Lu Thai Textile Co., Ltd. Annual Report 2021
LU THAI TEXTILE CO., LTD.
ANNUAL REPORT 2021
April 2022
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Lu Thai Textile Co., Ltd. Annual Report 2021
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 is subject to the disclosure requirements for listed companies engaging in
textile and apparel as stated in Guideline No. 3 of the Shenzhen Stock Exchange for
Self-regulation of Listed Companies—Industry-specific Information Disclosure.
In 2021, the unstable and uncertain global economic situation caused by COVID-19 has
become more prominent. China's foreign trade environment has become more volatile due to
the combination of COVID-19 and other multiple factors. Global industrial and supply chains
have shown their vulnerability amid the pandemic. All unfavorable factors combined, such as
the shortage of raw materials and power supply, the surging prices of production materials
and ocean freight, and the appreciation of RMB, have posed great challenges to China's
textile and garment exports. With the support and encouragement of China's effective
prevention and control measures and policies to stabilize the economy and export, the textile
and garment industry has overcome many difficulties, strengthened the upstream and
downstream coordination of the industrial chain and supply chain, seized the opportunities of
the window period of overseas order recovery and order backflow, and achieved growth in
exports. With the rise in the COVID-19 vaccination rate, the spread of COVID-19 is slowing
down, but there are still outbreaks in some areas and the vaccination rates in low-income
countries are still low. Additionally, affected by geopolitical factors and high commodity prices,
the trade situation in 2022 remains highly uncertain. For details, please refer to Part III
Management Discussion and Analysis.
The Board has approved a final dividend plan as follows: based on 882,341,295 shares, a cash
dividend of RMB0.70 (tax inclusive) per 10 shares is to be distributed to the shareholders,
with no bonus issue from either profit or capital reserves.
This Report and its summary have been prepared in both Chinese and English. Should there
be any discrepancies or misunderstandings between the two versions, the Chinese versions
shall prevail.
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Lu Thai Textile Co., Ltd. Annual Report 2021
Table of Contents
Part I Important Notes, Table of Contents and Definitions ........................................................... 2
Part II Corporate Information and Key Financial Information ................................................... 6
Part III Management Discussion and Analysis ............................................................................. 11
Part IV Corporate Governance ...................................................................................................... 39
Part V Environmental and Social Responsibility .......................................................................... 82
Part VI Significant Events ............................................................................................................... 87
Part VII Share Changes and Shareholder Information ............................................................. 124
Part VIII Preferred Shares ............................................................................................................ 139
Part IX Bonds ................................................................................................................................. 140
Part X Financial Statements ......................................................................................................... 145
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Lu Thai Textile Co., Ltd. Annual Report 2021
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.
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Lu Thai Textile Co., Ltd. Annual Report 2021
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 ten thousand
RMB, RMB’0,000
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 2021 to 31 December 2021
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Lu Thai Textile Co., Ltd. Annual Report 2021
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. 鲁泰纺织
Company name in English (if
LU THAI TEXTILE CO.，LTD
any)
Abbr. (if any) LTTC
Legal representative Liu Zibin
Registered address 61 Luthai Boulevard, High-tech Development Zone, Zibo City, Shandong Province, P.R.China
Zip code 255086
Past changes of registered
11 Mingbo Road, Zibo High-tech Development Zone, Shandong Province
address
Office address 81 Songling East Road, Zichuan District, Zibo City, Shandong Province, P.R.China
Zip code 255100
Company website www.lttc.com.cn
Email address lttc@lttc.com.cn
II Contact Information
Board Secretary Securities Representative
Name Zhang Keming Zheng Weiyin and Li Kun
81 Songling East Road, Zichuan District, 81 Songling East Road, Zichuan District,
Address
Zibo City, Shandong Province, P.R.China Zibo City, Shandong Province, 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 Media for Information Disclosure and Place where this Report Is Lodged
Stock exchange website where this Report is disclosed Securities Times, Shanghai Securities News, China Securities Journal and
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Lu Thai Textile Co., Ltd. Annual Report 2021
Ta Kung Pao (HK)
Media and website where this Report is disclosed www.cninfo.com.cn
Place where this Report is lodged The Securities Department of the Company
IV Change to Company Registered Information
Unified social credit code 91370300613281175K
Change to principal activity of the Company
No change
since going public (if any)
Every change of controlling shareholder since
No change
incorporation (if any)
V Other Information
The independent audit firm hired by the Company:
Name Grant Thornton China
Office address 5th Floor, Scitech Palace 22 Jianguomen Wai Avenue, Chaoyang District, Beijing
Accountants writing signatures He Feng and Cui Xiaoli
The independent sponsor hired by the Company to exercise constant supervision over the Company in the Reporting Period:
√ Applicable □ Not applicable
Name of sponsor
Name of sponsor Office address of sponsor Period of constant supervision
representative
Guotai Junan Plaza, 768
Guotai Junan Securities Co., Ding Xiaowen and From 1 January 2021 to 31 December
Nanjing West Road, Jing’an
Ltd. Wang Wenting 2021
District, Shanghai
The independent financial advisor hired by the Company to exercise constant supervision over the Company in the Reporting Period:
□ Applicable √ Not applicable
VI Key Financial Information
Indicate by tick mark whether there is any retrospectively restated datum in the table below.
□ Yes √ No
2021-over-2020
2021 2020 2019
change (%)
Operating revenue (RMB) 5,238,262,348.85 4,751,222,464.14 10.25% 6,801,381,448.94
Net profit attributable to the
listed company’s shareholders 347,609,693.30 97,308,593.36 257.22% 952,386,011.49
(RMB)
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Lu Thai Textile Co., Ltd. Annual Report 2021
Net profit attributable to the
listed company’s shareholders
190,492,580.40 20,039,094.03 850.60% 662,416,013.00
before exceptional gains and
losses (RMB)
Net cash generated from/used in
348,137,005.48 593,535,922.89 -41.35% 1,086,110,575.51
operating activities (RMB)
Basic earnings per share
0.39 0.11 254.55% 1.11
(RMB/share)
Diluted earnings per share
0.36 0.11 227.27% 1.11
(RMB/share)
Weighted average return on
4.44% 1.26% 3.18% 12.96%
equity (%)
Change of 31
December 2021 over
31 December 2021 31 December 2020 31 December 2019
31 December 2020
(%)
Total assets (RMB) 12,987,221,271.63 12,129,903,960.65 7.07% 11,885,431,553.08
Equity attributable to the listed
7,983,307,400.03 7,687,577,590.72 3.85% 7,697,135,324.92
company’s shareholders (RMB)
Indicate by tick mark whether the lower of the net profit attributable to the listed company’s shareholders before and after exceptional
gains and losses was negative for the last three accounting years, and the latest independent auditor’s report indicated that there was
uncertainty about the Company’s ability to continue as a going concern.
