LU THAI TEXTILE CO., LTD.
ANNUAL REPORT 2018
March 2019
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 Company’s legal representative, Zhang Hongmei, the Company’s ChiefAccountant, and Zhang Keming, the Company’s Financial Manager hereby guarantee thatthe Financial Statements carried in this Report are factual, accurate and complete.All the Company’s directors have attended the Board meeting for the review of this Reportand its summary.The Company has described in detail in this Report the possible risks. Please refer to thecontents about the major risks and countermeasures in “Outlook of the Company’s futuredevelopment” in “Part IV Operating Performance Discussion and Analysis” of this Report.Securities Times, Shanghai Securities News, China Securities Journal, Ta Kung Pao (HK) andwww.cninfo.com.cn have been designated by the Company for its information disclosure in2019. And all information about the Company shall be subject to what’s disclosed by theCompany on the aforesaid media. Investors are kindly reminded to pay attention toinvestment risks.The Board has approved a f inal dividend plan as follows: based on the 858,121,541 shares, acash dividend of RMB5.00 (tax inclusive) per 10 shares is to be distributed to the shareholders,with no bonus issue from either profit or capital reserves.This Report and its summary have been prepared in both Chinese and English. Should therebe any discrepancies or misunderstandings between th e two versions, the Chinese versionsshall prevail.
Table of Contents
Part I Important Notes, Table of Contents and Definitions ...... 2
Part II Corporate Information and Key Financial Information ...... 5
Part III Business Summary ...... 9
Part IV Operating Performance Discussion and Analysis ...... 12
Part V Significant Events ...... 30
Part VI Share Changes and Shareholder Information ...... 46
Part VII Preferred Shares ...... 54
Part VIII Directors, Supervisors, Senior Management and Staff ...... 55
Part IX Corporate Governance ...... 66
Part X Corporate Bonds ...... 76
Part XI Financial Statements ...... 77
Part XII Documents Available for Reference ...... 193
Definitions
Term DefinitionThe “Comp any”, “LTTC”, “Issuer” or “we”
cont ext ot herw ise requiresThe Board of Directors The Board of Directors of Lu Thai Textile Co., Ltd.The Supervisory Committee The Supervisory Committee of Lu Thai Textile Co., Ltd.CSRC The China Securities Regulatory CommissionRMB, RMB’0,000
Expressed in the Chinese currency of Renminbi, expressed in ten t
Lu Thai Textile Co., Ltd. and its consolidated subsidiaries, except where thehousand
RenminbiThe “Comp any L aw” 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 31 December 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/AStock exch ange for stock listing Shenzhen Stock ExchangeCompany name in Chinese 鲁泰纺织股份有限公司Abbr. 鲁泰纺织
LU THAI TEXTILE CO.，LTDAbbr. (if any) LTTCLegal repr esentative Liu ZibinRegistered address No. 11, Mingbo Road, High-tech Industry Development Zone, Zibo, Shandong, P.R.ChinaZip code 255086Office address
Company name in English (if any)No. 81, Songling East Road, Zichuan District, Zibo, Shandong, P.R.China; No. 11, Mingbo
Road, High-tech Industry Development Zone, Zibo, Shandong, P.R.ChinaZip code 255100; 255086Compan y website www.lttc.com.cnEmail addr es s lttc@lttc.com.cn
II Contact Information
Board Secretary Securities RepresentativeName Qin Guiling Zheng Weiyin and Li KunAddress
No. 81, Songling East Road, Zichuan District, Zibo, Shandong, P.R.China; No. 11, MingboNo. 81, Songling East Road, Zichuan District, Zibo,
Shandong, P.R.China
| No. 81, Songling East Road, Zichuan District, Zibo, | No. 81, Songling East Road, Zichuan District, Zibo, |
Shand ong , P.R.ChinaTel. 0533-5266188 0533-5285166Fax 0533-5418805 0533-5418805Email addr es s qinguiling@lttc.com.cn wyzheng@lttc.com.cn，likun@lttc.com.cn
III Media for Information Disclosure and Place where this Report Is Lodged
disclosure
| Newspapers designated by the Company for information | Securities Times, Shanghai S ecurities News, China Secur ities Journal |
and Ta Kung Pao (HK)
www.cninfo.com.cn
Place where this Report is lodged The Securities Department of the Company
IV Change to Company Registered Information
Unified s ocial credit code 91370300613281175KChange to prin cipal activity of the Company since going public (if any) No changeEvery change of controlling shareholder since incorporation (if any) No change
V Other Information
The independent audit firm hired by the Company:
Name Ruihua Certified Public Accountants LLPOffice address
5-
Road, Yongdingmen, Dongcheng District, Beijing, P.R.C.Accountants writing signatures Wang Chuanshun and Cui XiaoliThe independent sponsor hired by the Company to exercise constant supervision over the Company in the Reporting Period:
□ Applicable √ Not applicableThe independent financial advisor hired by the Company to exercise constant supervision over the Company in the Reporting Period:
□ Applicable √ Not applicable
VI Key Financial Information
Indicate by tick mark whether there is any retrospectively restated datum in the table below.□ Yes √ No
2018 2017
2018-over-2017
change (%)
2016Operating revenue (RMB)
11F, West Tower, China Overseas Property Plaza, Block No. 7, Compound No. 8, Xibinhe6,879,058,813.93
| 6,879,058,813.93 | 6,409,224,044.97 |
7.33%
| 5,990,493,909.36 |
Net profit attributable to
shareholders (RMB)
| the listed company’s | 811,526,477.83 | 841,150,934.75 |
-3.52%
| 808,760,025.91 |
Net profit attributable to
shareholders before exceptional items (RMB)
| the listed company’s | 805,197,824.28 | 780,637,833.47 |
3.15%
| 762,785,364.02 | |||
| Net cash generated from/used in operating |
activities (RMB)
| 1,430,341,663.16 | 1,070,510,653.43 |
33.61%
| 1,314,732,284.45 |
Basic earnings per share (RMB/share) 0.90
0.91
-1.10%
0.85
Diluted earnings per share (RMB/share) 0.90
0.91
-1.10%
0.85
Weighted average return on equi ty (%)
| 11.24% | 11.87% |
-0.63%
| 11.70% |
31 December31 December 2017
Change of 31Dec ember 2018 over
31 December
2018 31 December 2017
(%)
2016Total assets (RMB)
| 10,537,759,811.84 | 10,170,624,027.75 |
3.61%
| 9,464,604,315.39 | |||
| Equity attributable to the listed company’s |
shareholders (RMB)
| 7,146,548,467.86 | 7,230,942,770.16 |
-1.17%
| 6,970,913,125.59 |
VII Accounting Data Differences under China’s Accounting Standards for BusinessEnterprises (CAS) and International Financial Reporting Standards (IFRS) and ForeignAccounting Standards
1. Net Profit and Equity un der CA S and IFR S
□ Applicable √ Not applicableNo difference for the Reporting Period.
2. Net Profit and Equity under CAS and Foreign Accounting Standards
□ Applicable √ Not applicableNo difference for the Reporting Period.
VIII Key Financial Information by Quarter
Unit: RMBQ1 Q2 Q3 Q4Operati ng revenue
| 1,519,803,691.24 | 1,760,604,084.58 | 1,743,184,011.30 | 1,855,467,026.81 |
Net profit attributable to
shareholders
| the listed company’s | 159,278,371.57 | 218,077,587.45 | 209,540,056.51 | 224,630,462.30 |
Net profit attributable to the listed
shareholders before exceptional items
| company’s | 138,044,830.06 | 228,388,087.15 | 224,130,296.96 | 214,634,610.11 |
Net cash gen er ated from/used in operating activities
| 84,118,827.13 | 613,665,883.64 | 425,367,905.98 | 307,189,046.41 |
Indi cate by tick mar k whet her any o f the qu arterl y financial data in the t able ab ove or thei r summati ons d iffers materiall y fro m wh athave been disclosed in the Company’s quarterly or interim reports.□ Yes √ No
IX Exceptional Gains and Losses
√ Applicable □ Not applicable
Unit: RMBItem 2018 2017 2016
Gain or loss on disposal of non-
| Note | |||
| current assets (inclusive of impairment | 20,670,427.42 |
-1,326,737.85
-8,321,693.49
allowance writ e-offs)
business at fixed quotas or amounts as per the
| government’s uniform |
standards)
| 63,680,098.12 | 66,031,583.92 |
64,121,633.01
| Current profit or loss on subsidiaries obtained in business combinations |
involving enterprises under common control from the period-
com bi na ti on da t e s , net
| beginning to |
4,145,908.17
Gain or loss on fair-
lia
| bilities & investment income from disposal of trading financial assets |
and liabilities and available-for-
business)
-
| sale financial assets (exclusive of effective portion of hedges that arise in the Company’s ordinary course of | 63,632,606.67 |
4,794,598.32
3,212,471.16
Non-operating income and expense other than the above
4,638,779.84
| 2,784,021.34 |
3,925,471.62
Less: Incom e tax ef fe cts
| 6,656,476.16 |
8,690,224.28
3,065,544.25
Non-controlling interests effects (net of tax)
9,080,806.84
| 10,516,810.50 |
13,897,676.16
Total
| 6,328,653.55 | 60,513,101.28 |
45,974,661.89
--Explanation of why the Company reclassifies as recurrent an exceptional gain/loss item defined or listed in the ExplanatoryAnnouncement No. 1 on Information Disclosure for Companies Offering Their Securities to the Public—Exceptional Gain/LossItems:
□ Applicable √ Not applicableNo such cases for the Reporting Period.
Part III Business Summary
I Principal Activity of the Company in the Reporting Period
Is the Company subject to any industry-specific disclosure requirements?No.No changes occurred to the Company’s core businesses, primary products, business models and major growth drivers in theReport ing Period.
Lu Thai has always adhered to its mission of “creating wealth, contributing to the society, clothing the world and weaving our way toevery corner of the globe”, as well as to its values of “people foremost policy, rigorous scientific attitude, client oriented principleand integrity for win-win outcome” for a long time. It is devoted to improving and expanding its industrial chain, making it arenowned textile and garment business group combing cotton growing, spinning, bleaching and dyeing, neatening, testing, garmentmaking and marketing. Lu Thai produces and sells middle and high-grade yarn-dyed fabric and dyeing fabric for shirts and garment.It claimed its fame for it s co mpreh ens ive manage men t, R &D abi lit y, advanced technolo gy, international d evelop 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 b eco me th e world ’s l argest h igh-grade yarn dyed fabric producer and a world-class premium shirt provider. It had pavedits development pattern featured in going green, low-carbon growth, science and technology and humanism. Its operationperformance was always among the top comparing to its peers. 70% of Lu Thai’s products are exported to over 30 countries andregions including America, the EU and Japan, of which more than 70% is under the Company’s own brand. So far, the Company hastaken up around 18% of the world market of yarn dyed fabric for medium- and high-end shirts.
II Significant Changes in Major Assets
1. Significant Changes in Major Assets
Major as sets Main reason for significant changesConstruction in progress
The amount as at 31 December 2018 was RMB337,230,646.42, up 57.34%
beginning amount, primarily driven by a larger construction investment in
| and more |
to-be-installed equipment of the second phase of the Lu Thai (Vietnam) project.
2. Major Assets Overseas
√ Applicable □ Not applicable
Asset Source
Asset value
(RMB)
Location
Managemen
t model
Controlmeasures toprotect asset
safety
Returngenerated
(RMB)
As % of theCompany’s
equity
Material
risk(yes/no)Lu Thai
| impairment | ||
| (Hong Kong) |
Textile Co.,Ltd.
Incorporated
158,113,858.58
HongKong
Marketing
Mainmanagementpersonnel sent
as the p arent
4,021,080.04 2.05%
| by the Company |
No
Lu Thai(America)Textile Co.,Ltd.
Incorporated
11,650,032.05 New York
Marketing
Mainmanagementpersonnel sent
| by the Company |
as the p arent
-433,472.32 0.15%
No
Lu Thai(Cambodia)Textile Co.,Ltd.
Incorporated
151,429,516.55
SvayRieng
Manufacturi
ng
Mainmanagementpersonnel sent
| by the Company |
as the p arent
14,229,575.15 1.96%
No
Lu Thai(Burma)Textile Co.,Ltd.
Incorporated
75,062,596.79 Rangoon
Manufacturi
ng
Mainmanagementpersonnel sent
| by the Company |
as the p arent
617,677.23 0.97%
No
Lu Thai(Vietnam)Textile Co.,Ltd.
Incorporated
1,604,398,322.1
Tay Ninh
Manufacturi
ng
Mainmanagementpersonnel sent
| by the Company |
as the p arent
77,297,740.72
No
Lu A nGarmentsCo., Ltd.
Incorporated
150,804,573.61
Anjiang,Vietnam
Manufacturi
ng
Mainmanagementpersonnel sent
| 20.77% | ||
| by the Company |
as the p arent
-5,389,142.26 1.95%
No
III Core Competitiveness Analysis
Is the Company subject to any industry-specific disclosure requirements?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 g ive full play to its international resources, form a global businessnetwork 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 realize the internationali zation 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.5. I t attaches importance to customer-specific individualized product design service, following the philosophy of customersatisfaction at the forefront of market demand.
Part IV Operating Performance Discussion and Analysis
I Overview
In face of complicated and harsh market environments at home and abroad in 2018, the Company continued to push forward itsstrategies of “Improve Quality and Efficiency” and “Over all Internationalization”. In light of the new positioning of the textileindustry—“Technology, Fashionable and Green”, as well as following the strategies of high-quality development and new drivingforce creation, the Company carried out the “Year for Further Deepening Market Service” and other activities. As a result, itmaintained a he althy, stable development momentum. For 2018, the Company recorded operating revenue of RMB6,879 million, anoperating profit of RMB969 million, a net profit attributable to the listed company’s shareholders of RMB812 million, a net profitattributable to the listed company’s shareholders before exceptional items of RMB805 million, up 7.33%, -3.19%, -3.52% and 3.15%year-on-year, respectively. No changes have occurred to the principal activities, the main profit sources and structure of the Companyin the year.I. Continue to "Improve Quality and Efficiency" and Pursue High-quality DevelopmentDuring the reporting period, the Company took the initiative to adapt to the current economic and market changes at home andabroad through organizational structure adjustment, high-quality project construction, technical transformation, scientific andtechnological innovation, new business model exploration, and deep integration of informatization and industrialization. TheCompany actively promoted budget management information construction and group subsidiary budget control; conducted effectivecost control from procurement, production, sales, quality and other links; strengthened human resources management, perfectedcompensation, performance management and incentive mechanism; On the basis of system management, the Companycomprehensively promoted the excellent performance management, perfected and improved Lu Thai production style (LTPS) andsteadily advance the strategy of "Improve Quality and Efficiency". During the reporting period, "Lu Thai Intelligent ManufacturingSystem Based on Cloud Architecture" won "The First Prize for Innovative Application" of Information Achievement Award in textileindustry. The Company was named "National Technological Innovation Demonstration Enterprise" by the Ministry of Industry andInformation Technology, and awarded the "Evaluation Certificate of Informatization and Industrialization Integration Managementsystem" issued b y CICS-CERT.II. St eadily Advance the Strat egy of "All-round Internationalization" and Perfect the Global Strategic LayoutDuring the reporting period, the Company's overseas projects have progressed smoothly and the company's planning deployment hasbeen completed as a whole. The production, quality indicators, employee relationship management, system construction, culturalconstruction and other aspects have been further improved. During the reporting period, the Company set up an office in Tokyo,Japan. Together with the existing offices in New York and Milan, the Company has further improved its international servicestructure and actively expanded in the effective communication with its customers, product promotion, market investigation andoth er as pects to further grasp the market and understand the customer requirements.In order to better grasp the trend of fashion and train the design team, the Company has successively hired famous Italian fabricdesigners , French fashion consultants, British textile and garment designers, and other international designers as the design guides. Atthe same time, the Company has strengthened cooperation with European professional trend organizations, achieved the industryupgrade from manufacturing to creation to creativity through the international design layout to lay a foundation for the cultivation ofhigh-end design talents and the creation of fashionable and creative brands.III. Implement the Year of Continuous Deepening of Market Service and Build a Community with a Shared Future with CustomersThe Company promotes the establishment of a community with a shared future with customers in three business fields (yarn-dyed,dyeing and clothing), improves the pre-control management, basic work advancement, process standardization through information
systems such as yarn-dyed production system, printing and dyeing production system and garment production system, etc.,strengthens the process management and control, meets the customers' requirements for quality, delivery period and services, andshortens the production cycle of fabrics and shirts at home and abroad. The Company actively grasps the fashion trend, optimizes theprodu ct st ructu re, in creases cu stom R & D and new product development efforts, provides customers with a wealth of product designsolutions around the Company's core technology products, unique products, environment-friendly products, original products,functional and fashionable products five major directions. The Company has held more than 30 promotional meetings at home andabroad.The Company deepens the customer relationship through the product structure adjustment, supply chain fusion, design research anddevelopment docking, brand cooperation, overseas expansion, e-commerce platform and other positive measures, unceasinglyimproves the product design idea and innovative service model according to the market new characteristics and new demands to meetcustomer needs and adapt to market trends. During the reporting period, the Company started to build Luthai?1987 new retailplatform based on S2B2C model and opened the online and offline OMO model to provide high-quality services for the terminalcustomers with the partners.During the reporting period, the Company was rated "Top-20 Enterprise in China's Printing and Dyeing Industry in 2018" by CDPAand won "National Textile Industry Quality Award" awarded by CNTAC. After the rating of China Brand Promotion Association, theCompany was shortlisted as a top-50 enterprise in the field of textile, clothing, shoes and hats. The Company was rated as "Top-10Enterprise in Business income in Color Weaving Industry in 2017" and "Top-100 Enterprise in Main Business Income in CottonTextile Industry in 2017" by CCTA. In 2018 China International Fabrics Design Completion, Excellence Award for Spring/SummerChinese Fashion Fabric 2019, the company's works "Luxury and Unique Flow" won the Best Market Application Award and"Crisscross Footpaths between Fields" and "Time Wheel" won the first prize of good fabrics in Chinese printing and dyeing industry.IV. Adhere To Scientific and Technological Innovation, Attach Importance to R & D and ApplicationDuring the reporting period, the Company continued to promote scientific and technological innovation and focus on the researchand develo pment of new topics, new techn ologies and new materials. In view of the key core technol ogies and weak links affectingthe Company's industrial chain, as well as the technical key and difficult issues such as quality, cost, efficiency, environmentalprotection, and so on, which have a strong reaction in the production process, 18 technical improvement projects at the corporatelevel and 154 technical topics at the departmental le vel have been promoted. The Company always adheres to the "intelligent,energy-saving, low-carbon, environmental protection" concept of green, low-carbon and sustainable development, strives to create"health y, comfortable, environmen tall y friendl y" ecolo gical t extil es t hat th e pro cess can be traced b ack and the qu alit y can be trus ted .The project of "Key Technology and industrialization Application of Color Digitization of Yarn and Fabric in Textile and GarmentIndustry" has won the first prize for scientific and technological progress in Shandong province in 2018;In recent years, the Company has successfully developed more than 600 new technologies and new products, of which 48 productshave passed the scientific and techno logical achievements appraisal at provincial and ministerial level. Among them, 13 productshave reached the international leading level and 30 products have reached the international advanced level; The Company has won 53rewards at the nat ion al and provincial l evel, including 1 first prize and 2 second prizes for scientific and technological progress; TheCompany has undertaken 17 scientific and technical programs above the provincial level; The Company boasts the core technologyand equipment, such as "a complete set of technology and equipment for digital automatic dyeing of cylindrical yarn", "keyprocessing technology and industrialization of super high pure cotton fabric" and "high flux membrane treatment and reusetechnology and industrialization of printing and dyeing wastewater", etc. The Company has been authorized 335 patents and 3software copyrights; The Company has presided over or participated in the formulation of 44 national and industrial standards.V. Dig Deeply into the Connotation of Enterprise Culture and Assume Social ResponsibilityThe Co mpany conti nues to bu ild a regular, scientific, s tandard ized learni ng management organization, organizes the mana gement tolearn and understand from the traditional culture, modern management, professional technology and other aspects to improve themanagement and production management ability. In addition, the Company guides the employees to attach importance to theimprovement of skills through technical competition activities. During the reporting period, the Company strengthened the
construction and training of design talent teams and continued to deepen communication and cooperation with strategic customers inthe early design of fabric and shirt. The Company has received good market response. Lu Thai Textile was rated as the advanced unitfor the cultivation of designers in the fifth rating of "Golden Shuttle Award" for textile fabrics. During the reporting period, theCompany was rated as "Demonstration Enterprise of Fulfilling Social Responsibility in Shandong Province" and was shortlisted into"Top-30 Private Listed Company w ith Social Responsibility in China in 2018". The Company also won the honorary title of "FortyExemplary Organizations of Chinese Enterprise Culture in the 40 Years of Reform and Opening-up" by China Research Institute ofEnterprise Culture.During the reporting period, the Company continued to promote chemical control and strengthen supply chain environmentalmanagement; to promote the preparat ion and revision of environmental emergency plans; to study on the improvement of sewageStation Standard raising and the wastewater liqu id membrane separation technology, and increase annual waste water treatmentamount and recycled water recycling amount. To carry out more than 110 energy-saving and water-saving projects and promote thecomprehensive utilization of energy sources.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 Core Business Analysis
1. Overview
For the Reporting Period, the Company recorded operating revenue of RMB6.879 billion (a 7.33% year-on-year increase); cost ofsales of RMB4.861 billion (a 8.59% year-on-year increase), including selling expense of RMB158 million (a 9.75% year-on-year rise)and administrative exp ense of RMB391 m illion (a 20.98% year-on-year increase); research and development expense of RMB289million (a 11.88% year-on-year drop); and net cash generated from operating activities of RMB1.430 billion (a 33.61% year-on-yeargrowth).
2. Revenue and Cost Analysi s(1) Breakdown of Operating Revenue
Unit: RMB
2018 2017
Change (%)Operati ng revenue
As % of totaloperating revenue
(%)
Operati ng revenue
As % of totaloperating revenue
(%)Total
100%
| 6,879,058,813.93 | 6,409,224,044.97 |
100%
7.33%
By operating divisionTextile and apparel
90.25%
| 6,208,566,844.56 | 5,906,736,459.03 |
92.16%
| 5.11% |
Cotton
1.47%
| 101,088,256.72 | 35,606,856.03 |
0.56%
| 183.90% |
Electricity and steam
| 154,470,651.72 |
2.25%
| 103,870,652.93 |
1.62%
| 48.71% |
Others
6.03%
| 414,933,060.93 | 363,010,076.98 |
5.66%
| 14.30% |
By product categoryFabric products
71.61%
| 4,926,081,389.35 | 4,624,849,307.12 |
72.16%
6.51%
Shirts
18.64%
| 1,282,485,455.21 | 1,281,887,151.91 |
20.00%
0.05%
Cotton
1.47%
| 101,088,256.72 | 35,606,856.03 |
0.56%
| 183.90% |
Electricity and steam
| 154,470,651.72 |
2.25%
| 103,870,652.93 |
1.62%
| 48.71% |
Others
6.03%
| 414,933,060.93 | 363,010,076.98 |
5.66%
| 14.30% |
By operating segmentHong Kong
3.83%
| 263,460,345.34 | 246,434,343.62 |
3.84%
6.91%
| Japan And South |
Korea
6.57%
| 451,954,695.71 | 413,874,632.85 |
6.46%
9.20%
Southe ast A sia
29.22%
| 2,010,251,958.96 | 1,976,448,225.47 |
30.84%
1.71%
Europe and America
17.80%
| 1,224,318,099.10 | 1,044,242,539.46 |
16.29%
| 17.24% |
Others
5.65%
| 388,746,153.95 | 376,849,171.78 |
5.88%
3.16%
Mainland China
36.93%
| 2,540,327,560.87 | 2,351,375,131.79 |
36.69%
8.04%
(2) Operating Division, Product Category or Operating Segment Contributing over 10% of OperatingRevenue or Operating Profit
√ Applicable □ Not applicableIs the Company subject to any industry-specific disclosure requirements?No.
Unit: RMB
Cost of sales
| Operati ng revenue | Gross profit |
margin
YoY change in
operatingrevenue (%)
cost o f sales ( %)
YoY change in
gross profitmargin (%)By operating divisionTextile and pparel
| 6,208,566,844.56 | 4,323,535,187.46 | 30.36% | 5.11% |
5.71%
-
| 0.40% |
By product categoryFabric products
| 4,926,081,389.35 | 3,414,309,296.66 | 30.69% |
6.51%
7.69%
-
Shirts
| 0.76% | ||||
| 1,282,485,455.21 | 909,225,890.80 | 29.10% |
0.05%
-1.13%
| 0.84% |
By operating segmentSouthe ast A sia
| 2,010,251,958.96 | 1,393,864,915.85 | 30.66% |
1.71%
2.82%
-
Europe and America
| 0.75% | |||||
| 1,224,318,099.10 | 858,719,258.08 | 29.86% | 17.24% |
16.35%
| 0.54% |
Mainland China
| 2,540,327,560.87 | 1,838,033,059.66 | 27.65% |
8.04%
10.67%
-
Core b usiness data of the prior year restated according to the changed statistical caliber for the Reporting Period:
□ Applicable √ Not applicable
(3) Whether Revenue from Physical Sales Is Higher than Service Revenue
√ Yes □ No
Operating division
Item Unit 2018 2017 Change (%)Textile and fabric
Unit sales 0,000 meters 25,494.21
23,921.03
6.58%
Output 0,000 meters 28,752.73
26,614.99
8.03%
Inventory 0,000 meters 3,640.18
2,790
| 30.47% |
Textile and apparel
Unit sales 0,000 pieces 1,889.35
1,962.29
-3.72%
Output 0,000 pieces 1,868.74
1,914.08
-2.37%
Inventory 0,000 pieces 77.62
105.56
-
Cotton
Unit sales ton 6,610.89
| 26.47% | ||
2,110.48
| 213.24% |
Output ton 17,680.56
16,737.17
5.64%
Inventory ton 8,205.95
8,092.61
1.40%
Electricity
Unit sales 000 KWH 104,570.59
65,661.68
| 59.26% |
Output 000 KWH 445,490.43
401,967.71
| 10.83% |
Inventory 000 KWH
Steam
Unit sales ton 478,012.13
307,504.69
| 55.45% |
Output ton 1,434,662.48
1,235,609.78
| 16.11% |
Inventory ton
Any over 30% YoY movements in the data above and why:
√ Applicable □ Not applicable1. I nventory of textil e and facric in 2018 increased by 30.47% as compared with last year, mainly due to the increas e of reserves offabric production of Lu Thai.2. Unit sales of cotton in 2018 increased by 213.24% from last year, mainly due to the increase of external cotton sales from relatedcompanies of Xinjiang Lu Thai.3. Unit sales o f electri city in 2 0 18 in creased b y 59.26% as compared with last year, mainly due to the increase of non-related sales ofelectrici ty of Xinsheng Thermal Power.4. Un it sales of steam in 20 18 increased 55.45% as compared with last year, mainly due to the increase of non-related sales of steamof Xinsheng Thermal Power.
(4) Execution Progress of Major Signed Sales Contracts in the Reporting Period
□ Applicable √ Not applicable
(5) Breakdown of Cost of Sales
By operating division and product category
Unit: RMB
Operating
division
Item
2018 2017
Change (%)Cost of sales
of sales (%)
Cost of sales
| As % of total cost | As % of total cost |
of sales (%)Textile andapparel
Cost of sales
88.93%
| 4,323,535,187.46 | 4,090,113,368.00 |
91.36%
| 5.71% |
Cotton Cost of sales
1.93%
| 93,918,390.99 |
32,882,009.84
0.73%
| 185.62% |
Electricity andsteam
Cost of sales
3.19%
| 154,888,713.67 | 110,812,770.78 |
2.48%
| 39.78% |
Other Cost of sales
5.95%
| 289,100,950.83 |
243,239,636.06
5.43%
| 18.85% |
Unit: RMBProduct category Item
2018 2017
Change (%)Cost of sales
of sales (%)
Cost of sales
| As % of total cost | As % of total cost |
of sales (%)Fabric products Cost of sales
70.23%
| 3,414,309,296.66 | 3,170,487,809.95 |
70.82%
| 7.69% |
Shirts Cost of sales
18.70%
| 909,225,890.80 |
919,625,558.05
20.54%
-
Cotton Cost of sales
| 1.13% | ||
| 93,918,390.99 |
1.93%
32,882,009.84
0.73%
| 185.62% |
Electricity andsteam
Cost of sales
3.19%
| 154,888,713.67 | 110,812,770.78 |
2.48%
| 39.78% |
Other Cost of sales
5.95%
| 289,100,950.83 |
243,239,636.06
5.43%
| 18.85% |
Note
Product Period Raw material Labor cost Depreciation Energy Manufacture expenses TotalFabric
2018 56.77% 17.56% 5.50% 12.66% 7.51% 100.00%2017 55.02% 17.51% 5.41% 13.47% 8.59% 100.00%Shirts
2018 55.73% 37.48% 2.14% 0.92% 3.73% 100.00%2017 55.53% 37.50% 2.16% 0.92% 3.89% 100.00%
(6) Changes in the Scope of Consolidated Financial Stat em ent s for the Reporting Period
√ Yes □ NoDuring the Reporting Period, Beijing Sichaung Apparel Co., Ltd was cancelled, and Shanghai Zhinuo Textile New Material Co., Ltdwas newly est ablished.
(7) Major Changes to the Business Scope or Product or Service Range in the Reporting Period
□ Applicable √ Not applicable
(8) Major Customers and Suppliers
Major customers:
Total sales to top five customers (RMB)
Total sales to top five customers as % of total sales of
| 1,360,691,421.45 | |
| the |
Reporting Period (%)
Total sales to related parties among top five custo mers as %
| 19.78% | |
| of |
total sales of the Reporting Period (%)
0.00%
Information about top five customers:
No. Customer
Sales reven ue contributed forthe Repor t i ng Per iod (RMB)
As % o f total sales revenue (%)
1 A
| 373,427,618.03 |
5.43%
2 B
| 329,650,999.24 |
4.79%
3 C
| 265,493,804.74 |
3.86%
4 D
| 213,133,056.36 |
3.10%
5 E
| 178,985,943.08 |
2.60%
Total --
| 1,360,691,421.45 | 19.78% |
Other information about major customers:
□ Applicable √ Not applicableMajor suppliers:
Total purchases from top five suppliers (RMB)
| 654,234,880.87 | |
| Total purchases from top five suppliers as % of total purchases |
of the Re porting Period (%)
| 13.95% | |
| Total purchases from related parties among top five suppliers |
as % of total purchases of the Reporting Period (%)
2.48%
Information about top five suppliers:
No. Supplier
Purchase in the Reporting
Period (RMB)
As % of total purchases (%)1 A
151,879,635.33
3.24%
| 151,879,635.33 |
2 B
3.13%
| 147,033,663.37 |
3 C
2.60%
| 121,913,704.08 |
4 D
2.50%
| 117,094,668.39 |
5 E
2.48%
| 116,313,209.70 |
Total --
| 654,234,880.87 | 13.95% |
Other information about major suppliers:
□ Applicable √ Not applicable
3. Expense
Unit: RMB2018 2017 Change (%) Reason for any significant changeSelling expense
| 158,106,183.74 | 144,061,780.39 |
9.75%
Administrative expense
| 390,911,763.27 | 323,126,978.65 |
20.98%
Finance costs
| 48,779,680.31 | 63,342,671.31 |
-22.99%
R&D expense
| 289,395,092.58 | 328,403,990.29 |
-
4. R&D Expense
√ Applicable □ Not applicableWith leading the technology development in the industry as the goal, the research staff of the Company work hard in new productdevelopment, new technology promotion and transformation of new technological results to productivity to explore ways fortransforming the business mode, adjusting the structure and extending the industrial chain. These efforts will promote the Company’sdevelopment towards an energy-saving and environment-friendly enterprise and truly achieve the sustainable development.Details about R&D expense:
2018 2017 Change (%)Number of R&D personnel1,867
11.88%
1,673
11.60%
R&D personnel as % of total employees11.79%
| 11.72% |
0.07%
R&D expense (RMB)
| 289,395,092.58 | 328,403,990.29 |
-
R&D expense as % of operating revenue4.21%
| 11.88% | ||
5.12%
-
| 0.91% |
Capitalized R&D expense (RMB)0.00
0.00
| 0.00% |
Capitalized R&D expense as % of total R&D expense0.00%
0.00%
| 0.00% |
Reason s fo r any significant YoY change in the percentage of R&D expense in operating revenue:
□ Applicable √ Not applicableReason for any s harp variation in the percentage of capitalized R&D expense and rationale:
□ Applicable √ Not applicable
5. Cash Flows
Unit: RMBItem 2018 2017 Change (%)Sub total of cas h generated from operating activities
| 6,900,228,651.30 | 6,575,970,495.58 | 4.93% |
Subtotal of cash used in operating activities
| 5,469,886,988.14 | 5,505,459,842.15 |
-
Net cash gen er ated from/used in operating activities
| 0.65% | ||
| 1,430,341,663.16 | 1,070,510,653.43 | 33.61% |
Sub total of cas h generated from investing activities
| 115,825,451.80 | 84,563,735.04 | 36.97% |
Subtotal of cash used in investing activities
| 1,002,392,250.74 | 828,490,043.09 | 20.99% |
Net cash generated from/used in investing activities -
-
| 886,566,798.94 | 743,926,308.05 |
-
Sub total of cas h generated from financing activities
| 19.17% | ||
| 3,282,459,288.75 | 2,356,781,279.43 | 39.28% |
Subtotal of cash used in financing activities
| 3,969,383,669.10 | 2,626,785,842.65 | 51.11% |
Net cash generated from/used in financing activities -
-
| 686,924,380.35 | 270,004,563.22 |
-
Net incr eas e in cash and cash equivalents -
| 154.41% | ||
| 141,504,439.96 | 17,523,075.19 |
-
Explanation of why any of the data above varies significantly:
√ Applicable □ Not applicableDuring the reporting period, the amount of net cash flows from operating activities was RMB 1,430,341,663.16 with 33.61%year-on-year increase due to the year-on-year increase in cash received from the sale of commodities. The amount of cash inflowsfrom investment activities was RMB 115,825,451.80 with 36.97% year-on-year increase due to the recovery of trust funds. Theamount of net cash flows from financing activities was RMB -686,924,380.35 with 154.41% year-on-year decrease. First, the amountof cash outflows from financing activities was increased by RMB 1,342,597,826.45 year on year (increase: 51.11%) due to theincrease in cash paid for th e repayment of debts and the payment of B-share bu y-back funds; Second, the amount of cash inflowsfrom financing activities was increased by RMB 925,678,009.32 year on year (increase: 39.28%) due to the year-on-year increase ofcash recei ved from the b orrowings. The net i ncrease amoun t of cash and cash equivalen ts was RMB-141,504,439.96 with 907.53%year-on-year decrease be c ause the amount of net cash flows from operating activities was decreased by RMB 416,919,817.13, the netamount of cash inflows from investment activities was decreased by RMB 142,640,490.89 and the amount of net cash flows fromoperating activities was increased by RMB 359,831,009.73.Reason for any big difference between the net operating cash flow and the net profit for this Reporting Period□ Applicable √ Not applicable
III Analysis of Non-Core Businesses
√ Applicable □ Not applicable
Unit: RMBAmount
As % oftotal profit
907.53%
Source/Reason
Exceptional
| or recurrent |
Investmen t income -
-6.22%
| 60,273,275.04 |
Losses on delivery and losses on equityinvestment of financial assets (financialliabi lities) such as forward exchange settlement
No
-
| Gain/loss on changes in fair value | 4,877,600.00 |
-0.50%
Changes in fair value of financial liabilities at theperiod-end, such as undelivered
| forward exchange |
settlement
NoAsset imp airments
5.93%
| 57,528,337.04 |
Inventory falling price provision, fixed assetsimpairment provision, and bad debt provision
NoNon-oper ating income
1.10%
| 10,652,238.56 |
Income of non-operating compensation, etc NoNon-oper ating expense
1.09%
| 10,598,854.65 |
Non-operating compensation, losses on damage
of non-current assets
No
IV Analysis of Assets and Liabilities
1. Significant Changes in Asset Composition
Unit: RMB
31 December 2018 31 December 2017
Change inpercentage
(%)
Reason for
significant
changeAmount
As % of total
assets
Amount
As % of total
assetsMonetary capital
| any | ||
545,502,709.36
5.18%
693,989,293.38
| 6.82% |
-1.64%
Accountsreceivable
| 374,607,116.55 |
3.55%
334,080,524.05
| 3.28% |
0.27%
Inventories
| 2,093,366,992.30 |
19.87%
2,100,661,221.93
| 20.65% |
-0.78%
Investmentproperty
22,880,242.95
0.22%
24,563,544.58
| 0.24% |
-0.02%
Long-
| term equity |
investments
96,018,463.65
0.91%
97,536,732.02
| 0.96% |
-0.05%
Fixed assets
| 5,748,562,385.35 |
54.55%
5,421,295,850.03
| 53.30% |
1.25%
| Construction in |
progress
337,230,646.42
3.20%
214,335,626.74
| 2.11% |
1.09%
Short-termborrowings
| 1,325,273,780.05 |
12.58%
1,135,124,996.40
| 11.16% |
1.42%
Long-termborrowings
170,019,083.89
1.61%
| 0.00% |
1.61%
2. Assets and Liabilities at Fair Value
√ Applicable □ Not applicable
Unit: RMBItem
Beginning
amount
Gain/loss onfair-
value changes
in the Reporting
Period
Cumulativefair-
| value changes | value changes |
charged to equity
Impairmentallowance forthe Reporting
Period
| Purchased in |
theReporting
Period
Sold in theReporting
Period
Financial assets
| Ending amount | ||
3.Available-for-sa
assets
60,033,000.00
| le financial | 579,000.00 | 60,612,000.00 | |||||
| Subtotal of |
financial assets
60,033,000.00
| 579,000.00 | 60,612,000.00 |
Total of
above
60,033,000.00
| the | 579,000.00 | 60,612,000.00 |
Financialliabilities
0.00
-
| 4,877,600.00 | 4,877,600.00 |
Signi ficant changes to the measurement attributes of the major assets in the Reporting Period:
□ Yes √ No
3. Restricted Asset Rights as at the Period-End
For details, see Part XI. VII. 54. Assets with restricted ownership and using right in this Report.
V Investments Made
1. Total Investment Amount
□ Applicable √ Not applicable
2. Major Equity Investments Made in the Reporting Period
□ Applicable √ Not applicable
3. Major Non-Equity Investments Ongoing in the Reporting Period
□ Applicable √ Not applicable
4. Financial Investments
(1) Securities Investments
□ Applicable √ Not applicableNo such cases in the Reporting Period.
(2) Investments in Derivative Financial Instruments
√ Applicable □ Not applicable
Uni t: RMB'0,000
Relation
ship
| Operator | with the |
Compan
Related-partytransac
tion
Type
ofderivat
| y | ive |
Initialinvestment
amount
Startin
Ending date
| g date |
Beginninginvestmentamoun
t
theReporting
Period
| Purchased in | Sold in the Reporting |
Period
Impairmentprov
(ifany)
Ending
amount
Propor
| investment | tion of |
closin
ginvestmentamoun
Company’s
| ending |
netassets
Actualgain/loss
in the
| Reporting |
Period
Commercialbank
Non-rel
ated
No
Forwa
rdexchan
gesettlement
67,367.6
February2018
January
| 2019 |
67,367.6
| 60,855.55 |
6,512.05
0.84%
-1,590.01
Commercialbank
Non-rel
ated
No
Foreignexchangeoption
| 225,451.86 |
Novemeber2017
January
19,800
| 2019 |
205,651.86
| 223,541.9 |
1,909.89
0.25%
-4,656.64
Commercialbank
Non-rel
ated
No
Forwardexchangetransactions
| 27,803.58 |
March2018
February2019
27,803.58
| 26,193.47 | 1,610.11 |
0.21%
-239.74
Commercialbank
Non-rel
ated
No
Foreignexchangeswap
5,925.81
March2018
April2018
5,925.81
| 5,925.81 |
3.95
Total
| 326,548.85 |
-- -- 19,800
306,748.85
| 316,516.8 | 10,032.05 |
1.30%
-6,482.44
Capital source for derivativeinvestment
The Company’s own moneyLawsuit (if applicable) NaughtDisclosure date of board ofdirectors announcement onapproval of derivative investment
28 Apr il 2017
27 Apr il 2018
(if any)Disclos ure date of generalmeeting o f shareholdersannouncement on approval ofderivati ve i nvestment (if any)
Analysis on
risk, operation risk, law risk, etc.)
The Company conducted derivatives products transaction in order for hedgi
| risks and control measures of derivative products held in the Reporting Period (including but not limited to market risk, liquidity risk, credit | ng. And the forward settlement hedging was operated by installments, with the relevant amount not more than the planned derivatives products transactions. And all derivatives products transaction was |
zero-deposi t. Meanwhile, the Company had a complete risk
and risk of laws and regulation.1. Market risk: when the international and domestic economic situations change, t
| he corresponding changes in exchange rates and interest rates may have an adverse impact on th e financial |
derivati ves transactions of the Company. Precautionary measures to be taken include: the Companychooses risk-controlled financial derivative tools wi
operations, and adjusts the strategy according to market changes in a timely manner.2. Liquidity risk and cred
| it risk: a credit risk arising from failure of the contractually due Company or counterparty in performing the contract due to liquidity or factors other than liquidity. |
Precautionary measures to be taken include: the Company determines the upper limit of
disbursement. The derivative trades are free of guar antee dep
| osit and can still be guaranteed in |
perfor mance a fter th e contr act expi res b y means of extensio n and balan ce sett lement et c. to p revent
institutions with strong capabil
| ity and good reputation as a counterparty and signs standard |
derivative trading contracts to strictly control credit risk of the counterparty.3. Operation risk:
regulatory mechanism, fixed the operation procedures and appr
| oval procedures system to conduct derivative products transaction, established special risk control positions, implemented strict |
authorizati on and post checks an d balances s ystem, meanwhile, it i mproved the overall q uality ofrelevant personnel through st
ensure to lower the operation risks to the maximum.4. Risk of laws and regulation:
The Co
| mpany conducted derivatives products transaction in strict accordance with relevant laws and rules. If there were no standard operation procedures and strict approval pr ocedures, it was |
easy to cause compliant and regulatory risks existing in the validity
commitments and other l egal documents signed. Risk contro l measures: The Company carefully
| studied and mastered laws, regulations and policies relevant to derivative products transaction, |
formulated internal control rules for t
relevant approva
| l procedure, which was in line with relevant laws, regulations, the Company’s Articles of Asso ciation, the M anagement Rules for D erivative Transaction of Lu Thai Textile Co., |
Ltd. and the Proposal on the Plan of Lu Thai Textile Co., Ltd. for Derivative Tra
at the 7
th
M eetin g of the 8
th
B oard of Directors on 26 April 2017, and
| the Proposal on the Plan of |
Lu Thai Textile Co., Ltd. for Derivative Transactions ap proved at the 17
th
M eeti ng o f t he 8
th
of Directors on 25 April 2018, and performed relevant information disclosure responsibilities.
| Board | |
| Changes of market prices or fair values in the Reporting Period of the invested derivatives. And the analysis on the fair value of the derivatives should include the specific use methods and the relevant assumptions and |
parameters.
1. As of 31
10 million); 1 foreign exchange opti
| on portfolio (USD 3 million); 1 forward exchange transaction (USD 2.346 million); The contract expires by February 2019 at the latest. Financial derivatives |
accounted for 1.30 % of net assets at the end of the period. 2. In January -
amo
| unt of maturing financial derivatives of the Company amounted to USD 497,564,400 and to USD 3 million in extension period. USD 494,564,400 was executed as per the contract,which |
generated a loss of RMB 64,824,400. The amount of maturing settlements of exch
million in extension period. USD 353 million was executed as per the contract,
| which generat ed a loss of RMB 46,566,400. The amount of maturing exchange transaction amounted to USD 38,165,100 and has been closed in full, which generated a loss of RMB 2,397,400; the amount of |
Maturing foreign exchange swap amounte
generated an income of RMB 39,500.
| d to USD 9,399,300 and has been closed in full, which | |
| Whether significant changes occurred to the Company’s accounting policy and specific accounting principles of derivatives in the Reporting |
Period compared to the prev
Report ing Period
No sign ifi cant changes
| ious |
| Specific opinion from independent directors on the Compan y’s derivatives invest ment |
and risk control
The Company’s independent directors Zhou Zhiji,
Xinyu, concerning co
| nducting derivatives business, have issued the following professional advice: We are of the opinion that it will strengthen the Company’s competitiveness to use derivative |
transactions with focus on forward settlement and purchase as an effective tool to a
transactions with focus on forward settlement and purcha
| se, the C ompany foll ows a legal ap pro val procedure, has sound relevant institutions and keeps the risks relatively controllable. No harm has |
been done to the interests of the Company’s shareholders.
5. Use of Funds Raised
□ Applicable √ Not applicable
No such cases in the Reporting Period
VI Sale of Major Assets and Equity Interests
1. Sale of Major Assets
□ Applicable √ Not applicableNo such cases in the Reporting Period.
2. Sale of Major Equity Interests
□ Applicable √ Not applicable
VII Major Subsidiaries
√ Applicable □ Not applicableMajor fully/majority-owned subsidiaries and those minority-owned subsidiaries with an over 10% effect on the Company’s net profit:
Unit: RMBName
Relationship
with theCompany
Principalactivity
Registered
capital
Total assets
Net assets
Operating
revenue
Operating
profit
Net profit
| Lufeng Wea ving |
& Dyeing Co.,Ltd.
Subsidiary Fabric
706,160,000.
5.13
| 1,518,451,55 |
1.77
1,780,246,45
9.14
| 133,637,946. |
| 118,857,204. |
Subsidiaries obtained or disposed in the Reporting Period:
□ Applicable √ Not applicableInformation about major majority- and minority-owned subsidiaries:
Lufeng Weaving & Dyeing Co., Ltd. (herein after called “Lufeng Weaving & Dyeing”) is the holding su bsidiary corporation of theCompany. Registration place: Zibo, Shandong; registered capital: RMB706.160 million. It was authenticated to be high-techenterprise in October 2014, and authenticated to be high-tech enterprise again for re-evaluation in 2017, mainly manufacturing andselling textile printing and dyeing products and the products of clothing and garments. Its export income accounted for more than75%. During the Reporting Period, market required more and more on the production and environmental protection of printing anddyeing products. Lufeng Weaving & Dyeing had been further acknowledged in market as an enterprise with normative operation andthe focus on environmental protection and sustainable development. At the same time, the R & D and innovation of Lufeng Weaving& Dyeing constantly progressed. With the rise of the transfer ratio of scientific and technological achievements, proportion of thesale of new products with high additional value rose largely. In 2018, operation revenue of Lufeng Weaving & Dyeing was RMB1.78billion, increasing for 6.93% comparing with t hat of the last year. In another aspect, thanks to comprehensive budget management,costs control and investment in new products R & D, net profit RMB119 million was achieved in 2018, decreasing for 14.19%comparing with that of the last year.
