Lu Thai Textile Co., Ltd. Interim Report 2018
LU THAI TEXTILE CO., LTD.
INTERIM REPORT 2018
August 2018
Lu Thai Textile Co., Ltd. Interim Report 2018
Part I Important Notes, Table of Contents and Definitions
The B oard of Di rectors (or the “Board”), the S upervi sory Committ ee 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 co mpleteness 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 C ompany’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.Except for the following directors, all the other directors attended in person the Board
meeting for the review of this Report and its summary.
Name Office title
Reason for not attending in
person
Proxy entrusted to attend the
meetingXu Zhinan Director For reason of work Liu ZibinZeng Facheng Director For reason of work Qin GuilingBi Xiuli Independent Director For reason of work Xu JianjunZhao Yao Independent Director For reason of work Wang Xinyu
The Company has described in detail in this Report the possible risks. Please refer to thecontents unde r the subheading “Risks Facing the Company and Countermeasures” in “PartIV 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 d esignated by the Company for its information disclosure in2018. And all i nformation 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 Company has no interim dividend plan, either in the form of cash or stock.This Report and its summary have been prepared in both Chinese and English. Should therebe any discrepancies or misunderstandings between th e two versions, the Chinese versionsshall prevail.
Lu Thai Textile Co., Ltd. Interim Report 2018
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 ...... 9
Part IV Oper ating Performance Discussion and Analysis ...... 12
Part V Significant Events ...... 22
Part VI Share Changes and Shareholder Information ...... 32
Part VII Preferred Shares ...... 36
Part VIII Di r ectors, Supervisors and Senior Management ...... 36
Part IX Corporate Bonds ...... 39
Part X F ina ncial Report ...... 40
Part XI Documents Available for Reference ...... 153
Lu Thai Textile Co., Ltd. Interim Report 2018
Definitions
Term DefinitionThe “Comp any”, “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 Commission
RMB, RMB’0,000
Expressed in the Chinese currency of Renminbi, expressed in
Lu Thai Textile Co., Ltd. and its consolidated subsidiaries, except where theten thousand
RenminbiThe “Comp any 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 2018 to 30 June 2018
Lu Thai Textile Co., Ltd. Interim Report 2018
Part II Corporate Information and Key Financial Information
I Corporate Information
Stock name LTTC, LTTC-B Stock code 000726, 200726Changed stock name (if any) N/A
listing
Shen zhen S to ck E xchange
Company name in Chinese 鲁泰纺织股份有限公司Abbr. (if any) 鲁泰纺织
Stock exchange for stockCompany name in English (if
any)
LU THAI TEXTILE CO., LTD.Abbr. (if any) LTTC
Legal repr esentative Liu Zibin
II Contact Information
Board Secretary Securities RepresentativeName Qin Guiling Zheng Weiyin and Li Kun
Address
No. 81,
Company name in English (ifSongling East Road, Zichuan
District, Zibo, Shandong, P.R. China
No. 81,
Songling East Road, Zichuan | Songling East Road, Zichuan |
District, Zibo, Shandong, P.R. ChinaTel. 0533-5266188 0533-5285166Fax 0533-5418805 0533-5418805
Email addr es s qinguiling@lttc.com.cn wyzheng@lttc.com.cn,likun@lttc.com.cn
III Other Information
1. Contact Information of the Company
Indi cate by tick mark wheth er any change occurred to the register ed address, office address and their zi p codes, websit e address andemail address of the Company in the Reporting Period.
□ Applicable √ Not applicable
No change occurred to the said information in the Reporting Period, which can be found in the 2017 Annual Report.
Lu Thai Textile Co., Ltd. Interim Report 2018
2. Media for Information Disclosure and Place where this Report is Kept
Indicate by tick mark whether any change o ccurred to the information disclosure media and the place for keeping the Company’speriodic reports in the Reporting Period.
□ Applicable √ Not applicable
The newspapers designated by the Company for information disclosure, the website designated by the CSRC for disclosing theCompany’s periodic reports and the place for keeping such reports did not change in the Reporting Period. The said information canbe found in the 2017 Annual Report.
IV Key Financial Information
Indicate by tick mark whether there is any retrospectively restated datum in the table below.
√ Yes □ No
Business combination under common control resulted in the retrospective restatements in the following table.
H1 2018
H1 2017 Change (%)Before Restated RestatedOperating revenue (RMB) 3,281,014,155.43
2,990,459,696.43
2,997,093,395.84
9.47%
Net profit attributable to
company’s shareholders (RMB)
377,355,959.02
the listed |
393,069,981.55
395,130,296.26
-4.50%
Net profit attributable to
the listed |
company’s shareholders
exceptio nal items (RMB)
366,948,339.88
before |
385,081,158.45
387,141,210.63
-5.22%
Net cash generated from/used in operating |
activities (RMB)
697,784,710.77
342,919,758.30
343,246,750.57
103.29%
Basic earnings per share (RMB/share) 0.41
0.43
0.43
-4.65%
Dilut ed earnings per share (RMB/share) 0.41
0.43
0.43
-4.65%
Weighted average return on equity (%) 5.13%
5.58%
5.58%
-0.45%
30 June 2018
31 December 2017 Change (%)Before Restated RestatedTotal assets (RMB) 10,233,390,492.09
10,170,624,027.75
10,170,624,027.75
0.62%
Equity
shareholders (RMB)
7,060,561,399.27
attributable to the listed company’s |
7,230,942,770.16
7,230,942,770.16
-2.36%
Lu Thai Textile Co., Ltd. Interim Report 2018
V Accoun ti ng Data Di f feren c es u n d er China’s Accounting Standards for Business Enterpris es(CAS) and International Financial Reporting Standards (IFRS) and Foreign AccountingStandards
1. Net Profit and Equity Differences under CAS and IFRS
√ Applicable □ Not applicable
Unit: RMB
Net profit attributable to the listed company’s
shareholders
Equity attributable to the listed company’s
shareholdersH1 2018 H1 2017Ending amount Beginning amount
Under CAS377,355,959.02
395,130,296.26
7,060,561,399.27
7,230,942,770.16
Adjustments as per IFRS
deferred income under IFRS
Effect of tax credit from homemade equipment purchases bei ng recognized as |
164,500.00
Under IFRS377,355,959.02
395,294,796.26
7,060,561,399.27
7,230,942,770.16
2. Net Profit and Equity Differences under CAS and Forei gn Acco unti ng Sta nd ar ds
□ Applicable √ Not applicable
No such differences for the Reporting Period.
3. Reasons for Accounting Data Di fferenc es Above
□ Applicable √ Not applicable
XI Exceptional Gains and Losses
√ Applicable □ Not applicable
Unit: RMBItem Reporting Period NoteGain or loss on disposal of non-current assets (inclusive of impairment allowance write-offs) -1,603,714.32
Government subsidies charged to current profit or loss (exclusive of gove
rnment subsidies given in the Company’s ordinary course of business at fixed quotas or amounts as per |
government’s uniform standards)
39,071,113.48
Gain or loss on fair-
value changes in trading financial assets and liabilities & investment |
in come f rom d isposal of trading financial assets and liabilities and available-for-
business)
-22,104,388.63
sale financial assets (exclusive of effective portion of hedges that arise in the Company’s ordinary course of |
Lu Thai Textile Co., Ltd. Interim Report 2018Non-operating income and expense other than above 2,097,576.54
Less: Income tax effects 5,975,920.72
Non-controlling interests effects (net of tax) 1,077,047.21
Total 10,407,619.14
--Explanation of why the Company classifies a gain/loss item as exceptional according to the definition in the ExplanatoryAnnouncement No. 1 on Information Disclosure for Companies Offering Their Securities to the Public—Exceptional Gain/LossItems, o r reclassifies any exceptional item listed in the said explanatory announcement as recurrent:
□ Applicable √ Not applicable
No such cases for the Reporting Period.
Lu Thai Textile Co., Ltd. Interim Report 2018
Part III Business Summary
I Core Business Scope of the Company in Reporting Period
Is the Company subject to any disclosure requirements for special industries?No.No changes occurred to the Company’s core businesses, prim ary products, business models and major growth drivers in theReport ing Period.
Lu Th ai 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 it s co mpreh ens ive manage men t, R &D abi lit y, advanced technolo gy, international devel op ment p lan 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-grad e yarn dyed fabric producer and a worl d-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. 70% of Lu Thai’s products are exported to over 30 countries andregions including America, the EU and Japan, of whi ch more than 70% is under the Company’s own brand. So far, the Company hastaken up around 18% of t he world market of yarn dyed fabric for medium- and high-end shirts.
II Material Changes in Major Assets
1. Material Changes in Major Assets
Major as sets Main reason for material changes
progress
The amount as at 30 June 2018 was RMB212,917,526.85, up 35.25% from
Construction in | the beginning amount, primarily driven by increased investments in Lu Thai Vietnam’s second phase project and the construction projects of the |
Company as the parent.Engineering
materials
The amount as at 30 June 2018 was RMB152,136,560.03, up 167.31%
driven by a rise in Lu Thai Vietnam’s equipment to be installed.
2. Major Assets Overseas
√ Applicable □ Not applicable
Lu Thai Textile Co., Ltd. Interim Report 2018
Asset Formation
Asset size Location
Operating
model
Controlmeasures toensure as set
safety
Earnings
In theCompany’snet assets (% )
Major
impairment |
riskLu Thai
(Hong Kong)Textile Co.,Ltd.
Incorporated
149,581,052.94
HongKong
Marketing
Mainmanagement
personnel sent |
by theCompany as
the parent
1,455,136.51
1.96%
None
Lu Thai(America)Textile Co.,Ltd.
Incorporated
8,038,525.46
New York Marketing
Mainmanagement
personnel sent |
by theCompany as
the parent
-922,064.37
0.11%
None
Lu Thai(Cambodia)Textile Co.,Ltd.
Incorporated
143,111,761.17
SvayRieng
Manufacturi
ng
Mainmanagement
personnel sent |
by theCompany as
the parent
6,698,530.22
1.88%
None
Lu Thai(Burma)Textile Co.,Ltd.
Incorporated
73,656,698.21
Rangoon
Manufacturi
ng
Mainmanagement
personnel sent |
by theCompany as
the parent
-708,600.57
0.97%
None
Lu Thai(Vietnam)Textile Co.,Ltd.
Incorporated
1,437,372,805.22
Tay Ninh
Manufacturi
ng
Mainmanagement
personnel sent |
by theCompany as
the parent
40,012,706.19
18.87%
None
Lu A nGarmentsCo., Ltd.
Incorporated
129,387,425.52
Anjiang,Vietnam
Manufacturi
ng
Mainmanagement
personnel sent |
by theCompany as
the parent
-2,713,164.81
1.70%
None
Lu Thai Textile Co., Ltd. Interim Report 2018
III Core Competitiveness Analysis
Is the Company subject to any disclosure requirements for special industries?No.The comprehensive management ability, research and development ability, technological accumulation and global planning of theCompany’s whole industry chain are the Company's core competitiveness, which did not change during the Reporting Period.1. A complete industrial chain and a global network: The Company boasts a complete industrial chain from cotton planting, yarning,dyeing, weaving and post-processing to cloth manufacturing, and thus enjoys the cost advantage brought by complete steps forproducing high-end dyed textile. The Company has set up production bases in Cambodia, Burma, Vietnam, etc., a design agency inItaly and a market service agency in America, which hel ps give full play to its international resources, form a global bu sinessnetwork and solidify its internationally leading position as a yarn-dyed fabric maker.2. The sound comprehensive management capacity and an efficient quality control system: The Company has passed ISO9000quality management system, ISO14000 environmental management system, OHSAS18000 occupational health safety managementsystem, and SA8000 social accountability management system successively from 1995. Ever since 2007, the Company has alsopassed WRAP: 1999 global garment production social accountability standard, C-TPAT: 2004 anti-terrorism standard, OE100 andGOTS organic cotton system certification and CNAS national laboratory recognition, to reali ze the internationalization andstandardization of the Company’s management. In order to pursue the operational management of performance excellence and betterthe Company’s performance and capability, the Company has gradually introduced GB/T19580-2004 -Standards for PerformanceExcellence Evaluation, created “Great Quality” system and promoted management innovation, to ensure the Company’s businessquality.3. It enjoyed strong R&D capability and high-end technological platform for cooperation. The Company highly valuedself-dependent innovation and made full use of various technology platforms, inclusive of the National Enterprise Technical Center,National Talent-in draught Demonstration Base and Shandong Engineering and Technological Research Center. Moreover, Lu Thaialso reinforced its technical cooperation with scientific research institutes, colleges and universities, strategic clines and majorsuppliers. It was committed to cutting-edge technical research, and transformed itself from product development to technicalresearches step by step. What’s more, the Company also upgraded itself from overcoming key technological difficulties to mastertechnical principles and set up industrial standards. In the past, it only focused on technical innovation, but now, it is exploring newtechnology on one hand and boosting innovation on the other for better growth. Consequently, the Company pushed forward itsdevelopment in a green, low-carbon and cyclic manner and strengthened its vitality and growing momentum. Meanwhile, the shareof technology to its development was also increased, which could push forward industrial up gradation.4. It boasted considerate and efficient customer’s service. With customer-oriented principle as its guidance, the Companycomprehensively enhanced its quality control so as to persistently provide high standard service and set up an industry-leading brandimage, which, in return, could help to win customer’s satisfaction and market recognition. Quality awareness was weaved into everystep of the manufacturing process and the impeccable quality traceability ensured product reputation. Objective analysis and thinkingin the customer’s perspective was the Company’s service rule, which also helped to win the customers’ trust.
Lu Thai Textile Co., Ltd. Interim Report 2018
Part IV Operating Performance Discussion and Analysis
I Overview
For the Reporting Period, the Company recorded operating revenue of RMB3,281 million, an operating profit of RMB452 million, anet profit attributable to the listed company’s shareholders of RMB377 million and a net prof it b efore excep tion al items of RMB367million, up 9.47%, -7.99%, -4.50% and -5.22% respectively from the same period of last year. No changes have occurred to the corebusinesses, the main profit sources and structure of the Company in this period.During the Reporting Period, the Company continued to steadily promote “Improving Quality and Efficiency” and “ComprehensiveInternationalization”, maintaining the sound, stable and sustained development trend; made smooth progress in overseas projects andbasically achieved th e design expectation; initiated the establishment of the new retail platform Luthai?1987 based on the S2B2Cmode and opened up online and offline OMO mode, enabling Luthai to better serve end customers together with its partners. TheCompany deepened its relationship with customers through proactive measures such as adjustment of product structure, integrationof supply chains, design and development connection, brand cooperation, overseas expansion and e-commerce platforms and facingnew characteristi cs and new demands of the market, kept improving product design concept and innovating service mode to satisfycustomers’ demands and market trend. During the Reporting Period, the Company was named as “2018 Top Twenty Enterprise ofChina Dyeing and Printing Industry” by CDPA, won the title of “China Quality Award for Textile Industry” granted by CNTAC, wasranked among the top 50 in the field of textile, garments, shoes and hats by China Council for Brand Development, was named as“2017 Top Ten Enterprise for Key Business Revenue in Yarn-Dy ed Fabric Industry” and “2017 Top 100 Enterprise for Key BusinessRevenue in Cotton Textile Industry” by China Cotton Textile Association and as “Demonstration Enterprise of Social Responsibilitiesin Shandong”.During the Reporting Period, the Company intensified the building and training of its team of design talents and kept deepening theearly-stage communication and cooperation with strategic customers in the design of fabrics and shirts, gaining favorable marketresponse. The Company won the Award of Best Market Application for its works Modest Luxury ? Distinctive Flowers in 2018 ChinaInternational Fabrics Design Competition and appraising of 2019 Spring-Summer China Fashionable Fabrics. Luthai Textile won thetitle of “Fifth China Advanced Unit for Development of Textile Fabric Designers”.During the Reporting Period, the Company continued to persist in R&D investments, making new achievements in two national keyR&D projects of the 13th Five-Year Plan as well as in the application of new materials, research of new fabrics, key technologies ofnew product development and research of equipment upgrading. As of the reporting period, the Company had been granted a total of301 licensing patents, and 1 software copyright; and hosted or participated in the formulation of 40 national and industrial standards.At the current stage, Lu Thai, with natural fabric as its flagship, multi-component functional fiber fabric as its spearhead,wash-and-wear non-ironing technology as its core competency, the latest consumption trend as its guidance and internationalizedindustrial manufacturing as its basis, is sparing every effort to attain a global integrated development, so as to ensure its leadingposition in the yarn-dyed shirt fabric sector.
II Analysis of Core Businesses
Summary:
For the Reporting Period, operating revenue, cost of sales and administrative expense increased 9.47%, 15.08% and 3.77%respectively on a year-on-year basis; and selling expense, finance costs and income tax expen se went down 2.08%, 1.31% and20.36% r espectively from a year earli er. Net cash generated from operat ing activities went u p 103.29% mainly due to a rise in cash
Lu Thai Textile Co., Ltd. Interim Report 2018proceed s from pr od uct sales. Net cash gener ated fro m investing activities dropped 90.13% mainly because of a rise in cash paymen ts
for fixed assets in the Current P eriod and the same period of last year seeing pro ceeds from selling mar ketable securities. Net cashgenerated fr o m financing acti vities were down 74.51% main ly because of the payments for the B-stock repurchase programme. Andnet increase in cash and cash equivalents went up 91.18% mainly owing to a rise in net cash generated from operating activities.Year-on-year changes in key financial data:
Unit: RMBH1 2018 H1 2017 Change (%)
Main reason for changeOperating revenue
3,281,014,155.43
2,997,093,395.84
9.47%
Cost of sales
2,360,836,431.41
2,051,483,003.79
15.08%
Selling expense 66,941,088.56
68,365,512.22
-2.08%
Administrative expense 325,870,756.50
314,037,319.49
3.77%
Finance costs 30,525,225.31
30,930,178.28
-1.31%
Income tax e xpense 63,275,514.57
79,455,627.02
-20.36%
R&D expense 162,596,245.80
158,802,502.01
2.39%
operating activities
697,784,710.77
Net cash gen erated from/used i n |
343,246,750.57
103.29%
A rise in cash proceeds from productsales
investing activities
-423,627,352.67
Net cash gen erated from/used i n |
-222,814,977.08
-90.13%
A rise in cash payments for fixedassets in the Current Period and thesame period of last year seeingproceeds f r om selling marketablesecurities
financing activities
-285,883,409.46
Net cash gen erated from/used i n |
-163,823,565.09
-74.51%
Payments for the B-stock repurchaseprogramme
equivalents
-5,067,323.02
Net increase in cash and cash |
-57,458,811.02
91.18%
A rise in net cash generated fro moperating activitiesMaterial changes to the profit structure or sources of the Company in the Reporting Period:
□ Applicable √ Not applicable
No such changes in the Reporting Period.Breakdown of core businesses:
Unit: RMB
Operating
revenue
Gross profit
margin
YoY change in
Cost of sales | operating revenue |
(%)
YoY change incost o f sales ( %)
YoY change in
gross profitmargin (%)By operating division
apparel
2,921,119,883.93
Textile and |
2,058,587,657.40
29.53%
5.70%
11.01%
-3.36%
Cotton 101,088,256.72
93,918,390.99
7.09%
204.77%
208.99%
-1.27%
Electricity and |
101,760,249.29
98,746,424.74
2.96%
62.49%
41.84%
14.12% |
Lu Thai Textile Co., Ltd. Interim Report 2018steam
Other 37,033,179.78
35,574,083.44
3.94%
86.89%
135.64%
-
19.87% |
By product categoryFabric products 2,320,025,830.76
1,619,838,034.26
30.18%
8.28%
13.77%
-3.37%
Shirts 601,094,053.17
438,749,623.14
27.01%
-3.19%
1.88%
-3.63%
Cotton 101,088,256.72
93,918,390.99
7.09%
204.77%
208.99%
-1.27%
Electricity and |
steam
101,760,249.29
98,746,424.74
2.96%
62.49%
41.84%
14.12% |
Other 37,033,179.78
35,574,083.44
3.94%
86.89%
135.64%
-
19.87% |
By operating segmentHong Kong 184,569,814.29
129,348,144.91
29.92%
-8.43%
-3.72%
-3.43%
Japan And
Korea
211,981,297.61
South |
151,618,766.06
28.48%
-6.51%
-1.50%
-3.63%
Southe ast A sia 760,347,221.55
531,269,449.03
30.13%
25.33%
31.67%
-3.36%
Europe and |
America
577,623,099.67
412,656,452.50
28.56%
-1.14%
3.63%
-3.29%
Other 320,588,111.47
225,341,185.18
29.71%
-5.58%
-0.74%
-3.43%
Mainland China 1,105,892,025.13
836,592,558.89
24.35%
20.16%
28.19%
-4.74%
III Non-Core Business Analysis
√ Applicable □ Not applicable
Unit: RMBAmount
Source/reason ContinuityInvestmen t g ains 4,646,023.78
In total profits (%) | |
1.02% |
Gains on delivery of financial assets (liabilities)such as for ward exchange settlement, and losseson equ ities investment.
NoGains/losses on fair
value changes
-28,481,010.00
-
6.28% |
Losses on fair val ue changes of financial assetsand financial liabilities
NoAsset i mpai rment 2,121,494.84
0.47% |
Losses on bad-debt provisi o n for inventory NoNon-operatingrevenue
3,011,072.58
0.66% |
Claim for compensation NoNon-operating
expense
1,994,923.71
0.44% |
Losses on damage and scrap of n on-current assets
No
Lu Thai Textile Co., Ltd. Interim Report 2018
IV Analysis of Assets and Liabilities
1. Material Changes in Asset Composition
Unit: RMB
30 June 201 8 30 June 2017
Change inpercentage
(%)
material
change |
Value As % of total assets
Value
As % of total
assetsMonetary funds 671,721,970.36
6.56%
601,918,539.58
6.27%
0.29%
Accountsreceivable
356,818,963.69
3.49%
284,403,883.10
2.96%
0.53%
Inventories 2,017,424,627.73
19.71%
2,062,727,887.61
21.48%
-1.77%
Investmentproperty
23,856,705.69
0.23%
25,220,354.21
0.26%
-0.03%
Long-term equityinvestment
95,806,134.43
0.94%
0.00%
0.94%
Fixed assets 5,359,308,862.06
52.37%
5,182,031,627.12
53.96%
-1.59%
Construction inprogress
212,917,526.85
2.08%
267,448,802.45
2.78%
-0.70%
Short-termborrowings
1,458,058,962.33
14.25%
1,170,346,491.12
12.19%
2.06%
Long-termborrowings
69,431,359.47
0.68%
0.00
0.00%
0.68%
2. Assets and Liabilities at Fair Value
√ Applicable □ Not applicable
Unit: RMB
Item
Beginning
amount
Gain/loss on
fair-valuechanges inReporting
Period
Cumulative
fair-valuechangescharged to
equity
Impairmentallowance for
Reporting
Period
Purchased in
Reporting
Period
Sold inReporting
Period
Financial assets
Ending amount | ||
derivatives)
0.00
1. Financial assets at fair value through profit or loss (exclusive of |
Subtota l of0.00
Lu Thai Textile Co., Ltd. Interim Report 2018financial as sets
Total of above
0.00
0.00
Financialliabilities
0.00
-28,481,010.00
28,481,010.00
Material changes in the measurement attributes of the major assets in the Reporting Period:
□ Yes √ No
3. Restricted Asset Rights as of End of the Reporting Period
Not applicable
V Investments Made
1. Total Investments Made
√ Applicable □ Not applicable
Investmen ts made in the Reporting Period
(RMB)
Investmen ts made in same period of last
year (RMB)
+/-%0.00
0.00
0.00%
2. Significant Equity Investments Made in the Reporting Period
□ Applicable √ Not applicable
3. Significant 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'0,000Operat
or
Relati
onship
Connect
Type of
onship | derivative |
Initialinvestment
Starting
date
Ending
date
Beginning
Purchased
in the
Reporting
Impairment
Endinginvestment
Proporti
on of
Sold in the | Actual |
gain/lo
Lu Thai Textile Co., Ltd. Interim Report 2018
withtheComp
edtransactio
n
amount invest
mentamoun
t
Reporting
Period
Period provisi
on (ifany)
any |
amount closing
investme
ntamount
in theCompan
y’sending
netassets
ss intheReport
ing
Period |
Commercialbank
Non-connect
ed
No
Forwardexchangesettlement
59,531.89
2018
January2019
February |
59,531.89
21,477.86
38,054.03
5.00%
68.43
Commercialbank
Non-connect
ed
No
Foreignexchangeoption
219,775.64
November 2017
December 2018
19,800
199,975.64
134,129.87
85,645.77
11.24%
540.37
Commercialbank
Non-connect
ed
No
Forwardexchangetransactions
24,216.03
March2018
December 2018
24,216.03
16,881
7,335.03
0.96%
24.92
Commercialbank
Non-connect
ed
No
Foreignexchangeswap
5,925.81
March2018
1 1 April2018
5,925.81
5,925.81
3.95
Total 309,449.37
-- -- 19,800
289,649.37
178,414.54
131,034.83
17.20%
637.67
Capital source for derivativeinvestment
Self-owned fundsLawsuit (if applicable) Naught
Disclosure date of board ofdirectors announcement onapproval of derivativeinvestment (if any)
28 Apr il 2017Disclosure date of general
meeting of shareholdersannouncement on approval ofderivati ve i nvestment (if any)
Analysis on risks and controlmeasures of derivative p roducts
held in the Reporting Period
(including but not limited to market risk, liquidity risk, credit risk, operation risk, law risk, | The Company conducted derivatives products transaction in order for hedging. And the forward |
settlement hedging was operated by installments, with the
derivati ves produ cts transacti ons. And all der ivatives prod ucts transact ion was zero -
deposit. Meanwhile, the Company had a complete risk control system for sufficient analysis and prevention of possible risks |
such as market risk, liquidity risk and credit risk, operation risk and risk of laws and regulation.1.
Lu Thai Textile Co., Ltd. Interim Report 2018etc.) changes in exchange rates and interest rates may have an adve
risk-
controlled financial derivative tools with simple structure and good liquidity to carry out the hedging |
business, stri
strateg y according to market changes in a timely manner.2. Liquidity risk and credit risk: a credit risk arising from failure of the contractually due Company o
r 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 production and operation scale as
guarantee deposit and can still be guaranteed in performance after the contract expires by
means of extension and balance settlement etc. to prevent t he Company from credit damages due to lack of liquidity. The Company selects financial institutions with strong capability and good reputation as a |
counterparty and signs standard derivative trading contracts to strictly control c
counterparty.3. Operation risk:
The derivat ives
had high specialty and complexity, so imperfect internal operation procedures, staffs and |
external events would make the Company t o undertake risks during the transaction.
measures: T he Company
promulgated strict authorization and approval system and perfect regulatory mechanism, fixed the operation procedures and approval procedures system to conduct derivative |
produ cts tran saction, establi shed
strengthening the professional ethics education and business training for them.
Besides, it established the |
System of Reporting the Abnormal Situation Timely
maximum.4. R isk of laws and regulation:
The Company conducted derivatives product s transaction in strict accordance with rel
evant laws and |
rules. If
legal documents signed. Risk control
measures: 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.
compliant examination on derivative products transaction business. The Company conducted der
ivative |
transacti on business
regulations, the Company’s Articles of Associati on , th e Man agemen t R ules for Der ivati ve Transaction
of |
Lu Thai Textile Co., Ltd. and the Proposal on the Plan of Lu Thai Textile Co., Ltd. for
Transactions approved at the 7
th
M eeting of the 8
th
B oard of Directors on 26 April 2017
, and performed |
relevant information disclosure responsibilities.
values in the Reporting Period
of the invested derivatives. And the analysis on the fair value of |
the derivatives should
include | 1. As of 30 June 2018, the Company held a total of 50 immature derivative contracts worth |
US$204,285,800 in total, which were forward settlement of exchange, foreign exchange op
derivatives occupied 17.20% of the net assets as at the period end.2. From January to June 2018, the total amount of the Company’s matur
ed financial derivatives was |
Lu Thai Textile Co., Ltd. Interim Report 2018
parameters.
US$287,412,400, including an execution of US$284,412,400 with the gains of RMB6
the specific use methods and the relevant assumptions and | ,376,700 and an |
extension of US$3 million. Of all the derivatives, the matured forwar
US$33.5 million, which had been delivered in full with the gains of RMB684,300; the matured
foreign |
exchange op ti ons was US$ 219 million, including an execution of US$
contracts with the gains of RMB5,403,700 and an extension of US$3 million; the matured fo
reign |
exchange trad ing was US$
the matured foreign exch ange swap was US$
9,399,300, which had been delivered in full with the gains |
of RMB39,500.
occurred
to the Company’s accounting policy and specific accounting principles of |
derivatives in the
Period
compared to the previous |
Report ing Period
No sign ifi cant changes
Company’
s derivatives |
investment and risk control
The Company
opinion that it will strengthen the Company
’s competitiveness to use derivative transactions with focus on forward settl ement an d pu rch ase as an effective too l to avo id forei gn exch ange ri sks, to st rengt hen the |
relevant internal control and to carry out the loss and ris
purchase, t he Company
follows a legal approval procedure, has sound relevant institutions and keeps the |
risks relatively controllable. No harm has been done to the interests of the Company’s shareholders.
VI 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 Main Controlled and Joint Stock Companies
√ Applicable □ Not applicable
Main subsidiaries and joint stock companies with an over 10% influence on the Company’s net profit
Unit: RMBCompany Relation
Mainbusine
Registered Total assets Net assets Operating Operating Net profit
Lu Thai Textile Co., Ltd. Interim Report 2018
name ship
with theCompan
y
ssscope
capital revenues profit
Lu Thai(Vietnam)Textile Co.,Ltd.
Subsidiary
Fabric 632,855,310.00 1,437,372,805.22
620,547,451.12
249,790,705.43
40,008,592.34
40,012,706.19
Subsidiaries obtained or disposed in the Reporting Period
□ Applicable √ Not applicable
Particulars about the main controlled and joint stock companies:
Lu Thai (Vietnam) Co., Ltd. is a wholly-owned subsidiary of the Company established in Vietnam in 2015. With a total investmentof US$150 million, the subsidiary now has 60,000 spindles and a capacity of 30 million meters of yarn-dyed fabrics. Theestablishment o f the subsidiary will give better play to the Comp any’s technical experience and bran d advantages in the yarn-dyedfabric industry, integrate domestic and foreign advantageou s resources, effectively avoid the impact of potential trade barriers,increase the Company’s internationalized production scale and maintain the Company’s leading position in the global yarn-dyedfabric industry. As of the end of the Reporting Period, Lu Thai (Vietnam) Co., Ltd. had total assets of RMB1.437 billion and netassets of RMB621 million and achieved operating revenues of RMB250 million and net profits of RMB40 million. During theReporting Period, the subsid iary achieved steady improvements in production and operation and synchronous growth of operatingrevenues and net profits. Currently, the introduction of the new 76,000-spinning production line to Phase II Spinning and theexpansion of the annual capacity of 40 million meters of yarn-dyed fabrics are under construction as scheduled.
VIII Structured Bodies Controlled by the Company
□ Applicable √ Not applicable
IX Performance Forecast for January-September 2018
Warning of possible loss or considerable YoY change in the accumulative net profit made during the period-beginning to the end ofthe next reporting period, as well as the reasons:
□ Applicable √ Not applicable
X Risks Facing the Company and Countermeasures
Risks that bring adverse impact to company development strategy and business objectives and countermeasures of the Company(1) Economic environment: the world economy is getting better, but trade protectionism and economic policies of advancedecono mies, especiall y the uncertain risks o f monetary poli cy, pose greater threats to the recovery of the world economy, producing acertain degree of uncertainty on the market environment that the Company faces. Meanwhile, the new development of China’seconomy shows more characteristics such as speed change, structural ad justment and dynamic changes. The economic trend istowards stability. To cope with these impacts, the Company will work hard to maintain the international market and develop thedomestic market to balance development of domestic and foreign sales.
Lu Thai Textile Co., Ltd. Interim Report 2018(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, exchan ge rates and quotas. Furthermore, with the development ofenvironmental protection policies, the cost of dyeing auxiliaries also increased. Therefore, besides ensuring the stable supply oflong-staple cotton by the subsidiary in Xinjiang, the Company must study the market dynamics to reduce the cost fluctuations due tochanges in raw cotton price, and develop with the concept of green and environmental protection to meet environmental protectionrequirements.(3) Exchange rate changes: at present and in the future, the Company will continue to sell its products mainly in the internationalmarket for a long period of time, and US dollars will account for a relatively larger portion in sales reven ue. In addition, the mainmachinery and equipment and some of its raw materials of the Compan y are also imported. The foreign currencies pa yment forimports includes US dollar and other currencies. Moreover, the commissioning of the Company's overseas production base andsubsequent expansion of investment will increase the use of US dollar. Therefore, the Company will still be sensitive to the impact ofexchange rate changes.In order to redu ce adver se in fluence o f exchange rat e fluctu ati on, the Company ado pt ed the follo wing measures: firstl y, the Companyconducted foreign exchange hedging, using forward FX sales and purchase, forward foreign exchange trading and option portfoliosto avoid some risks S econdly, the Company made reasonable arrangement o n settlement day and currency stru cture and conclusionof agree ments on fixed forei gn exchange r ate to avoid exchange rat e-related risks. Thirdly, the Company adjusted the Renminbi andforeign-currency liabilities structure to control financial costs. Fourthly, according to the fluctuation trend of exchange rates, theCompany properly adjusted imports of raw and auxiliary materials to partially offset the influence of exchange rate fluctuations onthe Company.
Lu Thai Textile Co., Ltd. Interim Report 2018
Part V Significa nt Events
I Annual and Extraordinary General Meeting Convened during the Reporting Period
1. General Meeting Convened during the Reporting Period
Meeting Type
Investor
Conve ne d da t e Disclosure date Index to disclosed information
The 1
st
Extraordinary
participation ratio | ||
General Meeting |
of 2018
ExtraordinaryGeneralMeeting
0.00%
8 February 2018 9 February 2018
Announcement of Resolution (No.2018-007) published on SecuritiesTimes, China Securities Journal,Shan ghai Securities News, and HongKong Ta Kung Pao and
http://www.cninfo.co on 9 February
2018.The 2
nd
Extraordinary
General Meeting |
of 2018
ExtraordinaryGeneralMeeting
0.00%
23 Marc h 201 8 24 March 2018
Announcement of Resolution (No.2018-013) published on SecuritiesTimes, China Securities Journal,Shan ghai Securities News, and HongKong Ta Kung Pao and
http://www.cninfo.co on 24 March
2018.The 2017
Annual Gener al
Meeting
AnnualGeneralMeeting
0.00%
16 May 2018 17 May 2018
Announcement of Resolution (No.2018-025) published on SecuritiesTimes, China Securities Journal,Shan ghai Securities News, and HongKong Ta Kung Pao and
http://www.cninfo.co on 17 May 2018.