□ Yes √ No
Indicate by tick mark whether the lower of the net profit attributable to the listed company’s shareholders before and after exceptional
gains and losses was negative.
□ Yes √ No
VII 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 difference for the Reporting Period.
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Lu Thai Textile Co., Ltd. Annual Report 2021
2. Net Profit and Equity under CAS and Foreign Accounting Standards
□ Applicable √ Not applicable
No difference for the Reporting Period.
VIII Key Financial Information by Quarter
Unit: RMB
Q1 Q2 Q3 Q4
Operating revenue 993,485,161.79 1,226,828,489.15 1,346,367,447.24 1,671,581,250.67
Net profit attributable to the
74,530,850.40 78,966,494.26 93,666,571.98 100,445,776.66
listed company’s shareholders
Net profit attributable to the
listed company’s shareholders
15,513,465.07 38,768,067.01 80,690,683.49 55,520,364.83
before exceptional gains and
losses
Net cash generated from/used in
-36,745,428.28 219,506,453.42 61,907,667.37 103,468,312.97
operating activities
Indicate by tick mark whether any of the quarterly financial data in the table above or their summations differs materially from what
have been disclosed in the Company’s quarterly or interim reports.
□ Yes √ No
IX Exceptional Gains and Losses
√ Applicable □ Not applicable
Unit: RMB
Item 2021 2020 2019 Note
Gain or loss on disposal of non-current
assets (inclusive of impairment allowance 50,868,019.96 -3,265,763.83 -1,196,233.94
write-offs)
Government subsidies charged to current
profit or loss (exclusive of government
subsidies consistently given in the
58,686,874.90 61,358,132.11 62,198,864.45
Company’s ordinary course of business at
fixed quotas or amounts as per
governmental policies or standards)
Gain or loss on fair-value changes in
held-for-trading financial assets and
liabilities & income from disposal of 77,620,424.02 46,684,051.43 241,537,682.90
held-for-trading financial assets and
liabilities and available-for-sale financial
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Lu Thai Textile Co., Ltd. Annual Report 2021
assets (exclusive of the effective portion
of hedges that arise in the Company’s
ordinary course of business)
Reversed portions of impairment
allowances for receivables which are 6,198,745.44
tested individually for impairment
Non-operating income and expense other
-1,700,653.34 2,373,569.56 -2,857,141.21
than the above
Income from disposal of held-for-trading
financial assets, financial liabilities and 14,162,405.95
investments in debt obligations
Less: Income tax effects 28,885,946.87 24,345,018.31 14,593,639.87
Non-controlling interests effects
5,670,351.21 5,535,471.63 9,281,939.79
(net of tax)
Total 157,117,112.90 77,269,499.33 289,969,998.49 --
Particulars about other items that meet the definition of exceptional gain/loss:
□ Applicable √ Not applicable
No such cases for the Reporting Period.
Explanation of why the Company reclassifies as recurrent an exceptional gain/loss item 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. Annual Report 2021
Part III Management Discussion and Analysis
I Industry Overview for the Reporting Period
The Company is subject to the disclosure requirements for listed companies engaging in textile and apparel as stated in Guideline No.
3 of the Shenzhen Stock Exchange for Self-regulation of Listed Companies—Industry-specific Information Disclosure.
In 2021, facing the triple pressure of demand contraction, supply shock, and weakening expectations, China's textile industry still
showed a good development trend. According to the data of the China National Textile and Apparel Council, the revenue of textile
enterprises above the designated size has increased by 12.3% year on year in 2021; total profits rose by 25.4 % year on year. In terms
of export markets, China's textile and apparel exports hit a record high, totaling USD315.46 billion, up by 8.3% year on year. But the
lack of demand is still imposing pressure on the textile and garment industry. Domestically, market demand has not fully recovered
due to the impact of the pandemic. China's per capita spending on clothing accounts for 5.9% of the country's per capita spending in
2021, down 0.3 percentage points over 2019. The growth of online retail sales of apparel goods is significantly lower than the
pre-pandemic level. At abroad, uncertainty occurs in China’s textile and clothing export to developed economies, affected by factors
such as protectionism and geopolitics. In addition, the high price volatility of global commodities has become a significant challenge
to the smooth operation of the industry. There is still no fundamental change in problems of financing channels blockage, labor
shortage and expensiveness.
II Principal Activity of the Company in the Reporting Period
The Company is subject to the disclosure requirements for listed companies engaging in textile and apparel as stated in Guideline No.
3 of the Shenzhen Stock Exchange for Self-regulation of Listed Companies—Industry-specific Information Disclosure.
Since 2021, the Company has faced various challenges in production and management posed by intertwined disadvantages like
recurrent global pandemic, China-US trade friction and rising price of commodities including cotton and coal. In face of challenges,
the Company adhered to the "customer-focused" philosophy and continues to promote the strategies of "Improve Quality and
Efficiency" and "Overall Internationalization". Under the premise of implementing pandemic prevention and control, the Company
ensures an orderly advance in staff production and life, management and operation through expanding the market, adjusting the
structure and building capabilities. During the Reporting Period, the product order and business performance have gradually
recovered.
For the Reporting Period, the Company achieved operating revenue of RMB5,238 million, operating profit of RMB371 million, a net
profit attributable to the Company as the parent of RMB348 million, and a net profit attributable to the Company as the parent before
exceptional gains and losses of RMB190 million, respectively up 10.25%, 348.35%, 257.22% and 850.60% when compared to last
year.
During the Reporting Period, the Company has been rated as the "Leader in the Cotton Textile Industry during the 13th Five Year
Plan" by China Cotton Textile Association, as the "Top 30 Enterprises in 2021 in the Dyeing and Printing Industry" by China Dyeing
and Printing Association, and as the "Top Hundred Companies in 2021 in China’s Garment Industry" and the "Top 50 Business Suit
Companies in China" by China National Garment Association. Besides, it has been acclaimed as the "Advanced Enterprise in
Corporate Culture Development in 2020 by Shandong Textile and Apparel Association. The Company has prioritized the following
aspects:
(I) Achieve business goals together as guided by strategies
Confronted by the complicated global economic situation, the recurrent pandemic situation and uncertainties of domestic economic
environment, the management of the Company promoted measures to fight pandemic and ensure production, centered on customers
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Lu Thai Textile Co., Ltd. Annual Report 2021
and focused expanding market, adjusting structure and building capabilities. We also tried to achieve increase both in revenue and
profit, to keep overseas production and workforce steady and to unceasingly build our market.
