Lu Thai Textile Co., Ltd. First Quarter Report 2019 (Summary)
Stock Code: 000726, 200726 Stock Name: LTTC, LTTC-B Announcement No. 2019-030
LU THAI TEXTILE CO., LTD.
FIRST QUARTER REPORT 2019 (SUMMARY)
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Lu Thai Textile Co., Ltd. First Quarter Report 2019 (Summary)
Part I Important Notes
The Board of Directors (or the “Board”), the Supervisory Committee as well as the directors,
supervisors and senior management of Lu Thai Textile Co., Ltd. (hereinafter referred to as the
“Company”) hereby guarantee the factuality, accuracy and completeness of the contents of
this Report and its summary, and shall be jointly and severally liable for any
misrepresentations, misleading statements or material omissions therein.
All the Company’s directors have attended the Board meeting for the review of this Report
and its summary.
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.
This Report and its summary have been prepared in both Chinese and English. Should there
be any discrepancies or misunderstandings between the two versions, the Chinese versions
shall prevail.
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Lu Thai Textile Co., Ltd. First Quarter Report 2019 (Summary)
Part II Key Corporate Information
I Key Financial Information
Indicate by tick mark whether there is any retrospectively restated datum in the table below.
□ Yes √ No
Q1 2019 Q1 2018 Change (%)
Operating revenue (RMB) 1,545,153,566.09 1,519,803,691.24 1.67%
Net profit attributable to the listed company’s shareholders
195,173,391.82 159,278,371.57 22.54%
(RMB)
Net profit attributable to the listed company’s shareholders
175,390,785.73 138,044,830.06 27.05%
before exceptional items (RMB)
Net cash generated from/used in operating activities (RMB) -89,714,180.16 84,118,827.13 -206.65%
Basic earnings per share (RMB/share) 0.23 0.17 35.29%
Diluted earnings per share (RMB/share) 0.23 0.17 35.29%
Weighted average return on equity (%) 2.69% 2.18% 0.51%
31 March 2019 31 December 2018 Change (%)
Total assets (RMB) 10,858,794,197.15 10,537,759,811.84 3.05%
Equity attributable to the listed company’s shareholders
7,324,049,365.93 7,146,548,467.86 2.48%
(RMB)
Exceptional gains and losses:
√ Applicable □ Not applicable
Unit: RMB
Item Q1 2019 Note
Gain or loss on disposal of non-current assets (inclusive of impairment allowance write-offs) -12,249.61
Government subsidies charged to current profit or loss (exclusive of government subsidies
given in the Company’s ordinary course of business at fixed quotas or amounts as per the 20,199,549.00
government’s uniform standards)
Gain or loss on fair-value changes in trading financial assets and liabilities, as well as
derivative financial assets and liabilities & income from disposal of trading financial assets and
liabilities, derivative financial assets and liabilities, as well as investments in other debt 5,061,486.85
obligations (exclusive of effective portion of hedges that arise in the Company’s ordinary
course of business)
Non-operating income and expense other than the above 213,423.07
Less: Income tax effects 3,285,535.34
Non-controlling interests effects (net of tax) 2,394,067.88
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Lu Thai Textile Co., Ltd. First Quarter Report 2019 (Summary)
Total 19,782,606.09 --
Explanation of why the Company reclassifies as recurrent an exceptional gain/loss item defined or listed in the Explanatory
Announcement No. 1 on Information Disclosure for Companies Offering Their Securities to the Public—Exceptional Gain/Loss
Items:
□ Applicable √ Not applicable
No such cases for the Reporting Period.
