Lu Thai Textile Co., Ltd. Annual Report 2017
LU THAI TEXTILE CO., LTD.
ANNUAL REPORT 2017
April 2018
1
Lu Thai Textile Co., Ltd. Annual Report 2017
Part I Important Notes, Table of Contents and Definitions
The Board of Directors (or the “Board”), the Supervisory Board as well as the Directors,
Supervisors and senior management of Lu Thai Textile Co., Ltd. (the “Company”) hereby
guarantee the factuality, accuracy and completeness of the contents of this Report, and shall
be jointly and severally liable for any misrepresentations, misleading statements or material
omissions in this Report.
Liu Zibin, the Company’s legal representative, Zhang Hongmei, the Company’s Chief
Accountant, and Zhang Keming, the Company’s Financial Manager hereby guarantee that
the Financial Statements carried in this Report are factual, accurate and complete.
Except for the following Directors, all the other Directors attended in person the Board
meeting for the review of this Report.
Reason for not attending in
Name Office title Proxy
person
Zeng Facheng Director For reason of work Xu Zhinan
Xu Jianjun Independent Director For reason of work ZhaoYao
Pan Ailing Independent Director For reason of work Wang Xinyu
Bi Xiuli Independent Director For reason of work ZhaoYao
The Company has described in detail in this Report the possible risks. Please refer to the
contents about the major risks and countermeasures in “Outlook of the Company’s future
development” in “Part IV Company Performance Discussion and Analysis” of this Report.
Securities Times, Shanghai Securities News, China Securities Journal, Ta Kung Pao (HK) and
www.cninfo.com.cn have been designated by the Company for its information disclosure in 2018.
And all information about the Company shall be subject to what’s disclosed on the aforesaid
media. Investors are kindly reminded to pay attention to investment risks.
Investors are advised to read the full text of this Report carefully and pay attention to the risk
warning and uncertainties stated in Part IV, “Outlook of the Company’s Future
Development”.
The Board has considered and approved the following dividend payout proposal for common
shareholders for the Reporting Period: based on the total shares of 922,602,311, a cash
dividend of RMB5.00 (tax inclusive) per 10 shares would be distributed to all the common
shareholders, with no share dividend.
This Report has been prepared in both Chinese and English. Should there be any
discrepancies or misunderstandings between the two versions, the Chinese version shall
prevail.
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Lu Thai Textile Co., Ltd. Annual Report 2017
Table of Contents
Part I Important Notes, Table of Contents and Definitions ........................................................... 2
Part II Company Profile and Key Financial Information.............................................................. 5
Part III Business Summary ............................................................................................................. 10
Part IV Company Performance Discussion and Analysis ............................................................ 13
Part V Significant Events ................................................................................................................ 32
Part VI Share Changes and Shareholder Information ................................................................. 50
Part VII Preferred Shares ............................................................................................................... 57
Part VIII Directors, Supervisors, Senior Management and Staff................................................ 58
Part IX Corporate Governance ...................................................................................................... 69
Part X Corporate Bonds .................................................................................................................. 79
Part XI Financial Statements .......................................................................................................... 80
Part XII Documents Available for Reference .............................................................................. 207
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Lu Thai Textile Co., Ltd. Annual Report 2017
Definitions
Term Definition
Lu Thai Textile Co., Ltd. and its consolidated subsidiaries, except where the
The “Company”, “Issuer” or “we”
context otherwise requires
Lu Thai Textile Co., Ltd. exclusive of subsidiaries, except where the context
Parent, Parent Company
otherwise requires
The Board of Directors The Board of Directors of Lu Thai Textile Co., Ltd.
The Supervisory Board The Supervisory Board of Lu Thai Textile Co., Ltd.
CSRC China Securities Regulatory Commission
RMB, RMB’0,000 In RMB yuan, in RMB ten thousand yuan
The “Company Law” The “Company Law of the People‘s Republic of China”
The “Securities Law” The “Securities Law of the People‘s Republic of China”
The “Reporting Period” or “Current Period” The period from January 1, 2017 to December 31, 2017
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Lu Thai Textile Co., Ltd. Annual Report 2017
Part II Company Profile and Key Financial Information
I Corporate Information
Stock name Lu Thai A, Lu Thai B Stock symbol 000726, 200726
Changed stock name (if any) N/A
Stock exchange Shenzhen Stock Exchange
Company name in Chinese 鲁泰纺织股份有限公司
Abbr. 鲁泰纺织
Company name in English (if
LU THAI TEXTILE CO., LTD.
any)
Abbr. (if any) LTTC
Legal representative Liu Zibin
Registered address No. 11, Mingbo Road, High-tech Industry Development Zone, Zibo, Shandong, P.R.China
Zip code 255086
No. 81, Songling East Road, Zichuan District, Zibo, Shandong, P.R.China; No. 11, Mingbo Road,
Office address
High-tech Industry Development Zone, Zibo, Shandong, P.R.China
Zip code 255100; 255086
Company website www.lttc.com.cn
Email address lttc@lttc.com.cn
II Contact Information
Board Secretary Securities Representative
Name Qin Guiling Zheng Weiyin and Li Kun
No. 81, Songling East Road, Zichuan No. 81, Songling East Road, Zichuan
Address
District, Zibo, Shandong, P.R.China District, Zibo, Shandong, P.R.China
Tel. 0533-5266188 0533-5285166
Fax 0533-5418805 0533-5418805
Email address qinguiling@lttc.com.cn wyzheng@lttc.com.cn，likun@lttc.com.cn
III Media for Information Disclosure and Place where this Report Is Kept
Newspapers designated by the Company for Securities Times, Shanghai Securities News, China Securities Journal and
information disclosure Ta Kung Pao (HK)
Website designated by CSRC for publication of this www.cninfo.com.cn
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Lu Thai Textile Co., Ltd. Annual Report 2017
Report
Place where this Report is kept The Securities Department of the Company
IV Company Registered Information and Alterations
Unified social credit code 91370300613281175K
Changes in main business scope of the
No changes
Company since going public (if any)
Changes of controlling shareholder (if any) No changes
V Other Information
The independent certified public accounting (or “CPA”) firm hired by the Company:
Name Ruihua Certified Public Accountants LLP
5-11F, West Tower, China Overseas Property Plaza, Block No. 7, Compound No. 8, Xibinhe
Office address
Road, Yongdingmen, Dongcheng District, Beijing, P.R.C.
Accountants writing signatures He Feng and Cui Xiaoli
The independent sponsor hired by the Company to exercise constant supervision over the Company in the Reporting Period:
□ Applicable √ Not applicable
The independent financial advisor hired by the Company to exercise constant supervision over the Company in the Reporting Period:
□ Applicable √ Not applicable
VI Key Financial Information
Indicate by tick mark whether there is any retrospectively restated datum in the table below.
√ Yes □ No
The reasons for the retrospective restatements:
Business mergers under the same control.
2017-over-201
2016 2015
2017 6 change
Before Restated Restated Before Restated
6,409,224,044. 5,981,751,344. 5,990,493,909. 6,173,322,778. 6,173,322,778.
Sales revenue (RMB) 6.99%
97 63 36 61 61
Net income attributable to
shareholders of the listed 841,150,934.75 805,446,326.99 808,760,025.91 4.01% 712,193,243.19 712,193,243.19
company (RMB)
Net income attributable to
780,637,833.47 759,471,125.12 762,785,364.02 2.34% 718,263,125.89 718,263,125.89
shareholders of the listed
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Lu Thai Textile Co., Ltd. Annual Report 2017
company before nonrecurring
gains and losses (RMB)
Net cash flows from operating 1,038,035,053. 1,310,765,281. 1,314,732,284. 1,027,595,404. 1,027,595,404.
-21.05%
activities (RMB) 43 28 45 34 34
Basic earnings per share
0.91 0.85 0.85 7.06% 0.75 0.75
(RMB/share)
Diluted earnings per share
0.91 0.85 0.85 7.06% 0.75 0.75
(RMB/share)
Weighted average return on
11.87% 11.71% 11.70% 0.17% 10.66% 10.66%
equity (%)
Change of
December 31,
December 31, December 31, 2016 2017 over December 31, 2015
2017 December 31,
2016
Before Restated Restated Before Restated
10,170,624,027 9,407,103,263. 9,464,604,315. 9,091,170,499. 9,091,170,499.
Total assets (RMB) 7.46%
.75 34 39 22 22
Equity attributable to
7,230,942,770. 6,937,985,729. 6,970,913,125. 6,837,113,075. 6,837,113,075.
shareholders of the listed 3.73%
16 19 59 58 58
company (RMB)
VII Accounting Data Differences under Chinese Accounting Standards (CAS) and
International Financial Reporting Standards (IFRS) and Foreign Accounting Standards
1. Net Income and Equity Differences under CAS and IFRS
√ Applicable □ Not applicable
Unit: RMB
Net income attributable to shareholders of the Equity attributable to shareholders of the listed
listed company company
2017 2016 Closing amount Opening amount
Under CAS 841,150,934.75 808,760,025.91 7,230,942,770.16 6,970,913,125.59
Adjustments as per IFRS
Impact on domestic equipment
tax credit recognized as 329,000.00 725,000.00 -329,000.00
deferred income under IFRS
Under IFRS 841,479,934.75 809,485,025.91 7,230,942,770.16 6,970,584,125.59
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Lu Thai Textile Co., Ltd. Annual Report 2017
2. Net Income and Equity Differences under CAS and Foreign Accounting Standards
□ Applicable √ Not applicable
No such differences for the Reporting Period.
3. Reason for Accounting Data Differences under CAS and Foreign Accounting Standards
□ Applicable √ Not applicable
VIII Key Financial Information by Quarter
Unit: RMB
Q1 Q2 Q3 Q4
Sales revenue 1,273,058,505.40 1,717,401,191.03 1,631,824,401.03 1,786,939,947.51
Net income attributable to
157,994,708.53 235,075,273.02 197,038,648.01 251,042,305.19
shareholders of the listed company
Net income attributable to
shareholders of the listed company
155,049,414.60 230,031,743.85 179,229,437.40 216,327,237.62
before nonrecurring gains and
losses
Net cash flows from operating
-73,576,928.32 416,496,686.62 491,110,150.27 204,005,144.86
activities
Indicate by tick mark whether any of the financial data in the table above or their summations differs materially from what have been
disclosed in the Company’s quarterly or semi-annual reports.
□ Yes √ No
IX Nonrecurring Gains and Losses
√ Applicable □ Not applicable
Unit: RMB
Item 2017 2016 2015 Note
Gains and losses on disposal of non-current
assets (inclusive of offset allowance for -1,326,737.85 -8,321,693.49 -4,666,157.56
asset impairments)
Government subsidies charged to current
profit and loss (exclusive of government
subsidies given in the Company’s ordinary
66,031,583.92 64,121,633.01 43,266,788.43
course of business at fixed quotas or
amounts as per government’s uniform
standards )
Current gains and losses on subsidiaries
4,145,908.17
acquired through business mergers under
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Lu Thai Textile Co., Ltd. Annual Report 2017
same control from period-beginning to
merger dates, net
Gains and losses on changes in fair value of
trading financial assets and liabilities &
investment income from disposal of trading
financial assets and liabilities and 4,794,598.32 3,212,471.16 -29,145,915.85
available-for-sale financial assets (exclusive
of effective portion of hedges that arise in
the Company’s ordinary course of business)
Non-operating revenue and expense other
4,638,779.84 3,925,471.62 3,432,535.47
than above
Less: Income tax effects 8,690,224.28 3,065,544.25 12,302,309.25
Non-controlling interests effects (net
9,080,806.84 13,897,676.16 6,654,823.94
of tax)
Total 60,513,101.28 45,974,661.89 -6,069,882.70 --
Explanation of why the Company classifies an item as a nonrecurring gain/loss according to the definition in the Explanatory
Announcement No. 1 on Information Disclosure for Companies Offering Their Securities to the Public—Nonrecurring Gains and
Losses, or reclassifies any nonrecurring gain/loss item listed in the said explanatory announcement as a recurring gain/loss:
□ Applicable √ Not applicable
No such cases for the Reporting Period.
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Lu Thai Textile Co., Ltd. Annual Report 2017
Part III Business Summary
I Main Business Scope of the Company in Reporting Period
Is the Company subject to any disclosure requirements for special industries?
No.
Lu Thai, unremittingly taking “creating wealth, contributing to the society, clothing the country and boosting the development of the
world” as its mission, has been practicing the value of “people foremost policy, rigorous scientific attitude, client oriented principle
and integrity for win-win outcome” for a long time. It is devoted to improving and expanding its industrial chain, making it a
renowned textile and garment business group combing cotton breeding, spinning, bleaching and dyeing, neatening, testing, garment
making and marketing. Lu Thai produces and sells middle and high-grade yarn-dyed fabric and dyeing fabric for shirts and garment.
It claimed its fame for its comprehensive management, R&D ability, advanced technology, international development plan and stable
quality. Moreover, it also attaches great importance to improve the added value of its products, explore the emerging market and
renew its service philosophy. With natural fabric as its flagship, multi-component functional fiber fabric as its spearhead and
wash-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 had already become the largest world renowned manufacturer for high-grade yarn dyed fabric and premium-brand shirts. It
had paved its development pattern featured in going green, low-carbon growth, science and technology and humanism. Its operation
performance was always among the top comparing to its peers. 80% of Lu Thai’s products were exported over 30 countries and
regions in the world, including America, EU and Japan. The export percentage for high-grade yarn dyed fabric--a self-owned brand
attained 70% of its export volume, accounting for 18% of the world’s export market.
II Significant Changes in Major Assets
1. Significant Changes in Major Assets
Major assets Reason for significant changes in the period
Long-term equity investments stood at RMB97,536,732.02 on December 31, 2017, up
100.00% compared to the opening amount, primarily driven by the new investment by
Equity assets
the Parent Company in Ningbo Meishan Bonded Port Area Haohong Equity Investment
Partnership (L.P.) in the Current Period.
Engineering materials stood at RMB56,913,806.06 on December 31, 2017, down 51.41%
Engineering materials compared to the opening amount, primarily driven by the decrease in Lu Thai Vietnam’s
equipment to be installed.
2. Major Assets Overseas
√ Applicable □ Not applicable
Asset Source Value Location Operating Measures Earnings As a Major
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Lu Thai Textile Co., Ltd. Annual Report 2017
model taken to generated percentage of impairment
ensure asset the risk
safety Company’s
net value (%)
Main
Lu Thai
management
(Hong Kong) 149,293,602.
Incorporated Hong Kong Marketing personnel 1,864,122.58 1.92% None
Textile Co., 65
sent by the
Ltd.
Company
Main
Lu Thai
management
(America)
Incorporated 7,467,403.40 New York Marketing personnel -874,210.66 0.10% None
Textile Co.,
sent by the
Ltd.
Company
Main
Lu Thai
management
(Cambodia) 141,093,933. Manufacturin
Incorporated Svay Rieng personnel 6,960,560.40 1.81% None
Textile Co., 46 g
sent by the
Ltd.
Company
Main
Lu Thai
management
(Burma) 80,653,559.5 Manufacturin
Incorporated Rangoon personnel -3,895,125.02 1.04% None
Textile Co., 7 g
sent by the
Ltd.
Company
Main
Lu Thai
management
(Vietnam) 964,981,422. Manufacturin
Incorporated Tay Ninh personnel -3,299,669.64 12.41% None
Textile Co., 42 g
sent by the
Ltd.
Company
Main
Lu An management
109,097,323. Anjiang, Manufacturin -12,333,879.4
Garments Incorporated personnel 1.40% None
90 Vietnam g 9
Co., Ltd. sent by the
Company
III Core Competitiveness Analysis
Is the Company subject to any disclosure requirements for special industries?
No.
The comprehensive management ability, research and development ability, technological accumulation and global planning of the
Company’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,
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Lu Thai Textile Co., Ltd. Annual Report 2017
dyeing, weaving and post-processing to cloth manufacturing, and thus enjoys the cost advantage brought by complete steps for
producing high-end dyed textile. The Company has set up production bases in Cambodia, Burma, Vietnam, etc., a design agency in
Italy and a market service agency in America, which helps give full play to its international resources, form a global business
network 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 ISO9000
quality management system, ISO14000 environmental management system, OHSAS18000 occupational health safety management
system, and SA8000 social accountability management system successively from 1995. Ever since 2007, the Company has also
passed WRAP: 1999 global garment production social accountability standard, C-TPAT: 2004 anti-terrorism standard, OE100 and
GOTS organic cotton system certification and CNAS national laboratory recognition, to realize the internationalization and
standardization of the Company’s management. In order to pursue the operational management of performance excellence and better
the Company’s performance and capability, the Company has gradually introduced GB/T19580-2004 -Standards for Performance
Excellence Evaluation, created “Great Quality” system and promoted management innovation, to ensure the Company’s business
quality.
3. It enjoyed strong R&D capability and high-end technological platform for cooperation. The Company highly valued
self-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 Thai
also reinforced its technical cooperation with scientific research institutes, colleges and universities, strategic clines and major
suppliers. It was committed to cutting-edge technical research, and transformed itself from product development to technical
researches step by step. What’s more, the Company also upgraded itself from overcoming key technological difficulties to master
technical principles and set up industrial standards. In the past, it only focused on technical innovation, but now, it is exploring new
technology on one hand and boosting innovation on the other for better growth. Consequently, the Company pushed forward its
development in a green, low-carbon and cyclic manner and strengthened its vitality and growing momentum. Meanwhile, the share
of 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 Company
comprehensively enhanced its quality control so as to persistently provide high standard service and set up an industry-leading brand
image, which, in return, could help to win customer’s satisfaction and market recognition. Quality awareness was weaved into every
step of the manufacturing process and the impeccable quality traceability ensured product reputation. Objective analysis and thinking
in the customer’s perspective was the Company’s service rule, which also helped to win the customers’ trust.
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Lu Thai Textile Co., Ltd. Annual Report 2017
Part IV Company Performance Discussion and Analysis
I Overview
In 2017, the Company continued to push forward its strategies of “Improve Quality and Efficiency” and “Overall
Internationalization”. It kept improving its management capability to ensure a highly efficient production and operation system
through improvements through the system, adoption of an excellent performance-promoted model, great efforts in improving the Lu
Thai Production System (LTPS), and systematic supply chain management. In 2017, the Company established a global management
and control information platform to further promote the integration of “information technology and industrialization” within the
Company. Additionally, it continued to pursue high-tech, stylish and green products, adopt a low-carbon, sustainable development
model, and actively take on social responsibility.
For 2017, the Company recorded sales revenue of RMB6.409 billion, operating income of RMB1.001 billion, net income attributable
to its shareholders of RMB841 million, and net income before non-recurring gains and losses of RMB781 million, up 6.99%, 3.96%,
4.01% and 2.34% respectively compared to 2016. During the Reporting Period, the main business and main profit sources and their
structures of the Company remained unchanged.
During the Reporting Period, the Company built an internationalized management and control information platform for integration
informatization and industrialization. It had successively constructed and implemented a series of information management and
control platforms and system software such as APS advanced planning application, cotton sorting process management system, group
procurement and inventory management information platform and cost management system, customs supervision information
platform and new OA system. The independently developed " yarn-dyed fabric full process industrial control system V1.0" with a
multi-network integration, group management and control, multi-language support, remote control and other functions was granted
the computer software copyright. This system can be popularized and applied as a module in yarn-dyed factories. In addition, the
ERP established by the Company can achieve interconnection with the customs information system to establish a customs
supervision information platform for automatic sending of customs declaration data, building a rapid customs clearance capability,
and thus the Company becomes the first pilot enterprise of work order reporting in the textile industry. During the Reporting Period,
the Company was named "Demonstration Enterprise of Textile Industry on Smart Manufacturing Practice for 2017" by the China
Textile Engineering Society, and also was named "Demonstration Enterprise on Manufacturing Item Champion" by the Ministry of
Industry and Information Technology and China Federation of Industrial Economics.
During the Reporting Period, in terms of R&D and innovation, the Company focused on the overall strategic goal to tackle the
problems of "bottleneck" technology. In 2017, 226 technical projects of the Company were initiated, covering areas of spinning,
weaving, dyeing, treatment, garment manufacturing, energy, environmental protection, information and branding, among which, the
projects of "research and application development of key technologies for yarn and fabric color digitization" and "R&D and
industrial application of key technologies for salt-free dyeing of reactive dyes" won the first prize in scientific and technological
progress granted by the China National Textile And Apparel Council. For new product development, 16 projects were initiated by the
Company, among which the development of 37.5 temperature control products, Lu Thai durable white fabrics, wrinkle-free products
and freon-free waterproof products had all been successfully completed and the Company had received orders of mass production. In
2017, the projects of "key processing technology of high quality easy-care cotton fabric" and "key technology and application of
hygroscopic quick-drying comfortable fabric production" jointly developed by the Company and Jiangnan University, Donghua
University and other universities were recognized as the "13th Five-Year" national key research projects, and both projects had been
launched for implementation. In 2017, the Company was awarded 3 prizes in scientific and technological progress granted by the
China National Textile And Apparel Council, participated in the formulation of 6 national and industrial standards, and was granted
22 licensing patents. Up to now, the Company has successfully developed more than 600 new technologies and new products, among
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Lu Thai Textile Co., Ltd. Annual Report 2017
which 46 products have passed the provincial and ministerial level scientific and technological achievements appraisal, including 12
international leading items and 29 international advanced items. Moreover, the Company was granted 49 national, provincial and
ministerial awards, and undertook 17 science and technology projects above provincial and ministerial level and 11 major research
projects of national and provincial level. In addition, the Company was granted 289 licensing patents 1 software copyright, and
hosted or participated in the formulation of 38 national and industrial standards.
During the Reporting Period, in terms of green environmental protection, the Company held the development concept of innovation,
coordination, green, open and sharing. It implemented the basic national policy of resource conservation and environmental
protection, and aimed to increase energy efficiency and develop energy-saving production processes. The Company intended to
accelerate the construction of a resource-saving and environment-friendly society to achieve win-win in economic development and
environmental improvement and provide strong support for ecological civilization establishment. Based on the management model of
"source governance, process management and control, and end governance", the Company made great efforts on recovery and
comprehensive utilization of ammonia, alkali and PVA as well as odor and waste gas treatment, greatly improving the surrounding
environmental quality and occupational health and safety of company workplaces. The Company had made chemicals and chemical
substances available for inspection and control, and ensured the traceability of chemical substances in fabric products. It had been
awarded the honorary title of "Operation Leading Enterprise in Supply Chain Chemical Management Innovation 2020" granted by
CNTAC-ZDHC.
In 2017, the Company continued to improve its pollution control facilities and upgraded its waste-water treatment facilities to reduce
the total COD emissions by 14.9% year-on-year. The treated water quality was superior to the national Class A emission standards.
Honors such the "Advanced Energy-saving Enterprise in Shandong", "Water Efficiency Leader of Key Water-use Enterprises" and
"Industry Leading Unit of The Fourth Low Carbon Shandong" were granted to the Company. The Company set up a steering group
to be in charge of water-saving management, established a long-term water-saving management mechanism, and carried out
water-use processes and technical improvements to improve utilization efficiency of water resources and reduce water consumption
of unit product. Therefore, the water use indicators and product water consumption indicators of the Company were lower than the
average level of water-saving enterprises.
During the Reporting Period, in terms of innovation management, the Company launched the Lu Thai Production System (LTPS)
and focused on the basic guideline of "Building new dynamics for economic development with quality improvement". It levered
potential tapping, quality and efficiency improvement, development difficulties solving, transformation and upgrading by the
implementation of excellent performance and LTPS for the development of new dynamics. In order to solve the seven major
problems on wastes, six pilot plants were established for the three major production systems of yarn-dyed, garment production, and
printing and dyeing, where work plans were determined and implemented focused on quality, delivery, inventory and low cost for
improvement. The Company performed quarterly evaluations of the 39 plants of the Group on the three production systems from the
perspectives of 6S and visual management, TPM management, on-site control indicators and LTPS improvement, and granted
rewards for encouragement. Moreover, the Company continued to carry out company-level management improvement projects by
organizing internal and external experts to establish 149 management projects to further improve management efficiency by the
promotion and development of the projects.
During the Reporting Period, in the promotion of independent design, the Company made full use of domestic and foreign resource
advantage and followed the "market + design" concept to carry out targeted fabrics and clothing R&D and design based on the
diversity of customer needs. In 2017, the Industrial Design Center of the Company was recognized as a national industrial design
center by the Ministry of Industry and Information Technology. At the same time, the Company was awarded the "National Fashion
Research Center for Yarn-dyed Fabrics" by the China Textile Information Center (TIC) and China Textiles Development Center. As
the only national trend research center for yarn-dyed fabrics, the Company publishes fabric fashion trends for the industry every two
quarters each year. In 2017, the Company won the "Product Development Contribution Award of China National Textile And
Apparel Council". The Lu Thai GRFF pure cotton fabric was recommended by the China Cotton Textile Industry Association as the
"Most Influential Product Brand" of China's cotton textile industry in 2017. In addition, in the "2017 China International Fashion
14
Lu Thai Textile Co., Ltd. Annual Report 2017
Fabric Design Competition", the design of the Company "Time Fusion" won the "Best Cotton Textile Technology Innovation
Award" and the design "Cross the Jungle" won the "Best Market Application Award". The printed fabrics "Falling Petals" and "Blue
Waves" developed by the holding subsidiary of the Company, Lufeng Weaving & Dyeing, won the "Best Market Application
Award" and "Best Environmental Technology Application Award". The company design works "Chalk Coloring", "Chess and
Blossom Charm", "Lines in the Green Wood" and "Essence of Nature" won the "Excellent Award for Spring/Summer Chinese
Fashion Fabrics 2018". The works of the Company "Secondary Fusion", "Dazzling Camouflage", "Iron Jungle" and "Dream Magic",
"Illusions", "Dreaming the Operatic Circle" and "The Field" of the holding subsidiary Lufeng Weaving & Dyeing won the
"Excellence Award for Autumn/Winter Chinese Fashion Fabric 2018/19".
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 internationalized
industrial manufacturing as its basis, is sparing every effort to attain a global integrated development, so as to ensure its leading
position in the yarn-dyed shirt fabric sector.
II Analysis of Main Business
1. Summary
For the Reporting Period, the Company recorded sales revenue of RMB6.409 billion (a 6.99% year-over-year increase); cost of sales
of RMB4.477 billion (an 11.73% year-over-year increase), including selling expense of RMB144 million (a 9.32% year-over-year
drop) and administrative expense of RMB652 million (a 1.49% year-over-year drop); research and development expense of RMB328
million (a 13.31% year-over-year increase); and net cash flows from operating activities of RMB1.038 billion (a 21.05%
year-over-year drop).
2. Revenue and Cost
(1) Breakdown of Sales Revenue
Unit: RMB
2017 2016
As a percentage of As a percentage of
Change
Sales revenue total sales revenue Sales revenue total sales revenue
(%) (%)
Total 6,409,224,044.97 100% 5,990,493,909.36 100% 6.99%
By operating division
Textile and Apparel 5,906,736,459.03 92.16% 5,559,988,040.46 92.81% 6.24%
Cotton 35,606,856.03 0.56% 12,617,667.25 0.21% 182.20%
Electricity and steam 103,870,652.93 1.62% 111,228,572.38 1.86% -6.62%
Others 363,010,076.98 5.66% 306,659,629.27 5.12% 18.38%
By product category
Fabric products 4,624,849,307.12 72.16% 4,342,679,194.97 72.49% 6.50%
Shirts 1,281,887,151.91 20.00% 1,217,308,845.49 20.32% 5.31%
15
Lu Thai Textile Co., Ltd. Annual Report 2017
Cotton 35,606,856.03 0.56% 12,617,667.25 0.21% 182.20%
Electricity and steam 103,870,652.93 1.62% 111,228,572.38 1.86% -6.62%
Others 363,010,076.98 5.66% 306,659,629.27 5.12% 18.38%
By operating segment
Hong Kong 246,434,343.62 3.84% 243,268,777.10 4.06% 1.30%
Japan And South
413,874,632.85 6.46% 367,116,617.59 6.13% 12.74%
Korea
Southeast Asia 1,976,448,225.47 30.84% 1,973,589,974.34 32.95% 0.14%
Europe and America 1,044,242,539.46 16.29% 1,065,910,735.22 17.79% -2.03%
Others 376,849,171.78 5.88% 429,694,336.29 7.17% -12.30%
Mainland China 2,351,375,131.79 36.69% 1,910,913,468.82 31.90% 23.05%
(2) Operating Division, Product Category or Operating Segment Contributing over 10% of Sales Revenue
or Income
√ Applicable □ Not applicable
Is the Company subject to any disclosure requirements for special industries?
No.
Unit: RMB
YoY change in
Gross margin YoY change in YoY change in
Sales revenue Cost of sales gross margin
percentage sales revenue cost of sales
percentage
By operating division
Textile and
5,906,736,459.03 4,090,113,368.00 30.76% 6.24% 10.12% -2.44%
apparel
By product category
Fabric products 4,624,849,307.12 3,170,487,809.95 31.45% 6.50% 10.09% -2.23%
Shirts 1,281,887,151.91 919,625,558.05 28.26% 5.31% 10.24% -3.21%
By operating segment
Southeast Asia 1,976,448,225.47 1,355,637,274.13 31.41% 0.14% 3.54% -2.25%
Europe and
1,044,242,539.46 738,077,277.54 29.32% -2.03% 2.33% -3.01%
America
China 2,351,375,131.79 1,660,758,668.76 29.37% 23.05% 29.80% -3.68%
Main business data of the previous year restated according to the changed statistical caliber for the Reporting Period
□ Applicable √ Not applicable
16
Lu Thai Textile Co., Ltd. Annual Report 2017
(3) Whether Revenue from Physical Sales Is Higher than Service Revenue
√ Yes □ No
Operating division Item Unit 2017 2016 Change
Sales volume (0,000 meters) 23,921.03 22,035.33 8.56%
Textile and fabric Output (0,000 meters) 26,614.99 25,185.85 5.67%
Stock (0,000 meters) 2,790 3,286.52 -15.11%
Sales volume (0,000 pieces) 1,962.29 1,844.13 6.41%
Textile and apparel Output (0,000 pieces) 1,914.08 1,856.04 3.13%
Stock (0,000 pieces) 105.56 126.66 -16.66%
Sales volume (ton) 2,110.48 618.91 241.00%
Cotton Output (ton) 16,737.17 11,013.71 51.97%
Stock (ton) 8,092.61 3,760.35 115.21%
Sales volume (000 KWH) 65,661.68 95,570.01 -31.29%
Electricity Output (000 KWH) 401,967.71 406,457.36 -1.10%
Stock (000 KWH)
Sales volume (ton) 307,504.69 318,171.76 -3.35%
Steam Output (ton) 1,235,609.78 1,235,811.79 -0.02%
Stock (ton)
Reason for any over 30% YoY movements in the data above
√ Applicable □ Not applicable
1. Sales volume of cotton in 2017 increased by 241.00% as compared with last year, mainly due to the increase of external cotton
sales from related companies of Xinjiang Lu Thai.
Output in 2017 increased 51.97% as compared with last year, mainly because most of the seed cotton purchased by Xinjiang Lu Thai
in 2016 that was in rolling season (2016.9-2017.3) was produced and warehoused in 2017, which was influenced by public inspect of
cotton
Stock in 2017 increased 115.21% as compared with last year, mainly due to the newly added production line of Xinjiang Lu Thai
Textile in 2018, and the increase of inventory to produce cotton yarn.
2. Sales volume of electricity in 2017 decreased 31.29% as compared with last year, mainly due to the decrease of non-related sales
of electricity of Xinsheng Thermal Power.
(4) Execution Progress of Major Signed Sales Contracts in Reporting Period
□ Applicable √ Not applicable
(5) Breakdown of Cost of Sales
By operating division and product category
Unit: RMB
17
Lu Thai Textile Co., Ltd. Annual Report 2017
2017 2016
Operating Percentage of Percentage of
Item Change
division Cost of sales total cost of sales Cost of sales total cost of sales
(%) (%)
Textile and
Cost of sales 4,090,113,368.00 91.36% 3,714,143,672.96 92.69% 10.12%
apparel
Cotton Cost of sales 32,882,009.84 0.73% 11,742,505.52 0.29% 180.03%
Electricity and
Cost of sales 110,812,770.78 2.48% 96,995,072.89 2.42% 14.25%
steam
Other Cost of sales 243,239,636.06 5.43% 184,220,439.28 4.60% 32.04%
Unit: RMB
2017 2016
Percentage of Percentage of
Product category Item Change
Cost of sales total cost of sales Cost of sales total cost of sales
(%) (%)
Fabric products Cost of sales 3,170,487,809.95 70.82% 2,879,947,896.50 71.87% 10.09%
Shirts Cost of sales 919,625,558.05 20.54% 834,195,776.46 20.82% 10.24%
Cotton Cost of sales 32,882,009.84 0.73% 11,742,505.52 0.29% 180.03%
Electricity and
Cost of sales 110,812,770.78 2.48% 96,995,072.89 2.42% 14.25%
steam
Other Cost of sales 243,239,636.06 5.43% 184,220,439.28 4.60% 32.04%
Note:
Manufacture
Product Period Raw material Labor cost Depreciation Energy Total
expenses
2017 55.02% 17.51% 5.41% 13.47% 8.59% 100.00%
Fabric
2016 54.82% 17.01% 5.22% 12.86% 10.09% 100.00%
2017 55.53% 37.50% 2.16% 0.92% 3.89% 100.00%
Shirts
2016 57.10% 37.24% 2.07% 0.83% 2.76% 100.00%
(6) Change in Scope of Consolidated Financial Statements for Reporting Period
√ Yes □ No
Chengshun Thermal Power, a subsidiary of Xinsheng Thermal Power, was added into consolidated financial statements.
(7) Major Change in Business Scope or Product or Service Range in Reporting Period
□ Applicable √ Not applicable
18
Lu Thai Textile Co., Ltd. Annual Report 2017
(8) Main Customers and Suppliers
Main customers:
Total sales to top 5 customers (RMB) 1,160,240,554.18
Ratio of total sales to top 5 customers to annual total sales
18.10%
(%)
Ratio of total sales to top 5 customers to annual total sales
0.00%
from the related party (%)
Information about the top 5 customers
Serial No. Name of customer Sales (RMB) Proportion in annual total sales (%)
1 SBT 341,377,693.23 5.33%
2 OLYMP 232,356,968.38 3.63%
3 TAL 230,952,151.17 3.60%
CHENFENG (JIANGSU) GARMENT CO.,
4 177,860,580.60 2.78%
LTD.
5 PVH-PTU 177,693,160.80 2.77%
Total -- 1,160,240,554.18 18.10%
Other information about the main customers
□ Applicable √ Not applicable
Main suppliers
Total purchases from top 5 suppliers (RMB) 722,284,106.95
Ratio of total purchases from top 5 suppliers to annual
16.88%
total purchases (%)
Ratio of total purchases from top 5 suppliers to annual
0.00%
total purchases from related party (%)
Information about the top 5 suppliers
Serial No. Name of supplier Purchase amount (RMB) Proportion in annual total purchases (%)
ZIBO POWER SUPPLY COMPANY OF
1 STATE GRID SHANDONG ELECTRIC 187,900,456.31 4.39%
POWER COMPANY
2 ALLENBERG COTTON CO. 171,370,321.64 4.00%
AKSU YONGXING COTTON
3 146,639,967.60 3.43%
INDUSTRY CO., LTD
JESS SMITH AND SONS COTTON,
4 126,625,297.40 2.96%
LLC
XINJIANG PRODUCTION AND
5 89,748,064.00 2.10%
CONSTRUCTION CORPS COTTON
19
Lu Thai Textile Co., Ltd. Annual Report 2017
AND LINEN COMPANY
Total -- 722,284,106.95 16.88%
Other information about the main suppliers
□ Applicable √ Not applicable
3. Expense
Unit: RMB
2017 2016 Change Reason for material change
Selling expenses 144,061,780.39 158,869,993.22 -9.32%
Administrative expenses 651,530,968.94 661,355,141.82 -1.49%
Increase of exchange losses resulting
Finance costs 63,342,671.31 20,949,153.10 202.36%
from changes in exchange rate
4. R&D Input
√ Applicable □ Not applicable
With leading the technology development in the industry as the goal, the research staff of the Company work hard in new product
development, new technology promotion and transformation of new technological results to productivity to explore ways for
transforming the business mode, adjusting the structure and extending the industrial chain. These efforts will promote the Company’s
development towards an energy-saving and environment-friendly enterprise and truly achieve the sustainable development.
Particulars about the R&D input
2017 2016 Change
Number of R&D personnel 1,673 1,703 -1.76%
R&D personnel as a percentage
11.72% 10.81% 0.91%
of total employees
R&D expense (RMB) 328,403,990.29 289,826,541.83 13.31%
R&D expense as a percentage
5.12% 4.84% 0.28%
of sales revenue
Capitalized R&D expense
0.00 0.00 0.00%
(RMB)
Capitalized R&D expense as a
percentage of total R&D 0.00% 0.00% 0.00%
expense
Reason for any significant YoY change in the proportion of R&D expense in sales revenue:
□ Applicable √ Not applicable
Reason for any sharp variation in the percentage of the capitalized R&D expense and rationale
□ Applicable √ Not applicable
5. Cash Flows
Unit: RMB
20
Lu Thai Textile Co., Ltd. Annual Report 2017
Item 2017 2016 Change
Subtotal of cash generated by
6,543,494,895.58 6,183,425,459.46 5.82%
operating activities
Subtotal of cash used in
5,505,459,842.15 4,868,693,175.01 13.08%
operating activities
Net cash flows from operating
1,038,035,053.43 1,314,732,284.45 -21.05%
activities
Subtotal of cash generated by
84,563,735.04 34,625,847.40 144.22%
investing activities
Subtotal of cash used in
828,490,043.09 914,985,442.61 -9.45%
investing activities
Net cash flows from investing
-743,926,308.05 -880,359,595.21 15.50%
activities
Subtotal of cash generated by
2,389,256,879.43 2,254,527,867.50 5.98%
financing activities
Subtotal of cash used in
2,626,785,842.65 2,807,150,042.60 -6.43%
financing activities
Net cash flows from financing
-237,528,963.22 -552,622,175.10 57.02%
activities
Net increase in cash and cash
17,523,075.19 -109,710,957.16 115.97%
equivalents
Main influence factors for any significant YoY changes in the items above
√ Applicable □ Not applicable
During the Reporting Period, cash generated by operating activities was RMB84,563,735.04 with a year on year increase of 144.22%,
mainly due to the recovery and sales of marketable securities; net increase in cash and cash equivalents was RMB17,523,075.19 with
a year on year increase of 115.97%, mainly due to the increase of net cash flows from financing activities, and decrease of payment
of cash for debt and the repurchase of paying B share in the same period of last year.
Reasons for any big difference between the net operating cash flows and the net profits in the Reporting Period
□ Applicable √ Not applicable
III Non-Core Business Analysis
√ Applicable □ Not applicable
Unit: RMB
Percentage of pretax
Amount Source/Reason Recurring or not
income (%)
Gains on delivery and losses
on equity investment of
Investment income 2,331,330.34 0.23% financial assets (financial No
liabilities) such as forward
exchange settlement
21
Lu Thai Textile Co., Ltd. Annual Report 2017
Inventory falling price
Asset impairments 37,330,674.24 3.72% provision, fixed assets No
impairment provision, etc
Non-operating
12,122,767.09 1.21% Claims for compensations No
income
Non-operating Donations, losses on damage
9,022,725.64 0.90% No
expense of non-current assets
IV Analysis of Assets and Liabilities
1. Material Change in Asset Composition
Unit: RMB
December 31, 2017 December 31, 2016
Change in
Percentage of Percentage of
percentag Reason for material change
Value total assets Value total assets
e (%)
(%) (%)
693,989,293.3
Monetary funds 6.82% 667,304,702.34 7.05% -0.23%
8
Accounts 334,080,524.0
3.28% 293,129,727.93 3.10% 0.18%
receivable 5
2,100,661,221. 1,817,542,870.
Inventories 20.65% 19.20% 1.45%
93 99
Investing real
24,563,544.58 0.24% 25,844,090.56 0.27% -0.03%
estate
Long-term equity
97,536,732.02 0.96% 0.00% 0.96%
investment
5,421,295,850. 5,273,148,708.
Fixed assets 53.30% 55.71% -2.41%
03 20
Construction in 157,421,820.6
1.55% 177,075,655.16 1.87% -0.32%
progress 8
Short-term 1,135,124,996.
11.16% 873,261,856.02 9.23% 1.93%
borrowings 40
Long-term
0.00% 135,678,044.89 1.43% -1.43%
borrowings
2. Assets and Liabilities Measured at Fair Value
√ Applicable □ Not applicable
Unit: RMB
22
Lu Thai Textile Co., Ltd. Annual Report 2017
Gains/losses on
Cumulative fair Allowance for
fair value Purchased in Sold in
Opening value changes impairment for Closing
Item changes in Reporting Reporting
balance charged to Reporting balance
Reporting Period Period
equity Period
Period
Financial assets
1. Financial
assets measured
at fair value of
which changes
are recorded
0.00 33,000.00 60,000,000.00 60,330,000.0
into current
gains/losses
(excluding
derivative
financial assets)
Subtotal of
0.00 33,000.00 60,000,000.00 60,330,000.0
financial assets
Total of above 0.00 33,000.00 60,000,000.00 60,330,000.0
Financial
0.00 0.00
liabilities
Material change in the measurement attributes of the main assets in the Reporting Period:
□ Yes √ No
3. Restricted Asset Rights as of End of Reporting Period
Xinjiang Lu Thai, the subsidiary of the Company, took book value of RMB248,632,100.00 inventory, RMB4,316,209.51 fixed asset,
and RMB103,162,544.14 land use right as mortgage, and RMB16,000,000.00 certificate of deposit as pledge to obtain the short-term
borrowings from Bank of RMB440,000,000.00.
Monetary fund RMB1,350,080.52 whose ownership was restricted, of which, RMB1,200,000.00 was the deposit to handle the letter
of credit of Xinjiang Lu Thai; RMB150,080.52 was the deposit to handle the letter of guarantee of the Company’s subsidiary of
Lufeng Weaving & Dyeing.
V Investments Made
1. Total Investment Amount
√ Applicable □ Not applicable
Total investment amount of Reporting Total investment amount of last year
Change
Period (RMB) (RMB)
100,000,000.00 0.00 100.00%
23
Lu Thai Textile Co., Ltd. Annual Report 2017
2. Material Equity Investments Made in Reporting Period
√ Applicable □ Not applicable
Unit: RMB
Investm Return Index
Main The
Source ent on Any to
busines Amoun Compa Project
Way of of Term of Type of progres investm legal Disclos disclose
Investe s scope t of ny’s Joint ed
investm investm investm investm s as of ent in matter ure date d
e of investm stake in investor earning
ent ent ent ent balance Reporti involve (if any) informa
investe ent investe s
funds sheet ng d tion (if
e e
date Period any)
Haohon
g Haojun
Equity Investm
Invest ent and
ment Manage
Partner ment
Equity Newly 100,00 Self-ow
ship Co., Finishe -2,463, 10/31/2 2017-0
investm establis 0,000.0 33.33% ned 3 years Funds 0.00 No
Enterpr Ltd in d 267.98 017 44
ent hed 0 funds
ise in Ningbo
Ningbo Meisha
Meisha n
n bonded
bonded area
area
100,00
-2,463,
Total -- -- 0,000.0 -- -- -- -- -- -- 0.00 -- -- --
267.98
0
3. Material Non-Equity Investments Ongoing in Reporting Period
□ Applicable √ Not applicable
4. Financial Investments
(1) Securities Investments
□ Applicable √ Not applicable
No such cases during the Reporting Period.
(2) Investments in Derivative Financial Instruments
√ Applicable □ Not applicable
24
Lu Thai Textile Co., Ltd. Annual Report 2017
RMB’0,000
Proporti
on of
closing
Actua
investm
l
Related- Type of Amount Impairm ent
Initial Opening Amount Closing gain/l
party derivativ purchas ent amount
Operato investm Beginni Ending investm sold in investm oss in
Relation transacti e ed in provisio in the
r ent ng date date ent Reportin ent Repor
on or investme Reportin n (if Compan
amount amount g Period amount ting
not nt g Period any) y’s
Perio
closing
d
net
assets
(%)
Forward
Commer
Non-rel exchange 110,898. 01/19/2 12/15/2 110,898. 110,898. 419.3
cial No 0 0
ated settleme 18 017 017 18 18 4
bank
nt
Commer foreign
Non-rel 139,675. 01/03/2 03/29/2 139,675. 119,875.
cial No exchange 0 19,800 2.55% 61.93
ated 82 017 018 82 82
bank option
forward
Commer
Non-rel exchange 05/22/2 10/18/2
cial No 9,839.24 0 9,839.24 9,839.24 0 -6.57
ated transacti 017 017
bank
ons
Commer foreign
Non-rel 06/20/2 06/30/2
cial No exchange 12,937.1 0 12,937.1 12,937.1 0 4.76
ated 017 017
bank swap
273,350. 273,350. 253,550. 479.4
Total -- -- 0 19,800 2.55%
34 34 34 6
Capital source for derivative
Self-owned funds
investment
Lawsuit (if applicable) No
Disclosure date of board
announcement on approval of 04/28/2017
derivative investment (if any)
Disclosure date of general meeting
announcement on approval of
derivative investment (if any)
Risk analysis and risk control The Company conducted derivatives products transaction in order for hedging. And it was
measures for derivative products held operated by installments, with the relevant amount not more than the planned derivatives
25
Lu Thai Textile Co., Ltd. Annual Report 2017
in Reporting Period (including but not products transactions. And all derivatives products transaction was zero-deposit. Meanwhile,
limited to market risk, liquidity risk, the Company had a complete risk control system for sufficient analysis and prevention of
credit risk, operation risk, legal risk, possible risks such as market risks, liquidity risk and credit risk, operation risk and risk of
etc.) laws and regulations.
1. Market risk: when the international and domestic economic situations change, the
corresponding changes in exchange rates and interest rates may have an adverse impact on
the financial derivatives transactions of the Company. Precautionary measures to be taken
include: the Company chooses risk-controlled financial derivative tools with simple
structure and good liquidity to carry out the hedging business, strictly controls the scale of
financial derivatives trading by staged operations, and adjusts the strategy according to
market changes in a timely manner.
