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飞亚达B:2019年半年度财务报告(英文版) 查看PDF原文

公告日期:2019年08月15日
FIYTAHOLDING S LTD. 2019 Semi-annual Financial Report I. Audit ors’ Report Has the semi-annual report been audited No II. Financial Statements The currencyapplied in the financial notes and statements is Renminbi (CNY) 1. Consolidated Balance Sheet Prepared byFIYTAHOLDINGS LTD. In CNY Items June 30, 2019 December 31, 2018 C urren tassets: Monetary capital 226,521,552.42 164,828,059.97 Settlementreserve Inter-bank lending Transactional financial assets Financial assets which are measured at their fair values and the variation ofw hich is counted to the profitand loss of the current period Derivative financial assets N otes receiv able 9,940,991.52 7,051,846.85 Accounts receivable 448,122,115.59 370,545,656.61 Financing w ith accounts receivable Advance payment 25,833,366.51 13,666,816.33 Receivable premium Reins urance acc ounts receivable Reserv e for reinsurance contract receivable Other receivables 62,591,073.25 45,870,582.26 Including: Interestreceivable Dividends receivable Redemptory monetary capital for sale Inventories 1,727,402,092.53 1,782,306,301.70 C ontr actass ets H eld-for-s ale assets N on-curr en tass ets due w ithin a year Other currentassets 46,066,469.94 73,703,312.24 Total currentassets 2,546,477,661.76 2,457,972,575.96 N on-curr en tass ets: Loan issuing and advance in cash Equity inv estm ent Available-for-sale financial assets 85,000.00 Other equity inv estment H eld-to-d ue i nv estm ents Long term accounts receivable Long-term equity investment 46,412,373.21 44,881,063.15 Investmentin other equity instruments 85,000.00 Other non-currentfinancial assets Investment-oriented real estate 370,467,221.69 377,319,433.03 Fixed assets 414,522,443.81 425,649,562.85 C onstruction-in-progress 12,886,665.68 12,041,126.00 Produc tive biological asset Oil and gas assets Use right assets Intangible assets 41,477,871.11 43,545,477.61 Developmentexpenses Goodw ill Long-term ex pens es to be apportioned 137,535,709.85 128,572,545.15 Deferred income tax asset 83,293,488.15 100,675,706.09 Other non-currentassets 7,297,788.01 8,949,160.42 Total non-currentassets 1,113,978,561.51 1,141,719,074.30 Total assets 3,660,456,223.27 3,599,691,650.26 C urren tliabilities: Shortterm borrow ings 550,078,332.26 547,118,452.97 Borrow ings from central bank Loans from other banks Transactional financial liabilities Financial liabilities w hich are measured at their fair values and the variation ofw hich is counted to the currentprofitand loss Derivative financial liabilities N otes payable Accounts payable 227,682,547.55 259,913,612.34 Advance Receipts 18,022,460.66 16,459,445.00 Money from sale ofthe repurchased financial assets Deposits taking and interbank placement Acting trading securities Income from securities underwriting on commission Payroll pay able to the employees 48,582,058.35 69,779,037.83 Taxes payable 32,037,984.80 55,923,171.92 Other pay abl es 92,313,874.56 71,819,930.30 Including: interestpayable 740,561.84 772,351.26 Dividends payable Service charge and commission pay able Payable reinsurance C ontr actliabilities H eld-for-s ale liabilities N on-curr en tliabilities due w ith in a year 352,790.00 347,470.00 Other currentliabilities Total currentliabilities 969,070,048.18 1,021,361,120.36 N on-curr en tliabilities: Reserv e for insurance contract Long-term borrowings 4,409,875.00 4,517,110.00 Bonds payable Including: preferred shares Perpetual bond Lease liabilities Long-term accounts pay able Long term payroll payable to the employees Estimated liabilities Deferred income 3,672,855.36 3,672,855.36 Deferred income tax liability Other non-currentliabilities Total non-currentliabilities 8,082,730.36 8,189,965.36 Total liabilities 977,152,778.54 1,029,551,085.72 Ow ner’s equity: C apita l stock 442,968,881.00 438,744,881.00 Other equity instruments Including: preferred shares Perpetual bond C apita l Reserve 1,079,051,841.53 1,062,455,644.22 Less: shares in stock 32,902,198.89 Other comprehensive income -3,692,732.58 -5,442,139.78 Special reserve Surplus R eserv e 223,015,793.80 223,015,793.80 Reserv e againstgeneral risks Retained earnings 974,856,064.56 851,360,603.66 Total owners’ equity attributable to the parent company 2,683,297,649.42 2,570,134,782.90 Minority shareholders’ equity 5,795.31 5,781.64 Total owner’s equity 2,683,303,444.73 2,570,140,564.54 Total liabilities and owners’ equity 3,660,456,223.27 3,599,691,650.26 Legal representative: Huang Yongfeng Chief Financial Officer: Chen Zhuo Person in charge of theAccounting Department: Tian Hui 2. Balance Sheet (Parent Company) In CNY Items June 30, 2019 December 31, 2018 C urren tassets: Monetary capital 184,867,858.11 137,175,466.27 Transactional financial assets Financial assets which are measured at their fair values and the variation ofw hich is counted to the profit and loss of the current period Derivative financial assets N otes receiv able Accounts receivable 2,232,719.12 737,636.38 Financing w ith accounts receivable Advance payment Other receivables 802,334,152.26 870,739,378.37 Including: Interestreceivable Dividends receivable Inventories C ontr actass ets H eld-for-s ale assets N on-curr en tass ets due w ithin a year Other currentassets 11,816,267.04 10,081,272.94 Total currentassets 1,001,250,996.53 1,018,733,753.96 N on-curr en tass ets: Equity inv estm ent Available-for-sale financial assets 85,000.00 Other equity inv estment H eld-to-d ue i nv estm ents Long term accounts receivable Long-term equity investment 1,377,660,964.14 1,376,129,654.08 Investmentin other equity instruments 85,000.00 Other non-currentfinancial assets Investment-oriented real estate 291,562,362.07 297,042,937.87 Fixed assets 290,346,866.97 297,517,472.81 C onstruction-in-progress 12,886,665.68 12,041,126.00 Produc tive biological asset Oil and gas assets Use right assets Intangible assets 33,070,715.48 35,337,052.82 Developmentexpenses Goodw ill Long-term ex pens es to be apportioned 9,247,782.11 4,500,638.97 Deferred income tax asset 969,058.32 952,857.33 Other non-currentassets 2,486,782.05 4,493,971.35 Total non-currentassets 2,018,316,196.82 2,028,100,711.23 Total assets 3,019,567,193.35 3,046,834,465.19 C urren tliabilities: Shortterm borrow ings 520,000,000.00 505,000,000.00 Transactional financial liabilities Financial liabilities w hich are measured at their fair values and the variation ofw hich is counted to the currentprofitand loss Derivative financial liabilities N otes payable Accounts payable 26,696,117.76 52,324,191.98 Advance Receipts 3,252,081.05 1,636,520.02 C ontr actliabilities Payroll pay able to the employees 9,867,650.25 11,589,634.34 Taxes payable 3,611,483.28 943,919.26 Other pay abl es 45,726,573.85 57,997,397.28 Including: interestpayable 579,338.91 685,419.80 Dividends payable H eld-for-s ale liabilities N on-curr en tliabilities due w ith in a year Other currentliabilities Total currentliabilities 609,153,906.19 629,491,662.88 N on-curr en tliabilities: Long-term borrowings Bonds payable Including: preferred shares Perpetual bond Lease liabilities Long-term accounts pay able Long term payroll payable to the employees Estimated liabilities Deferred income 3,672,855.36 3,672,855.36 Deferred income tax liability Other non-currentliabilities Total non-currentliabilities 3,672,855.36 3,672,855.36 Total liabilities 612,826,761.55 633,164,518.24 Ow ner’s equity: C apita l stock 442,968,881.00 438,744,881.00 Other equity instruments Including: preferred shares Perpetual bond C apita l Reserve 1,084,707,382.63 1,068,111,185.32 Less: shares in stock 32,902,198.89 Other comprehensive income Special reserve Surplus R eserv e 223,015,793.80 223,015,793.80 Retained earnings 688,950,573.26 683,798,086.83 Total owner’s equity 2,406,740,431.80 2,413,669,946.95 Total liabilities and owners’ equity 3,019,567,193.35 3,046,834,465.19 Legal representative: Huang Yongfeng Chief Financial Officer: Chen Zhuo Person in charge of the Accounting Departm ent: Tian Hui 3. Consolidated Profit Statement In CNY Items The firsthalfyear of2019 The firs thalfyear of2018 I. Turnover 1,785,036,020.23 1,695,891,432.72 Including: operating income 1,785,036,020.23 1,695,891,432.72 Interestincome Earned insurance premium Service charge and commission income II. Total operating costs 1,634,493,191.74 1,559,905,673.67 Including: Operating costs 1,051,504,075.22 976,325,736.35 Interestpay ment Service charge and commission payment Surrender Value C ompensation expenses, net Provision ofr eserv e for insurance contract, net Paymentofpolicy div idend Reins urance expenses Taxes and surcharges 15,094,875.33 17,790,786.43 Sales costs 415,776,028.95 422,113,041.69 Administrative expenses 116,352,835.42 104,242,391.69 R & D ex penditures 19,526,410.93 21,285,926.02 Financial expenses 16,238,965.89 18,147,791.49 Where: Interestcos t 12,023,843.93 14,273,043.13 Interestincome -908,850.92 -1,079,587.08 Plus: Other income 13,045,742.36 6,497,018.80 Investmentincome (loss is stated w ith “-”) 1,531,310.06 93,013.38 Including: return on investmentin associate and joint venture 1,531,310.06 93,013.38 Gain from the derecognition of the financial assets measured atamortised cost (loss is stated w ith “-”) Exchange income (loss stated w ith “ -“ ) N etexposure hedge income (loss stated w ith “-“) Income from change offair value (loss is stated w ith “-”) Loss from impairmentofcredit(loss is stated with “ -” ) -3,081,768.89 5,178,800.41 Loss from impairmentofassets (loss is stated w ith “-”) 2,514,740.86 -1,765,800.30 Income from disposal ofassets (loss is s tated with “-“) -212,010.13 -54,407.16 III.Operating Profit(loss is stated with “-“) 164,340,842.75 145,934,384.18 Plus: Non-operating income 294,311.70 363,859.51 Less: N on-o per a tin g expenses 524,505.98 466,522.53 IV. Total profit(total loss is stated w ith “-”) 164,110,648.47 145,831,721.16 Less: Income tax expense 40,615,187.57 33,463,799.72 V.N etProfit(netloss is stated w ith “ -“ ) 123,495,460.90 112,367,921.44 (I) Classification based on operation sustainability 1. N etProfitfrom sustainable operation (netloss is 123,495,460.90 112,367,921.44 stated w ith “-”) 2. N etProfitfrom termination ofoperation (netloss is stated w ith “-”) (II) Classification by ownership 1. N etprofitattributable to the parentc ompany’s 123,495,460.90 112,367,921.44 ow ner 2. Minority shareholders’ gain/loss VI.Netofother comprehensive income after tax 1,749,420.87 -1,392,954.99 N etofother comprehensive income after tax attributable to the parentcompany’s ow ner 1,749,407.20 -1,392,919.75 (I) Other comprehensive income w hich cannotbe re-classified into gain and loss 1. Movementofthe netliabilities and netassets re-measured for setting the beneficial plan 2. Other comprehensive income w hich cannotbe converted into gain and loss bas ed on the equity method 3. Movementofthe fair value ofthe investmentin other equity instruments 4. Movementofthe fair value ofthe Company’s ow n credit risk 5. Others (II) Other comprehensive income which shall be 1,749,407.20 -1,392,919.75 re-classified into gain and loss 1. Other comprehensiv e income which can be converted into gain and loss based on the equity method 2. Movementofthe fair value ofthe investmentin other debtinstruments 3. Gain/loss from change in the fair value ofthe financial assets available for sale 4.Amount of the reclassified financial assets counted to the other comprehensive income 5. Gain/loss from which the held-to-maturity investmentis re-classified as available-for-sale financial assets 6. Provision for impairmentof the credit of the other debt inv estment 7. Reserve for cash flow hedge 8. C onversion difference in foreign currency statements 1,749,407.20 -1,392,919.75 9. Others N etamountofother comprehensive income after tax 13.67 -35.24 attributable to minority shareholders VII.Total com pr ehensiv e income 125,244,881.77 110,974,966.45 Total comprehensive income attributable to the parent 125,244,868.10 110,975,001.69 company ’s owner Total comprehensive income attributable to minority shareholders 13.67 -35.24 VIII.Earnings per share: (I) Basic earnings per share 0.2788 0.2561 (II) Diluted earnings per share 0.2788 0.2561 Legal representative: Huang Yongfeng Chief Financial Officer: Chen Zhuo Person in charge of theAccounting Department: Tian Hui 4. State ment of Profit, Pare nt Company In CNY Items The firs thalfyear of2019 The firsthalfyear of2018 I. Operating revenue 64,124,939.95 56,119,634.18 Less: Operating cost 11,807,925.90 9,578,544.70 Taxes and surcharges 2,257,018.92 2,206,362.07 Sales costs 582,036.03 Administrative expenses 39,783,149.16 31,314,977.66 R & D ex penditures 9,146,589.64 10,322,178.15 Financial expenses 3,247,689.32 3,554,000.36 Where: Interestcos t 4,007,526.54 4,234,698.63 Interestincome -776,046.44 -710,762.21 Plus: Other income 7,743,695.89 1,598,000.00 Investmentincome (loss is stated w ith “-”) 1,531,310.06 93,013.38 Including: return on investmentin associate and joint venture 1,531,310.06 93,013.38 Gain from the derecognition of the financial assets measured atamortised cost (loss is stated w ith “-”) N etexposure hedge income (loss stated w ith “-“) Income from change offair value (loss is stated w ith “-”) Loss from impairmentof credit(loss is stated w ith “ -” ) 64,803.91 Loss from impairmentofassets (loss is stated w ith “-”) Income from dis posal ofassets (loss is s tated with “-“) -2,074.20 -13,917.68 II. Operating Profit(loss is stated w ith “-“) 6,508,658.82 820,666.94 Plus: Non-operating income 18,000.00 9,480.00 Less: N on-o per a tin g expenses 200,000.00 446,782.07 III. Total profit(total loss is stated w ith “-“) 6,326,658.82 383,364.87 Less: Income tax expense 1,174,172.39 -169,477.50 IV.N etProfit(netloss is stated w ith “ -“ ) 5,152,486.43 552,842.37 (I) NetProfit from sustainable operation (netloss is stated w ith “-”) 5,152,486.43 552,842.37 (II) NetProfitfrom termination ofoperation (netloss is stated with “-”) V.N etof other comprehensiv e income after tax (I) Other comprehensive income w hich cannotbe re-classified into gain and loss 1. M ov ementofthe netliabilities and netassets re-measured for setting the beneficial plan 2. Other comprehensiv e income w hich cannotbe converted into gain and loss bas ed on the equity method 3. M ov ementofthe fair value ofthe investmentin other equity instruments 4. M ov ementofthe fair value ofthe Company’s ow n creditrisk 5. Others (II) Other comprehensive income which shall be re-classified into gain and loss 1. Other comprehensiv e income which can be converted into gain and loss bas ed on the equity method 2. M ov ementofthe fair value ofthe investmentin other debtinstruments 3. Gain/loss from c hange in the fair value ofthe financial assets available for sale 4.Amount of the reclassified financial assets counted to the other comprehensive income 5. Gain/loss from which the held-to-maturity inv estmentis re-classified as av ailable -for -sal e financial assets 6. Provision for impairmentof the credit of the other debtinvestment 7. Reserve for cash flow hedge 8. C onversion difference in foreign currency statements 9. Others VI. Total comprehensive income 5,152,486.43 552,842.37 VII.Earnings per share: (I) Basic earnings per share 0.0116 0.0013 (II) Diluted earnings per share 0.0116 0.0013 Legal representative: Huang Yongfeng Chief Financial Officer: Chen Zhuo Person in charge of the Accounting Departm ent: Tian Hui 5. Consolidated Cash Flow Statement In CNY Items The firsthalfyear of2019 The firs thalfyear of2018 I.C ash flows arising from operating activities: C ash receiv ed from sales ofgoods and supply oflabor serv ice 1,913,555,960.34 1,905,278,291.59 N etincrease ofcustomers’ depositand due from banks N etincrease ofborrowings from the central bank N etincrease ofborrowings from other financial institutions C ash receiv ed from the premium ofthe original insuranc e contract N etcash rec eived from the reinsurance business N etincrease of the reserve from policy holders and inv estment C ash receiv ed from interest, service charge and commission N etincrease ofloan from other banks N etincrease of fund from repurchase business N etcash rec eived from securities trading on commission Rebated taxes received 3,160,067.59 185,691.63 Other operation activ ity related cash receipts 40,976,127.91 25,022,648.38 Subtotal ofcash flow in from operating activity 1,957,692,155.84 1,930,486,631.60 C ash paid for purchase ofgoods and reception oflabor 1,116,738,134.87 1,010,882,821.40 serv ices N etincrease ofloans and advances to customers N etincrease ofdue from central bank and due from other banks C ash from pay mentfor settlement of the original insuranc e contract N etincrease of the financial assets held for trading purpose N etincrease of the lending capital C ash paid for inter es t, service charge and commission C ash for paymentofpolicy dividend C ash paid to and for staff 314,068,308.62 308,576,830.37 Taxes paid 130,569,918.63 169,009,260.06 Other business ac tivity related cash payments 237,301,143.35 217,345,445.68 Subtotal ofcash flow out from operating activity 1,798,677,505.47 1,705,814,357.51 N etcash flows arising from operating activities 159,014,650.37 224,672,274.09 II.C ash flow arising from investmentactivities: C ash receiv ed from recovery ofinvestment C ash receiv ed from investmentincome N etcash from disposal of fixed assets,intangible 84,258.51 6,872.90 assets and recovery ofother long term assets N etcash rec eived from disposal ofsubsidiaries and other operating units Other inv estm entrelated cash receipts Subtotal ofcash flow in from investmentactivity 84,258.51 6,872.90 C ash paid for purchase/construction offix ed assets, Intangible assets and other long term ass ets 89,298,306.14 52,519,739.81 C ash paid for investment N etincrease of the pledged loan N etcash paid for acquisition ofsubsidiaries and other operation units Other inv estm entrelated cash payments Subtotal ofcash flow out from investmentactivity 89,298,306.14 52,519,739.81 N etcash flow arising from i nv estmentactivities: -89,214,047.63 -52,512,866.91 III.C ash flow arising from fund-raising activ iti es: C ash receiv ed from absorbing investment 18,585,600.00 Incl.: Cash received from the subsidiaries’ absorption ofminority shareholders’ investment C ash receiv ed from loans 330,176,520.00 384,997,200.00 C ash receiv ed from bond issuing Other fund-raising related cash receipts Subtotal ofcash flow in from fund raising activity 348,762,120.00 384,997,200.00 C ash paid for debtrepayment 327,486,253.30 448,409,609.38 C ash paid for dividend/profitdistribution or r epay ment 12,018,884.30 15,009,057.38 ofinterest Including: Dividend and profitpaid by the subsidiaries to minority shareholders C ash paid for other financing activities 17,565,400.00 Sub-total cash flow paid for financing activities 357,070,537.60 463,418,666.76 N etcash flow arising from fund-raising activities -8,308,417.60 -78,421,466.76 IV.C hange of exchange rate influencing the cash and cash 201,307.31 118,439.84 equivalent V.N etincrease ofcash and cas h equivalents 61,693,492.45 93,856,380.26 Plus: Opening balance ofcash and cash equivalents 162,623,059.97 184,947,891.32 VI.Ending balance ofcash and cash equiv alents 224,316,552.42 278,804,271.58 Legal representative: Huang Yongfeng Chief Financial Officer: Chen Zhuo Person in charge of the Accounting Departm ent: Tian Hui 6. Cash Flow Stateme nt, Parent Company In CNY Items The firsthalfyear of2019 The firs thalfyear of2018 I.C ash flows arising from operating activities: C ash receiv ed from sales ofgoods and supply oflabor 66,872,263.13 56,758,456.16 serv ice Rebated taxes received Other operation activ ity related cash receipts 1,733,050,857.61 1,204,947,705.78 Subtotal ofcash flow in from operating activity 1,799,923,120.74 1,261,706,161.94 C ash paid for purchase ofgoods and reception oflabor serv ices C ash paid to and for staff 42,848,757.99 33,422,054.30 Taxes paid 5,460,385.81 4,702,936.63 Other business ac tivity related cash payments 1,676,610,396.74 1,045,289,650.60 Subtotal ofcash flow out from operating activity 1,724,919,540.54 1,083,414,641.53 N etcash flows arising from operating activities 75,003,580.20 178,291,520.41 II.C ash flow arising from i nv estmentactivities: C ash receiv ed from recovery ofinvestment C ash receiv ed from investmentincome N etcash from disposal of fixed assets,intangible 23,000.00 assets and recovery ofother long term ass ets N etcash rec eived from disposal ofsubsidiaries and other operating units Other inv estm entrelated cash receipts Subtotal ofcash flow in from investmentactivity 23,000.00 C ash paid for purchase/construction offixed ass ets, 31,845,425.44 9,442,405.28 Intangible assets and other long term assets C ash paid for investment N etcash paid for acquisition ofsubsidiaries and other operation units Other inv estm entrelated cash payments Subtotal ofcash flow out from investmentactivity 31,845,425.44 9,442,405.28 N etcash flow arising from i nv estmentactivities: -31,822,425.44 -9,442,405.28 III.C ash flow arising from fund-raising activities: C ash receiv ed from absorbing investment 18,585,600.00 C ash receiv ed from loans 310,000,000.00 360,000,000.00 C ash receiv ed from bond issuing Other fund-raising related cash receipts Subtotal ofcash flow in from fund raising activity 328,585,600.00 360,000,000.00 C ash paid for debtrepayment 295,000,000.00 392,500,000.00 C ash paid for dividend/profitdistribution or repayment 11,510,341.40 14,108,861.83 ofinterest C ash paid for other financing activities 17,565,400.00 Sub-total cash flow paid for financing activities 324,075,741.40 406,608,861.83 N etcash flow arising from fund-raising activities 4,509,858.60 -46,608,861.83 IV.C hange of exchange rate influencing the cash and cash 1,378.48 -5,683.55 equivalent V.N etincrease ofcash and cas h equivalents 47,692,391.84 122,234,569.75 Plus: Opening balance ofcash and cash equivalents 134,970,466.27 128,958,944.43 VI.Ending balance ofcash and cash equiv alents 182,662,858.11 251,193,514.18 Legal representative: Huang Yongfeng Chief Financial Officer: Chen Zhuo Person in charge of the Accounting Department: Tian Hui 7. Consolidated Statement of Changes in Owner’s Equity Amount in the reporting period In CNY The firsthalfyear of2019 Owners’ equityattributable to the parentcompany Minority Items Other equityinstruments Other Provision Total Less: sharehol Capital Preferr Perpet Capital compreh Special Surplus for Retained owner’s sharesin Others Sub-total ders’ stock ed ual Others Reserve ensive reserve Reserve general earnings equity stock equity shares bond income risks 438,74 I.Ending balance of 1,062,45 -5,442,13 223,015, 851,360, 2,570,13 2,570,14 4,881.0 5,781.64 the previousyear 5,644.22 9.78 793.80 603.66 4,782.90 0,564.54 0 Plus:Change in accounting policy Correction of previouserrors Consolidation of enterprisesunder the same control Others 438,74 II. Opening balance 1,062,45 -5,442,13 223,015, 851,360, 2,570,13 2,570,14 4,881.0 5,781.64 ofthe reporting year 5,644.22 9.78 793.80 603.66 4,782.90 0,564.54 0 III.Decrease/increase ofthe reportyear 4,224,0 16,596,1 32,902,1 1,749,40 123,495, 113,162, 113,162, 13.67 (decrease isstated 00.00 97.31 98.89 7.20 460.90 866.52 880.19 with “-“) (I) Total 1,749,40 123,495, 125,244, 125,244, comprehensive 13.67 7.20 460.90 868.10 881.77 income (II) Owners’ inputand 4,224,0 16,596,1 32,902,1 -12,082,0 -12,082,0 decrease ofcapital 00.00 97.31 98.89 01.58 01.58 1.Common shares 4,224,0 16,596,1 18,585,6 2,234,59 2,234,59 contributedbythe 00.00 97.31 00.00 7.31 7.31 owner 2.Capital contributed byotherequity instrumentsholders 3.Amountofpayment for sharescounted to owners’ equity 14,316,5 -14,316,5 -14,316,5 4.Others 98.89 98.89 98.89 (III) ProfitDistribution 1.Provision of surplusreserve 2.Provision for general risks 3.Distributionsto the owners(or shareholders) 4.Others (IV) Internal carry-over ofowners’ equity 1.Conversionof capital reserve into capital (or capital stock) 2.Conversionof surplusreserve into capital (or capital stock) 3.Lossmade up for with surplusreserve 4.Setting ofthe amountinvolved in the movementofthe beneficial plan carried over to the retained earnings 5.Other comprehensive income carried-over to the retained earnings 6.Others (V) Special reserve 1.Provision in the reporting period 2.Applied in the reporting period (VI) Others 442,96 IV. Ending balance of 1,079,05 32,902,1 -3,692,73 223,015, 974,856, 2,683,29 2,683,30 8,881.0 5,795.31 the reporting period 1,841.53 98.89 2.58 793.80 064.56 7,649.42 3,444.73 0 Amount in the previous period In CNY The firsthalfyear of2018 Owners’ equityattributable to the parentcompany Other equity Items Other Provision Minority Total instruments Less: Capital Capital compreh Special Surplus for Retained sharehold owner’s Preferr Perpet sharesin Others Sub-total ers’ equity equity stock Reserve ensive reserve Reserve general earnings ed ual Others stock income risks shares bond 438,74 I.Ending balance of 1,062,45 -11,523,4 206,805, 771,484, 2,467,96 2,467,972, 4,881.0 5,515.78 the previousyear 5,644.22 42.39 713.35 565.02 7,361.20 876.98 0 Plus:Change in accounting policy Correction of previouserrors Consolidation ofenterprisesunder the same control Others II. Opening balance 438,74 1,062,45 -11,523,4 206,805, 771,484, 2,467,96 2,467,972, 5,515.78 ofthe reporting year 4,881.0 5,644.22 42.39 713.35 565.02 7,361.20 876.98 0 III. Decrease/increase -1,392,91 112,367, 110,975, 110,974,9 ofthe reportyear -35.24 9.75 921.44 001.69 66.45 (decrease isstated with “-“) (I) Total -1,392,91 112,367, 110,975, 110,974,9 comprehensive -35.24 9.75 921.44 001.69 66.45 income (II) Owners’ input and decrease of capital 1.Common shares contributedbythe owner 2.Capital contributedbyother equityinstruments holders 3.Amountof paymentfor shares counted to owners’ equity 4.Others (III) ProfitDistribution 1.Provision of surplusreserve 2.Provision for general risks 3.Distributionsto the owners(or shareholders) 4.Others (IV) Internal carry-over ofowners’ equity 1.Conversionof capital reserve into capital (or capital stock) 2.Conversionof surplusreserve into capital (or capital stock) 3.Lossmade up for with surplusreserve 4.Setting ofthe amountinvolved in the movementofthe beneficial plan carried over to the retainedearnings 5.Other comprehensive income carried-over to the retained earnings 6.Others (V) Special reserve 1.Provision in the reporting period 2.Applied in the reporting period (VI) Others IV. Ending balance 438,74 1,062,45 -12,916,3 206,805, 883,852, 2,578,94 2,578,947, ofthe reporting 4,881.0 5,480.54 5,644.22 62.14 713.35 486.46 2,362.89 843.43 period 0 Legal representative: Huang Yongfeng Chief Financial Officer: Chen Zhuo Person in charge of the Accounting Departm ent: Tian Hui 8. Consolidated Statement of Changes in Owner’s Equity, Pare nt Company Amount in the reporting period In CNY The firsthalfyear of2019 Other equityinstruments Less: Other Items Capital Capital Special Surplus Retained Total owners’ Preferred Perpetual sharesin comprehen Others stock Others Reserve reserve Reserve earnings equity shares bond stock sive income I.Ending balance of 438,744,8 1,068,111,1 223,015,79 683,798,0 2,413,669,946 the previousyear 81.00 85.32 3.80 86.83 .95 Plus:Change in accounting policy Correction of previouserrors Others II. Opening balance of 438,744,8 1,068,111,1 223,015,79 683,798,0 2,413,669,946 the reporting year 81.00 85.32 3.80 86.83 .95 III.Decrease/increase ofthe reportyear 4,224,000 16,596,197. 32,902,198. 5,152,486 -6,929,515.15 (decrease isstated .00 31 89 .43 with “-“) (I) Total 5,152,486 comprehensive 5,152,486.43 .43 income (II) Owners’ inputand 4,224,000 16,596,197. 32,902,198. -12,082,001.5 decrease ofcapital .00 31 89 8 1.Common shares 4,224,000 16,596,197. 18,585,600. contributedbythe 2,234,597.31 .00 31 00 owner 2.Capital contributed byotherequity instrumentsholders 3.Amountofpayment for sharescounted to owners’ equity 14,316,598. -14,316,598.8 4.Others 89 9 (III) ProfitDistribution 1.Provision ofsurplus reserve 2.Distributionsto the owners(or shareholders) 3.Others (IV) Internal carry-over ofowners’ equity 1.Conversionof capital reserve into capital (or capital stock) 2.Conversionof surplusreserve into capital (or capital stock) 3.Lossmade up for with surplusreserve 4.Setting ofthe amountinvolved in the movementofthe beneficial plan carried over to the retained earnings 5.Other comprehensive income carried-over to the retained earnings 6.Others (V) Special reserve 1.Provision in the reporting period 2.Applied in the reporting period (VI) Others IV. Ending balance of 442,968,8 1,084,707,3 32,902,198. 223,015,79 688,950,5 2,406,740,431 the reporting period 81.00 82.63 89 3.80 73.26 .80 Amount in the previous period In CNY The firsthalfyear of2018 Other equityinstruments Other Items Less: Capital Capital comprehen Special Surplus Retained Total owners’ Preferred Perpetua sharesin Others stock Others Reserve sive reserve Reserve earnings equity shares l bond stock income I.Ending balance of 438,744, 1,068,111, 206,805,7 625,656,338. 2,339,318,118. the previousyear 881.00 185.32 13.35 99 66 Plus:Change in accounting policy Correction of previouserrors Others II. Opening balance 438,744, 1,068,111, 206,805,7 625,656,338. 2,339,318,118. ofthe reporting year 881.00 185.32 13.35 99 66 III. Decrease/increase of the reportyear 552,842.37 552,842.37 (decrease isstated with “-“) (I) Total comprehensive 552,842.37 552,842.37 income (II) Owners’ inputand decrease ofcapital 1.Common shares contributedbythe owner 2.Capital contributed byotherequity instrumentsholders 3.Amountof paymentfor shares counted to owners’ equity 4.Others (III) ProfitDistribution 1.Provision of surplusreserve 2.Distributionsto the owners(or shareholders) 3.Others (IV) Internal carry-over ofowners’ equity 1.Conversionof capital reserve into capital (or capital stock) 2.Conversionof surplusreserve into capital (or capital stock) 3.Lossmade up for with surplusreserve 4.Setting ofthe amountinvolved in the movementofthe beneficial plan carried over to the retainedearnings 5.Other comprehensive income carried-over to the retained earnings 6.Others (V) Special reserve 1.Provision in the reporting period 2.Applied in the reporting period (VI) Others IV. Ending balance of 438,744, 1,068,111, 206,805,7 626,209,181. 