Lu Thai Textile Co., Ltd. Annual Report 2021
LU THAI TEXTILE CO., LTD.
ANNUAL REPORT 2021
April 2022
Lu Thai Textile Co., Ltd. Annual Report 2021
Part I Important Notes, Table of Contents and DefinitionsThe Board of Directors (or the “Board”), the Supervisory Committee as well as the directors,supervisors and senior management of Lu Thai Textile Co., Ltd. (hereinafter referred to as the“Company”) hereby guarantee the factuality, accuracy and completeness of the contents ofthis Report and its summary, and shall be jointly and severally liable for anymisrepresentations, misleading statements or material omissions therein.Liu Zibin, the Company’s legal representative, Zhang Hongmei, the Company’s ChiefAccountant, and Zhang Keming, the Company’s Financial Manager hereby guarantee thatthe Financial Statements carried in this Report are factual, accurate and complete.All the Company’s directors have attended the Board meeting for the review of this Reportand its summary.The Company is subject to the disclosure requirements for listed companies engaging intextile and apparel as stated in Guideline No. 3 of the Shenzhen Stock Exchange forSelf-regulation of Listed Companies—Industry-specific Information Disclosure.In 2021, the unstable and uncertain global economic situation caused by COVID-19 hasbecome more prominent. China's foreign trade environment has become more volatile due tothe combination of COVID-19 and other multiple factors. Global industrial and supply chainshave shown their vulnerability amid the pandemic. All unfavorable factors combined, such asthe shortage of raw materials and power supply, the surging prices of production materialsand ocean freight, and the appreciation of RMB, have posed great challenges to China'stextile and garment exports. With the support and encouragement of China's effectiveprevention and control measures and policies to stabilize the economy and export, the textileand garment industry has overcome many difficulties, strengthened the upstream anddownstream coordination of the industrial chain and supply chain, seized the opportunities ofthe window period of overseas order recovery and order backflow, and achieved growth inexports. With the rise in the COVID-19 vaccination rate, the spread of COVID-19 is slowingdown, but there are still outbreaks in some areas and the vaccination rates in low-incomecountries are still low. Additionally, affected by geopolitical factors and high commodity prices,the trade situation in 2022 remains highly uncertain. For details, please refer to Part IIIManagement Discussion and Analysis.The Board has approved a final dividend plan as follows: based on 882,341,295 shares, a cashdividend of RMB0.70 (tax inclusive) per 10 shares is to be distributed to the shareholders,with no bonus issue from either profit or capital reserves.This Report and its summary have been prepared in both Chinese and English. Should therebe any discrepancies or misunderstandings between the two versions, the Chinese versionsshall prevail.
Lu Thai Textile Co., Ltd. Annual Report 2021
Table of Contents
Part I Important Notes, Table of Contents and Definitions ...... 2
Part II Corporate Information and Key Financial Information ...... 6
Part III Management Discussion and Analysis ...... 11
Part IV Corporate Governance ...... 39
Part V Environmental and Social Responsibility ...... 82
Part VI Significant Events ...... 87
Part VII Share Changes and Shareholder Information ...... 124
Part VIII Preferred Shares ...... 139
Part IX Bonds ...... 140
Part X Financial Statements ...... 145
Lu Thai Textile Co., Ltd. Annual Report 2021
Documents Available for Reference
1. The financial statements signed and stamped by the Company’s legal representative, Chief Accountant andFinancial Manager;
2. The originals of all the Company’s announcements and documents disclosed to the public during the ReportingPeriod on Securities Times, Shanghai Securities News, China Securities Journal and Ta Kung Pao.
Lu Thai Textile Co., Ltd. Annual Report 2021
Definitions
| Term | Definition |
| The “Company”, “LTTC”, “Issuer” or “we” | Lu Thai Textile Co., Ltd. and its consolidated subsidiaries, except where the context otherwise requires |
| The Board of Directors | The Board of Directors of Lu Thai Textile Co., Ltd. |
| The Supervisory Committee | The Supervisory Committee of Lu Thai Textile Co., Ltd. |
| CSRC | The China Securities Regulatory Commission |
| RMB, RMB’0,000 | Expressed in the Chinese currency of Renminbi, expressed in ten thousand Renminbi |
| The “Company Law” | The “Company Law of the People‘s Republic of China” |
| The “Securities Law” | The “Securities Law of the People‘s Republic of China” |
| The “Reporting Period” or “Current Period” | The period from 1 January 2021 to 31 December 2021 |
Lu Thai Textile Co., Ltd. Annual Report 2021
Part II Corporate Information and Key Financial InformationI Corporate Information
| Stock name | LTTC, LTTC-B | Stock code | 000726, 200726 |
| Changed stock name (if any) | N/A | ||
| Stock exchange for stock listing | Shenzhen Stock Exchange | ||
| Company name in Chinese | 鲁泰纺织股份有限公司 | ||
| Abbr. | 鲁泰纺织 | ||
| Company name in English (if any) | LU THAI TEXTILE CO.，LTD | ||
| Abbr. (if any) | LTTC | ||
| Legal representative | Liu Zibin | ||
| Registered address | 61 Luthai Boulevard, High-tech Development Zone, Zibo City, Shandong Province, P.R.China | ||
| Zip code | 255086 | ||
| Past changes of registered address | 11 Mingbo Road, Zibo High-tech Development Zone, Shandong Province | ||
| Office address | 81 Songling East Road, Zichuan District, Zibo City, Shandong Province, P.R.China | ||
| Zip code | 255100 | ||
| Company website | www.lttc.com.cn | ||
| Email address | lttc@lttc.com.cn | ||
II Contact Information
| Board Secretary | Securities Representative | |
| Name | Zhang Keming | Zheng Weiyin and Li Kun |
| Address | 81 Songling East Road, Zichuan District, Zibo City, Shandong Province, P.R.China | 81 Songling East Road, Zichuan District, Zibo City, Shandong Province, P.R.China |
| Tel. | 0533-5277008 | 0533-5285166 |
| Fax | 0533-5418805 | 0533-5418805 |
| Email address | zhangkeming@lttc.com.cn | wyzheng@lttc.com.cn，likun@lttc.com.cn |
III Media for Information Disclosure and Place where this Report Is Lodged
| Stock exchange website where this Report is disclosed | Securities Times, Shanghai Securities News, China Securities Journal and |
Lu Thai Textile Co., Ltd. Annual Report 2021
| Ta Kung Pao (HK) | |
| Media and website where this Report is disclosed | www.cninfo.com.cn |
| Place where this Report is lodged | The Securities Department of the Company |
IV Change to Company Registered Information
| Unified social credit code | 91370300613281175K |
| Change to principal activity of the Company since going public (if any) | No change |
| Every change of controlling shareholder since incorporation (if any) | No change |
V Other InformationThe independent audit firm hired by the Company:
| Name | Grant Thornton China |
| Office address | 5th Floor, Scitech Palace 22 Jianguomen Wai Avenue, Chaoyang District, Beijing |
| Accountants writing signatures | He Feng and Cui Xiaoli |
The independent sponsor hired by the Company to exercise constant supervision over the Company in the Reporting Period:
√ Applicable □ Not applicable
| Name of sponsor | Office address of sponsor | Name of sponsor representative | Period of constant supervision |
| Guotai Junan Securities Co., Ltd. | Guotai Junan Plaza, 768 Nanjing West Road, Jing’an District, Shanghai | Ding Xiaowen and Wang Wenting | From 1 January 2021 to 31 December 2021 |
The independent financial advisor hired by the Company to exercise constant supervision over the Company in the Reporting Period:
□ Applicable √ Not applicable
VI Key Financial InformationIndicate by tick mark whether there is any retrospectively restated datum in the table below.
□ Yes √ No
| 2021 | 2020 | 2021-over-2020 change (%) | 2019 | |
| Operating revenue (RMB) | 5,238,262,348.85 | 4,751,222,464.14 | 10.25% | 6,801,381,448.94 |
| Net profit attributable to the listed company’s shareholders (RMB) | 347,609,693.30 | 97,308,593.36 | 257.22% | 952,386,011.49 |
Lu Thai Textile Co., Ltd. Annual Report 2021
| Net profit attributable to the listed company’s shareholders before exceptional gains and losses (RMB) | 190,492,580.40 | 20,039,094.03 | 850.60% | 662,416,013.00 |
| Net cash generated from/used in operating activities (RMB) | 348,137,005.48 | 593,535,922.89 | -41.35% | 1,086,110,575.51 |
| Basic earnings per share (RMB/share) | 0.39 | 0.11 | 254.55% | 1.11 |
| Diluted earnings per share (RMB/share) | 0.36 | 0.11 | 227.27% | 1.11 |
| Weighted average return on equity (%) | 4.44% | 1.26% | 3.18% | 12.96% |
| 31 December 2021 | 31 December 2020 | Change of 31 December 2021 over 31 December 2020 (%) | 31 December 2019 | |
| Total assets (RMB) | 12,987,221,271.63 | 12,129,903,960.65 | 7.07% | 11,885,431,553.08 |
| Equity attributable to the listed company’s shareholders (RMB) | 7,983,307,400.03 | 7,687,577,590.72 | 3.85% | 7,697,135,324.92 |
Indicate by tick mark whether the lower of the net profit attributable to the listed company’s shareholders before and after exceptionalgains and losses was negative for the last three accounting years, and the latest independent auditor’s report indicated that there wasuncertainty about the Company’s ability to continue as a going concern.
□ Yes √ No
Indicate by tick mark whether the lower of the net profit attributable to the listed company’s shareholders before and after exceptionalgains and losses was negative.
□ Yes √ No
VII Accounting Data Differences under China’s Accounting Standards for BusinessEnterprises (CAS) and International Financial Reporting Standards (IFRS) and ForeignAccounting Standards
1. Net Profit and Equity under CAS and IFRS
□ Applicable √ Not applicable
No difference for the Reporting Period.
Lu Thai Textile Co., Ltd. Annual Report 2021
2. Net Profit and Equity under CAS and Foreign Accounting Standards
□ Applicable √ Not applicable
No difference for the Reporting Period.VIII Key Financial Information by Quarter
Unit: RMB
| Q1 | Q2 | Q3 | Q4 | |
| Operating revenue | 993,485,161.79 | 1,226,828,489.15 | 1,346,367,447.24 | 1,671,581,250.67 |
| Net profit attributable to the listed company’s shareholders | 74,530,850.40 | 78,966,494.26 | 93,666,571.98 | 100,445,776.66 |
| Net profit attributable to the listed company’s shareholders before exceptional gains and losses | 15,513,465.07 | 38,768,067.01 | 80,690,683.49 | 55,520,364.83 |
| Net cash generated from/used in operating activities | -36,745,428.28 | 219,506,453.42 | 61,907,667.37 | 103,468,312.97 |
Indicate by tick mark whether any of the quarterly financial data in the table above or their summations differs materially from whathave been disclosed in the Company’s quarterly or interim reports.
□ Yes √ No
IX Exceptional Gains and Losses
√ Applicable □ Not applicable
Unit: RMB
| Item | 2021 | 2020 | 2019 | Note |
| Gain or loss on disposal of non-current assets (inclusive of impairment allowance write-offs) | 50,868,019.96 | -3,265,763.83 | -1,196,233.94 | |
| Government subsidies charged to current profit or loss (exclusive of government subsidies consistently given in the Company’s ordinary course of business at fixed quotas or amounts as per governmental policies or standards) | 58,686,874.90 | 61,358,132.11 | 62,198,864.45 | |
| Gain or loss on fair-value changes in held-for-trading financial assets and liabilities & income from disposal of held-for-trading financial assets and liabilities and available-for-sale financial | 77,620,424.02 | 46,684,051.43 | 241,537,682.90 |
Lu Thai Textile Co., Ltd. Annual Report 2021
| assets (exclusive of the effective portion of hedges that arise in the Company’s ordinary course of business) | ||||
| Reversed portions of impairment allowances for receivables which are tested individually for impairment | 6,198,745.44 | |||
| Non-operating income and expense other than the above | -1,700,653.34 | 2,373,569.56 | -2,857,141.21 | |
| Income from disposal of held-for-trading financial assets, financial liabilities and investments in debt obligations | 14,162,405.95 | |||
| Less: Income tax effects | 28,885,946.87 | 24,345,018.31 | 14,593,639.87 | |
| Non-controlling interests effects (net of tax) | 5,670,351.21 | 5,535,471.63 | 9,281,939.79 | |
| Total | 157,117,112.90 | 77,269,499.33 | 289,969,998.49 | -- |
Particulars about other items that meet the definition of exceptional gain/loss:
□ Applicable √ Not applicable
No such cases for the Reporting Period.Explanation of why the Company reclassifies as recurrent an exceptional gain/loss item listed in the Explanatory Announcement No.1 on Information Disclosure for Companies Offering Their Securities to the Public—Exceptional Gain/Loss Items:
□ Applicable √ Not applicable
No such cases for the Reporting Period.
Lu Thai Textile Co., Ltd. Annual Report 2021
Part III Management Discussion and AnalysisI Industry Overview for the Reporting PeriodThe Company is subject to the disclosure requirements for listed companies engaging in textile and apparel as stated in Guideline No.3 of the Shenzhen Stock Exchange for Self-regulation of Listed Companies—Industry-specific Information Disclosure.In 2021, facing the triple pressure of demand contraction, supply shock, and weakening expectations, China's textile industry stillshowed a good development trend. According to the data of the China National Textile and Apparel Council, the revenue of textileenterprises above the designated size has increased by 12.3% year on year in 2021; total profits rose by 25.4 % year on year. In termsof export markets, China's textile and apparel exports hit a record high, totaling USD315.46 billion, up by 8.3% year on year. But thelack of demand is still imposing pressure on the textile and garment industry. Domestically, market demand has not fully recovereddue to the impact of the pandemic. China's per capita spending on clothing accounts for 5.9% of the country's per capita spending in2021, down 0.3 percentage points over 2019. The growth of online retail sales of apparel goods is significantly lower than thepre-pandemic level. At abroad, uncertainty occurs in China’s textile and clothing export to developed economies, affected by factorssuch as protectionism and geopolitics. In addition, the high price volatility of global commodities has become a significant challengeto the smooth operation of the industry. There is still no fundamental change in problems of financing channels blockage, laborshortage and expensiveness.II Principal Activity of the Company in the Reporting Period
The Company is subject to the disclosure requirements for listed companies engaging in textile and apparel as stated in Guideline No.3 of the Shenzhen Stock Exchange for Self-regulation of Listed Companies—Industry-specific Information Disclosure.Since 2021, the Company has faced various challenges in production and management posed by intertwined disadvantages likerecurrent global pandemic, China-US trade friction and rising price of commodities including cotton and coal. In face of challenges,the Company adhered to the "customer-focused" philosophy and continues to promote the strategies of "Improve Quality andEfficiency" and "Overall Internationalization". Under the premise of implementing pandemic prevention and control, the Companyensures an orderly advance in staff production and life, management and operation through expanding the market, adjusting thestructure and building capabilities. During the Reporting Period, the product order and business performance have graduallyrecovered.For the Reporting Period, the Company achieved operating revenue of RMB5,238 million, operating profit of RMB371 million, a netprofit attributable to the Company as the parent of RMB348 million, and a net profit attributable to the Company as the parent beforeexceptional gains and losses of RMB190 million, respectively up 10.25%, 348.35%, 257.22% and 850.60% when compared to lastyear.During the Reporting Period, the Company has been rated as the "Leader in the Cotton Textile Industry during the 13th Five YearPlan" by China Cotton Textile Association, as the "Top 30 Enterprises in 2021 in the Dyeing and Printing Industry" by China Dyeingand Printing Association, and as the "Top Hundred Companies in 2021 in China’s Garment Industry" and the "Top 50 Business SuitCompanies in China" by China National Garment Association. Besides, it has been acclaimed as the "Advanced Enterprise inCorporate Culture Development in 2020 by Shandong Textile and Apparel Association. The Company has prioritized the followingaspects:
(I) Achieve business goals together as guided by strategiesConfronted by the complicated global economic situation, the recurrent pandemic situation and uncertainties of domestic economicenvironment, the management of the Company promoted measures to fight pandemic and ensure production, centered on customers
Lu Thai Textile Co., Ltd. Annual Report 2021
and focused expanding market, adjusting structure and building capabilities. We also tried to achieve increase both in revenue andprofit, to keep overseas production and workforce steady and to unceasingly build our market.(II) Promote targeted service and cooperation centered around customersThe Company consistently strengthened the market development with a development direction of becoming a globalized apparelsolution provider with advanced fabrics as our pillar. Based on accurate grasp of market trend and customer demand, service upgradewas comprehensively achieved and win-win cooperation with customers realized; market structure was optimized constantly, producttype increased actively, domestic market developed vigorously and business of career apparel promoted further; customer relationsand stickiness were built by setting up mechanism of high-level connection and layered communication with strategic customers andadvancing design service and customized development project based on customer demand. Facing complicated and volatile situationamid the pandemic, the Company kept tiding over the current difficulty with customers.We stepped up product innovation, applied research of new materials, skill and craft, and cooperation of R&D among the upstreamand downstream of industrial chain, colleges and universities and scientific research institutions. According to the industry trend ofsustainable development and new demand for differentiated products of customers in the post-pandemic era, the Company carried outa series of key skill research and exploration of industrialization of relevant products, such as the development of one-way moisturepermeability fabrics and pure-cotton recycled fabrics, and R&D of pure-cotton products that are durable, non-ironing, anti-virus andanti-microbial. It totally obtained 117 patents throughout the year, including 16 invention patents.(III) Continue the process of "Improve Quality and Efficiency" and "Overall Internationalization", and complement links at homewith links abroad for better developmentThe Company moved forward with its strategy of "Improve Quality and Efficiency" and 'Overall Internationalization" backed by itsproduct line, striving to achieve two-way development in both domestic and foreign market. During the Reporting Period, whilemanaging to meet customers’ differential needs by leveraging domestic and foreign advantages and with finer product specialization,the Company took steps to unleash one after another the vitality of six main product lines of yarn, yarn-dyed fabric, dyeing fabric,functional fabric, knitted fabric and apparel, and focused on areas such as quality assurance and upgrading, cost reduction, shorterdelivery-day and higher efficiency. Efforts have been made to upgrade product lines such as Lulian functional fabric and knittedfabric, and to multiply the product mix, so as to provide various options for customers, from formal to casual, from comfy to stylish.During the Reporting Period, the Company has cooperated with Rhino Intelligent Manufacturing, a platform launched by Alibaba,and has applied intelligentization in the apparel factory in a comprehensive fashion at the beginning of the cooperation. This enablesa digitalized and information-based apparel factory of higher efficiency and lower operating costs.(IV) Carry forward the corporate culture and improve the brand image.During the Reporting Period, the Company continued to uphold the principle of hard-working and deepened its corporate culture.Workers were mobilized to learn the history of the Party and engage in Party-themed activity in celebration of the 100th anniversaryof the founding of the CPC, with an aim to lead to the enterprise’s high-quality development supported by high-quality Party building.Various forms of activities were conducted like awarding exemplary and predominant workers, skill competition, and basketball andfootball leagues. Restricted share incentive scheme was carried out for workers to share the fruits of development. Each renovationand improvement took place in an overall manner, fostering an enabling working environment in which all employees were involvedand pulled their wisdom together for business growth.The Company, centered on producing mid- to high-end products, has been rated as the "Enterprise for Incubation of High-endProducts in Shandong Province" for four consecutive years, and was named National Key Talent Project last year. In the meantime,its holding subsidiary Lufeng Co., Ltd. was also named "Enterprise for Incubation of High-end Products in Shandong Province" lastyear, and was selected as one of the critical projects of the major industry of transforming old growth driver into the new one.III Core Competitiveness Analysis
1. The Company has a comprehensive vertical industrial chain and internationalized layout. It possesses the whole industrial chain
Lu Thai Textile Co., Ltd. Annual Report 2021
integrating spinning, bleaching and dyeing, neatening, testing, and garment making, as well as excellent quality control capabilitiesthrough various links of the production of high-end yarn-dyed fabrics. In order to leverage international resources, give play to theadvantage of internationalized industrial distribution and reinforce the leading international status in manufacturing the yarn-dyedfabrics for shirts, the Company has built various production bases in Cambodia, Burma and Vietnam etc., and established the designagency in Italy, and the market service offices in the U.S. and Japan.
2. The Company has better integrated management capability and high-level management system architecture. Since 1995, theCompany has successively passed the certification of ISO9001 quality management system, ISO14001 environmental managementsystem, ISO45001 Occupation Health Safety Management System, SA8000 Social Responsibility Management System, TheWorldwide Responsible Apparel Production Standard (WRAP), Sustainable Textile Production (STeP), Global Organic TextileStandard (GOTS), Global Recycle Standard (GRS) and China National Accreditation Service for Conformity Assessment (CNAS),and realized the internationalization, standardization and normalization of the corporate management. In order to make outstandingachievement in its operating management, better improve the Company’s business performance and capabilities, the Company hasintroduced the GB/T19580 Criteria for Performance Excellence step by step, set up the “big quality” system, promoted themanagement innovation and guaranteed the management quality.
3. The Company establishes its high-level technical cooperation platform by virtue of strong R&D capability. In fact, the Companyalways insists on the independent innovation, enhances its technical cooperation with various research institutes, colleges anduniversities, strategic clients and important suppliers by relying on various technical platforms including the national enterprisetechnical center, the national industrial design center, the national demonstration base for introducing talents, the nationalpost-doctoral scientific research station and Shandong Provincial Engineering Technology Research Center, dedicates itself to thecutting-edge technical research, and gradually transforms from technology research to integrated product development. Besides, theCompany will also transform from the overcoming of key technical difficulties to the mastery of technical principles and theformulation of industrial standards, and from the focus on technical innovation to the dynamic integration of new techniqueexploration with model innovation, materialize the low-carbon, green and sustainable development.
IV Core Business Analysis
1. Overview
For the Reporting Period, the Company recorded operating revenue of RMB5,238 million (a 10.25% year-on-year increase); cost ofsales of RMB4,153 million (a 11.1% year-on-year increase), selling expense of RMB120 million (a 4.64% year-on-year decline) andadministrative expense of RMB335 million (a 7.01 % year-on-year decrease); research and development expense of RMB253 million(a 9.36% year-on-year increase); and net cash generated from operating activities of RMB348 million (a 41.35% year-on-year drop).
2. Revenue and Cost Analysis
(1) Breakdown of Operating Revenue
Unit: RMB
| 2021 | 2020 | Change (%) | |||
| Operating revenue | As % of total operating revenue (%) | Operating revenue | As % of total operating revenue (%) | ||
| Total | 5,238,262,348.85 | 100% | 4,751,222,464.14 | 100% | 10.25% |
Lu Thai Textile Co., Ltd. Annual Report 2021
| By operating division | |||||
| Textile and apparel | 4,915,654,282.18 | 93.84% | 4,238,645,661.96 | 89.20% | 15.97% |
| Personal protective equipment (PPE) | 5,788,794.50 | 0.11% | 184,669,256.67 | 3.89% | -96.87% |
| Cotton | 1,943,648.71 | 0.04% | -100.00% | ||
| Electricity and steam | 182,929,779.75 | 3.49% | 182,709,470.17 | 3.85% | 0.12% |
| Others | 133,889,492.42 | 2.56% | 143,254,426.63 | 3.02% | -6.54% |
| By product category | |||||
| Fabric products | 4,033,321,318.13 | 77.00% | 3,371,261,899.44 | 70.95% | 19.64% |
| Shirts | 882,332,964.05 | 16.84% | 867,383,762.52 | 18.25% | 1.72% |
| PPE | 5,788,794.50 | 0.11% | 184,669,256.67 | 3.89% | -96.87% |
| Cotton | 1,943,648.71 | 0.04% | -100.00% | ||
| Electricity and steam | 182,929,779.75 | 3.49% | 182,709,470.17 | 3.85% | 0.12% |
| Others | 133,889,492.42 | 2.56% | 143,254,426.63 | 3.02% | -6.54% |
| By operating segment | |||||
| Hong Kong | 166,071,385.74 | 3.17% | 189,971,723.94 | 4.00% | -12.58% |
| Japan And South Korea | 254,482,374.29 | 4.86% | 364,740,573.67 | 7.68% | -30.23% |
| Southeast Asia | 1,523,121,466.68 | 29.08% | 1,062,716,851.02 | 22.37% | 43.32% |
| Europe and America | 560,579,079.30 | 10.70% | 575,125,583.72 | 12.10% | -2.53% |
| Others | 306,457,017.82 | 5.85% | 336,434,709.67 | 7.08% | -8.91% |
| Mainland China | 2,427,551,025.02 | 46.34% | 2,222,233,022.12 | 46.77% | 9.24% |
| By sales model | |||||
| Direct sales | 5,238,262,348.85 | 100.00% | 4,751,222,464.14 | 100.00% | 10.25% |
(2) Operating Division, Product Category, Operating Segment or Sales Model Contributing over 10% ofOperating Revenue or Operating Profit
□ Applicable √ Not applicable
(3) Whether Revenue from Physical Sales Is Higher than Service Revenue
√ Yes □ No
| Operating division | Item | Unit | 2021 | 2020 | Change (%) |
Lu Thai Textile Co., Ltd. Annual Report 2021
| Fabric | Unit sales | 0,000 meters | 20,123.11 | 16,769.7 | 20.00% |
| Output | 0,000 meters | 22,271.95 | 18,808.22 | 18.42% | |
| Inventory | 0,000 meters | 4,844.58 | 4,375.76 | 10.71% | |
| Apparel | Unit sales | 0,000 pieces | 1,443.99 | 1,809.67 | -20.21% |
| Output | 0,000 pieces | 1,444.92 | 1,889.1 | -23.51% | |
| Inventory | 0,000 pieces | 171.99 | 156.09 | 10.19% | |
| Electricity | Unit sales | 000 KWH | 123,065.87 | 149,646.34 | -17.76% |
| Output | 000 KWH | 424,085.59 | 409,893.45 | 3.46% | |
| Inventory | 000 KWH | ||||
| Steam | Unit sales | ton | 327,979.23 | 339,064.67 | -3.27% |
| Output | ton | 1,193,199.66 | 1,082,057.31 | 10.27% | |
| Inventory | ton |
Any over 30% YoY movements in the data above and why:
□ Applicable √ Not applicable
(4) Execution Progress of Major Signed Sales and Purchase Contracts in the Reporting Period
□ Applicable √ Not applicable
(5) Breakdown of Cost of Sales
By operating division and product category
Unit: RMB
| Operating division | Item | 2021 | 2020 | Change (%) | ||
| Cost of sales | As % of total cost of sales (%) | Cost of sales | As % of total cost of sales (%) | |||
| Textile and apparel | Cost of sales | 3,837,905,961.39 | 92.42% | 3,329,872,586.97 | 89.08% | 15.26% |
| PPE | Cost of sales | 3,778,908.51 | 0.09% | 127,124,669.03 | 3.40% | -97.03% |
| Cotton | Cost of sales | 1,560,876.66 | 0.04% | -100.00% | ||
| Electricity and steam | Cost of sales | 210,275,788.87 | 5.06% | 161,892,710.06 | 4.33% | 29.89% |
| Other | Cost of sales | 101,020,417.08 | 2.43% | 117,533,240.73 | 3.15% | -14.05% |
Unit: RMB
| Product category | Item | 2021 | 2020 | Change (%) | ||
| Cost of sales | As % of total cost of sales (%) | Cost of sales | As % of total cost of sales (%) | |||
Lu Thai Textile Co., Ltd. Annual Report 2021
| Fabric products | Cost of sales | 3,153,777,018.80 | 75.94% | 2,670,531,996.56 | 71.44% | 18.10% |
| Shirts | Cost of sales | 684,128,942.59 | 16.48% | 659,340,590.41 | 17.64% | 3.76% |
| PPE | Cost of sales | 3,778,908.51 | 0.09% | 127,124,669.03 | 3.40% | -97.03% |
| Cotton | Cost of sales | 1,560,876.66 | 0.04% | -100.00% | ||
| Electricity and steam | Cost of sales | 210,275,788.87 | 5.06% | 161,892,710.06 | 4.33% | 29.89% |
| Other | Cost of sales | 101,020,417.08 | 2.43% | 117,533,240.73 | 3.15% | -14.05% |
Note:
| Product | Period | Raw material | Labor cost | Depreciation | Energy | Manufacture expenses | Total |
| Fabric | 2021 | 48.60% | 17.47% | 7.36% | 17.45% | 9.12% | 100.00% |
| 2020 | 47.30% | 18.05% | 8.29% | 16.10% | 10.26% | 100.00% | |
| Shirts | 2021 | 53.47% | 34.50% | 2.85% | 1.23% | 7.95% | 100.00% |
| 2020 | 54.84% | 35.16% | 2.84% | 1.34% | 5.82% | 100.00% |
(6) Changes in the Scope of Consolidated Financial Statements for the Reporting Period
√ Yes □ No
During the year, the Company established new subsidiaries Hainan Huilin International Holdings Co., Ltd., Libra InternationalInvestment Pte. Ltd., and Zibo Banyang Villa Hotel Co., Ltd.
(7) Major Changes to the Business Scope or Product or Service Range in the Reporting Period
□ Applicable √ Not applicable
(8) Major Customers and Suppliers
Major customers:
| Total sales to top five customers (RMB) | 856,767,149.72 |
| Total sales to top five customers as % of total sales of the Reporting Period (%) | 16.36% |
| Total sales to related parties among top five customers as % of total sales of the Reporting Period (%) | 0.00% |
Information about top five customers:
| No. | Customer | Sales revenue contributed for the Reporting Period (RMB) | As % of total sales revenue (%) |
| Total | -- | 856,767,149.72 | 16.36% |
Lu Thai Textile Co., Ltd. Annual Report 2021
Other information about major customers:
□ Applicable √ Not applicable
Major suppliers:
| Total purchases from top five suppliers (RMB) | 935,235,608.03 |
| Total purchases from top five suppliers as % of total purchases of the Reporting Period (%) | 23.95% |
| Total purchases from related parties among top five suppliers as % of total purchases of the Reporting Period (%) | 0.00% |
Information about top five suppliers:
| No. | Supplier | Purchase in the Reporting Period (RMB) | As % of total purchases (%) |
| Total | -- | 935,235,608.03 | 23.95% |
Other information about major suppliers:
□ Applicable √ Not applicable
3. Expense
Unit: RMB
| 2021 | 2020 | Change (%) | Reason for any significant change | |
| Selling expense | 119,883,494.68 | 125,717,288.31 | -4.64% | |
| Administrative expense | 335,380,025.54 | 360,656,722.39 | -7.01% | |
| Finance costs | 44,988,908.41 | 109,546,654.83 | -58.93% | Increased interest income and decreased exchange losses |
| R&D expense | 252,912,911.63 | 231,265,031.12 | 9.36% |
4. Other Information Required by Information Disclosure Guide for Companies Engaged in Textile andGarment Services
(1) Capacity
The Company's own capacity
| Industry Classification | Item | 2021 | 2020 |
Fabrics
| Fabrics | Total capacity (fabrics) (10,000 meters) | 29,360.00 | 29,360.00 |
| Rate of capacity utilization | 76% | 64% | |
| Plants under construction | The Company's convertible bond | The Company's convertible |
Lu Thai Textile Co., Ltd. Annual Report 2021
| fundraising projects: The "Functional Fabric Intelligent Eco-park Project (Phase I)" with an annual capacity of 35 million meters of high-grade functional fabrics and the "Production Line Project of High-grade Printed and Dyed Fabrics" with an annual capacity of 25 million meters of high-grade printed and dyed fabrics were in progress. | bond fundraising projects: The "Functional Fabric Intelligent Eco-park Project (Phase I)" with an annual capacity of 35 million meters of high-grade functional fabrics and the "Production Line Project of High-grade Printed and Dyed Fabrics" with an annual capacity of 25 million meters of high-grade printed and dyed fabrics were in progress. | ||
| Garment | Total capacity (garment) (10,000 pieces) | 2,030.00 | 2,030.00 |
| Rate of capacity utilization | 70% | 80% | |
| Plants under construction |
Year-on-year change in the rate of capacity utilization above 10%: √YesFabrics: The capacity utilization saw improvements due to foreign demand recovery and temporary rise of orders.Garments: Product quantity experienced a year-on-year decrease, and the capacity utilization declined, following the restrictions onproduction in foreign manufacturing bases induced by the COVID-19 pandemic.Overseas capacity: √Yes
| Industry Classification | Item | Domestic | Overseas |
| Fabrics | Percentage of capacity | 83% | 17% |
| Capacity layout | Mainly in Shandong Province | Mainly in T?y Ninh Province, Vietnam | |
| Rate of capacity utilization | 78% | 67% | |
| Garment | Percentage of capacity | 47% | 53% |
| Capacity layout | Mainly in Shandong Province | Mainly in T?nh An Giang, Vietnam; Svay Rieng Province, Cambodia; and Thilawa Special Economic Zone, Yangon, Myanmar | |
| Rate of capacity utilization | 81% | 54% |
The Company’s expansion plan on developing overseas production capacity
Lu Thai Textile Co., Ltd. Annual Report 2021
The Company will invest in constructions of production bases in T?y Ninh Province, Vietnam, to produce woven and knitted fabrics.For now, the projects are under preparation.
(2) Sales model and channels
Product sales channels and operation methodsa. Sales modelThe Company adopted the order-based sales model. With the self-owned trademark "Luthai" for its fabric sales, it provided customerswith development and design plans based on customer needs, fabrics and patterns leading the market, fashion and technology, functionsand environmental protection. In addition, it engaged in brand operation of spot fabric on the new retail e-commerce platform. Shirtswere mainly made according to the orders of customers at home and abroad, and sold by brand owners.The Company's self-owned brand was operated through self-owned exclusive shops such as Lu Thai Exhibition and Sales Pavilion,counters of affiliated stores in malls and e-networking marketing. Meanwhile, the Company could provide customers with high-endcustomized shirts and customized business wear to meet the market demand of the high-end service industry.b. Sales channelsDirect sales: The headquarters of the Company carried out direct investments and operation, and operated and managed a brand at theheadquarters or by setting up a branch company in other regions to conclude transactions with customers offline.Online sales: Through self-developed platforms and large third-party online shopping platforms, the Company concluded transactionswith customers on the Internet and delivered goods to customers by express delivery services.
Unit: RMB
| Sales channels | Operating revenue | Cost of sales | Gross profit margin | YoY change in operating revenue | YoY change in cost of sales | YoY change in gross profit margin |
| Online sales | 4,947,854.11 | 1,610,250.89 | 67.46% | 263,220.57 | -73,158.43 | 3.39% |
| Direct sales | 4,040,320,645.05 | 3,155,572,769.29 | 21.90% | 661,297,015.92 | 481,167,795.85 | 1.05% |
| OEM/ODM | 870,385,783.02 | 680,722,941.21 | 21.79% | 15,448,383.73 | 26,938,737.00 | -1.74% |
| Total | 4,915,654,282.18 | 3,837,905,961.39 | 21.92% | 677,008,620.22 | 508,033,374.42 | 0.48% |
(3) Franchise and distribution
Franchisees and distributors recorded more than 30% of sales revenue
□ Yes √ No
(4) Online sales
Online sales recorded more than 30% of sales revenue
□ Yes √ No
Self-developed sales platforms
Lu Thai Textile Co., Ltd. Annual Report 2021
√ Yes □ No
| Start of operation | 30 March 2009 |
| Number of registered users | 140,073 |
| Average number of active monthly users (AMU) | 5,000 |
| Return rate of main brands | 3.00% |
| Return rate of main types | 3.00% |
Cooperation with third-party sales platforms
√ Yes □ No
Online sales channels opened or closed by the Company
□ Applicable √ Not applicable
Impact on the Company in the current period and subsequent periods:
Not applicable.
(5) Agency operation model
Agency operation model involved
□ Yes √ No
(6) Inventory
Inventory
| Main products | Days of turnover of inventories | Quantity of inventory | Inventory age | Year-over-year change in inventory balance | Reason |
| Fabrics (10,000 meters) | 86 | 3,824.1 | Within 1 year | 10.76% | |
| Fabrics (10,000 meters) | 1,020.48 | Over 1 year | 10.54% | ||
| Shirts (10,000 pieces) | 34 | 111.63 | Within 1 year | 7.76% | |
| Shirts (10,000 pieces) | 13.91 | Over 1 year | 203.71% | Increase in inventory as a result of the restricted customs clearance for Sino-Us trade |
Reserves for falling prices of inventory
| Item | 2021.12.31 | ||
| Carrying amount | Falling price reserves or provision for | Carrying value | |
Lu Thai Textile Co., Ltd. Annual Report 2021
| impairment on contract performance cost | |||
| Raw materials | 928,078,106.34 | 17,925,640.41 | 910,152,465.93 |
| Goods in process | 611,695,332.97 | 2,538,846.30 | 609,156,486.67 |
| Products on hand | 939,550,089.36 | 143,767,058.72 | 795,783,030.64 |
| Commissioned products | 30,254,811.04 | 30,254,811.04 | |
| Total | 2,509,578,339.71 | 164,231,545.43 | 2,345,346,794.28 |
Inventory information of retail channels such as franchised stores or distributors:
Not applicable.
(7) Brand building
Production and sales of brand clothing, apparel and home textile products
√ Yes □ No
Self-owned brands
| Brand name | Trademark name | Main product types | Characteristics | Target consumer group | Price zone of main products | Main sales areas | City levels |
| LTGRFF | LTGRFF | Shirts and suits | Classic business attire | Business people | RMB500-3000 | East China, South China and Southwest China | Provincial capital cities and other prefecture-level cities |
Trademark ownership disputes
□ Applicable √ Not applicable
(8) Others
Engaged in business related to apparel design
□ Yes √ No
Whether the Company held meetings for the placement of orders
□ Yes √ No
5. R&D Investments
√ Applicable □ Not applicable
| Names of main | Goals of projects | Progresses of projects | Intended goals | Estimated impact |
Lu Thai Textile Co., Ltd. Annual Report 2021
| R&D projects | on future development of the Company | |||
| Development of one-way moisture permeability fabrics | This project is aimed at providing a comfortable dressing experience with the technology of one-way moisture permeability. | The outcomes of laboratory-scale experiment are satisfying, followed by a pilot-scale experiment. | The Company aims at setting standards and meeting customers’ requirements. | This project is expected to improve core competence of the Company’s products. |
| Development of recycled cotton fabrics | This project is aimed at reusing the waste materials so as to reduce the waste of resources and protect the environment. | The Company is still in its early stage of the technological research. | The Company aims at producing the recycled cotton with a spinnable average fiber length and meeting the goal of industrialization. | This project is expected to enhance the Company’s brand influence and raise its status in the industry as a benchmark. |
| R&D of durable non-iron products with anti-virus and antibacterial functions | This project is aimed at reducing damages to the human body by viruses and bacteria and producing healthy and safe textiles easy to take care of. | The requirements for industrialization are met. | This project is aimed at producing DP3.5 3A antibacterial products enduring 50-time washing and resisting H1N1 virus with an activity value at no less than 2.0. | This project is expected to increase the Company’s financial benefits with a huge market potential. |
Details about R&D personnel:
| 2021 | 2020 | Change (%) | |
| Number of R&D personnel | 1,535 | 1,604 | -4.30% |
| R&D personnel as % of total employees | 14.00% | 12.68% | 1.32% |
| Educational background of R&D personnel | —— | —— | —— |
| Bachelor’s degree | 206 | 190 | 8.42% |
| Master’s degree | 30 | 30 | 0.00% |
| Age structure of R&D personnel | —— | —— | —— |
| Below 30 | 231 | 327 | -29.36% |
| 30~40 | 1,083 | 1,108 | -2.26% |
| 40 and beyond | 221 | 169 | 30.77% |
Details about R&D investments:
| 2021 | 2020 | Change (%) | |
| R&D investments (RMB) | 252,912,911.63 | 231,265,031.12 | 9.36% |
Lu Thai Textile Co., Ltd. Annual Report 2021
| R&D investments as % of operating revenue | 4.83% | 4.87% | -0.04% |
| Capitalized R&D investments (RMB) | 0.00 | 0.00 | 0.00% |
| Capitalized R&D investments as % of total R&D investments | 0.00% | 0.00% | 0.00% |
Reasons for any significant change to the composition of R&D personnel and the impact:
□ Applicable √ Not applicable
Reasons for any significant YoY change in the percentage of R&D expense in operating revenue:
□ Applicable √ Not applicable
Reason for any sharp variation in the percentage of capitalized R&D expense and rationale:
□ Applicable √ Not applicable
6. Cash Flows
Unit: RMB
| Item | 2021 | 2020 | Change (%) |
| Subtotal of cash generated from operating activities | 5,095,876,566.67 | 4,775,015,226.05 | 6.72% |
| Subtotal of cash used in operating activities | 4,747,739,561.19 | 4,181,479,303.16 | 13.54% |
| Net cash generated from/used in operating activities | 348,137,005.48 | 593,535,922.89 | -41.35% |
| Subtotal of cash generated from investing activities | 1,558,983,659.21 | 850,680,343.34 | 83.26% |
| Subtotal of cash used in investing activities | 1,530,504,624.63 | 1,638,855,294.04 | -6.61% |
| Net cash generated from/used in investing activities | 28,479,034.58 | -788,174,950.70 | 103.61% |
| Subtotal of cash generated from financing activities | 1,711,261,939.49 | 3,622,339,439.58 | -52.76% |
| Subtotal of cash used in financing activities | 1,507,951,696.50 | 2,888,674,850.63 | -47.80% |
| Net cash generated from/used in financing activities | 203,310,242.99 | 733,664,588.95 | -72.29% |
| Net increase in cash and cash equivalents | 573,476,477.42 | 517,971,388.55 | 10.72% |
Explanation of why any of the data above varies significantly:
√ Applicable □ Not applicable
Net cash generated from operating activities amounted to RMB348,137,005.48 during the Reporting Period, down 41.35% year onyear, primarily driven by the increased payments for goods; net cash generated from investing activities amounted toRMB28,479,034.58 during the Reporting Period, up 103.61% year on year, primarily driven by the disinvestment in wealthmanagement products upon maturity and the decreased investments in fixed assets; and net cash generated from financing activities
Lu Thai Textile Co., Ltd. Annual Report 2021
amounted to RMB203,310,242.99 during the Reporting Period, down 72.29% year on year, primarily driven by the decreasedborrowings obtained.Reason for any big difference between the net operating cash flow and the net profit for this Reporting Period
□ Applicable √ Not applicable
V Analysis of Non-Core Businesses
√ Applicable □ Not applicable
Unit: RMB
| Amount | As % of total profit | Source/Reason | Recurrent or not | |
| Return on investment | 50,449,943.70 | 13.89% | Income from the disposal of held-for-trading financial assets | Not |
| Gain/loss on changes in fair value | 16,415,304.41 | 4.52% | Gains on changes in the fair value of held-for-trading financial assets | Not |
| Asset impairments | -85,623,858.26 | -23.57% | Inventory valuation allowances | Not |
| Non-operating income | 5,417,119.07 | 1.49% | Income of non-operating compensation, etc | Not |
| Non-operating expense | 13,424,054.88 | 3.69% | Losses on the damage and retirement of non-current assets, donations, etc. | Not |
VI Analysis of Assets and Liabilities
1. Significant Changes in Asset Composition
Unit: RMB
| 31 December 2021 | 1 January 2021 | Change in percentage (%) | Reason for any significant change | |||
| Amount | As % of total assets | Amount | As % of total assets | |||
| Monetary assets | 1,999,712,889.35 | 15.40% | 1,400,478,034.81 | 11.42% | 3.98% | |
| Accounts receivable | 647,277,198.51 | 4.98% | 522,425,219.87 | 4.26% | 0.72% | |
| Inventories | 2,345,346,794.28 | 18.06% | 1,988,968,681.64 | 16.22% | 1.84% | |
| Investment property | 21,362,302.03 | 0.16% | 22,263,668.85 | 0.18% | -0.02% | |
| Long-term equity investments | 169,443,106.66 | 1.30% | 138,079,577.25 | 1.13% | 0.17% | |
Lu Thai Textile Co., Ltd. Annual Report 2021
| Fixed assets | 5,561,601,374.44 | 42.82% | 5,637,980,006.69 | 45.99% | -3.17% | |
| Construction in progress | 237,579,082.99 | 1.83% | 356,273,197.49 | 2.91% | -1.08% | |
| Right-of-use assets | 257,019,286.15 | 1.98% | 269,362,245.88 | 2.20% | -0.22% | |
| Short-term borrowings | 1,011,034,138.32 | 7.78% | 930,871,008.19 | 7.59% | 0.19% | |
| Contract liabilities | 204,967,348.96 | 1.58% | 141,339,705.62 | 1.15% | 0.43% | |
| Long-term borrowings | 684,962,473.24 | 5.27% | 495,520,342.78 | 4.04% | 1.23% | |
| Lease liabilities | 121,357,658.41 | 0.93% | 128,815,114.07 | 1.05% | -0.12% |
Indicate whether overseas assets account for a larger proportion of the total assets.
√ Applicable □ Not applicable
| Asset | Source | Asset value (RMB) | Location | Management model | Control measures to protect asset safety | Return generated (RMB) | As % of the Company’s equity | Material impairment risk (yes/no) |
| Lu Thai (Hong Kong) Textile Co., Ltd. | Incorporated | 191,246,511.91 | Hong Kong | Marketing | Main management personnel sent by the Company as the parent | 4,432,903.98 | 2.29% | No |
| Lu Thai (America) Textile Co., Ltd. | Incorporated | 4,643,034.45 | New York | Marketing | Main management personnel sent by the Company as the parent | -1,527,611.59 | 0.06% | No |
| Qiming Apparel Co., Ltd. | Incorporated | 157,347,321.28 | Svay Rieng | Manufacturing | Main management personnel sent by the Company as the parent | 275,575.09 | 1.88% | No |
| Vanguard Apparel Co., Ltd. | Incorporated | 89,438,343.06 | Rangoon | Manufacturing | Main management personnel sent | -443,135.80 | 1.07% | No |
Lu Thai Textile Co., Ltd. Annual Report 2021
| by the Company as the parent | ||||||||
| Continental Textile Co., Ltd. | Incorporated | 2,403,192,122.53 | Tay Ninh | Manufacturing | Main management personnel sent by the Company as the parent | 127,900,171.61 | 28.72% | No |
| Lu An Garments Co., Ltd. | Incorporated | 186,984,990.96 | Anjiang, Vietnam | Manufacturing | Main management personnel sent by the Company as the parent | -6,025,605.81 | 2.23% | No |
| Libra International Investment Pte. Ltd. | Incorporated | 395,142,781.79 | Singapore | Investment | Main management personnel sent by the Company as the parent | 1,441,904.47 | 4.72% | No |
2. Assets and Liabilities at Fair Value
√ Applicable □ Not applicable
Unit: RMB
| Item | Beginning amount | Gain/loss on fair-value changes in the Reporting Period | Cumulative fair-value changes charged to equity | Impairment allowance for the Reporting Period | Purchased in the Reporting Period | Sold in the Reporting Period | Other change | Ending amount |
| Financial assets | ||||||||
| 1. Held-for-trading financial assets (excluding derivative | 408,730,337.23 | 31,329,804.41 | 250,008,141.64 | 190,052,000.00 | ||||
Lu Thai Textile Co., Ltd. Annual Report 2021
| financial assets) | ||||||||
| 2. Derivative financial assets | 16,641,500.00 | -14,914,500.00 | 1,727,000.00 | |||||
| Subtotal of financial assets | 425,371,837.23 | 16,415,304.41 | 250,008,141.64 | 191,779,000.00 | ||||
| Others | 55,150,926.34 | -379,267.35 | -20,108,587.11 | 34,663,071.88 | ||||
| Total of the above | 480,522,763.57 | 16,415,304.41 | -379,267.35 | 250,008,141.64 | -20,108,587.11 | 226,442,071.88 | ||
| Financial liabilities | 0.00 | 0.00 |
Content of other change:
Changes in receivables financing.Significant changes to the measurement attributes of the major assets in the Reporting Period:
□ Yes √ No
3. Restricted Asset Rights as at the Period-End
For details, see Part X. VII. 62. Assets with restricted ownership and using right in this Report.
VII Investments Made
1. Total Investment Amount
□ Applicable √ Not applicable
2. Major Equity Investments Made in the Reporting Period
□ Applicable √ Not applicable
3. Major Non-Equity Investments Ongoing in the Reporting Period
□ Applicable √ Not applicable
4. Financial Investments
(1) Securities Investments
□ Applicable √ Not applicable
Lu Thai Textile Co., Ltd. Annual Report 2021
No such cases in the Reporting Period.
(2) Investments in Derivative Financial Instruments
√ Applicable □ Not applicable
Unit: RMB'0,000
| Operator | Relationship with the Company | Related-party transaction | Type of derivative | Initial investment amount | Starting date | Ending date | Beginning investment amount | Purchased in the Reporting Period | Sold in the Reporting Period | Impairment provision (if any) | Ending investment amount | Proportion of closing investment amount in the Company’s ending net assets | Actual gain/loss in the Reporting Period |
| Commercial bank | Non-related | No | Forward exchange settlement | 166,697.7 | 26 November 2020 | 30 December 2021 | 129,805.79 | 36,891.91 | 166,697.7 | 0 | 4,936.64 | ||
| Commercial bank | Non-related | No | Foreign exchange option | 144,646.46 | 22 October 2020 | 30 December 2022 | 62,150 | 82,496.46 | 106,638.46 | 38,008 | 4.54% | 415.36 | |
| Commercial bank | Non-related | No | Forward exchange transactions | 13,081.6 | 14 January 2021 | 1 April 2021 | 0 | 13,081.6 | 13,081.6 | 0 | 17.76 | ||
| Total | 324,425.76 | -- | -- | 191,955.79 | 132,469.97 | 286,417.76 | 38,008 | 4.54% | 5,369.76 | ||||
| Capital source for derivative investment | The Company’s own money | ||||||||||||
| Lawsuit (if applicable) | N/A | ||||||||||||
| Disclosure date of board of | 30 April 2020 | ||||||||||||
Lu Thai Textile Co., Ltd. Annual Report 2021
| directors announcement on approval of derivative investment (if any) | 15 June 2021 |
| Disclosure date of general meeting announcement on approval of derivative investment (if any) | |
| Analysis on risks and control measures of derivative products held in the Reporting Period (including but not limited to market risk, liquidity risk, credit risk, operation risk, law risk, etc.) | The Company conducted derivatives products transaction in order for hedging. And the forward settlement hedging was operated by installments, with the relevant amount not more than the planned derivatives products transactions. And all derivatives products transaction was zero-deposit. Meanwhile, the Company had a complete risk control system for sufficient analysis and prevention of possible risks such as market risk, liquidity risk and credit risk, operation risk and risk of laws and regulation. 1. Market risk: When the international and domestic economic situations change, the corresponding changes in exchange rates and interest rates may have an adverse impact on the financial derivative transactions of the Company. Precautions: The Company chooses financial instruments with simple structures, high liquidity and controllable risk and strictly controls the scale of derivative transactions, performing them by stages and in batches. Means such as extension and balance settlement can be adopted to ensure contract performance after the contract expires. 2. Liquidity risk and credit risk: Credit risk arises when the Company or counterparties in transactions couldn’t perform contracts due now, to liquidity or other factors that result in further economic loss. Precautions: The derivative transactions can only be done with financial institutions qualified for derivative transactions, as authorized by relevant national authorities or financial or foreign exchange authorities in the country or region where the Company operates. Derivative transactions with other institutions or individuals are not allowed so as to control related risk concerning counterparties. 3. Internal risk control: Derivative transactions are highly specialized and complex. Therefore, there is a risk of loss in derivative transactions due to the imperfect internal control system when business is performed. Precautions: The Company should strictly implement Management Policy for Investments in Securities and Derivative Transactions of Lu Thai Textile Co., Ltd., continuously optimize the business operation process and authorization management system, strengthen professional ethics education and business training for relevant personnel, clarify job responsibilities, engage in derivative transaction business strictly within the scope of authorization, and establish a timely reporting system for abnormal conditions to avoid operational risks. 4. Risk of laws and regulation: Derivative transactions of the Company must be strictly in compliance with relevant national laws and regulations. Otherwise, signed contracts, commitments and other legal documents may entail compliance risk and regulatory risk in terms of effectiveness and enforceability. Precautions: The Company should strengthen the supervision and inspection of the standardization of derivative transactions, the effectiveness of internal control mechanism, and the authenticity of information disclosure to avoid possible legal risks. The Company has fulfilled relevant approval procedures for its derivative transactions business, which is in line with the relevant national laws, |
Lu Thai Textile Co., Ltd. Annual Report 2021
| regulations, the Articles of Association, the Management Policy for the Transaction of Derivatives of Lu Thai, the Proposal on the Company's Derivative Transaction Plan deliberated and adopted at the 13th meeting of the 9th session of the Board of Directors held on 28 April 2020, and the Proposal on the Company's Derivative Transaction Plan deliberated and adopted at the 25th meeting of the 9th session of the Board of Directors held on 11 June 2021, and fulfilled the relevant information disclosure obligations. | |
| Changes of market prices or fair values in the Reporting Period of the invested derivatives. And the analysis on the fair value of the derivatives should include the specific use methods and the relevant assumptions and parameters. | 1. As of 31 December 2021, the Company held 5 undue financial derivatives contracts, totaling USD60 million, all of which were forex option contracts. 2. During 2021, the total amount of all settled financial derivatives of the Company was equivalent to USD441.5 million, generating gains of RMB53.6976 million, among which, gains of RMB49.3664 million were from the settlement of forward forex settlement contracts of USD250 million; gains of RMB4.1536 million were from the settlement of forex option contracts of USD171.5 million; gains of RMB0.1776 million were from the settlement of forward forex transactions of USD20 million. |
| Whether significant changes occurred to the Company’s accounting policy and specific accounting principles of derivatives in the Reporting Period compared to the previous Reporting Period | No significant changes |
| Specific opinion from independent directors on the Company’s derivatives investment and risk control | Independent directors Zhou Zhiji, Pan Ailing, Wang Xinyu and Qu Dongmei have issued the following professional advice on the Company's derivative transaction business: We believe that the Company's foreign exchange derivative transaction business is performed on the condition of ensuring normal operations. Transactions using its own funds are beneficial to avoiding the risk of exchange rate fluctuations, and are an effective tool to hedge exchange rate risk. By strengthening internal control, implementing stop-loss and risk prevention measures, the Company can improve its ability to resist exchange rate fluctuations and improve its management level. The derivative transaction plan proposed by the Board of Directors is feasible, necessary, and the risks are manageable. There is no damage to the interests of the Company and all the shareholders. |
5. Use of Funds Raised
√ Applicable □ Not applicable
(1) Overall Use of Funds Raised
√ Applicable □ Not applicable
Unit: RMB’0,000
| Raising year | Raising manner | Total of raised capital | Total of raised capital used in | Cumulative amount of raised | Total of raised capital which | Cumulative amount of raised | Ratio of cumulative amount | Total of raised capital unused | Purpose and direction of raised | Amount of raised capital |
Lu Thai Textile Co., Ltd. Annual Report 2021
| this period | capital used | purpose is changed in the report period | capital which purpose is changed | which purpose is changed | capital unused | unused for two years | ||||
| 2020 | Convertible bonds | 138,800 | 13,662.54 | 80,162.47 | 0 | 0 | 0.00% | 61,963.06 | RMB 1.0397 million, deposited in the special account for raised capital; RMB 618.5909 million, for purchasing financial products and deposit products (including the net income RMB 33.1994 million from interest income deducted handling charge) | 0 |
| Total | -- | 138,800 | 13,662.54 | 80,162.47 | 0 | 0 | 0.00% | 61,963.06 | -- | 0 |
| General use situation of raised capital | ||||||||||
| (I) Amount of actual raised capital and arrival date Upon approval by China Securities Regulatory Commission in the document “ZJXK [2020]299”, the Company publically issued 14,000,000 convertible bonds on April 9, 2020 at par value RMB 100, the issued amount was RMB 1.4 billion, and the Company | ||||||||||
Lu Thai Textile Co., Ltd. Annual Report 2021
(2) Commitments on Projects with Funds Raised
√ Applicable □ Not applicable
Unit: RMB’0,000
actually received the amount of raised capital RMB 1.388 billion after deducted the underwriting fee RMB 12 million. The aboveamount was remitted in cash in RMB. After deducted legal fee, accountant fee, credit rating fee, information disclosure fee,issuing commission and other costs RMB 2.54 million in total from the above actually raised capital, the net amount of raisedcapital was RMB 1385.46 million, which entered the account on April 15, 2020, and Grant Thornton International Ltd (SpecialGeneral Partnership) issued the capital verification report with reference No. Grant Thornton Verification [2020] 371ZC0090 forit after verification.(II) Use situation and balance of raised capitalBy December 31, 2021, the Company directly invested RMB 801.6247 million in total from the raised capital for its capitalraising projects, the unused amount was RMB 619.6306 million (including the net income RMB 33.1994 million from interestincome deducted handling charge), the balance of the special raised capital account at the end of period was RMB 1.0397 millionand the amount of raised capital not redeemed and used for purchasing financial products, deposit products from banks was RMB
618.5909 million.
Committedinvestment projectsand use direction ofover raised capital
| Committed investment projects and use direction of over raised capital | Whether the projects are changed (including partially changed projects) | Total of committed investment of raised capital | Total investment after modification (1) | Amount invested in this report period | Cumulative investment amount by the end of period (2) | Investment progress by the end of period (3) ＝(2)/(1) | Date when the project reached the intended available status | Benefit realized in this report period | Whether reached the expected benefit | Whether project feasibility changed significantly |
| Committed investment projects | ||||||||||
| Functional fabric smart eco-park project (Phase 1) | No | 85,000 | 85,000 | 11,341.17 | 47,348.68 | 55.70% | 31 May 2023 | N/A | No | |
| High-end printing and dyeing fabric production line project | No | 25,000 | 25,000 | 2,321.37 | 4,008.2 | 16.03% | 31 October 2022 | N/A | No | |
| Supplement working capital | No | 28,800 | 28,800 | 28,805.59 | 100.02% | N/A | No | |||
| Subtotal of | -- | 138,80 | 138,80 | 13,662. | 80,162. | -- | -- | -- | -- | |
Lu Thai Textile Co., Ltd. Annual Report 2021
| committed investment projects | 0 | 0 | 54 | 47 | ||||||
| Use direction of over raised capital | ||||||||||
| N/A | ||||||||||
| Total | -- | 138,800 | 138,800 | 13,662.54 | 80,162.47 | -- | -- | 0 | -- | -- |
| Situation and reasons that it did not reach the planned progress or expected return (based on specific projects) | In the Reporting Period, due to the impact of the COVID-19 epidemic, the capital raising projects “Functional fabric smart eco-park project (Phase 1)” and “High-end Printing and Dyeing Fabric Production Line Project” delayed in construction progress. | |||||||||
| Note for significant change of project feasibility | N/A | |||||||||
| Amount, purpose and use progress of over raised capital | N/A | |||||||||
| Change of implementation site of capital raising project | N/A | |||||||||
| Adjustment of implementation mode of capital raising project | N/A | |||||||||
| Advance investment and displacement of capital raising project | Applicable | |||||||||
| By 30 April 2020, the total amount of displaced capital was RMB 191.4288 million, including the amount RMB 189.8388 million invested in the project with the self-raised capital of the Company in advance, and payment of issuing cost RMB 1.59 million with its self-raised capital | ||||||||||
| Temporary supplement to working capital with unused raised capital | N/A | |||||||||
| Balance of raised capital after implement of project and relevant reasons | N/A | |||||||||
| Purpose and use direction of unused | By 31 December 2021, RMB 1.0397 million in the unused raised capital was deposited in the raised capital account, and RMB 618.5909 million was used for cash management. | |||||||||
Lu Thai Textile Co., Ltd. Annual Report 2021
| raised capital | |
| Problems existing in use and information disclosure of raised capital or other situation | None |
(3) Changes in Projects with Funds Raised
□ Applicable √ Not applicable
No such cases in the Reporting Period.VIII Sale of Major Assets and Equity Interests
1. Sale of Major Assets
□ Applicable √ Not applicable
No such cases in the Reporting Period.
2. Sale of Major Equity Interests
□ Applicable √ Not applicable
IX Major Subsidiaries
√ Applicable □ Not applicable
Major fully/majority-owned subsidiaries and those minority-owned subsidiaries with an over 10% effect on the Company’s net profit:
Unit: RMB
| Name | Relationship with the Company | Principal activity | Registered capital | Total assets | Net assets | Operating revenue | Operating profit | Net profit |
| Lufeng Weaving & Dyeing Co., Ltd. | Subsidiary | Fabric | 706,160,000 | 1,885,678,911.54 | 1,249,487,228.93 | 1,400,185,935.63 | -15,836,294.87 | -7,534,683.42 |
Lu Thai Textile Co., Ltd. Annual Report 2021
| Shandong Lulian New Materials Co., Ltd. | Subsidiary | Fabric | 400,000,000 | 998,361,420.15 | 288,875,133.91 | 44,524,344.91 | -77,012,952.17 | -79,511,556.10 |
Subsidiaries obtained or disposed in the Reporting Period:
□ Applicable √ Not applicable
Information about major majority- and minority-owned subsidiaries:
Lufeng Weaving & Dyeing Co., Ltd. (hereinafter called “Lufeng Weaving & Dyeing”) is the holding subsidiary of the Company.Registration place: Zibo, Shandong; registered capital: RMB706.160 million. The mainly manufacturing and selling textile printingand dyeing products and the products of clothing and garments, and it were authenticated to be high-tech enterprise in October 2014.During the Reporting Period, due to the impact of the recurrent COVID-19 epidemic, Lufeng Weaving & Dyeing’s export business andhigh value-added orders were reduced, which had a greater impact on performance. Lufeng Weaving & Dyeing achieved operatingrevenue of RMB 1.4 billion, up 6.84% year on-year and net profit of RMB -7.5347 million, down 134.15% year-on-year.Shandong Lulian New Materials Co., Ltd. (hereinafter referred to as "Lulian New Materials") is the holding subsidiary of the Company.Registration place: Zibo, Shandong; registered capital: RMB 400 million. It was established in April 2019 and mainly manufacturingand selling functional fabrics. During the Reporting Period, it is still under construction, and production of some products has begun.Lulian New Materials achieved operating revenue of RMB 44.5243 million, up 480.97% year on-year due to a low base comparisonand net profit of RMB -79.5116 million, down 169.64% year-on-year.X Structured Bodies Controlled by the Company
□ Applicable √ Not applicable
XI Prospects
1. Industry competition and development trend
The textile industry of China has certain strength in the global textile industry, mainly showing in industry chain, technology, laborefficiency and other aspects. The COVID-19 epidemic has impacted the economy and trade of various countries since 2020, but thecompetitive edge of the textile industry of China in the international market still remains. In recent years, when the domesticenvironmental protection requirements are becoming more stringent, production costs are going up and the transformation and upgradepolicy is implemented in China, the textile industry in the post-epidemic era may face structural adjustment, and the demand toyarn-dyed fabric used for shirts will change as diversified products in small batch, functionality and leisure orientation.
2. Development strategy of the Company
The Company is a large-scale textile enterprise with a complete industrial chain integrating spinning, dyeing, weaving, post-treatmentand garment manufacturing. It is the world's largest production base for yarn-dyed fabrics for shirts, providing blending of three majorseries of shirt fabrics of pure cotton and natural fiber, cotton and natural fiber as well as cotton and functional fiber. And the newlydeveloped shirt knitted fabric and elastic fabric are also popular in markets. In order to maintain the outstanding advantages of theCompany in global shirt-dyed fabrics, the Company is pushing intelligent manufacturing upgrades and integrating domestic andforeign advantageous resources to deepen internationalization of the Company with regional advantages. The Company combines
Lu Thai Textile Co., Ltd. Annual Report 2021
quality innovation and customer needs, and innovates the marketing model with advantages of resources in each channel. High-endshirt customization services are provided to meet various needs of customers. Furthermore, the Company increases investment ininnovation to improve R&D and design and develop new fabrics. The Company holds the concept of low-carbon environmentalprotection for sustainable development.
3. Business plan (the following description does not constitute any commitment of the Company)
(1) In terms of corporate governance, in order to ensure the healthy, stable and sustainable development of the Company at theinstitutional level, the Company will establish an internal control system to improve organizational structure, corporate governancestructure and risk prevention mechanism.
(2) In the aspect of market development, the Company actively develops emerging markets on the basis of maintaining the existingmarket, accurately understands market trend and customers’ demand, and fully improves service capacity, so that the Company couldbe a global dress solution supplier based on leading fabric.
(3) In the aspect of business administration, the Company continually Implements the strategy of “quality and efficiency improvement”and “comprehensive internationalization”, makes more efforts in developing market, adjusting structure and improving capacity,strengthens integrated product development (IPD), promotes innovation while meeting market demand and builds up a flexible, rapidresponse, efficient and traceable supply system chain with internal and external resources.