2. Extraordinary General Meeting Convened at Request of Preference Shareholders with Resumed VotingRights
□ Applicable √ Not applicable
II Interim Dividend Plan for the Reporting Period
□ Applicable √ Not applicable
The Company has no interim dividend plan.
Lu Thai Textile Co., Ltd. Interim Report 2018
III Commitments of the Company’s Actual Controller, Shareholders, Connected Parties andAcquirer, as well as the Company and Other Commitment Makers, Fulfilled in the ReportingPeriod or still Ongoing at Period-End
□ Applicable √ Not applicable
The Company has no interim dividend plan.
IV Engagement and Disengagement of CPAs Firm
Has the Interim f inancial report been audited?
□Yes √ No
This Interim Report is unaudited.
V Explanations Given by Board of Directors and S upervisory Committee Regarding“Modified Auditor’s Report” Issued by CPAs Firm for the Reporting Period
□ Applicable √ Not applicable
VI Explanations Given by Board of Directors Regarding “Modified Auditor’s Report” Issuedfor Last Year
□ Applicable √ Not applicable
VII Bankruptcy and Restructuring
□ Applicable √ Not applicable
No such cases in the Reporting Period.
VIII Legal Matters
Significant lawsuits or arbitrations:
□ Applicable √ Not applicable
No such cases in the Reporting Period.Other leg al matters:
□ Applicable √ Not applicable
Lu Thai Textile Co., Ltd. Interim Report 2018
IX Punishments and Rectifications
□ Applicable √ Not applicable
No such cases in the Reporting Period.
X Credit Conditions of the Company as well as its Controlling Shareholder and ActualController
□ Applicable √ Not applicable
XI Eq ui ty In cen tiv e Pla n s, Empl oy ee S tock Ownership Plans or Other Incentive Measures forEmployees
□ Applicable √ Not applicable
No such cases in the Reporting Period.
XII Significant Connected Transactions
1. Connected Transactions Relevant to Routine Operations
□ Applicable √ Not applicable
No such cases in the Reporting Period.
2. Connected Transactions Regarding Purchase or Sales of Assets or Equity Interests
□ Applicable √ Not applicable
No such cases in the Reporting Period.
3. Connected Transactions Regarding Joint Investments in Third Parties
□ Applicable √ Not applicable
No such cases in the Reporting Period.
4. Credits and Liabilities with Connected Parties
□ Applicable √ Not applicable
No such cases in the Reporting Period.
Lu Thai Textile Co., Ltd. Interim Report 2018
5. Other Significant Connected Transactions
□ Applicable √ Not applicable
No such cases in the Reporting Period.
XIII. Particulars about the Non-operating Occupation of Funds by the ControllingShareholder and Other Connected Parties of the Company
□ Applicable √ Not applicable
The Company was not involved in the non-operating occupation of funds by the controlling shareholder and other connected partiesduring the Reporting Period.
XIV. Significant Contracts and Execution
1. Entrustment, Contracting and Leasing(1) Entrustment
□ Applicable √ Not ap p licable
No such cases in the Reporting Period.
(2) Contracting
□ Applicable √ Not ap p licable
No such cases in the Reporting Period.
(3) Leasing
□ Applicable √ Not ap p licable
No such cases in the Reporting Period.
2. Significant Guarantees
√ Applicable □ Not applicable
(1) Guarantees
Unit: RMB'0,000Guarantees provided by the Company for external parties (excluding those for subsidiaries)
Lu Thai Textile Co., Ltd. Interim Report 2018
Guaranteed party
Disclosuredate of theguarantee
lineannouncem
ent
Line of
Actualoccurr ence date
(date ofagreement
signing)
Actualguarantee
amount
Type ofguarantee
Term ofguarantee
Due or
not
Guarante
e for a
guarantee | connected |
party or
notGuarantees provided by the Company for subsidiaries
Guaranteed
party
Disclos ure date ofthe guar antee line
announcement
Line of
Actual occurrence
date (date ofagreement signing)
guarantee |
Actualguarantee
amount
Type ofguarantee
Term of guarantee
Due or |
not
Guarant
connect
ed
party or |
not
(Vietnam)Textile Co., Ltd.
25 January 2017 6,534.2
Lu Thai |
20 January 2017 532.94
Guarantee of
joint and several |
liability
Two years sincethe approval of theboard of theCompany
No Yes
(Vietnam)Textile Co., Ltd.
25 January 2017 5,227.36
Lu Thai |
20 January 2017
Guarantee of
joint and several |
liability
Two years sincethe approval of theboard of theCompany
No Yes
Lu A n GarmentsCo., Ltd.
25 January 2017 3,920.52
20 January 2017
Guarantee of
liability
Two years sincethe approval of theboard of theCompany
No Yes
joint and several | ||
Lu Thai |
(Vietnam)Textile Co., Ltd.
25 January 2017 26,790.22
20 January 2017 7,389.65
Guarantee of
liability
Five year s s incethe approval of theboard of theCompany
No Yes
joint and several | ||
Lu Thai |
(Vietnam)Textile Co., Ltd.
25 January 2017 19,602.6
20 January 2017
Guarantee of
liability
Two years sincethe approval of theboard of theCompany
No YesLu Thai
(Vietnam)Textile Co., Ltd./ Lu A nGarments Co.,Ltd.
25 January 2017 6,534.2
joint and several | ||
20 January 2017 3,701.28
Guarantee of
joint and several |
liability
Two years sincethe approval of theboard of theCompany
No Yes
(Vietnam)
25 January 2017 17,969.05
Lu Thai |
20 January 2017 7,259.53
Guarantee of
joint and several |
Five year s s incethe approval of the
No Yes
Lu Thai Textile Co., Ltd. Interim Report 2018Textile Co., Ltd. liability board of the
CompanyXinjiang Lu
Thai Harves tCotton Co., Ltd.
14 October 2017 15,000
12 October 2017 10,000
Guarantee of
liability
Three years sincethe approval of theboard of theCompany
No Yes
joint and several | ||
Lu Thai |
(Vietnam)Textile Co., Ltd.
27 October 2017 67,955.68
25 October 2017 14,756.08
Guarantee of
liability
Five year s s incethe approval of theboard of theCompany
No Yes
Total amount of approved guaranteefor subsidiaries during the ReportingPeriod (B1)
joint and several | ||
Total amount of actualguarant ee for subsidiaries
(B2)
43,488.64
during the Reporting Period |
Total amount of approved guaranteefor subsidiaries at the end of theReporting Period (B3)
169,533.83
Total amount of actual
guarant ee for subsidiaries at |
the end of the ReportingPeriod (B4)
43,639.48
Guarantees provided by subsidiaries for subsidiaries
Guaranteed
party
Disclos ure date ofthe guar antee line
announcement
Line of
guarantee
Actual occurrence
date (date ofagreement signing)
guarantee |
Actualguarantee
amount
Type ofguarantee
Term ofguarantee
Due or
not
Guarant
connect
ed
party or |
notXinjiang Lu
Ltd.
14 October 2017 30,000
Thai Textile Co., |
12 October 2017 20,000
Guarantee of
joint andseveral liability
12 months No YesTotal guarantee line approved for the
subsidiaries during the ReportingPeriod (C1)
Total actual occurred amoun tof guarant ee fo r thesubsidi a ri e s dur i ng t heReporting Period (C2)
20,000
Total guarantee line that has beenapproved for the subsidiaries at theend of the Reporting Period (C3)
30,000
Total actual guarantee balan ce |
for the subsidiaries at the endof the Reporting Period (C4)
20,000
Total guarantee amount provided by the Company (total of the above-mentioned three kinds of guarantees)
Total guarantee line approved during
the Reporting Period (A1+B1+C1)
Total guarantee line approved during |
Total actual occurred amoun tof guarantee during theReport ing Period (A2+B2+C2)
63,488.64
Total guarantee line that has beenapprov
199,533.83
ed at the end of the Reporting |
Total actual guarantee balan ceat the end of the Reporting
63,639.48
Lu Thai Textile Co., Ltd. Interim Report 2018Period (A3+B3+C3) Period (A4+B4+C4)
assets of th e C ompany
9.01%
Proportion of total guarantee amount (A4+B4+C4) to the net |
Of which:
Amount of
and related parties (D)
guarantee provide for shareholders, actual controller | |
Amount of guarantee provided directly or indirectly for guarantee |
objects wi th asset-liability ratio reaching over 70% (E)
Balance between 50% of net assets an d total amou
nt of guarant ee |
which exceeds 50% of net assets (F)
30,000
Sum total of the above three guaranteed amounts (D+E+F) 30,000
Explanation on possible bearing joint responsibility of liquidationdue to i mmatu re g uarantee (if any)
According to “Agreement on Count
October
2017 between Lu Thai Company and Xinjiang Lu Thai 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)
controlling subsidiaries.Notes for details about guarantee by complex method
(2) Illegal Provision of Guarantees for External Parties
□ Applicable √ Not applicable
No such cases in the Reporting Period.
3. Other Significant Contracts
□ Applicable √ Not applicable
No such cases in the Reporting Period.
XV. Social Responsibilities
1. Significant Environment Protection
Indicate by tick mark whether the Company or any of its subsidiaries is a heavily polluting business identified by the environmentalprotection authorities of China
The Company never provided guarantees for companies exceptName of the
Company or
its
Name of
mainpollutants
Emission
method
Numbe
Name of the Company or | r |
ofdischarg
Distributio
n ofdischarge
Emissionconcentration
Carried emission
standa r d ofpollutants
Total emission
Verified
totalemission
Excessi
veemissio
Lu Thai Textile Co., Ltd. Interim Report 2018subsidiaries
andcharacteristi
cs
e outlet
outlet n
Lu ThaiTextile Co.,Ltd
COD andammonianitrogen
Continuousdischarge
Huangjiap
u
Park;EastZone
Industrial |
Park
COD≤165mg/
L; ammonia
nitrogen≤10m
g/L
of waterpollut a nts i ntextile dyeing and
finishing industry: |
GB 4287-2012
COD is330.82t, andammonianitrogen is19.89t
COD is1495.08t,andammonianitrogen is149.51t
Naught
LufengWeaving &
Dyeing Co., |
Ltd.
COD andammonianitrogen
Continuousdischarge
Lufengchiefdischargeoutlet
COD≤135mg/
L; ammonia
nitrogen≤3mg/
L
of waterpollut a nts i ntextile dyeing and
finishing industry: |
GB 4287-2012
COD is 162t,and ammonianitrogen is3.03t
COD is575.985t,andammonianitrogen is57.6t
Naught
ZiboXinshengThermalPower Co.,Ltd.
SO2, NQx,and smoke
Continuousdischarge
Production |
plant ofXinshengThermalPower
SO2:
≤35mg/m3、
NQx:
≤100(50)
mg/m3, and
smoke≤10
(5)mg/m3
Ultra-low
emis s i on No. 2modification listLZJBF (2016)No. 46 ofEmissionstandard of airpollut a nts ofThermal PowerPlant inShandongProvince
The first halfyear of 2018:
SO2 is 27.65t ,NQx is145.37t, andsmoke is 4.97t
SO2 is286.01t/a,NQx is817.18t/a,
is 81.72t/a.
Naught
Lu Thai(Vietnam)Textile Co.,Ltd.
Sewage
Dischargeinto sewageplant in thepark districtaftertreatment
Besidesewageplant
/
QCVN40:
2011/BTNMT
Sewage:
309,200t
/ Naught
Lu Thai(Vietnam)Textile Co.,Ltd.
Exhaust gas
Directdischargeaftertreatment
Besideboilerroom
/
QCVN19:
2009/BTNMT
Exhaust gas:
95 million m
/ Naught
Construction 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 2018, Lu Thai Textile Co., Ltd. and its majority-owned subsidiary Lufeng
Lu Thai Textile Co., Ltd. Interim Report 2018Weaving & Dyeing Co., Ltd. carried out the waste wat er treatm ent s ystem trans for matio n proj ect to improve the treated water quality
by systematic and comprehensive reform, further im proving the river water quality and local ecological environment. The newlyadded online monitoring devices for total phosphorus and total nitrogen in 2018 monitor and detect the pollutants discharge indexcomprehensively. S upport teams were set up to be responsible for daily operation maintenance and inspection to guarantee the
normal operation of facilities. Both the exhaust emission and waste water discharge meet the emission standards.
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 "SNCR+SCR method" to reduce emissionconcentration of nitrogen oxides, and the "five-field electrostatic precipitator + wet electrostatic precipitator" to reduce soot emissionconcentration. The overall system works well.The waste water t reat men t p ro ject of th e wholl y-owned subsidiary Lu Thai (Vietnam) Textile Co., Ltd. is designed to treat 3,000 tonsof sewage water daily. The C ompany adopts a comprehensive treatment process of "pre-materialization + A2O biochemistry +post-materialization + ozone oxidation" for waste water treatment, and the treated water quality is better than the QCVN40:2011/BTNMT A-level emission standards stipulated by the Vietnam government. The treated waste water is all discharged to thewaste water t reatment st ation in th e park. Treated water qualit y analysis for January to June 2018: The COD (mean value) was 47.73mg/L, the ch rominance (mean val ue) was 44.4, the a mmonia nitrogen ( mean value) was 1.4 m g/L, and the total phosphorus (meanvalue) was 0.13 mg/L. All the parameters met the A-level emission standards set in the "Regulations on Parameters of IndustrialDrainage in Vietnam" (QCVN40:2011/BTNMT). Waste water discharge in the whole year met the standards without violation. Thetotal amount of waste water discharged in January to June 2018 was 309,200 tons, among which, the chemical oxygen demand (COD)was 1 4.758 tons, ammonia nitrogen (NH3-N) was 432.88 kg and total phosphorus (TP) was 40.196 kg. The Company is equippedwith multi-pipe and water film dust-separation devices to process the exhaust gas discharged from boilers of the Company. FromJanuary to June 2018, all the equipment was in normal operation, and the exhaust gas inspection parameters were lower than theQCVN19:2009/BTNMT emission standards set by Vietnam government. From January to June 2018, the total amount of sulfurdioxide emissions was 34.2 tons, and the total amount of nitrogen oxides emissions was 58.14 tons.Project Environmental Impact Assessment and Other Administrative Permission for Environmental ProtectionIn 2018, the environmental assessment project for technical upgrading of high-grade printed fabric production line of themajority-owned subsidiary Lufeng Weaving & Dyeing Co., Ltd. has been approved and entered the trial operation stage while thetrial operation stage o f the environmental assessment proj ect for high-grade grey fabric production line has been completed and isready t o enter the acceptance stage; the liq uid membrane separation of dyeing waste water and treat ment station comprehensiveupgrading projects have entered the commissioning stage. The wholly-owned subsidiary Zibo Xinsheng Thermal Power Co., Ltd. gotthe "Approval of Environmental Impact Assessment Report of the Environmental Protection Department of Shandong Province onthe Extension Project of Zibo Xinsheng Thermal Power Co., Ltd." (LHS [2015] No. 241) in accordance with the regulations, and thefirst ph ase of the project was put into trial operation at the end of 2017. The completion acceptance of the environmental protectionproject for the spinning and dyeing zone of the wholly-owned subsidiary Lu Thai (Vietnam) Co., Ltd. has been recognized, and theEIA report for the spinning and dyeing industrial park Phase II is under application.Emergency plan for environmental incidentsThe head office and facto ries in eastern dist rict of Lu Thai Textile Co., Ltd., and its majority-owned subsidiary Lufeng Weaving &Dyeing Co., Ltd. prepared the Emergency Plan for Environmental Incidents, which was filed with Zibo Environmental ProtectionBureau Xichuan Branch. The wholly-owned subsidiary Zibo Xinsheng Thermal Power Co., Ltd. has formulated the "Emergency Planfor Environmental Incidents" and filed it with the environmental protection management department. The identification and riskassessment of environmental ris k sources, prevention and early warning mechanisms, emergency protection and supervi sion andmanagement were included in the plan. The wholly-owned subsidiary Lu Thai (Vietnam) Co., Ltd. has prepared emergency plans fordifferent environmental incidents to reduce their impacts.Environmental self-monitoring program
Lu Thai Textile Co., Ltd. Interim Report 2018In accordance with the requirements of environmental protection authorities, Lu Thai Textile Co., Ltd. formulates environmental
self-testing plan for th e following year in December of each year, and implements the self-monitoring plan to submit data to ZiboAutomatic Environmental Monitoring System. The wholly-owned subsidiary Zibo Xinsheng Thermal Power Co., Ltd. complies withthe requirements of superior environmental protection authorities to meet discharge standards by online real-time monitoring ofenvironmental protection data. The wholly-owned subsidiary Lu Thai (Vietnam) Co., Ltd. installed an on-line monitoring device forreal-time treated water quality monitoring. In addition, the Company invites external qualified testing organizations to carry outinsp ections on waste water, sludge and exhaust gas every quarter, and provides reports to environmental inspection departments.Other environment information that should be disclosedNoOther related environment protection informationNo
2. Targeted Measures Taken to Help People Lift themselves out of Poverty
The Company didn’t conduct any targeted anti-poverty projects temporarily in the Reporting Period, no subsequent plan for targetedanti-poverty also.
XIX Other Significant Events
√ Applicable □ Not applicable
The Company implemented the project of repurchasing part of B shares in the Reporting Period. As of 30 June 2018, the Companyhad accumulatively repurchased 17,674,849 shar es, accounting for 1.9158% of total share capital. For details, see relevantannouncement about the repurchase of B shares.
XVII. Significant Events of Subsidiaries
□ Applicable √ Not applicable
Lu Thai Textile Co., Ltd. Interim Report 2018
Part VI Share Changes and Shareholder Information
I. Share Changes
1. Share Changes
Unit: share
Before Increase/decrease (+/-) AfterNumber
(%)
Newissues
Percentage | Bonus |
shares
Bonusissuefromprofit
Other Subtotal Number
Percenta
ge (%)
I. Shar es subject to tradingmoratorium
119,079,944
12.91% |
264,499
264,499
119,344,443
12.94%
3. Other domestic shares 847,544
0.09% |
264,499
264,499
1,112,043
0.12%
Shares held by domestic |
individuals
847,544
0.09% |
264,499
264,499
1,112,043
0.12%
4. Shares held by overseas |
shareholders
118,232,400
12.82% |
118,232,400
12.82%
Including: Shares held by |
overseas legal persons
118,232,400
12.82% |
118,232,400
12.82%
II. Shares not subject to |
trading moratorium
803,522,367
87.09% |
-264,499
-264,499
803,257,868
87.06%
1. RMB ordinar y shar es 561,150,431
60.82% |
-186,725
-186,725
560,963,706
60.80%
foreign shares
242,371,936
. Domestically listed | 26.27% |
-77,774
-77,774
242,294,162
26.26%
III. Total of shares 922,602,311
100.00% |
922,602,311
100.00%
Reasons for the share changes
√ Applicable □ Not applicable
Due to the changes of locked shares from the r esignation of some supervisors and senio r executives, the “limited sales conditionshares-domestic natural person holding” of the Company increased 264,499 shares.Approval of share changes
□ Applicable √ Not applicable
Transfer of share ownership
□ Applicable √ Not applicable
Effects of share changes on the basic EPS, diluted EPS, net assets per share attributable to common shareholders of the Company and
Lu Thai Textile Co., Ltd. Interim Report 2018other financial indexes over the prior year and the prior period
□ Applicable √ Not applicable
Other contents that the Company considers necessary or is required by the securities regulatory authorities to disclose
□ Applicable √ Not applicable
2. Changes in Restricted Shares
□ Applicable √ Not applicable
II. Issuance and Listing of Securities
□ Applicable √ Not applicable
III. Total Number of Shareholders and Their Shareholdings
Unit: shareTotal number of ordinaryshareholders at the period-end
57,783
Total number of preference shareholders with resumed voting rights |
at the peri od-end (if any) (see Note 8)
5% or greater ordinary shareholders or the top 10 ordinary shareholders
Name of shareholder
Nature ofshareholder
Sharehol
dingpercenta
ge (%)
Total sharesheld at theperiod-end
Increase/decrease during
theReporting
Period
Number ofrestrictedshares h eld
Number ofnon-restricted
shares h eld
Pledged or frozen
sharesStatus
Pledged or frozen | |
Numbe
r
Investment Co., Ltd.
Domesticnon-state-owned
Zibo Lucheng Textile | legal |
person
15.21%
140,353,583
140,353,583
Tailun (
Co., Ltd.
Foreign
Thailand) Textile | legal |
person
12.82%
118,232,400
118,232,400
Hong Kong Securities |
Clearing Co. Ltd
Foreign
person
3.32%
legal |
30,593,555
12,767,400
30,593,555
Central Huijin Assets |
Management Co., Ltd.
State-ownedlegal person
2.20%
20,315,300
20,315,300
T.Rowe Price Intl |
Discovery Fund
Foreign
person
2.16%
legal |
19,948,219
19,948,219
China Securities Finance |
Corporation Limited
Domesticnon-state-owned
1.70%
legal |
15,679,091
15,679,091
Lu Thai Textile Co., Ltd. Interim Report 2018
person
Authority-self-ownedfunds
Foreign
Hong Kong Monetary | legal |
person
1.25%
11,540,893
3,126,256
11,540,893
National Social Security |
Fund Port folio 103
Other 0.87%
7,999,947
7,999,947
7,999,947
Hua’an New
Investment Fund
Other 0.83%
Silk Road Theme Equity Securities |
7,650,000
-3,340,000
7,650,000
Bosera Selected Mixed
Fund
Other 0.81%
Securities Investment |
7,500,000
7,500,000
7,500,000
Strategic in vestors o r general corpo ration s |
becoming top-
3)
Naught
Connected or acting-in-
ten shareholders due to placing of new shares (if any) (see No te |
concert parties |
among the shareholders above
Zibo Lucheng Textile Investment Co., Ltd. is the largest shareholder
controller of the Company.
Tailun (Thailand) Textile Co., Ltd. is the second largest |
shareholder and the foreign sponsor of the Company. All the
holding tradable A-shares or B-shares. And it i s unknown whether there is any related
party or acting-in-concert party among them.Shareholdings of the top ten non-restricted ordinary shareholders
Name of shareholder
Number ofnon-restricted sharesheld at the period-
Type of sharesType Number
Zibo Lucheng Textile Investment Co., Ltd. 140,353,583
end | |
RMB ordinary |
share
140,353,583
Hong Kong Securities Clearing Co. Ltd 30,593,555
RMB ordinaryshare
30,593,555
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
share
19,948,219
listed foreign |
China Securitie s Finance Corporation Limited 15,679,091
RMB ordinary |
share
15,679,091
Hong Kong Monetary Authority-self-owned funds 11,540,893
RMB ordinaryshare
11,540,893
National Social Security Fund Portfolio 103 7,999,947
RMB ordinary |
share
7,999,947
Lu Thai Textile Co., Ltd. Interim Report 2018Hua’an N ew Silk Road Theme Equity Securities Investment Fund 7,650,000
RMB ordinaryshare
7,650,000
Bosera S elected Mixed Securities Investment Fund 7,500,000
RMB ordinary |
share
7,500,000
Foreningen AP Invest F.M.B.A. 6,879,562
Domestically
share
6,879,562
listed foreign |
Explanation on connected relationship among the
tradable share not subject t o trading moratorium
, as well as among the |
top ten shareholders of tradable share not subject to
and top ten shareholders, or explanation on acting-in-concert
trading moratorium | Zibo Lucheng Textile Investment Co., Ltd. is the largest |
shareholder and the actu al controller of
Tailun (Thailand) Textile Co., Ltd
. is the second largest |
shareholder and the foreign sponsor of
the o ther shareholders are holding tradable A-
shares or |
B-shares. A nd it is unknown whether there is any related
party or acting-in-concert party among them.Particular about
shareholder participate in the securities lending and |
borrowing business (if any) (note 4)
NaughtIndicate by tick mark whether any of the top ten common shareholders or the top ten non-restricted common shareholders of the
Company conducted any promissory repo during the Reporting Period.
□ Yea √ No
No such cases in the Reporting Period.
IV. Change of the Controlling Shareholder or the Actual Controller
Change of the controlling shareholder in the Reporting Period
□ Applicable √ Not applicable
There was no any change of the controlling shareholder of the Company in the Reporting Period.Change of t he actual controller in the Reporting Period
□ Applicable √ Not applicable
There was no any change of the actual controller of the Company in the Reporting Period.
Lu Thai Textile Co., Ltd. Interim Report 2018
Part VII Preferred Shares
□ Applicable √ Not ap p licable
No preferred shares in the Reporting Period.
Part VIII Directors, Supervisors and Senior Management
I Changes in Shareholdings of Directors, Supervisors and Senior Management
√ Applicable □ Not applicable
Name Office title
Incumbent/former
Beginning |
shareholding (share)
Increase in the Current |
Period(share)
Decrease
in theCurrentPeriod(share)
Endingshareholding (share)
Number of
grantedrestrictedshares at theperiod-begin
(share)
Number ofrestricted
sharesgranted in
the |
CurrentPeriod(share)
Number of
shares at theperiod-end
(share)Liu Zibin Chairman and GM
granted r es tricted | ||
Current
148,290
148,290
Xu Zhinan
Vice President
Current
FujiwaraHidetoshi
Director
Current
ChenRuimou
Director
Current
ZengFacheng
Director
Current
WangFangshui
GM, and
Chief |
Engineer
Current
146,753
146,753
LiuDeming
Director
Current
QinGuiling
Director andSecretary o f theBoard
Current
126,542
126,542
ZhangHongmei
Directo r and
Accountant
Current
92,500
Chief |
92,500
Lu Thai Textile Co., Ltd. Interim Report 2018Xu Jianjun
IndependentDirector
Current
Zhao Yao
IndependentDirector
Current
Bi Xiuli
IndependentDirector
Current
Pan Ailing
IndependentDirector
Current
WangXinyu
IndependentDirector
Current
ZhangShougang
SupervisoryCommitteeChairman
Current
73,100
73,100
Liu Zilong
Supervisor
Current
10,000
10,000
DongShibing
Supervisor
Current
5,000
5,000
ZhangJianxiang
Vice GM
Current
52,150
52,150
WangJiabin
Manager
Current
83,700
Vice GM, Product |
83,700
ZhangZhanqi
Lufeng Company
Current
80,300
Vice GM, GM of |
80,300
FujiwaraMatsuzaka
Manager of JapanOffice
Current
ZhangKeming
Financial Manager
Current
77,700
77,700
Li Wenji CIO
Current
10,000
10,000
Pan Pingli Customs Manager
Former
134,296
134,296
LvYongchen
Lufeng Company
Current
33,750
Vice GM of |
33,750
YuShouzheng
Manager
Current
83,100
Energy Business |
83,100
WangChangzhao
GM assistant,Fabri c MarketingManager
Current
22,500
22,500
Lu Thai Textile Co., Ltd. Interim Report 2018Quan Peng
Brand Marketingmanager
Current
27,750
27,750
ShangChenggang
Manager ofGarmentsProductionDepartment
Current
30,000
30,000
Du Lixin
GM of Lu T ha i(Vietnam)
Current
Guo Heng
Manager ofBusinessManagement
Current
Zhang Wei
GM assistant and
Manager ofStrategyPlanningDepartment
Current
LiTongmin
SupervisoryCommitteeChairman
Former
176,164
176,164
Total -- -- 1,413,595
1,413,595
II Changes in Directors, Supervisors and Executive Officers
√ Applicable □ Not applicable
Name Position Type Date ReasonLi Tongmin Supervisory Committee Chairman Left 18 January 2018 RetiredQin Guiling Vice GM Dismissed 18 January 2018 Job turnoverZhang Shougang Vice GM Dismissed 18 January 2018 Job turnoverZhang Shougang Supervisory Committee Chairman Elected 8 February 2018Pan Pingli Customs Manager Dismissed 18 January 2018 Job turnoverDu Lixin GM of Lu Thai (Vietnam) Employed 18 January 2018Guo Heng Manager of Business Management Employed 18 January 2018
Zhang Wei
GM assistant and Manager of
Strategy Plan ning Department
Employed 18 January 2018
Lu Thai Textile Co., Ltd. Interim Report 2018
Part IX Corporate Bonds
Are there any corporate bonds publicly offered and listed on the stock exchange, which were undue before the approval date of thisReport or were due but could not be redeemed in full?No
Lu Thai Textile Co., Ltd. Interim Report 2018
Part X Financial Report
I. Auditor’s Report
Whether the interim report has been audited?
□Yes √ No
The interim report of the Company has not been audited.
II. Financial Statements
The unit of the financial statements attached: RMB
1. Consolidated Balance Sheet
Prepared by Lu Thai Textile Co., Ltd.
