[年报]飞亚达Ｂ:2020年年度报告（英文版）
原标题:飞亚达Ｂ:2020年年度报告（英文版） FIYTA Precision Technology Co., Ltd. 2020 Annual Report March, 2021 Section 1 Important Notice, Table of Contents and Definition The Board of Directors, the Supervisory Committee, directors, supervisors and senior executives hereby individually and collectively accept responsibility for the correctness, accuracy and completeness of the contents of this report and confirm that there are neither material omissions nor errors which would render any statement misleading. Huang Yongfeng, the Company leader, Chen Zhuo, chief financial officer, and Tian Hui, the manager of the accounting department (treasurer) hereby confirm the authenticity and completeness of the financial report enclosed in this Annual Report. All the directors attended the board meeting for reviewing the Annual Report. Any perspective description, such as the future plan, development strategy, etc. involved in the Annual Report shall not constitute the Company’s substantial commitment to the investors and the investors should please pay attention to their investment risks. In this report, the Company has described in detail the existing macro-economic risks as well as operation risks. Investors are advised to refer to the contents concerning risk factors possibly to be confronted with and the countermeasures in the Company's future development prospect in Section 4 Discussion and Analysis of the Management The profit distribution preplan reviewed and approved by the Board of Directors is summarized as follows: With the total capital stock as at the date of record as the base, the Company would distribute cash dividend at the rate of CNY 4 for every 10 shares (with tax inclusive), bonus share at the rate of 0 share for every 10 shares (with tax inclusive) to the whole shareholders and shall capitalize no reserve. Table of Contents Section 1 Important Notice, Table of Contents and Definition Section 2 Company Profile and Financial Highlights Section 3 Business Summary Chapter 4 Discussion and Analysis of the Operation Section 5 Significant Events Section 6 Change of Shares and Particulars about Shareholders Section 7 About the Preferred Shares Section 8 About the Convertible Bonds Section 9 Directors, Supervisors, Senior Executives and Employees Chapter 10 Corporate Governance Section 11 Bond Related Information Section 12 Financial Report Section 13 Documents Available for Inspection Definitions Terms to be defined Refers to Definition This Company, the Company or FIYTA Refers to FIYTA Precision Technology Co., Ltd. AVIC Refers to Aviation Industry Corporation of China, Ltd. AVIC International Refers to AVIC International Holding Corporation AVIC International Shenzhen Refers to AVIC International Shenzhen Co., Ltd. AVIC IHL Refers to AVIC International Holdings Limited The Sales Co. Refers to FIYTA Sales Co., Ltd. Harmony Refers to Shenzhen Harmony World Watches Center Co., Ltd. Precision Technology Co. Refers to Shenzhen FIYTA Precision Technology Co., Ltd. Science & Technology Development Co. Refers to Shenzhen FIYTA Technology Development Co., Ltd. the Hong Kong Co. Refers to FIYTA (Hong Kong) Limited SHIYUEHUI Refers to Shiyuehui Boutique (Shenzhen) Co., Ltd. Hengdarui Refers to Liaoning Hengdarui Commerce & Trade Co., Ltd. Harmony E-Commerce Limited Refers to Shenzhen Harmony E-Commerce Limited Shanghai Watch Industry Refers to Shanghai Watch Industry Co., Ltd. Rainbow Ltd. Refers to Rainbow Digital Commercial Co., Ltd. Shennan Circuit Refers to Shennan Circuit Co., Ltd. Section 2 Company Profile and Financial Highlights I. Company Information Short form of the stock FIYTA and FIYTA B Stock Code 000026 and 200026 Stock Exchange Listed with Shenzhen Stock Exchange Company Name in Chinese FIYTA Precision Technology Co., Ltd. Abbreviation of the Company Name in Chinese 飞亚达公司 Company name in English (if any) FIYTA Precision Technology Co., Ltd. Abbreviation of the Company name in English (if any) FIYTA Legal Representative Huang Yongfeng Registered address: FIYTA Technology Building, Gaoxin S. Road One, Nanshan District, Shenzhen Postal Code of the Registered Address 518057 Office Address 20th Floor, FIYTA Technology Building, Gaoxin S. Road One, Nanshan District, Shenzhen Postal Code of the Registered Address 518057 Website: www.fiytagroup.com E-mail: [email protected] II. Liaison Persons and Communication Information Secretary of the Board Securities Affairs Representative Names Chen Zhuo Xiong Yaojia Liaison Address 20th Floor, FIYTA Technology Building, Gaoxin S. Road One, Nanshan District, Shenzhen 18th Floor, FIYTA Technology Building, Gaoxin S. Road One, Nanshan District, Shenzhen Tel. 0755-86013669 0755-86013669 Fax 0755-83348369 0755-83348369 [email protected] [email protected] III. Information Disclosure and Place where the Regular Reports are Prepared Names of the media chosen by the Company for disclosing information Securities Times and Hong Kong Commercial Daily Internet Web Site Designated by China Securities Regulatory Commission for Publishing the annual report: www.cninfo.com.cn Place where the Company’s Annual Report was