2,339,870,961. the reporting period 881.00 185.32 13.35 36 03 Legal representative: Huang Yongfeng Chief Financial Officer: Chen Zhuo Person in charge of the Accounting Departm ent: Tian Hui III. Company Profile Fiyta Holdings Ltd. (hereinafter referred to as the Com pany) was reorganized, incorporated and renamed from Shenzhen Fiyta Timer Indus tryCompanyon December 25 1992 with approval bythe General Office of Shenzhen Municipal People’s Government with Document SHEN FU BAN FU [1992] No. 1259 and with China NationalAero-TechnologyIm port & Export Corporation Shenzhen Indus try& Trade Center (which was renam ed as AVIC International Shenzhen CompanyLim ited) as the s ponsor. The Company's head office is located at the 20th Floor, FIYTATechnology Building, Gaoxin S. Road One, Nanshan Dis trict, Shenzhen, Guangdong Province. On March 10, 1993, the Com pany, with approval bythe People’s Bank of China Shenzhen Special Econom ic Zone Branch [SHEN REN YIN FU ZI (1993) No. 070], issued publicallydom esticCNYbas ed commonshares (A-shares) and CNYbased s pecial shares (B-s hares ). In accordance with the Approval Docum ent of Shenzhen Municipal Securities RegulatoryOffice SHEN ZHENG BAN FU [1993] No. 20 and the Approval Document of Shenzhen Stock Exchange SHEN ZHENG SHI ZI (1993) No. 16, the Com pany’s A-shares and B-shares were all lis ted with Shenzhen Stock Exchange for trading commencing from June 3, 1993. On January30, 1997, with approval byShenzhen Municipal Administration for Industryand Commerce, the Companywas renamed as Shenzhen Fiyta Holdings Ltd. On July 4, 1997, according to the equity assignment agreement between China National Aero-Technology Corporation Shenzhen (CATIC Shenzhen Corporation) and CATIC Shenzhen Holdings Limited (with original nam e of Shenzhen CATIC Group Co., Ltd. (hereinafter referred to as CATIC Shenzhen), CATIC Shenzhen Corporation assigned 72.36 m illion corporate shares (taking 52.24% of the Company’s total shares ) to CATIC Shenzhen. From then on, the Company’s controllingshareholder turned to be CATIC Shenzhen from CATIC Shenzhen Corporation. On October 26, 2007, the Company im plem ented the equity s eparation reform , according to which the shareholder of the Company’s non-negotiable shares would pay shares to the whole shareholders of negotiable shares regis tered on the equityrecord day as designated in the equitys eparation reform plan at the rate of 3.1 s hares for every 10 shares held by them while the Company’s total 249,317,999 shares remained unchanged. So far, after the equity s eparation reform , the proportion of the Com pany’s shares held byCATIC Shenzhen reduced from 52.24% to 44.69%. On February 29, 2008, due to expans ion of the Com pany’s business s cope and with approval by Shenzhen Municipal Adm inistration for Industry and Commerce, the Company’s enterprise corporate business licence number was changed from 4403011001583 into 440301103196089. In 2010, approved by China Securities Regulatory Commission (CSRC) with the Official Reply on Approval of Non-public Iss uing of Shenzhen Fiyta Holdings Ltd., ZHENG JIAN XU KE [2010] No. 1703 and the Official Reply on the Issue of Non-Public Issuing of Shenzhen Fiyta Holdings Ltd. byState-owned As sets Supervision and Adm inis tration Commissio n of the State Council [2010] No. 430, the Company was approved to non-publically iss ue no more than 50 million common s hares (A-shares). After completion of non -public issuing on Decem ber 9, 2010, the Company’s regis tered capital increased to CNY280,548,479.00 and CATIC Shenzhen holds 41.49% of the Company’s equitybased capital. On March 3, 2011, with approval by Shenzhen Municipal Adminis tration for Indus try and Commerce, the Com pany was renamed as Shenzhen Fiyta Holdings Ltd. OnApril 8, 2011, the Companytook the total capitalstock of 280,548,479shares as thebase, converted its capital res erve into capitalstock at the rate of 4 shares for every10 s hares.After the conversion, the Com pany’s total capitalstock became 392,767,870 shares . On Novem ber 11, 2015, approved byChina Securities RegulatoryCommission (CSRC) with the Official Replyon Approval of Non-public Issuing of Fiyta Holdings Ltd., ZHENG JIAN XU KE [2015] No. 2588 and the Official Reply on the Issue of Non-Public Issuing of Fiyta Holdings Ltd. by State-owned As sets Supervision and Administration Commission of the State Council [2015] No. 415, the Company was approved to non-publically issue no m ore than 46,911,649 common shares (A-s hares). After completion of non-public issuing on Decem ber 22, 2015, the Company’s registered capital increased to CNY438,744,881.00 andAVIC IHL holds 37.15% of the Company’s equitybased capital. On Decem ber20, 2018, approved byState -ownedAs sets SupervisionandAdministrationCommission of the State Council with the Official Replyon Fiyta Holdings Ltd. to Implement the Res trictive Stock Incentive Program (Phase I), GUO ZI K AO FEN [2018] No. 936, the Company awarded A-share restrict stock by less than 4.277 million shares. After completion of implementation of the A-share Restrictive Stock Incentive Program (Phase I) by January 30, 2019, the Company’s registered capital increased to CNY442,968,881 andAVIC IHL holds 36.79% of the Company’s equitybased capital. Ended June 30, 2019, the Company accumulatively issued altogether 442,968,881 shares of capital stock. For the detail, refer to Note VII. 53 “Share Capital”. The Companyhas established the Shareholders’ General Meeting, the Board of Directors, the SupervisoryCommittee, the Audit Committee, the Strategy Committee and the Nom ination, Remuneration and Ass essment Committee as the governance organs, etc. The Companyhas also es tablished a number of functional departments, including comprehensive management departm ent, the Party cons truction work department, department of dis cipline inspection, s upervis ion and audit, financial department, human resource department, s trategy operation department, data & information department, innovation & design center, R & D departm ent, propertyoperation department, etc. The principal business activities of the Company and its subsidiaries (collectively the Group) are: production and sales of various pointer type mechanical watches, quartz watches and their driving units, spares and parts, various tim ing apparatus, processing and wholesale of K gold watches and ornament watches ; dom estic trade,materials s upplyandsales (excluding the commodities for exclus ive operation, exclus ive control and monopoly); property management and lease; design service; self-run import & export business (implemented according to the Document SHEN MAO GUAN DENG ZHENG ZI No. 2007-072). The Com pany's legal representative is Huang Yongfeng. The financials tatem ents were approved and iss ued through the resolutionof the Boardof Directors datedAugus t 13, 2019. There were 11 s ubsidiaries consolidated during the reporting period. For the detail, refer to Note IX. "Equity in Other Entities ". The consolidationscope of the reporting year is the same as that of the previous year. For the detail, refer to Note VIII "Change of the Consolidation Scope". IV. Basis for preparation of the financial statements 1. Preparation Basis The financial statements are prepared with the going-concern assumption as the bas e and the trans actions and m atters actuallyoccurred in accordancewith theAccounting Standards for Business Enterprises - Basic Standards promulgated by the Minis tryof Finance (issued byOrder 33 of the Ministryof Finance and revis ed according to Order 76 of the Ministryof Finance), 42 specific accounting standards prom ulgated and revised on February 15, 2006 and afterwards, and their application guidelines, interpretations and other relevant requirem ents (collectively, "Accounting Standards for Enterpris es"). Besides, the Company dis closes the relevant financial information in accordance with Compilation Rules for Inform ation Disclosure byCompanies Offering Securities to the Public No.15-General Provisions on Financial Reports (2014 Revision) In accordance with the Enterprise Accounting Standards , the Com pany follows the accrual bas is of accounting. With the exception of som e financial instruments , these financial statements are m easured based on the his toric cost basis. If impaired, the assets shall provide for impairment in accordance with the relevant regulations. 2. Operation on Going Concern Basis The financials tatem ents of the Companyhave been prepared on going concern bas is . V. Important accounting policies and accounting estimates Presentation onspecific accounting policies and accounting estim ates: The Company and its subsidiaries have made a few of specific accounting policies and accounting es timates about cognition of revenue, depreciation of fixed assets, am ortization of intangible assets, R & D expenditures and other transactions and matters in accordance with the actual operation and m anagement characteristics and based on relevant provisions of accountingstandards for business enterprises. For the detail, refer to various des criptions stated inNote V.39 "Revenue", Note V.24 "Fixed as sets", Note V.30(1) "IntangibleAs sets", Note V.30(2) “R & D expenditure" for details. 1. Statement on complying with the accounting standards for business enterprise The Companydeclares that the financial statements prepared bythe Company complywith requirements of the enterpris e accountingstandards, trulyand completelyreflect the concerned inform ation, including the Company’s financial position as at June 30, 2019 and operation achievements, cas h flow, etc. from January to June, 2019. In addition, the Company's financial s tatements are in conformity with the disclosure requirements of Compilation Rules for Information Disclosure by Companies Offering Securities to the Public No. 15 - General Provis ions for Financing Reporting as amended in 2014 by China Securities RegulatoryCommission on relevant financial statements and their notes in all important aspects . 2. Fiscal period The accounting period adopted bythe Companyis from January1 to December 31 of the Gregorian calendar. 3. Business Cycle The Company's operating cycle is 12 months. 4. Recording Currency Renminbi is the currency for the major economic environment where the Company and its domestic subsidiaries are managed, and the Com panyand its domes ticsubsidiaries take Renminbi as the s tandard currencyfor accounting. Except Switzerland based Montres Chouriet SACompany (hereinafter referred to as the "Swiss Com pany"), an overseas s ubsidiary of FIYTA Hong Kong Co., Ltd. (hereinafter referred to as "FIYTA HK"), has determined Swiss Franc as its recording currencyfor accountingin accordance with the currencies available in its majoreconomic environment where it is operated. The other overseas subsidiaries , including FIYTAHK, Station-68 Limited (hereinafter referred to as “Station-68”), another subsidiary of FIYTA HK, have determined Hong Kong currency as their recording currency for accounting in accordance with the currencies available in their m ajor economic environment where they are operated. Hong Kong currencywill be converted into Renminbi while in preparing its financials tatem ents. The currencythe Companytakes in preparation of these financialstatements is Renm inbi. 5. The accounting treatment on consolidation of the enterprises under the same control and not under the same control Merger of enterprises refers to the trans action or matter that two or more independent enterprises are merged into a reporting entity. The m erger of enterprises includes m erger under the same control and the merger not under the sam e control. (1) Merger of enterpris es under the sam e control The enterprise participating in m erger is under the final control of the same party or parties and such control is not temporary, this is the merger of enterprises under the same control. In the merger of enterprises under the s ame control, the party that obtains the control right to the other enterprises participating in m erger on the date of m erger is the merging partyand the other enterprises participatingin themerger are them erged party. The date of m erger refers to the date when the m erging partyhas actuallyobtained the control right to the merged party. The assets and liabilities acquired bythe merging partyare measured at the book value on them erged partyon the date of merger. If the book value of net assets acquired by the merging party is different with the book value paid for merger consideration (or sum of book value of issued shares), the capital res erve (premium on s tock capital) shall be adjusted; if the capital reserve (premium ons tock capital) is not sufficient to be written down, the retained earnings shall be adjusted. Various direct expenses incurred by the merging party for m erger of enterpris es are included in the current profits and loss es at the time of occurrence. (2) Merger of enterpris es not under the same control The enterpris es to be merged, if not under the final control bythe same partyor parties before or after m erger, refer to the merger of enterpris es not under the sam e control. For the merger of enterprises not under the same control, the party acquiring the control right to the other enterprises involved with the merger on the date of purchase is the purchasing party and the other enterpris es involved with the m erger are the purchas ed party. The date of purchase refers to the date when the purchasing partyactuallyacquires the control right to the purchas ed party. For the m erger of enterprises not under thes ame control, them erger costs contain the ass ets paid bythe purchasing party on the date of purchase for acquiring the control right to the purchased party, the liabilities incurred or undertaken and the fair value of the issued equity securities are the commission incurred for merger of enterprises and involved with audit, legal service, evaluation, consultation and etc., as well as other overhead expenses, are included in the current profits and loss es at the time of occurrence. The transaction costs of equity securities or debt securities issued as m erger consideration by the purchasing partya re included in the initial confirmation amount of equitysecurities or debt securities. The contingent consideration involved is included into the merger costs at the fair value on its purchase date. If it is necessary to adjust the contingent consideration because any new or further evidence for the existing situation on the purchase date appears within 12months after the purchase date, the merged goodwill s hall be modified accordingly. The merger costs incurred and the net identifiable assets acquired in the merger by the purchasing partyare m easured at the fair value on the purchase date. The difference that the merger costs are larger than the fair value of the net identifiable assets of the purchased party on the purchas e date as acquired in the merger is confirm ed as the goodwill. If the m erger costs are less than the fair value of the net identifiable assets of the purchased party as acquired in the m erger, the fair value of various identifiable assets, liabilities and contingent liabilities of the purchased partyand m easurement of merger costs are first checked, and if the merger costs are less than the fair value of net identifiable assets of the purchased party acquired in them erger, the difference is included in the current profits and losses . If the deductable temporarydifference of the purchased partyacquired bythe purchasing partyis not confirmed for it does not conform to the confirmation conditions of deferred tax ass ets on the date of purchas e, but new or further inform ation obtained within 12months after the date of purchas eshows the exis tence of relevant situation on the date of purchas e and it is expected that the economic interest aris ing from deductable tem porarydifference of the purchased partyon the date of purchase could be realized, the relevant deferred tax assets are confirmed and the goodwill is reduced synchronously. If the goodwill is not sufficient to be written down, the difference is confirmed as the current profits and losses ; except the above situation, if the deferred tax assets involved with merger of enterprises are confirmed, it is included in the current profits and losses . For the merger of enterprises not under the s ame control as realized in s teps through several transactions, whether the s everal trans actio ns are "package deals" is judged in accordance with the Notice of the Minis tryof Finance on Issuing the Explanation No. 5 of Accounting Standards for Business Enterprises (Cai Kuai [2012]19) and the judgment s tandard on “package deals ” in article 51 ofAccounting Standards for Bus iness Enterprises No. 33 - Consolidated Financial Statements (see the Note 5.6(2)). If theyare package deals, theyare treated with reference to the description of various paragraphs in front of this part and the Note V.22 “Long-term Equity Inves tment”; if they are not package deals , individual financial s tatem ents and consolidated financial statements shall undergoseparatelyrelevant accounting treatment: In individual financialstatements , the sum of the book value of the equityinvestm ent of the purchased partyas held before the date of purchase and the newly increased inves tment cos ts on the date of purchase is used as the initial investm ent costs of the investm ent; if the equity of the purchased party as held before the date of purchase is involved with other comprehens ive income, while this investment is being dispos ed, other comprehensive incomes related to it are made accounting treatment on the same basis as the purchased party directly disposing relevant assets or liabilities (namely, except the purchas ed party m easures again the corres ponding share in the change caused by the net liabilities or net assets of theset benefit plan according to the equitymethod, the others are included in the current profits and losses ). In the consolidated financialstatements, the equityof the purchased partyas held before the date of purchas eis meas ured again at the fair value on the date of purchas e ofsuch equity, and the difference between the fair value and its book value is includedin the current profits and loss es; if the equityof the purchas edpartyas heldbefore thedate of purchase is involved with other comprehens ive incom es, other comprehensive incomes related to it shall bemade accounting treatm ent on the s ame basis as the purchased party directly dis posing relevant assets or liabilities (namely, except the purchased party measures again the corresponding share in the change caus ed by the net liabilities or net assets of the set benefit plan according to the equitym ethod, the others are included in the current profits and losses ). 6. Method of preparing consolidated financial statements (1) Principle of determining the s cope of cons olidated financial s tatements The consolidationscope of the consolidated financial statements is determined on the bas is of control. Control refers to, the Company owns the power to the purchased party, enjoys variable return by participating in the relevant activities of the purchased party and is able to impact the amount of return by using the power to the purchased party. The scope of consolidation includes the Company and all of its s ubsidiaries. A s ubsidiary refers to the entity under control of the Company. Once the change of relevant facts andsituations causes the change of relevant factors involved with the above definition of control, the Companywillmake new evaluation. (2) Method of preparing consolidated financials tatem ents As of the date when the actual control right to the net assets , production and management decision of subsidiary is acquired, the Companystarts to put it into thescope of consolidation; ceas es to containit in thescope of cons olidation from the date of losing the actual control right. For any s ubsidiary dis posed, its operation result and cash flow before dis posal date have been properly contained in the consolidated profit statement and consolidated cash flow; any subsidiary dis posed in the current period is notmodified the beginningnumber of the balancesheet. For anys ubsidiaryincreas ing due to merger of enterpris es not under thes ame control, its operation result and cas h flow after the date of purchas e have been properly contained in the consolidated profit statement and consolidated cash flow, and the beginning number and comparison number of the consolidated financials tatem ents are not modified. For anysubsidiaryincreas ing due to merger of enterprises under the s ame control, its operation result and cash flow from the beginning of the current consolidation period to the date of cons olidation have been properlycontainedin the consolidated profitstatement and consolidated cas h flow, and the comparis on numbers of the consolidated financial statement ares ynchronouslym odified. While preparing the consolidated financial statements , if the accounting policies or accounting period adopted by any s ubsidiary and the Company are not consistent, necessary m odification shall be made to the subsidiary's financial s tatem ents based on the Company's accounting policies and accounting period. For any s ubsidiaryacquired from merger of enterprises not under the same control, its financial s tatem ents are modified on the basis of the fair value of net identifiable assets on the date of purchase. All major current account balances, transactions and unrealized profit in the Company are set off in preparation of consolidated financialstatements. In the stockholder's equity and current net profit or loss of a s ubsidiary, the parts not owned by the Company are solely listed under thestockholder's equityand net profit in the cons olidated financials tatem ents separatelyas m inorityequityand minority interest. If the loss of s ubs idiary shared by m inority s hareholders exceeds the s hare enjoyed by minority s hareholders in the shareholders' equityof the subsidiary in the beginning, it still writes down them inorityequity. When the loss in a s ubsidiary shared by m inority shareholders exceeded the share in the shareholders’ equity enjoyable by the minoritys hareholders at the beginning of the reporting period, the minorityshareholders’ equityshould be written down. When the control right to the original subs idiary is los t due to disposal of partial equity investment or other reas ons, the residual equity is m easured again at its fair value on the date of losing the control right. The sum of the cons ideration acquired from disposal of equity and the fair value of residual equity is m inus the share of net assets of the original s ubsidiaryas continuallycalculated from the date of purchase at the original shareholding ratio, such difference is included in the inves tment income in the current period of los ing the control right. Other comprehensive incomes related to equity investment of the originalsubsidiaryshall bemade accounting treatment on thes amebasis as the purchased partydirectly dis posing relevant ass ets or liabilities when the control right is lost (namely, except the original subsidiarymeasures again the change caused bythe net liabilities or net assets of the set benefit plan according to the equity m ethod, the others are included in the current profits and losses ). Thereafter, s uch part of the residual equityis mades ubsequent meas urement in accordance with the Accounting Standards for Business Enterprises No. 2 - Long-term Equity Investm ent or Accounting Standards for Business Enterpris es No. 22 - Recognition and Measurement of Financial Ins truments and other relevant provisions . See the Note V.22 "Long-term EquityInvestment" or the Note V.10 “Financial Instruments”. If the Companydispos es the investment on thes ubs idiary's equityin steps throughs everal trans actions and until loses the control right, whether the various transactions dispos ing the investment on the s ubsidiary's equity until losing the control right are package deals shall be disti nguished. If the terms, conditions and economic impact of various transactions dis posing the investment on the s ubsidiary's equity conform to one or more of the following circumstances, it is usually indicated that several transactions shall be m ade accounting treatment as package deal:① these trans actions are concluded synchronously or in consideration of mutual impact; ② thes e transactions can wholly reach a complete commercial res ult; ③ Occurrence of a transaction lies on occurrenceof at leas t another transaction; ④ Atransactionmay be uneconom ic separately, but it is economical if the trans action is cons idered with other ones . If they are not package deals, each transaction thereof shall undergo accounting treatment in accordance with the principle applicable for “partially dis posinglong-term equityinvestment onsubsidiaryin the case of not los ing control power”(for the detail, refer to Note V.22. (2) and ④,) and “losing control power to the original subsidiary due to disposal of partial equity inves tment or other reasons”(for the detail, refer to the above paragraph) as appropriate. If the various transactions dispos ing theinvestm ent on the subsidiary's equityuntil losing control power are package deals , various trans actions undergo accounting treatment as a transaction of disposing the s ubsidiary and los ing control power; however, before losing control power, the difference between every dispos al amount and the share of the subsidiary's net ass ets enjoyed corres ponding to disposal of investment is recognized as other comprehensive income in the consolidated financial s tatem ents, and is included in the current profit and loss corres ponding to loss of control power. 7. Classification of joint venture arrangements and accounting treatment method of joint management Joint venture arrangement refers to an arrangement that two or more participants jointly control. In accordance with the rights enjoyed and obligations undertaken in the joint venture arrangement, the Com pany classifies joint venture arrangem ents into joint management and joint venture. Joint managem ent refers to the joint venture arrangement that the Company enjoys the relevant assets of the arrangement and undertakes the relevant liabilities of the arrangement. Joint venture refers to the joint venture arrangem ent that the Companyonlyenjoys rights to the net ass ets of the arrangem ent. The Company's investment in a joint venture is measured with equity method and is treated in accordance with the accounting policies as stated in the Note V.22(2) ② "Long-term equityinves tment meas ured with equitymethod". As a joint venture in the joint management, the Com panyconfirms the assets solelyheld, liabilities solelyundertaken and the assets jointlyheldand liabilities jointlyundertaken as confirmed according to the Company's share; confirms the income arising from sale of the jointmanagement's outputshare enjoyed bythe Company; confirms the income arising from sale of output if confirming joint management according to the Company's share; confirms the expens es solely incurred by the Company, and the expenses incurred if confirming jointmanagement according to the Com pany's share. When the Company as a joint venture delivers or sells assets to the joint m anagement (the ass ets do not constitute business, sam e as below), or the joint management purchas es ass ets, before such assets are sold to a third party, the Companyonly confirms the parts in the profit and loss arising from s uch transaction and belonging to other participants of the joint management. If occurrence of such assets is in conform ity with the im pairment loss as stated in the Accounting Standards for Bus iness Enterprises No. 8 - Im pairment of As sets, in the event that the Com panydelivers orsells assets to the joint management, the Companyfullyconfirms the loss ; in the event that the Companypurchases assets from the joint management, the Com panyconfirms the loss according to its share undertaken. 8. Standard for confirming cash and cash equivalent The cash and cas h equivalent of the Com panyinclude the cash on hand, the depos it that can be us ed for paym ent at any time, and the inves tment held bythe Company, which has s hort term (generallybecomes m ature within threemonths from the date of purchase), good liquidityand is easyto be converted into known am ount of cash and with low ris k in change of value. 9. Foreign currencytransactions and translation of foreign currencystatements (1) Trans lationm ethods for foreign currencytransactions The foreign currency trans actions occurred in the Company, at the tim e of initial recognition, shall be translated into the amount of bookkeeping base currency at the spot exchange rate (generally refer to the medium price of the foreign exchange quotation as declared by the People's Bank of China) on the date of transaction, but any foreign currency exchanging business or any transaction related to exchange of foreign currency occurred by the Company shall be translated into the amount of bookkeeping base currencyat the actual exchange rate. (2) Trans lationm ethods for monetaryitems in foreign currencyand nonmonetaryitems in foreign currency The balance of foreign currencymonetaryitems are translated at thespot exchange rate on the balances heet date and the exchange differences aris ing therefrom shall be included in the current profit and loss , except ① those exchange differences aris ing from thespecial borrowings of foreign currencyrelated to the acquired and constructed assets qualified for capitalization that will be capitalized at the borrowing expenses . ② (only applicable to the exis ting hedging caculated according to the hedge accounting method) thebalance of exchange us ed in the hedging instrument with effective hedging of net inves tment in foreign bus iness (such balance is counted to other com prehensive income until the disposed net investment is recognized as the current gain and loss); and ③ those arising from the other changes in the balance other than am ortized cost of available-for-s ale monetary items denominated in foreign currency are recognized in the other comprehens ive income. If preparation of cons olidated financial s tatem ents is involved with overseas operation and any m onetary item in foreign currency substantially cons titutes net investment to overseas operation, the balance of exchange arising from change of exchange rate is included in other comprehensive incomes; when overseas operation is disposed, it is transferred into the current profits and losses from disposal. The foreign currencynon -m onetaryitems measured bas ed on the historical cost is s till measured bymeans of the amount of the recording currency translated based on the spot rate incurred on the day when the transaction takes place. The non-monetary items in foreign currency m easured at fair value are translated at the exchange rate on the date of recognizing fair value, and the difference between the amount in bookkeeping base currency and the previous amount in bookkeeping bas e currency after translated is treated as change of fair value (including change of exchange rate) and included in the current profits and losses or recognized as other comprehensive incomes. (3) Method of Translation for the Statements in Foreign Currency In preparation of consolidated financial statements concerning overs eas business, in case there exist anyforeign currency monetary items which subs tantially form net investm ent in overseas business, the exchange differences arising from fluctuation in exchange rates are recognized as other comprehens ive income as " tralsation differences in foreign currency s tatem ents"; and are counted to the current profit and loss when the overs eas bus inesses are disposed. The financial s tatements in foreign currency for overseas operation are translated into the s tatem ents in Renminbi according to the following m ethod: the items of assets and liabilities in the balance sheet are translated at the spot exchange rate on the date of balance sheet; in the items of s tockholder's equity, except the item of “retained earnings”, other items are translated at the spot exchange rate at the tim e of occurrence. The items of incomes and expenses in the profit statement are translated at the current average exchange rate on the transaction occurring date. The undis tributed profit at the beginning of the year is the undistributed profit at the ending of the previous year after trans lated; the undistributed profit at the ending of the year is listed according to the calculation of trans lated profit distributed on various items; after translated, the difference between the sum of ass ets items and liabilities items and the s um of s tockholder's equity items is the translated difference of statements in foreign currency and is recognized as other com prehensive incomes . If overseas operation is dis posed and the control right is lost, the trans lated difference of foreign currency s tatem ents as lis tedunder the item ofstockholder's equityin balancesheet and related to overseas operation is trans ferred fullyor at the ratio of disposing the overseas operation into the current profits and losses from dispos al. The cash flow in foreign currency and cas h flow of overseas subs idiaries are trans lated at the current average exchange rate on the cas h flow occurring date. The amount affected by the change of the exchange rate on cash is used as the adjustm ent item and is separately pres ented on the cash flow statement. The am ount of cas h impacted by change of exchange rate is us ed as the m odification item and solelylis ted in the cas h flowstatement. The number in thebeginning of the year and the actual number in the previous year arelisted according to the amount after the financialstatements for the previous year are translated. While disposing all owners ' equity of the Company in overs eas operation or losing the control right to overseas operation due to dispos alof partial equityinves tment or other reasons, the foreign currents tatements attributive to the owners' equity of the parent company, as listed under the item of stockholder's equityin balancesheet and related to overseas operation, are translated into difference and fullytransferred into the current profits and loss es from dispos al. When the ratio of holding overs eas operation equity caused by disposal of partial equity investment or other reasons reduces but the control right to overseas operation is not lost, the translated difference of foreign currency statements related to the overseas operation disposing part is attributive to minority equity and not transferred into the current profits and loss es. When the disposal of overseas operation is involved with the partial equity of a joint venture or a cooperative enterprise, the translated difference of foreign currency s tatements related to the overseas operation is transferred at the ratio of disposing the overs eas operation into the current profits and losses from disposal. 10. Financial instruments (1) Recognition and derecognition of financial instruments Afinancial asset or financial liabilityis recognized when the Companybecomes a partyto a financial instrument contract. The financial ass ets purchased or sold in any conventional manner are recognized and derecognized bas ed on the accounting of the trading day. The financial assets purchas ed or s old in any conventional manner refers to reception or deliveryof the financial assets within the time limit as specified in the regulations or conventions.Atrading dayrefers to the daywhen the Companycommits to buyor sell a financial ass et. Afinancial asset (or a part of financial assets or apart of a similar financial asset group) is derecognized, namelywritten off from its account and balance sheet when the following conditions are satisfied: ① the rights to receive cash flows from the financial assets have expired; or ② the Bank has trans ferred its rights to receive cash flows from the assets; or has retained its rights to receive cash flows from the ass ets but has ass umed an obl igation to pay them in full without m aterial delay to a third party under a “pass-through” arrangement; and (a) the Bank has transferred subs tantially all the ris ks and rewards of owners hip of the financial asset; or (b) the Bank has neither trans ferred nor retainedsubs tantiallyall the risks and rewards of owners hip of the financial ass et, but has transferred control of the ass et. (2) Class ification andm easurement of financial assets The financial ass ets of the Company are classified at the initial recognition according to the business model of the Company's management of financial ass ets and the contractual cash flow characteris tics of the financial assets : financial assets measured at amortized cos t, financial ass ets m easured at fair value and whose movement is counted in the other comprehens ive income and financial assets measured at fair value and whos e movem ent is counted in the current profit and loss . Thesuccessive measure of financial assets depends on their class ification The Com pany class i fies financial assets according to the bus iness model of the Com pany's managem ent of financial assets and the cash flow characteris tics of financial assets . ① Financial assets measured based on the amortized cost Financial ass ets are class ified into financial assets meas ured at am ortized cost if the financial assets meet the following conditions : the business model for the m anagement of the financial assets takes collection of the contractual cash flows as the objective; according to the contractual terms of the financial asset, the cash flow created on the specific date is exclusively for paym ent of the principal and the interest based on the outstanding am ount of the principal The effective interes t method is applied for this class of financial assets and thesuccessive measurem ent is conducted according to the amortized cos t, and the gains or losses generated from the amortization or im pairm ent are counted to in the current profit and loss . ② Debt instrument inves tmentmeas ured at fair value with the change counted in the other comprehensive income A financial asset is class ified as a financial ass et measured at fair value and whose change is counted to other comprehens ive income it meets the following conditions : the business model for the management of the financial asset takes collectionof the contractual cash flows as the objective; according to the contractual terms of the financial ass et, the cash flow created on thes pecific date is exclusivelyfor paym ent of the principal and the interest based on the outstanding amount of the principal. For such class of financial ass et , the fair value is used for the s uccessive measurement。 