(4) In terms of industrial overall arrangement, in order to maintain the leading position of the Company in the global yarn-dyed industry,the Company rationally allocates domestic and foreign resources and improves production efficiency while keeping product qualityrelying on the advantages of U.S. companies, Milan and Japan Office in market development, design and R&D, customer service andtalent development, and the cost advantages of Southeast Asian production bases.
4. Capital needs, sources and planning
Within the Reporting Period, the functional fabric intelligent ecological park project (phase I) of the Company’s holding subsidiaryLulian New Materials and the high-end printing and dyeing fabrics production line project of Lufeng Weaving & Dyeing were underconstruction. Corresponding equipment installation and trial production will be arranged successively, and the project fund is from theraised fund of the A Share convertible bonds issued by the Company.
5. Risks that bring adverse impact to company development strategy and business objectives and countermeasures of the Company
(1) Impact of economic environment: under the enormous uncertainty risk of the international trade, the geopolitical risk and theimpact of the recurrent COVID-19 epidemic, the Company will face more challenges. In addition, the economic development of Chinashould be transformed and upgrade, therefore, the Company will continue to strictly execute coronavirus control measures, guaranteeproduction and safety and further utilize various resources at home and abroad to develop domestic and overseas markets, so as to catchdevelopment opportunities after COVID-19 is controlled.
(2) Price fluctuation of raw materials: cotton is the major production material of the Company, and the price of cotton is impacted bymarket supply and demand, climate, policy, exchange rate, quota and other factors, therefore, based on the production orders andimport quota, the Company seriously considers the information of global raw cotton market, properly works out procurement strategyand actively reduces cost and gross profit margin fluctuations arising from price change of raw cotton.
(3) Change of exchange rate: The import and export business takes up a large proportion in the Company’s business. With greaterfluctuations in RMB, the exchange rate fluctuations will place a remarkable impact on the Company’s performance. In order to reduceadverse influence of exchange rate fluctuation, the Company has established a risk-neutral philosophy to deal with exchange ratefluctuations. Based on actual needs arising from production and operation, it will take appropriate measures at a proper timing toavoid the risk of currency fluctuations. Firstly, the Company appropriately conducted foreign exchange hedging, using forward FXsales and purchase, forward foreign exchange trading and option portfolios to avoid some risks Secondly, the Company madereasonable arrangement on settlement day and currency structure and conclusion of agreements on fixed foreign exchange rate toavoid exchange rate-related risks. Thirdly, the Company adjusted the Renminbi and foreign-currency liabilities structure to preventthe transaction risks in a proactive manner. Fourthly, according to the trends of exchange rates, the Company properly adjustedimports of raw and auxiliary materials to partially offset the influence of exchange rate fluctuations on the Company.
Lu Thai Textile Co., Ltd. Annual Report 2021
XII Communications with the Investment Community such as Researches, Inquiries andInterviews during the Reporting Period
√ Applicable □ Not applicable
| Date of visit | Place of visit | Way of visit | Type of visitor | Visitor | Contents and materials provided | Index to main inquiry information |
| 31 March 2021 | The Company’s conference room | By phone | Institution | Institution investor | About basic information of the Company | Investor Relations Management Archive 20210401 disclosed on Cninfo by the Company on 1 April 2021 |
| 1 April 2021 | The Company’s conference room | By phone | Institution | Institution investor | About basic information of the Company | Investor Relations Management Archive 20210402 disclosed on Cninfo by the Company on 2 April 2021 |
| 13 April 2021 | The Company’s conference room | Other | Other | Institutional and individual investors | Annual results briefing | Results Briefing, Roadshow Information 20210413 disclosed on Cninfo by the Company on 14 April 2021 |
| 30 August 2021 | The Company’s conference room | By phone | Institution | Institution investor | About basic information of the Company | Investor Relations Management Archive 20210830 disclosed on Cninfo by the Company on 31 August 2021 |
| 2 September 2021 | The Company’s conference room | By phone | Institution | Institution investor | About basic information of the Company | Investor Relations Management Archive 20210904 disclosed on Cninfo by the Company on 4 September 2021 |
| 29 October 2021 | The Company’s conference room | By phone | Institution | Institution investor | About basic information of the Company | Investor Relations Management Archive 20211101 disclosed on Cninfo by the |
Lu Thai Textile Co., Ltd. Annual Report 2021
| Company on 1 November 2021 | ||||||
| 29 December 2021 | The Company’s conference room | By phone | Institution | Institution investor | About basic information of the Company | Investor Relations Management Archive 2021129 disclosed on Cninfo by the Company on 30 December 2021 |
Part IV Corporate GovernanceI General Information of Corporate GovernanceDuring the Reporting Period, the Company strictly conforms to Company Law, Securities Law (Revised in 2019) and Governing Rulesfor Listed Company, Guideline No. 1 of the Shenzhen Stock Exchange for the Self-regulation of Listed Companies—OperationCompliance of Main Board Listed Companies as well as relevant stipulations and requirements from normative documents,continuously improves the corporate governance structure, safeguards the standardized and efficient operation of three Committees andone Management, forms a sound and effective internal control system so as to safeguard legitimate interests of the Company andinvestors. Within the Reporting Period, the Company amended Articles of Association of Lu Thai Textile Co., Ltd., ManagementMethods for External Investments of Lu Thai Textile Co., Ltd., Management Rules for Authorization of Lu Thai Textile Co., Ltd.
1. Shareholders and Shareholders’ General Meeting
The Company shall convene and hold the shareholders meeting in strict accordance with the Shareholders Meeting Procedural Rules,and guarantee that all shareholders, especially the minority shareholders, could have equal status and fully execute their rights.
2. The relationship between the majority shareholders and the Company
The Company’s majority shareholders acted according to relevant standards without directly or indirectly intervening the Company’sdecision-making and operating activities; the Company was independent with its majority shareholders in business, personnel, assets,organization, finance, and the Company’s Board of Directors, Supervisory Committee and Internal Organs could completelyindependent to operate. There was no situation about annexing the assets or occupation of funds of the Company by principalshareholders or other events on infringing the interest of the Company and other shareholders.
3. The directors and Board of Directors
The Company’s Board of Directors shall perform their duties in strict accordance with Articles of Association and the Board ofDirectors Procedural Rules. Under the Board of Directors, the Company established the Strategy Committee, the Audit Committee, theNomination Committee and the Remuneration Committee. Various specialized committees would fully perform their functions andfurther guarantee the high-efficient operation and the scientific decision-making of the Board of Directors.
4. Supervisors and Supervisory Committee
The Company’s Supervisory Committee will perform their duties in strict accordance with Articles of Association and the SupervisoryCommittee Procedural Rules. The number of members and the composition of the Company’s Supervisory Committee shall complywith applicable laws and regulations; the Company’s supervisors shall strictly abide by relevant provisions, seriously execute theirduties and supervise the Company’s financial status and the legal execution of duties of the directors, president and other seniormanagers by adhering to the principle of being responsible for the shareholders and the listed company.
5. Information disclosure
The Company strictly, in accordance with the laws, regulations and the Articles of Association, disclosed relevant information in a true,accurate, complete and timely manner. The Company has formulated the Information Disclosure Management System, InformationInsider Registration Management System and Investor Relations Management System, etc., to ensure the fairness, openness andfairness of information disclosure.
6. Investor relations management
During the Reporting Period, as required by Investor Relations Management System, to maintain good communication with investors,the Company accepted on-site investigations and consultations of investors through on-site investigations and telephone consultations,and promptly answered questions asked by investors on the SZSE Easy-IR.Indicate by tick market whether there is any material incompliance with the applicable laws, administrative regulations and the CSRCrules for the governance of listed companies.
□ Yes √ No
No such cases in the Reporting Period.II The Company’s Independence from Its Controlling Shareholder and Actual Controller inAssets, Personnel, Financial Affairs, Organization and Business
1. As for the business: the Company shall establish its independent and complete business system with the market-oriented independentmanagement ability. In the respect of business operation, the Company is completely separated from the controlling shareholders.
2. As for the personnel: the Company’s labor, personnel and remuneration management departments shall be independent with theirown sound systems, and separated from that of the substantial shareholder. The Company’s senior managers are not allowed tosimultaneously hold any office in any shareholder’s unit.
3. As for the assets: the Company possesses the entire and independent legal person property right with independent and perfect theproduction system, auxiliary production systems and supporting facilities; and possesses the independent ownership of the intangibleassets such as the industrial property, trademarks, non-patented technology.
4. As for the institution: the Company’s Board of Directors, Supervisory Committee and other internal organization shall be sound andinvolved in independent operation. The substantial shareholder shall legally execute its rights, fulfill corresponding obligations and notsurpass the shareholders meeting to directly or indirectly interfere the Company’s business activities.
5. As for the finance: the Company possesses independent financial departments with normative financial accounting system andfinancial management system as well as internal control system with independent bank account.
III Horizontal Competition
□ Applicable √ Not applicable
IV Annual and Special General Meetings Convened during the Reporting Period
1. General Meeting Convened during the Reporting Period
| Meeting | Type | Investor participation ratio | Date of the meeting | Disclosure date | Resolutions |
| The 2020 Annual General Meeting | Annual General Meeting | 34.24% | 20 April 2021 | 21 April 2021 | It deliberated and approved: 1. Proposal on 2020 Annual Work Report of the Board of Directors; 2. Proposal on 2020 Annual Work Report of the Board of Supervisors; 3. Proposal on the Company's 2020 Annual Report and Its Abstracts; 4. Proposal on the Company's 2020 Annual Financial Accounting Report; 5. Proposal on the Company’s Profit Distribution Plan for 2020; 6. Proposal on the Renewal of the Company's 2021 Annual Financial Audit and Internal Control Audit Institution. |
| The 1st | Extraordinar | 34.50% | 13 May 2021 | 14 May 2021 | It deliberated and approved: 1. Proposal on the |
| Extraordinary General Meeting of 2021 | y General Meeting | Company's 2021 Restricted Share Incentive Scheme (Draft) and Its Abstracts; 2. Proposal on the Company's Implementation and Appraisal Regulations on 2021 Restricted Share Incentive Scheme; 3. Proposal on Submitting the Authorization for the Board of Directors to Handle the Company's 2021 Restricted Share Incentive Scheme to the General Meeting of Shareholders. | |||
| The 2nd Extraordinary General Meeting of 2021 | Extraordinary General Meeting | 31.69% | 13 September 2021 | 14 September 2021 | It deliberated and approved: 1. Proposal on Amending Relevant Articles of the Foreign Investment Regulations for Lu Thai Textile Co., Ltd.; 2. Proposal on Amending Relevant Articles of the Authorization Management System for Lu Thai Textile Co., Ltd.; 3. Proposal on Preparing the Remuneration Plan for Directors, Supervisors and Officers; 4. Proposal on Repurchase and Cancel Authorized but Unlocked Restricted Share of the Incentive Personnel not Conforming to the Incentive Condition. |
2. Special General Meetings Convened at the Request of Preferred Shareholders with Resumed VotingRights
□ Applicable √ Not applicable
V Directors, Supervisors and Senior Management
1. Basic Information
| Name | Office title | Incumbent/Former | Gender | Age | Start of tenure | End of tenure | Beginning shareholding (share) | Increase in the Reporting Period (share) | Decrease in the Reporting Period (share) | Other increase/decrease (share) | Ending shareholding (share) | Reason for change |
| Liu Zibin | Chairman and President | Incumbent | Male | 57 | 6 June 2007 | 10 June 2022 | 148,290 | 148,290 | ||||
| Xu Zhinan | Vice Chair | Incumbent | Male | 92 | 6 May 2004 | 10 June |
| man | 2022 | |||||||||||
| Fujiwara Hidetoshi | Director | Incumbent | Male | 82 | 7 May 1998 | 10 June 2022 | ||||||
| Chen Ruimou | Director | Incumbent | Male | 78 | 16 April 2000 | 10 June 2022 | ||||||
| Zeng Facheng | Director | Incumbent | Male | 71 | 6 June 2007 | 10 June 2022 | ||||||
| Liu Deming | Director, Vice Controller of Global Marketing Department | Incumbent | Male | 32 | 12 May 2017 | 10 June 2022 | ||||||
| Qin Guiling | Director | Incumbent | Female | 56 | 7 May 1998 | 10 June 2022 | 126,542 | 126,542 | ||||
| Zhang Hongmei | Director and Chief Accountant | Incumbent | Female | 52 | 6 June 2016 | 10 June 2022 | 92,500 | 300,000 | 392,500 | Granted restricted shares | ||
| Zhou Zhiji | Independent Director | Incumbent | Male | 59 | 10 March 2019 | 10 June 2022 | ||||||
| Pan Ailing | Independent Director | Incumbent | Female | 57 | 6 June 2016 | 10 June 2022 | ||||||
| Wang Xinyu | Independent Director | Incumbent | Male | 55 | 6 June 2016 | 10 June 2022 |
| Qu Dongmei | Independent Director | Incumbent | Female | 53 | 10 June 2019 | 10 June 2022 | ||||||
| Zhang Shougang | Chairman of the Supervisory Committee | Incumbent | Male | 52 | 18 February 2018 | 10 June 2022 | 73,100 | 73,100 | ||||
| Liu Zilong | Supervisor | Incumbent | Male | 54 | 6 June 2007 | 10 June 2022 | 10,000 | 10,000 | ||||
| Dong Shibing | Supervisor, Manager of Logistics Management Department | Incumbent | Male | 53 | 6 June 2007 | 10 June 2022 | 5,000 | 5,000 | ||||
| Zhang Jianxiang | Counselor | Incumbent | Male | 54 | 6 June 2007 | 10 June 2022 | 52,150 | 52,150 | ||||
| Wang Jiabin | Chairman of the Labor Union, Security Controller | Incumbent | Male | 59 | 6 June 2007 | 10 June 2022 | 83,700 | 300,000 | 383,700 | Granted restricted shares | ||
| Zhang Zhanqi | Vice president, Controller of Global | Incumbent | Male | 50 | 6 June 2007 | 10 June 2022 | 80,300 | 300,000 | 380,300 | Granted restricted shares |
| Marketing Department | ||||||||||||
| Zhang Keming | Board Secretary, Controller of Financial Management Department | Incumbent | Male | 54 | 6 June 2007 | 10 June 2022 | 77,700 | 200,000 | 277,700 | Granted restricted shares | ||
| Li Wenji | Controller of Business Management Department | Incumbent | Male | 55 | 8 June 2016 | 10 June 2022 | 10,000 | 200,000 | 210,000 | Granted restricted shares | ||
| Zhang Wei | Assistant to Chairman of the Board, Controller of Strategy and Market Department | Incumbent | Male | 37 | 18 January 2018 | 10 June 2022 | 200,000 | 200,000 | Granted restricted shares | |||
| Fujiwara Matsuzaka | GM of Japan Office | Incumbent | Male | 49 | 9 December 2014 | 10 June 2022 |
| Yu Shouzheng | President Assistant, Controller of Energy and Environment Protection Department | Incumbent | Male | 54 | 6 June 2007 | 10 June 2022 | 83,100 | 200,000 | 283,100 | Granted restricted shares | ||
| Shang Chenggang | President Assistant, Controller of Garment Product Line | Incumbent | Male | 49 | 6 June 2013 | 10 June 2022 | 30,000 | 200,000 | 230,000 | Granted restricted shares | ||
| Du Lixin | Chief Engineer, Executive Dean of Lu Thai Engineering Technology Research Institute | Incumbent | Male | 47 | 18 January 2018 | 10 June 2022 | 200,000 | 200,000 | Granted restricted shares | |||
| Guo | Contro | Incum | Male | 50 | 18 | 10 | 200,00 | 200,00 | Grante |
| Heng | ller of Functional Fabric Product Line | bent | January 2018 | June 2022 | 0 | 0 | d restricted shares | |||||
| Fu Guannan | President Assistant, Investment Director | Incumbent | Female | 39 | 14 December 2020 | 10 June 2022 | 200,000 | 200,000 | Granted restricted shares | |||
| Wang Fangshui | Director | Former | Male | 61 | 7 May 1998 | 26 February 2021 | 146,753 | 146,753 | ||||
| Bi Xiuli | Independent Director | Former | Female | 55 | 6 June 2016 | 25 February 2021 | ||||||
| Wang Changzhao | Executive Dean of Lu Thai Engineering Technology Research Institute | Former | Male | 48 | 6 June 2013 | 29 June 2021 | 22,500 | 22,500 | ||||
| Total | -- | -- | -- | -- | -- | -- | 1,041,635 | 0 | 0 | 2,500,000 | 3,541,635 | -- |
Indicate by tick mark whether any directors or supervisors left or any senior management were disengaged during the ReportingPeriod
√ Yes □ No
Bi Xiuli, an independent director of the Company, due to personal work arrangements, resigned as an independent director and amember of the Strategic Decision-making Committee of the Board of Directors, a member of the Nomination Committee and theRemuneration Committee of the Company on 25 February 2021, and no longer held any post in the Company; Wang Fangshui, adirector of the Company, due to retirement, resigned as a director of the Company and a member of the Strategic Decision-makingCommittee of the Board of Directors on 26 February 2021, and no longer held any post in the Company; Wang Changzhao, anExecutive Dean of the Company's Engineering Technology Research Institute, due to personal reasons, resigned as an officer on 29June 2021, and no longer held any post in the Company.Change of Directors, Supervisors and Senior Management
√Applicable □ Not applicable
| Name | Office title | Type of change | Date of change | Reason for change |
| Wang Fangshui | Director | Left | 26 February 2021 | Retirement |
| Bi Xiuli | Independent Director | Left | 25 February 2021 | Left for job arrangement |
| Wang Changzhao | Executive Dean of Lu Thai Engineering Technology Research Institute | Contract termination | 29 June 2021 | Left for personal reason |
2. Biographical Information
Professional backgrounds, major work experience and current duties in the Company of the incumbent directors, supervisors andsenior management:
1. Mr. Liu Zibin: Chairman and President of the Company, born in 1965, with a master degree. He served as the GM and chairman ofZibo Lucheng Textile Co., Ltd. And he currently serves as the chairman and president of Luthai Textile Co., Ltd., the chairman ofLufeng Textile Dyeing Co., Ltd., the chairman of Zibo Xinsheng Thermoelectric Co., Ltd., the chairman of Zibo Lu Qun Textile Co.,Ltd., the chairman of Shanghai Luthai Textile and Garment Co., Ltd., the chairman of Luthai Textile (USA) Co., Ltd., the chairmanof Luthai (Hong Kong) Co., Ltd., the chairman of Shanghai Zhinuo Textile New Materials Co., Ltd., the chairman of ShandongLulian New Materials Co., Ltd., the chairman of Shandong Lujia Import and Export Co., Ltd. and the chairman of Hainan HuilinInternational Holdings Co., Ltd.
2. Mr. Xu Zhinan: Vice chairman of the Company, a Thailander born in 1930. He served as director and GM of Thailand Fiber ClothFactory Co., Ltd., director of Thailand Fiber Co., Ltd., director of Thailand Fiber Printing and Co., Ltd., director and deputy GM ofLuthai Textile Co., Ltd. And he currently serves as the director and deputy chairman of the Company and GM of Thailand Fiber Co.,Ltd.
3. Mr. Fujiwara Hidetoshi: Director of the Company, a Japanese born in 1940. He served as director of Degang Weaving Factory inJapan, director and senior consultant of Luthai Textile Co., Ltd. He currently serves as a director of Luthai Textile Co., Ltd. and adirector of Lufeng Textile Dyeing Co., Ltd.
4. Mr. Chen Ruimou: Director of the Company, born in 1944 with a university degree. He served as staff of Jinyuan Co., Ltd, staff ofNissin Shokai Co., Ltd., supervisor and director of Luthai Textile Co., Ltd. And he currently serves as a director of the Company.
5. Mr. Zeng Facheng: Director of the Company, a Thailander born in 1951. He is currently the chairman of GOLD MINEGARMENT CO., LTD. and BLOSSOM GARMENT MANUFACTURING (THAILAND) CO., LTD.; he also is the chairman of theThai Shipping and Transportation Association, the chairman of the standing committee of the Thai Garment Industry DevelopmentCharity Foundation, the executive director of the Thai Chamber of Commerce, the Thai industry Director of the Association,
Chairman of the Thai Garment Industry Free Trade Association, and Director of Luthai.
6. Mr. Liu Deming: Director of the Company, vice director of global marketing department, born in 1990, with a master degree.Currently, he serves as chairman and GM of Zibo Lucheng Textile Investment Co., Ltd., director of Luthai Textile Co., Ltd. and vicedirector of global marketing department of the Luthai Textile Co., Ltd.
7. Ms. Qin Guiling: Director of the Company, born in 1966, with a master degree of business administration. He served as chief ofplanning department, manager of securities department, financial assistant to GM, deputy GM and secretary of board of directors ofLuthai Textile Co., Ltd. In addition, he currently serves as a director of Luthai.
8. Ms. Zhang Hongmei: Director and chief accountant of the Company, born in 1970, with a master degree of business administration.She is a senior accountant. She served as chief of cost department, chief of accounting department and deputy chief accountant ofLuthai Textile Co., Ltd., and currently serves as the director and chief accountant of the Company. He is also a supervisor ofShanghai Zhinuo Textile New Materials Co., Ltd.
9. Ms. Pan Ailing: Independent director of the Company, born in 1965, with a doctor degree of economics; and she serves as apostdoctor of financial management. She currently serves as a professor at the School of Management of Shandong University, adoctoral supervisor, a leader in accounting discipline, a director of the Investment and Financing Research Center of ShandongUniversity, a non-practicing member of CICPA, a director of the Shandong Institute of Accounting, a managing director of theShandong Institute of Comparative Management, a visiting professor at Soochow University in Taiwan, a visiting scholar at theUCONN, and a national candidate for the "New Century Talents Project". In addition, she is an outstanding talent of the Ministry ofEducation of the People’s Republic of China in the new century and an expert specially posted by the State Council of the People'sRepublic of China.
10. Mr. Wang Xinyu: Independent director of the Company, born in 1967, with a master's degree. He is in possession of thecertificates of CPA, CTA and CPV. He once taught at Jinan Vocational College, and successively worked as project manager &department manager of Shandong Zhengyuan Hexin Accounting Firm and Zhonglei Certified Public Accountants, and deputy GM ofShandong Branch. In addition, he currently serves as a senior partner of Reanda Certified Public Accountants LLP, Director ofShandong Branch, and independent director of the Company.
11. Mr. Zhou Zhiji: Independent director of the Company, born in 1963, with a bachelor degree. He is in possession of the certificatesof CPA and senior accountant. He served as a cadre of Shandong Provincial Department of Finance, director of department ofShandong accounting firm, chief accountant of Shandong Zhengyuan Accounting Firm, director and manager of Shandong YingshidaEnterprise Management Consulting Co., Ltd., chairman of Shandong Jinheng Consulting Co., Ltd. Now, he serves as a supervisor ofShandong Jinheng Consulting Co., Ltd.
12. Ms. Qu Dongmei: Independent director of the Company, born in 1969, with a doctor degree of economic law. She currentlyserves as a professor at the School of Law of Shandong Normal University, a master's supervisor in Civil and Commercial Law, adirector of the Western Returned Scholars Association, a lawyer of Grandall Law Firm (Jinan) and an arbitrator of Jinan ArbitrationCommission. In addition, he holds the license of insurance broker in Illinois, USA.
13. Mr. Zhang Shougang: Chairman of the Board of Supervisors, born in 1970, with a master degree of business administration. He isin possession of a certificate of senior engineer. And he served as director of the weaving factory, manager of the weaving department,manager of the quality management department, manager of the garment production department, manager of the enterprisemanagement department and Director of Human Resources Department of the Company.
14. Mr. Liu Zilong: Supervisor of the Company, born in 1968, with a master degree of business administration. In addition, he hasserved as the GM of Luthai (Hong Kong) since 2002.
15. Mr. Dong Shibing: Supervisor of the Company, born in 1969, with a diploma of technical secondary school. He once served asdeputy director of the GM's office of the Company. Currently, he served as the manager of the Company's logistics managementdepartment and GM of Zibo Banyang Villa Hotel Co., Ltd.
16. Mr. Zhang Jianxiang: born in 1968, Counselor of the Company, with a master degree of business administration. He served as thehead of the weaving section of Binzhou No.2 Cotton Mill, the director of the expansion office, the director of the weaving factory,
the deputy manager of the production department, the manager of the quality management department and the director of the fabricfinishing factory of Luthai Textile Co., Ltd., the deputy director and the executive director of the Luthai Textile and ClothingEngineering Research Institute, Vice President and director of the Functional Fabric Product Line of the Company.
17. Mr. Wang Jiabin: Chairman of the Labor Union and safety director of the Company. Born in 1963, with a master degree ofbusiness administration, he served as workshop director of Zibo No. 1 Cotton Textile Mill, director of labor safety, weavingworkshop director of Luthai Textile Co., Ltd., director of power, director of bleaching and dyeing factory, manager of bleaching anddyeing department, assistant to the GM, vice president and director of yarn-dyed fabric product line.
18. Mr. Zhang Zhanqi: Vice president of the Company, director of global marketing department and GM of LuFeng CompanyLimited, born in 1972, with a master degree of business administration. Also, he serves as a senior engineer, once was the factorydirector of fabric finishing factory and manager of quality management department of the Company.
19. Mr. Zhang Keming: Secretary of the board of directors of the Company, and director of Financial Management Department. Bornin 1968, with a master degree of business administration, he is a senior accountant. Once he was deputy manager and manager of thefinancial department of the Company.
20. Mr. Li Wenji: Controller of the enterprise management department, born in 1967. Once he was a teacher of Shandong Universityof Finance. He once served as the manager of the Company's information department and CIO.
21. Mr. Zhang Wei: Assistant to Chairman of the Board, director of the strategy and marketing department of the Company, born in1985, with a doctor degree. He served as a researcher of Guotai Junan Securities Co., Ltd. and China Asset Management Co, Ltd.,manager of the strategic planning department of the Company; he also serves as the director of Shanghai Zhinuo Textile NewMaterials Co., Ltd.
22. Mr. Fujiwara Matsuzaka: GM of branch office in Japan, Japanese with a bachelor degree. He is a special foreign expert of theCompany, and he once won the Qilu Friendship Award. In addition, he served as deputy manager of international businessdepartment, manager of No.1 international business department, manager of No.2 international business department and manager ofclothing marketing department of Luthai Textile Co., Ltd.
23. Mr. Yu Shouzheng: President Assistant, Director of the energy and environmental protection department of the Company, GM ofZibo Xinsheng Thermal Power Co., Ltd., born in 1968, with a master degree of business administration. As an engineer, he onceworked as the director of the power department and manager of the energy division of the Company.
24. Mr. Shang Chenggang: President Assistant and the director of clothing product line of the Company. Born in 1973, he served asdeputy director, director, manager of GM department, management representative and manager of garment production department,director of garment manufacturing center & manager of garment production management department of the Company.
25. Mr. Du Lixin: Chief engineer of the Company and executive dean of Luthai Institute of Engineering and Technology. Born in1975, he served as spinning operator, a weaver's planner, a deputy director of the production department's dispatching room, aweaver's factory director, a manager of the weaving department, and a deputy manager of the production department of Luthai, aswell as GM of Continental Textile Co., Ltd.
26. Mr. Guo Heng: Controller of Functional Fabric Product Line. Born in 1972, he served as the deputy director of the spinningfactory of Lu Thai, the deputy manager of the yarn business department, and the manager of the yarn business department andDirector of enterprise management department of Luthai.
27. Ms. Fu Guannan: President Assistant and Investment Director of the Company, GM of Beijing Zhishu Management ConsultingCo., Ltd. Born in 1983, with a master degree, she served as senior executive director of Investment Banking Department in GuotaiJunan Securities Co., Ltd.
Offices held concurrently in shareholding entities:
√Applicable □Not applicable
| Name | Shareholding entity | Office held in the shareholding entity | Start of tenure | End of tenure | Remuneration or allowance from the shareholding |
| entity | |||||
| Liu Zibin | Zibo Lucheng Textile Investment Co., Ltd. | Director | 26 February 1999 | No | |
| Xu Zhinan | Tailun (Thailand) Textile Co., Ltd. | GM | 29 January 1985 | No | |
| Liu Deming | Zibo Lucheng Textile Investment Co., Ltd. | Chairman and GM | 1 February 2017 | No | |
| Explanations about holding posts in shareholders’ companies | Mr. Liu Zibin is the Director of Zibo Lucheng Textile Investment Co., Ltd., holding 4% equities of Zibo Lucheng Textile Investment Co., Ltd. Basic information of Mr. Liu Zibin: Chinese, no right of residence in other countries or regions. Mr. Liu Deming holds the post of Chairman and GM of Zibo Lucheng Textile Investment Co., Ltd., holding 21% equities of Zibo Lucheng Textile Investment Co., Ltd. Basic information of Mr. Liu Deming: Chinese, no right of residence in other countries or regions. Mr. Xu Zhinan is the sponsor of foreign capital of the Company, shareholder of Tailun (Thailand) Textile Co., Ltd. and Tailun (Thailand) Textile Co., Ltd. is the second largest shareholder of the Company. Basic information about Mr. Xu Zhinan: Thai. | ||||
Offices held concurrently in other entities:
√Applicable □Not applicable
| Name | Other entity | Office held in the entity | Start of tenure | End of tenure | Remuneration or allowance from the entity |
| Liu Zibin | Lufeng Weaving & Dyeing Co., Ltd. Zibo Luqun Textile Co., Ltd., Zibo Xinsheng Thermal Power Co., Ltd., Shanghai Lu Thai Textile Garment Co., Ltd., Lu Thai (America) Textile Co., Ltd. Lu Thai (HK) Textile Co., Ltd, Shanghai Zhinuo Textile New Material Co., Ltd, Shandong Lulian New Materials Co., Ltd., Shandong Lujia Import and Export Co., Ltd., Hainan Huilin International Holdings Co., Ltd. | Chairman of the Board, Director, GM | 7 December 2015 | No | |
| Liu Deming | LuFeng Company Limited, Zibo Luqun Textile Co., Ltd., Shandong Lulian New Materials Co., Ltd., Shanghai Zhinuo Textile New Materials Co., Ltd., Beijing Zhishu Management Consulting Co., Ltd. | Director | 21 August 2017 | No | |
| Zhang Hongmei | Shanghai Zhinuo Textile New Materials Co., Ltd. | Supervisor | 15 October 2018 | No | |
| Dong Shibing | Zibo Banyang Villa Hotel Co., Ltd. | GM | 2 April 2021 | No | |
| Zhang Jianxiang | Shanghai Lu Thai Textile Garment Co., Ltd. | Supervisor | 30 December 2010 | No | |
| Du Lixin | Continental Textile Co., Ltd., Lu Thai (Vietnam) Textile Co., Ltd. | Director | 29 December 2015 | No | |
| Zhang Wei | Shanghai Zhinuo Textile New Materials | Director | 15 October | No |
| Co., Ltd. | 2018 | ||||
| Zhang Keming | Zibo Luqun Textile Co., Ltd., Shandong Lulian New Materials Co., Ltd. | Director, Supervisor | 3 March 2022 | No | |
| Pan Ailing | Shandong University School of Management | Professor | 1 July 1986 | Yes | |
| Wang Xinyu | Reanda Certified Public Accountants Shandong Branch | Head | 1 August 2013 | Yes | |
| Zhou Zhiji | Shandong Jinheng Consulting Co., Ltd | Supervisor | 1 October 2015 | Yes | |
| Qu Dongmei | Law School of Shandong Normal University | Professor | 1 July 2003 | Yes | |
| Zhang Zhanqi | LuFeng Company Limited | GM | 5 July 2014 | No | |
| Yu Shouzheng | Zibo Xinsheng Thermal Power Co., Ltd. | GM | 13 April 2021 | No | |
| Guo Heng | Shandong Lulian New Materials Co., Ltd. | GM | 28 August 2021 | No | |
| Fu Guannan | Beijing Zhishu Management Consulting Co., Ltd. | GM | 9 March 2022 | No | |
| Explanations about holding posts in other entities | Except for independent directors, all other entities the Company’s directors, supervisors and senior management hold posts are majority-owned subsidiaries of the Company. | ||||
Punishments imposed in the recent three years by the securities regulator on the incumbent directors, supervisors and seniormanagement as well as those who left in the Reporting Period:
□ Applicable √ Not applicable
3. Remuneration of Directors, Supervisors and Senior Management
Decision-making procedure, determination basis and actual payments of remuneration for directors, supervisors and seniormanagement:
The Remuneration and Appraisal Committee under the Board of Directors of the Company is liable to not only preparing appraisalcriteria for directors and senior management of the Company and appraising them, but also preparing and reviewing remunerationpolicies and plans for directors and senior management of the Company, who is liable to the Board of Directors. The Remunerationand Appraisal Committee shall propose the remuneration amount of directors and senior management according to the Company'smanagement condition and post performance results, and shall report to the Board of Directors for ratification after the approval byvoting.The Controller of Financial Management Department, the Corporate Management Department and the HR Department of theCompany shall be liable to the preliminary preparation for the decision of the Remuneration and Appraisal Committee, including butnot limited to providing information such as the Company's main financial indicators and the completion of management objectives.The Remuneration and Appraisal Committee shall confirm the annual appraisal results of directors and officers in accordance withthe completion of the Company's performance and the remuneration criteria for officers, and shall report to the Board of Directors for
ratification after the approval by voting.The number of incumbent directors, supervisors and senior executives is 27, among which there are 27 persons actually receivingremuneration from the Company. Till 31 December 2021, the total amount of annual payment drawn from the Company by directors,supervisors and senior executives is RMB14.1556 million (before tax).Remuneration of directors, supervisors and senior management for the Reporting Period
Unit: RMB'0,000
| Name | Office title | Gender | Age | Incumbent/Former | Total before-tax remuneration from the Company | Any remuneration from related party |
| Liu Zibin | Chairman and President | Male | 57 | Incumbent | 90.71 | No |
| Xu Zhinan | Vice Chairman | Male | 92 | Incumbent | 20.78 | No |
| Fujiwara Hidetoshi | Director | Male | 82 | Incumbent | 1.06 | No |
| Chen Ruimou | Director | Male | 78 | Incumbent | 20.78 | No |
| Zeng Facheng | Director | Male | 71 | Incumbent | 1.06 | No |
| Liu Deming | Director, Vice Controller of Global Marketing Department | Male | 32 | Incumbent | 57.7 | No |
| Qin Guiling | Director | Female | 56 | Incumbent | 69.54 | No |
| Zhang Hongmei | Director and Chief Accountant | Female | 52 | Incumbent | 77.61 | No |
| Zhou Zhiji | Independent Director | Male | 59 | Incumbent | 5.9 | No |
| Pan Ailing | Independent Director | Female | 57 | Incumbent | 5.9 | No |
| Wang Xinyu | Independent Director | Male | 55 | Incumbent | 5.9 | No |
| Qu Dongmei | Independent Director | Female | 53 | Incumbent | 5.9 | No |
| Zhang Shougang | Chairman of the Supervisory Committee | Male | 52 | Incumbent | 53.03 | No |
| Liu Zilong | Supervisor | Male | 54 | Incumbent | 59.96 | No |
| Dong Shibing | Supervisor, Manager of Logistics Management Department | Male | 53 | Incumbent | 57.98 | No |
| Zhang Jianxiang | Counselor | Male | 54 | Incumbent | 83.06 | No |
| Wang Jiabin | Chairman of the Labor Union, Security Controller | Male | 59 | Incumbent | 82.34 | No |
| Zhang Zhanqi | Vice president, Controller of Global Marketing Department | Male | 50 | Incumbent | 80.85 | No |
| Zhang Keming | Board Secretary, Controller of Financial Management Department | Male | 54 | Incumbent | 57.65 | No |
| Li Wenji | Controller of Business Management Department | Male | 55 | Incumbent | 60.12 | No |
| Zhang Wei | Assistant to Chairman of the Board, Controller of Strategy and Market Department | Male | 37 | Incumbent | 92.22 | No |
| Fujiwara Matsuzaka | GM of Japan Office | Male | 49 | Incumbent | 104.73 | No |
| Yu Shouzheng | President Assistant, Controller of Energy and Environment Protection Department | Male | 54 | Incumbent | 57.54 | No |
| Shang Chenggang | President Assistant, Controller of Garment Product Line | Male | 49 | Incumbent | 56.05 | No |
| Du Lixin | Chief Engineer, Executive Dean of Lu Thai Engineering Technology Research Institute | Male | 47 | Incumbent | 57.28 | No |
| Guo Heng | Controller of Functional Fabric Product Line | Male | 50 | Incumbent | 57.08 | No |
| Fu Guannan | President Assistant, Investment Director | Female | 39 | Incumbent | 92.83 | No |
| Total | -- | -- | -- | -- | 1,415.56 | -- |
VI Performance of Duty by Directors in the Reporting Period
1. Board Meeting Convened during the Reporting Period
| Meeting | Date of the meeting | Disclosure date | Meeting resolutions |
| 20th Meeting of the 9th Board of Directors | 2021-01-13 | 2021-01-15 | It deliberated and approved: 1. Proposal on Investing and |
| Establishing “Hainan Huilin International Holdings Co. Ltd”; 2. Proposal on Providing Joint and Several Liability Guarantee for the Wholly-owned Subsidiary Lu An Garments Co., Ltd. of Obtaining a Comprehensive Credit Limit of USD10 Million; 3. and Proposal on Routine Related Transactions. | |||
| 21st Meeting of the 9th Board of Directors | 2021-03-29 | 2021-03-31 | It deliberated and approved: 1. Proposal on 2020 Annual Work Report of the Board of Directors; 2. Proposal on 2020 Annual Work Report of the President; 3. Proposal on the Company's 2020 Annual Report and Its Abstracts; 4. Proposal on the Company's 2020 Annual Financial Accounting; 5. Proposal on the Company's 2021 Annual Financial Budget; 6. Proposal on the Company's 2020 Annual Profit Distribution Plan; 7. Proposal on the Company's 2020 Annual Appraisal Results of Officers; 8. Proposal on the Company's 2020 Annual Social Responsibility Report; 9. Proposal on the Company's 2020 Annual Assessment Report for Internal Control; 10. Proposal on the Renewal of the Company's 2021 Annual Financial Audit and Internal Control Audit Institution; 11. Proposal on Changing Part of the Accounting Policies; 12. Proposal on Applying for a |
| Comprehensive Credit Limit of RMB200 Million from China Merchants Bank; 13. Proposal on Providing Joint and Several Liability Guarantee for the Wholly-owned Subsidiary Continental Textile Co., Ltd. of Obtaining a Comprehensive Credit Limit of USD60 Million; 14. Proposal on the Special Report of the 2020 Annual Deposit and Use of the Raised Funds; 15. Proposal on Investing and Establishing Zibo Banyang Mountain Villa Hotel Co., Ltd.; 16. Proposal on the Delay of the Production Line Project of High-grade Printed and Dyed Fabrics; 17. Proposal on Holding 2020 Annual General Meeting. | |||
| 22nd Meeting of the 9th Board of Directors | 2021-04-12 | 2021-04-13 | It deliberated and approved: 1. Proposal on the Company's '2021 Restricted Share Incentive Scheme (Draft)' and Its Abstracts; 2. Proposal on the Company's 'Implementation and Appraisal Regulations on 2021 Restricted Share Incentive Scheme'; 3. Proposal on Submitting the Authorization for the Board of Directors to Handle the Company's 2021 Restricted Share Incentive Scheme to the General Meeting of Shareholders; 4. Proposal on Holding the 1st Extraordinary General Meeting of 2021. |
| 23rd Meeting of the 9th Board of Directors | 2021-04-28 | 2021-04-30 | It deliberated and approved: 1. Proposal on the Full Text and Body of the 2021 First Quarter Report; 2. Proposal on the Company's Using Part of the Idle Raised Funds for Cash Management. |
| 24th Meeting of the 9th Board of Directors | 2021-05-17 | 2021-05-18 | It deliberated and approved: 1. Proposal on Adjusting the List of the Name and Number of Incentive Staff of 2021 Restricted Share Incentive Scheme; 2. Proposal on Granting Restrictive Stocks to Incentive Staff for the First Time; 3. and Proposal on Providing Guarantee for Continental Textile Co., Ltd. and Its Subsidiaries of Obtaining a Comprehensive Credit Limit of USD20.80 Million from the Ho Chi Minh City Branch of China Trust Commercial Bank Co, Ltd. |
| 25th Meeting of the 9th Board of Directors | 2021-06-11 | 2021-06-15 | It deliberated and approved: 1. Proposal on the Company's Plan for Derivative Transaction; 2. Proposal on Opening a Special Account for Foreign Exchange Purchase and Deposit of Raised Funds and Signing a Supervision Agreement on Raised Funds; 3. Proposal on Amending Relevant Articles of the 'Articles of Incorporation' According to the Authorization of the General Meeting. |
| 26th Meeting of the 9th Board of Directors | 2021-08-26 | 2021-08-28 | It deliberated and approved: 1. Proposal on the Company's Interim Report 2021 and Its Abstracts; 2. Proposal on |
| Using Idle Equity Funds for Cash Management; 3. Proposal on the Special Interim Report 2021 of the Deposit and Use of the Raised Funds; 4. Proposal on Amending Relevant Articles of the ‘Foreign Investment Regulations for Lu Thai Textile Co., Ltd.’; 5. Proposal on Amending Relevant Articles of the Authorization Management System for Lu Thai Textile Co., Ltd.; 6. Proposal on Preparing the Remuneration Plan for Directors, Supervisors and Senior Management; 7. Proposal on the Additional Investment on Hainan Huilin International Holdings Co., Ltd.; 8. Proposal on Repurchase and Cancel Authorized but Unlocked Restricted Share of the Incentive Personnel not Conforming to the Incentive Condition; 9. Proposal on Holding the 2nd Extraordinary General Meeting of 2021. | |||
| 27th Meeting of the 9th Board of Directors | 2021-10-27 | 2021-10-29 | It deliberated and approved: Proposal on the 2021 Third Quarter Report. |
| 28th Meeting of the 9th Board of Directors | 2021-12-13 | 2021-12-14 | It deliberated and approved: 1. Proposal on Amending Relevant Articles of the 'Articles of Incorporation' According to the Authorization of the General Meeting; 2. Proposal on Designedly Providing Pledge of Deposit of RMB40 Million to the Holding Subsidiary |
2. Attendance of Directors at Board Meetings and General Meetings
Shandong Lulian NewMaterials Co., Ltd. forOpening Letter of Credit("l/C") for Import Equipmentin Bank of Qingdao Co, Ltd.Attendance of directors at board meetings and general meetings
| Attendance of directors at board meetings and general meetings | |||||||
| Director | Total number of board meetings the director was eligible to attend | Board meetings attended on site | Board meetings attended by way of telecommunication | Board meetings attended through a proxy | Board meetings the director failed to attend | The director failed to attend two consecutive board meetings (yes/no) | General meetings attended |
| Liu Zibin | 9 | 9 | 0 | 0 | 0 | No | 3 |
| Xu Zhinan | 9 | 0 | 9 | 0 | 0 | No | 0 |
| Fujiwara Hidetoshi | 9 | 0 | 9 | 0 | 0 | No | 0 |
| Chen Ruimou | 9 | 0 | 9 | 0 | 0 | No | 0 |
| Zeng Facheng | 9 | 0 | 9 | 0 | 0 | No | 0 |
| Wang Fangshui | 1 | 1 | 0 | 0 | 0 | No | 0 |
| Liu Deming | 9 | 9 | 0 | 0 | 0 | No | 0 |
| Qin Guiling | 9 | 9 | 0 | 0 | 0 | No | 2 |
| Zhang Hongmei | 9 | 9 | 0 | 0 | 0 | No | 3 |
| Bi Xiuli | 1 | 0 | 1 | 0 | 0 | No | 0 |
| Zhou Zhiji | 9 | 1 | 8 | 0 | 0 | No | 2 |
| Pan Ailing | 9 | 1 | 8 | 0 | 0 | No | 0 |
| Wang Xinyu | 9 | 1 | 8 | 0 | 0 | No | 2 |
| Qu Dongmei | 9 | 1 | 8 | 0 | 0 | No | 0 |
Why any director failed to attend two consecutive board meetings:
Not applicable.
3. Objections Raised by Directors on Matters of the Company
Indicate by tick mark whether any directors raised any objections on any matter of the Company.
□ Yes √ No
No such cases in the Reporting Period.
4. Other Information about the Performance of Duty by Directors
Indicate by tick mark whether any suggestions from directors were adopted by the Company.
√ Yes □ No
Suggestions from directors adopted or not adopted by the CompanyNaughtVII Performance of Duty by Specialized Committees under the Board in the Reporting Period
| Committee | Members | Number of meetings convened | Convened date | Content | Important opinions and suggestions raised | Other information about the performance of duty | Details about issues with objections (if any) |
| Audit Committee under the Board | Wang Xinyu, Zhou Zhiji, Qin Guiling | 7 | 2021-01-20 | Mainly, the Company's financial statements submitted to Grant Thornton Certified Public Accountants LLP for preliminary audit were reviewed, written opinions were expressed, and communication with Leader of annual audit accountant project was conducted. | The opinions were as follows: (1) Preparing the Company's financial accounting statements in accordance with the Company's accounting policies and applying accounting policies properly, it carried out accounting estimate fully and reasonably, which conformed to the New Accounting Standard for Business Enterprises, |
| 2021-03-29 | The following matters were mainly audited: (1) The Company's 2020 Annual Financial Report audited by the accounting firm. (2) Conclusion Report on the Company's Audit Work for the 2020 Annual Financial Report conducted by Grant Thornton Certified Public Accountants LLP. (3) Proposal on the renewal of Grant Thornton Certified Public Accountants LLP As the Company's 2021 Annual Financial Audit and Internal Control Audit | The opinions were as follows: The procedure of financial statement preparation was reasonable and normative as the Company conformed to the New Accounting Standard for Business Enterprises and relevant provisions of the Company's financial system, which fairly reflected the Company's assets, liabilities, shareholders' equity and operating results by 31 December 2020, which were true, accurate and complete. The Audit Committee thought that the Company's 2020 Annual |
| Institution. (4) Special Report of the 2020 Annual Deposit and Use of the Raised Funds. (5) Report on the Implementation of the 2020 Annual Internal Audit Plan by the Company's Audit Department. | Financial Accounting Report that was preliminarily approved by Grant Thornton Certified Public Accountants LLP could be submitted to the 21st Meeting of the 9th Board of Directors for review. | |||
| 2021-04-20 | Report on Implementation of Internal Audit Plan of 2021 First Quarter and Special Report of Deposit and Use of the Raised Funds of 2021 First Quarter by the Company's Audit Department were deliberated. | The following proposals were adopted by voting at the meeting: Report on Implementation of Internal Audit Plan of 2021 First Quarter and Special Report of Deposit and Use of the Raised Funds of 2021 First Quarter. | ||
| 2021-06-08 | The Proposal on the Company's Plan for Derivative | The Plan for Derivative Transaction of Lu Thai Textile Co., |
| Transaction was mainly deliberated. | Ltd. was audited and the following opinions were expressed: Facing the exchange rate fluctuation of RMB against USD in the foreign exchange market, the Financial Management Department of the Company proposed the Plan for Derivative Transaction, which was an effective tool to avoid exchange rate risk. By strengthening internal control and implementing stop-loss management and risk prevention measures, the management level could be improved, which was conducive to giving full |
| is feasible, necessary and risk-controllable, and agree to submit the Plan for Derivative Transaction of Lu Thai Textile Co., Ltd. to the 25th Meeting of the 9th Board of Directors for deliberation. | ||||
| 2021-08-16 | Mainly, the following matters were deliberated: (1) Special Interim Report 2021 of the Deposit and Use of the Raised Funds. (2) Interim Report 2021 on the Implementation of Internal Audit Plan. | The following proposals were adopted by voting at the meeting: Special Interim Report 2021 of the Deposit and Use of the Raised Funds and Interim Report 2021 on the Implementation of Internal Audit Plan. | ||
| 2021-10-20 | Mainly, the following matters were deliberated at the meeting: | The following proposals were adopted by voting at |
| (1) Special Report on the Deposit and Use of the Raised Funds of 2021 Third Quarter. (2) Report on the Implementation of Internal Audit Plan of 2021 Third Quarter. | the meeting: Special Report on the Deposit and Use of the Raised Funds of 2021 Third Quarter and Report on the Implementation of Internal Audit Plan of 2021 Third Quarter. | ||||||
| 2021-11-11 | The time arrangement for the Company's 2021 annual financial audit work was negotiated. | The time arrangement plan for 2021 annual financial audit work was unanimously determined at the meeting through the negotiation with the 2021 annual audit institution, Grant Thornton Certified Public Accountants LLP, of the Company. | |||||
| Remuneration Committee | Liu Zibin, Zhou Zhiji, Wang Xinyu, | 4 | 2021-03-29 | The main topic of the meeting was: Proposal on | The following proposal was deliberated |
| Pan Ailing | 2020 Annual Appraisal Results of the Company's Officers. | and approved by voting at the meeting: Proposal on 2020 Annual Appraisal Results of the Company's Officers. We agree to submit the above proposal to the 21st Meeting of the 9th Board of Directors of the Company for deliberation. | ||||
| 2021-04-11 | The main topics of the meeting were: (1) the Proposal on the Company's 2021 Restricted Share Incentive Scheme (Draft) and Its Abstracts. (2) the Proposal on the Company's Implementation and Appraisal Regulations on 2021 Restricted | The following proposals were deliberated and approved through on-site voting and communication voting at the meeting: the Proposal on the Company's '2021 Restricted Share Incentive Scheme (Draft)' and Its Abstracts and the Proposal on |
| Share Incentive Scheme. | the Company's 'Implementation and Appraisal Regulations on 2021 Restricted Share Incentive Scheme'. | |||
| 2021-05-13 | The main topic of the meeting was: the Proposal on 2020 Annual Appraisal Results and Distribution Quota of Risk Funds. | The following proposal was deliberated and approved through on-site voting and communication voting at the meeting: the Proposal on 2020 Annual Appraisal Results and Distribution Quota of Risk Funds. | ||
| 2021-08-16 | The main topic of the meeting was: the Proposal on Preparing the Remuneration Plan for Directors, Supervisors and Senior Management. | The following proposal was deliberated and approved through on-site voting and communication voting at the meeting: the Proposal on Preparing the |
| Remuneration Plan for Directors, Supervisors and Senior Management. | |||||||
| Strategy Committee | Liu Zibin, Xu Zhinan, Chen Ruimou, Zeng Facheng, Fujiwara Hidetoshi, Liu Deming, Qin Guiling, Zhang Hongmei, Zhou Zhiji, Wang Xinyu, Pan Ailing, Qu Dongmei | 1 | 2021-03-29 | Deliberate the Strategic Planning of Lu Thai Textile of 2021 to 2025. | The following proposal was approved by voting at the meeting: the Strategic Planning of Lu Thai Textile of 2021 to 2025. | ||
| Nomination Committee | Liu Zibin, Xu Zhinan, Zhou Zhiji, Wang Xinyu, Pan Ailing | 0 |
VIII Performance of Duty by the Supervisory CommitteeIndicate by tick mark whether the Supervisory Committee found any risk to the Company during its supervision in the ReportingPeriod.
□ Yes √ No
The Supervisory Committee raised no objections in the Reporting Period.V Employees
1. Number, Functions and Educational Backgrounds of Employees
| Number of in-service employees of the Company as the parent at the period-end | 8,807 |
| Number of in-service employees of major subsidiaries at the | 13,825 |
| period-end | |
| Total number of in-service employees | 22,632 |
| Total number of paid employees in the Reporting Period | 22,632 |
| Number of retirees to whom the Company as the parent or its major subsidiaries need to pay retirement pensions | 0 |
| Functions | |
| Function | Employees |
| Production | 16,877 |
| Sales | 515 |
| Technical | 4,581 |
| Financial | 107 |
| Administrative | 552 |
| Total | 22,632 |
| Educational backgrounds | |
| Educational background | Employees |
| Doctor | 5 |
| Master | 90 |
| Bachelor | 1,241 |
| College | 4,576 |
| High school and below | 16,720 |
| Total | 22,632 |
2. Employee Remuneration Policy
The Company has formulated a remuneration management system with its principle being “payment according to one’s work andmore pay for more work”. Through post evaluation and through researches of Social salary levels carried out as multi-faceted, as wellas the formulation of the reasonable salary management system, fully demonstrates the internal fairness, self-fairness and externalfairness. It has greatly motivated the employees and enhanced the corporate management.
3. Employee Training Plans
Trainings will be carried out according to requirements of the Company’s strategic development planning, improvement of employees’capability, performance management, employees’ career planning, etc. The annual training plan is determined by carrying outresearches on training needs. And the training courses fall into three major categories, i.e. management, technical skills and generalknowledge. Through these trainings, the Company will improve the knowledge structure of its employees, improve their job skills andincrease their comprehensive quality to provide excellent human resources for the long-term, sustained and stable development of theCompany.
4. Labor Outsourcing
√ Applicable □ Not applicable
| Total man-hours (hour) | 412,473 |
| Total rewards paid (RMB) | 10,614,943.76 |
X Profit Distributions (in the Form of Cash and/or Stock)How the profit distribution policy, especially the cash dividend policy, was formulated, executed or revised in the Reporting Period:
□ Applicable √ Not applicable
Indicate by tick mark whether the Company fails to put forward a cash dividend proposal for shareholders despite the facts that theCompany has made profits in the Reporting Period and the profits of the Company as the parent distributable to shareholders arepositive.
□ Applicable √ Not applicable
Final dividend plan for the Reporting Period
√ Applicable □ Not applicable
| Bonus shares for every 10 shares (share) | 0 |
| Dividend for every 10 shares (RMB) (tax inclusive) | 0.70 |
| Bonus issue from capital reserves (share/10 shares) | 0 |
| Total shares as the basis for the profit distribution proposal (share) | 882,341,295 |
| Cash dividends (RMB) (tax inclusive) | 61,763,890.65 |
| Cash dividends in other forms (such as share repurchase) (RMB) | 0.00 |
| Total cash dividends (including those in other forms) (RMB) | 61,763,890.65 |
| Distributable profit (RMB) | 4,887,481,100.66 |
| Total cash dividends (including those in other forms) as % of total profit distribution | 100% |
| Cash dividend policy | |
| If the Company is in a mature development stage and has plans for any significant expenditure, in profit allocation, the ratio of cash dividends in the profit allocation shall be 40% or above. | |
| Details about the proposal for profit distribution and converting capital reserve into share capital | |
| Based on 882,341,295 shares (including shares transferred from convertible bonds for the Reporting Period) on 31 December 2021, the cash allocated per 10 shares is RMB0.70(including tax). The individual income tax for A Share shall be subject to related regulations under CS [2015] No. 101 Notice on Certain Question about the Differentiated Individual Income Tax Policy | |
XI Equity Incentive Plans, Employee Stock Ownership Plans or Other Incentive Measures forEmployees
√ Applicable □ Not applicable
1. Equity Incentive
for Cash Dividend of Listed Companies jointly issued by Ministry of Finance, SAT, and CSRC; and that for B Share shall beconversed to HKD based on the central parity rate on interbank exchange market released by the People’s Bank of China on thefollowing day after shareholder’s meeting (for domestic individual shareholders, tax is paid pursuant to CS [2015] No. 101; forforeign shareholders, tax is free pursuant to CSZ (1994) No. 020 regulations; and non-residential corporate shareholders isentitled to a 10% reduction of enterprise income tax according to related regulations under Enterprise Income Tax Law of thePeople’s Republic of China). Since the Company is in the period of transferring convertible bonds into shares, the profitdistribution will be conducted based on the total share capital on the equity registration date for implementing this profitdistribution plan with no change in the amount per share.No.
| No. | Deliberation time | Relevant meeting | Overview of execution | Disclosure index |
| 1 | 12 April 2021 | The 22nd Meeting of the 9th Board of Directors | Deliberated and approved were Proposal on the Company's '2021 Restricted Share Incentive Scheme (Draft)' and Its Abstracts, Proposal on the Company's 'Implementation and Appraisal Regulations on 2021 Restricted Share Incentive Scheme', and Proposal on Submitting the Authorization for the Board of Directors to Handle the Company's 2021 Restricted Share Incentive Scheme to the General Meeting of Shareholders. The Company's independent directors expressed their independent opinions on this share incentive scheme. | Announcement of Resolution (No. 2021-024) published on http://www.cninfo.co on 13 April 2021 and relevant documents |
| 2 | 12 April 2021 | The 13th Meeting of the 9th Supervisory Committee | Deliberated and approved were Proposal on the Company's '2021 Restricted Share Incentive Scheme (Draft)' and Its Abstracts, Proposal on the Company's 'Implementation and Appraisal Regulations on 2021 Restricted Share Incentive Scheme', and Proposal on the Verification of the Company's Staff List of 2021 Restricted Share Incentive Scheme. | Announcement of Resolution (No. 2021-025) published on http://www.cninfo.co on 13 April 2021 |
| 3 | 16 April 2021 to 26 April 2021 | - | The Company internally announced the names and positions on the list of incentive staff. During the publicity period, the Board of Supervisors has not received any objections related to the planned subjects of the incentive scheme. | - |
| 4 | 8 May 2021 | - | The Ninth Board of Supervisors issued the Explanation of the Board of Supervisors on the Review and Publicity of the Staff List of 2021 Restricted Share Incentive Scheme on the basis of the list review and publicity. | Relevant documents published on http://www.cninfo.co on 8 May 2021 |
| 5 | 13 May 2021 | The First Extraordinary General Meeting of 2021 | Deliberated and approved were Proposal on the Company's '2021 Restricted Share Incentive Scheme (Draft)' and Its Abstracts, Proposal on the Company's 'Implementation and Appraisal Regulations on 2021 Restricted Share Incentive Scheme', and Proposal on Submitting the Authorization for the Board of Directors to Handle the Company's 2021 Restricted Share Incentive Scheme to the General Meeting of Shareholders. Self-inspection Report on the Company's 2021 Restricted Share Incentive Plan Insiders and Incentive Subjects' Trading of the Company's Shares was disclosed. | Relevant announcements (No. 2021-035, 2021-036) published on http://www.cninfo.co on 14 May 2021 |
| 6 | 17 May 2021 | The 24th Meeting of the 9th Board of Directors, the 15th Meeting of the 9th Supervisory Committee | Deliberated and approved were Proposal on Adjusting the List of the Name and Number of Incentive Staff of 2021 Restricted Share Incentive Scheme and Proposal on Granting Restrictive Stocks to Incentive Staff. The Board of Directors believed that the granting conditions specified in the incentive scheme had been fulfilled, and agreed to designate 17 May 2021 as the granting date. Except for 5 incentive staff who had been no longer qualified for the incentive due to resignation, and 47 incentive targets who had abandoned their subscription of all restricted stocks to be granted by the Company due to personal reasons, the number of incentive staff obtaining the first-granted restricted stocks were adjusted from 802 to 750, and the volume of the first restricted stocks from 25.965 million to 24.285 million shares. The independent directors consented independently to the matter. They believed that the qualification of granting incentive staff to some entities are legal and effective, and that the determined granting date complies with relevant regulations. The Board of Supervisors reviewed the list of incentive staff as of the grant date and expressed its verification opinions. | Relevant announcements (No. 2021-037, 2021-038, 2021-039, 2021-040) published on http://www.cninfo.co on 18 May 2021 |
| 7 | 7 June 2021 | - | As audited and confirmed by Shenzhen Stock Exchange | Relevant |
| and the Shenzhen branch of China Securities Depository and Clearing Corporation Limited, the registration of first-granted restricted stocks was completed. | announcements published on http://www.cninfo.co on 4 June 2021 | |||
| 8 | 26 August 2021 | The 26th Meeting of the 9th Board of Directors, 16th Meeting of the 9th Supervisory Committee | It deliberated and approved the Proposal on Repurchase and Cancel Authorized but Unlocked Restricted Share of the Incentive Personnel not Conforming to the Incentive Condition when agreeing to adjust the restricted share repurchase price according to the equity distribution plan, as well as repurchase and cancel authorized but unlocked restricted share of the incentive personnel not conforming to the incentive condition, while the Company's independent directors expressed independent opinions. The Supervisory Committee deliberated and approved the Proposal on Repurchase and Cancel Authorized but Unlocked Restricted Share of the Incentive Personnel not Conforming to the Incentive Condition and expressed its written review opinions. | Relevant announcements published on http://www.cninfo.co on 28 August 2021 |
| 9 | 13 Septermber 2021 | The Second Extraordinary General Meeting of 2021 | Deliberate and approve the Proposal on Repurchase and Cancel Authorized but Unlocked Restricted Share of Part of the Incentive Personnel. | Relevant announcements (No.2021-061) published on http://www.cninfo.co on 14 September 2021 |
| 10 | 27 November 2021 | - | As audited and confirmed by Shenzhen Stock Exchange and the Shenzhen Branch of China Securities Depository and Clearing Corporation Limited, the procedures of repurchasing and canceling 80,000 shares of authorized and unlocked restricted share of the incentive personnel not conforming to the incentive condition were completed. | Relevant announcements (No.2021-068) published on http://www.cninfo.co on 27 November 2021 |
Equity incentives for directors, supervisors and senior management in the Reporting Period:
√Applicable □Not applicable
Unit: share
| Name | Office title | Share options held at the period-begin | Share options granted in the Reporting | Shares feasible to exercise during the | Shares exercised during the Reporting | Exercise price of exercised shares durin | Share options held at the period-end | Market price at the period-end (RMB/share | Number of restricted shares held at the period | Number of released shares for the Repor | Number of restricted shares newly granted | The grant price of restricted shares (RMB | Number of restricted shares held at the period |
| Period | Reporting Period | Period | g the Reporting Period (RMB/share) | ) | -begin | ting Period | during the Reporting Period | /share) | -end | ||||
| Zhang Hongmei | Director and Chief Accountant | 0 | 300,000 | 3.31 | 300,000 | ||||||||
| Zhang Zhanqi | Vice president | 0 | 300,000 | 3.31 | 300,000 | ||||||||
| Wang Jiabin | Senior management | 0 | 300,000 | 3.31 | 300,000 | ||||||||
| Zhang Keming | Board Secretary, Senior management | 0 | 200,000 | 3.31 | 200,000 | ||||||||
| Yu Shouzheng | Senior management | 0 | 200,000 | 3.31 | 200,000 | ||||||||
| Shang Chenggang | Senior management | 0 | 200,000 | 3.31 | 200,000 |
| Li Wenji | Senior management | 0 | 200,000 | 3.31 | 200,000 | ||||||||
| Zhang Wei | Senior management | 0 | 200,000 | 3.31 | 200,000 | ||||||||
| Du Lixin | Senior management | 0 | 200,000 | 3.31 | 200,000 | ||||||||
| Guo Heng | Senior management | 0 | 200,000 | 3.31 | 200,000 | ||||||||
| Fu Guannan | Senior management | 0 | 200,000 | 3.31 | 200,000 | ||||||||
| Total | -- | 0 | 0 | 0 | 0 | -- | 0 | -- | 0 | 0 | 2,500,000 | -- | 2,500,000 |
Appraisal of and incentive for senior managementWithin Reporting Period, the Remuneration Committee of the Board of Directors researched and prepared the Remuneration Plan forDirectors, Supervisors and Senior Management of Lu Thai Textile Co., Ltd. in accordance with relevant systems such as Articles ofIncorporation and Working Instructions of Remuneration and Appraisal Committee of the Board of Directors, which wasimplemented as deliberated and approved through the Company's 2
nd
Extraordinary General Meeting of 2021 held on 13 September2021. During the Reporting Period, the Company constantly improved the performance evaluation mechanism and made theevaluation and incentive of the Senior Executives concerned with the Company’s performances and the individual working results.According to the overall development strategy and the annual operating target of the Company at the period-begin, the Companyconfirms the annual performance comprehensive indication and the management duty of each Senior Executives, and executes theperformance examination and the redemption of the rewards and punishment for the Senior Executives by the Remuneration andExamination Committee affiliated to the Board of Directors at the year-end. The Company will constantly improve the evaluationand incentive mechanism that to tightly concern the salary of the Senior Executives with the management level and the operatingperformance so that to fully mobilize and inspire the initiative and creativity of them.
2. Implementation of Employee Stock Ownership Plans
□ Applicable √ Not applicable
3. Other Incentive Measures for Employees
√Applicable □Not applicable
On 7 June 2021, the Company completed the first-granted registration of restricted share incentive scheme, and also granted21,785,000 restricted shares to 739 middle management and core members in addition to the above directors and senior management.XII Establishment and Execution of the Internal Control System for the Reporting Period
1. Establishment and Execution of the Internal Control System
According to Fundamental Norms for Internal Control of Enterprises, Supporting Guidelines for Internal Control of Enterprises andrelevant provisions prescribed by securities regulators for the internal control establishment of listed companies, combining the actualstatus of the Company's business, the Company established the internal control system that covers all stages including production andmanagement, as well as adapts to the Company's management requirements and development needs. It is relatively normative andcomplete, for which its organization is complete and reasonably designed, its implementation is basically effective, and there is nosubstantial omission, so as to ensure that the Company's operation and management is legal and compliant, the assets are safe, andthe financial reports and related information are true and complete, and maintain the fundamental interests of all shareholders of theCompany.Within Reporting Period, relevant systems and procedures were timely streamlined and optimized and the sound operation of riskmanagement and internal control system was ensured by the Company in line with the change of all business procedures and auditresults, without any violation of laws, regulations or Articles of Incorporation.