2. Liquidity risk and credit risk: a credit risk arising from failure of the contractually due
Company or counterparty in performing the contract due to liquidity or factors other than
liquidity. Precautionary measures to be taken include: the Company determines the upper
limit of derivatives transaction amounts according to production and operation scale as well
as foreign exchange income, and conducts operations by stage according to the budget of
future collections and disbursement. The derivative trades are free of guarantee deposit and
can still be guaranteed in performance after the contract expires by means of extension and
balance settlement etc. to prevent the Company from credit damages due to lack of liquidity.
The Company selects financial institutions with strong capability and good reputation as a
counterparty and signs standard derivative trading contracts to strictly control credit risk of
the counterparty.
3. Operation risk:
The derivative transactions had high specialty and complexity, so imperfect internal
operation procedures, staffs and external events would make the Company to undertake risks
during the transaction. Risk control measures: The Company promulgated strict
authorization and approval system and perfect regulatory mechanism, formulated the
operation procedures and approval procedures system to conduct derivative products
transaction, established special risk control positions, implemented strict authorization and
post checks and balances system, meanwhile, it improved the overall quality of relevant
personnel through strengthening the professional ethics education and business training for
them. Besides, it established the System of Reporting the Abnormal Situation Timely to
lower the operation risks to the maximum.
4. Risk concerning laws and regulations:
The Company conducted derivatives products transaction in strict accordance with State
relevant laws and rules, if there were no standard operation procedures and strict approval
procedures, it was easy to cause compliant and regulatory risks existing in the validity and
feasibility of contract, commitments and other legal documents signed. Risk control
measures: The Company carefully studied and mastered laws, regulations relevant to
derivative products transaction, formulated internal control rules for the forward settlement
hedging business, standardized the operation procedures, and strengthened the compliant
examination on derivative products transaction business. The Company carries out
derivative trading business upon fulfillment of relevant approval procedures, complying
26
Lu Thai Textile Co., Ltd. Annual Report 2017
with relevant national laws and regulations, the "Articles of Association", "Lu Thai
Derivatives Trading Management System" and the relevant provisions of the "Proposal on
the Company's Derivatives Trading Plan" reviewed and passed at the seventh meeting of the
eighth session of the Board of Directors held on April 26, 2017. Moreover, the Company
fulfilled the relevant information disclosure obligations.
1. As of December 31, 2017, the Company held a total of 5 undue financial derivative
contracts, totaling US$ 32.5 million, all of which were foreign exchange options. The
contract expires at the latest by March 2018. Financial derivatives accounted for 2.55% of
Changes in market prices or fair value
the net assets at the end of the reporting period. 2. From January to December of 2017, the
of invested derivatives in Reporting
mature financial derivatives of the Company amounted to US$ 382.1841 million, generating
Period (fair value analysis should
an income of RMB 4.7946 million, including the expiry long-term foreign exchange
include specific analysis methods as
settlement of US$162.2818 million, which generated an income of RMB4.1934 million. The
well as relevant assumptions and
mature foreign exchange options amounted to US$185.8 million, generating an income of
parameters)
RMB619,300. The long-term foreign exchange sale amounted to US$14.5023 million,
generating a loss of RMB65,700. The mature foreign exchange swap amounted to US$ 19
million, generating an income of RMB 47,600.
Significant changes in the Company’s
accounting policy and specific
accounting principles for derivatives No significant changes
in Reporting Period when compared
to last period
The Company’s independent directors Xu Jianjun, Zhao Yao, Bi Xiuli, Pan Ailing and Wang
Xinyu, concerning conducting derivatives business, have issued the following professional
advice: We are of the opinion that it will strengthen the Company’s competitiveness to use
Specific opinion from independent derivative transactions with focus on forward settlement and purchase as an effective tool to
directors on the Company’s avoid foreign exchange risks, to strengthen the relevant internal control and to carry out the
derivatives investment and risk loss and risk prevention measures so as to improve the operation and management. In
control conducting derivative transactions with focus on forward settlement and purchase, the
Company follows a legal approval procedure, has sound relevant institutions and keeps the
risks relatively controllable. No harm has been done to the interests of the Company’s
shareholders.
5. Use of Funds Raised
□ Applicable √ Not applicable
No such cases in this Reporting Period.
VI Sale of Major Assets and Equity Interests
1. Sale of Major Assets
□ Applicable √ Not applicable
No such cases in this Reporting Period.
27
Lu Thai Textile Co., Ltd. Annual Report 2017
2. Sale of Major Equity Interests
□ Applicable √ Not applicable
VII Main Controlled and Joint Stock Companies
√ Applicable □ Not applicable
Main subsidiaries and joint stock companies with an over 10% influence on the Company’s net profit
Unit: RMB
Relationship Main
Company business Registered Sales Operating
with the Total assets Net assets Net income
name scope capital revenue income
Company
Lufeng
Weaving & 706,160,000. 1,597,948,86 1,399,594,34 1,664,817,65 118,651,864. 104,083,484.
Subsidiary Fabric
Dyeing Co., 00 3.87 7.43 9.70 43 23
Ltd.
Subsidiaries obtained or disposed in the Reporting Period
□ Applicable √ Not applicable
Particulars about the main controlled and joint stock companies:
Lufeng Weaving & Dyeing Co., Ltd. (hereinafter called “Lufeng Weaving & Dyeing”) is the holding subsidiary corporation of the
Company. Registration place: Zibo, Shandong; registered capital: RMB 706.160 million. It was authenticated to be high-tech
enterprise in October 2014, and authenticated to be high-tech enterprise again for re-evaluation in 2017, mainly manufacturing and
selling textile printing and dyeing products and the products of clothing and garments. Its export income accounted for more than
75%. During the Reporting Period, market required more and more on the production and environmental protection of printing and
dyeing products. Lufeng Weaving & Dyeing had been further acknowledged in market as an enterprise with normative operation and
the 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 the
sale of new products with high additional value rose largely. In 2017, operation revenue of Lufeng Weaving & Dyeing was RMB
1.665 billion, increasing for 3.58% comparing with that of the last year. In another aspect, thanks to comprehensive budget
management, costs control and investment in new products R & D, net profit RMB 0.104 billion was achieved in 2017, decreasing
for 24.02% comparing with that of the last year.
VIII Structured Bodies Controlled by the Company
□ Applicable √ Not applicable
IX Outlook for the Future Development of the Company
1. Industry competition and development trend
China's textile industry possesses outstanding advantages in the global textile industry, mainly in terms of capital, technology and
labor efficiency, etc. Although the cost of production factors is increasing, China's textile industry still has an outstanding advantage
in the global competition. At present, the production capacity of yarn-dyed fabrics for high-end shirts in the world is about 800
28
Lu Thai Textile Co., Ltd. Annual Report 2017
million meters. Pure cotton-dyed fabrics have always been the fabric used for the production of middle and high-end shirts due to
their high color fastness, clear texture, rich colors, comfortableness and good air permeability. In recent years, with the increase of
domestic environmental protection requirements and production costs, and the trend of state transformation and upgrading, some
low-end and small yarn-dyed production capacities gradually quit the market, and production capacities have been concentrated on
large companies, while the demand for yarn-dyed fabrics for shirts is changing to small quantity, variety, diversity, functionality and
leisure.
2. Development strategy of the Company
The Company is a large-scale textile enterprise with a complete industrial chain integrating cotton cultivation, spinning, dyeing,
weaving, post-treatment and garment manufacturing. It is the world's largest production base for yarn-dyed fabrics for shirts,
providing blending of three major series of shirt fabrics of pure cotton and natural fiber, cotton and natural fiber as well as cotton and
functional fiber. In order to maintain the outstanding advantages of the Company in global shirt-dyed fabrics, the Company is
pushing intelligent manufacturing upgrades and integrating domestic and foreign advantageous resources to deepen
internationalization of the Company with regional advantages. The Company combines quality innovation and customer needs, and
innovates the marketing model with advantages of resources in each channel. High-end shirt customization services are provided to
meet various needs of customers. Furthermore, the Company increases investment in innovation to improve R&D and design and
develop new fabrics. The Company holds the concept of low-carbon environmental protection for sustainable economic
development.
3. Business plan (the following description does not constitute any commitment of the Company)
(1) In terms of corporate governance, in order to ensure the healthy, stable and sustainable development of the Company at the
institutional level, the Company will establish an internal control system to improve organizational structure, corporate governance
structure and risk prevention mechanism.
(2) In terms of market development, the Company will follow the business philosophy of "combining end-customer demand with
R&D, design and sales services". Based on the stability of existing markets, the Company will adjust operation models, establish
diversified sales models and explore new markets to increase domestic market share and balance the development of domestic and
foreign markets.
(3) In terms of corporate management, with the goal of "improving quality and increasing efficiency", the Company will fully
develop the group system and deeply practice the model of excellence performance. Relying on the Lu Thai Production System
(LTPS) and supply chain management, the Company creates a global procurement network to improve the enterprise management
system and company upgrade.
(4) In terms of brand building, the Company focuses on quality to integrate corporate philosophy and culture into brand building with
innovation. Based on customer demand, the Company innovated the marketing model and integrated online and offline channel
resources to push forward the process of brand internationalization and upgrading.
(5) In terms of industrial overall arrangement, in order to maintain the leading position of the Company in the global yarn-dyed
industry, the Company rationally allocates domestic and foreign resources and improves production efficiency while keeping product
quality relying on the advantages of Milan and U.S. companies in market development, design and R&D, customer service and talent
development, and the cost advantages of Southeast Asian production bases.
4. Capital needs, sources and planning
During the reporting period, the new spinning production line with a capacity of 76,000 spindles of the yarn manufacture project
Phase II of Lu Thai (Vietnam) Textile Co., Ltd. has been set up. The drawing plans for production workshops have been completed,
and the construction was started in December 2017. The expansion project of yarn dyed fabric with a capacity of 40 million meters in
Vietnam is in the preparatory stage. With regards to the Vietnam Garment Factory Phase II, the drawing design of production
workshops of the expansion project of high-end shirt manufacturing with a capacity of 3 million pieces was completed, and the
construction started in December 2017. The funds of the above projects were offered by wholly-owned subsidiaries with their
self-owned and self-raised capital.
29
Lu Thai Textile Co., Ltd. Annual Report 2017
5. Risks that bring adverse impact to company development strategy and business objectives and countermeasures of the Company
(1) Economic environment: the world economy is getting better, but trade protectionism and economic policies of advanced
economies, especially the uncertain risks of monetary policy, pose greater threats to the recovery of the world economy, producing a
certain degree of uncertainty on the market environment that the Company faces. Meanwhile, the new development of China’s
economy shows more characteristics such as speed change, structural adjustment and dynamic changes. The economic trend towards
stability. To cope with these impacts, the Company will work hard 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 many
factors such as market supply and demand, climate, policies, exchange rates and quotas. Furthermore, with the development of
environmental protection policies, the cost of dyeing auxiliaries also increased. Therefore, besides ensuring the stable supply of
long-staple cotton by the subsidiary in Xinjiang, the Company must study the market dynamics to reduce the cost fluctuations due to
changes in raw cotton price, and develop with the concept of green and environmental protection to meet environmental protection
requirements.
(3) Exchange rate changes: at present and in the future, the Company will continue to sell its products mainly in the international
market for a long period of time, and US dollars willaccount for a relatively larger portion in sales revenue. In addition, the main
machinery and equipment and some of its raw materials of the Company are also imported. The foreign currencies payment for
imports includes US dollar and other currencies. Moreover, the commissioning of the Company's overseas production base and
subsequent expansion of investment will increase the use of US dollar. Therefore, the Company will still be sensitive to the impact of
exchange rate changes.
In order to reduce adverse influence of exchange rate fluctuation, the Company adopted the following measures: firstly, the Company
positively conducted foreign exchange hedging, using forward FX sales and purchase, forward foreign exchange trading and option
portfolios to avoid some risks Secondly, the Company made reasonable arrangement on settlement day and currency structure and
conclusion of agreements on fixed foreign exchange rate to avoid exchange rate-related risks. Thirdly, the Company adjusted the
Renminbi and foreign-currency liabilities structure to control financial costs. Fourthly, according to the fluctuation trend of exchange
rates, the Company properly adjusted imports of raw and auxiliary materials to partially offset the influence of exchange rate
fluctuations on the Company.
X Visits Paid to the Company for Purposes of Research, Communication, Interview, etc.
1. In this Reporting Period
√ Applicable □ Not applicable
Date Way of visit Type of visitor Main inquiry information
02/23/2017 One-on-one meeting Institution About basic information of the Company
03/30/2017 By phone Institution About basic information of the Company
08/30/2017 By phone Institution About basic information of the Company
10/27/2017 By phone Institution About basic information of the Company
Times of visit 4
Number of visiting institutions 46
Number of visiting individuals 0
Number of other visiting entities 0
30
Lu Thai Textile Co., Ltd. Annual Report 2017
Significant undisclosed information disclosed,
No
revealed or leaked
31
Lu Thai Textile Co., Ltd. Annual Report 2017
Part V Significant Events
I Profit Distribution and Converting Capital Reserve into Share Capital for Common
Shareholders
Formulation, execution or adjustments of profit distribution policy, especially cash dividend policy, for common shareholders in this
Reporting Period
□ Applicable √ Not applicable
Profit distribution plans (or preliminary plans) for the common shareholders and plans (or preliminary plans) for turning capital
reserves into share capital for the recent three years (including the Reporting Period)
1. The 2017 annual profit allocation pre-plan reviewed and approved at the 16st Session of the 8th Board of Directors:
Based on the total 922,602,311 shares on December 31, 2017, the Company is to distribute a cash dividend of RMB5.00 for every 10
shares (including tax). The individual income tax for Share A shall be subject to related regulations under CS [2015] No. 101 Notice
on Certain Question about the Differentiated Individual Income Tax Policy for Share Dividend of Listed Companies jointly issued by
Ministry of Finance, SAT, and CSRC; and that for Share B shall be conversed to HKD based on the central parity rate on interbank
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-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 of China).
Based on the 922,602,311 shares, the Company should distribute a cash dividend of RMB5.00 per 10 shares. The aforesaid profit
distribution plan is subject to the final approval of the 2017 annual meeting of shareholders.
2. The 2016 annual profit allocation pre-plan reviewed and approved at the 5st Session of the 8th Board of Directors:
Based on the total 922,602,311 shares on December 31, 2016, the Company is to distribute a cash dividend of RMB5.00 for every 10
shares (including tax). The individual income tax for Share A shall be subject to related regulations under CS [2012] No. 85 Notice
on Certain Question about the Implementation of Differentiated Individual Income Tax Policy for Share Dividend of Listed
Companies jointly issued by Ministry of Finance, SAT, and CSRC; and that for Share B shall be conversed to HKD based on the
central parity rate on interbank 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-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 of China).
Based on the above distribution plan, the Company actually distributed RMB 461,301,155.50 dividends. Such plan was implemented
in June 2017 after the review and approval on 2016 shareholder’s meeting convened on May12, 2017.
3. The 2015 annual profit allocation pre-plan reviewed and approved at the 31th Session of the 7th Board of Directors:
By December 31 of 2015, (the total shares of 954,407,896as at 31 Dec. 2016 minus the 1,350,600 B-shares repurchased in the year),
the Company is to distribute a cash dividend of RMB5.00 distributed for every 10 shares (including tax). The individual income tax
for Share A was subject to related regulations under CS [2012] No. 85 Notice on Certain Question about the Implementation of
Differentiated Individual Income Tax Policy for Share Dividend of Listed Companies jointly issued by Ministry of Finance, SAT,
and CSRC; and that for Share B shall be conversed to HKD based on the central parity rate on interbank exchange market released
by the People’s Bank of China on the following day after shareholder’s meeting (for foreign shareholders, tax was free pursuant to
CSZ (1994) No. 020 regulations; and non-residential corporate shareholders were 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).
In the profit distribution, 24,707,749 repurchased but not yet canceled shares in the special account for repurchased shares on the
32
Lu Thai Textile Co., Ltd. Annual Report 2017
book closure date were excluded. As such, the Company actually distributed RMB 465,525,373.50 dividends for 2015. The aforesaid
profit distribution plan was implemented in June 2016 after being reviewed and approved by the Shareholders’ General Meeting 2015
held on April 29, 2016.
Cash dividends distributed to the common shareholders in the recent three years (including the Reporting Period)
Unit: RMB
Net profits Proportion in net
attributable to profits attributable
Cash dividend (tax shareholders of the to shareholders of Ratio of cash
Cash dividend in
Year dividend in other
included) Company in the Company in other forms
forms
consolidated consolidated
statements statements (%)
2017 461,301,155.50 841,150,934.75 54.84% 0.00 0.00%
2016 461,301,155.50 808,760,025.91 57.04% 0.00 0.00%
2015 465,525,373.50 712,193,243.19 65.37% 0.00 0.00%
Indicate by tick mark whether the Company made profit in this Reporting Period and the profit distributable to common shareholders
of the Company was positive, but it did not put forward a proposal for cash dividend distribution to its common shareholders
□ Applicable √ Not applicable
II Proposal for Profit Distribution and Converting Capital Reserve into Share Capital for this
Reporting Period
√ Applicable □ Not applicable
Bonus shares for every 10 shares (share) 0
Dividend for every 10 shares (RMB) (tax included) 5.00
Increased shares for every 10 shares (share) 0
Total shares as basis for preliminary distribution
922602311
plan (share)
Total cash dividends (RMB) (tax included) 461,301,155.50
Distributable profit (RMB) 3,630,102,526.37
Percentage of cash dividends in the total profit to 54.84%
be distributed (%)
Cash dividend policy
Where the Company is at a mature stage of development and has plans for considerable spending, in profit distribution, cash
dividends 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 capital
1. Based on the total 922,602,311 shares on December 31, 2017, the Company is to distribute a cash dividend of RMB5.00 for
every 10 shares (including tax). The individual income tax for Share A shall be subject to related regulations under CS [2015] No.
101 Notice on Certain Question about the Differentiated Individual Income Tax Policy for Share Dividend of Listed Companies
33
Lu Thai Textile Co., Ltd. Annual Report 2017
jointly issued by Ministry of Finance, SAT, and CSRC; and that for Share B shall be conversed to HKD based on the central parity
rate on interbank 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-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 of China).
2. Implementing above-mentioned distribution plan with RMB461,301,155.50dividend distribution, and the retained profits
RMB3,630,102,526.37 shall be carried forward to the future.
Note: if the equity base in preliminary distribution plan is not for sure, specific circumstances need to be described in the details of
preliminary profit distribution plan; if the system check can’t be passed, please contact staff and supervisor of periodic report timely.
The Company didn’t distribute the cash dividend, and there was no bonus share and no turn from capital reserve to share capital of
2017.
III Fulfillment of Commitments
1. Commitments of the Company’s Actual Controller, Shareholders, Related Parties and Acquirer, as well
as the Company and Other Commitment Makers, Fulfilled in this Reporting Period or Ongoing at the
Period-end
□ Applicable √ Not applicable
No such cases in this Reporting Period.
2. Where there had been an Earnings Forecast for an Asset or Project and this Reporting Period was still
within the Forecast Period, Explain why the Forecast has been Reached for this Reporting Period.
□Applicable √ Not applicable
IV Occupation of the Company’s Funds by the Controlling Shareholder or its Related Parties
for Non-operating Purposes
□ Applicable √ Not applicable
No such cases in this Reporting Period.
V Explanations Given by the Board of Directors, the Supervisory Board and the Independent
Directors (if any) regarding the “Modified Auditor’s Report” Issued by the CPAs Firm for
this Reporting Period
□ Applicable √ Not applicable
VI YoY changes in accounting policies, estimations and methods
√ Applicable □ Not applicable
Contents and reasons Approval procedure Remark
Before May 1, 2017, inventories of the Approved by the 7th Meeting of the 8th For it is unpractical to confirm the
34
Lu Thai Textile Co., Ltd. Annual Report 2017
Company shall be measured at planned Board of Directors of the Company on accumulative influences from the changes
cost when acquired. When acquired and April 26, 2017 of the accounting policies, according to the
delivered, it shall be measured as per the rules of Accounting Standards for Business
weighted average method. According to Enterprises - Changes in Accounting
the requirements of refining operation Policies and Estimates and Correction of
management of the Company, in order to Errors, the changes in accounting policies
further strengthen the refinement of adopted prospective application method,
financial accounting, the Company which was implemented from May 1,
changed the pricing method of acquired 2017.
inventories from planned cost to actual
cost from May 1, 2017, and changed the
pricing of delivered grey yarn, dyed yarn,
and plus material from the weighted
average method to first-in first-out method.
Accounting Standards for Business
Enterprises No. 42—Held-for-sale
Non-current Assets, Disposal Groups and
On April 28, 2017, the Ministry of Finance
Discontinued Operation standardize the
released Accounting Standards for
classification, measurement, and list of
Business Enterprises No.
held-for-sale non-current assets and
42—Held-for-sale Non-current Assets,
disposal group, and the list of termination
Disposal Groups and Discontinued
operation.
Operation (CaiKuai [2017] No. 3), which
According to Notice of the Ministry of
came into force from May 28, 2017.
Approved by the Resolutions on the 16th Finance on Revision and Issuance of
On December 25, 2017, the Ministry of
Meeting of the 8th Board of Directors of Format of General Financial Statements of
Finance issued the “Notice on Revision
the Company on April 15, 2018 Enterprises, the Company adjusted the
and Issuance of Format of General
presentation of financial statement. The
Financial Statements of Enterprises”
amount adjusted to “assets disposal
(CaiKuai [2017] No. 30) to revise the
income” in 2017 was RMB1,242,000.54,
format of general finance statements of
and the amount adjusted to “assets disposal
enterprises and apply to financial
income” in 2016 was RMB-6,843,361.94.
statements in 2017 and the subsequent
The changes in accounting policies had no
periods.
significant influences on financial
situations, operating results, and cash
flows of the Company.
On May 10, 2017, the Ministry of Finance
released Circular on Issuance and Revision Government subsidy related to routine
of Accounting Standards for Business activities happened after January 1, 2017
Approved by the Resolutions on the 9th
Enterprises No. 16—Government Subsidy shall be calculated into other income;
Meeting of the 8th Board of Directors of
(CaiKuai [2017] No. 15), and revised government subsidy that has nothing to do
the Company on August 28, 2017
Accounting Standards for Business with routine activities shall be calculated
Enterprises No. 16—Government Subsidy, into non-operating income.
which was implemented in the scope of all
35
Lu Thai Textile Co., Ltd. Annual Report 2017
companies who execute accounting
standards for business enterprises from
June 12, 2017.
VII Retroactive Restatement due to Correction of Material Accounting Errors in this
Reporting Period
□ Applicable √ Not applicable
No such cases in this Reporting Period.
VIII YoY Changes in the Scope of the Consolidated Financial Statements
√ Applicable □ Not applicable
Chengshun Thermal Power, a subsidiary of Xinsheng Thermal Power, was added into the consolidated financial statements.
IX Engagement and Disengagement of CPAs Firm
Current CPAs firm
Name of domestic CPAs firm Ruihua Certified Public Accountants (LLP)
Remuneration of domestic CPAs firm (RMB’0,000)) 173.50
Consecutive years of audit services provided by domestic CPAs
5
firm
Name of certified public accountants from domestic CPAs firm He Feng, Cui Xiaoli
Consecutive years of audit services provided by certified public
3
accountants from domestic CPAs firm
Indicate by tick mark whether the CPAs firm was changed in this Reporting Period.
□ Yes √ No
CPAs firm, financial advisor or sponsor engaged for internal control audit
√ Applicable □ Not applicable
On May 12, 2017, the Company held the Annual Meetings of Shareholders for 2016, which reviewed and approved the Proposal on
Engagement of the 2017 Financial Audit and Internal Control Auditor. The Company paid RMB435,000 in total for the internal
control audit.
X Possibility of Listing Suspension or Termination after Disclosure of this Report
□ Applicable √ Not applicable
XI Bankruptcy and Restructuring
□ Applicable √ Not applicable
No such cases in this Reporting Period.
36
Lu Thai Textile Co., Ltd. Annual Report 2017
XII Significant Litigations and Arbitrations
□ Applicable √ Not applicable
No such cases in this Reporting Period.
XIII Punishments and Rectifications
□ Applicable √ Not applicable
No such cases in this Reporting Period.
XIV Credit Conditions of the Company as well as its Controlling Shareholder and Actual
Controller
□ Applicable √ Not applicable
XV Implementation of any Equity Incentive Plan, Employee Stock Ownership Plan or other
Incentive Measures for Employees
□ Applicable √ Not applicable
No such cases in this Reporting Period.
XVI Significant Related-party Transactions
1. Related-party Transactions Relevant to Routine Operation
□ Applicable √ Not applicable
No such cases in this Reporting Period.
2. Related Transactions Regarding Purchase or Sales of Assets or Equity Interests
√ Applicable □ Not applicable
Profits
Book Estimated
and losses
Contents value of value of Transferr Index to
Relation Type of Method of
Related of Pricing transferre transferre ed price Disclosur disclosed
with the transactio of transactio
party transactio principle d assets d assets (RMB’0, e date informati
Company n settlement n
n (RMB’0, (RMB’0, 000) on
(RMB’0,
000) 000)
000)
Lucheng Purchasin For
Controllin Assessed
Textile g all details,
g Purchasin value of 09/16/201
Investme equities 1,359.75 2,343.04 2,343.04 Cash 0 see
sharehold g equity net 7
nt Co., of holding Announc
er assets
Ltd subsidiary ement on
37
Lu Thai Textile Co., Ltd. Annual Report 2017
held by Related
controllin Transacti
g ons of
sharehold Lucheng
er Textile
Co., Ltd
(No.
2017-035
)
disclosed
on
www.cnin
fo.com.cn
Reason for great difference of transferred
price and book value or assessed value (if No
any)
Influences on operating results and
No
financial situations of the Company
The achievement of the performance in the
Reporting Period if related transactions No
involved in results appointment
3. Related Transactions Regarding Joint Investments in Third Parties
□ Applicable √ Not applicable
No such cases in the Reporting Period.
4. Credits and Liabilities with Related Parties
√ Applicable □ Not applicable
Whether existed non-operating credits and liabilities with related parties
√ Yes □ No
Note: please pay attention to choose it from the aboved “whether exists non-operating credits and liabilities with related parties”
Credits of related parties to account receivable
Whether
Amount Amount
existed
newly received in
Relation occupation Opening added in
Current
Related Formation balance current interest
with the of the Funds (RMB’0,00 current Interest rate Closing
party reason (RMB’0,00
Company period period balance(RM
for 0) 0)
(RMB’0,00 B’0,000)
0) (RMB’0,00
non-operati
0)
ng purposes
38
Lu Thai Textile Co., Ltd. Annual Report 2017
Influences from credits
of related parties on
operating results and
financial situations of
the Company
Liabilities of parties related to account payable
Amount Amount
Opening newly added returned in Current
Relation with Formation
Related party balance in current current Interest rate interest Closing
the Company reason
(RMB’0,000) period period (RMB’0,000) balance(RMB
(RMB’0,000) (RMB’0,000) ’0,000)
Lucheng The Parent Currencies
985.47 16,763 11,848.71 4.35% 104.44 5,900
Textile Company deposit
Wholly-own
Limin Purified ed subsidiary Currencies
0 700 700 4.35% 3.59
Water of Lucheng deposit
Textile
Wholly-own
ed subsidiary Currencies
Lujia Property 0 60 4.35% 1.94 60
of Lucheng deposit
Textile
Wholly-own
Luqun Real ed subsidiary Currencies
0 900 900 4.35% 5.03
Estate of Lucheng deposit
Textile
Joint-stock
Shidanlu Company of Currencies
0 275 130 4.35% 2.91 145
Company Lucheng deposit
Textile
Controlling
subsidiary of Currencies
Taimei Ties 0 500 370 4.35% 7.32 130
Lucheng deposit
Textile
Influences from liabilities of
parties related on operating
No
results and financial
situations of the Company
5. Other Significant Related Transactions
□ Applicable √ Not applicable
39
Lu Thai Textile Co., Ltd. Annual Report 2017
No such cases in the Reporting Period.
XVII Significant Contracts and Execution
1. Entrustment, Contracting and Leasing
(1) Entrustment
□ Applicable √ Not applicable
No such cases in the Reporting Period.
(2) Contracting
□ Applicable √ Not applicable
No such cases in the Reporting Period.
(3) Leasing
□ Applicable √ Not applicable
No such cases in the Reporting Period.
2. Significant Guarantees
□ Applicable √ Not applicable
(1) Guarantees Provided by the Company
RMB’0,000
Particulars on external guarantee of the Company and its subsidiaries (excluding guarantees for subsidiaries)
Date of
disclosure Whether Whether
Date of making
of relevant Actual the guarantee
Name of guarantee Guarantee guarantee (date Type of Guarantee
announcem amount of guarantee ing for
object limit of signing guarantee period
ents on guarantee has been related
agreement)
guarantee fulfilled parties
limit
Particulars about guarantee of the Company for subsidiaries
Date of
Whether Whether
disclosure Date of making Actual
the guarantee
Name of guarantee of relevant Amount of guarantee (date amount of Type of Guarantee
guarantee ing for
object announcem guarantee of signing guarantee guarantee period
has been related
ents on agreement)
fulfilled parties
guarantee
40
Lu Thai Textile Co., Ltd. Annual Report 2017
limit
Five years
Guarantee of
since the
Lu Thai (Vietnam) joint and
01/25/2017 6,534.2 approval of No Yes
Textile Co., Ltd. several
the board of
liability
the Company
Two years
Guarantee of
since the
Lu Thai (Vietnam) joint and
01/25/2017 5,227.36 288.75 approval of No Yes
Textile Co., Ltd. several
the board of
liability
the Company
Two years
Guarantee of
since the
Lu Thai (Vietnam) joint and
01/25/2017 3,920.52 approval of No Yes
Textile Co., Ltd. several
the board of
liability
the Company
Two years
Guarantee of
since the
Lu An Garments Co., joint and
01/25/2017 26,790.22 487.64 approval of No Yes
Ltd. several
the board of
liability
the Company
Five years
Guarantee of
since the
Lu Thai (Vietnam) joint and
01/25/2017 19,602.6 approval of No Yes
Textile Co., Ltd. several
the board of
liability
the Company
Two years
Guarantee of
since the
Lu Thai (Vietnam) joint and
01/25/2017 6,534.2 approval of No Yes
Textile Co., Ltd. several
the board of
liability
the Company
Two years
Guarantee of
Lu Thai (Vietnam) since the
joint and
Textile Co., Ltd./Lu 01/25/2017 17,969.05 approval of No Yes
several
An Garments Co., Ltd. the board of
liability
the Company
Three years
Guarantee of
Xinjiang Lu Thai since the
joint and
Good Yield Cotton 10/14/2017 15,000 10/12/2017 approval of No Yes
several
Co., Ltd. the board of
liability
the Company
41
Lu Thai Textile Co., Ltd. Annual Report 2017
Five years
since the
Guarantee of
approval of
Lu Thai (Vietnam) joint and
10/27/2017 67,955.68 10/25/2017 8,880.13 the No Yes
Textile Co., Ltd. several
shareholders’
liability
meeting of
Company
Total amount of actual
Total amount of approved
guarantee for subsidiaries
guarantee for subsidiaries during 169,533.83 3,344.2
during the Reporting Period
the Reporting Period (B1)
(B2)
Total amount of actual
Total amount of approved
guarantee for subsidiaries at
guarantee for subsidiaries at the 169,533.83 9,656.52
the end of the Reporting
end of the Reporting Period (B3)
Period (B4)
Guarantees provided by subsidiaries for subsidiaries
Disclosure
date on Guarante
Actual
relevant Actual e for a
Amount for occurrence date Type of Period of Executed
Guaranteed party announcem guarantee related
guarantee (date of guarantee guarantee or not
ent of amount party or
agreement)
guaranteed not
amount
Guarantee of
Xinjiang Lu Thai joint and
10/14/2017 30,000 10/12/2017 12 months No Yes
Textile Co., Ltd. several
liability
Total actual occurred
Total guarantee line approved for
amount of guarantee for the
the subsidiaries during the 30,000 0
subsidiaries during the
Reporting Period (C1)
Reporting Period (C2)
Total actual guarantee
Total guarantee line that has been
balance for the subsidiaries
approved for the subsidiaries at the 30,000 0
at the end of the Reporting
end of the Reporting Period (C3)
Period (C4)
Total guarantee amount provided by the Company (total of the above-mentioned three kinds of guarantees)
Total actual occurred
Total guarantee line approved
amount of guarantee during
during the Reporting Period 199,533.83 3,344.2
the Reporting Period
(A1+B1+C1)
(A2+B2+C2)
Total guarantee line that has been 199,533.83 Total actual guarantee 9,656.52
42
Lu Thai Textile Co., Ltd. Annual Report 2017
approved at the end of the balance at the end of the
Reporting Period (A3+B3+C3) Reporting Period
(A4+B4+C4)
Proportion of total guarantee amount (A4+B4+C4) to the net
1.34%
assets of the Company
Of which:
Amount of guarantee provide for shareholders, actual controller
0
and related parties (D)
Amount of guarantee provided directly or indirectly for guarantee
0
objects with asset-liability ratio reaching over 70% (E)
Balance between 50% of net assets and total amount of guarantee
30,000
which exceeds 50% of net assets (F)
Sum total of the above three guaranteed amounts (D+E+F) 30,000
According to “Agreement on Counter Guarantee” signed on
October 12, 2017 between Lu Thai Company and Xinjiang Lu
Explanations about joint and several liability for repayment in
Thai Company, Xinjiang Lu Thai Company, the warrantee
respect of undue guarantee (if any)
Xinjiang Lu Thai Company provided the corresponding amount
of counter guarantee for Lu Thai Company.
Explanation about external guarantee violating established The Company never provided guarantees for companies except
procedure (if any) controlling subsidiaries.
Explanations about guarantees provided with complex methods
(2) Particulars about illegal external guarantee
□ Applicable √ Not applicable
No such cases in the Reporting Period.
3. Entrusted Cash Management
(1) Entrusted Cash Management
√ Applicable □ Not applicable
Overviews of entrusted cash management during the Reporting Period
RMB’0,000
Specific type Capital resources Amount incurred Undue Balance Overdue amount
Trusted financial
Self-owned funds 5,000 5,000 0
products
Others Self-owned funds 6,000 6,000 0
Total 11,000 11,000 0
Particulars of entrusted cash management with single significant amount or low security, bad liquidity, and no capital preservation
43
Lu Thai Textile Co., Ltd. Annual Report 2017
√ Applicable □ Not applicable
RMB’0,000
Wheth Overv
er iew of
Amou Actual
Amou there the
nt of recove
nt Wheth is item
Metho actual ry of
Annua Estima withdr er go wealth and
d of profits profits
Name Type Type Resou l yield te awn throug manag the
Amou Initial Ended Use of payme or or
of the of the of the rce of for profit impair h ement relate
nt date Date fund nt losses losses
trustee trustee product funds refere (if ment stator entrust d
determ in in
nce any) provis proced ment index
ination Report Report
ion (if ures plan for
ing ing
any) in inquiri
Period Period
future ng (if
or not any)
Repay
capital
with
Zhong Trust Consta Self-o Miya
9/14/2 09/14/ interes Not
hang compa nt 5,000 wned Baobe 7.20% 360 No Yes
017 2018 ts yet
Trust ny return funds i
when
expire
d
Accou
nt
receiv
Shang Repay
ables
hai capital
bonds
Gophe with
Fund Consta Self-o of
r Asset 12/18/ 01/18/ interes Not
compa nt 3,000 wned Guang 7.60% 228 No Yes
Manag 2017 2019 ts yet
ny return funds dong
ement when
Cheng
Co., expire
xing
Ltd d
and
Jingdo
ng
Shang Granti Repay
hai ng capi
Gophe Fund Consta Self-o trust tal
12/22/ 12/22/ Not
r Asset compa nt 3,000 wned loans whe 8.50% 255 No Yes
2017 2019 yet
Manag ny return funds to n
ement Jiexin expi
Co., Financ red
44
Lu Thai Textile Co., Ltd. Annual Report 2017
Ltd e with
ann
ual
inte
rest
s
pay
men
t
Total 11,000 -- -- -- -- -- -- 843 0 -- 0 -- -- --
Whether there is the case where the principal cannot be recovered at maturity or other case which may cause impairment for
entrusted asset management
□ Applicable √ Not applicable
(2) Entrusted Loans
√ Applicable □ Not applicable
Overviews of entrusted loans during the Reporting Period
RMB’0,000
Total amount incurred Capital resources Undue Balance Overdue amount
0 No 0 0
Particulars of entrusted loans with single significant amount or low security, bad liquidity, and no capital preservation
□ Applicable √ Not applicable
Whether there is the case where the principal cannot be recovered at maturity or other case which may cause impairment for
entrusted loans
□ Applicable √ Not applicable
4. Other Significant Contracts
□ Applicable √ Not applicable
No such cases in this Reporting Period.
XVIII Social Responsibilities
1. Social Responsibilities Taken
The Company has prepared social responsibilities report for 2017, for details, see Social Responsibilities Report disclosed
simultaneously with Annual Report 2017 of the Company.
45
Lu Thai Textile Co., Ltd. Annual Report 2017
2. Targeted Measures Taken to Help People Lift themselves out of Poverty
(1) Plan for Targeted Measures
No
(2) Outline of Targeted Measures in the Reporting Period
The Company continued to subsidize the education and poor students in poor areas and continued to carry out the social poverty
alleviation in 2017. The Company will continue to subsidize staff in difficulty and help designated poor villages to solve actual
difficulties for staffs for the year.
(3) Results of Targeted Measures
Indicator Measurement unit Number/Progress
I. General condition —— ——
Of which: 1. capital RMB’0,000 101.1
II. Itemized investment —— ——
1. Out of poverty by industrial development —— ——
2. Out of poverty by transferring employment —— ——
3. Out of poverty by relocating —— ——
4. Out of poverty by education —— ——
Of which: 4.3 improve the invested
RMB’0,000 44.29
amounts n educational resources of poor areas
5. Out of poverty by improving health —— ——
6. Out of poverty by protecting ecological
—— ——
environment
7. Subsidy for the poorest —— ——
8. Social poverty alleviation —— ——
Of which: 8.2 the invested amounts in
RMB’0,000 37.05
designated poverty alleviation
9. Other items —— ——
Of which: 9.2 the invested amounts RMB’0,000 19.76
III. Received awards(contents and rank) —— ——
(4) Subsequent Targeted Measure Plans
No
46
Lu Thai Textile Co., Ltd. Annual Report 2017
3. Particulars Relevant to Environmental Protection
Is the Company or any of its subsidiaries a heavily polluting business identified by the environmental protection authorities of China?
Yes
Name of
Name of the main Carried
Number of Distribution Emission Verified
Company or pollutants Emission emission Total Excessive
discharge of discharge concentratio total
its and method standard of emission emission
outlet outlet n emission
subsidiaries characteristi pollutants
cs
Emission
standard of
COD are COD are
Huangjiapu water
COD≤180m 804.54 tons 1495.08
Industrial pollutants in
Lu Thai COD and g/L; and and tons and
Continuous Park; textile
Textile Co., ammonia 2 ammonia ammonia ammonia No
discharge East Zone dyeing and
Ltd nitrogen nitrogen≤5 nitrogen nitrogen
Industrial finishing
mg/L are are 149.51
Park industry:
32.53tons tons
GB
4287-2012
Emission
standard of
COD are COD are
water
COD≤155m 321.43 tons 575.985
Lufeng Lufeng pollutants in
COD and g/L; and and tons and
Weaving & Continuous chief textile
ammonia 1 ammonia ammonia ammonia No
Dyeing Co., discharge discharge dyeing and
nitrogen nitrogen≤3. nitrogen nitrogen
Ltd. outlet finishing
5mg/L are 6.959 are 57.6
industry:
tons tons
GB
4287-2012
Ultra-low
emission
No. 2
SO2 are SO2 are
modificati
SO2: 36.63 tons 217.84 tons
Zibo Production on list
≤35mg/m3、 /a and NQx /a and NQx
Xinsheng plant of LZJBF
SO2, NQx, Continuous NQx: ≤100 are 302.1 are 622.41
Thermal 3 Xinsheng (2016) No No
and smoke discharge mg/m3 and tons /a and tons /a and
Power Co., Thermal 46 of
smoke: ≤10 smoke are smoke are
Ltd. Power Emission
mg/m3 6.515 tons 62.24 tons
standard of
/a. /a.
air
pollutants
of Thermal
47
Lu Thai Textile Co., Ltd. Annual Report 2017
Power
Plant in
Shangdong
Province
Discharge
Lu Thai into sewage
Beside QCVN40:
(Vietnam) plant in the 445,000
Sewage 1 sewage / 2011/BTN / No
Textile Co., park district tons
plant MT
Ltd. after
treatment
Lu Thai Direct
QCVN19:
(Vietnam) discharge Beside 0.15 billion
Exhaust gas 2 / 2009/BTN / No
Textile Co., after boiler room m3
MT
Ltd. teratment
Construction of pollution prevention equipment and operation condition
Lu Thai Textile Co., Ltd. and its holding subsidiary Lufeng Weaving & Dyeing Co., Ltd. strictly implement the "Three
Simultaneous" management system for environmental protection in project constructions. The companies are equipped with complete
facilities for waste gas and waste water treatment. In 2017, Lu Thai Textile Co., Ltd. and its holding subsidiary Lufeng Weaving &
Dyeing Co., Ltd. carried out the waste water treatment system transformation project to improve the treated water quality and reduce
the impact on subsequent municipal waste water treatment plants. The river water quality and local ecological environment were
improved. Support teams were set up to be responsible for daily operation maintenance and inspection to guarantee the normal
operation of facilities. Both the exhaust emission and waste water discharge meet the emission standards. The wholly-owned
subsidiary Zibo Xinsheng Thermal Power Co., Ltd. enforces the "Three Simultaneous" management system for environmental
protection in extension project construction in accordance with the government requirements, and adopts the "limestone-gypsum
method" to reduce emission concentration of sulfur dioxide, the "SNCR+SCR method" to reduce emission concentration of nitrogen
oxides, and the "five-field electrostatic precipitator + wet electrostatic precipitator" to reduce soot emission concentration. The
overall system works well. The waste water treatment project of the wholly-owned subsidiary Lu Thai (Vietnam) Textile Co., Ltd. is
designed to treat 3,000 tons of sewage water daily, and the project was completed for operation on schedule in 2017. 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 QCVN 40:2011/BTNMT A-level emission standards stipulated
by the Vietnam government. The treated waste water is all discharged to the waste water treatment station in the park. Treated water
quality analysis for 2017: The COD (mean value) was 42.35 mg/L, the chrominance (mean value) was 34.57, the ammonia nitrogen
(mean value) was 0.87 mg/L, and the total phosphorus (mean value) was 0.12 mg/L. All the parameters met the A-level emission
standards set in the "Regulations on Parameters of Industrial Drainage in Vietnam" (QCVN40:2011/BTNMT). Waste water discharge
in the whole year met the standards without violation. The total amount of waste water discharged in the year was 445,000 tons,
among which, the chemical oxygen demand (COD) was 18.845 tons, ammonia nitrogen (NH3-N) was 387.15 kg and total
phosphorus (TP) was 53.4 kg. The Company is equipped with multi-pipe and water film dust-separation devices to process the
exhaust gas discharged from boilers of the Company. In 2017, all the equipment was in normal operation, and the exhaust gas
inspection parameters were lower than the QCVN19:2009/BTNMT emission standards set by Vietnam government.
Environmental impact assessment of projects and other environmental protection administrative licensing
In 2017, Lu Thai Textile Co., Ltd. completed the acceptance of environmental protection of 3 environmental impact assessment
projects, namely the high-end dyed fabric technical renovation project in the western region, the production line technological
renovation project of high-grade jacquard fabric with an annual output of 1.8 million meters of No. 2 weaving factory and the
48
Lu Thai Textile Co., Ltd. Annual Report 2017
intelligent dyeing production and energy and water saving technological renovation project. The Company also completed the review
and approval of 2 environmental assessment projects, namely treatment and comprehensive improvement project of PVA waste water
at high concentration of Lu Thai Textile (I) and treatment and comprehensive improvement project of PVA waste water at high
concentration of Lu Thai Textile (II). The environmental protection review and approval of liquid membrane separation of dyeing
waste water and treatment station comprehensive upgrading projects of the holding subsidiary Lufeng Weaving & Dyeing Co., Ltd.
were completed. The wholly-owned subsidiary Zibo Xinsheng Thermal Power Co., Ltd. got the "Approval of Environmental Impact
Assessment Report of the Environmental Protection Department of Shandong Province on the Extension Project of Zibo Xinsheng
Thermal Power Co., Ltd." (LHS [2015] No. 241) in accordance with the regulations, and the first phase of the project was put into
trial operation at the end of 2017. The completion acceptance of the environmental protection project for the spinning and dyeing
zone of the wholly-owned subsidiary Lu Thai (Vietnam) Co., Ltd. has been recognized, and the EIA report for the spinning and
dyeing industrial park Phase II is under application.
Emergency plan for environmental incidents
In 2017, Lu Thai Textile Co., Ltd. prepared the Emergency Plan for Environmental Incidents for the head office and factories in
eastern district, which was filed with Zibo Environmental Protection Bureau Xichuan Branch. The wholly-owned subsidiary Zibo
Xinsheng Thermal Power Co., Ltd. has formulated 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 mechanisms, emergency protection and supervision and management were included in the plan. The
wholly-owned subsidiary Lu Thai (Vietnam) Co., Ltd. has prepared emergency plans for different environmental incidents to reduce
their impacts.
Environmental self-monitoring programme
In accordance with the requirements of environmental protection authorities, Lu Thai Textile Co., Ltd. formulates environmental
self-testing plan for the following year in December of each year, and implements the self-monitoring plan to submit data to Zibo
Automatic Environmental Monitoring System. The wholly-owned subsidiary Zibo Xinsheng Thermal Power Co., Ltd. complies with
the requirements of superior environmental protection authorities to meet discharge standards by online real-time monitoring of
environmental protection data. The wholly-owned subsidiary Lu Thai (Vietnam) Co., Ltd. installed an on-line monitoring device for
real-time treated water quality monitoring. In addition, the Company invites external qualified testing organizations to carry out
inspections on waste water, sludge and exhaust gas every quarter, and provides reports to environmental inspection departments.
Other environment information that should be disclosed
No
Other related environment protection information
No
XIX Other Significant Events
□ Applicable √ Not applicable
No such cases in the Reporting Period.
