Lu Thai Textile Co., Ltd. Interim Report 2020
LU THAI TEXTILE CO., LTD.
INTERIM REPORT 2020
August 2020
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Lu Thai Textile Co., Ltd. Interim Report 2020
Part I Important Notes, Table of Contents and Definitions
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.
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.
All the Company’s directors have attended the Board meeting for the review of this Report
and its summary.
The Company has described in detail in this Report the possible risks facing it. Please refer to
the section headed “Risks Facing the Company and Countermeasures” of “Part IV Operating
Performance Discussion and Analysis” of this Report.
The Company has no interim dividend plan, either in the form of cash or stock.
This Report and its summary have been prepared in both Chinese and English. Should there
be any discrepancies or misunderstandings between the two versions, the Chinese versions
shall prevail.
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Lu Thai Textile Co., Ltd. Interim Report 2020
Table of Contents
Interim Report 2020........................................................................................................................... 1
Part I Important Notes, Table of Contents and Definitions ........................................................... 2
Part II Corporate Information and Key Financial Information ................................................... 5
Part III Business Summary ............................................................................................................... 8
Part IV Operating Performance Discussion and Analysis ........................................................... 11
Part V Significant Events ................................................................................................................ 22
Part VI Share Changes and Shareholder Information ................................................................. 38
Part VII Preferred Shares ............................................................................................................... 43
Part VIII Convertible Corporate Bonds ........................................................................................ 44
Part IX Directors, Supervisors and Senior Management ............................................................. 47
Part X Corporate Bonds .................................................................................................................. 50
Part XI Financial Statements .......................................................................................................... 51
Part XII Documents Available for Reference .............................................................................. 167
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Lu Thai Textile Co., Ltd. Interim Report 2020
Definitions
Term Definition
Lu Thai Textile Co., Ltd. and its consolidated subsidiaries, except where the
The “Company”, “LTTC”, “Issuer” or “we”
context otherwise requires
The Board of Directors The Board of Directors of Lu Thai Textile Co., Ltd.
The Supervisory Committee The Supervisory Committee of Lu Thai Textile Co., Ltd.
CSRC The China Securities Regulatory Commission
Expressed in the Chinese currency of Renminbi, expressed in tens of thousands
RMB, RMB’0,000
of Renminbi
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 1 January 2020 to 30 June 2020
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Lu Thai Textile Co., Ltd. Interim Report 2020
Part II Corporate Information and Key Financial Information
I Corporate Information
Stock name LTTC, LTTC-B Stock code 000726, 200726
Changed stock name (if any) N/A
Stock exchange for stock
Shenzhen Stock Exchange
listing
Company name in Chinese 鲁泰纺织股份有限公司
Abbr. (if any) 鲁泰纺织
Company name in English (if
LU THAI TEXTILE CO.，LTD
any)
Abbr. (if any) LTTC
Legal representative Liu Zibin
II Contact Information
Board Secretary Securities Representative
Name Zhang Keming 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. 0533-5277008 0533-5285166
Fax 0533-5418805 0533-5418805
Email address zhangkeming@lttc.com.cn wyzheng@lttc.com.cn，likun@lttc.com.cn
III Other Information
1. Contact Information of the Company
Indicate by tick mark whether any change occurred to the registered address, office address and their zip codes, website address and
email address of the Company in the Reporting Period.
□ Applicable √ Not applicable
No change occurred to the said information in the Reporting Period, which can be found in the 2019 Annual Report.
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Lu Thai Textile Co., Ltd. Interim Report 2020
2. Media for Information Disclosure and Place where this Report is Lodged
Indicate by tick mark whether any change occurred to the information disclosure media and the place for lodging the Company’s
periodic reports in the Reporting Period.
□ Applicable √ Not applicable
The newspapers designated by the Company for information disclosure, the website designated by the CSRC for disclosing the
Company’s periodic reports and the place for lodging such reports did not change in the Reporting Period. The said information can
be found in the 2019 Annual Report.
IV Key Financial Information
Indicate by tick mark whether there is any retrospectively restated datum in the table below.
□ Yes √ No
H1 2020 H1 2019 Change (%)
Operating revenue (RMB) 2,286,744,080.79 3,185,448,344.01 -28.21%
Net profit attributable to the listed company’s shareholders
144,119,579.22 411,446,216.59 -64.97%
(RMB)
Net profit attributable to the listed company’s shareholders
108,105,593.17 376,816,535.93 -71.31%
before exceptional gains and losses (RMB)
Net cash generated from/used in operating activities (RMB) 209,392,265.69 119,717,062.57 74.91%
Basic earnings per share (RMB/share) 0.17 0.480 -64.58%
Diluted earnings per share (RMB/share) 0.16 0.480 -66.67%
Weighted average return on equity (%) 1.85% 5.70% -3.85%
30 June 2020 31 December 2019 Change (%)
Total assets (RMB) 12,863,406,129.65 11,885,431,553.08 8.23%
Equity attributable to the listed company’s shareholders
7,848,129,418.22 7,697,135,324.92 1.96%
(RMB)
V Accounting Data Differences under China’s Accounting Standards for Business Enterprises
(CAS) and International Financial Reporting Standards (IFRS) and Foreign Accounting
Standards
1. Net Profit and Equity under CAS and IFRS
□ Applicable √ Not applicable
No such differences for the Reporting Period.
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Lu Thai Textile Co., Ltd. Interim Report 2020
2. Net Profit and Equity Differences under CAS and Foreign Accounting Standards
□ Applicable √ Not applicable
No such differences for the Reporting Period.
XI Exceptional Gains and Losses
√ Applicable □ Not applicable
Unit: RMB
Item Amount Note
Gain or loss on disposal of non-current assets (inclusive of
-503,782.07
impairment allowance write-offs)
Government subsidies charged to current profit or loss (exclusive
of government subsidies given in the Company’s ordinary course
37,754,439.82
of business at fixed quotas or amounts as per the government’s
uniform standards)
Gain or loss on fair-value changes in trading and derivative
financial assets and liabilities & income from disposal of trading
and derivative financial assets and liabilities and investments in 9,613,583.08
other debt obligations (exclusive of the effective portion of
hedges that arise in the Company’s ordinary course of business)
Non-operating income and expense other than the above -108,188.60
Less: Income tax effects 7,325,580.81
Non-controlling interests effects (net of tax) 3,416,485.37
Total 36,013,986.05 --
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.
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Lu Thai Textile Co., Ltd. Interim Report 2020
Part III Business Summary
I Principal Activity of the Company in the Reporting Period
No changes occurred to the Company’s core businesses, primary products, business models and major growth drivers in the
Reporting Period.
Lu Thai has always adhered to its mission of “creating wealth, contributing to the society, clothing the world and weaving our way to
every corner of the globe”, as well as to its values 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 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 has become the world’s largest high-grade yarn dyed fabric producer and a world-class premium shirt provider. It had paved
its development pattern featured in going green, low-carbon growth, science and technology and humanism.
II Significant Changes in Major Assets
1. Significant Changes in Major Assets
Not applicable
2. Major Assets Overseas
√ Applicable □ Not applicable
As % of the Material
Control measures Return
Asset value Managem Company’s impairme
Asset Source Location to protect asset generated
(RMB) ent model net asset nt risk
safety (RMB)
value (yes/no)
Main
management
Lu Thai (Hong Kong) Incorp Hong Marketin
193,525,344.88 personnel sent by 5,031,239.90 2.29% No
Textile Co., Ltd. orated Kong g
the Company as
the parent
Main
Lu Thai (America) Textile Incorp Marketin
12,942,380.98 New York management 76,768.01 0.15% No
Co., Ltd. orated g
personnel sent by
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Lu Thai Textile Co., Ltd. Interim Report 2020
the Company as
the parent
Main
management
Lu Thai (Cambodia) Incorp Svay Manufact
194,741,122.06 personnel sent by 6,922,869.29 2.30% No
Textile Co., Ltd. orated Rieng uring
the Company as
the parent
Main
management
Lu Thai (Burma) Textile Incorp Manufact
91,676,813.06 Rangoon personnel sent by 4,129,974.69 1.08% No
Co., Ltd. orated uring
the Company as
the parent
Main
management
Lu Thai (Vietnam) Textile Incorp Manufact
2,669,422,156.25 Tay Ninh personnel sent by 3,137,289.96 31.58% No
Co., Ltd. orated uring
the Company as
the parent
Main
management
Incorp Anjiang, Manufact
Lu An Garments Co., Ltd. 189,250,696.08 personnel sent by 8,202,957.22 2.24% No
orated Vietnam uring
the Company as
the parent
III Core Competitiveness Analysis
1. The Company has a comprehensive vertical industrial chain and internationalized layout. As the Company possesses the whole
industrial chain integrating spinning, bleaching and dyeing, neatening, testing, and garment making, it has corresponding cost
advantage covering various links of the production of high-end yarn-dyed fabrics. In order to take full advantage of its international
resources, realize the internationalized industrial distribution and reinforce the leading international status in manufacturing the
yarn-dyed fabrics, the Company has built various production bases in Cambodia, Burma and Vietnam etc., and established the design
agency in Italy, and the market service offices in the U.S.A, Japan and India.
2. The Company has better integrated management capability and high-level management system architecture. Since 1995, the
Company has successively passed the certification of ISO9000 quality management system, ISO14000 environmental management
system, OHSAS18000 Occupation Health Safety Management System, SA8000 Social Responsibility Management System, The
Worldwide Responsible Apparel Production Standard (WRAP), Sustainable Textile Production (STeP), Global Organic Textile
Standard (GOTS), Global Recycle Standard (GRS) and China National Accreditation Service for Conformity Assessment (CNAS),
and realized the internationalization, standardization and normalization of the corporate management. In order to make outstanding
achievement in its operating management, better improve the Company’s business performance and capabilities, the Company has
introduced the GB/T19580 Criteria for Performance Excellence step by step, set up the “big quality” system, promoted the
management innovation and guaranteed the management quality.
3. The Company establishes its high-level technical cooperation platform by virtue of strong R&D capability. In fact, the Company
always insists on the independent innovation, enhances its technical cooperation with various research institutes, colleges and
universities, strategic clients and important suppliers by relying on various technical platforms including the national enterprise
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Lu Thai Textile Co., Ltd. Interim Report 2020
technical center, the national industrial design center, the national demonstration base for introducing talents, the national
post-doctoral scientific research station and Shandong Provincial Engineering Technology Research Center, dedicates itself to the
cutting-edge technical research, and gradually transforms from technology research to integrated product development. Besides, the
Company will also transform from the overcoming of key technical difficulties to the mastery of technical principles and the
formulation of industrial standards, and from the focus on technical innovation to the dynamic integration of new technique
exploration with model innovation, improve the low-carbon, green and sustainable development, enhance the impetus and vigor for
the enterprise development, promote the contribution of scientific and technological progress to the industrial development and
propel the industrial upgrading.
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Lu Thai Textile Co., Ltd. Interim Report 2020
Part IV Operating Performance Discussion and Analysis
I Overview
The COVID-19 pandemic had an enormous impact on China’s foreign trade sector in the first half of 2020. In face of a slowing
down macro-economy and declining demand both at home and abroad, the Company adhered to its own development
philosophy and the customer-oriented principle, overcame difficulties, resumed production and explored new products and
markets. However, the pandemic still adversely affected the Company’s production and operation to some degree. For the
Reporting Period, the Company recorded operating revenue of RMB2,287 million, an operating profit of RMB175 million, a net
profit attributable to the listed company’s shareholders of RMB144 million and a net profit attributable to the listed company’s
shareholders before exceptional gains and losses of RMB108 million, down 28.21%, 64.56%, 64.97% and 71.31% respectively
from the same period of last year.
During the Reporting Period, there was no change to the Company’s main businesses or major profit sources and components. As an
advantaged enterprise in the textile manufacturing industry, the Company was granted with the titles of “Top 100 Private Enterprises
with the Highest Brand Value of Shandong Province of 2020” by Shandong Council for Brand Development and “High-End Brand
Builders in the Manufacturing Sector of Shandong Province” by Shandong Administration for Market Regulation. During the
Reporting Period, the Company carried out a series of work in developing new products, expanding markets and improving staff
competencies.
1. Proactively developing new products, new markets and new channels
During the Reporting Period, the Company took measures to ensure normal businesses with traditional customers, strengthened the
development of products and customers, closely followed the actual demands of customers, and positively addressed the challenge of
business decline oriented by “new products and new markets”. Based on the epidemic development in the places where major foreign
customers are located, the Company developed and introduced protective products to overseas customers, particularly on Japan’s
market, satisfying their product demands for basic protection, environmental protection and reusability and gaining market
recognition. Subsequently, the Company will continue to provide related countries and markets with protective products that meet
their demands.
As the pandemic developed in foreign countries, the Company experienced increasing impact on its overseas business. By adjusting
the focus of its sale, the Company proactively developed potential domestic and foreign markets and customers and exhibited the
new products of its fabric exhibition hall via its official TikTok account. It launched its “NARCISU” shirt customization service on
“Biyao Mall”, with good effect achieved.
2. Continuing to strengthen product development and implementing measures to reduce costs and enhance efficiency
During the Reporting Period, the Company implemented 31 corporate-level product development projects and promoted process
upgrading, energy conservation and reduction of energy consumption. Meanwhile, it launched the customized development of fabrics
targeting strategic and key accounts. The Company focused its investment in the development of projects concerning ecological
non-iron fabrics, four-sided elastic fabrics, renewable and degradable fabrics, and anti-virus and protective fabrics and clothing, and
made smooth progress in the projects. During the Reporting Period, the Company was granted with 16 patents, with the “Textile
Fabric Color Digitization Key Technology and Industrialization” project winning the title of “Shandong Textile and Apparel
Industrial New Technology (Achievement)” by the Department of Industry and Information Technology of Shandong Province.
3. Enhancing the professional skills of staff as part of the effort to improve its internal competitiveness
During the Reporting Period, the Company organized all its employees to hold the “100-Day Competition” activity. By advancing the
activity in four stages, namely, mobilization, planning, implementation and appraisal, the Company aimed to improve the expertise
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Lu Thai Textile Co., Ltd. Interim Report 2020
and professional skills of all its employees in their respective areas, and successfully held the 30 th session of technology competition
activity on schedule. By carrying out the above various activities, the Company enabled its staff to maintain their enthusiasm for
continuously learning new skills, and competing with, catching up with, helping and outperforming others, laying a technological and
professional foundation for future business.
In the second half year of 2020, the Company will continue to implement the annual development plan, deepen its business reforms,
make effort in developing products, channels and markets, and cultivate new opportunities for its future development.
II Core Business Analysis
Overview:
For the Reporting Period, the Company recorded operating revenue of RMB2,287 million (a 28.21% year-on-year decrease); cost of
sales of RMB1,684 million (a 23.84% year-on-year decrease), including selling expense of RMB82 million (a 5.01% year-on-year
rise) and administrative expense of RMB178 million (a 6.96% year-on-year decrease); research and development expense of
RMB123 million (a 23.77% year-on-year drop); and net cash generated from operating activities of RMB209 million (a 74.91%
year-on-year increase).
Year-on-year changes in key financial data:
Unit: RMB
Change
H1 2020 H1 2019 Main reason for change
(%)
Operating revenue 2,286,744,080.79 3,185,448,344.01 -28.21%
Cost of sales 1,683,752,331.27 2,210,886,955.53 -23.84%
Selling expense 81,739,905.59 77,836,942.94 5.01%
Administrative expense 177,893,599.47 191,205,597.74 -6.96%
Increase in interest income and
Finance costs 25,207,309.68 52,554,570.05 -52.04%
decrease in exchange loss
Income tax expense 27,067,833.69 74,839,232.29 -63.83% Decrease in profit before tax
R&D investments 123,441,723.06 161,939,039.23 -23.77%
Net cash generated from/used in Decrease in taxes paid and payments
209,392,265.69 119,717,062.57 74.91%
operating activities to and for employees
Net cash generated from/used in Increase in income from disposal of
-129,138,967.68 -346,327,704.43 62.71%
investing activities held-for-trading financial assets
Increase in borrowings obtained as a
Net cash generated from/used in
1,059,376,072.72 315,262,989.36 236.03% result of the offering of convertible
financing activities
corporate bonds in the current period
Net increase in cash and cash 1,189.35 Offering of convertible corporate
1,140,089,624.57 88,423,644.38
equivalents % bonds in the current period
Significant changes to the profit structure or sources of the Company in the Reporting Period:
□ Applicable √ Not applicable
No such changes in the Reporting Period.
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Lu Thai Textile Co., Ltd. Interim Report 2020
Breakdown of operating revenue:
Unit: RMB
H1 2020 H1 2019
As % of total As % of total
Change (%)
Operating revenue operating revenue Operating revenue operating revenue
(%) (%)
Total 2,286,744,080.79 100% 3,185,448,344.01 100% -28.21%
By operating division
Textile and apparel 2,030,174,545.12 88.78% 2,934,448,827.78 92.12% -30.82%
Personal protective
75,350,026.50 3.30% 100.00%
equipment (PPE)
Cotton 1,943,648.71 0.08% 6,856,226.38 0.22% -71.65%
Electricity and steam 107,378,501.63 4.70% 99,820,071.53 3.13% 7.57%
Others 71,897,358.83 3.14% 144,323,218.32 4.53% -50.18%
By product category
Fabric products 1,612,566,391.94 70.52% 2,334,195,650.45 73.28% -30.92%
Shirts 417,608,153.18 18.26% 600,253,177.33 18.84% -30.43%
Personal protective
75,350,026.50 3.30% 100.00%
equipment (PPE)
Cotton 1,943,648.71 0.08% 6,856,226.38 0.22% -71.65%
Electricity and steam 107,378,501.63 4.70% 99,820,071.53 3.13% 7.57%
Others 71,897,358.83 3.14% 144,323,218.32 4.53% -50.18%
By operating segment
Hong Kong 116,864,760.52 5.11% 193,620,677.72 6.08% -39.64%
Japan And South
200,810,815.94 8.78% 227,171,179.04 7.13% -11.60%
Korea
Southeast Asia 598,894,637.52 26.19% 853,969,711.97 26.81% -29.87%
Europe and America 299,568,719.70 13.10% 579,841,115.57 18.20% -48.34%
Others 216,712,978.98 9.48% 267,533,852.91 8.40% -19.00%
Mainland China 853,892,168.13 37.34% 1,063,311,806.80 33.38% -19.70%
Operating division, product category or operating segment contributing over 10% of operating revenue or operating profit:
√ Applicable □ Not applicable
Unit: RMB
YoY change in YoY change in
Operating Gross profit YoY change in
Cost of sales operating revenue gross profit
revenue margin cost of sales (%)
(%) margin (%)
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Lu Thai Textile Co., Ltd. Interim Report 2020
By operating division
Textile and
2,030,174,545.12 1,478,461,157.09 27.18% -30.82% -26.37% -4.40%
apparel
Personal
protective 75,350,026.50 50,271,228.30 33.28% 100.00% 100.00% 33.28%
equipment (PPE)
By product category
Fabric products 1,612,566,391.94 1,174,569,458.23 27.16% -30.92% -25.97% -4.87%
Shirts 417,608,153.18 303,891,698.86 27.23% -30.43% -27.86% -2.59%
Personal
protective 75,350,026.50 50,271,228.30 33.28% 100.00% 100.00% 33.28%
equipment (PPE)
By operating segment
Southeast Asia 598,894,637.52 436,144,963.42 27.18% -29.87% -24.92% -4.80%
Europe and
299,568,719.70 216,150,609.49 27.85% -48.34% -45.98% -3.14%
America
Mainland China 853,892,168.13 644,110,531.75 24.57% -19.70% -15.02% -2.92%
Core business data of the prior year restated according to the changed statistical caliber for the Reporting Period:
□ Applicable √ Not applicable
Any over 30% YoY movements in the data above and why:
√ Applicable □ Not applicable
1. The changes in sales revenue from textile and apparel and from Europe and America were primarily attributed to decreased unit
sales due to the global pandemic of COVID-19.
2. The change in respect of sales revenue from PPE was primarily attributed to the new business of PPE production and marketing in
the current period.
III Analysis of Non-Core Businesses
√ Applicable □ Not applicable
Unit: RMB
As % of profit Exceptional or
Amount Source/Reason
before tax recurrent
Gains from disposal of held-for-trading financial
Investment income 150,730,013.89 86.11% No
assets
Gain/loss on
Gains on variation recognized of fair value reversed
changes in fair -144,695,954.16 -82.66% No
from disposal of held-for-trading financial assets
value
Asset impairments -24,613,079.38 -14.06% Withdrawal of inventory impairment provision No
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Lu Thai Textile Co., Ltd. Interim Report 2020
Non-operating
2,125,819.41 1.21% Income of non-operating compensation, etc No
income
Non-operating
2,383,926.90 1.36% Non-operating donations and compensation, etc. No
expense
IV Analysis of Assets and Liabilities
1. Material Changes in Asset Composition
Unit: RMB
30 June 2020 30 June 2019 Reason
Change in
for any
percentage
Amount As % of total assets Amount As % of total assets material
(%)
change
Monetary assets 2,028,297,550.15 15.77% 623,926,353.74 5.57% 10.20%
Accounts
390,917,955.82 3.04% 381,453,061.31 3.41% -0.37%
receivable
Inventories 2,595,135,869.67 20.17% 2,338,090,631.11 20.87% -0.70%
Investment
44,888,691.70 0.35% 38,718,468.86 0.35%
property
Long-term equity
149,646,776.65 1.16% 100,637,911.44 0.90% 0.26%
investments
Fixed assets 5,911,198,566.20 45.95% 5,729,951,131.93 51.15% -5.20%
Construction in
543,763,930.47 4.23% 460,389,887.15 4.11% 0.12%
progress
Short-term
1,881,237,261.83 14.62% 2,137,653,250.29 19.08% -4.46%
borrowings
Long-term
14,159,000.00 0.11% 0.11%
borrowings
2. Assets and Liabilities at Fair Value
√ Applicable □ Not applicable
Unit: RMB
Gain/loss on Impairm
Cumulative
fair-value ent
fair-value Purchased in Sold in the
Beginning changes in allowanc Ending
Item changes the Reporting Reporting Item
amount the e for the amount
charged to Period Period
Reporting Reportin
equity
Period g Period
15
Lu Thai Textile Co., Ltd. Interim Report 2020
Financial
assets
1.
Held-for-tradi
ng financial
assets
330,505,598.85 2,000,000.00 193,985,718.44 138,519,880.41
(exclusive of
derivative
financial
assets)
Subtotal of
financial 330,505,598.85 2,000,000.00 193,985,718.44 138,519,880.41
assets
Accounts
receivable 26,963,818.87 -12,156,275.76 14,807,543.11
financing
Total of the
357,469,417.72 2,000,000.00 193,985,718.44 -12,156,275.76 153,327,423.52
above
Financial
0.00 -841,402.78 841,402.78
liabilities
Content of other change
Caused by changes in amount of accounts receivable financing
Significant changes to the measurement attributes of the major assets in the Reporting Period:
□ Yes √ No
3. Restricted Asset Rights as at the Period-End
For details, see Part XI-VII. 61. Assets with restricted ownership and using right in this Report.
V Investments Made
1. Total Investments Made
□ Applicable √ Not applicable
2. Major Equity Investments Made in the Reporting Period
□ Applicable √ Not applicable
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Lu Thai Textile Co., Ltd. Interim Report 2020
3. Major Non-Equity Investments Ongoing in the Reporting Period
□ Applicable √ Not applicable
4. Financial Assets Measured by Fair Value
□ Applicable √ Not applicable
4. Financial Investments
(1) Securities Investments
□ Applicable √ Not applicable
No such cases in the Reporting Period.
(2) Investments in Derivative Financial Instruments
√ Applicable □ Not applicable
RMB’0,000
Be
Proporti
gi
on of
nn
ending
in
Relati Rela investme
g Impairm Actual
onship ted-p Purchased in nt
Initial in Sold in the ent Ending gain/loss
Operat with arty Type of Starting Ending the amount
investment ve Reporting provisio investment in the
or the trans derivative date date Reporting in the
amount st Period n (if amount Reportin
Comp actio Period Compan
me any) g Period
any n y’s
nt
ending
am
net
ou
assets
nt
Comm Forward 21 31
Non-re
ercial No exchange 39,398.69 January March 0 39,398.69 39,398.69 0 0 228.05
lated
bank settlement 2020 2020
Comm Foreign 19 25
Non-re
ercial No exchange 68,951.65 March Decemb 0 68,951.65 34,151.65 0 34,800 4.11% 598.57
lated
bank option 2020 er 2020
Forward 17
Comm
Non-re exchange 9 March Septem
ercial No 15,471.23 0 15,471.23 112.81 0 15,358.42 1.82% 2.8
lated transaction 2020 ber
bank
s 2020
Total 123,821.57 -- -- 0 123,821.57 73,663.15 0 50,158.42 5.93% 829.42
17
Lu Thai Textile Co., Ltd. Interim Report 2020
Capital source for derivative
The Company’s own money
investment
Lawsuit (if applicable) N/A
Disclosure date of board of
directors announcement on
30 April 2019
approval of derivative
investment (if any)
Disclosure date of general
meeting of shareholders
announcement on approval of
derivative investment (if any)
The Company conducted derivatives products transaction in order for hedging. And the forward
settlement hedging was operated by installments, with the relevant amount not more than the planned
derivatives products transactions. And all derivatives products transaction was zero-deposit.
Meanwhile, the Company had a complete risk control system for sufficient analysis and prevention of
possible risks such as market risk, liquidity risk and credit risk, operation risk and risk of laws and
regulation.
1. 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.
Analysis on risks and control 2. Liquidity risk and credit risk: a credit risk arising from failure of the contractually due Company or
measures of derivative products counterparty in performing the contract due to liquidity or factors other than liquidity. Precautionary
held in the Reporting Period measures to be taken include: the Company determines the upper limit of derivatives transaction
(including but not limited to amounts according to production and operation scale as well as foreign exchange income, and conducts
market risk, liquidity risk, credit operations by stage according to the budget of future collections and disbursement. The derivative
risk, operation risk, law risk, trades are free of guarantee deposit and can still be guaranteed in performance after the contract expires
etc.) 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.
18
Lu Thai Textile Co., Ltd. Interim Report 2020
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 26th Meeting of the 8th Board of Directors on 29
April 2019, and performed relevant information disclosure responsibilities.
1. As of 30 June 2020, the Company held 13 undue financial derivatives contracts, totaling USD80
million, among which 8 contracts were the forward exchange option portfolio, totaling USD58
million, and 5 contracts were forward exchange transactions, totaling USD22 million.
Changes of market prices or fair 2. In January - June 2020, the amount of maturing financial derivatives of the Company amounted
values in the Reporting Period
to USD104.6616 million which was executed as per the contract in full, which generated gains of
of the invested derivatives. And
RMB8.2942 million. The amount of delivered settlements of forward exchange was USD56.5
the analysis on the fair value of
million,
the derivatives should include
which generated the gain of RMB2.2805 million. The amount of delivered foreign exchange
the specific use methods and the
options
relevant assumptions and
parameters. was USD48 million, which generated the gain of RMB5.9857 million. The amount of delivered
foreign
exchange transactions was USD161,600, which generated the gain of RMB28, 000.
Whether significant changes
occurred to the Company’s
accounting policy and specific
accounting principles of No significant changes
derivatives in the Reporting
Period compared to the previous
Reporting Period
The Company’s independent directors Zhou Zhiji, Bi Xiuli, Pan Ailing, Wang Xinyu and Qu Dongmei
expressed the following professional opinions on the Company’s engagement in the transaction of
derivatives: In our opinions, the Company engaged in the transaction of derivatives strictly in
Specific opinion from
accordance with related laws and regulations, the Articles of Incorporation and the Management Policy
independent directors on the
of Lu Thai for the Transaction of Derivatives during the Reporting Period, which complied with the
Company’s derivatives
derivative transaction plan considered and approved by the Board of Directors, with the operation
investment and risk control
process complying with laws and regulations. While ensuring its normal production and operations, the
Company may use the transaction of derivatives dominated by forward settlement and sale of foreign
exchange as an effective instrument to avert exchange rate risks. By strengthening internal control and
19
Lu Thai Textile Co., Ltd. Interim Report 2020
implementing measures to prevent losses and risks, the risks of derivative transactions are relatively
controllable and thus, such transactions will help to improve the Company’s ability to defense against
exchange rate fluctuations, and will not harm the rights and interests of the Company and its
shareholders.
VI Sale of Major Assets and Equity Interests
1. Sale of Major Assets
□ Applicable √ Not applicable
No such cases in the Reporting Period.
2. Sale of Major Equity Interests
□ Applicable √ Not applicable
VII Major Subsidiaries
√ Applicable □ Not applicable
Major fully/majority-owned subsidiaries and those minority-owned subsidiaries with an over 10% effect on the Company’s net profit:
Unit: RMB
Relatio
nship Principal
Registered Operating Operating
Name with the activity Total assets Net assets Net profit
capital revenue profit
Compa
ny
Lufeng Weaving & Subsidi
Fabric 706,160,000 1,624,995,663.61 1,265,703,463.70 606,784,342.44 37,575,760.82 30,732,000.50
Dyeing Co., Ltd. ary
Subsidiaries obtained or disposed in the Reporting Period:
□ Applicable √ Not applicable
Information about major majority- and minority-owned subsidiaries:
Lufeng Weaving & Dyeing Co., Ltd. (hereinafter called “Lufeng Weaving & Dyeing”) is the holding subsidiary corporation of the
Company. Registration place: Zibo, Shandong; registered capital: RMB706.160 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. During the Reporting Period, Lufeng Weaving
& Dyeing actively made adjustment to address the changes in market demands under the impact of COVID-19. By upholding the
business concept of standard operations, environmental protection and sustainable development, it continued to increase R&D and
innovation spending, further enhanced the added value of products, and achieved operating revenue of RMB 607 million, down
24.68% year on-year and net profit of RMB30.73 million, down 41.88% year-on-year.
VIII Structured Bodies Controlled by the Company
□ Applicable √ Not applicable
20
Lu Thai Textile Co., Ltd. Interim Report 2020
IX Performance Forecast for January-September 2020
Warning of possible loss or considerable YoY change in the accumulative net profit made during the period-beginning to the end of
the next reporting period, as well as the reasons:
□ Applicable √ Not applicable
X Risks Facing the Company and Countermeasures
(1) Impacts generated by the economic environment: Currently there is an increasing risk in the uncertainties brought by the
economic policies, in particular the trade policies of global major economies. In the coming period of the year, coupled with the
impact of the global pandemic, the Company will be subject togreat uncertainties. At the same time, as China’s economy is facing the
downward pressure in the period recovery from the epidemic, the Company will continue to strictly implement the anti-epidemic
measures, ensure the resumption of work and production, strive to coordinate various resources, and make use of the crisis to
improve its capabilities. It will be geared to greater post-epidemic development opportunities on the basis of stabilizing production
and operations.
(2) Fluctuations in raw material prices: the raw cotton used by the Company is long-staple cotton, whose price is affected by many
factors such as market supply and demand, climate, policies, exchange rates and quotas. Therefore, the Company must study the
market dynamics to reduce the cost fluctuations due to changes in raw cotton price.
(3) Exchange rate changes: With the operations of its overseas production bases, the Company will continue to have a big proportion
of sales from international markets for long time in the future, with US dollars accounting for a great proportion of the export
revenue. In addition, major machinery and equipment and some raw materials used by the Company are imported and paid in US
dollars and other currencies. Therefore, the Company will remain sensitive to changes in the US exchange rates.
In order to reduce adverse influence of exchange rate fluctuation, the Company adopted the following measures: firstly, the Company
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.
21
Lu Thai Textile Co., Ltd. Interim Report 2020
Part V Significant Events
I Annual and Extraordinary General Meeting Convened during the Reporting Period
1. General Meeting Convened during the Reporting Period
Investor
Meeting Type Convened date Disclosure date Index to disclosed information
participation ratio
Announcement of Resolution (No.
The 1st
2020-042) published on Securities Times,
Extraordinary
Extraordinary China Securities Journal, Shanghai
General 40.82% 8 May 2020 9 May 2020
General Meeting Securities News, and Hong Kong Ta Kung
Meeting of
Pao and http://www.cninfo.co on 9 May
2020
2020
Announcement of Resolution (No.
The 2019 2020-047) published on Securities Times,
Annual Annual General China Securities Journal, Shanghai
42.79% 21 May 2020 22 May 2020
General Meeting Securities News, and Hong Kong Ta Kung
Meeting Pao and http://www.cninfo.co on 22 May
2020
2. Extraordinary General Meeting Convened at Request of Preference Shareholders with Resumed Voting
Rights
□ Applicable √ Not applicable
II Interim Dividend Plan for the Reporting Period
□ Applicable √ Not applicable
The Company has no interim dividend plan.
III Commitments of the Company’s Actual Controller, Shareholders, Connected Parties and
Acquirer, as well as the Company and Other Commitment Makers, Fulfilled in the Reporting
Period or still Ongoing at Period-End
√ Applicable □ Not applicable
Date of
Type of commit Term of Fulfill
Commitment Promisor Details of commitment
commitment ment commitment ment
making
22
Lu Thai Textile Co., Ltd. Interim Report 2020
Commitments made in share reform
Commitments made in acquisition
documents or shareholding alteration
documents
Commitments made in time of asset
restructuring
1. Not intervene the
Company’s operation and
management beyond the
authority and not occupy
the Company’s interests.
2. From the issuance
date of this commitment to
the completion of the
implementation of the
Company's public offering
of A-share convertible
corporate bonds, if the
CSRC makes other new
regulatory provisions on
remedial measures for
Dilution of at
returns and the
sight returns
commitment, and the
Controlling on public
above commitment fails to From 23 May
Commitments made in time of IPO or shareholder, offering 23 May On-goi
meet the requirements of 2019 to 8
refinancing actual A-share 2019 ng
the CSRC, the company / I April 2026
controller convertible
promise to issue
corporate
supplementary
bonds
commitment then in
accordance with the latest
regulations of CSRC. 3.
Commitment is made to
fulfill the Company's
relevant remedial
measures for returns and
any commitment made
herein by the company /
me. If the company / I
violate(s) such
commitment and cause(s)
losses to the Company or
investors, the company / I
will bear the compensation
23
Lu Thai Textile Co., Ltd. Interim Report 2020
responsibility to the
Company or investors in
accordance with the law.
1. Commitment is
made not to transfer
benefits to other units or
individuals free of charge
or under unfair conditions,
and no other ways
damaging the interests of
the Company will be
taken. 2. I will strictly
abide by the budget
management of the
Company, and accept the
strict supervision and
management of the
Company to avoid waste
or excessive consumption.
Any position-related
Dilution of at
consumption behaviors of
sight returns
Directors and myself will occur within
on public
senior the scope necessary for the From 23 May
offering 23 May On-goi
management performance of my duties. 2019 to 8
A-share 2019 ng
of the 3. Commitment is made April 2026
convertible
Company not to use the Company's
corporate
assets to engage in
bonds
investment and
consumption activities
unrelated to the
performance of duties. 4.
Commitment is made that
the remuneration system
developed by the Board of
Directors or the
Remuneration Committee
is linked to the
implementation of the
Company's remedial
measures for returns. 5.
Commitment is made that
the conditions for
exercising the Equity
Incentive Plan to be issued
24
Lu Thai Textile Co., Ltd. Interim Report 2020
in the future will be linked
to the implementation of
the Company's remedial
measures for returns. 6.
From the issuance date of
this commitment to the
completion of the
implementation of the
Company's public offering
of A-share convertible
corporate bonds, if the
CSRC makes other new
regulatory provisions on
remedial measures for
returns and the
commitment, and the
above commitment fails to
meet the requirements of
the CSRC, I promise to
issue supplementary
commitment then in
accordance with the latest
regulations of CSRC. 7.
Commitment is made to
fulfill the Company's
relevant remedial
measures for returns and
any commitment made
herein by me. If I violate
such commitment and
causes losses to the
Company or investors, I
will bear the compensation
responsibility to the
Company or investors in
accordance with the law.
Equity incentive commitments
Other commitments made to minority
interests
Executed on time or not Yes
25
Lu Thai Textile Co., Ltd. Interim Report 2020
IV Engagement and Disengagement of CPAs Firm
Has the Interim financial report been audited?
□Yes √ No
This Interim Report is unaudited.
V Explanations Given by Board of Directors and Supervisory Committee Regarding
“Modified Auditor’s Report” Issued by CPAs Firm for the Reporting Period
□ Applicable √ Not applicable
VI Explanations Given by Board of Directors Regarding “Modified Auditor’s Report” Issued
for Last Year
□ Applicable √ Not applicable
VII Bankruptcy and Restructuring
□ Applicable √ Not applicable
No such cases in the Reporting Period.
VIII Legal Matters
Significant lawsuits or arbitrations:
□ Applicable √ Not applicable
No such cases in the Reporting Period.
Other legal matters:
□ Applicable √ Not applicable
IX Media Query
□ Applicable √ Not applicable
No such cases in the Reporting Period.