2. Material Internal Control Weaknesses Identified for the Reporting Period
□ Yes √ No
XIII Management and Control over Subsidiaries by the Company for the Reporting Period
| Subsidiary | Integration plan | Integration progress | Problem | Countermeasures taken | Settlement progress | Follow-up settlement plan |
| - | - | - | - | - | - | - |
XIV Internal Control Self-Evaluation Report or Independent Auditor’s Report on InternalControl
1. Internal Control Self-Evaluation Report
| Disclosure date of the internal control self-evaluation report | 29 April 2022 |
| Index to the disclosed internal control self-evaluation report | For details, please refer to the Self-appraisal Report on Internal Control of Lu Thai Textile Co., Ltd. simultaneously disclosed on www.cninfo.com.cn with the 2021 Annual Report of the Company. | |
| Evaluated entities’ combined assets as % of consolidated total assets | 89.33% | |
| Evaluated entities’ combined operating revenue as % of consolidated operating revenue | 91.99% | |
| Identification standards for internal control weaknesses | ||
| Type | Weaknesses in internal control over financial reporting | Weaknesses in internal control not related to financial reporting |
| Nature standard | Great defect: malpractices of the Directors, Supervisors and Senior Executives; the Company revised the published financial report; the CPA founded the current financial report occurred significant misstatement while during the operating process of the internal control could not founded the misstatement; the supervision of the Audit Committee and the internal audit institution of the Company on the internal control was invalid. Significant defeat: had not abide by the generally accepted accounting principles to choose and apply the accounting policies; had not built up the anti-fraud and significant counterbalance mechanism and control measures; during the financial report process, there occurred single or multiple defects which not reached the recognition standard of the significant defeat but influenced the true and accurate target of the financial report. General defect: other internal control defect which had not constructed as the great defeat, significant defect. | Great defect: violated the national laws and regulations; the decision-making of the enterprise was not scientific that led to the mistakes of itself; outflow of the management personnel or the technician personnel was serious; frequently appeared the negative news from the Media; the significant business lacked of systematic control or the systematic control was invalid; the result of the internal control assessment which was the great defect event had not been revised. Significant defeat: violated the enterprise internal regulations that caused rather serious losses; significant business lacked of systematic control; outflow of the rather important personnel was serious; the Media reported the negative news that caused rather serious negative influence; rather important business lacked of systematic control or the systematic control was invalid; the results of the internal control assessment which as the significant defect had not been revised. General defect: other internal control defect which had not constructed as the great defeat, significant defect. |
| Quantitative standard | Great defect: misstatement≥2% of the total profits amount; misstatement≥0.3% of the | Great defect: the direct financial losses were RMB6 million and above |
| total assets amount; misstatement≥0.3% of the total operating income; misstatement≥0.4% of the total owners’ equities amount. Significant defect: 1% of the total profits amount ≤misstatement<2% of the total profits amount; 0.15% of the total assets amount ≤misstatement<0.3% of the total assets amount; 0.15% of the total operating amount ≤misstatement<0.3% of the total operating amount; 0.2% of the total owners’ equities amount ≤misstatement<0.4% of the total owners’ equities amount. General defect: misstatement<1% of the total profits amount; misstatement<0.15% of the total assets amount; misstatement<0.15% of the total operating income; misstatement<0.2% of the total owners’ equities amount. | Significant defect: RMB3 million (including RMB3 million)-RMB6 million General defect: RMB0.5 million (including RMB0.5 million)-RMB 3 million | |
| Number of material weaknesses in internal control over financial reporting | 0 | |
| Number of material weaknesses in internal control not related to financial reporting | 0 | |
| Number of serious weaknesses in internal control over financial reporting | 0 | |
| Number of serious weaknesses in internal control not related to financial reporting | 0 | |
2. Independent Auditor’s Report on Internal Control
√ Applicable □ Not applicable
| Opinion paragraph in the independent auditor’s report on internal control |
| All shareholders of Lu Thai Textile Co., Ltd.: According to Audit Guidelines for Enterprise Internal Control and the relevant requirements of Auditing Standards for Chinese Certified Public Accountants, we have audited the effectiveness of internal control in the financial report of Lu Thai Textile Co., Ltd. (Hereinafter referred to as "Lu Thai Textile”) by 31 December 2021. I. Responsibilities of Lu Thai Textile for internal control The Board of Directors of Lu Thai Textile is responsible for establishing, improving and implementation the internal controls and evaluating its effectiveness in accordance with Standard for Enterprise Internal Control, Application Guidelines for Enterprise Internal Control, Enterprise Internal Control Audit Guidelines. |
| II. Responsibilities of certified public accountants It is our responsibility to issue an audit opinion on the effectiveness of internal controls in financial report on the basis of the implementation of the audit, and to disclose significant deficiencies in the internal controls of non-financial reports that have been noted. III. Inherent limitations of internal control Internal control has inherent limitations, and there is a possibility that misreporting cannot be prevented. In addition, because the change of circumstances may cause the internal control to become inappropriate or the degree of compliance with the control policies and procedures is reduced, it is risky to infer the effectiveness of the future internal control based on the audit results of the internal control. IV. Audit Opinion on Internal Control in Financial Report We believe that Lu Thai Textile Co., Ltd. kept effectively internal control on financial reporting in all respects according to Enterprise Internal Control Basic Specification and the relevant provisions on 31 December 2021. | |
| Independent auditor’s report on internal control disclosed or not | Disclosed |
| Disclosure date | 29 April 2022 |
| Index to such report disclosed | For details, please refer to the Auditor’s Report on Internal Control on www.cninfo.com.cn at the same time of disclosing the Company’s 2021 Annual Report. |
| Type of the auditor’s opinion | Unmodified unqualified opinion |
| Material weaknesses in internal control not related to financial reporting | None |
Indicate by tick mark whether any modified opinion is expressed in the independent auditor’s report on the Company’s internalcontrol.
□ Yes √ No
Indicate by tick mark whether the independent auditor’s report on the Company’s internal control is consistent with the internalcontrol self-evaluation report issued by the Company’s Board.
√ Yes □ No
XV Rectifications of Problems Identified by Self-inspection in the Special Action for ListedCompany GovernanceNot applicable.
Part V Environmental and Social Responsibility
I Major Environmental IssuesIndicate by tick mark whether the Company or any of its subsidiaries is a heavily polluting business identified by the environmentalprotection authorities of China.
√ Yes □ No
| Name of polluter | Name of major pollutants | Way of discharge | Number of discharge outlets | Distribution of discharge outlets | Discharge concentration | Discharge standards implemented | Total discharge | Approved total discharge | Excessive discharge |
| Lu Thai Textile Co., Ltd | COD and ammonia nitrogen | Continuous discharge | 2 | Chief discharge outlet of Huangjiapu Industrial Park ; chief discharge outlet of East Zone | COD≤200mg/L;ammonia nitrogen≤20mg/L | Emission standard of water pollutants in textile dyeing and finishing industry GB 4287-2012 | COD：345.04t；ammonia nitrogen：7.93t | COD: 1495.08t；ammonia nitrogen: 149.51t | No |
| LuFeng Company Limited | COD and ammonia nitrogen | Continuous discharge | 1 | Chief discharge outlet of LuFeng Company Limited | COD≤200mg/L;ammonia nitrogen≤20mg/L | Emission standard of water pollutants in textile dyeing and finishing industry GB 4287-2012 | COD：250.75t；ammonia nitrogen：8.15t | COD is 653.53t；ammonia nitrogen is 65.3t | No |
| Zibo Xinsheng Thermal Power Co., Ltd. | SO2, NQx, and PM | Organized continuous discharge | 4 | Production plant | SO2：≤35mg/m3、NQx：≤50mg/m3, PM：≤5mg/m3 | Emission standard of air pollutants of Thermal | SO2: 39.87t, NQx : 143.1t, PM: 5.42t | SO2 is 236.13t/a, NQx : 674.63t/a, PM: 67.47t/a. | No |
| Power Plant in Shandong Province DB37/664-2019 | |||||||||
| Continental Textile Co., Ltd. | Sewage | Discharge into the ecological pond in the park district after treatment | 1 | Beside sewage plant | COD≤50mg/L;ammonia nitrogen≤1.0mg/L | QCVN40：2011/BTNMT | Sewage discharge is 1,273,400t | / | No |
| Continental Textile Co., Ltd. | Exhaust gas | Direct discharge after treatment | 2 | Beside boiler room | / | QCVN19：2009/BTNMT | Gas emission is 285 million m3 | / | No |
Construction of pollution prevention equipment and operation conditionLu Thai Textile Co., Ltd. (hereinafter referred to as “the Company”) and its majority-owned subsidiary Lufeng Weaving & DyeingCo., Ltd. (hereinafter referred to as “Lufeng Weaving & Dyeing”) strictly implement the “Three Simultaneous” management systemfor environmental protection in project constructions. The companies are equipped with complete facilities for waste gas and wastewater treatment. Lu Thai Textile Co., Ltd. and its majority-owned subsidiary Lufeng Weaving & Dyeing Co., Ltd. carried out thewaste water treatment system transformation project to improve the treated water quality by systematic and comprehensive reform,further improving the river water quality and local ecological environment. The Company and Lufeng Weaving & Dyeingcentralizedly collected and coped with the dyeing and finishing waste gas, so as to greatly reduce the pollutant emissionconcentration. Online supporting monitoring facilities were built, whose data was uploaded to the government environmentalmonitoring system, to comprehensively monitor the Company's emission pollutants such as waste water and waste gas. Supportteams were set up to be responsible for daily operation maintenance and inspection to guarantee the normal operation of facilities.Both the exhaust emission and waste water discharge meet the emission standards. In terms of energy saving, the Company won theMinistry of Industry and Information Technology's 2020 Water Efficiency Leader in Key Water-using Enterprises, China NationalTextile and Apparel Council's 2020 Textile Industry Water-saving Enterprise Award and Benchmarking Unit of Water-Saving inShandong Province in 2021, making outstanding contributions to the company's energy-saving development.The wholly-owned subsidiary Zibo Xinsheng Thermal Power Co., Ltd. (hereinafter referred to as “Xinsheng Thermal Power”)enforces the “Three Simultaneous” management system for environmental protection in extension project construction in accordancewith the government requirements, and adopts the “limestone-gypsum method” to reduce emission concentration of sulfur dioxide,the “Low-nitrogen combustion + SNCR” and “SNCR+SCR method” to reduce emission concentration of nitrogen oxides, and the“electric-bag electrostatic precipitator + wet electrostatic precipitator” to reduce soot emission concentration. The overall systemworks well.The waste water treatment project of the wholly-owned subsidiary Continental Textile Co., Ltd. (hereinafter referred to as“Continental Textile”), located in the KCN Phuoc Dong, Tay Ninh, Vietnam, is designed to treat 6,500 tons of sewage water daily,
among which, sewage plan I is designed to treat 3,000 tons of sewage water daily, and the sewage plant II is designed to treat 3,500tons of sewage water daily. Continental Textile adopts a comprehensive treatment process of “pre-materialization + A2Obiochemistry + post-materialization + ozone oxidation+ active sand filtration” for waste water treatment, and the treated waterquality is better than the QCVN 40: 2011/BTNMT A-level emission standards stipulated by the Vietnam government. The treatedwaste water is all discharged to the ecological pond in the park. Treated water quality analysis for 2021: The COD (mean value) was
48.1 mg/L, the chrominance (mean value) was 26, the ammonia nitrogen (mean value) was 0.16 mg/L, and the total phosphorus(mean value) was 0.15 mg/L. All the parameters met the A-level emission standards set in the “Regulations on Parameters ofIndustrial Drainage in Vietnam” (QCVN40: 2011/BTNMT). Waste water discharge in the whole year met the standards withoutviolation. The total amount of waste water discharged in 2021 was 1,273,400 tons, among which, the chemical oxygen demand(COD) was 61.19 tons, ammonia nitrogen (NH3-N) was 0.197 tons and total phosphorus (TP) was 0.173 ton. Continental Textile isequipped with multi-pipe and water film dust-separation devices to process the exhaust gas discharged from boilers. In 2021, all theequipment was in normal operation, and the exhaust gas inspection parameters were lower than the QCVN19: 2009/BTNMTemission standards set by Vietnam government. In 2021, the total amount of sulfur dioxide emissions was 50.05 tons, and the totalamount of nitrogen oxides emissions was 47.5 tons.Project Environmental Impact Assessment and Other Administrative Permission for Environmental ProtectionIn 2021, the “Lu Thai Textile Co., Ltd. Intelligent Technology Upgrading Project of 25 million-meter High-grade Fabric ProductionLine”, the “Engineering Technology Research Institute Project”, the “Technology Upgrading Project of High-end Printing andDyeing Fabric Finishing Production Process” and the “Technology Upgrading Project of Regenerated Fibre Production Line andColored Spun Yarn Production Line” has completed the acceptance check. The “Lufeng Weaving and Dyeing’s High-end Printingand Dyeing Fabric Production Line Project” of the holding subsidiary Lufeng Weaving and Dyeing Co., Ltd. has been approved andis under construction. The wholly-owned subsidiary Zibo Xinsheng Thermal Power Co., Ltd. obtained the “Response of theEnvironmental Impact Report of the Shandong Provincial Department of Environmental Protection on the Extension Project of ZiboXinsheng Thermal Power” (Luhuanjian [2015] No. 241), the phase II of the expansion project has been completed and been put intoproduction. The wholly-owned subsidiary Continental Textile’s Spinning Phase I and Dyeing Park Phase I environmental protectionprojects have been completed and accepted for confirmation. The spinning phase II and yarn dyeing park Phase II environmentalassessment reports have been approved.Emergency plan for environmental incidentsIn order to prevent environmental pollution accidents, the Company and the holding subsidiary Lufeng Weaving & Dyeingrespectively prepared the Emergency Plan for Environmental Incidents, which were filed with Zibo Environmental Protection BureauZichuan Branch. The Plan includes contents such as environmental risk sources identification and risk assessment, prevention andearly warning mechanism, emergency security, and supervision and management.The wholly-owned subsidiary Zibo Xinsheng Thermal Power Co., Ltd. has formulated the “Emergency Plan for EnvironmentalIncidents” and filed it with the ecological and environmental management department. The identification and risk assessment ofenvironmental risk sources, prevention and early warning mechanisms, emergency protection and supervision and management wereincluded in the plan.The wholly-owned subsidiary Continental Textile Co., Ltd. has prepared emergency plans for different environmental incidents toreduce their impacts.Environmental self-monitoring programIn accordance with the requirements of the competent environment authorities, the Company and the holding subsidiary LufengWeaving & Dyeing observed the requirements of the superior environmental protection department to install automatic wastewatermonitoring facilities and achieve real-time monitoring of wastewater discharge. Besides, the automatic environment monitoring planwas prepared. In addition, they invited a qualified testing institution quarterly to conduct tests on sewage and waste gas according tothe self-monitoring plan, duly disclosed the monitoring data to the Shandong Pollution Source Self-monitoring Sharing System, andsubmitted the test reports to the competent environment authorities ensuring the monitoring data is true and valid.
The wholly-owned subsidiary Zibo Xinsheng Thermal Power Co., Ltd. has implemented online real-time monitoring ofenvironmental data in accordance with the requirements of the superior environmental protection department, and has achievedemission standards.The wholly-owned subsidiary Continental Textile Co., Ltd. installs automatic sewage sampling and water quality automatic onlinemonitoring devices, real-time automatic sampling and online monitoring of sewage effluent water quality; while the automatic onlinewaste gas monitoring system was installed to monitor waste gas emission in real-time after debugging. The company invites externalqualified testing institutions to conduct sewage, sludge and exhaust gas quarterly Test and submit the test report to the environmentalsupervision department.Administrative penalties imposed for environmental issues during the Reporting Period
| Name | Reason | Case | Result | Influence on production and operation | Rectification measures |
| - | - | - | - | - | - |
Other environment information that should be disclosedNoMeasures taken to decrease carbon emission in the Reporting Period and corresponding effects
√ Applicable □ Not applicable
The annual coal consumption for power generation of the wholly-owned subsidiary Xinsheng Thermal Power in 2021 was reducedfrom 283g/kWh in 2020 to 262g/kWh through operation mode adjustment, energy conservation improvement and unit efficiencyenhancement. At the end of the Reporting Period, which was the heating season, Xinsheng Thermal Power, who independently cutemission by 13% on the basis of benchmarking the lowest pollutant emission over the years, dug deeply into contributing to greenenvironmental protection and energy conservation and emission reduction.Other related environment protection informationNoThe Company shall abide by relevant disclosure requirements of the Self-Regulatory Guidelines of Shenzhen Stock Exchange forListed Companies No.3 - Industry Information Disclosure on textile and garment industry.Environmental protection conformity situation of the Company in the report periodThe Company and its majority-owned subsidiary Lufeng Weaving & Dyeing strictly implement the “Three Simultaneous”management system for environmental protection in project construction. The companies are equipped with complete facilities forwaste gas and waste water treatment, wastewater is treated with hydrolysis and acidification technique + AO treatment process andfinally discharged according to GB4287-2012 the Discharge Standard of Water Pollutants for Dyeing and Finishing of TextileIndustry; the boiler exhaust is treated with low nitrogen combustion technology and meets DB37/2374-2018 the Emission Standardsof Air Pollutants for Boilers in Shandong Province. The spray + electrostatic technology is adopted in the waste gas treatment, whichmeets the requirement in Regional Comprehensive Standards for the Discharge of Air Pollutants DB37/2376-2019 and VolatileOrganic Emission Standard of Shandong Province: Part 7 - Other Industries DB37/2801.7-2019. Temporary storage room ofcommon solid waste and hazardous waste is constructed in accordance with environmental protection requirements, and theCompany signs hazardous waste disposal contracts with third party qualified companies every year to dispose the hazardous waste ofthe Company on basis of conformity. The Company strictly observes environmental protection laws and regulations, and its projectshave complete formalities and its environmental protection facilities are in normal operation; in 2021, the environmental protectiondepartments of governments at various levels checked the Company more than 30 times but nonconformity was found.Zibo Xinsheng Thermal Power utilizes neutralization basin to teat acidic and alkali wastewater, and reduces pH value to 6-9 afterprecipitation and neutralization. The treated wastewater and reverse osmosis water are used as desulfurizing water, coal feeding
system rinsing water, road sprinkling water and coal yard water. Desulfurizing wastewater is treated with flocculation sedimentationpurification process and the design output of wastewater treatment system is 10m3/h, and the water quality after treatment will meetthe requirements of Discharge Standard of Wastewater from Limestone-gypsum Flue Gas Desulfurization System In Fossil FuelPower Plant DL/T997-2006, and also meet the wastewater recycling requirement of the plant. The treated wastewater is used fordamping dry dust. The stove ash generating from coal burning and gypsum generating from ultralow emission in Zibo XinshengThermal Power. are general solid waste, the Company signs boiler ash and desulfurized gypsum supply and distribution agreementswith building material factory, cement factory for full comprehensive utilization.Intercontinental Textile uses the comprehensive treatment process “pre-materialization +A2O biochemistry + post-materialization +ozone treatment + activated sand filtration” to treat the industrial wastewater of the Company, and the relevant equipment has beenproperly operated for six years after installation, and the discharged wastewater meets the level A discharge standard in the TechnicalSpecifications of Vietnam on Industrial Wastewater Discharge (QCVN40: 2011/BTNMT). the boiler exhaust of the Company istreated with heat exchange and temperature reduction, dust separation, spraying, water film dust collection, absorption, chemicalreaction and etc. Now the equipment has been installed and properly operated for six years. Exhaust discharge meets the dischargestandard of Vietnam, “State Technical Specifications on Discharge of Industrial Inorganic Substances and Dust” (Circular36/2015/TT-BTNMT). Hazardous waste and industrial waste warehouses are built up for separated storage of hazardous waste andindustrial waste in accordance with the Vietnamese regulations, Regulations on Administration of Hazardous Waste (Circular36/2015/TT-BTNMT) and Decision on Administration of Waste (Decree 38/2015/N?-CP), and waste transportation and disposalcontracts are signed with local qualified treatment organizations, and relevant treatment records of waste are reported theenvironmental protection authority of Vietnam annually.II Social Responsibility
The Company has prepared the Sustainability Report 2021, and for more details, please refer to the Sustainability Report 2021simultaneously disclosed with the Annual Report 2021.III Consolidation and Expansion of Poverty Alleviation Outcomes, and Rural RevitalizationNot applicable
Part VI Significant EventsI Fulfillment of Commitments
1. Commitments of the Company’s De Facto Controller, Shareholders, Related Parties and Acquirers, aswell as the Company Itself and Other Entities Fulfilled in the Reporting Period or Ongoing at thePeriod-End
√ Applicable □ Not applicable
| Commitment | Promisor | Type of commitment | Details of commitment | Date of commitment making | Term of commitment | Fulfillment |
| Commitments made in share reform | ||||||
| Commitments made in acquisition documents or shareholding alteration documents | ||||||
| Commitments made in time of asset restructuring | ||||||
| Commitments made in time of IPO or refinancing | Controlling shareholder, actual controller | Dilution of at sight returns on public offering A-share convertible corporate bonds | 1. Not intervene the Company’s operation and management beyond the authority and not occupy the Company’s interests. 2. From the issuance date of this commitment to the | 23 May 2019 | From 23 May 2019 to 8 April 2026 | On-going |
| latest regulations of CSRC. 3. Commitment is made to fulfill the Company's relevant remedial measures for returns and any commitment made herein by the company / me. If the company / I violate(s) such commitment and cause(s) losses to the Company or investors, the company / I will bear the compensation responsibility to the Company or investors in accordance with the law. | |||||
| Directors and senior | Dilution of at sight | 1. Com | 23 May 2019 | From 23 May 2019 to | On-going |
| management of the Company | returns on public offering A-share convertible corporate bonds | mitment is made not to transfer benefits to other units or individuals free of charge or under unfair conditions, and no other ways damaging the interests of the Company will be taken. 2. I will strictly abide by the budget management of the Company, and accept the strict supervision and management of the Company to avoid waste or excessive consumption. Any position-related | 8 April 2026 |
| relevant remedial measures for returns and any commitment made herein by me. If I violate such commitment and causes losses to the Company or investors, I will bear the compensation responsibility to the Company or investors in accordance with the law. | ||||||
| Equity incentive commitments | ||||||
| Other commitments made to minority interests | ||||||
| Executed on time or not | Not | |||||
2. Where there had been an earnings forecast for an asset or project and the Reporting Period was stillwithin the forecast period, explain why the forecast has been reached for the Reporting Period.
□ Applicable √ Not applicable
II Occupation of the Company’s Capital by the Controlling Shareholder or any of Its RelatedParties for Non-Operating Purposes
□ Applicable √ Not applicable
No such cases in the Reporting Period.
III Irregularities in the Provision of Guarantees
□ Applicable √ Not applicable
No such cases in the Reporting Period.IV Explanations Given by the Board of Directors Regarding the Latest “Modified Opinion”on the Financial Statements
□ Applicable √ Not applicable
V Explanations Given by the Board of Directors, the Supervisory Board and the IndependentDirectors (if any) Regarding the Independent Auditor's “Modified Opinion” on the FinancialStatements of the Reporting Period
□ Applicable √ Not applicable
VI YoY Changes to Accounting Policies, Estimates or Correction of Material AccountingErrors
□ Applicable √ Not applicable
No such cases in the Reporting Period.VII YoY Changes to the Scope of the Consolidated Financial Statements
√ Applicable □ Not applicable
During the Reporting Period, three subsidiaries were newly established by the Company. They are Hainan Huilin InternationalHoldings Co., Ltd., Libra International Investment Pet. Ltd. and Zibo Banyang Villa Hotel Co., Ltd.VIII Engagement and Disengagement of Independent AuditorCurrent independent auditor:
| Name of the domestic independent auditor | Grant Thornton China (Special General Partnership) |
| The Company’s payment to the domestic independent auditor (RMB’0,000) | 173.5 |
| How many consecutive years the domestic independent auditor has provided audit service for the Company | 3 |
| Names of the certified public accountants from the domestic independent auditor writing signatures on the auditor’s report | Cui Xiaoli, He Feng |
| How many consecutive years the certified public accountants have provided audit service for the Company | 2 |
Indicate by tick mark whether the independent auditor was changed for the Reporting Period.
□ Yes √ No
Independent auditor, financial advisor or sponsor engaged for the audit of internal controls:
√ Applicable □ Not applicable
The Company held the 2020 Annual General Meeting on 20 April 2021 and approved the Proposal on Renewal Engagement of the2021 Financial Audit and Internal Control Auditor and decided to renew the contract with Grant Thornton China (Special GeneralPartnership) for 2021 financial audit and internal control affairs and paid RMB1.735 million in total for 2020 financial report auditand the internal control audit.IX Possibility of Delisting after Disclosure of this Report
□ Applicable √ Not applicable
X Insolvency and Reorganization
□ Applicable √ Not applicable
No such cases in the Reporting Period.XI Major Legal Matters
□ Applicable √ Not applicable
No such cases in the Reporting Period.XII Punishments and Rectifications
□ Applicable √ Not applicable
No such cases in the Reporting Period.XIII Credit Quality of the Company as well as Its Controlling Shareholder and ActualController
□ Applicable √ Not applicable
XIV Major Related-Party Transactions
1. Continuing Related-Party Transactions
□ Applicable √ Not applicable
No such cases in the Reporting Period.
2. Related-Party Transactions Regarding Purchase or Sales of Assets or Equity Interests
□ Applicable √ Not applicable
No such cases in the Reporting Period.
3. Related Transactions Regarding Joint Investments in Third Parties
□ Applicable √ Not applicable
No such cases in the Reporting Period.
4. Credits and Liabilities with Related Parties
□ Applicable √ Not applicable
No such cases in the Reporting Period.
5. Transactions with Related Finance Companies
□ Applicable √ Not applicable
The Company did not make deposits in, receive loans or credit from and was not involved in any other finance business with anyrelated finance company or any other related parties.
6. Transactions with Related Parties by Finance Companies Controlled by the Company
□ Applicable √ Not applicable
The finance company controlled by the Company did not make deposits, receive loans or credit from and was not involved in anyother finance business with any related parties.
7. Other Major Related-Party Transactions
□ Applicable √ Not applicable
No such cases in the Reporting Period.
XV Major Contracts and Execution thereof
1. Entrustment, Contracting and Leases
(1) Entrustment
□ Applicable √ Not applicable
No such cases in the Reporting Period.
(2) Contracting
□ Applicable √ Not applicable
No such cases in the Reporting Period.
(3) Leases
□ Applicable √ Not applicable
No such cases in the Reporting Period.
2. Major guarantees
√ Applicable □ Not applicable
Unit: RMB'0,000
| Guarantees provided by the Company as the parent and its subsidiaries for external parties (exclusive of those for subsidiaries) | ||||||||||
| Obligor | Disclosure date of the guarantee line announcement | Line of guarantee | Actual occurrence date | Actual guarantee amount | Type of guarantee | Collateral (if any) | Counter-guarantee (if any) | Term of guarantee | Having expired or not | Guarantee for a related party or not |
| Guarantees provided by the Company for its subsidiaries | ||||||||||
| Obligor | Disclosure date of the guarantee line announcement | Line of guarantee | Actual occurrence date | Actual guarantee amount | Type of guarantee | Collateral (if any) | Counter-guarantee (if any) | Term of guarantee | Having expired or not | Guarantee for a related party or not |
| Continental Textile Co., Ltd. | 25 January 2017 | 10,201.12 | 20 January 2017 | 993.95 | Joint-liability | Five years since the approval of the board of the Company | No | Yes | ||
| Continental Textile Co., Ltd. | 25 January 2017 | 17,533.18 | 20 January 2017 | 0 | Joint-liability | Five years since the approval of the | No | Yes | ||
| shareholders meeting of the Company | ||||||||||
| Continental Textile Co., Ltd. | 27 October 2017 | 26,777.94 | 25 October 2017 | 6,658.79 | Joint-liability | Five years since the approval of the shareholders meeting of the Company | No | Yes | ||
| Continental Textile Co., Ltd. | 22 August 2018 | 7,013.27 | 20 August 2018 | 2,681.92 | Joint-liability | Three years since the approval of the board of the Company | No | Yes | ||
| Continental Textile Co., Ltd. | 29 March 2019 | 3,825.42 | 27 March 2019 | 3,825.42 | Joint-liability | Three years since the approval of the board of the Compa | No | Yes |
| ny | ||||||||||
| Continental Textile Co., Ltd./ Lu Thai (Tan Chau) Textile Co., Ltd. | 17 May 2021 | 11,986.32 | 17 May 2021 | 8,666.16 | Joint-liability | Three years since the approval of the board of the Company | No | Yes | ||
| Lu Thai (Tan Chau) Textile Co., Ltd. | 28 September 2019 | 6,375.7 | 27 September 2019 | 0 | Joint-liability | Three years since the approval of the board of the Company | No | Yes | ||
| Continental Textile Co., Ltd. | 28 September 2019 | 10,838.69 | 27 September 2019 | 0 | Joint-liability | Three years since the approval of the board of the Company | No | Yes | ||
| Continental Textile Co., Ltd. | 28 September 2019 | 2,869.07 | 27 September 2019 | 0 | Joint-liability | Three years since the approval of the | No | Yes |
| board of the Company | ||||||||||
| Continental Textile Co., Ltd. | 28 August 2020 | 12,751.4 | 26 August 2020 | 0 | Joint-liability | Three years since the approval of the board of the Company | No | Yes | ||
| Lu Thai (Tan Chau) Textile Co., Ltd. | 15 December 2020 | 8,925.98 | 14 December 2020 | 938.51 | Joint-liability | Four years since the approval of the board of the Company | No | Yes | ||
| Lu Thai (Tan Chau) Textile Co., Ltd. | 15 December 2020 | 3,825.42 | 14 December 2020 | 0 | Joint-liability | Three years since the approval of the board of the Company | No | Yes | ||
| Lu An Garments Co., Ltd. | 15 January 2021 | 3,187.85 | 13 January 2021 | 112.15 | Joint-liability | Two years since | No | Yes |
| the approval of the board of the Company | |||||||||||
| Shandong Lulian New Materials Co., Ltd. | 14 December 2021 | 4,000 | 13 December 2022 | 3,020.72 | Joint-liability | One year since the approval of the board of the Company | No | Yes | |||
| Total approved line for such guarantees in the Reporting Period (B1) | 19,174.17 | Total actual amount of such guarantees in the Reporting Period (B2) | 64,500.33 | ||||||||
| Total approved line for such guarantees at the end of the Reporting Period (B3) | 130,111.36 | Total actual balance of such guarantees at the end of the Reporting Period (B4) | 26,897.62 | ||||||||
| Guarantees provided between subsidiaries | |||||||||||
| Obligor | Disclosure date of the guarantee line announcement | Line of guarantee | Actual occurrence date | Actual guarantee amount | Type of guarantee | Collateral (if any) | Counter-guarantee (if any) | Term of guarantee | Having expired or not | Guarantee for a related party or not | |
| Total guarantee amount (total of the three kinds of guarantees above) | |||||||||||
| Total guarantee line approved in the Reporting Period (A1+B1+C1) | 19,174.17 | Total actual guarantee amount in the Reporting Period (A2+B2+C2) | 64,500.33 | ||||||||
| Total approved guarantee line at the end of the Reporting Period (A3+B3+C3) | 130,111.36 | Total actual guarantee balance at the end of the Reporting Period (A4+B4+C4) | 26,897.62 |
| Total actual guarantee amount (A4+B4+C4) as % of the Company’s net assets | 3.37% | ||
| Of which: | |||
| Balance of guarantees provided for shareholders, actual controller and their related parties (D) | 0 | ||
| Balance of debt guarantees provided directly or indirectly for obligors with an over 70% debt/asset ratio (E) | 0 | ||
| Amount by which the total guarantee amount exceeds 50% of the Company’s net assets (F) | 0 | ||
| Total of the three amounts above (D+E+F) | 0 | ||
| Joint responsibilities possibly borne or already borne in the Reporting Period for undue guarantees (if any) | N/A | ||
| Explanation about external guarantee violating established procedure (if any) | N/A | ||
Compound guarantees:
The Company shall abide by relevant disclosure requirements of the Self-Regulatory Guidelines of Shenzhen Stock Exchange forListed Companies No.3 - Industry Information Disclosure on textile and garment industry.Whether the Company provides guarantees or financial assistance for dealers
□ Yes √ No
3. Cash Entrusted for Wealth Management
(1) Cash Entrusted for Wealth Management
√ Applicable □ Not applicable
Overviews of cash entrusted for wealth management during the Reporting Period
RMB’0,000
| Specific type | Capital resources | Amount incurred | Undue Balance | Overdue amount | Overdue amount with provision for impairment |
| Bank financial | Raised funds | 69,954 | 0 | 0 | 0 |
| products | |||||
| Bank financial products | Self-owned funds | 52,143 | 0 | 0 | 0 |
| Brokerage financial products | Raised funds | 5,990 | 0 | 0 | 0 |
| Brokerage financial products | Self-owned funds | 3,000 | 0 | 0 | 0 |
| Total | 131,087 | 0 | 0 | 0 | |
Particulars of entrusted cash management with single significant amount or low security and bad liquidity
√ Applicable □ Not applicable
RMB’0,000
| Name of the trustee | Type of the trustee | Type of the product | Amount | Resource of funds | Initial date | Ended Date | Use of fund | Method of payment determination | Annual yield for reference | Estimate profit (if any) | Amount of actual profits or losses in Reporting Period | Actual recovery of profits or losses in Reporting Period | Amount withdrawn impairment provision (if any) | Whether go through stator procedures | Whether there is wealth management entrustment plan in future or not | Overview of the item and the related index for inquiring (if any) |
| Agricultural Bank of Chin | Bank | Principal-protected | 10,000 | Raised funds | 2020/07/02 | 2021/01/08 | Commodity and financial | One-off repayment of principal | 3.50% | 171.88 | 171.88 | Recovery on schedule | 0 | Yes | Not yet | Refer to the related ann |
| a | derivative assets | and interests at maturity | ouncement (No.: 2020-051) disclosed on Cninfo on 23 May 2020 | |||||||||||||
| Qishang Bank | Bank | Principal-protected | 5,000 | Raised funds | 2020/10/16 | 2021/01/14 | Credit assets | One-off repayment of principal and interests at maturity | 3.50% | 40.71 | 40.71 | Recovery on schedule | 0 | Yes | Not yet | Refer to the related announcement (No.: 2020-051) disclosed on Cni |
| nfo on 23 May 2020 | ||||||||||||||||
| Qishang Bank | Bank | Principal-protected | 2,754 | Raised funds | 2020/12/10 | 2021/03/11 | Credit assets | One-off repayment of principal and interests at maturity | 3.50% | 22.67 | 22.67 | Recovery on schedule | 0 | Yes | Not yet | Refer to the related announcement (No.: 2020-051) disclosed on Cninfo on 23 May 2020 |
| Qishang Bank | Bank | Principal-protected | 5,000 | Raised funds | 2020/12/10 | 2021/03/11 | Credit assets | One-off repayment of prin | 3.50% | 41.16 | 41.16 | Recovery on schedule | 0 | Yes | Not yet | Refer to the relat |
| cipal and interests at maturity | ed announcement (No.: 2020-051) disclosed on Cninfo on 23 May 2020 | |||||||||||||||
| Agricultural Bank of China | Bank | Principal-protected | 10,000 | Raised funds | 2020/12/31 | 2021/03/25 | Commodity and financial derivative assets | One-off repayment of principal and interests at maturity | 3.15% | 68.39 | 68.39 | Recovery on schedule | 0 | Yes | Not yet | Refer to the related announcement (No.: 2020-051) disclose |
| d on Cninfo on 23 May 2020 | ||||||||||||||||
| Qishang Bank | Bank | Principal-protected | 2,500 | Raised funds | 2021/03/19 | 2021/06/22 | Credit assets | One-off repayment of principal and interests at maturity | 3.70% | 22.71 | 22.71 | Recovery on schedule | 0 | Yes | Not yet | Refer to the related announcement (No.: 2020-051) disclosed on Cninfo on 23 May 2020 |
| Agricultural | Bank | Principal-prote | 10,000 | Raised fund | 2021/01/22 | 2021/04/16 | Commodit | One-off repa | 3.30% | 71.65 | 71.65 | Recovery on | 0 | Yes | Not yet | Refer to |
| Bank of China | cted | s | y and financial derivative assets | yment of principal and interests at maturity | schedule | the related announcement (No.: 2020-051) disclosed on Cninfo on 23 May 2020 | ||||||||||
| Agricultural Bank of China | Bank | Principal-protected | 10,000 | Raised funds | 2021/03/30 | 2021/06/25 | Commodity and financial derivative assets | One-off repayment of principal and interests at maturity | 3.70% | 83.2 | 83.2 | Recovery on schedule | 0 | Yes | Not yet | Refer to the related announcement (No.: 2020-051) |
| disclosed on Cninfo on 23 May 2020 | ||||||||||||||||
| Agricultural Bank of China | Bank | Principal-protected | 5,000 | Raised funds | 2021/03/30 | 2021/06/25 | Commodity and financial derivative assets | One-off repayment of principal and interests at maturity | 3.70% | 41.6 | 41.6 | Recovery on schedule | 0 | Yes | Not yet | Refer to the related announcement (No.: 2020-051) disclosed on Cninfo on 23 May 2020 |
| Agri | Ban | Princ | 9,70 | Rais | 202 | 202 | Co | One | 3.50 | 76.3 | 76.3 | Rec | 0 | Yes | Not | Ref |
| cultural Bank of China | k | ipal-protected | 0 | ed funds | 1/04/27 | 1/07/23 | mmodity and financial derivative assets | -off repayment of principal and interests at maturity | % | 4 | 4 | overy on schedule | yet | er to the related announcement (No.: 2020-051) disclosed on Cninfo on 23 May 2020 | ||
| Zhongtai Securities Co., Ltd. | Securities | Principal-protected | 1,500 | Raised funds | 2021/08/26 | 2021/10/25 | Other | One-off repayment of principal and interests at maturity | 4.25% | 9.89 | 9.89 | Recovery on schedule | 0 | Yes | Not yet | Refer to the related announcement (No.: 2021-033) |
| disclosed on Cninfo on 30 April 2021 | ||||||||||||||||
| Zhongtai Securities Co., Ltd. | Securities | Principal-protected | 1,500 | Raised funds | 2021/08/26 | 2021/11/23 | Other | One-off repayment of principal and interests at maturity | 3.95% | 13.63 | 13.63 | Recovery on schedule | 0 | Yes | Not yet | Refer to the related announcement (No.: 2021-033) disclosed on Cninfo on 30 April 2021 |
| Zhongtai Securities Co., | Securities | Principal-protected | 1,490 | Raised funds | 2021/08/26 | 2021/10/25 | Other | One-off repayment of principa | 4.25% | 9.82 | 9.82 | Recovery on schedule | 0 | Yes | Not yet | Refer to the related ann |
| Ltd. | l and interests at maturity | ouncement (No.: 2021-033) disclosed on Cninfo on 30 April 2021 | ||||||||||||||
| Zhongtai Securities Co., Ltd. | Securities | Principal-protected | 1,500 | Raised funds | 2021/08/26 | 2021/11/23 | Other | One-off repayment of principal and interests at maturity | 3.95% | 13.63 | 13.63 | Recovery on schedule | 0 | Yes | Not yet | Refer to the related announcement (No.: 2021-033) disclosed on Cninfo on 30 April 202 |
| 1 | ||||||||||||||||
| Qishang Bank | Bank | Principal-protected | 3,000 | Self-owned funds | 2020/10/16 | 2021/01/14 | Credit assets | One-off repayment of principal and interests at maturity | 3.50% | 24.42 | 24.42 | Recovery on schedule | 0 | Yes | Not yet | Refer to the related announcement (No.: 2020-059) disclosed on Cninfo on 14 August 2020 |
| Qishang Bank | Bank | Principal-protected | 5,000 | Self-owned funds | 2020/11/04 | 2021/02/02 | Credit assets | One-off repayment of principal and interests at maturity | 3.50% | 40.71 | 40.71 | Recovery on schedule | 0 | Yes | Not yet | Refer to the related announcement (No.: 2020-059) disclose |
| d on Cninfo on 14 August 2020 | ||||||||||||||||
| Qishang Bank | Bank | Principal-protected | 5,000 | Self-owned funds | 2020/11/11 | 2021/02/09 | Credit assets | One-off repayment of principal and interests at maturity | 3.50% | 40.71 | 40.71 | Recovery on schedule | 0 | Yes | Not yet | Refer to the related announcement (No.: 2020-059) disclosed on Cninfo on 14 August 2020 |
| Qishang Bank | Bank | Principal-protected | 6,246 | Self-owned funds | 2020/12/10 | 2021/03/11 | Credit assets | One-off repayment of principal and | 3.50% | 51.42 | 51.42 | Recovery on schedule | 0 | Yes | Not yet | Refer to the related announcem |
| interests at maturity | ent (No.: 2020-059) disclosed on Cninfo on 14 August 2020 | |||||||||||||||
| Qishang Bank | Bank | Principal-protected | 3,000 | Self-owned funds | 2020/12/11 | 2021/01/20 | Credit assets | One-off repayment of principal and interests at maturity | 3.40% | 10.55 | 10.55 | Recovery on schedule | 0 | Yes | Not yet | Refer to the related announcement (No.: 2020-059) disclosed on Cninfo on 14 August 2020 |
| Everbright Bank | Bank | Principal-protected | 5,000 | Self-owned funds | 2020/12/18 | 2021/01/18 | Commodity and financial derivative assets | One-off repayment of principal and interests at maturity | 2.70% | 10.61 | 10.61 | Recovery on schedule | 0 | Yes | Not yet | Refer to the related announcement (No.: 2020-059) disclosed on Cninfo on 14 August 2020 |
| Qishang Bank | Bank | Principal-protected | 2,600 | Self-owned funds | 2021/01/07 | 2021/02/19 | Credit assets | One-off repayment of principal and interests at maturity | 3.40% | 9.82 | 9.82 | Recovery on schedule | 0 | Yes | Not yet | Refer to the related announcement (No.: 2020-059) disclosed on |
| Cninfo on 14 August 2020 | ||||||||||||||||
| Qishang Bank | Bank | Principal-protected | 2,000 | Self-owned funds | 2021/01/27 | 2021/03/03 | Credit assets | One-off repayment of principal and interests at maturity | 3.40% | 6.15 | 6.15 | Recovery on schedule | 0 | Yes | Not yet | Refer to the related announcement (No.: 2020-059) disclosed on Cninfo on 14 August 2020 |
| Qishang Bank | Bank | Principal-protected | 3,697 | Self-owned funds | 2021/02/09 | 2021/05/18 | Credit assets | One-off repayment of principal and inter | 3.50% | 32.78 | 32.78 | Recovery on schedule | 0 | Yes | Not yet | Refer to the related announcement |
| ests at maturity | (No.: 2020-059) disclosed on Cninfo on 14 August 2020 | |||||||||||||||
| Qishang Bank | Bank | Principal-protected | 7,000 | Self-owned funds | 2021/02/24 | 2021/06/29 | Credit assets | One-off repayment of principal and interests at maturity | 3.60% | 81.42 | 81.42 | Recovery on schedule | 0 | Yes | Not yet | Refer to the related announcement (No.: 2020-059) disclosed on Cninfo on 14 August 2020 |
| Qish | Ban | Principal- | 2,60 | Self-ow | 2021/02 | 2021/03 | Credit | One-off | 3.50 | 8.23 | 8.23 | Recover | 0 | Yes | Not | Refer |
| ang Bank | k | protected | 0 | ned funds | /24 | /31 | assets | repayment of principal and interests at maturity | % | y on schedule | yet | to the related announcement (No.: 2020-059) disclosed on Cninfo on 14 August 2020 | ||||
| Qishang Bank | Bank | Principal-protected | 2,000 | Self-owned funds | 2021/03/11 | 2021/06/15 | Credit assets | One-off repayment of principal and interests at maturity | 3.60% | 17.87 | 17.87 | Recovery on schedule | 0 | Yes | Not yet | Refer to the related announcement (No.: 2020-059) disclosed on Cninfo |
| on 14 August 2020 | ||||||||||||||||
| Qishang Bank | Bank | Principal-protected | 5,000 | Self-owned funds | 2021/03/19 | 2021/06/22 | Credit assets | One-off repayment of principal and interests at maturity | 3.70% | 45.43 | 45.43 | Recovery on schedule | 0 | Yes | Not yet | Refer to the related announcement (No.: 2020-059) disclosed on Cninfo on 14 August 2020 |
| Zhongtai Securities Co., Ltd. | Securities | Principal-protected | 1,900 | Self-owned funds | 2021/07/02 | 2021/08/02 | Other | One-off repayment of principal and interests at | 2.50% | 3.92 | 3.92 | Recovery on schedule | 0 | Yes | Not yet | Refer to the related announcement (No.: |
| maturity | 2020-059) disclosed on Cninfo on 14 August 2020 | |||||||||||||||
| Zhongtai Securities Co., Ltd. | Securities | Principal-protected | 1,100 | Self-owned funds | 2021/07/02 | 2021/09/28 | Other | One-off repayment of principal and interests at maturity | 4.35% | 11.01 | 11.01 | Recovery on schedule | 0 | Yes | Not yet | Refer to the related announcement (No.: 2020-059) disclosed on Cninfo on 14 August 2020 |
| Total | 131,087 | -- | -- | -- | -- | -- | -- | 1,082.33 | 1,082.33 | -- | 0 | -- | -- | -- | ||
Whether there is the case where the principal cannot be recovered at maturity or other case which may cause impairment forentrusted asset management
□ Applicable √ Not applicable
(2) Entrusted Loans
□ Applicable √ Not applicable
No such cases in the Reporting Period.
4. Other Major Contracts
□ Applicable √ Not applicable
No such cases in the Reporting Period.XVI Other Significant Events
□ Applicable √ Not applicable
No such cases in the Reporting Period.XVII Significant Events of Subsidiaries
□ Applicable √ Not applicable
Part VII Share Changes and Shareholder InformationI Share Changes
1. Share Changes
Unit: share
| Before | Increase/decrease in the Reporting Period (+/-) | After | |||||||
| Shares | Percentage (%) | New issues | Shares as dividend converted from profit | Shares as dividend converted from capital reserves | Other | Subtotal | Shares | Percentage (%) | |
| I. Restricted shares | 119,038,937 | 13.87% | 24,285,000 | -118,318,700 | -94,033,700 | 25,005,237 | 2.83% | ||
| 1. Shares held by State | |||||||||
| 2. Shares held by state-owned legal person | |||||||||
| 3. Shares held by other domestic investors | 806,537 | 0.09% | 24,285,000 | -86,300 | 24,198,700 | 25,005,237 | 2.83% | ||
| Among which: Shares held by domestic legal person | |||||||||
| Shares held by domestic natural person | 806,537 | 0.09% | 24,285,000 | -86,300 | 24,198,700 | 25,005,237 | 2.83% | ||
| 4. Shares held by other foreign investors | 118,232,400 | 13.78% | -118,232,400 | -118,232,400 | |||||
| Among which: Shares held by foreign corporations | 118,232,400 | 13.78% | -118,232,400 | -118,232,400 | |||||
| Shares held by foreign natural person | |||||||||
| II. Unrestricted shares | 739,093,385 | 86.13% | 118,242,673 | 118,242,673 | 857,336,058 | 97.17% | |||
| 1. RMB ordinary shares | 561,275 | 65.41% | 10,273 | 10,273 | 561,28 | 63.61% | |||
| ,069 | 5,342 | ||||||||
| 2. Domestically listed foreign shares | 177,818,316 | 20.72% | 118,232,400 | 118,232,400 | 296,050,716 | 33.55% | |||
| 3. Overseas listed foreign shares | |||||||||
| 4. Other | |||||||||
| III. Total shares | 858,132,322 | 100.00% | 24,285,000 | -76,027 | 24,208,973 | 882,341,295 | 100.00% |
Reasons for share changes:
√ Applicable □ Not applicable
①According to its 2021 restricted share incentive scheme, the Company have firstly granted 24,285,000 restricted ordinary A sharesthat were directly issued to the incentive staff on 7 June 2021.
②Due to the fact that the Company had issued convertible A-share bonds on 9 April 2020, convertible bonds were converted to3,973 shares in the period from the beginning of 2021 to 31 December 2021.
③80,000 shares of equity incentive restricted stock were repurchased and canceled.
④The Company's restricted B shares held by Tailun (Thailand) Textile Co., Ltd., with a volume of 118,232,400 shares, wereamended and registered as tradable B shares on 12 July 2021.
⑤Due to the retirement of directors and the resignation of executives, the shares held by former directors or executives will beunlocked and adjusted in accordance with relevant regulations on the executive share management.Approval of share changes:
√ Applicable □ Not applicable
①On 13 May 2021, the first Extraordinary General Meeting of this year was held in the Company. Deliberated and approved wereProposal on the Company's '2021 Restricted Share Incentive Scheme (Draft)' and Its Abstracts, Proposal on the Company's'Implementation and Appraisal Regulations on 2021 Restricted Share Incentive Scheme', and Proposal on Submitting theAuthorization for the Board of Directors to Handle the Company's 2021 Restricted Share Incentive Scheme to the General Meeting ofShareholders. Self-inspection Report on the Company's 2021 Restricted Share Incentive Plan Insiders and Incentive Subjects'Trading of the Company's Shares was disclosed. On 17 May 2021, the Company convened the 24th Meeting of the 9th Board ofDirectors and the 15th Meeting of the 9th Supervisory Committee. Deliberated and approved were Proposal on Adjusting the List ofthe Name and Number of Incentive Staff of 2021 Restricted Share Incentive Scheme and Proposal on Granting Restrictive Stocks toIncentive Staff. The Board of Directors believed that the granting conditions specified in the incentive scheme had been fulfilled, andagreed to designate 17 May 2021 as the granting date. 24,285,000 restricted shares were effectively granted to 750 incentive staff.
②On 26 August 2021, the Proposal on Repurchase and Cancel Authorized but Unlocked Restricted Share of Part of the IncentivePersonnel was deliberated and approved at the 26th Meeting of the 9th Board of Directors of the Company, as four of the incentivepersonnel of the 2021 restricted share incentive scheme resigned due to personal reasons, who no longer met the condition of beingincentive personnel. The restricted shares held by the four personnel with a volume of 80,000 shares, which were authorized but notlifted from restricted sales, shall be repurchased and canceled by the Company in accordance with the 2021 Restricted ShareIncentive Scheme and relevant provisions of laws and regulations. The aforesaid matters were deliberated and approved at the 2ndExtraordinary General Meeting of the Company in 2021 that was held on 13 September 2021.
③118,232,400 shares of non-listed foreign share of the Company held by the shareholder and sponsor of foreign capital Tailun(Thailand) Textile Co., Ltd. were amended and registered as restricted B shares at Shenzhen Branch of China Securities Depositoryand Clearing Corporation Limited on 30 June 2020, whose restricted term was one year and expiration was on 29 June 2021. Asexamined and approved by Shenzhen Stock Exchange, the Company's restricted B shares held by Tailun (Thailand) Textile Co., Ltd.,
with a volume of 118,232,400 shares, were amended and registered as tradable B shares at Shenzhen Branch of China SecuritiesDepository and Clearing Corporation Limited on 12 July 2021.Transfer of share ownership:
√ Applicable □ Not applicable
On 7 June 2021, the first-granted restricted shares in the Company's 2021 Restricted Share Incentive Scheme were registered, asaudited and confirmed by Shenzhen Stock Exchange and the Shenzhen branch of China Securities Depository and ClearingCorporation Limited. The Company completed the procedures of repurchasing and canceling 80,000 shares of restricted share at theShenzhen Branch of China Securities Depository and Clearing Corporation Limited on 27 November 2021.
Effects of share changes on the basic and diluted earnings per share, equity per share attributable to the Company’s ordinaryshareholders and other financial indicators of the prior year and the prior accounting period, respectively:
√ Applicable □ Not applicable
See relevant contents of "VI Key Financial Information" under "Part II Corporate Information and Key Financial Information".Other information that the Company considers necessary or is required by the securities regulator to be disclosed:
□ Applicable √ Not applicable
2. Changes in Restricted Shares
√ Applicable □ Not applicable
Unit: share
| Name of the shareholders | Restricted shares amount at the period-begin | Restricted shares increased of the period | Restricted shares relieved of the period | Restricted shares amount at the period-end | Restricted reasons | Restricted shares relieved date |
| Tailun (Thailand) Textile Co., Ltd. | 118,232,400 | 118,232,400 | 0 | Restricted shares relieved before the IPO | 12 July 2021 | |
| Liu Zibin | 111,217 | 111,217 | Locked public shares held by senior management | The Company shall implement the provisions on restricted sale by directors, supervisors and senior management within tenure | ||
| Wang Fangshui | 110,065 | 110,065 | Locked public shares held by senior | The Company shall implement the |
| management | provisions on restricted sale by directors, supervisors and senior management | |||||
| Qin Guiling | 94,906 | 94,906 | Locked public shares held by senior management | The Company shall implement the provisions on restricted sale by directors, supervisors and senior management within tenure | ||
| Zhang Hongmei | 69,375 | 300,000 | 369,375 | Locked public shares held by senior management: 69375 shares; restricted shares from equity incentive: 300000 shares | The Company shall implement the provisions on restricted sale by directors, supervisors and senior management within tenure, and lift the lock-up in batches according to the share incentive scheme | |
| Wang Jiabin | 62,775 | 300,000 | 362,775 | Locked public shares held by senior management: | The Company shall implement the provisions on |
| 62775 shares; restricted shares from equity incentive: 300000 shares | restricted sale by directors, supervisors and senior management within tenure, and lift the lock-up in batches according to the share incentive scheme | |||||
| Yu Shouzheng | 62,325 | 200,000 | 262,325 | Locked public shares held by senior management: 62325 shares; restricted shares from equity incentive: 200000 shares | The Company shall implement the provisions on restricted sale by directors, supervisors and senior management within tenure, and lift the lock-up in batches according to the share incentive scheme | |
| Zhang Zhanqi | 60,225 | 300,000 | 360,225 | Locked public shares held by senior management: 60225 shares; restricted shares from equity | The Company shall implement the provisions on restricted sale by directors, supervisors and senior |
| incentive: 300000 shares | management within tenure, and lift the lock-up in batches according to the share incentive scheme | |||||
| Zhang Keming | 58,275 | 200,000 | 258,275 | Locked public shares held by senior management: 58275 shares; restricted shares from equity incentive: 200000 shares | The Company shall implement the provisions on restricted sale by directors, supervisors and senior management within tenure, and lift the lock-up in batches according to the share incentive scheme | |
| Zhang Shougang | 54,825 | 54,825 | Locked public shares held by senior management | The Company shall implement the provisions on restricted sale by directors, supervisors and senior management within tenure | ||
| Zhang Jianxiang | 39,112 | 39,112 | Locked public | The Company |
| shares held by senior management | shall implement the provisions on restricted sale by directors, supervisors and senior management within tenure | |||||
| Lyu Yongchen | 25,312 | 6,300 | 19,012 | Locked public shares held by senior management | The Company shall implement the provisions on restricted sale by directors, supervisors and senior management | |
| Shang Chenggang | 22,500 | 200,000 | 222,500 | Locked public shares held by senior management: 22500 shares; restricted shares from equity incentive: 200000 shares | The Company shall implement the provisions on restricted sale by directors, supervisors and senior management within tenure, and lift the lock-up in batches according to the share incentive scheme | |
| Wang Changzhao | 16,875 | 16,875 | Locked public shares held by | The Company shall |
| senior management | implement the provisions on restricted sale by directors, supervisors and senior management | |||||
| Li Wenji | 7,500 | 200,000 | 207,500 | Locked public shares held by senior management: 7500 shares; restricted shares from equity incentive: 200000 shares | The Company shall implement the provisions on restricted sale by directors, supervisors and senior management within tenure, and lift the lock-up in batches according to the share incentive scheme | |
| Liu Zilong | 7,500 | 7,500 | Locked public shares held by senior management | The Company shall implement the provisions on restricted sale by directors, supervisors and senior management within tenure | ||
| Dong Shibing | 3,750 | 3,750 | Locked public shares held by senior | The Company shall implement the |
| management | provisions on restricted sale by directors, supervisors and senior management within tenure | |||||
| Du Lixin | 200,000 | 200,000 | Restricted shares from equity incentive | Lift the lock-up in batches according to the share incentive scheme | ||
| Zhang Wei | 200,000 | 200,000 | Restricted shares from equity incentive | Lift the lock-up in batches according to the share incentive scheme | ||
| Fu Guannan | 200,000 | 200,000 | Restricted shares from equity incentive | Lift the lock-up in batches according to the share incentive scheme | ||
| Guo Heng | 200,000 | 200,000 | Restricted shares from equity incentive | Lift the lock-up in batches according to the share incentive scheme | ||
| Other subjects of first-granted incentive of restricted share incentive scheme in 2021 | 21,705,000 | 21,705,000 | Restricted shares from equity incentive | Lift the lock-up in batches according to the share incentive scheme |
| Total | 119,038,937 | 24,205,000 | 118,238,700 | 25,005,237 | -- | -- |
II. Issuance and Listing of Securities
1. Securities (Exclusive of Preferred Shares) Issued in the Reporting Period
√ Applicable □ Not applicable
| Name of Stock and derivative securities thereof | Issue date | issue price (interest) | Issue amount | Listing date | Approved amount for listing | Termination date for trading | Disclosure index | Disclosure date |
| Stock | ||||||||
| LTTC | 7 June 2021 | 3.31 | 24,285,000 | 7 June 2021 | 24,285,000 | Refer to the announcement (No.: 2021-040) disclosed on http://www.cninfo.com.cn/ on 4 June 2021. | 4 June 2021 | |
| Convertible corporate bonds, convertible corporate bonds separately traded and corporate bonds | ||||||||
| Other derivative securities | ||||||||
Notes:
The 2021 Restricted Share Incentive Scheme and relevant proposals were deliberated and approved through the 22nd Meeting of the9th Supervisory Committee, the 13th Meeting of the 9th Board of Supervisors and the 1st Extraordinary General Meeting in 2021.On 7 June 2021, as audited and confirmed by Shenzhen Stock Exchange and the Shenzhen Branch of China Securities Depositoryand Clearing Corporation Limited, the registration of granting 24,285,000 shares of restricted share to 750 incentive personnel wascompleted. For details, see relevant announcement disclosed on Securities Times, Shanghai Securities News, China SecuritiesJournal, Ta Kung Pao and the cninfo website (www.cninfo.com.cn).
2. Changes to Total Shares, Shareholder Structure and Asset and Liability Structures
√ Applicable □ Not applicable
At the beginning of 2021, the Company possessed 858,132,322 shares in total (561,894,181 A shares and 296,238,141 B sharesinclusive). 24,285,000 restricted ordinary A shares issued directly to the incentive personnel were firstly granted and completed bythe Company on 7 June 2021. As convertible bonds of Lu Thai were converted to 3,973 A shares cumulatively from 1 January 2021to 31 December 2021, the repurchasing and canceling 80,000 shares of equity incentive restricted stock was completed on 27November 2021. By 31 December 2021, the Company possessed 882,341,295 shares in total (586,103,154 A shares and 296,238,141
B shares inclusive), which had no significant impact on the Company's assets and liability structure.
3. Existing Staff-Held Shares
□ Applicable √ Not applicable
III Shareholders and Actual Controller
1. Total Number of Shareholders and Their Shareholdings
Unit: share
| Number of ordinary shareholders | 57,722 | Number of ordinary shareholders at the month-end prior to the disclosure of this Report | 55,183 | Number of preferred shareholders with resumed voting rights (if any) (see note 8) | 0 | Number of preferred shareholders with resumed voting rights at the month-end prior to the disclosure of this Report (if any) (see note 8) | 0 | |||||||
| 5% or greater shareholders or top 10 shareholders | ||||||||||||||
| Name of shareholder | Nature of shareholder | Shareholding percentage | Total shares held at the period-end | Increase/decrease in the Reporting Period | Restricted shares held | Unrestricted shares held | Shares in pledge, marked or frozen | |||||||
| Status | Shares | |||||||||||||
| Zibo Lucheng Textile Investment Co., Ltd. | Domestic non-state-owned legal person | 15.91% | 140,353,583 | 0 | 140,353,583 | |||||||||
| Tailun (Thailand) Textile Co., Ltd. | Foreign legal person | 13.40% | 118,232,400 | 0 | 118,232,400 | |||||||||
| Central Huijin Assets Management Co., Ltd. | State-owned legal person | 2.25% | 19,884,100 | -431,200 | 19,884,100 | |||||||||
| National Social | Domestic | 1.11% | 9,810,0 | 360,00 | 9,810,0 | |||||||||
| Security Fund Portfolio 413 | non-state-owned legal person | 51 | 0 | 51 | ||||
| Zhong Ou China Securities Asset Management Plan | Other | 0.59% | 5,235,900 | 0 | 5,235,900 | |||
| Dacheng China Securities Asset Management Plan | Other | 0.59% | 5,235,900 | 0 | 5,235,900 | |||
| Harvest China Securities Asset Management Plan | Other | 0.59% | 5,235,900 | 0 | 5,235,900 | |||
| GF China Securities Asset Management Plan | Other | 0.59% | 5,235,900 | 0 | 5,235,900 | |||
| Yinhua China Securities Asset Management Plan | Other | 0.59% | 5,235,900 | 0 | 5,235,900 | |||
| Liao Cuimeng | Domestic natural person | 0.58% | 5,142,200 | 5,142,200 | 5,142,200 | |||
| Strategic investor or general legal person becoming a top-10 ordinary shareholder due to rights issue (if any) (see note 3) | Naught | |||||||
| Related or acting-in-concert parties among the shareholders above | Zibo Lucheng Textile Investment Co., Ltd. is the largest shareholder of the Company and the actual controller. All of other shareholders are people holding public A share or public B share and the Company is not able to confirm whether there is associated relationship or concerted action among other shareholders. | |||||||
| Above shareholders involved in Entrusting/being entrusted voting rights and giving up voting rights | Naught | |||||||
| Special account for share repurchases (if any) among the top 10 shareholders (see note 10) | Naught | |||||||
| Top 10 unrestricted shareholders | ||||||||
| Name of shareholder | Unrestricted shares held at the period-end | Shares by type | ||||||
| Type | Shares | ||
| Zibo Lucheng Textile Investment Co., Ltd. | 140,353,583 | RMB ordinary share | 140,353,583 |
| Tailun (Thailand) Textile Co., Ltd. | 118,232,400 | Domestically listed foreign shares | 118,232,400 |
| Central Huijin Assets Management Co., Ltd. | 19,884,100 | RMB ordinary share | 19,884,100 |
| National Social Security Fund Portfolio 413 | 9,810,051 | RMB ordinary share | 9,810,051 |
| Zhong Ou China Securities Asset Management Plan | 5,235,900 | RMB ordinary share | 5,235,900 |
| Dacheng China Securities Asset Management Plan | 5,235,900 | RMB ordinary share | 5,235,900 |
| Harvest China Securities Asset Management Plan | 5,235,900 | RMB ordinary share | 5,235,900 |
| GF China Securities Asset Management Plan | 5,235,900 | RMB ordinary share | 5,235,900 |
| Yinhua China Securities Asset Management Plan | 5,235,900 | RMB ordinary share | 5,235,900 |
| Liao Cuimeng | 5,142,200 | RMB ordinary share | 5,142,200 |
| Related or acting-in-concert parties among top 10 unrestricted public shareholders, as well as between top 10 unrestricted public shareholders and top 10 shareholders | Zibo Lucheng Textile Investment Co., Ltd. is the largest shareholder of the Company and the actual controller. All of other shareholders are people holding public A share or public B share and the Company is not able to confirm whether there is associated relationship or concerted action among other shareholders. | ||
| Top 10 ordinary shareholders involved in securities margin trading (if any) (see note 4) | N/A | ||
Indicate by tick mark whether any of the top 10 ordinary shareholders or the top 10 unrestricted ordinary shareholders of theCompany conducted any promissory repo during the Reporting Period.
□ Yes √ No
No such cases in the Reporting Period.
2. Controlling Shareholder
Nature of the controlling shareholder: Controlled by a natural person
Type of the controlling shareholder: legal person
| Name of controlling shareholder | Legal representative/person in charge | Date of establishment | Unified social credit code | Principal activity |
| Zibo Lucheng Textile Investment Co., Ltd. | Liu Deming | 25 September 1998 | 91370303164200391J | Investment on textile, electricity and chemical; purchase, process and sale of cotton; retail service etc. |
| Particulars about shareholding of controlling shareholders controlling and holding shares of other listed companies during the Reporting Period | N/A | |||
Change of the controlling shareholder in the Reporting Period:
□ Applicable √ Not applicable
No such cases in the Reporting Period.