XX Significant Events of Subsidiaries
□ Applicable √ Not applicable
49
Lu Thai Textile Co., Ltd. Annual Report 2017
Part VI Share Changes and Shareholder Information
I Share Changes
1. Share Changes
Unit: share
Before Increase/decrease (+/-) After
Increase
Percentag New Bonus from Percentag
Number Other Subtotal Number
e (%) issues shares capital e (%)
reserve
119,375,2 119,079,9
I. Restricted shares 12.94% -295,296 -295,296 12.91%
40 44
3. Shares held by other
1,142,840 0.12% -295,296 -295,296 847,544 0.09%
domestic corporations
Shares held by domestic
1,142,840 0.12% -295,296 -295,296 847,544 0.09%
natural persons
4. Shares held by foreign 118,232,4 118,232,4
12.82% 12.82%
investors 00 00
Among which: Shares held 118,232,4 118,232,4
12.82% 12.82%
by foreign corporations 00 00
803,227,0 803,522,3
87.06% 295,296 295,296 87.09%
II. Non-restricted shares 71 67
560,822,4 561,150,4
60.79% 327,971 327,971 60.82%
1. RMB ordinary shares 60 31
2. Domestically listed foreign 242,404,6 242,371,9
26.27% -32,675 -32,675 26.27%
shares 11 36
922,602,3 922,602,3
III. Total shares 100.00% 0 0 100.00%
11 11
Reasons for any share changes:
√ Applicable □ Not applicable
Due to the adjustment of unlock of senior managers’ shares and lock of share increase of Shenzhen branch of China Securities
Depository and Clearing Corporation Limited, 295,296 shares of “limited sales condition shares-domestic natural person holding” of
the Company decreased.
Approval of share changes:
□ Applicable √ Not applicable
50
Lu Thai Textile Co., Ltd. Annual Report 2017
Transfer of share ownership:
□ Applicable √ Not applicable
Effects of share changes on the basic EPS, diluted EPS, net assets per share attributable to common shareholders of the Company and
other financial indexes of the prior year and the prior period:
□ Applicable √ Not applicable
Other contents that the Company considers necessary or is required by the securities regulatory authorities to disclose:
□ Applicable √ Not applicable
2. Changes in Restricted Shares
√ Applicable □ Not applicable
Unit: share
Reason for
Name of Opening Unlocked in Increased in Closing restricted Date of
lock-up/unlockin
shareholder restricted shares Reporting Period Reporting Period shares unlocking
g
Locked the 6 months after
Qin Guiling (Lu shareholding of the departure
0 0 19,500 19,500
Thai B) the Senior
Executives
Locked the 6 months after
Liu Zilong (Lu shareholding of the departure
0 0 9,375 9,375
Thai B) the Senior
Executives
Locked the 6 months after
Pan Pingli (Lu Thai shareholding of the departure
19,950 0 3,800 23,750
B) the Senior
Executives
Total 19,950 0 32,675 52,625 -- --
II Issuance and Listing of Securities
1. Securities (Excluding Preference Shares) Issued in this Reporting Period
□ Applicable √ Not applicable
2. Changes in Total Shares of the Company and the Shareholder Structure, as well as the Asset and
Liability Structures
51
Lu Thai Textile Co., Ltd. Annual Report 2017
□ Applicable √ Not applicable
3. Existing Employee-held Shares
□ Applicable √ Not applicable
III Shareholders and Actual Controller
1. Total Number of Shareholders and their Shareholdings
Unit: share
Total number of
preference
Total number of
Total number of shareholders
common
preference with resumed
Total number shareholders at
shareholders with voting rights at
of common the prior
62,667 61,943 resumed voting 0 the prior 0
shareholders at month-end
rights at the month-end
the period-end before the
period-end (if any) before the
disclosure of this
(see note 8) disclosure of this
Report
Report (if any)
(see note 8)
5% or greater shareholders or the top 10 shareholders
Total Increase/ Pledged or frozen shares
Number Number
Sharehold shares decrease
of of
Name of Nature of ing held at during
restricted non-restric
shareholder shareholder percentag the this Status Number
shares ted shares
e (%) period-en Reporting
held held
d Period
Zibo Lucheng Domestic
140,353,5 140,353,5
Textile Investment non-state-owned 15.21% 0 0
83 83
Co., Ltd. corporation
Tailun (Thailand) Foreign 118,232,4 118,232,4
12.82% 0 0
Textile Co., Ltd. corporation 00 00
Central Huijin
Assets State-owned 20,315,30 20,315,30
2.20% 0 0
Management Co., corporation 0 0
Ltd.
T.ROWE PRICE Foreign 19,948,21 19,948,21
2.16% 0 0
INTL corporation 9 9
52
Lu Thai Textile Co., Ltd. Annual Report 2017
DISCOVERY
FUND
Hong Kong
Foreign 17,826,15 17,826,15
Securities Clearing 1.93% 11654438 0
corporation 5 5
Co., Ltd
China Securities
Domestic
Finance 15,679,09 15,679,09
non-state-owned 1.70% 0 0
Corporation 1 1
corporation
Limited
Bank of China
Limited-Hua’an
Domestic
New Silk Road 10,990,00 10,990,00
non-state-owned 1.19% 3790000 0
Theme Equity 0 0
corporation
Securities
Investment Fund
Hong Kong
Monetary Foreign
0.91% 8,414,637 4031977 0 8,414,637
Authority-self-own corporation
ed funds
RBC EMERGING
MARKETS Foreign
0.74% 6,785,384 356700 0 6,785,384
SMALL CAP corporation
EQUITY FUND
LYNAS ASIA Foreign
0.72% 6,682,153 -5757847 0 6,682,153
FUND corporation
Strategic investors or general
corporations becoming top-ten
N/A
shareholders due to placing of new
shares (if any) (see Note 3)
Zibo Lucheng Textile Investment Co., Ltd. is the largest shareholder of the Company and
the actual controller. Tailun (Thailand) Textile Co., Ltd. is the second largest shareholder as
Related or acting-in-concert parties
well as sponsor of foreign capital of the Company. All of other shareholders are people
among the shareholders above
holding circulating A share or circulating B share and the Company is not able to confirm
whether there is associated relationship or concerted action among other shareholders.
Shareholdings of the top ten non-restricted shareholders
Number of non-restricted shares held at the Type of shares
Name of shareholder
period-end Type Number
Zibo Lucheng Textile Investment Co., RMB common
140,353,583 140,353,583
Ltd. shares
Central Huijin Assets Management 20,315,300 RMB common 20,315,300
53
Lu Thai Textile Co., Ltd. Annual Report 2017
Co., Ltd. shares
Domestically
T.ROWE PRICE INTL DISCOVERY
19,948,219 listed foreign 19,948,219
FUND
shares
Hong Kong Securities Clearing Co., RMB common
17,826,155 17,826,155
Ltd shares
China Securities Finance Corporation RMB common
15,679,091 15,679,091
Limited shares
Bank of China Limited-Hua’an New
RMB common
Silk Road Theme Equity Securities 10,990,000 10,990,000
shares
Investment Fund
Hong Kong Monetary RMB common
8,414,637 8,414,637
Authority-self-owned funds shares
Domestically
RBC EMERGING MARKETS
6,785,384 listed foreign 6,785,384
SMALL CAP EQUITY FUND
shares
Domestically
LYNAS ASIA FUND 6,682,153 listed foreign 6,682,153
shares
Domestically
HTHK-MANULIFE CHINA VALUE
5,730,938 listed foreign 5,730,938
FUND
shares
Explanation about associated
relationship and concerted action Zibo Lucheng Textile Investment Co., Ltd. is the largest shareholder of the Company and
among the top ten shareholders not the actual controller. Tailun (Thailand) Textile Co., Ltd. is the second largest shareholder as
subject to trading moratorium as well well as sponsor of foreign capital of the Company. All of other shareholders are people
as between the top ten shareholders holding circulating A share or circulating B share and the Company is not able to confirm
not subject to trading moratorium and whether there is associated relationship or concerted action among other shareholders.
the top ten shareholders
Particulars about the top 10 common
shareholders participating in margin N/A
trading (if any) (Notes 4)
Indicate by tick mark whether any of the top ten common shareholders or the top ten non-restricted common shareholders of the
Company conducted any promissory repo during this Reporting Period.
□ Yea √ No
No such cases in this Reporting Period.
54
Lu Thai Textile Co., Ltd. Annual Report 2017
2. Information about the Controlling Shareholder
Nature of controlling shareholder: controlled by individual
Type of controlling shareholder: corporation
Name of controlling Legal representative
Date of establishment Organization code Business scope
shareholder / company principal
Investment on textile,
Zibo Lucheng Textile electricity and chemical;
Liu Deming 09/25/1998 91370303164200391J
Investment Co., Ltd. purchase, process and sale
of cotton; retail service etc.
Particulars about shareholding
of controlling shareholders
controlling and holding shares N/A
of other listed companies
during the Reporting Period
Change of the controlling shareholder during this Reporting Period
□ Applicable √ Not applicable
No such cases in this Reporting Period.
3. Information about the Actual Controller
Nature of actual controller: domestic individual
Type of actual controller: individual
Whether gain the right of residence in other countries or
Name of the actual controller Nationality
regions or not
Liu Zibin China No
Liu Deming China No
Liu Zibin is the Chairman of the Board and GM of Lu Thai Textile Co., Ltd. , Liu
Professions and titles Deming is the Chairman of the Board and GM of Zibo Lucheng Textile Investment
Co., Ltd.
Particulars about listed companies with
shares ever held by the actual controller over N/A
the past 10 years
Change of the actual controller during this Reporting Period
□ Applicable √ Not applicable
No such cases in this Reporting Period.
Ownership and control relations between the actual controller and the Company
55
Lu Thai Textile Co., Ltd. Annual Report 2017
Liu Zibin Liu Deming
4% 21%
Zibo Lucheng Textile Investment Co., Ltd.
0.02%
15.21%
Lu Thai Textile Co., Ltd.
The actual controller controls the Company in the means of entrustment or other means of assets
management
□ Applicable √ Not applicable
4. 10% or Greater Corporate Shareholders
√ Applicable □ Not applicable
Legal representative / Date of
Name of corporate shareholder Registered capital Business scope
company principal establishment
600 million baht 600 million baht (Thai)
Tailun (Thailand) Textile Co., Ltd. Xu Zhinan 01/29/1985
(Thai)
5. Limitations on Shareholding Decrease by the Company’s Controlling Shareholder, Actual Controller,
Reorganizer and Other Commitment Makers
□ Applicable √ Not applicable
56
Lu Thai Textile Co., Ltd. Annual Report 2017
Part VII Preferred Shares
□ Applicable √ Not applicable
No preferred shares in the Reporting Period.
57
Lu Thai Textile Co., Ltd. Annual Report 2017
Part VIII Directors, Supervisors, Senior Management and Staff
I Changes in Shareholdings of Directors, Supervisors and Executive Officers
Increase Decrease
Opening Other Closing
in this in this
Office Incumben Starting Ending sharehold increase/d sharehold
Name Gender Age date of date of Reporting Reporting
title t/former tenure tenure ing ecrease ing
Period Period
(share) (share) (share)
(share) (share)
Chairman 06/06/200 06/05/201
Liu Zibin Current Male 53 148,290 148,290
, GM 7 9
Xu Vice 05/06/200 06/05/201
Current Male 88
Zhinan President 4 9
Fujiwara 05/07/199 06/05/201
Director Current Male 78
Hidetoshi 8 9
Chen 04/16/200 06/05/201
Director Current Male 74
Ruimou 0 9
Zeng 06/06/200 06/05/201
Director Current Male 67
Facheng 7 9
Director
and Vice
Wang 05/07/199 06/05/201
GM and Current Male 57 146,753 146,753
Fangshui 8 9
Chief
Engineer
Liu 05/12/201 06/09/201
Director Current Male 27
Deming 7 9
Director
Qin and 05/07/199 06/05/201
Current Female 52 107,042 19,500 126,542
Guiling Chairman 8 9
Secretary
Director
Zhang and Chief 06/06/201 06/05/201
Current Female 48 92,500 92,500
Hongmei Accounta 6 9
nt
Independ
Xu 06/06/201 06/05/201
ent Current Male 44
Jianjun 3 9
Director
Independ 09/19/201 06/05/201
Zhao Yao Current Male 48
ent 4 9
58
Lu Thai Textile Co., Ltd. Annual Report 2017
Director
Independ
06/06/201 06/05/201
Bi Xiuli ent Current Female 51
6 9
Director
Independ
Pan 06/06/201 06/05/201
ent Current Female 53
Ailing 6 9
Director
Independ
Wang 06/06/201 06/05/201
ent Current Male 51
Xinyu 6 9
Director
Superviso
Li 09/19/201 06/05/201
ry Board Current Male 62 176,164 176,164
Tongmin 4 9
Chairman
Liu Superviso 06/06/200 06/05/201
Current Male 50 10,000 10,000
Zilong r 7 9
Dong Superviso 06/06/200 06/05/201
Current Male 49 5,000 5,000
Shibing r 7 9
Zhang 06/06/200 06/05/201
Vice GM Current Male 50 52,150 52,150
Jianxiang 7 9
Vice GM,
Wang 06/06/200 06/05/201
Product Current Male 55 83,700 83,700
Jiabin 7 9
Manager
Vice GM,
Zhang Managem 06/06/200 06/05/201
Current Male 48 73,100 73,100
Shougang ent 7 9
Manager
Vice GM,
Zhang GM of 06/06/200 06/05/201
Current Male 46 80,300 80,300
Zhanqi Lufeng 7 9
Company
Manager
Fujiwara of clothes
12/09/201 06/05/201
Matsuzak marketing Current Male 45
4 9
a departme
nt
Zhang Financial 06/06/200 06/05/201
Current Male 50 77,700 77,700
Keming Manager 7 9
06/08/201 06/05/201
Li Wenji CIO Current Male 51 10,000 10,000
6 9
Pan Customs Current Male 50 06/06/200 06/05/201 130,496 3,800 134,296
59
Lu Thai Textile Co., Ltd. Annual Report 2017
Pingli Manager 7 9
Vice GM
Lv 06/06/200 06/05/201
of Lufeng Current Male 50 33,750 33,750
Yongchen 7 9
Company
Yu Energy
06/06/200 06/05/201
Shouzhen Business Current Male 50 83,100 83,100
7 9
g Manager
GM
assistant,
Wang manager
06/06/201 06/05/201
Changzha of fabric Current Male 44 22,500 22,500
3 9
o marketing
departme
nt
Manager
of brand
Quan expandin 06/06/201 06/05/201
Current Male 51 27,750 27,750
Peng g 3 9
departme
nt
Manager
of
Shang garments
06/06/201 06/05/201
Chenggan productio Current Male 45 30,000 30,000
3 9
g n
departme
nt
Total -- -- -- -- -- -- 1,380,295 33,300 0 0 1,413,595
II Changes in Directors, Supervisors and Executive Officers
√ Applicable □ Not applicable
Name Position Type Date Reason
Appointed and
Liu Deming Director 05/12/2017 Elected as Director of the 8th Board of the Directors.
dismissed
III Brief Biographies
Professional backgrounds, main working experience and current responsibilities in the Company of the incumbent directors,
supervisors and executive officers
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 was
Chairman of the Board of Xinjiang Lu Thai Good Yield Cotton Co., Ltd., Xinjiang Lu Thai Textile, Lufeng Weaving & Dyeing,
60
Lu Thai Textile Co., Ltd. Annual Report 2017
Luqun Textile, Xinsheng Thermal Power, Chengshun Thermal Power, Shanghai Li Thai, and Beijing Lu Thai Youxian, and the
President of Lu Thai (America), Director of Lu Thai (Hong Kong).
2. Mr. Xu Zhinan: Vice Chairman of the Board of the Company. He was born in 1930, Thailand Nationality. Since 2004, he has been
acting as Director 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 holding
post 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 been
Director 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 GOLD
MINE 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 MBA
degree. Since 1998, he has been Director and Chief Engineer of the Company, and concurrently is Director of Xinjiang Lu Thai Good
Yield Cotton Co., Ltd., Lufeng Weaving & Dyeing, Xinjiang Lu Thai Luqun Textile, 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 the
Chairman and GM of Zibo Lucheng Textile Investment Co., Ltd, and the supervisor of Beijing Lu Thai Youxian.
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 Supervisory Board Chairman of Xinjiang Lu Thai.
9. Ms. Zhang Hongmei: Chief Accountant. She was born in 1970; holder of MBA degree and senior accountant. She had served
successively as Chief of cost section of financial department of Lu Thai Textile Co., Ltd., director of the accounting department and
deputy 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.
10. Mr. Xu Jianjun: Independent Director of the Company, born in 1974, master degree holder. Once took the post of Senior Staff
Member of Head Office of Bank of China, Legal Counsel, lawyer at Beijing Jingtian Gongsheng Law Firm. From August of 2004 up
to now, serves as a partner of Beijing Deheng Law Firm. Now he is taking a post of partner and Deputy Director of Beijing Deheng
Law Firm.
11. Mr. Zhao Yao: Independent Director of the Company, born in 1970, master degree holder, associate professor of accounting,
master tutor and successively acted as member of a council of Accounting Association in Shandong Province, executive member of
the council of Shandong Province Institute of CPAs, member of Shandong Province internal control consultant experts, member of
Shandong Province accounting criterion consultant experts and currently act as Director of Department of Accounting of Shandong
University of Technology.
12. Ms. Bi Xiuli: female, independent director of the Company, born in 1967, master. She worked as a judge of Zibo Intermediate
People's Court from 1990 to 1996, worked as a lawyer of Beijing Jingwei Law Firm from 2002 to 2003, worked as a lawyer of
Beijing King & Capital Law Firm from 2003 to 2004, worked as a partner of Beijing JunZeJun Law Offices from 2004 to 2011 and
works as a partner of Beijing DeHeng Law Offices now.
13. Ms. Pan Ailing: female, independent director of the Company, born in 1965, doctor of economics, postdoctor of financial
management. Now, she works as a professor, doctoral supervisor and academic leader of accounting in School of Management of
Shandong University, the director of investment and financing research center of Shandong University, a member of Shandong
Accounting Society, an executive member of Shandong Research Society of Comparative Management and a visiting professor of
Taiwan Soochow University.
14. Mr. Wang Xinyu: male, independent director of the Company, born in 1967, master, certified public accountant, certified tax
agent and certified public assets estimator. From December 2007 to August 2013, he worked in Zhonglei Accounting Firm as the
vice general manager of Shandong branch. Now he works as the senior partner and director of Shandong branch of Reanda Certified
Public Accountants (special general partnership).
15. Mr. Li Tongmin: male, chairman of board of supervisors of the Company, born in 1956, technical secondary school education.
61
Lu Thai Textile Co., Ltd. Annual Report 2017
Now he works as chairman of the labor union of the Company. From October 1993 to 2010, he worked as supervisor, vice general
manager and the manager of production department of the Company.
16. Mr. Liu Zilong: Supervisor of the Company. He was born in 1968, holder of MBA degree. From 2002 to present, he was General
Manager 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 took
the post of Deputy Director of the General Manager Office of the Company, and now holds post of Manager of Property
Management Company.
18. Mr. Zhang Jianxiang: male, vice general manager of the Company & the executive director of Lu Thai Textile Garment
Engineering Research Institute, born in 1968, Master of Business Administration. He once worked as the manager of quality
management 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 security
checkpoint of production department. He was born in 1963, MBA and once acted as Manager of Dyeing Business Department.
20. Mr. Zhang Shougang: Assistant General Manager, Garment Division Manager of the Company. He was born in 1970, MBA and
senior engineer, once was Director of Weaving Factory, Manager of Weaving Business Department and Manager of Quality Control
Department in the Company.
21. Mr. Zhang Zhanqi: General Manager Assistant and deputy General Manager in Lufeng Weaving & Dyeing of the Company. He
was born in 1972, MBA, once worked as Director of Fabric Finishing Plant and Manager of Quality Control Department.
22. Mr. Fujiwara Matsuzaka: Manager of clothes marketing department of the Company. He was born in 1973 and had acted as
General Manager of International Business Department I of the Company.
23. Mr. Li Wenji: male, CIO & manager of information department of the Company, born in 1967. He once worked as a teacher in
Shandong University of Finance and Economics. From July 2005 to now, he works as the manager of information department of the
Company. In 2016, he was employed as chief information officer of the Company.
24. Mr. Zhang Keming: Manager of Financial Department of the Company. He was born in 1968, MBA and senior accountant. From
2002 to 2006, he held the post of Deputy Manager of Financial Department; from Apr. 2006 to present, he has acted as General
Manager of Financial Department.
25. Mr. Pan Pingli: Customs Manager of the Company. He was born in 1968 and MBA degree holder. He ever acted as General
Manager of International Business Department of the Company.
26. Mr. Lv Yongchen: Deputy General Manager of Lufeng Weaving and Dyeing Co., Ltd. He was born in 1968 and MBA degree
holder. From 2002 to 2010, he acted as Deputy Manager of International Business Department in the Company.
27. Mr. Yu Shouzheng: Energy Business Manager of the Company. He was born in 1968, MBA degree holder and engineer. He once
worked as Director of Dynamic Department in the Company. From 2007 to present, he has acted as Manager of Energy Business
Department in the Company.
28. Mr. Wang Changzhao: GM assistant, manager of fabric marketing department of the Company. He was born in 1974 and had
acted as General Manger Assistant of International Business Department.
29. Mr. Quan Peng: Manager of brand expanding department of the Company. He was born in 1967, MBA degree holder. From 2004
to present, he has acted as Marketing Manager.
30. Mr. Shang Chenggang: manager of garments production department of the Company, born in 1973. He once worked as the vice
director and director of general manager office, the manager of enterprise manager department and the representative of managers.
Posts concurrently held in shareholding entities
√Applicable □Not applicable
Name of Posts held in Start date of Whether receiving
Name of shareholders’ companies Expiration
employers shareholders’ tenure subsidies and
62
Lu Thai Textile Co., Ltd. Annual Report 2017
companies Date of tenure remuneration in
shareholders’
companies
Liu Zibin Zibo Lucheng Textile Investment Co., Ltd. Director 02/26/1999 No
Xu Zhinan Tailun (Thailand) Textile Co., Ltd. Chairman 01/29/1985 No
Chairman and
Liu Deming Zibo Lucheng Textile Investment Co., Ltd. 02/01/2017 No
GM
Mr. Liu Zibin is the Director of Zibo Lucheng Textile Investment Co., Ltd., holding 4% equities of Zibo Lucheng
Explanations Textile Investment Co., Ltd. Basic information of Mr. Liu Zibin: Chinese, no right of residence in other countries
about holding or regions. Mr. Liu Deming holds the post of Chairman and GM of Zibo Lucheng Textile Investment Co., Ltd.,
posts in holding 21% equities of Zibo Lucheng Textile Investment Co., Ltd. Basic information of Mr. Liu Deming:
shareholders’ Chinese, no right of residence in other countries or regions. Mr. Xu Zhinan is the sponsor of foreign capital of the
companies Company, shareholder of Tailun (Thailand) Textile Co., Ltd. and Tailun (Thailand) Textile Co., Ltd. is the second
largest shareholder of the Company. Basic information about Mr. Xu Zhinan: Thai.
Posts held concurrently in other entities
√Applicable □Not applicable
Whether
Posts held in receiving
Name of Start date of Expiration Date
Name of other companies shareholders’ subsidies and
employers tenure of tenure
companies remuneration in
other companies
Xinjiang Lu Thai Good Yield Cotton Co.,
Ltd., Xinjiang Lu Thai Textile Co., Ltd.,
Lufeng Weaving & Dyeing Co., Ltd. Zibo
Chairman,
Luqun Textile Co., Ltd., Zibo Xinsheng
Director,
Thermal Power Co., Ltd., Zibo Chengshun
Chairman of
Liu Zibin Thermal Power Co., Ltd., Shanghai Lu Thai 12/07/2015 No
Supervisory
Textile Garment Co., Ltd., Beijing Lu Thai
Board, and
Youxian E-commerce Co., Ltd., Lu Thai
GM
(America) Textile Co., Ltd. Lu Thai (HK)
Textile Co., Ltd, Beijing Sichuang Garment
Co., Ltd
Xinjiang Lu Thai Good Yield Cotton Co.,
Ltd., Xinjiang Lu Thai Textile Co., Ltd.,
Wang Fangshui Lufeng Weaving & Dyeing Co., Ltd. Zibo Director 06/17/2003 No
Luqun Textile Co., Ltd., Lu Thai (Burma)
Textile Co., Ltd.
Beijing Lu Thai Youxian E-commerce Co.,
Liu Deming Supervisor 08/21/2017 No
Ltd.
Xinjiang Lu Thai Good Yield Cotton Co., Supervisory
Qin Guiling 06/17/2003 No
Ltd. Board
63
Lu Thai Textile Co., Ltd. Annual Report 2017
Chairman
Zibo Luqun Textile Co., Ltd., Beijing Lu Director and
Zhang Hongmei 06/17/2003
Thai Youxian E-commerce Co., Ltd. Supervisor
Xu Jianjun Beijing Deheng Law Offices Partner 08/01/2004 Yes
Associate
Zhao Yao Shandong University of Technology 03/01/2001 Yes
Professor
Bi Xiuli Beijing Deheng Law Offices Partner 01/01/2011 Yes
Shandong University School of
Pan Ailing Professor 07/01/1986 Yes
Management
Reanda Certified Public Accountants
Wang Xinyu Director 08/01/2013 Yes
Shandong Branch
Explanations
about
Except independent directors, other companies directors, supervisors, senior executives are holding posts in are all
employment in
controlling subsidiaries of the Company.
other
companies
Punishments imposed in the recent three years by the securities regulators on the incumbent directors, supervisors and executive
officers as well as those who left in this Reporting Period
□ Applicable √ Not applicable
IV Remuneration of Directors, Supervisors and Executive Officers
Decision-making procedure, determination basis and actual remuneration payment of directors, supervisors and executive officers
Decision-making Remuneration committee under the board of directors is responsible for formulating assessment
procedures of standards of directors and senior executives and conducting assessment; for formulating and reviewing
remuneration of directors, remuneration policy and program of directors and senior executives; it is responsible for the board of
supervisors, senior directors. The remuneration committee, according to appraisal results of position performance and
executives motivation and restriction plan for senior executives, proposes amount of payment and methods of
reward for directors and senior executives and submits the above resolutions to the board of directors for
ratification after the approval by voting.
Determinate basis of The Chief Accountant Office, the Corporate Management Department and the HR Department of the
remuneration of directors, Company was responsible for preparations for the decision-making of the Remuneration and Appraisal
supervisors, senior Committee by providing relevant information of the Company as follows: (I) accomplishment of main
executives financial and business objectives; (II) accomplishment of relevant indicators of other listed companies in
the sector; (III) work scope and main responsibilities of senior management staff.
The remuneration committee appraised directors and senior management staff according to the
completion situation of the Company’s performance and the annual appraisal results of senior
management staff were put forward according to the performance appraisal results and the senior staff
incentive and disciplinary plan. Upon approval by voting, the results were reported to the Board of
Directors for approval.
Actual payment of The number of incumbent directors, supervisors and senior executives is 30, among which there are 30
64
Lu Thai Textile Co., Ltd. Annual Report 2017
remuneration of directors, persons actually receiving remuneration from the Company. Till December 31, 2017, the total amount of
supervisors, senior annual payment drawn from the Company by directors, supervisors and senior executives is RMB21.
executives 8813million (before tax).
Remuneration of directors, supervisors and executive officers in this Reporting Period
Unit: RMB'0,000
Whether gained
Total before-tax
remuneration
remuneration
Name Position Gender Age Current/former from the related
gained from the
parties of the
Company
Company
Chairman and
Liu Zibin Male 53 Current 115.7 No
GM
Xu Zhinan Vice President Male 88 Current 36.1 No
Fujiwara
Director Male 78 Current 440.98 No
Hidetoshi
Chen Ruimou Director Male 74 Current 36.1 No
Zeng Facheng Director Male 67 Current 1.19 No
Director and Vice
Wang Fangshui GM and Chief Male 57 Current 132.42 No
Engineer
Liu Deming Director Male 27 Current 4.94 No
Director and
Qin Guiling Chairman Female 52 Current 127.62 No
Secretary
Director and
Zhang Hongmei Female 48 Current 89.11 No
Chief Accountant
Independent
Xu Jianjun Male 44 Current 4.8 No
Director
Independent
Zhao Yao Male 48 Current 4.8 No
Director
Independent
Bi Xiuli Female 51 Current 4.8 No
Director
Independent
Pan Ailing Female 53 Current 4.8 No
Director
Independent
Wang Xinyu Male 51 Current 4.8 No
Director
Supervisory
Li Tongmin Male 62 Current 128.6 No
Board Chairman
65
Lu Thai Textile Co., Ltd. Annual Report 2017
Liu Zilong Supervisor Male 50 Current 63.6 No
Dong Shibing Supervisor Male 49 Current 62.15 No
Zhang Jianxiang Vice GM Male 50 Current 84.69 No
Vice GM,
Wang Jiabin Male 55 Current 87.93 No
Product Manager
Vice GM,
Zhang Shougang Management Male 48 Current 77.85 No
Manager
Vice GM, GM of
Zhang Zhanqi Male 46 Current 78.19 No
Lufeng Company
Manager of
Fujiwara
clothes marketing Male 45 Current 114.01 No
Matsuzaka
department
Financial
Zhang Keming Male 50 Current 71.41 No
Manager
Li Wenji CIO Male 51 Current 49.07 No
Customs
Pan Pingli Male 50 Current 58.91 No
Manager
Vice GM of
Lv Yongchen Male 50 Current 61.52 No
Lufeng Company
Energy Business
Yu Shouzheng Male 50 Current 61.18 No
Manager
GM assistant,
manager of fabric
Wang Changzhao Male 44 Current 60.37 No
marketing
department
Manager of brand
Quan Peng expanding Male 51 Current 60.94 No
department
Manager of
Shang garments
Male 45 Current 59.55 No
Chenggang production
department
Equity incentives for directors, supervisors and executive officers in this Reporting Period
□ Applicable √ Not applicable
66
Lu Thai Textile Co., Ltd. Annual Report 2017
V Employees
1. Number, Functions and Educational Backgrounds of Employees
Number of the serving employees of the parent company
14,277
(person)
Number of the serving employees of the major subsidiaries
10,926
(person)
Total number of the serving employees (person) 25,203
Total number of the employees receiving the salary of the
25,203
Reporting Period (person)
Number of the left and retired employees that the parent
company and the major subsidiaries should undertake the 0
expenses (person)
Component difference
Category Number (person)
Production personnel 18,871
Sales personnel 549
Technical personnel 5,206
Financial personnel 75
Administrative personnel 502
Total 25,203
Educational background
Category Number (person)
Doctor 4
Master 93
Bachelor 1,119
College 6,072
High school and below 17,915
Total 25,203
2. Employee Remuneration Policy
The Company has formulated a remuneration management system with its principle being “payment according to one’s work and
more pay for more work”. Through post evaluation and through researches of Social salary levels carried out as multi-faceted, as well
as the formulation of the reasonable salary management system, fully demonstrates the internal fairness, self-fairness and external
fairness. It has greatly motivated the employees and enhanced the corporate management.
67
Lu Thai Textile Co., Ltd. Annual Report 2017
3. Employee Training Plans
Trainings will be carried out according to requirements of the Company’s strategic development planning, improvement of
employees’ capability, performance management, employees’ career planning, etc. The annual training plan is determined by carrying
out researches on training needs. And the training courses fall into three major categories, i.e. management, technical skills and
general knowledge. Through these trainings, the Company will improve the knowledge structure of its employees, improve their job
skills and increase their comprehensive quality to provide excellent human resources for the long-term, sustained and stable
development of the Company.
4. Labor Outsourcing
□ Applicable √ Not applicable
68
Lu Thai Textile Co., Ltd. Annual Report 2017
Part IX Corporate Governance
I Basic Situation of Corporate Governance
The Company continued to perfect the corporate governance structure, establish and perfect the modern enterprise system and ensure
the efficient and standardized operation of the Company’s Shareholders’ General Meeting, Board of Directors, Board of Supervisors
and Senior Executives strictly according to Company Law, Securities Law and Governing Rules for Listed Company as well as
relevant stipulations and requirements from CSRC. It formed a relationship of clear division of rights and responsibilities, assuming
each own functions and check and balance each other between the management organ, decision-making organ, supervisory organ and
management layer, so as to provide a good internal operational environment for the Company’s standardized and efficient operation.
During the Reporting Period, the Company revised Articles of Lu Thai Textile Co., Ltd. and Authorized Management System of Lu
Thai Textile Co., Ltd. At present, there is no difference between the actual situation of the Company’s corporate governance structure
and the requirements on the corporate governance of CSRC and Shenzhen Stock Exchange.
1. Shareholders and Shareholders’ General Meeting
The Company convened and held the Shareholders’ General Meeting in strict accordance with the stipulation of the Rules of
Procedure for Shareholders’ General Meeting. In 2017, as for the convening conditions of extraordinary general meetings and the
medias of information disclosure, the Company revised part of the regulations of the Articles of Association and Rules of Procedure
of the Shareholders' General Meeting of Lu Thai Textile Co., Ltd. according to the requirements of the Rules of Procedure of the
Shareholders' General Meeting of Listed Companies and Index of Articles of Listed Companies (revised in 2016), which ensured that
the convening conditions were in line with the actual situations of the Company and the information disclosure was timely and
accurate.
2. The relationship between the principal shareholders and the Company
The Company’s principal shareholders acted according to relevant standards without directly or indirectly intervening the Company’s
decision-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 completely
independent to operate. There was no situation about annexing the assets or occupation of funds of the Company by principal
shareholders or other events on infringing the interest of the Company and other shareholders.
3. The directors and Board of Directors
The Company nominated and elected directors in strict accordance with the Articles of Association, the structure of the Board of
Directors and the number of independent directors was in compliance with the requirement of laws and regulations. Besides, it
established four special committees such as Strategy Committee, Nomination Committee, Audit Committee and Remuneration &
Appraisal Committee in accordance with the Rules of Procedure for the Board of Directors, and accordingly promulgated the work
rules for the committees. The committees clearly understood their responsibilities and operated well. The directors and independent
directors completely enjoyed the rights stipulated in Company Law and Articles of Association, which ensure the scientific and
impartial decision made by the Board of Directors of the Company. During the Reporting Period, the Company revised the Rules of
Procedure of the Board of Directors of Lu Thai Textile Co., Ltd. according to the actual situation and revised the number of the
Directors, and review permission of Board of Directors to assets disposal, external guarantee for assets pledge, related-party
transactions, and investment plan of derivatives.
4. Supervisors and Supervisory Committee
The Company’s Supervisory Committee and supervisors conscientiously performed their duties by strictly implementing relevant
regulations of Articles of Association and the Rules of Procedure for Supervisory Committee, and conducted effective supervision on
the Company’s finance, the legal and regulatory compliance of directors and senior executive in duty performance. During the
69
Lu Thai Textile Co., Ltd. Annual Report 2017
Reporting Period, according to Index of Articles of the Listed Companies (revised in 2016), the Company revised the Rules of
Procedure of the Supervisory Board of Lu Thai Textile Co., Ltd combined with the revision of Articles of Association.
5. Information disclosure
In order to ensure the truthfulness, accuracy, completeness and timeliness of company information disclosure, during the reporting
period, the Company made revision on the "Information Disclosure Management System of Lu Thai Textile Co., Ltd." in accordance
with the "Administrative Measures for the Disclosure of Information of Listed Companies ", "Stock Listing Rules (Revised in 2014)"
of Shenzhen Stock Exchange, and " Standard Operation of Companies Listed on the Main Board (Revised in 2015)" and other
relevant provisions as well as the "Notice on Further Improving Investor Protection in the Capital Market of Shandong Province
(LZJF [2017] No. 6 Document)" issued by the Shandong Securities Regulatory Bureau.
6. Investor relations management
During the reporting period, to maintain good communication with investors, the Company accepted on-site investigations and
consultations of investors through on-site investigations and telephone consultations, and promptly answered questions asked by
investors on the SZSE Easy-IR. During the reporting period, based on actual situation, the Company made revision on the
"Information Disclosure Management System of Lu Thai Textile Co., Ltd." in accordance with the relevant laws, regulations,
normative documents of the "Stock Listing Rules of Shenzhen Stock Exchange", "Guidelines for Relations between Listed
Companies and Investors", "Guidelines of the Shenzhen Stock Exchange for the Standard Operation of Listed Companies on the
Main Board" and the Articles of Associations.
Any significant incompliance with the regulatory documents issued by the CSRC governing the governance of listed companies
□ Yes √ No
No such cases in this Reporting Period.
II Independence of Businesses, Personnel, Asset, Organizations and Finance which are
Separate from the Controlling Shareholder
1. As for the business: the Company completely separates from the controlling shareholders in the business that possesses the entirely
independent 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, the
personnel 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 the
production system, auxiliary production systems and supporting facilities; and possesses the independent ownership of the intangible
assets 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 any
situation of working with the controlling shareholders.
5. As for the finance: the Company possesses independent financial departments with normative financial accounting system and
financial management system as well as internal control system with independent bank account.
III Horizontal Competition
□ Applicable √ Not applicable
70
Lu Thai Textile Co., Ltd. Annual Report 2017
IV Annual and Special Meetings of Shareholders Convened during this Reporting Period
1. Meetings of Shareholders Convened during this Reporting Period
Proportion of
Index to the
Session Type investors' Convening date Disclosure date
disclosed
participation
Announcement on
the Resolution of the
Meeting (No.:
2017-010) disclosed
on March 22, 2017
2017 1st
Extraordinary on Securities Times,
Extraordinary 0.00% 03/21/2017 03/22/2017
General Meeting China Securities
General Meeting
Journal, Shanghai
Securities News, Ta
Kung Pao, and
http://www.cninfo.co
m.cn
Announcement on
the Resolution of the
Meeting (No.:
2017-023) disclosed
on May 13, 2017 on
2016 Annual General Annual General Securities Times,
0.00% 05/12/2017 05/13/2017
Meeting Meeting China Securities
Journal, Shanghai
Securities News, Ta
Kung Pao, and
http://www.cninfo.co
m.cn
Announcement on
the Resolution of the
Meeting (No.:
2017-030) disclosed
on August 25, 2017
2017 2nd
Extraordinary on Securities Times,
Extraordinary 0.00% 08/24/2017 08/25/2017
General Meeting China Securities
General Meeting
Journal, Shanghai
Securities News, Ta
Kung Pao, and
http://www.cninfo.co
m.cn
71
Lu Thai Textile Co., Ltd. Annual Report 2017
Announcement on
the Resolution of the
Meeting (No.:
2017-047) disclosed
on November 9,
rd
2017 3 2017 on Securities
Extraordinary
Extraordinary 0.00% 11/08/2017 11/09/2017 Times, China
General Meeting
General Meeting Securities Journal,
Shanghai Securities
News, Ta Kung Pao,
and
http://www.cninfo.co
m.cn
2. Special Meetings of Shareholders Convened at the Request of Preference Shareholders with Resumed
Voting Rights
□ Applicable √ Not applicable
V Performance of Independent Directors in this Reporting Period
1. Attendance of Independent Directors in Board Meetings and General Meetings of Shareholders
Attendance of independent directors in Board Meetings and General Meetings of Shareholders
Absent in
Due presence Presence in Presence in Presence
Presence in Absence in Board
in Board Board Board General
Independent Board Board Meetings for
Meetings in Meetings by Meetings Meetings of
director name Meetings on Meetings two
this Reporting telecommunica through a Shareholders
site (times) (times) consecutive
Period (times) tion (times) proxy (times) (times)
times
Xu Jianjun 10 1 8 1 0 No 0
Zhao Yao 10 2 8 0 0 No 0
Bi Xiuli 10 1 8 1 0 No 0
Pan Ailing 10 2 8 0 0 No 0
Wang Xinyu 10 2 8 0 0 No 1
Notes to non-attendance in Board Meetings in person for two consecutive times
Not applicable.
2. Objections Raised by Independent Directors on Issues of the Company
Indicate by tick mark whether any independent directors raised any objections on issues of the Company.
□ Yes √ No
No such cases in this Reporting Period.
72
Lu Thai Textile Co., Ltd. Annual Report 2017
3. Other Details about the Performance of Duties by Independent Directors
Indicate by tick mark whether any suggestions from independent directors were adopted by the Company.
√ Yes □ No
Suggestions from independent directors adopted or not adopted by the Company:
The Independent Directors of the Company had not raised any objection to the proposals and other events approved and reviewed by
the Board of the Directors while executed the carefully review on the events needed advices and put forward the professional
suggestion and advice as well as stated 15 independent advices which improved the scientificity and objectivity of the
decision-making that exerted the due role on the supervision mechanism for improving the Company.
VI Performance of Duties by Specialized Committees under the Board during this Reporting
Period
I. Duty fulfillment of Audit Committee under the Board
1. Major work of the 2017 annual report of the Audit Committee:
(1) The Audit Committee had held the 2017 the 1st Meeting of the Audit Committee on the Financial Audit Work in the meeting room
of the Company on November 17, 2017 and the meeting had confirmed the time and arrangement plan of the 2017 annual financial
audit work unanimously with the 2017 Audit Institution Ruihua CPAs (LLP).
(2) On January 27, 2018, the Audit Committee had held the 2nd Meeting of the 2017 Audit Work, which reviewed and submitted the
financial 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 Ruihua
CPAs (LLP) by the methods such as the telephones and e-mails and had been urged which to submit the audit report within the
appointed time.
(4) The 3rd Meeting on 2017 Annual Audit and the 2017 Annual Work Conference, were convened by the Committee on April 15,
2018, where the following proposals were approved as resolutions, namely, the audited 2017 Financial Report of the Company, the
Summary Report on the Audit Conducted by Ruihua CPAs (LLP) on the Company’s 2017 Financial Report.
2. Written opinions, summary report of the annual audit, and resolutions of 2017 Work Conference on Annual Report by Audit
Committee
(1) According to the Rules for Audit Committee of the Board Concerning Annual Reports of Lu Thai Textile Co., Ltd., the Audit
Committee shall perform its duties of conducting supervision and checks in the Company’s preparation and disclosure of its annual
reports. The Committee reviewed the 2017 financial and accounting statements prepared by the Company’s Financial Department
before the presence of the registered accountants for the annual audit, and expressed its opinion as follows:
1. The financial and accounting statements were prepared in accordance with the Company’s accounting policy with proper
application of the accounting policy and reasonable accounting estimates, which were in line with the New Accounting Standards for
Business Enterprises, the Accounting System for Business Enterprises, and the relevant regulations issued by the Ministry of Finance
of PRC;
2. The subsidiary statements included in the Company’s consolidated statements were complete in terms of contents, providing an
accurate basis for the statement combination;
3. The Company’s financial statements were found objective, factual and accurate with no major misstatements or information
omission.
4. Since there is still a certain period of time from this review of the financial statements to the formal issuance of the auditor’s report
and the financial statements, the Company’s Financial Department is advised to pay close attention to and carefully handle the
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Lu Thai Textile Co., Ltd. Annual Report 2017
matters after the balance sheet date, so as to ensure the fairness, factuality and completeness of the financial statements. The Audit
Committee is of the opinion that the financial and accounting statements are ready to be submitted to the registered accountants for
audit.
(2) Audit Committee’s written opinion on the Company’s financial statements after the preliminary audit opinion was issued by
Ruihua CPAs (LLP):
According to the Rules for Audit Committee of the Board Concerning Annual Reports of Lu Thai Textile Co., Ltd., the Audit
Committee shall perform its duties of conducting supervision and checks in the Company’s preparation and disclosure of its annual
reports. We effectively communicated with the said CPA firm (LLP) at the beginning of the audit. And we once again reviewed the
Company’s 2017 financial and accounting statements following the preliminary audit opinion to the Company’s 2017 financial
statements 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 financial
statements were prepared in a rational and standardized way, which fairly, factually, accurately and completely presented the
Company’s assets, liabilities, shareholders’ equity and operation results by December 31, 2017.
The Audit Committee is of the opinion that the Company’s 2017 financial and accounting statements preliminarily audited by RSM
China Certified Public Accountants (Special General Partnership) are ready to be submitted to the 16th Session of the 8th Board of the
Directors for review.
(3) Resolutions made at 2017 Annual Work Conference of Audit Committee of the Board
The Audit Committee of the Board of Lu Thai Textile Co., Ltd. held its 2017 Annual Work Conference at Banyang Villa Meeting
Room of the Company on April 15, 2018. Three persons were supposed to attend the meeting, and all three of them were in fact
present at the meeting as well as the Chief Accountant, the Manager Assistant of the Audit Department, the project responsible person
of Lu Thai of Ruihua CPAs attended the meeting. Mr. Zhao Yao, Chairman of the Audit Committee, presided over the meeting, and
Chief Accountant and Chief Auditor of the Audit Department sat in on the meeting. The meeting was convened in accordance with
the Company Law and the Articles of Association of the Company. And the following proposals were passed by vote at the meeting:
I. With 3 favorable votes, 0 negative votes and no abstentions, the 2017 Financial Report of the Company audited by Ruihua CPAs
(LLP) was passed;
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 2017 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 fees
for the 2017 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 the
Company’s audit agency for 2018 Finance and Internal Control was passed.
The Committee agrees to submit the above-mentioned proposals I and III and IV to the Board of Directors for examination on the
16th Session of the 8th Board of Directors.
II. Duty performance of Remuneration Committee affiliated to the Board of Directors
1. The Remuneration Committee of the Board of Lu Thai Textile Co., Ltd. held the First Conference in 2017 at Banyang Villa
Meeting Room of the Company on March 28, 2017. 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 of
Association of the Company and reviewed and approved the Proposal on the 2016 Appraisal Result of the Senior Executives of Lu
Thai Company by the voting method and agreed to submit the above-mentioned proposal to the Board of Directors for examination
on the 6th Session of the 8th Board of Directors.
2. According to authorization of the 6th Meeting of the 8th Board of Directors of Lu Thai, remuneration committee of board of
directors of Lu Thai Textile Co., Ltd. held the second meeting of 2017 in the meeting room of Panyang Villa Meeting Room of the
Company on May 23, 2017. Five persons should attend the meeting and five persons actually attended the meeting. Among the five
74
Lu Thai Textile Co., Ltd. Annual Report 2017
persons, Bi Xiuli, Wang Xinyu, Zhao Yao, and Pan Ailing voted in the form of communication. Chief accountant and the secretary of
board of directors also attended the meeting. The meeting accorded with relevant stipulations in Company Law and Articles of
Company. Proposal for Risk Fund Assessment and Release Amount for 2016 weas passed at the meeting in voting form.
III. Duty execution of the strategy committee of board of directors
The Strategy Committee of Board of Directors of Lu Thai Textile Co., Ltd. held the 1st Conference of 2017 in the meeting room of
Panyang Villa Meeting Room of the Company on March 28, 2017. 13 persons should attend the meeting and 13 persons actually
attended the meeting. Chief accountant also attended the meeting. This meeting was hosted by Liu Liu Zibin, the president of
strategy committee. The meeting accorded with relevant stipulations in Company Law and Articles of Association and passed the
following proposals in voting form.