Its dis count or premium is am ortized by us ing the effective interest method and recognized as interest income or expens e。 Except for the impairment loss and the exchange differences of foreign currencym onetary financial assets recognized as the current profit or loss, the change in the fair value of such financial assets is recognised in other comprehensive income untilsuch a financial asset is derecognised and its accum ulated profit or loss is transferred to the current profit or loss. The interes t income related to such type of financial asset is counted to the current profit and loss. ③ Equityinstrument investm entm easured at fair value with the change counted in the other comprehensive incom e The Company irrevocably chooses to designate partial non-tradable equity ins trument inves tments as financial asset measured at fair value with its change counted to the other comprehensive income and the relevant dividend income counted to the current profit or loss and the change in the fair value recognized as other comprehensive income until the financial ass et is derecognised and its accum ulated profit or loss is trans ferred to the retained earnings . ④ The financial assetm easured at fair values with the change counted to the current profit and loss The financial assets other than thos emeas ured at the am ortized cost as well as at fair value with the change counted to the other com prehensive income are classified as the financial assets measured at fair value with the change counted to the current profit and loss. At the time of the initial recognition, for the purpos e of eliminating or significantly reducing accounting mismatching, it is possible to designate the financial assets as that measured at fair value with the change counted to the current profit and loss . For s uch class of financial asset, the fair value is used for the successive measurement and all the change in the fair value is counted to the current profit and loss. All the affected relevant financial assets are reclassified if and only if the Com pany changes the business model for managing financial ass ets. For the financial assets m easured at fair value with the change counted to the current profits and losses, the relevant transaction expenses are directly included in the current profit and loss; the relevant transaction expens es for other categories of financial assets are counted to the am ount of the initial recognition. (3) Class ification andm easurement of financial liabilities In the initial recognition, financial liabilities are classified as the financial liabilities measured at the amortized cost and that measured at fair value with the change counted to the current profit and loss. The financial liabilities that meet one of the following conditions can be des ignated as the financial liabilities measured at fair value with the change counted to the current profit or loss : ① the designation mayeliminate ors ignificantlyreduce the accounting m ismatching; ② to conduct management and performance assessment for financial liability portfolios or combination of financial assets and financial liabilities based on fair value according to the Com pany’s ris kmanagem ent or investment s trategies as stated in the formal written docum ents, and to report to the key management personnel on the basis of this ; ③ the financial liabilities including the embedded derivatives that need to be split separately. Class ification of the financial liabilities determined by the Company at the tim e of the initial recognition. For the financial assets m easured at fair value with the change counted to the current profits and losses, the relevant trans action expenses are directlyincluded in the current profit andloss; the relevant transaction expens es for other financial liabilities are counted to the amount of the initial recognition. The s uccessive measurement of financial liabilities depends on their classification: ① Financial liabilities meas ured based on the amortized cost The effective interest method is applied for this category of financial liabilities and the successive measurement is conducted according to the am ortized cost. ② The financial liabilities meas ured at fair values with the change counted to the current profit and loss Financial liabilities m easured at their fair values with the change counted to the current profits and losses include transactional financial liabilities (including the derivative instruments belonging to financial liabilities) and the financial liabilities measured at fair value with the change counted to the current profits and loss es directly des ignated at the initial recognition. (4) Offs etting of financial ins truments When the following condition is satis fied at the same time, the financial assets and financial liabilities are presented in the balance sheet with the net amount after offsetting each other: there is a s tatutoryright to offset the confirm ed amount, and the legal right is currently enforceable; it is planned to make settlem ent with net amount, or the financial asset is realized and the financial liabilityis paid off at the same time. (5) Impairment of financial assets ① The Company recognizes loss provision based on expected credit losses for financial ass ets m easured at amortized cost, debt instrument investm ents and financial guarantee contracts meas ured at fair valuewith the changes counted to the other com prehensive incom e. The Company confirms the expected credit loss by considering reasonable and evidenced inform ation about past events, current conditions , forecasting the future economic conditions , taking the risk of default as the weight, calculating the probability weighted amount of the present value of the difference between the cash flow receivable from the contract and the cash flow expected to be received. On each balance sheet day, the Company measures the expected credit losses of financial instruments at different stages. If the credit risk has not increased s ignificantly since the initial recognition, the financial instrument is at the first stage, and the Company measures the provision for the loss according to the expected credit loss within the next 12 m onths; if the credit risk has increased s ignificantlysince the initial confirmation but impairment of the credit has not yet occurred, the financial ins trum ent is at the s econd s tage, the Company m easures the provision for the loss according to the expected credit loss of the financial ins trum ent for the entire duration; if the credit impairment has taken place s ince the initial recognition, the financial ins trum ent is at the thirdstageand the Companyprovides res erve for the expected credit loss of the financial instrument for the entire duration. For financial instruments with lower credit risk on the balancesheet day, the Companyass umes that its credit risk has not increasedsignificantlysince the initial recognition, andm easures the provis ion for the loss according to the expected credit loss es in the next 12 months . For the financial ins trum ent at the first stage or the s econdstage or with lower credit risk, the Companycalculates the interest incom e. Based on the book balance without deduction of the provision for the impairment and the actual interes t rate. For the financial ins trument at the third stage, the Companycalculates the interest income according to the book balance less the amortized cos t after provision for the impairment and the actual interes t rate. ② For receivables, regardless of whether there exists a significant financing com ponent, the Company considers all reasonable and evidence-based information, including forward-looking inform ation, to estimate the expected credit losses of the afores aid receivables in asingle or combinedmanner and to adopt thesimplifiedmodelof the expected credit losses , always meas ures provis ion for loss bas ed on expected credit losses for the entire duration. Provisionm ethod is as follows: (a) At the end of the reporting period, the Com pany conducts separate im pairm ent tes ting on the receivables if there is objective evidence proving that such receivables have experienced im pairm ent. Loss for impairment is recognized and provision for bad debt is m ade based on the difference of the present value of the estimated future cash flows lower than their carrying am ount. (b) When the inform ation of the expected credit loss of a single financing ass et cannot be assessed with reasonable cos t, the Com panydivides the receivables portfolio according to the credit risk characteristics and calculates the expected credit loss es on a portfolio basis. For receivables classified as ris k portfolios, the Company calculates the expected credit losses with reference to the his torical experience of credit loss with consideration of the present situation and the prediction of the future economic condition by using the impairment provision model. The Company counts the provision for loss made or revers ed to the current profit and loss (6) Trans fer of financial assets If s ubstantiallyall of risks and remunerations on theownership of the financial asset have been transferred to the trans feree, the financial asset's recognition is terminated; if s ubstantially all of risks and remunerations on the ownership of the financial ass et are kept, the financial asset's recognition is not term inated. If the enterprise has neither transferred nor kept substantially all of risks and rem unerations on the ownership of the financial asset, treatment is made res pectively based on the following conditions: in case control over the financial asset has been given up, recognition of that financialasset as welland the ass ets and liabilities generated are terminated; in case control over the financial ass et has not been given up, relevant financial assets are recognized based on the extent continuallyinvolved with the trans ferred financial asset, and relevant liabilities are recognized accordingly. In the trans ferred financial ass et continues to be involved byproviding financial guarantee, the asset formed bycontinuous involvement is recognized based on the lower of the book value of the financial asset and the amount of the financial guarantee. The amount of the financial guarantee refers to the maximum amount in the consideration received and required to be repaid. 11. Notes receivable Refer to Note 10. Financial Instrument Item (5) 12. Accounts receivable Refer to Note 10. Financial Instrument Item (5) 13. Financing with accounts receivable Inapplicable 14. Other receivables Refer to Note 10. Financial Instrument Item (5) 15. Invent ories Does the Companyneed to complywith the requirem ents on information disclosure for special indus tries? No (1) Class ification of Inventories Inventories mainlycons is t of raw materials , products-in-process , comm oditystocks, etc. (2) Pricing of Inventories Acquired and Delivered Inventories delivered are priced based on the actual cost. Costs of inventories which cons is t of purchase cost, Raw materials, products-in-process and merchandise inventory are priced respectively according to the weighted average (with brand world watchstocks exclusive), s pecific identification (for famous brand watchstocks ) at the time of delivery. (3) Determ ination of the net realizable value of inventories and themethod for provision for price falling of inventories The net realizable value of the inventories refers to the amount of the estimated sales price of the inventory less the estimatedsales costs to incur at the tim e of completion, sales expenses and relevant taxes inprocess of normal production and operation. In determ ining the net realizable value of inventory, with the obtained valid evidence as the base, the purpose of holding the inventoryand the influence from theevents after the balancesheet dayis taken into consideration at the same time.. On the balance sheet day, inventories are measured bas ed on the lower of the cos t and the net realizable value. When the net realizable value is lower than the costs , reserve for price falling of inventories is provided. in which ① For the inventories directly for sale, including the finished products and the materials for sale, in process of normal production and operation, the realizable net value is the amount of the estimated s ales price of the inventories less the estimatedsales costs and the relevant taxes ; ② For the material inventories necess ary to be processed, the realizable net value is the am ount of the estimated s ales price of the finished products produced in process of normal production and operation less the costs predicted to incur at the tim e of finishing the work, the estimatedsales expens es and the relevant taxes . The Com pany provides reserve for price falling of the inventories classified based on the models of self-made watch inventories. For the fam ous brand watches in distribution, reserve for price falling of inventories is provided based on the individual items. For the raw materials for FIYTAwatches , bas ed on the terminal sales s tatus of FIYTAfinished watches, reserve for price falling of inventories is provided with interchangeabilityof s pares and parts and specialized class ification of applications of materials taken into consideration. After provision for price falling of inventories, in case the influencing element for previous reduction of the inventory value has dis appeared, causing the realizable net value of the inventory higher than the carrying value, the provis ion for price falling of the inventoryoriginallym ade can be revers ed and the reversed amount is charged to the current gain and loss . (4) The inventorysystem for the inventories is the perpetual inventorysystem (5)Amortization of low value consumables and packingmaterials Low value consumables and packing materials are am ortized in lump sum at the time of reception. 16. Contract assets Inapplicable 17. Contract cost Inapplicable 18. Classified as assets held for sale The Companyshall classifya non-current asset or dis posal group as held for sale if its carrying amount will be recovered principallythrough a sale transaction (including a non-m onetaryass et exchange of commercialsubstance, thesame below) rather than through continuous use. Non-current assets or disposal group class ifiedas held fors aleshallmeet the following criteria: dis posable immediately under current conditions based on s imilar transactions for disposals of s uch assets or practices for the disposal group; adecision has beenmade on a plan for disposal and anundertaking to purchase has been obtained, and thedispos al is expected to be completed within a year. Where, the disposal group refers to a group of assets which are disposed altogether by sale or other way as a whole in a transaction as well as a liability trans ferred in the transaction with direct connection with thes e these assets. For an asset group or asset group portfolio attributable to the dis posal group where the goodwill has been apportioned at the time of entity consolidation according to the Standards for Enterpris e Accounting No. 8 - Impairment of Assets , the disposal group should be included in the goodwill apportioned to the disposal group. When the Company initially measures or re-measures the held-for-sale non-current assets and disposal group on the balances heet date, if the book value is higher than the fair value less the sales expenses, the book value is reduced to the net amount of the fair value less the s ales expenses , the amount of the write-down is recognized as the ass et impairment loss , which is included in the current profit and loss, and the provision for im pairment of ass ets held forsale is made. For the dis posal group, the loss from impairm ent of the assets as recognized first offsets the carrying value of the goodwill in the dis posal group and then offs ets the carrying value of various non-current assets in the dis posal group in com pliance with the measurem ent provisions as s pecified in the Standard for EnterpriseAccounting No. 42 - Held-for-Sale Non-current Assets , Disposal Group and Termination of Operation (hereinafter referr ed to as the “Standard for Holding for Sale). In cas e the net amount of the fair value of the held -for-saledispos algroup less thesales expense increas es after the balancesheet day, the am ount previouslywritten down should be recovered and reversed within the amount of loss from the impairment of the ass ets recognized as thenon-current assets according to theprovisions applicable to themeasurement based on the s tandards for holding-for-sale after being classified as the categoryof holding-for-sale and the am ount revers ed is counted to the current profit and loss;and the book value increases based on the proportions of the book value of each non-current asset accounted for in the dis posal group except for the goodwill; the book value of the goodwill alreadywritten down and loss from the im pairm ent of the assets recognized as the non-current assets according to the provisions applicable to the measurement bas ed on thes tandards for holding-for-sale after being classified as the categoryof holding-for-salemus t not be reversed. No depreciation or amortization is provided for a non-current asset in the non-current assets or dispos al groups held for s ale. Interes t and other expens es attributable to the liabilities of a disposal group held for s ale shall continue to be recognized. When a non-current ass et or dispos al group no longer satisfies the conditions for class ification of the held-for-sale, the Companyno longer classifies it as held -for-sale categoryor removes the non-current ass et from the held-for-s ale dis posal group, and measures it based on the lower of the two: (1) for the book value before classification as the held-for-s ale, the amount after the adjus tment for depreciation, amortization or impairment whichshouldbe recognized under the conditionin which it is assumed not to be class ified as held-for-sale; (2) recoverable am ount. 19. Equityinvestment Inapplicable 20. Other equityinvestment Inapplicable 21. Long term accounts receivable Inapplicable 22. Long-term equity investments The long-term equity investment as stated in this part refers to the long term equity investment with control over, joint control over or significant influence upon the investees. The long term equity investment without control over, joint control over or significant influence upon the investees in the Company are taken as available-for-sale financial assets or the financial assets which are m easured based on the fair value and their changes are counted to the current profit and loss. For the detail of the accounting policy, refer to Note V. 10 "Financial Ins truments". Joint control refers to the joint control over some arrangement made bythe Companyaccording to the relevant agreement and the relevant activities for the arrangement mus t be jointly decided by all the parties sharing the control power. Significant influence refers to the Com pany's power of participation in making an investee's financial and operation policies but the Companycannot control or jointlycontrol with other parties to make these policies . (1) Determ ination of Investment Costs For the long term equityinvestm ent acquired through cons olidation of enterprises under the common control, the share of the book value of the consolidatee's owner's equity as at the date of cons olidation in the eventual controller's financial s tatem ents is taken as the initial inves tment cost of the long term equity investment. The balance among the initial investment cos t of the long term equityinves tment and the cash as paid, non-cash asset as assigned and the book value of the liabilities as assumed is used for adjustment of the capital res erve; in case the capital reserve is not enough for writing-down, the retained earnings is adjusted. Where the equitysecurities are iss ued as the consolidation consideration, the share of the book value of the s hareholders' equityin the ultim ate controlling party's consolidated financialstatements on the cons olidation day is the initial investm ent cos t of the long-term equity investm ent, and the total carrying amount of the issued shares is taken as the s hare capital, the difference between the initial investment cost of the long-term equity investment and the total carrying amount of the shares issued is used to adjus t the capital reserve; if the capital reserve is ins ufficient to offs et, the retained earnings are adjus ted. The equity which is acquired in s teps through a number of transactions and eventuallyforms consolidationof enterprises not under the common control shall be treated dependingon whether it belongs to "one package deal": if it belongs to "one package deal", all the transactions s hall be taken as a transaction for acquiring the controlpower foraccounting treatment. If it does not belong to“one package deal”, theshare of the book value of the shareholders’ equity in the consolidatee enjoyable in the eventual controller's consolidated financial s tatem ents as at the consolidation day is taken as the initial investm ent cost of the long term equity investment; the difference between the initial investm ent cost of the long term equityinvestment and the sum of the book value of the long term equityinvestment before the consolidation plus the book value of the consideration newlypaid for further acquiring the s hares on the consolidation dayis used to adjus t the capital reserve; if the capital reserve is not enough for writing down, the retained earnings should be adjusted. For the equity investment held before the date of consolidation or the other comprehens ive income as recognized from the available-for-sale financial assets, no accounting treatment shall be taken for tim e being. For the long term equity investment acquired through consolidation of enterprises not under the common control, the consolidation cost as at the acquis ition date is taken as the initial inves tment cos t of the long term equityinvestment. The consolidation cost is the sum of the ass ets paid to the buyer, the liabilities incurred or assum ed, and the fair value of the equity s ecurities as iss ued. The equity which is acquired in steps through a number of transactions and eventually forms consolidation of enterprises not under the common control s hall be treated depending on whether it belongs to "one package deal": if it belongs to "one package deal", all the transactions shall be taken as a transaction for acquiring the control power for accounting treatm ent. If it does not belong to "one package deal", the sum of the book value of the equity investment in the purchaseeoriginallyheld plus the newlyincreas ed investment costshall be taken as the initial inves tment cost of the long term equity inves tment calculated according to the cost method. In case the equity originally held is calculated bas ed on the equitymethod, the relevant other comprehensive income shall not undergo accounting treatm ent for time being. If the equity investment originally held is an available-for-s ale financial asset, the balance between its fair value and the book value and the accumulative m ovement of the fair value originally counted to other comprehensive income are transferred to the current profit and loss. Intermediary fees in connection with audit, law service, appraisal and consulting, etc. incurred to the consolidator or purchaser andother relevant administrative fees s hall be counted to the current profit and income at the time of incurrence. The equityinvestm ent other than the long term equityinvestment formed from the enterprise consolidation which is initially measured based on the cost, such costs are recognized in such ways as the fair value of the equitysecurities issued bythe Company, the value as s pecified in the investment contract or agreement, the fair value or the original book value of the assets exchanged out in the non -monetary ass et exchange transactions , or the own fair value of the long term equity investment, etc. depending on the ways of acquirem ent of the long term equityinves tment. The expenses , taxes and other necessary expenditures directly in connection with the acquirement of the long term equity investment are counted to the investment cos ts . For the long term equity inves tment resulted from the additional investment which may bring out s ignificant influence upon or joint control over the inves tee but shall not cons titute control, the cost of the long term equity investment is the sum of the fair value of the equity investment originally held as determined according to the Accounting Standards for Enterprises No. 22 - Recognition and Measurement of Financial Instruments plus the cos t of the newly increased inves tment. (2)Subs equent meas urement and recognition of gains and loss es The long-term equityinvestment with joint control (excluding the composition of the joint operators) or significant influence on the investee is accounted by using the equity method. and als o for the long term equity investment in which the Company's financials tatem ents can implement control over the investee bycalculation bas ed on the costm ethod. ① Long term equityinvestm ent calculated based on the cost method In calculation by cos t method, the long term equity inves tment is valuated according to the initial investm ent cost, and for additional or recoveryof inves tment, the cost of the long term equityinvestment is adjusted. Except that the actual payment or cons ideration paid at the time of acquiring the investm ent contains the cash dividend or profit alreadyannounced but not yet dis tributed, the return on the inves tment in the reporting period is recognized based on the cash dividend or profit alreadyannounced for dis tribution bythe investee. ② Long term equityinvestm ent calculated based on the equitymethod When the calculation bas ed on the equitym ethod is used, if the initial inves tment cost of the long term equityinvestment is greater than the share of the fair value of net identifiable ass ets enjoyable in the investee, the initial investment cost of the long term equityinves tmentshall not be adjus ted; when the initial inves tment cost is less than the s hare of the fair value of net identifiable assets enjoyable in the investee, the balance is counted to the current profit and loss and at the sam e time the cos t of the long term equityinvestm ent is adjusted. When the equitymethod is used for calculation, the net gains and losses realized bythe investeeand theshareof the other comprehens ive income enjoyable or sharable shall be respectively us ed to recognize the return on investment and other comprehens ive incom e and at thes ame tim e thebook value of the long term equityinves tment is adjusted; according to the profit announced for distribution bythe investee or the part of the cash dividend enjoyable upon calculation, the book value of the long term equity inves tment is reduced correspondingly. For other change in the net profit and loss , other comprehens ive income and owner's equity other than the profit dis tribution, the book value of the long term equity investment is adjusted and counted to the capital reserve. In determining the net profit and loss in the inves tee enjoyable, with the fair value of various identifiable assets, etc. in the investee when the investm ent is acquired as the bas e, the net profit of the investee is recognized after adjustm ent. When the accounting policyand fiscal period adopted bythe investee is different from that of the Com pany, the investee's financial statements are adjus ted according to the accounting policy and fiscal period adopted by the Company and the return on the inves tment and other comprehens ive income are recognized on this bas is . For the transactions between the Companyandits associates or joint ventures , in case the ass ets provided or sold do not constitute business, the part calculated based on the proportion of the unrealized internal transaction gains and loss es attributable to the Companyshall be offset and the gains and losses on the inves tm ent shall be recognized on this basis. However, the loss from no internal transactionbetween the Com panyand an investeeshall not be offset if the loss belongs to impairment of the ass ets assigned. In cas e the assets inves ted in a joint venture or an associate constitutes business and the investor has acquired the long term equity investm ent therefrom but has not achieved the control power, the fair value of the bus iness providedshall be taken as the initial inves tment cost of the newly added long term equity investm ent, the balance between the initial investment cos t and the book value of the business provided shall all be counted to the current gains and losses. In case assets sold by the Com pany to its joint ventures or associates constitute bus iness, the balance between the cons ideration acquired and the book value of the bus iness shall all be counted to the current gains and losses . In cas e the asset provided to the Com pany by its joint venture or the associate constitutes bus iness, accounting treatment shall be conducted according to the EnterpriseAccounting Standards No. 20 - Enterprise Cons olidation and all the amountshall be recognized as the transaction related gains and losses . In determining the part of the net loss incurred to the investee tobes hared bythe Company, the book valueof the long term equity investment and other long term equity which has substantially cons tituted net investment in the inves tee shall be reduced to the lim it of zero. In addition, in cas e the Companyis obliged for extra loss in an investee, the predicted liabilities s hall be recognized according to the obligation predicted to assume and counted to the current gains and losses in the investment. In case an investee realizes net profit in subsequent periods, the Com panys hall recover recognition of the part of incom e enjoyable after the recognized part of the loss s hared bythe Com panyhas beenmade up for with the part of the benefit enjoyable. For the long-term equityinves tment in the ass ociated enterpris es and joint ventures held bythe Com panyfor the firs t time before the implementation of the new accountingstandards , if there exis ts a debit balance of the equityinvestm ent related to the investm ent, the am ount of thestraight-line amortizationof the original res idualmaturityis counted to the current profit and loss . ③ Acquis ition of minorityequity In preparation of the consolidated financial statements , the balance between the long term equity inves tment newly increased resulted from purchase of m inority equity and the share of the net asset continuous ly calculated commencing from the date of purchase (or date of cons olidation) enjoyable bythe subs idiaryshall be used to adjus t the capital res erve. In case the capital reserve is not enough for writing-down, the retained earnings shall be adjusted. ④ Disposal of long term equityinves tment In a consolidated financial statement, the parent company has partially dis posed the long term equity investm ent in its s ubsidiary without losing its control power, the difference between the disposal income of the amount enjoyable in the s ubsidiary’s net ass ets corresponding to the long term equityinves tment disposed is counted to the owner’s equity. In case that the parent com pany has partially disposed the long term equity inves tment in its subs idiary has caused the parent company to have lost the control power over the subs idiary, it s hould be treated according to the accounting policy as s pecified in the “method for preparation of consolidated financial s tatements” of Note V. 5.