3. Actual Controller and Its Acting-in-Concert Parties
Nature of the actual controller: Domestic natural personType of the actual controller: natural person
| Name of the actual controller | Relations with the actual controller | Nationality | Whether gain the right of residence in other countries or regions or not |
| Liu Zibin | In person | China | No |
| Liu Deming | Concerted action (including agreement, relatives, and same control) | China | No |
| Professions and titles | Liu Zibin is the Chairman of the Board and President of Lu Thai Textile Co., Ltd. , Liu Deming is the Chairman of the Board and GM of Zibo Lucheng Textile Investment Co., Ltd. | ||
| Particulars about listed companies with shares ever held by the actual controller over the past 10 years | N/A | ||
Change of the actual controller during the Reporting Period:
□ Applicable √ Not applicable
No such cases in the Reporting Period.Ownership and control relations between the actual controller and the Company:
Indicate by tick mark whether the actual controller controls the Company via trust or other ways of asset management.
□ Applicable √ Not applicable
4. Number of Accumulative Pledged Shares held by the Company’s Controlling Shareholder or the LargestShareholder as well as Its Acting-in-Concert Parties Accounts for 80% of all shares of the Company heldby Them
□ Applicable √ Not applicable
5. Other 10% or Greater Corporate Shareholders
□ Applicable √ Not applicable
6. Limitations on Shareholding Decrease by the Company’s Controlling Shareholder, Actual Controller,Reorganizer and Other Commitment Makers
□ Applicable √ Not applicable
IV Specific Implementation of Share Repurchase during the Reporting PeriodProgress on any share repurchase
□ Applicable √ Not applicable
Progress on reducing the repurchased shares by means of centralized bidding
□ Applicable √ Not applicable
Part VIII Preference Shares
□ Applicable √ Not applicable
No preference shares in the Reporting Period.
Part IX Bonds
√ Applicable □ Not applicable
I Enterprise Bonds
□ Applicable √ Not applicable
No enterprise bonds in the Reporting Period.
II Corporate Bonds
□ Applicable √ Not applicable
No corporate bonds in the Reporting Period.
III Debt Financing Instruments of Non-financial Enterprises
□ Applicable √ Not applicable
No such cases in the Reporting Period.
IV Convertible Corporate Bonds
√ Applicable □ Not applicable
1. Previous Adjustments of Conversion Price
On 9 April 2020, the Company publicly issued 14 million A-share convertible corporate bonds (short name: Lu Thai Convertible Bonds,bond code: 127016) on Shenzhen Stock Exchange with an issue price of RMB100 per share and a share conversion price of RMB9.01per share. The bonds were listed on Shenzhen Stock Exchange on 13 May 2020. In accordance with related terms of the “Prospectus forthe Public Offering of A-Share Convertible Corporate Bonds of Lu Thai Textile Co., Ltd.”, as well as the regulations of ChinaSecurities Regulatory Commission on the public offering of convertible corporate bonds, if the Company has any distribution of sharedividends, conversion into share capital, additional issue of new shares (excluding share capital increase due to conversion into sharesfrom the convertible corporate bonds issued this time), share allotment and distribution of cash dividends after the issue of “Lu ThaiConvertible Bonds”, adjustment shall be made to the share conversion price.On 21 May 2020, the Company held the Annual General Meeting of 2019, where the “Proposal on the Company’s Profit DistributionPlan for 2019” was considered and approved. According to the Proposal, a cash amount of RMB 1.00 (inclusive of tax) would bedistributed to every 10 shares, with the 858,121,541 shares of share capital on 31 December 2019 as the base. The share registrationdate for the Company’s equity distribution of 2019 was 8 July 2020 and the ex-rights and ex-dividend date was 9 July 2020. Therefore,the share conversion price of “Lu Thai Convertible Bonds” was adjusted from RMB9.01 per share to RMB8.91 per share, and the new
price after the adjustment took effect on and as of 9 July 2020 (the ex-rights and ex-dividend date).On 3 June 2021, the Company completed the registration of first-granted restricted stocks of restricted share incentive scheme at theShenzhen Branch of China Securities Depository and Clearing Corporation Limited (China Clear). 7 June 2021 is designated as thelisting date of first-granted restricted stocks of the Company in 2021. The Company grants 750 subjects of incentive 24,285,000restricted shares at a price of RMB3.31 per share, accounting for 2.83% of total share capital of the Company. The source of the stockis RMB A-share ordinary shares issued by the Company to subjects of incentive. Therefore, the conversion price of Lu ThaiConvertible Bond will be adjusted from RMB8.91 per share to RMB8.76 per share, with the adjusted conversion price coming intoforce from 7 June 2021.The 2020 annual general meeting convened on 20 April 2021 deliberated on and adopted the Company's Proposal on ProfitAppropriation Plan in 2020, which distributes cash of RMB0.50 per 10 shares (including tax) with total share capital at the record dateof this distribution scheme as base. The record date of the Company's interest distribution in 2020 is set on 17 June 2021. The ex-date isset on 18 June 2021. Therefore, the conversion price of Lu Thai Convertible Bond will be adjusted from RMB8.76 per share toRMB8.71 per share, with the adjusted conversion price coming into force from 18 June 2021 (the ex-date).
2. Accumulative Conversion
√ Applicable □ Not applicable
| Abbreviation | Start date | Total circulation (piece) | Total amount | Accumulative amount converted (RMB) | Accumulative shares converted (share) | Converted shares as % of total shares issued by the Company before the start date of conversion | Unconverted amount (RMB) | Unconverted amount as % of total amount |
| Lu Thai Convertible Bonds | 15 October 2020 | 14,000,000 | 1,400,000,000.00 | 131,400.00 | 14,754 | 0.00% | 1,399,868,600.00 | 99.99% |
3. Top 10 Convertible Bond Holders
Unit: share
| No. | Name of holders | Nature of holders | Number of convertible bonds held at the period-end (share) | Amount of convertible bonds held at the period-end (RMB) | As % of convertible bonds held at the period-end |
| 1 | ICBC Credit | Other | 675,551 | 67,555,100.00 | 4.83% |
| Suisse Tianxiang Hybrid Pension Products-Industrial and Commercial Bank of China | |||||
| 2 | National Social Security Fund Portfolio 1005 | Domestic non-state-owned legal person | 665,778 | 66,577,800.00 | 4.76% |
| 3 | Industrial and Commercial Bank of China－China Universal Convertible Bond Securities Investment Fund | Other | 647,295 | 64,729,500.00 | 4.62% |
| 4 | Guosen Securities Co., Ltd. | State-owned legal person | 568,528 | 56,852,800.00 | 4.06% |
| 5 | National Social Security Fund Portfolio 1002 | Domestic non-state-owned legal person | 493,247 | 49,324,700.00 | 3.52% |
| 6 | Shanghai Pudong Development Bank－E Fund Yuxiang Return Bond Securities Investment Fund | Other | 492,427 | 49,242,700.00 | 3.52% |
| 7 | ICBC Credit Suisse Ruixi Fixed Benefit Pension Product-Bank of China | Other | 456,604 | 45,660,400.00 | 3.26% |
| 8 | Fullgoal Fuyi Progressive Fixed Benefit Pension Product- Industrial and Commercial Bank of China | Other | 444,112 | 44,411,200.00 | 3.17% |
| 9 | Agricultural Bank of China-Essence Target Income Bond Securities | Other | 439,291 | 43,929,100.00 | 3.14% |
| Investment Fund | |||||
| 10 | Genertec Investment Management Co., Ltd. | State-owned legal person | 434,645 | 43,464,500.00 | 3.10% |
4. Significant Changes in Profitability, Assets Condition and Credit Status of Guarantors
□ Applicable √ Not applicable
5. The Company’s Liabilities, Credit Changes at the Period-end and Cash Arrangements to Repay Debts inFuture YearsFor the relevant indicators, please refer to the Part IX Bonds- VIII The Major Accounting Data and the Financial Indicators of theRecent 2 Years of the Company up the Period-end.The credit rating of the Company's convertible bonds for the Reporting Period is AA+, which has not changed compared with that ofthe same period of last year.
V Losses of Scope of Consolidated Financial Statements during the Reporting PeriodExceeding 10% of Net Assets up the Period-end of Last Year
□ Applicable √ Not applicable
VI Matured Interest-bearing Debt excluding Bonds up the Period-end
□ Applicable √ Not applicable
VII Whether there was any Violation of Rules and Regulations during the Reporting Period
□ Yes √ No
VIII The Major Accounting Data and the Financial Indicators of the Recent 2 Years of theCompany up the Period-end
Unit: RMB’0,000
| Item | Period-end | The end of last year | Increase/decrease |
| Current ratio | 2.62 | 2.68 | -2.24% |
| Asset-liability ratio | 35.57% | 33.29% | 2.28% |
| Quick ratio | 1.49 | 1.62 | -8.02% |
| Reporting Period | Same period of last year | YoY increase/decrease |
| Net profit after deducting non-recurring profit or loss | 19,049.26 | 2,003.91 | 850.60% |
| Debt/EBITDA ratio | 28.94% | 22.44% | 6.50% |
| Interest cover (times) | 4.49 | 1.84 | 144.02% |
| Cash-to-interest cover (times) | 4.03 | 7.37 | -45.32% |
| EBITDA interest coverage ratio | 9.39 | 7.81 | 20.23% |
| Rate of redemption | 100.00% | 100.00% | 0.00% |
| Interest coverage | 100.00% | 100.00% | 0.00% |
Part X Financial Statements
I Independent Auditor’s Report
| Type of the independent auditor’s opinion | Unmodified unqualified opinion |
| Date of signing this report | 27 April 2022 |
| Name of the independent auditor | Grant Thornton China (Special General Partnership) |
| Name of the certified public accountants | He Feng, Cui Xiaoli |
Text of the Independent Auditor’s ReportTo the shareholders of Lu Thai Textile Co., Ltd:
I OpinionWe have audited the financial statements of Lu Thai Textile Co., Ltd. (hereinafter referred to as the “Company”), which comprise theconsolidated and parent company balance sheets as of 31 December 2021, the consolidated and parent company statements ofincome, cash flows and changes in owners’ equity for the year then ended, as well as the notes to the financial statements.In our opinion, the financial statements referred to above present fairly, in all material respects, the consolidated and parent companyfinancial position of the Company at 31 December 2021, and the consolidated and parent company operating results and cash flowsfor the year then ended, in conformity with the Chinese Accounting Standards (CAS).II Basis for OpinionWe conducted our audits in accordance with the Audit Standards for Chinese Registered Accountants. Our responsibilities underthose standards are further described in the Auditor’s Responsibilities for Audit of Financial Statements section of our report. We areindependent of the Company in accordance with the China Code of Ethics for Certified Public Accountants, and we have fulfilled ourother ethical responsibilities in accordance with the said Code of Ethics. We believe that the audit evidence we have obtained issufficient and appropriate to provide a basis for our opinion.III Key Audit MattersKey audit matters are those matters that, in our professional judgment, were of most significance in our audit of the financialstatements of the current period. These matters were addressed in the context of our audit of the financial statements as a whole, andin forming our opinion thereon, and we do not provide a separate opinion on these matters.(I) Recognition of revenueFor details, please refer to the Note III-26 and the Note V-44 of the financial report.
1. Item description
The businesses of Lu Thai Textile Co., Ltd. mainly are production and sales of yarn-dyed fabrics and shirts. The operation revenue ofthe Company in 2021 was RMB 5,238,262,300, of which export income accounted for over 50%. For the income from domesticsales, the amount of product sales income is recognized when the products are delivered to and confirmed by the purchaser accordingto the contract. The income is recognized when the purchaser obtains control of the product. For the income from export sales, theamount of sales income is recognized when products are declared and depart from port according to the contract, and the bill oflading is received. The income is recognized when the purchaser obtains control of the product.
Since income is one of the key performance indicators of Lu Thai Textile Co., Ltd., there is an inherent risk that the managementmanipulates income to achieve specific goals or expectations, therefore, we identify income recognition as a key audit item.
2. Audit response
The audit procedures for revenue recognition mainly include:
(1) Understand and evaluate the design effectiveness of internal control related to revenue recognition, and test the effectiveness ofoperation;
(2) Through interviewing the management and reviewing the relevant contract terms, understand and evaluate whether the incomeconfirmation accounting policy meets the requirements of the enterprise accounting standards;
(3) Perform analytical procedures on revenue and costs to analyze the rationality of fluctuations in sales volume, unit price, and grossprofit in each month, current year, and previous year of the current period;
(4) Check the supporting evidence such as sales contract, product delivery order, invoice, customs declaration, shipping order, andsigning receipt;
(5) Select samples to verify the balance and transaction amount;
(6) Select samples and conduct spot checks on relevant information such as export sales revenue, export tax rebate declaration forms,and China electronic port export data;
(7) Perform a cut-off test on the revenue recognized before and after the balance sheet date, and check the product delivery slip,invoice, customs declaration, shipping bill, signing receipt, etc., to assess whether the revenue is recognized within the appropriateperiod.(II) Inventory falling price reservesFor details, please refer to the Note III-12 and the Note V-8 of the financial report.
1. Item description
As of 31 December 2021, the inventory balance of Lu Thai Textile Co., Ltd. was RMB2,509,578,300 and the inventory depreciationreserve was RMB164,231,500. The management withdrew the inventory falling price reserves with significant judgments andestimates, and therefore, we identify inventory falling price reserves as a key audit item.
2. Audit response
The audit procedures for inventory falling price reserves mainly include:
(1) Understand and evaluate the design effectiveness of the internal control related to the provision of inventory decline price, andtest the effectiveness of operation;
(2) Understand and evaluate the appropriateness of the company's inventory depreciation reserve provision policy;
(3) Monitor the inventory and pay attention to the status of the inventory, check whether the defective and inventory with long aginghave been identified;
(4) Obtain the inventory age table, and conduct an analytical review of the long-age inventory status and turnover;
(5) Check the changes in the inventory depreciation reserves accrued in previous years and evaluate the rationality of the changes ininventory depreciation reserves;
(6) Obtain the inventory falling price reserves calculation sheet; recheck and evaluate the rationality of major estimations made bythe management during the determination of net realizable value; conduct the recalculation, check the selling price after the period
and analyze the rationality of the predicted selling price.(III) Assessment of fair value of financial assets measured at fair value and changes included in current profit or lossPlease refer to Notes to Financial Statements (Note III 10 and Note V 2, 13 and 52) for details about relevant information disclosure.
1. Event Description
Up to 31 December 2021, the balance of financial asset measured based on the fair value whose variations were included the currentprofit and loss of Lu Thai Textiles was RMB191.779 million, of which, the fair value of financial asset classified into the tier-2 inputvalue by adopting the observable input value was RMB1.727 million, and the fair value of financial asset classified into the tier-3 inputvalue by adopting the non-observable input value was RMB190.052 million. Considering that the financial asset’s fair value variationshad significant impact on the profit and loss of Lu Thai Textiles in 2021, and Lu Thai Textiles adopted the valuation technique todetermine its fair value (usually, the valuation technique involves various assumptions and estimations based on subjective judgment,and huge difference in the estimated fair value of financial instrument may be caused by adopting different valuation techniques orassumptions), we recognized the event as the key audit event.
2. Audit response
Our audit procedures geared to the evaluation of the financial instrument’s fair value mainly include:
(1) Study and evaluate the effectiveness of the designed internal control for the valuation of financial instruments and test theoperational effectiveness;
(2) Assess the professional quality, competence and objectiveness of the independent appraiser employed by the Company’smanagement; evaluate the rationality of various assumptions applied by the independent appraiser in the evaluation report and theappropriateness of the financial instrument valuation models;
(3) Assess the rationality and appropriateness of the observable key input value applied during the valuation of the tier-2 fair value;
(4) Recheck the rationality, appropriateness and calculation accuracy of the key input value during the fair value assessment for thetier-3 financial instrument measured based the fair value and involving the management’s major judgment.IV Other InformationThe Company’s management is responsible for the other information. The other information comprises all of the information includedin the Company’s 2021 Annual Report other than the financial statements and our auditor’s report thereon.Our opinion on the financial statements does not cover the other information and we do not express any form of assurance conclusionthereon.In connection with our audit of the financial statements, our responsibility is to read the other information and, in doing so, considerwhether the other information is materially inconsistent with the financial statements or our knowledge obtained in the audit orotherwise appears to be materially misstated.If, based on the work we have performed, we conclude that there is a material misstatement of this other information, we are required toreport that fact. We have nothing to report in this regard.V Responsibilities of Management and Those Charged with Governance for Financial StatementsThe Company’s management (hereinafter referred to as the “Management”) is responsible for the preparation of the financialstatements that give a fair view in accordance with CAS, and for designing, implementing and maintaining such internal control as themanagement determines is necessary to enable the preparation of financial statements that are free from material misstatement, whetherdue to fraud or error.
In preparing the financial statements, the management is responsible for assessing the Company’s ability to continue as a going concern,disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless the managementeither intends to liquidate the Company or to cease operations, or have no realistic alternative but to do so.Those charged with governance are responsible for overseeing the Company’s financial reporting process.VI Auditor’s Responsibilities for Audit of Financial StatementsOur objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement,whether due to fraud or error, and to issue an auditor’s report that includes our opinion. Reasonable assurance is a high level ofassurance, but is not a guarantee that an audit conducted in accordance with CAS will always detect a material misstatement when itexists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they couldreasonably be expected to influence the economic decisions of users taken on the basis of these financial statements.As part of an audit in accordance with CAS, we exercise professional judgment and maintain professional skepticism throughout theaudit. We also:
(1) Identify and assess the risks of material misstatement of the financial statements, whether due to fraud or error, design and performaudit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion.The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involvecollusion, forgery, intentional omissions, misrepresentations, or the override of internal control.
(2) Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in thecircumstances.
(3) Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosuresmade by the management.
(4) Conclude on the appropriateness of the management’s use of the going concern basis of accounting and, based on the audit evidenceobtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on the Company’s abilityto continue as a going concern. If we conclude that a material uncertainty exists, we are required by CAS to draw users’ attention in ourauditor’s report to the related disclosures in the financial statements or, if such disclosures are inadequate, we should modify ouropinion. Our conclusions are based on the audit evidence obtained up to the date of our auditor’s report. However, future events orconditions may cause the Company to cease to continue as a going concern.
(5) Evaluate the overall presentation, structure and content of the financial statements, and whether the financial statements representthe underlying transactions and events in a manner that achieves fair presentation.
(6) Obtain sufficient appropriate audit evidence regarding the financial information of the entities or business activities within theCompany to express an opinion on the financial statements. We are responsible for the direction, supervision and performance of theCompany audit. We remain solely responsible for our audit opinion.We communicate with those charged with governance of the Company regarding the planned scope and timing of the audit andsignificant audit findings, including any noteworthy deficiencies in internal control that we identify during our audit.We also provide those charged with governance with a statement that we have complied with relevant ethical requirements regardingindependence, and communicate with them all relationships and other matters that may reasonably be thought to bear on ourindependence, and where applicable, related safeguards (if applicable).From the matters communicated with those charged with governance, we determine those matters that were of most significance in theaudit of the financial statements of the current period and are therefore the key audit matters. We describe these matters in our auditor’sreport unless law or regulation precludes public disclosure about the matter or when, in extremely rare circumstances, we determine
that a matter should not be communicated in our report because the adverse consequences of doing so would reasonably be expected tooutweigh the public interest benefits of such communication.
| Grant Thornton China (Special General Partnership) | Chinese CPA (Engagement Partner): Chinese CPA: | |
| Beijing · China | 27 April 2022 | |
II Financial StatementsCurrency unit for the financial statements and the notes thereto: RMB
1. Consolidated Balance Sheet
Prepared by Lu Thai Textile Co., Ltd.
31 December 2021
Unit: RMB
| Item | 31 December 2021 | 31 December 2020 |
| Current assets: | ||
| Monetary assets | 1,999,712,889.35 | 1,400,478,034.81 |
| Held-for-trading financial assets | 1,727,000.00 | 268,456,216.98 |
| Notes receivable | 227,740,247.89 | 182,994,110.86 |
| Accounts receivable | 647,277,198.51 | 522,425,219.87 |
| Accounts receivable financing | 34,663,071.88 | 55,150,926.34 |
| Prepayments | 54,545,954.20 | 19,611,775.28 |
| Other receivables | 74,191,613.22 | 105,710,818.69 |
| Including: Interest receivable | ||
| Dividends receivable | 47,025,975.44 | 75,488,652.49 |
| Inventories | 2,345,346,794.28 | 1,988,968,681.64 |
| Contract assets |
| Held-for-sale assets | ||
| Current portion of non-current assets | 45,750,018.30 | |
| Other current assets | 55,992,522.81 | 433,432,258.63 |
| Total current assets | 5,441,197,292.14 | 5,022,978,061.40 |
| Non-current assets: | ||
| Long-term receivables | 41,053,183.15 | |
| Long-term equity investment | 169,443,106.66 | 138,079,577.25 |
| Other equity instrument investment | ||
| Other non-current financial assets | 190,052,000.00 | 156,915,620.25 |
| Investment property | 21,362,302.03 | 22,263,668.85 |
| Fixed assets | 5,561,601,374.44 | 5,661,592,991.66 |
| Construction in progress | 237,579,082.99 | 356,273,197.49 |
| Right-of-use assets | 257,019,286.15 | |
| Intangible assets | 363,130,978.14 | 373,543,480.84 |
| Development costs | ||
| Goodwill | 20,563,803.29 | 20,563,803.29 |
| Long-term deferred expenses | 672,601.04 | 118,340,494.60 |
| Deferred income tax assets | 138,516,136.50 | 122,865,841.69 |
| Other non-current assets | 586,083,308.25 | 95,434,040.18 |
| Total non-current assets | 7,546,023,979.49 | 7,106,925,899.25 |
| Total assets | 12,987,221,271.63 | 12,129,903,960.65 |
| Current liabilities: | ||
| Short-term borrowings | 1,011,034,138.32 | 930,871,008.19 |
| Held-for-trading financial liabilities | ||
| Derivative financial liabilities | ||
| Notes payable | ||
| Accounts payable | 335,401,371.30 | 243,262,473.69 |
| Advances from customers | ||
| Contract liabilities | 204,967,348.96 | 141,339,705.62 |
| Payroll payable | 272,014,296.09 | 265,648,198.38 |
| Taxes payable | 29,457,702.72 | 36,468,978.77 |
| Other payables | 97,200,565.31 | 17,587,470.79 |
| Including: Interest payable | ||
| Dividends payable | 441,113.64 | 441,113.64 |
| Current portion of non-current liabilities | 8,877,404.52 | 43,149,400.13 |
| Other current liabilities | 120,434,721.81 | 192,574,674.68 |
| Total current liabilities | 2,079,387,549.03 | 1,870,901,910.25 |
| Non-current liabilities: | ||
| Long-term borrowings | 684,962,473.24 | 495,520,342.78 |
| Bonds payable | 1,395,480,652.71 | 1,350,171,526.97 |
| Lease liabilities | 121,357,658.41 | |
| Long-term payables | ||
| Long-term payroll payable | 57,384,062.39 | 62,137,656.00 |
| Provisions | ||
| Deferred income | 188,958,133.78 | 173,862,983.31 |
| Deferred income tax liabilities | 92,571,310.14 | 85,633,161.44 |
| Other non-current liabilities | ||
| Total non-current liabilities | 2,540,714,290.67 | 2,167,325,670.50 |
| Total liabilities | 4,620,101,839.70 | 4,038,227,580.75 |
| Owners’ equity: | ||
| Share capital | 882,341,295.00 | 858,132,322.00 |
| Other equity instruments | 71,384,656.84 | 71,386,451.81 |
| Capital reserves | 340,587,387.65 | 255,912,488.01 |
| Less: Treasury stock | 78,908,300.00 | |
| Other comprehensive income | -36,423,748.37 | 1,308,922.89 |
| Specific reserve | ||
| Surplus reserves | 1,215,124,336.54 | 1,154,017,457.79 |
| General reserve | ||
| Retained earnings | 5,589,201,772.37 | 5,346,819,948.22 |
| Total equity attributable to owners of the Company as the parent | 7,983,307,400.03 | 7,687,577,590.72 |
| Non-controlling interests | 383,812,031.90 | 404,098,789.18 |
| Total owners’ equity | 8,367,119,431.93 | 8,091,676,379.90 |
| Total liabilities and owners’ equity | 12,987,221,271.63 | 12,129,903,960.65 |
Legal representative: Liu Zibin Chief Accountant: Zhang HongmeiFinancial Manager: Zhang Keming
2. Balance Sheet of the Company as the Parent
Unit: RMB
| Item | 31 December 2021 | 31 December 2020 |
| Current assets: | ||
| Monetary assets | 977,713,296.25 | 729,437,231.33 |
| Held-for-trading financial assets | 1,286,000.00 | 163,636,075.34 |
| Derivative financial assets | ||
| Notes receivable | 132,028,322.80 | 108,863,689.79 |
| Accounts receivable | 425,711,738.27 | 326,166,935.10 |
| Accounts receivable financing | 29,361,263.86 | 48,764,088.05 |
| Prepayments | 31,580,697.18 | 13,059,806.74 |
| Other receivables | 2,060,180,025.87 | 1,500,882,682.19 |
| Including: Interest receivable | ||
| Dividends receivable | 94,525,975.44 | 75,488,652.49 |
| Inventories | 1,230,487,585.69 | 1,097,438,610.46 |
| Contract assets | ||
| Available-for-sale assets | ||
| Current portion of non-current assets | 45,750,018.30 | |
| Other current assets | 205,568.38 | 247,860,882.02 |
| Total current assets | 4,888,554,498.30 | 4,281,860,019.32 |
| Non-current assets: | ||
| Long-term receivables | 41,053,183.15 | |
| Long-term equity investments | 2,818,047,993.16 | 2,555,150,859.13 |
| Investments in other equity instruments | ||
| Other non-current financial assets | 178,052,000.00 | 144,915,620.25 |
| Investment property | 65,888,260.77 | 29,734,239.22 |
| Fixed assets | 2,305,059,429.29 | 2,471,686,117.72 |
| Construction in progress | 12,268,416.12 | 48,694,822.74 |
| Right-of-use assets | 116,279,075.24 | |
| Intangible assets | 209,970,392.83 | 225,128,308.75 |
| Development costs | ||
| Goodwill | ||
| Long-term deferred expenses | 672,601.04 | 1,406,347.76 |
| Deferred income tax assets | 56,003,944.38 | 65,729,304.26 |
| Other non-current assets | 366,112,002.79 | 7,936,745.28 |
| Total non-current assets | 6,128,354,115.62 | 5,591,435,548.26 |
| Total assets | 11,016,908,613.92 | 9,873,295,567.58 |
| Current liabilities: | ||
| Short-term borrowings | 615,181,318.98 | 332,466,931.13 |
| Held-for-trading financial liabilities | ||
| Derivative financial liabilities | ||
| Notes payable | ||
| Accounts payable | 146,714,973.77 | 132,231,596.74 |
| Advances from customers | ||
| Contract liabilities | 58,280,121.24 | 56,841,289.66 |
| Payroll payable | 190,277,420.32 | 202,694,515.93 |
| Taxes payable | 15,288,956.94 | 21,896,035.49 |
| Other payables | 92,914,225.42 | 79,668,657.80 |
| Including: Interest payable | ||
| Dividends payable | 441,113.64 | 441,113.64 |
| Current portion of non-current liabilities | 8,605,336.67 | 4,000,000.00 |
| Other current liabilities | 64,202,247.99 | 166,257,466.30 |
| Total current liabilities | 1,191,464,601.33 | 996,056,493.05 |
| Non-current liabilities: | ||
| Long-term borrowings | 684,962,473.24 | 495,520,342.78 |
| Bonds payable | 1,395,480,652.71 | 1,350,171,526.97 |
| Lease liabilities | 118,780,465.67 | |
| Long-term payables | ||
| Long-term payroll payable | 57,384,062.39 | 62,137,656.00 |
| Provisions |
| Deferred income | 125,360,026.35 | 131,546,549.87 |
| Deferred income tax liabilities | 67,488,141.18 | 58,927,115.71 |
| Other non-current liabilities | ||
| Total non-current liabilities | 2,449,455,821.54 | 2,098,303,191.33 |
| Total liabilities | 3,640,920,422.87 | 3,094,359,684.38 |
| Owners’ equity: | ||
| Share capital | 882,341,295.00 | 858,132,322.00 |
| Other equity instruments | 71,384,656.84 | 71,386,451.81 |
| Capital reserves | 401,967,421.89 | 317,292,522.25 |
| Less: Treasury stock | 78,908,300.00 | |
| Other comprehensive income | -293,580.24 | -424,313.33 |
| Specific reserve | ||
| Surplus reserves | 1,212,015,596.90 | 1,150,908,718.15 |
| Retained earnings | 4,887,481,100.66 | 4,381,640,182.32 |
| Total owners’ equity | 7,375,988,191.05 | 6,778,935,883.20 |
| Total liabilities and owners’ equity | 11,016,908,613.92 | 9,873,295,567.58 |
3. Consolidated Income Statement
Unit: RMB
| Item | 2021 | 2020 |
| 1. Revenue | 5,238,262,348.85 | 4,751,222,464.14 |
| Including: Operating revenue | 5,238,262,348.85 | 4,751,222,464.14 |
| 2. Costs and expenses | 4,965,632,056.69 | 4,631,408,764.38 |
| Including: Cost of sales | 4,152,981,075.85 | 3,737,984,083.45 |
| Taxes and surcharges | 59,485,640.58 | 66,238,984.28 |
| Selling expense | 119,883,494.68 | 125,717,288.31 |
| Administrative expense | 335,380,025.54 | 360,656,722.39 |
| Development cost | 252,912,911.63 | 231,265,031.12 |
| Finance costs | 44,988,908.41 | 109,546,654.83 |
| Including: Interest expense | 65,526,817.38 | 67,914,115.97 |
| Interest income | 40,686,077.22 | 25,174,851.32 |
| Add: Other income | 58,686,029.71 | 59,711,274.11 |
| Return on investment (“-” for loss) | 50,449,943.70 | 145,968,403.88 |
| Including: Share of profit or loss of joint ventures and | -10,755,175.91 | -5,146,737.73 |
| associates | ||
| Income from the derecognition of financial assets at amortized cost (“-” for loss) | ||
| Exchange gain (“-” for loss) | ||
| Net gain on exposure hedges (“-” for loss) | ||
| Gain on changes in fair value (“-” for loss) | 16,415,304.41 | -107,002,594.56 |
| Credit impairment loss (“-” for loss) | 1,590,092.00 | -21,892,753.70 |
| Asset impairment loss (“-” for loss) | -85,623,858.26 | -113,460,308.96 |
| Asset disposal income (“-” for loss) | 57,175,147.62 | -317,803.17 |
| 3. Operating profit (“-” for loss) | 371,322,951.34 | 82,819,917.36 |
| Add: Non-operating income | 5,417,119.07 | 6,466,024.36 |
| Less: Non-operating expense | 13,424,054.88 | 4,468,911.08 |
| 4. Profit before tax (“-” for loss) | 363,316,015.53 | 84,817,030.64 |
| Less: Income tax expense | 35,993,079.51 | -4,273,027.75 |
| 5. Net profit (“-” for net loss) | 327,322,936.02 | 89,090,058.39 |
| 5.1 By operating continuity | ||
| 5.1.1 Net profit from continuing operations (“-” for net loss) | 327,322,936.02 | 89,090,058.39 |
| 5.1.2 Net profit from discontinued operations (“-” for net loss) | ||
| 5.2 By ownership | ||
| 5.2.1 Net profit attributable to shareholders of the Company as the parent | 347,609,693.30 | 97,308,593.36 |
| 5.2.2 Net profit attributable to non-controlling interests | -20,286,757.28 | -8,218,534.97 |
| 6. Other comprehensive income, net of tax | -37,732,671.26 | -90,369,605.96 |
| Attributable to owners of the Company as the parent | -37,732,671.26 | -90,317,648.86 |
| 6.1 Items that will not be reclassified to profit or loss | ||
| 6.1.1 Changes caused by re-measurements on defined benefit schemes | ||
| 6.1.2 Other comprehensive income that will not be reclassified to profit or loss under the equity method | ||
| 6.1.3 Changes in the fair value of investments in other equity instruments | ||
| 6.1.4 Changes in the fair value arising from changes in own credit risk |
| 6.1.5 Other | ||
| 6.2 Items that will be reclassified to profit or loss | -37,732,671.26 | -90,317,648.86 |
| 6.2.1 Other comprehensive income that will be reclassified to profit or loss under the equity method | ||
| 6.2.2 Changes in the fair value of investments in other debt obligations | ||
| 6.2.3 Other comprehensive income arising from the reclassification of financial assets | ||
| 6.2.4 Credit impairment allowance for investments in other debt obligations | ||
| 6.2.5 Reserve for cash flow hedges | ||
| 6.2.6 Differences arising from the translation of foreign currency-denominated financial statements | -37,716,717.19 | -90,065,261.51 |
| 6.2.7 Other | -15,954.07 | -252,387.35 |
| Attributable to non-controlling interests | -51,957.10 | |
| 7. Total comprehensive income | 289,590,264.76 | -1,279,547.57 |
| Attributable to owners of the Company as the parent | 309,877,022.04 | 6,990,944.50 |
| Attributable to non-controlling interests | -20,286,757.28 | -8,270,492.07 |
| 8. Earnings per share | ||
| 8.1 Basic earnings per share | 0.39 | 0.11 |
| 8.2 Diluted earnings per share | 0.36 | 0.11 |
Where business combinations under common control occurred in the current period, the net profit achieved by the acquirees before thecombinations was RMB0.00, with the amount for the same period of last year being RMB0.00.Legal representative: Liu Zibin Chief Accountant: Zhang HongmeiFinancial Manager: Zhang Keming
4. Income Statement of the Company as the Parent
Unit: RMB
| Item | 2021 | 2020 |
| 1. Operating revenue | 3,647,402,509.21 | 3,275,667,055.94 |
| Less: Cost of sales | 2,824,451,867.80 | 2,594,772,449.08 |
| Taxes and surcharges | 39,686,908.16 | 43,852,034.14 |
| Selling expense | 85,257,586.04 | 90,924,780.86 |
| Administrative expense | 212,434,986.88 | 223,829,705.58 |
| R&D expense | 178,176,401.25 | 155,781,784.46 |
| Finance costs | 14,374,893.63 | 63,053,311.41 |
| Including: Interest expense | 33,309,727.39 | 29,507,836.33 |
| Interest income | 33,021,266.87 | 12,603,128.63 |
| Add: Other income | 33,778,765.18 | 40,725,385.28 |
| Return on investment (“-” for loss) | 298,576,196.15 | 438,956,821.28 |
| Including: Share of profit or loss of joint ventures and associates | -10,755,175.91 | -5,146,737.73 |
| Income from the derecognition of financial assets at amortized cost (“-” for loss) | ||
| Net gain on exposure hedges (“-” for loss) | ||
| Gain on changes in fair value (“-” for loss) | 20,786,304.41 | -111,822,736.20 |
| Credit impairment loss (“-” for loss) | 3,935,670.51 | -20,099,155.46 |
| Asset impairment loss (“-” for loss) | -34,971,247.79 | -78,930,638.97 |
| Asset disposal income (“-” for loss) | 57,897,322.56 | -557,994.15 |
| 2. Operating profit (“-” for loss) | 673,022,876.47 | 371,724,672.19 |
| Add: Non-operating income | 4,866,312.90 | 4,554,095.15 |
| Less: Non-operating expense | 11,591,362.60 | 1,671,120.09 |
| 3. Profit before tax (“-” for loss) | 666,297,826.77 | 374,607,647.25 |
| Less: Income tax expense | 55,229,039.28 | 7,106,585.68 |
| 4. Net profit (“-” for net loss) | 611,068,787.49 | 367,501,061.57 |
| 4.1 Net profit from continuing operations (“-” for net loss) | 611,068,787.49 | 367,501,061.57 |
| 4.2 Net profit from discontinued operations (“-” for net loss) | ||
| 5. Other comprehensive income, net of tax | 130,733.09 | -424,313.33 |
| 5.1 Items that will not be reclassified to profit or loss | ||
| 5.1.1 Changes caused by re-measurements on defined benefit schemes | ||
| 5.1.2 Other comprehensive income that will not be reclassified to profit or loss under the equity method | ||
| 5.1.3 Changes in the fair value of investments in other equity instruments | ||
| 5.1.4 Changes in the fair value arising from changes in own credit risk | ||
| 5.1.5 Other | ||
| 5.2 Items that will be reclassified to profit or loss | 130,733.09 | -424,313.33 |
| 5.2.1 Other comprehensive income that will be reclassified to profit or loss under the equity method | ||
| 5.2.2 Changes in the fair value of investments in other debt obligations | ||
| 5.2.3 Other comprehensive income arising from the reclassification of financial assets | ||
| 5.2.4 Credit impairment allowance for investments in other debt obligations | ||
| 5.2.5 Reserve for cash flow hedges | ||
| 5.2.6 Differences arising from the translation of foreign currency-denominated financial statements | ||
| 5.2.7 Other | 130,733.09 | -424,313.33 |
| 6. Total comprehensive income | 611,199,520.58 | 367,076,748.24 |
| 7. Earnings per share | ||
| 7.1 Basic earnings per share | 0.71 | 0.43 |
| 7.2 Diluted earnings per share | 0.64 | 0.41 |
5. Consolidated Cash Flow Statement
Unit: RMB
| Item | 2021 | 2020 |
| 1. Cash flows from operating activities: | ||
| Proceeds from sale of commodities and rendering of services | 4,877,137,793.95 | 4,549,188,241.18 |
| Tax rebates | 118,978,037.24 | 106,212,520.44 |
| Cash generated from other operating activities | 99,760,735.48 | 119,614,464.43 |
| Subtotal of cash generated from operating activities | 5,095,876,566.67 | 4,775,015,226.05 |
| Payments for commodities and services | 3,075,758,673.05 | 2,382,593,861.18 |
| Cash paid to and for employees | 1,394,301,069.51 | 1,443,277,224.36 |
| Taxes paid | 139,250,588.74 | 144,996,754.22 |
| Cash used in other operating activities | 138,429,229.89 | 210,611,463.40 |
| Subtotal of cash used in operating activities | 4,747,739,561.19 | 4,181,479,303.16 |
| Net cash generated from/used in operating activities | 348,137,005.48 | 593,535,922.89 |
| 2. Cash flows from investing activities: | ||
| Proceeds from disinvestment | 1,318,751,294.68 | 460,131,152.08 |
| Return on investment | 41,433,282.80 | 149,130,790.55 |
| Net proceeds from the disposal of fixed assets, intangible assets | 4,645,043.40 | 102,560,031.90 |
| and other long-lived assets | ||
| Net proceeds from the disposal of subsidiaries and other business units | 95,860,000.00 | 76,625,459.68 |
| Cash generated from other investing activities | 98,294,038.33 | 62,232,909.13 |
| Subtotal of cash generated from investing activities | 1,558,983,659.21 | 850,680,343.34 |
| Payments for the acquisition of fixed assets, intangible assets and other long-lived assets | 430,591,025.71 | 580,156,640.57 |
| Payments for investments | 760,870,000.00 | 1,052,215,000.00 |
| Cash used in other investing activities | 339,043,598.92 | 6,483,653.47 |
| Subtotal of cash used in investing activities | 1,530,504,624.63 | 1,638,855,294.04 |
| Net cash generated from/used in investing activities | 28,479,034.58 | -788,174,950.70 |
| 3. Cash flows from financing activities: | ||
| Capital contributions received | 80,122,550.00 | 50,000,000.00 |
| Including: Capital contributions by non-controlling interests to subsidiaries | 50,000,000.00 | |
| Borrowings raised | 1,631,139,389.49 | 3,398,339,439.58 |
| Cash generated from other financing activities | 174,000,000.00 | |
| Subtotal of cash generated from financing activities | 1,711,261,939.49 | 3,622,339,439.58 |
| Repayment of borrowings | 1,359,634,451.98 | 2,529,112,565.20 |
| Interest and dividends paid | 84,499,928.33 | 199,362,285.43 |
| Including: Dividends paid by subsidiaries to non-controlling interests | 59,618,853.07 | |
| Cash used in other financing activities | 63,817,316.19 | 160,200,000.00 |
| Subtotal of cash used in financing activities | 1,507,951,696.50 | 2,888,674,850.63 |
| Net cash generated from/used in financing activities | 203,310,242.99 | 733,664,588.95 |
| 4. Effect of foreign exchange rates changes on cash and cash equivalents | -6,449,805.63 | -21,054,172.59 |
| 5. Net increase in cash and cash equivalents | 573,476,477.42 | 517,971,388.55 |
| Add: Cash and cash equivalents, beginning of the period | 1,396,530,407.47 | 878,559,018.92 |
| 6. Cash and cash equivalents, end of the period | 1,970,006,884.89 | 1,396,530,407.47 |
6. Cash Flow Statement of the Company as the Parent
Unit: RMB
| Item | 2021 | 2020 |
| 1. Cash flows from operating activities: |
| Proceeds from sale of commodities and rendering of services | 3,312,220,027.60 | 3,132,082,316.96 |
| Tax rebates | 24,444,047.02 | 37,614,591.44 |
| Cash generated from other operating activities | 51,752,143.18 | 77,891,597.93 |
| Subtotal of cash generated from operating activities | 3,388,416,217.80 | 3,247,588,506.33 |
| Payments for commodities and services | 2,128,657,555.64 | 2,217,942,543.44 |
| Cash paid to and for employees | 837,615,352.93 | 889,963,420.68 |
| Taxes paid | 83,471,328.14 | 79,127,361.47 |
| Cash used in other operating activities | 97,694,765.19 | 154,885,854.59 |
| Subtotal of cash used in operating activities | 3,147,439,001.90 | 3,341,919,180.18 |
| Net cash generated from/used in operating activities | 240,977,215.90 | -94,330,673.85 |
| 2. Cash flows from investing activities: | ||
| Proceeds from disinvestment | 587,311,294.68 | 514,020,256.94 |
| Return on investment | 255,233,323.75 | 316,780,237.87 |
| Net proceeds from the disposal of fixed assets, intangible assets and other long-lived assets | 6,091,843.79 | 114,941,392.08 |
| Net proceeds from the disposal of subsidiaries and other business units | 263,014,351.00 | |
| Cash generated from other investing activities | 970,377,365.78 | 1,484,210,870.85 |
| Subtotal of cash generated from investing activities | 2,082,028,179.00 | 2,429,952,757.74 |
| Payments for the acquisition of fixed assets, intangible assets and other long-lived assets | 68,414,055.96 | 70,577,315.74 |
| Payments for investments | 640,977,947.65 | 955,125,000.00 |
| Net payments for the acquisition of subsidiaries and other business units | ||
| Cash used in other investing activities | 1,729,113,808.44 | 2,085,396,649.29 |
| Subtotal of cash used in investing activities | 2,438,505,812.05 | 3,111,098,965.03 |
| Net cash generated from/used in investing activities | -356,477,633.05 | -681,146,207.29 |
| 3. Cash flows from financing activities: | ||
| Capital contributions received | 80,122,550.00 | |
| Borrowings raised | 800,983,356.71 | 2,225,619,549.50 |
| Cash generated from other financing activities | 58,215,720.00 | 168,980,600.00 |
| Subtotal of cash generated from financing activities | 939,321,626.71 | 2,394,600,149.50 |
| Repayment of borrowings | 312,407,315.63 | 791,236,980.16 |
| Interest and dividends paid | 75,954,642.88 | 112,547,531.31 |
| Cash used in other financing activities | 182,836,702.32 | 236,619,700.00 |
| Subtotal of cash used in financing activities | 571,198,660.83 | 1,140,404,211.47 |
| Net cash generated from/used in financing activities | 368,122,965.88 | 1,254,195,938.03 |
| 4. Effect of foreign exchange rates changes on cash and cash equivalents | -3,255,947.76 | -9,693,224.69 |
| 5. Net increase in cash and cash equivalents | 249,366,600.97 | 469,025,832.20 |
| Add: Cash and cash equivalents, beginning of the period | 728,346,695.28 | 259,320,863.08 |
| 6. Cash and cash equivalents, end of the period | 977,713,296.25 | 728,346,695.28 |
7. Consolidated Statements of Changes in Owners’ Equity
2021
Unit: RMB
| Item | 2021 | ||||||||||||||
| Equity attributable to owners of the Company as the parent | Non-controlling interests | Total owners’ equity | |||||||||||||
| Share capital | Other equity instruments | Capital reserves | Less: Treasury stock | Other comprehensive income | Specific reserve | Surplus reserves | General reserve | Retained earnings | Other | Subtotal | |||||
| Preferred shares | Perpetual bonds | Other | |||||||||||||
| 1. Balances as at the end of the prior year | 858,132,322.00 | 71,386,451.81 | 255,912,488.01 | 1,308,922.89 | 1,154,017,457.79 | 5,346,819,948.22 | 7,687,577,590.72 | 404,098,789.18 | 8,091,676,379.90 | ||||||
| Add: Adjustments for changed accounting policies | |||||||||||||||
| Adjustments for corrections of previous errors | |||||||||||||||
| Adjustments for business combinations under common control | |||||||||||||||
| Other adjustments | |||||||||||||||
| 2. Balances as at the beginning of the year | 858,132,322.00 | 71,386,451.81 | 255,912,488.01 | 1,308,922.89 | 1,154,017,457.79 | 5,346,819,948.22 | 7,687,577,590.72 | 404,098,789.18 | 8,091,676,379.90 | ||||||
| 3. Increase/ decrease in the period (“-” for decrease) | 24,208,973.00 | -1,794.97 | 84,674,899.64 | 78,908,300.00 | -37,732,671.26 | 61,106,878.75 | 242,381,824.15 | 295,729,809.31 | -20,286,757.28 | 275,443,052.03 | |||||
| 3.1 Total comprehensive income | -37,732,671.26 | 347,609,693.30 | 309,877,022.04 | -20,286,757.28 | 289,590,264.76 | ||||||||||
| 3.2 Capital increased and reduced by owners | 24,208,973.00 | -1,794.97 | 84,674,899.64 | 78,908,300.00 | 29,973,777.67 | 29,973,777.67 | |||||||||
| 3.2.1 Ordinary shares increased by shareholders | 24,208,973.00 | 55,949,334.21 | 80,158,307.21 | 80,158,307.21 | |||||||||||
| 3.2.2 Capital increased by holders of other equity instruments | 0.00 | ||||||||||||||
| 3.2.3 Share-based payments included in owners’ equity | 28,325,788.60 | 28,325,788.60 | 28,325,788.60 | ||||||||||||
| 3.2.4 Other | -1,794.97 | 399,776.83 | 78,908,300.00 | -78,510,318.14 | -78,510,318.14 | ||||||||||
| 3.3 Profit distribution | 61,106,878.75 | --105,227,869.15 | -44,120,990.40 | -44,120,990.40 | |||||||||||
| 3.3.1 Appropriation to | 61,106,878.75 | -61,106,878.75 |
| surplus reserves | |||||||||||||||
| 3.3.2 Appropriation to general reserve | |||||||||||||||
| 3.3.3 Appropriation to owners (or shareholders) | -44,120,990.40 | -44,120,990.40 | -44,120,990.40 | ||||||||||||
| 3.3.4 Other | |||||||||||||||
| 3.4 Transfers within owners’ equity | |||||||||||||||
| 3.4.1 Increase in capital (or share capital) from capital reserves | |||||||||||||||
| 3.4.2 Increase in capital (or share capital) from surplus reserves | |||||||||||||||
| 3.4.3 Loss offset by surplus reserves | |||||||||||||||
| 3.4.4 Changes in defined benefit pension schemes transferred to retained |
| earnings | |||||||||||||||
| 3.4.5 Other comprehensive income transferred to retained earnings | |||||||||||||||
| 3.4.6 Other | |||||||||||||||
| 3.5 Specific reserve | |||||||||||||||
| 3.5.1 Increase in the period | |||||||||||||||
| 3.5.2 Used in the period | |||||||||||||||
| 3.6 Other | |||||||||||||||
| 4. Balances as at the end of the period | 882,341,295.00 | 71,384,656.84 | 340,587,387.65 | 78,908,300.00 | -36,423,748.37 | 1,215,124,336.54 | 5,589,201,772.37 | 7,983,307,400.03 | 383,812,031.90 | 8,367,119,431.93 |
2020
Unit: RMB
| Item | 2020 | ||||||||||||||
| Equity attributable to owners of the Company as the parent | Non-controlling interests | Total owners’ equity | |||||||||||||
| Share capital | Other equity instruments | Capital reserves | Less: Treasury stock | Other comprehensive income | Specific reserve | Surplus reserves | General reserve | Retained earnings | Other | Subtotal | |||||
| Preferred shares | Perpetual bonds | Other | |||||||||||||
| 1. Balances as at the end of the prior year | 858,121,541.00 | 258,046,245.42 | 91,626,571.75 | 1,117,267,351.63 | 5,372,073,615.12 | 7,697,135,324.92 | 602,169,223.52 | 8,299,304,548.44 | |||||||
| Add: Adjustments for changed accounting policies | |||||||||||||||
| Adjustments for corrections of previous errors | |||||||||||||||
| Adjustments for business combinations under common control | |||||||||||||||
| Other adjustments | |||||||||||||||
| 2. Balances as at the beginning of the year | 858,121,541.00 | 258,046,245.42 | 91,626,571.75 | 1,117,267,351.63 | 5,372,073,615.12 | 7,697,135,324.92 | 602,169,223.52 | 8,299,304,548.44 | |||||||
| 3. Increase/ decrease in the period (“-” for decrease) | 10,781.00 | 71,386,451.81 | -2,133,757.41 | -90,317,648.86 | 36,750,106.16 | -25,253,666.90 | -9,557,734.20 | -198,070,434.34 | -207,628,168.54 | ||||||
| 3.1 Total comprehensive income | -90,317,648.86 | 97,308,593.36 | 6,990,944.50 | -8,270,492.07 | -1,279,547.57 | ||||||||||
| 3.2 Capital increased and reduced by owners | 10,781.00 | 71,386,451.81 | -2,133,757.41 | 69,263,475.40 | -74,628,239.47 | -5,364,764.07 |
| 3.2.1 Ordinary shares increased by shareholders | 10,781.00 | 86,234.48 | 97,015.48 | 50,000,000.00 | 50,097,015.48 | ||||||||||
| 3.2.2 Capital increased by holders of other equity instruments | 0.00 | ||||||||||||||
| 3.2.3 Share-based payments included in owners’ equity | 0.00 | ||||||||||||||
| 3.2.4 Other | 71,386,451.81 | -2,219,991.89 | 69,166,459.92 | -124,628,239.47 | -55,461,779.55 | ||||||||||
| 3.3 Profit distribution | 36,750,106.16 | -122,562,260.26 | -85,812,154.10 | -115,171,702.80 | -200,983,856.90 | ||||||||||
| 3.3.1 Appropriation to surplus reserves | 36,750,106.16 | -36,750,106.16 | 0.00 | ||||||||||||
| 3.3.2 Appropriation to general reserve | |||||||||||||||
| 3.3.3 Appropriation to owners (or shareholders) | -85,812,154.10 | -85,812,154.10 | -115,171,702.80 | -200,983,856.90 | |||||||||||
| 3.3.4 Other |
| 3.4 Transfers within owners’ equity | |||||||||||||||
| 3.4.1 Increase in capital (or share capital) from capital reserves | |||||||||||||||
| 3.4.2 Increase in capital (or share capital) from surplus reserves | |||||||||||||||
| 3.4.3 Loss offset by surplus reserves | |||||||||||||||
| 3.4.4 Changes in defined benefit pension schemes transferred to retained earnings | |||||||||||||||
| 3.4.5 Other comprehensive income transferred to retained earnings | |||||||||||||||
| 3.4.6 Other | |||||||||||||||
| 3.5 Specific reserve | |||||||||||||||
| 3.5.1 Increase in |
| the period | |||||||||||||||
| 3.5.2 Used in the period | |||||||||||||||
| 3.6 Other | |||||||||||||||
| 4. Balances as at the end of the period | 858,132,322.00 | 71,386,451.81 | 255,912,488.01 | 1,308,922.89 | 1,154,017,457.79 | 5,346,819,948.22 | 7,687,577,590.72 | 404,098,789.18 | 8,091,676,379.90 |
8. Statements of Changes in Owners’ Equity of the Company as the Parent
2021
Unit: RMB
| Item | 2021 | |||||||||||
| Share capital | Other equity instruments | Capital reserves | Less: Treasury stock | Other comprehensive income | Specific reserve | Surplus reserves | Retained earnings | Other | Total owners’ equity | |||
| Preferred shares | Perpetual bonds | Other | ||||||||||
| 1. Balances as at the end of the prior year | 858,132,322.00 | 71,386,451.81 | 317,292,522.25 | -424,313.33 | 1,150,908,718.15 | 4,381,640,182.32 | 6,778,935,883.20 | |||||
| Add: Adjustments for changed accounting policies | ||||||||||||
| Adjustments for corrections of previous | ||||||||||||
| errors | ||||||||||||
| Other adjustments | ||||||||||||
| 2. Balances as at the beginning of the year | 858,132,322.00 | 71,386,451.81 | 317,292,522.25 | -424,313.33 | 1,150,908,718.15 | 4,381,640,182.32 | 6,778,935,883.20 | |||||
| 3. Increase/ decrease in the period (“-” for decrease) | 24,208,973.00 | -1,794.97 | 84,674,899.64 | 78,908,300.00 | 130,733.09 | 61,106,878.75 | 505,840,918.34 | 597,052,307.85 | ||||
| 3.1 Total comprehensive income | 130,733.09 | 611,068,787.49 | 611,199,520.58 | |||||||||
| 3.2 Capital increased and reduced by owners | 24,208,973.00 | -1,794.97 | 84,674,899.64 | 78,908,300.00 | 29,973,777.67 | |||||||
| 3.2.1 Ordinary shares increased by shareholders | 24,208,973.00 | 55,949,334.21 | 80,158,307.21 | |||||||||
| 3.2.2 Capital increased by holders of other equity instruments |
| 3.2.3 Share-based payments included in owners’ equity | 28,325,788.60 | 28,325,788.60 | ||||||||||
| 3.2.4 Other | -1,794.97 | 399,776.83 | 78,908,300.00 | -78,510,318.14 | ||||||||
| 3.3 Profit distribution | 61,106,878.75 | -105,227,869.15 | -44,120,990.40 | |||||||||
| 3.3.1 Appropriation to surplus reserves | 61,106,878.75 | -61,106,878.75 | ||||||||||
| 3.3.2 Appropriation to owners (or shareholders) | -44,120,990.40 | -44,120,990.40 | ||||||||||
| 3.3.3 Other | ||||||||||||
| 3.4 Transfers within owners’ equity | ||||||||||||
| 3.4.1 Increase in capital (or share capital) from capital reserves |
| 3.4.2 Increase in capital (or share capital) from surplus reserves | ||||||||||||
| 3.4.3 Loss offset by surplus reserves | ||||||||||||
| 3.4.4 Changes in defined benefit pension schemes transferred to retained earnings | ||||||||||||
| 3.4.5 Other comprehensive income transferred to retained earnings | ||||||||||||
| 3.4.6 Other | ||||||||||||
| 3.5 Specific reserve | ||||||||||||
| 3.5.1 Increase in the period | ||||||||||||
| 3.5.2 Used in the period | ||||||||||||
| 3.6 Other |
| 4. Balances as at the end of the period | 882,341,295.00 | 71,384,656.84 | 401,967,421.89 | 78,908,300.00 | -293,580.24 | 1,212,015,596.90 | 4,887,481,100.66 | 7,375,988,191.05 |
2020
Unit: RMB
| Item | 2020 | |||||||||||
| Share capital | Other equity instruments | Capital reserves | Less: Treasury stock | Other comprehensive income | Specific reserve | Surplus reserves | Retained earnings | Other | Total owners’ equity | |||
| Preferred shares | Perpetual bonds | Other | ||||||||||
| 1. Balances as at the end of the prior year | 858,121,541.00 | 317,206,232.47 | 1,114,158,611.99 | 4,136,701,381.01 | 6,426,187,766.47 | |||||||
| Add: Adjustments for changed accounting policies | ||||||||||||
| Adjustments for corrections of previous errors | ||||||||||||
| Other adjustments | ||||||||||||
| 2. Balances as at the beginning of the year | 858,121,541.00 | 317,206,232.47 | 1,114,158,611.99 | 4,136,701,381.01 | 6,426,187,766.47 | |||||||
| 3. Increase/ decrease in the period (“-” for decrease) | 10,781.00 | 71,386,451.81 | 86,289.78 | -424,313.33 | 36,750,106.16 | 244,938,801.31 | 352,748,116.73 | |||||
| 3.1 Total comprehensive income | -424,313.33 | 367,501,061.57 | 367,076,748.24 | |||||||||
| 3.2 Capital increased and reduced by owners | 10,781.00 | 71,386,451.81 | 86,289.78 | 71,483,522.59 | ||||||||
| 3.2.1 Ordinary shares increased by shareholders | 10,781.00 | 86,234.48 | 97,015.48 | |||||||||
| 3.2.2 Capital increased by holders of other equity instruments | ||||||||||||
| 3.2.3 Share-based payments included in owners’ equity | ||||||||||||
| 3.2.4 Other | 71,386,451.81 | 55.30 | 71,386,507.11 | |||||||||
| 3.3 Profit distribution | 36,750,106.16 | -122,562,260.26 | -85,812,154.10 | |||||||||
| 3.3.1 Appropriation to surplus reserves | 36,750,106.16 | -36,750,106.16 | ||||||||||
| 3.3.2 Appropriation to owners (or | -85,812,154.10 | -85,812,154.10 |
| shareholders) | ||||||||||||
| 3.3.3 Other | ||||||||||||
| 3.4 Transfers within owners’ equity | ||||||||||||
| 3.4.1 Increase in capital (or share capital) from capital reserves | ||||||||||||
| 3.4.2 Increase in capital (or share capital) from surplus reserves | ||||||||||||
| 3.4.3 Loss offset by surplus reserves | ||||||||||||
| 3.4.4 Changes in defined benefit pension schemes transferred to retained earnings | ||||||||||||
| 3.4.5 Other comprehensive income transferred to retained earnings | ||||||||||||
| 3.4.6 Other | ||||||||||||
| 3.5 Specific reserve |
| 3.5.1 Increase in the period | ||||||||||||
| 3.5.2 Used in the period | ||||||||||||
| 3.6 Other | ||||||||||||
| 4. Balances as at the end of the period | 858,132,322.00 | 71,386,451.81 | 317,292,522.25 | -424,313.33 | 1,150,908,718.15 | 4,381,640,182.32 | 6,778,935,883.20 |
III Company ProfileLu Thai Textile Co., Ltd. (hereinafter referred to as the “Company”) is a joint venture invested by Zibo Lucheng Textile Investment Co.,Ltd (originally named Zibo Lucheng Textile Co., Ltd, hereinafter referred to as Lucheng Textile) and Thailand Tailun Textile Co., Ltd.On 3 February 1993, the Company is approved by the former Ministry of Foreign Trade and Economy of the State (1993) inWJMZEHZ No. 59 to convert into a joint-stock enterprise. Zibo Administration for Industry and Commerce issued the Companycorporate business license with the registration No. of QGLZZZ No. 000066.In July 1997, the Company is approved by the Securities Committee of the Department of the State in the ZWF (1997) No. 47 to issue80 million shares of domestically listed foreign share( B-shares) at the price of RMB 1.00 per share. Upon approved by Shenzhen StockExchange with No. (1997) 296 Listing Notice, the Company is listed on the Shenzhen Stock Exchange on 19 August 1997 withB-shares stock code of 200726. On 24 November 2000, approved by ZJGSZ [2000] No.199 by CSRC, the Company increasedpublication of 50 million shares of general share (A-shares) at the book value of RMB 1.00, which are listed on the Shenzhen StockExchange on 25 December 2000 with A-shares stock code of 000726 through approval by Shenzhen Stock Exchange with No. (2000)162 Listing Notice.As approved by 2000 Annual General Meeting in May 2001, the Company carried out the distribution plan that 10 shares of capitalpublic reserve are converted to 3 more shares for each 10 shares.As approved by Resolutions of 2001 Annual General Meeting in June 2002, the Company implemented the distribution plan that 10shares of capital public reserve are converted 3 more shares for each 10 shares again.As approved by 2002 Annual General Meeting in May 2003, the Company implemented the distribution plan that 10 shares of capitalpublic reserve are 2 more shares for each 10 shares, and inner employees’ shared increased to 40.56 million shares. As examined andapproved by ZJGSZ No. [2000] 199 of CSRC, the inner employees’ shares will start circulation 3 years later since listing on theA-share market. On 25 December 2003, the inner employees’ shares reach 3 years since listing on the A-share stock market, and theyset out circulation on 26 December 2003.As approved by the Annual General Meeting 2006 held in June 2007, the Company implemented the plan on converting 10 shares to allits shareholders with capital reserves for every 10 shares. After capitalization, the registered capital of the Company was RMB
844.8648 million.
The Company, in accordance with the official reply on approving Lu Thai Textile Co., Ltd. to issue additional shares (ZJXK [2008] No.890 document) from CSRC, issued the Renminbi common shares (A shares) amounting to 150 million shares on 8 December 2008.According to the relevant resolution of the 2
nd Special Extraordinary General Meeting of 2011, the relevant resolution of the 15
th
Meeting of the 6
thBoard of Directors, the Opinion of China Securities Regulatory Commission on the Restricted Share Incentive Planof Lu Thai Textile Co., Ltd. (Shang-Shi-Bu-Han [2011] No. 206), the Company applied for a registered capital increment of RMB
14.09 million, which was contributed by restricted share incentive receivers with monetary funds.In accordance with the resolution of Proposal on Repurchasing and Canceling Partial Restricted Shares already Granted for the OriginalIncentive Targets not Reaching the Incentive Conditions made at the 23
rd
Session of the 6
th
Board of Directors on 13 August 2012, the
Company canceling a total of 60,000.00 shares already granted for the original incentive targets not reaching the incentive conditions.According to the second temporary resolution of Proposal on counter purchase of part of the domestic listed foreign share (B share) on25 June 2012, the Company counter purchase domestic listed foreign share (B share) 48,837,300 shares.According to the Proposal on Repurchase and Cancel Part of Unlocked Restricted Share of the Original Incentive Personnel notConforming to the Incentive Condition, Proposal on Repurchase and Cancel unlocked Restricted Share in Second Unlocked Period ofall the Incentive Personnel reviewed and approved by the 26
th
Meeting of the 6
th
Board of Directors on 27 March 2013, the Companyrepurchase and cancel 4,257,000 shares owned by original people whom to motivate.According to the Proposal on Repurchase and Write-off of Partly of the Original Incentive Targets Not Met with the IncentiveConditions but Granted Restricted Shares approved on the 11
th
Meeting of the 7
thBoard of Directors on 11 June 2014, to executerepurchase and write-off of the whole granted shares of 42,000 shares of the original incentive targets not met with the incentive targetsof the Company.As per the Proposal on Buy-back of Some A- and B-shares considered and approved as a resolution at the 1
stspecial meeting ofshareholders on 5 August 2015, the Company repurchased 33,156,200 domestically listed foreign shares (B-shares).As per the Proposal on Buy-back of Some B-shares considered and approved as a resolution at the 2
ndExtraordinary General Meetingon 23 March 2018, the Company repurchased 64,480,800 domestically listed foreign shares (B-shares).There were 10,800 shares of the Company which were converted from the convertible bonds in 2020.In line with the resolution of the 1st Extraordinary General Meeting of the Company on 13 May 2021 and the resolution of the 24thMeeting of the 9th Board of Directors on 17 May 2021, the Company implemented the restricted share incentive scheme and appliedfor a registered capital increment of RMB24,285,000 which was contributed by restricted share incentive receivers with monetaryfunds.In conformity with the resolution of the 26th Meeting of the 9th Board of Directors of the Company on 26 August 2021, the Proposalon Repurchase and Cancel Authorized but Unlocked Restricted Share of the Incentive Personnel not Conforming to the IncentiveCondition, the Company applied for a registered capital decrease of RMB80,000.There were 4,000 shares of the Company which were converted from the convertible bonds in 2021.As of 31 December 2021, the registered capital of the Company was RMB882.3413 million.The Company’s registered address: No. 61, Luthai Avenue, Hi-tech Development Zone, Zibo, ShandongThe Company’s unified social credit code: 91370300613281175KThe Company’s legal representative: Liu ZibinThe Company establishes the corporate governance structure consisting of the shareholders meeting, the Board of Directors and theSupervisory Committee. At present, the Company has set up various departments including the Yarn-dyed Fabric Product Line,Garment Product Line, the Clothing Marketing Department, the Global Marketing Department, the Supply Chain Department, LuThai Engineering Technology Institute, the Enterprise Management Department, the Financial Management Department and theStrategy and Market Department etc.The scope of business of the Company and its subsidiaries shall include general projects: Fabric textile processing; fabric printingand dyeing processing; garment manufacturing; the sales of textiles and raw materials; clothing wholesale; clothing retail; Internet
sales (except for the sale of goods requiring a license); the production of Class I medical devices; the production of routine masks(non-medical); the production of labour protection appliances; software development; technical services, development of technology,technology consulting, technical exchange, technology transfer and technology promotion; the sales of textile special equipment; thesales of mechanical and electrical equipment; the procurement of primary agricultural products; business training (trainings thatrequire approval such as educational training and vocational skill training exclusive); housing lease; the lease of non-residential realestate; the lease of land usage right; the sales of special chemical products (dangerous chemicals exclusive); and the sales of buildingmaterials. It shall also include licensed projects (business activities can be carried out legally and independently with business licensein addition to projects that must be approved by law): Inspection and testing service; catering service; power generation business,power transmission business, and power supply (distribution) business. (For projects that must be approved by law, the businessactivities can only be carried out upon approval by the relevant departments, and the specific business projects shall be subject to theapproval document or license of relevant departments)The Company’s financial statements and Notes thereof have been approved by the 32
nd Meeting of the 9
thBoard of Directors held on27 April 2022.There were 19 subsidiaries included into the consolidation scope of the Company in 2021, and for the details, please refer to NoteVIII. “Changes of Consolidation Scope” and Notes IX. “Equities among Other Entities”.IV Basis for Preparation of Financial Statements
1. Preparation Basis
This financial statement is prepared in accordance with the accounting standards for business enterprises, and the application guide,interpretation and other relevant regulations (hereinafter collectively referred to as “Accounting Standards for Business Enterprises”)issued by the Ministry of Finance. In addition, the Company also disclosed relevant financial information in accordance with theRegulations on Information Disclosure and Compilation for Companies Public Offering Securities No. 15-General Provisions onFinancial Report (revised in 2014) issued by China Securities Regulatory Commission.The Company's accounting is based on the accrual basis. Except for certain financial instruments, this financial statement ismeasured on the basis of historical cost. If the asset is impaired, the corresponding impairment provision shall be made in accordancewith relevant regulations.