VIII Structured Bodies Controlled by the Company
□ Applicable √ Not applicable
IX Prospects
1. Industry competition and development trendChina's textile industry possesses outstanding advantages in the global textile industry, mainly in terms of industrial chain,technology and labor efficiency, etc. Although the cost of production factors is increasing, China's textile industry still has anoutstanding advantage in the global competition. At present, the main current fabric for high-end shirts in the world is purecotton-dyed fabric. In recent years, with the increase of domestic environmental protection requirements and production costs, andthe trend of state transformation and upgrading, some low-end and small yarn-dyed production capacities gradually quit the market,and p roduction cap acities have been co ncentrat ed on large companies, while the d emand for yarn-dyed fabrics for shirts is changingto small quantity, variety, diversity, functionality and leisure.2. Development strategy of the CompanyThe Company is a large-scale textile enterprise with a complete industrial chain integrating cotton cultivation, spinning, dyeing,weaving, post-treatment and garment manufacturing. It is the world's largest production base for yarn-dyed fabrics for shirts,providing blending of three major series of shirt fabrics of pure cotton and natural fiber, cotton and natural fiber as well as cotton andfunctional fiber. In order to maintain the outstanding advantages of the Company in global shirt-dyed fabrics, the Company ispushing intelligent manufacturing upgrades and integrating domestic and foreign advantageous resources to deepeninternationalization of the Company with regional advantages. The Company combines quality innovation and customer needs, andinnovates the marketing mod el with advan tages of resources in each chann el. High-end shirt customization services are provided tomeet various needs of customers. Furthermore, the Company increases investment in innovation to improve R&D and design anddevelop new fabrics. The Company holds the concept of low-carbon environmental protection for sustainable economicdevelopment.3. Business plan (the following description does not constitute any commitment of the Company)(1) In terms of corporate governance, in order to ensure the healthy, stable and sustainable development of the Company at theinstitutional level, the Company will establish an internal control system to improve organizational structure, corporate governancestructure and risk prevention mechanism.(2) In terms of market development, the Company will follow the business philosophy of "combining end-customer demand withR&D, design and sales servic es". Based on the stabilit y of existing markets, the Company will adjust operation models, establishdiversified sales platforms an d explo re new markets to i ncrease domest ic market s hare and b alance the develo pment o f domestic andforeign markets .(3) In terms of corporate management, with the goal of "improving quality and increasing efficiency", the Company will fullydevelop the group system and deeply practice the model o f excellence performance. Relying on the Lu Thai Production System(LTPS) and supply chain management, the Company creates a global procurement network to improve the enterprise managementsystem and company upgrade.(4) In terms of brand building, the Company focuses on quality to integrate corporate philosophy and culture into brand building withinnovation. Based on customer demand, the Company innovated the marketing model and integrated online and offline channelresources to push forward the process of brand internationalization.(5) In terms of industrial overall arrangement, in order to maintain the leading position of the Company in the global yarn-dyedindustry, the Company rationally allocates domestic and foreign resources and improves production efficiency while keeping productquality relying on the advantages of U.S. companies, Milan and Japan Office in market development, design and R&D, customerservice and talent development, and the cost advantages of Southeast Asian production bases.
4. Capital needs, sources and planningDuring the reporting period, the new spinning production line with a capacity of 76,000 spindles of the yarn manufacture projectPhase II of Lu Thai (Vietnam) Textile Co., Ltd. has been set up; The main plant of 40 million meters of production expansion projectof yarn -dyed fabrics was co mpleted and the first batch equipment will be installed in the first quarter of 2019. The expansion projectof 3 million high-grade shirts in Vietnamese garment factory Phase II has been put into production in August 2018. Preparatory workis under way for infrastructure construction of the investment project of Lu Thai (Tan Chau) Co., Ltd., the wholly owned subsidiaryof Lu Thai (Vietnam) Textile Co., Ltd. The above-mentioned project funds all come from the owned and self-financing funds of thewholly owned subsidiary.5. Ri sks that bring adverse impact to company deve lopment strategy and business objectives and countermeasures of the Company(1) Economic environment: at present, the rise of the international trade protectionism and the increasing uncertain risks of economicpol icies of advanced eco nomies, especially monetary policy, produce a certain degree of uncertainty on the market environment thatthe Company faces. Meanwhile, the new development of Chi na’s economy shows more characteristics such as speed change,structural adjustment and dynamic changes. The economic trend is going stable. To cope with these impacts, the Company will workhard to maintain the international market and develop the domestic market to balance development of domestic and foreign sales.(2) Fluctuations in raw material prices: the raw cotton used by the Company is long-staple cotton, whose price is affected by manyfactors 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 improve environmentalprotection standards.(3) Exchange rate changes: along wit h the operation of overseas production base of the Company and in the future, the Company willcontinue to sell its products mainly in the international market for a long period of time, and US dollars willaccount for a relativelylarger portion in sales revenue. In addition, the main machinery and equipment and some of its raw materials of the Company arealso imported. The foreign currencies payment for imports includes US dollar and other currencies. Therefore, the Company will stillbe sensitive to the impact of exchange rate changes.In order to redu ce adver se in fluence of exchange rate fluctuation, the Company adopted the following measures: firstly, the Companyappropriately cond ucted foreign exchange hedging, using forward FX sales and purchase, forward foreign exchange trading andoption portfolios to avoid some risks Secondly, the Company made reasonable arrangement on settlement day and currency structureand conclusion of agreements on fixed foreign exchange rate to avoid exchange rate-related risks. Thirdly, the Company adjusted theRenminbi and foreign-currency liabilities structure to control financial costs. Fourthly, according to the fluctuation trend of exchangerates, the Company properly adjusted imports of raw and auxiliary materials to partially offset the influence of exchange ratefluc t ua ti ons on the Company.
X Communications with the Investment Community such as Researches, Inquiries andInterviews
1. During the Reporting Period
√ Applicable □ Not applicable
Date Way of communication
Type of communication
party
Index to main information
communicated17 Apr il 2018 By phone Institution
27 Apr il 2018 By phone Institution
| About basic information of the Company |
| About basic information of the Company |
22 Aug ust 2018 By phone Institution
31 October 2018 By phone Institution
| About basic information of the Company |
| About basic information of the Company |
31 October 2018 By phone Institution
8 November 2018 One-on-one meeting Institution
| About basic information of the Company |
| About basic information of the Company |
Times of communications 6
Number of institutions communicated with 86
Number of individuals communicated with 0
Number of other communication parties 0
Tip-offs or leakages o f substantial supposedly-confidentialinformation during communications
None
Part V Significa nt Events
I Profit Distributions to Ordinary Shareholders (in the Form of Cash and/or Stock)
How the profit distribution policy, especially the cash dividend policy, for ordinary shareholders was formulated, executed or revisedin the Reporting Period:
√ Applicable □ Not applicableThe 1
st
E xtraordinary General Meeting of 2018 convened by the Company on 8 February 2018 reviewed and approved the Proposalon Revision of Part of Clauses of Articles of Lu Thai Textile Co., Ltd., among which revised the contents of the profit distributionpolicy and decision-making mechanism of t he Compan y in Articl e 154, adequately prot ecting the l egitimate int erest of medium andsmall investors. For details, see related announcement disclosed onwww.cninfo.com.cn on 9 February 2018.
Special statement about the cash dividend policyIn compliance with the Company’s Articles of Association and resolution of general meeting YesSpecific and clear dividend standard and ratio YesComplete decision-making procedure and mechanism YesIndependent directors faithfully performed their duties and played their due role YesNon-controlling interests are able
rights and interests are fully protected
YesIn c ase of adjusting or changing the c ash dividend policy, the conditions and procedures
| to fully express their opinion and desire and their legal |
involved are in compliance with applicable regulations and transparent
YesThe profit distributions to ordinary shareholders, either in the form of cash or stock, in the past three years (including the ReportingPeriod) are summarized as follows:
1. The 24
th
Meeting of the 8
th
Board of Directors of the Company reviewed and approved 2018 Profit Distribution PlanAs of 31 Dec ember 2018, the total share capital of the Company was 922,602,311 shares. Since 28 May 2018, the Company hasimplemented B-share repurchase. As of 22 Marc h 2019, the Company has repurchased 64,480,770 shares which have not beencancelled. The repurchase shares were inventory shares and were not entitled the rights of all shareholders, such as profit distribution.Therefore, the Company's profit distribution plan for 2018: Based on 858,121,541 shares (the total share capital of 922,602,311shares deducted 64,480,770 shares which have been repurchased but not cancelled on 31 December 2018), the cash allocated per 10shares is RMB 5.00 (including tax). The individual income tax for A Share shall be subject to related regulations under CS [2012] No.85 Notice on Certain Question about the Differentiated Individual Income Tax Policy for Cash Dividend of Listed Companies jointlyissued by Ministry of Finance, SAT, and CSRC; and that for B Share shall be conversed to HKD based on the central parity rate oninterbank exchange market released by the People’s Bank of China on the following day after shareholder’s meeting (for foreignshareholders, tax is free pursuant to CSZ (1994) No. 020 regulations; and non-residential corporate shareholders is entitled to a 10%reduction of enterprise income tax according to related regulations under Enterprise Income Tax Law of the People’s Republic ofChina).RMB429,060,770.50 should be allocated based on 922,602,311 shares deducting 64,480,770 B shares which have been repurchasedbut not cancelled. The above-mentioned allocation scheme shall be submitted to the shareholders' meeting in 2018 for consideration
and approval.2. The 16
th
Meeting of the 8
th
Board of Directors of the Company reviewed and approved 2017 Profit Distribution PlanBased on the total 922,602,311 shares on 31 December 2017, the Company is to distribute a cash dividend of RMB5.0 for every 10shares (including tax). The individual income tax for A Share shall be subject to related regulations under CS [2015] No. 101 Noticeon Certain Question about the Differentiated Individual Income Tax Policy for Share Dividend of Listed Companies jointly issued byMinistry of Finance, SAT, and CSRC; and that for B Share shall be conversed to HKD based on the central parity rate on interbankexchange market rel eased b y the P eople’ s Bank of Ch ina on t he followin g day after sh arehol der’s meet ing (for foreign s hareho lders,tax is free pursuant to CSZ (1994) No. 020 regulations; and non-residential corporate shareholders is entitled to a 10% reduction ofenterprise income tax according to related regulations under Enterprise Income Tax Law of the People’s Republic of China).The Compan y has implemented B-share b uyback scheme from 28 M ay 2018. As of the date of equity distribution, the total numberof B shares repurchased by the Company was 15,913,655 shares. According to the provisions of the Company Law, listed companiesdo not have the right to participate in the distribution of profits by buying back the shares of the Company. Therefore, the allocationbase of the Company's profit distribution scheme in 2017 shall be the total share capital less the number of shares repurchased, that isRMB 453,344,328.00 shall be allocated based on 906,688,656 shares as the profit distribution base in 2017. The above distributionscheme has been implemented in June 2018.3. The 5
th
Meeting o f the 8
th
Board of Directors of the Company reviewed and approved 2016 Profit Distribution PlanBased on the total 922,602,311 shares on 31 December 2016, the Company is to distribute a cash dividend of RMB5.0 for every 10shares (including tax). The individual income tax for A Share shall be subject to related regulations under CS [2012] No. 85 Noticeon Certain Question about the Differentiated Individual Income Tax Policy for Share Dividend of Listed Companies jointly issued byMinistry of Finance, SAT, and CSRC; and that for B Share shall be conversed to HKD based on the central parity rate on interbankexchange market rel eased b y the P eople’ s Bank of Ch ina on t he followin g day after sh arehol der’s meet ing (for foreign s hareho lders,tax is free pursuant to CSZ (1994) No. 020 regulations; and non-residential corporate shareholders is entitled to a 10% reduction ofenterprise income tax according to related regulations under Enterprise Income Tax Law of the People’s Republic of China).The a ctual distributed dividend for above-mentioned distribution plan was of RMB461,301,155.50. The above-mentioneddistribution plan was implemented on June 2017 after being reviewed and approved by the 2016 Annual General Meeting convenedon 12 May 2017.Cash dividend for ordinary shareholders in the past three years (including the Reporting Period):
Unit: RMB
Year
Cashdividends (taxinclusive) (A)
Net profitattributable to
ordinaryshareholdersof the listedcompany inconsolidatedstatements for
the year (B)
A as % of B
(%)
in other forms(such as s harerepurchase) (C)
C as % of B
(%)
Total cashdividends(includingthose in other
forms) (D)
D as % of B
(%)
2018 429,060,770.50
| 811,526,477.83 |
52.87%
| 486,922,944.94 |
59.99%
915,983,715.44
112.87%
2017 453,344,328.00
| 841,150,934.75 |
53.90%
0.00
0.00%
453,344,328.00
| 53.90% |
2016 461,301,155.50
| 808,760,025.91 |
57.04%
0.00
0.00%
461,301,155.50
| 57.04% |
Indicate by tick mark whether the Company fails to put forward a cash dividend proposal for the ordinary shareholders despite the
facts that the Company has made profits in the Reporting Period and the profits of the Company as the parent distributable to theordinary shareholders are positive.□ Applicable √ Not applicable
II Final Dividend Plan for the Reporting Period
√ Applicable □ Not applicableBonus shares for every 10 shares (share)
Dividend for every 10 shares (RMB) (tax inclusive)5.00
Additi onal shares to be converted from capital reserve for every 10 shares (share) 0
Total shares as the basis for the profit distribution proposal (share)
| 858,121,541 |
Cash dividends (RMB) (tax inclusive)
Cash dividends in other forms (such as share repurchase) (RMB)
| 429,060,770.50 |
| 486,922,944.94 |
Total cash dividends (including those in other forms) (RMB)
Distributable profit (RMB)
| 915,983,715.44 |
| 3,714,813,049.43 |
Total cash dividends (including those in other forms) as % of total profit distribution 112.87%
Cash dividend policyWhere the Company is at a mature stage of develop ment and has plans for considerable
spending, in profit distribution, cash
dividen ds shall reach at least 40% in the total profit to be distributed.
Details about the proposal for profit distribution and converting capital reserve into share capitalAs o f 31 December 2018, the total share capital of the Company was 922,602,311 shares. Since 28
spending, in profit distribution, cash
May 2018, the Company has
implemented B-share repurchase. As of 22
| March 2019, the Company has repurchased 64,480,770 shares which have not been |
cancelled. The repurchas
distribution. Therefore, the Company's profit distribution plan for 2018: Based on 858,121,541 shares (the total share capita
| l of |
922,602,311 shares deducted 64,480,770 shares which have been repurchased but not cancelled on 31
allocated per 10 shares is RMB 0.00 (including tax).
| The ind ividual income tax for A Shar e shall be subject to related regulat ions |
under CS [2012] No. 85 Notice on Certain Question about the Differentiated Individual Income Tax Policy for Cash
on the central parity rate on inter
| bank exchange market released by the People’s Bank of China on the following day after |
shareholder’s meeting (for foreign shareholders, tax is free pursuant to CSZ (1994) No. 020 regulations; and non-
corporate shareholders i s entitled to a 10%
| reduction of enterprise income tax according to related regulations under Enterprise |
Income Tax Law of the People’s Republic of China). 2. T
RMB429,060,770.50, the rest of the profit available for distribution RMB3,285,752,278.93
| will be carried forward into the next |
year.
III Fulfillment of Commitments
1. Commitments of the Company’s Actual Controller, Shareholders, Related Parties and Acquirers, as wellas the Company Itself and other Entities Fulfilled in the Reporting Period or Ongoing at the Period-end
□ Applicable √ Not applicableNo such cases in the Reporting Peri od.
2. Where there had been an earnings forecast for an asset or project and the R eporting Period was stillwithin the forecast period, explain why the forecast has been reached for the Reporting Period.
□Applicable √ Not applicable
IV Occupation of the Company’s Capital by the Controlling Shareholder or Its RelatedParties for Non-Operating Purposes
□ Applicable √ Not applicableNo such cases in the Reporting Peri od.
V Explanations Given by the Board of Directors, the Supervisory Board and the IndependentDirectors (if any) Regarding the Independent Auditor's “Modified Opinion” on the FinancialStatements of the Reporting Period
□ Applicable √ Not applicable
VI YoY Changes to Accounting Policies, Estimates and Methods
□ Applicable √ Not applicableNo such cases in the Reporting Peri od.
VII Retrospective Restatements due to Correction of Material Accounting Errors in theReporting Period
□ Applicable √ Not applicableNo such cases in the Reporting Peri od.
VIII YoY Changes to the Scope of the Consolidated Financial Statements
√Applicable □ Not applicable
During the Report ing Period, Beijing Sichaung Apparel Co., Ltd was cancelled, and Shanghai Zhinuo Textile NewMaterial Co., Ltd was newly established.
IX Engagement and Disengagement of Independent Auditor
Current independent auditor:
Name of the dom estic independent auditor Ruihua Certified Public Accountants (LLP)The Company’s payment to the domestic independent auditor(RMB’0,000)
How many consecutive years the domestic independent auditor
| 173.5 | |
| has |
provided audit service for the Company
Names of the certified public accountants from the domestic independentauditor writing signatures on the auditor’s report
Wang Chuanshun and Cui XiaoliHow many consecutive years the certified public accountants
have
provided audit service for the Company
1, 4
| have |
Indicate by tick mark whether the independent auditor was changed for the Reporting Period.□ Yes √ NoIndependent auditor, financial advisor or sponsor engaged for the audit of internal controls:
√ Applicable □ Not applicableOn 16 May 2018, the Compa ny held the 2017 Annual General Meeting, which reviewed and approved the Proposal on Engagementof the 2018 Financial Audit and Internal Control Auditor. The Company paid RMB1.735 million in total for 2017 financial reportaudit and the internal control audit.
X Possibility of Listing Suspension or Termination after Disclosure of this Report
□ Applicable √ Not applicable
XI Insolvency and Reorganization
□ Applicable √ Not applicableNo such cases in the Reporting Period.
XII Major Legal Matters
□ Applicable √ Not applicableNo such cases in the Reporting Peri od.
Quality of the Company as well as Its Controlling Shareholder and Actual Controller
□ Applicable √ Not applicable
XV Equity Incentive Plans, Employee Stock Ownership Plans or O ther Incentive Measuresfor Employees
□ Applicable √ Not applicableNo such cases in the Reporting Period.
XVI Major Related-Party Transactions
1. Continuing Related-Party Transactions
□ Applicable √ Not applicableNo such cases in the Reporting Peri od.
2. Related-Party Transactions Regarding Purchase or Sales of Assets or Equity Interests
□ Applicable √ Not applicableNo such cases in the Reporting Period.
3. Related Transactions Regarding Joint Investments in Third Parties
□ Applicable √ Not applicableNo such cases in the Reporting Period.
4. Credits and Liabilities with Related Parties
√Applicable □ Not applicableIndicate by tick mark whether there were any credits and liabilities with related parties for non-operating purposes.√ Yes □ NoLiabilities of related part ies to account payable
Related party
Relation with the
Company
reason
Beginning
balance(RMB’0,0
00)
Amount
| Formation | newly added |
in cu r r ent
period(RMB’0,000
)
Amountretur ne d in
currentperiod(RMB’0,000
)
Interes
t rate
Currentinterest(RMB’0,0
00)
Endingbalance(RMB’0,0
00)Zibo Lucheng TextileInvestmentt Co., Ltd
The Company asthe p ar ent
deposit
5,900
| Currencies |
7,852
1,600
4.35%
413.55
| 12,152 |
Zibo Lujia PropertyManage ment C o., Ltd
Wholly-ownedsubsidiary ofLucheng Textil e
deposit
| Currencies |
4.35%
2.57
Zibo Shidanlu Cosmetics Co.,Ltd
Joint-stockCompany of
| Currencies |
deposit
4.35%
6.03
Lucheng Textil eZibo Taimei Ties Co., Ltd
Controlling
subsidiary of
Lucheng Textil e
deposit
| Currencies |
4.35%
5.41
Influences from liabilities of parties related onoperating results and financial situations of theCompany
No
5. Other Major Related-Party Transactions
□ Applicable √ Not applicableNo such cases in the Reporting Period.
XVII Major Contracts and Execution thereof
1. Entrustment, Contracting and Leases
(1) Entrustment
□ Applicable √ Not applicableNo such cases in the Reporting Peri od.
(2) Contracting
□ Applicable √ Not applicableNo such cases in the Reporting Peri od.
(3) Leases
□ Applicable √ Not applicableNo such cases in the Reporting Peri od.
2. Major guarantees
√ Applicable □ Not applicable
(1) Guarantees
Uni t: RMB'0,000
Guarantees provided by the Company as the parent for its subsidiaries
Obligor
Disclos ure dateof the guarantee
lineannouncement
Line of
Actualoccurr ence date
| guarantee |
Actualguarantee
amount
Type ofguarantee
Term ofguarantee
Having
not
Guarante
e for arelatedparty or
notLu Thai (Vietnam)Textile Co., Ltd.
| expired or | ||
| 25 January 2017 |
6,534.2
| 20 January 2017 |
Joint-liability
Two yearssince theapproval ofthe boa rd ofthe Company
No Yes
Lu Thai (Vietnam)Textile Co., Ltd.
5,227.36
| 25 January 2017 | 20 January 2017 |
1,390.90
Joint-liability
Two yearssince theapproval ofthe boa rd ofthe Company
No Yes
Lu A n GarmentsCo., Ltd.
3,920.52
| 25 January 2017 | 20 January 2017 |
Joint-liability
Two yearssince theapproval ofthe boa rd ofthe Company
No Yes
Lu Thai (Vietnam)Textile Co., Ltd.
| 25 January 2017 | 25,483.38 | 20 January 2017 |
Joint-liability
Five yearssince theapproval ofthe boa rd ofthe Company
No Yes
Lu Thai (Vietnam)Textile Co., Ltd.
19,602.6
| 25 January 2017 | 20 January 2017 |
18,530.64
Joint-liability
Two yearssince theapproval ofthe boa rd ofthe Company
No Yes
Lu Thai (Vietnam)Textile Co., Ltd. /Lu A n GarmentsCo., Ltd.
6,534.2
| 25 January 2017 | 20 January 2017 |
Joint-liability
Two yearssince theapproval ofthe boa rd ofthe Company
No Yes
Lu Thai (Vietnam)Textile Co., Ltd.
25 January 2017
| 17,969.05 | 20 January 2017 |
5,089.27
Joint-liability
Five yearssince theapproval ofthe boa rd ofthe Company
No Yes
Xinjiang Lu ThaiGood Yield CottonCo., Ltd.
15,000
| 14 October 2017 | 12 October 2017 |
Joint-liability
Three yearssince theapproval ofthe boa rd ofthe Company
No Yes
Lu Thai (Vietnam)Textile Co., Ltd.
| 27 October 2017 | 33,977.84 | 25 October 2017 |
17,001.91
Joint-liability
Five yearssince theapproval ofthe boa rd ofthe Company
No Yes
Lu Thai (Vietnam)Textile Co., Ltd.
22 Aug ust 2018
7,549.52
20 Aug ust 2018
Joint-liability
Three yearssince theapproval ofthe boa rd ofthe Company
No Yes
Lu Thai (Vietnam)Textile Co., Ltd.
22 Aug ust 2018
2,745.28
20 Aug ust 2018
Joint-liability
Two yearssince theapproval ofthe boa rd ofthe Company
No Yes
Total
guarantees in the
| Reporting Period |
(B1)
10,294.8
Total actual amount
| of |
such guarantees in
Report ing Period (B2)
42,012.72
| the |
Total
guarantees at the end of the
| Reporting |
Period (B3)
144,543.95
Total
| actual balance of |
such gu arantees at the
of the
| Reporting Period |
(B4)
42,012.72
Guarantees provided between subsidiaries
Obligor
Disclosuredate o f theguarantee
lineannounceme
nt
Line of
guarantee
Actual occurrence
date
Actual
| guarantee | guarantee |
amount
Type ofguarantee
Term ofguarantee
Havingexpiredor not
Guarante
e for arelatedparty or
notXinjiang Lu ThaiTextile Co., Ltd.
20,000
5 November 2018 20,000
Joint-
12 months No YesTotal
| liability | ||
| approved line for such |
guarantees in the
(C1)
20,000
| Reporting Period |
Total actual amount
such guarantees in
| the |
Report ing Period (C2)
20,000
Total
| approved line for such |
guarantees at the end of
20,000
| the |
Total
such guarantees at
| the |
20,000
Report ing Period (C3) end of the
Period (C4)Total guarantee amount (total of the three kinds of guarantees above)Total guarantee line approved in
Reporting
the
Report ing Period (A1+B1+C1)
30,294.8
| the | Total actual guarantee |
amount in the
Period (A2+B2+C2)
62,012.72
| Reporting |
Total approved guarantee line at
end of the
| Reporting Period |
(A3+B3+C3)
| 164,543.95 | Total actual guarantee |
balan ce at the e nd of
(A4+B4+C4)
62,012.72
| the Reporting Period | ||
| Total actual guarantee amount (A4+B4+C4) as % of the Company’s |
net assets
8.68%
Of which:
Balance of guarantees provided for shareholders, actual controllerand their related parties (D)
| Balance of debt guarantees provided directly or indirectly for obligors |
with an over 70% debt/asset ratio (E)
Amount by which the total guarantee amount exceeds 50% of theCompany’s net assets (F)
Total of the three amounts above (D+E+F) 0
| Explanations about joint and several liability for repayment in respect |
of undue guarantee (if any)
12 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.
(if any)
| Explanation about external guarantee violating established procedure | The Company never provided guarantees for companies |
except controlling subsidiaries.Compound guarantees:
None.
(2) Irregularities in Provision of Guarantees
□ Applicable √ Not applicableNo such cases in the Reporting Peri od.
3. Cash Entrusted to Other Entities for Management(1) Cash Entrusted for Wealth Management
√ Applicable □ Not applicableOverviews of entrusted cash management during the Reporting Period
RMB’0,000Specific type Capital resources Amount incurred Undue Balance Overdue amountTrusted financialproducts
Self-owned funds 0
Others Self-owned funds 0
6,000
Total 0
6,000
Particulars of entrusted cash management with single significant amount or low security, bad liquidity, and no capital preservation√ Applicable □ Not applicable
RMB’0,000
Nameof thetrustee
Typeof thetrustee
Typeof the
Amou
nt
Resource offunds
| product |
Initial
date
Date
| Ended | Use of |
fund
Metho
d ofpayme
ntdetermination
Annua
forrefere
nce
Estima
teprofit
(ifany)
Amount ofactual
orlosses
inReport
ingPeriod
| Actual |
recove
ry of
or
| losses |
inReport
ingPeriod
Amou
ntwithdr
awnimpairmentprovision (if
any)
Whether gothroug
hstatorproced
ures
Wheth
erthere
is
managemententrust
mentplan
in
| future |
or not
Overvie w of
theitemandtherelate
dindex
forinquiring (ifany)AVICTrustCo.,Ltd
Trustcompany
Constantreturn
5,000
Self-ownedfunds
September2017
September2018
MiyaBaobei
Repay
| capital |
withinterestswhenexpired
7.20%
356.62
No
Yes
Notyet
ShanghaiGophe
Manag
Fundcompany
Constantreturn
| r Asset |
3,000
Self-ownedfunds
December2017
January
Accountreceivablesbonds
Repay
| 2019 | capital |
withinterests
7.60%
No
Yes
Notyet
ementCo.,Ltd
ofGuangdongChengxingandJingdong
whenexpired
ShanghaiGophe
ManagementCo.,Ltd
Fundcompany
Constantreturn
| r Asset |
3,000
Self-ownedfunds
December2017
December2019
GrantingtrustloanstoJiexinFinance
Repay
whenexpired with
| annual |
interestspayment
8.50%
250.32
No
Yes
Notyet
Total
-- -- -- -- -- -- 843
| 11,000 |
606.94
--
-- -- --Whether there is the case where the prin cipal cannot be recovered at maturity or other case whi ch may cause impairment forentrusted asset management□ Applicable √ Not applicable
(2) Entrusted Loans
□ Applicable √ Not applicableNo such cases in the Reporting Peri od.
4. Other Major Contracts
□ Applicable √ Not applicableNo such cases in the Reporting Peri od.
XVIII Corporate Social Responsibility (CSR)
1. Measures Taken to Fulfill CSR Commitment
The Company has prepared social responsibilities report for 2018, for details, see Social Responsibilities Report disclosedsimultaneously with Annual Report 2018 of the Company.
2. Measures Tak en for Targeted Poverty Allevi ati on
The Companydid not carry out any targeted poverty allviaton work in the Reporting Period, nor did it have subsequent targeted
poverty allviaton plan.
3. Issues Related to Environmental Protection
Indicate by tick mark whether the Company or any of its subsidiaries is identified as a major polluter by the environmental protectionauthorities.Yes
Name ofpolluter
Name of
majorpollutants
Way ofdischarge
Number ofdischarge
outlets
outlets
Dischargeconcentratio
n
Dischargestandardsimplemente
d
Totaldischarge
| Distribution of discharge |
Approved
totaldischarge
Excessivedischarge
Lu ThaiTextile Co.,Ltd
COD andammonianitrogen
Continuousdischarge
HuangjiapuIndustrial
ZoneIndustrialPark
COD≤150mg/L;ammonianitrogen≤10mg/L
Emissionstanda r d ofwater
| Park; East | pollut a nts i n |
textiledyeing andfinishingindustry:
GB4287-2012
COD is622.28
ammonianitrogen is33.98t
COD is1495.08t,andammonianitrogen is149.51t
No
LufengWeaving &
| t, and | ||
| Dyeing Co., |
Ltd.
COD andammonianitrogen
Continuousdischarge
Lufengchiefdischargeoutlet
COD≤130mg/L;ammonianitrogen≤3mg/L
Emissionstanda r d ofwater
textiledyeing andfinishingindustry:
GB4287-2012
COD is306.49 t,andammonianitrogen is5.93t
COD is575.985t,andammonianitrogen is57.6t
No
ZiboXinshengThermalPower Co.,Ltd.
SO2, NQx,and smoke
Continuousdischarge
Productionplant ofXinshengThermalPower
SO2：
≤35mg/m3,NQx：
≤100(50)mg/m3 andsmoke:≤10(5)mg/m3
Ultra-lowemissionNo. 2modification listLZJBF
(2016) No
46 ofEmissionstanda r d ofairpollutants
Y2018:
SO2 is54.41t, NQx
| pollut a nts i n | |
is 276.5t,and smokeis 9.914t.
SO2 is286.01t/a,NQx is817.18t/a,and smokeis 81.72t/a.
No
of ThermalPower PlantinShangdongProvinceLu Thai(Vietnam)Textile Co.,Ltd.
Sewage
Dischargeinto sewageplant in thepark districtaftertreatment
Besidesewageplant
/
QCVN40：
2011/BTNMT
Sewagedisch arge is763,200t
/ No
Lu Thai(Vietnam)Textile Co.,Ltd.
Exhaust gas
Directdischargeafterteratment
Besideboiler room
/
QCVN19：
2009/BTNMT
Gasemission is190 millionm
/ NoConstruction of pollution prevention equipment and operation conditionLu Thai Textile Co., Ltd. and its majority-owned subsidiary Lufeng Weaving & Dyeing Co., Ltd. strictly implement the "ThreeSimultaneous" management system for environmental protection in project constructions. The companies are equipped with completefacilities for waste gas and waste water treatment . In 2018, Lu Thai Textile Co., Ltd. and its majority-owned subsidiary LufengWeaving & Dyeing Co., Ltd. carried out the waste wat er treatm ent s ystem trans for matio n pr oj ect to improve the t reated water qualityby systematic and comprehensive reform, further improving 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 with autom atic sampling apparatus. Support teams were set up to be responsible for daily operation maintenanceand inspection to guarantee the normal operation of facilities. Both th e exhaust emission and waste water discharge meet theemission standards.The wholly-owned subsidiary Zibo Xinsheng Thermal Power Co., Ltd. enforces the "Three Simultaneous" management system forenvironmental protection in extension project construction in accordance with the government requirements, and adopts the"limestone-gypsum method" to reduce emission concentration of sulfur dioxide, the “Low-nitroen combustion+SNCR” and"SNCR+SCR method" to reduce emission concentration of nitrogen oxides, and the "electric-bag electrostatic precipitator + wetelectros tatic precipitator" to reduce soot emission concentration. The overall system works well.The waste water t reat men t p ro ject of th e whol ly-owned subsidiary Lu Thai (Vietnam) Textile Co., Ltd. is designed to treat 3,000 tonsof sewage water daily. The Company 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 treatment station in the p ark. Treated water quality analysis for 2018: The COD (mean valu e) was 47.8 mg /L, thechromin ance (mean valu e) was 36, the ammoni a ni trogen (mean val ue) was 1.5 mg/L, and the total phosphorus (mean value) was 0.3mg/L. All the parameters met the A-level emission standards set in the "Regulations on Parameters of Industrial Drainage inVietnam" (QCVN40:2011/BTNMT). Waste water discharge in the whole year met the standards without violation. The total amountof waste wat er discharged in 2 018 was 763,200 tons, among which, the chemical oxygen demand (COD) was 38.48 tons, ammonianitrogen (NH3-N) was 1119.39kg and total phosphorus (TP) was 235.33kg. The Company is equipped with multi-pipe and waterfilm dust-separation devices to process the exhaust gas discharged from boilers of the Company. In 2018, all the equipment was innormal operation, and the exhaust gas inspection parameters were lower than the QCVN19:2009/BTNMT emission standards set byVietnam governmen t. I n 2018, the total amount of sulfur dioxide emissions was 67.45 tons, and the total amount of nitrogen oxides
emissions was 73.3 tons.Project Environmental Impact Assessment and Other Administrative Permission for Environmental ProtectionIn treat ment and comprehensive i mprovement proj ect of PVA waste water at high concentration of Lu Thai Textil e in 2018 (I), theapproval has been obtained, and the main works have been completed and entered the commissioning phase; The treatment andcomprehen sive i mpro ve ment p ro ject o f PV A waste water at h igh co n cent ratio n of Lu Thai Text ile ( II) h as co mpleted th e accept ance;The technical transformation of production line of high-grade greige cloth of Lu Thai Textile has been approved. The project is underconstruction. The technical transformation project of automatic equipment of Lu Thai Garment has been completed. In its holdingsubsidiary Lufeng Weaving & Dyeing Co., Ltd., EIA project of technical transformation of high-grade printed fabric production linehas been approved and entered the trial run phase. The production line of high-grade greige cloth has been accepted; The separationof dyeing wastewater liquid membrane and comprehensive improvement project of sewage station in Lufeng Weaving & Dyeing hasbeen a pproved and entered the commissioning phase. Its wholly-owned subsidiary Zibo Xinsheng Thermal Power Co., Ltd. hasobtained Reply of Environmental Protection Department of Shandong Province on Environmental Impact Report of ExpansionProject of Zibo Xinsheng Thermal Power Co., Ltd. (LHS [2015] No. 241) as specified. The expansion project (phase II) is underconstruction. The completion acceptance of environmental protection project for spinning and yarn-dyed park phase I in itswholly-owned subsidiary Lu Thai (Vietnam) Co., Ltd. has been confirmed. EIA report of spinning phase II and yarn-dyed park phaseII has been approved.Emergency plan for environmental incidentsThe head office, factories in eastern dist rict, an d factories in western d istrict of Lu Thai Textile Co., Ltd., and its majority-ownedsubsidiary Lufeng Weaving & Dyeing Co., Ltd. prepared the Emergency Plan for Environmental Incidents, which was filed withZibo Environmental Protection Bureau Xichuan Branch. The wholly-owned subsidiary Zibo Xinsheng Thermal Power Co., Ltd. hasformulated the "Emergency Plan for Environmental Incidents" and filed it with the environmental protection management department.The identification and risk assessment of environmental risk sources, prevention and early warning mechan isms, emergencyprotection and supervision and management were included in the plan. The wholly-owned subsidiary Lu Thai (Vietnam) Co., Ltd.has pr epared emer gency plans for different environmental incidents to reduce their impacts.Environmental self-monitoring programIn accordance with the requirements of environmental protection authorities, Lu Thai Textile Co., Ltd and and its majority-ownedsubsidiary Lufeng Weaving & Dyeing Co., Ltd. formulates environmental self-testing plan for the following year in December ofeach year accordint to the requirements of superior environmental protection administration, and implements the self-monitoring planto submit data to Zibo Automatic Environmental Monitoring System. The Company invited external qualified angency to detect thesewage, sludge, and exhaus t gas every quarter, and report the examing report to environment inspection department. Thewholly-owned subsidiary Zibo Xinsheng Thermal Power Co., Ltd. complies with the requirements of superior environmentalprotection authorities to meet discharge standards by online real-time monitoring of environmental protection data. Thewholly-owned subsidiary Lu Thai (Vietnam) Co., Ltd. installed an on-line monitoring device for real-time treated water qualitymonitoring. In addition, the Company invites external qualified testing organizations to carry out inspections on waste water, sludgeand exhaust gas every quarter, and provides reports to environmental inspection departments.Other environment information that should be disclosedNoOther related environment protection informationNo
XIX Other Significant Events
√ Applicable □ Not applicableThe Company held its 2
nd
Extraordinary General Meeting of 2018 on 23 March 2018 and passed Bill to Buy Bac k Some of the
B-shares of the Company. For details, please refer to the relevant announcements on www.cninfo.com.cn published on 24 March2018 (N o.: 20 18-013); The Company disclosed Report on the Buyback of Some B-shares of the Company on 16 May 2018 and issuedAnnouncement of Lu Thai Textile Co., Ltd. about the Implementation of Buy-back of Shares on 29 May 2018 that the first buybackshares were disclosed for the first time. The above contents refer to relevant announcements on www.cninfo.com.cn.As of 31 Dec ember 2018, the Company had repurchased 62,751,332 B shares. As of 22 March 2019 when the repurchase periodexpired the Company repurchased 64,480,770 B shares. For details, please refer to the relevant announcements onwww.cninfo.com.cn published on 3 January 2019 and 23 March 2019 (No.: 2019-001; 2019-013).
XX Significant Events of Subsidiaries
□ Applicable √ Not applicable
Part VI Share Changes and Shareholder Information
I. Share Changes
1. Share Changes
Unit: share
Before Increase/decrease in the Reporting Period (+/-) After
Shares
Percentage
(%)
Newissues
Shares
as
| dividend |
converte
d fromprofit
Shares
as
converte
d fromcapitalreserves
Other Subtotal Shares
Percentag
e (%)
I. Restricted shares
| 119,079,944 | 12.91% | 215,875 |
215,875
| 119,295,819 |
12.93%
3. Shares held by otherdomestic corporations
847,544
| 0.09% | 215,875 |
215,875
1,063,419
0.12%
Shares held by domesticnatura l pe rs ons
847,544
| 0.09% | 215,875 |
215,875
1,063,419
0.12%
4. Shar es held by for e igninvestors
| 118,232,400 | 12.82% | 118,232,400 |
12.82%
Among which: Sharesheld by f or e i g ncorporations
| 118,232,400 | 12.82% | 118,232,400 |
12.82%
II. Unrest r icted shares 803,522,367
| 87.06% |
-
-215,875
| 215,875 |
803,306,492
87.07%
1. RMB ordinary shares 561,150,431
| 60.79% |
-
-45,000
| 45,000 |
561,105,431
60.82%
2. Domestically listedforeign shares
242,371,936
| 26.27% |
-
-170,875
| 170,875 |
242,201,061
26.25%
III. Total shares
| 922,602,311 | 100.00% |
| 922,602,311 |
100.00%
Reason s fo r s hare changes:
√ Applicable □ Not applicableShenzhen Branch of China Securities Depository and Clearing Corporation Limited locked and adjusted theshareholding of the Senior ExecutivesApproval of share changes:
□ Applicable √ Not applicableTrans fer of share ownership:
□ Applicable √ Not applicableProgress on any share repurchases:
√ Applicable □ Not applicableThe Company held its 2
nd
Extraordinary General Meeting of 2018 on 23 March 2018 and passed Bill to Buy Bac k Some of theB-shares of the Company. For details, please refer to the relevant announcements on www.cninfo.com.cn published on 24 March2018 (N o.: 20 18-013); The Company disclosed Report on the Buyback of Some B-shares of the Company on 16 May 2018 and issuedAnnouncement of Lu Thai Textile Co., Ltd. about the Implementation of Buy-back of Shares on 29 May 2018 that the first buybackshares were disclosed for the first time. The above contents refer to relevant announcements on www.cninfo.com.cn.As of 31 Dec ember 2018, the Company had repurchased 62,751,332 B shares. As of 22 March 2019 when the repurchase periodexpired the Company repurchased 64,480,770 B shares. For details, please refer to the relevant announcements onwww.cninfo.com.cn published on 3 January 2019 and 23 March 2019 (No.: 2019-001; 2019-013).Progress on reducing the repurchased shares by means of centralized bidding:
√ Applicable □ Not applicableMr. Quan Peng, the senior executive of the Company, reduced 6,900 shares by means of centralized bidding on 14 February 2019 dueto his p erson al cap ital needs, and the average p ri ce of th is tr ade was RMB 10.15 /sh are, accoun ting for 0.00075% of the total shares ofthe Company. For details, see related announcements (No. 2019-001, and 2019-006) disclosed onwww.cninfo.com.cn on 3 January
2019, and 15 February 2019.Effects of share changes on the basic and diluted earnings per share, equity per share attributable to the Company’s ordinaryshareholders and oth er financial indicators of the prior year and the prior accounting period, respectively:
□ Applicable √ Not applicableOther information that the Company considers necessary or is required by the securities regulator to be disclosed:
□ Applicable √ Not applicable
2. Changes in Restricted Shares
√ Applicable □ Not applicable
Unit: shareName ofshareholder
Openingrestricted
shares
Unlocked inReport ing Period
Increased inReport ing Period
Closingrestrict ed shares
Reason forlock-up/unlocking
Date of unlocking
LiuZibin
| 96,067 |
15,150
111,217
| Locked the shareholding |
of the Senior Executives
6 months after the
departure of
directorWangFangshui
| 71,740 |
38,325
110,065
Locked th e
of the Senior Executives
6 months after the
departure of
directorQinGuiling
| 53,431 |
41,475
94,906
| Locked the shareholding |
of the Senior Executives
6 months after the
departure of
director
ZhangHongmei
| 48,300 |
21,075
69,375
Locked th e
of the Senior Executives
6 months after the
departure of
director
ZhangShougang
| 45,000 |
9,825
54,825
| Locked the shareholding |
of the Senior Executives
6 months after the
departure of
supervisorLiu
Zilong
7,500
7,500
Locked th e
of the Senior Executives
6 months after the
departure of
supervisorZhangJianxiang
| 34,687 |
4,425
39,112
| Locked the shareholding |
of the Senior Executives
6 months after thedeparture
| of senior |
executiveZhangZhanqi
| 52,725 |
7,500
60,225
| Locked the shareholding |
of the Senior Executives
6 months after thedeparture
| of senior |
executiveZhangKeming
| 46,875 | 11,400 |
58,275
| Locked the shareholding |
of the Senior Executives
6 months after thedeparture
| of senior |
executiveWangJiabin
| 55,275 |
7,500
62,775
| Locked the shareholding |
of the Senior Executives
6 months after thedeparture
| of senior |
executivePanPingli
| 69,572 |
34,375
103,947
| Locked the shareholding |
of the Senior Executives
6 months after thedeparture
| of senior |
executiveYuShouzheng
| 45,000 |
17,325
62,325
| Locked the shareholding |
of the Senior Executives
6 months after thedeparture
| of senior |
executiveTotal
| 618,672 |
215,875
834,547
-- --
II. Issuance and Listing of Securities
1. Securities (Exclusive of Preferred Shares) Issued in the Reporting Period
□ Applicable √ Not applicable
2. Changes to Total Shares, Shareholder Structure and Asset and Liability Structures
□ Applicable √ Not applicable
3. Existing Staff-Held Shares
□ Applicable √ Not applicable
III Shareholders and Actual Controller
1. Shareholders and Their Shareholdings at the Period-End
Unit: share
ordinaryshareholders
54,163
| Number of | Number of |
ordinary
the month-
| end |
prior to
Report
| the disclosure of this | 54,494 | Number of |
preferred
note 8)
| shareholders with resumed voting rights (if any) (see | Number of |
preferred
rights at
| the |
month-
to the
| disclosure of this Report (if |
any) (see note 8)
5% or greater shareholders or top 10 shareholdersName of shareholder
Nature ofshareholder
Sharehol
dingpercenta
ge
Total shares
held at theperiod-end
Increase/decrease in theReporting
Period
Restrictedshares h eld
| Total shares |
Unstrictedshares h eld
Shares in pledge
or frozenStatus
Shares
| Zibo Lucheng Textile Investment |
Co., Ltd.
Domesticnon-state-o
person
15.21%
| wned legal | 140,353,583 |
- 0
| 140,353,583 | |||||
| Tailun (Thailand) Textile Co., Ltd. |
Foreignlegal person
12.82%
| 118,232,400 |
-
| 118,232,400 | |||||
| Hong Kong Securities Clearing |
Co . Ltd
Foreignlegal person
3.69%
| 34,015,548 |
16,189,393
| 34,015,548 | ||||||
| Central Huijin Assets |
Management Co., Ltd.
State-
legal person
2.20%
| owned | 20,315,300 |
-
| 20,315,300 |
T.Rowe Price Intl Discovery Fund
Foreignlegal person
2.16%
| 19,948,219 |
-
| 19,948,219 | ||||||
| China Securities Finance |
Corporation Limited
Other 1.98%
| 18,313,391 |
2,634,300
| 18,313,391 | ||||||
| National Social Security Fund |
Portfolio 103
Other 1.30%
| 11,999,947 | 11,999,947 |
| 11,999,947 | |||||
| Hong Kong Monetary |
Other 1.26%
| 11,635,393 |
3,220,756
| 11,635,393 |
Authority-self-owned funds
Securi ties Investment Fund
Other 1.08%
| Bosera Selected Mixed | 9,991,034 |
9,991,034
| 9,991,034 |
Invesco Great Wall
Capital Construction
| Mixed |
Securi ties Investment Fund
Other 1.08%
| 9,939,476 |
9,939,476
| 9,939,476 | ||||||
| Strategic investor or general legal person |
becoming a top-
rights issue (if any) (see note 3)
Naught
Related or acting-in-
| 10 ordinary shareholder due to |
| concert parties among the |
shareh olders above
Zibo
All of other shareholders are people holding public A share or public
| B share and the Company is not able to confirm whether there is associated relationship or |
concerted action among other shareholders.Top 10 unrestricted shareholdersName of shareholder Unrestricted shares held at the period-end
Shares by typeType SharesZibo Lucheng Textile Investment Co., Ltd.
| 140,353,583 |
RMB ordinary share 140,353,583
Hong Kong Securities Clearing Co. Ltd
| 34,015,548 |
RMB ordinary share 34,015,548
Central Huijin Assets Management Co., Ltd.
| 20,315,300 |
RMB ordinary share 20,315,300
T.Rowe Price Intl Discovery Fund
| 19,948,219 | Domestically listed |
foreign share
19,948,219
China Securities Finance Corporation Limited
| 18,313,391 |
RMB ordinary share 18,313,391
National Social S ecurity Fund Portfolio 103
| 11,999,947 |
RMB ordinary share
Hong Kong Monetary Authority-self-
| 11,999,947 | ||
| owned |
funds
RMB ordinary share
| 11,635,393 | 11,635,393 |
Bosera Selected Mixed
Fund
| Securities Investment | 9,991,034 |
RMB ordinary share 9,991,034
Invesco Great Wall
| Energy Capital Construction |
Mixed Securities Investment Fund
RMB ordinary share 9,939,476
| 9,939,476 |
Invesco Great Wall
Securi ties Investment Fund
| Hugangshen S elected Stock | 6,769,285 |
RMB ordinary share 6,769,285
Related or acting-in-
| concert parties among top |
10 unrestricted public
between to p 10 unrestricted public
| shareholders |
and top 10 shareholders
Company and
| the actual controller. Tailun (Thailand) Textile Co., Ltd. is the second largest sharehold er as well as sponsor of foreign capital of th e Company. |
All of other shareholders are people holding public A share or public
the Company is not able to
| confirm whether there is associated relationship or |
concerted action among other shareholders.
securit ies margin trading (if any) (see note 4)
N/AIndicate by tick mark whether any of the top 10 ordinary shareholders or the top 10 unrestricted ordinary shareholders of theCompany conducted any promissory repo during the Reporting Period.□ Yea √ NoNo such cases in the Reporting Period.