II Total Number of Shareholders and Holdings of Top 10 Shareholders at 31 March 2019
1. Numbers of Ordinary Shareholders and Preferred Shareholders with Resumed Voting Rights as well as
Holdings of Top 10 Shareholders
Unit: share
Number of ordinary shareholders at Number of preferred shareholders with resumed voting rights at
55,250 0
the period-end the period-end (if any)
Top 10 shareholders
Shareholdi Shares in pledge or
Nature of Total shares Restricted
Name of shareholder ng frozen
shareholder held shares held
percentage Status Shares
Domestic
Zibo Lucheng Textile Investment Co., Ltd. non-state-owned 15.21% 140,353,583
legal person
Foreign legal
Tailun (Thailand) Textile Co., Ltd. 12.82% 118,232,400 118,232,400
person
Foreign legal
Hong Kong Securities Clearing Co. Ltd 3.23% 29,821,256
person
State-owned legal
Central Huijin Assets Management Co., Ltd. 2.20% 20,315,300
person
Foreign legal
T.ROWE PRICE INTL DISCOVERY FUND 2.16% 19,948,219
person
China Securities Finance Corporation Limited Other 1.98% 18,313,391
Foreign legal
Hong Kong Monetary Authority 1.77% 16,365,164
person
National Social Security Fund Portfolio 103 Other 1.08% 9,999,947
RBC EMERGING MARKETS SMALL CAP Foreign legal
0.65% 6,033,062
EQUITY FUND person
First State Investments Management (UK) Foreign legal
0.59% 5,444,048
Co., Ltd. person
Top 10 unrestricted shareholders
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Lu Thai Textile Co., Ltd. First Quarter Report 2019 (Summary)
Shares by type
Name of shareholder Unrestricted shares held
Type Shares
RMB-denominate
Zibo Lucheng Textile Investment Co., Ltd. 140,353,583 140,353,583
d ordinary stock
RMB-denominate
Hong Kong Securities Clearing Co. Ltd 29,821,256 29,821,256
d ordinary stock
RMB-denominate
Central Huijin Assets Management Co., Ltd. 20,315,300 20,315,300
d ordinary stock
Domestically
T.ROWE PRICE INTL DISCOVERY FUND 19,948,219 listed foreign 19,948,219
stock
RMB-denominate
China Securities Finance Corporation Limited 18,313,391 18,313,391
d ordinary stock
RMB-denominate
Hong Kong Monetary Authority 16,365,164 16,365,164
d ordinary stock
RMB-denominate
National Social Security Fund Portfolio 103 9,999,947 9,999,947
d ordinary stock
Domestically
RBC EMERGING MARKETS SMALL CAP EQUITY FUND 6,033,062 listed foreign 6,033,062
stock
RMB-denominate
First State Investments Management (UK) Co., Ltd. 5,444,048 5,444,048
d ordinary stock
Domestically
FORENINGEN AP INVEST F.M.B.A. 5,398,839 listed foreign 5,398,839
stock
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 among the shareholders well as sponsor of foreign capital of the Company. All of other
above shareholders are people holding public A share or public B share
and the Company is not able to confirm whether there is
associated relationship or concerted action among other
shareholders.
Top 10 ordinary shareholders involved in securities margin
Naught
trading (if any)
Indicate by tick mark whether any of the top 10 ordinary shareholders or the top 10 unrestricted ordinary shareholders of the
Company conducted any promissory repo during the Reporting Period.
□ Yea √ No
No such cases in the Reporting Period.
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Lu Thai Textile Co., Ltd. First Quarter Report 2019 (Summary)
2. Number of Preferred Shareholders and Shareholdings of Top 10 of Them
□ Applicable √ Not applicable
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Lu Thai Textile Co., Ltd. First Quarter Report 2019 (Summary)
Part III Significant Events
I Changes in Key Financial Statement Line Items and Explanation of why
√ Applicable □ Not applicable
Unit: RMB
Item 31 March 2019 31 December 2018 Change Reason for change
Prepayments 278,788,371.55 149,582,616.21 86.38% Increase in prepayments for raw materials
Decrease in receivable export tax rebates
and recovery of some advances for
Other
33,769,400.99 63,012,001.10 -46.41% agricultural means of production during
receivables
Q1 2019 by Xinjiang Luthai Fengshou
Cotton Industry Co., Ltd.