(II) Promote targeted service and cooperation centered around customers
The Company consistently strengthened the market development with a development direction of becoming a globalized apparel
solution provider with advanced fabrics as our pillar. Based on accurate grasp of market trend and customer demand, service upgrade
was comprehensively achieved and win-win cooperation with customers realized; market structure was optimized constantly, product
type increased actively, domestic market developed vigorously and business of career apparel promoted further; customer relations
and stickiness were built by setting up mechanism of high-level connection and layered communication with strategic customers and
advancing design service and customized development project based on customer demand. Facing complicated and volatile situation
amid the pandemic, the Company kept tiding over the current difficulty with customers.
We stepped up product innovation, applied research of new materials, skill and craft, and cooperation of R&D among the upstream
and downstream of industrial chain, colleges and universities and scientific research institutions. According to the industry trend of
sustainable development and new demand for differentiated products of customers in the post-pandemic era, the Company carried out
a series of key skill research and exploration of industrialization of relevant products, such as the development of one-way moisture
permeability fabrics and pure-cotton recycled fabrics, and R&D of pure-cotton products that are durable, non-ironing, anti-virus and
anti-microbial. It totally obtained 117 patents throughout the year, including 16 invention patents.
(III) Continue the process of "Improve Quality and Efficiency" and "Overall Internationalization", and complement links at home
with links abroad for better development
The Company moved forward with its strategy of "Improve Quality and Efficiency" and 'Overall Internationalization" backed by its
product line, striving to achieve two-way development in both domestic and foreign market. During the Reporting Period, while
managing to meet customers’ differential needs by leveraging domestic and foreign advantages and with finer product specialization,
the Company took steps to unleash one after another the vitality of six main product lines of yarn, yarn-dyed fabric, dyeing fabric,
functional fabric, knitted fabric and apparel, and focused on areas such as quality assurance and upgrading, cost reduction, shorter
delivery-day and higher efficiency. Efforts have been made to upgrade product lines such as Lulian functional fabric and knitted
fabric, and to multiply the product mix, so as to provide various options for customers, from formal to casual, from comfy to stylish.
During the Reporting Period, the Company has cooperated with Rhino Intelligent Manufacturing, a platform launched by Alibaba,
and has applied intelligentization in the apparel factory in a comprehensive fashion at the beginning of the cooperation. This enables
a digitalized and information-based apparel factory of higher efficiency and lower operating costs.
(IV) Carry forward the corporate culture and improve the brand image.
During the Reporting Period, the Company continued to uphold the principle of hard-working and deepened its corporate culture.
Workers were mobilized to learn the history of the Party and engage in Party-themed activity in celebration of the 100th anniversary
of the founding of the CPC, with an aim to lead to the enterprise’s high-quality development supported by high-quality Party building.
Various forms of activities were conducted like awarding exemplary and predominant workers, skill competition, and basketball and
football leagues. Restricted share incentive scheme was carried out for workers to share the fruits of development. Each renovation
and improvement took place in an overall manner, fostering an enabling working environment in which all employees were involved
and pulled their wisdom together for business growth.
The Company, centered on producing mid- to high-end products, has been rated as the "Enterprise for Incubation of High-end
Products in Shandong Province" for four consecutive years, and was named National Key Talent Project last year. In the meantime,
its holding subsidiary Lufeng Co., Ltd. was also named "Enterprise for Incubation of High-end Products in Shandong Province" last
year, and was selected as one of the critical projects of the major industry of transforming old growth driver into the new one.
III Core Competitiveness Analysis
1. The Company has a comprehensive vertical industrial chain and internationalized layout. It possesses the whole industrial chain
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Lu Thai Textile Co., Ltd. Annual Report 2021
integrating spinning, bleaching and dyeing, neatening, testing, and garment making, as well as excellent quality control capabilities
through various links of the production of high-end yarn-dyed fabrics. In order to leverage international resources, give play to the
advantage of internationalized industrial distribution and reinforce the leading international status in manufacturing the yarn-dyed
fabrics for shirts, 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. and Japan.
2. The Company has better integrated management capability and high-level management system architecture. Since 1995, the
Company has successively passed the certification of ISO9001 quality management system, ISO14001 environmental management
system, ISO45001 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
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, materialize the low-carbon, green and sustainable development.
IV Core Business Analysis
1. Overview
For the Reporting Period, the Company recorded operating revenue of RMB5,238 million (a 10.25% year-on-year increase); cost of
sales of RMB4,153 million (a 11.1% year-on-year increase), selling expense of RMB120 million (a 4.64% year-on-year decline) and
administrative expense of RMB335 million (a 7.01 % year-on-year decrease); research and development expense of RMB253 million
(a 9.36% year-on-year increase); and net cash generated from operating activities of RMB348 million (a 41.35% year-on-year drop).