2. Going-concern
The financial statements are presented on the basis of continuing operations.V Significant Accounting Policies and EstimatesSpecific accounting policies and accounting estimates indicators:
The Company determines income recognition policy according to its production and operation characteristics, and the specificaccounting policies are shown in Note V (27).
1. Statement of Compliance with the Accounting Standards for Business EnterprisesThe financial statements prepared by the Company are in compliance with in compliance with the Accounting Standards for BusinessEnterprises, which factually and completely present the consolidated, and the Company’s financial positions as at 31 December 2021,business results and cash flows for 2021, and other relevant information.
2. Fiscal Year
The Company’s fiscal year starts on 1 January and ends on 31 December of every year according to the Gregorian calendar.
3. Operating Cycle
The Company regards 12 months as an operating cycle.
4. Recording Currency
The Company and its domestic subsidiaries adopt RMB as the recording currency. The Company’s overseas subsidiaries confirm toadopt HK Dollar and US Dollar as the recording currency according their major economic environment of the operating. Whenpreparing the financial statements for the Reporting Period, the Company adopted RMB as the recording currency.
5. Accounting Treatment for Business Combinations under the Common Control and Not under theCommon Control
(1) Business combinations under the same control
For business combinations under the same control, the assets and liabilities of the merged party acquired by the merger party in themerger, except for adjustments due to different accounting policies, shall be measured at the carrying value of the merged party in theconsolidated financial statement of the final controller on the combination date. As for the difference between the carrying value ofthe merger consideration and carrying value of the net assets obtained in the merger, the capital reserve (capital stock premium) shallbe adjusted, and if the capital reserve (capital stock premium) is insufficient to offset, the retained earnings shall be adjusted.Realize business combination under the same control in steps by transaction several timesIn specific financial statements, the share of book value of the net assets of the combined party that shall be enjoyed in the combinedfinancial statements of the final control party on the combination date as calculated according to the shareholding ratio of thecombination date is regarded as the initial investment cost of the investment; the difference between the initial investment cost andthe sum of book value of investment held before combination plus the book value of the consideration newly paid on the combinationdate is used for adjusting the capital reserve (capital stock premium), and if the capital reserve is insufficient to offset, the retainedearnings shall be adjusted.In the combined financial statements, the assets and liabilities of the combined party acquired by the combining party in thecombination, except for adjustments due to different accounting policies, shall be measured at the book value of the combined partyin the consolidated financial statement of the final controller on the combination date; the difference between the sum of the bookvalue of investment held before combination plus the book value newly paid on the combination date, and the book value of the netassets acquired in combination, is used for adjusting the capital reserve (capital stock premium), and if the capital reserve (capitalstock premium) is insufficient to offset, the retained earnings shall be adjusted. The long-term equity investment held by thecombining party before acquiring the control right of the combined party, if relevant gains and losses, other comprehensive revenuesand changes in other owner’s equity have been confirmed from the date of acquiring equity and the date when the combining partyand the combined party under the final control of the same party, whichever is later, to the combination date, shall offset the retainedearnings at the beginning or current profits and losses in the period of comparing statements.
(2) Business combinations not under the same control
For a business combination not under the same control, the cost of the combination is the assets paid, liabilities incurred or assumed,and the fair value of the equity securities issued on the acquisition date to obtain control over the purchased party. On the purchasedate, the acquired assets, liabilities and contingent liabilities of the purchased party are recognized at fair value.The difference between the merger cost and the fair value of the identifiable net assets of the acquired party acquired in the merger
(the former is greater than the latter) is recognized as goodwill, and subsequent measurement is made based on the cost deducting theaccumulated impairment provision; the difference between the merger cost and the fair value of the identifiable net assets of theacquired party acquired in the merger (the former is less than the latter) shall be recorded into the current profit or loss after therecheck.Achieve business combination not under the same control step by step through multiple transactionsIn specific financial statements, the sum of book value of the acquired party's equity investment held before the purchase date and theinvestment cost newly paid on the purchase date is regarded as the initial investment cost of the investment. The other comprehensiveincome recognized by using the equity method of accounting of the equity investment held before the purchase date, is not disposedon the purchase date, and the same basis as the direct disposal of relevant assets or liabilities of the investee is used to conductaccounting treatment when disposing the investment; the owner's equity recognized as a result of the changes of the other owner'sequity except for the net profit and loss of the investee, other comprehensive income and profit distribution shall be transferred to thecurrent profit and loss during the disposal period when disposing the investment. If the equity investment held before the purchasedate is measured at fair value, the accumulative changes in fair value originally included in other comprehensive income shall betransferred to retained earnings when accounting by cost method.In consolidated financial statements, the cost of consolidation is the sum of the consideration paid at the purchase date and the fairvalue at the purchase date of the equity already held by the acquired party before the purchase date. For equity of the acquired partythat is already held before the purchase date, it shall be re-measured according to the fair value of the equity on the purchase date,and the difference between the fair value and its book value shall be included in the current income. If the equity of the acquiredparty held before the purchase date involves other comprehensive income and the changes of other owner's equity, it shall betransferred to current income on the purchase date, except for other comprehensive income caused by changes in net liabilities or netassets of the income plan remeasured and reset by the investee.
(3) Treatment of transaction costs in business combinations
Intermediary expenses such as auditing, legal services, evaluation and consulting and other related management expenses incurredfor the business combination shall be included in the current profit and loss when incurred. The transaction costs of equity securitiesor debt securities issued as the merger consideration shall be included in the initial recognition amount of equity securities or debtsecurities.
6. Preparation of the Consolidated Financial Statements
(1) Consolidation scope
The consolidation scope of the consolidated financial statements is determined on the basis of control. Control means that theCompany has the power over the invested unit, enjoys variable returns by participating in the related activities of the invested unit,and has the ability to use the power over the invested unit to influence the amount of its return. Subsidiaries refer to the entitiescontrolled by the Company (including enterprises, divisible parts of invested entities, structured entities, etc.).
(2) Preparation method of consolidated financial statements
The consolidated financial statements are prepared by the Company based on the financial statements of the Company and itssubsidiaries and other relevant materials. When preparing the consolidated financial statements, the accounting policies andaccounting fiscal of the Company and those of subsidiaries shall be consistent and the large transactions and intercourse balanceamong companies shall be offset. Subsidiaries and businesses increased due to business combinations under the same control duringthe Reporting Period shall be included into the Company’s combination scope since the date when they are jointly controlled by thefinal controller, and the operating result and cash flow since then shall be respectively included into the consolidated incomestatement and consolidated cash flow statement. As for subsidiaries and businesses increase due to business combinations not underthe same control during the Reporting Period, the revenue, expenses and profit or those subsidiaries and businesses from the purchasedate to the end of the Reporting Period shall be included into the consolidated income statement and the cash flow thereof shall be
included into the consolidated cash flow statement. The share of shareholders’ equity in subsidiaries not belonging to the Companyshall be regarded as the minority interests and separately listed under the item of shareholders’ equity in the consolidated balancesheet. The share of current portion of net profit or loss in subsidiaries belonging to minority interests shall presented as the item ofminority interests under the item of net profit in the consolidated income statement. The difference between the losses of subsidiariesborn by not-controlling shareholders and the share of the company’s owners’ equity at the period-beginning the not-controllingshareholders enjoy (the former is larger than the latter) shall be offset the minority interests.
(3) Purchase of minority shareholders' equity of subsidiaries
As for the difference between the cost of a long-term equity investment newly acquired due to the purchase of the minority sharesand the share of net assets of the subsidiary continuously accounted from the purchase date or combination date the Company shallenjoy based on the new shareholding ratio and the difference between the disposal price of partial equity investments in thesubsidiary under the premise of remaining the control power and the share of net assets of the subsidiary continuously accountedfrom the purchase date or combination date the Company shall enjoy and corresponding to the disposal of long-term equityinvestments, the capital reserve (capital stock premium) in the consolidated balance sheet shall be adjusted and when the capitalreserve is insufficient to offset, the retained earnings shall be adjusted.
(4) Treatment of loss of control over subsidiaries
If the control over the original subsidiary is lost due to the disposal of partial equity investments or other reasons, the residual equityshall be remeasured at the fair value on the date of losing the control power; the balance of the sum of the consideration obtainedfrom equity disposal and the fair value of residual equity after deducting the sum of the share of the carrying value of net assets in theoriginal subsidiary continuously accounted from the purchase date the Company shall enjoy based on the original shareholding ratioand the goodwill shall be recorded into the investment income of the period when the control power is lost. The other comprehensiveincome related to the equity investments in the original subsidiary shall be transferred to the current profit or loss when the controlpower is lost except for the other comprehensive income arising from changes in net liabilities or net assets due to the remeasurementof defined benefit plan by the investee.
7. Classification of Joint Arrangements and Accounting Treatment of Joint OperationsJoint arrangement refers to an arrangement under the joint control of two or more participants. The Company's joint arrangements aredivided into joint operations and joint ventures.
(1) Joint operations
A joint operation refers to a joint arrangement whereby the Company enjoys relevant assets of the arrangement, and assumesobligations relevant liabilities of the arrangement.The Company recognizes the following items related to the interest share in joint operation, and conducts accounting treatment inaccordance with relevant provisions of the Accounting Standard for Business Enterprises:
A. It recognizes separately held assets and jointly held assets according to the proportion;B. It recognizes separately assumed liabilities and jointly assumed liabilities according to the proportion;C. Income from the sale of the proportion of joint operation output is recognized;D. Income from the sale of the joint operation output is recognized according to the proportion.E. While the separately incurred fee is recognized, the incurred fee for joint operation is recognized according to the proportion.
(2) Joint ventures
A joint venture refers to a joint arrangement whereby the Company enjoys the right of the net assets of the arrangement only.Accounting treatment of the investment of a joint venture is conducted by the Company in line with the provisions of relevant equitymethod of accounting for long-term equity investment.
8. Confirmation Standard for Cash and Cash Equivalent
The term “cash” refers to cash on hand and deposits that are available for payment at any time. Cash equivalents refer to investmentsheld by the Company that are short-term, highly liquid, easily convertible into known amounts of cash, and have little risk of changein value.
9. Foreign Currency Businesses and Translation of Foreign Currency Financial Statements
(1) Foreign currency business
The Company's foreign currency business is translated into the amount of the recording currency at the spot exchange rate on thetransaction date.On the balance sheet date, foreign currency monetary items are translated at the spot exchange rate on the balance sheet date. Theexchange difference arising from the difference between the spot exchange rate on the balance sheet date and the spot exchange rateat the time of initial recognition or the previous balance sheet date is included in the current profit and loss; for foreign currencynon-monetary items measured at historical cost, the translation adopts the spot exchange rate on the day the transaction occurs; forforeign currency non-monetary items measured at fair value, the translation adopts the spot exchange rate on the day when the fairvalue is confirmed, and the difference between the amount of recording currency and the amount of original recording currency shallbe included into the current profit or loss or other comprehensive income based on the nature of non-monetary items.
(2) Conversion of foreign currency financial statements
When converting the foreign currency financial statements of overseas subsidiaries on the balance sheet date, the assets and liabilitiesitems in the balance sheet shall be converted at the spot exchange rate on the balance sheet date. Other items of shareholders' equityexcept for "undistributed profits" shall be converted at the spot exchange rate on the occurrence date.Income and expense items in the income statement shall be converted using the spot exchange rate on the transaction date.All items in the cash flow statement are converted according to the spot exchange rate on the occurrence date of cash flow. Theimpact of exchange rate changes on cash is taken as a reconciling item, and the item "impact of exchange rate changes on cash andcash equivalents" is separately listed in the cash flow statement to reflect.The difference arising from the conversion of financial statements is reflected in the "other comprehensive income" under theshareholders' equity in the balance sheet.When disposing of the overseas operation and losing control rights, the foreign currency statement conversion difference related tothe overseas operation shown under the shareholders' equity in the balance sheet shall be transferred to current profit and loss ofdisposal in whole or in proportion to the disposal of overseas operation.
10. Financial Instruments
Financial instruments refer to contracts that form one party’s financial assets and form other parties’ financial liabilities or equityinstruments.
(1) Recognition and derecognition of financial instruments
The Company recognizes a financial asset or liability when it becomes a party of the relevant financial instrument contract.Where a financial asset satisfies any of the following requirements, the recognition of it is terminated:
① The contractual rights for collecting the cash flow of the said financial asset are terminated;
② The said financial asset has been transferred and meet the following derecognition conditions for transfer of financial assets.Only when the prevailing obligations of a financial liability are relieved in all or in part may the recognition of the financial liabilitybe terminated in all or partly. Where the Company (debtor) enters into an agreement with a creditor so as to substitute the existingfinancial liabilities by way of any new financial liability, and if the contractual stipulations regarding the new financial liability issubstantially different from that regarding the existing financial liability, it terminates the recognition of the existing financial
liability, and at the same time recognizes the new financial liability.The purchase and sale of financial assets under the normal ways shall be recognized and stopped to be recognized respectively at theprice of transaction date.
(2) Classification and measurement of financial assets
The Company classifies financial assets into the following three categories according to the business mode of managing financialassets and the contractual cash flow characteristics of financial assets upon initial recognition: financial assets measured at amortizedcost, financial assets measured at fair value and whose changes are included in other comprehensive income, and financial assetsmeasured at fair value and whose changes are included in current profit and loss.Financial assets measured at amortized costThe Company classifies financial assets that meet the following conditions and are not designated to be measured at fair value andwhose changes are included in current profit and loss as financial assets measured at amortized cost:
The Company's business model for managing this financial asset is aimed at collecting contractual cash flow;The contractual terms of this financial asset stipulate that the cash flow generated on the specific date is only the payment of principaland interest based on the principal amount outstanding.Such financial assets are measured in amortized cost by the effective interest method after initial recognition. Gains or losses arisingfrom financial assets measured in amortized cost that are not part of any hedging relationship are included in current profit and losswhen derecognition, amortization according to the effective interest method, or impairment is recognized.Financial assets measured at fair value and whose changes are included in other comprehensive incomeThe Company classifies financial assets that meet the following conditions and are not designated to be measured at fair value andwhose changes are included in current profit and loss as financial assets measured at fair value and whose changes are included inother comprehensive income:
The Company's business model for managing this financial asset is aimed at both collecting the contractual cash flow and selling thisfinancial asset;The contractual terms of this financial asset stipulate that the cash flow generated on the specific date is only the payment of principaland interest based on the principal amount outstanding.Such financial assets are subsequently measured at fair value after initial recognition. Interest, impairment losses or gains andexchange gains and losses calculated by the effective interest method are included in current profit and loss, while other gains orlosses are included in other comprehensive income. When the financial asset is derecognized, the accumulated gains or lossespreviously included in other comprehensive income are transferred out and included in current profit and loss.Financial assets measured at fair value and whose changes are included in current profit and lossExcept for the above financial assets measured at amortized cost and at fair value with changes included in other comprehensiveincome, the Company classifies all other financial assets as financial assets measured at fair value with changes included in currentprofit and loss. Upon initial recognition, in order to eliminate or significantly reduce accounting mismatches, the Companyirrevocably designates some financial assets that should have been measured at amortized cost or at fair value and whose changes areincluded in other comprehensive income as financial assets measured at fair value and whose changes are included in current profitand loss.Such financial assets are subsequently measured at fair value after initial recognition, and the resulting gains or losses (includinginterest and dividend income) are included in current profit and loss unless the financial assets are part of the hedging relationship.The business model of managing financial assets refers to how the Company manages financial assets to generate cash flow. Thebusiness model determines whether the cash flow of the financial assets managed by the Company comes from the collection ofcontractual cash flow, the sale of financial assets or both. The Company determines the business model for managing financial assetson the basis of objective facts and specific business objectives decided by key management personnel to manage financial assets.The Company evaluates the contractual cash flow characteristics of financial assets to determine whether the contractual cash flowgenerated by the relevant financial assets on the specific date is only the payment of principal and interest based on the principal
amount outstanding. Among them, the principal refers to the fair value of financial assets upon initial recognition; interest includesconsideration for the time value of money, credit risks related to the principal amount outstanding in the specific period, and otherbasic lending risks, costs and profits. In addition, the Company evaluates the contract terms that may lead to changes in the timedistribution or amount of contractual cash flow of financial assets to determine whether they meet the requirements of theabove-mentioned contractual cash flow characteristics.Only when the Company changes the business mode of managing financial assets will all affected related financial assets bereclassified on the first day of the first reporting period after business model changes, otherwise financial assets cannot be reclassifiedafter initial recognition.Financial assets are measured at fair value upon initial recognition. For financial assets measured at fair value and whose changes areincluded in current profit and loss, relevant transaction expenses are directly included in current profit and loss; for other types offinancial assets, relevant transaction expenses are included in the initial recognition amount. For accounts receivable arising from thesale of products or the provision of labor services, which do not include or do not consider significant financing components, theamount of consideration the Company is expected to be entitled to receive is taken as the initial recognition amount.
(3) Classification and measurement of financial liabilities
The Company's financial liabilities are classified upon initial recognition as: financial liabilities measured at fair value and whosechanges are included in current profit and loss, and financial liabilities measured at amortized cost. For financial liabilities that arenot classified as measured at fair value and whose changes are included in current profit and loss, relevant transaction costs areincluded in the initial recognition amount.Financial liabilities measured at fair value and whose changes are included in current profit and lossFinancial liabilities measured at fair value and whose changes are included in current profit and loss include transactional financialliabilities and financial liabilities designated as measured at fair value upon initial recognition and whose changes are included incurrent profit and loss. Subsequent measurement shall be carried out according to fair value for such financial liabilities. Gains orlosses resulting from changes in fair value and dividends and interest expenses related to such financial liabilities shall be included incurrent profit and loss.Financial liabilities measured at amortized costOther financial liabilities are subsequently measured at amortized cost by using the effective interest method. Gains or lossesresulting from derecognition or amortization are included in current profit and loss.Distinction between financial liabilities and equity instrumentsFinancial liabilities refer to liabilities that meet one of the following conditions:
① The contractual obligation to deliver cash or other financial assets to other parties.
② The contractual obligation to exchange financial assets or financial liabilities with other parties under potentially unfavorableconditions.
③ Non-derivative contracts that must be or can be settled with the enterprise's own equity instruments in the future, and theenterprise will deliver a variable number of its own equity instruments according to the contract.
④ Derivative contracts that must be or can be settled with the enterprise's own equity instruments in the future, except derivativescontracts that exchange a fixed amount of cash or other financial assets with a fixed amount of its own equity instruments.Equity instruments refer to contracts that can prove that an enterprise has the residual equity in its assets after deducting all liabilities.If the Company cannot unconditionally avoid performing a contractual obligation by delivering cash or other financial assets, thecontractual obligation meets the definition of financial liability.If a financial instrument must be or can be settled with the Company's own equity instruments, it is necessary to consider whether theCompany's own equity instruments used to settle the instrument are used as substitutes for cash or other financial assets or to enablethe holder of this instrument to enjoy the residual equity in the assets after deducting all liabilities from the issuer. If it is the former,this instrument is the Company's financial liability; if the latter is the case, this instrument is the Company's equity instrument.
(4) Derivative financial instruments and embedded derivatives
The Company's derivative financial instruments include forward foreign exchange contracts. Initially, the fair value on the date whenthe derivative transaction contract is signed shall be used for measurement, and the fair value shall be used for subsequentmeasurement. Derivative financial instruments with positive fair value are recognized as an asset, while those with negative fairvalue are indeed recognized as a liability. Any gains or losses arising from changes in fair value that do not conform to the provisionsof hedge accounting are directly included in current profit and loss.For hybrid instruments containing embedded derivatives, such as the main contract is a financial asset, the relevant provisions onclassification of financial assets shall apply to the hybrid instruments as a whole. If the main contract is not a financial asset, and thehybrid instrument is not measured at fair value and its changes are included in current profit and loss for accounting treatment, theembedded derivative instrument has no close relationship with the main contract in terms of economic characteristics and risks, andhas the same conditions as the embedded derivative instrument, and the separate existing instrument meets the definition ofderivative instrument, the embedded derivative instrument shall be separated from the hybrid instrument and treated as a separatederivative financial instrument. If it is not possible to separately measure embedded derivative instruments at the time of acquisitionor the subsequent balance sheet date, the hybrid instruments as a whole are designated as financial assets or financial liabilitiesmeasured at fair value and their changes are included in current profit and loss.
(5) Fair value of financial instruments
See Note V(11) for the method of determining the fair value of financial assets and liabilities.
(6) Impairment of financial assets
The Company conducts impairment accounting treatment for the following items and confirms the loss provision based on theexpected credit losses:
Financial assets measured at amortized cost;Receivables and creditors' investments measured at fair value and whose changes are included in other comprehensive income;Contract assets defined in the Accounting Standards for Business Enterprises No. 14-Revenue;Lease receivables;Financial guarantee contracts (except those that are measured at fair value and whose changes are included in current profit and loss,the transfer of financial assets does not meet the conditions for derecognition or continue to involve in the transferred financialassets).Measurement of expected credit lossExpected credit loss refers to the weighted average of the credit losses of financial instruments weighted by the risk of default. Creditloss refers to the difference between all contractual cash flows discounted at the original effective interest rate and receivableaccording to the contract and all cash flows expected to be collected of the Company, i.e. the present value of all cash shortfalls.Considering the reasonable and reliable information about past events, current situation and the forecast of future economic situation,the company takes the risk of default as the weight, calculates the probability weighted amount of the present value of the differencebetween the cash flow receivable from the contract and the cash flow expected to be received, and confirms the expected credit loss.The Company separately measures the expected credit losses of financial instruments at different stages. If the credit risk of financialinstruments has not increased significantly since the initial recognition, it is in the first stage. The Company measures the loss reserveaccording to the expected credit loss in the next 12 months; if the credit risk of financial instruments has increased significantly sinceits initial recognition but no credit impairment has occurred, it is in the second stage. The Company measures the loss reserveaccording to the expected credit loss during the whole duration of this instrument; if the financial instrument has suffered creditimpairment since its initial recognition, it is in the third stage. The Company measures the loss reserve according to the expectedcredit loss during the whole duration of this instrument.For financial instruments with low credit risk on the balance sheet date, the Company assumes that their credit risk has not increasedsignificantly since the initial recognition, and measures the loss reserve according to the expected credit loss in the next 12 months.The expected credit loss during the whole duration refers to the expected credit loss caused by all possible default events during thewhole expected duration of financial instruments. The expected credit loss in the next 12 months refers to the expected credit loss
caused by the possible default events of financial instruments within 12 months (or the expected duration if the expected duration offinancial instruments is less than 12 months) after the balance sheet date, which is part of the expected credit loss in the wholeduration.When measuring the expected credit loss, the longest term that the Company needs to consider is the longest contract term that theenterprise faces credit risk (including the option to renew the contract).The Company calculates interest income based on the book balance before deducting impairment provisions and the effective interestrate for financial instruments in the first and second stages and with low credit risk. The interest income shall be calculated accordingto their book balance minus the amortized cost after impairment provision and the effective interest rate for financial instruments inthe third stage.Notes receivable, accounts receivable and contract assetsThe Company always measures its loss reserves at an amount equivalent to the expected credit loss during the entire duration fornotes receivable, contract assets and accounts receivable, regardless of whether there is any significant financing component.If a single financial asset cannot be used to evaluate the expected credit loss information at a reasonable cost, the Company willdivide the notes receivable and accounts receivable into portfolio on the basis of the credit risk features, and calculate the expectedcredit loss based on the portfolio. The basis for determining the portfolio is as follows:
A. Notes receivable
Notes receivable portfolio 1: bank acceptance bills and L/CNotes receivable portfolio 2: commercial acceptance billsB. Accounts receivableAccounts receivable portfolio 1: payment not overdue (with credit insurance)Accounts receivable portfolio 2: payment not overdue (without credit insurance)Accounts receivable portfolio 3: payment overdue (with credit insurance)Accounts receivable portfolio 4: payment overdue (without credit insurance)C. Contract assetsContract assets portfolio 1: product salesContract assets portfolio 2: engineering constructionFor notes receivable and contract assets divided into portfolios, with reference to historical credit loss experience, combined withcurrent conditions and predictions of future economic conditions, the Company has calculated expected credit losses through defaultrisk exposure and expected credit loss rate for the entire duration.For accounts receivable divided into portfolios, with reference to historical credit loss experience, combined with current conditionsand predictions of future economic conditions, the Company has prepared a comparison table between the number of aging/overduedays of accounts receivable and the expected credit loss rate over the entire duration, and has calculated the expected credit loss.Other receivablesThe Company divides other receivables into several portfolios based on the features of credit risk, and calculates the expected creditlosses on the basis of the combination. The basis for determining the portfolio is as follows:
Other receivables portfolio 1: Receivables from related parties within the scope of consolidationOther receivables portfolio 2: Tax refund receivableOther receivables portfolio 3: Deposit receivable and security depositOther receivables portfolio 4: other receivablesFor other receivables that are divided into portfolios, the Company calculates the expected credit loss with the default risk exposure andthe expected credit loss rate within the next 12 months or the entire duration.Creditors' investment and other creditors' investmentFor creditors' investment and other creditors' investment, the Company calculates the expected credit based on the nature of theinvestment, as well as kinds of types of counterparties and risk exposures, the default risk exposure and the expected credit loss rate
within the next 12 months or the entire duration loss.Assessment on significant increase of credit riskIn order to determine the relative changes in the default risk of financial instruments during their expected life and to assess whether thecredit risk of financial instruments has increased significantly since initial recognition, the Company compares the default risk offinancial instruments on the balance sheet date with the default risk on the initial recognition date.When determining whether the credit risk has risen greatly since the initial recognition, the Company considers reasonable and reliableinformation (forward-looking information inclusive) that can be obtained without unnecessary extra costs or efforts. The informationthe Company considers shall include:
The debtor fails to pay the principal and interest according to the contract expiration date;The external or internal credit ratings (if any) of financial instruments, which have occurred or are expected, deteriorate significantly;The debtor’s operating results, which have occurred or are expected, deteriorate significantly;Existing or expected changes in technology, market, economy or legal environment will lead to a great adverse effect on the debtor'sability to repay the Company.Based on the nature of financial instruments, the Company assesses whether there is great risk in credit risk on the basis of individualfinancial instruments or financial instrument portfolios. During assessment based on financial instrument portfolios, the Company candivide financial instruments on the basis of common credit risk characteristics, such as overdue information and credit risk ratings.In case that the period overdue exceeds 30 days, the Company determines that there is a significant increase in the credit risk offinancial instruments.Financial assets with depreciation of creditThe Company assesses, on the balance sheet date, whether there is any credit impairment to financial assets measured at amortized costand creditors' investment measured at fair value and whose changes are included in other comprehensive income. In case of one or moreevents that adversely affect the expected future cash flow of a financial asset occur, the financial asset will become financial assets withdepreciation of credit. The observable information below can be treated as evidence for credit impairment to financial assets:
The issuer or debtor is caught in a serious financial difficulty;The debtor breaches the agreement of contract, such as default or overdue payment of interest or principal, or other default;Due to economic or contractual considerations related to the debtor's financial difficulties, the Company gives concessions to the debtor;and the concessions will not be made under any other circumstances;There lies a great probability of bankruptcy or other financial restructuring for the debtor;The issuer or debtor is caught in financial difficulties, which leads to the disappearance of the active market of the financial asset;Presentation of expected credit loss provisionThe Company remeasures expected credit losses on each balance sheet date to reflect the changes in the credit risk of financialinstruments since initial recognition; the increase or reversal amount of the loss reserve formed there from shall be included in thecurrent profit and loss as impairment losses or gains. For financial assets measured at amortized cost, the loss allowance offsets thecarrying amount of the financial asset listed in the balance sheet; for creditors’ investment that are measured at fair value and itschanges are included in other comprehensive income, the Company recognizes its loss reserve in other comprehensive income and willnot offset the carrying amount of the financial asset.Write-offsIn case that the Company fails to reasonably expect the contract cash flow of the financial asset to be recovered in a full or partial scale,the book balance of the financial asset will be written off directly. Such write-downs may constitute the derecognition for relatedfinancial assets. This situation occurs frequently when the Company determines that the debtor does not have any assets or any sourceof income to generate sufficient cash flow to repay the amount that will be written off. However, in accordance with the procedures forrecovering due payments of the Company, the written-off financial assets may still be affected by the execution activities.In case that the financial asset written off is recovered later, it shall be included in the current profit and loss as the reversal of theimpairment loss.
(7) Transfer of financial assets
The transfer of financial assets refers to the transfer or delivery of financial assets to another party (transferee) other than the issuer ofthe financial asset.If the Company has transferred almost all the risks and rewards of the ownership of financial assets to the transferee, derecognize thefinancial asset; if it retains almost all the risks and rewards of the ownership of financial assets, the financial asset will not bederecognized.If the Company has neither transferred nor retained almost all the risks and rewards of the ownership of financial assets, it shall be dealtwith in the following situations: if the control of the financial asset is abandoned, the confirmation of the financial asset shall beterminated and the generated assets and liabilities shall be confirmed; If the financial assets are controlled, the relevant financial assetsshall be recognized according to the extent of their continued involvement in the transferred financial assets, and the relevant liabilitiesshall be recognized accordingly.
(8) Offsetting financial assets and financial liabilities
When the Company has a legal right that is currently enforceable to set off the recognized financial assets and financial liabilities, andintends either to settle on a net basis, or to realize the financial asset and settle the financial liability simultaneously, a financial asset anda financial liability shall be offset and the net amount is presented in the balance sheet. Except for the above circumstances, financialassets and financial liabilities shall be presented separately in the balance sheet and shall not be offset.
11. Measurement of Fair Value
Fair value refers to the price that market participants can receive from sales of a asset or shall pay for transfer of a liability in the orderlytransaction that occurs on the measurement date.The Company measures related assets or liabilities at fair value, assuming that the orderly transaction of selling assets or transferringliabilities is conducted in the main market of related assets or liabilities; if there is no main market, the Company assumes that thetransaction is conducted in the most beneficial market. The main market (or the most favorable market) is the trading market that theCompany can enter on the measurement date. The Company uses the assumptions used by market participants to maximize theireconomic benefits when pricing the asset or liability.For financial assets or financial liabilities with active markets, the Company uses the quotation in active markets to determine its fairvalue. If there is no active market for financial instruments, the Company uses valuation techniques to determine its fair value.When measuring non-financial assets at fair value, the ability of market participants to best use the asset for generating economicbenefits, or the ability to sell the asset to other market participants that can best use the asset to generate economic benefits shall beconsidered.The Company adopts valuation techniques that are applicable in the current situation and have sufficient available data and otherinformation to support it. Priority is given to using relevant observable input values. Only when observable input values are unavailableor are not feasible to obtain, the unobservable input values can be used. For assets and liabilities measured or disclosed at fair value inthe financial statements, the fair value hierarchy to which they belong is determined based on the lowest level input value that isimportant to the fair value measurement as a whole: the first level input value is the unadjusted quotation of the same assets or liabilitiesable to be obtained in an active market on the measurement date; the second level input value is the directly or indirectly observableinput value of the relevant asset or liability except the first level input value; the third level input value is unobservable input value ofrelated assets or liabilities.On each balance sheet date, the Company reassessed the assets and liabilities continuously measured at fair value confirmed in thefinancial statements to determine whether there is a transition among levels of fair value measurement.
12. Inventory
(1) Classification
Inventories mainly include raw materials, work-in-progress, stock products, materials processed on entrustment and etc.
(2) Valuation method of inventories acquiring and issuing
Inventories shall be measured at actual cost when acquired, and the cost of the inventories including the procurement cost, processingcost and other costs. Grey yarn, dyed yarn, and plus material shall be measured at first-in first-out method when acquired anddelivered; other inventories shall be measured as per the weighted average method
(3) Basis for determining net realizable value of inventories and provision methods for decline in value of inventoriesNet realizable value is the estimated selling price in the ordinary course of business less the estimated costs of completion, theestimated costs necessary to make the sale and relevant taxes. Net realizable value is determined on the basis of clear evidenceobtained, and takes into consideration the purpose of holding inventories and effect of post balance sheet events.At the balance sheet date, inventories are measured at the lower of the cost and net realizable value. If the net realizable value isbelow the cost of inventories, a provision for decline in value of inventories is made. The provision for inventories decline in value isdetermined by the difference of the cost of individual item less its realizable value. After the provision for decline in value ofinventories is made, if the circumstances that previously caused inventories to be written down below cost no longer exist so that thenet realizable value of inventories is higher than their cost, the original provision for decline in value is reversed and the reversal isincluded in profit or loss for the period.
(4) The perpetual inventory system is maintained for stock system.
(5) Amortization method of the low-value consumption goods and packing articles
For the Low-value consumption goods and the packing articles should be amortized by one-off amortization method whenconsuming.
13. Contract Costs
Contract cost includes the incremental cost incurred for acquiring contract and contract performance cost.The incremental cost incurred for acquiring contract refers to the cost that will not occur if the Company has not acquired contract (forexample, sales commission). If the cost is expected to be recovered, the Company regards it as contract acquiring cost and confirms it asan asset. The expenses incurred by the Company for acquiring contract, other than the incremental cost expected to be recovered, areincluded in the current profits and losses at the time of occurrence.If the cost incurred for performance of contract does not belong to inventory and other scope of other corporate accounting standardsand meets the following conditions, the Company will regard it as contract performance cost and confirm it as an asset:
①The cost is directly related to a copy of contract currently acquired or expected to be acquired, including direct labor, direct materials,manufacture expenses (or similar expenses), cost determined to be undertaken by the customer and other cost incurred due to thecontract;
②The cost increases the resources of the Company that will be used for performance of contract obligations in the future;
③The cost is expected to be recovered.
The assets confirmed by the contract acquiring cost and the assets confirmed by the contract performance cost (“assets related tocontract cost”) are amortized according to the same basis as confirmation of goods or service income related to the asset and areincluded in the current profits and losses. If the amortization term does not exceed one year, it will be included in the current profits andlosses at the time of occurrence.When the book value of an asset related to contract cost is higher than the difference between the following two items, the Companyaccrues provision for impairment to the excessive part and confirms it as impairment loss:
①The remaining consideration that the Company expects to acquire from transfer of goods or services related to the asset;
②The cost that will occur for transfer of such related goods or services as estimated.
The contract performance cost confirmed as asset, if amortization term does not exceed one year or a normal business cycle at the timeof initial confirmation, is listed in the item of “inventory”; if amortization term exceeds one year or a normal business cycle at the time
of initial confirmation, is listed in the item of “other non-current assets”.The contract acquiring cost that is confirmed as asset, if amortization term does not exceed one year or a normal business cycle at thetime of initial confirmation, is listed in the item of “other current assets”; if amortization term exceeds one year or a normal businesscycle at the time of initial confirmation, is listed in the item of “other non-current assets”.
14. Long-term Equity Investments
Long-term equity investments include equity investments in subsidiaries, joint ventures and associated enterprises. The investee thatthe Company is able to exert significant influence is an associated enterprise of the Company.
(1) Determination of initial investment cost
Long-term equity investment that forms a business combination: Long-term equity investment obtained by business combinationunder the same control, on the merger date, based on the book value share of the merged party’s owners’ equity in the finalcontroller’s consolidated financial statements as investment cost; The long-term equity investment acquired by a businesscombination shall be the investment cost of the long-term equity investment according to the cost of the combination.For long-term equity investments obtained by other means: the long-term equity investment obtained by paying cash shall be theinitial investment cost according to the actual purchase price; the long-term equity investment obtained by issuing equity securitiesshall be the initial investment cost of the fair value of the equity securities issued.
(2) Subsequent measurement and profit and loss confirmation method
Investment in subsidiaries is accounted for using the cost method unless the investment meets the conditions for holding for sale;investment in associates and joint ventures is accounted for using the equity method.For long-term equity investments that are accounted for using the cost method, in addition to the cash dividends or profits that havebeen declared but not yet included in the actual payment or consideration included in the investment, the cash dividends or profitsdeclared by the invested entity are recognized as investment income and recorded into the current profit and loss.For long-term equity investments accounted for using the equity method, where the initial investment cost is greater than the fairvalue share of the investee’s identifiable net assets at the time of investment, the investment cost of the long-term equity investmentis not adjusted; when the initial investment cost is less than the investment, the investee ’s If the fair value share of net assets isidentified, the book value of the long-term equity investment is adjusted, and the difference is included in the current profit and lossof the investment.When using the equity method of accounting, the investment income and other comprehensive income are recognized separatelyaccording to the share of net profit and loss and other comprehensive income realized by the invested unit that should be enjoyed orshared, and the book value of the long-term equity investment is adjusted at the same time; The distribution of profits or cashdividends should be calculated to reduce the book value of long-term equity investment; the investee's other changes in owner'sequity other than net profit and loss, other comprehensive income and profit distribution, adjust the book value of long-term equityinvestment and Included in capital reserves (other capital reserves). When confirming the share of the investee’s net profit or loss,based on the fair value of the investee’s identifiable assets at the time of investment, and in accordance with the Company’saccounting policies and accounting period, the net profit of the investee Confirm after making adjustments.If the additional investment and other reasons can exert significant influence on the investee or exercise joint control but do notconstitute control, on the conversion date, the sum of the fair value of the original equity plus the additional investment cost will beused as the initial accounting for the equity method cost of investment. If the original equity is classified as non-trading equityinstrument investment measured at fair value whose changes are included in other comprehensive income, the relevant original andaccumulative changes in fair value included in other comprehensive income shall be transferred to retained earnings when accountingby equity method.If the joint control or significant influence on the invested unit is lost due to the disposal of part of the equity investment, etc., theremaining equity after the disposal shall be changed to the Accounting Standards for Business Enterprises No. 22-Recognition and
Measurement of Financial Instruments is performed, and the difference between fair value and book value is included in the currentprofit and loss. Other comprehensive income recognized by the original equity investment due to the equity method of accountingshall be accounted for on the same basis as the investee’s direct disposal of related assets or liabilities when the equity method ofaccounting is terminated; changes in other owners ’equity related to the original equity investment Transfer to current profit and loss.If the control of the invested unit is lost due to the disposal of part of the equity investment, if the remaining equity after the disposalcan exercise joint control or exert significant influence on the invested unit, the equity method is used for accounting and theremaining equity is treated as When acquiring, the equity method is adopted for adjustment; if the remaining equity after disposalcannot exercise joint control or exert significant influence on the investee, the accounting shall be changed according to the relevantprovisions of "Accounting Standards for Business Enterprises No. 22-Recognition and Measurement of Financial Instruments Thedifference between the fair value and the book value on the date of loss of control is included in the current profit and loss.If the shareholding ratio of the company decreases due to the capital increase of other investors, thereby losing control but being ableto exercise joint control or exert significant influence on the investee, the new shareholding ratio shall be used to confirm that thecompany should enjoy the capital increase of the investee. The difference between the increase in share and the increase in the shareof net assets and the original book value of the long-term equity investment corresponding to the decrease in the proportion of theshareholding that should be carried forward are included in the current profit and loss; That is, adjustments are made using the equitymethod of accounting.The unrealized internal transaction gains and losses that occur between the Company and associates and joint ventures are calculatedaccording to the shareholding ratio and are attributed to the Company, and the investment gains and losses are recognized on thebasis of offset. However, the unrealized internal transaction losses incurred by the Company and the investee are the impairmentlosses of the transferred assets and shall not be offset.
(3) Determine the basis for joint control and significant influence on the invested unit
Joint control refers to the common control of an arrangement in accordance with the relevant agreement, and related activities of thearrangement must be agreed upon by the parties sharing control rights before they can make decisions. When judging whether thereis joint control, first determine whether all participants or a combination of participants collectively control the arrangement, andsecondly determine whether the decision-making related activities of the arrangement must be unanimously agreed by theparticipants who collectively control the arrangement. If all participants or a Company of participants must act in concert todetermine the relevant activities of an arrangement, it is considered that all participants or a Company of participants collectivelycontrol the arrangement; if there is a combination of two or more participants can collectively Controlling an arrangement does notconstitute joint control. When judging whether there is joint control, the protective rights enjoyed are not considered.Significant influence means that the investor has the right to participate in the decision-making of the financial and operating policiesof the invested unit, but cannot control or jointly control the formulation of these policies with other parties. When determiningwhether it can exert significant influence on the invested unit, consider that the investor directly or indirectly holds the voting sharesof the invested unit and the current executable potential voting rights held by the investor and other parties are assumed to beconverted into the invested unit After the equity of the company, the impact includes the current convertible warrants, stock optionsand convertible corporate bonds issued by the investee.When the Company directly or indirectly owns more than 20% (including 20%) but less than 50% of the voting shares of the investedunit, it is generally considered to have a significant impact on the invested unit, unless there is clear evidence that such circumstancescannot participate in the production and operation decisions of the invested unit, and does not have a significant impact; when theCompany owns less than 20% (excluding) voting rights of the invested unit, it generally does not consider it to have a significantimpact on the invested unit unless there is clear evidence that Under these circumstances, it can participate in the production andoperation decisions of the invested unit and have a significant impact.
(4) Impairment test method and impairment provision method
For the investments in subsidiaries, associates and joint ventures, the method of accruing asset impairment is shown in the NoteV-22.
15. Investment Property
Measurement model of investment real estateCosting method measurementDepreciation or amortization methodThe investment real estate refers to the real estate gaining the rent or capital appreciation or both. It includes rented land use right,holding land use right to be transferred after the appreciation and rented building, etc.The investment real estate is measured initially according to the cost and withdrawn depreciation or amortization as regulations offixed assets or intangible assets.The Company adopts the cost mode to conduct the subsequent measurement on the investment real estate, see the Note V-22 for themethod of withdrawing asset impairment provision.The difference between the disposal income of investment real estate sales, transfer, scrap or damage after deducting its book valueand related taxes is included in the current profit and loss.
16. Fixed Assets
(1) Conditions for Recognition
The term “fixed assets” refers to the tangible assets that simultaneously possess the features as follows: (a) they are held for the sakeof producing commodities, rendering labor service, renting or business management; and (b) their useful life is in excess of one fiscalyear.The fixed assets are only recognized when the relevant economic benefits probably flow in the Company and its cost could bereliable measured.The fixed assets of the Company are initially measured at the actual cost at the time of acquisition.The subsequent expenditures related to the fixed assets shall be included in the cost of the fixed assets when the economic benefitsrelated to the fixed assets are likely to flow into the Company and the costs can be measured reliably. The daily repair expenses offixed assets that do not meet the conditions of capitalized subsequent expenditures of fixed assets shall be included in the currentprofit and loss or the cost of relevant assets according to the beneficiaries when incurred. The book value of the replaced part shall beterminated.
(2) Test Method of Impairment of Fixed Assets and Method of Impairment ProvisionPlease refer to Note V-22 for details.
(3) Depreciation Methods
| Category of fixed assets | Method | Useful life | Salvage value (%) | Annual deprecation (%) |
| Housing and building | Average method of useful life | 5-30 | 0-10 | 20.00-3.00 |
| Machinery equipments | Average method of useful life | 10-18 | 0-10 | 10.00-5.00 |
| Transportation vehicle | Average method of useful life | 5 | 0-10 | 20.00-18.00 |
| Electronic equipments and others | Average method of useful life | 5 | 0-10 | 20.00-18.00 |
(4) At the end of each year, review is carried out by the Company for the service life, estimated net residualvalue and depreciation method of fixed assets.If there is any difference between the expected service life and the original estimated service life, the service life of fixed assets willbe adjusted; if there is any difference between the expected net residual value and the original estimated net residual value, theexpected net residual value will be adjusted.
(5) Disposal of Fixed Assets
A fixed asset shall be derecognized when it is disposed of or it is expected that no economic benefit can be generated by using ordisposing of it. The amount of the disposal income of sales, transfer, scrap or damage of the fixed asset after deducting its book valueand related taxes is included in the current profit and loss.
17. Construction in Progress
Construction in process is measured at actual cost. Actual cost comprises construction costs, borrowing costs that are eligible forcapitalization before the fixed assets being ready for their intended us and other relevant costs.Construction in process is transferred to fixed assets when the assets are ready for their intended use.See the details of the impairment provision withdrawal method of the construction in progress to Notes V-22.
18. Engineering Materials
Engineering materials of the Company refer to various materials prepared for projects under construction, including engineeringmaterials, equipment not yet installed, tools and instruments prepared for production, etc.The purchased engineering materials will be measured according to the cost. The received engineering materials will be transferredto the project under construction, and the remaining engineering materials after the completion of the project will be stored asinventory.Please refer to Note V (22) for the method of provision for impairment of assets for engineering materials.In the balance sheet, the ending balance of engineering materials is listed in the "project under construction" item.
19. Borrowing Costs
(1) Confirmation principle of Capitalized Borrowing Expense
The borrowing expenses incurred by the Company, if can directly belong to acquisition, construction or production of assets meetingcapitalization conditions, are capitalized and included in relevant asset cost; other borrowing expenses are confirmed as expenseaccording to its amount at the time of occurrence and included in the current profits and losses. If the borrowing expenses meet thefollowing conditions, capitalization starts:
①Assets expenditure has occurred, and asset expenditure includes the expenditure occurring in the form of payment in cash,transferring noncash asset or assuming interest bearing debt for acquiring, constructing or producing the assets meeting capitalization
conditions;
② Borrowing expenses have occurred;
③The acquisition, construction or production activities required for making assets usable or saleable as intended have started.
(2) Capitalization period of borrowing expenses
When the Company acquires, constructs or produces assets, which meet capitalization conditions and reach the intended usable orsaleable status, the borrowing expenses stop capitalization. The borrowing expenses that occur after the assets meeting capitalizationconditions reach the intended usable or saleable status are confirmed as expenses according to its amount at the time of occurrence andare included in the current profits and losses.If the assets meeting capital conditions generate improper interruption in the course of acquisition, construction or production, and theinterruption time continuously exceeds three months, capitalization of borrowing expenses suspends; the borrowing expenses in thenormal interruption period are continually capitalized.
(3) Capitalization rate of borrowing expenses and calculation method of capitalized amountThe interest expenses of special borrowing actually occurring in the current period, minus the interest income of the unused borrowedcapital obtained from depositing in bank or the gain on temporary investment, are capitalized; for common borrowing, the weightedaverage of asset expenditure of the part that the cumulative asset expenditure exceeds special borrowing is multiplied by thecapitalization rate of the occupied common borrowing to determine capitalization amount. Capitalization rate is calculated anddetermined according to the weighted average rate of common borrowing.In the period of capitalization, the exchange difference of special borrowing in foreign currency is fully capitalized; the exchangedifference of special borrowing in foreign currency is included in the current profits and losses.
20. Right-of-use Assets
(1) Recognition conditions for right-of-use assets
The term "right-of-use assets" refers to the right of the lessee to use the leased assets during the lease term. At the start date of thelease term. The Company initially measures the right-of-use assets at cost. The cost includes: a) the initial measurement amount oflease obligations; b) the lease payment amount paid on or prior to the inception of the lease (less the related amount of leaseincentives already enjoyed if any); c) the initial direct cost incurred by the lessee; and d) the anticipated cost of dismantling andremoving the leasehold property, restoring the site where the leasehold property is located, or bringing the leasehold property back tothe state agreed upon in the lease terms. As the lessee, the Company shall recognize and measure the cost of demolition andrestoration in accordance with the Accounting Standards for Business Enterprises No.13 - Contingencies. Subsequent adjustments aremade for any re-measurement of the lease liabilities.
(2) Depreciation method of right-of-use assets
The company uses the straight-line method for depreciation. Where it can be reasonably certain that the Company, the lessee, canobtain ownership of the leased assets at the expiry of the lease term, the leased assets are depreciated over the residual service life.Where it cannot be reasonably certain that the Company can obtain ownership of the leased assets at the end of the lease term, theleased assets are depreciated at the shorter of the lease term and the residual service life of the leased assets.
(3) Impairment test method and impairment provision method of right-of-use assets
See Note V-22.
21. Intangible Assets
(1) Pricing Method, Useful Life and Impairment Test
The intangible assets of the Company include land use right, patent right, etc.Intangible assets are initially measured at cost, and their service life is analyzed and determined when intangible assets are acquired.
If the service life of intangible assets is limited, the intangible assets shall be amortized by the method that can reflect the expectedrealization method of the economic benefits related to the assets within the expected service life since they are available for use. Thestraight-line method shall be used for amortization if no expected realization method can be determined reliably. Intangible assetswith uncertain service life shall not be amortized.The amortization method of intangible assets with limited service life is as follows:
| Category | Service life | Amortization method | Note |
| Land use right | Stipulated in the land certificate | Method of line |
Patent use right
| Patent use right | 10 years | Method of line | |
| Software use right | 1-3 years | Method of line |
Brand use right
| Brand use right | 10 years | Method of line |
At the end of each year, the Company reviews the service life and amortization method of intangible assets with limited service life.If the estimate is different from the previous one, the original estimate shall be adjusted and treated as per accounting estimatechange.If it is estimated that an intangible asset can no longer bring future economic benefits to the enterprise on the date of balance sheet,this carrying amount of the intangible asset shall be transferred into the current profit and loss.The method of withdrawing impairment on intangible assets was stated in the Note V-22.
(2) Accounting Policy for Internal Research and Development ExpendituresThe expenditures for internal research and development projects of an enterprise shall be classified into research expenditures anddevelopment expenditures.The research expenditures shall be recorded into the profit or loss for the current period.The development expenditures can be capitalized only when they satisfy the following conditions simultaneously: ① It is feasibletechnically to finish intangible assets for use or sale; ② It is intended to finish and use or sell the intangible assets; ③ The usefulnessof methods for intangible assets to generate economic benefits shall be proved, including being able to prove that there is a potentialmarket for the products manufactured by applying the intangible assets or there is a potential market for the intangible assets itself orthe intangible assets will be used internally; ④ It is able to finish the development of the intangible assets, and able to use or sell theintangible assets, with the support of sufficient technologies, financial resources and other resources; ⑤ The developmentexpenditures of the intangible assets can be reliably measured. The development expenditures shall be recorded into profit or loss forthe current period when they don’t satisfy the following conditions.The research and development project of the Company will enter the development stage after meeting the above conditions and theproject is approved and initiated through technical feasibility and economic feasibility study.The capitalized expenditure in the development stage is listed as expenditure for development on the balance sheet, and it will betransferred to intangible assets from the date when the project reaches the intended purpose.
22. Impairment of Long-term Assets
For long term equity investment in subsidiaries, associated enterprises and joint ventures, investment real estate which follow-upmeasurement is carried out by cost pattern, fixed assets, construction in progress, right-of-use assets, intangible assets, businessreputation, etc. (excluding inventory, investment property measured at fair value, deferred income tax assets, financial assets), theimpairment of assets shall be determined according to the following methods:
On the date of the balance sheet, determination shall be made to see whether there is any sign of possible impairment of assets. If thereis, the Company will estimate its recoverable amount and conduct impairment test. For goodwill, intangible assets with uncertain
service life and intangible assets that have not reached the serviceable state due to business merger, impairment test shall be carried outevery year regardless of whether there is any sign of impairment.The recoverable amount is determined according to the net amount of the fair value of the asset minus the disposal expenses and thepresent value of the expected future cash flow of the asset, the higher amount shall be prevail. The Company estimates the recoverableamount on the basis of a single asset. If it is difficult to estimate the recoverable amount of a single asset, the recoverable amount of theasset group shall be determined based on the asset group to which the asset belongs. The asset group is determined on the basis ofwhether the main cash inflow generated by the asset group is independent of the cash inflow of other assets or asset groups.When the recoverable amount of an asset or asset group is lower than its carrying amount, the group will write down its carryingamount to the recoverable amount, and the written down amount will be included in the current profit and loss, and the correspondingasset impairment reserve will be accrued.Regarding the impairment test of business reputation, the carrying amount of business reputation formed by business merger shall beapportioned to the relevant asset group in a reasonable way from the date of purchase. If it is difficult to apportion to the relevant assetgroup, it shall be apportioned to the relevant combination of asset group. The relevant asset group or combination of asset groups is theone that can benefit from the synergy effect of business merger, and is the one smaller than the reportable segment determined by theCompany.In the impairment test, if there is any sign of impairment in the asset group or combination of asset groups related to business reputation,first, impairment test shall be carried out on the asset group or combination of asset groups not containing business reputation, tocalculate the recoverable amount and recognize the corresponding impairment loss. Then impairment test shall be carried out on theasset group or combination of asset group containing business reputation to compare the carrying amount with the recoverable amount.If the recoverable amount is lower than the carrying amount, the impairment loss of business reputation shall be recognized.Once the impairment loss of assets is recognized, it will not be reversed in the future accounting period.
23. Long-term Deferred Expenses
The long-term expenses to be amortized incurred by the Company are valued at the actual cost and amortized averagely according tothe expected benefit period. For long-term expenses to be amortized, the amortized value that cannot benefit the future accountingperiod shall be included in the current profit and loss.
24. Payroll
(1) Accounting Treatment of Short-term Compensation
During the accounting period in which employees provide services, the Company recognizes the actual employee wages, bonuses,social insurance premiums such as medical insurance premiums, industrial injury insurance premiums, and maternity insurancepremiums and housing provident funds paid to employees according to the prescribed standards and proportions as liabilities andincluded them in the current profit and loss or related asset costs. If the liability is not expected to be fully paid within twelve monthsafter the end of the annual reporting period for employees to provide related services, and the financial impact is significant, theliability will be measured at the discounted amount.
(2) Accounting Treatment of the Welfare after Departure
The post-employment benefit plan includes a defined contribution plan and a defined benefit plan. Among them, the definedcontribution plan refers to the post-employment benefit plan that the enterprise no longer assumes further payment obligations afterthe fixed fund has paid a fixed fee; the defined benefit plan refers to the post-employment benefit plan other than the established
contribution plan.Set withdrawal planThe set contribution plan includes basic pension insurance and unemployment insurance.During the accounting period in which employees provide services, the amount of deposit payable calculated according to the setwithdrawal plan is recognized as a liability and included in the current profit and loss or related asset costs.Define a benefit planFor the defined benefit plan, an independent actuary performs an actuarial valuation on the annual balance sheet date, and the cost ofproviding benefits is determined by the expected cumulative benefit unit method. The employee compensation cost caused by theCompany's defined benefit plan includes the following components:
①Service cost, including current service cost, past service cost and settlement gains or losses. Among them, the current service costrefers to the increase in the present value of the defined benefit plan obligations caused by the employees providing services in thecurrent period; the past service cost refers to the defined benefit related to the employee services in the previous period caused by themodification of the defined benefit plan An increase or decrease in the present value of plan obligations.
② The net interest of the net liabilities or net assets of the defined benefit plan, including the interest income of the plan assets, theinterest expense of the defined benefit plan obligations and the interest affected by the asset ceiling.
③ Re-measure the changes caused by the net liabilities or net assets of the defined benefit plan.Unless other accounting standards require or allow employee benefit costs to be included in the cost of assets, the Company willinclude the above items ① and ② into the current profit and loss; item ③ is included in other comprehensive income and will not betransferred back to profit or loss in the subsequent accounting period When the defined benefit plan is terminated, all the partsoriginally included in other comprehensive income are carried forward to undistributed profits within the scope of equity.
(3) Accounting Treatment of the Demission Welfare
The Company relieves the labor relation with the employees before the due date of the labor contacts or puts forward the advice ofproviding the compensation for urging the employees volunteered to receive the downsizing and when the Company could notunilaterally withdraw the demission welfare owning to the relieving plan of the labor relation or the downsizing advice, shouldconfirm the liabilities of the employees’ salary from the demission welfare on the earlier day between the cost confirmed by theCompany and the cost related to the reorganization of the payment of the demission welfare and includes which in the current gainsand losses.Regarding the implementation of internal retirement plan of the employees, the economic compensation before the official retirementdate belongs to the dismissal welfare. From the date when the employees stop providing services to the normal retirement date, thewages and social insurance premiums to be paid to the early retired employees shall be included in the current profit and loss at onetime. Financial compensation (such as normal pension) after the official retirement date shall be handled as welfare after separation.
(4) Accounting Treatment of the Welfare of Other Long-term Staffs
Other long-term employee benefits provided by the Company to employees that meet the conditions of defined contribution plansshall be handled in accordance with the above-mentioned relevant provisions on defined contribution plans. Those in line with thedefined benefit plan shall be handled in accordance with the above-mentioned relevant provisions on the defined benefit plan.However, the part of "changes caused by remeasuring the net liabilities or net assets of the defined benefit plan" in the salary cost ofrelevant employees shall be included in the current profit and loss or the relevant asset cost.
25. Provisions
If the obligation related to contingency meets the following conditions at the same time, the Company will recognize it as aprovision.
(1) The obligation is the current obligation assumed by the Company;
(2) The performance of the obligation is likely to cause an outflow of economic benefits of the Company;
(3) The amount of the obligation can be measured reliably.
The provisions are initially measured in accordance with the optimal estimate of the necessary expenditures for the fulfillment of thecurrent obligation, with factors such as risks, uncertainty and the time value of money related to contingencies taken intoconsideration comprehensively. Where the time value of money has a significant impact, the best estimate is determined bydiscounting the relevant future cash outflow. The Company re-checks the book value of the provisions on the balance sheet date andadjusts the book value to reflect the current best estimate.If all or part of the expenditure required to settle recognized provisions is expected to be compensated by a third party or other parties,the amount of compensation shall be recognized separately as an asset only when it is substantially certain that it will be received.The recognized amount of compensation shall not exceed the book value of the recognized liabilities.
26. Share-based Payments and Equity Instruments
(1) Category of share-based payment
The share-based payments of the Company are divided into equity-settled share payments and cash-settled share payments.
(2) Method of determining the fair value of equity instruments
The Company shall determine the fair value of equity instruments such as options granted in active markets according to thequotations in active markets. For granted equity instruments such as options without active markets, the fair value is determined byoption pricing model. The following factors shall be considered for the selected option pricing model: A. Exercise price of the option;B. Expiration date of the option; C. Current price of the object shares; D. Expected fluctuation rate of stock price; E. Estimateddividends of shares; F. Risk-free interest rate within the option term.
(3) Ground for recognizing the optimal estimation of feasible right equity instruments
On each balance sheet date during the waiting period, the Company shall make the optimal estimate based on subsequent informationsuch as the latest change in the number of employees with feasible rights, and revise the number of equity instruments for theestimated feasible rights. On the feasible right date, the final estimated number of feasible right equity instruments shall be the sameas the actual number of feasible rights.
(4) Relevant accounting treatment for implementing, modifying and terminating share-based payment planEquity-settled share-based payments shall be measured at the fair value of the equity instruments granted to employees. Where theright is exercised immediately after the grant, relevant costs or fees shall be included in accordance with the fair value of the equityinstruments on the grant date to accordingly increase the capital reserve. Where the right is exercised upon the completion of theservices during the waiting period or the achievement of the specified result conditions, the services obtained in the current periodshall be included in the relevant costs or fees and the capital reserve according to the fair value of the equity instruments on the grant
date based on the optimal estimate of the number of feasible right equity instruments on each balance sheet date during the waitingperiod. The recognized related costs or fees and total owner's equity after the feasible right date shall not be adjusted any more.The cash-settled share-based payments shall be measured according to the fair value of liabilities calculated and determined on thebasis of shares or other equity instruments, which are assumed by the Company. Where the right is exercised immediately after thegrant, the fair value of the liabilities assumed by the Company shall be included in the relevant costs or fees on the grant date, so as toaccordingly increase the liabilities. For the cash-settled share-based payments, for which the right is exercised upon the completion ofthe services during the waiting period or the achievement of the specified result conditions, the services obtained in the current periodshall be included in costs or fees and corresponding liabilities according to the fair value amount of liabilities assumed by theCompany based on the optimal estimate of feasible status on each balance sheet date during the waiting period. On each balancesheet date and settlement date before the relevant liabilities are settled, the fair value of the liabilities shall be re-measured, and thechanges shall be included in the current profit and loss.When the Company modifies a share-based payment plan, if the modification increases the fair value of the equity instrumentsgranted, the increase in the services acquired shall be recognized accordingly according to the increase in the fair value of the equityinstruments; if the modification increases the number of equity instruments granted, the fair value of the increased equity instrumentsshall be recognized accordingly as the increase in the services acquired. The increase in the fair value of the equity instruments refersto the difference between the fair values of the equity instruments before and after the modification on the modification date. If themodification reduces the total fair value of the share-based payment or any other method not conducive to the employees is adoptedto modify the terms and conditions of the share-based payment plan, the accounting treatment of the services acquired wouldcontinue, as if such change had never occurred, unless the Company cancels some or all of the granted equity instruments.During the waiting period, if the granted equity instrument is canceled (except for the cancellation due to non-market conditions thatdo not meet the feasible conditions), the Company shall treat the canceled equity instrument as an accelerated exercise, immediatelyinclude the left amount to be recognized during the waiting period in the current profit and loss, and recognize the capital reserve atthe same time. Where the employee or other party can choose to meet the non-feasible right condition but fails during the waitingperiod, it shall be treated as the cancellation of the granted equity instrument.
27. Revenue
Accounting policies adopted for the recognition and measurement of revenue
(1) General principle
The Company recognizes revenue when it has fulfilled its contract performance obligation in a contract, namely, when the customerobtains the control over the related commodity or service.If a contract contains two or more performance obligations, the Company allocates transaction price to single performanceobligations on the contract commencement date according to the relative ratio of separate price of goods or services committed bysingle performance obligation, and income is measured according to the transaction price allocated to single performance obligation.When meeting one of the following conditions, the Company belongs to performance of contract performing obligations in a period,or otherwise, the Company belongs to performance of contract performing obligations at a point of time:
①While the Company is performing the contract, the customer acquires and consumes the economic benefit arising fromperformance by the Company.
②The customer can control the goods in construction in the course of performance by the Company.
③The goods outputted in the course of performance by the Company have irreplaceable purpose, and the Company has the right tocollection of money for the completed performance part cumulative up to now in the whole term of contract.For the performance obligation performed in a period, the Company confirms income according to the performance progress in suchperiod. When the performance progress cannot be reasonably determined, if the cost that the Company has incurred is expected to becompensated, income is confirmed according to the cost amount that has occurred, until the performance progress can be reasonably
determined.For the performance obligation performed at a point of time, income is confirmed at the point of time when the customer acquires thecontrol right to relevant goods or services. When it judges whether the customer has acquired the control right to the goods orservices, the Company will consider the following indications:
①The Company enjoys the current collection right to the goods or services, i.e. the customer undertakes current payment obligationto the goods.
②The Company has transferred the legal ownership of the goods to the customer, that is, the customer has owned the legalownership of the goods.
③The Company has transferred the kind of the goods to the customer, namely, the customer has possessed the good in kind.
④The Company has transferred the major risks and remuneration on the ownership of the goods, i.e. the customer has acquired themajor risks and remuneration on the ownership of the goods.
④The customer has accepted the goods or services.
⑤Other indications showing that the customer has acquired the control right to the goods.The Company has transferred goods or services and has the right to collect consideration (and the right depends on factors other thantime elapse) as contract assets, and contract asset is accrued impairment on the basis of expected credit loss (refer to Note V 10(6)).The right of the Company, unconditionally (only depending on time elapse) charging consideration from the customer, is listed asreceivable. The obligation of the Company that shall transfer goods or services to the customer for the consideration that has been orshall be collected is liability to the contract.The contract assets and contract liabilities under the same contract are listed in net amount. If net amount is debit balance, it is listedin the items “contract asset” or “other non-current asset” according to its fluidity; if net amount is credit balance, it is listed in theitems “contract liability” or “other non-current liability” according to its fluidity.