prepared and is placed for inquiry Company Planning & Operation Department IV. Changes in Registration Organization Code 91440300192189783K Changes in principal business activities since listing (if any) No change Changes in the controlling shareholder over the past years (if any) No change V. Other Relevant Information The CPAs appointed by the Company Name of the CPAs Grant Thornton LLP Office address 5/F, SciTech Building, No.22 JianGuoMenWai Avenue, Chaoyang District, Beijing Names of the CPAs as the authorized signatories Dong Xu, Meng Junfeng The sponsor performing persistent supervision duties engaged by the Company in the reporting period Inapplicable The financial advisor performing persistent supervision duties engaged by the Company in the reporting period Inapplicable VI. Summary of Accounting/Financial Data Does the Company need to make retroactive adjustment or restatement of the accounting data of the previous years? No 2020 2019 Increase/decrease in the reporting year over the previous year 2018 Turnover in CNY 4,243,439,952.59 3,704,210,734.90 14.56% 3,400,450,599.90 Net profit attributable to the Company’s shareholders, in CNY 294,115,156.04 215,909,014.15 36.22% 183,835,095.29 Net profit attributable to the Company’s shareholders less the non- recurring items, in CNY 269,095,012.41 199,678,661.09 34.76% 162,758,061.00 Net cash flows arising from operating activities, in CNY 378,210,505.87 444,820,768.61 -14.97% 331,627,789.62 Basic earning per share (CNY/share) 0.6764 0.4943 36.84% 0.4190 Diluted earning per share (CNY/share) 0.6764 0.4943 36.84% 0.4190 Return on equity, weighted average (%) 10.78% 8.21% 2.57% 7.30% End of 2020 End of 2019 Increase/decrease of the end of the reporting year over the end of the previous year End of 2018 Total assets, in CNY 4,018,712,700.18 3,760,923,285.37 6.85% 3,599,691,650.26 Net assets attributable to the Company’s shareholders (owner’s equity attributable to the Company’s shareholders, in CNY) 2,799,948,388.09 2,654,533,766.99 5.48% 2,570,134,782.90 The lower of the company’s net profit before and after the deduction of non-recurring gains and losses in the last three fiscal years is negative, and the auditor's report of the previous year shows that the Company’s going concern ability is uncertain. No The lower of the net profit before and after the deduction of the non-recurring gains and losses is negative. No VII. Discrepancy in accounting data between IAS and CAS 1. Differences in the net profit disclosed in the financial report & the net assets attributable to the Company’s shareholders respectively according to the IAS and the CAS. Inapplicable 2. Differences in the net profit disclosed in the financial report & the net assets attributable to the Company’s shareholders according to both the IAS and the CAS Inapplicable VIII. Financial Data Summary based on Quarters In CNY The first quarter The second quarter The third quarter The fourth quarter Turnover 588,361,057.06 993,473,657.97 1,362,598,720.97 1,299,006,516.59 Net profit attributable to the Company’s shareholders -12,974,795.53 90,713,701.83 137,048,377.83 79,327,871.91 Net profit less the non-recurring profit/loss attributable to the Company’s shareholders -13,738,773.72 82,408,251.17 129,723,577.01 70,701,957.95 Net cash flows arising from operating activities -106,747,751.88 210,392,987.15 112,503,592.52 162,061,678.08 Are the above financial indicators or their totals significantly different from the financial indicators disclosed by the Company in the quarterly and semi-annual reports? No IX. Extraordinary items and amount In CNY Items Amount in 2020 Amount in 2019 Amount in 2018 Note Gain/loss from disposal of non-current assets, including the part written-off with the provision for impairment of assets. -369,857.30 -926,118.60 -180,302.24 The government subsidies included in the profits and losses of the current period ( (excluding government grants which are closely related to the Company’s business and conform with the national standard amount or quantity) 30,634,128.57 18,428,906.18 19,375,618.48 Reversal of the impairment provision for receivables and contract assets which have been tested individually for impairment 163,925.30 0.00 7,533,121.86 Non-operating income and expenses other than the aforesaid items 1,556,300.78 3,353,916.43 792,842.56 Other gains and losses in compliance with the definition of non-recurring gains and losses. 