30 June 2018
Unit: RMBItem 30 June 2018 31 December 2017Current assets:
Monetary assets 671,721,970.36
693,989,293.38
Derivative financial assets
Notes recei vable 115,709,268.88
139,276,742.34
Accounts r eceiv able 356,818,963.69
334,080,524.05
Prepayments 134,524,113.79
146,463,066.38
Interest recei vable 874,571.14
590,003.07
Dividends receivable
Other receiv ables 76,480,721.09
56,182,782.04
Financi al assets purchased under resale agreements
Inventories 2,017,424,627.73
2,100,661,221.93
Assets classi fied as held for sale
Curr e nt portion of non-current assets
Other curr ent assets 150,806,143.77
118,588,703.34
Total cur rent assets3,524,360,380.45
3,589,832,336.53
Non-current assets:
Lu Thai Textile Co., Ltd. Interim Report 2018Available-for-sale financial assets 85,733,000.00
84,533,000.00
Held-to-maturity investments
Long-term receivables 650,000.00
Long-term equity investments95,806,134.43
97,536,732.02
Investment property 23,856,705.69
24,563,544.58
Fixed assets5,359,308,862.06
5,421,295,850.03
Construction in progress 212,917,526.85
157,421,820.68
Engineeri ng mater ials152,136,560.03
56,913,806.06
Proceeds from disposal of fixed assets
Productive living assets
Intangible assets 491,291,914.65
498,948,301.48
R&D expense
Goodwill 20,613,803.29
20,613,803.29
Long-term prepaid expense110,885,589.66
107,877,194.52
Deferred in come t ax assets 75,315,743.25
74,697,159.71
Other no n-current assets80,514,271.73
36,390,478.85
Total non-current assets 6,709,030,111.64
6,580,791,691.22
Total assets10,233,390,492.09
10,170,624,027.75
Current liabilities:
Short-term borrowings1,458,058,962.33
1,135,124,996.40
Financial liabilities at fair value through profit or loss 28,481,010.00
Derivative financial liabilities
Notes payable 3,118,556.78
7,301,771.85
Accounts payable283,653,868.64
366,265,132.65
Advances fro m cust omers 99,307,372.64
119,785,945.48
Financi al assets sold under repurchase agreements
Handling char ges and comm issions payable
Payroll p ayable246,282,564.04
316,836,488.95
Taxes payable 42,752,421.70
33,055,090.58
Interest p ayabl e2,079,744.07
1,572,231.86
Dividends payable 441,113.64
441,113.64
Other payables157,412,933.90
127,090,009.25
Liabilities direc tly associated with assets classified as held for sale
Current portion of non-current liabilities
62,750,292.49
Lu Thai Textile Co., Ltd. Interim Report 2018Other current liabilities
Total current liabilities2,321,588,547.74
2,170,223,073.15
Non-current liabilities:
Long-term borrowings69,431,359.47
Long-term payables
Long-term payroll payable92,458,178.53
93,843,473.02
Specific payables
Provisions
Deferred in come 126,957,174.18
126,737,092.32
Deferred income tax liabilities3,112,735.33
2,904,899.46
Other no n-current liabilities 1,840,000.00
1,840,000.00
Total non-current liabilities293,799,447.51
225,325,464.80
Total liabilities 2,615,387,995.25
2,395,548,537.95
Owners’ equity:
Share capital 922,602,311.00
922,602,311.00
Capital reserves699,493,647.48
699,493,593.82
Less: Treasury shares 121,952,709.49
Other comprehensive income44,370,228.14
16,810,574.22
Specific reserv e
Surplus r es er ves962,933,579.06
962,933,579.06
General reserve
Retained profits4,553,114,343.08
4,629,102,712.06
Total equity attributable to owners of the Company as the parent 7,060,561,399.27
7,230,942,770.16
Non-controlling interests557,441,097.57
544,132,719.64
Total owners’ equity 7,618,002,496.84
7,775,075,489.80
Total liabilities and owners’ equity10,233,390,492.09
10,170,624,027.75
Legal repr esentative: Liu Zibin Chief A ccountant : Zhang HongmeiFinancial Manager: Zhang Keming
2. Balance Sheet of the Company as the Parent
Unit: RMBItem 30 June 2018 31 December 2017Current assets:
Monetary assets155,738,414.91
267,809,829.78
Lu Thai Textile Co., Ltd. Interim Report 2018Financial assets at fair value through profit or loss
Derivative financial assets
Notes recei vable 73,448,876.87
93,244,480.81
Accounts r eceiv able283,715,100.32
305,903,590.98
Prepayments 48,847,481.49
81,471,605.69
Interest recei vable
220,590.38
Dividends receivable
Other receiv ables442,255,215.86
519,788,239.57
Inventories 1,167,143,139.52
1,164,055,145.96
Assets classi fied as held for sale
Current portion of non-current assets
Other curr ent assets104,977,154.77
53,657,308.33
Total cur rent assets 2,276,125,383.74
2,486,150,791.50
Non-current assets:
Available-for-sale financial assets 73,733,000.00
72,533,000.00
Held-to-maturity investments
Long-term receivables
Long-term equity investments2,165,499,250.47
1,816,493,348.06
Investment property 15,170,780.40
15,536,968.08
Fixed assets2,665,189,699.04
2,811,046,847.91
Construction in progress 71,255,813.53
25,703,496.87
Engineeri ng mater ials21,630,265.23
1,609,204.75
Proceeds from disposal of fixed assets
Productive living assets
Intangible assets 245,840,436.86
249,994,817.83
R&D expense
Goodwill
Long-term prepaid expense
Deferred in come t ax assets 45,569,866.60
51,474,007.76
Other no n-current assets14,937,345.52
27,077,391.31
Total non-current assets 5,318,826,457.65
5,071,469,082.57
Total assets7,594,951,841.39
7,557,619,874.07
Current liabilities:
Short-term borrowings705,343,347.97
622,438,413.87
Lu Thai Textile Co., Ltd. Interim Report 2018Financial liabilities at fair value through profit or loss 18,847,500.00
Derivative financial liabilities
Notes payable 1,401,325.50
6,124,239.92
Accounts payable233,442,898.51
147,883,359.29
Advances fro m cust omers 56,386,065.62
52,314,250.61
Payroll p ayable183,941,763.51
240,391,459.47
Taxes payable 33,744,215.20
17,297,415.92
Interest p ayabl e2,013,677.88
973,134.21
Dividends payable 441,113.64
441,113.64
Other payables201,727,467.65
22,933,385.28
Liabilities directly associated with assets classified as held for sale
Current portion of non-current liabilities
Other current liabilities
Total current liabilities1,437,289,375.48
1,110,796,772.21
Non-current liabilities:
Long-term borrowings
Long-term payables
Long-term payroll payable92,458,178.53
93,843,473.02
Specific payables
Provisions
Deferred in come 81,699,952.30
80,580,249.14
Deferred income tax liabilities184,950.00
4,950.00
Other no n-current liabilities
Total non-current liabilities174,343,080.83
174,428,672.16
Total liabilities 1,611,632,456.31
1,285,225,444.37
Owners’ equity:
Share capital 922,602,311.00
922,602,311.00
Capital reser ves759,836,756.57
759,836,702.91
Less: Treasury shares 121,952,709.49
Other comprehensive income1,048,050.00
28,050.00
Specific reserv e
Surplus r es er ves959,824,839.42
959,824,839.42
Retained profits 3,461,960,137.58
3,630,102,526.37
Total owners’ equity5,983,319,385.08
6,272,394,429.70
Lu Thai Textile Co., Ltd. Interim Report 2018Total liabilities and owners’ equity 7,594,951,841.39
7,557,619,874.07
3. Consolidated Income Statement
Unit: RMBItem H1 2018 H1 20171. Reven ue3,281,014,155.43
2,997,093,395.84
Including: Operating revenue 3,281,014,155.43
2,997,093,395.84
2. Op erati ng costs and expenses2,840,765,404.50
2,517,282,163.05
Including: Cost of sales 2,360,836,431.41
2,051,483,003.79
Taxes and s urtaxes54,470,407.88
51,503,327.13
Selling expense 66,941,088.56
68,365,512.22
Administrative expense325,870,756.50
314,037,319.49
Finance costs 30,525,225.31
30,930,178.28
Asset impairment loss2,121,494.84
962,822.14
Add: Gain on changes in fair value (“-” for loss) -28,481,010.00
1,110,700.00
Investmen t income (“-” for loss)4,646,023.78
1,385,535.34
Including: Share of profit or loss of joint ventures and associates -1,730,597.59
Forei gn exchange gain (“-” for loss)
Asset disposal income (“-” for loss) -522,286.65
-1,191,082.48
Other income36,532,224.59
10,580,637.29
3. Operating profit (“-” for loss) 452,423,702.65
491,697,022.94
Add: Non-operating income3,011,072.58
4,365,273.28
Less: Non-operating expense 1,994,923.71
4,648,925.39
4. Profit before taxation (“-” for loss)453,439,851.52
491,413,370.83
Less: Income tax expense 63,275,514.57
79,455,627.02
5. Net profit (“-” for net loss)390,164,336.95
411,957,743.81
5.1 N e t profit fr om c onti n ui ng ope r a ti o ns (“-” for net loss) 390,164,336.95
411,957,743.81
5.2 Net profit from discontinued operations (“-” for net loss)
Net profit attributable to owners of the Company as the parent 377,355,959.02
395,130,296.26
Net profit attributable to non-controlling interests12,808,377.93
16,827,447.55
6. Other comprehensive income, net of tax 27,559,653.92
-14,785,091.90
Attributable to owners of the Company as the parent27,559,653.92
-14,785,091.90
6.1 Items that will not be reclassified to profit or loss
6.1.1 Changes in net liabilities or assets caused by |
Lu Thai Textile Co., Ltd. Interim Report 2018remeasurements on defined benefit pension schemes
6.1.2
will not be reclassified to profit or loss under equity method
Share of other comprehensive income of investees that |
6.2 Items that may subsequently be reclassified to profit or loss
27,559,653.92
-14,785,091.90
6.2.1
Share of other comprehensive income of investees that |
will be reclassified to profit or loss under equity method
6.2.2 Gain/Loss on changes in fair value of available-for-
financial as sets
1,020,000.00
sale |
6.2.3 Gain/Loss arising from reclassificatio n o f held -to-
investments to available-for-sale financial assets
maturity |
6.2.4 Effective gain/loss on cash flow hedges
6.2.5
currency-denominated financial statements
26,539,653.92
Differences arising from translation of foreign |
-14,785,091.90
6.2.6 Other
Attributable to non-controlling interests
7. Total comprehensive income 417,723,990.87
397,172,651.91
Attributable to owners of the Company as the parent404,915,612.94
380,345,204.36
Attributable to non-controlling interests 12,808,377.93
16,827,447.55
8. Ear ni ngs per share
8.1 B as ic earnings per share 0.41
0.43
8.2 Diluted earnings per share0.41
0.43
Where business mergers under the same control occurred in the current period, the net income achieved by the merged parties beforethe business mergers was RMB0.00, with the amount for last year being RMB0.00.Legal repr esentative: Liu Zibin Chief A ccountant : Zhang Hongmei
Financial Manager: Zhang Keming
4. Income Statement of the Company as the Parent
Unit: RMBItem H1 2018 H1 20171. Op erati ng revenue 2,504,395,230.25
2,482,323,588.80
Less: Cost of sales 1,861,404,465.69
1,766,681,024.07
Taxes and s urtaxes 40,307,584.75
37,477,779.18
Selling expense 38,315,465.09
43,320,775.03
Administrative expense 214,766,851.49
210,435,426.62
Finance costs 11,391,279.87
8,369,769.83
Asset impairment loss -1,182,154.91
262,131.70
Lu Thai Textile Co., Ltd. Interim Report 2018
Add: Gain on changes in fair value (“-” for loss) -18,847,500.00
1,110,700.00
Investmen t income (“-” for loss)1,917,402.93
19,258,397.61
Including: Share of profit or loss of joint ventures and |
associates
-1,730,597.59
Asset disposal income (“-” for loss) -9,032,750.08
-243,716.20
Other i ncome27,986,366.59
5,169,055.33
2. Operating profit (“-” for loss) 341,415,257.71
441,071,119.11
Add: Non-operating income1,865,030.22
2,207,064.75
Less: Non-operating expense 1,119,027.21
3,935,434.10
3. Profit before taxation (“-” for loss)342,161,260.72
439,342,749.76
Less: Income tax expense 56,959,321.51
65,645,694.09
4. Net profit (“-” for net loss)285,201,939.21
373,697,055.67
4.1 Net profit from continuing operations (“-” for net loss) 285,201,939.21
373,697,055.67
4.2 Net profit from discontinued operations (“-” for net loss)
5. Other comprehensive income, net of tax 1,020,000.00
5.1 Items that will not be reclassified to profit or loss
5.1.1 Changes in net liabilities or assets caused by |
remeasurements on defined benefit pension schemes
5.1.2
not be reclassified into profit or loss under equity method
Share of other compreh en sive inco me of investees t hat will |
5.2 Items that may subsequently be reclassified to profit or loss1,020,000.00
5.2.1 Share of other compreh
be reclassified into profit or loss under equity method
ensive inco me of investees t hat will |
5.2.2 Gain/Loss on changes in fair value of available-for-
financial as sets
1,020,000.00
sale |
5.2.3 Gain/Loss arising from reclassifi cation of hel d-to-
investments to available-for-sale financial assets
maturity |
5.2.4 Effective gain/loss on cash flow hedges
5.2.5 Differences arising from translation of foreign |
currency-denominated financial statements
5.2.6 Other
6. Total comprehensive income286,221,939.21
373,697,055.67
7. Ear ni ngs per share
7.1 Basic earnings per share0.31
0.41
7.2 Diluted earnings per share 0.31
0.41
Lu Thai Textile Co., Ltd. Interim Report 2018
5. Consolidated Cash Flo w Statem ent
Unit: RMBItem H1 2018 H1 20171. Cash flows from operating activities:
Proceeds fr om sale of commodities and rendering of services 3,222,986,999.01
2,965,847,838.31
Tax rebates 114,081,775.79
103,287,108.06
Cash gener ated from other operating activities 58,830,516.70
50,784,884.88
Sub to tal of cas h generated from operating activities 3,395,899,291.50
3,119,919,831.25
Payments for commodities and services 1,580,866,513.00
1,633,500,466.75
Cash paid to and for employees 866,022,073.85
819,888,473.79
Taxes paid 138,363,376.99
179,630,100.30
Cash used in ot her operating activities 112,862,616.89
143,654,039.84
Subtotal of cash used in operating activities 2,698,114,580.73
2,776,673,080.68
Net cash gen er ated from/used in operating activities 697,784,710.77
343,246,750.57
2. Cash flows from investing activities:
Proceeds from disinvestments
Investment i ncome
439,800.00
Net
long-lived assets
936,526.59
proceeds from disposal of fixed assets, intangible assets and other |
1,257,813.92
Net proceeds from disposal of subsidiaries or other business units
Cash gener ated from other investing activities13,528,136.07
70,035,606.25
Sub to tal of cas h generated from investing activities 14,464,662.66
71,733,220.17
Payments for acquisition of fixed assets, intangible assets and other |
long-lived assets
438,092,015.33
294,548,197.25
Payments for inv estments
Net increase in pledged loans granted
Net payments for acquisition of subsidiaries and other business units
Cash used in other investing activities
Subtotal of cash used in investing activities438,092,015.33
294,548,197.25
Net cash gen er ated from/used in investing activities -423,627,352.67
-222,814,977.08
3. Cash flows from financing activities:
Capital contributions received 500,000.00
500,000.00
Including: Capital contributions by non-
subsidiaries
500,000.00
controlling interests to |
500,000.00
Increase in borrowings obtained1,554,914,896.37
1,143,078,297.25
Lu Thai Textile Co., Ltd. Interim Report 2018
Net proceeds from issuance of bonds
Cash gener ated from other financing activities39,317,500.00
10,300,000.00
Sub to tal of cas h generated from financing activities 1,594,732,396.37
1,153,878,297.25
Repayment of borrowings1,235,496,710.59
833,454,881.16
Payments for interest and dividends 469,601,858.04
484,246,981.18
Including: Dividends paid by subsidiaries to non-controlling interests
Cash us ed i n other financing activities 175,517,237.20
0.00
Subtotal of cash used in financing activities1,880,615,805.83
1,317,701,862.34
Net cash gen er ated from/used in financing activities -285,883,409.46
-163,823,565.09
4. Effect of fo r eign exchange rate changes on cash and cash equivalents6,658,728.34
-14,067,019.42
5. Net in cr eas e in cash and cash equivalents -5,067,323.02
-57,458,811.02
Add: Cash and cash equivalents, beginning of the period676,639,212.86
659,116,137.67
6. Cash and cash equivalents, end of the period 671,571,889.84
601,657,326.65
6. Cash Flow Statement of the Company as the Parent
Unit: RMBItem H1 2018 H1 20171. Cash flows from operating activities:
Proceeds fr om sale of commodities and rendering of services 2,547,140,430.96
2,436,886,166.08
Tax rebates70,272,032.57
75,165,906.24
Cash gener ated from other operating activities 36,415,607.59
15,897,897.32
Sub to tal of cas h generated from operating activ ities2,653,828,071.12
2,527,949,969.64
Payments for commodities and services 1,356,047,613.94
1,526,580,047.50
Cash paid to and for employees605,320,730.04
587,514,691.21
Taxes paid 87,174,263.36
97,827,376.39
Cash us ed in other operating activities65,254,416.78
75,176,222.57
Subtotal of cash used in operating activities 2,113,797,024.12
2,287,098,337.67
Net cash gen er ated from/used in operating activities540,031,047.00
240,851,631.97
2. Cash flows from investing activities:
Proceeds from disinvestments
Investment i ncome
17,976,433.62
long-lived assets
71,378,849.40
Net proceeds from disposal of fixed assets, intangible assets and other |
1,272,813.92
Net proceeds from disposal of subsidiaries or other business units
Lu Thai Textile Co., Ltd. Interim Report 2018Cash gener ated from other investing activities 408,047,687.20
143,584,458.87
Sub to tal of cas h generated from investing activities479,426,536.60
162,833,706.41
Payments for acquisition of fixed assets, intangible assets and othe
long-lived assets
75,495,986.86
r |
35,162,185.30
Payments for inv estments 350,352,500.00
7,934,750.00
Net payments for acquisition of subsidiaries and other business units
Cash used in other investing activities 329,863,300.00
162,588,600.00
Subtotal of cash used in investing activities755,711,786.86
205,685,535.30
Net cash gen er ated from/used in investing activities -276,285,250.26
-42,851,828.89
3. Cash flows from financing activities:
Capital contributions received
Increase in borrowings obtained905,214,428.57
921,800,512.27
Net proceeds from issuance of bonds
Cash gener ated from other financing activities173,828,100.00
Sub to tal of cas h generated from financing activities 1,079,042,528.57
921,800,512.27
Repayment of borrowings821,108,369.41
597,328,780.40
Payments for interest and dividends 455,588,046.43
464,854,599.26
Cash us ed i n other financing activities175,517,237.20
Sub-total of cash used in financing activities 1,452,213,653.04
1,062,183,379.66
Net cash generated from/used in financing activities-373,171,124.47
-140,382,867.39
4. Effect of fo r eign exchange rate changes on cash and cash equivalents -2,646,087.14
-8,267,806.48
5. Net in cr eas e in cash and cash equivalents-112,071,414.87
49,349,129.21
Add: Cash and cash equivalents, beginning of the period 267,809,829.78
177,016,859.63
6. Cash and cash equivalents, end of the period155,738,414.91
226,365,988.84
7. Consolidated Statements of Changes in Owners’ Equity
Lu Thai Textile Co., Ltd. Interim Report 2018H1 2018
Unit: RMB
Item
H1 2018Equity attributable to owners of the Company as the parent
Non-controlling
interests
Total owners’
equityShare capital
Other equityinstruments
Capital reserves
Less: Treasury
shares
Othercomprehensiv
e income
Specifi
creserv
e
Surplus reserves
Generalreserve
Retained profits
Preferre
d shares
Perpetual bonds
d shares |
Othe
r
end of prior year
922,602,311.00
1. Balances as of |
699,493,593.82
16,810,574.22
962,933,579.06
4,629,102,712.06
544,132,719.64
7,775,075,489.80
Add: Adjustments for changed |
accountingpolicies
previous errors
Adjustments for corrections of |
businesscombinationsinvolving
enterprises under |
common control
Otheradjustments
2. Balances as of |
beginning of
year
922,602,311.00
the |
699,493,593.82
16,810,574.22
962,933,579.06
4,629,102,712.06
544,132,719.64
7,775,075,489.80
3. Increase/ |
53.66
121,952,709.49
27,559,653.92
-75,988,368.98
13,308,377.93
-157,072,992.96
Lu Thai Textile Co., Ltd. Interim Report 2018
period (“-
” for |
decrease)
comprehensiveincome
3.1 Total |
27,559,653.92
377,355,959.02
12,808,377.93
417,723,990.87
3.2 Capital increased and reduced by owners |
53.66
121,952,709.49
500,000.00
-121,452,655.83
3.2.1Ordinary sharesincreased byshareholders
121,952,709.49
500,000.00
-121,452,709.49
3.2.2 Capitalincreased byholders of otherequity instruments
3.2.3Share-based
in owners’ equity
payments included |
3.2.4 Other
53.66
53.66
3.3
Profit |
distribution
-453,344,328.00
-453,344,328.00
3.3.1
Appropriation to |
surplus reserves
3.3.2
general reserve
Appropriation to |
Lu Thai Textile Co., Ltd. Interim Report 20183.3.3
shareholders)
Appropriation to owners (or |
-453,344,328.00
-453,344,328.00
3.3.4 Other
3.4Carryforwards
equity
within owners’ |
capital r es er ves
3.4.1 Increase in capital (or share capital) from |
surplus reserves
3.4.2 Increase in capital (or share capital) from |
make up losses
3.4.3 Surplus reserves used to |
3.4.4 Other
3.5 Specific |
reserve
3.5.1
period
Withdrawn for the |
during t he pe r iod
3.5.2 Used |
3.6 Other
Lu Thai Textile Co., Ltd. Interim Report 2018
end of the period
922,602,311.00
4. Balances as of |
699,493,647.48
121,952,709.49
44,370,228.14
962,933,579.06
4,553,114,343.08
557,441,097.57
7,618,002,496.84
H1 2017
Unit: RMB
Item
H1 2017Equity attributable to owners of the Company as the parent
Non-controlling
interests
Total owners’
equityShare capital
Other equityinstruments
Capital reserves
Less: Treasury
shares
Othercomprehensiv
e income
Specifi
creserv
e
Surplus reserves
Generalreserve
Retained profits
Preferre
d shares
Perpetual bonds
d shares |
Othe
r
end of prior year
922,602,311.00
1. Balances as of |
761,280,557.83
53,293,544.89
891,870,522.68
4,341,866,189.19
475,088,111.17
7,446,001,236.76
Add: Adjustments for changed |
accountingpolicies
previous errors
Adjustments for corrections of |
businesscombinationsinvolving
enterprises under |
common control
Otheradjustments
2. Balances as of |
beginni
922,602,311.00
ng of the |
761,280,557.83
53,293,544.89
891,870,522.68
4,341,866,189.19
475,088,111.17
7,446,001,236.76
Lu Thai Textile Co., Ltd. Interim Report 2018year
period (“-
” for |
decrease)
-61,786,964.01
-36,482,970.6
71,063,056.38
287,236,522.87
69,044,608.47
329,074,253.04
3.1 Total |
comprehensiveincome
-36,482,970.6
841,150,934.75
42,168,174.85
846,836,138.93
3.2 Capital increased and reduced by owners |
-61,786,964.01
38,900,000.00
-22,886,964.01
3.2.1Ordinary sharesincreased byshareholders
500,000.00
500,000.00
3.2.2 Capitalincreased byholders of otherequity instruments
3.2.3Share-based
in owners’ equity
payments included |
3.2.4 Other
-61,786,964.01
38,400,000.00
-23,386,964.01
3.3
distribution
Profit |
71,063,056.38
-553,914,411.88
-12,023,566.38
-494,874,921.88
3.3.1
Appropriation to |
surplus reserves
71,063,056.38
-71,063,056.38
Lu Thai Textile Co., Ltd. Interim Report 20183.3.2
general reserve
Appropriation to |
3.3.3
shareholders)
Appropriation to owners (or |
-482,851,355.50
-12,023,566.38
-494,874,921.88
3.3.4 Other
3.4Carryforwards
equity
within owners’ |
capital r es er ves
3.4.1 Increase in capital (or share capital) from |
surplus reserves
3.4.2 Increase in capital (or share capital) from |
make up losses
3.4.3 Surplus reserves used to |
3.4.4 Other
3.5 Specific |
reserve
3.5.1
period
Withdrawn for the |
Lu Thai Textile Co., Ltd. Interim Report 2018
during t he pe r iod
3.5.2 Used |
3.6 Other
4. Balances as of |
end of the period
922,602,311.00
699,493,593.82
16,810,574.22
962,933,579.06
4,629,102,712.06
544,132,719.64
7,775,075,489.80
8. Statements of Changes in Owners’ Equity of the Company as the Parent
H1 2018
Unit: RMBItem
H1 2018Share capital
Other equity instruments
Capital reserves
Less: Treasury
shares
Othercomprehensive
income
Specificreserve
Surplus reserves
Retained profits
Total owners’
equityPreferre
Perpetual bonds
d shares |
Other
1. Balanc
es as of end of 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 |
acc ount ing pol ic i e s
previous errors
Adjustments for corrections of |
Other adjustments
2. Balan ces as of 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 p eriod |
(“-” for decrease)
53.66
121,952,709.49
1,020,000.00
-168,142,388.79
-289,075,044.62
income
3.1 Total comprehensive |
1,020,000.00
285,201,939.21
286,221,939.21
reduced by owners
3.2 Capital increased and |
53.66
121,952,709.49
-121,952,655.83
Lu Thai Textile Co., Ltd. Interim Report 2018
3.2.1 Ordinary sharesincreased by shareholders
121,952,709.49
-121,952,709.49
3.2.2 Capital increased byholders of other equityinstruments
3.2.3 Share-based paymentsincluded in owners’ equity
3.2.4 Other
53.66
53.66
3.3 Profit distribution
-453,344,328.00
-453,344,328.00
3.3.1
surplus reserves
Appropriation to |
3.3.2
owners (or shareholders)
Appropriation to |
-453,344,328.00
-453,344,328.00
3.3.3 Other
owners’ equity
3.4 Carryforwards within |
reserves
3.4.1 Increase in capital (or share capital) from capital |
reserves
3.4.2 Increase in capital (or share capital) from surplus |
to make up losses
3.4.3 Surplus reserves used |
3.4.4 Other
3.5 Specific reserve
period
3.5.1 Withdrawn for the |
Lu Thai Textile Co., Ltd. Interim Report 2018
3.5. 2 Us e d during the period |
3.6 Other
4. Balances as of end of the period |
922,602,311.00
759,836,756.57
121,952,709.49
1,048,050.00
959,824,839.42
3,461,960,137.58
5,983,319,385.08
H1 2017
Unit: RMBItem
H1 2017Share capital
Other equity instruments
Capital reserves
Less: Treasury
shares
Othercomprehensive
income
Specificreserve
Surplus reserves
Retained profits
Total owners’
equityPreferre
Perpetual bonds
d shares |
Other
1. Balanc
es as of end of prior year |
922,602,311.00
759,793,238.92
888,761,783.04
3,451,836,174.44
6,022,993,507.40
Add: Adjustments for changed |
acc ount ing pol ic i e s
previous errors
Adjustments for corrections of |
Other adjustments
2. Balan ces as of beginning of the |
year
922,602,311.00
759,793,238.92
888,761,783.04
3,451,836,174.44
6,022,993,507.40
3. Increase/ decrease in the p eriod |
(“-” for decrease)
43,463.99
28,050.00
71,063,056.38
178,266,351.93
249,400,922.30
3.1 Total comprehensive |
income
28,050.00
710,630,563.81
710,658,613.81
reduced by owners
3.2 Capital increased and |
43,463.99
43,463.99
3.2.1 Ordinary sharesincreased by shareholders
3.2.2 Capital increased byholders of other equity
Lu Thai Textile Co., Ltd. Interim Report 2018instruments
3.2.3 Share-based paymentsincluded in owners’ equity
3.2.4 Other
43,463.99
43,463.99
3.3 Profit distribution
71,063,056.38
-532,364,211.88
-461,301,155.50
3.3.1
Appropriation to |
surplus reserves
71,063,056.38
-71,063,056.38
3.3.2
owners (or shareholders)
Appropriation to |
-461,301,155.50
-461,301,155.50
3.3.3 Other
owners’ equity
3.4 Carryforwards within |
reserves
3.4.1 Increase in capital (or share capital) from capital |
reserves
3.4.2 Increase in capital (or share capital) from surplus |
to make up losses
3.4.3 Surplus reserves used |
3.4.4 Other
3.5 Specific reserve
period
3.5.1 Withdrawn for the |
3.5. 2 Us e d during the period |
3.6 Other
4. Balances as of end of the period |
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
III. Company ProfileLu Thai Textile Co., Ltd. (hereinafter referred to as the “Company”) is a joint venture invested by
Zibo Lucheng Textile Investment Co., Ltd (originally named Zibo Lucheng Textile Co., Ltd,hereinafter referred to as Luchen g Textile) and Thailand Tailun Textile Co., Ltd. On 3 February1993, t he Company i s approved by the former Ministry of Foreign Trade and Economy of the State(1993) in WJMZEHZ No. 59 to convert into a joint-stock enterprise. Zibo Administration forIndustry and Commerce issued the Company corporate business license with the registration No. ofQGLZZZ No. 000066. In July 1997, the Company is approved by the Securities Committee of theDepartment of the State in the ZWF (1997) No. 47 to issue 80 million shares of domestically listedforeign share( B-shares) at the price of RMB 1.00 per share. Upon approved by Shenzhen StockExchange with No. (1997) 296 Listing Notice, the Company is listed on the Shenzhen StockExchange on 19 A ugust 1997 with B-shares stock code of 200726. On 24 November 2000,approved by ZJGSZ [2000] No.199 by CSRC, the Company increased publication of 50 millionshares of gene ral sh a re ( A-shares) at the book val ue of RMB 1.00, which are listed on the ShenzhenStock Exchange on 25 D ecember 2000 with A-shares stock code of 000726 through approval byShenzhen Stock Exchange with No. (2000) 162 Listing Notice. As approved by 2000 AnnualGeneral Meeting in May 2001, the Company carried out the distribution plan that 10 shares ofcapital public reserve are converted to 3 more shares for each 10 shares. As approved byResolutions of 2001 Annual G eneral Meeting in June 2002, the Company imple mented thedistribution plan that 10 shares of capital public reserve are converted 3 more shares for each 10shares again. As approved by 2002 Annual General Meeting in May 2003, the Companyimplemented the distribution plan that 10 shares of capital public reserve ar e 2 mo r e sh a res fo r ea ch10 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 3years later since listing on the A-share m arket. On 25 December 2003, the inner employees’ sharesreach 3 years s in ce li s ti ng on t he A -share stock market, and they set out circulation on 26 December2003. As approved by the Annual G eneral Meeting 2006 held in June 2007, the Companyimplemented the plan on converting 10 shares to all its shareholders with capital reserves for every10 shares. Aft er capitalizatio n, the registered c apital of the Company was RMB 844.8648 million.The Company, in accordance with the official repl y on approving Lu Thai Textile Co., Ltd. to issueadditional shares (ZJXK [2008] No. 890 document) from CSRC, issued the Renminbi commonshares (A s hares) amounting to 150 million shares on 8 December 2008. Ac cording to the relevantresolution of the 2
nd
Special Extraordinary General Meeting of 2011, the relevant resolution of the
th
Meeting of the 6
th
B oard of Directors, the Opini on of China Securities Regulator y Commissionon the Restricted Share Incentive Plan of Lu Thai Textile Co., Ltd. (Shang-Shi-Bu-Han [2011] No.206), t he Company a pplied for a registered capital increment of RMB 14.09 million, which wascontributed by restricted share incentive receivers with monetary funds. In accordance with theresolution of Proposal on Repurchasing and Canceling Partial Restricted Shares already Granted forthe Original Incentive Targets not Reaching the Incentive Conditions made at the 23
rd
Session of the
th
B oard of Directors on 13 August 2012, t he Company c anceling a total of 60,000.00 sharesalread y granted for the original incentive targets not reaching the incentive conditions. According tothe second temporary resolution of Proposal on counter purchase of part of the domestic listedforeign 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 ofUnlocked Restricted Share of the Original Incentive Personnel not Conforming to the IncentiveCondition, Proposal on Repurchase and Cancel unlocked Restricted Share in Second UnlockedPeriod of all the Incentive Personnel reviewed and approved by the 26
th
Meet ing o f the 6
th
Board ofDirectors on 27 March 2013, the Company repurchase and cancel 4,257,000 shares owned byoriginal people whom to motivate. According to the Proposal on Repurchase and Write-off of Partlyof the Original Incentive Targets Not Met with the Incentive Conditions but Granted RestrictedShares approved on the 11
th
Meeting of the 7
th
B oard of Directors on 11 June 2014, to executerepurchase and write-off of the whole granted shares of 42,000 shares of the original incentivetargets not met with the incentive targets of the Company. As per the Proposal on Buy-back ofSome A- and B-shares considered and approved as a resolution at the 1
st
s pecial meeting ofshareholders on 5 August 2015, the Company repurchased 33,156,200 domestically listed foreignshares (B-shares). According to the Agreement about Repurchas e of Part of the Company’s BShares by t he Resolutions on the 2
nd
Ext raordinary General Meeting of 2018 on 23 March 2018, th eComp any repurchased 17.6748 millio n domestically listed foreign shares (B shares). As of 30 June2018, the registered capital of the Company was RMB922.6023 million.The Company’s registered address: No. 11, Mingbo Road, Hi-tech Development Zone, Zibo,ShandongThe Company’s legal representative: Liu ZibinThe Company’s business scope includes the production, processing and sales business of cottonyarn, yarn dyed fabrics, shirts, fashion accessories, health underwear and other textile products andtheir mating products; design, R&D and technology services of the textile and garment products;acquisition and export of products not under exclusive rights or quota licenses; and hotel,guesthouses, cate ring, conferences, and training services; r ental business of the sel f-owned housesand land; the production and sales of the purified water projects.The Com pany’s financial statement s have been approved fo r issue b y the Board o f Directors of theCompany on 20 August 2018.There were 16 s ubsidiaries included into the consolidation scope of the Company from January toJune 2018, and for the details, please refer to Notes VIII. “Equities among Other Entities”.
IV Basis for Preparation of Financial Statements
1. Preparation Basis
With the going-concern assumption as the basis and based on transactions and other events thatactually occurred, the Group prepared financial statements in accordance with The AccountingStandards for Business Enterprises—Basic Standard issued by the Ministry of Finance with DecreeNo. 33 and revised with Decree No. 76, the 42 specific accounting standards, the ApplicationGuidance of Accounting Standards for Business Enterprises, the Interpretation of AccountingStandards for Business Enterprises and other regulations issued and revised from 15 Februar y 2006onwards (hereinafter jointly referred t o as “the Accounting Standards for Business Enterprises”,“China Accounting Standards” or “CAS”), as well as the Rules for Preparation Convention ofDisclosure of Public Offering Companies No.15 – G eneral Regulations for Financial Reporting(revised in 2014) by China Securities Regulatory Commission.
In accordance with relevant provisions of the Accounting Standards for Business Enterprises, theGroup adopted the accrual basis in accounting. Except for some financial instruments, the financialstatements were based on historical costs for measurement. Non-current asset h eld for sale waspriced according to the lower one between the amount of fair value minus estimated costs and theoriginal book value which complies with the conditions of holding for sale. If impairment occurredon an asset, an impairment reserve was withdrawn accordingly pursuant to relevant requirements.
V. Significant Accounting Policies and Estimates
Specific accounting policies and accounting estimates indicators:
The Company a nd each subsidiary mainly engage in the production and operation of textileproducts. T he Company a nd each subsidiary according to the actual production and operationcharacteristics and the regulations of th e relevant ASBE, formulated certain specific accountingpolicies and accounting esti mates of the transaction s and events such as recogniz ing the revenues,and f or details, please refer to each description of Notes V. As for the notes to the importantaccounting judgment and estimations made by the management level, please refer to Notes V. 28“Other important accounting policies and estimations”.
1. Statement of Compliance with the Accounting Standards for Business Enterprises
The financial st atements prepared b y the Company a re in compliance with in compliance with theAccounting Standards for Business Enterprises, which factually and completely present theCompany’s, and the Company’s financial positions as at 30 June 2018, business results and cashflows for the January to June of 2018, and other relevant information. In addition, the Company’sand t he Company’s financial statements meet the requirements of disclosing financial statementsand notes thereto stated in the Rules for Preparation Convention of Disclosure of Public OfferingCompanies No.15 – G eneral Regulations for Financial Reporting (revised in 2014) by ChinaSecurities Regulatory Commission.
2. Fiscal Period
The Company’s fiscal periods include fi scal years an d fiscal period s shorter than a complete fiscalyear. The Company’s fiscal year starts on January 1
st
a nd ends on December 31
st
of every yearaccording to the Gregorian calendar.
3. Operating Cycle
Normal operating cycle refers to the period from the Group purchases the assets for processing torealize the cash or cash equivalents. The Group regards 12 months as an operating cycle and regardswhich as the partition criterion of the mobility of the assets and liabilities.
4. Recording Currency
Renminbi (RMB) is regarded as the prevailing currency used in the main economic circumstancesof the Company and its domestic subsidiaries. The Company and its domestic subsidiaries adopt
RMB as the recording currency. The Company and its overseas subsidiaries confirm to adopt HKDollar, US Dollar and Vietnamese Dong as the recording currency according their major economicenvironment of the operating. When preparing the financial statements for the Reporting Period, theCompany adopted RMB as the recording currency.