(2) Specific methods
The specific income confirming methods of the Company are following:
For income of domestic products, after the Company delivers products to the purchaser according to the provisions of the contractand the purchaser confirms receipt, the purchaser acquires the control right of products, and the Company confirms income.For income of exportable products, after the Company completes customs declaration of products, departure and obtains bill oflading according to the provisions of the contract, the purchaser acquires the control right of products, and the Company confirmsincome.Differences in accounting policies for revenue recognition due to different business models of the same type of business
28. Government Grants
Government grants are recognized when they meet the conditions attached to government grants and when they can be received.Government grants for monetary assets shall be measured according to the amount received or receivable. Government grants fornon-monetary assets shall be measured by fair value, and they shall be measured by the nominal amount of RMB1 if the fair valuecannot be obtained reliably. Asset related government grants refer to the government grants obtained by the Company for acquisitionand construction or other forms of long-term assets. In addition, they are government grants related to income.Regarding the government grants that the government document does not specify the object of subsidy and can form long-term assets,the part of government subsidy corresponding to the asset value shall be regarded as the asset-related government subsidy and the restshall be regarded as income-related government subsidy. If it is difficult to distinguish, the government subsidy shall be regarded as theincome-related government subsidy.The government grants related to assets shall be recognized as the deferred income, which shall be included in the profit and loss ininstallment in a reasonable and systematic way within the service life of the relevant assets. Income-related government grants whichare used to compensate the relevant costs or losses incurred shall be included in the current profit and loss. Those used to compensate
the relevant costs or losses in the later period shall be included in the deferred income, and shall be included in the current profit andloss during the recognition period of the relevant costs or losses. The government grants measured according to the nominal amountshall be directly included in the current profit and loss. The same method is adopted for the same or similar government subsidybusinesses of the Company.Government grants related to daily activities shall be included in other incomes according to the essence of business transactions.Government grants irrelevant to daily activities are included in non-business income.When the recognized government grants need to be returned, and are used to offset the carrying value of related assets when initiallyrecognized, the carrying value of the assets shall be adjusted; the book balance of relevant deferred income shall be offset if there is abalance of relevant deferred income, and the excess part shall be included in the current profit and loss. Otherwise, it shall be directlyincluded in the current profit and loss.Regarding the interest subsidy of the policy preferential loan obtained, if the Ministry of Finance allocates the interest subsidy to theloan bank, the actual received loan amount shall be taken as the entry value of the loan, and the loan cost shall be calculated accordingto the loan principal and the policy preferential interest rate. If the Ministry of Finance allocates the interest subsidy directly to theCompany, the interest subsidy will offset the borrowing costs.
29. Deferred Income Tax Assets/Deferred Income Tax Liabilities
Income tax includes current income tax and deferred income tax. All shall be included in the current profit and loss as income taxexpense except the adjustment business reputation arising from business merger, or the deferred income tax related to the transactionsor events directly included in the owner's equity is included in the owner's equity.Pursuant to the temporary difference between the carrying amount of assets and liabilities on the date of balance sheet and the tax basis,the Company recognizes the deferred income tax by balance sheet liability method.For all taxable temporary differences, related deferred income tax liabilities are recognized, unless the taxable temporary differencesare generated in the following transactions:
(1) The initial recognition of business reputation or the initial recognition of assets or liabilities arising from transactions with thefollowing characteristics: The transaction is not a business merger, and does not affect the accounting profit or taxable income when itoccurs;
(2) Regarding the taxable temporary difference related to the investment of subsidiaries, joint ventures and associated enterprises, thetime of reversal of the temporary difference can be controlled and the temporary difference is unlikely to be reversed in the foreseeablefuture.For deductible temporary differences, deductible losses and tax credits that can be carried forward in subsequent years, the Company islikely to obtain the future taxable income as the limit to offset the deductible temporary differences, deductible losses and tax credits, inwhich way to recognize the deferred income tax assets arising from the deductible temporary differences, deductible losses and taxcredits, unless the deductible temporary differences are generated in the following transactions:
(1) The transaction is not a business merger, and does not affect the accounting profit nor taxable income when it occurs;
(2) The corresponding deferred income tax assets shall be recognized if the deductible temporary differences related to the investmentof subsidiaries, joint ventures and associated enterprises meet the following conditions simultaneously: The temporary differences arelikely to be reversed in the foreseeable future, and the taxable income used to deduct the deductible temporary differences is likely to beobtained in the future.On the date of the balance sheet, the income tax assets and deferred income tax liabilities shall be measured by the Company on thebasis of the applicable tax rate during the period when the assets are expected to be recovered or the liabilities are expected to be paidoff, and the income tax impact on the expected recovery of assets on the date of the balance sheet or on the method to pay off theliabilities shall be reflected.
The book value of deferred income tax assets shall be reviewed at each balance sheet date. If it is unlikely to obtain sufficient taxableincome to offset against the benefit of the deferred income tax asset, the book value of the deferred income tax assets shall be writtendown. Any such write-down should be subsequently reversed where it becomes probable that sufficient taxable income will beavailable.
30. Lease
(1) As the lessee
On the commencement date of the lease term, the Company recognizes the right-of-use assets and lease liabilities for all leases,except for short-term leases and low-value asset leases with simplified treatment.For accounting policies for the right-of-use assets, see Note V-20.Lease liabilities are initially measured in line with the lease payments not yet paid on the commencement date of the lease term usingthe present value calculated by the interest rate implicit in lease. If the interest rate implicit in lease cannot be determined, theincremental borrowing rate shall be used as the discount rate. Lease payments include: Fixed payment and substantial fixed payment,and the relevant amount after deducting the lease incentive if any; variable lease payments depending on index or ratio; exercise priceof the purchased option, provided that the lessee reasonably determines that the option will be exercised; the amount to be paid forthe exercise of the lease termination options, provided that the lease term reflects that the lessee will exercise the options to terminatethe lease; and estimated payments due to the guaranteed residual value provided by the lessee. Subsequently, it calculates the interestexpenses of the lease liabilities during each period of the lease term at a fixed periodic interest rate, and includes them in currentprofit and loss. Variable lease payments that are not covered in the measurement of the lease liabilities are included in current profitor loss when actually incurred.Short-term leaseA short-term lease refers to a lease for a period not exceeding 12 months on the commencement date of the lease, except for leaseswith a purchase option.The Company includes the short-term lease payment in the cost of relevant assets or the current profit and loss in each period of thelease term by the straight-line method.Low-value asset leaseA low-value asset lease refers to a lease where the value is lower than RMB40,000 and a single leased asset is a new asset.The Company includes the lease payment of the low-value asset lease in the cost of relevant assets or the current profit and loss ineach period of the lease term by the straight-line method.For low-value asset lease, it chooses to adopt the aforesaid simplified treatment method in line with the specific status of each lease.Lease changeIf a lease changes and meets the following conditions simultaneously, the lease change shall be regarded as a separate lease foraccounting treatment: a) The lease change expands its lease cope by increasing one or multiple use rights of lease assets; and b) Theincreased consideration is equivalent to the amount of the separate price for the expanded part of the lease, which is adjustedaccording to the contract.Where the lease change is not regarded as a separate lease for accounting treatment, on the effective date of the lease change, by theCompany, the consideration of the contract is amortized again upon change, the lease term is redetermined, and the lease liabilitiesare remeasured according to the present value that is calculated by the lease payments and the revised discount rate upon change.The Company shall correspondingly reduce the book value of the right-of-use assets and include the profit or loss of the leaseterminated in part or whole in the current profit or loss, if the lease change narrows the scope of lease or shortens the lease term.The Company shall correspondingly adjust the book value of the right-of-use assets, if other lease changes result in the re-calculationof the lease liability.
(2) As the lessor
When the Company is a lessor, it shall recognize leases that substantially transfer all risks and remuneration related to the ownershipof assets as finance leases, and leases other than finance leases as operating leases.Financial leaseIn a finance lease, the Company recognizes the net lease investment as the book value of finance lease receivables on thecommencement date of the lease term. The net lease investment is the sum of the unguaranteed residual value and the present valueof lease receivables not yet received on the commencement date of the lease term at the interest rate implicit in lease. The Companycalculates and confirms the interest income at a fixed periodic interest rate in each period in the lease term. Variable lease paymentsobtained that are not included in the net lease investment for measurement, where the Company is the lessor, are included in theprofit or loss of the current period when actually incurred.Accounting treatment shall be conducted for the derecognition and impairment of finance lease receivables in accordance with theprovisions of the Accounting Standard for Business Enterprises No.22 - Recognition and Measurement of Financial Instruments andthe Accounting Standard for Business Enterprises No.23 - Transfer of Financial Assets.Operating leasesThe Company shall recognize the current profit and loss of the rent of the operating lease in each period of the lease term by thestraight-line method. The initial direct costs related to the operating lease shall be capitalized, amortized within the lease term on thesame basis as the recognition of rental earning, and included in profit or loss for the current period. The received variable leasepayments related to the operating lease that are not included in the lease payments receivable are included in profit or loss for thecurrent period when they are actually incurred.Lease changeWhere an operating lease changes, the accounting treatment is conducted for it which is regarded as a new lease from the effectivedate of the change, and receivables in advance or lease receivables related to lease before change are deemed as the receivables in thenew lease.Where a finance lease changes and meets the following conditions simultaneously, the change is regarded as a separate lease by theCompany for accounting treatment: a) The change expands its lease cope by increasing one or multiple use rights of lease assets; andb) The increased consideration is equivalent to the amount of the separate price for the expanded part of the lease, which is adjustedaccording to the contract.Where a finance lease changes and is not regarded as a separate lease for accounting treatment, the Company treats the changed leaseunder the following circumstances: a) If the change comes into force on the commencement date of the lease term, the lease will beclarified as an operating lease, while it will be regarded as a new lease for accounting treatment by the Company on the effective dateof the lease change, and the net lease investment before the effective date of lease change will be regarded as the book value of leaseassets; and b) If the change comes into force on the commencement date of the lease term, the lease will be clarified as a financelease, the Company will carry out accounting treatment in accordance with the provisions on modification or renegotiation of acontract of the Accounting Standard for Business Enterprises No. 22 - Recognition and Measurement of Financial Instruments.
31. Repurchase of Shares
Before the shares repurchased by the Company are cancelled or transferred, they are managed as treasury shares, and all expendituresfor the repurchase of shares are transferred to the cost of treasury shares. Consideration and transaction costs paid in share repurchasereduce shareholders' equity. When buying back, transferring or cancelling shares in the Company, no profits or losses are recognized.The transfer of inventory shares shall be credited to the capital reserve on the basis of the difference between the amount actuallyreceived and the carrying amount of the treasury stock. Write off surplus reserves and undistributed profits if capital reserves areinsufficient to offset. Write-off of treasury stocks can reduce shares in par with par value and number of write-out stocks. The capitalreserve is offset based on the difference between book balance and face value of cancelled treasury stocks. Write off surplus reserves
and undistributed profits if capital reserves are insufficient to offset.
32. Restricted Shares
In the equity incentive plan, the Company grants restricted stocks to the incentive personnel, who firstly subscribe the stocks. If theunlocking conditions specified in the equity incentive plan are not met, the Company will repurchase the stocks at the previouslyagreed price. Where the restricted stocks issued to the employees has gone through capital increase procedures such as registration inaccordance with relevant provisions, the Company shall, on the grant date, recognize the share capital and the capital reserve (sharecapital premium) in conformity with the subscription payment received from the employees. Meanwhile, it shall recognize thetreasury stocks and other payables with respect to repurchase obligations.
33. Changes in Main Accounting Policies and Estimates
(1) Significant Changes in Accounting Policies
√ Applicable □ Not applicable
| Contents of changes in accounting policies and reasons thereof | Approval procedures | Note |
| The Ministry of Finance issued the Accounting Standards for Business Enterprise No.21-Leases (Revised) in 2018 and required that those enterprises that are listed both at home and abroad and those enterprises that are listed overseas and adopt the International Financial Reporting Standards or the Accounting Standards for Business Enterprises for preparation of financial statements should implement it from 1 January 2019; the other enterprises that adopt the Accounting Standards for Business Enterprises should implement it from 1 January 2021. Main changes are: 1. Under the New Lease Standards, except for short-term leases and low-value asset leases, the lessees will no longer distinguish finance leases from operating leases. All leases are subject to the same accounting treatment, and the right-of-use assets and lease liabilities must be both recognized; 2. For the right-of-use assets, if the lessee reasonably recognizes that it can obtain the ownership of the leased assets at the | The Company held the 21st Meeting of the 9th Board of Directors on 29 March 2021 and approved the implementation of the new standards governing leases since 1 January 2021 and adjusted related contents of accounting policies. | Refer to Note V. 20 and 30 for details about new accounting policies. |
For contracts that have existed before the first execution date, the Company chooses not to re-evaluate whether they are leases orleases inclusive on the first execution date. For contracts that are signed or changed after the first execution date, the Companyevaluates whether they are leases or leases inclusive in conformity with the definition of lease in the New Leasing Standards.The definition of lease in the New Leasing Standards does not have a material impact on the scope of the Company's contracts thatmeet the definition of lease.As a lesseeThe New Leasing Standards requires that the lessor shall recognize right-of-use assets and lease liabilities of all leases, except forsimplified short-term leases and low-value asset leases, and ensure depreciation and interest expenses separately.The New Leasing Standards allows the lessor to select one of the following methods for bridging accounting treatment of the lease.
In accordance with the provisions of the Accounting Standard for Business Enterprises No.28 - Accounting Policies, AccountingEstimated Changes and Error Correction (hereinafter referred to as "the Standard"), the retrospective adjustment method is adoptedfor treatment.The retained earnings at the beginning of the year and the amount of relevant projects of financial statements for the firstexecution of the Standard are adjusted based on the cumulative impact of the first execution of the Standard, without adjustingcomparable period information.The difference between the New Leasing Standards and the current leasing standards on the first execution date is included in theretained earnings at the beginning of 2021 through retroactive adjustment by the Company, in accordance with the provisions of theNew Leasing Standards. Simultaneously, it does not adjust the data of comparable financial statements.For finance leases before the first execution date, it respectively measures the right-of-use assets and lease liabilities in line withthe original book value of the finance lease assets and the finance lease payables.For operating leases before the first execution date, when measuring the lease liabilities in conformity with the present value ofthe residual lease payments discounted by the incremental borrowing rate on the first execution date, with the amount of all leasesbeing equivalent to lease liabilities, it necessarily adjusts and measures the right-of-use assets according to the advance rentalpayments.On the first execution date, the Company carries out impairment test and corresponding accounting treatment for theright-of-use assets in line with Note V-20.For operating leases in which the lease assets are low-value assets before the first execution date or operating leases to be completedwithin 12 months, the Company adopts simplified treatment without recognizing the right-of-use assets or lease liabilities.For operating leases before the first execution date, it adopts the following simplified treatment:
The same discount rate is utilized for leases with similar features when measuring lease liabilities, where the used incrementalborrowing rates are 3.85% and 4.65%; the measurement for right-of-use assets does not include the initial direct fees.Where there is renewal option or termination option, the lease term is determined by the Company based on the actual exerciseof option and the latest other status before the first execution date.As the substitute for the impairment test of right-of-use assets, the Company evaluates whether the contract containing lease is aloss-making contract before the first execution date, and adjusts the right-of-use assets in conformity with the loss reserve amountincluded in the balance sheet before the first execution date.The accounting treatment is implemented for the lease change before the first execution date according to the final arrangementof the lease change.The impact of exercising the New Leasing Standards on the project of consolidated balance sheet is as follows:
| Item | Carrying amount before adjustment (31 December 2020) | Reclassified | Remeasured | Carrying amount after adjustment (1 January 2021) |
Assets:
| Assets: | ||||
| Fixed assets | 23,612,984.97 | -23,612,984.97 | ||
| Right-of-use assets | — | 140,547,131.81 | 128,815,114.07 | 269,362,245.88 |
Long-termprepaid expense
| Long-term prepaid expense | 116,934,146.84 | -116,934,146.84 | ||
| Total assets | 140,547,131.81 | 128,815,114.07 | 269,362,245.88 |
Liabilities:
| Liabilities: | ||||
| Lease liabilities | — | 128,815,114.07 | 128,815,114.07 |
Total liabilities
| Total liabilities | 128,815,114.07 | 128,815,114.07 |
For the minimum lease payment unpaid under a significant operating lease in the 2020 annual financial statements, the Companyadjusts the minimum operating lease payment unpaid under the original lease standards to the reconciliation statement of leaseliabilities recognized under the New Leasing Standards at the incremental borrowing rate of 1 January 2021 as a lessee, as follows:
| Minimum lease payments under significant operating leases on 31 December 2020 | A | 181,920,500.41 |
Less: Simplified short-term lease payments
| Less: Simplified short-term lease payments | B | |
| Less: Simplified low-value asset leases | C | |
| Add (or less): Adjustment of minimum lease payments due to re-evaluation of lease terms | D |
Add (or less): Adjustment of variable lease payments depending on indexor ratio
| Add (or less): Adjustment of variable lease payments depending on index or ratio | E | |
| Subtotal | F=A-B-C+/-D+/-E | 181,920,500.41 |
Less: VAT
| Less: VAT | G | 8,662,880.97 |
Adjusted commitments on operating leases
| Adjusted commitments on operating leases | H=F-G | 173,257,619.44 |
| Present value of operating lease payments on 1 January 2021 | I | 128,815,114.07 |
Add: Financing lease payable on 31 December 2020
| Add: Financing lease payable on 31 December 2020 | J | |
| Lease liabilities on 1 January 2021 | K=I+J | 128,815,114.07 |
Of which: Current portion of non-current liabilities
| Of which: Current portion of non-current liabilities |
The composition of carrying value of right-of-use assets on 1 January 2021 is as follows:
| Item | 1 January 2021 |
Right-of-use assets:
| Right-of-use assets: | |
| Right-of-use assets recognized from the operating lease before the first execution date | 269,362,245.88 |
| Financing lease assets recognized based on original lease standards |
Total:
| Total: | 269,362,245.88 |
Influence of implementation of the new lease standards on items of financial statements for 2021 is as follows:
| Consolidated balance sheet | 31 December 2021 | Based on original lease standards assumed | Increase/decrease (-) |
| Assets: |
Fixed assets
| Fixed assets | 5,559,649,164.65 | 5,581,837,140.31 | -22,187,975.66 |
| Right-of-use assets | 257,019,286.15 | -- | 257,019,286.15 |
Long-term prepaid expense
| Long-term prepaid expense | 672,601.04 | 121,424,154.46 | -120,751,553.42 |
| Total assets | 12,994,654,820.09 | 12,880,575,063.02 | 114,079,757.07 |
Liabilities:
| Liabilities: | |||
| Current portion of non-current liabilities | 8,877,404.52 | 8,500,000.00 | 377,404.52 |
Lease libilities
| Lease libilities | 121,357,658.41 | 121,357,658.41 | |
| Total liabilities | 4,621,177,426.73 | 4,499,442,363.80 | 121,735,062.93 |
Consolidated income statement
| Consolidated income statement | 2021 | Based on original lease standards assumed | Increase/decrease (-) |
| Finance costs | 44,988,908.41 | 39,524,885.66 | 5,464,022.75 |
Administrative expense
| Administrative expense | 335,380,025.54 | 333,188,742.43 | 2,191,283.11 |
As a lessorIn accordance with the New Leasing Standards, it is not necessary for the Company to adjust its lease as a lessor according to thebridging provisions, but it is necessary to conduct accounting treatment in line with the New Leasing Standards on the first executiondate for the New Leasing Standards.
(2) Significant Changes in Accounting Estimates
□ Applicable √ Not applicable
(3) Adjustments to the Financial Statements at the Beginning of the First Execution Year of any NewStandards Governing Leases since 2021
√ Applicable □ Not applicable
Whether need to adjust items of balance sheet at the beginning of the year
√ Yes □ No
Consolidated balance sheet
Unit: RMB
| Item | 31 December 2020 | 1 January 2021 | Adjusted |
| Current assets: | |||
| Monetary assets | 1,400,478,034.81 | 1,400,478,034.81 | |
| Held-for-trading financial assets | 268,456,216.98 | 268,456,216.98 | |
| Derivative financial assets | |||
| Notes receivable | 182,994,110.86 | 182,994,110.86 | |
| Accounts receivable | 522,425,219.87 | 522,425,219.87 | |
| Accounts receivable financing | 55,150,926.34 | 55,150,926.34 | |
| Prepayments | 19,611,775.28 | 19,611,775.28 | |
| Other receivables | 105,710,818.69 | 105,710,818.69 | |
| Including: Interest receivable | |||
| Dividends receivable | 75,488,652.49 | 75,488,652.49 | |
| Financial assets purchased under resale agreements |
| Inventories | 1,988,968,681.64 | 1,988,968,681.64 | |
| Contract assets | |||
| Assets held for sale | |||
| Current portion of non-current assets | 45,750,018.30 | 45,750,018.30 | |
| Other current assets | 433,432,258.63 | 433,432,258.63 | |
| Total current assets | 5,022,978,061.40 | 5,022,978,061.40 | |
| Non-current assets: | |||
| Long-term receivables | 41,053,183.15 | 41,053,183.15 | |
| Long-term equity investments | 138,079,577.25 | 138,079,577.25 | |
| Investments in other equity instruments | |||
| Other non-current financial assets | 156,915,620.25 | 156,915,620.25 | |
| Investment property | 22,263,668.85 | 22,263,668.85 | |
| Fixed assets | 5,661,592,991.66 | 5,637,980,006.69 | -23,612,984.97 |
| Construction in progress | 356,273,197.49 | 356,273,197.49 | |
| Right-of-use assets | 269,362,245.88 | 269,362,245.88 | |
| Intangible assets | 373,543,480.84 | 373,543,480.84 | |
| Development costs | |||
| Goodwill | 20,563,803.29 | 20,563,803.29 | |
| Long-term prepaid expense | 118,340,494.60 | 1,406,347.76 | -116,934,146.84 |
| Deferred income tax assets | 122,865,841.69 | 122,865,841.69 | |
| Other non-current assets | 95,434,040.18 | 95,434,040.18 | |
| Total non-current assets | 7,106,925,899.25 | 7,235,741,013.32 | 128,815,114.07 |
| Total assets | 12,129,903,960.65 | 12,258,719,074.72 | 128,815,114.07 |
| Current liabilities: | |||
| Short-term borrowings | 930,871,008.19 | 930,871,008.19 | |
| Notes payable | |||
| Accounts payable | 243,262,473.69 | 243,262,473.69 | |
| Advances from customers | |||
| Contract liabilities | 141,339,705.62 | 141,339,705.62 | |
| Employee benefits payable | 265,648,198.38 | 265,648,198.38 | |
| Taxes payable | 36,468,978.77 | 36,468,978.77 |
| Other payables | 17,587,470.79 | 17,587,470.79 | |
| Including: Interest payable | |||
| Dividends payable | 441,113.64 | 441,113.64 | |
| Current portion of non-current liabilities | 43,149,400.13 | 43,149,400.13 | |
| Other current liabilities | 192,574,674.68 | 192,574,674.68 | |
| Total current liabilities | 1,870,901,910.25 | 1,870,901,910.25 | |
| Non-current liabilities: | |||
| Insurance contract reserve | |||
| Long-term borrowings | 495,520,342.78 | 495,520,342.78 | |
| Bonds payable | 1,350,171,526.97 | 1,350,171,526.97 | |
| Lease liabilities | 128,815,114.07 | 128,815,114.07 | |
| Long-term payables | |||
| Long-term employee benefits payable | 62,137,656.00 | 62,137,656.00 | |
| Provisions | |||
| Deferred income | 173,862,983.31 | 173,862,983.31 | |
| Deferred income tax liabilities | 85,633,161.44 | 85,633,161.44 | |
| Other non-current liabilities | |||
| Total non-current liabilities | 2,167,325,670.50 | 2,296,140,784.57 | 128,815,114.07 |
| Total liabilities | 4,038,227,580.75 | 4,167,042,694.82 | 128,815,114.07 |
| Owners’ equity: | |||
| Share capital | 858,132,322.00 | 858,132,322.00 | |
| Other equity instruments | 71,386,451.81 | 71,386,451.81 | |
| Capital reserves | 255,912,488.01 | 255,912,488.01 | |
| Less: Treasury stock | |||
| Other comprehensive income | 1,308,922.89 | 1,308,922.89 | |
| Specific reserve | |||
| Surplus reserves | 1,154,017,457.79 | 1,154,017,457.79 | |
| General reserve | |||
| Retained earnings | 5,346,819,948.22 | 5,346,819,948.22 | |
| Total equity attributable to owners of the Company as the parent | 7,687,577,590.72 | 7,687,577,590.72 | |
| Non-controlling interests | 404,098,789.18 | 404,098,789.18 |
| Total owners’ equity | 8,091,676,379.90 | 8,091,676,379.90 | |
| Total liabilities and owners’ equity | 12,129,903,960.65 | 12,258,719,074.72 | 128,815,114.07 |
Balance Sheet of the Company as the Parent
Unit: RMB
| Item | 31 December 2020 | 1 January 2021 | Adjusted |
| Current assets: | |||
| Monetary assets | 729,437,231.33 | 729,437,231.33 | |
| Held-for-trading financial assets | 163,636,075.34 | 163,636,075.34 | |
| Derivative financial assets | |||
| Notes receivable | 108,863,689.79 | 108,863,689.79 | |
| Accounts receivable | 326,166,935.10 | 326,166,935.10 | |
| Accounts receivable financing | 48,764,088.05 | 48,764,088.05 | |
| Prepayments | 13,059,806.74 | 13,059,806.74 | |
| Other receivables | 1,500,882,682.19 | 1,500,882,682.19 | |
| Including: Interest receivable | |||
| Dividends receivable | 75,488,652.49 | 75,488,652.49 | |
| Inventories | 1,097,438,610.46 | 1,097,438,610.46 | |
| Contract assets | |||
| Assets held for sale | |||
| Current portion of non-current assets | 45,750,018.30 | 45,750,018.30 | |
| Other current assets | 247,860,882.02 | 247,860,882.02 | |
| Total current assets | 4,281,860,019.32 | 4,281,860,019.32 | |
| Non-current assets: | |||
| Investments in debt obligations | |||
| Investments in other debt obligations | |||
| Long-term receivables | 41,053,183.15 | 41,053,183.15 | |
| Long-term equity investments | 2,555,150,859.13 | 2,555,150,859.13 | |
| Investments in other equity instruments | |||
| Other non-current financial assets | 144,915,620.25 | 144,915,620.25 |
| Investment property | 29,734,239.22 | 29,734,239.22 | |
| Fixed assets | 2,471,686,117.72 | 2,471,686,117.72 | |
| Construction in progress | 48,694,822.74 | 48,694,822.74 | |
| Right-of-use assets | 130,978,971.80 | 130,978,971.80 | |
| Intangible assets | 225,128,308.75 | 225,128,308.75 | |
| Development costs | |||
| Goodwill | |||
| Long-term prepaid expense | 1,406,347.76 | 1,406,347.76 | |
| Deferred income tax assets | 65,729,304.26 | 65,729,304.26 | |
| Other non-current assets | 7,936,745.28 | 7,936,745.28 | |
| Total non-current assets | 5,591,435,548.26 | 5,722,414,520.06 | 130,978,971.80 |
| Total assets | 9,873,295,567.58 | 10,004,274,539.38 | 130,978,971.80 |
| Current liabilities: | |||
| Short-term borrowings | 332,466,931.13 | 332,466,931.13 | |
| Held-for-trading financial liabilities | |||
| Derivative financial liabilities | |||
| Notes payable | |||
| Accounts payable | 132,231,596.74 | 132,231,596.74 | |
| Advances from customers | |||
| Contract liabilities | 56,841,289.66 | 56,841,289.66 | |
| Employee benefits payable | 202,694,515.93 | 202,694,515.93 | |
| Taxes payable | 21,896,035.49 | 21,896,035.49 | |
| Other payables | 79,668,657.80 | 79,668,657.80 | |
| Including: Interest payable | |||
| Dividends payable | 441,113.64 | 441,113.64 | |
| Liabilities directly associated with assets held for sale | |||
| Current portion of non-current liabilities | 4,000,000.00 | 4,000,000.00 | |
| Other current liabilities | 166,257,466.30 | 166,257,466.30 | |
| Total current liabilities | 996,056,493.05 | 996,056,493.05 | |
| Non-current liabilities: | |||
| Long-term borrowings | 495,520,342.78 | 495,520,342.78 |
| Bonds payable | 1,350,171,526.97 | 1,350,171,526.97 | |
| Lease liabilities | 130,978,971.80 | 130,978,971.80 | |
| Long-term payables | |||
| Long-term employee benefits payable | 62,137,656.00 | 62,137,656.00 | |
| Provisions | |||
| Deferred income | 131,546,549.87 | 131,546,549.87 | |
| Deferred income tax liabilities | 58,927,115.71 | 58,927,115.71 | |
| Other non-current liabilities | |||
| Total non-current liabilities | 2,098,303,191.33 | 2,229,282,163.13 | 130,978,971.80 |
| Total liabilities | 3,094,359,684.38 | 3,225,338,656.18 | 130,978,971.80 |
| Owners’ equity: | |||
| Share capital | 858,132,322.00 | 858,132,322.00 | |
| Other equity instruments | 71,386,451.81 | 71,386,451.81 | |
| Capital reserves | 317,292,522.25 | 317,292,522.25 | |
| Less: Treasury stock | |||
| Other comprehensive income | -424,313.33 | -424,313.33 | |
| Specific reserve | |||
| Surplus reserves | 1,150,908,718.15 | 1,150,908,718.15 | |
| Retained earnings | 4,381,640,182.32 | 4,381,640,182.32 | |
| Total owners’ equity | 6,778,935,883.20 | 6,778,935,883.20 | |
| Total liabilities and owners’ equity | 9,873,295,567.58 | 10,004,274,539.38 | 130,978,971.80 |
(4) Retroactive Adjustments to Comparative Data of Prior Years when First Execution of any NewStandards Governing Leases since 2021
□Applicable √ Not applicable
34. Material Accounting Judgments and Estimates
The Company evaluates the important accounting estimates and key assumptions adopted on an ongoing basis, based on historicalexperience and other factors, including reasonable expectations of future events. Important accounting estimates and criticalassumptions that have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within thenext fiscal year are listed as follows:
Classification of financial assetsThe significant judgments involved when the Company determines the classification of financial assets include analysis of businessmodels and contractual cash flow characteristics. The Company determines the business model for managing financial assets at thelevel of the financial asset portfolio, taking into account factors such as the approach of evaluating and reporting the performance of
financial assets to key management personnel, the risks affecting the performance of financial assets and the manner in which theyare managed, and way in which the relevant business management personnel are compensated.The following main judgments exist in assessing whether the contractual cash flows of financial assets are consistent with the basiclending arrangements:
Whether the time distribution or amount of the principal amount during the duration may change due to early repayment or for otherreasons; whether the interest includes only the time value of money, credit risk, other basic lending risks and consideration againstcosts and profits. For example, whether the amount of early repayment reflects only the outstanding principal and interest based onthe outstanding principal, as well as reasonable compensation paid for early termination of the contract.Measurement of expected credit losses of accounts receivableThe Company calculates the expected credit loss of accounts receivable using the exposure to default risk of accounts receivable andthe expected credit loss ratio, and determines the expected credit loss ratio based on the probability of default and the default lossratio. When determining the expected credit loss ratio, the Company uses data such as internal historical credit loss experience andadjusts historical data to take into account current conditions and forward-looking information. When considering forward-lookinginformation, the Company uses indicators such as the risk of economic downturn and changes in the external market environment,technological environment and customer profile. The Company regularly monitors and reviews the assumptions related to thecalculation of expected credit losses.Goodwill impairmentWe shall assess whether there is impairment of goodwill at least annually. This requires estimating the use value of the asset group towhich goodwill has been assigned. When estimating the use value, the Company shall estimate the future cash flows from the assetgroup and select the appropriate discount rate to calculate the present value of future cash flows at the same time.Deferred income tax assetsTo the extent that it is probable that sufficient taxable profit will be available to offset the losses, the Company recognizes deferredincome tax assets for all unused tax losses. This requires the Company's management to use many judgments to estimate the timingand amount of future taxable profits, taking into account tax planning strategies, so as to determine the amount of deferred incometax assets to be recognized.Determination of fair value of unlisted equity investmentThe fair value of unlisted equity investment is the expected future cash flows discounted at the current discount rate for items withsimilar terms and risk characteristics. Such valuation requires the Company to estimate expected future cash flows and discount ratesand is therefore subject to uncertainty. Under limited circumstances, if the information used to determine fair value is insufficient, orif the range of possible estimates of fair value is wide and the cost represents the best estimate of fair value within that range, the costmay represent its appropriate estimate of fair value within that range of distribution.VI Taxation
1. Main Taxes and Tax Rate
| Category of taxes | Tax basis | Tax rate |
| VAT | Taxable income | 13%、9%、6%、5%、3%、0 |
| Urban maintenance and construction tax | Turnover tax payable | 7%、5% |
| Enterprise income tax | Income tax payable | 0、8.5%、15%、16.5%、17%、20%、25% |
Notes of the disclosure situation of the taxpaying bodies with different enterprises income tax rate
| Taxpayer | Income tax rate |
| The Company | 15% |
| Lufeng Weaving & Dyeing | 15% |
| Lu Thai Hong Kong | 16.50% |
| Luqun Textile | 25% |
| Xinsheng Power | 25% |
| Shanghai Lu Thai | 20% |
| Shanghai Zhinuo | 20% |
| Lulian New Materials | 25% |
| Lujia Import & Export | 20% |
| Zhishu Trading | 20% |
| Lu Thai Vocational Training School | 0% |
| Banyang Villa | 20% |
| Huilin International | 15% |
| Libra International | 17% |
| Qiming Apparel | 20% |
| Vanguard Apparel | 0% |
| Continental Textile | 0% |
| Lu Thai Tan Chau | 0% |
| Lu An Garments | 8.5% |
2. Tax Preference
In accordance with the Reply on Filing of the Second Batch of Hi-tech Enterprises of Shandong Province in 2020 with Reference No.Guo Ke Huo Zi [2021]25, the Company was identified as a hi-tech enterprise and the certificate issuing date was December 8, 2020;in accordance with the Notice for Announcing the First Batch of Hi-tech Enterprise Identification List of Shandong Province in 2020with reference No. Lu Ke Zi [2020]136, the majority-owned subsidiary Lufeng Weaving & Dyeing was identified as a hi-techenterprise, and the certificate issuing date was August 17, 2020. Pursuant to Article 28 of the Law of the PRC on Enterprise IncomeTax and the No. 23 Announcement revised and published by the State Administration of Taxation in 2018, namely Management ofPreferential Policy on Corporate Income Tax, the Measures for the Administration of the Recognition of High and New TechnologicalEnterprises (GKFH [2016] No. 195) revised and published by the Ministry of Science and Technology, Ministry of Finance and StateAdministration of Taxation, the Company and the holding subsidiary Lufeng Weaving & Dyeing enjoy a corporate income tax rate of15%.According to Announcement of the State Taxation Administration on Issues Concerning the Implementation of the Inclusive IncomeTax Reduction and Exemption Policy for Small and Low-profit Enterprises (Announcement No. 2 [2019] of the State TaxationAdministration) and Announcement of the State Taxation Administration on Issues Concerning the Implementation of PreferentialIncome Tax Policies to Support the Development of Small and Low-profit Enterprises and Individual Businesses (Announcement No.8 [2021] of the State Taxation Administration), the portion of annual taxable income of within RMB1 million of the wholly-owned
subsidiaries of the Company, including Shanghai Luthai, Shanghai Zhinuo Textile New Materials Co., Ltd., Lu Jia Import & ExportCo., Ltd., Beijing Zhishu Trading Co., Ltd. and Zibo Banyang Villa Hotel Co., Ltd. shall be included in taxable income by reductionof 12.5% based on the enterprise income tax rate of 20%; for the portion exceeding RMB1 million but within RMB3 million, it shallbe included in taxable income by reduction of 50% based on the enterprise income tax rate of 20%.Lu Thai (Hong Kong) Textile Co., Ltd. (hereinafter refers as Lu Thai (Hong Kong) Textile), the wholly-owned subsidiary companyof the Company, was incorporated in Hong Kong SAR, whose profit tax shall be paid at tax rate of 16.5%.The wholly own subsidiary Vanguard Apparel, according to the Burma’s Special Economic Zone Law issued by Pyidaungsu Hluttaw,Vanguard Apparel enjoys tax preference on corporate income tax of 7 (7 years tax holiday) + 5 (5 years tax revenues drop by half) +5 (re-invest the profits within 1 year and continues to enjoy the half tax revenues 5 years afterwards). After grace period, enterpriseincome tax rate was of 25%. Year 2021 is the sixth year of tax holiday.The wholly-owned subsidiary Continental Textile shall enjoy the preference of enterprise income tax at 3 years’ starting term + 4years’ duty-free term + 9 years’ half-tax term according to the investment license issued by Vietnamese Tay Ninh Industrial ZoneManagement Committee, and it will enter into 2 years’ duty-free term if it is profitable within 3 years’ starting term. ContinentalTextile shall enjoy 10% of the preference tax rate within 15 years since the tax year to get the first production and operation income,and the enterprise income tax rate shall be 20% after the preference term ends. Year 2021 is the fourth year of the duty-free term.The wholly-owned subsidiary of Continental Textile, Lu Thai Tan Chau, shall enjoy the preference of enterprise income tax at 3years’ starting term + 4 years’ duty-free term + 9 years’ half-tax term according to the investment license issued by Vietnamese TayNinh Investment Planning Office, and it will enter into 2 years’ duty-free term if it is profitable within 3 years’ starting term. TheCompany shall enjoy 10% of the preference tax rate within 15 years since the tax year to get the first production and operationincome, and the enterprise income tax rate shall be 20% after the preference term ends. Year 2021 is the first year of the duty-freeterm.Lu Thai America, the wholly-owned subsidiary of the Company registered in New York, America, was imposed the federal enterpriseincome tax at fixed tax rate of 21%, and imposed the New York Enterprise income tax at the fixed tax rate of 6.5%. If the tax payableexceeds USD5 million, the tax rate is 7.25%.The wholly-owned subsidiary Lu Thai Vocational Training School Co., Ltd. enjoys the preferential policy for non-profit organizationincome exemption from corporate income tax according to Article 26, Item 4 of the Enterprise Income Tax Law of the People'sRepublic of China and Article 84 and Article 85 of Regulations for the Implementation of the Enterprise Income Tax Law of thePeople's Republic of China and CS (2018) No. 13.The Wholly-owned subsidiary Huilin International, which is registered in Hainan Pilot Free Zone and operates the encouragedindustry, pays corporate income tax at a reduced tax rate of 15% according to Announcement of the Ministry of Finance and the StateTaxation Administration on the Corporate Income Tax Preferential Policies of Hainan Pilot Free Zone (Announcement No.31 [2020]of the Ministry of Finance and the State Taxation Administration)The Wholly-owned subsidiary Libra International of Huilin International is registered in Singapore and pays the corporate incometax at a rate of 17%.The enterprise income tax rate of Qiming Apparel, the wholly-owned subsidiary of Libra International, is 20% based on theprovisions of the Tax Law of Kingdom of Cambodia on income tax.The wholly-owned subsidiary of Libra International-Lu An Garments Co., Ltd. shall enjoy the preference of enterprise income tax at3 years’ starting term + 2 years’ duty-free term + 4 years’ half-tax term according to the investment license issued by VietnameseAnjiang Province Economic Zone Management Committee, and it will enter into duty-free term if the profitability is realized at anyyear within 3 years’ starting term. The Company shall enjoy 17% of the preference tax rate within 10 years since the tax year to getthe first production and operation income, and the enterprise income tax rate shall be 20% after the preference term ends. Year 2021is the first year of the halving collection period.
VII. Notes to Major Items in the Consolidated Financial Statements of the Company
1. Monetary capital
Unit: RMB
| Item | Ending balance | Beginning balance |
| Cash on hand | 3,475,164.56 | 7,009,891.16 |
| Bank deposits | 1,994,544,688.81 | 1,390,809,492.44 |
| Other monetary capital | 1,693,035.98 | 2,658,651.21 |
| Total | 1,999,712,889.35 | 1,400,478,034.81 |
| Of which: The total amount deposited overseas | 124,950,227.06 | 131,075,580.22 |
Other notes
(1) On December 31, 2021, the monetary capital with restricted ownership was RMB1,693,035.98, which included USD6,750.00(RMB43,035.98) L/C guarantee deposit for the Company's subsidiary Continental Textile Co., Ltd., RMB550,000.00 L/C guaranteedeposit and RMB1.1 million guarantee deposit of long-term settlement of exchange for the Company's subsidiary Lulian NewMaterials Co., Ltd.
(2) The interest receivable in bank deposits was RMB519,369.56.
2. Trading financial assets
Unit: RMB
| Item | Ending balance | Beginning balance |
| Financial assets at fair value through profit or loss | 1,727,000.00 | 268,456,216.98 |
| Of which: | ||
| Debt instrument investment | 251,814,716.98 | |
| Derivative financial assets | 1,727,000.00 | 16,641,500.00 |
| Of which: | ||
| Total | 1,727,000.00 | 268,456,216.98 |
3. Notes receivable
(1) Notes receivable listed by category
Unit: RMB
| Item | Ending balance | Beginning balance |
| Bank acceptance bill | 129,359,621.79 | 141,168,447.70 |
| Trade acceptance bill | 121,492.55 | |
| L/C | 98,259,133.55 | 41,825,663.16 |
| Total | 227,740,247.89 | 182,994,110.86 |
Unit: RMB
| Category | Ending balance | Beginning balance | ||||||||
| Carrying amount | Bad debt provision | Carrying amount | Carrying amount | Bad debt provision | Carrying amount | |||||
| Amount | Proportion | Amount | Withdrawal proportion | Amount | Proportion | Amount | Withdrawal proportion | |||
| Of which: | ||||||||||
| Notes receivable of bad debt provision withdrawn by groups | 227,746,642.23 | 100.00% | 6,394.34 | 227,740,247.89 | 182,994,110.86 | 100.00% | 182,994,110.86 | |||
| Of which: | ||||||||||
| Commercial acceptance bill | 127,886.89 | 0.06% | 6,394.34 | 5.00% | 121,492.55 | |||||
| Bank acceptance bill and L/C | 227,618,755.34 | 99.94% | 227,618,755.34 | 182,994,110.86 | 100.00% | 182,994,110.86 | ||||
| Total | 227,746,642.23 | 100.00% | 6,394.34 | 227,740,247.89 | 182,994,110.86 | 100.00% | 182,994,110.86 | |||
If the bad debt provision for notes receivable was withdrawn in accordance with the general model of expected credit losses,information related to bad debt provision shall be disclosed by reference to the disclosure method of other receivables:
□ Applicable √ Not applicable
(2) Bad debt provision withdrawn, reversed or collected during the Reporting Period
Bad debt provision withdrawn in the Reporting Period:
Unit: RMB
| Category | Beginning balance | Changes in the reporting period | Ending balance | |||
| Withdrawal | Reversal or recovery | Write-off | Other | |||
| Commercial acceptance bill | 0.00 | 6,394.34 | 0.00 | 0.00 | 0.00 | 6,394.34 |
| Total | 0.00 | 6,394.34 | 0.00 | 0.00 | 0.00 | 6,394.34 |
Of which significant amount of reversal or recovery bad debt provision in the Reporting Period:
□ Applicable √ Not applicable
(3) Notes receivable which had endorsed by the Company or had discounted and had not due on thebalance sheet date at the period-end
Unit: RMB
| Item | Derecognized amount at the period-end | Non-derecognized amount at the period-end |
| Bank acceptance bill | 0.00 | 112,995,745.69 |
| Trade acceptance bill | 0.00 | 0.00 |
| Total | 0.00 | 112,995,745.69 |
4. Accounts receivable
(1) Accounts receivable classified by category
Unit: RMB
| Category | Ending balance | Beginning balance | ||||||||
| Carrying amount | Bad debt provision | Carrying amount | Carrying amount | Bad debt provision | Carrying amount | |||||
| Amount | Proportion | Amount | Withdrawal proportion | Amount | Proportion | Amount | Withdrawal proportion | |||
| Accounts receivable of bad debt provision separately accrued | 2,179,970.77 | 0.31% | 2,179,970.77 | 100.00% | 8,378,716.21 | 1.48% | 8,378,716.21 | 100.00% | ||
| Of which: | ||||||||||
| Accounts receivable of bad debt provision withdrawn by groups | 692,042,157.38 | 99.69% | 44,764,958.87 | 6.47% | 647,277,198.51 | 558,478,267.74 | 98.52% | 36,053,047.87 | 6.46% | 522,425,219.87 |
| Of which: | ||||||||||
| Group 1: Undue accounts (credit insurance insured) | 99,484,489.32 | 14.33% | 1,044,587.17 | 1.05% | 98,439,902.15 | 166,997,706.03 | 29.46% | 1,753,475.92 | 1.05% | 165,244,230.11 |
| Group 2: Undue accounts (no credit insurance) | 508,102,078.32 | 73.19% | 25,405,103.98 | 5.00% | 482,696,974.34 | 269,999,707.80 | 47.63% | 13,499,985.39 | 5.00% | 256,499,722.41 |
| Group 3: Overdue accounts (credit insurance insured) | 20,932,298.93 | 3.02% | 2,239,755.99 | 10.70% | 18,692,542.94 | 46,514,806.33 | 8.21% | 4,977,084.28 | 10.70% | 41,537,722.05 |
| Group 4: Overdue accounts (no credit insurance) | 63,523,290.81 | 9.15% | 16,075,511.73 | 25.31% | 47,447,779.08 | 74,966,047.58 | 13.22% | 15,822,502.28 | 21.11% | 59,143,545.30 |
| Total | 694,222,128.15 | 100.00% | 46,944,929.64 | 6.76% | 647,277,198.51 | 566,856,983.95 | 100.00% | 44,431,764.08 | 7.84% | 522,425,219.87 |
Bad debt provision separately accrued: Y2021
Unit: RMB
| Name | Ending balance | |||
| Carrying amount | Bad debt provision | Withdrawal proportion | Provision reason | |
| Customer 1 | 1,347,066.83 | 1,347,066.83 | 100.00% | Customer filed for bankruptcy protection |
| Customer 2 | 273,384.76 | 273,384.76 | 100.00% | Customer filed for bankruptcy protection |
| Other customer | 559,519.18 | 559,519.18 | 100.00% | Customer financial difficulties or filed for bankruptcy protection |
| Total | 2,179,970.77 | 2,179,970.77 | -- | -- |
Bad debt provision separately accrued: Y2020
Unit: RMB
| Name | Ending balance | |||
| Carrying amount | Bad debt provision | Withdrawal proportion | Provision reason | |
| Customer 1 | 4,493,505.62 | 4,493,505.62 | 100.00% | Customer filed for bankruptcy protection |
| Customer 2 | 1,944,326.18 | 1,944,326.18 | 100.00% | Customer filed for bankruptcy protection |
| Other customer | 1,940,884.41 | 1,940,884.41 | 100.00% | Customer financial difficulties or filed for bankruptcy protection |
| Total | 8,378,716.21 | 8,378,716.21 | -- | -- |
Bad debt provision withdrawn by groups: Y2021
Unit: RMB
| Name | Ending balance | ||
| Carrying amount | Bad debt provision | Withdrawal proportion | |
| Group 1: Undue accounts (credit insurance insured) | 99,484,489.32 | 1,044,587.17 | 1.05% |
| Group 2: Undue accounts (no credit insurance) | 508,102,078.32 | 25,405,103.98 | 5.00% |
| Group 3: Overdue accounts (credit insurance insured) | 20,932,298.93 | 2,239,755.99 | 10.70% |
| Group 4: Overdue accounts (no credit insurance) | 63,523,290.81 | 16,075,511.73 | 25.31% |
| Total | 692,042,157.38 | 44,764,958.87 | -- |
Bad debt provision withdrawn by groups: Y2020
Unit: RMB
| Name | Ending balance | ||
| Carrying amount | Bad debt provision | Withdrawal proportion | |
| Group 1: Undue accounts (credit insurance insured) | 166,997,706.03 | 1,753,475.92 | 1.05% |
| Group 2: Undue accounts (no credit insurance) | 269,999,707.80 | 13,499,985.39 | 5.00% |
| Group 3: Overdue accounts (credit insurance insured) | 46,514,806.33 | 4,977,084.28 | 10.70% |
| Group 4: Overdue accounts (no credit insurance) | 74,966,047.58 | 15,822,502.28 | 21.11% |
| Total | 558,478,267.74 | 36,053,047.87 | -- |
Please refer to the relevant information of disclosure of bad debt provision of other accounts receivable if adopting the general modeof expected credit loss to withdraw bad debt provision of accounts receivable.
□ Applicable √ Not applicable
Disclosure by aging
Unit: RMB
| Aging | Carrying amount |
| Within 1 year (including 1 year) | 680,519,446.98 |
| 1 to 2 years | 5,246,083.66 |
| 2 to 3 years | 7,459,352.83 |
| Over 3 years | 997,244.68 |
| 3 to 4 years | 704,998.61 |
| 4 to 5 years | 292,246.07 |
| Total | 694,222,128.15 |
(2) Bad debt provision withdrawn, reversed or collected during the Reporting Period
Bad debt provision withdrawn in the Reporting Period:
Unit: RMB
| Category | Beginning | Changes in the reporting period | Ending balance |
| balance | Withdrawal | Reversal or recovery | Write-off | Other | ||
| Bad debt provision | 44,431,764.08 | 4,661,497.52 | 0.00 | 2,148,331.96 | 0.00 | 46,944,929.64 |
| Total | 44,431,764.08 | 4,661,497.52 | 0.00 | 2,148,331.96 | 0.00 | 46,944,929.64 |
(3) Particulars of the actual verification of accounts receivable during the Reporting Period
Unit: RMB
| Item | Amount |
| Accounts receivable actually verified | 2,148,331.96 |
(4) Top 5 of accounts receivable of ending balance collected by arrears party
Unit: RMB
| Name of Entity | Ending balance | Proportion to total ending balance of accounts receivable | Ending balance of bad debt provision |
| Aggregate amount of top 5 of accounts receivable of ending balance collected by arrears party | 207,105,932.07 | 29.83% | 12,168,821.23 |
| Total | 207,105,932.07 | 29.83% |
5. Accounts receivable financing
Unit: RMB
| Item | Ending balance | Beginning balance |
| Notes receivable | 35,042,339.23 | 55,508,978.63 |
| Less: Other comprehensive income - changes in fair value | -379,267.35 | -358,052.29 |
| Total | 34,663,071.88 | 55,150,926.34 |
Changes in accounts receivable financing and fair value in the Reporting Period
□ Applicable √ Not applicable
Please refer to the relevant information of disclosure of bad debt provision of other accounts receivable if adopting the general modeof expected credit loss to withdraw bad debt provision of accounts receivable financing.
□ Applicable √ Not applicable
Other notes:
There was no bank acceptance bill for which bad debt provision accrued separately in the Company. On 31 December 2021, theCompany believed that there was no significant credit risk in the bank acceptance bill held by the Company, and no significant loss
caused by bank defaults.
(1) Notes receivable endorsed by the Company or discounted and not due on the balance sheet date at the period-end
| Category | Derecognized amount at the period-end | Non-derecognized amount at the period-end |
Bank acceptance bill
| Bank acceptance bill | 335,172,057.08 |
Trade acceptance bill
| Trade acceptance bill | ||
| Total | 335,172,057.08 |
The bank acceptance bill used for discount is accepted by a bank with high credit grade, the credit risk and deferred payment risk arelow, and the interest rate risk related to the bill has been transferred to the bank. It can be judged that the main risk and reward on theownership of the bill have been transferred, so the bank acceptance bill was derecognized at the period-end.
6. Prepayment
(1) List by aging analysis
Unit: RMB
| Aging | Ending balance | Beginning balance | ||
| Amount | Proportion | Amount | Proportion | |
| Within 1 year | 54,395,566.77 | 99.73% | 19,462,310.59 | 99.24% |
| 1 to 2 years | 80,046.79 | 0.15% | 113,434.12 | 0.58% |
| 2 to 3 years | 57,065.73 | 0.10% | 36,030.57 | 0.18% |
| Over 3 years | 13,274.91 | 0.02% | ||
| Total | 54,545,954.20 | -- | 19,611,775.28 | -- |
(2) Top 5 of the ending balance of the prepayment collected according to the prepayment target
The advances to suppliers from the top five of prepaid parties classified based on the ending balance totals RMB36,049,753.17 in thecurrent period, accounting for 66.90% of the total ending balance of the advances to suppliers.
7. Other receivables
Unit: RMB
| Item | Ending balance | Beginning balance |
| Dividends receivable | 47,025,975.44 | 75,488,652.49 |
| Other receivables | 27,165,637.78 | 30,222,166.20 |
| Total | 74,191,613.22 | 105,710,818.69 |
(1) Dividends receivable
1) Category of dividends receivable
Unit: RMB
| Item (or Investee) | Ending balance | Beginning balance |
| Sanchang Fengshou Cotton Industry Co., Ltd. (hereinafter referred to as "Fengshou Cotton") | 49,501,026.78 | 79,461,739.46 |
| Less: Bad debt provision | -2,475,051.34 | -3,973,086.97 |
| Total | 47,025,975.44 | 75,488,652.49 |
2) Significant dividends receivable aging over 1 year
Unit: RMB
| Item (or investee) | Ending balance | Aging | Reason | Whether occurred impairment and its judgment basis |
| Fengshou Cotton | 49,501,026.78 | 1 to 2 years | Collect in accordance with agreed dividend payment plan | Not past due |
| Total | 49,501,026.78 | -- | -- | -- |
3) Withdrawal of bad debt provision
√ Applicable □ Not applicable
Unit: RMB
| Bad debt provision | First stage | Second stage | Third stage | Total |
| Expected credit loss of the next 12 months | Expected loss in the duration (credit impairment not occurred) | Expected loss in the duration (credit impairment occurred) | ||
| Balance of 1 January 2021 | 3,973,086.97 | 3,973,086.97 | ||
| Balance of 1 January 2021 in the Reporting Period | —— | —— | —— | —— |
| Withdrawal of the current period | -1,498,035.63 | -1,498,035.63 | ||
| Balance of 31 December 2021 | 2,475,051.34 | 2,475,051.34 |
Changes of carrying amount with significant amount changed of loss provision in the current period
□ Applicable √ Not applicable
Other notes:
The Company did not have dividends receivable in the second and third stages at the Period-end.