2. Controlling Shareholder
Nature of the controlling shareholder: Controlled by a natural personType of the controlling shareholder: legal person
Name of controlling
shareholder
Legalrepresentative/person in
charge
Date of estab lishment
Unified s ocial credit
code
Principal activity
Zibo Lucheng TextileInvestment Co., Ltd.
Liu Deming 25 September 1998 91370303164200391J
Top 10 ordinary shareholders involved in
Investment on textile,electrici ty and chemical;purchase, process andsale of cotton; retailservice et c.
| Particulars about shareholding |
of controlling shareholders
of other listed companiesduring the Reporting Period
N/A
Change of the controlling shareholder in the Reporting Period:
□ Applicable √ Not applicableNo such cases in the Reporting Period.
3. Actual Controller and Its Acting-in-Concert Parties
Nature of the actual controller: Domestic natural personType of the actual controller: natural person
Name of the actual controller Relations with the actual controller
National
ity
controlling and holding sharesWhether gai n the right of residence
in other countries or regions or not
Liu Zibin In person China NoLiu Deming
Concerted action (including agreement,
relatives, and same control)
China No
Professions and titles
Liu Zibin is the Chai rman of the Board and GM of Lu Thai Textile Co., Ltd. , LiuDeming is the Chairman of the Board and GM of Zibo Lucheng Textile InvestmentCo., Ltd.
over th e past 10 years
N/AChange of the actual controller during the Reporting Period:
□ Applicable √ Not applicableNo such cases in the Reporting Peri od.Ownership and control relations between the actual controller and the Company:
Indicate by tick mark whether the actual controller controls the Company via trust or other ways of asset m anagement.□ Applicable √ Not applicable
4. Other 10% or Greater Corporate Shareholders
√ Applicable □ Not applicable
Name of corp orate
shareholder
Legal repr esentative /
company principal
Date ofestablishment
Registered capital Business scopeTailun (Thailand) TextileCo., Ltd.
Xu Zhinan 29 January 1985
600 mi ll ion ba ht
(Thai)
600 million baht (Thai)
5. Limitations on Shareholding Decrease by the Company’s Controlling Shareholder, Actual Controller,Reorganizer and Other Comm itment Makers
□ Applicable √ Not applicable
4%
Particulars about listed companies withshares ever held by the actual controller
Zibo Lucheng Textile Investment Co., Ltd.
Zibo Lucheng Textile Investment Co., Ltd.0.02%
0.02%Lu Thai Textile Co., Ltd.
Lu Thai Textile Co., Ltd.Liu Zibin
| Liu Zibin | Liu Deming |
15.21%
Part VII Preferred Shares
□ Applicable √ Not applicableNo preferred shares in the Reporting Period.
Part VIII Directors, Supervisors, Senior Management and Staff
I Change in Shareholdings of Directors, Supervisors and Senior Management
Name
Office
title
Incumbent/Former
Gende
r
AgeStart of tenure
End
Beginnin
gsharehold
ing(share)
Increase
in the
| of tenure | Reporting |
Period(share)
Decrease
in the
Period(share)
Otherincrease/d
ecrease
(share)
Endingsharehold
ing
(share)Liu Zibin
Chairmanand GM
Incumbent
Male 54
| Reporting | ||
6 June 2007 5 June 2019
148,290
148,290
XuZhinan
VicePresident
Incumbent
Male 89
6 May 2004 5 June 2019
FujiwaraHidetoshi
Director
Incumbent
Male 79
7 May 1998 5 June 2019
ChenRuimou
Director
Incumbent
Male 75
16 Apr il 2000
5 June 2019
ZengFacheng
Director
Incumbent
Male 68
6 June 2007 5 June 2019
WangFangshui
Director,
Engineer
Incumbent
Male 58
| Vice GM, and Chief |
7 May 1998 5 June 2019
146,753
146,753
LiuDeming
Director
Incumbent
Male 28
12 May 2017
9 June 2019
QinGuiling
DirectorandSecretaryof theBoard
Incumbent
Femal
e
7 May 1998 5 June 2019
126,542
126,542
ZhangHongmei
Director
| and Chief |
Accountant
Incumbent
Femal
e
6 June 2016 5 June 2019
92,500
92,500
XuJianjun
IndependentDirector
Incumbent
Male 45
6 June 2013 5 June 2019
Zhao Yao
Independent
Incumbent
Male 49
19 Septe mber2014
5 June 2019
DirectorBi Xiuli
Independ
ent
Director
Incumbent
Femal
e
6 June 2016 5 June 2019
PanAiling
Independ
ent
Director
Incumbent
Femal
e
6 June 2016 5 June 2019
WangXinyu
Independ
ent
Director
Incumbent
Male 52
6 June 2016 5 June 2019
ZhangShougang
Superviso
ry
Committe
e
Chairman
Incumbent
Male 49
8 February2018
5 June 2019
73,100
73,100
LiuZilong
Superviso
r
Incumbent
Male 51
6 June 2007
5 June 2019
10,000
10,000
DongShibing
Superviso
r
Incumbent
Male 50
6 June 2007
5 June 2019
5,000
5,000
ZhangJianxiang
Vice GM
Incumbent
Male 51
6 June 2007 5 June 2019
52,150
52,150
WangJiabin
| Vice GM, |
Product
Manager
Incumbent
Male 56
6 June 2007
5 June 2019
83,700
83,700
ZhangZhanqi
| Vice GM, GM of |
Lufeng
Company
Incumbent
Male 47
6 June 2007 5 June 2019
80,300
80,300
FujiwaraMatsuzaka
Manager
of Japan
Office
Incumbent
Male 46
9 December2014
5 June 2019
ZhangKeming
Financial
Manager
Incumbent
Male 51
6 June 2007 5 June 2019
77,700
77,700
Li Wenji
CIO
Incumbent
Male 52
8 June 2016 5 June 2019
10,000
10,000
LvYongchen
| Vice GM |
of
Company
Incumbent
Male 51
| Lufeng |
6 June 2007
5 June 2019
33,750
33,750
YuShouzhen
Energy
Business
Incumbent
Male 51
6 June 2007 5 June 2019
83,100
83,100
g ManagerWangChangzhao
GMassistant,FabricMarketingManager
Incumbent
Male 45
6 June 2013 5 June 2019
22,500
22,500
QuanPeng
BrandMarketingmanager
Incumbent
Male 52
6 June 2013 5 June 2019
27,750
27,750
ShangChenggang
ManagerofGarmentsProductionDepartment
Incumbent
Male 46
6 June 2013 5 June 2019
30,000
30,000
Du Lixin
Deputychiefengineer,
Thai
| (Vietnam) |
Incumbent
Male 43
18 January2018
5 June 2019
GuoHeng
ManagerofBusinessManagement
Incumbent
Male 46
18 January2018
5 June 2019
ZhangWei
GMassistantandManagerofStrategyPlanningDepartment
Incumbent
Male 33
18 January2018
5 June 2019
LiTongmin
SupervisoryCommittee
Former Male 63
18 January2018
5 June 2019
176,164
176,164
ChairmanPanPingli
Customs
Manager
Former Male 51
6 June 2007
18 January2018
134,296
4,300
138,596
Total -- -- -- -- -- -- 1,413,595
4,300
1,417,895
II Change of Directors, Supervisors and Senior Management
√Applicable □ Not applicable
Name Office title Type of change Date of change Reason for changeLi 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 Appointed 8 February 2018Pan Pingli Customs Manager Dismissed 18 January 2018 Job turnoverDu Lixin GM of Lu Thai (Vietnam) Appointed 18 January 2018Guo Heng Manager of Business Management Appointed 18 January 2018Zhang Wei
GM assistant and Manager of StrategyPlanning Department
Appointed 18 January 2018
III Biographical Information
Professional backgrounds, major work experience an d current duties in the C ompany of the incumbent directors, supervisors andsenio r man agement:
1. Mr. Liu Zibin: Director and concurrently General Manager of the Company. He was born in 1965, and achieved Master Degree.From Oct. 2004 to Jun. 2007, he acted as Chairman of the Board of Zibo Lucheng Textile Investment Co., Ltd, now concurrently wasChairman of the Board of Xinjiang Lu Thai Good Yield Cotton Co., Ltd., Xinjiang Lu Thai Textile, Lufeng Weaving & Dyeing,Luqun Textile, Xinsheng Thermal Power, Chengshun Thermal Power, Shanghai Li Thai, and Beijing Lu Thai Youxian, and thePresident of Lu Thai (America), Director of Lu Thai (Hong Kong) and Shanghai Zhinuo Text ile New Material Co., Ltd.2. Mr. Xu Zhinan: Vice Chairman of the Board of the Company. He was born in 1930, Thailand Nationality. Since 2004, he has beenacting as Di rector and Vice Chairman of the Board of the Company, and General Manager of Tailun (Thailand) Textile Co., Ltd.3. Mr. Fujiwara Hidetoshi: Director of the Company. He was born in 1940, Japanese Nationality. Since 1998, he has been holdingpost of Director of Lu Thai Company, and Director of Lufeng Weaving & Dyeing Co., Ltd.4. Mr. Chen Ruimou: Director of the Company. He was born in 1944, and holder of bachelor degree. From 1998 to now, he has beenDirector of the Company.5. Mr. Zeng Facheng, Director of the Company, was born in 1951, Thailand nationality. He acts as Chairman of the Board of GOLDMINE GARMENT CO., LTD. and BLOSSOM GARMENT MANUFACTURING (THAILAND) CO., LTD.6. Mr. Wang Fangshui: Director, Vice General Manager and Chief Engineer of the Company. He was born in 1961, holder of MBAdegree. Since 1998, he has been Director and Chief Engineer of the Company, and concurrently is Director of Xinjiang Lu Thai GoodYield Cotton Co., Ltd., Lufeng Weaving & Dyeing, Xinjiang Lu Thai, Luqun Textile, and Shanghai Zhinuo Textile New Material Co.,Ltd, and the Executive Director of Lu Thai (Burma).7. Mr. Liu Deming: Director, Assistant of GM of the Company. He was born in 1990, and achieved Master Degree. He is theChairman and GM of Zibo Lucheng Textile Investment Co., Ltd, the supervisor of Beijing Lu Thai Youxian, and the director of
Shanghai Zhinuo Textile New Material Co., Ltd.8. Ms. Qin Guiling: Director, and Secretary to the Board of the Company. She was born in 1966, holder of MBA degree. Since 1998,she has been Director and Secretary to the Board of the Company, and Supervisor of Xinjiang Lu Thai Good Yield Cotton Co., Ltd.,Xinjiang Lu Thai Textile Co., Ltd.9. M s. Zhang Hongmei: Chief Accountant. She was born in 1970; holder of MBA degree and senior accountant. She had servedsuccessiv ely as Chie f of cost sectio n of financial d epartment o f Lu Thai Textile Co., Ltd., director of th e accounti ng department anddeputy chief accountant. Now she serves as Chief Accountant of the Company. At the same time, she is the director of Luqun Textile,and supervisor of Beijing Lu Thai Youxian and Shanghai Zhinuo Textile New Material Co., Ltd10. Mr. Xu Jianjun: Independent Director of the Company, born in 1974, master degree holder. Once took the post of Senior StaffMember of Head Office of Bank of China, Legal Counsel, lawyer at Beijing Jingtian Gongsheng Law Firm. From August of 2004 upto n ow, serves as a partner of Beijing Deheng Law Firm. Now he is taking a post of partner and Deputy Director of Beijing DehengLaw Firm.11. M r. Zhao Yao: Independent Director of the Company, born in 1970, master degree holder, associate professor of accounting,master tut or and successively acted as member of a council of Accou nting Association in Sh andong Province, executive member ofthe council of Shandong Province Institute of CPAs, member of Shandong Province internal control consultant experts, member ofShandong Province accounting criterion consultant experts and currently act as Director of Department of Accounting of ShandongUniv e rs i ty of Technology.12. M s. Bi Xiuli: female, independent director of the Company, born in 1967, master. She worked as a judge of Zibo IntermediatePeople's Court from 1990 to 1996, worked as a lawyer of Beijing Jingwei Law Firm from 2002 to 2003, worked as a lawyer ofBeijing King & Capital Law Firm from 2003 to 2004, worked as a partner of Beijing JunZeJun Law Offices from 2004 to 2011 andworks as a partner of Beijing DeHeng Law Offices now.13. M s. Pan Ailing: female, independent director of the Company, born in 1965, doctor of economics, postdoctor of financialmanagement. Now, she works as a professor, doctoral supervisor and academic leader of accounting in School of Management ofShandong University, the director of investment and financing research center of Shandong University, a member of ShandongAccounting Societ y, an executive member of Shandong Research S ociety of Comparative Management and a visiting professor ofTaiwan Soochow University.14. Mr. Wang Xinyu: male, independent director of the Company, born in 1967, master, certified public accountant, certified taxagent and certified p ublic assets estimator. From December 2007 to August 2013, he worked in Zhonglei Accounting Firm as thevice general manager of Shandong branch. Now he works as the senior partner and director of Shandong branch of Reanda CertifiedPub lic Accountants (special general partnership).15. Mr. Zhang Shougang: male, chairman of supervisory committee, born in 1970, MBA, senior engineer. He once worked as thefactory manager of weaving factory of the Com pany, manager of weaving business division, quality management department,Garments Pr oduction Department, and business management dividion.16. Mr. Liu Zilong: Supervisor of the Company. He was born in 1968, holder of MBA degree. From 2002 to present, he was GeneralManager of Lu Thai (Hong Kong).17. Mr. Dong Shibing: Supervisor of the Company. He was born in 1969, graduated from technical secondary school. He ever tookthe post of Deputy Director of the General Manager Office of the Company, and now holds post of Manager of PropertyManage ment C ompany.18. Mr. Zhang Jianxiang: male, vice general manager of the Company & the executive director of Lu Thai Textil e GarmentEngineering Research Institute, born in 1968, Master of Business Administration. He once worked as the manager of qualitymanagement department of the Company and the director of textile finishing factory.19. Mr. Wang Jiabin: General Manager Assistant and Manager of Production Department of the Company, head of securitycheckpoint of production department. He was born in 1963, MBA and once acted as Manager of Dyeing Business Department.
20. Mr. Zhang Zhanqi: General Manager As sistant and dep uty General Manager in Lufeng Weaving & Dyeing of the Company. Hewas born in 1972, MBA, once worked as Director of Fabric Finishing Plant and Manager of Quality Control Department.21. M r. Fujiwara Matsuzaka: Manager i n Japan office. He was born in 1973 and had acted as Manager of International BusinessDepartment I and cl othes marketing department of the Company.22. M r. Li Wenji : male, CIO & manager of in formation depar tment of the Company, born in 1967. He once worked as a teacher inShandong University of Finance and Economics. From July 2005 to now, he works as the manager of information department of theCompany. In 2016, he was employed as chief information officer of the Company.23. M r. Zhang Keming: Manager of Financial Department of the Company. He was born in 1968, MBA and senior accountant. From2002 to 2006, he held the post of Deputy Manager of Financial Department; from Apr. 2006 to present, he has acted as Manager ofFinancial D epartment.24. M r. Lv Yongchen: Deputy General Manager of Lufeng Weaving and Dyeing Co., Ltd. He was born in 1968 and MBA degreeholder. From 2002 to 2010, he acted as Deputy Manager of International Business Department in the Company.25. Mr. Yu Shouzheng: Energy Business Manager of the Company. He wa s born in 1968, MBA degree holder and engineer. He onceworked as Director of Dynamic Department in the Company. From 2007 to present, he has acted as Manager of Energy BusinessDepartment in the Company.26. M r. Wang Changzhao: GM assistant, manager of fabric marketing department of the Company. He was born in 1974 and hadacted as General Manger Assist ant of International Business Department.27. Mr. Quan Peng: Manager of brand expanding department of the Company. He was born in 1967, MBA degree holder. From 2004to p r es ent , he has acted as Marketing Manager.28. Mr. Shang Chenggang: manager of garments production department of the Company, born in 1973. He once worked as the vicedirector and director of general manager office, the manager of enterprise manager department and the representative of managers.29. Mr. Du Lixin: dedputy chief engineer, GM of Lu Thai (Vietnam) Textile Co., Ltd, born in 1975. He once held the posts ofspinning operator, planner of weaving factory, deputy director of production dept. control center, director of weaving factory,manager of weaving business division, and vice manager of production dept. of the Company.30. Mr. Guo Heng: manager of business management dept. of the Company, born in 1972. He once worked as deputy director ofspinnery, vice manager of yarn business division, and manager of yarn business division of the Company.31. Mr. Zhang Wei, GM assistant and manager of strategy planning dept. of the Company, born in 1985, doctor. He once worked asthe reasearch er of Guo tai Ju n an Secu rit ies Co ., Ltd and China Asset management Co., Ltd. Now he acts as the director of Beijing LuTha i Youxian E-commerce Co., Ltd., and Shanghai Zhinuo Textile New Material Co., Ltd32. Mr. Li Tongmin: male, born in 1956, technical secondary school education. Now he works as chairman of the labor union of theCompany. From October 1993 to 2010, he worked as supervisor, chairman of supervisory committee, manager of productiondepartment and vice general manager of the Company.33. M r. Pan Pingli: Customs Manager of the Company. He was born in 1968 and MBA degree holder. He ever acted as GeneralManager of International Business Department of the Company.Offices held concurrently in shareholding entities:
√Applicable □Not applicable
Name Shareholding entity
Office held in theshareholding entity
Start of tenure
End oftenure
Rem une r a ti on orallowance from
| the shareholding entity |
Liu Zibin Zibo Lucheng Textile Investment Co., Ltd. Director 26 February 1999
NoXu Zhinan Tailun (Thailand) Textile Co., Ltd. Chairman 29 January 1985 NoLiu Deming Zibo Lucheng Textile Investment Co., Ltd. Chairman and GM 1 February 2017 No
Explanations aboutholdingposts inshareholders’ companies
Mr. Liu Zibin is the Director of Zibo Lucheng Textile Investment Co., Ltd., holding 4% equities of Zibo LuchengTextile Investment Co., Ltd. Basic information of Mr. Liu Zibin: Chinese, no right of residence in other countries orregions. Mr. Liu Deming holds the post of Chairman and GM of Zibo Lucheng Textile Investment Co., Ltd., holding21% equities of Zibo Lucheng Textile Investment Co., Ltd. Basic information of Mr. Liu Deming: Chinese, no rightof residence in other countries or re gions. Mr. Xu Zhinan is the sponsor of foreign capital of the Company,shareholder of Tailun (Thailand) Textile Co., Ltd. and Tailun (Thailand) Textile Co., Ltd. is the second largestshareholder of the Company. Basic information about Mr. Xu Zhinan: Thai.Offices held concurrently in other entities:
√Applicable □Not applicable
Name Other entityOffice held in the
Start oftenure
End oftenure
| entity | Rem une r a ti on or |
allowance from
the entity
Liu Zibin
Co., Ltd.,
| Zibo Xinsheng Thermal Power Co., |
Ltd., Zibo Chengshun Thermal Power
Shanghai Lu Thai Textile Garmen
| t Co., Ltd., |
Beijing Lu Thai Youxian E-
(HK) Textile Co., Ltd,
| Shanghai Zhinuo Textile |
New Materi al C o ., Ltd
Chairman, D irector,Chairman of and GM
December2015
No
Wang Fangshui
| Xinjiang Lu Thai Good Yield Cotton Co., Ltd., Xinjiang Lu Thai Textile Co., Ltd., Lufeng Weaving & Dyeing Co., Ltd . Zibo Lu qun Textile |
Co., Ltd., Lu Thai (Burma) Textile Co., Ltd.
Shan ghai Zhinuo Textile New Material Co., Ltd
Director and Supervi s or
| , Lu Thai (Vietnam) Textile Co., Ltd., and |
17 June2003
No
Liu Deming
Shanghai Zhinuo Textile New Material Co., Ltdand Beijing Lu Thai Youxian E-commerce Co.,Ltd.
Directo r and Supervisor
21 Aug ust2017
NoQin Guiling
Xinjiang Lu Thai Good Yield Cotton Co., Ltd.,and Xinjia ng Lu T hai Textile Co., Ltd
Supervisory Board
Chairman
17 June2003
NoZhang Hongmei
Zibo Luqun Textile Co., Ltd., Beijing Lu ThaiYouxian E-commerce Co., Ltd., and ShanghaiZhinuo Textile New Material Co., Ltd
Directo r and Supervisor
17 June2003
NoXu Jianjun Beijing Deheng Law Offices Partner
1 Aug ust2004
YesZhao Yao Shandong University of Technology Associate Professor
1 March2001
YesBi Xiuli Beijing Deheng Law Offices Partner
1 January2011
Yes
Pan Ailing Shandong University School of Management Professor
1 July1986
YesWang Xinyu
Reanda Certified Public Accountants ShandongBranch
Director
1 Aug ust2013
YesZhangJianxiang
Beijing Lu Thai Youxian E-commerce Co., Ltd.,Shan ghai Lu Thai Textile Garment Co., Ltd.,
Dire c t or and Supervisor
December2010
No
Du Lixin Lu Thai (Vietnam) Textile Co., Ltd. GM
December2015
No
Zhang Wei
Beijing Lu Thai Youxian E-commerce Co., Ltd.,and Shanghai Zhinuo Textile New Material Co.,Ltd
Director
23 May2014
YesPunishments imposed in the recent three years by the securities regulator on the incumbent directors, supervisors and seniormanagement as well as those who left in the Reporting Period:
□ Applicable √ Not applicable
IV Remuneration of Directors, Supervisors and Senior Management
Decision-making procedure, determination basis and actual payments of remuneration for directors, supervisor s and seniormanagement:
Remuneration committee under the board of directors is responsible for formulating assessment standards of directors and seni
orexecutives and conducting assessment; for formulating and reviewing remuneration policy and program of directors and senior
exec
| utives; it is responsible for the board of directors. The remuneration committee, according to appraisal results of position performance and motivation and restriction plan for senior executives, proposes amount of payment and methods of reward for |
directo
voting.
| rs and senior executives and submits the above resolutions to the board of directors for ratification after the approval by |
| The Chief Accountant Office, the Corporate Management Department and the HR Department of the Company was responsible for |
preparations for the decision-
Compan y as follows: (I) acco mplishment of main financial an d business obj ectives; (II) acco mplishment of relevan t indicators
| of |
other listed companies in the sector; (III) work scope and main responsibilities of senior management staff.The remuneration committee appraised directors and senior management staff according to the
Company’s performance and the an
| nual appraisal results of senior management staff were put forward according to the performance appraisal results and the senior staff incentive and disciplinary plan. Upon approval by voting, the results were |
reported to the Board of Directors for approval.The number of incumbent directors, supervisors and senior executives is 31, among which there are 31 persons actually receivingremuneration from the Company. Till 31 December 2018, the total amount of annual payment drawn from the Company bydirectors, supervisors and senior executives is RMB23. 5271million (before tax).Remuneration of directors, supervisors and senior management for the Reporting Period
Unit: RMB'0,000
Name Office title Gender Age
Incumbent/For
mer
Total before-taxremuneration from
the Company
Anyremuneration
Liu Zibin Chairman and GM Male 54
| from related party | ||
Incumbent 147.59
NoXu Zhinan Vice President Male 89
Incumbent 37.35
NoFujiwaraHidetoshi
Director Male 79
Incumbent 374.5
NoChen Ruimou Director Male 75
Incumbent 37.35
NoZeng Facheng Director Male 68
Incumbent 1.19
NoWangFangshui
Directo r and Vice GM and Chief Engineer
Male 58
Incumbent 156.5
NoLiu Deming Director Male 28
Incumbent 14.13
NoQin Guiling Director and Chairman Secretary Female 53
Incumbent 162.97
NoZhangHongmei
Director and Chief Accountant Female 49
Incumbent 106.61
NoXu Jianjun Independent Director Male 45
Incumbent 4.8
NoZhao Yao Independent Director Male 49
Incumbent 4.8
NoBi Xiuli Independent Director Female 52
Incumbent 4.8
NoPan Ailing Independent Director Female 54
Incumbent 4.8
NoWang Xinyu Independent Director Male 52
Incumbent 4.8
NoZhangShougang
Supervisory Board Chairman Male 49
Incumbent 91.95
NoLiu Zilong Supervisor Male 51
Incumbent 72.3
NoDong Shibing Supervisor Male 50
Incumbent 69.24
NoZhangJianxiang
Vice GM Male 51
Incumbent 108.16
NoWang Jiabin Vice GM, Product Manager Male 56
Incumbent 101.98
NoZhang Zhanqi Vice GM, GM of Lufeng Company Male 47
Incumbent 93.17
NoFujiwaraMatsuzaka
Manager of Japan Off ice Male 46
Incumbent 113.12
NoZhangKeming
Financial Manager Male 51
Incumbent 69.61
NoLi Wenji CIO Male 52
Incumbent 63.16
NoLv Yongchen Vice GM of Lufeng Company Male 51
Incumbent 69.57
NoYu Shouzheng Energy Business Manager Male 51
Incumbent 69.57
NoWangChangzhao
GM assistant, Fabric Marketing Manager
Male 45
Incumbent 71.77
No
Quan Peng Brand Marketing manager Male 52
Incumbent 71.53
NoShangChenggang
Manager of G arments ProductionDepartment
Male 46
Incumbent 70.62
NoZhang Wei
GM assistant and Manager of StrategyPlanning Department
Male 33
Incumbent 98.57
YesGuo Heng Manager of Business Management Male 46
Incumbent 22.15
NoDu Lixin
Deputy chief engineer, GM of Lu Thai(Vietnam)
Male 43
Incumbent 34.05
NoTotal -- -- -- -- 2,352.71
--Equity incentives for directors, supervisors and senior management in the Reporting Period:
□ Applicable √ Not applicable
V Employees
1. Number, F unct ions and Educ ati onal Backgrounds of Employees
Number of in-service employees of the Company as the parent
13,207
Number of in-service employees of major subsidiaries
| 13,207 |
| 12,644 |
Total number of in-service employees
Total number of paid employees in the Reporting Period
| 25,851 |
| 25,851 |
Number of retirees to whom the Company as the parent or itsmajor sub s id iaries need to pay retirement pensions
FunctionsFunction EmployeesProduction
19,292
Sales 553
| 19,292 |
Technical 5,232
Financial 99
Administrative 675
Total
| 25,851 |
Educat ional backgroundsEducat ional background EmployeesDoctor 5
Master 99
Bachelor 1,145
College 5,354
High school and below
Total
| 19,248 |
| 25,851 |
2. Employee Remuneration Policy
The Company has formulated a remuneration management system with its principle being “payment according to one’s work andmore pay for more work”. Through post evaluation and through researches of Social salary levels carried out as multi-faceted, as wellas the formulation of the reasonable salary management system, fully demonstrates the intern al fairness, self-fairness and externalfairness. It has greatly motivated the employees and enhanced the corporate management.
3. Employee Training Plans
Trainings will be carried out according to requirements of the Company’s strategic development planning, improvement ofemployees’ capability, performance management, employees’ career planning, etc. The annual training plan is determined by carryingout researches on training needs. And the training courses fall into three major categories, i.e. management, technical skills andgeneral knowledge. Through these trainings, the Company will improve the knowledge structure of its employees, improve their jobskills and increase their comprehensive quality to prov ide excellent human resources for the long-term, sustained and stabledevelopment of the Company.
4. Labor Outsourcing
□ Applicable √ Not applicable
Part IX Corporate Governance
I General Information of Corporate Governance
During the Reporting Peri od, the Company strictly conforms to Company Law, Securities Law and Governing Rules for ListedCompany, Stock Listing Rules of Shenzhen Stock Exchange, and Standard Operation of Companies Listed on the Main Board ofShen zhen Stock Exch ange as wel l as relevant stip ulation s and requiremen ts fro m normamtive documents. It formed a relationship ofclear divi sio n of righ ts and respon sib iliti es, assu ming each own funct ions and check and balan ce each other between th e managementorgan, decision-making organ, supervisory organ and management layer, so as to provide a good internal operational environment forthe Company’s standardized and efficient operation. During the Reporting Period, the Company revised Articles of Lu Thai TextileCo., Ltd. At present, there is no difference between the actual situation of the Company’s corporate governance structure and therequirements on the corporate governance of CSRC and Shenzhen Stock Exchange.1. Shareholders and Shareholders’ General MeetingThe Company shall gather and convene the shareholders meeting in strict accordance with the regulations in the Rules of Procedureof Shareholders' Meeting. In 2018, according to Company Law of the PRC, Securities Law of the People's Republic of China,Regulation Guidelines for Listed Companies No. 3-cash Dividends for Listed Companies (CSRC), Notice on Further Implementationof Matters Related To Cash Dividend of Listed Companies and other related documents, the Company revised some articles of theArticles of Association regarding "the priority of Cash dividend method in profit distribution, the implementation of differentiatedcash dividend policy", in order to ensure that the profit distribution of the Company not only attaches importance to the reasonablereturn on investment to the investors, but also implements the principle of continuous and stable profit distribution, takes into accountthe o verall interests of all shareholders and the sustainable development of the Company.2. The relationship between the principal shareholders and the CompanyThe Company’s principal shareholders acted according to relevant standards without directly or indirectly intervening the Company’sdecision-making and operating activities; the Company was independent with its principal shareholders in business, personnel, assets,organization, finance, and the Company’s Board of Directors, Supervisory Committee and Internal Organs could completelyindependent to operate. There was no situation about annexing the assets or occupation of funds of the Company by principalshareholders or other events on infringing the interest of the Company and other shareholders.3. The directors and Board of DirectorsIn 2018, according to Company Law of the PRC, Securities Law of the People's Republic of China, the Company standardized somearticles of the Articles of Association regarding the nominat ion and election of directors, replacement of Board of Directors,qualifications for non-independent directors, etc. The Company nominates and elects directors in strict accordance with theprovisions of the Articles of Association. The composition of the Board of Directors and the number of independent directors meetthe requirements of laws and regulations. Directors and independent directors fully enjoy the functions and powers given by theCompany Law and the Articles of Association to ensure the scientific and fair decision-making of the Board of Directors of theCompany.4. Supervisors and Supervisory CommitteeIn 2018, according to Company Law of the PRC, Securities Law of the People's Republic of China, the Company standardized somearticles of the Articles of Association regarding the nomination of candidates for shareholders and supervisors. The Board ofSupervisors and supervisors of the Company can strictly enforce relevant regulations, conscientiously perform their duties, upholdthe tenet of being responsible to shareho lders and to listed companies, strictly inspect the fin ancial affairs of the Company, andsuper vi se the performance of directors and senior executives.5. Information disclosure
The Company strictly comforms to the Administrative Measures for the Disclosure of Information of Listed Companies by CSRC,Stock Listing Rules (Revised in 2018) of Shenzhen Stock Exchange, and Standard Operation of Companies Listed on the MainBoard (Revised in 2015) and other relevant provisions, disclosing the nformation timely, objectively and justly to ensure thetruthf ul ness, accuracy, compl eteness.6. Investor relations managementDuring the reporting period, to maintain good communication with investors, the Company accepted on-site investigations andconsultations of investors through on-site investigations and telephone consultations, and promptly answered questions asked byinvestors on the SZSE Easy-IR.Indi cate b y tick market whet her there is any material incompliance with the regulatory documents issued by the CSRC governing thegovernance of listed companies.□ Yes √ NoNo such cases in the Reporting Peri od.
II The Company’s Independence from Its Controlling Shareholder in Business, Personnel,Asset, Organization and Financial Affairs
1. As for the business: the Company completely separates from the controlling shareholders in the business that possesses the entirelyindependent production, supply and sales system and the autonomous operating ability.2. As for the personnel: the Company remains completely independent in the Human Resources aspects such as the labor, theperso nnel and the wages with entirely independent self-controlling ability.3. As for the assets: the Company possesses the entire and independent legal person property right with independent and perfect theproduction system, auxiliary production systems and supporting facilities; and possesses the independent ownership of the intangibleassets such as the i Industrial property, trademarks, non-patented technology.4. As for the institution: the organizations and institutions of the Company are all independent and perfect that there is no anysituation of working with the controlling shareholders.5. As for the finance: the Company possesses independent financial departments with normative financial accounting system andfinancial m anagement system as well as internal control system with independent bank account.
III Horizontal Competition
□ Applicable √ Not applicable
IV Annual and Special General Meetings Convened during the Reporting Period
1. General Meeting Convened during the Reporting Period
Meeting Type
Investor
Date of the
meeting
Disclos ure date Index to disclosed informationThe 1
st
ExtraordinaryGeneral Meeting of2018
Extraordinary GeneralMeeting
0.00%
| participation ratio |
8 February
9 February 2018
Announcement on the Resolution ofthe Meeting (No.: 2018-007
| 2018 | ) disclosed |
on 9 February 2018 on SecuritiesTimes, China Securities Journal,Shan ghai Securities News, Ta KungPao, and http://www.cninfo.com.cn
The 2
nd
ExtraordinaryGeneral Meeting of2018
Extraordinary GeneralMeeting
0.00%
23 Marc h 2018
24 Marc h 2018
Announcement on the Resolution ofthe Meeting (No.: 2018-013
on 24 Mar c h 2018
| on Securities Times, |
China Securities Journal, ShanghaiSecuri ties News, Ta Kung Pao, andhttp://www.cninfo.com.cn
The 2017 AnnualGeneral Meeting
AnnualGeneralMeeting
0.00%
16 May 2018 17 May 2018
Announcement on the Resolution ofthe Meeting (No.: 2018-025
| ) disclosed |
on 17 May 2018 on Securities T imes,China Securities Journal, ShanghaiSecuri ties News, Ta Kung Pao, andhttp://www.cninfo.com.cnThe 3
rd
ExtraordinaryGeneral Meeting of2018
Extraordinary GeneralMeeting
0.00%
18 Septe mber2018
19 Septe mber2018
Announcement on the Resolution ofthe Meeting (No.: 2018-042
| ) disclosed |
on 19 Sept e mber 2018 on Securi tiesTimes, China Securities Journal,Shan ghai Securities News, Ta KungPao, and http://www.cninfo.com.cn
2. Special General M eetings Convened at the R equest of Preferred Shareholders with Resumed VotingRights
□ Applicable √ Not applicable
V Performance of Duty by Independent Directors in the Reporting Period
1. Attendance of Independent Directors at Board Meetings and General Meetings
Attendance of independent directors at board meetings and general meetings
Independent
director
Total number
of boardmeetings theindependentdirector was
eligible to
attend
Boardmeetingsattended on
site
attended by
way oftelecommunicat
ion
Board meetingsattended
| Board meetings | through |
a proxy
Board meetings
director failed to
attend
attend twoconsecutive
| board meetings |
(yes/no)
Generalmeetingsattended
Xu Jianjun 8
No 0
Zhao Yao 8
No 0
Bi Xiuli 8
No 1
Pan Ailing 8
No 0
Wang Xinyu 8
No 1
Why any independent director failed to attend two consecutive board meetings:
Not ap pl icable.
2. Objections Raised by Independent Dir ectors on Matters of the Company
Indicate by tick mark whether any independent directors raised any objections on any matter of the Company.□ Yes √ NoNo such cases in the Reporting Peri od.
3. Other Information about the Performance of Duty by Independent Directors
Indicate by tick mark whether any suggestions from independent directors were adopted by the Company.√ Yes □ NoSuggestions from independent directors adopted or not adopted by the Company:
The Independent Directors of the Company had not raised any objection to the proposals and other events approved and reviewed bythe Board of the Directors while executed the carefully review on the events needed advices and put forward the professionalsuggestion and advice as well as stated 15 independent advices which improved the scientificity and objectivity of thedecision-mak ing that exerted the due role on the supervision me chanism for improving the Company.
VI Performance of Duty by Specialized Committees under the Board in the Reporting Period
I. Duty fulfillment of Audit Committee under the Board1. Major work of the 2018 annual report of the Audit Committee:
(1) The Audit Committee had held the 2018 the 1
st
Meeting of the Audit Committee on the Financial Audit Work in the meeting roomof the Company on 27 November 2018 and the meeting had confirmed the time and arran gement plan of the 2018 an nual finan cialaudit work unanimously with the 2018 Audit Institution Ruihua CPAs (LLP).(2) On 12 J anuary 2019, the Audit Committee had held the 2
nd
Meeting of the 2018 Audit Work, which reviewed and submitted thefinancial report audited by Ruihua CPAs (LLP) and issued the written advice.(3) During the audit process, the Company had been maintained the contract and communication with the project leader of RuihuaCPAs (LLP) by the methods such as the telephones and e-mails and had been urged which to submit the audit report within theappoi nte d t ime.
(4) Th e 3
rd
M eeting on 2018 Annual Audit and the 2018 Annual Work Conference, were convened by the Committee on 27 March2019, where the following proposals were approved as resolutions, namely, the audited 2018 Financial Report of the Company, theSummary Report on the Audit Conducted by Ruihua CPAs (LLP) on the Company’s 2018 Financial Report.2. Written opinions, summary report of the annual audit, and resolutions of 2018 Work Conference on Annual Report by AuditCommittee(1) According to the Rules for Audit Committee of the Board Concerning Annual Reports of Lu Thai Textile Co., Ltd., the AuditCommittee shall perform its duties of conducting supervision and checks in the Company’s preparation and disclosure of its annualreports. The Committee revie wed the 2018 f inancial and accoun ting statements prepared by the Co mpany’s Financial Departmentbefore the presence of the registered accountants for the annual audit, and expressed its opinion as follows:
1. The financial and accounting statements were prepared in accordance with the Company’s accounting policy with properappl icati on o f the acco unt ing po licy and r eason ab le acco unti ng est imates, which were in l in e with the New Accounting Standards forBusiness Enterprises, the Accounting System for Business Enterprises, and the relevant regulations issued by the Ministry of Financeof PRC;
2. The subsidiary statement s included in the Company’s consolidated statements were co mplete in terms of contents, providing anaccurate basis for the statement combination;3. The Company’s financial statements were found objective, factual and accurate with no major misstatements or informationomission.4. Since there is still a certain period of time from this review of the financial statements to the formal issuance of the auditor’s reportand the financial statements, the Company’s Financial Department is advised to pay close attention to and carefully handle thematters after th e balance sheet date, so as to ensure the fair ness, factuality and co mpleteness of the fin ancial statements. The AuditCommittee is o f the opini on that the financi al and account ing statements are read y to be sub mitted to the regis tered account ants foraudit.(2) A udit Committee’s written opinion on the Company’s financial statements after the preliminary audit opinion was issued byRuihua CPAs (LLP):
According to the Rules for Audit Committee of the Board Concerning Annual Reports of Lu Thai Textile Co., Ltd., the AuditCommittee shall perform its duties of conducting supervision and checks in the Company’s preparation and disclosure of its annualrepor ts. We effectively communicated with the said CPA firm (LLP) at the beginning of the audit. And we on ce again reviewed th eCompany’s 2018 financial and accounting statements following the preliminary audit opinion to the Company’s 2018 financialstatements issued by the CPA firm (LLP), and expressed our opinions as follows:
In accordance with the New Accounting Standards for Business Enterprises and the Company’s relevant financial rules, the financialstatements were prepared in a rational and standardized way, which fairly, factually, accurately and completely presented theCompany’s assets, liabilities, shareholders’ equity and operation results by 31 December 2018.The Audit Committee is of the opinion that the Company’s 2018 financial and accounting statements preliminarily audited by RSMChina Certified Public Accountants (Special General Partnership) are ready to be submitted to the 24
th
Meeting of the 8
th
Board of theDirectors for review.(3) Resolutions made at 2018 Annual Work Conference of Audit Committee of the BoardThe Audit Committee of the Board of Lu Thai Textile Co., Ltd. held its 2018 Annual Work Conference at Banyang Villa MeetingRoom of the Company on 27 March 2019. Three persons were suppo sed to attend the meeting, and all three of th em were in factpresen t at the meeting as well as the Chief Accountant, the Manager Assistant of the Audit Department, the project responsible personof Lu Thai of Ruihua CPAs attended the meeting. Mr. Zhao Yao, Chairman of the Audit Committee, presided over the meeting. Themeeting was convened in accordance with the Company Law and the Articles of Association of the Company. And the followingproposals were passed by vote at the meeting:
I. With 3 favorable votes, 0 negative votes and no abstentions, the 2018 Financial Report of the Company audited by Ruihua CPAs(LLP) was pas s ed;II. With 3 favorable votes, 0 negative votes and no abstentions, the Summary Report on the Audit Conducted by Ruihua CPAs (LLP)on the Company’s 2018 Financial Report was passed;III. With 3 favorable votes, 0 negative votes and no abstentions, the Company paid RMB1.735 million to the said CPAs firm as feesfor the 2018 annual financial report audit and internal control audit.IV. With 3 favorable votes, 0 negative votes and no abstentions, the Proposal on Employment of Ruihua CPAs (LLP) as theCompany’s audit agency for 2019 Finance and Internal Control was passed.The Commit tee agrees to submit the above-mentioned proposals I and III and IV to the Board of Directors for examination on the 24
h
Meeting of the 8
th
Board of Directors.II. Duty performance of Remuneration Committee affiliated to the Board of Directors1. The Remuneration Committee of the Board of Lu Thai Textile Co., Ltd. held the First Conference in 2018 at Banyang VillaMeeting Room of the Company on 15 April 2018. Five persons were supposed to attend the meeting, and all of them were in fact
present at the meeting. The meeting held by the Company met with the relevant regulations of Company Law and the Articles ofAssociation of the Company and reviewed and approved the Proposal on the 2017 Appraisal Result of the Senior Executives of LuThai Company by the voting method and agreed to submit the above-mentioned proposal to the Board of Directors for examinationon the 16
th
Meeting of the 8
th
Board of Directors.2. According to authorization of the 16
th
M eeting of the 8
th
B oard of Directors of Lu Thai, remuneration committee of board ofdirectors of Lu Thai Textile Co., Ltd. held the second Meeting of 2018 in the meeting room of Panyang Villa Meeting Room of theCompany on 23 May 2018. Five persons should attend the meeting and five persons actually attended the meeting. Among the fivepersons, Zhao Yao, and Pan Ailing voted in the form of communication. Chief accountant and the secretary of board of directors alsoattend ed the meetin g. The meeting acco rded with relevan t stipu lations in Company Law and Articles of Company. Proposal for RiskFund Assessment and Release Amount for 2017 weas passed at the meeting in voting form.III. Duty execution of the strategy committee of board of directorsThe Strateg y Committee of Boar d of Directo rs of Lu Thai Textile Co., Ltd. held the 1
st
C onference of 2018 in the meeting room ofPanyang Villa Meeting Room of the Company on 15 April 2018. 13 persons should attend th e meeting and 13 persons actuallyattended the meeting. This meeting was hosted by Liu Liu Zibin, the president of strategy committee. The meeting accorded withrelevant stipulations in Company Law and Articles of Association and passed the following proposals in voting form.1. Overall S trategic Objectives of Yarn Dyed Fabric of Lu Thai Textile Co., Ltd. for 2018-2020.2. Overall S trategic Objectives of Shirts Processing of Lu Thai Textile Co., Ltd. for 2018-2020.3. R&D, human resources, fabric information, and clothing manufacture information engineering, and design development sub-plan.4. Overall Strategic Objectives of Lu Thai Textile Co., Ltd. for 2018-2020IX. Duty performance of nominations committee affiliated to the Board of Directors1. The Company held the 1
st
Me eting of 2018 of the nominations committee of the 8
th
Bo ard of Directors on 17 January 2108according to the relevant regulations of the Company Law and Articles of Association, with 6 favorable votes, 0 negative votes andno abstentions, which reviewed and approved the Proposal on Nominating Du Lixin, Guo Heng, and Zhang Wei as Senior Executivesof the Company. And it was submitted to the 14
th
Meeting of the 8
th
B oard of Directors for review and approval. The Proposal wasreviewed and approved by the 14
th
Meeting of the 8
th
Board of Directors.2. T he Company held the 2
nd
Me eting of 2018 of the nominations committee of the 8
th
B oard of Directors on 15 April 2018 with 7favorable votes, 0 negative votes and no abstentions, which reviewed and approved the Proposal on Nominating the Members of theBy-election of Strategy Committee of 8
th
Boa rd of Directors. M r. Liu Deming was nominated as the member of the StrategyCommittee of 8
th
Board of Directors, and the term of office will expire until 5 June 2019. It was submitted to the 16
th
Meeting of the
th
Bo ard of Directors for review and approval, and the 16
th
Meeting of the 8
th
Board of Directors reviewed and approved theproposal.
VII Performance of Duty by the Supervisory Committee
Indicate by tick mark whether the Supervisory Committee found any risk to the Company during its supervision in the ReportingPeriod.□ Yes √ NoThe Supervisory Committee raised no objections in the Reporting Period.
VIII Appraisal of and Incentive for Senior Management
In the Reporting Period, Remuneration Committee of the Board of Directors appraised operating achievements of the Company forthe year 2017 ac cording to Incentive and Restricted Proposal for Senior Executives of Lu Thai Textile Co., Ltd, and drew upincentive proposal for senior executives, which will be execut ed after review and approval by the 16
th
Meeting of the 8
th
Board ofDirectors dated 15 April 2018. During the Reporting Period, the Company constantly improved the performance evaluation
mechanism and made the evaluation and incentive of the Senior Executives concerned with the Company’s performances and the
individual working results. According to the overall development strategy and the annual op erating target of the Company at theperiod-begin, the Company confirms the annual performance comprehensive indication and the management duty of each SeniorExecutives, and executes t he performance ex amination and the redemption of the rewards and punishment for the Senior Executivesby the Remuneration and Examination Committee affiliated to the Board of Directors at the year-end. The Company will constantlyimprove the evaluation and incen tive mechanism that to tightly concern the salar y of the Senior Executives with the managementlevel and the operating performance so that to fully mobilize and inspire the initiative and creativity of them.
IX Internal Control
1. Material Internal Control Weaknesses Identified for the Reporting Period
□ Yes √ No
2. Internal Control Self-Evaluation Report
self-evaluation report
29 Marc h 2019
| Disclosure date of the internal control |
| Index to the disclosed internal control |
self-evaluation report
For details, please refer to the Self-appraisal Report on Internal Control of Lu ThaiTextile Co., Ltd. simultaneously disclosed on www.cninfo.com.cn with the 2018Annual Report of the Company.Evaluated
consolidated total assets
| entit ies’ combined assets as % of | 97.51% |
Evaluated entities ’ combined operating
revenue as % of consolidated
| operating |
revenue
Identification standards for internal control weaknessesType
Weaknesses in internal
96.57%contro l o ver financial
reporting
Weaknesses in internal control not
related to financial reporting
Nature standard
Great defect: malpractices of the Directors,Supervisors and Senior Executives; theCompany revised the published financial
| contro l o ver financial |
| report; the CPA founded the current financial |
report occurred significant m isstatementwhile during the operating process of theinternal control could not founded themisstatement; the supervision of the AuditCommittee and the internal audit institutionof the Company on the internal control wasinvalid. Significant defeat: had not abide bythe gener ally accepted accounting principles
Great defect: violated the national lawsand regulations; the decision-making ofthe en terprise was not scientific that ledto the mistakes of itself; outflow of themanagemen t personnel or the technicianperso nnel w as s er ious; frequentlyappeared the negative news from theMedia; the significant business lacked ofsystematic control or the systematiccontrol was invalid; the result of theinternal control assessment which wasthe great defect event had not beenrevised. Significant defeat: violated the
had not built up the anti-
counterbalance mechanism and controlmeasures; during the financial reportproces s, there occurred single or multipledefects whi ch not reached the recognitionstandard of the significant defeat butinfluenced the true and accurate target of thefinancial report. General defect: otherinternal control defect which had notconst ructed as the great defeat, significantdefect.
enterprise internal regulations thatcaused r ather serious losses; significantbusiness lacked of systematic control;
| fraud and significant | outflow of the rather important personnel |
was serious; the Media reported thenegative n ews that caused rather seriousnegative influence; rather importantbusiness lacked of systematic control orthe systematic control was invalid; theresults of the internal control assessmentwhich as the significant defect had notbeen revi s ed. General defect: otherinternal control defect which had notconst ructed as the great defeat,significant defect.
