount of related costs and expenses recognized during the
waiting period resulting from the difference between the fair price at the time of unlocking of
restricted shares and the grant price at the time of grant was adjusted to other capital surplus by
RMB1359195.74 accordingly.Note 31. Treasury shares
Item Opening balance Increase Decrease Closing balance
Share repurchase 64340669.42 64340669.42
Share based payment 50759806.16 36454943.35 14304862.81
Total 50759806.16 64340669.42 36454943.35 78645532.23
Notes to treasury shares:
1. In 2023 the Company repurchased an aggregate of 9355763 B shares of the Company
through the Shenzhen Stock Exchange by way of centralized bidding and paid a repurchase
amount of HK70401771.17 (excluding transaction costs) equivalent to RMB64340669.42 thus
increasing "Reduction of registered capital repurchase" by RMB64340669.42.Notes to the financial statements - Page 86FIYTA Precision Technology Co. Ltd.Notes to the Financial Statements
For the year ended 31 December 2023
2. As described in Note V. 29. 2 the Company repurchased and canceled the A-share restricted
shares for which the conditions for release from restriction on sale had not been met thereby
reducing the "Restricted share-based payments" by RMB15187797.00.
3. As described in Note V. 29. 1 the Company repurchased and canceled the A-share restricted
shares that had been granted but not yet released from restriction thereby reducing "Restricted
share-based payments" by RMB1415644.00; and reduced "Restricted share-based payments" by
RMB588620.00 in respect of the corresponding cash dividends.
4. As described in Note V. 30. 1 for those shares that meet the unlocking conditions for
restricted shares and do not need to be repurchased the corresponding repurchase obligations were
derecognized thus reducing "Restricted share-based payments" by RMB19262882.35.Notes to the financial statements - Page 87FIYTA Precision Technology Co. Ltd.Notes to the Financial Statements
For the year ended 31 December 2023
Note 32. Other Comprehensive income
Amount in current period
Less:
recorded in
Less: recorded Less:
OCI in Less: recorded in
in OCI in prior reserve of Attribute to
Opening prior period Less: OCI in prior
Item period and hedging Attribute to non-and Less: movements period and Closing balance balance Pre-tax amount transferred to transferred parent company controlling
transferred CIT of defied transferred to
profit or loss in to related after tax shareholders
to financial benefit plan retained earnings
current assets or after tax
assets at in current period
period liabilities
amortized
cost
I. Other
comprehensive
income items which
will not be
reclassified
subsequently to profit
or loss
II. Other
comprehensive
income items which
5739589.8913585746.0413585746.0419325335.93
may be reclassified
subsequently to profit
or loss
Including:translation
5739589.8913585746.0413585746.0419325335.93
difference
Total 5739589.89 13585746.04 13585746.04 19325335.93
Notes to the financial statements - Page 88FIYTA Precision Technology Co. Ltd.Notes to the Financial Statements
For the year ended 31 December 2023
Note 33. Specific reserve
Item Opening balance Increase Decrease Closing balance
Safety production fee 2012064.91 1537825.22 326732.07 3223158.06
Total 2012064.91 1537825.22 326732.07 3223158.06
Note 34. Surplus reserve
Item Opening balance Increase Decrease Closing balance
Statutory surplus reserve 213025507.50 213025507.50
Discretionary surplus
61984894.0061984894.00
reserve
Total 275010401.50 275010401.50
Notes to surplus reserve:
Note: According to the Company Law and Articles of Association the Company draws
statutory surplus reserve at 10% of net profit. If the statutory surplus reserve is over 50% of the
Company’s registered capital drawing of statutory surplus reserve will be stopped.The Company can draw discretionary surplus reserve after drawing statutory surplus reserve.If approved discretionary surplus reserve can be used to make up for losses in previous years or
increase share capital.Note 35. Undistributed profit
Item Current period Prior period
Undistributed profit at the end of prior year before
1479706638.531338444326.09
adjustments
Adjustments to undistributed profit at the
beginning of year (“+” for increase and “-“ fordecrease)
Undistributed profit at the beginning of year after
1479706638.531338444326.09
adjustment
Plus: Net profit attributable to the owner of the
333178102.37266681451.84
parent company for the year
Less: statutory surplus reserve drawn
Dividends payable to ordinary shares 103371355.14 125419139.40
Undistributed profit at the end of year 1709513385.76 1479706638.53
Note 36. Operating income and operating cost
1．Operating income and operating cost
Amount in current period Amount in prior period
Item
Revenue Cost Revenue Cost
Main business 4553706250.49 2904751241.51 4336586473.74 2738100529.23
Other business 15983752.50 712233.30 17510406.62 872261.88
Notes to the financial statements - Page 89FIYTA Precision Technology Co. Ltd.Notes to the Financial Statements
For the year ended 31 December 2023
Amount in current period Amount in prior period
Item
Revenue Cost Revenue Cost
Total 4569690002.99 2905463474.81 4354096880.36 2738972791.11
2．Revenue generated by contract
Types of contract Amount in current period Amount in prior period
I. Types of goods
Watch
4270245173.864044205847.75
business
Precision
133103042.03163114009.23
manufacturing
Other business 15916680.92 17510406.62
II. Categorized
based on timing
of goods
transfer
At a point of
4410670831.144212548175.21
time
During a
8594065.6712282088.39
period of time
Note: revenue generated by contract does not include lease income of RMB150425106.18
which is regulated under “CAS No.21 – Lease”.Note 37. Tax and surcharges
Item Amount in current period Amount in prior period
Consumption tax 12205585.22 10509059.81
Urban maintenance and
5188370.214483205.18
construction tax
Educational surcharge 3452657.63 2988250.62
Property tax 7512564.92 5824577.36
Stamp duty 3040109.98 3814124.17
Others 4794558.14 3180982.59
Total 36193846.10 30800199.73
Note 38. Selling and distribution expenses
Item Amount in current period Amount in prior period
Salary 364493305.57 390723066.47
Department store expense and rental 159738493.87 154977256.13
Market promotion expenses 146787677.11 114559488.13
Depreciation and amortization 187456893.25 210324656.21
Packaging expenses 10367129.63 8210424.75
Utilities and property management expenses 22673870.27 22115070.79
Shipping fees 5921929.02 5928120.89
Notes to the financial statements - Page 90FIYTA Precision Technology Co. Ltd.Notes to the Financial Statements
For the year ended 31 December 2023
Item Amount in current period Amount in prior period
Office expenses 6285406.47 5617713.76
Travel expenses 8415884.60 4533814.79
Entertainment expenses 4581476.42 3081324.66
Others 7287113.11 11761893.82
Total 924009179.32 931832830.40
Note 39. Administrative expenses
Item Amount in current period Amount in prior period
Salary 159074391.51 169831180.19
Depreciation and amortization 23462090.05 23584581.61
Travel expenses 4773457.90 1651207.39
Office expenses 3174249.82 3967189.58
Agents fees 1917258.68 1764355.96
Rental and utilities 1359636.27 941300.03
Entertainment expenses 1368967.18 764414.05
Vehicle and transportation expenses 1884805.22 1528304.66
Telecommunication expenses 368370.99 825712.63
Others 7976049.62 14156262.42
Total 205359277.24 219014508.52
Note 40. R&D expenses
Item Amount in current period Amount in prior period
Salary 43658293.35 47534889.46
Sample and material expenses 2219443.20 1964204.63
Molding expenses 2263.43 853056.11
Depreciation and amortization 4300190.56 4852325.18
Technical cooperation fee 2758347.16 217203.80
Others 4863706.38 5666906.43
Total 57802244.08 61088585.61
Note 41. Financial expenses
Item Amount in current period Amount in prior period
Interest expenses 12824222.06 16846749.14
Less: Interest income 5722586.39 3923999.48
Exchange gain or losses 1879443.15 -3053760.78
Bank charges 12488693.95 11319753.23
Total 21469772.77 21188742.11
Notes to the financial statements - Page 91FIYTA Precision Technology Co. Ltd.Notes to the Financial Statements
For the year ended 31 December 2023
Note 42. Other income
1．Details
Sources of other income Amount in current period Amount in prior period
Government subsidy 9105016.49 18648210.06
Commission on IIT payment 494598.35
VAT plus credit 1835758.94
Total 11435373.78 18648210.06
2．Government subsidy included in other income
The Company's government subsidy are detailed in Note VIII Government subsidy.2 for
government subsidy recognized in profit or loss and Note VIII.3 for Subsidy returned.Note 43. Investment gain
Item Amount in current period Amount in prior period
Gain from long-term equity investments
-5819479.603026481.59
accounted for using equity method
Total -5819479.60 3026481.59