(2) Other receivables
1) Other receivables classified by category
Unit: RMB
| Nature | Ending carrying amount | Beginning carrying amount |
| Export rebates | 1,384,112.79 | |
| VAT to be returned | 8,486,685.52 | 9,341,623.77 |
| Payment on behalf | 11,917,827.00 | 13,868,814.75 |
| Guarantee deposit and cash deposit | 6,586,697.20 | 5,163,865.78 |
| Borrowings and petty cash | 1,051,186.48 | 4,483,805.85 |
| Other | 402,457.40 | 218,743.34 |
| Total | 29,828,966.39 | 33,076,853.49 |
2) Withdrawal of bad debt provision
Unit: RMB
| Bad debt provision | First stage | Second stage | Third stage | Total |
| Expected credit loss of the next 12 months | Expected loss in the duration (credit impairment not occurred) | Expected loss in the duration (credit impairment occurred) | ||
| Balance of 1 January 2021 | 1,516,853.79 | 1,337,833.50 | 2,854,687.29 | |
| Balance of 1 January 2021 in the Reporting Period | —— | —— | —— | —— |
| Withdrawal of the current period | -159,090.16 | -32,268.52 | -191,358.68 | |
| Balance of 31 December 2021 | 1,357,763.63 | 1,305,564.98 | 2,663,328.61 |
Changes of carrying amount with significant amount changed of loss provision in the current period
□ Applicable √ Not applicable
Disclosure by aging
Unit: RMB
| Aging | Carrying amount |
| Within 1 year (including 1 year) | 24,927,281.70 |
| 1 to 2 years | 745,274.93 |
| 2 to 3 years | 273,773.82 |
| Over 3 years | 3,882,635.94 |
| 3 to 4 years | 164,144.98 |
| 4 to 5 years | 0.00 |
| Over 5 years | 3,718,490.96 |
| Total | 29,828,966.39 |
3) Bad debt provision withdrawn, reversed or collected during the Reporting Period
Bad debt provision withdrawn in the Reporting Period:
Unit: RMB
| Category | Beginning balance | Changes in the Reporting Period | Ending balance | |||
| Withdrawal | Reversal or recovery | Write-off | Other | |||
| Expected credit loss in the next 12 months in the first stage | 1,516,853.79 | -159,090.16 | 1,357,763.63 | |||
| Expected loss in the duration (credit impairment not occurred) in the second stage | 1,337,833.50 | -32,268.52 | 1,305,564.98 | |||
| Expected loss in the duration (credit impairment occurred) in the third stage | ||||||
| Total | 2,854,687.29 | -191,358.68 | 2,663,328.61 | |||
4) Top 5 of the ending balance of the other receivables collected according to the arrears party
Unit: RMB
| Name of entity | Nature | Ending balance | Aging | Proportion to ending balance of total other receivables | Ending balance of bad debt provision |
| VAT receivable to be returned from Polaris Apparel | Input VAT | 4,849,187.44 | Within 1 year | 16.26% | 242,459.37 |
| VAT receivable to be returned from Lu Thai Tan Chau | Input VAT | 3,637,498.08 | Within 1 year | 12.20% | 181,874.89 |
| Withheld personal endowment insurance | Advance payments | 4,642,678.84 | Within 1 year | 15.56% | 232,133.94 |
| Receivable export rebates | Export rebates | 1,384,112.79 | Within 1 year | 4.64% | 69,205.64 |
| Zibo Customs, People's Republic of China | Margin | 1,182,146.29 | Within 1 year | 3.96% | 59,107.31 |
| Total | -- | 15,695,623.44 | -- | 52.62% | 784,781.15 |
8. Inventory
Whether the Company needs to comply with the disclosure requirements for real estate industryNot
(1) Category of inventory
Unit: RMB
| Item | Ending balance | Beginning balance | ||||
| Carrying amount | Falling price reserves of inventory or depreciation reserves of contract performance cost | Carrying amount | Carrying amount | Falling price reserves of inventory or depreciation reserves of contract performance cost | Carrying amount | |
| Raw materials | 928,078,106.34 | 17,925,640.41 | 910,152,465.93 | 849,455,158.83 | 2,547,151.31 | 846,908,007.52 |
| Goods in process | 611,695,332.97 | 2,538,846.30 | 609,156,486.67 | 393,404,083.58 | 5,437,464.35 | 387,966,619.23 |
| Inventory goods | 939,550,089.36 | 143,767,058.72 | 795,783,030.64 | 877,507,714.63 | 136,403,191.01 | 741,104,523.62 |
| Assigned processing products | 30,254,811.04 | 30,254,811.04 | 12,989,531.27 | 12,989,531.27 | ||
| Total | 2,509,578,339.71 | 164,231,545.43 | 2,345,346,794.28 | 2,133,356,488.31 | 144,387,806.67 | 1,988,968,681.64 |
(2) Falling price reserves of inventory and depreciation reserves of contract performance cost
Unit: RMB
| Item | Beginning balance | Increased amount of the period | Decreased amount of the period | Ending balance | ||
| Withdrawal | Other | Reverse or write-off | Other | |||
| Raw materials | 2,547,151.31 | 15,378,489.10 | 17,925,640.41 | |||
| Goods in process | 5,437,464.35 | 2,538,846.30 | 5,437,464.35 | 2,538,846.30 | ||
| Inventory goods | 136,403,191.01 | 66,275,284.27 | 58,911,416.56 | 143,767,058.72 | ||
| Total | 144,387,806.67 | 84,192,619.67 | 64,348,880.91 | 164,231,545.43 | ||
9. Current portion of non-current assets
Unit: RMB
| Item | Ending balance | Beginning balance |
| Long-term accounts receivable due within 1 year | 45,750,018.30 | |
| Total | 45,750,018.30 |
10. Other current assets
Unit: RMB
| Item | Ending balance | Beginning balance |
| Input tax | 53,076,859.19 | 69,924,309.37 |
| Prepaid income tax | 2,589,285.09 | 8,268,591.39 |
| Other prepaid taxes | 126,618.09 | 3,161,080.82 |
| Short-term debt investments | 351,379,736.36 | |
| Convertible bond fractional share funds | 199,760.44 | 199,858.61 |
| Short-term prepaid expense | 498,682.08 | |
| Total | 55,992,522.81 | 433,432,258.63 |
11. Long-term receivables
(1) List of long-term receivables
Unit: RMB
| Item | Ending balance | Beginning balance | Interval of discount rate | ||||
| Carrying amount | Bad debt provision | Carrying amount | Carrying amount | Bad debt provision | Carrying amount | ||
| Equity transfer fee receivable | 91,371,791.00 | 4,568,589.55 | 86,803,201.45 | 3.85% | |||
| Less: Long-term accounts receivable due within one year | -48,157,914.00 | -2,407,895.70 | -45,750,018.30 | ||||
| Total | 43,213,877.00 | 2,160,693.85 | 41,053,183.15 | -- | |||
Impairment of bad debt provision
Unit: RMB
| Bad debt provision | First stage | Second stage | Third stage | Total |
| Expected credit loss of the next 12 months | Expected loss in the duration (credit impairment not occurred) | Expected loss in the duration (credit impairment occurred) | ||
| Balance of 1 January 2021 | 4,568,589.55 | |||
| Balance of 1 January 2021 in the Reporting Period | —— | —— | —— | —— |
| Withdrawal of the current period | -4,568,589.55 | |||
| Balance of 31 December 2021 | 0.00 |
Changes of carrying amount with significant amount changed of loss provision in the current period
□ Applicable √ Not applicable
12. Long-term equity investment
Unit: RMB
| Investee | Beginning | Increase/decrease | Ending balance | Ending balance | |||||||
| Addition | Reduced | Gains | Adjustm | Changes | Cash | Withdra | Other | ||||
| balance (carrying value) | al investment | investment | and losses recognized under the equity method | ent of other comprehensive income | of other equity | bonus or profits announced to issue | wal of impairment provision | (carrying value) | of depreciation reserve | ||
| I. Joint ventures | |||||||||||
| II. Associated enterprises | |||||||||||
| Ningbo Meishan Bonded Port Area Haohong Equity Investment Partnership (L.P.) (hereinafter referred to as "Haohong Investment") | 88,329,922.16 | 7,881,294.68 | -12,791,000.83 | 67,657,626.65 | |||||||
| Haohong Equity Investment Partnership (L.P.) (hereinafter referred to as "Haohong Investment") | 49,749,655.09 | 50,000,000.00 | 2,035,824.92 | 101,785,480.01 | |||||||
| Subtotal | 138,079, | 50,000,0 | 7,881,29 | -10,755, | 169,443, | ||||||
| 577.25 | 00.00 | 4.68 | 175.91 | 106.66 | |||||||
| Total | 138,079,577.25 | 50,000,000.00 | 7,881,294.68 | -10,755,175.91 | 169,443,106.66 |
13. Other non-current financial assets
Unit: RMB
| Item | Ending balance | Beginning balance |
| Debt instrument investment | ||
| Equity instrument investment | 178,052,000.00 | 144,915,620.25 |
| Financial assets designated to be measured at fair value with the changes in fair value included in current profits and losses | 12,000,000.00 | 12,000,000.00 |
| Other | ||
| Total | 190,052,000.00 | 156,915,620.25 |
14. Investment property
(1) Investment property adopting the cost measurement mode
√ Applicable □ Not applicable
Unit: RMB
| Item | Houses and buildings | Land use right | Construction in progress | Total |
| I. Original carrying value | ||||
| 1. Beginning balance | 33,577,852.12 | 33,577,852.12 | ||
| 2. Increased amount of the period | ||||
| (1) Outsourcing | ||||
| (2) Transfer from inventories/fixed assets/construction in progress | ||||
| (3) Enterprise combination increase | ||||
| 3. Decreased amount of the period | ||||
| (1) Disposal | ||||
| (2) Other transfer | ||||
| 4. Ending balance | 33,577,852.12 | 33,577,852.12 |
| II. Accumulative depreciation and accumulative amortization | ||||
| 1. Beginning balance | 11,314,183.27 | 11,314,183.27 | ||
| 2. Increased amount of the period | 901,366.82 | 901,366.82 | ||
| (1) Withdrawal or amortization | 901,366.82 | 901,366.82 | ||
| 3. Decreased amount of the period | ||||
| (1) Disposal | ||||
| (2) Other transfer | ||||
| 4. Ending balance | 12,215,550.09 | 12,215,550.09 | ||
| III. Depreciation reserves | ||||
| 1. Beginning balance | ||||
| 2. Increased amount of the period | ||||
| (1) Withdrawal | ||||
| 3. Decreased amount of the period | ||||
| (1) Disposal | ||||
| (2) Other transfer | ||||
| 4. Ending balance | ||||
| IV. Carrying value | ||||
| 1. Ending carrying value | 21,362,302.03 | 21,362,302.03 | ||
| 2. Beginning carrying value | 22,263,668.85 | 22,263,668.85 |
(2) Investment property adopting the fair value measurement mode
□ Applicable √ Not applicable
15. Fixed assets
Unit: RMB
| Item | Ending balance | Beginning balance |
| Fixed assets | 5,559,649,164.65 | 5,600,022,186.24 |
| Proceeds from disposal of fixed assets | 1,952,209.79 | 37,957,820.45 |
| Total | 5,561,601,374.44 | 5,637,980,006.69 |
(1) List of fixed assets
Unit: RMB
| Item | Houses and buildings | Machinery equipment | Transportation equipment | Electronic equipment and others | Total |
| I. Original carrying value | |||||
| 1. Beginning balance | 3,300,178,588.71 | 6,830,302,709.90 | 53,794,437.30 | 129,442,986.01 | 10,313,718,721.92 |
| 2. Increased amount of the period | 143,776,655.08 | 302,038,943.88 | 1,885,548.07 | 5,456,406.98 | 453,157,554.01 |
| (1) Purchase | 71,188.12 | 264,071,138.32 | 1,885,548.07 | 5,456,406.98 | 271,484,281.49 |
| (2) Transfer from construction in progress | 143,705,466.96 | 37,967,805.56 | 181,673,272.52 | ||
| (3) Enterprise combination increase | |||||
| 3. Decreased amount of the period | 42,958,593.06 | 128,195,630.23 | 7,014,364.59 | 4,747,895.57 | 182,916,483.45 |
| (1) Disposal or scrap | 11,116,914.87 | 102,893,321.05 | 6,797,297.62 | 4,618,814.53 | 125,426,348.07 |
| (2) Transferred to construction in progress | 11,406,001.81 | 11,406,001.81 | |||
| (3) Other decreases | 20,435,676.38 | 25,302,309.18 | 217,066.97 | 129,081.04 | 46,084,133.57 |
| 4. Ending balance | 3,400,996,650.73 | 7,004,146,023.55 | 48,665,620.78 | 130,151,497.42 | 10,583,959,792.48 |
| II. Accumulative depreciation | |||||
| 1. Beginning balance | 995,997,040.59 | 3,533,778,199.66 | 36,975,373.50 | 97,668,147.56 | 4,664,418,761.31 |
| 2. Increased amount of the | 111,658,120.66 | 307,490,406.98 | 4,594,796.87 | 13,355,956.78 | 437,099,281.29 |
| period | |||||
| (1) Withdrawal | 111,658,120.66 | 307,490,406.98 | 4,594,796.87 | 13,355,956.78 | 437,099,281.29 |
| 3. Decreased amount of the period | 16,854,384.20 | 82,885,340.86 | 5,758,817.75 | 4,241,291.43 | 109,739,834.24 |
| (1) Disposal or scrap | 3,599,754.43 | 77,115,764.67 | 5,638,899.45 | 4,144,702.28 | 90,499,120.83 |
| (2) Transferred to construction in progress | 9,101,573.57 | 9,101,573.57 | |||
| (3) Other decreases | 4,153,056.20 | 5,769,576.19 | 119,918.30 | 96,589.15 | 10,139,139.84 |
| 4. Ending balance | 1,090,800,777.05 | 3,758,383,265.78 | 35,811,352.62 | 106,782,812.91 | 4,991,778,208.36 |
| III. Depreciation reserves | |||||
| 1. Beginning balance | 1,574,730.45 | 47,619,177.12 | 5,671.30 | 78,195.50 | 49,277,774.37 |
| 2. Increased amount of the period | 1,429,523.09 | 1,715.50 | 1,431,238.59 | ||
| (1) Withdrawal | 1,429,523.09 | 1,715.50 | 1,431,238.59 | ||
| 3. Decreased amount of the period | 1,145,314.29 | 17,018,765.51 | 12,513.69 | 18,176,593.49 | |
| (1) Disposal or scrap | 1,145,314.29 | 17,018,765.51 | 12,513.69 | 18,176,593.49 | |
| (2) Other decreases | |||||
| 4. Ending balance | 429,416.16 | 32,029,934.70 | 5,671.30 | 67,397.31 | 32,532,419.47 |
| IV. Carrying value | |||||
| 1. Ending carrying value | 2,309,766,457.52 | 3,213,732,823.07 | 12,848,596.86 | 23,301,287.20 | 5,559,649,164.65 |
| 2. Beginning carrying value | 2,326,219,802.64 | 3,248,905,333.12 | 16,813,392.50 | 31,696,642.95 | 5,623,635,171.21 |
(2) Fixed assets leased out by operation lease
Unit: RMB
| Item | Ending carrying value |
| Houses and buildings | 3,707,101.82 |
(3) Fixed assets failed to accomplish certification of property
Unit: RMB
| Item | Carrying amount | Reason of certificate of titles have not yet been obtained |
| Lufeng weaving dye gray yarn warehouse | 10,857,920.88 | Under the relevant certificate procedures of acceptance, measurement, examination by the real estate trading center and other departments |
| Yarn dyeing workshop of Lulian New Materials Co., Ltd. | 45,875,873.52 | Ditto |
| Slashing workshop of Lulian New Materials Co., Ltd. | 11,662,166.57 | Ditto |
| Dyeing and finishing workshop of Lulian New Materials Co., Ltd. | 44,211,118.84 | Ditto |
| Power workshop of Lulian New Materials Co., Ltd. | 22,914,071.91 | Ditto |
(4) Proceeds from disposal of fixed assets
Unit: RMB
| Item | Ending balance | Beginning balance |
| Zhangdian Industrial Park houses and buildings | 37,957,820.45 | |
| Boiler and ancillary equipment | 1,952,209.79 | |
| Total | 1,952,209.79 | 37,957,820.45 |
16. Construction in progress
Unit: RMB
| Item | Ending balance | Beginning balance |
| Construction in progress | 157,651,325.17 | 201,339,271.24 |
| Engineering materials | 79,927,757.82 | 154,933,926.25 |
| Total | 237,579,082.99 | 356,273,197.49 |
(1) List of construction in progress
Unit: RMB
| Item | Ending balance | Beginning balance | ||||
| Carrying amount | Depreciation reserve | Carrying amount | Carrying amount | Depreciation reserve | Carrying amount | |
| Reform project of Xinsheng Thermal Power | 33,240,957.43 | 33,240,957.43 | 15,024,257.20 | 15,024,257.20 | ||
| Expansion project of Xinsheng Thermal Power (Phase II) | 24,901,015.93 | 24,901,015.93 | ||||
| Dormitory project of Lu Thai (Vietnam) | 19,083,725.35 | 19,083,725.35 | ||||
| Spinning project of Lu Thai (Tan Chau) | 5,296,923.55 | 5,296,923.55 | ||||
| Functional Fabric Intelligent Ecological Park Project (Phase I) | 84,984,974.35 | 84,984,974.35 | 95,803,812.78 | 95,803,812.78 | ||
| Other sporadic projects | 39,425,393.39 | 39,425,393.39 | 41,229,536.43 | 41,229,536.43 | ||
| Total | 157,651,325.17 | 157,651,325.17 | 201,339,271.24 | 201,339,271.24 | ||
(2) Changes in significant construction in progress during the Reporting Period
Unit: RMB
| Item | Budget | Beginning balance | Increased amount of the period | Transferred in fixed assets | Other decreased amount | Ending balance | Proportion of accumulated investm | Job schedule | Accumulated amount of interest | Including: Amount of capitaliz | Capitalization rate of interests for the | Capital resources |
| ent in constructions to budget | capitalization | ed interests for the reporting period | reporting period | |||||||||
| Reform project of Xinsheng Thermal Power | 54,380,000.00 | 15,024,257.20 | 21,679,011.56 | 3,462,311.33 | 33,240,957.43 | 67.49% | 67.49 | Other | ||||
| Expansion project of Xinsheng Thermal Power (Phase II) | 110,690,000.00 | 24,901,015.93 | 1,260,127.41 | 26,161,143.34 | 116.00% | 100 | Other | |||||
| Dormitory project of Lu Thai (Vietnam) | 21,626,200.00 | 19,083,725.35 | 6,406,053.04 | 25,280,363.93 | 209,414.46 | 117.00% | 100 | Other | ||||
| Spinning project of Lu Thai (Tan Chau) | 153,470,000.00 | 5,296,923.55 | 4,126,473.87 | 9,364,408.54 | 58,988.88 | 95.00% | 100 | Other | ||||
| Functional Fabric Intelligent Ecological Park | 217,211,000.00 | 95,803,812.78 | 70,865,083.91 | 81,683,922.34 | 84,984,974.35 | 120.00% | 93 | 30,996,506.59 | 15,968,307.04 | 3.68% | Public offering fund |
| Project (Phase I) | ||||||||||||
| Other sporadic projects | 41,229,536.43 | 34,422,827.72 | 35,721,123.04 | 505,847.72 | 39,425,393.39 | Other | ||||||
| Total | 557,377,200.00 | 201,339,271.24 | 138,759,577.51 | 181,673,272.52 | 774,251.06 | 157,651,325.17 | -- | -- | 30,996,506.59 | 15,968,307.04 | -- |
(3) Engineering materials
Unit: RMB
| Item | Ending balance | Beginning balance | ||||
| Carrying amount | Depreciation reserve | Carrying amount | Carrying amount | Depreciation reserve | Carrying amount | |
| Special materials | ||||||
| Special equipment | 79,927,757.82 | 79,927,757.82 | 154,933,926.25 | 154,933,926.25 | ||
| Total | 79,927,757.82 | 79,927,757.82 | 154,933,926.25 | 154,933,926.25 | ||
17. Right-of-use assets
Unit: RMB
| Item | Houses and buildings | Land use right | Total |
| I. Original carrying value | |||
| 1. Beginning balance | 72,833,229.83 | 196,529,016.05 | 269,362,245.88 |
| 2. Increased amount of the period | 9,729,395.18 | 9,729,395.18 | |
| (1) Rent | 9,729,395.18 | 9,729,395.18 | |
| (2) Lease liabilities adjustment | |||
| 3. Decreased amount of the period | 96,330.54 | 3,435,058.49 | 3,531,389.03 |
| (1) Sublease is a financial lease | |||
| (2) Transfer or hold for sale | |||
| (3) Other decreases | 96,330.54 | 3,435,058.49 | 3,531,389.03 |
| 4. Ending balance | 72,736,899.29 | 202,823,352.74 | 275,560,252.03 |
| II. Accumulative depreciation | |||
| 1. Beginning balance | |||
| 2. Increased amount of the period | 11,237,313.49 | 7,352,272.48 | 18,589,585.97 |
| (1) Withdrawal | 11,237,313.49 | 7,352,272.48 | 18,589,585.97 |
| (2) Other increases | |||
| 3. Decreased amount of the period | 10,227.12 | 38,392.97 | 48,620.09 |
| (1) Disposal | |||
| (2) Other decreases | 10,227.12 | 38,392.97 | 48,620.09 |
| 4. Ending balance | 11,227,086.37 | 7,313,879.51 | 18,540,965.88 |
| III. Depreciation reserves | |||
| 1. Beginning balance | |||
| 2. Increased amount of the period | |||
| (1) Withdrawal | |||
| 3. Decreased amount of the period | |||
| (1) Disposal | |||
| 4. Ending balance | |||
| IV. Carrying value | |||
| 1. Ending carrying value | 61,509,812.92 | 195,509,473.23 | 257,019,286.15 |
| 2. Beginning carrying value | 72,833,229.83 | 196,529,016.05 | 269,362,245.88 |
18. Intangible assets
(1) List of intangible assets
Unit: RMB
| Item | Land use right | Patent right | Non-patent technology | Software use right | Total |
| I. Original carrying value | |||||
| 1. Beginning balance | 470,338,494.00 | 3,627,343.66 | 473,965,837.66 | ||
| 2. Increased amount of the period | 409,550.00 | 300,088.49 | 709,638.49 | ||
| (1) Purchase | 409,550.00 | 300,088.49 | 709,638.49 | ||
| (2) Internal R&D | |||||
| (3) Enterprise combination increase | |||||
| 3. Decreased amount of the period | 1,796,044.79 | 1,796,044.79 |
| (1) Disposal | |||||
| (2) Invalid and recognition terminated portion | 1,792,749.64 | 1,792,749.64 | |||
| (3) Other decreases | 3,295.15 | 3,295.15 | |||
| 4. Ending balance | 470,338,494.00 | 409,550.00 | 2,131,387.36 | 472,879,431.36 | |
| II. Accumulated amortization | |||||
| 1. Beginning balance | 98,250,066.12 | 2,172,290.70 | 100,422,356.82 | ||
| 2. Increased amount of the period | 10,096,399.24 | 30,716.28 | 992,423.65 | 11,119,539.17 | |
| (1) Withdrawal | 10,096,399.24 | 30,716.28 | 992,423.65 | 11,119,539.17 | |
| 3. Decreased amount of the period | 1,793,442.77 | 1,793,442.77 | |||
| (1) Disposal | |||||
| (2) Invalid and recognition terminated portion | 1,792,749.64 | 1,792,749.64 | |||
| (3) Other decreases | 693.13 | 693.13 | |||
| 4. Ending balance | 108,346,465.36 | 30,716.28 | 1,371,271.58 | 109,748,453.22 | |
| III. Depreciation reserves | |||||
| 1. Beginning balance | |||||
| 2. Increased amount of the period | |||||
| (1) Withdrawal | |||||
| 3. Decreased amount of the period | |||||
| (1) Disposal | |||||
| 4. Ending balance | |||||
| IV. Carrying value | |||||
| 1. Ending carrying value | 361,992,028.64 | 378,833.72 | 760,115.78 | 363,130,978.14 | |
| 2. Beginning | 372,088,427.88 | 1,455,052.96 | 373,543,480.84 |
The proportion of intangible assets formed from the internal R&D of the Company at the Period-end to the ending balance ofintangible assets was 0.00%.
19. Development costs
Unit: RMB
carrying valueItem
| Item | Beginning balance | Increased amount of the period | Decreased amount of the period | Ending balance | ||
| Internal development | Other | Recognized as intangible assets | Transfer to current gains and losses | |||
| Product R&D | 252,912,911.63 | 252,912,911.63 | ||||
| Total | 252,912,911.63 | 252,912,911.63 | ||||
20. Goodwill
(1) Original carrying value of goodwill
Unit: RMB
| Name of the invested units or events generating goodwill | Beginning balance | Increase | Decrease | Ending balance |
| Formed by business combination | Disposal | |||
| Xinsheng Power | 20,563,803.29 | 20,563,803.29 | ||
| Total | 20,563,803.29 | 20,563,803.29 |
21. Long-term prepaid expense
Unit: RMB
| Item | Beginning balance | Increased amount of the period | Amortization amount of the period | Other decreased amount | Ending balance |
| Renovation costs | 1,406,347.76 | 733,746.72 | 672,601.04 | ||
| Total | 1,406,347.76 | 733,746.72 | 672,601.04 |
22. Deferred income tax assets/deferred income tax liabilities
(1) Deferred income tax assets that had not been off-set
Unit: RMB
| Item | Ending balance | Beginning balance | ||
| Deductible temporary difference | Deferred income tax assets | Deductible temporary difference | Deferred income tax assets | |
| Depreciation reserves of assets | 211,902,261.84 | 32,571,574.68 | 232,609,684.18 | 37,624,855.86 |
| Unrealized profit of internal transactions | 154,652,429.83 | 23,546,803.59 | 109,437,547.23 | 17,073,399.27 |
| Deductible losses | 125,211,374.31 | 23,469,558.56 | 80,123,710.98 | 16,776,355.64 |
| One-time listed decoration expenses | 93,446.60 | 23,361.65 | ||
| Payroll payable | 62,871,779.73 | 9,443,195.07 | 118,015,305.73 | 17,802,836.18 |
| Deferred income | 188,769,454.53 | 31,627,668.49 | 173,862,983.31 | 27,188,106.81 |
| Contract liability | 50,555,810.44 | 12,638,952.61 | 16,596,721.35 | 4,149,180.34 |
| Changes in the fair value of other non-current financial assets | 160,000.00 | 24,000.00 | 14,493,587.33 | 2,174,038.10 |
| Changes in fair value of receivable financing | 379,267.35 | 58,968.83 | 358,052.29 | 53,707.84 |
| Operating leases | 3,105,101.78 | 486,827.11 | ||
| Restricted stock incentive fees | 30,990,583.74 | 4,648,587.56 | ||
| Total | 828,598,063.55 | 138,516,136.50 | 745,591,039.00 | 122,865,841.69 |
(2) Deferred income tax liabilities had not been off-set
Unit: RMB
| Item | Ending balance | Beginning balance | ||
| Deductible temporary difference | Deferred income tax liabilities | Deductible temporary difference | Deferred income tax liabilities | |
| Depreciation of fixed assets | 462,125,128.72 | 74,185,425.08 | 417,366,245.56 | 67,382,126.00 |
| Changes in fair value of trading assets | 1,727,000.00 | 259,050.00 | 18,456,216.98 | 2,768,432.55 |
| Changes in the fair value of other non-current financial assets | 120,845,567.06 | 18,126,835.06 | 102,042,774.64 | 15,306,416.20 |
| Accrued interests on creditors' investment | 1,174,577.93 | 176,186.69 | ||
| Total | 584,697,695.78 | 92,571,310.14 | 539,039,815.11 | 85,633,161.44 |
(3) Deferred income tax assets or liabilities had been off-set listed in net amount
Unit: RMB
| Item | Ending off-set amount of deferred income tax assets and liabilities | Ending balance of deferred income tax assets and liabilities | Beginning off-set amount of deferred income tax assets and liabilities | Beginning balance of deferred income tax assets and liabilities |
| Deferred income tax assets | 138,516,136.50 | 122,865,841.69 | ||
| Deferred income tax liabilities | 97,442,412.65 | 85,633,161.44 |
(4) List of unrecognized deferred income tax assets
Unit: RMB
| Item | Ending balance | Beginning balance |
| Deductible temporary difference | 9,031,432.71 | 16,884,024.75 |
| Deductible losses | 73,702,292.27 | 586,187.49 |
| Total | 82,733,724.98 | 17,470,212.24 |
(5) Deductible losses of unrecognized deferred income tax assets will due in the following years
Unit: RMB
| Years | Ending amount | Beginning amount | Note |
| Y2022 | |||
| Y2023 | |||
| Y2024 | 1,344.62 | 1,344.62 | |
| Y2025 | 584,842.87 | 584,842.87 | |
| Y2026 | 73,116,104.78 | ||
| Total | 73,702,292.27 | 586,187.49 | -- |
23. Other non-current assets
Unit: RMB
| Item | Ending balance | Beginning balance |
| Carrying amount | Depreciation reserve | Carrying amount | Carrying amount | Depreciation reserve | Carrying amount | |
| Prepaid land transfer fee | 214,131,583.94 | 214,131,583.94 | 86,515,839.05 | 86,515,839.05 | ||
| Prepayment of equipment | 11,691,427.91 | 11,691,427.91 | 6,195,947.23 | 6,195,947.23 | ||
| Term deposits over 1 year | 351,000,000.00 | 351,000,000.00 | ||||
| Interest receivable from term deposits over 1 year | 9,260,296.40 | 9,260,296.40 | ||||
| Land use rights to be recovered by the government | 2,722,253.90 | 2,722,253.90 | ||||
| Total | 586,083,308.25 | 586,083,308.25 | 95,434,040.18 | 95,434,040.18 |
24. Short-term borrowings
(1) Category of short-term borrowings
Unit: RMB
| Item | Ending balance | Beginning balance |
| Pledged borrowings | 11,763,977.73 | |
| Guaranteed borrowings | 238,770,866.65 | 550,258,596.41 |
| Credit borrowings | 772,263,271.67 | 368,848,434.05 |
| Total | 1,011,034,138.32 | 930,871,008.19 |
Notes of short-term borrowings category:
(1) The period-end guaranteed borrowing is the guarantee provided by the Company for the bank borrowings of its subsidiariesContinental Textile Co., Ltd., Lu Thai (Tan Chau) and Lu An Garments. Refer to Note XIV-2 for details.
(2) The short-term borrowing includes interest payable of RMB764,283.57.
25. Accounts payable
(1) List of accounts payable
Unit: RMB
| Item | Ending balance | Beginning balance |
| Payment for goods | 217,076,555.49 | 137,003,680.16 |
| Payment for engineering equipment | 73,998,453.07 | 80,349,348.21 |
| Other | 44,326,362.74 | 25,909,445.32 |
| Total | 335,401,371.30 | 243,262,473.69 |
26. Contract liabilities
Unit: RMB
| Item | Ending balance | Beginning balance |
| Proceeds from sale received in advance | 218,008,930.11 | 152,333,217.97 |
| Less: Contract liabilities included in other current liabilities | -13,041,581.15 | -10,993,512.35 |
| Total | 204,967,348.96 | 141,339,705.62 |
27. Payroll payable
(1) List of payroll payable
Unit: RMB
| Item | Beginning balance | Increase | Decrease | Ending balance |
| I. Short-term salary | 265,648,198.38 | 1,312,885,066.50 | 1,307,364,468.10 | 271,168,796.78 |
| II. Post-employment benefit-defined contribution plans | 127,587,983.68 | 126,742,484.37 | 845,499.31 | |
| III. Termination benefits | 212,789.00 | 212,789.00 | ||
| Total | 265,648,198.38 | 1,440,685,839.18 | 1,434,319,741.47 | 272,014,296.09 |
(2) List of short-term salary
Unit: RMB
| Item | Beginning balance | Increase | Decrease | Ending balance |
| 1. Salary, bonus, allowance and subsidy | 202,510,898.31 | 1,164,539,273.15 | 1,153,327,689.71 | 213,722,481.75 |
| 2. Employee welfare | 52,568,401.16 | 52,568,401.16 | ||
| 3. Social insurance | 24,203.32 | 62,831,450.23 | 62,415,264.01 | 440,389.54 |
| Including: Medical insurance premiums | 17,079.14 | 56,722,725.72 | 56,340,808.78 | 398,996.08 |
| Work-related injury insurance | 6,854.60 | 6,103,154.04 | 6,068,927.64 | 41,081.00 |
| Maternity insurance | 269.58 | 5,570.47 | 5,527.59 | 312.46 |
| 4. Housing fund | 10,658,244.20 | 10,658,244.20 | ||
| 5. Labor union budget and employee education budget | 63,113,096.75 | 22,287,697.76 | 28,394,869.02 | 57,005,925.49 |
| Total | 265,648,198.38 | 1,312,885,066.50 | 1,307,364,468.10 | 271,168,796.78 |
(3) List of defined contribution plans
Unit: RMB
| Item | Beginning balance | Increase | Decrease | Ending balance |
| 1. Basic pension benefits | 121,808,946.14 | 120,998,491.93 | 810,454.21 | |
| 2. Unemployment insurance | 5,779,037.54 | 5,743,992.44 | 35,045.10 | |
| Total | 127,587,983.68 | 126,742,484.37 | 845,499.31 |
28. Taxes payable
Unit: RMB
| Item | Ending balance | Beginning balance |
| VAT | 5,534,817.32 | 12,077,311.75 |
| Corporate income tax | 8,173,413.58 | 11,531,626.63 |
| Personal income tax | 607,463.91 | 422,663.35 |
| Urban maintenance and construction tax | 3,645,871.40 | 3,390,064.57 |
| Stamp duty | 320,584.10 | 441,946.14 |
| Property tax | 5,200,898.00 | 4,868,121.51 |
| Land use tax | 2,651,253.23 | 900,240.84 |
| Education surcharge | 1,585,262.09 | 1,338,871.23 |
| Local education surcharge | 1,056,841.39 | 876,371.30 |
| Local water conservancy facility construction fund | 218,962.12 | |
| Resources tax | 179,258.00 | 70,554.00 |
| Environmental protection tax | 502,039.70 | 332,245.33 |
| Total | 29,457,702.72 | 36,468,978.77 |
29. Other payables
Unit: RMB
| Item | Ending balance | Beginning balance |
| Dividends payable | 441,113.64 | 441,113.64 |
| Other Payables | 96,759,451.67 | 17,146,357.15 |
| Total | 97,200,565.31 | 17,587,470.79 |
(1) Dividends payable
Unit: RMB
| Item | Ending balance | Beginning balance |
| Dividends payable to individual shareholders | 441,113.64 | 441,113.64 |
| Total | 441,113.64 | 441,113.64 |
Other notes, including significant dividends payable unpaid for over 1 year, the unpaid reason shall be disclosed:
The cash dividend of the previous year not received by individual shareholders
(2) Other payables
1) Other payables listed by nature
Unit: RMB
| Item | Ending balance | Beginning balance |
| Deposits and cash deposits etc. | 4,544,176.56 | 5,571,490.73 |
| Withholding costs | 3,148,636.19 | 1,266,624.26 |
| Intercourse funds | 73,371.05 | |
| Restricted stock repurchase obligations | 78,908,300.00 | |
| Other | 10,158,338.92 | 10,234,871.11 |
| Total | 96,759,451.67 | 17,146,357.15 |
30. Current portion of non-current liabilities
Unit: RMB
| Item | Ending balance | Beginning balance |
| Current portion of long-term borrowings | 8,500,000.00 | 43,149,400.13 |
| Current portion of lease liabilities | 377,404.52 | |
| Total | 8,877,404.52 | 43,149,400.13 |
31. Other current liabilities
Unit: RMB
| Item | Ending balance | Beginning balance |
| Taxes to be written off | 13,041,581.15 | 10,993,512.35 |
| Relocation compensation received | 95,751,465.00 | |
| Endorsed and undue notes that have not been terminated recognition | 107,393,140.66 | 85,829,697.33 |
| Total | 120,434,721.81 | 192,574,674.68 |
32. Long-term borrowings
(1) Category of long-term borrowings
Unit: RMB
| Item | Ending balance | Beginning balance |
| Guaranteed borrowings | 39,149,400.13 | |
| Credit borrowings | 693,462,473.24 | 499,520,342.78 |
| Less: Current portion of long-term borrowings | -8,500,000.00 | -43,149,400.13 |
| Total | 684,962,473.24 | 495,520,342.78 |
Notes to the category of long-term borrowings:
The long-term borrowing includes interest payable of RMB732,473.24.Other notes, including the interval of interest rate:
| Item | Ending balance | Rate range (%) | Beginning balance | Rate range (%) |
| Guaranteed borrowings | 39,149,400.13 | 2.89-3.10 |
Credit borrowings
| Credit borrowings | 693,462,473.24 | 3.06-3.65 | 499,520,342.78 | 3.06-3.50 |
33. Bonds payable
(1) Bonds payable
Unit: RMB
| Item | Ending balance | Beginning balance |
| Convertible corporate bond | 1,395,480,652.71 | 1,350,171,526.97 |
| Total | 1,395,480,652.71 | 1,350,171,526.97 |
(2) Changes of bonds payable (excluding other financial instruments divided as financial liabilities such aspreferred shares and perpetual bonds)
Unit: RMB
| Bonds name | Par value | Issuing date | Duration | Issuing amount | Beginning | The curren | Withdrawal of interest | Amortization of | Repayment in the | Transferred shares | Ending balance |
| balance | t issue | by par value | premium and depreciation | reporting period | in reporting period | ||||||
| Lu Thai Convertible Bonds (127016) | 1,400,000,000.00 | 9 April 2020 | 6 years | 1,400,000,000.00 | 1,350,171,526.97 | 7,272,210.68 | 42,271,841.48 | 4,199,726.42 | 35,200.00 | 1,395,480,652.71 | |
| Total | -- | -- | -- | 1,400,000,000.00 | 1,350,171,526.97 | 7,272,210.68 | 42,271,841.48 | 4,199,726.42 | 35,200.00 | 1,395,480,652.71 |
(3) Notes to the conditions and time of the shares transfer of the convertible corporate bondsBased on the Reply on Approving Luthai Textile Co., Ltd. to Issue Convertible Bonds to the Public (ZJXK (2020) No. 299) of CSRC,the Company issued 14 million convertible corporate bonds, each with a par value of RMB100, with a total amount of RMB1.4billion and a duration of 6 years, from 9 April 2020 to 8 April 2026.The coupon rates of convertible corporate bonds issued by the Company are 0.3%, 0.6%, 1%, 1.5%, 1.8% and 2% in the first sixperiods, with an annually paid interest. The conversion period starts on 15 October 2020 (including the same day), the first tradingday six months after the issuance date, and ends on the trading day before the due date of corporate convertible bonds (8 April 2026)(including the same day). The holder may apply for bond conversion within the conversion period.The initial conversion price of convertible corporate bonds was RMB9.01 per share when it was issued but was adjusted to RMB8.91per share since 9 July 2020, after the Company implemented the 2019 profit sharing agreement on 8 July 2020. After the Companyimplemented the restricted stock incentive plan in 2021, the price was adjusted to RMB8.76 per share accordingly since 7 June 2021.Upon the implementation of the 2020 profit sharing agreement by the Company on 18 June 2021, it was adjusted to RMB8.71 pershare accordingly again since 18 June 2021.
34. Lease liabilities
Unit: RMB
| Item | Ending balance | Beginning balance |
| Lease payments | 160,713,545.55 | 173,257,619.44 |
| Unrecognized financing costs | -38,978,482.62 | -44,442,505.37 |
| Less: Current portion of lease liabilities | -377,404.52 | |
| Total | 121,357,658.41 | 128,815,114.07 |
Other notesThe amount of interest expense on lease liabilities accrued in 2021 was RMB5,464,022.75, which was included in financial costs -interest expense.
35. Long-term payroll payable
(1) List of long-term payroll payable
Unit: RMB
| Item | Ending balance | Beginning balance |
| III. Other long-term welfare | 57,384,062.39 | 62,137,656.00 |
| Total | 57,384,062.39 | 62,137,656.00 |
36. Deferred income
Unit: RMB
| Item | Beginning balance | Increase | Decrease | Ending balance | Reason for formation |
| Government subsidy | 173,862,983.31 | 40,581,979.25 | 25,486,828.78 | 188,958,133.78 | Government subsidy |
| Total | 173,862,983.31 | 40,581,979.25 | 25,486,828.78 | 188,958,133.78 | -- |
37. Share capital
Unit: RMB
| Beginning balance | Increase/decrease (+/-) | Ending balance | |||||
| New shares issued | Bonus shares | Capital reserve transferred into share capital | Other | Subtotal | |||
| The sum of shares | 858,132,322.00 | 24,285,000.00 | -76,027.00 | 24,208,973.00 | 882,341,295.00 | ||
Other notes:
(1) In line with the resolution of the first Extraordinary General Meeting of the Company on 13 May 2021 and the resolution of the24th session of the Ninth Board of Directors on 17 May 2021, the Company implemented the restricted share incentive scheme toincrease its share capital by RMB24,285,000. This change in share capital has been audited by Zhitong Accounting Firm (SpecialGeneral Partnership) and the capital verification report ZTYZ (2021) No. 371C000287 was issued on 30 May 2021.
(2) In conformity with the resolution of the 26th session of the Ninth Board of Directors of the Company on 26 August 2021, theProposal on Repurchase and Cancel Authorized but Unlocked Restricted Share of the Incentive Personnel not Conforming to theIncentive Condition, all the 80,000 shares authorized to the original incentive personnel who did not conform to the incentivecondition of the Company were repurchased and canceled. This change in share capital has been audited by Zhitong Accounting Firm(Special General Partnership) and the capital verification report ZTYZ (2021) No. 371C000779 was issued on 16 November 2021.
(3) A total of 3,973.00 shares of convertible bonds of the Company can be converted in the Reporting Period.
38. Other equity instruments
(1) Basic information about other outstanding financial instruments such as preferred shares and perpetualbonds at the period-endOn 9 April 2020, the Company publicly issued 14 million A-share convertible corporate bonds (short name: Luthai ConvertibleBonds, bond code: 127016) on Shenzhen Stock Exchange with an issue price of RMB100 per share. The bonds were listed onShenzhen Stock Exchange on 13 May 2020.
(2) Changes of outstanding financial instruments such as preferred shares and perpetual bonds at theperiod-end
Unit: RMB
| Outstanding financial instruments | Period-beginning | Increase | Decrease | Period-end | ||||
| Number | Carrying amount | Number | Carrying amount | Number | Carrying amount | Number | Carrying amount | |
| Convertible debt to equity | 71,386,451.81 | 1,794.97 | 71,384,656.84 | |||||
| Total | 71,386,451.81 | 1,794.97 | 71,384,656.84 | |||||
Other notes:
The decrease in other equity instruments in the current period was due to the conversion of convertible bonds.
39. Capital reserves
Unit: RMB
| Item | Beginning balance | Increase | Decrease | Ending balance |
| Capital premium (premium on stock) | 197,695,880.68 | 56,130,134.21 | 180,800.00 | 253,645,214.89 |
| Other capital reserves | 58,216,607.33 | 28,725,565.43 | 86,942,172.76 | |
| Total | 255,912,488.01 | 84,855,699.64 | 180,800.00 | 340,587,387.65 |
Other notes: including increase and decrease in the Reporting Period and the reasons for changes:
(1) In line with the resolution of the first Extraordinary General Meeting of the Company on 13 May 2021 and the resolution of the24th session of the Ninth Board of Directors on 17 May 2021, the Company implemented the restricted share incentive scheme toincrease its share capital by RMB24,285,000.00 and increase its capital reserve-capital premium by RMB56,098,350.00. Inconformity with the resolution of the 26th session of the Ninth Board of Directors of the Company on 26 August 2021, the Proposalon Repurchase and Cancel Authorized but Unlocked Restricted Share of the Incentive Personnel not Conforming to the IncentiveCondition, all the 80,000 shares authorized to the original incentive personnel who did not conform to the incentive condition of theCompany were repurchased and canceled, reducing the capital reserve-capital premium by RMB180,800.00.
(2) In terms of the restricted stock incentive fees in the Reporting Period, the capital reserves-other capital reserves increased byRMB28,325,788.60. As for deferred income tax assets arising from the restricted stock incentive fees, the capital reserves-othercapital reserves increased by RMB399,719.27.
(3) The capital reserves—capital premium arising from the conversion of convertible bonds increased by RMB31,784.21 in theReporting Period.
40. Treasury stocks
Unit: RMB
| Item | Beginning balance | Increase | Decrease | Ending balance |
| Restricted stock repurchase | 78,908,300.00 | 78,908,300.00 | ||
| Total | 78,908,300.00 | 78,908,300.00 |
Other notes: including increase and decrease in the Reporting Period and the reasons for changes:
The Company recognized the restricted stock repurchase obligations and increased the treasury stocks by RMB78,908,300.00.
41. Other comprehensive income
Unit: RMB
| Item | Beginning balance | Reporting period | Ending balance | |||||
| Income before taxation in the Current Period | Less: Recorded in other comprehensive income in prior period and transferred in profit or loss in the Current Period | Less: Recorded in other comprehensive income in prior period and transferred in retained earnings in the Current Period | Less: Income tax expense | Attributable to owners of the Company as the parent after tax | Attributable to non-controlling interests after tax | |||
| II. Other comprehensive income that may subsequently be reclassified to profit or loss | 1,308,922.89 | -37,737,932.25 | -5,260.99 | -37,732,671.26 | -36,423,748.37 | |||
| Differences arising from translation of foreign currency-denominated financial statements | 1,561,310.24 | -37,716,717.19 | -37,716,717.19 | -36,155,406.95 | ||||
| Changes in fair value of receivable financing | -252,387.35 | -21,215.06 | -5,260.99 | -15,954.07 | -268,341.42 | |||
| Total of other comprehensive income | 1,308,922.89 | -37,737,932.25 | -5,260.99 | -37,732,671.26 | -36,423,748.37 |
42. Surplus reserves
Unit: RMB
| Item | Beginning balance | Increase | Decrease | Ending balance |
| Statutory surplus reserves | 1,150,675,885.21 | 61,106,878.75 | 1,211,782,763.96 | |
| Discretional surplus reserves | 3,341,572.58 | 3,341,572.58 | ||
| Total | 1,154,017,457.79 | 61,106,878.75 | 1,215,124,336.54 |
Notes, including increase and decrease in the Reporting Period and the reasons for changes:
According to the Company Law and Articles of Association, the Company has withdrawn the statutory surplus reserves on the basisof 10% of net profit.
43. Retained profits
Unit: RMB
| Item | Reporting period | Same period of last year |
| Beginning balance of retained profits before adjustments | 5,346,819,948.22 | 5,372,073,615.12 |
| Beginning balance of retained profits after adjustments | 5,346,819,948.22 | 5,372,073,615.12 |
| Add: Net profit attributable to owners of the Company as the parent | 347,609,693.30 | 97,308,593.36 |
| Less: Withdrawal of statutory surplus reserves | 61,106,878.75 | 36,750,106.16 |
| Dividend of ordinary shares payable | 44,120,990.40 | 85,812,154.10 |
| Ending retained profits | 5,589,201,772.37 | 5,346,819,948.22 |
List of adjustment of beginning retained profits:
1) RMB0.00 beginning retained profits was affected by retrospective adjustment conducted according to the Accounting Standardsfor Business Enterprises and relevant new regulations.
2) RMB0.00 beginning retained profits was affected by changes in accounting policies.
3) RMB0.00 beginning retained profits was affected by correction of significant accounting errors.
4) RMB0.00 beginning retained profits was affected by changes in combination scope arising from same control.
5) RMB0.00 beginning retained profits was affected totally by other adjustments.
44. Operating revenue and cost of sales
Unit: RMB
| Item | Reporting period | Same period of last year | ||
| Operating revenue | Cost of sales | Operating revenue | Cost of sales | |
| Main operations | 5,104,372,856.43 | 4,051,960,658.77 | 4,617,041,425.50 | 3,626,523,021.96 |
| Other operations | 133,889,492.42 | 101,020,417.08 | 134,181,038.64 | 111,461,061.49 |
| Total | 5,238,262,348.85 | 4,152,981,075.85 | 4,751,222,464.14 | 3,737,984,083.45 |
Whether the lower of the audited net profit before and after deduction of non-recurring gains and losses was negative
□ Yes √ No
Other notesNot applicable
45. Taxes and surtaxes
Unit: RMB
| Item | Reporting period | Same period of last year |
| Urban maintenance and construction tax | 14,381,696.21 | 16,267,317.58 |
| Education surcharge | 6,290,701.80 | 7,130,143.42 |
| Resources tax | 549,706.00 | 505,772.00 |
| Property tax | 20,100,901.40 | 20,777,433.63 |
| Land use tax | 9,909,346.19 | 10,840,949.57 |
| Vehicle and vessel usage tax | 76,140.82 | 117,267.16 |
| Stamp duty | 2,859,516.00 | 3,613,573.57 |
| Local education surcharge | 4,193,801.19 | 4,753,426.83 |
| Local water conservancy facility construction fund | 1,160,401.18 | |
| Environmental protection tax | 1,123,830.97 | 1,072,699.34 |
| Total | 59,485,640.58 | 66,238,984.28 |
Other notes:
Please refer to Note VI. Taxes for details of various taxes and additional standards for calculation and payment.
46. Selling expense
Unit: RMB
| Item | Reporting period | Same period of last year |
| Salary | 57,662,873.54 | 50,666,138.45 |
| Sales service fee | 21,639,487.21 | 20,798,085.79 |
| Advertising expense | 14,810,042.91 | 18,067,874.04 |
| Depreciation charge | 5,622,896.50 | 6,780,645.30 |
| Repair material consumption | 4,215,335.36 | 7,360,671.96 |
| Business entertainment expenses | 2,902,178.36 | 1,145,955.38 |
| Insurance | 1,725,564.05 | 1,392,889.17 |
| Travel expense | 1,450,850.24 | 2,313,778.38 |
| Office expense | 1,317,861.12 | 2,030,701.54 |
| Other | 8,536,405.39 | 15,160,548.30 |
| Total | 119,883,494.68 | 125,717,288.31 |
47. Administrative expense
Unit: RMB
| Item | Reporting period | Same period of last year |
| Salary | 131,684,437.04 | 133,834,030.11 |
| Depreciation charge | 39,245,353.92 | 35,613,188.28 |
| Warehouse funding | 37,711,640.44 | 33,864,462.81 |
| Travel expense | 25,162,377.20 | 21,654,390.78 |
| Labor-union expenditure | 12,176,204.31 | 11,783,103.47 |
| Amortization of intangible assets | 10,997,114.25 | 12,415,037.36 |
| Business entertainment expenses | 8,995,348.15 | 9,403,372.91 |
| Employee education budget | 8,570,709.45 | 8,330,662.45 |
| Vehicle costs | 6,771,148.79 | 5,896,177.70 |
| Labor cost | 6,249,981.95 | 10,480,835.36 |
| Energy cost | 6,042,018.37 | 4,051,585.48 |
| Office expense | 5,690,554.65 | 7,536,785.41 |
| Environmental protection cost | 3,139,516.50 | 7,005,973.46 |
| Audit and assessment fees | 3,110,755.89 | 2,987,938.06 |
| Security and firefighting fees | 3,100,553.74 | 3,663,515.33 |
| Information development cost | 2,987,855.62 | 3,578,952.66 |
| Repair material consumption | 2,874,837.88 | 4,610,678.89 |
| Decoration & repair expenses | 2,789,399.86 | 2,863,836.66 |
| Insurance | 2,729,563.84 | 4,219,512.50 |
| Rental charges | 13,250,044.64 |
| Other | 15,350,653.69 | 23,612,638.07 |
| Total | 335,380,025.54 | 360,656,722.39 |
48. R&D expense
Unit: RMB
| Item | Reporting period | Same period of last year |
| Labor cost | 150,169,732.63 | 119,008,873.85 |
| Material expense | 71,155,134.23 | 90,657,026.38 |
| Depreciation charge | 12,291,606.38 | 12,610,517.42 |
| Other | 19,296,438.39 | 8,988,613.47 |
| Total | 252,912,911.63 | 231,265,031.12 |
49. Financial costs
Unit: RMB
| Item | Reporting period | Same period of last year |
| Interest expense | 95,549,947.27 | 82,942,315.52 |
| Less: Capitalized interest expense | 30,023,129.89 | 15,028,199.55 |
| Interest income | 53,773,124.16 | 25,174,851.32 |
| Add: Capitalized interest income | 13,087,046.94 | |
| Foreign exchange gains or losses | 12,488,479.34 | 59,912,996.06 |
| Less: Capitalized foreign exchange gains or losses | ||
| Commission charge and other | 7,659,688.91 | 6,894,394.12 |
| Total | 44,988,908.41 | 109,546,654.83 |
Other notes:
The amount of interest capitalization has been included in the construction. The capitalization rate used to calculate and determinethe capitalization amount of borrowing expenses during the period was 3.68%.
50. Other income
Unit: RMB
| Sources | Reporting period | Same period of last year |
| Subsidies for the price of heating coal | 11,000,000.00 | |
| Strengthen the enterprise government subsidy | 10,822,100.00 | 13,321,100.00 |
| Subsidies for work-based training | 4,055,500.00 | 38,000.00 |
| Preferential policy subsidy of developing local enterprises | 3,613,100.00 | 3,048,500.00 |
| Subsidies for multi-purpose pavilions | 3,600,000.00 | |
| Transformation subsidy of garden greens | 3,329,374.13 | 6,530,776.86 |
| Subsidies for key technology projects for the preparation of high-conformity textiles | 2,745,000.00 | |
| Vocational training subsidies | 2,477,050.00 | |
| Post subsidies | 1,988,888.91 | 4,970,305.36 |
| New enterprise apprenticeship training subsidy | 1,306,800.00 | 2,118,480.00 |
| Subsidies for key technology and application projects for the preparation of moisture-wicking, cool and comfortable fabric | 1,030,000.00 | |
| Talent incentive funds | 900,000.00 | |
| One-off absorption of employment subsidies for college graduates | 822,158.52 | 208,000.00 |
| Special subsidies for green factory | 500,000.00 | |
| Refund of withholding tax handling fee | 494,750.80 | 903,449.95 |
| Tax relief | 431,893.85 | 680,073.81 |
| Special subsidies for 2020 National Water Efficiency Frontrunner | 300,000.00 | |
| 2019 Provincial Technological Innovation Demonstration Enterprise Award Fund | 250,000.00 | |
| Special funds for the conversion of new and old industrial kinetic energy in 2019 | 240,000.00 | 336,600.00 |
| 2019 Provincial Innovation Platform Award Fund | 200,000.00 | 500,000.00 |
| Prize for winning projects in the 2020 Science and Technology Awards | 200,000.00 | |
| Second prize of Shandong Province Science and Technology Awards | 200,000.00 | |
| Probation subsidy of youth | 164,717.00 | |
| Shandong Province financial development subsidy in 2021 | 140,000.00 | |
| Subsidy for order skilled talents training | 120,000.00 | |
| R&D subsidy | 87,050.00 | 19,750.00 |
| Social insurance subsidy | 71,053.81 | 954,720.99 |
| Special fund of Zibo Talents Plan | 60,000.00 | 400,000.00 |
| Taishan effective declaration area support subsidy | 50,000.00 | |
| Occupational skills appraisal subsidy | 30,430.00 | |
| Subsidy for scrapped trucks with China III Emission Standard | 25,600.00 | |
| Banyang Talent Program Subsidy | 20,000.00 | 40,000.00 |
| Employment and apprenticeship subsidy fund | 19,508.04 | 500,038.00 |
| Prize for the Best Eco-friendly Award | 5,000.00 | |
| Foreign trade premium stand subsidy | 2,400.00 | |
| Unemployment dynamic monitoring subsidy | 1,200.00 | 1,200.00 |
| Special awards and subsidies for stabilizing employment | 4,837,950.00 | |
| Freight allowance of cotton yarn | 4,054,494.88 | |
| Rewards for R&D projects | 1,700,000.00 | |
| Electricity fee subsidy | 1,168,761.00 | |
| Reward for key technologies of high-quality textiles | 1,150,000.00 | |
| 2019 National and Provincial Science and Technology Awards Supporting Funds | 1,000,000.00 | |
| 2019 State Science and Technology Award supporting subsidies | 800,000.00 | |
| Subsidy for leading persons project of Mount Tai industry | 850,000.00 | |
| 2019 Municipal Special Fund Subsidy in the Field of Commerce | 289,900.00 | |
| Municipal subsidy for overseas engineer introduction project | 270,000.00 | |
| Provincial subsidies for commercial development and market development | 256,300.00 | |
| Talent subsidy | 200,000.00 | |
| Central Foreign Trade and Economic Development Fund | 198,000.00 | |
| One-off subsidy for new employment | 196,000.00 | |
| Special fund subsidy for the conversion of new and old industrial kinetic energy in 2019 | 180,000.00 | |
| Vocational Skills Subsidy Fund | 160,000.00 | |
| Subsidies and awards for patent funding | 152,000.00 | |
| The 2019 State Science and Technology Award | 150,000.00 | |
| Award of the 3rd "Governor Cup" Industrial Design Competition | 150,000.00 | |
| Municipal Foreign Economic and Trade Development Special Fund | 123,400.00 | |
| Subsidy for the new enterprise apprenticeship in 2020 | 99,000.00 | |
| Workstation subsidy to the payment to technicians | 80,000.00 | |
| Subsidy award of project research and development | 67,300.00 | |
| Supporting funds and government subsidies for Zibo Talents Program | 60,000.00 | |
| Employee training subsidy | 58,316.18 | |
| 2019 Municipal Special Funds for Commercial Fields | 55,500.00 | |
| 2019 provincial special fund for business development and market expansion | 53,100.00 |
| Shandong Province Enterprise Research and Development Financial Subsidy Funds in 2020 | 31,000.00 | |
| Excellent system innovation subsidy | 30,000.00 | |
| Talent project support subsidies | 30,000.00 | |
| Support funds for domestic private enterprises | 20,000.00 | |
| "Top Ten Technologies" Prize | 3,000.00 | |
| Land subsidies | 1,354,251.84 | 1,380,189.20 |
| Low-torque high energy-saving and high-quality new spinning projects | 349,473.60 | 349,473.60 |
| Intelligent dyeing production and energy and water conservation renovation projects | 2,081,140.68 | 1,941,303.27 |
| Recycled water reuse project | 451,376.16 | 451,376.16 |
| Technical transformation project of high grade yarn-dyed fabric | 112,144.32 | 112,144.32 |
| Technical transformation project of high-grade grey cloth production line | 587,840.49 | 176,767.71 |
| Support funds for sewage treatment and reuse of recycled water | 103,083.72 | 103,083.72 |
| Technical improvement project of bobbin yarn dyeing | 593,406.60 | 593,406.60 |
| Subsidy for public rental housing | 48,231.48 | 48,231.48 |
| Subsidy of green power | 1,022,818.80 | 1,022,818.80 |
| Subsidies for ultra-low emission technical upgrading projects | 105,109.44 | 105,109.44 |
| Hu sheep subsidies | 56,666.64 | |
| Subsidy of cotton seed reproduction | 46,666.64 | |
| Technical Transformation Project of Garment Automation Equipment | 38,814.66 | 15,589.98 |
| Subsidy for investment in technical renovation equipment | 262,162.86 | 263,429.52 |
| Investment subsidy | 272,600.00 | |
| Total | 58,686,029.71 | 59,711,274.11 |
51. Investment income
Unit: RMB
| Item | Reporting period | Same period of last year |
| Long-term equity investment income accounted by equity method | -10,755,175.91 | -5,146,737.73 |
| Investment income from disposal of long-term equity investment | -2,571,504.38 | |
| Investment income from holding of trading | 5,196,411.23 | 6,793,854.87 |
| financial assets | ||
| Investment income from disposal of trading financial assets | 52,737,594.16 | 144,480,875.90 |
| Interest income from debt investment during the holding period | 3,271,114.22 | 2,411,915.22 |
| Total | 50,449,943.70 | 145,968,403.88 |
52. Gain on changes in fair value
Unit: RMB
| Sources | Reporting period | Same period of last year |
| Trading financial assets | 16,415,304.41 | -107,002,594.56 |
| Of which: Income from changes in fair value generated by derivative financial instruments | -14,914,500.00 | 16,641,500.00 |
| Total | 16,415,304.41 | -107,002,594.56 |
53. Credit impairment loss
Unit: RMB
| Item | Reporting period | Same period of last year |
| Bad debt loss of other receivables | 191,358.68 | 718,398.77 |
| Bad debt loss of long-term receivables | 4,568,589.55 | -4,633,230.30 |
| Bad debt loss of notes receivable ("-" indicates loss) | -6,394.34 | |
| Bad debt loss of accounts receivable ("-" indicates loss) | -4,661,497.52 | -14,004,835.20 |
| Bad debt loss of dividends receivable ("-" indicates loss) | 1,498,035.63 | -3,973,086.97 |
| Total | 1,590,092.00 | -21,892,753.70 |
54. Asset impairment loss
Unit: RMB
| Item | Reporting period | Same period of last year |
| II. Inventory falling price loss and impairment provision for contract performance costs | -84,192,619.67 | -112,327,808.51 |
| V. Impairment loss on fixed assets | -1,431,238.59 | -1,132,500.45 |
| Total | -85,623,858.26 | -113,460,308.96 |
55. Asset disposal income
Unit: RMB
| Sources | Reporting period | Same period of last year |
| Fixed asset disposal income ("-" for loss) | 37,736,401.52 | -317,803.17 |
| Intangible asset disposal income ("-" for loss) | 19,438,746.10 | |
| Total | 57,175,147.62 | -317,803.17 |
56. Non-operating income
Unit: RMB
| Item | Reporting period | Same period of last year | Amount recorded in the current non-recurring profit or loss |
| Government subsidy | 845.19 | 845.19 | |
| Claim income | 3,882,284.18 | 5,032,951.79 | 3,882,284.18 |
| Other | 1,533,989.70 | 1,433,072.57 | 1,533,989.70 |
| Total | 5,417,119.07 | 6,466,024.36 | 5,417,119.07 |
Government subsidies recorded into current profit or loss:
Unit: RMB
| Item | Distribution entity | Distribution reason | Nature | Whether subsidies influence the current profits and losses or not | Special subsidy or not | Reporting period | Same period of last year | Related to assets/related to income |
| Labor safety and health incentives | People's Committee of An Giang Province, Vietnam | Reward | Not | Not | 845.19 | Related to income |
57. Non-operating expense
Unit: RMB
| Item | Reporting period | Same period of last year | Amount recorded in the current non-recurring profit or loss |
| Donations | 5,427,805.35 | 1,752,876.18 | 5,427,805.35 |
| Losses from damage and scrap of non-current assets | 6,307,127.66 | 376,456.28 | 6,307,127.66 |
| Other | 1,689,121.86 | 2,339,578.62 | 1,689,121.86 |
| Total | 13,424,054.88 | 4,468,911.08 | 13,424,054.88 |
58. Income tax expense
(1) List of income tax expense
Unit: RMB
| Item | Reporting period | Same period of last year |
| Current income tax expense | 44,300,245.37 | 38,469,209.70 |
| Deferred income tax expense | -8,307,165.86 | -42,742,237.45 |
| Total | 35,993,079.51 | -4,273,027.75 |
(2) Adjustment process of accounting profit and income tax expense
Unit: RMB
| Item | Reporting period |
| Profit before taxation | 363,316,015.53 |
| Current income tax expense accounted at statutory/applicable tax rate | 54,497,402.33 |
| Influence of applying different tax rates by subsidiaries | -15,238,189.47 |
| Influence of income tax before adjustment | 820,327.33 |
| Influence of non-taxable income | -17,138,395.05 |
| Influence of not deductable costs, expenses and losses | 15,399,653.28 |
| Influence of deductable losses of unrecognized deferred income tax assets at the beginning of the Reporting Period | -2,436,584.32 |
| Influence of deductible temporary difference or deductable losses of unrecognized deferred income tax assets at the beginning of the Reporting Period | 24,611,274.88 |
| Profit/loss of associated enterprises and joint ventures accounted by equity method | 1,613,276.39 |
| Influence of additional deduction of R&D expenses (filled in with "-") | -26,061,699.54 |
| Influence of other expense deduction (filled in with "-") | -73,986.32 |
| Income tax expense | 35,993,079.51 |
59. Other comprehensive income
Refer to Note VII. 41 for details.
60. Cash flow statement
(1) Cash generated from other operating activities
Unit: RMB
| Item | Reporting period | Same period of last year |
| Government subsidy | 73,782,025.37 | 80,076,898.17 |
| Claim income | 1,868,220.21 | 3,931,883.43 |
| Recovery of employee borrowings, petty cash and deposit | 17,533,544.43 | 19,948,308.54 |
| Collection for employees | 3,269,342.35 | 15,442,855.96 |
| Other | 3,307,603.12 | 214,518.33 |
| Total | 99,760,735.48 | 119,614,464.43 |
(2) Cash used in other operating activities
Unit: RMB
| Item | Reporting period | Same period of last year |
| Business travel charges | 27,609,515.01 | 24,029,920.48 |
| Insurance | 5,399,989.92 | 3,271,534.17 |
| Audit advisory announcement fee | 6,968,624.27 | 10,381,102.45 |
| Decoration & repair expenses | 2,551,270.42 | 8,348,948.84 |
| Donation | 5,427,805.35 | 1,752,876.18 |
| Pre-payment | 2,540,000.00 | 10,400,000.00 |
| Payment of employee borrowings, petty cash and deposit | 20,293,286.72 | 15,750,161.05 |
| Agency service fee | 6,934,810.71 | 9,055,676.53 |
| Advertising expense | 837,155.92 | 1,540,564.49 |
| Freight and miscellaneous charges | 51,802,597.09 | |
| Rental charges | 15,537,996.80 | |
| Other | 59,866,771.57 | 58,740,085.32 |
| Total | 138,429,229.89 | 210,611,463.40 |
(3) Cash generated from other investing activities
Unit: RMB
| Item | Reporting period | Same period of last year |
| Interest income | 40,794,225.34 | 26,063,185.14 |
| Income from forward foreign exchange | 52,737,594.16 | 6,312,453.22 |
| Cash deposit of L/C for purchasing equipment | 1,515,615.23 | 28,897,270.77 |
| Recovery of intercourse funds | 3,246,603.60 | |
| Option cost | 960,000.00 | |
| Total | 98,294,038.33 | 62,232,909.13 |
(4) Cash used in other investing activities
Unit: RMB
| Item | Reporting period | Same period of last year |
| Forward settlement exchange loss | 3,825,002.26 | |
| Term deposit | 338,493,598.92 | |
| Payment of deposit for the L/C of equipment purchase | 550,000.00 | 1,558,651.21 |
| Payment of forward settlement deposit | 1,100,000.00 | |
| Total | 339,043,598.92 | 6,483,653.47 |
(5) Cash generated from other financing activities
Unit: RMB
| Item | Reporting period | Same period of last year |
| Return of loan guarantees | 14,000,000.00 | |
| Recovery of intercourse accounts | 160,000,000.00 | |
| Total | 174,000,000.00 |
(6) Cash used in other financing activities
Unit: RMB
| Item | Reporting period | Same period of last year |
| Repayment of lease liabilities and prepaid rent | 23,817,316.19 | |
| Time deposit certificates pledged | 40,000,000.00 | |
| Payment for intercourse accounts | 160,000,000.00 | |
| Payment of convertible bond fractional stock funds | 200,000.00 | |
| Total | 63,817,316.19 | 160,200,000.00 |
61. Supplemental information for cash flow statement
(1) Supplemental information for cash flow statement
Unit: RMB
| Supplementary materials | Reporting period | Same period of last year |
| 1. Reconciliation of net profit to net cash flows generated from operating activities | -- | -- |
| Net profit | 327,322,936.02 | 89,090,058.39 |
| Add: Provision for impairment of assets | 84,033,766.26 | 135,353,062.66 |
| Depreciation of fixed assets, oil-gas assets, and productive living assets | 438,000,648.11 | 457,209,289.42 |
| Depreciation of right-of-use assets | 18,589,585.97 | |
| Amortization of intangible assets | 11,119,539.17 | 15,282,546.20 |
| Amortization of long-term prepaid expenses | 733,746.72 | 7,623,370.94 |
| Losses from disposal of fixed assets, intangible assets and other long-lived assets (gains: negative) | -57,175,147.62 | 317,803.17 |
| Losses from scrap of fixed assets (gains: negative) | 6,307,127.66 | 376,456.28 |
| Losses from changes in fair value (gains: negative) | -16,415,304.41 | 107,002,594.56 |
| Finance costs (gains: negative) | 35,591,822.80 | 101,349,136.17 |
| Investment loss (gains: negative) | -50,449,943.70 | -145,968,403.88 |
| Decrease in deferred income tax assets (gains: negative) | -15,245,314.55 | -35,935,040.48 |
| Increase in deferred income tax liabilities (“-” means decrease) | 6,938,148.70 | -6,807,196.97 |
| Decrease in inventory (gains: negative) | -376,221,851.40 | 183,611,561.73 |
| Decrease in accounts receivable generated from operating activities (gains: negative) | -183,550,625.67 | -59,283,977.32 |
| Increase in accounts payable used in operating activities (decrease: negative) | 118,557,871.42 | -255,685,337.98 |
| Other | ||
| Net cash generated from/used in operating activities | 348,137,005.48 | 593,535,922.89 |
| 2. Significant investing and financing activities without involvement of cash receipts and payments | -- | -- |
| Conversion of debt into capital | ||
| Convertible corporate bonds due within one year | ||
| Fixed assets under financing lease | ||
| 3. Net increase/decrease of cash and cash equivalent: | -- | -- |
| Ending balance of cash | 1,970,006,884.89 | 1,396,530,407.47 |
| Less: Beginning balance of cash | 1,396,530,407.47 | 878,559,018.92 |
| Add: ending balance of cash | ||
| Less: Beginning balance of cash equivalents | ||
| Net increase in cash and cash equivalents | 573,476,477.42 | 517,971,388.55 |
(2) Cash and cash equivalents
Unit: RMB
| Item | Ending balance | Beginning balance |
| I. Cash | 1,970,006,884.89 | 1,396,530,407.47 |
| Including: Cash on hand | 3,475,164.56 | 7,009,891.16 |
| Bank deposit on demand | 1,966,531,720.33 | 1,389,520,516.31 |
| III. Ending balance of cash and cash equivalents | 1,970,006,884.89 | 1,396,530,407.47 |
62. Assets with restricted ownership or right to use
Unit: RMB
| Item | Ending carrying value | Reason for restriction |
| Monetary capital | 1,693,035.98 | Margin |
| Other Non-current Assets | 40,000,000.00 | Time deposit certificates pledge |
| Total | 41,693,035.98 | -- |
63. Foreign currency monetary items
(1) Foreign currency monetary items
Unit: RMB
| Item | Ending foreign currency balance | Exchange rate | Ending balance converted to RMB |
| Monetary capital | -- | -- | |
| Of which: USD | 55,572,448.31 | 6.3757 | 354,313,258.69 |
| EUR | 503,879.03 | 7.2197 | 3,637,855.43 |
| HKD | 4,855,897.76 | 0.8176 | 3,970,182.01 |
| JPY | 1,064,347.00 | 0.0554 | 58,964.82 |
| GBP | 1,957.18 | 8.6064 | 16,844.27 |
| CHF | 14,787.87 | 6.9776 | 103,183.84 |
| Dong | 109,127,146,496.00 | 0.00028 | 30,443,218.78 |
| MMK | 657,459,135.18 | 0.0036 | 2,357,571.56 |
| Riel | 30,482,639.00 | 0.0016 | 47,704.51 |
| Notes receivable: | |||
| Of which: USD | 15,411,505.22 | 6.3757 | 98,259,133.55 |
| Accounts receivable | -- | -- | |
| Of which: USD | 67,838,770.47 | 6.3757 | 432,519,648.89 |
| EUR | 310,320.35 | 7.2197 | 2,240,419.83 |
| HKD | |||
| Dong | 12,700,133,886.00 | 0.00028 | 3,542,958.53 |
| MMK | 14,108,400.00 | 0.0036 | 50,591.07 |
| Other receivables: | |||
| Of which: USD | 1,675,733.86 | 6.3757 | 10,683,976.37 |
| JPY | 1,395,040.00 | 0.0554 | 77,285.22 |
| HKD | 140,749.00 | 0.8176 | 115,076.38 |
| Dong | 22,790,000.00 | 0.00028 | 6,357.73 |
| GBP | 7,250.00 | 8.6064 | 62,396.40 |
| MMK | 1,200,000.00 | 0.0036 | 4,303.06 |
| Accounts payable: | |||
| Of which: USD | 30,120,694.27 | 6.3757 | 192,040,510.46 |
| JPY | 14,210,028.00 | 0.0554 | 787,235.55 |
| EUR | 500,208.06 | 7.2197 | 3,611,352.13 |
| CHF | 20,100.00 | 6.9776 | 140,249.76 |
| Dong | 24,704,657,463.00 | 0.00028 | 6,891,862.53 |
| MMK | 8,439,074.40 | 0.0036 | 30,261.53 |
| Other payables: | |||
| Of which: USD | 5,448.60 | 6.3757 | 34,738.64 |
| Dong | 1,078,493,475.00 | 0.00028 | 300,867.51 |
| MMK | 1,030,000.00 | 0.0036 | 3,693.46 |
| Short-term borrowings: | |||
| Of which: USD | 145,926,410.93 | 6.3757 | 930,383,018.17 |
| Dong | 93,763,475,075.00 | 0.00028 | 26,231,805.75 |
(2) Notes to overseas entities including: for significant oversea entities, main operating place, recordingcurrency and selection basis shall be disclosed; if there are changes in recording currency, relevant reasonsshall be disclosed.
√ Applicable □ Not applicable
The operating places of the Company’s subsidiaries Lu Thai (Hong Kong), Vanguard Apparel, Lu Thai (America) and ContinentalTextile, as well as the sub-subsidiaries Lu Thai Tan Chau, Libra International, Polaris Apparel and Lu An Garment Co., Ltd. wereHong Kong, Burma, America, Vietnam, Vietnam, Singapore, Cambodia and Vietnam respectively, and the recording currency wasHKD for Lu Thai (Hong Kong), and USD for other overseas companies.