Quantitative standard
Great defect: misstatement≥2% of the totalprofits amount; misstatement≥0.3% of thetotal assets amount; misstatement≥0.3% ofthe total operating income;misstatement≥0.4% of the total owners’equities amount. Significant defect: 1% ofthe total profits amount ≤misstatement<2%
assets amount ≤misstatement<0.3% of thetotal assets amount; 0.15% of the totaloperating amount ≤misstatement<0.3% ofthe total operating amount; 0.2% of the totalowners’ equities amount≤misstatement<0.4% of the total owners’equi ties amount. General defect:
| misstatement<1% of the total profits amount; |
misstatement<0.15% of the total assetsamount; misstatement<0.15% of the total
total owners’ equities amount.
Great defect: the direct financial losseswere RMB6 million and aboveSignificant defect: RMB3 million(including RMB3 million)-RMB6million General defect: RMB0.5 million(including RMB0.5 million)-RMB 3million
Number of material w eaknesse s in internal
| operating income; misstatement<0.2% of the | |
control over financial reporting
Number of material weaknesse s in internal
control not related to financial reporting
Number of serious weaknesses in internal
control over financial reporting
Number of serious weaknesses in internal
control not related to financial reporting
X Independent Auditor’s Report on Internal Control
√ Applicable □ Not applicable
Opinion paragraph in the independent auditor’s report on internal controlAll shareholders of Lu Thai Textile Co., Ltd.:
Certified Pub lic Accountants, we have audit ed the effectiveness of internal con trol in the financial report of Lu Thai Textile Co.
| , |
Ltd. (Hereinafter referred to as "Lu Thai T ext ile”) by 31 December 2018.I. Responsibilities of Lu Thai Textile for internal controlThe Board of Directors of Lu Thai Textile is responsible for establishing, improving and implementation the internal co
Internal Control, Enterprise Internal Control Audit Guidelines.III. Responsibilities of certified public accountantsIt is our responsibility to issue an audit opinion on the effectiveness of internal controls in financial report on the basis
| of the |
implementation of the audit, and to disclose significant deficiencies in the internal controls of non-financial reports
noted.III. Inherent limitations of internal controlInternal control has inherent limitations, and there is a possibility that misreporting cannot be prevented. In addition, bec
| ause the |
change of circumstances may caus e the internal contr
policies and procedures is reduced, it is risky to infer the effectiveness of the future internal control based on the audit
| results of the |
internal control.IV. Audit Opinion on Internal Control in Financial ReportWe believe that Lu Thai Textile Co., Ltd. kept effectively internal control on financial reporting in all respects according
Enterprise Internal Control Basic Specification and the relevant provisions on 31 December 2018.Independent auditor’s report oninternal control disclosed or not
DisclosedDisclos ure date29 Marc h 2019Index to such report disclosed
For details, please refer to the Auditor’s Report on Internal Control on www.cninfo.com.cn at
the same time of disclosing the Company’s 2018 Annual Report.Type of the auditor’s opinion Unmodified unqualified opinionMaterial w eaknesses in internal
to
control not related to financial
reporting
NoneIndicate by tick mark whether any modified opinion is expressed in the independent auditor’s report on the Company’s internalcontrol.□ Yes √ NoIndicate by tick mark whether the independent a uditor’s report on the Company’s internal control is consistent with the internalcontrol self-evaluation report issued by the Company’s Board.√ Yes □ No
Part X Corporate Bonds
Does the Company have any corporate bonds publicly offered on the stock exchange, which were outstanding before the date of thisReport’s approval or were due but could not be redeemed in full?No.
Part XI Financial Statements
I Independent Auditor’s Report
Type of the independent auditor’s opinion Unmodified unqualified opinionDate of signing this report 7 March 2019Name of the independent auditor Ruihua Certified Public Accountants LLPReference number of Audit Report Ruihua Audit Report [2019] No. 37010002Name of the certified public accountants Wang Chuanshun, and Cui Xiaoli
Text of the Independent Auditor’s ReportTo the shareholders of Lu Thai Textile Co., Ltd:
I OpinionWe have audited the financial state ments of Lu Thai Textile Co., Ltd. (hereinafter referred to as the “Compan y”), which compri se th econsolidated and parent company balance sheets as of 31 December 2018, the consolidated an d parent company statements ofinco me, cash fl ows and changes in owners’ equity for the year then ended, as well as the notes to the financial statements.In our opi nion, the financi al statemen ts referred t o above p resent fairl y, in all material respects, the consolidated and p arent compan yfinancial position of the Company at 31 December 2018, and the consolidated and parent company operating results and cash flowsfor the year then ended, in conformity with the Chinese Accounting Standards (CAS).II Basis for OpinionWe conducted our audits in accordance with the Audit Standards for Chinese Registered Accountants. Our responsibilities underthose standards are further described in the Auditor’s Responsibilities for Audit of Financial Statements section of our report. We areindependent of the Company in accordance with the China Code of Ethics for Certified Public Accountants, and we have fulfilled ourother ethical responsibilities in accord ance with the said Code of Ethics. We believe that the audit evidence we have obtained issufficient and appropriate to provide a basis for our opinion.III Key Audit MattersKey audit matters are those matters that, in our professional judgment, were of most significance in our audit of the financialstatement s of the cu rrent p eriod. These matters were addr essed in the co ntext o f our audit o f the financial statement s as a whole, andin forming our opinion thereon, and we do not provide a separate opinion on these matters. And key audit matter identified in ouraudit is summarized as follows:
(I) Recognition of income1. Item descriptionThe sales in come of Lu Thai Textile Co., Ltd. mainly comes from sales of yarn-dyed fabrics and shirts. The operation income of theCompany in 2018 was RM B6,878,414,700, of which export income accounted for 63.25%. As stated in "Note IV 22 Income" and“Note VI. 37 Operat ing Revenue and Cost of Sales” of the financial statements, for the income from domestic sales, the amount ofproduct sales income is recognized when the products are delivered to pu rchaser according to the contract. The income is alsorecogni zed when th e purch ase price has b een reco vered or the receipt certificate h as been recei ved and the related economic benefitsare likely to flow into the Company, and the product-related costs can be measured in a reliable way. For the income from export
sales, the amoun t of sales income is recognized when products are declared and depart from port according to th e contract, and th ebill of lading is received. The income is also recognized when the purchase pr ice has been recovered or the receipt certificate hasbeen recei ved and the related economic ben efits are likely to flow into the Co mpany, and the product-related costs can be measuredin a reliable way.Since income is one of the key performance indicators of Lu Thai Textile Co., Ltd., there is an inherent risk that the managementmanipulates income to achieve specific goals or expectations, therefore, we identify income recognition as a key audit item.2. Audi t response(1) Evaluate and test the rationality of the internal control design related to income recognition and the operation effectiveness.(2) Understan d and assess whether the accounting policies related to income recognition by interviews with management and reviewof relevant contract terms conform to the regulations of ASBE.(3) Perform analysis procedures on income and costs, and analyze the rationality of fluctuations in sales volume, unit price and grossprofit of each month and each year.(4) Check the supporting documents such as sales contracts, delivery receipts, invoices, customs declarations, shipping orders andreceipts.(5) Confirm the balances of major customers and the amount of transactions, and execute the procedure of customs confirmation ofthe amount of export income for the year 2018.(6) Check the export income with the export tax rebate declaration form and the export data of China's electronic port;(7) Perform cut-off tests on the income recognized b efore and after the balance sheet date, chec k the delivery receipts, invoice,customs declarations, shipping orders and receipts etc. to assess whether the income is recognized within appropriate period.(II) Inventory falling price reserves1. Item descriptionAs o f 31 D ecember 2 018, t he inventory balance of Lu Thai Textile Co., Ltd. was RMB216,0663,200 and the inventory depreciationreserve was RMB67,296,200. As stated in "Notes IV 10 Inventory" and "Notes VI 5 Inventory" of the financial statements,inventories are measured b y cost or net realizable value, which i s lower. The management determines the net reali zable value ofinventories with significant judgments and estimates, and therefore, we identify inventory falling price reserves as a key audit item.2. Audi t response(1) Understand the process of provision for inventory depreciation reserves, evaluate and test the rationality of the internal controland the effectiveness of the operation of the internal control related to preparation for inventory depreciation.(2) Monitor the inventory and check the inventory condition, check whether the defective and long-lived inventory have beenidentified.(3) Obtain inventory age table and carry out analytical review of long term inventory;(4) Check the changes in the current period of the inven tory falling price reserves recorded in previous years, and assess th erationality of the change in inventory falling price reserves;(5) Test the calculation table for invento ry depreciation prep aration to assess the rational ity of estimated selling p rice, and comparethe post-sales price with the esti mated selling price.IV Other InformationThe Company’s management is responsible for the other information. The other information comprises all of the informationincluded in the Company’s 2018 Annual Report other than the financial statements and our auditor’s report thereon.Our opinion on the financial statements does not cover the other information and we do not express any form of assurance conclusionthereon.In connection with our audit of the financial statements, our responsibility is to read the other information and, in doing so, considerwhether the other information is materially inconsistent with the financial statements or our knowledge obtained in the audit or
otherwise appears to b e materi ally misstated.If, based on th e work we have perfor med, we con clu d e that there is a material misstat emen t o f this other in formation , we are requiredto report that fact. We have nothing to report in this regard.V Responsibilities of Management and Those Charged with Governance for Financial StatementsThe Company’s management (hereinafter referred to as the “Manage ment”) is responsible for the preparation of the financialstatements th at give a fair view in accord ance with CAS, and for designing, implementing and maintaining such internal control asthe management det ermines is necessary to enable the pr eparation of financial statements t hat are free from material misstatement,whether due to fraud or error.In preparing the financial statements, the management is responsible for assessing the Company’s ability to continu e as a goingconcern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless themanagemen t either intends to liquidate the Company or to cease operations, or have no realistic alternative but to do so.Those charged with governance are responsible for overseeing the Company’s financial reporting process.VI Auditor’s Responsibilities for Audit of Financial StatementsOur objectives are to obtain reasonable assurance abou t whether the financial statements as a whole are free from materialmisstatement, whether due to fraud or error, and to issue an auditor’s report that includes our opinion. Reasonable assurance is a highlevel of assur ance, b ut is no t a guarantee t hat an aud it condu cted in accord ance with CAS will alw ays detect a material misstatementwhen it exis ts. M isst ate ments can aris e fro m fraud or erro r and ar e consi dered material if, in di vid ually or in th e aggregat e, t hey cou ldreason ably be expected to influence the economic decisions of users taken on the basis of these financial statements.As part of an audit in accordance with CAS, we exercise professional judgment and maintain professional skepticism throughout theaudit. We also:
(1) Identify and assess the risks of material misstatement of the financial statements, whether du e to fraud or error, design andperform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis forour opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, asfraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control.(2) Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in thecircumstances.(3) Evaluat e the appropriateness of accoun ting policies used and the r easonableness of accoun ting estimates and related disclosuresmade by the management.(4) Conclude on the appropriateness of the management’s use of the going concern basis of accounting and, based on the auditevidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on theCompany’s ability to continue as a going concern. If we conclude that a material uncertainty exists, we are required by CAS to drawusers’ attention in our auditor’s report to the related disclosures in the financial statements or, if such disclosures are inadequate, weshould modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of our auditor’s report. However,future events or conditions may cause the Company to cease to continue as a going concern.(5) Evaluate the overall presentation, structure and content of the financial statements, including the disclosures, and whether thefinancial statements represent the underlying transactions and events in a manner that achieves fair presentation.
(6) Obtain sufficient appropriate audit evidence regarding the financial information of the entities or business activities within theCompany to express an opinion on the financial statements. We are responsible for the direction, supervision and performance of theCompany audit. We remain solely responsible for our audit opinion.We communicate with those charged with governance of the Company regarding the planned scope and timing of the audit andsignificant audit findings, including any noteworthy deficiencies in internal control that we identify during our audit.We also provide those charged with governance with a statement that we have complied with relevant ethical requi rements regardi ngindependence, and communicate with them all relationships and other matters that may reasonably be thought to bear on ourindependence, and where applicable, related safeguards (if applicable).From the matters commun icated with thos e charged with governance, we determine tho se matters that were of most significance inthe audit of the finan cial statements of the curren t period and are therefore the key aud it matters. We describe these matters in ourauditor ’s report unless law or regulat ion precludes publ ic disclosure about the matter or when, in extremely rare circumstan ces, wedetermine that a matter should not be communicated in our report because the adverse consequences of doing so would reasonably beexpected to outweigh the public interest benefits of such communication.
Ruihua Certified Public Accountants LLP Chinese CPA
(Engagement Partner): Wang ChuanshunBeijing · China Chinese CPA: Cui Xiaoli
II Financial Statements
Currency unit for the financial statements and the notes thereto: RMB
1. Consolidated Balance Sheet
Prepared by Lu Thai Textile Co., Ltd.
31 December 20 18
Unit: RMBItem 31 December 2018 31 December 2017Current assets:
Monetary capi tal545,502,709.36
| 693,989,293.38 |
Derivative financial assets
Notes and accounts receivable549,265,034.81
| 473,357,266.39 |
Including: Notes receivable 174,657,918.26
| 139,276,742.34 |
Accounts receivable
| 374,607,116.55 | 334,080,524.05 |
Prepayments 149,582,616.21
| 146,463,066.38 |
Other receiv ables63,012,001.10
| 56,772,785.11 |
Including: Int er es t receivable
| 590,003.07 |
Dividends receivable
Financi al assets purchased under resale agreements
Inventories
| 2,093,366,992.30 | 2,100,661,221.93 |
Assets classi fied as held for sale
Current portion of non-current assets
Other curr ent assets 86,366,454.56
| 118,588,703.34 |
Total current assets
| 3,487,095,808.34 | 3,589,832,336.53 |
Non-cu r r ent assets:
Loans and advances to customers
Available-for-sale financial assets
| 85,112,000.00 | 84,533,000.00 |
Held-to-maturity investments
Long-term receivables 10,693,844.75
Long-term equity investments96,018,463.65
| 97,536,732.02 |
Investment property 22,880,242.95
| 24,563,544.58 |
Fixed assets
| 5,748,562,385.35 | 5,421,295,850.03 |
Construction in progress 337,230,646.42
| 214,335,626.74 |
Productive living assets
Oil and gas assets
Intangible assets478,689,064.45
| 498,948,301.48 |
R&D expense
Goodwill20,613,803.29
| 20,613,803.29 |
Long-term prepaid expense
| 119,126,407.71 | 107,877,194.52 |
Deferred in come t ax assets88,636,929.06
| 74,697,159.71 |
Other no n-current assets 43,100,215.87
| 36,390,478.85 |
Total non-current assets
| 7,050,664,003.50 | 6,580,791,691.22 |
Total assets
| 10,537,759,811.84 | 10,170,624,027.75 |
Current liabilities:
Short-term borrowings
| 1,325,273,780.05 | 1,135,124,996.40 |
Financial liabilities at fair value through profit or loss4,877,600.00
Derivative financial liabilities
Notes and accounts payable353,688,510.95
| 373,566,904.50 |
Advances fro m customers 105,562,378.66
| 119,785,945.48 |
Financi al assets sold under repurchase agreements
Handling char ges and comm issions payable
Payroll p ayable325,998,210.17
| 316,836,488.95 |
Taxes payable 43,556,823.75
| 33,055,090.58 |
Other payables215,946,987.68
| 129,103,354.75 |
Including: Int er es t payable 3,068,841.54
| 1,572,231.86 |
Dividends payable 441,113.64
| 441,113.64 |
Current portion of non-current liabilities
| 62,750,292.49 |
Other current liabilities
Total current liabilities
| 2,374,904,291.26 | 2,170,223,073.15 |
Non-current liabilities:
Long-term borrowings 170,019,083.89
Bonds payable
Including: Preferred shares
Perpetual bonds
Long-term payables
Long-term payroll payable96,958,178.53
| 93,843,473.02 |
Provisions
Deferred in come140,183,446.39
| 126,737,092.32 |
Deferred income tax liabilities 28,030,096.38
| 2,904,899.46 |
Other no n-current liabilities1,840,000.00
| 1,840,000.00 |
Total non-current liabilities 437,030,805.19
| 225,325,464.80 |
Total liabilities
| 2,811,935,096.45 | 2,395,548,537.95 |
Owners’ equity:
Share capital
| 922,602,311.00 | 922,602,311.00 |
Capital reser ves 699,493,647.48
| 699,493,593.82 |
Less: Treasu ry stock486,922,944.94
Other comprehensive income 61,157,013.37
| 16,810,574.22 |
Specific reserv e
Surplus reserves
| 1,022,717,451.40 | 962,933,579.06 |
General reserve
Retained ear nings
| 4,927,500,989.55 | 4,629,102,712.06 |
Total equity attributable to owners of the Company as the parent
| 7,146,548,467.86 | 7,230,942,770.16 |
Non-controlling interests 579,276,247.53
| 544,132,719.64 |
Total owners’ equity
| 7,725,824,715.39 | 7,775,075,489.80 |
Total liabilities and owners’ equity
| 10,537,759,811.84 | 10,170,624,027.75 |
Legal repr esentative: Liu Zibin Chief Accountant: Zhang Hongmei Financial Manager: Zhang Keming
2. Balance Sheet of the Company as the Parent
Unit: RMBItem 31 December 2018 31 December 2017Current assets:
Monetary capi tal 191,305,104.80
| 267,809,829.78 |
Financial assets at fair value through profit or loss
Derivative financial assets
Notes and accounts receivable 407,781,221.62
| 399,148,071.79 |
Including: Notes receivable 91,555,248.34
| 93,244,480.81 |
Accounts receivable 316,225,973.28
| 305,903,590.98 |
Prepayments
| 115,020,260.51 | 81,471,605.69 |
Other receiv ables 395,847,213.77
| 520,008,829.95 |
Including: Int er es t receivable
| 220,590.38 |
Dividends receivable
Inventories
| 1,040,433,078.53 | 1,164,055,145.96 |
Assets classi fied as held for sale
Current portion of non-current assets
Other curr ent assets 12,671,631.64
| 53,657,308.33 |
Total current assets
| 2,163,058,510.87 | 2,486,150,791.50 |
Non-cu r r ent assets:
Available-for-sale financial assets
| 73,112,000.00 | 72,533,000.00 |
Held-to-maturity investments
Long-term receivables
Long-term equity investments
| 2,165,711,579.69 | 1,816,493,348.06 |
Investment property 14,804,592.72
| 15,536,968.08 |
Fixed assets
| 2,731,726,695.28 | 2,811,046,847.91 |
Construction in progress 61,182,771.86
| 27,312,701.62 |
Productive living assets
Oil and gas assets
Intangible assets 242,204,032.54
| 249,994,817.83 |
R&D expense
Goodwill
Long-term prepaid expense
Deferred in come t ax assets 52,758,961.05
| 51,474,007.76 |
Other no n-current assets 6,047,443.10
| 27,077,391.31 |
Total non-current assets
| 5,347,548,076.24 | 5,071,469,082.57 |
Total assets
| 7,510,606,587.11 | 7,557,619,874.07 |
Current liabilities:
Short-term borrowings 622,604,447.52
| 622,438,413.87 |
Financial liabilities at fair value through profit or loss4,877,600.00
Derivative financial liabilities
Notes and accounts payable120,141,727.66
| 154,007,599.21 |
Advances fro m customers 49,798,551.14
| 52,314,250.61 |
Payroll p ayable240,090,943.88
| 240,391,459.47 |
Taxes payable 30,914,089.32
| 17,297,415.92 |
Other payables303,672,590.72
| 24,347,633.13 |
Including: Int er es t payable 2,475,549.88
| 973,134.21 |
Dividends payable 441,113.64
| 441,113.64 |
Liabilities directly associated with assets classified as held for sale
Current portion of non-current liabilities
Other current liabilities
Total current liabilities
| 1,372,099,950.24 | 1,110,796,772.21 |
Non-current liabilities:
Long-term borrowings
Long-term payables
Long-term payroll payable96,958,178.53
| 93,843,473.02 |
Provisions
Deferred in come94,390,844.09
| 80,580,249.14 |
Deferred income tax liabilities 16,699,530.43
| 4,950.00 |
Other no n-current liabilities
Total non-current liabilities 208,048,553.05
| 174,428,672.16 |
Total liabilities
| 1,580,148,503.29 | 1,285,225,444.37 |
Owners’ equity:
Share capital
| 922,602,311.00 | 922,602,311.00 |
Capital reser ves 759,836,756.57
| 759,836,702.91 |
Less: Treasu ry stock486,922,944.94
Other comprehensive income 520,200.00
| 28,050.00 |
Specific reserv e
Surplus reserves
| 1,019,608,711.76 | 959,824,839.42 |
Retained ear nings
| 3,714,813,049.43 | 3,630,102,526.37 |
Total owners’ equity
| 5,930,458,083.82 | 6,272,394,429.70 |
Total liabilities and owners’ equity
| 7,510,606,587.11 | 7,557,619,874.07 |
3. Consolidated Income Statement
Unit: RMBItem 2018 20171. Reven ue
| 6,879,058,813.93 | 6,409,224,044.97 |
Including: Operating revenue
| 6,879,058,813.93 | 6,409,224,044.97 |
2. Costs and expenses
| 5,913,127,926.44 | 5,469,545,482.56 |
Including: Cost of sales
| 4,861,443,242.95 | 4,477,047,784.68 |
Taxes and surcharges 106,963,626.55
| 96,231,603.00 |
Selling expense158,106,183.74
| 144,061,780.39 |
Administrative expense
| 390,911,763.27 | 323,126,978.65 |
R&D expense 289,395,092.58
| 328,403,990.29 |
Finance costs 48,779,680.31
| 63,342,671.31 |
Includ ing: Interest expense57,300,653.51
| 23,753,894.13 |
Interest income 17,925,826.14
| 7,488,918.00 |
Asset impairment loss57,528,337.04
| 37,330,674.24 |
Add: Other income 60,846,383.76
| 58,099,783.92 |
Investment income (“-” for loss) -60,273,275.04
| 2,331,330.34 | ||
| Including: Share of profit or loss of joint ventures and |
associates
-1,518,268.37
-
| 2,463,267.98 |
Gain on changes in fair value (“-” for loss) -4,877,600.00
Forei gn exchange gain (“-” for loss)
Asset disposal income (“-” for loss) 7,826,983.38
| 1,242,000.54 |
3. Operating profit (“-” for loss)969,453,379.59
| 1,001,351,677.21 |
Add: Non-operating income 10,652,238.56
| 12,122,767.09 |
Less: Non-operating expense10,598,854.65
| 9,022,725.64 |
4. Profit before tax (“-” for loss) 969,506,763.50
| 1,004,451,718.66 |
Less: Incom e tax expense
| 111,313,191.40 | 121,132,609.06 |
5. Net profit (“-” for net loss) 858,193,572.10
| 883,319,109.60 |
5.1 Net profit from continuing operations (“-” for net loss) 858,193,572.10
| 883,319,109.60 |
5.2 Net profit from discontinued operations (“-” for net loss)
Net profit attributable to owners of the Company as the parent
| 811,526,477.83 | 841,150,934.75 |
Net profit attributable to non-controlling interests46,667,094.27
| 42,168,174.85 |
6. Other comprehensive income, net of tax 44,346,439.15
-
| 36,482,970.67 |
Attributable to owners of the Company as the parent44,346,439.15
-
| 36,482,970.67 |
6.1 Items that will not be reclassified to profit or loss
| 6.1.1 Changes caused by remeasurements on defined benefit |
pensi on schemes
| 6.1.2 Share of other comprehensive income of investees that |
will not be reclassified to profit or loss under equity method
6.2 Items that may subsequently be reclassified to profit or loss
44,346,439.15
-
| 36,482,970.67 | ||
| 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 assets
492,150.00
| sale | 28,050.00 |
6.2.3 Gain/Loss arising from reclassification of held-to-
investments to available-for-sale financial ass ets
| maturity |
6.2.4 Effective gain/loss on cas h flow hedges
| 6.2.5 Differences arising from translation of foreign |
currency-denominated financial statements
43,854,289.15
-
| 36,511,020.67 |
6.2.6 Other
Attributable to non-controlling interests
7. Total comprehensive income
| 902,540,011.25 | 846,836,138.93 |
Attributable to owners of the Company as the parent 855,872,916.98
| 804,667,964.08 |
Attributable to non-controlling interests46,667,094.27
| 42,168,174.85 |
8. Ear ni ngs per share
8.1 B as ic earnings per share0.90
0.91
8.2 Diluted earnings per share 0.90
0.91
Where business combinations under common control occurred in the current period, the net profit achieved by the acquirees beforethe combinations was RMB0.00, with the amount for last year being RMB0.00Legal repr esentative: Liu Zibin Chief Accountant: Zhang HongmeiFinancial Manager: Zhang Keming
4. Income Statement of the Company as the Parent
Unit: RMBItem 2018 20171. Operating revenue
| 5,234,872,142.46 | 5,146,496,112.54 |
Less: Cost of sales
| 3,878,117,572.95 | 3,736,059,702.41 |
Taxes and surcharges 75,314,816.61
| 70,180,764.01 |
Selling expense93,816,791.69
| 91,517,514.19 |
Administrative expense 240,621,922.89
| 211,887,601.86 |
R&D expense202,174,766.82
| 230,897,165.13 |
Finance costs 22,580,855.82
| 21,229,673.23 |
Includ ing: Interest expense16,973,906.92
| 5,911,413.18 |
Interest income 4,042,869.20
| 4,147,488.37 |
Asset impairment loss35,087,426.51
| 12,803,852.07 |
Add: Other income 33,789,992.88
| 41,705,496.22 |
Investment income (“-” for loss) -25,036,851.77
| 20,371,762.61 | ||
| Including: Share of profit or loss of joint ventures and |
associates
-1,518,268.37
-
| 2,463,267.98 |
Gain on changes in fair value (“-” for loss) -4,877,600.00
Asset disposal income (“-” for loss)-8,418,900.16
-
| 14,364,342.23 |
2. Operating profit (“-” for loss) 682,614,630.12
| 819,632,756.24 |
Add: Non-operating income7,127,379.86
| 5,449,927.03 |
Less: Non-operating expense 6,778,974.37
| 4,693,009.37 |
3. Profit before tax (“-” for loss)682,963,035.61
| 820,389,673.90 |
Less: Incom e tax expense 85,124,312.21
| 109,759,110.09 |
4. Net profit (“-” for net loss)597,838,723.40
| 710,630,563.81 |
4.1 Net profit from continuing operations (“-” for net loss) 597,838,723.40
| 710,630,563.81 |
4.2 Net profit from discontinued operations (“-” for net loss)
5. Other comprehensive income, net of tax 492,150.00
| 28,050.00 |
5.1 Items that will not be reclassified to profit or loss
| 5.1.1 Changes in caused by remeasurements on defined benefit |
pensi on schemes
| 5.1.2 Share of other comprehensive income of investees that will |
not be reclassified to profit or loss under equity method
5.2 Items that may subsequently be reclassified to profit or loss492,150.00
| 28,050.00 | ||
| 5.2.1 Share of other comprehensive income of investees that will |
be reclassified to profit or loss under equity method
5.2.2 Gain/Loss on changes in fair value of available-for-
financial assets
492,150.00
| sale | 28,050.00 |
5.2.3 Gain/Loss arising from reclassification of held-to-
investments to available-for-sale financial ass ets
| maturity |
5.2.4 Effective gain/loss on cas h flow hedges
| 5.2.5 Differences arising from translation of foreign |
currency-denominated financial statements
5.2.6 Other
6. Total comprehensive income598,330,873.40
| 710,658,613.81 |
7. Ear ni ngs per share
7.1 Basic earnings per share0.66
0.77
7.2 Diluted earnings per share 0.66
0.77
5. Consolidated Cash Flo w Statem ent
Unit: RMBItem 2018 20171. Cash flows from operating activities:
Proceeds from sale of commodities and rendering of services
| 6,589,170,715.37 | 6,219,235,885.20 |
Tax rebates200,637,812.52
| 219,602,657.95 |
Cash gener ated from other operating activities
| 110,420,123.41 | 137,131,952.43 |
Sub total of cas h generated from operating activities
| 6,900,228,651.30 | 6,575,970,495.58 |
Payments for commodities and services
| 3,361,829,445.15 | 3,405,465,059.44 |
Cash paid to and for employees
| 1,606,604,705.02 | 1,537,319,127.10 |
Taxes paid 248,475,301.28
| 305,512,465.13 |
Cash used in ot her operating activities252,977,536.69
| 257,163,190.48 |
Subtotal of cash used in operating activities
| 5,469,886,988.14 | 5,505,459,842.15 |
Net cash gen er ated from/used in operating activities
| 1,430,341,663.16 | 1,070,510,653.43 |
2. Cash flows from investing activities:
Proceeds from disinvestment50,000,000.00
Investment i ncome 6,069,367.03
other long-lived assets
32,483,391.91
| Net proceeds from disposal of fixed assets, intangible assets and | 8,757,416.99 |
Net proceeds from disposal of subsidiaries or other business units
Cash gener ated from other investing activities 27,272,692.86
| 75,806,318.05 |
Sub total of cas h generated from investing activities
| 115,825,451.80 | 84,563,735.04 | |
| Payments for acquisition of fixed assets, intangible assets and other |
long-lived assets
928,794,291.04
| 617,226,044.44 |
Payments for inv es tm ents
| 210,000,000.00 |
Net increase in pledged loans granted
| Net payments for acquisition of subsidiaries and other business units |
Cash used in other investing activities 73,597,959.70
| 1,263,998.65 |
Subtotal of cash used in investing activities
| 1,002,392,250.74 | 828,490,043.09 |
Net cash gen er ated from/used in investing activities -886,566,798.94
-
| 743,926,308.05 |
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 obtained
| 3,187,659,288.75 | 2,156,301,279.43 |
Net proceeds from issuance of bonds
Cash gener ated from other financing activities94,300,000.00
| 199,980,000.00 |
Sub total of cas h generated from financing activities
| 3,282,459,288.75 | 2,356,781,279.43 |
Repayment of borrowings
| 2,925,408,591.68 | 1,924,349,996.85 |
Payments for interest and dividends 518,987,542.25
| 524,005,417.80 |
Including: Dividends paid by subsidiaries to non-
interests
12,023,566.38
| controlling | 12,023,566.38 |
Cash u sed in other financing activities 524,987,535.17
| 178,430,428.00 |
Subtotal of cash used in financing activities
| 3,969,383,669.10 | 2,626,785,842.65 |
Net cash gen er ated from/used in financing activities -686,924,380.35
-
| 270,004,563.22 |
4. Effect of foreign exchange rate changes on cash and cash equivalents
1,645,076.17
-
5. Net in crease in cash and cash equivalents -141,504,439.96
| 39,056,706.97 | |
| 17,523,075.19 |
Add: Cash and cash equivalents, beginning of the period 676,639,212.86
| 659,116,137.67 |
6. Cash and cash equivalents, end of the period 535,134,772.90
| 676,639,212.86 |
6. Cash Flow Statement of the Company as the Parent
Unit: RMBItem 2018 20171. Cash flows from operating activities:
Proceeds from sale of commodities and rendering of services
| 5,055,067,711.94 | 5,031,327,920.20 |
Tax rebates
| 134,608,110.60 | 147,979,834.16 |
Cash gener ated from other operating activities 54,426,092.92
| 66,325,383.38 |
Sub total of cas h generated from operating activities
| 5,244,101,915.46 | 5,245,633,137.74 |
Payments for commodities and services
| 2,867,484,652.12 | 2,835,545,725.67 |
Cash paid to and for employees
| 1,115,678,459.19 | 1,101,800,926.25 |
Taxes paid 133,530,662.18
| 203,201,646.35 |
Cash used in ot her operating activities 156,477,992.20
| 149,048,367.90 |
Subtotal of cash used in operating activities
| 4,273,171,765.69 | 4,289,596,666.17 |
Net cash gen er ated from/used in operating activities 970,930,149.77
| 956,036,471.57 |
2. Cash flows from investing activities:
Proceeds from disinvestment 50,000,000.00
Investment i ncome24,045,800.65
| 17,976,433.62 |
other long-lived assets
84,896,956.61
| Net proceeds from disposal of fixed assets, intangible assets and | 3,857,174.49 |
Net proceeds from disposal of subsidiaries or other business units
Cash gener ated from other investing activities621,071,940.73
| 369,607,376.66 |
Sub total of cas h generated from investing activities 780,014,697.99
| 391,440,984.77 | ||
| Payments for acquisition of fixed assets, intangible assets and other |
long-lived assets
215,016,290.76
| 158,989,610.94 |
Payments for inv es tm ents 350,736,500.00
| 217,934,750.00 |
| Net payments for acquisition of subsidiaries and other business units |
Cash used in other investing activities 537,403,361.43
| 547,733,600.00 |
Subtotal of cash used in investing activities 1,
| 103,156,152.19 | 924,657,960.94 |
Net cash gen er ated from/used in investing activities -323,141,454.20
-
| 533,216,976.17 |
3. Cash flows from financing activities:
Capital contributions received
Increase in borrowings obtained
| 1,867,420,105.89 | 1,549,844,124.40 |
Net proceeds from issuance of bonds
Cash gener ated from other financing activities 276,073,100.00
| 69,000,000.00 |
Sub total of cas h generated from financing activities
| 2,143,493,205.89 | 1,618,844,124.40 |
Repayment of borrowings
| 1,895,523,735.81 | 1,387,780,386.17 |
Payments for interest and dividends 479,201,499.77
| 473,154,729.91 |
Cash u sed in other financing activities 498,538,235.01
| 69,000,000.00 |
Sub-total of cash used in financing activities
| 2,873,263,470.59 | 1,929,935,116.08 |
Net cash gen er ated from/used in financing activities -729,770,264.70
-
| 311,090,991.68 |
4. Effect of foreign exchange rate changes on cash and cash equivalents
5,476,844.15
-
5. Net in crease in cash and cash equivalents -76,504,724.98
| 20,935,533.57 | |
| 90,792,970.15 |
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 period 191,305,104.80
| 267,809,829.78 |
7. Consolidated Statements of Changes in Owners’ Equity
2018
Unit: RMB
Item
2018Equity attributable to owners of the Company as the parent
Non-
interests
Total owners’
equityShare capital
Other equity instruments
Capital reserves
controlling
Less: Treasury
stock
Othercomprehensiv
e inco me
| Specific |
reserve
Surplus reserves
Generalreserve
Retained earnings
Preferred
shares
Perpetual bonds
| shares |
Other
1. Balan ces as at
| the |
end of the prior year
| 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 | |||||||
| Add: Adjustments for changed |
acc ount ing pol icies
previous errors
| Adjustments for corrections of |
business
| combinations under |
common control
| Other adjustments |
2. Balan ces as at
year
| the beginning of the | 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 | ||||||
| 3. In crease/ decr ease |
in the period (“-
decrease)
| ” fo r | 53.66 | 486,922,944.94 | 44,346,439.15 | 59,783,872.34 | 298,398,277.49 | 35,143,527.89 |
-
| 49,250,774.41 | ||
| 3.1 Total |
comprehensive
| 44,346,439.15 | 811,526,477.83 | 46,667,094.27 | 902,540,011.25 |
income
reduced by owners
| 3.2 Capital increased and | 53.66 | 486,922,944.94 | 500,000.00 |
-
3.2.1 Ordinaryshares increased byshareholders
| 486,422,891.28 | ||||||||||||
| 486,922,944.94 | 500,000.00 |
-
3.2.2 Capital
| 486,422,944.94 | ||
| increased by holders |
of other equityinstruments
3.2.3Share-basedpayments includedin owners’ equity
3.2.4 Other
| 53.66 |
53.66
| 3.3 Profit |
distribution
| 59,783,872.34 |
-
-
| 513,128,200.34 | 12,023,566.38 |
-
3.3.1
| 465,367,894.38 | ||
| Appropriation to |
surp lus reserves
| 59,783,872.34 |
-
| 59,783,872.34 |
3.3.2
general reserve
| Appropriation to |
3.3.3
shareholders)
| Appropriation to owners (or |
-
-
| 453,344,328.00 | 12,023,566.38 |
-
3.3.4 Other
| 465,367,894.38 | ||||||||||||
equity
| 3.4 Transfers within owners’ |
reserves
| 3.4.1 Increase in capital (or share capital) from capital |
reserves
| 3.4.2 Increase in capital (or share capital) from surplus |
reserves
| 3.4.3 Loss offset by surplus |
retained earnings
| 3.4.4 Changes in defined benefit pension schemes transferred to |
3.4.5 Other
| 3.5 Specific |
reserve
in the period
| 3.5.1 Increase |
the period
| 3.5.2 Used in |
3.6 Other
4. Balan ces as at
end of the period
| the | 922,602,311.00 | 699,493,647.48 | 486,922,944.94 | 61,157,013.37 | 1,022,717,451.4 |
| 4,927,500,989.55 | 579,276,247.53 | 7,725,824,715.39 |
2017
Unit: RMB
Item
2017Equity attributable to owners of the Company as the parent
Non-
interests
Total owners’
equityShare capital
Other equity instruments
Capital reserves
controlling
Less: Treasury
stock
Othercomprehensiv
e inco me
| Specific |
reserve
Surplus reserves
Generalreserve
Retained earnings
Preferred
shares
Perpetual bonds
| shares |
Other
1. Balan ces as at
| the |
end of the prior year
| 922,602,311.00 | 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 |
acc ount ing pol icies
previous errors
| Adjustments for corrections of |
business
| combinations under |
common control
| Other adjustments |
2. Balan ces as at
year
| the beginning of the | 922,602,311.00 | 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 | ||||||
| 3. In crease/ decr ease |
in the period (“-
decrease)
| ” fo r |
-
| 61,786,964.01 |
-
| 71,063,056.38 | 287,236,522.87 | 69,044,608.47 | 329,074,253.04 |
comprehensive
| 3.1 Total |
-
| 841,150,934.75 | 42,168,174.85 | 846,836,138.93 |
income
reduced by owners
| 3.2 Capital increased and |
-
| 61,786,964.01 | 38,900,000.00 |
-
3.2.1 Ordinaryshares increased byshareholders
| 22,886,964.01 | ||||||||||||
| 500,000.00 | 500,000.00 |
3.2.2 Capital
of other equityinstruments
| increased by holders |
3.2.3Share-basedpayments includedin owners’ equity
3.2.4 Other
-
| 61,786,964.01 | 38,400,000.00 |
-
| 23,386,964.01 | ||
| 3.3 Profit |
distribution
| 71,063,056.38 |
-
-
| 553,914,411.88 | 12,023,566.38 |
-
3.3.1
| 494,874,921.88 | ||
| Appropriation to |
surp lus reserves
| 71,063,056.38 |
-
| 71,063,056.38 |
3.3.2
general reserve
| Appropriation to |
3.3.3
shareholders)
| Appropriation to owners (or |
-
-
| 482,851,355.50 | 12,023,566.38 |
-
3.3.4 Other
| 494,874,921.88 | ||||||||||||
equity
| 3.4 Transfers within owners’ |
reserves
| 3.4.1 Increase in capital (or share capital) from capital |
reserves
| 3.4.2 Increase in capital (or share capital) from surplus |
reserves
| 3.4.3 Loss offset by surplus |
retained earnings
| 3.4.4 Changes in defined benefit pension schemes transferred to |
3.4.5 Other
| 3.5 Specific |
reserve
in the period
| 3.5.1 Increase |
the period
| 3.5.2 Used in |
3.6 Other
4. Balan ces as at
end of the period
| the | 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
2018
Unit: RMBItem
2018Share capital
Other equity instruments
Capital reserves
Less: Treasury
stock
Othercomprehensi
ve income
Specificreserve
Surplus reserves Retained earnings
Total owners’
equityPreferred
shares
Perpetual
bonds
Other1. Balances as at the end of
prior year
| the | 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
acc ount ing pol icies
| changed |
previous errors
| Adjustments for corrections of |
Other adjustments
2. Balances as at the
the year
| beginning of | 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
| 486,922,944.94 |
492,150.00
| 59,783,872.34 | 84,710,523.06 |
-
| 341,936,345.88 | ||
| 3.1 Total comprehensive |
income
492,150.00
| 597,838,723.40 | 598,330,873.40 |
reduced by owners
| 3.2 Capital increased and |
53.66
| 486,922,944.94 |
-
3.2.1 Ordinary sharesincreased by s hareholders
| 486,922,891.28 | ||||||||||
| 486,922,944.94 |
-
3.2 .2 Capital increased byholders of other equityinstruments
| 486,922,944.94 | ||||||||||
3.2.3 Sha r e -based payments
included in owners’ equity
3.2.4 Other
53.66
53.66
3.3 Profit distributi on
| 59,783,872.34 |
-
-
| 513,128,200.34 | 453,344,328.00 |
surp lus reserves
| 3.3.1 Appropriation to | 59,783,872.34 |
-
| 59,783,872.34 |
owners (or shareholders)
| 3.3.2 Appropriation to |
-
-
| 453,344,328.00 | 453,344,328.00 |
3.3.3 Other
equity
| 3.4 Transfers within owners’ |
3.4.1
reserves
| Increase in capital (or share capital) from capital |
reserves
| 3.4.2 Increase in capital (or share capital) from surplus |
reserves
| 3.4.3 Loss offset by surplus |
3.4.4
transferred to retained earnings
| Changes in defined benefit pension schemes |
3.4.5 Other
3.5 Specific reserve
3.5.1 Increase in the period
3.5.2 Used in the period
3.6 Other
4. Balances as at the
period
| end of the | 922,602,311.00 |
759,836,756.57
| 486,922,944.94 |
520,200.00
| 1,019,608,711.76 | 3,714,813,049.43 | 5,930,458,083.82 |
2017
Unit: RMBItem
2017Share capital
Other equity instruments
Capital reserves
Less: Treasury
stock
Othercomprehensi
ve income
Specificreserve
Surplus reserves Retained earnings
Total owners’
equityPreferred
shares
Perpetual
bonds
Other1. Balances as at the end of
prior year
| the | 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 icies
previous errors
| Adjustments for corrections of |
Other adjustments
2. Balances as at the b
the year
| eginnin g of | 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 |
income
| 3.1 Total comprehensive |
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 s hareholders
3.2 .2 Capital increased byholders of other equityinstruments
3.2.3 Sha r e -based paymentsincluded in owners’ equity
3.2.4 Other
43,463.99
| 43,463.99 |
3.3 Profit distributi on
| 71,063,056.38 |
-
-
| 532,364,211.88 | 461,301,155.50 |
surp lus reserves
| 3.3.1 Appropriation to | 71,063,056.38 |
-
| 71,063,056.38 |
owners (or shareholders)
| 3.3.2 Appropriation to |
-
-
| 461,301,155.50 | 461,301,155.50 |
3.3.3 Other
equity
| 3.4 Transfers within owners’ |
3.4.1
reserves
| Increase in capital (or share capital) from capital |
reserves
| 3.4.2 Increase in capital (or share capital) from surplus |
reserves
| 3.4.3 Loss offset by surplus |
3.4.4
transferred to retained earnings
| Changes in defined benefit pension schemes |
3.4.5 Other
3.5 Specific reserve
3.5.1 Increase in the period
3.5.2 Used in the period
3.6 Other
4. Balances as at the
period
| end of the | 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 Profile
Lu Thai Textile Co., Ltd. (hereinafter re ferred to as t he “Co mpany”) is a jo int ventu re invested by Zibo Lucheng Textile InvestmentCo., Ltd (originally named Zibo Lucheng Textile Co., Ltd, hereinafter referred to as Lucheng Textile) and Thailand Tailun Textile Co.,Ltd. On 3 February 1993, the Company is approved by the former Ministry of Foreign Trade and Economy of the State (1993) inWJMZEHZ No. 59 to convert into a joint-stock enterprise. Zibo Administration for Industry and Commerce issued the Companycorporate business license with the registration No. of QGLZZZ No. 000066. In July 1997, the Company is approved by theSecurities Committee of the Department 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 Stock Exchange with No. (1997) 296Listing Notice, the Company is listed on the Shenzhen Stock Exchange on 19 August 1997 with B-shares stock code of 200726. On24 November 2000, approved by ZJGSZ [2000] No.199 by CSRC, the Company increased publication of 50 million shares ofgeneral share (A-shares) at the book value of RMB 1.00, which are listed on the Shenzhen Stock Exchange on 25 December 2000with A-shares stock code of 000726 through approval by Shenzhen Stock Exchange with No. (2000) 162 Listing Notice. As approvedby 2000 Annual General Meeting in May 2001, the Company carried out the distribution plan that 10 shares of capital public reserveare converted to 3 more shares for each 10 shares. As approved by Resolutions of 2001 Annual General Meeting in June 2002, theCompany implemented the distribution plan that 10 shares of capital public reserve are converted 3 more shares for each 10 sharesagain. As approved by 2002 Annual General Meeting in May 2003, the Company implemented the distribution plan that 10 shares ofcapital public reserve are 2 more shares for each 10 shares, and inner employees’ shared increased to 40.56 million shares. Asexamined and approved by ZJGSZ No. [2000] 199 of CSRC, the inner employees’ shares will start circulation 3 years later sincelisting on the A-share market. On 25 December 200 3, the inner employees’ shares reach 3 years since listi ng on the A-share stockmarket, and they set ou t circulation on 26 December 2003. As approved by the Annual General Meeting 2006 held in June 2007, theCompany implemented the plan on converting 10 shares to all its sh areholders with capital reserves for every 10 shares. Aftercapital izati on , the regist ered capital of the Company was RMB 844.8648 million. The Company, in accordance with the official replyon approving Lu Thai Textile Co., Ltd. to issue additional shares (ZJXK [2008] No. 890 document) from CSRC, issued the Renminbicommon shares (A shares) amounting to 150 mill ion shares on 8 December 2008. According to the relevant resolution of the 2
nd
Special Extraordinary General Meeting of 2011, the relevant resolution of the 15
th
Meet in g of th e 6
th
Board of Directors, the Opinionof China Securities Regulatory Commission on the Restricted Share Incentive Plan of Lu Thai Textile Co., Ltd. (Shang-Shi-Bu-Han[2011] No. 206), the Company applied for a registered capital increment of RMB 14.09 million, which was contributed by restrictedshare incentive receivers with monetary funds. In accordance with the resolution of Proposal on Repurchasing and Canceling PartialRestrict ed Shares alr eady Granted for the Original Incentive Targets not Reaching the Incentive Conditions made at the 23
rd
Sessionof the 6
th
B oard of Directors on 13 August 2012, the Company canceling a total of 60,000.00 shares already granted for the originalincentive targets not reaching the incentive conditions. According to the second temporary resolution of Proposal on counter purchaseof part of the domestic listed foreign share (B share) on 25 June 2012, the Company counter purchase domestic listed foreign share(B share) 48,837,300 shares. According to the Proposal on Repurchase and Cancel Part of Unlocked Restricted Share of the OriginalIncentive Personnel not Conforming to the Incentive Condition, Proposal on Repurchase and Cancel unlocked Restricted Share inSecond Unlocked Period of all the Incentive Personnel reviewed and approved by the 26
th
M eetin g of the 6
th
Bo ard of Directors on27 March 2013, the Company repurchase and cancel 4,257,000 shares owned by original people whom to motivate. According to theProposal on Repurchase and Write-off of Partly of the Original Incentive Targets Not Met with the Incentive Conditions but GrantedRestrict ed Sh ares approved on the 11
th
M eeting of the 7
th
Board of Directors on 11 June 2014, to execute repurchase and write-off ofthe whole granted shares of 42,000 shares of the original incentive targets not met with the incentive targets of the Company. As perthe Propos a l on B uy-back of Some A- and B-shares consid er ed and approved as a resolution at the 1
st
special meet ing of shareholderson 5 August 2015, the Company repurchased 33,156,200 domestically listed foreign shares (B-shares). As of 31 December 2018, theregistered capital of the Company was RMB922.6023 million.The Company’s registered address: No. 11, Mingbo Road, Hi-tech Development Zone, Zibo, Shandong
The Company’s legal representative: Liu ZibinThe Company’s business scope includes the production, processing and sales business of cotton yarn, yarn dyed fabrics, shirts,fashion accessories, health underwear and other textile products and their mating products; design, R&D and technology services ofthe textile and garment products; acquisition and export of products not under exclusive rights or quota licenses; and hotel,guestho uses, catering, conferences, an d train ing services; ren tal busin ess of the sel f-owned houses and land; the production and salesof the purified water projects.The Company’s financial statements have been approved for issue by the Board of Directors of the Company on 27 March 2019.There were 16 subsidiaries included into the consolidation scope of the Company in 2018, and for the details, please refer to NotesIX. “Equities among Other Entities”. There was 1 increased subsidiary in the consolidation scope as compared with last year, andplease refer to Notes VIII. “Changes in Consolidation Scope” for details.