2. Revenue and Cost Analysis
(1) Breakdown of Operating Revenue
Unit: RMB
2021 2020
As % of total As % of total
Change (%)
Operating revenue operating revenue Operating revenue operating revenue
(%) (%)
Total 5,238,262,348.85 100% 4,751,222,464.14 100% 10.25%
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Lu Thai Textile Co., Ltd. Annual Report 2021
By operating division
Textile and apparel 4,915,654,282.18 93.84% 4,238,645,661.96 89.20% 15.97%
Personal
protective 5,788,794.50 0.11% 184,669,256.67 3.89% -96.87%
equipment (PPE)
Cotton 1,943,648.71 0.04% -100.00%
Electricity and
182,929,779.75 3.49% 182,709,470.17 3.85% 0.12%
steam
Others 133,889,492.42 2.56% 143,254,426.63 3.02% -6.54%
By product category
Fabric products 4,033,321,318.13 77.00% 3,371,261,899.44 70.95% 19.64%
Shirts 882,332,964.05 16.84% 867,383,762.52 18.25% 1.72%
PPE 5,788,794.50 0.11% 184,669,256.67 3.89% -96.87%
Cotton 1,943,648.71 0.04% -100.00%
Electricity and
182,929,779.75 3.49% 182,709,470.17 3.85% 0.12%
steam
Others 133,889,492.42 2.56% 143,254,426.63 3.02% -6.54%
By operating segment
Hong Kong 166,071,385.74 3.17% 189,971,723.94 4.00% -12.58%
Japan And South
254,482,374.29 4.86% 364,740,573.67 7.68% -30.23%
Korea
Southeast Asia 1,523,121,466.68 29.08% 1,062,716,851.02 22.37% 43.32%
Europe and
560,579,079.30 10.70% 575,125,583.72 12.10% -2.53%
America
Others 306,457,017.82 5.85% 336,434,709.67 7.08% -8.91%
Mainland China 2,427,551,025.02 46.34% 2,222,233,022.12 46.77% 9.24%
By sales model
Direct sales 5,238,262,348.85 100.00% 4,751,222,464.14 100.00% 10.25%
(2) Operating Division, Product Category, Operating Segment or Sales Model Contributing over 10% of
Operating Revenue or Operating Profit
□ Applicable √ Not applicable
(3) Whether Revenue from Physical Sales Is Higher than Service Revenue
√ Yes □ No
Operating division Item Unit 2021 2020 Change (%)
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Lu Thai Textile Co., Ltd. Annual Report 2021
Unit sales 0,000 meters 20,123.11 16,769.7 20.00%
Fabric Output 0,000 meters 22,271.95 18,808.22 18.42%
Inventory 0,000 meters 4,844.58 4,375.76 10.71%
Unit sales 0,000 pieces 1,443.99 1,809.67 -20.21%
Apparel Output 0,000 pieces 1,444.92 1,889.1 -23.51%
Inventory 0,000 pieces 171.99 156.09 10.19%
Unit sales 000 KWH 123,065.87 149,646.34 -17.76%
Electricity Output 000 KWH 424,085.59 409,893.45 3.46%
Inventory 000 KWH
Unit sales ton 327,979.23 339,064.67 -3.27%
Steam Output ton 1,193,199.66 1,082,057.31 10.27%
Inventory ton
Any over 30% YoY movements in the data above and why:
□ Applicable √ Not applicable
(4) Execution Progress of Major Signed Sales and Purchase Contracts in the Reporting Period
□ Applicable √ Not applicable
(5) Breakdown of Cost of Sales
By operating division and product category
Unit: RMB
2021 2020
Operating
Item As % of total As % of total Change (%)
division Cost of sales Cost of sales
cost of sales (%) cost of sales (%)
Textile and 3,329,872,586.
Cost of sales 3,837,905,961.39 92.42% 89.08% 15.26%
apparel 97
PPE Cost of sales 3,778,908.51 0.09% 127,124,669.03 3.40% -97.03%
Cotton Cost of sales 1,560,876.66 0.04% -100.00%
Electricity and
Cost of sales 210,275,788.87 5.06% 161,892,710.06 4.33% 29.89%
steam
Other Cost of sales 101,020,417.08 2.43% 117,533,240.73 3.15% -14.05%
Unit: RMB
2021 2020
Product
Item As % of total cost As % of total cost Change (%)
category Cost of sales Cost of sales
of sales (%) of sales (%)
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Lu Thai Textile Co., Ltd. Annual Report 2021
Fabric 2,670,531,996.
Cost of sales 3,153,777,018.80 75.94% 71.44% 18.10%
products 56
Shirts Cost of sales 684,128,942.59 16.48% 659,340,590.41 17.64% 3.76%
PPE Cost of sales 3,778,908.51 0.09% 127,124,669.03 3.40% -97.03%
Cotton Cost of sales 1,560,876.66 0.04% -100.00%
Electricity and
Cost of sales 210,275,788.87 5.06% 161,892,710.06 4.33% 29.89%
steam
Other Cost of sales 101,020,417.08 2.43% 117,533,240.73 3.15% -14.05%
Note:
Manufacture
Product Period Raw material Labor cost Depreciation Energy Total
expenses
2021 48.60% 17.47% 7.36% 17.45% 9.12% 100.00%
Fabric
2020 47.30% 18.05% 8.29% 16.10% 10.26% 100.00%
2021 53.47% 34.50% 2.85% 1.23% 7.95% 100.00%
Shirts
2020 54.84% 35.16% 2.84% 1.34% 5.82% 100.00%
(6) Changes in the Scope of Consolidated Financial Statements for the Reporting Period
√ Yes □ No
During the year, the Company established new subsidiaries Hainan Huilin International Holdings Co., Ltd., Libra International
Investment Pte. Ltd., and Zibo Banyang Villa Hotel Co., Ltd.
(7) Major Changes to the Business Scope or Product or Service Range in the Reporting Period
□ Applicable √ Not applicable
(8) Major Customers and Suppliers
Major customers:
Total sales to top five customers (RMB) 856,767,149.72
Total sales to top five customers as % of total sales of
16.36%
the Reporting Period (%)
Total sales to related parties among top five customers
0.00%
as % of total sales of the Reporting Period (%)
Information about top five customers:
Sales revenue contributed
No. Customer for the Reporting Period As % of total sales revenue (%)
(RMB)
Total -- 856,767,149.72 16.36%
16
Lu Thai Textile Co., Ltd. Annual Report 2021
Other information about major customers:
□ Applicable √ Not applicable
Major suppliers:
Total purchases from top five suppliers (RMB) 935,235,608.03
Total purchases from top five suppliers as % of total
23.95%
purchases of the Reporting Period (%)
Total purchases from related parties among top five
suppliers as % of total purchases of the Reporting 0.00%
Period (%)
Information about top five suppliers:
Purchase in the Reporting
No. Supplier As % of total purchases (%)
Period (RMB)
Total -- 935,235,608.03 23.95%
Other information about major suppliers:
□ Applicable √ Not applicable
3. Expense
Unit: RMB
2021 2020 Change (%) Reason for any significant change
Selling expense 119,883,494.68 125,717,288.31 -4.64%
Administrative
335,380,025.54 360,656,722.39 -7.01%
expense
Increased interest income and
Finance costs 44,988,908.41 109,546,654.83 -58.93%
decreased exchange losses
R&D expense 252,912,911.63 231,265,031.12 9.36%
4. Other Information Required by Information Disclosure Guide for Companies Engaged in Textile and
Garment Services
(1) Capacity
The Company's own capacity
Industry Item 2021 2020
Classification
Total capacity (fabrics) 29,360.00 29,360.00
(10,000 meters)
Fabrics 76% 64%
Rate of capacity utilization
Plants under construction The Company's convertible bond The Company's convertible
17
Lu Thai Textile Co., Ltd. Annual Report 2021
fundraising projects: The bond fundraising projects: The
"Functional Fabric Intelligent "Functional Fabric Intelligent
Eco-park Project (Phase I)" with an Eco-park Project (Phase I)" with
annual capacity of 35 million an annual capacity of 35 million
meters of high-grade functional meters of high-grade functional
fabrics and the "Production Line fabrics and the "Production Line
Project of High-grade Printed and Project of High-grade Printed and
Dyed Fabrics" with an annual Dyed Fabrics" with an annual
capacity of 25 million meters of capacity of 25 million meters of
high-grade printed and dyed high-grade printed and dyed
fabrics were in progress. fabrics were in progress.
