Auditor’s Report
FIYTA Precision Technology Co., Ltd.
RSMSZ[2026]NO.350Z0003
RSM CHINA CPA LLP
CHINA·BEIJING
If there is any conflict of meaning between the Chinese and English versions, the Chinese
version will prevail
Contents
Page
容诚会计师事务所（特殊普通合伙）
总所：北京市西城区阜成门外大街 22 号
TEL:010-6600 1391 FAX:010-6600 1392
E-mail:bj@rsmchina.com.cn
https://www.rsm.global/china/
(English Translation for Reference Only)
Auditor’s Report
RSMSZ[2026]NO.350Z0003
To the Shareholders of FIYTA Precision Technology Co., Ltd.，
Opinion
We have audited the financial statements of FIYTA Precision Technology Co., Ltd.
(hereafter referred to as “the Company”), which comprises the consolidated and the
parent company’s statement of financial position as at 31 December 2025, the
consolidated and the parent company’s statement of profit or loss and other
comprehensive income, the consolidated and the parent company’s statement of cash
flows, the consolidated and the parent company’s statement of changes in equity for the
year then ended, and the notes to the financial statements.
In our opinion, the accompanying the Company’s financial statements present fairly, in
all material respects, the consolidated and the company’s financial position as at 31
December 2025, and of their financial performance and cash flows for the year then
ended in accordance with Accounting Standards for Business Enterprises.
Basis for Opinion
We conducted our audit in accordance with Chinese Standards on Auditing (CSAs). Our
responsibilities under those standards are further described in the Auditor’s
Responsibilities for the Audit of the Financial Statements section of our report. In
accordance with the Code of Ethics for Professional Accountants and the Code of
Independence for Professional Accountants of the Chinese Institute of Certified Public
Accountants, we are independent of the Company, have complied with the provisions of
the independence standards applicable to audits of financial statements of public interest
entities, and have fulfilled our other ethical responsibilities. We believe that the audit
evidence we obtained is sufficient and appropriate to provide a basis for our opinion.
Key Audit Matters
Key audit matters are those matters that, in our professional judgment, were of the most
significance in our audit of the financial statements of the current period. These matters
were addressed in the context of our audit of the financial statements as a whole, and in
forming our opinion thereon, and we do not provide a separate opinion on these matters.
(I) Existence and Net Realizable Value of Inventory
For the details, please refer to Note 3.13 and Note 5.6 of the financial statements.
As stated in Note 5.6, as of 31 December 2025, the carrying amount of the Company's
inventory was RMB 1,830.9665 million, with an inventory write-down provision of
RMB 102.9841 million, resulting in a net inventory value of RMB 1,727.9824 million,
accounting for 46.28% of total assets. The Company's main business involves selling
FIYTA brand watches and other agency-branded watches, with year-end inventory
primarily consisting of finished watches and watch components. Given the small size
and high unit value of branded watches and the widely dispersed inventory across
central warehouses, regional warehouses, and retail stores, there is a heightened risk
related to inventory existence and impairment.
As of the balance sheet date, the Company's management is required to determine the
net realizable value (NRV) of inventory, and any excess of cost over NRV should be
written down accordingly. The determination of NRV involves significant management
estimates regarding selling prices, costs to completion, selling expenses, and relevant
taxes. Due to the materiality of the inventory balance and the significant accounting
estimates and judgments involved in the impairment provision, we have identified the
existence of inventory and the determination of its NRV as a key audit matter.
The audit procedures we performed in relation to existence and net realizable value of
inventory:
(1) Understanding, evaluating, and testing the design and operating effectiveness of
internal controls related to procurement and payment, production and warehousing, and
inventory write-down provisions;
(2) Utilizing expert work to conduct IT audits on the information system to evaluate the
authenticity and accuracy of business data related to financial reporting;
(3) Performing inventory counts at selected warehouses and retail stores to verify the
existence and condition of year-end inventory;
(4) Selecting samples of significant purchases during the reporting period and tracing
them to purchase contracts, invoices, purchase requisitions, and warehouse receipts;
(5) Sending confirmation requests to selected suppliers to verify transaction amounts
and balances to confirm procurement details;
(6) Reviewing the Company’s inventory impairment policy and methodology to assess
its reasonableness, obtaining management’s inventory impairment calculation, and
evaluating key assumptions such as estimated selling prices, costs to completion, selling
expenses, and related taxes, along with performing recalculations;
(II) Revenue Recognition
For the details, please refer to Note 3.27 and Note 5.33 of the financial statements.
As stated in Note 5.33 to the financial statements, the main operating revenue of the
Company for the current year was RMB 3490.3203 million, representing a 11.16%
decrease compared to the previous year. The Company's main operating revenue is
primarily derived from the sales of self-owned and agency-brand watches.
Since revenue is one of the Company's key performance indicators, there is an inherent
risk that revenue may be recognized in the incorrect period or manipulated to meet
specific targets or expectations. Therefore, we have identified the revenue recognition of
the Company as a key audit matter.
The audit procedures we performed in relation to revenue recognition:
(1) Understanding, evaluating, and testing the design and operating effectiveness of
internal controls related to revenue recognition;
(2) Utilizing expert work to conduct IT audits on the information system, evaluating the
authenticity and accuracy of business data related to financial reporting;
(3) Obtaining and reviewing accounting policies related to revenue recognition, and
assessing whether the timing of control transfer, transaction price measurement, and
special transaction accounting treatment comply with the requirements of accounting
standards;
(4) Selecting samples to examine supporting documents related to revenue recognition,
including sales contracts, sales invoices, mall reconciliation statements, customer
receipt records, and logistics documents;
(5) Performing audit procedures on accounts receivable by selecting samples for
confirmation of transaction amounts and balances with customers, as well as verifying
subsequent collections;
(6) Selecting samples of sales revenue recognized before and after the balance sheet
date to review sales contracts, sales invoices, mall reconciliation statements, customer
receipt records, and logistics documents to evaluate whether revenue is recognized in
the appropriate accounting period.
Other information
Management of the Company is responsible for the other information. The other
information comprises the information included in the Annual Report of the Company
for the year of 2025, but does not include the financial statements and our auditor’s
report thereon.
Our opinion on the financial statements does not cover the other information and we do
not express any form of assurance conclusion thereon.
In connection with our audit of the financial statements, our responsibility is to read the
other information and, in doing so, consider whether the other information is materially
inconsistent with the financial statements or our knowledge obtained in the audit or
otherwise appears to be materially misstated.
If, based on the work we have performed, we conclude that there is a material
misstatement of this other information, we are required to report that fact. We have
nothing to report in this regard.
Responsibilities of Management and Those Charged with Governance for the
Financial Statements
Management of the Company is responsible for the preparation and fair presentation of
the financial statements in accordance with Accounting Standards of Business
Enterprises, and for the design, implementation and maintenance of such internal
control as management determines is necessary to enable the preparation of financial
statements that are free from material misstatement, whether due to fraud or error.
In preparing the financial statements, management is responsible for assessing the
Company’s ability to continue as a going concern, disclosing, as applicable, matters
related to going concern and using the going concern basis of accounting unless
management either intends to liquidate the Company or to cease operations, or have no
realistic alternative but to do so.
Those charged with governance are responsible for overseeing the Company’s financial
reporting process.
Auditor’s Responsibilities for the Audit of the Financial Statements
Our Objectives are to obtain reasonable assurance about whether the financial
statements as a whole are free from material misstatement, whether due to fraud or error,
and to issue an auditor’s report that includes our opinion. Reasonable assurance is a
high level of assurance, but is not a guarantee that an audit conducted in accordance
with CSAs will always detect a material misstatement when it exists. Misstatements can
arise from fraud or error and are considered material if, individually or in the aggregate,
they could reasonably be expected to influence the economic decisions of users taken on
the basis of these financial statements.
As part of an audit in accordance with CSAs, we exercise professional judgment and
maintain professional skepticism throughout the audit. We also:
i) Identify and assess the risks of material misstatement of the financial statements,
whether due to fraud or error, design and perform audit procedures responsive to
those risks, and obtain audit evidence that is sufficient and appropriate to provide a
basis for our opinion. The risk of not detecting a material misstatement resulting
from fraud is higher than for one resulting from error, as fraud may involve
collusion, forgery, intentional omissions, misrepresentations, or the override of
internal control.
ii) Obtain an understanding of internal control relevant to the audit in order to design
audit procedures that are appropriate in the circumstances.
iii) Evaluate the appropriateness of accounting policies used and the reasonableness of
accounting estimates and related disclosures made by management.
iv) Conclude on the appropriateness of management’s use of the going concern basis of
accounting and, based on the audit evidence obtained, whether a material
uncertainty exists related to events or conditions that may cast significant doubt on
the Company’s ability to continue as a going concern. If we conclude that a material
uncertainty exists, we are required to draw attention in our auditor’s report to the
related disclosures in the financial statements or, if such disclosures are inadequate,
to modify our opinion. Our conclusions are based on the audit evidence obtained up
to the date of our auditor’s report. However, future events or conditions may cause
the Company to cease to continue as a going concern.
v) Evaluate the overall presentation, structure and content of the financial statements,
and whether the financial statements represent the underlying transactions and
events in a manner that achieves fair presentation.
vi) Obtain sufficient appropriate audit evidence regarding the financial information of
the entities or business activities within the Company to express an opinion on the
financial statements. We are responsible for the direction, supervision and
performance of the group audit. We remain solely responsible for our audit opinion.
We communicate with those charged with governance regarding, among other matters,
the planned scope and timing of the audit and significant audit findings, including any
significant deficiencies in internal control that we identify during our audit.
We also provide those charged with governance with a statement that we have complied
with relevant ethical requirements regarding independence, and to communicate with
them all relationships and other matters that may reasonably be thought to bear on our
independence, and where applicable, related safeguards.
From the matters communicated with those charged with governance, we determine
those matters that were of most significance in the audit of the financial statements of
the current period and are therefore the key audit matters. We describe these matters in
our auditor’s report unless law or regulation precludes public disclosure about the
matter or when, in extremely rare circumstances, we determine that a matter should not
be communicated in our report because the adverse consequences of doing so would
reasonably be expected to outweigh the public interest benefits of such communication.
(This is seal page for Auditor’s Report of RSMSZ[2026]No.350Z0003 for FIYTA
Precision Technology Co., Ltd.)
RSM China CPA LLP
Cai Ruxiao
China Certified Public Accountant
(Engagement Partner)
China·Beijing
Ge Hua
China Certified Public Accountant
FIYTA Precision Technology Co., Ltd. Notes to the financial statements
FIYTA Precision Technology Co., Ltd.
Notes to the Financial Statements
For the year ended 31 December 2025
（All amounts are expressed in Renminbi Yuan(“RMB”)unless otherwise stated）
FIYTA Precision Technology Co., Ltd. (hereinafter referred to as “the Company”) was
established, under the approval of Shen Fu Ban Fu (1992) 1259 issued by the General Office of
Shenzhen Municipal Government, through the restructuring of former Shenzhen FIYTA Time
Industrial Company by the promoter of China National Aero-Technology Import 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 2025, the outstanding shares issued by the Company was 405.764007
million shares and the registered capital was 405.764007 million after a series of share
dividends, rights offering, capitalization of reserves, and issuing of new shares. The Company’s
registered address is FIYTA Hi-Tech Building, Gao Xin Nan Yi Dao, Nanshan District,
Shenzhen, Guangdong Province, where the Company’s headquarters locates. The parent
company of the Company is CATIC Shenzhen Holdings Limited (CATIC Shenzhen) and the
ultimate controlling party of the Company is Aviation Industry Corporation of China, Ltd.
(AVIC) .
The business nature and main operating activities of the Company and its subsidiaries mainly
include: Watch and Clock Sales; Watch and Timing Instrument Manufacturing; Watch and
Timing Instrument Sales; Jewelry Wholesale; Jewelry Retail; Wearable Intelligent Devices
Manufacturing; Wearable Intelligent Devices Sales; Non-residential Real Estate Leasing;
Professional Design Services; Sales of Household Electrical Appliances; Sales of Satellite
Mobile Communication Terminals. (Except for projects that require approval by law, business
activities may be conducted independently based on the business license in accordance with the
law.)
The Company included a total of 12 subsidiaries in the consolidation scope for the current
period. For details, refer to Note 7, Interests in Other Entities. There were no changes in the
entities included in the consolidated financial statements compared to the previous period.
The financial statements were approved and authorized for issue, upon the resolution of the
Company’s Board of Directors meeting on 12 March 2026.
FIYTA Precision Technology Co., Ltd. Notes to the financial statements
Based on going concern, according to actually occurred transactions and events, the Company
prepares its financial statements in accordance with the Accounting Standards for Business
Enterprises – Basic standards and concrete accounting standards, Accounting Standards for
Business Enterprises – Application Guidelines, Accounting Standards for Business Enterprises
– Interpretations and other relevant provisions (collectively known as “Accounting Standards
for Business Enterprises, issued by Ministry of Finance of PRC”). In addition, the Company
discloses the relevant financial information in accordance with "Rules No.15 for the Information
Disclosure and Reporting of Companies Offering Securities to the Public - General
Requirements for Financial Reporting (2023 Revision)" issued by CSRC.
The Company has assessed its ability to continually operate for the next twelve months from
the end of the reporting period, and no any matters that may result in doubt on its ability as a
going concern were noted. Therefore, it is reasonable for the Company to prepare financial
statements on the going concern basis.
The following significant accounting policies and accounting estimates of the Company are
formulated in accordance with the Accounting Standards for Business Enterprises. Businesses
not mentioned are complied with relevant accounting policies of the Accounting Standards for
Business Enterprises.
The Company prepares its financial statements in accordance with the requirements of the
Accounting Standards for Business Enterprises, truly and completely reflecting the Company’s
financial position as at 31 December 2025, and its operating results, changes in shareholders'
equity, cash flows and other related information for the year then ended.
The accounting year of the Company is from 1 January to 31 December in calendar year.
The normal operating cycle of the Company is twelve months.
The Company and its domestic subsidiaries use RMB as the functional currency. The
Company’s overseas subsidiary, FIYTA (Hong Kong) Limited (“FIYTA Hong Kong”) , has
determined HKD as its functional currency based on the primary economic environment in
which it operates. Montres Chouriet SA, a subsidiary of FIYTA Hong Kong, has determined
CHF as its functional currency based on its operating environment. When preparing financial
statements, their amounts are translated into RMB. The Company prepares its financial
statements in RMB.
FIYTA Precision Technology Co., Ltd. Notes to the financial statements
Item Factor and basis of materiality
Accounts receivable with significant reversal or
The amount of an individual item for year-end
recovery of provision for bad debts recognized
balance is more than RMB 1,000,000
during the current period
Significant other payables aged more than one The amount of an individual item for year-end
year balance is more than RMB 1,000,000
Control
(a) Business combinations under common control
The assets and liabilities that the Company obtains in a business combination under common
control shall be measured at their carrying amount of the acquired entity at the combination
date. If the accounting policy and accounting period adopted by the acquired entity is different
from that adopted by the acquiring entity, the acquiring entity shall, according to accounting
policy and accounting period it adopts, adjust the relevant items in the financial statements of
the acquired party based on the principal of materiality. As for the difference between the
carrying amount of the net assets obtained by the acquiring entity and the carrying amount of
the consideration paid by it, the capital reserve (capital premium or share premium) shall be
adjusted. If the capital reserve (capital premium or share premium) is not sufficient to absorb
the difference, any excess shall be adjusted against retained earnings.
(b) Business combinations not under common control
The assets and liabilities that the Company obtains in a business combination not under
common control shall be measured at their fair value at the acquisition date. If the accounting
policy and accounting period adopted by the acquired entity is different from that adopted by
the acquiring entity, the acquiring entity shall, according to accounting policy and accounting
period it adopts, adjust the relevant items in the financial statements of the acquired entity based
on the principal of materiality. The acquiring entity shall recognise the positive balance between
the combination costs and the fair value of the identifiable net assets it obtains from the acquired
entity as goodwill. The acquiring entity shall, pursuant to the following provisions, treat the
negative balance between the combination costs and the fair value of the identifiable net assets
it obtains from the acquired entity:
(i) It shall review the measurement of the fair values of the identifiable assets, liabilities and
contingent liabilities it obtains from the acquired entity as well as the combination costs;
(ii) If, after the review, the combination costs are still less than the fair value of the identifiable
net assets it obtains from the acquired entity, the balance shall be recognised in profit or loss of
the reporting period.
(c) Treatment of business combination related costs
FIYTA Precision Technology Co., Ltd. Notes to the financial statements
The intermediary costs such as audit, legal services and valuation consulting and other related
management costs that are directly attributable to the business combination shall be charged in
profit or loss in the period in which they are incurred. The costs to issue equity or debt securities
for the consideration of business combination shall be recorded as a part of the value of the
respect equity or debt securities upon initial recognition.
Statements
(a) Judgment of control and consolidation decision
Control exists when the Company has power over the investee, exposure, or rights, to variable
returns from its involvement with the investee and the ability to use its power over the investee
to affect the amount of the returns. The definition of control contains there elements: - power
over the investee; exposure, or rights to variable returns from the Company’s involvement with
the investee; and the ability to use its power over the investee to affect the amount of the
investor’s returns. The Company controls an investee if and only if the Company has all the
above three elements.
The scope of consolidated financial statements shall be determined on the basis of control. It
not only includes subsidiaries determined based on voting rights (or similar) or together with
other arrangement, but also structured entities under one or more contractual arrangements.
Subsidiaries are the entities that controlled by the Company (including enterprise, a divisible
part of the investee, and structured entity controlled by the enterprise). A structured entity
(sometimes called a Special Purpose Entity) is an entity that has been designed so that voting
or similar rights are not the dominant factor in deciding who controls the entity.
(b) Method of preparing the consolidated financial statements
The consolidated financial statements shall be prepared by the Company based on the financial
statements of the Company and its subsidiaries, and using other related information.
When preparing consolidated financial statements, the Company shall consider the entire group
as an accounting entity, adopt uniform accounting policies and apply the requirements of
Accounting Standard for Business Enterprises related to recognition, measurement and
presentation. The consolidated financial statements shall reflect the overall financial position,
operating results and cash flows of the group.
(i) Like items of assets, liabilities, equity, income, expenses and cash flows of the parent are
combined with those of the subsidiaries.
(ii) The carrying amount of the parent’s investment in each subsidiary is eliminated (off-set)
against the parent’s portion of equity of each subsidiary.
(iii) Eliminate the impact of intragroup transactions between the Company and the subsidiaries
or between subsidiaries, and when intragroup transactions indicate an impairment of related
assets, the losses shall be recognised in full.
FIYTA Precision Technology Co., Ltd. Notes to the financial statements
(iv) Make adjustments to special transactions from the perspective of the group.
(c) Special consideration in consolidation elimination
(i) Long-term equity investment held by the subsidiaries to the Company shall be recognised as
treasury stock of the Company, which is offset with the owner’s equity, represented as “treasury
stock” under “owner’s equity” in the consolidated statement of financial position.
Long-term equity investment held by subsidiaries between each other is accounted for taking
long-term equity investment held by the Company to its subsidiaries as reference. That is, the
long-term equity investment is eliminated (off-set) against the portion of the corresponding
subsidiary’s equity.
(ii) Due to not belonging to paid-in capital (or share capital) and capital reserve, and being
different from retained earnings and undistributed profit, “Specific reserves” and “General risk
provision” shall be recovered based on the proportion attributable to owners of the parent
company after long-term equity investment to the subsidiaries is eliminated with the
subsidiaries’ equity.
(iii) If temporary timing difference between the book value of the assets and liabilities in the
consolidated statement of financial position and their tax basis is generated as a result of
elimination of unrealized inter-company transaction profit or loss, deferred tax assets of
deferred tax liabilities shall be recognised, and income tax expense in the consolidated
statement of profit or loss shall be adjusted simultaneously, excluding deferred taxes related to
transactions or events directly recognised in owner’s equity or business combination.
(iv) Unrealised inter-company transactions profit or loss generated from the Company selling
assets to its subsidiaries shall be eliminated against “net profit attributed to the owners of the
parent company” in full. Unrealized inter-company transactions profit or loss generated from
the subsidiaries selling assets to the Company shall be eliminated between “net profit attributed
to the owners of the parent company” and “non-controlling interests” pursuant to the proportion
of the Company in the related subsidiaries. Unrealized inter-company transactions profit or loss
generated from the assets sales between the subsidiaries shall be eliminated between “net profit
attributed to the owners of the parent company” and “non-controlling interests” pursuant to the
proportion of the Company in the selling subsidiaries.
(v) If loss attributed to the minority shareholders of a subsidiary in current period is more than
the proportion of non-controlling interest in this subsidiary at the beginning of the period, non-
controlling interest is still to be written down.
A joint arrangement is an arrangement of which two or more parties have joint control. Joint
arrangement of the Company is classified as either a joint operation or a joint venture.
(a) Joint operation
A joint operation is a joint arrangement whereby the parties that have joint control of the
FIYTA Precision Technology Co., Ltd. Notes to the financial statements
arrangement have rights to the assets, and obligations for the liabilities, relating to the
arrangement.
The Company shall recognise the following items in relation to shared interest in a joint
operation, and account for them in accordance with relevant accounting standards of the
Accounting Standards for Business Enterprises:
(i) its assets, including its share of any assets held jointly;
(ii) its liabilities, including its share of any liabilities incurred jointly;
(iii) its revenue from the sale of its share of the output arising from the joint operation;
(iv) its share of the revenue from the sale of the output by the joint operation; and
(v) its expenses, including its share of any expenses incurred jointly.
(b) Joint venture
A joint venture is a joint arrangement whereby the parties that have joint control of the
arrangement have rights to the net assets of the arrangement.
The Company accounts for its investment in the joint venture by applying the equity method of
long-term equity investment.
Cash comprises cash on hand and deposits that can be readily withdrawn on demand. Cash
equivalents include short-term (generally within three months of maturity at acquisition), highly
liquid investments that are readily convertible into known amounts of cash and which are
subject to an insignificant risk of changes in value.
Statements
(a) Determination of the exchange rate for foreign currency transactions
At the time of initial recognition of a foreign currency transaction, the amount in the foreign
currency shall be translated into the amount in the functional currency at the spot exchange rate
of the transaction date, or at an exchange rate which is determined through a systematic and
reasonable method and is approximate to the spot exchange rate of the transaction date
(hereinafter referred to as the approximate exchange rate).
(b) Translation of monetary items denominated in foreign currency on the balance sheet
date
The foreign currency monetary items shall be translated at the spot exchange rate on the balance
sheet date. The balance of exchange arising from the difference between the spot exchange rate
on the balance sheet date and the spot exchange rate at the time of initial recognition or prior to
the balance sheet date shall be recorded into the profits and losses at the current period. The
foreign currency non-monetary items measured at the historical cost shall still be translated at
the spot exchange rate on the transaction date; for the foreign currency non-monetary items
FIYTA Precision Technology Co., Ltd. Notes to the financial statements
restated to a fair value measurement, shall be translated into the at the spot exchange rate at the
date when the fair value was determined, for the Fair Value Through Profit or Loss,the
difference between the restated functional currency amount and the original functional currency
amount shall be recorded into the profits and losses at the current period.