Note 44. Credit impairment loss
Item Amount in current period Amount in prior period
Bad debt loss 6827575.82 4845379.45
Total 6827575.82 4845379.45
Note 45. Asset impairment loss
Item Amount in current period Amount in prior period
Inventory decline in value 571980.37 -37625482.96
Total 571980.37 -37625482.96
Note 46. Gains from assets disposal
Item Amount in current period Amount in prior period
Gains (losses) from assets disposal 527753.57 -203932.45
Gains (losses) from right-of-use
158115.00295857.51
assets disposal
Total 685868.57 91925.06
Note 47. Non-operating income
Amount included in
Amount in current
Item Amount in prior period non-recurring gains or
period
losses in current period
Payables cannot be paid 1346926.73 305066.79 1346926.73
Compensation 2215389.10 860904.01 2215389.10
Notes to the financial statements - Page 92FIYTA Precision Technology Co. Ltd.Notes to the Financial Statements
For the year ended 31 December 2023
Revenues from rights-based
938486.50938486.50
compensation
Others 269704.47 121231.28 269704.47
Total 4770506.80 1287202.08 4770506.80
Note 48. Non-operating expense
Amount included in
Amount in current Amount in prior non-recurring gains or
Item
period period losses in current
period
Donation 311464.98 78860.00 311464.98
Fine and penalty for late payment 6014.28 403084.07 6014.28
Payment for breach of agreement 37725.30 1412548.66 37725.30
Others 504565.54 456773.58 504565.54
Total 859770.10 2351266.31 859770.10
Note 49. CIT expenses
1．Details
Item Amount in current period Amount in prior period
Current tax expense for the year
88559245.7286356685.06
based on tax law and regulations
Changes in deferred tax
15266916.22-13916465.05
assets/liabilities
Total 103826161.94 72440220.01
2．Reconciliation between income tax expenses and accounting profit is as follows:
Item Amount in current period
Profits before tax 437004264.31
Income tax calculated based on statutory tax rate 109251066.08
Effect of different tax rates applied by subsidiaries -10206789.27
Adjustment to income tax of previous years 6187582.94
Effect of non-taxable income 1454869.90
Effect of non-deductible costs expenses and losses 781125.37
Effect of using the deductible temporary differences or deductible losses
-337571.86
for which no deferred tax asset was recognized in prior period
Effect of deductible temporary differences or deductible losses for which
no deferred tax asset was recognized this year
Effect of research and development expenses super deduction -4769518.22
Others 1465397.00
Income tax expenses 103826161.94
Note 50. Notes to cash flow statement
1. Cash received from other operating activities
Notes to the financial statements - Page 93FIYTA Precision Technology Co. Ltd.Notes to the Financial Statements
For the year ended 31 December 2023
Item Amount in current period Amount in prior period
Security deposit 7550296.24 15956047.24
Government subsidy 8796670.12 18151302.96
Promotion expenses 12561700.18 12201925.26
Interest income 5722586.39 3923999.48
Return of petty cash 7787782.02 8030966.63
Others 25760176.26 21392611.71
Total 68179211.21 79656853.28
2. Cash paid for other operating activities
Item Amount in current period Amount in prior period
Security deposit 11191285.76 24008323.15
Petty cash advanced to employee 22048433.11 11049894.11
Current period expenses 293728229.26 288360173.00
Others 60670140.56 617269.28
Total 387638088.69 324035659.54
3. Cash paid for other financing activities
Item Amount in current period Amount in prior period
Lease payment 114908744.94 124087402.37
Cash paid for re-purchase of shares 83148230.83 53390338.09
Total 198056975.77 177477740.46
Note 51. Supplement information to cash flow statement
1. Supplement to cash flow statement
Amount in current
Item Amount in prior period
period
1. Reconciliation of net profit/loss to cash flows from
operating activities：
Net profit 333178102.37 266681451.84
Add: Credit impairment loss -6827575.82 -4845379.45
Impairment for assets -571980.37 37625482.96
Depreciation of fixed assets、oil and gas assets and
41658377.4640524642.37
productive biological assets
Depreciation of right-of-use assets 103958386.94 110464700.15
Intangible asset amortization 3689183.21 5009348.81
Amortization of long-term deferred expenses 91039489.52 110435014.09
Loss on disposal of fixed assets intangible assets and
-685868.57-91925.06other long-term assets (“-“ for gain)Loss on scrap of fixed assets (“-“ for gain)Notes to the financial statements - Page 94FIYTA Precision Technology Co. Ltd.Notes to the Financial Statements
For the year ended 31 December 2023
Amount in current
Item Amount in prior period
periodLoss on changes of fair value (“-“ for gain)Financial expenses (“-“ for income) 10346099.61 16846749.14Investment loss (“-“ for gain) 5819479.60 -3026481.59Decrease in deferred tax assets (“-“ for increase) 15556840.48 -14551337.29Increase in deferred tax liabilities (“-“ for decrease) -289924.26 262330.92Decrease in inventories (“-“ for increase) 82605123.05 -92627165.17Decrease in operating receivables (“-“ for increase) 34507754.85 121164749.65Increase in operating payables (“-“ for decrease) -77781831.49 -117643404.85Others -3800168.60
Net cash flows from operating activities 632401487.98 476228776.52
2. Significant investment or financing activities not
involving cash:
Debts converted to capital
Convertible debts mature within one year
Added right-of-use assets in the current period
3．Net changes in cash and cash equivalents:
Cash at end of year 504629153.71 313738389.64
Less: cash at beginning of year 313738389.64 210254737.14
Plus: cash equivalents at end of year
Less: cash equivalents at beginning of year
Net increase in cash and cash equivalents 190890764.07 103483652.50
2. Total cash outflows related to leaseTotal cash outflows related to lease amounted to RMB114908744.94.（Prior period：RMB124087402.37）
3. Cash and cash equivalents
Item Closing balance Opening balance
I. Cash 504629153.71 313738389.64
Incl. Cash on hand 178996.87 173368.68
Bank deposit available for immediate payment 503187176.88 312433893.29
Other monetary funds available for immediate
1262979.961131127.67
payment
II. Cash equivalents
Including Bond investment due in three months
III. Cash and cash equivalents at the end of year 504629153.71 313738389.64
Notes to the financial statements - Page 95FIYTA Precision Technology Co. Ltd.Notes to the Financial Statements
For the year ended 31 December 2023
Item Closing balance Opening balance
Including Restricted cash and cash equivalents for the
1202601.86716733.44
Company and its subsidiaries
4. Restricted use but still presented as cash and cash equivalents
Item Amount for the period rationaleFunds in the accounts of the Company's subsidiaryFIYTA（HongKong）Ltd and its grandson Montres Chouriet SA which are kept
Cash at bank 1202601.86
outside the country and are subject to restrictions on repatriation of
funds but do not affect their daily use.Note 52. Monetary items denominated in foreign currency
1．Monetary items denominated in foreign currency
Balance denominated in
Balance translated in
Item foreign currency as at 31 Exchange rate
RMB as at 31 Dec 2023
Dec 2023
Monetary fund 4912660.52
USD 197793.98 7.0827 1400915.42
EUR 109603.02 7.8592 861392.06
HKD 1594744.82 0.9062 1445189.46
CHF 143158.27 8.4184 1205163.58
Accounts receivable 7180426.44
USD 496860.67 7.0827 3519115.06
HKD 3737843.78 0.9062 3387308.79
EUR 4824.46 7.8592 37916.39
CHF 28044.07 8.4184 236086.20
Other receivables 243119.93
HKD 119645.92 0.9062 108425.53
CHF 16000.00 8.4184 134694.40
Accounts payable 8936497.51
HKD 552191.52 0.9062 500407.00
CHF 1002101.41 8.4184 8436090.51
Other payables 810006.84
HKD 585023.91 0.9062 530160.37
CHF 33242.24 8.4184 279846.47
2．Overseas operational entity
For main business location and recording currency of important overseas operating entities refer to
Note III. 5.Notes to the financial statements - Page 96FIYTA Precision Technology Co. Ltd.Notes to the Financial Statements
For the year ended 31 December 2023
Note 53. Tenancy
The Company as a lessor:
The Company's right-of-use assets lease liabilities and total cash outflows related to leases are
detailed in Note 12 Note 27 and Note 51.The Company as a lessee is recognized in profit or loss as
follows:
Item Amount in current period Amount in prior period
Interest on lease liabilities 4583361.68 8442125.35
Short-term rental costs 784401.29 407454.71
Lease costs for low-value assets
Variable lease payments not included in the
85741239.5685618040.29
measurement of the lease liability
Income from sublease of right-to-use assets
Sale and leaseback transactions
Additional information on the Company as lessee is set forth below:
1. Lease activities
All lease of the Company is property lease including short-term lease and other leased that
recognized right-of-use asset and lease liabilities.