X Punishments and Rectifications
□ Applicable √ Not applicable
No such cases in the Reporting Period.
XI Credit Conditions of the Company as well as its Controlling Shareholder and Actual
Controller
□ Applicable √ Not applicable
26
Lu Thai Textile Co., Ltd. Interim Report 2020
XII Equity Incentive Plans, Employee Stock Ownership Plans or Other Incentive Measures
for Employees
□ Applicable √ Not applicable
No such cases in the Reporting Period.
XIII Significant Related-party Transactions
1. Continuing Related-Party Transactions
□ Applicable √ Not applicable
No such cases in the Reporting Period.
2. Related-Party Transactions Regarding Purchase or Sales of Assets or Equity Interests
□ Applicable √ Not applicable
No such cases in the Reporting Period.
3. Related Transactions Regarding Joint Investments in Third Parties
□ Applicable √ Not applicable
No such cases in the Reporting Period.
4. Credits and Liabilities with Related Parties
√Applicable □ Not applicable
Indicate by tick mark whether there were any credits and liabilities with related parties for non-operating purposes.
√ Yes □ No
Liabilities of related parties to account payable:
Amount
Relation Amount
Beginning newly added Current Ending
with the Formation returned in
Related party balance in current Interest rate interest balance
Compan reason current period
(RMB’0,000) period (RMB’0,000) (RMB’0,000)
y (RMB’0,000)
(RMB’0,000)
The
Zibo Lucheng
Compan Currencies
Textile Investment 0 16,000 16,000 4.35% 131.23 0
y as the deposit
Co., Ltd
parent
Influences from liabilities of
parties related on operating
No
results and financial
situations of the Company
27
Lu Thai Textile Co., Ltd. Interim Report 2020
5. Other Major Related-Party Transactions
□ Applicable √ Not applicable
No such cases in the Reporting Period.
XIV Particulars about the Non-operating Occupation of Funds by the Controlling
Shareholder and Other Related Parties of the Company
□ Applicable √ Not applicable
No such cases in the Reporting Period.
XV Major Contracts and Execution thereof
1. Entrustment, Contracting and Leases
(1) Entrustment
□ Applicable √ Not applicable
No such cases in the Reporting Period.
(2) Contracting
□ Applicable √ Not applicable
No such cases in the Reporting Period.
(3) Leases
□ Applicable √ Not applicable
No such cases in the Reporting Period.
2. Major guarantees
√ Applicable □ Not applicable
(1) Guarantees
Unit: RMB'0,000
Guarantees provided by the Company as the parent for its subsidiaries
Havin Guarant
Disclosure date of Actual occurrence Actual g ee for a
Line of Type of
Obligor the guarantee line date (date of guarantee Term of guarantee expire related
guarantee guarantee
announcement agreement signing) amount d or party or
not not
28
Lu Thai Textile Co., Ltd. Interim Report 2020
Lu Thai Five years since
(Vietnam) the approval of the
25 January 2017 11,327.2 20 January 2017 0 Joint-liability No Yes
Textile Co., board of the
Ltd. Company
Lu Thai Five years since
(Vietnam) the approval of the
25 January 2017 19,468.63 20 January 2017 8,506.93 Joint-liability No Yes
Textile Co., board of the
Ltd. Company
Lu Thai Five years since
(Vietnam) the approval of the
27 October 2017 29,733.9 25 October 2017 7,186.78 Joint-liability No Yes
Textile Co., board of the
Ltd. Company
Lu Thai Three years since
(Vietnam) the approval of the
22 August 2018 7,787.45 20 August 2018 4,492.83 Joint-liability No Yes
Textile Co., board of the
Ltd. Company
Lu Thai Three years since
(Vietnam) the approval of the
29 March 2019 4,247.7 27 March 2019 0 Joint-liability No Yes
Textile Co., board of the
Ltd. Company
Lu Thai Two years since
(Vietnam) the approval of the
22 August 2018 2,831.8 20 August 2018 0 Joint-liability No Yes
Textile Co., board of the
Ltd. Company
Lu Thai Two years since
(Vietnam) the approval of the
29 March 2019 10,619.25 27 March 2019 0 Joint-liability No Yes
Textile Co., board of the
Ltd. Company
Lu Thai Two years since
(Vietnam) the approval of the
29 March 2019 31,857.75 27 March 2019 25,840.18 Joint-liability No Yes
Textile Co., board of the
Ltd. Company
Lu Thai Two years since
(Vietnam) the approval of the
29 March 2019 5,592.81 27 March 2019 0 Joint-liability No Yes
Textile Co., board of the
Ltd. Company
Lu Thai
Three years since
(Vietnam)
the approval of the
Textile Co., 28 September 2019 8,141.43 27 September 2019 5,578.52 No Yes
board of the
Ltd./ Lu
Company
Thai (Tan
29
Lu Thai Textile Co., Ltd. Interim Report 2020
Chau)
Textile Co.,
Ltd.
Lu Thai Three years since
(Tan Chau) the approval of the
28 September 2019 7,079.5 27 September 2019 7,079.5 No Yes
Textile Co., board of the
Ltd. Company
Lu Thai Three years since
(Vietnam) the approval of the
28 September 2019 12,035.15 27 September 2019 9,911.3 No Yes
Textile Co., board of the
Ltd. Company
Lu Thai Three years since
(Vietnam) the approval of the
28 September 2019 3,185.78 27 September 2019 0 No Yes
Textile Co., board of the
Ltd. Company
Total approved line for such Total actual amount of such
guarantees in the Reporting 0 guarantees in the Reporting 53,138.51
Period (B1) Period (B2)
Total approved line for such Total actual balance of such
guarantees at the end of the 153,908.35 guarantees at the end of the 68,596.04
Reporting Period (B3) Reporting Period (B4)
Guarantees provided between subsidiaries
Disclosure
Actual Guarante
date of the
occurrence date Actual Having e for a
guarantee Line of Type of Term of
Obligor (date of guarantee expired or related
line guarantee guarantee guarantee
agreement amount not party or
announcem
signing) not
ent
Total guarantee amount (total of the three kinds of guarantees above)
Total guarantee line approved in Total actual guarantee amount
the Reporting Period 0 in the Reporting Period 53,138.51
(A1+B1+C1) (A2+B2+C2)
Total approved guarantee line at Total actual guarantee balance
the end of the Reporting Period 153,908.35 at the end of the Reporting 68,596.04
(A3+B3+C3) Period (A4+B4+C4)
Total actual guarantee amount (A4+B4+C4) as % of the
8.74%
Company’s net assets
Of which:
Balance of guarantees provided for shareholders, actual
0
controller and their related parties (D)
30
Lu Thai Textile Co., Ltd. Interim Report 2020
Balance of debt guarantees provided directly or indirectly for
0
obligors with an over 70% debt/asset ratio (E)
Amount by which the total guarantee amount exceeds 50% of
0
the Company’s net assets (F)
Total of the three amounts above (D+E+F) 0
Explanations about joint and several liability for repayment in
Naught
respect of undue guarantee (if any)
Explanation about external guarantee violating established The Company never provided guarantees for companies except
procedure (if any) controlling subsidiaries.
Compound guarantees:
(2) Irregularities in Provision of Guarantees
□ Applicable √ Not applicable
No such cases in the Reporting Period.
3. Cash Entrusted for Wealth Management
√ Applicable □ Not applicable
RMB’0,000
Specific type Capital resources Amount incurred Undue Balance Overdue amount
Trusted financial
Self-owned funds 5,000 0 0
products
Total 5,000 0 0
Particulars of entrusted cash management with single significant amount or low security, bad liquidity, and no capital preservation
√ Applicable □ Not applicable
RMB’0,000
Amou Actual Overvie
Amou Whether
nt of recove w of the
nt Wheth there is
Metho actual ry of item and
Annua Estima withdr er go wealth
d of profits profits the
Name Type Type Resou l yield te awn throug manage
Amou Initial Ended Use of payme or or related
of the of the of the rce of for profit impair h ment
nt date Date fund nt losses losses index
trustee trustee product funds refere (if ment stator entrustm
determ in in for
nce any) provis proced ent plan
ination Report Report inquirin
ion (if ures in future
ing ing g (if
any) or not
Period Period any)
AVIC Trust Consta Self-o Self-o 7 9 No Timel
Trust compa nt 5,000 wned wned March March fixed 8.00% 400 402.19 y 0 Yes Not yet
Co., ny return funds funds 2019 2020 directi recove
31
Lu Thai Textile Co., Ltd. Interim Report 2020
Ltd on ry
Total 5,000 -- -- -- -- -- -- 400 402.19 -- 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
4. Other Significant Contracts
□ Applicable √ Not applicable
No such cases in the Reporting Period.
XVI Social Responsibilities
1. Significant Environment Protection
Indicate by tick mark whether the Company or any of its subsidiaries is identified as a major polluter by the environmental protection
authorities.
Yes
Numb
er of Excessi
Name of Distribution Discharge Approved
Name of Way of discha Discharge Total ve
major of discharge standards total
polluter discharge rge concentration discharge dischar
pollutants outlets implemented discharge
outlet ge
s
Emission
standard of
water
pollutants in
Huangjiapu COD
textile dyeing COD
Industrial is198.717t
Lu Thai COD and COD≤140mg/L; and finishing is1495.08t;
Continuous Park; East and
Textile Co., ammonia 2 ammonia industry GB ammonia No
discharge Zone ammonia
Ltd nitrogen nitrogen≤5mg/L 4287-2012 nitrogen is
Industrial nitrogen is
COD: 149.51t
Park 4.045t.
200mg/L,
ammonia
nitrogen:
20mg/L
Emission
COD is COD is
standard of
Lu Thai COD and Lufeng chief COD≤140mg/L; 140.358t; 575.985t;
Continuous water
Textile Co., ammonia 1 discharge ammonia ammonia ammonia No
discharge pollutants in
Ltd nitrogen outlet nitrogen≤6mg/L nitrogen is nitrogen is
textile dyeing
4.504t 57.6t
and finishing
32
Lu Thai Textile Co., Ltd. Interim Report 2020
industry GB
4287-2012
COD:
200mg/L,
ammonia
nitrogen:
20mg/L
Emission
standard of
SO2 is
Zibo Production air pollutants of SO2 is
SO2：≤35mg/m3, 259.09t,
Xinsheng plant of Thermal Power 24.14t, NQx
SO2, NQx, Continuous NQx:≤ 50 NQx is
Thermal 4 Xinsheng Plant in is 67.55t, No
and smoke discharge mg/m3, 740.25t, and
Power Co., Thermal Shandong and smoke
smoke:≤5mg/m3 smoke is
Ltd. Power Province is 2.424t.
74.03t.
DB37/664-201
9
Discharge
into the
Lu Thai COD≤52mg/L;
ecological Sewage
(Vietnam) Beside ammonia QCVN40:
Sewage pond in the 1 discharge is / No
Textile Co., sewage plant nitrogen≤1.5mg/ 2011/BTNMT
park district 517,000 t.
Ltd. L
after
treatment
Lu Thai Direct Gas
(Vietnam) discharge Beside QCVN19: emission is
Exhaust gas 4 / / No
Textile Co., after boiler room 2009/BTNMT 105 million
Ltd. treatment m3.
Construction of pollution prevention equipment and operation condition
Lu Thai Textile Co., Ltd. and its majority-owned 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. Lu Thai Textile Co., Ltd. and its majority-owned subsidiary Lufeng
Weaving & Dyeing Co., Ltd. carried out the waste water treatment system transformation project to improve the treated water quality
by systematic and comprehensive reform, further improving the river water quality and local ecological environment. In May 2020,
Lu Thai Textile Co., Ltd. and its majority-owned subsidiary Lufeng Weaving & Dyeing Co., Ltd. uploaded the emission data of
VOCs to the government environmental monitoring system so as to monitor the emission data of VOCs comprehensively. 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 “Low-nitrogen combustion + SNCR” and
“SNCR+SCR method” to reduce emission concentration of nitrogen oxides, and the “electric-bag 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 6,500 tons
33
Lu Thai Textile Co., Ltd. Interim Report 2020
of sewage water daily, among which, sewage plan I is designed to treat 3,000 tons of sewage water daily, and the sewage plant II is
designed to treat 3,500 tons of sewage water daily. The Company adopts a comprehensive treatment process of “pre-materialization +
A2O biochemistry + post-materialization + ozone oxidation+ active sand filtration” for waste water treatment, and the treated 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 ecological pond in the park. Treated water quality analysis for the first half year of 2020: The
COD (mean value) was 50.7 mg/L, the chrominance (mean value) was 27, the ammonia nitrogen (mean value) was 0.65 mg/L, and
the total phosphorus (mean value) was 0.35 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 first half year of 2020 was 517,000 tons, among which, the
chemical oxygen demand (COD) was 26.96 tons, ammonia nitrogen (NH3-N) was 0.28 tons and total phosphorus (TP) was 0.17 ton.
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 the first half year of 2020, 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. In the first half year of 2020, the total
amount of sulfur dioxide emissions was 21.6 tons, and the total amount of nitrogen oxides emissions was 17.7 tons.
Project Environmental Impact Assessment and Other Administrative Permission for Environmental Protection
In 2020, the main part of “Lu Thai Textile Co., Ltd. High-Concentration PVA Wastewater Treatment and Sewage Comprehensive
Upgrading Project (1)” has been completed and entered the commissioning stage; the “Lu Thai Textile Co., Ltd. Intelligent
Technology Upgrading Project of 25 million-meter High-grade Fabric Production Line” has been approved and is under construction;
the “Engineering Technology Research Institute Project” has been established and entered the stage of preparing the environmental
assessment report; the “Technology Upgrading Project of Regenerated Fibre Production Line and Colored Spun Yarn” has been
established and entered the stage of preparing the environmental assessment report; the “Lufeng Weaving and Dyeing Co., Ltd.
High-end Printing and Dyeing Fabric Production Line Project” of the holding subsidiary Lufeng Weaving and Dyeing Co., Ltd. has
been approved and is under construction.The wholly-owned subsidiary Zibo Xinsheng Thermal Power Co., Ltd. obtained the
“Response of the Environmental Impact Report of the Shandong Provincial Department of Environmental Protection on the
Extension Project of Zibo Xinsheng Thermal Power Co., Ltd.” (Luhuanjian [2015] No. 241), expansion project II The period is under
construction. The wholly-owned subsidiary Lu Thai (Vietnam) Co., Ltd. Spinning Phase I and Dyeing Park Phase I environmental
protection projects have been completed and accepted for confirmation. The spinning phase II and yarn dyeing park Phase II
environmental assessment reports have been approved.
Emergency plan for environmental incidents
Lu Thai Textile Co., Ltd. and its majority-owned subsidiary Lufeng Weaving & Dyeing Co., Ltd. prepared the Emergency Plan for
Environmental Incidents, which was filed with Zibo Environmental 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 program
Lu Thai Textile Co., Ltd. and its majority-owned subsidiary Lufeng Weaving & Dyeing Co., Ltd. observed the requirements of the
competent environment authorities to install online monitoring devices to monitor sewage and waste gas. They established
environmental self-test plans strictly in accordance with the “Guidance for Pollutant Discharge Units on Self-monitoring Technology
- Textile and Dyeing Industry”. In addition, they invited a qualified testing institution to conduct tests on sewage and waste gas
according to the frequency requirement in the self-monitoring plan, duly disclosed the monitoring data to the Shandong Pollution
Source Self-monitoring Sharing System, and submitted the test reports to the competent environment authorities. The wholly-owned
subsidiary Zibo Xinsheng Thermal Power Co., Ltd. has implemented online real-time monitoring of environmental data in
34
Lu Thai Textile Co., Ltd. Interim Report 2020
accordance with the requirements of the superior environmental protection department, and has achieved emission standards. The
wholly-owned subsidiary Lu Thai (Vietnam) Co., Ltd. installs automatic sewage sampling and water quality automatic online
monitoring devices, real-time automatic sampling and online monitoring of sewage effluent water quality; the company invites
external qualified testing institutions to conduct sewage, sludge and exhaust gas quarterly Test and submit the test report to the
environmental supervision department.
Other environment information that should be disclosed
No
Other related environment protection information
No
2. Measures Taken for Targeted Poverty Alleviation
(1) Plans
The Company assumes social responsibilities by carrying out poverty alleviation. The Company helps poor people to find jobs and
peasants financially in the areas where majority-owned subsidiaries locate to maintain their basic livelihood.
(2) Summary of the Related Work Done in the Reporting Period
The Company assumes social responsibilities by carrying out poverty alleviation. The Company helps poor people to find jobs and
peasants financially in the areas where majority-owned subsidiaries locate to maintain their basic livelihood.
(3) Results
Measurement
Indicator Quantity/Progress
unit
I. General results —— ——
Of which: 1.1 Funds Ten thousand 20.58
1.3. Number of people out of poverty being helped to
Person 31
establish archival cards
II. Itemized results —— ——
1. Out of poverty by industrial development —— ——
2. Out of poverty by transferring employment —— ——
2.3 Number of poverty-stricken family in employment being
Person 31
helped to establish archival cards
3. Out of poverty by relocation —— ——
4. Out of poverty by education —— ——
5. Out of poverty by improving health —— ——
6. Out of poverty by protecting ecological environment —— ——
7. Subsidy for the poorest —— ——
35
Lu Thai Textile Co., Ltd. Interim Report 2020
8. Social poverty alleviation —— ——
9. Other items —— ——
9.2 Amount of input Ten thousand 20.58
III. Accolades received (for what and at what level) —— ——
(4) Subsequent Plans
None
XVII Other Significant Events
√ Applicable □ Not applicable
The Company reviewed and approved various proposals including the Proposal of the Company’s Plan for the Public Issue of A
Share Convertible Bonds during the 28th Meeting of the 8th Board of Directors and the 3rd Extraordinary Shareholders Meeting in
2019. Please refer to relevant announcements (No.: 2019-039, 2019-041, 2019-042, 2019-043, 2019-044, 2019-045 and 2019-059)
respectively issued on 24 May 2019 and 17 September 2019 via www.cninfo.com.cn for details.
The Company received the CSRC Administrative License Application Acceptance Notice on 15 October 2019 and the Notice on First
Feedback of CSRC Administrative License Project Review on 19 November 2019. Please refer to relevant announcements (No.:
2019-064 and 2019-068) respectively issued on 16 October 2019 and 20 November 2019 via www.cninfo.com.cn for details.
On 27 November 2019, the Company held the 7th Meeting of the 9th Board of Directors, and reviewed and approved five proposals
including the Proposal of Adjusting the Fund-raising Scale of A Share Convertible Bonds to Be Publicly Issued by the Company.
Please refer to relevant announcements (No.: 2019-074, 2019-075, 2019-076, 2019-077 and 2019-078) issued on 28 November 2019
via www.cninfo.com.cn for details.
On 29 November 2019, the Company disclosed the Reply on the First Feedback of A Share Convertible Bonds Public Issue
Application Documents of Lu Thai Textile (Announcement No.: 2019-079); on 2 January 2020, the Company received the Notice on
Making Preparations for the Lu Thai Textiles’ Convertible Bonds Public Issue IEC Meeting and replied. Please refer to relevant
announcement (No.: 2020-001) and the Reply on the Notice on Making Preparations for the Lu Thai Textiles’ Convertible Bonds
Public Issue IEC Meeting issued on 3 January 2020 via www.cninfo.com.cn for details.
On 9 January 2020, the Company’s application for the public issue of A Share convertible bonds was approved by the Issuance
Examination Committee (IEC) of CSRC. On 6 March 2020, the Company received the Reply on Approving the Public Issue of
Convertible Bonds by Lu Thai Textile Co., Ltd. (ZJXK [2020] No. 299) issued by CSRC. Please refer to relevant announcements
(No.: 2020-002 and 2020-010) respectively issued on 10 January 2020 and 7 March 2020 via www.cninfo.com.cn for details.
On 3 April 2020, the Company held the 10th Meeting of the 9th Board of Directors. In the meeting, the Company reviewed and
approved the Proposal of Further Establishing the Concrete Scheme for the Company’s Public Issue of A Share Convertible Bonds,
the Proposal of the Listing of the Company’s Public Issue of A Share Convertible Bonds and the Proposal of Opening A Special
Account for the Funds Raised for the Company’s Public Issue of A Share Convertible Bonds and Signing the Raised Fund
Supervision Agreement, and disclosed the Prospectus and Summary for the Public Issue of A Share Convertible Bonds via
www.cninfo.com.cn. Please refer to relevant announcements and documents (No.: 2020-011, 2020-013 and 2020-014) for details.
The Company issued the Prompt Notice on the Public Issue of A Share Convertible Bonds, Announcement on the DTOR for the
Public Issue of A Share Convertible Bonds and the Placement Priority Result, Announcement on the Online Lot-winning Result of the
Public Issue of A Share Convertible Bonds and Announcement on the Result of the Public Issue of A Share Convertible Bonds
respectively on 9 April, 10 April, 13 April and 15 April in 2020. Please refer to relevant announcements (No.: 2020-017, 2020-018,
2020-020 and 2020-022) issued via www.cninfo.com.cn for details.
36
Lu Thai Textile Co., Ltd. Interim Report 2020
On 12 May 2020, the Company published the “Announcement on the Listing of A-Share Convertible Corporate Bonds through
Public Offering”. On 13 May 2020, Lu Thai’s convertible corporate bonds were listed on Shenzhen Stock Exchange for trading. The
duration of the bonds was set from 9 April 2020 to 8 April 2026. The period for converting into shares will be from 15 October 2020
to 8 April 2026. For more detail, refer to the announcement (No.: 2020-043) on www.cninfo.com.cn.
On 2 July 2020, the Company published the “Announcement on the Adjustment to the Price for Converting Convertible Corporate
Bonds into Shares”. According to the “Proposal on the Company’s Profit Distribution Plan for 2019”, which was considered and
approved at the Company’s Annual General Meeting of 2019 held on 21 May 2020, a cash amount of RMB 1.00 (inclusive of tax)
would be distributed to every 10 shares, with the 858,121,541 shares of share capital on 31 December 2019 as the base. The share
registration date for the Company’s equity distribution of 2019 was 8 July 2020 and the ex-rights and ex-dividend date was 9 July
2020. Therefore, the share conversion price of “Lu Thai Convertible Bonds” was adjusted from RMB 9.01 per share to RMB 8.91 per
share, and the new price after the adjustment took effect on and as of 9 July 2020 (the ex-rights and ex-dividend date). For more
detail, refer to the announcement (No.: 2020-054) on www.cninfo.com.cn.
XVIII Significant Events of Subsidiaries
□ Applicable √ Not applicable
37
Lu Thai Textile Co., Ltd. Interim Report 2020
Part VI Share Changes and Shareholder Information
I. Share Changes
1. Share Changes
Unit: share
Before Increase/decrease (+/-) After
Bonus
Percentage New Bonus Percenta
Number issue from Other Subtotal Number
(%) issues shares ge (%)
profit
1. Restricted shares 119,038,937 13.87% 8,438 8,438 119,047,375 13.87%
1.3 Shares held by other
806,537 0.09% 8,438 8,438 814,975 0.09%
domestic investors
Shares held by domestic
806,537 0.09% 8,438 8,438 814,975 0.09%
natural person
1.4 Oversea shareholdings 118,232,400 13.78% 118,232,400 13.78%
Among which: shares held
118,232,400 13.78% 118,232,400 13.78%
by oversea legal person
Shares held by oversea
0
natural person
2. Unrestricted shares 739,082,604 86.13% -8,438 -8,438 739,074,166 86.13%
2.1 RMB ordinary shares 561,264,288 65.41% -8,438 -8,438 561,255,850 65.41%
2.2 Domestically listed
177,818,316 20.72% 177,818,316 20.72%
foreign shares
3. Total shares 858,121,541 100.00% 0 0 858,121,541 100.00%
Reasons for the share changes
√ Applicable □ Not applicable
Due to the demission of Senior Executive, China Securities Depository and Clearing Co., Ltd. Shenzhen Branch adjusted the number
of lock-up shares held by Senior Executive.
Approval of share changes:
√ Applicable □ Not applicable
The foreign sponsor shareholder of the Company, Tailun (Thailand) Textile Co., Ltd. holds 118,232,400 non-listed foreign shares,
which have changed the registration to be restricted tradable B-shares with 1 year restricted period at China Securities Depository
and Clearing Co., Ltd. Shenzhen Branch 30 June 2020, and the restriction shall be unlocked on 1 July 2021.
Transfer of share ownership:
□ Applicable √ Not applicable
Progress on any share repurchases:
38
Lu Thai Textile Co., Ltd. Interim Report 2020
□ Applicable √ Not applicable
Progress on reducing the repurchased shares by means of centralized bidding:
□ Applicable √ Not applicable
Effects of share changes on the basic and diluted earnings per share, equity per share attributable to the Company’s ordinary
shareholders and other financial indicators of the prior year and the prior accounting period, respectively:
□ Applicable √ Not applicable
Other information that the Company considers necessary or is required by the securities regulator to be disclosed:
□ Applicable √ Not applicable
2. Changes in Restricted Shares
√ Applicable □ Not applicable
Unit: share
Name of
Beginning Increased in Unlocked in Ending restricted Reason for
shareholde Date of unlocking
restricted shares Reporting Period Reporting Period shares restriction
r
Locked the
6 months after the
Lyu shareholding of
25,312 8,438 33,750 expiration of the
Yongchen the Senior
original term
Executives
Total 25,312 0 8,438 33,750 -- --
II Issuance and Listing of Securities
√ Applicable □ Not applicable
Number of
Name of
Issue price listed Index to
stocks and Termination Disclosur
Issued date (or interest Number Listing date transaction disclosed
derivative date e date
rate) with information
securities
approval
Stock
Convertible bonds, separate bargaining convertible bonds and corporate bonds
Announcement
of Resolution
(No. 2020-013)
Lu Thai published on
7 April
convertible 9 April 2020 100 14,000,000 13 May 2020 14,000,000 8 April 2026 Securities Times,
2020
bond China Securities
Journal, Shanghai
Securities News,
and Hong Kong
39
Lu Thai Textile Co., Ltd. Interim Report 2020
Ta Kung Pao and
http://www.cninf
o.co on 7 April
2020
Other derivative securities
Notes to securities issuance during the Reporting Period:
On 9, 10, 13 and 15 April 2020, the Company published the “Suggestive Announcement on the Issue of A-Share Convertible
Corporate Bonds through Public Offering”, the “Announcement on the Online Winning Rate and Priority Allotment Result of the
Public Offering of A-Share Convertible Corporate Bonds”, the “Announcement on the Online Winning Result of the Public Offering
of A-Share Convertible Corporate Bonds”, and the “Announcement on the Result of the Issue of A-Share Convertible Corporate
Bonds through Public Offering”. For more detail, refer to the related announcements (No: 2020-017, 2020-018, 2020-020 and
2020-022) on www.cninfo.com.cn. On 9 April, the Company issued convertible corporate bonds of RMB 1.4 billion (14 million
bonds) on Shenzhen Stock Exchange under the short name of Lu Thai Convertible Bonds with the bond code of 127016.
On 12 May 2020, the Company published the “Announcement on the Listing of A-Share Convertible Corporate Bonds through
Public Offering”. On 13 May 2020, Lu Thai’s convertible corporate bonds were listed on Shenzhen Stock Exchange for trading. The
duration of the bonds was set from 9 April 2020 to 8 April 2026. The period for converting into shares will be from 15 October 2020
to 8 April 2026. For more detail, refer to the announcement (No.: 2020-043) on www.cninfo.com.cn.
On 2 July 2020, the Company published the “Announcement on the Adjustment to the Price for Converting Convertible Corporate
Bonds into Shares”. According to the “Proposal on the Company’s Profit Distribution Plan for 2019”, which was considered and
approved at the Company’s Annual General Meeting of 2019 held on 21 May 2020, a cash amount of RMB 1.00 (inclusive of tax)
would be distributed to every 10 shares, with the 858,121,541 shares of share capital on 31 December 2019 as the base. The share
registration date for the Company’s equity distribution of 2019 was 8 July 2020 and the ex-rights and ex-dividend date was 9 July
2020. Therefore, the share conversion price of “Lu Thai Convertible Bonds” was adjusted from RMB 9.01 per share to RMB 8.91 per
share, and the new price after the adjustment took effect on and as of 9 July 2020 (the ex-rights and ex-dividend date). For more
detail, refer to the announcement (No.: 2020-054) on www.cninfo.com.cn.
III Total Number of Shareholders and Their Shareholdings
Unit: share
Total number of preference
Total number of ordinary shareholders with resumed voting
58,376 0
shareholders at the period-end rights at the period-end (if any) (see
Note 8)
5% or greater ordinary shareholders or the top 10 ordinary shareholders
Increase/d Pledged or frozen
Sharehol Number of
Total shares ecrease Number of shares
Nature of ding non-restricte
Name of shareholder held at the during the restricted
shareholder percenta d shares Num
period-end Reporting shares held Status
ge (%) held ber
Period
Domestic
Zibo Lucheng Textile
non-state-owned 16.36% 140,353,583 0 0 140,353,583
Investment Co., Ltd.
legal person
40
Lu Thai Textile Co., Ltd. Interim Report 2020
Tailun (Thailand) Textile Co., Foreign legal
13.78% 118,232,400 0 118,232,400
Ltd. person
Hong Kong Securities Foreign legal
2.70% 23,180,137 -2,520,512 23,180,137
Clearing Co. Ltd person
Central Huijin Assets State-owned legal
2.37% 20,315,300 0 20,315,300
Management Co., Ltd. person
Domestic
China Securities Finance
non-state-owned 2.13% 18,313,391 0 18,313,391
Corporation Limited
legal person
T.ROWE PRICE INTL Foreign legal
1.71% 14,712,012 -5,236,207 14,712,012
DISCOVERY FUND person
Hong Kong Monetary Foreign legal
1.49% 12,754,384 -1,287,500 12,754,384
Authority-self-owned funds person
Domestic
National Social Security Fund
non-state-owned 1.09% 9,360,051 1,050,000 9,360,051
Portfolio 413
legal person
First State Investment
Management (Britain) Co., Foreign legal
1.02% 8,764,322 3,350,322 8,764,322
Ltd.- First State China A person
Share Fund
Domestic
Generali China Life Insurance
non-state-owned 0.63% 5,385,759 -1,279,200 5,385,759
Co., Ltd.-Dividend product 2
legal person
Strategic investors or general corporations
becoming top-ten shareholders due to placing of Naught
new shares (if any) (see Note 3)
Zibo Lucheng Textile Investment Co., Ltd. is the largest shareholder and the actual
controller of the Company. Tailun (Thailand) Textile Co., Ltd. is the second largest
Related or acting-in-concert parties among the
shareholder and the foreign sponsor of the Company. All the other shareholders
shareholders above
are holding tradable A-shares or B-shares. And it is unknown whether there is any
related party or acting-in-concert party among them.
Shareholdings of the top ten non-restricted ordinary shareholders
Number of Type of shares
Name of shareholder non-restricted shares
Type Shares
held at the period-end
RMB ordinary
Zibo Lucheng Textile Investment Co., Ltd. 140,353,583 140,353,583
share
RMB ordinary
Hong Kong Securities Clearing Co. Ltd 23,180,137 23,180,137
share
Central Huijin Assets Management Co., Ltd. 20,315,300 RMB ordinary 20,315,300
41
Lu Thai Textile Co., Ltd. Interim Report 2020
share
RMB ordinary
China Securities Finance Corporation Limited 18,313,391 18,313,391
share
Domestically
T.ROWE PRICE INTL DISCOVERY FUND 14,712,012 listed foreign 14,712,012
share
RMB ordinary
Hong Kong Monetary Authority-self-owned funds 12,754,384 12,754,384
share
RMB ordinary
National Social Security Fund Portfolio 413 9,360,051 9,360,051
share
First State Investment Management (Britain) Co., Ltd.- First State China A RMB ordinary
8,764,322 8,764,322
Share Fund share
RMB ordinary
Generali China Life Insurance Co., Ltd.-Dividend Product 2 5,385,759 5,385,759
share
Industrial and Commercial Bank of China- Fullgoal CSI Dividend Index RMB ordinary
5,270,243 5,270,243
Enhanced Securities Investment Funds share
Zibo Lucheng Textile Investment Co., Ltd. is the largest
shareholder and the actual controller of the Company.
Explanation on connected relationship among the top ten shareholders of
Tailun (Thailand) Textile Co., Ltd. is the second largest
tradable share not subject to trading moratorium, as well as among the top
shareholder and the foreign sponsor of the Company. All
ten shareholders of tradable share not subject to trading moratorium and top
the other shareholders are holding tradable A-shares or
ten shareholders, or explanation on acting-in-concert
B-shares. And it is unknown whether there is any related
party or acting-in-concert party among them.
Particular about shareholder participate in the securities lending and
Naught
borrowing business (if any) (note 4)
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.
IV Change of the Controlling Shareholder or the Actual Controller
Change of the controlling shareholder in the Reporting Period:
□ Applicable √ Not applicable
No such cases in the Reporting Period.
Change of the actual controller during the Reporting Period:
□ Applicable √ Not applicable
No such cases in the Reporting Period.
42
Lu Thai Textile Co., Ltd. Interim Report 2020
Part VII Preferred Shares
□ Applicable √ Not applicable
No such cases in the Reporting Period.
43
Lu Thai Textile Co., Ltd. Interim Report 2020
Part VIII Convertible Corporate Bonds
√ Applicable □ Not applicable
I Previous Adjustments of Conversion Price
On 9 April 2020, the Company publicly issued 14 million A-share convertible corporate bonds (short name: Lu Thai Convertible
Bonds, bond code: 127016) on Shenzhen Stock Exchange with an issue price of RMB100 per share and a share conversion price of
RMB9.01 per share. The bonds were listed on Shenzhen Stock Exchange on 13 May 2020. In accordance with related terms of the
“Prospectus for the Public Offering of A-Share Convertible Corporate Bonds of Lu Thai Textile Co., Ltd.”, as well as the regulations
of China Securities Regulatory Commission on the public offering of convertible corporate bonds, if the Company has any
distribution of share dividends, conversion into share capital, additional issue of new shares (excluding share capital increase due to
conversion into shares from the convertible corporate bonds issued this time), share allotment and distribution of cash dividends after
the issue of “Lu Thai Convertible Bonds”, adjustment shall be made to the share conversion price. On 21 May 2020, the Company
held the Annual General Meeting of 2019, where the “Proposal on the Company’s Profit Distribution Plan for 2019” was considered
and approved. According to the Proposal, a cash amount of RMB 1.00 (inclusive of tax) would be distributed to every 10 shares, with
the 858,121,541 shares of share capital on 31 December 2019 as the base. The share registration date for the Company’s equity
distribution of 2019 was 8 July 2020 and the ex-rights and ex-dividend date was 9 July 2020. Therefore, the share conversion price of
“Lu Thai Convertible Bonds” was adjusted from RMB9.01 per share to RMB8.91 per share, and the new price after the adjustment
took effect on and as of 9 July 2020 (the ex-rights and ex-dividend date).
II Accumulative Conversion
□ Applicable √ Not applicable
III Top 10 Convertible Bond Holders
Unit: share
As % of
Number of Amount of
convertible
Nature of convertible bonds convertible bonds
No. Name of holders bonds held at
holders held at the held at the
the
period-end (share) period-end (RMB)
period-end
State-owned
1 Guosen Securities Co., Ltd. 1,600,001 160,000,100.00 11.43%
legal person
Domestic
China Pacific Insurance (Group)Co., Ltd.－Dividend- non-state-o
2 637,716 63,771,600.00 4.56%
Individual dividends wned legal
person
3 Shanghai Pudong Development Bank－E Fund Domestic 512,435 51,243,500.00 3.66%
44
Lu Thai Textile Co., Ltd. Interim Report 2020
Yuxiang Return Bond Securities Investment Fund non-state-o
wned legal
person
Domestic
Industrial and Commercial Bank of China－Fullgoal non-state-o
4 467,938 46,793,800.00 3.34%
TianLi Growth Bond Investment Fund wned legal
person
Domestic
Industrial and Commercial Bank of China－China
non-state-o
5 Universal Convertible Bond Securities Investment 445,714 44,571,400.00 3.18%
wned legal
Fund
person
Domestic
non-state-o
6 National Social Security Fund Portfolio 005 425,369 42,536,900.00 3.04%
wned legal
person
Domestic
ICBC Credit Suisse Tainfeng Convertible Benefit non-state-o
7 409,986 40,998,600.00 2.93%
Pension Product－Bank of China Limited wned legal
person
Domestic
China Everbright Bank－E Fund Yujing Tianli
non-state-o
8 6-month Regular Open Bond Securities Investment 356,534 35,653,400.00 2.55%
wned legal
Fund
person
State-owned
9 Essence Securities Co., Ltd. 277,400 27,740,000.00 1.98%
legal person
Domestic
ICBC Credit Suisse Fund－China Minsheng Bank
non-state-o
10 Corp. Ltd.－Jiangsu International Trust－Jiangsu 256,132 25,613,200.00 1.83%
wned legal
TrustMinsheng Wealth Single Fund Trust
person
IV Significant Changes in Profitability, Assets Condition and Credit Status of Guarantors
□ Applicable √ Not applicable
V The Company’s Liabilities, Credit Changes at the Period-end and Cash Arrangements to
Repay Debts in Future Years
1. YoY changes of main financial index between the period-end and the end of last year (or the same reporting period as prior year)
Item Period-end The end of last year Increase/decrease
Current ratio 189.60% 132.78% 56.83%
Asset-liability ratio 34.28% 30.17% 4.10%
45
Lu Thai Textile Co., Ltd. Interim Report 2020
Quick ratio 96.35% 56.78% 39.57%
Reporting Period Same period of last year YoY increase/decrease
EBITDA interest coverage ratio 10.66 16.49 -5.83
Rate of redemption 100% 100% -
Interest coverage 100% 100% -
Major reasons for more than 30% year-on-year changes in the aforementioned accounting data and financial indicators: the current
ratio as at the end of this Reporting Period increased by 56.83% from the end of last year, which was mainly due to the increase in
the monetary fund in current assets after the Company issued the convertible corporate bonds; the quick ratio as at the end of this
Reporting Period increased by 39.57% from the end of last year, which was mainly due to the increase in the monetary fund in quick
assets after the Company issued the convertible corporate bonds.