(c) Translation of foreign currency financial statements
Before translating the financial statements of foreign operations, the accounting period and
accounting policy shall be adjusted so as to conform to the Company. The adjusted foreign
operation financial statements denominated in foreign currency (other than functional currency)
shall be translated in accordance with the following method:
(i) The asset and liability items in the statement of financial position shall be translated at the
spot exchange rates at the date of that statement of financial position. The owners’ equity items
except undistributed profit shall be translated at the spot exchange rates when they are incurred.
(ii) The income and expense items in the statement of profit and other comprehensive income
shall be translated at the spot exchange rates or approximate exchange rate at the date of
transaction.
(iii) Foreign currency cash flows and cash flows of foreign subsidiaries shall be translated at
the spot exchange rate or approximate exchange rate when the cash flows are incurred. The
effect of exchange rate changes on cash is presented separately in the statement of cash flows
as an adjustment item.
(iv) The differences arising from the translation of foreign currency financial statements shall
be presented separately as “other comprehensive income” under the owners’ equity items of the
consolidated statement of financial position.
When disposing a foreign operation involving loss of control, the cumulative amount of the
exchange differences relating to that foreign operation recognised under other comprehensive
income in the statement of financial position, shall be reclassified into current profit or loss
according to the proportion disposed.
Financial instrument is any contract which gives rise to both a financial asset of one entity and
a financial liability or equity instrument of another entity.
(a) Recognition and derecognition of financial instrument
A financial asset or a financial liability should be recognised in the statement of financial
position when, and only when, an entity becomes party to the contractual provisions of the
instrument.
A financial asset can only be derecognised when meets one of the following conditions:
(i) The rights to the contractual cash flows from a financial asset expire
(ii) The financial asset has been transferred and meets one of the following derecognition
FIYTA Precision Technology Co., Ltd. Notes to the financial statements
conditions:
Financial liabilities (or part thereof) are derecognised only when the liability is extinguished—
i.e., when the obligation specified in the contract is discharged or cancelled or expires. An
exchange of the Company (borrower) and lender of debt instruments that carry significantly
different terms or a substantial modification of the terms of an existing liability are both
accounted for as an extinguishment of the original financial liability and the recognition of a
new financial liability.
Purchase or sale of financial assets in a regular-way shall be recognised and derecognised using
trade date accounting. A regular-way purchase or sale of financial assets is a transaction under
a contract whose terms require delivery of the asset within the time frame established generally
by regulations or convention in the market place concerned. Trade date is the date at which the
entity commits itself to purchase or sell an asset.
(b) Classification and measurement of financial assets
At initial recognition, the Company classified its financial asset based on both the business
model for managing the financial asset and the contractual cash flow characteristics of the
financial asset: financial asset at amortised cost, financial asset at fair value through profit or
loss (FVTPL) and financial asset at fair value through other comprehensive income (FVTOCI).
Reclassification of financial assets is permitted if, and only if, the objective of the entity’s
business model for managing those financial assets changes. In this circumstance, all affected
financial assets shall be reclassified on the first day of the first reporting period after the changes
in business model; otherwise the financial assets cannot be reclassified after initial recognition.
Financial assets shall be measured at initial recognition at fair value. For financial assets
measured at FVTPL, transaction costs are recognised in current profit or loss. For financial
assets not measured at FVTPL, transaction costs should be included in the initial measurement.
Notes receivable or accounts receivable that arise from sales of goods or rendering of services
are initially measured at the transaction price defined in the accounting standard of revenue
where the transaction does not include a significant financing component.
Subsequent measurement of financial assets will be based on their categories:
(i)Financial asset at amortised cost
The financial asset at amortised cost category of classification applies when both the following
conditions are met: the financial asset is held within the business model whose objective is to
hold financial assets in order to collect contractual cash flows, and the contractual term of the
financial asset gives rise on specified dates to cash flows that are solely payment of principal
and interest on the principal amount outstanding. These financial assets are subsequently
measured at amortised cost by adopting the effective interest rate method. Any gain or loss
arising from derecognition according to the amortization under effective interest rate method
or impairment are recognised in current profit or loss.
(ii)Financial asset at fair value through other comprehensive income (FVTOCI)
FIYTA Precision Technology Co., Ltd. Notes to the financial statements
The financial asset at FVTOCI category of classification applies when both the following
conditions are met: the financial asset is held within the business model whose objective is
achieved by both collecting contractual cash flows and selling financial assets, and the
contractual term of the financial asset gives rise on specified dates to cash flows that are solely
payment of principle and interest on the principal amount outstanding. All changes in fair value
are recognised in other comprehensive income except for gain or loss arising from impairment
or exchange differences, which should be recognised in current profit or loss. At derecognition,
cumulative gain or loss previously recognised under OCI is reclassified to current profit or loss.
However, interest income calculated based on the effective interest rate is included in current
profit or loss.
The Company make an irrevocable decision to designate part of non-trading equity instrument
investments as measured through FVTOCI. All changes in fair value are recognised in other
comprehensive income except for dividend income recognised in current profit or loss. At
derecognition, cumulative gain or loss are reclassified to retained earnings.
(iii)Financial asset at fair value through profit or loss (FVTPL)
Financial asset except for above mentioned financial asset at amortised cost or financial asset
at fair value through other comprehensive income (FVTOCI), should be classified as financial
asset at fair value through profit or loss (FVTPL). These financial assets should be subsequently
measured at fair value. All the changes in fair value are included in current profit or loss.
(c) Classification and measurement of financial liabilities
The Company classified the financial liabilities as financial liabilities at fair value through profit
or loss (FVTPL), loan commitments at a below-market interest rate and financial guarantee
contracts and financial asset at amortised cost.
Subsequent measurement of financial assets will be based on the classification:
(i)Financial liabilities at fair value through profit or loss (FVTPL)
Held-for-trading financial liabilities (including derivatives that are financial liabilities) and
financial liabilities designated at FVTPL are classified as financial liabilities at FVTP. After
initial recognition, any gain or loss (including interest expense) are recognised in current profit
or loss except for those hedge accounting is applied. For financial liability that is designated as
at FVTPL, changes in the fair value of the financial liability that is attributable to changes in
the own credit risk of the issuer shall be presented in other comprehensive income. At
derecognition, cumulative gain or loss previously recognised under OCI is reclassified to
retained earnings.
(ii)Loan commitments and financial guarantee contracts
Loan commitment is a commitment by the Company to provide a loan to customer under
specified contract terms. The provision of impairment losses of loan commitments shall be
recognised based on expected credit losses model.
Financial guarantee contract is a contract that requires the Company to make specified
FIYTA Precision Technology Co., Ltd. Notes to the financial statements
payments to reimburse the holder for a loss it incurs because a specified debtor fails to make
payment when due in accordance with the original or modified terms of a debt instrument.
Financial guarantee contracts liability shall be subsequently measured at the higher of: The
amount of the loss allowance recognised according to the impairment principles of financial
instruments; and the amount initially recognised less the cumulative amount of income
recognised in accordance with the revenue principles.
(iii) Financial liabilities at amortised cost
After initial recognition, the Company measured other financial liabilities at amortised cost
using the effective interest method.
Except for special situation, financial liabilities and equity instrument should be classified in
accordance with the following principles:
(i) If the Company has no unconditional right to avoid delivering cash or another financial
instrument to fulfill a contractual obligation, this contractual obligation meet the definition of
financial liabilities. Some financial instruments do not comprise terms and conditions related
to obligations of delivering cash or another financial instrument explicitly, they may include
contractual obligation indirectly through other terms and conditions.
(ii) If a financial instrument must or may be settled in the Company's own equity instruments,
it should be considered that the Company’s own equity instruments are alternatives of cash or
another financial instrument, or to entitle the holder of the equity instruments to sharing the
remaining rights over the net assets of the issuer. If the former is the case, the instrument is a
liability of the issuer; otherwise, it is an equity instrument of the issuer. Under some
circumstances, it is regulated in the contract that the financial instrument must or may be settled
in the Company's own equity instruments, where, amount of contractual rights and obligations
are calculated by multiplying the number of the equity instruments to be available or delivered
by its fair value upon settlement. Such contracts shall be classified as financial liabilities,
regardless that the amount of contractual rights and liabilities is fixed, or fluctuate totally or
partially with variables other than market price of the entity’s own equity instruments (such as
interest rate, price of some kind of goods or some kind of financial instrument).
(d) Derivatives and embedded derivatives
At initial recognition, derivatives shall be measured at fair value at the date of derivative
contracts are signed and subsequently measured at fair value. The derivative with a positive fair
value shall be recognized as an asset, and with a negative fair value shall be recognised as a
liability.
Gains or losses arising from the changes in fair value of derivatives shall be recognised directly
into current profit or loss except for the effective portion of cash flow hedges which shall be
recognised in other comprehensive income and reclassified into current profit or loss when the
hedged items affect profit or loss.
An embedded derivative is a component of a hybrid contract with a financial asset as a host,
FIYTA Precision Technology Co., Ltd. Notes to the financial statements
the Company shall apply the requirements of financial asset classification to the entire hybrid
contract. If a host that is not a financial asset and the hybrid contract is not measured at fair
value with changes in fair value recognised in profit or loss, and the economic characteristics
and risks of the embedded derivative are not closely related to the economic characteristics and
risks of the host, and a separate instrument with the same terms as the embedded derivative
would meet the definition of a derivative, the embedded derivative shall be separated from the
hybrid instrument and accounted for as a separate derivative instrument. If the Company is
unable to measure the fair value of the embedded derivative at the acquisition date or
subsequently at the balance sheet date, the entire hybrid contract is designated as financial assets
or financial liabilities at fair value through profit or loss.
(e) Impairment of financial instrument
The Company shall recognise a loss allowance based on expected credit losses on a financial
asset that is measured at amortised cost, a debt investment at fair value through other
comprehensive income, a contract asset, a lease receivable, a loan commitment and a financial
guarantee contract.
(i) Measurement of expected credit losses
Expected credit losses are the weighted average of credit losses of the financial instruments
with the respective risks of a default occurring as the weights. Credit loss is the difference
between all contractual cash flows that are due to the Company in accordance with the contract
and all the cash flows that the Company expects to receive (ie all cash shortfalls), discounted at
the original effective interest rate or credit- adjusted effective interest rate for purchased or
originated credit-impaired financial assets.
Lifetime expected credit losses are the expected credit losses that result from all possible default
events over the expected life of a financial instrument.
the expected credit losses that result from default events on a financial instrument that are
possible within the 12 months after the reporting date (or the expected lifetime, if the expected
life of a financial instrument is less than 12 months).
At each reporting date, the Company classifies financial instruments into three stages and makes
provisions for expected credit losses accordingly. A financial instrument of which the credit
risk has not significantly increased since initial recognition is at stage 1. The Company shall
measure the loss allowance for that financial instrument at an amount equal to 12-month
expected credit losses. A financial instrument with a significant increase in credit risk since
initial recognition but is not considered to be credit-impaired is at stage 2. The Company shall
measure the loss allowance for that financial instrument at an amount equal to the lifetime
expected credit losses. A financial instrument is considered to be credit-impaired as at the end
of the reporting period is at stage 3. The Company shall measure the loss allowance for that
financial instrument at an amount equal to the lifetime expected credit losses.
The Company may assume that the credit risk on a financial instrument has not increased
FIYTA Precision Technology Co., Ltd. Notes to the financial statements
significantly since initial recognition if the financial instrument is determined to have low credit
risk at the reporting date and measure the loss allowance for that financial instrument at an
amount equal to 12-month expected credit losses.
For financial instrument at stage 1, stage 2 and those have low credit risk, the interest revenue
shall be calculated by applying the effective interest rate to the gross carrying amount of a
financial asset (ie, impairment loss not been deducted). For financial instrument at stage 3,
interest revenue shall be calculated by applying the effective interest rate to the amortised cost
after deducting of impairment loss.
For notes receivable, accounts receivable and accounts receivable financing, no matter it
contains a significant financing component or not, the Company shall measure the loss
allowance at an amount equal to the lifetime expected credit losses.
Receivables
For the notes receivable, accounts receivable, other receivables, accounts receivable financing
and long-term receivables which are demonstrated to be impaired by any objective evidence,
or applicable for individual assessment, the Company shall individually assess for impairment
and recognise the loss allowance for expected credit losses. If the Company determines that no
objective evidence of impairment exists for notes receivable, accounts receivable, other
receivables, accounts receivable financing and long-term receivables, or the expected credit
loss of a single financial asset cannot be assessed at reasonable cost, such notes receivable,
accounts receivable, other receivables, accounts receivable financing and long-term receivables
shall be divided into several groups with similar credit risk characteristics and collectively
calculated the expected credit loss. The determination basis of groups is as following:
Determination basis of notes receivable is as following:
Group 1: Commercial acceptance bills
Group 2: Bank acceptance bills
For each group, the Company calculates expected credit losses through default exposure and
the lifetime expected credit losses rate, taking reference to historical experience for credit losses
and considering current condition and expectation for the future economic situation.
Determination basis of accounts receivable is as following:
Group 1: Accounts receivables due from customers
For each group, the Company calculates expected credit losses through preparing an aging
analysis schedule with the lifetime expected credit losses rate, taking reference to historical
experience for credit losses and considering current condition and expectation for the future
economic situation.
Determination basis of other receivables is as following:
Group 1: Deposit and guarantee receivable
FIYTA Precision Technology Co., Ltd. Notes to the financial statements
Group 2: Employee advance payments
Group 3: Others
For each group, the Company calculates expected credit losses through default exposure and
the 12-months or lifetime expected credit losses rate, taking reference to historical experience
for credit losses and considering current condition and expectation for the future economic
situation.
The Company calculates the aging of receivables (notes receivable, accounts receivable, and
other receivables) based on the period from the transaction date to the balance sheet date to
determine credit risk characteristic groups.
Debt investment and other debt investment
For debt investment and other debt investment, the Company shall calculate the expected credit
loss through the default exposure and the 12-month or lifetime expected credit loss rate based
on the nature of the investment, counterparty and the type of risk exposure.
(ii) Low credit risk
If the financial instrument has a low risk of default, the borrower has a strong capacity to meet
its contractual cash flow obligations in the near term and adverse changes in economic and
business conditions in the longer term may, but will not necessarily, reduce the ability of the
borrower to fulfill its contractual cash flow obligations.
(iii) Significant increase in credit risk
The Company shall assess whether the credit risk on a financial instrument has increased
significantly since initial recognition, using the change in the risk of a default occurring over
the expected life of the financial instrument, through the comparison of the risk of a default
occurring on the financial instrument as at the reporting date with the risk of a default occurring
on the financial instrument as at the date of initial recognition.
To make that assessment, the Company shall consider reasonable and supportable information,
that is available without undue cost or effort, and that is indicative of significant increases in
credit risk since initial recognition, including forward-looking information. The information
considered by the Company are as following:
Significant changes in internal price indicators of credit risk as a result of a change in credit
risk since inception
Existing or forecast adverse change in the business, financial or economic conditions of the
borrower that results in a significant change in the borrower’s ability to meet its debt obligations；
An actual or expected significant change in the operating results of the borrower; An actual
or expected significant adverse change in the regulatory, economic, or technological
environment of the borrower；
Significant changes in the value of the collateral supporting the obligation or in the quality
FIYTA Precision Technology Co., Ltd. Notes to the financial statements
of third-party guarantees or credit enhancements, which are expected to reduce the borrower’s
economic incentive to make scheduled contractual payments or to otherwise influence the
probability of a default occurring;
Significant change that are expected to reduce the borrower’s economic incentive to make
scheduled contractual payments;
Expected changes in the loan documentation including an expected breach of contract that
may lead to covenant waivers or amendments, interest payment holidays, interest rate step-ups,
requiring additional collateral or guarantees, or other changes to the contractual framework of
the instrument；
Significant changes in the expected performance and behavior of the borrower；
Contractual payments are more than 30 days past due.
Depending on the nature of the financial instruments, the Company shall assess whether the
credit risk has increased significantly since initial recognition on an individual financial
instrument or a group of financial instruments. When assessed based on a group of financial
instruments, the Company can group financial instruments on the basis of shared credit risk
characteristics, for example, past due information and credit risk rating.
Generally, the Company shall determine the credit risk on a financial asset has increased
significantly since initial recognition when contractual payments are more than 30 days past
due. The Company can only rebut this presumption if the Company has reasonable and
supportable information that is available without undue cost or effort, that demonstrates that the
credit risk has not increased significantly since initial recognition even though the contractual
payments are more than 30 days past due.
(iv) Credit-impaired financial asset
The Company shall assess at each reporting date whether the credit impairment has occurred
for financial asset at amortised cost and debt investment at fair value through other
comprehensive income. A financial asset is credit-impaired when one or more events that have
a detrimental impact on the estimated future cash flows of that financial asset have occurred.
Evidences that a financial asset is credit-impaired include observable data about the following
events:
Significant financial difficulty of the issuer or the borrower；a breach of contract, such as a
default or past due event; the lender(s) of the borrower, for economic or contractual reasons
relating to the borrower’s financial difficulty, having granted to the borrower a concession(s)
that the lender(s) would not otherwise consider；it is becoming probable that the borrower will
enter bankruptcy or other financial reorganisation;the disappearance of an active market for that
financial asset because of financial difficulties；the purchase or origination of a financial asset
at a deep discount that reflects the incurred credit losses.
(v) Presentation of impairment of expected credit loss
FIYTA Precision Technology Co., Ltd. Notes to the financial statements
In order to reflect the changes of credit risk of financial instrument since initial recognition, the
Company shall at each reporting date remeasure the expected credit loss and recognise in profit
or loss, as an impairment gain or loss, the amount of expected credit losses addition (or reversal).
For financial asset at amortised cost, the loss allowance shall reduce the carrying amount of the
financial asset in the statement of financial position; for debt investment at fair value through
other comprehensive income, the loss allowance shall be recognised in other comprehensive
income and shall not reduce the carrying amount of the financial asset in the statement of
financial position.
(vi) Write-off
The Company shall directly reduce the gross carrying amount of a financial asset when the
Company has no reasonable expectations of recovering the contractual cash flow of a financial
asset in its entirety or a portion thereof. Such write-off constitutes a derecognition of the
financial asset. This circumstance usually occurs when the Company determines that the debtor
has no assets or sources of income that could generate sufficient cash flow to repay the write-
off amount.
Recovery of financial asset written off shall be recognised in profit or loss as reversal of
impairment loss.
(f) Transfer of financial assets
Transfer of financial assets refers to following two situations:
Transfers the contractual rights to receive the cash flows of the financial asset;
Transfers the entire or a part of a financial asset and retains the contractual rights to receive
the cash flows of the financial asset, but assumes a contractual obligation to pay the cash flows
to one or more recipients.
(i) Derecognition of transferred assets
If the Company transfers substantially all the risks and rewards of ownership of the financial
asset, or neither transfers nor retains substantially all the risks and rewards of ownership of the
financial asset but has not retained control of the financial asset, the financial asset shall be
derecognised.
Whether the Company has retained control of the transferred asset depends on the transferee’s
ability to sell the asset. If the transferee has the practical ability to sell the asset in its entirety
to an unrelated third party and is able to exercise that ability unilaterally and without needing
to impose additional restrictions on the transfer, the Company has not retained control.
The Company judges whether the transfer of financial asset qualifies for derecognition based
on the substance of the transfer.
If the transfer of financial asset qualifies for derecognition in its entirety, the difference between
the following shall be recognised in profit or loss:
The carrying amount of transferred financial asset;
FIYTA Precision Technology Co., Ltd. Notes to the financial statements
The sum of consideration received and the part derecognised of the cumulative changes in
fair value previously recognised in other comprehensive income (The financial assets involved
in the transfer are classified as financial assets at fair value through other comprehensive income
in accordance with Article 18 of the Accounting Standards for Business Enterprises -
Recognition and Measurement of Financial Instruments).
If the transferred asset is a part of a larger financial asset and the part transferred qualifies for
derecognition, the previous carrying amount of the larger financial asset shall be allocated
between the part that continues to be recognised (For this purpose, a retained servicing asset
shall be treated as a part that continues to be recognised) and the part that is derecognised, based
on the relative fair values of those parts on the date of the transfer. The difference between
following two amounts shall be recognised in profit or loss:
The carrying amount (measured at the date of derecognition) allocated to the part
derecognised；
The sum of the consideration received for the part derecognised and part derecognised of
the cumulative changes in fair value previously recognised in other comprehensive income (The
financial assets involved in the transfer are classified as financial assets at fair value through
other comprehensive income in accordance with Article 18 of the Accounting Standards for
Business Enterprises - Recognition and Measurement of Financial Instruments).
(ii) Continuing involvement in transferred assets
If the Company neither transfers nor retains substantially all the risks and rewards of ownership
of a transferred asset, and retains control of the transferred asset, the Company shall continue
to recognise the transferred asset to the extent of its continuing involvement and also recognise
an associated liability.
The extent of the Company’s continuing involvement in the transferred asset is the extent to
which it is exposed to changes in the value of the transferred asset
(iii) Continue to recognise the transferred assets
If the Company retains substantially all the risks and rewards of ownership of the transferred
financial asset, the Company shall continue to recognise the transferred asset in its entirety and
the consideration received shall be recognised as a financial liability.
The financial asset and the associated financial liability shall not be offset. In subsequent
accounting period, the Company shall continuously recognise any income (gain) arising from
the transferred asset and any expense (loss) incurred on the associated liability.
(g) Offsetting financial assets and financial liabilities
Financial assets and financial liabilities shall be presented separately in the statement of
financial position and shall not be offset. When meets the following conditions, financial assets
and financial liabilities shall be offset and the net amount presented in the statement of financial
position:
FIYTA Precision Technology Co., Ltd. Notes to the financial statements
The Company currently has a legally enforceable right to set off the recognised amounts; The
Company intends either to settle on a net basis, or to realise the asset and settle the liability
simultaneously.
In accounting for a transfer of a financial asset that does not qualify for derecognition, the
Company shall not offset the transferred asset and the associated liability.
(h) Determination of fair value of financial instruments
Determination of fair value of financial assets and financial liabilities please refer to Note 3.12
Fair value refers to the price that would be received to sell an asset or paid to transfer a liability
in an orderly transaction between market participants at the measurement date.
The Company determines fair value of the related assets and liabilities based on market value
in the principal market, or in the absence of a principal market, in the most advantageous market
price for the related asset or liability. The fair value of an asset or a liability is measured using
the assumptions that market participants would use when pricing the asset or liability, assuming
that market participants act in their economic best interest.
The principal market is the market in which transactions for an asset or liability take place with
the greatest volume and frequency. The most advantageous market is the market which
maximizes the value that could be received from selling the asset and minimizes the value
which is needed to be paid in order to transfer a liability, considering the effect of transport
costs and transaction costs both.
If the active market of the financial asset or financial liability exists, the Company shall measure
the fair value using the quoted price in the active market. If the active market of the financial
instrument is not available, the Company shall measure the fair value using valuation techniques.
A fair value measurement of a non-financial asset takes into account a market participant’s
ability to generate economic benefits by using the asset in its highest and best use or by selling
it to another market participant that would use the asset in its highest and best use.