1. Overall Strategic Objectives of Yarn Dyed Fabric of Lu Thai Textile Co., Ltd. for 2017-2019.
2. Overall Strategic Objectives of Shirts Processing of Lu Thai Textile Co., Ltd. for 2017-2019.
3. Brand, R&D, human resources, fabric information, and clothing manufacture information engineering sub-plan.
4. 2018 Annual Operation Plan of Lu Thai Textile Co., Ltd.
IX. Duty performance of nominations committee affiliated to the Board of Directors
1. The Company held the 1st meeting of 2017 of the nominations committee of the 8th Board of Directors on June 8, 2017 according
to the relevant regulations of the Company Law and Articles of Association, with 6 favorable votes, 0 negative votes and no
abstentions, which reviewed and approved the Proposal on Nominating Candidates of the 8th Board of Directors. Mr. Liu Deming
was nominated as the candidate of the director of the 8th Board of Director, and the term of office will expire until June 5, 2019. It
was submitted to the 6th Session of the 8th Board of Directors for approval, and the 6th Session of the 8th Board of Directors reviewed
and approved the proposal.
VII Performance of Duties by the Supervisory Board
Did the Supervisory Board find any risks to the Company during its supervision in this Reporting Period?
□ Yes √ No
The Supervisory Board raised no objections in this Reporting Period.
VIII Appraisal and Incentive for Executive Officers
In the Reporting Period, Remuneration Committee of the Board of Directors appraised operating achievements of the Company for
the year 2016 according to Incentive and Restricted Proposal for Senior Executives of Lu Thai Textile Co., Ltd, and drew up
incentive proposal for senior executives, which will be executed after review and approval by the 6st Session of the 8th Board of
Directors dated March 28, 2017. 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 operating target of the Company at the
period-begin, the Company confirms the annual performance comprehensive indication and the management duty of each Senior
Executives, and executes the performance examination and the redemption of the rewards and punishment for the Senior Executives
by the Remuneration and Examination Committee affiliated to the Board of Directors at the year-end. The Company will constantly
improve the evaluation and incentive mechanism that to tightly concern the salary of the Senior Executives with the management
level and the operating performance so that to fully mobilize and inspire the initiative and creativity of them.
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Lu Thai Textile Co., Ltd. Annual Report 2017
IX Internal Control
1. Serious Internal Control Defects Found in this Reporting Period
□ Yes √ No
2. Internal Control Self-evaluation Report
Disclosure date of the Self-appraisal
04/17/2018
Report on Internal Control
For details, please refer to the Self-appraisal Report on Internal Control of Lu Thai
Disclosure index of the Self-appraisal
Textile Co., Ltd. simultaneously disclosed on www.cninfo.com.cn with the 2017
Report on Internal Control
Annual Report of the Company.
The proportion of total assets included in
evaluation scope entities in the
88.41%
Company's total assets of the consolidated
financial statements
The proportion of operation revenue
included in evaluation scope entities in
90.71%
the Company's operation revenue of the
consolidated financial statements
Defect judging standards
Category Financial Report Non-Financial Report
Great defect: malpractices of the Directors, Great defect: violated the national laws
Supervisors and Senior Executives; the and regulations; the decision-making of
Company revised the published financial the enterprise was not scientific that led
report; the CPA founded the current financial to the mistakes of itself; outflow of the
report occurred significant misstatement management personnel or the technician
while during the operating process of the personnel was serious; frequently
internal control could not founded the appeared the negative news from the
misstatement; the supervision of the Audit Media; the significant business lacked of
Committee and the internal audit institution systematic control or the systematic
Qualitative criteria
of the Company on the internal control was control was invalid; the result of the
invalid. Significant defeat: had not abide by internal control assessment which was
the generally accepted accounting principles the great defect event had not been
to choose and apply the accounting policies; revised. Significant defeat: violated the
had not built up the anti-fraud and significant enterprise internal regulations that
counterbalance mechanism and control caused rather serious losses; significant
measures; during the financial report business lacked of systematic control;
process, there occurred single or multiple outflow of the rather important personnel
defects which not reached the recognition was serious; the Media reported the
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Lu Thai Textile Co., Ltd. Annual Report 2017
standard of the significant defeat but negative news that caused rather serious
influenced the true and accurate target of the negative influence; rather important
financial report. General defect: other business lacked of systematic control or
internal control defect which had not the systematic control was invalid; the
constructed as the great defeat, significant results of the internal control assessment
defect. which as the significant defect had not
been revised. General defect: other
internal control defect which had not
constructed as the great defeat,
significant defect.
Great defect: the direct financial losses
Great defect: misstatement≥2% of the total
were more than RMB6 million or had
profits amount; misstatement≥0.3% of the
been formally and externally disclosed
total assets amount; misstatement≥0.3% of
and caused negative influences on the
the total operating income;
disclosure of the periodical report of the
misstatement≥0.4% of the total owners’
Company. Significant defect: the direct
equities amount. Significant defect: 1% of
financial losses were of RMB3 million
the total profits amount ≤misstatement<2%
(including RMB3 million)-RMB6
of the total profits amount; 0.15% of the total
million or had been punished by the
assets amount ≤misstatement<0.3% of the
state-owned government sectors while
total assets amount; 0.15% of the total
Quantitative criteria not caused negative influences on the
operating amount ≤misstatement<0.3% of
disclosure of the periodical report of the
the total operating amount; 0.2% of the total
Company. General defect: the direct
owners’ equities amount
financial losses were of RMB0.5 million
≤misstatement<0.4% of the total owners’
(including RMB0.5 million)-RMB 3
equities amount. General defect:
million or had been punished by the
misstatement<1% of the total profits amount;
below-provincial (including the
misstatement<0.15% of the total assets
provincial level) government sectors
amount; misstatement<0.15% of the total
while not caused negative influences on
operating income; misstatement<0.2% of the
the disclosure of the periodical report of
total owners’ equities amount.
the Company.
Number of significant defects of financial
0
report (piece)
Number of significant defects of non-
0
financial report (piece)
Number of important defects of financial
0
report (piece)
Number of important defects of
0
non-financial report (piece)
X Auditor’s Report on Internal Control
√ Applicable □ Not applicable
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Lu Thai Textile Co., Ltd. Annual Report 2017
Audit opinion paragraphs in the Audit Report on Internal Control
IV. Audit opinion of the internal control of the financial report
We believe that the Company has made valid internal control on financial report in all significant aspects on December 31, 2017
according to the Basic Rules for Enterprise Internal Control and other relevant stipulations.
Particulars about Audit Report on
Disclosure
Internal Control
Disclosure date of the Audit Report
04/17/2018
on Internal Control
Disclosure index of the Audit For details, please refer to the Auditor’s Report on Internal Control on www.cninfo.com.cn at
Report on Internal Control the same time of disclosing the Company’s 2017Annual Report.
Type of Audit Report on Internal
Unqualified auditor’s report
Control
Whether there is significant defect
No
in non-financial report
Indicate by tick mark whether any modified opinions are expressed by the CPAs firm in its auditor’s report on the Company’s
internal control.
□ Yes √ No
Indicate by tick mark whether the auditor’s report on the Company’s internal control issued by the CPAs firm is consistent with the
self-evaluation report of the Board.
√ Yes □ No
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Lu Thai Textile Co., Ltd. Annual Report 2017
Part X Corporate Bonds
Are there any corporate bonds publicly offered and listed on the stock exchange, which were undue before the approval date of this
Report or were due but could not be redeemed in full?
No.
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Lu Thai Textile Co., Ltd. Annual Report 2017
Part XI Financial Statements
I Independent Auditor’s Report
Type of auditor’s opinion Standard unqualified opinion
Date of signing the auditor’s report 04/15/2017
Name of the auditor Ruihua Certified Public Accountants LLP
No. of the auditor’s report RHSZ[2018] No.37040003
Name of CPA He Feng, Cui Xiaoli
Text of the Auditor’s Report
To the shareholders of Lu Thai Textile Co., Ltd:
I Opinion
We have audited the financial statements of Lu Thai Textile Co., Ltd. (hereinafter referred to as the “Company”), which comprise the
consolidated and parent company balance sheets as of December 31, 2017, the consolidated and parent company statements of
income, cash flows and changes in owners’ equity for the year then ended, as well as the notes to the financial statements.
In our opinion, the financial statements referred to above present fairly, in all material respects, the consolidated and parent company
financial position of the Company at December 31, 2017, and the consolidated and parent company operating results and cash flows
for the year then ended, in conformity with the Chinese Accounting Standards (CAS).
II Basis for Opinion
We conducted our audits in accordance with the Audit Standards for Chinese Registered Accountants. Our responsibilities under
those standards are further described in the Auditor’s Responsibilities for Audit of Financial Statements section of our report. We are
independent of the Company in accordance with the China Code of Ethics for Certified Public Accountants, and we have fulfilled our
other ethical responsibilities in accordance with the said Code of Ethics. We believe that the audit evidence we have obtained is
sufficient and appropriate to provide a basis for our opinion.
III Key Audit Matters
Key audit matters are those matters that, in our professional judgment, were of most significance in our audit of the financial
statements of the current period. These matters were addressed in the context of our audit of the financial statements as a whole, and
in forming our opinion thereon, and we do not provide a separate opinion on these matters. And key audit matter identified in our
audit is summarized as follows:
(I) Recognition of income
1. Item description
The sales income of Lu Thai Textile Co., Ltd. mainly comes from sales of yarn-dyed fabrics and shirts. The operation income of the
Company in 2017 was RMB 6,409,224,000, of which export income accounted for 65.71%. As stated in "Note IV 22 Income" of the
financial statements, for the income from domestic sales, the amount of product sales income is recognized when the products are
delivered to purchaser according to the contract. The income is also recognized when the purchase price has been recovered or the
receipt certificate has been received and the related economic benefits are likely to flow into the Company, and the product-related
costs can be measured in a reliable way. For the income from export sales, the amount of sales income is recognized when products
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Lu Thai Textile Co., Ltd. Annual Report 2017
are declared and depart from port according to the contract, and the bill of lading is received. The income is also recognized when the
purchase price has been recovered or the receipt certificate has been received and the related economic benefits are likely to flow into
the Company, and the product-related costs can be measured in a reliable way.
Since income is one of the key performance indicators of Lu Thai Textile Co., Ltd., there is an inherent risk that the management
manipulates income to achieve specific goals or expectations, therefore, we identify income recognition as a key audit item.
2. Audit response
(1) Evaluate and test the rationality of the internal control design related to income recognition and the operation effectiveness.
(2) Understand and assess the rationality of accounting policies related to income recognition by interviews with management and
review of relevant contract terms.
(3) Perform analysis procedures on income and costs, and analyze the rationality of fluctuations in sales volume, unit price and gross
profit of each month and each year.
(4) Check the supporting documents such as sales contracts, delivery receipts, invoices, customs declarations, shipping orders and
receipts.
(5) Confirm the balances of major customers and the amount of transactions, and execute the procedure of customs confirmation of
the amount of export income for the year 2017.
(6) Perform cut-off tests on the income recognized before and after the balance sheet date, check the delivery receipts, customs
declarations, shipping orders and receipts etc. to assess whether the income is recognized within appropriate period.
(II) Depreciation of inventory
1. Item description
As of December 31, 2017, the inventory balance of Lu Thai Textile Co., Ltd. was RMB2,153,891,300.00 and the inventory
depreciation reserve was RMB53,230,100.00. As stated in "Notes IV 10 Inventory" and "Notes VI 7 Inventory" of the financial
statements, inventories are measured by cost or net realizable value, which is lower. The management determines the net realizable
value of inventories with significant judgments and estimates, and therefore, we identify inventory depreciation as a key audit item.
2. Audit response
(1) Understand the process of provision for inventory depreciation reserves, evaluate and test 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 been
identified.
(3) Check the inventory age analysis sheet.
(4) Test the calculation table for inventory depreciation preparation to assess the rationality of estimated selling price, and compare
the post-sales price with the estimated selling price.
IV Other Information
The Company’s management is responsible for the other information. The other information comprises all of the information
included in the Company’s 2017 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 conclusion
thereon.
In connection with our audit of the financial statements, our responsibility is to read the other information and, in doing so, consider
whether the other information is materially inconsistent with the financial statements or our knowledge obtained in the audit or
otherwise appears to be materially misstated.
If, based on the work we have performed, we conclude that there is a material misstatement of this other information, we are required
to report that fact. We have nothing to report in this regard.
V Responsibilities of Management and Those Charged with Governance for Financial Statements
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Lu Thai Textile Co., Ltd. Annual Report 2017
The Company’s management (hereinafter referred to as the “Management”) is responsible for the preparation of the financial
statements that give a fair view in accordance with CAS, and for designing, implementing and maintaining such internal control as
the management determines is necessary to enable the preparation of financial statements that are free from material misstatement,
whether due to fraud or error.
In preparing the financial statements, the management is responsible for assessing the Company’s ability to continue as a going
concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless the
management 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 Statements
Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material
misstatement, whether due to fraud or error, and to issue an auditor’s report that includes our opinion. Reasonable assurance is a high
level of assurance, but is not a guarantee that an audit conducted in accordance with CAS will always detect a material misstatement
when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could
reasonably 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 the
audit. We also:
(1) Identify and assess the risks of material misstatement of the financial statements, whether due to fraud or error, design and
perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for
our opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as
fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control.
(2) Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the
circumstances.
(3) Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures
made by the management.
(4) Conclude on the appropriateness of the management’s use of the going concern basis of accounting and, based on the audit
evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on the
Company’s ability to continue as a going concern. If we conclude that a material uncertainty exists, we are required by CAS to draw
users’ attention in our auditor’s report to the related disclosures in the financial statements or, if such disclosures are inadequate, to
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 the
financial statements represent the underlying transactions and events in a manner that achieves fair presentation.
(6) Obtain sufficient appropriate audit evidence regarding the financial information of the entities or business activities within the
Company to express an opinion on the financial statements. We are responsible for the direction, supervision and performance of the
Company audit. We remain solely responsible for our audit opinion.
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Lu Thai Textile Co., Ltd. Annual Report 2017
We communicate with those charged with governance regarding the planned scope and timing of the audit and significant audit
findings, including any noteworthy deficiencies in internal control that we identify during our audit.
We also provide those charged with governance with a statement that we have complied with relevant ethical requirements regarding
independence, and communicate with them all relationships and other matters that may reasonably be thought to bear on our
independence, and where applicable, related safeguards.
From the matters communicated with those charged with governance, we determine those matters that were of most significance in
the audit of the financial statements of the current period and are therefore the key audit matters. We describe these matters in our
auditor’s report unless law or regulation precludes public disclosure about the matter or when, in extremely rare circumstances, we
determine that a matter should not be communicated in our report because the adverse consequences of doing so would reasonably be
expected to outweigh the public interest benefits of such communication.
Ruihua Certified Public Accountants LLP Chinese CPA (Engagement Partner):
Beijing China Chinese CPA:
April 15, 2018
II Financial Statements
Currency unit for the statements in the notes to the financial statements: RMB
1. Consolidated Balance Sheet
Prepared by Lu Thai Textile Co., Ltd.
December 31, 2017
Unit: RMB
Item December 31, 2017 December 31, 2016
Current assets:
Monetary assets 693,989,293.38 667,304,702.34
Settlement reserve
Interbank loans granted
Financial assets at fair value through
profit or loss
Derivative financial assets
Notes receivable 139,276,742.34 84,161,909.91
Accounts receivable 334,080,524.05 293,129,727.93
Prepayments 146,463,066.38 212,488,120.48
Premiums receivable
Reinsurance receivables
Receivable reinsurance contract
reserve
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Lu Thai Textile Co., Ltd. Annual Report 2017
Interest receivable 590,003.07
Dividends receivable
Other receivables 56,182,782.04 46,720,732.97
Financial assets purchased under
resale agreements
Inventories 2,100,661,221.93 1,817,542,870.99
Assets classified as held for sale
Current portion of non-current assets
Other current assets 118,588,703.34 108,332,246.24
Total current assets 3,589,832,336.53 3,229,680,310.86
Non-current assets:
Loans and advances to customers
Available-for-sale financial assets 84,533,000.00 24,500,000.00
Held-to-maturity investments
Long-term receivables 2,310,000.00
Long-term equity investments 97,536,732.02
Investment property 24,563,544.58 25,844,090.56
Property, plant and equipment 5,421,295,850.03 5,273,148,708.20
Construction in progress 157,421,820.68 177,075,655.16
Construction materials 56,913,806.06 117,120,463.50
Proceeds from disposal of property,
plant and equipment
Productive living assets 1,381,292.75
Oil and gas assets
Intangible assets 498,948,301.48 384,253,077.39
R&D expense
Goodwill 20,613,803.29 20,613,803.29
Long-term prepaid expense 107,877,194.52 114,227,364.54
Deferred income tax assets 74,697,159.71 63,190,080.76
Other non-current assets 36,390,478.85 31,259,468.38
Total non-current assets 6,580,791,691.22 6,234,924,004.53
Total assets 10,170,624,027.75 9,464,604,315.39
Current liabilities:
Short-term borrowings 1,135,124,996.40 873,261,856.02
Borrowings from central bank
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Lu Thai Textile Co., Ltd. Annual Report 2017
Customer deposits and deposits from
banks and other financial institutions
Interbank loans obtained
Financial liabilities at fair value
through profit or loss
Derivative financial liabilities
Notes payable 7,301,771.85
Accounts payable 366,265,132.65 257,635,466.41
Advances from customers 119,785,945.48 97,929,002.93
Financial assets sold under
repurchase agreements
Handling charges and commissions
payable
Payroll payable 316,836,488.95 315,678,103.92
Taxes payable 33,055,090.58 77,775,673.14
Interest payable 1,572,231.86 1,165,730.47
Dividends payable 441,113.64 441,113.64
Other payables 127,090,009.25 79,744,084.66
Reinsurance payables
Insurance contract reserve
Payables for acting trading of
securities
Payables for acting underwriting of
securities
Liabilities directly associated with
assets classified as held for sale
Current portion of non-current
62,750,292.49
liabilities
Other current liabilities
Total current liabilities 2,170,223,073.15 1,703,631,031.19
Non-current liabilities:
Long-term borrowings 135,678,044.89
Bonds payable
Including: Preferred shares
Perpetual bonds
Long-term payables
Long-term payroll payable 93,843,473.02 79,122,422.89
Specific payables
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Lu Thai Textile Co., Ltd. Annual Report 2017
Provisions
Deferred income 126,737,092.32 95,990,489.79
Deferred income tax liabilities 2,904,899.46 2,341,089.87
Other non-current liabilities 1,840,000.00 1,840,000.00
Total non-current liabilities 225,325,464.80 314,972,047.44
Total liabilities 2,395,548,537.95 2,018,603,078.63
Owners’ equity:
Share capital 922,602,311.00 922,602,311.00
Other equity instruments
Including: Preferred shares
Perpetual bonds
Capital reserves 699,493,593.82 761,280,557.83
Less: Treasury shares
Other comprehensive income 16,810,574.22 53,293,544.89
Specific reserve
Surplus reserves 962,933,579.06 891,870,522.68
General reserve
Retained earnings 4,629,102,712.06 4,341,866,189.19
Total equity attributable to owners of
7,230,942,770.16 6,970,913,125.59
Parent Company
Non-controlling interests 544,132,719.64 475,088,111.17
Total owners’ equity 7,775,075,489.80 7,446,001,236.76
Total liabilities and owners’ equity 10,170,624,027.75 9,464,604,315.39
Legal representative: Liu Zibin Chief Accountant: Zhang Hongmei
Financial Manager: Zhang Keming
2. Parent Company Balance Sheet
Unit: RMB
Item December 31, 2017 December 31, 2016
Current assets:
Monetary assets 267,809,829.78 177,016,859.63
Financial assets at fair value through
profit or loss
Derivative financial assets
Notes receivable 93,244,480.81 64,421,665.52
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Lu Thai Textile Co., Ltd. Annual Report 2017
Accounts receivable 305,903,590.98 297,026,110.33
Prepayments 81,471,605.69 139,013,057.80
Interest receivable 220,590.38
Dividends receivable
Other receivables 519,788,239.57 340,458,208.20
Inventories 1,164,055,145.96 1,086,364,931.72
Assets classified as held for sale
Current portion of non-current assets
Other current assets 53,657,308.33 1,126,006.88
Total current assets 2,486,150,791.50 2,105,426,840.08
Non-current assets:
Available-for-sale financial assets 72,533,000.00 12,500,000.00
Held-to-maturity investments
Long-term receivables
Long-term equity investments 1,816,493,348.06 1,711,021,866.04
Investment property 15,536,968.08 14,829,443.58
Property, plant and equipment 2,811,046,847.91 3,019,132,803.64
Construction in progress 25,703,496.87 25,796,329.33
Construction materials 1,609,204.75 663,894.82
Proceeds from disposal of property,
plant and equipment
Productive living assets
Oil and gas assets
Intangible assets 249,994,817.83 229,433,475.02
R&D expense
Goodwill
Long-term prepaid expense
Deferred income tax assets 51,474,007.76 62,042,513.61
Other non-current assets 27,077,391.31 8,831,098.34
Total non-current assets 5,071,469,082.57 5,084,251,424.38
Total assets 7,557,619,874.07 7,189,678,264.46
Current liabilities:
Short-term borrowings 622,438,413.87 503,005,010.24
Financial liabilities at fair value
through profit or loss
87
Lu Thai Textile Co., Ltd. Annual Report 2017
Derivative financial liabilities
Notes payable 6,124,239.92
Accounts payable 147,883,359.29 158,737,347.81
Advances from customers 52,314,250.61 54,552,285.78
Payroll payable 240,391,459.47 240,389,712.34
Taxes payable 17,297,415.92 47,790,003.82
Interest payable 973,134.21 646,147.15
Dividends payable 441,113.64 441,113.64
Other payables 22,933,385.28 19,309,386.42
Liabilities directly associated with
assets classified as held for sale
Current portion of non-current
liabilities
Other current liabilities
Total current liabilities 1,110,796,772.21 1,024,871,007.20
Non-current liabilities:
Long-term borrowings
Bonds payable
Including: Preferred shares
Perpetual bonds
Long-term payables
Long-term payroll payable 93,843,473.02 79,122,422.89
Specific payables
Provisions
Deferred income 80,580,249.14 62,691,326.97
Deferred income tax liabilities 4,950.00
Other non-current liabilities
Total non-current liabilities 174,428,672.16 141,813,749.86
Total liabilities 1,285,225,444.37 1,166,684,757.06
Owners’ equity:
Share capital 922,602,311.00 922,602,311.00
Other equity instruments
Including: Preferred shares
Perpetual bonds
Capital reserves 759,836,702.91 759,793,238.92
88
Lu Thai Textile Co., Ltd. Annual Report 2017
Less: Treasury shares
Other comprehensive income 28,050.00
Specific reserve
Surplus reserves 959,824,839.42 888,761,783.04
Retained earnings 3,630,102,526.37 3,451,836,174.44
Total owners’ equity 6,272,394,429.70 6,022,993,507.40
Total liabilities and owners’ equity 7,557,619,874.07 7,189,678,264.46
3. Consolidated Income Statement
Unit: RMB
Item 2017 2016
1. Operating revenue 6,409,224,044.97 5,990,493,909.36
Including: Sales revenue 6,409,224,044.97 5,990,493,909.36
Interest revenue
Premium revenue
Handling charge and commission
revenue
2. Cost of operating revenue 5,469,545,482.56 5,023,662,230.26
Including: Cost of sales 4,477,047,784.68 4,007,101,690.65
Interest expense
Handling charge and commission
expense
Surrenders
Net claims paid
Net amount provided as insurance
contract reserve
Expenditure on policy dividends
Reinsurance premium expense
Taxes and surtaxes 96,231,603.00 86,527,783.76
Selling expense 144,061,780.39 158,869,993.22
Administrative expense 651,530,968.94 661,355,141.82
Finance costs 63,342,671.31 20,949,153.10
Asset impairment losses 37,330,674.24 88,858,467.71
Add: Gains on changes in fair value (“-”
63,992,131.36
for losses)
Investment income (“-” for loss) 2,331,330.34 -60,779,660.20
89
Lu Thai Textile Co., Ltd. Annual Report 2017
Including: Share of profit or loss of
-2,463,267.98
joint ventures and associates
Foreign exchange gains (“-” for losses)
Asset disposal income (“-” for loss) 1,242,000.54 -6,843,361.94
Other income 58,099,783.92
3. Operating income (“-” for loss) 1,001,351,677.21 963,200,788.32
Add: Non-operating income 12,122,767.09 73,687,483.32
Less: Non-operating expense 9,022,725.64 7,118,710.24
4. Pretax income (“-” for loss) 1,004,451,718.66 1,029,769,561.40
Less: Income tax expense 121,132,609.06 173,382,412.36
5. Net income (“-” for net loss) 883,319,109.60 856,387,149.04
5.1 Net income from continuing
883,319,109.60 856,387,149.04
operations (“-” for net loss)
5.2 Net income from discontinued
operations (“-” for net loss)
Attributable to owners of Parent
841,150,934.75 808,760,025.91
Company
Attributable to non-controlling
42,168,174.85 47,627,123.13
interests
6. Other comprehensive income, net of
-36,482,970.67 36,202,772.58
tax
Attributable to owners of Parent
-36,482,970.67 36,202,772.58
Company
6.1 Items that will not be
reclassified to profit or loss
6.1.1 Changes in net liabilities or
assets caused by remeasurements on
defined benefit pension 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
-36,482,970.67 36,202,772.58
reclassified to profit or loss
6.2.1 Share of other
comprehensive income of investees that
will be reclassified to profit or loss under
equity method
6.2.2 Gains/Losses on changes in
fair value of available-for-sale financial 28,050.00
assets
90
Lu Thai Textile Co., Ltd. Annual Report 2017
6.2.3 Gains/Losses arising from
reclassification of held-to-maturity
investments to available-for-sale financial
assets
6.2.4 Effective gains/losses on
cash flow hedges
6.2.5 Differences arising from
translation of foreign
-36,511,020.67 36,202,772.58
currency-denominated financial
statements
6.2.6 Other
Attributable to non-controlling
interests
7. Total comprehensive income 846,836,138.93 892,589,921.62
Attributable to owners of Parent
804,667,964.08 844,962,798.49
Company
Attributable to non-controlling
42,168,174.85 47,627,123.13
interests
8. Earnings per share
8.1 Basic earnings per share 0.91 0.85
8.2 Diluted earnings per share 0.91 0.85
Where business mergers under the same control occurred in the current period, the net income achieved by the merged parties before
the business mergers was RMB4,145,908.17, with the amount for last year being RMB3,313,698.92.
Legal representative: Liu Zibin Chief Accountant: Zhang Hongmei
Financial Manager: Zhang Keming
4. Parent Company Income Statement
Unit: RMB
Item 2017 2016
1. Sales revenue 5,146,496,112.54 5,078,847,567.10
Less: Cost of sales 3,736,059,702.41 3,604,147,665.88
Taxes and surtaxes 70,180,764.01 59,722,954.27
Selling expense 91,517,514.19 85,012,619.20
Administrative expense 442,784,766.99 458,281,382.46
Finance costs 21,229,673.23 15,651,562.69
Asset impairment losses 12,803,852.07 104,344,445.08
Add: Gains on changes in fair value
39,527,800.00
(“-” for losses)
91
Lu Thai Textile Co., Ltd. Annual Report 2017
Investment income (“-” for loss) 20,371,762.61 21,172,648.92
Including: Share of profit or loss
-2,463,267.98
of joint ventures and associates
Asset disposal income (“-” for
-14,364,342.23 1,556,063.22
loss)
Other income 41,705,496.22
2. Operating income (“-” for loss) 819,632,756.24 813,943,449.66
Add: Non-operating income 5,449,927.03 29,667,999.54
Less: Non-operating expense 4,693,009.37 2,265,787.24
3. Pretax income (“-” for loss) 820,389,673.90 841,345,661.96
Less: Income tax expense 109,759,110.09 110,212,874.41
4. Net income (“-” for net loss) 710,630,563.81 731,132,787.55
4.1 Net income from continuing
710,630,563.81 731,132,787.55
operations (“-” for net loss)
4.2 Net income from discontinued
operations (“-” for net loss)
5. Other comprehensive income, net of
28,050.00
tax
5.1 Items that will not be reclassified
to profit or loss
5.1.1 Changes in net liabilities or
assets caused by remeasurements on
defined benefit pension schemes
5.1.2 Share of other
comprehensive income of investees that
will not be reclassified into profit or
loss under equity method
5.2 Items that may subsequently be
28,050.00
reclassified to profit or loss
5.2.1 Share of other
comprehensive income of investees that
will be reclassified into profit or loss
under equity method
5.2.2 Gains/Losses on changes in
fair value of available-for-sale financial 28,050.00
assets
5.2.3 Gains/Losses arising from
reclassification of held-to-maturity
investments to available-for-sale
financial assets
5.2.4 Effective gains/losses on
92
Lu Thai Textile Co., Ltd. Annual Report 2017
cash flow hedges
5.2.5 Differences arising from
translation of foreign
currency-denominated financial
statements
5.2.6 Other
6. Total comprehensive income 710,658,613.81 731,132,787.55
7. Earnings per share
7.1 Basic earnings per share
7.2 Diluted earnings per share
5. Consolidated Cash Flow Statement
Unit: RMB
Item 2017 2016
1. Cash generated by or used in
operating activities:
Proceeds from sale of commodities
6,219,235,885.20 5,883,566,531.04
and rendering of services
Net increase in customer deposits and
deposits from banks and other financial
institutions
Net increase in loans from central
bank
Net increase in loans from other
financial institutions
Premiums received on original
insurance contracts
Net proceeds from reinsurance
Net increase in deposits and
investments of policy holders
Net increase in proceeds from
disposal of financial assets at fair value
through profit or loss
Interest, handling charges and
commissions received
Net increase in interbank loans
obtained
Net increase in proceeds from
repurchase transactions
Tax rebates received 219,602,657.95 197,711,424.88
93
Lu Thai Textile Co., Ltd. Annual Report 2017
Cash generated by other operating
104,656,352.43 102,147,503.54
activities
Subtotal of cash generated by operating
6,543,494,895.58 6,183,425,459.46
activities
Payments for goods and services 3,405,465,059.44 2,825,602,104.24
Net increase in loans and advances to
customers
Net increase in deposits in central
bank and in interbank loans granted
Payments for claims on original
insurance contracts
Interest, handling charges and
commissions paid
Policy dividends paid
Cash paid to and for employees 1,537,319,127.10 1,428,732,145.22
Taxes paid 305,512,465.13 380,705,302.09
Cash used in other operating
257,163,190.48 233,653,623.46
activities
Subtotal of cash used in operating
5,505,459,842.15 4,868,693,175.01
activities
Net cash flows from operating activities 1,038,035,053.43 1,314,732,284.45
2. Cash generated by or used in
investing activities:
Proceeds from disinvestments
Investment income received
Net proceeds from disposal of
property, plant and equipment,
8,757,416.99 2,104,478.61
intangible assets and other long-lived
assets
Net proceeds from disposal of
subsidiaries or other business units
Cash generated by other investing
75,806,318.05 32,521,368.79
activities
Subtotal of cash generated by investing
84,563,735.04 34,625,847.40
activities
Payments for acquisition of property,
plant and equipment, intangible assets 617,226,044.44 873,466,208.61
and other long-lived assets
Payments for investments 210,000,000.00
Net increase in pledged loans granted
Net payments for acquisition of
94
Lu Thai Textile Co., Ltd. Annual Report 2017
subsidiaries and other business units
Cash used in other investing
1,263,998.65 41,519,234.00
activities
Subtotal of cash used in investing
828,490,043.09 914,985,442.61
activities
Net cash flows from investing activities -743,926,308.05 -880,359,595.21
3. Cash generated by or used in
financing activities:
Capital contributions received 500,000.00
Including: Capital contributions by
500,000.00
non-controlling interests to subsidiaries
Increase in borrowings 2,156,301,279.43 2,215,183,445.08
Net proceeds from issuance of bonds
Cash generated by other financing
232,455,600.00 39,344,422.42
activities
Subtotal of cash generated by financing
2,389,256,879.43 2,254,527,867.50
activities
Repayment of borrowings 1,924,349,996.85 2,047,960,531.26
Payments for interest and dividends 524,005,417.80 497,559,966.43
Including: Dividends paid by
12,023,566.38 12,023,566.38
subsidiaries to non-controlling interests
Cash used in other financing
178,430,428.00 261,629,544.91
activities
Subtotal of cash used in financing
2,626,785,842.65 2,807,150,042.60
activities
Net cash flows from financing activities -237,528,963.22 -552,622,175.10
4. Effect of foreign exchange rate
-39,056,706.97 8,538,528.70
changes on cash and cash equivalents
5. Net increase in cash and cash
17,523,075.19 -109,710,957.16
equivalents
Add: Cash and cash equivalents,
659,116,137.67 768,827,094.83
beginning of the period
6. Cash and cash equivalents, end of the
676,639,212.86 659,116,137.67
period
6. Parent Company Cash Flow Statement
Unit: RMB
Item 2017 2016
1. Cash generated by or used in
operating activities:
95
Lu Thai Textile Co., Ltd. Annual Report 2017
Proceeds from sale of commodities
5,031,327,920.20 5,092,041,690.19
and rendering of services
Tax rebates received 147,979,834.16 151,105,262.23
Cash generated by other operating
48,434,983.38 31,468,452.51
activities
Subtotal of cash generated by operating
5,227,742,737.74 5,274,615,404.93
activities
Payments for goods and services 2,835,545,725.67 2,705,013,474.52
Cash paid to and for employees 1,101,800,926.25 1,072,276,579.49
Taxes paid 203,201,646.35 185,976,982.65
Cash used in other operating
149,048,367.90 136,946,899.89
activities
Subtotal of cash used in operating
4,289,596,666.17 4,100,213,936.55
activities
Net cash flows from operating activities 938,146,071.57 1,174,401,468.38
2. Cash generated by or used in
investing activities:
Proceeds from disinvestments
Investment income received 17,976,433.62 55,179,470.68
Net proceeds from disposal of
property, plant and equipment,
3,857,174.49 1,413,254.61
intangible assets and other long-lived
assets
Net proceeds from disposal of
subsidiaries or other business units
Cash generated by other investing
369,607,376.66 2,931,847.14
activities
Subtotal of cash generated by investing
391,440,984.77 59,524,572.43
activities
Payments for acquisition of property,
plant and equipment, intangible assets 158,989,610.94 163,318,218.59
and other long-lived assets
Payments for investments 217,934,750.00 137,295,249.67
Net payments for acquisition of
subsidiaries and other business units
Cash used in other investing
547,733,600.00 346,158,324.00
activities
Subtotal of cash used in investing
924,657,960.94 646,771,792.26
activities
Net cash flows from investing activities -533,216,976.17 -587,247,219.83
3. Cash generated by or used in
96
Lu Thai Textile Co., Ltd. Annual Report 2017
financing activities:
Capital contributions received
Increase in borrowings 1,549,844,124.40 1,498,632,773.04
Net proceeds from issuance of bonds
Cash generated by other financing
86,890,400.00
activities
Subtotal of cash generated by financing
1,636,734,524.40 1,498,632,773.04
activities
Repayment of borrowings 1,387,780,386.17 1,543,292,096.38
Payments for interest and dividends 473,154,729.91 474,745,698.14
Cash used in other financing
69,000,000.00 253,629,544.91
activities
Sub-total of cash used in financing
1,929,935,116.08 2,271,667,339.43
activities
Net cash flows from financing activities -293,200,591.68 -773,034,566.39
4. Effect of foreign exchange rate
-20,935,533.57 1,570,774.33
changes on cash and cash equivalents
5. Net increase in cash and cash
90,792,970.15 -184,309,543.51
equivalents
Add: Cash and cash equivalents,
177,016,859.63 361,326,403.14
beginning of the period
6. Cash and cash equivalents, end of the
267,809,829.78 177,016,859.63
period
7. Consolidated Statements of Changes in Owners’ Equity
2017
Unit: RMB
2017
Equity attributable to owners of Parent Company
Other equity Non-co
Other Retaine Total
Item instruments Less: ntrollin
Share Capital compre Specific Surplus General d owners’
Prefer Perpet Treasur g
capital reserves hensive reserve reserves reserve earning equity
red ual Other y shares interests
income s
shares bonds
922,60 4,341,8 7,446,0
1. Balances as of 761,280 53,293, 891,870 475,088
2,311. 66,189. 01,236.
end of prior year ,557.83 544.89 ,522.68 ,111.17
00 19 76
Add: Adjustments
for changed
accounting
97
Lu Thai Textile Co., Ltd. Annual Report 2017
policies
Adjustments for
corrections of
previous errors
Adjustments for
business mergers
under same control
Other
adjustments
2. Balances as of 922,60 4,341,8 7,446,0
761,280 53,293, 891,870 475,088
beginning of the 2,311. 66,189. 01,236.
,557.83 544.89 ,522.68 ,111.17
year 00 19 76
3. Increase/
decrease in the -61,786, -36,482, 71,063, 287,236 69,044, 329,074
period (“-” for 964.01 970.67 056.38 ,522.87 608.47 ,253.04
decrease)
3.1 Total
-36,482, 841,150 42,168, 846,836
comprehensive
970.67 ,934.75 174.85 ,138.93
income
3.2 Capital
-61,786, 38,900, -22,886,
increased and
964.01 000.00 964.01
reduced by owners
3.2.1
Common shares 500,000 500,000
increased by .00 .00
shareholders
3.2.2 Capital
increased by
holders of other
equity instruments
3.2.3
Share-based
payments included
in owners’ equity
-61,786, 38,400, -23,386,
3.2.4 Other
964.01 000.00 964.01
-553,91 -494,87
3.3 Profit 71,063, -12,023,
4,411.8 4,921.8
distribution 056.38 566.38
8 8
3.3.1
71,063, -71,063,
Appropriation to
056.38 056.38
surplus reserves
3.3.2
98
Lu Thai Textile Co., Ltd. Annual Report 2017
Appropriation to
general reserve
3.3.3
-482,85 -494,87
Appropriation to -12,023,
1,355.5 4,921.8
owners (or 566.38
0 8
shareholders)
3.3.4 Other
3.4
Carryforwards
within owners’
equity
3.4.1 Increase
in capital (or share
capital) from
capital reserves
3.4.2 Increase
in capital (or share
capital) from
surplus reserves
3.4.3 Surplus
reserves used to
make up losses
3.4.4 Other
3.5 Specific
reserve
3.5.1
Withdrawn for the
period
3.5.2 Used
during the period
3.6 Other
922,60 4,629,1 7,775,0
4. Balances as of 699,493 16,810, 962,933 544,132
2,311. 02,712. 75,489.
end of the period ,593.82 574.22 ,579.06 ,719.64
00 06 80
2016
Unit: RMB
2016
Equity attributable to owners of Parent Company Non-co
Other equity Other ntrollin Total
Item Less: Retaine
Share instruments Capital compre Specific Surplus General g owners’
Treasur d
capital reserves hensive reserve reserves reserve interest equity
Prefer Perpet Other y shares earnings
income s
99
Lu Thai Textile Co., Ltd. Annual Report 2017
red ual
shares bonds
955,75 1,007,1 4,053,0 7,276,5
1. Balances as of 11,610, 17,090, 815,648 439,484
8,496. 46,166. 79,857. 97,630.
end of prior year 721.68 772.31 ,504.28 ,554.42
00 97 70 00
Add: Adjustments
for changed
accounting
policies
Adjustments for
corrections of
previous errors
Adjustments for
7,840,0 2,777,3 18,996, 29,613,
business mergers
00.00 69.75 327.73 697.48
under same control
Other
adjustments
2. Balances as of 955,75 1,014,9 4,072,0 7,306,2
11,610, 17,090, 818,425 439,484
beginning of the 8,496. 86,166. 76,185. 11,327.
721.68 772.31 ,874.03 ,554.42
year 00 97 43 48
3. Increase/
-33,15 -253,70
decrease in the -11,610, 36,202, 73,444, 269,790 35,603, 139,789
6,185. 5,609.1
period (“-” for 721.68 772.58 648.65 ,003.76 556.75 ,909.28
00 4
decrease)
3.1 Total
36,202, 808,760 47,627, 892,589
comprehensive
772.58 ,025.91 123.13 ,921.62
income
3.2 Capital -33,15 -253,70 -275,25
-11,610,
increased and 6,185. 5,609.1 1,072.4
721.68
reduced by owners 00 4 6
3.2.1
-33,15 -253,70 -275,25
Common shares -11,610,
6,185. 6,278.0 1,741.3
increased by 721.68
00 5 7
shareholders
3.2.2 Capital
increased by
holders of other
equity instruments
3.2.3
Share-based
payments included
in owners’ equity
3.2.4 Other 668.91 668.91
100
Lu Thai Textile Co., Ltd. Annual Report 2017
-538,97 -477,54
3.3 Profit 73,444, -12,023
0,022.1 8,939.8
distribution 648.65 ,566.38
5 8
3.3.1
73,444, -73,444,
Appropriation to
648.65 648.65
surplus reserves
3.3.2
Appropriation to
general reserve
3.3.3
-465,52 -477,54
Appropriation to -12,023
5,373.5 8,939.8
owners (or ,566.38
0 8
shareholders)
3.3.4 Other
3.4
Carryforwards
within owners’
equity
3.4.1 Increase
in capital (or share
capital) from
capital reserves
3.4.2 Increase
in capital (or share
capital) from
surplus reserves
3.4.3 Surplus
reserves used to
make up losses
3.4.4 Other
3.5 Specific
reserve
3.5.1
Withdrawn for the
period
3.5.2 Used
during the period
3.6 Other
922,60 4,341,8 7,446,0
4. Balances as of 761,280 53,293, 891,870 475,088
2,311. 66,189. 01,236.
end of the period ,557.83 544.89 ,522.68 ,111.17
00 19 76
101
Lu Thai Textile Co., Ltd. Annual Report 2017
8. Parent Company Statements of Changes in Owners’ Equity
2017
Unit: RMB
2017
Other equity instruments Other
Less: Retaine Total
Item Share Capital comprehe Specific Surplus
Preferre Perpetu Treasury d owners’
capital Other reserves nsive reserve reserves
d shares al bonds shares earnings equity
income
3,451,8
1. Balances as of 922,602, 759,793,2 888,761,7 6,022,993
36,174.
end of prior year 311.00 38.92 83.04 ,507.40
44
Add: Adjustments
for changed
accounting
policies
Adjustments for
corrections of
previous errors
Other
adjustments
2. Balances as of 3,451,8
922,602, 759,793,2 888,761,7 6,022,993
beginning of the 36,174.
311.00 38.92 83.04 ,507.40
year 44
3. Increase/
decrease in the 71,063,05 178,266 249,400,9
43,463.99 28,050.00
period (“-” for 6.38 ,351.93 22.30
decrease)
3.1 Total
710,630 710,658,6
comprehensive 28,050.00
,563.81 13.81
income
3.2 Capital
increased and 43,463.99 43,463.99
reduced by owners
3.2.1
Common shares
increased by
shareholders
3.2.2 Capital
increased by
holders of other
equity instruments
3.2.3
102
Lu Thai Textile Co., Ltd. Annual Report 2017
Share-based
payments included
in owners’ equity
3.2.4 Other 43,463.99 43,463.99
-532,36
3.3 Profit 71,063,05 -461,301,
4,211.8
distribution 6.38 155.50
8
3.3.1
71,063,05 -71,063,
Appropriation to
6.38 056.38
surplus reserves
3.3.2
-461,30
Appropriation to -461,301,
1,155.5
owners (or 155.50
0
shareholders)
3.3.3 Other
3.4
Carryforwards
within owners’
equity
3.4.1 Increase
in capital (or share
capital) from
capital reserves
3.4.2 Increase
in capital (or share
capital) from
surplus reserves
3.4.3 Surplus
reserves used to
make up losses
3.4.4 Other
3.5 Specific
reserve
3.5.1
Withdrawn for the
period
3.5.2 Used
during the period
3.6 Other
3,630,1
4. Balances as of 922,602, 759,836,7 959,824,8 6,272,394
28,050.00 02,526.
end of the period 311.00 02.91 39.42 ,429.70
37
103
Lu Thai Textile Co., Ltd. Annual Report 2017
2016
Unit: RMB
2016
Other equity instruments Other
Less: Retaine Total
Item Share Capital comprehe Specific Surplus
Preferre Perpetu Treasury d owners’
capital Other reserves nsive reserve reserves
d shares al bonds shares earnings equity
income
3,259,3
1. Balances as of 955,758, 1,013,498 11,610,72 815,648,5 6,032,637
42,039.
end of prior year 496.00 ,848.06 1.68 04.28 ,165.81
15
Add: Adjustments
for changed
accounting
policies
Adjustments for
corrections of
previous errors
Other
adjustments
2. Balances as of 3,259,3
955,758, 1,013,498 11,610,72 815,648,5 6,032,637
beginning of the 42,039.