2. Short-term lease
Short-term leases are treated using simplified method. Short-term leases include lease term that
is shorter than 12 month and no renew options attached and leases that will be matured in 12 month
after first adoption of CAS 21 – Lease. Short-term lease expenses charged to profit or loss was RMB
784401.29.
3.Future potential cash outflows that does not included in lease liabilities
(1) Variable lease payment
The lessee leased a lot of retail shops which contains variable lease payment terms in
connection with sales.Many of the Company’s property lease contain variable lease payment terms in connection
with sales. In most circumstances the Company uses these terms to matches lease payment to shops
that can generate more cash flows lease payment. For standalone shops variable can reach 100% of
all lease payment at most and that the scope of percentage of sales used is quite large. In some
circumstances variable payment terms include annual bottom payment and upper limit.In 2023 the variable lease payment included in the current profit and loss is RMB
85741239.56.
(2) Option to renew
Notes to the financial statements - Page 97FIYTA Precision Technology Co. Ltd.Notes to the Financial Statements
For the year ended 31 December 2023
Many lease contracts entered by the Company has option to renew. The Company has already
estimated the option to renew reasonably when determining lease terms in measuring lease liabilities.
(1) Option to discontinue lease
Some of the lease contract entered by the Company has option to discontinue. The Company
has already estimated the option to discontinue reasonably when determining lease terms in
measuring lease liabilities.
(2) Residual value guarantee
The Company’s lease does not involve residual value guarantee.
(3) Lease that the lessee has already made commitment but not yet started
The Company does not have lease that has already made commitment but not yet started.Disclosure as a lessor:
1. Information relating to operating leases
Gains related to operating leases are shown below:
Including: not recognized
in lease receipts Income
Item Rental income
relating to variable lease
payments
Property 150425106.18
Total 150425106.18
2. Risk management strategy of retaining rights over lease assets
To reduce risks of lease the Company normally asks lessee to pay rental in advance and
collects 1-3 months rental as deposit.VI. Research and development expenditures
1.Presentation by nature of costs
Item Amount in current period Amount in prior period
Salary 43658293.35 47534889.46
Sample and material expenses 2219443.20 1964204.63
Molding expenses 2263.43 853056.11
Depreciation and amortization 4300190.56 4852325.18
Technical cooperation fee 2758347.16 217203.80
Others 4863706.38 5666906.43
Total 57802244.08 61088585.61
Notes to the financial statements - Page 98FIYTA Precision Technology Co. Ltd.Notes to the Financial Statements
For the year ended 31 December 2023
2.Development expenditure on R&D projects eligible for capitalization
Nil.VII. Interests in other entities
1.Equity in subsidiary
(1) Composition of enterprise group
Place of Shareholding ratio
Place of Nature of
Name registratio (%) Ways acquired
operation business
n Direct Indirect
Shenzhen Harmony World incorporated or
Shenzhen Shenzhen Commerce 100.00
Watch Center Co. Ltd. investment
incorporated or
FIYTA Sales Co. Ltd. Shenzhen Shenzhen Commerce 100.00
investment
Shenzhen FIYTA Precision incorporated or
Shenzhen Shenzhen Manufacturing 99.00 1.00
Technology Co. Ltd. investment
Shenzhen FIYTA
incorporated or
Technology Development Shenzhen Shenzhen Manufacturing 100.00
investment
Co. Ltd.Harmony World Watch incorporated or
Sanya Sanya Commerce 100.00
Center (Hainan) Co. Ltd. investment
Shenzhen Xunhang
incorporated or
Precision Technology Co. Shenzhen Shenzhen Manufacturing 100.00
investment
Ltd.Emile Choureit Timing incorporated or
Shenzhen Shenzhen Commerce 100.00
(Shenzhen) Ltd. investment
Business
Liaoning Hengdarui
combination
Commercial & Trade Co. Shenyang Shenyang Commerce 100.00
under common
Ltd.control
TEMPORAL (Shenzhen) incorporated or
Shenzhen Shenzhen Commerce 100.00
Co. Ltd. investment
Shenzhen Harmony E- incorporated or
Shenzhen Shenzhen Commerce 100.00
commerce Co. Ltd. investment
Hong Hong incorporated or
FIYTA (Hong Kong) Ltd. Commerce 100.00
Kong Kong investment
Business
combination
Montres Chouriet SA Swiss Swiss Manufacturing 100.00 not under
common
control
2. Equity in joint arrangement or associates
(1) Significant associates
Place of Shareholding ratio
Place of Nature of Accounting
Name registrati (%)
operation business treatment
on Direct Indirect
Commer
Shanghai Watch Co. Ltd. Shanghai Shanghai 25% Equity method
cial
(2) Principal financial information of significant associate company
Notes to the financial statements - Page 99FIYTA Precision Technology Co. Ltd.Notes to the Financial Statements
For the year ended 31 December 2023
Closing balance/Amount in Opening balance/Amount in
Item
current period prior period
Current assets 165796119.65 175890077.66
Non-current assets 16753785.07 21637323.67
Total assets 182549904.72 197527401.33
Current liabilities 60781571.60 44595566.75
Non-current liabilities 5885583.05
Total liabilities 60781571.60 50481149.80
Non-controlling interest
Equity attributable to parent company 121768333.12 147046251.53
Portion of net asset calculated based on
30442083.2836761562.88
shareholding
Adjustment matters 21420524.02 21420524.02
- Goodwill 21420524.02 21420524.02
- Unrealized profit or losses from
internal transaction
- Others
Carrying value of investment to associates 51862607.30 58182086.90
Fair value of equity investment that has
public quotation
Operating income 110947629.04 141379376.32
Net profit -23277918.41 12105926.36
Net profit from discontinued operation
Other comprehensive income
Total comprehensive income -23277918.41 12105926.36
Dividends received from associated
500000.00
company during the year
VIII.Government subsidy
1．Liability items involving government grants
Include in
non- Include in Offsetti Related to
Opening Additi operating other gains ng Closing
Item asset
balance on income in in current expense balance
current period or cost /income
period
Special fund for
Shenzhen
Asset related
industrial design 314539.36 4882.52 309656.84
industry
development
Funding project
for construction
of National
338833.33 293147.06 45686.27 Asset related
Enterprise
Technology
Center
Notes to the financial statements - Page 100FIYTA Precision Technology Co. Ltd.Notes to the Financial Statements
For the year ended 31 December 2023
Provincial
Specialized
Fund for 642554.11 45111.53 597442.58 Asset related
Industrial and
Information
Total 1295926.80 343141.11 952785.69
2．Government subsidy recognized in profit or loss
Amount in current Amount in prior Asset or
Item
period period income related
Subsidy to promote consumption 7920500.00 Income related
Trade and Distribution Industry Funding Projects 2579700.00 Income related
Quality and Branding Promotion Multiplication 1180000.00 Income related
Subsidy
Relief Policy Subsidy 1058150.00 Income related
Shenzhen Special Fund for Technology Research 1000000.00 1000000.00 Income related
Training subsidy 4900.00 953220.00 Income related
Subsidy for stabilizing job position 824116.60 819833.38 Income related
Subsidy to Foster High and New Technology
220000.00 700000.00 Income related
Enterprise
Commission on IIT payment 730811.84 Income related
Other subsidies 104887.83 624893.74 Income related
Shenzhen Standard Special Fund 660468.00 550694.00 Income related
Shenzhen E-commerce Innovation and 330000.00 Income related
Development Support Program Subsidy
Professional SpecializeUnique and New" SME 200000.00 Income related
Development Subsidy
State certified R&D center 293147.06 293147.06 Asset related
Provincial industry and information special
45111.53 128176.25 Asset related