5. Accounting Treatment for Business Combinations under the Common Control and Not under theCommon Control
Business combinations, it is refer to two or more separate enterprises merge to form a reportingentity transactions or events. Business combination is divided into under the same control and thosenon under the same control.(1) Business combinations under the same controlA business combination under the same control is a business combination in which all of thecombining enterprises are ultimately controlled by the same party or the same parties both beforeand after the business combination and on which the control is not temporary. In a businesscombination under the same control, the party which obtains control of other combining enterprise(s)on the combining date is the combining party, the other combining enterprise(s) is (are) thecombined party. The “combining date” refers to the date on which the combining party actuallyobtains control on the combined party.The assets and liabilities that the combining party obtains in a business combination shall bemeasured on the basis of their carrying amount in the combined party on the combining date. As forthe balance between the carrying amount of the net assets obtained by the combining party and thecarrying amount of the consideration paid by it (or the total par value of the shares issued), theadditional paid-in capital (share premium) shall be adjusted. If the additional paid-in capital (sharepremium) is not sufficient to be offset, the retained earnings shall be adjusted.The direct cost for the business combination of the combining party shall be recorded into theprofits and losses at the current period.(2) Business combinations not under the same controlA business combination not under the same control is a business combination in which thecombining enterprises are not ultimately controlled by the same party or the same parties bothbefore and after the business combination. In a business combination not under the same control,the party which obtains the control on other combining enterprise(s) on the purchase date is theacquirer, and other combining enterprise(s) is (are) the acquiree.For a business combination not under the same control, the combination costs shall include th e fairvalues, on the acquisition date, of the assets paid, the liabilities incurred or assumed and the equitysecurities issued by the acquirer in exchange for the control on the acquire e, the expenses for audit,legal services and assessment, and other administrative expenses, whi ch are recorded into theprofits and losses in the current period. The trading expenses for the equity securities or debtsecurities issued b y the acquirer as the combination consideration shall be r ecorded into the amountof in itial measurement of the equity securities or debt securities. The involved contingentconsideration shall be recorded into the combination costs at its fair value on the acquiring date.Where new or further evidences emerge, within 12 months since the acquiring date, against theexisting circumstances on the acquiring date and the contingent consideration thus needs to be
adjusted, the combined goodwill shall be adjusted accordingly. The combination costs of theacquirer and the identifiable net assets obtained by it in the combination shall be measuredaccordin g to th eir fair v alues at the acqu iring dat e. Th e acquirer s hall r ecogn ize t he pos itive bal ancebetween the combination costs and the fair value of the identifiable net assets it obtains from theacquiree as business reputation. Where the combination costs are less than the fair value of theidentifiable net assets it obtains from the acquiree, the acquirer shall re-examine the measurement ofthe fair values of the identifiable assets, liabilities and contingent liabilities it obtains from theacquiree as well as the combination costs. If, after the reexamination, the combination costs are stillless than the fair v alue of the identifiabl e net assets it obtains from the acquiree, the acquirer s hallrecord the balance into the profits and losses of the current period.As for the deductible temporary differences the acquirer obtains from the acquiree which are notrecognized into deferred income tax liabilities due to their not meeting the recognition standards, ifnew or further information shows that the relevant situation has existed on the acquiring date andthe economic benefits brought by the deductible temporary differences the acquirer obtains from theacquiree on the acquiring date can be realized, they shall be recognized into deferred income taxassets and the relevant goodwill shall be reduced. Where the goodwill is not sufficient to be offset,the difference shall be recognized into the profits and losses in the current period. In othercircumstances than the above, where the deductible temporary differences are recognized intodeferred income tax assets on the acquiring date, they shall be recorded into the profits and losses inthe current period.In a business combination not under same control realized by two or more transactions of exchange,according to about the 5
th
N otice about the Treasury Issuing the Accounting Standards forEnterprises (Finance accounting) [2012] No. 19 Criterion about the “package deal” (see Notes V. 6(2)), Whether the deals are “package deal” or n ot, belong to the “package deal”, see t he previousparagraphs described in this section and Notes V. 13 “Long term equity investment transaction” andconduct accounting treatment, those not belong to the "package deal" distinguish between theindividual financial statements and the consolidated financial statements and conduct relevantaccounting treatment.In the individual financial statements, the sum of the book value and new investment cost of theCompany hol ds in the acquiree befo re the acquiring date sh all be considered as initial cost of theinvestment. Other related comprehensive gains in relation to the equit y interests that the Companyholds in the acquiree before t he acquiring date shall be treated o n the same basis as the acquireedirectly disposes the related assets or liabilities when disposing the investment (that is, except forthe corresponding share in the changes in the net liabilities or assets with a defined benefit planmeasured at the equity method arising from the acquiree’s re-measurement, the others shall betransferred into current investment gains).In the Company’s consolidated financial statements, as for the equity interests that the Companyholds in the acquiree before the acquiring date, they shall be re-measured according to t heir fairvalues at t he acquirin g date; the pos itive differen ce between thei r fair val ues and carr ying amountsshall be recorded into the investment gains for the period including the acquiring date. Other relatedcomprehensive gains in relation to the equity interests that the Company hol ds in the acquireebefore the acquiring date shall be treated on the same basis as the acquiree directly disposes therelated assets or liabilities when disposing the investment (that is, except for the correspondingshare in t he changes in the net liabilities or assets with a defined benefit plan measured at the equity
method arising from the acquiree’s re-measurement, the others shall be transferred into currentinvestment gains on the acquiring date).
6. Preparation of the Consolidated Financial Statements
(1) Principle for determining the consolidation scopeThe consolidation scope for financial statements is determined on the basis of control. The term“control” is the power of the Company upon an investee, with which it can take part in relevantactivities of the investee to obtain variable returns and is able to influence the amount of returns.The consolidated financial statements comprise the financial statements of the Company and itssubsidiaries. A subsidiary is an enterprise or entity controlled by the Company.If any changes in the relevant facts or situations result in any changes in the elements involved inthe aforesaid definition of “control”, the Company shall carry out a reassessment.(2) Methods for preparing the consolidated financial statementsSubsidiaries are fully consolidated from the date on which the Compan y ob t ains control on their netassets and operation decision-making and are de-consolidated from the date when such controlceases. As for a disposed subsidiary, its operating results and cash flows before the disposal date hasbeen appropriately included in the consolidated income statement and cash flow statement; and asfor subsidiaries disposed in the current period, the opening items in the consolidated balance sheetare not adjusted. For a subsidi ary acquired in a busi ness combination not u nder the same control, itsoperating results and cash flows after the acquiring date have been appropriately included in theconsolidated income statement and cash flow statement, and the opening items and comparativeitems in the consolidated financial statements are not adjusted. For a subsidiary acquired in abusiness combination under the same control or a combined party obtained in a takeover, itsoperating results and cash flows from the beginning of the Reporting Period of the combination tothe combination date have been appropriately included in the consolidated income statement andcash flow statement, and the comparative items in the consolidated financial statements are adjustedat the same time.The finan cial stat emen ts of subs idi aries are adj ust ed in accord anc e with th e accou ntin g poli cies andaccounting period of the Company du ring the preparation of the consolidated financial statements,where the accounting policies and the accounting periods are inconsistent between the Companyand subsidiaries. For a subsidiary acquired from a business combination not under the same control,the individual financial statements of the subsidiary are adjusted based on the fair value of theidentifiable net assets at the acquisition date.All significant inter-group balances, transactions and unrealized profits are offset in theconsolidated financial statements.The portion of a subsidiary’s shareholders’ equity and the portion of a subsidiary’s net profits andlosses for the period not held by the Company are recognized as minority interests and mino rityshareholder profits and losses respectively and presented separately under shareholders’ equity andnet profits in the consolidation financial statements. The portion of a subsidiary’s net profits andlosses for the period that belong to minority interests is presented as the item of “minorityshareholder profits and losses” under the bigger item of net profits in the consolidated financialstatements. Where the loss of a subsidiary shared by minority shareholders exceeds the portion
enjoyed by minority shareholders in the subsidiary’s opening owners’ equity, minority interests areoffset.Where t he Company l osses control on its original subsidiaries due to disposal of some equityinvestments or other reasons, the residual equity interests are re-measured according to the fairvalue on the date when s uch control ceases. The summation of the consideration obtained from th edisposal of equity interests and the fair value of the residual equity interests, minus the portion inthe original subsidiary’s net assets measured on a continuous basis from the acquisition date that isenjoyable by the Company accor ding to the original shareholding percentage in the subsidiary, isrecorded in investment gains for the period when the Company’s control on the subsidiary ceases.Other comprehensive incomes in relation to the equity investment in the original subsidiary aretreated on the same accounting basis as the acquiree directly disposes t he relevant assets orliabilities (that is, except for the changes in the net liabilities or assets with a defined benefit planresulted fro m re-measurement of the original subsidiar y, the rest shall all be transferred into currentinvestment gains) when such control ceases. And subsequent measurement is conducted on theresidual equity interests according to the No. 2 Accounting Standard for Business Enterprises—Long-term Equity Investments or the No. 22 Accounting Standard for BusinessEnterprises—Recogni tion and Measurement o f Financial Instruments. For details, see Notes V. 13“Long Term Equity Investment” or Notes V. 9 “Financial Instruments”.Where t he Compan y losses control on its original subsidi aries due to step by step disposal of equityinvestments through multiple transactions, it need to distinguish the Group losses control on itssubsidiaries due to disposal of equity investments whether belongs to a package deal. All thetransaction terms, conditions and economic impact of the disposal of subsidiaries’ equity investmentare in accordance with one or more of the following conditions, which usually indicate the multiple
transactions, should be considered as a package deal for accounting treatment. ① These deals areat the same time or under the condition of considering the influence of each other to concluded; ②These transactions only be as a whole can a chieve a complete business result; ③ The occurrenceof a deal depends on at least one other transactions;④ A deal a lone is not economical, it is
economical with other trading together. Those not belong to a package deal, each of them a dealdepends on circumstances respectively conduct accounting treatment in accordance with theapplicable principles of “part disposal of subsidiaries of a long-term equity investment under the
condition of not losing control on its subsidiaries” (see Notes V. 13. (2) ④ in this section) and
“Where t he Company l osses control on its original subsidiaries due to disposal of some equityinvestments or other reasons” (see the front paragraph) relevant transactions of the Company lossescontrol on its subsidiaries due to disposal of equity investments belonging to a package deal,considered as a transaction and conduct accounting treatment. However, Before losing control,every disposal cost and corresponding net assets balance of subsidiary of disposal investment areconfirmed as other comprehensive income in consolidated financial statements, which togethertransferred into the current profits and losses in the loss of control, when the Company losingcontrol on its subsidiary.
7. Confirm ati on Standard for Cash and Cash Equi vale nt
The term “cas h” ref ers t o cas h on hand and d epos its t hat are avai labl e for p a yment at an y time. Th eterm “cash equivalents” refe rs to short-term (within 3 months from the purchase date) and highly
liquid i nvestments that are readily convertible to known amounts of cash and which are subject toan insignificant risk of change in value.
8. Foreign Currency Businesses and Translation of Foreign Currency Financial Statements
(1) Accounting treatments for translation of foreign currency transactionsAs for a foreign currency transaction, the Company shall convert the amount in a foreign currencyinto amount in its bookkeeping base at the spot exchange rate (usually referring to the central parityrate announced by the People’s Bank of China, the same below) of the transaction date, while as forsuch transactions as foreign exchange or involving in foreign exchange, the Company shallconverted into amount in the bookkeeping base currenc y at actual exchange rate the t ransaction isoccurred.(2) Accounting treatments for translation of foreign currency monetary items and non-monetaryitemsOn the balance sheet date, the foreign currenc y monetary items shall be translated at the spotexchange rate on the balance sheet date. The exchange difference arising from th e differencebetween the spot exchange rate on the b alance sheet date and th e spot exchange rate at th e time ofinitial recognition or prior to the balance sheet dat e shall be r eco rded in the profi ts an d l osses i n t he
current period, excluding the following situations: ① the exchange difference arising from foreign
currenc y loans relat ed to acq uisit ion of fix ed asset s shall b e treated at th e princi ple of capitalization
of borrowing costs; ② the exchange difference arising from the hedging instruments used for
effective hedging of net overseas operation investments shall be recorded into ot her comprehensiveincomes, and shall be recognized into current gains and losses when the net investments are
disposed; and ③ the exchange difference arising from change in the book balance of foreign
currency monetar y items available for sale ex cept the amortized co sts shall be recorded int o othercomprehensive gains and losses.For the preparation for consolidated financial statement involved in foreign operations, if there areitems of foreign currency monetary of net investment in foreign operations in essence, then thebalance of exchange generated by changes in exchange rate shall included into other comprehensiveincome; when disposing foreign operations, it shall be converted into the disposal of the currentprofits and losses.A foreign currency non-monetary item measured at the historical costs shall still be translated at thespot exchange rate on the transaction date. Where the foreign non-monetar y items measured at thefair value shall be converted into amount in its bookkeeping base currency at spot exchange rate,the exchange gains and losses arising thereof shall b e treated as change in fair value, and record edinto the current period gains and losses or as other comprehensive incomes.(3) Translation of foreign currency financial statementsWhen it involves overseas business in preparing the consolidated financial statement, for thetranslation difference of foreign currency monetary items of net investment in overseas businessarisin g from t he ch an ge i n ex chan ge rate, it s hall be r ecord ed int o the item of “difference o f forei gncurrency financial statement trans lation” under the owners’ equity; and be recorded into disposalgains and losses at current period when disposing overseas business.The foreign currency financial statement of overseas business should be translated in to RMB
financial statement by the following methods: The asset and liability items in the balance sheetsshall be translated at a spot exchange rate on the bal ance sheet date. Among the owner’s equityitems, except for the items as “undistributed profits”, other items shall be translated at the spotexchange rate at the time when they are incur red. The income and expense items in the profitstatements shall be translated at the spot exchange rate of the transactio n date. The undistributedprofits at year-begin is the undistributed profits at the end of last year after the translation;undistributed profits at year-end shall be listed as various distribution items after the translation;after the translation, the balance between assets and the sum of liabilities and owners’ equities shallbe record ed into other comprehensive gains and los ses as difference of foreign currency translation.Where an enterprise disposes of an overseas business without the control right, it shall shift thedifferences, which is presented under the items of the owner’s equities i n the balance sheet andwhich arises from the translation of foreign currency financial statements relating to this overseasbusiness, into the disposal profits and losses of the current period by all or proportion of thedisposed overseas business.Foreign cash flow shall be translated at the spot exchange rate of the date of cash flow incurred. Theinfluence of exchange rate on the cash flow shall be adjustment item and individually listed in thecash flow statement.And the opening balance and t he actual balance of last year shall be listed at the amount s aftertranslation of foreign currency financial statement in last year.Where the control of the Company over an overseas operation ceases due to disposal of all or someof the Company’s owner’s equity in the overseas operation or other reasons, the foreign-currencystatement translation difference belonging to the parent company’s owner’s equity in relation to theoverseas operation which is stated under the shareholders’ equity in the balance sheet shall be allrestated as gains and losses of the disposal period.Where the Company’s equity in an overseas operation decreases due to disposal of some equityinvestment or other reasons but the Company still has control over the overseas operation, theforeign-currency statement translation d ifference in relation to the disposed part o f the overseasoperation shall be recorded into minority interests instead of current gains and losses. If what’sdisposed is some equity in an overseas associated enterprise or joint venture, the foreign-currencystatement translation difference related t o the overseas operation shall be record ed into the gainsand losses of the current period of the disposal according to the disposal ratio.
9. Financial Instruments
The Company r ecognizes a financial asset or liability when it be comes a party of the relevantfinancial instrument contract. Financial assets and liabilities are measured at fair value in initialrecognition. As for the financial assets and liabilities measured at fair value of which changes arerecorded in to curr en t gai n s an d l os ses , t he rel ev an t deal i ng expenses are directly recorded into gainsand losses; and the dealing expenses on other kinds of financial assets and liabilities are included inthe amounts initially recognized.(1) Determination of the fair value of main financial assets and financial liabilitiesFair value refers to the price that a market participant shall receive for selling an asset or shall payfor transferring a liability in an orderly transaction on the measurement date. As for the financialassets or financial liabilities for which there is an active market, the quoted prices in the active
market shall be used to determine the fair values thereof. The quoted prices in the active marketrefers to the prices available from stock exchange, broker’s agencies, guilds, pricing organizationand etc., whi ch represent t he actual tradin g price under equ al transactio n. Where there i s no activemarket for a financial instrument, the enterprise concerned shall adopt value appraisal techniques,including the prices adopted by the parties, who are familiar with the condition, in the latest markettransaction upon their own free will, the current fair value obtained by referring to other financialinstruments of the same essential nature, the cash flow capitalization method and the option pricingmodel, etc., to determine its fair value.(2) Classification, recognition and measurement of financial assetsThe purchas e and sal e of finan cial asset s under the normal ways shall be recognized and stopped tobe recognized respectiv ely at the price of transaction date. Financial assets shall be cl assified intothe following four cat egories when the y are initially recognized: (a) the financial assets which aremeasured at their fair values and the variation of which is recorded into th e profits and losses of thecurrent period, (b) the investments which will be held to their maturity; (c) loans and the accountreceivables; and (d) financial assets available for sale.
① The financial assets which are measured at their fair values and the variation of which is
recorded into the profits and losses of the current periodIncludi ng tr an sa ct i onal financial assets and the financial assets which are designated to be measuredat their fair value when they are initially recognized and of which the variation is recorded into theprofits and losses of the current period;The financial assets meeting any of the following requirements shall be classified as transactional
financial assets:A. The purpose to acquire the said financial assets is mainly for selling them in the
near future; B. Forming a part of the identifiable combination of financial instruments which aremanaged in a centralized way and for which there are objective evidences proving that theenterprise may manage the combination by way of short-term profit making in the near future; C.Being a derivative instrument, excluding the designated derivative instruments which are effectivehedging instruments, or derivative instruments to financial guarantee contracts, and the derivativeinstruments which are connected with the equity instrument investments for which there is noquoted price in the active market, whose fair value cannot be reliably measured, and which shall besettled by delivering the said equity instruments.A transactional financial asset is subsequently measured at the fair valu e. The gains and lossesarising fro m the fair valu e changes, as well as the dividend and interest incomes from the financialasset, are recorded in the gains and losses for the current period.
② Held-to-maturity investment
The term "held-to-maturity investment" refers to a non-derivative financial asset with a fixed dateof maturity, a fixed or determinable amount of repo price and which the enterprise holds for adefinite purpose or the enterprise is able to hold until its maturity.For the held-to-maturity investment adopting actual interest rate method, which is measured at thepost-amortization costs, the profits and losses that arise when such financial assets or financialliabilities are terminated from recognition, or are impaired or amortized, shall be recorded into theprofits and losses of the current period.The actual interest rate method refers to the method by which the post-amortization costs and theinterest incomes of different installments or interest expenses are calculated in light of the actual
interest rates of the financial assets or financial liabilities (including a set of financial assets orfinancial liabilities). The actual interest rate refers to the interest rate adopted to cash the future cashflow of a financial asset or financial liability within the predicted term of existence or within ashorter applicable term into the current carrying amount of the financial asset or financial liability.When the actual i nterest rate is det ermined, the future cash flow shall be predicted on the basis oftaking into account all the contractual provisions concerning the financial asset or financial liability(the future credit losses shall not be taken into account).and also the various fee charges, tradin gexpen ses, pr emium s or redu ced val ues, etc., whi ch ar e paid or coll ected by th e p arties to a fi nancia lasset or financial liability contract and which form a part of the actual interest rate.
③ Loans and the accounts receivables
Loans and the accounts receivables refer to non-derivative financial assets, which there is noquotation in the active market, with fixed recovery cost or recognizable. F inancial assets that a redefined as loans and the accounts receivables by the Company including notes receivables, accountsreceivables, interest receivable, dividends receivable and other receivables etc..Loans and the accounts receivables are made follow-up measurement on the basis ofpost-amortization costs employing the effective interest method. Gains or loss arising from thetermination recognition, impairment occurs or amortization shall be recorded into the profits andlosses of the current period.
④ Assets available for sales
Assets available for sales including non-derivative financi al asset that has been assigned as assetsavailable for sales on the initial recogniti on and financial assets excluded those measured at fairvalue and of which the variation into profits and losses of the current period, they are some financialassets, loans and accounts receivables, held-to-maturity investment.The cost at the period-end of the available-for-sale liabilities instruments should be confirmedaccording to its amortized cost method, that is the initially recognized amount which deduct theprincipal that had been repaid, to plus or minus the accumulative amortization amount formed bythe amortization between the difference of the initially recognized amount and the amount on thedue date that adopted the actual interest rate method, and at the same time deduct the amount afterthe impairment loss happened. The cost at the period-end of the available-for-sale liabilitiesinstruments is its initial cost.Financial assets available-for-trade are subsequently measured at fair value, and gains or losses
arising from changes in the fair value are recognized as other comprehensive income,and be carried
forward when the said financial assets stopped recognition, then it shall be recorded into the p rofitsand losses of the current period. But, the equit y instrument investment which neither have quotationin the active market nor its fair valu e could not be reliable measured, as well as the derivativefinancial assets that concern with the equity instruments and should be settled through handing overto its equity instruments, should take the follow-up measurement according to the cost.Interest receive during the holding of assets available for sales and cash dividends with distributionannouncement by invested companies, it shall be rec orded into the profits and losses of the currentperiod.(3) Impairment of financial assetsThe Company as sesses a t the b alance sheet d ate t he ca rr ying amoun t of ever y finan cial asset ex ceptfor the financial assets t hat m easured by the fair valu e. If there is objective evidenc e indicating a
financial asset may be impaired, a provision is provided for the impairment.The Company ca rries out a sep arate impairment test for every financial as set which is indi viduallysignificant. As for a financial asset which is individually insignificant, an impairment test is carriedout separately or in the financial asset group with similar credit risk. Where the financial asset(individually significant or insignificant) is found not impai red after th e separate i mpairm ent test , itis included in the financial asset group with similar credit risk and tested again on the group basis.Where the impairment loss is recognized for an individual financial asset, it is not included in thefinancial asset group with similar credit risk for an impairment test.
① Impairment on held-to maturity investment, loans and receivables
The financial assets measured by cos t or amortized cost write down thei r carrying value by theestimated pres ent value of future cash fl ow. The difference is recorded as impairment l oss. If thereis obj ective evidence t o indicate t he recover y of value of financi al assets af ter impairmen t, and it isrelated with subsequent event after recognition of loss, the impairment loss recorded originally canbe reversed. Th e carrying value o f financial asse ts after impairment loss reversed shal l not exceedthe amortized cost of the financial assets without provisions of impairment loss on the reservingdate.
② Impairment of available-for-sale financial assets
When i t jud ged that t he decre ase of f air val ue of t he avail able-for-sale equit y instrument investmentis serious and not temporarily after comprehensive considering relevant factors, it reflected that theavailable-for-sale equity instrument investment occurred impairment. Of which, the “seriousdecline” refers to the accumulative decline range of the fair value over 20%; while the“non-temporary decline” refers to the consecutive decline time of the fair value over 12 months.Where an available-for-sale financial a sset is impaired, the accumulative losses arising from thedecrease of the fair valu e of the capital reserve wh ich is directly included are tr ansferred out andrecorded in the profits and losses for the current period. The accu mulat ive los ses tran sferred ou t arethe balance obtain ed from the initi ally obtained cost of t he said financial as set after deductin g theprincipals as taken back, the amortized amount, the current fair value and the impairment lossoriginally recorded in the profits and losses.Where the impairment loss has been recogni zed for an available-for-sale financial asset, if, withinthe accounting periods thereafter, there is any objective evidence proving that the value of the s aidfinancial asset has been restored and the restoration is objectively related to the events that occurafter the impairment loss was recognized, the originally recognized impairment loss is reversed.The impairment losses on the available-for-sale equity instrument investments are reversed andrecognized as other comprehensive incomes, and the impairment losses on the available-for-saleliability instruments are reversed and recorded in the profits and losses for the current period.The impairment loss incurred to an equit y instrument investment for whi ch there is no quoted pricein the active market and whose fair value cannot be reliably measured, or incurred to a derivativefinancial asset which is connected with the said equity instrument investment and which must besettled by delivering the said equity investment, is not reversed.(4) Recognition and measurement of financial asset transfersWhere 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 areterminated; ② The said financial asset has been transferred and nearly all of the risks and rewards
related to the ownership of the financial asset to the transferee; or ③ The said financial asset has
been t ransferred. And the Company ha s ceased its control on the said financial asset though itneither transfers nor retains nearly all of the risks and rewards related to the ownership of thefinancial asset.Where t he Company n either transfers nor retains nearly all of the risks and reward s related to theownership of a financial asset, and it does not cease its control on the said financial asset, itrecognizes the relevant financial asset and liability accordi ngly according to the extent of itscontinuous i nvolvement in the transferred financial asset. The term "continuous involvement in thetransfer red fin anci al asse t" re fers to t he ris k lev el th at the en terpris e fac es r esult ing from t he ch ang eof the value of the financial asset.If the transfer of an entire financial asset satisfies the conditions for stopping recognition, thedifference between the amounts of the following 2 items is recorded in the profits and losses of thecurrent period: (1) The book value of the transferred financial asset; and (2) The sum ofconsideration received from the transfer, and the accumulative amount of the changes of the fairvalue originally recorded in other comprehensive incomes.If the transfer of partial financial asset satisfies the conditions to stop the recognition, the bookvalue of the transferred financial asset is apportioned between the portion whose recognition hasbeen stopped and the portion whose recognition has not been stopped according to their respectiverelativ e fair valu e, and the d ifference betwe en the amounts of the following 2 items is included intothe profits and losses of the current period: (1) The summation of the consideration received fromthe transfer and the portion of the accumulative amount of changes in the fair value originallyrecorded in other comprehensive incomes which corresponds to the portion whose recognition hasbeen stopped; and (2) The amortized carrying amounts of the aforesaid amounts.In respect of the asset s using recour se to sell o r using endo rsement to tr ansfer, the Company needsto determine whether almost all of the risks and rewards of the financial asset ownership aretransferred. If almost all of the risks and rewards of the financial asset ownership had beentransfer red to th e tran s feree, derecognize the financial assets. For almost all of the risks and rewardsof the financial asset ownership retained, do not end to recognize the financial assets. For whichneither transfer or retain almost all of the risks and rewards of the financial asset ownership,continuously j udge whether the Company r etain the control of the assets, and conduct accountingtreatment according to the principle of mentioned in the previous paragraphs.(5) Classification and measurement of financial liabilitiesIn the initial recognition, financial liabilities are divided into the financial liabilities measured at fairvalues and whose changes are recorded in current gains and losses and other financial liabilities.Financial liabilities are initially recognized at their fair values. As for a financial liability measuredat fair value and whose changes are recorded in current gains and l osses, the relevant tradingexpense is directly recorded in the profits and losses for the current period. As for other financialliabilities, the relevant trading expenses are recorded in the initially recognized amounts.
① Financial liabilities measured at fair values and whose changes are recorded in current gains and
lossesSuch financial liabilities are divided into transactional financial liabilities and financial liabilitiesdesignated to be measured at fair values and whose changes are recorded in current gains and lossesin the initial recognition under the same conditions where such financial assets are divided into
transactional financial assets and financial asset s designated to be measured at fair values andwhose changes are recorded in current gains and losses in the initial recognition.Financial liabilities measured at fair values and whose changes are recorded in cu rrent gains andlosses are subsequently measured at their fair values. Gains or l osses arising from the fair valu echanges, as well as the divi dend and i nterest ex penses i n relation to the sai d financial liabil ities, arerecorded in the profits and losses for the current period.
② Other financial liabilities
As for a derivative financial liability connected to an equity instrument for which there is not quotedprice in an active market and whose fair value cannot be reliably measured and which must besettled by delivering the equit y instrument, it is subsequently measured on the basis of costs. Otherfinancial liabilities are subsequently measured according to the amortized cost using the actualinterest rate method. Gains or losses arising from de-recognition or amortization of the saidfinancial liabilities is recorded in the profits and losses for the current period.(6) De-recognition of financial liabilitiesOnly when the prevailing obligations of a financial liability are relieved in all or in part may therecognition of the financial liability be 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 ofany new financial liability, and if the contractual stipulations regarding the new financial liability issubstantially different from that regarding the existing financial liability, it terminates therecognition of the existing financial liability, and at the same time recognizes the new financialliability.Where the recognition of a financial liability is totally or partially terminated, the enterpriseconcerned shall include into the profits and losses of the current period for the gap between thebook value which has been terminated from recognition and the considerations it has paid(including the non-cash assets it has transferred out and the new financial liabilities it has assumed)(7) Derivatives and embedded derivativesDerivative financial instruments include derivatives are initially measured at fair value at the datewhen the derivative cont racts are entered into and are subs tantially re-measured at fair val ue. Theresulting gain and loss is recognized in profit or loss.An embedded derivative is separated from the hybrid instrument, where the hybrid instrument is notdesignat ed as a fi nan cial ass et or fi nancial liability at fair value though profit or loss, and the treatedas a standalone derivati ve if (a) the economic charact eristics and risks of t he embedded derivativeare not closely related to the economic characte ristics and risks of the host contract; and (b) aseparate instrument with the same terms as the embedded derivative would meet the definition of aderivative. If the Company is unable to measure the embedded derivative separately either atacquisition or at a subsequent balance sheet date, it designates the entire hybrid instrument as afinancial asset or financial liability at fair value through profit or loss.(8) Offsetting financial assets and financial liabilitiesWhen t he Company h as a le gal right th at is curre ntl y enforceable t o set off the reco gnized fi nancia lassets and financial liabilities, and intends either to settle on a net basis, or to realize the financialasset and settle the financial liability simultaneously, a financial asset and a financial liability shallbe offset and the net amount is presented in the balance sheet. Except for the above circumstances,financial asset s and financial li abilities shall be presented separatel y in the balance sh eet and shall
not be offset.(9) Equity instrumentsAn equit y inst rument is an y contract that ev idenc es a resi dual i nterest in t he assets of the C ompan yafter deducting all of its liabilities. The Company issues (including refinancing), re-purchases, sellsor written-offs the equity instrument as the disposing of the changes of the equity. The Group notrecognized the changes of the fair value of the equity instrument. The transaction expenses relatedto the equity transaction would be deducted from the equity.All t ypes of distribution (excluding stock dividends) made by the Company to holders of equityinstruments are deducted from shareholders’ equity. The Company does not recognize any changesin the fair value of equity instruments.
10. Receivables(1) Accounts Receivable with Significant Single Amount for Which the Bad Debt Provision is Made
Individually
Judgement
debts of the individually significant accounts receivable
Receivables with the amount of RMB5 million
basis or monetary standards of provision for bad | or more than |
RMB5
significant single amount.
million should recognize as the receivables with | |
Method of individual provision for bad debts of the individually |
significan t accounts receivable
receivables
with significant single amounts; the financial assets without impairment by independent impairment test should be included in financial assets portfolio with similar credit risk to take the impairment test. Receivables was recognized with |
impairment should
with similar credit risk to take the impairment test.
(2) Accounts Receivable Which the Bad Debt Provision is Withdrawn by Credit Risk Characteristics
Name of portfolios Bad debt provision methodAging group Aging analysis methodIn the groups, adopting aging analysis method to withdraw bad debt provision:
√ Applicable □ Not applicable
Age
no longer be included in receivables portfolioWithdrawal proportion for accounts
receivable ( %)
Withdrawal proportion for accounts | Withdrawal proportion for other accounts |
receivable ( %)Within 1 year (including 1 year) 5.00%
5.00%
1-2 years 10.00%
10.00% |
2-3 years 20.00%
20.00% |
Over 3 years 30.00%
30.00% |
In the groups, adopting balance percentage method to withdraw bad debt provision:
□ Applicable √ Not applicable
In the groups, adopting other methods to withdraw bad debt provision:
□ Applicable √ Not applicable
(3) Accounts Receivable with an Insignificant Single Amount but for Which the Bad Debt Provision isMade Individually
withdrawing bad debt provision
Reason of individually | Receivables have dispute with the other parties or involving lawsuit and arbitration; receivables have obvious indication showing that the debtors are likely to fail to perform the duty of |
repa yment, etc.
provision
Withdrawal method for bad debt | The Company made independent impairment test on receivables with insignificant amount but with the following characteri stics, if any objective evidence sh ows that the accounts receivabl e |
has been impaired, impairment loss shall be recognized on the b
that the debtor is not likely to repay; and the like.
11. Inventory
Is the Company subject to any disclosure requirements for special industries?No.
(1) ClassificationInventories mainly include raw materials, work-in-progress, product processed on entrustment,consumptive biological assets and stock products etc.(2) Valuation method of inventories acquiring and issuingInventories shall be measured at actual cost when acquired, and the cost of the inventories includingthe procurement cost, processing cost and other costs. Gre y yarn, dyed yarn, and plus material sh allbe measured at first-in first-out method when acquired and delivered; other inventories shall bemeasured as per the weighted average method(3) Basis for determining net realizable value of inventories and provision methods for decline invalue of inventoriesNet realizable value is the estimated selling price in the ordinary course of business less theestimated costs of completion, the estimated costs necessary to make the sale and relevant taxes.Net realizable value is determined on the basis of clear evidence obtained, and takes intoconsideration the purpose of holding inventories and effect of post balance sheet events.At the balance sheet date, inventories are m easu red at the lo wer of th e cost and net realiz able v alue.If the net realizable value is below the cost of inventories, a provision for decline in value ofinventories is made. The provision for inventories decline in value is determined by the differenceof the cost of individual item less its realizable value.After the provision for decline in value of inventories is made, if the circumstances that previouslycaused inventories to be written down below cost no longer exist so that the net re alizable v alue ofinventories is higher than their cost, the original provision for decline in value is reversed and thereversal is included 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 articlesFor the low-value consumption goods, should be amortized by one-off amortization method whenconsuming; and for the packing articles, should be amortized by one-off amortization method whenconsuming.
12. Assets Held for Sale
The Company classifies an asset into held-for-sale when its book value is mainly recovered byselling (including the exchanges of non-monetary assets with commercial subs tance) instead of anon-current asset or disposal group. Specifi c standards are simultaneously satisfying the followingconditions: A asset or disposal group can be sold immediately under current conditions based on thepractice of selling such assets or disposal groups in similar transactions; the Company has alreadymade a resolution on sale plan and obtained a confirmed purchase commitment; and the sale isexpected to will be completed within one year. A disposal group refers to a group of assets that aredisposed of together as a whole by sale or other means in a transaction and the liabilities directlyrelated to t hese assets transferred i n the transacti on. Where th e asset group or combination of assetgroups to which a disposal group belongs apportions the goodwill acquired in the businesscombination in accordance with the "Accounting Standards for Enterprises No. 8 - AssetImpairment", the disposal group shall include the goodwill allocated to it.When the Company initially measures or re-measures on the balance sheet date the non-currentassets and disposal groups cl assified as hel d-for-sale, If the book value is higher than the fair valueminus the net amount of the sale costs, the book value will be written down to the net amount of fairvalue minus the sale costs, and the amount written down will be recognized as impairment loss ofassets and included in the current profit and loss, and provision for impairment of held-for-saleassets will be made at the same time. For the confirmed amount of impairment loss of assets of thedisposal groups held for sale, the book value of goodwill of the disposal groups will be offset first,and then the book value of various non-current ass ets appli cable to th e measurement of Accoun tingStandards for Business Enterprises No. 42 - Non-curre nt Assets and Disposal Groups Held fo r Saleand Termination of Operations (hereinafter referred to as “Held for sale standards”) in the disposalgroups will be offset according to the proportions. If the net amount that the fair value of thedisposal groups held for sale on the follow-up balance sheet date m inus th e sale costs increases, t heprevious written-down amount will be restored, and reversed to the asset impairment loss confirmedafter the as s et s b ein g cl ass ifi ed as hel d-for-s ale. The reversed amount will be included in the currentprofit or loss. And its book value shall be increased proportionately to the proportion of the bookvalue of various non-current assets measured by the disposal group in addition to goodwillapplicab le t o t he m eas ur e m ent of h eld -for-sale norm s; The book value of deducted goodwill and thenon-current assets applicable to the m easurement of held-for-sale norms will not be reversed if the
asset impairment loss is recognized before it is classified as held for sale.