496.00 ,848.06 1.68 04.28 ,165.81
year 15
3. Increase/
decrease in the -33,156, -253,705, -11,610,7 73,113,27 192,494 -9,643,65
period (“-” for 185.00 609.14 21.68 8.76 ,135.29 8.41
decrease)
3.1 Total
731,132 731,132,7
comprehensive
,787.55 87.55
income
3.2 Capital
-33,156, -253,705, -11,610,7 -275,251,
increased and
185.00 609.14 21.68 072.46
reduced by owners
3.2.1
Common shares -33,156, -253,706, -11,610,7 -275,251,
increased by 185.00 278.05 21.68 741.37
shareholders
3.2.2 Capital
increased by
holders of other
equity instruments
3.2.3
Share-based
payments included
104
Lu Thai Textile Co., Ltd. Annual Report 2017
in owners’ equity
3.2.4 Other 668.91 668.91
-538,63
3.3 Profit 73,113,27 -465,525,
8,652.2
distribution 8.76 373.50
6
3.3.1
73,113,27 -73,113,
Appropriation to
8.76 278.76
surplus reserves
3.3.2
-465,52
Appropriation to -465,525,
5,373.5
owners (or 373.50
0
shareholders)
3.3.3 Other
3.4
Carryforwards
within owners’
equity
3.4.1 Increase
in capital (or share
capital) from
capital reserves
3.4.2 Increase
in capital (or share
capital) from
surplus reserves
3.4.3 Surplus
reserves used to
make up losses
3.4.4 Other
3.5 Specific
reserve
3.5.1
Withdrawn for the
period
3.5.2 Used
during the period
3.6 Other
3,451,8
4. Balances as of 922,602, 759,793,2 888,761,7 6,022,993
36,174.
end of the period 311.00 38.92 83.04 ,507.40
44
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Lu Thai Textile Co., Ltd. Annual Report 2017
III. Company Profile
Lu Thai Textile Co., Ltd. (hereinafter referred to as the “Company”) is a joint venture established by Zibo Lucheng Textile
Investment Co., Ltd (originally named Zibo Lucheng Textile Co., Ltd, hereinafter referred to as Lucheng Textile) and Thailand Tailun
Textile Co., Ltd. On Feb. 3, 1993, the Company is approved by the former Ministry of Foreign Trade and Economy of the State (1993)
in WJMZEHZ No. 59 to convert into a joint-stock enterprise. Zibo Administration for Industry and Commerce issued the Company
corporate business license with the registration No. of QGLZZZ No. 000066. In July 1997, the Company is approved by the
Securities Committee of the Department of the State in the ZWF (1997) No. 47 to issue 80 million shares of domestically listed
foreign share( B-shares) at the price of RMB 1.00 per share. Upon approved by Shenzhen Stock Exchange with No. (1997) 296
Listing Notice, the Company is listed on the Shenzhen Stock Exchange on August 19, 1997 with B-shares stock code of 200726. On
November 24, 2000, approved by ZJGSZ [2000] No.199 by CSRC, the Company increased publication of 50 million shares of
general share (A-shares) at the book value of RMB 1.00, which are listed on the Shenzhen Stock Exchange on December 25, 2000
with A-shares stock code of 000726 through approval by Shenzhen Stock Exchange with No. (2000) 162 Listing Notice. As approved
by 2000 Shareholders’ General Meeting in May, 2001, the Company carried out the distribution plan that 10 shares of capital public
reserve are converted to 3 more shares for each 10 shares. As approved by Resolutions of 2001 Shareholders’ General Meeting in
June 2002, the Company implemented the distribution plan that 10 shares of capital public reserve are converted 3 more shares for
each 10 shares again. As approved by 2002 Shareholders’ General Meeting in May 2003, the Company implemented the distribution
plan that 10 shares of capital public reserve are 2 more shares for each 10 shares, and inner employees’ shared increased to 40.56
million shares. As examined and approved by ZJGSZ No. [2000] 199 of CSRC, the inner employees’ shares will start circulation 3
years later since listing on the A-share market. On Dec. 25, 2003, the inner employees’ shares reach 3 years since listing on the
A-share stock market, and they set out circulation on Dec.26, 2003. As approved by the Shareholders’ General Meeting 2006 held in
June 2007, the Company implemented the plan on converting 10 shares to all its shareholders with capital reserves for every 10
shares. After capitalization, the registered capital of the Company was RMB 844.8648 million. The Company, in accordance with the
official reply on approving Lu Thai Textile Co., Ltd. to issue additional shares (ZJXK [2008] No. 890 document) from CSRC, issued
the Renminbi common shares (A shares) amounting to 150 million shares on 8 Dec. 2008. According to the relevant resolution of the
2nd Special Shareholders’ General Meeting for 2011, the relevant resolution of the 15th Session of the 6th Board of Directors, the
Opinion of 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 restricted share incentive receivers with monetary funds. In accordance with the resolution of Proposal on
Repurchasing and Canceling Partial Restricted Shares already Granted for the Original Incentive Targets not Reaching the Incentive
Conditions made at the 23rd Session of the 6th Board of Directors on 13 Aug. 2012, the Company canceling a total of 60,000.00
shares already granted for the original incentive targets not reaching the incentive conditions. According to the second temporary
resolution of Proposal on counter purchase of part of the domestic listed foreign share (B share) on 25 Jun. 2012, the Company
counter purchase domestic listed foreign share (B share) 48,837,300 shares. According to the Proposal on Repurchase and Cancel
Part of Unlocked Restricted Share of the Original Incentive Personnel not Conforming to the Incentive Condition, Proposal on
Repurchase and Cancel unlocked Restricted Share in Second Unlocked Period of all the Incentive Personnel reviewed and approved
by the 26th meeting of 6th session of the board of the directors on 27 Mar. 2013, the Company repurchase and cancel 4,257,000 shares
owned by original people whom to motivate. According to the Proposal on Repurchase and Write-off of Partly of the Original
Incentive Targets Not Met with the Incentive Conditions but Granted Restricted Shares approved on the 11th Session of the 7th Board
of Directors on 11 Jun. 2014, to execute repurchase and write-off of the whole granted shares of 42,000 shares of the original
incentive targets not met with the incentive targets of the Company. As per the Proposal on Buy-back of Some A- and B-shares
considered and approved as a resolution at the 1st special meeting of shareholders on August 5, 2015, the Company repurchased
33,156,200 domestically listed foreign shares (B-shares). As of December 31, 2017, the registered capital of the Company was
RMB922.6023 million.
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Lu Thai Textile Co., Ltd. Annual Report 2017
The Company’s registered address: No. 11, Mingbo Road, Hi-tech Development Zone, Zibo, Shandong
The Company’s legal representative: Liu Zibin
The 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 of
the textile and garment products; acquisition and export of products not under exclusive rights or quota licenses; and hotel,
guesthouses, catering, conferences, and training services; rental business of the self-owned houses and land; the construction and
management of the purified water projects.
The Company’s financial statements have been approved for issue by the Board of Directors of the Company on April 15, 2018.
There were 16 subsidiaries included into the consolidation scope of the Company in 2017, and for the details, please refer to Notes
IX. “Equities among Other Entities”. There was 1 increased subsidiary in the consolidation scope as compared with last year, and
please 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 Group
prepared financial statements in accordance with The Accounting Standards for Business Enterprises—Basic Standard issued by the
Ministry of Finance with Decree No. 33 and revised with Decree No. 76, the 42 specific accounting standards, the Application
Guidance of Accounting Standards for Business Enterprises, the Interpretation of Accounting Standards for Business Enterprises and
other regulations issued and revised from February 15, 2006 onwards (hereinafter jointly referred to as “the Accounting Standards
for Business Enterprises”, “China Accounting Standards” or “CAS”), as well as the Rules for Preparation Convention of Disclosure
of Public Offering Companies No.15 – General Regulations for Financial Reporting (revised in 2014) by China Securities Regulatory
Commission.
In accordance with relevant provisions of the Accounting Standards for Business Enterprises, the Group adopted the accrual basis in
accounting. Except for some financial instruments, the financial statements were based on historical costs for measurement.
Non-current asset held for sale was priced according to the lower one between the amount of fair value minus estimated costs and the
original book value which complies with the conditions of holding for sale. If impairment occurred on an asset, an impairment
reserve was withdrawn accordingly pursuant to relevant requirements.
V Important Accounting Policies and Estimations
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 each
subsidiary according to the actual production and operation characteristics and the regulations of the relevant ASBE, formulated
certain specific accounting polices and accounting estimates of the transactions and events such as recognizing the revenues, and
please refer to each description of the section for details. As for the notes to the important accounting judgment and estimations made
by the management level, please refer to the 27. “Other important accounting policies and estimations” of the section.
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Lu Thai Textile Co., Ltd. Annual Report 2017
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 Business
Enterprises, which factually and completely present the Company’s, and the Company’s financial positions as at December 31, 2017,
business results and cash flows for the year of 2017 and other relevant information. In addition, the Company’s and the Company’s
financial statements meet the requirements of disclosing financial statements and notes thereto stated in the Rules for Preparation
Convention of Disclosure of Public Offering Companies No.15 – General Regulations for Financial Reporting (revised in 2014) by
China Securities Regulatory Commission.
2. Fiscal Year
The Company’s fiscal periods include fiscal years and fiscal periods shorter than a complete fiscal year. The Company’s fiscal year
starts 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 and
liabilities.
4. Recording Currency
Renminbi (RMB) is regarded as the prevailing currency used in the main economic circumstances of the Company and its domestic
subsidiaries. The Company and its domestic subsidiaries adopt RMB as the recording currency. The Company and its overseas
subsidiaries confirm to adopt HK Dollar, US Dollar and Vietnamese Dong as the recording currency according their major economic
environment of the operating. When preparing the financial statements for the Reporting Period, the Company adopted RMB as the
recording currency.
5. Accounting Treatment Methods for Business Combinations under the Same Control or not under the
Same Control
Business combinations, it is refer to two or more separate enterprises merge to form a reporting 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 control
A business combination under the same control is a business combination in which all of the combining enterprises are ultimately
controlled by the same party or the same parties both before and after the business combination and on which the control is not
temporary. In a business combination under the same control, the party which obtains control of other combining enterprise(s) on the
combining date is the combining party, the other combining enterprise(s) is (are) the combined party. The “combining date” refers to
the 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 carrying
amount in the combined party on the combining date. As for the balance between the carrying amount of the net assets obtained by
the combining party and the carrying amount of the consideration paid by it (or the total par value of the shares issued), the additional
paid-in capital (share premium) shall be adjusted. If the additional paid-in capital (share premium) is not sufficient to be offset, the
retained earnings shall be adjusted.
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Lu Thai Textile Co., Ltd. Annual Report 2017
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 control
A business combination not under the same control is a business combination in which the combining enterprises are not ultimately
controlled by the same party or the same parties both before and after the business combination. In a business combination not under
the same control, the party which obtains the control on other combining enterprise(s) on the purchase date is the acquirer, and other
combining 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, of
the assets paid, the liabilities incurred or assumed and the equity securities issued by the acquirer in exchange for the control on the
acquiree, the expenses for audit, legal services and assessment, and other administrative expenses, which are recorded into the profits
and losses in the current period. The trading expenses for the equity securities or debt securities issued by the acquirer as the
combination consideration shall be recorded into the amount of initial measurement of the equity securities or debt securities. The
involved contingent consideration shall be recorded into the combination costs at its fair value on the acquiring date. Where new or
further evidences emerge, within 12 months since the acquiring date, against the existing circumstances on the acquiring date and the
contingent consideration thus needs to be adjusted, the combined goodwill shall be adjusted accordingly. The combination costs of
the acquirer and the identifiable net assets obtained by it in the combination shall be measured according to their fair values at the
acquiring date. The acquirer shall recognize the positive balance between the combination costs and the fair value of the identifiable
net assets it obtains from the acquiree as business reputation. Where the combination costs are less then the fair value of the
identifiable net assets it obtains from the acquiree, the acquirer shall re-examine the measurement of the fair values of the identifiable
assets, 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 shall
record the balance into the profits and losses of the current period.
As for the deductible temporary differences the acquirer obtains from the acquiree which are not recognized into deferred income tax
liabilities due to their not meeting the recognition standards, if new or further information shows that the relevant situation has
existed on the acquiring date and the economic benefits brought by the deductible temporary differences the acquirer obtains from
the acquiree on the acquiring date can be realized, they shall be recognized into deferred income tax assets and the relevant goodwill
shall be reduced. Where the goodwill is not sufficient to be offset, the difference shall be recognized into the profits and losses in the
current period. In other circumstances than the above, where the deductible temporary differences are recognized into deferred
income 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 5th Notice
about the Treasury Issuing the Accounting Standards for Enterprises (Finance accounting) [2012] No. 19 Criterion about the
“package deal” (see 6 (2) in this section), Whether the deals are “package deal” or not, belong to the “package deal”, see the previous
paragraphs described in this section and 13. “long term equity investment transaction” in this section and conduct accounting
treatment, those not belong to the "package deal" distinguish between the individual financial statements and the consolidated
financial statements 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 acquiree
before the acquiring date shall be considered as initial cost of the investment. Other related comprehensive gains in relation to the
equity interests that the Company holds in the acquiree before the acquiring date shall be treated on the same basis as the acquiree
directly disposes the related assets or liabilities when disposing 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 equity method arising from the acquiree’s
re-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 the
acquiring date, they shall be re-measured according to their fair values at the acquiring date; the positive difference between their fair
values and carrying amounts shall be recorded into the investment gains for the period including the acquiring date. Other related
comprehensive gains in relation to the equity interests that the Company holds in the acquiree before the acquiring date shall be
109
Lu Thai Textile Co., Ltd. Annual Report 2017
treated on the same basis as the acquiree directly disposes the related assets or liabilities when disposing 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 equity
method arising from the acquiree’s re-measurement, the others shall be transferred into current investment gains on the acquiring
date).
6. Methods for Preparing Consolidated Financial Statements
(1) Principle for determining the consolidation scope
The consolidation scope for financial statements is determined on the basis of control. The term “control” is the power of the
Company upon an investee, with which it can take part in relevant activities of the investee to obtain variable returns and is able to
influence the amount of returns. The consolidated financial statements comprise the financial statements of the Company and its
subsidiaries. A subsidiary is an enterprise or entity controlled by the Company.
Once any changes in the relevant facts or situations resulted in any changes in the elements involved in the aforesaid definition of
“control”, the Company shall carry out a reassessment.
(2) Methods for preparing the consolidated financial statements
Subsidiaries are fully consolidated from the date on which the Company obtains control on their net assets and operation
decision-making and are de-consolidated from the date when such control ceases. As for a disposed subsidiary, its operating results
and cash flows before the disposal date has been appropriately included in the consolidated income statement and cash flow
statement; 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 the
acquiring date have been appropriately included in the consolidated income statement and cash flow statement, and the opening items
and comparative items in the consolidated financial statements are not adjusted. For a subsidiary acquired in a business combination
under the same control or a combined party obtained in a takeover, its operating results and cash flows from the beginning of the
Reporting Period of the combination to the combination date have been appropriately included in the consolidated income statement
and 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 the
Company during the preparation of the consolidated financial statements, where the accounting policies and the accounting periods
are inconsistent between the Company and subsidiaries. For a subsidiary acquired from a business combination not under the same
control, the individual financial statements of the subsidiary are adjusted based on the fair value of the identifiable net assets at the
acquisition 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 the
Company are recognized as minority interests and minority shareholder profits and losses respectively and presented separately under
shareholders’ equity and net profits in the consolidation financial statements. The portion of a subsidiary’s net profits and losses for
the period that belong to minority interests is presented as the item of “minority shareholder profits and losses” under the bigger item
of net profits in the consolidated financial statements. Where the loss of a subsidiary shared by minority shareholders exceeds the
portion enjoyed by minority shareholders in the subsidiary’s opening owners’ equity, minority interests are offset.
Where the Company losses control on its original subsidiaries due to disposal of some equity investments or other reasons, the
residual equity interests are re-measured according to the fair value on the date when such control ceases. The summation of the
consideration obtained from the disposal of equity interests and the fair value of the residual equity interests, minus the portion in the
original subsidiary’s net assets measured on a continuous basis from the acquisition date that is enjoyable by the Company according
to the original shareholding percentage in the subsidiary, is recorded in investment gains for the period when the Company’s control
on the subsidiary ceases. Other comprehensive incomes in relation to the equity investment in the original subsidiary are treated on
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Lu Thai Textile Co., Ltd. Annual Report 2017
the same accounting basis as the acquiree directly disposes the relevant assets or liabilities (that is, except for the changes in the net
liabilities or assets with a defined benefit plan resulted from re-measurement of the original subsidiary, the rest shall all be transferred
into current investment gains) when such control ceases. And subsequent measurement is conducted on the residual equity interests
according to the No. 2 Accounting Standard for Business Enterprises —Long-term Equity Investments or the No. 22 Accounting
Standard for Business Enterprises—Recognition and Measurement of Financial Instruments. For details, see 13. “Long Term Equity
Investment” or 9. “Financial Instruments” in this section.
Where the Company losses control on its original subsidiaries due to step by step disposal of equity investments through multiple
transactions, it need to distinguish the Group losses control on its subsidiaries due to disposal of equity investments whether belongs
to a package deal. All the transaction terms, conditions and economic impact of the disposal of subsidiaries’ equity investment are in
accordance with one or more of the following conditions, which usually indicate the multiple transactions, should be considered as a
package deal for accounting treatment. ① These deals are at the same time or under the condition of considering the influence of
each other to concluded; ② These transactions only be as a whole can achieve a complete business result; ③ The occurrence of a
deal depends on at least one other transactions；④ A deal alone is not economical, but it is economical with other trading together.
Those not belong to a package deal, each of them a deal depends on circumstances respectively conduct accounting treatment in
accordance with the applicable principles of “part disposal of subsidiaries of a long-term equity investment under the condition of not
losing control on its subsidiaries” (see 13 (2) ④ in this section) and “Where the Company losses control on its original subsidiaries
due to disposal of some equity investments or other reasons” (see the front paragraph) relevant transactions of the Company losses
control on its subsidiaries due to disposal of equity investments belonging to a package deal, considered as a transaction and conduct
accounting treatment. However, Before losing control, every disposal cost and corresponding net assets balance of subsidiary of
disposal investment are confirmed as other comprehensive income in consolidated financial statements, which together transferred
into the current profits and losses in the lose of control, when the Company losing control on its subsidiary.
7. Recognition Standard for Cash and Cash Equivalents
The term “cash” refers to cash on hand and deposits that are available for payment at any time. The term “cash equivalents” refers to
short-term (within 3 months from the purchase date) and highly liquid investments that are readily convertible to known amounts of
cash and which are subject to an insignificant risk of change in value.
8. Foreign Currency and Accounting Method for Foreign Currency
(1) Accounting treatments for translation of foreign currency transactions
As for a foreign currency transaction, the Company shall convert the amount in a foreign currency into amount in its bookkeeping
base at the spot exchange rate (usually referring to the central parity rate announced 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 shall
converted 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 items
On the balance sheet date, the foreign currency monetary items shall be translated at the spot exchange rate on the balance sheet date.
The exchange difference arising from the difference between the spot exchange rate on the balance sheet date and the spot exchange
rate 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 fixed
assets shall be treated at the principle of capitalization of borrowing costs; ② the exchange difference arising from the hedging
instruments used for effective hedging of net overseas operation investments shall be recorded into other comprehensive incomes,
and shall be recognized into current gains and losses when the net investments are disposed; and ③ the exchange difference arising
from change in the book balance of foreign currency monetary items available for sale except the amortized costs shall be recorded
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Lu Thai Textile Co., Ltd. Annual Report 2017
into other comprehensive gains and losses.
For the preparation for consolidated financial statement involved in foreign operations, if there are items of foreign currency
monetary of net investment in foreign operations in essence, then the balance of exchange generated by changes in exchange rate
shall 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 the
transaction date. Where the foreign non-monetary items measured at the fair value shall be converted into amount in its bookkeeping
base currency at spot exchange rate, the exchange gains and losses arising thereof shall be treated as change in fair value, and
recorded into the current period gains and losses or as other comprehensive incomes.
(3) Translation of foreign currency financial statements
When it involves overseas business in preparing the consolidated financial statement, for the translation difference of foreign
currency monetary items of net investment in overseas business arising from the change in exchange rate, it shall be recorded into the
item of “difference of foreign currency financial statement translation” under the owners’ equity; and be recorded into disposal gains
and losses at current period when disposing overseas business.
The foreign currency financial statement of overseas business should be translated in to RMB financial statement by the following
methods: The asset and liability items in the balance sheets shall be translated at a spot 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 exchange
rate at the time when they are incurred. The income and expense items in the profit statements shall be translated at the spot exchange
rate of the transaction date. The undistributed profits at year-begin is the undistributed profits at the end of last year after the
translation; undistributed profits at year-end shall be listed as various distribution items after the translation; after the translation, the
balance between assets and the sum of liabilities and owners’ equities shall be recorded into other comprehensive gains and losses as
difference of foreign currency translation. Where an enterprise disposes of an overseas business without the control right, it shall shift
the differences, which is presented under the items of the owner’s equities in the balance sheet and which arises from the translation
of foreign currency financial statements relating to this overseas business, into the disposal profits and losses of the current period by
all or proportion of the disposed overseas business.
Foreign cash flow shall be translated at the spot exchange rate of the date of cash flow incurred. The influence of exchange rate on
the cash flow shall be adjustment item and individually listed in the cash flow statement.
And the opening balance and the actual balance of last year shall be listed at the amounts after translation of foreign currency
financial statement in last year.
Where the control of the Company over an overseas operation ceases due to disposal of all or some of the Company’s owner’s equity
in the overseas operation or other reasons, the foreign-currency statement translation difference belonging to the parent company’s
owner’s equity in relation to the overseas operation which is stated under the shareholders’ equity in the balance sheet shall be all
restated 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 the
Company still has control over the overseas operation, the foreign-currency statement translation difference in relation to the
disposed part of the overseas operation shall be recorded into minority interests instead of current gains and losses. If what’s disposed
is some equity in an overseas associated enterprise or joint venture, the foreign-currency statement translation difference related to
the overseas 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 Company recognizes a financial asset or liability when it becomes a party of the relevant financial instrument contract. Financial
assets and liabilities are measured at fair value in initial recognition. As for the financial assets and liabilities measured at fair value
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Lu Thai Textile Co., Ltd. Annual Report 2017
of which changes are recorded into current gains and losses, the relevant dealing expenses are directly recorded into gains 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 liabilities
Fair value refers to the price that a market participant shall receive for selling an asset or shall pay for transferring a liability in an
orderly transaction on the measurement date. As for the financial assets or financial liabilities for which there is an active market, the
quoted prices in the active market shall be used to determine the fair values thereof. The quoted prices in the active market refers to
the prices available from stock exchange, broker’s agencies, guilds, pricing organization and etc., which represent the actual trading
price under equal transaction. Where there is no active market for a financial instrument, the enterprise concerned shall adopt value
appraisal techniques, including the prices adopted by the parties, who are familiar with the condition, in the latest market transaction
upon their own free will, the current fair value obtained by referring to other financial instruments of the same essential nature, the
cash flow capitalization method and the option pricing model, etc., to determine its fair value.
(2) Classification, recognition and measurement of financial assets
The purchase and sale of financial assets under the normal ways shall be recognized and stopped to be recognized respectively at the
price of transaction date. Financial assets shall be classified into the following four categories when they are initially recognized: (a)
the financial assets which are measured at their fair values and the variation of which is recorded into the profits and losses of the
current period, (b) the investments which will be held to their maturity; (c) loans and the account receivables; and (d) financial assets
available for sale.
① The financial assets which are measured at their fair values and the variation of which is recorded into the profits and losses of
the current period
Including transactional financial assets and the financial assets which are designated to be measured at their fair value when they are
initially recognized and of which the variation is recorded into the profits and losses of the current period;
The financial assets meeting any of the following requirements shall be classified as transactional financial assets：A. The purpose to
acquire the said financial assets is mainly for selling them in the near future; B. Forming a part of the identifiable combination of
financial instruments which are managed in a centralized way and for which there are objective evidences proving that the enterprise
may manage the combination by way of short-term profit making in the near future; C. Being a derivative instrument, excluding the
designated derivative instruments which are effective hedging instruments, or derivative instruments to financial guarantee contracts,
and the derivative instruments which are connected with the equity instrument investments for which there is no quoted price in the
active market, whose fair value cannot be reliably measured, and which shall be settled by delivering the said equity instruments.
A transactional financial asset is subsequently measured at the fair value. The gains and losses arising from the fair value changes, as
well 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 investment
The term "held-to-maturity investment" refers to a non-derivative financial asset with a fixed date of maturity, a fixed or
determinable amount of repo price and which the enterprise holds for a definite purpose or the enterprise is able to hold until its
maturity.
For the held-to-maturity investment adopting actual interest rate method, which is measured at the post-amortization costs, the profits
and losses that arise when such financial assets or financial liabilities are terminated from 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 post-amortization costs and the interest incomes of different
installments or interest expenses are calculated in light of the actual interest rates of the financial assets or financial liabilities
(including a set of financial assets or financial liabilities). The actual interest rate refers to the interest rate adopted to cash the future
cash flow of a financial asset or financial liability within the predicted term of existence or within a shorter applicable term into the
current carrying amount of the financial asset or financial liability.
When the actual interest rate is determined, the future cash flow shall be predicted on the basis of taking into account all the
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contractual provisions concerning the financial asset or financial liability (the future credit losses shall not be taken into account).and
also the various fee charges, trading expenses, premiums or reduced values, etc., which are paid or collected by the parties to a
financial 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 financial assets, which there is no quotation in the active market, with
fixed recovery cost or recognizable. Financial assets that are defined as loans and the accounts receivables by the Company including
notes receivables, accounts receivables, interest receivable, dividends receivable and other receivables etc..
Loans and the accounts receivables are made follow-up measurement on the basis of post-amortization costs employing the effective
interest method. Gains or loss arising from the termination recognition, impairment occurs or amortization shall be recorded into the
profits and losses of the current period.
④ Assets available for sales
Assets available for sales including non-derivative financial asset that has been assigned as assets available for sales on the initial
recognition and financial assets excluded those measured at fair value and of which the variation into profits and losses of the current
period, 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 accumulative
amortization amount formed by the amortization between the difference of the initially recognized amount and the amount on the due
date that adopted the actual interest rate method, and at the same time deduct the amount after the impairment loss happened. The
cost at the period-end of the available-for-sale liabilities instruments is its initial cost.
Financial assets available-for-trade are subsequently measured at fair value, and gains or losses arising from changes in the fair value
are recognized as other comprehensive income，and be carried forward when the said financial assets stopped recognition, then it
shall be recorded into the profits and losses of the current period. But, the equity instrument investment which neither have quotation
in the active market nor its fair value could not be reliable measured, as well as the derivative financial assets that concern with the
equity instruments and should be settled through handing over to its equity instruments, should take the follow-up measurement
according to the cost.
Interest receive during the holding of assets available for sales and cash dividends with distribution announcement by invested
companies, it shall be recorded into the profits and losses of the current period.
(3) Impairment of financial assets
The Company assesses at the balance sheet date the carrying amount of every financial asset except for the financial assets that
measured by the fair value. If there is objective evidence indicating a financial asset may be impaired, a provision is provided for the
impairment.
The Company carries out a separate impairment test for every financial asset which is individually significant. As for a financial asset
which 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 is
included in the financial asset group with similar credit risk and tested again on the group basis. Where the impairment loss is
recognized for an individual financial asset, it is not included in the financial asset group with similar credit risk for an impairment
test.
① Impairment on held-to maturity investment, loans and receivables
The financial assets measured by cost or amortized cost write down their carrying value by the estimated present value of future cash
flow. The difference is recorded as impairment loss. If there is objective evidence to indicate the recovery of value of financial assets
after impairment, and it is related with subsequent event after recognition of loss, the impairment loss recorded originally can be
reversed. The carrying value of financial assets after impairment loss reversed shall not exceed the amortized cost of the financial
assets without provisions of impairment loss on the reserving date.
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② Impairment of available-for-sale financial assets
When it judged that the decrease of fair value of the available-for-sale equity instrument investment is serious and not temporarily
after comprehensive considering relevant factors, it reflected that the available-for-sale equity instrument investment occurred
impairment. Of which, the “serious decline” refers to the accumulative decline range of the fair value over 20%; while the
“non-temporary decline” refers to the consecutive decline time of the fair value over 12 months.
Where an available-for-sale financial asset is impaired, the accumulative losses arising from the decrease of the fair value of the
capital reserve which is directly included are transferred out and recorded in the profits and losses for the current period. The
accumulative losses transferred out are the balance obtained from the initially obtained cost of the said financial asset after deducting
the principals as taken back, the amortized amount, the current fair value and the impairment loss originally recorded in the profits
and losses.
Where the impairment loss has been recognized for an available-for-sale financial asset, if, within the accounting periods thereafter,
there is any objective evidence proving that the value of the said financial asset has been restored and the restoration is objectively
related to the events that occur after the impairment loss was recognized, the originally recognized impairment loss is reversed. The
impairment losses on the available-for-sale equity instrument investments are reversed and recognized as other comprehensive
incomes, and the impairment losses on the available-for-sale liability instruments are reversed and recorded in the profits and losses
for the current period.
The impairment loss incurred to an equity instrument investment for which there is no quoted price in the active market and whose
fair value cannot be reliably measured, or incurred to a derivative financial asset which is connected with the said equity instrument
investment and which must be settled by delivering the said equity investment, is not reversed.
(4) Recognition and measurement of financial asset transfers
Where a financial asset satisfies any of the following requirements, the recognition of it is terminated: ① The contractual rights for
collecting the cash flow of the said financial asset are terminated; ② The said financial asset has been transferred and nearly all of
the risks and rewards related to the ownership of the financial asset to the transferee; or ③ The said financial asset has been
transferred. And the Company has ceased its control on the said financial asset though it neither transfers nor retains nearly all of the
risks and rewards 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, and
it does not cease its control on the said financial asset, it recognizes the relevant financial asset and liability accordingly according to
the extent of its continuous involvement in the transferred financial asset. The term "continuous involvement in the transferred
financial asset" refers to the risk level that the enterprise faces resulting from the change of the value of the financial asset.
If the transfer of an entire financial asset satisfies the conditions for stopping recognition, the difference between the amounts of the
following 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 originally
recorded 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 asset
is apportioned between the portion whose recognition has been stopped and the portion whose recognition has not been stopped
according to their respective relative fair value, and the difference between the amounts of the following 2 items is included into the
profits and losses of the current period: (1) The summation of the consideration received from the transfer and the portion of the
accumulative amount of changes in the fair value originally recorded in other comprehensive incomes which corresponds to the
portion 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 of
the risks and rewards of the financial asset ownership are transferred. If almost all of the risks and rewards of the financial asset
ownership had been transferred to the transferee, derecognize the financial assets. For almost all of the risks and rewards of the
financial asset ownership retained, do not end to recognize the financial assets. For which neither transfer or retain almost all of the
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risks and rewards of the financial asset ownership, continuously judge whether the Company retain the control of the assets, and
conduct accounting treatment according to the principle of mentioned in the previous paragraphs.
(5) Classification and measurement of financial liabilities
In 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. As
for a financial liability measured at fair value and whose changes are recorded in current gains and losses, the relevant trading
expense is directly recorded in the profits and losses for the current period. As for other financial liabilities, the relevant trading
expenses are recorded in the initially recognized amounts.
① Financial liabilities measured at fair values and whose changes are recorded in current gains and losses
Such financial liabilities are divided into transactional financial liabilities and financial liabilities designated to be measured at fair
values and whose changes are recorded in current gains and losses in the initial recognition under the same conditions where such
financial assets are divided into transactional financial assets and financial assets designated to be measured at fair values and whose
changes are recorded in current gains and losses in the initial recognition.
Financial liabilities measured at fair values and whose changes are recorded in current gains and losses are subsequently measured at
their fair values. Gains or losses arising from the fair value changes, as well as the dividend and interest expenses in relation to the
said financial liabilities, are recorded in the profits and losses for the current period.
② Other financial liabilities
As for a derivative financial liability connected to an equity instrument for which there is not quoted price in an active market and
whose fair value cannot be reliably measured and which must be settled by delivering the equity instrument, it is subsequently
measured on the basis of costs. Other financial liabilities are subsequently measured according to the amortized cost using the actual
interest rate method. Gains or losses arising from de-recognition or amortization of the said financial liabilities is recorded in the
profits and losses for the current period.
(6) De-recognition of financial liabilities
Only when the prevailing obligations of a financial liability are relieved in all or in part may the recognition of the financial liability
be terminated in all or partly. Where the Company (debtor) enters into an agreement with a creditor so as to substitute the existing
financial liabilities by way of any new financial liability, and if the contractual stipulations regarding the new financial liability is
substantially different from that regarding the existing financial liability, it terminates the recognition of the existing financial liability,
and at the same time recognizes the new financial liability.
Where the recognition of a financial liability is totally or partially terminated, the enterprise concerned shall include into the profits
and losses of the current period for the gap between the book value which has been terminated from recognition and the
considerations it has paid (including the non-cash assets it has transferred out and the new financial liabilities it has assumed)
(7) Derivatives and embedded derivatives
Derivative financial instruments include derivatives are initially measured at fair value at the date when the derivative contracts are
entered 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 or
financial liability at fair value though profit or loss, and the treated as a standalone derivative if (a) the economic characteristics and
risks of the embedded derivative are not closely related to the economic characteristics and risks of the host contract; and (b) a
separate instrument with the same terms as the embedded derivative would meet the definition of a derivative. If the Company is
unable to measure the embedded derivative separately either at acquisition or at a subsequent balance sheet date, it designates the
entire hybrid instrument as a financial asset or financial liability at fair value through profit or loss.
(8) Offsetting financial assets and financial liabilities
When the Company has a legal right that is currently enforceable to set off the recognized financial assets and financial liabilities,
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and intends either to settle on a net basis, or to realize the financial asset and settle the financial liability simultaneously, a financial
asset and a financial liability shall be offset and the net amount is presented in the balance sheet. Except for the above circumstances,
financial assets and financial liabilities shall be presented separately in the balance sheet and shall not be offset.
(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 changes
of the equity. The Group not recognized the changes of the fair value of the equity instrument. 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 from
shareholders’ equity. The Company does not recognize any changes in the fair value of equity instruments.
10. Receivables
(1) Accounts Receivable with Significant Single Amount for which the Bad Debt Provision is Made
Individually
Receivables with the amount of RMB 5 million or more than
Judgement basis or monetary standards of provision for bad
RMB 5 million should recognize as the receivables with
debts of the individually significant accounts receivable
significant single amount.
The Company made an independent impairment test on
receivables with significant single amounts; the financial assets
without impairment by independent impairment test should be
Method of individual provision for bad debts of the individually
included in financial assets portfolio with similar credit risk to
significant accounts receivable
take the impairment test. Receivables was recognized with
impairment should no longer be included in receivables 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 method
Aging group Aging analysis method
In the groups, adopting aging analysis method to withdraw bad debt provision:
√ Applicable □ Not applicable
Withdrawal proportion for accounts Withdrawal proportion for other accounts
Age
receivable (%) receivable (%)
Within 1 year (including 1 year) 5.00% 5.00%
1-2 years 10.00% 10.00%
2-3 years 20.00% 20.00%
Over 3 years 30.00% 30.00%
In the groups, adopting balance percentage method to withdraw bad debt provision:
□ Applicable √ Not applicable
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In the groups, adopting other methods to withdraw bad debt provision:
□ Applicable √ Not applicable
(3) Accounts Receivable with an Insignificant Single Amount but for which the Bad Debt Provision is Made
Independently
Receivables have dispute with the other parties or involving
lawsuit and arbitration; receivables have obvious indication
Reason of individually withdrawing bad debt provision
showing that the debtors are likely to fail to perform the duty of
repayment, etc.
The Company made independent impairment test on receivables
with insignificant amount but with the following characteristics,
if any objective evidence shows that the accounts receivable has
been impaired, impairment loss shall be recognized on the basis
Withdrawal method for bad debt provision 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 with clear signs that the debtor is not likely to repay;
and the like.
11. Inventory
Is the Company subject to any disclosure requirements for special industries?
No.
(1) Classification
Inventories mainly include raw materials, work-in-progress, product processed on entrustment, consumptive biological assets and
stock products etc.
(2) Valuation method of inventories acquiring and issuing
Inventories shall be measured at actual cost when acquired, and the cost of the inventories including the procurement cost, processing
cost and other costs. Grey yarn, dyed yarn, and plus material shall be measured at first-in first-out method when acquired and
delivered; other inventories shall be measured as per the weighted average method
(3) Basis for determining net realizable value of inventories and provision methods for decline in value of inventories
Net realizable value is the estimated selling price in the ordinary course of business less the estimated costs of completion, the
estimated costs necessary to make the sale and relevant taxes. Net realizable value is determined on the basis of clear evidence
obtained, and takes into consideration the purpose of holding inventories and effect of post balance sheet events.
At the balance sheet date, inventories are measured at the lower of the cost and net realizable value. If the net realizable value is
below the cost of inventories, a provision for decline in value of inventories is made. The provision for inventories decline in value is
determined 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 written
down below cost no longer exist so that the net realizable value of inventories is higher than their cost, the original provision for
decline 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.
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(5) Amortization method of the low-value consumption goods and packing articles
For the low-value consumption goods, should be amortized by one-off amortization method when consuming; and for the packing
articles, should be amortized by one-off amortization method when consuming.
12. Assets Held for Sale
The Company classifies an asset into held-for-sale when its book value is mainly recovered by selling (including the exchanges of
non-monetary assets with commercial substance) instead of a non-current asset or disposal group. Specific standards are
simultaneously satisfying the following conditions: A asset or disposal group can be sold immediately under current conditions based
on the practice of selling such assets or disposal groups in similar transactions; the Company has already made a resolution on sale
plan and obtained a confirmed purchase commitment; and the sale is expected to will be completed within one year. A disposal group
refers to a group of assets that are disposed of together as a whole by sale or other means in a transaction and the liabilities directly
related to these assets transferred in the transaction. Where the asset group or combination of asset groups to which a disposal group
belongs apportions the goodwill acquired in the business combination in accordance with the "Accounting Standards for Enterprises
No. 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 classified
as 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 written
down to the net amount of fair value minus the sale costs, and the amount written down will be recognized as impairment loss of
assets 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 disposal
groups will be offset first, and then the book value of various non-current assets applicable to the measurement of Accounting
Standards 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 net
amount that the fair value of the disposal groups held for sale on the follow-up balance sheet date minus the sale costs increases, the
previous written-down amount will be restored, and reversed to the asset impairment loss confirmed after the assets being classified
as held-for-sale. The reversed amount will be included in the current profit or loss. And its book value shall be increased
proportionately to the proportion of the book value of various non-current assets measured by the disposal group in addition to
goodwill applicable to the measurement of held-for-sale norms; The book value of deducted goodwill and the non-current assets
applicable to the measurement of held-for-sale norms will not be reversed if the asset impairment loss is recognized before it is
classified as held for sale.
Non-current assets held for sale or non-current assets in the disposal group are not subject to depreciation or amortization. Interest
and 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 the
held-for-sale disposal group due to failure in meeting the classification conditions for the category of held-for-sale, it will be
measured by one of the followings whichever is lower: (1) The book value before being classified as held for sale will be adjusted
according to the depreciation, amortization or impairment that would have been recognized under the assumption that it was not
classified as held for sale; (2) The recoverable amount.
13. Long-term Equity Investments
The long-term equity investments of this part refer to the long-term equity investments that the Company has control, joint control or
significant influence over the investees. The long-term equity investment that the Company does not have control, joint control or
significant influence over the investees, should be recognized as available-for-sale financial assets or be measured by fair value with
the changes should be included in the financial assets accounting of the current gains and losses, and please refer the details of the
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accounting polices to “9. financial instrument” in this section.
Joint control, refers to the control jointly owned according to the relevant agreement on an arrangement by the Company and the
relevant activities of the 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 the
investees, but could not control or jointly control the formulation of the policies with the other parties.
(1) Recognition of investment costs
As for long-term equity investments acquired by enterprise merger, if the merger is under the same control, the share of the book
value of the owner’s equity of the merged enterprise, on the date of merger, is regarded as the initial cost of the long-term equity
investment. The difference between the initial cost of the long-term equity investment and the payment in cash, non-cash assets
transferred as well as the book value of the debts borne by the merging party shall offset against the capital reserve. If the capital
reserve is insufficient to dilute, the retained earnings shall be adjusted. If the consideration of the merging enterprise is that it issues
equity securities, it shall, on the date of merger, regard the share of the book value of the shareholder's equity of the merged
enterprise 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 the stocks issued shall be regarded as the capital stock, while the difference between the initial cost of the
long-term equity investment and total face value of the shares issued shall offset against the capital reserve. If the capital reserve is
insufficient 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 as
long-term equity investment on the purchasing date according to the combination cost, the combination costs shall be the sum of the
fair 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, assessment and consultancy services and other relevant expenses occurred in the
business combination by the combining party or the purchase party, shall be recorded into current profits and losses upon their
occurrence.
Besides the long-term equity investments formed by business combination, the other long-term equity investments shall be initially
measured by cost, the cost is fixed in accordance with the ways of gaining, such as actual cash payment paid by the Company, the
fair value of equity securities issued by the Company, the agreed value of the investment contract or agreement, the fair value or
original carrying amount of exchanged assets from non-monetary assets exchange transaction, the fair value of the long-term equity
investments, etc. The expenses, taxes and other necessary expenditures directly related with gaining the long-term equity investments
shall also be recorded into investment cost.
(2) Subsequent measurement and recognition of gains or losses
A long-term equity investment where the investing enterprise has joint control (except for which forms into common operators) or
significant influence over the investors should be measured by equity method. Moreover, long-term equity investment adopting the
cost method in the financial statements, and which the Company has control on invested entity.
① Long-term equity investment measured by adopting cost method
The price of a long-term equity investment measured by adopting the cost method shall be included at its initial investment cost and
append as well as withdraw the cost of investing and adjusting the long-term equity investment. The return on investment at current
period shall be recognized in accordance with the cash dividend or profit announced to distribute by the invested entity, except the
announced 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 method
If the initial cost of a long-term equity investment is more than the Company's attributable share of the fair value of the invested
entity's identifiable net assets for investment, the initial cost of the long-term equity investment may not be adjusted. If the initial cost
of a long-term equity investment is less than the Company's attributable share of the fair value of the invested entity's identifiable net
assets for the investment, the difference shall be included in the current profits and losses and the cost of the long-term equity
investment shall be adjusted simultaneously.
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When measured by adopting equity method, respectively recognize investment income and other comprehensive income according to
the net gains and losses as well as the portion of other comprehensive income which should be enjoyed or be shared, and at the same
time adjust the book value of the long-term equity investment; corresponding reduce the book value of the long-term equity
investment according to profits which be declared to distribute by the investees or the portion of the calculation of cash dividends
which 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 as
include in the capital reserve. The investing enterprise shall, on the ground of the fair value of all identifiable assets of the invested
entity when it obtains the investment, recognize the attributable share of the net profits and losses of the invested entity after it
adjusts the net profits of the invested entity. If the accounting polices 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 the
accounting period and according which to recognize the investment income as well as other comprehensive income. For the
transaction happened between the Company and associated enterprises as well as joint ventures, if the assets launched or sold not
form into business, the portion of the unrealized gains and losses of the internal transaction, which belongs to the Company according
to the calculation of the enjoyed proportion, should recognize the investment gains and losses on the basis. But the losses of the
unrealized internal transaction happened between the Company and the investees which belongs to the impairment losses of the
transferred 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 and
other long-term rights and interests which substantially form the net investment made to the invested entity are reduced to zero.
However, if the Company has the obligation to undertake extra losses, it shall be recognized as the estimated liabilities in accordance
with the estimated duties and then recorded into investment losses at current period. If the invested entity 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 recognizing 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 Jan. 2007 of
the associated enterprises and joint ventures, if there is debit difference of the equity investment related to the investment, should be
included in the current gains and losses according to the amount of the straight-line amortization during the original remained period.
③ Acquiring shares of minority interest
In the preparation for the financial statements, the balance existed between the long-term equity investment increased by acquiring
shares of minority interest and the attributable net assets on the subsidiary calculated by the increased shares held since the purchase
date (or combination date), the capital reserves shall be adjusted, if the capital reserves are not sufficient to offset, the retained profits
shall be adjusted.
④ Disposal of long-term equity investment
In the preparation of financial statements, the Company disposed part of the long-term equity investment on subsidiaries without
losing its controlling right on them, the balance between the disposed price and attributable net assets of subsidiaries by disposing the
long-term equity investment shall be recorded into owners’ equity; where the Company losses the controlling right by disposing part
of long-term equity investment on such subsidiaries, it shall treated in accordance with the relevant accounting policies in 6. (2)
“Method on preparation of combined financial statements” in this section.
For other ways on disposal of long-term equity investment, the balance between the book value of the disposed equity and its actual
payment 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 equity
method for measurement, the other comprehensive income originally recorded into owners’ equity should adopt the same basis of the
accounting 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 according
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to 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 and
measurement standards of financial instrument before acquiring the control of the investees, should adopt the same basis of the
accounting disposal of the relevant assets or liabilities directly disposed by the investees and should be carried forward into the
current gains and losses according to the proportion; the changes of the other owners’ equity except for the net gains and losses, other
comprehensive income and the profits distribution among the net assets of the investees which recognized by adopting the equity
method for measurement, should be carried forward into the current gains and losses according to the proportion.
14. Investment Real Estates
Measurement model of investment real estate
Costing method measurement
Depreciation or amortization method
The investment real estate refers to the real estate gaining the rent or capital appreciation or both. It includes rented land use right,
holding land use right to be transferred after the appreciation and rented building, etc.
The investment real estate is measured initially according to the cost. The subsequent expenses related with the investment real estate
shall be calculated into the cost of investment real estate if the economic benefit related with the asset may flow in and the cost may
be 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 amortizes
according 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 Section 20 “Long-term
Asset Devaluation”.
When the self-use real estate or stock is converted to the investment real estate or the investment real estate is converted to the
self-use real estate, the book value before the conversion shall be the entry value after the conversion.
When the investment real estate is disposed, or out of usage permanently, and it is expected not to get the economic benefit from the
disposal, the confirmation on the investment real estate shall be terminated. The disposal income for the sales, transferring, scrap or
damage of the investment real estate deducing the book value and related tax shall be calculated in the current profits and losses.
15. Fixed Assets
(1) Recognition Conditions
The term “fixed assets” refers to the tangible assets that simultaneously possess the features as follows: (a) they are held for the sake
of producing commodities, rendering labor service, renting or business management; and (b) their useful life is in excess of one fiscal
year. The fixed assets are only recognized when the relevant economic benefits probably flow in the Company and its cost could be
reliable measured. The fixed assets should take the initial measurement according to the cost and at the same time consider the
influences of the factors of the estimated discard expenses.
(2) Depreciation Method
Category of fixed assets Method Useful life Salvage value Annual deprecation
Housing and building Average method of 5-30 0-10% 3.00%-20.00%
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useful life
Average method of
Machinery equipments 10-18 0-10% 5.00%-10.00%
useful life
Average method of
Transportation vehicle 5 0-10% 18.00%-20.00%
useful life
Electronic equipments Average method of
5 0-10% 18.00%-20.00%
and others useful life
(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 ownership may or may not eventually be transferred. The fixed assets by finance lease shall adopt the same depreciation policy for
self-owned fixed assets. If it is reasonable to be certain that the lessee will obtain the ownership of the leased asset when the lease
term expires, the leased asset shall be fully depreciated over its useful life. If it is not reasonable to be certain that the lessee will
obtain the ownership of the leased asset at the expiry of the lease term, the leased asset shall be fully depreciated over the shorter one
of the lease term or its useful life.
16. Construction in Progress
Is the Company subject to any disclosure requirements for special industries?
No.