Valuation techniques
The Company uses valuation techniques that are appropriate in the circumstances and for which
sufficient data are available to measure fair value, including the market approach, the income
approach and the cost approach. The Company shall use valuation techniques consistent with
one or more of those approaches to measure fair value. If multiple valuation techniques are used
to measure fair value, the results shall be evaluated considering the reasonableness of the range
of values indicated by those results. A fair value measurement is the point within that range that
is most representative of fair value in the circumstances.
When using the valuation technique, the Company shall give the priority to relevant observable
inputs. The unobservable inputs can only be used when relevant observable inputs is not
available or practically would not be obtained. Observable inputs refer to the information which
FIYTA Precision Technology Co., Ltd. Notes to the financial statements
is available from market and reflects the assumptions that market participants would use when
pricing the asset or liability. Unobservable Inputs refer to the information which is not available
from market and it has to be developed using the best information available in the circumstances
from the assumptions that market participants would use when pricing the asset or liability.
Fair value hierarchy
To Company establishes a fair value hierarchy that categorises into three levels the inputs to
valuation techniques used to measure fair value. The fair value hierarchy gives the highest
priority to Level 1 inputs and second to the Level 2 inputs and the lowest priority to Level 3
inputs. Level 1 inputs are quoted prices (unadjusted) in active markets for identical assets or
liabilities that the entity can access at the measurement date. Level 2 inputs are inputs other
than quoted prices included within Level 1 that are observable for the asset or liability, either
directly or indirectly. Level 3 inputs are unobservable inputs for the asset or liability.
(a) Classification of inventories
Inventories are finished goods or products held for sale in the ordinary course of business, in
the process of production for such sale, or in the form of materials or supplies to be consumed
in the production process or in the rendering of services, including raw materials, work in
progress, and goods in stock, etc.
(b) Measurement method of cost of inventories sold or used
The cost of raw materials and goods in stock (except the branded luxury watch inventory) used
or sold is determined on the weighted average basis, while the cost of the branded luxury watch
inventory used or sold is determined on individual valuation method basis.
(c) Inventory system
The perpetual inventory system is adopted. The inventories should be counted at least once a
year, and surplus or losses of inventory stocktaking shall be included in current profit and loss.
(d) Recognition Criteria and Provision for impairment of inventory
Inventories are stated at the lower of cost and net realizable value. The excess of cost over net
realizable value of the inventories is recognised as provision for impairment of inventory, and
recognised in current profit or loss.
Net realizable value of the inventory should be determined on the basis of reliable evidence
obtained, and factors such as purpose of holding the inventory and impact of post balance sheet
event shall be considered.
(i) In normal operation process, finished goods, products and materials for direct sale, their net
realizable values are determined at estimated selling prices less estimated selling expenses and
relevant taxes and surcharges; for inventories held to execute sales contract or service contract,
their net realizable values are calculated on the basis of contract price. If the quantities of
inventories specified in sales contracts are less than the quantities held by the Company, the net
FIYTA Precision Technology Co., Ltd. Notes to the financial statements
realizable value of the excess portion of inventories shall be based on general selling prices.
Net realizable value of materials held for sale shall be measured based on market price.
(ii) For materials in stock need to be processed, in the ordinary course of production and
business, net realisable value is determined at the estimated selling price less the estimated costs
of completion, the estimated selling expenses and relevant taxes. If the net realisable value of
the finished products produced by such materials is higher than the cost, the materials shall be
measured at cost; if a decline in the price of materials indicates that the cost of the finished
products exceeds its net realisable value, the materials are measured at net realisable value and
differences shall be recognised at the provision for impairment.
(iii) Provisions for inventory impairment are generally determined on an individual basis. For
inventories with large quantity and low unit price, the provisions for inventory impairment are
determined on group basis.
(iv) If any factor rendering write-downs of the inventories has been eliminated at the reporting
date, the amounts written down are recovered and reversed to the extent of the inventory
impairment, which has been provided for. The reversal shall be included in profit or loss.
The Company shall present contract assets or contract liabilities in the statement of financial
position, depending on the relationship between the Company’s satisfying a performance
obligation and the customer’s payment. A contract asset shall be presented if the Company has
the right to consideration in exchange for goods or services that the Company has transferred
to a customer when that right is conditioned on something other than the passage of time. A
contract liability shall be presented if the Company has the obligation to transfer goods or
services to a customer for which the Company has received consideration (or the amount is due)
from the customer.
Method of determination and accounting for expected credit loss for contract assets please refer
to Note 3.11.
Contract assets and contract liabilities shall be presented separately in the statement of financial
position. The contract asset and contract liability for the same contract shall be presented on a
net basis. A net balance shall be listed in the item of "Contract assets" or "Other non-current
assets" according to its liquidity; a credit balance shall be listed in the item of "Contract
liabilities" or "Other non-current liabilities" according to its liquidity. Contract assets and
contract liabilities for different contracts cannot be offset.
Contract costs include costs to fulfill a contract and the costs to obtain a contract.
The Company shall recognise an asset from the costs incurred to fulfill a contract only if those
costs meet all of the following criteria:
(i) the costs relate directly to a contract or to an anticipated contract, including: direct labour,
FIYTA Precision Technology Co., Ltd. Notes to the financial statements
direct materials, manufacturing costs (or similar costs), costs that are explicitly chargeable to
the customer under the contract and other costs that are incurred only because an entity entered
into the contract;
(ii) the costs enhance resources of the Company that will be used in satisfying performance
obligations in the future; and
(iii) the costs are expected to be recovered.
The incremental costs of obtaining a contract shall be recognised as an asset if the Company
expects to recover them.
An asset related to contract costs shall be amortised on a systematic basis that is consistent with
the revenue recognition of the goods or services to which the asset relates. The Company
recognises the contract acquisition costs as an expense when incurred if the amortisation period
of the asset that the Company otherwise would have recognised is one year or less.
The Company shall accrue the provision for impairment, recognise an impairment loss in profit
or loss to the extent that the carrying amount of an asset related to the contract cost exceeds the
difference of below two items, and further consider whether the estimated liability related to
the onerous contract needs to be accrued:
(i) the remaining amount of consideration that the Company expects to receive in exchange
for the goods or services to which the asset relates; less
(ii) the costs that relate directly to providing those goods or services and that have not been
recognised as expenses.
The Company shall recognise in profit or loss a reversal of some or all of an impairment loss
previously recognised when the impairment conditions no longer exist or have improved. The
increased carrying amount of the asset shall not exceed the amount that would have been
determined (net of amortisation) if no impairment loss had been recognised previously.
Providing that the costs to fulfil a contract satisfy the requirement to be recognised as an asset,
the Company shall present them in the account “Inventory” if the contract has an original
expected duration of one year (or a normal operating cycle) or less, or in the account “Other
non-current assets” if the contract has an original expected duration of more than one year (or
a normal operating cycle).
Providing that the costs to obtain a contract satisfy the requirement to be recgonised as an asset,
the Company shall present them in the account “Other current asset” if the contract has an
original expected duration of one year (or a normal operating cycle) or less, or in the account
“Other non-current assets” if the contract has an original expected duration of more than one
year (or a normal operating cycle).
Long-term equity investments refer to equity investments where an investor has control of, or
significant influence over, an investee, as well as equity investments in joint ventures.
FIYTA Precision Technology Co., Ltd. Notes to the financial statements
Associates of the Company are those entities over which the Company has significant influence.
(a) Determination basis of joint control or significant influence over the investee
Joint control is the relevant agreed sharing of control over an arrangement, and the arranged
relevant activity must be decided under unanimous consent of the parties sharing control. In
assessing whether the Company has joint control of an arrangement, the Company shall assess
first whether all the parties, or a group of the parties, control the arrangement. When all the
parties, or a group of the parties, considered collectively, are able to direct the activities of the
arrangement, the parties control the arrangement collectively. Then the Company shall assess
whether decisions about the relevant activities require the unanimous consent of the parties that
collectively control the arrangement. If two or more groups of the parties could control the
arrangement collectively, it shall not be assessed as have joint control of the arrangement. When
assessing the joint control, the protective rights are not considered.
Significant influence is the power to participate in the financial and operating policy decisions
of the investee but is not control or joint control of those policies. In determination of significant
influence over an investee, the Company should consider not only the existing voting rights
directly or indirectly held but also the effect of potential voting rights held by the Company and
other entities that could be currently exercised or converted, including the effect of share
warrants, share options and convertible corporate bonds that issued by the investee and could
be converted in current period.
If the Company holds, directly or indirectly 20% or more but less than 50% of the voting power
of the investee, it is presumed that the Company has significant influence of the investee, unless
it can be clearly demonstrated that in such circumstance, the Company cannot participate in the
decision-making in the production and operating of the investee.
(b) Determination of initial investment cost
(i) Long-term equity investments generated in business combinations
For a business combination involving enterprises under common control, if the Company makes
payment in cash, transfers non-cash assets or bears liabilities as the consideration for the
business combination, the share of carrying amount of the owners’ equity of the acquiree in the
consolidated financial statements of the ultimate controlling party is recognised as the initial
cost of the long-term equity investment on the combination date. The difference between the
initial investment cost and the carrying amount of cash paid, non-cash assets transferred and
liabilities assumed shall be adjusted against the capital reserve; if capital reserve is not enough
to be offset, undistributed profit shall be offset in turn.
For a business combination involving enterprises under common control, if the Company issues
equity securities as the consideration for the business combination, the share of carrying amount
of the owners’ equity of the acquiree in the consolidated financial statements of the ultimate
controlling party is recognised as the initial cost of the long-term equity investment on the
combination date. The total par value of the shares issued is recognised as the share capital. The
difference between the initial investment cost and the carrying amount of the total par value of
FIYTA Precision Technology Co., Ltd. Notes to the financial statements
the shares issued shall be adjusted against the capital reserve; if capital reserve is not enough to
be offset, undistributed profit shall be offset in turn.
For business combination not under common control, the assets paid, liabilities incurred or
assumed and the fair value of equity securities issued to obtain the control of the acquiree at the
acquisition date shall be determined as the cost of the business combination and recognised as
the initial cost of the long-term equity investment. The audit, legal, valuation and advisory fees,
other intermediary fees, and other relevant general administrative costs incurred for the business
combination, shall be recognised in profit or loss as incurred.
(ii) Long-term equity investments acquired not through the business combination, the
investment cost shall be determined based on the following requirements:
For long-term equity investments acquired by payments in cash, the initial cost is the actually
paid purchase cost, including the expenses, taxes and other necessary expenditures directly
related to the acquisition of long-term equity investments.
For long-term equity investments acquired through issuance of equity securities, the initial cost
is the fair value of the issued equity securities.
For the long-term equity investments obtained through exchange of non-monetary assets, if the
exchange has commercial substance, and the fair values of assets traded out and traded in can
be measured reliably, the initial cost of long-term equity investment traded in with non-
monetary assets are determined based on the fair values of the assets traded out together with
relevant taxes. Difference between fair value and book value of the assets traded out is recorded
in current profit or loss. If the exchange of non-monetary assets does not meet the above
criterion, the book value of the assets traded out and relevant taxes are recognised as the initial
investment cost.
For long-term equity investment acquired through debt restructuring, the initial cost is
determined based on the fair value of the equity obtained and the difference between initial
investment cost and carrying amount of debts shall be recorded in current profit or loss.
(c) Subsequent measurement and recognition of profit or loss
Long-term equity investment to an entity over which the Company has ability of control shall
be accounted for at cost method. Long-term equity investment to a joint venture or an associate
shall be accounted for at equity method.
(i) Cost method
For Long-term equity investment at cost method, cost of the long-term equity investment shall
be adjusted when additional amount is invested or a part of it is withdrawn. The Company
recognises its share of cash dividends or profits which have been declared to distribute by the
investee as current investment income.
(ii) Equity method
If the initial cost of the investment is in excess of the share of the fair value of the net identifiable
FIYTA Precision Technology Co., Ltd. Notes to the financial statements
assets in the investee at the date of investment, the difference shall not be adjusted to the initial
cost of long-term equity investment; if the initial cost of the investment is in short of the share
of the fair value of the net identifiable assets in the investee at the date investment, the difference
shall be included in the current profit or loss and the initial cost of the long-term equity
investment shall be adjusted accordingly.
The Company recognises the share of the investee’s net profits or losses, as well as its share of
the investee’s other comprehensive income, as investment income or losses and other
comprehensive income respectively, and adjusts the carrying amount of the investment
accordingly. The carrying amount of the investment shall be reduced by the share of any profit
or cash dividends declared to distribute by the investee. The investor’s share of the investee’s
owners’ equity changes, other than those arising from the investee’s net profit or loss, other
comprehensive income or profit distribution, shall be recognised in the investor’s equity, and
the carrying amount of the long-term equity investment shall be adjusted accordingly. The
Company recognises its share of the investee’s net profits or losses after making appropriate
adjustments of investee’s net profit based on the fair values of the investee’s identifiable net
assets at the investment date. If the accounting policy and accounting period adopted by the
investee is not in consistency with the Company, the financial statements of the investee shall
be adjusted according to the Company’s accounting policies and accounting period, based on
which, investment income or loss and other comprehensive income, etc., shall be adjusted. The
unrealized profits or losses resulting from inter-company transactions between the company
and its associate or joint venture are eliminated in proportion to the company’s equity interest
in the investee, based on which investment income or losses shall be recognised. Any losses
resulting from inter-company transactions between the investor and the investee, which belong
to asset impairment, shall be recognised in full.
Where the Company obtains the power of joint control or significant influence, but not control,
over the investee, due to additional investment or other reason, the relevant long-term equity
investment shall be accounted for by using the equity method, initial cost of which shall be the
fair value of the original investment plus the additional investment. Where the original
investment is classified as other equity investment, difference between its fair value and the
carrying value, in addition to the cumulative changes in fair value previously recorded in other
comprehensive income, shall be recogised into retained earnings of the period of using equity
method.
If the Company loses the joint control or significant influence of the investee for some reasons
such as disposal of equity investment, the retained interest shall be measured at fair value and
the difference between the carrying amount and the fair value at the date of loss the joint control
or significant influence shall be recognised in profit or loss. When the Company discontinues
the use of the equity method, the Company shall account for all amounts previously recognised
in other comprehensive income under equity method in relation to that investment on the same
basis as would have been required if the investee had directly disposed of the related assets or
liabilities.
FIYTA Precision Technology Co., Ltd. Notes to the financial statements
(d) Impairment testing and provision for impairment loss
For investment in subsidiaries, associates or a joint ventures, provision for impairment loss
please refer to Note 3.22.
(a) Classification of investment properties
Investment properties are properties to earn rentals or for capital appreciation or both, including:
(i)Land use right leased out
(ii)Land held for transfer upon appreciation
(iii)Buildings leased out
(b) The measurement model of investment property
The Company adopts the cost model for subsequent measurement of investment properties. For
provision for impairment please refer to Note 3.22.
The Company calculates the depreciation or amortization based on the net amount of
investment property cost less the accumulated impairment and the net residual value using
straight-line method. The estimated useful life and annual depreciation rates which are
determined according to the categories, estimated economic useful lives and estimated net
residual rates are listed as followings:
Estimated useful Annual depreciation rates
Category Residual rates (%)
life (year) (%)
Buildings and constructions 20-35 5.00 2.71-4.85
Fixed assets refer to the tangible assets with higher unit price held for the purpose of producing
commodities, rendering services, renting or business management with useful lives exceeding
one year.
(a) Recognition criteria of fixed assets
Fixed assets will only be recognised at the actual cost paid when obtaining as all the following
criteria are satisfied:
(i) It is probable that the economic benefits relating to the fixed assets will flow into the
Company;
(ii) The costs of the fixed assets can be measured reliably.
Subsequent expenditure for fixed assets shall be recorded in cost of fixed assets, if recognition
criteria of fixed assets are satisfied, otherwise the expenditure shall be recorded in current profit
or loss when incurred.
FIYTA Precision Technology Co., Ltd. Notes to the financial statements
(b) Depreciation methods of fixed assets
The Company begins to depreciate the fixed asset from the next month after it is available for
intended use using the straight-line-method. The estimated useful life and annual depreciation
rates which are determined according to the categories, estimated economic useful lives and
estimated net residual rates of fixed assets are listed as followings:
Depreciation Estimated useful Residual rates Annual depreciation
Category
method life (year) (%) rates (%)
Buildings and straight-line-
constructions method
straight-line-
Machinery equipment 10 5.00-10.00 9.00-9.50
method
straight-line-
Electrical equipment 5 5.00 19.00
method
straight-line-
Vehicles 5 5.00 19.00
method
straight-line-
Other equipment 5 5.00 19.00
method
For the fixed assets with impairment provided, the impairment provision should be excluded
from the cost when calculating depreciation.
At the end of reporting period, the Company shall review the useful life, estimated net residual
value and depreciation method of the fixed assets. Estimated useful life of the fixed assets shall
be adjusted if it is changed compared to the original estimation.
(a) Classification of construction in progress
Construction in progress is measured on an individual project basis.
(b) Recognition criteria and timing of transfer from construction in progress to fixed
assets
The initial book values of the fixed assets are stated at total expenditures incurred before they
are ready for their intended use, including construction costs, original price of machinery
equipment, other necessary expenses incurred to bring the construction in progress to get ready
for its intended use and borrowing costs of the specific loan for the construction or the
proportion of the general loan used for the constructions incurred before they are ready for their
intended use. The construction in progress shall be transferred to fixed asset when the
installation or construction is ready for the intended use. For construction in progress that has
been ready for their intended use but relevant budgets for the completion of projects have not
FIYTA Precision Technology Co., Ltd. Notes to the financial statements
been completed, the estimated values of project budgets, prices, or actual costs should be
included in the costs of relevant fixed assets, and depreciation should be provided according to
relevant policies of the Company when the fixed assets are ready for intended use. After the
completion of budgets needed for the completion of projects, the estimated values should be
substituted by actual costs, but depreciation already provided is not adjusted.
(a) Recognition criteria and period for capitalization of borrowing costs
The Company shall capitalize the borrowing costs that are directly attributable to the acquisition,
construction or production of qualifying assets when meet the following conditions:
(i) Expenditures for the asset are being incurred;
(ii) Borrowing costs are being incurred, and;
(iii) Acquisition, construction or production activities that are necessary to prepare the assets
for their intended use or sale are in progress.
Other borrowing cost, discounts or premiums on borrowings and exchange differences on
foreign currency borrowings shall be recognized into current profit or loss when incurred.
Capitalization of borrowing costs is suspended during periods in which the acquisition,
construction or production of a qualifying asset is interrupted abnormally and the interruption
is for a continuous period of more than 3 months.
Capitalization of such borrowing costs ceases when the qualifying assets being acquired,
constructed or produced become ready for their intended use or sale. The expenditure incurred
subsequently shall be recognised as expenses when incurred.
(b) Capitalization rate and measurement of capitalized amounts of borrowing costs
When funds are borrowed specifically for purchase, construction or manufacturing of assets
eligible for capitalization, the Company shall determine the amount of borrowing costs eligible
for capitalisation as the actual borrowing costs incurred on that borrowing during the period
less any interest income on bank deposit or investment income on the temporary investment of
those borrowings.
Where funds allocated for purchase, construction or manufacturing of assets eligible for
capitalization are part of a general borrowing, the eligible amounts are determined by the
weighted-average of the cumulative capital expenditures in excess of the specific borrowing
multiplied by the general borrowing capitalization rate. The capitalisation rate will be the
weighted average of the borrowing costs applicable to the general borrowing.
(a) Measurement method of intangible assets
Intangible assets are recognised at actual cost at acquisition.
(b) The useful life and amortisation of intangible assets
FIYTA Precision Technology Co., Ltd. Notes to the financial statements
(i) The estimated useful lives of the intangible assets with finite useful lives are as follows:
Estimated useful
Category Basis
life
Land use right 50years Legal life
The service life is determined by reference to the
Software 5 years period that can bring economic benefits to the
Company
The service life is determined by reference to the
Right to use the trademark 5-10 years period that can bring economic benefits to the
Company
For intangible assets with finite useful life, the estimated useful life and amortisation method
are reviewed annually at the end of each reporting period and adjusted when necessary. No
change has incurred in current year in the estimated useful life and amortisation method upon
review.
(ii) Assets of which the period to bring economic benefits to the Company are unforeseeable
are regarded as intangible assets with indefinite useful lives. The Company reassesses the useful
lives of those assets at every year end. If the useful lives of those assets are still indefinite,
impairment test should be performed on those assets at the balance sheet date.
(iii) Amortisation of the intangible assets
For intangible assets with finite useful lives, their useful lives should be determined upon their
acquisition and systematically amortised on a straight-line basis [units of production method]
over the useful life. The amortisation amount shall be recognised into current profit or loss or
capitalized as part of the cost of the related asset according to the beneficial items. The amount
to be amortised is cost deducting residual value. For intangible assets which has impaired, the
cumulative impairment provision shall be deducted as well. The residual value of an intangible
asset with a finite useful life shall be assumed to be zero unless: there is a commitment by a
third party to purchase the asset at the end of its useful life; or there is an active market for the
asset and residual value can be determined by reference to that market; and it is probable that
such a market will exist at the end of the asset’s useful life.
Intangible assets with indefinite useful lives shall not be amortised. The Company reassesses
the useful lives of those assets at every year end. If there is evidence to indicate that the useful
lives of those assets become finite, the useful lives shall be estimated and the intangible assets
shall be amortised systematically and reasonably within the estimated useful lives.
(c) Scope of Research and Development Expenditures
The Company classifies the expenses directly related to research and development activities as
research and development expenditures, including remuneration of research and development
staff, direct material, depreciation cost and long-term amortised expense, design fee, equipment
FIYTA Precision Technology Co., Ltd. Notes to the financial statements
commissioning fee, intangible assets amortisation cost, outsourcing research and development
cost, and other expenses, etc.
(d) Criteria of classifying expenditures on internal research and development projects into
research phase and development phase
Preparation activities related to materials and other relevant aspects undertaken by the Company
for the purpose of further development shall be treated as research phase.
Expenditures incurred during the research phase of internal research and development projects
shall be recognised in profit or loss when incurred.
Development activities after the research phase of the Company shall be treated as development
phase.
(e) Criteria for capitalization of qualifying expenditures during the development phase
Expenditures arising from development phase on internal research and development projects
shall be recognised as intangible assets only if all of the following conditions have been met:
(i) Technical feasibility of completing the intangible assets so that they will be available for use
or sale;
(ii) Its intention to complete the intangible asset and use or sell it;
(iii) The method that the intangible assets generate economic benefits, including the Company
can demonstrate the existence of a market for the output of the intangible assets or the intangible
assets themselves or, if it is to be used internally, the usefulness of the intangible assets;
(iv) The availability of adequate technical, financial and other resources to complete the
development and to use or sell the intangible asset; and
(v) Its ability to measure reliably the expenditure attributable to the intangible asset.
Impairment loss of long-term equity investment in subsidiaries, associates and joint ventures,
investment properties subsequently measured at cost, fixed assets ,constructions in progress,
intangible assets, and right of use assets, shall be determined according to following method:
The Company shall assess at the end of each reporting period whether there is any indication
that an asset may be impaired. If any such indication exists, the Company shall estimate the
recoverable amount of the asset and test for impairment. Irrespective of whether there is any
indication of impairment, the Company shall test for impairment of goodwill acquired in a
business combination, intangible assets with an indefinite useful life or intangible assets not yet
available for use annually.
