LU THAI TEXTILE CO., LTD.
ANNUAL REPORT 2019
April 2020
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 has described in detail in this Report the possible risks. Please refer to thecontents about the major risks and countermeasures in “Outlook of the Company’s futuredevelopment” in “Part IV Operating Performance Discussion and Analysis” of this Report.Securities Times, Shanghai Securities News, China Securities Journal, Ta Kung Pao (HK) andwww.cninfo.com.cn have been designated by the Company for its information disclosure in2020. And all information about the Company shall be subject to what’s disclosed by theCompany on the aforesaid media. Investors are kindly reminded to pay attention toinvestment risks.The Board has approved a final dividend plan as follows: based on the 858,121,541 shares, acash dividend of RMB1.00 (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.
Table of Contents
Part I Important Notes, Table of Contents and Definitions ...... 2
Part II Corporate Information and Key Financial Information ...... 5
Part III Business Summary ...... 10
Part IV Operating Performance Discussion and Analysis ...... 13
Part V Significant Events ...... 31
Part VI Share Changes and Shareholder Information ...... 52
Part VII Preferred Shares ...... 59
Part VIII Convertible Corporate Bonds ...... 60
Part IX Directors, Supervisors, Senior Management and Staff ...... 61
Part X Corporate Governance ...... 74
Part XI Corporate Bonds ...... 84
Part XII Financial Statements ...... 85
Part XIII Documents Available for Reference ...... 218
Definitions
Term DefinitionThe “Company”, “LTTC”, “Issuer” or “we”
context otherwise requiresThe 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 CommissionRMB, RMB’0,000
Lu Thai Textile Co., Ltd. and its consolidated subsidiaries, except where theExpressed in the Chinese currency of Renminbi, expressed in ten thousand
RenminbiThe “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 2019 to 31 December 2019
Part II Corporate Information and Key Financial InformationI Corporate Information
Stock name LTTC, LTTC-B Stock code 000726, 200726Changed stock name (if any) N/A
listing
Shenzhen Stock ExchangeCompany name in Chinese 鲁泰纺织股份有限公司Abbr. 鲁泰纺织
Stock exchange for stockCompany name in English (if
any)
LU THAI TEXTILE CO.，LTDAbbr. (if any) LTTCLegal representative Liu ZibinRegistered address No. 11, Mingbo Road, High-tech Industry Development Zone, Zibo, Shandong, P.R.ChinaZip code 255086Office address No. 81, Songling East Road, Zichuan District, Zibo, Shandong, P.R.ChinaZip code 255100Company website www.lttc.com.cnEmail address lttc@lttc.com.cnII Contact Information
Board Secretary Securities RepresentativeName Zhang Keming Zheng Weiyin and Li KunAddress
No. 81,
Company name in English (ifSongling East Road, Zichuan
District, Zibo, Shandong, P.R.China
No. 81, Songling East Road
| Songling East Road, Zichuan | , Zichuan |
District, Zibo, Shandong, P.R.ChinaTel. 0533-5277008 0533-5285166Fax 0533-5418805 0533-5418805Email 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
Newspapers designated by the Company for
information disclosure
Securities Times, Shanghai Securities News,
| Newspapers designated by the Company for | China Securities Journal and |
Ta Kung Pao (HK)
www.cninfo.com.cn
ReportPlace where this Report is lodged The Securities Department of the CompanyIV Change to Company Registered InformationUnified social credit code 91370300613281175K
since going public (if any)
No change
| Change to principal activity of the Company |
| Every change of controlling shareholder since |
incorporation (if any)
No changeV Other InformationThe independent audit firm hired by the Company:
Name Grant Thornton ChinaOffice address 5th Floor, Scitech Palace 22 Jianguomen Wai Avenue, Chaoyang District, BeijingAccountants writing signatures Wei Qianting and Guo DongmeiThe independent sponsor hired by the Company to exercise constant supervision over the Company in the Reporting Period:
□ Applicable √ Not applicable
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
2019 2018
2019-over-2018
change (%)
2017Operating revenue (RMB) 6,801,381,448.94
6,879,058,813.93
-1.13%
6,409,224,044.97
Net profit attributable to
company’s shareholders (RMB)
952,386,011.49
| the listed |
811,526,477.83
17.36%
841,150,934.75
Net profit attributable to
| the listed |
company’s shareholders
exceptional gains and losses (RMB)
662,416,013.00
| before |
805,197,824.28
-17.73%
780,637,833.47
| Net cash generated from/used in |
operating activities (RMB)
1,086,110,575.51
1,430,341,663.16
-24.07%
1,070,510,653.43
Basic earnings per share (RMB/share) 1.11
0.90
23.33%
0.91
Diluted earnings per share (RMB/share) 1.11
0.90
23.33%
0.91
Weighted average return on equity (%) 12.96%
11.24%
1.72%
| 11.87% |
31 December 2019 31 December 2018
Change of 31December 2019 over
31 December 2018(%)
31 December 2017Total assets (RMB) 11,885,431,553.08
10,537,759,811.84
12.79%
10,170,624,027.75
| Equity attributable to the listed |
company’s shareholders (RMB)
7,697,135,324.92
7,146,548,467.86
7.70%
7,230,942,770.16
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.
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: RMBQ1 Q2 Q3 Q4Operating revenue 1,545,153,566.09
1,640,294,777.92
1,626,165,317.03
1,989,767,787.90
Net profit attributable to
company’s shareholders
195,173,391.82
| the listed |
216,272,824.77
176,453,154.53
364,486,640.37
Net profit attributable to
| the listed |
company’s shareholders
exceptional gains and losses
175,390,785.73
| before |
201,425,750.20
172,442,753.62
113,156,723.45
| Net cash generated from/used in |
operating activities
-89,714,180.16
209,431,242.73
362,086,553.56
604,306,959.38
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: RMBItem 2019 2018 2017 Note
Gain or loss on disposal of non-
| current assets (inclusive of impairment allowance |
write-offs)
-1,196,233.94
20,670,427.42
-1,326,737.85
Government subsidies charged to
| current profit or loss (exclusive of government subsidies given in the Company’s ordinary course of business at fixed quotas or amounts as per the government’s uniform |
standards)
62,198,864.45
63,680,098.12
66,031,583.92
| Current profit or loss on subsidiaries obtained in business combinations involving enterprises under common control from the |
period-beginning to combination dates, net
4,145,908.17
Gain or loss on fair-
| value changes in |
held-for-trading and derivative
of held-for-
| trading and derivative financial assets and liabilities and other investments in debt obligations (exclusive of the effective portion of hedges that arise in the |
Company’s ordinary course of business)
241,537,682.90
-63,632,606.67
4,794,598.32
Non-
| operating income and expense other |
than the above
-2,857,141.21
2,784,021.34
4,638,779.84
Income from disposal of held-for-tradingfinancial assets, financial liabilities andinvestments in debt obligations
14,162,405.95
Less: Income tax effects 14,593,639.87
6,656,476.16
8,690,224.28
Non-
| controlling interests effects (net |
of tax)
9,281,939.79
10,516,810.50
9,080,806.84
Total 289,969,998.49
6,328,653.55
60,513,101.28
--Explanation of why the Company reclassifies as recurrent an exceptional gain/loss item defined or listed in the ExplanatoryAnnouncement No. 1 on Information Disclosure for Companies Offering Their Securities to the Public—Exceptional Gain/LossItems:
□ Applicable √ Not applicable
No such cases for the Reporting Period.
Part III Business Summary
I Principal Activity of the Company in the Reporting PeriodNo changes occurred to the Company’s core businesses, primary products, business models and major growth drivers in theReporting Period.Lu Thai has always adhered to its mission of “creating wealth, contributing to the society, clothing the world and weaving our way toevery corner of the globe”, as well as to its values of “people foremost policy, rigorous scientific attitude, client oriented principleand integrity for win-win outcome” for a long time. It is devoted to improving and expanding its industrial chain, making it arenowned textile and garment business group combing cotton growing, spinning, bleaching and dyeing, neatening, testing, garmentmaking and marketing. Lu Thai produces and sells middle and high-grade yarn-dyed fabric and dyeing fabric for shirts and garment.It claimed its fame for its comprehensive management, R&D ability, advanced technology, international development plan and stablequality. Moreover, it also attaches great importance to improve the added value of its products, explore the emerging market andrenew its service philosophy. With natural fabric as its flagship, multi-component functional fiber fabric as its spearhead andwash-and-wear non-ironing technology as its core competency, the Company kept a watchful eye on the latest consumption trend.Great attention was paid to improve its healthy product series so as to satisfy the needs from the diversified and personalized market.Lu Thai has become the world’s largest high-grade yarn dyed fabric producer and a world-class premium shirt provider. It had pavedits development pattern featured in going green, low-carbon growth, science and technology and humanism. Its operationperformance was always among the top comparing to its peers. 60% of Lu Thai’s products are exported to over 30 countries andregions including America, the EU and Japan, of which more than 70% is under the Company’s own brand.II Significant Changes in Major Assets
1. Significant Changes in Major Assets
√ Applicable □ Not applicable
2. Major Assets Overseas
√ Applicable □ Not applicable
Asset
Asset value
(RMB)
Loc
| Source | ation |
Manage
mentmodel
Controlmeasures toprotect asset
safety
Returngenerated
(RMB)
As % of theCompany’s
equity
Materialimpairmentrisk (yes/no)Lu Thai (HongKong) Textile Co.,Ltd.
Incorporated
200,352,532.10
HongKong
Marketi
ng
Mainmanagementpersonnel sent
| by the Company |
as the parent
11,695,969.47
2.41%
No
Lu Thai (America) Incorp11,902,346.89
New MarketiMain834,739.89
0.14%
No
Textile Co., Ltd. orated
York ng management
personnel sent
| by the Company |
as the parentLu Thai (
Textile Co., Ltd.
Incorporated
| Cambodia) |
183,377,369.00
SvayRieng
Manufacturing
Main
managementpersonnel sent
as the parent
26,790,366.68
| by the Company |
2.21%
No
Lu Thai (Burma)Textile Co., Ltd.
Incorporated
79,716,109.94
Rangoon
Manufacturing
Main
managementpersonnel sent
| by the Company |
as the parent
8,701,103.83
0.96%
No
Lu Thai (Vietnam)Textile Co., Ltd.
Incorporated
2,517,102,848.13
TayNinh
Manufac
turing
Main
managementpersonnel sent
| by the Company |
as the parent
32,654,676.83
30.33%
No
Lu An GarmentsCo., Ltd.
Incorporated
210,839,742.85
| Anjiang, |
Vietnam
Manufac
turing
Main
managementpersonnel sent
as the parent
6,783,681.59
| by the Company |
2.54%
No
III Core Competitiveness Analysis
Within the Reporting Period, the Company still maintained its core competitiveness consisting of the integrated managementcapability of the whole industrial chain, R&D ability, technological accumulation and internationalized layout.
1. The Company has the whole industrial chain and internationalized layout. As the Company possesses the whole industrial chain
integrating cotton growing, spinning, bleaching and dyeing, neatening, testing, and garment making, it has corresponding costadvantage covering various links of the production of high-end yarn-dyed fabrics. In order to take full advantage of its internationalresources, realize the internationalized industrial distribution and reinforce the leading international status in manufacturing theyarn-dyed fabrics, 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.A, Japan and India.
2. The Company has better integrated management capability and high-level management system architecture. Since 1995, the
Company has successively passed the certification of ISO9000 quality management system, ISO14000 environmental managementsystem, OHSAS18000 Occupation Health Safety Management System, and SA8000 Social Responsibility Management System.From 2007 to this day, the Company has obtained the WRAP:1999 (The Worldwide Responsible Apparel Production) Standard,STeP and GOTS Certification Standards, GRS Certification and CNAS, and realized the internationalization, standardization andnormalization of the corporate management. In order to make outstanding achievement in its operating management, better improvethe Company’s business performance and capabilities, the Company has introduced the GB/T19580-2012 Criteria for PerformanceExcellence step by step, set up the “big quality” system, promoted the management 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 Company
always 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 the product R&D to the technical research. Besides, the Company willalso transform from the overcoming of key technical difficulties to the mastery of technical principles and the formulation ofindustrial standards, and from the focus on technical innovation to the dynamic integration of new technique exploration with modelinnovation, improve the low-carbon, green and sustainable development, enhance the impetus and vigor for the enterprisedevelopment, promote the contribution of scientific and technological progress to the industrial development and propel the industrialupgrading.
Part IV Operating Performance Discussion and AnalysisI OverviewIn 2019, under the dual influence of the continuous international trade friction and the domestic economic downturn, the Companystill adhered to its own development concept, focused on the customers, regarded “vitalize the stocks, expand the increment,strengthen the industry and resort to moderate operation” as the guiding principle, made unremitting effort to execute the strategy of“quality and efficiency improvement” and “comprehensive internationalization”, insisted on the high-quality development, steadilymade progress in various works and maintained the healthy and stable development trend.For the Reporting Period, the Company achieved operating revenue of RMB6.801 billion, operating profit of RMB1.132 billion, anet profit attributable to the listed company’s shareholders of RMB952 million, and a net profit before exceptional gains and losses ofRMB662 million, respectively down 1.13%, up 16.73%, up 17.36% and down 17.73% when compared to last year. Within theReporting Period, no change occurred to the Company’s main business, and main source and structure of profit. Within the ReportingPeriod, the Company was rated “Top-100 Enterprise in Main Business Income in Cotton Textile Industry in 2018” by CCTA,“Top-10 Enterprise in Business income in Color Weaving Industry in 2018 ”, “Top-100 Competitive Enterprise in China’s CottonTextile Industry in 2018”, and “Top-100 Enterprise in China’s Clothing Industry in 2018” by CNGA. Besides, the Company was alsoentitled as “The Representative Unit with the Inclusive and Open Enterprise Spirit in the 70
th
Anniversary of New China” by CCCI,and “Advanced Enterprise in Performing the Party Building in China’s Textile Industry” by CNTAC.(I) Focus on the Customers and Rely on the Reform to Develop the New Kinetic Energy for the High-quality DevelopmentWithin the Reporting Period, the Company continued focusing on the customers and implementing the enterprise reform step by step.In addition, in combination with the Group’s idea of “a game of chess”, the Company, following the development path of“Strategy-System-Organization-Incentive”, and took the initiative in provoking the reform in four aspects--Strategy, Marketing,Product Development and Organization & Performance so as to develop the Company into the global clothing solution supplier withthe leading fabric as the core, and maintain the sustainable, healthy and steady development.Firstly, the Company made full use of various resources to make great breakthrough and optimize the customer structure, andeffectively expanded the market based on the collaboration of marketing, R&D and supply chain. While consolidating the traditionalEuropean, American and Japanese Market and strategic customers, the Company also made great effort to expand the emergingmarket in China, Asia and Africa and develop small and medium-sized customers. Moreover, popular deign, advanced technologyand efficient production were applied to cater for the market features including fast fashion, small orders and short delivery time etc..Secondly, the Company improved the design capability and upgraded the service. In order to provide the customers with theall-round product solution, the Company expanded its design service to realize the service upgrading, promoted the product structureadjustment, comprehensively developed the comfortable and elastic fabrics, the printed fabrics and the polyester fabrics andgradually transformed into the leisure and diversified style. Within the Reporting Period, the Company made corresponding progressin the research and development of the multi-component series of products, the development of the working clothes, the developmentof four-sided elastic fabrics and the development of yarn-dyeing easy-care high-elastic fabrics. In 2019, the Company finished 41,630clothing designs, independently developed 26 new products and customized 22 products. Based on the special effort made to developthe key projects, the Company made great breakthrough in the field of knitted fabrics.Furthermore, in order to improve the comprehensive service and R&D ability, the Company invested and built the R&D centercapable of the pilot scale test, strengthened the linkage and synergy between the product development and technical research, andpromoted the integration of various related scientific research platforms.(II) Continuously Boost the Strategy of Quality and Efficiency Improvement and Drive the New Force for High-quality
Development.In respect of technological transformation: in 2019, the Company highlighted the construction of weaving and high-end gray fabricsproduction line technological transformation projects. Especially, the Company invested a total of RMB2.5 billion to the functionalfabrics intelligent ecological park project under construction. Besides, the project is now listed into Zibo Municipal Old and NewKinetic Energy Conversion Project (Shandong Provincial Major Project in 2020) and will be developed into a demonstrationinnovation park integrating the intelligent manufacturing, green processing and industrial upgrading.In respect of management innovation: in 2019, the Company continued promoting the Group’s data integration, strengthened theGroup’s comprehensive budget management and cost control, improved the Group’s financial management quality, fended offpossible financial risks, enhanced the human resources management and the talent selection, training and retention work, andperfected the remuneration, performance management and incentive mechanism. In terms of the system management, continuouseffort was made to completely propel the excellent performance management and perfect the Lu Thai Production System (LTPS).In respect of scientific and technological innovation: based on the industrial development trend and the customer’s demand, theCompany continuously strengthened its scientific and technological innovation, and overcame great difficulties arising from theindustrial chain’s core technology and weak links. Besides, the Company also propelled 17 company-level technical improvementtasks and 127 ministerial technical tasks, and declared 28 projects above the ministerial and provincial level. However, 2 newproducts were ranked among Top-10 Innovative Products in the Industry; 2 “The 13
thFive-year Plan” National Key R&D Planspassed the medium-term assessment conducted by the Ministry of Science and Technology; Shandong Provincial Key EnterpriseLaboratory passed the biennial evaluation. Meanwhile, the Company won 4 awards for scientific and technological advancementabove the ministerial and provincial level, and the “textile fabric color digitization key technology and industrialization” project wonthe second prize of national science and technology award. Furthermore, the Company obtained 37 authorized patents, and guided orparticipated in the formulation of 8 national and industrial standards.In addition, the Company accelerated the in-depth integration between digitization and industrialization, advocated the centralizedmanagement-control mode, completed the system integration of the Group’s financial system and supply chain system, continuouslypropelled the APS and the optimization of MES, deepened the industrial control technology and intelligent manufacturing technologyapplication, and continuously improved its informatization and intellectualization level.(III) Continue the Comprehensive Internationalization StrategyIn respect of foreign design and R&D: in 2019, the Company continuously deepened its globalized strategic layout to exert variousbranch offices’ functions. By making full use of the cutting-edge advantages of various branches and offices in Hong Kong, Milan,New York, Tokyo and Bangalore etc., the Company vigorously applied various design and R&D resources to stimulate the industrialchain’s synergy effect, encouraged the customers to upgrade their products and realized the value-added design service.In respect of overseas customers development: by enhancing the seamless communication with the customers, the Company couldprovide the customers with diversified product and service programs, and positively develop new customers while maintaining oldcustomers. In order to promote and popularize new products and improve the product awareness, the Company successively attended13 fairs in France, Italy, Spain, Denmark, Russia and America.Moreover, in terms of the construction of marketing channels, the Company established the U.K Office, Russian Office and Ho ChiMinh Office to provide the strategic customers and valuable customers with the close-range design and R&D customized service,gradually advanced the sales, maintained a steady increase of orders and improved its profitability.In respect of international capacity construction: the Company steadily propelled the construction of overseas production bases,smoothly operated the yarn dye business in Vietnam and the garment making business in Vietnam, Cambodia and Burma. As a result,the number of orders obviously increased and the efficiency was largely improved. While making use of the local tax preferences andlabor resources, the Company moderately avoided the adverse impact caused by the Sino-US trade friction. Meanwhile, variousoverseas production bases promoted the localization of lower management, the synergy of product structure and the integration oftechnical resources step by step so as to enable the four overseas production bases to largely improve the production and sales and
complete their annual business objectives.(IV) Continuously Promote and Increase the Investment in Environmental Protection and Realize the Company’s GreenDevelopment.Within the Reporting Period, the Company focused on the green manufacturing, continuously improved the chemical control,enhanced the supply chain environmental footprint management, and implemented the upgrading and reconstruction of sewagetreatment plants. Meanwhile, the power plants introduced the low-nitrogen combustion equipment to reinforce the air pollutionprevention and performed the special management of solid wastes and hazardous wastes. Further, the Company made great effort toadvocate the sewage waste heat transfer technology, positively promoted the recycled water reuse technology application andresearch, and passed the green factory audit conducted by the MIIT.At present, the Company has regarded the natural fiber fabrics as the principle line, the multi-component functional fiber fabrics theguiding line, the wash-and-wear super easy-care technology the core, the knitted elastic fabrics the breakthrough direction, theworld’s cutting-edge consumption the orientation and the international industrial layout the base to realize its integrated developmentand guarantee its leading position in the field of yarn-dyed shirt fabrics.II Core Business Analysis
1. Overview
For the Reporting Period, the Company recorded operating revenue of RMB6.801 billion (a 1.13% year-on-year decrease); cost ofsales of RMB4.791 billion (a 1.64 % year-on-year decrease), including selling expense of RMB168 million (a 6.4% year-on-year rise)and administrative expense of RMB436 million (a 11.58% year-on-year increase); research and development expense of RMB317million (a 9.39% year-on-year increase); and net cash generated from operating activities of RMB1.086 billion (a 24.07%year-on-year drop).
2. Revenue and Cost Analysis
(1) Breakdown of Operating Revenue
Unit: RMB
2019 2018
Change (%)Operating revenue
As % of totaloperating revenue
(%)
Operating revenue
As % of totaloperating revenue
(%)Total 6,801,381,448.94
100%
6,879,058,813.93
100%
-1.13%
By operating divisionTextile and apparel 6,200,013,276.17
91.16%
6,208,566,844.56
90.25%
-0.14%
Cotton 14,064,809.50
0.21%
101,088,256.72
1.47%
-86.09%
Electricity and steam
157,581,305.05
2.32%
154,470,651.72
2.25%
2.01%
Others 429,722,058.22
6.32%
414,933,060.93
6.03%
3.56%
By product categoryFabric products 4,909,745,821.91
72.19%
4,926,081,389.35
71.61%
-0.33%
Shirts 1,290,267,454.26
18.97%
1,282,485,455.21
18.64%
0.61%
Cotton 14,064,809.50
0.21%
101,088,256.72
1.47%
-86.09%
Electricity and steam
157,581,305.05
2.32%
154,470,651.72
2.25%
2.01%
Others 429,722,058.22
6.32%
414,933,060.93
6.03%
3.56%
By operating segmentHong Kong 267,880,620.85
3.94%
263,460,345.34
3.83%
1.68%
Japan And
| South |
Korea
437,324,606.90
6.43%
451,954,695.71
6.57%
-3.24%
Southeast Asia 2,077,793,566.16
30.55%
2,010,251,958.96
29.22%
3.36%
Europe and America 1,127,470,815.82
16.58%
1,224,318,099.10
17.80%
-7.91%
Others 443,227,080.72
6.52%
388,746,153.95
5.65%
14.01%
Mainland China 2,447,684,758.49
35.99%
2,540,327,560.87
36.93%
-3.65%
(2) Operating Division, Product Category or Operating Segment Contributing over 10% of Operating
Revenue or Operating Profit
√ Applicable □ Not applicable
Unit: RMB
Operating
revenue
Cost of sales
Gross profitmargin
YoY change in
| Cost of sales | operating revenue |
(%)
YoY change incost of sales (%)
YoY change in
gross profitmargin (%)By operating division
apparel
6,200,013,276.17
| Textile and |
4,317,537,053.82
30.36%
-0.14%
-0.14%
0.00%
By product categoryFabric products 4,909,745,821.91
3,411,135,055.55
30.52%
-0.33%
-0.09%
-0.17%
Shirts 1,290,267,454.26
906,401,998.27
29.75%
0.61%
-0.31%
0.65%
By operating segmentSoutheast Asia 2,077,793,566.16
1,443,825,054.21
30.51%
3.36%
3.58%
-0.15%
| Europe and |
America
1,127,470,815.82
788,096,374.51
30.10%
-7.91%
-8.22%
0.24%
Mainland China 2,447,684,758.49
1,757,973,857.55
28.18%
-3.65%
-4.36%
0.53%
Core business data of the prior year restated according to the changed statistical caliber for the Reporting Period:
□ Applicable √ Not applicable
(3) Whether Revenue from Physical Sales Is Higher than Service Revenue
√ Yes □ No
Operating division
Item Unit 2019 2018 Change (%)Textile and fabric
Unit sales 0,000 meters 24,872.14
25,494.21
-2.44%
Output 0,000 meters 27,594.29
28,752.73
-4.03%
Inventory 0,000 meters 3,897.93
3,640.18
7.08%
Textile and apparel
Unit sales 0,000 pieces 1,836.81
1,889.35
-2.78%
Output 0,000 pieces 1,826.4
1,868.74
-2.27%
Inventory 0,000 pieces 61.28
77.62
-21.05%
Cotton
Unit sales ton 664.19
6,610.89
-89.95%
Output ton 13,952.24
17,680.56
-21.09%
Inventory ton 5,943
8,205.95
-27.58%
Electricity
Unit sales 000 KWH 118,444.03
104,570.59
13.27%
Output 000 KWH 438,795.21
445,490.43
-1.50%
Inventory 000 KWH
Steam
Unit sales ton 389,968.19
478,012.13
-18.42%
Output ton 1,303,340.54
1,434,662.48
-9.15%
Inventory ton
Any over 30% YoY movements in the data above and why:
√ Applicable □ Not applicable
Unit sales of cotton in 2019 decreased by 89.95% from last year, mainly due to the decrease of external cotton sales from outsidecompanies of the Group.
(4) Execution Progress of Major Signed Sales Contracts in the Reporting Period
□ Applicable √ Not applicable
(5) Breakdown of Cost of Sales
By operating division and product category
Unit: RMBOperatingdivision
Item
2019 2018
Change (%)Cost of sales
of sales (%)
Cost of sales
| As % of total cost | As % of total cost |
of sales (%)Textile andapparel
Cost of sales 4,317,537,053.82
90.13%
4,323,535,187.46
88.94%
-0.14%
Cotton Cost of sales 12,191,266.36
0.25%
93,918,390.99
1.93%
-
| 87.02% |
Electricity andsteam
Cost of sales 156,970,101.07
3.28%
154,888,713.67
3.19%
1.34%
Other Cost of sales 303,906,684.11
6.34%
289,100,950.83
5.95%
5.12%
Unit: RMBProduct category Item
2019 2018
Change (%)Cost of sales
of sales (%)
Cost of sales
| As % of total cost | As % of total cost |
of sales (%)Fabric products Cost of sales 3,411,135,055.55
71.20%
3,414,309,296.66
70.23%
-0.09%
Shirts Cost of sales 906,401,998.27
18.92%
909,225,890.80
18.70%
-0.31%
Cotton Cost of sales 12,191,266.36
0.25%
93,918,390.99
1.93%
-
Electricity andsteam
Cost of sales 156,970,101.07
| 87.02% | ||
3.28%
154,888,713.67
3.19%
1.34%
Other Cost of sales 303,906,684.11
6.34%
289,100,950.83
5.95%
5.12%
Note
Product Period
Rawmaterial
Labor cost Depreciation Energy
Manufacture
expenses
TotalFabric
2019 53.36% 18.15% 5.70% 12.99% 9.80% 100.00%2018 56.77% 17.56% 5.50% 12.66% 7.51% 100.00%Shirts
2019 58.53% 34.15% 2.29% 1.05% 3.98% 100.00%2018 55.73% 37.48% 2.14% 0.92% 3.73% 100.00%
(6) Changes in the Scope of Consolidated Financial Statements for the Reporting Period
√ Yes □ No
The Company incorporated three subsidiaries: Shandong Lulian New Materials Co., Ltd., Shandong Lujia Import & Export Co., Ltd.and Lu Thai Vocational School and one sub-subsidiaryLu Thai (Tan Chau) Textile Co., Ltd., cancelled the sub-subsidiary ZiboHelijie Energy-saving Technology Service Co., Ltd. and merged the sub-subsidiary Zibo Chengshun Heating 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) 1,425,103,584.46
Total sales to top five
| customers as % of total sales of the |
Reporting Period (%)
20.95%
| 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 forthe Reporting Period (RMB)
1 A 496,534,014.10
| As % of total sales revenue (%) | |
7.30%
2 B 336,810,472.44
4.95%
3 C 262,600,302.41
3.86%
4 D 167,688,100.72
2.47%
5 E 161,470,694.79
2.37%
Total -- 1,425,103,584.46
| 20.95% |
Other information about major customers:
□ Applicable √ Not applicable
Major suppliers:
Total purchases from top five suppliers (RMB) 942,752,587.65
| Total purchases from top five suppliers as % of total purchases of |
the Reporting Period (%)
21.23%
| 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 ReportingPeriod (RMB)
As % of total purchases (%)1 A 274,531,921.72
6.18%
2 B 208,593,543.80
4.70%
3 C 168,929,618.35
3.80%
4 D 149,550,667.33
3.37%
5 E 141,146,836.45
3.18%
Total -- 942,752,587.65
| 21.23% |
Other information about major suppliers:
□ Applicable √ Not applicable
3. Expense
Unit: RMB2019 2018 Change (%) Reason for any significant changeSellingexpense
168,227,064.83
158,106,183.74
6.40%
Administrative expense
436,171,656.30
390,911,763.27
11.58%
Finance costs
96,179,716.62
48,779,680.31
97.17%
| The finance costs of 2019 is RMB96,179,716.62 with a YoY increase of 97.17%, primarily due to the increase of interest expense caused by the increase in bank borrowings and the decrease of interest income caused by the decrease |
in deposits for the Reporting Period.R&D expense
316,575,474.85
289,395,092.58
9.39%
4. R&D Expense
√ Applicable □ Not applicable
With leading the technology development in the industry as the goal, the research staff of the Company work hard in new productdevelopment, new technology promotion and transformation of new technological results to productivity to explore ways fortransforming the business mode, adjusting the structure and extending the industrial chain. These efforts will promote the Company’sdevelopment towards an energy-saving and environment-friendly enterprise and truly achieve the sustainable development.
Details about R&D expense:
2019 2018 Change (%)Number of R&D personnel1,714
1,867
-8.19%
| R&D personnel as % of total employees |
11.89%
11.79%
0.10%
R&D expense (RMB)316,575,474.85
289,395,092.58
9.39%
| R&D expense as % of operating revenue |
4.65%
4.21%
0.44%
Capitalized R&D expense (RMB)
0.00
0.00
0.00%
| Capitalized R&D expense as % of total R&D expense |
0.00%
0.00%
0.00%
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
5. Cash Flows
Unit: RMB
Item 2019 2018 Change (%)
Subtotal of cash generated from operating
activities
6,870,532,638.88
| Subtotal of cash generated from operating |
6,900,228,651.30
-0.43%
| Subtotal of cash used in operating |
activities
5,784,422,063.37
5,469,886,988.14
5.75%
| Net cash generated from/used in operating |
activities
1,086,110,575.51
1,430,341,663.16
-
| 24.07% | ||
| Subtotal of cash generated from investing |
activities
90,780,303.67
115,825,451.80
-
activities
878,837,255.97
| Subtotal of cash used in investing |
1,002,392,250.74
-
| 12.33% | |||
| Net cash generated from/used in investing |
activities
-788,056,952.30
-886,566,798.94
11.11%
| Subtotal of cash generated from financing |
activities
4,170,463,313.14
3,282,459,288.75
| 27.05% | |||
| Subtotal of cash used in financing |
activities
4,121,225,344.37
3,969,383,669.10
3.83%
| Net cash generated from/used in financing |
activities
49,237,968.77
-686,924,380.35
107.17%
Net increase in cash and cash equivalents
343,424,246.02
-141,504,439.96
342.70%
Explanation of why any of the data above varies significantly:
√ Applicable □ Not applicable
During the Reporting Period, the net cash generated from/used in financing activities was RMB49,237,968.77 with a 107.17% YoYincrease, which primarily was the YoY increase in the cash generated from financing activities of RMB888,004,024.39 with a
27.05% increase, which primarily caused by the YoY increase in the cash generated from borrowings obtained; the net increase in
cash and cash equivalents was RMB343,424,246.02 with a 342.70% YoY increase, which primarily due to the YoY increase in thenet cash generated from/used in financing activities of RMB736,162,349.12, the increase in the net cash generated from/used ininvesting activities of RMB98,509,846.64, and the decrease in the net cash generated from/used in operating activities ofRMB344,231,087.65.Reason for any big difference between the net operating cash flow and the net profit for this Reporting Period
□ Applicable √ Not applicable
III Analysis of Non-Core Businesses
√ Applicable □ Not applicable
Unit: RMBAmount
As % of total
profit
Source/Reason
Exceptional or
recurrentInvestment income
21,783,896.05
1.93%
| Investment income from financial assets such as |
forw
and equity investment income
No
| ard foreign exchange settlement and funds | ||
| Gain/loss on changes in fair |
value
241,537,682.90
21.42%
| Income from changes in fair value of |
held-for-
period-end
NoAsset impairments
| trading financial assets at the | ||
-91,316,988.81
-8.10%
| Withdrawal of inventory falling price provision, |
fixed assets impairment provision
NoNon-operatingincome
7,833,728.20
0.69%
Income of non-operating compensation, etc NoNon-operatingexpense
11,939,226.65
1.06%
Non-
etc.
No
IV Analysis of Assets and Liabilities
1. Significant Changes in Asset Composition
First implementation of new standards governing financial instruments, revenue or leases since 2019 and adjustment to the financialstatements at the beginning of the first execution year
√ Applicable □ Not applicable
Unit: RMB
31 December 2019 1 January 2019
Change inpercentage(%)
Reason for anysignificantchangeAmount
As % of total
assets
Amount
As % of total
assets
924,322,008.17
| Monetary assets |
7.78%
545,502,709.36
5.17%
2.61%
Accountsreceivable
515,306,599.62
4.34%
374,607,116.55
3.55%
0.79%
Inventories 2,421,500,259.30
20.37%
2,093,366,992.30
19.84%
0.53%
Investmentproperty
45,896,747.87
0.39%
22,880,242.95
0.22%
0.17%
Long-
| term equity |
investments
103,226,300.00
0.87%
95,554,809.90
0.91%
-0.04%
Fixed assets 6,012,094,104.67
50.58%
5,748,562,385.35
54.47%
-3.89%
progress
400,235,070.01
| Construction in |
3.37%
337,230,646.42
3.20%
0.17%
Short-termborrowings
2,120,154,330.61
17.84%
1,325,273,780.05
12.56%
5.28%
Long-termborrowings
42,364,019.74
0.36%
170,019,083.89
1.61%
-1.25%
2. Assets and Liabilities at Fair Value
√ Applicable □ Not applicable
Unit: RMB
Item
Beginning
amount
Gain/loss on
fair-value
Reporting
Period
Cumulative
fair-valuechangescharged to
equity
Impairm
entallowanc
| changes in the | e for the |
Reportin
| g Period | Purchased in |
theReporting
Period
Sold in theReporting
Period
Otherchange
Ending amount
Financial assets1.Held-for-trading
103,630,515.9
236,660,082.9
50,215,000.
60,000,000.00
330,505,598.85
financial assets(excludingderivativefinancial assets)
Subtotal offinancial assets
103,630,515.9
236,660,082.9
50,215,000.
60,000,000.00
330,505,598.85
Accountsreceivablefinancing
26,963,818.
26,963,818.87
| Total of the |
above
103,630,515.9
236,660,082.9
50,215,000.
60,000,000.00
26,963,818.
357,469,417.72
Financialliabilities
4,877,600.00
-4,877,600.00
0.00
Content of other changeCaused by changes in amount of accounts receivable financingSignificant 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 XI. VII. 58. Assets with restricted ownership and using right in this Report.V 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
No such cases in the Reporting Period.
(2) Investments in Derivative Financial Instruments
√ Applicable □ Not applicable
Unit: RMB'0,000
Operator
Relati
| onship |
withtheComp
Related-partytransaction
| any |
Typeofderivat
Initialinvestmentamount
Starting
date
Ending
date
Beginni
nginvestmentamount
| ive |
Purchasedin theReporting
Period
Sold in theReporting
Period
Impairmentprovision (ifany)
Endi
nginvestme
ntamo
unt
Proportion ofclosinginvestment amountin theCompany’
s endingnet assets
| Actual |
gain/lo
ss intheReport
ingPeriod
Commercial
| bank |
Non-re
lated
No
Forwa
rdexchan
gesettlement
135,851.35
19 June2018
December2019
6,512.05
129,339.3
| 135,851.35 |
0.00%
862.05
Commercial
| bank |
Non-re
lated
No
Foreignexchangeoption
16,018.76
23 March2018
30 August2019
1,909.89
14,108.87
| 16,018.76 |
0.00%
40.15
Commercial
| bank |
Non-re
lated
No
Forwardexchangetransactions
7,293.44
| September |
2018
November2019
1,610.11
5,683.33
| 7,293.44 |
0.00%
26.46
Total 159,163.55
-- --
10,032.0
149,131.5
| 159,163.55 |
0.00%
928.66
Capital source forderivative investment
The Company’s own moneyLawsuit (if applicable) N/ADisclosure date of board
of directors announcement
on approval of derivativeinvestment (if any)
27 April 2018
30 April 2019Disclosure date of generalmeeting of shareholdersannouncement on
approval of derivativeinvestment (if any)
derivative prod
| ucts held in the Reporting Period (including but not limited to market risk, liquidity risk, credit risk, operation |
risk, law risk, etc.)
settlement hedging was op
| erated by installments, with the relevant amount not more than the planned |
derivatives products transactions. And all derivatives products transaction was zero-
the Company had a complete risk control system for sufficient analysis and p
| revention of possible risks |
such as market risk, liquidity risk and credit risk, operation risk and risk of laws and regulation.
changes in exchange rates an
| d interest rates may have an adverse impact on the financial derivatives transactions of the Company. Precautionary measures to be taken include: the Company chooses |
risk-controlled financial derivative tools with simple structure and good liquidity to car
strategy according to market changes in a timely manner.
2. Liquidity risk and credit risk: a credit risk arising from failure o
| f the contractually due Company or counterparty in performing the contract due to liquidity or factors other than liquidity. Precautionary measures to be taken include: the Company determines the upper limit of derivatives transaction amounts |
according to
guarantee deposit and can still be guaranteed in performan
| ce after the contract expires by means of extension and balance settlement etc. to prevent the Company from credit damages due to lack of liquidity. The Company selects financial institutions with strong capability and good reputation as a |
counterparty and
counterparty.
3. Operation risk:
| The derivatives had high specialty and complexity, so imperfect internal operation procedures, staffs and |
external events would make the C
education and business training for them. Besides, it
| established the System of Reporting the Abnormal |
Situation Timely so as to ensure to lower the operation risks to the maximum.
4. Risk of laws and regulation:
The Company conducted derivatives products transaction in strict accordance with relevant laws
legal documents signed. Risk control m
| easures: The Company carefully studied and mastered laws, regulations and policies relevant to derivative products transaction, formulated internal control rules for |
the forward settlement hedging business, standardized the operation procedures. And streng
regulations, the Company’s Articles of
| Association, the Management Rules for Derivative Transaction of Lu Thai Textile Co., Ltd., the Proposal on the Plan of Lu Thai Textile Co., Ltd. for Derivative |
Transactions approved at the 17
th Meeting of the 8
th
Board of Directors on 25 April 2018 and th
Proposal on Plan for Derivative Transaction of Lu Thai Textile Co., Ltd. approved at the 26
th
| Meeting of |
the 8th
responsibilities.
| Board of Directors on 29 April 2019, and performed relevant information disclosure | |
| Changes of market prices |
or fair values
parameters.
1. As of 31 December 2019, the Company has completed the delivery of all financial derivatives.
2. January-
| 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 | December in 2019: the amount of all due financial derivatives of the Company converted into USD is US$230,596,900 which were executed in accordance with agreements with revenues of |
RMB9,286,600, among which, gai
transactions of US$10.4837 million.
| ns of RMB8,620,500 was from the delivery of forward foreign exchange settlement of US$196,613,200; gains of RMB401,500 was from the delivery of foreign exchange options of US$23.5 million; gains of RMB264,600 was from the delivery of forward exchange | |
| 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
control
| Specific opinion from independent directors on the Company’s derivatives investment and risk | The Company’s independent directors Zhou Zhiji, Bi Xiuli, Pan Ailing, Wang Xinyu and Qu Dongmei, |
concerning conducting derivatives business, have issued th
on forward settlement and purchase as an effective tool to avoid foreign exchange risks, to strengthen th
| e relevant internal control and to carry out the loss and risk prevention measures so as to improve the operation and management. In conducting derivative transactions with focus on forward settlement and |
purchase, the Company follows a legal approval proc
risks relatively controllable. No harm has been done to the interests of the Company’s shareholders.
5. Use of Funds Raised
□ Applicable √ Not applicable
No such cases in the Reporting PeriodVI 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
VII 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
Relationsh
| Name | ip with the |
Company
Principal
| activity |
Registered
capital
Total assets Net assets
Operating
revenue
Operating
profit
Net profitLufengWeaving& DyeingCo., Ltd.
Fabric
706,160,000.0
1,676,416,363
.95
| Subsidiary |
1,434,971,463.2
1,743,680,018.6
131,180,206.0
116,519,911.
Subsidiaries obtained or disposed in the Reporting Period:
√ Applicable □ Not applicable
Name Method Influence on overall production operation and performanceLu Thai (Tan Chau) TextileCo., Ltd.
Incorporation
We will further improve the yarn-
Co., Ltd. to achieve the balance of supporting of production capacity andfacilities.
Shandong Lulian NewMaterials Co., Ltd.
Incorporation
| dyed fabric industry chain of Luthai (Vietnam) |
| To expand the Company's fabric product categories in the large textile field, realize green processing and manufacturing through the use of advanced technology and automation equipment on the basis of the future market |
judgment of functional fabrics, creat
consumer upgrading.Shandong Lujia Import &Export Co., Ltd.
Incorporation
Making better use of the Company's existing resources, in
| e healthy and comfortable functional fabrics with traceable process and reliable quality, and meet the growing demand for |
| tegrating the existing |
material supply chain, and reducing procurement costs.Information about major majority- and minority-owned subsidiaries:
Lufeng Weaving & Dyeing Co., Ltd. (hereinafter called “Lufeng Weaving & Dyeing”) is the holding subsidiary corporation of theCompany. Registration place: Zibo, Shandong; registered capital: RMB706.160 million. It was authenticated to be high-techenterprise in October 2014, and authenticated to be high-tech enterprise again for re-evaluation in 2017, mainly manufacturing andselling textile printing and dyeing products and the products of clothing and garments. Its export income accounted for more than70%. During the Reporting Period, Lufeng Weaving & Dyeing continued to increase investment in R & D and innovation, adhered tothe business philosophy of standardized operation, green environmental protection and sustainable development, continuouslyimproved the conversion rate of R & D results, and increased the proportion of new products with high added value. In 2019,operation revenue of Lufeng Weaving & Dyeing was RMB1.743 billion, decreasing for 2.05% comparing with that of the last year.In another aspect, thanks to influence of exchange rate fluctuation, net profit RMB117 million was achieved in 2019, decreasing for
1.97% comparing with that of the last year.
VIII Structured Bodies Controlled by the Company
□ Applicable √ Not applicable
IX Prospects
1. Industry competition and development trend
China's textile industry possesses outstanding advantages in the global textile industry, mainly in terms of industrial chain,technology and labor efficiency, etc. Although the cost of production factors and environment requirements are increasing, China'stextile industry still has an outstanding advantage in the global competition. At present, the main current fabric for high-end shirts inthe world is pure cotton-dyed fabric. In recent years, with the increase of domestic environmental protection requirements andproduction costs, and the trend of state transformation and upgrading, some low-end and small yarn-dyed production capacitiesgradually quit the market, and production capacities have been concentrated on scale-type companies, while the demand foryarn-dyed fabrics for shirts is changing to small quantity, variety, diversity, functionality and leisure.