Non-current assets held for sale or non-current assets in the disposal group are not subject todepreciation or amortization. Interest and other expenses of liabilities in the disposal group held forsale will be confirmed as before.When a non-current asset or disposal group ceases be classified as held-for-sale or a non-currentasset is removed out from the held-for-sale disposal group due to failure in meeting the
classification conditions for the category of held-for-sale, it will be measured by one of thefollowings whichever is lower: (1) The book value before being classified as held for sale will beadjusted according to the depreciation, amortization or impairment that would have been recognizedunder the assumption that it was not classified as held for sale; (2) The recoverable amount.
13. Long-term Equity Investments
The long-term equity investments of this part refer to the long-term equity investments that theCompany has control, joint control or significant influence over the investees. The long-term equityinvestment that the Company does not have cont rol, joint control or significant influence over theinvestees, should be recognized as available-for-sale financial assets o r be measured by fair val uewith the changes should be included in the financial assets accounting of the current gains andlosses, and please refer the details of the accounting policies to Notes V. 9 “Financial instrument”Joint control, refers to the control jointly owned according to the relevant agreement on anarrangem ent by the Company and t he relevant activities of the arrangement should be decided onlyafter the particip ants which share the cont rol right make consens us. Significant in fluence refers tothe power of the Company w hich could a nticipate in the finance and the operation polices of theinvestees, but could not control or jointly control the formulation of the policies with the otherparties.(1) Recognition of investment costsAs for lon g-term equit y invest ments acquired by enterp rise merger, if the merger is under the sam econtrol, the share of the book value of the owner ’s equity of the merged enterprise, on the date ofmerger, is regarded as the initial cost of the long-term equity investment. The difference betweenthe initial cost of the long-term equity investment and the payment in cash, non-cash assetstransferred as well as the book value of the debts borne by the merging party shall offset against thecapital reserve. If the capital reserve is insufficient to dilute, the retained earnings shall be adjusted.If the consideration of the merging enterprise is that it issues equity securities, it shall, on the date ofmerger, regard the share of the book value of the shareholder's equity of the merged enterprise onthe consolidated financial statement of the ultimate control party as the initial cost of the long-termequity investment. The total face value of the stocks issued shall be regarded as the capital stock,while the difference between the initial cost of the long-term equit y investment and total face valueof the shares issued shall offset against t he capital reserve. If the capital reserv e is insufficient todilute, the retained earnings shall be adjusted.For the long-term investment required from the business combination under different control, theinitial investment cost regarded as long-term equity investment on the purchasing date according tothe combination cost, the combination costs shall be the sum of the fair values of the assets paid, theliabilities incurred or assumed and the equity securities issued by the Company.The commission fees for audit, law services, assessment and consultancy services and otherrelevant expenses occurred in the business combination by the combining party or the purchaseparty, shall be recorded into current profits and losses upon their occurrence.Besides the long-term equity investments formed by business combination, the other long-termequity investments shall be initially measured by cost, the cost is fixed in accordance with the waysof gaining, such as actual cash payment paid by the Company, the fair value of equity securitiesissued by the Company, the agreed value of the investment contract or agreement, the fair value or
original carrying amount of exchanged assets from non-monetary assets ex change transaction, thefair value of the long-term equity investments, etc. The expenses, taxes and other necessaryexpenditures directly related with gaining the long-term equity investments shall also be recordedinto investment cost.(2) Subsequent measurement and recognition of gains or lossesA lo ng -term equity investment where the investing enterprise has joint control (except for whichforms into common operators) or significant influence over the investors should be measured byequity method. Moreover, long-term equity investment adopting the cost method in the financialstatements, and which the Company has control on invested entity.
① Long-term equity investment measured by adopting cost method
The price o f a lo ng-term equity investment measured by adopting the cost method shall be includedat its initial investment cost and append as well as withdraw the cost of investing and adjusting thelong-term equity investment. The return on investment at current period shall be recognized inaccordance with the cash dividend or profit announced to distribute b y the invested entity, exceptthe announced but not distributed cash dividend or profit included in the actual payment orconsideration upon gaining the investment.
② Long-term equity investment measured by adopting equity method
If the initial cost of a long-term equity investment is more than the Company's attributable share ofthe fair value of the invested entity's identifiable net assets for investment, the initial cost of thelong-term equity investment may not be adjusted. If the initial cost of a long-term equity investmentis less than the Company's attributable share of the fair value of the invested entity's identifiable netassets for the investment, the difference shall be included in the current profits and losses and thecost of the long-term equity investment shall be adjusted simultaneously.When measured by adopting equity method, respectively recognize investment income and othercomprehensive income according to the net gains and losses as well as the portion of othercomprehen sive in come which should be enjo yed or be shared, and at the same time adjust the bookvalue of the long-term equity investment; corresponding reduce the book value of the long-termequity investment according to profits which be declared to distribute by the investees or the portionof the calculation of cash dividends which should be enjoyed; for the other changes except for thenet gains and losses, other comprehensive income and the owners’ equity except for the profitsdistribution of the investees, should adjust the book value of the long-term equity investment aswell as include in the capital reserve. The investing enterprise shall, on the ground of the fair valueof all identifiable assets of the invested entity when it obtains the investment, recognize theattributable share of the net profits and losses of the invested entity after it adjusts the net profits ofthe invested entity. If the accounting policies adopted by the investees i s not accord wit h that of theCompany, should be adjusted according to the accounting policies of the Company and the financialstatement of the investees during the accounting period and according which to recognize theinvestment income as well as other comprehensive income. For the transaction happened betweenthe Company an d associat ed enterprises as well as joint v entures, if the assets launched or sold notform into business, the portion of the unrealiz ed gains and losses of the internal transaction, whichbelongs to the Company according to the calculation of the enjoyed proportion, should recognizethe investment gains and losses on the basis. But the losses of the unrealized internal transactionhappened between the Company a nd the investees which belongs to the impairment losses of the
transferred assets, should not be neutralized.The Company s hall recognize the net losses of the invested enterprise until the book value of thelong-term equity investment and other long-term rights and interests which substantially form thenet investment made to the invested entity are reduced to zero. However, if the Company h as theobligation to undertake extra losses, it shall be recognized as the estimated liabilities in accordancewith the estimated duties and then recorded into investment losses a t current period. If the investedentity realizes any net profits later, the Company shall, after the amount of its attributable share ofprofits offsets against its attributable share of the un-recognized losses, resume recognizing itsattributable share of profits.For the long-term equity investment held by the Company before the first ex ecution of the newaccounting criterion on January 1, 2007 of the as sociated enterprises and joint ventures, if there isdebit difference of the equity investment related to the investment, should be included in the currentgains and losses according to the amount of the straight-line amortization during the originalremained period.
③ Acquiring shares of minority interest
In the preparation for the financi al statements, the balance existed betw een the long-term equityinvestment in creased by acquirin g shares of minorit y interest and the att ributable net asset s on thesubsi di ar y calcul at ed by th e in cre ased sh a res h eld si nce t he pu rch as e d at e ( or co mb in ati on dat e), t hecapital reserves shall be adjusted, if t he capital reserves are not sufficient t o offset, the retainedprofits shall be adjusted.
④ Disposal of long-term equity investment
In the preparation of financial statements, the Company dispos ed part of the long-term equityinvestment on subsidiaries without losing its controlling right on them, the balance between thedisposed price and attributable net assets of subsidiaries by disposing the long-term equityinvestment shall be recorded into owners’ equity; where the Company losses the controlling right bydisposing part of long-term equity investment on such subsidiaries, it shall treated in accordancewith the relevant accounting policies in Notes V. 6. (2) “ Method on preparation of combinedfinancial statements”.For other ways on disposal of long-term equity investment, the balance between the book value ofthe disposed equity and its actual payment gained shall be recorded into current profits and losses.For the long-term equity investment measured by adopting e quity method, if the remained equityafter disposal still adopts the equity method for measurement, the other comprehensive incomeoriginally recorded into owners’ equity should adopt the same basis of the accounting disposal ofthe relevant assets or lia bilities directly disposed by the investees according to the correspondingproportion. The owners’ equity recognized owning to the changes of the other owners’ equity exceptfor the net gains and losses, other comprehensive income and the profits distribution of theinvestees, should be transferred into the current gains and losses according to the proportion.For the long-term equity investment which adopts the cost method of measurement, if the remainedequity still adopt the cost method, the other comprehensive income recognized owning to adoptingthe equity method for measurement or the recognition and measurement standards of financialinstrument before acquiring the control of the investees, should adopt the same basis of theaccounting disposal of the relevant assets or liabilities directly disposed by the investees and shouldbe carried forward into the current gains and losses according to the proportion; the changes of the
other owners’ equity except for the net gains and losses, other comprehensive income and theprofits distribution among the net assets of the in vestees which recognized by adopting the equitymethod for measurement, should be carried forward into the current gains and losses according tothe proportion.
14. Investment Real Estate
Measurement model of investment real estateCosting method measurementDepreciation or amortization method
The inv estment real estate refe rs to the r eal estate gaini ng the rent or capita l appreciat ion or bot h. Itincludes rented land use r ight, holding land use right to be transferred after the appreciation andrented building, etc.The investment real estate is measured initiall y according to the cost. The subsequent expensesrelated with the investment real estate shall be calculated into the cost of investment real estate ifthe economic benefit related with the asset may flow in and the cost may be m easured reliably.Other subsequent expenses shall be calculated in the current profits and losses at the occurrence.The Company a dopts the cost mode to conduct the subsequent measurement on the investment realestate, depreciates or amortizes according to the policy consistent with the house building or landuse right.The devaluation test method and devaluation provision method for the investment real est ate can beseen in Notes V. 20 “Long-te rm Asset Devaluation”.When the self-use real estate or stock is con verted to the invest ment real estate or the investmentreal estate i s converted to t he self-use real estate, the book value before the conversion shall be theentry value after the conversion.When the investment real estate is disposed, or out of usage permanently, and it is expected not toget the economic ben efit from the disposal, the confirmation on the investment real estate shall beterminated. The disposal income for the sales, transferring, scrap or damage of the investment realestate deducing the book value and related tax shall be calculated in the current profits and losses.
15. Fixed Assets(1) Conditions for Recognition
The term “fixed assets” refers to the tangible assets that simultaneously possess the features asfollows: (a) they are held for the sake of producing commodities, rendering labor service, renting orbusiness management ; and (b) their useful li fe is in excess of one fis cal year. The fixed assets areonly recognized when the relevant economic benefits probably flow in the Company and its costcould be reliable measured. The fixed assets should ta ke the initial measurement according to thecost and at the same time consider the influences of the factors of the estimated discard expenses.
(2) Depreciation Methods
Category o f fi xed assets Method Useful life Salvage value Annual deprecation
Housing and building
useful life
5-30 0-10% 3.00-20.00Machinery equipments
Average method of |
Average method of |
useful life
10-18 0-10% 5.00-10.00Transportation vehicle
useful life
5 0-10% 18.00-20.00
Average method of | |
Electronic equipments |
and others
Ave
useful life
5 0-10% 18.00-20.00
(3) Recognition Basis, pricing and depreciation method of fixed assets by finance lease
The “finance leas e” shall refer to a l ease that has transf erred in substance all the risks and reward srelated to the own ership of an asset. Its ownership may or may not eventually be transferred. Thefix ed asset s by fi nance l ease s hall adop t the s ame depreci ati on po lic y for s elf-own ed fi xed assets . Ifit is reasonable to be certain that the lessee will obtain the ownership of the leased asset when thelease term expires, the leased asset shall be fully depreciated over its u seful life. If it is notreasonable to be certain that the lessee will obtain the ownership of the leased asset at the expiry ofthe leas e t erm , t he leased asset shall be fully depreciated over the shorter one of the lease term or its
useful life.
16. Construction in Progress
Construction in process is measured at actual cost. Actual cost comprises construction costs,borrowing costs that are eligible for capitalization befo re the fixed assets being ready for theirintended us and other relevant costs. Construction in process is transferred to fixed assets when theassets are ready for their intended use. See the details of the impairment test method of th eimpairment provision withdrawal method of the c onstruction in pro gress to Notes V. 20 “Long-termassets impairment”.
17. Borrowing Costs
Borrowing costs include interest on borrowings, amortization of discounts or premiums, ancillaryexpenses and exchange differences arising from foreign currency borrowings. The capitalization ofborrowing costs, which can be directl y attributable to asset acquisition or construction, starts whenasset expenditure or borrowing cost are generated, or the asset acquisition or construction islaunched to enable the asset to meet the predefined conditions for use or sale, and ends when theacquired or constructed asset conforming to capitalization conditions meet the predefinedconditions for use or sale. The other borrowing costs are recognized as expens es in the currentperiod.The actual interest expenses incurred in the current period of specific borrowings shall becapitalized by subtracting the interest income earned by the bank from unused borrowing funds orinvestment income gained from temporary investment. For general borrowings, the amount to becapitaliz ed shall be deter mined based on t he weighted aver age of total ass et expendit ure exceeding
the specific borrowing multiplied by the capitalization rate of general borrowings. Thecapitalization rate is determined based on the weighted average interest rate of general borrowings.During the capitalization period, the foreign ex change differences on foreign currency specificborrowings shall be capitalized. The exchange differences on foreign currency general borrowingsshall be included in the current profits and losses.Assets eligible for capitalization refer to assets such as fixed assets, investment re al estate andinventory that require a considerable amount of time for acquisition or construction to be ready foruse or sale.If the acquisition or construction process of the assets eligible for capitalization is stoppedunexpectedly for more than 3 months, the capitalization of borrowing costs shall be suspended untilthe asset acquisition or construction resumes.
18. Biological Assets(1) Consumptive biological assets
Consumptive biological assets refer to the biolo gical assets held for sale or to be harvested asagricultural products in future, including crops, vegetables under growing, timber production forestand domest ic animals fo r sale. The consu mptive bio logical assets s hall be measured based on cos t.All costs for planting, creating, cultivating or raising of consumptive biological assets shall be thenecessary expenses directly added to such assets that accrued before harvest, including any loan thatsatisfies capitalization conditions. Subsequent expenses for keeping and feeding the consumptivebiological assets after the harvest should be recognized as the losses and gains of the current period.Upon harvest or sale, the cost of consumptive biological assets shall be based on its book valuethrough weighted average.On the date of Balance Sheet, the consumptive biological assets shall be measured with lower ofcost and net realizable value, and the method for confirming the reserve for inventory price dropshall be adopted to confirm the reserve for price drop of consumptive biological assets. If theimpacts of depreci ation disappear, the depreciati on amount shall be reco vered, and the reserve forprice drop originally accrued shall be reversed. Such amount reversed shall be recognized as lossand gain for the current period.If consumptive biological assets change its usage to be as productive biological assets, the co st aft e rsuch change shall be confirmed based on the book value when the usa ge is changed. If consumptivebiological assets are changed as public biological assets, depreciation shall be taken intoconsideration pursuant to Corporate Accounting Rules No. 8 – Assets Depreciation. Whendepreciation occur, accrued the depreciation reserve first and then confirm based on the book valueafter such accrual.(2) Productive biological assetsProductive biological assets refer to agricultural products produced, and biological assets held forlabor provision or lease, including economic forest, firewood forest, productive animals and laboranimals. The productive biological assets shall be measured based on cost. All costs for creating orfostering productive b iological as sets shall be t he necessary ex penses directl y added to such asset sthat accrued before it reaches expected production purpose, including any loan t hat satisfiescapitalization conditions.
The Company shall withdraw the depreciation of the productive biological assets by adopting thestraight-line method since the second month of its useful life. Useful life, expected net salvagevalue and annual depreciation rate of each productive biological assets are as below:
Category Useful life (Year) Ex
(%)
Annual deprecation (%)Livestock
pected net salvage value | |||
5 | 5% | 19 |
The Company shall review the service life, expected net residuals and depreciation method of theproductive biological assets at least by the end of the year. In case of any change, it shall be deemedas accounting estimate change.The difference between proceedings from disposal (sale, loss, death or damage) of the productivebiological assets deducted b y book value and related tax shall be recognized as loss and gain for thecurrent period.The Company shall check on the date of Balance Sheet whether there is a depreciation sign for theproductive biological assets. If yes, estimate the recoverable amount. Such recoverable amount shallbe estimated based on single asset item. If it is difficult, the recoverable amount of the portfolioshall be confirmed based on the portfolio such assets belong to. If the recoverable amount of theassets is lower than book value, reserve for asset depreciation shall be accrued based on suchdifference, and recognized as loss and gain for the current period.The above assets impairment losses once be recognized should not be reversed during theaccounting periods afterwards.If the productive biological assets changed the usage as the consumptive biological assets, the costafter the change should be recognized as the book value when changing the usage; of the productivebiological assets ch anged the usage as non-p rofit living assets, should be recognized according tothe book value after the withdrawal of the impair ment provision in a ccord with the regulation of N o.8 of ASBE - Assets Impairment for considering whether there was impairment and should withdrawthe impairment provision in ahead of it.
19. Intangible Assets(1) Pricing Method, Useful Life and Impairment Test
The term “i nt angib le as s et ” ref ers to th e id ent ifi abl e no n-monetar y assets possessed or controlled byenterprises which have no physical shape.The intangible assets shall be in itially measured according to its cost . The costs related with theintangible assets, if the economic benefits related to intangible assets are likely to flow into theenterpri se and t he cost o f i ntangibl e asset s can be measured reli abl y, shall be recorded into the cos tsof intangible assets; otherwise, it shall be recorded into current profits and losses upon theoccurrence.The use right of land gained is usually measured as intangible assets. For the self-developed andconstructed factories and other constructions, the related expenditures on use right of land andconstruction costs shall be respectively measured as intangible assets and fixed assets. For thepurchased houses and buildings, the related payment shall be distributed into the payment for useright of land and the payment for buildings, if it is difficult to be distributed, the whole payment
shall be treated as fixed assets.For intangible assets with a finite service life, from the time when it is available for use, the costafter deducting the sum of the expect ed salvage value and the accumulated im pairment provisionshall be amortized by straight line method during the service life. While the intangible assetswithout certain service life shall not be amortized.At the end of period, the Company s hall check the service life and amortization method ofintangible assets wit h finite service life, if th ere is any change, it shall be regarded as a change ofthe accounting estimates. Besides, the Company shall check the service life of intangible assetswithout certain s ervice life, if there is any evidence showing that the period of intangible assets tobring the econo mic ben ef its t o the en terpris e can be pro spect ed, i t shal l be est imat ed the ser vice li feand amortized in accordance with the amortization policies for intangible assets with finite servicelife.For details of impairment testing method and provision-making method for intangible assets, seeNotes V. 20 “Long-term assets impairment”.
(2) Accounting Pol ic y for Interna l Resea r ch and Deve l opm ent Expendit ures
The expend itures for intern al research an d devel opment proj ects of an enterprise s hall be classifi edinto research expenditures and development expenditures.The research expenditures shall be recorded into the profit or loss for the current period.The development expenditures shall be confirmed as intangible assets when they satisfy thefollowing conditions simultaneously, and shall be recorded into profit or loss for the current periodwhen they don’t satisfy the following conditions.
① It is feasible technically to finish intangible assets for use or sale;② It is intended to finish and use or sell the intangible assets;③ T he usefulness of methods for intangible assets to generate economic benefits shall be proved,
including being able to prove that there is a potential market for the products manufactured byapplying the intangible assets or there is a potential market for the intangible assets itself or theintangible assets will be used internally;
④ I t is able to finish the development of the intangible assets, and able to use or sell the intangible
assets, with the support of sufficient technologies, financial resources and other resources;
⑤ The development expenditures of the intangible assets can be reliably measured.
As for expenses that can’t be identified as research expenditures or development expenditures, theoccurred R & D expenses shall be all included in current profits and losses.
20. Impairment of Long-term Assets
For non-current financial Assets of fixed Assets, projects under construction, intangible Assets withlimited service life, investing real estate with cost model, long-term equity investment ofsubsidiaries, cooperative enterprises and joint ventures, the Company should judge whetherdecrease in value exists on the date of balance sheet. Recoverable amounts should be tested fordecrease in value if it exists. Other intangible Assets of reputation and uncertain service life andother non-accessible intangible asset s should be tested for decreas e in value no matter whether i t
exists.If the recoverable amount is less than book value in impairment test results, the provision forimpairment of differences should include in impairment loss. Recoverable amounts would be thehigher of net value of asset fair value deducting disposal charges or present value of predicted cashflow. Asset fair value should be determined according to negotiated sales price of fair trade. If nosales agreement exists but with asset active market, fair value should be determined according to theBu yer ’s price of the asset . If no sal es agreem ent o r asset active ma rket ex ists, as set fair value cou ldbe acquired on the basis of best information available. Disposal expenses include legal fees, taxes,cartage or other direct e xpenses of merchantable As sets related to asset disp osal. Present value ofpredicted asset cash flow should be determined by the proper discount rate according to Assets inservice and predicted cash flow of final disposal. Asset depreciation reserves should be calculatedon the basis of single Assets. If it is difficult to predict the recoverable amounts for single Assets,recoverable amounts should be determined according to the belonging asset group. Asset group isthe minimum asset combination producing cash flow independently.In impairment test, book value of the business reputation in financial report should be shared tobeneficial asset group and asset group combination in collaboration of business merger. It is shownin the test that if recoverable amounts of shared business reputation asset group or asset groupcombination a re lower than book value, it should determine the impairment loss. Impairment lossamount should firstly be deducted and shared to the book value of business reputation of assetgroup or asset group combination, then deduct book value of all assets according to proportions ofother book value of above assets in asset group or asset group combination except businessreputation.After the asset impairment loss is determined, rec overable value amounts would not be returned infuture.
21. Long-term Deferred Expenses
Long-term deferred expenses refer to general expenses with the apportioned period over one year(one year excluded) that have occurred but attributable to the current and future periods. Thelong-term deferred expe nses mainly including land contract fees, land rental fees and house rentalfees, and etc. And the long-term deferred expense shall be amortiz ed by the straight-line methodaveragely within the benefit period.
22. Payroll(1) Accounting Treatment of Short-term Compensation
The payroll of the Company mainly includes: short-term employees compensation, welfare afterdeparture, demission welfare, and the welfare of other long-term staffs, of which:
Short-term compensation mainly including salary, bonus, allowances and subsidies, employeeservices and benefits, medical insurance premiums, birth insurance premium, industrial injuryinsurance premium, housing fund, labor union expenditure and personnel education fund,non-monetary benefits etc. The short-term compensation actually happened during the accountingperiod when the active staff offering the service for the Company should be recognized as liabilities
and is included in the current gains and losses or relevant assets cost. Of which the non-monetarybenefits should be measured according to the fair value.
(2) Accounting Treatment of the Welfare after Departure
Welfare after demission mainly includes basic endowment insurance and unemployment insuranceand welfare plans aft er demission incl ude setting drawing plan. Where the setting drawing plan isadopted, the corresponding payable and deposit amount should be included into the relevant assetscost or the current gains and losses when happen.
(3) Accounting Treatment of the Demission Welfare
The Company relieves the labor relation with the employees before the due date of the laborcontacts or puts forward the advice of providing the compensation for urging the employeesvolunteered to receive the downsizing and when the Company could not unilaterally withdraw thedemission welfare owning to the relieving plan of the labor relation or the downsizing advice,should confirm the liabilities of the employees’ salary from the demission welfare on the earlier daybetween the cost confirmed by the Company and the cost related to the reorganization of thepayment of the demission welfare and includes which in the current gains and losses. But as for thedemission welfare be estimated that could not be completed paid within 12 months after the end ofthe annual Reporting Period, should be handled according to the other long-term employee’s salary.
(4) Accounting Treatment of the Welfare of Other Long-term Staffs
The internal retire plan of the employees should be handled by adopting th e same principles of theabove demission welfare. The Company includes the salary and the paid social insurance chargesplaned to pay by the personnel retreated inside during the period from the date when ceased theservices to the no rmal ret ire dat e i n the cur rent gai ns a nd losses (demission welfare) when met withthe recognition conditions of the estimated liabilities.The other long-term welfare that the Company offers to the staffs, if met with the setting drawingplan, should be accounting disposed according to the setting drawing plan, while the rest should bedisposed according to the setting revenue plan.
23. Revenue
Is the Company subject to any disclosure requirements for special industries?No.
(1) Selling productsNo revenue from selling goods may be recognized unless the following conditions are metsimultaneously: the significant risks and rewards of ownership of the goods have been transferred tothe buyer by the enterprise; the enterprise retains neither continuous management right that usuallykeeps r elation with the ownership nor e ffective control over the sold goods; the relevant amount ofrevenue can be measured in a reliable way; the relevant economic benefits may flow into theenterprise; and the relevant costs incurred or to be incurred can be measured in a reliable way.
As for the revenues from the domestic sales products, the Company deliveries the products to thebuyers according to the contracts agreement, and the revenues amount of the products sales hadbeen confirmed with the goods payment had been withdrawn or had received the receipt voucher ofwhich t he relevant econo mic benefit s probably flo w into the en terprise as well as t he relevant cost sof the products could be reliable measured when being confirming as the revenues.As for th e revenues from the export sales products, the Company executes the customs declarationand the products departure according to the contracts agreement, and the Company had acquired thebill of lading with the revenues amount of the products sale had been confirmed and the goodspayment 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 productscould be reliable measured when being confirming as the revenues.(2) Providing labor servicesIf the Company can reliably estimate the outcome of a transaction concerning the labor services itprovides, it shall recognize the revenue from providing services employing thepercentage-of-completion method on the da te of the balance sheet. The completed proportion of atransaction concerning the providing of labor services shall be decided by the proportion of thelabor service already provided to the total labor service to provide.The outcome of a transaction concerning the providing of labor services can be measured in a
reliable way, means that the following conditions shall be met simultaneously: ① The amount ofrevenue can be measured in a reliable way; ② The relevant economic benefits are likely to flowinto the enterprise; ③ The schedule of completion under the transaction can be confirmed in areliable way; and ④ The costs incurred or to be incurred in the transaction can be measured in a
reliable way.If the outcome of a transaction concerning the providing of labor services can’t be measured in areliable way, the revenue from the providing of labor services shall be recognized in accordancewith the amount of the cost of labor services incurred and expected to be compensated, and makethe cost of labor services incurred as the cu rrent expenses. If it is p redicted that the cost of labo rservices incurred couldn’t be compensated, thus no revenue shall be recognized.Where a contract or agreement signed bet ween Company and other enterprises conce rns sellinggoods and providing of labor services, if the part of sale of goods and the part of providing laborservices can be distin guished from each other and can be measured r espectivel y, the part of sale ofgoods and the part of providing labor services shall be t reated respectively. If the part of sellinggoods and the part of providing labor services can’t be distinguished from each other, or if the partof sale of goods and the part of providing labor services can be distinguished from each other butcan’t be measured respectively, both parts shall be conducted as selling goods.(3) Royalty revenueIn accordance with relevant contract or agreement, the amount of royalty revenue should berecognized as revenue on accrual basis.(4) Interest revenueThe amount of interest revenue should be measured and confirmed in accordance with the length oftime for which the Company’s monetary fund is used by others and the agreed interest rate.
24. Government Subsidies(1) Judgment Basis and Accounting Treatment of Government Subsidies Related to Assets
The government subsidy refers to the Company gets the monetary and non-monetary assets fo r freefrom the government, excluding the capital that the government invests as the investor who enjoysthe corresponding owner’s equity. It can be divided into the asset-related government subsidy andincome-related government subsidy. The Company defines the obtained government subsidy for theacquisition and construction or forming the long-term asset in other ways as the asset-relatedgovernment subsidy; other government subsidies are defined as the income-related governmentsubsidy. If the government document does not clearly prescribe the subsidy object, the followingways shall be adopted to divide the subsidy into the income-related government subsidy andasset-related government subsidy: (1) The government document clears the specific project for thesubsidy, it shall divide according to the relative ratio of asset expenditure amount and entry costexpenditure amount to be formed in the bud get of specific project, review according to the divisionratio at each balance sh eet date, and change when necessary; (2) The government document onlymakes the general expression on the usage without indicated specific project, it shall be theincome-related government subsidy. If the government subsidy is monetary asset, it shall bemeasured according to the received or receivable amount. If the government subsidy isnon-monetary asset, it shall be measured according to the fair value; it the fair value can’t be gotreliably, it shall be measured according to the nominal amount. The gove rnment subsidy measuredaccording to the nominal amount shall be calculated in the current profits and losses directly.The asset-related government subsidy shall be confirmed as the deferred income, and it shall becalculated into the current profits and losses by stages in reasonable and systematic way within the
service life of related asset.
Government subsidies related to routine activities of the Company shall be calculated into otherincome or offset related costs accordin g to the essence of economic business; government subsidie sthat have nothing to do with routine activities shall calculated into non-operating income.When the confirmed government subsidy needs to be returned and there is the relat ed deferredincome balance, the related deferred income book balance shall be deducted, and the surpassing partshall be calculated into the current profits and losses; If in other situations, it shall be calculated inthe current profits and losses directly.
(2) Judgment Basis and Accounting Treatment of Government Subsidies Pertinent to Incomes
The Company usually confirms and measures the government subsidy according to the receivedamount when receiving actually. However, the financial support fund which can be receivedcomplying with the related conditions prescribed in the financial support policy indicated by theconclusive evidence shall be measured according to the receivable amount. The followingconditions shall be met for the government subsidy measured by the receivable amount: (1) Thereceivable subsidy amount has been confirmed by the authorized government department, or it canbe measured reasonably according to the officially released provisions related with the financialfund management method, and it is expected there is no major uncertaint y for the amount; (2) It isbased on the financial support project and financial fund management method actively opened
released offici ally by the local fi nancial department and according to the provision in GovernmentInformation Disclosure Provisions, the management method shall be universal (any enterprisecomplying with the prescribed condition can apply) rather than for the specific enterprise; (3) Therelated subsid y approval document has clearly promised the appropriate term, and the appropriationof the amount shall have the corresponding financial budget for the guarantee, therefore, it canensure to receive within the prescribed term reasonably.The income-related government subsi dy to compensate the related expens e and loss later shall beconfirmed as the deferred income, and it s hall be calculated in the current profits and losses duringthe period to confirm the related costs or losses; the occurred related costs or losses forcompensation shall be calculated in the current profits and losses directly.For government subsidy including the asset-related government subsidy and the income-relatedgovernment subsidy at one time, accounting treatment shall be conducted respectively to distinguishthe different parts; if it is difficult to distinguish, then it shall be classified into the income-relatedgovernment subsidy
25. Deferred Income Tax Assets/Deferred Income Tax Liabilities
(1) Income tax of the current periodOn the balance sh eet date, for the cu rrent income tax liabilities (or as sets) of the curr ent period aswell as the part formed during the previous period, should be measured by the income tax of theestimated payable (returnable) amount which be calculated according to the regulations of the taxlaw. The amount of the income tax payable which is based by the calculation of the current incometax expenses, are according to the result measured from the correspondin g adjustment of the pre -taxaccounting profit of this Reporting Period which in accord to the relevant regulations of the tax law.(2) Deferred income tax assets and deferred income tax liabilitiesThe differenc e bet we en t he b oo k val ue o f cert ain ass ets and l i abi li ti es and thei r t ax as ses sment basis,as well as the tempo rary difference o ccurs from t he difference betw een the bo ok value of t he itemswhich not be recognized as assets and liabilities but could confirm their tax assessment basisaccording to the regulations of the tax law, the deferred incom e tax assets and the defer red incom etax liabilities should be recognized by adopting liabilities law of the balance sheet.No deferred tax liability is recognized for a temporary difference arising from the initial recognitionof goodwill, the initial recognition of assets or liabilities due to a transaction other than a businesscombination, which affects neither accounting profit nor taxable profit (or deductible loss). Besides,no defer red tax as sets is recognized for the t axable t emporar y di fferences r elated t o the inves tmentsof subsidiary companies, associated enterprises and joint enterprises, and the investing enterprisecan contro l the t ime o f the revers e of temp orar y differenc es as well as the t empor ar y differences areunlikely to be r eversed in the excepted future. Otherwise, the Group should recognize the deferredincome tax liabilities arising form other taxable temporary difference.No deferred taxable asset s should be recognized for the dedu ctible temporary difference of init ialrecognition of assets and liabilities arising from the transaction which is not business combination,the accounting profits will not be affected, nor will the taxable amount or deductible loss be affectedat the time of transaction. Besides, no deferred taxable assets should be recognized for thedeductible temp orary difference related to the investment s of the subsidiar y companies, associat edenterprises and joint enterprises, which are not likely to be reversed in the expected future or is not
likely to acquire any amount of taxable income tax that may be used for making up such dedu ctibletemporary differences. Otherwise, the Company shall recogni ze the deferred income tax assetsarising from a deductible temporary difference basing on the extent of the amount of the taxableincome that is likely to be acquired to make up such deductible temporary differencesFor any deductible loss or tax deduction that can be carried forward to the next year, thecorrespon ding deferr ed income tax asset shal l be determined to the extent that the amount of futuretaxable income to be offset by the deductible loss or tax deduction to be likely obtained.On the balance sheet date, the d eferred income tax assets and the deferred income tax liabilitiesshall be measur ed at the tax rate ap plicable t o the p eriod duri ng which the as sets are ex pected t o berecovered or the liabilities are expected to be settled.The book value o f deferred income t ax assets shall be reviewed at each b alance sheet date. If it isunlikely to obtain sufficient taxable income to offset against the benefit of the deferred income taxasset, the book value of t he deferred income tax a ssets shall be written down. An y such write-downshould be subsequently r eversed where it becomes prob able that sufficient taxable incom e will beavailable.(3) Income tax expensesIncome tax expenses include current income tax and deferred income tax.The rest current income tax and the deferred income tax expenses or revenue should be includedinto current gains and losses ex cept for the curre nt income tax and the deferred income tax relatedto the transaction and events that be confirmed as other comprehensive income or be directlyincluded in the shareholders’ equity which should be included in other comprehensive income orshareholders’ equity as well as the book value for adjusting the goodwill of the deferred income taxoccurs from the business combination.(4) Offset of income taxThe curr ent income tax assets and liabilities of the Company should be listed by the written-off netamount which intend to executes the net amount s ettlement as well as the assets acquiring andliabilities liquidation at the same time while owns the legal rights of settling the net amount.The deferred income tax assets and liabilities of the Company should be listed as written-off netamount when having the legal rights of settling the current income tax assets and liabilities by netamount and the deferred income tax and liabilities is relevant to the income tax which be collectedfrom the same taxpaying bodies by the same tax collection and administration department or isrelevant to the different taxpaying bodies but during each period which there is significant reverseof the deferr ed income assets and liabilities in the future and among which the involved taxpayingbodies intend to settle the current income tax and liabilities by net amount or are at the same timeacquire the asset as well as liquidate the liabilities.