0.00 Less: Amount affected by the income tax 6,964,353.72 4,626,350.95 6,444,246.37 Total 25,020,143.63 16,230,353.06 21,077,034.29 -- For the Company’s non-recurring gain/loss items as defined in the Explanatory Announcement No. 1 on Information Disclosure for Companies Offering their Securities to the Public – Non-recurring Gains and Losses and its non-recurring gain/loss items as illustrated in the Explanatory Announcement No. 1 on Information Disclosure for Companies Offering their Securities to the Public – Non-recurring Gains and Losses which have been defined as recurring gains and losses, it is necessary to explain the reason. Inapplicable Section 3 Business Summary I. Principal business the Company operated in the reporting period (1) Principal Business and Operation Model With the establishment and development originated from aviation precision manufacturing and material technology, the Company is mainly carrying out the activities of watch brand management and luxurious watch retails. From the perspective of technical characteristics, the Company is engaged in precision technology industry. Over the past three decades or more, relying on the advantages in precision manufacturing technology, material technology and talents of the aviation industry, the Company has been continuously devoting itself to the building of professional watch-making capability and brand operation, has successfully built the "FIYTA" brand and established the brand a leading position in the domestic industry by virtue of the advantages in technology and quality, and has cultivated brands of different styles such as "Emile Chouriet ", "JONAS&VERUS ", "Beijing" and "JEEP" to meet the needs of market segments. In 1997, in order to grasp the opportunities in the domestic famous watch market and accelerate the breakthrough of its own brand, the Company developed the retail business of famous watches. As one of the first explorers of brand watch retail chain business, the Company has been focusing on strengthening the construction of both brand and channel resources, refining operations, and has established stable cooperation with international outstanding famous watch brands and domestic high-end channels, which is contributing to the company’s revenue and profit while providing a source of growth, it has also established a stable base for the growth and development of its own brands. Under the general background of industrial upgrading and intelligent manufacturing, the Company relies on high-end precision manufacturing technology and industrial accumulation, based on the development principle of “technology being homologous, the industry being same-rooted and value being co-directional”, and extends the development of precision technology business and smart wearable business. At present, these two businesses have begun to take shape. (2) Development Status of the Industry and the Company's Position Therein Watches bear both characteristics of precision technology and fashion: high-end watch-making is supported by precision technology, material technology and craftsmanship as the core. In addition, it is necessary to meet consumers' demands for brands, aesthetics and artistic and cultural connotation. The global watch industry has developed for more than two hundred years, and it has a long history. Technological innovation and design creativity have always pushed the brand forward. Globally, the high-end luxury watch market is mainly occupied by the Swiss watch brands. Middle-end and fashion watches mainly consist of European and American brands, Japanese brands and domestic brands. In recent years, smart watches are developing rapidly, and have won the favor of tech-savvy, sports-savvy and fashion-savvy citizens. Today, the increase in national disposable income, the people’s yearning for a better life, and the demand for high-quality life are driving consumption upgrading; in addition, with the effective advancement of tariff reduction, China's domestic watch consumer market is ushering in a new development opportunity and the Company keeps optimistic about the market development potential. In the past year 2020, affected by COVID-19, the global watch industry experienced a severe test of growth pressure. With China’s effective control over the pandemic, the rapid growth of luxury goods consumption, and the rise of duty-free shopping on Hainan offshore island, China outshone all the other countries in the world in performance of the high-end luxury watch retail industry. According to the data disclosed by the Federation of the Swiss Watch Industry FH, the export volume of Swiss watches in 2020 dropped by 21.8% year-on-year, but the export to mainland China began to increase commencing from June, 2020 with a year-on-year growth by 20%. This was the first time for mainland China to be the world's largest market of Swiss watches. These data are the best evidence of the strong consumption power of Chinese consumers. The company has focused on the watch industry. After years of hard work, it has grown into the flagship enterprise of Chinese watches, and has been ranked first in China's watch industry for many consecutive years. The Brand "FIYTA" is one of China's most well-known watch brands that have grown up under the market economy after China’s reform and opening-up. The Company has adhered to the original intention of "Big Country Brand", relying on precision manufacturing technology, brand perception and deep cultivation of channels to promote continuous brand breakthroughs, and its sales scale ranks among the top in the industry. In 2017, the Brand was selected as the unique watch brand in the country in the "Made-in-China" Brand Plan by the Ministry of Commerce; "FIYTA won the "China Grand Awards for Industry" in 2018, and was honorably put on the "70 Top Brands