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 that actually occurred, the Groupprepar ed financial statements in accordan ce with The Acco unting Standards for Business Enterprises—Basic Standard issued by theMinistry of Finance with Decree No. 33 and revised with Decree No. 76, the 42 specific acco unting standards, the ApplicationGuidance of Accounting Standards for Business Enterprises, the Interpretation of Accounting Standards for Business Enterprises andother regulations issued and revised from 15 February 2006 onwards (hereinafter jointly referred to as “the Accounting Standards forBusiness Enterprises”, “China Accounting Standards” or “CAS”), as well as the Rules for Preparation Convention of Disclosure ofPublic Offering Companies No.15 – General Regulations for Financial Reporting (revised in 2014) by China Securities RegulatoryCommission.In accordance with relevant provisions of the Accounting Standards for Business Enterprises, the Group adopted the accrual basis inaccounting. Except for some financial instruments, the financial statements were based on historical costs for measurement.Non-cu rren t asset held for sal e was priced 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 occurred on an asset, an impairmentreserve was withdrawn accordingly pursuant to relevant requirements.
V. Significant Accounting Policies and Estimates
Is the Company subject to any disclosure requirements for special industries?No.Indication of specific accounting policies and estimations:
The Company and each subsidiary mainly engage in the production and operation of textile products. The Company and eachsubsidiary according to the actual production and operation characteristics and the regulations of the relevant ASBE, formulatedcertain specific accounti ng policies and accounting estimates of the transact ions and events such as recognizing the revenues, andplease re fer to the Note V. 23 “Revenue” for details. As for the notes to the important accounting judgment and estimations made bythe management level, please refer to the Note V. 29. “Other important accounting policies and estimations” of the section.
1. Statement of Compliance with the Accounting Standards for Business Enterprises
The financial statements prepared by the Company are in compliance with in compliance with the Accounting Standards for BusinessEnterprises, which factually and completely present the Company’s, and the Company’s financial positions as at 31 December 2018,
business results and cash flows for the year of 2018 and other relevant information. In addition, the Company’s and the Company’sfinancial statements meet t he requirements of disclosin g financial statements and no tes thereto stated in the Rul es for PreparationConvention of Disclosure of Public Offering Companies No.15 – General Regulations for Financial Reporting (revised in 2014) byChina Securities Regulatory Commission.
2. Fiscal Year
The Co mpany’s fiscal periods inclu de fiscal years and fiscal period s shorter than a complete fiscal year. The Company’s fiscal yearstarts on 1 Jan. and ends on 31 Dec. of every year according to the Gregorian calendar.
3. Operating Cycle
Normal operating cycle refers to the period from the Group purchases the assets for processing to realize the cash or cash equivalents.The Group regards 12 months as an operating cycle and regards which as the partition criterion of the mobility of the assets andliabilities.
4. Recording Currency
Renminbi (RMB) is regard ed as th e prevailin g currenc y used in the main economic circumstances of the Co mpany and its domesticsubsidiaries. The Company and its domestic subsidiaries adopt RMB as the recording currency. The Company and its overseassubsidiaries confirm to adopt HK Dollar, US Dollar and Vietnamese Dong as the recording currency according their majo r economicenvironment of the operating. When preparing the financial statements for the Reporting Period, the Company adopted RMB as therecording 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 repor ting entity transactions or events.Business combination is divided into under the same control and those non 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 the combining enterprises are ultimatelycontrolled by the same party or the same parties both before and after the business combination and on which the control is nottemporary. In a business combination under the same control, the party which obtains control of other combining enterprise(s) on thecombining date is the combining party, the other combining enterprise(s) is (are) the combined party. The “combining date” refers tothe date on which the combining party actually obtains control on the combined party.The assets and liabilities that the combining party obtains in a business combination shall be measured on the basis of their carryingamount in the combined party on the combining date. As for the balance between the carrying amount of the net assets obtained bythe combining party and the carrying amount of the consideration paid by it (or the total par value of the shares issued), the additionalpaid-in capital (share premium) shall be adjusted. If the additional paid-in capital (share premium) is not sufficient to be offset, theretained earnings shall be adjusted.The direct cost for the business combination of the combining party shall be recorded into the profits 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 the combining enterprises are not ultimatelycontrolled by the same party or the same parties both before and after the business combination. In a business combination not under
the same co ntro l, the party which obtains the control on other combining enterprise(s) on the purchase date is the acquirer, and othercombining enterprise(s) is (are) the acquiree.For a business combination not under the same control, the combination costs shall include the fair values, on the acquisition date, ofthe assets paid, the liabilities incurred or assumed and the equity securities issued by the acquirer in exchange for the control on theacqui ree, t he exp enses for au dit, legal servi ces and assess men t, and o th er administrative expenses, which are recorded into the profitsand losses in the current period. The trading expenses for the equity securities or debt securities issued by the acquirer as thecombination consideration shall be recorded into the amount of initial measurement of the equity securities or debt securities. Theinvolved contingent consideration shall be recorded into the combination costs at its fair value on the acquiring date. Where new orfurther evidences emerge, within 12 months since the acquiring date, against the existing circumstances on the acquiring date and thecontingent consideration thus needs to be adjusted, the combined goodwill shall be adjusted accordingly. The combination costs ofthe acquirer and the id entifiable net assets obtain ed by it in the combination shall be measured according to their fair values at theacqui ring date. The acqui rer shall recogn ize the positive b alance between th e combination co sts and the fair value of th e identifiablenet assets it obtains from the acquiree as business reputation. Where the combination costs are less than the fair value of theiden tifiab le net asset s it obt ain s from the acqu iree, the acq u irer shall r e-examine t he measur ement o f th e fair values of the iden ti fiableassets, liabilities and contingent liabilities it obtains from the acquiree as well as the combination costs. If, after the reexamination,the combination costs are still less than the fair value of the identifiable net assets it obtains from the acquiree, the acquirer shallrecord t he balance into the profits and losses of the current period.As for the d ed uct ible t emporar y di fferences the acq u irer ob tai ns from the acq ui ree which are n ot recognized in to d eferred in come taxliabilities due to their not meeting the recognition standards, if new or further information shows that the relevant situation hasexisted on the acquiring date and the economic benefits brought by the deductible temporary differences the acquirer obtains fromthe acq uiree on th e acquiring d ate can be reali zed, they shall be recognized into deferred inco me tax assets and t he relevan t goodwillshall be reduced. Where the goodwill is not sufficient to be offset, the difference shall be recognized into the profits and losses in thecurrent period. In other circumstances than the above, where the deductible temporary differences are recognized into deferredincome tax assets on the acquiring date, they shall be recorded into the profits and losses in the current period.In a business combination not under same control realized by two or more transactions of exchange, according to about the 5
th
Noticeabout the Treasury Issuing the Accounting Standards for Enterprises (Finance accounting) [2012] No. 19 Criterion about the“package deal” (see Notes V. 6 (2)), Whether the deals are “package deal” or not, belong to the “package deal”, see the previousparagraphs descr ibed in this section and No tes V. 13 “Long term equity investment transaction” and conduct accounting tr eatment,those not belong to the "package deal" distinguish between the individual financial statements and the consolidated financialstatement s and conduct relevant accounting treatment.In the individual financial statements, the sum of the book value and new investment cost of the Company holds in the acquireebefore the acqu iring date shall be con sidered as initial co st of the investment. Oth er related comprehens ive gains in relation to theequity interests that the Company holds in the acquiree before the acquiring date shall be treated on the same basis as the acquireedirectly disposes the related assets or liabilities when disposing the investment (that is, except for the corresponding share in thechanges in the net liabilities or assets with a defined ben efit plan measured at the equity method arising from the acquiree’sre-measurement, the others shall be transferred into current investment gains).In the Company’s consolidated financial statements, as for the equity interests that the Company holds in the acquiree before theacqui rin g date, they shall be r e-measur ed acco rd in g to their fair valu es at th e acqu iring d ate; the positi ve difference b etween th eir fairvalues and carrying amounts shall 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 holds in the acquiree before the acquiring date shall betreated on the same basis as the acquiree directly disposes the r elated assets or liabilities when d isposing the investment (that is,except for the corresponding share in the changes in the net liabilities or assets with a defined benefit plan measured at the equitymethod arising from the acquiree’s re-measurement, the oth ers shall be transferred into current investment gain s on the acquiringdate).
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 theCompany upon an investee, with which it can take part in relevant activities of the investee to obtain variable returns and is able toinfluence 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 in the aforesaid definition of “control”,the Comp any shall carry out a reassessment.(2) Methods for preparing the consolidated financial statementsSubsidiaries are fully consolidated from the date on which the Company obtains control on their net assets and operationdecision-m aking and are de-consolidated from the date when such control ceases. As for a disposed subsidiary, its operating resultsand cash flows before the disposal date has been appropriately included in the consolidated income statement and cash flowstatement; and as for subsidiaries disposed in the current period, the opening items in the consolidated balance sheet are not adjusted.For a subsidiary acquired in a business combination not under the same control, its operating results and cash flows after theacquiring date have been appropriately included in the consolidated income statement and cash flow statement, and the opening itemsand comparative items in the consolidated financial statements are not adjusted. For a subsidiary acquired in a business combinationunder the same control or a combined party obtained in a takeover, its operating results and cash flows from the beginning of theReporting Period of the combination to the combination date have been appropriately included in the consolidated income statementand cash flow statement, and the comparative items in the consolidated financial statements are adjusted at the same time.The financial statements of subsidiaries are adjusted in accordance with the accounting policies and accounting period of theCompany during the preparation of the consolidated financial statements, where the accounting policies and the accounting periodsare inconsistent between the Company and subsidiaries. For a subsidiary acquired from a business combination not under the samecontrol, the individual financial statements of the subsidiary are adjusted based on the fair value of the identifiable net assets at theacquisition date.All significant inter-group balances, transactions and unrealized profits are offset in the consolidated financial statements.The portion of a subsidiary’s shareholders’ equity and the portion of a subsidiary’s net profits and losses for the period not held by theCompany are r ecognized as minority interests and minority shareholder profits and losses respectively and presented separately undershareholders’ equity and net profits in the consolidation financial statements. The portion of a subsidiary’s net profits and losses forthe period that belong to minority interests is presented as the item of “minority shareholder profits and losses” under the bigger itemof net profits in the consolidated financial statements. Where the loss of a subsidiary shared by minority shareholders exceeds theportion enjoyed by minority shareholders in the subsidiary’s opening owners’ equity, minority interests are offset.Where the Company losses control on its original subsidiaries due to disposal of some equity investments or other reasons, theresidual equity interests are re-measu red according to the fair value on the date when such con trol ceases. The summation of theconsideration obtained from the disposal of equity interests and the fair value of the residual equity interests, minus the portion in theoriginal subsidiary’s net assets measured on a continuous basis from the acquisition date that is enjoyable by the Company accordingto the original shareholding percentage in the subsidiary, is recorded in investment gains for the period when the Company’s controlon the subsidiary ceases. Other comprehensive incomes in relation to the equity investment in the original subsidiary are treated onthe sa me accountin g basis as the acq uiree di rectly dispo ses the relevant assets or liabilit ies (that i s, except for th e changes in t he netliabilities or assets with a defined benefit plan resulted from re-measurement of the original subsidiary, the rest shall all be transferredinto current investment gains) when such control ceases. And subsequent measurement is conducted on the residual equity interestsaccording to the No. 2 Accounting Standard for Business Enterprises —Long-term Equity Investments or the No. 22 AccountingStandard for Business Enterprises—Recognition and Measurement of Financial Instruments. For details, see Notes V. 13 “Long Term
Equity Investment” or Notes V. 9 “Financial Instruments”.Where the C ompany losses control on its original subsidiaries due to step by step disposal of equity investments through multipletransactions, it need to distinguish the Group losses control on its subsidiaries due to disposal of equity investments whether belongsto a p ackage deal. All th e transact ion terms, co ndi tions and economic impact o f the dis posal of subsidiari es’ equity investment are inaccordance with one or more of the following conditions, which usually indicate the multiple transactions, should be considered as apackage deal for accoun ting treatment. ①These deals are ofeach other to concl uded; ②These transactions only urrence of adeal d epends on at least one other transactions；④ A deal alone is not economical, it is economical with other trading together. Thosenot belong to a p ackage deal, eac h o f them a deal dep ends on cir cumstances resp ectiv el y cond u ct accou ntin g treatment in acco rd ancewith the applicable principles of “part disposal of subsidiaries of a long-term equity investment under the condition of not losingcontrol on its subsidiaries” (see Notes V. 13. (2) ④in thi s sectio n) a nd “Where the ntrol on its originalsubsidiaries due to disposal of some equity investments or other reasons” (see the front paragraph) relevant transactions of theCompany losses control on its subsidiaries due to disposal of equity investments belonging to a package deal, considered as atransaction and conduct accounting treatment. However, Before losing control, every disposal cost and corresponding net assetsbalance of subsidiary of disposal investment are confirmed as other comprehensive income in consolidated financial statements,which together transferred into the current profits and losses in the loss of control, when the Company losing control on itssubsidiary.
7. Confirm ati on Standard for Cash and Cash Equi vale nt
The ter m “cash ” re fers to cash o n han d and depo sits th at are avai la bl e for p a yment at an y ti me. The ter m “cash eq ui valent s” re fers toshort-term (within 3 months from the purchase date) and highly liquid investments that are readily convertible to known amounts ofcash and which are subject to an insignificant risk of change in value.
8. Foreign Currency Businesses and Translation of Foreign Currency Financial Statem ent s
(1) Accounting treatments for translation of foreign currency transactionsAs for a foreign currency transaction, the Company shall convert the amount in a foreign currency into amount in its bookkeepingbase at th e spot exchan ge rate (usu ally referrin g to th e central p arity rate anno unced by the People’s Bank of China, the same below)of the transaction date, while as for such transactions as foreign exchange or involving in foreign exchange, the Company shallconvert ed into amount in the bookkeeping base currency at actual exchange rate the transaction is occurred.(2) Accounting treatments for translation of foreign currency monetary items and non-monetary itemsOn the b alance sh eet date, th e foreign cu rren cy monet ary items sha ll be tran slat ed at the spo t exchange rate o n the bal ance sheet d ate.The exchan ge differen ce arisin g fro m the differenc e bet ween the s pot exchange rate o n th e balan ce sheet d ate and t he spo t exchan gerate at the time of initial recognition or prior to the balance sheet date shall be recorded in the profits and losses in the current period,excluding the following situations: ① the exchange difference arising from foreign currency loans related to acquisition of fixedassets shall be treated at the principl e of capitalization of borrowing costs; ②the exchange dif ginginstruments used for effective hedging of net overseas operation investments shall be recorded into other comprehensive incomes,and shall be recognized into current gai ns and losses when the net invest ments are disposed; and ③ the exchange diff isingfrom change in the book balance of foreign currency monetary items available for sale except the amortized costs shall be recordedinto other comprehensive gains and losses.For the preparation for consolidated financial statement involved in foreign operations, if there are items of foreign currencymonetary of net invest ment in foreign op erations in essence, then t he balance of exchange gener ated by changes in exch ange rateshall included into other comprehensive income; when disposing foreign operations, it shall be converted into the disposal of the
current profits and losses.A foreign currency non-monetary item measured at the historical costs shall still be translated at the spot exchange rate on thetransact ion dat e. Where the foreign no n-monet ary items measured at the fair valu e shall be convert ed into amoun t in its boo kkeep ingbase currency at spot exchange rate, the exchan ge gains and losses arising thereof shall be treated as change in fair value, andrecorded into 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 the translation difference of foreigncurrency monetary items of net investment in overseas business arising from the change in exchange rate, it shall be recorded into theitem of “di fference of foreign curren cy financial statemen t tran slation ” under th e owners’ equity; and be recorded in to disposal gainsand 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 followingmethods: The asset and liabilit y items in the balance sheets shall be translated at a spo t exchange rate on the balance sheet date.Among the owner’s equity items, except for the items as “undistributed profits”, other items shall be translated at the spot exchangerate at the time when they are incurred. The income and expense items in the profit statements shall be translated at the spot exchangerate of the transaction date. The undistributed profits at year-begin is the undistributed profits at the end of last year after thetranslation; undistributed profits at year-end shall be listed as various distribution items after the translation; after the translation, thebalan ce between assets an d th e sum of liabiliti es and owner s’ equities shall be recorded into other comprehensive g ains an d losses asdifference of foreign currency translation. Where an enterprise disposes of an overseas business without the control right, it shall shiftthe differences, whi ch is presen ted under the items of th e owner ’s equities in the balance sheet and which arises from th e translationof foreign currency financial statements relating to this overseas business, into the disposal profits and losses of the current period byall or proportion of the disposed overseas business.Foreign cash flow shall b e translated at the spot exch ange rate of th e date of cash flo w incurred. Th e influence of e xchange rate o nthe cash flow shall be adjustment item and individually listed in the cash flow statement.And the opening balance and the actual bal ance of last year shall be listed at the amounts after translation of foreign currencyfinancial statement in last year.Where the co n trol of the Company over an overseas operation ceases due to disposal of all or some of the Company’s owner’s equityin the overseas operation or other reasons, the foreign-currency statement translation difference belonging to the parent company’sowner’s equity in relati on to the overseas operation which is stated under th e 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 equity investment or other reasons but theCompany still has control over the overseas operation, the foreign-currency statement translation difference in relation to thedisposed part of the overseas operation shall be recorded into minority interests instead of current gains and losses. If what’s disposedis some equity in an o verseas associated enter prise or joint venture, the fo reign-currency statement tr anslation difference related tothe o vers eas operation shall be recorded into the gains and losses of the current period of the disposal according to the disposal ratio.
9. Financial Instruments
The Compan y reco gni zes a finan cial as set o r li abi lit y when i t b ecomes a part y of th e rele vant finan c ial i nst ru ment co nt ract. Financialassets and liabilities are measured at fair value in initial recognition. As for the financial assets and liabilities measured at fair valueof which ch anges are r ecor ded into cu rrent gains and losses , the relevan t d ealin g expen ses are d ir ectly record ed into gain s and losses;and the dealing expenses on other kinds of financial assets and liabilities are included in the amounts initially recognized.(1) Determination of the fair value of main financial assets and financial liabilitiesFair value re fers to the price th at a market participant shall receive for selling an asset or shall pay for transferring a liability in an
order ly transact io n on th e measure ment d ate. As for th e finan cial assets or fin an cial l iab ili ties fo r wh ich there is an act ive market, th equoted prices i n th e active market sh all be used t o determine the f air values th ereof. The quo ted prices in t he active market refers tothe prices avail able from stock exchan ge, broker ’s agencies, guilds, pricing organization and etc., which represent the act ual trad ingprice u nder equal transact ion. Where there i s no active market for a financial inst rument, the ent erprise concerned shall adopt valueappraisal techniques, including the prices adopted by the parties, who are familiar with the condition, in the latest market transactionupon their own free will , the current fair value ob tained by referring to other fin ancial instruments of the same ess ential natur e, thecash flow capitalization method and the option pricing model, etc., to determine its fair value.(2) Classificati on, recognition and measurement of financial assetsThe pur chase and sal e of financial asset s under th e normal ways shall be recogn ized and stopped to be recogn ized resp ectively at theprice o f transacti on d ate. Fi nancial asset s shal l be clas sified into the following four categories when they are initially recognized: (a)the financial asset s which are measured at th eir fair values and the variation of which is recorded into the pr ofits and losses of thecurrent period, (b) the investments which will be held to their maturity; (c) loans and the account receivables; and (d) financi al assetsavailable fo r s ale.① The financial assets which are measured at their fair values and the variation of which is recorded into the profits and losses of thecurrent periodInclu ding tran sactional financial assets and the fin ancial ass ets which are desi gnated t o be measured at th eir fair value when they ar einitially recognized and of which the variation is recorded into the profits and losses of the current period;The financi al assets meeting any of the following requirements shall be classified as transactional financial assets：A. The purpose toacquire the said financial assets is mainly for selling them in the near future; B. Forming a part of the identifiable combination offinancial instr uments which are managed in a centrali zed way and for which there are object ive eviden ces provin g that the enterprisemay manage the combination by way of short-term profit making in the near future; C. Being a derivative instrument, excluding thedesignat ed der ivative in struments which are effective hedgin g instrument s, or deri vative inst ruments to fin ancial gu arantee contracts,and the derivative instruments which are connected with the equity instrument investments for which there is no quoted price in theactive market , whose fair value cannot be reliably measured, and which shall be settled by delivering the said equity instruments.A transactional financial ass et is s u b sequen tl y measured at t he fair valu e. Th e gai ns an d losses ar isin g from the fair valu e chan ges, a swell as the dividend and interest incomes from the financial asset, are recorded in the gains and losses for the current period.② Held-to-maturity investmentThe term "held-to-maturity investment" refers to a non-derivative financial asset with a fixed date of maturity, a fixed ordeterminable amount of repo price and which the enterprise holds for a definite purpose or the enterprise is able to hold until itsmaturity.For the held-to-maturity investment adopting actual interest rate method, which is measured at the post-amortization costs, the profitsand los ses that arise when such finan cial assets or financial li abilities are ter minated fro m recognition , or are impaired or amortized,shall be recorded into the profits and losses of the current period.The actual interest rate method refers to the method by which the po st-amortization costs and the interest incomes of differentinstallments or interest expenses are calculated in light of th e actual interest rates of the financial assets or financial liabilities(including a set of financial assets or financial liabilities). The actual interest rate refers to the interest rate adopted to cash the futurecash flow of a financial asset or financial liability within the predicted term of existence or within a shorter applicable term into thecurrent carrying amount of the financial asset or financial liability.When the actual interest rate is determined, the future cash flow shall be pred icted on the basis of taking into account all thecontractual provisions concerning the financial asset or financial liability (the future credit losses shall not be taken into account).andalso the various fee charges, trad ing expenses, premiums or reduced valu es, etc., which are paid or coll ected by the parties to afinancial asset 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 finan cial assets, which there is no quotation in the active market, withfixed reco ver y cost o r recogni zabl e. F inanci al asset s th at are defin ed as loans and the accou nt s receivabl es by the C ompan y includingnot es receivables, accounts receivables, interest receivable, dividends receivable and other receivables etc..Loans an d the accou nts receivab les are made follo w-up measurement on the basis of post-amortization costs employing the effectiveinterest method. Gains or loss arising from the termination recognition, impairment occurs or amortization shall be recorded into theprofits and losses of the current period.④ Assets available for salesAssets available for sales including non-derivative financial asset that has been assigned as assets available for sale s on the initialrecognition and financial assets excluded those measured at fair value and of which the variation into profits and losses of the currentperiod , they are some financial assets, loans and accounts receivables, held-to-maturity investment.The cost at the period-end of the available-for-sale liabilities instruments should be confirmed according to its amortized cost method,that is the initially recognized amount which deduct the principal that had been repaid, to plus or minus the accumulativeamortization amount formed by the amortization between the difference of the initially recognized amount and the amount on the duedate that adop ted the actual interest rate meth od, and at the same time deduct the amount after the impair ment loss happened. Thecost at the period-end of the available-for-sale liabilities instruments is its initial cost.Finan cial assets avai lab le-for-t r ade are s ub seq uen tl y measured at fa ir valu e, an d gain s or losses ari sin g fro m chan ges in th e fair valu eare recognized as other comprehensive in come，and be carried forward when the said financial assets stopped recognition, then itshall be recorded into the profits and losses of the current period. But, the equity instrument investment which neither have quotationin the acti ve market nor its fair valu e could not be reliab le measured, as well as th e derivative financi al assets that concern with theequity instruments and should be settled through handing over to its equity instruments, should take the follow-up measurementacc or ding t o the cost.Interest receive during the holding of assets available for sales and cash dividends with distribution announcement by investedcompanies, it shall be recorded into the profits and losses of the current period.(3) Impair ment of financial assetsThe Com pany assesses at the b alance sheet date the carrying amou nt of every financial asset except for th e financial assets thatmeasured b y the fair value. If there is object ive eviden ce indicat ing a financial asset may be impai red, a provisi on is provid ed for th eimpairment.The Company carries out a separate impairment test for every financial asset which is individually significant. As for a financial assetwhich is individually insignificant, an impairment test is carried out separately or in the financial asset group with similar credit risk.Where the financial asset (individually significant or insignificant) is found not impaired after the separate impairment test, it isincluded in the financial asset group with similar credit risk and tested again on the group basis. Where the impairment loss isrecognized for an individual financial asset, it is not included in the financial asset group with similar credit risk for an impairmenttest.① Impairment on he ld-to maturity investment, loans and receivablesThe financi al ass ets measu red by co st o r amort ized cost write d own th eir carrying valu e b y the est imated p resen t valu e o f future cas hflow. The difference is record ed as i mpair ment lo ss. If ther e is o bj e ctive e vid ence t o i nd icat e th e reco very of val ue of fin anci al asset safter impairment, and it is related with subsequent event after recognition of loss, the impairment loss recorded originally can bereversed. The carrying valu e of financial assets after impair ment loss reversed shall not exceed the amortized cost of the financialassets without provisions of impairment loss on the reserving date.② Impairment of available-for-sale financial assetsWhen it judged that the decrease of fair value of the availabl e-for-sale equity instrument investment is serious and not temporarilyafter comprehensive considering relevant factors, it reflected th at the available-for-sale equity instrument investment occurredimpairment. Of which, the “serious decline” refers to the accumulative decline range of the fair value over 20%; while the
“non-temporary declin e” r efers to the consecutive decline time of the fair value over 12 months.Where an available-for-sale financial asset is impaired, th e accumulative losses arising fro m the decrease of the fair value of th ecapital r eserve which is directly included are transferred out and recorded in the profits and losses for the current period. Theaccumulat ive lo sses t ran sferred o ut are th e b alan ce obtai ned from th e in iti ally ob tain ed co st o f the sai d fin anci al asset after deductingthe principals as taken back, the amortized amount, the current fair value and the impairment loss originally recorded in the profitsand losses.Where the i mpairment loss has been r ecognized for an availab le-for-sale financial asset, if, within the accounting periods thereafter,there is any ob jective evidence proving t hat the value of the said financi al asset has been resto red and the restoratio n is objectivelyrelated t o the event s that occu r after th e impairment loss was reco gnized, t he origin ally recognized impairment loss is re versed. Th eimpairment losses on the available-for-sale equity instrument investments ar e reversed and recognized as other comprehensiveinco mes, and the impai rment lo sses on th e available-for-s ale liability instruments are reversed and recorded in the profits and lossesfor the current period.The impairment loss incurred to an equity instrument investment for which there is no quoted price in the active market and whosefair valu e cannot b e reliably measu red, or incurred to a d erivative financi al asset which is conn ected with th e said equi ty instrumentinvestment and which must be settled by delivering the said equity investment, is not reversed.(4) Recognition and measurement of financial asset transfersWhere a finan cial asset satisfies any of the following requirements, the recognition of it is terminated: ① The contraccollect ing the cash flow of the said financial asset are terminated; ② The said financial asset ly all of therisks and rewards r elated t o the o wnershi p of th e finan cial asset t o t he tran sferee; or ③The said financial asset ransferred.And the Company has ceased its control on the said financial asset though it neither transfers nor retains nearly all of the risks andrewards related to the ownership of the financial asset.Where the Company neither transfers nor retains nearly all of the risks and rewards related to the ownership of a financial asset, andit does no t cease its contr ol on the said finan cial asset, it recognizes th e relevant finan cial asset and liabil ity accordin gly accordin g tothe extent of its continuous involvement in the transferred financial asset. The term "continuous involvement in the transferredfinancial asset" refers to the risk level that the enterprise faces resulting from the change of the value of the financial asset.If the tran sfer of an ent ire financial asset satisfies t he cond itions for st opping reco gnition, th e difference between th e amounts of thefollowing 2 items is recorded in the profits and losses of the current period: (1) The book value of the transferred financial asset; and(2) The sum of consideration received from the transfer, and the accumulative amount of the changes of the fair value originallyrecorded in other comprehensive incomes.If the transfer of partial financial asset satisfies the conditions to stop the recognition, the book value of the transferred financial assetis apportioned between the portion whose recognition has been stopped and the portion whose recognition has not been stoppedaccordi ng to their resp ective relative fair value, an d the difference between t he amounts of the following 2 it ems is included into theprofits and losses of the current period: (1) The summation of the consideration received from the transfer and the portion of theaccumulative amount of changes in the fair value originally recorded in other comprehensive incomes which corresponds to theportion whose recognition has been stopped; and (2) The amortized carrying amounts of the aforesaid amounts.In respect of the assets using recourse to sell or using endorsement to transfer, the Company needs to determine whether almost all ofthe risks and rewards o f the financial asset ownersh ip are transferred. If almost all of the risks and rewards of the financial assetownership had been transferred t o the transferee, derecognize the financi al assets. For almost all of the risks an d rewards of thefinancial asset ownership r etained, do not end to recogn ize the financial assets. For which neither transfer or retain almost all of therisks and rewards of the financial asset ownership, continuously judge whether the Company retain the control of the assets, andconduct accounting treatment 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 fair values and whose changes are
recorded in current gains and losses and other financial liabilities. Financial liabilities are initially recognized at their fair values. Asfor a financial liability measured at fair value an d whose changes are recorded in current gains and lo sses, the relevant tradingexpense is directly recorded in the profits and losses for the current period. As for other financial liabilities, the relevant tradingexpenses are recorded in the initially recognized amounts.① F inancial 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 liabilities designated to be measured at fairvalues and whose changes are recorded in current gains and losses in the initial recognition under the same conditions where suchfinancial assets are d ivided into tran saction al finan cial assets an d financial assets des ignated to be measured at fair values and whosechanges are r ecorded in current gains and losses in the initial recognition.Finan cial liab ilit ies measu red at fair valu es and whose ch an ges ar e r ecor ded in cu rren t gain s an d losses are su bs equ ent ly measured attheir fair v alues. Gains o r losses ari sing from the fair value chang es, as well as th e dividend an d interest expenses in relation to thesaid financial liabilities, are recorded in the profits and losses for the current period.② O ther financial liabilitiesAs for a derivative financial liability connected to an equity instrument for which there is not quoted price in an active market andwhose fair value cannot be reliably measured and which must be settled by delivering the equity instrument, it is subsequentlymeasured o n th e basis of cos ts. Oth er financi al liab iliti es are sub sequently measu red accor din g to the a mort ized cos t usin g the actu alinterest rate method. Gains or losses arising from de-recognition or amortization of the said financial liabilities is recorded in theprofits 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 the recognition of the financial liabilitybe terminated in all or partly. Where the Company (debtor) enters into an agreement with a creditor so as to substitute the existingfinancial liabilities by way of any new financial liability, and if the contractual stipulations regarding the new financial liability issubstantially different from that regarding the existing financial liability, it terminates the recognition of the existing financial liability,and at th e s ame time recognizes the new financial liability.Where the recognition of a financial liability is totally or partially terminated, the enterprise concerned shall include into the profitsand losses of the current period for the gap between the book value which has been terminated from recognition and theconsiderations it has paid (including the non-cash assets it has transferred out and the new financial liabilities it has assumed)(7) Deriv atives and embedded derivativesDerivativ e financial in struments incl ude derivatives are i nitially measu red at fair val ue at the date when the deri vative contracts ar eentered into and are substantially re-measured at fair value. The resulting gain and loss is recognized in profit or loss.An embedded derivative is separated from the hybrid instrument, where the hybrid instrument is not designated as a financial asset orfinancial liability at fair value though profit or loss, and the treated as a standalone derivative if (a) the economic characteristics andrisks of the embedded derivative are not closely related to the economic characteristics and risks of the host contract; and ( b) aseparate instrument with the s ame terms as the embedded derivative would meet the defini tion of a derivative. If the Company isunable to measure the e mbedded derivative separat ely either at acquisitio n or at a subsequent balance sh eet date, it designates theentire hybrid instrument as a financial asset or financial liability at fair value through profit or loss.(8) Offsetting financial assets and financial liabilitiesWhen the Company has a l egal right that is curren tly enforceable to set o ff the recognized financial assets and fin ancial liabilities,and intends either to settle on a net basis, or to realize the financial asset and settle the financial liability simultaneously, a financialasset and a finan cial liab il ity shal l b e offset and th e net amou nt is present ed i n the b alan ce sh eet. Except for t he abo ve circumstances,financial assets and financial liabilities shall be presented separately in the balance sheet and shall not be offset.
(9) Equity instruments
An equity instrument is any contract that evidences a residual interest in the assets of the Company after deducting all of its liabilities.The Company issues (including refinancing), re-purchases, sells or written-offs the equity instrument as the disposing of the changesof the equity. The transaction expenses related to the equity transaction would be deducted from the equity.All types of distribution (excluding stock dividends) made by the Company to holders of equity instruments are deducted fromshareholders’ equity. The Company does not recognize any changes in the fair value of equity instruments.
10. Notes and Accounts Receivable(1) Accounts Receivable with Significant Single Amount for Which the Bad Debt Provision is MadeIndividually
Judgement
accounts receivable
Receivables with
| basis or monetary standards of provision for bad debts of the individually significant | the amount of RMB5 million or more than RMB5 million |
should recognize as the receivables with significant single amount.
individually significant accounts receivable
The Company made an independent
| Method of individual provision for bad debts of the | impairment test on 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 |
re
portfolio 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 methodAgin g group Aging analysis methodIn the groups, adopting aging analysis method to withdraw bad debt provision:
√ Applicable □ Not applicableAge
cognized with impairment should no longer be included in receivablesWithdrawal proportion for accounts
receivable ( %)
Withdrawal proportion for other
| Withdrawal proportion for accounts | 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 applicableIn 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
Reason of individually w
provision
| ithdrawing bad debt | 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 repayment, etc.
Withdrawal method for bad debt provision
loss sh all be reco
| gnized on the basis of the gap between the current values of the future cash flow lower than its book value so as to withdraw provision for bad debts: receivables involved in disputes, lawsuits or arbitrations; |
receivables w ith clear signs that the debtor is not likely to repay; and the like.
(4) Reversal of Bad Debt Provision
If there is ob jective evidence provin g that the value of such receivables has been r estored and it is o bjectively related to t he eventoccurring after recognizing such loss, the i mpairment loss recognized originally will be recovered and included into the currentprofits and lo sses. However, the book value after reco very shall not exceed the amortized cost of such receivables on th e recoverydate in the case of not calculating and withdrawing the impairment reserves.
11. Inventory
Is the Company subject to any disclosure requirements for special industries?No.
(1) Classification
Inventories mainly include raw materials, work-in-progress, stock products, pr oduct processed on entrustment, consumptivebio lo gi cal assets and etc.(2) Valuation method of inventories acquiring and issuingInventories shall be measured at actual cost when acquired, and the cost of the inventories including the procurement cost, processingcost and other costs. Grey yarn, dyed yarn, and plus material shall be measured at first-in first-out method when acquired anddelivered; other inventories shall be measured as per the weighted average method(3) Basis for determining net realizable value of inventories and provision methods for decline in value of inventoriesNet realizable value is the estimated selling price in the ordin ary course of business less the estimated costs of completion, theestimated costs necessary to make the sale an d relevant taxes. Net realizable value is determin ed on the basis of clear evidenceobtained, and takes into consideration the purpose of holding inventories and effect of post balance sheet events.At the balance sheet date, invento ries are measured at the lower of the cost and net realizab le value. If the net realizable value isbelow the cost of inventories, a provision for decline in value of inventories is made. The provision for inventories decline in value isdetermined by the difference of the cost of individual item less its realizable value.After the provision for decline in value of inventories is made, if the circumstances that previously caused inventories to be writtendown below cost no longer exist so that the net realizable value of inventories is higher than their cost, the original provision fordecline in value is reversed and the reversal 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 when consuming; and for the packingarticles, should be amortized by one-off amortization method when consuming.
12. Assets Held for Sale
The Com pan y classifies an asset into h eld-for-sale when its book value is mainly recovered by selling (including the exchanges ofnon-monetary assets with commercial substance) instead of a non-current asset or disposal group. Specific standards aresimultaneously satisfying the following conditions: A asset or disposal group can be sold immediately under current conditions basedon the practice of selling such assets or disposal groups in similar transactions; the Company has already made a resolution on saleplan and o btained a confirmed purchase commitment; and the sale is expected to will be completed within one year. A disposal grouprefers to a group of assets that are disposed of together as a whole by sale or other means in a transaction and the liabilities directlyrelated to these assets transferred in the transaction. Where the asset group or combination of asset groups to which a disposal groupbelongs apportions the goodwill acquired in the business combination in accordance with the "Accounting Standards for EnterprisesNo. 8 - Asset Impairment", 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-current assets and disposal groups classifiedas held -for-sale, If the book value is higher than the fair value minus the net amount of the sale costs, the book value will be writtendown to the net amount of fair value 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-sale assets will be made at the same time.For the confirmed amount of impairment loss of assets of the disposal groups held for sale, the book value of goodwill of the disposalgroups will be offset first, and then the book value of various non-current assets applicable to the measurement of AccountingStandards for Business Enterprises No. 42 - Non-current Assets and Disposal Groups Held for Sale and Termination of Operations(hereinafter referred to as “Held for sale standards”) in the disposal groups will be offset according to the proportions. If the netamount that the fair value of the disposal groups held for sale on the follow-up balance sheet date minus the sale costs increases, theprevious written-down amount wi ll be resto red, and reversed to the asset i mpairmen t loss con firmed after th e assets b eing classi fiedas held-for-sale. The reversed amount will be included in the current profit or loss. And its book value shall be increasedproportionately to the proportion of the book value of various non-current assets measured by the disposal group in addition togoodwill applicable to the measurement of held-for-sale norms; The book value of deducted goodwill and the non-current assetsapplicable to the measurement of held -for-sale norms will not be rever sed if the asset impairment loss is r ecognized before it isclassi fied as held for sale.Non-current assets h eld for sale or non-current assets in the disposal group are not subject to depreciation or amortization. Interestand other expenses of liabilities in the disposal group held for sale will be confirmed as before.When a non-current asset or disposal group ceases be classified as held -for-sale or a non-current asset is removed out from theheld-for-sale disposal group due to failure in meeting the classification conditions for the category of held-for-sale, it will bemeasured by one of the followings whichever is lower: (1) The book value before being classified as held for sale will be adjustedaccording to the depreciation, amortization or impairment that would have been recognized under the assumption that it was notclassi fied 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 the Company has control, joint control orsignificant influence over the investees. The long-term equity investment that the Company does not have control, joint control orsignifican t influen ce over the investees, sh ould be reco gnized as available-for-s ale financial ass ets or be measured b y fair value withthe changes should be included in the financial assets accounting of the current gains and losses, and please refer the details of the
acc ount ing pol icies to Notes V. 9 “Financial instrument”Joint control, refers to the control jointly owned according to the relevant agreement on an arrangement by the Company and therelevant activities of th e arrangement should be decided only after the participants which share the control right make consensus.Significant influence refers to the power of the Company which could anticipate in the finance and the operation polices of theinvestees, but could not control or jointly control the formulation of the policies with the other parties.(1) Recognition of investment costsAs for long-term equity investments acquired by enterprise merger, if the merger is under the s ame control, the share of the b ookvalue of the owner’s equity of the merged enterprise, on the date of merger, is regarded as the initial cost of the long-term equityinvestment. The difference between the initial co st of the long-term equity investment and the payment in cash, non-cash assetstransferred as well as the b ook value of the debts borne by the merging party shall offset against the capital reserve. If th e capitalreserve is insufficient to dilute, the retained earnings shall be adjusted. If the consideration of the merging enterprise is that it issuesequity securities, it shall, on the date of merger, regard the share of the book value of the shareholder's equity of the mergedenterprise on the consolidated financial statement of the ultimate control party as the initial cost of the long-term equity investment.The total face value of th e stocks issued shall be regarded as the capital stock, while the difference b etween the initial cost of thelong-term equity invest ment and t otal face value o f the shares iss ued shall o ffset against the capi tal reserve. I f the capital res erve isinsufficient to dilute, the retained earnings shall be adjusted.For the long-term investment required from the business combination under different control, the initial investment cost regarded aslong-term equity invest ment on the purchasing date according to the combination cost, the combination costs shall be the sum of thefair values of the assets paid, the liabilities incurred or assumed and the equity securities issued by the Company.The commission fees for audit, law services, as sessment and consultancy services and other relevant expenses occurred in thebusiness combination by the combining party or the purchase party, shall be recorded into current profits and losses upon theiroccurrence.Besides the long-term equity investments formed by business combination, the other long-term equity investments shall be initiallymeasured by cost, the cost is fixed in accordance with the ways of gaining, such as actual cash payment paid by the Company, thefair value of equity securities issued by the Company, the agreed value of the investment contract or agree ment, the fair value ororiginal carrying amount of exchanged assets from non-monetary assets exchange transaction, the fair value of the long-term equityinvestments, etc. The expenses, taxes and other necessary expenditures directly related with gaining the long-term equity investmentsshall also be recorded into investment cost.(2) Subsequent measurement and recognition of gains or lossesA long-term equity investment where the investing enterprise has joint control (except for which forms into common operators) orsignificant influence over the investors should be measured by equity method. Moreover, long-term equity investment adopting thecost method in the financial statements, and which the Company has control on invested entity.① Long-term equity investment measured by adopting cost methodThe price of a long-term equity investment measured by adopting the cost method shall be included at its initial investment cost andappend as well as withdraw the cost of investing and adjusting the long-term equity investment. The return on investment at currentperiod shall be recognized in accordance with the cash dividend or profit announced to distribute by the invested entity, except theannounced but not distributed cash dividend or profit included in the actual payment or consideration upon gaining the investment.② Long-term equity investment measured by adopting equity methodIf the initial cost of a long-term equity investment is more than the Company's attributable share of the fair value of the investedentity's identifiable net assets for investment, the initial cost of the long-term equity investment may not be adjusted. If the initial costof a long-term equity investment is 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 the cost of the long-term equityinvestment shall be a djusted simultaneously.
When measured by adopting equity method, respectively recognize investment income and other comprehensive income according tothe net gains and losses as well as the portion of other comprehensive income which should be enjoyed or be shared, and at the sametime adjust the book value of the long-term equity investment; corresponding reduce the book value of the long-term equityinvestment according to profits which be declared to distribute by the investees or the portion of the calculation of cash dividendswhich should be enjoyed; for the other changes except for the net gains and losses, other comprehensive income and the owners’equity except for the profits distribution of the investees, should adjust the book value of the long-term equity investment as well asinclud e in the capital res erve. The investin g enterprise sh all, on the ground of the fair value of all i dentifiable ass ets of t he investedentity when it obtains the investment, recognize the attributable share of the net profits and losses of the invested entity after itadjusts the net profits of the invested entity. If the accounting policy adopted by the investees is not accord with that of the Company,should be adjusted according to the accounting policies of the Company and the financial statement of the investees during theaccounting period and according which to recognize the investment income as well as other comprehensive income. For thetransaction happened between the Company and associated enterprises as well as joint ventures, if the assets launched or sold notform into business, the portion of the unrealized gains and losses of the internal transaction, which belongs to the Company accordingto the calculation of the enjoyed proportion, should recognize the investment gains and losses on the basis. But the losses of theunrealized internal transaction happened between the Company and the investees which belongs to the impairment losses of thetransferred assets, should not be neutralized.The Company shall recognize the net losses of the invested enterprise until the book value of the long-term equity investment andother long-term rights and interests which substantially form the net investment made to the invested entity are reduced to zero.However, if the Compan y has t he o bl igati on to un d ertake extra l oss es, it sh all b e reco gni zed as t he es timat ed l iab ili ties i n accordancewith th e estimated duti es and th en recorded i nto in vestment lo sses at cu rren t period . If the invested en tit y realizes any net profits later,the Company shall, after the amount of its attributable share of profits offsets against its attributable share of the un-recognized losses,resume recog nizing its attributable share of profits.For the long-term equity investment held by the Company before the first execution of the new accounting criterion on 1 January2007 of the associ ated enterprises and joint ventu res, if there is debit difference of the equity investmen t related to the investment,should be included in the current gains and losses according to the amount of the straight-line amortization during the originalremained period.③ Acquiring shar e s of m inority inte r e stIn the preparation for the financial statements, th e balance existed between the long-term equity investment increased by acquiri ngshares o f minori ty interest and the attrib utab le net assets o n th e subsid iary calculated b y the increas ed sh ares held since th e purchasedate (o r co mbinat ion d ate), the capi tal r eserves sh all b e ad justed , if the cap it al reser ves are not sufficient to offset, the retained profitsshall be adjusted.④ Disposal of long-term equity investmentIn the preparation of financial statements, the Company disposed part of the long-term equity investment on subsidiaries withoutlosing its controlling right on them, the balance between the disposed price and attributable net assets of subsidiaries by disposing thelong-term equity investment shall be recorded into owners’ equity; where the Company losses the controlling right by disposing partof long-term equity investment on su ch subsi di aries, it shall t reated in acco rd ance with the rel evant accoun tin g polici es in Not es V. 6.(2) “Method on preparation of combined financial statements”.For other ways on disposal of long-term equity investment, the balance between the book value of the disposed equity and its actualpayment gained shall be recorded into current profits and losses.For the long-term equity investment measured by adopting equity method, if the remained equity after disposal still adopts the equitymethod for measurement, the other comprehensive income originally recorded into owners’ equity should adopt the same basis of theaccounting disposal of the relevant assets or liabilities directly disposed by the investees according to the corresponding proportion.The owners’ equity recognized owning to the changes of the other owners’ equity except for the net gains and losses, other
comprehensive income and the profits distribution of the investees, should be transferred into the current gains and losses accordingto the proportion.For the long-term equity investment which adopts the cost method of measurement, if the remained equity still adopt the cost method,the other comprehensive income recognized owning to adopting the equity method for measurement or the recognition andmeasurement standards of financial instrument 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 should be carried forward into thecurrent gains and losses according to the proportion; the changes of the other owners’ equity except for the net gains and losses, othercomprehensive income and the profits distribution among the net assets of the investees which recognized by adopting the equitymethod for measurement, should be carried forward into the current gains and losses according to the proportion.