(2). If a long term equityinvestm ent is dis posed under other situation, for the equity dispos ed, the difference between its book value and the consideration actuallyobtained is counted to the current gains and losses . For the long term equity investment calculated bas ed on the equity method, the other comprehensive income part which was originallycounted to the owner’s equityundergoes accounting treatment according to the corresponding proportion by using the s ame base for direct disposal of the relevant assets or liabilities used by the inves tee. The owner's equity recognized due to change of the other owners ' equity of the inves tee with the net gains and loss , other com prehensive income and profit distribution exclus i ve is carried over into the current gains and losses based on the proportions. For the long term equityinvestment, in case the remaining equityafter disposalstill needs to be calculatedaccording to the costmethod, the other com prehensive income calcu lated bythe equity method or calculated and recognized based on the s tandards for recognitionandmeasurement of financial instruments undergoes theaccounting treatm ent byusing thesame base as the investee has adopted for direct dis posal of the relevant assets or liabilities and carried over to the current gains and losses according to the proportion;movement of all other owners' equitycalculated and determined byusing the equity method with the net gains and losses in the investee's net ass ets as determ ined, other com prehensive income and profit dis tribution exclus ive is carried over to the current gains and losses according to the proportion. In cas e the Company has los t the control over an investee due to disposal of partial equity, in preparation of individual financial s tatements, the remaining equityafter disposal can still implement joint control over or significant influence on the investee; the equity method is applied for calculation ins tead and the s aid remaining equity is adjus ted as if the equity method was used for calculation commencing from the tim e of its acquis ition; in case the remaining equity after the adjustm ent can no longer implement joint control over or significant influence on the inves tee, the accounting treatm ent s hall be conducted according to the provisions concerning recognition and meas urement of financial ins trum ents; the balance between the fair value as at the dayof los ing the control power and the book value is counted to the current gains and losses. The other comprehensive income calculated by m eans of the equity method or calculated and recognized according to the standards for recognition and measurement of financial ins trum ents undergoes accounting treatm ent on the s ame base as the investee has los t control and the investee directly dispos es the relevant ass ets or liabilities. The movem ent of the other owner's equity in the inves tee's net ass ets calculated and recognized by means of the equity method is carriedover into the current gains and loss es at the time of losing the control over the investee with theexception of the net gains and profit, other com prehensive incom e and profit dis tribution. Where, for the remaining equity after dis posal calculated bymeans of equitym ethod, the other comprehensive income and other owner's equityare carried over according to the proportion; in case the rem aining equityafter dis posal is recognized andm easured based on the financial ins trum ents, the other comprehensive incom e and other owner's equityare all carried over. In case the Companyhas los t the joint control over or significant influence on the investee due to disposal of partial equity, the remaining equity after disposal is calculated according to the standards for recognition and m easurem ent of financial ins trum ents while the balance between the fair value and the book value as at the day when the Company lost its joint control or s ignificant influence is counted to the current gains and loss es. The other comprehens ive income from the original equity inves tment calculated and recognized by means of the equity method undergoes accounting treatment by using the s ame base as the inves tee directly disposes the relevant assets or liabilities when the calculation based on teh equitym ethod is terminated; the owner's e quityrecognized due to the movement of other owner's equitywith the investee's net gains and losses , other comprehens ive income and profit distribution exclusive is all transferred into the current return on inves tment when the equitymethod is stopped. The Companydisposes the equityinvestment in a subsidiaryin s teps through a number of transactions until it has lost the control power. If the aforesaid transaction belongs to a one-package transaction, the trans actions shall undergo accounting treatment as a transaction in which the equity investm ent in a subsidiary is disposed and the control power is lost. The balance between the first disposal consideration prior to loss of the control power the book value of the long term equity investment corresponding to the equitydisposed is recognized as other comprehensive income first and then all trans ferred into the current gains and losses from loss of the control power. 23. Investment based real estate Measurement model for inves tment real estate Measured based on the cost m ethod Depreciation or am ortizationmethod Investm ent bas ed realestate refers to the real es tateheld bythe Companywhich creates rentalor added valueof capital or both, including housing and building already let out. Including the land us e right which has already been let out, the land use right held and to be ass igned after appreciation, building which has been leased out, etc. In addition, if the Board of Directors (or sim ilar institution) has a written resolution on the vacant buildings held by the Company for the purpose of operating the lease, it is clearlystated that theywill be used for operating leases and that the intention to hold is no longer changed in theshort term and theyare presented as inves tment -oriented real estate. Investm ent-oriented real estate is initiallymeasuredaccording to the cost Inves tment based real estateis initiallymeasured based on the cost. The follow-expenses in connectionwith the inves tment based real estate are recorded in the investment based real estate cos ts in case the relevant economic benefit may flow into the Company while the costs can be reliably measured. Other follow-up expens es are recorded in the current gain and loss at the time of incurrence. Other follow-up expenses are recorded in the current gain and loss at the tim e of incurrence. The Com pany adopts the cost model to make follow-up meas urement of the inves tment based real estate and makes depreciation or amortization according to the policyof coincidence with hous ing and building or land us e right. About the im pairm ent test m ethod and method for provision for impairment of the investm ent-oriented real estate. For the detail, refer to Note V.31 “Im pairment of Long Term Ass ets”. When the self-use real estate is transferred into the inves tment bas ed real estate or the inves tment bas ed real estate is trans ferred into thes elf-us e real es tate, the book value prior to the transfer is taken as the entryvalue after the trans fer. When the application of the inves tment based real estate is for self-us e, the investm ent based real estate is transferred to fixed as set or intangible asset commencing from the date of change. When the application of the self-use real estate is changed into earning rental or increase of capita l value, comm encing from the date of change, the fixed asset or intangible asset are transferred into investment based real estate. When convers ion takes place, for the inves tment based real estate measured by means of the cos t module instead, the book value before conversion shall be taken as the entry value after the conversion; for the investment based real estate m easured by means of fair value instead, the fair value as at the convers ion dateshall be taken as the entry value after conversion. When the investment based real estate is dispos ed or perm anentlywithdrawn from us e and it is predicted that it is unable to earn economic benefit, the recognition of the investm ent based real estate is terminated. The income from dis posal of investment based real es tate, including sale, assignm ent, discarding or dam age, is charged to the current gain and loss after deduction of the book value and the relevant taxes . 24. Fixed asset (1) Recognition of f ixed assets Fixed assets are tangible ass ets that are held for use in the production or supply of services, for rental to others , or for administrative purposes and have useful lives more than one accounting year. Afixed asset s hall be recognized onlywhen it is probable that economic benefits associated with the ass et will flow into the enterprise and the cost of the ass et can be measured reliably. Afixed ass etshall be initiallym easured at actual cos t. (2) Depreciation methods Categories Depreciation methods Depreciation life Residual rate Yearly depreciation Plant& buildings Average service life method 20 -35 5.00 2.70-4.80 Machinery & equipment Average service life method 10 5.00-10.00 9.00-9.50 Electronic equipment Average service life method 5 5.00 19.00 Motor vehicle Average service life method 5 5.00 19.00 Other equipment Average service life method 5 5.00 19.00 Other fixed as sets m ainlyincludingsome tools , furniture. (3) Basis for recognizing the fixed ass ets under financing lease, Pricing and Depreciation Methods The "finance lease" shall refer to a leas e that has trans ferred in substance all the ris ks and rewards related to the ownership of an asset. The ownership of it mayor maynot eventuallybe trans ferred. For the fixed assets rented bymeans of financing lease, depreciation of the rented assets is provided according to the policyidentical to the proprietaryassets. If it is reas onable to be certain that the lessee will obtain the ownership of the leased ass et when the lease term expires, the leased asset s hall be fullydepreciated over its us eful life. If it is not reasonable to be certain that the lessee will obtain the ownership of the leased asset at the expiry of the lease term , the leased ass et shall be fully depreciated over the shorter one of the lease term or its useful life. 25. Construction-in- process The cost of construction-in-process is determined according to the actual expenditure incurred for the cons truction, including all necess ary construction expenditures incurred during the construction period, borrowing costs that shall be capitalized before the cons truction reaches the condition for intended use and other relevant expenses . Construction-in-process is transferred to fixed assets when the asset is readyfor its intended use. For provis ion for impairment of construction-in-process and the method for provis ion for impairm ent, refer to Note V.31 “Impairment of Long Term Assets ”. 26. Borrowing Costs Borrowing costs include interest on borrowings , amortizationof depreciation or prem ium, auxiliaryexpenses and balance of exchange res ulted from foreign currency loan, etc. he borrowing costs from acquisition or production of the assets or borrowing expenses res ult therefrom directly attributable to compliance with the condition of capitalization s tarts to be capitalized when the expense of theas set has incurred, borrowing costs have incurred and the acquis ition and cons truction or production activities necessary to let the as set reach the predicted applicable or sellable status; when the ass ets acquired, constructed or produced in compliance with capitalization have reached the predicted applicable s tatus or s ellablestatus, the capitalization s tops. The other borrowing cos ts are recognized as expenses in the period of incurrence. Interest expens es of special borrowings incurred actually for the current period less interest income from borrowings at bank or inves tment income from temporaryinves tments is capitalized; capitalization am ount is determined as accumulative asset expenditure of general borrowings over weighted average asset expenditure of special borrowings multiples capitalization rate of general borrowings . Capitalization rate is determined as calculating weighted average interest rate of general borrowings. In the capitalization period, exchange differences of s pecial borrowings in foreign currencyis totallycapitalized; exchange differences of general borrowings in foreign currencyis recognized in profit or loss for the current period. The assets in compliance with the capitalization conditions refer to such assets as fixed assets, investment based real estate, inventories , etc. which need to undergo long time of acquisition or construction or production activities before they can reach the predicted applicable ors ellables tatus. Capitalization of borrowing costs is suspended during periods in which the acquisition, construction or production of a qualifying asset is interrupted abnormallyand when the interruption is for a continuous period of more than 3 m onths until the acquisition or construction or production activities of the ass ets res tart. 27. Biological Assets Inapplicable 28. Oil and Gas Assets Inapplicable 29. Use right assets Inapplicable 30. Intangible assets (1) Pricing Method, Service Life and Impairment Test An intangible asset refers to a recognizable non-monetaryasset without physical form possessed byor under the control of the Com pany. Intangible ass ets are initiallymeasured according to cots. The expenditure in connection with intangible assets is recorded in the costs of the intangible ass ets in case the relevant econom ic benefit mayflow into the Companywhile the costs can be reliablymeas ured. Other expenses are recorded in the current gain and loss at the tim e of incurrence. The land use right acquired is us uallycalculated as intangible asset. For the buildings, such as factorybuilding, cons tructed independently, the expenses in connection with the land use right and the cons truction cost of such building are calculated as intangible asset and fixed assets. For purchased housing and buildings , the relevant cos ts are distributed between the land use right and buildings ; in case it is difficult to distribution rationally, they shall all be handled as fixed assets . An intangible asset with limited service life is amortized in average by us ing the s traight -line method over the predicted s ervice life with its original value less the predicted residual value and the accumulated am ount of the reserve for impairment alreadyprovided commencing from the time of availabilityfor use. The intangible ass et with unidentifiedservice life would not be amortized. The method for am ortization of intangible assets with limiteds ervice life is as follows : C ateg ori es Useful Life (Year) Amortization Method Land use right 50 Straight-line method Softw are system 5 Straight-line method Trademark rights 5-10 Straight-line method At the end of a year, the Companyrechecks theservice life of the intangible asset and the am ortizationmethod. The change incurred is treated as change of accounting es timation. In addition, the Companyalso rechecks the service life of the intangible assets with indefiniteservice life, In case thereis evidences howing that the time limit inwhichsuchintangible asset maybring about economic interest to the Companyis predictable, thes ervice life has to be estimated and the amortization is conducted according to the amortization policyof intangible assets with lim ited service life. About the impairm ent tes t method and method for provis ion for im pairment of the intangible assets. For the detail, refer to Note V.31 “Im pairment of Long Term As sets ”. (2) Accounting policyfor internal research and development expenditure Expenditure on an internal research and development project is classified into expenditure on the research phas e and expenditure on the developm ent phase. Expenditure on the research phase is recognized in profit or loss when incurred. Expenditure on the development phase is capitalized onlywhen the Com panycan satisfyall of the following conditions : ① the technical feasibilityof completing the intangible asset so that it will be available for us e orsale; ② its intention to complete theintangible asset is to use or sellit; how the intangible asset will generate economic benefits; ③ Way of intangible assets producing economic interes t, including those that can demons trate the existence of a market for the output of the intangible ass et or the intangible asset itself or, if it is to be us ed internally, the us efulness of the intangible asset; ④ The availabilityof adequate technical, financial and other resources to com plete the development and the abilityto use or sell the intangible asset; ⑤ Its abilityto m easure reliablythe expenditure attributable to the intangible ass et during its development phas e. If it is impossible to dis tinguish res earch stage expenses and developm ent stage expenses, the R & D expens es as incurred shall be all charged to the current gains and loss es. 31. Impairment of long term assets For non-current and non-financial ass ets such as fixed assets, construction-in-process, intangible ass ets with limited s ervice life, inves tment based real estate m easured bas ed on the cost model, the long term equity investment in s ubsidiaries , joint ventures and associates , etc., the Company m ake judgment on whether there exis ts any sign of impairment on balance sheet day. In cas e there exists a sign of impairment, the Company estimates the recoverable amount and m akes impairment tes t. For goodwill and the intangible assets with the s ervice life undetermined and the intangible assets which have not reached applicable status, regardless whether there exists sign of impairm ent, the Companymakes impairment test every year. In case impairment test result shows that the recoverable am ount of asset is lower than the book value, provision for impairment is made based on the difference and is regarded in the loss for impairment. The recoverable amount is determined based on the higher of the net amount of the fair value of the asset less the expense of dispos al and the present value of the predicted future cash flow of the asset. The fair value of ass ets is determined based on the sales agreement price in fair trans action; in case there is no sales agreement but does exist active market of asset, the fair value is determined according to the buyer’s offer of the asset; in cas e there exists neither sales agreement nor active market of asset, the fair value of assets is estimated based on the best inform ation obtainable. The disposal expens es include legal expenses , relevant taxes, handling fee and direct expenses incurred before the asset reaches the sellable status in connection with disposal of the assets. For the present value of the predicted future cash flow of ass ets, with reference to the predicted future cas h flow generated in process of s ustained use and final dispos al, a proper discount rate is chos en to determine the amount after the dis count. Provis ion for impairment of asset is calculated and recognized based on the individual asset. In case it is difficult to make estimation of the recoverable amount of individual asset, the recoverable amount of ass et groupis determined based on the asset group which the asset belongs to. The asset group is them inimum grouping of assets which can independentlyproduce cash flow in. For the goodwill separately stated in the financial s tatements, at the time of impairment testing, the book value of the goodwill is apportioned to the asset group or combination of asset groups of assets benefited from the s ynergis tic effect of enterprise consolidation. In case the testing result shows that the recoverable amount of an as set group or combination of asset groups which contain apportioned goodwill is lower than their book value, the corresponding impairm ent loss is recognized. The amount of the impairment loss firs t offsets and is apportioned to thebook valueof the goodwill of the asset group or combination of ass et groups , and then offset the book value of other assets according to the proportions of other various assets in the book value with the exception of goodwill in the asset group or combination of asset groups. The impairment loss of the aforesaid assets, once recognized, shall not be revers ed as the recovered part in subs equent periods . 32. Long term expenses to be apportioned Long term expenses to be apportioned refer to various expens es which have already incurred but should be borne in the reporting period and s ubsequent periods with the apportioning term exceeding one year. The Company's long term expenses to be apportioned include the special counter fabrication cost, repairing fee, etc. Long term expenses to be apportioned are am ortized according to thes traight-line method in the predicted beneficial period. 33. Contract liabilities Inapplicable 34. Employees’Wages and Salaries (1) Accounting treatment of short term salaries Short term salaries m ainly include wages, bonus, allowances and subs idy, welfare expenses to employees , medical ins urance prem ium, birth insurance premium , work related injury ins urance premium , housing fund, labor union dues and employees' personnel education fund, non-monetarywelfare, etc. The Companyrecognizes theshort term s alaries to incur during the fis cal periods when em ployees offer services to the Com pany as liabilities and count the sam e to the current gains and losses or the relevant cost of ass ets. Of them , non-monetarywelfare is meas ured based on the fair value. (2) Post-employment benefits The post-employment benefits mainly include the basic endowment ins urance, unemployment insurance, annuity, etc. Pos t-employment benefit program includes defined contribution plan. In case the defined contribution plan is used, the corres ponding contributable amount is counted to the corresponding asset cos t or the current gains and losses at the time of incurrence. (3) Dismissal welfare In cas e the labor relationship with an employm ent is terminated prior to the expiry of an employee's labor contract, or in case the Com panyproposes a compens ation plan for encouraging employees to volunteerlyaccept lay-off, the liabilityof remuneration to employees arising from pos t-service benefit is recognized in the current gains and loss es at the earlier of the following conditions: when the Company cannot unilaterally withdraw the offer of pos t-s ervice benefit provided for the purpos e of the plan of termination of the labor relationship or propos al of lay-off, and when the Company recognizes any related restructuring costs or expenses in connection with the paym ent of the post-service benefit. However, if the term ination benefits are predicted to be unable to be fully paid within 12 months after term ination of the annual reporting period, it shall be handled according to the other long term payroll to employees. (4) Other long term employees' welfare The internal retirement program for employees is handled bas ed on the same principle as that for the aforesaid Dism issal welfare. The Company plans to count the salaries paid to the internally retired employees and their social insurance prem ium paidbythe Companyfrom the date when the concernedemployees s tops offeringservices to theCompanyto the time of their official retirement to the current gains and losses (post-service benefit ) when theycomplywith the conditions for recognizing the predicted liabilities. Other long term em ployees ' welfare provided by the Company to its employees shall undergo the accounting treatm ent according to the defined contribution plan as long as it complies with the defined contribution plan. With the exception of this, it shall undergo accounting treatment according to the defined beneficial plan. 35. Lease liabilities Inapplicable 36. Predicted liabilities Predicted liabilities are recognized when an obligation in connection with contingencies complies with the following conditions : (1) The obligation is a present obligation of the Company; (2) It is probable that an outflowof econom icbenefits will be required tosettle the obligation; (3) The amount of the obligation can bemeasured reliably. On the balancesheet day, with consideration of such factors as contingencyrelated risk, uncertaintyand the time value of money, etc., the predicted liabilities are measured according to the bes t estimated amount necessary to be paid in implementation of the relevant current obligation. If the expens es for clearing of predictive liability is fully or partially compensated by a third party, and the com pensated amount can be definitelyreceived, it is recognizedseparated as asset. The compensated amounts hall not be greater than the carrying amount of the predictive liability. (1) Loss contract A loss contract is a contract in which the cost unavoidably exceeds the expected economic interes t in implementing the contract obligations. If the contract to be executedbecomes a loss contract, and the obligation arising from the loss contract s atisfies the conditions for the confirmation of the above-mentioned estimated liabilities , the part of the contract’s estimated loss that exceeds the recognized im pairm ent loss (if any) of the contracted asset is recognized as the estimated liability. (2) Obligation of reorganization For a reorganization plan that is detailed, form al, and has been announced to the public, the estim ated liabilities are determined based on the direct expenses related to the reorganization, subject to the recognition conditions of the aforementioned estimated liabilities . 37. Share-based payment (1) Accounting treatment method for the share -based payment Share-based payment is a trans action that grants an equityinstrument or assumes a liabilitydetermined on the bas is of an equity ins trument in order to obtain s ervices from employees or other parties. Share-bas ed payments are divided into equity-s ettled share-based paym ent and cash -s ettled share-based payment. ① An equity-settled share-based paym ent Share-basedpaymentsettled withequityin exchange forservices provided byem ployees is m easured with the fair value of the employee's equityinstruments at the grant date. This amount of the fair value, if the right cannot be exercised until the ves ting period comes to an end or until the prescribed performance conditions are met, with the best es timate of the quantity of the exercis able equity instrument as the base within the vesting period, is counted to the relevant cost or expense calculated bas ed on thestraight-linemethod/when the right is exercisable immediatelyafter granting, it is counted to the relevant cos t or expenses on the date of the grant and the capital reserve increases corres pondingly. On each balance sheet day during the ves ting period, the Company may make best estim ate based on the subs equent inform ation, such as the movem ent of the number of em ployees eligible for exercis ing the wrights as latest obtained and the number of the equity ins trument of the predicted exercisable is corrected. The influence of the afores aid es timate is counted to the current relevant cos t or expens e and the capital res erve is adjus ted correspondingly. Share-based payment in exchange for services from other parties: if the fair value of the services from other parties can be reliablym easured, theshare-based paym ent is m easured according to the fair value of theservices from other parties as at the date of theacquisition. If the fair valueof theservices from otherparties cannot be reliablymeasuredwhile the fair value of the equityinstrument can be reliablymeasured, the s hare-based paym ent is meas ured according to the fair value of the equity instrument as at the date of the acquisition of the service and counted to the relevant cos t or expense and the s hareholder's equityincreas es correspondingly. ② Cas h-settled share -bas ed payment The cash-settledshare -bas ed payment is measured at the fair value of the liabilities ass umed bythe Companydeterm ined and based on shares and other equity instruments . If the right is exercis able immediately after the grant, the cas h-settled s hare-based paym ent is counted in the relevant costs or expenses on the date of the grant date, and the liabilities increas e accordingly; if the services within the waiting periodmust be completed or the requiredperformance conditions arem et, the fair value of the liabilities ass umed by the Company is based on the bes t estim ate of the ves ting rights on each balance s heet day of the waiting period. The s ervices obtained in the current period are included in the cost or expense, and the liabilities increase accordingly. The fair value of the liabilities is re -meas ured and the m ove ment is counted in the current profits and loss es on each balances heet dayand settlement daybefore the settlement of related liabilities . (2) Relevant account ing treatment for amendment or termination of the share-based payment plan When the Company amends the share-based payment plan, if the amendment increases the fair value of the equity ins trum ents granted, the increaseof the services obtained is recognized accordinglybased on the increase of the fair value of the equityins trum ents. Increas eof the fair value of the equityins trum ent refers to the difference between the fair value of the equity instrument on the am endm ent day before and after the amendment. If the modification reduces the total fair value of the share-based payment or adopts any other m ethod unfavorable to the employees , the s ervice obtained will continue to undergo accounting treatm ent, unless the Companycancels part or all of the granted equityinstruments. If the Companycancels the granted equityinstrument during the ves ting period, the Com panyshall treat it as accelerated ves ting, the am ount which s hould be recognized during the remaining ves ting period is counted to the current profit and loss immediatelyand at the same tim e the capital reserve is recognized. If an employee or other partycan choose to meet the non-ves ting conditions but fails tomeet the ves ting period, the Companytreats it as a cancellation of the granted equity ins trum ent. (3) Accounting treating involving the share-based payment transaction of the Company, the Company’s shareholders or actual controller In respect of the share-based payment transaction between the Company and the Company's shareholders or its actual controller, of the settlement enterprise and the enterprise receiving services , one is in the Company, and the other is outside the Com pany, and the accounting is carried out in the Com pany's consolidated financial s tatements according to the following provisions: ① In case the settlement enterprise conducts the settlement with its own equity ins trument, the share-based paym ent transaction s hall be treated as equity-s ettled s hare -based payment; otherwis e, it shall be treated as a cash-settled s hare-based paym ent. In case the s ettlement enterprise is the investor of the enterprise receivingservices , the fair value of the equity instrument as at the granting date or the fair value of the liabilities necessary to be as sumed is recognized as the long term equity investment in the enterprise receiving the services ; at the sam e time the capital reserve (other capital reserve) or liabilities is recognized. ① In case theenterprise receiving services has no obligationof settlement or what it grants its employees is its own equity ins trum ent, the share-based payment trans action shall be treated as equity-s ettled s hare -based payment; in case the enterprise receiving s ervices have the settlement obligation and what it grants its employees equity instrument of not its own, suchs hare-based payment transactionshall be treated as a cash-settledshare-based paym ent. In case the s hare -based payment trans action takes place among the enterprises within the Companywhile the enterprise receiving the service and the settlement enterprise are not the same enterprise, the respective confirmation and measurement of the s hare -based payment trans action in the individual financials tatements of the enterpris e receiving the s ervices and the settlement enterprise are treated with reference to the above principles . 