Total capacity (garment) 2,030.00 2,030.00
(10,000 pieces)
Garment 70% 80%
Rate of capacity utilization
Plants under construction
Year-on-year change in the rate of capacity utilization above 10%: √Yes
Fabrics: The capacity utilization saw improvements due to foreign demand recovery and temporary rise of orders.
Garments: Product quantity experienced a year-on-year decrease, and the capacity utilization declined, following the restrictions on
production in foreign manufacturing bases induced by the COVID-19 pandemic.
Overseas capacity: √Yes
Industry Item Domestic Overseas
Classification
Percentage of 83% 17%
capacity
Mainly in Shandong Mainly in Ty Ninh
Fabrics Capacity layout
Province Province, Vietnam
Rate of capacity 78% 67%
utilization
Percentage of 47% 53%
capacity
Mainly in Tnh An Giang,
Vietnam; Svay Rieng
Mainly in Shandong
Garment Capacity layout Province, Cambodia; and
Province
Thilawa Special Economic
Zone, Yangon, Myanmar
Rate of capacity 81% 54%
utilization
The Company’s expansion plan on developing overseas production capacity
18
Lu Thai Textile Co., Ltd. Annual Report 2021
The Company will invest in constructions of production bases in Ty Ninh Province, Vietnam, to produce woven and knitted fabrics.
For now, the projects are under preparation.
(2) Sales model and channels
Product sales channels and operation methods
a. Sales model
The Company adopted the order-based sales model. With the self-owned trademark "Luthai" for its fabric sales, it provided customers
with development and design plans based on customer needs, fabrics and patterns leading the market, fashion and technology, functions
and environmental protection. In addition, it engaged in brand operation of spot fabric on the new retail e-commerce platform. Shirts
were mainly made according to the orders of customers at home and abroad, and sold by brand owners.
The Company's self-owned brand was operated through self-owned exclusive shops such as Lu Thai Exhibition and Sales Pavilion,
counters of affiliated stores in malls and e-networking marketing. Meanwhile, the Company could provide customers with high-end
customized shirts and customized business wear to meet the market demand of the high-end service industry.
b. Sales channels
Direct sales: The headquarters of the Company carried out direct investments and operation, and operated and managed a brand at the
headquarters or by setting up a branch company in other regions to conclude transactions with customers offline.
Online sales: Through self-developed platforms and large third-party online shopping platforms, the Company concluded transactions
with customers on the Internet and delivered goods to customers by express delivery services.
Unit: RMB
Gross YoY change in YoY change in
YoY change in
Sales channels Operating revenue Cost of sales profit operating gross profit
cost of sales
margin revenue margin
Online sales 4,947,854.11 1,610,250.89 67.46% 263,220.57 -73,158.43 3.39%
Direct sales 4,040,320,645.05 3,155,572,769.29 21.90% 661,297,015.92 481,167,795.85 1.05%
OEM/ODM 870,385,783.02 680,722,941.21 21.79% 15,448,383.73 26,938,737.00 -1.74%
Total 4,915,654,282.18 3,837,905,961.39 21.92% 677,008,620.22 508,033,374.42 0.48%
(3) Franchise and distribution
Franchisees and distributors recorded more than 30% of sales revenue
□ Yes √ No
(4) Online sales
Online sales recorded more than 30% of sales revenue
□ Yes √ No
Self-developed sales platforms
19
Lu Thai Textile Co., Ltd. Annual Report 2021
√ Yes □ No
Start of operation 30 March 2009
Number of registered users 140,073
Average number of active monthly users (AMU) 5,000
Return rate of main brands 3.00%
Return rate of main types 3.00%
Cooperation with third-party sales platforms
√ Yes □ No
Online sales channels opened or closed by the Company
□ Applicable √ Not applicable
Impact on the Company in the current period and subsequent periods:
Not applicable.
(5) Agency operation model
Agency operation model involved
□ Yes √ No
(6) Inventory
Inventory
Year-over-year
Days of
Quantity of Inventory change in
Main products turnover of Reason
inventory age inventory
inventories
balance
Fabrics (10,000 Within 1
86 3,824.1 10.76%
meters) year
Fabrics (10,000
1,020.48 Over 1 year 10.54%
meters)
Shirts (10,000 Within 1
34 111.63 7.76%
pieces) year
Increase in inventory as a result of the
Shirts (10,000
13.91 Over 1 year 203.71% restricted customs clearance for
pieces) Sino-Us trade
Reserves for falling prices of inventory
2021.12.31
Item
Carrying amount Falling price reserves or provision for Carrying value
20
Lu Thai Textile Co., Ltd. Annual Report 2021
impairment on contract performance cost
Raw materials 928,078,106.34 17,925,640.41 910,152,465.93
Goods in process 611,695,332.97 2,538,846.30 609,156,486.67
Products on hand 939,550,089.36 143,767,058.72 795,783,030.64
Commissioned
30,254,811.04 30,254,811.04
products
Total 2,509,578,339.71 164,231,545.43 2,345,346,794.28
Inventory information of retail channels such as franchised stores or distributors:
Not applicable.
(7) Brand building
Production and sales of brand clothing, apparel and home textile products
√ Yes □ No
Self-owned brands
Target
Trademark Main product Price zone of Main sales
Brand name Characteristics consumer City levels
name types main products areas
group
Provincial
East China,
capital cities
Classic Business South China
LTGRFF LTGRFF Shirts and suits RMB500-3000 and other
business attire people and Southwest
prefecture-level
China
cities
Trademark ownership disputes
□ Applicable √ Not applicable
(8) Others
Engaged in business related to apparel design
□ Yes √ No
Whether the Company held meetings for the placement of orders
□ Yes √ No
5. R&D Investments
√ Applicable □ Not applicable
Names of main Goals of projects Progresses of projects Intended goals Estimated impact
21
Lu Thai Textile Co., Ltd. Annual Report 2021
R&D projects on future
development of the
Company
This project is aimed at The outcomes of
This project is
Development of providing a comfortable laboratory-scale
The Company aims at setting expected to improve
one-way moisture dressing experience with experiment are
standards and meeting core competence of
permeability the technology of satisfying, followed
customers’ requirements. the Company’s
fabrics one-way moisture by a pilot-scale
products.
permeability. experiment.