Current portion Purchase of wealth management products
of non-current 50,261,580.38 - 100.00% of AVIC TRUST by the Company as the
assets parent during Q1 2019
Other
Increase in prepayment for land lease by
non-current 68,330,830.51 43,100,215.87 58.54%
Lu Thai (Vietnam) Textile Co., Ltd.
assets
Payroll payable 200,183,479.23 325,998,210.17 -38.59% Payment of 2018 year-end bonus
Payment of enterprise income tax by the
Taxes payable 21,864,508.35 43,556,823.75 -49.80% Company as the parent during the Q1
2019
Item Q1 2019 Q1 2018 Change Reason for change
Selling expense 39,973,056.09 30,483,720.76 31.13% Increase in sales service charges
Increase in operating government
Other income 20,199,549.00 13,538,655.19 49.20%
subsidies received in Q1 2019
Investment Increase in losses on investment in
-93,250.75 2,439,952.13 -103.82%
income derivative financial instruments
Decrease in gains on changes in fair value
Gain on changes or fails-to-delivery forward foreign
5,108,600.00 7,895,000.00 -35.29%
in fair value exchange settlement and options at the
period-end
Asset disposal
-4,492.87 -300,994.82 98.51% Decrease in losses on fixed asset disposal
income
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Lu Thai Textile Co., Ltd. First Quarter Report 2019 (Summary)
Income tax
37,131,437.89 27,669,680.25 34.20% Increase in Profit before tax
expense
II Progress, Influence and Solutions with regard to Significant Events
□ Applicable √ Not applicable
Progress of any share repurchase:
√ Applicable □ Not applicable
The Company held the 2nd Extraordinary General Meeting of 2018 on 23 March 2018, on which, the Proposal on Repurchase of
Some B-Shares of the Company was reviewed and approved. For details, please refer to the announcement (announcement No.:
2018-013) disclosed on www.cninfo.com.cn on 24 March 2018. The Company disclosed the Report on Repurchase of Some
B-Shares of the Company on 16 May 2018 and particulars about the first share repurchase in the Announcement on Implementation of
Repurchase of B-Shares of Lu Thai Textile Co., Ltd. published on 29 May 2018. As of 22 March 2019, the repurchase term has
expired and the accumulative B-shares repurchased were 64,480,770 which have been cancelled completely at CSDCC Shenzhen on
4 April 2019. The total share capital of the Company now is decreased to 858,121,541. For details, please refer to the two
announcements (announcement No.: 2019-013, announcement No.: 2019-023) respectively disclosed on 23 March 2019 and 9 April
2019.
Progress of any reduction of the repurchased shares through centralized bidding:
□ Applicable √ Not applicable
III Commitments that the Company’s Actual Controller, Shareholders, Related Parties,
Acquirers, the Company Itself or Other Parties, Failed to Fulfill on Time during the
Reporting Period
□ Applicable √ Not applicable
No such cases in the Reporting Period.
IV Operating Performance Forecast for H1 2019
Warning of a forecast loss on or a forecast significant year-on-year change in the net profit of H1 2019, as well as explanation of
why:
□ Applicable √ Not applicable
V Securities Investments
□ Applicable √ Not applicable
No such cases in the Reporting Period.
VI Investments in Derivative Financial Instruments
√ Applicable □ Not applicable
Unit: RMB'0,000
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Lu Thai Textile Co., Ltd. First Quarter Report 2019 (Summary)
Proportion
Rela Rela
Endin of closing
tions ted- Impairm Actual
Purchased g investment
hip part Type of Initial Beginning Sold in the ent gain/loss
Operat Starting Ending in the invest amount in
with y derivativ investment investment Reporting provisio in the
or date date Reporting ment the
the trans e amount amount Period n (if Reportin
Period amoun Company’
Com actio any) g Period
t s ending
pany n
net assets
Forward
Comm Non- exchang
19 June 7 March
ercial relat No e 25,089.2 6,512.05 18,577.15 25,089.2 0 0.00% -196.97
2018 2019
bank ed settleme
nt
Comm Non- Foreign
23 March 28 March
ercial relat No exchang 3,922.86 1,909.89 2,012.97 3,922.86 0 0.00% -140.28
2018 2019
bank ed e option
Forward
Comm Non- exchang
8 March 30 April
ercial relat No e 2,637.88 1,610.11 1,027.77 2,028.78 609.1 0.08% 53.27
2018 2019
bank ed transacti
ons
Total 31,649.94 -- -- 10,032.05 21,617.89 31,040.84 609.1 0.08% -283.98
Capital source for derivative
The Company’s own money
investment
Lawsuit (if applicable) Naught
Disclosure date of board of
directors announcement on
27 April 2018
approval of derivative
investment (if any)
Disclosure date of general
meeting of shareholders
announcement on approval
of derivative investment (if
any)
Analysis on risks and The Company conducted derivatives products transaction in order for hedging. And the forward settlement
control measures of hedging was operated by installments, with the relevant amount not more than the planned derivatives
derivative products held in products transactions. And all derivatives products transaction was zero-deposit. Meanwhile, the Company
the Reporting Period had a complete risk control system for sufficient analysis and prevention of possible risks such as market
(including but not limited to risk, liquidity risk and credit risk, operation risk and risk of laws and regulation.