2. Development strategy of the Company
The Company is a large-scale textile enterprise with a complete industrial chain integrating cotton cultivation, spinning, dyeing,weaving, post-treatment and garment manufacturing. It is the world's largest production base for yarn-dyed fabrics for shirts,providing blending of three major series of shirt fabrics of pure cotton and natural fiber, cotton and natural fiber as well as cotton andfunctional fiber. And the newly developed shirt knitted fabric and elastic fabric are also popular in markets. In order to maintain theoutstanding advantages of the Company in global shirt-dyed fabrics, the Company is pushing intelligent manufacturing upgrades andintegrating domestic and foreign advantageous resources to deepen internationalization of the Company with regional advantages.The Company combines quality innovation and customer needs, and innovates the marketing model with advantages of resources ineach channel. High-end shirt customization services are provided to meet various needs of customers. Furthermore, the Companyincreases investment in innovation to improve R&D and design and develop new fabrics. The Company holds the concept oflow-carbon environmental protection 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 the
institutional level, the Company will establish an internal control system to improve organizational structure, corporate governancestructure and risk prevention mechanism.
(2) In terms of market development, the Company will follow the business philosophy of "combining end-customer demand with
R&D, design and sales services". Based on the stability of existing markets, the Company will adjust operation models, establishdiversified sales platforms and explore new markets to increase domestic market share and balance the development of domestic andforeign markets.
(3) In terms of corporate management, with the goal of "improving quality and increasing efficiency", the Company will fully
develop the group system and deeply practice the model of excellence performance. Relying on the Lu Thai Production System(LTPS) and supply chain management, the Company creates a global procurement network to improve the enterprise managementsystem, promote the company reform and upgrade.
(4) In terms of brand building, the Company focuses on quality to integrate corporate philosophy and culture into brand building with
innovation. Based on customer demand, the Company innovated the marketing model and integrated online and offline channelresources to push forward the process of brand internationalization.
(5) 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 productquality relying on the advantages of U.S. companies, Milan, India and Japan Office in market development, design and R&D,customer service and talent development, and the cost advantages of Southeast Asian production bases.
4. Capital needs, sources and planning
Within the Reporting Period, the 40 million meters yarn-dyed fabric production expansion project of Lu Thai (Vietnam) Co., Ltd.was successfully established and put into operation; the spinning project (phase I) and the air spinning project of Lu Thai Tan Chau,the wholly-owned subsidiary of Lu Thai (Vietnam) Co., Ltd. were established and put into operation and the phase II was underconstruction. However, all project funds were self-owned and self-raised by the wholly-owned subsidiary. The functional fabricintelligent ecological park project (phase I) of the Company’s holding subsidiary Lulian New Materials and the high-end printing anddyeing fabrics production line project of Lufeng Weaving & Dyeing were on the initial construction and preparatory phase.Corresponding equipment installation and trial production will be arranged successively, and the project fund is from the raised andinvested 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) Economic environment: Currently, the global major economic entities’ economic policies (specially the trade policy) have
intensified the risk of uncertainty. In addition, the global outbreak of novel coronavirus will exert significant uncertain impact on theCompany in the following years. In the meantime, China’s economic development is still on a downward trend, and experiencing aperiod of recovery on the whole. In this respect, the Company will continue strictly taking various prevention and control measuresso as to guarantee the work and production resumption, coordinate various resources, enhance its internal strength by seizing thecrisis opportunity and obtain greater development opportunity after the epidemic while guaranteeing the stable production andmanagement.
(2) Fluctuations in raw material prices: the raw cotton used by the Company is long-staple cotton, whose price is affected by many
factors such as market supply and demand, climate, policies, exchange rates and quotas. Therefore, besides ensuring the stable supplyof long-staple cotton by the subsidiary in Xinjiang, the Company must study the market dynamics to reduce the cost fluctuations dueto changes in raw cotton price.
(3) Exchange rate changes: along with the operation of overseas production base of the Company and in the future, the Company will
continue to sell its products mainly in the international market for a long period of time, and US dollars will account for a relativelylarger portion in sales revenue. In addition, the main machinery and equipment and some of its raw materials of the Company arealso imported. The foreign currencies payment for imports includes US dollar and other currencies. Therefore, the Company will stillbe sensitive to the impact of exchange rate changes.In order to reduce adverse influence of exchange rate fluctuation, the Company adopted the following measures: firstly, the Companyappropriately conducted foreign exchange hedging, using forward FX sales and purchase, forward foreign exchange trading andoption portfolios to avoid some risks Secondly, the Company made reasonable arrangement on settlement day and currency structureand conclusion of agreements on fixed foreign exchange rate to avoid exchange rate-related risks. Thirdly, the Company adjusted theRenminbi and foreign-currency liabilities structure to control financial costs. Fourthly, according to the fluctuation trend of exchangerates, the Company properly adjusted imports of raw and auxiliary materials to partially offset the influence of exchange ratefluctuations on the Company.
X Communications with the Investment Community such as Researches, Inquiries andInterviews
1. During the Reporting Period
√ Applicable □ Not applicable
Date Way of communication
Type of communication
party
Index to main informationcommunicated29 March 2019 By phone Institution
30 April 2019 By phone Institution
31 October 2019 By phone Institution
| About basic information of the Company |
| About basic information of the Company |
Times of communications 3
Number of institutions communicated with 26
Number of individuals communicated with 0
Number of other communication parties 0
Tip-offs or leakages of substantial supposedly-
information during communications
No
| confidential |
Part V Significant EventsI Profit Distributions to Ordinary Shareholders (in the Form of Cash and/or Stock)How the profit distribution policy, especially the cash dividend policy, for ordinary shareholders was formulated, executed or revisedin the Reporting Period:
□ Applicable √ Not applicable
The profit distributions to ordinary shareholders, either in the form of cash or stock, in the past three years (including the ReportingPeriod) are summarized as follows:
1. The 13
th
Meeting of the 9
th
Board of Directors of the Company reviewed and approved 2019 Profit Distribution PlanBased on the total capital of 858,121,541 shares as of 31 December 2019, the Company is to distribute a cash dividend of RMB1.00for every 10 shares (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 for Share Dividend of Listed Companiesjointly issued by Ministry of Finance, SAT, and CSRC; and that for B Share shall be conversed to HKD based on the central parityrate on interbank exchange market released by the People’s Bank of China on the following day after shareholder’s meeting (forforeign shareholders, tax is free pursuant to CSZ (1994) No. 020 regulations; and non-residential corporate shareholders is entitled toa 10% reduction of enterprise income tax according to related regulations under Enterprise Income Tax Law of the People’s Republicof China).The actual distributed dividend for above-mentioned distribution plan was of RMB85,812,154.10, the residualavailable-for-distribution profit of RMB4,050,889,226.91 was carried forward to next year. Above distribution plan shall beimplemented after being approved by the Annual General Meeting of 2018.
2. The 24
th Meeting of the 8
th
Board of Directors of the Company reviewed and approved 2018 Profit Distribution PlanAs of 31 December 2018, the total share capital of the Company was 922,602,311 shares. Since 28 May 2018, the Company hasimplemented B-share repurchase. As of 22 March 2019, the Company has repurchased 64,480,770 shares which have not beencancelled. The repurchase shares were inventory shares and were not entitled the rights of all shareholders, such as profit distribution.Therefore, the Company's profit distribution plan for 2018: Based on 858,121,541 shares (the total share capital of 922,602,311shares deducted 64,480,770 shares which have been repurchased but not cancelled on 31 December 2018), the cash allocated per 10shares is RMB5.00 (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 for Cash Dividend of Listed Companiesjointly issued by Ministry of Finance, SAT, and CSRC; and that for B Share shall be conversed to HKD based on the central parityrate on interbank exchange market released by the People’s Bank of China on the following day after shareholder’s meeting (forforeign shareholders, tax is free pursuant to CSZ (1994) No. 020 regulations; and non-residential corporate shareholders is entitled toa 10% reduction of enterprise income tax according to related regulations under Enterprise Income Tax Law of the People’s Republicof China).RMB429,060,770.50 should be allocated based on 858,121,541 shares. The above-mentioned allocation scheme has beenimplemented in June 2019.
3. The 16
th Meeting of the 8
th
Board of Directors of the Company reviewed and approved 2017 Profit Distribution PlanBased on the total 922,602,311 shares on 31 December 2017, the Company is to distribute a cash dividend of RMB5.0 for every 10shares (including tax). The individual income tax for A Share shall be subject to related regulations under CS [2015] No. 101 Noticeon Certain Question about the Differentiated Individual Income Tax Policy for Share Dividend of Listed Companies jointly issued by
Ministry of Finance, SAT, and CSRC; and that for B Share shall be conversed to HKD based on the central parity rate on interbankexchange market released by the People’s Bank of China on the following day after shareholder’s meeting (for foreign shareholders,tax is free pursuant to CSZ (1994) No. 020 regulations; and non-residential corporate shareholders is entitled to a 10% reduction ofenterprise income tax according to related regulations under Enterprise Income Tax Law of the People’s Republic of China).The Company has implemented B-share buyback scheme from 28 May 2018. As of the date of equity distribution, the total numberof B shares repurchased by the Company was 15,913,655 shares. According to the provisions of the Company Law, listed companiesdo not have the right to participate in the distribution of profits by buying back the shares of the Company. Therefore, the allocationbase of the Company's profit distribution scheme in 2017 shall be the total share capital less the number of shares repurchased, that isRMB 453,344,328.00 shall be allocated based on 906,688,656 shares as the profit distribution base in 2017. The above distributionscheme has been implemented in June 2018.Cash dividend for ordinary shareholders in the past three years (including the Reporting Period):
Unit: RMB
Year
Cashdividends (taxinclusive) (A)
Net profitattributable to
ordinaryshareholdersof the listedcompany inconsolidatedstatements for
the year (B)
A as % of B
(%)
in other forms(such as sharerepurchase) (C)
C as % of B(%)
Total cashdividends(includingthose in other
forms) (D)
D as % of B
(%)
2019 85,812,154.10
952,386,011.49
9.01%
20,188,374.10
2.12%
106,000,528.20
11.13%
2018 429,060,770.50
811,526,477.83
52.87%
486,922,944.94
59.99%
915,983,715.44
112.87%
2017 453,344,328.00
841,150,934.75
53.90%
0.00
0.00%
453,344,328.00
53.90%
Indicate by tick mark whether the Company fails to put forward a cash dividend proposal for the ordinary shareholders despite thefacts that the Company has made profits in the Reporting Period and the profits of the Company as the parent distributable to theordinary shareholders are positive.
□ Applicable √ Not applicable
II Final Dividend Plan for the Reporting Period
√ Applicable □ Not applicable
Bonus shares for every 10 shares (share)
Dividend for every 10 shares (RMB) (tax inclusive)
Additional shares to be converted from capital reserve
10 shares (share)
| for every | |
| Total shares as the basis for the profit distribution proposal |
(share)
858,121,541
Cash dividends (RMB) (tax inclusive) 85,812,154.10
Cash dividends in other forms (such as share repurchase) (RMB) 20,188,374.10
Total cash dividends (including those in other forms) (RMB) 106,000,528.20
Distributable profit (RMB)4,136,701,381.01
Total cash dividends (including those in other forms) as % of
profit distribution
11.13%
| total |
Cash dividend policyOther
Details about the proposal for profit distribution and converting capital reserve into share capitalBased on the total capital of 858,121,541 shares as of 31 December 2019, the Company is to distribute a cash dividend of RMB1
for every 10 shares (including tax). The individual income tax for A Share shall be subject to related regulations under CS [20
| 15] No. 101 Notice on Certain Question about the Differentiated Individual Income Tax Policy for Share Dividend of Listed Companies jointly issued by Ministry of Finance, SAT, and CSRC; and that for B Share shall be conversed to HKD based on the |
central pa
meeting (for foreign shareholders, tax is free pursuant to CSZ (1994) No. 020 regulations; and non-
| residential corporate |
shareholders is
Law of the People’s Republic of China).The actual distributed dividend for above-mentioned distribution plan was of RMB85,812,154.10, the res
| idual |
available-for-distribution profit of RMB4,050,889,226.91 was carried forward to next year.III Fulfillment of Commitments
1. Commitments of the Company’s Actual Controller, Shareholders, Related Parties and Acquirers, as well
as the Company Itself and other Entities Fulfilled in the Reporting Period or Ongoing at the Period-end
√ Applicable □ Not applicable
Commitment Promisor
Type of
Details ofcommitment
Date of
| commitment | commitment |
making
Term ofcommitme
nt
FulfillmentCommitments made in share reformCommitments made in acquisitiondocuments or shareholding alterationdocuments
Commitments made in time of assetrestructuring
refinancing
Controllingshareholder,actualcontroller
Dilution ofat sightreturns onpublicofferingA-shareconvertiblecorporate
| Commitments made in time of IPO or | 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 |
23 May2019
From 23May 2019to 8 April2026
On-going
bonds
offering of A-
| share convertible corporate bonds, if the CSRC makes other new regulatory provisions on remedial measures for returns and the |
commitment
supplementary
| commitment then in accordance with the latest regulations of CSRC. 3. Commitment is made to fulfill the Company's relevant |
remedial measur
in accor
| dance with the |
law.Directors andseniormanagementof the
Dilution ofat sightreturns onpublic
1.
23 May2019
From 23May 2019to 8 April2026
On-going
Company offering
A-shareconvertiblecorporatebonds
Company, an
| d accept the strict supervision and management of the Company to avoid waste or excessive consumption. Any |
position-relatedconsumption
not to
| use the Company's assets to engage in investment and consumption activities unrelated to the performance of duties. 4. Commitment is made that the remuneration system developed by the Board of Directors or the Remuneration Committee is linked to |
the imple
6.
| From the issuance date of this commitment to the completion of the implementation of the Company's public |
offering of A-
commitment
| , and the above commitment fails to meet the requirements of the CSRC, I promise to issue supplementary commitment then in accordance with the latest regulations of CSRC. 7. Commitment is made to fulfill the Company's relevant remedial measures for |
returns
compensation
| responsibility to the Company or investors in accordance with the |
law.
Equity incentive commitmentsOther commitments made to minorityinterests
Executed on time or not Yes
2. Where there had been an earnings forecast for an asset or project and the Reporting Period was still
within the forecast period, explain why the forecast has been reached for the Reporting Period.
□Applicable √ Not applicable
IV Occupation of the Company’s Capital by the Controlling Shareholder or Its RelatedParties for Non-Operating Purposes
□ Applicable √ Not applicable
No such cases in the Reporting Period.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 and Methods
√ Applicable □ Not applicable
The Ministry of Finance issued the Accounting Standards for Business Enterprises No. 22-Recognition and Measurement ofFinancial Instruments (Revised), Accounting Standards for Business Enterprises No. 23-Transfer of Financial Assets (Revised), andAccounting Standards for Business Enterprises No. 37-Presentation of Financial Instruments (Revised) (hereinafter collectivelyreferred to as “new standards governing financial instruments”) in 2017. The Company held the 24
th Meeting of the 8
thBoard ofDirectors on 27 March 2019 and approved the implementation of new standards governing financial instruments since 1 January2019 and adjusted relevant accounting policies. For details about revised accounting policies, please refer to Part XII FinancialReport-V-9. Financial Instruments of the Annual Report.VII Retrospective Restatements due to Correction of Material Accounting Errors in theReporting Period
□ Applicable √ Not applicable
No such cases in the Reporting Period.
VIII YoY Changes to the Scope of the Consolidated Financial Statements
√Applicable □ Not applicable
During the Reporting Period, the Company incorporated three subsidiaries: Shandong Lulian New Materials Co., Ltd., Shandong
Lujia Import & Export Co., Ltd. and Lu Thai Vocational School and one sub-subsidiary Lu Thai (Tan Chau) Textile Co., Ltd.,cancelled the sub-subsidiary Zibo Helijie Energy-saving Technology Service Co., Ltd. and merged the sub-subsidiary ZiboChengshun Heating Co., Ltd.
IX 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
Names of the certified public accountants from the domesticindependent auditor writing signatures on the auditor’s report
Wei Qianting, Guo Dongmei
How many consecutive years the certi
have provided audit service for the Company
| fied public accountants |
Indicate by tick mark whether the independent auditor was changed for the Reporting Period.
√ Yes □ No
Indicate by tick mark whether the independent auditor was changed during the audit period.
□ Yes √ No
Indicate by tick mark whether an approval procedure was implemented for the change of independent auditor.
√ Yes □ No
Further details about the change of independent auditor:
The 3rd
Meeting of the 9
thBoard of Directors held on 26 August 2019 approved the Proposal on Change of Audit Institution: theBoard intended to turn to hire Grant Thornton China (Special General Partnership) as the audit institution for the Company’s 2019annual financial report and internal control affairs which had obtained prior approval independent opinions from independentdirectors and had been effective after being approved by the 3
rd
Extraordinary General Meeting of 2019 held on 16 September 2019.For more details, please refer to relevant announcements (No.: 2019-056, No.: 2019-057, No.: 2019-059) disclosed onwww.cninfo.com.cn respectively on 27 August 2019 and 17 September 2019.
Independent auditor, financial advisor or sponsor engaged for the audit of internal controls:
√ Applicable □ Not applicable
The Company held the Annual General Meeting of 2018 on 23 April 2019 and approved the Proposal on Engagement of the 2019Financial Audit and Internal Control Auditor and decided to renew the contract with Ruihua Certified Public Accountants (LLP) for2019 financial audit and internal control affairs and paid RMB1.735 million in total for 2018 financial report audit and the internalcontrol audit. The Company held the 3
rd
Extraordinary General Meeting of 2019 on 16 September 2019 and approved the Proposalon Change of Auditor and turned to hire Grant Thornton China (Special General Partnership) as the audit institution for theCompany’s 2019 financial report audit and internal control audit with the term of one year.
X Possibility of Listing Suspension or Termination after Disclosure of this Report
□ Applicable √ Not applicable
XI Insolvency and Reorganization
□ Applicable √ Not applicableNo such cases in the Reporting Period.XII Major Legal Matters
□ Applicable √ Not applicableNo such cases in the Reporting Period.XIII Punishments and Rectifications
□ Applicable √ Not applicable
No such cases in the Reporting Period.XIV Credit Quality of the Company as well as Its Controlling Shareholder and ActualController
□ Applicable √ Not applicable
XV Equity Incentive Plans, Employee Stock Ownership Plans or Other Incentive Measuresfor Employees
□ Applicable √ Not applicable
No such cases in the Reporting Period.XVI 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
Indicate by tick mark whether there were any credits and liabilities with related parties for non-operating purposes.
√ Yes □ No
Liabilities payable to related parties
Related party
the Company
Formation
reason
Beginning
balance(RMB’0,000)
Amount
| newly added |
in current
period(RMB’0,000)
Amountreturned in
currentperiod(RMB’0,000)
Interest rate
Currentinterest(RMB’0,000)
Endingbalance(RMB’0,000)
Zibo LuchengTextileInvestmentCo., Ltd
TheCompany asthe parent
Currenciesdeposit
12,152
10,000
22,152
4.35%
513.58
Zibo LujiaPropertyManagementCo., Ltd
Wholly-owned subsidiaryof LuchengTextile
Currenciesdeposit
4.35%
2.57
Zibo Shidanlu
Ltd
Joint-stockCompany ofLuchengTextile
Currenciesdeposit
| Cosmetics Co., |
4.35%
2.69
Zibo TaimeiTies Co., Ltd
Controllingsubsidiary ofLuchengTextile
Currenciesdeposit
4.35%
2.42
Influences from liabilities ofparties related on operatingresults and financialsituations of the Company
No significant influence
5. Other Major Related-Party Transactions
□ Applicable √ Not applicable
No such cases in the Reporting Period.
XVII 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
(1) Guarantees
Unit: RMB'0,000Guarantees provided by the Company as the parent for its subsidiaries
Obligor
Disclosuredate of the
announcement
Line of
| guarantee line | guarantee |
Actualoccurrence
date
Actual
amount
Type ofguarantee
Term ofguarantee
Having
| guarantee | expired or |
not
Guarante
e for arelatedparty or
notLu Thai (Vietnam)Textile Co., Ltd.
25 January2017
11,161.92
20 January2017
760.48
Joint-liability
Five years sincethe approval ofthe board of theCompany
No Yes
Lu Thai (Vietnam)Textile Co., Ltd.
25 January2017
19,184.55
20 January2017
8,407.31
Joint-liability
Five years sincethe approval ofthe board of theCompany
No Yes
Lu Thai (Vietnam)Textile Co., Ltd.
27 October2017
29,300.04
25 October2017
7,587.73
Joint-liability
Five years sincethe approval ofthe board of the
No Yes
CompanyLu Thai (Vietnam)Textile Co., Ltd.
22 August2018
7,673.82
20 August2018
7,328.20
Joint-liability
Thr
the approval of
the board of the
Company
No Yes
Lu Thai (Vietnam)Textile Co., Ltd.
29 March2019
4,185.72
| ee years since | ||
27 March 2019
Joint-liability
the approval of
the board of the
Company
No Yes
Lu Thai (Vietnam)Textile Co., Ltd.
22 August2018
2,790.48
| Three years since | ||
20 August2018
2,671.80
Joint-liability
Two years since
the approval of
the board of the
Company
No Yes
Lu Thai (Vietnam)Textile Co., Ltd.
29 March2019
10,464.3
27 March 2019
Joint-liability
Two years since
the approval of
the board of the
Company
No Yes
Lu Thai (Vietnam)Textile Co., Ltd.
29 March2019
31,392.9
27 March 2019
19,882.17
Joint-liability
Two years since
the approval of
the board of the
Company
No Yes
Lu Thai (Vietnam)Textile Co., Ltd.
29 March2019
5,511.2
27 March 2019
Joint-liability
Two years since
the approval of
the board of the
Company
No YesLu Thai (Vietnam)Textile Co., Ltd./
Thai (Tan Chau)Textile Co., Ltd.
28 September2019
6,976.2
| Lu |
27 September2019
| Three years since |
the approval ofthe board of theCompany
No Yes
Lu Thai (Tan Chau)Textile Co., Ltd.
28 September2019
6,976.2
27 September2019
6,976.2
the approval ofthe board of theCompany
No Yes
Lu Thai (Vietnam)Textile Co., Ltd.
28 September2019
11,859.54
| Three years since | ||
27 September2019
8,371.44
| Three years since |
the approval ofthe board of theCompany
No Yes
Lu Thai (Vietnam)Textile Co., Ltd.
28 September2019
3,139.29
27 September2019
the approval ofthe board of theCompany
No Yes
Xinjiang LuthaiFengshou CottonIndustry Co., Ltd.
14 October2017
15,000
12 October2017
Joint-liability
Three years s
the approval ofthe board of theCompany
No Yes
| ince | ||
| Total approved line for such guarantees in the Reporting Period |
(B1)
80,505.35
| Total actual amount of such guarantees in the |
Reporting Period (B2)
55,072.62
| Total approved line for such guarantees at the end of the |
Reporting Period (B3)
165,616.16
| Total actual balance of such guarantees at the end of the Reporting |
Period (B4)
61,985.33
Guarantees provided between subsidiaries
Obligor
Disclosuredate of theguaranteelineannouncem
ent
Line of
guarantee
Actualoccurrence date
| guarantee |
Actualguarantee
amount
Type ofguarantee
Term ofguarantee
Having
not
Guarante
e for arelatedparty or
notXinjiang
| expired or | ||
| Lu Thai |
Textile Co., Ltd.
3 August2019
20,000
3 August 2019 20,000
Joint-liability 12 months No YesTotal ap
(C1)
20,000
| proved line for such guarantees in the Reporting Period | Total actual amount of such guarantees in the Reporting |
Period (C2)
19,900
| Total approved line for such guarantees at the end of the |
Reporting Period (C3)
20,000
Tot
| al actual balance of such guarantees at the end of the |
Reporting Period (C4)
19,900
Total guarantee amount (total of the three kinds of guarantees above)
Total guarantee line approved in
the Reporting Period (A1+B1+C1)
100,505.35
| Total guarantee line approved in | Total actual guarantee amount in the Reporting |
Period (A2+B2+C2)
74,972.62
| Total approved guarantee line at the end of the Reporting Period |
(A3+B3+C3)
185,616.16
| Total actual guarantee balance at the end of the Reporting Period |
(A4+B4+C4)
81,885.33
| Total actual guarantee amount (A4+B4+C4) as % of the |
Company’s net assets
10.64%
Of which:
Balance of guarantees provided for shareholders, actual controllerand their related parties (D)
Balance of debt guarantees provided directly or indirectly for
obligors with an over 70% debt/asset ratio (E)Amount by which the total guarantee amount exceeds 50% of theCompany’s net assets (F)
Total of the three amounts above (D+E+F) 0
Explanations about joint and several liability for repayment inrespect of undue guarantee (if any)
Company, Xinjiang Lu Thai Company, the
| warrantee Xinjiang Lu Thai Company provided the corresponding amount of |
counter guarantee for Lu Thai Company.Explanation about external guarantee violating establishedprocedure (if any)
N/ACompound guarantees:
(2) Irregularities in Provision of Guarantees
□ Applicable √ Not applicable
No such cases in the Reporting Period.
3. Cash Entrusted to Other Entities for Management
(1) Cash Entrusted for Wealth Management
√ Applicable □ Not applicable
Overviews of entrusted cash management during the Reporting Period
RMB’0,000Specific type Capital resources Amount incurred Undue Balance Overdue amountTrusted financialproducts
Self-owned funds 5,000
5,000
Others Self-owned funds 6,000
Total 11,000
5,000
Particulars of entrusted cash management with single significant amount or low security, bad liquidity, and no capital preservation
√ Applicable □ Not applicable
RMB’0,000Nameof thetrustee
Typeof thetrustee
Typeof theproduct
Amount
Resource offunds
Initial
date
Date
| Ended | Use of |
fund
Metho
d ofpayme
ntdetermination
Annua
forrefere
nce
Estima
teprofit(ifany)
Amount of
or
| losses |
in
recove
ry of
| profits |
or
in
Amountwithdr
awnimpairmentprovis
Whether gothroug
hstatorproced
ures
| losses |
Whetherthere
is
management
Overv
| wealth | iew of |
theitemandtherelate
ReportingPeriod
ReportingPeriod
| ion (if |
any)
entrustmentplaninfutureor not
dindexforinquiring (ifany)
ShanghaiGophe
ManagementCo.,Ltd
Fundcompany
Constantreturn
| r Asset |
3,000
Self-ownedfunds
December2017
Januar
| y 2019 |
AccountreceivablesbondsofGuangdongChengxingandJingdong
Repay
withinterestswhenexpired
7.60%
| capital |
240.21
No
Yes
Notyet
ShanghaiGophe
| r Asset |
ManagementCo.,Ltd
Fundcompany
Constantreturn
3,000
Self-ownedfunds
December2017
December2019
GrantingtrustloanstoJiexinFinance
Repay
whenexpired with
| annual |
interestspayment
8.50%
247.37
No
YesNotyet
AVICTrustCo.,Ltd
Trustcompany
Constantreturn
5,000
Self-ownedfunds
2019
| March | March |
2020
Nofixeddirection
Repay
whenexpired with
| annual |
interestspayment
8.00%
No
Yes
Notyet
Total 11,000
-- -- -- -- -- -- 883
487.58
--
-- -- --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.XVIII Corporate Social Responsibility (CSR)
1. Measures Taken to Fulfill CSR Commitment
The Company has prepared social responsibilities report for 2019, for details, see Social Responsibilities Report disclosedsimultaneously with Annual Report 2019 of the Company.
2. Measures Taken for Targeted Poverty Alleviation
(1) Plans
The Company assumes social responsibilities by carrying out education support and poverty alleviation. The Company helps needystudents to continue their studies and impoverished peasants to maintain their basic livelihood.
(2) Summary of the Related Work Done in the Reporting Period
The Company assumes social responsibilities by carrying out education support and poverty alleviation. The Company helps needystudents to continue their studies and impoverished peasants to maintain their basic livelihood.
(3) Results
Indicator Measurement unit Quantity/Progress
1. General results —— —— Of which: 1.1 Funds Ten thousand 33.07
2. Itemized results —— ——
2.4 Out of poverty by education —— ——Of which: 2.4.1 Amount for funding poorstudents
Ten thousand 17
2.4.2 Number of poor students
funded
Person 56
2.8 Social poverty alleviation —— ——Of which: 2.8.1 Amount of input throughTen thousand 11.07
East-West Poor Alleviation Cooperation
2.9 Other items —— ——Of which: 2.9.1 Number of items Piece 1
2.9.2 Amount of input Ten thousand 5
3. Accolades received (for what and at what
level)
—— ——
(4) Subsequent Plans
None
3. Issues Related to Environmental Protection
Indicate by tick mark whether the Company or any of its subsidiaries is identified as a major polluter by the environmental protectionauthorities.Yes
Name of
polluter
Name ofmajorpollutants
Way ofdischarge
Number ofdischarge
Distributionof dischargeoutlets
Dischargeconcentratio
n
Dischargestandardsimplemented
Totaldischarge
Approved
totaldischarge
Excessi
vedischar
ge
Lu ThaiTextile Co.,Ltd
COD andammonianitrogen
Continuousdischarge
HuangjiapuIndustrial
| outlets | |
| Park; East |
ZoneIndustrialPark
COD≤140mg/L;ammonianitrogen≤10mg/L
of waterpollutants intextile dyeing andfinishing industry:
GB 4287-2012COD: 200mg/LAmmonianitrogen:20mg/L
COD is
572.13t and
ammonianitrogen is
23.51t
COD is1495.08 t,andammonianitrogen is
149.51t
No
LufengWeaving &
| Emission standard | ||
| Dyeing Co., |
Ltd.
COD andammonianitrogen
Continuousdischarge
dischargeoutlet
COD≤140mg/L;ammonianitrogen≤4mg/L
Emission sta
| Lufeng chief | ndard |
of waterpollutants intextile dyeing and
GB 4287-2012COD: 200mg/LAmmonianitrogen:20mg/L
COD is
296.27t and
ammonianitrogen is
6.73t
COD is
575.985 t,
andammonianitrogen is
57.6t
No
ZiboXinsheng
SO2, NQx,and smoke
Continuousdischarge
Productionplant of
SO2：
≤35mg/m3
| finishing industry: | |
| 、 |
Ultra-lowemission No. 2
SO2 is 38.3t,
SO2 is
354.18 t/a,
No
ThermalPower Co.,Ltd.
XinshengThermalPower
NQx：
≤100(50)mg/m3 andsmoke:≤10
(5)mg/m3
modification listLZJBF (2016) No46 of Emissionstandard of airpollutants ofThermal PowerPlant in ShandongProvince
t and smoke is
6.452t.
NQx is1011.95 t/aand smokeis 101.2 t/a.
Lu Thai(Vietnam)Textile Co.,Ltd.
Sewage
Dischargeinto theecologicalpond in theparkdistrictaftertreatment
Beside
COD≤50mg
| sewage plant | /L; ammonia |
nitrogen≤
2.0mg/L
QCVN40：
2011/BTNMT
Sewagedischarge is1235700t
/ No
Lu Thai(Vietnam)Textile Co.,Ltd.
Exhaust gas
Directdischargeaftertreatment
Besideboiler room
/
QCVN19：
2009/BTNMT
Gas emissionis 226 millionm
/ NoConstruction of pollution prevention equipment and operation conditionLu Thai Textile Co., Ltd. and its majority-owned subsidiary Lufeng Weaving & Dyeing Co., Ltd. strictly implement the "ThreeSimultaneous" management system for environmental protection in project constructions. The companies are equipped with completefacilities for waste gas and waste water treatment. In 2019, Lu Thai Textile Co., Ltd. and its majority-owned subsidiary LufengWeaving & Dyeing Co., Ltd. carried out the waste water treatment system transformation project to improve the treated water qualityby systematic and comprehensive reform, further improving the river water quality and local ecological environment. The newlyadded online monitoring devices for PH in 2019 monitor and detect the pollutants discharge index comprehensively. In 2019, theCompany makes great efforts to transform exhaust emission so as to reduce the discharge of atmospheric pollutants, including thecomprehensive treatment of VOCs discharged and low-nitrogen combustion of NOx discharged from boilers. Support teams were setup to be responsible for daily operation maintenance and inspection to guarantee the normal operation of facilities. Both the exhaustemission and waste water discharge meet the emission standards.The wholly-owned subsidiary Zibo Xinsheng Thermal Power Co., Ltd. enforces the "Three Simultaneous" management system forenvironmental protection in extension project construction in accordance with 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 + wetelectrostatic precipitator" to reduce soot emission concentration. The overall system works well.The waste water treatment project of the wholly-owned subsidiary Lu Thai (Vietnam) Textile Co., Ltd. is designed to treat 6,500 tonsof sewage water daily, among which, sewage plan I is designed to treat 3,000 tons of sewage water daily, and the sewage plant II isdesigned to treat 3,500 tons of sewage water daily. The Company adopts a comprehensive treatment process of "pre-materialization +A2O biochemistry + 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 2019: The COD (mean value) was
47.6 mg/L, the chrominance (mean value) was 30, the ammonia nitrogen (mean value) was 1.60 mg/L, and the total phosphorus
(mean value) was 0.19 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 2019 was 1,235,700 tons, among which, the chemical oxygen demand(COD) was 58.5 tons, ammonia nitrogen (NH3-N) was 2.06 tons and total phosphorus (TP) was 240kg. The Company is equippedwith multi-pipe and water film dust-separation devices to process the exhaust gas discharged from boilers of the Company. In 2019,all the equipment was in normal operation, and the exhaust gas inspection parameters were lower than the QCVN19:2009/BTNMTemission standards set by Vietnam government. In 2019, the total amount of sulfur dioxide emissions was 62.35 tons, and the totalamount of nitrogen oxides emissions was 67.48 tons.Project Environmental Impact Assessment and Other Administrative Permission for Environmental ProtectionIn 2019, the main project of "Lutai Textile Co., Ltd. High-Concentration PVA Wastewater Treatment and Sewage ComprehensiveUpgrading Project (1)" project has been completed and entered the commissioning stage; "Lutai Textile Co., Ltd. High-grade GreyFabric Production Line Technical Transformation Project" has been completed. Complete the acceptance. The controlling subsidiaryLufeng Weaving and Dyeing Co., Ltd. has completed the acceptance of the "High-end Printing Fabric Production Line TechnicalTransformation Project", and the "high-grade grey fabric production line technical transformation project" has completed theacceptance; "Lufeng Weaving and Dyeing Co., Ltd. dyeing wastewater liquid membrane separation and sewage station synthesis The"Upgrading and Upgrading Project" project has entered the commissioning stage; the "Lufeng Weaving and Dyeing Co., Ltd.High-end Printing and Dyeing Fabric Production Line Project" has been approved and is under construction. The wholly-ownedsubsidiary Zibo Xinsheng Thermal Power Co., Ltd. obtained the “Response of the Environmental Impact Report of the ShandongProvincial Department of Environmental Protection on the Extension Project of Zibo Xinsheng Thermal Power Co., Ltd.”(Luhuanjian [2015] No. 241), expansion project II The period is under construction. The wholly-owned subsidiary Lu Thai (Vietnam)Co., Ltd. Spinning Phase I and Dyeing Park Phase I environmental protection projects have been completed and accepted forconfirmation. The spinning phase II and yarn dyeing park Phase II environmental assessment reports have been approved.Emergency plan for environmental incidentsLu Thai Textile Co., Ltd., and its majority-owned subsidiary Lufeng Weaving & Dyeing Co., Ltd. prepared the Emergency Plan forEnvironmental Incidents, which was filed with Zibo Environmental Protection Bureau Xichuan Branch. The wholly-ownedsubsidiary Zibo Xinsheng Thermal Power Co., Ltd. has formulated the "Emergency Plan for Environmental Incidents" and filed itwith the environmental protection management department. The identification and risk assessment of environmental risk sources,prevention and early warning mechanisms, emergency protection and supervision and management were included in the plan. Thewholly-owned subsidiary Lu Thai (Vietnam) Co., Ltd. has prepared emergency plans for different environmental incidents to reducetheir impacts.Environmental self-monitoring programAccording to the requirements of the environmental authorities, Lutai Textile Co., Ltd. and its holding subsidiary Lufeng Weavingand Dyeing Co., Ltd. all follow the requirements of the superior environmental protection department to formulate an environmentalself-testing plan for the following year in December each year. The company invites qualified According to the self-monitoring plan,the testing agency will test the waste water and waste gas, disclose the monitoring data to the Shandong Province Pollution SourceSelf-Monitoring and Sharing System on time, and submit the test report to the environmental protection department. Thewholly-owned subsidiary Zibo Xinsheng Thermal Power Co., Ltd. has implemented online real-time monitoring of environmentaldata in accordance with the requirements of the superior environmental protection department, and has achieved emission standards.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 Lu Thai (Vietnam) Co., Ltd. installs automatic sewage sampling and water qualityautomatic online monitoring devices, real-time automatic sampling and online monitoring of sewage effluent water quality; thecompany invites external qualified testing institutions to conduct sewage, sludge and exhaust gas quarterly Test and submit the testreport to the environmental supervision department.
Other environment information that should be disclosedNoOther related environment protection informationNoXIX Other Significant Events
√ Applicable □ Not applicable
1. B share repurchase
On 16 May 2018, the company announced the "Lutai Textile Co., Ltd. Repurchasing Part B Shares Report". For details, please referto the related information on www.cninfo.com.cn on 17 May 2018 Announcement (No.: 2019-013). On 28 May 2018, the Companyimplemented the repurchase program for the first time. For details, please refer to the relevant announcement (No.: 2018-026) of thewww.cninfo.com.cn on 29 May 2018. As of 22 March 2019, when the repurchase period expires, the Company has repurchased64,480,770 shares of B shares. On 4 April 2019, the Company has completed the cancellation of share repurchase in ShenzhenBranch of China Securities Depository and Clearing Co., Ltd. For details, please refer to the relevant information onwww.cninfo.com.cn on 9 April 2019 Announcement (No.: 2019-023).II. Matters Concerning the Issue of A Share Convertible BondsThe Company reviewed and approved various proposals including the Proposal of the Company’s Plan for the Public Issue of AShare Convertible Bonds during the 28
th
Meeting of the 8
th Board of Directors and the 3
rdExtraordinary Shareholders Meeting in2019. Please refer to relevant announcements (No.: 2019-039, 2019-041, 2019-042, 2019-043, 2019-044, 2019-045 and 2019-059)respectively issued on 24 May 2019 and 17 September 2019 viawww.cninfo.com.cn for details.The Company received the CSRC Administrative License Application Acceptance Notice on 15 October 2019 and the Notice on FirstFeedback of CSRC Administrative License Project Review on 19 November 2019. Please refer to relevant announcements (No.:
2019-064 and 2019-068) respectively issued on 16 October 2019 and 20 November 2019 viawww.cninfo.com.cn for details.On 27 November 2019, the Company held the 7
th
Meeting of the 9
thBoard of Directors, and reviewed and approved five proposalsincluding the Proposal of Adjusting the Fund-raising Scale of A Share Convertible Bonds to Be Publicly Issued by the Company.Please refer to relevant announcements (No.: 2019-074, 2019-075, 2019-076, 2019-077 and 2019-078) issued on 28 November 2019viawww.cninfo.com.cn for details.
On 29 November 2019, the Company disclosed the Reply on the First Feedback of A Share Convertible Bonds Public IssueApplication Documents of Lu Thai Textile (Announcement No.: 2019-079); on 2 January 2020, the Company received the Notice onMaking Preparations for the Lu Thai Textiles’ Convertible Bonds Public Issue IEC Meeting and replied. Please refer to relevantannouncement (No.: 2020-001) and the Reply on the Notice on Making Preparations for the Lu Thai Textiles’ Convertible BondsPublic Issue IEC Meeting issued on 3 January 2020 viawww.cninfo.com.cn for details.On 9 January 2020, the Company’s application for the public issue of A Share convertible bonds was approved by the IssuanceExamination Committee (IEC) of CSRC. On 6 March 2020, the Company received the Reply on Approving the Public Issue ofConvertible Bonds by Lu Thai Textile Co., Ltd. (ZJXK [2020] No. 299) issued by CSRC. Please refer to relevant announcements(No.: 2020-002 and 2020-010) respectively issued on 10 January 2020 and 7 March 2020 viawww.cninfo.com.cn for details.
On 3 April 2020, the Company held the 10
th Meeting of the 9
thBoard of Directors. In the meeting, the Company reviewed andapproved the Proposal of Further Establishing the Concrete Scheme for the Company’s Public Issue of A Share Convertible Bonds,the Proposal of the Listing of the Company’s Public Issue of A Share Convertible Bonds and the Proposal of Opening A SpecialAccount for the Funds Raised for the Company’s Public Issue of A Share Convertible Bonds and Signing the Raised FundSupervision Agreement, and disclosed the Prospectus and Summary for the Public Issue of A Share Convertible Bonds viawww.cninfo.com.cn. Please refer to relevant announcements and documents (No.: 2020-011, 2020-013 and 2020-014) for details.The Company issued the Prompt Notice on the Public Issue of A Share Convertible Bonds, Announcement on the DTOR for the
Public Issue of A Share Convertible Bonds and the Placement Priority Result, Announcement on the Online Lot-winning Result of thePublic Issue of A Share Convertible Bonds and Announcement on the Result of the Public Issue of A Share Convertible Bondsrespectively on 9 April, 10 April, 13 April and 15 April in 2020. Please refer to relevant announcements (No.: 2020-017, 2020-018,2020-020 and 2020-022) issued viawww.cninfo.com.cn for details.III. Change the Accounting Firm in Charge of the Annual AuditOn 26 August 2019, the Company reviewed and approved the Proposal of Changing the Audit Agency during the 3
rd
Meeting of the
th
Board of Directors: the Company’s Board of Directors proposed to employ Grant Thornton (special general partnership) as theCompany’s financial statements and internal control audit agency in 2019. The Company’s independent director issued the priorapproval opinion and independent advice on the Proposal of Changing the Audit Agency. Please refer to relevant announcements(No.: 2019-056 and 2019-057) issued on 27 August 2019 viawww.cninfo.com.cn for details. The above-mentioned proposal wasreviewed and approved during the 3
rdExtraordinary Shareholders Meeting of 2019 held on 16 September 2019. Please refer torelevant announcement (No.: 2019-059) issued on 17 September 2019 viawww.cninfo.com.cn for details.XX Significant Events of Subsidiaries
□ Applicable √ Not applicable
Part VI Share Changes and Shareholder InformationI. Share Changes
1. Share Changes
Unit: share
Before Increase/decrease in the Reporting Period (+/-) After
Shares
Percentag
e (%)
New
| issues | Shares |
asdividendconvertedfromprofit
Sharesas
converte
d fromcapital
| reserves |
Other Subtotal Shares
Percentage (%)
I. Restricted shares 119,295,819
12.93%
-256,882
-256,882
119,038,937
13.87%
1. Shares held by State
2. Shares held by
state-owned legal person
3. Shares held by other
domestic investors
1,063,419
0.12%
-256,882
-256,882
806,537
0.09%
| Among which: Shares |
held by domestic
person
| legal |
| Shares held by domestic natural |
person
1,063,419
0.12%
-256,882
-256,882
806,537
0.09%
4. Shares held by other
foreign investors
118,232,400
12.82%
118,232,400
13.78%
Among which: Sharesheld by foreigncorporations
118,232,400
12.82%
118,232,400
13.78%
Shares held byforeign natural person
II. Unrestricted shares 803,306,492
87.07%
-64,223,888
-64,223,888
739,082,604
86.13%
1. RMB ordinary shares 561,105,431
60.82%
158,857
158,857
561,264,288
65.41%
2. Domestically listed
foreign shares
242,201,061
26.25%
-64,382,745
-64,382,745
177,818,316
20.72%
3. Overseas listed foreign
shares
4. Other
III. Total shares 922,602,311
100.00%
-64,480,770
-64,480,770
858,121,541
100.00%
Reasons for share changes:
√ Applicable □ Not applicable
The cancellation of B share repurchase and Shenzhen Branch of China Securities Depository and Clearing Corporation Limitedlocked and adjusted the shareholding of the Senior ExecutivesApproval of share changes:
□ Applicable √ Not applicable
Transfer of share ownership:
□ Applicable √ Not applicable
Progress on any share repurchases:
√ Applicable □ Not applicable
The Company held its 2
ndExtraordinary General Meeting of 2018 on 23 March 2018 and passed Bill to Buy Back Some of theB-shares of the Company. For details, please refer to the relevant announcements on www.cninfo.com.cn published on 24 March2018 (No.: 2018-013); The Company disclosed Report on the Buyback of Some B-shares of the Company on 16 May 2018 and issuedAnnouncement of Lu Thai Textile Co., Ltd. about the Implementation of Buy-back of Shares on 29 May 2018 that the first buybackshares were disclosed for the first time. The above contents refer to relevant announcements on www.cninfo.com.cn.As of 22 March 2019 when the repurchase period expired the Company repurchased 64,480,770 B shares. For details, please refer tothe relevant announcements on www.cninfo.com.cn published on 23 March 2019 (No.: 2019-013). On 4 April 2019, the Companyhas completed the cancellation of share repurchase in Shenzhen Branch of China Securities Depository and Clearing Co., Ltd. Fordetails, please refer to the relevant announcements on www.cninfo.com.cn published on 9 April 2019 (No.: 2019-023).Progress on reducing the repurchased shares by means of centralized bidding:
□ Applicable √ Not applicable
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
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: shareName ofshareholde
r
Beginning
Increased inReporting Period
Unlocked inReporting Period
Ending
| restricted shares | restricted shares |
Reason forrestriction
Date of unlockingLi132,123
132,123
Locked theshareholding of
6 months after thedeparture of senior
Tongmin the Senior
Executives
executive
Pan Pingli 103,947
103,947
Locked theshareholding ofthe SeniorExecutives
6 months after thedeparture of senior
executive
20,812
| Quan Peng |
20,812
Locked theshareholding of
the Senior
Executives
6 months after thedeparture of senior
executiveTotal 256,882
256,882
-- --
II. Issuance and Listing of Securities
1. Securities (Exclusive of Preferred Shares) Issued in the Reporting Period
□ Applicable √ Not applicable
2. Changes to Total Shares, Shareholder Structure and Asset and Liability Structures
□ Applicable √ Not applicable
3. Existing Staff-Held Shares
□ Applicable √ Not applicable
III Shareholders and Actual Controller
1. Shareholders and Their Shareholdings at the Period-End
Unit: share
ordinaryshareholders
56,457
| Number of | Number of ordinary shareholders at the |
month-
disclosure of this Report
56,319
| Number of preferred shareholders with |
resumed voting
any) (see note 8)
| rights (if | Number of preferred shareholders with resumed |
voting rights at the month-
Report (if any) (see note 8)
| end prior to the disclosure of this |
5% or greater shareholders or top 10 shareholdersName of shareholder
Nature ofshareholde
r
Shareholdingpercen
tage
Total sharesheld at theperiod-end
Increase/decrease in theReporting
Period
Restrictedshares held
| Unrestricted |
shares held
Shares in pledgeor frozenStatus
Shares
| Zibo Lucheng Textile Investment Co., |
Domestic 16.36140,353,583
0.00
140,353,583
Ltd. non-state-
ownedlegalperson
%
Tailun (Thailand) Textile Co., Ltd.