This project is
This project is aimed at
The Company aims at expected to enhance
reusing the waste The Company is still
Development of producing the recycled cotton the Company’s
materials so as to reduce in its early stage of
recycled cotton with a spinnable average fiber brand influence and
the waste of resources the technological
fabrics length and meeting the goal of raise its status in the
and protect the research.
industrialization. industry as a
environment.
benchmark.
This project is aimed at
This project is aimed at This project is
R&D of durable reducing damages to the
producing DP3.5 3A expected to increase
non-iron products human body by viruses The requirements for
antibacterial products enduring the Company’s
with anti-virus and bacteria and industrialization are
50-time washing and resisting financial benefits
and antibacterial producing healthy and met.
H1N1 virus with an activity with a huge market
functions safe textiles easy to take
value at no less than 2.0. potential.
care of.
Details about R&D personnel:
2021 2020 Change (%)
Number of R&D personnel 1,535 1,604 -4.30%
R&D personnel as % of total
14.00% 12.68% 1.32%
employees
Educational background of
—— —— ——
R&D personnel
Bachelor’s degree 206 190 8.42%
Master’s degree 30 30 0.00%
Age structure of R&D
—— —— ——
personnel
Below 30 231 327 -29.36%
30~40 1,083 1,108 -2.26%
40 and beyond 221 169 30.77%
Details about R&D investments:
2021 2020 Change (%)
R&D investments (RMB) 252,912,911.63 231,265,031.12 9.36%
22
Lu Thai Textile Co., Ltd. Annual Report 2021
R&D investments as % of
4.83% 4.87% -0.04%
operating revenue
Capitalized R&D investments
0.00 0.00 0.00%
(RMB)
Capitalized R&D investments
as % of total R&D 0.00% 0.00% 0.00%
investments
Reasons for any significant change to the composition of R&D personnel and the impact:
□ Applicable √ Not applicable
Reasons for any significant YoY change in the percentage of R&D expense in operating revenue:
□ Applicable √ Not applicable
Reason for any sharp variation in the percentage of capitalized R&D expense and rationale:
□ Applicable √ Not applicable
6. Cash Flows
Unit: RMB
Item 2021 2020 Change (%)
Subtotal of cash generated from
5,095,876,566.67 4,775,015,226.05 6.72%
operating activities
Subtotal of cash used in operating
4,747,739,561.19 4,181,479,303.16 13.54%
activities
Net cash generated from/used in
348,137,005.48 593,535,922.89 -41.35%
operating activities
Subtotal of cash generated from
1,558,983,659.21 850,680,343.34 83.26%
investing activities
Subtotal of cash used in investing
1,530,504,624.63 1,638,855,294.04 -6.61%
activities
Net cash generated from/used in
28,479,034.58 -788,174,950.70 103.61%
investing activities
Subtotal of cash generated from
1,711,261,939.49 3,622,339,439.58 -52.76%
financing activities
Subtotal of cash used in financing
1,507,951,696.50 2,888,674,850.63 -47.80%
activities
Net cash generated from/used in
203,310,242.99 733,664,588.95 -72.29%
financing activities
Net increase in cash and cash
573,476,477.42 517,971,388.55 10.72%
equivalents
Explanation of why any of the data above varies significantly:
√ Applicable □ Not applicable
Net cash generated from operating activities amounted to RMB348,137,005.48 during the Reporting Period, down 41.35% year on
year, primarily driven by the increased payments for goods; net cash generated from investing activities amounted to
RMB28,479,034.58 during the Reporting Period, up 103.61% year on year, primarily driven by the disinvestment in wealth
management products upon maturity and the decreased investments in fixed assets; and net cash generated from financing activities
23
Lu Thai Textile Co., Ltd. Annual Report 2021
amounted to RMB203,310,242.99 during the Reporting Period, down 72.29% year on year, primarily driven by the decreased
borrowings obtained.
Reason for any big difference between the net operating cash flow and the net profit for this Reporting Period
□ Applicable √ Not applicable
V Analysis of Non-Core Businesses
√ Applicable □ Not applicable
Unit: RMB
As % of total
Amount Source/Reason Recurrent or not
profit
Return on Income from the disposal of held-for-trading
50,449,943.70 13.89% Not
investment financial assets
Gain/loss on
Gains on changes in the fair value of
changes in fair 16,415,304.41 4.52% Not
held-for-trading financial assets
value
Asset impairments -85,623,858.26 -23.57% Inventory valuation allowances Not
Non-operating
5,417,119.07 1.49% Income of non-operating compensation, etc Not
income
Non-operating Losses on the damage and retirement of
13,424,054.88 3.69% Not
expense non-current assets, donations, etc.
VI Analysis of Assets and Liabilities
1. Significant Changes in Asset Composition
Unit: RMB
31 December 2021 1 January 2021 Change in Reason for
As % of total As % of total percentage any significant
Amount Amount
assets assets (%) change
Monetary
1,999,712,889.35 15.40% 1,400,478,034.81 11.42% 3.98%
assets
Accounts
647,277,198.51 4.98% 522,425,219.87 4.26% 0.72%
receivable
Inventories 2,345,346,794.28 18.06% 1,988,968,681.64 16.22% 1.84%
Investment
21,362,302.03 0.16% 22,263,668.85 0.18% -0.02%
property
Long-term
equity 169,443,106.66 1.30% 138,079,577.25 1.13% 0.17%
investments
24
Lu Thai Textile Co., Ltd. Annual Report 2021
Fixed assets 5,561,601,374.44 42.82% 5,637,980,006.69 45.99% -3.17%
Construction in
237,579,082.99 1.83% 356,273,197.49 2.91% -1.08%
progress
Right-of-use
257,019,286.15 1.98% 269,362,245.88 2.20% -0.22%
assets
Short-term
1,011,034,138.32 7.78% 930,871,008.19 7.59% 0.19%
borrowings
Contract
204,967,348.96 1.58% 141,339,705.62 1.15% 0.43%
liabilities
Long-term
684,962,473.24 5.27% 495,520,342.78 4.04% 1.23%
borrowings
Lease liabilities 121,357,658.41 0.93% 128,815,114.07 1.05% -0.12%
Indicate whether overseas assets account for a larger proportion of the total assets.