2. United Credit Ratings Co., Ltd. (hereinafter referred to as “Untied Ratings”), the credit ratings institution of the Company’s
convertible bonds, issued the “Credit Ratings Report on the A-Share Convertible Corporate Bonds Publicly Issued by Lu Thai Textile
Co., Ltd.” on 27 September 2019. According to the Report, the Company’s corporate credit rating was “AA+” with a rating outlook
of “Stable”, and the bond credit rating was “AA+”. United Ratings will perform follow-up rating once every year during the duration
of the corporate bonds. On 17 June 2020, United Ratings issued the “Follow-up Ratings Report of 2020 for the Convertible
Corporate Bonds of Lu Thai Textile Co., Ltd.”. According to the Report, the Company’s corporate credit rating remained “AA+” and
the bond credit rating remained “AA+”. Disclosure index: “Follow-up Ratings Report of 2020 for the Convertible Corporate Bonds
of Lu Thai Textile Co., Ltd.” was disclosed on www.cninfo.com.cn on 19 June 2020.
46
Lu Thai Textile Co., Ltd. Interim Report 2020
Part IX Directors, Supervisors and Senior Management
I Change in Shareholdings of Directors, Supervisors and Senior Management
√ Applicable □ Not applicable
Number of
Number of Number of
Increase in Decrease restricted
Incu granted granted
Beginning the in the Ending shares
mbe restricted restricted
Name Office title shareholdi Current Current shareholdi granted in
nt/fo shares at the shares at the
ng (share) Period Period ng (share) the Current
rmer period-begin period-end
(share) (share) Period
(share) (share)
(share)
Incu
Liu
Chairman and GM mbe 148,290 148,290
Zibin
nt
Incu
Xu
Vice President mbe
Zhinan
nt
Fujiwara Incu
Hidetosh Director mbe
i nt
Incu
Chen
Director mbe
Ruimou
nt
Incu
Zeng
Director mbe
Facheng
nt
Wang Incu
Director, Vice GM, and
Fangshu mbe 146,753 146,753
Chief Engineer
i nt
Director, controller of Incu
Liu
Global Marketing mbe
Deming
Department nt
Incu
Qin
Director mbe 126,542 126,542
Guiling
nt
Zhang Incu
Director and Chief
Hongme mbe 92,500 92,500
Accountant
i nt
47
Lu Thai Textile Co., Ltd. Interim Report 2020
Incu
Zhou
Independent director mbe
Zhiji
nt
Incu
Bi Xiuli Independent Director mbe
nt
Incu
Pan
Independent Director mbe
Ailing
nt
Incu
Wang
Independent Director mbe
Xinyu
nt
Qu Incu
Dongme Independent director mbe
i nt
Supervisory Committee
Zhang Incu
Chairman, Controller of
Shougan mbe 73,100 73,100
Human Resources
g nt
Department
Incu
Liu
Supervisor mbe 10,000 10,000
Zilong
nt
Supervisor, Manager of Incu
Dong
Logistics Management mbe 5,000 5,000
Shibing
Department nt
Vice president,
Zhang Incu
controller of Functional
Jianxian mbe 52,150 52,150
Fabric Manufacturing
g nt
Center
Vice president, Security
Incu
Wang Controller, Controller of
mbe 83,700 83,700
Jiabin Yarn-dyed Fabric
nt
Manufacturing Center
Vice president,
Incu
Zhang controller of Dyeing and
mbe 80,300 80,300
Zhanqi Finishing Fabric
nt
Manufacturing Center
Board Secretary,
Incu
Zhang controller of Financial
mbe 77,700 77,700
Keming Management
nt
Department
48
Lu Thai Textile Co., Ltd. Interim Report 2020
Incu
Li Wenji CIO mbe 10,000 10,000
nt
Incu
Zhang Controller of Strategy
mbe
Wei and Market Department
nt
Wang Vice controller of Incu
Changzh Global Marketing mbe 22,500 22,500
ao Department nt
Fujiwara Incu
Matsuza GM of Japan Office mbe
ka nt
Yu Controller of Energy Incu
Shouzhe and Environment mbe 83,100 83,100
ng Protection Department nt
Shang Incu
Controller of Garment
Chengga mbe 30,000 30,000
Manufacturing Center
ng nt
Deputy chief engineer,
Incu
Du Executive Dean of Lu
mbe
Lixin Thai Engineering
nt
Technology Institute
Incu
Guo Manager of Business
mbe
Heng Management
nt
Lyu
Non-director senior For
Yongche 33,750 33,750
executive mer
n
Total -- -- 1,075,385 0 0 1,075,385 0 0 0
II Change of Directors, Supervisors and Senior Management
√Applicable □ Not applicable
Name Office title Type of change Date of change Reason for change
Lyu Yongchen Non-director senior executive Former 2 March 2020 Left for personal reason
49
Lu Thai Textile Co., Ltd. Interim Report 2020
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
50
Lu Thai Textile Co., Ltd. Interim Report 2020
Part XI Financial Statements
I Independent Auditor’s Report
Are these interim financial statements audited by an independent auditor?
□Yes √ No
They are unaudited by such an auditor.
II Financial Statements
Currency unit for the financial statements and the notes thereto: RMB
1. Consolidated Balance Sheet
Prepared by Lu Thai Textile Co., Ltd.
30 June 2020
Unit: RMB
Item 30 June 2020 31 December 2019
Current assets:
Monetary assets 2,028,297,550.15 924,322,008.17
Held-for-trading financial assets 52,356,098.85
Derivative financial assets
Notes receivable 72,130,996.17 104,737,949.91
Accounts receivable 390,917,955.82 515,306,599.62
Accounts receivable financing 14,807,543.11 26,963,818.87
Prepayments 61,112,805.74 56,828,987.59
Other receivables 34,453,389.96 59,743,471.84
Including: Interest receivable
Dividends receivable
Financial assets purchased under resale agreements
Inventories 2,595,135,869.67 2,421,500,259.30
Contract assets
Assets held for sale
Current portion of non-current assets
Other current assets 79,489,297.56 68,788,674.10
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Lu Thai Textile Co., Ltd. Interim Report 2020
Total current assets 5,276,345,408.18 4,230,547,868.25
Non-current assets:
Long-term receivables 7,080,682.04 7,058,233.71
Long-term equity investment 149,646,776.65 103,226,300.00
Other equity instrument investment
Other non-current financial assets 138,519,880.41 278,149,500.00
Investment property 44,888,691.70 45,896,747.87
Fixed assets 5,911,198,566.20 6,012,094,104.67
Construction in progress 543,763,930.47 400,235,070.01
Intangible assets 508,639,397.75 516,479,519.15
Development costs
Goodwill 20,563,803.29 20,563,803.29
Long-term deferred expenses 157,331,360.54 153,031,253.79
Deferred income tax assets 97,673,474.64 99,307,233.72
Other non-current assets 7,754,157.78 18,841,918.62
Total non-current assets 7,587,060,721.47 7,654,883,684.83
Total assets 12,863,406,129.65 11,885,431,553.08
Current liabilities:
Short-term borrowings 1,881,237,261.83 2,120,154,330.61
Held-for-trading financial liabilities 841,402.78
Derivative financial liabilities
Notes payable 3,233,148.00 85,219,724.63
Accounts payable 224,782,981.19 305,346,284.94
Advances from customers 108,783,148.03
Contract liabilities 111,405,604.38
Payroll payable 275,261,176.37 335,576,560.36
Taxes payable 33,128,004.92 25,051,630.06
Other payables 195,332,422.01 104,982,189.40
Including: Interest payable
Dividends payable 86,253,267.74 441,113.64
Current portion of non-current liabilities 57,591,068.49 101,111,297.49
Other current liabilities
Total current liabilities 2,782,813,069.97 3,186,225,165.52
Non-current liabilities:
52
Lu Thai Textile Co., Ltd. Interim Report 2020
Provision for insurance contracts
Long-term borrowings 14,159,000.00 42,364,019.74
Bonds payable 1,324,932,419.54
Long-term payables
Long-term payroll payable 52,317,084.85 105,589,249.56
Provisions
Deferred income 162,647,704.62 157,668,211.41
Deferred income tax liabilities 70,536,666.51 92,440,358.41
Other non-current liabilities 1,840,000.00 1,840,000.00
Total non-current liabilities 1,626,432,875.52 399,901,839.12
Total liabilities 4,409,245,945.49 3,586,127,004.64
Owners’ equity:
Share capital 858,121,541.00 858,121,541.00
Other equity instruments 71,391,357.42
Capital reserves 258,046,245.42 258,046,245.42
Less: Treasury stock
Other comprehensive income 112,921,882.51 91,626,571.75
Specific reserve
Surplus reserves 1,117,267,351.63 1,117,267,351.63
General reserve
Retained earnings 5,430,381,040.24 5,372,073,615.12
Total equity attributable to owners of the Company as the parent 7,848,129,418.22 7,697,135,324.92
Non-controlling interests 606,030,765.94 602,169,223.52
Total owners’ equity 8,454,160,184.16 8,299,304,548.44
Total liabilities and owners’ equity 12,863,406,129.65 11,885,431,553.08
Legal representative: Liu Zibin Chief Accountant: Zhang Hongmei
Financial Manager: Zhang Keming
2. Balance Sheet of the Company as the Parent
Unit: RMB
Item 30 June 2020 31 December 2019
Current assets:
Monetary assets 1,357,902,448.38 259,320,863.08
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Lu Thai Textile Co., Ltd. Interim Report 2020
Held-for-trading financial assets 52,356,098.85
Derivative financial assets
Notes receivable 40,214,591.24 67,898,885.35
Accounts receivable 264,980,445.66 417,599,518.08
Accounts receivable financing 3,170,000.00 2,675,090.00
Prepayments 25,204,392.09 10,178,452.88
Other receivables 981,462,785.76 838,523,449.52
Including: Interest receivable
Dividends receivable
Inventories 1,359,654,442.14 1,280,620,296.02
Current portion of non-current assets
Other current assets 1,707.49 5,780,635.28
Total current assets 4,032,590,812.76 2,934,953,289.06
Non-current assets:
Investments in debt obligations
Investments in other debt obligations
Long-term receivables
Long-term equity investments 2,713,239,081.49 2,510,868,604.84
Investments in other equity instruments
Other non-current financial assets 126,519,880.41 266,149,500.00
Investment property 30,411,749.80 31,089,260.38
Fixed assets 2,535,355,316.06 2,603,258,003.94
Construction in progress 33,567,305.93 53,443,768.04
Intangible assets 231,391,216.61 235,277,114.25
Development costs
Goodwill
Long-term deferred expenses
Deferred income tax assets 61,185,242.93 60,974,304.57
Other non-current assets 2,328,457.86
Total non-current assets 5,733,998,251.09 5,761,060,556.02
Total assets 9,766,589,063.85 8,696,013,845.08
Current liabilities:
Short-term borrowings 712,419,330.83 816,301,973.60
Held-for-trading financial liabilities
54
Lu Thai Textile Co., Ltd. Interim Report 2020
Derivative financial liabilities
Notes payable 278,243,091.90 602,741,973.76
Accounts payable 145,727,979.94 105,588,631.54
Advances from customers 53,418,950.04
Contract liabilities 55,727,385.25
Payroll payable 213,270,291.86 242,300,723.41
Taxes payable 25,440,208.22 11,995,830.49
Other payables 159,757,664.88 149,255,207.79
Including: Interest payable
Dividends payable 86,253,267.74 441,113.64
Liabilities held for sale
Current portion of non-current liabilities 955,068.49
Other current liabilities
Total current liabilities 1,591,541,021.37 1,981,603,290.63
Non-current liabilities:
Long-term borrowings
Bonds payable 1,324,932,419.54
Long-term payables
Long-term payroll payable 52,317,084.85 105,589,249.56
Provisions
Deferred income 115,087,900.64 112,187,678.66
Deferred income tax liabilities 48,867,677.05 70,445,859.76
Other non-current liabilities
Total non-current liabilities 1,541,205,082.08 288,222,787.98
Total liabilities 3,132,746,103.45 2,269,826,078.61
Owners’ equity:
Share capital 858,121,541.00 858,121,541.00
Other equity instruments 71,391,357.42
Capital reserves 317,206,232.47 317,206,232.47
Less: Treasury stock
Other comprehensive income
Specific reserve
Surplus reserves 1,114,158,611.99 1,114,158,611.99
Retained earnings 4,272,965,217.52 4,136,701,381.01
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Lu Thai Textile Co., Ltd. Interim Report 2020
Total owners’ equity 6,633,842,960.40 6,426,187,766.47
Total liabilities and owners’ equity 9,766,589,063.85 8,696,013,845.08
3. Consolidated Income Statement
Unit: RMB
Item H1 2020 H1 2019
1. Revenue 2,286,744,080.79 3,185,448,344.01
Including: Operating revenue 2,286,744,080.79 3,185,448,344.01
2. Costs and expenses 2,127,801,124.48 2,737,159,910.26
Including: Cost of sales 1,683,752,331.27 2,210,886,955.53
Taxes and surcharges 35,766,255.41 42,736,804.77
Selling expense 81,739,905.59 77,836,942.94
Administrative expense 177,893,599.47 191,205,597.74
Development cost 123,441,723.06 161,939,039.23
Finance costs 25,207,309.68 52,554,570.05
Including: Interest expense 38,659,705.45 47,316,465.76
Interest income 13,506,359.51 4,338,765.10
Add: Other income 36,850,705.82 32,226,225.91
Return on investment (“-” for loss) 150,730,013.89 10,417,475.41
Including: Share of profit or loss of joint ventures and
-3,579,523.35 5,083,101.54
associates
Income from the derecognition of financial assets at
amortized cost (“-” for loss)
Exchange gain (“-” for loss)
Net gain on exposure hedges (“-” for loss)
Gain on changes in fair value (“-” for loss) -144,695,954.16 5,282,600.00
Credit impairment loss (“-” for loss) -1,553,716.48 -530,951.31
Asset impairment loss (“-” for loss) -24,613,079.38 -1,543,199.38
Asset disposal income (“-” for loss) -353,863.18 513,490.00
3. Operating profit (“-” for loss) 175,307,062.82 494,654,074.38
Add: Non-operating income 2,125,819.41 3,097,024.44
Less: Non-operating expense 2,383,926.90 2,214,356.54
4. Profit before tax (“-” for loss) 175,048,955.33 495,536,742.28
Less: Income tax expense 27,067,833.69 74,839,232.29
5. Net profit (“-” for net loss) 147,981,121.64 420,697,509.99
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Lu Thai Textile Co., Ltd. Interim Report 2020
5.1 By operating continuity
5.1.1 Net profit from continuing operations (“-” for net loss) 147,981,121.64 420,697,509.99
5.1.2 Net profit from discontinued operations (“-” for net loss)
5.2 By ownership
5.2.1 Net profit attributable to owners of the Company as the
144,119,579.22 411,446,216.59
parent
5.2.1 Net profit attributable to non-controlling interests 3,861,542.42 9,251,293.40
6. Other comprehensive income, net of tax 21,295,310.76 11,806,511.25
Attributable to owners of the Company as the parent 21,295,310.76 11,806,511.25
6.1 Items that will not be reclassified to profit or loss
6.1.1 Changes caused by re-measurements on defined
benefit schemes
6.1.2 Other comprehensive income that will not be
reclassified to profit or loss under the equity method
6.1.3 Changes in the fair value of investments in other
equity instruments
6.1.4 Changes in the fair value arising from changes in own
credit risk
6.1.5 Other
6.2 Items that will be reclassified to profit or loss 21,295,310.76 11,806,511.25
6.2.1 Other comprehensive income that will be reclassified
to profit or loss under the equity method
6.2.2 Changes in the fair value of investments in other debt
obligations
6.2.3 Other comprehensive income arising from the
reclassification of financial assets
6.2.4 Credit impairment allowance for investments in other
debt obligations
6.2.5 Reserve for cash flow hedges
6.2.6 Differences arising from the translation of foreign
21,295,310.76 11,806,511.25
currency-denominated financial statements
6.2.7 Other
Attributable to non-controlling interests
7. Total comprehensive income 169,276,432.40 432,504,021.24
Attributable to owners of the Company as the parent 165,414,889.98 423,252,727.84
Attributable to non-controlling interests 3,861,542.42 9,251,293.40
8. Earnings per share
8.1 Basic earnings per share 0.17 0.480
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Lu Thai Textile Co., Ltd. Interim Report 2020
8.2 Diluted earnings per share 0.16 0.480
Where business combinations under common control occurred in the current period, the net profit achieved by the acquirees before
the combinations was RMB0, with the amount for the same period of last year being RMB0.
Legal representative: Liu Zibin Chief Accountant: Zhang Hongmei
Financial Manager: Zhang Keming
4. Income Statement of the Company as the Parent
Unit: RMB
Item H1 2020 H1 2019
1. Operating revenue 1,524,486,328.98 2,488,329,566.37
Less: Cost of sales 1,181,364,557.21 1,847,868,451.77
Taxes and surcharges 23,730,341.94 28,685,411.40
Selling expense 46,988,183.91 46,460,101.19
Administrative expense 111,338,619.84 115,345,994.08
R&D expense 82,599,289.44 111,017,731.29
Finance costs 5,664,248.42 12,593,818.90
Including: Interest expense 10,420,836.93 14,948,218.54
Interest income 3,879,751.58 1,707,105.18
Add: Other income 26,850,419.74 20,170,944.34
Return on investment (“-” for loss) 297,360,063.89 156,928,724.90
Including: Share of profit or loss of joint ventures and
-3,579,523.35 5,083,101.54
associates
Income from the derecognition of financial assets at
amortized cost (“-” for loss)
Net gain on exposure hedges (“-” for loss)
Gain on changes in fair value (“-” for loss) -143,854,551.38 5,282,600.00
Credit impairment loss (“-” for loss) 1,110,012.04 -2,533,623.96
Asset impairment loss (“-” for loss) -20,100,921.17
Asset disposal income (“-” for loss) -414,285.87 593,665.89
2. Operating profit (“-” for loss) 233,751,825.47 506,800,368.91
Add: Non-operating income 1,982,724.35 2,310,510.04
Less: Non-operating expense 1,505,277.66 1,023,788.67
3. Profit before tax (“-” for loss) 234,229,272.16 508,087,090.28
Less: Income tax expense 12,153,281.55 56,933,685.54
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Lu Thai Textile Co., Ltd. Interim Report 2020
4. Net profit (“-” for net loss) 222,075,990.61 451,153,404.74
4.1 Net profit from continuing operations (“-” for net loss) 222,075,990.61 451,153,404.74
4.2 Net profit from discontinued operations (“-” for net loss)
5. Other comprehensive income, net of tax
5.1 Items that will not be reclassified to profit or loss
5.1.1 Changes caused by re-measurements on defined benefit
schemes
5.1.2 Other comprehensive income that will not be reclassified
to profit or loss under the equity method
5.1.3 Changes in the fair value of investments in other equity
instruments
5.1.4 Changes in the fair value arising from changes in own
credit risk
5.1.5 Other
5.2 Items that will be reclassified to profit or loss
5.2.1 Other comprehensive income that will be reclassified to
profit or loss under the equity method
5.2.2 Changes in the fair value of investments in other debt
obligations
5.2.3 Other comprehensive income arising from the
reclassification of financial assets
5.2.4 Credit impairment allowance for investments in other
debt obligations
5.2.5 Reserve for cash flow hedges
5.2.6 Differences arising from the translation of foreign
currency-denominated financial statements
5.2.7 Other
6. Total comprehensive income 222,075,990.61 451,153,404.74
7. Earnings per share
7.1 Basic earnings per share 0.26 0.53
7.2 Diluted earnings per share 0.26 0.53
5. Consolidated Cash Flow Statement
Unit: RMB
Item H1 2020 H1 2019
1. Cash flows from operating activities:
Proceeds from sale of commodities and rendering of services 2,349,623,633.05 3,110,163,161.87
Tax rebates 88,289,716.37 95,975,203.98
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Lu Thai Textile Co., Ltd. Interim Report 2020
Cash generated from other operating activities 55,602,212.50 46,482,650.58
Subtotal of cash generated from operating activities 2,493,515,561.92 3,252,621,016.43
Payments for commodities and services 1,263,252,180.21 1,987,264,167.92
Cash paid to and for employees 818,429,524.90 882,377,720.86
Taxes paid 98,517,829.70 171,428,644.27
Cash used in other operating activities 103,923,761.42 91,833,420.81
Subtotal of cash used in operating activities 2,284,123,296.23 3,132,903,953.86
Net cash generated from/used in operating activities 209,392,265.69 119,717,062.57
2. Cash flows from investing activities:
Proceeds from disinvestment 50,131,167.06 30,000,000.00
Return on investment 146,015,342.75 2,402,138.74
Net proceeds from the disposal of fixed assets, intangible assets
2,828,220.00 2,599,510.60
and other long-lived assets
Net proceeds from the disposal of subsidiaries and other business
units
Cash generated from other investing activities 46,094,785.79 9,836,798.66
Subtotal of cash generated from investing activities 245,069,515.60 44,838,448.00
Payments for the acquisition of fixed assets, intangible assets and
318,762,103.03 336,291,428.03
other long-lived assets
Payments for investments 52,215,000.00 50,000,000.00
Net increase in pledged loans granted
Net payments for the acquisition of subsidiaries and other
business units
Cash used in other investing activities 3,231,380.25 4,874,724.40
Subtotal of cash used in investing activities 374,208,483.28 391,166,152.43
Net cash generated from/used in investing activities -129,138,967.68 -346,327,704.43
3. Cash flows from financing activities:
Capital contributions received 50,000,000.00 50,000,000.00
Including: Capital contributions by non-controlling interests to
50,000,000.00 50,000,000.00
subsidiaries
Borrowings raised 2,152,485,725.20 2,583,222,673.24
Cash generated from other financing activities 174,000,000.00 19,000,000.00
Subtotal of cash generated from financing activities 2,376,485,725.20 2,652,222,673.24
Repayment of borrowings 1,075,621,432.55 1,801,353,379.40
Interest and dividends paid 81,488,219.93 514,442,200.45
Including: Dividends paid by subsidiaries to non-controlling
50,000,000.00 50,000,000.00
interests
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Lu Thai Textile Co., Ltd. Interim Report 2020
Cash used in other financing activities 160,000,000.00 21,164,104.03
Subtotal of cash used in financing activities 1,317,109,652.48 2,336,959,683.88
Net cash generated from/used in financing activities 1,059,376,072.72 315,262,989.36
4. Effect of foreign exchange rates changes on cash and cash
460,253.84 -228,703.12
equivalents
5. Net increase in cash and cash equivalents 1,140,089,624.57 88,423,644.38
Add: Cash and cash equivalents, beginning of the period 878,559,018.92 535,134,772.90
6. Cash and cash equivalents, end of the period 2,018,648,643.49 623,558,417.28
6. Cash Flow Statement of the Company as the Parent
Unit: RMB
Item H1 2020 H1 2019
1. Cash flows from operating activities:
Proceeds from sale of commodities and rendering of services 1,618,771,452.43 2,462,659,877.36
Tax rebates 36,161,757.59 61,662,415.98
Cash generated from other operating activities 32,417,593.75 21,521,514.73
Subtotal of cash generated from operating activities 1,687,350,803.77 2,545,843,808.07
Payments for commodities and services 1,120,352,074.73 1,310,008,487.94
Cash paid to and for employees 497,295,354.33 584,827,906.35
Taxes paid 43,095,322.48 111,246,694.11
Cash used in other operating activities 70,463,669.09 44,098,655.74
Subtotal of cash used in operating activities 1,731,206,420.63 2,050,181,744.14
Net cash generated from/used in operating activities -43,855,616.86 495,662,063.93
2. Cash flows from investing activities:
Proceeds from disinvestment 50,131,167.06 30,000,000.00
Return on investment 296,015,342.75 152,402,138.74
Net proceeds from the disposal of fixed assets, intangible assets
9,912,775.89 2,577,416.61
and other long-lived assets
Net proceeds from the disposal of subsidiaries and other business
units
Cash generated from other investing activities 411,047,820.90 71,873,773.84
Subtotal of cash generated from investing activities 767,107,106.60 256,853,329.19
Payments for the acquisition of fixed assets, intangible assets and
28,778,618.38 122,593,981.68
other long-lived assets
Payments for investments 208,165,000.00 402,922,200.00
Net payments for the acquisition of subsidiaries and other
61
Lu Thai Textile Co., Ltd. Interim Report 2020
business units
Cash used in other investing activities 535,327,516.63 240,578,744.40
Subtotal of cash used in investing activities 772,271,135.01 766,094,926.08
Net cash generated from/used in investing activities -5,164,028.41 -509,241,596.89
3. Cash flows from financing activities:
Capital contributions received
Borrowings raised 1,538,788,675.65 1,694,064,390.96
Cash generated from other financing activities 58,280,000.00 130,000,000.00
Subtotal of cash generated from financing activities 1,597,068,675.65 1,824,064,390.96
Repayment of borrowings 298,208,024.53 1,115,914,126.27
Interest and dividends paid 16,129,305.81 434,574,114.51
Cash used in other financing activities 135,072,100.00 196,713,504.03
Subtotal of cash used in financing activities 449,409,430.34 1,747,201,744.81
Net cash generated from/used in financing activities 1,147,659,245.31 76,862,646.15
4. Effect of foreign exchange rates changes on cash and cash
-58,014.74 -1,121,122.58
equivalents
5. Net increase in cash and cash equivalents 1,098,581,585.30 62,161,990.61
Add: Cash and cash equivalents, beginning of the period 259,320,863.08 191,305,104.80
6. Cash and cash equivalents, end of the period 1,357,902,448.38 253,467,095.41
7. Consolidated Statements of Changes in Owners’ Equity
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Lu Thai Textile Co., Ltd. Interim Report 2020
H1 2020
Unit: RMB
H1 2020
Equity attributable to owners of the Company as the parent
Other equity instruments Less Sp
Item : eci Gen
Other Non-controlling Total owners’
Pref Perp
Trea fic eral Othe
Share capital Capital reserves comprehensive Surplus reserves Retained earnings Subtotal interests equity
erred etual
Other sury res reser r
shar bond income
stoc er ve
es s
k ve
1. Balances as at the end of
858,121,541.00 258,046,245.42 91,626,571.75 1,117,267,351.63 5,372,073,615.12 7,697,135,324.92 602,169,223.52 8,299,304,548.44
the prior year
Add: Adjustments for
changed accounting policies
Adjustments for
corrections of previous
errors
Adjustments for business
combinations under
common control
Other adjustments
2. Balances as at the
858,121,541.00 258,046,245.42 91,626,571.75 1,117,267,351.63 5,372,073,615.12 7,697,135,324.92 602,169,223.52 8,299,304,548.44
beginning of the year
3. Increase/ decrease in the
71,391,357.42 21,295,310.76 58,307,425.12 150,994,093.30 3,861,542.42 154,855,635.72
period (“-” for decrease)
3.1 Total comprehensive
21,295,310.76 144,119,579.22 165,414,889.98 3,861,542.42 169,276,432.40
income
3.2 Capital increased and
71,391,357.42 71,391,357.42 50,000,000.00 121,391,357.42
reduced by owners
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Lu Thai Textile Co., Ltd. Interim Report 2020
3.2.1 Ordinary shares
50,000,000.00 50,000,000.00
increased by shareholders
3.2.2 Capital increased
by holders of other equity 71,391,357.42 71,391,357.42 71,391,357.42
instruments
3.2.3 Share-based
payments included in
owners’ equity
3.2.4 Other
3.3 Profit distribution -85,812,154.10 -85,812,154.10 -50,000,000.00 -135,812,154.10
3.3.1 Appropriation to
surplus reserves
3.3.2 Appropriation to
general reserve
3.3.3 Appropriation to
-85,812,154.10 -85,812,154.10 -50,000,000.00 -135,812,154.10
owners (or shareholders)
3.3.4 Other
3.4 Transfers 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 Loss offset by
surplus reserves
3.4.4 Changes in
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Lu Thai Textile Co., Ltd. Interim Report 2020
defined benefit pension
schemes transferred to
retained earnings
3.4.5 Other
comprehensive income
transferred to retained
earnings
3.4.6 Other
3.5 Specific reserve
3.5.1 Increase in the
period
3.5.2 Used in the
period
3.6 Other
4. Balances as at the end of
858,121,541.00 71,391,357.42 258,046,245.42 112,921,882.51 1,117,267,351.63 5,430,381,040.24 7,848,129,418.22 606,030,765.94 8,454,160,184.16
the period
H1 2019
Unit: RMB
H1 2019
Equity attributable to owners of the Company as the parent
Other equity
Item instruments Specifi Gen
Other Non-controlling Total owners’
Pref Perp Less: Treasury c eral Othe
Share capital Ot Capital reserves comprehensiv Surplus reserves Retained earnings Subtotal interests equity
erre etual stock reserv reser r
he e income
d bond e ve
r
shar s
65
Lu Thai Textile Co., Ltd. Interim Report 2020
es
1. Balances as at the end
922,602,311.00 699,493,647.48 486,922,944.94 61,157,013.37 1,022,717,451.40 4,927,500,989.55 7,146,548,467.86 579,276,247.53 7,725,824,715.39
of the prior year
Add: Adjustments for
changed accounting -520,200.00 15,797,284.81 15,277,084.81 15,277,084.81
policies
Adjustments for
corrections of previous
errors
Adjustments for
business combinations
under common control
Other adjustments
2. Balances as at the
922,602,311.00 699,493,647.48 486,922,944.94 60,636,813.37 1,022,717,451.40 4,943,298,274.36 7,161,825,552.67 579,276,247.53 7,741,101,800.20
beginning of the year
3. Increase/ decrease in
the period (“-” for -64,480,770.00 -442,861,219.20 -486,922,944.94 11,806,511.25 -17,614,553.91 -26,227,086.92 8,640,988.50 -17,586,098.42
decrease)
3.1 Total
11,806,511.25 411,446,216.59 423,252,727.84 9,251,293.40 432,504,021.24
comprehensive income
3.2 Capital increased
-64,480,770.00 -442,861,219.20 -486,922,944.94 -20,419,044.26 49,389,695.10 28,970,650.84
and reduced by owners
3.2.1 Ordinary shares
-64,480,770.00 -442,630,569.04 -486,922,944.94 -20,188,394.10 50,000,000.00 29,811,605.90
increased by shareholders
3.2.2 Capital
increased by holders of
other equity instruments
3.2.3 Share-based
payments included in
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Lu Thai Textile Co., Ltd. Interim Report 2020
owners’ equity
3.2.4 Other -230,650.16 -230,650.16 -610,304.90 -840,955.06
3.3 Profit distribution -429,060,770.50 -429,060,770.50 -50,000,000.00 -479,060,770.50
3.3.1 Appropriation
to surplus reserves
3.3.2 Appropriation
to general reserve
3.3.3 Appropriation
to owners (or -429,060,770.50 -429,060,770.50 -50,000,000.00 -479,060,770.50
shareholders)
3.3.4 Other
3.4 Transfers 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 Loss offset by
surplus reserves
3.4.4 Changes in
defined benefit pension
schemes transferred to
retained earnings
3.4.5 Other
comprehensive income
transferred to retained
earnings
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Lu Thai Textile Co., Ltd. Interim Report 2020
3.4.6 Other
3.5 Specific reserve
3.5.1 Increase in the
period
3.5.2 Used in the
period
3.6 Other
4. Balances as at the end
858,121,541.00 256,632,428.28 72,443,324.62 1,022,717,451.40 4,925,683,720.45 7,135,598,465.75 587,917,236.03 7,723,515,701.78
of the period
8. Statements of Changes in Owners’ Equity of the Company as the Parent
H1 2020
Unit: RMB
H1 2020
Other equity instruments Less:
Other
Item Treas Specific Total owners’
Share capital Preferre Perpetual Capital reserves comprehensiv Surplus reserves Retained earnings Other
Other ury reserve equity
d shares bonds e income
stock
1. Balances as at the end of the prior year 858,121,541.00 317,206,232.47 1,114,158,611.99 4,136,701,381.01 6,426,187,766.47
Add: Adjustments for changed accounting
policies
Adjustments for corrections of previous errors
Other adjustments
2. Balances as at the beginning of the year 858,121,541.00 317,206,232.47 1,114,158,611.99 4,136,701,381.01 6,426,187,766.47
3. Increase/ decrease in the period (“-” for
71,391,357.42 136,263,836.51 207,655,193.93
decrease)
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Lu Thai Textile Co., Ltd. Interim Report 2020
3.1 Total comprehensive income 222,075,990.61 222,075,990.61
3.2 Capital increased and reduced by owners 71,391,357.42 71,391,357.42
3.2.1 Ordinary shares increased by
shareholders
3.2.2 Capital increased by holders of other
71,391,357.42 71,391,357.42
equity instruments
3.2.3 Share-based payments included in
owners’ equity
3.2.4 Other
3.3 Profit distribution -85,812,154.10 -85,812,154.10
3.3.1 Appropriation to surplus reserves
3.3.2 Appropriation to owners (or
-85,812,154.10 -85,812,154.10
shareholders)
3.3.3 Other
3.4 Transfers 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 Loss offset by surplus reserves
3.4.4 Changes in defined benefit pension
schemes transferred to retained earnings
3.4.5 Other comprehensive income
transferred to retained earnings
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Lu Thai Textile Co., Ltd. Interim Report 2020
3.4.6 Other
3.5 Specific reserve
3.5.1 Increase in the period
3.5.2 Used in the period
3.6 Other
4. Balances as at the end of the period 858,121,541.00 71,391,357.42 317,206,232.47 1,114,158,611.99 4,272,965,217.52 6,633,842,960.40
H1 2019
Unit: RMB
H1 2019
Other equity instruments
Other
Item Perpet Less: Treasury Specific Total owners’
Share capital Preferred Capital reserves comprehensiv Surplus reserves Retained earnings Other
ual Other stock reserve equity
shares e income
bonds
1. Balances as at the end of the prior year 922,602,311.00 759,836,756.57 486,922,944.94 520,200.00 1,019,608,711.76 3,714,813,049.43 5,930,458,083.82
Add: Adjustments for changed accounting
-520,200.00 15,797,284.81 15,277,084.81
policies
Adjustments for corrections of previous errors
Other adjustments
2. Balances as at the beginning of the year 922,602,311.00 759,836,756.57 486,922,944.94 1,019,608,711.76 3,730,610,334.24 5,945,735,168.63
3. Increase/ decrease in the period (“-” for
-64,480,770.00 -442,630,524.10 -486,922,944.94 22,092,634.24 1,904,285.08
decrease)
3.1 Total comprehensive income 451,153,404.74 451,153,404.74
3.2 Capital increased and reduced by owners -64,480,770.00 -442,630,524.10 -486,922,944.94 -20,188,349.16
3.2.1 Ordinary shares increased by
-64,480,770.00 -442,630,569.04 -486,922,944.94 -20,188,394.10
shareholders
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Lu Thai Textile Co., Ltd. Interim Report 2020
3.2.2 Capital increased by holders of other
equity instruments
3.2.3 Share-based payments included in
owners’ equity
3.2.4 Other 44.94 44.94
3.3 Profit distribution -429,060,770.50 -429,060,770.50
3.3.1 Appropriation to surplus reserves
3.3.2 Appropriation to owners (or
-429,060,770.50 -429,060,770.50
shareholders)
3.3.3 Other
3.4 Transfers 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 Loss offset by surplus reserves
3.4.4 Changes in defined benefit pension
schemes transferred to retained earnings
3.4.5 Other comprehensive income
transferred to retained earnings
3.4.6 Other
3.5 Specific reserve
3.5.1 Increase in the period
3.5.2 Used in the period
3.6 Other
4. Balances as at the end of the period 858,121,541.00 317,206,232.47 1,019,608,711.76 3,752,702,968.48 5,947,639,453.71
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Lu Thai Textile Co., Ltd. Interim Report 2020
III Company Profile
Lu Thai Textile Co., Ltd. (hereinafter referred to as the “Company”) is a joint venture invested by Zibo Lucheng Textile Investment
Co., Ltd (originally named Zibo Lucheng Textile Co., Ltd, hereinafter referred to as Lucheng Textile) and Thailand Tailun Textile Co.,
Ltd. On 3 February 1993, the Company is approved by the former Ministry of Foreign Trade and Economy of the State (1993) 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 19 August
1997 with B-shares stock code of 200726. On 24 November 2000, approved by ZJGSZ [2000] No.199 by CSRC, the Company
increased publication of 50 million shares of general share (A-shares) at the book value of RMB 1.00, which are listed on the
Shenzhen Stock Exchange on 25 December 2000 with A-shares stock code of 000726 through approval by Shenzhen Stock Exchange
with No. (2000) 162 Listing Notice.