Foreignlegalperson
13.78
%
118,232,400
0.00
118,232,400
Hong
Ltd
Foreignlegalperson
2.99%
| Kong Securities Clearing Co. |
25,700,649
-8314899.00
25,700,649
| Central Huijin Assets Management |
Co., Ltd.
State-own
person
2.37%
| ed legal |
20,315,300
0.00
20,315,300
T.Rowe Price Intl Discovery Fund
Foreignlegalperson
2.32%
19,948,219
0.00
19,948,219
| China Securities Finance Corporation |
Limited
Domesticnon-state-ownedlegalperson
2.13%
18,313,391
0.00
18,313,391
| Hong Kong Monetary |
Authority-self-owned funds
Foreignlegalperson
1.64%
14,041,884
2406491.00
14,041,884
| National Social Security Fund |
Portfolio 103
Other 1.40%
11,999,897
-50.00
11,999,897
| National Social Security Fund |
Portfolio 413
Other 0.97%
8,310,051
8310051.00
8,310,051
| Generali China Life Insurance Co., |
Ltd.-Dividend Product 2
Other
0.78%
6,664,959
2960813.00
6,664,959
| Strategic investor or general legal person |
becoming a top-
rights issue (if any) (see note 3)
Naught
Related or acting-in-
| 10 ordinary shareholder due to |
| concert parties among the |
shareholders above
Company and the actual controller. Tailun (
| Thailand) Textile Co., Ltd. is the |
second largest shareholder a
or concerted action among other shareholders.Top 10 unrestricted shareholders
Name of shareholder
Unrestricted shares held at the
period-end
Shares by typeType SharesZibo Lucheng Textile Investment Co., Ltd. 140,353,583
RMB ordinary share
| 140,353,583 |
Hong Kong Securities Clearing Co. Ltd 25,700,649
RMB ordinary share
| 25,700,649 |
Central Huijin Assets Management Co., Ltd. 20,315,300
RMB ordinary share
| 20,315,300 |
T.Rowe Price Intl Discovery Fund 19,948,219
| Domestically listed |
foreign share
China Securities Finance Corporation Limited 18,313,391
| 19,948,219 | ||
RMB ordinary share
Hong Kong Monetary Authority-self-owned funds
| 18,313,391 | ||
14,041,884
RMB ordinary share
| 14,041,884 |
National Social Security Fund Portfolio 103 11,999,897
RMB ordinary share
| 11,999,897 |
National Social Security Fund Portfolio 413 8,310,051
RMB ordinary share
| 8,310,051 |
Generali China Life Insurance Co., Ltd.-
Product 2
6,664,959
| Dividend |
RMB ordinary share
RBC EMERGING MARKETS SMALL CAPEQUITY FUND
6,181,462
| 6,664,959 | ||
| Domestically listed |
foreign share
Related or acting-in-
| 6,181,462 | ||
| 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
Company and the actual controller. Tailun (
| Thailand) Textile Co., Ltd. is the second largest shareholder as well as sponsor of foreign capital of the Company. |
All of other shareholders are people holding pu
or concerted action among other shareholders.
| blic A share or public B share and the Company is not able to confirm whether there is associated relationship | |
| Top 10 ordinary shareholders involved in |
securities margin trading (if any) (see note 4)
N/AIndicate 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 personType of the controlling shareholder: legal personName of controlling shareholder
Legalrepresentative/person incharge
Date ofestablishment
Unified social credit
code
Principal activityZibo Lucheng Textile Investment Co.,Ltd.
Liu Deming
91370303164200391J
Investment on textile, electricityand chemical; purchase, processand sale of cotton; retail service
etc.Particulars about shareholding ofcontrolling shareholders controllingand holding shares of other listedcompanies during the ReportingPeriod
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
in other countries or regions or not
Liu Zibin In person China
NoLiu Deming
Concerted action (including agreement,
relatives, and same control)
China
NoProfessions and titles
Co., Ltd.Particulars about liste
| Liu Zibin is the Chairman of the Board and GM of Lu Thai Textile Co., Ltd. , Liu Deming is the Chairman of the Board and GM of Zibo Lucheng Textile Investment | |
| d companies with shares ever held by the actual controller over the past |
10 years
N/AChange 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. Other 10% or Greater Corporate Shareholders
□ Applicable √ Not applicable
5. Limitations on Shareholding Decrease by the Company’s Controlling Shareholder, Actual Controller,
Reorganizer and Other Commitment Makers
□ Applicable √ Not applicable
Part VII Preferred Shares
□ Applicable √ Not applicable
No preferred shares in the Reporting Period.
Part VIII Convertible Corporate Bonds
□ Applicable √ Not applicable
No convertible corporate bonds in the Reporting Period.
Part IX Directors, Supervisors, Senior Management and StaffI Change in Shareholdings of Directors, Supervisors and Senior Management
Name Office title
Incumbent/Former
Gender
Age
Start oftenure
| End of tenure |
Beginnin
gshareholding(share)
Increasein the
Period(share)
Decrease
in the
| Reporting | Reporting |
Period(share)
Otherincrease/d
ecrease
(share)
Endingsharehold
ing
(share)Liu Zibin
Chairman andPresident
Incum
bent
Mal
e
6 June 2007 10 June 2022
148,290
148,290
XuZhinan
Vice Chairman
Incum
bent
Mal
e
6 May 2004 10 June 2022
FujiwaraHidetoshi
Director
Incum
bent
Mal
e
7 May 1998 10 June 2022
ChenRuimou
Director
Incum
bent
Mal
e
16 April2000
10 June 2022
ZengFacheng
Director
Incum
bent
Mal
e
6 June 2007 10 June 2022
WangFangshui
Director, vicepresident, ChiefEngineer
Incum
bent
Mal
e
7 May 1998 10 June 2022
146,753
146,753
LiuDeming
Director,controller ofGlobalMarketingDepartment
Incum
bent
Mal
e
12 May2017
10 June 2022
QinGuiling
Director
Incum
bent
Female
7 May 1998 10 June 2022
126,542
126,542
ZhangHongmei
| Director and |
Chief Accountant
Incum
bentFemale
6 June 2016 10 June 2022
92,500
92,500
XuJianjun
IndependentDirector
Forme
r
Mal
e
6 June 2013
10 March2019
ZhouZhiji
IndependentDirector
IncumbentMale
10 March2019
10 June 2022
Zhao Yao
IndependentDirector
Forme
r
Mal
e
September2014
10 June 2019
Bi Xiuli
IndependentDirector
Incum
bent
Female
6 June 2016 10 June 2022
PanAiling
IndependentDirector
Incum
bent
Female
6 June 2016 10 June 2022
WangXinyu
IndependentDirector
Incum
bent
Mal
e
6 June 2016 10 June 2022
QuDongmei
IndependentDirector
Incum
bent
Female
10 June2019
10 June 2022
Zhang
Chairman of theSupervisoryCommittee,Controller ofHumanResourcesDepartment
Incum
bent
Mal
e
| Shougang |
8 February2018
10 June 2022
73,100
73,100
LiuZilong
Supervisor
Incum
bent
Mal
e
6 June 2007 10 June 2022
10,000
10,000
DongShibing
Supervisor,Manager ofLogisticsManagementDepartment
Incum
bent
Mal
e
6 June 2007 10 June 2022
5,000
5,000
ZhangJianxiang
Vice president,controller ofFunctionalFabricManufacturingCenter
Incum
bent
Mal
e
6 June 2007 10 June 2022
52,150
52,150
WangJiabin
Vice president,SecurityController,controller ofYarn-
| dyed Fabric |
ManufacturingCenter
Incum
bent
Mal
e
6 June 2007 10 June 2022
83,700
83,700
ZhangZhanqi
Vice president,controller ofDyeing andFinishing FabricManufacturingCenter
Incum
bent
Mal
e
6 June 2007 10 June 2022
80,300
80,300
ZhangKeming
Board Secretary,controller ofFinancialManagementDepartment
Incumbent
Mal
e
6 June 2007 10 June 2022
77,700
77,700
Li Wenji
CIO
Incum
bentMale
8 June 2016 10 June 2022
10,000
10,000
ZhangWei
Controller ofStrategy andMarketDepartment
Incum
bent
Mal
e
18 January2018
10 June 2022
WangChangzhao
GlobalMarketingDepartment
Incum
bent
Mal
e
| Vice controller of |
6 June 2013 10 June 2022
22,500
22,500
FujiwaraMatsuzaka
GM of JapanOffice
Incum
bent
Mal
e
9 December2014
10 June 2022
YuShouzheng
Controller ofEnergy andEnvironmentProtectionDepartment
Incumbent
Mal
e
6 June 2007 10 June 2022
83,100
83,100
ShangChenggang
Controller ofGarmentManufacturingCenter
Incum
bent
Mal
e
6 June 2013 10 June 2022
30,000
30,000
Du Lixin
Deputy chiefengineer,Executive Deanof Lu ThaiEngineeringTechnologyInstitute
Incum
bent
Mal
e
18 January2018
10 June 2022
GuoHeng
Manager ofBusinessManagement
Incumbent
Mal
e
18 January2018
10 June 2022
Lyu
Former
Mal
e
| Yongchen |
6 June 2007
2 March2022
33,750
33,750
QuanPeng
Manager of
| Brand Expanding |
Appoi
nted
Mal
e
6 June 2013 10 June 2019
27,750
6,900
20,850
DepartmentTotal -- -- -- -- -- -- 1,103,135
6,900
1,096,235
II Change of Directors, Supervisors and Senior Management
√Applicable □ Not applicable
Name Office title Type of change
Date of change Reason for changeXu Jianjun
Independentdirector
Left 12 March 2019 Left for personal reasonZhou Zhiji
Independentdirector
Appointed 12 March 2019 By-election of independent directorZhao Yao
Independentdirector
Left 10 June 2019 Change the term of office of the BoardQu Dongmei
Independentdirector
Appointed 10 June 2019 Change the term of office of the BoardQuan Peng
Seniormanagement
Left for term
expiration
10 June 2019 Appointment of senior management
III Biographical InformationProfessional 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 of
Zibo 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 Xinjiang Luthai Harvest Cotton Industry Co., Ltd., the chairman of Xinjiang LuthaiTextile Co., Ltd., the chairman of Zibo Xinsheng Thermoelectric Co., Ltd., the chairman of Zibo Lu Qun Textile Co., Ltd., thechairman of Shanghai Luthai Textile and Garment Co., Ltd., the chairman of Luthai Textile (USA) Co., Ltd., the chairman of Luthai(Hong Kong) Co., Ltd., the director of Shanghai Zhinuo Textile New Materials Co., Ltd., and the chairman of Shandong Lulian NewMaterials 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 Cloth
Factory 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 in
Japan, 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 of
Nissin 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 MINE
GARMENT 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. Wang Fangshui: Director, vice president and chief engineer of the Company, born in 1961, with a master degree of business
administration. He served as laboratory manager of Zibo No.2 Cotton Mill, manager of production department of Zibo No.7 CottonMill, chief engineer of Luthai Textile Co., Ltd. and chief engineer of Luthai Textile Co., Ltd. He currently serves as a director, deputyGM and chief engineer of the Company. Also, he serves as a director of Lufeng Textile Dyeing Co., Ltd., a director of Zibo LuQun Textile Co., Ltd., a director of Xinjiang Luthai Harvest Cotton Industry Co., Ltd., Xinjiang Luthai Textile Co., Ltd., ShanghaiZhinuo Textile New Materials Co., Ltd., Shandong Lulian New Materials Co., Ltd., executive director of Luthai (Myanmar) Co.,Ltd. and a supervisor of Luthai (Vietnam) Co., Ltd.
7. Mr. Liu Deming: Director of the Company, director of global marketing department and minister of customer 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 director of global marketing department of the Luthai Textile Co., Ltd.
8. Ms. Qin Guiling: Director of the Company, born in 1966, with a master degree of business administration. He served as chief of
planning 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 and chairman of board of supervisors of XinjiangLuthai Harvest Cotton Industry Co., Ltd.
9. 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 chief accountant of the Company. He is also a director of Zibo Lu Qun TextileCo., Ltd. and a supervisor of Shanghai Zhinuo Textile New Materials Co., Ltd. and Shandong Lulian New Materials Co., Ltd.
10. Ms. Bi Xiuli: Independent director of the Company, born in 1967, with a master degree. He currently serves as a partner of
DeHeng Law Offices and DeHeng Law Offices (Hong Kong). His main fields of practice are domestic and overseas listing, M&A,restructuring, private placement financing, venture capital and so on. He served as a lawyer of Beijing King & Capital Law Firm,Beijing JunZeJun Law Offices and China Legal Adviser of Li & Partners (China), and has been a partner in DeHeng Law Officessince January 2011.
11. Ms. Pan Ailing: Independent director of the Company, born in 1965, with a doctor degree of economics; and she serves as a
postdoctor 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.
12. Mr. Wang Xinyu: Independent director of the Company, born in 1967, with a master's degree. He is in possession of the
certificates 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.
13. Mr. Zhou Zhiji: Independent director of the Company, born in 1963, with a bachelor degree. He is in possession of the certificates
of 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.
14. Ms. Qu Dongmei: Independent director of the Company, born in 1969, with a doctor degree of economic law. She currently
serves as a professor at the School of Law of Shandong Normal University, a master's supervisor in Civil and Commercial Law, a
director 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.
15. Mr. Zhang Shougang: Chairman of the Board of Supervisors and Director of Human Resources Department of the Company,
born in 1970, with a master degree of business administration. He is in possession of a certificate of senior engineer. And he served asdirector of the weaving factory, manager of the weaving department, manager of the quality management department, manager of thegarment production department and manager of the enterprise management department of the Company.
16. Mr. Liu Zilong: Supervisor of the Company, born in 1968, with a master degree of business administration. In addition, he has
served as the GM of Luthai (Hong Kong) since 2002.
17. Mr. Dong Shibing: Supervisor of the Company, born in 1969, with a diploma of technical secondary school. He once served as
deputy director of the GM's office of the Company. Currently, he served as the manager of the Company's logistics managementdepartment.
18. Mr. Zhang Jianxiang: Vice President of the Company and director of the Functional Fabric Manufacturing Center, born in 1968,
with a master degree of business administration. He served as the head of the weaving section of Binzhou No.2 Cotton Mill, thedirector of the expansion office of Luthai Textile Co., Ltd., the director of the weaving factory of Luthai Textile Co., Ltd., the deputymanager of the production department of Luthai Textile Co., Ltd., the manager of the quality management department of LuthaiTextile Co., Ltd., the director of the fabric finishing factory of Luthai Textile Co., Ltd., the deputy director and the executive directorof the Luthai Textile and Clothing Engineering Research Institute.
19. Mr. Wang Jiabin: Vice president and safety director of the Company, director of yarn-dyed fabric manufacturing center, manager
of yarn-dyed production management department and director of safety inspection department. 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 and assistant to the GM.
20. Mr. Zhang Zhanqi: Vice president of the Company and director of printing and dyeing fabric manufacturing center, born in 1972,
with a master degree of business administration. Also, he serves as a senior engineer, once was the factory director of fabric finishingfactory and manager of quality management department of the Company.
21. Mr. Zhang Keming: Secretary of the board of directors of the Company, and director of Financial Management Department. Born
in 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.
22. Mr. Li Wenji: CIO of the Company and manager of the information department of the enterprise management department, born in
1967. Once he was a teacher of Shandong University of Finance. He has served as the manager of the Company's informationdepartment Since July 2005; and he was appointed CIO in 2016.
23. Mr. Zhang Wei: director of the strategy and marketing department of the Company, born in 1985, with a doctor degree. He served
as a researcher & manager of the strategic planning department of Guotai Junan Securities Co., Ltd., China Asset Management Co,Ltd.; he also serves as the director of Shanghai Zhinuo Textile New Materials Co., Ltd.
24. Mr. Wang Changzhao: Deputy director of the global marketing department and minister of product marketing department of the
Company. Born in 1974, with a college degree, he served as a security worker in a weaving factory, an equipment manager, adocument maker in an international business department, a copy clerk, a deputy section chief in a fabric department, a section chief,an assistant to manager, a manager in No.1 international business department, a manager in a marketing department and a manager ina yarn-dyed fabric marketing department.
25. Mr. Fujiwara Matsuzaka: GM of branch office in Japan, Japanese with a bachelor degree. He is a special foreign expert of the
Company, 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.
26. Mr. Yu Shouzheng: Director of the energy and environmental protection department of the Company, born in 1968, with a master
degree of business administration. As an engineer, he once worked as the director of the power department and manager of the energydivision of the Company.
27. Mr. Shang Chenggang: As the director of clothing manufacturing center and manager of clothing production management
department. Born in 1973, he served as deputy director, director, manager of GM department, management representative andmanager of garment production department of the Company.
28. Mr. Du Lixin: Executive director and deputy chief engineer of Luthai Institute of Engineering and Technology. Born in 1975, he
served as spinning operator, a weaver's planner, a deputy director of the production department's dispatching room, a weaver's factorydirector, a manager of the weaving department, and a deputy manager of the production department of Luthai, as well as GM ofLuthai (Vietnam) Co., Ltd.
29. Mr. Guo Heng: Director of enterprise management department of the Company. Born in 1972, he served as the deputy director of
the spinning factory of Lu Thai, the deputy manager of the yarn business department, and the manager of the yarn businessdepartment of Luthai.Offices held concurrently in shareholding entities:
√Applicable □Not applicable
Name Shareholding entity
Office held in theshareholding entity
Start of tenure End of tenure
Remuneration orallowance fromthe shareholdingentityLiu Zibin
Zibo Lucheng TextileInvestment Co., Ltd.
Director 26 February 1999 NoXu Zhinan
Tailun (Thailand) Textile Co.,Ltd.
Chairman 29 January 1985 NoLiu Deming
Zibo Lucheng TextileInvestment Co., Ltd.
Chairman and GM 1 February 2017 NoExplanationsabout holdingposts inshareholders’companies
Mr. Liu Zibin is the Director of Zibo Lucheng Textile Investment Co., Lt
d., holding 4% equities of Zibo LuchengTextile 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.
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 (
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 theentity
Thailand) Textile Co., Ltd. is the secondStart of tenure
End oftenure
Remuneration orallowance from
the entity
Liu Zibin
Xinjiang Lu Thai Good Yield Cotton Co
| Start of tenure | ||
| ., Ltd., Xinjiang Lu Thai Textile Co., Ltd., Lufeng Weaving & Dyeing Co., Ltd. Zibo Luqun |
Textile Co., Ltd.,
Power Co., Ltd.
| , Shanghai Lu Thai Textile Garment Co., Ltd., Lu Thai (America) Textile |
Co., Ltd. Lu Thai (HK) Textile Co., Lt
Chairman of theBoard, Director,GM
7 December2015
No
Ltd, Shandong Lulian New Materials Co., Ltd.
Wang Fangshui
Xinjiang Lu Thai Good Yie
Co., Ltd., Lu Thai (
| Vietnam) Textile Co., Ltd., and Shanghai Zhinuo Textile New Material |
Co., Lt
Ltd.
Director,Supervisor
17 June 2003 No
Liu Deming
| d, Shandong Lulian New Materials Co., |
| Shanghai Zhinuo Textile New Materials Co., |
Ltd.
Director
21 August2017
NoQin Guiling
Xinjiang Lu Thai Textile Co., Ltd.
Chairman of theSupervisoryCommittee
17 June 2003 No
Zhang Hongmei
| Xinjiang Lu Thai Good Yield Cotton Co., Ltd., | |
Zibo Luqun Textile Co., Ltd.,
Shandong Lulian New Materials Co., Ltd.
Director,Supervisor
17 June 2003 NoZhangJianxiang
| Shanghai Zhinuo Textile New Materials Co., Ltd., |
| Shandong Lulian New Materials Co., Ltd., |
Shanghai Lu Thai Textile Garment Co., Ltd.
Director,Supervisor
30 December
2010
NoDu Lixin
(Vietnam) Textile Co., Ltd.
Director
29 December2015
NoZhang Wei
| Lu Thai (Tan Chau) Textile Co., Ltd., Lu Thai |
| Shanghai Zhinuo Textile New Materials Co., |
Ltd.
Director
15 October2018
NoBi Xiuli
Offices (Hong Kong)
Partner
1 January2011
YesPan Ailing Shandong University School of Management Professor 1 July 1986 YesWang Xinyu
Beijing Deheng Law Offices, Deheng LawReanda Certified Public Accountants
Shandong Branch
Head 1 August 2013
| Reanda Certified Public Accountants |
YesZhou Zhiji Shandong Jinheng Consulting Co., Ltd Supervisor
1 October2015
YesQu Dongmei Law School of Shandong Normal University Professor 1 July 2003 YesXu Jianjun Beijing Deheng Law Offices Partner
YesZhao Yao Shandong University of Technology
Associateprofessor
1 March 2001 YesExplanationsabout holdingposts in otherentities
Except for independent directors, all other entities the Company’s directors, supervisors an
1 August 2004
d 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
IV Remuneration of Directors, Supervisors and Senior ManagementDecision-making procedure, determination basis and actual payments of remuneration for directors, supervisors and seniormanagement:
standards of directors and seni
| or executives and conducting assessment; for formulating and reviewing remuneration policy and program of directors and senior executives; it is responsible for the board of |
directors. The remuneration committee, according to appraisal results of position
ratification after the approval by voting.The Chief Accountant, the C
| performance and motivation and restriction plan for senior executives, proposes amount of payment and methods of reward for directors and senior executives and submits the above resolutions to the board of directors for |
| orporate Management Department and the HR Department of the Company |
was responsible for preparations for the decision-
by providing relevant information of the Company as follows: (I) accomplishment of main
| financial and business objectives; (II) accomplishment of relevant indicators of other listed companies in the sector; |
(III) work scope and main responsibilities of senior management staff.The remuneration committee appraised directors and senior managem
completion situation of the Company’s performance and the
| annual appraisal results of senior management staff were put forward according to the performance appraisal results and the senior staff |
incentive and disciplinary plan. U
Directors for approval.
| pon approval by voting, the results were reported to the Board of |
| The number of incumbent directors, supervisors and senior executives is 29, among which there are 29 |
persons actually receiving remuneration from the Company. Till 3
RMB21.0342 million (before tax).
Remuneration of directors, supervisors and senior management for the Reporting Period
Unit: RMB'0,000Name Office title Gender Age
Incumbent/Forme
r
Total before-taxremunerationfrom theCompany
Any
remuneration
1 December 2019, the total amount ofannual payment drawn from the Company by directors, supervisors and senior executives isfrom related party
Liu Zibin
Chairman andPresident
Male 55
| from related party | ||
Incumbent 1,519,501.63
NoXu Zhinan Vice Chairman Male 90
Incumbent 476,811.19
NoFujiwaraHidetoshi
Director Male 80
Incumbent 3,004,825.00
NoChen Ruimou Director Male 76
Incumbent 476,811.19
NoZeng Facheng Director Male 69
Incumbent 10,641.30
No
Wang Fangshui
Director, vicepresident, ChiefEngineer
Male 59
Incumbent 1,539,369.67
No
Liu Deming
Director,controller of
Department
Male 29
| Global Marketing |
Incumbent 400,859.44
NoQin Guiling Director Female 54
Incumbent 1,327,455.51
NoZhang Hongmei
| Director and |
Chief Accountant
Female 50
Incumbent 929,233.35
NoZhou Zhiji
IndependentDirector
Male 56
Incumbent 48,000.00
NoBi Xiuli
IndependentDirector
Female 53
Incumbent 48,000.00
NoPan Ailing
IndependentDirector
Female 55
Incumbent 48,000.00
NoWang Xinyu
IndependentDirector
Male 53
Incumbent 48,000.00
NoQu Dongmei
IndependentDirector
Female 51
Incumbent 48,000.00
No
Zhang Shougang
Chairman of theSupervisoryCommittee,Controller ofHumanResourcesDepartment
Male 50
Incumbent 886,234.81
No
Liu Zilong Supervisor Male 52
Incumbent 691,644.02
No
Dong Shibing
Supervisor,Manager ofLogisticsManagementDepartment
Male 51
Incumbent 666,298.15
No
Zhang Jianxiang
Vice president,controller ofFunctional FabricManufacturingCenter
Male 52
Incumbent 996,633.16
No
Wang Jiabin
Vice president,Security
Male 57
Incumbent 963,897.87
No
Controller,controller ofYarn-dyed FabricManufacturingCenter
Zhang Zhanqi
Vice president,controller ofDyeing andFinishing FabricManufacturingCenter
Male 48
Incumbent 953,483.12
No
Zhang Keming
Board Secretary,controller ofFinancialManagementDepartment
Male 52
Incumbent 657,564.16
Yes
Li Wenji CIO Male 53
Incumbent 610,283.52
NoZhang Wei
Controller ofStrategy andMarketDepartment
Male 34
Incumbent 776,735.67
No
Wang Changzhao
Vice controller of
| Global Marketing |
Department
Male 46
Incumbent 699,936.14
YesFujiwaraMatsuzaka
GM of JapanOffice
Male 47
Incumbent 1,052,803.15
No
Yu Shouzheng
Controller ofEnergy andEnvironmentProtectionDepartment
Male 52
Incumbent 667,214.86
No
ShangChenggang
Controller ofGarmentManufacturingCenter
Male 47
Incumbent 680,837.26
No
Du Lixin
Deputy chiefengineer,Executive Deanof Lu ThaiEngineeringTechnology
Male 44
Incumbent 406,480.62
No
InstituteGuo Heng
Controller of
Business
Management
Department
Male 47
Incumbent 398,620.58
NoTotal -- -- -- -- 21,034,175.37
--Equity incentives for directors, supervisors and senior management in the Reporting Period:
□ Applicable √ Not applicable
V Employees
1. Number, Functions and Educational Backgrounds of Employees
Number of in-service employees of the Company as the parent 11,821
Number of in-service employees of major subsidiaries 14,592
Total number of in-service employees 26,413
Total number of paid employees in the Reporting Period 26,413
| Number of retirees to whom the Company as the parent or its |
major subsidiaries need to pay retirement pensions
FunctionsFunction EmployeesProduction 19,857
Sales 569
Technical 5,109
Financial 120
Administrative 758
Total 26,413
Educational backgroundsEducational background EmployeesDoctor 6
Master 96
Bachelor 1,143
College 5,151
High school and below 20,017
Total 26,413
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 ofemployees’ capability, performance management, employees’ career planning, etc. The annual training plan is determined by carryingout researches on training needs. And the training courses fall into three major categories, i.e. management, technical skills andgeneral knowledge. Through these trainings, the Company will improve the knowledge structure of its employees, improve their jobskills and increase their comprehensive quality to provide excellent human resources for the long-term, sustained and stabledevelopment of the Company.
4. Labor Outsourcing
√ Applicable □ Not applicable
Total man-hours (hour) 138,296
Total rewards paid (RMB) 1,521,254.00
Part X Corporate GovernanceI General Information of Corporate GovernanceDuring the Reporting Period, the Company strictly conforms to Company Law, Securities Law and Governing Rules for ListedCompany, Stock Listing Rules of Shenzhen Stock Exchange, and Standard Operation of Companies Listed on the Main Board ofShenzhen Stock Exchange as well as relevant stipulations and requirements from normative documents, continuously improves thecorporate governance structure, safeguards the standardized and efficient operation of three Committees and one Management, formsa sound and effective internal control system so as to safeguard legitimate interests of the Company and investors. Within theReporting Period, the Company supplemented and amended partial provisions stated in Lu Thai Textile Board of Directors AuditCommittee Working Instructions, Lu Thai Textile Board of Directors Audit Committee Annual Report Working Procedures, Lu ThaiTextile Information Insider Registration Management System, Lu Thai Textile Board of Directors Procedural Rules, Lu Thai TextileSupervisory Committee Procedural Rules, Lu Thai Textile Independent Director Working System, Lu Thai Textile Related TransactionManagement System, Management System of Fund Flow between Lu Thai Textile and the Related Parties and Articles of Associationof Lu Thai Textile according to Listed Company Governance Criteria issued by CSRC and the latest provisions stipulated in Decisionon Revising the Guidelines for the Listed Company’s Articles of Association (CSR Announcement [2019] No.10).
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,the Nomination Committee and the Remuneration Committee. Various specialized committees would fully perform their functionsand further 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 theSupervisory Committee Procedural Rules. The number of members and the composition of the Company’s Supervisory Committeeshall comply with applicable laws and regulations; the Company’s supervisors shall strictly abide by relevant provisions, seriouslyexecute their duties and supervise the Company’s financial status and the legal execution of duties of the directors, manager andother senior managers 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 atrue, accurate, complete and timely manner. The Company has formulated the Information Disclosure Management System, InsideInformation and Insider 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 telephoneconsultations, and promptly answered questions asked by investors on the SZSE Easy-IR.Indicate by tick market whether there is any material incompliance with the regulatory documents issued by the CSRC governing thegovernance of listed companies.
□ Yes √ No
No such cases in the Reporting Period.II The Company’s Independence from Its Controlling Shareholder in Business, Personnel,Asset, Organization and Financial Affairs
1. As for the business: the Company shall establish its independent and complete business system with the market-oriented
independent management ability. In the respect of business operation, the Company is completely separated from the controllingshareholders.
2. As for the personnel: the Company’s labor, personnel and remuneration management departments shall be independent with their
own 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 the
production 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
and involved in independent operation. The substantial shareholder shall legally execute its rights, fulfill corresponding obligationsand not surpass 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 and
financial 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
Date of the meeting
| participation ratio |
Disclosure date Index to disclosed information
The 1
st
ExtraordinaryGeneral Meetingof 2019
ExtraordinaryGeneral Meeting
| 0.00% |
12 March 2019 13 March 2019
(No.: 2019-012
| ) disclosed on |
13 March 2019
http://www.cninfo.com.cn
The 2018 AnnualGeneral Meeting
| News, Ta Kung Pao, and | ||
Annual GeneralMeeting
23 April 2019 24 April 2019
| 0.00% | Announcement on the Resolution of the Meeting |
(No.: 2019-
24 April 2019
| on Securities Times, China Securities Journal, Shanghai Securities News, Ta Kung Pao, and |
http://www.cninfo.com.cn
The 2nd
ExtraordinaryGeneral Meetingof 2019
ExtraordinaryGeneral Meeting
| 0.00% |
10 June 2019 11 June 2019
Resolu
| tion of the Meeting |
(No.: 2019-
http://www.cninfo.com.cn
The 3rd
ExtraordinaryGeneral Meetingof 2019
ExtraordinaryGeneral Meeting
| 047) disclosed on 10 June 2019 on Securities Times, China Securities Journal, Shanghai Securities News, Ta Kung Pao, and | ||
0.00%
16 September 2019 17 September 2019
| Announcement on the Resolution of the Meeting |
(No.: 2019-
http://www.cninfo.com.cn
2. Special General Meetings Convened at the Request of Preferred Shareholders with Resumed Voting
Rights
□ Applicable √ Not applicable
V Performance of Duty by Independent Directors in the Reporting Period
1. Attendance of Independent Directors at Board Meetings and General Meetings
Attendance of independent directors at board meetings and general meetings
Independentdirector
Total numberof boardmeetings theindependentdirector was
eligible to
Boardmeetingsattended onsite
Boardmeetingsattended by
way oftelecommunica
tion
Boardmeetingsattendedthrough a
proxy
Board
059) disclosed on10 June 2019 on SecuritiesTimes, China SecuritiesJournal, Shanghai SecuritiesNews, Ta Kung Pao, andmeetings theindependent
directorfailed toattend
The independentdirector failed to
attend twoconsecutive boardmeetings (yes/no)
| meetings the independent |
Generalmeetingsattended
attendBi Xiuli 14
No
Pan Ailing 14
No
Wang Xinyu 14
No
Zhou Zhiji 12
No
Qu Dongmei 7
No
Xu Jianjun 2
No
Zhao Yao 7
No
Why any independent director failed to attend two consecutive board meetings:
Not applicable
2. Objections Raised by Independent Directors on Matters of the Company
Indicate by tick mark whether any independent directors raised any objections on any matter of the Company.
□ Yes √ No
No such cases in the Reporting Period.
3. Other Information about the Performance of Duty by Independent Directors
Indicate by tick mark whether any suggestions from independent directors were adopted by the Company.
√ Yes □ No
Suggestions from independent directors adopted or not adopted by the Company:
The Independent Directors of the Company had not raised any objection to the proposals and other events approved and reviewed bythe Board of the Directors while executed the carefully review on the events needed advices and put forward the professionalsuggestion and advice as well as stated 27 independent advices which improved the scientificity and objectivity of thedecision-making that exerted the due role on the supervision mechanism for improving the Company.VI Performance of Duty by Specialized Committees under the Board in the Reporting Period
I. Duty fulfillment of Audit Committee under the Board
1. Major work of the 2019 annual report of the Audit Committee:
(1) The Audit Committee had held the 2018 the 1
st
Meeting of the Audit Committee on the Financial Audit Work in the meeting roomof the Company on 11 November 2019 and the meeting had confirmed the time and arrangement plan of the 2019 annual financialaudit work unanimously with the 2019 Audit Institution Grant Thornton China (Special General Partnership).
(2) On 20 January 2020, the Audit Committee had held the 2
ndMeeting of the 2019 Audit Work, which reviewed and submitted thefinancial report audited by Grant Thornton China (Special General Partnership) and issued the written advice.
(3) During the audit process, the Company had been maintained the contract and communication with the project leader of Grant
Thornton China (Special General Partnership) by the methods such as the telephones and e-mails and had been urged which tosubmit the audit report within the appointed time.
(4) The 3
rdMeeting on 2019 Annual Audit and the 2018 Annual Work Conference, were convened by the Committee on 28 April
2020, where the following proposals were approved as resolutions, namely, the audited 2019 Financial Report of the Company, theSummary Report on the Audit Conducted by Grant Thornton China (Special General Partnership) on the Company’s 2019 FinancialReport.
2. On 28 April 2019, the Audit Committee held the 3
rd
Meeting of the Audit Committee of the 8
thBoard of Directors at theCompany’s Meeting Room, reviewed and approved the Proposal of the Company’s Derivatives Trading Plan, and gave thefollowing opinions: in the foreign exchange market, the exchange rate of RMB against U.S. Dollars was subject to the intervalfluctuations. The financial department put forward the derivatives trading plan as an effective tool to avoid possible exchange raterisks. By enhancing the internal control and implementing various measures to stop losses and control risks, the operation andmanagement level could be improved and the Company could give full play to its competitive advantages. On the premise that thenormal operation could be guaranteed, the Company could use its own funds to conduct the derivatives trading, which would beconductive to avoid the RMB exchange rate variation risks, enhance the Company’s ability to fend off the exchange rate fluctuations,improve the operation and management level and give full play to the competitive advantages without damaging the interests of theCompany and all shareholders. In our opinions, the derivatives trading plan is feasible and necessary and possible risks arecontrollable. Therefore, we agree to submit the Derivatives Trading Plan of Lu Thai Textile to the 26
th
Meeting of the 8
thBoard ofDirectors for further deliberation.
3. Written opinions, summary report of the annual audit, and resolutions of 2019 Work Conference on Annual Report by Audit
Committee:
(1) According to the Rules for Audit Committee of the Board Concerning Annual Reports of Lu Thai Textile Co., Ltd., the Audit
Committee shall perform its duties of conducting supervision and checks in the Company’s preparation and disclosure of its annualreports. The Committee reviewed the 2019 financial and accounting statements prepared by the Company’s Financial Departmentbefore the presence of the registered accountants for the annual audit, and expressed its opinion as follows:
1. The financial and accounting statements were prepared in accordance with the Company’s accounting policy with proper
application of the accounting policy and reasonable accounting estimates, which were in line with the New Accounting Standards forBusiness Enterprises, the Accounting System for Business Enterprises, and the relevant regulations issued by the Ministry of Financeof PRC;
2. The subsidiary statements included in the Company’s consolidated statements were complete in terms of contents, providing an
accurate basis for the statement combination;
3. The Company’s financial statements were found objective, factual and accurate with no major misstatements or information
omission.
4. Since there is still a certain period of time from this review of the financial statements to the formal issuance of the auditor’s report
and the financial statements, the Company’s Financial Department is advised to pay close attention to and carefully handle thematters after the balance sheet date, so as to ensure the fairness, factuality and completeness of the financial statements. The AuditCommittee is of the opinion that the financial and accounting statements are ready to be submitted to the registered accountants foraudit.
(2) Audit Committee’s written opinion on the Company’s financial statements after the preliminary audit opinion was issued by Grant
Thornton China (Special General Partnership):
According to the Rules for Audit Committee of the Board Concerning Annual Reports of Lu Thai Textile Co., Ltd., the AuditCommittee shall perform its duties of conducting supervision and checks in the Company’s preparation and disclosure of its annualreports. We effectively communicated with the said CPA firm (LLP) at the beginning of the audit. And we once again reviewed theCompany’s 2019 financial and accounting statements following the preliminary audit opinion to the Company’s 2019 financialstatements issued by the CPA firm (LLP), and expressed our opinions as follows:
In accordance with the New Accounting Standards for Business Enterprises and the Company’s relevant financial rules, the financialstatements were prepared in a rational and standardized way, which fairly, factually, accurately and completely presented the
Company’s assets, liabilities, shareholders’ equity and operation results by 31 December 2019.The Audit Committee is of the opinion that the Company’s 2019 financial and accounting statements preliminarily audited by GrantThornton China (Special General Partnership) are ready to be submitted to the 13
th
Meeting of the 9
thBoard of the Directors forreview.
(3) Resolutions made at 2019 Annual Work Conference of Audit Committee of the Board
The Audit Committee of the Board of Lu Thai Textile Co., Ltd. held its 2019 Annual Work Conference at F1 Meeting Room of thehead office of the Company on 28 April 2020. Three persons were supposed to attend the meeting, and all three of them were in factpresent at the meeting as well as the Chief Accountant, Board Secretary and Controller of the Audit Department, the projectresponsible person of Lu Thai of Grant Thornton China (Special General Partnership) attended the meeting. Mr. Wang Xinyu,Chairman of the Audit Committee, presided over the meeting. The meeting was convened in accordance with the Company Law andthe Articles of Association of the Company. And the following proposals were passed by vote at the meeting:
I. With 3 favorable votes, 0 negative votes and no abstentions, the 2019 Financial Report of the Company audited by Grant ThorntonChina (Special General Partnership) was passed;II. With 3 favorable votes, 0 negative votes and no abstentions, the Summary Report on the Audit Conducted by Grant ThorntonChina (Special General Partnership) on the Company’s 2019 Financial Report was passed;III. With 3 favorable votes, 0 negative votes and no abstentions, the Company paid RMB1.735 million to the said CPAs firm as feesfor the 2019 annual financial report audit and internal control audit.IV. With 3 favorable votes, 0 negative votes and no abstentions, the Proposal on Employment of Grant Thornton China (SpecialGeneral Partnership) as the Company’s audit agency for 2020 Finance and Internal Control was passed.The Committee agrees to submit the above-mentioned proposals I and III and IV to the Board of Directors for examination on the
th
Meeting of the 9
th
Board of Directors.II. Duty performance of Remuneration Committee affiliated to the Board of Directors
1. The Remuneration Committee of the Board of Lu Thai Textile Co., Ltd. held the First Conference in 2019 at Banyang Villa
Meeting Room of the Company on 27 March 2019. Five persons were supposed to attend the meeting, and all of them were in factpresent at the meeting. The chief accountant and Board Secretary attended this meeting. The meeting held by the Company met withthe relevant regulations of Company Law and the Articles of Association of the Company and reviewed and approved the Proposalon the 2018 Appraisal Result of the Senior Executives of Lu Thai Company by the voting method and agreed to submit theabove-mentioned proposal to the Board of Directors for examination on the 24
th
Meeting of the 8
thBoard of Directors.
2. According to authorization of the 24
th Meeting of the 8
thBoard of Directors of Lu Thai, remuneration committee of board ofdirectors of Lu Thai Textile Co., Ltd. held the second Meeting of 2019 in the meeting room of Panyang Villa Meeting Room of theCompany on 14 May 2019. Five persons should attend the meeting and five persons actually attended the meeting. Among the fivepersons, Bi Xiuli, Zhao Yao, Wang Xinyu and Pan Ailing voted in the form of communication. Chief accountant and the secretary ofboard of directors also attended the meeting. The meeting accorded with relevant stipulations in Company Law and Articles ofCompany. Proposal for Risk Fund Assessment and Release Amount for 2018 was passed at the meeting in voting form.III. Duty execution of the strategy committee of board of directorsThe Strategy Committee of Board of Directors of Lu Thai Textile Co., Ltd. held the 1
stConference of 2019 in the meeting room ofPanyang Villa Meeting Room of the Company on 27 March 2019. 13 persons should attend the meeting and 13 persons actuallyattended the meeting. This meeting was hosted by Liu Zibin, the president of strategy committee. The meeting accorded with relevantstipulations in Company Law and Articles of Association and passed the following proposals in voting form.