The recoverable amounts of the long-term assets are the higher of their fair values less costs to
dispose and the present values of the estimated future cash flows of the long-term assets. The
Company estimate the recoverable amounts on an individual basis. If it is difficult to estimate
the recoverable amount of the individual asset, the Company estimates the recoverable amount
FIYTA Precision Technology Co., Ltd. Notes to the financial statements
of the groups of assets that the individual asset belongs to. Identification of a group of asset is
based on whether the cash inflows from it are largely independent of the cash inflows from
other assets or groups of assets.
If, and only if, the recoverable amount of an asset or a group of assets is less than its carrying
amount, the carrying amount of the asset shall be reduced to its recoverable amount and the
provision for impairment loss shall be recognised accordingly.
When test for impairment, if there is an indication that relevant group of assets or combination
of asset groups may be impaired, impairment testing for group of assets or combination of asset
groups excluding goodwill shall be conducted first, and the recoverable amount shall be then
calculated and the impairment loss shall be recognised accordingly. Then the group of assets or
combination of asset groups including goodwill shall be tested for impairment, by comparing
the carrying amount with its recoverable amount. If the recoverable amount is less than the
carrying amount, the Company shall recognise the impairment loss.
The mentioned impairment loss will not be reversed in subsequent accounting period once it
had been recognised.
Long-term deferred expenses are various expenses already incurred, which shall be amortised
over current and subsequent periods with the amortisation period exceeding one year.Long-
term deferred expenses are evenly amortised over the beneficial period.
Employee benefits refer to all forms of consideration or compensation given by the Company
in exchange for service rendered by employees or for the termination of employment
relationship. Employee benefits include short-term employee benefits, post-employment
benefits, termination benefits and other long-term employee benefits. Benefits provided to an
employee's spouse, children, dependents, family members of decreased employees, or other
beneficiaries are also employee benefits.
According to liquidity, employee benefits are presented in the statement of financial position as
“Employee benefits payable” and “Long-term employee benefits payable”.
(a) Short-term employee benefits
(i) Employee basic salary (salary, bonus, allowance, subsidy)
The Company recognises, in the accounting period in which an employee provides service,
actually occurred short-term employee benefits as a liability, with a corresponding charge to
current profit except for those recognised as capital expenditure based on the requirement of
accounting standards.
(ii) Employee welfare
The Company shall recognise the employee welfare based on actual amount when incurred into
current profit or loss or related capital expenditure. Employee welfare shall be measured at fair
FIYTA Precision Technology Co., Ltd. Notes to the financial statements
value as it is a non-monetary benefits.
(iii) Social insurance such as medical insurance, work injury insurance and maternity insurance,
housing funds, labor union fund and employee education fund
Payments made by the Company of social insurance for employees, such as medical insurance,
work injury insurance and maternity insurance, payments of housing funds, and labor union
fund and employee education fund accrued in accordance with relevant requirements, in the
accounting period in which employees provide services, is calculated according to required
accrual bases and accrual ratio in determining the amount of employee benefits and the related
liabilities, which shall be recognised in current profit or loss or the cost of relevant asset.
(iv) Short-term paid absences
The company shall recognise the related employee benefits arising from accumulating paid
absences when the employees render service that increases their entitlement to future paid
absences. The additional payable amounts shall be measured at the expected additional
payments as a result of the unused entitlement that has accumulated. The Company shall
recognise relevant employee benefit of non-accumulating paid absences when the absences
actually occurred.
(v)Short-term profit-sharing plan
The Company shall recognise the related employee benefits payable under a profit-sharing plan
when all of the following conditions are satisfied:
The Company has a present legal or constructive obligation to make such payments as a
result of past events; and
A reliable estimate of the amounts of employee benefits obligation arising from the profit-
sharing plan can be made.
(b) Post-employment benefits
(i) Defined contribution plans
The Company shall recognise, in the accounting period in which an employee provides service,
the contribution payable to a defined contribution plan as a liability, with a corresponding
charge to the current profit or loss or the cost of a relevant asset.
When contributions to a defined contribution plan are not expected to be settled wholly before
twelve months after the end of the annual reporting period in which the employees render the
related service, they shall be discounted using relevant discount rate (market yields at the end
of the reporting period on high quality corporate bonds in active market or government bonds
with the currency and term which shall be consistent with the currency and estimated term of
the defined contribution obligations) to measure employee benefits payable.
(ii) Defined benefit plan
The present value of defined benefit obligation and current service costs
FIYTA Precision Technology Co., Ltd. Notes to the financial statements
Based on the expected accumulative welfare unit method, the Company shall make estimates
about demographic variables and financial variables in adopting the unbiased and consistent
actuarial assumptions and measure defined benefit obligation, and determine the obligation
period. The Company shall discount the obligation arising from defined benefit plan using
relevant discount rate (market yields at the end of the reporting period on high quality corporate
bonds in active market or government bonds with the currency and term which shall be
consistent with the currency and estimated term of the defined benefit obligations) in order to
determine the present value of the defined benefit obligation and the current service cost.
The net defined benefit liability or asset
The net defined benefit liability (asset) is the deficit or surplus recognised as the present value
of the defined benefit obligation less the fair value of plan assets (if any).
When the Company has a surplus in a defined benefit plan, it shall measure the net defined
benefit asset at the lower of the surplus in the defined benefit plan and the asset ceiling.
The amount recognised in the cost of asset or current profit or loss
Service cost comprises current service cost, past service cost and any gain or loss on settlement.
Other service cost shall be recognised in profit or loss unless accounting standards require or
allow the inclusion of current service cost within the cost of assets.
Net interest on the net defined benefit liability (asset) comprising interest income on plan assets,
interest cost on the defined benefit obligation and interest on the effect of the asset ceiling, shall
be included in profit or loss.
The amount recognised in other comprehensive income
Changes in the net liability or asset of the defined benefit plan resulting from the
remeasurements including:
Actuarial gains and losses, the changes in the present value of the defined benefit obligation
resulting from experience adjustments or the effects of changes in actuarial assumptions;
Return on plan assets, excluding amounts included in net interest on the net defined benefit
liability or asset;
Any change in the effect of the asset ceiling, excluding amounts included in net interest on
the net defined benefit liability (asset).
Remeasurements of the net defined benefit liability (asset) recognised in other comprehensive
income shall not be reclassified to profit or loss in a subsequent period. Upon termination of
the original defined benefit plan, the Company may, within equity, transfer the entire amount
previously recognized in other comprehensive income to retained earning.
(c) Termination benefits
The Company providing termination benefits to employees shall recognise an employee
benefits liability for termination benefits, with a corresponding charge to the profit or loss of
FIYTA Precision Technology Co., Ltd. Notes to the financial statements
the reporting period, at the earlier of the following dates:
(i) When the Company cannot unilaterally withdraw the offer of termination benefits because
of an employment termination plan or a curtailment proposal.
(ii) When the Company recognises costs or expenses related to a restructuring that involves
the payment of termination benefits.
If the termination benefits are not expected to be settled wholly before twelve months after the
end of the annual reporting period, the Company shall discount the termination benefits using
relevant discount rate (market yields at the end of the reporting period on high quality corporate
bonds in active market or government bonds with the currency and term which shall be
consistent with the currency and estimated term of the defined benefit obligations) to measure
the employee benefits.
(d) Other long-term employee benefits
(i) Meet the conditions of the defined contribution plan
When other long-term employee benefits provided by the Company to the employees satisfies
the conditions for classifying as a defined contribution plan, all those benefits payable shall be
accounted for as employee benefits payable at their discounted value.
(ii) Meet the conditions of the defined benefit plan
At the end of the reporting period, the Company recognised the cost of employee benefit from
other long-term employee benefits as the following components:
Service costs;
Net interest cost for net liability or asset of other long-term employee benefits
Changes resulting from the remeasurements of the net liability or asset of other long-term
employee benefits
In order to simplify the accounting treatment, the net amount of above items shall be recognised
in profit or loss or relevant cost of assets.
(a) Recognition criteria of estimated liabilities
The Company recognises the estimated liabilities when obligations related to contingencies
satisfy all the following conditions:
(i) That obligation is a current obligation of the Company;
(ii) It is likely to cause any economic benefit to flow out of the Company as a result of
performance of the obligation; and
(iii) The amount of the obligation can be measured reliably.
(b) Measurement method of estimated liabilities
FIYTA Precision Technology Co., Ltd. Notes to the financial statements
The estimated liabilities of the Company are initially measured at the best estimate of expenses
required for the performance of relevant present obligations. The Company, when determining
the best estimate, has had a comprehensive consideration of risks with respect to contingencies,
uncertainties and the time value of money. The carrying amount of the estimated liabilities shall
be reviewed at the end of every reporting period. If conclusive evidences indicate that the
carrying amount fails to be the best estimate of the estimated liabilities, the carrying amount
shall be adjusted based on the updated best estimate.
(a) Classification of share-based payments
Share-based payments of the Company include equity-settled share-based payments and cash-
settled share-based payments.
(b) Determining fair value of equity instruments
(i) The fair value of shares granted to the employees can be determined by reference to the
quotations in the active market, adjusted in accordance with the terms and conditions granted
(excluding vesting conditions other than market conditions).
(ii) For share option granted to the employees, it is usually difficult to obtain its market price.
If the share option with similar terms and conditions is not available, the Company estimates
the fair value of those options using an applicable option pricing model.
(c) Basis of best estimate of equity instruments expected to vest
Every balance sheet date during the vesting period, the Company makes best estimate according
to the most updated number of employees that are eligible to exercise their options and revises
the number of equity instruments expected to vest in order to make the best estimate of equity
instruments expected to vest.
(d) Accounting for implementation of share-based payment programs
Cash-settled share-based payment
(i) For cash-settled share-based payment vested immediately after granting, the Company shall
recognise relevant costs or expenses at the fair value of the liability borne at grant date and a
corresponding increase in liability. Until the liability is settled, the Company shall remeasure
the fair value of the liability at the end of each reporting period and at the date of settlement,
with any changes in fair value recognised in profit or loss.
(ii) If the share instrument do not vest until services during the vesting period are completed or
performance conditions are satisfied during the vesting period, at the end of each reporting
period during the vesting period, the Company shall recognise relevant costs or expenses and
the corresponding increase in liability for services received in the reporting period at the fair
value of the liability borne, based on the best available estimate of the number expected to vest.
Equity-settled share-based payment
FIYTA Precision Technology Co., Ltd. Notes to the financial statements
(i) For equity-settled share-based payment transaction in which services are received, if the
equity instrument granted vest immediately, the Company shall recognise relevant costs or
expenses at the fair value of the equity instruments at grant date and the corresponding increase
in capital reserve.
(ii) If the equity instrument do not vest until services during the vesting period are completed
or performance conditions are satisfied , at the end of each reporting period during the vesting
period, the Company shall recognise relevant costs or expenses and the corresponding increase
in capital reserve for services received in the reporting period at the fair value of the equity
instruments at grant date, based on the best available estimate of the number of equity
instruments expected to vest.
(e) Accounting for modification of share-based payment programs
When the Company modifies terms and conditions of the share-based payment program, if the
modification increases the fair value of the equity instruments granted, the increased amount
should be recognised for service received accordingly; if the quantity granted of the equity
instruments is increased, the increased amount should be recgonised for service received
accordingly as well. If the modification reduces the total fair value of the share-based payment
arrangement, or the terms are changed in such a way that the arrangement is no longer for the
benefit of the employee, the entity is still required to account for the services received as
consideration for the equity instruments granted as if that modification had not occurred unless
a part or all of the equity instruments are cancelled.
(f) Accounting for termination of share-based payment programs
If a grant of equity instruments is cancelled or settled during the vesting period (other than a
grant cancelled by forfeiture when the vesting conditions are not satisfied), the Company shall:
(i) Account for the cancellation or settlement as an acceleration of vesting, and therefore
recognise immediately the amount that otherwise would have been recognised for services
received over the remainder of the vesting period.
(ii)Account for any payment made to the employee on the cancellation or settlement of the grant
as the repurchase of an equity interest, and recognize any excess of the payment over the fair
value of the equity instruments measured at the repurchase date as an expense.
If the Company repurchases vested equity instruments, the payment made to the employee shall
be accounted for as a deduction from equity, and recognize any excess of the payment over the
fair value of the equity instruments measured at the repurchase date shall be recognised in
current profit or loss.
(a) General Principle
Revenue is defined as the gross inflow of economic benefits arising in the course of the ordinary
activities of the Company when those inflows result in the increases in shareholders’ equity,
FIYTA Precision Technology Co., Ltd. Notes to the financial statements
other than increases relating to contributions from shareholders.
The Company shall recognise revenue when it satisfies a performance obligation in the contract
as the customer obtains control of a good or service. Control of a good or service refers to the
ability to direct the use of, and obtain substantially all of the remaining economic benefits from,
the good or service.
When the contract has two or more obligation performances, the Company shall allocate the
transaction price to each performance obligation in proportion to a relative stand-alone selling
price at contract inception of the promised good or service underlying each performance
obligation in the contract and recognize revenue based on the transaction price allocated to each
performance obligation.
The transaction price is the amount of consideration to which the Company expects to be
entitled in exchange for transferring promised goods or services to a customer, excluding
amounts collected on behalf of third parties. When determining the transaction price of the
contract, if the contract includes a variable consideration, the Company shall determine the best
estimate of the variable consideration based on the expected value or the most likely amount
and include in the transaction price only to the extent that it is highly probable that a significant
reversal in the amount of cumulative revenue recognised will not occur when the uncertainty
associated with the variable consideration is subsequently resolved. If the contract contains a
significant financing component, the Company shall determine the transaction price at an
amount that reflects the price that a customer would have paid for the promised goods or
services if the customer had paid cash for those goods or services when (or as) they transfer to
the customer. The difference between the transaction price and the promised consideration shall
be amortised using the effective interest method within the contract period. The Company need
not consider the effects of a significant financing component if the period between when the
Company transfers control of a good or service to a customer and when the customer pays for
that good or service will be one year or less.
The Company satisfies a performance obligation over time, if one of the following criteria is
met; otherwise a performance obligation is satisfied at a point in time:
(i) the customer simultaneously receives and consumes the benefits provided by the Company’s
performance as the Company performs;
(ii) the Company’s performance creates or enhances an asset (for example, work in progress)
that the customer controls as the asset is created or enhanced;
(iii) the Company’s performance does not create an asset with an alternative use to the Company
and the Company has an enforceable right to payment for performance completed to date.
For each performance obligation satisfied over time, the Company shall recognise revenue over
time by measuring the progress towards complete satisfaction of that performance obligation,
unless those progress cannot be reasonably measured. The Company measures the progress of
a performance obligation for the service rendered using input methods (or output methods). In
some circumstances, the Company cannot be able to reasonably measure the progress of a
FIYTA Precision Technology Co., Ltd. Notes to the financial statements
performance obligation, but the Company expects to recover the costs incurred in satisfying the
performance obligation. In those circumstances, the Company shall recognise revenue only to
the extent of the costs incurred until such time that it can reasonably measure the progress of
the performance obligation.
The Company shall recognise revenue at the point in which a customer obtains control of a
promised good or service if a performance obligation is satisfied at a point in time. To determine
the point in time at which a customer obtains control of a promised good or service, the
Company shall consider indicators of the transfer of control, which include, but are not limited
to, the followings:
(i) The Company has a present right to payment for the good or service – a customer is presently
obliged to pay for the good or service;
(ii) The Company has transferred legal title of an asset to a customer - the customer has legal
title to the asset;
(iii) The Company has transferred physical possession of an asset to a customer - the customer
has physical possession of the asset;
(iv) The Company has transferred the significant risks and rewards of ownership of the asset to
a customer - the customer has the significant risks and rewards of ownership of the asset;
(v) The customer has accepted the asset.
Sale with a right of return
For sales with a right of return, when the customer obtains the control of a product, the Company
shall recognise revenue for the transferred products in the amount of consideration to which the
Company expects to be entitled and a refund liability at the amounts receivable for which the
Company does not expect to be entitled; meanwhile, an asset shall be recognised as receivables
on the cost of return measured at the former carrying amount of the product expected to be
returned less any expected costs to recover those products (including potential decreases in the
value to the entity of returned products), and the net amount of the former carrying amount of
the product when transferred to the customer less above mentioned cost shall be recorded into
the cost of sales. At the end of each reporting period, the Company shall re-assess the
expectations about the sales return and remeasure above mentioned assets and liabilities.
Warranties
In accordance with the contract, the law or other requirements, the Company provides a
warranty in connection with the sale of a product or construction of a project. For warranties
which provide a customer with assurance that the related product will function as the parties
intended because it complies with agreed-upon specifications, the Company shall treat it in
accordance with " Accounting Standards for Business Enterprise No. 13-Contingencies". If a
warranty, or a part of a warranty, provides a customer with a service in addition to the assurance
that the product complies with agreed-upon specifications, the Company shall treat it as a
performance obligation, and allocate the transaction price to the warranty based on the relative
FIYTA Precision Technology Co., Ltd. Notes to the financial statements
proportion to the stand-alone selling price of the product and the service, and recognise revenue
when the customer obtains the control of the service. In assessing whether a warranty provides
a customer with a service in addition to the assurance that the product complies with agreed-
upon specifications, the Company shall consider factors such as: whether the warranty is
required by law; the length of the warranty coverage period and the nature of the tasks that the
Company promises to perform.
Principal versus agent considerations
The Company determines whether it is a principal or an agent of the transaction on the basis of
whether it has control over the goods or services before they are transferred to customers. If the
Company obtains the control of the specified goods or services from another party and then
transfers the goods or services to the customer, the Company is therefore a principal, and
recognises revenue in the gross amount of consideration to which it expects to be entitled in
exchange for the specified goods or services transferred. Otherwise, the Company is an agent,
and shall recognise revenue in the amount of any fee or commission to which it expects to be
entitled in exchange for arranging for the specified goods or services to be provided by another
party. The fee or commission might be the net amount of received or receivable consideration
that the Company retains after paying the other party the consideration received in exchange
for the goods or services to be provided by that party or determined based on the specified
commission amount or proportion.
Consideration payable to a customer
The Company shall account for consideration payable to a customer as a reduction of the
transaction price unless the payment to the customer is in exchange for a distinct good or service
that the customer transfers to the Company. The reduction of revenue shall be recognised when
(or as) the later of either of the following events occurs: the Company recognises revenue for
the transfer of the related goods or services to the customer; and the Company pays or promises
to pay the consideration.
Customers’ unexercised rights
Upon receipt of a prepayment for a good or service from a customer, the Company shall
recognise a contract liability in the amount of the prepayment and recognise revenue when it
satisfies its performance obligation. If the prepayment to the Company is non-refundable and
the customer may not exercise part or all of its contractual rights, and the Company expects to
be entitled to a breakage amount related to those unexercised rights of the customer, the
Company shall recognise the expected breakage amount as revenue in proportion to the pattern
of rights exercised by the customer; otherwise, the Company shall recognise the remaining
balance of above mentioned liability as revenue when the likelihood of the customer exercising
its remaining rights becomes remote.
Contract modifications
When the construction contract modifications exist between the Company and the customer:
FIYTA Precision Technology Co., Ltd. Notes to the financial statements
(i) The Company shall account for a contract modification as a separate contract if the
modification results in the addition of promised construction services that are distinct and
increase of the price of the contract, and the price of the contract increases by an amount of
consideration that reflects the Company’s stand-alone selling prices of the additional promised
construction services;
(ii) If the contract modification is not accounted for as a separate contract in accordance with
above mentioned circumstance, and the remaining construction services are distinct from the
construction services transferred on or before the date of the contract modification, the
Company shall account for the contract modification as if it were a termination of the existing
contract and the creation of a new contract with the combination of the remaining performance
obligations of the existing contract and the contract modification.
(iii) If the contract modification is not accounted for as a separate contract in accordance with
above mentioned circumstance, and the remaining construction services cannot be distinct from
the construction services transferred on or before the date of the contract modification, the
Company shall account for the contract modification as if it were a part of the existing contract
and the effect that the contract modification has on the transaction price, and on the entity’s
measure of progress towards complete satisfaction of the performance obligation, is recognised
as an adjustment to revenue at the date of the contract modification.
(b) Specific Method
Revenue recognition methods of the Company are as follows:
(i) Sales of watch
Sale of watch belongs to fulfilling performance obligations at a point of time.
A. Online sales
Revenue shall be recognized at the point that the goods are dispatched, the customer confirmed
received the goods, and the platform has collected the payment
B. Offline sales
Revenue shall be recognized at the point when the goods are delivered and payment by
customer is collected.
Revenue shall be recognized at the point when the products are delivered to and accepted by
the customer, the payment has been received or the right to collect payment is obtained, and
related economic benefits are probable to flow into the entity
C. Consignment sale
Under consignment sales arrangements, revenue is recognized upon receiving the sales list from
the consignee, confirming that control of goods has been transferred to the customer.
D. Sale of consigned goods from others
FIYTA Precision Technology Co., Ltd. Notes to the financial statements
Under sale arrangement of consigned goods from others, the Company recognizes revenue
using the net method when external consigned products are delivered to customers and control
of the goods has been transferred to the buyer
(ii) Precision manufacturing
Precision manufacturing business belongs to fulfilling performance obligations at a point of
time. Revenue from domestic sales shall be recognized when the goods are delivered and the
economic benefit associated with the goods is probable to flow into the Company. Revenue
from export shall be recognized when the following criteria is satisfied: the Company declared
the good at custom; obtained bill of lading; the right of collecting payment is obtained and its
probable that the economic benefit associated with the goods flows into the Company.
(iii) Property leasing
For the accounting treatment of the Company as a lessor, please refer to Note 3.30.
(a) Recognition of government grants
A government grant shall not be recgonised until there is reasonable assurance that:
(i) The Company will comply with the conditions attaching to them; and
(ii) The grants will be received.
(b) Measurement of government grants
Monetary grants from the government shall be measured at amount received or receivable, and
non-monetary grants from the government shall be measured at their fair value or at a nominal
value of RMB 1.00 when reliable fair value is not available.
(c) Accounting for government grants
(i) Government grants related to assets
Government grants pertinent to assets mean the government grants that are obtained by the
Company used for purchase or construction, or forming the long-term assets by other ways.
Government grants pertinent to assets shall be recognised as deferred income, and should be
recognised in profit or loss on a systematic basis over the useful lives of the relevant assets.
Grants measured at their nominal value shall be directly recognised in profit or loss of the period
when the grants are received. When the relevant assets are sold, transferred, written off or
damaged before the assets are terminated, the remaining deferred income shall be transferred
into profit or loss of the period of disposing relevant assets.
(ii) Government grants related to income
Government grants other than related to assets are classified as government grants related to
income. Government grants related to income are accounted for in accordance with the
following principles:
FIYTA Precision Technology Co., Ltd. Notes to the financial statements
If the government grants related to income are used to compensate the enterprise’s relevant
expenses or losses in future periods, such government grants shall be recognised as deferred
income and included into profit or loss in the same period as the relevant expenses or losses are
recognised;
If the government grants related to income are used to compensate the enterprise’s relevant
expenses or losses incurred, such government grants are directly recognised into current profit
or loss.