26. Lease(1) Accounting Treatment of Operating Lease
(1) Business of operating leases recorded by the Group as the lesseeThe rent expenses from operating leases shall be recorded by the lessee in the relevant asset costs orthe profits and losses of the current period by using the straight-line method over each period of the
lease term. The initial direct costs shall be r ecogniz ed as the profits and losses of t he current period.The contingent rents shall be r ecorded into th e profits and losses of th e curr ent period in which the yactually arise.(2) Business of operating leases recorded by the Group as the lessorThe rent inco mes from operat ing leases shall be recognized as the profits and losses of the cu rrentperiod by using the straight-line method over each period of the lease term. The initial direct costsof great amount shall be capitalized when incurred, and be recorded into current profits and lossesin accordance with the same basis for reco gnition of rent incom es over the whole leas e term. Theinitial direct costs of small amount shall be recorded into current profits and losses when incurred.The contingent rents shall be r ecorded into th e profits and losses of th e curr ent period in which the yactually arise.
(2) Accounting Treatments of Financial Lease
(1) Business of finance leases recorded by the Company as the lesseeOn the l ease beginning d ate, the Com pany shall record t he lower one of th e fair value of the l easedasset and the present value of the minimum lease payments on the lease beginning date as theentering value in an account, recognize the amount of the minimum lease payments as the enteringvalue in an account of long-term account payable, and treat the balance between the recordedamount of the leased asset and the long-term account payable as unrecognized financing charges.Besides, the initial direct costs directly attributable to the leased item incurred during the process oflease negotiating and signing the leasing agreement sh all be recorded in the asset value of thecurrent period. The balance through deducting unrecognized financing charges from the minimumlease payments shall be respectively stated in long-term liabilities and long-term liabilities duewithin 1 year.Unrecognized finan cing charges shall be adopted b y the effective interest rate met hod in the leaseterm, so as to calculate and recognize current financing charges. The contingent rents shall berecorded into the profits and losses of the current period in which they actually arise.(2) Business of finance leases recorded by the Company as the lessorOn the beginning date of the lease term, the Company shall recognize the sum of the minimumlease receipts on the lease beginning date and the initial direct costs as the entering value in anaccount of the financi ng lease values receiv able, and record the un guaranteed residual val ue at thesame 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 r ecognized asunrealized financing income. The balance through deducting unrealized financing incomes from thefinance lease accounts receivable shall be res pectively stated in long-term claims and long-termclaims due within 1 year.Unrecognized f inancing incomes shall be adopted b y the effective interest rat e method in the leaseterm, so as to calculate and recognize current fi nancing revenues. The contingent rents shall b erecorded into the profits and losses of the current period in which they actually arise.
27. Repurchase of Shares
No gains or losses shall be recognized when the consideration and transaction fees paid in share
repurchases reduce the shareho lders’ equit y and the Compan y’s shares are repurchas ed, transferredor cancelled.Transfer of treasury stocks shall be included into t he capital reserves according to the differencebetween the actually received amount and the book value of the treasury stocks. If the capitalreserves are insufficient for adjustment, the surplus reserves and retained profits shall be adjustedaccordingl y. For cancel lation of tre asury stocks, the share capi tal shall be reduced accordi ng to thepar val ue an d num ber of shares cancel led and th e capital res erves shall be adju sted a ccordi ng t o thedifference between the b ook value of the treasury stocks and the par value. If the capital reservesare insufficient for adjustment, the surplus reserves and retained profits shall be adjustedaccordingly.
28. Other Significant Accounting Policies and Estimates
Due to the internal uncertainty of operating activities, the Company needs to make judgments,estimates and assumptions for carrying amounts of statement items that can’t be measuredaccurately during the process of applying accounting policies. Such judgments, estimates andassumptions are made on the basis of the past experience of Company’s management staffs and onthe consideration of other relevant factors. Such judgments, estimates and assumptions have effecton reporting amount of incomes, expense, assets and liabilities, as well as disclosure of contingentliabilities on the balance sheet date. However, the uncertainty of such estimates may results in majoradjustments of carrying amounts of assets or liabilities that will be influenced in future.The Company shall have a check on the aforesaid judgments, estimates and assumptions at fixedintervals on the basis of sustainable operation. As for the change in accounting estimates that onl yeffects on the current period of the change, the affected amount thereof shall be recognized atcurrent period of the change. As for accounting estimates that effects on both the current period ofthe change and future periods, the affected amount thereof shall be recognized at current period ofthe change and future periods.On balance sheet date, major fields requiring judgments, estimates and a ssumptions on amounts offinancial statement items by the Company are as follows:
(1) Classification of leasesIn line with rules in Accounting Standards for Enterprises No. 21 – L e ases, the C ompany class ifiesleases i nto op eratin g leases and finan ce leas es. Up on the cl assif ication, the management s taffs needto make analysis and judgments on whether to essentially transfer all risks and remunerationrelating to the ownership of leased-out as sets to th e lessee, or wheth er the Co mpany has essenti allyundertaken all risks and remuneration relating to the ownership of leased-in assets.(2) Withdrawal of bad debt provisionsThe Company shall, in accordance with accounting policies of receivables, calculate bad debtprovisions by adopting allowance method. Impairment of accounts receivable is based on theassessment of the recovery of accounts receivable. Identification of impairment of accountsreceivable requires judgments and es timates by management staffs. The difference betw een actualoutcomes and originally estimated outcomes, which will influence the carrying amount of accountsreceivable and bad debt provisions thereof in the estimated period of the change, shall be withdrawnor reversed.
(3) Inventory depreciation reservesThe Compan y shall calculate w hichever is lowe r between the cost and realizab le net value in li ghtof inventory accounting policies. As for inventories of which the cost is h igher than the realizablenet valu e and inventories which are obsolete and unsalable inventory depreciation reserves shall bewithdrawn. Impairment of inventories to realizable net value is based on the assessment of themarketing of inventories and realizable net value thereof. Identification of inventory impairmentrequires well-established evidences by management staffs, as well as j udgments and estimatesbased on consideration of the purpose of holding inventories and other factors such as eventsoccurring after the date of balanc e sheet. The difference between actual outcomes and originallyestimated outcomes, which will influence the carrying amount of inventories and inventorydepreciation reserves in the estimated period of the change, shall be withdrawn or reversed.(4) Fair values of financial instrumentsAs for financial instruments not existing in active trading market, the Company shall determinetheir fair values by all kinds of assessment methods, which include model analysis of discountedcash flow and etc. During the assessment, t he Company needs to assess for respects such as futurecash flows, credit risks, market volatility, correlation, and choose appropriate discount rate. Suchrelated assumptions have uncertai nty, of which the change will effect on fair values of fi nancialinstruments.(5) Impairment of financial assets available for saleTo a large extent, whether the impairmen t of financial assets available for sale is reco gnized or notrelies on the judgments and assumptions of the management staffs. In that way, the Company shallbe cert ain about w hether t o recognize i mpairment losses of fi nancial assets avai lable for s ale in th eprofit statement. During the process of making judgments and assumptions, the Company needs toevaluate how much the fair value of such investment is less than its cost, h ow long such investmentwill last, and the financial condition and short-term business outlook of the invested parties, whichinclude industry status, technolog y transform, credit rating, default rate and risks from the oppositeparties.(6) Impairment provisions of non-financial non-current assetsThe Company shall judge whether there is sign of impairment of non-current assets other thanfinancial assets on b alance sheet date. Int angible assets with un certain service lives, b esides beingconducted with annual impai rment test every year, have to accept impairment tests when there issign of impairment. Other non-current as sets except for financial ass ets have to accept impairm enttests when there is sign indicating the carrying amount thereof is unrecoverable.When the carrying amounts of the asset or group assets are higher than the recoverable amounts,namely whichever is higher between the net amount through deducting disposal charges from thefair value and the present value of the estimated future cash flow, impairment occurs.The net amount of the fair value of an asset minus the disposal expenses shall be determined in lightof the amount of the basis of the price as stipulated in the sales agreement or the observable marketprice in the fair transaction minus the incremental cost directly subject to the disposal of the asset.When estimating present value of future cash flows, it is necessary to make significant judgmentson characters of the asset or asset group, such as out put, sales price, related operating costs, anddiscount used to calculate the present value. When estimating recoverable amount, the Companyshall adopt all relevant materials that can be required, including estimates relating to output, sales
price and relevant operating costs judged by rational and supportable assumptions.The Company tests whether there is impairment of good will at least for e very year, which requiresitself to estimate the present value of the future cash flow of group assets or combination of groupassets. When estimating the present value of the future cash flow, the Company needs to estimatethe cash flow arising from future group assets or combination of group assets, and at the same timechoose appropriate discount rate to determine the present value of the future cash flow.(7) Depreciation and amortizationUpon consideration on the salvage value of investment real estates, fixed assets and intangibleassets, the Company shall withdraw depreciation and amortization by straight-line method overtheir service lives. T he Company checks on s ervice lives at fixed intervals, so as to determ ine theamounts of depreciation expenses and amortization ex penses at each period. Service lives areconfirmed in accordance with the past ex perience on similar assets of the Company, along withrenewed technology of expectation. If any significant change occurred to previous es timated,
depreciation expenses and amortization expenses will be adjusted in future period.
(8) Deferred income tax assetsIn a limit providing large possibility of offset losses from sufficient taxable profits, the Group shallrecogniz e deferr ed inco me tax as sets in line wit h all unused t ax los ses, which requires man ageme ntstaffs of the Group to estimate the time when future taxable profits occurs and the amount thereofby applying plenty of judgments and combining tax planning strategies, so as to determine theamount of the recognizable deferred income tax assets.(9) Income taxesThere’s certain uncertainty of disposal and calculation of taxes of partial transactions in normaloperating activities. It is uncertain whether some pre-taxed items can set aside the app rovals b y taxauthorities or not. If there are differences between the ultimate recognition outcomes and theoriginally estimated amounts o f such tax issues, then such differences sh all effect on the currentincome tax and deferred income tax during the ultimate recognition period.(10) Measurement of fair valueSome of assets and liabilities in financial statement of the Company are measured by fair value.When estimating the fair value of a asset or liability, the Company adopts the available andobservable market data. During the process of confir ming the fair value of various assets andliabilities, relevant information of the adopted valuation technique and input value was disclosure inNote X.
29. Changes in Main Accounting Policies and Estimates(1) Change of Accounting Poli cies
□ Applicable √ Not applicable
(2) Significant Changes in Accounting Estimates
□ Applicable √ Not applicable
VI Taxes
1. Main Taxes and Tax Rates
Category o f tax Taxable basis Tax rateVAT
Calculated the output tax at 17%, 16%, 11%, 10%, 6%, 5%,3%, and 0% of taxable income and paid the VAT by the amountafter deducting the deductible withholding VAT at currentperiod.
17%, 6% , 11%, 10%, 6%, 5%, 3%, 0%Urban main tenance
and cons tr uc t i on t a x
Paid at 7%, 5%, 1% of the circulating tax actually paid 7%, 5%, 1%Enterprise income tax
Paid at 0%, 15%, 16.5% and 25% of taxab
respectively
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%
le incomeLufeng Weaving & Dyeing Co., Ltd. (hereinafter refer to as
“Lufeng Weaving & Dyeing”)
15%Lu Thai (Hong Kong) Textile
Lufeng Weaving & Dyeing Co., Ltd. (hereinafter refer to as |
Co., Ltd. (hereinafter refer to as |
“Lu Thai Hong Kong”)
16.50%Xinjiang Lu Thai Harvest Cotton Co., Ltd. (“Xinjiang Lu Th ai”) 25%
Zibo Luqun Textile Co., Ltd. (hereinafter refer to as “L
Textile”)
25%
uqun |
Zibo Xinsheng Power Co., Ltd. hereinafter refer to as “Xinsheng |
Power”)
25%Beijing Innovative Garment Co., Ltd.
“Beijing Innovative”
25%Shanghai Lu Thai Textile & Garments Co., Ltd.
(hereinafter referred to as |
(hereinafter |
referred to as “Shanghai Lu T ha i ”)
25%Beijing Lu Thai Youxian Electronic Commerce Co., Ltd.
(hereinafter referred to as “Beijing Y ouxian”)
25%Zibo Chengshun Heating Co., Ltd. (hereinafter referred to as
“Chengshun Heating”)
25%Zibo Helijie Energy-saving Technology Service Co., Ltd.
(hereinafter referred to as “Helijie”)
25%Xinji ang L u Thai Textile Co., Ltd. (herein after r eferred to as
“Xinjiang T extile”)
15%Lu Thai (C ambodia) Textile Co., Ltd. (herei
nafter referred to as
“L u T hai Cambodia”)
0%
Lu Th ai (
Thai Bur ma”)
0%Lu Thai (
Burma) Textile Co., Ltd. (herein after referred to as “Lu |
Vietnam) Textile Co., Ltd. (hereinafter referred to as |
“Lu Thai Vi etnam”)
0%Lu An Garmen
Garments”
0%Lu Thai (America) Textile Co., Ltd. (hereinafter referred to as
“Lu Thai America”
Refer to 2. Tax Preference presented as foll ows for details
2. Tax Preference
According to the "On the Recognition of 2078 Enterprises as High-tech Enterprises for 2017 suc has W eihaiTuozhan Fiber Co., Ltd." (LK Zi[2018 ] No. 37) issued Department of Science andTechnology of Shandong Province, Shandong Provincial Finance Department, State Administrationof Taxation of Shandong Province and Local Taxation Bureau of Shandong Province, the Companyand the holding subsidiary Lufeng Weaving and Dyeing Co., Ltd. were identified as high-techenterprises. Pursuant to Article 28 of the "Law of the PRC on Enterprise Income Tax” and the No.76 Announcement published by the State Administration of Taxation in 2015, namely“Management of Preferential Policy on Corporate Income Tax” and the “Measures for theAdministration of the Recognition of Hi-tech Enterprises” GKFH [2016] No. 195 revised andpublished by the Ministry of Science and Technology, Ministry of Finance and StateAdministration of Taxation, the Company and the holding subsidiar y Lufeng Weaving and DyeingCo., Ltd. enjoy a corporate income tax rate of 15%.According to the "Notice of the Ministry of Finance, the General Administration of Customs andthe State Administration of Taxation on Tax Policy Issues concerning Further Implementing theWestern China Development Strategy " (CS[2011] No. 58), Xinjiang Textile Co., Ltd., thesubsidiary 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), thewholly-owned subsidiary company of the Company, was incorporated in Hong Kong SAR, whoseprofit tax shall be paid at tax rate of 16.5%.The wholly own subsidiary Lu Thai Cambodia, ac cording to the Lu Thai Cambodia Profits tax freeapproval issued by Investment Committee of Cambodia, Lu Thai Cambo dia enjoys tax preferen ceof tax free o n corp or at e income tax of 3 (3 years start-up period) + 3 (3 years tax holiday)+1 (1 yeargrace period). If profit during the 3 year start-up period then turn into 3 years tax holiday, aftergrace period, enterprise income tax rate was of 20%.The wholly own subsidiary Lu Thai Burma, according to the Burma’s Special Economic Zone Lawissued by Pyidaungsu Hluttaw, Lu Thai Burma enjoys tax preference on corporate income tax of 7(7 years t ax holiday) + 5 (5 years tax revenues drop by half) + 5 (re-invest the profits within 1 yearand continues to enjoy the half tax revenues 5 years afterwards). After grace period, enterp riseincome tax rate was of 25%.The wholly-owned subsidiary Lu Thai (Vietnam) Textile Co., Ltd. shall enjoy the preference ofenterprise income tax at 3 years’ starting term + 4 years’ dut y-free term + 9 y ears’ half-tax termaccording to the investment license issued by Vietnamese Fudong Industrial Zone Management
Committee, and it will enter into 2 years’ duty-free term if it is profitable within 3 years’ startingterm. The enterprise inc ome tax rate shall be 20% after the preference term ends. The Companyshall enjoy 10% of the preference tax rate within 15 years since the tax year to get the firstproduction and operation income, and the enterprise income tax rate shall be 20% after thepreference term ends.The wholly-owned subsidiary Lu An Garments Co., Ltd. shall enjoy the preference of enterpriseincome tax at 3 years’ starting term + 2 years’ duty-free term + 4 years’ half-tax term according tothe investment license issued by Vietnamese Anjiang Province Economi c Zone ManagementCommittee, 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 sincethe tax year to get the first production and operation income, and the enterprise income tax rate shallbe 20% after the preference term ends.Lu Thai America, the wholly-owned subsidiary of the Company registered in New York, America,was imposed the fed eral enterprise income tax at progressive tax rate in excess of specific amountof 15%-39%, and imposed the New Yo rk Enterpri se income tax at the r ate of 6.5%. The income taxrate shal l b e 6.5 % wh en t he sal es in com e in New York was b elow US $1 million, while 8.85% whenabove US$1 million.
VII. Notes to Main Items of Consolidated Financial Statements
1. Monetary Funds
Unit: RMBItem Ending balance Beginning balanceCash on hand 3,982,351.33
8,040,420.28
Bank deposits 667,589,538.44
668,598,792.58
Other monetary funds 150,080.59
17,350,080.52
Total 671,721,970.36
693,989,293.38
Of which: total amount deposited
oversees
310,358,555.04
54,911,636.96
Other notes:
On 30 June 2018, the monetary fund with restricted ownership of the Company was of RMB150,080.52 (31 December 2017: RMB17,350,080.52), which was guarantee deposit ofRMB150,080.52 by t he Company’s subsidiary Lufeng Weaving & Dyeing
2. Notes Receivable(1) Notes Receivable Listed by Category
Unit: RMBItem Ending balance Beginning balanceBank accept ance bill 24,304,548.05
28,926,913.53
L/C 91,404,720.83
110,349,828.81
Total 115,709,268.88
139,276,742.34
(2) Notes Receivable which Had Endorsed by the Company or Had Discounted and Had not Due on theBalance 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 accept ance bill 178,434,467.09
Total 178,434,467.09
3. Accounts Receivable(1) Accounts Receivable Disclosed by Category
Unit: RMB
Category
Ending balance Beginning balanceCarrying amount Bad debt provision
Carrying value
Carrying amount Bad debt provision
Carrying valueAmount
Propor
tion
Amount
Withdraw
alproportio
n
Amount
Propor
tion
Amount
Withdraw
alproportio
nAccountsreceivablewithdrawal ofbad debtprovision ofby credit riskscharacteristics
375,832,028.96
100.00
%
19,013,065.27
5.06
%
356,818,963.69
351,991,919.14
100.00
%
17,911,395.09
5.09
%
334,080,524.05
Total 375,832,028.96
100.00
%
19,013,065.27
5.06
%
356,818,963.69
351,991,919.14
100.00
%
17,911,395.09
5.09
%
334,080,524.05
Accounts receivable with significant single amount for which bad debt provision separately accrued at the period-end:
□ Applicable √ Not applicable
In the groups, accounts receivable adopted aging analysis method to withdraw bad debt provision:
√ Applicable □ Not applicable
Unit: RMBAging Ending balance
Accounts receivable Bad debt provision Withdrawal proportionSubitem within 1 yearSubtotal within 1 year 373,199,150.22
18,659,957.51
5.00%
1 to 2 years 2,028,679.82
202,867.98
10.00%
2 to 3 years 310,198.92
62,039.78
20.00%
Over 3 years 294,000.00
88,200.00
30.00%
Total 375,832,028.96
19,013,065.27
5.06%
In the groups, accounts receivable adopted balance percentage method to withdraw bad debt provision:
□ Applicable √ Not applicable
(2) Bad Debt Provision Withdrawn, Reversed or Recovered in the Reporting Period
The withdrawal amount of the bad debt provision during the Reporting Period was of RMB1,101,670.18; the amount of the reversedor collected part during the Reporting Period was of RMB0.00.
(3) Top 5 Accounts Receivable in Ending Balance Collected according to the Arrears Party
The tot al t op 5 ac co unt s r eceivable in ending balance collected according to the arrears party for theCompany was RMB105,332,965.56, accounting f or 28.03% of the total endi ng balance of accountsreceivable, and the total ending balance of bad debt provision correspondingly withdrawn wasRMB5,266,648.28.
4. Prepayment(1) Prepayment Listed by Aging Analysis
Unit: RMBAging
Ending balance Beginning balanceAmount Proportion Amount ProportionWithin 1 year 133,166,462.98
98.99%
145,673,771.77
99.46% |
1 to 2 years 1,347,850.81
1.00%
625,210.35
0.43%
2 to 3 years 0.00
0.00%
162,029.49
0.11%
Over 3 years 9,800.00
0.01%
2,054.77
0.00%
Total 134,524,113.79
-- 146,463,066.38
--
(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 th eCompany was RMB54,276,853.14, accounting for 40.35% of total ending balance of prepayment.
5. Interest Receivable(1) Category of Interest Receivable
Unit: RMBItem Ending balance Beginning balanceFixed term deposits 874,571.14
590,003.07
Total 874,571.14
590,003.07
6. Other Accounts Receivable(1) Other Accounts Receivable Disclosed by Category
Unit: RMB
Category
Ending balance Beginning balanceCarrying amount Bad debt provision
Carrying
value
Carrying amount
Bad debt provision
Carrying
valueAmount
Proportio
n
Amount
Withdra
walproportio
n
Proportio
n
Amount
Amount | Withdrawal |
proportion
Other accounts
receivable with d rawn |
bad debt pr ov i s ionaccording to creditrisks characteristics
83,485,3
77.63
100.00%
7,004,65
6.54
8.39%
76,480,72
1.09
62,067,808.10
100.00%
5,885,026
.06
9.48%
56,182,782.
Total
83,485,3
77.63
100.00%
7,004,65
6.54
8.39%
76,480,72
1.09
62,067,808.10
100.00%
5,885,026
.06
9.48%
56,182,782.
Other accounts receivable with significant single amount for which bad debt provision separately accrued at the period-end:
□ Applicable √ Not applicable
In the groups, other accounts receivable adopted aging analysis method to withdraw bad debt provision:
√ Applicable □ Not applicable
Unit: RMBAging
Ending balanceOther accounts receivable Bad debt provision Withdrawal proportionSubentry within 1 yearSubtotal of within 1 year 70,295,023.36
3,514,751.15
5.00%
1 to 2 years 2,313,867.15
231,386.72
10.00%
2 to 3 years 44,274.42
8,854.87
20.00%
Over 3 years 10,832,212.70
3,249,663.80
30.00%
Total 83,485,377.63
7,004,656.54
8.39%
In the groups, other accounts receivable adopted balance percentage method to withdraw bad debt provision
□ Applicable √ Not applicable
In the groups, other accounts receivable adopted other methods to withdraw bad debt provision:
□ Applicable √ Not applicable
(2) Bad Debt Provision Withdrawn, Reversed or Recovered in the Reporting Period
The withdrawal amount of the bad debt provision during the Reporting Period was of RMB1,119,630.48; the amount of the reversedor collected part during the Reporting Period was of RMB0.00.
(3) Other Account Receivable Classified by Account Nature
Unit: RMBNature Ending carrying amount Beginning carrying amountExport taxes refund 18,877,922.77
26,928,248.68
Advance payment 45,328,177.05
19,470,920.20
Cash Pl edge & Margin 5,523,371.84
5,915,873.52
Borrowings and petty cash 3,587,192.13
1,533,438.12
Other 10,168,713.84
8,219,327.58
Total 83,485,377.63
62,067,808.10
(4) Top 5 Other Accounts Receivable in Ending Balance Collected according to the Arrears Party
Unit: RMBName of the entity Nature Ending balance
Aging
Propor tion to totalending ba la nc e of
other accounts
receivable
Ending balance |
of bad debt
provisionAdvances for agricultural machinery Advance 20,144,428.21
Within 1 year 24.13%
1,007,221.41
Expor t taxes refund receivable
Export taxesrefund
16,212,237.17
Within 1 year 19.41%
810,611.86
Advance money r eceivable of thefundraising houses
Advance 7,393,934.63
Within 1 year 8.86%
369,696.73
Farmland premium Premium 5,607,294.08
Within 1 year 6.72%
280,364.70
Advances for farm land leveling andcanal projects in Xinjiang
Advance 4,811,384.69
Within 1 year 5.76%
240,569.23
Total -- 54,169,278.78
-- 64.88%
2,708,463.93
7. Inventory(1) Category of Inventory
Unit: RMBItem
Ending balance Beginning balanceCarrying amount
Depreciation
reserves
Carrying value Carrying amount
Depreciation
reserves
Carrying valueRaw materials 894,061,853.37
894,061,853.37
859,429,529.00
1,172,453.02
858,257,075.98
Goods in proc e s s 458,253,436.36
458,253,436.36
508,535,945.66
508,535,945.66
Inventory goods 668,773,766.10
32,279,398.47
636,494,367.63
754,961,464.17
51,653,377.28
703,308,086.89
Consumptiveliving assets
1,477,285.41
355,425.24
1,121,860.17
1,531,621.67
404,221.67
1,127,400.00
Assignedprocessingproducts
27,493,110.20
27,493,110.20
29,432,713.40
29,432,713.40
Total 2,050,059,451.44
32,634,823.71
2,017,424,627.73
2,153,891,273.90
53,230,051.97
2,100,661,221.93
Whether the Company needs to comply with the disclosure requirements of Shenzhen Stock Exchange Industry InformationDisclosure Guidelines No. 4 - Listed Companies Engaged in Seed Industry and Planting BusinessNo
(2) Falling Price Reserves of Inventory
Unit: RMBItem
Beginning
balance
Increased amount Decreased amount
Ending balanceWithdrawal Other
Reverse or
write-off
OtherRaw materials 1,172,453.02
1,172,453.02
Inventory goods 51,653,377.28
-99,805.82
19,274,172.99
32,279,398.47
Consumptiveliving assets
404,221.67
48,796.43
355,425.24
Total 53,230,051.97
-99,805.82
20,495,422.44
32,634,823.71
(3) Notes to the Inventory with the Ending Balance Including Capitalized Borrowing Expenses
Not ap pl icable
(4) The Withdrawal Basis for Inventory Falling Price Reserves and Reasons for Write-back or Write-offduring the Reporting Period
Item Specific basis of
withdrawal of inventory
falling price reserves
Reasons for write-back Reasons for write-off
Raw materials
The lower one between
cost of each item of
net value
inventory and its realizable |
Disposed in the Reportin
g Period
Inventory goods
The lower one between
cost of each item ofinventory and its realiza
ble
net value
ble |
Sold
Period
Consumptive livingassets
The lower one between
cost of each item of
net value
inventory and its realizable |
Sold
Period
Notes: ①T he inventory falling price reserves shall be made based on the balance of inventory cost
and the realizable net val ue regarding the former is higher th an the latter, which is caused b y thequality problem of some raw materials, the gray yarn and dyed yarn in finished products, by thelong stock age of some shirts and fabric and by the decrease of market price of the consumptiveliving asset Hu sheep at the end of the Reporting Period.
②The subsidiary of the Company-Xinjiang Lu Thai Textile-obtained the short-term borrowing of
RMB100,000,000.00 f rom the bank taking t he inventories with the carrying value ofRMB67,984,874.74 as a pledge.
8. Other Current Assets
Unit: RMBItem Ending balance Beginning balanceVAT input tax to be deducted 44,426,042.78
68,286,428.20
Prepai d i ncome tax to be deducted 2,629,302.17
302,275.14
Financ ia l pr o duc ts 50,000,000.00
50,000,000.00
B-share repurchase account 53,750,798.82
Total 150,806,143.77
118,588,703.34
9. Available-for-sale Financial Assets(1) List of Available-for-sale Financial Assets
Unit: RMB
Item
Ending balance Beginning balanceCarryingamount
Depreciation
reserves
Carrying value
Carryingamount
Depreciation
reserves
Carrying valueAvailable-for-dale debt
instruments:
61,233,000.00
61,233,000.00
60,033,000.00
60,033,000.00
Available-for-sale equityinstruments:
67,282,600.00
42,782,600.00
24,500,000.00
67,282,600.00
42,782,600.00
24,500,000.00
Measured at fair value 61,233,000.00
61,233,000.00
60,033,000.00
60,033,000.00
Measured at cost 67,282,600.00
42,782,600.00
24,500,000.00
67,282,600.00
42,782,600.00
24,500,000.00
Total 128,515,600.00
42,782,600.00
85,733,000.00
127,315,600.00
42,782,600.00
84,533,000.00
(2) Available-for-sale Financial Assets Measured by Fair Value at the Period-end
Unit: RMBCategory o f av ailable-for-sale financial assets
Available-for-saleequity instruments
Available-for-sal e debt
instruments
TotalEquity inst
rument costs/debt instrument amortization
costs
rument costs/debt instrument amortization |
60,000,000.00
60,000,000.00
Fair value
61,233,000.00
61,233,000.00
Accumulat ive amount of changes i n fair value included |
in other comprehensive income
1,233,000.00
1,233,000.00
(3) Available-for-sale Financial Assets Measured by Cost at the Period-end
Unit: RMB
Investee
Carrying amount Depreciation reserves
Shareholdi
ng
proportion
in theinvestee
Cash
during theReportingPerio
d
Period-beginni
ng
Increa
se
Decrea
se
Period-end
Period-beginni
ng
Increa
se
Decrea
se
Period-end
bonus | ||
Yantai Rongchang |
Pharmacy Co.,Ltd. (hereinafterrefer to as“Rongchang
55,282,600.00
Pharmacy”) |
55,282,600.00
42,782,600.00
42,782,600.00
3.13%
ShandongHongqiao PowerCo., Ltd.(Hong qia o P
12,000,000.00
ower) |
12,000,000.00
19.38%
Total 67,282,600.00
67,282,600.00
42,782,600.00
42,782,600.00
--
(4) Changes in the Depreciation of Available-for-sale Financial Assets during the Reporting Period
Unit: RMBCategory o f theavailable-for-sale
financial as sets
Available-for-
instruments
Available-for-sale debt
instruments
TotalBeginning balance of
impairment withdrawn
42,782,600.00
sale equity | |
42,782,600.00
Ending balance ofimpairment withdrawn
42,782,600.00
42,782,600.00
10. Long-term Accounts Receivable(1) List of Long-term Accounts receivable
Unit: RMBItem
Ending balance Beginning balance
Interval
ofdiscoun
t rate
Carryingamount
Bad debtprovision
Carrying
value
Carryingamount
Bad debtprovision
Carrying
valueFinanci ng lease accounts
650,000.00 |
650,000.00
29.40% |
Of which: unrealized financing income
145,204.18 |
145,204.18
Total
650,000.00 |
650,000.00
--
11. Long-term Equity Investment
Unit: RMB
Investees
Increase/decrease
Endingbalance
Endin
gbalance ofdepreciatio
nreserv
es
Additiona
linvestme
nt
Redu
cedinvestment
Beginn ing balance
Gains and
lossesrecognizedunder theequity method
Adjustm
ent ofothercompreh
ensiveincome
Changesof otherequity
Cashbonus or
profits
announced |
to issue
Withdra
wal ofdeprecia
tionreserves
Othe
r
I. Joint venturesII. Associated enterprisesNingbo M e i97,536,732.02
-1,730,597.59
95,806,134.43
shan BondedPoer AreaHaohongEquityInvestmentPartnership(L.P)(hereinafterreferred to as“HaohongInvestment”)Subtotal 97,536,732.02
-1,730,597.59
95,806,134.43
Total 97,536,732.02
-1,730,597.59
95,806,134.43
12. Investment Property(1) Investment Property Adopted the Cost Measurement Mode
√ Applicable □ Not applicable
Unit: RMBItem
Houses and
buildings
Land use right
Construction in
progress
TotalI. Original carrying value
1. Beginning balance 35,982,382.40
35,982,382.40
2. Increased amount of the period
(1) Outsourcing
(2) Transfer from inventory\
assets\construction in progress
fixed |
(3) Enterprise combination increase
3. Decreased amount of the period
(1) Disposal
(2) Other transfer
4. Ending balance 35,982,382.40
35,982,382.40
II. Accumulative depreciation and accumulative |
amortization
1. Beginning balance 11,418,837.82
11,418,837.82
2. Increased amount of the period 706,838.89
706,838.89
(1) Withdrawal or amortization 706,838.89
706,838.89
3. Decreased amount of the period
(1) Disposal
(2) Other transfer
4. Ending balance 12,125,676.71
12,125,676.71
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 23,856,705.69
23,856,705.69
2. Beginning carrying value 24,563,544.58
24,563,544.58
(2) Investment Property Adopted the Fair Value Measurement Mode
□ Applicable √ Not applicable
13. Fixed Assets(1) List of Fixed Assets
Unit: RMBItem
Houses and
buildings
Machineryequipment
Transportation
equipment
Electronicequipment and
others
TotalI. Original carrying value
1. Beginning balance 3,136,008,729.48
6,013,226,456.60
75,605,860.26
118,680,314.89
9,343,521,361.23
2. Increased amount of theperiod
625,984.09
220,691,369.26
3,002,436.32
4,940,100.33
229,259,890.00
(1) Purchase 8,387.68
103,632,024.02
3,002,436.32
3,872,410.24
110,515,258.26
(2) Transfer f rom constructionin progress
617,596.41
117,059,345.24
1,067,690.09
118,744,631.74
(3) Enterprise combinationincrease
3. Decreased amount of theperiod
61,665,913.62
109,299,112.67
2,623,436.05
692,964.26
174,281,426.60
(1) Disposal or Scrap 2,273,039.58
9,678,561.86
2,676,654.36
730,095.66
15,358,351.46
(2) Transferred into investmentproperty
(3) Transferred into construction |
in progress
63,326,344.11
104,747,451.53
11,980.00
168,085,775.64
(4) Other decrease -3,933,470.07
-5,126,900.72
-53,218.31
-49,111.40
-9,162,700.50
4. Ending balance 3,074,968,799.95
6,124,618,713.19
75,984,860.53
122,927,450.96
9,398,499,824.63
II. Accumulative depreciation
1. Beginning balance 888,764,731.56
2,869,058,997.31
53,792,239.67
78,471,588.54
3,890,087,557.08
2. Increased amount of theperiod
48,755,271.49
147,932,075.47
2,467,451.93
4,944,608.19
204,099,407.08
(1) Withdrawal 48,755,271.49
147,932,075.47
2,467,451.93
4,944,608.19
204,099,407.08
3. Decreased amount of theperiod
22,399,548.45
60,416,202.84
2,326,468.59
689,045.79
85,831,265.67
(1) Disposal or Scrap 335,639.84
7,970,480.70
2,344,130.34
696,971.60
11,347,222.48
(2) Transferred into construction |
in progress
22,311,100.92
52,974,322.84
10,782.00
75,296,205.76
(3) Other decrease -247,192.31
-528,600.70
-17,661.75
-18,707.81
-812,162.57
4. Ending balance 915,120,454.60
2,956,574,869.94
53,933,223.01
82,727,150.94
4,008,355,698.49
III. Depreciation reserves
1. Beginning balance 2,893,416.89
29,123,503.34
27,269.67
93,764.22
32,137,954.12
2. Increased amount of theperiod
(1) Withdrawal
3. Decreased amount of theperiod
1,302,690.04
1,302,690.04
(1) Disposal or Scrap
1,302,690.04
1,302,690.04
4. Ending balance 2,893,416.89
27,820,813.30
27,269.67
93,764.22
30,835,264.08
IV. Carrying value
1. Ending carrying value 2,156,954,928.46
3,140,223,029.95
22,024,367.85
40,106,535.80
5,359,308,862.06
2. Beginning carrying value 2,244,350,581.03
3,115,043,955.95
21,786,350.92
40,114,962.13
5,421,295,850.03
(2) Fixed Assets Leased out by Operation Lease
Unit: RMBItem Ending carrying valueHouse s and bu il dings 19,075,215.72
(3) Fixed Assets Failed to Accomplish Certification of Property
Unit: RMBItem Carrying value
ReasonWeaving and yarn dying workshop 103,467,194.39
Ongoing inspection, surveying, verification to application proceduresby Housing authoritiesEmployee’s dormitory building of easternarea of industrial park
42,283,610.59
Same with aboveSpinning Fourth factory workshop 92,197,016.21
Same with aboveEmployee’s dormitory building of westernarea of industrial park
123,773,968.11
Same with aboveEastern sampl e plant 30,318,302.04
Same with aboveLufeng weaving dye workshop 128,263,529.32
Same with aboveXinjiang construction project of100,000-spindle spinning production line
64,027,681.05
Same with above
Note: T he original carrying value a nd other decrease in accumulative depreciation of fixed assets inthe Reporting Period were exchange rate difference generated from th e conversion of overseassubsidiaries’ recording currency into RMB due to the fluctuation of the exchange rates.