Construction in process is measured at actual cost. Actual cost comprises construction costs, borrowing costs that are eligible for
capitalization before the fixed assets being ready for their intended us and other relevant costs. Construction in process is transferred
to fixed assets when the assets are ready for their intended use.
See the details of the impairment test method of the impairment provision withdrawal method of the construction in progress to 20
“Long-term assets impairment” in this section.
17. Borrowing Costs
Borrowing costs include interest on borrowings, amortization of discounts or premiums, ancillary expenses and exchange differences
arising from foreign currency borrowings. The capitalization of borrowing costs, which can be directly attributable to asset
acquisition or construction, starts when asset expenditure or borrowing cost are generated, or the asset acquisition or construction is
launched 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 as
expenses in the current period.
The actual interest expenses incurred in the current period of specific borrowings shall be capitalized by subtracting the interest
income earned by the bank from unused borrowing funds or investment income gained from temporary investment. For general
borrowings, the amount to be capitalized shall be determined based on the weighted average of total asset expenditure exceeding the
specific borrowing multiplied by the capitalization rate of general borrowings. The capitalization rate is determined based on the
weighted average interest rate of general borrowings.
During the capitalization period, the foreign exchange differences on foreign currency specific borrowings shall be capitalized. The
exchange 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, investment real estate and inventory that require a considerable
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amount 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, the
capitalization of borrowing costs shall be suspended until the asset acquisition or construction resumes.
18. Biological Assets
(1) Consumptive biological assets
Consumptive biological assets refer to the biological assets held for sale or to be harvested as agricultural products in future,
including crops, vegetables under growing, timber production forest and domestic animals for sale. The consumptive biological
assets shall be measured based on cost. All costs for planting, creating, cultivating or raising of consumptive biological assets shall be
the necessary expenses directly added to such assets that accrued before harvest, including any loan that satisfies capitalization
conditions. Subsequent expenses for keeping and feeding the consumptive biological assets after the harvest should be recognized as
the losses and gains of the current period.
Upon harvest or sale, the cost of consumptive biological assets shall be based on its book value through weighted average.
On the date of Balance Sheet, the consumptive biological assets shall be measured with lower of cost and net realizable value, and
the method for confirming the reserve for inventory price drop shall be adopted to confirm the reserve for price drop of consumptive
biological assets. If the impacts of depreciation disappear, the depreciation amount shall be recovered, and the reserve for price drop
originally accrued shall be reversed. Such amount reversed shall be recognized as loss and gain for the current period.
If consumptive biological assets change its usage to be as productive biological assets, the cost after such change shall be confirmed
based 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. When
depreciation occur, accrued the depreciation reserve first and then confirm based on the book value after such accrual.
(2) Productive biological assets
Productive biological assets refer to agricultural products produced, and biological assets held for labor provision or lease, including
economic forest, firewood forest, productive animals and labor animals. The productive biological assets shall be measured based on
cost. All costs for creating or fostering productive biological assets shall be the necessary expenses directly added to such assets that
accrued before 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 the
second month of its useful life. Useful life, expected net salvage value and annual depreciation rate of each productive biological
assets are as below:
Category Useful life (Year) Expected net salvage value Annual deprecation (%)
(%)
Livestock 5 5% 19
The Company shall review the service life, expected net residuals and depreciation method of the productive biological assets at least
by 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 book
value 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 amount shall be estimated based on single asset item. If it is difficult, the
recoverable amount of the portfolio shall be confirmed based on the portfolio such assets belong to. If the recoverable amount of the
assets is lower than book value, reserve for asset depreciation shall be accrued based on such difference, and recognized as loss and
gain for the current period.
The above assets impairment losses once be recognized should not be reversed during the accounting periods afterwards.
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If the productive biological assets changed the usage as the consumptive biological assets, the cost after the change should be
recognized as the book value when changing the usage; of the productive biological assets changed the usage as non-profit living
assets, should be recognized according to the book value after the withdrawal of the impairment provision in accord with the
regulation of No. 8 of ASBE - Assets Impairment for considering whether there was impairment and should withdraw the impairment
provision in ahead of it.
19. Intangible Assets
(1) Pricing Method, Useful Life and Impairment Test
The term “intangible asset” refers to the identifiable non-monetary assets possessed or controlled by enterprises which have no
physical shape.
The intangible assets shall be initially measured according to its cost. The costs related with the intangible assets, if the economic
benefits 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 other
constructions, the related expenditures on use right of land and construction costs shall be respectively measured as intangible assets
and fixed assets. For the purchased houses and buildings, the related payment shall be distributed into the payment for use right of
land and the payment for buildings, if it is difficult to be distributed, the whole payment shall be treated as fixed assets.
For intangible assets with a finite service life, from the time when it is available for use, the cost after deducting the sum of the
expected salvage value and the accumulated impairment provision shall be amortized by straight line method during the service life.
While the intangible assets without certain service life shall not be amortized.
At the end of period, the Company shall check the service life and amortization method of intangible assets with finite service life, if
there is any change, it shall be regarded as a change of the accounting estimates. Besides, the Company shall check the service life of
intangible assets without certain service life, if there is any evidence showing that the period of intangible assets to bring the
economic benefits to the enterprise can be prospected, it shall be estimated the service life and amortized in accordance with the
amortization policies for intangible assets with finite service life.
(2) Accounting Policy for Internal Research and Development Expenditures
The expenditures for internal research and development projects of an enterprise shall be classified into research expenditures and
development expenditures.
The research expenditures shall be recorded into the profit or loss for the current period.
The development expenditures shall be confirmed as intangible assets when they satisfy the following conditions simultaneously, and
shall 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 that
there is a potential market for the products manufactured by applying the intangible assets or there is a potential market for the
intangible assets itself or the intangible assets will be used internally;
④ It is able to finish the development of the intangible assets, and able to use or sell the intangible assets, with the support of
sufficient technologies, financial resources and other resources;
⑤ The development expenditures of the intangible assets can be reliably measured.
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As for expenses that can’t be identified as research expenditures or development expenditures, the occurred R & D expenses shall be
all included in current profits and losses.
(3) Impairment testing method and provision-making method for intangible assets
See 20 “Impairment of long-term assets” in this section.
20. Impairment of Long-term Assets
For non-current financial Assets of fixed Assets, projects under construction, intangible Assets with limited service life, investing real
estate with cost model, long-term equity investment of subsidiaries, cooperative enterprises and joint ventures, the Company should
judge whether decrease in value exists on the date of balance sheet. Recoverable amounts should be tested for decrease in value if it
exists. Other intangible Assets of reputation and uncertain service life and other non-accessible intangible assets should be tested for
decrease in value no matter whether it exists.
If the recoverable amount is less than book value in impairment test results, the provision for impairment of differences should
include in impairment loss. Recoverable amounts would be the higher of net value of asset fair value deducting disposal charges or
present value of predicted cash flow. Asset fair value should be determined according to negotiated sales price of fair trade. If no
sales agreement exists but with asset active market, fair value should be determined according to the Buyer’s price of the asset. If no
sales agreement or asset active market exists, asset fair value could be acquired on the basis of best information available. Disposal
expenses include legal fees, taxes, cartage or other direct expenses of merchantable Assets related to asset disposal. Present value of
predicted asset cash flow should be determined by the proper discount rate according to Assets in service and predicted cash flow of
final disposal. Asset depreciation reserves should be calculated on the basis of single Assets. If it is difficult to predict the recoverable
amounts for single Assets, recoverable amounts should be determined according to the belonging asset group. Asset group is the
minimum 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 asset
group combination in collaboration of business merger. It is shown in the test that if recoverable amounts of shared business
reputation asset group or asset group combination are lower than book value, it should determine the impairment loss. Impairment
loss 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 group
combination 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 general expenses with the apportioned period over one year (one year excluded) that have
occurred but attributable to the current and future periods. The long-term deferred expenses mainly including land contract fees, land
rental fees and house rental fees, and etc. And the long-term deferred expense shall be amortized by the straight-line method
averagely 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, medical
insurance premiums, birth insurance premium, industrial injury insurance premium, housing fund, labor union expenditure and
personnel education fund, non-monetary benefits etc. The short-term compensation actually happened during the accounting period
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when the active staff offering the service for the Company should be recognized as liabilities and is included in the current gains and
losses or relevant assets cost. Of which the non-monetary benefits should be measured according to the fair value.
(2) Accounting Treatment of the Welfare after Departure
Welfare after demission mainly includes basic endowment insurance and unemployment insurance and welfare plans after demission
include setting drawing plan. Where the setting drawing plan is adopted, the corresponding payable and deposit amount should be
included 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 of
providing the compensation for urging the employees volunteered to receive the downsizing and when the Company could not
unilaterally withdraw the demission welfare owning to the relieving plan of the labor relation or the downsizing advice, should
confirm the liabilities of the employees’ salary from the demission welfare on the earlier day between the cost confirmed by the
Company and the cost related to the reorganization of the payment of the demission welfare and includes which in the current gains
and losses. But as for the demission welfare be estimated that could not be completed paid within 12 months after the end of the
annual Reporting Period, should be handled according to the other long-term employee’s salary.
The internal retire plan of the employees should be handled by adopting the same principles of the above demission welfare. The
Company includes the salary and the paid social insurance charges planed to pay by the personnel retreated inside during the period
from the date when ceased the services to the normal retire date in the current gains and losses (demission welfare) when met with
the recognition conditions of the estimated liabilities.
(4) Accounting Treatment of the Welfare of Other Long-term Staffs
The other long-term welfare that the Company offers to the staffs, if met with the setting drawing plan, should be accounting
disposed 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 and
rewards of ownership of the goods have been transferred to the buyer by the enterprise; the enterprise retains neither continuous
management right that usually keeps relation with the ownership nor effective control over the sold goods; the relevant amount of
revenue can be measured in a reliable way; the relevant economic benefits may flow into the enterprise; and the relevant costs
incurred or to be incurred can be measured in a reliable way.
As for the revenues from the domestic sales products, the Company deliveries the products to the buyers according to the contracts
agreement, and the revenues amount of the products sales had been confirmed with the goods payment had been withdrawn or had
received the receipt voucher of which the relevant economic benefits probably flow into the enterprise as well as the relevant costs of
the 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 departure
according to the contracts agreement, and the Company had acquired the bill of lading with the revenues amount of the products sale
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had been confirmed and the goods payment had been withdrawn or had had received the receipt voucher of which the relevant
economic benefits probably flow into the enterprise as well as the relevant costs of the products could be reliable measured when
being confirming as the revenues.
(2) Providing labor services
If the Company can reliably estimate the outcome of a transaction concerning the labor services it provides, it shall recognize the
revenue from providing services employing the percentage-of-completion method on the date of the balance sheet. The completed
proportion of a transaction concerning the providing of labor services shall be decided by the proportion of the labor service already
provided to the total labor service to provide.
The outcome of a transaction concerning the providing of labor services can be measured in a reliable way, means that the following
conditions shall be met simultaneously: ① The amount of revenue can be measured in a reliable way; ② The relevant economic
benefits are likely to flow into the enterprise; ③ The schedule of completion under the transaction can be confirmed in a reliable
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 the
providing of labor services shall be recognized in accordance with the amount of the cost of labor services incurred and expected to
be compensated, and make the cost of labor services incurred as the current expenses. If it is predicted that the cost of labor services
incurred 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 measured
respectively, the part of sale of goods and the part of providing labor services shall be treated respectively. If the part of selling goods
and 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 providing
labor services can be distinguished from each other but can’t be measured respectively, both parts shall be conducted as selling
goods.
(3) Royalty revenue
In accordance 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’s
monetary fund is used by others and the agreed interest rate.
24. Government Subsidies
(1) Judgment Basis and Accounting Treatment of Government Subsidies Related to Assets
The government subsidy refers to the Company gets the monetary and non-monetary assets for free from the government, excluding
the capital that the government invests as the investor who enjoys the corresponding owner’s equity. It can be divided into the
asset-related government subsidy and income-related government subsidy. The Company defines the obtained government subsidy
for the acquisition and construction or forming the long-term asset in other ways as the asset-related government subsidy; other
government subsidies are defined as the income-related government subsidy. If the government document does not clearly prescribe
the subsidy object, the following ways shall be adopted to divide the subsidy into the income-related government subsidy and
asset-related government subsidy: (1) The government document clears the specific project for the subsidy, it shall divide according
to the relative ratio of asset expenditure amount and entry cost expenditure amount to be formed in the budget of specific project,
review according to the division ratio at each balance sheet date, and change when necessary; (2) The government document only
makes the general expression on the usage without indicated specific project, it shall be the income-related government subsidy. If
the government subsidy is monetary asset, it shall be measured according to the received or receivable amount. If the government
subsidy is non-monetary asset, it shall be measured according to the fair value; it the fair value can’t be got reliably, it shall be
measured according to the nominal amount. The government subsidy measured according to the nominal amount shall be calculated
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in the current profits and losses directly.
The asset-related government subsidy shall be confirmed as the deferred income, and it shall be calculated into the current profits and
losses by stages in reasonable and systematic way within the service life of related asset.
Government subsidies related to routine activities of the Company shall be calculated into other income or offset related costs
according to the essence of economic business; government subsidies that have nothing to do with routine activities shall calculated
into non-operating income.
When the confirmed government subsidy needs to be returned and there is the related deferred income balance, the related deferred
income book balance shall be deducted, and the surpassing part shall be calculated into the current profits and losses; If in other
situations, it shall be calculated in the current profits and losses directly.
(2) Judgment Basis and Accounting Treatment of Government Subsidies Pertinent to Incomes
The Company usually confirms and measures the government subsidy according to the received amount when receiving actually.
However, the financial support fund which can be received complying with the related conditions prescribed in the financial support
policy indicated by the conclusive evidence shall be measured according to the receivable amount. The following conditions shall be
met for the government subsidy measured by the receivable amount: (1) The receivable subsidy amount has been confirmed by the
authorized government department, or it can be measured reasonably according to the officially released provisions related with the
financial fund management method, and it is expected there is no major uncertainty for the amount; (2) It is based on the financial
support project and financial fund management method actively opened released officially by the local financial department and
according to the provision in Government Information Disclosure Provisions, the management method shall be universal (any
enterprise complying with the prescribed condition can apply) rather than for the specific enterprise; (3) The related subsidy approval
document has clearly promised the appropriate term, and the appropriation of the amount shall have the corresponding financial
budget for the guarantee, therefore, it can ensure to receive within the prescribed term reasonably.
The income-related government subsidy to compensate the related expense and loss later shall be confirmed as the deferred income,
and it shall be calculated in the current profits and losses during the period to confirm the related costs or losses; the occurred related
costs or losses for compensation shall be calculated 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 be
classified into the income-related government subsidy
25. Deferred Income Tax Assets/Deferred Income Tax Liabilities
(1) Income tax of the current period
On the balance sheet date, for the current income tax liabilities (or assets) of the current period as well as the part formed during the
previous period, should be measured by the income tax of the estimated payable (returnable) amount which be calculated according
to the regulations of the tax law. The amount of the income tax payable which is based by the calculation of the current income tax
expenses, are according to the result measured from the corresponding adjustment of the pre-tax accounting profit of this Reporting
Period which in accord to the relevant regulations of the tax law.
(2) Deferred income tax assets and deferred income tax liabilities
The difference between the book value of certain assets and liabilities and their tax assessment basis, as well as the temporary
difference occurs from the difference between the book value of the items which not be recognized as assets and liabilities but could
confirm their tax assessment basis according to the regulations of the tax law, the deferred income tax assets and the deferred income
tax 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 initial
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recognition of assets or liabilities due to a transaction other than a business combination, which affects neither accounting profit nor
taxable profit (or deductible loss). Besides, no deferred tax assets is recognized for the taxable temporary differences related to the
investments of subsidiary companies, associated enterprises and joint enterprises, and the investing enterprise can control the time of
the 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 assets should be recognized for the deductible temporary difference of initial recognition of assets and liabilities
arising from the transaction which is not business combination, the accounting profits will not be affected, nor will the taxable
amount or deductible loss be affected at the time of transaction. Besides, no deferred taxable assets should be recognized for the
deductible temporary difference related to the investments of the subsidiary companies, associated enterprises and joint enterprises,
which are not likely to be reversed in the expected future or is not likely to acquire any amount of taxable income tax that may be
used for making up such deductible temporary differences. Otherwise, the Company shall recognize the deferred income tax assets
arising from a deductible temporary difference basing on the extent of the amount of the taxable income that is likely to be acquired
to make up such deductible temporary differences
For any deductible loss or tax deduction that can be carried forward to the next year, the corresponding deferred income tax asset
shall be determined to the extent that the amount of future taxable income to be offset by the deductible loss or tax deduction to be
likely obtained.
On the balance sheet date, the deferred income tax assets and the deferred income tax liabilities shall be measured at the tax rate
applicable to the period during which the assets are expected to be recovered or the liabilities are expected to be settled.
The book value of deferred income tax assets shall be reviewed at each balance sheet date. If it is unlikely to obtain sufficient taxable
income to offset against the benefit of the deferred income tax asset, the book value of the deferred income tax assets shall be written
down. Any such write-down should be subsequently reversed where it becomes probable that sufficient taxable income will be
available.
(3) Income tax expenses
Income tax expenses include current income tax and deferred income tax.
The rest current income tax and the deferred income tax expenses or revenue should be included into current gains and losses except
for the current income tax and the deferred income tax related to the transaction and events that be confirmed as other comprehensive
income 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 income tax
The current income tax assets and liabilities of the Company should be listed by the written-off net amount which intend to executes
the net amount settlement as well as the assets acquiring and liabilities liquidation at the same time while owns the legal rights of
settling the net amount.
The deferred income tax assets and liabilities of the Company should be listed as written-off net amount when having the legal rights
of settling the current income tax assets and liabilities by net amount and the deferred income tax and liabilities is relevant to the
income tax which be collected from the same taxpaying bodies by the same tax collection and administration department or is
relevant to the different taxpaying bodies but during each period which there is significant reverse of the deferred income assets and
liabilities 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.
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26. Lease
(1) Accounting Treatment of Operating Lease
(1) Business of operating leases recorded by the Group as the lessee
The rent expenses from operating leases shall be recorded by the lessee in the relevant asset costs or the profits and losses of the
current period by using the straight-line method over each period of the lease term. The initial direct costs shall be recognized as the
profits and losses of the current period. The contingent rents shall be recorded into the profits and losses of the current period in
which they actually arise.
(2) Business of operating leases recorded by the Group as the lessor
The rent incomes from operating leases shall be recognized as the profits and losses of the current period by using the straight-line
method over each period of the lease term. The initial direct costs of great amount shall be capitalized when incurred, and be
recorded 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 be
recorded 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 lessee
On the lease beginning date, the Company shall record the lower one of the fair value of the leased asset and the present value of the
minimum lease payments on the lease beginning date as the entering value in an account, recognize the amount of the minimum lease
payments as the entering value in an account of long-term account payable, and treat the balance between the recorded amount of the
leased asset and the long-term account payable as unrecognized financing charges. Besides, the initial direct costs directly
attributable to the leased item incurred during the process of lease negotiating and signing the leasing agreement shall be recorded in
the asset value of the current period. The balance through deducting unrecognized financing charges from the minimum lease
payments shall be respectively stated in long-term liabilities and long-term liabilities due within 1 year.
Unrecognized financing charges shall be adopted by the effective interest rate method in the lease term, so as to calculate and
recognize current financing charges. The contingent rents shall be recorded into the profits and losses of the current period in which
they actually arise.
(2) Business of finance leases recorded by the Company as the lessor
On the beginning date of the lease term, the Company shall recognize the sum of the minimum lease receipts on the lease beginning
date and the initial direct costs as the entering value in an account of the financing lease values receivable, and record the
unguaranteed residual value at the same time. The balance between the sum of the minimum lease receipts, the initial direct costs and
the unguaranteed residual value and the sum of their present values shall be recognized as unrealized financing income. The balance
through deducting unrealized financing incomes from the finance lease accounts receivable shall be respectively stated in long-term
claims and long-term claims due within 1 year.
Unrecognized financing incomes shall be adopted by the effective interest rate method in the lease term, so as to calculate and
recognize current financing revenues. The contingent rents shall be recorded into the profits and losses of the current period in which
they actually arise.
27. Other Significant Accounting Policies and Estimates
Due to the internal uncertainty of operating activities, the Company needs to make judgments, estimates and assumptions for carrying
amounts of statement items that can’t be measured accurately during the process of applying accounting policies. Such judgments,
131
Lu Thai Textile Co., Ltd. Annual Report 2017
estimates and assumptions are made on the basis of the past experience of Company’s management staffs and on the consideration of
other relevant factors. Such judgments, estimates and assumptions have effect on reporting amount of incomes, expense, assets and
liabilities, as well as disclosure of contingent liabilities on the balance sheet date. However, the uncertainty of such estimates may
results 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 sustainable
operation. As for the change in accounting estimates that only effects on the current period of the change, the affected amount thereof
shall be recognized at current period of the change. As for accounting estimates that effects on both the current period of the change
and 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 the
Company are as follows:
(1) Classification of leases
In line with rules in Accounting Standards for Enterprises No. 21 – Leases, the Company classifies leases into operating leases and
finance leases. Upon the classification, the management staffs need to make analysis and judgments on whether to essentially transfer
all risks and remuneration relating to the ownership of leased-out assets to the lessee, or whether the Company has essentially
undertaken all risks and remuneration relating to the ownership of leased-in assets.
(2) Withdrawal of bad debt provisions
The Company shall, in accordance with accounting policies of receivables, calculate bad debt provisions by adopting allowance
method. Impairment of accounts receivable is based on the assessment of the recovery of accounts receivable. Identification of
impairment of accounts receivable requires judgments and estimates by management staffs. The difference between actual outcomes
and originally estimated outcomes, which will influence the carrying amount of accounts receivable and bad debt provisions thereof
in the estimated period of the change, shall be withdrawn or reversed.
(3) Inventory depreciation reserves
The Company shall calculate whichever is lower between the cost and realizable net value in light of inventory accounting policies.
As for inventories of which the cost is higher than the realizable net value and inventories which are obsolete and unsalable inventory
depreciation reserves shall be withdrawn. Impairment of inventories to realizable net value is based on the assessment of the
marketing of inventories and realizable net value thereof. Identification of inventory impairment requires well-established evidences
by management staffs, as well as judgments and estimates based on consideration of the purpose of holding inventories and other
factors such as events occurring after the date of balance sheet. The difference between actual outcomes and originally estimated
outcomes, which will influence the carrying amount of inventories and inventory depreciation reserves in the estimated period of the
change, shall be withdrawn or reversed.
(4) Fair values of financial instruments
As for financial instruments not existing in active trading market, the Company shall determine their fair values by all kinds of
assessment methods, which include model analysis of discounted cash flow and etc. During the assessment, the Company needs to
assess for respects such as future cash flows, credit risks, market volatility, correlation, and choose appropriate discount rate. Such
related assumptions have uncertainty, of which the change will effect on fair values of financial instruments.
(5) Impairment of financial assets available for sale
To a large extent, whether the impairment of financial assets available for sale is recognized or not relies on the judgments and
assumptions of the management staffs. In that way, the Company shall be certain about whether to recognize impairment losses of
financial assets available for sale in the profit statement. During the process of making judgments and assumptions, the Company
needs to evaluate how much the fair value of such investment is less than its cost, how long such investment will last, and the
financial 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 of non-financial non-current assets
132
Lu Thai Textile Co., Ltd. Annual Report 2017
The 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 every year, have to accept
impairment tests when there is sign of impairment. Other non-current assets except for financial assets have to accept impairment
tests when there is sign indicating the carrying amount thereof is unrecoverable.
When the carrying amounts of the asset or group assets are higher than the recoverable amounts, namely whichever is higher between
the net amount through deducting disposal charges from 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 the
price as stipulated in the sales agreement or the observable market price in the fair transaction minus the incremental cost directly
subject to the disposal of the asset.
When estimating present value of future cash flows, it is necessary to make significant judgments on characters of the asset or asset
group, such as output, sales price, related operating costs, and discount used to calculate the present value. When estimating
recoverable amount, the Company shall adopt all relevant materials that can be required, including estimates relating to output, sales
price and relevant operating costs judged by rational and supportable assumptions.
The Company tests whether there is impairment of good will at least for every year, which requires itself to estimate the present value
of the future cash flow of group assets or combination of group assets. When estimating the present value of the future cash flow, the
Company needs to estimate the cash flow arising from future group assets or combination of group assets, and at the same time
choose appropriate discount rate to determine the present value of the future cash flow.
(7) Depreciation and amortization
Upon consideration on the salvage value of investment real estates, fixed assets and intangible assets, the Company shall withdraw
depreciation and amortization by straight-line method over their service lives. The Company checks on service lives at fixed intervals,
so as to determine the amounts of depreciation expenses and amortization expenses at each period. Service lives are confirmed in
accordance with the past experience on similar assets of the Company, along with renewed technology of expectation. If any
significant change occurred to previous estimated, depreciation expenses and amortization expenses will be adjusted in future period.
(8) Deferred income tax assets
In a limit providing large possibility of offset losses from sufficient taxable profits, the Group shall recognize deferred income tax
assets in line with all unused tax losses, which requires management staffs of the Group to estimate the time when future taxable
profits occurs and the amount thereof by applying plenty of judgments and combining tax planning strategies, so as to determine the
amount 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 uncertain
whether some pre-taxed items can set aside the approvals by tax authorities or not. If there are differences between the ultimate
recognition outcomes and the originally estimated amounts of such tax issues, then such differences shall effect on the current
income tax and deferred income tax during the ultimate recognition period.
(10) Measurement of fair value
Some of assets and liabilities in financial statement of the Company are measured by fair value. When estimating the fair value of a
asset or liability, the Company adopts the available and observable market data. During the process of confirming the fair value of
various assets and liabilities, relevant information of the adopted valuation technique and input value was disclosure in Note XI.
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Lu Thai Textile Co., Ltd. Annual Report 2017
28. Changes in Main Accounting Policies and Estimates
(1) Change of Accounting Policies
√ Applicable □ Not applicable
Content and reason for changes Approval procedures Remark
Before May 1, 2017, inventories of the
Company shall be measured at planned
cost when acquired. When acquired and
For it is unpractical to confirm the
delivered, it shall be measured as per the
accumulative influences from the changes
weighted average method. According to
of the accounting policies, according to the
the requirements of refining operation
rules of Accounting Standards for Business
management of the Company, in order to Approved by the 7th Meeting of the 8th
Enterprises - Changes in Accounting
further strengthen the refinement of Board of Directors of the Company on
Policies and Estimates and Correction of
financial accounting, the Company April 26, 2017
Errors, the changes in accounting policies
changed the pricing method of acquired
adopted prospective application method,
inventories from planned cost to actual
which was implemented from May 1,
cost from May 1, 2017, and changed the
2017.
pricing of delivered grey yarn, dyed yarn,
and plus material from the weighted
average method to first-in first-out method.
Accounting Standards for Business
Enterprises No. 42—Held-for-sale
Non-current Assets, Disposal Groups and
On April 28, 2017, the Ministry of Finance
Discontinued Operation standardize the
released Accounting Standards for
classification, measurement, and list of
Business Enterprises No.
held-for-sale non-current assets and
42—Held-for-sale Non-current Assets,
disposal group, and the list of termination
Disposal Groups and Discontinued
operation.
Operation (CaiKuai [2017] No. 3), which
According to Notice of the Ministry of
came into force from May 28, 2017.
th
Approved by the Resolutions on the 16 Finance on Revision and Issuance of
On December 25, 2017, the Ministry of
Meeting of the 8th Board of Directors of Format of General Financial Statements of
Finance issued the “Notice on Revision
the Company on April 15, 2018 Enterprises, the Company adjusted the
and Issuance of Format of General
presentation of financial statement. The
Financial Statements of Enterprises”
amount adjusted to “assets disposal
(CaiKuai [2017] No. 30) to revise the
income” in 2017 was RMB1,242,000.54,
format of general finance statements of
and the amount adjusted to “assets disposal
enterprises and apply to financial
income” in 2016 was RMB-6,843,361.94.
statements in 2017 and the subsequent
The changes in accounting policies had no
periods.
significant influences on financial
situations, operating results, and cash
flows of the Company.
On May 10, 2017, the Ministry of Finance Approved by Resolutions on the 9th Government subsidy related to routine
134
Lu Thai Textile Co., Ltd. Annual Report 2017
released Circular on Issuance and Revision Meeting of the 8th Board of Directors of activities happened after January 1, 2017
of Accounting Standards for Business the Company on August 28, 2017 shall be calculated into other income;
Enterprises No. 16—Government Subsidy government subsidy that has nothing to do
(CaiKuai [2017] No. 15), and revised with routine activities shall be calculated
Accounting Standards for Business into non-operating income.
Enterprises No. 16—Government Subsidy,
which was implemented in the scope of all
companies who execute accounting
standards for business enterprises from
June 12, 2017.
(2) Significant Changes in Accounting Estimates
□ Applicable √ Not applicable
VI Taxes
1. Main Taxes and Tax Rates
Category of tax Taxable basis Tax rate
Calculated the output tax at 17%, 11%,
6%, 5%, 3% and 0% of taxable income and
VAT paid the VAT by the amount after 17%, 11%, 6%, 5%, 3%, 0%
deducting the deductible withholding VAT
at current period.
Paid at 7%, 5%, 1% of the circulating tax
Urban maintenance and construction tax 7%, 5%, 1%
actually paid
Paid at 0%, 15%, 16.5% and 25% of
Enterprise income tax 0%, 15%, 16.5%, 25%
taxable income respectively
Notes of the disclosure situation of the taxpaying bodies with different enterprises income tax rate
Taxpayer Income tax rate
The Company 15%
Lufeng Weaving & Dyeing Co., Ltd. (hereinafter refer to as
15%
“Lufeng Weaving & Dyeing”)
Lu Thai (Hong Kong) Textile Co., Ltd. (hereinafter refer to as
16.50%
“Lu Thai Hong Kong”)
Xinjiang Lu Thai Harvest Cotton Co., Ltd. (“Xinjiang Lu Thai”) 25%
Zibo Luqun Textile Co., Ltd. (hereinafter refer to as “Luqun
25%
Textile”)
Zibo Xinsheng Power Co., Ltd. hereinafter refer to as “Xinsheng
25%
Power”)
135
Lu Thai Textile Co., Ltd. Annual Report 2017
Beijing Innovative Garment Co., Ltd. (hereinafter referred to as
25%
“Beijing Innovative”
Shanghai Lu Thai Textile & Garments Co., Ltd. (hereinafter
25%
referred to as “Shanghai Lu Thai”)
Beijing Lu Thai Youxian Electronic Commerce Co., Ltd.
25%
(hereinafter referred to as “Beijing Youxian”)
Zibo Chengshun Heating Co., Ltd. (hereinafter referred to as
25%
“Chengshun Heating”)
Zibo Helijie Energy-saving Technology Service Co., Ltd.
25%
(hereinafter referred to as “Helijie”)
Xinjiang Lu Thai Textile Co., Ltd. (hereinafter referred to as
15%
“Xinjiang Textile”)
Lu Thai (Cambodia) Textile Co., Ltd. (hereinafter referred to as
0%
“Lu Thai Cambodia”)
Lu Thai (Burma) Textile Co., Ltd. (hereinafter referred to as “Lu
0%
Thai Burma”)
Lu Thai (Vietnam) Textile Co., Ltd. (hereinafter referred to as
0%
“Lu Thai Vietnam”)
Lu An Garments Co., Ltd. (hereinafter referred to as “Lu An
0%
Garments”
Lu Thai (America) Textile Co., Ltd. (hereinafter referred to as
Refer to 2. Tax Preference presented as follows for details
“Lu Thai America”
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 Finance
Department, State Administration of Taxation of Shandong Province and Local Taxation Bureau of Shandong Province, the
Company and the holding subsidiary Lufeng Weaving and Dyeing Co., Ltd. were identified as high-tech enterprises. Pursuant to
Article 28 of the "Law of the PRC on Enterprise Income Tax” and the No. 76 Announcement published by the State Administration
of Taxation in 2015, namely "Management of Preferential Policy on Corporate Income Tax" and the " Measures for the
Administration of the Recognition of Hi-tech Enterprises" GKFH [2016] No. 195 revised and published by the Ministry of Science
and Technology, Ministry of Finance and State Administration of Taxation, the Company and the holding subsidiary Lufeng
Weaving 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 of
Taxation 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 company
of 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 Investment
Committee of Cambodia, Lu Thai Cambodia enjoys tax preference of tax free on corporate income tax of 3 (3 years start-up period)
+ 3 (3 years tax holiday)+1 (1 year grace period). If profit during the 3 year start-up period then turn into 3 years tax holiday, after
136
Lu Thai Textile Co., Ltd. Annual Report 2017
grace 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, enterprise
income 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 + 2 years’ duty-free term + 4 years’ half-tax term according to the investment license issued by Vietnamese Fudong
Industrial Zone Management Committee, and it will enter into 2 years’ duty-free term if it is profitable within 3 years’ starting
term. The enterprise income tax rate shall be 20% after the preference term ends. The Company shall enjoy 17% of the preference tax
rate within 10 years since the tax year to get the first production and operation income, and the enterprise income tax rate shall be
20% after the preference term ends.
The wholly-owned subsidiary Lu An Garments Co., Ltd. shall enjoy the preference of enterprise income tax at 3 years’ starting
term + 2 years’ duty-free term + 4 years’ half-tax term according to the investment license issued by Vietnamese Anjiang
Province Economic 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 production and operation 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 New York, America, was imposed the federal
enterprise income tax at progressive tax rate in excess of specific amount of 15%-39%, and imposed the New York Enterprise
income tax at the rate of 6.5%. The income tax rate shall be 6.5% when the sales income in New York was below USD1 million,
while 8.85% when above USD1 million.
VII. Notes to Main Items of Consolidated Financial Statements
1. Monetary Funds
Unit: RMB
Item Closing balance Opening balance
Cash on hand 8,040,420.28 3,229,473.38
Bank deposits 668,598,792.58 655,886,664.29
Other monetary funds 17,350,080.52 8,188,564.67
Total 693,989,293.38 667,304,702.34
Of which: total amount deposited
54,911,636.96 98,109,438.71
oversees
Other notes
Note: On Dec. 31, 2017, the monetary capital with restricted ownership of the Company was of RMB17,350,080.52 (Dec. 31, 2016:
RMB8,188,564.67), which was the fixed deposit receipt of RMB16,000,000.00 pledged in order to obtain the short-term loan (See 23
and 58 in this Section), the cash deposit of 1,200,000.00 for opening the L/C by the Company’s subsidiary Xinjiang Lu Thai and the
margin of RMB150,080.52 for opening L/G by the Company’s subsidiary Lufeng Weaving & Dyeing.
137
Lu Thai Textile Co., Ltd. Annual Report 2017
2. Notes Receivable
(1) Notes Receivable Listed by Category
Unit: RMB
Item Closing balance Opening balance
Bank acceptance bill 28,926,913.53 12,263,703.90
L/C 110,349,828.81 71,898,206.01
Total 139,276,742.34 84,161,909.91
(2) Notes Receivable which Had Endorsed by the Company or Had Discounted and Had not Due on the
Balance Sheet Date at the Period-end
Unit: RMB
Amount of recognition termination at the Amount of not terminated recognition at
Item
period-end the period-end
Bank acceptance bill 184,749,663.81
Total 184,749,663.81
3. Accounts Receivable
(1) Accounts Receivable Disclosed by Category
Unit: RMB
Closing balance Opening balance
Book balance Bad debt provision Book balance Bad debt provision
Category Withdra
Book
Proportio wal Proportio Withdrawal Book value
Amount Amount value Amount Amount
n proportio n proportion
n
Accounts receivable
withdrawn bad debt
351,991, 17,911,3 334,080,5 308,637 15,507,82 293,129,72
provision according 100.00% 5.09% 100.00% 5.02%
919.14 95.09 24.05 ,549.96 2.03 7.93
to credit risks
characteristics
351,991, 17,911,3 334,080,5 308,637 15,507,82 293,129,72
Total 100.00% 5.09% 100.00% 5.02%
919.14 95.09 24.05 ,549.96 2.03 7.93
Accounts receivable with significant single amount for which bad debt provision separately accrued at the period-end
□ Applicable √ Not applicable
In the groups, accounts receivable adopting aging analysis method to accrue bad debt provision:
138
Lu Thai Textile Co., Ltd. Annual Report 2017
√ Applicable □ Not applicable
Unit: RMB
Closing balance
Aging
Accounts receivable Bad debt provision Withdrawal proportion
Subitem within 1 year
Within 1 year 347,017,932.00 17,350,896.58 5.00%
Subtotal within 1 year 347,017,932.00 17,350,896.58 5.00%
1 to 2 years 4,636,989.14 463,698.91 10.00%
2 to 3 years 42,998.00 8,599.60 20.00%
Over 3 years 294,000.00 88,200.00 30.00%
Total 351,991,919.14 17,911,395.09 5.09%
Notes of the basis for the determination of the group:
In the groups, accounts receivable adopting balance percentage method to withdraw bad debt provision:
□ Applicable √ Not applicable
In the groups, accounts receivable adopting other methods to withdraw bad debt provision:
(2) Bad Debt Provision Withdrawn, Reversed or Collected during the Reporting Period
The withdrawal amount of the bad debt provision during the Reporting Period was of RMB2,410,128.05; the amount of the reversed
or collected part during the Reporting Period was of RMB0.00.
(3) The Actual Write-off Accounts Receivable
Unit: RMB
Item Amount
Actual write-off accounts receivable 6,554.99
(4) Top 5 of the Closing Balance of the Accounts Receivable Collected according to the Arrears Party
The total amount of the Company’s top 5 of the closing balance of the accounts receivable collected according to the arrears party
was RMB102,408,407.58, 29.09% of the total balance of account receivable at period-end. The relevant total balance of bad debt
provision was RMB5,120,420.38.
4. Prepayment
(1) Listed by Aging Analysis
Unit: RMB
Closing balance Opening balance
Aging
Amount Proportion Amount Proportion
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Lu Thai Textile Co., Ltd. Annual Report 2017
Within 1 year 145,673,771.77 99.46% 211,403,422.01 99.49%
1 to 2 years 625,210.35 0.43% 805,437.09 0.38%
2 to 3 years 162,029.49 0.11% 242,576.42 0.11%
Over 3 years 2,054.77 0.00% 36,684.96 0.02%
Total 146,463,066.38 -- 212,488,120.48 --
Notes of the reasons of the prepayment aging over 1 year with significant amount but failed to settle in time:
(2) Top 5 of the Closing Balance of the Prepayment Collected according to the Prepayment Target
The total amount of top 5 of the closing balance of the prepayment collected according to the prepayment target was RMB
63,315,827.06, 43.23% of total balance of prepayment at period-end.
Other notes:
5. Interest Receivable
(1) Category of Interest Receivable
Unit: RMB
Item Closing balance Opening balance
Fixed term deposit 590,003.07
Total 590,003.07
6. Other Accounts Receivable
(1) Other Accounts Receivable Disclosed by Category
Unit: RMB
Closing balance Opening balance
Book balance Bad debt provision Book balance Bad debt provision
Category Withdra
Book
Proportio wal Proportio Withdrawal Book value
Amount Amount value Amount Amount
n proportio n proportion
n
Other accounts
receivable withdrawn
62,067,8 5,885,02 56,182,78 52,492, 5,771,278 46,720,732.
bad debt provision 100.00% 9.48% 100.00% 10.99%
08.10 6.06 2.04 011.83 .86 97
according to credit
risks characteristics
62,067,8 5,885,02 56,182,78 52,492, 5,771,278 46,720,732.
Total 100.00% 9.48% 100.00% 10.99%
08.10 6.06 2.04 011.83 .86 97
140
Lu Thai Textile Co., Ltd. Annual Report 2017
Other receivable with single significant amount and withdrawal bad debt provision separately at the end of the Period:
□ Applicable √ Not applicable
In the groups, other accounts receivable adopting aging analysis method to withdraw bad debt provision:
√ Applicable □ Not applicable
Unit: RMB
Closing balance
Aging
Other accounts receivable Bad debt provision Withdrawal proportion
Subitem within 1 year
Within 1 year 50,524,037.28 2,526,201.87 5.00%
Subtotal within 1 year 50,524,037.28 2,526,201.87 5.00%
1 to 2 years 434,035.33 43,403.54 10.00%
2 to 3 years 175,000.00 35,000.00 20.00%
Over 3 years 10,934,735.49 3,280,420.65 30.00%
Total 62,067,808.10 5,885,026.06 9.48%
Notes of the basis for the determination of the group:
In the groups, other accounts receivable adopting balance percentage method to withdraw bad debt provision:
□ Applicable √ Not applicable
In the groups, other accounts receivable adopting other methods to withdraw bad debt provision:
□ Applicable √ Not applicable
(2) Bad Debt Provision Withdrawal, Reversed or Recovered in the Reporting Period
The amount of bad debt provision was RMB168,904.97, the amount of reversed or recovered bad debt provision in the Reporting
Period RMB0.00.
(3) Particulars of Other Accounts Receivable Actually Verified during the Reporting Period
Unit: RMB
Item Amount
Other accounts receivable actually verified 55,157.77
(4) Other Accounts Receivable Classified by Account Nature
Unit: RMB
Nature Closing book balance Opening book balance
Export taxes refund 26,928,248.68 18,563,850.28
Advance payment 19,470,920.20 17,597,169.14
Pledge and guarantee 5,915,873.52 3,777,964.01
141
Lu Thai Textile Co., Ltd. Annual Report 2017
Lending and petty cash 1,533,438.12 1,404,072.87
Other 8,219,327.58 11,148,955.53
Total 62,067,808.10 52,492,011.83
(5) Top 5 of the Closing Balance of the Other Accounts Receivable Collected according to the Arrears Party
Unit: RMB
Closing balance of
Name of units Nature Closing balance Aging Proportion%
bad debt provision
Export taxes refund
Export taxes refund 24,262,563.08 Within 1 year 39.09% 1,213,128.15
receivable
Advance money
receivable of the Advance money 4,909,766.50 Within 1 year 7.91% 245,488.33
fundraising houses
Deposits for wages Deposits for wages
paid to migrant paid to migrant
2,955,620.10 Over 3 years 4.76% 886,686.03
workers of Zichuan workers of
District, Zibo infrastructure works
Finance Bureau of
Export tax refunds of
Zichuan District, 2,665,685.60 Over 3 years 4.29% 799,705.68
the local government
Zibo
Advance money
receivable of the Advance money 2,024,208.67 Within 1 year 3.26% 101,210.43
heating
Total -- 36,817,843.95 -- 59.32% 3,246,218.62
7. Inventory
Whether the Company needs to comply with the disclosure requirements of the real estate industry
No
(1) Category of Inventory
Unit: RMB
Closing balance Opening balance
Item Falling price Falling price
Book balance Book value Book balance Book value
reserves reserves
Raw materials 859,429,529.00 1,172,453.02 858,257,075.98 720,197,267.25 620,979.00 719,576,288.25
Goods in process 508,535,945.66 508,535,945.66 412,808,521.45 412,808,521.45
Inventory goods 754,961,464.17 51,653,377.28 703,308,086.89 731,266,751.73 64,673,863.30 666,592,888.43
142
Lu Thai Textile Co., Ltd. Annual Report 2017
Consumptive
1,531,621.67 404,221.67 1,127,400.00 1,141,156.72 671,556.72 469,600.00
biological assets
Assigned
processing 29,432,713.40 29,432,713.40 18,095,572.86 18,095,572.86
products
Total 2,153,891,273.90 53,230,051.97 2,100,661,221.93 1,883,509,270.01 65,966,399.02 1,817,542,870.99
Whether the Company needs to comply with the disclosure requirements of Shenzhen Stock Exchange Industry Information
Disclosure Guidelines No. 4 - Listed companies engaged in seed industry and planting business
No
(2) Falling Price Reserves of Inventory
Unit: RMB
Increased amount Decreased amount
Item Opening balance Reverse or Closing balance
Withdrawal Other Other
write-off
Raw materials 620,979.00 1,172,453.02 620,979.00 1,172,453.02
Inventory goods 64,673,863.30 23,993,839.93 37,014,325.95 51,653,377.28
Consumptive
671,556.72 54,032.48 321,367.53 404,221.67
biological assets
Total 65,966,399.02 25,220,325.43 37,956,672.48 53,230,051.97
Item Specific basis of withdrawal of Reasons for reversal Reasons for write-off
falling price reserves of
inventory
The lower one between cost of Sale in this year
Raw materials each item of inventory and its
realizable net value.
The lower one between cost of Sale in this year
Inventory goods each item of inventory and its
realizable net value.
Consumptive biological The lower one between cost of Sale in this year
assets each item of inventory and its
realizable net value.
Notes:
① Due to the quality problem in the garment accessories of partial raw materials, raw yarn and dyed yarn of finished goods and long
age of partial shirts and fabric at the year-end as well as the falling market price of the consumptive biological assets-Hu-sheep, the
costs of inventories became higher than the realizable net value, and the Company withdrew the provision for falling price of
inventories according to their balance.
② Lu Thai (Xinjiang) Textile Co., Ltd., the Company’s subsidiary got the short-term borrowing of RMB210,000,000.00 pleadged
with the inventory with book value of RMB248,632,100.00.
143
Lu Thai Textile Co., Ltd. Annual Report 2017
(3) Notes of the Closing Balance of the Inventory which Includes Capitalized Borrowing Expenses
(4) Completed Unsettled Assets Formed from the Construction Contact at the Period-end
8. Other Current Assets
Unit: RMB
Item Closing balance Opening balance
Prepaid income tax to be deducted 302,275.14 1,325,487.99
VAT input tax to be deducted 68,286,428.20 41,038,664.17
Sales the shares 65,968,094.08
Financial products 50,000,000.00
Total 118,588,703.34 108,332,246.24
Other notes:
9. Available-for-sale Financial Assets
(1) List of Available-for-sale Financial Assets
Unit: RMB
Closing balance Opening balance
Item Depreciation Depreciation
Book balance Book value Book balance Book value
reserves reserves
Available-for-dale debt
60,033,000.00 60,033,000.00
instruments:
Available-for-sale equity
67,282,600.00 42,782,600.00 24,500,000.00 67,282,600.00 42,782,600.00 24,500,000.00
instruments:
Measured by fair
60,033,000.00 60,033,000.00
value
Measured by 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 127,315,600.00 42,782,600.00 84,533,000.00 67,282,600.00 42,782,600.00 24,500,000.00
144
Lu Thai Textile Co., Ltd. Annual Report 2017
(2) Available-for-sale Financial Assets Measured by Fair Value at the Period-end
Unit: RMB
Category of
Available-for-sale equity Available-for-sale debt
available-for-sale Total
instruments instruments
financial assets
Equity instrument
costs/debt instrument 60,000,000.00 60,000,000.00
amortization costs
Fair value 60,033,000.00 60,033,000.00
Accumulative amount of
changes in fair value
33,000.00 33,000.00
included in other
comprehensive income
Impairment amount
withdrawn
(3) Available-for-sale Financial Assets Measured by Cost at the Period-end
Unit: RMB
Book balance Depreciation reserves Shareholdi Cash
ng bonus of
Investee Period-beg Period-beg proportion the
Increase Decrease Period-end Increase Decrease Period-end
in in among the Reporting
investees Period
Yantai
Rongchan
g
Pharmacy
Co., Ltd.