As approved by 2000 Annual General Meeting in May 2001, the Company carried out the distribution plan that 10 shares of capital
public reserve are converted to 3 more shares for each 10 shares.
As approved by Resolutions of 2001 Annual General Meeting in June 2002, the Company implemented the distribution plan that 10
shares of capital public reserve are converted 3 more shares for each 10 shares again.
As approved by 2002 Annual General Meeting in May 2003, the Company implemented the distribution plan that 10 shares of 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 25 December 2003, the inner employees’ shares reach 3 years since listing on the A-share stock market, and they
set out circulation on 26 December 2003.
As approved by the Annual General Meeting 2006 held in June 2007, the Company implemented the plan on converting 10 shares 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 December
2008.
According to the relevant resolution of the 2nd Special Extraordinary General Meeting of 2011, the relevant resolution of the 15 th
Meeting 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 23 rd Session of the 6th Board of Directors on 13 August
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 June 2012, the Company counter purchase domestic listed foreign share (B share) 48,837,300 shares.
According to the Proposal on Repurchase and Cancel Part of Unlocked Restricted Share of the Original Incentive Personnel 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 the 6th Board of Directors on 27 March 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
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Lu Thai Textile Co., Ltd. Interim Report 2020
Conditions but Granted Restricted Shares approved on the 11th Meeting of the 7th Board of Directors on 11 June 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 5 August 2015, the Company repurchased 33,156,200 domestically listed foreign shares (B-shares).
As per the Proposal on Buy-back of Some B-shares considered and approved as a resolution at the 2nd Extraordinary General Meeting
on 23 March 2018, the Company repurchased 64,480,800 domestically listed foreign shares (B-shares).
As of 30 June 2020, the registered capital of the Company was RMB858.1215 million.
The Company’s registered address: No. 11, Mingbo Road, Hi-tech Development Zone, Zibo, Shandong
The Company’s unified social credit code: 91370300613281175K
The Company’s legal representative: Liu Zibin
The Company establishes the corporate governance structure consisting of the shareholders meeting, the Board of Directors and the
Supervisory Committee. At present, the Company has set up various departments including the production department, the quality
management department, the yarn BD, the weaving BD, the dyeing BD, the fabric finishing BD, the clothing manufacturing
department, the clothing manufacturing BD, the clothing marketing department, the global marketing department, the enterprise
management department, the financial department, the design & development department and the strategy and market department
etc..
The scope of business of the Company and its subsidiaries (hereinafter referred to as “the Group”) shall include: the design, R&D,
production and sales of various textiles and garments including yarns, fabrics, blouses/shirts, suits and coats etc.; the textiles and
clothing testing; the production and sales of Class I medical devices; the production and sales of non-medical masks and protective
clothing; the technical development, service and consultation based on the e-commerce platform; the processing and sales of
mechanical and electrical products; the procurement of agricultural products; hotel, restaurant, catering, conference and training
services; the lease of self-owned premises and lands; the non-quota license management; the procurement and sales of non-exclusive
goods.
The Company’s financial statements and Notes thereof have been approved for issue by the 13 th Meeting of the 9th Board of Directors
held on 26 August 2020.
There were 18 subsidiaries included into the consolidation scope of the Company from January to June 2020, and for the details,
please refer to Notes VIII. “Equities among Other Entities”.
IV Basis for Preparation of Financial Statements
1. Preparation Basis
This financial statement is prepared in accordance with the accounting standards for business enterprises, and the application guide,
interpretation and other relevant regulations (hereinafter collectively referred to as “Accounting Standards for Business Enterprises”)
issued by the Ministry of Finance. In addition, the Group also disclosed relevant financial information in accordance with the
Regulations on Information Disclosure and Compilation for Companies Public Offering Securities No. 15-General Provisions on
Financial Report (revised in 2014) issued by China Securities Regulatory Commission.
The Group's accounting is based on the accrual basis. Except for certain financial instruments, this financial statement is measured on
the basis of historical cost. If the asset is impaired, the corresponding impairment provision shall be made in accordance with relevant
regulations.
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Lu Thai Textile Co., Ltd. Interim Report 2020
2. Going-concern
The financial statements are presented on the basis of continuing operations.
V Significant Accounting Policies and Estimates
Specific accounting policies and accounting estimates indicators:
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 30 June 2020,
business results and cash flows for the January to June of 2020, and other relevant information.
2. Fiscal Year
The Company’s fiscal year starts on 1 January and ends on 31 December of every year according to the Gregorian calendar.
3. Operating Cycle
The Group regards 12 months as an operating cycle.
4. Recording Currency
The Company and its domestic subsidiaries adopt RMB as the recording currency. The Company’s overseas subsidiaries confirm to
adopt HK Dollar and US Dollar as the recording currency according their major economic environment of the operating. When
preparing the financial statements for the Reporting Period, the Group adopted RMB as the recording currency.
5. Accounting Treatment for Business Combinations under the Common Control and Not under the
Common Control
(1) Business combinations under the same control
For business combinations under the same control, the assets and liabilities of the merged party acquired by the merger party in the
merger, except for adjustments due to different accounting policies, shall be measured at the carrying value of the merged party in the
consolidated financial statement of the final controller on the combination date. As for the difference between the carrying value of
the merger consideration and carrying value of the net assets obtained in the merger, the capital reserve (capital stock premium) shall
be adjusted, and if the capital reserve (capital stock premium) is insufficient to offset, the retained earnings shall be adjusted.
(2) Business combinations not under the same control
For a business combination not under the same control, the cost of the combination is the assets paid, liabilities incurred or assumed,
and the fair value of the equity securities issued on the acquisition date to obtain control over the purchased party. On the purchase
date, the acquired assets, liabilities and contingent liabilities of the purchased party are recognized at fair value.
The difference between the merger cost and the fair value of the identifiable net assets of the acquired party acquired in the merger
(the former is greater than the latter) is recognized as goodwill, and subsequent measurement is made based on the cost deducting the
accumulated impairment provision; the difference between the merger cost and the fair value of the identifiable net assets of the
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Lu Thai Textile Co., Ltd. Interim Report 2020
acquired party acquired in the merger (the former is less than the latter) shall be recorded into the current profit or loss after the
recheck.
(3) Treatment of transaction costs in business combinations
Intermediary expenses such as auditing, legal services, evaluation and consulting and other related management expenses incurred
for the business combination shall be included in the current profit and loss when incurred. The transaction costs of equity securities
or debt securities issued as the merger consideration shall be included in the initial recognition amount of equity securities or debt
securities.
6. Preparation of the Consolidated Financial Statements
(1) Consolidation scope
The consolidation scope of the consolidated financial statements is determined on the basis of control. Control means that the
Company has the power over the invested unit, enjoys variable returns by participating in the related activities of the invested unit,
and has the ability to use the power over the invested unit to influence the amount of its return. Subsidiaries refer to the entities
controlled by the Company (including enterprises, divisible parts of invested entities, structured entities, etc.).
(2) Preparation method of consolidated financial statements
The consolidated financial statements are prepared by the Company based on the financial statements of the Company and its
subsidiaries and other relevant materials. When preparing the consolidated financial statements, the accounting policies and
accounting fiscal of the Company and those of subsidiaries shall be consistent and the large transactions and intercourse balance
among companies shall be offset. Subsidiaries and businesses increased due to business combinations under the same control during
the Reporting Period shall be included into the Company’s combination scope since the date when they are jointly controlled by the
final controller, and the operating result and cash flow since then shall be respectively included into the consolidated income
statement and consolidated cash flow statement. As for subsidiaries and businesses increase due to business combinations not under
the same control during the Reporting Period, the revenue, expenses and profit or those subsidiaries and businesses from the purchase
date to the end of the Reporting Period shall be included into the consolidated income statement and the cash flow thereof shall be
included into the consolidated cash flow statement. The share of shareholders’ equity in subsidiaries not belonging to the Company
shall be regarded as the minority interests and separately listed under the item of shareholders’ equity in the consolidated balance
sheet. The share of current portion of net profit or loss in subsidiaries belonging to minority interests shall presented as the item of
minority interests under the item of net profit in the consolidated income statement. The difference between the losses of subsidiaries
born by not-controlling shareholders and the share of the company’s owners’ equity at the period-beginning the not-controlling
shareholders enjoy (the former is larger than the latter) shall be offset the minority interests.
(3) Purchase of minority shareholders' equity of subsidiaries
As for the difference between the cost of a long-term equity investment newly acquired due to the purchase of the minority shares
and the share of net assets of the subsidiary continuously accounted from the purchase date or combination date the Company shall
enjoy based on the new shareholding ratio and the difference between the disposal price of partial equity investments in the
subsidiary under the premise of remaining the control power and the share of net assets of the subsidiary continuously accounted
from the purchase date or combination date the Company shall enjoy and corresponding to the disposal of long-term equity
investments, the capital reserve (capital stock premium) in the consolidated balance sheet shall be adjusted and when the capital
reserve is insufficient to offset, the retained earnings shall be adjusted.
(4) Treatment of loss of control over subsidiaries
If the control over the original subsidiary is lost due to the disposal of partial equity investments or other reasons, the residual equity
shall be remeasured at the fair value on the date of losing the control power; the balance of the sum of the consideration obtained
from equity disposal and the fair value of residual equity after deducting the sum of the share of the carrying value of net assets in the
original subsidiary continuously accounted from the purchase date the Company shall enjoy based on the original shareholding ratio
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Lu Thai Textile Co., Ltd. Interim Report 2020
and the goodwill shall be recorded into the investment income of the period when the control power is lost. The other comprehensive
income related to the equity investments in the original subsidiary shall be transferred to the current profit or loss when the control
power is lost except for the other comprehensive income arising from changes in net liabilities or net assets due to the remeasurement
of defined benefit plan by the investee.
7. Confirmation Standard for Cash and Cash Equivalent
The term “cash” refers to cash on hand and deposits that are available for payment at any time. Cash equivalents refer to investments
held by the Group that are short-term, highly liquid, easily convertible into known amounts of cash, and have little risk of change in
value.
8. Foreign Currency Businesses and Translation of Foreign Currency Financial Statements
(1) Foreign currency business
The Group's foreign currency business is translated into the amount of the recording currency at the spot exchange rate on the
transaction date.
On the balance sheet date, foreign currency monetary items are 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 the previous balance sheet date is included in the current profit and loss; for foreign currency
non-monetary items measured at historical cost, the translation adopts the spot exchange rate on the day the transaction occurs; for
foreign currency non-monetary items measured at fair value, the translation adopts the spot exchange rate on the day when the fair
value is confirmed, and the difference between the amount of recording currency and the amount of original recording currency shall
be included into the current profit or loss.
(2) Conversion of foreign currency financial statements
When converting the foreign currency financial statements of overseas subsidiaries on the balance sheet date, the assets and liabilities
items in the balance sheet shall be converted at the spot exchange rate on the balance sheet date. Other items of shareholders' equity
except for "undistributed profits" shall be converted at the spot exchange rate on the occurrence date.
Income and expense items in the income statement shall be converted using the current average exchange rate on the transaction date.
All items in the cash flow statement are converted according to the current average exchange rate on the occurrence date of cash flow.
The impact of exchange rate changes on cash is taken as a reconciling item, and the item "impact of exchange rate changes on cash
and cash equivalents" is separately listed in the cash flow statement to reflect.
The difference arising from the conversion of financial statements is reflected in the "other comprehensive income" under the
shareholders' equity in the balance sheet.
When disposing of the overseas operation and losing control rights, the foreign currency statement conversion difference related to
the overseas operation shown under the shareholders' equity in the balance sheet shall be transferred to current profit and loss of
disposal in whole or in proportion to the disposal of overseas operation.
9. Financial Instruments
Financial instruments refer to contracts that form one party’s financial assets and form other parties’ financial liabilities or equity
instruments.
(1) Recognition and derecognition of financial instruments
The Company recognizes a financial asset or liability when it becomes a party of the relevant financial instrument contract.
Where a financial asset satisfies any of the following requirements, the recognition of it is terminated:
① The contractual rights for collecting the cash flow of the said financial asset are terminated;
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Lu Thai Textile Co., Ltd. Interim Report 2020
② The said financial asset has been transferred and meet the following derecognition conditions for transfer of financial assets.
Only when the prevailing obligations of a financial liability are relieved in all or in part may the recognition of the financial 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.
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.
(2) Classification and measurement of financial assets
The Group classifies financial assets into the following three categories according to the business mode of managing financial assets
and the contractual cash flow characteristics of financial assets upon initial recognition: financial assets measured at amortized cost,
financial assets measured at fair value and whose changes are included in other comprehensive income, and financial assets measured
at fair value and whose changes are included in current profit and loss.
Financial assets measured at amortized cost
The Group classifies financial assets that meet the following conditions and are not designated to be measured at fair value and
whose changes are included in current profit and loss as financial assets measured at amortized cost:
The Group's business model for managing this financial asset is aimed at collecting contractual cash flow;
The contractual terms of this financial asset stipulate that the cash flow generated on the specific date is only the payment of principal
and interest based on the principal amount outstanding.
Such financial assets are measured in amortized cost by the effective interest method after initial recognition. Gains or losses arising
from financial assets measured in amortized cost that are not part of any hedging relationship are included in current profit and loss
when derecognition, amortization according to the effective interest method, or impairment is recognized.
Financial assets measured at fair value and whose changes are included in other comprehensive income
The Group classifies financial assets that meet the following conditions and are not designated to be measured at fair value and
whose changes are included in current profit and loss as financial assets measured at fair value and whose changes are included in
other comprehensive income:
The Group's business model for managing this financial asset is aimed at both collecting the contractual cash flow and selling this
financial asset;
The contractual terms of this financial asset stipulate that the cash flow generated on the specific date is only the payment of principal
and interest based on the principal amount outstanding.
Such financial assets are subsequently measured at fair value after initial recognition. Interest, impairment losses or gains and
exchange gains and losses calculated by the effective interest method are included in current profit and loss, while other gains or
losses are included in other comprehensive income. When the financial asset is derecognized, the accumulated gains or losses
previously included in other comprehensive income are transferred out and included in current profit and loss.
Financial assets measured at fair value and whose changes are included in current profit and loss
Except for the above financial assets measured at amortized cost and at fair value with changes included in other comprehensive
income, the Group classifies all other financial assets as financial assets measured at fair value with changes included in current
profit and loss. Upon initial recognition, in order to eliminate or significantly reduce accounting mismatches, the Group irrevocably
designates some financial assets that should have been measured at amortized cost or at fair value and whose changes are included in
other comprehensive income as financial assets measured at fair value and whose changes are included in current profit and loss.
Such financial assets are subsequently measured at fair value after initial recognition, and the resulting gains or losses (including
interest and dividend income) are included in current profit and loss unless the financial assets are part of the hedging relationship.
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The business model of managing financial assets refers to how the Group manages financial assets to generate cash flow. The
business model determines whether the cash flow of the financial assets managed by the Group comes from the collection of
contractual cash flow, the sale of financial assets or both. The Group determines the business model for managing financial assets on
the basis of objective facts and specific business objectives decided by key management personnel to manage financial assets.
The Group evaluates the contractual cash flow characteristics of financial assets to determine whether the contractual cash flow
generated by the relevant financial assets on the specific date is only the payment of principal and interest based on the principal
amount outstanding. Among them, the principal refers to the fair value of financial assets upon initial recognition; interest includes
consideration for the time value of money, credit risks related to the principal amount outstanding in the specific period, and other
basic lending risks, costs and profits. In addition, the Group evaluates the contract terms that may lead to changes in the time
distribution or amount of contractual cash flow of financial assets to determine whether they meet the requirements of the
above-mentioned contractual cash flow characteristics.
Only when the Group changes the business mode of managing financial assets will all affected related financial assets be reclassified
on the first day of the first reporting period after business model changes, otherwise financial assets cannot be reclassified after initial
recognition.
Financial assets are measured at fair value upon initial recognition. For financial assets measured at fair value and whose changes are
included in current profit and loss, relevant transaction expenses are directly included in current profit and loss; for other types of
financial assets, relevant transaction expenses are included in the initial recognition amount. For accounts receivable arising from the
sale of products or the provision of labor services, which do not include or do not consider significant financing components, the
amount of consideration the Group is expected to be entitled to receive is taken as the initial recognition amount.
(3) Classification and measurement of financial liabilities
The Group's financial liabilities are classified upon initial recognition as: financial liabilities measured at fair value and whose
changes are included in current profit and loss, and financial liabilities measured at amortized cost. For financial liabilities that are
not classified as measured at fair value and whose changes are included in current profit and loss, relevant transaction costs are
included in the initial recognition amount.
Financial liabilities measured at fair value and whose changes are included in current profit and loss
Financial liabilities measured at fair value and whose changes are included in current profit and loss include transactional financial
liabilities and financial liabilities designated as measured at fair value upon initial recognition and whose changes are included in
current profit and loss. Subsequent measurement shall be carried out according to fair value for such financial liabilities. Gains or
losses resulting from changes in fair value and dividends and interest expenses related to such financial liabilities shall be included in
current profit and loss.
Financial liabilities measured at amortized cost
Other financial liabilities are subsequently measured at amortized cost by using the effective interest method. Gains or losses
resulting from derecognition or amortization are included in current profit and loss.
Distinction between financial liabilities and equity instruments
Financial liabilities refer to liabilities that meet one of the following conditions:
① The contractual obligation to deliver cash or other financial assets to other parties.
② The contractual obligation to exchange financial assets or financial liabilities with other parties under potentially unfavorable
conditions.
③ Non-derivative contracts that must be or can be settled with the enterprise's own equity instruments in the future, and the
enterprise will deliver a variable number of its own equity instruments according to the contract.
④ Derivative contracts that must be or can be settled with the enterprise's own equity instruments in the future, except derivatives
contracts that exchange a fixed amount of cash or other financial assets with a fixed amount of its own equity instruments.
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Equity instruments refer to contracts that can prove that an enterprise has the residual equity in its assets after deducting all liabilities.
If the Group cannot unconditionally avoid performing a contractual obligation by delivering cash or other financial assets, the
contractual obligation meets the definition of financial liability.
If a financial instrument must be or can be settled with the Group's own equity instruments, it is necessary to consider whether the
Group's own equity instruments used to settle the instrument are used as substitutes for cash or other financial assets or to enable the
holder of this instrument to enjoy the residual equity in the assets after deducting all liabilities from the issuer. If it is the former, this
instrument is the Group's financial liability; if the latter is the case, this instrument is the Group's equity instrument.
(4) Derivative financial instruments and embedded derivatives
The Group's derivative financial instruments include forward foreign exchange contracts. Initially, the fair value on the date when the
derivative transaction contract is signed shall be used for measurement, and the fair value shall be used for subsequent measurement.
Derivative financial instruments with positive fair value are recognized as an asset, while those with negative fair value are indeed
recognized as a liability. Any gains or losses arising from changes in fair value that do not conform to the provisions of hedge
accounting are directly included in current profit and loss.
For hybrid instruments containing embedded derivatives, such as the main contract is a financial asset, the relevant provisions on
classification of financial assets shall apply to the hybrid instruments as a whole. If the main contract is not a financial asset, and the
hybrid instrument is not measured at fair value and its changes are included in current profit and loss for accounting treatment, the
embedded derivative instrument has no close relationship with the main contract in terms of economic characteristics and risks, and
has the same conditions as the embedded derivative instrument, and the separate existing instrument meets the definition of
derivative instrument, the embedded derivative instrument shall be separated from the hybrid instrument and treated as a separate
derivative financial instrument. If it is not possible to separately measure embedded derivative instruments at the time of acquisition
or the subsequent balance sheet date, the hybrid instruments as a whole are designated as financial assets or financial liabilities
measured at fair value and their changes are included in current profit and loss.
(5) Fair value of financial instruments
See Note V (10) for the method of determining the fair value of financial assets and liabilities.
(6) Impairment of financial assets
The Group conducts impairment accounting treatment for the following items and confirms the loss provision based on the expected
credit losses:
Financial assets measured at amortized cost;
Receivables and creditors' investments measured at fair value and whose changes are included in other comprehensive income;
Lease receivables;
Financial guarantee contracts (except those that are measured at fair value and whose changes are included in current profit and loss,
the transfer of financial assets does not meet the conditions for derecognition or continue to involve in the transferred financial
assets).
Measurement of expected credit loss
Expected credit loss refers to the weighted average of the credit losses of financial instruments weighted by the risk of default. Credit
loss refers to the difference between all contractual cash flows discounted at the original effective interest rate and receivable
according to the contract and all cash flows expected to be collected of the Group, i.e. the present value of all cash shortfalls.
Considering the reasonable and reliable information about past events, current situation and the forecast of future economic situation,
the company takes the risk of default as the weight, calculates the probability weighted amount of the present value of the difference
between the cash flow receivable from the contract and the cash flow expected to be received, and confirms the expected credit loss.
The Group separately measures the expected credit losses of financial instruments at different stages. If the credit risk of financial
instruments has not increased significantly since the initial recognition, it is in the first stage. The Group measures the loss reserve
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according to the expected credit loss in the next 12 months; if the credit risk of financial instruments has increased significantly since
its initial recognition but no credit impairment has occurred, it is in the second stage. The Group measures the loss reserve according
to the expected credit loss during the whole duration of this instrument; if the financial instrument has suffered credit impairment
since its initial recognition, it is in the third stage. The Group measures the loss reserve according to the expected credit loss during
the whole duration of this instrument.
For financial instruments with low credit risk on the balance sheet date, the Group assumes that their credit risk has not increased
significantly since the initial recognition, and measures the loss reserve according to the expected credit loss in the next 12 months.
The expected credit loss during the whole duration refers to the expected credit loss caused by all possible default events during the
whole expected duration of financial instruments. The expected credit loss in the next 12 months refers to the expected credit loss
caused by the possible default events of financial instruments within 12 months (or the expected duration if the expected duration of
financial instruments is less than 12 months) after the balance sheet date, which is part of the expected credit loss in the whole
duration.
When measuring the expected credit loss, the longest term that the Group needs to consider is the longest contract term that the
enterprise faces credit risk (including the option to renew the contract).
The Group calculates interest income based on the book balance before deducting impairment provisions and the effective interest
rate for financial instruments in the first and second stages and with low credit risk. The interest income shall be calculated according
to their book balance minus the amortized cost after impairment provision and the effective interest rate for financial instruments in
the third stage.
The Group always measures its loss reserves at an amount equivalent to the expected credit loss during the entire duration for notes
receivable and accounts receivable, regardless of whether there is any significant financing component.
If a single financial asset cannot be used to evaluate the expected credit loss information at a reasonable cost, the Group will divide
the notes receivable and accounts receivable into portfolio on the basis of the credit risk features, and calculate the expected credit
loss based on the portfolio. The basis for determining the portfolio is as follows:
A. Notes receivable
Notes receivable portfolio 1: bank acceptance bills and L/C
Notes receivable portfolio 2: commercial acceptance bills
B. Accounts receivable
Accounts receivable portfolio 1: payment not overdue (with credit insurance)
Accounts receivable portfolio 2: payment not overdue (without credit insurance)
Accounts receivable portfolio 3: payment overdue (with credit insurance)
Accounts receivable portfolio 4: payment overdue (without credit insurance)
For notes receivable divided into portfolios, with reference to historical credit loss experience, combined with current conditions and
predictions of future economic conditions, the Group has calculated expected credit losses through default risk exposure and
expected credit loss rate for the entire duration.
For accounts receivable divided into portfolios, with reference to historical credit loss experience, combined with current conditions
and predictions of future economic conditions, the Group has prepared a comparison table between the number of overdue days of
accounts receivable and the expected credit loss rate over the entire duration, and has calculated the expected credit loss.
Other receivables
The Group divides other receivables into several portfolios based on the features of credit risk, and calculates the expected credit
losses on the basis of the combination. The basis for determining the portfolio is as follows:
Other receivables portfolio 1: Receivables from related parties within the scope of consolidation
Other receivables portfolio 2: Tax refund receivable
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Other receivables portfolio 3: Deposit receivable and security deposit
Other receivables portfolio 4: other accounts
For other receivables that are divided into portfolios, the Group calculates the expected credit loss with the default risk exposure and
the expected credit loss rate within the next 12 months or the entire duration.
Long-term receivables
The long-term receivables of the Group include finance lease receivables and long-term advance receivables.
Based on credit risk characteristics, the Group divides long-term receivables into portfolios of finance lease receivables and other
long-term receivables, calculates expected credit losses based on the portfolio. The basis for determining the portfolio is as follows:
A. Finance lease receivable portfolio: finance lease receivable
B. Other long-term receivables: prepaid receivables
For the financial lease receivables, the with reference to the historical credit loss experience, in combination with the current situation
and the prediction of the future economic situation, the Group calculates the expected credit loss with the default risk exposure and
the expected credit loss rate for the entire duration.
Others, except finance lease receivables, are divided into portfolio long-term receivables; the Group calculates expected credit losses
with default risk exposure and expected credit loss rate within the next 12 months or the entire duration.
Creditors' investment and other creditors' investment
For creditors' investment and other creditors' investment, the Group calculates the expected credit based on the nature of the
investment, as well as kinds of types of counterparties and risk exposures, the default risk exposure and the expected credit loss rate
within the next 12 months or the entire duration loss.
Assessment on significant increase of credit risk
In order to determine the relative changes in the default risk of financial instruments during their expected life and to assess whether
the credit risk of financial instruments has increased significantly since initial recognition, the Group compares the default risk of
financial instruments on the balance sheet date with the default risk on the initial recognition date.
When determining whether the credit risk has risen greatly since the initial recognition, the Group considers reasonable and reliable
information (forward-looking information inclusive) that can be obtained without unnecessary extra costs or efforts. The information
the Group considers shall include:
The debtor fails to pay the principal and interest according to the contract expiration date;
The external or internal credit ratings (if any) of financial instruments, which have occurred or are expected, deteriorate significantly;
The debtor’s operating results, which have occurred or are expected, deteriorate significantly;
Existing or expected changes in technology, market, economy or legal environment will lead to a great adverse effect on the debtor's
ability to repay the Group.
Based on the nature of financial instruments, the Group assesses whether there is great risk in credit risk on the basis of individual
financial instruments or financial instrument portfolios. During assessment based on financial instrument portfolios, the Group can
divide financial instruments on the basis of common credit risk characteristics, such as overdue information and credit risk ratings.
In case that the period overdue exceeds 30 days, the Group determines that there is a significant increase in the credit risk of financial
instruments.
Financial assets with depreciation of credit
The Group assesses, on the balance sheet date, whether there is any credit impairment to financial assets measured at amortized cost
and creditors' investment measured at fair value and whose changes are included in other comprehensive income. In case of one or
more events that adversely affect the expected future cash flow of a financial asset occur, the financial asset will become financial
assets with depreciation of credit. The observable information below can be treated as evidence for credit impairment to financial
assets:
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The issuer or debtor is caught in a serious financial difficulty;
The debtor breaches the agreement of contract, such as default or overdue payment of interest or principal, or other default;
Due to economic or contractual considerations related to the debtor's financial difficulties, the Group gives concessions to the debtor;
and the concessions will not be made under any other circumstances;
There lies a great probability of bankruptcy or other financial restructuring for the debtor;
The issuer or debtor is caught in financial difficulties, which leads to the disappearance of the active market of the financial asset;
Presentation of expected credit loss provision
The Group remeasures expected credit losses on each balance sheet date to reflect the changes in the credit risk of financial
instruments since initial recognition; the increase or reversal amount of the loss reserve formed there from shall be included in the
current profit and loss as impairment losses or gains. For financial assets measured at amortized cost, the loss allowance offsets the
carrying amount of the financial asset listed in the balance sheet; for creditors’ investment that are measured at fair value and its
changes are included in other comprehensive income, the Group recognizes its loss reserve in other comprehensive income and will
not offset the carrying amount of the financial asset.
Write-offs
In case that the Group fails to reasonably expect the contract cash flow of the financial asset to be recovered in a full or partial scale,
the book balance of the financial asset will be written off directly. Such write-downs may constitute the derecognition for related
financial assets. This situation occurs frequently when the Group determines that the debtor does not have any assets or any source of
income to generate sufficient cash flow to repay the amount that will be written off. However, in accordance with the procedures for
recovering due payments of the Group, the written-off financial assets may still be affected by the execution activities.
In case that the financial asset written off is recovered later, it shall be included in the current profit and loss as the reversal of the
impairment loss.
(7) Transfer of financial assets
The transfer of financial assets refers to the transfer or delivery of financial assets to another party (transferee) other than the issuer of
the financial asset.
If the Group has transferred almost all the risks and rewards of the ownership of financial assets to the transferee, derecognize the
financial asset; if it retains almost all the risks and rewards of the ownership of financial assets, the financial asset will not be
derecognized.
If the Group has neither transferred nor retained almost all the risks and rewards of the ownership of financial assets, it shall be dealt
with in the following situations: if the control of the financial asset is abandoned, the confirmation of the financial asset shall be
terminated and the generated assets and liabilities shall be confirmed; If the financial assets are controlled, the relevant financial assets
shall be recognized according to the extent of their continued involvement in the transferred financial assets, and the relevant liabilities
shall be recognized accordingly.
(8) Offsetting financial assets and financial liabilities
When the Company has a legal right that is currently enforceable to set off the recognized financial assets and financial liabilities,
and intends either to settle on a net basis, or to realize the financial asset and settle the financial liability simultaneously, a 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.
10. Measurement of Fair Value
Fair value refers to the price that market participants can receive from sales of a asset or shall pay for transfer of a liability in the
orderly transaction that occurs on the measurement date.
The Group measures related assets or liabilities at fair value, assuming that the orderly transaction of selling assets or transferring
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liabilities is conducted in the main market of related assets or liabilities; if there is no main market, the Group assumes that the
transaction is conducted in the most beneficial market. The main market (or the most favorable market) is the trading market that the
Group can enter on the measurement date. The Group uses the assumptions used by market participants to maximize their economic
benefits when pricing the asset or liability.
For financial assets or financial liabilities with active markets, the Group uses the quotation in active markets to determine its fair
value. If there is no active market for financial instruments, the Group uses valuation techniques to determine its fair value.
When measuring non-financial assets at fair value, the ability of market participants to best use the asset for generating economic
benefits, or the ability to sell the asset to other market participants that can best use the asset to generate economic benefits shall be
considered.
The Group adopts valuation techniques that are applicable in the current situation and have sufficient available data and other
information to support it. Priority is given to using relevant observable input values. Only when observable input values are
unavailable or are not feasible to obtain, the unobservable input values can be used. For assets and liabilities measured or disclosed at
fair value in the financial statements, the fair value hierarchy to which they belong is determined based on the lowest level input
value that is important to the fair value measurement as a whole: the first level input value is the unadjusted quotation of the same
assets or liabilities able to be obtained in an active market on the measurement date; the second level input value is the directly or
indirectly observable input value of the relevant asset or liability except the first level input value; the third level input value is
unobservable input value of related assets or liabilities.
On each balance sheet date, the Group reassessed the assets and liabilities continuously measured at fair value confirmed in the
financial statements to determine whether there is a transition among levels of fair value measurement.
Presented respectively without mutual offset.
11. Inventory
(1) Classification
Inventories mainly include raw materials, work-in-progress, stock products, product processed on entrustment, consumptive
biological assets and etc.
(2) Valuation method of inventories acquiring and issuing
Inventories shall be measured at actual cost when acquired, and the cost of the inventories including the procurement cost, 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.
(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.
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For the packing articles, should be amortized by one-off amortization method when consuming.
12. Long-term Equity Investments
Long-term equity investments include equity investments in subsidiaries, joint ventures and associated enterprises. The investee that
the Group is able to exert significant influence is an associated enterprise of the Group.
(1) Determination of initial investment cost
Long-term equity investment that forms a business combination: Long-term equity investment obtained by business combination
under the same control, on the merger date, based on the book value share of the merged party’s owners’ equity in the final
controller’s consolidated financial statements as investment cost; The long-term equity investment acquired by a business
combination shall be the investment cost of the long-term equity investment according to the cost of the combination.
For long-term equity investments obtained by other means: the long-term equity investment obtained by paying cash shall be the
initial investment cost according to the actual purchase price; the long-term equity investment obtained by issuing equity securities
shall be the initial investment cost of the fair value of the equity securities issued.
(2) Subsequent measurement and profit and loss confirmation method
Investment in subsidiaries is accounted for using the cost method unless the investment meets the conditions for holding for sale;
investment in associates and joint ventures is accounted for using the equity method.
For long-term equity investments that are accounted for using the cost method, in addition to the cash dividends or profits that have
been declared but not yet included in the actual payment or consideration included in the investment, the cash dividends or profits
declared by the invested entity are recognized as investment income and recorded into the current profit and loss.
For long-term equity investments accounted for using the equity method, where the initial investment cost is greater than the fair
value share of the investee’s identifiable net assets at the time of investment, the investment cost of the long-term equity investment
is not adjusted; when the initial investment cost is less than the investment, the investee ’s If the fair value share of net assets is
identified, the book value of the long-term equity investment is adjusted, and the difference is included in the current profit and loss
of the investment.
When using the equity method of accounting, the investment income and other comprehensive income are recognized separately
according to the share of net profit and loss and other comprehensive income realized by the invested unit that should be enjoyed or
shared, and the book value of the long-term equity investment is adjusted at the same time; The distribution of profits or cash
dividends should be calculated to reduce the book value of long-term equity investment; the investee's other changes in owner's
equity other than net profit and loss, other comprehensive income and profit distribution, adjust the book value of long-term equity
investment and Included in capital reserves (other capital reserves). When confirming the share of the investee’s net profit or loss,
based on the fair value of the investee’s identifiable assets at the time of investment, and in accordance with the Group’s accounting
policies and accounting period, the net profit of the investee Confirm after making adjustments.
If the additional investment and other reasons can exert significant influence on the investee or exercise joint control but do not
constitute control, on the conversion date, the sum of the fair value of the original equity plus the additional investment cost will be
used as the initial accounting for the equity method cost of investment. The difference between the fair value of the original equity on
the conversion date and the book value, as well as the cumulative changes in fair value originally included in other comprehensive
income, are transferred to the current profit and loss accounted for using the equity method.
If the joint control or significant influence on the invested unit is lost due to the disposal of part of the equity investment, etc., the
remaining equity after the disposal shall be changed to the Accounting Standards for Business Enterprises No. 22-Recognition and
Measurement of Financial Instruments is performed, and the difference between fair value and book value is included in the current
profit and loss. Other comprehensive income recognized by the original equity investment due to the equity method of accounting
shall be accounted for on the same basis as the investee’s direct disposal of related assets or liabilities when the equity method of
accounting is terminated; changes in other owners ’equity related to the original equity investment Transfer to current profit and loss.
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If the control of the invested unit is lost due to the disposal of part of the equity investment, if the remaining equity after the disposal
can exercise joint control or exert significant influence on the invested unit, the equity method is used for accounting and the
remaining equity is treated as When acquiring, the equity method is adopted for adjustment; if the remaining equity after disposal
cannot exercise joint control or exert significant influence on the investee, the accounting shall be changed according to the relevant
provisions of "Accounting Standards for Business Enterprises No. 22-Recognition and Measurement of Financial Instruments The
difference between the fair value and the book value on the date of loss of control is included in the current profit and loss.
If the shareholding ratio of the company decreases due to the capital increase of other investors, thereby losing control but being able
to exercise joint control or exert significant influence on the investee, the new shareholding ratio shall be used to confirm that the
company should enjoy the capital increase of the investee. The difference between the increase in share and the increase in the share
of net assets and the original book value of the long-term equity investment corresponding to the decrease in the proportion of the
shareholding that should be carried forward are included in the current profit and loss; That is, adjustments are made using the equity
method of accounting.
The unrealized internal transaction gains and losses that occur between the Group and associates and joint ventures are calculated
according to the shareholding ratio and are attributed to the Group, and the investment gains and losses are recognized on the basis of
offset. However, the unrealized internal transaction losses incurred by the Group and the investee are the impairment losses of the
transferred assets and shall not be offset.