For government grants comprised of part related to assets as well as part related to income, each
part is accounted for separately; if it is difficult to identify different part, the government grants
are accounted for as government grants related to income as a whole.
Government grants related to daily operation activities are recognised in other income in
accordance with the nature of the activities, and government grants irrelevant to daily operation
activities are recognised in non-operating income.
(iii) Loan interest subsidy
When loan interest subsidy is allocated to the bank, and the bank provides a loan at lower-
market rate of interest to the Company, the loan is recognised at the actual received amount,
and the interest expense is calculated based on the principal of the loan and the lower-market
rate of interest.
When loan interest subsidy is directly allocated to the Company, the subsidy shall be recognised
as offsetting the relevant borrowing cost.
(iv) Repayment of the government grants
Repayment of the government grants shall be recorded by increasing the carrying amount of
the asset if the book value of the asset has been written down, or reducing the balance of relevant
deferred income if deferred income balance exists, any excess will be recognised into current
profit or loss; or directly recognised into current profit or loss for other circumstances.
Temporary differences are differences between the carrying amount of an asset or liability in
the statement of financial position and its tax base at the balance sheet date. The Company
recognise and measure the effect of taxable temporary differences and deductible temporary
differences on income tax as deferred tax liabilities or deferred tax assets using liability method.
Deferred tax assets and deferred tax liabilities shall not be discounted.
(a) Recognition of deferred tax assets
Deferred tax assets should be recognised for deductible temporary differences, the carryforward
of unused tax losses and the carryforward of unused tax credits to the extent that it is probable
that taxable profit will be available against which the deductible temporary differences, the
carryforward of unused tax losses and the carryforward of unused tax credits can be utilised at
the tax rates that are expected to apply to the period when the asset is realised, unless the
FIYTA Precision Technology Co., Ltd. Notes to the financial statements
deferred tax asset arises from the initial recognition of an asset or liability in a transaction that:
(i) Is not a business combination; and
(ii) At the time of the transaction, affects neither accounting profit nor taxable profit (tax loss)
However, a single transaction that meets both of the above two conditions and where the
initially recognized assets and liabilities give rise to equal amounts of taxable temporary
differences and deductible temporary differences is not eligible for the exemption from the
requirement to initially recognize deferred tax liabilities and deferred tax assets under this
provision. For the taxable temporary differences and deductible temporary differences arising
from the initial recognition of the assets and liabilities of such a transaction, the Company
recognizes the corresponding deferred tax liabilities and deferred tax assets separately at the
time of the transaction.
The Company shall recognise a deferred tax asset for all deductible temporary differences
arising from investments in subsidiaries, associates and joint ventures, only to the extent that,
it is probable that:
(i) The temporary difference will reverse in the foreseeable future; and
(ii) Taxable profit will be available against which the deductible temporary difference can be
utilised.
At the end of each reporting period, if there is sufficient evidence that it is probable that taxable
profit will be available against which the deductible temporary difference can be utilized, the
Company recognises a previously unrecognised deferred tax asset.
The carrying amount of a deferred tax asset shall be reviewed at the end of each reporting period.
The Company shall reduce the carrying amount of a deferred tax asset to the extent that it is no
longer probable that sufficient taxable profit will be available to allow the benefit of part or all
of that deferred tax asset to be utilised. Any such reduction shall be reversed to the extent that
it becomes probable that sufficient taxable profit will be available.
(b) Recognition of deferred tax liabilities
A deferred tax liability shall be recognised for all taxable temporary differences at the tax rate
that are expected to apply to the period when the liability is settled.
(i) No deferred tax liability shall be recognised for taxable temporary differences arising from:
The initial recognition of goodwill; or
The initial recognition of an asset or liability in a transaction which: is not a business
combination; and at the time of the transaction, affects neither accounting profit nor taxable
profit (tax loss)
(ii) An entity shall recognise a deferred tax liability for all taxable temporary differences
associated with investments in subsidiaries, associates, and joint ventures, except to the extent
that both of the following conditions are satisfied:
FIYTA Precision Technology Co., Ltd. Notes to the financial statements
The Company is able to control the timing of the reversal of the temporary difference; and
It is probable that the temporary difference will not reverse in the foreseeable future.
(c) Recognition of deferred tax liabilities or assets involved in special transactions or
events
(i) Deferred tax liabilities or assets related to business combination
For the taxable temporary difference or deductible temporary difference arising from a business
combination not under common control, a deferred tax liability or a deferred tax asset shall be
recognised, and simultaneously, goodwill recognised in the business combination shall be
adjusted based on relevant deferred tax expense (income).
(ii) Items directly recognised in equity
Current tax and deferred tax related to items that are recognised directly in equity shall be
recognised in equity. Such items include: other comprehensive income generated from fair
value fluctuation of other debt investments; an adjustment to the opening balance of retained
earnings resulting from either a change in accounting policy that is applied retrospectively or
the correction of a prior period (significant) error; amounts arising on initial recognition of the
equity component of a compound financial instrument that contains both liability and equity
component.
(iii) Unused tax losses and unused tax credits
Unused tax losses and unused tax credits generated from daily operation of the Company itself
Deductible loss refers to the loss calculated and permitted according to the requirement of tax
law that can be offset against taxable income in future periods. The criteria for recognising
deferred tax assets arising from the carryforward of unused tax losses and tax credits are the
same as the criteria for recognising deferred tax assets arising from deductible temporary
differences. The Company recognises a deferred tax asset arising from unused tax losses or tax
credits only to the extent that there is convincing other evidence that sufficient taxable profit
will be available against which the unused tax losses or unused tax credits can be utilised by
the Company. Income taxes in current profit or loss shall be deducted as well.
Unused tax losses and unused tax credits arising from a business combination
Under a business combination, the acquiree’s deductible temporary differences which do not
satisfy the criteria at the acquisition date for recognition of deferred tax asset shall not be
recognised. Within 12 months after the acquisition date, if new information regarding the facts
and circumstances exists at the acquisition date and the economic benefit of the acquiree’s
deductible temporary differences at the acquisition is expected to be realised, the Company
shall recognise acquired deferred tax benefits and reduce the carrying amount of any goodwill
related to this acquisition. If goodwill is reduced to zero, any remaining deferred tax benefits
shall be recognised in profit or loss. All other acquired deferred tax benefits realised shall be
recognised in profit or loss.
FIYTA Precision Technology Co., Ltd. Notes to the financial statements
(iv) Temporary difference generated in consolidation elimination
When preparing consolidated financial statements, if temporary difference between carrying
value of the assets and liabilities in the consolidated financial statements and their taxable bases
is generated from elimination of inter-company unrealized profit or loss, deferred tax assets or
deferred tax liabilities shall be recognised in the consolidated financial statements, and income
taxes expense in current profit or loss shall be adjusted as well except for deferred tax related
to transactions or events recognised directly in equity and business combination.
(v) Share-based payment settled by equity
If tax authority permits tax deduction that relates to share-based payment, during the period in
which the expenses are recognised according to the accounting standards, the Company
estimates the tax base in accordance with available information at the end of the accounting
period and the temporary difference arising from it. Deferred tax shall be recognised when
criteria of recognition are satisfied. If the amount of estimated future tax deduction exceeds the
amount of the cumulative expenses related to share-based payment recognised according to the
accounting standards, the tax effect of the excess amount shall be recognised directly in equity.
(d) Basis for deferred income tax assets and deferred income tax liabilities presented on a
net basis
The Company shall offset deferred tax assets and deferred tax liabilities if, and only if: (i) the
Company has a legally enforceable right to set off current tax assets against current tax liabilities;
and
(ii) the deferred tax assets and the deferred tax liabilities relate to income taxes levied by the
same taxation authority on either:
the same taxable entity; or
different taxable entities which intend either to settle current tax liabilities and assets on a
net basis, or to realise the assets and settle the liabilities simultaneously, in each future period
in which significant amounts of deferred tax liabilities or assets are expected to be settled or
recovered.
(a) Identifying a lease
At inception of a contract, the Company shall assess whether the contract is, or contains, a lease.
A contract is, or contains, a lease if the contract conveys the right to control the use of one or
more identified assets for a period of time in exchange for consideration. To assess whether a
contract conveys the right to control the use of an identified asset for a period of time, the
Company shall assess whether, throughout the period of use, the customer has the right to obtain
substantially all of the economic benefits from use of the identified asset and to direct the use
of the identified asset.
(b) Identifying a separate lease component
FIYTA Precision Technology Co., Ltd. Notes to the financial statements
When a contract includes more than one separate lease components, the Company shall separate
components of the contract and account for each lease component separately. The right to use
an underlying asset is a separate lease component if both conditions have been satisfied: (i) the
lessee can benefit from use of the underlying asset either on its own or together with other
resources that are readily available to the lessee; (ii) the underlying asset is neither highly
dependent on, nor highly interrelated with, the other underlying assets in the contract.
(c) The Company as a lessee
At the commencement date, the Company identifies the lease that has a lease term of 12 months
or less and does not contain a purchase option as a short-term lease. A lease qualifies as a lease
of a low-value asset if the nature of the asset is such that, when new, the asset is typically of
low value. If the Company subleases an asset, or expects to sublease an asset, the head lease
does not qualify as a lease of a low-value asset.
For all the short-term leases or leases for which the underlying asset is of low value, the
Company shall recognise the lease payments associated with those leases as cost of relevant
asset or expenses in current profit or loss on a straight-line basis over the lease term.
Except for the election of simple treatment as short-term lease or lease of a low-value asset as
mentioned above, at the commencement date, the Company shall recognise a right-of-use asset
and a lease liability.
(i) Right-of-use asset
A right-of-use asset is an asset that represents a lessee’s right to use an underlying asset for the
lease term.
At the commencement date, the Company shall initially measure the right-of-use asset at cost.
The cost of the right-of-use asset shall comprise:
the amount of the initial measurement of the lease liability；
any lease payments made at or before the commencement date, less any lease incentives
received;
any initial direct costs incurred by the lessee; and
an estimate of costs to be incurred by the lessee in dismantling and removing the underlying
asset, restoring the site on which it is located or restoring the underlying asset to the condition
required by the terms and conditions of the lease. The Company recognises and measures the
cost in accordance with the recognition criteria and measurement method for estimated
liabilities, details please refer to Notes 3.25. Those costs incurred to produce inventories shall
be included in the cost of inventories.
The right-of-use asset shall be depreciated according to the categories using straight‐line
method. If it is reasonably certain that the ownership of the underlying asset shall be transferred
to the lessee by the end of the lease term, the depreciation rate shall be determined based on the
classification of the right-of- use asset and estimated residual value rate from the
FIYTA Precision Technology Co., Ltd. Notes to the financial statements
commencement date to the end of the useful life of the underlying asset. Otherwise, the
depreciation rate shall be determined based on the classification of the right-of-use asset from
the commencement date to the earlier of the end of the useful life of the right-of-use asset or
the end of the lease term.
After the commencement date, the Company shall remeasure the lease liability based on the
revised present value of the lease payments and adjust the carrying amount of the right-of-use
asset if there is a change in the in-substance fixed payments, or change in the amounts expected
to be payable under a residual value guarantee, or change in an index or a rate used to determine
lease payments, or change in the assessment or exercising of an option to purchase the
underlying asset, or an option to extend or terminate the lease.
(d) The Company as a lessor
At the commencement date, the Company shall classify a lease as a finance lease if it transfers
substantially all the risks and rewards incidental to ownership of an underlying asset, otherwise
it shall be classified as an operating lease.
(i) Operating leases
The Company shall recognise lease payments from operating leases as income on a straight-
line basis over the term of the relevant lease and the initial direct costs incurred in obtaining an
operating lease shall be capitalised and recognised as an expense over the lease term on the
same basis as the lease income. The Company shall recognise the variable lease payments
relating to the operating lease but not included in the measurement of the lease receivables into
current profit or loss when incurred.
(ii) Finance leases
At the commencement date, the Company shall recognise the lease receivables at an account
equal to the net investment in the lease (the sum of the present value of the unguaranteed
residual values and the lease payment that are not received at the commencement date
discounted at the interest rate implicit in the lease) and derecognise the asset relating to the
finance lease. The Company shall recognise interest income using the interest rate implicit in
the lease over the lease term.
The Company shall recognise the variable lease payments relating to the finance lease but not
included in the measurement of the net investment in the lease into current profit or loss when
incurred.
(e) Lease modifications
(i) A lease modification accounted for as a separate lease
The Company shall account for a modification to a lease as a separate lease, if both:
the modification increases the scope of the lease by adding the right to use one or more
underlying assets; and
the consideration for the lease increases by an amount commensurate with the stand-alone
FIYTA Precision Technology Co., Ltd. Notes to the financial statements
price for the increase in scope.
(ii) A lease modification not accounted for as a separate lease
The Company as a lessee
At the effective date of the lease modification, the Company shall redetermine the lease term
of the modified lease and remeasure the lease liability by discounting the revised lease payments
using a revised discount rate. The revised discount rate is determined as the interest rate implicit
in the lease for the remainder of the lease term, if that rate can be readily determined, or the
incremental borrowing rate at the effective date of the modification, if the interest rate implicit
in the lease cannot be readily determined.
The Company shall account for the remeasurement of the lease liability by:
decreasing the carrying amount of the right-of-use asset to reflect the partial or full
termination of the lease for lease modifications that decrease the scope of the lease or shorten
the lease term. The Company shall recognise in profit or loss any gain or loss relating to the
partial or full termination of the lease.
Making a corresponding adjustment to the carrying amount of the right-of-use asset for all
other lease modifications.
The Company as a lessor
The Company shall account for a modification to an operating lease as a new lease from the
effective date of the modification, considering any prepaid or accrued lease payments relating
to the original lease as part of the lease payments for the new lease.
For a modification to a finance lease that is not accounted for as a separate lease, the Company
shall account for the modification as follows:
if the lease would have been classified as an operating lease had the modification been in
effect at the inception date, the Company shall account for the lease modification as a new lease
from the effective date of the modification and measure the carrying amount of the underlying
asset as the net investment in the lease immediately before the effective date of the lease
modification;
if the lease would have been classified as a finance lease had the modification been in effect
at the inception date, the Company shall account for the lease modification according to the
requirements in the modification or renegotiation of the contract.
(f) Sale and leaseback
The Company shall determine whether the transfer of an asset under the sale and leaseback
transaction is a sale of that asset according to the policies in Note 3.27.
(i) The Company as a seller (lessee)
If the transfer of the asset is not a sale, the Company shall continue to recognise the transferred
asset and shall recognise a financial liability equal to the transfer proceeds. It shall account for
FIYTA Precision Technology Co., Ltd. Notes to the financial statements
the financial liability according to Note 3.11. If the transfer of the asset is a sale, the Company
shall measure the right-of-use asset arising from the leaseback at the proportion of the previous
carrying amount of the asset that relates to the right of use retained by the Company.
Accordingly, the Company shall recognise only the amount of any gain or loss that relates to
the rights transferred to the buyer-lessor.
(ii) The Company as a buyer (lessor)
If the transfer of the asset is not a sale, the Company shall not recognise the transferred asset
and shall recognise a financial asset equal to the transfer proceeds. It shall account for the
financial asset according to Note 3.11. If the transfer of the asset is a sale, the Company shall
account for the purchase of the asset applying applicable Accounting Standards of Business
Enterprises, and for the lease applying the lessor accounting requirements.
According to the relevant regulations, the Company accrues the safety production costs.
The safety production costs shall be recognised in the cost of the relevant products or current
profit or loss when makes the accrual, and included in the “special reserve” account
simultaneously.
When the accrued safety production costs are used within the scope of the regulations, it shall
be treated as expense and directly deducted from the special reserve; if the fixed assets are
capitalized, the expenditure incurred shall be firstly collectively recorded in “construction in
progress” and recognised as fixed asset when the safety project has been completed for its
intended use. At the same time, the cost that capitalized as the fixed assets shall be deducted
from the special reserve and the accumulated depreciation with the same amount shall be
recognised. The fixed assets shall not be depreciated in subsequent reporting period.
(a) If the Company reduces its registered capital through repurchase of the Company’s share
according to the approval required in relevant laws and regulations, the share capital shall be
reduced at the par value of the shares deregistered, the difference between the consideration
paid for repurchase (including the transaction cost) and the par value of the shares shall adjust
the owner’s equity. Any excess of the total par value shall offset the capital reserve (share
premium), surplus reserve and retained earnings in turn. If the consideration paid is less than
the total par value, the difference shall increase the capital reserve (share premium).
(b) Before being deregistered or transfered, shares repurchased by the Company shall be treated
as treasury stock and all expenditures of the repurchase shall be recognised as the cost of
treasury stock.
(c) Any excess of the income generated from transferring the treasury stock over their cost shall
increase the capital reserve (share premium), and any less shall offset the capital reserve (share
premium), surplus reserve and retained earnings in turn.
FIYTA Precision Technology Co., Ltd. Notes to the financial statements
In the equity incentive plan, the Company shall grant restricted shares to the motivated target,
and the motivated object first subscribes for the stock. If the subsequent unlocking conditions
specified in the equity incentive plan are not met, the Company repurchases the stock at the
price agreed in advance. If the restricted shares issued to employees are subject to the
procedures for capital increase such as registration in accordance with relevant regulations, at
grant date, the Company shall recognise the share capital and capital reserve (share premium)
based on the received subscription fees from the employees; treasury stocks and other payables
shall be recognised based on the repurchase obligation.
(a) Changes in accounting polices
The Company has no significant changes in accounting polices for the reporting period..
(b) Significant changes in accounting estimates
The Company has no significant changes in accounting estimates for the reporting period.
Categories of tax Basis of tax assessment Tax rate
Output tax is calculated at rates of 5%, 6%,
Value added tax (VAT) Taxable revenue
deducting input tax as per regulations, the
net tax payable is determined.
Taxable Price and Sales
Consumption tax Volume of High-End Watch 20%
Sales Revenue
Urban maintenance and
Turnover tax payable 5%, 7%
construction tax
Property tax 1.2%, 12%
cost of property
Tax rates of income tax of different subsidiaries are stated as below:
Name of Taxpayer Rate of Income Tax
FIYTA Precision Technology Co., Ltd. 25%
Shenzhen HARMONY World Watch Center Co., Ltd. (i) 25%
FIYTA Sales Co., Ltd. (i) 25%
Shenzhen FIYTA Precision Technology Co., Ltd. (ii) 15%
Shenzhen FIYTA Technology Development Co., Ltd. (ii) 15%
FIYTA Precision Technology Co., Ltd. Notes to the financial statements
Name of Taxpayer Rate of Income Tax
HARMONY World Watch Center(Hainan) Co., Ltd. (v) 20%
Shenzhen Xunhang Precision Technology Co., Ltd. 25%
Emile Choureit Timing (Shenzhen) Ltd. 25%
Liaoning Hengdarui Commercial & Trade Co., Ltd. 25%
Temporal (Shenzhen) Co., Ltd. 25%
Shenzhen Harmony E-commerce Co., Ltd. (v) 20%
FIYTA Hong Kong (iii) 16.5%
Montres Chouriet SA (iv) 30%
Notes:
(i) According to the relevant provisions of the Notice of the State Administration of Taxation
on Issuing the Interim Measures for the Administration of Collection of Enterprise Income Tax
on the Basis of Consolidation of Trans-regional Business Operations, the head office of the
Company and its branches shall be governed by the administrative measures for enterprise
income tax, namely namely “centralized calculation, level-by-level administration, pre-
payment at the locality, consolidated settlement and payment, and transfer to treasury”. 50% of
the prepayment shall be apportioned among the branches and 50% shall be apportioned by the
head office;
(ii) the companies enjoy the corporate income tax rate reduction for “key high-tech enterprises
supported by the state”;
(iii) the company is incorporated in Hong Kong and is subject to Hong Kong Profits Tax at a
rate of 16.50% for the current year;
(iv) the company is incorporated in Switzerland and is subject to the local tax rate, which the
comprehensive tax rate for the current year is 30%;
(v) the companies qualify as small low-profit enterprises and are subject to corporate income
tax at a rate of 20%.
In accordance with the Corporate Income Tax Law of the People's Republic of China, high-tech
enterprises that are key areas of state support are subject to a reduced corporate income tax rate
of 15%. The subsidiary, Shenzhen FIYTA Precision Technology Co., Ltd., was certified as a
high-tech enterprise in 2024 with a certificate number of GR202444200965, valid for three
years, and is subject to a corporate income tax rate of 15% from 2024 to 2026. The subsidiary,
Shenzhen FIYTA Technology Development Co., Ltd., was certified as a high-tech enterprise
in 2025 with a certificate number of GR202544201002, valid for three years, and is subject to
a corporate income tax rate of 15% from 2025 to 2027.
In accordance with the relevant provisions of the Announcement of the Ministry of Finance and
the State Administration of Taxation on Preferential Income Tax Policies for Small and Micro
FIYTA Precision Technology Co., Ltd. Notes to the financial statements
Enterprises and Individual Businesses (Cai Shui [2023] No. 6), small low-profit enterprises are
allowed to include only 25% of their income in the taxable income base and are then subject to
a 20% corporate income tax rate.
In accordance with the Notice of the Ministry of Finance and the State Administration of
Taxation on Extending the Loss Carryforward Period for High-Tech Enterprises and
Technology-Based Small and Medium-Sized Enterprises (Cai Shui [2018] No. 76), effective
from January 1, 2018, any unutilized losses incurred during the five accounting years prior to
obtaining high-tech enterprise status may be carried forward to subsequent years. The
maximum carryforward period has been extended from five years to ten years.
In accordance with the Announcement of the Ministry of Finance and the State Administration
of Taxation on Further Improving the Pre-Tax Additional Deduction Policy for R&D
Expenses (Cai Shui [2023] No. 7), for R&D expenses actually incurred by enterprises that do
not result in the creation of an intangible asset (and are therefore recorded in the current profit
or loss), an additional 100% deduction may be claimed for tax purposes, on top of the
statutory deduction, starting from January 1, 2023. If the R&D activities result in the creation
of an intangible asset, beginning January 1, 2023, 200% of the intangible asset’s cost may be
amortized for tax purposes.
Since 2019, Hong Kong has implemented a two-tiered profits tax regime. Under this system,
the first HKD 2 million of profits is taxed at a rate of 8.25%, and any profits exceeding that
threshold continue to be taxed at 16.5%.
Items 31 December 2025 31 December 2024
Cash on hand 34,041.22 76,344.01
Cash in bank 75,156,082.51 18,205,968.96
Other monetary funds 3,489,741.96 2,055,640.10
Funds in finance company 552,559,173.96 498,616,224.42
Total 631,239,039.65 518,954,177.49
Including：The total amount
deposited overseas
Notes:
(i) Funds in finance company primarily refer to amounts held at AVIC Finance Co., Ltd..
(ii) As of 31 December 2025, the Company has no pledged or frozen funds, nor any amounts
with potential recovery risk.