√ Applicable □ Not applicable
As % of
Control Material
Manage Return the
Sourc Asset value Locatio measures to impairm
Asset ment generated Compan
e (RMB) n protect asset ent risk
model (RMB) y’s
safety (yes/no)
equity
Main
Lu Thai
management
(Hong
Incorp Hong Marketin personnel sent
Kong) 191,246,511.91 4,432,903.98 2.29% No
orated Kong g by the
Textile Co.,
Company as the
Ltd.
parent
Main
Lu Thai management
(America) Incorp New Marketin personnel sent
4,643,034.45 -1,527,611.59 0.06% No
Textile Co., orated York g by the
Ltd. Company as the
parent
Main
management
Qiming
Incorp Svay Manufact personnel sent
Apparel 157,347,321.28 275,575.09 1.88% No
orated Rieng uring by the
Co., Ltd.
Company as the
parent
Vanguard Main
Incorp Rangoo Manufact
Apparel 89,438,343.06 management -443,135.80 1.07% No
orated n uring
Co., Ltd. personnel sent
25
Lu Thai Textile Co., Ltd. Annual Report 2021
by the
Company as the
parent
Main
management
Continental
Incorp Tay Manufact personnel sent
Textile Co., 2,403,192,122.53 127,900,171.61 28.72% No
orated Ninh uring by the
Ltd.
Company as the
parent
Main
Anjian management
Lu An
Incorp g, Manufact personnel sent
Garments 186,984,990.96 -6,025,605.81 2.23% No
orated Vietna uring by the
Co., Ltd.
m Company as the
parent
Main
Libra
management
Internation
Incorp Singap Investme personnel sent
al 395,142,781.79 1,441,904.47 4.72% No
orated ore nt by the
Investment
Company as the
Pte. Ltd.
parent
2. Assets and Liabilities at Fair Value
√ Applicable □ Not applicable
Unit: RMB
Gain/loss
on Cumulative Impairment
Purchas
fair-value fair-value allowance Sold in the
Beginning ed in the Other Ending
Item changes in changes for the Reporting
amount Reportin change amount
the charged to Reporting Period
g Period
Reporting equity Period
Period
Financial
assets
1.
Held-for-tra
ding
408,730,33 31,329,804. 250,008,14 190,052,0
financial
7.23 41 1.64 00.00
assets
(excluding
derivative
26
Lu Thai Textile Co., Ltd. Annual Report 2021
financial
assets)
2.
Derivative 16,641,500. -14,914,500 1,727,000
financial 00 .00 .00
assets
Subtotal of
425,371,83 16,415,304. 250,008,14 191,779,0
financial
7.23 41 1.64 00.00
assets
55,150,926. -20,108,5 34,663,07
Others -379,267.35
34 87.11 1.88
Total of the 480,522,76 16,415,304. 250,008,14 -20,108,5 226,442,0
-379,267.35
above 3.57 41 1.64 87.11 71.88
Financial
0.00 0.00
liabilities
Content of other change:
Changes in receivables 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 X. VII. 62. Assets with restricted ownership and using right in this Report.
VII Investments Made
1. Total Investment Amount
□ Applicable √ Not applicable
2. Major Equity Investments Made in the Reporting Period
□ Applicable √ Not applicable
3. Major Non-Equity Investments Ongoing in the Reporting Period
□ Applicable √ Not applicable
4. Financial Investments
(1) Securities Investments
□ Applicable √ Not applicable
27
Lu Thai Textile Co., Ltd. Annual Report 2021
No such cases in the Reporting Period.
(2) Investments in Derivative Financial Instruments
√ Applicable □ Not applicable
Unit: RMB'0,000
Propo
rtion
Act
of
Rel ual
closin
atio gai
g
nshi Begin Purch Endin n/lo
Initial Sold Impai invest
p Relate ning ased g ss
Type of invest in the rment ment
Opera wit d-party Startin Endin invest in the invest in
derivati ment Repor provis amou
tor h transac g date g date ment Repor ment the
ve amou ting ion (if nt in
the tion amou ting amou Rep
nt Period any) the
Co nt Period nt orti
Comp
mp ng
any’s
any Peri
endin
od
g net
assets
Forward
Com No 26 30
exchang 4,9
merci n-re 166,6 Nove Dece 129,8 36,89 166,6
No e 0 36.
al late 97.7 mber mber 05.79 1.91 97.7
settleme 64
bank d 2020 2021
nt
Com No 22 30
Foreign
merci n-re 144,6 Octob Dece 62,15 82,49 106,6 38,00 415
No exchang 4.54%
al late 46.46 er mber 0 6.46 38.46 8 .36
e option
bank d 2020 2022
Forward
Com No 14
exchang 1
merci n-re 13,08 Januar 13,08 13,08 17.
No e April 0 0
al late 1.6 y 1.6 1.6 76
transacti 2021
bank d 2021
ons
5,3
324,4 191,9 132,4 286,4 38,00
Total -- -- 4.54% 69.
25.76 55.79 69.97 17.76 8
76
Capital source for derivative
The Company’s own money
investment
Lawsuit (if applicable) N/A
Disclosure date of board of 30 April 2020
28
Lu Thai Textile Co., Ltd. Annual Report 2021
directors announcement on
approval of derivative investment 15 June 2021
(if any)
Disclosure date of general meeting
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 derivative transactions of the Company. Precautions: The Company chooses
financial instruments with simple structures, high liquidity and controllable risk and
strictly controls the scale of derivative transactions, performing them by stages and in
batches. Means such as extension and balance settlement can be adopted to ensure
contract performance after the contract expires.
2. Liquidity risk and credit risk: Credit risk arises when the Company or counterparties in
transactions couldn’t perform contracts due now, to liquidity or other factors that result in
further economic loss. Precautions: The derivative transactions can only be done with
Analysis on risks and control
financial institutions qualified for derivative transactions, as authorized by relevant
measures of derivative products
national authorities or financial or foreign exchange authorities in the country or region
held in the Reporting Period
where the Company operates. Derivative transactions with other institutions or individuals
(including but not limited to market
are not allowed so as to control related risk concerning counterparties.
risk, liquidity risk, credit risk,
3. Internal risk control: Derivative transactions are highly specialized and complex.
operation risk, law risk, etc.)
Therefore, there is a risk of loss in derivative transactions due to the imperfect internal
control system when business is performed. Precautions: The Company should strictly
implement Management Policy for Investments in Securities and Derivative Transactions
of Lu Thai Textile Co., Ltd., continuously optimize the business operation process and
authorization management system, strengthen professional ethics education and business
training for relevant personnel, clarify job responsibilities, engage in derivative
transaction business strictly within the scope of authorization, and establish a timely
reporting system for abnormal conditions to avoid operational risks.