38. Other financial instruments, such as preferred shares, perpetual liabilit ies, etc. Inapplicable 39. Revenue Does the Companyneed to complywith the requirem ents on information disclosure for special indus tries? No Has the newstandard for income been implem ented No (1) General Principle ① Sale of goods Revenue from the sale of goods is recognized only when all of the following conditions are satis fied: the Com pany has trans ferred to the buyer the significant risks and rewards of ownership of the goods , the Companyretains neither continuing managerial involvement nor effective control over the goods s old, and related income has been achieved or evidences of receivable have been obtained, and the ass ociated costs can bemeasured reliably. ②Providing of services Where the outcome of a transaction involving the provision of services can be estimated reliably, at the end of the period, revenue associated with the transaction is recognized using the percentageof completionm eth od. Thes tage of completion of a trans action involving the providing of services is determined according to the proportion of the s ervices performed to the total services to be performed. Reliablemeasurement of the result of thelaborservice transaction provided refers to that it cansatis fyat the sam e time: ①. The amount of revenue can be measured reliably; ②. The associated econom ic benefits are likely to flow into the enterprise; ③. The stage of completion of the trans action can be measured reliably; ④. The cos ts incurred and to be incurred in the transaction can bem easured reliably. If the outcom e of a transaction involving the providing of services can’t be es timated reliably, the revenue of providing of s ervices is recognized at the s ervice cos t that incurred and is es timated to obtain com pens ation and the service cost incurred is recognized in profit or loss for the current period. If the service cost incurred is estimated to obtain compens ation, revenue isn’t recognized. When a contract or agreement signed between the Company and other enterprise covers sales of goods and s upply of labor service, in cas e the part of sales of goods and the part of providing labor s ervice are dis tinguishable and can be measuredseparately, the part of sales of goods and the part of providinglabors erviceshould be treatedseparately; in cas e the part of sales of goods and the part of providinglabor service cannot be dis tinguishedor cannot bes eparatelymeasured despite that theyare distinguishable, all the contract shall be treated as s ales of goods . ③ Royaltyrevenue Revenue is recognized on accrual basis according to the relevant contract or agreement. ④ Interest incom e The interest incom e shall be calculated based on the tenure of the Company’s monetary funds used by others and the actual interes t rates used. 40. Government subsidies Government s ubsidy refers to the monetary asset and non-monetary asset obtained free by the Com pany from the government, excluding the capital inves ted by the government in the corresponding owner's equity enjoyable by the government as the investor. Government subs idy consists of ass et -related governm ent subsidy and income-related government subs idy. The governmentsubsidyrelated to assets refers to governments ubsidyobtained bythe Companyfor the purpos e of purchasing or cons tructing or otherwise form ing long-term assets in other way; the remaining governm ent s ubsidy refers to the governm ent s ubsidy related to the income. If the government docum ents do not clearly define the object of subsidy, the subsidyshall be divided into the government subsidyrelated to incom e and the government subsidy related to assets in the following ways: (1) If the governm ent documents pecifies thespecific project for which thes ubsidy is targeted, the budget of the project will be divided into the relative proportion of the expenditure amount of the assets and the expens es included in the expens es, and the division ratio shall be reviewed on each balance s heet date and changed when necessary; (2) If the government documents use onlyfor generalstatement, and not s pecifya s pecific project, it will be as income-related government grants. If a governm ent grant is in form of monetaryasset, it is measured at the amount received or receivable. If a government grant is in the form of non-monetaryasset, is m easuredat fair value; if the fair value cannot bem easured reliably, it is m easured at a nominal amount. The governm entsubsidymeasured at a nominal am ount is directlycounted to the current profit and loss. The Com pany us ually confirms and m easures government grants according to the actual amount received. If there is evidence at the end of the period that the Company can meet the relevant conditions stipulated by the financial support policy and is expected to receive financial support funds , the government subsidy will be recognized according to the receivable amount. The governm ent grants measured according to the receivable amount s hall meet the following conditions at thesame time: (1) The amount of thegrants receivable has been authorized bythe government departm ent to issue the documents or can be reas onably measured according to the relevant provisions of the form ally promulgated financial capitalm anagement meas ures ; (2) It is based on the financial s upport items formally promulgated by the local finance department and proactively disclosed in accordance with the provisions of the "Regulations Governing the Disclosure of Governm ent Information" and the fiscal fund management measures, and the management measures should be generalized (any eligible enterprises can apply), rather than s pecifically for a specific com pany; (3) the relevant grant approval has been clearly committed to the deadline for dis bursement, and the disbursement of funds has corresponding budget as a guarantee, so that it can reasonablyensure that it can be received within the pres cribed time limit; (4) Other relevant conditions (if any) that should be s atisfied according to the Companyand the specific circumstances of the grants. Agovernm ent grant related to ass et is recognized as deferred incom e, and evenlyam ortized and charged to profit or loss over its us eful life. If a government grant re lated to incom e is used to com pensate related expenses and losses in s ubsequent periods, it is recognized as deferred income and charged to current profit or loss when recognize the relevant cost and expense or loss; if it is us ed to compensate related expens es and losses that are alreadyincurred, it is charged to current profit or loss directly. Government grants including ass ets-related parts and income-related parts at the s ame time should be treatedseparately. If it is difficult to dis tinguish them, theywill be classified as incom e-related government grants completely. The government s ubsidy related to the daily activities of the Company are included in other income; the government s ubsidynot related to the dailyactivities of the Companyare included in the non-operating income and expenditure. If a government grant alreadyrecognized needs to be repaid, the carrying amount of related deferred incom e, if any, is to be reduced. Any excess are charged to current profit or loss. If there is no deferred income, the repayment is charged to current profit or loss directly. 41. Deferred income tax asset/deferred income tax liability (1) Income tax in the reporting period At the balance sheet date, the current income tax liabilities (or asset) formed in the reporting period and previous periods are meas ured bas ed on the income tax amount predicted payable (or returnable) as calculated according to the tax law. The taxable incom e amount based on which the current income tax expense is calculated is worked out after the corres ponding adjustment of the pretaxaccounting profit during the reporting period according to the relevant provisions of the taxlaw. (2) Deferred income tax asset and deferred income tax liability The balance between the book value of some ass ets and liability items and their tax base and the provis ional difference arising from the balance between the book value of the items which have not been taken as asset and liabilitybut may be determined as tax base according to the tax law are r ecognized as deferred income tax asset and deferred incom e tax liabilitybymeans of the debt method based on balancesheet. The taxable provis ional difference which is connected with the initial recognition of goodwill and the initial recognition of the asset or liability aris ing from the transaction which is neither enterpris e cons olidation nor influences the accounting profit and taxable income amount (or may be used to offs et loss) at the time of incurrence are not recognized as relevant deferred income tax liability. In addition, as to the taxable provisional difference in connection with investm ent in the s ubsidiaries , associates and joint ventures, if the Company can control the time of reversal of the provisional difference while such provisionaldifference maybe poss iblyunable to be reversedin the fores eeable future and the relevant deferred income taxliabilityshall not be recognized either. With the exception of theaforesaids ituation, the Companyrecognizes the deferred income taxliabilityarising from other taxable provisional difference. The offsetable provisional difference which is connected with the initial recognition of the as set or liability(or maybe used to offset loss) arising from the trans action which is neither enterprise cons olidation nor influences the accounting profit and taxable income amount is not recognized as the relevant deferred income tax asset. In addition the offsetable provisional difference in connection with inves tment in the s ubsidiaries, ass ociates and joint ventures, in cas e such provisional difference may be possibly unable to be revers ed in the fores eeable future, or it is not highly possible to obtain taxable income am ount which can be used to offset the offs etable provincial difference in future, s hall not be recognized as the relevant deferred incom e tax ass et. With the exception of the aforesaid s ituation, the Com pany recognizes the deferred income tax asset arising from the other offs etable provis ional difference only with the taxable income am ount which may possiblybe obtainable for offsetting the offsetable provisional difference. For the offsetable loss and tax paym ent write-down whichmay be carried over to the future years, only the future taxable income amount which may be obtainable and used to offs et the offsetable loss and write down the tax payment may be recognized as the corres ponding deferred income taxasset. At the balance sheet date, deferred taxassets and deferred taxliabilities aremeas ured at the taxrates that are expected to applyto the period when the ass et is realized or the liabilityis settled according to the taxlaw. At the balances heet date, the Com panyreviews the carrying amount of a deferred taxasset. If it is probable that sufficient taxable profits will not be available in future to allow the benefit of the deferred taxasset to be utilized, the carrying amount of the deferred tax asset is reduced. Any such reduction in amount is reversed when it becomes probable that sufficient taxable profits will be available. (3) Income tax expense Income taxexpense includes the current incom e taxand deferred income tax. Except that the current income tax and deferred incom e tax in connection with other comprehensive income or the transactions and matters which are directly s tated in the shareholders' equity are counted to the other comprehensive income or shareholder's equity and the deferred income tax arising from enterprise consolidation is used to adjusted the book value of goodwill, all the other current income tax and deferred incom e tax expenses or incom e are counted to the current gains and losses. (4) Income Tax Offsetting In case theCompanyhas legal right to make netting and is des irous tomake netting or obtain assets andsettle liabilities at the same time, the Companymaypresent the net amount after offsetting the current income tax liabilities with the current income taxassets. In case the Com panyhas legal right to s ettle the current income tax ass et and current income tax liabilityin net while the deferred income taxasset and the deferred income taxliabilityare related to the incom e taxwhich is collected bythe s ame taxcollection and adminis tration authorityfrom thesame taxpayer or related to thedifferent taxpayer, but during theperiod in future when each significant deferred incom e tax ass et and liability are reversed, the Company pres ent the deferred income taxasset and deferred income taxliabilityin net after offsetting when it involves the taxpayer's desire to settle the current income taxas set and liabilityor obtaining asset andsatis fying liabilityin net. 42. Lease (1) Accounting process for operating lease The "finance lease" shall refer to a leas e that has trans ferred in substance all the ris ks and rewards related to the ownership of an asset. The ownership of it may or may not eventually be transferred. Other lease except the financing lease is operational lease ① The Companyrecords the operational leas e bus iness as the tenant Rental paym ent of operational leas e is recorded in the relevant asset cost or current gain and loss based on the s traight linemethod over various fiscal periods within the lease term . The initial direct expens e is recorded in the current gain and loss . Contingent rental is recorded in the current gain and loss when it actuallyincurs. ② The Companyrecords the operational leas e bus iness as the lessor The rental income of the operational lease is recorded in the current gain and loss according to the straight line method in different periods within the lease term. The initial direct expens e with bigger amount is capitalized at the time of incurrence and is recorded in the current gain and loss periodicallyaccording to thesamebas ein recognizing the rental incomeduring the lease term; other initial direct expense with sm aller am ount is recorded in the current gain and loss at the tim e of incurrence. Contingent rental is recorded in the current gain and loss when it actuallyincurs. (2) Accounting treatment method for finance lease ① As lessor At the beginning date of lease period, the Company will recognize the lower of the fair value of the lease asset at the beginning of the leas e and the present value of theminimum amount of rent paym ent as the entryvalue of rent ass et; takes the m inimum rent payment as the entry value of long term account payable and its balance as the unrecognized financial charges. In addition, when the lease negotiation takes place in the sam e process of conclusion of lease contract, the initial direct expenses attributable to leas e item are also counted to the value of rent asset. The balance of the minimum rent payment am ount less theunrecognized financial charges is respectivelystated on the long term liabilities and the long term liabilities due within a year. Unrecognized financial charges are recognized in the current financing expens es byus ing the actual interest rate method within the lease term . Contingent rental is recorded in the current gain and loss when it actuallyincurs . ② As lessee As at the beginning date of l ease period, the Company takes the sum of the minimum am ount of the rent collected at the beginning of the lease and the initial direct expense as the entryvalue of the finance leas e receivable and at the same tim e records the uns ecured res idual value; the recognizes the balance of the sum of the minimum rent collection amount, initial direct expens es and unsecured residual value and the sum of its present value as the unrealized financing income. The balance between the receivable rent from finance lease less the unrealized revenue of financing is res pectivelypres ented in the long term claim and the long term claim due within a year. The unrecognized financial charges are calculated by means of the actual interest rate method within the lease term and recognized as the current financial expenses. Contingent rental is recorded in the current gain and loss when it actually incurs. 43. Other important accounting policyand account ing estimate Operation term ination Operation termination refers to the com ponents which can s atisfy one of the following conditions, can be separately dis tinguished and have been disposed or class ified as the category of held-for-sale by the Company: ① this component represents an independent major business or an independent m ajor operation region; ② this com ponent is a part of a related plan for an independent principal business or an independent principal operation region; ③ this component is a s ubsidiaryacquired exclusivelyfor resale. About the accounting treatment method for operation termination, refer to the relevant description of Note V.18 “Held-for-sale assets and disposal group” 44. Changes in significant accounting policies and accounting estimates (1) Change in si gnif icant accounting policies Contentsand cause ofthe change in the Examination and approval Time of s tarting the accounting policy procedures application Remarks On March 31,2017,the MinistryofFinance The change in the relevant January1, 2019 For the detail, refer to revised the Accounting Standardsfor accounting policywas Explanation I BusinessEnterprisesNo.22 - Recognition approved at the 8thsessionof and MeasurementofFinancial Instruments, the Ninth Board of Directors the Accounting Standardsfor Business of the CompanyonApril 19, EnterprisesNo.23 - Transfer ofFinancial 2019. Assetsand the Accounting Standardsfor BusinessEnterprisesNo.24 - Hedging Accounting CAIKUAI(2017) No.7,8 and 9 respectively;on May2,2017,the Ministry ofFinance revised the the Accounting Standardsfor BusinessEnterprisesNo.37 - Presentation ofFinancial Instruments.In processofpreparing the financial statementsofthe firsthalfof2019,the Companyimplemented the relevant accounting standardsand made treatment according to the relevantconnecting provisions. On April 30,2019,the MinistryofFinance revised the Circular on Issuing the Amended General Corporate Financial StatementTemplatesfor the Year 2019 CAIKUAI(2019) No.6,according to which the itemsofAccountsReceivable and NotesReceivable are splitinto“Accounts Receivable” and“NotesReceivable”; “AccountsPayable and NotesPayable” are splitinto“AccountsPayable” and “Notes Payable”;the presentation detailsofthe The change in the relevant itemsof“InterestIncome”,“Other Income”, accounting policywas “Income fromDisposal ofAssets”, approved at the 10ths ession For the detail, refer to “Non-operating Income” and of the Ninth Board of April 30, 2019 Explanation II “Non-operating Expenses” under the items Directors of the Com panyon of“Other Receivables”,“Non -cu rren tAssets April 13, 2019. due in a Year”,“Other Payables”,“Deferred Income”,“R &D Expenses,” and“Financial Expenses” have been specified or revised. For the enterprisesthathave implemented the new standardsfor financial instruments, the item“ReceivablesFinancing” isadded to reflectthe notesreceivable and accounts receivable thatare measured atfair value under the new standardsfor financial instrumentsand whose changesare included in other comprehensive income. The newlyadded“the Income from DerecognitionofFinancial Assets Measured atthe Amortized Cost” isused to reflectthe profitor lossarising fromthe derecognition offinancial assetsmeasured atamortized cost.For the change ofthe aforesaid presented items,the Company adoptsthe retrospectiveadjustmentmethod to make accounting changes,and retrospectivelyadjuststhe data in comparable accounting periods. Explanation I: Influence from the im plementation of the news tandards for financial instruments The main impacts of the change in theaccounting policies arising from the above newstandards for financial ins trument on the financialstatements of January 1, 2019 are as follows : Consolidated Financial Statements: Book value as pres ented Book value as presented according to the original standards (Decem ber 31, Reclassified according to the newstandards (January1, 2019) 2018) Available-for-sale financial assets 85,000.00 -85,000.00 Investment in other equityinstruments 85,000.00 85,000.00 Financial Statem ents, Parent Company Book value as pres ented Book value as presented according to the original Reclassified according to the newstandards standards (Decem ber 31, 2018) (January1, 2019) Available-for-sale financial assets 85,000.00 -85,000.00 Investment in other equityinstruments 85,000.00 85,000.00 Explanation II: In accordance with the Circular on Revising and Issuing the 2019 Versions of General Corporate Financial Statement Templates (CAI KUAI [2019] No. 6], the accounting policy for thes e financial statement templated has been updated. In addition to the change of the items involved in the aforesaid standard, other statement items and the corres ponding amount affected are as follows : Description of the s tatement item s affected Amount affected Administrative expenses in the half year of 2018 (cons olidated financial Reduced byCNY statements ) 21,285,926.02 Increas ed byCNY R & D expens es in the half year of 2018 (consolidated financial statements ) 21,285,926.02 Administrative expenses in the half year of 2018 (the parent company's Reduced byCNY financials tatements ) 10,322,178.15 R & D expens es in the half year of 2018 (the parent company's financial Increas ed byCNY statements ) 10,322,178.15 Notes receivable and accounts receivable as at December 31, 2018 Reduced byCNY (cons olidated financialstatements ) 377,597,503.46 Increas ed byCNY Notes receivable as at Decem ber 31, 2018 (consolidated financials tatem ents) 7,051,846.85 Accounts receivable and accounts receivable as at December 31, 2018 Increas ed byCNY (cons olidated financialstatements ) 370,545,656.61 Notes payable and accounts payable as at December 31, 2018 (consolidated Reduced byCNY financials tatements ) 259,913,612.34 Accounts payable as at December 31, 2018 (consolidated financial Increas ed byCNY statements ) 259,913,612.34 Notes receivable and accounts receivable as at December 31, 2018 (the Reduced byCNY parent company's financials tatem ents) 737,636.38 Accounts receivable as at Decem ber 31, 2018 (the parent com pany's financial Increas ed byCNY statements ) 737,636.38 Notes payable and accounts payable as at December 31, 2018 (the Reduced byCNY Company's financialstatements ) 52,324,191.98 Increas ed byCNY Notes payable as at December 31, 2018 (the Company's financial statements) 52,324,191.98 Note: Explanation on the nam es and amount of the s tatem ent items significantlyaffected. (2) Change in si gnif icant accounting estimates Inapplicable (3) Adjustment of the relevant financial statements at the current year beginning according to the new standards for financial instruments, the new standards for revenues and the new standards for lease initially implemented Consolidated Balance Sheet In CNY Items December 31,2018 January01,2019 Amountinvolved in the adjustment Currentassets: Monetarycapital 164,828,059.97 164,828,059.97 Settlementreserve Inter-banklending Transactional financial assets The financialassetsmeasured at fair valueswith the change counted to the currentprofitand loss Derivative financial assets Notesreceivable 7,051,846.85 7,051,846.85 Accountsreceivable 370,545,656.61 370,545,656.61 Financing with accounts receivable Advance payment 13,666,816.33 13,666,816.33 Receivablepremium Reinsurance accountsreceivable Reserve for reinsurance contract receivable Other receivables 45,870,582.26 45,870,582.26 Including:Interestreceivable Dividendsreceivable Redemptorymonetarycapital for sale Inventories 1,782,306,301.70 1,782,306,301.70 Contractassets Held-for-sale assets Non-currentassetsdue withina year Other currentassets 73,703,312.24 73,703,312.24 Total currentassets 2,457,972,575.96 2,457,972,575.96 Non-currentassets: Loan issuing and advance in cash Equityinvestment Available-for-sale financialassets 85,000.00 -85,000.00 Other equityinvestment Held-to-due investments Long termaccountsreceivable Long-termequityinvestment 44,881,063.15 44,881,063.15 Investmentin other equity 85,000.00 85,000.00 instruments Other non-currentfinancial assets Investment-oriented real estate 377,319,433.03 377,319,433.03 Fixed assets 425,649,562.85 425,649,562.85 Construction-in-progress 12,041,126.00 12,041,126.00 Productive biological asset Oil and gasassets Use rightassets Intangibleassets 43,545,477.61 43,545,477.61 Developmentexpenses Goodwill Long-termexpensesto be 128,572,545.15 128,572,545.15 apportioned Deferred income tax asset 100,675,706.09 100,675,706.09 Other non-currentassets 8,949,160.42 8,949,160.42 Total non-currentassets 1,141,719,074.30 1,141,719,074.30 Total assets 3,599,691,650.26 3,599,691,650.26 Currentliabilities: Shorttermborrowings 547,118,452.97 547,118,452.97 Borrowingsfromcentralbank Loansfromother banks Transactional financial liabilities The financial liabilitiesmeasured atfair valueswith the change counted to the currentprofitand loss Derivative financial liabilities Notespayable Accountspayable 259,913,612.34 259,913,612.34 Advance receipts 16,459,445.00 16,459,445.00 Moneyfromsale ofthe repurchased financial assets Depositstaking and interbank placement Acting trading securities Income fromsecurities underwriting on commission Payroll payable to the employees 69,779,037.83 69,779,037.83 Taxespayable 55,923,171.92 55,923,171.92 Other payables 71,819,930.30 71,819,930.30 Including:interestpayable 772,351.26 772,351.26 Dividendspayable Service charge and commission payable Payable reinsurance Contractliabilities Held-for-sale liabilities Non-currentliabilitiesdue within a 347,470.00 347,470.00 year Other currentliabilities Total currentliabilities 1,021,361,120.36 1,021,361,120.36 Non-currentliabilities: Reserve for insurance contract Long-termborrowings 4,517,110.00 4,517,110.00 Bondspayable Including:preferred shares Perpetual bond Lease liabilities Long-termaccountspayable Long termpayroll payable to the employees Estimated liabilities Deferred income 3,672,855.36 3,672,855.36 Deferred income tax liability Other non-currentliabilities Total non-currentliabilities 8,189,965.36 8,189,965.36 Total liabilities 1,029,551,085.72 1,029,551,085.72 Owner’s equity: Capital stock 438,744,881.00 438,744,881.00 Other equityinstruments Including:preferred shares Perpetual bond Capital Reserve 1,062,455,644.22 1,062,455,644.22 Less:sharesin stock Other comprehensive income -5,442,139.78 -5,442,139.78 Special reserve SurplusReserve 223,015,793.80 223,015,793.80 Reserveagainstgeneral risks Retained earnings 851,360,603.66 851,360,603.66 Total owners’equityattributable to the 2,570,134,782.90 2,570,134,782.90 parentcompany Minorityshareholders’ equity 5,781.64 5,781.64 Total owner’sequity 2,570,140,564.54 2,570,140,564.54 Total liabilities andowners’ equity 3,599,691,650.26 3,599,691,650.26 Note to the Adjustment In March 2017, the Minis try of Finance promulgated the Circular on Printing and Issuing the Revised “Accounting Standards for Enterprises No.22–Recognition and Meas urem ent of Financial Instruments”, the Circular on Printing and Iss uing the Revised “Accounting Standards for Enterprises No.23–Transfer of Financial Assets”, the Circular on Printing and Iss uing the Revis ed “Accounting Standards for Enterpris es No.24–Hedging”; on May 2, 2017, the Ministry of Finance prom ulgated the Circular on Printing and Issuing the Revised “Accounting Standards for Enterprises No. 37–Pres entation of Financial Instruments ” and on June 15, 2018, Notice by the Minis tryof Finance of Revising and Iss uing the Format of 2018 Consolidated Financial Statements asked the lis ted companies of A-s hares to implement the updated standards for financial ins truments s eries and the new form at of presentation comm encing from January1, 2019. In accordance with the requirements of the updated standards for new financial instrument series, the Company adjuste d the “available -for-s ale financial assets” to “inves tment in otherequityinstruments ”based on the business modelof the Company's managem ent of financial ass ets and the contractual cash flow characteristics of financial assets . Balance Sheet, Parent Company In CNY Items Monday,December 31,2018 January01,2019 Amountinvolved in the adjustment Currentassets: Monetarycapital 137,175,466.27 137,175,466.27 Transactional financial assets The financialassetsmeasured at fair valueswith the change counted to the currentprofitand loss Derivative financial assets Notesreceivable Accountsreceivable 737,636.38 737,636.38 Financing with accounts receivable Advance payment Other receivables 870,739,378.37 870,739,378.37 Including:Interestreceivable Dividendsreceivable Inventories Contractassets Held-for-sale assets Non-currentassetsdue withina year Other currentassets 10,081,272.94 10,081,272.94 Total currentassets 1,018,733,753.96 1,018,733,753.96 Non-currentassets: Equityinvestment Available-for-sale financialassets 85,000.00 -85,000.00 Other equityinvestment Held-to-due investments Long termaccountsreceivable Long-termequityinvestment 1,376,129,654.08 1,376,129,654.08 Investmentin other equity 85,000.00 85,000.00 instruments Other non-currentfinancial assets Investment-oriented real estate 297,042,937.87 297,042,937.87 Fixed assets 297,517,472.81 297,517,472.81 Construction-in-progress 12,041,126.00 12,041,126.00 Productive biological asset Oil and gasassets Use rightassets Intangibleassets 35,337,052.82 35,337,052.82 Developmentexpenses Goodwill Long-termexpensesto be 4,500,638.97 4,500,638.97 apportioned Deferred income tax asset 952,857.33 952,857.33 Other non-currentassets 4,493,971.35 4,493,971.35 Total non-currentassets 2,028,100,711.23 2,028,100,711.23 Total assets 3,046,834,465.19 3,046,834,465.19 Currentliabilities: Shorttermborrowings 505,000,000.00 505,000,000.00 Transactional financial liabilities The financial liabilitiesmeasured atfair valueswith the change counted to the currentprofitand loss Derivative financial liabilities Notespayable Accountspayable 52,324,191.98 52,324,191.98 Advance receipts 1,636,520.02 1,636,520.02 Contractliabilities Payroll payable to the employees 11,589,634.34 11,589,634.34 Taxespayable 943,919.26 943,919.26 Other payables 57,997,397.28 57,997,397.28 Including:interestpayable 685,419.80 685,419.80 Dividendspayable Held-for-sale liabilities Non-currentliabilitiesdue within a year Other currentliabilities Total currentliabilities 629,491,662.88 629,491,662.88 Non-currentliabilities: Long-termborrowings Bondspayable Including:preferred shares Perpetual bond Lease liabilities Long-termaccountspayable Long termpayroll payable to the employees Estimated liabilities Deferred income 3,672,855.36 3,672,855.36 Deferred income tax liability Other non-currentliabilities Total non-currentliabilities 3,672,855.36 3,672,855.36 Total liabilities 633,164,518.24 633,164,518.24 Owner’sequity: Capital stock 438,744,881.00 438,744,881.00 Other equityinstruments Including:preferred shares Perpetual bond Capital Reserve 1,068,111,185.32 1,068,111,185.32 Less:sharesin stock Other comprehensive income Special reserve SurplusReserve 223,015,793.80 223,015,793.80 Retained earnings 683,798,086.83 683,798,086.83 Total owner’sequity 2,413,669,946.95 2,413,669,946.95 Total liabilities andowners’ equity 3,046,834,465.19 3,046,834,465.19 Note to the Adjustment In March 2017, the Ministry of Finance promulgated the Circular on Printing and Issuing the Revised “Accounting Standards for Enterprises No.22–Recognition and Meas urem ent of Financial Instruments”, the Circular on Printing and Iss uing th Revised “Accounting Standards for Enterpris es No.23–Transfer of Financial Assets ”, the Circular on Printing and Iss uing the Revised “Accounting Standards for Enterpris es No.24–Hedging”; on May 2, 2017, the Ministry of Finance prom ulgated the Circular on Printing and Issuing the Revised “Accounting Standards for Enterprises No. 37–Pres entation of Financial Instruments ” and on June 15, 2018, Notice by the Ministryof Finance of Revising and Issuing the Format of 2018 Consolidated Financial Statements asked the lis ted companies of A-s hares to implement the updated standards for financial ins truments s eries and the new format of presentation comm encing from January1, 2019. In accordance with the requirements of the updated standards for new financial instrument series, the Company adjusted the “available-for-s ale financial assets” to “inves tment in otherequityinstruments ” based on the business modelof the Company's management of financial ass ets and the contractual cash flow characteristics of financial assets . (4) Note to the retroactive adjustment of the previous comparative data according to the new standards from financial instruments and the new standards for lease initiallyimplemented Items to be adjusted Amountinvolved in the adjustment Add the item of credit impairment loss to the income statement, and re cla ssify Du ring the reporting period, the credit impairment loss amounted to CNY part of the impairment loss of assets related to receivables to the credit-3,081,768.89, the asset impairment loss of the previous period was adjusted impairmentloss down by CNY -5,178,800.41 and credit impairment loss was adjusted up by CNY5,178,800.41. Note: When the Companymakes retrospective adjustment of the am ount involved in the first implementation of the new accountingstandards and adjus ts the comparison data of the previous period, it was necessaryto disclose the name and adjustm ent amount of the financialstatement items involved in the adjustm ent. 45. Others Inapplicable VI. Taxation 1. Types of m ajor taxes and taxrates Type of taxes Tax basis Tax rates For tax able income, the outputVATis calculated based on the rate of13% and the Value-added tax VATis calculated and paid based on the 13% difference after deduction ofthe inputVAT offsetable in the very period. For the high-grade watch at the price higher than CNY 10,000 (w ith C NY 10,000 inclusive) C onsump ti on tax imported or produced, the consumption tax is 20% calculated and pay abl e. The urban maintenance and construction tax is U rban maintenance and construc tion tax based on 7% ofthe turnover tax actually paid 7% C orpor ation income tax Taxable inc ome amount 15%-30% Real estate tax 1.2% of70% ofthe costofthe property or 12% 1.2% and 12% of the rental inc ome In case there exist taxpayers subject to different corporate incom e taxrates , disclose the information. Taxpayers Income tax rates The Company (Notes① and ②) 25% H armony (Notes①) 25% the Manufacture Co. (Notes② and ③) 15% FIYTA Hong Kong (N ote ④) 16.5% Station-68 (Note ④) 16.5% the Technology C o. (N otes② and ③) 15% SHIYUEHUI (N ote ⑤) 25% H arbin C o. (Note ⑤) 25% Emile C houri e t(Shenzhen) Limited (N ote ⑤) 25% The Sales Co. (Notes① and ⑤) 25% H engda rui (Note ⑤) 25% Switzerland Company (N ote ⑥) 30% 2. Tax Preferences (1) Enterprise Income Tax Note ①: According to the regulations stated in GuoShuiFa (2008) No. 28, “Interim Adm inis tration Method for Levy of Corporate Incom e Taxto Enterpris e that Operates Cross-regionally”, the head office of the Companyand its branch offices , the head office of HARMONY Company and its branch offices adopt tax s ubmiss ion method of “unified calculation, managing by classes, pre-paid in its registered place, settlement in total, and adjustment by finance authorities” s tarting from 1 January2008. 