FIYTA Precision Technology Co., Ltd. Notes to the financial statements
(a) Notes receivable by category
Items Provision
Book Carrying Book Provision Carrying
for bad
Balance amount Balance for bad debt amount
debt
Bank acceptance bills 3,665,974.22 3,665,974.22 9,184,912.30 9,184,912.30
Commercial
acceptance bills
Total 14,140,935.62 523,748.07
(b) Notes receivable by bad debt provision method
Book balance Provision for bad debt
Category Carrying
Provisio
Amount Proportion (%) Amount n ratio amount
(%)
Provision for bad debt
recognised
individually
Provision for bad debt
recognised by groups
Including: Group 2 3,665,974.22 25.92 3,665,974.22
Group 1 10,474,961.40 74.08 523,748.07 5.00 9,951,213.33
Total 14,140,935.62 100.00 523,748.07 3.70 13,617,187.55
(Continued)
Book balance Provision for bad debt
Category Carrying
Provisio
Proportion amount
Amount Amount n ratio
(%)
(%)
Provision for bad debt recognised
individually
Provision for bad debt recognised
by groups
Including: Group 2 9,184,912.30 29.93 9,184,912.30
Group 1 21,501,777.16 70.07 1,075,088.86 5.00 20,426,688.30
Total 30,686,689.46 100.00 1,075,088.86 3.50 29,611,600.60
For details of recognition criteria and explanation for provision of bad debt by groups, please
refer to Notes 3.11.
(c) Changes of provision for bad debt during the reporting period
FIYTA Precision Technology Co., Ltd. Notes to the financial statements
Changes during the reporting period
Category 31 December 2024 Recovery December
Elimination
Provision or others 2025
or write-off
reversal
Provision for bad debt
recognised individually
Provision for bad debt
recognised by groups
Including: Group 2 1,075,088.86 -551,340.79 523,748.07
Group 1 1,075,088.86 -551,340.79 523,748.07
Total 1,075,088.86 -551,340.79 523,748.07
(a) Accounts receivable by aging
Aging 31 December 2025 31 December 2024
Within one year 260,899,769.98 271,349,349.06
Over 3 years 9,567,138.57 20,138,406.23
Subtotal 274,556,500.34 293,662,774.44
Less: provision for bad debt 24,687,959.40 33,509,940.01
Total 249,868,540.94 260,152,834.43
(b) Accounts receivable by bad debt provision method
Category Book balance Provision for bad debt
Carrying
Proportion Provision amount
Amount Amount
(%) ratio (%)
Provision for bad debt
recognised individually 15,766,982.49 5.74 15,433,987.23 97.89 332,995.26
Provision for bad debt
recognised by groups 258,789,517.85 94.26 9,253,972.17 3.58 249,535,545.68
Including:Group1 258,789,517.85 94.26 9,253,972.17 3.58 249,535,545.68
Total 274,556,500.34 100.00 24,687,959.40 8.99 249,868,540.94
(Continued)
Category Book balance Provision for bad debt
Carrying
Proportion Provision ratio amount
Amount Amount
(%) (%)
Provision for bad debt 25,816,016.35 8.79 24,222,124.31 93.83 1,593,892.04
FIYTA Precision Technology Co., Ltd. Notes to the financial statements
Category Book balance Provision for bad debt
Carrying
Proportion Provision ratio amount
Amount Amount
(%) (%)
recognised individually
Provision for bad debt
recognised by groups 267,846,758.09 91.21 9,287,815.70 3.47 258,558,942.39
Including:Group1 267,846,758.09 91.21 9,287,815.70 3.47 258,558,942.39
Total 293,662,774.44 100.00 33,509,940.01 11.41 260,152,834.43
Detailed explanation of provision for bad debt:
(i) As at 31 December 2025, accounts receivable with bad debt provision recognised
individually
Name Provision for Provision ratio
Book balance Reason for provision
bad debt (%)
Existence of disputes, poor
Other customers 15,766,982.49 15,433,987.23 97.89
management, ect
(ii) As at 31 December 2025, accounts receivable with bad debt provision recognised by group
Aging Accounts Provision for Provision Accounts Provision for Provision
receivable bad debt ratio (%) receivable bad debt ratio (%)
Within one year 257,859,630.24 8,916,306.48 3.46 266,494,339.01 8,150,327.80 3.06
Over 2 years 271,863.26 271,863.26 100.00 1,113,606.66 1,113,606.66 100.00
Total 258,789,517.85 9,253,972.17 3.58 267,846,758.09 9,287,815.70 3.47
(c) Changes of provision for bad debt during the reporting period
Changes during the reporting period
Category Recovery or Elimination
reversal or write-off
Provision for bad
debt recognised 23,148,792.25 4,728,732.75 3,699,262.84 43,862.15 24,222,124.31
individually
Provision for bad
debt recognised 11,242,194.21 -1,945,944.73 -8,433.78 9,287,815.70
by groups
Including:Group1 11,242,194.21 -1,945,944.73 -8,433.78 9,287,815.70
Total 34,390,986.46 2,782,788.02 3,699,262.84 35,428.37 33,509,940.01
(d) Details of accounts receivable written off during the current period
FIYTA Precision Technology Co., Ltd. Notes to the financial statements
Items Amount
Accounts receivable written off 9,701,377.67
(e) Top five closing balances by entity
Percentage
of Total
Entity Balance as at 31 Age of Other
Nature of Amount Provision for Bad Debts
name December 2025 Amount Receivables
at Period
End (%)
Within
No. 1 Others 2,650,000.00 4.56 2,650,000.00
Deposit and guarantee Within
No. 2 1,998,936.00 3.44 99,946.79
receivable 1 year
Deposit and guarantee Within
No. 3 1,937,848.05 3.33 115,232.33
receivable 1 year
Deposit and guarantee Within
No. 4 1,859,688.00 3.20 92,984.40
receivable 1 year
Deposit and guarantee Within
No. 5 1,594,477.50 2.74 79,723.88
receivable 1 year
(a) Advances to suppliers by aging
Aging
Amount Proportion (%) Amount Proportion (%)
Within one year 4,912,759.05 100.00 3,858,053.60 100.00
(b) Top five closing balances by entity
Balance as at 31 Proportion of the balance to the
Entity name
December 2025 total advances to suppliers (%)
Total of the top five advances to suppliers
at the end of the period
(a) Other receivables by aging
Aging 31 December 2025 31 December 2024
Within one year 54,498,112.58 59,521,049.33
Over 3 years 1,446,064.90 1,278,954.90
Subtotal 58,106,697.07 61,321,812.40
Less: provision for bad debt 7,066,543.88 4,339,461.13
Total 51,040,153.19 56,982,351.27
FIYTA Precision Technology Co., Ltd. Notes to the financial statements
(b) Other receivables by nature
Nature 31 December 2025 31 December 2024
Deposit and guarantee receivable 49,507,243.06 52,384,967.00
Employee advance payments 941,768.76 1,282,327.49
Others 7,657,685.25 7,654,517.91
Subtotal 58,106,697.07 61,321,812.40
Less: provision for bad debt 7,066,543.88 4,339,461.13
Total 51,040,153.19 56,982,351.27
(c) Other receivables by bad debt provision method
A. As at 31 December 2025, provision for bad debt recognised based on three stages model
Stages Book balance Provision for bad debt Carrying amount
Stage 1 53,691,455.91 2,651,302.72 51,040,153.19
Stage 2
Stage 3 4,415,241.16 4,415,241.16
Total 58,106,697.07 7,066,543.88 51,040,153.19
As at 31 December 2025, provision for bad debt at stage 1:
Provision ratio Provision for Carrying
Category Book balance
(%) bad debt amount
Provision for bad debt
recognised individually
Provision for bad debt
recognised by groups
Including: Group 1 48,443,814.53 5.06 2,453,308.64 45,990,505.89
Group 2 908,012.96 908,012.96
Group 3 4,339,628.42 4.56 197,994.08 4,141,634.34
Total 53,691,455.91 4.94 2,651,302.72 51,040,153.19
As at 31 December 2025, provision for bad debt at stage 3:
Provision for Carrying
Category Book balance Provision ratio (%)
bad debt amount
Provision for bad debt
recognised individually
B. As at 31 December 2024, provision for bad debt recognised based on three stages model
Stages Book balance Provision for bad debt Carrying amount
Stage 1 59,786,824.63 2,872,168.83 56,914,655.80
Stage 2
Stage 3 1,534,987.77 1,467,292.30 67,695.47
FIYTA Precision Technology Co., Ltd. Notes to the financial statements
Stages Book balance Provision for bad debt Carrying amount
Total 61,321,812.40 4,339,461.13 56,982,351.27
As at 31 December 2024, provision for bad debt at stage 1:
Provision ratio Provision for Carrying
Category Book balance
(%) bad debt amount
Provision for bad debt
recognised individually
Provision for bad debt
recognised by groups
Including: Group 1 51,515,791.06 5.10 2,629,814.29 48,885,976.77
Group 2 1,282,327.49 1,282,327.49
Group 3 6,988,706.08 3.47 242,354.54 6,746,351.54
Total 59,786,824.63 4.80 2,872,168.83 56,914,655.80
As at 31 December 2024, provision for bad debt at stage 3:
Provision for Carrying
Category Book balance Provision ratio (%)
bad debt amount
Provision for bad debt
recognised individually
Basis of provision for bad debt during the reporting period:
For details of recognition criteria and explanation for provision of bad debt by groups, please
refer to Notes 3.11
(d) Changes of provision for bad debt during the reporting period
Changes during the reporting period
Category Recovery Elimination
or reversal or write-off
Provision for bad
debt recognised 1,467,292.30 2,960,644.33 12,695.47 4,415,241.16
individually
Provision for bad
debt recognised by 2,872,168.83 -221,458.72 592.61 2,651,302.72
groups
Total 4,339,461.13 2,739,185.61 12,695.47 592.61 7,066,543.88
(e) Details of other receivables written off during the current period
Items Amount
Accounts receivable actually written off 9,701,377.67
(f) Top five closing balances by entity
FIYTA Precision Technology Co., Ltd. Notes to the financial statements
Balance as at 31 Proportion of the balance to
Entity name Provision for bad debt
December 2025 the total other receivables (%)
Total of the top five
other receivables at the 10,040,949.55 17.28 3,037,887.40
end of the period.
(a) Inventories by category
Items Provision for Provision for
Book balance Carrying amount Book balance Carrying amount
impairment impairment
Raw
materials
Work in
process
Goods in
stock
Total 1,830,966,506.16 102,984,101.50 1,727,982,404.66 2,057,873,383.71 73,386,413.97 1,984,486,969.74
(b) Provision for impairment
Increase during the Decrease during the
Items
Provision Others Others
elimination
Raw
materials
Work in
process
Goods in
stock
Total 73,386,413.97 53,936,941.10 24,178,528.73 160,724.84 102,984,101.50
Items 31 December 2025 31 December 2024
Reclassification from debit side
balance of VAT payable
Term Deposit 29,408,855.46
Advance Tax Payment 5,517,052.75 4,402,072.04
Others 13,690,557.92 18,430,363.63
Total 66,510,872.63 98,007,925.22
FIYTA Precision Technology Co., Ltd. Notes to the financial statements
Changes during the reporting period
Investment
Investees income/(losses) Changes
recognised in other
investme investme comprehensi
under equity equity
nt nt ve income
method
I. Associates
Shanghai Watch
Co., Ltd.
(Continued)
Changes during the reporting period
Provision for
Declaration of cash 31 December impairment at
Investees dividends or Provision for
Others 2025 31 December
distribution of impairment 2025
profit
II. Associates
Shanghai Watch
Co., Ltd.
(a) Investment properties accounted for using cost model
Items Building and plants
Initial cost:
Balance as at 31 December 2024 544,545,292.87
Increase during the reporting period 31,364,878.67
(i) Transfer from fixed assets 31,364,878.67
Decrease during the reporting period 20,051,952.11
(i) Transfer to fixed assets 20,051,952.11
Balance as at 31 December 2025 555,858,219.43
Accumulated depreciation and amortisation:
Balance as at 31 December 2024 243,542,928.46
Increase during the reporting period 15,299,764.79
(i) Provision 12,747,661.27
(ii) Transfer from fixed assets 2,552,103.52
Decrease during the reporting period 11,255,054.19
(i) Transfer to fixed assets 11,255,054.19
Balance as at 31 December 2025 247,587,639.06
Provision for impairment:
Carrying amount:
FIYTA Precision Technology Co., Ltd. Notes to the financial statements
Items Building and plants
Balance as at 31 December 2025 308,270,580.37
Balance as at 31 December 2024 301,002,364.41
(a)Details of fixed assets
Buildings and Machinery Electrical Other
Items Vehicles Total
constructions equipment equipment equipment
Initialcost:
Balance as at 31 December 2024 515,518,210.64 131,660,591.28 12,031,744.02 51,743,615.12 43,815,743.01 754,769,904.07
Increase during the reporting period 25,735,214.41 9,976,509.89 6,095.44 5,123,507.07 1,819,719.87 42,661,046.68
(i)Acquisition 7,421,347.01 6,095.44 5,042,075.03 1,585,918.17 14,549,793.21
(ii)Transfer from investment properties 20,051,952.11 20,051,952.11
(iii)Exchange differences on translating foreign
operations
Decrease during the reporting period 31,439,555.87 662,604.92 2,690,812.87 3,977,462.46 3,915,311.32 42,685,747.44
(i) Disposal 631,760.47 2,690,812.87 3,977,139.78 3,915,311.32 11,215,024.44
(ii) Transfer to investment properties 31,364,878.67 31,364,878.67
(iii ) Exchange differences on translating
foreign operations
Balance as at 31 December 2025 509,813,869.18 140,974,496.25 9,347,026.59 52,889,659.73 41,720,151.56 754,745,203.31
Accumulated depreciation:
Balance as at 31 December 2024 195,960,430.03 90,553,556.06 11,195,032.63 40,399,800.29 39,092,940.65 377,201,759.66
Increase during the reporting period 31,272,155.78 9,484,929.29 565,561.39 3,434,613.56 1,286,779.15 46,044,039.17
(i) Provision 16,034,245.03 6,995,125.56 565,561.39 3,357,907.33 1,053,059.37 28,005,898.68
(ii)Transfer from investment properties 11,255,054.19 11,255,054.19
(iii) Exchange differences on translating foreign
operations
Decrease during the reporting period 2,620,144.63 608,340.70 2,550,307.45 2,803,574.54 3,272,226.35 11,854,593.67
(i) Disposal 579,038.47 2,550,307.45 2,803,267.99 3,272,226.35 9,204,840.26
(ii) Transfer to investment properties 2,552,103.52 2,552,103.52
(iii ) Exchange differences on translating
foreign operations
Balance as at 31 December 2025 224,612,441.18 99,430,144.65 9,210,286.57 41,030,839.31 37,107,493.45 411,391,205.16
Provision for impairment:
Carrying amount:
Balance as at 31 December 2025 285,201,428.00 41,544,351.60 136,740.02 11,858,820.42 4,612,658.11 343,353,998.15
Balance as at 31 December 2024 319,557,780.61 41,107,035.22 836,711.39 11,343,814.83 4,722,802.36 377,568,144.41
(b) Fixed assets without certificate of title
FIYTA Precision Technology Co., Ltd. Notes to the financial statements
Items Carrying amount Reason
Buildings and constructions 158,506.40 Defective property rights
Items Buildings and constructions
Initial cost:
Balance as at 31 December 2024 216,731,879.49
Increase during the reporting period 84,382,199.14
(i) New leasing 84,382,199.14
Decrease during the reporting period 111,855,194.44
(i) Disposal 111,855,194.44
Balance as at 31 December 2025 189,258,884.19
Accumulated depreciation:
Balance as at 31 December 2024 118,293,903.08
Increase during the reporting period 102,678,424.23
(i) Provision 102,674,310.42
(ii) Exchange differences on translating foreign
operations
Decrease during the reporting period 104,504,535.18
(i) Disposal 104,504,535.18
Balance as at 31 December 2025 116,467,792.13
Provision for impairment:
Carrying amount:
Balance as at 31 December 2025 72,791,092.06
Balance as at 31 December 2024 98,437,976.41
Right to use the
Items Land use rights Software Total
trademark
Initial cost:
Balance as at 31 December
Increase during the
reporting period
(i) Acquisition 3,159,520.88 3,159,520.88
(ii) Exchange differences on
translating foreign 24,661.22 24,661.22
operations
Decrease during the
reporting period
FIYTA Precision Technology Co., Ltd. Notes to the financial statements
Right to use the
Items Land use rights Software Total
trademark
(i)Disposal
Balance as at 31 December
Accumulated depreciation:
Balance as at 31 December
Increase during the
reporting period
(i) Provision 733,553.29 2,278,135.68 19,676.25 3,031,365.22
Decrease during the
reporting period
Balance as at 31 December
Provision for impairment:
Carrying amount:
Balance as at 31 December
Balance as at 31 December
Decrease during the reporting
Items 31 December 2025
Amortisation
decrease
Renovation
expenses and
counter 107,493,262.36 35,661,123.29 64,812,808.67 2,109,876.49 76,231,700.49
fabrication
expenses
Others 2,712,060.93 16,612,375.45 6,381,867.37 12,942,569.01
Total 110,205,323.29 52,273,498.74 71,194,676.04 2,109,876.49 89,174,269.50
(a) Deferred tax assets before offsetting
Items Deductible
Deductible temporary Deferred tax
Deferred tax assets temporary
differences assets
differences
Provision for
impairment loss
Unrealised
intragroup profit
Deductible losses 203,464,885.90 45,249,255.22 150,789,689.25 35,315,775.40
Equity Incentive 7,958,442.71 1,839,229.47
FIYTA Precision Technology Co., Ltd. Notes to the financial statements
Items Deductible
Deductible temporary Deferred tax
Deferred tax assets temporary
differences assets
differences
Lease liabilities 74,789,934.31 18,697,483.59 98,553,370.15 24,638,342.52
Others 5,030,696.54 1,248,681.80 11,064,124.31 2,766,031.08
Total 480,361,046.21 111,439,499.18 442,817,247.92 105,879,079.87
(b) Deferred tax liabilities before offsetting
Items Taxable temporary Deferred tax Taxable temporary Deferred tax
difference liabilities difference liabilities
One-off deduction of
fixed asset before 27,169,935.68 4,075,490.34 27,444,135.67 4,116,620.35
Corporate income tax
Right-of-use asset 72,643,762.42 18,160,940.61 98,388,890.53 24,597,222.63
Total 99,813,698.10 22,236,430.95 125,833,026.20 28,713,842.98
(c) Net balance of deferred tax liabilities and deferred tax assets after offsetting
Net balance after Net balance after
Offset amount at 31 Offset amount at 31
Items offsetting at 31 offsetting at 31
December 2025 December 2024
December 2025 December 2024
Deferred tax
assets
Deferred tax
liabilities
(d) Unrecognized deferred tax assets
Items 31 December 2025 31 December 2024
Deductible temporary differences 11,868,777.70 3,466,155.48
Deductible losses 42,305,096.05
Total 11,868,777.70 45,771,251.53
(e) Deductible losses not recognised as deferred tax assets will expire in the following
periods:
Year 31 December 2025 31 December 2024
FIYTA Precision Technology Co., Ltd. Notes to the financial statements
Items Provision Provision
Book Book Carrying
for Carrying amount for
balance balance amount
impairment impairment
Prepayment
of long- 5,757,347.81 5,757,347.81 3,792,253.84 3,792,253.84
term assets
Items 31 December 2025 31 December 2024
Credit loans 120,000,000.00
Bill discounting 3,957,187.86
Accrued interest payable 130,566.65
Total 124,087,754.51
Items 31 December 2025 31 December 2024
Payables for goods 94,791,440.02 114,881,141.96
Payables for project 651,779.61
Total 94,791,440.02 115,532,921.57
Items 31 December 2025 31 December 2024
Rental received in advance 11,368,005.63 11,783,796.49
Items 31 December 2025 31 December 2024
Advances for goods 16,450,934.50 12,605,722.95
(a) Details of employee benefits payable
Items
Short-term employee
benefits
Post-employment benefits-
defined contribution plans
Termination benefits 5,040,229.42 19,323,749.66 19,516,006.50 4,847,972.58
Total 92,260,153.14 517,179,751.14 529,380,686.46 80,059,217.82
FIYTA Precision Technology Co., Ltd. Notes to the financial statements
(b) Short-term employee benefits
Items
Salaries, bonuses,
allowances and subsidies
Employee benefits 74,715.46 8,000,962.96 8,070,016.54 5,661.88
Social insurance 240,049.63 20,588,686.72 20,479,063.60 349,672.75
Including: Health
insurance
Injury insurance 78.32 1,168,695.23 1,168,695.23 78.32
Birth insurance 848,035.56 848,035.56
Housing accumulation
fund
Labour union funds and
employee education 866,070.23 5,415,167.15 5,647,976.70 633,260.68
funds
Total 79,250,553.06 450,414,443.54 462,096,745.60 67,568,251.00
(c) Defined contribution plans
Items
Post-employment
benefits:
insurance
insurance
Total 7,969,370.66 47,441,557.94 47,767,934.36 7,642,994.24
Items 31 December 2025 31 December 2024
Value added tax (VAT) 24,404,139.24 33,699,458.80
Corporate income tax 12,878,070.87 11,535,771.24
Individual income tax 969,315.24 994,923.84
Urban maintenance and construction tax 453,029.07 1,359,840.26
Educational surcharge 316,181.96 972,536.24
Others 1,177,277.66 1,252,620.97
Total 40,198,014.04 49,815,151.35
(a) Other payables by category
FIYTA Precision Technology Co., Ltd. Notes to the financial statements
Items 31 December 2025 31 December 2024
Dividend payable 2,785,293.14
Other payables 75,141,232.27 101,853,190.67
Total 75,141,232.27 104,638,483.81
(b) Dividends payable
Items 31 December 2025 31 December 2024
Dividends on ordinary shares 2,785,293.14
(c) Other payables
Items 31 December 2025 31 December 2024
Deposit, security deposit 28,070,048.35 31,563,500.48
Repurchase liability for restricted shares 12,815,556.81
Decoration expenses 3,524,465.97 3,978,759.28
Accrued expenses and others 43,546,717.95 53,495,374.10
Total 75,141,232.27 101,853,190.67
Items 31 December 2025 31 December 2024
Lease liabilities due within one year 57,044,492.54 63,538,231.06
Items 31 December 2025 31 December 2024
Tax payable-reclassification from credit
balance of VAT Payable
Items 31 December 2025 31 December 2024
Lease payments 76,851,971.25 101,263,377.23
Less: Unrealised finance expenses 1,915,088.40 2,659,854.13
Subtotal 74,936,882.85 98,603,523.10
Less: lease liabilities due within one year 57,044,492.54 63,538,231.06
Total 17,892,390.31 35,065,292.04
FIYTA Precision Technology Co., Ltd. Notes to the financial statements
Changes during the reporting period (+,-)
Items New Bonus Capitalisation
issues issues of reserves
Number of total shares 405,764,007.00 405,764,007.00
Items
Share premium 912,742,221.49 8,861,512.48 921,603,733.97
Other capital reserves 23,597,282.11 9,591,764.14 14,005,517.97
Total 936,339,503.60 8,861,512.48 9,591,764.14 935,609,251.94
Notes:
(i) According to the resolution approved by the Company's Board of Directors and the General
Meeting of Shareholders on the Proposal for the Achievement of the Conditions for Lifting of
Restrictions in the Third Restriction Lifting Period under the 2018 A-Share Restricted Stock
Incentive Plan (Phase II), the Company completed the procedures for lifting restrictions on
during the year 2025. The capital reserve of RMB 8,861,512.48 corresponding to the restricted
shares of the aforementioned incentive recipients was transferred from “Other capital reserves”
to “Share premium”.