64. Government subsidy
(1) Basic information on government subsidy
Unit: RMB
| Category | Amount | Listed items | Amount recorded in the current profit or loss |
| Equipment subsidy | 7,293,300.00 | Deferred income | 5,707,371.33 |
| R&D subsidy | 288,679.25 | Deferred income | 3,775,000.00 |
| Subsidies for the price of heating coal | 33,000,000.00 | Deferred income | 11,000,000.00 |
| Strengthen the enterprise government subsidy | 10,822,100.00 | Other income | 10,822,100.00 |
| Subsidies for work-based training | 4,055,500.00 | Other income | 4,055,500.00 |
| Preferential policy subsidy of developing local enterprises | 3,613,100.00 | Other income | 3,613,100.00 |
| Subsidies for multi-purpose pavilions | 3,600,000.00 | Other income | 3,600,000.00 |
| Vocational training subsidies | 2,477,050.00 | Other income | 2,477,050.00 |
| Post subsidies | 1,988,888.91 | Other income | 1,988,888.91 |
| New enterprise apprenticeship training subsidy | 1,306,800.00 | Other income | 1,306,800.00 |
| Talent incentive funds | 900,000.00 | Other income | 900,000.00 |
| One-off absorption of employment subsidies for college graduates | 822,158.52 | Other income | 822,158.52 |
| Special subsidies for green factory | 500,000.00 | Other income | 500,000.00 |
| Refund of withholding tax handling fee | 494,750.80 | Other income | 494,750.80 |
| Tax relief | 431,893.85 | Other income | 431,893.85 |
| Special subsidies for 2020 National Water Efficiency Frontrunner | 300,000.00 | Other income | 300,000.00 |
| 2019 Provincial Technological Innovation Demonstration Enterprise Award Fund | 250,000.00 | Other income | 250,000.00 |
| Special funds for the conversion of new and old industrial kinetic energy in 2019 | 240,000.00 | Other income | 240,000.00 |
| 2019 Provincial Innovation Platform Award Fund | 200,000.00 | Other income | 200,000.00 |
| Prize for winning projects in the 2020 Science and Technology Awards | 200,000.00 | Other income | 200,000.00 |
| Second prize of Shandong Province Science and Technology Awards | 200,000.00 | Other income | 200,000.00 |
| Probation subsidy of youth | 164,717.00 | Other income | 164,717.00 |
| Shandong Province financial development subsidy in 2021 | 140,000.00 | Other income | 140,000.00 |
| Subsidy for order skilled talents training | 120,000.00 | Other income | 120,000.00 |
| R&D subsidy | 87,050.00 | Other income | 87,050.00 |
| Social insurance subsidy | 71,053.81 | Other income | 71,053.81 |
| Special fund of Zibo Talents Plan | 60,000.00 | Other income | 60,000.00 |
| Taishan effective declaration area support subsidy | 50,000.00 | Other income | 50,000.00 |
| Occupational skills appraisal subsidy | 30,430.00 | Other income | 30,430.00 |
| Subsidy for scrapped trucks with China III Emission Standard | 25,600.00 | Other income | 25,600.00 |
| Panyang Talent Program | 20,000.00 | Other income | 20,000.00 |
| Subsidy | |||
| Employment and apprenticeship subsidy fund | 19,508.04 | Other income | 19,508.04 |
| Prize for the Best Eco-friendly Award | 5,000.00 | Other income | 5,000.00 |
| Foreign trade premium stand subsidy | 2,400.00 | Other income | 2,400.00 |
| Unemployment dynamic monitoring subsidy | 1,200.00 | Other income | 1,200.00 |
| Labor safety and health incentives | 845.19 | Non-operating Income | 845.19 |
| Total | 73,782,025.37 | 53,682,417.45 |
(2) Return of government subsidy
□ Applicable √ Not applicable
VIII. Change of Consolidation Scope
1. Other reasons for changes of consolidation scope
Note to changes in combination scope for other reasons (such as newly establishment or liquidation of subsidiaries, etc.) and relevantinformation:
The newly-established subsidiaries of the Company in the Reporting Period included Hainan Huilin International Holdings Co., Ltd.,Libra International Investment Pet. Ltd. and Zibo Banyang Mountain Villa Hotel Co., Ltd.IX. Equity in Other Entities
1. Equity in subsidiary
(1) Subsidiaries
| Name | Main operating place | Registration place | Nature of business | Holding percentage (%) | Way of gaining | |
| Directly | Indirectly | |||||
| Luthai (Hong Kong) | Hong Kong | Hong Kong | Wholesale and retail industry | 100.00% | Set-up | |
| Shanghai Luthai | Shanghai | Shanghai | Wholesale and retail industry | 100.00% | Set-up | |
| Lufeng Company Limited | Zibo | Zibo | Manufacturing industry | 75.00% | Set-up | |
| Luqun Textile | Zibo | Zibo | Manufacturing industry | 100.00% | Set-up | |
| Xinsheng Power | Zibo | Zibo | Manufacturing industry | 100.00% | Business combination not under the same control | |
| Shanghai Zhinuo | Shanghai | Shanghai | Technology development, technical consultancy and transfer of technologies | 100.00% | Set-up | |
| Lulian New Materials | Zibo | Zibo | Manufacturing industry | 75.00% | Set-up | |
| Lujia Import & Export | Zibo | Zibo | Import and export trade | 100.00% | Set-up | |
| Zhishu Trading | Beijing | Beijing | Wholesale and retail industry | 100.00% | Set-up | |
| Lu Thai Occupational Training School | Zibo | Zibo | Skill training | 100.00% | Set-up | |
| Banyang Mountain Villa | Zibo | Zibo | Catering services | 100.00% | Set-up | |
| Huilin International | Wenchang | Wenchang | Modern service industry | 100.00% | Set-up | |
| Libra International (sub-subsidiary) | Singapore | Singapore | Wholesale textiles and leather, holding company | 100.00% | Set-up | |
| Polaris Apparel (sub-subsidiary) | Cambodia | Cambodia | Manufacturing industry | 100.00% | Set-up | |
| Vanguard Apparel | Burma | Burma | Manufacturing industry | 100.00% | Set-up | |
| Lu Thai (America) | America | America | Wholesale and retail industry | 100.00% | Set-up | |
| Continental Textile | Vietnam | Vietnam | Manufacturing industry | 100.00% | Set-up | |
| Lu Thai Tan | Vietnam | Vietnam | Manufacturing | 100.00% | Set-up |
| Chau (sub-subsidiary) | industry | |||||
| Lu An Garments (sub-subsidiary) | Vietnam | Vietnam | Manufacturing industry | 100.00% | Set-up |
Notes to holding proportion in subsidiary different from voting proportion:
Not applicable.Basis of holding half or less voting rights but still controlling the investee and holding more than half of the voting rights but notcontrolling the investee:
Not applicableSignificant structural entities and controlling basis in the scope of combination:
Not applicable.Basis of determining whether the Company is the agent or the principal:
Not applicable.
(2) Significant non-wholly-owned subsidiary
Unit: RMB
| Name | Shareholding proportion of non-controlling interests | The profit or loss attributable to the non-controlling interests | Declaring dividends distributed to non-controlling interests | Balance of non-controlling interests at the period-end |
| LuFeng Company Limited | 25.00% | -593,259.31 | 311,408,857.37 | |
| Lulian New Materials | 25.00% | -19,693,497.97 | 72,403,174.53 |
(3) The main financial information of significant not wholly-owned subsidiary
Unit: RMB
| Name | Ending balance | Beginning balance | ||||||||||
| Current assets | Non-current assets | Total assets | Current liabilities | Non-current liability | Total liabilities | Current assets | Non-current assets | Total assets | Current liabilities | Non-current liability | Total liabilities | |
| Lufeng Company Limited | 1,126,316,837.35 | 759,362,074.19 | 1,885,678,911.54 | 586,526,434.78 | 49,665,247.83 | 636,191,682.61 | 900,603,950.86 | 765,771,111.19 | 1,666,375,062.05 | 365,567,492.89 | 43,982,357.41 | 409,549,850.30 |
| Lulian New | 474,526,303.81 | 523,835,116.34 | 998,361,420.15 | 706,300,975.36 | 3,185,310.88 | 709,486,286.24 | 508,510,155.05 | 414,671,978.33 | 923,182,133.38 | 551,639,028.01 | 3,156,415.36 | 554,795,443.37 |
Unit: RMB
MaterialsName
| Name | Reporting period | Same period of last year | ||||||
| Operating revenue | Net profit | Total comprehensive income | Cash flows from operating activities | Operating revenue | Net profit | Total comprehensive income | Cash flows from operating activities | |
| Lufeng Company Limited | 1,400,185,935.63 | -7,534,683.42 | -7,337,982.82 | -186,015,899.52 | 1,310,505,310.08 | 22,061,576.93 | 21,853,748.55 | -11,925,802.56 |
| Lulian New Materials | 44,524,344.91 | -79,511,556.10 | -79,511,556.10 | -54,085,659.40 | 7,663,754.58 | -29,488,362.76 | -29,488,362.76 | -62,887,712.36 |
2. Equity in joint ventures or associated enterprises
(1) Significant joint ventures or associated enterprises
| Name | Main operating place | Registration place | Nature of business | Holding percentage (%) | Accounting treatment of the investment to joint venture or associated enterprise | |
| Directly | Indirectly | |||||
| I. Joint ventures | ||||||
| II. Associated enterprises | ||||||
| Haohong Investment | Ningbo | Ningbo | Equity investment | 33.33% | Equity method | |
| Haoing Investment | Ningbo | Ningbo | Equity investment | 47.62% | Equity method | |
(2) Main financial information of significant associated enterprises
Unit: RMB
| Ending balance/reporting period | Beginning balance/the same period of last year | |||
| Haohong Investment | Haoying Investment | Haohong Investment | Haoying Investment | |
| Current assets | 206,401,708.32 | 214,686,791.30 | 265,506,727.38 | 104,472,061.07 |
| Non-current assets | ||||
| Total assets | 206,401,708.32 | 214,686,791.30 | 265,506,727.38 | 104,472,061.07 |
| Current liabilities | 3,433,167.13 | 517,461.99 | ||
| Non-current liability | ||||
| Total liabilities | 3,433,167.13 | 517,461.99 | ||
| Net assets | 202,968,541.19 | 214,686,791.30 | 264,989,265.39 | 104,472,061.07 |
| Equity of non-controlling interests | ||||
| Equity attributable to shareholders of the Company as the parent | 202,968,541.19 | 214,686,791.30 | 264,989,265.39 | 104,472,061.07 |
| Net assets shares calculated at the shareholding proportion | 67,657,626.65 | 102,231,850.02 | 88,329,922.16 | 49,749,655.09 |
| Adjusted items | ||||
| - Goodwill | ||||
| - Unrealized profit of internal transactions | ||||
| - Others | -446,370.01 | |||
| Carrying value of investment to associated enterprises | 67,657,626.65 | 101,785,480.01 | 88,329,922.16 | 49,749,655.09 |
| Fair value of equity investments in associated enterprises with publicly quoted prices | ||||
| Operating revenue | ||||
| Net profit | -38,376,840.16 | 5,214,730.23 | -17,110,725.89 | -525,713.80 |
| Total comprehensive income | -38,376,840.16 | 5,214,730.23 | -17,110,725.89 | -525,713.80 |
X. The Risk Related to Financial InstrumentsThe Company's major financial instruments include monetary capital, notes receivable, accounts receivable, accounts receivablefinancing, other receivables, other current assets, trading financial assets, investment in debt obligations, other non-current financialassets, long-term receivables, notes payable, accounts payable, other payables, short-term borrowings, current portion of non-currentliabilities, long-term borrowings, bonds payable, and lease liabilities. Details of various financial instruments are disclosed inrelevant Notes. Possible risks related to these financial instruments and various risk management policies implemented to reducethese risks are described as follows. The Company’s management has controlled and monitored these risk exposures in order tocontrol the above-mentioned risks within the limited scope.
1. Risk management objectives and policies
The Company has conducted the risk management to achieve an appropriate balance between the risk and the income and tominimize the adverse influence of financial risks on the Company’s financial performance. According to such risk management
objective, the Company has formulated corresponding risk management policy to recognize and analyze possible risks encounteredby the Company, set the appropriate acceptable risk level and designed corresponding internal control procedures to monitor theCompany’s risk level. Meanwhile, the Company will regularly review these risk management policies and relevant internal controlsystem so as to cater for the market or respond to any change in the Company’s business operations. Accordingly, the Company’sinternal audit department will also regularly or randomly check whether the internal control system is implemented in conformitywith relevant risk management policies.The major risks caused by financial instruments of the Company are credit risk, liquidity risk and market risk (including foreignexchange risk and interest rate risk).The Board of Directors shall be responsible for planning and establishing the risk management framework for the Company,determining the Company’s risk management policies and relevant guidelines and monitoring the implementation of various riskmanagement measures. However, the Company has established corresponding risk management policies to recognize and analyzepossible risks encountered by the Company. Besides, various risks are specified in these risk management policies, including thecredit risk, the liquidity risk and the market risk management etc. On a regular basis, the Company will evaluate the specificmarketing environment and various changes in the Company’s business operations so as to determine whether any risk managementpolicy and system need be updated.
(1) Credit risk
Credit Risk means that the Company will suffer any financial losses due to the counter party’s failure in fulfilling the contractobligations.The Company shall manage the credit risk based on the specific Group Classification, and the credit risk mainly arises from bankdeposit, notes receivable, accounts receivable, other receivables and long-term accounts receivable.The Group’s bank deposits are mainly saved in state-owned banks and other large and medium-sized listed banks. The Group’s bankdeposits are expected not to suffer any major credit risks.For notes receivable, accounts receivable, other accounts receivable and long-term accounts receivable, the Company has establishedrelevant policies to control the credit risk exposure. According to the client’s financial status, credit record and other factors(including the current market condition), the Company will evaluate the client’s credit qualification and set corresponding creditperiod. In addition, the Company will regularly monitor the client’s credit record. For clients with poor credit records, the Companywill issue the written Reminder Notice, shorten the credit period or cancel the credit period to guarantee the Company’s overall creditrisk under control.The hugest credit risk exposure borne by the Company is the book value of each financial asset reflected in the balance sheet, and theCompany also faces credit risk due to the provision of financial guarantee, as detailed in Note XII 2.In terms of accounts receivable, the top 5 customers in accounts receivable were accounted for 29.83% of the total amount ofaccounts receivable of the Company (29.49% in 2020). As for other receivables, the top 5 of the ending balance according to thearrears party was accounted for 52.62% of the total amount of other receivables of the Company (65.27% in 2020).Investment in debt obligationsThe Group supervised the changes of credit risk through tracking the published external credit ratings. In order to make sure whetherthe credit rating was the latest, and whether the credit risk has increased obviously of evaluation report date but not been reflected inthe published external ratings, the Company has supplemented through examining the changes of bond yield and the available newsand supervision information.On the balance sheet date, the carrying value of investment in debt obligations of the Company are listed as follows according toreport items (Unit: RMB’0,000).
| 31 December 2021 | 31 December 2020 |
Trading financial assets
| Trading financial assets | 25,181.47 | |
| Available-for-sale financial assets | 35,137.97 |
Total
| Total | 60,319.44 |
(2) Liquidity risk
Liquidity Risk refers to the risk of capital shortage encountered by the Company during the cash payment or the settlement of otherfinancial assets.During the management of liquidity risk, the Company shall reserve and monitor corresponding cash and cash equivalent deemedsufficient by the management so as to meet the Company’s operational requirements and mitigate the impact caused by the cash flowfluctuation. The Group’s management will monitor the use of bank loans and guarantee the fulfillment of loan agreement. Meanwhile,major financial institutions shall promise to provide the Group with sufficient reserve funds in order to satisfy the short-term andlong-term fund demand. The Group shall raise its working capital based on the capital generated from business operations and bankloans.
(3) Market risk
The financial instrument’s market risk refers to the fluctuation risk of fair value of financial instrument or future cash flow caused bythe changes of market price, including the interest rate risk and the exchange rate risk.Interest rate riskInterest rate risk refers to the fluctuation risk of fair value of financial instrument or future cash flow caused by the changes of marketinterest rate. The interest rate can derive from the recognized interest-bearing financial instruments and unrecognized financialinstruments (including certain loan commitment).The Group’s interest rate risk mainly arises from the bank loan. Financial liabilities based on the floating interest rate will cause thecash flow interest rate risk to the Company, and financial liabilities based on the fixed interest rate the fair value interest rate risk.However, the Company has paid close attention the impact of interest rate fluctuations on the Company’s interest rate risk. At present,the Company has not taken any interest rate hedging measures. The rise of interest rate will increase the cost of newly-addedinterest-bearing debts and the interest cost of the Company’s unsettled interest-bearing debts based on the floating interest rate, andcause major adverse influence on the Company’s financial performance. The management will timely make correspondingadjustment according to the latest market situation, and corresponding interest rate swap will be arranged to reduce the interest raterisk.The interest-bearing financial liabilities held by the Company are as follows (Unit: RMB’0,000):
| Item | Amount of current year | Amount of last year |
| Financial liabilities with fixed interest rate |
Of which: Short-term borrowings
| Of which: Short-term borrowings | 101,026.99 | 34,385.82 |
| Current portion of long-term borrowings | 850.00 | 400.00 |
| Long-term borrowings | 58,523.00 | 20,000.00 |
| Bonds payable | 139,548.07 | 135,017.15 |
Total
| Total | 299,948.05 | 189,802.97 |
| Financial liabilities with floating interest rate | ||
| Of which: Short-term borrowings | 58,452.36 | |
| Current portion of long-term borrowings | 3,914.94 | |
| Long-term borrowings | 9,900.00 | 29,500.00 |
Total
| Total | 9,900.00 | 86,029.29 |
On 31 December 2021, if the lending rate calculated at floating interest rate up or down 100 basis points with other variablesunchanged, the net profit and shareholders’ equity will be decreased or increased about RMB990,000.
Foreign exchange riskForeign exchange risk is referred to the fluctuation risk of fair value of financial instruments or future cash flows resulted from thechange of foreign exchange rate. The foreign exchange rate was originated from the financial instruments denominated in foreigncurrencies other than the recording currency.On 31 December 2021, the amount of foreign currency financial assets and foreign currency financial liabilities converted torenminbi is as follows (Unit: RMB’0,000):
The Group pays close attention on the influence of foreign exchange risk due to the changes in exchange rate. At the end of eachreporting periods, for the monetary capital, notes receivable, accounts receivable, accounts payable, short-term borrowings andlong-term borrowings denominated in foreign currency, if renminbi to foreign currency up or down 10% with other variablesunchanged, the influence on the shareholders’ equity and net profit of the Company is as follows (Unit: RMB’0,000):
| Exchange rate changes | Reporting period | Same period of last year | ||
| Influence on the profits | Influence on shareholders’ equity | Influence on the profits | Influence on shareholders’ equity | |
| Up 10% against RMB | 2,179.45 | 2,179.45 | 4,329.95 | 4,329.95 |
| Down 10% against RMB | -2,179.45 | -2,179.45 | -4,329.95 | -4,329.95 |
2. Capital management
The objectives of capital management policies of the Company are to ensure the continuous operation of the Company so as toprovide return to shareholders and benefit other stakeholders, as well as to reduce capital cost by maintaining the optimal capitalstructure.In order to maintain or adjust capital structure, the Company might adjust financing method and the dividends paid to shareholders,return capital to shareholders, issue new shares and other equity instrument or sell assets to reduce debts.The Group supervised the capital structure based on the asset-liability ratio (namely total liabilities divide total assets). On 31December 2021, the asset-liability ratio was 35.57% of the Company (33.29% on 31 December 2020).
| Item | Foreign currency liabilities | Foreign currency assets | ||
| Ending balance | Beginning balance | Ending balance | Beginning balance | |
| USD | 112,245.83 | 100,434.65 | 89,577.60 | 54,643.66 |
| EUR | 361.14 | 136.74 | 587.83 | 894.96 |
JPY
| JPY | 78.72 | 195.5 | 13.63 | 64.2 |
| HKD | 29.49 | 408.53 | 328.79 | |
| GBP | 7.92 | 8.19 |
CHF
| CHF | 14.02 | 24.32 | 10.32 | 5.18 |
| SEK | 0.00 | 0.06 | ||
| Dong | 3,342.45 | 1,583.90 | 3,399.25 | 3,110.91 |
MMK
| MMK | 3.40 | 28.21 | 241.25 | 30.99 |
| Riel | 4.77 | 46.39 | ||
| Total | 116,045.56 | 102,432.81 | 94,251.09 | 59,133.34 |
XI. The Disclosure of Fair Value
1. Ending fair value of assets and liabilities at fair value
Unit: RMB
| Item | Ending fair value | |||
| Fair value measurement items at level 1 | Fair value measurement items at level 2 | Fair value measurement items at level 3 | Total | |
| I. Consistent fair value measurement | -- | -- | -- | -- |
| i. Trading financial assets | 1,727,000.00 | 1,727,000.00 | ||
| (3) Derivative financial assets | 1,727,000.00 | 1,727,000.00 | ||
| vi. Accounts receivable financing | 34,663,071.88 | 34,663,071.88 | ||
| vii. Other non-current financial assets | 190,052,000.00 | 190,052,000.00 | ||
| The total amount of assets consistently measured at fair value | 1,727,000.00 | 224,715,071.88 | 226,442,071.88 | |
| II. Non-consistent fair value measurement | -- | -- | -- | -- |
2. Valuation technique adopted and nature and amount determination of important parameters forconsistent and inconsistent fair value measurement items at level 2
The Company determines the fair value of forward foreign exchange settlement based on the bank's forward foreign exchangequotation at the end of the period.
3. Valuation technique adopted and nature and amount determination of important parameters forconsistent and inconsistent fair value measurement items at level 3For the unlisted equity investment, the Company adopts the comparable listed company comparison method, and the non-observableinput value of the comparable listed company comparison method includes the liquidity discount.The investment into Shandong Hongqiao Thermoelectric Co., Ltd. made by Luqun Textile (the Company’s subsidiary) is expected tobe held in the long run for obtaining the discount on power purchase. As no revenue distribution right is vested in the investment, theinvested unit’s operating profit and loss are not shared or borne, and the equity transfer is not proposed, the Company regards it as thefinancial asset which shall be measured based on the fair value and whose variations are included in the current profit and loss, andthe investment cost is deemed as the fair value of the financial asset.For accounts receivables financing at fair value and the changes included in other comprehensive income, its fair value shall bedetermined by the discount cash flow method.
XII. Related Party and Related-party Transactions
1. Information related to the company as the parent of the Company
| Name | Registration place | Nature of business | Registered capital | Proportion of share held by the company as the parent against the company (%) | Proportion of voting rights owned by the company as the parent against the company (%) |
| Lucheng Textile | Zibo | Textile, chemistry and investment | 6,326 | 15.91% | 15.91% |
Notes: information on the Company as the parentThe final controllers of the Company are Mr. Liu Zibin and Mr. Liu Deming.
2. Subsidiaries of the Company
Refer to Note IX-1.
3. Information on the joint ventures and associated enterprises of the Company
Refer to Note IX-2.
4. Information on other related parties
| Name | Relationship with the company |
| Zibo Limin Purified Water Co., Ltd. (hereinafter referred to as "Limin Purified Water") | Wholly-owned subsidiary of the Company as the parent |
| Zibo Luqun Land Co., Ltd (hereinafter referred to as "Luqun Land") | Wholly-owned subsidiary of the Company as the parent |
| Zibo Lurui Fine Chemical Co., Ltd. (hereinafter referred to as "Lurui Chemical") | Wholly-owned subsidiary of the Company as the parent |
| Zibo Lujia Property Management Co., Ltd. (hereinafter referred to as "Lujia Property") | Wholly-owned subsidiary of the Company as the parent |
| Hong Kong Tung Hoi International Company Limited (hereinafter referred to as "Tung Hoi International") | Wholly-owned subsidiary of the Company as the parent |
| Shandong Chengshun Petrochemical Co., Ltd. (hereinafter referred to as "Chengshun Petro") | Wholly-owned subsidiary of the Company as the parent |
| Zibo Chengshun Hosiery Co., Ltd. (hereinafter referred to as "Chengshun Hosiery") | Wholly-owned subsidiary of the Company as the parent |
| Zibo Chengshun Economic and Trade Co., Ltd. (hereinafter | Wholly-owned subsidiary of the Company as the parent |
| referred to as "Chengshun Economic and Trade") | |
| Chengshun Petrochemical (Zhejiang Zhoushan) Co., Ltd. (hereinafter referred to as "Chengshun Petrochemical") | Wholly-owned subsidiary of the Company as the parent |
| Zibo Lucheng Petrochemical Sales Co., Ltd. (hereinafter referred to as "Lucheng Petrochemical") | Wholly-owned subsidiary of the Company as the parent |
| Shanghai Hengjiu Textile New Materials Co., Ltd. (hereinafter referred to as "Hengjiu Textile") | Wholly-owned subsidiary of the Company as the parent |
| Shandong Xirui New Material Co., Ltd. (hereinafter referred to as "Xirui New Material") | Wholly-owned subsidiary of the parent company's wholly-owned subsidiary |
| Zibo Lumei Economic and Trade Co., Ltd. (hereinafter referred to as "Lumei Economic and Trade") | Wholly-owned subsidiary of the Company as the parent |
5. List of related-party transactions
(1) Information on acquisition of goods and reception of labor service
Information on acquisition of goods and reception of labor service
Unit: RMB
| Related party | Content | Reporting period | The approval trade credit | Whether exceed trade credit or not | Same period of last year |
| Limin Purified Water | Recycled water, sewage treatment, materials and equipment | 26,328,581.68 | 33,374,000.00 | Not | 28,125,943.88 |
| Lurui Fine Chemical | Auxiliaries | 91,043,342.61 | 103,500,000.00 | Not | 72,807,066.89 |
| Chengshun Hosiery | Paper core, hosiery, hosiery processing fees, purchase of hosiery, accessories and other materials | 8,979,576.69 | 14,100,000.00 | Not | 7,770,989.74 |
| Chengshun Trading | Supermarket retail | 2,013,167.16 | 3,580,000.00 | Not | 2,333,060.60 |
| Lucheng Petrochemical | Oils | 3,338,571.42 | 5,140,000.00 | Not | 2,232,371.95 |
| Chengshun Petrochemical | Natural gas and oil products | 40,436,209.23 | 49,755,000.00 | Not | 31,169,896.80 |
| Xirui New | Fabrics and face | 829,157.05 | Not | 6,187.61 |
| Materials | masks |
Information of sales of goods and provision of labor service
Unit: RMB
| Related party | Content | Reporting period | Same period of last year |
| Lucheng Textile | Tap water | 1,093.19 | |
| Chengshun Hosiery | Materials, electricity, running water, heating, steam | 280,543.32 | 152,705.47 |
| Chengshun Hosiery | Grey yarn, dyed yarn and garments | 682,514.98 | 331,813.72 |
| Chengshun Hosiery | Processing fee for woven towels | 1,031.86 | |
| Chengshun Trading | Materials, electricity, tap water, garments, steamed buns and heat charges | 133,676.54 | 131,430.59 |
| Lucheng Petrochemical | Electricity, garments and materials | 16,228.55 | 22,952.62 |
| Limin Purified Water | Materials, garments, lunch components and electricity | 3,483,636.46 | 2,155,963.97 |
| Lurui Fine Chemical | Garments, shell fabric, yarn, water & electricity, lunch components and materials | 158,981.84 | 164,690.07 |
| Lujia Property | Reclaimed water, materials and heat charges | 141,800.60 | 151,056.88 |
| Xirui New Materials | Fabric, material, isolation clothing, etc. | 1,169,150.35 | 45,881,242.54 |
| Xirui New Materials | Catering service fees and sales of alcoholic beverages | 13,854.72 | 1,024.38 |
| Lumei Economic and Trade | Garments and computer supplies | 123.36 | |
| Luqun Property | Apparel | 38.62 | |
| Luqun Property | Copy paper, etc. | 652.26 | |
| Luqun Property | Heating facilities supporting fee | 1,720,174.32 |
(2) Information on related-party lease
The Company was lessor:
Unit: RMB
| Name of lessee | Category of leased assets | The lease income confirmed in the reporting period | The lease income confirmed in the same period of last year |
| Chengshun Trading | Houses and buildings | 36,108.00 | 36,108.00 |
| Lurui Fine Chemical | Houses and buildings | 6,819.70 |
The Company was lessee:
Unit: RMB
| Name of lessor | Category of leased assets | The lease fee confirmed in the reporting period | The lease fee confirmed in the same period of last year |
| Lucheng Textile | Rent of land | 3,614,857.20 | 3,614,857.20 |
| Lucheng Textile | Rent of gas station | 233,142.84 | 233,142.84 |
| Lucheng Textile | Rent of buildings | 11,022,228.60 | 11,022,228.60 |
| Luqun Property | Rent of land and buildings | 1,971,428.52 | 1,971,428.52 |
The right-of-use assets newly added by the Company as a lessee in the current year:
| Name of lessor | Category of leased assets | Increase | Increase in previous period |
| Lucheng Textile | Rent of land | 29,675,587.49 |
Lucheng Textile
| Lucheng Textile | Rent of gas station | 2,589,219.21 | |
| Lucheng Textile | Rent of buildings | 62,292,894.06 |
Luqun Property
| Luqun Property | Rent of land and buildings | 26,379,793.30 |
Interest expense on lease liabilities borne by the Company as a lessee in the current year:
| Name of lessor | Category of leased assets | Interest expense in the reporting period | Interest expense in the last period |
Lucheng Textile
| Lucheng Textile | Rent of land | 1,317,351.96 |
Lucheng Textile
| Lucheng Textile | Rent of gas station | 117,041.60 | |
| Lucheng Textile | Rent of buildings | 2,551,333.93 | |
| Luqun Property | Rent of land and buildings | 1,202,776.50 |
(3) Information on remuneration for key management personnel
Unit: RMB
| Item | Reporting period | Same period of last year |
| Remuneration for key management personnel | 14,155,635.36 | 17,485,446.61 |
6. Accounts receivable and payable of related party
(1) Accounts payable
Unit: RMB
| Item | Related party | Ending carrying amount | Beginning carrying amount |
| Accounts payable | Chengshun Trading | 7,720.00 | |
| Accounts payable | Lurui Fine Chemical | 6,022,580.15 | 988,293.00 |
| Contract liability | Luqun Property | 649,676.55 | 649,676.55 |
XIII. Stock Payment
1. The overall situation of share-based payments
√ Applicable □ Not applicable
Unit: RMB
| The total amount of equity instruments granted by the Company for the current period | 24,205,000.00 |
| The total amount of the Company's equity instruments exercised for the current period | 0.00 |
| The total amount of equity instruments of the Company losing efficacy for the current period | 0.00 |
2. Equity-settled share-based payments
√ Applicable □ Not applicable
Unit: RMB
| Methods for determining the fair value of equity instruments on the grant date | Difference between the market price of the stock and the grant price on the grant date |
| Basis for determining the number of feasible right equity instruments | Optimal estimation of expected feasible right in the future |
| Reasons for the significant discrepancy between the current period estimates and the previous estimates | No |
| Accumulated amount of equity-settled share-based payment included in capital reserves | 28,325,788.60 |
| The total amount of the expense recognized for the current period paid on equity-settled shares | 28,325,788.60 |
XIV. Commitments and Contingency
1. Significant commitments
Significant commitments on balance sheet date
(1) Capital commitments
| Commitments signed but have not been recognized in financial statements | 31 December 2021 | 31 December 2020 |
| Commitment on constructing and purchasing long-lived assets (RMB’0,000) | 10,006.86 | 9,864.22 |
2. Contingency
(1) Significant contingency on balance sheet date
(1) Contingent liabilities formed by the debt guarantee provided to other entities and the financial impactAs at 31 December 2021, the Company provided guarantee to loans of the following entities:
| Name | Item | Currency | Foreign currency amount | Amount converted to RMB | Start date | Due date | Note |
I. Subsidiary
| I. Subsidiary | |||||||
| Continental Textile | Short-term borrowings | USD | 933,705.38 | 5,953,025.39 | 9 July 2021 | 6 January 2022 |
ContinentalTextile
| Continental Textile | Short-term borrowings | USD | 450,190.40 | 2,870,278.93 | 15 July 2021 | 11 January 2022 | |
| Continental Textile | Short-term borrowings | USD | 1,062,314.44 | 6,772,998.18 | 16 August 2021 | 12 February 2022 |
ContinentalTextile
| Continental Textile | Short-term borrowings | USD | 446,578.71 | 2,847,251.88 | 17 August 2021 | 13 February 2022 | |
| Continental Textile | Short-term borrowings | USD | 236,300.76 | 1,506,582.76 | 18 August 2021 | 14 February 2022 | |
| Continental Textile | Short-term borrowings | USD | 1,227,876.98 | 7,828,575.26 | 18 August 2021 | 14 February 2022 |
ContinentalTextile
| Continental Textile | Short-term borrowings | USD | 371,427.46 | 2,368,110.06 | 23 August 2021 | 19 February 2022 | |
| Continental Textile | Short-term borrowings | USD | 297,239.42 | 1,895,109.37 | 27 August 2021 | 23 February 2022 |
Continental
| Continental | Short-ter | USD | 250,841.66 | 1,599,291.17 | 7 September | 7 March |
| Textile | m borrowings | 2021 | 2022 | ||||
| Continental Textile | Short-term borrowings | USD | 200,235.73 | 1,276,642.94 | 7 September 2021 | 7 March 2022 |
ContinentalTextile
| Continental Textile | Short-term borrowings | USD | 584,194.94 | 3,724,651.68 | 15 September 2021 | 14 March 2022 | |
| Continental Textile | Short-term borrowings | USD | 217,805.53 | 1,388,662.72 | 15 September 2021 | 14 March 2022 |
ContinentalTextile
| Continental Textile | Short-term borrowings | USD | 455,548.00 | 2,904,437.38 | 27 September 2021 | 26 March 2022 | |
| Continental Textile | Short-term borrowings | USD | 1,413,237.83 | 9,010,380.43 | 4 October 2021 | 2 April 2022 | |
| Continental Textile | Short-term borrowings | USD | 410,431.44 | 2,616,787.73 | 5 October 2021 | 4 April 2022 |
ContinentalTextile
| Continental Textile | Short-term borrowings | USD | 241,460.00 | 1,539,476.52 | 22 October 2021 | 20 April 2022 | |
| Continental Textile | Short-term borrowings | USD | 289,667.93 | 1,846,835.82 | 22 October 2021 | 20 April 2022 |
ContinentalTextile
| Continental Textile | Short-term borrowings | USD | 201,452.56 | 1,284,401.09 | 27 October 2021 | 25 April 2022 | |
| Continental Textile | Short-term borrowings | USD | 161,021.67 | 1,026,625.86 | 26 November 2021 | 25 May 2022 |
| Continental Textile | Short-term borrowings | USD | 754,945.56 | 4,813,306.41 | 16 December 2021 | 14 June 2022 |
ContinentalTextile
| Continental Textile | Short-term borrowings | USD | 1,040,488.12 | 6,633,840.11 | 12 July 2021 | 8 January 2022 | |
| Continental Textile | Short-term borrowings | USD | 838,942.30 | 5,348,844.42 | 14 July 2021 | 10 January 2022 |
ContinentalTextile
| Continental Textile | Short-term borrowings | USD | 449,323.01 | 2,864,748.71 | 14 July 2021 | 10 January 2022 | |
| Continental Textile | Short-term borrowings | USD | 925,498.63 | 5,900,701.62 | 4 November 2021 | 3 May 2022 |
ContinentalTextile
| Continental Textile | Short-term borrowings | USD | 322,819.69 | 2,058,201.50 | 5 November 2021 | 4 May 2022 | |
| Continental Textile | Short-term borrowings | USD | 171,821.68 | 1,095,483.49 | 5 November 2021 | 4 May 2022 | |
| Continental Textile | Short-term borrowings | USD | 1,097,387.49 | 6,996,613.42 | 23 November 2021 | 22 May 2022 |
ContinentalTextile
| Continental Textile | Short-term borrowings | USD | 378,408.20 | 2,412,617.16 | 26 November 2021 | 25 May 2022 | |
| Continental Textile | Short-term borrowings | USD | 1,095,757.42 | 6,986,220.58 | 1 December 2021 | 30 May 2022 |
ContinentalTextile
| Continental Textile | Short-term borrowin | USD | 1,099,357.33 | 7,009,172.53 | 3 December 2021 | 1 June 2022 |
| gs | |||||||
| Continental Textile | Short-term borrowings | USD | 1,111,971.83 | 7,089,598.80 | 6 December 2021 | 4 June 2022 |
ContinentalTextile
| Continental Textile | Short-term borrowings | USD | 615,700.19 | 3,925,519.70 | 7 December 2021 | 5 June 2022 | |
| Continental Textile | Short-term borrowings | USD | 201,753.39 | 1,286,319.09 | 7 December 2021 | 5 June 2022 | |
| Continental Textile | Short-term borrowings | USD | 1,094,786.56 | 6,980,030.67 | 14 December 2021 | 12 June 2022 |
ContinentalTextile
| Continental Textile | Short-term borrowings | USD | 1,577,491.36 | 10,057,611.66 | 20 July 2021 | 20 January 2022 | |
| Continental Textile | Short-term borrowings | USD | 303,367.65 | 1,934,181.13 | 23 July 2021 | 23 January 2022 |
ContinentalTextile
| Continental Textile | Short-term borrowings | USD | 749,535.00 | 4,778,810.30 | 29 July 2021 | 25 January 2022 | |
| Continental Textile | Short-term borrowings | USD | 1,039,901.84 | 6,630,102.16 | 3 August 2021 | 30 January 2022 | |
| Continental Textile | Short-term borrowings | USD | 1,324,222.00 | 8,442,842.21 | 4 August 2021 | 31 January 2022 |
ContinentalTextile
| Continental Textile | Short-term borrowings | USD | 151,960.00 | 968,851.37 | 5 August 2021 | 1 February 2022 | |
| Continental Textile | Short-term | USD | 446,282.00 | 2,845,360.15 | 6 August 2021 | 2 February 2022 |
borrowingsContinentalTextile
| Continental Textile | Short-term borrowings | USD | 627,475.38 | 4,000,594.78 | 10 August 2021 | 6 February 2022 | |
| Continental Textile | Short-term borrowings | USD | 2,102,632.54 | 13,405,754.29 | 10 August 2021 | 6 February 2022 | |
| Continental Textile | Short-term borrowings | USD | 392,468.62 | 2,502,262.18 | 11 August 2021 | 7 February 2022 |
ContinentalTextile
| Continental Textile | Short-term borrowings | Dong | 28,492,025,317.00 | 7,971,091.86 | 5 July 2021 | 7 January 2022 | |
| Continental Textile | Short-term borrowings | Dong | 5,010,041,160.00 | 1,401,637.75 | 28 July 2021 | 24 January 2022 |
ContinentalTextile
| Continental Textile | Short-term borrowings | Dong | 5,100,504,313.00 | 1,426,946.24 | 27 August 2021 | 23 February 2022 | |
| Continental Textile | Short-term borrowings | Dong | 1,265,060,542.00 | 353,920.57 | 23 September 2021 | 22 March 2022 |
ContinentalTextile
| Continental Textile | Short-term borrowings | Dong | 2,680,197,866.00 | 749,827.48 | 24 September 2021 | 23 March 2022 | |
| Continental Textile | Short-term borrowings | Dong | 4,208,289,534.00 | 1,177,335.13 | 11 October 2021 | 8 April 2022 | |
| Continental Textile | Short-term borrowings | Dong | 6,087,019,685.00 | 1,702,939.42 | 21 October 2021 | 19 April 2022 |
Continental
| Continental | Short-ter | Dong | 4,914,041,560.00 | 1,374,780.36 | 27 October | 25 April |
| Textile | m borrowings | 2021 | 2022 | ||||
| Continental Textile | Short-term borrowings | Dong | 6,262,630,846.00 | 1,752,069.40 | 29 October 2021 | 27 April 2022 |
Lu Thai TanChau
| Lu Thai Tan Chau | Short-term borrowings | USD | 1,043,907.65 | 6,655,642.00 | 2 August 2021 | 29 January 2022 | |
| Lu Thai Tan Chau | Short-term borrowings | USD | 260,231.78 | 1,659,159.76 | 4 November 2021 | 3 May 2022 |
Lu Thai TanChau
| Lu Thai Tan Chau | Short-term borrowings | USD | 167,878.80 | 1,070,344.87 | 16 November 2021 | 15 May 2022 | |
| Lu Thai Tan Chau | Short-term borrowings | USD | 186,483.00 | 1,188,959.66 | 13 July 2021 | 9 January 2022 | |
| Lu Thai Tan Chau | Short-term borrowings | USD | 186,627.00 | 1,189,877.76 | 22 July 2021 | 18 January 2022 |
Lu Thai TanChau
| Lu Thai Tan Chau | Short-term borrowings | USD | 125,059.44 | 797,341.47 | 3 August 2021 | 30 January 2022 | |
| Lu Thai Tan Chau | Short-term borrowings | USD | 422,099.00 | 2,691,176.59 | 4 August 2021 | 31 January 2022 |
Lu Thai TanChau
| Lu Thai Tan Chau | Short-term borrowings | USD | 202,284.00 | 1,289,702.10 | 5 August 2021 | 1 February 2022 | |
| Lu Thai Tan Chau | Short-term borrowings | USD | 1,039,223.81 | 6,625,779.25 | 17 August 2021 | 13 February 2022 |
| Lu Thai Tan Chau | Short-term borrowings | USD | 159,989.50 | 1,020,045.06 | 23 September 2021 | 22 March 2022 |
Lu Thai TanChau
| Lu Thai Tan Chau | Short-term borrowings | Dong | 8,679,496,797.00 | 2,428,225.65 | 5 July 2021 | 7 January 2022 | |
| Lu Thai Tan Chau | Short-term borrowings | Dong | 1,426,118,356.00 | 398,979.02 | 22 July 2021 | 22 January 2022 |
Lu Thai TanChau
| Lu Thai Tan Chau | Short-term borrowings | Dong | 4,039,940,300.00 | 1,130,236.79 | 29 July 2021 | 4 February 2022 | |
| Lu Thai Tan Chau | Short-term borrowings | Dong | 1,427,162,237.00 | 399,271.07 | 23 August 2021 | 23 February 2022 |
Lu Thai TanChau
| Lu Thai Tan Chau | Short-term borrowings | Dong | 1,013,341,681.00 | 283,498.26 | 23 September 2021 | 23 March 2022 | |
| Lu Thai Tan Chau | Short-term borrowings | Dong | 3,532,199,220.00 | 988,188.24 | 23 September 2021 | 23 March 2022 | |
| Lu Thai Tan Chau | Short-term borrowings | Dong | 3,375,788,790.00 | 944,429.97 | 29 September 2021 | 29 March 2022 |
Lu Thai TanChau
| Lu Thai Tan Chau | Short-term borrowings | Dong | 5,334,234,404.00 | 1,492,335.91 | 4 October 2021 | 4 April 2022 | |
| Lu Thai Tan Chau | Short-term borrowings | Dong | 915,382,467.00 | 256,092.63 | 26 October 2021 | 26 April 2022 |
Lu AnGarments
| Lu An Garments | Short-term borrowin | USD | 120,974.78 | 771,298.90 | 29 October 2021 | 26 February 2022 |
| gs | |||||||
| Lu An Garments | Short-term borrowings | USD | 54,895.55 | 349,997.56 | 13 December 2021 | 12 April 2022 |
Total
| Total | 238,768,844.34 |
As at 31 December 2021, there was no other significant contingency in the Company to disclose.XV. Events after Balance Sheet Date
1. Significant non-adjustment matters
Unit: RMB
| Item | Contents | Influence number to the financial position and operating results | Reason of inability to estimate influence number |
| Issuance of stocks and bonds | On 18 February 2022, the Proposal on Granting the Reserved Restricted Shares under the 2021 Incentive Plan to the Incentive Personnel was deliberated and approved at the 30th session of the Ninth Board of Directors of the Company. The grant date of the reserved shares was 18 February 2022, and 5.838 million reserved restricted shares were granted to the incentive personnel who met the grant conditions at the grant price of RMB3.56 per share. | 13,423,520.33 |
2. Profit distribution
Unit: RMB
| Profits or dividends to be distributed | 61,763,890.65 |
| Profits or dividends announced to be distributed after the approval | 61,763,890.65 |
3. Notes to other events after balance sheet date
As at 27 April 2022, the Company has no other events after balance sheet date that should be disclosed.
XVI. Notes of Main Items in the Financial Statements of the Company as the Parent
1. Accounts receivable
(1) Accounts receivable classified by category
Unit: RMB
| Category | Ending balance | Beginning balance | ||||||||
| Carrying amount | Bad debt provision | Carrying amount | Carrying amount | Bad debt provision | Carrying amount | |||||
| Amount | Proportion | Amount | Withdrawal proportion | Amount | Proportion | Amount | Withdrawal proportion | |||
| Accounts receivable of bad debt provision separately accrued | 1,788,432.20 | 0.39% | 1,788,432.20 | 100.00% | 5,730,132.44 | 1.60% | 5,730,132.44 | 100.00% | ||
| Of which: | ||||||||||
| Accounts receivable of bad debt provision withdrawn by groups | 453,937,579.34 | 99.61% | 28,225,841.07 | 6.22% | 425,711,738.27 | 352,666,401.84 | 98.40% | 26,499,466.74 | 7.51% | 326,166,935.10 |
| Of which: | ||||||||||
| Group 1: Undue accounts (credit insurance insured) | 45,299,117.13 | 9.94% | 475,640.73 | 1.05% | 44,823,476.40 | 29,328,670.49 | 8.18% | 307,951.04 | 1.05% | 29,020,719.45 |
| Group 2: Undue accounts (no credit insurance) | 366,082,322.24 | 80.33% | 18,304,116.12 | 5.00% | 347,778,206.12 | 242,017,947.74 | 67.53% | 12,100,897.39 | 5.00% | 229,917,050.35 |
| Group 3: Overdue accounts (credit insurance insured) | 11,631,278.80 | 2.55% | 1,244,546.83 | 10.70% | 10,386,731.97 | 23,520,765.79 | 6.56% | 2,516,721.94 | 10.70% | 21,004,043.85 |
| Group 4: Overdue accounts (no credit insurance) | 30,924,861.17 | 6.79% | 8,201,537.39 | 26.52% | 22,723,323.78 | 57,799,017.82 | 16.13% | 11,573,896.37 | 20.02% | 46,225,121.45 |
| Total | 455,726,011.54 | 100.00% | 30,014,273.27 | 6.59% | 425,711,738.27 | 358,396,534.28 | 100.00% | 32,229,599.18 | 8.99% | 326,166,935.10 |
Bad debt provision separately accrued: Y2021
Unit: RMB
| Name | Ending balance |
| Carrying amount | Bad debt provision | Withdrawal proportion | Provision reason | |
| Customer 1 | 967,724.98 | 967,724.98 | 100.00% | Customer filed for bankruptcy protection |
| Customer 2 | 273,384.76 | 273,384.76 | 100.00% | Customer filed for bankruptcy protection |
| Other customer | 547,322.46 | 547,322.46 | 100.00% | Customer financial difficulties or filed for bankruptcy protection |
| Total | 1,788,432.20 | 1,788,432.20 | -- | -- |
Bad debt provision separately accrued: Y2020
Unit: RMB
| Name | Ending balance | |||
| Carrying amount | Bad debt provision | Withdrawal proportion | Provision reason | |
| Customer 1 | 3,410,632.89 | 3,410,632.89 | 100.00% | Customer filed for bankruptcy protection |
| Customer 2 | 1,565,397.64 | 1,565,397.64 | 100.00% | Customer filed for bankruptcy protection |
| Other customer | 754,101.91 | 754,101.91 | 100.00% | Customer financial difficulties or filed for bankruptcy protection |
| Total | 5,730,132.44 | 5,730,132.44 | -- | -- |
Bad debt provision withdrawn by groups: Y2021
Unit: RMB
| Name | Ending balance | ||
| Carrying amount | Bad debt provision | Withdrawal proportion | |
| Group 1: Undue accounts (credit insurance insured) | 45,299,117.13 | 475,640.73 | 1.05% |
| Group 2: Undue accounts (no credit insurance) | 366,082,322.24 | 18,304,116.12 | 5.00% |
| Group 3: Overdue accounts (credit insurance insured) | 11,631,278.80 | 1,244,546.83 | 10.70% |
| Group 4: Overdue accounts (no credit insurance) | 30,924,861.17 | 8,201,537.39 | 26.52% |
| Total | 453,937,579.34 | 28,225,841.07 | -- |
Bad debt provision withdrawn by groups: Y2020
Unit: RMB
| Name | Ending balance |
| Carrying amount | Bad debt provision | Withdrawal proportion | |
| Group 1: Undue accounts (credit insurance insured) | 29,328,670.49 | 307,951.04 | 1.05% |
| Group 2: Undue accounts (no credit insurance) | 242,017,947.74 | 12,100,897.39 | 5.00% |
| Group 3: Overdue accounts (credit insurance insured) | 23,520,765.79 | 2,516,721.94 | 10.70% |
| Group 4: Overdue accounts (no credit insurance) | 57,799,017.82 | 11,573,896.37 | 20.02% |
| Total | 352,666,401.84 | 26,499,466.74 | -- |
Please refer to the relevant information of disclosure of bad debt provision of other accounts receivable if adopting the general modeof expected credit loss to withdraw bad debt provision of accounts receivable.
√ Applicable □ Not applicable
Disclosure by aging
Unit: RMB
| Aging | Carrying amount |
| Within 1 year (including 1 year) | 447,209,201.62 |
| 1 to 2 years | 2,511,805.71 |
| 2 to 3 years | 5,264,224.44 |
| Over 3 years | 740,779.77 |
| 3 to 4 years | 448,533.70 |
| 4 to 5 years | 292,246.07 |
| Total | 455,726,011.54 |
(2) Bad debt provision withdrawn, reversed or collected during the Reporting Period
Bad debt provision withdrawn in the Reporting Period:
Unit: RMB
| Category | Beginning balance | Changes in the reporting period | Ending balance | |||
| Withdrawal | Reversal or recovery | Write-off | Other | |||
| Bad debt provision | 32,229,599.18 | -2,015,565.96 | 199,759.95 | 30,014,273.27 | ||
| Total | 32,229,599.18 | -2,015,565.96 | 199,759.95 | 30,014,273.27 | ||
(3) Particulars of the actual verification of accounts receivable during the Reporting Period
Unit: RMB
| Item | Amount |
| Accounts receivable actually verified | 199,759.95 |
(4) Top 5 of accounts receivable of ending balance collected by arrears party
Unit: RMB
| Name of entity | Ending balance | Proportion to total ending balance of accounts receivable | Ending balance of bad debt provision |
| Customer A | 46,292,727.15 | 10.16% | 2,650,707.30 |
| Customer B | 37,055,066.08 | 8.13% | 2,874,415.80 |
| Customer C | 25,674,099.30 | 5.63% | 1,329,121.55 |
| Customer D | 24,860,977.60 | 5.46% | 1,243,048.88 |
| Customer E | 22,441,812.72 | 4.92% | 1,122,090.64 |
| Total | 156,324,682.85 | 34.30% | -- |
2. Notes receivable
| Notes Category | 31 December 2021 | 31 December 2020 | ||||
| Carrying amount | Bad debt provision | Carrying amount | Carrying amount | Bad debt provision | Carrying amount | |
Bankacceptancebill
| Bank acceptance bill | 70,946,803.29 | 70,946,803.29 | 75,987,373.12 | 75,987,373.12 |
Commercialacceptancebill
| Commercial acceptance bill | 127,886.89 | 6,394.34 | 121,492.55 |
L/C
| L/C | 60,960,026.96 | 60,960,026.96 | 32,876,316.67 | 32,876,316.67 | ||
| Total | 132,034,717.14 | 6,394.34 | 132,028,322.80 | 108,863,689.79 | 108,863,689.79 |
(1) Notes receivable endorsed by the Company or discounted and not due on the balance sheet date at the period-end
| Category | Derecognized amount at the period-end | Non-derecognized amount at the period-end |
Bank acceptance bill
| Bank acceptance bill | 59,223,996.79 | |
| Trade acceptance bill |
Total
| Total | 59,223,996.79 |
If the bank acceptance bill used for endorsement and discount is accepted by a bank with low credit grade, the endorsement anddiscount do not affect the right of recourse, and the credit risk and deferred payment risk related to the bill have not been transferred,so the bank acceptance bill was not derecognized at the period-end.
| Category | 31 December 2021 | ||||
| Carrying amount | |||||
| Carrying amount | Bad debt provision | ||||
| Amount | Proportion | Amount | Expected | ||
| (%) | credit loss rate (%) | ||||
| Bad debt provision separately accrued |
Bad debt provisionwithdrawn by groups
| Bad debt provision withdrawn by groups | 132,034,717.14 | 100.00 | 6,394.34 | 132,028,322.80 | |
| Of which: | |||||
| Commercial acceptance bill | 127,886.89 | 0.10 | 6,394.34 | 5 | 121,492.55 |
Bank acceptance bill andL/C
| Bank acceptance bill and L/C | 131,906,830.25 | 99.90 | 131,906,830.25 | ||
| Total | 132,034,717.14 | 100.00 | 6,394.34 | 132,028,322.80 |
Category
| Category | 31 December 2020 | ||||
| Carrying amount | Bad debt provision | Carrying amount | |||
| Amount | Proportion (%) | Amount | Expected credit loss rate (%) | ||
| Bad debt provision separately accrued | |||||
| Bad debt provision withdrawn by groups | 108,863,689.79 | 100.00 | 108,863,689.79 | ||
Of which:
| Of which: | |||||
| Commercial acceptance bill | |||||
| Bank acceptance bill and L/C | 108,863,689.79 | 100.00 | 108,863,689.79 |
Total
| Total | 108,863,689.79 | 100.00 | 108,863,689.79 |
(3) Bad debt provision withdrawn, reversed or collected during the Reporting Period
| Amount of bad debt provision |
31 December 2020
| 31 December 2020 | |
| Withdrawal of the current period | 6,394.34 |
Reversal or recovery in the Reporting Period
| Reversal or recovery in the Reporting Period |
Amount written-off for the Reporting Period
| Amount written-off for the Reporting Period | |
| Write-off in the current period |
Other
| Other | |
| 31 December 2021 | 6,394.34 |
3. Other accounts receivable
Unit: RMB
| Item | Ending balance | Beginning balance |
| Dividends receivable | 94,525,975.44 | 75,488,652.49 |
| Other receivables | 1,965,654,050.43 | 1,425,394,029.70 |
| Total | 2,060,180,025.87 | 1,500,882,682.19 |
(1) Dividends receivable
1) Category of dividends receivable
Unit: RMB
| Item (or investee) | Ending balance | Beginning balance |
| Fengshou Cotton | 49,501,026.78 | 79,461,739.46 |
| Luqun Textile | 50,000,000.00 | |
| Less: Bad debt provision | -4,975,051.34 | -3,973,086.97 |
| Total | 94,525,975.44 | 75,488,652.49 |
2) Significant dividends receivable aging over 1 year
Unit: RMB
| Item (or investee) | Ending balance | Aging | Reason | Whether occurred impairment and its judgment basis |
| Fengshou Cotton | 49,501,026.78 | 1 to 2 years | Collect in accordance with agreed dividend payment plan | Not past due |
| Total | 49,501,026.78 | -- | -- | -- |
3) Withdrawal of bad debt provision
√ Applicable □ Not applicable
Unit: RMB
| Bad debt provision | First stage | Second stage | Third stage | Total |
| Expected credit loss of the next 12 months | Expected loss in the duration (credit impairment not occurred) | Expected loss in the duration (credit impairment occurred) | ||
| Balance of 1 January2021 | 3,973,086.97 | 3,973,086.97 | ||
| Balance of 1 January 2021 in | —— | —— | —— | —— |
| the Reporting Period | ||||
| Withdrawal of the current period | 1,001,964.37 | 1,001,964.37 | ||
| Balance of 31 December 2021 | 4,975,051.34 | 4,975,051.34 |
Changes of carrying amount with significant amount changed of loss provision in the current period
□ Applicable √ Not applicable
(2) Other receivables
1) Other receivables classified by category
Unit: RMB
| Nature | Ending carrying amount | Beginning carrying amount |
| Intercourse funds | 1,958,920,668.29 | 1,415,868,182.84 |
| Payment on behalf | 9,591,346.65 | 11,567,504.63 |
| Guarantee deposit and cash deposit | 3,764,642.06 | 3,119,958.81 |
| Borrowings and petty cash | 737,517.66 | 859,406.80 |
| Other | 399,089.06 | 98,063.62 |
| Total | 1,973,413,263.72 | 1,431,513,116.70 |
2) Withdrawal of bad debt provision
Unit: RMB
| Bad debt provision | First stage | Second stage | Third stage | Total |
| Expected credit loss of the next 12 months | Expected loss in the duration (credit impairment not occurred) | Expected loss in the duration (credit impairment occurred) | ||
| Balance of 1 January 2021 | 4,905,594.37 | 1,213,492.63 | 6,119,087.00 | |
| Balance of 1 January 2021 in the Reporting Period | —— | —— | —— | —— |
| Withdrawal of the current period | 1,563,716.47 | 76,409.82 | 1,640,126.29 | |
| Balance of 31 December 2021 | 6,469,310.84 | 1,289,902.45 | 7,759,213.29 |
Changes of carrying amount with significant amount changed of loss provision in the current period
□ Applicable √ Not applicable
Disclosure by aging
Unit: RMB
| Aging | Carrying amount |
| Within 1 year (including 1 year) | 1,304,815,450.41 |
| 1 to 2 years | 665,685,512.92 |
| 2 to 3 years | 270,396.40 |
| Over 3 years | 2,641,903.99 |
| 3 to 4 years | 164,144.98 |
| Over 5 years | 2,477,759.01 |
| Total | 1,973,413,263.72 |
3) Top 5 of the Ending Balance of the Other Receivables Collected according to the Arrears Party
Unit: RMB
| Name of entity | Nature | Ending balance | Aging | Proportion to ending balance of total other receivables | Ending balance of bad debt provision |
| Lulian New Materials | Intercourse funds | 678,605,801.54 | Within 1 year and 1 to 2 years | 34.39% | 2,035,817.40 |
| Continental Textile | Intercourse funds | 606,806,381.11 | Within 1 year and 1 to 2 years | 30.75% | 1,820,419.14 |
| Lufeng Company Limited | Intercourse funds | 344,179,136.19 | Within 1 year and 1 to 2 years | 17.44% | 1,032,537.41 |
| Lu Thai Tan Chau | Intercourse funds | 217,039,055.64 | Within 1 year | 11.00% | 651,117.17 |
| Lu An Garments | Intercourse funds | 92,240,293.81 | Within 1 year | 4.67% | 276,720.88 |
| Total | -- | 1,938,870,668.29 | -- | 98.25% | 5,816,612.00 |
4. Long-term equity investment
Unit: RMB
| Item | Ending balance | Beginning balance | ||||
| Carrying amount | Depreciation reserve | Carrying amount | Carrying amount | Depreciation reserve | Carrying amount | |
| Investment to Subsidiaries | 2,648,604,886.50 | 2,648,604,886.50 | 2,417,071,281.88 | 2,417,071,281.88 | ||
| Investment to Joint Ventures and Associated | 169,443,106.66 | 169,443,106.66 | 138,079,577.25 | 138,079,577.25 | ||
| Enterprises | ||||||
| Total | 2,818,047,993.16 | 2,818,047,993.16 | 2,555,150,859.13 | 2,555,150,859.13 |
(1) Investment to subsidiaries
Unit: RMB
| Investee | Beginning balance (carrying value) | Increase/decrease | Ending balance (carrying value) | Ending balance of depreciation reserve | |||
| Additional investment | Reduced investment | Withdrawal of impairment provision | Other | ||||
| Xinsheng Power | 176,340,737.93 | 176,340,737.93 | |||||
| Lufeng Company Limited | 529,620,000.00 | 529,620,000.00 | |||||
| Luqun Textile | 171,784,550.00 | 171,784,550.00 | |||||
| Luthai (Hong Kong) | 128,771,800.00 | 128,771,800.00 | |||||
| Shanghai Luthai | 20,000,000.00 | 20,000,000.00 | |||||
| Polaris Apparel | 108,242,335.38 | 2,947.65 | 108,245,283.03 | ||||
| Lu Thai (America) | 10,209,050.00 | 10,209,050.00 | |||||
| Vanguard Apparel | 62,337,238.57 | 62,337,238.57 | |||||
| Continental Textile | 834,936,510.00 | 834,936,510.00 | |||||
| Lu An Garments | 64,229,060.00 | 64,229,060.00 | |||||
| Lulian New Materials | 300,000,000.00 | 300,000,000.00 | |||||
| Lujia Import & Export | 10,000,000.00 | 10,000,000.00 | |||||
| Lu Thai Occupational Training School | 100,000.00 | 100,000.00 | |||||
| Shanghai Zhinuo | 5,000.00 | 5,000.00 | |||||
| Zhishu Trading | 500,000.00 | 500,000.00 | 1,000,000.00 | ||||
| Huilin International | 400,000,000.00 | 400,000,000.00 | |||||
| Banyang Mountain Villa | 3,500,000.00 | 3,500,000.00 | |||||
| Total | 2,417,071,281.88 | 404,007,947.65 | 172,474,343.03 | 2,648,604,886.50 | |||
(2) Investment to joint ventures and associated enterprises
Unit: RMB
| Investee | Beginning balance (carrying value) | Increase/decrease | Ending balance (carrying value) | Ending balance of depreciation reserve | |||||||
| Additional investment | Reduced investment | Gains and losses recognized under the equity method | Adjustment of other comprehensive income | Changes of other equity | Cash bonus or profits announced to issue | Withdrawal of impairment provision | Other | ||||
| I. Joint ventures | |||||||||||
| II. Associated enterprises | |||||||||||
| Haohong Investment | 88,329,922.16 | 7,881,294.68 | -12,791,000.83 | 67,657,626.65 | |||||||
| Haoying Investment | 49,749,655.09 | 50,000,000.00 | 2,035,824.92 | 101,785,480.01 | |||||||
| Subtotal | 138,079,577.25 | 50,000,000.00 | 7,881,294.68 | -10,755,175.91 | 169,443,106.66 | ||||||
| Total | 138,079,577.25 | 50,000,000.00 | 7,881,294.68 | -10,755,175.91 | 169,443,106.66 | ||||||
5. Operating revenue and cost of sales
Unit: RMB
| Item | Reporting period | Same period of last year | ||
| Operating revenue | Cost of sales | Operating revenue | Cost of sales | |
| Main operations | 3,452,380,376.61 | 2,643,956,373.18 | 3,097,396,791.67 | 2,431,256,287.15 |
| Other operations | 195,022,132.60 | 180,495,494.62 | 178,270,264.27 | 163,516,161.93 |
| Total | 3,647,402,509.21 | 2,824,451,867.80 | 3,275,667,055.94 | 2,594,772,449.08 |
6. Investment income
Unit: RMB
| Item | Reporting period | Same period of last year |
| Long-term equity investment income accounted by cost method | 274,015,922.61 | 247,438,173.08 |
| Long-term equity investment income accounted by equity method | -10,755,175.91 | -5,146,737.73 |
| Investment income from disposal of long-term equity investment | -5,319,992.03 | 43,068,687.97 |
| Investment income from holding of trading financial assets | 1,974,280.18 | 6,793,854.87 |
| Investment income from disposal of trading financial assets | 36,259,900.00 | 144,809,578.16 |
| Interest income from debt investment during the holding period | 2,401,261.30 | 1,993,264.93 |
| Total | 298,576,196.15 | 438,956,821.28 |
XVII. Supplemental Information
1. Items and amounts of non-recurring profit or loss
√ Applicable □ Not applicable
Unit: RMB
| Item | Amount | Note |
| Gains/losses from the disposal of non-current assets | 50,868,019.96 | |
| Government grants recorded in the current profit or loss (except for those acquired in the ordinary course of company's business, or granted at certain quotas or amounts continuously in line with national policies and regulations) | 58,686,874.90 | |
| Gain/loss from change of fair value of trading financial assets and liabilities, and investment gains from disposal of trading financial assets and liabilities as well as financial assets available for sale, other than valid hedging related to the Company’s common businesses | 77,620,424.02 | |
| Reversal of provision for impairment of receivables separately tested for impairment | 6,198,745.44 | |
| Other non-operating income and expense other than the above | -1,700,653.34 | |
| Investment income from disposal of trading financial assets, financial liabilities and investment in debt obligations | ||
| Less: Income tax effects | 28,885,946.87 | |
| Non-controlling interests effects | 5,670,351.21 | |
| Total | 157,117,112.90 | -- |
Details of other profit and loss items in line with the definition of non-recurring gains and losses:
□ Applicable √ Not applicable
There are no other profit and loss items in line with the definition of non-recurring gains and losses in the Company.
Note to define the non-recurring profit and loss items listed in the Explanatory Announcement No. 1 on Information Disclosure forCompanies Offering Their Securities to the Public—Non-recurring Gains and Losses as recurring profit and loss items.
□ Applicable √ Not applicable
2. Return on equity and earnings per share
| Profit as of reporting period | Weighted average roe (%) | EPS (Yuan/share) | |
| EPS-basic | EPS-diluted | ||
| Net profit attributable to ordinary shareholders of the Company | 4.44% | 0.39 | 0.36 |
| Net profit attributable to ordinary shareholders of the Company after deduction of non-recurring profit or loss | 2.44% | 0.21 | 0.21 |
3. Differences between accounting data under domestic and overseas accounting standards
(1) Differences of net profit and net assets disclosed in financial reports prepared under international andChinese accounting standards
□ Applicable √ Not applicable
(2) Differences of net profit and net assets disclosed in financial reports prepared under overseas andChinese accounting standards
□ Applicable √ Not applicable
Chairman of the Board: Liu Zibin
Lu Thai Textile Co., Ltd.
29 April 2022