(3) Determine the basis for joint control and significant influence on the invested unit
Joint control refers to the common control of an arrangement in accordance with the relevant agreement, and related activities of the
arrangement must be agreed upon by the parties sharing control rights before they can make decisions. When judging whether there
is joint control, first determine whether all participants or a combination of participants collectively control the arrangement, and
secondly determine whether the decision-making related activities of the arrangement must be unanimously agreed by the
participants who collectively control the arrangement. If all participants or a group of participants must act in concert to determine
the relevant activities of an arrangement, it is considered that all participants or a group of participants collectively control the
arrangement; if there is a combination of two or more participants can collectively Controlling an arrangement does not constitute
joint control. When judging whether there is joint control, the protective rights enjoyed are not considered.
Significant influence means that the investor has the right to participate in the decision-making of the financial and operating policies
of the invested unit, but cannot control or jointly control the formulation of these policies with other parties. When determining
whether it can exert significant influence on the invested unit, consider that the investor directly or indirectly holds the voting shares
of the invested unit and the current executable potential voting rights held by the investor and other parties are assumed to be
converted into the invested unit After the equity of the company, the impact includes the current convertible warrants, stock options
and convertible corporate bonds issued by the investee.
When the company directly or indirectly owns more than 20% (including 20%) but less than 50% of the voting shares of the invested
unit, it is generally considered to have a significant impact on the invested unit, unless there is clear evidence that such circumstances
cannot participate in the production and operation decisions of the invested unit, and does not have a significant impact; when the
Group owns less than 20% (excluding) voting rights of the invested unit, it generally does not consider it to have a significant impact
on the invested unit unless there is clear evidence that Under these circumstances, it can participate in the production and operation
decisions of the invested unit and have a significant impact.
(4) Impairment test method and impairment provision method
For the investments in subsidiaries, associates and joint ventures, the method of accruing asset impairment is shown in the Note
V-18.
13. Investment Property
Measurement model of investment real estate
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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 and withdraw depreciation or amortization as regulations of
fixed assets or intangible assets.
The Company adopts the cost mode to conduct the subsequent measurement on the investment real estate, see the Note V-18 for the
method of withdrawing asset impairment provision.
The difference between the disposal income of investment real estate sales, transfer, scrap or damage after deducting its book value and
related taxes is included in the current profit and loss.
14. Fixed Assets
(1) Conditions for Recognition
The term “fixed assets” refers to the tangible assets that simultaneously possess the features as follows: (a) they are held for the 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 of the Group are initially measured at the actual cost at the time of acquisition. Please refer to
Note V-18 for the test method of impairment of fixed assets and the method of impairment provision.
(2) Depreciation Methods
Category of fixed assets Method Useful life Salvage value Annual deprecation
Average method of
Housing and building 5-30 0-10 20.00-3.00
useful life
Average method of
Machinery equipments 10-18 0-10 10.00-5.00
useful life
Average method of
Transportation vehicle 5 0-10 20.00-18.00
useful life
Electronic equipments Average method of
5 0-10 20.00-18.00
and others useful life
(3) Recognition Basis, Pricing and Depreciation Method of Fixed Assets by Finance Lease
When the fixed assets leased by the Group meet one or more of the following criteria, it is recognized as fixed assets leased by
financing: ① When the lease term expires, the ownership of the leased assets is transferred to the Group. ② The Group has the
option to purchase leased assets, and the purchase price concluded is expected to be much lower than the fair value of the leased
assets when the option is exercised, so it can be reasonably determined that the Group will exercise this option on the lease start date.
③Even if the ownership of the asset is not transferred, the lease period accounts for most of the service life of the leased asset. ④
The present value of the Group's minimum lease payment on the lease start date is almost equivalent to the fair value of the leased
asset on the lease start date. ⑤ The leased assets are of a special nature and only the Group can use them without major renovation.
The fixed assets leased under financial leases shall be the booked value at the lower of the fair value of the leased assets on the lease
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Lu Thai Textile Co., Ltd. Interim Report 2020
start date and the present value of the minimum lease payment. The minimum lease payment is taken as the book value of long-term
payables, and the difference is taken as unrecognized financing expenses. The initial direct costs such as handling fees, attorney’s
fees, travel expenses, and stamp taxes that occurred during the lease negotiation and signing of the lease contract are included in the
value of the leased asset. Unrecognized financing expenses are allocated using the effective interest rate method in each period of the
lease period. Financing leased fixed assets adopts the same policy as its own fixed assets to withdraw depreciation of leased assets. If
it can be reasonably determined that the ownership of the leased asset will be acquired at the end of the lease period, depreciation will
be accrued within the useful life of the leased asset; if it cannot be reasonably determined that the ownership of the leased asset can
be acquired at the end of the lease period, the depreciation shall be accrued in the shorter period between the lease period and the
residual life of the leased asset.
(4) Other Notes
At the end of each year, review is carried out by the Group for the service life, estimated net residual value and depreciation method
of fixed assets. If there is any difference between the expected service life and the original estimated service life, the service life of
fixed assets will be adjusted; if there is any difference between the expected net residual value and the original estimated net residual
value, the expected net residual value will be adjusted.
Major repair expenses incurred by the Group in the regular inspection of fixed assets are included in the cost of fixed assets if
evidences show that they meet the recognition conditions of fixed assets, and those fail to meet the recognition conditions of fixed
assets are included in the current profit and loss. Fixed assets at intervals of regular major repairs shall be depreciated as accrued.
15. Construction in Progress
Construction in process is measured at actual cost. Actual cost comprises construction costs, borrowing costs that are eligible 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 provision withdrawal method of the construction in progress to Notes V-18.
16. Biological Assets
(1) Criteria for determination of biological assets
Biological assets refer to the assets composed of living animals and plants. It shall be recognized if biological assets meet the
following conditions at the same time:
① The enterprise owns or controls the biological assets on account of past transactions or events;
② The economic benefits or service potential related to the biological assets are likely to flow into the enterprise;
③ The cost of the biological assets can be reliably measured.
(2) Classification of biological assets
The biological assets of the Group include consumptive biological assets and productive biological assets.
①Consumptive biological assets
Consumptive biological assets refer to the biological assets held for sale or to be harvested as agricultural products in future,
including crops, vegetables under growing, timber production forest and domestic animals for sale. The consumptive biological
assets shall be measured based on cost. All costs for planting, creating, cultivating or raising of consumptive biological assets shall 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.
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Upon harvest or sale, the cost of consumptive biological assets shall be based on its book value through weighted average.
②Productive biological assets
Productive biological assets refer to agricultural products produced, and biological assets held for labor provision or lease, 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 management, maintenance and feed cost, which incurred after the productive biological assets are closed or the expected
production and operation purpose are achieved, will be included in the current profit and loss.
The depreciation of productive biological assets is calculated by the straight-line method. The depreciation rate is determined as
follows after deducting the residual value based on the estimated service life of various biological assets:
Annual
Service life Residuals
Category depreciation
(year) rate %
rate %
Stockbreeding
① 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.
(3) Treatment of impairment of biological assets
If the net realizable value of the consumptive biological asset is lower than its carrying amount, falling price reserves of the
biological asset shall be accrued according to the difference between the net realizable value and the carrying amount, and it shall be
included in the current profit and loss. If the factors influencing the impairment of consumptive biological assets have been
eliminated, the write-down amount shall be recovered and reversed within the amount of the original falling price reserves, and the
reversed amount shall be included in the current profit and loss.
Please refer to Note V-18 for the method of provision for impairment of assets of productive biological assets.
17. Intangible Assets
(1) Pricing Method, Useful Life and Impairment Test
The intangible assets of the Group include land use right, patent right, etc.
Intangible assets are initially measured at cost, and their service life is analyzed and determined when intangible assets are acquired.
If the service life of intangible assets is limited, the intangible assets shall be amortized by the method that can reflect the expected
realization method of the economic benefits related to the assets within the expected service life since they are available for use. The
straight-line method shall be used for amortization if no expected realization method can be determined reliably. Intangible assets
with uncertain service life shall not be amortized.
The amortization method of intangible assets with limited service life is as follows:
Amortization
Category Service life Note
method
Land use right Stipulated in the land certificate Method of line
Patent use right 10 years Method of line
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Software use right 1-3 years Method of line
Brand use right 10 years Method of line
At the end of each year, the Group reviews the service life and amortization method of intangible assets with limited service life. If
the estimate is different from the previous one, the original estimate shall be adjusted and treated as per accounting estimate change.
If it is estimated that an intangible asset can no longer bring future economic benefits to the enterprise on the date of balance sheet,
this carrying amount of the intangible asset shall be transferred into the current profit and loss.
The method of withdrawing impairment on intangible assets was stated in the Note V-18.
(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 can be capitalized only when they satisfy the following conditions simultaneously: 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. The development expenditures shall be recorded into profit or loss for
the current period when they don’t satisfy the following conditions.
The research and development project of the Group will enter the development stage after meeting the above conditions and the
project is approved and initiated through technical feasibility and economic feasibility study.
The capitalized expenditure in the development stage is listed as expenditure for development on the balance sheet, and it will be
transferred to intangible assets from the date when the project reaches the intended purpose.
18. Impairment of Long-term Assets
For long term equity investment in subsidiaries, associated enterprises and joint ventures, investment real estate which follow-up
measurement is carried out by cost pattern, fixed assets, project under construction, productive biological assets measured by cost
pattern, intangible assets, business reputation, etc. (excluding inventory, investment real estate measured by fair value pattern,
deferred income tax assets, financial assets), the impairment of assets shall be determined according to the following methods:
On the date of the balance sheet, determination shall be made to see whether there is any sign of possible impairment of assets. If
there is, the Group will estimate its recoverable amount and conduct impairment test. For goodwill, intangible assets with uncertain
service life and intangible assets that have not reached the serviceable state due to business merger, impairment test shall be carried
out every year regardless of whether there is any sign of impairment.
The recoverable amount is determined according to the net amount of the fair value of the asset minus the disposal expenses and the
present value of the expected future cash flow of the asset, the higher amount shall be prevail. The Group estimates the recoverable
amount on the basis of a single asset. If it is difficult to estimate the recoverable amount of a single asset, the recoverable amount of
the asset group shall be determined based on the asset group to which the asset belongs. The asset group is determined on the basis of
whether the main cash inflow generated by the asset group is independent of the cash inflow of other assets or asset groups.
When the recoverable amount of an asset or asset group is lower than its carrying amount, the group will write down its carrying
amount to the recoverable amount, and the written down amount will be included in the current profit and loss, and the corresponding
asset impairment reserve will be accrued.
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Regarding the impairment test of business reputation, the carrying amount of business reputation formed by business merger shall be
apportioned to the relevant asset group in a reasonable way from the date of purchase. If it is difficult to apportion to the relevant
asset group, it shall be apportioned to the relevant combination of asset group. The relevant asset group or combination of asset
groups is the one that can benefit from the synergy effect of business merger, and is the one smaller than the reportable segment
determined by the Group.
In the impairment test, if there is any sign of impairment in the asset group or combination of asset groups related to business
reputation, first, impairment test shall be carried out on the asset group or combination of asset groups not containing business
reputation, to calculate the recoverable amount and recognize the corresponding impairment loss. Then impairment test shall be
carried out on the asset group or combination of asset group containing business reputation to compare the carrying amount with the
recoverable amount. If the recoverable amount is lower than the carrying amount, the impairment loss of business reputation shall be
recognized.
Once the impairment loss of assets is recognized, it will not be reversed in the future accounting period.
19. Long-term Deferred Expenses
The long-term expenses to be amortized incurred by the Group are valued at the actual cost and amortized averagely according to the
expected benefit period. For long-term expenses to be amortized, the amortized value that cannot benefit the future accounting period
shall be included in the current profit and loss.
20. Contract liabilities
Contract liabilities reflect the Company’s obligation of transferring commodities to customers for the consideration received or
receivable from them. Before the transfer of a commodity to a customer, if the customer has paid the contract consideration or gained
the right to charge the contract consideration unconditionally, the contract liability should be recognized by the amount received or
receivable at the earlier between the customer’s actual payment and the due date of the amount payable. Contract assets and contract
liabilities under the same contract are presented in net amounts, and contract assets and contract liabilities under different contracts
should not be offset.
21. Payroll
(1) Accounting Treatment of Short-term Compensation
During the accounting period in which employees provide services, the Group recognizes the actual employee wages, bonuses, social
insurance premiums such as medical insurance premiums, industrial injury insurance premiums, and maternity insurance premiums
and housing provident funds paid to employees according to the prescribed standards and proportions as liabilities and included them
in the current profit and loss or related asset costs. If the liability is not expected to be fully paid within twelve months after the end
of the annual reporting period for employees to provide related services, and the financial impact is significant, the liability will be
measured at the discounted amount.
(2) Accounting Treatment of the Welfare after Departure
The post-employment benefit plan includes a defined contribution plan and a defined benefit plan. Among them, the defined
contribution plan refers to the post-employment benefit plan that the enterprise no longer assumes further payment obligations after
the fixed fund has paid a fixed fee; the defined benefit plan refers to the post-employment benefit plan other than the established
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Lu Thai Textile Co., Ltd. Interim Report 2020
contribution plan.
Set withdrawal plan
The set contribution plan includes basic pension insurance and unemployment insurance.
During the accounting period in which employees provide services, the amount of deposit payable calculated according to the set
withdrawal plan is recognized as a liability and included in the current profit and loss or related asset costs.
Define a benefit plan
For the defined benefit plan, an independent actuary performs an actuarial valuation on the annual balance sheet date, and the cost of
providing benefits is determined by the expected cumulative benefit unit method. The employee compensation cost caused by the
Group's defined benefit plan includes the following components:
①Service cost, including current service cost, past service cost and settlement gains or losses. Among them, the current service cost
refers to the increase in the present value of the defined benefit plan obligations caused by the employees providing services in the
current period; the past service cost refers to the defined benefit related to the employee services in the previous period caused by the
modification of the defined benefit plan An increase or decrease in the present value of plan obligations.
② The net interest of the net liabilities or net assets of the defined benefit plan, including the interest income of the plan assets, the
interest expense of the defined benefit plan obligations and the interest affected by the asset ceiling.
③ Re-measure the changes caused by the net liabilities or net assets of the defined benefit plan.
Unless other accounting standards require or allow employee benefit costs to be included in the cost of assets, the Group will include
the above items ① and ② into the current profit and loss; item ③ is included in other comprehensive income and will not be
transferred back to profit or loss in the subsequent accounting period When the defined benefit plan is terminated, all the parts
originally included in other comprehensive income are carried forward to undistributed profits within the scope of equity.
(3) Accounting Treatment of the Demission Welfare
The Company relieves the labor relation with the employees before the due date of the labor contacts or puts forward the advice 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.
Regarding the implementation of internal retirement plan of the employees, the economic compensation before the official retirement
date belongs to the dismissal welfare. From the date when the employees stop providing services to the normal retirement date, the
wages and social insurance premiums to be paid to the early retired employees shall be included in the current profit and loss at one
time. Financial compensation (such as normal pension) after the official retirement date shall be handled as welfare after separation.
(4) Accounting Treatment of the Welfare of Other Long-term Staffs
Other long-term employee benefits provided by the Group to employees that meet the conditions of defined contribution plans shall
be handled in accordance with the above-mentioned relevant provisions on defined contribution plans. Those in line with the defined
benefit plan shall be handled in accordance with the above-mentioned relevant provisions on the defined benefit plan. However, the
part of "changes caused by remeasuring the net liabilities or net assets of the defined benefit plan" in the salary cost of relevant
employees shall be included in the current profit and loss or the relevant asset cost.
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22. Revenue
Accounting policies adopted for the recognition and measurement of revenue
(1) General principle
The Company recognizes revenue when it has fulfilled its contract performance obligation in a contract, namely, when the customer
obtains the control over the related commodity or service.
① Selling commodities
The Company recognizes operating revenue when: the major risks and remunerations in respect of the commodity ownership have
been transferred to the buyer in the sales of a commodity; the Company no longer exercises continued management and actual
control over the commodity; economic interests in relation to the transaction are very likely to flow in the Company; and revenue and
costs in relation to the sales of the commodity can be reliably measured.
The specific sales revenue recognition time point in major transaction models:
The sales revenue recognition time point is when: the goods specified in a contract have been delivered with the receipt
acknowledgement of the customer; the payment voucher has been obtained and related economic interests are very likely to flow in
the Company; and the costs in relation to the products can be measured reliably.
② Providing labor service
For labor commenced and completed in the same accounting year, the revenue is recognized at the completion of the labor service; if
the commencement and completion of a labor service fall in different accounting years, the labor service revenue should be
recognized at the end of the period by the percentage of the service completed towards completion, provided that the result of
providing the labor transaction can be estimated reliably; the specific recognition method: After providing a labor service, the
Company recognizes the revenue when the other party inspects and accepts the service and issues the invoice.
③ Assigning the right to use an asset
The interests revenue and the use revenue obtained from the assignment of the right to use an asset are recognized when economic
interests in relation to the transaction are able to flow in the Company and the amount of revenue can be measured reliably. Revenue
from the assignment of the right to use an asset includes interests revenue and use revenue. The amount of the interests revenue
should be recognized according to the period of the party using the Company’s monetary fund and the effective interest rate; the
amount of the use revenue should be recognized according to the period and method specified in the related contract or agreement.
Differences in accounting policies for revenue recognition due to different business models of the same type of business
(2) Specific methods
The Company uses the following methods to recognize the revenue from commodity sales:
For revenue from domestic sales of products, the Company recognizes the revenue after delivering the products to the purchaser
pursuant to the contract with receipt acknowledgement from the purchaser.
For revenue from export sales of products, the Company recognizes the revenue when obtaining the bill of lading after customs
declaration and departure from the port pursuant to the contract.
Differences in accounting policies for revenue recognition due to different business models of the same type of business
Not applicable.
23. Government Grants
Government grants are recognized when they meet the conditions attached to government grants and when they can be received.
Government grants for monetary assets shall be measured according to the amount received or receivable. Government grants for
non-monetary assets shall be measured by fair value, and they shall be measured by the nominal amount of RMB1 if the fair value
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cannot be obtained reliably. Asset related government grants refer to the government grants obtained by the Group for acquisition and
construction or other forms of long-term assets. In addition, they are government grants related to income.
Regarding the government grants that the government document does not specify the object of subsidy and can form long-term assets,
the part of government subsidy corresponding to the asset value shall be regarded as the asset-related government subsidy and the
rest shall be regarded as income-related government subsidy. If it is difficult to distinguish, the government subsidy shall be regarded
as the income-related government subsidy.
The government grants related to assets shall be recognized as the deferred income, which shall be included in the profit and loss in
installment in a reasonable and systematic way within the service life of the relevant assets. Income-related government grants which
are used to compensate the relevant costs or losses incurred shall be included in the current profit and loss. Those used to compensate
the relevant costs or losses in the later period shall be included in the deferred income, and shall be included in the current profit and
loss during the recognition period of the relevant costs or losses. The government grants measured according to the nominal amount
shall be directly included in the current profit and loss. The same method is adopted for the same or similar government subsidy
businesses of the Group.
Government grants related to daily activities shall be included in other incomes according to the essence of business transactions.
Government grants irrelevant to daily activities are included in non-business income.
When the recognized government grants need to be returned, the book balance of relevant deferred income shall be offset if there is a
balance of relevant deferred income, and the excess part shall be included in the current profit and loss. Otherwise, it shall be directly
included in the current profit and loss.
Regarding the interest subsidy of the policy preferential loan obtained, if the Ministry of Finance allocates the interest subsidy to the
loan bank, the actual received loan amount shall be taken as the entry value of the loan, and the loan cost shall be calculated
according to the loan principal and the policy preferential interest rate. If the Ministry of Finance allocates the interest subsidy
directly to the Group, the interest subsidy will offset the borrowing costs.
24. Deferred Income Tax Assets/Deferred Income Tax Liabilities
Income tax includes current income tax and deferred income tax. All shall be included in the current profit and loss as income tax
expense except the adjustment business reputation arising from business merger, or the deferred income tax related to the transactions
or events directly included in the owner's equity is included in the owner's equity.
Pursuant to the temporary difference between the carrying amount of assets and liabilities on the date of balance sheet and the tax
basis, the Group recognizes the deferred income tax by balance sheet liability method.
For all taxable temporary differences, related deferred income tax liabilities are recognized, unless the taxable temporary differences
are generated in the following transactions:
(1) The initial recognition of business reputation or the initial recognition of assets or liabilities arising from transactions with the
following characteristics: The transaction is not a business merger, and does not affect the accounting profit or taxable income when
it occurs;
(2) Regarding the taxable temporary difference related to the investment of subsidiaries, joint ventures and associated enterprises, the
time of reversal of the temporary difference can be controlled and the temporary difference is unlikely to be reversed in the
foreseeable future.
For deductible temporary differences, deductible losses and tax credits that can be carried forward in subsequent years, the Group is
likely to obtain the future taxable income as the limit to offset the deductible temporary differences, deductible losses and tax credits,
in which way to recognize the deferred income tax assets arising from the deductible temporary differences, deductible losses and tax
credits, unless the deductible temporary differences are generated in the following transactions:
(1) The transaction is not a business merger, and does not affect the accounting profit nor taxable income when it occurs;
(2) The corresponding deferred income tax assets shall be recognized if the deductible temporary differences related to the
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Lu Thai Textile Co., Ltd. Interim Report 2020
investment of subsidiaries, joint ventures and associated enterprises meet the following conditions simultaneously: The temporary
differences are likely to be reversed in the foreseeable future, and the taxable income used to deduct the deductible temporary
differences is likely to be obtained in the future.
On the date of the balance sheet, the income tax assets and deferred income tax liabilities shall be measured by the Group on the
basis of the applicable tax rate during the period when the assets are expected to be recovered or the liabilities are expected to be paid
off, and the income tax impact on the expected recovery of assets on the date of the balance sheet or on the method to pay off the
liabilities shall be reflected.
The book value of deferred income tax assets shall be reviewed at each balance sheet date. If it is unlikely to obtain sufficient 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.
25. Lease
(1) Accounting Treatment of Operating Lease
(1) The Group as the lessor
The rent incomes from operating leases shall be recognized as the profits and losses of the current period by using the straight-line
method over each period of the lease term. The initial direct costs shall be recorded into current profits and losses.
(2) The Group as the lessee
The rent expenses from operating leases shall be recorded by the lessee in the relevant asset costs or the profits and losses of 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.
(2) Accounting Treatments of Financial Lease
(1) The Company as the lessor
On the beginning date of the lease term, the Company shall recognize the sum of the minimum lease receipts on the lease 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.
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.
(2) The Company as the lessee
On the lease beginning date, the Company shall record the lower one of the fair value of the leased asset and the present value of 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. The initial direct costs shall be recorded into value
of leased assets. 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 Group adopts a depreciation policy consistent with its own fixed assets to
accrue the depreciation of leased assets.
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26. Other Significant Accounting Policies and Estimations
Pursuant to historical experience and other factors and reasonable expectations for future events, the Group continuously evaluates
the important accounting estimates and key assumptions adopted. The important accounting estimates and key assumptions that are
likely to cause major adjustment risk to the carrying amount of assets and liabilities in the next fiscal year are listed as follows:
Classification of financial assets
During the recognition of the classification of financial assets by the Group, the major judgments involved include the analysis of
business model and contract cash flow characteristics, etc.
The Group determines the business model for managing financial assets at the level of financial asset portfolio, and factors
considered include methods of evaluation and reporting financial asset performance to key management personnel, risks affecting
financial asset performance and their management methods, and the way in which relevant business management personnel are paid.
When assessing whether the contractual cash flow of financial assets is consistent with the basic lending arrangements, the Group has
the following main judgments: Whether the principal may change in the time distribution or amount during the duration due to
prepayment and other reasons; whether the interest include only the time value of money, credit risk, other basic lending risks, and
considerations of costs and profits. For example, whether the amount of prepayment only reflect the unpaid principal and interest
based on the unpaid principal, as well as reasonable compensation due to early termination of the contract.
Measurement of expected credit loss of accounts receivable
The Group calculates the expected credit loss of accounts receivable through the default risk exposure and the expected credit loss
rate of accounts receivable, and determines the expected credit loss rate based on the default probability and loss given default. When
determining the expected credit loss rate, the Group adjusts the historical data by using internal historical credit loss experience and
other data, and combining the current situation and forward-looking information. The indicators used by the Group include risks of
economic downturn, changes in external market environment, technological environment and customer conditions, etc. when
considering forward-looking information. The Group regularly monitors and reviews assumptions related to the calculation of
expected credit losses.
Impairment of goodwill
The Group assesses whether goodwill is impaired at least annually. This requires estimating the value in use of the asset group to
which goodwill has been allocated. When estimating the value in use, the Group needs to estimate the future cash flows from the
asset group and select the appropriate discount rate to calculate the present value of future cash flows.
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.
Recognition of fair value of unlisted equity investment
When confirming the fair value of unlisted equity investments, the Group will choose an appropriate valuation method. The valuation
method makes maximum use of observable market information. However, the management will estimate the significant unobservable
information included in the valuation method when observable market information is unavailable. Under limited circumstances, if the
information used to determine the fair value is insufficient, or the possible estimated amount of fair value is widely distributed, and
the cost represents the best estimate of fair value within the range, the cost may represent the appropriate estimate of fair value within
the distribution range.
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27. Changes in Main Accounting Policies and Estimates
(1) Significant Changes in Accounting Policies
√ Applicable □ Not applicable
Contents of changes in accounting policies and reasons thereof Approval procedures Note
On 5 July 2017, the Ministry of Finance published the revision on the
“Accounting Standards for Business Enterprises No. 14 - Revenue”
(hereinafter referred to as “the new revenue standards”) (CK [2017] No.
22). Domestic listed companies shall implement the new revenue
standards starting from 1 January 2020. Main content of the changes in
The Company approved this
the “Accounting Standards for Business Enterprises No. 14 - Revenue”
change in accounting policies
includes (1) The current two standards for revenue and construction
on the 13th Meeting of the 9th
contracts are integrated into a unified revenue recognition model; (2) the
Board of Directors held on 28
transfer of control is used to replace the transfer of risks and
April 2020.
remunerations as the criteria to judge the time point of revenue
recognition; (3) clearer guidance is provided for the accounting treatment
of a contract containing multiple transaction arrangements; (4) specific
regulations are provided for the revenue recognition and measurement in
some specific transactions (or matters).
(2) Significant Changes in Accounting Estimates
□ Applicable √ Not applicable
(3) Adjustments to the Financial Statements at the Beginning of the First Execution Year of any New
Standards Governing Revenue or Leases since 2020
Applicable
Whether need to adjust items of balance sheet at the beginning of the year
√ Yes □ No
Consolidated balance sheet
Unit: RMB
Item 31 December 2019 1 January 2020 Adjusted
Current assets:
Monetary assets 924,322,008.17 924,322,008.17
Settlement reserve
Interbank loans granted
Held-for-trading financial assets 52,356,098.85 52,356,098.85
Derivative financial assets
Notes receivable 104,737,949.91 104,737,949.91
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Lu Thai Textile Co., Ltd. Interim Report 2020
Accounts receivable 515,306,599.62 515,306,599.62
Accounts receivable financing 26,963,818.87 26,963,818.87
Prepayments 56,828,987.59 56,828,987.59
Premiums receivable
Reinsurance receivables
Receivable reinsurance contract reserve
Other receivables 59,743,471.84 59,743,471.84
Including: Interest receivable
Dividends receivable
Financial assets purchased under resale
agreements
Inventories 2,421,500,259.30 2,421,500,259.30
Contract assets
Assets held for sale
Current portion of non-current assets
Other current assets 68,788,674.10 68,788,674.10
Total current assets 4,230,547,868.25 4,230,547,868.25
Non-current assets:
Loans and advances to customers
Investments in debt obligations
Investments in other debt obligations
Long-term receivables 7,058,233.71 7,058,233.71
Long-term equity investments 103,226,300.00 103,226,300.00
Investments in other equity instruments
Other non-current financial assets 278,149,500.00 278,149,500.00
Investment property 45,896,747.87 45,896,747.87
Fixed assets 6,012,094,104.67 6,012,094,104.67
Construction in progress 400,235,070.01 400,235,070.01
Productive living assets
Oil and gas assets
Right-of-use assets
Intangible assets 516,479,519.15 516,479,519.15
Development costs
Goodwill 20,563,803.29 20,563,803.29
Long-term prepaid expense 153,031,253.79 153,031,253.79
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Lu Thai Textile Co., Ltd. Interim Report 2020
Deferred income tax assets 99,307,233.72 99,307,233.72
Other non-current assets 18,841,918.62 18,841,918.62
Total non-current assets 7,654,883,684.83 7,654,883,684.83
Total assets 11,885,431,553.08 11,885,431,553.08
Current liabilities:
Short-term borrowings 2,120,154,330.61 2,120,154,330.61
Borrowings from the central bank
Interbank loans obtained
Held-for-trading financial liabilities
Derivative financial liabilities
Notes payable 85,219,724.63 85,219,724.63
Accounts payable 305,346,284.94 305,346,284.94
Advances from customers 108,783,148.03 -108,783,148.03
Contract liabilities 108,783,148.03 108,783,148.03
Financial assets sold under repurchase
agreements
Customer deposits and interbank deposits
Payables for acting trading of securities
Payables for underwriting of securities
Employee benefits payable 335,576,560.36 335,576,560.36
Taxes payable 25,051,630.06 25,051,630.06
Other payables 104,982,189.40 104,982,189.40
Including: Interest payable
Dividends payable 441,113.64 441,113.64
Handling charges and commissions payable
Reinsurance payables
Liabilities directly associated with assets
held for sale
Current portion of non-current liabilities 101,111,297.49 101,111,297.49
Other current liabilities
Total current liabilities 3,186,225,165.52 3,186,225,165.52
Non-current liabilities:
Insurance contract reserve
Long-term borrowings 42,364,019.74 42,364,019.74
Bonds payable
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Including: Preferred shares
Perpetual bonds
Lease liabilities
Long-term payables
Long-term employee benefits payable 105,589,249.56 105,589,249.56
Provisions
Deferred income 157,668,211.41 157,668,211.41
Deferred income tax liabilities 92,440,358.41 92,440,358.41
Other non-current liabilities 1,840,000.00 1,840,000.00
Total non-current liabilities 399,901,839.12 399,901,839.12
Total liabilities 3,586,127,004.64 3,586,127,004.64
Owners’ equity:
Share capital 858,121,541.00 858,121,541.00
Other equity instruments
Including: Preferred shares
Perpetual bonds
Capital reserves 258,046,245.42 258,046,245.42
Less: Treasury stock
Other comprehensive income 91,626,571.75 91,626,571.75
Specific reserve
Surplus reserves 1,117,267,351.63 1,117,267,351.63
General reserve
Retained earnings 5,372,073,615.12 5,372,073,615.12
Total equity attributable to owners of the
7,697,135,324.92 7,697,135,324.92
Company as the parent
Non-controlling interests 602,169,223.52 602,169,223.52
Total owners’ equity 8,299,304,548.44 8,299,304,548.44
Total liabilities and owners’ equity 11,885,431,553.08 11,885,431,553.08
Note for adjustment
Balance Sheet of the Company as the Parent
Unit: RMB
Item 31 December 2019 1 January 2020 Adjusted
Current assets:
Monetary assets 259,320,863.08 259,320,863.08
Held-for-trading financial assets 52,356,098.85 52,356,098.85
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Lu Thai Textile Co., Ltd. Interim Report 2020
Derivative financial assets
Notes receivable 67,898,885.35 67,898,885.35
Accounts receivable 417,599,518.08 417,599,518.08
Accounts receivable financing 2,675,090.00 2,675,090.00
Prepayments 10,178,452.88 10,178,452.88
Other receivables 838,523,449.52 838,523,449.52
Including: Interest receivable
Dividends receivable
Inventories 1,280,620,296.02 1,280,620,296.02
Contract assets
Assets held for sale
Current portion of non-current assets
Other current assets 5,780,635.28 5,780,635.28
Total current assets 2,934,953,289.06 2,934,953,289.06
Non-current assets:
Investments in debt obligations
Investments in other debt obligations
Long-term receivables
Long-term equity investments 2,510,868,604.84 2,510,868,604.84
Investments in other equity instruments
Other non-current financial assets 266,149,500.00 266,149,500.00
Investment property 31,089,260.38 31,089,260.38
Fixed assets 2,603,258,003.94 2,603,258,003.94
Construction in progress 53,443,768.04 53,443,768.04
Productive living assets 235,277,114.25
Oil and gas assets
Right-of-use assets
Intangible assets 235,277,114.25
Development costs
Goodwill
Long-term prepaid expense
Deferred income tax assets 60,974,304.57 60,974,304.57
Other non-current assets
Total non-current assets 5,761,060,556.02 5,761,060,556.02
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Lu Thai Textile Co., Ltd. Interim Report 2020
Total assets 8,696,013,845.08 8,696,013,845.08
Current liabilities:
Short-term borrowings 816,301,973.60 816,301,973.60
Held-for-trading financial liabilities
Derivative financial liabilities
Notes payable 602,741,973.76 602,741,973.76
Accounts payable 105,588,631.54 105,588,631.54
Advances from customers 53,418,950.04 -53,418,950.04
Contract liabilities 53,418,950.04 53,418,950.04
Employee benefits payable 242,300,723.41 242,300,723.41
Taxes payable 11,995,830.49 11,995,830.49
Other payables 149,255,207.79 149,255,207.79
Including: Interest payable
Dividends payable 441,113.64 441,113.64
Liabilities directly associated with assets
held for sale
Current portion of non-current liabilities
Other current liabilities
Total current liabilities 1,981,603,290.63 1,981,603,290.63
Non-current liabilities:
Long-term borrowings
Bonds payable
Including: Preferred shares
Perpetual bonds
Lease liabilities
Long-term payables
Long-term employee benefits payable 105,589,249.56 105,589,249.56
Provisions
Deferred income 112,187,678.66 112,187,678.66
Deferred income tax liabilities 70,445,859.76 70,445,859.76
Other non-current liabilities
Total non-current liabilities 288,222,787.98 288,222,787.98
Total liabilities 2,269,826,078.61 2,269,826,078.61
Owners’ equity:
Share capital 858,121,541.00 858,121,541.00
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Other equity instruments
Including: Preferred shares
Perpetual bonds
Capital reserves 317,206,232.47 317,206,232.47
Less: Treasury stock
Other comprehensive income
Specific reserve
Surplus reserves 1,114,158,611.99 1,114,158,611.99
Retained earnings 4,136,701,381.01 4,136,701,381.01
Total owners’ equity 6,426,187,766.47 6,426,187,766.47
Total liabilities and owners’ equity 8,696,013,845.08 8,696,013,845.08
Note for adjustment
None
(4) Retroactive Adjustments to Comparative Data of Prior Years when First Execution of any New
Standards Governing Revenue or Leases since 2020
√ Applicable □ Not applicable
28. Other
VI Taxation
1. Main Taxes and Tax Rate
Category of taxes Tax basis Tax rate
VAT Taxable income 13%, 10%, 9%, 6%, 5%, 3%, 0
Urban maintenance and construction tax Turnover tax payable 7%, 5%, 1%
Enterprise income tax Income tax payable 0, 15%, 16.5%, 20%, 25%
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 15%
Lu Thai Hong Kong 16.50%
Xinjiang Lu Thai 25%
Luqun Textile 25%
Xinsheng Power 25%
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Lu Thai Textile Co., Ltd. Interim Report 2020
Shanghai Lu Thai 20%
Beijing Youxian 20%
Shanghai Zhinuo 20%
Xinjiang Textile 15%
Lulian New Materials 25%
Lujia Import & Export 20%
Lu Thai Cambodia 20%
Lu Thai Burma 0%
Lu Thai Vietnam 0%
Lu Thai Tan Chau 0%
Lu An Garments 0%
Lu Thai America Refer to 2. Tax Preference presented as follows for details
2. Tax Preference
According to the Notice on the Recognition of 2078 Enterprises as High-tech Enterprises for 2017 such as Weihai Tuozhan Fiber
Co., Ltd. (LK Zi [2018] No. 37) issued by the 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 & Dyeing were identified as high-tech enterprises. Pursuant to Article 28 of
the Law of the PRC on Enterprise Income Tax and the No. 23 Announcement revised and published by the State Administration of
Taxation in 2018, namely Management of Preferential Policy on Corporate Income Tax, the Measures for the Administration of the
Recognition of High and New Technological Enterprises (GKFH [2016] No. 195) and Announcement on Implementing the
Preferential Policies regarding Enterprise Income Tax for High-Tech Enterprises (GJSWZJY2017No.24) revised and published by
the Ministry of Science and Technology, Ministry of Finance and State Administration of Taxation, the Company and the holding
subsidiary Lufeng Weaving & Dyeing enjoy a corporate income tax rate of 15%.
According to the Announcement on Implementing the Universal Income Tax Reduction and Exemption Policy Published the State
Administration of Taxation (SAT) (SAT Announcement No.2 of 2019), from 1 January 2019 to 31 December 2021, the portion of
annual taxable income of within RMB1 million of the wholly-owned subsidiaries of the Company Shanghai Lu Thai, Beijing
Youxian, Shanghai Zhinuo and Lujia Import & Export (the small-scale and low-profit enterprise) shall be included in taxable income
by reduction of 25% based on the enterprise income tax rate of 20%; for the portion exceeding RMB1 million but within RMB3
million, it shall be included in taxable income by reduction of 50% based on the enterprise income tax rate of 20%.