(ii) The difference between the current year’s income tax pre-tax deduction amount and the
relevant costs and expenses recognized during the waiting period, arising from the difference
between the fair value at the time of unlocking the restricted shares and the grant price at the
time of grant, resulted in an income tax effect, which accordingly decreased “Other capital
reserves” by RMB 730,251.66.
Increase during the Decrease during the 31 December
Items 31 December 2024
reporting period reporting period 2025
Share Repurchase for
Capital Reduction
Restricted Stock
Payment
Total 78,645,532.23 65,829,975.42 12,815,556.81
Note:
(i) As stated in Note 5.27.1 to these financial statements, for the restricted shares for which the
repurchase obligations are no longer required as the unlocking conditions have been met, the
corresponding repurchase obligations were derecognized, thereby reducing “Restricted Share
Payment” by RMB 12,815,556.81.
FIYTA Precision Technology Co., Ltd. Notes to the financial statements
Changes during the reporting period
Less: Items
Less: Items
previously
previously
Items recognized in other Attributable to 31 December 2025
comprehensive owners of the
before tax comprehensive tax controlling
income being Company
income being expenses interest
reclassified to
reclassified to
current profit or loss
retained earnings
(a)Items will not be
reclassified to profit or
loss
(b)Items will be
reclassified to profit or 15,686,794.62 7,978,422.75 7,978,422.75 23,665,217.37
loss
Including: Exchange
differences on translating 15,686,794.62 7,978,422.75 7,978,422.75 23,665,217.37
foreign operations
Total 15,686,794.62 7,978,422.75 7,978,422.75 23,665,217.37
FIYTA Precision Technology Co., Ltd. Notes to the financial statements
Items
Safety production costs 4,340,162.76 223,177.64 602,170.53 3,961,169.87
Items
Statutory surplus reserves 213,025,507.50 213,025,507.50
Others 61,984,894.00 61,984,894.00
Total 275,010,401.50 275,010,401.50
As of 31 December 2025, the Company's cumulative surplus reserve has reached 50% of its
registered capital, and therefore, no further extraction will be made during current period.
Items 2025 2024
Balance as at the end of last period before
adjustments
Adjustments for the opening balance (increase
/(decrease))
Balance as at the beginning of the reporting period
after adjustments
Add: net profit attributable to owners of the parent
company for the reporting period
Less: Declaration of ordinary share dividends 162,305,602.80 162,345,682.81
Balance as at the end of the reporting period 1,692,530,114.77 1,767,517,887.94
Items
Revenue Costs of sales Revenue Costs of sales
Principal activities 3,490,320,310.17 2,257,153,747.65 3,928,845,057.63 2,475,847,402.83
Other activities 18,167,601.23 4,977,286.11 11,685,876.44 350,531.60
Total 3,508,487,911.40 2,262,131,033.76 3,940,530,934.07 2,476,197,934.43
Principal activities by category
Items
Revenue Costs of sales Revenue Costs of sales
Watch Brand Business 570,402,572.45 186,950,718.29 721,623,074.27 236,520,324.15
Watch Retail Services 2,662,429,068.19 1,901,757,507.69 2,934,683,059.47 2,080,768,868.69
FIYTA Precision Technology Co., Ltd. Notes to the financial statements
Items
Revenue Costs of sales Revenue Costs of sales
Precision Technology
Business
Leasing Business 113,496,227.38 41,900,699.32 138,069,112.39 43,245,383.91
Others 18,167,601.23 4,977,286.11 11,685,876.44 350,531.60
Total 3,508,487,911.40 2,262,131,033.76 3,940,530,934.07 2,476,197,934.43
Items 2025 2024
Urban maintenance and construction tax 10,668,474.38 10,496,860.12
Educational surcharge 7,526,202.94 7,450,711.80
Property tax 7,523,043.74 7,672,948.68
Stamp duty 2,302,823.44 2,638,753.37
Others 3,015,326.28 3,217,860.83
Total 31,035,870.78 31,477,134.80
Items 2025 2024
Employee Compensation 286,763,707.41 350,108,585.64
Department store expense and rental 143,592,007.22 141,659,138.17
Advertising, Exhibition, and
Marketing Expenses
Depreciation and amortization 168,982,088.02 187,804,323.98
Utilities and property management
expenses
Packaging expenses 6,429,475.59 8,732,106.49
Office Expenses 4,172,341.49 5,299,644.22
Transportation Expenses 4,133,136.45 5,326,216.64
Travel Expenses 3,261,011.00 6,511,503.28
Business Entertainment Expenses 1,379,425.70 3,354,425.04
Others 11,868,035.89 8,470,993.04
Total 781,062,383.74 882,777,806.63
Items 2025 2024
Employee Compensation 139,683,676.61 141,263,743.91
FIYTA Precision Technology Co., Ltd. Notes to the financial statements
Items 2025 2024
Depreciation and amortization 20,859,869.65 21,858,646.45
Office Expenses 2,697,248.05 3,237,040.25
Intermediary Agents fees 2,043,134.60 2,072,802.52
Travel Expenses 1,551,295.98 3,444,726.00
Vehicle and Transportation Expenses 1,067,770.55 1,184,673.02
Utilities, Property Management, and
Rental Fees
Business Entertainment Expenses 401,441.02 854,422.68
Telecommunication expenses 206,918.14 329,077.20
Others 7,963,641.22 7,982,781.89
Total 177,357,796.51 183,277,930.17
Items 2025 2024
Employee Compensation 54,014,603.82 38,055,759.66
Sample and Material Costs 1,205,956.77 1,635,339.74
Depreciation and Amortization 5,099,464.51 4,783,178.84
Technical Cooperation Fees 2,836,648.30 3,704,971.76
Others 6,050,008.96 7,820,750.18
Total 69,206,682.36 56,000,000.18
Items 2025 2024
Interest expenses 4,883,063.98 10,697,706.12
Less: Interest income 4,192,623.18 4,925,264.78
Net interest expenses 690,440.80 5,772,441.34
Net foreign exchange losses -717,041.20 1,151,055.95
Bank charges and others 11,422,485.63 11,001,374.05
Total 11,395,885.23 17,924,871.34
Items 2025 2024
Including: Government grant related to deferred
income
Government grant directly recognised in current 3,071,440.45 4,527,755.07
FIYTA Precision Technology Co., Ltd. Notes to the financial statements
Items 2025 2024
profit or loss
recognised in other income
Including: Charges of withholding individual
income tax
Additional Deduction for Input VAT 2,178,780.74 1,534,404.24
Total 5,722,898.08 7,492,642.33
Items 2025 2024
Investment income from long-term equity investments
-4,324,269.84 -955,570.46
under equity method
Interest income from term deposit 437,789.65 524,315.57
Total -3,886,480.19 -431,254.89
Items 2025 2024
Bad debt of notes receivable 551,340.79 -659,008.68
Bad debt of accounts receivable -887,347.19 916,474.82
Bad debt of other receivables -2,726,490.14 9,019.82
Total -3,062,496.54 266,485.96
Items 2025 2024
Impairment of inventories -53,936,941.10 -19,289,865.31
Items 2025 2024
Gains/(losses) from disposal of fixed
-279,011.13 2,795,633.25
assets
Gains/(losses) from disposal of
-954,954.96 -427,816.65
Right-of-use assets
Total -1,233,966.09 2,367,816.60
Recognised in current non-
Items 2025 2024
recurring profit or loss
No payables required 125,708.82 1,217,512.88 125,708.82
Compensation income 1,797,356.05 1,916,585.22 1,797,356.05
FIYTA Precision Technology Co., Ltd. Notes to the financial statements
Recognised in current non-
Items 2025 2024
recurring profit or loss
Others 199,641.35 489,407.21 199,641.35
Total 2,122,706.22 3,623,505.31 2,122,706.22
Recognised in current non-
Items 2025 2024
recurring profit or loss
Donations 115,080.00 243,626.35 115,080.00
Fine and penalty for late payment 1,330,662.34 143,706.74 1,330,662.34
Payment for breach of agreement 90,666.43 279,932.96 90,666.43
Others 383,732.91 121,651.88 383,732.91
Total 1,920,141.68 788,917.93 1,920,141.68
(a) Details of income tax expenses
Items 2025 2024
Current tax expenses 45,203,294.78 67,911,869.72
Deferred tax expenses -12,417,286.69 -2,146,386.12
Total 32,786,008.09 65,765,483.60
(b) Reconciliation of accounting profit and income tax expenses
Items 2025 2024
Profit before tax 120,103,837.72 286,115,668.59
Income tax expense at the statutory /applicable tax
rate
Effect of different tax rate of subsidiaries -1,147,998.02 -2,574,951.45
Adjustments of impact from prior period income
tax
Effect of income that is exempt from taxation 1,081,067.46 238,892.62
Effect of non-deductible costs, expenses or losses 1,900,231.98 1,160,439.96
Effect of previously unrecognised deductible
-163,165.84 -172,422.26
losses recognised as deferred tax assets
Effect of deductible temporary differences and
deductible losses not recognised as deferred tax
assets
R&D expenses plus deduction -6,198,287.18 -4,855,738.14
Others
Income tax expenses 32,786,008.09 65,765,483.60
FIYTA Precision Technology Co., Ltd. Notes to the financial statements
For details of the other comprehensive income and related tax effect, transfer to profit or loss
and adjustment of other comprehensive income, please refer to Note 5.29 Other Comprehensive
Income.
(a) Cash relating to operating activities
(i)Other cash received relating to operating activities
Items 2025 2024
Security deposit 8,493,431.78 9,790,425.68
Government grants 3,543,246.91 4,922,856.45
Promotion expenses 6,268,215.19 12,351,768.55
Interest income 4,192,623.18 4,925,264.78
Return of petty cash 2,021,594.33 3,851,281.76
Others 12,736,500.64 13,783,494.72
Total 37,255,612.03 49,625,091.94
(ii) Other cash payments relating to operating activities
Items 2025 2024
Security deposit 9,573,911.71 8,953,141.58
Period expenses and others 301,031,362.89 321,439,889.86
Total 310,605,274.60 330,393,031.44
(b) Cash relating to investing activities
(i)Other cash received relating to investing activities
Items 2025 2024
Withdrawal of time deposits 185,690,609.60 201,839,677.57
(ii) Other cash payments relating to investing activities
Items 2025 2024
Purchase of time deposits 156,380,120.10 231,179,882.49
(c) Cash relating to financing activities
(i)Other cash payments relating to financing activities
Items 2025 2024
Payment for principal and interest
of lease liabilities
FIYTA Precision Technology Co., Ltd. Notes to the financial statements
Items 2025 2024
Payment for share buyback 794,690.45
Total 103,960,778.17 116,757,093.91
(ii) Changes in liabilities arising from financing activities
Increase in the current period Decrease in the current period
Items Changes in Changes in Changes in Changes in
cash non-cash cash non-cash
Short-term
borrowings
Dividend
payables
Non-current
liabilities
maturing within
one year
Lease liabilities 35,065,292.04 80,294,137.92 97,467,039.65 17,892,390.31
Total 225,476,570.75 140,000,000.00 340,066,780.37 530,370,553.83 100,235,914.44 74,936,882.85
(a) Supplementary information to the statement of cash flows
Supplementary information 2025 2024
(i) Adjustments of net profit to cash flows from
operating activities:
Net profit 87,317,829.63 220,350,184.99
Add: Provisions for impairment of assets 53,936,941.10 19,289,865.31
Impairment Loss of Credit 3,062,496.54 -266,485.96
Depreciation of fixed assets, Investment
Properties ,oil and gas asset and productive 40,707,711.30 42,123,553.82
biological assets
Depreciation of right-of-use assets 102,674,310.42 107,301,685.07
Amortisation of intangible assets 3,031,365.22 3,623,865.56
Amortisation of long-term deferred expenses 71,194,676.04 72,228,172.82
Losses /(gains) on disposal of fixed assets,
intangible assets and other long-term assets
Losses /(gains) on scrapping of fixed assets
Losses /(gains) on changes in fair value
Finance costs /(income) 4,883,063.98 10,697,706.12
Investment losses /(income) 3,886,480.19 431,254.89
Decreases /(increases) in deferred tax assets -8,570,285.57 -1,928,006.85
Increases /(decreases) in deferred tax liabilities -3,467,545.77 -218,379.27
Decreases /(increases) in inventories 226,906,877.55 114,705,609.37
FIYTA Precision Technology Co., Ltd. Notes to the financial statements
Supplementary information 2025 2024
Decreases /(increases) in operating receivables 37,261,097.03 55,993,621.50
Increases /(decreases) in operating payables -81,807,703.33 -106,350,875.18
Others -378,992.89 1,117,004.70
Net cash flows from operating activities 541,872,287.53 536,730,960.29
(ii)Significant activities not involving cash receipts
and payments:
Conversion of debt into capital
Convertible corporate bonds maturing within one
year
Assets under leases(other than leases under
simplified method)
(iii)Net increases in cash and cash equivalents:
Cash at the end of the reporting period 631,239,039.65 518,954,177.49
Less: Cash at the beginning of the reporting period 518,954,177.49 504,629,153.71
Add: Cash equivalents at the end of the reporting
period
Less: Cash equivalents at the beginning of the
reporting period
Net increase in cash and cash equivalents 112,284,862.16 14,325,023.78
(b) The components of cash and cash equivalents
Items 31 December 2025 31 December 2024
(i) Cash 631,239,039.65 518,954,177.49
Including: Cash on hand 34,041.22 76,344.01
Cash in bank available for immediate use 627,225,875.81 516,822,193.38
Other monetary funds available for
immediate use
(ii) Cash equivalents
Including: Bond investments maturing within three
months
(iii) Cash and cash equivalents at the end of the
reporting period
Including Restricted cash and cash equivalents for the
Company and its subsidiaries
(c) Presented as cash and cash equivalents despite restrictions in scope of application
Items 2025 2024 Reason
The Company's subsidiary, FIYTA Hong Kong, and
its subsidiary, Montres Chouriet SA, hold funds in
Cash in bank 7,127,169.50 6,150,258.49 accounts located overseas. These funds are subject
to restrictions on repatriation, but this does not
affect their daily use.
FIYTA Precision Technology Co., Ltd. Notes to the financial statements
(a) Foreign currency monetary items at 31 December 2025:
Carrying amount at
Items Exchange rate Carrying amount at RMB
foreign currency
Monetary funds 20,882,200.49
Including: USD 554,469.45 7.0288 3,897,254.87
EUR 238,872.98 8.2355 1,967,238.43
HKD 9,531,520.15 0.9032 8,608,869.00
CHF 724,080.69 8.8510 6,408,838.19
Accounts receivable 6,230,672.18
Including: USD 663,545.07 7.0288 4,663,925.59
EUR 62.71 8.2355 516.45
HKD 1,482,135.05 0.9032 1,338,664.38
CHF 25,710.74 8.8510 227,565.76
Other receivables 274,146.65
Including: HKD 25,605.60 0.9032 23,126.98
CHF 28,360.60 8.8510 251,019.67
Accounts payable 141,631.35
Including: HKD 156,810.62 0.9032 141,631.35
Other payables 878,305.57
Including: HKD 856,802.22 0.9032 773,863.77
CHF 11,800.00 8.8510 104,441.80
(b) Overseas business entity
Please refer the Note 3.4, for the details of the main operating locations and functional
currencies of significant overseas operating entities .
(a) The Company as a lessee
Items 2025
Expenses for short-term lease under simplified method 6,106,487.48
Expenses for lease of low value asset (except for short-term lease) under
simplified method
Interest expense of lease liabilities 3,992,813.82
Variable lease payments not included in lease liabilities recognised in
current profit or loss
Income from subleasing the right-of-use assets
FIYTA Precision Technology Co., Ltd. Notes to the financial statements
Items 2025
Cash outflows related to leases 193,886,636.81
Profit or loss in sale and leaseback transaction
(b) The Company as a lessor
(i) Operating lease
A. Lease income
Items 2025
Lease income 113,496,227.38
Including: income related to variable lease payments not included in lease
receivables
Items 2025 2024
Employee Compensation 54,014,603.82 38,055,759.66
Sample and Material Costs 1,205,956.77 1,635,339.74
Depreciation and Amortization 5,099,464.51 4,783,178.84
Technical Cooperation Fees 2,836,648.30 3,704,971.76
Others 6,050,008.96 7,820,750.18
Total 69,206,682.36 56,000,000.18
Including：Expensed R&D 69,206,682.36 56,000,000.18
expenditures
Capitalized R&D
expenditures
(a) Composition of corporate group
Percentage of equity
Nature of interests by the
Name of subsidiary Principal place Registered Ways of acquisition
business Company (%)
of business Address Direct Indirect
Shenzhen HARMONY
World Watch Center Commerce 100.00 Incorporated or
Shenzhen Shenzhen
Co., Ltd. investment
FIYTA Sales Co., Ltd. Commerce 100.00 Incorporated or
Shenzhen Shenzhen
investment
Shenzhen FIYTA
Precision Technology Manufacturing 99.44 0.56 Incorporated or
Shenzhen Shenzhen
Co., Ltd. investment
FIYTA Precision Technology Co., Ltd. Notes to the financial statements
Percentage of equity
Nature of interests by the
Name of subsidiary Principal place Registered Ways of acquisition
business Company (%)
of business Address Direct Indirect
Shenzhen FIYTA
Technology Manufacturing 100.00 Incorporated or
Shenzhen Shenzhen
Development Co., Ltd. investment
HARMONY World
Watch Center(Hainan) Commerce 100.00 Incorporated or
Sanya Sanya
Co., Ltd. investment
Shenzhen Xunhang
Precision Technology Manufacturing 100.00 Incorporated or
Shenzhen Shenzhen
Co., Ltd. investment
Emile Choureit Timing Incorporated or
Shenzhen Shenzhen Commerce 100.00
(Shenzhen) Ltd. investment
Liaoning Hengdarui Business
Commercial & Trade Shenyang Shenyang Commerce 100.00 combination under
Co., Ltd. common 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
FIYTA (Hong Kong) Incorporated or
Hong Kong Hong Kong Commerce 100.00
Limited investment
Business
Montres Chouriet SA combination not
Switzerland Switzerland Manufacturing 100.00
under common
control
(a) Insignificant associates
Proportion of equity
Company name Principal place Registered Nature of interests by the Measurement
address business methods
of business Company (%)
Direct Indirect
Shanghai Watch Co.,
Shanghai Shanghai Commerce 25% Equity method
Ltd.
(a) Main financial information of the insignificant associates
Items
Shanghai Watch Co., Ltd.
Aggregate amount of the following items calculated
at the proportion of shareholding ratio
—Net profit/(loss)
—Other comprehensive income -4,470,479.98 -955,570.46
—Total comprehensive income
FIYTA Precision Technology Co., Ltd. Notes to the financial statements
Items presented in income
statement
Other income 3,071,440.45 5,480,540.76
Risks related to the financial instruments of the Company arise from the recognition of various
financial assets and financial liabilities during its operation, including credit risk, liquidity risk
and market risk.
Management of the Company is responsible for determining risk management objectives and
policies related to financial instruments. Operational management is responsible for the daily
risk management through functional departments (e.g. credit management department of the
Company reviews each credit sale). Internal audit department is responsible for the daily
supervision of implementation of the risk management policies and procedures, and report their
findings to the audit committee in a timely manner.
Overall risk management objective of the Company is to establish risk management policies to
minimize the risks without unduly affecting the competitiveness and resilience of the Company.
Credit risk is the risk of one party of the financial instrument face to a financial loss because
the other party of the financial instrument fails to fulfill its obligation. The credit risk of the
Company is related to cash and equivalent, notes receivable, accounts receivables, other
receivables and long-term receivables. Credit risk of these financial assets is derived from the
counterparty’s breach of contract. The maximum risk exposure is equal to the carrying amount
of these financial instruments.
Cash and cash equivalent of the Company has lower credit risk, as they are mainly deposited in
such financial institutions as commercial bank, of which the Company thinks with higher
reputation and financial position.
For notes receivable, accounts receivable, accounts receivable financing and other receivables,
the Company establishes related policies to control their credit risk exposure. The Company
assesses credit capability of its customers and determines their credit terms based on their
financial position, possibility of the guarantee from third party, credit record and other factors
(such as current market status, etc.). The Company monitors its customers’ credit record
periodically, and for those customers with poor credit record, the Company will take measures
such as written call, shortening or cancelling their credit terms so as to ensure the overall credit
risk of the Company is controllable.
(i) Determination of significant increases in credit risk
The Company assesses at each reporting date as to whether the credit risk on financial
FIYTA Precision Technology Co., Ltd. Notes to the financial statements
instruments has increased significantly since initial recognition. When the Company determines
whether the credit risk has increased significantly since initial recognition, it considers based
on reasonable and supportable information that is available without undue cost or effort,
including quantitative and qualitative analysis of historical information, external credit ratings
and forward-looking information. The Company determines the changes in the risk of a default
occurring over the expected life of the financial instrument through comparing the risk of a
default occurring on the financial instrument as at the reporting date with the risk of a default
occurring on the financial instrument as at the date of initial recognition based on individual
financial instrument or a group of financial instruments with the similar credit risk
characteristics.
When met one or more of the following quantitative or qualitative criteria, the Company
determines that the credit risk on financial instruments has increased significantly: the
quantitative criteria applied mainly because as at the reporting date, the increase in the
probability of default occurring over the lifetime is more than a certain percentage since the
initial recognition; the qualitative criteria applied if the debtor has adverse changes in business
and economic conditions, early warning list of customer, and etc.
(ii) Definition of credit-impaired financial assets
The criteria adopted by the Company for determination of credit impairment are consistent with
internal credit risk management objectives of relevant financial instruments in considering both
quantitative and qualitative indicators.
When the Company assesses whether the debtor has incurred the credit impairment, the main
factors considered are as following: Significant financial difficulty of the issuer or the borrower;
a breach of contract, e.g., default or past-due event; a lender having granted a concession to the
borrower for economic or contractual reasons relating to the borrower’s financial difficulty that
the lender would not otherwise consider; the probability that the borrower will enter bankruptcy
or other financial re-organisation; the disappearance of an active market for the financial asset
because of financial difficulties of the issuer or the borrower; the purchase or origination of a
financial asset at a deep discount that reflects the incurred credit losses.
(iii) The parameter of expected credit loss measurement
The company measures impairment provision for different assets with the expected credit loss
of 12-month or the lifetime based on whether there has been a significant increase in credit risk
or credit impairment has occurred. The key parameters for expected credit loss measurement
include default probability, default loss rate and default risk exposure. The Company sets up
the model of default probability, default loss rate and default risk exposure in considering the
quantitative analysis of historical statistics (such as counterparties’ ratings, guarantee method
and collateral type, repayment method, etc.) and forward-looking information.
Relevant definitions are as following:
Default probability refers to the probability of the debtor will fail to discharge the repayment
obligation over the next 12 months or the entire remaining lifetime;
FIYTA Precision Technology Co., Ltd. Notes to the financial statements
Default loss rate refers to the Company's expectation of the loss degree of default risk exposure.