14. Construction in Progre ss(1) List of Construction in Progress
Unit: RMBItem
Ending balance Beginning balanceCarrying
amount
Depreciati
onreserves
Carrying value
Carryingamount
Depreciati
onreserves
Carrying value |
Roof transformation engineering of forthe whole eastern weaving complexworkshop (Phase II)
33,997,010.54
33,997,010.54
Reform project of Xinsheng ThermalPower
9,719,978.74
9,719,978.74
6,192,038.65
6,192,038.65 |
Expansion project of Xinsheng ThermalPower
5,697,893.74
5,697,893.74
744,000.00
744,000.00 |
Expansion project of Xinsheng ThermalPower (Phase II)
9,864,619.23
9,864,619.23
Heat supply engineering of ChengshunHeating
5,028,045.18
5,028,045.18
1,805,751.30
1,805,751.30 |
Reform engineering of 100,000-spindlespinning
77,875,603.13
77,875,603.13 |
Lu Thai (Vietnam) project 34,325,323.53
34,325,323.53
34,325,323.53
34,325,323.53 |
Spinning Phase II of Lu Thai (Vietnam)project
40,564,949.43
40,564,949.43
4,922,411.28
4,922,411.28 |
Yarn Dye Phase II of
project
17,584,838.00
Lu Thai (Vietnam) |
17,584,838.00
Proj ect of Lu An Garments 16,468,087.74
16,468,087.74
3,371,413.19
3,371,413.19 |
Other retails projects 39,666,780.72
39,666,780.72
28,185,279.60
28,185,279.60 |
Total 212,917,526.85
212,917,526.85
157,421,820.6
157,421,820.68 |
(2) Changes in Signi fic ant Construction in Progress during the Reporting Period
Unit: RMB
Item Budget
Beginning
balance
Increased
amount
Transferred in
fixed assets
Otherdecreased
amount
Ending balance
Propor
tion of |
accumulatedinvestment
inconstruction
s to
Jobschedu
le
Accumulate
damoun
t ofinteres
tcapital
budget | ization |
Ofwhich:
amount
ofcapitaliz
ed
for theReporting P
eriod |
Capitaliz
rateofinterestsfortheReportin
gPeriod
Capi
talresource
s
Rooftransformationengineering offor thewholeeasternweavingcomplexworkshop (PhaseII)
36,000,000.00
33,997,010.54
33,997,010.54
94.00
%
94.00%
Other
ReformprojectofXinshengThermalPower
20,000,000.00
6,192,038.65
3,527,940.09
9,719,978.74
49.00
%
49.00%
Other
ExpansionprojectofXinshengThermalPower
240,000,000.0
744,000.00
4,953,893.74
5,697,893.74
86.00
%
86.00%
Other
ExpansionprojectofXinshengThermalPower(PhaseII)
97,950,000.00
9,864,619.23
9,864,619.23
10.00
%
10.00%
Other
Heatsupplyengineering ofChengshunHeating
38,000,000.00
1,805,751.30
3,222,293.88
5,028,045.18
99.00
%
99.00%
Other
Reformengineering of100,000-spindle
156,000,000.0
spinning |
77,875,603.13
38,710,587.12
116,586,190.25
100.00
%
100.00%
Other
Lu Thai(Vietnam)project
242,282,300.0
34,325,323.53
34,325,323.53
99.00
%
99.00%
Other
Phase IIof LuThai(Vietnam)project
52,750,000.00
Spinning |
4,922,411.28
35,233,707.58
-408,830.57
40,564,949.43
76.00
%
76.00%
Other
YarnDyePhase IIof LuThai(Vietnam)project
110,300,000.0
17,584,838.00
17,584,838.00
16.00
%
16.00%
Other
Project
Garments
93,035,700.00
of Lu An |
3,371,413.19
13,573,989.65
512,433.99
-35,118.89
16,468,087.74
91.00
%
91.00%
Other
Otherretailsprojects
28,185,279.60
13,127,508.62
1,646,007.50
39,666,780.72
Other
Total
1,086,318,000
.00
157,421,820.68
173,796,388.45
118,744,631.74
-443,949.46
212,917,526.85
-- --
--
15. Engineering Materials
Unit: RMBItem Ending balance Beginning balanceSpecific material s
Specific equipment152,136,560.03
56,913,806.06
Total152,136,560.03
56,913,806.06
16. Intangible Assets(1) List of Intangible Assets
Unit: RMBItem Land use right Patent right
Non-patent
right
Software use
rights
Brand use
rights
TotalI. Original carrying value
1. Beginning balance 604,760,289.56
1,985,176.47
6,710,503.67
300,000.00
613,755,969.70
2. Increased amount of theperiod
1,106,048.24
1,106,048.24
(1) Purchase
1,106,048.24
1,106,048.24
(2) Internal R&D
(3) Business combinationincrease
3. Decreased amount of theperiod
(1) Disposal
4. Ending balance 604,760,289.56
1,985,176.47
7,816,551.91
300,000.00
614,862,017.94
II. Accumulated amortization
1. Beginning balance 111,042,573.91
1,422,710.04
2,252,384.27
90,000.00
114,807,668.22
2. Increased amount of theperiod
6,873,241.70
99,258.84
1,774,934.53
15,000.00
8,762,435.07
(1) Withdrawal 6,873,241.70
99,258.84
1,774,934.53
15,000.00
8,762,435.07
3. Decreased amount of theperiod
(1) Disposal
4. Ending balance 117,915,815.61
1,521,968.88
4,027,318.80
105,000.00
123,570,103.29
III. Depreciation reserves
1. Beginning balance
2. Increased amount of theperiod
(1) Withdrawal
3. Decreased amount of theperiod
(1) Disposal
4. Ending balance
IV. Carrying value
1. Ending carrying value 486,844,473.95
463,207.59
3,789,233.11
195,000.00
491,291,914.65
2. Beginning carrying value 493,717,715.65
562,466.43
4,458,119.40
210,000.00
498,948,301.48
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: RMB
Item
Beginnin
Increase Decrease
Endingbalance
Internal R&D
expense
Other
g balance
Recogni zed asintangible assets
Transferred int othe current profit
or loss
R&D ofproducts
162,596,245.80
162,596,245.80
Total
162,596,245.80
162,596,245.80
18. Goodwill(1) Original Carrying Value of Goodwill
Unit: RMBName of the invested
units or ev entsgenerating goodwill
Increase Decrease Ending balance
Beginn ing balance |
Xinshe ng Power 20,563,803.29
20,563,803.29
Helijie 50,000.00
50,000.00
Total 20,613,803.29
20,613,803.29
(2) Impairment Provision for Goodwill
Unit: RMBName of theinvested units or
events gener ating
goodwill
Beginning
balance
Increase Decrease Ending balance
events gener ating |
Xinshe ng Power
Helijie
Notes of the testing process of goodwill impairment, parameters and the recognition method of goodwill impairment losses:
Refer to Note V-20 for details of the testing process of goodwill impairment.
19. Long-term Prepaid Expense
Unit: RMBItem Beginning balanceIncreased Amortization Other decreasedEnding balance
amount amount of the
period
amountLand contracting fee of
Xinjiang Luthai
26,693,642.92
543,109.50
26,150,533.42
Decorati on fee ofXinjiang Lu Thai
865,660.06
96,940.31
768,719.75
Land ren t of overseassubsidiaries
80,148,619.17
3,713,555.49
761,994.05
-866,155.88
83,966,336.49
Housing rent of overseassubsidiaries
169,272.37
171,406.99
-2,134.62
Total 107,877,194.52
3,713,555.49
1,573,450.85
-868,290.50
110,885,589.66
Other notes
Note: Other decrease wa s the exchange rate difference generated from the conversi on of overseassubsidiaries’ recording currency into RMB due to the fluctuation of exchange rates.
20. Deferred Income Tax Assets/Deferred Income Tax Liabilities(1) Deferred Income Tax Assets Had Not Been Off-set
Unit: RMBItem
Ending balance Beginning balanceDeduct ible temporary
difference
Deferred income tax
assets
Deduct ible temporary
difference
Deferred income tax
assetsProvi
sion for impairment
of assets
123,762,792.64
sion for impairment |
19,984,983.02
140,256,135.72
22,531,008.74
Inter na l unr e a l iz e d pr ofit 109,048,430.64
14,813,500.08
100,706,925.35
11,627,841.87
One-time listeddecoration expenses
5,405,702.23
1,351,425.56
5,405,702.23
1,351,425.56
Payroll payable 124,021,657.72
18,701,206.18
124,021,657.72
18,701,206.18
Deferred income 126,957,174.18
20,464,628.41
126,737,092.32
20,485,677.36
Total 489,195,757.41
75,315,743.25
497,127,513.34
74,697,159.71
(2) Deferred Income Tax Liabilities Had not Been Off-set
Unit: RMBItem
Ending balance Beginning balanceDeduct ible temporary
difference
Deferred income tax
liabilities
Deduct ible temporary
difference
Deferred income tax
liabilitiesDepreciat ion of fixed16,979,223.43
2,927,785.33
16,820,058.15
2,899,949.46
assetsAvailable-for-salefinancial as sets
1,233,000.00
184,950.00
33,000.00
4,950.00
Total 18,212,223.43
3,112,735.33
16,853,058.15
2,904,899.46
(3) List of Unrecognized Deferred Income Tax Assets
Unit: RMBItem Ending balance Beginning balanceDeduct ible temporary difference 8,507,616.96
11,690,891.52
Deduct ible losses 28,067,909.91
27,993,886.84
Total 36,575,526.87
39,684,778.36
(4) Deductible Losses of Unrecognized Deferred Income Tax Assets will Due in the Following Years
Unit: RMBYears Ending amount Beginning amount NotesY2018 97,981.65
97,981.65
Y2019 1,456,659.23
1,456,659.23
Y2020 18,458,244.61
18,458,244.61
Y2021 4,250,703.45
4,250,703.45
Y2022 3,730,297.90
3,730,297.90
Y2023 74,023.07
Total 28,067,909.91
27,993,886.84
--
21. Other Non-current Ass ets
Unit: RMBItem Ending balance Beginning balancePrepayment for equipment 78,517,334.73
28,984,077.85
Prepayment for land 1,996,937.00
7,406,401.00
Total 80,514,271.73
36,390,478.85
22. Short-term Borrowings(1) Category of Short-term Borrowings
Unit: RMB
Item Ending balance Beginning balanceMort gage loan 150,000,000.00
440,000,000.00
Guaranteed loan 527,722,734.36
28,254,022.53
Credit loan 780,336,227.97
666,870,973.87
Total 1,458,058,962.33
1,135,124,996.40
Notes of the category for short-term loans:
Note: for the type and amount of the pledged assets for mortgage loan, please refer to Note VII-7,16and 58.
23. Financial Liabilities at Fair Value through Profit or Loss
Unit: RMBItem Ending balance Beginning balanceTrading financial liabilities 28,481,010.00
Of which: issued trading bonds
Derivative financial liabilities 28,481,010.00
Other
Financial liabilities desig nate d to bemeasured at fair value through profit orloss
Total 28,481,010.00
24. Notes Payable
Unit: RMBCategory Ending balance Beginning balanceTrade acceptance 2,039,106.28
2,441,810.45
Bank’s acceptance bill 1,079,450.50
4,859,961.40
Total 3,118,556.78
7,301,771.85
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 balance
Purchase of goods 188,533,806.46
219,463,023.43
Engineering equipment 83,642,879.87
134,864,245.66
Other 11,477,182.31
11,937,863.56
Total 283,653,868.64
366,265,132.65
26. Advances from Custom ers(1) List of Advances from Customers
Unit: RMBItem Ending balance Beginning balanceAdvance from goods 99,307,372.64
119,785,945.48
Total 99,307,372.64
119,785,945.48
27. Payroll Payable(1) List of Payroll Payable
Unit: RMBItem Beginning balance Increase Decrease Ending balanceI. Short-term salary 316,812,093.17
841,207,933.99
911,760,588.44
246,259,438.72 |
II. Post-employment benefit-definedcontribution plans
24,395.78
75,787,694.44
75,788,964.90
23,125.32 |
III. Termination benefits
180,688.20
180,688.20
Total 316,836,488.95
917,176,316.63
987,730,241.54
246,282,564.04 |
(2) List of Short-term Salary
Unit: RMBItem Beginning balance Increase Decrease Ending balance
subsidy
1. Salary, bonus, allowance, | 267,328,134.33 |
757,339,575.32
831,946,327.90
192,721,381.75 |
2. Employee welfare
27,175,649.69
27,175,649.69
3. Social insurance
34,876,878.81
35,231.00 |
34,874,630.67
37,479.14 | |||
Of which: 1. Medical |
insurance premiums
27,627,857.60
28,800.70 |
27,627,430.47
29,227.83 |
Work-related injury insurance
3,570,163.13
5,065.07 |
3,568,361.67
6,866.53 |
Matern ity i nsurance
3,678,858.08
1,365.23 |
3,678,838.53
1,384.78 |
4. Housing fund
8,133,982.10
1,293.00 |
8,135,275.10
5. Labor union budget and |
employee education budget
13,681,848.07
49,447,434.84 |
9,628,705.08
53,500,577.83 |
Total
841,207,933.99
316,812,093.17 |
911,760,588.44
246,259,438.72 |
(3) List of Defined Contribution Plans
Unit: RMBItem Beginning balance Increase Decrease Ending balance1. Basic pension benefits 22,636.70
72,984,343.09
72,984,781.91
22,197.88
2. Unemploymentinsurance
1,759.08
2,803,351.35
2,804,182.99
927.44
Total 24,395.78
75,787,694.44
75,788,964.90
23,125.32
Other notes:
The Company, in line with the requirement, participate the endowment insurance, unemploymentinsurance scheme and so on, according to the scheme, the Company monthly pay to the scheme inline with 18% and 0.7% of the endowment insurance base, except the monthly payment, theCompany 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 2,760,614.68
2,639,133.26
Corp or ate income tax 21,524,297.71
13,934,074.08
Personal income tax 3,214,555.49
1,453,967.09
Urban maintenance and construction tax 2,967,638.49
3,036,340.88
Stamp tax 347,321.70
400,579.00
Property tax 4,667,520.13
4,618,710.82
Land use tax 4,486,008.66
4,537,230.07
Education surcharge 1,293,949.35
1,314,401.95
Local education surcharge 862,632.88
876,267.97
Local water conservan cy facili t yconstruction fund
214,710.11
217,869.46
Resource tax 139,102.00
26,516.00
Environmental protection tax 274,070.50
Total 42,752,421.70
33,055,090.58
29. Interest Payable
Unit: RMBItem Ending balance Beginning balanceInterest payable on short-term borrowings 2,079,744.07
1,572,231.86
Total 2,079,744.07
1,572,231.86
30. Dividends Payable
Unit: RMBItem Ending balance Beginning balanceDividends payable to individualshareholders by the Company
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:
Notes: the dividends payable unpaid for over one year were the cash divi dend of previous year notreceived by individual shareholders.
31. Other Accounts Payable(1) Other Accounts Payable Listed by Nature of Account
Unit: RMBItem Ending balance Beginning balanceDeposits and cash deposits etc. 18,572,061.86
19,600,682.80
Collecting payment on behalf of others 19,770,608.87
17,030,878.91
Intercourse funds 95,570,959.03
66,354,397.71
Other 23,499,304.14
24,104,049.83
Total 157,412,933.90
127,090,009.25
(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
--
32. Non-current Liabilities Due within One Year
Unit: RMB
Item Ending balance Beginning balanceLong-
term borrowings due within one year |
62,750,292.49
Total
62,750,292.49
33. Long-term Borrowings(1) Category of Long-term Borrowings
Unit: RMBItem Ending balance Beginning balanceGuarantee loan 69,431,359.47
62,750,292.49
Less: long-term borrowings due within one year
-62,750,292.49
Total 69,431,359.47
34. Long-term Payroll Payable(1) List of Long-term Payroll Payable
Unit: RMBItem Ending balance Beginning balanceIII. Other long-term welfare 92,458,178.53
93,843,473.02
Total 92,458,178.53
93,843,473.02
35. Deferred Income
Unit: RMBItem Beginning balance Increase Decrease Ending balance
Reason forformationGovernmentsubsidies
126,737,092.32
2,417,500.00
2,342,622.32
126,811,970.00
Governmentsubsidies
incomes
Unrealized financing |
237,606.84
92,402.66
145,204.18
Finance leaseTotal 126,737,092.32
2,655,106.84
2,435,024.98
126,957,174.18
--Item involving government subsidies:
Unit: RMBItem
Beginning
balance
Amount ofnewly subsidy
Amountrecorded
intonon-operat
Amountrecorded intoother income
in the
Amount
offset cost in
theReporting
Otherchange
s
Ending balance
Related to
offset cost in | assets/related |
income
ingincome in
theReporting
Period
Reporting
Period
Period
Land 59,265,769.33
696,578.94
58,569,190.39
Related t o the |
assetsEquipment 64,626,322.95
417,500.00
1,579,543.40
63,464,279.55
Related t o the |
assetsProductionliving assets
691,000.04
66,499.98
624,500.06
Related t o the |
assetsOverseasinvestment
100,000.00
400,000.00
500,000.00
Related t o the |
assetsR&D 2,054,000.00
1,600,000.00
3,654,000.00
Related to the |
incomeTotal 126,737,092.32
2,417,500.00
0.00
2,342,622.32
0.00
0.00
126,811,970.00
--Other notes:
36. Other Non-current Liabilities
Unit: RMBItem Ending balance Beginning balanceOther 1,840,000.00
1,840,000.00
Total 1,840,000.00
1,840,000.00
37. Share Capital
Unit: RMB
Beginning
balance
Increase/decrease (+/-)
New shares
issued
Bonus shares
Bonus issuefrom profit
Other SubtotalThe sum of
shares
922,602,311.00
Ending balance | ||||||
922,602,311.00
38. Capital Reserves
Unit: RMBItem Beginning balance Increase Decrease Ending balanceCapital premium(premium on stock)
640,470,910.34
640,470,910.34
Other capital reserves 59,022,683.48
53.66
59,022,737.14
Total 699,493,593.82
53.66
0.00
699,493,647.48
39. Treasury Shares
Unit: RMBItem Beginning balance
Increase Decrease Ending balanceShares of the Company acquired fordecrease in registered capital
0.00
121,952,709.49
0.00
121,952,709.49
Total
121,952,709.49
121,952,709.49
40. Other Comprehensive Income
Unit: RMB
Item
Beginning
balance
Report ing Period
Ending balance
Ending balanceIncome befor e
taxation in
the |
Current Period
Less: reco rded in
othercomprehensiveincome in prior
period andtransferred inprofit or loss in
the Current
Period
Less:
Income tax
expense
Attributable to |
owners of theCompany as
the parentafter tax
Attributable
tonon-controlling interests
after tax
II. Othercomprehensiveincome th at maysubsequently bereclassifi ed toprofi t or los s
16,810,574.22
27,739,653.92
180,000.00
27,559,653.92
44,370,228.14
Profit or lossgenerated fromchanges in f airvalue ofavailable-for-salefinancial as sets
28,050.00
1,200,000.00
180,000.00
1,020,000.00
1,048,050.00
Differencesarising fromtranslation offoreigncurrency-denomin
16,782,524.22
26,539,653.92
26,539,653.92
43,322,178.14
ated financialstatementsTotal of othercomprehensiveincome
16,810,574.22
27,739,653.92
180,000.00
27,559,653.92
44,370,228.14
41. Surplus Reserves
Unit: RMBItem Beginning balance Increase Decrease Ending balanceStatutory surplusreserves
959,592,006.48
959,592,006.48
Discretional surplusreserves
3,341,572.58
3,341,572.58
Total 962,933,579.06
962,933,579.06
42. Retained Profits
Unit: RMBItem Reporting Period Same period of last yearBeginning
balance of retained profits before
adjustments
4,629,102,712.06
balance of retained profits before |
4,341,866,189.19
Beginning
balance of retained profits after |
adjustments
4,629,102,712.06
4,341,866,189.19
Add: Net profit attributable to owners of theCompany as the parent
377,355,959.02
841,150,934.75
Less: Withdrawal of statutory surplus reserves
71,063,056.38
Divide nd of ordinary shares payable 453,344,328.00
482,851,355.50
Ending r e ta ined profits 4,553,114,343.08
4,629,102,712.06
List of adjustment of beginning retained profits:
(1) RMB0.00 beginning retained profits was affected by retrospective adjustment conducted according to the Accounting Standardsfor Business Enterprises and relevant new regulations.(2) RMB 0.00 beginning retained profits was affected by changes in accounting policies.(3) RMB0.00 beginning retained profits was affected by correction of significant accounting errors.(4) RMB0.00 beginning retained profits was affected by changes in combination scope arising from same control.(5) RMB0.00 beginning retained profits was affected totally by other adjustments.
43. Operating Revenue and Cost of Sales
Unit: RMBItem
Report ing Period Same Period of last yearOperati ng revenue Cost of sales Operating revenue Cost of salesMain operations 3,161,001,569.72
2,286,826,556.57
2,879,100,712.82
1,969,571,645.66
Other operations 120,012,585.71
74,009,874.84
117,992,683.02
81,911,358.13
Total 3,281,014,155.43
2,360,836,431.41
2,997,093,395.84
2,051,483,003.79
44. Taxes and Surtaxes
Unit: RMBItem Reporting Period Same Period of last yearUrban maintenance and construction tax 17,451,386.91
16,393,442.71
Education Surcharge 7,605,633.12
7,180,677.97
Property tax 10,374,539.75
9,865,797.76
Land use tax 9,379,056.90
9,262,257.89
Vehicle and vessel usage tax 75,652.02
71,177.18
Stamp duty 1,989,710.41
1,973,396.29
Local education surcharge 5,070,422.01
4,787,118.66
Local water conservan cy facili t yconstruction fund
1,262,384.77
1,969,458.67
Resource tax 220,654.00
Environmental protection tax 1,040,967.99
Total 54,470,407.88
51,503,327.13
45. Selling Expense
Unit: RMBItem Reporting Period Same Period of last yearSalary 19,297,126.63
18,231,453.63
Transport fees 20,928,650.85
19,456,296.25
Advertising expense 5,420,732.63
8,178,116.43
Mall costs 875,238.41
0.00
Port sur char ge 6,170,035.18
5,798,672.52
Depreciat ion charge 2,532,810.28
2,631,285.73
Business travel charges 1,629,252.55
2,401,690.68
Rental char ges 556,033.51
687,727.39
Other 9,531,208.52
10,980,269.59
Total 66,941,088.56
68,365,512.22
46. Administ rative Expense
Unit: RMBItem Reporting Period Same Period of last yearR&D expenses 162,596,245.80
158,802,502.01
Salary 49,380,053.99
50,247,742.67
Depreciat ion charge 13,579,871.22
12,850,463.13
Warehouse funding 14,923,489.16
14,931,054.00
Travel expense 8,855,345.37
12,066,196.48
Rental char ges 8,383,823.95
6,524,734.12
Labor-union expenditure 8,029,634.53
7,312,516.87
Employee education budget 5,642,213.54
5,469,769.99
Amortization of intangible assets 5,669,585.44
5,452,967.89
Transport fees 3,049,340.29
3,489,273.36
Other 45,761,153.21
36,890,098.97
Total 325,870,756.50
314,037,319.49
47. Finance Costs
Unit: RMBItem Reporting Period Same Period of last yearInterest ex pense 22,535,312.05
14,653,232.24
Less: Interest income 7,403,493.02
2,645,051.42
Less: Amount of capitalized interest
Forei gn exchange gains or losses 11,511,469.36
15,375,073.21
Other 3,881,936.92
3,546,924.25
Total 30,525,225.31
30,930,178.28
48. Asset Impairment Loss
Unit: RMBItem Reporting Period Same Period of last yearI. Bad debt loss 2,221,300.66
-1,283,546.44
II. Inventory falling price loss -99,805.82
2,246,368.58
Total 2,121,494.84
962,822.14
49. Gain on Changes in Fair Value
Unit: RMBSources Reporting Period Same period of last yearFinancial assets at fair value through profit or loss
1,110,700.00
Financial liabilities at fair value through profit or loss -28,481,010.00
Total -28,481,010.00
1,110,700.00
50. Investment Income
Unit: RMBItem Reporting Period
Same P er io d of last
yearLong-term equity invest ment income accounted by equity method -1,730,597.59
Investment incom
loss
6,376,621.37
e from disposal of financial assets at fair value through profit or |
1,385,535.34
Total 4,646,023.78
1,385,535.34
51. Asset Disposal Income
Unit: RMBSources Reporting Period Same period of last yearIncome from disposal of fixed assets -522,286.65
-1,191,082.48
52. Other Income
Unit: RMBSources Reporting Period
Same period of |
last year
No.2)
2,517,200.00
2016 Incentive Fund for international and provincial R&D platforms (CCQZ [2018] No.13 and |
2017 Provincial Specific Fund for service industry development (ZCQZ [2017] No.169) 133,000.00
2017 Central Specific Fund for foreign trade and economic development (ZCQZ [2017]No.179)
48,200.00
2017 Municipal Specific fund for foreign trade and economic development (ZCQZ [2017]No.168)
131,200.00
Municipal Specific Fund for R&D of application technology (ZKF [2017] No.100) 400,000.00
2017 Municipal Specific Fund for patent development (ZCJZ [2018] No.23) 32,000.00
2017 Award for Shandong science and technology (LZF [2018] No.10) 200,000.00
Subsidy for leading talents in Mount Tai (ZZF [2018] No.14) 1,000,000.00
Subsidy for Zibo Gifted Person Plan (ZZF [2018] No.14) 700,000.00
Specific Raised Fund for integration of IT application with industrialization (ZCQZ [2017]No.189)
4,735,700.00
Government subsidy in premium of ECI (CCQZ [2018] No.9) 373,200.00
Government subsidy for new industry format of Foreign trade (CCQZ [2018] No.9) 10,600.00
Government subsidy for international market development project (CCQZ [2018] No.8) 23,200.00
Government subsidy for leading enterprises in export (CCQZ [2018] No.8) 100,000.00
2017 Government subsidy for 17
th
Asia International Textile Machine and Fittings Exhibition(CCQZ [2018] No.11)
5,400.00
Gov e r nme nt subsidy for TEXWORLD held in Feb. 2017 (CCQZ [2018] No.11) 40,000.00
Government subsidy for 30
th
Vietnam HCM Exhibition of Textile & Clothing Industry held inApril 2017 (CCQZ [2018] No.11)
21,300.00
Government subsidy for LT. GRFF (CCQZ [2018] No.11) 1,700,000.00
Government subsidy for international qualification certification (CCQZ [2018] No.11) 10,000.00
Specific government subsidy for corporate management improvement (ZGXWF [2018] No.1) 304,450.00
2016 Government subsidy for freight of cotton out of Xinjiang (XCJ [2017] No.206) 464,400.00
Government subsidy for capital of supporting infrastructure construction of Lu Thai Group(CCFSZ [2018] No.34)
16,527,500.00
Zibo Qilu Cup Industrial Design Rewards 30,000.00
Government subsidy for social insurance and post subsidy of people with job huntingdifficulties hired during Jan. to May of 2018 (LCS [2011] No.55)
1,042,819.75
2016 subsidy for outstanding energy-saving enterprises in Zibo (ZZZ [2017] No.118) 300,000.00
Fund for green cotton project with high yield and high efficiency 500,000.00
Specific fund for agricultural industrialized development 600,000.00
Compensatory resettlement fund from land acquisition for highway 500,390.33
2017 4
th
subsidy for freight of cotton yarn 908,274.23
2017 4
th
electricity price subsidy 305,711.64
2017 4
th
quarter social insurance subsidy 246,565.76
2017 Pre -employment training subsidy for textile enterprises 278,490.56
Deferred income amortization 2,342,622.32
2016 power industrial city 30 policies support fund (special fund for business managementZica iqi z hi [ 2016] No. 205)
3,036,000.00
Special fund for development of service sector (Chuancaiqizhi[2017] No. 16, No. 17)
70,500.00
Subsidy for Elite Program of Zibo (Zizhengbanzi[2016] No. 159)
500,000.00
Receiving subsidy from the academician workstation (Cheque No: 14916508)
200,000.00
Progress of Science and Technology Award
50,000.00
Reward fund for enterprises with an advantage in patent creation in 2016 (Zizhizi[2017] No.22)
30,000.00
Fund for energy-saving
30,000.00
Fund for supporting talents
300,000.00
Funding for Municipal Key Talents Introduce Project
50,000.00
Export credit insurance premiums
135,200.00
Subsidy for Las Vegas Show
56,000.00
Government subsidy for brand construction
740,200.00
Government subsidy for service trade
20,000.00
Progress of Science and Technology Award in of Zibo in 2016
50,000.00
Counterpart funding for post doctorates
50,000.00
Special subsidy liquidation fund for textile and garment in 2016
3,871,234.20
Deferred income amortization
1,391,503.09
Total 36,532,224.59
10,580,637.29
53. Non-operating Income
Unit: RMBItem Reporting Period
Same Period of
last year
Amount recorded in the current
non-recurring profit or lossGains from damage and scrap of non-current assets
12,598.97
12,598.97
Government subsidies unrelated to normaloperations of the Company
130,000.00
Other 2,998,473.61
4,235,273.28
2,998,473.61
Total 3,011,072.58
4,365,273.28
3,011,072.58
54. Non-operati ng Ex pense
Unit: RMBItem Reporting Period Same Period of last year
non-recurring profit or lossDonations 7,246.70
Amount recorded in the current | ||
3,010,000.00
7,246.70
Losses from d amage and scrap1,094,026.64
781,154.66
1,094,026.64
of non-current assetsOther 893,650.37
857,770.73
893,650.37
Total 1,994,923.71
4,648,925.39
1,994,923.71
55. Income Tax Expense(1) List of Income Tax Expense
Unit: RMBItem Reporting Period Same Period of last yearCurrent income tax expense 63,894,098.11
82,330,397.98
Deferred income tax expense -618,583.54
-2,874,770.96
Total 63,275,514.57
79,455,627.02
(2) Adjustment Process of Accounting Profit and Income Tax Expense
Unit: RMBItem Reporting PeriodProfit before taxation 453,439,851.52
Current inco me tax e xpense accounted at statutory/applicable tax rate 68,015,977.73
Influence of applying different tax rates by subsidiaries -917,425.56
Influence of income tax before adjustment 629,616.91
Influence of non-taxable income -9,000,551.96
Influence of not deductable costs, expenses and losses 3,795,257.08
Influence of deductable temporary difference or deductable losses of unrecognizeddeferred income tax in the Reporting Period
752,640.37
Income tax e xpense 63,275,514.57
56. Cash Flow Statement(1) Cash Generated from Other Operating Activities
Unit: RMBItem Reporting Period Same Period of last yearGovernment subsidies 38,328,491.16
32,282,179.48
Claim income 1,639,520.19
1,325,325.55
Recovery of employee borrowings, petty |
cash and deposit
7,332,632.94
293,762.05
Collection for employees 2,811,301.35
278,441.53
Other 8,718,571.06
16,605,176.27
Total 58,830,516.70
50,784,884.88
(2) Cash Used in Other Operating Activities
Unit: RMBItem Reporting Period Same Period of last yearFreight and miscellaneous charges 30,263,702.56
29,710,088.63
Rental char ges 5,121,075.62
12,119,156.17
Advertising expense 361,478.56
2,594,594.92
Business travel charges 17,701,778.95
16,603,736.64
Insurance 9,043,863.69
3,345,635.81
Audit advisory announcement fee 4,654,078.64
2,901,671.62
Decorati on & repair expenses 1,092,271.20
4,151,211.04
Donation 207,152.51
4,226,982.21
Pre-payment 967,632.15
24,679,803.50
Payment of employee borrowings, pettycash and deposit
9,938,512.86
5,521,282.60
Other 33,511,070.15
37,799,876.70
Total 112,862,616.89
143,654,039.84
(3) Cash Generated from Other Investing Activities
Unit: RMBItem Reporting Period Same Period of last yearInterest income 7,141,264.70
2,642,590.05
Income from forward foreign exchange 6,274,421.37
1,385,535.34
Sale of secu r ities
66,007,480.86
Option cost 112,450.00
Total 13,528,136.07
70,035,606.25
(4) Cash Used in Other Investing Activities
Unit: RMBItem Reporting Period Same Period of last yearforward set tlement exchange loss 0.00
0.00
Payment of deposit for the L/C ofequipment purchase
0.00
0.00
(5) Cash Generated from Other Financing Activities
Unit: RMBItem Reporting Period Same Period of last yearReturn of loan guarantees 17,200,000.00
8,000,000.00
Recover y of intercourse accounts 21,300,000.00
2,300,000.00
Government subsidies related to assets 817,500.00
0.00
Total 39,317,500.00
10,300,000.00
(6) Cash Used in Other Financing Activities
Unit: RMBItem Reporting Period Same Period of last yearReturn of the B-share buy-back amount 175,517,237.20
0.00
Total 175,517,237.20
0.00
57. Supplemental Information for Cash Flow Statement(1) Supplemental Information for Cash Flow Statement
Unit: RMBSupplemental information Reporting Period Same period of last year
activities
-- --Net profit 390,164,336.95
1. Reconciliation of net profit to net cash flows generated from operating | |
411,957,743.81
Add: Provision for impairment of assets 2,121,494.84
962,822.14
Depreciat ion of fixed assets, oil-gas assets, and productive living assets 204,806,245.97
206,209,335.09
Amortization of intangible assets 8,762,435.07
7,901,439.13
Amortization of long-term prepaid expenses 1,573,450.85
2,182,955.03
Losses from disposal of fixed assets, intangible assets and otherlong-lived assets (gain s : negative)
522,286.65
1,972,237.14
Losses from s cr ap of fixed assets (gains: negative) 1,081,427.67
Losses from changes in fair value (gains: negative) 28,481,010.00
-1,110,700.00
Finance costs (gains: negative) 29,182,177.28
27,385,715.40
Investmen t loss (gains: negative) -4,646,023.78
-1,385,535.34
Decrease in deferred income tax assets (gains: negative) -618,583.54
-2,805,205.65
Increase in deferred income tax liabilities(“-” means decrease)
207,835.87
-69,565.31
Decrease in inventory (gains: negative) 103,831,822.46
-222,720,851.30
Decrease in accounts receivable generated
(gains: negative)
-10,014,110.37
from operating activities |
35,400,564.44
Increase in accounts payable used in
operating activities (decrease: |
negative)
-56,853,595.15
-122,634,204.01
Other -817,500.00
Net cash gen er ated from/used in operating a ctivities 697,784,710.77
343,246,750.57
2. Significant investing and financing activities without involvement of |
cash receipts and payments
-- --3. Net in cr eas e/decrease of cash and cash equivalent: -- --
Ending balance of cash 671,571,889.84
601,657,326.65
Less: beginning balance of cash 676,639,212.86
659,116,137.67
Net incr ease in cash and cash equivalents -5,067,323.02
-57,458,811.02
(2) Cash and Cash Equivalent
Unit: RMBItem Ending balance Beginning balanceI. Cash 671,571,889.84
676,639,212.86
Includ i ng : Cas h on ha nd 3,982,351.33
8,040,420.28
Bank deposit on demand 667,589,538.44
668,598,792.58
Other monetary fund on demand 0.07
III. Ending
equivalents
671,571,889.84
balance of cash and cash |
676,639,212.86
58. Assets with Restricted Ownership or Right to Use
Unit: RMBItem Ending carrying value Reason for restrictionMon etary capital 150,080.52
cash deposit of L/GInventory 67,984,874.74
Mortgaged for short-term borrowingsFixed assets 101,474,035.19
Mortgaged for short-term borrowingsTotal 169,608,990.45
--
59. Foreign Currency Monetary Items(1) Foreign Currency Monetary Items
Unit: RMBItem
Ending foreign currency
balance
Exchange rate
Ending balance converted t o
RMBMon etary capital -- --
Including: USD 35,333,824.63
6.6166
233,789,784.06
EUR 589,293.86
7.6515
4,508,981.98
HKD 11,259,904.56
0.8431
9,493,225.55
JPY 1,814,848.00
0.0599
108,709.39
THB 190.19
0.1998
38.00
SGD 1.90
4.8386
9.19
GBP 2,850.86
8.6551
24,674.47
AUD 131.03
4.8633
637.24
CHF 23,407.90
6.6350
155,311.42
SEK 920.00
0.7328
674.18
MMK 381,590,866.86
0.004887
1,864,834.59
Dong 832,968,600,275.00
0.000291
242,393,862.68
Accounts receivable -- --
Including: USD 35,861,603.26
6.6166
237,281,884.13
EUR
HKD 3,017,862.52
0.8431
2,544,359.89
Dong 19,943,156,276.00
0.000291
5,803,458.48
Long-term borrowings -- --
Including: USD 10,493,510.18
6.6166
69,431,359.47
EUR
HKD
Notes recei vable:
Including: USD 13,814,454.68
6.6166
91,404,720.83
Other accounts receivable
Including: USD 198,313.13
6.6166
1,312,158.66
HKD 6,500.00
0.8431
5,480.15
JPY 1,813,040.00
0.0599
108,601.10
EUR 10,000.00
7.6515
76,515.00
MMK 1,090,000.00
0.004887
5,326.83
Dong 4,714,754,917.00
0.000291
1,371,993.68
Accounts payable:
Including: USD 1,459,263.63
6.6166
9,655,363.74
JPY 998.37
0.0599
59.80
EUR 498,001.11
7.6515
3,810,455.50
MMK 54,124,376.26
0.004887
264,505.83
Dong 8,063,790,891.00
0.000291
2,346,563.15
Other accounts payable:
Including: USD 5,455.33
6.6166
36,095.74
HKD 5,813,035.34
0.8431
4,900,970.10
Dong 389,536,742.00
0.000291
113,355.19
Short-term borrowings:
Including: USD 91,703,604.26
6.6166
606,766,067.97
Dong 588,635,375,814.00
0.000291
171,292,894.36
(2) Notes to Overseas Entities Including: for Significant Oversea Entities, Main Operating Place, RecordingCurrency and Selection Basis Shall Be Disclosed; if there Are Changes in Recording Currency, RelevantReasons Shall Be Disclosed.