1. Overall Strategic Objectives of Yarn Dyed Fabric of Lu Thai Textile Co., Ltd. for 2019-2021.
2. Overall Strategic Objectives of Shirts Processing of Lu Thai Textile Co., Ltd. for 2019-2021.
3. Overall Strategic Objectives of Lu Thai Textile Co., Ltd. for 2019-2021
IV. Duty performance of nominations committee affiliated to the Board of Directors
1. The Company held the 1
st
Meeting of 2019 of the nominations committee of the 8
thBoard of Directors on 21 February 2019according to the relevant regulations of the Company Law and Articles of Association, with 7 favorable votes, 0 negative votes andno abstentions, which reviewed and approved the Proposal on Nomination for the By-Election of Candidates of IndependentDirectors of the 8
th Board of Directors. And it was approved by the 1
stExtraordinary General Meeting of 2019 after approved by the
rd Meeting of the 8
th
Board of Directors.
2. The Company held the 2
nd Meeting of 2019 of the nominations committee of the 8
th
Board of Directors on 14 May 2019 with 6favorable votes, 0 negative votes and no abstentions, which reviewed and approved the Proposal on the General Election of the Boardand Nomination for Candidates of Directors of the 9
th
Board of Directors and the Proposal on Nomination for Candidates ofIndependent Directors of the 9
th Board of Directors. Above proposals were approved by the 2
ndExtraordinary General Meeting of2019 after approved by the 27
th Meeting of the 8
thBoard of Directors.
3. The Company held the 1
st Meeting of 2019 of the nominations committee of the 9
th
Board of Directors on 10 June 2019 with 6favorable votes, 0 negative votes and no abstentions, which reviewed and approved ten proposals on nomination for election ofChairman of the Board, Vice Chairman of the Board, Chairman and members of all specialized committees, Board Secretary andSecurities Representative, GMs, Deputy GMs, Chief Accountant and other senior management. Above proposals were approved bythe 1st
Meeting of the 9
thBoard of Directors of the Company.VII 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.VIII Appraisal of and Incentive for Senior ManagementIn the Reporting Period, Remuneration Committee of the Board of Directors appraised operating achievements of the Company forthe year 2018 according to Incentive and Restricted Proposal for Senior Executives of Lu Thai Textile Co., Ltd, and drew upincentive proposal for senior executives, which will be executed after review and approval by the 24
th
Meeting of the 8
thBoard ofDirectors dated 27 March 2019. During the Reporting Period, the Company constantly improved the performance evaluationmechanism and made the evaluation and incentive of the Senior Executives concerned with the Company’s performances and theindividual working results. According to the overall development strategy and the annual operating target of the Company at theperiod-begin, the Company confirms the annual performance comprehensive indication and the management duty of each SeniorExecutives, and executes the performance examination and the redemption of the rewards and punishment for the Senior Executivesby the Remuneration and Examination Committee affiliated to the Board of Directors at the year-end. The Company will constantlyimprove the evaluation and incentive mechanism that to tightly concern the salary of the Senior Executives with the managementlevel and the operating performance so that to fully mobilize and inspire the initiative and creativity of them.IX Internal Control
1. Material Internal Control Weaknesses Identified for the Reporting Period
□ Yes √ No
2. Internal Control Self-Evaluation Report
self-evaluation report
30 April 2020
| Disclosure date of the internal control |
| Index to the disclosed internal control |
self-evaluation report
For details, please refer to the Self-
Textile Co., Ltd. simultaneously disclosed on
| www.cninfo.com.cn with the 2019 |
Annual Report of the Company.
consolidated total assets
94.26%
| Evaluated entities’ combined assets as % of | |
| Evaluated entities’ combined operating revenue as % of consolidated operating |
revenue
90.17%
Identification standards for internal control weaknessesType
Weaknesses in in
ternal control over financial
reporting
Weaknesses in internal control not
related to financial reporting
Nature standard
| ternal control over financial |
| Great defect: malpractices of the Directors, Supervisors and Senior Executives; the Company revised the published financial |
repor
of th
| e 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-
counterbalance mechanism and contr
| ol 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 |
inte
defect.
| rnal control defect which had not constructed as the great defeat, significant | Great defect: violated the national laws |
and regulations; the decision-
m
| anagement 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 wh
was seriou
| s; 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 def
significant defect.
Quantitative standard
Great defect: misstatement≥
profits amount; misstatement≥
| 0.3% of the |
total assets amount; misstatement≥
misstatement≥
| 0.4% of the total owners’ equities amount. Significant defect: 1% of |
the total profits amount ≤
assets amount ≤misstat
| ement<0.3% of the total assets amount; 0.15% of the total |
operating amount ≤
≤
| misstatement<0.4% of the total owners’ equities amount. General defect: |
misstatement<1%
total owners’ equities amount.
| 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 | Great defect: the direct financial losses were RMB6 million and above |
Sig
(including RMB3 million)-
| RMB6 million General defect: RMB0.5 million |
(including RMB0.5 million)-
million
| RMB 3 | ||
| Number of material weaknesses in internal |
control over financial reporting
Number of material
| weaknesses in internal |
control not related to financial reporting
| Number of serious weaknesses in internal |
control over financial reporting
| Number of serious weaknesses in internal |
control not related to financial reporting
X Independent Auditor’s Report on Internal Control
√ Applicable □ Not applicable
Opinion paragraph in the independent auditor’s report on internal controlAll 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 2019.I. Responsibilities of Lu Thai Textile for internal controlThe Board of Directors of Lu Thai Textile is responsible for establishing, improving and implementation the internal co
evaluating its effectiveness in accordance with Standard for Enterprise Internal Control, Application Guidelines for Enterpri
| se |
Internal Control, Enterprise Internal Control Audit Guidelines.III. Responsibilities of certified public accountantsIt is our responsibility to issue an audit opinion on the effectiveness of internal controls in financial report on the basis
implementation of the audit, and to disclose significant deficiencies in the internal controls of non-financial reports
noted.III. Inherent limitations of internal controlInternal control has inherent limitations, and there is a possibility that misreporting cannot be prevented. In addition, bec
| ause the |
change of circumstances may cause the internal contr
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 ReportWe believe that Lu Thai Textile Co., Ltd. kept effectively internal control on financial reporting in all respects according
Enterprise Internal Control Basic Specification and the relevant provisions on 31 December 2019.Independent auditor’s report oninternal control disclosed or not
DisclosedDisclosure date30 April 2020Index to such report disclosed
For details, please refer to the Auditor’s Report on Internal Control on www.cninfo.com.cn
toat
the same time of disclosing the Company’s 2019 Annual Report.Type of the auditor’s opinion Unmodified unqualified opinionMate
atrial weaknesses in internalcontrol not related to financial
reporting
NoneIndicate 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
Part XI Corporate BondsDoes the Company have any corporate bonds publicly offered on the stock exchange, which were outstanding before the date of thisReport’s approval or were due but could not be redeemed in full?No.
Part XII Financial StatementsI Independent Auditor’s ReportType of the independent auditor’s opinion Unmodified unqualified opinionDate of signing this report28 April 2020Name of the independent auditor Grant Thornton China (Special General Partnership)Reference number of Audit Report GTSZ(2020)No. 371ZA7982Name of the certified public accountants Wei Qianting, Guo Dongmei
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 2019, 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 2019, 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 V-22 and the Note VII-41 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 2019 was RMB6801,381,400, of which export income accounted for over 60%. For the income from domestic sales,the amount of product sales income is recognized when the products are delivered to and confirmed by the purchaser according to thecontract. The income is also recognized when the purchase price has been recovered or the receipt certificate has been received andthe related economic benefits are likely to flow into the Company, and the product-related costs can be measured in a reliable way.For the income from export sales, the amount of sales income is recognized when products are declared and depart from port
according to the contract, and the bill of lading is received. The income is also recognized when the purchase price has beenrecovered or the receipt certificate has been received and the related economic benefits are likely to flow into the Company, and theproduct-related costs can be measured in a reliable way.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 of
operation;
(2) Through interviewing the management and reviewing the relevant contract terms, understand and evaluate whether the income
confirmation accounting policy meets the requirements of the enterprise accounting standards and is consistently applied;
(3) Perform analytical procedures on revenue and costs to analyze the rationality of fluctuations in sales volume, unit price, and gross
profit 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, and
signing 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 appropriate period.(II) Inventory falling price reservesFor details, please refer to the Note V-11 and the Note VII-8 of the financial report.
1. Item description
As of 31 December 2019, the inventory balance of Lu Thai Textile Co., Ltd. was RMB2,524,353,000 and the inventory depreciationreserve was RMB102,852,700. 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, and
test 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 aging
have 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 in
inventory depreciation reserves;
(6) Obtain the inventory falling price reserves calculation sheet; recheck and evaluate the rationality of major estimations made by
the management during the determination of net realizable value; conduct the recalculation, check the selling price after the periodand 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 V 10 and Note VII 2, 12 and 49) for details about relevant information disclosure.
1. Event Description
Up to 31 December 2019, the balance of financial asset measured based on the fair value whose variations were included the currentprofit and loss of Lu Thai Textiles was RMB330.5056 million, of which, the fair value of financial asset classified into the tier-2
input value by adopting the observable input value was RMB232.1495 million, and the fair value of financial asset classified into thetier-3 input value by adopting the non-observable input value was RMB98.3561 million. Considering that the financial asset’s fairvalue variations had significant impact on the profit and loss of Lu Thai Textiles in 2019, and Lu Thai Textiles adopted the valuationtechnique to determine its fair value (usually, the valuation technique involves various assumptions and estimations based onsubjective judgment, and huge difference in the estimated fair value of financial instrument may be caused by adopting differentvaluation techniques or assumptions), 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 the
operational effectiveness;
(2) Assess the professional quality, competence and objectiveness of the independent appraiser employed by the Company’s
management; 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) Check the rationality, appropriateness and calculation accuracy of the key input value during the fair value assessment for the
tier-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 informationincluded in the Company’s 2019 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 requiredto report 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 asthe management determines is necessary to enable the preparation of financial statements that are free from material misstatement,whether due to fraud or error.In preparing the financial statements, the management is responsible for assessing the Company’s ability to continue as a goingconcern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless themanagement either intends to liquidate the Company or to cease operations, or have no realistic alternative but to do so.Those charged with governance are responsible for overseeing the Company’s financial reporting process.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 materialmisstatement, whether due to fraud or error, and to issue an auditor’s report that includes our opinion. Reasonable assurance is a highlevel of assurance, but is not a guarantee that an audit conducted in accordance with CAS will always detect a material misstatement
when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they 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
perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis forour opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, asfraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control.
(2) Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the
circumstances.
(3) Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures
made by the management.
(4) Conclude on the appropriateness of the management’s use of the going concern basis of accounting and, based on the audit
evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on theCompany’s ability to continue as a going concern. If we conclude that a material uncertainty exists, we are required by CAS to drawusers’ attention in our auditor’s report to the related disclosures in the financial statements or, if such disclosures are inadequate, weshould modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of our auditor’s report. However,future events or conditions may cause the Company to cease to continue as a going concern.
(5) Evaluate the overall presentation, structure and content of the financial statements, and whether the financial statements represent
the underlying transactions and events in a manner that achieves fair presentation.
(6) Obtain sufficient appropriate audit evidence regarding the financial information of the entities or business activities within the
Company to express an opinion on the financial statements. We are responsible for the direction, supervision and performance of 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 inthe audit of the financial statements of the current period and are therefore the key audit matters. We describe these matters in ourauditor’s report unless law or regulation precludes public disclosure about the matter or when, in extremely rare circumstances, wedetermine that a matter should not be communicated in our report because the adverse consequences of doing so would reasonably beexpected to outweigh the public interest benefits of such communication.
Grant Thornton China (Special General Partnership) Chinese CPA
(Special General Partnership) (Engagement Partner):
Chinese CPA:
Beijing · China 28 April 2020
II Financial Statements
Currency unit for the financial statements and the notes thereto: RMB
1. Consolidated Balance Sheet
Prepared by Lu Thai Textile Co., Ltd.
31 December 2019
Unit: RMBItem 31 December 2019 31 December 2018Current assets:
Monetary assets924,322,008.17
545,502,709.36
Held-for-trading financial assets 52,356,098.85
Financial assets at fair value through profit or loss
Notes receivable 104,737,949.91
174,657,918.26
Accounts receivable515,306,599.62
374,607,116.55
Accounts receivable financing 26,963,818.87
Prepayments56,828,987.59
149,582,616.21
Other receivables 59,743,471.84
63,012,001.10
Including: Interest receivable
Dividends receivable
Inventories 2,421,500,259.30
2,093,366,992.30
Assets classified as held for sale
Current portion of non-current assets
Other current assets 68,788,674.10
86,366,454.56
Total current assets4,230,547,868.25
3,487,095,808.34
Non-current assets:
Investments in debt obligations
Available-for-sale financial assets
85,112,000.00
Investments in other debt obligations
Held-to-maturity investments
Long-term receivables 7,058,233.71
10,693,844.75
Long-term equity investments103,226,300.00
96,018,463.65
Investments in other equity instruments
Other non-current financial assets 278,149,500.00
Investment property 45,896,747.87
22,880,242.95
Fixed assets6,012,094,104.67
5,748,562,385.35
Construction in progress 400,235,070.01
337,230,646.42
Productive living assets
Intangible assets 516,479,519.15
478,689,064.45
R&D expense
Goodwill 20,563,803.29
20,613,803.29
Long-term prepaid expense153,031,253.79
119,126,407.71
Deferred income tax assets 99,307,233.72
88,636,929.06
Other non-current assets18,841,918.62
43,100,215.87
Total non-current assets 7,654,883,684.83
7,050,664,003.50
Total assets11,885,431,553.08
10,537,759,811.84
Current liabilities:
Short-term borrowings 2,120,154,330.61
1,325,273,780.05
Held-for-trading financial liabilities
Financial liabilities at fair value through profit or loss
4,877,600.00
Derivative financial liabilities
Notes payable85,219,724.63
502,347.05
Accounts payable 305,346,284.94
353,186,163.90
Advances from customers108,783,148.03
105,562,378.66
Payroll payable 335,576,560.36
325,998,210.17
Taxes payable25,051,630.06
43,556,823.75
Other payables 104,982,189.40
215,946,987.68
Including: Interest payable
3,068,841.54
Dividends payable 441,113.64
441,113.64
Current portion of non-current liabilities101,111,297.49
Other current liabilities
Total current liabilities3,186,225,165.52
2,374,904,291.26
Non-current liabilities:
Long-term borrowings 42,364,019.74
170,019,083.89
Long-term payables
Long-term payroll payable105,589,249.56
96,958,178.53
Provisions
Deferred income157,668,211.41
140,183,446.39
Deferred income tax liabilities 92,440,358.41
28,030,096.38
Other non-current liabilities1,840,000.00
1,840,000.00
Total non-current liabilities 399,901,839.12
437,030,805.19
Total liabilities3,586,127,004.64
2,811,935,096.45
Owners’ equity:
Share capital858,121,541.00
922,602,311.00
Other equity instruments
Including: Preferred shares
Perpetual bonds
Capital reserves258,046,245.42
699,493,647.48
Less: Treasury stock
486,922,944.94
Other comprehensive income91,626,571.75
61,157,013.37
Specific reserve
Surplus reserves1,117,267,351.63
1,022,717,451.40
General reserve
Retained earnings5,372,073,615.12
4,927,500,989.55
| Total equity attributable to owners of the Company as the |
parent
7,697,135,324.92
7,146,548,467.86
Non-controlling interests 602,169,223.52
579,276,247.53
Total owners’ equity8,299,304,548.44
7,725,824,715.39
Total liabilities and owners’ equity 11,885,431,553.08
10,537,759,811.84
Legal representative: Liu Zibin Chief Accountant: Zhang HongmeiFinancial Manager: Zhang Keming
2. Balance Sheet of the Company as the Parent
Unit: RMBItem 31 December 2019 31 December 2018Current assets:
Monetary assets 259,320,863.08
191,305,104.80
Held-for-trading financial assets 52,356,098.85
Financial assets at fair value through profit or loss
Notes receivable 67,898,885.35
91,555,248.34
Accounts receivable417,599,518.08
316,225,973.28
Accounts receivable financing 2,675,090.00
Prepayments10,178,452.88
115,020,260.51
Other receivables 838,523,449.52
395,847,213.77
Including: Interest receivable
Dividends receivable
Inventories1,280,620,296.02
1,040,433,078.53
Assets classified as held for sale
Current portion of non-current assets
Other current assets 5,780,635.28
12,671,631.64
Total current assets2,934,953,289.06
2,163,058,510.87
Non-current assets:
Investments in debt obligations
Available-for-sale financial assets
73,112,000.00
Investments in other debt obligations
Held-to-maturity investments
Long-term receivables
Long-term equity investments 2,510,868,604.84
2,165,711,579.69
Investments in other equity instruments
Other non-current financial assets 266,149,500.00
Investment property31,089,260.38
14,804,592.72
Fixed assets 2,603,258,003.94
2,731,726,695.28
Construction in progress53,443,768.04
61,182,771.86
Productive living assets
Intangible assets 235,277,114.25
242,204,032.54
Deferred income tax assets 60,974,304.57
52,758,961.05
Other non-current assets
6,047,443.10
Total non-current assets 5,761,060,556.02
5,347,548,076.24
Total assets8,696,013,845.08
7,510,606,587.11
Current liabilities:
Short-term borrowings816,301,973.60
622,604,447.52
Held-for-trading financial liabilities
Financial liabilities at fair value through profit or loss
4,877,600.00
Derivative financial liabilities
Notes payable602,741,973.76
120,000.00
Accounts payable 105,588,631.54
120,021,727.66
Advances from customers53,418,950.04
49,798,551.14
Payroll payable 242,300,723.41
240,090,943.88
Taxes payable11,995,830.49
30,914,089.32
Other payables 149,255,207.79
303,672,590.72
Including: Interest payable
2,475,549.88
Dividends payable 441,113.64
441,113.64
Current portion of non-current liabilities
Other current liabilities
Total current liabilities1,981,603,290.63
1,372,099,950.24
Non-current liabilities:
Long-term borrowings
Bonds payable
Including: Preferred shares
Perpetual bonds
Long-term payables
Long-term payroll payable 105,589,249.56
96,958,178.53
Provisions
Deferred income 112,187,678.66
94,390,844.09
Deferred income tax liabilities70,445,859.76
16,699,530.43
Other non-current liabilities
Total non-current liabilities288,222,787.98
208,048,553.05
Total liabilities 2,269,826,078.61
1,580,148,503.29
Owners’ equity:
Share capital 858,121,541.00
922,602,311.00
Other equity instruments
Including: Preferred shares
Perpetual bonds
Capital reserves 317,206,232.47
759,836,756.57
Less: Treasury stock
486,922,944.94
Other comprehensive income
520,200.00
Specific reserve
Surplus reserves 1,114,158,611.99
1,019,608,711.76
Retained earnings4,136,701,381.01
3,714,813,049.43
Total owners’ equity 6,426,187,766.47
5,930,458,083.82
Total liabilities and owners’ equity8,696,013,845.08
7,510,606,587.11
3. Consolidated Income Statement
Unit: RMBItem 2019 2018
1. Revenue 6,801,381,448.94
6,879,058,813.93
Including: Operating revenue6,801,381,448.94
6,879,058,813.93
Interest income
2. Costs and expenses
5,892,300,065.15
5,855,599,589.40
Including: Cost of sales 4,790,605,105.36
4,861,443,242.95
Taxes and surcharges84,541,047.19
106,963,626.55
Selling expense 168,227,064.83
158,106,183.74
Administrative expense436,171,656.30
390,911,763.27
R&D expense 316,575,474.85
289,395,092.58
Finance costs96,179,716.62
48,779,680.31
| Including: Interest |
expense
91,643,124.97
57,300,653.51
Interestincome
10,146,938.67
17,925,826.14
Add: Other income62,084,864.45
60,846,383.76
Return on investment (“-” for loss) 21,783,896.05
-60,273,275.04
Including: Share
of joint ventures and associates
7,671,490.10
| of profit or loss |
-1,518,268.37
| Income from the derecognition of financial assets at |
amortized cost (“-” for loss)
Foreign exchange gain (“-
loss)
| ” for |
Net gain on exposure hedges (“-
for loss)
| ” |
Gain on changes in fair value (“-”for loss)
241,537,682.90
-4,877,600.00
Credit impairment loss (“-
loss)
-11,747,033.22
| ” for |
Asset impairment loss (“-” for loss)
-91,316,988.81
-57,528,337.04
Asset disposal income (“-
| ” for |
loss)
186,123.30
7,826,983.38
3. Operating profit (“-” for loss) 1,131,609,928.46
969,453,379.59
Add: Non-operating income 7,833,728.20
10,652,238.56
Less: Non-operating expense 11,939,226.65
10,598,854.65
4. Profit before tax (“-” for loss) 1,127,504,430.01
969,506,763.50
Less: Income tax expense 138,177,754.10
111,313,191.40
5. Net profit (“-” for net loss) 989,326,675.91
858,193,572.10
5.1 By operating continuity
operations (“-” for net loss)
989,326,675.91
| 5.1.1 Net profit from continuing |
858,193,572.10
| 5.1.2 Net profit from discontinued |
operations (“-” for net loss)
5.2 By ownership
owners of the Company as the parent
952,386,011.49
| 5.2.1 Net profit attributable to |
811,526,477.83
| 5.2.1 Net profit attributable to |
non-controlling interests
36,940,664.42
46,667,094.27
| 6. Other comprehensive income, net of |
tax
30,989,758.38
44,346,439.15
| Attributable to owners of the Company |
as the parent
30,989,758.38
44,346,439.15
| 6.2 Items that will be reclassified to |
profit or loss
30,989,758.38
44,346,439.15
| 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 Gain/Loss on changes in the |
fair value of available-for-
assets
| sale financial |
492,150.00
| 6.2.4 Other comprehensive income arising from the reclassification |
of financial assets
| 6.2.5 Gain/Loss arising from the |
reclassification of held-to-
investments to available-for-
| sale financial |
assets
obligations
| 6.2.6 Allowance for credit impairments in investments in other debt | ||
| 6.2.7 Reserve for cash flow |
hedges
6.2.8
currency-
| denominated financial |
statements
30,989,758.38
43,854,289.15
6.2.9 Other
Attributable to non-
interests
| controlling |
7. Total comprehensive income 1,020,316,434.29
902,540,011.25
| Attributable to owners of the Company |
as the parent
983,375,769.87
855,872,916.98
Attributable to non-
interests
36,940,664.42
| controlling |
46,667,094.27
8. Earnings per share
8.1 Basic earnings per share
1.11
0.90
8.2 Diluted earnings per share 1.11
0.90
Where business combinations under common control occurred in the current period, the net profit achieved by the acquirees beforethe combinations was RMB0.00, with the amount for 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: RMBItem 2019 2018
1. Operating revenue 5,105,711,442.90
5,234,872,142.46
Less: Cost of sales3,798,120,617.00
3,878,117,572.95
Taxes and surcharges 56,539,743.95
75,314,816.61
Selling expense95,202,970.17
93,816,791.69
Administrative expense 260,145,884.34
240,621,922.89
R&D expense219,891,715.24
202,174,766.82
Finance costs 31,122,463.38
22,580,855.82
Including: Interest expense 28,708,510.46
16,973,906.92
Interest income 2,861,783.48
4,042,869.20
Add: Other income31,731,358.99
33,789,992.88
Return on investment (“-” forloss)
185,457,258.88
-25,036,851.77
| Including: Share of profit or |
loss of joint ventures and associates
7,671,490.10
-1,518,268.37
amortized cost (“-” for loss)
| Income from the derecognition of financial assets at |
Net gain on exposure hedges (“-”for loss)
Gain on changes in fair value (“-
for loss)
241,537,682.90
| ” |
-4,877,600.00
Credit impairment loss (“-
| ” for |
loss)
-7,710,573.04
Asset impairment loss (“-
loss)
-62,122,253.32
| ” for |
-35,087,426.51
Asset disposal income (“-
| ” for |
loss)
11,362,991.28
-8,418,900.16
2. Operating profit (“-” for loss) 1,044,944,514.51
682,614,630.12
Add: Non-operating income 4,653,501.25
7,127,379.86
Less: Non-operating expense 6,099,201.01
6,778,974.37
3. Profit before tax (“-” for loss) 1,043,498,814.75
682,963,035.61
Less: Income tax expense 113,797,097.25
85,124,312.21
4. Net profit (“-” for net loss) 929,701,717.50
597,838,723.40
operations (“-” for net loss)
929,701,717.50
| 4.1 Net profit from continuing |
597,838,723.40
| 4.2 Net profit from discontinued |
operations (“-” for net loss)
| 5. Other comprehensive income, net of |
tax
492,150.00
| 5.2 Items that will be reclassified to |
profit or loss
492,150.00
| 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 Ga
fair value of available-for-
| sale financial |
492,150.00
assets
financial assets
| 5.2.4 Other comprehensive income arising from the reclassification of | ||
| 5.2.5 Gain/Loss arising from the |
reclassification of held-to-
investments to available-for-
| sale |
financial assets
| 5.2.6 Allowance for credit impairments in investments in other |
debt obligations
5.2.7 Reserve for cash flow hedges
| 5.2.8 Differences arising from the translation of foreign |
currency-denominated financial
statements
5.2.9 Other
6. Total comprehensive income 929,701,717.50
598,330,873.40
5. Consolidated Cash Flow Statement
Unit: RMBItem 2019 2018
1. Cash flows from operating activities:
and rendering of services
6,547,147,672.62
| Proceeds from sale of commodities |
6,589,170,715.37
Tax rebates 207,866,504.29
200,637,812.52
| Cash generated from other operating |
activities
115,518,461.97
110,420,123.41
| Subtotal of cash generated from |
operating activities
6,870,532,638.88
6,900,228,651.30
services
3,661,102,468.51
| Payments for commodities and |
3,361,829,445.15
Cash paid to and for employees 1,623,138,103.34
1,606,604,705.02
Taxes paid261,999,883.37
248,475,301.28
| Cash used in other operating |
activities
238,181,608.15
252,977,536.69
| Subtotal of cash used in operating |
activities
5,784,422,063.37
5,469,886,988.14
| Net cash generated from/used in |
operating activities
1,086,110,575.51
1,430,341,663.16
2. Cash flows from investing activities:
Proceeds from disinvestment60,000,000.00
50,000,000.00
Return on investment 4,875,806.53
6,069,367.03
long-lived assets
3,260,418.11
| Net proceeds from the disposal of fixed assets, intangible assets and other |
32,483,391.91
| Net proceeds from the disposal of |
subsidiaries and other business units
| Cash generated from other investing |
activities
22,644,079.03
27,272,692.86
| Subtotal of cash generated from |
investing activities
90,780,303.67
115,825,451.80
| Payments for the acquisition of fixed assets, intangible assets and other |
long-lived assets
789,961,925.00
928,794,291.04
Payments for investments 50,000,000.00
| Net increase in pledged loans granted |
Net payments for the acquisi
subsidiaries and other business units
| tion of | ||
| Cash used in other investing |
activities
38,875,330.97
73,597,959.70
| Subtotal of cash used in investing |
activities
878,837,255.97
1,002,392,250.74
| Net cash generated from/used in |
investing activities
-788,056,952.30
-886,566,798.94
3. Cash flows from financing activities:
Capital contributions received50,000,000.00
500,000.00
| Including: Capital contributions by |
non-controlling interests to subsidiaries
50,000,000.00
500,000.00
Borrowings obtained 4,010,463,313.14
3,187,659,288.75
| Cash generated from other financing |
activities
110,000,000.00
94,300,000.00
| Subtotal of cash generated from |
financing activities
4,170,463,313.14
3,282,459,288.75
Repayments of borrowings 3,299,893,907.00
2,925,408,591.68
Payments for interest and dividends573,047,333.34
518,987,542.25
| Including: Dividends paid by |
subsidiaries to non-
62,023,566.38
| controlling interests |
12,023,566.38
| Cash used in other financing |
activities
248,284,104.03
524,987,535.17
| Subtotal of cash used in financing |
4,121,225,344.37
3,969,383,669.10
activities
financing activities
49,237,968.77
| Net cash generated from/used in |
-686,924,380.35
| 4. Effect of foreign exchange rate |
changes on cash and cash equivalents
-3,867,345.96
1,645,076.17
| 5. Net increase in cash and cash |
equivalents
343,424,246.02
-141,504,439.96
| Add: Cash and cash equivalents, |
beginning of the period
535,134,772.90
676,639,212.86
| 6. Cash and cash equivalents, end of the |
period
878,559,018.92
535,134,772.90
6. Cash Flow Statement of the Company as the Parent
Unit: RMBItem 2019 2018
1. Cash flows from operating activities:
and rendering of services
4,952,756,297.43
| Proceeds from sale of commodities |
5,055,067,711.94
Tax rebates142,037,546.90
134,608,110.60
| Cash generated from other operating |
activities
82,964,558.55
54,426,092.92
Subto
operating activities
5,177,758,402.88
| tal of cash generated from |
5,244,101,915.46
| Payments for commodities and |
services
2,604,536,642.87
2,867,484,652.12
Cash paid to and for employees1,050,596,751.37
1,115,678,459.19
Taxes paid 153,270,926.22
133,530,662.18
activities
147,379,613.59
| Cash used in other operating |
156,477,992.20
| Subtotal of cash used in operating |
activities
3,955,783,934.05
4,273,171,765.69
| Net cash generated from/used in |
operating activities
1,221,974,468.83
970,930,149.77
2. Cash flows from investing activities:
Proceeds from disinvestment60,000,000.00
50,000,000.00
Return on investment 172,852,240.15
24,045,800.65
long-lived assets
30,472,795.67
| Net proceeds from the disposal of fixed assets, intangible assets and other |
84,896,956.61
| Net proceeds from the disposal of |
subsidiaries and other business units
activities
529,651,811.23
| Cash generated from other investing |
621,071,940.73
| Subtotal of cash generated from |
investing activities
792,976,847.05
780,014,697.99
| Payments for the acquisition of fixed assets, intangible assets and other |
long-lived assets
164,568,732.04
215,016,290.76
Payments for investments403,072,200.00
350,736,500.00
subsidiaries and other business units
| Net payments for the acquisition of | ||
| Cash used in other investing |
activities
921,445,294.40
537,403,361.43
| Subtotal of cash used in investing |
activities
1,489,086,226.44
1,103,156,152.19
| Net cash generated from/used in |
investing activities
-696,109,379.39
-323,141,454.20
3. Cash flows from financing activities:
Capital contributions received
Borrowings obtained 2,414,848,549.50
1,867,420,105.89
| Cash generated from other financing |
activities
450,811,100.00
276,073,100.00
| Subtotal of cash generated from |
financing activities
2,865,659,649.50
2,143,493,205.89
Repayments of borrowings2,243,633,569.59
1,895,523,735.81
Payments for interest and dividends 464,408,760.74
479,201,499.77
| Cash used in other financing |
activities
615,855,904.03
498,538,235.01
S
activities
3,323,898,234.36
| ubtotal of cash used in financing |
2,873,263,470.59
| Net cash generated from/used in |
financing activities
-458,238,584.86
-729,770,264.70
| 4. Effect of foreign exchange rate |
changes on cash and cash equivalents
389,253.70
5,476,844.15
| 5. Net increase in cash and cash |
equivalents
68,015,758.28
-76,504,724.98
| Add: Cash and cash equivalents, |
beginning of the period
191,305,104.80
267,809,829.78
| 6. Cash and cash equivalents, end of the |
period
259,320,863.08
191,305,104.80
7. Consolidated Statements of Changes in Owners’ Equity
2019
Unit: RMB
Item
2019Equity attributable to owners of the Company as the parent
Non-controlling interests
Total owners’equity
Share capital
Less:
Treasurystock
Othercomprehensive income
| Share capital |
Specificreserve
Surplusreserves
Generalreserve
Retainedearnings
Other
SubtotalPreferred shares
Perpetual bonds
Othe
r
1. Balances as at the end of the prior year
922,602,311.
699,493,647
.48
486,922,944
.94
61,157,013.
1,022,717,451
.40
4,927,500,989
.55
7,146,548,467.8
579,276,247
.53
7,725,824,715.
| Add: Adjustments for changed |
accounting policies
-520,200.00
1,579,728.48
14,217,556.33
15,277,084.81
15,277,084.81
| Adjustments for corrections of |
previous errors
under common control
| Adjustments for business combinations |
Other adjustments
| 2. Balances as at the beginning of the |
year
922,602,311.
699,493,647
.48
486,922,944
.94
60,636,813.
1,024,297,179
.88
4,941,718,545
.88
7,161,825,552.6
579,276,247
.53
7,741,101,800.
3. Increase/ decrease in the period (“-
| ” for |
decrease)
-64,480,770.
-441,447,40
2.06
-486,922,94
4.94
30,989,758.
92,970,171.75
430,355,069.2
535,309,772.25
22,892,975.
558,202,748.2
3.1 Total comprehensive income
30,989,758.
952,386,011.4
983,375,769.87
36,940,664.
1,020,316,434.
| 3.2 Capital increased and reduced by |
owners
-64,480,770.
-441,447,40-486,922,94
-19,005,227.12
47,975,877.28,970,650.84
2.06
4.94
3.2.1 Ordinary shares increased by
owners
-64,480,770.
-442,861,26
4.14
-486,922,94
4.94
-20,419,089.20
49,389,695.
28,970,605.90
| 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
1,413,862.0
1,413,862.08
-1,413,817.1
44.94
3.3 Profit distribution
92,970,171.75
-522,030,942.
-429,060,770.50
-62,023,566.
-491,084,336.8
| 3.3.1 Appropriation to surplus |
reserves
92,970,171.75
-92,970,171.7
reserve
| 3.3.2 Appropriation to general |
shareholders)
| 3.3.3 Appropriation to owners (or |
-429,060,770.
-429,060,770.50
-62,023,566.
-491,084,336.8
3.3.4 Other
3.4 Transfers within owners’ equity
capital) from capital reserves
| 3.4.1 Increase in capital (or share |
capital) from surplus reserves
| 3.4.2 Increase in capital (or share |
3.4.3 Loss offset by surplus reserves
earnings
| 3.4.4 Changes in defined benefit pension schemes transferred to retained |
transferred to retained earnings
| 3.4.5 Other comprehensive income |
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
858,121,541.
258,046,245
.42
91,626,571.
1,117,267,351.
5,372,073,615
.12
7,697,135,324.9
602,169,223
.52
8,299,304,548.
2018
Unit: RMB
Item
2018Equity attributable to owners of the Company as the parent
Non-controlling interests
Total owners’equityShare capital
Other equity instruments
Capitalreserves
Less:
Treasury
stock
Othercomprehensive income
Specificreser
ve
Surplusreserves
Gener
alreserv
e
Retainedearnings
Othe
r
SubtotalPreferred shares
Perpetual bonds
| Other | ||||
| 1. Balances as at the end of the prior year |
922,602,311.
699,493,59
3.82
16,810,574.
962,933,579.06
4,629,102,712
.06
7,230,942,770.1
544,132,719
.64
7,775,075,489.80
| Add: Adjustments for changed |
accounting policies
previous errors
| Adjustments for corrections of |
combinations under common control
| Adjustments for business |
Other adjustments
year
922,602,311.
| 2. Balances as at the beginning of the |
699,493,59
3.82
16,810,574.
962,933,579.06
4,629,102,712
.06
7,230,942,770.1
544,132,719
.64
7,775,075,489.80
3. Increase/ decrease in the period (“-
| ” |
for decrease)
53.66
486,922,944
.94
44,346,439.
59,783,872.34
298,398,277.4
-84,394,302.30
35,143,527.
-49,250,774.41
3.1 Total comprehensive income
44,346,439.
811,526,477.8
855,872,916.98
46,667,094.
902,540,011.25
| 3.2 Capital increased and reduced by |
owners
53.66
486,922,944
.94
-486,922,891.28
500,000.00
-486,422,891.28
3.2.1 Ordinary shares increased by
owners
486,922,944
.94
-486,922,944.94
500,000.00
-486,422,944.94
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
53.66
53.66
53.66
3.3 Profit distribution
59,783,872.34
-513,128,200.
-453,344,328.00
-12,023,566.
-465,367,894.38
| 3.3.1 Appropriation to surplus |
reserves
59,783,872.34
-59,783,872.3
0.00
reserve
| 3.3.2 Appropriation to general |
shareholders)
| 3.3.3 Appropriation to owners (or |
-453,344,328.
-453,344,328.00
-12,023,566.
-465,367,894.38
3.3.4 Other
3.4 Transfers within owners’ equity
capital) from capital reserves
| 3.4.1 Increase in capital (or share |
capital) from surplus reserves
| 3.4.2 Increase in capital (or share |
| 3.4.3 Loss offset by surplus reserves |
earnings
| 3.4.4 Changes in defined benefit pension schemes transferred to retained |
transferred to retained earnings
| 3.4.5 Other comprehensive income |
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
922,602,311.
699,493,64
7.48
486,922,944
.94
61,157,013.
1,022,717,451.
4,927,500,989
.55
7,146,548,467.8
579,276,247
.53
7,725,824,715.39
8. Statements of Changes in Owners’ Equity of the Company as the Parent
2019
Unit: RMB
Item
2019Share capital
Other equity instruments
Capital reserves
Less: Treasury
stock
Other
comprehensive
income
Specifi
creserv
e
Surplus reserves
Retained earnings
| Retained earnings | Other |
Total owners’equityPreferred
shares
Perpetual bonds
Other
1. Balances as at the end of the prior year 922,602,311.00
759,836,756.57
486,922,944.94
520,200.00
| 1,019,608,711.76 |
3,714,813,049.43
5,930,458,083.82
| Add: Adjustments for changed accounting |
-520,200.00
| 1,579,728.48 |
14,217,556.33
15,277,084.81
policies
errors
| Adjustments for corrections of previous |
Other adjustments
2. Balances as at the beginning of the year 922,602,311.00
759,836,756.57
486,922,944.94
| 1,021,188,440.24 |
3,729,030,605.76
5,945,735,168.63
3. Increase/ decrease in the period (“-
| ” for |
decrease)
-64,480,770.00
-442,630,524.10
-486,922,944.94
| 92,970,171.75 |
407,670,775.25
480,452,597.84
3.1 Total comprehensive income
929,701,717.50
929,701,717.50
3.2 Capital increased and reduced by owners
-64,480,770.00
-442,630,524.10
-486,922,944.94
-20,188,349.16
| 3.2.1 Ordinary shares increased by owners |
-64,480,770.00
-442,630,569.04
-486,922,944.94
-20,188,394.10
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
44.94
44.94
3.3 Profit distribution
| 92,970,171.75 |
-522,030,942.25
-429,060,770.50
3.3.1 Appropriation to surplus reserves
| 92,970,171.75 |
-92,970,171.75
shareholders)
| 3.3.2 Appropriation to owners (or |
-429,060,770.50
-429,060,770.50
3.3.3 Other
3.4 Transfers within owners’ equity
3.4.1 Increase in capital (or share c
from capital reserves
| apital) |
from surplus reserves
| 3.4.2 Increase in capital (or share capital) |
3.4.3 Loss offset by surplus reserves
schemes transferred to retained earnings
| 3.4.4 Changes in defined benefit pension |
transferred to retained earnings
| 3.4.5 Other comprehensive income |
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 858,121,541.00
317,206,232.47
| 1,114,158,611.99 |
4,136,701,381.01
6,426,187,766.47
2018
Unit: RMB
Item
2018Share capital
Other equity instruments
Capital reserves
Less: Treasurystock
Other
comprehensive
income
Specifi
creserv
e
Surplus reserves
Retained earnings
Othe
r
Total owners’
equityPreferred
shares
Perpetual bonds
Retained earnings
Other
1. Balances as at the end of the prior year
922,602,311.00
759,836,702.91
28,050.00
| 959,824,839.42 |
3,630,102,526.37
6,272,394,429.70
| Add: Adjustments for changed accounting |
policies
errors
| Adjustments for corrections of previous |
Other adjustments
2. Balances as at the beginning of the year 922,602,311.00
759,836,702.91
28,050.00
| 959,824,839.42 |
3,630,102,526.37
6,272,394,429.70
3. Increase/ decrease in the period (“-
| ” for |
decrease)
53.66
486,922,944.94
492,150.00
| 59,783,872.34 |
84,710,523.06
-341,936,345.88
3.1 Total comprehensive income
492,150.00
597,838,723.40
598,330,873.40
3.2 Capital increased and reduced by owners
53.66
486,922,944.94
-486,922,891.28
| 3.2.1 Ordinary shares increased by owners |
486,922,944.94
-486,922,944.94
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
53.66
53.66
3.3 Profit distribution
| 59,783,872.34 |
-513,128,200.34
-453,344,328.00
3.3.1 Appropriation to surplus reserves
| 59,783,872.34 |
-59,783,872.34
shareholders)
| 3.3.2 Appropriation to owners (or |
-453,344,328.00
-453,344,328.00
3.3.3 Other
3.4 Transfers within owners’ equity
3.4.1 Increase in capital (or share c
from capital reserves
| apital) |
from surplus reserves
| 3.4.2 Increase in capital (or share capital) |
3.4.3 Loss offset by surplus reserves
schemes transferred to retained earnings
| 3.4.4 Changes in defined benefit pension |
transferred to retained earnings
| 3.4.5 Other comprehensive income |
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
922,602,311.00
759,836,756.57
486,922,944.94
520,200.00
| 1,019,608,711.76 |
3,714,813,049.43
5,930,458,083.82
III. Company ProfileLu Thai Textile Co., Ltd. (hereinafter referred to as the “Company”) is a joint venture invested by Zibo Lucheng Textile InvestmentCo., 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 toissue 80 million shares of domestically listed foreign share( B-shares) at the price of RMB 1.00 per share. Upon approved byShenzhen Stock Exchange with No. (1997) 296 Listing Notice, the Company is listed on the Shenzhen Stock Exchange on 19 August1997 with B-shares stock code of 200726. On 24 November 2000, approved by ZJGSZ [2000] No.199 by CSRC, the Companyincreased publication of 50 million shares of general share (A-shares) at the book value of RMB 1.00, which are listed on theShenzhen Stock Exchange on 25 December 2000 with A-shares stock code of 000726 through approval by Shenzhen Stock Exchangewith 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 toall its 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 December2008.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 IncentivePlan of Lu Thai Textile Co., Ltd. (Shang-Shi-Bu-Han [2011] No. 206), the Company applied for a registered capital increment ofRMB 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 theOriginal Incentive Targets not Reaching the Incentive Conditions made at the 23
rd Session of the 6
th
Board of Directors on 13 August2012, the Company canceling a total of 60,000.00 shares already granted for the original incentive targets not reaching the incentiveconditions.According to the second temporary resolution of Proposal on counter purchase of part of the domestic listed foreign share (B share)on 25 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
thBoard 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 Incentive
Conditions 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 incentivetargets of the Company.As per the Proposal on Buy-back of Some A- and B-shares considered and approved as a resolution at the 1
st
special 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)As of 31 December 2019, the registered capital of the Company was RMB858,121,500.The Company’s registered address: No. 11, Mingbo Road, 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 production department, the qualitymanagement department, the yarn BD, the weaving and dyeing BD, the fabric finishing BD, the clothing manufacturing department,the clothing manufacturing BD, the clothing marketing department, the global marketing department, the enterprise managementdepartment, the financial department, the design & development department and the strategy and market department etc..The scope of business of the Company and its subsidiaries (hereinafter referred to as “the Group”) shall include: the design, R&D,production and sales of various textiles and garments including yarns, fabrics, blouses/shirts, suits and coats etc.; the textiles andclothing testing; the technical development, service and consultation based on the e-commerce platform; the processing and sales ofmechanical and electrical products; the procurement of agricultural products; hotel, restaurant, catering, conference and trainingservices; the lease of self-owned premises and lands; the non-quota license management; the procurement and sales of non-exclusivegoods.The Company’s financial statements and Notes thereof have been approved for issue by the 13
th
Meeting of the 9
th
Board of Directorsheld on 28 April 2020.There were 18 subsidiaries included into the consolidation scope of the Company in 2019, and for the details, please refer to NotesIX. “Equities among Other Entities” and Notes VIII. “Changes in Consolidation Scope”.