14. Investment Real Estate
Measurement model of investment real estateCosting method measurementDepreciation or amortization methodThe investment r eal estate refers to the real estate gain ing the rent o r capital appreciat ion or both. It incl udes rented land use right,holding land use right to be transferred after the appreciation and rented building, etc.The invest ment r eal estat e is measu red init iall y accordi ng to th e cost. The subs equ ent exp enses r elated with the invest ment real estateshall b e calcul ated in to the co st of inve stment real estat e if the e con omic benefit relat ed with the asset may flow in and the cost maybe measured reliably. Other subsequent expenses shall be calculated in the current profits and losses at the occurrence.The Company adopts the cost mode to conduct the subsequent measurement on the investment real estate, depreciates or amortizesaccording to the policy consistent with the house building or land use right.The devaluation test method and devaluation provision method for the investment real estate can be seen in Notes V. 20 “Long-termAsset Devaluation”.When the self-use real estate or s tock is converted to the investment real est ate or the investment real estate is con verted to theself-use re al estate, the book value before the conversion shall be the entry value after the conversion.When the investment real estate is disposed, or out o f usage perma nent ly, and it is expected not to get th e econo mic benefit fro m thedisp osal, the confirmation on the investment real estate sh all be terminated. The di sposal income for th e sales, transferring, scrap ordamage of the i nvestment real estate deducing the book value and related tax shall be calculated in the current profits and losses.
15. Fixed Assets(1) Conditions for Recognition
The ter m “fixed assets” r efers to the tan gible asset s that simult aneou sly possess th e features as fol lo ws: (a) they are h eld for the sakeof producing commodities, rendering labor service, renting or business management; and (b) their useful life is in excess of one fiscalyear. The fixed assets ar e only reco gnized when t he relevant economic benefits probably flow in the Company and its cost could bereliable measured. The fixed assets sho uld take the initial measurement according to the co st and at the same time consider theinfluences of the factors of the estimated discard expenses.
(2) Depreciation Methods
Category of fixed assets Method Useful life Salvage value Annual deprecationHousing and building Average method of useful life 5-30 0-10 3.00-20.00Machinery equipments Average method of useful life 10-18 0-10 5.00-10.00Transportation vehicle Average method of useful life 5 0-10 18.00-20.00Electronic equipments and others Average method of useful life 5 0-10 18.00-20.00
(3) Recognition Basis, Pricing and Depreciation Method of Fixed Assets by Finance Lease
The “finance lease” shall refer to a lease that has transferred in substance all the risks and rewards related to the ownership of an asset.Its owners hip may or may not eventually be transferred. The fixed assets by finance lease shall adopt the same depreciation policy forself-owned fi xed assets. If it is reasonable to be certain that t he lessee will obtain the ownership o f the leased asset when the leaseterm expires, the leased asset shall be fully depreciat ed over its useful life. I f it is not reasonable to b e certain that the lessee willobt ain th e ownersh ip of the leased asset at th e expi ry of the l ease ter m, th e leased asset sh all be fu lly depreciat ed o ver t he shorter oneof the lease term or its useful life.
(4) Other Notes
The subsequent expenditures related to fixed asset shall be included into fixed asset cost and stop the confirmation of the book valueof the substitution part if economic benefits related to such fixed asset may flow in and its cost can be reliably measured. Othersubsequent expenditures except for the above said subsequent expenditure shall be included into the current profits and losses onceoccurred.When the fixed asset is disposed or cannot be expected to produce economic interests through use or disposal, the confirmation ofthat asset should b e ceased. The balance of the amount left after ded ucting book value and relevant taxes from the disposal incomeobtained from the sale, transfer, abandonment or damage of the fixed assets shall be included in current profits and losses.The Compan y shall review the service l ife, expected net residuals and dep reciation method of the fixed assets at least b y the end ofthe year. In cas e of any change, it shall be deemed as accounting estimate change.
16. Construction in Progre ss
Is the Company subject to any disclosure requirements for special industries?No.Construction in process is measured at actual cost. Actual cost comprises construct ion costs, borrowing costs that are eligible forcapitalization before the fixed assets being ready for their intended us and other relevant costs. Construction in process is transferredto fixed assets when the assets are ready for their intended use.See the details of the impairment test method of the impairment provision withdrawal method of the construction in progress to NotesV. 20 “Long-term assets impairment”.
17. Borrowing Costs
Borrowing costs include interest on borrowings, amortization of discounts or premiums, ancillary expenses and exchange differencesarising from foreign currency borrowings. The capitalization of borrowing costs, which can be directly attributable to assetacquisition or construction, starts when asset 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 the acquired or constructed asset
conforming to capitalization conditions meet the predefined conditions for use or sale. The other borrowing costs are recognized asexpenses i n the current period.The actual interest expenses incurred in th e current period of specific borrowings shall be capitalized by subtracting the interestincome earned by the bank from unused borrowing funds or investment income gained from temporary investment. For generalborrowings, the amount to be capitalized shall be determined based on the weighted average of total asset expenditure exceeding thespecific borrowing multiplied by the capitalization rate of general borrowings. The capitalization rate is determined based on theweighted av erage interest rate of general borrowings.During the capitalization period, the foreign exchan ge differences on foreign currency specific b orrowings shall be capital ized. Theexchange differences on foreign currency general borrowings shall be included in the current profits and losses.Assets eligible for capitalization refer to assets such as fixed assets, in vestment real estate and inventory th at require a con siderableamount of time for acquisition or construction to be ready for use or sale.If the acquisition or construction process of the assets eligible for capitalization is stopped unexpectedly for more than 3 months, thecapitalization of borrowing costs shall be suspended until the asset acquisition or construction resumes.
18. Biological Assets
(1) Consumptive biological assetsConsumptive biological assets refer to the biological assets held for sale or to be harvested as agricultural products in future,including crops, vegetables under growing, timber production forest and domestic animals for sale. The consumptive biologicalassets shall be measured based on cost. All costs for planting, creating, cultivating or raising of consumptive biological assets shall bethe necessary expenses directly added to such assets that accrued before h arvest, including any loan that satisfies capitalizationconditions. Subsequent expenses for keeping and feeding the consumptive biological assets after the harvest should be recognized asthe losses and gains of the current period.Upon harvest or sale, the cost of consumptive biological assets shall be based on its book value through weighted average.On the date o f Balance Sheet, the con sumptive biological asset s shall be measured with lower of cost an d net realizable value, andthe method for confirming the reserve for inventory price drop shall be adopted to confirm the reserve for price drop of consumptivebio logical assets. If th e impacts of depreciati on disappear, the depreciation amount shall b e recovered, and the reserve for price droporiginally accrued shall be reversed. Such amount reversed shall be recognized as loss and gain for the current period.If consu mptive biologi cal assets change i ts usage to be as produ ctive biological asset s, the cost after su ch change shall b e confirmedbased on the book value when the usage is changed. If consumptive biological assets are changed as public biological assets,depreciation shall be taken into consideration pursuant to Corporate Accounting Rules No.8 – Assets Depreciation. Whendepreciation occur, accrued the depreciation reserve first and then confirm based on the book value after such accrual.(2) Pro ductive biological assetsProductive biological assets refer to agricultural products produced, and biological assets held for labor provision or lease, includingeconomic forest, firewood forest, productive animals and labor animals. The productive biological assets shall be measured based oncost. All co sts for cr eatin g or foster ing pr oducti ve biolo gical assets shall b e the necessar y expen ses d irectly added to su ch as sets t hataccrued bef ore it reaches expected production purpose , including any loan that satisfies capitalization conditions.
The Company shall withdraw the depreciation of the productive biological assets by adopting the straight-line method since thesecond month of its useful life. Useful life, expected net salvage value and annual depreciation rate of each productive biologicalassets are a s below:
Category Useful life Expected net salvage
value (%)
Annual deprecation (%)
| Livestock | 5 | 5% | 19 |
The Compan y shall review th e service li fe, expected n et resi du als and dep reciati on metho d o f the prod uctive b iolo gical as sets at leastby the end of the year. In case of any change, it shall be deemed as accounting estimate change.The difference between proceedings from disposal (sale, loss, death or damage) of the productive biological assets deducted by bookvalue and related tax shall be recognized as loss and gain for the current period.The Company shall check on the date of Balance Sheet whether there is a depreciation sign for the productive biological assets. If yes,estimate the recoverable amount. Such recoverable amoun t shall be estimated based on single asset item. If it is difficult, therecoverable amount of the portfolio shall be confirmed based on the portfolio such assets belong to. If the recoverable amount of theassets is lo wer than book valu e, reserve for asset depreci ation sh all be accru ed based o n such di fference, and reco gnized as loss an dgain for the current period.The above assets impairment losses once be recognized should not be reversed during the accounting periods afterwards.If the productive biological assets changed the usage as the consumptive biological assets, the cost after the change should berecognized as the book value when changing the usage; of the productive biological assets changed the usage as non-profit livingassets, should be recognized according to the book value after the withdrawal of the impairment provision in accord with theregulation of No. 8 of ASBE - Assets Impairment for considering whether there was impairment and should withdraw the impairmentprovision in ahead of it.
19. Intangible Assets(1) Pricing Method, Useful Life and Impairment Test
The term “intangible asset” refers t o the identifiable non-monetary assets possessed or controlled by enterprises which have nophysical shape.The intangible assets shall be initially measured according to its cost. The costs related with the intangible assets, if the economicbenefits related to intangible assets are likely to flow into the enterprise and the cost of intangible assets can be measured reliably,shall be recorded into the costs of intangible assets; otherwise, it shall be recorded into current profits and losses upon the occurrence.The use right of land gained is usually measured as intangible assets. For the self-developed and constructed factories and otherconstructions, the related expenditures on use right of land and construction costs shall be respectively measured as intangible assetsand fixed assets. For the purchased houses and buildings, the related payment shall be distributed into the payment for use right ofland 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 cost after deducting the sum of theexpected sal vage value and the accumulated impair ment provi sion shall be amort ized by straight line method during t he service life.While the intangible assets without certain service life shall no t be amo r tized.At the end of period, the Company shall check the service life and amortization method of intangible assets with finite service life, ifthere is any chan ge, it shal l be regard ed as a chan ge of th e accou n ting es timate s. B esid es, t he Co mpan y shall ch eck th e servic e li fe ofintangible assets without certain service life, i f there is any evidence showing that the period of int angible assets to bring theeconomic benefits to the enterprise can be prospected, it shall be estimated the service life and amortized in accordance with theamortization policies for intangible assets with finite service life.
(2) Accounting Pol ic y for Internal Research a nd Deve l opm ent Expendit ures
The expenditures for in ternal research and d evelopment proj ects of an enterprise shall be classifie d into research expenditures anddevelopment 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 the following conditions simultaneously, andshall be recorded into profit or loss for the current period when 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 The usefulness of methods for intangible assets to generate economic benefits shall be proved, including being able to prove thatthere is a potential market for the products manufactured by applying the intangible assets or there is a potential market for theintangible assets itself or the intangible 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 ofsufficient t echnologies, financial resources and other resources;⑤ The development expenditures of the intangible assets can be reliably measured.As for expen s es that can’t be identified as research expenditures or development expenditures, the occurred R & D expenses shall beall included in current profits and losses.
(3) Impairment testing method and provision-making method for intangible assets
For details of impairment testing method and provision-making method for intangible assets, see Notes V. 20 “Long-term assetsimpairment”.
20. Impairment of Long-term Assets
For non-current financial Assets of fixed Assets, projects under construction, intangible Assets with limited service life, investing realestate with cost model, long-term equity investment of subsidiaries, cooperative enterprises and joint ventures, the Company shouldjud ge whether decrease in value exists on the date of balance sh eet. Recoverabl e amounts shou ld be tested for decrease i n value if itexists. Other intangible Assets of reputation and uncertain service life and other non-accessible intangible assets should be tested fordecrease in value no matter whether it exists.If the recoverable amount is less th an book value in impairment test results, the provision for impairment of differences shouldinclude in impairment loss. Recoverable amounts would be the higher of net value of asset fair value deducting disposal charges orpresent value of pred icted cash flow. Asset fair value should be determined according to nego tiated sales price of fair trade. I f nosales agree ment exis ts bu t with asset active market, fair value sh oul d be deter mined accord ing to the Bu yer ’s price of the asset. If nosales agree ment or asset acti ve market exist s, asset fair v alue could be acquired on the basis of best information available. Disposalexpenses i nclude l egal fees, taxes, cartage o r other di rect expenses of merchan table Assets related to asset d isposal . Present val ue ofpredi cted asset cash flo w shoul d be det ermined by the proper discount rate according to Assets in service and predicted cash flow offinal disposal. Asset depreciation reserves should be calculated on the basis of single Assets. If it is difficult to predict the recoverableamounts for single Assets, recoverable amounts should be determined according to the belonging asset group. Asset group is theminimum asset combination producing cash flow independently.In impairment test, book value of the business reputation in financial report should be shared to beneficial asset group and assetgroup combination in collaboration of business merger. It is shown in the test that if recoverable amounts of shared businessreputation asset group or asset group combination are lower than book value, it should determine the impairment loss. Impairmentloss amount should firstly be deducted and shared to the book value of business reputation of asset group or asset group combination,then deduct book value of all assets according to proportions of other book value of above assets in asset group or asset groupcombination except business reputation.After the asset impairment loss is determined, recoverable value amounts would not be returned in future.
21. Long-term Deferred Expenses
Long-term deferred expenses refer to gener al expenses with the apportioned period over one year (one year excluded) that haveoccurred but attributable to the current and future periods. The long-term deferred expenses mainly including land contract fees, landrental fees and house rental fees, and etc. And the long-term deferred expense shall be amortized by the straight-line methodaveragely within the benefit period.
22. Payroll(1) Accounting Treatment of Short-term Compensation
Short-term compensation mainly including salary, bonus, allowances and subsidies, employee services and benefits, medicalinsurance premiums, birth insurance premium, industrial injury insurance premium, housing fund, labor union expenditure andpersonnel education fund, non-monetary benefits etc. The short-term compensation actually happened during the accounting periodwhen the active staff offering the service for the Company should be recognized as liabilities and is included in the current gains andlosses or relevant assets cost. Of which the non-monetary benefits should be measured according to the fair value.
(2) Accounting Treatment of the Welfare after Departure
Welfare after demission mainly incl udes basi c endowment i nsur ance and unempl oyment i nsuran ce and welfare p lans after d emissioninclude setting drawing plan. Where the setting drawing plan is adopted, the corresponding payable and deposit amount should beincluded into the relevant assets cost 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 labor contacts or puts forward the advice ofproviding the compensation for urging the employees volunteered to receive the downsizing and when the Company could notunilaterally withdraw the demission welfare owning to the relieving plan of the labor relation or the downsizing advice, shouldconfirm the liabilities o f the employees’ salary from the demission welfare on the earlier day between the cost confirmed by theCompany and the cost related to the reorganization of the payment of the demission welfare and includes which in the current gainsand losses. But as for the demission welfare be estimated that could not be completed paid within 12 months after the end of theannual 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 the same principles of the above demission welfare. TheCompany includes the salary and the paid social insurance charges planed to pay by the personnel retreated inside during the periodfrom the date when ceased the services to the no rmal retire date in the curren t gains and 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 drawing plan, should be accountingdisposed according to the setting drawing plan, while the rest should be disposed according to the setting revenue plan.
23. Revenue
Is the Company subject to any disclosure requirements for special industries?No.
(1) Selling products
No revenue from selling goods may be recognized unless the following conditions are met simultaneously: the significant risks andrewards of ownership of the goods have been transferred to the buyer by the enterprise; the enterprise retains neither continuousmanagement right that usual ly keeps relation with the ownership nor effective control over the sold goods; the relevant amount ofrevenue can be measured in a reliable way; the relevant econ omic benefits may flow into the enterprise; and the relevant costsincurred 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 the buyers according to the contractsagreement, and the revenues amount of the products sales had been confirmed with the goods payment had been withdrawn or hadreceived th e recei pt vou cher of which the rel evant econ o mic benefit s prob ab ly flow into the enter pr ise as well as the r elevant costs ofthe products could be reliable measured when being confirming as the revenues.As for the revenues from the export sales products, the Company executes the customs declaration and the products departureaccording to the contracts agreement, and the Company had acquired the bill of lading with the revenues amount of the products salehad been confirmed and the goods payment had been withdrawn or had had received the receipt voucher of which the relevanteconomic benefits pro bably flow into the ent erprise as well as the relevant costs of th e products could be reliabl e measured whenbeing confirming as the revenues.(2) Providing labor servicesIf the Company can reli ably estimate the outcome of a tran saction concerning th e labor services it provid es, it shall recognize therevenue from providing services employing the percentage-of-completion method on the date of the balance sheet. The completedproportion of a transaction concerning the providing of labor services shall be decided by the proportion of the labor service alreadyprovided 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 followingconditions shall be met simultaneously: ① The amount of revenue can be measured in a reliable way; ② T he relevant econo micbenefits are likely to flow into the enterprise; ③ The schedule of completion under the transacti on can be confirmed in a rel iable 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 a reliable way, the revenue from theproviding of labor services shall be recognized in accordance with the amount of the cost of labor services incurred and expected tobe compen sated, an d make th e cost o f labor ser vices incu rred as th e curren t expen ses. If it is predi cted th at th e cost of labo r service sincurred couldn’t be compensated, thus no revenue shall be recognized.Where a contract or agreement signed between Company and other enterprises concerns selling goods and providing of labor services,if the part of sale of goods and the part of providing labor services can be distinguished from each other and can be measuredrespectively, the part of sale of goods and the part of providing labor services shall be treated respectively. If the part of selling goodsand the part of providing labor services can’t be distinguished from each other, or if the part of sale of goods and the part of providinglabor services can be distinguished from each other but can’t be measured respectively, both parts shall be conducted as sellinggoods.
(3) Royalty revenue
In accor dance with relevant contract or agreement, the amount of royalty revenue should be recognized as revenue on accrual basis.
(4) Interest revenue
The amount of interest revenue should be measured and confirmed in accordance with the length of time for which the Company’smonetary fund is used by others and the agreed interest rate.
24. Government Subsidies
The government subsidy refers to the Company gets the monetary and non-monetary assets for free from the government, excludingthe capital that the government invests as the investor who enjoys the corresponding owner’s equity. It can be divided into theasset-related government subsidy and income-related government subsidy. The Company defines the obtained government subsidyfor the acquisition and construction or forming the long-term asset in other ways as the asset-related government subsidy; othergovern ment sub sidies ar e defined as th e inco me-related govern men t subsidy. If the government subsidy is monetary asset, it shall bemeasured according to the received or receivable amou nt. If the government subsidy is non-monetary asset, it shall be measuredaccording to the fair value; it the fair value can’t b e got reliably, it shall be measured according to the nominal amount. Thegovernment subsidy measured according to the nominal amount shall be calculated in the current profits and losses directly.The Company usually confirms and measures the government subsidy according to the received amount when receiving actually.However, the financial support fund which can be received complying with the related conditions prescribed in the financial supportpol icy indicat ed by the conclu sive eviden ce shall b e measured acco rding to the receivable amount. The following conditions shall bemet for the government subsidy measured by the receivable amount: (1) The receivable subsidy amount has been confirmed by theautho rized government dep artment, or it can b e measured reasonabl y according to the officially released provisions related with thefinancial fund management method, and it is expected there is no major uncertainty for the amount; (2) It is based on the financialsupport project and financial fund management method actively opened released officially by the local financial department andaccording to the provision in Government Information Disclosure Provisions, the management method shall be universal (anyenterprise complying with the prescribed condition can apply) rather than for the specific enterprise; (3) The related subsidy approvaldocument has clearly promised the appropriate term, and the appropriation of the amount shall have the corresponding financialbudg et for the guarantee, therefore, it can ensure to receive within the prescribed term reasonably.The asset-related government subsidy shall be confirmed as the deferred income, and it shall be calculated into the current profits andlosses b y stages in reaso nable and systemati c way within the service life of related asset. The i ncome-related government subsidy tocompensate the related expense and loss later shall be confirmed as the deferred income, and it shall be calculated in the currentprofits and losses during the period to confirm the related costs or losses; the occurred related costs or losses for compensation shallbe calcu lated in the current profits and losses directly.For government subsidy including the asset-related government subsidy and the income-related government subsidy at one time,accounting treatment shall be conducted respectively to distinguish the different parts; if it is difficult to distinguish, then it shall beclassi fied into the income-related government subsidyGovernment subsidies related to routine activities of the Company shall be calculated into other income or offset related costsaccording to the essence of economic business; government subsidies that have nothing to do with routine activities shall calculatedinto non-oper ating income.When the confirmed government subsidy needs to be returned and there is the related deferred income balance, the related deferredincome book balance shall be deducted, and the surpassing part shall be calculated into the current profits and losses; If in othersituations, it shall be calculated in the current profits and losses directly.
25. Deferred Income Tax Assets/Deferred Income Tax Liabilities
(1) Income tax of the current periodOn the balan ce sheet date, for th e current income tax liabi lities (or assets) of the cu rrent period as well as the part formed during thepreviou s period, should be measur ed by the income tax of the estimated payable (return able) amount which be calcu lated accordingto the regulations of the tax law. The amount of the income tax payable which is based by the calculation of the current income taxexpenses, are according to the result measured from the corresponding adjustment of the pre-tax accounting profit of this year whichin acco r d t o the relevant regulations of the tax law.
(2) Deferred income tax assets and deferred income tax liabilitiesThe difference between the book value of certain assets and liabilities and their tax assessmen t basis, as well as the temporarydifference occurs from the difference between the book value of the items which not be recognized as assets and liabilities but couldconfirm thei r ta x asse ss ment b asi s acco rd in g to t he r egul ation s o f the tax la w, the deferred income tax asset s and th e d eferred incometax 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 recognition of goodwill, the initialrecognition of assets or liabilities due to a transaction other than a business combination, which affects neither accounting profit nortaxable pro fit (or deducti ble loss). Besides, n o deferred tax assets is recognized for the taxable te mporary differences related to theinvestments of subsidiary companies, associated enterprises and joint enterprises, and the investing enterprise can control the time ofthe reverse of temporary differences as well as the temporary differences are unlikely to be reversed in the excepted future. Otherwise,the Group should recognize the deferred income tax liabilities arising form other taxable temporary difference.No deferred taxable as sets sh oul d be recogn ized for t he dedu ctibl e temporary differen ce of ini tial reco gniti on of assets an d liabilitiesarising from the transaction which is not business combination, the accounting profits will not be affected, nor will the taxableamount or deductible loss be affected at th e time of transaction. Besides, no deferred taxabl e assets should be recognized for thedeductib le temporary difference related t o the investments of the su bsidiary companies, asso ciated enterprises and joint enterprises ,which are no t likely to be reversed in the expected fut ure or is not likel y to acquire any amount o f taxable income tax th at may b eused for making up such deductible temporary differences. Otherwise, the Company shall recognize the deferred income tax assetsarising from a deductible temporary difference basing on the extent of the amount of the taxable income that is likely to be acquiredto make up such deductible temporary differencesFor any deductible loss or tax deduction that can be carried forward to the next year, the corresponding deferred inco me tax assetshall be determined to the extent that the amount of future taxable income to be offset by the deductible loss or tax deduction to belikely obtained.On the balance sheet date, th e deferred income tax assets and the deferred i ncome tax liabilities shall be measured at the tax rateappl icable to the period during which the assets are expected to be recovered or the liabilities are expected to be settled.The boo k valu e of deferred i ncome tax asset s sh all b e revie wed at each b alan ce sh eet date. If it is unli kely to o bt ain su fficient taxabl einco me to offset again st th e b enefit of th e deferred in co me tax asset, th e book valu e of th e deferred inco me tax assets shall be writtendown. Any such write-down should be subsequently reversed where it becomes probable that sufficient taxable income will beavailable.
(3) Income tax expenses
Income tax e xpenses include current income tax and deferred income tax.The rest current income tax and the deferred income tax expenses or revenue should be included into current gains and losses exceptfor the curr ent in come tax and th e deferred in come tax relat ed to the tr ansact io n and event s that be con firmed as o th er comprehensiveincome or be directly included in the shareholders’ equity which should be included in other comprehensive income or shareholders’equity as well as the book value for adjusting the goodwill of the deferred income tax occurs from the business combination.
(4) Offset of in come t ax
The current income tax assets and liabilities of the Company should be listed by the written-off net amount which intend to executesthe net amount settlement as well as the assets acquiring and liabilities liquidation at the same time while owns the legal rights ofsettling the net amount.The deferred income tax assets and liabilities of the Company should be listed as written-off net amount when having the legal rightsof settling the current income tax assets and liabilities by net amount and the deferred income tax and liabilities is relevant to theincome tax which be collected from the same taxpaying bodies by the same tax col lection and administration department or isrelevant to the different taxpaying bodies but during each period which there is significant reverse of the deferred income assets andliabilities in the future and among which the involved taxpaying bodies intend to settle the current income tax and liabilities by net
amount or are at the same time acquire the asset as well as liquidate the liabilities.
26. Repurchase of Shares
Consideration and transaction costs paid in share repurchase reduce shareholders' equity. When buying back, transferring orcancelling shares in the Company, no profits or losses are recognized.The transfer of inventor y shares shall be credited to t he capital reserve on the basis of the difference between the amount actuallyreceived and the carrying amount of the treasury stock. Write off surplus reserves and undistributed profits if capital reserves areinsufficient to offset. Write-off of treasury stocks can reduce shares in par with par value and number of write-out stocks. The capitalreserve is offset b ased on th e d ifferen ce bet ween b o ok b alan ce an d face val ue o f cancell ed t reasu r y sto cks. Writ e off su rp lu s reservesand undistributed profits if capital reserves are insufficient to offset.
27. Lease(1) Accounting Treatment of Operating Lease
(1) Business of operating leases recorded by the Group as the lesseeThe rent expenses from operating leases s hall be recorded by the lessee in the relevant asset costs or the profits and losses of thecurrent period by using the straight-line method over each period of the lease term. The initial d irect costs shall b e recogni zed as th eprofits and losses of the current period. The contingent rents shall be recorded into the profits and losses of the current period inwhich they actually arise.(2) Business of operating leases recorded by the Group as the lessorThe rent incomes from operating leases shall be recognized as the profits and losses of the current period by using the straight-linemethod over each period of the lease term. The initial direct costs of great amount shall be capitalized when incurred, and berecorded into current profits and losses in accordance with the same basis for recognition of rent incomes over the whole lease term.The initial direct costs of small amount shall be recorded into current profits and losses when incurred. The contingent rents shall berecorded into the profits and losses of the current period in which they actually arise.
(2) Accounting Treatments of Financial Lease
(1) Business of finance leases recorded by the Company as the lesseeOn the lease b eginn ing date, the Compan y shall reco rd the lower on e of the fair value o f the leased asset an d the presen t value of theminimum lease payments on the lease beginning date as the entering value in an account, recognize the amount of the minimum leasepayments as th e ent erin g value i n an acco u nt of lon g-term accou n t payabl e, an d t reat th e bal ance b etween t he reco rd ed amount of theleased asset and the long-term account payable as unrecognized financing charges. Besid es, the initial direct costs directlyattributable to the leased item incurred during the process of lease negotiating and signing the leasing agreement shall be recorded inthe asset value of the current period. The balance through deducting unrecognized financing charges from the minimum leasepayments s hall be respectively stated in long-term liabilities and long-term liabilities due within 1 year.Unrecognized financing charges shall be adopted by the effective int erest rate method in the lease term, so as to calculate andrecognize current financing charges. The contingent rents shall be recorded into the profits and losses of the current period in whichthey actually arise.(2) Business of finance leases recorded by the Company as the lessorOn the begin ning date of the lease term, th e Company shall r ecognize th e sum of the minimum lease receipt s on the lease beginningdate and the initial direct costs as the entering value in an account of the financing lease values receivable, and record the
ungu aran teed resid u al value at the same time. The bal ance b etween the sum of th e minimum lease r eceip ts, t he init ial di rect cost s andthe u nguaran teed resi dual value and the sum of their present values shall be recognized as unrealized financing income. The balancethrough deducting unreali zed financing inco mes from the finance lease accoun ts receivable shall be respectively stated i n long-termclaims and long-term claims due within 1 year.Unrecognized financing incomes shall be adopt ed by the effective interest rate method in the lease term, so as to calculate andrecognize current financing revenues. The contingent rents shall be recorded into the profits and losses of the current period in whichthey actually arise.
28. Changes in Main Accounting Policies and Estimates(1) Change of Accounting Poli cies
□ Applicable √ Not applicable
(2) Changes in Accounting Estimates
□ Applicable √ Not applicable
29. Significant Acounting Adjustemnt and Estimates
Due to the internal uncertainty of operating activities, the Company needs to make judgments, estimates and assumptions for carryingamounts of stat ement items that can’t be measured accu rately during the pro cess of applying accounting policies. Such judgments,estimates an d as su mpti on s are mad e on the b asis of the pas t exper ien ce of Co mpan y’s management staffs and o n the co n siderat ion o fother relevant factors. Such judgments, esti mates and assumptions have effect on reporting amount of incomes, expense, assets andliabilities, as well as disclo sure of contingent liabilities on the balance sheet date. However, the uncertainty of such estimates ma yresults in major adjustments 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 fixed intervals on the basis of sustainableoperation. As for the change in accounting estimates that only effects on the current period of the change, the affected amount thereofshall be recognized at current period of the change. As for accounting estimates that effects on both the current period of the changeand future periods, the affected amount thereof shall be recognized at current period of the change and future periods.On balance sheet date, major fields requiring judgments, estimates and assumptions on amounts of financial statement items by theCompany are as follows:
(1) Cl as sifi cation of leasesIn line with rules in Accounting Standards for Enterprises No. 21 – Leases, the Company classifies leases into operating leases andfinance leases. Upon the classification, the management staffs need to make analysis and judgments on whether to essentially transferall risks and remuneration relating to the ownership of leased-out assets to the lessee, or whether the Company has essentiallyundertaken 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 debt provisions by adopting allowancemethod. Impairment of accounts receivable is based on the assess ment of the recovery of accounts receivable. Identification ofimpairment of accounts receivable requ ires judgments an d estimates by manage ment staffs. The differen ce between actual o utcomesand originally estimated outcomes, which will influence the carrying amount of accounts receivable and bad debt provisions thereofin the est imated period of the change, shall be withdrawn or reversed.(3) Inventory depreciation reserves
The Compan y shall calculate whichever i s lower between the cost and realizable net value in light of inven tory accountin g policies.As for inventories of which the cost is higher than the realizable net value and inventories which are obsolete and unsalable inventorydepreciation reserves shall be withdrawn. Impairment of in ventories to realizable net value is based on the assessment of themarketing of inventories and realizable net value thereof. Identification of inventory impai rment req uires well-estab lished evi dencesby management staffs, as well as judgments and estimates based on consideration of the purpose of holding inventories and otherfactors such as events occurring after the date of balance sheet. The difference between actual outcomes and originally estimatedoutcomes, which will influence the carrying amount of inventories and inventory depreciation reserves in the estimated period of thechange, s hall be withdrawn or reversed.(4) Fair values of financial instrumentsAs for financial instruments not existing in active trading market, the Company shall determine their fair values by all kinds ofassessment methods, which include model analysis of discounted cash flow and etc. During the assessment, the Company needs toassess for respects su ch as future cash flows, credi t risks, market volatili ty, correlation, and choose appropriate disco unt rate. Suchrelated assumptions have uncertainty, of which the change will effect on fair values of financial instruments.(5) Impair ment of financial assets available for saleTo a large extent, whether the impairment of financial assets available for sale is recognized or not relies on the judgments andassumptions of the management staffs. In that way, the Company shall be certain about wheth er to recognize impairment lo sses offinancial assets available for sale in the profit statement. During the process of making judgments and assumptions, the Companyneeds to evaluate how much the fair value of such investment is less than its cost, how long such investment will last, and thefinancial condition and short-term business outlook of the invested parties, which include industry status, technology transform,credit rating, default rate and risks from the opposite parties.(6) Impairment provisions for long-term assetsThe Company shall judge whether there is sign of impairment of non-current assets other than financial assets on balance sheet date.Intangible assets with uncertain service lives, besides being conducted with annual impairment test ever y year, have to acceptimpairment tests when there is sign of impairment. Other non-current assets except for financial assets have to accept impairmenttests 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 betweenthe net amount through deducting disposal charges from the fair 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 light of the amount of the basis of theprice as stipu lated in the sales agr eement or the observab le market price in t he fair transaction minus the incremental cost directlysubject to the disposal of the asset.When estimating present value of future cash flows, it is necessary to make significant judgments on characters of the asset or assetgroup, such as output, sales price, related operating costs, and discount used to calculat e the present value. When estimatingrecoverabl e amoun t, th e Company shal l ado pt all r elevant material s th at can b e requi red, inclu ding estimates rel ating to ou tput, salesprice and relevant operating costs judged by rational and supportable assumptions.The Company t es ts whether there is impairment of good will at least for every year, which requires itself to estimate the present valueof the future cash flow of group assets or combination of group assets. When estimating the present value of the future cash flow, theCompany needs to estimate the cash flow arising fro m future group assets or combination of group assets, and at the same timechoose appropriate discount rate to determine the pr esent value of the future cash flow .(7) Depreciation and amortizationUpon con sideration on the salvage valu e of investment real est ates, fixed assets an d intangible assets, the Company shall withdrawdepreciation and amortization by straight-line method over their service lives. The Company checks on service lives at fixed intervals,so as to determine th e amounts of depreciation expenses and amortization exp enses at each period. Servi ce lives are confirmed in
accordance with the past experience on similar assets of the Company, along with renewed technology of expectation . If anysignificant change occurred to previous estimated, depreciation expenses and amortization expenses will be adjusted in future period.(8) Deferred in come t ax assetsIn a limit providing large possibility of offset losses from sufficient taxable profits, the Group shall recognize deferred income taxassets in line with all unused tax losses, which requires management staffs of the Group to estimate th e time when future taxableprofits occurs and the amount thereof by applying plenty of judgments and combining tax planning strategies, so as to determine theamount of the recognizable deferred income tax assets.
(9) Income taxes
There’s certain uncertainty of disposal and calculation of taxes of partial transactions in normal operating activities. It is uncertainwhether some pre-taxed items can set asi de the approvals by tax authorities or not. If th ere are differences between the ultimaterecognition outcomes and the originally estimated amounts of such tax issues, then such differences shall 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 th e Company are measured b y fair value. When estimating th e fair value o f aasset or liability, the Company adopts the available and observable market data. During the process of confirming the fair value ofvariou s ass ets and liabilities, relevant information of the adopted valuation technique and input value was disclosure in Note XI.
VI. Taxation
1. Main Taxes and Tax Rate
Category of t axes Tax basis Tax rateVAT
Calculated the output tax at 17%, 16%, 11%, 10%,6%, 5%, 3%, and 0% of taxable income and paid theVAT by the amount after deducting the deductiblewithholding VAT at current period.
17%、16%、11%、10%、6%、5%
3%、0%
| 、 | ||
| Urban maintenance and construction tax | 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%
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%Lufeng Weaving & Dyeing Co., Ltd. (hereinafter refer to as “Lufeng Weaving & Dyeing”) 15%Lu Thai (Hong Kong) Textile 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 “Luqun Textile”) 25%Zibo Xinsheng Power Co., Ltd. hereinafter refer to as “Xinsheng Power”) 25%Beijing Innovative Garment Co., Ltd. (hereinafter referred to as “Beijing Innovative” 25%Shang ha i L u T hai Textile & Garments Co., Ltd. (hereinafter referred to as “S ha ng ha i Lu Thai”)
of taxable income
25%
Beijing Lu Thai Youxian Electronic Commerce Co., Ltd. ( hereinafter referred to as “
Youxian”)
25%Shanghai Zhinuo Textile New Materials Co., Ltd. (“Shanghai Zhinuo” 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 referred to as “Xinjiang Textile”) 15%Lu Thai (Cambo dia) Textile Co., Ltd. (hereinaft er referred to as “Lu Thai Cambodia”) 0%Lu Thai (Burma) Textile Co., Ltd. (hereinafter r ef erred to as “Lu Thai Burma”) 0%Lu Thai (Vietnam) Textile Co., Ltd. (hereinafter referred to as “Lu Thai Vietnam”) 0%Lu An Garments Co., Ltd. (hereinafter referred to as “Lu An Garments” 0%Lu Thai (America) Textile Co., Ltd. (herein after r ef erred to as “Lu Thai America”
Refer to 2. Tax Preference
presented as follows for details
2. Tax Preference
According to the "On the Recognition of 2078 Enterprises as High-tech Enterprises for 2017 such as WeihaiTuozhan Fiber Co., Ltd."(LK Zi[2018 ] No. 37) issued Department of Science and Technology of Shandong Province, Shandong Provincial FinanceDepartment, State Administration of Taxation of Shandong Province and Local Taxation Bureau of Shandong Province, theCompany and the holding subsidiary Lufeng Weaving and Dyeing Co., Ltd. were identified as high-tech enterprises. Pursuant toArticle 28 of the "Law of the PRC on Enterprise Income Tax” and the No. 23 Announcement revised and published by the StateAdministrati on of Taxation in 2018, namely “Man agement of Preferenti al Policy on Corporate Income Tax” and the “Measures forthe Administration of the Recognition of Hi-tech Enterprises” GKFH [2016] No. 195 revised and published by the Ministry ofScience and Technology, Ministry of Finance and State Administration of Taxation, the Company and the holding subsidiary LufengWeaving and Dyeing Co., Ltd. enjoy a corporate income tax rate of 15%.According to the "Notice of the Ministry of Finance, the General Administration of Customs and the State Administration ofTaxation on Tax Policy Issues concerning Further Implementing the Western China Development Strategy " (CS[2011] No. 58),Xinjiang Textile Co., Ltd., the subsidiary of Lu Thai in Xinjiang, enjoys a preferential corporate income tax rate of 15%.Lu Thai (Hong Kong) Textile Co., Ltd. (hereinafter refers as Lu Thai (Hong Kong) Textile), the wholly-owned subsidiary companyof the Company, was incorporated in Hong Kong SAR, whose profit tax shall be paid at tax rate of 16.5%.The wholly own subsidiary Lu Thai Cambodia, according to the Lu Thai Cambodia Profits tax free approval issued by InvestmentCommittee of Cambodia, Lu Thai Cambodia enjoys tax preference of tax free on corporate income tax of 3 (3 years start-up period)+ 3 (3 years tax holiday)+1 (1 year grace period). If profit during the 3 year start-up period then turn into 3 years tax holiday, aftergrace period, enterprise income tax rate was of 20%.The wholly own subsidiary Lu Thai Burma, according to the Burma’s Special Economic Zone Law issued by Pyidaungsu Hluttaw,Lu Thai Burma enjoys tax preference on corporate income tax of 7 (7 years tax holiday) + 5 (5 years tax revenues drop by half) + 5(re-invest the profits within 1 year and continues to enjoy the half tax revenues 5 years afterwards). After grace period, enterpriseinco me tax rate was of 25%.The wholly-owned subsidiary Lu Thai (Vietnam) Textile Co., Ltd. shall enjoy the preference of enterprise income tax at 3 years’starting term + 4 years’ d uty-free term + 9 years’ half-tax ter m according to the investment licen se issued by Vietnamese Fudo ngIndustrial Zone Management Committee, and it will enter into 2 years’ duty-free term if it is profitable within 3 years’ starting term.The enterp rise in come tax rat e shal l be 2 0% after the p referenc e term en ds. The C ompan y shall enj oy 10% of th e preferen ce tax ratewithin 15 years since the tax year to get the first production and operation income, and the enterprise income tax rate shall be 20%after the p r eference term ends.
The wholly-owned subsidiary Lu An Garments C o., Ltd . shal l enjoy the prefer ence of en terp rise income t ax at 3 year s’ starti ng ter m+ 2 years’ duty-f ree term + 4 years’ half-tax term according to the investment licens e issued by Vietnamese Anjiang ProvinceEconomic Zone Management Committee, and it will enter into duty-free term if the profitability is realized at any year within 3 years’starting term. The Company shall enjoy 17% of the preference tax rate within 10 years since the tax year to get the first productionand op eration income, and the enterprise income tax rate shall be 20% after the preference term ends.Lu Thai America, the wholly-owned subsidiary of the Company registered in N ew York, America, was imposed the federalenterprise income tax at progressive tax rat e in excess of specific amount of 15%-39%, and imposed the New York Enterpriseincome tax at the rate of 6. 5%. The income tax rate shall be 6.5% when the sales income in New York was below US$1 million,while 8.85% when above US$1 million.
VII. Notes to Major Items in the Consolidated Financial Statements of the Company
1. Monetary Funds
Unit: RMBItem Ending balance Beginning balanceCash on hand
| 9,087,924.86 | 8,040,420.28 |
Bank deposits
| 526,046,848.04 | 668,598,792.58 |
Other monetary funds
| 10,367,936.46 | 17,350,080.52 |
Total
| 545,502,709.36 | 693,989,293.38 |
Of which: total amount depositedoversees
| 92,173,384.32 | 54,911,636.96 |
Other notesAs of 31 December 2018, the monetary capital with restricted ownership of the Company was RMB10,367,936.46 (31 December2017: RMB17,350,080.52), among which, RMB10,000,000.00 was pledged for short-term borrowings from banks by the Company’ssubsidiary Xinjiang Lu Thai (refer to NoteVII-19 and NoteVII-54), RMB295,288.20 was used as cash deposit for opening L/C andRMB72,648.26 was used as cash deposit for opening L/G by the subsidiary Lufeng Weaving & Dyeing.
2. Notes Receivable and Accounts Receivable
Unit: RMBItem Ending balance Beginning balanceNotes receiv able
| 174,657,918.26 | 139,276,742.34 |
Accounts receivable
| 374,607,116.55 | 334,080,524.05 |
Total
| 549,265,034.81 | 473,357,266.39 |
(1)Notes Receivable
1) No tes Receivable Listed by Category
Unit: RMB
Item Ending balance Beginning balanceBank accept ance bill
| 72,215,993.39 | 28,926,913.53 |
L/C
| 102,441,924.87 | 110,349,828.81 |
Total
| 174,657,918.26 | 139,276,742.34 |
2) Notes Receivable which Had Endorsed by the Company or had Discounted and had not Due on the Balance Sheet Date at thePeriod-end
Unit: RMB
Item
Amount of recognition termination at the
period-end
Amount of not terminated recognition at
the period-endBank accept ance bill
| 178,971,553.11 |
Total
| 178,971,553.11 |
(2)Accounts Receivable
1) Accounts Receivable Clas sified by Category
Unit: RMB
Category
Ending balance Beginning balanceCarrying amount
Bad debtprovision
Carrying
value
Carrying amount
Bad debtprovision
Carrying
valueAmount
Proporti
on
Amount
Withdr
awalpropor
tion
Amount Proportion
Amount
Withdrawalpropor
tionAccounts receivablewithdrawal of baddebt prov i s ion bycredit riskscharacteristics
394,430,83
0.86
100.00%
| 19,823,71 |
4.31
5.03%
| 374,607,1 |
16.55
351,991,9
19.14
| 100.00% | 17,911,39 |
5.09
5.09%
| 334,080,52 |
4.05
Total
394,430,83
0.86
100.00%
| 19,823,71 |
4.31
5.03%
| 374,607,1 |
16.55
351,991,9
19.14
| 100.00% | 17,911,39 |
5.09
5.09%
| 334,080,52 |
4.05
Accounts receivable with significant single amount for which bad debt provision separately accrued at the period-end：
□ Applicable √ Not applicableAmong these groups, accounts receivable adopting aging analysis method to withdraw bad debt provision:
√ Applicable □ Not applicable
Unit: RMBAging
Ending balanceAccounts receivable Bad debt provision Withdrawal proportionSubtotal of within 1 year
393,182,054.12
19,659,102.74
| 393,182,054.12 |
5.00%
1 to 2 years
85,143.82
| 851,438.00 | 10.00% |
2 to 3 years
79,467.75
| 397,338.74 | 20.00% |
Total
19,823,714.31
| 394,430,830.86 |
5.03%
Notes of the basis of recognizing the group:
Among these groups, accounts receivable adopting balance percentage method to withdraw bad debt provision:
□ Applicable √ Not applicableAmong these groups, accounts receivable adopting other methods to withdraw bad debt provision:
2) Bad Debt Provision Withdrawn, Reversed or Recovered in the Reporting PeriodThe withdrawal amount of the bad debt provision during the Reporting Period was of RMB1,955,031.74; the amount of the reversedor collected part during the Reporting Period was of RMB0.00.Significant amount of reversed or recovered bad debt provision:
None3) Particulars of the Actual Verification of Accounts Receivable during the Reporting P er iod
Unit: RMBItem AmountAccounts receivable actually verified
42,712.52
Of which: s ig nificant actual verification of accounts receivableNoneNotes of t he verification of accounts receivable:
4) Top 5 of the Ending Balance of the Accounts Receivable Collected according to the Arrears PartyThe Top 5 of the ending balance of the accounts receivable collected according to the arrears party for the Company wasRMB112,823,256.42 accounting for 28.60% of total ending balance of accounts receivable. And the ending balance of bad debtprovision withdrawn was RMB5,641,162.82.
3. Prepayments
(1) List by Aging Analysis
Unit: RMBAging
Ending balance Beginning balanceAmount Proportion Amount ProportionWithin 1 year
42,712.52149,436,553.91
99.90%
| 149,436,553.91 |
145,673,771.77
| 99.46% |
1 to 2 years
0.01%
| 10,838.26 |
625,210.35
| 0.43% |
2 to 3 years
0.01%
| 8,319.04 |
162,029.49
| 0.11% |
Over 3 years
0.08%
| 126,905.00 |
2,054.77
| 0.00% |
Total
-- 146,463,066.38
| 149,582,616.21 |
--Notes of the reasons of the prepayment ages over 1 year with significant amount but failed settled in time:
(2) Top 5 of the Ending Balance of the Prepayments Collected according to the Prepayment Target
The total top 5 of the ending balance of the prepayments collected according to the prepayment target for the Company wasRMB106,260,293.93 accounting for 71.04% of total ending balance of prepayments.Other notes:
4. Other Receivables
Unit: RMBItem Ending balance Beginning balanceInterest receivable
| 590,003.07 |
Other receiv ables
| 63,012,001.10 | 56,182,782.04 |
Total
| 63,012,001.10 | 56,772,785.11 |
(1) Interest Receivable
1) Category of Interest Receivable
Unit: RMBItem Ending balance Beginning balanceFixed time deposits
| 590,003.07 |
Total
| 590,003.07 |
(2) Other Receivables
1) Other Receivables Classified 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
walproporti
on
Amount
Proporti
on
Amount
Withdrawalpropor
tionOther receiv ableswithdrawn bad debtprovision accordingto credit riskscharacteristics
68,104,5
71.98
99.14%
| 5,092,570 |
.88
7.48%
| 63,012,00 |
1.10
62,067,80
8.10
| 100.00% |
5,885,026.0
9.48%
| 56,182,782. |
Other receiv ableswith insignificantsingle amount for
592,437.