for the 70th Anniversary of the Founding of New China" List in 2019, and honorably won the "People's Ingenuity Brand Award 2019".2020, the Company honorably won the title of “the 40 Brand Makers in the Past 40 Years of Shenzhen”; Sun Lei, the Company’s chief designer, won the title of “40 Persons of Innovation and Entrepreneurship and Model Worker.” After more than two decades’ development, Harmony World Watches has been operating brand watch retail business in more than 60 cities across the country and has nearly 200 chain stores. It has established abound brand and channel resources and good operating ability, and its market share ranks domestically forefront in the watch retail industry. II. Significant Movements in Prime Assets 1. Significant Movements in Prime Assets Major assets Note to the significant changes Equity assets Inapplicable Fixed assets Inapplicable Intangible assets Inapplicable Construction-in-process Inapplicable 2. Major Overseas Assets Inapplicable III. Analysis on Core Competitiveness I. Adhering to Brand Leadership and Having Accumulated Rich Experience in Brand Management Since its establishment, FIYTA has always adhered to brand leadership, with building of a flagship brand in the Chinese watch industry as its development goal, and has achieved multiple industry firsts in brand building, marketing communication, product design, etc., and has a solid brand operation foundation. In the 1990s, with the CCTV news broadcast announcing "FIYTA Telling Time for you", the Company successfully established the popularity and influence of the FIYTA Brand in China; at the beginning of the 21st century, since the Chinese astronauts first entered space, their professional chronographs were all manufactured by FIYTA. “FIYTA” has become one of the world's three biggest aerospace watch brands, and the spirit of professional watch-making continues to be passed on with the country's manned aerospace industry. Meanwhile, the Company actively promoted the development of internationalization and by participating in the preparation of international standards, entered BASELWORLD etc., strengthen exchanges and interactions with outstanding Swiss brands, played an active role on the world watch stage, and persistently increased global influence. II. Construction of Deep Ploughed Channel and Creating Excellent Channel Management Ability FIYTA persistently constructed the deeply ploughed channel, and provided a continuous source of power for brand development with high-quality services and refined operation capability. The Company has formed a globalized sales network centered on the domestic market. FIYTA brand channels have been distributed in more than 30 countries and regions around the world, with more than 3,000 business outlets; HARMONY World Watch Retails have upgraded the deep ploughed channels with more than 200 business outlets; on the basis of full coverage of cooperation with mainstream e-commerce platforms, the Company focused on promoting the expansion of innovative channels, and started trial for the new channels, such as live video, mini programs, etc. The Company has always devoted itself to building the ability of outstanding channel operation, powerful team, excellent services, and providing customers with the best consumption experience in all aspects. The “Three-Level Marketing”, “Perfect Sales”, “Outstanding Operation” etc. have already been deposited as the core base work logic of channel operation. In recent years, the Company has comprehensively promoted digital construction, achieved full coverage of online and offline self-operated stores, and shall provide customers with more systematic professional services and create more value. III. Building the Advantages of the Leading Core technology Based on Precision Technology Over more than 30 years, the company has been devoting itself to the building of precision technology research and development capability, has successively built advanced R & D, production technology and manufacturing technology platforms, and has established R & D and production bases in Shenzhen and Switzerland respectively; and has established professional watch-making capabilities, including self-made driving units of watches and key components manufacturing, space watch research and development and high-end watch-making techniques, etc., and achieved continuous breakthroughs in research and development and application of new materials, new processes and new technologies. At present, the Company has 2 national high-tech enterprises, established a national enterprise technology center, a national industrial design center, and is a national technological innovation demonstration enterprise. The Company has accumulatively applied for 558 patents and been granted 509 patents, including 4 honorable mentions of the Chinese patents, 1 gold award of China Design and 5 honorable mentions of China design; the Company has taken lead in preparation of more than 55% of the national watch industry standards and has also actively participated in preparation of the international industrial standards and took lead and