50% is shared and prepaid bybranches and 50% is prepaid bythe headquarters . Note ②: According to the Notice of Improving R & D Expense Pre-tax Weighted Deduction Policy (CAI SHUI (2015) No. 119 prom ulgated by the Science and Technology Departm ent of State Administration of Taxation, the R & D expens es arising from development of new technology, new products and new process in the Company, the Manufacture Company and the TechnologyCompanymayenjoy50% weighted deductionas the R &D expenses bas ed on thespecified deduction according to fact as long as they have not formed intangible ass ets and counted to the current gains and loss; Note ③: The company enjoys the “income tax rate exclusion of high-tech enterprises enjoying the key support from the s tate”; Note ④: These companies are regis tered in Hong Kong and the income tax rate of Hong Kong applicable is 16.50% this year; Note ⑤:According to the People's Republic of China Enterprise Income TaxLaw, the income taxrate is 25% for res idential enterprises since 1 January2008; Note ⑥: The taxrate of 30% is applicable for Swiss companies as it was regis tered in Switzerland. (2) Propertytax According to Article 2 of the Circular on Transm iss ion of the Provisions on the Policy in Connection with the Property Tax and Urban Land Use Tax Prom ulgated bythe State Adminis tration of Taxation (SHEN DI SHUI FA[2003] No. 676: for the new properties newly cons tructed or purchas ed by taxpayers, the property tax may be exempted for three years commencing from the next m onth after completion of the construction or purchase. Our FIYTA Watch Building located at Guangming New Zone of Shenzhen enjoys exemption from the property tax for three years commencing from the next month of completion of the cons truction. 3. Others Inapplicable VII. Notes to items of consolidated f inancial statements 1. Monetarycapital In CNY Items Ending balance Opening balance C ash in stock 225,027.58 420,783.85 Bank deposit 223,207,376.62 160,135,454.62 Other Monetary Funds 3,089,148.22 4,271,821.50 Total 226,521,552.42 164,828,059.97 Including: total amountdeposited overseas 8,012,479.02 9,192,653.31 Other notes Of other monetaryfund, CNY1,575,000.00 (December31, 2018: CNY1,575,000.00)was themargin deposits deposited by the Com panyfor application to banks for unconditional and irrevocable letter of guarantee, of which CNY630,000.00 was judiciallyfrozen due to litigation matters. 2. Transactional financial assets Inapplicable 3. Derivative financial assets Inapplicable 4. Notes receivable (1) Presentation of classification of notes receivable In CNY Items Ending balance Opening balance Bank acceptance 2,105,700.57 0.00 Trade acceptance 7,835,290.95 7,051,846.85 Total 9,940,991.52 7,051,846.85 (2) Bad debt provision accrual, received or reversed in the reporting period Inapplicable (3) Notes receivable already pledged by the Company at the end of the reporting period Inapplicable (4) Endorsed or discounted notes receiv able at the end of the reproting period, but not yet due on the balance sheet date Inapplicable (5) Note s transferred to re ceivables due to issuer’s default at the end of the reporting period Inapplicable (6) Notes receivable actually written off in current period Inapplicable 5. Accounts receivable (1) Accounts re ceivables disclosed by types In CNY Endingbalance Opening balance Bookbalance Bad debtreserve Bookbalance Bad debtreserve Categories Provision Bookvalue Provision Bookvalue Amount Proportion Amount Amount Proportion Amount proportion proportion Accountsreceivable for which bad debtreserve has 1,799,519.78 0.39% 1,799,519.78 100.00% 0.00 1,799,519.78 0.47% 1,799,519.78 100.00% 0.00 been provided basedon individual items in which Accountsreceivable with significantsingle amount 1,702,371.94 0.37% 1,702,371.94 100.00% 0.00 1,702,371.94 0.44% 1,702,371.94 100.00% 0.00 and provision ofbad debt reserve on individual basis Accountsreceivable with insignificantsingleamount 97,147.84 0.02% 97,147.84 100.00% 0.00 97,147.84 0.03% 97,147.84 100.00% 0.00 and provision ofbad debt reserve on individual basis Accountsreceivable for which bad debtreserve has 461,793,096. 13,670,980.9 448,122,115. 381,434,944. 10,889,287.4 99.61% 2.96% 99.53% 2.85% 370,545,656.61 been provided basedon 56 7 59 02 1 portfolios in which 251,194,196. 13,670,980.9 237,523,215. 189,655,491. 10,889,287.4 Group ofaging 54.18% 5.44% 49.49% 5.74% 178,766,203.67 43 7 46 08 1 210,598,900. 210,598,900. 191,779,452. Specificfund portfolio 45.43% 0.00 0.00 50.04% 0.00 0.00 191,779,452.94 13 13 94 463,592,616. 15,470,500.7 448,122,115. 383,234,463. 12,688,807.1 Total 100.00% 3.34% 100.00% 3.31% 370,545,656.61 34 5 59 80 9 Provis ion for bad debt based on individual items:Accounts receivable with s ignificant single amount and provision of bad debt reserve on separate basis In CNY Ending balance N ame Book balance Bad debtreserve Provision proportion Provision reas on Due poor operation of the Xi'an C entury Ginwa shopping mall, itis less Qujiang Shopping Center 1,702,371.94 1,702,371.94 100.00% C o., Ltd. likely to recover paymentfor goods Total 1,702,371.94 1,702,371.94 -- -- Provis ion for bad debt based on individual items:Accounts receivable with insignificants ingle amount but provision of bad debt reserve on separate basis In CNY Ending balance N ame Book balance Bad debtreserve Provision proportion Provision reas on Shenzhen Number One Shop Co., Ltd. 97,147.84 97,147.84 100.00% U nrecoverable Total 97,147.84 97,147.84 -- -- Provis ion for bad debt based on portfolio: Specific fund portfolio In CNY Ending balanc e Name Book balanc e Bad debtreserve Prov ision proportion Specific fund portfolio 210,598,900.13 0.00 0.00 Total 210,598,900.13 0.00 -- Note to the basis for determining the combination: Based on historical experience, the Company’s receivables due from petty cash paid to employees , receivables due from s ubsidiaries of the Company and accounts receivable for the s ales between the las t settlement date of the sam e department s tore and the balance sheet date are with high recoverability and low possibility of incurring bad debt, as a result, no bad debt provisions are provided for such receivables . For the provision for bad debts of accounts receivable m ade according to the generalmodel of the expected credit losses, please refer to the relevant information about the disclosure of provision for bad debt in the way of disclos ing other receivables: Bad debtreserve The 1ststage The 2nd stage The 3rd stage Total Predicted creditlossin the Predicted creditlossin the whole Predicted creditlossin the whole future 12 months duration (no creditimpairmenttaken duration (creditimpairmentalready place) taken place) BalanceasatJanuary1,2019 12,688,807.19 12,688,807.19 BalanceasatJanuary1,2019 —— —— —— —— during the reporting period -- transferred to the 2nd stage -- transferred to the 3rd stage -- reversed to the 2nd stage -- reversed to the 1ststage Provision in the reporting period 2,819,885.29 2,819,885.29 Reversal in the reporting period 38,191.73 38,191.73 Charged-offin the reporting period Written-offin the reportingperiod Other changes BalanceasatJune 30,2019 15,470,500.75 15,470,500.75 Disclosed based on aging In CNY Aging Ending balance Within 1 y ear (w ith 1 year inclusive) 244,101,929.86 1 to 2 years 4,476,538.60 2 to 3 years 1,322,754.44 Ov er 3y ears 1,292,973.53 Total 251,194,196.43 (2) Provision, recovery or reversal of reserve for bad debts during the reporting period Provis ion for bad debt during the reporting period In CNY Amountofmovementduring the reporting period C ateg ories Opening balance Amountrecovered or Ending balance Provision reversed Written-off Accounts receivable w ith signific antsingle amountand provision 1,702,371.94 0.00 0.00 0.00 1,702,371.94 ofbad debtreserve on separate basis Accounts receivable w ith insignificant 97,147.84 0.00 0.00 0.00 97,147.84 amountand provision ofbad debtreserve on separate basis Group of aging 10,889,287.41 2,819,885.29 38,191.73 0.00 13,670,980.97 Total 12,688,807.19 2,819,885.29 38,191.73 0.00 15,470,500.75 (3) Accounts receivable actually written off in current period Inapplicable (4) Accounts receivable due from the top five debtors are as follows: Total accounts receivable due from the top five debtors of the Company in the current period is CNY51,743,736.88, accounting for 11.16% of the totalaccounts receivableas at the end of the current period and the totalprovision for bad and doubtful debts made as at the end of the current period is CNY2,587,186.85. (5)Accounts receivable term inated for recognition due to trans fer of financial assets Inapplicable (6)Amount of assets , liabilities form ed bytrans fer of accounts receivable and continuing to be involved Inapplicable 6. Financing with accounts receivable Inapplicable 7. Advance payments (1)Advance paym ents are pres ented based on ages In CNY Ending balance Opening balance Aging Amount Proportion Amount Proportion Within 1 y ear 21,301,410.87 82.46% 12,886,273.93 94.29% 1 to 2 years 2,868,479.09 11.10% 0.00 0.00 2 to 3 years 1,014,446.65 3.93% 780,542.40 5.71% Ov er 3y ears 649,029.90 2.51% 0.00 0.00 Total 25,833,366.51 -- 13,666,816.33 -- (2)Advance paym ent to the top five payees of the ending balance collected based on the payees of the advance paym ent Inapplicable 8. Other receivables In CNY Items Ending balance Opening balance Other rec eivables 62,591,073.25 45,870,582.26 Total 62,591,073.25 45,870,582.26 (1) Interest receivable Inapplicable (2) Dividends receivable Inapplicable (3) Other receivables 1) Classification of other receivables based on nature of payment In CNY N atur e ofPayment Ending book balance Opening book balance Reserve for employees 5,096,955.76 2,478,447.48 C ollatera l and Deposit 42,447,660.48 38,091,767.87 C ommodi ty promotion 1,959,416.00 7,827,524.03 Guarantee for property suit 8,958,057.64 0.00 Repurchase paymentfrom securities brokers 3,327,401.11 0.00 Others 11,236,826.69 7,510,384.99 Total 73,026,317.68 55,908,124.37 2) Provision for bad debts The 1ststage The 2nd stage The 3rd stage Bad debtreserve Predicted creditlossin the whole Predicted creditlossin the whole Total Predicted creditlossin the duration (no creditimpairmenttaken duration (creditimpairmentalready future 12 months place) taken place) BalanceasatJanuary1,2019 10,037,542.11 10,037,542.11 BalanceasatJanuary1,2019 —— —— —— —— during the reporting period -- transferred to the 2nd stage -- transferred to the 3rd stage -- reversed to the 2nd stage -- reversed to the 1ststage Provision in the reporting period 453,051.98 453,051.98 Reversal in the reporting period 55,349.66 55,349.66 Charged-offin the reporting period Written-offin the reportingperiod Other changes BalanceasatSunday,June30, 10,435,244.43 10,435,244.43 2019 Disclosed based on aging In CNY Aging Ending balance Within 1 y ear (w ith 1 year inclusive) 58,700,727.02 1 to 2 years 6,429,749.30 2 to 3 years 6,489,591.36 Ov er 3y ears 1,406,250.00 Total 73,026,317.68 3) Provision, recovery or reversal of reserve for bad debts during the reporting period Provis ion for bad debt during the reporting period In CNY Amountofmovementduring the reporting period Categories Opening balance Amountrecov ered or Ending balance Provision reversed Other rec eivables with significantsingle amount 7,093,237.65 96,353.71 0.00 7,189,591.36 and prov ision ofbad debt reserve on individual basis Other rec eivables with insignificantsingle amount butprovision ofbad debt 565,400.00 0.00 0.00 565,400.00 reserve on individual basis Group of aging 2,378,904.46 356,698.27 55,349.66 2,680,253.07 Total 10,037,542.11 453,051.98 55,349.66 10,435,244.43 4) Accounts receivable actually written off in the reporting period Inapplicable 5) Other receivables owed bythe top five debtors based on t he ending balance In CNY Proportion in total Ending balance ofthe Company name Nature ofPay ment Ending balanc e Aging ending balance of other receivables prov ision for bad debts BeatBlattman Paymentfor goods 4,103,512.16 Over 3years 5.62% 4,103,512.16 Marketing C hina Resourc es Depositin security 3,059,224.00 Within 1 year 4.19% 152,961.20 (Shenzhen) Co., Ltd Liberty Time Center GmbH Paymentfor goods 2,286,079.20 Over 3years 3.13% 2,286,079.20 CH INA RESOURC ES SUN HUNG KAI PROPERTIES Depositin security 1,672,563.00 Within 1 year 2.29% 83,628.15 (H ANGZHOU) LIMITED Shenzhen Yitian Depositin security 1,145,523.00 Within 1 year 1.57% 57,276.15 H oliday Plaza C o,. Ltd. Total -- 12,266,901.36 -- 16.80% 6,683,456.86 6) Accounts receivable involving government subsidy Inapplicable 7) Other receivables with recognition terminated due to transfer of financial assets Inapplicable 8) Amount of assets and liabilities formed through transfer of other receivables and continuing to be involved Inapplicable 9. Inventories Has the newstandard for income been implemented No (1) Classification of inventories In CNY Ending balance Opening balance Items Prov ision for price Provision for price Book balance falling Book value Book balance falling Book value Raw materials 167,245,372.54 28,350,027.04 138,895,345.50 183,679,226.95 28,296,729.51 155,382,497.44 Products in process 10,557,912.97 0.00 10,557,912.97 10,787,777.81 0.00 10,787,777.81 C ommodi ti es in 1,634,849,921.44 56,901,087.38 1,577,948,834.06 1,675,548,898.56 59,412,872.11 1,616,136,026.45 stock Total 1,812,653,206.95 85,251,114.42 1,727,402,092.53 1,870,015,903.32 87,709,601.62 1,782,306,301.70 Does the Companyneed to complywith the requirem ents on dis clos ure according to the Guidance of Shenzhen Stock Exchange on Disclosure of Information of the IndustryEngaged in No. 4 - Listed Companies Engaged in Seed Industry, Cultivation? No (2) Reserve for Price Falling of Inventorie s In CNY Increase in the reporting period Decrease in the reporting period Items Opening balance Rev ersal or Ending balance Provision Others Offset Others Raw materials 28,296,729.51 0.00 53,297.53 0.00 0.00 28,350,027.04 C ommodi ti es in 59,412,872.11 0.00 2,956.13 2,514,740.86 0.00 56,901,087.38 stock Total 87,709,601.62 0.00 56,253.66 2,514,740.86 0.00 85,251,114.42 (3) Note to the amount of capitalized borrowing costs involved in the ending balance of inventories Inapplicable (4) Assets already completed but not yet settled formed in the construction contract at the end of the reporting period Inapplicable 10. Contract assets Inapplicable 11. Classified as assets held for sale Inapplicable 12. Non-current assets due within a year Inapplicable 13. Other current assets Has the newstandard for income been implemented No In CNY Items Ending balance Opening balance InputVAT to be offset 33,834,787.17 52,444,448.67 Income tax paid in advance 543,648.10 7,846,471.11 Others 11,688,034.67 13,412,392.46 Total 46,066,469.94 73,703,312.24 14. Equityinvestment Inapplicable 15. Other equityinvestment Inapplicable 16. Long term accounts receivable (1) About long term accounts receivable Inapplicable (2) Long term account receivable with recognition terminated due to transfer of financial assets Inapplicable (3) Amount of assets and liabilities f ormed through transfer of long term account receivable and continuing to be involved Inapplicable 17. Long-term equity investments In CNY Increase/Decrease (+ /-) in the reporting period Income from Announced Ending equity Other for balance of Opening Ending Investees Additional Decrease of investment comprehensive Other equity distributing Provision for the provision balance Others balance investment investment recognized income movement cash impairment for under equity adjustment dividendor impairment method profit I.JointVenture II.Associates Shanghai Watch IndustryCo., 44,881,063.15 0.00 0.00 1,531,310.06 0.00 0.00 0.00 0.00 0.00 46,412,373.21 0.00 Ltd. (Shanghai Watch) Sub-total 44,881,063.15 0.00 0.00 1,531,310.06 0.00 0.00 0.0 0.00 0.00 46,412,373.21 0.00 Total 44,881,063.15 0.00 0.00 1,531,310.06 0.00 0.00 0.00 0.00 0.00 46,412,373.21 0.00 18. Investment in other equity instruments Inapplicable 19. Other non-current financial assets Inapplicable 20. Investment based real estate (1) Investm ent propertym easured based on the costm ethod In CNY Items Plantand buildings Land use right Construction-in-process Total I.Original bookvalue 546,695,433.81 0.00 0.00 546,695,433.81 1.Opening balance 546,695,433.81 0.00 0.00 546,695,433.81 2.Increase in the reportingperiod (1) Purchased (2) Inventories\fixed assets/construction- in– process transferred in (3) Increase ofenterprise consolidation 3.Amountdecreased in the reporting period (1) Disposal (2) Other transfer out 4.Ending balance 546,695,433.81 0.00 0.00 546,695,433.81 II.Accumulative depreciation and accumulative amortization 1.Opening balance 169,376,000.78 0.00 0.00 169,376,000.78 2.Increase in the reportingperiod 6,852,211.34 0.00 0.00 6,852,211.34 (1) Provision oramortization 6,852,211.34 0.00 0.00 6,852,211.34 3.Amountdecreased in the reporting period (1) Disposal (2) Other transfer out 4.Ending balance 176,228,212.12 0.00 0.00 176,228,212.12 III. Provision for impairment 1.Opening balance 2.Increase in the reportingperiod (1) Provision 3.Amountdecreased in the reporting period (1) Disposal (2) Other transfer out 4.Ending balance IV. Bookvalue 1.Bookvalue atthe end ofthe 370,467,221.69 0.00 0.00 370,467,221.69 reporting period 2.Bookvalue atthe beginning of 377,319,433.03 0.00 0.00 377,319,433.03 the reporting period (2) Investment property measured based on fair value Inapplicable (3) Investment property that does not have certificate for property right Inapplicable 21. Fixed asset In CNY Items Ending balance Opening balance Fix ed assets 414,522,443.81 425,649,562.85 Total 414,522,443.81 425,649,562.85 (1) About fixed assets In CNY Items Plant&buildings Machinery&equipment Motor vehicle Electronicequipment Other equipment Total I.Original bookvalue 1.Opening balance 458,621,315.96 80,799,655.00 15,572,717.72 44,137,536.41 58,422,164.62 657,553,389.71 2.Increase in the 652,992.91 2,232,519.28 0.00 397,625.55 1,186,820.07 4,469,957.81 reporting period (1) Purchase 652,992.91 2,232,519.28 0.00 397,625.55 1,186,820.07 4,469,957.81 (2) Construction-in-process transferred in (3) Increase of enterprise consolidation 3.Amount decreased in the 68,681.52 959,530.62 706,638.00 734,427.91 1,293,798.83 3,763,076.88 reporting period (1) Disposal or 68,681.52 959,530.62 706,638.00 734,427.91 1,293,798.83 3,763,076.88 scrapping 4.Ending balance 459,205,627.35 82,072,643.66 14,866,079.72 43,800,734.05 58,315,185.86 658,260,270.64 II.Accumulative depreciation 1.Opening balance 97,899,718.69 43,012,974.47 13,664,912.06 28,707,685.36 48,618,536.28 231,903,826.86 2.Increase in the 7,193,596.75 3,569,439.07 356,775.98 2,382,887.27 1,515,801.29 15,018,500.36 reporting period (1) Provision 7,193,596.75 3,569,439.07 356,775.98 2,382,887.27 1,515,801.29 15,018,500.36 3.Amount decreased in the 14,817.35 670,153.70 671,306.10 642,750.80 1,185,472.44 3,184,500.39 reporting period (1) Disposal or 14,817.35 670,153.70 671,306.10 642,750.80 1,185,472.44 3,184,500.39 scrapping 4.Ending balance 105,078,498.09 45,912,259.84 13,350,381.94 30,447,821.83 48,948,865.13 243,737,826.83 III. Provision for impairment 1.Opening balance 2.Increase in the reporting period (1) Provision 3.Amount decreased in the reporting period (1) Disposal or scrapping 4.Ending balance IV. Bookvalue 1.Bookvalue atthe 354,127,129.26 36,160,383.82 1,515,697.78 13,352,912.22 9,366,320.73 414,522,443.81 end ofthe reporting period 2.Bookvalue atthe beginningofthe 360,721,597.27 37,786,680.53 1,907,805.66 15,429,851.05 9,803,628.34 425,649,562.85 reporting period (2) About temporarily idle fixed assets Inapplicable (3) Fixed assets rented through finance lease Inapplicable (4) Fixed assets leased through operating lease Inapplicable (5) Fixed assets that do not have certificate for propertyright In CNY Items Book value The reason w hy the property ow nershi p certificate has notbeen granted Offic e occupancy ofHarbin Office 263,188.43 There existed problem in ownership Property belonging to Zhengzhou Office 5,986,023.77 In proc ess of handling the procedures (6) Disposal of fixed assets Inapplicable 22. Construction-in- process In CNY Items Ending balance Opening balance C onstruction-in-progress 12,886,665.68 12,041,126.00 Total 12,886,665.68 12,041,126.00 (1)About construction in progress In CNY Ending balance Opening balance Items Book balance Impairmentreserve Book value Book balance Impairmentreserve Book value FIYTA Watch Building supporting 12,886,665.68 0.00 12,886,665.68 12,041,126.00 0.00 12,041,126.00 w orks Total 12,886,665.68 0.00 12,886,665.68 12,041,126.00 0.00 12,041,126.00 (2) Movements of important construction-in-progress projects in the reporting period In CNY Including: Transferred Proportion of Accumulativ amountof Other Interest Increase in into the the e amount the decreases capitalizatio Project Opening the fixed assets Ending accumulative Project involved in capitalized Capital Budget in the n rate in the name balance reporting in the balance engineering progress interest interestin source reporting reporting period current inputin the capitalizatio the year period period budget n reporting period FIYTA Watch 34,050,900. 12,041,126. 12,886,665. Self-raised Building 845,539.68 0.00 0.00 37.85% 100% 0.00 0.00 0.00 00 00 68 fund supporting works 34,050,900. 12,041,126. 12,886,665. Total 845,539.68 0.00 0.00 -- -- 0.00 0.00 0.00 -- 00 00 68 (3) Provision for impairment of construction in progress in the current period Inapplicable (4) Engineering materials Inapplicable 23. Productive biological asset (1) Productive biological asset byusing the cost measurement model Inapplicable (2) Productive biological asset byusing the fair value measurement model Inapplicable 24. Oil and Gas Assets Inapplicable 25. Use right assets Inapplicable 26. Intangible assets (1) About the intangible assets In CNY Items Land use right PatentRight Non-patenttechnology Software system Trademarkrights Total I.Original bookvalue 1.Opening 34,933,822.40 0.00 0.00 23,887,215.08 10,093,308.61 68,914,346.09 balance 2.Increase in the 0.00 0.00 93,469.34 871,572.00 965,041.34 reporting period (1) Purchase 0.00 0.00 93,469.34 871,572.00 965,041.34 (2) Internal R &D (3) Increase of enterprise consolidation 3.Amount decreased in the reporting period (1) Disposal 4.Ending balance II.Accumulative amortization 1.Opening 13,581,708.89 0.00 0.00 8,076,111.69 3,711,047.90 25,368,868.48 balance 2.Increase in the 366,776.65 0.00 0.00 2,206,057.05 459,814.14 3,032,647.84 reporting period (1) Provision 366,776.65 0.00 0.00 2,206,057.05 459,814.14 3,032,647.84 3.Amount decreased in the reporting period (1) Disposal 4.Ending balance 13,948,485.54 0.00 0.00 10,282,168.74 4,170,862.04 28,401,516.32 III. Provision for impairment 1.Opening balance 2.Increase in the reporting period (1) Provision 3.Amount decreased in the reporting period (1) Disposal 4.Ending balance IV. Bookvalue 1.Bookvalue at the end ofthe reporting 20,985,336.86 0.00 0.00 13,698,515.68 6,794,018.57 41,477,871.11 period 2.Bookvalue at the beginning ofthe 21,352,113.51 0.00 0.00 15,811,103.39 6,382,260.71 43,545,477.61 reporting period (2) About the land use right that does not have certificate of tit le Inapplicable 27. Development expenditure Inapplicable 28. Goodwill (1) Original book value of the goodwill Inapplicable (2) Provision for impairment of the goodwill Inapplicable 29. Long term expenses to be apportioned In CNY Items Opening balance Increas e in the Amountamortized in Other decrease Ending balance reporting period the reporting period C harge of fabrication of special counters 49,305,000.10 14,718,343.28 20,893,290.14 0.00 43,130,053.24 Refurbishment 74,651,287.13 21,714,834.94 14,319,441.48 0.00 82,046,680.59 ex penses Marketpromotion 0.00 9,245,282.81 2,083,333.34 0.00 7,161,949.47 Others 4,616,257.92 1,740,660.12 1,159,891.49 0.00 5,197,026.55 Total 128,572,545.15 47,419,121.15 38,455,956.45 0.00 137,535,709.85 30. Deferred income tax asset/deferred income tax liability (1) Deferred income tax asset without offsetting In CNY Ending balance Opening balance Items Offsetable provisional Offsetable provisional difference Deferred income tax asset difference Deferred income tax asset Assetimpairmentreserve 64,862,735.35 17,749,843.25 79,775,704.17 17,676,690.28 U nrealized profitfrom the 294,735,562.07 59,547,817.25 272,840,911.63 67,717,517.83 intracompany transactions Offsetable loss 23,096,749.97 5,077,613.81 61,529,125.81 14,363,284.14 Deferred income 3,672,855.36 918,213.84 3,672,855.36 918,213.84 Total 386,367,902.75 83,293,488.15 417,818,596.97 100,675,706.09 (2) Deferred income tax liabilit ies without offsetting Inapplicable (3) Deferred income tax asset or liabilities stated with net amount after offsetting In CNY Amountmutually offset Amountmutually offset between the deferred Ending balance ofthe between the deferred Opening balance of the Items income tax assets and deferred income tax asset income tax assets and deferred income tax asset liabilities at the end ofthe or liabilities after offsetting liabilities at the beginning of or liabilities after offsetting reporting period the reporting period Deferred income tax asset 0.00 83,293,488.15 0.00 100,675,706.09 (4) State ment of deferred income tax asset not recognized In CNY Items Ending balance Opening balance Offsetable provisional difference 0.00 0.00 Offsetable loss 69,044,760.33 65,181,936.05 Provision for impairmentofassets 30,788,147.42 30,660,246.75 Total 99,832,907.75 95,842,182.80 Note: The Swiss Co., one of the Com pany’s sub-subsidiaries, has not recognized the deferred incom e tax income as it is indefinite whether it can obtain enough amount of taxable income in future. Offs etable loss of the income tax ass ets: FIYTA Hong Kong, one of the Company's subsidiaries , is not necess ary to recognize the deferred incom e taxas set for provision for impairment of assets according to the local taxpolicy (5) Unrecognized deferred income tax asset available for offsetting loss is going to expire in the following years Inapplicable 31. Other non-current assets Has the newstandard for income been implemented No In CNY Items Ending balance Opening balance Advance paymentfor engineering w orks and equipment 7,297,788.01 8,949,160.42 Total 7,297,788.01 8,949,160.42 32. Short te rm loans (1) Classification of short -te rm loans In CNY Items Ending balance Opening balance Secured loan 30,078,332.26 187,118,452.97 C reditloan 520,000,000.00 360,000,000.00 Total 550,078,332.26 547,118,452.97 (2)Short-term loans overdue but still remaining outstanding Inapplicable 33. Transactional financial liabilities Inapplicable 34. Derivative financial liabilities Inapplicable 35. Notes payable Inapplicable 36. Accounts payable (1) Statement of accounts payable In CNY Items Ending balance Opening balance Paymentfor goods 146,930,733.24 188,957,240.00 Paymentfor materials 54,055,696.55 18,632,180.36 Engineering fees 26,696,117.76 52,324,191.98 Total 227,682,547.55 259,913,612.34 (2) Significant accounts payable with age exceeding 1 year Inapplicable 37. Advance Receipts (1) Statement of advances from customers In CNY Items Ending balance Opening balance Paymentfor goods 14,770,379.61 14,822,924.98 Rent 3,252,081.05 1,636,520.02 Total 18,022,460.66 16,459,445.00 (2) Significant advances from customers with age exceeding 1 year Inapplicable 38. Contract liabilities Inapplicable 39. Employee remuneration payable (1) Statement of employee remuneration payable In CNY Increase in the reporting Decrease in the reporting Items Opening balance period period Ending balance I. Shortterm remuneration 63,805,316.88 272,491,338.67 292,637,143.21 43,659,512.34 II. Post-employmentbenefit program - defined 5,973,720.95 22,090,963.73 23,142,138.67 4,922,546.01 contribution plan. Total 69,779,037.83 294,582,302.40 315,779,281.88 48,582,058.35 (2) Presentation of short term remuneration In CNY Items Opening balance Increase in the reporting Decrease in the reporting Ending balance period period 1. Salaries, bonus, 63,307,013.46 242,746,533.20 262,946,115.16 43,107,431.50 allowanc es and subsidies 2. Staff’s welfare 0.00 5,795,147.74 5,795,147.74 0.00 3. Social security premium 0.00 9,967,657.28 9,916,381.28 51,276.00 Including: m edic al insurance premium 0.00 8,869,151.88 8,827,318.88 41,833.00 Work injury 0.00 357,040.05 350,766.05 6,274.00 insurance Maternity 0.00 741,465.35 738,296.35 3,169.00 Insurance 4. Public reserve for housing 0.00 8,518,713.97 8,518,713.97 0.00 5. Trade union fund and 498,303.42 3,849,765.11 3,847,263.69 500,804.84 staff education fund 6. Short-term paid leave 0.00 1,613,521.37 1,613,521.37 0.00 Total 63,805,316.88 272,491,338.67 292,637,143.21 43,659,512.34 (3) Presentation of the defined contribution plan In CNY Items Opening balance Increase in the reporting Decrease in the reporting Ending balance period period 1. Basic endowment 473,251.38 20,675,747.29 21,030,867.66 118,131.01 insurance premium 2. Unemploymentinsurance premium 0.00 552,469.46 548,054.46 4,415.00 3. Contribution to the 5,500,469.57 862,746.98 1,563,216.55 4,800,000.00 enterpris e annuity scheme Total 5,973,720.95 22,090,963.73 23,142,138.67 4,922,546.01 40. Taxes payable In CNY Items Ending balance Opening balance Value-added tax 12,738,306.56 32,344,121.18 C onsump ti on tax -153,015.94 0.00 Enterprise Income Tax 15,900,477.46 21,599,264.54 Individual income tax 1,812,507.91 998,190.73 U rban maintenance and construc tion tax 366,990.40 321,914.01 Real estate tax 1,370,185.18 248,795.56 Education Surcharge 262,286.98 229,955.09 Others -259,753.75 180,930.81 Total 32,037,984.80 55,923,171.92 41. Other payables In CNY Items Ending balance Opening balance Interestpayable 740,561.84 772,351.26 Other payables 91,573,312.72 71,047,579.04 Total 92,313,874.56 71,819,930.30 (1) Interest payable In CNY Items Ending balance Opening balance Interestpayable for shortterm loan 740,561.84 772,351.26 Total 740,561.84 772,351.26 (2) Dividend payable Inapplicable (3) Other payables 1) Other payments stated based on nature of fund In CNY Items Ending balance Opening balance C ollatera l and Deposit 33,429,349.06 22,954,307.95 Fund for shop-frontactiv ities 1,939,718.66 17,461,589.65 Personal account pay able 20,580,376.18 3,058,122.71 Refurbishment 5,100,755.67 6,096,460.99 Dow n pay ment 387,531.46 612,659.73 Others 30,135,581.69 20,864,438.01 Total 91,573,312.72 71,047,579.04 2) Other payables in significant amount and with aging over 1 year In CNY Items Ending balance Cause of failure in repaymentor carry-over Shenzhen TencentComputer Sy stem C o., Ltd . 4,693,429.16 Deposit for property lease Shenzhen Qianhai Zubao N etw ork Technology C o., Ltd. 1,877,815.24 Deposit for property lease SHENZH EN C OMENMEDICAL 1,059,236.96 Deposit for property lease INSTRUMENTS CO., LTD. Shenzhen Zhongshen Commercial Property Service C o.,Ltd. 903,166.80 Deposit for property lease Oracle Researc h & Development 804,000.00 Deposit for property lease C ente r(She nzh en) Co.,Ltd Total 9,337,648.16 -- 42. Held-for-sale liabilities Inapplicable 43. Non-current liabilities due within a year In CNY Items Ending balance Opening balance Long-term liabilities due within a year 352,790.00 347,470.00 Total 352,790.00 347,470.00 44. Othe r current liabilities Inapplicable 45. Long-term Loan (1) Classification of Long-term Borrowings In CNY Items Ending balance Opening balance Mortgage loan 4,409,875.00 4,517,110.00 Total 4,409,875.00 4,517,110.00 Notes to class ification of long term borrowings : (1) The Companyhas no overdue and outs tanding long term borrowing. (2) The Companyhas nosecured borrowings in the balance of the long term borrowings during the reporting period Other notes , including the interest rate interval: The interes t rate of long term borrowings is 3.00%. 46. Bonds Payable (1) Bonds payable Inapplicable (2) Increase/De cre ase of bonds payable (excluding other financial instruments classified as financial liabilities, such as preferred share s, perpe tual bonds, etc.) Inapplicable (3) Note to the conditions and time of share conversion of convertible company bonds Inapplicable (4) Note to other financial instruments classified as financial liabilities Inapplicable 47. Lease liabilities Inapplicable 48. Long term accounts payable Inapplicable (1) Long term accounts payable stated based on the nature Inapplicable (2) Special accounts payable Inapplicable 49. Long term payroll payable (1) State ment of long term payroll payable Inapplicable (2) Change of defined benefit plans Inapplicable 50. Predicted liabilities Inapplicable 51. De ferred income In CNY Items Opening balance Increas e in the Decrease in the Ending balance C ause of formation reporting period reporting period Income to be Governmentsubsidies 3,672,855.36 0.00 0.00 3,672,855.36 recognized Total 3,672,855.36 0.00 0.00 3,672,855.36 -- Items involving governments ubsidies : In CNY Amountcounted Amountofnewly Amountcounted Amountoffsetting to the Related with added subsidyin to the other costsand Liabilities Opening balance non-operating Other changes Endingbalance assets/related the reporting income in the expensesin the income in the with income period reporting period reporting period reporting period Special purpose fund ofShenzhen Related with industrial design 933,011.22 0.00 0.00 0.00 0.00 0.00 933,011.22 assets development (Note (1)) Fundingproject for construction of enterprise Related with 1,511,421.57 0.00 0.00 0.00 0.00 0.00 1,511,421.57 technologycenter assets designated bythe state (Note (2)) Special purpose fund for 2017 Industryand Related with 1,162,384.83 0.00 0.00 0.00 0.00 0.00 1,162,384.83 Informationization income atProvincial Level (Note (3)) Special fund for upgrading Related with 66,037.74 0.00 0.00 0.00 0.00 0.00 66,037.74 standard and assets qualityof consumer goods Other notes : Note (1): It is the special fund for development of industrial design in Shenzhen obtained according to the Operation Instructions on Certification and Financial Support Program for Indus trial Design Centers in Shenzhen (Trial Implem entation) SHEN JING MAO IT Zi [2013] No. 227 jointly promulgated by Economy, Trade and Information Commission of Shenzhen Municipalityand Finance Commission of Shenzhen Municipality; Note (2) : It is the fund from the financial support for cons truction of enterprise technology centers in Shenzhen obtained according to the Circular of Developm ent and Reform Commission of Shenzhen Municipalityon Is suing the Firs t Batch of Supporting Program of Financial Support Fund for Cons truction of Enterprise Technology Centers in Shenzhen in 2015 (SHEN JING MAO XINXI YU [2015] No. 129 on October 28, 2015; Note (3): The s pecial purpos e fund obtained according to the Circular of the Economic and Information Commiss ion of Guangdong Province on Doing a Good Job in Subm iss ion to the Special Project Library of Production and Services at Provincial Level in 2017 (YUE JING XIN SHENG CHAN HAN (2016) No. 53) jointly promulgated by the Econom ic & Information Commiss ion of Guangdong Province and the Finance Department of Guangdong Province. 