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 Group 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 Group's accounting is based on the accrual basis. Except for certain financial instruments, this financial statement is measured onthe basis of historical cost. If the asset is impaired, the corresponding impairment provision shall be made in accordance with relevantregulations.
2. Going-concern
The financial statements are presented on the basis of continuing operations.
V. Significant Accounting Policies and Estimates
1. Statement of Compliance with the Accounting Standards for Business Enterprises
This financial statement complies with the requirements of the Accounting Standards for Business Enterprises and truly andcompletely reflects the Company’s and consolidated financial status as of 31 December 2019 as well as the Company’s andconsolidated operating results for 2019 and the Company’s and consolidated cash flow 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 Group 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 Group adopted RMB as the recording currency.
5. Accounting Treatment for Business Combinations under the Common Control and Not under the
Common 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.
(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.
(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 debt
securities.
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 during the Reporting Period shall beincluded into the Company’s combination scope since the date when they are jointly controlled by the final controller, and theoperating result and cash flow since then shall be respectively included into the consolidated income statement and consolidated cashflow statement.As for subsidiaries and businesses increase due to business combinations not under the same control during the Reporting Period, therevenue, expenses and profit or those subsidiaries and businesses from the purchase date to the end of the Reporting Period shall beincluded into the consolidated income statement and the cash flow thereof shall be included into the consolidated cash flowstatement.The share of shareholders’ equity in subsidiaries not belonging to the Company shall be regarded as the minority interests andseparately listed under the item of shareholders’ equity in the consolidated balance sheet. The share of current portion of net profit orloss in subsidiaries belonging to minority interests shall presented as the item of minority interests under the item of net profit in theconsolidated income statement. The difference between the losses of subsidiaries born by not-controlling shareholders and the shareof the company’s owners’ equity at the period-beginning the not-controlling shareholders 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 comprehensive income related to the equity investments in the original subsidiary shall be transferred to the current profitor loss when the control power is lost except for the other comprehensive income arising from changes in net liabilities or net assets
due to the remeasurement of defined benefit plan by the investee.
7. 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 Group that are short-term, highly liquid, easily convertible into known amounts of cash, and have little risk of change invalue.
8. Foreign Currency Businesses and Translation of Foreign Currency Financial Statements
(1) Foreign currency business
The Group'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.
(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 current average exchange rate on the transaction date.All items in the cash flow statement are converted according to the current average exchange rate on the occurrence date of cash flow.The impact of exchange rate changes on cash is taken as a reconciling item, and the item "impact of exchange rate changes on cashand cash 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.
9. 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 existing
financial 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 Group classifies financial assets into the following three categories according to the business mode of managing financial assetsand the contractual cash flow characteristics of financial assets upon initial recognition: financial assets measured at amortized cost,financial assets measured at fair value and whose changes are included in other comprehensive income, and financial assets measuredat fair value and whose changes are included in current profit and loss.Financial assets measured at amortized costThe Group 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 Group'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 Group 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 Group'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 Group 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 Group irrevocablydesignates some financial assets that should have been measured at amortized cost or at fair value and whose changes are included inother comprehensive income as financial assets measured at fair value and whose changes are included in current profit and 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 Group manages financial assets to generate cash flow. Thebusiness model determines whether the cash flow of the financial assets managed by the Group comes from the collection ofcontractual cash flow, the sale of financial assets or both. The Group determines the business model for managing financial assets on
the basis of objective facts and specific business objectives decided by key management personnel to manage financial assets.The Group 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 principalamount 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 Group 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 Group changes the business mode of managing financial assets will all affected related financial assets be reclassifiedon the first day of the first reporting period after business model changes, otherwise financial assets cannot be reclassified after initialrecognition.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 Group is expected to be entitled to receive is taken as the initial recognition amount.
(3) Classification and measurement of financial liabilities
The Group'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 unfavorable
conditions.
③ Non-derivative contracts that must be or can be settled with the enterprise's own equity instruments in the future, and the
enterprise 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 derivatives
contracts 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 Group 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 Group's own equity instruments, it is necessary to consider whether theGroup's own equity instruments used to settle the instrument are used as substitutes for cash or other financial assets or to enable theholder of this instrument to enjoy the residual equity in the assets after deducting all liabilities from the issuer. If it is the former, thisinstrument is the Group's financial liability; if the latter is the case, this instrument is the Group's equity instrument.
(4) Derivative financial instruments and embedded derivatives
The Group's derivative financial instruments include forward foreign exchange contracts. Initially, the fair value on the date when thederivative transaction contract is signed shall be used for measurement, and the fair value shall be used for subsequent measurement.Derivative financial instruments with positive fair value are recognized as an asset, while those with negative fair value are indeedrecognized as a liability. Any gains or losses arising from changes in fair value that do not conform to the provisions of hedgeaccounting 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 (10) for the method of determining the fair value of financial assets and liabilities.
(6) Impairment of financial assets
The Group conducts impairment accounting treatment for the following items and confirms the loss provision based on the expectedcredit losses:
Financial assets measured at amortized cost;Receivables and creditors' investments measured at fair value and whose changes are included in other comprehensive income;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 Group, 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 Group 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 Group 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 Group measures the loss reserve accordingto the expected credit loss during the whole duration of this instrument; if the financial instrument has suffered credit impairment
since its initial recognition, it is in the third stage. The Group measures the loss reserve according to the expected credit loss duringthe whole duration of this instrument.For financial instruments with low credit risk on the balance sheet date, the Group 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 losscaused 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 Group needs to consider is the longest contract term that theenterprise faces credit risk (including the option to renew the contract).The Group 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.The Group always measures its loss reserves at an amount equivalent to the expected credit loss during the entire duration for notesreceivable 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 Group will dividethe notes receivable and accounts receivable into portfolio on the basis of the credit risk features, and calculate the expected creditloss 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/C? Notes receivable portfolio 2: commercial acceptance billsB. Accounts receivable? Accounts 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)For notes receivable divided into portfolios, with reference to historical credit loss experience, combined with current conditions andpredictions of future economic conditions, the Group has calculated expected credit losses through default risk exposure andexpected 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 Group has prepared a comparison table between the number of overdue days ofaccounts receivable and the expected credit loss rate over the entire duration, and has calculated the expected credit loss.Other receivablesThe Group 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 accounts
For other receivables that are divided into portfolios, the Group calculates the expected credit loss with the default risk exposure andthe expected credit loss rate within the next 12 months or the entire duration.Long-term receivablesThe long-term receivables of the Group include finance lease receivables and long-term advance receivables.Based on credit risk characteristics, the Group divides long-term receivables into portfolios of finance lease receivables and otherlong-term receivables, calculates expected credit losses based on the portfolio. The basis for determining the portfolio is as follows:
A. Finance lease receivable portfolio: finance lease receivableB. Other long-term receivables: prepaid receivablesFor the financial lease receivables, the with reference to the historical credit loss experience, in combination with the current situationand the prediction of the future economic situation, the Group calculates the expected credit loss with the default risk exposure andthe expected credit loss rate for the entire duration.Others, except finance lease receivables, are divided into portfolio long-term receivables; the Group calculates expected credit losseswith default risk exposure and 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 Group 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 ratewithin 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 whetherthe credit risk of financial instruments has increased significantly since initial recognition, the Group 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 Group considers reasonable and reliableinformation (forward-looking information inclusive) that can be obtained without unnecessary extra costs or efforts. The informationthe Group 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 Group.Based on the nature of financial instruments, the Group 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 Group 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 Group determines that there is a significant increase in the credit risk of financialinstruments.Financial assets with depreciation of creditThe Group 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 ormore events that adversely affect the expected future cash flow of a financial asset occur, the financial asset will become financialassets with depreciation of credit. The observable information below can be treated as evidence for credit impairment to financialassets:
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 Group 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 Group 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 therefrom 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 Group recognizes its loss reserve in other comprehensive income and willnot offset the carrying amount of the financial asset.Write-offsIn case that the Group 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 Group determines that the debtor does not have any assets or any source ofincome 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 Group, 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 Group 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 Group 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,and intends either to settle on a net basis, or to realize the financial asset and settle the financial liability simultaneously, a financialasset and a financial liability shall be offset and the net amount is presented in the balance sheet. Except for the above circumstances,financial assets and financial liabilities shall be presented separately in the balance sheet and shall not be offset.
10. 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 theorderly transaction that occurs on the measurement date.The Group 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 Group assumes that thetransaction is conducted in the most beneficial market. The main market (or the most favorable market) is the trading market that the
Group can enter on the measurement date. The Group uses the assumptions used by market participants to maximize their economicbenefits when pricing the asset or liability.For financial assets or financial liabilities with active markets, the Group uses the quotation in active markets to determine its fairvalue. If there is no active market for financial instruments, the Group 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 Group 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 areunavailable or are not feasible to obtain, the unobservable input values can be used.For assets and liabilities measured or disclosed at fair value in the financial statements, the fair value hierarchy to which they belongis determined based on the lowest level input value that is important to the fair value measurement as a whole: the first level inputvalue is the unadjusted quotation of the same assets or liabilities able to be obtained in an active market on the measurement date; thesecond level input value is the directly or indirectly observable input value of the relevant asset or liability except the first level inputvalue; the third level input value is unobservable input value of related assets or liabilities.On each balance sheet date, the Group 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.
11. Inventory
(1) Classification
Inventories mainly include raw materials, work-in-progress, stock products, product processed on entrustment, consumptivebiological assets 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 inventories
Net 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 packing articles, should be amortized by one-off amortization method when consuming.
12. Long-term Equity Investments
Long-term equity investments include equity investments in subsidiaries, joint ventures and associated enterprises. The investee that
the Group is able to exert significant influence is an associated enterprise of the Group.
(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 Group’s accountingpolicies 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. The difference between the fair value of the original equity onthe conversion date and the book value, as well as the cumulative changes in fair value originally included in other comprehensiveincome, are transferred to the current profit and loss accounted for using the 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 andMeasurement 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 The
difference 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 Group and associates and joint ventures are calculatedaccording to the shareholding ratio and are attributed to the Group, and the investment gains and losses are recognized on the basis ofoffset. However, the unrealized internal transaction losses incurred by the Group and the investee are the impairment losses of thetransferred 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 group of participants must act in concert to determinethe relevant activities of an arrangement, it is considered that all participants or a group of participants collectively control thearrangement; if there is a combination of two or more participants can collectively Controlling an arrangement does not constitutejoint 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 theGroup owns less than 20% (excluding) voting rights of the invested unit, it generally does not consider it to have a significant impacton the invested unit unless there is clear evidence that Under these circumstances, it can participate in the production and operationdecisions 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-19.
13. 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 withdraw depreciation or amortization as regulations of
fixed assets or intangible assets.The Company adopts the cost mode to conduct the subsequent measurement on the investment real estate, see the Note V-19 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 value andrelated taxes is included in the current profit and loss.
14. 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 Group are initially measured at the actual cost at the time of acquisition. Please refer toNote V.19 for the test method of impairment of fixed assets and the method of impairment provision.
(2) Depreciation Methods
Category of fixed assets Method Useful life Salvage value Annual deprecationHousing and building
life
5-30
| Average method of useful |
0-10
20.00-3.00
Machinery equipments
life
10-18
| Average method of useful |
0-10
10.00-5.00
Transportation vehicle
life
| Average method of useful |
0-10
20.00-18.00
| Electronic equipments |
and others
life
| Average method of useful |
0-10
20.00-18.00
(3) Recognition Basis, Pricing and Depreciation Method of Fixed Assets by Finance Lease
When the fixed assets leased by the Group meet one or more of the following criteria, it is recognized as fixed assets leased byfinancing: ① When the lease term expires, the ownership of the leased assets is transferred to the Group. ② The Group has theoption to purchase leased assets, and the purchase price concluded is expected to be much lower than the fair value of the leasedassets when the option is exercised, so it can be reasonably determined that the Group will exercise this option on the lease start date.
③Even if the ownership of the asset is not transferred, the lease period accounts for most of the service life of the leased asset. ④
The present value of the Group's minimum lease payment on the lease start date is almost equivalent to the fair value of the leasedasset on the lease start date. ⑤ The leased assets are of a special nature and only the Group can use them without major renovation.The fixed assets leased under financial leases shall be the booked value at the lower of the fair value of the leased assets on the leasestart date and the present value of the minimum lease payment. The minimum lease payment is taken as the book value of long-termpayables, and the difference is taken as unrecognized financing expenses. The initial direct costs such as handling fees, attorney’sfees, travel expenses, and stamp taxes that occurred during the lease negotiation and signing of the lease contract are included in thevalue of the leased asset. Unrecognized financing expenses are allocated using the effective interest rate method in each period of thelease period. Financing leased fixed assets adopts the same policy as its own fixed assets to withdraw depreciation of leased assets. If
it can be reasonably determined that the ownership of the leased asset will be acquired at the end of the lease period, depreciation willbe accrued within the useful life of the leased asset; if it cannot be reasonably determined that the ownership of the leased asset canbe acquired at the end of the lease period, the depreciation shall be accrued in the shorter period between the lease period and theresidual life of the leased asset.
(4) Other Notes
At the end of each year, review is carried out by the Group for the service life, estimated net residual value and depreciation methodof fixed assets. If there is any difference between the expected service life and the original estimated service life, the service life offixed assets will be adjusted; if there is any difference between the expected net residual value and the original estimated net residualvalue, the expected net residual value will be adjusted.Major repair expenses incurred by the Group in the regular inspection of fixed assets are included in the cost of fixed assets ifevidences show that they meet the recognition conditions of fixed assets, and those fail to meet the recognition conditions of fixedassets are included in the current profit and loss. Fixed assets at intervals of regular major repairs shall be depreciated as accrued.
15. 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. 19.
16. Engineering Materials
Engineering materials of the Group 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 transferred tothe project under construction, and the remaining engineering materials after the completion of the project will be stored as inventory.Please refer to Note V (19) 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.
17. Biological Assets
(1) Criteria for determination of biological assets
Biological assets refer to the assets composed of living animals and plants. It shall be recognized if biological assets meet thefollowing conditions at the same time:
① The enterprise owns or controls the biological assets on account of past transactions or events;
② The economic benefits or service potential related to the biological assets are likely to flow into the enterprise;
③ The cost of the biological assets can be reliably measured.
(2) Classification of biological assets
The biological assets of the Group include consumptive biological assets and productive biological assets.
①Consumptive biological assets
Consumptive biological assets refer to the biological assets held for sale or to be harvested as agricultural products in future,including crops, vegetables under growing, timber production forest and domestic animals for sale. The consumptive biological
assets shall be measured based on cost. All costs for planting, creating, cultivating or raising of consumptive biological assets shall bethe necessary expenses directly added to such assets that accrued before harvest, including any loan that satisfies capitalizationconditions. Subsequent expenses for keeping and feeding the consumptive biological assets after the harvest should be recognized asthe losses and gains of the current period.Upon harvest or sale, the cost of consumptive biological assets shall be based on its book value through weighted average.
②Productive biological assets
Productive biological assets refer to agricultural products produced, and biological assets held for labor provision or lease, includingeconomic forest, firewood forest, productive animals and labor animals. The productive biological assets shall be measured based oncost. All costs for creating or fostering productive biological assets shall be the necessary expenses directly added to such assets thataccrued before it reaches expected production purpose, including any loan that satisfies capitalization conditions.The management, maintenance and feed cost, which incurred after the productive biological assets are closed or the expectedproduction and operation purpose are achieved, will be included in the current profit and loss.The depreciation of productive biological assets is calculated by the straight-line method. The depreciation rate is determined asfollows after deducting the residual value based on the estimated service life of various biological assets:
Category Service life
(year)
Residualsrate %
Annual
rate %Stockbreeding
| depreciation | ||
① Livestock
| 5 | 19 |
The Company shall review the service life, expected net residuals and depreciation method of the productive biological assets at leastby the end of the year. In case of any change, it shall be deemed as accounting estimate change.The difference between proceedings from disposal (sale, loss, death or damage) of the productive biological assets deducted by bookvalue and related tax shall be recognized as loss and gain for the current period.
(3) Treatment of impairment of biological assets
If the net realizable value of the consumptive biological asset is lower than its carrying amount, falling price reserves of thebiological asset shall be accrued according to the difference between the net realizable value and the carrying amount, and it shall beincluded in the current profit and loss. If the factors influencing the impairment of consumptive biological assets have beeneliminated, the write-down amount shall be recovered and reversed within the amount of the original falling price reserves, and thereversed amount shall be included in the current profit and loss.Please refer to Note V (19) for the method of provision for impairment of assets of productive biological assets.
18. Intangible Assets
(1) Pricing Method, Useful Life and Impairment Test
The intangible assets of the Group 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 Note
methodLand use right Stipulated in the land certificate Method of line
Patent use right 10 years Method of line
Software use right 1-3 years Method of line
Brand use right 10 years Method of line
At the end of each year, the Group reviews the service life and amortization method of intangible assets with limited service life. Ifthe estimate is different from the previous one, the original estimate shall be adjusted and treated as per accounting estimate change.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-19.
(2) Accounting Policy for Internal Research and Development Expenditures
The 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 Group 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.
19. 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, project under construction, productive biological assets measured by costpattern, intangible assets, business reputation, etc. (excluding inventory, investment real estate measured by fair value pattern,deferred income tax assets, financial assets), the impairment 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. Ifthere is, the Group will estimate its recoverable amount and conduct impairment test. For goodwill, intangible assets with uncertainservice life and intangible assets that have not reached the serviceable state due to business merger, impairment test shall be carriedout every 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 Group 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 ofthe asset 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 relevantasset group, it shall be apportioned to the relevant combination of asset group. The relevant asset group or combination of assetgroups is the one that can benefit from the synergy effect of business merger, and is the one smaller than the reportable segmentdetermined by the Group.In the impairment test, if there is any sign of impairment in the asset group or combination of asset groups related to businessreputation, first, impairment test shall be carried out on the asset group or combination of asset groups not containing businessreputation, to calculate the recoverable amount and recognize the corresponding impairment loss. Then impairment test shall becarried out on the asset group or combination of asset group containing business reputation to compare the carrying amount with therecoverable amount. If the recoverable amount is lower than the carrying amount, the impairment loss of business reputation shall berecognized.Once the impairment loss of assets is recognized, it will not be reversed in the future accounting period.
20. Long-term Deferred Expenses
The long-term expenses to be amortized incurred by the Group are valued at the actual cost and amortized averagely according to theexpected benefit period. For long-term expenses to be amortized, the amortized value that cannot benefit the future accounting periodshall be included in the current profit and loss.
21. Payroll
(1) Accounting Treatment of Short-term Compensation
During the accounting period in which employees provide services, the Group recognizes the actual employee wages, bonuses, socialinsurance premiums such as medical insurance premiums, industrial injury insurance premiums, and maternity insurance premiumsand housing provident funds paid to employees according to the prescribed standards and proportions as liabilities and included themin the current profit and loss or related asset costs. If the liability is not expected to be fully paid within twelve months after the endof the annual reporting period for employees to provide related services, and the financial impact is significant, the liability will bemeasured 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 establishedcontribution 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 of
providing benefits is determined by the expected cumulative benefit unit method. The employee compensation cost caused by theGroup'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 cost
refers 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, the
interest 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 Group will includethe 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 Group to employees that meet the conditions of defined contribution plans shallbe handled in accordance with the above-mentioned relevant provisions on defined contribution plans. Those in line with the definedbenefit plan shall be handled in accordance with the above-mentioned relevant provisions on the defined benefit plan. However, thepart of "changes caused by remeasuring the net liabilities or net assets of the defined benefit plan" in the salary cost of relevantemployees shall be included in the current profit and loss or the relevant asset cost.
22. Revenue
Is the Company has implemented the new standards governing revenue
□ Yes √ No
(1) General principle
①Selling products
No revenue from selling goods may be recognized unless the following conditions are met simultaneously: the significant risks andrewards of ownership of the goods have been transferred to the buyer by the enterprise; the enterprise retains neither continuousmanagement right that usually keeps relation with the ownership nor effective control over the sold goods; the relevant amount of
revenue can be measured in a reliable way; the relevant economic benefits may flow into the enterprise; and the relevant costsincurred or to be incurred can be measured in a reliable way.
② Providing labor service
On the balance sheet date, the company shall recognize the income by the percentage of completion method when the result of thetransaction of labor service provided can be estimated reliably.The completion schedule of the transaction of labor service shall be determined according to the proportion of labor cost incurred inthe estimated total cost.Reliable estimation of the result of labor service's transaction means that: A. The amount of revenue can be measured reliably; B.Relevant economic benefits are more likely to flow into the enterprise; C. The degree of completion of the transaction can bedetermined reliably; D. The costs incurred and to be incurred in the transaction can be measured reliably.If the result of the transaction of labor service provided cannot be estimated reliably, the revenue of labor service provided shall berecognized according to the amount of labor cost incurred and expected to be compensated, and the incurred labor cost shall berecognized as the current expenses. If the incurred labor cost is not expected to be compensated, the revenue will not be recognized.
③ Transfer of asset use right
When the economic benefits related to the transfer of right to use an asset can flow into the company and the amount of revenue canbe reliably measured, the company recognizes the revenue.
(2) Specific method
The specific method of recognizing revenue from selling products is as follows:
As for the revenues from the domestic sales products, the Company deliveries the products to the buyers according to the contractsagreement, and the revenues amount of the products sales had been confirmed with the goods payment had been withdrawn or hadreceived the receipt voucher of which the relevant economic benefits probably flow into the enterprise as well as the relevant costs ofthe products could be reliable measured when being confirming as the revenues.As for the revenues from the export sales products, the Company executes the customs declaration and the products departureaccording to the contracts agreement, and the Company had acquired the bill of lading with the revenues amount of the products salehad been confirmed and the goods payment had been withdrawn or had had received the receipt voucher of which the relevanteconomic benefits probably flow into the enterprise as well as the relevant costs of the products could be reliable measured whenbeing confirming as the revenues.
23. Government Subsidies
Government subsidies are recognized when they meet the conditions attached to government subsidies and when they can bereceived.Government subsidies for monetary assets shall be measured according to the amount received or receivable. Government subsidiesfor non-monetary assets shall be measured by fair value, and they shall be measured by the nominal amount of RMB1 if the fairvalue cannot be obtained reliably.Asset related government subsidies refer to the government subsidies obtained by the Group for acquisition and construction or otherforms of long-term assets. In addition, they are government subsidies related to income.Regarding the government subsidies that the government document does not specify the object of subsidy and can form long-termassets, the part of government subsidy corresponding to the asset value shall be regarded as the asset-related government subsidy andthe rest shall be regarded as income-related government subsidy. If it is difficult to distinguish, the government subsidy shall beregarded as the income-related government subsidy.The government subsidies related to assets shall be recognized as the deferred income, which shall be included in the profit and lossin installment in a reasonable and systematic way within the service life of the relevant assets. Income-related government subsidieswhich are 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 thecurrent profit and loss during the recognition period of the relevant costs or losses. The government subsidies measured according tothe nominal amount shall be directly included in the current profit and loss. The same method is adopted for the same or similargovernment subsidy businesses of the Group.Government subsidies related to daily activities shall be included in other incomes according to the essence of business transactions.Government subsidies irrelevant to daily activities are included in non-business income.When the recognized government subsidies need to be returned, the book balance of relevant deferred income shall be offset if thereis a balance of relevant deferred income, and the excess part shall be included in the current profit and loss. Otherwise, it shall bedirectly included 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 calculatedaccording to the loan principal and the policy preferential interest rate. If the Ministry of Finance allocates the interest subsidydirectly to the Group, the interest subsidy will offset the borrowing costs.
24. 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 taxbasis, the Group 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 the
following characteristics: The transaction is not a business merger, and does not affect the accounting profit or taxable income whenit occurs;
(2) Regarding the taxable temporary difference related to the investment of subsidiaries, joint ventures and associated enterprises, the
time of reversal of the temporary difference can be controlled and the temporary difference is unlikely to be reversed in theforeseeable future.For deductible temporary differences, deductible losses and tax credits that can be carried forward in subsequent years, the Group islikely to obtain the future taxable income as the limit to offset the deductible temporary differences, deductible losses and tax credits,in which 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
investment of subsidiaries, joint ventures and associated enterprises meet the following conditions simultaneously: The temporarydifferences are likely to be reversed in the foreseeable future, and the taxable income used to deduct the deductible temporarydifferences is likely to be obtained in the future.On the date of the balance sheet, the income tax assets and deferred income tax liabilities shall be measured by the Group 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 written
down. Any such write-down should be subsequently reversed where it becomes probable that sufficient taxable income will beavailable.
25. Lease
(1) Accounting Treatment of Operating Lease
(1) The Group as the lessor
The rent incomes from operating leases shall be recognized as the profits and losses of the current period by using the straight-linemethod over each period of the lease term. The initial direct costs shall be recorded into current profits and losses.
(2) The Group as the lessee
The rent expenses from operating leases shall be recorded by the lessee in the relevant asset costs or the profits and losses of thecurrent period by using the straight-line method over each period of the lease term. The initial direct costs shall be recognized as theprofits and losses of the current period.
(2) Accounting Treatments of Financial Lease
(1) The Company as the lessor
On the beginning date of the lease term, the Company shall recognize the sum of the minimum lease receipts on the lease beginningdate and the initial direct costs as the entering value in an account of the financing lease values receivable, and record theunguaranteed residual value at the same time. The balance between the sum of the minimum lease receipts, the initial direct costs andthe unguaranteed residual value and the sum of their present values shall be recognized as unrealized financing income.Unrecognized financing incomes shall be adopted by the effective interest rate method in the lease term, so as to calculate andrecognize current financing revenues.
(2) The Company as the lessee
On the lease beginning date, the Company shall record the lower one of the fair value of the leased asset and the present value of theminimum lease payments on the lease beginning date as the entering value in an account, recognize the amount of the minimum leasepayments as the entering value in an account of long-term account payable, and treat the balance between the recorded amount of theleased asset and the long-term account payable as unrecognized financing charges. The initial direct costs shall be recorded into valueof leased assets. Unrecognized financing charges shall be adopted by the effective interest rate method in the lease term, so as tocalculate and recognize current financing charges. The Group adopts a depreciation policy consistent with its own fixed assets toaccrue the depreciation of leased assets.
26. 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 reservesand undistributed profits if capital reserves are insufficient to offset.
27. Other Significant Accounting Policies and Estimations
Pursuant to historical experience and other factors and reasonable expectations for future events, the Group continuously evaluatesthe important accounting estimates and key assumptions adopted. The important accounting estimates and key assumptions that arelikely to cause major adjustment risk to the carrying amount of assets and liabilities in the next fiscal year are listed as follows:
Classification of financial assetsDuring the recognition of the classification of financial assets by the Group, the major judgments involved include the analysis ofbusiness model and contract cash flow characteristics, etc.The Group determines the business model for managing financial assets at the level of financial asset portfolio, and factorsconsidered include methods of evaluation and reporting financial asset performance to key management personnel, risks affectingfinancial asset performance and their management methods, and the way in which relevant business management personnel are paid.When assessing whether the contractual cash flow of financial assets is consistent with the basic lending arrangements, the Group hasthe following main judgments: Whether the principal may change in the time distribution or amount during the duration due toprepayment and other reasons; whether the interest include only the time value of money, credit risk, other basic lending risks, andconsiderations of costs and profits. For example, whether the amount of prepayment only reflect the unpaid principal and interestbased on the unpaid principal, as well as reasonable compensation due to early termination of the contract.Measurement of expected credit loss of accounts receivableThe Group calculates the expected credit loss of accounts receivable through the default risk exposure and the expected credit lossrate of accounts receivable, and determines the expected credit loss rate based on the default probability and loss given default. Whendetermining the expected credit loss rate, the Group adjusts the historical data by using internal historical credit loss experience andother data, and combining the current situation and forward-looking information. The indicators used by the Group include risks ofeconomic downturn, changes in external market environment, technological environment and customer conditions, etc. whenconsidering forward-looking information. The Group regularly monitors and reviews assumptions related to the calculation ofexpected credit losses.Impairment of goodwillThe Group assesses whether goodwill is impaired at least annually. This requires estimating the value in use of the asset group towhich goodwill has been allocated. When estimating the value in use, the Group needs to estimate the future cash flows from theasset group and select the appropriate discount rate to calculate the present value of future cash flows.Deferred income tax assetsIn a limit providing large possibility of offset losses from sufficient taxable profits, the Group shall recognize deferred income taxassets in line with all unused tax losses, which requires management staffs of the Group to estimate the time when future taxableprofits occurs and the amount thereof by applying plenty of judgments and combining tax planning strategies, so as to determine theamount of the recognizable deferred income tax assets.Recognition of fair value of unlisted equity investmentWhen confirming the fair value of unlisted equity investments, the Group will choose an appropriate valuation method. The valuationmethod makes maximum use of observable market information. However, the management will estimate the significant unobservableinformation included in the valuation method when observable market information is unavailable. Under limited circumstances, if theinformation used to determine the fair value is insufficient, or the possible estimated amount of fair value is widely distributed, andthe cost represents the best estimate of fair value within the range, the cost may represent the appropriate estimate of fair value withinthe distribution range.
28. 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
for Business Enterprises No. 22-
| Recognition and Measurement of Financial Instruments (Revised), Accounting Standards for Business Enterprise No. |
23-
Standards for Business Enterprises No. 24-
| Hedge Accounting (Revised) and Accounting Standards for |
Business Enterprises No. 37-
Instruments (Revised) (hereinafter collectively re
| ferred to as “the new standards governing financial instruments”) |
in 2017.
policies on the 24
th Meeting of the 8
th
| Board |
of Directors held on 27 March 2019.
Refer to the Note V-
The Ministry of Finance issued the Notice on Revisingand Issuing the 2019 Formats of Financial Statements forGeneral Enterprises (CK[2019]No. 6) in April 2019 andthe Notice on Revising and Issuing the 2018 Formats ofFinancial Statements for General Enterprises(CK[2018]No. 15) issued in June 2018 was accordinglyabolished. The Ministry of Finance issued the Notice onRevising and Issuing the Formats of ConsolidatedFinancial Statements (2019) (CK[2019]No. 16) inSeptember 2019 and the Notice on Revising and Issuingthe 2018 Formats for Consolidated Statements
| 9 for revised accounting policies | ||
| (CK[2019] |
No. 1) was accordingly abolished. In accordance with the
the following revisions for the formats of financialstatements: as for the balance sheet, the item of “notesreceivable and accounts receivable” was split into theitem of “notes receivable” and “accounts receivable”; theitem of “notes payable and accounts payable” was split
| into the item of “notes payable” and the item of “accounts |
payable”.
accounting policies on the 24
th
| Meeting of |
the 8
th
Board of D
2019 and he 13
th
Meeting of the 9
th
| Board |
of Directors held on 28 April 2020.
CK[2019]No. 6
| . The revision of formats for financial statements has no influence on the Company’s total assets, total liabilities, net profit and other comprehensive |
income.
In 2015, the Company set up the two wholly-
subsidiaries Lu Thai Vietnam and Lu An Garmen
| ts in Vietnam. The recording currency of both two subsidiaries is DONG during the period from respective establishment date to 31 December 2018. The sales export of the two | The Company approved the change in recording currency of Lu Thai Vietnam and Lu An Garments into USD from DONG |
since 1 January 2019 on the 24
th
the 8
th
| Board of Directors held on 27 March |
revenue of Lu Thai Vietnam
| in 2018 was settled in USD and all sales revenue of Lu An Garments were settled in USD. In accordance with provisions of No. |
200/2014TT-
the two subsidiaries satis
| fied the condition taking USD as the recording currency, thus, their recording currencies |
have been changed into USD since 1 January 2019.
2019.
The comparison statement of financial assets of the Company classified and measured respectively according to the new standardsgoverning financial instruments and the original one on 1 January 2019:
Original standards governing financial instruments New standards governing financial instrumentsItem Category Carrying value
Item
Category Carrying value
Financial assets atfair value throughprofit or loss
At fair value throughprofit or loss
Held-for-tradingfinancial assets
At fair value throughprofit or loss
Derivativefinancial assets
At fair value throughprofit or loss
Available-for-salefinancial assets
At fair value throughother comprehensiveincome (debtinstruments)
60,612,000.00
Held-for-tradingfinancial assets
At fair value throughprofit or loss
60,612,000.00At fair value throughother comprehensiveincome (equityinstruments)
Held-for-tradingfinancial assets
At fair value throughprofit or loss
Investment inother equityinstruments
At fair value throughother comprehensiveincome
Measured at cost(equity instruments)
24,500,000.00
Othernon-currentfinancial assets
At fair value throughprofit or loss
43,018,515.95Investment inother equityinstruments
At fair value throughother comprehensiveincome
Notes receivable Amortized cost 174,657,918.26
Notesreceivable
Amortized cost 174,657,918.26Accountsreceivablefinancing
At fair value through
other comprehensive
income
Accountsreceivable
Amortized cost 374,607,116.55
Accountsreceivable
Amortized cost 374,607,116.55Accountsreceivable
At fair value through
other comprehensive
financing incomeOther receivables Amortized cost 63,012,001.10
Other current
assets
Amortized cost
Other
receivables
Amortized cost 63,012,001.10
Long-termreceivables
Amortized cost 10,693,844.75
Long-term
receivables
Amortized cost 10,693,844.75
Other
non-current
financial assets
At fair value throughprofit or loss
Investment in
debt obligations
Amortized costThe reconciliation statement financial instruments in classification and carrying value when implementing the new standardsgoverning financial instruments on 1 January 2019:
Item
Carrying amountbefore theadjustment
Reclassified
Remeasured
Carrying amountafter the adjustment
(31 December 2018) (1 January 2019)Assets:
| Financial assets at fair value |
through profit or loss
-- --Held-for-
assets
-- 60,612,000.0
| trading financial |
60,612,000.00Notes receivable 174,657,918.26
174,657,918.26Accounts receivable 374,607,116.55
374,607,116.55Accounts receivable financing
Other receivables 63,012,001.10
63,012,001.10Current portion of non-currentassets
· At amortized
· At fair value through othercomprehensive income
· Other
Other current assets
Available-for-
assets
85,112,000.00 -85,112,000.0
-- --Held-to-maturity investments
| sale financial | ||
-- --Investment in debt obligations --
| Investment in other debt |
obligations
--
Long-term receivables 10,693,844.75
10,693,844.75
--
| Investment in other equity |
instrumentsOther non-
assets
-- 24,500,000.0
18,518,515.95 43,018,515.95Long-term equity investments 96,018,463.65
| current financial | ||
-463,653.75 95,554,809.90Deferred income tax assets 88,636,929.06
-2,777,777.39 85,859,151.67Liabilities:
| Financial liabilities at fair |
value through profit or loss
4,877,600.00 -4,877,600.00 -- --Held-for-
liabilities
-- 4,877,600.00
| trading financial |
4,877,600.00Shareholders’ equity
Other comprehensive income 61,157,013.37
-520,200.00 60,636,813.37Surplus reserves 1,022,717,451.40
1,579,728.48 1,024,297,179.88Retained earnings 4,927,500,989.55
14,217,556.33 4,941,718,545.88Non-controlling interests 579,276,247.53
579,276,247.53
The reconciliation statement between the provision for loss as of 31 December 2018 measured according to the original standardsgoverning financial instruments and that as of 1 January 2019 confirmed according to the new standards governing financialinstruments:
Measurement category
Carrying amountbefore the adjustmentReclassified
Remeasured
Carrying amount after the
adjustment(31 December 2018) (1 January 2019)
on notes receivable
| Provision for impairment | ||||
| Provision for impairment |
on accounts receivable
19,823,714.31
19,823,714.31
on other receivables
5,685,008.11
| Provision for impairment |
5,685,008.11
on long-term receivables
528,623.41
| Provision for impairment |
528,623.41
(2) Changes in Accounting Estimates
□ Applicable √ Not applicable
(3) Adjustments to the Financial Statements at the Beginning of the First Execution Year of any New
Standards Governing Financial Instruments, Revenue or Leases since 2019
√ Applicable □ Not applicable
Consolidated balance sheet
Unit: RMBItem 31 December 2018 1 January 2019 Adjusted
Current assets:
Monetary assets545,502,709.36
545,502,709.36
Held-for-trading financial assets
60,612,000.00
60,612,000.00
Financial assets at fa
| ir value through profit |
or loss
Derivative financial assets
Notes receivable 174,657,918.26
174,657,918.26
Accounts receivable374,607,116.55
374,607,116.55
Accounts receivable financing
Prepayments149,582,616.21
149,582,616.21
Other receivables 63,012,001.10
63,012,001.10
Including: Interest receivable
Dividends receivable
Financial assets
agreements
| purchased under resale |
Inventories 2,093,366,992.30
2,093,366,992.30
Assets classified as held for sale
Current portion of non-current assets
Other current assets 86,366,454.56
86,366,454.56
Total current assets 3,487,095,808.34
3,547,707,808.34
60,612,000.00
Non-current assets:
Investments in debt obligations
Available-for-sale financial assets 85,112,000.00
-85,112,000.00
Investments in other debt obligations
Held-to-maturity investments
Long-term receivables 10,693,844.75
10,693,844.75
Long-term equity investments 96,018,463.65
95,554,809.90
-463,653.75
Investments in other equity instruments
Other non-current financial assets
43,018,515.95
43,018,515.95
Investment property 22,880,242.95
22,880,242.95
Fixed assets 5,748,562,385.35
5,748,562,385.35
Construction in progress 337,230,646.42
337,230,646.42
Productive living assets
Intangible assets 478,689,064.45
478,689,064.45
R&D expense
Goodwill 20,613,803.29
20,613,803.29
Long-term prepaid expense119,126,407.71
119,126,407.71
Deferred income tax assets 88,636,929.06
85,859,151.67
-2,777,777.39
Other non-current assets43,100,215.87
43,100,215.87
Total non-current assets 7,050,664,003.50
7,005,329,088.31
-45,334,915.19
Total assets10,537,759,811.84
10,553,036,896.65
15,277,084.81
Current liabilities:
Short-term borrowings1,325,273,780.05
1,325,273,780.05
Held-for-trading financial liabilities
profit or loss
4,877,600.00
| Financial liabilities at fair value through |
-4,877,600.00
Derivative financial liabilities
4,877,600.00
4,877,600.00
Notes payable 502,347.05
502,347.05
Accounts payable353,186,163.90
353,186,163.90
Advances from customers 105,562,378.66
105,562,378.66
Payroll payable325,998,210.17
325,998,210.17
Taxes payable 43,556,823.75
43,556,823.75
Other payables215,946,987.68
215,946,987.68
Including: Interest payable 3,068,841.54
3,068,841.54
Dividends payable 441,113.64
441,113.64
Current portion of non-current liabilities
Other current liabilities
Total current liabilities 2,374,904,291.26
2,374,904,291.26
Non-current liabilities:
Insurance contract reserve
Long-term borrowings170,019,083.89
170,019,083.89
Bonds payable
Including: Preferred shares
Perpetual bonds
Lease liabilities
Long-term payables
Long-term payroll payable96,958,178.53
96,958,178.53
Provisions
Deferred income140,183,446.39
140,183,446.39
Deferred income tax liabilities 28,030,096.38
28,030,096.38
Other non-current liabilities 1,840,000.00
1,840,000.00
Total non-current liabilities437,030,805.19
437,030,805.19
Total liabilities 2,811,935,096.45
2,811,935,096.45
Owners’ equity:
Share capital 922,602,311.00
922,602,311.00
Other equity instruments
Including: Preferred shares
Perpetual bonds
Capital reserves 699,493,647.48
699,493,647.48
Less: Treasury stock486,922,944.94
486,922,944.94
Other comprehensive income 61,157,013.37
60,636,813.37
-520,200.00
Specific reserve
Surplus reserves 1,022,717,451.40
1,024,297,179.88
1,579,728.48
General reserve
Retained earnings 4,927,500,989.55
4,941,718,545.88
14,217,556.33
| Total equity attributable to owners of the |
Company as the parent
7,146,548,467.86
7,161,825,552.67
15,277,084.81
Non-controlling interests579,276,247.53
579,276,247.53
Total owners’ equity 7,725,824,715.39
7,741,101,800.20
15,277,084.81
Total liabilities and owners’ equity10,537,759,811.84
10,553,036,896.65
15,277,084.81
Notes to adjustmentBalance sheet of the Company as the Parent
Unit: RMBItem 31 December 2018 1 January 2019 AdjustedCurrent assets:
Monetary assets 191,305,104.80
191,305,104.80
Held-for-trading financial assets
60,612,000.00
60,612,000.00
| Financial assets at fair value through profit |
or loss
Derivative financial assets
Notes receivable91,555,248.34
91,555,248.34
Accounts receivable 316,225,973.28
316,225,973.28
Accounts receivable financing
Prepayments 115,020,260.51
115,020,260.51
Other receivables395,847,213.77
395,847,213.77
Including: Interest receivable
Dividends receivable
Inventories 1,040,433,078.53
1,040,433,078.53
Contractual assets
Assets classified as held for sale
Current portion of non-current assets
Other current assets 12,671,631.64
12,671,631.64
Total current assets2,163,058,510.87
2,223,670,510.87
60,612,000.00
Non-current assets:
Investments in debt obligations
Available-for-sale financial assets 73,112,000.00
-73,112,000.00
Investments in other debt obligations
Held-to-maturity investments
Long-term receivables
Long-term equity investments 2,165,711,579.69
2,165,247,925.94
-463,653.75
Investments in other equity instruments
Other non-current financial assets
31,018,515.95
31,018,515.95
Investment property14,804,592.72
14,804,592.72
Fixed assets 2,731,726,695.28
2,731,726,695.28
Construction in progress61,182,771.86
61,182,771.86
Productive living assets
Intangible assets242,204,032.54
242,204,032.54
R&D expense
Goodwill
Deferred income tax assets 52,758,961.05
49,981,183.66
-2,777,777.39
Other non-current assets6,047,443.10
6,047,443.10
Total non-current assets 5,347,548,076.24
5,302,213,161.05
-45,334,915.19
Total assets7,510,606,587.11
7,525,883,671.92
15,277,084.81
Current liabilities:
Short-term borrowings622,604,447.52
622,604,447.52
Held-for-trading financial liabilities
profit or loss
4,877,600.00
| Financial liabilities at fair value through |
-4,877,600.00
Derivative financial liabilities
4,877,600.00
4,877,600.00
Notes payable 120,000.00
120,000.00
Accounts payable 120,021,727.66
120,021,727.66
Advances from customers49,798,551.14
49,798,551.14
Payroll payable 240,090,943.88
240,090,943.88
Taxes payable30,914,089.32
30,914,089.32
Other payables 303,672,590.72
303,672,590.72
Including: Interest payable 2,475,549.88
2,475,549.88
Dividends payable 441,113.64
441,113.64
Current portion of non-current liabilities
Other current liabilities
Total current liabilities1,372,099,950.24
1,372,099,950.24
Non-current liabilities:
Long-term borrowings
Long-term payables
Long-term payroll payable96,958,178.53
96,958,178.53
Provisions
Deferred income94,390,844.09
94,390,844.09
Deferred income tax liabilities 16,699,530.43
16,699,530.43
Other non-current liabilities
Total non-current liabilities 208,048,553.05
208,048,553.05
Total liabilities1,580,148,503.29
1,580,148,503.29
Owners’ equity:
Share capital922,602,311.00
922,602,311.00
Other equity instruments
Including: Preferred shares
Perpetual bonds
Capital reserves759,836,756.57
759,836,756.57
Less: Treasury stock 486,922,944.94
486,922,944.94
Other comprehensive income520,200.00
-520,200.00
Specific reserve
Surplus reserves1,019,608,711.76
1,021,188,440.24
1,579,728.48
Retained earnings 3,714,813,049.43
3,729,030,605.76
14,217,556.33
Total owners’ equity5,930,458,083.82
5,945,735,168.63
15,277,084.81
Total liabilities and owners’ equity 7,510,606,587.11
7,525,883,671.92
15,277,084.81
Notes to adjustment
VI Taxes
1. Main Taxes and Tax Rates
Category of tax Taxable basis Tax rateVAT Taxable income 16%, 13%, 10%, 9%, 6%, 5%, 3%, 0Urban maintenance andconstruction tax
Turnover tax payable 7%, 5%, 1%Enterprise income tax Income tax payable 0, 15%, 16.5%, 25%Notes of the disclosure situation of the taxpaying bodies with different enterprises income tax rate
Taxpayer Income tax rateThe Company 15%Lufeng Weaving & Dyeing 15%Lu Thai Hong Kong 16.50%Xinjiang Lu Thai 25%Luqun Textile 25%Xinsheng Power 25%Shanghai Lu Thai 20%Beijing Youxian 25%Shanghai Zhinuo 25%Xinjiang Textile 15%Lulian New Materials 25%Lujia Import & Export 25%Lu Thai Cambodia 0%Lu Thai Burma 0%Lu Thai Vietnam 0%Lu Thai Tan Chau 0%Lu An Garments 0%Lu Thai America Refer to 2. Tax Preference presented as follows for details
2. Tax Preference
According to the Notice on Publicizing the List of Proposed High-tech Enterprises for 2014 in Shandong Province (LKH Zi [2014]No. 136), and the Notice on the Recognition of 2078 Enterprises as High-tech Enterprises for 2017 such as Weihai Tuozhan FiberCo., Ltd. (LK Zi [2018] No. 37) issued by the Department of Science and Technology of Shandong Province, Shandong ProvincialFinance Department, State Administration of Taxation of Shandong Province and Local Taxation Bureau of Shandong Province, theCompany and the holding subsidiary Lufeng Weaving & Dyeing were identified as high-tech enterprises. Pursuant to Article 28 ofthe Law of the PRC on Enterprise Income Tax and the No. 23 Announcement revised and published by the State Administration of
Taxation in 2018, namely Management of Preferential Policy on Corporate Income Tax and the Measures for the Administration ofthe Recognition of Hi-tech Enterprises (GKFH [2016] No. 195) revised and published by the Ministry of Science and Technology,Ministry of Finance and State Administration of Taxation, the Company and the holding subsidiary Lufeng Weaving & Dyeing enjoya corporate income tax rate of 15%.According to the Announcement on Implementing the Universal Income Tax Reduction and Exemption Policy Published the StateAdministration of Taxation (SAT) (SAT Announcement No.2 of 2019), from 1 January 2019 to 31 December 2021, the portion ofannual taxable income of within RMB1 million of the wholly-owned subsidiary of the Company Shanghai Lu Thai (a small-scale andlow-profit enterprise) shall be included in taxable income by reduction of 25% based on the enterprise income tax rate of 20%; forthe portion exceeding RMB1 million but within RMB3 million, it shall be included in taxable income by reduction of 50% based onthe enterprise income tax rate of 20%.According to the Notice of the Ministry of Finance, the General Administration of Customs and the State Administration of Taxationon Tax Policy Issues concerning Further Implementing the Western China Development Strategy (CS[2011] No. 58), XinjiangTextile Co., Ltd., the subsidiary of Lu Thai in Xinjiang, enjoys a preferential corporate income tax rate of 15%.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 Lu Thai Cambodia, according to the Lu Thai Cambodia Profits tax free approval issued by InvestmentCommittee of Cambodia, Lu Thai Cambodia enjoys tax preference of tax free on corporate income tax of 3 (3 years start-up period) +3 (3 years tax holiday)+1 (1 year grace period). If profit during the 3 year start-up period then turn into 3 years tax holiday, after graceperiod, enterprise income tax rate was of 20%. Year 2019 is in grace period.The wholly own subsidiary Lu Thai Burma, according to the Burma’s Special Economic Zone Law issued by Pyidaungsu Hluttaw,Lu Thai Burma 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 2019 is the fourth year of tax holiday.The wholly-owned subsidiary Lu Thai (Vietnam) Textile Co., Ltd. shall enjoy the preference of enterprise income tax at 3 years’starting term + 4 years’ duty-free term + 9 years’ half-tax term according to the investment license issued by Vietnamese Tay NinhIndustrial Zone Management Committee, and it will enter into 2 years’ duty-free term if it is profitable within 3 years’ starting term.The Company 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 2019 is the second year of the duty-freeterm.The wholly-owned subsidiary of Lu Thai Vienam, Lu Thai Tan Chau, shall enjoy the preference of enterprise income tax at 3 years’starting term + 4 years’ duty-free term + 9 years’ half-tax term according to the investment license issued by Vietnamese Tay NinhInvestment Planning Office, and it will enter into 2 years’ duty-free term if it is profitable within 3 years’ starting term. The Companyshall enjoy 10% of the preference tax rate within 15 years since the tax year to get the first production and operation income, and theenterprise income tax rate shall be 20% after the preference term ends. Year 2019 is the first year of the starting term.The wholly-owned subsidiary Lu An Garments Co., Ltd. shall enjoy the preference of enterprise income tax at 3 years’ starting term+ 2 years’ duty-free term + 4 years’ half-tax term according to the investment license issued by Vietnamese Anjiang ProvinceEconomic Zone Management Committee, and it will enter into duty-free term if the profitability is realized at any year within 3years’ starting term. The Company shall enjoy 17% of the preference tax rate within 10 years since the tax year to get the firstproduction and operation income, and the enterprise income tax rate shall be 20% after the preference term ends. Year 2019 is thefirst year of the duty-free term.Lu Thai America, the wholly-owned subsidiary of the Company registered in New York, America, was imposed the federal enterpriseincome tax at progressive tax rate in excess of specific amount of 15%-39%, and imposed the New York Enterprise income tax at therate of 6.5%. The income tax rate shall be 6.5% when the sales income in New York was below US$10 million, while 8.85% whenabove US$10 million. The 6.5% of income tax rate was applied in 2019.