0.86%
| 592,437.2 |
100.00%
which bad debtprovi s io n separatelyaccruedTotal
68,697,0
09.21
100.00%
| 5,685,008 |
.11
8.28%
| 63,012,00 |
1.10
62,067,80
8.10
| 100.00% |
5,885,026.0
9.48%
| 56,182,782. |
Other receiv ables with significant single amount for which bad debt provision separately accrued at the period-end:
□ Applicable √ Not applicableAmong these groups, other receivables adopting aging analysis method to withdraw bad debt provision:
√ Applicable □ Not applicable
Unit: RMBAging
Ending balanceOther receiv ables Bad debt provision Withdrawal proportionSubtotal of within 1 year
59,117,907.18
2,955,895.33
| 59,117,907.18 |
5.00%
1 to 2 years
| 2,585,348.38 |
258,534.84
| 10.00% |
2 to 3 years
84,508.41
| 422,542.07 | 20.00% |
Over 3 years
1,793,632.31
| 5,978,774.35 | 30.00% |
Total
5,092,570.88
| 68,104,571.98 |
7.48%
Notes:
Among these groups, other receivables adopting balance percentage method to withdraw bad debt provision:
□ Applicable √ Not applicableAmong these groups, other receivables adopting other methods to withdraw bad debt provision:
□ Applicable √ Not applicable2) Bad Debt Provision Withdrawn, Reversed or Recovered in the Reporting PeriodThe w ithdrawal amount of the bad debt provision during the Reporting Period was of RMB-200,017.95; the amount of the reversedor collected part during the Reporting Period was of RMB0.00.Significant amount of reversed or recovered bad debt provision during the Reporting Period:
None3) Other Receivables Classified by Account Nature
Unit: RMBNature Ending carrying amount Beginning carrying amountExport taxes refund
25,988,374.88
| 25,988,374.88 | 26,928,248.68 |
Advance payment
| 30,975,850.53 | 19,470,920.20 |
Cash Pledge & Margin 6,227,752.93
| 5,915,873.52 |
Borrowings and petty cash 3,232,785.56
| 1,533,438.12 |
Other 2,272,245.31
| 8,219,327.58 |
Total
| 68,697,009.21 | 62,067,808.10 |
4) Top 5 of the Ending Balance of the Other Receivables Collected according to the Arrears Party
Unit: RMBName of the entity Nature
Endingbalance
Aging
balan ce of other
receivables%
Ending balance ofbad debt pr ovisionExpor t taxes refund receivable
| Propor tion to e nding | ||
Export taxes refund
Within 1
year
41.25%
| 25,988,374.88 | 1,299,418.74 |
Advances for agriculturalmachinery
Advance
Within 1
year
11.28%
| 7,108,109.14 | 355,405.46 |
Advance money receivable ofthe fundr a is i ng houses
Advance
Within 1
year
8.95%
| 5,641,728.49 | 282,086.42 |
Cash deposit for salary ofmigrant workers in Zichuandistrict of Zibo city
Cash deposit for salary ofmigrant workers forconstruction work
| 2,955,620.10 | Over 3 years |
4.69%
| 886,686.03 |
Advances for heating fees ofemployees
Advance
Within 1
year
3.24%
| 2,043,220.77 | 102,161.04 |
Total --
-- 69.41%
| 43,737,053.38 | 2,925,757.69 |
5. Inventories
Whether the Company need satisfy relevant disclosure requirements governing the real estate industryNo
(1) Category of Inventories
Unit: RMBItem
Ending balance Beginning balance
Falling price
reserves
Carrying value
| Carrying amount | Carrying amount |
Falling price
reserves
Carrying value
Raw materials 768,264,219.42
| 2,069,324.65 |
766,194,894.77
859,429,529.00
| 1,172,453.02 | 858,257,075.98 |
Goods in proc e s s 568,371,033.96
568,371,033.96
508,535,945.66
| 508,535,945.66 |
Inventory goods 798,090,300.29
| 64,960,183.31 | 733,130,116.98 |
754,961,464.17
| 51,653,377.28 | 703,308,086.89 |
Consumptiveliving assets
1,352,241.24
266,680.61
1,085,560.63
1,531,621.67
| 404,221.67 | 1,127,400.00 |
Assignedprocessingproducts
24,585,385.96
24,585,385.96
29,432,713.40
| 29,432,713.40 |
Total
| 2,160,663,180.87 | 67,296,188.57 |
2,093,366,992.30
| 2,153,891,273.90 | 53,230,051.97 | 2,100,661,221.93 |
Whether the Company need satisfy relevant disclosure requiremen ts stated in SZSE Industrial Information Disclosure GuidanceNo.4---Listed Company Specialized in Seed Industry and Planting Businesses or not?No
Whether the Company need satisfy relevant disclosure requirements stated in SZSE Industrial Information Disclosure GuidanceNo.11-Listed Company Specialized in Jewelry-related Business or not?No
(2) Falling Price Reserves of Inventories
Unit: RMBItem Beginning balance
Increase Decrease
Ending balanceWithdrawal Other
Reverse or
write-off
OtherRaw materials 1,172,453.02
2,069,324.65
| 1,172,453.02 | 2,069,324.65 |
Inventory goods 51,653,377.28
| 39,925,825.39 | 26,619,019.36 | 64,960,183.31 |
Consumptiveliving assets
404,221.67
| 137,541.06 | 266,680.61 |
Total 53,230,051.97
| 41,995,150.04 | 27,929,013.44 | 67,296,188.57 |
(3) 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 fall ing price reserves
Reasons for write-back Reasons for write-offRaw materials
of inventory and its realizable net value
| The lower one between cost of each item | Disposed in the Reporting Period |
Inventory goods
of inventory and its realizable net value
| The lower one between cost of each item |
Sold in the Reporting Period
Consumptiveliving assets
The lower one between cost of each item
of inventory and its realizable net value
| The lower one between cost of each item |
Sold in the Reporting Period
Note: ① The inventory falling price reserves shall be made based on the balance of inventory cost and the realizable net valueregardin g the former is h igher than th e latter, which is caused by the q uality probl em and long stock age of so me raw materials, andfinished goods as well as d ecr ease in market price in consumptive living assets Hu Sheep.②The Company’s subsidiary Xinjiang Lu Thai pledged inventories with carrying value of RMB270,068,760.00 for short-termborrowings from the bank (refer to Note VII-19 and Note VII-54).
(4) Notes to the Ending Balance of Inventories Including Capitalized Borrowing Expense(5) Completed but Unsettled Assets Generated from Construction Contacts at the Period-end6. Other Current Assets
Unit: RMB
Item Ending balance Beginning balancePrepai d i ncome tax to be deducted 4,820,039.66
| 302,275.14 |
VAT input tax to be deducted
| 69,931,124.83 | 68,286,428.20 |
Financ ia l pr o duc t s
| 50,000,000.00 |
B-share repurchase account
| 11,615,290.07 |
Total
| 86,366,454.56 | 118,588,703.34 |
Other notes: none
7. Available-for-sale Financial Assets(1) List of Available-for-sale Financial Assets
Unit: RMBItem
Ending balance Beginning balanceCarryingamount
Depreciation
reserves
Carrying value
Carryingamount
Depreciation
reserves
Carrying value
Available-for-dale debtinstruments:
60,612,000.00
| 60,612,000.00 |
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 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 127,894,600.00
42,782,600.00
| 85,112,000.00 |
127,315,600.00
| 42,782,600.00 | 84,533,000.00 |
(2) Available-for-sa le Financial Assets Measured by Fair Value at the Period-end
Unit: RMBCategory
Available-for-sale equity
instruments
Available-for-sale debt
instruments
Total
amortization costs
60,000,000.00
| Equity instrument costs/debt instrument | 60,000,000.00 |
Fair value 60,612,000.00
| 60,612,000.00 | |||
| Accumulative amount of changes in fair value |
included in other comprehensive income
612,000.00
612,000.00
(3) Available-for-sale Financial Assets Measured by Cost at the Period-end
Unit: RMB
Investee
Carrying amount Depreciation reserves Sharehol
dingproportion among
theinvestees
Cashbonus of
theReporting
PeriodPeriod-
beginning
Increase
| beginning |
Decre
ase
Period-end
Period-beginni
ng
Increa
se
Decrea
se
Period-end
| Yantai |
RongchangPharmacyCo., Ltd.(hereinafter refer toas“RongchangPharmacy”
| ) | 55,282,600.00 | 55,282,600.00 | 42,782,600.00 | 42,782,600.00 |
3.13%
| Shandong |
Hongqiao
Ltd.
| (Hongqiao |
Power)
| 12,000,000.00 | 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 Depreciation of Available-for-sale Financial Assets during the Reporting Period
Unit: RMBCategory
Available-for-sale equity
instruments
Available-for-sale debt
instruments
TotalBeginning balance ofimpairment withdrawn
42,782,600.00
| 42,782,600.00 | 42,782,600.00 |
Ending balance of impairmentwithdrawn
| 42,782,600.00 | 42,782,600.00 |
8. Long-term Receivables(1) List of Long-term Receivables
Unit: RMBItem
Ending balance Beginning balance
Interval ofdisco unt rate
Carryingamount
Bad debtprovision
Carrying value
Carryingamount
Bad debtprovision
Carrying
valueFinanci ng lease accounts 650,000.00
650,000.00
| 15.37% |
Of which: unrealizedfinancing income
105,603.04
105,603.04
Long-term advancesreceivable
528,623.41
| 10,572,468.16 |
10,043,844.75
Total
528,623.41
| 11,222,468.16 |
10,693,844.75
--
9. Long-term Equity Investment
Unit: RMB
Investees
Beginning
balance
Increase/decrease
Endingbalance
Endingbalance
ofdepreci
ationreserve
s
Additi
onalinvestment
Red
investme
nt
Gains and
lossesrecognizedunder theequity method
| uced |
Adjustm
ent ofothercompreh
ensiveincome
Chang
es ofotherequity
Cashbonus or
profits
| announced |
to issue
Withdra
wal ofdeprecia
tionreserves
Other
I. Joint venturesII. Associated enterprisesNing bo Me ishan BondedPoer AreaHaohongEquityInvestmentPartnership(L.P)(hereinafterreferred to as“HaohongInvestment”)
97,536,732.02
| 97,536,732.02 |
-1,518,268.37
96,018,463.65
Subtotal
| 97,536,732.02 |
-1,518,268.37
96,018,463.65
Total
| 97,536,732.02 |
-1,518,268.37
96,018,463.65
10. Investment Property(1) Investment Property Adopting 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) Ent er prise combination increase
3. Decreased amount of the period
| 3,582,400.00 | 3,582,400.00 |
(1) Disposal
| 3,582,400.00 | 3,582,400.00 |
(2) Other transfer
4. Ending balance
| 32,399,982.40 | 32,399,982.40 | |||
| II. Accumulative depreciation and |
accumulative amortization
1. Beginning balance
| 11,418,837.82 | 11,418,837.82 |
2. Increased amount of the period
| 1,368,740.42 | 1,368,740.42 |
(1) Withdrawal or amortization
| 1,368,740.42 | 1,368,740.42 |
3. Decreased amount of the period
| 3,267,838.79 | 3,267,838.79 |
(1) Disposal
| 3,267,838.79 | 3,267,838.79 |
(2) Other transfer
4. Ending balance
| 9,519,739.45 | 9,519,739.45 |
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
| 22,880,242.95 | 22,880,242.95 |
2. Beginning carrying value
| 24,563,544.58 | 24,563,544.58 |
11. Fixed Assets
Unit: RMBItem Ending balance Beginning balance
Fixed assets
| 5,748,562,385.35 | 5,421,295,850.03 |
Total
| 5,748,562,385.35 | 5,421,295,850.03 |
(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 the period
| 190,717,425.62 | 610,870,898.51 | 7,017,277.89 | 11,065,615.88 | 819,671,217.90 |
(1) Purchase
| 4,663,594.43 | 445,728,112.67 | 6,851,625.84 | 10,460,699.17 | 467,704,032.11 |
(2) Transfer f rom constructionin progress
| 173,880,054.64 | 145,520,331.02 | 421,197.50 | 319,821,583.16 |
(3) Enterprise combination
increase
(4) Other
| 12,173,776.55 | 19,622,454.82 | 165,652.05 | 183,719.21 | 32,145,602.63 |
3. Decreased amount of theperiod
| 75,440,343.48 | 56,833,448.59 | 18,930,937.56 | 4,180,910.06 | 155,385,639.69 |
(1) Disposal or Scrap
| 9,029,397.60 | 56,833,448.59 | 18,930,937.56 | 4,180,910.06 | 88,974,693.81 |
(2) Transfer of construction inprogress
| 66,410,945.88 | 66,410,945.88 |
4. Ending balance
| 3,251,285,811.62 | 6,567,263,906.52 | 63,692,200.59 | 125,565,020.71 | 10,007,806,939.4 |
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 the period
| 100,032,141.65 | 306,681,594.29 | 4,513,656.02 | 11,441,894.54 | 422,669,286.50 |
(1) Withdrawal
| 98,847,636.36 | 304,101,675.37 | 4,444,243.23 | 11,348,582.63 | 418,742,137.59 |
(2) Other
| 1,184,505.29 | 2,579,918.92 | 69,412.79 | 93,311.91 | 3,927,148.91 |
3. Decreased amount of theperiod
| 29,285,208.19 | 45,885,545.23 | 17,160,096.30 | 3,865,431.21 | 96,196,280.93 |
(1) Disposal or Scrap
| 6,204,276.94 | 45,885,545.23 | 17,160,096.30 | 3,865,431.21 | 73,115,349.68 |
(2) Transfer of construction inprogress
| 23,080,931.25 | 23,080,931.25 |
4. Ending balance
| 959,511,665.02 | 3,129,855,046.37 | 41,145,799.39 | 86,048,051.87 | 4,216,560,562.65 |
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 the period
| 13,226,669.80 | 22,880.00 | 13,249,549.80 |
(1) Withdrawal
| 13,226,669.80 | 22,880.00 | 13,249,549.80 |
3. Decreased amount of theperiod
| 2,701,046.50 |
2,465.98
| 2,703,512.48 |
(1) Disposal or Scrap
| 2,701,046.50 |
2,465.98
| 2,703,512.48 |
4. Ending balance
| 2,893,416.89 | 39,649,126.64 | 24,803.69 | 116,644.22 | 42,683,991.44 |
IV. Carrying value
1. Ending carrying value
| 2,288,880,729.71 | 3,397,759,733.51 | 22,521,597.51 | 39,400,324.62 | 5,748,562,385.35 |
2. 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
(3) Fixed Assets Failed to Accomplish Certification of Property
Unit: RMBItem Carrying value ReasonWeaving and yarn dying workshop
18,743,628.71101,571,711.77
Ongoing inspection, surveying, verification to application proceduresby Housing authoritiesEmployee’s dormitory building ofeastern area of industrial park
41,532,673.45
| 101,571,711.77 | |
| Ongoing inspection, surveying, verification to application procedures |
by Housing authoritiesSpinning Fourth factory workshop 89,599,430.51
| Ongoing inspection, surveying, verification to application procedures |
by Housing authoritiesEmployee’s dormitory building ofwestern ar ea of industrial park
121,719,256.73
Ongoing inspection, surveying, verification to application procedures
| by Housing authorities for some assets and uncompleted inspection by |
relevant authorities for some other assetsEastern s ampl e plant 29,822,729.70
Uncompleted inspection by relevant authoritiesLufeng weaving dye workshop 125,905,390.60
Ongoing registration of premises permit by real estate exchangeXinjiang construction project of100,000-spindle spinningproduction line
64,788,650.97
Ongoing verification to application procedures by Bureau of Land
ResourcesOther notes:
Note: a. The subsidiary of the Company Xinjiang Lu Thai pledged the fixed assets with carrying value of RMB54,356,312.70 forshort-term borrowings from the bank. Refer to Note VII-19 and VII-54 for details.
b. The oth er incr ease in carrying o rigi nal value of fixed assets and in accu mulati ve dep reciat io n refers t o th e exchan ge rate d ifferencewhen th e r ecording currencies of overseas subsidiaries were converted into RMB due to changes in exchange rate.
12. Construction in Progre ss
Unit: RMBItem Ending balance Beginning balanceConstruction in progress
| 244,493,960.75 | 157,421,820.68 |
Engineering materials
| 92,736,685.67 | 56,913,806.06 |
Total
| 337,230,646.42 | 214,335,626.74 |
(1) List of Construction in Progress
Unit: RMBItem
Ending balance Beginning balanceCarrying amount
Depreciation
reserves
Carrying value
Carryingamount
reserves
Carrying value
| Depreciation |
Roof transformationengineering of for the wholeeastern weavi ng complexworkshop
Renov a t ion pr o j e c t f orexhibition hall and officebuilding
| 24,788,720.86 |
24,788,720.86
Reform project of XinshengThermal Power
| 12,145,265.65 |
12,145,265.65
6,192,038.65
| 6,192,038.65 |
Expansion project ofXinshe ng Thermal Power
744,000.00
| 744,000.00 |
Expansion project ofXinshe ng Thermal Power(Phase II)
| 73,512,524.40 |
73,512,524.40
Heat supply engineering ofChengshun Heating
| 9,025,279.89 |
9,025,279.89
1,805,751.30
| 1,805,751.30 |
Reform engineering of100,000-spindle spinning
77,875,603.13
| 77,875,603.13 |
Lu Thai (Vietnam) project
| 12,414,796.74 |
12,414,796.74
34,325,323.53
| 34,325,323.53 |
Spinning Phase II of Lu Thai(Vietnam) project
| 3,908,174.87 |
3,908,174.87
4,922,411.28
| 4,922,411.28 |
Yarn Dye Phase II of Lu Thai
| 83,880,726.83 |
83,880,726.83
(Vietnam) projectProj ect of Lu An Garments
| 4,140,135.90 |
4,140,135.90
3,371,413.19
| 3,371,413.19 |
Other retails projects
| 20,678,335.61 |
20,678,335.61
28,185,279.60
| 28,185,279.60 |
Total
| 244,493,960.75 |
244,493,960.75
157,421,820.68
| 157,421,820.68 |
(2) Changes in Signi fic ant Construction in Progress during the Reporting Period
Unit: RMB
Item Budget
balance
Increased
amount
Transferred in fixe d
assets
Otherdecrease
damount
| Beginning |
Endingbalance
Proporti
on ofaccumul
atedinvestme
nt inconstructions tobudget
Job
Accumu
latedamount
ofinterestcapitaliz
ation
Ofwhich:
amount
ofcapitaliz
ed
| schedule | interests |
for theReportin
Capitalization rate
ofinterests for
theReport
ingPeriod
| g Period |
Capit
alresources
Rooftransformationengineeri
thewholeeasternweavingcomplexworkshop
36,000,00
0.00
| ng of for |
43,574,94
5.54
| 43,574,94 |
5.54
100.00%
100.00%
Renovationprojectforexhibition hallandofficebuilding
13,200,00
0.00
24,788,72
0.86
| 24,788,72 |
0.86
91.00%
91.00%
Reformprojectof
20,000,00
0.00
6,192,038.
12,675,40
8.76
| 6,722,181.76 | 12,145,26 |
5.65
94.00%
94.00%
XinshengThermalPower
ofXinshengThermalPower
240,000,0
00.00
| Expansion project |
744,000.0
3,725,723.
| 4,469,723.74 |
100.00%
100.00%
ofXinshengThermalPower(PhaseII)
97,950,00
0.00
| Expansion project |
73,512,52
4.40
| 73,512,52 |
4.40
75.00%
75.00%
Heatsupplyengineering ofChengshunHeating
25,390,00
0.00
1,805,751.
15,052,75
9.93
| 7,833,231.34 | 9,025,279. |
66.00%
66.00%
Reformengineering of100,000-spindle
156,000,0
00.00
| spinning |
77,875,60
3.13
33,443,34
0.10
| 111,318,943.23 |
100.00%
100.00%
Lu Thai(Vietnam) pro ject
242,282,3
00.00
34,325,32
3.53
34,393,70
5.26
| 56,304,23 |
2.05
| 12,414,79 |
6.74
99.00%
99.00%
Phase IIof LuThai(Vietnam) pro ject
52,750,00
0.00
| Spinning |
4,922,411.
46,104,06
2.95
| 47,118,29 |
9.36
| 3,908,174. |
96.00%
96.00%
YarnDyePhase IIof LuThai(Vietnam) pro ject
00.00
83,880,72
6.83
| 83,880,72 |
6.83
76.00%
76.00%
Project
Garments
93,035,70
0.00
| of Lu An |
3,371,413.
32,851,73
6.84
| 32,083,01 |
4.13
| 4,140,135. |
99.00%
99.00%
Otherretailsprojects
28,185,27
9.60
2,890,068.
| 10,397,01 |
2.01
| 20,678,33 |
5.61
Total
1,086,908,
000.00
157,421,8
20.68
406,893,7
23.23
| 319,821,583.16 | 244,493,960.75 |
-- --
--
(3) Engineering Materials
Unit: RMBItem
Ending balance Beginning balance
Depreciation
reserves
Carrying value
| Carrying amount |
Carryingamount
Depreciation
reserves
Specific material s
| Carrying value | |||||
Specific equipment
| 92,736,685.67 | 92,736,685.67 | 56,913,806.06 | 56,913,806.06 |
Total
| 92,736,685.67 | 92,736,685.67 | 56,913,806.06 | 56,913,806.06 |
13. Intangible Assets(1) List of Intangible Assets
Unit: RMBItem Land use right Patent right
Brand use right TotalI. Original carrying value
| Software use right | ||||
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
| 3,000,186.12 |
3,000,186.12
(1) Purchase
| 3,000,186.12 |
3,000,186.12
(2) Internal R&D
(3) Business combination
increase
3. Decreased amount of theperiod
| 24,002,787.93 | 24,002,787.93 |
(1) Disposal
| 5,969,822.39 |
5,969,822.39
(2) Losing efficiency and
derecognized
| 18,032,965.54 | 18,032,965.54 |
4. Ending balance
| 580,757,501.63 | 1,985,176.47 | 9,710,689.79 |
300,000.00
| 592,753,367.89 |
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
| 15,058,905.80 | 198,517.68 | 3,819,982.05 |
30,000.00
| 19,107,405.53 |
(1) Withdrawal
| 15,058,905.80 | 198,517.68 | 3,819,982.05 |
30,000.00
| 19,107,405.53 |
3. Decreased amount of theperiod
| 19,850,770.31 | 19,850,770.31 |
(1) Disposal
| 1,817,804.77 |
1,817,804.77
(2) Losing efficiency and
derecognized
| 18,032,965.54 | 18,032,965.54 |
4. Ending balance
| 106,250,709.40 | 1,621,227.72 | 6,072,366.32 |
120,000.00
| 114,064,303.44 |
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
| 474,506,792.23 | 363,948.75 | 3,638,323.47 |
180,000.00
| 478,689,064.45 |
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.
(2) Land Use Right with Certificate of Title Uncompleted
Unit: RMB
Item Carrying value ReasonLand use right
Pledged for short-term borrowingsOther notes:
The Company’s subsidiary Xinjiang Lu Thai pledged the land use right with carrying value of RMB107,288,609.62 for short-termborrowings from the bank. Refer to Note VII-19 and Note VII-54 for details.
14. R&D Expense
Unit: RMBItem
Beginning
balance
Increase Decrease
Ending balance
107,288,609.62
Internal R&D expense
Other
Recogni zed asintangible assets
| Internal R&D expense |
Transferred int o t hecurrent profit or loss
R&D of products
| 289,395,092.58 | 289,395,092.58 |
Total
| 289,395,092.58 | 289,395,092.58 |
Other notes
15. Goodwill(1) Original Carrying Value of Goodwill
Unit: RMBName of the invested units or
events generating goodwill
Beginn ing balance Increase Decrease Ending 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 |
16. Long-term Prepaid Expense
Unit: RMBItem Beginning balance Increased amount
Amortizationamount of t he
period
Other decreased
amount
Ending balanceLand contracting fee ofXinjiang Luthai
| 26,693,642.92 | 1,086,219.00 | 25,607,423.92 |
Decoration fee of Xinjiang LuThai
| 865,660.06 | 192,980.65 | 672,679.41 |
Land ren t of overseassubsidiaries
| 80,148,619.17 | 15,354,332.37 | 2,656,647.16 | 92,846,304.38 |
Housing rent of overseassubsidiaries
| 169,272.37 | 2,380.73 | 171,653.10 |
Total
| 107,877,194.52 | 15,356,713.10 | 4,107,499.91 | 119,126,407.71 |
17. Deferred Income Tax Assets/Deferred Income Tax Liabilities(1) Deferred Income Tax Assets that Had not Been Set-off
Unit: RMBItem
Ending balance Beginning balanceDeduct ible temporary
difference
Deferred income tax
assets
Deduct ible temporary
difference
Deferred income
tax assetsProvision for impairment of assets
| 169,477,066.74 | 27,322,107.95 | 140,256,135.72 | 22,531,008.74 |
Unrealized profit of internaltransactions
| 130,892,601.80 | 16,151,715.20 | 100,706,925.35 | 11,627,841.87 |
Deduct ible losses
2,479,871.60
| 16,532,477.30 |
One-time listed decoration expenses 4,140,492.30
1,035,123.08
5,405,702.23
| 1,351,425.56 |
Payroll payable
| 122,397,245.35 | 18,458,763.12 | 124,021,657.72 | 18,701,206.18 |
Deferred income
| 140,183,446.39 | 22,457,708.11 | 126,737,092.32 | 20,485,677.36 |
Changes in fair value of tradingfinancial liabilities
4,877,600.00
731,640.00
Total
| 588,500,929.88 | 88,636,929.06 | 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 fixed assets
| 162,016,488.25 | 25,838,853.38 | 16,820,058.15 | 2,899,949.46 |
Unrealized profit of internaltransactions
2,099,443.00
| 13,996,286.66 |
Changes in fair value ofavailable-for-sale financial assets
612,000.00
91,800.00
33,000.00
| 4,950.00 |
Total
| 176,624,774.91 | 28,030,096.38 | 16,853,058.15 | 2,904,899.46 |
(3) List of Unrecognized Deferred Income Tax Assets
Unit: RMB
Item Ending balance Beginning balanceDeduct ible temporary difference
| 9,323,059.10 | 11,690,891.52 |
Deduct ible losses
| 26,603,299.43 | 27,993,886.84 |
Total
| 35,926,358.53 | 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
Y2019
1,456,659.23
| 451,833.98 |
Y2020
18,458,244.61
| 18,170,464.10 |
Y2021
4,250,703.45
| 4,250,703.45 |
Y2022
3,730,297.90
| 3,730,297.90 |
Y2023
Total
27,993,886.84
| 26,603,299.43 |
--
18. Other Non-current Ass ets
Unit: RMBItem Ending balance Beginning balancePrepayment for equipment
| 17,275,143.10 | 28,984,077.85 |
Prepayment for land
| 1,996,937.00 | 7,406,401.00 |
Prepaymen t for rental fees of land
| 23,828,135.77 |
Total
| 43,100,215.87 | 36,390,478.85 |
19. Short-term Borrowings(1) Category of Short-term Borrowings
Unit: RMBItem Ending balance Beginning balanceMortgage borrowings
| 450,000,000.00 | 440,000,000.00 |
Guaranteed borrowings
| 250,108,063.34 | 28,254,022.53 |
Credit borrowings
| 625,165,716.71 | 666,870,973.87 |
Total
| 1,325,273,780.05 | 1,135,124,996.40 |
Notes of short-term borrowings category:
For details of category and amount for each assets mortgaged for mortgage borrowings, please refer to Note VII-5-11, 13 and 54.
20. Financial Liabilities at Fair Value through Profit or Loss
Unit: RMBItem Ending balance Beginning balanceTrading financial liabilities
| 4,877,600.00 |
Derivative financial liabilities
| 4,877,600.00 |
Total
| 4,877,600.00 |
21. Notes Payable and Accounts Payable
Unit: RMBItem Ending balance Beginning balanceNotes payable 502,347.05
| 7,301,771.85 |
Accounts payable
| 353,186,163.90 | 366,265,132.65 |
Total
| 353,688,510.95 | 373,566,904.50 |
(1) Notes Payable Listed by Category
Unit: RMBCategory Ending balance Beginning balanceTrade acceptance 502,347.05
| 2,441,810.45 |
Bank accept ance bill
| 4,859,961.40 |
Total 502,347.05
| 7,301,771.85 |
The total overdue but unpaid notes payable at the period-end were RMB0.00.
(2) List of Accounts Payable
Unit: RMBItem Ending balance Beginning balancePurchase of goods
| 237,111,166.13 | 219,463,023.43 |
Engineering equipment
| 106,527,421.37 | 134,864,245.66 |
Other
| 9,547,576.40 | 11,937,863.56 |
Total
| 353,186,163.90 | 366,265,132.65 |
22. Advances from Custom ers(1) List of Advances from Customers
Unit: RMB
Item Ending balance Beginning balanceAdvances of goods
| 105,562,378.66 | 119,785,945.48 |
Total
| 105,562,378.66 | 119,785,945.48 |
23. Payroll Payable
(1) List of Payroll Payable
Unit: RMBItem Beginning balance Increase Decrease Ending balanceI. Short-term salary
| 316,812,093.17 | 1,501,921,908.10 | 1,492,761,856.17 | 325,972,145.10 |
II. Post-employment benefit-definedcontribution plans
24,395.78
| 176,370,847.72 | 176,369,178.43 | 26,065.07 |
Total
| 316,836,488.95 | 1,678,292,755.82 | 1,669,131,034.60 | 325,998,210.17 |
(2) List of Short-term Salary
Unit: RMBItem Beginning balance Increase Decrease Ending balance1. Salary, bonus, allowance, subsidy
| 267,328,134.33 | 1,314,788,873.29 | 1,313,328,308.86 | 268,788,698.76 |
2. Employee welfare
| 64,655,591.25 | 64,655,591.25 |
3. Social insurance 35,231.00
| 81,906,432.90 | 81,904,371.77 | 37,292.13 |
Of wh ich: Medical insurance premiums 28,800.70
| 64,893,571.93 | 64,892,905.94 | 29,466.69 |
Work-related injury insurance 5,065.07
8,349,100.43
8,347,874.02
| 6,291.48 |
Matern ity i nsurance 1,365.23
8,663,760.54
8,663,591.81
| 1,533.96 |
4. Housing fund 1,293.00
| 13,786,192.10 | 13,787,485.10 | |||
| 5. Labor union budget and employee |
education budget
| 49,447,434.84 | 26,784,818.56 | 19,086,099.19 | 57,146,154.21 |
Total
| 316,812,093.17 | 1,501,921,908.10 | 1,492,761,856.17 | 325,972,145.10 |
(3) List of Defined Contribution Plans
Unit: RMBItem Beginning balance Increase Decrease Ending balance1. Basic pension benefits
169,719,455.35
| 22,636.70 |
169,717,072.56
| 25,019.49 |
2. Unemployment insurance
6,651,392.37
| 1,759.08 |
6,652,105.87
| 1,045.58 |
Total
176,370,847.72
| 24,395.78 |
176,369,178.43
| 26,065.07 |
Other notes:
The Company, in line with the requirement, participate the endowment insurance, unemployment insurance scheme and so on,according to the scheme, the Company monthly pay to the scheme in line with 18% and 0.7% of the endowment insurance base,except the monthly payment, the Company no longer shoulder the further payment obligation, the relevant expense occurred wasrecorded into current profits and losses or related assets costs.
24. Taxes Payable
Unit: RMBItem Ending balance Beginning balanceVAT
| 4,057,605.21 | 2,639,133.26 |
Corp or ate income tax
| 18,491,849.09 | 13,934,074.08 |
Personal income tax
| 1,279,197.68 | 1,453,967.09 |
Urban maintenance and construction tax
| 5,509,392.03 | 3,036,340.88 |
Stamp tax 187,822.50
| 400,579.00 |
Property tax
| 4,684,717.85 | 4,618,710.82 |
Land us e tax
| 4,215,720.49 | 4,537,230.07 |
Education surcharge
| 2,381,414.25 | 1,314,401.95 |
Local education surcharge
| 1,587,021.34 | 876,267.97 |
Local water conservan cy facili t yconstruction fund
394,952.66
| 217,869.46 |
Resou r ce tax 154,200.00
| 26,516.00 |
Environmental protection tax 612,930.65
Total
| 43,556,823.75 | 33,055,090.58 |
25. Other Payables
Unit: RMBItem Ending balance Beginning balanceInterest pay able
| 3,068,841.54 | 1,572,231.86 |
Dividends payable
| 441,113.64 | 441,113.64 |
Other payab les
| 212,437,032.50 | 127,090,009.25 |
Total
| 215,946,987.68 | 129,103,354.75 |
(1) Interest Payable
Unit: RMB
Item Ending balance Beginning balanceInterest payable of short-term borrowings
| 3,068,841.54 | 1,572,231.86 |
Total
| 3,068,841.54 | 1,572,231.86 |
List of the significant overdue unpaid interest:
None
(2) Dividends Payable
Unit: RMB
Item 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:
The dividends payable unpaid for over one year were cash dividends of previous year not received by individual shareholders yet.
(3) Other Payables
1) Other Pay ables Listed by Nature
Unit: RMB
Item Ending balance Beginning balanceDeposits and cash deposits etc.
| 19,035,286.49 | 19,600,682.80 |
Collecting payment on behalf of others
| 18,288,047.56 | 17,030,878.91 |
Intercourse funds
| 165,655,961.20 | 66,354,397.71 |
Other
| 9,457,737.25 | 24,104,049.83 |
Total
| 212,437,032.50 | 127,090,009.25 |
2) Significant Other Payables Aging over One Year
Unit: RMB
Item Ending balance Unpaid/Un-carry-over reasonCotton and Linen Company
Received deposit of sale contractTotal
| 11,925,000.00 |
| 11,925,000.00 |
--Other notes
26. Current Portion of Non-current Liabilities
Unit: RMB
Item Ending balance Beginning balanceCurrent portion of long-term borrowings
| 62,750,292.49 |
Total
| 62,750,292.49 |
Other notes:
27. Long-term Borrowings(1) Category of Long-term Borrowings
Unit: RMB
Item Ending balance Beginning balanceGuaranteed borrowings
| 170,019,083.89 | 62,750,292.49 |
Less: current portion of long-
(Note VII-26)
| term borrowings |
-
Total
| 62,750,292.49 | |
| 170,019,083.89 |
28. Long-term Payroll Payable(1) List of Long-term Payroll Payable
Unit: RMB
Item Ending balance Beginning balanceIII. Other long-term welfare
| 96,958,178.53 | 93,843,473.02 |
Total
| 96,958,178.53 | 93,843,473.02 |
29. Deferred Income
Unit: RMBItem Beginning balance Increase Decrease Ending balance Reason for formationGovernment subsidies
| 126,737,092.32 | 18,954,622.18 |
5,613,871.15
| 140,077,843.35 |
Government subsidiesUnrealized financing incomes
| 237,606.84 |
132,003.80
105,603.04
Finance leaseTotal
| 126,737,092.32 | 19,192,229.02 |
5,745,874.95
| 140,183,446.39 |
--Item involving government subsidies:
Unit: RMB
Item
Beginning
balance
Amount ofnewly subsidy
| Amount recorded |
intonon-oper
atingincomein theReporting Period
Amountrecorded intoother income
in theReporting
Period
Amount
| offset cost |
in the
Period
Othe
rchanges
Endingbalance
Related to
| Reporting | assets/related |
income
Land
| 59,265,769.33 |
1,393,157.88
| 57,872,611.45 |
Related toassetsEquipment
1,240,100.00
| 64,626,322.95 |
4,075,655.44
| 61,790,767.51 |
Related toassetsProduction living assets 691,000.04
132,999.96
| 558,000.08 |
Related toassetsOverseas investment 100,000.00
400,000.00
| 500,000.00 |
Related toassetsR&D 2,054,000.00
3,208,000.00
| 5,262,000.00 |
Related toincomePublic housing subsidy
1,250,000.00
12,057.87
| 1,237,942.13 |
Related toassetsSubsidy for improvementand transformation ofgarden green land
12,856,522.18
| 12,856,522.18 |
Related toincome
30. 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 |
31. Share Capital
Unit: RMB
Increase/decrease (+/-)
| Beginn ing balance | Ending balance |
New shares issued
Bonus shares
| Bonus issue from profit |
Other
| Subtotal |
The sum ofshares
| 922,602,311.00 | 922,602,311.00 |
32. 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
53.66
| 59,022,683.48 | 59,022,737.14 |
Total
53.66
| 699,493,593.82 | 699,493,647.48 |
33. Treasury Shares
Unit: RMBItem Beginning balance Increase Decrease Ending balanceShares of the Companyre-purcha s e d but no tcancelled
0.00
| 486,922,944.94 | 486,922,944.94 |
Total
| 486,922,944.94 | 486,922,944.94 |
Other notes, inc luding changes and reason of change:
The 15
th
Meeting of the 8
th
B oard of Directors was held on 5 March 2018, on which the Proposal on Counter Purchase of SomeB-shares of the Company was reviewed and approved. The counter purchase price was not higher than HKD9.90 per share. The totalfund for counter purchase did not exceed RMB0.6 billion with term of one year.
34. Other Comprehensive Income
Unit: RMB
Item
Beginning
balance
Report ing Period
Ending balanceIncome befor etaxation in the
Current Period
Less:
recorded in
othercomprehensi
andtransferredin profit orloss in the
CurrentPeriod
Less:
Income
taxexpense
| ve income in prior pe ri o d | Attributable to |
owners of theCompany as
the p ar entafter tax
tonon-controll
| ing interests |
after tax
II. Other comprehensiveinco me th at ma y
| subsequently be reclassified | 16,810,574.22 |
44,433,289.15
86,850.00
44,346,439.15
| 61,157,013.37 |
to profit or loss
changes in f air value ofavailable-for-sale financialassets
28,050.00
| Profit or loss generated from |
579,000.00
86,850.00
492,150.00
| 520,200.00 |
Differences arising fromtranslation of foreigncurrency-denominatedfinancial statements
43,854,289.15
| 16,782,524.22 |
43,854,289.15
| 60,636,813.37 |
Total of othercomprehensive income
44,433,289.15
| 16,810,574.22 |
86,850.00
44,346,439.15
| 61,157,013.37 |
35. Surplus Reserves
Unit: RMBItem Beginning balance Increase Decrease Ending balanceStatutory surplusreserves
| 959,592,006.48 | 59,783,872.34 | 1,019,375,878.82 |
Discretional surplusreserves
| 3,341,572.58 | 3,341,572.58 |
Total
| 962,933,579.06 | 59,783,872.34 | 1,022,717,451.40 |
Notes, including changes and reason of change:
In accordance with provisions of Articles of Association and Corporate Law, the Company withdrew 10% of net profits as thestatuto ry surp l us reserve s.
36. Retained Earnings
Unit: RMBItem Reporting Period Same period of last yearBeginn ing balance of retained earnings before adjustments 4,629,102,712.06
| 4,341,866,189.19 |
Beginn ing balance of retained earnings after adjustments 4,629,102,712.06
| 4,341,866,189.19 |
Add: Net profit attributable to owners of the Company as the parent
| 811,526,477.83 | 841,150,934.75 |
Less: Withdrawal of statutory surplus reserves 59,783,872.34
| 71,063,056.38 |
Dividend of ordinary shares payable 453,344,328.00
| 482,851,355.50 |
Ending retained earnings 4,927,500,989.55
| 4,629,102,712.06 |
List of adjustment of beginning retained earnings:
(1) RMB0.00 beginning retained earnings was affected by retrospective adjustment conducted according to the Accounting Standardsfor Business Enterprises and relevant new regulations.(2) RMB0.00 beginning retained earnings was affected by changes in accounting policies.
(3) RMB0.00 beginning retained earnings was affected by correction of significant accounting errors.(4) RMB0.00 beginning retained earnings was affected by changes in combination scope arising from same control.(5) RMB 0.00 beginning retained earnings was affected totally by other adjustments.
37. 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
| 6,521,949,742.58 | 4,623,882,060.39 | 6,117,830,993.82 | 4,289,552,667.57 |
Other operations
| 357,109,071.35 | 237,561,182.56 |
291,393,051.15
| 187,495,117.11 |
Total
| 6,879,058,813.93 | 4,861,443,242.95 | 6,409,224,044.97 | 4,477,047,784.68 |
38. Taxes and Surtaxes
Unit: RMBItem Reporting Period Same Period of last yearUrban maintenance and construction tax
| 33,944,678.18 | 29,433,844.39 |
Education Surcharge
| 15,139,056.40 | 12,875,631.00 |
Property tax 509,654.00
| 26,516.00 |
Land us e tax
| 20,677,064.40 | 19,773,203.46 |
Vehicle and vessel usage tax
| 18,336,178.97 | 18,594,973.00 |
Stamp duty
| 119,478.40 | 125,398.56 |
Local education surcharge
| 3,530,606.51 | 3,904,063.89 |
Local water conservan cy facili t yconstruction fund
| 10,091,063.11 | 8,583,754.04 |
Urban maintenance and construction tax
| 2,443,114.17 | 2,914,218.66 |
Environmental protection tax
| 2,172,732.41 |
Total
| 106,963,626.55 | 96,231,603.00 |
Other notes:
For details of specific payment standard for each taxes and surtaxes, please refer to Note VI Taxation
39. Selling Expense
Unit: RMB
Item Reporting Period Same Period of last yearSalary
| 41,280,390.85 | 38,293,547.89 |
Transport fees
| 45,652,493.32 | 39,722,184.43 |
Advertising expense
| 14,493,972.68 | 16,846,415.91 |
Mall costs
| 1,849,384.70 | 2,188,487.89 |
Port sur char ge
| 13,502,640.80 | 13,661,450.06 |
Depreciat ion charge
| 5,106,206.04 | 5,364,151.04 |
Sales service charge
| 12,086,904.35 | 3,439,035.08 |
Business travel charges
| 3,965,930.06 | 5,101,239.69 |
Express fee
| 3,395,253.39 | 1,679,556.11 |
Premium
| 1,752,795.53 | 1,774,967.94 |
Other
| 15,020,212.02 | 15,990,744.35 |
Total
| 158,106,183.74 | 144,061,780.39 |
Other notes:
40. Administ rative Expense
Unit: RMB
Item Reporting Period Same Period of last yearSalary
| 150,178,467.11 | 107,277,843.02 |
Depreciat ion charge
| 28,922,673.45 | 24,973,816.12 |
Warehouse funding
| 31,869,397.11 | 27,431,827.37 |
Travel expense
| 23,001,296.54 | 26,081,106.36 |
Rental char ges
| 14,398,948.38 | 14,440,878.80 |
Labor-union expenditure
| 15,600,583.68 | 15,289,305.43 |
Employee education budget
| 11,186,186.88 | 10,872,970.81 |
Amortization of intangible assets
| 12,954,322.84 | 11,112,088.24 |
Transport fees
| 10,436,445.11 | 10,015,673.62 |
Office expense
| 8,060,077.81 | 7,878,754.56 |
Other
| 84,303,364.36 | 67,752,714.32 |
Total
| 390,911,763.27 | 323,126,978.65 |
41. R&D Expense
Unit: RMB
Item Reporting Period Same Period of last yearSalary
| 135,380,494.55 | 167,270,119.29 |
Materials
| 119,832,589.83 | 135,510,566.11 |
Depreciation
| 10,069,125.27 | 10,971,936.72 |
Other
| 24,112,882.93 | 14,651,368.17 |
Total
| 289,395,092.58 | 328,403,990.29 |
42. Finance Costs
Unit: RMBItem Reporting Period Same Period of last yearInterest ex pense
| 57,300,653.51 | 23,753,894.13 |
Less: Inter est income
| 17,925,826.14 | 7,488,918.00 |
Less: Amount of capitalized interest
Forei gn exchange gains or losses
| 2,055,009.44 | 39,937,734.42 |
Other
| 7,349,843.50 | 7,139,960.76 |
Total
| 48,779,680.31 | 63,342,671.31 |
43. Asset Impairment Loss
Unit: RMBItem Reporting Period Same Period of last yearI. Bad debt loss
| 2,283,637.20 | 2,579,033.02 |
II. Inventory falling price loss
| 41,995,150.04 | 25,220,325.43 |
VII. Losses on depreciation of fixed assets
| 13,249,549.80 | 9,531,315.79 |
Total
| 57,528,337.04 | 37,330,674.24 |
44. Other Income
Unit: RMBSources Reporting Period Same period of last yearGovernment subsidies
| 60,846,383.76 | 58,099,783.92 |
Total
| 60,846,383.76 | 58,099,783.92 |
45. Investment Income
Unit: RMB
Item Reporting Period Same Period of last yearLong-term equity investm ent incomeacc ount e d by e qui ty method
-
-
| 1,518,268.37 | 2,463,267.98 | |
| Investment income from disposal of financial |
assets at fair value through profit or loss
-
| 64,824,373.70 | 4,794,598.32 |
Investment income from financial products
| 6,069,367.03 |
Total -
| 60,273,275.04 | 2,331,330.34 |
Other notes:
46. Gain on Changes in Fair Value
Unit: RMBSources Reporting Period Same period of last yearFinancial liabilities at fair value throughprofi t or los s
-
| 4,877,600.00 |
Total -
| 4,877,600.00 |
Other notes:
47. Asset Disposal Income
Unit: RMBSources Reporting Period Same period of last yearFixed asset disposal income
| 4,525,108.75 | 1,242,000.54 |
Intangible asset disposal income
| 3,301,874.63 |
Total
| 7,826,983.38 | 1,242,000.54 |
48. Non-operating Income
Unit: RMBItem Reporting Period Same Period of last year
non-recurring profit or lossGovernment subsidies
| Amount recorded in the current | ||
| 290,000.00 |
1,030,000.00
| 290,000.00 |
Other
| 10,362,238.56 | 11,092,767.09 | 10,362,238.56 |
Total
12,122,767.09
| 10,652,238.56 | 10,652,238.56 |
49. Non-operati ng Ex pense
Unit: RMB
Item Reporting Period Same Period of last year
non-recurring profit or lossDonations
| Amount recorded in the current | ||
| 1,123,744.69 |
5,004,075.00
| 1,123,744.69 |
Losses from damage and scrapof non-current assets
2,568,738.39
| 3,020,637.43 | 3,020,637.43 |
Other
1,449,912.25
| 6,454,472.53 | 6,454,472.53 |
Total
9,022,725.64
| 10,598,854.65 | 10,598,854.65 |
50. Income Tax Expense(1) List of Income Tax Expense
Unit: RMBItem Reporting Period Same Period of last yearCurrent income tax expense
| 100,214,613.83 | 132,080,828.42 |
Deferred income tax expense
-
| 11,098,577.57 | 10,948,219.36 |
Total
| 111,313,191.40 | 121,132,609.06 |
(2) Adjustment Process of Accounting Profit and Income Tax Expense
Unit: RMBItem Reporting PeriodProfit before taxation
| 969,506,763.50 | |
| Curren t income tax expen se acco unted at statuto ry/applicab le tax |
rate
Influence of applying different tax rates by subsidiaries -
| 145,426,014.53 |
| 6,004,653.24 |
Influence of income tax before adjustment
Influence of non-taxable income -
| 491,153.57 |
| 8,168,646.62 |
Influence of not deductable costs, expenses and losses
Influence of deductable losses of unrecognized deferred incometax assets at the beginning of the Reporting Period
-
| 4,843,108.96 |
| 1,086,891.47 |
Influence of expense deduction -24,186,894.34
Income tax e xpense
| 111,313,191.40 |
51. Other Comprehensive Income
Refer to Note VII-34 for details.