52. Othe r non-current liabilities Inapplicable 53. Capital stock In CNY Increase /Decrease (+/-) Opening balance Sharesconverted Endingbalance New issuing Bonusshares Others Sub-total fromreserve Total Shares 438,744,881.00 4,224,000.00 0.00 0.00 0.00 4,224,000.00 442,968,881.00 Other notes : Approved by the 3rd sess ion of the Ninth Board of Directors held on November 12, 2018 and 2019 1st Extraordinary General Meeting held on January 11, 2019, the Company decided to grant 4.224 million restrictive A-shares to 128 persons eligible for the incentive at the price of CNY 4.40 per s hare. This part of A-s hare res trictive stock was all granted and registered for listing by the end of the reporting period. The total consideration of the s hares granted to the persons eligible for the incentive received by the Companyamounted to CNY 18,585,600.00, including the increased capital stock amounted to CNY4,224,000.00. 54. Othe r equity instruments (1) Basic information on the outstanding other financial instruments, including prefe rred shares, perpetual bonds, etc. at the end of the reporting period Inapplicable (2)Movement of the outstanding other financial instrume nts, including prefe rred shares, perpe tual bonds, etc. at the end of the re porting period Inapplicable 55. Capital reserve In CNY Items Opening balance Increase in the reporting Decrease in the reporting Ending balance period period C apita l premium (capital 1,047,963,195.57 14,361,600.00 0.00 1,062,324,795.57 stock premium) Other capital reserve 14,492,448.65 2,234,597.31 0.00 16,727,045.96 Total 1,062,455,644.22 16,596,197.31 0.00 1,079,051,841.53 Other notes , including the note to its increase/decrease and the cause(s) of its movement in the reporting period: Approved by the 3rd sess ion of the Ninth Board of Directors held on November 12, 2018 and 2019 1st Extraordinary General Meeting held on January 11, 2019, the Company decided to grant 4.224 million restrictive A-shares to 128 persons eligible for the incentive at the price of CNY 4.40 per s hare. This part of A-s hare restrictive s tock was all granted and registered for listing by the end of the reporting period. The total consideration of the shares granted to the persons eligible for the incentive received by the Companyamounted to CNY 18,585,600.00, including the increas ed capital s tock amounted to CNY4,224,000.00; the increased capital res erve (capitalstock prem ium) amounted to CNY14,361,600.00. The increase of other capital reserve was the amount of the expens es recognized in the reporting period. 56. Treasury shares In CNY Items Opening balance Increase in the reporting Decrease in the reporting Ending balance period period Shares in stock 0.00 32,902,198.89 0.00 32,902,198.89 Total 0.00 32,902,198.89 0.00 32,902,198.89 Other notes , including the note to its increase/decrease and the cause(s) of its movement in the reporting period: The increase of the shares ins tock during the reporting period consisted of two parts . One part was the consideration from the subs cription of the em ployees’ restrictive shares received totaling CNY18,585,600.00 and the other part was the amount from the repurchas e of B-shares totaling CNY14,316,598.89. 57. Othe r comprehensive income In CNY Amountincurred in the reporting period Less:the Less:the amount amount counted to counted to the profit the retained and loss earnings during the during the reporting Amountincurred reporting Less: Attributable Items Opening balance period Attributable to the Endingbalance before income tax period which Income to minority which had parentcompany in the reporting had been tax shareholder been after tax period counted to expense safter tax counted to the other the other comprehens comprehens ive income ive income in the in the previous previous period. period. I.Other comprehensive income which 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 cannotbe re-classified intoprofitand loss II. Other comprehensive income which shall -5,442,139.78 1,749,407.20 0.00 0.00 0.00 1,749,407.20 13.67 -3,692,732.58 be re-classified into profitand loss Conversiondifference in foreign -5,442,139.78 1,749,407.20 0.00 0.00 0.00 1,749,407.20 13.67 -3,692,732.58 currencystatements Total other comprehensive income -5,442,139.78 1,749,407.20 0.00 0.00 0.00 1,749,407.20 13.67 -3,692,732.58 58. Special reserve Inapplicable 59. Surplus Re serve In CNY Items Opening balance Increase in the reporting Decrease in the reporting Ending balance period period Statutory surplus reserve 161,030,899.80 0.00 0.00 161,030,899.80 Discretionary surplus 61,984,894.00 0.00 0.00 61,984,894.00 reserve Total 223,015,793.80 0.00 0.00 223,015,793.80 60. Re taine dearnings In CNY Items Reporting period Previous period Before adjustment:Retained earningsattheendofthe previous 851,360,603.66 771,484,565.02 period After adjustment:Retained earningsatthe beginningofthe 0.00 771,484,565.02 reporting period Plus:Netprofitattributable to theparentcompany’sowner in the 123,495,460.90 183,835,095.29 reportperiod Less:Provisionofstatutorysurpluspublicreserve 0.00 16,210,080.45 Dividendsofcommon sharespayable 0.00 87,748,976.20 Retained earningsatthe end ofthe reporting period 974,856,064.56 851,360,603.66 61. Operation Income and Costs In CNY Amountincurred in the reporting period Amountincurred in thepreviousperiod Items Income Costs Income Costs Principal business 1,775,615,457.33 1,049,188,996.85 1,683,836,915.14 973,240,076.81 Other businesses 9,420,562.90 2,315,078.37 12,054,517.58 3,085,659.54 Total 1,785,036,020.23 1,051,504,075.22 1,695,891,432.72 976,325,736.35 Has the new standard for income been implem ented No 62. Business Taxes and Surcharge s In CNY Items Amountincurred in the reporting period Amountincurred in the previous period C onsump ti on tax 184,399.06 35,185.87 U rban maintenance and construc tion tax 6,395,004.36 8,003,388.87 Education Surcharge 4,548,531.69 5,707,461.48 Real estate tax 1,886,754.77 1,987,807.87 Land us e tax 211,126.82 189,899.66 Tax on using vehicle and boat 1,035.00 375.00 Stamp duty 1,102,915.98 990,689.30 Others 765,107.65 875,978.38 Total 15,094,875.33 17,790,786.43 63. Sales expenses In CNY Items Amountincurred in the reporting period Amountincurred in the previous period Salaries & bonus 145,512,139.90 139,546,287.86 Employees’ welfare 3,159,080.44 3,138,963.39 Public reserve for housing 5,750,656.98 5,500,716.30 Social security premium 22,997,809.84 20,980,632.82 Shopping mall and rental fees 83,986,057.93 64,037,045.34 Advertising, exhibition and marketpromotion 72,972,500.97 97,597,459.44 fee Depreciation and amortization 43,315,834.35 39,426,656.57 Packing expenses 5,502,133.20 8,692,707.95 Water & pow er supply and property 9,561,119.07 6,745,296.70 management fee Freight 6,971,013.87 5,646,078.77 Offic e expenses 2,779,674.92 4,263,061.96 Business travel ex pens es 4,887,148.59 5,097,034.58 Others 8,380,858.89 21,441,100.01 Total 415,776,028.95 422,113,041.69 64. Administrative expenses In CNY Items Amountincurred in the reporting period Amountincurred in the prev ious period Salaries & bonus 67,718,045.37 63,138,017.67 Social security premium 5,755,767.56 5,047,581.22 Depreciation and amortization 14,295,251.10 12,160,071.63 Enterprise annuity 1,125,994.66 625,494.72 Labor union dues 2,630,194.16 2,603,067.32 Training fee 518,230.67 1,199,149.56 Business travel expenses 3,353,907.41 3,182,680.24 Offic e expenses 1,688,108.77 1,870,367.44 Public reserve for housing 2,077,719.29 2,048,849.77 Service fee to intermediary agencies 1,625,961.96 1,792,807.55 Employees’ welfare 1,790,667.18 1,385,238.49 Others 13,772,987.29 9,189,066.08 Total 116,352,835.42 104,242,391.69 65. R & D expenditures In CNY Items Amountincurred in the reporting period Amountincurred in the previous period Salaries & bonus 10,860,114.59 10,517,474.56 Employees’ welfare 205,127.58 307,905.39 Social security premium 924,124.54 992,592.32 Public reserve for housing 304,138.80 336,550.86 C ostofmaterials 63,256.68 2,478,026.50 Paymentfor samples 868,357.42 1,146,145.67 Processing charges - 15,226.36 Depreciation and amortization 2,627,949.69 2,356,002.47 Technical cooperation fee 560,030.37 604,801.61 Others 3,113,311.26 2,531,200.28 Total 19,526,410.93 21,285,926.02 66. Financial expense s In CNY Items Amountincurred in the reporting period Amountincurred in the previous period Interestpayment 12,023,843.93 14,273,043.13 Less: capitalized interest 0.00 0.00 Less: Interestincome 908,850.92 1,079,587.08 Exchange gain & loss -134,740.68 33,652.69 Financial s ervice charges and miscellaneous 5,258,713.56 4,920,682.75 Total 16,238,965.89 18,147,791.49 67. Othe r income In CNY Source ofarising ofother income Amountincurred in the reporting period Amountincurred in the prev ious period Governmentsubsidies 13,045,742.36 6,497,018.80 Total 13,045,742.36 6,497,018.80 68. Re turn on investment In CNY Items Amountincurred in the reporting period Amountincurred in the previous period Income from long term equity investmentbased on 1,531,310.06 93,013.38 equity method Total 1,531,310.06 93,013.38 69. Ne t exposure hedge income Inapplicable 70. Income from change of the fair v alue Inapplicable 71. Loss from impairment of credit Items Amountincurred in the reporting period Amountincurred in the previous period Provision for bad debtofother rec eivables -301,318.07 -253,014.23 Loss from bad debt ofaccounts r eceiv able -2,780,450.82 5,431,814.64 Total -3,081,768.89 5,178,800.41 72. Loss from impairment of assets Has the newstandard for income been implemented No In CNY Items Amountincurred in the reporting period Amountincurred in the previous period I. Loss from impairmentofassets II. Loss from price falling ofinv entor ies 2,514,740.86 -1,765,800.30 Total 2,514,740.8 -1,765,800.30 73. Income from disposal of assets In CNY Source ofincome from disposal ofassets Amountincurred in the reporting period Amountincurred in the previous period Profitfrom disposal ofassets 1,720.00 3,490.00 Loss from disposal ofassets -213,730.13 -57,897.16 74. Non-ope rating expenses In CNY Items Amountinc urr ed in the reporting Amountincurred in the previous Amountcounted to the current period period non-operating gain and loss Disposal ofaccountpayable impossible to be paid 212,175.93 52,506.24 212,175.93 Others 82,135.77 311,353.27 82,135.77 Total 294,311.70 363,859.51 294,311.70 75. Non-ope rating expenditure In CNY Amountinc urr ed in the reporting Amountincurred in the previous Amountcounted to the current Items period period non-operating gain and loss Outw ard donation 200,000.00 380,000.00 200,000.00 Others 324,505.98 86,522.53 324,505.98 Total 524,505.98 466,522.53 524,505.98 76. Income taxexpense (1) State ment of income tax expense In CNY Items Amountincurred in the reporting period Amountincurred in the previous period Income tax expense in the reporting period 22,066,289.48 34,026,742.02 Deferred income tax expense 18,548,898.09 -562,942.30 Total 40,615,187.57 33,463,799.72 (2) Process of adjustme nt of accounting profit and income tax expense In CNY Items Amountinc urr ed in the reporting period Total profit 164,110,648.47 Income tax expense calculated based on the statutory / applicable tax 41,027,662.12 rate Influence ofdifferent tax rates applicable to subsidiaries -3,658,836.86 Influence ofadjustmentofthe income tax in the previous period 414,337.14 Influence ofthe non-offsetable costs, expenses and loss 1,425,382.35 Influence from the offsetable provisional difference or offsetable loss of the unrec ognized deferred income tax assetatthe end of the reporting 1,797,934.13 period Profitand loss of the jointventures and associated calculated based on the equity method -382,827.52 Others -8,463.80 Income tax expenses 40,615,187.57 77. Othe r comprehensive income For the detail, refer to Note 57. 78. Cash Flow Statement Items (1) Other operation activities relate d cash rece ipts In CNY Items Amountincurred in the reporting period Amountinc urr ed in the previous period C ommodi ty promotion fee 7,326,827.42 6,072,093.46 Governmentsubsidies 13,045,742.36 6,497,018.80 C ash deposit 6,493,217.88 4,350,761.76 Interestincome 908,850.92 1,079,587.08 Reserve 687,618.62 1,406,129.93 Others 12,513,870.71 5,617,057.35 Total 40,976,127.91 25,022,648.38 (2) Other cash paid in connection with operation activities In CNY Items Amountincurred in the reporting period Amountincurred in the previous period Marketpromotion 55,480,743.21 66,401,628.85 Rent 54,742,365.90 39,732,881.18 Shopping mall fees 30,786,192.52 26,461,676.31 Advertisementfee 11,083,207.52 11,176,335.56 Packing expenses 5,703,500.29 8,883,462.57 Business travel expenses 8,284,981.38 8,333,226.89 Water and electricity fees 6,714,986.63 7,029,160.13 R & D expenses 4,322,224.36 6,759,781.73 Offic e expenses 5,207,489.18 6,534,273.39 Freight 7,747,014.23 6,018,407.34 Exhibition fee 6,546,230.71 5,974,002.19 Property management fee 7,982,065.97 4,228,170.40 Business entertainment 2,683,582.53 2,830,040.57 Service fee to intermediary agencies 2,043,210.38 2,156,715.09 Others 27,973,348.54 14,825,683.48 Total 237,301,143.35 217,345,445.68 (3) Other investme nt activities re lated cash receipts Inapplicable (4) Other investme nt activities re lated cash payme nts Inapplicable (5) Other fund-raising activities related cash re ceipts Inapplicable (6) Other fund-raising activities related cash payments In CNY Items Amountincurred in the reporting period Amountincurred in thepreviousperiod Others 17,565,400.00 0.00 Total 17,565,400.00 0.00 Note to the cash paid for other fund rais ing related activities : The amount incurred in the reporting period was the payment for repurchas e of B-shares . 79. Suppleme ntary information of the cash flow statement (1) Suppleme ntary information of the cash flow state ment In CNY Supplementary information Amountin the reporting period Amountin the previous period 1. Netcash flows arising from adjustmentofnet profitinto operating activ iti es: -- -- N etprofit 123,495,460.90 112,367,921.44 Plus: Provision for impairmentofassets 567,028.03 -14,525,567.48 Depreciation of fixed assets, depletion of oil and gas asset, depreciation ofproduc tive biological 21,385,076.08 21,080,763.14 asset Amortization ofintangible assets 3,291,008.97 2,430,354.87 Amortization ofthe long-term expenses to be 46,754,405.36 40,947,482.90 apportioned Loss (income is stated in “ -” ) from disposal of fixed assets, intangible assets and other long 212,010.13 54,407.16 term assets Financial ex penses (income is stated with “-”) 12,023,843.93 14,273,043.13 Inv estmentloss (income is stated with “-”) -1,531,310.06 -93,013.38 Decrease of the deferred inc ome tax asset (increase is stated w ith “_”) 17,382,217.94 -562,942.30 Decrease ofinventories (Increase is stated w ith 57,362,696.37 94,502,115.24 “-”) Decrease ofoperative items receivable (Increase -112,532,040.70 -56,854,840.95 is stated w ith “-”) Increas e ofoperative items payable (Decrease is stated with “-”) -9,395,746.59 11,052,550.32 N etcash flow s arising from operating ac tivities 159,014,650.37 224,672,274.09 2. Significantinvestmentand fund-raising activ iti es with no cash income and expenses -- -- involv ed: 3. Netchange in cash and cash equivalents: -- -- Ending cash balance 224,316,552.42 278,804,271.58 Less: Opening balance ofcash 162,623,059.97 184,947,891.32 N etincrease ofcash and cash equivalents 61,693,492.45 93,856,380.26 (2) Net cash paid for acquisition of subsidiary in the reporting period Inapplicable (3) Net cash received from disposal of subsidiary in the reporting period Inapplicable (4) Composition of cash and cash equivalents In CNY Items Ending balance Opening balance I.Cash 224,316,552.42 162,623,059.97 Including: Cash in stock 225,027.58 420,783.85 Bank depositavailable for paymentat 223,207,376.62 160,135,454.62 any time Other monetary fund used for paymentat 884,148.22 2,066,821.50 any time II.Cash equivalents 224,316,552.42 162,623,059.97 III.Ending balance ofcash and cash equivalents 224,316,552.42 162,623,059.97 Including: cash and cash equivalents restricted for use from the parentcompany or other 2,205,000.00 2,205,000.00 subsidiaries ofthe Group 80. Notes to items of statement of change in owner’s equity Inapplicable 81. Assets restricted in ownership or use right In CNY Items Bookvalueatthe end ofthe reporting period Cause ofrestriction L/Gcash deposit:CNY1,575,000.00;judiciallyfrozen Monetaryfund 2,205,000.00 fund:CNY630,000.00. Fixed assets 14,609,376.25 Securityguarantee Other receivables 8,958,057.64 Guarantee forpropertysuit Total 25,772,433.89 -- 82. Foreign currency mone tary items (1) Foreign currency monetary items Items Endingbalanceofforeign currency Conversion rate EndingbalanceofRenminbi converted Monetarycapital -- -- 19,563,618.98 Including:USD 1,544,000.97 6.87470 10,614,543.46 Euro 5,335.38 7.81700 41,706.67 HKD 8,474,774.02 0.87966 7,454,919.72 CHF 206,348.97 7.03880 1,452,449.13 Accountsreceivable -- -- 19,722,262.85 Including:USD 1,666,823.49 6.87470 11,458,911.45 Euro 38,235.40 7.81700 298,886.12 HKD 8,181,240.80 0.87966 7,196,710.28 CHF 109,074.70 7.03880 767,755.00 Long-termLoan -- -- 4,409,875.00 Including:USD 0.00 0.00 0.00 Euro 0.00 0.00 0.00 HKD 0.00 0.00 0.00 CHF 625,000.00 7.03880 4,409,875.00 Advance payments 7,691,652.56 Including:HKD 567,280.00 0.87966 499,013.52 CHF 742,779.63 7.03880 5,228,277.26 JPYen 30,781,650.00 0.06382 1,964,361.78 Other receivables 6,622,119.65 Including:HKD 281,839.74 0.87966 247,923.15 CHF 905,580.00 7.03880 6,374,196.50 Accountspayable 5,839,977.02 Including:USD 3,144.30 6.87470 21,616.12 HKD 6,459,259.72 0.87966 5,681,952.41 CHF 19,379.51 7.03880 136,408.49 Advance receipt 1,903,605.64 Including:USD 265,931.77 6.87470 1,828,201.14 HKD 85,720.05 0.87966 75,404.50 Other payables 1,289,717.20 Including:USD 25,326.00 6.87470 174,108.65 HKD 498,843.80 0.87966 438,812.94 CHF 96,152.13 7.03880 676,795.61 Shorttermloans 30,086,500.00 Including:HKD 23,000,000.00 0.87966 20,232,180.00 CHF 1,400,000.00 7.03880 9,854,320.00 Non-currentliabilitiesdue within a year Including:CHF 50,000.00 7.03880 352,790.00 (2) Note to overseas operating entities, including important overseas operating entit ies, which should be disclosed about its principal business place, function currency for bookkeeping and basis for the choice. In case of any change in function currency, the cause should be disclosed. Inapplicable 83. Hedging Inapplicable 84. Government subsidies (1) Basic information of government subsidies In CNY Amountcounted to the current C ateg ories Amount Items presented profitand loss Allow ance for BaselWorld from Shenzhen Watch & C lock 114,333.32 Other income 114,333.32 Association Financial s uppor tin 2018 from 435,000.00 Other income 435,000.00 Shenzhen Standardization Special Fund Industrial Standard in 2018 (N ote (1)) Financial s uppor tofShenzhen Intellectual Property Big Data 500,000.00 Other income 500,000.00 Testing Platform (Note (2)) 2018 R & D Financial Support from Shenzhen Science & Tec hnology 1,191,000.00 Other income 1,191,000.00 Innovation Commission (Note (3)) 2018 Self-innovation Industry DevelopmentFinancial Support 593,600.00 Other income 593,600.00 from Shenz hen Science & Technology Innovation Commission Supplementary Aw ard of the 20th C hina PatentAward ofGuangdong 150,000.00 Other income 150,000.00 Intellectual Property 2018 H ead Office Enterprise C ontri bu ti onAward from Developmentand Reform 4,843,500.00 Other income 4,843,500.00 C ommission ofShenzhen Municipality (Note (4)) Subsidy ofthe TalentQualification ImprovementEngineering Project of the H uman Resource Bureau of 25,000.00 Other income 25,000.00 N anshan Dis tr ict, Shenzhen Allow ance for the supporting projectofcommerce & trade circulation innovation development 712,664.00 Other income 712,664.00 (N ote (5)) Financial s uppor tfrom the Special Fund of Shenzhen Standards 233,000.00 Other income 233,000.00 in 2018 2018 R & D financial support from the municipal bureau (Note 961,000.00 Other income 961,000.00 (6)) Bonus ofthe R & D Financial SupportProjects ofGuangming 351,000.00 Other income 351,000.00 District2018 Special fund for the Economic DevelopmentofGuangdong 300,000.00 Other income 300,000.00 District2019 Financial s uppor tfor the production capacity expansion and efficiency improvementofthe key industrial enterpris es from the Science and 1,000,000.00 Other income 1,000,000.00 Technology Innovation Commission in 2018 (Note (7)) Special financial support for the standards of the Market and 108,000.00 Other income 108,000.00 Quality Supervision C ommissio n Allow ance for the Endowmentand Medical Insurance for the Disabled in the Second Half of 2018 from the U nited Frontand Social 3,651.47 Other income 3,651.47 C onstruction Bureau ofGuangming District Birth allowance from the Social Security Bureau ofShenzhen 65,323.57 Other income 65,323.57 Municipality R & D financial supportfrom 258,000.00 Other income 258,000.00 Guangming Dis trictin 2017 Domestic marketdevelopment subsidy ofSmall and Medium-sized Enterprises Division ofShenzhen 14,670.00 Other income 14,670.00 Municipality Supplementary Aw ard of the 20th C hina PatentAward ofGuangdong Province - Shenzhen Market 150,000.00 Other income 150,000.00 Supervision Financial s uppor tfrom the Finance Bureau ofGuangming Districton 286,000.00 Other income 286,000.00 Making Enterprises in Guangming DistrictBigger and Stronger Shenzhen R & D Financial Support in 2018 (expenses in 2017) (Note 550,000.00 Other income 550,000.00 (8)) Allow ance for the talents’ quality 100,000.00 Other income 100,000.00 improvementproject Bonus for encouraging medi um-siz ed and small 100,000.00 Other income 100,000.00 enterpris es from Ecomomic Promotion Bureau ofNanshan District Total 13,045,742.36 13,045,742.36 Note (1): It refers to the financial support from thegovernment according to the “Measures for Management of the Special Fund for Developing Shenzhen Standards in Shenzhen” and the “Operating Ins tructions on Financial Support with the Special Fund for Developing Shenzhen Standards in Shenzhen” (SHEN SHI ZHI (2019) No. 17) promulgated by Market and QualitySupervis ion Commission of Shenzhen Municipality. Note (2): It refers to the special fund obtained according to the “Circular on Application for the Financial Support for the Intellectual PropertyBig Data Monitoring in Shenzhen during 2018 - 2019” promulgated byMarket and QualitySupervis ion Commission of Shenzhen Municipality. Note (3): It refers to the bonus from of the governm ental financial support bonus obtained according to the “Announcement of the First Enterprises to be Financially Supported for the Enterpris e R & D Financial Support Program in 2018” prom ulgated byScience & TechnologyInnovation Commission of Shenzhen Municipality. Note (4): It refers to the governm ental financial support obtained according to the “Measures for Implementation of Encouraging Development of Head Office Enterprises in Shenzhen” promulgated by Development and Reform Commission of Shenzhen Municipality(SHEN FU GUI (2017) No. 7). Note (5): It refers to the governm ental financial s upport according to the “Program for Supporting Commerce & Trade Circulation Innovation Development 2019” promulgated by Shenzhen Municipal Commission of Econom y and Informatization. Note (6): It refers to the bonus from of the governm ental financial support bonus obtained according to the “Announcement of the First Enterprises to be Financially Supported for the Enterprise R & D Financial Support Program in 2018” prom ulgated byScience & TechnologyInnovation Comm iss ion of Shenzhen Municipality. Note (7): It refers to thegovernmental financials upport obtainedaccording to the “Circularon Instructions forApplication for Projects to be Awarded for Production CapacityExpansion and EfficiencyImprovement of the Key Indus trial Enterprises in 2018” promulgated byShenzhen Municipal Commission of Econom yand Informatization. Note (8): It refers to the bonus from of the governm ental financial support bonus obtained according to the “Announcement of the First Enterprises to be Financially Supported for the Enterpris e R & D Financial Support Program in 2018” prom ulgated byScience & TechnologyInnovation Comm iss ion of Shenzhen Municipality. (2) Refunding of the government subsidies Inapplicable 85. Others Inapplicable VIII. Change in consolidation scope 1. Consolidation of enterprises not under the same control (1) Consolidation of enterprises not under common control during the reporting period Inapplicable (2) Consolidation cost and goodwill Inapplicable (3) Purchasee's distinguishable assets and liabilities as at the date of purchase Inapplicable (4) Profit or loss of the equit y held before t he date of purchase arising from re-measurement based on the fair value Inapplicable (5) Note to the consolidation consideration or the fair value of the distinguishable assets and liabilities of the purchasee which cannot be reasonably identif ied as at the date of purchase or at the end of the very period of consolidation Inapplicable (6) Other notes Inapplicable 2. Consolidation of enterprises under the same control (1) Consolidation of enterprises not under common control during the reporting period Inapplicable (2) Consolidation cost Inapplicable (3) Book value of the consolidatee's assets and liabilities as at the date of consolidation Inapplicable 3. Counter purchase Inapplicable 4. Disposal of subsidiaries Inapplicable 5. Change of consolidation scope due to other reason Inapplicable 6. Others Inapplicable IX. Equityin other entities 1. Equit y in a subsidiary (1) Composit ion of an enterprise group Shareholding proportion Subsidiaries Main businesslocation Place ofregistration Natureofbusiness Wayofacquisition Direct Indirect Establishmentor Harmony Shenzhen Shenzhen Commerce 100.00% investment Establishmentor the Manufacture Co. Shenzhen Shenzhen Manufacture 90.00% 10.00% investment Establishmentor the Hong Kong Co. Hong Kong Hong Kong Commerce 100.00% investment Establishmentor Station-68 Co. Hong Kong Hong Kong Commerce 60.00% investment Establishmentor Harbin Co. Harbin Harbin Commerce 100.00% investment Establishmentor the TechnologyCo. Shenzhen Shenzhen Manufacture 100.00% investment Establishmentor SHIYUEHUI Shenzhen Shenzhen Commerce 100.00% investment Emile Chouriet Establishmentor Shenzhen Shenzhen Commerce 100.00% (Shenzhen) Limited investment Establishmentor The SalesCo. Shenzhen Shenzhen Commerce 100.00% investment Consolidation of Hengdarui Shenyang Shenyang Commerce 100.00% enterprisesunder the same control Consolidation of Switzerland Company Switzerland Switzerland Commerce 100.00% enterprisesnotunder the same control (2) Important non-wholly-owned subsidiaries Inapplicable (3) Keyfinancial information of important non-wholly-owned subsidiaries Inapplicable (4) Significant restriction on use of enterprise group’s assets and paying off t he enterprise group’s liabilities Inapplicable (5) Financial support or other support provided to the structured entities incorporated in the scope of consolidated financial statements Inapplicable 2. Transaction with a subsidiarywith the share of the owner’s equit ychanged but still under control (1)Note to change in the share of the owner's equity in subsidiaries Inapplicable (2) Affect of the transaction on the minorityequityand owner's equity attributable to the parent company Inapplicable 3. Equit y in joint venture arrangement or associates (1) Important joint ventures or associates Name ofjointventure Main business Place ofregistration Nature of business Shareholding proportion Accounting or associate location treatmentmethod for investmentin Direc t Indirect jointventures or associates Shanghai Watch Industry Co., Ltd. Shanghai Shanghai Manufacture 25.00% Equity method (2) Keyfinancial information of important joint vent ures Inapplicable (3) Keyfinancial information of important associates In CNY Ending balance/amountincurred in the Opening balance/amountincurred in the reporting period reporting period C urren tassets 108,665,233.95 99,901,286.09 N on-curr en tassets 15,540,417.40 15,459,207.08 Total assets 124,205,651.35 115,360,493.17 C urren tliabilities 13,047,529.95 10,833,917.48 Total liabilities 13,047,529.95 10,833,917.48 Equity attributable to the parentcompany’s shareholders 111,158,121.40 104,526,575.69 Share ofnetassets calculated according to the 27,789,530.35 26,131,643.92 shareholding proportion Book value ofthe equity investmentin associates 46,412,373.21 44,881,063.15 Revenue 57,039,155.07 46,323,386.37 N etprofit 6,125,240.23 372,053.52 Total comprehensive income 6,125,240.23 372,053.52 (4) Financial information summaryof unimportant joint ventures and associates Inapplicable (5) Note to significant restriction on the competence of a joint venture or an associate in transferring funds to the Company Inapplicable (6) Excessive loss incurred to a joint venture or an associate Inapplicable (7) Unrecognized commitment in connection with investment in a joint vent ure Inapplicable (8) Contingent liabilities in connection with investment in joint ventures or associates Inapplicable 4. Important joint operation Inapplicable 5. Equit y in the structurized entities not incorporated in the consolidated financial statements Inapplicable 6. Others Inapplicable X. Financial instruments and risk management The Company's major financial ins trum ents include monetary funds, notes receivable and accounts receivable, other receivables, available-for-sale financial assets, equity inves tment, notes payable and accounts payable, other payables , borrowings, etc. For details of financial instruments , please refer to the relevant items inNote VI. The ris ks involved in these financial instruments and the Com pany’s risk control policies aiming at reducing these risks are stated as follows. The Company’s managem ent conducts management and m onitoring of these risk exposures so as to ensure risks to be controlled within as pecific limitation. The Com pany used the s ensitivity analysis technique to analyze the possible influence of the reasonable and poss ible change of the ris k variables upon the current profit and loss or s hareholders’ equity. Since any risk variables seldom happen individually, relativity between variables will cause significant influences on the ultimate impacted amount of the change in a risk variable, so the followingstatement is based ons upposition that each variable happens independently. (I) Risk management goals and policies The goal of risk management is to keep proper balance between risk and profit, to reduce negative influence of financial risk to financial performance of the Com pany, lower the negative influence of the ris ks upon the Com pany's business performance to the minimum and maximize the interest of the shareholders and its other equity inves tors . Based on this goal, the basic s trategy of risk management for the Company is to ascertain and analyze all the risks that the Group confronts, es tablish appropriate bottom line for ris k-taking, andmanage the risks accordingly, in the m eantimesupervise all the ris ks in a timelyand reliable manner, controlling the risks within the lim ited scope. 