(hereinafte 55,282,600 55,282,600 42,782,600 42,782,600
3.13%
r refer to .00 .00 .00 .00
as
“Rongcha
ng
Pharmacy”
)
Shandong
Hongqiao
Power Co., 12,000,000 12,000,000
19.38%
Ltd. .00 .00
(Hongqiao
Power)
67,282,600 67,282,600 42,782,600 42,782,600
Total --
.00 .00 .00 .00
(3) Changes of the Impairment of the Available-for-sale Financial Assets during the Reporting Period
Unit: RMB
145
Lu Thai Textile Co., Ltd. Annual Report 2017
Category of the
Available-for-sale equity Available-for-sale debt
available-for-sale financial Total
instruments instruments
assets
Withdrawn impairment balance
42,782,600.00 42,782,600.00
at the period-begin
Withdrawn impairment balance
42,782,600.00 42,782,600.00
at the period-end
10. Long-term Accounts Receivable
(1) Long-term Accounts receivable
Unit: RMB
Closing balance Opening balance
Discount rate
Item Bad debt Bad debt
Book balance Book value Book balance Book value range
provision provision
Financing lease
2,310,000.00 2,310,000.00 10.54%
accounts
Of which:
unrealized 55,437.00 55,437.00
financing income
Total 2,310,000.00 2,310,000.00 --
11. Long-term Equity Investment
Unit: RMB
Increase/decrease
Closing
Gains and Adjustme
Cash Withdraw balance
Additiona losses nt of
Opening Reduced Changes bonus or al of Closing of
Investee l recognize other
balance investmen of other profits impairme Other balance impairme
investmen d under comprehe
t equity announce nt nt
t the equity nsive
d to issue provision provision
method income
I. Joint ventures
II. Associated enterprises
Ningbo
Mei shan
100,000,0 -2,463,26 97,536,73
Bonded
00.00 7.98 2.02
Poer Area
Haohong
146
Lu Thai Textile Co., Ltd. Annual Report 2017
Equity
Investme
nt
Partnershi
p (L.P)
(hereinaft
er
referred
to as
“Haohong
Investme
nt”)
100,000,0 -2,463,26 97,536,73
Subtotal
00.00 7.98 2.02
100,000,0 -2,463,26 97,536,73
Total
00.00 7.98 2.02
Other notes
12. Investment Property
(1) Investment property adopted the cost measurement mode
√Applicable □ Not applicable
Unit: RMB
Item Houses and buildings Land use right Construction in process Total
I. Original book value
1. Opening balance 35,848,151.08 35,848,151.08
2. Increased amount of
134,231.32 134,231.32
the Period
(1) Purchase
(2) Inventory/fixed
assets / transfer of project 134,231.32 134,231.32
under construction
(3) Enterprise
combination increase
3. Decreased amount
of the Period
(1) Disposal
(2) Other transfers
147
Lu Thai Textile Co., Ltd. Annual Report 2017
4. Closing balance 35,982,382.40 35,982,382.40
II. Accumulative
depreciation
1. Opening balance 10,004,060.52 10,004,060.52
2. Increased amount of
1,414,777.30 1,414,777.30
the Period
(1) Withdrawal or
1,414,777.30 1,414,777.30
amortization
3. Decreased amount
of the Period
(1) Disposal
(2) Other transfers
4. Closing balance 11,418,837.82 11,418,837.82
III. Depreciation reserves
1. Opening balance
2. Increased amount of
the Period
(1) Withdrawal
3. Decreased amount
of the Period
(1) Disposal
(2) Other transfers
4. Closing balance
IV. Book value
1. Closing book value 24,563,544.58 24,563,544.58
2. Opening book value 25,844,090.56 25,844,090.56
13. Fixed Assets
(1) List of Fixed Assets
Unit: RMB
148
Lu Thai Textile Co., Ltd. Annual Report 2017
Electronic
Houses and Machinery Transportation
Item equipment and Total
buildings equipment equipment
others
I. Original book
value:
1. Opening
3,003,765,886.38 5,941,366,922.97 69,429,718.17 108,713,752.93 9,123,276,280.45
balance
2. Increased
208,153,190.55 463,149,612.30 7,726,194.10 15,090,956.38 694,119,953.33
amount of the period
(1) Purchase 2,326,953.12 256,029,802.86 7,726,194.10 10,982,282.94 277,065,233.02
(2) Transfer of
project under 205,826,237.43 207,119,809.44 4,108,673.44 417,054,720.31
construction
(3) Enterprises
combination increase
3. Decreased
75,910,347.45 391,290,078.67 1,550,052.01 5,124,394.42 473,874,872.55
amount of the period
(1) Disposal or
7,510,494.72 62,639,610.19 1,278,538.07 4,890,261.96 76,318,904.94
scrap
(2) Transferred into
134,231.32 134,231.32
investment property
(3) Transferred into
construction in 46,380,318.04 305,622,079.88 352,002,397.92
progress
(4) Other decrease 21,885,303.37 23,028,388.60 271,513.94 234,132.46 45,419,338.37
4. Closing balance 3,136,008,729.48 6,013,226,456.60 75,605,860.26 118,680,314.89 9,343,521,361.23
II. Accumulated
desperation
1. Opening
816,572,289.59 2,881,216,670.95 50,462,170.42 74,337,166.12 3,822,588,297.08
balance
2. Increased
91,617,551.83 277,500,291.61 4,450,570.19 8,833,897.82 382,402,311.45
amount of the period
(1) Withdrawal 91,617,551.83 277,500,291.61 4,450,570.19 8,833,897.82 382,402,311.45
3. Decreased
19,425,109.86 289,657,965.25 1,120,500.94 4,699,475.40 314,903,051.45
amount of the period
(1) Disposal or
2,182,298.38 52,437,036.04 1,047,280.95 4,618,229.43 60,284,844.80
scrap
(2) Transferred into
16,272,025.52 235,175,418.39 251,447,443.91
construction in
149
Lu Thai Textile Co., Ltd. Annual Report 2017
progress
(3) Other decrease 970,785.96 2,045,510.82 73,219.99 81,245.97 3,170,762.74
4. Closing balance 888,764,731.56 2,869,058,997.31 53,792,239.67 78,471,588.54 3,890,087,557.08
III. Depreciation
reserves
1. Opening
4,830,670.26 22,596,691.34 27,269.67 84,643.90 27,539,275.17
balance
2. Increased
1,145,314.29 8,358,377.50 27,624.00 9,531,315.79
amount of the period
(1) Withdrawal 1,145,314.29 8,358,377.50 27,624.00 9,531,315.79
3. Decreased
3,082,567.66 1,831,565.50 18,503.68 4,932,636.84
amount of the period
(1) Disposal or
3,082,567.66 1,831,565.50 18,503.68 4,932,636.84
scrap
4. Closing balance 2,893,416.89 29,123,503.34 27,269.67 93,764.22 32,137,954.12
IV. Book value
1. Closing book
2,244,350,581.03 3,115,043,955.95 21,786,350.92 40,114,962.13 5,421,295,850.03
value
2. Opening book
2,182,362,926.53 3,037,553,560.68 18,940,278.08 34,291,942.91 5,273,148,708.20
value
(2) Fixed Assets Leased out from Operation Lease
Unit: RMB
Item Closing book value
Houses and buildings 62,670,502.74
Total 62,670,502.74
(3) Details of Fixed Assets Failed to Accomplish Certificate of Property
Unit: RMB
Item Book value Reason
Ongoing inspection, surveying,
Weaving and yarn dying workshop 105,329,978.75 verification to application procedures by
Housing authorities
Employee’s dormitory building of eastern
43,929,532.94 Same with above
area of industrial park
Spinning Fourth factory workshop 93,848,170.38 Same with above
150
Lu Thai Textile Co., Ltd. Annual Report 2017
Employee’s dormitory building of western
125,869,506.33 Same with above
area of industrial park
Eastern sample plant 30,925,295.14 Same with above
Lufeng weaving dye workshop 130,621,668.04 Same with above
Xinjiang construction project of
67,895,445.45 Same with above
100,000-spindle spinning production line
Other notes
Note: ①Lu Thai (Xinjiang) Textile Co., Ltd., the Company’s subsidiary got the short-term borrowing of RMB130,000,000.00
mortgaged with the fixed assets with book value of RMM4,316,209.51 and the land use right with book value of RMB1,688,508.95
and pledged with the deposit of RMB16,000,000.00. For details, please refer to 23 and 58 in this Section.
②The original book value and other decrease in accumulative depreciation of fixed assets in the Reporting Period were exchange
rate difference generated from the conversion of overseas subsidiaries’ recording currency into RMB due to the fluctuation of the
exchange rates.
14. Construction in Progress
(1) List of Construction in Progress
Unit: RMB
Closing balance Opening balance
Item Depreciation Depreciation
Book balance Book value Book balance Book value
reserves reserves
Roof
transformation
engineering of for
the whole eastern
weaving complex
workshop
Reform project of
Xinsheng 6,192,038.65 6,192,038.65 13,387,636.75 13,387,636.75
Thermal Power
Expansion project
of Xinsheng 744,000.00 744,000.00 72,155,299.06 72,155,299.06
Thermal Power
Energy
conservation 9,607,705.02 9,607,705.02
project of Helijie
Heat supply
engineering of
1,805,751.30 1,805,751.30 21,966,774.45 21,966,774.45
Chengshun
Heating
151
Lu Thai Textile Co., Ltd. Annual Report 2017
Reform
engineering of
77,875,603.13 77,875,603.13
100,000-spindle
spinning
Lu Thai
34,325,323.53 34,325,323.53 26,114,552.04 26,114,552.04
(Vietnam) project
Phase II of Lu
Thai (Vietnam) 4,922,411.28 4,922,411.28
project
Project of Lu An
3,371,413.19 3,371,413.19 3,966,433.79 3,966,433.79
Garments
Other retails
28,185,279.60 28,185,279.60 29,877,254.05 29,877,254.05
projects
Total 157,421,820.68 157,421,820.68 177,075,655.16 177,075,655.16
(2) Changes of Significant Construction in Progress
Unit: RMB
Of
Amount Proporti which:
Accumul
that on the Capitaliz
Other ative
transferr estimate amount ation rate
Estimate decrease amount
Name of Opening Increase ed to Closing d of the Project of the of the Capital
d d amount of
item balance d amount fixed balance project progress capitaliz interests resources
number of the capitaliz
assets of accumul ed of the
period ed
the ative interests period
interests
period input of the
period
Roof
transfor
mation
engineeri
ng of for
the 36,000,0 44,913,4 44,913,4
100.00% 100.00% Other
whole 00.00 37.52 37.52
eastern
weaving
complex
worksho
p
Reform 28,000,0 13,387,6 12,511,2 19,706,8 6,192,03
92.00% 92.00% Other
project 00.00 36.75 13.40 11.50 8.65
152
Lu Thai Textile Co., Ltd. Annual Report 2017
of
Xinshen
g
Thermal
Power
Expansio
n project
of
240,000, 72,155,2 126,662, 198,073, 744,000.
Xinshen 84.00% 84.00% Other
000.00 99.06 676.94 976.00 00
g
Thermal
Power
Energy
conserva
tion 9,000,00 9,607,70 9,607,70
100.00% 100.00% Other
project 0.00 5.02 5.02
of
Helijie
Heat
supply
engineeri
38,000,0 21,966,7 14,667,9 34,828,9 1,805,75
ng of 96.00% 96.00% Other
00.00 74.45 42.42 65.57 1.30
Chengsh
un
Heating
Reform
engineeri
ng of 156,000, 144,344, 66,469,3 77,875,6
85.00% 85.00% Other
100,000- 000.00 984.37 81.24 03.13
spindle
spinning
Lu Thai
242,282, 26,114,5 10,122,2 1,911,46 34,325,3
(Vietnam 99.00% 99.00% Other
300.00 52.04 35.06 3.57 23.53
) project
Phase II
of Lu
52,750,0 4,922,41 4,922,41
Thai 9.00% 9.00% Other
00.00 1.28 1.28
(Vietnam
) project
Project
93,035,7 3,966,43 4,291,18 4,676,94 209,260. 3,371,41
of Lu An 88.00% 88.00% Other
00.00 3.79 3.61 3.59 62 3.19
Garment
153
Lu Thai Textile Co., Ltd. Annual Report 2017
s
Other
29,877,2 37,165,5 38,777,4 79,988.4 28,185,2
retails Other
54.05 13.89 99.87 7 79.60
projects
895,068, 177,075, 399,601, 417,054, 2,200,71 157,421,
Total -- -- --
000.00 655.16 598.49 720.31 2.66 820.68
15. Engineering Material
Unit: RMB
Item Closing balance Opening balance
Specific materials 6,491.45
Specific equipment 56,913,806.06 117,113,972.05
Total 56,913,806.06 117,120,463.50
Other notes:
16. Productive Biological Assets
(1) Productive Biological Assets Adopted Cost Measurement Mode
√ Applicable □ Not applicable
Unit: RMB
Item Planting industry Livestock Forestry Aquaculture Total
Hu sheep
I. Original book
value
1. Opening
1,805,109.43 1,805,109.43
balance
2. Increased
437,306.32 437,306.32
amount of the period
(1) Outsourcing 260,950.00 260,950.00
(2) Self
176,356.32 176,356.32
cultivate
3. Decreased
2,242,415.75 2,242,415.75
amount of the period
(1) Disposal 878,387.78 878,387.78
(2) Other 1,364,027.97 1,364,027.97
4. Closing balance
154
Lu Thai Textile Co., Ltd. Annual Report 2017
II. Accumulative
depreciation
1. Opening
423,816.68 423,816.68
balance
2. Increased
334,157.96 334,157.96
amount of the period
(1) Withdrawal 334,157.96 334,157.96
3. Decreased
757,974.64 757,974.64
amount of the period
(1) Disposal 439,426.09 439,426.09
(2) Other 318,548.55 318,548.55
4. Closing balance
III. Depreciation
reserves
1. Opening
balance
2. Increased
amount of the period
(1) Withdrawal
3. Decreased
amount of the period
(1) Disposal
(2) Other
4. Closing balance
IV. Book value
1. Closing book
value
2. Opening book
1,381,292.75 1,381,292.75
value
17. Intangible Assets
(1) List of Intangible Assets
Unit: RMB
Software use
Item Land use right Patent right Non-patent right Brand use rights Total
rights
I. Original book
155
Lu Thai Textile Co., Ltd. Annual Report 2017
value
1. Opening
479,972,935.82 1,985,176.47 180,000.00 300,000.00 482,438,112.29
balance
2. Increased
amount of the 124,787,353.74 6,530,503.67 131,317,857.41
period
(1) Purchase 124,787,353.74 6,530,503.67 131,317,857.41
(2) Internal R
&D
(3) Increase
from enterprise
combination
3. Decrease in
the Reporting
Period
(1) Disposal
4. Closing
604,760,289.56 1,985,176.47 6,710,503.67 300,000.00 613,755,969.70
balance
II. Total accrued
amortization
1. Opening
96,720,842.54 1,224,192.36 180,000.00 60,000.00 98,185,034.90
balance
2. Increased
amount of the 14,321,731.37 198,517.68 2,072,384.27 30,000.00 16,622,633.32
period
(1)
14,321,731.37 198,517.68 2,072,384.27 30,000.00 16,622,633.32
Withdrawal
3. Decrease in
the Reporting
Period
(1)
Disposal
4. Closing
111,042,573.91 1,422,710.04 2,252,384.27 90,000.00 114,807,668.22
balance
III. Depreciation
reserves
1. Opening
balance
2. Increased
156
Lu Thai Textile Co., Ltd. Annual Report 2017
amount of the
period
(1)
Withdrawal
3. Decrease in
the Reporting
Period
(1) Disposal
4. Closing
balance
IV. Book value
1. Book value of
493,717,715.65 562,466.43 4,458,119.40 210,000.00 498,948,301.48
the period-end
2. Book value of
383,252,093.28 760,984.11 240,000.00 384,253,077.39
the period-begin
The proportion of the intangible assets formed from the internal R&D through the Company to the balance of the intangible assets at
the period-end was 0.00%
18. R&D Expenses
Unit: RMB
Opening Closing
Item Increase Decrease
balance balance
Product 328,403,990. 328,403,990.
development 29 29
328,403,990. 328,403,990.
Total
29 29
Other notes
19. Goodwill
(1) Original Book Value of Goodwill
Unit: RMB
Name of the
investees or the
Opening balance Increase Decrease Closing balance
events formed
goodwill
Xinsheng Power 20,563,803.29 20,563,803.29
Helijie 50,000.00 50,000.00
157
Lu Thai Textile Co., Ltd. Annual Report 2017
Total 20,613,803.29 20,613,803.29
(2) Impairment Provision of Goodwill
Unit: RMB
Name of the
investees or the
Opening balance Increase Decrease Closing balance
events formed
goodwill
Xinsheng Power
Helijie
Notes of the testing process of goodwill impairment, parameters and the recognition method of goodwill impairment losses:
Refer to V-20 for details of the testing method of goodwill impairment.
Other notes
20. Long-term Unamortized Expenses
Unit: RMB
Amortization
Item Opening balance Increased amount Other decrease Closing balance
amount
Land contracting fee
26,793,269.36 1,153,160.00 1,252,786.44 26,693,642.92
of Xinjiang Luthai
Decoration fee of
873,759.86 8,099.80 865,660.06
Xinjiang Lu Thai
Land rent of
86,894,972.90 1,926,938.87 4,819,414.86 80,148,619.17
overseas subsidiaries
Housing rent of
539,122.28 350,104.63 19,745.28 169,272.37
overseas subsidiaries
Total 114,227,364.54 2,026,919.86 3,537,929.74 4,839,160.14 107,877,194.52
Other notes
Note: Other decrease was the exchange rate difference generated from the conversion of overseas subsidiaries’ recording currency
into RMB due to the fluctuation of exchange rates.
21. Deferred Income Tax Assets/Deferred Income Tax Liabilities
(1) Deferred Income Tax Assets Had not Been Off-set
Unit: RMB
Closing balance Opening balance
Item
Deductible temporary Deferred income tax Deductible temporary Deferred income tax
158
Lu Thai Textile Co., Ltd. Annual Report 2017
difference assets difference assets
Assets impairment
140,256,135.72 22,531,008.74 140,373,275.47 22,088,126.23
provision
Unrealized internal sales
100,706,925.35 11,627,841.87 81,198,211.62 9,319,462.09
gain and loss
One-time listed
5,405,702.23 1,351,425.56 2,901,238.68 725,309.67
decoration expenses
Payroll payable 124,021,657.72 18,701,206.18 110,698,173.59 17,032,239.77
Deferred income 126,737,092.32 20,485,677.36 94,231,052.79 14,024,943.00
Total 497,127,513.34 74,697,159.71 429,401,952.15 63,190,080.76
(2) Deferred Income Tax Liabilities Had not Been Off-set
Unit: RMB
Closing balance Opening balance
Item Taxable temporary Deferred income tax Taxable temporary Deferred income tax
difference liabilities difference liabilities
Depreciation of fixed
16,820,058.15 2,899,949.46 14,188,423.45 2,341,089.87
assets
Available-for-sale
33,000.00 4,950.00
financial assets
Total 16,853,058.15 2,904,899.46 14,188,423.45 2,341,089.87
(3) List of Unrecognized Deferred Income Tax Assets
Unit: RMB
Item Closing balance Opening balance
Deductible temporary difference 11,690,891.52 17,124,084.90
Deductible losses 27,993,886.84 28,727,921.83
Total 39,684,778.36 45,852,006.73
(4) Deductible Losses of Unrecognized Deferred Income Tax Assets will Due in the Following Years
Unit: RMB
Years Closing amount Opening amount Remark
Y 2018 97,981.65 125,946.78
Y 2019 1,456,659.23 1,456,659.23
Y 2020 18,458,244.61 22,245,128.73
159
Lu Thai Textile Co., Ltd. Annual Report 2017
Y 2021 4,250,703.45 4,250,703.45
Y 2022 3,730,297.90
Total 27,993,886.84 28,078,438.19 --
Other notes:
22. Other Non-current Assets
Unit: RMB
Item Closing balance Opening balance
Prepayment for equipment 28,984,077.85 5,853,067.38
Prepayment for land 7,406,401.00 25,406,401.00
Total 36,390,478.85 31,259,468.38
Other notes:
23. Short-term Loans
(1) Category of Short-term Loans
Unit: RMB
Item Closing balance Opening balance
Mortgage loan 440,000,000.00 310,000,000.00
Guaranteed loan 28,254,022.53 33,987,976.00
Credit loan 666,870,973.87 529,273,880.02
Total 1,135,124,996.40 873,261,856.02
Notes of the category for short-term loans:
Refer to VII-7, 13, 17 and 58 in this Section for details about the category and amount of mortgaged assets for mortgage loans.
24. Notes Payable
Unit: RMB
Category Closing balance Opening balance
Commercial acceptance bill 2,441,810.45
Trade acceptance 4,859,961.40
Total 7,301,771.85
The total unpaid notes payable due at the Period-end was RMBXXX.
160
Lu Thai Textile Co., Ltd. Annual Report 2017
25. Accounts Payable
(1) List of Accounts Payable
Unit: RMB
Item Closing balance Opening balance
Purchase of goods 219,463,023.43 151,401,411.93
Engineering equipment 134,864,245.66 86,280,441.98
Other 11,937,863.56 19,953,612.50
Total 366,265,132.65 257,635,466.41
26. Advance from Customers
(1) List of Advance from Customers
Unit: RMB
Item Closing balance Opening balance
Advance from goods 119,785,945.48 97,929,002.93
Total 119,785,945.48 97,929,002.93
27. Payroll Payable
(1) List of Payroll Payable
Unit: RMB
Item Opening balance Increase Decrease Closing balance
I. Short-term salary 315,597,802.11 1,443,695,983.97 1,442,481,692.91 316,812,093.17
II. Post-employment
benefit-defined 80,301.81 150,331,653.75 150,387,559.78 24,395.78
contribution plans
III. Termination benefits 352,232.50 352,232.50
Total 315,678,103.92 1,594,379,870.22 1,593,221,485.19 316,836,488.95
(2) List of Short-term Salary
Unit: RMB
Item Opening balance Increase Decrease Closing balance
1. Salary, bonus,
273,092,937.14 1,282,333,309.52 1,288,098,112.33 267,328,134.33
allowance, subsidy
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Lu Thai Textile Co., Ltd. Annual Report 2017
2. Employee welfare 50,521,004.35 50,521,004.35
3. Social insurance 42,846.03 70,774,399.38 70,782,014.41 35,231.00
Including: 1. Medical
35,918.60 55,556,064.52 55,563,182.42 28,800.70
insurance premiums
Work-related injury
6,110.95 7,796,382.28 7,797,428.16 5,065.07
insurance
Maternity insurance 816.48 7,421,952.58 7,421,403.83 1,365.23
4. Housing fund 667.07 13,904,994.48 13,904,368.55 1,293.00
5. Labor union budget
and employee education 42,461,351.87 26,162,276.24 19,176,193.27 49,447,434.84
budget
Total 315,597,802.11 1,443,695,983.97 1,442,481,692.91 316,812,093.17
(3) List of Drawing Scheme
Unit: RMB
Item Opening balance Increase Decrease Closing balance
1. Basic pension benefits 73,723.82 144,833,728.00 144,884,815.12 22,636.70
2. Unemployment
6,577.99 5,497,925.75 5,502,744.66 1,759.08
insurance
Total 80,301.81 150,331,653.75 150,387,559.78 24,395.78
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 was
recorded into current profits and losses or related assets costs.
28. Taxes Payable
Unit: RMB
Item Closing balance Opening balance
VAT 2,639,133.26 8,584,752.76
Corporate income tax 13,934,074.08 46,545,105.37
Personal income tax 1,453,967.09 1,377,020.01
Urban maintenance and construction tax 3,036,340.88 6,314,742.98
Stamp duty 400,579.00 469,422.60
Property tax 4,618,710.82 4,484,688.82
Land use tax 4,537,230.07 4,428,494.17
162
Lu Thai Textile Co., Ltd. Annual Report 2017
Education surcharge 1,314,401.95 2,798,858.01
Local education surcharge 876,267.97 1,865,905.35
Local water conservancy facility
217,869.46 906,683.07
construction fund
Resource tax 26,516.00
Total 33,055,090.58 77,775,673.14
Other notes:
29. Interest Payable
Unit: RMB
Item Closing balance Opening balance
Interest payable on short-term borrowings 1,572,231.86 1,165,730.47
Total 1,572,231.86 1,165,730.47
Significant overdue interest:
Unit: RMB
Borrower Overdue amount Overdue reason
Other notes:
30. Dividends Payable
Unit: RMB
Item Closing balance Opening balance
Dividends payable to individual
441,113.64 441,113.64
shareholders by the Company
Total 441,113.64 441,113.64
Other notes, including significant unpaid dividends payable over one year, the unpaid reason shall be disclosed:
Note: Dividends payable which were unpaid over one year were previous cash dividends not received by individual shareholders yet.
31. Other Accounts Payable
(1) Other Accounts Payable Listed by Nature of the Account
Unit: RMB
Item Closing balance Opening balance
The deposit and guarantee 19,600,682.80 19,268,467.36
Collecting payment on behalf of others 17,030,878.91 22,870,555.86
Intercourse funds 66,354,397.71 12,496,663.17
163
Lu Thai Textile Co., Ltd. Annual Report 2017
Other 24,104,049.83 25,108,398.27
Total 127,090,009.25 79,744,084.66
(2) Other Significant Accounts Payable with Aging Over One Year
Unit: RMB
Item Closing balance Unpaid/ Un-carry-over reason
Cotton and Linen Company 11,925,000.00 Received deposit of sale contract
Total 11,925,000.00 --
Other notes
32. Non-current Liabilities Due within 1 Year
Unit: RMB
Item Closing balance Opening balance
Long-term loans due within one year 62,750,292.49
Total 62,750,292.49
Other notes:
33. Long-term Loan
(1) Category of Long-term Loans
Unit: RMB
Item Closing balance Opening balance
Guaranteed loans 62,750,292.49 135,678,044.89
Less: Long-term loans due within one year
-62,750,292.49
(Note VII-32 in this Section)
Total 135,678,044.89
Notes of the category of long-term loans:
Other notes including interest rate range:
34. Long-term Payroll Payable
(1) List of Long-term Payroll Payable
Unit: RMB
Item Closing balance Opening balance
III. Other long-term welfare 93,843,473.02 79,122,422.89
164
Lu Thai Textile Co., Ltd. Annual Report 2017
Total 93,843,473.02 79,122,422.89
35. Government Subsidies
(1) List of government subsidies initially recognized in the Reporting Period
Item Amount Related to assets Related to income Whet
her
Deferred income Offset Deferred Other income Non-ope Offset the
actual
the income rating cost expenses
ly
book income
receiv
value
ed
of
assets
Project of intelligent 5,027,400.00 5,027,400.00 Yes
dyeing production and
technical transformation
of energy-saving water
Technical transformation 1,813,000.00 1,813,000.00 Yes
project of high-grade
yarn-dyed fabric
Financial support fund 1,950,000.00 1,950,000.00 Yes
for sewage treatment and
re-use of recycled water
Technical transformation 9,000,000.00 9,000,000.00 Yes
project of digital
workshop of bobbin
yarn-dyed
Subsidy for overseas 100,000.00 100,000.00 Yes
investment
Subsidy for equipment 685,200.00 685,200.00 Yes
investment in
technological
transformation
Ultra-low emission 12,700,000.00 12,700,000.00 Yes
transformation fund for
utility boiler
Subsidy for the technical 1,200,000.00 1,200,000.00 Yes
transformation project of
low-emission
Subsidy for application 584,000.00 584,000.00 Yes
R&D of high quality
165
Lu Thai Textile Co., Ltd. Annual Report 2017
dope dyeing fiber
Subsidy for Key 1,050,000.00 1,050,000.00 Yes
Technology R & D of
textile equipment with
good shape preservation
Subsidy for key 420,000.00 420,000.00 Yes
technology R & D of
preparation of
comfortable and cool
fabric with function of
moisture absorption
Interest subsidy for 857,500.00 857,500.00 Yes
import
Interest subsidy for loans 6,044,300.00 6,044,300.00 Yes
Incentive funds for talent 300,000.00 300,000.00 Yes
support
Subsidy for constructing 920,000.00 920,000.00 Yes
network platform
Subsidy for dyed 400,000.00 400,000.00 Yes
integrated system of
information management
and control
Subsidy for quality 100,000.00 100,000.00 Yes
control innovation
Project subsidy for 500,000.00 500,000.00 Yes
production mode
consultancy of TPS
Toyota
Subsidy for technical 146,000.00 146,000.00 Yes
service project of
standardized
management
Rewards for enterprises 300,000.00 300,000.00 Yes
with outstanding
performance in
energy-saving
Rewards for energy 30,000.00 30,000.00 Yes
system management and
construction
166
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Subsidy for the 400,000.00 400,000.00 Yes
industrialization of 3D
functional garments
Subsidy for municipal 50,000.00 50,000.00 Yes
key talents introduction
project
Subsidy for export credit 135,200.00 135,200.00 Yes
insurance premium
Government subsidy for 56,000.00 56,000.00 Yes
trade show in Las Vegas
Government subsidy for 740,200.00 740,200.00 Yes
brand construction
Government subsidy for 49,700.00 49,700.00 Yes
service trade
Government subsidy for 500,000.00 500,000.00 Yes
gifted and talented
persons in Zibo
Science & Technology 1,140,700.00 1,140,700.00 Yes
Process Award
Subsidy for 50,000.00 50,000.00 Yes
post-doctoral counterpart
funds
Subsidy for the 13,700,000.00 13,700,000.00 Yes
reconstruction of
landscape
Subsidy for internship 277,020.00 277,020.00 Yes
and employment
Subsidy for municipal 300,000.00 300,000.00 Yes
standardized projects
Government subsidy for 1,380,028.92 1,380,028.92 Yes
employing people with
job hunting difficulties
Subsidy for Mount Tai 1,000,000.00 1,000,000.00 Yes
Industry Talents Project
Subsidy for R & D 179,700.00 179,700.00 Yes
Subsidy for posts and 12,649,472.47 12,649,472.47 Yes
subsidy for social
security
167
Lu Thai Textile Co., Ltd. Annual Report 2017
Subsidy for stabilizing 5,228,735.00 5,228,735.00 Yes
posts
Subsidy for dynamic 1,200.00 1,200.00 Yes
monitoring
unemployment
Subsidy for Zibo 200,000.00 200,000.00 Yes
Academician
Workstation
Rewards for outstanding 100,000.00 100,000. Yes
performance 00
management
Subsidy for systematic 140,000.00 140,000.00 Yes
development,
popularization of
products and training
Mayor Quality Award 30,000.00 30,000.00 Yes
Subsidy for export credit 40,800.00 40,800.00 Yes
insurance premium
Government subsidy for 100,000.00 100,000.00 Yes
Shandong Science &
Technology Progress
Award
Incentive fund for 30,000.00 30,000.00 Yes
enterprises with
advantage in patent
creation
Patent subsidy 50,000.00 50,000.00 Yes
Subsidy for booth fee 21,509.43 21,509.43 Yes
Special subsidy for 30,000.00 30,000.00 Yes
energy-saving and
consumption reduction
Support fund for 30,000.00 30,000.0 Yes
enterprises and 0
economic community
Subsidy for strategic 900,000.00 900,000. Yes
emerging industry in 00
autonomous region
Subsidy from the 20,000.00 20,000.00 Yes
federation trade unions
168
Lu Thai Textile Co., Ltd. Annual Report 2017
in Awat County
Subsidy for electric 1,261,152.00 1,261,152.00 Yes
charge
Cotton yarn freight 3,449,703.38 3,449,703.38 Yes
subsidies
Subsidy for social 2,931,175.20 2,931,175.20 Yes
security
Subsidy for newly 1,285,000.00 1,285,000.00 Yes
increased employment
Subsidy for new 129,778.00 129,778.00 Yes
employment of security
personnel by private
enterprises in four
districts of South
Xinjiang
Subsidy for pre-job 495,849.05 495,849.05 Yes
training
Subsidy for village-level 80,000.00 80,000.00 Yes
comprehensive cultural
service in Awat County
Subsidies for 2,723,300.00 2,723,300.00 Yes
transferring Xinjiang
cotton to warehouses out
of Xinjiang
Project subsidy for 820,000.00 820,000.00 Yes
energy management
Total 96,833,623.45 32,475,600.00 2,054,000.00 1,030,00 6,901,800.00 ——
54,372,223.45
0.00
(2) List of government subsidies recorded into the current gains and losses
Item Related to Recorded into other Recorded Offset cost
assets/income income into expenses
non-operatin
g income
Land subsidy Related to assets 1,393,157.88
Subsidy for green power Related to assets 1,022,818.80
Subsidy for the technical transformation project of Related to assets 105,109.44
low-emission
Subsidy for equipment investment in Related to assets 27,136.64
169
Lu Thai Textile Co., Ltd. Annual Report 2017
technological transformation
Production project of 230,000-spindle spinning Related to assets 222,607.08
and 35,000-spindle spinning
Project of production line of 1,800,000-meter Related to assets
high-grade jacquard fabric
Project of intelligent dyeing production and Related to assets
technical transformation of energy-saving water
Project of intelligent dyeing production and Related to assets 94,615.44
technical transformation of energy-saving water
Project of intelligent dyeing production and Related to assets 187,261.92
energy-saving and water-saving
Technical transformation project of high-grade Related to assets 112,144.32
yarn-dyed fabric
Financial support fund for sewage treatment and Related to assets 77,312.79
re-use of recycled water
Technical transformation project of digital Related to assets 3,495.14
workshop of bobbin yarn-dyed
Project of digital workshop of bobbin yarn-dyed Related to assets 98,901.10
Subsidy for hu-sheep Related to assets 132,999.96
Subsidy for cotton picker Related to assets 180,000.00
Subsidy for cotton seed-breeding Related to assets 69,999.96
Interest subsidy for import Related to income 857,500.00
Interest subsidy for loans Related to income 6,044,300.00
Incentive funds for supporting talents Related to income 300,000.00
Subsidy for constructing network platform Related to income 920,000.00
Subsidy for dyed integrated system of information Related to income 400,000.00
management and control
Subsidy for quality control innovation Related to income 100,000.00
Project subsidy for production mode consultancy Related to income 500,000.00
of TPS Toyota
Subsidy for technical service project of Related to income 146,000.00
standardized management
Rewards for enterprises with outstanding Related to income 300,000.00
performance in energy-saving
Rewards for energy system management and Related to income 30,000.00
construction
170
Lu Thai Textile Co., Ltd. Annual Report 2017
Subsidy for the industrialization of 3D functional Related to income 400,000.00
garments
Subsidy for municipal key talents introduction Related to income 50,000.00
project
Subsidy for export credit insurance premium Related to income 135,200.00
Government subsidy for trade show in Las Vegas Related to income 56,000.00
Government subsidy for brand construction Related to income 740,200.00
Government subsidy for service trade Related to income 49,700.00
Government subsidy for gifted and talented Related to income 500,000.00
persons in Zibo
Science & Technology Process Award Related to income 1,140,700.00
Subsidy for post-doctoral counterpart funds Related to income 50,000.00
Subsidy for the reconstruction of landscape Related to income 13,700,000.00
Subsidy for internship and employment Related to income 277,020.00
Subsidy for municipal standardized projects Related to income 300,000.00
Government subsidy for employing people with Related to income 1,380,028.92
job hunting difficulties
Subsidy for Mount Tai Industry Talents Project Related to income 1,000,000.00
Subsidy for R & D Related to income 179,700.00
Subsidy for posts and subsidy for social security Related to income 12,649,472.47
Subsidy for stabilizing posts Related to income 5,228,735.00
Subsidy for dynamic monitoring unemployment Related to income 1,200.00
Subsidy for Zibo Academician Workstation Related to income 200,000.00
Rewards for outstanding performance Related to income 100,000.00
management
Subsidy for systematic development, Related to income 140,000.00
popularization of products and training
Mayor Quality Award Related to income 30,000.00
Subsidy for export credit insurance premium Related to income 40,800.00
Government subsidy for Shandong Science & Related to income 100,000.00
Technology Progress Award
Incentive fund for enterprises with advantage in Related to income 30,000.00
patent creation
Patent subsidy Related to income 50,000.00
171
Lu Thai Textile Co., Ltd. Annual Report 2017
Subsidy for booth fee Related to income 21,509.43
Special subsidy for energy-saving and Related to income 30,000.00
consumption reduction
Support fund for enterprises and economic Related to income 30,000.00
community
Subsidy for strategic emerging industry in Related to income 900,000.00
autonomous region
Subsidy from the federation trade unions in Awat Related to income 20,000.00
County
Subsidy for social security Related to income 2,931,175.20
Subsidy for electric charge Related to income 1,261,152.00
Cotton yarn freight subsidies Related to income 3,449,703.38
Subsidy for newly increased employment Related to income 1,285,000.00
Subsidy for new employment of security Related to income 129,778.00
personnel by private enterprises in four districts of
South Xinjiang
Subsidy for pre-job training Related to income 495,849.05
Subsidy for village-level comprehensive cultural Related to income 80,000.00
service in Awat County
Subsidies for transferring Xinjiang cotton to Related to income 2,723,300.00
warehouses out of Xinjiang
Project subsidy for energy management Related to income 820,000.00
Total —— 58,099,783.92 1,030,000.00 6,901,800.00
36. Deferred Income
Unit: RMB
Item Opening balance Increase Decrease Closing balance Formation reasons
Government Government
95,935,052.79 34,529,600.00 3,727,560.47 126,737,092.32
subsidies subsidies
Unrealized financing
55,437.00 55,437.00 Finance lease
incomes
Total 95,990,489.79 34,529,600.00 3,782,997.47 126,737,092.32 --
Items involved in government subsidies:
Unit: RMB
Opening Amount of Amount Amount Amount Other Closing Related to the
Item
balance newly accrued in accrued in offset cost changes balance assets/
172
Lu Thai Textile Co., Ltd. Annual Report 2017
subsidy non-business other income expenses income
income
Subsidy for 60,658,927.2 59,265,769.3 Related to
1,393,157.88
land 1 3 assets
Subsidy for 34,452,125.5 32,375,600.0 64,626,322.9 Related to
2,201,402.63
equipment 8 0 5 assets
Subsidy for
production Related to
824,000.00 132,999.96 691,000.04
biological assets
assets
Subsidy for
Related to
overseas 100,000.00 100,000.00
assets
investment
Subsidy for R Related to
2,054,000.00 2,054,000.00
&D assets
95,935,052.7 34,529,600.0 126,737,092.
Total 3,727,560.47 --
9 0 32
Other notes:
37. Other Non-current Liabilities
Unit: RMB
Item Closing balance Opening balance
Other 1,840,000.00 1,840,000.00
Total 1,840,000.00 1,840,000.00
Other notes:
38. Share Capital
Unit: RMB
Increase/decrease (+/-)
Opening Capitalization Closing
Newly issue
balance Bonus shares of public Other Subtotal balance
share
reserves
The sum of
922,602,311.00 922,602,311.00
shares
Other notes:
173
Lu Thai Textile Co., Ltd. Annual Report 2017
39. Capital Reserves
Unit: RMB
Item Opening balance Increase Decrease Closing balance
Capital premium 702,301,338.34 61,830,428.00 640,470,910.34
Other capital reserves 58,979,219.49 43,463.99 59,022,683.48
Total 761,280,557.83 43,463.99 61,830,428.00 699,493,593.82
Other notes, including changes and reason of change:
Note: The capital reserves decreased RMB61,830,428.00 in the Reporting Period which was caused by Chengshun Heating’s
decrease in capital reserves of RMB23,430,428.00; The debt remission with the subsidiary Beijing innovative was equal to
transferring parts of profits to minority shareholders for offsetting capital reserves of RMB38,400,000.00.
40. Other Comprehensive Income
Unit: RMB
Reporting Period
Less: Amount
transferred
into profit and
loss in the
Amount After-tax After-tax
Opening current period Less: Closing
Item incurred attribute to attribute to
balance that income tax balance
before the Parent minority
recognized expense
income tax Company shareholder
into other
comprehensive
income in
prior period
I. Other comprehensive income not
reclassified into profits or losses
Of which: changes of net assets and
liabilities of defined benefit plans
recalculated
Share in other comprehensive income
cannot be reclassified into profits or
losses in investment entity under the
equity method
II. Other comprehensive reclassified 53,293,544.8 -36,478,020 -36,482,970 16,810,57
4,950.00
into profits or losses 9 .67 .67 4.22
Share in other comprehensive income
174
Lu Thai Textile Co., Ltd. Annual Report 2017
reclassified into profits or losses in
investment entity under the equity
method
Profits or losses of change in fair
value of available-for-sale financial 33,000.00 4,950.00 28,050.00 28,050.00
assets
Held-to-maturity investment
reclassified as available-for-sale
financial assets profits and losses
Effective hedging gains and losses
on cash flows
Converted difference of the 53,293,544.8 -36,511,020 -36,511,020 16,782,52
foreign currency financial statement 9 .67 .67 4.22
53,293,544.8 -36,478,020 -36,482,970 16,810,57
Total of other comprehensive income 4,950.00
9 .67 .67 4.22
41. Surplus Reserves
Unit: RMB
Item Opening balance Increase Decrease Closing balance
Statutory surplus
888,528,950.10 71,063,056.38 959,592,006.48
reserves
Discretional surplus
3,341,572.58 3,341,572.58
reserves
Total 891,870,522.68 71,063,056.38 962,933,579.06
Notes to the surplus reserves including the notes to the increase/decrease during the Reporting Period as well as the reasons:
In accordance with the applicable regulations stipulated in Corporation Law and Articles of Association, the Company withdrew the
statutory surplus reserves at 10% of net profits.
42. Retained Profits
Unit: RMB
Item Reporting Period Same period of last year
Retained profits of period-end of last year before
4,341,866,189.19 4,053,079,857.70
adjustments
Total retained profits of period-begin in the
18,996,327.73
adjustment (“+” means up; “-“means down)
Opening balance of retained profits after
4,341,866,189.19 4,072,076,185.43
adjustments
175
Lu Thai Textile Co., Ltd. Annual Report 2017
Add: Net profit attributable to owners of the
841,150,934.75 808,760,025.91
Company
Less: Withdrawal of statutory surplus reserves 71,063,056.38 73,444,648.65
Withdrawal of discretional surplus reserves
Withdrawal of general risk reserves
Dividend of common stock payable 482,851,355.50 465,525,373.50
Dividend of common stock transferred as
share capital
Others
Closing retained profits 4,629,102,712.06 4,341,866,189.19
List of adjustment of opening retained profits:
1) RMB000 opening retained profits was affected by retrospective adjustment conducted according to the Accounting Standards for
Business Enterprises and relevant new regulations.
2) RMB000 opening retained profits was affected by changes on accounting policies.
3) RMB000 opening retained profits was affected by correction of significant accounting errors.
4) RMB18,996,327.73 opening retained profits was affected by changes in combination scope arising from same control.
5) RMB000 opening retained profits was affected totally by other adjustments.
43. Revenue and Cost of Sales
Unit: RMB
Reporting Period Same period of last year
Item
Sales revenue Cost of sales Sales revenue Cost of sales
Main operations 6,117,830,993.82 4,289,552,667.57 5,715,045,686.89 3,840,569,957.03
Other operations 291,393,051.15 187,495,117.11 275,448,222.47 166,531,733.62
Total 6,409,224,044.97 4,477,047,784.68 5,990,493,909.36 4,007,101,690.65
44. Business Tax and Surcharges
Unit: RMB
Item Reporting Period Same period of last year
Urban maintenance and construction tax 29,433,844.39 30,239,685.31
Education surcharge 12,875,631.00 13,667,756.39
Resource tax 26,516.00
Property tax 19,773,203.46 13,107,952.04
Land use tax 18,594,973.00 12,854,644.38
Vehicle and vessel usage tax 125,398.56 61,044.20
176
Lu Thai Textile Co., Ltd. Annual Report 2017
Stamp duty 3,904,063.89 2,558,253.84
Business tax 593,989.16
Local education surcharge 8,583,754.04 9,111,881.84
Local water conservancy facility
2,914,218.66 4,332,576.60
construction fund
Total 96,231,603.00 86,527,783.76
Other notes:
Note: Refer to Note VI Tax for details of payable standards for various taxes and surcharges.