52. Cash Flow Statement(1) Cash Generated from Other Operating Activities
Unit: RMBItem Reporting Period Same Period of last yearGovernment subsidies
| 77,020,849.15 | 96,833,623.45 |
Claim income
| 3,936,691.83 | 1,292,703.23 |
Recovery of employee borrowings, petty cash and deposit
| 13,896,229.53 | 24,879,575.61 |
Collection for employees
| 7,574,231.79 | 5,363,500.00 |
Other
| 7,992,121.11 | 8,762,550.14 |
Total
| 110,420,123.41 | 137,131,952.43 |
(2) Cash Used in Other Operating Activities
Unit: RMBItem Reporting Period Same Period of last yearFreight and miscellaneous charges
| 62,091,418.60 | 59,083,362.18 |
Rental char ges
| 20,722,534.75 | 18,504,054.24 |
Advertising expense
| 1,460,237.64 | 4,890,771.45 |
Business travel charges
| 28,898,308.10 | 29,550,544.27 |
Insurance
| 4,892,563.92 | 5,350,729.67 |
Audit advisory announcement fee
| 7,092,869.11 | 4,519,003.71 |
Decorati on & repair expenses
| 7,474,700.27 | 9,540,186.72 |
Donation
| 1,123,744.69 | 5,004,075.00 |
Pre-payment
| 17,052,070.00 | 10,793,990.64 |
Payment of employee borrowings, petty cash and deposit
| 27,292,704.63 | 28,801,006.36 |
Other
| 74,876,384.98 | 81,125,466.24 |
Total
| 252,977,536.69 | 257,163,190.48 |
(3) Cash Generated from Other Investing Activities
Unit: RMBItem Reporting Period Same Period of last yearInterest income
| 17,685,395.06 | 6,894,588.05 |
Income from forward foreign exchange
| 8,376,097.80 | 4,858,596.97 |
Sale of secu r ities
| 63,962,133.03 |
Cash deposit of L/C for purchasing equipment
| 1,200,000.00 |
Option cost
| 11,200.00 | 91,000.00 |
Total
| 27,272,692.86 | 75,806,318.05 |
(4) Cash Used in Other Investing Activities
Unit: RMBItem Reporting Period Same Period of last yearforward settlement exchange loss
| 73,302,671.50 | 63,998.65 |
Payment of deposit for the L/C of equipment purchase
| 295,288.20 | 1,200,000.00 |
Total
| 73,597,959.70 | 1,263,998.65 |
Notes:
(5) Cash Generated from Other Financing Activities
Unit: RMBItem Reporting Period Same Period of last yearReturn of loan guarantees
| 16,000,000.00 | 8,000,000.00 |
Recover y of intercourse accounts
| 78,300,000.00 | 191,980,000.00 |
Total
| 94,300,000.00 | 199,980,000.00 |
Notes:
(6) Cash Used in Other Financing Activities
Unit: RMBItem Reporting Period Same Period of last yearPayment of t he B-share buy-back amount
| 498,538,235.01 |
Certificate of deposit pledged
| 10,000,000.00 | 16,000,000.00 |
Payment for intercourse accounts
| 16,449,300.16 | 139,000,000.00 | |
| Cash consideration paid for business combination under the |
same control
| 23,430,428.00 |
Total
| 524,987,535.17 | 178,430,428.00 |
Notes:
53. Supplemental Information for Cash Flow Statement(1) Supplemental Information for Cash Flow Statement
Unit: RMB
Supplemental information Reporting Period Same period of last year
from operating activities
-- --Net profit
| 1. Reconciliation of net profit to net cash flows generated | ||
| 858,193,572.10 | 883,319,109.60 |
Add: Provision for impairment of assets
| 57,528,337.04 | 37,330,674.24 |
Depreciation of fixed assets, oil-
living assets
| gas assets, and productive | 420,110,878.01 | 384,151,246.71 |
Amortization of intangible assets
| 19,107,405.53 | 16,622,633.32 |
Amortization of long-term prepaid expenses
| 4,107,499.91 | 3,537,929.74 |
Losses from disposal of fixed assets, intangible assets andother long-lived assets (gains: negative)
-
-
| 23,691,064.85 | 1,242,000.54 |
Losses from s cr ap of fixed assets (gains: negative)
| 3,020,637.43 | 2,568,738.39 |
Losses from changes in fair value (gains: negative)
| 4,877,600.00 |
Finance costs (gains: negative)
| 43,973,551.17 | 63,104,510.55 |
Investmen t loss (gains: negative)
-
| 60,273,275.04 | 2,331,330.34 |
Decrease in deferred income tax assets (gains: negative) -
-11,507,078.95
| 13,939,769.35 |
Increase in deferred income tax liabilities(“-” means decrease)
| 25,125,196.92 | 558,859.59 |
Decrease in inventory (gains: negative) -
-
| 6,771,906.97 | 270,382,003.89 | |
| Decrease in accounts receivable generated fro m operating |
activities (gains: negative)
-
-
| 87,641,526.60 | 63,289,943.78 | |
| Increase in accounts payable used in operating activities |
(decrease: negative)
| 66,067,977.78 | 28,069,308.79 |
Net cash gen er ated from/used in operating activities
| 1,430,341,663.16 | 1,070,510,653.43 | |
| 2. Significant investing and financing activities without |
involv ement of cash receipts and payments
-- --3. Net in crease/decrease of cash and cash equivalent: -- --End in g balance of cash
| 535,134,772.90 | 676,639,212.86 |
Less: begin ning balance of cash
| 676,639,212.86 | 659,116,137.67 |
Net incr eas e in cash and cash equivalents -
| 141,504,439.96 | 17,523,075.19 |
(2) Cash and Cash Equivalents
Unit: RMBItem Ending balance Beginning balanceI. Cash
| 535,134,772.90 | 676,639,212.86 |
Includ i ng : Cas h on ha nd
| 9,087,924.86 | 8,040,420.28 |
Bank deposit on demand
| 526,046,848.04 | 668,598,792.58 |
III. Ending balance of cash and cash equivalents
| 535,134,772.90 | 676,639,212.86 |
Other notes:
54. Assets with Restricted Ownership or Right to Use
Unit: RMBItem Ending carrying value Reason for restrictionMon etary capital 10,367,936.46
Pledged for short-term borrowings, as cash deposit for L/G and L/CInventory 270,068,760.00
Mortgaged for short-term borrowingsFixed assets 54,356,312.70
Mortgaged for short-term borrowingsIntang ible assets 107,288,609.62
Mortgaged for short-term borrowingsTotal 442,081,618.78
--Other notes:
55. Foreign Currency Monetary Items(1) Foreign Currency Monetary Items
Unit: RMBItem Ending foreign currency balance Exchange rate Ending balance converted to RMBMon etary capital -- --
Of which: USD 23,669,536.16
6.8632
| 162,448,760.57 |
EUR 48,938.81
7.8473
| 384,034.11 |
HKD 14,769,878.16
0.8762
| 12,941,367.25 |
JPY 22,321,139.00
0.0619
| 1,381,678.51 |
GBP 8,140.26
8.6762
| 70,626.53 |
CHF 46,040.93
6.9494
| 319,956.84 |
Dong
0.000295
| 127,005,803,716.75 | 37,466,712.10 |
MMK 250,055,904.64
0.00439
| 1,097,745.42 |
Notes receiv able
Of which: USD 14,926,262.51
6.8632
| 102,441,924.87 |
Accounts receivable -- --
Of which: USD 41,431,206.26
6.8632
| 284,350,654.80 |
EUR
HKD 20,123,741.12
0.8762
| 17,632,421.97 |
Dong 15,851,339,679.00
0.000295
| 4,676,145.21 |
Other receiv ables
Of which: USD 87,654.31
6.8632
| 601,589.06 |
JPY 1,595,040.00
0.0619
| 98,732.98 |
Dong
0.000295
| 3,302,631,511.00 | 974,276.30 |
GBP 1,500.00
8.6762
| 13,014.30 |
Accounts payable
Of which: USD 3,086,275.16
6.8632
| 21,181,723.67 |
JPY 76,050,920.00
0.0619
| 4,707,551.95 |
EUR 191,497.98
7.8473
| 1,502,742.11 |
CHF 482,250.00
6.9494
| 3,351,348.15 |
Dong 28,499,554,747.22
0.000295
| 8,407,368.65 |
Other payab les
Of which: USD 204,867.00
6.8632
| 1,406,043.20 |
HKD 28,000.00
0.8762
| 24,533.60 |
Dong 651,734,092.00
0.000295
| 192,261.56 |
Short-
| term borrowings |
Of which: USD 97,044,473.48
6.8632
| 666,035,630.41 |
Dong
0.000295
| 82,163,219,117.00 | 24,238,149.64 |
Long-
-- --
| term borrowings |
Of which: USD 24,772,567.30
6.8632
| 170,019,083.89 |
(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 applicableThe operating places of Company’s subsidiaries Lu Thai( Hong Kong), Lu Thai(Cambodia), Lu Thai(Burma), Lu Thai(America),and Lu Thai(Vietnam), and Lu An Garment Co., Ltd. were Hong Kong, Cambodia, Burma, America, Vietnam and Vietnam, and therecording currency respec t ively was HKD, USD, USD, USD, Dong and Dong.
56. Government Subsidy(1) Basic Information on Government Subsidy
Unit: RMBCategory Amount Listed items
Amount recorded in the
current profit or loss
Award for technical center2,000,000.00
Other i ncome
| 2,000,000.00 |
Subsidy for leading talent of Mount Tai industry900,000.00
Other i ncome
| 900,000.00 |
Subsidy fund for key project of innovation and
Zibo City
600,000.00
| develo p ment in | Deferred income | ||
| Fund for development and research project of high quality |
dope dyeing fiber
400,000.00
Other i ncome
| 400,000.00 |
2017-2019 award for excellent performance project290,000.00
Non-operating
income
| 290,000.00 | |||
| Subsidy for application technology development and |
demonstration of high quality dope dyeing fiber
203,000.00
| Deferred income |
Government subsidy for gifted and talented persons in Zibo200,000.00
Other i ncome
| 200,000.00 |
Subsidy for export credit insurance premium557,400.00
Other i ncome
| 557,400.00 |
2018 subsidy for municipal-level patent140,000.00
Other i ncome
| 140,000.00 | |||
| Subsidy for dyeing waste water liquid membrane separation |
and comprehensive upgrading and
water station
| reconstruction of waste | 117,200.00 |
Other i ncome
Subsidy for three-
| 117,200.00 | ||
| dimensional marketing syst em design and |
marketing value chain distribution and consultation project
Other i ncome
| 110,000.00 | 110,000.00 |
Subsidy for development
cotton non-ironing digital ink jet printing fab r ic s
100,000.00
| and industrial application of pure |
Other i ncome
Subsidy for foreign expert project100,000.00
| 100,000.00 | ||
Other i ncome
Export bounty of leading enterprise150,000.00
| 100,000.00 | ||
Other i ncome
Subsidy for intern a tion al market development project30,000.00
| 150,000.00 | ||
Other i ncome
Subsidy for intern a tion al qualification certification22,000.00
| 30,000.00 | ||
Other i ncome
Subsidy for support of gifted and talented persons20,000.00
| 22,000.00 | ||
Other i ncome
Subsidy for text ile a nd garments industrial exhibition14,200.00
| 20,000.00 | ||
Other i ncome
Subsidy for fabr ic s/ac c essories exhibition12,000.00
| 14,200.00 | ||
Other i ncome
| 12,000.00 | ||
| 2017 award for science and technology education of "light of |
textile"
10,000.00
Other i ncome
| 10,000.00 |
Return of service c harge for withholding and remitting tax610,075.60
Other i ncome
| 610,075.60 | |||
| Subsidy for Key Technolo gy R & D o f textile equip ment with |
good shape preservation
1,215,000.00
| Deferred income | |||
| Subsidy for key technology R & D of preparation of comfortable and cool fabric with function of moisture |
absorption
490,000.00
| Deferred income | |||
| Subsidy for research & development and promotion application project of key technology and processing |
technology of high shape-preserving cotton fabric
700,000.00
| Deferred income |
Gove rnment subsidy for Lu Thai (Vietnam) investment project
200,000.00
| Deferred income |
Subsidy for purchase of technical transformation equipment417,500.00
| Deferred income |
Subsidy for Lu An Garments investment project200,000.00
| Deferred income |
Subsidy fund for Xiqu Beiyuan public rental house1,250,000.00
| Deferred income |
Subsidy for garden green land promotion and transformation
| 12,856,522.18 | Deferred income |
Subsidy for informatization planning project240,000.00
Other i ncome
| 240,000.00 |
Subsidy for promoting TBS Toyota production system150,000.00
Other i ncome
| 150,000.00 | |||
| Subsidy for material classification coding and standard |
management improvement proj ect
10,000.00
Other i ncome
| 10,000.00 | |||
| Subsidy for production and integration system of fabric |
industry
350,000.00
Other i ncome
| 350,000.00 | |||
| Subsidy for energy optimization of fabric finishing process |
thermal energy system
785,700.00
Other i ncome
| 785,700.00 |
Subsidy for country-level industrial design center2,000,000.00
Other i ncome
| 2,000,000.00 | |||
| Subsidy for research and industrialization of pure cotton |
ener gy conservation cool non-ironing garments
500,000.00
Other i ncome
| 500,000.00 |
Subsidy for enterprise broadcasting in CCTV700,000.00
Other i ncome
| 700,000.00 |
Subsidy for new industry format of foreign trade10,600.00
Other i ncome
| 10,600.00 |
Subsidy for intern a tion al market development project23,200.00
Other i ncome
| 23,200.00 |
Subsidy for Textile Asia5,400.00
Other i ncome
| 5,400.00 |
Subsidy fund for Texworld40,000.00
Other i ncome
| 40,000.00 |
Subsidy fund for SaigonTex21,300.00
Other i ncome
| 21,300.00 |
Subsidy for intern a tion al self-owned brand cultivation1,700,000.00
Other i ncome
| 1,700,000.00 |
Subsidy for service trade development project10,000.00
Other i ncome
| 10,000.00 |
Special subsidy for improving management level of enterprise304,450.00
Other i ncome
| 304,450.00 |
2016 subsidies for transferring
out of Xinjiang
464,400.00
| Xinjiang cotton to warehouses |
Other i ncome
2016 matching subsidy fund for gifted and talented persons200,000.00
| 464,400.00 | ||
Other i ncome
2017 matching subsidy fund for gifted and talented persons200,000.00
| 200,000.00 | ||
Other i ncome
| 200,000.00 | ||
| Matching subsidy fund for leading persons of Mount Tai |
industry
500,000.00
Other i ncome
| 500,000.00 |
Science and technology award in Shandong Province100,000.00
Other i ncome
| 100,000.00 |
Award of Zibo "Qilu Cup" Industrial Design Competition30,000.00
Other i ncome
| 30,000.00 | |||
| Social insurance, post subsidy for employing people with job |
hunting difficu lties
1,042,819.75
Other i ncome
| 1,042,819.75 | |||
| 2016 subsidy fund for outstanding enterprises in energy |
conservation evaluation in Zibo City
300,000.00
Other i ncome
| 300,000.00 |
2017 special subsidy for municipal-level patent development2,000.00
Other i ncome
| 2,000.00 |
Subsidy for the reconstruction of landscape6,970,977.82
Other i ncome
| 6,970,977.82 |
Subsidy for stab iliz ing posts3,755,585.00
Other i ncome
| 3,755,585.00 |
Subsidy fo r d yna mic mon it o ri ng unem p loyment1,200.00
Other i ncome
| 1,200.00 |
2018 award for science and technology innovation300,000.00
Other i ncome
| 300,000.00 |
2018 post subsidy for enterprise5,551,940.00
Other i ncome
| 5,551,940.00 |
2018 social insurance subsidy for enterprise2,846,960.47
Other i ncome
| 2,846,960.47 | |||
| 2018 subsidy for setting up station of Shandong Technician |
Workstation
100,000.00
Other i ncome
| 100,000.00 |
2018 capital subsidy for province-
development
26,000.00
| level international market |
Other i ncome
2018 award for water-saving enterpris e in Shandong Province3,000.00
| 26,000.00 | ||
Other i ncome
Sludge subsidy5,503,600.00
| 3,000.00 | ||
Other i ncome
Award fund for water-saving enterprise3,000.00
| 5,503,600.00 | ||
Other i ncome
Social insurance subsidy1,785,737.88
| 3,000.00 | ||
Other i ncome
Electricity fee subsidy2,030,064.06
| 1,785,737.88 | ||
Other i ncome
Subsidies for
| 2,030,064.06 | ||
| transferri ng Xinjiang cotton ya rn to warehouses |
out of Xinjiang
7,194,091.44
Other i ncome
| 7,194,091.44 |
Government subsidy for pre-job training835,290.56
Other i ncome
| 835,290.56 |
Subsidy for green high-yield and hi gh-
cotton
500,000.00
| efficiency project of |
Other i ncome
| 500,000.00 | ||
| Special fund subsidy for agriculture industrialization |
development
600,000.00
Other i ncome
| 600,000.00 |
Subsidy for internship of college graduates300,000.00
Other i ncome
| 300,000.00 |
Subsidy for house settlement fee, moving fee in Awat County1,617,000.95
Other i ncome
| 1,617,000.95 |
2017 social insurance subsidy
Other i ncome
| 117,997.56 | 117,997.56 |
Loan with discounted interest2,543,714.36
Finance costs
| 2,543,714.36 |
Subsidy for investment of technical transformation equipment822,600.00
| Deferred income |
Subsidy for pe ople with job hunting difficulties7,321.52
Other i ncome
| 7,321.52 |
(2) Return of Government Subsidy
□ Applicable √ Not applicable
VIII. Changes of Consolidation Scope
1. Other
The subsidiary cancelled in the Reporting Period is Beijing Sichuang Clothing Co.,Ltd. The subsidiary established in the ReportingPeriod is Shanghai Zhinuo Textile New Materials Co., Ltd.
IX. Equity in Other Entities
1. Equity in Subsidiary
(1) Subsidiaries
Name
Main operating
place
Registration
place
Nature of business
Hold ing percentage
(%)
Way of gainingDirectly
Indirectl
yLuthai (Hong Kong) Hong Kong Hong Kong
Wholesal e andretail industry
| 100.00% |
Set-upShanghai Luthai Shanghai Shanghai
Wholesal e andretail industry
| 100.00% |
Set-upXinjiang Luthai Xinjiang Xinjiang
Manufacturingindustry
| 59.92% | Business combination not |
under the same controlLufeng Wea ving &Dyeing
Zibo Zibo
Manufacturingindustry
| 75.00% |
Set-upLuqun Textile Zibo Zibo
Manufacturingindustry
| 100.00% |
Set-upXinshe ng Power Zibo Zibo
Manufacturingindustry
| 100.00% | Business combination not |
under the same controlXinjiang Textile(sub-subsidiary)
Xinjiang Xinjiang
Manufacturingindustry
59.92%
Set-upHelijie (sub-subsidiary) Zibo Zibo Service
100.00%
| Business combination not |
under the same controlChengshun Heating(sub-subsidiary)
Zibo Zibo
Manufacturingindustry
100.00%
Business combination
under the same controlBeijing Youxian Beijing Beijing
Wholesal e andretail industry
| 90.00% |
Set-up
Shanghai Zhinuo Shanghai Shanghai
Technologydevelopment,technical
technologies
| consultancy and transfer of | 100.00% |
Set-up
Lu T ha i (Cambodia) Cambodia Cambodia
Manufacturingindustry
| 100.00% |
Set-upLu Thai (Burma) Burma BurmaManufacturing
| 100.00% |
Set-up
industryLu Thai (America) America America
Wholesal e and
retail industry
| 100.00% |
Set-upLu Thai (Vietnam) Vietnam Vietnam
Manufacturingindustry
| 100.00% |
Set-upLu A n Garments Vietnam Vietnam
Manufacturingindustry
| 100.00% |
Set-up
(2) Significant Non-wholly-owned Subsidiary
Unit: RMBName
Shareholdingproportion ofnon-controlling
interests
the non-controlling interests
Declaring dividends
| The profit or loss attributable to | distributed to |
non-controlling interests
Balance of non-
interests at the period-end
XinjiangLuthai
40.08%
| 16,216,794.15 |
12,023,566.38
| 200,636,304.75 |
LufengWeaving &Dyeing
25.00%
| 30,357,729.74 | 378,029,637.88 |
(3) The Main Financial Information 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
577,801,
870.44
| 569,395, |
421.71
1,147,197,292.15
628,672,
392.36
4,814,37
3.04
| 633,486, |
765.40
| 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
908,054,
381.50
| 820,360, |
513.63
1,728,414,895.13
176,914,
108.80
33,049,2
34.56
| 209,963, |
343.36
| 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: RMB
Name
Report ing Period Same period of last yearOperating
revenue
Net profit
Totalcomprehensi
ve income
Cash flows
fromoperatingactivities
Operating
revenue
Net profit
Totalcomprehensi
ve income
Cash flows
fromoperatingactivitiesXinjiangLuthai
| 32,871,893.8 |
| 32,871,893.8 |
196,160,759.
477,021,975.
| 47,297,093.4 |
| 47,297,093.4 |
-
| 18,512,573.3 |
LufengWeaving &Dyeing
| 1,780,246,45 |
9.14
| 118,857,204. |
| 118,857,204. |
179,357,371.
1,664,817,65
9.70
| 104,083,484. |
| 104,083,484. |
| 140,455,230. |
Other notes:
2. Equity in Joint Ventures or Associated Enterprises(1) Significant Joint Ventures or Associated Enterprises
Name
Main operating
place
Registration place
Nature ofbusiness
Hold ing percentage (%) Accounting
treat ment of the
investment tojoint ve ntur e or
associatedenterpriseDirectly IndirectlyHaohongInvestment
Ningbo Ningbo
Equityinvestment
33.33%
Equity methodNotes to holding proportion of joint venture or associated enterprise different from voting proportion: noneBasis of holding less than 20% of the voting rights but has a significant impact or holding 20% or more voting rights but does nothave a signi ficant impact: none
(2) Main Financial Information of Significant Joint Ventures
Unit: RMB
Beginn ing balance/The same
period of last yearCurrent assets 100,703,096.38
| Ending bal a nc e / Re porting Period | |
| 128,880,401.95 |
Non-cu r r ent assets 187,501,100.00
| 163,879,055.06 |
Total assets 288,204,196.38
| 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 the Company as the parent |
288,054,196.38
| 292,609,457.01 |
Net assets shares calculated at the shareholding proportion 96,018,463.65
| 97,536,732.02 |
Carrying value of investment to associated enterprises 96,018,463.65
| 97,536,732.02 |
Net profit -4,555,260.63
-
| 7,390,542.99 |
Total comprehensive income -4,555,260.63
-
| 7,390,542.99 |
Other notes
X. The Risk Related to Financial Instruments
Main financial instruments of the Company included: Loans, accounts receivable, accounts payable, etc., all the details of thefinancial instruments, see related projects o f “Section VII”. The risk associated with these financial instruments, as well as t heCompany’s risk management policy to reduce these risks which were described below. The Company's management managed andsuper vi sed these risks to ensure that the above risk was controlled in a limited scope.The Company use sensiti vity analysis technolo gy to analyze the reasonable of risk variab les, influence of pro bable changes to thecurren t profits and Stockhold ers' equity. Because rarel y any risk variables chan ge in isolation, and t he correl ation between variablesfor the eventual impact o f the change of a risk variables will have a significant effect, t hus, the aforesaid conten t was processingunder 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 between the risks and benefits, reduced thenegative impact t o the Company op erating performance risk to a minimum, maximized th e profits of shareholders and other equityinvestors. Based on the risk management goal, the basic strat egy of the Company's risk management i s determine and analyze thevarious risks faced by the Company, set up the bottom line of risk and conducted appropriate risk management, and timelysupervised various risks in a reliable way and controlled the risk within the range of limit.1. Market Risk
(1) For eig n exchange risk
Foreign exchange risk is referred to the risk incurred due to loss of changes in exchange rate. Foreign exchange risk is referred tothe risk incurred due to loss of changes in exchange rate. The Company’s foreign exchange risk was mainly related to USD, HKDand EUR, excepting the Company’ s several subsi diaries purch ase and sale, in USD, HKD and Dong, the other main business settledby RMB. On 30 December 2018, in addition to the following assets or liabilities in statement was USD, HKD and EUR, theCompan y’s assets o r li abi lities was RM B b alan ce. The foreign exchan ge risk in cu rred by assets and liabilities of foreign balance mayhave impact to the operation results of the Company.
Item Period-end Period-beginningCash and cash equivalents
| 216,061,990.69 | 556,296,995.92 |
Notes receivable
| 102,441,924.87 | 110,349,828.81 |
Account receivable
| 306,659,681.14 | 252,210,660.04 | |
| Other receivables | 1,687,612.64 | 6,010,153.41 |
Accounts payable
| 39,150,734.53 | 44,343,006.71 | |
| Other payables | 1,622,838.36 | 4,566,032.47 |
Short-term borrowings
| 690,273,780.05 | 695,124,996.40 |
Current portion of long-term borrowings
| 62,750,292.49 |
Long-term borrowings
| 170,019,083.89 |
Forei gn exchange risk sensitivity analysis:
Based on the monetary assets and liabilities o f foreign currency at the end of the year, and with other variabl es unchanged, thepre-tax impact of reasonable changes in the exchange rate on current profit and loss and shareholders' equity is as follows:
Change in interest
rate
Reporting Period Same period of last yearInfluence on the
profits
Influence on equity of
shareholders
Influence on the
profits
of shareholders
| Influence on equity | ||||
| Up 10% against RMB | 30,624,611.46 | 30,624,611.46 | -5,234,092.49 | -5,234,092.49 |
Down 10%
RMB
-
| against | 30,624,611.46 |
-30,624,611.46
| 5,234,092.49 | 5,234,092.49 |
(2) Interest rate risk
The risk of c ash f low changes of financial instruments due to change of interest rate mainly was related bank loan (for details, refer toNote VII-22 and 33).Sensitive analysis of interest rate risk:
Influence of interest increasing 100 BP to current profits and losses and equity of shareholders before tax was followed:
Reporting Period Same period of last yearInfluence on the
profits
Change in interest rateInfluence on equity of
shareholders
Influence on the
profits
| Influence on equity of | Influence on equity |
of shareholdersIncrease 100 BP
-
-14,083,265.20
| 16,014,828.88 |
-11,312,164.38
-10,086,733.25
Decrease 100 BP
| 16,014,828.88 | 14,083,265.20 | 11,312,164.38 | 10,086,733.25 |
2. Credit RiskOn 30 December 20 18, maximum cr edit ri sk what may lead to the financi al losses was the other party of the contract failed to fulfillthe obligations and causes loss of the Company’s financial assets, which including: book value of financial assets recognized inconsolidated balance sheet.In order to reduce the credit risk, the Company established a special team be responsible for the determination of credit limit tocondu ct cred it appr oval, and per for m other su per visin g procedu res t o ensure that takin g necessar y measu res to recycle expir ed claims.In addition, the Company at each balance sheet date, review every single receivables recycling situation, to ensure that the moneyunable to recycle withdrawn provision for bad debt fully. Thus, the Company management believed that have assume the credit riskthe Company shouldered had been greatly reduced.The Company's working capital was in bank with higher credit rating, so credit risk of working capital was low.3. Liquidity RiskWhen manage liquidity risk, the Company keep administrators deemed sufficient cash and cash equivalents and supervised it to meetthe need of the operation of the Company and reduce the influence of cash flow volatility. The Company management supervised theusage of bank loan and ensured to comply with the loan agreement.In the end of Reporting Period, the Company held cash and bank deposit of RMB535 million. In recent two years, the average of netcash flow of operation activities was RMB1.25 billion. The Company believed that the liquidity risk was insignificant.
XI. The Disclosure of Fair Value
1. Ending Fair Value of Assets and Liabilities at Fair Value
Unit: RMB
Item
Ending fair valueFair valuemeasure ment 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
| 60,612,000.00 | 60,612,000.00 |
(1) Debt instrument investment
| 60,612,000.00 | 60,612,000.00 |
The total amount of assetsconsi s tently measured at fair value
| 60,612,000.00 | 60,612,000.00 |
(5) Trading financial liabilities 4,877,600.00
| 4,877,600.00 |
Derivative financial liabilities 4,877,600.00
| 4,877,600.00 |
The total amount of liabilitiesconsi s tently measured at fair value
4,877,600.00
| 4,877,600.00 |
2. Market Price Recognition Basis for Consistent and Inconsistent Fair Value Measure ment Items at Level
The fair value of financial l iabilities at level 1 was determined in accordance with the quotati on of future foreign exchange of thebank on 30 December 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 investmen t without active markets in avai lable-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.
XII. Related Party and Related-party Transactions1. Information Related to the Company as the Parent of the Company
Name
Registrat
ionplace
Nature of business
Registered
capital
Proportion of share held by the
Company (%)
| Company as t he parent against the | Propor tion of voting rights owned |
by the Company as the parent
against the Company (%)ZiboLuchengTextileInvestmentCo., Ltd.
Zibo
investment
RMB63,260,000
| Textile, chemistry and | 15.21% |
15.21%
Notes: information on the Company as the parentThe final controllers of the Company are Mr. Liu Zibin and Mr. Liu Deming.
2. Subsidiaries of the Company
Refer to N ote IX-1. E q uity 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 for details of significant joint ventures or associatedenterprises of the Company.
4. Information on Other Related Parties
Name Relationship with the CompanyZibo S tanluian Cosmetics Co., Ltd. (hereinafter called“Stanluian”)
Joint-stock company of the Company as the parentZibo Taimei Ties Co., Ltd. (hereinafter called Taimei Ties) Majority-owned subsidiary of the Company as the parentZibo Limin Purified Water Co., Ltd. (hereinafter called 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 parentZibo 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 referredto as Lujia Property)
Wholly-owned subsidiary of the Company as the parentHong Kong Tung Hoi International Company Limited(hereinafter called Tung Hoi International)
Wholly-owned subsidiary of the Company as the parentShandong Chengshun Petrochemical Co., Ltd. (hereinafterreferred to as Chengshun Petrochemical)
Wholly-owned subsidiary of the Company as the parentOther notes: none
5. List of Connected Transactions(1) Information on Acquisition of Goods and Reception of Labor Service
Information on acquisition of goods and reception of labor service
Unit: RMBRelated party Content Reporting Period
| The appr oval trade |
credit
Whether exceedtrade credit or not
last yearZibo LuchengTextileInvestment Co.,Ltd.
Towels, socks, oils, supermarketretail, welfar e, electronics,computer equipment, computersuppl ies, paper cores, etc.
| Same period of | |||
| 13,489,689.69 | 23,116,700.00 |
No
Taimei Ties Goods processing fee, materials
| 13,051,075.96 | |||
| 3,415.03 |
No
Limin PurifiedWater
Recycled water, sewage treatment,materials
| 24,915,630.44 | 35,388,000.00 |
No
ChengshunPetrochemical
Gas
| 23,742,561.84 | |||
| 36,438,292.48 | 54,000,000.00 |
No
Lurui FineChemical
Auxiliaries
| 19,719,905.39 | |||
| 100,403,329.00 | 136,000,000.00 |
No
Stanluian Materials
| 91,452,731.48 | |||
| 6,344.03 |
No
Information of sales of goods and provision of labor service
Unit: RMBRelated party Content Reporting Period Same period of last yearLucheng Textil e
Sales of mater ials, electricity, running water, draughtwater, gas etc.
125,194.09
| 244,822.05 |
Lucheng Textil e Sales of grey yarn, dyed yarn, garment etc. 324,500.22
| 560,701.89 |
Taimei Ties Sales of electricity, heating charges
| 17,715.81 |
StanluianCompany
Sales of mater ials, electricity, an d running water 6,926.79
| 52,431.80 |
Limin PurifiedWater
Sales of mater ials, garment, electricity etc. 1,096,870.07
| 71,473.11 |
Lurui FineChemical
Sales of garment, shell fabric, yarn, water&electricity,lunch components and materials
241,453.88
| 442,833.05 |
Lujia Property Sales of materials and recycled water 60,753.33
| 68,442.42 |
(2) Information on Related-party 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 yearZibo Lucheng TextileInvestment Co., Ltd.
House s and bu il dings
| 48,965.14 | 30,857.15 |
Lurui Fine Chemical Houses and buildings
| 8,183.64 | 8,183.64 |
The Company was lessee:
Unit: RMBName of lessor Category of leased assets
The lease 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 3,614,857.20
| 3,614,857.20 |
Zibo Lucheng TextileRent of gas station 501,714.24
| 501,714.24 |
Investment Co., Ltd.Zibo Lucheng TextileInvestment Co., Ltd.
Rent of land and buildings
| 11,259,371.47 | 11,460,190.52 |
Luqun Pr o pe r ty Rent of land and buildings 1,394,285.64
| 1,394,285.64 |
(3) Information on Inter-bank Lending of Capital of Related Parties
Unit: RMBRelated party
Amount Start date End date NoteBorrowingZibo LuchengTextileInvestmentCo., Ltd.
137,520,000.00
2 Aug ust 2017 31 December 2018
| Borrowed by the Company’s subsidiaries Xinshe ng Power and Chengshun Heating |
Lujia Property 600,000.00
30 Marc h 201 7 31 December 2018
Borrowed by the Company’s subsidiaryChengshun HeatingStanluianCompany
1,450,000.00
17 Aug ust 2017 31 December 2018
Borrowed by the Company’s subsidiaryChengshun HeatingTaimei Ties 1,300,000.00
31 Marc h 201 7 31 December 2018
Borrowed by the Company’s subsidiaryChengshun Heating
(4) Information on Remuneration for Key Management Personnel
Unit: RMBItem Reporting period Same period of last yearRemuneration for key management personnel
23,527,100.00
| 23,527,100.00 | 21,881,300.00 |
6. Accounts Receivable and Payable of Related Party
(1) Accounts Payable
Unit: RMBItem Related party Ending carrying amount Beginning carrying amount
Other payab les
Zibo Lucheng TextileInvestment Co., Ltd.
127,139,981.30
| 60,456,317.14 |
Other payab les Lujia Property 646,472.50
| 620,010.00 |
Other payab les Stanluian Company 1,537,779.37
| 1,473,828.33 |
Other payab les Taimei Ties 1,420,277.49
| 1,362,942.08 |
XIII. Commitments and Contingency
1. Significant Commit ment s
Signi ficant commitments on Balance Sheet DateCapital comm itments
Item Ending balance
(RMB’0,000)
Beginning balance
(RMB’0,000)Commitments signed but hasn’t been recognizedin financial statements
-- Commitment on constructing and purchasinglong-lived assets
| 4,528.59 | 6,364.72 |
Total
| 4,528.59 | 6,364.72 |
2. Contingency(1) Significant Contingency on Balance Sheet Date
As of 31 December 2018, there was no significant contingency for the Company to disclose.
(2) In Despite of no Significant Contingency to Disclose, the Company Shall Also Make RelevantStatements
There was no significant contingency in the Company to disclose.
XIV. Events after Balance Sheet Date
1. Profit Distribution
Unit: RMBProfits or dividends to be distributed
Profits or dividends announced to be distributed after the approval
| 429,060,770.50 |
| 429,060,770.50 |
2. Notes to Other Events after Balance Sheet Date
Influence of implementation of new accounting standards since 1 January 2019The Ministry of Finance issued the following standards on 31 March 2017: Accounting Standards for Business EnterprisesNo.22-Recognization and Measurement of Financial Instruments (revised in 2017) (CK [2017] No.7), Accounting Standards forBusiness Enterprises No.23-Transfer of Financial Assets (revised in 2017) (CK [2017] No.8), Accounting Standards for BusinessEnterprises No.24-Hedge Accounting (revised in 2017) (CK [2017] No.9), and issued the Accounting Standards for BusinessEnterprises No.37-Presentation of Financial Instruments (revised in 2017) (CK [2017] No. 14) on 2 May 2017 (the above standardswere referred to as “new financial instru ment standards” collectively hereafter) and requ ired all domestically listed companies to
implement since 1 January 2019.Approve d by the 24
th
M eeti ng of th e 8
th
B oard of Directors held on 27 March 2019, the Companywill carry out the aforesaid new financial instrument standards since 1 January 2019 and made changes in relevant accountingpolicies pursuant to above new financial instrument standards.Accounting policy changes mainly involve the following:
Under new Financial Instruments Standards, all recognized financial assets are subsequently measured at amortized cost or fair value.On the date of implementation of new financial instrument standards, the business model of managing financial assets is evaluated onthe basis of the existin g facts and circumstances of the Company o n the same date, the characteristics of con tractual cash flow onfinancial assets are evalu ated on the basis of facts an d circumstances at the time of in itial recognition of th e financial assets, andfinancial assets ar e cl assi fied in to th ree catego ries : measur ed at amort ized cos t, measur ed at fair val ue with ch anges i ncl uded in othercomprehensive income, measured at fair value with changes included in profits and losses. For equity instrument investmentsmeasured at fair value with changes included in other comprehensive in come, when the recognition of the financial asset isterminated, the accumulated gains or losses previously included in other comprehensive income will be transferred from othercomprehensive income to retained income, and not included in the current profits and losses.Under new financial instrument standards, the Company makes provisions for impairment and recognition of credit impairmentlosses, based on the expected credit loss, for finan cial asset s measur ed at amorti zed cost , investment in deb t instruments measured atfair value with changes included in other comprehensive income, lease recei vables, contractual assets and financial guaranteecontracts.
XV. Notes of Main Items in the Financial Statements of the Company as the Parent
1. Notes Receivable and Accounts Receivable
Unit: RMBItem Ending balance Beginning balanceNotes receiv able
| 91,555,248.34 | 93,244,480.81 |
Accounts receivable
| 316,225,973.28 | 305,903,590.98 |
Total
| 407,781,221.62 | 399,148,071.79 |
(1) Notes Receivable
1) No tes Receivable Listed by Category
Unit: RMBItem Ending balance Beginning balanceBank accept ance bill
| 28,101,500.00 | 10,051,004.05 |
L/C
| 63,453,748.34 | 83,193,476.76 |
Total
| 91,555,248.34 | 93,244,480.81 |
2) No tes Receivable Endorsed by the Company or Discounted and not due on the Balance Sheet Date at the Period-end
Unit: RMB
Item Derecognized Amount at the period-end Non-derecognized amount at the period-endBank accept ance bill
| 122,902,178.11 |
Total
| 122,902,178.11 |
(2) Accounts Receivable
1) Accounts Receivable Clas sified by Category
Unit: RMB
Category
Ending balance Beginning balanceCarrying amount
Carrying
value
Carrying amount
| Bad debt provision |
Bad debt provision
Carrying
valueAmount
Proportio
n
Amount
Withdra
walproportio
n
Amount
Proportio
n
Amount
proportionAccounts receivablewithdrawal of baddebt provision of bycredit riskscharacteristics
332,953,
633.50
| Withdrawal | ||
100.00%
16,727,6
60.22
5.02%
316,225,9
73.28
| 322,076 |
,206.04
| 100.00% |
16,172,61
5.06
5.02%
| 305,903,59 |
0.98
Total
332,953,
633.50
100.00%
16,727,6
60.22
5.02%
316,225,9
73.28
| 322,076 |
,206.04
| 100.00% |
16,172,61
5.06
5.02%
| 305,903,59 |
0.98
Accounts receivable with significant single amount for which bad debt provision separately accrued at the period-end□ Applicable √ Not applicableAmong these groups, accounts receivable adopting aging analysis method to withdraw bad debt provision:
√ Applicable □ Not applicable
Unit: RMBAging
Ending balanceAccounts receivable Bad debt provision Withdrawal proportionSubtotal within 1 year
332,019,229.97
16,600,961.50
| 332,019,229.97 |
5.00%
1 to 2 years
| 601,819.84 |
60,181.99
| 10.00% |
2 to 3 years
66,516.73
| 332,583.69 | 20.00% |
Total
16,727,660.22
| 332,953,633.50 |
5.02%
Notes:
Among these groups, accounts receivable adopting balance percentage method to withdraw bad debt provision:
□ Applicable √ Not applicableAmong these groups, accounts receivable adopting other methods to withdraw bad debt provision:
2) Bad Debt Provision Withdrawal, Reversed or Recovered in the Reporting PeriodThe withdrawal amount of the bad debt provision during the Reporting Period was of RMB597,757.68; the amount of the reversed orcollected part during the Reporting Period was of RMB0.00.
597,757.68Significant amount of reversed or recovered bad debt provision: none3) Particulars of the Actual Verification of Accounts Receivable during the Reporting Period
Unit: RMBItem AmountAccounts receivable actually verified
Of which: s ig nificant actual verification of accounts receivable: noneNotes to verification of accounts receivable: none4) Top5 of the Ending Balance of the Accounts Receivable Collected according to Arrears PartyThe total top5 of th e ending balan ce of the accoun ts receivable co llected acco rding to arrears part y during th e Reporting P eriod wasRMB83,283,235.83 accounting for 25.01% of total ending balance of accounts receivable. The total ending balance of bad debtprovision withdrawn was RMB4,164,161.79.
2. Other Receivables
Unit: RMBItem Ending balance Beginning balanceInterest receivable
42,712.52
| 220,590.38 |
Other receiv ables
| 395,847,213.77 | 519,788,239.57 |
Total
| 395,847,213.77 | 520,008,829.95 |
(1) Interest Receivable
1) Category of Interest Receivable
Unit: RMBItem Ending balance Beginning balanceFix time deposit
| 220,590.38 |
Total
| 220,590.38 |
(2) Other Receivables
1) Other Receivables 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
Amount
Proportio
n
Amount
Withdrawal
proportionOther accountsreceivable withsignificant singleamount for whichbad debt pr ovisionseparately accrued
358,031,
837.54
89.82%
358,031,8
37.54
| 486,974 |
,195.33
| 93.16% | 486,974,19 |
5.33
Other accountsreceivable with d rawnbad debt pr ovisionaccording to creditrisks characteristics
40,576,2
64.00
10.18%
2,760,88
7.77
6.80%
37,815,37
6.23
| 35,729, |
408.00
| 6.84% |
2,915,363
.76
8.16%
| 32,814,044. |
Total
398,608,
101.54
100.00%
2,760,88
7.77
0.69%
395,847,2
13.77
| 522,703 |
,603.33
| 100.00% |
2,915,363
.76
0.56%
| 519,788,23 |
9.57
Other receivables with significant single amount for which bad debt provision separately accrued at the end of the period√ Applicable □ Not applicable
Unit: RMBOther receiv ables (by unit)
Ending balanceOther receiv ables Bad debt provision Withdrawal proportion Withdrawal reasonLu Thai (Vietnam) 280,680,488.53
no impairment for the
individual testLu A n Garments 77,351,349.01
no impairment for the
individual testTotal 358,031,837.54
-- --Among these groups, other receivables adopting aging analysis method to withdraw bad debt provision:
√ Applicable □ Not applicable
Unit: RMBAging
Ending balanceOther receiv ables Bad debt provision Withdrawal proportionSubtotal of within 1 year
1,792,237.58
| 35,844,751.49 |
5.00%
1 to 2 years
| 2,067,517.79 |
206,751.78
| 10.00% |
2 to 3 years
74,600.00
| 373,000.00 | 20.00% |
Over 3 years
687,298.42
| 2,290,994.72 | 30.00% |
Total
2,760,887.77
| 40,576,264.00 |
6.80%
Notes:
Among these groups, other receivables adopting balance percentage method to withdraw bad debt provision□ Applicable √ Not applicableAmong these groups, other receivables adopting other methods to withdraw bad debt provision:
□ Applicable √ Not applicable2) Bad Debt Provision Withdrawal, Reversed or Recovered in the Reporting PeriodThe withdrawal amount of the bad debt provision during the Reporting Period was of RMB-154,475.99; the amount of the reversedor collected part during the Reporting Period was of RMB0.00.Significant amount of reversed or recovered bad debt provision: none3) Other Receivables Classified by Nature
Unit: RMBNature Ending carrying amount Beginning carrying amountIntercourse funds
358,031,837.54
| 358,031,837.54 | 486,974,195.33 |
Expor t rebates
| 22,505,284.46 | 16,370,989.66 |
Payment on behalf
| 13,005,358.64 | 14,593,482.76 |
Guarantee deposit and cash deposit
| 3,221,373.64 | 2,532,658.50 |
Borrowings and petty cash
| 1,774,825.33 | 1,044,226.03 |
Other
| 69,421.93 | 1,188,051.05 |
Total
| 398,608,101.54 | 522,703,603.33 |
4) Top 5 of the Ending Balance of Other Receivables Collected according to the Arrears Party
Unit: RMBName of the entity Nature Ending balance Aging
balan ce of totaloth er r eceiv ables%
| Propor tion to e nding | Ending balance |
of bad debt
provisionLu Thai (Vietnam) Intercourse funds 280,680,488.53
Within 1year
70.41%
| 14,034,024.43 |
Lu A n Garments Intercourse funds 77,351,349.01
Within 1year
19.41%
| 3,867,567.45 |
Refund of tax for exportreceivable
Expor t rebates 22,505,284.46
Within 1year
5.65%
| 1,125,264.22 |
Accounts receivable ofadvance mone y for thesocial security undertake bythe individual of theemployee
Advance money for thesocial security undertake bythe individual of theemployee
5,536,517.43
Within 1year
1.39%
| 276,825.87 |
Advances of heating charge Advances 2,043,220.77
Within 1year
0.51%
| 102,161.04 |
Total --
-- 97.37%
| 388,116,860.20 | 19,405,843.01 |
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 | 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
| 96,018,463.65 | 96,018,463.65 | 97,536,732.02 | 97,536,732.02 |
Total
| 2,165,711,579.69 | 2,165,711,579.69 | 1,841,693,348.06 | 25,200,000.00 | 1,816,493,348.06 |
(1) Investment to Subsidiaries
Unit: RMBInvestee
Beginning
balance
Increase Decrease Ending balance
Depreciation
| reserve withdrawn |
Ending balanceof depreciation
reserveBeijing Innovative
| 25,200,000.00 |
25,200,000.00
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 Thai(Cambodia)
| 108,242,335.38 | 108,242,335.38 |
Lu Thai (America)
| 10,209,050.00 | 10,209,050.00 |
Lu Thai(Burma)
| 62,337,238.57 | 62,337,238.57 |
Beijing Youxian
4,500,000.00
| 13,500,000.00 | 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 |
(2) Investment to Joint Ventures and Associated Enterprises
Unit: RMB
Investee
Beginning
balance
Increase/decrease
Endingbalance
Endingbalance
ofdepreciati
onreserve
Additi
onalinvestment
Reduc
edinvestment
Gains and
lossesrecognizedunder theequity method
Adjustm
ent ofothercompreh
ensiveincome
Change
s ofotherequity
Cashbonus or
profitsannounced to issue
Withdra
wal ofimpairm
entprovisio
n
Other
I. Joint venturesII. Associated enterprisesHaohongInvestment
97,536,732.02
| 97,536,732.02 |
-1,518,268.37
96,018,463.65
Subtotal
| 97,536,732.02 |
-1,518,268.37
96,018,463.65
Total
| 97,536,732.02 |
-1,518,268.37
96,018,463.65
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
| 4,949,117,460.00 | 3,635,767,983.52 | 4,912,726,656.13 | 3,548,107,954.49 |
Other operations 285,754,682.46
| 242,349,589.43 |
233,769,456.41
| 187,951,747.92 |
Total 5,234,872,142.46
| 3,878,117,572.95 | 5,146,496,112.54 | 3,736,059,702.41 |
Other notes:
5. Investment Income
Unit: RMBItem Reporting Period Same period of last yearLong-term equity investm ent incomeaccounted by cost method
| 17,976,433.62 | 17,976,433.62 |
Long-term equity investm ent incomeacc ount e d by e qui ty method
-
-
| 1,518,268.37 | 2,463,267.98 |
Investment income generated from disposal
or loss
-
| of financial assets at fair value through profit | 47,564,384.05 | 4,858,596.97 |
Investment income from financial products
| 6,069,367.03 |
Total -
| 25,036,851.77 | 20,371,762.61 |
XVI. Supplementary Materials1. Items and Amounts of Non-recurring Profit or Loss
√ Applicable □ Not applicable
Unit: RMBItem Amount NoteGains/losses from the disposal of non-current assets
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
| 20,670,427.42 |
| 63,680,098.12 |
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
-
Other non-operating income and expense other than the above
| 63,632,606.67 |
| 2,784,021.34 |
Less: Incom e tax ef fe cts
Non-controlling interests effects
| 6,656,476.16 |
| 10,516,810.50 |
Total
--Explain the reasons if the Company classifies an ite m as an non-recurring gain/loss according to the definition in the ExplanatoryAnnouncement No. 1 on Information Disclosure for Companies Offering Their Securities to the Public—Non-recurring Gains andLosses, o r 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 Shar e
Profit as of Reporting Period Weighted average ROE (%)
EPS (Yuan/share)EPS-basic EPS-diluted
6,328,653.55Net profit attributable to ordinary
shareholders of the Company
| Net profit attributable to ordinary | 11.24% |
0.90
0.90
| Net profit attributable to ordinary shareholders of the Company after |
deduction of non-
loss
| recurring profit or | 11.15% |
0.90
0.90
Part XII Documents Available for Reference
1. The financial statements signed and stamped by the Company’s legal representative, Chief Accountant andFinancial Manager;2. The original copy of the Independent Auditors’ Report carrying the seal of the CPA firm, as well as the personalsignatures of the engagement certified public accountants.3. 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
L u Thai Textile Co., Ltd.
29 March 2019