According to the Notice of the Ministry of Finance, the General Administration of Customs and the State Administration of 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, the preferential term expired, enjoys the enterprise income tax rate 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
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Lu Thai Textile Co., Ltd. Interim Report 2020
income tax rate was of 25%. Year 2020 is the fifth year of tax holiday.
The wholly-owned subsidiary Lu Thai (Vietnam) Textile Co., Ltd. shall enjoy the preference of enterprise income tax at 3 years’
starting term + 4 years’ duty-free term + 9 years’ half-tax term according to the investment license issued by Vietnamese Tay Ninh
Industrial Zone Management Committee, and it will enter into 2 years’ duty-free term if it is profitable within 3 years’ starting term.
The Company shall enjoy 10% of the preference tax rate within 15 years since the tax year to get the first production and operation
income, and the enterprise income tax rate shall be 20% after the preference term ends. Year 2020 is the third year of the duty-free
term.
The wholly-owned subsidiary of Lu Thai Vienam, Lu Thai Tan Chau, shall enjoy the preference of enterprise income tax at 3 years’
starting term + 4 years’ duty-free term + 9 years’ half-tax term according to the investment license issued by Vietnamese Tay Ninh
Investment Planning Office, and it will enter into 2 years’ duty-free term if it is profitable within 3 years’ starting term. The
Company shall enjoy 10% of the preference tax rate within 15 years since the tax year to get the first production and operation
income, and the enterprise income tax rate shall be 20% after the preference term ends. Year 2020 is the second year of the starting
term.
The wholly-owned subsidiary Lu An Garments Co., Ltd. shall enjoy the preference of enterprise income tax at 3 years’ starting term
+ 2 years’ duty-free term + 4 years’ half-tax term according to the investment license issued by Vietnamese Anjiang 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. Year 2020 is the
second year of the duty-free term.
Lu Thai America, the wholly-owned subsidiary of the Company registered in New York, America, was imposed the federal
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 US$10 million,
while 8.85% when above US$10 million. The 6.5% of income tax rate was applied in 2020.
3. Others
VII. Notes to Main Items of Consolidated Financial Statements
1. Monetary Assets
Unit: RMB
Item Ending balance Beginning balance
Cash on hand 9,094,993.18 9,544,377.41
Bank deposits 2,014,615,919.85 870,590,467.70
Other monetary funds 4,586,637.12 44,187,163.06
Total 2,028,297,550.15 924,322,008.17
Of which: total amount deposited overseas 394,517,114.44 299,088,689.18
Total amount of restriction in use by guaranteed,
4,586,637.12 44,187,163.06
pledged or frozen
Other notes:
(1) On 30 June 2020, the monetary assets with restricted ownership of the Company was of RMB4.5866 million, which was L/C
guarantee deposit of RMB1.9433 million for the Company’s subsidiary Lu Thai Vietnam; L/C guarantee deposit of RMB1.423
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Lu Thai Textile Co., Ltd. Interim Report 2020
million for the Company’s subsidiary Lu Thai Tan Chau; L/C guarantee deposit of RMB0.925 million for the Company’s subsidiary
Lulian New Materials; and L/C guarantee deposit of RMB0.2953 for the Company’s subsidiary Xinjiang Lu Thai.
(2) The interest receivable in bank deposits was RMB5,062,269.54.
2. Trading Financial Assets
Unit: RMB
Item Ending balance Beginning balance
Financial assets at fair value through profit or loss 52,356,098.85
Of which:
Debt instrument investment 52,356,098.85
Of which:
Total 52,356,098.85
3. Notes Receivable
(1) Notes Receivable Listed by Category
Unit: RMB
Item Ending balance Beginning balance
Bank acceptance bill 15,386,031.86 13,622,998.20
L/C 56,744,964.31 91,114,951.71
Total 72,130,996.17 104,737,949.91
Please refer to the relevant information of disclosure of bad debt provision of other accounts receivable if adopting the general mode
of expected credit loss to withdraw bad debt provision of notes receivable.
□ Applicable √ Not applicable
(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 158,108,463.95
Total 158,108,463.95
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Lu Thai Textile Co., Ltd. Interim Report 2020
4. Accounts Receivable
(1) Accounts Receivable Disclosed by Category
Unit: RMB
Ending balance Beginning balance
Carrying amount Bad debt provision Carrying amount Bad debt provision
Category Withdr Withdra
Proporti awal Carrying value Proporti wal Carrying value
Amount Amount Amount Amount
on proport on proporti
ion on
Of which:
Accounts
receivable
withdrawal of bad 424,558,081.29 100.00% 33,640,125.47 7.92% 390,917,955.82 546,428,127.56 100.00% 31,121,527.94 5.70% 515,306,599.62
debt provision of
by group
Of which:
Group 1: Undue
accounts (credit 120,187,113.74 28.31% 1,261,964.64 1.05% 118,925,149.10 146,231,602.81 26.76% 1,535,431.83 1.05% 144,696,170.98
insurance insured)
Group 2: Undue
accounts(no credit 114,352,857.84 26.94% 5,717,642.90 5.00% 108,635,214.94 298,971,131.80 54.72% 14,948,556.59 5.00% 284,022,575.21
insurance)
Group 3: Overdue
accounts (credit 116,685,694.57 27.48% 12,485,369.25 10.70% 104,200,325.32 59,793,875.78 10.94% 6,397,944.71 10.70% 53,395,931.07
insurance insured)
Group 4: Overdue
accounts (no credit 73,332,415.14 17.27% 14,175,148.68 19.33% 59,157,266.46 41,431,517.17 7.58% 8,239,594.81 19.89% 33,191,922.36
insurance)
Total 424,558,081.29 100.00% 33,640,125.47 7.92% 390,917,955.82 546,428,127.56 100.00% 31,121,527.94 5.70% 515,306,599.62
Bad debt provision separately accrued:
Please refer to the relevant information of disclosure of bad debt provision of other accounts receivable if adopting the general mode
of expected credit loss to withdraw bad debt provision of accounts receivable.
√ Applicable □ Not applicable
Disclosure by aging
Unit: RMB
Aging Ending balance
Within 1 year (including 1 year) 415,233,048.36
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Lu Thai Textile Co., Ltd. Interim Report 2020
1 to 2 years 8,698,826.62
2 to 3 years 287,070.75
Over 3 years 339,135.56
3 to 4 years 339,135.56
Total 424,558,081.29
(2) Bad Debt Provision Withdrawn, Reversed or Recovered in the Reporting Period
Withdrawal of bad debt provision:
Unit: RMB
Changes in the Reporting Period
Category Beginning balance Reversal or Ending balance
Withdrawal Verified Other
recovery
Bad debt provision
of accounts 31,121,527.94 2,518,597.53 33,640,125.47
receivable
Total 31,121,527.94 2,518,597.53 33,640,125.47
(3) Top 5 Accounts Receivable in Ending Balance Collected according to the Arrears Party
Unit: RMB
Proportion to total ending balance Ending balance of bad debt
Name of entity Ending balance
of accounts receivable provision
A 38,710,993.71 9.12% 5,036,493.37
B 35,475,317.09 8.36% 2,714,450.81
C 20,855,871.57 4.91% 229,475.50
D 16,934,300.99 3.99% 846,715.05
E 16,612,273.70 3.91% 1,913,619.05
Total 128,588,757.06 30.29%
5. Accounts Receivable Financing
Unit: RMB
Item Ending balance Beginning balance
Notes receivable 14,807,543.11 26,963,818.87
Total 14,807,543.11 26,963,818.87
The changes of accounts receivable financing in the Reporting Period and the changes in fair value
□ Applicable √ Not applicable
Please refer to the relevant information of disclosure of bad debt provision of other accounts receivable if adopting the general mode
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Lu Thai Textile Co., Ltd. Interim Report 2020
of expected credit loss to withdraw bad debt provision of accounts receivable financing.
□ Applicable √ Not applicable
Other notes:
There was no bank acceptance bill for which bad debt provision accrued separately in the Company. On 30 June 2020, the Company
believed that there was no significant credit risk in the bank acceptance bill held by the Company, and no significant loss caused by
bank defaults.
6. Prepayment
(1) Prepayment Listed by Aging Analysis
Unit: RMB
Ending balance Beginning balance
Aging
Amount Proportion Amount Proportion
Within 1 year 59,302,005.11 97.04% 53,283,453.85 93.76%
1 to 2 years 350,207.34 0.57% 3,529,989.66 6.21%
2 to 3 years 1,445,049.21 2.36% 0.00%
Over 3 years 15,544.08 0.03% 15,544.08 0.03%
Total 61,112,805.74 -- 56,828,987.59 --
(2) Top 5 Prepayment in Ending Balance Collected according to the Prepayment Target
The total top 5 prepayment in ending balance collected according to the prepayment target for the Company was RMB34,867,312.99,
accounting for 57.05% of total ending balance of prepayment.
7. Other Accounts Receivable
Unit: RMB
Item Ending balance Beginning balance
Other accounts receivable 34,453,389.96 59,743,471.84
Total 34,453,389.96 59,743,471.84
(1) Other Accounts Receivable
1) Other Account Receivable Classified by Account Nature
Unit: RMB
Nature Ending carrying amount Beginning carrying amount
Export taxes refund 114,937.20 10,107,773.06
VAT to be returned 7,166,722.20 28,015,795.39
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Lu Thai Textile Co., Ltd. Interim Report 2020
Advance payment 14,980,474.50 12,156,529.38
Cash Pledge & Margin 9,875,778.47 6,749,222.66
Borrowings and petty cash 2,720,501.23 6,971,063.51
Other 4,494,114.55 1,210,146.25
Total 39,352,528.15 65,210,530.25
2) Withdrawal of Bad Debt Provision
Unit: RMB
First stage Second stage Third stage
Expected loss in the Expected loss in the
Bad debt provision Expected credit loss Total
duration (credit impairment duration (credit impairment
of the next 12 months
not occurred) occurred)
Balance of 1 January
3,043,394.21 1,831,226.97 592,437.23 5,467,058.41
2020
Balance of 1 January
2020 in the Current —— —— —— ——
Period
Withdrawal of the
-1,206,855.30 638,935.08 0.00 -567,920.22
Current Period
Balance of 30 June 2020 1,836,538.91 2,470,162.05 592,437.23 4,899,138.19
Changes of carrying amount with significant amount changed of loss provision in the Current Period
□ Applicable √ Not applicable
Disclosure by aging
Unit: RMB
Aging Ending balance
Within 1 year (including 1 year) 29,361,581.37
1 to 2 years 2,873,988.95
2 to 3 years 2,288,889.85
Over 3 years 4,828,067.98
3 to 4 years 317,386.98
4 to 5 years 325,486.20
Over 5 years 4,185,194.80
Total 39,352,528.15
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Lu Thai Textile Co., Ltd. Interim Report 2020
3) Bad Debt Provision Withdrawn, Reversed or Recovered in the Reporting Period
Information of bad debt provision withdrawn:
Unit: RMB
Changes in the Reporting Period
Beginning
Category Reversal or Ending balance
balance Withdrawal Verified Other
recovery
Bad debt provision of
5,467,058.41 -567,920.22 4,899,138.19
other receivables
Total 5,467,058.41 -567,920.22 4,899,138.19
4) Top 5 Other Accounts Receivable in Ending Balance Collected according to the Arrears Party
Unit: RMB
Proportion to total Ending
Ending ending balance of balance of
Name of the entity Nature Aging
balance other accounts bad debt
receivable provision
VAT receivable to be returned Input VAT 7,166,722.20 Within 1 year 18.21% 358,336.11
Xining Electric Power Company Intercourse borrowing 3,537,824.38 Within 1 year 8.99% 176,891.22
Security deposit for
Zibo Customs, P.R.China 3,481,705.53 Within 1 year 8.85% 174,085.28
imported equipment
Advance electric charge of Payment of electric charge
2,336,299.11 Within 1 year 5.93% 116,814.96
branches on behalf
Migrant workers’ wage
Migrant workers’ wage margin Within 1 year, over 3
margin of infrastructural 2,242,126.50 5.70% 112,106.33
in Zichuan District of Zibo years
project
Total -- 18,764,677.72 -- 47.68% 938,233.90
8. Inventory
Whether the Company needs to comply with the disclosure requirements for real estate industry
No
(1) Category of Inventory
Unit: RMB
Ending balance Beginning balance
Item Depreciation Depreciation
Carrying amount Carrying value Carrying amount Carrying value
reserves of reserves of
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Lu Thai Textile Co., Ltd. Interim Report 2020
inventories or inventories or
impairment impairment
provision for provision for
contract contract
performance performance
costs costs
Raw materials 1,146,718,983.35 1,146,718,983.35 1,022,913,125.05 1,022,913,125.05
Goods in process 460,496,199.39 460,496,199.39 583,495,292.95 583,495,292.95
Inventory goods 1,073,612,442.52 97,641,596.89 975,970,845.63 888,016,891.18 102,276,414.38 785,740,476.80
Consumptive
1,472,972.75 576,304.29 896,668.46 1,472,972.75 576,304.29 896,668.46
living assets
Assigned
processing 11,053,172.84 11,053,172.84 28,454,696.04 28,454,696.04
products
Total 2,693,353,770.85 98,217,901.18 2,595,135,869.67 2,524,352,977.97 102,852,718.67 2,421,500,259.30
(2) Falling Price Reserves of Inventory and Impairment Provision for Contract Performance Costs
Unit: RMB
Increased amount Decreased amount
Beginning
Item Reversal or Ending balance
balance Withdrawal Other Other
write-off
Inventory goods 102,276,414.38 24,613,079.38 29,247,896.87 97,641,596.89
Consumptive
576,304.29 576,304.29
living assets
Total 102,852,718.67 24,613,079.38 29,247,896.87 98,217,901.18
Item Specific basis of Reasons for write-off
withdrawal of inventory or write-back
falling price reserves
The lower one between Sales
cost of each item of
Inventory goods
inventory and its
realizable net value
The lower one between
cost of each item of
Consumptive living assets
inventory and its
realizable net value
111
Lu Thai Textile Co., Ltd. Interim Report 2020
(3) Ending Balance of Inventories Including Capitalized Borrowing Expense
(4) Amount of Contract Performance Costs Amortized in the Reporting Period
9. Other Current Assets
Unit: RMB
Item Ending balance Beginning balance
Prepaid income tax 18,272,897.64 18,801,867.00
Input VAT 61,216,399.92 49,986,686.74
Prepaid other taxes 120.36
Total 79,489,297.56 68,788,674.10
10. Long-term Receivables
(1) List of Long-term Receivables
Unit: RMB
Ending balance Beginning balance Interval
of
Item Carrying Bad debt Carrying Carrying
Carrying value Carrying value discoun
amount provision amount amount
t rate
Financing lease accounts 250,000.00 250,000.00 250,000.00 250,000.00
Of which: unrealized
26,400.76 26,400.76
financing income
Long-term advances
7,190,191.62 359,509.58 6,830,682.04 7,564,704.12 756,470.41 6,808,233.71
receivable
Total 7,440,191.62 359,509.58 7,080,682.04 7,814,704.12 756,470.41 7,058,233.71 --
Impairment of bad debt provision
Unit: RMB
First stage Second stage Third stage
Expected loss in the Expected loss in the
Bad debt provision Expected credit loss Total
duration (credit impairment duration (credit impairment
of the next 12 months
not occurred) occurred)
Balance of 1 January 2020 756,470.41 756,470.41
Balance of 1 January 2020 in
—— —— —— ——
the Current Period
Withdrawal of the Current
-396,960.83 -396,960.83
Period
112
Lu Thai Textile Co., Ltd. Interim Report 2020
Balance of 30 June 2020 359,509.58 359,509.58
Changes of carrying amount with significant amount changed of loss provision in the Current Period
□ Applicable √ Not applicable
11. Long-term Equity Investment
Unit: RMB
Increase/decrease
Ending
Adjustm
Beginning Red Gains and Cash Withdra Ending balance
ent of Chang
balance uced losses bonus or wal of balance of
Investees Additional other es of Othe
(carrying inve recognized profits deprecia (carrying depreciati
investment compreh other r
value) stme under the announced tion value) on
ensive equity
nt equity method to issue reserves reserves
income
I. Joint ventures
II. Associated enterprises
Ningbo Mei shan
Bonded Port Area
Haohong Equity
Investment
99,516,74
Partnership (L.P) 103,226,300.00 -3,709,556.61
3.39
(hereinafter
referred to as
“Haohong
Investment”)
Ningbo Haoying
Equity
Investment
Partnership (L.P) 50,130,03
50,000,000.00 130,033.26
(hereinafter 3.26
referred to as
“Haoying
Investment”)
149,646,7
Subtotal 103,226,300.00 50,000,000.00 -3,579,523.35
76.65
149,646,7
Total 103,226,300.00 50,000,000.00 -3,579,523.35
76.65
Other notes
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Lu Thai Textile Co., Ltd. Interim Report 2020
12. Other Non-current Financial Assets
Unit: RMB
Item Ending balance Beginning balance
Equity instrument investment 126,519,880.41 266,149,500.00
Financial assets assigned measured by fair value and the changes be
12,000,000.00 12,000,000.00
included in the current gains and losses
Total 138,519,880.41 278,149,500.00
13. Investment Property
(1) Investment Property Adopted the Cost Measurement Mode
√ Applicable □ Not applicable
Unit: RMB
Houses and Construction in
Item Land use right Total
buildings progress
I. Original carrying value
1. Beginning balance 60,832,966.04 60,832,966.04
2. Increased amount of the period
(1) Outsourcing
(2)Transfer from inventory/fixed
assets/construction in progress
(3) Enterprise combination increase
3. Decreased amount of the period
(1) Disposal
(2) Other transfer
4. Ending balance 60,832,966.04 60,832,966.04
II. Accumulative depreciation and
accumulative amortization
1. Beginning balance 14,936,218.17 14,936,218.17
2. Increased amount of the period 1,008,056.17 1,008,056.17
(1) Withdrawal or amortization 1,008,056.17 1,008,056.17
3. Decreased amount of the period
(1) Disposal
(2) Other transfer
4. Ending balance 15,944,274.34 15,944,274.34
114
Lu Thai Textile Co., Ltd. Interim Report 2020
III. Depreciation reserves
1. Beginning balance
2. Increased amount of the period
(1) Withdrawal
3. Decreased amount of the period
(1) Disposal
(2) Other transfer
4. Ending balance
IV. Carrying value
1. Ending carrying value 44,888,691.70 44,888,691.70
2. Beginning carrying value 45,896,747.87 45,896,747.87
14. Fixed Assets
Unit: RMB
Item Ending balance Beginning balance
Fixed assets 5,911,198,566.20 6,012,094,104.67
Total 5,911,198,566.20 6,012,094,104.67
(1) List of Fixed Assets
Unit: RMB
Transportation Electronic equipment and
Item Houses and buildings Machinery equipment Total
equipment others
I. Original carrying value
1. Beginning balance 3,566,066,620.95 6,950,430,267.50 66,490,962.47 145,125,211.07 10,728,113,061.99
2. Increased amount of the
35,719,541.15 106,836,999.02 3,863,521.81 5,472,067.02 151,892,129.00
period
(1) Purchase 42,562.00 88,696,317.74 3,775,948.23 4,957,581.06 97,472,409.03
(2) Transfer from
23,911,624.53 3,101,939.48 0.00 426,254.98 27,439,818.99
construction in progress
(3) Enterprise combination
increase
(4) Other increase 11,765,354.62 15,038,741.80 87,573.58 88,230.98 26,979,900.98
3. Decreased amount of the
2,077.90 28,221,896.60 4,412,343.76 992,867.74 33,629,186.00
period
(1) Disposal or scrap 2,077.90 28,221,896.60 4,412,343.76 992,867.74 33,629,186.00
115
Lu Thai Textile Co., Ltd. Interim Report 2020
4. Ending balance 3,601,784,084.20 7,029,045,369.92 65,942,140.52 149,604,410.35 10,846,376,004.99
II. Accumulative
depreciation
1. Beginning balance 1,055,126,921.87 3,453,435,496.65 45,436,360.53 101,913,448.80 4,655,912,227.85
2. Increased amount of the
59,321,095.33 173,849,716.41 3,002,788.38 8,061,719.89 244,235,320.01
period
(1) Withdrawal 58,483,036.20 171,636,818.56 2,953,992.96 8,003,021.75 241,076,869.47
(2) Other increase 838,059.13 2,212,897.85 48,795.42 58,698.14 3,158,450.54
3. Decreased amount of the
2,077.90 16,152,983.00 3,994,696.23 945,019.89 21,094,777.02
period
(1) Disposal or scrap 2,077.90 16,152,983.00 3,994,696.23 945,019.89 21,094,777.02
4. Ending balance 1,114,445,939.30 3,611,132,230.06 44,444,452.68 109,030,148.80 4,879,052,770.84
III. Depreciation reserves
1. Beginning balance 5,090,742.73 54,860,025.36 26,383.69 129,577.69 60,106,729.47
2. Increased amount of the
period
(1) Withdrawal
3. Decreased amount of the
3,940,581.21 41,480.31 3,982,061.52
period
(1) Disposal or scrap 3,940,581.21 41,480.31 3,982,061.52
4. Ending balance 5,090,742.73 50,919,444.15 26,383.69 88,097.38 56,124,667.95
IV. Carrying value
1. Ending carrying value 2,482,247,402.17 3,366,993,695.71 21,471,304.15 40,486,164.17 5,911,198,566.20
2. Beginning carrying value 2,505,848,956.35 3,442,134,745.49 21,028,218.25 43,082,184.58 6,012,094,104.67
(2) Fixed Assets Leased out by Operation Lease
Unit: RMB
Item Ending carrying value
Houses and buildings 2,885,865.83
(3) Fixed Assets Failed to Accomplish Certification of Property
Unit: RMB
Item Carrying value Reason
Lufeng weaving dye gray yarn 11,529,607.08 Under the relevant certificate procedures of acceptance, measurement,
116
Lu Thai Textile Co., Ltd. Interim Report 2020
warehouse examination by the real estate trading center and other departments
Other notes
15. Construction in Progress
Unit: RMB
Item Ending balance Beginning balance
Construction in progress 248,852,110.85 165,841,680.32
Engineering materials 294,911,819.62 234,393,389.69
Total 543,763,930.47 400,235,070.01
(1) Construction in Progress
Unit: RMB
Ending balance Beginning balance
Depreciati Depreciati
Item Carrying Carrying
on Carrying value on Carrying value
amount amount
reserves reserves
Reform project of Xinsheng Thermal
3,493,638.27 3,493,638.27 2,837,138.88 2,837,138.88
Power
Expansion project of Xinsheng
24,870,169.90 24,870,169.90 22,186,638.85 22,186,638.85
Thermal Power (Phase II)
Dormitory project of Lu Thai
11,266,561.67 11,266,561.67 7,701,372.43 7,701,372.43
(Vietnam)
Spinning project of Lu Thai Tan Chau 57,596,392.37 57,596,392.37 52,700,509.90 52,700,509.90
Functional Fabric Intelligent
128,024,572.68 128,024,572.68 56,365,451.33 56,365,451.33
Ecological Park Project Phase I
Other retails projects 23,600,775.96 23,600,775.96 24,050,568.93 24,050,568.93
Total 248,852,110.85 248,852,110.85 165,841,680.32 165,841,680.32
(2) Changes in Significant Construction in Progress during the Reporting Period
Unit: RMB
Proporti Of which: Capitaliz
Accumula
on of amount of ation
ted
Transferre Other accumul Job capitalized rate of Capital
Beginning Increased Ending amount of
Item Budget d in fixed decreased ated schedu interests for interests resource
balance amount balance interest
assets amount investme le the for the s
capitalizat
nt in Reporting Reportin
ion
construc Period g Period
117
Lu Thai Textile Co., Ltd. Interim Report 2020
tions to
budget
Reform
project of
26,000,000 2,837,138. 3,429,063. 2,772,563. 3,493,638.
Xinsheng 0.00 24.00% 24% Other
.00 88 26 87 27
Thermal
Power
Expansio
n project
of
110,690,00 22,186,63 3,193,015. 509,484.6 24,870,16
Xinsheng 0.00 111.00% 99% Other
0.00 8.85 69 4 9.90
Thermal
Power
(Phase II)
Dormitor
y project
21,626,200 7,701,372. 3,451,151. -114,037.9 11,266,56
of Lu 0.00 52.00% 52% Other
.00 43 26 8 1.67
Thai
(Vietnam)
Spinning
project of 153,470,00 52,700,50 11,029,87 6,914,353. -780,362.1 57,596,39
90.00% 90% Other
Lu Thai 0.00 9.90 3.82 53 8 2.37
Tan Chau
Functiona
l Fabric
Raised
Intelligent
217,211,00 56,365,45 71,659,12 128,024,5 5,092,555 through
Ecologica 0.00 0.00 59.00% 59% 5,092,555.05 3.68%
0.00 1.33 1.35 72.68 .05 equity
l Park
offering
Project
Phase I
Other
24,050,56 16,787,97 17,243,41 23,600,77
retails -5,649.58
8.93 4.40 6.95 5.96
projects
528,997,20 165,841,6 109,550,1 27,439,81 -900,049.7 248,852,1 5,092,555
Total -- -- 5,092,555.05 3.68% --
0.00 80.32 99.78 8.99 4 10.85 .05
(3) Engineering Materials
Unit: RMB
Ending balance Beginning balance
Item
Carrying amount Depreciation Carrying value Carrying Depreciation Carrying value
118
Lu Thai Textile Co., Ltd. Interim Report 2020
reserves amount reserves
Special equipment 294,911,819.62 294,911,819.62 234,393,389.69 0.00 234,393,389.69
Total 294,911,819.62 294,911,819.62 234,393,389.69 0.00 234,393,389.69
16. Intangible Assets
(1) List of Intangible Assets
Unit: RMB
Non-patent Software use Brand use
Item Land use right Patent right Total
technologies rights rights
I. Original carrying value
1. Beginning balance 633,234,119.27 1,985,176.47 5,960,347.27 300,000.00 641,479,643.01
2. Increased amount of the
644,070.79 644,070.79
period
(1) Purchase 644,070.79 644,070.79
(2) Internal R&D
(3) Business combination
increase
3. Decreased amount of the
25,057.34 950,371.07 975,428.41
period
(1) Disposal
(2) Invalid and recognition
25,057.34 950,371.07 975,428.41
terminated portion
4. Ending balance 633,209,061.93 1,985,176.47 5,654,046.99 300,000.00 641,148,285.39
II. Accumulated amortization
1. Beginning balance 119,122,908.13 1,819,745.40 3,907,470.33 150,000.00 125,000,123.86
2. Increased amount of the
7,311,646.62 99,258.84 1,084,879.93 15,000.00 8,510,785.39
period
(1) Withdrawal 7,311,646.62 99,258.84 1,084,879.93 15,000.00 8,510,785.39
3. Decreased amount of the
49,369.10 952,652.51 1,002,021.61
period
(1) Disposal 49,369.10 952,652.51 1,002,021.61
4. Ending balance 126,385,185.65 1,919,004.24 4,039,697.75 165,000.00 132,508,887.64
III. Depreciation reserves
1. Beginning balance
2. Increased amount of the
119
Lu Thai Textile Co., Ltd. Interim Report 2020
period
(1) Withdrawal
3. Decreased amount of the
period
(1) Disposal
4. Ending balance
IV. Carrying value
1. Ending carrying value 506,823,876.28 66,172.23 1,614,349.24 135,000.00 508,639,397.75
2. Beginning carrying value 514,111,211.14 165,431.07 2,052,876.94 150,000.00 516,479,519.15
The proportion of intangible assets formed from the internal R&D of the Company at the Period-end to the ending balance of
intangible assets was 0.00%.
17. Development Costs
Unit: RMB
Increase Decrease
Beginning Ending
Item Internal Recognized as intangible Transferred into the
balance Other balance
development costs assets current profit or loss
R&D of
123,441,723.06 123,441,723.06
products
Total 123,441,723.06 123,441,723.06
18. Goodwill
(1) Original Carrying Value of Goodwill
Unit: RMB
Name of the Increase Decrease
invested units or Beginning Formed by
Ending balance
events generating balance business Disposal
goodwill combination
Xinsheng Power 20,563,803.29 20,563,803.29
Total 20,563,803.29 20,536,803.29
19. Long-term Prepaid Expense
Unit: RMB
Amortization Other decreased
Item Beginning balance Increased amount Ending balance
amount of the amount
120
Lu Thai Textile Co., Ltd. Interim Report 2020
period
Land contracting fee of
24,521,204.92 543,109.50 0.00 23,978,095.42
Xinjiang Lu Thai
Decoration fee 486,407.69 81,067.98 0.00 405,339.71
Land rent of overseas
128,023,641.18 1,520,353.98 -1,895,708.56 128,398,995.76
subsidiaries
Charge for supporting
4,587,155.95 38,226.30 4,548,929.65
facilities
Total 153,031,253.79 4,587,155.95 2,182,757.76 -1,895,708.56 157,331,360.54
20. Deferred Income Tax Assets/Deferred Income Tax Liabilities
(1) Deferred Income Tax Assets Had Not Been Off-set
Unit: RMB
Ending balance Beginning balance
Item Deductible temporary Deferred income tax Deductible temporary Deferred income tax
difference assets difference assets
Provision for impairment of assets 175,881,729.93 28,713,937.96 180,480,880.04 29,370,310.33
Internal unrealized profit 104,223,041.48 12,437,892.74 123,500,857.32 14,085,213.14
Deductible losses 31,584,302.32 5,600,742.22 31,584,302.32 5,600,742.22
One-time listed decoration expenses 3,496,364.02 874,091.01 3,496,364.02 874,091.01
Payroll payable 140,654,344.00 21,198,255.31 140,654,344.00 21,198,255.31
Deferred income 162,647,704.62 25,656,165.40 157,668,211.41 24,986,231.71
Changes in fair value of other
21,282,600.00 3,192,390.00 21,282,600.00 3,192,390.00
non-current financial assets
Total 639,770,086.37 97,673,474.64 658,667,559.11 99,307,233.72
(2) Deferred Income Tax Liabilities Had not Been Off-set
Unit: RMB
Ending balance Beginning balance
Item Taxable temporary Deferred income tax Taxable temporary Deferred income tax
difference liabilities difference liabilities
Depreciation of fixed assets 350,186,466.49 55,734,466.30 349,845,317.15 55,676,007.33
Internal unrealized profit 8,245,287.26 1,236,793.09 10,805,075.00 1,620,761.25
Changes in fair value of trading
0.00 0.00 2,356,098.85 353,414.83
financial assets
121
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Changes in fair value of other
90,436,047.47 13,565,407.12 231,934,500.00 34,790,175.00
non-current financial assets
Total 448,867,801.22 70,536,666.51 594,940,991.00 92,440,358.41
(3) List of Unrecognized Deferred Income Tax Assets
Unit: RMB
Item Ending balance Beginning balance
Deductible temporary difference 15,930,114.89 19,823,624.86
Deductible losses 23,975,983.50 23,728,086.37
Total 39,906,098.39 43,551,711.23
(4) Deductible Losses of Unrecognized Deferred Income Tax Assets will Due in the Following Years
Unit: RMB
Years Ending amount Beginning amount Notes
Y2020 13,393,727.33 13,393,727.33
Y2021 4,250,703.45 4,250,703.45
Y2022 3,730,297.90 3,730,297.90
Y2023 0.00 0.00
Y2024 2,353,357.69 2,353,357.69
Y2025 247,897.13 0.00
Total 23,975,983.50 23,728,086.37 --
21. Other Non-current Assets
Unit: RMB
Ending balance Beginning balance
Item Carrying Impairmen Carrying Impairment
Carrying value Carrying value
amount t provision amount provision
Prepayment for equipment 7,754,157.78 7,754,157.78 18,841,918.62 18,841,918.62
Total 7,754,157.78 7,754,157.78 18,841,918.62 18,841,918.62
22. Short-term Borrowings
(1) Category of Short-term Borrowings
Unit: RMB
122
Lu Thai Textile Co., Ltd. Interim Report 2020
Item Ending balance Beginning balance
Mortgage loan 200,000,000.00 309,422,409.94
Guaranteed loan 615,165,368.62 479,189,664.03
Credit loan 1,066,071,893.21 1,331,542,256.64
Total 1,881,237,261.83 2,120,154,330.61
Notes of the category for short-term loans:
(1) As of 30 June 2020, he Company’s subsidiary Xinjiang Lu Thai pledged the inventory with carrying value of
RMB76,161,332.00 and the land use rights with carrying value of RMB97,498,130.83 for bank short-term borrowing of
RMB200,000,000.00.
(2) The guaranteed loan at the period-end was the guarantee provided for the bank loan of the subsidiary Lu Thai (Vietnam)
by the Company. Refer to Note XII-2 for details.
(3) The short-term borrowings include interest payable of RMB 7,340,636.27.
23. Trading Financial Liabilities
Unit: RMB
Item Ending balance Beginning balance
Trading financial liabilities 841,402.78
Of which:
Derivative financial liabilities 841,402.78
Of which:
Total 841,402.78
24. Notes Payable
Unit: RMB
Item Ending balance Beginning balance
Trade acceptance 848,873.48
Bank’s acceptance bill 3,233,148.00 84,370,851.15
Total 3,233,148.00 85,219,724.63
The total overdue but unpaid notes payable at the period-end were RMB0.00.
25. Accounts Payable
(1) List of Accounts Payable
Unit: RMB
Item Ending balance Beginning balance
123
Lu Thai Textile Co., Ltd. Interim Report 2020
Payment for goods 97,246,497.38 159,191,179.02
Engineering equipment 101,306,194.97 135,578,852.63
Other 26,230,288.84 10,576,253.29
Total 224,782,981.19 305,346,284.94
26. Contract Liabilities
Unit: RMB
Item Ending balance Beginning balance
Payment for goods 111,405,604.38 108,783,148.03
Total 111,405,604.38 108,783,148.03
27. Payroll Payable
(1) List of Payroll Payable
Unit: RMB
Item Beginning balance Increase Decrease Ending balance
I. Short-term salary 327,102,126.87 809,960,231.98 865,693,350.19 271,369,008.66
II. Post-employment
8,474,433.49 49,230,274.99 53,812,540.77 3,892,167.71
benefit-defined contribution plans
Total 335,576,560.36 859,190,506.97 919,505,890.96 275,261,176.37
(2) List of Short-term Salary
Unit: RMB
Item Beginning balance Increase Decrease Ending balance
1. Salary, bonus, allowance, subsidy 267,390,519.63 719,066,736.26 777,680,537.39 208,776,718.50
2. Employee welfare 0.00 41,192,308.46 41,192,308.46 0.00
3. Social insurance 486,333.39 31,013,459.50 31,264,502.75 235,290.14
Of which: 1. Medical insurance
21,917.76 28,774,976.64 28,779,514.66 17,379.74
premiums
Work-related injury insurance 464,415.63 2,237,981.18 2,484,486.41 217,910.40
Maternity insurance 0.00 501.68 501.68 0.00
4. Housing fund 0.00 8,542,617.20 8,542,617.20 0.00
5. Labor union budget and
59,225,273.85 10,145,110.56 7,013,384.39 62,357,000.02
employee education budget
Total 327,102,126.87 809,960,231.98 865,693,350.19 271,369,008.66
124
Lu Thai Textile Co., Ltd. Interim Report 2020
(3) List of Defined Contribution Plans
Unit: RMB
Item Beginning balance Increase Decrease Ending balance
1. Basic pension benefits 8,119,137.55 46,847,776.72 51,237,893.95 3,729,020.32
2. Unemployment
355,295.94 2,382,498.27 2,574,646.82 163,147.39
insurance
Total 8,474,433.49 49,230,274.99 53,812,540.77 3,892,167.71
Other notes:
The Company, in line with the requirement, participate the endowment insurance, unemployment insurance scheme and so on.