45. Sales Expenses
Unit: RMB
Item Reporting Period Same period of last year
Salary 38,293,547.89 50,423,791.03
Transport fees 39,722,184.43 34,708,081.50
Advertising expense 16,846,415.91 12,619,004.10
Mall costs 2,188,487.89 8,740,936.16
Terminal Handing charges 13,661,450.06 10,170,488.09
Depreciation charge 5,364,151.04 5,654,563.26
Sales service fee 3,439,035.08 6,656,203.48
Business travel charges 5,101,239.69 4,928,478.09
Rental charges 1,105,273.12 1,524,816.35
Design charges 2,355,173.94 2,209,686.15
Other 15,984,821.34 21,233,945.01
Total 144,061,780.39 158,869,993.22
Other notes:
46. Administration Expenses
Unit: RMB
Item Reporting Period Same period of last year
R&D expenses 328,403,990.29 289,826,541.83
Salary 107,277,843.02 133,042,320.62
Taxes 14,735,118.17
Depreciation charge 24,973,816.12 25,890,615.46
Warehouse funding 27,431,827.37 24,187,533.53
177
Lu Thai Textile Co., Ltd. Annual Report 2017
Travel expense 26,081,106.36 24,028,836.88
Rental charges 14,440,878.80 14,837,609.14
Labor-union expenditure 15,289,305.43 14,792,241.78
Employee education budget 10,872,970.81 10,797,684.26
Amortization of intangible assets 11,112,088.24 10,442,349.46
Transport fees 10,015,673.62 6,941,005.81
Other 75,631,468.88 91,833,284.88
Total 651,530,968.94 661,355,141.82
Other notes:
47. Financial Expenses
Unit: RMB
Item Reporting Period Same period of last year
Interest expenses 23,753,894.13 19,159,848.99
Less: Interest income 7,488,918.00 5,883,468.28
Less: Amount of capitalized interest
Exchange gains and losses 39,937,734.42 953,185.06
Other 7,139,960.76 6,719,587.33
Total 63,342,671.31 20,949,153.10
Other notes:
48. Asset Impairment Loss
Unit: RMB
Item Reporting Period Same period of last year
I. Bad debt loss 2,579,033.02 -2,186,419.66
II. Inventory falling price loss 25,220,325.43 46,520,981.23
III. Impairment losses on available-for-sale
42,782,600.00
financial assets
VII. Impairment losses of fix asset
9,531,315.79 1,741,306.14
impairment loss
Total 37,330,674.24 88,858,467.71
Other notes:
49. Gains and Losses from Changes in Fair Value
Unit: RMB
178
Lu Thai Textile Co., Ltd. Annual Report 2017
Source Reporting Period Same period of last year
Financial assets measured by fair value and
the changes be included in the current 17,296,256.36
profits and losses
Financial liabilities measured by fair value
and the changes included in the current 46,695,875.00
gains and losses
Total 63,992,131.36
Other notes:
50. Investment Income
Unit: RMB
Item Reporting Period Same period of last year
Investment income received from long-term
-2,463,267.98
equity measured by equity method
Investment income received from financial
assets measured by fair value and the changes
1,381,926.82
be included in the current profits and losses
during holding period
Investment income received from disposal of
financial assets measured by fair value and the
4,794,598.32 -62,161,587.02
changes be included in the current profits and
losses during holding period
Total 2,331,330.34 -60,779,660.20
Other notes:
51. Return on Disposal of Assets
Unit: RMB
Source Reporting Period Same period of last year
Return on Disposal of fixed assets 1,242,000.54 -6,843,361.94
Total 1,242,000.54 -6,843,361.94
52. Other Income
Unit: RMB
Source Reporting Period Same period of last year
Government subsidies 58,099,783.92
179
Lu Thai Textile Co., Ltd. Annual Report 2017
Total 58,099,783.92
53. Non-operating Gains
Unit: RMB
Recorded in the amount of the
Item Reporting Period Same period of last year
non-recurring gains and losses
Government subsidies 64,121,633.01
Gains from damage and
6,834.95
scrapping of non-current assets
Government subsidies unrelated
to the normal operation of the 1,030,000.00 1,030,000.00
Company
Other 11,092,767.09 9,559,015.36 11,092,767.09
Total 12,122,767.09 73,687,483.32 12,122,767.09
Government subsidies included into the current gains and losses:
Unit: RMB
Whether
subsidies
Special Related to
Distribution Distribution influence the Reporting Same period
Item Nature subsidy or assets/related
entity reason current Period of last year
not income
profits and
losses or not
Other notes:
54. Non-operating Expenses
Unit: RMB
Recorded in the amount of the
Item Reporting Period Same period of last year
non-recurring gains and losses
Donation 5,004,075.00 1,558,693.43 5,004,075.00
Losses from damage and
2,568,738.39 1,485,166.50 2,568,738.39
scrapping of non-current assets
Other 1,449,912.25 4,074,850.31 1,449,912.25
Total 9,022,725.64 7,118,710.24 9,022,725.64
Other notes:
180
Lu Thai Textile Co., Ltd. Annual Report 2017
55. Income Tax Expense
(1) Lists of Income Tax Expense
Unit: RMB
Item Reporting Period Same period of last year
Current income tax expense 132,080,828.42 174,301,006.07
Deferred income tax expense -10,948,219.36 -918,593.71
Total 121,132,609.06 173,382,412.36
(2) Adjustment Process of Accounting Profit and Income Tax Expense
Unit: RMB
Item Reporting Period
Total profits 1,004,451,718.66
Current income tax expense accounted by tax and relevant
150,667,757.80
regulations
Influence of different tax rate suitable to subsidiary 7,805,719.32
Influence of income tax before adjustment 629,616.91
Influence of non-taxable income -8,413,254.05
Influence of not deductable costs, expenses and losses 1,794,068.47
Influence of deductable losses of deferred income tax assets
-16,302,949.41
derecognized used in previous period
Influence of deductible temporary difference or deductible losses
1,026,518.68
of deferred income tax assets derecognized in Reporting Period.
Influence of plus deducting costs -15,830,353.58
Changes in the balance of period-begin deferred income tax
-244,515.08
assets/liabilities due to the adjustment of tax rate
Income tax expense 121,132,609.06
Other notes
56. Cash Flow Statement
(1) Other Cash Received Relevant to Operating Activities
Unit: RMB
Item Reporting Period Same period of last year
Government subsidies 64,358,023.45 62,996,866.30
181
Lu Thai Textile Co., Ltd. Annual Report 2017
Claim income 1,292,703.23 2,439,371.55
Recovery of employee borrowings, petty
24,879,575.61 8,734,686.33
cash and deposit
Collection for employees 5,363,500.00 18,969,901.19
Other 8,762,550.14 9,006,678.17
Total 104,656,352.43 102,147,503.54
Notes:
(2) Other Cash Paid Relevant to Operating Activities
Unit: RMB
Item Reporting Period Same period of last year
Freight and miscellaneous charges 59,083,362.18 53,789,783.05
Rental charges 18,504,054.24 23,992,282.87
Advertising expense 4,890,771.45 4,894,117.88
Business travel charges 29,550,544.27 26,296,270.48
Insurance 5,350,729.67 9,157,201.71
Audit advisory announcement fee 4,519,003.71 5,195,501.86
Decoration & repair expenses 9,540,186.72 6,068,058.70
Donation 5,004,075.00 1,558,693.43
Pre-payment 10,793,990.64 7,752,260.57
Payment of employee borrowings, petty
28,801,006.36 12,028,200.74
cash and deposit
Other 81,125,466.24 82,921,252.17
Total 257,163,190.48 233,653,623.46
Notes:
(3) Other Cash Received Relevant to Investment Activities
Unit: RMB
Item Reporting Period Same period of last year
Interest income 6,894,588.05 6,536,543.36
Income from forward foreign exchange 4,858,596.97
Sale of securities 63,962,133.03 24,602,898.61
Income from holding of tradable financial
1,381,926.82
assets during holding period
Option cost 91,000.00
182
Lu Thai Textile Co., Ltd. Annual Report 2017
Total 75,806,318.05 32,521,368.79
Notes:
(4) Other Cash Paid Relevant to Investment Activity
Unit: RMB
Item Reporting Period Same period of last year
forward settlement exchange loss 63,998.65 41,519,234.00
Payment of deposit for the L/C of
1,200,000.00
equipment purchase
Total 1,263,998.65 41,519,234.00
Notes:
(5) Other Cash Received Relevant to Financing Activities
Unit: RMB
Item Reporting Period Same period of last year
Return of loan guarantees 8,000,000.00 29,754,422.42
Recovery of intercourse accounts 191,980,000.00 9,590,000.00
Government subsidies related to assets 32,475,600.00
Total 232,455,600.00 39,344,422.42
Notes:
(6) Other Cash Paid Relevant to Financing Activities
Unit: RMB
Item Reporting Period Same period of last year
Return of the B-share buy-back amount 253,629,544.91
The certificates of deposit pledged 16,000,000.00 8,000,000.00
Payment of intercourse accounts 139,000,000.00
Cash consideration paid in the business
23,430,428.00
combination under the same control
Total 178,430,428.00 261,629,544.91
Notes:
183
Lu Thai Textile Co., Ltd. Annual Report 2017
57. Supplemental Information for Cash Flow Statement
(1) Supplemental Information for Cash Flow Statement
Unit: RMB
Supplemental information Reporting Period Same period of last year
1. Reconciliation of net profit to net cash
-- --
flows generated from operating activities
Net profit 883,319,109.60 856,387,149.04
Add: Provision for impairment of assets 37,330,674.24 88,858,467.71
Depreciation of fixed assets, of oil-gas
384,151,246.71 363,238,407.58
assets, of productive biological assets
Amortization of intangible assets 16,622,633.32 12,302,441.42
Long-term unamortized expenses 3,537,929.74 2,627,785.85
Losses on disposal of fixed assets, intangible
assets and other long-term assets (gains: -1,242,000.54 6,843,361.94
negative)
Losses on retirement of fixed assets 2,568,738.39 1,478,331.55
Losses from variation of fair value -63,992,131.36
Financial cost (gains: negative) 63,104,510.55 13,951,394.66
Investment loss (gains: negative) -2,331,330.34 60,779,660.20
Decrease in deferred income tax assets
-11,507,078.95 -1,066,989.23
(gains: negative)
Increase in deferred income tax liabilities
558,859.59 148,395.52
(“-” means decrease)
Decrease in inventory (gains: negative) -270,382,003.89 -92,876,874.35
Decrease in accounts receivable from
-63,289,943.78 30,153,001.02
operating activities (gains: negative)
Increase in payables from operating
28,069,308.79 35,899,882.90
activities (decrease: negative)
Other -32,475,600.00
Net cash flows generated from operating
1,038,035,053.43 1,314,732,284.45
activities
2. Investing and financing activities that do
-- --
not involving cash receipts and payment:
3. Net increase in cash and cash equivalents -- --
Closing balance of cash 676,639,212.86 659,116,137.67
Less: Opening balance of cash 659,116,137.67 768,827,094.83
184
Lu Thai Textile Co., Ltd. Annual Report 2017
Net increase in cash and cash equivalents 17,523,075.19 -109,710,957.16
(2) Cash and Cash Equivalents
Unit: RMB
Item Closing balance Opening balance
I. Cash 676,639,212.86 659,116,137.67
Including: Cash on hand 8,040,420.28 3,229,473.38
Bank deposit on demand 668,598,792.58 655,886,664.29
III. Closing balance of cash and cash
676,639,212.86 659,116,137.67
equivalents
Other notes:
58. The Assets with Restricted Ownership or Use Right
Unit: RMB
Item Closing book value Restricted reason
Pledged for short-term loans, as cash
Monetary capital 17,350,080.52
deposit of L/G and L/C
Inventory 248,632,100.00 Mortgaged for short-term loans
Fixed assets 4,316,209.51 Mortgaged for short-term loans
Intangible assets 103,162,544.14 Mortgaged for short-term loans
Total 373,460,934.17 --
Other notes:
59. Foreign Currency Monetary Items
(1) Foreign Currency Monetary Items
Unit: RMB
Closing foreign currency Closing balance of converting
Item Exchange rate
balance to RMB
Monetary capital
Including: USD 81,791,849.81 6.5342 534,444,305.01
EUR 55,295.47 7.8023 431,431.85
HKD 16,493,608.85 0.8359 13,787,007.63
JPY 16,809,184.00 0.0579 973,251.74
THB 190.19 0.2000 38.00
185
Lu Thai Textile Co., Ltd. Annual Report 2017
SGD 1.90 4.8831 9.28
GBP 2,380.86 8.7792 20,902.05
AUD 6.03 5.0928 30.71
CHF 37.94 6.6779 253.36
SEK 920.00 0.7921 728.73
Dong 19,603,870,691.00 0.000288 5,645,914.76
MMK 207,312,216.61 0.00479 993,122.80
Accounts receivable
Including: USD 36,973,156.24 6.5342 241,589,997.51
HKD 7,387,921.00 0.8359 6,175,563.16
Dong 15,456,009,548.00 0.000288 4,445,099.37
Notes receivable:
USD 16,168,756.43 6.5342 105,649,888.28
HKD 5,622,611.00 0.8359 4,699,940.53
Other accounts receivable
USD 868,482.11 6.5342 5,674,828.81
JPY 375,700.00 0.0579 21,753.03
Dong 1,088,790,163.00 0.000288 313,571.57
Accounts payable
USD 4,823,602.62 6.5342 31,518,390.17
JPY 45,504,228.37 0.0579 2,634,193.27
EUR 476,032.87 7.8023 3,714,633.67
Dong 22,516,901,797.94 0.000288 6,475,789.60
Other accounts payable
USD 509,640.00 6.5342 3,330,089.69
HKD 28,000.00 0.8359 23,405.20
MMK 12,250.00 0.00479 58.68
Dong 4,210,268,592.00 0.000288 1,212,478.91
Short-term loans
USD 106,382,571.15 6.5342 695,124,996.40
Long-term loans due within one
year
USD 9,603,362.69 6.5342 62,750,292.49
Other notes:
186
Lu Thai Textile Co., Ltd. Annual Report 2017
(2) Notes to Overseas Entities Including: for Significant Oversea Entities, Main Operating Place, Recording
Currency and Selection Basis Shall Be Disclosed; if there Are Changes into Recording Currency, Relevant
Reasons Shall Be Disclosed.
√ Applicable □ Not applicable
The operating places of Company’s subsidiaries Lu Thai (Hong Kong), Lu Thai (Cambodia), Lu Thai (Burma) Co., Ltd. (hereinafter
referred to as “Lu Thai (Burma)”) Lu Thai (America) and Lu Thai (Vietnam) Co., Ltd. , Lu An Garments Co., Ltd. were Hong Kong,
Cambodia, Burma, America, Vietnam, Vietnam, and the recording currency respectively was HKD, USD, USD, USD , Dong and
Dong.
VIII. Changes of Merger scope
1. Business Combination under the Same Control
(1) Business Combination under the Same Control during the Reporting Period
Unit: RMB
Basis for the Income from Net profits
constitution the from this
Recognition Income Net profits
Proportion of of the period-begin Reporting
Combined Combination basis of during the during the
the equity business to the Period to the
party date combination period of period of
obtained combination combination combination
date comparison comparison
under the date of the date of the
same control combination combination
Under the
Transfer of
Chengshun control of the 16,295,560.3 15,255,896.3
100.00% 11/01/2017 controlling 4,145,908.17 3,313,698.92
Heating same final 9 2
power
controller
Other notes:
(2) Combination Cost
Unit: RMB
Combination cost Chengshun Heating
--Cash 23,430,428.00
--Book value of non-cash assets 160,000.00
Notes of consideration and the changes:
Other notes:
(3) The Book Value of the Assets and Liabilities of the Combined Party on Combining Date
Unit: RMB
187
Lu Thai Textile Co., Ltd. Annual Report 2017
Chengshun Heating
Item
Combination date Period-end of last period
Assets: 64,796,672.73 57,661,052.05
Monetary capital 1,798,102.66 4,336,916.85
Accounts receivable 3,717,550.07
Inventory 2,867,097.92 842,429.14
Fixed assets 52,265,026.01 28,813,248.40
Prepayment 430,766.93 618.97
Other accounts receivable 151,147.47 457,897.50
Other current assets 639,495.01 796,356.86
Construction in progress 2,876,582.75 22,407,296.20
Deferred income tax assets 50,903.91 6,288.13
Liabilities: 49,553,368.16 24,573,655.65
Accounts payable 2,416,599.70 5,096,903.35
Advance from customers 7,810,602.25 8,477,688.31
Payroll payable 51,417.05 59,654.01
Tax payable 479.66 560,966.47
Other accounts payable 39,274,269.50 10,378,443.51
Net assets 15,243,304.57 33,087,396.40
Net assets obtained 15,243,304.57 33,087,396.40
Contingent liabilities of the combined party undertaken in combination
Other notes:
IX. Equity in Other Entities
1. Equity in Subsidiary
(1) The Structure of the Enterprise Group
Main operating Nature of Holding percentage (%)
Name Registration place Way of gaining
place business Directly Indirectly
Beijing Wholesale and
Beijing Beijing 60.00% Set-up
Innovative retail industry
Luthai (Hong Wholesale and
Hong Kong Hong Kong 100.00% Set-up
Kong) retail industry
Wholesale and
Shanghai Luthai Shanghai Shanghai 100.00% Set-up
retail industry
188
Lu Thai Textile Co., Ltd. Annual Report 2017
Business
Manufacturing combination not
Xinjiang Luthai Xinjiang Xinjiang 59.92%
industry under the same
control
Lufeng Weaving Manufacturing
Zibo Zibo 75.00% Set-up
& Dyeing industry
Manufacturing
Luqun Textile Zibo Zibo 100.00% Set-up
industry
Business
Manufacturing combination not
Xinsheng Power Zibo Zibo 100.00%
industry under the same
control
Xinjiang Textile Manufacturing
Xinjiang Xinjiang 59.92% Set-up
(sub-subsidiary) industry
Business
Helijie combination not
Zibo Zibo Service 100.00%
(sub-subsidiary) under the same
control
Business
Chengshun
Manufacturing combination
Heating Zibo Zibo 100.00%
industry under the same
(sub-subsidiary)
control
Wholesale and
Beijing Youxian Beijing Beijing 90.00% Set-up
retail industry
Lu Thai Manufacturing
Cambodia Cambodia 100.00% Set-up
(Cambodia) industry
Manufacturing
Lu Thai (Burma) Burma Burma 100.00% Set-up
industry
Lu Thai Wholesale and
America America 100.00% Set-up
(America) retail industry
Lu Tha Manufacturing
Vietnam Vietnam 100.00% Set-up
i(Vietnam) industry
Manufacturing
Lu An Garments Vietnam Vietnam 100.00% Set-up
industry
Notes: holding proportion in subsidiary different from voting proportion:
Basis of holding half or less voting rights but still been controlled investee and holding more than half of the voting rights not been
controlled investee:
Basis for the control over the significant structured entities included into the consolidated scope:
Basis for determining the Company as the agent or the principal:
Other notes:
189
Lu Thai Textile Co., Ltd. Annual Report 2017
(2) Significant Non-wholly-owned Subsidiary
Unit: RMB
The profits and losses Declaring dividends Balance of minority
Shareholding proportion
Name attributable to the distributed to minority shareholder at closing
of minority shareholder
minority shareholders shareholder period
Xinjiang Luthai 40.08% 16,896,555.94 12,023,566.38 196,443,076.98
Lufeng Weaving &
25.00% 23,794,192.35 347,671,908.14
Dyeing
Holding proportion of minority shareholder in subsidiary different from voting proportion:
Other notes:
(3) The Main Financial Information of Significant not Wholly Owned Subsidiary
Unit: RMB
Closing balance Opening balance
Non-curr Non-curr Non-curr Non-curr
Name Current Total Current Total Current Total Current Total
ent ent ent ent
assets assets liabilities liabilities assets assets liabilities liabilities
assets liability assets liability
Xinjiang 533,910, 552,920, 1,086,83 593,505, 4,950,67 598,456, 528,219, 350,642, 878,862, 402,356, 5,428,01 407,784,
Luthai 300.91 939.85 1,240.76 546.28 5.96 222.24 890.20 671.38 561.58 617.55 8.92 636.47
Lufeng
Weaving 756,065, 841,883, 1,597,94 168,738, 29,616,0 198,354, 592,276, 843,971, 1,436,24 111,025, 29,711,1 140,737,
& 670.02 193.85 8,863.87 484.34 32.10 516.44 639.42 262.60 7,902.02 894.92 43.90 038.82
Dyeing
Unit: RMB
Reporting Period Same period of last year
Total Total
Name Operation Operating Operation Operating
Net profit comprehensi Net profit comprehensi
revenue cash flow revenue cash flow
ve income ve income
Xinjiang 477,021,975. 47,297,093.4 47,297,093.4 -18,512,573.3 440,825,035. 61,554,812.9 61,554,812.9 17,047,373.8
Luthai 57 1 1 0 33 5 5 0
Lufeng
1,664,817,65 104,083,484. 104,083,484. 140,455,230. 1,607,276,25 136,980,576. 136,980,576. 104,830,712.
Weaving &
9.70 23 23 55 7.49 95 95 63
Dyeing
Other notes:
190
Lu Thai Textile Co., Ltd. Annual Report 2017
2. Equity in Joint Venture Arrangement or Associated Enterprise
(1) Main Financial Information of Significant Associated Enterprise
Unit: RMB
Closing balance/ Reporting Period Opening balance /same period of last year
Haohong Investment Haohong Investment
Current assets 128,880,401.95
Non-current assets 163,879,055.06
Total assets 292,759,457.01
Current liabilities 150,000.00
Total liabilities 150,000.00
Equity attributable to shareholders of the
292,609,457.01
Parent Company
Net assets shares calculated at the
97,536,732.02
shareholding proportion
Book value of investment to associated
97,536,732.02
enterprises
Net profits -7,390,542.99
Total comprehensive income -7,390,542.99
Other notes
X. The Risk Related Financial Instruments
Main financial instruments of the Company included: Loans, accounts receivable, accounts payable, etc., all the details of the
financial instruments, see related projects of “Section VI”. The risk associated with these financial instruments, as well as the
Company’s risk management policy to reduce these risks which were described below. The Company's management managed and
supervised these risks to ensure that the above risk was controlled in a limited scope.
The Company use sensitivity analysis technology to analyze the reasonable of risk variables, influence of probable changes to the
current profits and Stockholders' equity. Because rarely any risk variables change in isolation, and the correlation between variables
for the eventual impact of the change of a risk variables will have a significant effect, thus, the aforesaid content was processing
under the assumption of the change of each variable was conducted independently.
(I) Risk management objectives and policies
The goals of Company engaged in the risk management is to achieve the proper balance between the risks and benefits, reduced the
negative impact to the Company operating performance risk to a minimum, maximized the profits of shareholders and other equity
investors. Based on the risk management goal, the basic strategy of the Company's risk management is determine and analyze the
various risks faced by the Company, set up the bottom line of risk and conducted appropriate risk management, and timely supervised
various risks in a reliable way and controlled the risk within the range of limit.
1. Market risk
(1) Foreign exchange risk
191
Lu Thai Textile Co., Ltd. Annual Report 2017
Foreign exchange risk is referred to the risk incurred due to loss of changes in exchange rate. Foreign exchange risk is referred to
the risk incurred due to loss of changes in exchange rate. The Company’s foreign exchange risk was mainly related to USD, HKD
and EUR, excepting the Company’s several subsidiaries purchase and sale, in USD, HKD and Dong, the other main business settled
by RMB. On 31 Dec. 2016, in addition to the following assets or liabilities in statement was USD, HKD and EUR, the Company’s
assets or liabilities was RMB balance. The foreign exchange risk incurred by assets and liabilities of foreign balance may have
impact to the operation results of the Company.
Item Closing amount Opening amount
Cash and cash equivalents 556,296,995.92 295,220,057.63
Notes receivable 110,349,828.81 71,898,206.01
Account receivable 252,210,660.04 201,635,005.83
Other accounts receivable 6,010,153.41 5,624,249.98
Other current assets 65,968,094.08
Accounts payable 44,343,006.71 47,263,170.03
Other accounts payable 4,566,032.47 4,286,466.39
Short-term loans 695,124,996.40 563,261,856.02
Long-term loans due within one year 62,750,292.49
Long-term loans 135,678,044.89
Sensitive analysis of foreign exchange risk:
Base on the foreign currency monetary assets and liabilities, and ignoring other factors, influence of change of exchange rate to
current profits and losses and equity of shareholders was followed:
Change Reporting Period Same period of last year
Influence to the Influence to equity of Influence to the profits Influence to equity of
profits shareholders shareholders
Up 10% against RMB -5,234,092.49 -5,234,092.49 14,763,070.22 14,763,070.22
Down 10% against RMB 5,234,092.49 5,234,092.49 -14,763,070.22 -14,763,070.22
(2) Interest rate risk
The risk of cash flow changes of financial instruments due to change of interest rate mainly was related bank loan (for details, see23
in this Section).
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:
Change Reporting Period Same period of last year
Influence to the profits Influence to equity of Influence to the profits Influence to equity of
shareholders shareholders
Increase 100 BP -11,312,164.38 -10,086,733.25 -7,634,051.31 -6,516,890.66
Decrease 100 BP 11,312,164.38 10,086,733.25 7,634,051.31 6,516,890.66
2. Credit risk
192
Lu Thai Textile Co., Ltd. Annual Report 2017
On Dec. 31, 2017, credit risk what may lead to the financial losses was the other party of the contract failed to fulfill the obligations
and causes loss of the Company’s financial assets, which including: book value of financial assets recognized in consolidated balance
sheet.
In order to reduce the credit risk, the Company established a special team be responsible for the determination of credit limit to
conduct credit approval, and perform other supervising procedures to ensure that taking necessary measures to recycle expired claims.
In addition, the Company at each balance sheet date, review every single receivables recycling situation, to ensure that the money
unable to recycle withdrawn provision for bad debt fully. Thus, the Company management believed that have assume the credit risk
the Company shouldered had been greatly reduced.
The Company's working capital was in bank with higher credit rating, so credit risk of working capital was low.
3. Liquidity Risk
When manage liquidity risk, the Company keep administrators deemed sufficient cash and cash equivalents and supervised it to meet
the need of the operation of the Company and reduce the influence of cash flow volatility. The Company management supervised the
usage 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 RMB694 million. In recent two years, the average of net
cash flow of operation activities was RMB1.176 billion. The Company believed that the liquidity risk was insignificant.
XI. The Disclosure of the Fair Value
1. Closing Fair Value of Assets and Liabilities Calculated by Fair Value
Unit: RMB
Closing fair value
Item Fair value measurement Fair value measurement Fair value measurement
Total
items at level 1 items at level 2 items at level 3
I. Consistent fair value
-- -- -- --
measurement
(II) Available-for-sale
60,033,000.00 60,033,000.00
financial assets
(1) Debt instrument
60,033,000.00 60,033,000.00
investment
(2) Equity tool investment
(3) Others
Total assets of consistent
60,033,000.00 60,033,000.00
fair value measurement
193
Lu Thai Textile Co., Ltd. Annual Report 2017
2. Valuation Technique Adopted and Nature and Amount Determination of Important Parameters for
Consistent and Inconsistent Fair Value Measurement Items at Level 2
As for the fund investment without active markets in available-for-sale financial assets, the determination of its fair value was based
on the evaluation on the balance sheet date provided by the asset manager.
XII. Related Party and Related Transaction
1. Information Related to the Parent Company
Proportion of voting
Proportion of share
rights owned by
Name of parent held by parent
Registration place Nature of business Registered capital parent company
company company against the
against the Company
Company (%)
(%)
Zibo Lucheng
Textile, chemistry
Textile Investment Zibo RMB63,260,000 15.21% 15.21%
and investment
Co., Ltd.
Information on the Parent Company
The final controllers of the Company were Mr. Liu zibin and Mr. Liu Deming.
Other notes:
2. Subsidiaries of the Company
Refer to Note IX-1. Equity in Subsidiaries for details.
3. Information on the Joint Ventures and Associated Enterprises of the Company
Refer to IX-2. Equity in Joint Ventures or Associated Enterprises in this Section.
4. Information on Other Related Parties of the Company
Name Relationship
Zibo Stanluian Cosmetics Co., Ltd. (hereinafter called
Joint-stock company
“Stanluian”)
Zibo Taimei Ties Co., Ltd. (hereinafter called Taimei Ties) Majority-owned subsidiary of the Parent Company
Zibo Limin Purified Water Co., Ltd. (hereinafter called Limin
Wholly-owned subsidiary of the Parent Company
Purified Water)
Zibo Luqun Land Co., Ltd (hereinafter called Luqun Land) Wholly-owned subsidiary of the Parent Company
Zibo Lurui Fine Chemical Co., Ltd. (hereinafter referred to as
Majority-owned subsidiary of the Parent Company
Lurui Chemical)
Zibo Lujia Property Management Co. , Ltd. (hereinafter referred Wholly-owned subsidiary of the Parent Company
194
Lu Thai Textile Co., Ltd. Annual Report 2017
to as Lujia Property)
Shandong Chengshun Petrochemical Co., Ltd. (hereinafter
Wholly-owned subsidiary of the Parent Company
referred to as Chengshun Petrochemical)
Other notes
5. List of Related-party Transactions
(1) Information on Acquisition of Goods and Reception of Labor Service (Unit: Ten Thousand Yuan)
Information on acquisition of goods and reception of labor service
Unit: RMB
Whether exceed trade
The approval trade credit or not Whether Same period of last
Related party Content Reporting Period
credit exceed trade credit or year
not
Towel, sock, oil
product,
supermarket retail,
welfare, electronic
Zibo Lucheng
products, computer
Textile Investment 13,051,075.96 18,183,300.00 No 12,157,996.07
equipment,
Co., Ltd.
computer supplies,
paper core, hose
processing fees,
etc.
Goods processing
Taimei Ties 1,072,762.83 1,300,000.00 No 922,555.61
fee
Recycled water,
Limin Purified
sewage treatment, 23,742,561.84 25,850,000.00 No 19,438,805.23
Water
materials
Chengshun
Gas 19,719,905.39 29,000,000.00 No 742,901.39
Petrochemical
Lurui Fine
Auxiliaries 91,452,731.48 117,000,000.00 No 81,933,412.13
Chemical
Information of sales of goods and provision of labor service
Unit: RMB
Related party Content Reporting Period Same period of last year
Sales of materials, electricity,
running water, gas, LED
Lucheng Textile 805,523.94 1,163,940.37
lamp, garment, basic yarn and
dyed yarn, etc.
195
Lu Thai Textile Co., Ltd. Annual Report 2017
Sales of electricity, heating
Taimei Ties 17,715.81 20,180.03
charges
Sales of materials, electricity,
Stanluian Company 52,431.80 36,152.79
and running water
Sales of materials, garment,
Limin Purified Water 71,473.11 4,913.20
and LED lamp
Sales of garments, LED lamp,
fabric, yarn, water &
Lurui Fine Chemical 442,833.05 579,514.02
electricity and lunch
components
Sales of materials and
Lujia Property 68,442.42 43,831.55
recycled water
Notes:
(2) Information of Related Lease
The Company was lessor:
Unit: RMB
The lease income confirmed in The lease income confirmed in
Name of lessee Category of leased assets
Reporting Period last year
Zibo Lucheng Textile
Houses and buildings 30,857.15 292,836.83
Investment Co., Ltd.
Lurui Fine Chemical Houses and buildings 8,183.64 4,091.82
The Company was lessee:
Unit: RMB
The lease income confirmed in
lessor Category of leased assets Category of leased assets
Reporting Period
Zibo Lucheng Textile
Rent of land 3,614,857.20 3,675,104.80
Investment Co., Ltd.
Zibo Lucheng Textile
Rent of gas station 501,714.24 510,076.16
Investment Co., Ltd.
Zibo Lucheng Textile
Rent of land and buildings 11,460,190.52 12,404,419.08
Investment Co., Ltd.
Luqun Property Rent of land and buildings 1,394,285.64 4,017,523.76
Notes of related lease
(3) Inter-bank Lending of Capital of Related Parties
Unit: RMB
196
Lu Thai Textile Co., Ltd. Annual Report 2017
Amount borrowed and
Related-party Initial date Due date Explanation
loaned
Borrowed
Borrowed by the
Zibo Lucheng Textile Company’s subsidiaries
59,000,000.00 10/24/2017 12/31/2018
Investment Co., Ltd. Xinsheng Power and
Chengshun Heating
Borrowed by the
Lujia Property 600,000.00 03/30/2017 12/31/2018 Company’s subsidiary
Chengshun Heating
Borrowed by the
Stanluian Company 1,450,000.00 08/17/2017 12/31/2018 Company’s subsidiary
Chengshun Heating
Borrowed by the
Taimei Ties 1,300,000.00 03/31/2017 12/31/2018 Company’s subsidiary
Chengshun Heating
Loaned
(4) Rewards for the Key Management Personnel
Unit: RMB
Item Reporting Period Same period of last year
Rewards for the key management
21881300 24486300
personnel
6. Receivables and Payables of Related Parties
(1) Payables
Unit: RMB
Name of item Related party Closing book balance Opening book balance
Accounts payable:
Lurui Fine Chemical 790,533.58
Zibo Lucheng Textile
9,214.58
Investment Co., Ltd.
Total 799,748.16
Other accounts payable:
Zibo Lucheng Textile
60,456,317.14 9,854,741.01
Investment Co., Ltd.
197
Lu Thai Textile Co., Ltd. Annual Report 2017
Lujia Property 620,010.00
Stanluian Company 1,473,828.33
Taimei Ties 1,362,942.08
Total 63,913,097.55 9,854,741.01
XIII. Commitments and Contingency
1. Significant Commitments
Significant commitments on the balance sheet date
Capital commitments
Item Closing balance (RMB Ten Opening balance (RMB Ten
thousand Yuan) thousand Yuan)
Commitments signed but hasn’t been recognized in
financial statements
-- Commitment for constructing and purchasing 6,364.72 20,581.71
long-term assets
Total 6,364.72 20,581.71
2. Contingency
(1) Significant Contingency on Balance Sheet Date
As of Dec. 31, 2017, there was no significant contingency for the Company to disclose.
(2) In Despite of no Significant Contingency to Disclose, the Company Shall Also Make Relevant
Statements.
There was no significant contingency for the Company to disclose.
XIV. Events after Balance Sheet Date
1. Profit Distribution
Unit: RMB
198
Lu Thai Textile Co., Ltd. Annual Report 2017
XIV. Notes of Main Items in the Financial Statements of the Parent Company
1. Accounts Receivable
(1) Accounts Receivable Classified by Category
Unit: RMB
Closing balance Opening balance
Book balance Bad debt provision Book balance Bad debt provision
Category Withdra
Book
Proportio wal Proportio Withdrawal Book value
Amount Amount value Amount Amount
n proportio n proportion
n
Accounts receivable
with significant
single amount for 102,459 102,459,6
24.68% 100.00%
which bad debt ,665.95 65.95
provision separately
accrued
Accounts receivable
withdrawn bad debt
322,076, 16,172,6 305,903,5 312,659 15,633,26 297,026,11
provision according 100.00% 5.02% 75.32% 5.00%
206.04 15.06 90.98 ,373.66 3.33 0.33
to credit risks
characteristics
322,076, 16,172,6 305,903,5 415,119 118,092,9 297,026,11
Total 100.00% 5.02% 100.00% 28.45%
206.04 15.06 90.98 ,039.61 29.28 0.33
Accounts receivable with significant single amount for which bad debt provision separately accrued at the period-end:
□ Applicable √ Not applicable
In the groups, accounts receivable adopting aging analysis method to accrue bad debt provision:
√ Applicable □ Not applicable
Unit: RMB
Closing balance
Aging
Accounts receivable Bad debt provision Withdrawal proportion
Subitem within 1 year
Within 1 year 320,700,110.68 16,035,005.53 5.00%
Subtotal within 1 year 320,700,110.68 16,035,005.53 5.00%
1 to 2 years 1,376,095.36 137,609.53 10.00%
Total 322,076,206.04 16,172,615.06 5.02%
Notes of the basis for the determination of the group:
In the groups, accounts receivable adopting balance percentage method to withdraw bad debt provision:
199
Lu Thai Textile Co., Ltd. Annual Report 2017
□ Applicable √ Not applicable
In the groups, accounts receivable adopting other methods to withdraw bad debt provision:
(2) Bad Debt Provision Withdrawal, Reversed or Recovered in the Reporting Period
The withdrawal amount of the bad debt provision during the Reporting Period was of RMB-5,913,759.23; the amount of the reversed
or collected part during the Reporting Period was of RMB0.00.
(3) Particulars of the Actual Verification of Accounts Receivable during the Reporting Period
Unit: RMB
Item Amount
Accounts receivable verified actually 96,006,554.99
Of which, the verification of significant accounts receivable:
Unit: RMB
Whether occurred
Name of the entity Nature Amount Reason Procedure because of related
party transactions
Under the process of
Beijing Innovative Intercourse accounts 96,000,000.00 Approval of the GM No
cancellation
Total -- 96,000,000.00 -- -- --
Notes of the verification of accounts receivable:
(4) Top Five of Account Receivable of Closing Balance Collected by Arrears Party
The total amount of top five of account receivable of closing balance collected by arrears party was RMB132,731,214.06, accounting
for 41.21% of total closing balance of account receivable, and the relevant closing balance of bad debt provision withdrawn was
RMB6,636,560.70.
2. Other Accounts Receivable
(1) Other Account Receivable Classified by Category
Unit: RMB
Closing balance Opening balance
Book balance Bad debt provision Book balance Bad debt provision
Category Withdra
Book
Proportio wal Proportio Withdrawal Book value
Amount Amount value Amount Amount
n proportio n proportion
n
Other accounts 486,974, 93.16% 486,974,1 317,675 92.64% 317,675,16
200
Lu Thai Textile Co., Ltd. Annual Report 2017
receivable with 195.33 95.33 ,160.04 0.04
significant single
amount for which
bad debt provision
separately accrued
Other accounts
receivable withdrawn
35,729,4 2,915,36 32,814,04 25,228, 2,445,924 22,783,048.
bad debt provision 6.84% 8.16% 7.36% 9.69%
08.00 3.76 4.24 972.17 .01 16
according to credit
risks characteristics
522,703, 2,915,36 519,788,2 342,904 2,445,924 340,458,20
Total 100.00% 0.56% 100.00% 0.71%
603.33 3.76 39.57 ,132.21 .01 8.20
Other receivable with single significant amount and withdrawal bad debt provision separately at end of period
√ Applicable □ Not applicable
Unit: RMB
Closing balance
Other accounts receivable
Other accounts
(unit） Bad debt provision Withdrawal proportion Withdrawal reason
receivable
no impairment of the
Lu Thai (Vietnam) 404,392,797.42
individual test
no impairment of the
Lu An Garments 82,581,397.91
individual test
Total 486,974,195.33 -- --
In the groups, other accounts receivable adopting aging analysis method to withdraw bad debt provision:
√ Applicable □ Not applicable
Unit: RMB
Closing balance
Aging
Other accounts receivable Bad debt provision Withdrawal proportion
Subitem within 1 year
Within 1 year 30,939,672.96 1,546,983.65 5.00%
Subtotal within 1 year 30,939,672.96 1,546,983.65 5.00%
1 to 2 years 280,702.00 28,070.20 10.00%
2 to 3 years 124,000.00 24,800.00 20.00%
Over 3 years 4,385,033.04 1,315,509.91 30.00%
Total 35,729,408.00 2,915,363.76 8.16%
Notes of the basis for the determination of the group:
In the groups, other accounts receivable adopting balance percentage method to withdraw bad debt provision:
□ Applicable √ Not applicable
201
Lu Thai Textile Co., Ltd. Annual Report 2017
In the groups, other accounts receivable adopting other methods to withdraw bad debt provision:
□ Applicable √ Not applicable
(2) Bad Debt Provision Withdrawn, Reversed or Collected during the Reporting Period
The amount of bad debt provision was RMB469,439.75, the amount of reversed or recovered bad debt provision in the Reporting
Period RMBXXX.
Of which, the current bad debt provision reversed or collected with significant amount:
Unit: RMB
Name of the entity Reversed or collected amount Method
(3) Other Accounts Receivable Classified by the Nature
Unit: RMB
Nature Closing book balance Opening book balance
Intercourse funds 486,974,195.33 317,675,160.04
Export rebates 16,370,989.66 7,802,287.09
Payment on behalf 14,593,482.76 13,285,751.37
Guarantee deposit and cash deposit 2,532,658.50 442,488.00
Borrowings and petty cash 1,044,226.03 1,013,029.29
Other 1,188,051.05 2,685,416.42
Total 522,703,603.33 342,904,132.21
(4) Top 5 of the Closing Balance of the Other Accounts Receivable Collected according to the Arrears Party
Unit: RMB
Proportion to total
closing balance of Closing balance of
Name of units Nature Closing balance Aging
other accounts bad debt provision
receivable
Lu Thai (Cambodia) Intercourse funds 404,392,797.42 Within 1 year 77.37%
Lu An Garments Intercourse funds 82,581,397.91 Within 1 year 15.80%
Refund of tax for
Export rebates 16,370,989.66 Within 1 year 3.13% 818,549.48
export receivable
Accounts receivable
Advance money for
of advance money for
the social security
the social security
undertake by the 4,836,084.96 Within 1 year 0.92% 241,804.25
undertake by the
individual of the
individual of the
employee
employee
202
Lu Thai Textile Co., Ltd. Annual Report 2017
Pre-paid heating
Pre-paid 2,024,208.67 Within 1 year 0.39% 101,210.43
charges
Total -- 510,205,478.62 -- 97.61% 1,161,564.16
3. Long-term Equity Investment
Unit: RMB
Closing balance Opening balance
Item Depreciation Depreciation
Book balance Book value Book balance Book value
reserves reserves
Investment to the
1,744,156,616.04 25,200,000.00 1,718,956,616.04 1,736,221,866.04 25,200,000.00 1,711,021,866.04
subsidiary
Investment to
joint ventures and
97,536,732.02 97,536,732.02
associated
enterprises
Total 1,841,693,348.06 25,200,000.00 1,816,493,348.06 1,736,221,866.04 25,200,000.00 1,711,021,866.04
(1) Investment to the Subsidiary
Unit: RMB
Withdrawn
Closing balance
impairment
Investee Opening balance Increase Decrease Closing balance of impairment
provision in the
provision
Reporting Period
Beijing Innovative 25,200,000.00 25,200,000.00 25,200,000.00
Xinjiang Luthai 147,303,034.16 147,303,034.16
Xinsheng Power 176,340,737.93 176,340,737.93
Lufeng Weaving &
529,620,000.00 529,620,000.00
Dyeing
Luqun Textile 171,784,550.00 171,784,550.00
Luthai (Hong
128,771,800.00 128,771,800.00
Kong)
Shanghai Luthai 20,000,000.00 20,000,000.00
Lu Thai
108,242,335.38 108,242,335.38
(Cambodia)
Lu Thai (America) 6,774,300.00 3,434,750.00 10,209,050.00
Lu Thai(Burma) 62,337,238.57 62,337,238.57
Beijing Youxian 9,000,000.00 4,500,000.00 13,500,000.00
203
Lu Thai Textile Co., Ltd. Annual Report 2017
Lu Thai (Vietnam) 318,034,810.00 318,034,810.00
Lu An Garments 32,813,060.00 32,813,060.00
Total 1,736,221,866.04 7,934,750.00 1,744,156,616.04 25,200,000.00
(2) Investment to Joint Ventures and Associated Enterprises
Unit: RMB
Increase/decrease
Closing
Gains and Adjustme
Cash Withdraw balance
Additiona losses nt of
Opening Reduced Changes bonus or al of Closing of
Investee l recognize other
balance investmen of other profits impairme Other balance impairme
investmen d under comprehe
t equity announce nt nt
t the equity nsive
d to issue provision provision
method income
I. Joint ventures
II. Associated enterprises
Haohong
100,000,0 -2,463,26 97,536,73
Investme
00.00 7.98 2.02
nt
100,000,0 -2,463,26 97,536,73
Subtotal
00.00 7.98 2.02
100,000,0 -2,463,26 97,536,73
Total
00.00 7.98 2.02
4. Revenues and Operating Costs
Unit: RMB
Reporting Period Same period of last year
Item
Sales revenue Cost of sales Sales revenue Cost of sales
Main operations 4,912,726,656.13 3,548,107,954.49 4,807,878,511.56 3,378,032,986.90
Other operations 233,769,456.41 187,951,747.92 270,969,055.54 226,114,678.98
Total 5,146,496,112.54 3,736,059,702.41 5,078,847,567.10 3,604,147,665.88
Other notes:
5. Investment Income
Unit: RMB
Item Reporting Period Same period of last year
Long-term equity investment income 17,976,433.62 55,179,470.68
204
Lu Thai Textile Co., Ltd. Annual Report 2017
accounted by cost method
Investment income from disposal of
-2,463,267.98
long-term equity investment
Investment income received from disposal of
-199,507.76
long-term equity investment
Investment income received from disposal of
financial assets measured at fair value and
4,858,596.97 -33,807,314.00
the changes recorded into the current gains
and losses
Total 20,371,762.61 21,172,648.92
XVI. Supplementary Materials
1. Non-recurring Gains and Losses during this Reporting Period
√ Applicable □ Not applicable
Unit: RMB
Item Amount Note
Gains/losses on the disposal of non-current
-1,326,737.85
assets
Tax rebates, reductions or exemptions due to
approval beyond authority or the lack of 66,031,583.92
official approval documents
Current net gains and losses of the subsidiary
from the period-begin to the combination
4,145,908.17
date generated from the business
combination under the same control
Gain/loss from change of fair value of
transactional assets and liabilities, and
investment gains from disposal of
transactional financial assets and liabilities 4,794,598.32
and available-for-sale financial assets, other
than valid hedging related to the Company’s
common businesses
Other non-operating income and expenses
4,638,779.84
other than the above
Less: Income tax effects 8,690,224.28
Minority interests effects 9,080,806.84
Total 60,513,101.28 --
Explain the reasons if the Company classifies an item as an extraordinary gain/loss according to the definition in the Explanatory
205
Lu Thai Textile Co., Ltd. Annual Report 2017
Announcement No. 1 on Information Disclosure for Companies Offering Their Securities to the Public—Extraordinary Gains and
Losses, or classifies any extraordinary gain/loss item mentioned in the said explanatory announcement as a recurrent gain/loss item
□ Applicable √ Not applicable
2. Return on Equity (ROE) and Earnings Per Share (EPS)
EPS (Yuan/share)
Profit as of Reporting Period Weighted average ROE (%)
EPS-basic EPS-diluted
Net profit attributable to common
11.87% 0.91 0.91
shareholders of the Company
Net profit attributable to common
shareholders of the Company after
11.02% 0.85 0.85
deduction of non-recurring profit
and loss
3. Differences between Accounting Data under Domestic and Overseas Accounting Standards
(1) Differences of Net Profit and Net Assets Disclosed in Financial Reports Prepared under International
and Chinese Accounting Standards
√ Applicable □ Not applicable
Unit: RMB
Net profit Net asset
Reporting Period Same period of last year Closing balance Opening balance
According to Chinese
841,150,934.75 808,760,025.91 7,230,942,770.16 6,970,913,125.59
accounting standards
Items and amounts adjusted according to international accounting standards:
Impact on domestic
equipment tax credit
recognized as deferred
329,000.00 725,000.00 -329,000.00
income under
international accounting
standards
According to international
841,479,934.75 809,485,025.91 7,230,942,770.16 6,970,584,125.59
accounting standards
206
Lu Thai Textile Co., Ltd. Annual Report 2017
Part XII Documents Available for Reference
1. The financial statements signed and stamped by the Company’s legal representative, Chief Accountant and
Financial Manager;
2. The original copy of the Independent Auditors’ Report carrying the seal of the CPA firm, as well as the personal
signatures of the engagement certified public accountants.
3. The originals of all the Company’s announcements and documents disclosed to the public during the Reporting
Period on Securities Times, Shanghai Securities News, China Securities Journal and Ta Kung Pao.
Chairman of the Board: Liu Zibin
Lu Thai Textile Co., Ltd.
April 17, 2018
207