market risk, liquidity risk, 1. Market risk: when the international and domestic economic situations change, the corresponding changes
credit risk, operation risk, in exchange rates and interest rates may have an adverse impact on the financial derivatives transactions of
law risk, etc.) the Company. Precautionary measures to be taken include: the Company chooses risk-controlled financial
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Lu Thai Textile Co., Ltd. First Quarter Report 2019 (Summary)
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 derivatives 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, fixed
the operation procedures and approval procedures system to conduct derivative products transaction,
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 so as to ensure to
lower the operation risks to the maximum.
4. Risk of laws and regulation:
The Company conducted derivatives products transaction in strict accordance with relevant laws 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
and policies 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 conducted derivative transaction
business according to the relevant approval procedure, which was in line with relevant laws, regulations, the
Company’s Articles of Association, the Management Rules for Derivative Transaction of Lu Thai Textile
Co., Ltd. and the Proposal on the Plan of Lu Thai Textile Co., Ltd. for Derivative Transactions approved at
the 17th Meeting of the 8th Board of Directors on 25 April 2018, and performed relevant information
disclosure responsibilities.
Changes of market prices or 1. As of 31 March 2019, the Company held one undue financial derivatives contracts, totaling USD0.908
fair values in the Reporting million, which was the forward exchange transaction; The contract expires by April 2019 at the latest.
Period of the invested Financial derivatives accounted for 0.08% of net assets at the end of the period.
derivatives. And the analysis 2. In January - March 2019, the amount of maturing financial derivatives of the Company amounted to USD
on the fair value of the 46,462,800 which was executed as per the contract in full, which generated a loss of RMB2,839,800. The
derivatives should include amount of maturing settlements of exchange in the long term amounted to USD37.5 million which generated
the specific use methods and a loss of RMB1,969,700; the amount of maturing foreign exchange options was USD6 million which
the relevant assumptions generated a loss of RMB1,402,800. The amount of maturing exchange transaction amounted to
and parameters. USD2,962,800 which generated an income of RMB532,700.
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Lu Thai Textile Co., Ltd. First Quarter Report 2019 (Summary)
Whether significant changes
occurred to the Company’s
accounting policy and
specific accounting
No significant changes
principles of derivatives in
the Reporting Period
compared to the previous
Reporting Period
The Company’s independent directors Zhou Zhiji, Zhao Yao, Bi Xiuli, Pan Ailing and Wang Xinyu,
concerning conducting derivatives business, have issued the following professional advice: We are of the
Specific opinion from opinion that it will strengthen the Company’s competitiveness to use derivative transactions with focus on
independent directors on the forward settlement and purchase as an effective tool to avoid foreign exchange risks, to strengthen the
Company’s derivatives relevant internal control and to carry out the loss and risk prevention measures so as to improve the operation
investment and risk control and management. In 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.
VII Communications with the Investment Community such as Researches, Inquiries and
Interviews during the Reporting Period
√ Applicable □ Not applicable
Type of communication Index to main information
Date Way of communication
party communicated
29 March 2019 By phone Individual Basic information of the Company
VIII Irregularities in the Provision of Guarantees
□ Applicable √ Not applicable
No such cases in the Reporting Period.
IX Occupation of the Company’s Capital by the Controlling Shareholder or Its Related
Parties for Non-Operating Purposes
□ Applicable √ Not applicable
No such cases in the Reporting Period.
Signature of the Chairman of the Board: Liu Zibin
Lu Thai Textile Co., Ltd.
30 April 2019
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