participated in preparation of many international standards. Section 4 Discussion and Analysis of the Operation I. General 2020 is an extraordinary year. The sudden pandemics of COVID-19 has brought a huge impact to the Company's business. The Company suffered a quarterly loss in its operation result in the first quarter. In the face of unprecedented challenge, the Company actively responded and quickly launched the "Wartime Command System", mobilized all employees to prevent and control the epidemic, and at the same time, fully promoted the operational counterattack, controlled costs and expenses, and captured market opportunity through innovations such as live video and community marketing, accelerated digital transformation, and established close relationships with customers. With gradual recovery of the market, the Company’s operating performances turned better and better continuously. In the second half year, the Company seized the opportunity of the explosive growth of the high-end luxury watch business after the epidemic in the country was basically brought under control, actively deployed new growth opportunities in Hainan’s tax-free channels, and continued to accelerate internal capacity building and the cultivation of new growth points. As a result, the Company realized a big growth on year-on-year basis in the whole year. In the reporting period, the Company realized revenue amounting to CNY 4243.44 million with year-on-year growth of 14.56% and realized total profit amounting to CNY 373.4606 million with a year-on-year growth of 35.20%. The Company has also made further breakthrough in high- quality development with the efficiency and performance indicator rapidly improved, the return on net assets has increased to 10.78% with the year-on-year growth of 2.57%, and the inventory turnover rate has reached 1.35 times, an increase of 0.17 times over the previous year. With the joint efforts of the team, the Company has achieved sustained and rapid growth in operating profit for 4 consecutive years. During the reporting period, the Company carried out the following key work. I. Promoting the epidemic prevention and control work steadily, and having achieve "zero suspicion and zero diagnosis" throughout the year After the outbreak of COVID-19, the Company’s management team took the lead in commanding, followed the overall deployment of the CPC Central Committee and authorities, refined the deployment of prevention and control strategies based on the situation at different stages of epidemic prevention and control, implemented responsibilities at all levels, and achieved "zero suspicion and zero diagnosis" prevention and control performance, implemented the obligation and responsibilities of a central enterprise with practical actions, and ensured the safety of employees’ lives and the Company’s assets. II. Activating the "wartime command system” and having demonstrated strong "combat power” During the reporting period, in the face of the severe market environment, the Company established a "wartime command system", quickly adjusted the status of the team, actively organized the resumption of work and production, strictly controlled internal costs, lean management, and seized market opportunity externally and actively expanded community marketing through WeChat, live video and other methods, adapted itself to the market situation and competitive situation in an innovative way after the epidemic, and promoted business breakthrough through multiple channels and multi ways. From the basic zero revenue in February to the profit-making in the main business in March, the Company achieved year-on-year profit growth in April, hit a new high in monthly revenue in August. The Company achieved one step at a time, with strong combat effectiveness, it has achieved growth against trend in operating performance in a down-to-earth way, which has demonstrated powerful market recovery and adjustment and adaptation capability, and further improved the ability of the team. III. Continuously tamping the basic management and persistently consolidating the core competition advantages During the reporting period, the Company continued to build professional capabilities around the“brand power, product power, and channel power” to strengthen the advantage of the core competition. During the reporting period, the Company continued to build professional capabilities around the “brand power, product power, and channel power” to strengthen the advantage of the core competitiveness. Under the severe situation of the off-line sales once returning to zero for a time, the Company deepened the integration of products and sales. With the brand of “FIYTA”, the livestreaming hosted by “Gao Yuanyuan X Viya” set the highest sales record of watch category in Tmall single store livestreaming; the Company focused on improvement of product efficiency with the core series. The new products, such as Four-Leaf clover and Xtreme Series, were launched in the market as scheduled. Professional series products such as "Mars-500" and "Attack-11" are favored by consumers; the Company promoted the implementation