VII. Notes to Main Items of Consolidated Financial Statements
1. Monetary Assets
Unit: RMBItem Ending balance Beginning balanceCash on hand 9,544,377.41
9,087,924.86
Bank deposits 870,590,467.70
526,046,848.04
Other monetary funds 44,187,163.06
10,367,936.46
Total 924,322,008.17
545,502,709.36
Of which: total amount depositedoverseas
299,088,689.18
92,173,384.32
Other notes:
(1) On 31 December 2019, the monetary fund with restricted ownership of the Company was of RMB44.1872 million, which was
guarantee deposit of RMB14 million pledged for bank short-term borrowings and L/C guarantee deposit of RMB0.2953 million forby the Company’s subsidiary Xinjiang Lu Thai; L/C guarantee deposit of RMB20.09 million for by the Company’s subsidiary LulianNew Materials; L/C guarantee deposit of USD1.3946 million (RMB9.7292 million) for by the Company’s subsidiary Lu ThaiVietnam; and guarantee deposit of RMB72,600 by the Company’s subsidiary Lufeng Weaving & Dyeing.
(2) The interest receivable in bank deposits was RMB1,575,826.19.
2. Trading Financial Assets
Unit: RMBItem Ending balance Beginning balanceFinancial assets at fair value and thechanges be included in gains and losses
52,356,098.85
60,612,000.00
Of which:
Debt instrument investment 52,356,098.85
60,612,000.00
Total 52,356,098.85
60,612,000.00
Other notes:
The trading financial assets were the trust products purchased by the Company.
3. Notes Receivable
(1) Notes Receivable Listed by Category
Unit: RMBItem Ending balance Beginning balanceBank acceptance bill 13,622,998.20
72,215,993.39
L/C 91,114,951.71
102,441,924.87
Total 104,737,949.91
174,657,918.26
(2) Notes Receivable which Had Endorsed by the Company or Had Discounted and Had not Due on the
Balance Sheet Date at the Period-end
Unit: RMBItem
Amount of recognition termination at the
period-end
Amount of not terminated recognition at
the period-endBank acceptance bill220,716,455.27
Total220,716,455.27
4. Accounts Receivable
(1) Accounts Receivable Disclosed by Category
Unit: RMB
Category
Ending balance Beginning balanceCarrying amount Bad debt provision
Carryingvalue
Carrying amount Bad debt provision
CarryingvalueAmount
Proportion
Amount
Withdr
awalpropor
tion
Amount
Proportion
Amount
Withdrawalpropor
tionOf which:
Accounts receivablewithdrawal of baddebt provision of bygroup
546,428,
127.56
100.00%
| 31,121,527.94 |
5.70%
515,306,5
99.62
394,430,8
30.86
100.00%
19,823,714.
5.03%
374,607,11
6.55
Of which:
Group 1: Undueaccounts (creditinsurance insured)
146,231,
602.81
26.76%
| 1,535,431.8 |
1.05%
144,696,1
70.98
110,999,4
85.40
28.14%
566,097.38
0.51%
110,433,38
8.02
Group 2: Undueaccounts(no creditinsurance)
298,971,
131.80
54.72%
| 14,948,556.59 |
5.00%
284,022,5
75.21
210,764,4
15.97
53.44%
10,538,220.
5.00%
200,226,19
5.17
Group 3: Overdueaccounts (creditinsurance insured)
59,793,8
75.78
10.94%
| 6,397,944.7 |
10.70
%
53,395,93
1.07
52,706,06
1.02
13.36%
4,759,357.3
9.03%
47,946,703.
Group 4: Overdueaccounts (no credit
41,431,5
17.17
7.58%
| 8,239,594.8 |
19.89
%
33,191,92
2.36
19,960,86
8.47
5.06%
3,960,038.8
19.84
%
16,000,829.
insurance)Total
546,428,
127.56
100.00%
| 31,121,527.94 |
5.70%
515,306,5
99.62
394,430,8
30.86
100.00%
19,823,714.
5.03%
374,607,11
6.55
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: RMBAging Carrying amountWithin 1 year (including 1 year) 544,850,099.58
1 to 2 years 1,161,336.20
2 to 3 years 72,463.86
Over 3 years 344,227.92
3 to 4 years 344,227.92
Total 546,428,127.56
(2) Bad Debt Provision Withdrawn, Reversed or Recovered in the Reporting Period
Withdrawal of bad debt provision:
Unit: RMBCategory
Beginning
balance
Changes in the Reporting Period
Ending balanceWithdrawal
Reversal or
recovery
Write-off Other
Adjusted amount of the first executionof new standard governing financialinstruments
19,823,714.31
11,737,135.92
439,322.29
31,121,527.94
Total 19,823,714.31
11,737,135.92
439,322.29
31,121,527.94
(3) The Actual Verification of Accounts Receivable
Unit: RMBItem AmountActual verified accounts receivable 439,322.29
(3) Top 5 Accounts Receivable in Ending Balance Collected according to the Arrears Party
Unit: RMBName of entity Ending balance
Proportion to total ending balance of
accounts receivable
Ending balance of bad debt
provision
A 34,860,989.94
6.38%
2,438,333.64
B 24,443,651.53
4.47%
1,222,182.58
C 23,601,641.23
4.32%
279,252.01
D 23,317,891.86
4.27%
1,173,420.34
E 17,893,286.99
3.27%
894,664.35
Total 124,117,461.55
22.71%
5. Accounts Receivable Financing
Unit: RMBItem Ending balance Beginning balanceNotes receivable 26,963,818.87
Total 26,963,818.87
The changes of accounts receivable financing in the Reporting Period and the changes in fair value
□ 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 2019, theCompany believed that there was no significant credit risk in the bank acceptance bill held by the Company, and no significant losscaused by bank defaults.
6. Prepayment
(1) Prepayment Listed by Aging Analysis
Unit: RMBAging
Ending balance Beginning balanceAmount Proportion Amount ProportionWithin 1 year 53,283,453.85
93.76%
149,436,553.91
| 99.90% |
1 to 2 years 3,529,989.66
6.21%
10,838.26
0.01%
2 to 3 years
8,319.04
0.01%
Over 3 years 15,544.08
0.03%
126,905.00
0.08%
Total 56,828,987.59
-- 149,582,616.21
--
(2) Top 5 Prepayment in Ending Balance Collected according to the Prepayment Target
The total top 5 prepayment in ending balance collected according to the prepayment target for the Company was RMB13,407,773.20,
accounting for 23.59% of total ending balance of prepayment.
6. Other Accounts Receivable
Unit: RMBItem Ending balance Beginning balanceOther accounts receivable 59,743,471.84
63,012,001.10
Total 59,743,471.84
63,012,001.10
(1) Other Accounts Receivable
1) Other Account Receivable Classified by Account Nature
Unit: RMBNature Ending carrying amount Beginning carrying amountExport taxes refund 10,107,773.06
25,988,374.88
VAT to be returned 28,015,795.39
Advance payment 12,156,529.38
30,975,850.53
Cash Pledge & Margin 6,749,222.66
6,227,752.93
Borrowings and petty cash 6,971,063.51
3,232,785.56
Other 1,210,146.25
2,272,245.31
Total 65,210,530.25
68,697,009.21
2) Withdrawal of Bad Debt Provision
Unit: RMBBad debt provision
First stage Second stage Third stage
TotalExpected credit loss of
the next 12 months
Expected loss in theduration (credit impairmentnot occurred)
Expected loss in theduration (credit impairment
occurred)Balance of 1 January 2019
1,917,702.71
| 3,174,868.17 |
592,437.23
5,685,008.11
Balance of 1 January 2019 inthe Current Period
—— —— —— ——Withdrawal of the CurrentPeriod
-
-86,475.74
| 131,473.96 |
-217,949.70
Balance of 31 December 2019
| 3,043,394.21 |
1,831,226.97
592,437.23
5,467,058.41
Changes of carrying amount with significant amount changed of loss provision in the Current Period
□ Applicable √ Not applicable
Disclosure by aging
Unit: RMBAging Carrying amountWithin 1 year (including 1 year) 57,056,355.41
1 to 2 years 530,548.80
2 to 3 years 2,918,827.72
Over 3 years 4,704,798.32
3 to 4 years 339,095.44
4 to 5 years 4,000.00
Over 5 years 4,361,702.88
Total 65,210,530.25
3) Top 5 Other Accounts Receivable in Ending Balance Collected according to the Arrears Party
Unit: RMBName of the entity Nature Ending balance
Aging
Proportion to totalending balance ofother accounts
receivable
Ending balance ofbad debt provision
VAT receivable to bereturned
Input VAT 28,015,795.39
Within 1 year 42.96%
1,400,789.77
Export taxes refundreceivable
Export taxes refund 10,107,773.06
Within 1 year 15.50%
505,388.65
Xinning Electric PowerCompany
Intercourse borrowing 4,816,368.48
Within 1 year 7.39%
240,818.42
Advance heating expenses Payment on behalf 1,927,464.39
Within 1 year 2.96%
96,373.22
Migrant workers’ wagemargin in Zichuan Districtof Zibo
Migrant workers’wage margin ofinfrastructural project
1,902,126.50
Over 3 years 2.91%
95,106.33
Total -- 46,769,527.82
-- 71.72%
2,338,476.39
8. Inventory
Whether the Company has already implemented the new revenue standards
□ Yes √ No
(1) Category of Inventory
Unit: RMB
Item
Ending balance Beginning balanceCarrying amount
Depreciationreserves
Carrying value Carrying amount
Depreciationreserves
Carrying valueRaw materials 1,022,913,125.05
1,022,913,125.05
768,264,219.42
2,069,324.65
766,194,894.77
Goods in process 583,495,292.95
583,495,292.95
568,371,033.96
568,371,033.96
Inventory goods 888,016,891.18
102,276,414.38
785,740,476.80
798,090,300.29
64,960,183.31
733,130,116.98
Consumptiveliving assets
1,472,972.75
576,304.29
896,668.46
1,352,241.24
266,680.61
1,085,560.63
Assignedprocessingproducts
28,454,696.04
28,454,696.04
24,585,385.96
24,585,385.96
Total 2,524,352,977.97
102,852,718.67
2,421,500,259.30
2,160,663,180.87
67,296,188.57
2,093,366,992.30
(2) Falling Price Reserves of Inventory
Unit: RMBItem
Beginning
balance
Increased amount Decreased amount
Ending balanceWithdrawal Other
Reversal or
write-off
OtherRaw materials 2,069,324.65
2,069,324.65
Inventory goods 64,960,183.31
71,337,067.85
34,020,836.78
102,276,414.38
Consumptiveliving assets
266,680.61
368,035.50
58,411.82
576,304.29
Total 67,296,188.57
71,705,103.35
36,148,573.25
102,852,718.67
Item Specific basis of withdrawal of
inventory falling price reserves
Reasons for write-off or write-backRaw materials
The lower one between cost of eachitem of inventory and its realizable net
value
Sales
Inventory goods
The lower one between cost of eachitem of inventory and its realizable net
value
Sales
Consumptive livingassets
The lower one between cost of eachitem of inventory and its realizable net
value
Sales
9. Other Current Assets
Whether the Company has already implemented the new revenue standards
□ Yes √ No
Unit: RMBItem Ending balance Beginning balanceInput VAT 49,986,686.74
69,931,124.83
Prepaid income tax 18,801,867.00
4,820,039.66
Prepaid other taxes 120.36
Prepaid B-share repurchase account
11,615,290.07
Total 68,788,674.10
86,366,454.56
10. Long-term Receivables
(1) List of Long-term Receivables
Unit: RMBItem
Ending balance Beginning balance Interval
of
discountrateCarryingamount
Bad debtprovision
Carrying value
Carryingamount
Carrying
value
CarryingamountFinancing leaseaccounts
250,000.00
250,000.00
650,000.00
650,000.00
15.37%
Of which: unrealizedfinancing income
26,400.76
26,400.76
105,603.04
105,603.04
Long-term advancesreceivable
7,564,704.12
| 756,470.41 |
6,808,233.71
10,572,468.16
528,623.41
10,043,844.75
Total 7,814,704.12
| 756,470.41 |
7,058,233.71
11,222,468.16
528,623.41
10,693,844.75
--Impairment of bad debt provision
Unit: RMBBad debt provision
First stage Second stage Third stage
TotalExpected credit lossof the next 12 months
Expected loss in the
| duration (credit impairment |
not occurred)
Expected loss in the
occurred)Balance of 1 January2019
528,623.41
| duration (credit impairment | ||
528,623.41
Balance of 1 January2019 in the CurrentPeriod
—— —— —— ——
--Transfer to Secondstage
-- Transfer to Third stage
-- Reverse to Secondstage
-- Reverse to First stage
Withdrawal of theCurrent Period
227,847.00
227,847.00
Reversal of the CurrentPeriod
Write-offs of the CurrentPeriod
Verification of theCurrent Period
Other changes
Balance of 31 December2019
756,470.41
756,470.41
Changes of carrying amount with significant amount changed of loss provision in the Current Period
□ Applicable √ Not applicable
11. Long-term Equity Investment
Unit: RMB
Investees
Beginningbalance(carryingvalue)
Increase/decrease
Ending balance(carrying value)
Endingbalance
ofdepreciati
onreserves
Additi
onalinvestment
Reduc
edinvestment
Gains and
lossesrecognizedunder the
equity
method
Adjustm
ent ofothercompreh
ensiveincome
Change
s ofotherequity
Cashbonus or
profitsannounced to issue
Withdra
wal ofdepreciationreserves
Othe
r
II. Associated enterprisesNingbo Mei
shan Bonded
Poer AreaHaohongEquityInvestmentPartnership
95,554,809.90
| shan Bonded |
7,671,490.1
103,226,300.00
(L.P)(hereinafterreferred to
Investment”)Subtotal 95,554,809.90
| as “Haohong | |||
7,671,490.1
103,226,300.00
Total 95,554,809.90
7,671,490.1
103,226,300.00
12. Other Non-current Financial Assets
Unit: RMBItem Ending balance Beginning balanceDebt instrument investment
Equity instrument investment
31,018,515.95
| 266,149,500.00 | ||
| Financial assets assigned measured by fair value and the changes be |
included in the current gains and losses
12,000,000.00
| 12,000,000.00 |
Other
Total
43,018,515.95
| 278,149,500.00 |
13. Investment Property
(1) Investment Property Adopted the Cost Measurement Mode
√ Applicable □ Not applicable
Unit: RMBItem Houses and buildings TotalI. Original carrying value
1. Beginning balance 32,399,982.40
32,399,982.40
2. Increased amount of the period 28,432,983.64
28,432,983.64
(1) Outsourcing 7,283,640.60
7,283,640.60
| (2)Transfer from inventory/fixed |
assets/construction in progress
21,149,343.04
21,149,343.04
(3) Enterprise combination increase
3. Decreased amount of the period
(1) Disposal
(2) Other transfer
4. Ending balance 60,832,966.04
60,832,966.04
| II. Accumulative depreciation and accumulative |
amortization
1. Beginning balance 9,519,739.45
9,519,739.45
2. Increased amount of the period 5,416,478.72
5,416,478.72
(1) Withdrawal or amortization 1,595,501.60
1,595,501.60
(2) Transfer from fixed assets 3,820,977.12
3,820,977.12
3. Decreased amount of the period
(1) Disposal
(2) Other transfer
4. Ending balance 14,936,218.17
14,936,218.17
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 45,896,747.87
45,896,747.87
2. Beginning carrying value 22,880,242.95
22,880,242.95
14. Fixed Assets
Unit: RMBItem Ending balance Beginning balanceFixed assets 6,012,094,104.67
5,748,562,385.35
Total 6,012,094,104.67
5,748,562,385.35
(1) List of Fixed Assets
Unit: RMBItem
Houses and
buildings
Machineryequipment
Transportation
equipment
Electronicequipment and
others
TotalI. Original carrying value
1. Beginning balance 3,251,285,811.62
6,567,263,906.52
63,692,200.59
125,565,020.71
10,007,806,939.44
2. Increased amount of the period 357,789,695.39
392,585,348.36
6,071,534.91
22,632,166.93
779,078,745.59
(1) Purchase 1,115,943.64
260,078,736.64
6,067,796.56
7,298,915.11
274,561,391.95
(2) Transfer from construction in
progress
343,788,276.38
113,533,822.92
15,274,883.24
472,596,982.54
(3) Enterprise combination
increase
(3) Other increase 12,885,475.37
18,972,788.80
3,738.35
58,368.58
31,920,371.10
3. Decreased amount of the period
43,008,886.06
9,418,987.38
3,272,773.03
3,071,976.57
58,772,623.04
(1) Disposal or scrap 5,230,626.36
9,418,987.38
3,272,773.03
3,071,976.57
20,994,363.34
(2) Transferred into construction
in progress
16,628,916.66
16,628,916.66
(3) Transferred into investment
property
21,149,343.04
21,149,343.04
4. Ending balance 3,566,066,620.95
6,950,430,267.50
66,490,962.47
145,125,211.07
10,728,113,061.99
II. Accumulative depreciation
1. Beginning balance 959,511,665.02
3,129,855,046.37
41,145,799.39
86,048,051.87
4,216,560,562.65
2. Increased amount of the period 110,140,431.63
331,740,297.24
5,396,270.20
18,744,588.36
466,021,587.43
(1) Withdrawal 109,207,716.48
329,528,687.99
5,338,687.22
18,565,000.57
462,640,092.26
(2) Other increase 932,715.15
2,211,609.25
57,582.98
179,587.79
3,381,495.17
3. Decreased amount of the period
14,525,174.78
8,159,846.96
1,105,709.06
2,879,191.43
26,669,922.23
(1) Disposal or scrap 3,442,557.40
8,159,846.96
1,105,709.06
2,879,191.43
15,587,304.85
(2) Transferred into construction
in progress
7,261,640.26
7,261,640.26
(3) transferred into investment
property
3,820,977.12
3,820,977.12
4. Ending balance 1,055,126,921.87
3,453,435,496.65
45,436,360.53
101,913,448.80
4,655,912,227.85
III. Depreciation reserves
1. Beginning balance 2,893,416.89
39,649,126.64
24,803.69
116,644.22
42,683,991.44
2. Increased amount of the period 2,197,325.84
17,400,046.15
1,580.00
12,933.47
19,611,885.46
(1) Withdrawal 2,197,325.84
17,400,046.15
1,580.00
12,933.47
19,611,885.46
3. Decreased amount of the period
2,189,147.43
2,189,147.43
(1) Disposal or scrap
2,189,147.43
2,189,147.43
4. Ending balance 5,090,742.73
54,860,025.36
26,383.69
129,577.69
60,106,729.47
IV. Carrying value
1. Ending carrying value 2,505,848,956.35
3,442,134,745.49
21,028,218.25
43,082,184.58
6,012,094,104.67
2. Beginning carrying value 2,288,880,729.71
3,397,759,733.51
22,521,597.51
39,400,324.62
5,748,562,385.35
(2) Fixed Assets Leased out by Operation Lease
Unit: RMBItem Ending carrying valueHouses and buildings 1,056,351.97
(3) Fixed Assets Failed to Accomplish Certification of Property
Unit: RMBItem Carrying value ReasonLufeng weaving dye grayyarn warehouse
11,753,502.48
Under the relevant certificate procedures of acceptance, measurement,examination by the real estate trading center and other departmentsOther notes:
Refer to Note VII-22 for fixed assets pledged.
15. Construction in Progress
Unit: RMBItem Ending balance Beginning balanceConstruction in progress 165,841,680.32
244,493,960.75
Engineering materials 234,393,389.69
92,736,685.67
Total 400,235,070.01
337,230,646.42
(1) Construction in Progress
Unit: RMBItem
Ending balance Beginning balanceCarryingamount
Depreciati
onreserves
Carrying value
Carryingamount
reserves
| Depreciation | Carrying value |
Reconstruction project of exhibitionhall and office building
24,788,720.86
| 24,788,720.86 |
Reconstruction project ofinternational business center andcreative experience center
Reform project of XinshengThermal Power
2,837,138.88
2,837,138.88
12,145,265.65
| 12,145,265.65 |
Expansion project of XinshengThermal Power (Phase II)
22,186,638.85
22,186,638.85
73,512,524.40
| 73,512,524.40 |
Heat supply engineering ofXinsheng Thermal Power
Lu Thai (Vietnam) project
12,414,796.74
| 12,414,796.74 |
Spinning Phase II of Lu Thai(Vietnam) project
3,908,174.87
| 3,908,174.87 |
Yarn Dye Phase II of Lu Thai(Vietnam) project
83,880,726.83
| 83,880,726.83 |
Dormitory project of Lu Thai(Vietnam)
7,701,372.43
7,701,372.43
Spinning project of Lu Thai TanChau
52,700,509.90
52,700,509.90
Project of Lu An Garments
4,140,135.90
| 4,140,135.90 |
Functional Fabric IntelligentEcological Park Project Phase I
56,365,451.33
56,365,451.33
Other retails projects 24,050,568.93
24,050,568.93
29,703,615.50
| 29,703,615.50 |
Total 165,841,680.32
165,841,680.32
244,493,960.75
| 244,493,960.75 |
(2) Changes in Significant Construction in Progress during the Reporting Period
Unit: RMB
Item Budget
balance
Increasedamount
Transferredin fixedassets
Otherdecrea
sedamoun
t
Endingbalance
Propor
| Beginning | tion of |
accumulatedinvestment
inconstruction
s to
Jobschedule
Accumulate
damoun
t ofinteres
tcapital
| budget | ization |
Of
amoun
t ofcapital
izedinterests for
theReport
ing
| Period |
Capitalization rate
ofinterests for
theReport
ing
Capit
alresources
Reconstructionproject ofexhibitionhall andoffice
27,420,000.
| Period | ||
24,788,72
0.86
6,473,382.8
31,262,103.
100%
100%
Other
buildingReconstructionproject ofinternation
center andcreative
| experience |
center
15,740,000.
15,407,996.
15,407,996.
100%
100%
Other
Reformproject ofXinshengThermalPower
42,170,000.
12,145,26
5.65
14,341,721.
23,649,848.
2,837,138.8
88%
88%
Other
| Expansion |
project ofXinshengThermalPower(Phase II)
110,690,000
.00
73,512,52
4.40
48,295,335.
99,621,221.
22,186,638.
110%
98%
Other
Heatsupplyengineering ofXinshengThermalPower
10,500,000.
9,025,279.
1,453,235.2
10,478,515.
100 %
100%
Other
Lu Thai(Vietnam)project
242,282,300
.00
12,414,79
6.74
32,876,314.
45,291,111.3
100%
100%
Other
Spinning
| Phase II of |
Lu Thai(Vietnam)project
52,750,000.
3,908,174.
12,088,923.
15,997,097.
100%
100%
Other
Yarn Dye
| Phase II of |
Lu Thai(Vietnam)project
110,300,000
.00
83,880,72
6.83
49,512,589.
133,393,316
.40
100%
100%
Other
| Dormitory |
21,626,200.
7,701,372.4
7,701,372.436%
36%
Other
project ofLu Thai(Vietnam)
Spinning
| project of |
Lu ThaiTan Chau
153,470,000
.00
127,458,343
.28
74,757,833.
52,700,509.
83%
83%
Other
Project ofLu AnGarments
93,035,700.
4,140,135.
5,116,013.7
9,256,149.6
100%
100%
Other
| Functional |
FabricIntelligent
ParkProjectPhase I
217,211,000
.00
| Ecological |
56,365,451.
56,365,451.
26%
26%
Other
Otherretailsprojects
20,678,33
5.61
16,854,021.
13,481,788.
24,050,568.
Other
Total
1,097,195,2
00.00
244,493,9
60.75
393,944,702
.11
472,596,982
.54
165,841,680
.32
-- --
--
(3) Engineering Materials
Unit: RMBItem
Ending balance Beginning balance
Depreciationreserves
Carrying value
Carryingamount
Depreciation
reserves
Carrying value
| Carrying amount |
Special equipment 234,393,389.69
0.00
234,393,389.69
92,736,685.67
0.00
92,736,685.67
Total 234,393,389.69
0.00
234,393,389.69
92,736,685.67
0.00
92,736,685.67
Other notes:：
16. Intangible Assets
(1) List of Intangible Assets
Unit: RMBItem Land use right Patent right
Software userights
Brand userights
TotalI. Original carrying value
1. Beginning balance 580,757,501.63
1,985,176.47
9,710,689.79
300,000.00
592,753,367.89
2. Increased amount of the period 53,620,516.95
1,842,296.90
55,462,813.85
(1) Purchase 53,620,516.95
1,842,296.90
55,462,813.85
(2) Internal R&D
(3) Business combination increase
3. Decreased amount of the period 1,143,899.31
5,592,639.42
6,736,538.73
(1) Disposal
(2) Invalid and recognition terminated
portion
1,143,899.31
5,592,639.42
6,736,538.73
4. Ending balance 633,234,119.27
1,985,176.47
5,960,347.27
300,000.00
641,479,643.01
II. Accumulated amortization
1. Beginning balance 106,250,709.40
1,621,227.72
6,072,366.32
120,000.00
114,064,303.44
2. Increased amount of the period 14,016,098.04
198,517.68
3,427,743.43
30,000.00
17,672,359.15
(1) Withdrawal 14,016,098.04
198,517.68
3,427,743.43
30,000.00
17,672,359.15
3. Decreased amount of the period 1,143,899.31
5,592,639.42
6,736,538.73
(1) Disposal 1,143,899.31
5,592,639.42
6,736,538.73
4. Ending balance 119,122,908.13
1,819,745.40
3,907,470.33
150,000.00
125,000,123.86
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 514,111,211.14
165,431.07
2,052,876.94
150,000.00
516,479,519.15
2. Beginning carrying value 474,506,792.23
363,948.75
3,638,323.47
180,000.00
478,689,064.45
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%.
17. R&D Expense
Unit: RMBItem
Beginningbalance
Increase Decrease
EndingbalanceInternal R&D expense Other
Recognized asintangible assets
Transferred into thecurrent profit or loss
R&D ofproducts
| 316,575,474.85 |
316,575,474.85
Total
| 316,575,474.85 |
316,575,474.85
Other notes:
18. Goodwill
(1) Original Carrying Value of Goodwill
Unit: RMBName of the invested units or events
generating goodwill
Beginning balance
Increase Decrease
Ending balanceFormed by business
combination
DisposalXinsheng Power 20,563,803.29
20,563,803.29
Helijie 50,000.00
50,000.00
Total 20,613,803.29
50,000.00
20,563,803.29
19. Long-term Prepaid Expense
Unit: RMBItem Beginning balance Increased amount
Amortizationamount of the
period
amount
Ending balanceLand contracting fee ofXinjiang Lu Thai
25,607,423.92
| Other decreased | |||
1,086,219.00
24,521,204.92
Decoration fee 672,679.41
174.53
186,446.25
486,407.69
Land rent of overseassubsidiaries
92,846,304.38
38,223,836.99
3,046,500.19
128,023,641.18
Total 119,126,407.71
38,224,011.52
4,319,165.44
153,031,253.79
Other notes:
20. Deferred Income Tax Assets/Deferred Income Tax Liabilities
(1) Deferred Income Tax Assets Had Not Been Off-set
Unit: RMBItem
Ending balance Beginning balanceDeductibletemporarydifference
Deferred income tax
assets
Deductible temporary
difference
Deferred income tax
assets
Provision for impairment of assets 180,480,880.04
29,370,310.33
169,477,066.74
| 27,322,107.95 |
Internal unrealized profit 123,500,857.32
14,085,213.14
130,892,601.80
| 16,151,715.20 |
Deductible losses 31,584,302.32
5,600,742.22
16,532,477.30
| 2,479,871.60 |
One-time listed decoration expenses 3,496,364.02
874,091.01
4,140,492.30
| 1,035,123.08 |
Payroll payable 140,654,344.00
21,198,255.31
122,397,245.35
| 18,458,763.12 |
Deferred income 157,668,211.41
24,986,231.71
140,183,446.39
| 22,457,708.11 |
Changes in fair value of othernon-current financial assets
21,282,600.00
3,192,390.00
Changes in fair value of tradingfinancial liabilities
4,877,600.00
| 731,640.00 |
Total 658,667,559.11
99,307,233.72
588,500,929.88
| 88,636,929.06 |
(2) Deferred Income Tax Liabilities Had not Been Off-set
Unit: RMBItem
Ending balance Beginning balanceTaxable temporary
difference
Deferred income tax
liabilities
Taxable temporary
difference
Deferred income tax
liabilitiesDepreciation of fixed assets 349,845,317.15
55,676,007.33
162,016,488.25
| 25,838,853.38 |
Internal unrealized profit 10,805,075.00
1,620,761.25
13,996,286.66
| 2,099,443.00 |
Changes in fair value of tradingfinancial assets
2,356,098.85
353,414.83
Changes in fair value of othernon-current financial assets
231,934,500.00
34,790,175.00
Changes in fair value ofavailable-for-sale financial asset
612,000.00
| 91,800.00 |
Total 594,940,991.00
92,440,358.41
176,624,774.91
| 28,030,096.38 |
(3) List of Unrecognized Deferred Income Tax Assets
Unit: RMBItem Ending balance Beginning balanceDeductible temporary difference 19,823,624.86
9,323,059.10
Deductible losses 23,728,086.37
26,603,299.43
Total 43,551,711.23
35,926,358.53
(4) Deductible Losses of Unrecognized Deferred Income Tax Assets will Due in the Following Years
Unit: RMBYears Ending amount Beginning amount NotesY2019
451,833.98
Y2020 13,393,727.33
16,714,120.30
Y2021 4,250,703.45
4,250,703.45
Y2022 3,730,297.90
3,730,297.90
Y2023
Y2024 2,353,357.69
Total 23,728,086.37
25,146,955.63
--
21. Other Non-current Assets
Whether the Company has already implemented the new revenue standards
□ Yes √ No
Unit: RMBItem Ending balance Beginning balancePrepayment for equipment 18,841,918.62
17,275,143.10
Prepayment for land
1,996,937.00
Prepayment for land rental
23,828,135.77
Total 18,841,918.62
43,100,215.87
22. Short-term Borrowings
(1) Category of Short-term Borrowings
Unit: RMBItem Ending balance Beginning balanceMortgage loan 309,422,409.94
450,000,000.00
Guaranteed loan 479,189,664.03
250,108,063.34
Credit loan 1,331,542,256.64
625,165,716.71
Total 2,120,154,330.61
1,325,273,780.05
Notes of the category for short-term loans:
(1) As of 31 December 2019, he Company’s subsidiary Xinjiang Lu Thai pledged the inventory with carrying value of
RMB82,322,676.24, fixed assets with carrying value of RMB3,718,559.83, land use rights with carrying value ofRMB111,926,333.18 and guarantee deposit of RMB14,000,000.00 for bank short-term borrowing of RMB309,000,000.00.
(2) The guaranteed loan at the period-end was the guarantee provided to the bank loan of the subsidiary Lu Thai (Vietnam) by the
Company. Refer to Note XIII-2 for details.
(3) The short-term borrowings include interest payable of RMB8,846,818.47.
23. Trading Financial Liabilities
Unit: RMBItem Ending balance Beginning balanceTrading financial liabilities
4,877,600.00
Of which:
Derivative financial liabilities
4,877,600.00
Total
4,877,600.00
24. Notes Payable
Unit: RMBItem Ending balance Beginning balanceTrade acceptance 848,873.48
502,347.05
Bank’s acceptance bill 84,370,851.15
Total 85,219,724.63
502,347.05
The total overdue but unpaid notes payable at the period-end were RMB0.00.
25. Accounts Payable
(1) List of Accounts Payable
Unit: RMBItem Ending balance Beginning balancePayment for goods 159,191,179.02
237,111,166.13
Engineering equipment 135,578,852.63
106,527,421.37
Other 10,576,253.29
9,547,576.40
Total 305,346,284.94
353,186,163.90
26. Advances from Customers
Whether the Company has already implemented the new revenue standards
□ Yes √ No
(1) List of Advances from Customers
Unit: RMB
Item Ending balance Beginning balancePayment for goods 108,783,148.03
105,562,378.66
Total 108,783,148.03
105,562,378.66
27. Payroll Payable
(1) List of Payroll Payable
Unit: RMBItem Beginning balance Increase Decrease Ending balanceI. Short-term salary 325,972,145.10
1,511,863,877.16
1,510,733,895.39
| 327,102,126.87 |
II. Post-employment benefit-
contribution plans
26,065.07
| defined |
178,597,416.64
170,149,048.22
| 8,474,433.49 |
Total 325,998,210.17
1,690,461,293.80
1,680,882,943.61
| 335,576,560.36 |
(2) List of Short-term Salary
Unit: RMBItem Beginning balance Increase Decrease Ending balance
1. Salary, bonus, allowance, subsidy 268,788,698.76
1,320,987,528.68
1,322,385,707.81
| 267,390,519.63 |
2. Employee welfare
63,378,199.61
63,378,199.61
3. Social insurance 37,292.13
86,797,471.93
86,348,430.67
| 486,333.39 | |||
| Of which: 1. Medical insurance |
premiums
29,466.69
69,187,804.59
69,195,353.52
| 21,917.76 |
Work-related injury insurance 6,291.48
8,648,350.42
8,190,226.27
| 464,415.63 |
Maternity insurance 1,533.96
8,961,316.92
8,962,850.88
4. Housing fund
16,765,003.10
16,765,003.10
| 5. Labor union budget and |
employee education budget
57,146,154.21
23,935,673.84
21,856,554.20
| 59,225,273.85 |
Total 325,972,145.10
1,511,863,877.16
1,510,733,895.39
| 327,102,126.87 |
(3) List of Defined Contribution Plans
Unit: RMBItem Beginning balance Increase Decrease Ending balance
1. Basic pension benefits 25,019.49
170,961,313.12
162,867,195.06
| 8,119,137.55 |
2. Unemployment insurance 1,045.58
7,636,103.52
7,281,853.16
| 355,295.94 |
Total 26,065.07
178,597,416.64
170,149,048.22
| 8,474,433.49 |
Other notes:
The Company, in line with the requirement, participate the endowment insurance, unemployment insurance scheme and so on.According to the scheme, the Company monthly pay to the scheme in line with 16% and 0.7% of the endowment insurance base.Except the monthly payment, the Company no longer shoulder the further payment obligation, the relevant expense occurred wasrecorded into current profits and losses or related assets costs.
28. Taxes Payable
Unit: RMBItem Ending balance Beginning balanceVAT 3,285,763.29
4,057,605.21
Corporate income tax 4,184,737.55
18,491,849.09
Personal income tax 714,935.78
1,279,197.68
Urban maintenance and construction tax 4,805,486.91
5,509,392.03
Stamp tax 423,497.30
187,822.50
Property tax 4,802,550.30
4,684,717.85
Land use tax 2,477,984.56
4,215,720.49
Education surcharge 2,128,521.32
2,381,414.25
Local education surcharge 1,419,014.22
1,587,021.34
Local water conservancy facilityconstruction fund
342,756.22
394,952.66
Resource tax 116,530.00
154,200.00
Environmental protection tax 349,852.61
612,930.65
Total 25,051,630.06
43,556,823.75
Other notes:
29. Other Accounts Payable
Unit: RMBItem Ending balance Beginning balanceInterest payable
3,068,841.54
Dividends payable 441,113.64
441,113.64
Other payables 104,541,075.76
212,437,032.50
Total 104,982,189.40
215,946,987.68
(1) Interest Payable
Unit: RMB
Item Ending balance Beginning balanceInterest payable on short-term borrowings
3,068,841.54
Total
3,068,841.54
(2) Dividends Payable
Unit: RMB
Item Ending balance Beginning balanceDividends payable to individualshareholders
441,113.64
441,113.64
Total 441,113.64
441,113.64
Other notes: including significant dividends payable unpaid for over one year, the unpaid reason shall be disclosed:
Name Amount ReasonDividends payable toindividualshareholders
| 441,113.64 | Cash dividend of previous year not received by individual shareholders |
Total
--
(3) Other Accounts Payable
1) Other Accounts Payable Listed by Nature of Account
Unit: RMBItem Ending balance Beginning balanceDeposits and cash deposits etc. 19,949,169.11
441,113.64
19,035,286.49
Collecting payment on behalf of others 22,312,587.01
18,288,047.56
Intercourse funds 51,201,798.22
165,655,961.20
Other 11,077,521.42
9,457,737.25
Total 104,541,075.76
212,437,032.50
2) Significant Other Accounts Payable Aging over One Year
Unit: RMBItem Ending balance Unpaid/Un-carry-over reasonCotton and Linen Company 11,925,000.00
Received deposit of sale contractTotal 11,925,000.00
--
30. Non-current Liabilities Due within One Year
Unit: RMBItem Ending balance Beginning balanceLong-
101,111,297.49
| term borrowings due within one year |
Total 101,111,297.49
31. Long-term Borrowings
(1) Category of Long-term Borrowings
Unit: RMBItem Ending balance Beginning balanceGuarantee loan 143,475,317.23
170,019,083.89
Less: long-
year
-101,111,297.49
| term borrowings due within one |
Total 42,364,019.74
170,019,083.89
Note to the category of long-term borrowings:
(1) The guarantee loan was the guarantee provided to the bank loan of the subsidiary Lu Thai (Vietnam) by the Company. Refer to
Note XIII-2 for details.