subsidy
Special fund for Shenzhen industrial designing 4882.52 75583.79 Asset related
2019 Headquarters Economic Contribution -496500.00 Income related
Award
2022 Second Half of Nanshan District
Industry and Information Technology
1251400.00 Income related
Bureau Business Stable Growth Special
Funding Project Grant
Industrial Insurance Fund 17566.00 Income related
2023 Technology Innovation Project
Support Program and Manufacturing 1000000.00 Income related
Individual Champion Incentive
Subsidy to assist high quality development
900188.00 Income related
of fashion industry
Special Funds for Civil-Military
Integration and Funds for the Fifth Project 200000.00 Income related
Grant Scheme
Specialized Economic Development
100000.00 Income related
Funding Grants
High-tech Enterprise Recognition Reward
100000.00 Income related
Subsidy
Notes to the financial statements - Page 101FIYTA Precision Technology Co. Ltd.Notes to the Financial Statements
For the year ended 31 December 2023
Subsidies for Production Expansion and
Efficiency Incentives in the Third Quarter
70000.00 Income related
of Bureau of Industry and Information
Technology
Epidemic subsidies 12000.00 Income related
Employment subsidies 5382.00 Income related
Incentive subsidy for employers of
14920.77 Income related
persons with disabilities
Specialized funding in the field of
130468.00 Income related
Shenzhen standards
Ventilator and key components research
868178.18 Income related
and application project
VAT relief for key groups 179400.00 Income related
Funding for technological improvements 350000.00 Income related
Key projects for technology development 250000.00 Income related
Ministry of Industry and Information
300000.00 Income related
Technology-Joint security projects
Incentive payments from the Bureau of
Science Technology and Industry to
encourage the standardization and 200000.00 Income related
upgrading of micro and small enterprises
to above-scale enterprisesGovernment subsidies for《E-Commerce-2000.00 Income relatedMasters》
Total 9105016.49 18648210.06
3．Subsidy returned
Amount in Amount in prior
Item Type Reasons for return
current period periodRefund of government subsidies for《E-Income related 2000.00 Not qualifiedCommerce Masters》
Total 2000.00
IX. Risk disclosure related to financial instrument
The major financial instruments of the Company primarily include cash at bank and on hand
equity investments borrowings accounts receivable accounts payables and bond payables. The
Company is exposed to risks from various financial instruments in day-to-day operation mainly
including credit risk liquidity risk and market risk. The risks in connection with such financial
instruments and the risk management policies adopted by the Company to mitigate such risks are
summarized as follows:
The board of directors is responsible for planning and establishing the risk management
structure for the Company developing risk management policies and the related guidelines across
the Company and supervising the performance of risk management measures. The Company has
developed risk management policies to identify and analyse risks exposed by the Company. These
Notes to the financial statements - Page 102FIYTA Precision Technology Co. Ltd.Notes to the Financial Statements
For the year ended 31 December 2023
risk management policies have clear regulations over specific risks covering various aspects of
market risk credit risk and liquidity risk management. The Company will evaluate the market
environment and changes of the Company’s operating activities on a regular basis to decide whether
to update the risk management policies and systems. Risk management of the Company is carried
out by the Risk Management Committee based on the policies as approved by the board of directors.Risk Management Committee identifies evaluates and mitigates related risks by working closely
with other business divisions of the Company. Internal Audit Department of the Company will
review the risk management control and process regularly and submit the review results to Audit
Committee of the Company. The Company spreads the risks of financial instruments through
appropriate diversified investment and business portfolio and mitigates the risk of focusing on any
single industry specific regions or counterparties by way of formulating the corresponding policies
for risk management.
1. Credit risk
Credit risk refers to the risk of financial losses to the Company as a result of the failure of
performance of contractual obligations by the counterparties. The management has developed
proper credit policies and continuously monitors credit risk exposures.The Company has adopted the policy of transacting with creditworthy counterparties only. In
addition the Company evaluates the credit qualification of customers and sets up corresponding
credit term based on the financial status of customers the possibility of obtaining guarantees from
third parties credit records and other factors such as current market conditions. The Company
monitors the balances and recovery of bills and accounts receivable and contract assets on a
continual basis. As for bad credit customers the Company will use the written reminders shorten
the credit term or cancel the credit term to ensure that the Company is free from material credit
losses. In addition the Company reviews the recovery of financial assets on each balance sheet date
to ensure adequate expected credit loss provision is made for relevant financial assets.The Company’s other financial assets include currency funds and other receivables. The credit
risk relating to these financial assets arises from the default of counterparties but the maximum
exposure to credit risk is the carrying amount of each financial asset in the balance sheet. The
Company does not provide any other guarantee that may expose the Company to credit risk.The monetary funds held by the Company are mainly deposited with financial institutions such
as state-owned banks and other large and medium-sized commercial banks. The management
believes that these commercial banks have a higher reputation and assets so there is no major credit
risk and the Company would not have any significant losses caused by the default by these
institutions. The Company’s policy is to control the amount deposited with these famous financial
institutions based on their market reputation operating size and financial background to limit the
credit risk amount of any single financial institution.Notes to the financial statements - Page 103FIYTA Precision Technology Co. Ltd.Notes to the Financial Statements
For the year ended 31 December 2023
As a part of its credit risk asset management the Company assesses the credit loss of
receivables using aging. The Company’s receivable and other receivables involve large amount of
customers. Aging information can reflect the ability to repay and risk of bad debt of these customers.The Company determined expected loss rate by calculating historical bad debt rate for receivables
with different aging based on historical data and also taking forecast of future economic condition
into consideration such as GDP growth rate state currency policy etc... For long-term receivables
the Company assesses expected credit loss reasonably by considering settlement period contracted
payment terms debtor’s financial situation and the economic situation of the debtor’s industry.As at 31 December 2023 the carrying amount of related assets and corresponding ECL is as
follows:
Aging Carrying amount Provision
Bill receivable 18685052.55 416080.18
Accounts receivable 357533748.10 34390986.46
Other receivable 62073902.09 4348110.09
Total 438292702.74 39155176.73
As the Company’s customer base is large no material credit concentration risk.As at 31 December 2023 the balance of top 5 receivable accounts accounted for 21.42% of
total accounts receivables (2022: 32.76%) .