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 Ending balance Beginning balance
VAT 4,216,792.63 3,285,763.29
Corporate income tax 12,742,870.58 4,184,737.55
Personal income tax 4,461,704.23 714,935.78
Urban maintenance and construction tax 982,146.45 4,805,486.91
Stamp tax 236,011.40 423,497.30
Property tax 4,866,325.70 4,802,550.30
Land use tax 4,241,519.13 2,477,984.56
Education surcharge 434,131.03 2,128,521.32
Local education surcharge 289,420.68 1,419,014.22
Local water conservancy facility
70,788.15 342,756.22
construction fund
Resource tax 137,168.00 116,530.00
Environmental protection tax 189,815.83 349,852.61
Tax for foreign contractors 259,311.11
Total 33,128,004.92 25,051,630.06
29. Other Payables
Unit: RMB
Item Ending balance Beginning balance
Dividends payable 86,253,267.74 441,113.64
125
Lu Thai Textile Co., Ltd. Interim Report 2020
Other payables 109,079,154.27 104,541,075.76
Total 195,332,422.01 104,982,189.40
(1) Dividends Payable
Unit: RMB
Item Ending balance Beginning balance
Ordinary stock dividends 85,812,154.10
Dividends payable to individual
441,113.64 441,113.64
shareholders
Total 86,253,267.74 441,113.64
Other notes: including significant dividends payable unpaid for over one year, the unpaid reason shall be disclosed:
Name Amount Reason
Dividends payable to 441,113.64
Cash dividend of previous year not received
individual
by individual shareholders
shareholders
Total 441,113.64 --
(2) Other Payables
1) Other Payables Listed by Nature of Account
Unit: RMB
Item Ending balance Beginning balance
Deposits and cash deposits etc. 7,018,209.82 19,949,169.11
Collecting payment on behalf of others 23,391,793.62 22,312,587.01
Intercourse funds 60,899,499.87 51,201,798.22
Other 17,769,650.96 11,077,521.42
Total 109,079,154.27 104,541,075.76
2) Significant Other Accounts Payable Aging over One Year
Unit: RMB
Item Ending 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
126
Lu Thai Textile Co., Ltd. Interim Report 2020
30. Current Portion of Non-current Liabilities
Unit: RMB
Item Ending balance Beginning balance
Current portion of long-term borrowings 56,636,000.00 101,111,297.49
Interest of current portion of bonds payable 955,068.49
Total 57,591,068.49 101,111,297.49
31. Long-term Borrowings
(1) Category of Long-term Borrowings
Unit: RMB
Item Ending balance Beginning balance
Guarantee loan 70,795,000.00 143,475,317.23
Less: current portion of long-term
-56,636,000.00 -101,111,297.49
borrowings
Total 14,159,000.00 42,364,019.74
Note to the category of long-term borrowings:
(1) The guarantee loan was the guarantee provided for the bank loan of the subsidiary Lu Thai (Vietnam) by the
Company. Refer to Note XII-2 for details.
32. Bonds Payable
(1) Bonds Payable
Unit: RMB
Item Ending balance Beginning balance
Convertible corporate bonds 1,324,932,419.54
Total 1,324,932,419.54
(2) Changes of Bonds Payable (Excluding Other Financial Instruments Divided as Financial Liabilities such
as Preferred Shares and Perpetual Bonds)
Unit: RMB
Begi Rep Less:
Bon Amortization
nnin Interest aid interest of
Bonds Par d Issued in the of premium
Issue date Issue amount g accrued at in current Ending balance
name value dura Reporting Period and
bala par value the portion of
tion depreciation
nce Rep bonds
127
Lu Thai Textile Co., Ltd. Interim Report 2020
ortin payable
g
Peri
od
LuThai
Convertibl 9 April
100.00 6 1,400,000,000.00 1,314,891,661.48 955,068.49 10,040,758.06 955,068.49 1,324,932,419.54
e Bond 2020
127016
Total -- -- -- 1,400,000,000.00 1,314,891,661.48 955,068.49 10,040,758.06 955,068.49 1,324,932,419.54
(3) Convertible Conditions and Time for Convertible Corporate Bonds
On 9 April 2020, the Company publicly issued 14 million A-share convertible corporate bonds (short name: Luthai Convertible Bonds,
bond code: 127016) on Shenzhen Stock Exchange with an issue price of RMB 100 per share and a share conversion price of RMB 9.01
per share. The bonds were listed on Shenzhen Stock Exchange on 13 May 2020. The period for converting the convertible bonds into
shares will start from the first trading day next to six months upon the end of the bond issue (15 April 2020, T+4) and end on the
maturity of the convertible bonds, namely, from 15 October 2020 till 8 April 2026.
33. Long-term Payroll Payable
(1) List of Long-term Payroll Payable
Unit: RMB
Item Ending balance Beginning balance
III. Other long-term welfare 52,317,084.85 105,589,249.56
Total 52,317,084.85 105,589,249.56
34. Deferred Income
Unit: RMB
Reason for
Item Beginning balance Increase Decrease Ending balance
formation
Government grants 157,641,810.65 11,502,800.00 6,496,906.03 162,647,704.62 Government grants
Unrealized financing
26,400.76 26,400.76 0.00 Finance lease
incomes
Total 157,668,211.41 11,502,800.00 6,523,306.79 162,647,704.62 --
Item involving government grants:
Unit: RMB
128
Lu Thai Textile Co., Ltd. Interim Report 2020
Amount Amount
Amount
recorded into recorded into
offset cost in Other Related to
Beginning Amount of non-operating other income
Item the change Ending balance assets/related
balance newly subsidy income in the in the
Reporting s income
Reporting Reporting
Period
Period Period
Related to the
Land 56,479,453.57 0.00 0.00 696,578.94 0.00 0.00 55,782,874.63
assets
Related to the
Equipment 79,175,495.32 8,702,800.00 0.00 2,493,310.22 0.00 0.00 85,384,985.10
assets
Related to the
Production living assets 425,000.12 0.00 0.00 42,499.90 0.00 0.00 382,500.22
assets
Related to the
Overseas investment 500,000.00 800,000.00 0.00 0.00 0.00 0.00 1,300,000.00
assets
Related to the
R&D 10,012,000.00 2,000,000.00 0.00 0.00 0.00 0.00 12,012,000.00
income
Related to the
public rental housing 1,189,710.65 0.00 0.00 24,115.74 0.00 0.00 1,165,594.91
assets
Transformation of garden Related to the
9,860,150.99 0.00 0.00 3,240,401.23 0.00 0.00 6,619,749.76
greens income
Total 157,641,810.65 11,502,800.00 0.00 6,496,906.03 0.00 0.00 162,647,704.62
Other notes:
35. Other Non-current Liabilities
Unit: RMB
Item Ending balance Beginning balance
Loan project 1,840,000.00 1,840,000.00
Total 1,840,000.00 1,840,000.00
36. Share Capital
Unit: RMB
Increase/decrease (+/-)
Beginning
New shares Bonus issue Ending balance
balance Bonus shares Other Subtotal
issued from profit
The sum of
858,121,541.00 858,121,541.00
shares
129
Lu Thai Textile Co., Ltd. Interim Report 2020
37. Other Equity Instruments
(1) Basic Information about Other Outstanding Financial Instruments such as Preferred Shares and
Perpetual Bonds at the Period-end
On 9 April 2020, the Company publicly issued 14 million A-share convertible corporate bonds (short name: Luthai Convertible Bonds,
bond code: 127016) on Shenzhen Stock Exchange with an issue price of RMB 100 per share and a share conversion price of RMB 9.01
per share. The bonds were listed on Shenzhen Stock Exchange on 13 May 2020.
(2) Changes of Outstanding Financial Instruments such as Preferred Shares and Perpetual Bonds at the
Period-end
Unit: RMB
Period-beginning Increase Decrease Period-end
Outstanding financial
Carrying Carrying
instruments Number Number Carrying value Number Number Carrying value
value value
Equity part of LuThai
14,000,000 71,391,357.42 14,000,000 71,391,357.42
Convertible Bonds
Total 14,000,000 71,391,357.42 14,000,000 71,391,357.42
Changes of other equity instruments in the Reporting Period, reasons thereof and basis of related accounting treatment:
Other notes;
The Company analyzed the debt and equity components in convertible bonds issued: after taking the issue expense into account, the
fair value of RMB1,314,891,661.48 of debt part shall be recorded into bonds payable and the fair value of RMB71,391,357.42 of the
equity part shall be recorded into other equity instruments.
38. Capital Reserves
Unit: RMB
Item Beginning balance Increase Decrease Ending balance
Capital premium
197,609,646.20 197,609,646.20
(premium on stock)
Other capital reserves 60,436,599.22 60,436,599.22
Total 258,046,245.42 258,046,245.42
39. Other Comprehensive Income
Unit: RMB
Reporting Period
Beginning Income before Less: recorded Less: recorded Less: Attributable to Attributa
Item Ending balance
balance taxation in the in other in other Incom owners of the ble to
Current Period comprehensive comprehensive e tax Company as non-cont
130
Lu Thai Textile Co., Ltd. Interim Report 2020
income in prior income in prior expens the parent rolling
period and period and e after tax interests
transferred in transferred in after tax
profit or loss in retained
the Current earnings in the
Period Current Period
II. Other
comprehensive
income that may
91,626,571.75 21,295,310.76 21,295,310.76 112,921,882.51
subsequently be
reclassified to profit
or loss
Differences arising
from translation of
foreign
91,626,571.75 21,295,310.76 21,295,310.76 112,921,882.51
currency-denominat
ed financial
statements
Total of other
comprehensive 91,626,571.75 21,295,310.76 21,295,310.76 112,921,882.51
income
40. Surplus Reserves
Unit: RMB
Item Beginning balance Increase Decrease Ending balance
Statutory surplus
1,113,925,779.05 1,113,925,779.05
reserves
Discretional surplus
3,341,572.58 3,341,572.58
reserves
Total 1,117,267,351.63 1,117,267,351.63
41. Retained Profits
Unit: RMB
Item Reporting Period Same period of last year
Beginning balance of retained profits before
5,372,073,615.12 4,927,500,989.55
adjustments
Total beginning retained profits of the adjustments
15,797,284.81
( “+” for increase, “-” for decrease)
Beginning balance of retained profits after 5,372,073,615.12 4,943,298,274.36
131
Lu Thai Textile Co., Ltd. Interim Report 2020
adjustments
Add: Net profit attributable to owners of the
144,119,579.22 411,446,216.59
Company as the parent
Dividend of ordinary shares payable 85,812,154.10 429,060,770.50
Ending retained profits 5,430,381,040.24 4,925,683,720.45
List of adjustment of beginning retained profits:
1) RMB0.00 beginning retained profits was affected by retrospective adjustment conducted according to the Accounting Standards
for Business Enterprises and relevant new regulations.
2) RMB0.00 beginning retained profits was affected by changes in accounting policies.
3) RMB0.00 beginning retained profits was affected by correction of significant accounting errors.
4) RMB0.00 beginning retained profits was affected by changes in combination scope arising from same control.
5) RMB0.00 beginning retained profits was affected totally by other adjustments.
42. Operating Revenue and Cost of Sales
Unit: RMB
Reporting Period Same period of last year
Item
Operating revenue Cost of sales Operating revenue Cost of sales
Main operations 2,222,332,890.30 1,634,158,882.29 3,067,390,155.73 2,138,306,997.45
Other operations 64,411,190.49 49,593,448.98 118,058,188.28 72,579,958.08
Total 2,286,744,080.79 1,683,752,331.27 3,185,448,344.01 2,210,886,955.53
Performance obligations:
Naught
Information in relation to the transaction price apportioned to the residual contract performance obligation:
As at the end of the Reporting Period, the revenue amount corresponding to the contract performance obligation yet to be fulfilled or
yet to be completed under a signed contract is RMB 0.00, including RMB 0.00 expected to be recognized as revenue in the year,
RMB 0.00 expected to be recognized as revenue in the year, and RMB 0.00 expected to be recognized as revenue in the year.
Other notes
Naught
43. Taxes and Surtaxes
Unit: RMB
Item Reporting Period Same period of last year
Urban maintenance and construction tax 7,630,680.55 12,942,977.77
Education Surcharge 3,402,460.99 6,280,555.02
Resources tax 262,578.00 273,812.00
Property tax 10,624,279.89 10,445,304.80
132
Lu Thai Textile Co., Ltd. Interim Report 2020
Land use tax 8,760,353.77 4,971,821.88
Vehicle and vessel usage tax 75,368.72 67,558.06
Stamp duty 1,668,370.50 1,974,918.20
Local education surcharge 2,268,305.20 4,186,251.77
Local water conservancy facility
541,123.15 906,978.57
construction fund
Environmental protection tax 532,734.64 686,626.70
Total 35,766,255.41 42,736,804.77
44. Selling Expense
Unit: RMB
Item Reporting Period Same period of last year
Salary 24,858,302.63 20,574,080.44
Transport fees 18,556,351.95 23,619,036.59
Advertising expense 218,938.82 842,219.72
Port surcharge 5,552,752.80 6,962,843.36
Depreciation charge 3,364,600.96 2,590,789.92
Business travel charges 963,154.55 2,276,163.13
Rental charges 2,003,837.09 352,005.53
Sales service fee 4,662,986.11 9,324,787.65
Publicity expenses 8,117,611.43 5,672,646.13
Expense for repairmen and loss 7,115,057.20 1,040,128.85
Other 6,326,312.05 4,582,241.62
Total 81,739,905.59 77,836,942.94
45. Administrative Expense
Unit: RMB
Item Reporting Period Same period of last year
Salary 67,681,094.74 70,734,616.39
Depreciation charge 17,659,534.12 16,165,351.08
Warehouse funding 20,442,304.85 18,689,030.12
Travel expense 12,025,932.80 9,626,697.87
Rental charges 6,948,195.24 7,783,345.21
Labor-union expenditure 5,915,433.42 7,253,250.66
133
Lu Thai Textile Co., Ltd. Interim Report 2020
Employee education budget 4,188,129.15 4,917,654.51
Amortization of intangible assets 6,766,430.80 6,659,983.58
Carriage charges 3,500,431.81 3,978,013.51
Other 32,766,112.54 45,397,654.81
Total 177,893,599.47 191,205,597.74
46. R&D Expense
Unit: RMB
Item Reporting Period Same period of last year
Labor cost 63,175,350.86 81,442,048.22
Material expense 43,001,450.30 61,389,843.36
Depreciation charge 6,678,502.09 5,495,504.06
Other 10,586,419.81 13,611,643.59
Total 123,441,723.06 161,939,039.23
47. Finance Costs
Unit: RMB
Item Reporting Period Same period of last year
Interest expense 43,752,260.50 47,316,465.76
Less: Interest income 13,506,359.51 4,338,765.10
Less: Capitalized interest 5,092,555.05
Foreign exchange gains or losses -3,962,751.87 4,695,399.57
Less: Capitalized foreign exchange gains
or losses
Other 4,016,715.61 4,881,469.82
Total 25,207,309.68 52,554,570.05
48. Other Income
Unit: RMB
Sources Reporting Period Same period of last year
Government grants 36,850,705.82 32,226,225.91
Total 36,850,705.82 32,226,225.91
134
Lu Thai Textile Co., Ltd. Interim Report 2020
49. Investment Income
Unit: RMB
Item Reporting Period Same period of last year
Long-term equity investment income
-3,579,523.35 5,083,101.54
accounted by equity method
Investment income from disposal of long-term
-46,137.60
equity investment
Investment income from holding of trading
1,382,405.99
financial assets
Investment income from disposal of trading
154,309,537.24 3,998,105.48
financial assets
Total 150,730,013.89 10,417,475.41
50. Gain on Changes in Fair Value
Unit: RMB
Sources Reporting Period Same period of last year
Trading financial assets -143,854,551.38 405,000.00
Trading financial liabilities -841,402.78 4,877,600.00
Total -144,695,954.16 5,282,600.00
51. Credit Impairment Loss
Unit: RMB
Item Reporting Period Same period of last year
Bad debt loss of other receivables 567,920.22 597,634.52
Bad debt loss of long-term receivables 396,960.83 -62,635.15
Bad debt loss of accounts receivable -2,518,597.53 -1,065,950.68
Total -1,553,716.48 -530,951.31
52. Asset Impairment Loss
Unit: RMB
Item Reporting Period Same period of last year
II. Inventory falling price loss and
impairment provision for contract -24,613,079.38 -1,543,199.38
performance costs
Total -24,613,079.38 -1,543,199.38
135
Lu Thai Textile Co., Ltd. Interim Report 2020
53. Asset Disposal Income
Unit: RMB
Sources Reporting Period Same period of last year
Fixed asset disposal income (“-” for loss) -405,636.42 513,490.00
Intangible asset disposal income (“-” for
51,773.24 0.00
loss)
Total -353,863.18 513,490.00
54. Non-operating Income
Unit: RMB
Amount recorded in the current
Item Reporting Period Same period of last year
non-recurring profit or loss
Gains on exchange of
16,961.25
non-monetary assets
Other 2,125,819.41 3,080,063.19
Total 2,125,819.41 3,097,024.44
55. Non-operating Expense
Unit: RMB
Amount recorded in the current
Item Reporting Period Same period of last year
non-recurring profit or loss
Donations 1,000,000.00 102,676.14
Losses from damage and scrap
149,918.89 24,624.99
of non-current assets
Other 1,234,008.01 2,087,055.41
Total 2,383,926.90 2,214,356.54
56. Income Tax Expense
(1) List of Income Tax Expense
Unit: RMB
Item Reporting Period Same period of last year
Current income tax expense 26,171,457.60 72,479,054.50
Deferred income tax expense 896,376.09 2,360,177.79
Total 27,067,833.69 74,839,232.29
136
Lu Thai Textile Co., Ltd. Interim Report 2020
(2) Adjustment Process of Accounting Profit and Income Tax Expense
Unit: RMB
Item Reporting Period
Profit before taxation 175,048,955.33
Current income tax expense accounted at statutory/applicable tax
26,257,343.30
rate
Influence of applying different tax rates by subsidiaries 4,031,973.86
Influence of income tax before adjustment -2,684,554.97
Profit/loss of associated enterprises and joint ventures accounted
-536,928.50
by equity method
Income tax expense 27,067,833.69
57. Other Comprehensive Income
Refer to Note VII-39 for details.
58. Cash Flow Statement
(1) Cash Generated from Other Operating Activities
Unit: RMB
Item Reporting Period Same period of last year
Government subsidies 42,760,333.79 31,316,634.62
Claim income 657,147.73 2,085,818.06
Recovery of employee borrowings, petty
7,829,609.00 10,419,971.60
cash and deposit
Collection for employees 1,507,827.48 1,888,073.17
Other 2,847,294.50 772,153.13
Total 55,602,212.50 46,482,650.58
(2) Cash Used in Other Operating Activities
Unit: RMB
Item Reporting Period Same period of last year
Freight and miscellaneous charges 25,102,769.53 27,584,811.06
Rental charges 11,393,199.71 10,519,175.31
Advertising expense 1,074,493.45 1,918,696.01
Business travel charges 14,492,835.30 11,411,011.08
137
Lu Thai Textile Co., Ltd. Interim Report 2020
Insurance 2,130,902.85 6,869,594.27
Audit advisory announcement fee 9,146,615.17 2,301,944.65
Decoration & repair expenses 1,368,170.04 82,537.34
Donation 1,000,000.00 22,546.59
Pre-payment 1,750,359.55 5,086,731.48
Payment of employee borrowings, petty
6,298,914.86 11,643,401.71
cash and deposit
Other 30,165,500.96 14,392,971.31
Total 103,923,761.42 91,833,420.81
(3) Cash Generated from Other Investing Activities
Unit: RMB
Item Reporting Period Same period of last year
Interest income 8,467,672.27 3,366,107.52
Income from forward foreign exchange 8,657,194.49 6,470,691.14
Cash deposit of L/C for purchasing
28,969,919.03
equipment
Total 46,094,785.79 9,836,798.66
(4) Cash Used in Other Investing Activities
Unit: RMB
Item Reporting Period Same period of last year
Forward settlement exchange loss 363,000.00 4,874,724.40
Payment of deposit for the L/C of
2,868,380.25
equipment purchase
Total 3,231,380.25 4,874,724.40
(5) Cash Generated from Other Financing Activities
Unit: RMB
Item Reporting Period Same period of last year
Return of loan guarantees 14,000,000.00 10,000,000.00
Recovery of intercourse accounts 160,000,000.00 9,000,000.00
Total 174,000,000.00 19,000,000.00
138
Lu Thai Textile Co., Ltd. Interim Report 2020
(6) Cash Used in Other Financing Activities
Unit: RMB
Item Reporting Period Same period of last year
Payment of the B-share buy-back amount 8,573,104.03
Payment for intercourse accounts 160,000,000.00 11,750,000.00
Acquisition of minority equity of
841,000.00
subsidiaries
Total 160,000,000.00 21,164,104.03
59. Supplemental Information for Cash Flow Statement
(1) Supplemental Information for Cash Flow Statement
Unit: RMB
Same period of last
Supplemental information Reporting Period
year
1. Reconciliation of net profit to net cash flows generated from operating activities -- --
Net profit 147,981,121.64 420,697,509.99
Add: Provision for impairment of assets 26,166,795.86 2,074,150.69
Depreciation of fixed assets, oil-gas assets, and productive living assets 242,090,445.82 226,725,498.16
Amortization of intangible assets 8,510,785.39 9,965,756.01
Amortization of long-term prepaid expenses 2,182,757.76 1,602,913.05
Losses from disposal of fixed assets, intangible assets and other long-lived assets
353,863.18 -513,490.00
(gains: negative)
Losses from scrap of fixed assets (gains: negative) 149,918.89 7,663.74
Losses from changes in fair value (gains: negative) 143,854,551.38 -5,282,600.00
Finance costs (gains: negative) 21,190,594.07 47,673,100.23
Investment loss (gains: negative) -150,730,013.89 -10,417,475.41
Decrease in deferred income tax assets (gains: negative) 1,633,759.08 2,508,867.66
Increase in deferred income tax liabilities (“-” means decrease) 21,903,691.90 -148,689.87
Decrease in inventory (gains: negative) -169,000,792.88 -221,528,624.76
Decrease in accounts receivable generated from operating activities (gains: negative) 188,207,459.72 -174,035,167.80
Increase in accounts payable used in operating activities (decrease: negative) -275,102,672.23 -179,612,349.12
Net cash generated from/used in operating activities 209,392,265.69 119,717,062.57
2. Significant investing and financing activities without involvement of cash receipts
-- --
and payments
139
Lu Thai Textile Co., Ltd. Interim Report 2020
3. Net increase/decrease of cash and cash equivalent: -- --
Ending balance of cash 2,018,648,643.49 623,558,417.28
Less: beginning balance of cash 878,559,018.92 535,134,772.90
Net increase in cash and cash equivalents 1,140,089,624.57 88,423,644.38
(2) Cash and Cash Equivalents
Unit: RMB
Item Ending balance Beginning balance
I. Cash 2,018,648,643.49 878,559,018.92
Including: Cash on hand 9,094,993.18 9,544,377.41
Bank deposit on demand 2,009,553,650.31 869,014,641.51
III. Ending balance of cash and cash
2,018,648,643.49 878,559,018.92
equivalents
60. Notes of Items in Owners’ Equity Change
Specific name of “other” related to the adjustment of the ending balance of last year and adjusted amount: Not applicable.
61. Assets with Restricted Ownership or Right to Use
Unit: RMB
Item Ending carrying value Reason for restriction
Monetary assets 4,586,637.12 Cash deposit for L/G and L/C
Inventory 76,161,332.00 Mortgaged for short-term borrowings
Intangible assets 97,498,130.83 Mortgaged for short-term borrowings
Total 178,246,099.95 --
62. Foreign Currency Monetary Items
(1) Foreign Currency Monetary Items
Unit: RMB
Ending foreign currency Ending balance converted to
Item Exchange rate
balance RMB
Monetary assets -- --
Of which: USD 58,303,032.08 7.0795 412,756,315.61
EUR 90,052.92 7.9610 716,911.30
HKD 3,204,206.74 0.9134 2,926,722.44
140
Lu Thai Textile Co., Ltd. Interim Report 2020
JPY 34,192,053.00 0.0658 2,249,837.09
GBP 2,667.18 8.7144 23,242.87
CHF 163.16 7.4434 1,214.47
SEK 800.00 0.7589 607.12
Dong 873,916,580,881.03 0.000305 266,531,448.42
MMK 296,405,273.21 0.00515 1,525,776.97
Riel 450,723,939.55 0.0017 779,599.62
Notes receivable
Of which: USD 8,015,391.52 7.0795 56,744,964.31
Accounts receivable -- --
Of which: USD 42,608,540.53 7.0795 301,647,162.68
EUR 63,901.92 7.9610 508,723.19
HKD
Dong 10,407,738,019.90 0.000305 3,174,203.98
Other receivables
Of which: USD 133,004.59 7.0795 941,606.00
JPY 1,395,039.97 0.0658 91,793.63
Dong 13,996,291,784.84 0.000305 4,268,659.05
GBP 9,250.00 8.7144 80,608.20
MMK 1,099,999.15 0.00515 5,662.36
Accounts payable
Of which: USD 7,271,078.54 7.0795 51,475,600.52
HKD 350,463.00 0.9134 320,112.90
JPY 8,087,725.08 0.0658 532,172.31
EUR 433,568.07 7.9610 3,451,635.41
Dong 9,502,365,788.48 0.000305 2,898,079.03
MMK 51,969,718.34 0.00515 267,519.53
Other payables
Of which: USD 86,080.00 7.0795 609,403.36
HKD 16,868,397.14 0.9134 15,407,593.95
Dong 241,549,846.71 0.000305 73,669.08
MMK 999,999.22 0.005148 5,147.60
Short-term borrowings
Of which: USD 184,755,016.35 7.0795 1,307,973,138.29
141
Lu Thai Textile Co., Ltd. Interim Report 2020
Dong 237,146,179,601.00 0.000305 72,325,994.33
Current portion of long-term
borrowings
Of which: USD 8,000,000.00 7.0795 56,636,000.00
Long-term borrowings -- --
Of which: USD 2,000,000.00 7.0795 14,159,000.00
EUR
HKD
(2) Notes to Overseas Entities Including: for Significant Oversea Entities, Main Operating Place, Recording
Currency and Selection Basis Shall Be Disclosed; if there Are Changes in Recording Currency, 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), Lu Thai (America),
and Lu Thai (Vietnam), Lu An Garment Co., Ltd., and the sub-subsidiary Lu Thai Tan Chau were Hong Kong, Cambodia, Burma,
America, Vietnam, Vietnam and Vietnam, and the recording currency was HKD for Lu Thai (Hong Kong), and USD for other
overseas companies..
63. Government Grants
(1) Basic Information on Government Grants
Unit: RMB
Amount recorded in the current
Category Amount Listed items
profit or loss
Provincial industrial transformation
2,000,000.00 Deferred income
development fund
Central government foreign trade and
800,000.00 Deferred income
economic development fund
Enterprise technology improvement fund 8,702,800.00 Deferred income
Fund for providing generous support to
16,455,600.00 Other income 16,455,600.00
local enterprises
Subsidy for stabilizing employment 4,970,305.36 Other income 4,970,305.36
Transport subsidy for the transfer of cotton
2,641,138.52 Other income 2,641,138.52
yarns
Support incentive fund of national and
1,000,000.00 Other income 1,000,000.00
provincial science and technology awards
Subsidy for electricity bills 871,326.00 Other income 871,326.00
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Support of national science and technology
800,000.00 Other income 800,000.00
awards
Loans with discounted interests 630,534.00 Finance costs 630,534.00
Social insurance subsidies 531,858.71 Other income 531,858.71
Rebate of surcharges for withholding taxes 379,942.04 Other income 379,942.04
Fund for the conversion from old to new
336,600.00 Other income 336,600.00
industrial growth drivers
Training subsidy for the new apprenticeship
330,000.00 Other income 330,000.00
system
Municipal commerce and trade fund
289,900.00 Other income 289,900.00
subsidy
Imports with discounted interests 273,200.00 Finance costs 273,200.00
Project subsidy for the introduction of
270,000.00 Other income 270,000.00
overseas engineers at the municipal level
Subsidy for market expansion in commerce
and trade development at the provincial 256,300.00 Other income 256,300.00
level
Central government foreign trade and
198,000.00 Other income 198,000.00
economic development fund
Once-off new employment subsidy fund 196,000.00 Other income 196,000.00
Subsidy fund for the conversion from old to
180,000.00 Other income 180,000.00
new industrial growth drivers
Bonus of national science and technology
150,000.00 Other income 150,000.00
awards
Municipal foreign trade and economic
123,400.00 Other income 123,400.00
development fund
Transport subsidy for outbound transfer of
116,238.53 Other income 116,238.53
cotton from Xinjiang
VAT exemption amount 96,254.89 Other income 96,254.89
Workstation subsidy to the payment to
80,000.00 Other income 80,000.00
technicians
Municipal business area fund 55,500.00 Other income 55,500.00
Social insurance subsidy for absorbing
19,519.67 Other income 19,519.67
personnel with difficulties in finding jobs
Additional deduction amount of VAT 3,800.48 Other income 3,800.48
VAT deduction of GTS equipment 1,540.00 Other income 1,540.00
VAT reduction and exemption 575.59 Other income 575.59
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Total 42,760,333.79 31,257,533.79
(2) Return of Government Grants
□ Applicable √ Not applicable
Other notes:
VIII. Equity in Other Entities
1. Equity in Subsidiary
(1) Subsidiaries
Main Holding percentage (%)
Registration
Name operating Nature of business Way of gaining
place Directly Indirectly
place
Luthai (Hong Kong) Hong Kong Hong Kong Wholesale and retail industry 100.00% Set-up
Shanghai Luthai Shanghai Shanghai Wholesale and retail industry 100.00% Set-up
Business
combination not
Xinjiang Luthai Xinjiang Xinjiang Manufacturing industry 59.92%
under the same
control
Lufeng Weaving &
Zibo Zibo Manufacturing industry 75.00% Set-up
Dyeing
Luqun Textile Zibo Zibo Manufacturing industry 100.00% Set-up
Business
combination not
Xinsheng Power Zibo Zibo Manufacturing industry 100.00%
under the same
control
Xinjiang Textile
Xinjiang Xinjiang Manufacturing industry 59.92% Set-up
(sub-subsidiary)
Beijing Youxian Beijing Beijing Wholesale and retail industry 100.00% Set-up
Technology development,
Shanghai Zhinuo Shanghai Shanghai technical consultancy and transfer 100.00% Set-up
of technologies
Lulian New Materials Zibo Zibo Manufacturing industry 75.00% Set-up
Lujia Import & Export Zibo Zibo Import and export trade 100.00% Set-up
Lu Thai Occupational
Zibo Zibo Skill training 100.00% Set-up
Training School
Lu Thai (Cambodia) Cambodia Cambodia Manufacturing industry 100.00% Set-up
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Lu Thai (Burma) Burma Burma Manufacturing industry 100.00% Set-up
Lu Thai (America) America America Wholesale and retail industry 100.00% Set-up
Lu Thai (Vietnam) Vietnam Vietnam Manufacturing industry 100.00% Set-up
Lu Thai Tan Chau
Vietnam Vietnam Manufacturing industry 100.00% Set-up
(sub-subsidiary)
Lu An Garments Vietnam Vietnam Manufacturing industry 100.00% Set-up
(2) Significant Non-wholly-owned Subsidiary
Unit: RMB
Shareholding proportion The profit or loss Declaring dividends Balance of
Name of non-controlling attributable to the distributed to non-controlling interests
interests non-controlling interests non-controlling interests at the period-end
Xinjiang Luthai 40.08% -2,166,723.45 193,750,107.65
Lufeng Weaving &
25.00% 7,992,782.43 50,000,000.00 314,776,411.66
Dyeing
(3) The Main Financial Information of Significant Not Wholly-owned Subsidiary
Unit: RMB
Ending balance Beginning balance
Name Current Non-curre Total Current Non-curre Total Current Non-curre Total Current Non-curre Total
assets nt assets assets liabilities nt liability liabilities assets nt assets assets liabilities nt liability liabilities
Xinjiang 311,441,7 502,104,2 813,545,9 315,701,4 4,369,911. 320,071,4 420,902,2 514,128,6 935,030,9 441,046,8 4,493,264. 445,540,0
Luthai 26.96 37.30 64.26 99.54 06 10.60 64.09 62.24 26.33 27.41 80 92.21
Lufeng
835,342,2 789,653,4 1,624,995, 315,764,7 43,527,42 359,292,1 869,432,9 806,983,3 1,676,416, 200,786,1 40,658,79 241,444,9
Weaving
38.42 25.19 663.61 76.90 3.01 99.91 92.40 71.55 363.95 05.11 5.64 00.75
& Dyeing
Unit: RMB
Reporting Period Same period of last year
Total Cash flows Total Cash flows
Name Operating Operating
Net profit comprehensive from operating Net profit comprehensive from operating
revenue revenue
income activities income activities
Xinjiang
182,903,647.38 -8,070,795.31 -8,070,795.31 94,628,954.27 314,368,667.80 -5,299,119.43 -5,299,119.43 30,794,222.48
Luthai
Lufeng
Weaving & 606,784,342.44 30,732,000.50 30,732,000.50 -27,139,185.20 805,575,459.05 52,877,665.09 52,877,665.09 106,151,171.66
Dyeing
Other notes:
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2. Equity in Joint Ventures or Associated Enterprises
(1) Significant Joint Ventures or Associated Enterprises
Holding percentage (%) Accounting
treatment of the
Main operating Nature of investment to
Name Registration place
place business Directly Indirectly joint venture or
associated
enterprise
Haohong Equity
Ningbo Ningbo 33.33% Equity method
Investment investment
Haoying Equity
Ningbo Ningbo 47.62% Equity method
Investment investment
(2) Main Financial Information of Significant Associated Enterprises
Unit: RMB
Beginning balance/The same period of last
Ending balance/Reporting Period
year
Haohong Investment Haohong Investment
Current assets 298,700,085.17 312,249,946.34
Total assets 298,700,085.17 312,249,946.34
Current liabilities 150,000.00 150,000.00
Total liabilities 150,000.00 150,000.00
Net assets 298,550,085.17 312,099,946.34
Equity attributable to shareholders of the
298,550,085.17 312,099,946.34
Company as the parent
Net assets shares calculated at the
99,516,743.39 104,032,882.42
shareholding proportion
--Other 0.00 -806,582.42
Carrying value of investment to associated
99,516,743.39 103,226,300.00
enterprises
Net profit -13,549,861.17 15,250,829.70
Total comprehensive income -13,549,861.17 15,250,829.70
Other notes:
According to the partnership agreement, all the partners shall enjoy 80% of surplus earnings in partnerships in proportion
to their contributions, and the general partner shall enjoy the rest of 20%. Therefore, there was difference between the net
assets shares calculated at shareholding proportion and he carrying value of equity investment in associated enterprises
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for the Company.
(3) Summary Financial Information of Insignificant Joint Ventures and Associated Enterprises
Unit: RMB
Beginning balance/The same period of last
Ending balance/Reporting Period
year
Joint ventures: -- --
Total of the following calculated at the
-- --
shareholding proportion
Associated enterprises: -- --
Total carrying value of investments 50,130,033.26
Total of the following calculated at the
-- --
shareholding proportion
--Net profit 130,033.26
-- Total comprehensive income 130,033.26
IX. The Risk Related to Financial Instruments
The Group’s major financial instruments include the monetary assets, notes receivable, accounts receivables, accounts receivable
financing, other receivables, other current assets, trading financial assets, other equity instrument investments, other non-current
financial assets, long-term receivables, notes payable, accounts payable, other payables, the short-term borrowings, trading financial
liabilities, non-current liabilities due within one year and long-term borrowings. Details of various financial instruments are disclosed
in relevant Notes. Possible risks related to these financial instruments and various risk management policies implemented to reduce
these risks are described as follows. The Group’s management has controlled and monitored these risk exposures in order to control
the above-mentioned risks within the limited scope.
1. Risk management objectives and policies
The Group has conducted the risk management to achieve an appropriate balance between the risk and the income and to minimize
the adverse influence of financial risks on the Group’s financial performance. According to such risk management objective, the
Company has formulated corresponding risk management policy to recognize and analyze possible risks encountered by the Group,
set the appropriate acceptable risk level and designed corresponding internal control procedures to monitor the Group’s risk level.
Meanwhile, the Group will regularly review these risk management policies and relevant internal control system so as to cater for the
market or respond to any change in the Group’s business operations. Accordingly, the Group’s internal audit department will also
regularly or randomly check whether the internal control system is implemented in conformity with relevant risk management
policies.
The major risks caused by financial instruments of the Group are credit risk, liquidity risk and market risk (including foreign
exchange risk and interest rate risk).
The Board of Directors shall be responsible for planning and establishing the risk management framework for the Group,
determining the Group’s risk management policies and relevant guidelines and monitoring the implementation of various risk
management measures. However, the Company has established corresponding risk management policies to recognize and analyze
possible risks encountered by the Group. Besides, various risks are specified in these risk management policies, including the credit
risk, the liquidity risk and the market risk management etc.. On a regular basis, the Group will evaluate the specific marketing
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environment and various changes in the Group’s business operations so as to determine whether any risk management policy and
system need be updated.
(1) Credit risk
Credit Risk means that the Group will suffer any financial losses due to the counter party’s failure in fulfilling the contract
obligations.
The Group shall manage the credit risk based on the specific Group Classification, and the credit risk mainly arises from bank deposit,
notes receivable, accounts receivable, other receivables and long-term accounts receivable etc..
The Group’s bank deposits are mainly saved in state-owned banks and other large and medium-sized listed banks. The Group’s bank
deposits are expected not to suffer any major credit risks.
For notes receivable, accounts receivable, other accounts receivable and long-term accounts receivable, the Group has established
relevant policies to control the credit risk exposure. According to the client’s financial status, credit record and other factors
(including the current market condition), the Group will evaluate the client’s credit qualification and set corresponding credit period.
In addition, the Group will regularly monitor the client’s credit record. For clients with poor credit records, the Group will issue the
written Reminder Notice, shorten the credit period or cancel the credit period to guarantee the Group’s overall credit risk under
control.