1. Market Risks (1) Foreign exchange risk Foreign exchange ris k refers to the ris k aris ing from the loss on exchange rate changes . The Com panyis mainlyexposed to foreign exchange risk that relates to Hong Kong dollars, Swiss Franc. Except a num ber of the Company's s ubsidiaries that conduct procurem ent and s ales in Hong Kong Dollars and Swiss Franc, the principal business activities of the Company’s principal business activities ares ettled in Renminbi.As at 30 June 2019, except the balance of the afores aid ass ets orliabilities which arestated in Hong Kong dollar, Swiss Franc, US dollar, etc., the balance of the financial ass ets and financial liabilities of the Companyare all in Renminbi. Foreign exchange risks arising from the balance of ass ets and liabilities of such foreign currencies may have an impact on the operating results of the Company. Items Ending balanc e Opening balance Monetary fund 19,563,618.98 11,875,297.06 N otes receiv able and accounts receivable 19,722,262.85 11,545,880.33 Advance paymentfor goods 7,691,652.56 4,733,540.86 Other receivables 6,622,119.65 6,589,218.31 N otes payable and accounts payable 5,839,977.02 2,655,278.19 Advance from customers 1,903,605.64 65,276.30 Other pay abl es 1,289,717.20 489,881.07 Shortterm loans 30,086,500.00 42,118,460.00 N on-curr en tliabilities due w ith in a year 352,790.00 347,470.00 Long-term Loan 4,409,875.00 4,517,110.00 The Companypaid close attention to the influence from themovement of exchange rate upon theCompany. The Company has not taken anymeasures to avoid foreign exchange risks. Sens itivityanalysis on foreign exchange ris ks : Assumption fors ensitivity analys is on foreign exchange ris ks : both the net investment hedge of the overseas business and cash flow hedge are highlyeffective. On the basis of the aforesaid assumption, while the other variables remainunchanged, the pre-tax influence of the reas onable change of the exchange rate possibly incurred upon the current income and loss andshareholders’ equityis as follows: End of the reporting period End of the same period ofthe prev ious year Items C hange of the exchange rate Influence upon the profit Influence upon the Influence upon the profit Influence upon the shareholders’ equity shareholders’ equity Appreciation agai ns t 978,180.95 978,180.95 483,724.43 483,724.43 Renminbi by 5% Monetary fund Depreciation against -978,180.95 -978,180.95 -483,724.43 -483,724.43 Renminbi by 5% N otes receiv able and accounts Appreciation agai ns t 986,113.14 986,113.14 846,483.91 846,483.91 receivable Renminbi by 5% Depreciation against -986,113.14 -986,113.14 -846,483.91 -846,483.91 Renminbi by 5% Appreciation agai ns t 384,582.63 384,582.63 598,990.31 598,990.31 Renminbi by 5% Advance paymentfor goods Depreciation against -384,582.63 -384,582.63 -598,990.31 -598,990.31 Renminbi by 5% Appreciation agai ns t 331,105.98 331,105.98 312,581.81 312,581.81 Renminbi by 5% Other receivables Depreciation against -331,105.98 -331,105.98 -312,581.81 -312,581.81 Renminbi by 5% Appreciation agai ns t 291,998.85 291,998.85 494,013.75 494,013.75 N otes payable and accounts Renminbi by 5% pay able Depreciation against -291,998.85 -291,998.85 -494,013.75 -494,013.75 Renminbi by 5% Appreciation agai ns t 95,180.28 95,180.28 9,193.71 9,193.71 Renminbi by 5% Advance from customers Depreciation against -95,180.28 -95,180.28 -9,193.71 -9,193.71 Renminbi by 5% Appreciation agai ns t 64,485.86 64,485.86 23,904.05 23,904.05 Renminbi by 5% Other pay abl es Depreciation against -64,485.86 -64,485.86 -23,904.05 -23,904.05 Renminbi by 5% Appreciation agai ns t 1,504,325.00 1,504,325.00 1,264,650.00 1,264,650.00 Renminbi by 5% Shortterm loans Depreciation against -1,504,325.00 -1,504,325.00 -1,264,650.00 -1,264,650.00 Renminbi by 5% Appreciation agai ns t 17,639.50 17,639.50 - - N on-curr en tliabilities due w ith in Renminbi by 5% a year Depreciation against -17,639.50 -17,639.50 - - Renminbi by 5% Appreciation agai ns t 220,493.75 220,493.75 240,518.75 240,518.75 Renminbi by 5% Long-term borrowings Depreciation against -220,493.75 -220,493.75 -240,518.75 -240,518.75 Renminbi by 5% (2) Interest rate risk - risk from change of the cash flow The Company’s risk of movement in the cash flow of financial instrument aris ing from change of the interes t rate is mainly related with the bankloanof the fluctuating interest rate. The Company's policyis to maintain the fluctuating interest rate of these loans. Sens itivityanalysis on interest rate ris ks : Sens itivityanalysis on interest rate ris ks is bas ed on the following assumption: Influence of the change of market interest rate upon the interes t income or expens es of the financial ins trum ents with variable interest rates; For the financial instrument with fixed interes t rate m easured based on the fair value, the change of the interest rate only impact its interes t income or expenses; For the derivative financial instrument designated as arbitrage tool, the change of the m arket interest rate impacts its fair value and all the interest rate hedging is predicted to be highlyvalid; The market interes t rate as at the balancesheet dayuses the discounted cash flow technique to calculate the change of the fair value of the financial instrument and other financial assets and liabilities. On the basis of the aforesaid ass umption, while the other variables remain unchanged, the pre-tax influence of the reasonable change of the interest rate poss ibly incurred upon the current incom e and loss and shareholders’ equity is as follows: As at June 30, 2019, the Companyhad no borrowings calculated bas ed on the floating interest rate. (3) Other price risks The investment classified as the available -for-sale financial asset held bythe Com panyis measured at the cost value as at the balances heet date. Therefore, there exists no price risk necessaryto be disclosed in the Com pany. 2. Credit risk As at June 30, 2019, the m aximum credit risk exposure possiblyarising from the financial loss to the Companywas mainly from the loss arising from failure of the other party to the contract in implementing the obligations which caused loss from generation of the Company's financial assets, which specifically included: the carrying amount of the financial ass es recognized in the consolidated balances heet. The Companyprovided no other guarantee whichmayrender the Companybear the credit risk. For the purpos e of lowering the credit risk, the Company may possibly access to the guarantee, credit record and other elements from the third party based on the debtor's financial status , independent rating and other elem ents, such as assessment of the debtor’s credit qualification, such as the current market situation and specifying the corresponding debt lim it and credit term. The Company conducts regular supervision over the debtors’ credit records and may take the measures of written rem inders ,s hortening the credit period or canceling the credit period, etc. against the debtors with poor credit recordso as to ens ure the Company’s overall credit risk to be within the controllablescope. In addition, the Com pany examines the recoveryof the accounts receivableon each balances heet datesoas to ensure to providesufficient baddebt reserve for the accounts imposs ible to be recovered. Therefore, in the opinion of the Company's management, the credit risk borne bythe Companyhas been greatlyreduced. The Company's working capital is deposited in banks with higher credit ratings,so the credit ris k of liquid funds is relatively low. In the Company's accounts receivable, the accounts receivable owed by the top five customers took 11.16% of the Company's total accounts receivable; in the Com pany's other receivables , the total other receivables owed bythe top five customers took 16.8% of the Company's total other receivables. 3. Liquidity risk In management of the liquidity risk, the Company kept the cash and cash equivalent as sufficient as the m anagement considered necess ary and conducted supervision over the s ame so as to s atisfy the Company's bus iness requirements and reduced the im pact from the fluctuation of cash flow. The Company's m anagement conducted m onitoring over the application of the bank loans and ensured its compliance with the loan agreements. The Companytook the capital arising from its business and bank loans as themajor capitalsource.As at June 30,2019, the amount of the bank loan not yet used by the Company was CNY 1,527.61 million (December 31,2018: CNY 1,981.03 million). The expiry of the remaining contract obligations for the financial assets and liabilities held bythe Companynot discounted is analyzed as follows : (in CNY10,000) Items Within 1 year 1 to 2 years 2-3 years Over 3years Total Financial assets: Monetary fund 22,652.16 - - - 22,652.16 N otes receiv able and accounts receivable 47173.41 - - - 47173.41 Where: Notes receivable 994.10 - - - 994.10 Accounts receivable 46,179.31 - - - 46,179.31 Other receivables 6,527.13 - - - 6,527.13 Total financial assets 76,352.70 - - - 76,352.70 Financial liabilities: Shortterm loans 55,007.83 - - - 55,007.83 N otes payable and accounts payable 22,768.25 - - - 22,768.25 Including: accounts payable 22,768.25 - - - 22,768.25 Other pay abl es 9231.39 - - - 9231.39 Including: interestpayable 74.06 - - - 74.06 Other pay abl es 9,157.33 - - - 9,157.33 N on-curr en tliabilities due w ith in a year 35.28 - - - 35.28 Long-term Loan - 440.99 440.99 Financial guarantee 11,007.83 - - - 11,007.83 Total financial liabilities and contingent 174,403.28 - - 440.99 174,844.27 liabilities XI. Disclosure of Fair Value 1. Fair value at the end of the reporting period of the assets and liabilities measured based on the fair value Inapplicable 2. Basis for determining the market price of the itemsmeasured based on the continuous and non-continuous first level fair value Inapplicable 3. Items measured based on t he cont inu ous or uncontinuous 2nd level fair value, valuation technique as used, nature of important parameters and quantitative information Inapplicable 4. Items measured based on the continuous or uncontinuous 3rd level fair value, valuation technique as used, nature of important parameters and quantitative information Inapplicable 5. Items measured based on the continuous 3rd level fair value, sensiti vit y analysis on adjusted inf ormation and unobservable parameters between the book value at beginning and end of the period Inapplicable 6. In case items measured based on fair value are converted between different levels incurred in the current period, state the cause of conversion and determine con ver sion time point Inapplicable 7. Change of valuation technique incurred in the current period and cause of such change Inapplicable 8. Fair value of financial assets and financial liabilities not measured at fair value Inapplicable 9. Others Inapplicable XII. Related parties and transactions 1. Details of the parent companyof the Company Shareholding ratioofthe Ratio ofvote rightofthe Name ofthe parent Place ofregistration Natureofbusiness Registered capital parentcompanyin the parentcompanyin the company Company Company Investmentin industries, AVIC International Holding domestictrade,material Shenzhen 36.79% 36.79% Limited supplyand distribution; 1,166,161,996 importand export. Note to the parent company: The proportion of the equity held by AVIC International Shenzhen Co., Ltd. in AVIC International Holdings Limited is 33.93%. AVIC International Shenzhen is a wholly owned subsidiary of AVIC International Holdings Limited (AVIC IHL). China Aviation Industry Corporation (AVIC) directly holds 62.52% of the equity of AVIC IHL. Therefore, the Company’s eventual controller is AVIC. Therefore, the eventual controller of the Companyis AVIC. 2. Subsidiaries of the Company Refer to Note IX. 1 for details of subsidiaries of the Company. 3. Joint venture and association of the Company Refer to NOTE IX.3 for details of the Company's major joint ventures or associates . 4. Other related parties of the Company N ames ofother related parties Relationship between other related parties and the Company AVIC Property ManagementCo., Ltd. (AVIC Property) Controlled by the same party Shenzhen AVIC Building Technology C o.,Ltd. (AVIC Building C o.) Controlled by the same party Rainbow Department Store C o., Ltd. (RAINBOW) Controlled by the same party Shennan CircuitC o., Ltd. (Shennan Circuit) Controlled by the same party AVIC SUN DACo.,Ltd. (AVIC SUN DA) Controlled by the same party AVIC Securities Co., Ltd. (AVIC Securities) Controlled by the same party Xi’an Skytel H otel Co., Ltd. (Skytel H ote l) Controlled by the same party Shenzhen AVIC C ity Property DevelopmentC o., Ltd.(AVIC City Property) Controlled by the same party Shenzhen AVIC DevelopmentC o., Ltd. (AVIC C ity Development) Controlled by the same party Shenzhen AVIC Guanlan Real Estate D evelopmentC o., Ltd. (AVIC Controlled by the same party Guanlan R eal Estate) Shenzhen AVIC C hangtai InvestmentDevelopmentC o., Ltd. (AVIC C hang tai ) Controlled by the same party Shenzhen AVIC 9Square Assets ManagementC o., Ltd. (9 Square Controlled by the same party Asset) Shenzhen AVIC C ity InvestmentC o., Ltd.(AVIC City Investment) Controlled by the same party Shenzhen CATIC Group Enter pris e Training Center (CATIC Training C ente r) Controlled by the same party Ganzhou C ATIC 9 Square Commerce C o., Ltd. (Ganzhou 9 Square) Controlled by the same party AVIC City Property (Kunshan) C o., Ltd. (AVIC C ity Property (Kunshan) ) Controlled by the same party Shenzhen AVIC H uacheng Property DevelopmentC o. , Ltd.(AVIC H uachen g Property) Controlled by the same party AVIC Finance Co., Ltd. (AVIC Finance ) Controlled by the same party Shenzhen AVIC Security Service C o., Ltd. (AVIC Security Service) Controlled by the same party Shenzhen AVIC Property Asset ManagementCo., Ltd. (AVIC Property Controlled by the same party AssetManagement) Jiujiang 9 Square C omme rce ManagementC o., Ltd. (9 Square C omme rce Management) Controlled by the same party Shenzhen AVIC Grand SkylightH otel ManagementC o., Ltd. (Grand Controlled by the same party Sky lightH o tel) Shenzhen AVIC C ity Parking Lots ManagementCo., Ltd. (AVIC Parking Lots Management) Controlled by the same party Shenzhen AVIC Grand SkylightH otel ManagementC o., Ltd. (Grand Controlled by the same party Sky lightH o tel) Shenzhen CATIC Technical Testing Office (CATIC Technical Testing) Controlled by the same party Gongqingcheng C ATIC Cultural InvestmentC o., Ltd. (Gongqingcheng C ATIC Cultural Investment) Controlled by the same party AVIC International C ompl e te SetEquipmentCo., Ltd. (AVICComplete Set Controlled by the same party Equipment) Shenzhen AVIC Real Estate DevelopmentC o., Ltd. (AVIC Real Estate) Controlled by the same party Jiujiang AVIC City Real Estate Dev elopmentC o., Ltd. (JiujiangAVIC Real Controlled by the same party Estate) Shenzhen AVIC Property AssetManagementC o., Ltd. (AVIC Property Controlled by the same party AssetManagement) Shenzhen AVIC N anguan g Elevator C o., Ltd. (AVIC N angua ng ) Controlled by the same party Shenzhen AVIC C urtain Wall Engineering C o., Ltd. (AVIC C urta in Wall Engineering ) Controlled by the same party H uang Yongfeng A senior executive Wang Mingchuan A senior executive Fu Debin A senior executive Xiao Zhanglin A senior executive Wang Bo A senior executive C hen Libin A senior executive Wang Jianxin A senior executive Zhong H ongm in g A senior executive Tang Xiaofei A senior executive Wang Baoying A senior executive Sheng Qing A senior executive Fang Jiasheng A senior executiv e Lu Bingqiang A senior executive Lu Wanjun A senior executive Liu Xiaoming A senior executive Pan Bo A senior executive Li Ming A senior executive C hen Zhuo A senior executive Zou Zhix iang A senior executive 5. Related transactions (1) Related transactions of purchase and sale of commodities and supply and acceptance of labor serv ices Statement of purchase of comm odities and acceptance of labor services In CNY Description ofR ela te d Amountincurred in the Transaction quota Has itexceeded the Amountincurred Related parties in the previous Transac tions reporting period as approved transac tion quota period AVIC Property Reception ofservices 4,665,553.46 10,000,000.00 No 2,966,178.17 Shopping mall Rainbow Ltd. fees/purchase ofgoods 3,005,499.82 8,000,000.00 No 2,554,556.27 Shenzhen AVIC Group Training fee 0.00 500,000.00 No 144,548.39 Enterprise Training Center Statement of sales of goods /s upplyof labor services In CNY Related parties Description ofR ela te d Amountincurred in the reporting Amountincurred in the previous period Transac tions period Rainbow Ltd. Products and labor services 35,273,411.88 35,060,373.29 Shennan Circuit Products and labor services 4,656,548.21 3,300,322.92 Ganzhou 9 Square Products and labor serv ices 68,392.00 701,423.33 Shenzhen Grand SkylightH otel Products and labor services 0.00 5,982.90 ManagementCo., Ltd. (2) Relatede ntrusted management/contracted and mandatory manageme nt/contracting Inapplicable (3) Related lease The Companyas lessor: In CNY Names oflessees Categories ofleasehold properties Rental income recognized in the Rental income recognized in the currentperiod previous period AVIC Property Housing 9,236,271.13 3,786,677.96 Tianyue Hotel Housing 2,095,238.09 1,746,031.74 9 SquareAssets Housing 993,238.13 579,564.39 AVIC SUN DA Housing 926,577.86 898,931.71 C ATIC Public Security Serv iceC o. Housing 706,043.41 0.00 AVIC Securities Housing 527,428.55 608,571.42 Rainbow Ltd. Housing 289,764.58 229,327.58 Guanlan R eal Estate Housing 172,145.99 53,919.42 AVIC City Property Co.,Ltd. Housing 149,630.10 187,965.57 AVIC Real Estate Development Housing 133,876.07 33,406.82 AVIC City Investment Housing 133,320.56 232,636.75 AVIC Huacheng Property Housing 117,566.50 143,684.84 AVIC City Development Housing 0.00 2,428.57 The Companyas less ee: In CNY N ames oflessees Categories ofleasehold properties Rental fee recognized in the Rental fee rec ognized in the currentperiod previous period Ganzhou 9 Square Housing 538,609.84 544,600.15 Jiujiang AVIC Real Estate Housing 191,570.45 201,501.48 AVIC City Property (Kunshan) Housing 87,666.38 110,753.27 AVIC City Property Co.,Ltd. Housing 203,568.04 0.00 (4) Related guarantee The Companyas a guarantor In CNY Guarantees Amountguaranteed Effective date Expiring date Is the guarantee finished the Hong Kong Co. 30,078,332.26 July 24, 2018 May 31, 2020 No H armony 80,000,000.00 December 30, 2018 December 29, 2019 No The Companyas a guarantee In CNY Guarantors Amountguaranteed Effective date Expiring date Is the guarantee finished H armony 60,000,000.00 December 04, 2018 March 08, 2020 No (5) Borrowings and lendings among related parties In CNY Related parties Borrow ing amount Starting date Due date N ote Borrowed from AVIC Financial C o. 100,000,000.00 April 02, 2019 April 02, 2020 AVIC Financial C o. 50,000,000.00 March 26, 2019 March 26, 2020 Lending (6) Assets assignment and liabilities reorganization of related parties Inapplicable (7)Remuneration to senior executives Inapplicable (8) Other related transactions Inapplicable 6. Accounts receivable from and payable to related parties (1) Receivables In CNY Ending balance Opening balance Projec tname Related parties Book balanc e Bad debtreserve Book balance Bad debtreserve Accounts receivable: Rainbow Ltd. 7,724,759.31 386,237.97 2,205,867.79 115,293.39 AVIC City Property C o., Ltd. 46,669.00 2,333.45 3.00 0.15 Shennan Circuit 2,972,141.83 148,607.09 1,659,077.38 82,953.87 Ganzhou 9 Square 0.00 0.00 4,000.00 200.00 Gongqingcheng C ATIC C ultur al Investment 0.00 0.00 28,269.36 1,413.47 9 Square C ommerce 0.00 0.00 4,288.00 214.40 ManagementCo., Ltd. AVIC Securities 0.00 0.00 101,428.57 5,071.43 9 SquareAssets 0.00 0.00 33,331.01 1,666.55 Guanlan R eal Estate 0.00 0.00 8,315.43 415.77 AVIC SUN DA 0.00 0.00 148,915.46 7,445.77 AVIC Property 0.52 0.03 0.52 0.03 Total 10,743,570.66 537,178.54 4,293,496.52 214,674.83 N otes receivable: Shennan Circuit 1,357,388.98 0.00 2,398,579.72 0.00 Total 1,357,388.98 0.00 2,398,579.72 0.00 Other rec eivables: Rainbow Ltd. 905,787.00 45,289.35 761,860.00 38,093.00 AVIC Property 464,011.74 23,200.59 10,100.00 505.00 Ganzhou 9 Square 122,666.00 6,133.30 122,665.60 6,133.28 AVIC City Property 50,400.00 2,520.00 50,400.00 2,520.00 (Kunshan) 9 Square C ommerce 50,000.00 2,500.00 50,000.00 2,500.00 ManagementCo., Ltd. AVIC City Property C o., Ltd. 59,923.00 2,996.15 54,923.00 2,746.15 AVIC IHL 11,101.80 555.09 11,101.80 555.09 AVIC Training Center 16,000.00 800.00 0.00 0.00 Grand SkylightHotel 0.00 0.00 32,000.00 1,600.00 Gongqingcheng C ATIC 0.00 0.00 5,500.00 275.00 C ultur al Investment Total - 1,679,889.54 83,994.48 1,098,550.40 54,927.52 (2) Payables In CNY Projectname Related parties Endingbook balance Opening bookbalance Accountspayable: AVIC Building Co. 0.00 24,000.00 AVIC Property 0.00 40,821.05 Total 0.00 64,821.05 Advance receipts: Rainbow Ltd. 0.00 0.00 AVIC SUNDA 160,128.00 0.00 CATIC PublicSecurityService Co. 122,016.00 0.00 AVIC Property 1,756.40 0.00 Total 283,900.40 0.00 Other payables: AVIC Property 960,753.30 1,131,164.13 AVIC SUNDA 442,407.92 442,407.92 AVIC City Investment 309,732.00 309,732.00 AVIC Securities 213,000.00 213,000.00 AVIC Building Co. 117,888.63 116,960.23 AVIC City PropertyCo.,Ltd. 99,052.32 99,052.32 AVIC Huacheng Property 73,819.68 73,819.68 9 Square Assets 378,483.84 378,483.84 Rainbow Ltd. 96,465.30 60,000.00 AVIC Changtai 0.00 4,064.81 AVIC Real Estate 51,014.88 51,014.88 Guanlan Real Estate 25,401.60 25,401.60 CATIC PublicSecurityService Co. 10,533.44 10,533.44 Ganzhou 9 Square 4,909.00 3,446.22 Shennan Circuit 0.00 150,000.00 9 Square Commerce ManagementCo., 1,135.00 0.00 Ltd. Total 2,784,596.91 3,069,081.07 7. Related parties’commitments Inapplicable 8. Others Inapplicable XIII. Stock payment 1. General In CNY Total amountofvariousequityinstrumentsgranted bythe Companyduring the reporting period 4,224,000.00 Total amountofvariousequityinstrumentsofthe Companyexercisable during the reporting period 0.00 Total amountofvariousequityinstruments ofthe Companyexpired during the reportingperiod 0.00 The scope ofthe exercise price ofstockoptionsissued atthe end ofthe reportingperiod and the Inapplicable remaining time ofthe contract The granting price ofthe A-share restrictive stockincentive plan in 2018 (Phase I) wasCNY4.40 per share.The restricted period isfromJanuary The scope ofthe exercise price ofother equity instrumentsissued atthe end ofthe reporting 11,2019 to January11,2021and the unlocking period isfromJanuary11, period and the remaining time ofthe contract 2021 to January11,2024 (itisnecessaryto satisfythe vested unlocking conditions). Other notes: Approved by the 3rd session of the Ninth Board of Directors held on November 12, 2018 and 2019 1st Extraordinary General Meeting held on January11, 2019, the Companydecided to grant 4.224 million res trictiveA-shares to 128 persons eligible for the incentive at the price of CNY4.40 per share. This part ofA-share res trictive stock was all granted and registered for listing bythe end of the reporting period. The total cons ideration of the shares granted to the persons eligible for the incentive received bythe Companyamounted to CNY18,585,600.00, including the increased capitalstock amounted to CNY4,224,000.00; the increased capital reserve (capitalstock premium) amounted to CNY14,361,600.00. The valid term of the incentive plan is 5 years (60months), including the 2 years (24months) of the lock-up period and 3 years of unlocking period (36 months ). 2. Stock payment for eq uit ysettlement In CNY Method for determining the fair v alue of equity instruments Fair value of the restrictiv e stock = closing price as at the date ofauthorization granted - granting price - costs of the restrictive factors Basis for determining the quantity ofexercisable equity Predicted exercisable quantity of the equity incentive shares as atthe balance instruments sheetday C ause ofsignificantdifference be tw ee n the estimation ofthe reporting period and thatof the pr ev ious period Nil Accumulated amount of the equity-settled share-based payment 16,596,197.31 counted to the capital reserve Total expenses recognized in the equity-settled share-based paymentduring the reporting period 2,234,597.31 3. Stock payment for cash settlement Inapplicable 4. Correction and termination of stock payment Inapplicable 5. Others Inapplicable XIV. Commitments and contingencies 1. Important commitments Important commitments existing as at the balance sheet date (1) Operating lease commitment Implem entation of irrevocable operating lease contract s igned bythe Companyended the balancesheet date is as follows : Items Ending balance Opening balance Minimum rentpayment for irrevocable operational lease: 1styear after the balance sheetday 59,257,332.36 54,382,100.37 2nd year after the balance sheetday 33,741,124.09 28,501,337.58 3rd y ear after the balance sheetday 1,4659709.91 12,406,400.37 Subsequentyears 6,968,712.39 9,533,027.43 Total 114,626,878.74 104,822,865.75 (2) Other commitments Ended June 30, 2019, there was no other comm itments necessaryto be disclosed. 2. Contingencies (1) Significant contingencies existing as at the balance sheet day Nil (2) Important contingencies unnecessaryto be disclosed but necessaryto be explained There existed no such contingencies necessaryto be disclosed in the Company. 3. Others Inapplicable XV. Events after balance sheet day Significant non -adjus tment events Inapplicable 2. Profit distribution In CNY Profitor dividend to be distributed 87,748,976.20 Profitor dividend announced to be distributed after rev iew and approval 87,748,976.20 3. Sales return Inapplicable 4. Note to other matters after the balance sheet date Inapplicable XVI. Other significant events 1. Correction of the account ing errors in the previous period (1) Retroactive res tatement Inapplicable (2) Prospective application Inapplicable 2.Liabilities restructuring Inapplicable 3. Replacement of assets (1) Non-m onetaryassets exchange Inapplicable (2) Other assets exchange Inapplicable 4. Pension plan Inapplicable 5. Discontinuing operation Inapplicable 6. Segment information (1) Basis for determining the reportingsegments and accounting policy Inapplicable (2) Financial information of the reportingsegments Inapplicable (3) In cas e there is no reporting segment or the total assets and liabilities of the reportings egm ents cannot be disclosed, explain the reason Inapplicable (4) Other notes Inapplicable 7. Other significant transactions and matters that mayaffect investors' decision making Inapplicable 8. Others Inapplicable XVII. Notes to the parent company’s financial statements 1. Accounts receivable (1)Accounts receivables dis closed bytypes In CNY Endingbalance Opening balance Bookbalance Bad debtreserve Bookbalance Bad debtreserve Categories Provision Bookvalue Provision Bookvalue Amount Proportion Amount Amount Proportion Amount proportion proportion in which Accountsreceivable for which bad debtreserve 2,350,230.66 100.00% 117,511.54 5.00% 2,232,719.12 776,459.35 100.00% 38,822.97 5.00% 737,636.38 hasbeen provided based on portfolios in which Group ofaging 2,350,230.66 100.00% 117,511.54 5.00% 2,232,719.12 776,459.35 100.00% 38,822.97 5.00% 737,636.38 Total 2,350,230.66 100.00% 117,511.54 5.00% 2,232,719.12 776,459.35 100.00% 38,822.97 5.00% 737,636.38 Individual provis ion for bad and doubtful debts: Inapplicable Total provision for bad and doubtful debts based on portfolio: CNY117,511.54 In CNY Ending balanc e Name Book balanc e Bad debtreserve Prov ision proportion Group of aging 2,350,230.66 117,511.54 5.00% Total 2,350,230.66 117,511.54 -- Note to the basis for determining the combination: In the portfolio, the account receivable for which provision for bad debt is made bas ed on balance percentage: (2) Provision, recovery or reversal of reserve for bad debts during the reporting period Provis ion for bad debt during the reporting period In CNY Amountofmov ementduring the reporting period C ateg ories Opening balance Amountrecovered or Ending balance Provision reversed Written-off Group of aging 38,822.97 78,688.57 0.00 0.00 117,511.54 Total 38,822.97 78,688.57 0.00 0.00 117,511.54 (3) Accounts receivable actually written off in current period Inapplicable (4) Accounts receivable owed bythe t op five debtors based on the ending balance Bad debtreserve at Natureof Proportion Are theyrelated No. Namesofthe debtors Amount Aging the end ofthe Payment taken parties reporting period 1 Shenzhen Zhongshen Commercial PropertyService Co.,Ltd. Rent 909,993.48 Within 1 year 38.72% 45,499.67 No 2 ICBC Shenzhen Branch Rent 661,473.12 Within 1 year 28.15% 33,073.66 No 3 Shenzhen GoodfamilySportsEquipmentChain Store Co., Rent 356,020.60 Within 1 year 15.15% 17,801.03 No Ltd. 4 Bravo Tech (Shenzhen)Limited Rent 313,391.69 Within 1 year 13.33% 15,669.58 No 5 Rainbow Ltd. Rent 99,343.20 Within 1 year 4.23% 4,967.16 Yes (5) Account receivable with recognition terminated due to transfer of financial assets Inapplicable (6) Amount of assets and liabilities f ormed through transfer of long term account receivable and continuing to be involved Inapplicable 2. Other receivables In CNY Items Ending balance Opening balance Other rec eivables 802,334,152.26 870,739,378.37 Total 802,334,152.26 870,739,378.37 (1) Interest receivable Inapplicable (2) Dividends receivable Inapplicable (3) Other receivables 1) Classification of other receivables based on nature of payment In CNY N atur e ofPayment Ending book balance Opening book balance Dealings among related parties w ithin the 797,642,912.65 869,342,613.30 consolidation scope Reserve 76,233.69 70,000.00 C ash deposit and depositin security 257,635.90 248,104.00 Others 4,443,236.36 1,178,412.07 Total 802,420,018.60 870,839,129.37 2) Provision for bad debts Disclosed based on aging In CNY Aging Ending balance Within 1 y ear (w ith 1 year inclusive) 878,515.24 1 to 2 years 219,155.80 Ov er 3y ears 40,050.00 Total 1,137,721.04 3) Provision, recovery or reversal of reserve for bad debts during t he reporting period Provis ion for bad debt during the reporting period In CNY Amountofmovementduring the reporting period Categories Opening balance Amountrecov ered or Ending balance Provision reversed Group of aging 99,751.00 1,355.09 15,239.75 85,866.34 Total 99,751.00 1,355.09 15,239.75 85,866.34 4) Accounts receivable actually written off in the reporting period Inapplicable 5) Other receivables owed bythe top five debtors based on t he ending balance In CNY Proportion in total Company name N ature of Ending balanc e Aging ending balance ofother Ending balance ofthe Payment prov ision for bad debts receivables Inter-company H armony current 464,511,889.07 Within 1 year 57.89% 0.00 account Inter-company The Sales C o. current 192,510,054.01 Within 1 year 23.99% 0.00 account Inter-company H engda rui current 98,030,500.00 Within 1 year 12.22% 0.00 account Inter-company SHIYUEHUI current 22,846,703.45 Within 1 year 2.85% 0.00 account Inter-company Emile C houri e t(Shenzhen) current 19,743,766.12 Within 1 year 2.46% 0.00 Limited account Total -- 797,642,912.65 -- 99.40% 0.00 6) Accounts receivable involving government subsidy Inapplicable 3. Long-term equity inve stments In CNY Endingbalance Opening balance Items Bookbalance Impairmentreserve Bookvalue Bookbalance Impairmentreserve Bookvalue Investmentin 1,331,248,590.93 0.00 1,331,248,590.93 1,331,248,590.93 0.00 1,331,248,590.93 subsidiaries Investmentin associatesand joint 46,412,373.21 0.00 46,412,373.21 44,881,063.15 0.00 44,881,063.15 ventures Total 1,377,660,964.14 0.00 1,377,660,964.14 1,376,129,654.08 0.00 1,376,129,654.08 (1) Investment in subsidiarie s In CNY Provision for Increase in the Decrease in the Endingbalanceofthe Investees Opening balance Endingbalance impairmentin the reporting period reporting period provision for impairment reporting period Harmony 601,307,200.00 0.00 0.00 601,307,200.00 0.00 0.00 The SalesCo. 450,000,000.00 0.00 0.00 450,000,000.00 0.00 0.00 the Manufacture Co. 9,000,000.00 0.00 0.00 9,000,000.00 0.00 0.00 the TechnologyCo. 10,000,000.00 0.00 0.00 10,000,000.00 0.00 0.00 FIYTA(Hong Kong) 137,737,520.00 0.00 0.00 137,737,520.00 0.00 0.00 Limited SHIYUEHUI 5,000,000.00 0.00 0.00 5,000,000.00 0.00 0.00 Harbin HarmonyWorld 2,184,484.39 0.00 0.00 2,184,484.39 0.00 0.00 Watch Co.,Ltd. Hengdarui 36,867,843.96 0.00 0.00 36,867,843.96 0.00 0.00 Emile Chouriet 79,151,542.58 0.00 0.00 79,151,542.58 0.00 0.00 (Shenzhen) Limited Total 1,331,248,590.93 0.00 0.00 1,331,248,590.93 0.00 0.00 (2) Investment in associate s and joint ventures In CNY Increase/Decrease (+ /-) in the reporting period Income from Announced Ending equity Other for balance of Opening Ending Investees Additional Decrease of investment comprehensive Other equity distributing Provision for the provision balance Others balance investment investment recognized income movement cash impairment for under equity adjustment dividendor impairment method profit I.JointVenture II.Associates Shanghai 44,881,063.15 0.00 0.00 1,531,310.06 0.00 0.00 0.00 0.00 0.00 46,412,373.21 0.00 Watch IndustryCo., Ltd. Sub-total 44,881,063.15 0.00 0.00 1,531,310.06 0.00 0.00 0.00 0.00 0.00 46,412,373.21 0.00 Total 44,881,063.15 0.00 0.00 1,531,310.06 0.00 0.00 0.00 0.00 0.00 46,412,373.21 0.00 (3) Other notes Inapplicable 4. Operation Income and Costs In CNY Amountincurred in the reporting period Amountincurred in theprevious period Items Income Costs Income Costs Principal business 64,124,939.95 11,807,925.90 56,119,634.18 9,578,544.70 Other businesses 0.00 0.00 0.00 0.00 Total 64,124,939.95 11,807,925.90 56,119,634.18 9,578,544.70 Has the newstandard for income been implemented No 5. Return on investment In CNY Items Amountincurred in the reporting period Amountincurred in the previous period Income from long term equity investmentbased on equity method 1,531,310.06 93,013.38 Total 1,531,310.06 93,013.38 6. Others Inapplicable XVIII. Supplementaryinformation 1. Statement of non-recurring gains and losses in the reporting period In CNY Items Amount Note Itrefers to the loss from disposal of fixed 1.Gain/Lossfromdisposal ofn on -curren tassets -212,010.13 assets, such as the obsolete production equipment The government subsidies included in the profitsand For detail, refer to the supplementary lossesofthe currentperiod ( (ex cluding governmentgrants 13,045,742.36 description ofthe governmentsubsidy counted which are closelyrelated to the Company’sbusinessand to the currentprofitand loss, Note VII.67. conformwith the national standard amountorquantity) Other non-operating income and expensesother than the Itmai nly refers to the security depositdue to -230,194.27 the advance withd raw al ofthe shops in some aforesaid items channels, etc. Less:Amountaffected bythe income tax 2,735,223.75 Total 9,868,314.21 -- For the Com pany’s non-recurring gain/loss items as defined in the Explanatory Announcem ent No. 1 on Information Disclosure for Com panies Offering their Securities to the Public – Non-recurring Gains and Losses and its non-recurring gain/loss items as illustrated in the Explanatory Announcement No. 1 on Information Disclosure for Companies Offering their Securities to the Public –Non-recurring Gains andLosses which have been definedas recurring gains and loss es, it is necessaryto explain the reason. Inapplicable 2. ROE and EPS Earnings per share Profitin the reporting period Return on equity, w eighted av erage Basic earnings per share Diluted earnings per share (CNY/share) (CNY/share) N etprofitattributable to the Company’s 4.69% 0.2788 0.2788 shareholders ofordinary shares N etprofitattributable to the C ompa ny’s shareholders ofordinary shares less 4.32% 0.2565 0.2565 non-recurring gains and loss 3. Discrepancyin accounting data between IAS and CAS (1) Discrepancy in net profit and net assets as disclosed in the financial report respectively according to IAS and CAS Inapplicable (2) Discrepancy in net prof it and net assets as disclosed in the financial report respectively according to the accounting standards outside Mainland China and CAS Inapplicable (3) Note to the discrepancy in accounting data under the account ing standards outside Mainland China. In case the discrepancyin data which have been audited byan overseas auditing agent has been adjusted, please specify the name of the overseas auditing agent. Inapplicable 4. Others Inapplicable
飞亚达B 200026
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数据来源:东方财富Choice数据