(2) The long-term borrowings include interest payable of RMB506,819.74.
Other notes: including interest rate interval:
Item Ending balanceInterest rateinterval (%)
Beginning balanceInterest rate interval (%)Guarantee loan
3.27-3.80
| 143,475,317.23 | 170,019,083.89 |
1.50-
32. Long-term Payroll Payable
(1) List of Long-term Payroll Payable
Unit: RMBItem Ending balance Beginning balanceIII. Other long-term welfare 105,589,249.56
3.81
96,958,178.53
Total 105,589,249.56
96,958,178.53
33. Deferred Income
Unit: RMBItem Beginning balance Increase Decrease Ending balance
Reason forformation
Governmentsubsidies
140,077,843.35
31,097,600.00
13,533,632.70
157,641,810.65
Governmentsubsidies
incomes
105,603.04
| Unrealized financing |
79,202.28
26,400.76
Finance leaseTotal 140,183,446.39
31,097,600.00
13,612,834.98
157,668,211.41
--Item involving government subsidies:
Unit: RMB
Item
Beginning
balance
Amount ofnewly subsidy
Amountrecorded intonon-operatingincome in the
Reporting
Period
Amountrecorded intoother income
in theReporting
Period
Amount
| offset cost in |
theReporting
Period
chang
es
Ending balance
Related toassets/relate
d income
Land 57,872,611.45
| Other | ||||
1,393,157.88
56,479,453.57
| Related to |
the assetsEquipment 61,790,767.51
22,347,600.00
4,962,872.19
79,175,495.32
| Related to |
the assetsProductionliving assets
558,000.08
132,999.96
425,000.12
| Related to |
the assetsOverseasinvestment
500,000.00
500,000.00
| Related to |
the assetsR&D 5,262,000.00
4,750,000.00
10,012,000.00
Related to
the incomepublic rentalhousing
1,237,942.13
48,231.48
1,189,710.65
| Related to |
the assetsTransformation of gardengreens
12,856,522.18
4,000,000.00
6,996,371.19
9,860,150.99
Related to
the incomeTotal 140,077,843.35
31,097,600.00
13,533,632.70
157,641,810.65
34. Other Non-current Liabilities
Whether the Company has already implemented the new revenue standards
□ Yes √ No
Unit: RMBItem Ending balance Beginning balanceLoan project 1,840,000.00
1,840,000.00
Total 1,840,000.00
1,840,000.00
35. Share Capital
Unit: RMB
Beginning
balance
Increase/decrease (+/-)
New shares
issued
Bonus shares
Bonus issuefrom profit
Other SubtotalThe sum ofshares
922,602,311.00
| Ending balance | |||||
-64,480,770.00
-64,480,770.00
858,121,541.00
Other notes:
Refer to Note VII-37 for changes of share capital. Ruihua Accounting Firm LLP has inspected the above changes of share capital andhas issued the Capital Verification Report (RHYZ [2019] 37010001).
36. Capital Reserves
Unit: RMBItem Beginning balance Increase Decrease Ending balanceCapital premium(premium on stock)
640,470,910.34
442,861,264.14
197,609,646.20
Other capital reserves 59,022,737.14
1,413,862.08
60,436,599.22
Total 699,493,647.48
1,413,862.08
442,861,264.14
258,046,245.42
Other notes: including increase and decrease in the Reporting Period and the reasons for changes:
(1) Refer to Note VII-37 for the reason for the decrease of RMB442,630,569.04 in capital reserves.
(2) The capital reserves decreased RMB230,695.10, which was resulted from the acquisition of minority shareholding in the
subsidiary Beijing Youxian. The difference between the cost of newly-acquired long-term equity investment and the share of netidentifiable assets which the subsidiary shall enjoy calculated continuously from the purchase date according to the proportion ofnewly-increased shareholding ratio, and the capital reserves-capital premium was adjusted to reduce RMB230,695.10.
37. Treasury Shares
Unit: RMBItem Beginning balance Increase Decrease Ending balanceShares of the Companyrepurchased and not canceled
486,922,944.94
20,188,394.10
507,111,339.04
Total 486,922,944.94
20,188,394.10
507,111,339.04
Other notes: including increase and decrease in the Reporting Period and the reasons for changes:
The 2ndExtraordinary General Meeting held on 23 March 2018 has approved the Proposal on Repurchase of Partial B Shares of theCompany, and the Company has repurchased 64.4808 million shares of domestically listed foreign stock (B share). The Companyrepurchased HKD594,671,866.13 of domestically listed foreign stock (B share) through currency, among which converted toRMB507,111,339.04 according to the exchange rate on the repurchase date and was accounted into treasury shares, while the sharecapital was reduced RMB64,480,770.00 and RMB442,630,569.04 of capital reserves-capital premium due to the deregistration of
treasury shares.
38. Other Comprehensive Income
Unit: RMB
Item
Beginningbalance
Reporting Period
EndingbalanceIncomebefore
theCurrentPeriod
Less:
recorded in
othercomprehensive income inprior period
and
| taxation in | transferred in |
profit or loss
in theCurrent
Period
Less:
recordedin othercomprehe
nsiveincome in
prior
the
| Current |
Period
Less:
taxexpense
Attributable
the
| Company as |
the parent
after tax
Attributa
ble tonon-cont
rolling
after tax
II. Other comprehensive incomethat may subsequently bereclassified to profit or loss
60,636,813.
30,989,75
8.38
30,989,758.
91,626,571.
Differences arising fromtranslation of foreigncurrency-denominated financialstatements
60,636,813.
30,989,75
8.38
30,989,758.
91,626,571.
Total of other comprehensiveincome
60,636,813.
30,989,75
8.38
30,989,758.
91,626,571.
39. Surplus Reserves
Unit: RMBItem Beginning balance Increase Decrease Ending balanceStatutory surplusreserves
1,020,955,607.30
92,970,171.75
1,113,925,779.05
Discretional surplusreserves
3,341,572.58
3,341,572.58
Total 1,024,297,179.88
92,970,171.75
1,117,267,351.63
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 basis
of 10% of net profit.
40. Retained Profits
Unit: RMBItem Reporting Period Same period of last yearBeginning
adjustments
4,927,500,989.55
| balance of retained profits before |
4,629,102,712.06
| Total beginning retained profits of the adjustments |
( “+” for increase, “-” for decrease)
14,217,556.33
| Beginning balance of retained profits after |
adjustments
4,941,718,545.88
4,629,102,712.06
Add: Net profit attributable to owners of theCompany as the parent
952,386,011.49
811,526,477.83
Less: Withdrawal of statutory surplus reserves 92,970,171.75
59,783,872.34
Dividend of ordinary shares payable 429,060,770.50
453,344,328.00
Ending retained profits 5,372,073,615.12
4,927,500,989.55
List of adjustment of beginning retained profits:
1) RMB0.00 beginning retained profits was affected by retrospective adjustment conducted according to the Accounting Standards
for Business Enterprises and relevant new regulations.
2) RMB14,217,556.33 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.
41. Operating Revenue and Cost of Sales
Unit: RMBItem
Reporting Period Same period of last yearOperating revenue Cost of sales Operating revenue Cost of salesMain operations 6,443,826,769.74
4,546,632,402.14
6,521,949,742.58
4,623,882,060.39
Other operations 357,554,679.20
243,972,703.22
357,109,071.35
237,561,182.56
Total 6,801,381,448.94
4,790,605,105.36
6,879,058,813.93
4,861,443,242.95
Whether there is a single disposal of the investment to the subsidiary and lost control?
□ Yes √ No
42. Taxes and Surtaxes
Unit: RMBItem Reporting Period Same period of last yearUrban maintenance and construction tax 25,271,252.17
33,944,678.18
Education Surcharge 11,887,442.41
15,139,056.40
Resources tax 508,120.00
509,654.00
Property tax 21,199,584.04
20,677,064.40
Land use tax 10,165,968.52
18,336,178.97
Vehicle and vessel usage tax 109,001.08
119,478.40
Stamp duty 4,349,998.90
3,530,606.51
Local education surcharge 7,924,176.74
10,091,063.11
Local water conservancy facilityconstruction fund
1,799,843.58
2,443,114.17
Environmental protection tax 1,325,659.75
2,172,732.41
Total 84,541,047.19
106,963,626.55
Other notes:
43. Selling Expense
Unit: RMBItem Reporting Period Same period of last yearSalary 43,003,351.19
41,280,390.85
Transport fees 50,103,517.38
45,652,493.32
Advertising expense 17,019,745.40
14,493,972.68
Port surcharge 15,030,918.96
13,502,640.80
Depreciation charge 5,373,475.36
5,106,206.04
Sales service fee 10,733,270.44
12,086,904.35
Business travel charges 5,770,588.96
3,965,930.06
Insurance expense 2,828,274.19
1,752,795.53
Business entertainment expenses 2,434,900.79
2,112,240.32
Office expense 2,142,542.55
1,497,611.34
Other 13,786,479.61
16,654,998.45
Total 168,227,064.83
158,106,183.74
44. Administrative Expense
Unit: RMBItem Reporting Period Same period of last yearSalary 166,606,510.52
150,178,467.11
Depreciation charge 35,449,735.39
28,922,673.45
Warehouse funding 36,066,865.72
31,869,397.11
Travel expense 24,392,736.36
23,001,296.54
Labor cost 14,801,512.54
3,143,515.49
Rental charges 14,442,720.27
14,398,948.38
Labor-union expenditure 14,568,596.20
15,600,583.68
Employee education budget 10,906,172.69
11,186,186.88
Amortization of intangible assets 13,395,982.64
12,954,322.84
Vehicle costs 8,687,963.57
10,436,445.11
Office expense 7,736,881.70
8,060,077.81
Other 89,115,978.70
81,159,848.87
Total 436,171,656.30
390,911,763.27
45. R&D Expense
Unit: RMBItem Reporting Period Same period of last yearLabor cost 151,148,710.58
135,380,494.55
Material expense 122,619,853.38
119,832,589.83
Depreciation charge 16,037,122.69
10,069,125.27
Other 26,769,788.20
24,112,882.93
Total 316,575,474.85
289,395,092.58
46. Finance Costs
Unit: RMBItem Reporting Period Same period of last yearInterest expense 91,643,124.97
57,300,653.51
Less: Capitalized interest
Less: Interest income 10,146,938.67
17,925,826.14
Foreign exchange gains or losses 5,156,692.19
2,055,009.44
Less: Capitalized foreign exchange gainsor losses
Commission charge and other 9,526,838.13
7,349,843.50
Total 96,179,716.62
48,779,680.31
47. Other Income
Unit: RMBSources Reporting Period Same period of last yearFreight allowance of cotton yarn 11,826,172.27
7,194,091.44
Transformation subsidy of garden greens 6,996,371.19
6,970,977.82
Post subsidies 5,973,681.00
3,755,585.00
Subsidy of “Six Articles in Developing Local Enterprises”in 2018
3,493,500.00
Social insurance subsidy 3,991,156.60
4,750,695.91
Electricity fee subsidy 3,103,439.88
2,030,064.06
Employment increase subsidy in 2017 and 2018 2,775,000.00
Reward of demonstration enterprise in single item 2,000,000.00
Subsidy for leading persons project of Mount Tai industry 2,170,000.00
1,400,000.00
Social insurance subsidy for admission of persons withemployment difficulties in 2019
1,633,560.80
Preferential policy subsidy of developing local enterprises 1,400,000.00
Subsidy of central foreign trade development in 2018 1,293,700.00
Subsidies for transferring Xinjiang cotton yarn out ofXinjiang
1,034,400.00
464,400.00
Provincial subsidy for quality and efficiency improvementand energy conservation in 2018
1,000,000.00
Provincial subsidy for technology development andinnovation in 2019
1,000,000.00
Subsidy of 30 Articles of strengthening counties by industry
500,000.00
Subsidy for technology development and innovation 400,000.00
Return on taxes and commission charges on behalf 374,835.70
610,075.60
Probation subsidy of youth 368,725.50
New apprenticeship subsidy for 2019 360,000.00
Subsidy for pre-job training in textile and garmententerprises
338,400.00
Fund of municipal-level talents introduce major project 300,000.00
Reward of innovation in science and technology conferenceof 2017
300,000.00
Special fund for energy conservation and consumptionreduction
300,000.00
Reward for science and technology in Shandong in 2018 300,000.00
R&D subsidy 262,000.00
Provincial subsidy of 2019 international market expansion 238,000.00
Subsidy of innovation and development of technology in2019
215,500.00
Subsidy of enterprise management and consulting 200,000.00
Talent matching subsidy for 2016 talent plan 200,000.00
Talent support subsidy 200,000.00
R&D subsidies for enterprises in 2019 158,000.00
Export credit insurance subsidy 127,700.00
Special fund for top 30 industries 100,000.00
Subsidy for quality and efficiency improvement of industryand energy conservation in 2018
100,000.00
Subsidy of technician workstation of Shandong province in2019
100,000.00
Subsidy of municipal industrial design center 100,000.00
Subsidy of high-value patent in Zibo 100,000.00
Subsidy of job probation 64,860.00
Reward of Shandong provincial science popularization andeducation base in 2019
50,000.00
Subsidy of Banyang Talents Plan 40,000.00
Special subsidies for foreign trade and economicdevelopment
25,400.00
Subsidy of patent creation 20,000.00
The third batch of patent subsidy funds of Shandongprovince in 2018
6,000.00
Subsidies for patent creation in the second half of 2018 6,000.00
Unemployment dynamic monitoring subsidy 1,200.00
Job subsidies for enterprises in 2018
5,551,940.00
Sludge subsidies
5,503,600.00
Reward for technical center
2,000,000.00
Subsidy of national industrial design center
2,000,000.00
Subsidies for the cultivation of international independentbrands
1,700,000.00
Subsidy of housing resettlement and relocation
1,617,000.95
Social security and job subsidies for admission of personswith employment difficulties
1,042,819.75
Government subsidies for pre-job training
835,290.56
Energy optimization subsidy for thermal energy system infabric finishing process
785,700.00
Subsidies for CCTV exhibition and broadcast
700,000.00
Special subsidy for the development of agriculturalindustrialization
600,000.00
Export credit insurance premium subsidy
557,400.00
Research and industrialization subsidy of cotton energyconservation and heat-resistant garments
500,000.00
Subsidy of high-yield and high-efficiency cotton greenproject subsidy
500,000.00
Development and research fund of high quality raw dyefabric
400,000.00
Subsidy of fabric industrial chain production integrationsystem
350,000.00
Special subsidies for improving enterprise management
304,450.00
Subsidy for energy conservation assessment outstandingenterprise of 2016 in Zibo
300,000.00
Reward for 2018 science and technology innovation
300,000.00
Subsidy for college and technical secondary schoolgraduates
300,000.00
Subsidies for informatization plan project
240,000.00
Subsidy of Zibo Talents Plan
200,000.00
Talent matching subsidy of the talents plan in 2016
200,000.00
Talent matching subsidy of the talents plan in 2017
200,000.00
Reward of leading enterprises in export
150,000.00
Subsidy of promotion of TBS Toyota production mode
150,000.00
Municipal-level patent subsidies in 2018
140,000.00
Subsidies for liquid membrane separation of dyeingwastewater and upgrading of sewage station
117,200.00
Subsidy of 3D marketing system design and marketingvalue chain distribution consulting project
110,000.00
Subsidy of development and industrial application in purecotton free press digital ink-jet printing fabric
100,000.00
Subsidy of foreign experts program
100,000.00
Reward of science and technology Shandong
100,000.00
Subsidies for Shandong technician workstation in 2018
100,000.00
Subsidy of French textile fabric auxiliary exhibition subsidy
40,000.00
Subsidies for international market development project
30,000.00
“Qilu Cup” industrial design competition award in Zibo
30,000.00
Provincial subsidy for international market development in2018
26,000.00
Subsidies for international market development project
23,200.00
Subsidy of international general qualification certification
22,000.00
Subsidy of Vietnam Ho Chi Minh textile and garmentindustry exhibition
21,300.00
Support subsidy of talents plan
20,000.00
Subsidy of textile and clothing industry exhibition
14,200.00
Subsidy of fabric accessories exhibition
12,000.00
Subsidy of new commercial activities project in foreigntrade
10,600.00
2017 “Textile Light” science and technology educationaward
10,000.00
Subsidy of upgradation project of material classificationcode and standardization management
10,000.00
Subsidies for service trade development projects
10,000.00
Subsidies for people with employment difficulties
7,321.52
Subsidy of Asia international textile machinery andaccessories exhibition
5,400.00
Reward of water saving enterprise in 2018 in Shandong
3,000.00
Reward of water saving enterprise
3,000.00
special fund of municipal patent development in 2017
2,000.00
Unemployment dynamic monitoring subsidy
1,200.00
Intelligent dyeing production and energy and waterconservation renovation projects
1,535,378.28
1,124,534.92
Land subsidies 1,463,797.56
1,393,157.88
Subsidy of green power 1,022,818.80
1,022,818.80
Technical improvement project of bobbin yarn dyeing593,406.60
593,406.60
digital workshopRecycled water reuse project 451,376.16
300,917.44
Low-torque high energy-saving and high-quality newspinning projects
349,473.60
349,473.60
Subsidy for investment in technical renovation equipment 326,834.55
71,559.56
230,000 spinnings and 35,000 double twist productionprojects
Production line project of 1.8 million meters of high-gradejacquard fabric
222,607.08
222,607.08
Intelligent dyeing production and energy and waterconservation technology renovation project
Hu sheep subsidies 132,999.96
132,999.96
Technical transformation project of high grade yarn-dyedfabric
112,144.32
112,144.32
Subsidies for ultra-low emission technical upgradingprojects
105,109.44
105,109.44
Support funds for sewage treatment and reuse of recycledwater
103,083.72
103,083.72
Subsidy of cotton seed reproduction 69,999.96
69,999.96
Subsidy for public rental housing 48,231.48
12,057.87
Total 62,084,864.45
60,846,383.76
48. Investment Income
Unit: RMBItem Reporting Period Same period of last yearLong-term equity investment income accounted by equitymethod
7,671,490.10
-1,518,268.37
Investment income from disposal of long-term equityinvestment
-50,000.00
Investment income from holding of trading financial assets 4,875,806.53
Investment income from disposal of trading financial assets
9,286,599.42
Investment income from holding of available-for-salefinancial assets
6,069,367.03
Investment income from disposal of financial assets(liabilities) at fair value through profit or loss
-64,824,373.70
Total 21,783,896.05
-60,273,275.04
49. Gain on Changes in Fair Value
Unit: RMBSources Reporting Period Same period of last yearTrading financial assets 236,660,082.90
Trading financial liabilities 4,877,600.00
Financial liabilities at fair value through profit or loss
-4,877,600.00
Total 241,537,682.90
-4,877,600.00
50. Credit Impairment Loss
Unit: RMBItem Reporting Period Same period of last yearBad debt loss of other receivables 217,949.70
Bad debt loss of long-term receivables -227,847.00
Bad debt loss of accounts receivable -11,737,135.92
Total -11,747,033.22
51. Asset Impairment Loss
Whether there is a single disposal of the investment to the subsidiary and lost control?
□ Yes √ No
Unit: RMBItem Reporting Period Same period of last yearI. Bad debt loss
-2,283,637.20
II. Inventory falling price loss -71,705,103.35
-41,995,150.04
VII. Impairment loss on fixed assets -19,611,885.46
-13,249,549.80
Total -91,316,988.81
-57,528,337.04
52. Asset Disposal Income
Unit: RMBSources Reporting Period Same period of last yearFixed asset disposal income (“-” for loss) 186,123.30
4,525,108.75
Intangible asset disposal income (“-” forloss)
3,301,874.63
Total 186,123.30
7,826,983.38
53. Non-operating Income
Unit: RMBItem Reporting Period Same period of last year
Amount recorded in the current
non-recurring profit or lossGovernment subsidies
290,000.00
| 84,000.00 |
84,000.00
Claim income
| 3,745,565.50 |
4,829,787.20
3,745,565.50
Other
5,532,451.36
| 4,004,162.70 |
4,004,162.70
Total
| 7,833,728.20 |
10,652,238.56
7,833,728.20
Government subsidies recorded into current profit or loss:
Unit: RMB
Item
Distributio
n entity
Distributionreason
Nature
Whethersubsidies
currentprofits andlosses or not
Specialsubsidy or
not
Reporting
Period
Same period of
last year
Related to
to incomeReward forexcellentperformancemanagement
Reward Not Not 84,000.00
| assets/related | ||
290,000.00
Related toincome
54. Non-operating Expense
Unit: RMBItem Reporting Period Same period of last year
Amount reco
rded in the current
non-recurring profit or lossDonations 6,979,965.96
| rded in the current | ||
1,123,744.69
6,979,965.96
Losses from damage and scrapof non-current assets
1,332,357.24
3,020,637.43
1,332,357.24
Other 3,626,903.45
6,454,472.53
3,626,903.45
Total 11,939,226.65
10,598,854.65
11,939,226.65
55. Income Tax Expense
(1) List of Income Tax Expense
Unit: RMBItem Reporting Period Same period of last yearCurrent income tax expense 87,215,574.12
100,214,613.83
Deferred income tax expense 50,962,179.98
11,098,577.57
Total 138,177,754.10
111,313,191.40
(2) Adjustment Process of Accounting Profit and Income Tax Expense
Unit: RMBItem Reporting PeriodProfit before taxation 1,127,504,430.01
Current income tax expense accounted at statutory/applicable tax rate 169,125,664.50
Influence of applying different tax rates by subsidiaries -4,419,756.89
Influence of income tax before adjustment 553,077.27
Influence of non-taxable income -7,209,092.56
Influence of not deductable costs, expenses and losses 8,861,763.39
Influence of deductable losses of unrecognized deferred income tax assets at the beginningof the Reporting Period
-1,621,866.29
Influence of deductible tempor
| ary difference or deductable losses of unrecognized deferred |
income tax assets at the beginning of the Reporting Period
588,339.43
Profit/loss of associated enterprises and joint ventures accounted by equity method -1,150,723.52
Influence of additional deduction of R&D expenses (filled in with “-”) -23,291,903.05
Influence of other expense deduction (filled in with “-”) -479,970.79
Other -2,777,777.39
Income tax expense 138,177,754.10
56. Cash Flow Statement
(1) Cash Generated from Other Operating Activities
Unit: RMBItem Reporting Period Same period of last yearGovernment subsidies 79,762,831.75
77,020,849.15
Claim income 3,168,466.05
3,936,691.83
| Recovery of employee borrowings, petty cash and |
deposit
26,413,312.84
13,896,229.53
Collection for employees 5,817,182.28
7,574,231.79
Other 356,669.05
7,992,121.11
Total 115,518,461.97
110,420,123.41
(2) Cash Used in Other Operating Activities
Unit: RMBItem Reporting Period Same period of last yearFreight and miscellaneous charges 61,879,244.81
62,091,418.60
Rental charges 17,904,770.64
20,722,534.75
Advertising expense 3,401,127.88
1,460,237.64
Business travel charges 28,404,922.29
28,898,308.10
Insurance 3,431,292.03
4,892,563.92
Audit advisory announcement fee 3,223,952.59
7,092,869.11
Decoration & repair expenses 2,719,362.09
7,474,700.27
Donation 6,979,965.96
1,123,744.69
Pre-payment 1,316,920.07
17,052,070.00
Payment of employee borrowings, petty cash anddeposit
33,233,609.55
27,292,704.63
Other 75,686,440.24
74,876,384.98
Total 238,181,608.15
252,977,536.69
(3) Cash Generated from Other Investing Activities
Unit: RMBItem Reporting Period Same period of last yearInterest income 8,195,787.89
17,685,395.06
Income from forward foreign exchange 14,448,291.14
8,376,097.80
Cash deposit of L/C for purchasing equipment
1,200,000.00
Option cost
11,200.00
Total 22,644,079.03
27,272,692.86
(4) Cash Used in Other Investing Activities
Unit: RMBItem Reporting Period Same period of last yearForward settlement exchange loss 5,161,691.72
73,302,671.50
Intercourse funds payment 4,816,368.48
Payment of deposit for the L/C ofequipment purchase
28,897,270.77
295,288.20
Total 38,875,330.97
73,597,959.70
(5) Cash Generated from Other Financing Activities
Unit: RMBItem Reporting Period Same period of last yearReturn of loan guarantees 10,000,000.00
16,000,000.00
Recovery of intercourse accounts 100,000,000.00
78,300,000.00
Total 110,000,000.00
94,300,000.00
(6) Cash Used in Other Financing Activities
Unit: RMBItem Reporting Period Same period of last yearPayment of the B-share buy-back amount 8,573,104.03
498,538,235.01
Guarantee deposit pledged 14,000,000.00
10,000,000.00
Payment for intercourse accounts 224,870,000.00
16,449,300.16
Acquisition of minority equity ofsubsidiaries
841,000.00
Total 248,284,104.03
524,987,535.17
57. Supplemental Information for Cash Flow Statement
(1) Supplemental Information for Cash Flow Statement
Unit: RMBSupplemental information Reporting Period
Same period of last
year
1. Reconciliation of net profit to net cash flows generated from operating activities -- --Net profit 989,326,675.91
858,193,572.10
Add: Provision for impairment of assets 103,064,022.03
57,528,337.04
Depreciation of fixed assets, oil-gas assets, and productive living assets 464,235,593.86
420,110,878.01
Amortization of intangible assets 17,672,359.15
19,107,405.53
Amortization of long-term prepaid expenses 4,319,165.44
4,107,499.91
Losses from disposal of fixed assets, intangible assets and other long-lived assets(gains: negative)
-186,123.30
-23,691,064.85
Losses from scrap of fixed assets (gains: negative) 1,332,357.24
3,020,637.43
Losses from changes in fair value (gains: negative) -241,408,682.90
4,877,600.00
Finance costs (gains: negative) 77,353,035.99
43,973,551.17
Investment loss (gains: negative) -21,912,896.05
60,273,275.04
Decrease in deferred income tax assets (gains: negative) -13,448,082.05
-13,939,769.35
Increase in deferred income tax liabilities (“-” means decrease) 64,410,262.03
25,125,196.92
Decrease in inventory (gains: negative) -363,689,797.10
-6,771,906.97
Decrease in accounts receivable generated from operating activities (gains: negative)-14,785,981.03
-87,641,526.60
Increase in accounts payable used in operating activities (decrease: negative) 19,828,666.29
66,067,977.78
Net cash generated from/used in operating activities 1,086,110,575.51
1,430,341,663.16
| 2. Significant investing and financing activities without involvement of cash receipts |
and payments
-- --
3. Net increase/decrease of cash and cash equivalent: -- --Ending balance of cash 878,559,018.92
535,134,772.90
Less: beginning balance of cash 535,134,772.90
676,639,212.86
Net increase in cash and cash equivalents 343,424,246.02
-141,504,439.96
(2) Cash and Cash Equivalents
Unit: RMBItem Ending balance Beginning balanceI. Cash 878,559,018.92
535,134,772.90
Including: Cash on hand 9,544,377.41
9,087,924.86
Bank deposit on demand 869,014,641.51
526,046,848.04
III. Ending balance of cash and cashequivalents
878,559,018.92
535,134,772.90
58. Assets with Restricted Ownership or Right to Use
Unit: RMBItem Ending carrying value Reason for restrictionMonetary capital 44,187,163.06
Pledged for short-
| term borrowings, as cash |
deposit for L/G and L/CInventory 82,322,676.24
Mortgaged for short-term borrowingsFixed assets 3,718,559.83
Mortgaged for short-term borrowingsIntangible assets 111,926,333.18
Mortgaged for short-term borrowingsTotal 242,154,732.31
--
59. Foreign Currency Monetary Items
(1) Foreign Currency Monetary Items
Unit: RMBItem
Ending foreign currency
balance
Exchange rate
Ending balance converted to
RMBMonetary assets -- --
Of which: USD 81,979,682.84
6.9762
571,906,663.43
EUR 118,920.47
7.8155
929,390.25
HKD 24,895,895.49
0.8958
22,301,743.18
JPY 6,074,631.00
0.0641
389,383.85
GBP 3,517.18
9.1501
32,182.55
CHF 56,668.45
7.2028
408,171.51
SEK 800.00
0.7464
597.12
Dong 322,156,844,547.40
0.000301
96,976,624.59
MMK 151,020,902.87
0.00473
711,955.74
Riel 372,787,939.00
0.0017
638,194.71
Notes receivable
Of which: USD 13,033,293.98
6.9762
90,922,865.46
Accounts receivable -- --
Of which: USD 52,699,362.53
6.9762
367,641,292.92
EUR 19,964.81
7.8155
156,034.97
HKD 29,573,151.00
0.8958
26,491,628.67
Dong 27,828,547,945.84
0.000301
8,376,391.69
Other receivables
Of which: USD 63,506.04
6.9762
443,030.84
JPY 1,395,040.00
0.0641
89,422.06
Dong 21,310,599,972.16
0.000301
6,414,490.59
GBP 9,250.00
9.1501
84,638.43
Accounts payable
Of which: USD 9,711,963.80
6.9762
67,752,601.86
HKD 8,948,999.00
0.8958
8,016,513.30
JPY 27,801,102.00
0.0641
1,782,050.64
EUR 119,633.71
7.8155
934,997.26
CHF 65,859.25
7.2028
474,371.01
Dong 8,516,157,352.88
0.000301
2,563,363.36
Other payables
Of which: USD 86,280.00
6.9762
601,906.54
HKD 350,463.00
0.8958
313,944.76
Dong 228,590,000.00
0.000301
68,805.59
Short-term borrowings
Of which: USD 174,420,816.07
6.9762
1,216,794,497.07
Dong 295,441,808,600.00
0.000301
88,934,788.40
Current portion of long-termborrowings
Of which: USD 14,493,749.82
6.9762
101,111,297.49
Long-term borrowings -- --
Of which: USD 6,072,649.83
6.9762
42,364,019.74
(2) Notes to Overseas Entities Including: for Significant Oversea Entities, Main Operating Place, Recording
Currency and Selection Basis Shall Be Disclosed; if there Are Changes in Recording Currency, RelevantReasons Shall Be Disclosed.
√ Applicable □ Not applicable
The operating places of Company’s subsidiaries Lu Thai (Hong Kong), Lu Thai (Cambodia), Lu Thai (Burma), Lu Thai (America),and Lu Thai (Vietnam), Lu An Garment Co., Ltd., and the sub-subsidiary Lu Thai Tan Chau were Hong Kong, Cambodia, Burma,America, Vietnam, Vietnam and Vietnam, and the recording currency was HKD for Lu Thai (Hong Kong), and USD for otheroverseas companies..
56. Government Subsidy
(1) Basic Information on Government Subsidy
Unit: RMBCategory Amount Listed items
Amount recorded in the
current profit or lossEquipment subsidy 22,347,600.00
Deferred income
R&D subsidy 4,750,000.00
Deferred income
Transformation subsidy of garden greens 4,000,000.00
Deferred income
Freight allowance of cotton yarn 11,826,172.27
Other income 11,826,172.27
Post subsidies 5,973,681.00
Other income 5,973,681.00
Subsidy of “Six Articles in Developing Local3,493,500.00
Other income 3,493,500.00
Enterprises” in 2018Social insurance subsidy 3,991,156.60
Other income 3,991,156.60
Electricity fee subsidy 3,103,439.88
Other income 3,103,439.88
Employment increase subsidy in 2017 and 2018 2,775,000.00
Other income 2,775,000.00
Reward of demonstration enterprise in single item 2,000,000.00
Other income 2,000,000.00
Subsidy for leading persons project of Mount Taiindustry
2,170,000.00
Other income 2,170,000.00
Social insurance subsidy for admission of personswith employment difficulties in 2019
1,633,560.80
Other income 1,633,560.80
Preferential policy subsidy of developing localenterprises
1,400,000.00
Other income 1,400,000.00
Subsidy of central foreign trade development in2018
1,293,700.00
Other income 1,293,700.00
Subsidies for transferring Xinjiang cotton yarn outof Xinjiang
1,034,400.00
Other income 1,034,400.00
Provincial subsidy for quality and efficiencyimprovement and energy conservation in 2018
1,000,000.00
Other income 1,000,000.00
Provincial subsidy for technology development andinnovation in 2019
1,000,000.00
Other income 1,000,000.00
Subsidy of 30 Articles of strengthening counties byindustry
500,000.00
Other income 500,000.00
Subsidy for technology development andinnovation
400,000.00
Other income 400,000.00
Return on taxes and commission charges on behalf 374,835.70
Other income 374,835.70
Probation subsidy of youth 368,725.50
Other income 368,725.50
New apprenticeship subsidy for 2019 360,000.00
Other income 360,000.00
Subsidy for pre-job training in textile and garmententerprises
338,400.00
Other income 338,400.00
Fund of municipal-level talents introduce majorproject
300,000.00
Other income 300,000.00
Reward of innovation in science and technologyconference of 2017
300,000.00
Other income 300,000.00
Special fund for energy conservation andconsumption reduction
300,000.00
Other income 300,000.00
Reward for science and technology in Shandong in2018
300,000.00
Other income 300,000.00
R&D subsidy 262,000.00
Other income 262,000.00
Provincial subsidy of 2019 international marketexpansion
238,000.00
Other income 238,000.00
Subsidy of innovation and development oftechnology in 2019
215,500.00
Other income 215,500.00
Subsidy of enterprise management and consulting 200,000.00
Other income 200,000.00
Talent matching subsidy for 2016 talent plan 200,000.00
Other income 200,000.00
Talent support subsidy 200,000.00
Other income 200,000.00
R&D subsidies for enterprises in 2019 158,000.00
Other income 158,000.00
Export credit insurance subsidy 127,700.00
Other income 127,700.00
Special fund for top 30 industries 100,000.00
Other income 100,000.00
Subsidy for quality and efficiency improvement ofindustry and energy conservation in 2018
100,000.00
Other income 100,000.00
Subsidy of technician workstation of Shandongprovince in 2019
100,000.00
Other income 100,000.00
Subsidy of municipal industrial design center 100,000.00
Other income 100,000.00
Subsidy of high-value patent in Zibo 100,000.00
Other income 100,000.00
Subsidy of job probation 64,860.00
Other income 64,860.00
Reward of Shandong provincial sciencepopularization and education base in 2019
50,000.00
Other income 50,000.00
Subsidy of Banyang Talents Plan 40,000.00
Other income 40,000.00
Special subsidies for foreign trade and economicdevelopment
25,400.00
Other income 25,400.00
Subsidy of patent creation 20,000.00
Other income 20,000.00
The third batch of patent subsidy funds ofShandong province in 2018
6,000.00
Other income 6,000.00
Subsidies for patent creation in the second half of2018
6,000.00
Other income 6,000.00
Unemployment dynamic monitoring subsidy 1,200.00
Other income 1,200.00
Reward for excellent performance project 84,000.00
Non-operating income
84,000.00
Loan with discounted interest 30,000.00
Finance costs 30,000.00
(2) Return of Government Subsidy
□ Applicable √ Not applicable
VIII. Changes 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:
Shandong Lulian New Materials Co., Ltd., Shandong Lujia Import & Export Co., Ltd. and Lu Thai Occupational Training Schoolwere newly-established subsidiaries of the Company; the sub-subsidiary Zibo Helijie Energy Saving Technology Service Co., Ltd.was deregistered; and the sub-subsidiary Zibo Chengshun Heating Power Co., Ltd. was consolidated.IX. Equity in Other Entities
1. Equity in Subsidiary
(1) Subsidiaries
Name
Mainoperatingplace
Registratio
n place
Nature of business
Holdingpercentage (%)
Way of gainingDirectly
IndirectlyLuthai (Hong Kong) Hong Kong
HongKong
Wholesale and retail industry 100.00%
Set-upShanghai Luthai Shanghai Shanghai Wholesale and retail industry 100.00%
Set-upXinjiang Luthai Xinjiang Xinjiang Manufacturing industry 59.92%
| Business combination not |
under the same controlLufeng Weaving &Dyeing
Zibo Zibo Manufacturing industry 75.00%
Set-upLuqun Textile Zibo Zibo Manufacturing industry 100.00%
Set-upXinsheng Power Zibo Zibo Manufacturing industry 100.00%
| Business combination not |
under the same controlXinjiang Textile(sub-subsidiary)
Xinjiang Xinjiang Manufacturing industry
59.92%
Set-upBeijing Youxian Beijing Beijing Wholesale and retail industry 100.00%
Set-upShanghai Zhinuo Shanghai Shanghai
of technologies
100.00%
| Technology development, technical consultancy and transfer |
Set-upLulian New Materials Zibo Zibo Manufacturing industry 75.00%
Set-upLujia Import & Export
Zibo Zibo Import and export trade 100.00%
Set-upLu Thai OccupationalTraining School
Zibo Zibo Skill training 100.00%
Set-up
Lu Thai (Cambodia) Cambodia Cambodia Manufacturing industry 100.00%
Set-upLu Thai (Burma) Burma Burma Manufacturing industry 100.00%
Set-upLu Thai (America) America America Wholesale and retail industry 100.00%
Set-upLu Thai (Vietnam) Vietnam Vietnam Manufacturing industry 100.00%
Set-upLu Thai Tan Chau(sub-subsidiary)
Vietnam Vietnam Manufacturing industry
100.00%
Set-upLu An Garments Vietnam Vietnam Manufacturing industry 100.00%
Set-up
(2) Significant Non-wholly-owned Subsidiary
Unit: RMBName
Shareholdingproportion ofnon-controlling
interests
The profit or loss attributable
to the non-controlling
interests
Declaring dividends distributed to
non-controlling interests
Balance ofnon-controlling interests
at the period-endXinjiangLuthai
40.08%
8,717,909.88
12,023,566.38
| 195,916,831.10 |
LufengWeaving &Dyeing
25.00%
28,753,991.35
50,000,000.00
| 356,783,629.23 |
(3) The Main Financial Information of Significant Not Wholly-owned Subsidiary
Unit: RMBName
Ending balance Beginning balanceCurrentassets
Non-curr
entassets
Totalassets
Currentliabilities
Non-curr
entliability
Totalliabilities
Currentassets
Non-curr
entassets
Totalassets
Currentliabilities
Non-curr
entliability
Totalliabilities
XinjiangLuthai
420,902,
264.09
514,128,
662.24
935,030,
926.33
441,046,
827.41
4,493,26
4.80
445,540,
092.21
577,801,
870.44
550,298,
919.95
1,128,100,790.39
628,672,
392.37
4,814,37
3.04
633,486,
765.41
LufengWeaving&Dyeing
869,432,
992.40
806,983,
371.55
1,676,416,363.95
200,786,
105.11
40,658,7
95.64
241,444,
900.75
908,054,
381.50
820,360,
513.63
1,728,414,895.13
176,914,
108.80
33,049,2
34.56
209,963,
343.36
Unit: RMBName
Reporting Period Same period of last yearOperatingrevenue
Net profit
Totalcomprehensive income
Cash flows
fromoperating
Operating
revenue
Net profit
Totalcomprehensi
ve income
Cash flows
fromoperating
activities activitiesXinjiangLuthai
723,971,149.
24,876,809.1
24,876,809.1
85,703,001.2
708,959,464.
36,239,006.4
36,239,006.4
196,160,759.
LufengWeaving &Dyeing
1,743,680,01
8.67
116,519,911.
116,519,911.
184,886,875.
1,780,246,45
9.14
118,857,204.
118,857,204.
179,357,371.
2. The Transaction of the Company with Its Owner’s Equity Share Changed but Still Controlling the
Subsidiary
(1) Note to the Owner’s Equity Share Changed in Subsidiary
The Company held 9% of equity in Beijing Youxian formerly, while the Company signed the equity transfer agreement with BeijingBishibo E-commerce Consulting Co., Ltd. in March 2019, allowed to purchase 10% of equity in Beijing Youxian held by BeijingBishibo E-commerce Consulting Co., Ltd. As of 31 December 2019, the equity transfer agreement has been fulfilled with thepayment of consideration of RMB841,000.00. The transaction resulted in the decrease of RMB610,304.90 in non-controlling interest,and RMB230,695.10 in capital reserves.
(2) The Transaction’s Influence on the Equity of Non-controlling Shareholders and the Owner's Equity
Attributable to the Company as the Parent
Unit: RMBBeijing Youxian--Cash 841,000.00
Total of cost of acquisition/disposal consideration 841,000.00
Less: Net assets shares of subsidiary calculated at the proportionof acquired/disposed equity
610,304.90
Difference 230,695.10
Of which: Adjustment of capital reserves 230,695.10
3. Equity in Joint Ventures or Associated Enterprises
(1) Significant Joint Ventures or Associated Enterprises
Name
Mainoperatingplace
Registration
place
Nature of business
Holding percentage (%) Accounting treatment of the
| investment to joint venture or |
associated enterpriseDirectly IndirectlyHaohongInvestment
Ningbo Ningbo Equity investment
33.33%
权益法
(2) Main Financial Information of Significant Joint Ventures
Unit: RMBEnding balance/Reporting Period
yearHaohong Investment Haohong InvestmentCurrent assets 312,249,946.34
Beginning balance/The same period of last
100,703,096.38
Non-current assets
186,140,002.64
Total assets 312,249,946.34
286,843,099.02
Current liabilities 150,000.00
150,000.00
Total liabilities 150,000.00
150,000.00
Net assets 312,099,946.34
286,693,099.02
Equity attributable to shareholders of theCompany as the parent
312,099,946.34
286,693,099.02
Net assets shares calculated at theshareholding proportion
104,032,882.42
95,554,809.90
--Other -806,582.42
Carrying value of investment to associatedenterprises
103,226,300.00
95,554,809.90
Net profit 25,406,847.32
-5,916,357.99
Total comprehensive income 25,406,847.32
-5,916,357.99
Other notes:
According to the partnership agreement, all the partners shall enjoy 80% of surplus earnings in partnerships in proportion to theircontributions, and the general partner shall enjoy the rest of 20%. Therefore, there was difference between the net assets sharescalculated at shareholding proportion and he carrying value of equity investment in associated enterprises for the Company.X. The Risk Related to Financial InstrumentsThe Group’s major financial instruments include the monetary assets, notes receivable, accounts receivables, accounts receivablefinancing, other receivables, other current assets, trading financial assets, other equity instrument investments, other non-currentfinancial assets, long-term receivables, notes payable, accounts payable, other payables, the short-term borrowings, trading financialliabilities, non-current liabilities due within one year and long-term borrowings. Details of various financial instruments are disclosedin relevant Notes. Possible risks related to these financial instruments and various risk management policies implemented to reducethese risks are described as follows. The Group’s management has controlled and monitored these risk exposures in order to controlthe above-mentioned risks within the limited scope.
1. Risk management objectives and policies
The Group has conducted the risk management to achieve an appropriate balance between the risk and the income and to minimizethe adverse influence of financial risks on the Group’s financial performance. According to such risk management objective, theCompany has formulated corresponding risk management policy to recognize and analyze possible risks encountered by the Group,set the appropriate acceptable risk level and designed corresponding internal control procedures to monitor the Group’s risk level.
Meanwhile, the Group will regularly review these risk management policies and relevant internal control system so as to cater for themarket or respond to any change in the Group’s business operations. Accordingly, the Group’s internal audit department will alsoregularly or randomly check whether the internal control system is implemented in conformity with relevant risk managementpolicies.The major risks caused by financial instruments of the Group 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 Group,determining the Group’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 Group. Besides, various risks are specified in these risk management policies, including the creditrisk, the liquidity risk and the market risk management etc.. On a regular basis, the Group will evaluate the specific marketingenvironment and various changes in the Group’s business operations so as to determine whether any risk management policy andsystem need be updated.