The hugest credit risk exposure borne by the Group is the book value of each financial asset reflected in the balance sheet, and the
Group has not provided any other guarantees that may cause the Company to bear any credit risk.
In terms of accounts receivable, the top 5 customers in accounts receivable were accounted for 30.29% of the total amount of
accounts receivable of the Group (22.71% in 2019). In terms of other receivables, the top 5 of the ending balance according to the
arrears party was accounted for 47.68% of the total amount of other receivables of the Group (71.72% in 2019).
Investment in debt obligations
The Group supervised the changes of credit risk through tracking the published external credit ratings. In order to make sure whether
the credit rating was the latest, and whether the credit risk has increased obviously of evaluation report date but not been reflected in
the published external ratings, the Group has supplemented through examining the changes of bond yield and the available news and
supervision information.
On the balance sheet date, the carrying value of investment in debt obligations of the Group are listed as follows according to report
items (Unit: RMB’0,000).
Item 2020.6.30 2019.12.31
Trading financial assets 0 5,235.61
Available-for-sale
financial assets
Total 5,235.61
(2) Liquidity risk
Liquidity Risk refers to the risk of capital shortage encountered by the Group during the cash payment or the settlement of other
financial assets.
During the management of liquidity risk, the Group shall reserve and monitor corresponding cash and cash equivalent deemed
sufficient by the management so as to meet the Group’s operational requirements and mitigate the impact caused by the cash flow
fluctuation. The Group’s management will monitor the use of bank loans and guarantee the fulfillment of loan agreement. Meanwhile,
major financial institutions shall promise to provide the Group with sufficient reserve funds in order to satisfy the short-term and
long-term fund demand. The Group shall raise its working capital based on the capital generated from business operations and bank
loans.
(3) Market risk
The financial instrument’s market risk refers to the fluctuation risk of fair value of financial instrument or future cash flow caused by
the changes of market price, including the interest rate risk and the exchange rate risk.
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Interest rate risk
Interest rate risk refers to the fluctuation risk of fair value of financial instrument or future cash flow caused by the changes of market
interest rate. The interest rate can derive from the recognized interest-bearing financial instruments and unrecognized financial
instruments (including certain loan commitment).
The Group’s interest rate risk mainly arises from the bank loan. Financial liabilities based on the floating interest rate will cause the
cash flow interest rate risk to the Group, and financial liabilities based on the fixed interest rate the fair value interest rate risk.
However, the Group has paid close attention the impact of interest rate fluctuations on the Group’s interest rate risk. At present, the
Group has not taken any interest rate hedging measures. The rise of interest rate will increase the cost of newly-added
interest-bearing debts and the interest cost of the Group’s unsettled interest-bearing debts based on the floating interest rate, and
cause major adverse influence on the Group’s financial performance. The management will timely make corresponding adjustment
according to the latest market situation, and corresponding interest rate swap will be arranged to reduce the interest rate risk.
On 30 June 2020, if the lending rate calculated at floating interest rate up or down 100 basis points with other variables unchanged,
the net profit and shareholders’ equity will be decreased or increased about RMB9.8156 million.
Foreign exchange risk
Foreign exchange risk is referred to the fluctuation risk of fair value of financial instruments or future cash flows resulted from the
change of foreign exchange rate. The foreign exchange rate was originated from the financial instruments denominated in foreign
currencies other than the recording currency.
On 30 June 2020, the amount of foreign currency financial assets and foreign currency financial liabilities converted to renminbi is as
follows (Unit: RMB’0,000):
Item Foreign currency liabilities Foreign currency assets
Ending balance Beginning balance Ending balance Beginning balance
USD 143,085.31 142,862.43 77,209.00 103,091.39
EUR 345.16 93.50 122.56 108.54
JPY 53.22 178.21 234.16 47.88
HKD 1,572.77 833.05 292.67 4,879.34
GBP - 10.39 11.68
CHF - 47.44 0.12 40.82
SEK - 0.06 0.06
Dong 7,529.77 9,156.70 27,397.43 11,176.75
MMK 27.27 153.14 71.20
Riel - 77.96 63.82
Total 152,613.50 153,171.32 105,497.49 119,491.47
2. Capital management
The objectives of capital management policies of the Group are to insure the continuous operation of the Group so as to provide return
to shareholders and benefit other stakeholders, as well as to reduce capital cost by maintaining the optimal capital structure.
In order to maintain or adjust capital structure, the Group might adjust financing method and the dividends paid to shareholders, return
capital to shareholders, issue new shares and other equity instrument or sell assets to reduce debts.
The Group supervised the capital structure based on the asset-liability ratio (namely total liabilities divide total assets). On 30 June 2020,
the asset-liability ratio was 34.28% of the Group (30.17% on 31 December 2019).
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X. The Disclosure of Fair Value
1. Ending Fair Value of Assets and Liabilities at Fair Value
Unit: RMB
Ending 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) Accounts receivable financing 14,807,543.11 14,807,543.11
(III) Other non-current financial
90,519,880.41 48,000,000.00 138,519,880.41
assets
The total amount of assets
90,519,880.41 62,807,543.11 153,327,423.52
consistently measured at fair value
(VI) Trading financial liabilities 841,402.78 841,402.78
The total amount of liabilities
841,402.78 841,402.78
consistently measured at fair value
II. Inconsistent fair value
-- -- -- --
measurement
2. Market Price Recognition Basis for Consistent and Inconsistent Fair Value Measurement Items at Level
2
As for the unlisted equity investment of Rongchang Pharmacy, the fair value was determined in accordance with the transaction
value of the most recent period.
3. Valuation Technique Adopted and Nature and Amount Determination of Important Parameters for
Consistent and Inconsistent Fair Value Measurement Items at Level 3
For the trust investment not existing in the active market, the Company shall recognize its fair value based on the estimated value on
the balance sheet day provided by the asset manager.
For the unlisted equity investment into Rongchang Pharmacy, the Company adopts the comparable listed company comparison
method, and the non-observable input value of the comparable listed company comparison method includes the liquidity discount.
The investment into Shandong Hongqiao Thermoelectric Co., Ltd. made by Luqun Textile (the Company’s subsidiary) is expected to
be held in the long run for obtaining the discount on power purchase. As no revenue distribution right is vested in the investment, the
invested unit’s operating profit and loss are not shared or borne, and the equity transfer is not proposed, the Company regards it as
the financial asset which shall be measured based on the fair value and whose variations are included in the current profit and loss,
and the investment cost is deemed as the fair value of the financial asset.
For accounts receivables financing at fair value and the changes included in other comprehensive income, its fair value shall be
determined by the discount cash flow method.
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4. Fair Value of Financial Assets and Liabilities Not Measured at Fair Value
The financial assets and financial liabilities measured at amortized cost mainly include: monetary assets, notes receivable, accounts
receivable, other receivables, long-term receivables, short-term borrowings, notes payable, accounts payables, other payables, current
portion of long-term borrowings and long-term borrowings, etc..
5. Other
XI. Related Party and Related-party Transactions
1. Information Related to the Company as the Parent of the Company
Proportion of share Proportion of voting
held by the rights owned by the
Name Registration place Nature of business Registered capital Company as the Company as the
parent against the parent against the
Company (%) Company (%)
Zibo Lucheng
Textile, chemistry
Textile Investment Zibo RMB63.26 million 16.36% 16.36%
and investment
Co., Ltd.
Notes: information on the Company as the parent
The final controllers of the Company are Mr. Liu Zibin and Mr. Liu Deming.
2. Subsidiaries of the Company
Refer to Note IX-1.
3. Information on the Joint Ventures and Associated Enterprises of the Company
Refer to Note IX-3.
4. Information on Other Related Parties
Name Relationship with the Company
Zibo Limin Purified Water Co., Ltd. (hereinafter called Limin
Wholly-owned subsidiary of the Company as the parent
Purified Water)
Zibo Luqun Land Co., Ltd (hereinafter called Luqun Land) Wholly-owned subsidiary of the Company as the parent
Zibo Lurui Fine Chemical Co., Ltd. (hereinafter referred to as
Majority-owned subsidiary of the Company as the parent
Lurui Chemical)
Zibo Lujia Property Management Co. , Ltd. (hereinafter referred
Wholly-owned subsidiary of the Company as the parent
to as Lujia Property)
Hong Kong Tung Hoi International Company Limited Wholly-owned subsidiary of the Company as the parent
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Lu Thai Textile Co., Ltd. Interim Report 2020
(hereinafter called Tung Hoi International)
Zibo Chengshun Hosiery Co., Ltd. (hereinafter referred to as
Majority-owned subsidiary of the Company as the parent
Chengshun Hosiery)
Zibo Chengshun Economic and Trade Co., Ltd. (hereinafter
Wholly-owned subsidiary of the Company as the parent
referred to as Chengshun Economic and Trade)
Chengshun Petrochemical (Zhejiang Zhoushan) Co., Ltd.
Wholly-owned subsidiary of the Company as the parent
(hereinafter referred to as Chengshun Petrochemical)
Zibo Lucheng Petrochemical Sales Co., Ltd. (hereinafter referred
Wholly-owned subsidiary of the Company as the parent
to as Lucheng Petrochemical)
Shanghai Hengjiu Textile New Materials Co., Ltd. Majority-owned subsidiary of the Company as the parent
Majority-owned subsidy of wholly-owned subsidiary of the
Lumei New Materials Co., Ltd.
Company as the parent
Wholly-owned subsidiary of wholly-owned subsidiary of the
Unikorn Nonwovens Co., Ltd.
Company as the parent
Zibo Lumei Economic and Trade Co., Ltd. Wholly-owned subsidiary of the Company as the parent
5. List of Related-party Transactions
(1) Information on Acquisition of Goods and Reception of Labor Service
Information on acquisition of goods and reception of labor service
Unit: RMB
The approval trade Whether exceed trade Same period of
Related party Content Reporting Period
credit credit or not last year
Towels, socks, oils,
supermarket retail,
welfare, electronics,
Lucheng Textile 6,177,619.85
computer equipment,
computer supplies, paper
cores, etc.
Limin Purified Recycled water, sewage
9,822,323.88 11,800,000.00 No 11,140,353.11
Water treatment, materials
Chengshun
Gas No 22,728,978.86
Petroleum
Lurui Chemical Auxiliaries 36,593,447.10 44,000,000.00 No 57,285,041.23
Socks, paper cores, hose
Chengshun Hosiery 3,909,785.92 4,700,000.00 No
processing, etc.
Chengshun
Economic and Supermarket retail 1,796,605.97 2,200,000.00 No
Trade
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Lu Thai Textile Co., Ltd. Interim Report 2020
Lucheng
Oils 844,180.74 1,020,000.00 No
Petrochemical
Chengshun
Gas and Oils 16,749,727.55 20,100,000.00 No
Petrochemical
Unikorn
Clothes 6,187.61 No
Nonwovens
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,
Lucheng Textile 56,265.15
draught water, gas etc.
Lucheng Textile Sales of grey yarn, dyed yarn, garment etc. 252,090.27
Materials, electricity, running water,
Chengshun Hosiery 64,659.60
heating, steam
Chengshun Hosiery Sales of grey yarn, dyed yarn 186,772.14
Chengshun Economic and
Materials, electricity, running water 98,220.46
Trade
Lucheng Petrochemical Electricity, materials 11,892.89
Limin Purified Water Sales of materials, garment, electricity etc. 750,467.47 865,399.14
Sales of garment, water & electricity, lunch
Lurui Fine Chemical 27,177.52 155,742.15
components and materials
Lujia Property Sales of materials and recycled water 95,382.35 45,794.67
Unikorn Nonwovens Materials and table money 2,563.14
Luqun Property Materials 463.68
Luqun Property Heating utilities 1,720,174.32
(2) Information on Related-party Lease
The Company was lessor:
Unit: RMB
The lease income confirmed in The lease income confirmed in
Name of lessee Category of leased assets
the Reporting Period the same period of last year
Zibo Lucheng Textile
Houses and buildings 36,108.00
Investment Co., Ltd.
Chengshun Economic and
Houses and buildings 36,108.00
Trade
Lurui Fine Chemical Houses and buildings 4,091.82 4,091.82
The Company was lessee:
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Lu Thai Textile Co., Ltd. Interim Report 2020
Unit: RMB
The lease fee confirmed in the The lease fee confirmed in the
Name of lessor Category of leased assets
Reporting Period same period of last year
Zibo Lucheng Textile
Rent of land 1,807,428.60 1,807,428.60
Investment Co., Ltd.
Zibo Lucheng Textile
Rent of gas station 116,571.42 250,857.12
Investment Co., Ltd.
Zibo Lucheng Textile
Rent of buildings 5,511,114.30 5,511,114.30
Investment Co., Ltd.
Luqun Property Rent of land and buildings 985,714.26 697,142.82
(3) Information on Inter-bank Lending of Capital of Related Parties
Unit: RMB
Related party Amount Start date End date Note
Borrowing
Lucheng Textile 10,000,000.00 16 January 2020 9 March 2020
Lucheng Textile 20,000,000.00 16 January 2020 12 March 2020
Lucheng Textile 20,000,000.00 16 January 2020 16 March 2020
Lucheng Textile 40,000,000.00 16 January 2020 24 March 2020
Lucheng Textile 40,000,000.00 16 January 2020 26 March 2020
Lucheng Textile 30,000,000.00 16 January 2020 8 April 2020
Lending
6. Accounts Receivable and Payable of Related Party
(1) Accounts Payable
Unit: RMB
Item Related party Ending carrying amount Beginning carrying amount
Chengshun Economic and
Accounts payable 2,794.00
Trade
Accounts payable Lurui Fine Chemical 806,304.80
Contract liabilities Luqun Property 708,147.44
Chengshun Economic and
Contract liabilities 784.00
Trade
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XII. Commitments and Contingency
1. Significant Commitments
Significant commitments on balance sheet date
Commitments signed but hasn’t been 2020.6.30 2019.12.31
recognized in financial statements
Commitment on constructing and purchasing 18,487.40 19,386.82
long-lived assets (RMB’0,000)
2. Contingency
(1) Significant Contingency on Balance Sheet Date
(1) Contingent liabilities formed by the debt guarantee provided to other entities and the financial impact
As of 30 June 2020, the Company provided guarantee to loans of the following entities:
Name Item Curren Foreign currency Amount converted Start date Due date Rema
cy amount to RMB rk
I.
Subsidiary
Lu Thai Short-term Dong 21,820,795,310.00 6,655,012.12 2020/1/3 2020/7/3
(Vietnam) borrowings
Lu Thai Short-term Dong 6,176,783,618.00 1,883,825.50 2020/1/15 2020/7/15
(Vietnam) borrowings
Lu Thai Short-term Dong 19,962,139,440.00 6,088,150.32 2020/1/20 2020/7/20
(Vietnam) borrowings
Lu Thai Short-term Dong 4,573,845,114.00 1,394,953.53 2020/1/20 2020/7/20
(Vietnam) borrowings
Lu Thai Short-term Dong 5,439,698,125.00 1,659,025.60 2020/1/21 2020/7/21
(Vietnam) borrowings
Lu Thai Short-term Dong 14,570,655,511 4,443,829.34 2020/2/11 2020/8/11
(Vietnam) borrowings
Lu Thai Short-term Dong 10,986,788,576 3,350,804.16 2020/2/19 2020/8/19
(Vietnam) borrowings
Lu Thai Short-term Dong 4,377,113,788 1,334,953.42 2020/2/25 2020/8/25
(Vietnam) borrowings
Lu Thai Short-term Dong 6,115,007,882 1,864,984.83 2020/2/26 2020/8/26
(Vietnam) borrowings
Lu Thai Short-term Dong 22,011,511,752 6,713,177.86 2020/3/5 2020/9/5
(Vietnam) borrowings
Lu Thai Short-term Dong 7,449,117,623 2,271,868.12 2020/3/19 2020/9/19
(Vietnam) borrowings
155
Lu Thai Textile Co., Ltd. Interim Report 2020
Lu Thai Short-term Dong 4,398,499,302 1,341,475.69 2020/3/24 2020/9/24
(Vietnam) borrowings
Lu Thai Short-term Dong 7,642,691,864 2,330,905.34 2020/3/24 2020/9/24
(Vietnam) borrowings
Lu Thai Short-term Dong 23,515,375,245 7,171,833.39 2020/4/6 2020/10/6
(Vietnam) borrowings
Lu Thai Short-term Dong 12,019,783,770 3,665,852.04 2020/4/7 2020/10/7
(Vietnam) borrowings
Lu Thai Short-term Dong 23,555,323,880 7,184,017.14 2020/5/8 2020/11/8
(Vietnam) borrowings
Lu Thai Short-term USD 1,052,074.08 7,448,158.45 2020/1/17 2020/7/15
(Vietnam) borrowings
Lu Thai Short-term USD 337,443.80 2,388,933.38 2020/2/4 2020/8/2
(Vietnam) borrowings
Lu Thai Short-term USD 859,256.80 6,083,108.52 2020/2/6 2020/8/4
(Vietnam) borrowings
Lu Thai Short-term USD 1,184,915.24 8,388,607.44 2020/2/24 2020/8/22
(Vietnam) borrowings
Lu Thai Short-term USD 1,774,709.07 12,564,052.86 2020/2/27 2020/8/25
(Vietnam) borrowings
Lu Thai Short-term USD 34,858.37 246,779.83 2020/3/4 2020/8/31
(Vietnam) borrowings
Lu Thai Short-term USD 917,605.42 6,496,187.57 2020/3/6 2020/9/2
(Vietnam) borrowings
Lu Thai Short-term USD 1,495,446.52 10,587,013.64 2020/3/31 2020/9/27
(Vietnam) borrowings
Lu Thai Short-term USD 606,091.37 4,290,823.85 2020/4/14 2020/10/11
(Vietnam) borrowings
Lu Thai Short-term USD 1,314,673.55 9,307,231.40 2020/5/6 2020/11/2
(Vietnam) borrowings
Lu Thai Short-term USD 574,465.01 4,066,925.04 2020/6/18 2020/12/15
(Vietnam) borrowings
Lu Thai Short-term USD 10,000,000.00 70,795,000.00 2019/7/8 2020/7/6
(Vietnam) borrowings
Lu Thai Short-term USD 8,000,000.00 56,636,000.00 2019/8/19 2020/8/17
(Vietnam) borrowings
Lu Thai Short-term USD 7,500,000.00 53,096,250.00 2019/8/28 2020/8/26
(Vietnam) borrowings
Lu Thai Short-term USD 3,000,000.00 21,238,500.00 2019/9/24 2020/9/22
(Vietnam) borrowings
Lu Thai Short-term USD 5,000,000.00 35,397,500.00 2020/3/9 2021/3/8
(Vietnam) borrowings
156
Lu Thai Textile Co., Ltd. Interim Report 2020
Lu Thai Short-term USD 3,000,000.00 21,238,500.00 2020/3/13 2020/9/11
(Vietnam) borrowings
Lu Thai Short-term USD 2,000,000.00 14,159,000.00 2020/6/24 2020/12/22
(Vietnam) borrowings
Lu Thai Short-term USD 10,000,000.00 70,795,000.00 2020/6/26 2020/12/24
(Vietnam) borrowings
Lu Thai Short-term USD 2,000,000.00 14,159,000.00 2020/3/12 2020/9/14
(Vietnam) borrowings
Lu Thai Short-term USD 1,428,322.58 10,111,809.71 2020/4/16 2020/10/16
(Vietnam) borrowings
Lu Thai Short-term USD 263,451.94 1,865,108.01 2020/4/23 2020/10/23
(Vietnam) borrowings
Lu Thai Short-term USD 198,444.50 1,404,887.84 2020/4/24 2020/10/24
(Vietnam) borrowings
Lu Thai Short-term USD 816,660.35 5,781,546.95 2020/4/27 2020/10/27
(Vietnam) borrowings
Lu Thai Short-term USD 316,614.44 2,241,471.93 2020/5/5 2020/11/5
(Vietnam) borrowings
Lu Thai Short-term USD 608,779.44 4,309,854.05 2020/5/15 2020/11/15
(Vietnam) borrowings
Lu Thai Short-term USD 1,435,131.73 10,160,015.08 2020/2/14 2020/8/12
(Vietnam) borrowings
Lu Thai Short-term USD 2,157,057.73 15,270,890.20 2020/3/2 2020/8/29
(Vietnam) borrowings
Lu Thai Short-term USD 1,401,178.90 9,919,646.02 2020/5/28 2020/11/24
(Vietnam) borrowings
Lu Thai Short-term USD 290,695.81 2,057,980.99 2020/6/5 2020/12/2
(Vietnam) borrowings
Lu Thai Short-term USD 573,641.66 4,061,096.13 2020/6/25 2020/12/22
(Vietnam) borrowings
Lu Thai Short-term USD 285,540.84 2,021,486.38 2020/3/9 2020/9/5
(Vietnam) borrowings
Lu Thai Short-term USD 203,005.65 1,437,178.50 2020/3/13 2020/9/9
(Vietnam) borrowings
Lu Thai Short-term USD 5,314,478.07 37,623,847.50 2020/5/5 2021/5/5
(Vietnam) borrowings
Lu Thai Short-term Dong 5,943,610,398.00 1,812,711.21 2020/5/6 2020/11/2
Tan Chau borrowings
Lu Thai Short-term Dong 5,692,613,415.00 1,736,160.93 2020/5/7 2020/11/3
Tan Chau borrowings
Lu Thai Short-term Dong 8,247,906,497.00 2,515,486.59 2020/6/15 2020/12/12
Tan Chau borrowings
157
Lu Thai Textile Co., Ltd. Interim Report 2020
Lu Thai Short-term USD 1,360,796.50 9,633,758.82 2020/5/6 2021/5/6
Tan Chau borrowings
Lu Thai Short-term USD 245,277.96 1,736,445.32 2020/6/4 2020/12/1
Tan Chau borrowings
Lu Thai Short-term USD 102,655.00 726,746.08 2020/6/23 2020/12/20
Tan Chau borrowings
Lu Thai Long-term USD 244,800.00 1,733,061.60 2019/9/30 2021/8/30
Tan Chau borrowings
Lu Thai Long-term USD 2,436,000.00 17,245,662.00 2019/9/30 2021/8/30
Tan Chau borrowings
Lu Thai Long-term USD 285,296.40 2,019,755.86 2019/10/3 2021/8/30
Tan Chau borrowings
Lu Thai Long-term USD 160,650.00 1,137,321.68 2019/10/3 2021/8/30
Tan Chau borrowings
Lu Thai Long-term USD 194,256.00 1,375,235.35 2019/10/7 2021/8/30
Tan Chau borrowings
Lu Thai Long-term USD 51,840.00 367,001.28 2019/10/11 2021/8/30
Tan Chau borrowings
Lu Thai Long-term USD 171,720.00 1,215,691.74 2019/10/17 2021/8/30
Tan Chau borrowings
Lu Thai Long-term USD 189,802.91 1,343,709.70 2019/10/21 2021/8/30
Tan Chau borrowings
Lu Thai Long-term USD 48,030.00 340,028.39 2019/10/21 2021/8/30
Tan Chau borrowings
Lu Thai Long-term USD 7,560.00 53,521.02 2019/10/21 2021/8/30
Tan Chau borrowings
Lu Thai Long-term USD 104,024.05 736,438.26 2019/11/7 2021/8/30
Tan Chau borrowings
Lu Thai Long-term USD 109,656.67 776,314.40 2019/11/7 2021/8/30
Tan Chau borrowings
Lu Thai Long-term USD 2,507,548.87 17,752,192.23 2019/11/20 2021/8/30
Tan Chau borrowings
Lu Thai Long-term USD 461,217.60 3,265,190.00 2019/11/20 2021/8/30
Tan Chau borrowings
Lu Thai Long-term USD 128,520.00 909,857.34 2019/12/4 2021/8/30
Tan Chau borrowings
Lu Thai Long-term USD 2,588,953.33 18,328,495.10 2019/12/5 2021/8/30
Tan Chau borrowings
Lu Thai Long-term USD 310,124.17 2,195,524.05 2019/12/17 2021/8/30
Tan Chau borrowings
Total 685,960,368.62
158
Lu Thai Textile Co., Ltd. Interim Report 2020
(2) Explanation shall be given even if there is no significant contingency for the Company to disclose
There was no significant contingency in the Company to disclose.
XIII. Events after Balance Sheet Date
1. Notes to Other Events after Balance Sheet Date
On 13 August 2020, the 16th Meeting of the 9th Board of Directors of the Company reviewed and approved the Proposal on Sales of
Equity Interests in Xinjiang Lu Thai Fengshou Cotton Industry Co., Ltd. The Company will sell all equity interest in Xinjiang Lu
Thai held it to Mr. Li Jingquan at the price of RMB195.86 million. After the transfer, the Company will no longer hold equity interest
of Xinjiang Lu Thai. On the same date, the Company signed the Transfer Agreement of Equity Interest in Xinjiang Lu Thai Fengshou
Cotton Industry Co., Ltd. with Mr. Li Jingquan.
XIV. Notes of Main Items in the Financial Statements of the Company as the Parent
1. Accounts Receivable
(1) Listed by Category
Unit: RMB
Ending balance Beginning balance
Carrying amount Bad debt provision Carrying amount Bad debt provision
Category
Withdrawa Carrying Withdrawa Carrying
Amount Proportion Amount l value Amount Proportion Amount l value
proportion proportion
Of which:
Accounts receivable
286,056,8 21,076,42 264,980,44 439,725,29 22,125,772 417,599,518.
withdrawal of bad debt 100.00% 7.37% 100.00% 5.03%
72.94 7.28 5.66 0.44 .36 08
provision of by group
Of which:
Group 1: Undue
36,312,57 381,282.0 35,931,293 87,886,175 86,963,370.7
accounts (credit 12.69% 1.05% 19.99% 922,804.84 1.05%
5.11 4 .07 .56 2
insurance insured)
Group 2: Undue
163,120,8 8,156,040. 154,964,76 312,932,45 15,646,622 297,285,833.
accounts (no credit 57.02% 5.00% 71.16% 5.00%
06.29 32 5.97 6.44 .82 62
insurance)
Group 3: Overdue
50,529,41 5,406,646. 45,122,763 26,018,416 2,783,970. 23,234,445.7
accounts (credit 17.67% 10.70% 5.92% 10.70%
0.66 94 .72 .33 55 8
insurance insured)
159
Lu Thai Textile Co., Ltd. Interim Report 2020
Group 4: Overdue
36,094,08 7,132,457. 28,961,622 12,888,242 2,772,374. 10,115,867.9
accounts (no credit 12.62% 19.76% 2.93% 21.51%
0.88 98 .90 .11 15 6
insurance)
286,056,8 21,076,42 264,980,44 439,725,29 22,125,772 417,599,518.
Total 100.00% 7.37% 100.00% 5.03%
72.94 7.28 5.66 0.44 .36 08
Withdrawal of bad debt provision by single item: RMB0.00.
Withdrawal of bad debt provision by group:
Unit: RMB
Ending balance
Name
Carrying amount Bad debt provision Withdrawal proportion
Group 1: Undue accounts (credit insurance
36,312,575.11 381,282.04 1.05%
insured)
Group 2: Undue accounts (no credit
163,120,806.29 8,156,040.32 5.00%
insurance)
Group 3: Overdue accounts (credit
50,529,410.66 5,406,646.94 10.70%
insurance insured)
Group 4: Overdue accounts (no credit
36,094,080.88 7,132,457.98 19.76%
insurance)
Total 286,056,872.94 21,076,427.28 --
Please refer to the relevant information of disclosure of bad debt provision of other accounts receivable if adopting the general mode
of expected credit loss to withdraw bad debt provision of accounts receivable.
√ Applicable □ Not applicable
Disclosure by aging
Unit: RMB
Aging Ending balance
Within 1 year (including 1 year) 279,555,324.65
1 to 2 years 6,167,185.37
2 to 3 years 0.00
Over 3 years 334,362.92
3 to 4 years 334,362.92
Total 286,056,872.94
(2) Bad Debt Provision Withdrawal, Reversed or Recovered in the Reporting Period
Withdrawal of bad debt provision:
Unit: RMB
Beginning Changes in the Reporting Period
Category Ending balance
balance Withdrawal Reversal or Verification Other
160
Lu Thai Textile Co., Ltd. Interim Report 2020
recovery
Bad debt
22,125,772.36 -1,049,345.08 21,076,427.28
provision
Total 22,125,772.36 -1,049,345.08 21,076,427.28
(3) Top 5 of the Ending Balance of the Accounts Receivable Collected according to Arrears Party
Unit: RMB
Proportion to total ending Ending balance of bad debt
Name of entity Ending balance
balance of accounts receivable provision
A 28,492,484.05 9.96% 2,081,690.53
B 27,904,570.30 9.75% 4,058,695.57
C 16,934,300.99 5.92% 846,715.05
D 8,707,125.10 3.04% 435,356.26
E 7,382,558.18 2.58% 694,234.44
Total 89,421,038.62 31.25%
2. Other Receivables
Unit: RMB
Item Ending balance Beginning balance
Other receivables 981,462,785.76 838,523,449.52
Total 981,462,785.76 838,523,449.52
(1) Other Receivables
1) Other Receivables Classified by Account Nature
Unit: RMB
Nature Ending carrying amount Beginning carrying amount
Intercourse funds 974,395,331.33 820,813,180.93
Export rebates 9,928,747.48
Payment on behalf 1,272,190.64 7,908,873.14
Guarantee deposit and cash deposit 4,185,003.44 3,290,964.29
Borrowings and petty cash 1,130,004.89 998,879.96
Other 5,085,023.38 248,238.60
Total 986,067,553.68 843,188,884.40
161
Lu Thai Textile Co., Ltd. Interim Report 2020
2) Withdrawal of Bad Debt Provision
Unit: RMB
First stage Second stage Third stage
Expected loss in the Expected loss in the
Bad debt provision Expected credit loss of Total
duration (credit duration (credit impairment
the next 12 months
impairment not occurred) occurred)
Balance of 1 January 2020 3,457,541.15 1,207,893.73 4,665,434.88
Balance of 1 January 2020 in the
—— —— —— ——
Current Period
Withdrawal of the Current Period -75,997.38 15,330.42 -60,666.96
Balance of 30 June 2020 3,381,543.77 1,223,224.15 4,604,767.92
Changes of carrying amount with significant amount changed of loss provision in the Current Period
□ Applicable √ Not applicable
Disclosure by aging
Unit: RMB
Aging Ending balance
Within 1 year (including 1 year) 981,425,199.70
1 to 2 years 366,693.63
2 to 3 years 2,262,046.85
Over 3 years 2,013,613.50
4 to 5 years 300,000.00
Over 5 years 1,713,613.50
Total 986,067,553.68
3) Top 5 of the Ending Balance of Other Receivables Collected according to the Arrears Party
Unit: RMB
Proportion to ending Ending balance
Name of the entity Nature Ending balance Aging balance of total of bad debt
other receivables% provision
Within 1
Lu Thai (Vietnam) Intercourse funds 637,155,000.00 64.62% 1,911,465.00
year
Within 1
Lufeng Weaving & Dyeing Intercourse funds 130,400,946.63 13.22% 391,202.84
year
Within 1
Lu Thai Tan Chau Intercourse funds 111,148,150.00 11.27% 333,444.45
year
Lu An Garments Intercourse funds 95,573,250.00 Within 1 9.69% 286,719.75
162
Lu Thai Textile Co., Ltd. Interim Report 2020
year
Migrant workers’ wage
Migrant workers’ wage margin Over 3
margin of infrastructural 1,458,593.50 0.15% 72,929.68
in Zichuan District of Zibo years
project
Total -- 975,735,940.13 -- 98.95% 2,995,761.72
3. Long-term Equity Investment
Unit: RMB
Ending balance Beginning balance
Item Depreciation Depreciation
Carrying amount Carrying value Carrying amount Carrying value
reserve reserve
Investment to
2,578,715,316.04 15,123,011.20 2,563,592,304.84 2,422,765,316.04 15,123,011.20 2,407,642,304.84
subsidiaries
Investment to joint
ventures and associated 149,646,776.65 149,646,776.65 103,226,300.00 103,226,300.00
enterprises
Total 2,728,362,092.69 15,123,011.20 2,713,239,081.49 2,525,991,616.04 15,123,011.20 2,510,868,604.84
(1) Investment to Subsidiaries
Unit: RMB
Increase/decrease
Ending balance
Beginning balance Withdrawal of Ending balance
Investee Additional Reduced of depreciation
(carrying value) depreciation Other (carrying value)
investment investment reserve
reserve
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
10,209,050.00 10,209,050.00
(America)
Lu Thai 62,337,238.57 62,337,238.57
163
Lu Thai Textile Co., Ltd. Interim Report 2020
(Burma)
Beijing Youxian 3,717,988.80 3,717,988.80 15,123,011.20
Lu Thai
834,936,510.00 834,936,510.00
(Vietnam)
Lu An Garments 64,229,060.00 64,229,060.00
Lulian New
150,000,000.00 150,000,000.00 300,000,000.00
Materials
Lujia Import &
50,000.00 5,950,000.00 6,000,000.00
Export
Lu Thai
Occupational 100,000.00 100,000.00
Training School
Total 2,407,642,304.84 155,950,000.00 2,563,592,304.84 15,123,011.20
(2) Investment to Joint Ventures and Associated Enterprises
Unit: RMB
Increase/decrease
Ending
Gains and Adjustm Withdra
balance
Beginning Redu losses ent of Change Cash bonus wal of
Ending balance of
Investee balance Additional ced recognized other s of or profits impair Oth
(carrying value) depreci
(carrying value) investment invest under the compreh other announced ment er
ation
ment equity ensive equity to issue provisio
reserve
method income n
I. Joint ventures
II. Associated enterprises
Haohong
103,226,300.00 -3,709,556.61 99,516,743.39
Investment
Haoying
50,000,000.00 130,033.26 50,130,033.26
Investment
Subtotal 103,226,300.00 50,000,000.00 -3,579,523.35 149,646,776.65
Total 103,226,300.00 50,000,000.00 -3,579,523.35 149,646,776.65
(3) Other Notes
As of 30 June 2020, the Company didn’t invest to the subsidiary Shanghai Zhinuo.
4. Operating Revenue and Cost of Sales
Unit: RMB
164
Lu Thai Textile Co., Ltd. Interim Report 2020
Reporting Period Same period of last year
Item
Operating revenue Cost of sales Operating revenue Cost of sales
Main operations 1,433,647,769.93 1,095,226,641.53 2,354,610,227.06 1,732,468,733.73
Other operations 90,838,559.05 86,137,915.68 133,719,339.31 115,399,718.04
Total 1,524,486,328.98 1,181,364,557.21 2,488,329,566.37 1,847,868,451.77
Information about performance obligations:
Naught
Information in relation to the transaction price apportioned to the residual contract performance obligation:
As at the end of the Reporting Period, the revenue amount corresponding to the contract performance obligation yet to be fulfilled or
yet to be completed under a signed contract is RMB 0.00, including RMB 0.00 expected to be recognized as revenue in the year,
RMB 0.00 expected to be recognized as revenue in the year, and RMB 0.00 expected to be recognized as revenue in the year.
Other notes:
Naught
5. Investment Income
Unit: RMB
Item Reporting Period Same period of last year
Long-term equity investment income
150,000,000.00 150,000,000.00
accounted by cost method
Long-term equity investment income
-3,579,523.35 5,083,101.54
accounted by equity method
Investment income from holding of trading
1,382,405.99
financial assets
Investment income from disposal of trading
150,939,587.24 463,217.37
financial assets
Total 297,360,063.89 156,928,724.90
6. Other
XV. Supplementary Materials
1. Items and Amounts of Non-recurring Profit or Loss
√ Applicable □ Not applicable
Unit: RMB
Item Amount Note
Gains/losses from the disposal of non-current assets -503,782.07
Government grants recognized in the current period, except for those acquired in the ordinary 37,754,439.82
165
Lu Thai Textile Co., Ltd. Interim Report 2020
course of business or granted at certain quotas or amounts according to the government’s unified
standards
Gain/loss from change of fair value of trading financial assets and liabilities, and derivative
financial assets and liabilities, and investment gains from disposal of trading financial assets and
9,613,583.08
liabilities, and derivative financial assets and liabilities, and investment in other debt obligations,
other than valid hedging related to the Company’s common businesses
Other non-operating income and expense other than the above -108,188.60
Less: Income tax effects 7,325,580.81
Non-controlling interests effects 3,416,485.37
Total 36,013,986.05 --
Explain the reasons if the Company classifies an item as an non-recurring gain/loss according to the definition in the Explanatory
Announcement No. 1 on Information Disclosure for Companies Offering Their Securities to the Public—Non-recurring 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 and Earnings Per Share
Weighted average EPS (Yuan/share)
Profit as of Reporting Period
ROE (%) EPS-basic EPS-diluted
Net profit attributable to ordinary shareholders of the
1.85% 0.17 0.16
Company
Net profit attributable to ordinary shareholders of the
1.39% 0.13 0.12
Company after deduction of non-recurring profit or loss
3. Other
166
Lu Thai Textile Co., Ltd. Interim Report 2020
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 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.
28 August 2020
167