The default loss rate varies depending on the type of counterparty, recourse method and priority,
and the collateral. The default loss rate is the percentage of the risk exposure loss when default
has occurred and it is calculated over the next 12 months or the entire lifetime;
The default risk exposure refers to the amount that the company should be repaid when default
has occurred in the next 12 months or the entire lifetime. Both the assessment of significant
increase in credit risk of forward-looking information and the calculation of expected credit
losses involve forward-looking information. Through historical data analysis, the Company
identifies key economic indicators that have impact on the credit risk and expected credit losses
for each business.
The maximum exposure to credit risk of the Company is the carrying amount of each financial
asset in the statement of financial position. The Company does not provide any other guarantees
that may expose the Company to credit risk.
For the accounts receivable of the Company, the amount of top 5 clients represents 26.91% of
the total (31 December 2024: 22.77%).
Liquidity risk is the risk of shortage of funds when fulfilling the obligation of settlement by
delivering cash or other financial assets. The Company is responsible for the capital
management of all of its subsidiaries, including short-term investment of cash surplus and
dealing with forecasted cash demand by raising loans. The Company’s policy is to monitor the
demand for short-term and long-term floating capital and whether the requirement of loan
contracts is satisfied so as to ensure to maintain adequate cash and cash equivalents.
As at 31 December 2025, the maturity profile of the Company’s financial liabilities is as follows:
Unit: RMB 10,000
Items
Within 1 year 1-2 years 2-3 years Over 3 years
Short-term loans
Accounts payable 9,479.14
Other payables 7,514.12
Non-current liabilities
maturing within one year
Lease liabilities 1,416.11 373.13
Total 22,697.71 1,416.11 373.13
(Continued)
Items
Within 1 year 1-2 years 2-3 years Over 3 years
Short-term loans 12,408.78
FIYTA Precision Technology Co., Ltd. Notes to the financial statements
Items
Within 1 year 1-2 years 2-3 years Over 3 years
Accounts payable 11,553.29
Other payables 10,463.85
Non-current liabilities
maturing within one year
Lease liabilities 2,851.41 655.12
Total 40,779.74 2,851.41 655.12
(a) Foreign currency risk
Except for the operations of the Company’s subsidiaries located in Hong Kong and foreign
countries are denominated and settled in HKD, USD, BPD, RMB and SGD, other main
operations of the Company are settled in RMB.
Except that the Company’s subsidiary in Hong Kong uses HKD as settlement currency and sub-
subsidiary in Swiss used CHF as settlement currency, the principal places of operations of the
Company are located in China and the major businesses are settled in RMB. However, the
Company’s recognized foreign currency assets and liabilities as well as the foreign currency
transactions in the future (the functional currencies of foreign assets and liabilities as well as
the transactions are mainly HKD and CHF) remain exposed to exchange rate risk.
(i) Please refer to Note 5.50 Foreign Currency Monetary Items, for the details of the main
foreign currency risk exposures of the Company’s foreign currency assets and liabilities as at
(ii) Sensitivity analysis
As at 31 December 2025, if RMB appreciates or depreciates 5% against USD, while all other
risk variables stay unchanged, net profit in current year of the Company will increase or
decrease by RMB 131,840 (31 December 2024: RMB 394,100).
(b) Interest rate risk
Interest rate risk of the Company primarily arises from its long-term interest-bearing debts, such
as long-term loans and bonds payables, etc. Financial liabilities with floating interest rate make
the Company subject to cash flow interest rate risk, and financial liabilities with fixed interest
rate make the Company subject to fair value interest rate risk. The Company determines the
relative proportion of the fixed interest contracts and floating interest contracts based on the
current market environment.
Finance department of the Company’s headquarter monitors interest rate of the group
continuously. Increase of the interest rate will result in the increase of the cost of new interest-
bearing debts and the interest expense of the unpaid interest-bearing debts with floating rate,
and subsequently lead to significant negative impact on the financial performance of the
FIYTA Precision Technology Co., Ltd. Notes to the financial statements
Company. The management makes adjustment in accordance with the update market condition
in a timely manner.
As at 31 December 2025, the company does not have any long-term interest-bearing debt.
As at 31 December 2025, the Company does not have financial instruments measured at fair
value.
Fair Value
Financial assets and financial liabilities not measured at fair value include: accounts receivable,
short-term borrowings, accounts payable, long-term borrowings due within one year, and equity
instrument investment that does not have public quotation in an active market and its fair value
cannot be measured reliably.
The difference between fair value and carrying amount of the above financial assets and
liabilities that not measured at fair value is insignificant.
Recognition of related parties: The Company has control or joint control of, or exercise
significant influence over another party; or the Company and another party are controlled or
jointly controlled by the same third party.
Percentage of
Voting rights in
Registered Nature of Registered equity interests
Name of the parent the Company
address the business capital in the Company
(%)
(%)
CATIC Shenzhen
Shenzhen Commercial 116,616.20 40.17 40.17
Holdings Limited
(a) Details of the parent company
CATIC Shenzhen Holdings Limited is a subsidiary that 100.00% held, indirectly, by AVIC
Innovation Holding Limited.
(b) Ultimate controlling party of the Company is AVIC Innovation Holding Limited.
Details of the subsidiaries please refer to Notes 7 INTERESTS IN OTHER ENTITIES.
Details of significant associates please refer to Notes 7 INTERESTS IN OTHER ENTITIES.
FIYTA Precision Technology Co., Ltd. Notes to the financial statements
Name Relationship with the Company
Joint ventures of Aviation Industry Corporation of China and their
The associate of the ultimate
subsidiaries (hereinafter referred to as "Joint ventures of AVIC and
controlling party
their subsidiaries")
Aviation Industry Corporation of China and its subsidiaries
Under the same control
(hereinafter referred to as "AVIC and its subsidiaries")
The directors, managers, Chief Financial Officer (CFO), and Secretary
to the Board of Directors Key management personnel
(hereinafter referred to as "key management personnel").
(a) Purchases or sales of goods, rendering or receiving of services
Purchases of goods, receiving of services:
Related parties Nature of the transaction(s) 2025 2024
Mall Expenses and Goods
AVIC and its subsidiaries 14,257,917.38 16,376,625.49
Procurement
Joint ventures of AVIC and Mall Expenses and Property
their subsidiaries Management Fees
Sales of goods and rendering of services:
Related parties Nature of the transaction(s) 2025 2024
Sales of goods and rendering of
AVIC and its subsidiaries 33,254,801.38 46,244,991.78
services
Joint ventures of AVIC SSales of goods and Property
and their subsidiaries Management Fees
Shanghai Watch Co., Ltd. Sales of goods 3,695,244.27
(b) Leases
The Company as lessor:
The lessee Type of assets 2025 2024
Joint ventures of AVIC and
Buildings 45,714.32 1,666,400.02
their subsidiaries
AVIC and its subsidiaries Buildings 281,999.98 1,637,357.56
The Company as lessee:
Type of Variable lease Increase in
The lessor Lease payment Interest expense of
assets payments not included right-of-use
for current period lease liabilities
in lease liabilities assets
Joint
ventures of
AVIC and Buildings 21,750.50 350,896.02 5,099.96
their
subsidiaries
AVIC and
Buildings 129,523.85 5,108.57 44,363.60
its
FIYTA Precision Technology Co., Ltd. Notes to the financial statements
Type of Variable lease Increase in
The lessor Lease payment Interest expense of
assets payments not included right-of-use
for current period lease liabilities
in lease liabilities assets
subsidiaries
(Continued)
Type of Variable lease Increase in
The lessor Lease payment Interest expense of
assets payments not included right-of-use
for current period lease liabilities
in lease liabilities assets
Joint
ventures of
AVIC and Buildings 2,692.68 485,331.20 11,649.16 -100,148.57
their
subsidiaries
AVIC and
its Buildings 162,868.56 1,894.34 -157,702.74
subsidiaries
(c) Key management personnel compensation
Items 2025 2024
Key management personnel
compensation
(d) Other related party transactions
The deposit balance of our company held at AVIC Finance Company as at 31 December 2025
amounted to RMB 552,559,173.96, of which the deposit interest received during the year
totaled RMB 1,963,880.34.
(a) Receivables
Items Related parties Bad debt Bad debt
Book balance Book balance
provision provision
Notes
AVIC and its subsidiaries 200,546.78 508,273.49
receivable
Accounts
AVIC and its subsidiaries 5,142,670.67 530,714.66 2,894,425.51 281,416.75
receivable
Other
AVIC and its subsidiaries 867,917.00 43,395.85 924,947.00 47,070.35
receivables
Other Joint ventures of AVIC
receivables and their subsidiaries
(b) Payables
FIYTA Precision Technology Co., Ltd. Notes to the financial statements
Items Related parties 31 December 2025 31 December 2024
Other payables AVIC and its subsidiaries 358,280.00
Joint ventures of AVIC and
Other payables 892,941.08 1,066,456.79
their subsidiaries
Accounts payable AVIC and its subsidiaries 37,471.91
Receipts in advance AVIC and its subsidiaries 11,250.00 7,500.00
Grant in the Exercise in the Failure in the
Unlocking in the current period
Grant object category current period current period current period
Qty Amount Qty Amount Qty Amount Qty Amount
Some Directors,
Senior Management
& Core Backbone
Staff
Method of determining fair value of equity
Close price of share on grant date
instrument on grant date
Evidence to determine the number of exercisable Term of employee service, status of target
equity instrument completion, and personal performance assessment
Reasons for significant difference between current
Nil
period estimation and prior period estimation
Accumulated amount charged to capital reserve for
equity settled share-based payment
As of the balance sheet date, the significant external commitments of the Company include
lease contracts that have been signed and are in progress or are about to be executed, along with
their financial impacts. For detailed information, please refer to Note 5.25 Lease Liabilities and
Note 5.51 Leases.
Except for the commitments mentioned above, as of 31 December 2025, the Company has no
other significant commitments that need to be disclosed.
As at 31 December 2025, the Company has no significant contingencies need to be disclosed.
FIYTA Precision Technology Co., Ltd. Notes to the financial statements
In accordance with the resolutions at the 14th Meeting of the 11th Board
The proposed profit or of Directors held on 12 March 2026, the Company will distribute cash
dividend distribution refers to dividends of RMB 1.20 (tax included) per 10 share to all shareholders
the profit or dividend that has from the undistributed profits, based on the total number of shares
been reviewed, approved, and eligible for profit distribution for the year end 31 December 2025. No
announced for payment. stock dividends will be distributed, nor will there be any conversion of
capital reserves into share capital.
Note: The profit distribution plan above shall be implemented after being reviewed and
approved by the general meeting of shareholders.
(a) On 12 March 2026, upon the approval of the resolutions passed at the 14th Meeting of the
credit facilities from banks and other financial institutions in 2026 through various methods
including credit, guarantee, mortgage and pledge, with the outstanding balance of actual
borrowings under such credit facilities not exceeding RMB 1.2 billion. The proposal for the
total credit facilities from banks is still pending approval by the Company's shareholders'
meeting.
(b) On 12 March 2026, upon the approval of the resolutions passed at the 14th Meeting of the
subsidiaries in 2026 in respect of credit facilities applied from banks and other financial
institutions, with the amount not exceeding RMB 300 million. Such limit is included within the
actual borrowing limit of RMB 1.2 billion under the credit facilities. The proposal for the
aforementioned guarantee limit is still pending approval by the Company's shareholders'
meeting.
As at 12 March 2026, the Company has no other events after the reporting period that require
disclosure.
The Company identifies operating segments according to its internal organization structure,
management requirements and internal reporting systems. Then the reportable segments are to
be determined based on the Company’s operating segments:
(a) its business activities are engaged to generate revenue and incur expenses;
(b) its operating results are regularly reviewed by the Company’s management to make
decisions on resources allocation and performance assessment;
(c) its financial conditions, operating results, cash flow and related accounting information are
FIYTA Precision Technology Co., Ltd. Notes to the financial statements
available to the Company.
The Company determines the reporting segment based on the operating segment, and the
operating segment that meets any of the following conditions is determined as the reporting
segment:
(a) The segment income of the operating segment accounts for 10.00% or more of total income
of all segments;
(b) The absolute amount of profits (losses) of the segment account for 10.00% or more of the
higher of the absolute amount of total profits of the profiting segment and the absolute amount
of total losses of the unprofitable segment.
The Company’s business is simple. The business mainly involves manufacturing and sales of
watch. The management considers the business as a whole in implementing management and
assessing its performance. As a result, no segment information is disclosed in this financial
statement.
As at 31 December 2025, the Company does not have other significant matters that require to
disclose.
PARENT COMPANY
(a) Accounts receivable by aging
Aging 31 December 2025 31 December 2024
Within one year 10,466,091.51 6,238,972.29
Subtotal 319.04
Less: provision for bad debt 12,103,666.34 6,478,103.75
Total 2,120,455.62 1,846,113.37
(b) Accounts receivable by bad debt provision method
Category Book balance Provision for bad debt
Carrying
Proportion Provision amount
Amount Amount
(%) ratio (%)
Provision for bad debt recognised
individually 2,303,565.35 19.03 1,970,570.09 85.54 332,995.26
FIYTA Precision Technology Co., Ltd. Notes to the financial statements
Category Book balance Provision for bad debt
Carrying
Proportion Provision amount
Amount Amount
(%) ratio (%)
Provision for bad debt recognised
by groups 9,800,100.99 80.97 149,885.53 1.53 9,650,215.46
Including: Group 1 4,632,024.39 38.27 149,885.53 3.24 4,482,138.86
Receivable from Related party in
scope of consolidation 5,168,076.60 42.70 5,168,076.60
Total 12,103,666.34 100.00 2,120,455.62 17.52 9,983,210.72
(Continued)
Category Book balance Provision for bad debt
Carrying
Proportion Provision amount
Amount Amount
(%) ratio (%)
Provision for bad debt recognised
individually
Provision for bad debt recognised
by groups
Including: Group 1 4,041,736.34 62.39 214,314.71 5.30 3,827,421.63
Receivable from Related party in
scope of consolidation
Total 6,478,103.75 100.00 1,846,113.37 28.50 4,631,990.38
Detailed explanation of provision for bad debt:
(i)As at 31 December 2025, accounts receivable with bad debt provision recognised
individually
Name Provision for bad Reason for
Book balance Provision ratio (%)
debt provision
Expected to be
Other customers 2,303,565.35 1,970,570.09 85.54
irrecoverable
(ii) As at 31 December 2025, accounts receivable with bad debt provision recognised by group
Aging Accounts Provision for Provision Accounts Provision for Provision
receivable bad debt ratio (%) receivable bad debt ratio (%)
Within
one year
Total 4,632,024.39 149,885.53 3.24 4,041,736.34 214,314.71 5.30
FIYTA Precision Technology Co., Ltd. Notes to the financial statements
(c) Changes of provision for bad debt during the reporting period
Changes during the reporting period
Category Recovery Elimination
or reversal or write-off
Provision for bad debt
recognised 1,631,798.66 338,771.43 1,970,570.09
individually
Provision for bad debt
recognised by groups
Including:Group1 214,314.71 -64,429.18 149,885.53
Total 1,846,113.37 274,342.25 2,120,455.62
(d) No accounts receivable written off during the reporting period
(e) Top five closing balances by entity
Balance of accounts Proportion of the balance Provision for bad
Entity name receivable as at 31 to the total accounts debt of accounts
December 2025 receivable (%) receivable
Total of the top five accounts
receivable balances at the end 9,623,667.20 1,268,165.48 79.51
of the period
(a) Other receivables by aging
Aging 31 December 2025 31 December 2024
Within one year 545,738,870.53 659,558,728.69
Over 3 years 40,050.00 40,050.00
Subtotal 545,791,977.16 659,622,488.10
Less: provision for bad debt 40,702.83 56,619.62
Total 545,751,274.33 659,565,868.48
(b) Other receivables by nature
Nature 31 December 2025 31 December 2024
Related party in scope of
consolidation 545,517,289.16 658,724,812.91
Deposit and guarantee receivable 61,809.82 119,550.00
Others 212,878.18 778,125.19
Subtotal 545,791,977.16 659,622,488.10
Less: provision for bad debt 40,702.83 56,619.62
Total 545,751,274.33 659,565,868.48
FIYTA Precision Technology Co., Ltd. Notes to the financial statements
(c) Other receivables by bad debt provision method
A. As at 31 December 2025, provision for bad debt recognised based on three stages model
Stages Book balance Provision for bad debt Carrying amount
Stage 1 545,791,977.16 40,702.83 545,751,274.33
As at 31 December 2025, provision for bad debt at stage 1:
Provision Provision for
Category Book balance Carrying amount
ratio (%) bad debt
Provision for bad debt recognised
individually
Provision for bad debt recognised by
groups 545,791,977.16 0.01 40,702.83 545,751,274.33
Including: Deposit and guarantee
receivable 61,809.82 65.80 40,673.05 21,136.77
Related party in scope of
consolidation 545,517,289.16 545,517,289.16
Others 212,878.18 0.01 29.78 212,848.40
Total 545,791,977.16 0.01 40,702.83 545,751,274.33
B. As at 31 December 2024, provision for bad debt recognised based on three stages model
Stages Book balance Provision for bad debt Carrying amount
Stage 1 659,622,488.10 56,619.62 659,565,868.48
As at 31 December 2024, provision for bad debt at stage 1:
Provision Provision for
Category Book balance Carrying amount
ratio (%) bad debt
Provision for bad debt recognised
individually
Provision for bad debt recognised by
groups 659,622,488.10 0.01 56,619.62 659,565,868.48
Including: Deposit and guarantee
receivable 119,550.00 36.83 44,025.00 75,525.00
Related party in scope of
consolidation 658,724,812.91 658,724,812.91
Others 778,125.19 1.62 12,594.62 765,530.57
Total 659,622,488.10 0.01 56,619.62 659,565,868.48
Basis of provision for bad debt during the reporting period:
For details of recognition criteria and explanation for provision of bad debt by groups, please
refer to Notes 3.11
(d) Changes of provision for bad debt during the reporting period
FIYTA Precision Technology Co., Ltd. Notes to the financial statements
Changes during the reporting period
Category Recovery Elimination
or reversal or write-off
Provision for bad debt
recognised by groups
(e) No other receivables written off during the reporting period
(f) Top five closing balances by entity
Percentage
of Total
Balance as at 31 Age of Other Provision for
Entity name Nature of Amount
December 2025 Amount Receivables Bad Debts
at Period
End (%)
Related party in scope of Within 1
No. 1 427,402,059.90 78.31
consolidation year
Related party in scope of Within 1
No. 2 63,265,181.51 11.59
consolidation year
Related party in scope of Within 1
No. 3 28,923,820.90 5.30
consolidation year
Related party in scope of Within 1
No. 4 15,680,483.80 2.87
consolidation year
Related party in scope of Within 1
No. 5 6,000,000.00 1.10
consolidation year
Items Provision Provision
Book balance for Carrying amount Book balance for Carrying amount
impairment impairment
Subsidiaries 1,592,543,885.91 1,592,543,885.91 1,592,543,885.91 1,592,543,885.91
Associates 46,436,556.86 46,436,556.86 50,907,036.84 50,907,036.84
Total 1,638,980,442.77 1,638,980,442.77 1,643,450,922.75 1,643,450,922.75
(a) Investments in subsidiaries
Provisi
Investees on for Additional Disposal of Provision for Provision for
Book balance Others Book balance
impair investment investment impairment impairment
ment
ShenzhenHARMONYWo 609,891,973.62 609,891,973.62
rldWatchCenterCo.,Ltd.
ShenzhenHarmonyE-
FIYTA Precision Technology Co., Ltd. Notes to the financial statements
Provisi
Investees on for Additional Disposal of Provision for Provision for
Book balance Others Book balance
impair investment investment impairment impairment
ment
commerceCo.,Ltd.
ShenzhenFIYTAPrecision 182,290,834.31 182,290,834.31
TechnologyCo.,Ltd.
ShenzhenFIYTATechnolo 51,160,141.67 51,160,141.67
gyDevelopmentCo.,Ltd.
FIYTA(HongKong)Ltd.
Temporal(Shenzhen)Co., 5,000,000.00 5,000,000.00
Ltd.
FIYTASalesCo.,Ltd.
LiaoningHengdaruiComm 36,867,843.96 36,867,843.96
ercial&TradeCo.,Ltd.
EmileChoureitTiming(Sh 80,613,904.83 80,613,904.83
enzhen)Ltd.
HARMONYWorldWatch 10,000,000.00 10,000,000.00
Center(Hainan)Co.,Ltd.
ShenzhenXunhangPrecisi 10,000,000.00
onTechnologyCo.,Ltd.
Total
(b) Investments in associates
Changes during the reporting period
Investees Changes
in other
reporting reporting under the comprehensive
equity
period period equity method income
Shanghai
Watch Co., Ltd.
(Continued)
FIYTA Precision Technology Co., Ltd. Notes to the financial statements
Changes during the reporting period Provision for
Declaration of cash 31 December impairment at
Investees Provision for
dividends or Others 2025 31 December
impairment 2025
distribution of profit
Investees 46,436,556.86
Items
Revenue Costs of sales Revenue Costs of sales
Principal
activities
Other activities 3,858,500.75 3,524,696.56
Total 184,540,282.60 56,887,861.74 180,874,926.74 49,729,440.87
Items 2025 2024
Investment income from long-term equity investments
under equity method
Investment income from long-term equity investments
-955,570.46 -5,819,479.60
under cost method
Total 287,322,662.30 192,180,520.40
Items 2025
Gains /(losses) on disposal of non-current assets (including the written-
-1,233,966.09
off portion of provisions for asset impairment)
Government grants (except for government grants which are closely
related to the ordinary course of business of the Company, in
compliance with national policies and regulations, granted in 3,071,440.46
accordance with the determined standards; and influence the profit and
loss on an ongoing basis) charged to gains or losses for the period
Non-financial business’s gains or losses from fair value change
arising from financial assets and financial liabilities held and gains or
losses from disposal of financial assets and financial liabilities, other 437,789.65
than effective value protection hedges relating to the Company’s
ordinary course of business
Reversal of provision for impairment of individually tested
receivables
Other non-operating income/expenses except for items mentioned
above
Other profit /(loss) items that meet the definition of non-recurring
profit or loss
FIYTA Precision Technology Co., Ltd. Notes to the financial statements
Items 2025
Total non-recurring profit /(loss) 5,099,818.58
Less: Income tax effect 961,852.20
Net non-recurring profit /(loss) 4,137,966.38
Less: net non-recurring profit /(loss) attributable to non-controlling
interest
Net non-recurring profit /(loss) attributable to ordinary shareholders 4,137,966.38
(a) 2025
Weighted average return EPS
Profit for the reporting period
on net assets (%) Basic Diluted
Net profit attributable to ordinary
shareholders 2.60 0.2153 0.2152
Net profit attributable to ordinary
shareholders after non-recurring profit 2.48 0.2051 0.2050
or losses
(b) 2024
Weighted average return EPS
Profit for the reporting period
on net assets (%) Basic Diluted
Net profit attributable to ordinary
shareholders 6.55 0.5385 0.5378
Net profit attributable to ordinary
shareholders after non-recurring profit 6.21 0.5100 0.5093
or losses
Name of the Company：FIYTA Precision Technology Co., Ltd.
Date: 12 March 2026