2. Liquidity risk
Liquidity risk refers to the risk of short of funds when the company performs its obligation of
cash payment or settlement by other financial assets. The Company’s subordinate member
companies are responsible for their respective cash flow projections. Based on the results thereof
the subordinate financial management department continually monitors its short-term and long-term
capital needs at the company level to ensure adequate cash reserves; in the meantime continually
monitors the compliance with loan agreements and secures undertakings for sufficient reserve funds
from major financial institutions to address its short-term and long-term capital needs. Besides the
Company mainly signs financing agreements with banks that have business transactions to provide
support to fulfill commercial bill obligation. As at 31 December 2023 the Company has financing
facilities from several banks amounting to RMB2375.95 million. Amongst RMB375.95 million
has already been used.As at 31 December 2023 the discounted contractual cash flows for financial liabilities and off-
balance sheet guarantee that presented in maturity are as follows:
Closing balance in ten thousands yuan
Item Over 3
Within 1 year 1 - 2 years 2 - 3 years Total
years
Short term loan 25018.78
Notes to the financial statements - Page 104FIYTA Precision Technology Co. Ltd.Notes to the Financial Statements
For the year ended 31 December 2023
Closing balance in ten thousands yuan
Item Over 3
Within 1 year 1 - 2 years 2 - 3 years Total
years
Bills payable
Accounts payable 17382.59
Other payables 12193.78
Total 54595.15
3. Market risk
(1) Exchange rate risk
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
As at 31 December 2023 the RMB equivalent of financial assets and financial liabilities
denominated in foreign currencies are as follows:
Closing balance
Item
HKD USD EUR CHF Total
Financial asset
denominated in 0.9062 7.0827 7.8592 8.4184
foreign currency:
Monetary fund 1445189.46 1400915.42 861392.06 1205163.58 4912660.52
Accounts receivable 3387308.79 3519115.06 37916.39 236086.20 7180426.44
Other receivables 108425.53 134694.40 243119.93
Subtotal 4940923.78 4920030.48 899308.45 1575944.18 12336206.89
Financial liabilities
denominated in
foreign currency:
Accounts payables 500407.00 8436090.51 8936497.51
Other payables 530160.37 279846.47 810006.84
Total 1030567.37 8715936.98 9746504.35
Sensitivity analysis
As at 31 December 2023 for financial assets and financial liabilities that denominated in foreign
currency if Renminbi appreciate or depreciate of 5% to foreign currency and other factors remain
unchanged the net profit will decrease or increase about RMB0.130 million(31 Dec 2022:RMB1.419
million) .Notes to the financial statements - Page 105FIYTA Precision Technology Co. Ltd.Notes to the Financial Statements
For the year ended 31 December 2023
(2) Interest rate risk
The interest rate risk of the Company mainly associates with bank borrowings bonds payable
etc. Floating rate financial liabilities expose the Company to cash-flow interest rate risk while fixed
rate financial liabilities expose the Company to fair-value interest rate risk. The Company
determines the comparative proportion of fixed rate contracts and floating rate contracts based on
the then market conditions.The interest rate risk of the Company mainly associates with bank borrowings bonds payable
etc. Floating rate financial liabilities expose the Company to cash-flow interest rate risk while fixed
rate financial liabilities expose the Company to fair-value interest rate risk. The Company
determines the comparative proportion of fixed rate contracts and floating rate contracts based on
the latest market conditions.Sensitivity analysis:
As at 31 December 2023 it is estimated that a general increase or decrease 50 basis points in
the borrowings with floating interest rates with all other variables held constant the Company’s net
profit and shareholder’s equity for the year will decrease or increase by approximately
RMB307300.00 (2022: RMB1200000.00) .The above sensitivity analysis assumes that interest rate changed on the balance sheet date and
applicable to all loans with floating interest rate terms.X. Fair value
1. Financial instruments measured at fair value
As at 31 December 2023 the Company does not have financial instruments measured at fair
value.
2. Status of financial assets and financial liabilities not measured at fair value
Financial assets and financial liabilities not measured at fair value include: accounts receivable
short-term loans accounts payable long-term loans 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.XI. Related party and related transaction
1. The parent company of the Company
Notes to the financial statements - Page 106FIYTA Precision Technology Co. Ltd.Notes to the Financial Statements
For the year ended 31 December 2023
Shareholdin Ratio of vote
Registered
g ratio of right of
capital
Registration parent parent
Name Type of business (in ten
place company to company to
thousand
the the
RMB)
Company % Company%
CATIC Shenzhen Shenzhen Commercial 116616.20 39.25 39.25
(4) Notes to the parent company
CATIC Shenzhen is a subsidiary that 100.00% held indirectly by AVIC International and AVIC
directly holds 100.00% of the equity of AVIC International.
(5) The ultimate controlling party of the Company is AVIC.
2. Refer to Note VI. 1 for information about the Company’s subsidiaries
3. Refer to Note VI. 2 for information about the Company’s material associates
4. Other related parties
Name of other related parties Relationship
Associate company of the
Shenzhen CATIC Property Management Limited (CATIC Property Management)
controlling shareholder
Rainbow Digital Science Co. Ltd. and its associated companies (Rainbow Company Controlled by the same party
Shennan Circuits Co. Ltd. and its associated companies (Shennan Circuits) Controlled by the same party
AVIC Huadong Photoelectric Co. Ltd.(AVIC Huadong Photoelectric) Controlled by the same party
AVIC Xi’an Flight Automatic Control Research Institute(AVIC Xi’an Flight Institute) C ontrolled by the same party
Shenzhen Grand Skylight Hotel Management Co. Ltd (Grand Skylight Hotel
Controlled by the same party
Management Company)
AVIC Securities Co. Ltd. (AVIC Securities Company) Controlled by the same party
AVIC Training Center Controlled by the same party
AVIC Finance Co. Ltd. (AVIC Finance Company) Controlled by the same party
Gongqingcheng CATIC Culture Investment Co. Ltd (Gongqingcheng CATIC
Controlled by the same party
Culture Investment Company)
Avic Jonhon Optronic Technology Co. Ltd.(AVIC Jonhon) Controlled by the same party
AVIC International Holdings (Zhuhai) Co. Ltd. (AVIC Zhuhai) Controlled by the same party
Guizhou HUAYANG Electronics Co. Ltd. Controlled by the same party
Zhuhai Pilot Composite Material Technology Co. Ltd. Controlled by the same party
Guangdong International Mansion Industrial Co. Ltd. (Guangdong International
Controlled by the same party
Mansion)
Shenzhen Zhonghang Technology Checking & Measuring Institute (Shenzhen
Controlled by the same party
ZHTCMI)
Shenyang Xinghua Aviation Electric Co. Ltd.（Shenyang Xinghua） Controlled by the same party
Shenzhen AVIC Changtai Investment Development Co. Ltd.（Avic Changtai） Controlled by the same party
AVIC China Aviation Futures Co. Ltd.（AVIC Futures） Controlled by the same party
Anhui AVIC Display Technology Co. Ltd（Anhui AVIC） Controlled by the same partyShenzhen Lingzhi Digital Technology Co. Ltd.（Shenzhen Lingzhi Digital Controlled by the same partyNotes to the financial statements - Page 107FIYTA Precision Technology Co. Ltd.Notes to the Financial Statements
For the year ended 31 December 2023
Name of other related parties RelationshipTechnology）
Shenzhen Aero-Fasteners MFG Co. Ltd.（Shenzhen Aero-Fasteners） Controlled by the same party
Castic-SMP Machinery Corp. Ltd.（Castic-SMP Machinery） Controlled by the same party
Company directors managers CFO and secretary of the board Key management member
5. Related party transactions
(1) Related transaction between subsidiaries and between parent company and
subsidiaries which are in the scope of consolidation have already been offset.