(1) Credit risk
Credit Risk means that the Group will suffer any financial losses due to the counter party’s failure in fulfilling the contractobligations.The Group shall manage the credit risk based on the specific Group Classification, and the credit risk mainly arises from bank deposit,notes receivable, accounts receivable, other receivables and long-term accounts receivable etc..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 Group 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 Group will evaluate the client’s credit qualification and set corresponding credit period.In addition, the Group will regularly monitor the client’s credit record. For clients with poor credit records, the Group will issue thewritten Reminder Notice, shorten the credit period or cancel the credit period to guarantee the Group’s overall credit risk undercontrol.The hugest credit risk exposure borne by the Group is the book value of each financial asset reflected in the balance sheet, and theGroup has not provided any other guarantees that may cause the Company to bear any credit risk.In terms of accounts receivable, the top 5 customers in accounts receivable were accounted for 22.71% of the total amount ofaccounts receivable of the Group (28.60% in 2018). In terms of other receivables, the top 5 of the ending balance according to thearrears party was accounted for 71.72% of the total amount of other receivables of the Group (69.41% in 2018).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 Group has supplemented through examining the changes of bond yield and the available news andsupervision information.On the balance sheet date, the carrying value of investment in debt obligations of the Group are listed as follows according to reportitems (Unit: RMB’0,000).
Item 2019.12.31 2018.12.31Trading financial assets 5,
| 235.61 |
Available-for-salefinancial assets
6,
| 061.2 |
Total 5,
6,
| 235.61 | 061.2 |
(2) Liquidity risk
Liquidity Risk refers to the risk of capital shortage encountered by the Group during the cash payment or the settlement of otherfinancial assets.During the management of liquidity risk, the Group shall reserve and monitor corresponding cash and cash equivalent deemedsufficient by the management so as to meet the Group’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 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 Group, and financial liabilities based on the fixed interest rate the fair value interest rate risk.However, the Group has paid close attention the impact of interest rate fluctuations on the Group’s interest rate risk. At present, theGroup 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 Group’s unsettled interest-bearing debts based on the floating interest rate, andcause major adverse influence on the Group’s financial performance. The management will timely make corresponding adjustmentaccording to the latest market situation, and corresponding interest rate swap will be arranged to reduce the interest rate risk.The interest-bearing financial liabilities held by the Group are as follows (Unit: RMB’0,000):
Item Reporting Period
yearFinancial liabilities with fixedinterest rate
Of which: Short-term borrowings 80,
Same period of last
788.31
63,
| 788.31 | 500 |
Other payables
12,
| 487 |
Total 80,
75,
| 788.31 | 987 |
Financial liabilities with floatinginterest rate
Of which: Short-term borrowings 130,
69,
| 342.44 | 027.38 |
Current portion of long-termborrowings
10,
| 111.13 |
Long-term borrowings 4,
17,
| 185.72 | 001.91 |
Total 144,
86,
| 639.29 | 029.29 |
On 31 December 2019, 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 RMB14.4639 million.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 2019, the amount of foreign currency financial assets and foreign currency financial liabilities converted torenminbi is as follows (Unit: RMB’0,000):
Item Foreign currency liabilities Foreign currency assets Ending balance
Beginningbalance
Ending balance Beginning
balanceUSD
| 142,862.43 | 85,864.25 | 103,091.39 | 54,984.29 |
EUR
| 93.50 | 150.27 | 108.54 | 38.40 |
JPY
| 178.21 | 470.76 | 47.88 | 148.04 |
HKD
| 833.05 | 2.45 | 4,879.34 | 3,057.38 |
GBP
| 11.68 | 8.36 |
CHF
| 47.44 | 335.13 | 40.82 | 32.00 |
SEK
| 0.06 |
Dong
| 9,156.70 | 3,283.78 | 11,176.75 | 4,311.71 |
MMK
| 71.20 | 109.77 |
Riel
| 63.82 |
Total
| 153,171.32 | 90,106.64 | 119,491.47 | 62,689.96 |
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 assets, 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 Group is as follows (Unit: RMB’0,000):
Reporting Period Same period of last year
Influence on the
profits
Influence onshareholders’ equity
Influence on theprofits
Influence onshareholders’ equity
Up 10% against RMB
| 3,956.31 | 3,956.31 | 3,062.46 | 3,062.46 |
Down 10%
RMB
-
| against | 3,956.31 |
-
-
| 3,956.31 | 3,062.46 |
-
2. Capital management
The objectives of capital management policies of the Group are to insure the continuous operation of the Group so as to providereturn to shareholders and benefit other stakeholders, as well as to reduce capital cost by maintaining the optimal capital structure.In order to maintain or adjust capital structure, the Group 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 2019, the asset-liability ratio was 30.17% of the Group (26.68% on 31 December 2018).XI. The Disclosure of Fair Value
1. Ending Fair Value of Assets and Liabilities at Fair Value
Unit: RMBItem
Ending fair valueFair value measurement Fair value measurement Fair value measurementTotal
items at level 1 items at level 2 items at level 3I. Consistent fair valuemeasurement
-- -- -- --(I) Trading financial assets
52,356,098.85
| 52,356,098.85 |
1. Financial assets at fair
value through profit orloss
(1) Debt instrument
investment
52,356,098.85
| 52,356,098.85 |
2. Financial assets
assigned measured by fairvalue and the changes beincluded in the currentgains and losses
(1) Debt instrument
investment
(2) Equity instrument
investment
(II) Accounts receivablefinancing
26,963,818.87
| 26,963,818.87 |
(III) other non-currentfinancial assets
232,149,500.00
46,000,000.00
| 278,149,500.00 |
The total amount of assetsconsistently measured atfair value
232,149,500.00
125,319,917.72
| 357,469,417.72 |
2. Market Price Recognition Basis for Consistent and Inconsistent Fair Value Measurement Items at Level
As for the unlisted equity investment of Rongchang Pharmacy, the fair value was determined in accordance with the transaction valueof the most recent period.
3. Valuation Technique Adopted and Nature and Amount Determination of Important Parameters for
Consistent and Inconsistent Fair Value Measurement Items at Level 3
For the trust investment not existing in the active market, the Company shall recognize its fair value based on the estimated value onthe balance sheet day provided by the asset manager.For the unlisted equity investment into Rongchang Pharmacy, the Company adopts the comparable listed company comparisonmethod, and the non-observable input 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, the
invested 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.
4. Fair Value of Financial Assets and Liabilities Not Measured at Fair Value
The financial assets and financial liabilities measured at amortized cost mainly include: monetary assets, notes receivable, accountsreceivable, other receivables, long-term receivables, short-term borrowings, notes payable, accounts payables, other payables, currentportion of long-term borrowings and long-term borrowings, etc..
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 theCompany as the parent againstthe Company (%)
Proportion of voting rights owned
by the Company as the parentagainst the Company (%)ZiboLuchengTextileInvestmentCo., Ltd.
Zibo
Textile, chemistry andinvestment
RMB63.26
million
16.36%
16.36%
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-3.
4. Information on Other Related Parties
Name Relationship with the CompanyZibo Stanluian Cosmetics Co., Ltd. (hereinafter called“Stanluian”)
Joint-stock company of the Company as the parentZibo Taimei Ties Co., Ltd. (hereinafter called Taimei Ties) Majority-owned subsidiary of the Company as the parentZibo Limin Purified Water Co., Ltd. (hereinafter called LiminWholly-owned subsidiary of the Company as the parent
Purified Water)Zibo Luqun Land Co., Ltd (hereinafter called Luqun Land) Wholly-owned subsidiary of the Company as the parentZibo Lurui Fine Chemical Co., Ltd. (hereinafter referred to asLurui Chemical)
Majority-owned subsidiary of the Company as the parentZibo Lujia Property Management Co. , Ltd. (hereinafter referredto as Lujia Property)
Wholly-owned subsidiary of the Company as the parentHong Kong Tung Hoi International Company Limited(hereinafter called Tung Hoi International)
Wholly-owned subsidiary of the Company as the parentShandong Chengshun Petrochemical Co., Ltd. (hereinafterreferred to as Chengshun Petrochemical)
Wholly-owned subsidiary of the Company as the parentZibo Chengshun Hosiery Co., Ltd. (hereinafter referred to asChengshun Hosiery)
Majority-owned subsidiary of the Company as the parentZibo Chengshun Economic and Trade Co., Ltd. (hereinafterreferred to as Chengshun Economic and Trade)
Wholly-owned subsidiary of the Company as the parentChengshun Petrochemical (Zhejiang Zhoushan) Co., Ltd.(hereinafter referred to as Chengshun Petrochemical)
Wholly-owned subsidiary of the Company as the parent
to as Lucheng Petrochemical)
Wholly-owned subsidiary of the Company as the parentShanghai Hengjiu Textile New Materials Co., Ltd. Majority-owned subsidiary of the Company as the parentLumei New Materials Co., Ltd.
Majority-owned subsidy of wholly-owned subsidiary of the
Company as the parent
5. List of Connected Transactions
(1) Information on Acquisition of Goods and Reception of Labor Service
Information on acquisition of goods and reception of labor service
Unit: RMBRelated party Content Reporting Period
The approval trade
credit
Whether exceedtrade credit or not
Zibo Lucheng Petrochemical Sales Co., Ltd. (hereinafter referredSame period of
last year
Lucheng Textile
Towels, socks, oils,supermarket retail,welfare, electronics,computer equipment,computer supplies, papercores, etc.
12,344,703.95
| Same period of | ||
15,000,000.00
No 13,489,689.69
Taimei Ties
Goods processing fee,materials
0.00
0.00
No 3,415.03
Stanluian Materials 0.00
0.00
No 6,344.03
Limin Purified Water
Recycled water, sewagetreatment, materials
21,927,449.10
33,750,000.00
No 24,915,630.44
Chengshun
| Petroleum, Chengshun |
Petrochemical
Gas 41,734,937.14
54,000,000.00
No 36,438,292.48
Lurui Chemical Auxiliaries 114,848,768.52
138,000,000.00
No 100,403,329.00
Chengshun Hosiery
Socks, paper cores, hoseprocessing, etc.
716,355.68
0.00
Yes
Chengshun Economicand Trade
Supermarket retail 59,684.06
0.00
Yes
LuchengPetrochemical
Oils 46,546.34
0.00
Yes
Information of sales of goods and provision of labor service
Unit: RMBRelated party Content Reporting Period Same period of last yearLucheng Textile
Sales of materials, electricity, running water,draught water, gas etc.
112,274.67
125,194.09
Lucheng Textile Sales of grey yarn, dyed yarn, garment etc. 326,137.94
324,500.22
Chengshun Hosiery Materials, electricity, running water, heating, steam 15,859.24
Chengshun Hosiery Sales of grey yarn, dyed yarn 15,398.23
Chengshun Economicand Trade
Materials, electricity, running water 2,270.46
LuchengPetrochemical
Electric charge 1,898.17
Taimei Ties Sales of electricity, heating charges
Stanluian Sales of materials, electricity, and running water
6,926.79
Limin Purified Water Sales of materials, garment, electricity etc. 1,627,664.17
1,096,870.07
Lurui Fine Chemical
Sales of garment, shell fabric, yarn, water &electricity, lunch components and materials
393,479.14
241,453.88
Lujia Property Sales of materials and recycled water 96,838.18
60,753.33
Note:
(2) Information on Related-party Lease
The Company was lessor:
Unit: RMBName of lessee Category of leased assets
The lease income confirmed in
the Reporting Period
The lease income confirmed inthe same period of last year
Zibo Lucheng TextileInvestment Co., Ltd.
Houses and buildings 36,108.00
48,965.14
Lurui Fine Chemical Houses and buildings 8,183.64
8,183.64
The Company was lessee:
Unit: RMBName of lessor Category of leased assets
The lease fee confirmed in theReporting Period
The lease fee confirmed in thesame period of last yearZibo Lucheng TextileInvestment Co., Ltd.
Rent of land 3,614,857.20
3,614,857.20
Zibo Lucheng TextileInvestment Co., Ltd.
Rent of gas station 501,714.24
501,714.24
Zibo Lucheng TextileInvestment Co., Ltd.
Rent of buildings 11,022,228.60
11,259,371.47
Luqun Property Rent of land and buildings 1,394,285.64
1,394,285.64
Note:
(3) Information on Inter-bank Lending of Capital of Related Parties
Unit: RMBRelated party Amount Start date End date NoteBorrowingLujia Property 600,000.00
1 January 2019 31 December 2019Stanluian 1,450,000.00
1 January 2019 12 June 2019Taimei Ties 1,300,000.00
1 January 2019 12 June 2019Lucheng Textile 221,520,000.00
1 January 2019 31 December 2019
(4) Information on Remuneration for Key Management Personnel
Unit: RMBItem Reporting period Same period of last yearRemuneration for key managementpersonnel
21,034,175.37
23,527,100.00
6. Accounts Receivable and Payable of Related Party
(1) Accounts Payable
Unit: RMBItem Related party Ending carrying amount Beginning carrying amount
Other payables Lucheng Textile
127,139,981.30
Other payables Lujia Property
646,472.50
Other payables Stanluian
1,537,779.37
Other payables Taimei Ties
1,420,277.49
Accounts payable
Chengshun Economic andTrade
2,794.00
XIII. Commitments and Contingency
1. Significant Commitments
Significant commitments on balance sheet dateCapital commitments
Commitments signed but hasn’t beenrecognized in financial statements
2019.12.31 2018.12.31Commitment on constructing and purchasinglong-lived assets (RMB’0,000)
19,386.
| 82 | 4,528.59 |
2. Contingency
(1) Significant Contingency on Balance Sheet Date
(1) Contingent liabilities formed by the debt guarantee provided to other entities and the financial impact
As of 31 December 2019, the Company provided guarantee to loans of the following entities:
Name Item Currenc
y
amount
Amountconverted to
RMB
Start date Due date NoteI. Subsidiary
| Oreign currency | |||||
Lu Thai (Vietnam) Short-term
borrowings
USD
| 4,537,875.38 | 31,657,126.23 |
2019-7-
2020-1-
| 9 | 5 |
Lu Thai (Vietnam) Short-term
borrowings
USD
| 1,380,217.59 | 9,628,673.95 |
2019-7-
2020-1-
| 25 | 21 |
Lu Thai (Vietnam) Short-term
borrowings
USD
| 1,414,723.10 | 9,869,391.29 |
2019-7-
2020-1-
| 25 | 21 |
Lu Thai (Vietnam) Short-term
borrowings
USD
| 1,066,239.86 | 7,438,302.51 |
2019-8-
2020-2-
| 20 | 16 |
Lu Thai (Vietnam) Short-term
borrowings
USD
| 1,106,975.43 | 7,722,481.99 |
2019-9-
2020-3-
| 26 | 24 |
Lu Thai (Vietnam) Short-term
borrowings
USD
| 1,090,107.94 | 7,604,811.01 |
2019-11-
2020-5-
| 13 | 11 |
Lu Thai (Vietnam) Short-term
borrowings
USD
| 10,000,000.00 | 69,762,000.00 |
2019-7-
2020-7-
| 8 | 6 |
Lu Thai (Vietnam) Short-term
borrowings
USD
| 8,000,000.00 | 55,809,600.00 |
2019-8-
2020-8-
| 19 | 17 |
Lu Thai (Vietnam) Short-term
borrowings
USD
| 7,500,000.00 | 52,321,500.00 |
2019-8-
2020-8-
| 28 | 26 |
Lu Thai (Vietnam) Short-term
borrowings
USD
| 3,000,000.00 | 20,928,600.00 |
2019-9-
2020-9-
| 24 | 22 |
Lu Thai (Vietnam) Short-term
borrowings
USD
| 382,850.69 | 2,670,842.98 |
2019-12-
2020-6-
| 11 | 8 |
Lu Thai (Vietnam) Short-term
borrowings
USD
| 1,888,843.51 | 13,176,950.09 |
2019-11-
2020-5-
| 12 | 10 |
Lu Thai (Vietnam) Short-term
borrowings
USD
| 97,587.90 | 680,792.71 |
2019-7-
2020-1-
| 3 | 3 |
Lu Thai (Vietnam) Short-term
borrowings
USD
| 642,265.20 | 4,480,570.49 |
2019-7-
2020-1-
| 9 | 9 |
Lu Thai (Vietnam) Short-term
borrowings
USD
| 2,324,475.68 | 16,216,007.24 |
2019-10-
2020-4-
| 10 | 10 |
Lu Thai (Vietnam) Short-term
borrowings
USD
| 230,769.71 | 1,609,895.65 |
2019-10-
2020-4-
| 11 | 11 |
Lu Thai (Vietnam) Short-term
borrowings
USD
| 2,000,000.00 | 13,952,400.00 |
2019-12-
2020-6-
| 24 | 24 |
Lu Thai (Vietnam) Short-term
borrowings
USD
| 10,000,000.00 | 69,762,000.00 |
2019-12-
2020-6-
| 26 | 26 |
Lu Thai (Vietnam) Short-term
borrowings
Dong
| 7,082,665,334.00 | 2,132,042.71 |
2019-12-
2020-6-
| 17 | 14 |
Lu Thai (Vietnam) Short-term
borrowings
Dong
| 4,317,542,004.00 | 1,299,677.95 |
2019-12-
2020-6-
| 24 | 21 |
Lu Thai (Vietnam) Short-term
borrowings
Dong
| 6,019,988,552.00 | 1,812,152.93 |
2019-12-
2020-6-
| 25 | 22 |
Lu Thai (Vietnam) Short-term
borrowings
Dong
| 5,721,065,327.00 | 1,722,170.27 |
2019-12-
2020-6-
| 30 | 27 |
Lu Thai (Vietnam) Short-term
borrowings
Dong
| 5,153,925,479.00 | 1,551,448.32 |
2019-11-
2020-5-
| 14 | 12 |
Lu Thai (Vietnam) Short-term
borrowings
Dong
| 5,374,416,000.00 | 1,617,820.97 |
2019-11-
2020-5-
| 8 | 6 |
Lu Thai (Vietnam) Short-term
borrowings
Dong
| 34,454,984,610.00 | 10,371,730.90 |
2019-11-
2020-5-
| 4 | 2 |
Lu Thai (Vietnam) Short-term
borrowings
Dong
| 19,320,124,319.00 | 5,815,795.09 |
2019-7-
2020-1-
| 5 | 5 |
Lu Thai (Vietnam) Short-term
borrowings
Dong
| 7,182,124,714.00 | 2,161,982.24 |
2019-7-
2020-1-
| 8 | 8 |
Lu Thai (Vietnam) Short-term
borrowings
Dong
| 12,372,501,559.00 | 3,724,403.25 |
2019-7-
2020-1-
| 19 | 19 |
Lu Thai (Vietnam) Short-term
borrowings
Dong
| 6,428,287,404.00 | 1,935,060.13 |
2019-7-
2020-1-
| 25 | 25 |
Lu Thai (Vietnam) Short-term
borrowings
Dong
| 11,277,368,545.00 | 3,394,743.41 |
2019-8-
2020-2-
| 7 | 7 |
Lu Thai (Vietnam) Short-term
borrowings
Dong
| 20,320,560,177.00 | 6,116,948.95 |
2019-8-
2020-2-
| 5 | 5 |
Lu Thai (Vietnam) Short-term
borrowings
Dong
| 8,189,151,172.00 | 2,465,120.02 |
2019-8-
2020-2-
| 19 | 19 |
Lu Thai (Vietnam) Short-term
borrowings
Dong
| 20,551,019,031.00 | 6,186,322.29 |
2019-9-
2020-3-
| 5 | 5 |
Lu Thai (Vietnam) Short-term
borrowings
Dong
| 18,834,844,601.00 | 5,669,714.90 |
2019-9-
2020-3-
| 6 | 6 |
Lu Thai (Vietnam) Short-term
borrowings
Dong
| 6,961,496,770.00 | 2,095,568.23 |
2019-9-
2020-3-
| 18 | 18 |
Lu Thai (Vietnam) Short-term
borrowings
Dong
| 7,219,794,299.00 | 2,173,321.64 |
2019-10-
2020-4-
| 1 | 1 |
Lu Thai (Vietnam) Short-term
borrowings
Dong
| 11,651,328,765.00 | 3,507,313.90 |
2019-10-
2020-4-
| 3 | 3 |
Lu Thai (Vietnam) Short-term
borrowings
Dong
| 20,988,434,481.00 | 6,317,994.24 |
2019-10-
2020-4-
| 4 | 4 |
Lu Thai (Vietnam) Short-term
borrowings
Dong
| 8,171,010,860.00 | 2,459,659.37 |
2019-10-
2020-4-
| 17 | 17 |
Lu Thai (Vietnam) Short-term
borrowings
Dong
| 8,395,020,374.00 | 2,527,091.31 |
2019-11-
2020-5-
| 19 | 19 |
Lu Thai (Vietnam) Short-term
borrowings
Dong
| 15,064,184,545.00 | 4,534,771.99 |
2019-12-
2020-6-
| 5 | 5 |
Lu Thai (Vietnam) Long-term
borrowings
USD
| 579,358.04 | 4,041,717.56 |
2018-5-
2020-5-
| 31 | 4 |
Lu Thai (Vietnam) Long-term
borrowings
USD
| 614,869.37 | 4,289,451.70 |
2018-6-
2020-5-
| 5 | 4 |
Lu Thai (Vietnam) Long-term
borrowings
USD
| 371,522.20 | 2,591,813.17 |
2018-6-
2020-5-
| 20 | 4 |
Lu Thai (Vietnam) Long-term
borrowings
USD
| 684,640.80 | 4,776,191.15 |
2018-6-
2020-5-
| 20 | 4 |
Lu Thai (Vietnam) Long-term
borrowings
USD
| 476,181.42 | 3,321,936.82 |
2018-6-
2020-5-
| 25 | 4 |
Lu Thai (Vietnam) Long-term
borrowings
USD
| 576,240.00 | 4,019,965.49 |
2018-6-
2020-5-
| 25 | 4 |
Lu Thai (Vietnam) Long-term
borrowings
USD
| 753,104.88 | 5,253,810.26 |
2018-6-
2020-5-
| 26 | 4 |
Lu Thai (Vietnam) Long-term
borrowings
USD
| 304,604.28 | 2,124,980.38 |
2018-7-
2020-5-
| 6 | 4 |
Lu Thai (Vietnam) Long-term
borrowings
USD
| 667,675.80 | 4,657,839.92 |
2018-8-
2020-5-
| 6 | 4 |
Lu Thai (Vietnam) Long-term
borrowings
USD
| 73,440.00 | 512,332.13 |
2018-8-
2020-5-
| 13 | 4 |
Lu Thai (Vietnam) Long-term
borrowings
USD
| 606,978.00 | 4,234,399.92 |
2018-8-
2020-5-
| 17 | 4 |
Lu Thai (Vietnam) Long-term
borrowings
USD
| 603,160.00 | 4,207,764.79 |
2018-8-
2020-5-
| 17 | 4 |
Lu Thai (Vietnam) Long-term
borrowings
USD
| 127,999.88 | 892,952.76 |
2018-8-
2020-5-
| 20 | 4 |
Lu Thai (Vietnam) Long-term
borrowings
USD
| 371,522.20 | 2,591,813.17 |
2018-8-
2020-5-
| 22 | 4 |
Lu Thai (Vietnam) Long-term
borrowings
USD
| 112,919.04 | 787,745.81 |
2018-8-
2020-5-
| 22 | 4 |
Lu Thai (Vietnam) Long-term
borrowings
USD
| 520,379.04 | 3,630,268.26 |
2018-8-
2020-5-
| 27 | 4 |
Lu Thai (Vietnam) Long-term
borrowings
USD
| 543,680.00 | 3,792,820.42 |
2018-8-
2020-5-
| 27 | 4 |
Lu Thai (Vietnam) Long-term
borrowings
USD
| 56,605.53 | 394,891.50 |
2018-9-
2020-5-
| 10 | 4 |
Lu Thai (Vietnam) Long-term
borrowings
USD
| 476,181.42 | 3,321,936.82 |
2018-9-
2020-5-
| 10 | 4 |
Lu Thai (Vietnam) Long-term
borrowings
USD
| 392,113.58 | 2,735,462.76 |
2018-9-
2020-5-
| 21 | 4 |
Lu Thai (Vietnam) Long-term
borrowings
USD
| 170,208.00 | 1,187,405.05 |
2018-9-
2020-5-
| 26 | 4 |
Lu Thai (Vietnam) Long-term
borrowings
USD
| 269,024.80 | 1,876,770.81 |
2018-11-
2020-5-
| 27 | 4 |
Lu Thai (Vietnam) Long-term
borrowings
USD
| 236,339.41 | 1,648,750.99 |
2018-12-
2020-5-
| 17 | 4 |
Lu Thai (Vietnam) Long-term
borrowings
USD
| 148,975.20 | 1,039,280.79 |
2018-12-
2020-5-
| 18 | 4 |
Lu Thai (Vietnam) Long-term
borrowings
USD
| 171,304.00 | 1,195,050.96 |
2018-12-
2020-5-
| 25 | 4 |
Lu Thai (Vietnam) Long-term
borrowings
USD
| 371,789.58 | 2,593,678.47 |
2019-1-
2020-5-
| 7 | 4 |
Lu Thai (Vietnam) Long-term
borrowings
USD
| 52,750.08 | 367,995.11 |
2019-1-
2020-5-
| 7 | 4 |
Lu Thai (Vietnam) Long-term
borrowings
USD
| 160,183.27 | 1,117,470.53 |
2019-1-
2020-5-
| 24 | 4 |
Lu Thai Tan Chau Long-term
borrowings
USD
| 2,680,800.00 | 18,701,796.96 |
2019-9-
2021-8-
| 30 | 30 |
Lu Thai Tan Chau Long-term
borrowings
USD
| 194,256.00 | 1,355,168.71 |
2019-10-
2021-8-
| 7 | 30 |
Lu Thai Tan Chau Long-term
borrowings
USD
| 51,840.00 | 361,646.21 |
2019-10-
2021-8-
| 11 | 30 |
Lu Thai Tan Chau Long-term
borrowings
USD
| 171,720.00 | 1,197,953.06 |
2019-10-
2021-8-
| 17 | 30 |
Lu Thai Tan Chau Long-term
borrowings
USD
| 245,392.91 | 1,711,910.02 |
2019-10-
2021-8-
| 21 | 30 |
Lu Thai Tan Chau Long-term
borrowings
USD
| 160,650.00 | 1,120,726.53 |
2019-10-
2021-8-
| 3 | 30 |
Lu Thai Tan Chau Long-term
borrowings
USD
| 285,296.40 | 1,990,284.74 |
2019-10-
2021-8-
| 3 | 30 |
Lu Thai Tan Chau Long-term
borrowings
USD
| 104,024.05 | 725,692.58 |
2019-11-
2021-8-
| 7 | 30 |
Lu Thai Tan Chau Long-term
borrowings
USD
| 109,656.67 | 764,986.86 |
2019-11-
2021-8-
| 7 | 30 |
Lu Thai Tan Chau Long-term
borrowings
USD
| 2,507,548.87 | 17,493,162.43 |
2019-11-
2021-8-
| 20 | 30 |
Lu Thai Tan Chau Long-term
borrowings
USD
| 461,217.60 | 3,217,546.22 |
2019-11-
2021-8-
| 20 | 30 |
Lu Thai Tan Chau Long-term
borrowings
USD
| 128,520.00 | 896,581.22 |
2019-12-
2021-8-
| 4 | 30 |
Lu Thai Tan Chau Long-term
borrowings
USD
| 2,588,953.33 | 18,061,056.22 |
2019-12-
2021-8-
| 5 | 30 |
Lu Thai Tan Chau Long-term
borrowings
USD
| 310,124.17 | 2,163,488.23 |
2019-12-
2021-8-
| 17 | 30 |
Total
--
| 619,853,298.64 |
There was no other significant contingency in the Group to disclose.XIV. Events after Balance Sheet Date
1. Profit Distribution
Unit: RMBProfits or dividends to be distributed 85,812,154.10
Profits or dividends announced to be distributed after the approval 85,812,154.10
2. Notes to Other Events after Balance Sheet Date
(1) Issuance of convertible bonds
On 6 March 2020, the Company received the Ratification on Approval of Public Issuance of Convertible Corporate Bonds of Lu ThaiTextile Co., Ltd. (ZJXK [2020] No. 299) issued by CSRC, in which the Company was approved to publicly issue the convertiblebonds with the total face value RMB 1.4 Billion to the society and the term was 6 years. The issue of convertible bonds wascompleted on 15 April 2020 and the issued amount was RMB1.4 billion.
(2) Equity transfer of Rongchang Pharmacy
On 7 March 2020, the 9
th Meeting of the 9
thBoard of Directors reviewed and approved the Proposal on Transferring PartialContribution to Rongchang Pharmacy. The Company held 4,917,393 shares in Rongchang Pharmacy, occupying 2.92%. Now, theCompany decides to transfer partial shares held in Rongchang Pharmacy with the transfer price is RMB141.6296 million in total.After such transfer, the Company’s amount of contribution to Rongchang Pharmacy will be changed to RMB1,917,393. On 3 March2020, the Company signed the Agreement of Equity Transfer of Rongchang Pharmacy (Yantai) with various transferees.
(3) Impact of epidemic situation of COVID-19
Since the outbreak of COVID-19 in January 2020 (hereinafter referred to as “the epidemic outbreak”), the Company has activelyresponded to and strictly adhered to various regulations and requirements on preventing and controlling the epidemic outbreakpublished by the Party and country. In March 2020, the Europe and America were also stricken with the novel coronavirus outbreak.As the Company’s export sales occupy more than 60%, the domestic and international epidemic situation and various prevention andcontrol measures will exert certain impact on the Company’s production and management and the specific impact depends on theepidemic prevention and control progress achieved by various countries, the duration and the actual implementation of variousprevention and control policies. However, the Company will still pay close attention to the epidemic situation and evaluate andrespond to the epidemic situation’s impact the Company’s financial status and business performance.As of 28 April 2019 (the approval date of the Board of Directors), there was no other event after balance sheet date to disclose.
XV. Notes of Main Items in the Financial Statements of the Company as the Parent
1. Accounts Receivable
(1) Listed by Category
Unit: RMB
Category
Ending balance Beginning balanceCarrying amount Bad debt provision
Carrying
value
Carrying amount Bad debt provision
CarryingvalueAmount
Proportion
Amount
Withdra
walproportio
n
Amount
Proportion
Amount
Withdraw
alproportio
nOf which:
Accounts receivablewithdrawal of baddebt provision of bygroup
439,725,
290.44
100.00%
22,125,7
72.36
5.03%
417,599,5
18.08
332,953,6
33.50
100.00%
16,727,66
0.22
5.02%
316,225,97
3.28
Of which:
Group 1: Undueaccounts (credit
87,886,1
75.56
19.99%
922,804.
1.05%
86,963,37
0.72
73,094,40
9.16
21.95%
372,781.4
0.51%
72,721,627.
insurance insured)Group 2: Undueaccounts (no creditinsurance)
312,932,
456.44
71.17%
15,646,6
22.82
5.00%
297,285,8
33.62
208,215,0
90.51
62.54%
10,411,24
2.18
5.00%
197,803,84
8.33
Group 3: Overdueaccounts (creditinsurance insured)
26,018,4
16.33
5.92%
2,783,97
0.55
10.70%
23,234,44
5.78
40,374,52
7.84
12.13%
3,645,819
.86
9.03%
36,728,707.
Group 4: Overdueaccounts (no creditinsurance)
12,888,2
42.11
2.93%
2,772,37
4.15
21.51%
10,115,86
7.96
11,269,60
5.99
3.38%
2,297,816.69
20.39%
8,971,789.3
Total
439,725,
290.44
100.00%
22,125,7
72.36
5.03%
417,599,5
18.08
332,953,6
33.50
100.00%
16,727,66
0.22
5.02%
316,225,97
3.28
Withdrawal of bad debt provision by group:
Unit: RMBName
Ending balanceCarrying amount Bad debt provision Withdrawal proportionGroup 1: Undue accounts(credit insurance insured)
87,886,175.56
922,804.84
1.05%
Group 2: Undue accounts (nocredit insurance)
312,932,456.44
15,646,622.82
5.00%
Group 3: Overdue accounts(credit insurance insured)
26,018,416.33
2,783,970.55
10.70%
Group 4: Overdue accounts (nocredit insurance)
12,888,242.11
2,772,374.15
21.51%
Total 439,725,290.44
22,125,772.36
--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: RMBAging Carrying amountWithin 1 year (including 1 year) 438,756,039.71
1 to 2 years 634,887.81
2 to 3 years 24,164.00
Over 3 years 310,198.92
3 to 4 years 310,198.92
Total 439,725,290.44
(2) Bad Debt Provision Withdrawal, Reversed or Recovered in the Reporting Period
Withdrawal of bad debt provision:
Unit: RMBCategory
Beginning
balance
Changes in the Reporting Period
Ending balanceWithdrawal
Reversal or
recovery
Write-off OtherBad debtprovision
16,727,660.22
5,806,025.93
407,913.79
22,125,772.36
Total 16,727,660.22
5,806,025.93
407,913.79
22,125,772.36
(3) Particulars of the Actual Verification of Accounts Receivable during the Reporting Period
Unit: RMBItem AmountAccounts receivable actually verified 407,913.79
(4) Top5 of the Ending Balance of the Accounts Receivable Collected according to Arrears Party
Unit: RMBName of entity Ending balance
Proportion to total endingbalance of accounts receivable
Ending balance of bad debt
provisionA 23,481,166.10
5.34%
1,348,278.87
B 16,811,812.65
3.82%
1,222,182.58
C 13,303,001.89
3.03%
206,693.89
D 24,443,651.53
5.56%
894,664.35
E 17,893,286.99
4.07%
229,459.85
Total 95,932,919.16
21.82%
2. Notes Receivable
Category
2019.12.31 2018.12.31
Carrying amount
Bad debtprovision
Carrying value
Carrying amount
Bad debtprovision
Carrying value
Bank acceptance
bill
| Bank acceptance | 4,849,983.90 | 4,849,983.90 | 28,101,500.00 | 28,101,500.00 |
L/C
| 63,048,901.45 | 63,048,901.45 | 63,453,748.34 | 63,453,748.34 |
Total
| 67,898,885.35 | 67,898,885.35 | 91,555,248.34 | 91,555,248.34 |
Note: the Company believes that there is no significant credit risks in bank acceptance bill and L/C held by the Company, and no
significant losses caused by bank default.
(1) There was no notes receivable pledged in the Company at the period-end.
(2) Notes receivable endorsed by the Company or discounted and not due on the balance sheet date at the period-end
Category
period-end
Non-derecognized amountat the period-end
Bank acceptance bill
| Derecognized amount at the | ||
| 271,572,658.93 |
Trade acceptance bill
Total
| 271,572,658.93 |
The bank acceptance bill belongs to bank acceptance with high credit grade which can be used for discount. The credit risk and therisk of deferred payment are low, and the interest risk related to notes has transferred to bank, which the major risks and incomeunder ownership of notes has been transferred as well. Thus, the bank acceptance bill was derecognized at the period-end.
(3) There was no bad debt provision withdrawn, reversed and recovered in the Reporting Period.
3. Other Receivables
Unit: RMBItem Ending balance Beginning balanceOther receivables 838,523,449.52
395,847,213.77
Total 838,523,449.52
395,847,213.77
(2) Other Receivables
1) Other Receivables Classified by Account Nature
Unit: RMBNature Ending carrying amount Beginning carrying amountIntercourse funds 820,813,180.93
358,031,837.54
Export rebates 9,928,747.48
22,505,284.46
Payment on behalf 7,908,873.14
13,005,358.64
Guarantee deposit and cash deposit 3,290,964.29
3,221,373.64
Borrowings and petty cash 998,879.96
1,774,825.33
Other 248,238.60
69,421.93
Total 843,188,884.40
398,608,101.54
2) Withdrawal of Bad Debt Provision
Unit: RMBBad debt provision
First stage Second stage Third stage
TotalExpected credit lossof the next 12 months
Expected loss in the
| duration (credit impairment |
Expected loss in the
not occurred) occurred)Balance of 1 January2019
2,220,825.86
540,061.91
2,760,887.77
Balance of 1 January2019 in the CurrentPeriod
—— —— —— ——Withdrawal of theCurrent Period
1,236,715.29
667,831.82
1,904,547.11
Balance of 31 December2019
3,457,541.15
1,207,893.73
4,665,434.88
Changes of carrying amount with significant amount changed of loss provision in the Current Period
□ Applicable √ Not applicable
Disclosure by aging
Unit: RMBAging Carrying amountWithin 1 year (including 1 year) 838,616,197.46
1 to 2 years 424,174.43
2 to 3 years 1,927,517.79
Over 3 years 2,220,994.72
3 to 4 years 300,000.00
4 to 5 years 4,000.00
Over 5 years 1,916,994.72
Total 843,188,884.40
3) Top 5 of the Ending Balance of Other Receivables Collected according to the Arrears Party
Unit: RMBName of the entity Nature Ending balance Aging
Proportion to ending
receivables%
Ending balance ofbad debt provisionLu Thai (Vietnam) Intercourse funds 561,654,018.48
| balance of total other | ||
Within 1 year 66.61%
1,684,962.06
Xinshen Power Intercourse funds 121,520,000.00
Within 1 year 14.41%
364,560.00
Lu An Garments Intercourse funds 102,736,300.18
Within 1 year 12.18%
308,208.90
Lu Thai Tan Chau Intercourse funds 34,901,347.27
Within 1 year 4.14%
104,704.04
Refund of tax forexport receivable
Export rebates 9,928,747.48
Within 1 year 1.18%
496,437.37
Total -- 830,740,413.41
-- 98.52%
2,958,872.37
4. Long-term Equity Investment
Unit: RMBItem
Ending balance Beginning balanceCarrying amount
Depreciationreserve
Carrying value Carrying amount
Depreciati
| on reserve |
Carrying value
Investment tosubsidiaries
2,422,765,316.04
15,123,011.20
2,407,642,304.84
2,069,693,116.04
2,069,693,116.04
Investment to jointventures and associatedenterprises
103,226,300.00
103,226,300.00
95,554,809.90
95,554,809.90
Total 2,525,991,616.04
15,123,011.20
2,510,868,604.84
2,165,247,925.94
2,165,247,925.94
(1) Investment to Subsidiaries
Unit: RMBInvestee
Beginning balance
(carrying value)
Increase/decrease
Ending balance(carrying value)
reserveAdditionalinvestment
Reducedinvestmen
t
Withdrawal of
depreciationreserve
OtherXinjiang Luthai 147,303,034.16
| Ending balance of depreciation | ||||||
147,303,034.16
Xinsheng Power
176,340,737.93
176,340,737.93
| Lufeng Weaving |
& Dyeing
529,620,000.00
529,620,000.00
Luqun Textile 171,784,550.00
171,784,550.00
Luthai (HongKong)
128,771,800.00
128,771,800.00
Shanghai Luthai
20,000,000.00
20,000,000.00
Lu Thai(Cambodia)
108,242,335.38
108,242,335.38
Lu Thai(America)
10,209,050.00
10,209,050.00
Lu Thai(Burma)
62,337,238.57
62,337,238.57
Beijing Youxian 18,000,000.00
841,000.00
15,123,011.20
3,717,988.80
15,123,011.20
Lu Thai(Vietnam)
632,855,310.00
202,081,200.00
834,936,510.00
Lu An Garments
64,229,060.00
64,229,060.00
Lulian NewMaterials
150,000,000.00
150,000,000.00
Lujia Import &Export
50,000.00
50,000.00
Lu ThaiOccupationalTraining School
100,000.00
100,000.00
Total 2,069,693,116.04
353,072,200.00
15,123,011.20
2,407,642,304.84
15,123,011.20
(2) Investment to Joint Ventures and Associated Enterprises
Unit: RMB
Investee
Beginningbalance(carryingvalue)
Increase/decrease
Ending balance
Endin
gbalance ofdepreciatio
nreserv
e
Additi
onalinvestment
Red
(carrying value)uced
investme
nt
Gains and
lossesrecognizedunder theequity method
| uced |
Adjustm
ent ofothercompreh
ensiveincome
Chang
es ofotherequity
Cash bonusor profitsannounced
to issue
Withdr
awal
ofimpairmentprovisi
on
Other
II. Associated enterprisesHaohongInvestment
95,554,809.90
7,671,490.10
103,226,300.00
Subtotal 95,554,809.90
7,671,490.10
103,226,300.00
Total 95,554,809.90
7,671,490.10
103,226,300.00
(3) Other Notes
As of 31 December 2019, the Company didn’t invested to the subsidiary Shanghai Zhinou.
5. Operating Revenue and Cost of Sales
Unit: RMBItem
Reporting Period Same period of last yearOperating revenue Cost of sales Operating revenue Cost of salesMain operations 4,830,453,763.42
3,561,373,245.36
4,949,117,460.00
| 3,635,767,983.52 |
Other operations 275,257,679.48
236,747,371.64
285,754,682.46
| 242,349,589.43 |
Total 5,105,711,442.90
3,798,120,617.00
5,234,872,142.46
| 3,878,117,572.95 |
Whether the Company has already implemented the new revenue standards
□ Yes √ No
6. Investment Income
Unit: RMBItem Reporting Period Same period of last yearLong-term equity investment incomeaccounted by cost method
167,976,433.62
17,976,433.62
Long-term equity investment incomeaccounted by equity method
7,671,490.10
-1,518,268.37
Investment income from holding of tradingfinancial assets
4,875,806.53
Investment income from disposal of tradingfinancial assets
4,933,528.63
Investment income from holding ofavailable-for-sale financial assets
6,069,367.03
Investment income from disposal of
loss
| financial assets at fair value through profit or |
-47,564,384.05
Total 185,457,258.88
-25,036,851.77
XVI. Supplementary Materials
1. Items and Amounts of Non-recurring Profit or Loss
√ Applicable □ Not applicable
Unit: RMBItem Amount NoteGains/losses from the disposal of non-current assets -1,196,233.94
Government grants recognized in the current period, except for those acquired in the ordinarycourse of business or granted at certain quotas or amounts according to the government’s unifiedstandards
62,198,864.45
| Gain/loss from change of fair value of trading financial assets and liabilities, and derivative financial assets and liabilities, and investment gains from disposal of trading financial assets and |
liabilities, and derivative financial assets and liabilitie
other than valid hedging related to the Company’s common businesses
241,537,682.90
| s, and investment in other debt obligations, |
Other non-operating income and expense other than the above -2,857,141.21
Investment income from disposal of trading financial assets, financial liabilities and investmentin debt obligations
14,162,405.95
Less: Income tax effects 14,593,639.87
Non-controlling interests effects 9,281,939.79
Total 289,969,998.49
--Explain the reasons if the Company classifies an item as an non-recurring gain/loss according to the definition in the ExplanatoryAnnouncement No. 1 on Information Disclosure for Companies Offering Their Securities to the Public—Non-recurring Gains andLosses, or classifies any extraordinary gain/loss item mentioned in the said explanatory announcement as a recurrent gain/loss item
□ 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
shareholders of the Company
12.96%
| Net profit attributable to ordinary |
1.11
1.11
| Net profit attributable to ordinary shareholders of the Company after |
deduction of non-
loss
9.01%
| recurring profit or |
0.77
0.77
Part XIII Documents Available for Reference
1. The financial statements signed and stamped by the Company’s legal representative, Chief Accountant and
Financial Manager;
2. The original copy of the Independent Auditors’ Report carrying the seal of the CPA firm, as well as the personal
signatures of the engagement certified public accountants.
3. The originals of all the Company’s announcements and documents disclosed to the public during the Reporting
Period on Securities Times, Shanghai Securities News, China Securities Journal and Ta Kung Pao.
Chairman of the Board: Liu Zibin
Lu Thai Textile Co., Ltd.
30 April 2020