√ Applicable □ Not applicable
The operating places of Company’s subsidiaries Lu Thai( Hong Kong), Lu Thai(Cambodia), LuThai(Burma), Lu Thai(America), and Lu Thai(Vietnam), and Lu An Garment Co., Ltd. were HongKong, Cambodia, Burma, America, Vietnam and Vietnam, and the recording currency respectivelywas HKD, USD, USD, USD, Dong and Dong.
VIII. Equity in Other Entities
1. Equity in Subsidiary(1) Subsidiaries
Name
Mainoperating
place
place
Nature ofbusiness
Hold in g percentage (%)
Way of gainingDirectly Indirectly
Beijing Innovative Beijing Beijing
Registration | |
Wholesal e and |
retail industry
60.00% |
Set-upLuthai (Hong Kong)
HongHong Kong
Wholesal e and |
100.00%
Set-up
Kong retail industryShanghai Luthai Shanghai Shanghai
retail industry
100.00%
Wholesal e and |
Set-upXinjiang Luthai Xinjiang
Xinjiang
Manufacturing |
industry
59.92% |
Business combination not under thesame control
Lufeng Wea ving &Dyeing
Zibo Zibo
industry
Manufacturing | 75.00% |
Set-upLuqun Textile Zibo Zibo
industry
100.00%
Manufacturing |
Set-upXinshe ng Power Zibo Zibo
Ma
industry
100.00%
nufacturing |
Business combination not under thesame controlXinjiang Textile(sub-subsidiary)
Xinjiang Xinjiang
industry
Manufacturing |
59.92%
Set-upHelijie
(sub-subsidiary)
Zibo Zibo Service
100.00%
Business combination not under thesame controlChengshun Heating(sub-subsidiary)
Zibo Zibo
Manufacturing |
industry
100.00%
Business combination under thesame control
Beijing Youxian Beijing Beijing
retail industry
Wholesal e and | 90.00% |
Set-upLu Thai (Cambodia)
Cambodia Cambodia
Manufacturing |
industry
100.00%
Set-upLu Thai (Burma) Burma Burma
industry
100.00%
Manufacturing |
Set-upLu Thai (America) America America
retail industry
100.00%
Wholesal e and |
Set-upLu Thai (Vietnam) Vietnam Vietnam
industry
100.00%
Manufacturing |
Set-upLu A n Garments Vietnam Vietnam
industry
100.00%
Manufacturing |
Set-up
(2) Significant Non-wholly-owned Subsidiary
Unit: RMBName
Shareholdingproportion ofnon-controlling
shareholders
The profit or loss attributable
to the non-controlling
shareholders
Declaring dividends distributed to
non-controlling shareholders
Balance ofnon-controllingshareholders at the
period-endXinjiang
Luthai
40.08%
4,822,646.19
201,265,723.17 |
LufengWeaving &Dyeing
25.00%
7,920,513.21
355,592,421.35 |
(3) The Main Financial Inform at ion of Significant Not Wholly-owned Subsidiary
Unit: RMBName
Ending balance Beginning balanceCurrent
assets
Non-curr
entassets
Totalassets
Currentliabilities
Non-curr
entliability
Totalliabilities
Current
assets
Non-curr
entassets
Totalassets
Currentliabilities
Non-curr
entliability
Totalliabilities
XinjiangLuthai
488,075,
178.89
578,451,
477.03
1,066,526,655.92
555,782,
242.59
4,974,92
7.16
560,757,
169.75
533,910,
300.91
552,920,
939.85
1,086,831,240.76
593,505,
546.28
4,950,67
5.96
598,456,
222.24
LufengWeaving &Dyeing
817,800,
218.73
833,800,
294.71
1,651,600,513.44
193,995,
287.89
29,276,4
76.20
223,271,
764.09
756,065,
670.02
841,883,
193.85
1,597,948,863.87
168,738,
484.34
29,616,0
32.10
198,354,
516.44
Unit: RMBName
Report ing Period Same period of last yearOperating
revenue
Net profit
Totalcomprehensiv
e income
Cash flows
activities
Operating
revenue
Net profit
Totalcomprehensiv
e income
Cash flows from
from operating |
operatingactivitiesXinjiangLuthai
342,127,462.81
3,505,617.21
3,505,617.21
96,172,947.55
259,171,106.59
14,636,728.56
14,636,728.56
79,439,238.74
LufengWeaving& Dyeing
793,449,942.60
28,734,401.92
28,734,401.92
16,773,852.80
791,134,076.11
66,827,430.66
66,827,430.66
69,665,169.07
2. Equity in Joint Ventures or Associated Enterprises(1) Significant Joint Ventures or Associated Enterprises
Unit: RMBEnding balance/Reporting Period
yearHaohong Investment Haohong InvestmentCurrent assets 70,056,089.94
Beginn ing balance/The same period of last
128,880,401.95
Non-current assets 217,511,055.06
163,879,055.06
Total assets 287,567,145.00
292,759,457.01
Current liabilities 150,000.00
150,000.00
Total liabilities 150,000.00
150,000.00
Equity attributable to shareholders of theCompany as the parent
287,417,145.00
292,609,457.01
Net assets shares calculated at theshareholding proportion
95,806,134.43
97,536,732.02
Carrying value of investment to associatedenterprises
95,806,134.43
97,536,732.02
Net profit -5,192,312.01
Total comprehensive income -5,192,312.01
IX. The Risk Related to Financial InstrumentsMain financial instruments of the Company included: Loans, accounts receivable, accounts payable,
etc., all the details of the financial instruments, see related projects of “Section V I”. The riskassociated with these financial instruments, as well as the Company’s risk management policy toreduce these risks which were described below. The Company's management managed andsupervised these risks to ensure that the above risk was controlled in a limited scope.The Company use sensitivity analysis technology to analyze the reasonable of risk variables,influence of probable changes to the current profits and Stockholders' equity. Because rarely anyrisk variables change in isolation, and the correlation between variables for the eventual impact ofthe change of a risk variables will have a significant effect, thus, the aforesaid con tent wasprocessing under the assumption of the change of each variable was conducted independently.(I) Risk management objectives and policiesThe goals of Company engaged in the risk management is to achieve the proper balance betweenthe risks and benefits, reduced the negative impa ct to the Company operating performance risk to aminimum, maximized the profits of shareholders and other equity investors. Based on the riskmanagement goal, t he basic strate gy of the Company's ris k management is d etermine and anal yzethe various risks faced by the Company, set up the bottom line of risk and conducted appropriaterisk management, and timely supervised various risks in a reliable way and controlled the riskwithin the range of limit.1. Market Risk(1) Foreign exchange riskForeign exchange risk is referred to the risk incurred due to loss of changes in exchange rate.Foreign exchange risk is referred to the risk incurred due to loss of changes in exchange rate. TheCompany’s foreign exchange risk was mainly related to USD, HKD and EUR, excepting theCompany’s several subsidiaries purchase and sale, in USD, HKD and Dong, the other mainbusiness settled by RMB. On 30 June 2018, in addition to the following assets or liabilities instatement was USD, HKD and EUR, the Company’s assets or liabilities was RMB balance. Theforeign exchange risk in curred by assets and liabili ties of foreign balance may have imp act to theoperation results of the Company.
Item Period-end Period-beginning
Cash and cash equivalents
492,340,742.75 | 556,296,995.92 |
Notes receivable
91,404,720.83 | 110,349,828.81 |
Account receivable
245,629,702.50 |
252,210,660.04
Other accounts receivable
2,880,075.42 | 6,010,153.41 |
Accounts payable
16,076,948.02 | 44,343,006.71 |
Other accounts payable
5,050,421.03 | 4,566,032.47 |
Short-term borrowings
778,058,962.33 | 695,124,996.40 |
Long-term borrowings due with one year
62,750,292.49 |
Long-term borrowings
69,431,359.47 |
(2) Interes t rate ri skThe risk of cash flow changes of financial instruments due to change of interest rate mainly wasrelated bank loan (for details, refer to Note VII-22 and 33).Sensitive analysis of interest rate risk:
Influence of interest increasing 100 BP to current profits and losses and equity of shareholdersbefore tax was followed:
Change Reporting Period Same period of last year
Influence to the
profits
Influence to equity of
shareholders
Influence to the
profits
Influence to equity of
shareholdersIncrease 100 BP
-
-1,891,755.11
3,208,984.32 |
-8,376,485.24
-7,702,361.91
Decrease 100 BP
1,891,755.11
3,208,984.32 |
8,376,485.24
7,702,361.91 |
2. Credit RiskOn 30 J une 2018, credit risk what may lead to the financial losses was the other party of thecontract failed to fulfill the obligations and causes loss of the Company’s financial assets, whichincluding: book value of financial assets recognized in consolidated balance sheet.In order to reduce the credit risk, the Company established a special team be responsible for thedetermination of credit limit to conduct credit approval, and perform other supervising proceduresto ensure that taking necessary measures to recycle expired claims. In addition, the Company ateach balance sheet date, review every single receivables rec ycling situation, to ensure that themoney unable to rec ycle withdrawn provision for bad debt fully. Thus, the Company managementbelieved that have assume the credit risk the Company shouldered had been greatly reduced.The Company's working capital was in bank with higher credit rating, so credit risk of workingcapital was low.3. Liquidity RiskWhen manage liquidity risk, the Company keep administrators deemed sufficient cash and cashequivalents and supervised it to meet the need of the operation of the Company and reduce theinfluence of cash flow volatilit y. The Company management supervised the usage of bank loan andensured to comply with the loan agreement.In the end of Reporting Period, the Company held cash and bank deposit of RMB672 million. In
recent two years, the average of net cash flow of operation activities was RMB1.176 billion. TheCompany believed that the liquidity risk was insignificant.
X. The Disclosure of Fair Value
1. Ending Fair Value of Assets and Liabilities at Fair Value
Unit: RMBItem
Ending fair valueFair value measurement
items at level 1
Fair value measurement
items at level 2
Fair value measurement
items at level 3
TotalI. Consistent fair value
measurement
-- -- -- --(II)Available-for-sale financial
assets
61,233,000.00
61,233,000.00
(1) Debt instrument investment
61,233,000.00
61,233,000.00
(2) Equity instrument investment
(3) Other
The total amount of assetsconsistently measured at fair value
61,233,000.00
61,233,000.00
(5) Trading financial liabilities 28,481,010.00
28,481,010.00
Of which: issued trading bonds
Derivative financial liabilities 28,481,010.00
28,481,010.00
Other
The total amount of liabilitiesconsi stently measured at fair value
28,481,010.00
28,481,010.00
2. Market Price Recognition Basis for Consistent and Inconsistent Fair Value Measurement Items at Level
The fair value of financial l iabilities at level 1 was determined in accordance with the quotation of future foreign exchange of thebank on 30 June 2018.
3. Valuation Technique Adopted and Nature and Amount Determination of Important Parameters forConsistent and Inconsistent Fair Value Measurement Items at Level 2
For the fund investment without active markets in avail able-for-sale financial assets, the fair value was determined in accordancewith th e eval uation on the balance sheet date provided by the asset manager.
XI. Connected Party and Connected Transaction
1. Information Related to the Company as the Parent of the Company
Name Registration place
Nature of business
Registered capital
Propor tion of share
held by theCompany as theparent ag ainst the
Company (%)
rights owned by the
Company as theparent against the
Company (%)Zibo LuchengTextile InvestmentCo., Ltd.
Zibo
Textile, chemistryand investment
RMB63,260,000 15.21%
Propor tion of voting | |
15.21%
Notes to information on the Company as the parent of the Company:
The final controllers of the Company are Mr. Liu Zibin and Mr. Liu Deming.
2. Subsidiaries of the Company
Refer to Note VIII-1. Equity in Subsidiaries.
3. Information on the Joint Ventures and Associated Enterprises of the Company
Refer to Note VIII-2. Equity in Joint Ventures or Associated Enterprises.
4. Information on Other Connected 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 parent
Zibo Limin Purified Water Co., Ltd. (hereinafter called LiminPurified Water)
Wholly-owned subsidiary of the Company as the parentZibo Luqun Land Co., Ltd (hereinafter called Luqun Land) Wholly-owned subsidiary of the Company as the parent
Zibo Lur ui Fine Chemical Co., Ltd. (hereinafter referred to asLurui C hemi cal)
Majority-owned subsidiary of the Company as the parentZibo Luj ia Property Management Co. , Ltd. (hereinafter referred
to as Lujia Property)
Wholly-owned subsidiary of the Company as the parentShandong Chengshun Petrochemical Co., Ltd. (hereinafter
referred to as Chengshun Petrochemical)
Wholly-owned subsidiary of the Company as the parentHongkong Donghai International Co., Ltd. (hereinafter referred
to as “Donghai International”)
Wholly-owned subsidiary of the Company as the parent
5. List of Connected Transact ions(1) Information on Acquisition of Goods and Reception of Labor Service (Unit:RMB’0,000)
Information on acquisition of goods and reception of labor service
Unit: RMB
Content Reporting Period
Connec te d pa r t y |
The appr oval trade
credit
Whether exceedtrade credit or not
last yearZibo LuchengTextileInvestment Co.,Ltd.
Processing of towel, sock, oilproduct, supermarket retail,
Same period of | ||
household chemicals and boot etc. |
6,462,966.30
7,750,000.00
No 6,638,544.04
Taimei Ties Goods processing fee
No 641,693.32
Limin PurifiedWater
Recycled water, sewage treatment 12,624,335.83
14,310,000.00
No 11,460,424.24
ChengshunPetrochemical
Gas 15,016,102.73
18,000,000.00
No 8,940,846.94
Lurui FineChemical
Auxiliaries 53,067,182.08
63,600,000.00
No 44,827,622.22
Information of sales of goods and provision of labor service
Unit: RMBConnec te d pa r t y Content Reporting Period Same period of last year
Lucheng Textil e
Sales of materials, electricity, runningwater, draught water etc.
534,393.58
268,002.48 |
Taimei Ties Sales of electricity, heating charges
12,289.62
Stanluian Company
Sales of materials, electricity, andrunning water
29,595.68
6,926.79 |
Limin Purified Water
Sales of materials, electricity and lunchcomponents etc.
1,365.29
72,279.13 |
Lurui Fine Chemical
Sales of drinking water, water &electricity and lunch components
105,936.42
88,729.05 |
Lujia Property Sales of materials and recycled water
44,777.40
35,871.66 |
(2) Information on Connected Lease
The Company was lessor:
Unit: RMBName of lessee Category of leased assets
The lease in come confirmed in
the Repor t i ng Per iod
The lease in come confirmed in
the same period of last year
Zibo Lucheng TextileInvestment Co., Ltd.
House s and bu il dings 48,965.14
15,428.58
Lurui Fine Chemical Houses and buildings 4,091.82
4,091.82
The Company was lessee:
Unit: RMBName of lessor Category of leased assets
The lease fe e confirmed in the
Report ing Period
The lease fe e confirmed in the
same period of last yearZibo Lucheng TextileInvestment Co., Ltd.
Rent of land 1,807,428.60
1,807,428.60
Zibo Lucheng TextileInvestment Co., Ltd.
Rent of gas station 250,857.12
250,857.12
Zibo Lucheng TextileInvestment Co., Ltd.
Rent of land and buildings 5,748,600.80
5,634,857.16
Luqun Property Rent of land and buildings 697,142.82
697,142.82
(3) Information on Inter-bank Lending of Capital of Related Parties
Unit: RMBConnec te d pa r t y Amount Start date End date NoteBorrowingZibo Lucheng TextileInvestment Co., Ltd.
80,520,000.00
2 Aug . 2017 31 Dec. 2018
Borrowed by the Company’s subsidiariesXinshe ng Power and Chengshun Heating
Lujia Property 600,000.00
30 Mar. 2017 31 Dec. 2018
Borrowed by the Company’s subsidiaryChengshun Heating
Stanluian Company 1,450,000.00
17 Aug . 2017 31 Dec. 2018
Borrowed by the Company’s subsidiaryChengshun Heating
Taimei Ties 1,300,000.00
31 Mar. 2017 31 Dec. 2018
Borrowed by the Company’s subsidiaryChengshun HeatingLending
6. Accounts Receivable and Payable of Connected Party(1) Accounts Receivable
Unit: RMBItem Connected party Ending carrying amount Beginning carrying amountAccounts payable: Lurui Fine Chemical 3,774,559.50
Other accounts payable:
Zibo Lucheng TextileInvestment Co., Ltd.
83,474,436.64
60,456,317.14
Other accounts payable: Lujia Property 633,132.50
620,010.00
Other accounts payable: Stanluian Company 1,505,541.04
1,473,828.33
Other accounts payable: Taimei Ties 1,391,374.16
1,362,942.08
XII. Commitments and Contingency
1. Significant Commitments
Signi ficant commitments on the balance sheet date
Capital commitments
Item Ending balance
(RMB’0,000)
Beginning balance
(RMB’0,000)Commitments signed but hasn’t been recognized
in financial statements
-- Commitment for constructing and purchasinglong-lived assets
16,665.29 | 6,364.72 |
Total
16,665.29 | 6,364.72 |
2. Contingency(1) In Despite of no Significant Contingency to Disclose, the Company Shall Also Make Relevant
Statements.
There was no significant contingency for the Company to disclose.
XIII. Notes of Main Items in the Financial Statements of the Company as the Parent
1. Accounts Receivable(1) Accounts Receivable Disclosed by Category
Unit: RMB
Category
Ending balance Beginning balanceCarrying amount Bad debt provision
Carrying value
Carrying amount Bad debt provision
Carrying valueAmount
Propor
tion
Amount
Withdraw
alproportio
n
Amount
Propor
tion
Amount
Withdraw
alproportio
nAccounts298,726,378.20
100.0015,011,277.88
5.03283,715,100.32
322,076,206.04
100.0016,172,615.06
5.02305,903,590.98
receivablewithdrawal ofbad debtprovision ofby credit riskscharacteristics
%
%
%
%
Total 298,726,378.20
100.00
%
15,011,277.88
5.03
%
283,715,100.32
322,076,206.04
100.00
%
16,172,615.06
5.02
%
305,903,590.98
Accounts receivable with significant single amount for which bad debt provision separately accrued at the period-end:
□ Applicable √ Not applicable
In the groups, accounts receivable adopted aging analysis method to withdraw bad debt provision:
√ Applicable □ Not applicable
Unit: RMBAging
Ending balanceAccounts receivable Bad debt provision Withdrawal proportionSubitem within 1 yearSubtotal within 1 year 297,847,596.66
14,892,379.84
5.00%
1 to 2 years 568,582.62
56,858.26
10.00%
2 to 3 years 310,198.92
62,039.78
20.00%
Total 298,726,378.20
15,011,277.88
5.03%
In the groups, accounts receivable adopted balance percentage method to withdraw bad debt provision:
□ Applicable √ Not applicable
(2) Bad Debt Provision Withdrawn, Reversed or Recovered in the Reporting Period
The withdrawal amount of the bad debt provision during the Reporting Period was of RMB-1,161,337.18; the amount of the reversedor collected part during the Reporting Period was of RMB0.00.
(3) Top 5 Accounts Receivable in Ending Balance Collected according to the Arrears Party
The tot al top5 acco unts r eceivabl e in ending bal ance co llected accordin g to the arre ars part y for theCompany was RMB101,861,233.11, accounting for 34.10% of total ending balance of accountsreceivable, and the total accounts receivable correspondingly withdrawn was RMB5,093,061.66.
2. Other Accounts Receivable(1) Other Accounts Receivable Disclosed by Category
Unit: RMBCategory Ending balance Beginning balance
Carrying amount Bad debt provision
Carrying value
Carrying amount Bad debt provision
Carrying valueAmount
Propor
tion
Amount
Withdraw
alproportio
n
Amount
Proporti
on
Amount
Withdraw
alproportio
nOther acco untsreceivable withsignificant singleamount for which
bad debt pr ov i s ion
separately accrued
410,476,728.06
92.21
%
410,476,728.06
486,974,195.33
93.16%
486,974,195.33
Other acco untsreceivablewithdrawn baddebt prov i s ion
according to credit |
riskscharacteristics
34,673,033.83
7.79%
2,894,546.03
8.35
%
31,778,487.80
35,729,408.00
6.84%
2,915,363.76
8.16
%
32,814,044.24
Total 445,149,761.89
100.00
%
2,894,546.03
0.65
%
442,255,215.86
522,703,603.33
100.00%
2,915,363.76
0.56
%
519,788,239.57
Other accounts receivable with significant single amount for which bad debt provision separately accrued at the period-end:
√ Applicable □ Not applicable
Unit: RMBOther accounts receivable
(unit)
Ending balanceOther accounts
receivable
Bad debt provision Withdrawal proportion Withdrawal reasonLu Thai (Vietnam) 353,963,796.16
no impairment for the
individual testLu A n Garments 56,512,931.90
no impairment for the
individual testTotal 410,476,728.06
-- --In the groups, other accounts receivable adopted aging analysis method to withdraw bad debt provision:
√ Applicable □ Not applicable
Unit: RMBAging
Ending balanceOther accounts receivable Bad debt provision Withdrawal proportionSubentry within 1 year
Subtotal of within 1 year 28,291,279.16
1,414,563.96
5.00%
1 to 2 years 2,172,721.63
217,272.16
10.00%
2 to 3 years
20.00%
Over 3 years 4,209,033.04
1,262,709.91
30.00%
Total 34,673,033.83
2,894,546.03
8.35%
Notes to the determination basis for the Group:
In the groups, other accounts receivable adopted balance percentage method to withdraw bad debt provision
□ Applicable √ Not applicable
In the groups, other accounts receivable adopted other methods to withdraw bad debt provision:
□ Applicable √ Not applicable
(2) Bad Debt Provision Withdrawn, Reversed or Recovered in the Reporting Period
The withdrawal amount of the bad debt provision during the Reporting Period was of RMB-20,817.73; the amount of the reversed orcollected part during the Reporting Period was of RMB0.00.
(3) Other Account Receivable Classified by Account Nature
Unit: RMBNature Ending carrying amount Beginning carrying amountIntercourse funds 410,476,728.06
486,974,195.33
Expor t rebates 11,876,418.09
16,370,989.66
Payment on behalf 12,069,966.78
14,593,482.76
Guarantee deposit and cash deposit 2,434,068.07
2,532,658.50
Borrowings and petty cash 1,489,937.80
1,044,226.03
Other 6,802,643.09
1,188,051.05
Total 445,149,761.89
522,703,603.33
(4) Top 5 Other Accounts Receivable in Ending Balance Collected according to the Arrears Party
Unit: RMBName of the entity Nature Ending balance
Aging
Propor tion to totalending ba la nc e of
other accounts
receivable
Endingbalance of
bad debtprovision
Lu Thai (Vietnam) Intercourse funds 353,963,796.16
Within 1 year 79.51%
Lu A n Garments Intercourse funds 56,512,931.90
Within 1 year 12.70%
Refund of tax for exportreceivable
Expor t rebates 11,876,418.09
Within 1 year 2.67%
593,820.90
Accounts receivable ofadvance money for thesocial security undertakeby the individual of theemployee
Advance money for thesocial security undertake bythe individual of theemployee
7,263,748.25
Within 1 year 1.63%
363,187.41
B-share dividend refundsreceivable f r om securities
registration and settlement |
companies
B-share dividend refundsreceivable f r om securitiesregistration and settlementcompanies
4,791,546.35
Within 1 year 1.08%
239,577.32
Total -- 434,408,440.75
-- 97.59%
1,196,585.63
3. Long-term Equity Investment
Unit: RMBItem
Ending balance Beginning balanceCarrying amount
Depreciation |
reserve
Carrying value Carrying amount
Depreciation
reserve
Carrying value
Investment tosubsidiaries
2,069,693,116.04
0.00
2,069,693,116.04
1,744,156,616.04
25,200,000.00
1,718,956,616.04
Investment to jointventur es and associatedenterprises
95,806,134.43
95,806,134.43
97,536,732.02
97,536,732.02
Total 2,165,499,250.47
2,165,499,250.47
1,841,693,348.06
25,200,000.00
1,816,493,348.06
(1) Investment to the Subsidiary
Unit: RMBInvestee
Beginning
balance
Increase Decrease Ending balance
withdrawn
Ending balance of
Depreciat ion reserve | depreciation reserve |
Beijing Innovative 25,200,000.00
25,200,000.00
0.00
Xinjiang Luthai 147,303,034.16
147,303,034.16
Xinshe ng Power 176,340,737.93
176,340,737.93
Lufeng Wea ving & |
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 Thai108,242,335.38
108,242,335.38
(Cambodia)Lu Thai (America)
10,209,050.00
10,209,050.00
Lu Thai(Burma) 62,337,238.57
62,337,238.57
Beijing Youxian 13,500,000.00
4,500,000.00
18,000,000.00
Lu Thai (Vietnam) 318,034,810.00
314,820,500.00
632,855,310.00
Lu A n Garments 32,813,060.00
31,416,000.00
64,229,060.00
Total 1,744,156,616.04
350,736,500.00
25,200,000.00
2,069,693,116.04
0.00
(2) Investment to Joint Ventures and Associated Enterprises
Unit: RMB
Investee
Beginning
balance
Increase/decrease
Endingbalance
Ending
balance
ofdepreci
ationreserve
Additi
onalinvestment
Reduc
edinvestment
Gains and
lossesrecognizedunder theequity method
Adjustm
ent ofothercompreh
ensiveincome
Change
s o fotherequity
Cash bonus |
or profitsannounced
to issue
Withdra
wal ofimpairmentprovisio
n
Other
I. Joint venturesII. Associated enterprisesHaohongInvestment
97,536,732.02
-1,730,597.59
95,806,134.43
Subtotal 97,536,732.02
-1,730,597.59
95,806,134.43
Total 97,536,732.02
-1,730,597.59
95,806,134.43
4. Operating Revenue and Cost of Sales
Unit: RMBItem
Report ing Period Same period of last yearOperati ng revenue Cost of sales Operating revenue Cost of salesMain operations 2,360,871,867.81
1,740,109,055.52
2,368,342,984.34
1,674,625,537.10 |
Other operations 143,523,362.44
121,295,410.17
113,980,604.46
92,055,486.97 |
Total 2,504,395,230.25
1,861,404,465.69
2,482,323,588.80
1,766,681,024.07 |
5. Investment Income
Unit: RMB
Item Reporting Period Same period of last yearLong-term equity investment incomeacc ount e d by c os t method
17,976,433.62
Long-term equity invest ment incomeacc ount e d by e qui ty method
-1,730,597.59
Investment income from disposal of
loss
3,648,000.52
financial assets at fair value through profit or |
1,281,963.99
Total 1,917,402.93
19,258,397.61
6. Other
XIV. 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 -1,603,714.32
Government grants recognized in the current period, except for those acquired in theordinary course of business or granted at certain quotas or amounts according to thegovernment’s unified standards
39,071,113.48
Gain/loss from change of fair value of trading financial assets and liabilities, andinvestment gains from disposal of trading financial assets and liabilities andavailable-for-sale financial assets, other than valid hedging related to the Company’scommon businesses
-22,104,388.63
Other non-operating income and expense other than the above 2,097,576.54
Less: Income tax effects 5,975,920.72
Non-controlling interests effects 1,077,047.21
Total 10,407,619.14
--Explain the reasons if the Company classifies an item as an non-recurring g ain/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 E arni ngs Per S hare
Profit as of Reporting Period
Weighted average
ROE (%)
EPS (Yuan/share)EPS-basic EPS-diluted
Net profit attributable to ordinary
Company
5.13%
shareholders of the |
0.41
0.41
Net profit attributable to ordinary
Company after deduction of non-recurring profit and loss
4.99%
shareholders of the |
0.40
0.40
3. Differences between Accounting Data under Domesti c and Overseas Accounting Standards(1) Differences of Net Profit and Net Assets Disclosed in Fina ncial Reports Prepared under International
and Chinese Accounting Standards
√ Applicable □ Not applicable
Unit: RMB
Net profit Net assetsReport ing Period
Same peri od of last
year
Ending balance Beginning balanceAccording to Chinese accounting
standards
377,355,959.02
395,130,296.26
7,060,561,399.27
7,230,942,770.16
Items and amounts adjusted according to international accounting standards:
Impact on domestic equipment taxcredit recognized as deferred incomeunder international accountingstandards
164,500.00
According to internationalaccounting standards
377,355,959.02
395,294,796.26
7,060,561,399.27
7,230,942,770.16
(2) Differences of Net profit and Net assets Disclosed in Financial Reports Prepared under Overseas andChinese Accounting Standards
□ Applicable √ Not applicable
Part XI Documents Available for Reference
1. The financial statements signed and stamped by the Company’s legal representative, Chief Accountant andFinancial Manager.2. The originals of all the Company’s announcements and documents disclosed to the public during the ReportingPeriod on Securities Times, Shanghai Securities News, China Securities Journal and Ta Kung Pao.
Chairman of the Board: Liu Zibin
Lu Thai Textile Co., Ltd.
22 August 2018