(2) Purchase good and receiving service
Related parties Related transaction Amount in current Amount in prior
content period period
CATIC Property Management Property management 11593446.00 11834156.05
Department store
Rainbow Company expenses/ Commodity 13276756.38 4184883.88
purchase
AVIC Jonhon Purchase of goods 242771.36 238755.07
Gongqingcheng CATIC Culture Departmental store
28667.0925733.73
Investment Company expense
Grand Skylight Hotel
Purchase of goods 3855.65
Management Company
Guangdong International
Property management 18157.71
Mansion
Shenzhen ZHTCM Accept labour 6590.00
AVIC Xi’an Flight Automatic
Control Research Institute(AVIC Accept labour 179245.28
Xi’an Flight Institute)
Total 25141640.83 16491377.37
Notes: All amount listed above exclude tax
(3) Sale of goods and providing services
Nature of Amount in current Amount in prior
Related party
transaction period period
Gongqingcheng CATIC Culture
Sale of product 293786.47 310404.70
Investment Company
Sale of material and
Shennan Circuit 460.80 335070.20
providing service
AVIC Training Center Others 2725.66 2453.10
Rainbow Company Product and service 58044173.59 53197052.19
AVIC International Sale of product 7710.59
AVIC Jonhon Sale of product 500559.59 1252054.56
AVIC Zhuhai Sale of product 8800.00
Share of Utilities
CATIC Property Management 3363663.82 3298502.35
and management fee
Guizhou HUAYANG Electronics Sale of product 18814.16 87263.71
Notes to the financial statements - Page 108FIYTA Precision Technology Co. Ltd.Notes to the Financial Statements
For the year ended 31 December 2023
Co. Ltd.AVIC Huadong
Sale of product 21238.94
PHOTOELECTRIC
Zhuhai Pilot Composite Material
Sale of product 865256.63 1805929.20
Technology Co. Ltd.Shenzhen Aero-Fasteners Sale of product 227747.79
Castic-SMP Machinery Sale of product 3960.18
Shenyang Xinghua Sale of product 464331.51
Anhui AVIC Sale of product 75504.42
Total 63868695.21 60318768.95
Notes: All amount listed above exclude tax
(4) Related party lease
1) The Company as lessor
Recognized rental Recognized rental income
Lessee Type of leased assets
income in current year in prior year
CATIC Property Management Property 1811657.16 4947314.30
AVIC Securities Company Property 1411885.68 1411885.68
Rainbow Company Property 606792.94 437897.82
Total 3830335.78 6797097.80
2) The Company as lessee
Variable lease payments that
Interest payment of lease
are not included in lease Rental payment Addition of right-of-use asset
liabilities
Lessor Type liabilities
Current Current Current
Prior period Prior period Current period Prior period Prior period
period period period
Guangdong
International
Mansion Property 40527.84 3572.58 51030.81
Industrial Co.Ltd.CATIC Property
Property 59899.04 60513.53 501788.87 811476.76 6776.94 29337.67 489781.90 138708.90
Management
Rainbow
Property 323382.81 417268.91 9642.03 14378.80 247505.55
Company
Total 59899.04 60513.53 825171.68 1269273.51 16418.97 47289.05 489781.90 437245.26
(5) Related party fund lending and borrowing
Nil.
(6) Remuneration to key management
Item Amount in current period Amount in prior period
Remuneration to key management 14232500.00 15148600.00
Total 14232500.00 15148600.00
(7) Other related transactions
The year-end balance of the Company’s cash that is deposited with AVIC Finance Company is
RMB467743798.76. Interests received from the deposit during the year were RMB342896.12.Notes to the financial statements - Page 109FIYTA Precision Technology Co. Ltd.Notes to the Financial Statements
For the year ended 31 December 2023
(8) Receivables from and payables to related parties
1) Receivables from related parties
Closing balance Opening balance
Item Related party Carrying Bad debt Carrying Bad debt
amount provision amount provision
Monetary
fund
AVIC Finance Company 467743798.76 271327031.83
Accounts
receivable
Gongqingcheng CATIC
Culture Investment 22684.75 832.29 27297.28 1364.88
Company
Shennan Circuit 7255.14 544.14
Rainbow Company 5973322.25 248095.43 3808470.31 219873.20
AVIC Jonhon 202712.86 12162.77 649797.16 48734.79
CATIC Property
183123.059156.15101672.005083.60
Management
Guizhou HUAYANG
21260.001275.6059528.004464.60
Electronics Co. Ltd.Zhuhai Pilot Composite
Material Technology Co. 1412045.00 105903.38
Ltd.AVIC Training Center 2772.00 207.90
Shenyang Xinghua 292370.58 17542.23
Anhui AVIC 15800.00 790.00
Bill
receivable
AVIC Jonhon 262429.22
Zhuhai Pilot Composite
Material Technology Co. 892185.99 44609.30
Ltd.Anhui AVIC 192339.42
Other
receivables
Gongqingcheng CATIC
Culture Investment 6500.00 325.00 6500.00 325.00
Company
Rainbow Company 143990.00 7199.50 123000.00 5300.00
AVIC 834903.00 43170.15 1055557.43 52777.87
Notes to the financial statements - Page 110FIYTA Precision Technology Co. Ltd.Notes to the Financial Statements
For the year ended 31 December 2023
2）Payables to related parties
Item Related party Closing balance Opening balance
Accounts
payable
CATIC Property Management 32992.35 32992.35
AVIC Jonhon 391.96 19411.27
Other
payables:
Rainbow Company 1935611.93 108186.52
CATIC Property Management 1023487.21 2590116.05
AVIC Securities Company 247080.00 247080.00
Avic Changtai 4064.81
Advance
received
Rainbow Company 162324.03
AVIC Securities Company 123540.00
AVIC Futures 9435.48
XII. Share-based payments
1.General information about share-based payments
(1) Equity instrument
Category
Granted during Exercised during Voided in current
of grant Unlocked in current period
current period current period period
recipients
Quantity Amount Quantity Amount Quantity Amount Quantity Amount
Some of
the
company's
directors 3436710.00 3436710.00
supervisors
and core
cadres
合计3436710.003436710.00
(2) Stock options or other equity instruments issued and outstanding at the end of the
period
Nil.
2.Equity settled share-based payment
Method of determining fair value of equity
Close price of share on grant date
instrument on grant date
Evidence to determine the number of Term of employee service status of target completion
exercisable equity instrument and personal performance assessment
Notes to the financial statements - Page 111FIYTA Precision Technology Co. Ltd.Notes to the Financial Statements
For the year ended 31 December 2023
Reasons for significant difference between
current period estimation and prior period Nil
estimation
Accumulated amount charged to capital reserve
27909283.55
for equity settled share-based payment
Total expenses for equity settled share-based
-4078998.50
payment recognized in current period
3. Expenses for share-based payment recognized in current period
Expenses for equity
Expenses for cash settled share-based
Category of grant recipients settled share-based
payment
payment
Some of the company's
directors supervisors and core -4078998.50
cadres
XIII. Commitment and contingencies
1. Significant commitments
(1) Lease contract that already signed or prepared to fulfil and its financial effect
Refer to Note V.53 for details.