of the "Excellent Operation, Excellent Sales" project in a solid way; and the per unit yield of self-operated stores continued to increase. The sales began to rebound steadily in the third quarter. HARMONY World Watch Retail seized the opportunity, continuously deepened and refined store operations. In the second quarter, it began to achieve year-on-year sales growth, with an average monthly growth of more than 50%. IV. Continuously promoting channel upgrading and reserving the core kinetic energy for future development During the reporting period, the Company paid close attention to changes in consumption trends and market conditions, and continued to promote channel optimization, adjustment and upgrading. The retail business of “HARMONY” World Watches Retail focused on core cities and core business area, systematically counted future opportunities, drew a strategic channel map, promoted channel entry in an orderly manner, and further increased the number of high-end brand accounts. While maintaining endogenous growth, it was also actively exploring extensional expansion model and accelerated the coverage of target channels. “FIYTA” Brand reshaped the image of the terminal and actively promoted the entry of shopping malls and also achieved good results. During the reporting period, the Company actively seized the opportunity in Hainan’s existing duty-free channel market, accelerated the entry and sales of its own brands, and actively explored channel development opportunities. V. Breakthrough in digital transformation and initial results of membership operation During the reporting period, the Company was persistently building a customer-centered digital operation system. The full implementation and popularization of the "HARMONY" Digital Retail System effectively promoted customer value mining and operational efficiency improvement. The on-line and off-line service interactions were realized. Potential customer transactions and repurchases of regular customers made important contribution to the growth of sales throughout the year. During the Pandemic of COVID-19, the system has provided a strong guarantee for making up the income gap. The own-brand membership management system was also officially launched in September and full coverage of all self-run stores both online and offline was realized, which laid the foundation for in-depth operations with focus on "people, goods, and markets". VI. Accelerating the cultivation of new growth points and transforming and upgrading to high-end precision technology During the reporting period, the Company continued to promote the development of precision technology business and smart wearables business. The precision technology business accelerated the expansion of the medical and aerospace markets on the basis of deep cultivating optical communications and lasers, and initiated cooperation with core customers in related fields. The revenue increased by more than 50% year-on-year; the smart wearable business completed its own R&D team formation. The new products of "Little Red Watch" and "Black Knight" came into the market smoothly; more than 100,000 smart watches were sold during the “Double Eleven” activities. Balance sheet items Items Ending balance Opening balance Variation proportion Cause of the movement Notes receivable 48,192,442.15 10,596,431.31 354.80% Mainly due to the influence from the growth of the precision technology business scale and the bill payment term. Advance payment for goods 16,612,773.76 10,847,962.28 53.14% Mainly due to the increase of advance payment for purchases for HARMONY World Watch Retail Other non-current assets 13,536,307.13 7,373,248.48 83.59% Mainly due to the increase of advance payment for refurbishment for HARMONY World Watch Retail Notes payable 3,581,360.00 - - Mainly due to the impact of the new bill payable business in the precision technology business in the reporting year. Advance receipts 9,991,850.67 23,433,463.57 -57.36% Mainly due to the impact of the adjustment of presentation in accordance with the requirements of the new revenue standard in the reporting year. Contract liabilities 18,213,396.49 - - Mainly due to the impact of the adjustment of presentation in accordance with the requirements of the new revenue standard in the reporting year. Payroll payable to the employees 132,853,462.20 82,602,845.67 60.83% Mainly due to the growth in performance in the reporting year and the issuance of excess incentives. Payable taxes 68,925,271.90 24,064,803.00 186.42% Mainly due to the increase in taxes and fees payable due to the increase in income in the reporting year and the greater impact of retainment in the same period last year. Dividends payable 1,639,513.77 848,233.27 93.29% Mainly due to the increase in dividends payable in the equity incentive part of the current year. Other current liabilities 2,299,755.09 - - Mainly due to the impact of the tax part of the contract liabilities in accordance with the requirements of the new income standards in the reporting year. Deferred income tax liability 3,067,834.55 1,256,242.49 144.21% Mainly due to the impact of