2. Contingencies on balance sheet date
The Company does not have material contingent events that need to be disclosed
XIV. Post balance sheet date events
1. Profit distribution
Cash dividend of RMB4.00 (tax inclusive) for
Profit distributions or dividends proposed
every 10 shares held
2.Other events after the balance sheet date
(1) Financing and guarantee after the balance sheet date
1) On 12 March 2024 pursuant to approval by the 18th meeting of the 10th Board of directors the
Company proposed to apply for financing facility of no more than RMB1200 million by means of credit
pledge and mortgage in 2024. The resolution is pending for approval by the shareholder’s meeting.
2) On 12 March 2024 pursuant to approval by the 18th meeting of the 10th Board of directors the
Company proposed to provide guarantee for the Company’s wholly-owned subsidiary to borrow from
banks of no more than RMB600 million in 2024. The credit line is included in the actual usage limit of
RMB1200 million mentioned above. The resolution is waiting approval from the shareholder’s meeting.
(2) Others
As at 14 March 2024 the Company does not have other post-balance sheet events that need to
Notes to the financial statements - Page 112FIYTA Precision Technology Co. Ltd.Notes to the Financial Statements
For the year ended 31 December 2023
be disclosed.XV. Other material information
1. Segments
Operating segments of the Company are identified on the basis of internal organization
structure management requirements and internal reporting system. An operating segment represents
a component of the Company that satisfied the following criteria simultaneously:
(1) Its business activities are engaged to earn revenue and incur expenses;
(2) Its operating results are regularly reviewed by the Company’s management to make
decisions on resources allocation and performance assessment;
(3) Its financial conditions operating results cash flow and related accounting information are
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:
(1) The segment income of the operating segment accounts for 10.00% or more of total income
of all segments;
(2) 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.
2. Other material events
As at 31 December 2023 the Company does not have other significant matters that require to
disclose.XVI. Notes to the parent company’s financial statement
Note 1. Accounts receivables
1. Presented by aging
Aging Closing balance Opening balance
Within 1 year 1875782.07 635132.16
Over 1 year 23346.03
Subtotal 1899128.10 635132.16
Less: bad debt provision 76211.49 31916.13
Total 1822916.61 603216.03
2. Presentation by method of providing bad debt
Notes to the financial statements - Page 113FIYTA Precision Technology Co. Ltd.Notes to the Financial Statements
For the year ended 31 December 2023
Closing balance
Category Carrying amount Bad debt provision
Percentage ECL rate Book value
Amount Amount
(%)(%)
Accounts receivable that
provided expected credit
losses on single basis
Accounts receivable that
provided expected credit 1899128.10 100.00 76211.49 4.01 1822916.61
losses on portfolio basis`
Including: Receivable from
1898159.0299.9576211.494.021821947.53
other customers
Including: Related party in
969.080.05969.08
scope of consolidation
Total 1899128.10 100.00 76211.49 1822916.61
Continued
Opening balance
Category Carrying amount Bad debt provision
Percentage ECL rate Book value
Amount Amount
(%)(%)
Accounts receivable that
provided expected credit
losses on single basis
Accounts receivable that
provided expected credit 635132.16 100.00 31916.13 5.03 603216.03
losses on portfolio basis`
Including: Receivable from
635132.16100.0031916.135.03603216.03
other customers
Including: Related party in
scope of consolidation
Total 635132.16 100.00 31916.13 603216.03
3. In the portfolio accounts receivable with expected credit loss provided based on credit
risk characteristic portfolio
(1) Portfolio of receivable from other customer
Closing balance
Aging
Carrying amount Bad debt provision ECL rate (%)
Within 1 year 1874812.99 73876.89 3.94
1 - 2 years 23346.03 2334.60 10.00
Total 1898159.02 76211.49 4.02
4. Movements of provision during the period
Movements during the period
Opening Closing
Category
balance Recovered Other Accrual Written-off balance
or reversed movements
Accounts
receivable that
provided expected 85000.00 85000.00
credit losses on
single basis
Notes to the financial statements - Page 114FIYTA Precision Technology Co. Ltd.Notes to the Financial Statements
For the year ended 31 December 2023
Movements during the period
Opening Closing
Category
balance Recovered Other Accrual Written-off balance
or reversed movements
Accounts
receivable that
provided expected 31916.13 44295.36 76211.49
credit losses on
portfolio basis`
Including:
Receivable from 31916.13 44295.36 76211.49
other customers
Total 31916.13 129295.36 85000.00 76211.49
5. No actual write-off of accounts receivable during the current period.
6. Top 5 receivable accounts
Proportion in
total closing
Name Closing balance balance of Bad debt provision
accounts
receivable (%)
Top 5 receivables accounts in total 1301233.17 68.52 66197.12
Total 1301233.17 68.52 66197.12
Note 2. Other receivables
1．Presentation of other receivables by aging
Aging Closing balance Opening balance
Within 1 year 614472373.93 839808164.17
1 - 2 years 81857231.39
2- 3 years
Over 3 years 40050.00 40050.00
Subtotal 696369655.32 839848214.17
Less: bad debt provision 41235.47 65671.10
Total 696328419.85 839782543.07
2．Presented by nature
Nature Closing balance Opening balance
Related party in scope of
696041965.52839174096.87
consolidation
Security deposit 49581.90 537615.90
Petty cash 24542.88
Others 278107.90 111958.52
Total 696369655.32 839848214.17
Less: bad debt provision 41235.47 65671.10
Notes to the financial statements - Page 115FIYTA Precision Technology Co. Ltd.Notes to the Financial Statements
For the year ended 31 December 2023
Nature Closing balance Opening balance
Total 696328419.85 839782543.07
3．Presented according to three stages of financial assets impairment
Closing balance Opening balance
Item Carrying Bad debt Bad debt
Book value Carrying amount Book value
amount provision provision
First stage 696369655.32 41235.47 696328419.85 839848214.17 65671.10 839782543.07
Second stage
Third stage
Total 696369655.32 41235.47 696328419.85 839848214.17 65671.10 839782543.07
4．Presented by bad debt provision method
Closing balance
Category Carrying amount Bad debt provision Book value
Percentage ECL rate
Amount Amount
(%)(%)
Other receivables that provided expected
credit losses on single basis
Other receivables that provided expected
696369655.32100.0041235.470.01696328419.85
credit losses on portfolio basis
Including: Security deposit portfolio 49581.90 0.01 40526.60 81.74 9055.30
Petty cash portfolio
Social security payment on-behalf
263930.390.04263930.39
portfolio
Receivables from related parties
696041965.5299.95696041965.52
within scope of consolidation
Portfolio of others 14177.51 708.87 5.00 13468.64
Total 696369655.32 100.00 41235.47 696328419.85
Continued
Opening balance
Category Carrying amount Bad debt provision
Percentage ECL rate Book value
Amount Amount
(%)(%)
Other receivables that provided expected
credit losses on single basis
Other receivables that provided expected
839848214.17100.0065671.100.01839782543.07
credit losses on portfolio basis
Including: Security deposit portfolio 537615.90 0.06 64928.30 12.08 472687.60
Petty cash portfolio 24542.88 0.01 24542.88
Social security payment on-behalf
97102.570.0197102.57
portfolio
Receivables from related parties
839174096.8799.92839174096.87
within scope of consolidation
Portfolio of others 14855.95 0.00 742.80 5.00 14113.15
Notes to the financial statements - Page 116FIYTA Precision Technology Co. Ltd.Notes to the Financial Statements
For the year ended 31 December 2023
Opening balance
Category Carrying amount Bad debt provision
Percentage ECL rate Book value
Amount Amount
(%)(%)
Total 839848214.17 100.00 65671.10 0.01 839782543.07
5．In the portfolio other receivables with expected credit loss provided based on credit
risk characteristic portfolio
(1) Security deposit portfolio
Closing balance
Aging
Carrying amount Bad debt provision ECL rate (%)
Within 1 year
1 - 2 years 9531.90 476.60 5.00
2- 3 years
Over 3 years 40050.00 40050.00 100.00
Total 49581.90 40526.60
(2) Social security payment on-behalf portfolio
Closing balance
Aging
Carrying amount Bad debt provision ECL rate (%)
Within 1 year 263930.39
Total 263930.39
(3) Receivables from related parties within scope of consolidation
Closing balance
Aging
Carrying amount Bad debt provision ECL rate (%)
Within 1 year 696041965.52
Total 696041965.52
(4) Portfolio of others
Closing balance
Aging
Carrying amount Bad debt provision ECL rate (%)
Within 1 year 14177.51 708.87 5.00
Total 14177.51 708.87 5.00
6．Bad debt provision status
Notes to the financial statements - Page 117FIYTA Precision Technology Co. Ltd.Notes to the Financial Statements
For the year ended 31 December 2023
First stage Second stage Third stage
Lifetime expected Lifetime expected
Bad debt provision Expected credit credit losses (no credit losses (credit Total
losses over the
credit impairment impairment
next 12 months
occurred) occurred)
Opening balance 65671.10 65671.10
Opening balance
movements in current
period
—Transfer into the
second stage
—Transfer into the
third stage
—Reverse back to
the second stage
—Reverse back to
the first stage
Accrual during the
period
Reversed during the
-24435.63-24435.63
period
Recovered during the
period
Written-off during the
period
Other movements
Closing balance 41235.47 41235.47
7．No other receivables were written-off during the period.
8．Top 5 other receivable accounts
Proportion to
closing balance of Bad debt provision
Name Closing balance
other receivables Closing balance
(%)
Top 5 other receivables in total 696041965.52 99.95
Total 696041965.52 99.95
Note 3. Long-term equity investment
Closing balance Opening balance
Nature
Carrying amount Provision Book value Carrying amount Provision Book value
Investment in
1581179108.811581179108.811494128399.601494128399.60
subsidiaries
Investment in
51862607.3051862607.3058182086.9058182086.90
associates
Total 1633041716.11 1633041716.11 1552310486.50 1552310486.50
1．Investment in subsidiaries
Notes to the financial statements - Page 118FIYTA Precision Technology Co. Ltd.Notes to the Financial Statements
For the year ended 31 December 2023
Provisio
Closing
n
Addition/new balance
Opening Closing accrued
Investee investment Withdrawn of
balance balance in
provisio
current
n
period
Shenzhen Harmony World
610354397.341058906.51609295490.83
Watch Center Co.Shenzhen Harmony E-
11684484.3911684484.39
commerce Co. Ltd.Shenzhen FIYTA Precision
102482069.7680000000.00437608.56182044461.20
Technology Co. Ltd.Shenzhen FIYTA Technology
51224974.98162083.3151062891.67
Development Co. Ltd.FIYTA (Hong Kong) Ltd. 137737520.00 137737520.00
TEMPORAL (Shenzhen) Co.
5000000.005000000.00
Ltd.FIYTA Sales Co. Ltd. 458083251.89 1090795.72 456992456.17
Liaoning Hengdarui
Commercial & Trade Co. 36867843.96 36867843.96
Ltd.Emile Choureit Timing
80693857.28199896.6980493960.59
(Shenzhen) Ltd.HARMONY World Watch
10000000.0010000000.00
Center(Hainan) Co. Ltd.Total 1494128399.60 90000000.00 2949290.79 1581179108.81
2．Investment in associates
Movements in current period
Investment gain
Investee Opening balance Addition/new recognized Adjustment to
investment Withdrawn
under equity OCI
method
Associates
Shanghai Watch 58182086.90 -5819479.60
Continued
Movements in current period
Cash dividends Closing
Investee Impairment Other equity declared or Closing balance balance of
provision Others
movements distribution of provision
accrual
profit
Associates
Shanghai Watch -500000.00 51862607.30
Note 4. Operating income and operating cost
Amount in current period Amount in prior period
Item
Revenue Cost Revenue Cost
Main business 177350230.18 49729440.87 148557095.50 41765441.70
Other business 3524696.56 6727705.55
Notes to the financial statements - Page 119FIYTA Precision Technology Co. Ltd.Notes to the Financial Statements
For the year ended 31 December 2023
Amount in current period Amount in prior period
Item
Revenue Cost Revenue Cost
Total 180874926.74 49729440.87 155284801.05 41765441.70
Note 5. Investment gain
Amount in current
Item Amount in prior period
period
Gain from long-term equity investments accounted for
-5819479.603026481.59
using equity method
Gain from long-term equity investments accounted for
198000000.00240595696.70
using cost method
Total 192180520.40 243622178.29
XVII. Supplementary information
1. Details of non-recurring gain or loss for the year
Item Amount Note
Disposal gain or loss of non-current assets，including elimination of
685868.57
provision for impairment of assets
Government grants included in current profit or loss (except for the fixed
or quantitative government grants enjoyed in a consecutive way which
8665506.85
closely related to the enterprise businesses and according to nation
policies)
Except for effective hedging business related to normal operating
business profit and loss from changes in fair value incurred in financial
assets and financial liabilities and the investment gain from disposal of
financial assets financial liabilities and available-for-sale financial assets
Charges for the possessions of funds collected from non-monetary
enterprises
Profit and loss from entrusting others to invest or manage assets
Asset impairment provision accrued due to force majeure such as natural
disasters
Impairment provision reversal of accounts receivable under standalone
7570975.54
impairment test
Gain from investment in subsidiaries joint venture and cooperative
enterprises when cost of investment is less than the profit incurred in
identifiable net asset fair value of invested unit when investment
Current net profit and loss of subsidiaries from business combination
under common control from the opening period to combination date
Profit and loss of non-monetary assets exchange
Profit and loss of debt restructuring
Enterprise restructuring expenses such as expenses for arranging
employees integrating cost
One-time effect on current period's profit or loss due to adjustments in
tax accounting and other laws and regulations
Overridden approval or without official approval document or incidental
tax return or exemption
For cash-settled share-based payments gains and losses arising from
changes in the fair value of employee compensation payable after the date
of exercise of options
Profit and loss incurred in fair value change of investment property
subsequently measured in fair value mode
Profit and loss over fair value part accrued in transactions of unreasonable
transaction price
Profit and loss incurred contingent matters unrelated to normal operating
business
Notes to the financial statements - Page 120FIYTA Precision Technology Co. Ltd.Notes to the Financial Statements
For the year ended 31 December 2023
Item Amount Note
Income from trustee fee obtained by trusting operation
Other non-operating income and expenses other than the above items 3910736.70
Profit and loss items pursuant to the definition of non-recurring profit and
loss
Less：Effect of income tax of non-recurring profit or loss 4461193.42
Effect of non-recurring profit or losses attributable to minority
shareholders (after tax)
Total 16371894.24
2. Return on Equity (ROE) and Earnings per share (EPS)
EPS
Profit of the reporting period Weighted average ROE %
Basic EPS Diluted EPS
Net profit attributable to ordinary
10.280.80820.8075
shareholders of the Company
Net profit attributable to ordinary
shareholders of the Company after 9.77 0.7685 0.7678
deducting non-recurring profit or loss
FIYTA Precision Technology Co. Ltd.(Official Stamp)
12 March 2024
Notes to the financial statements - Page 121
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