a one-off pre-tax deduction of fixed assets. Other comprehensive income 976,871.41 -940,209.09 203.90% Mainly due to movement of the translation balance of foreign currency statements Income statement items from the beginning of the year to the end of the reporting period Items Amount incurred in the reporting period Amount incurred in the previous period Variation proportion Cause of the movement Interest income 4,941,334.19 1,956,334.31 152.58% Mainly due to the impact of the increase in the stock of monetary funds in the current year. Other income 25,170,397.09 18,428,906.18 36.58% Mainly due to the increase in government subsidies received in the reporting year. Return on Investment 5,072,577.64 1,787,907.10 183.72% Mainly due to the influence from the profit increase of Shanghai Watch Industry in the current year. Loss from impairment of credit -9,096,922.74 -16,640,961.07 45.33% Mainly due to the decrease in bad debt provision for individual accounts receivable in the current year. Loss from impairment of assets -15,426,526.41 -4,295,134.47 -259.16% Mainly due to the increase in the price falling of the proprietary- brand inventory. Income from disposal of assets -369,857.30 -926,118.60 60.06% Mainly due to big loss from the auxiliary facilities and equipment of Xi'an FIYTA Building in the same period last year. Non-operating income 3,111,413.64 4,754,105.30 -34.55% Mainly due to the greater impact of the adjustment of the compensation received by some of HARMONY's stores in the same period last year. Income tax expenses 79,338,516.60 60,324,629.25 31.52% The increase in income tax expenses was mainly due to the increase in profit. Cash flow statement items from the beginning of the year to the end of the reporting period Items Amount incurred in the reporting period Amount incurred in the previous period Variation proportion Cause of the movement Rebated taxes received 1,849,055.57 5,510,592.39 -66.45% Mainly due to the reduction in export tax rebates caused by the reduction in export business affected by the overseas pandemic in the current year. Net cash received from disposal of fixed assets, intangible assets and other long- term assets 150,556.62 626,107.64 -75.95% Mainly due to decrease of the fixed assets disposed in the current year. Cash received from absorbing investment - 18,585,600.00 -100.00% Mainly due to the implementation of equity incentives in the same period and received subscription payments last year, but none in the current year. Cash paid for other financing activities 72,317,669.93 53,117,325.02 36.15% Mainly due increase of B-shares repurchased. Influence of the change of exchange rate on the cash and cash equivalent -2,810,603.32 468,366.93 -700.09% Mainly due to the influence of the change of exchange rate. II. Analysis on the Principal Business 1. General Refer to the relevant details of “I. General" of “Business Discussion and Analysis”. 2. Revenue and Costs (1) Composition of Revenues In CNY 2020 2019 Year-on-year increase/decrease Amount Proportion in the revenue Amount Proportion in the revenue Total operating revenue 4,243,439,952.59 100% 3,704,210,734.90 100% 14.56% Based on sectors Watches 3,970,903,426.36 93.58% 3,463,608,966.45 93.50% 14.65% Precision technology business 138,806,456.76 3.27% 91,341,945.34 2.47% 51.96% Leases 117,282,310.32 2.76% 132,005,033.07 3.56% -11.15% Others 16,447,759.15 0.39% 17,254,790.04 0.47% -4.68% Based on products Watch brand business 970,035,756.22 22.86% 1,110,678,489.04 29.98% -12.66% Watch retail and services 3,000,867,670.14 70.72% 2,352,930,477.41 63.52% 27.54% Precision technology business 138,806,456.76 3.27% 91,341,945.34 2.47% 51.96% Leases 117,282,310.32 2.76% 132,005,033.07 3.56% -11.15% Others 16,447,759.15 0.39% 17,254,790.04 0.47% -4.68% Based on regions South China 2,198,531,106.33 51.81% 1,823,927,995.51 49.24% 20.54% Northwest China 601,805,121.89 14.18% 586,521,631.97 15.83% 2.61% Northeast China 198,893,856.16 4.69% 204,386,707.45 5.52% -2.69% East China 561,941,020.36 13.24% 502,541,659.80 13.57% 11.82% Northeast China 233,806,759.67 5.51% 230,662,172.16 6.23% 1.36% Southwest China 448,462,088.18 10.57% 356,170,568.01 9.62% 25.91% (2) Sector(s), Product(s) or Region(s) Taking over 10% of the Operating Revenue or Operating Profit In CNY Turnover Operating cost Gross profit rate Year-on-year increase/decrease of operating revenue over the previous year Year-on-year increase/decrease of operating costs over the previous year Year-on-year increase/decrease of gross profit rate over the previous year Based on sectors Watches 3,970,903,426.36 2,478,548,735.40 37.58% 14.65% 17.47% -1.50% Precision technology business 138,806,456.76 113,748,608.41 18.05% 51.96% 54.30% -1.24% Leases 117,282,310.32 40,571,940.35 65.41% -11.15% 43.98% -13.25% Others 16,447,759.15 6,360,252.90 61.33% -4.68% 19.26% -7.76% Based on products Watch brand business 970,035,756.22 279,990,343.43 71.14% -12.66% -15.40% 0.93% Watch retail and services 3,000,867,670.14 2,198,558,391.97 26.74% 27.54% 23.58% 2.34% Precision technology business 138,806,456.76 113,748,608.41 18.05% 51.96% 54.30% （未完）  |