4. Risk of laws and regulation: Derivative transactions of the Company must be strictly in
compliance with relevant national laws and regulations. Otherwise, signed contracts,
commitments and other legal documents may entail compliance risk and regulatory risk in
terms of effectiveness and enforceability. Precautions: The Company should strengthen
the supervision and inspection of the standardization of derivative transactions, the
effectiveness of internal control mechanism, and the authenticity of information disclosure
to avoid possible legal risks. The Company has fulfilled relevant approval procedures for
its derivative transactions business, which is in line with the relevant national laws,
29
Lu Thai Textile Co., Ltd. Annual Report 2021
regulations, the Articles of Association, the Management Policy for the Transaction of
Derivatives of Lu Thai, the Proposal on the Company's Derivative Transaction Plan
deliberated and adopted at the 13th meeting of the 9th session of the Board of Directors
held on 28 April 2020, and the Proposal on the Company's Derivative Transaction Plan
deliberated and adopted at the 25th meeting of the 9th session of the Board of Directors
held on 11 June 2021, and fulfilled the relevant information disclosure obligations.
Changes of market prices or fair 1. As of 31 December 2021, the Company held 5 undue financial derivatives contracts,
values in the Reporting Period of totaling USD60 million, all of which were forex option contracts.
the invested derivatives. And the 2. During 2021, the total amount of all settled financial derivatives of the Company was
analysis on the fair value of the equivalent to USD441.5 million, generating gains of RMB53.6976 million, among which,
derivatives should include the gains of RMB49.3664 million were from the settlement of forward forex settlement
specific use methods and the contracts of USD250 million; gains of RMB4.1536 million were from the settlement of
relevant assumptions and forex option contracts of USD171.5 million; gains of RMB0.1776 million were from the
parameters. settlement of forward forex transactions of USD20 million.
Whether significant changes
occurred to the Company’s
accounting policy and specific
No significant changes
accounting principles of derivatives
in the Reporting Period compared
to the previous Reporting Period
Independent directors Zhou Zhiji, Pan Ailing, Wang Xinyu and Qu Dongmei have issued
the following professional advice on the Company's derivative transaction business: We
believe that the Company's foreign exchange derivative transaction business is performed
Specific opinion from independent on the condition of ensuring normal operations. Transactions using its own funds are
directors on the Company’s beneficial to avoiding the risk of exchange rate fluctuations, and are an effective tool to
derivatives investment and risk hedge exchange rate risk. By strengthening internal control, implementing stop-loss and
control risk prevention measures, the Company can improve its ability to resist exchange rate
fluctuations and improve its management level. The derivative transaction plan proposed
by the Board of Directors is feasible, necessary, and the risks are manageable. There is no
damage to the interests of the Company and all the shareholders.
5. Use of Funds Raised
√ Applicable □ Not applicable
(1) Overall Use of Funds Raised
√ Applicable □ Not applicable
Unit: RMB’0,000
Raisin Total of Cumulati Total of Cumulat Ratio of Total of Purpose Amoun
Total of
Raisin g raised ve raised ive cumulati raised and t of
raised
g year manne capital amount capital amount ve capital direction raised
capital
r used in of raised which of raised amount unused of raised capital
30
Lu Thai Textile Co., Ltd. Annual Report 2021
this capital purpose capital which capital unused
period used is which purpose unused for two
changed purpose is years
in the is changed
report changed
period
RMB
1.0397
million,
deposited
in the
special
account
for raised
capital;
RMB
618.5909
million,
for
purchasin
g
Conve
financial
2020 rtible 138,800 13,662.54 80,162.47 0 0 0.00% 61,963.06 0
products
bonds
and
deposit
products
(includin
g the net
income
RMB
33.1994
million
from
interest
income
deducted
handling
charge)
Total -- 138,800 13,662.54 80,162.47 0 0 0.00% 61,963.06 -- 0
General use situation of raised capital
(I) Amount of actual raised capital and arrival date
Upon approval by China Securities Regulatory Commission in the document “ZJXK [2020]299”, the Company publically issued
14,000,000 convertible bonds on April 9, 2020 at par value RMB 100, the issued amount was RMB 1.4 billion, and the Company
31
Lu Thai Textile Co., Ltd. Annual Report 2021
actually received the amount of raised capital RMB 1.388 billion after deducted the underwriting fee RMB 12 million. The above
amount was remitted in cash in RMB. After deducted legal fee, accountant fee, credit rating fee, information disclosure fee,
issuing commission and other costs RMB 2.54 million in total from the above actually raised capital, the net amount of raised
capital was RMB 1385.46 million, which entered the account on April 15, 2020, and Grant Thornton International Ltd (Special
General Partnership) issued the capital verification report with reference No. Grant Thornton Verification [2020] 371ZC0090 for
it after verification.
(II) Use situation and balance of raised capital
By December 31, 2021, the Company directly invested RMB 801.6247 million in total from the raised capital for its capital
raising projects, the unused amount was RMB 619.6306 million (including the net income RMB 33.1994 million from interest
income deducted handling charge), the balance of the special raised capital account at the end of period was RMB 1.0397 million
and the amount of raised capital not redeemed and used for purchasing financial products, deposit products from banks was RMB
618.5909 million.
(2) Commitments on Projects with Funds Raised
√ Applicable □ Not applicable
Unit: RMB’0,000
Whethe
r the
Date
project
Cumul when Whethe
s are Invest
Total of Total Amoun ative the Whethe r
change ment Benefit
commit invest t invest project r project
Committed d progres realize
ted ment investe ment reached reached feasibil
investment projects (includi s by the d in
invest after d in amount the the ity
and use direction of ng end of this
ment of modific this by the intende expecte change
over raised capital partiall period report
raised ation report end of d d d
y (3) ＝ period
capital (1) period period availab benefit signific
change (2)/(1)
(2) le antly
d
status
project
s)
Committed investment projects
Functional fabric
11,341. 47,348. 31 May
smart eco-park No 85,000 85,000 55.70% N/A No
17 68 2023
project (Phase 1)
High-end printing
31
and dyeing fabric 2,321.3
No 25,000 25,000 4,008.2 16.03% Octobe N/A No
production line 7
r 2022
project
Supplement working 28,805. 100.02
No 28,800 28,800 N/A No
capital 59 %
Subtotal of -- 138,80 138,80 13,662. 80,162. -- -- -- --
32
Lu Thai Textile Co., Ltd. Annual Report 2021
committed 0 0 54 47
investment projects
Use direction of over raised capital
N/A
138,80 138,80 13,662. 80,162.
Total -- -- -- 0 -- --
0 0 54 47
Situation and reasons
that it did not reach
In the Reporting Period, due to the impact of the COVID-19 epidemic, the capital raising projects
the planned progress
“Functional fabric smart eco-park project (Phase 1)” and “High-end Printing and Dyeing Fabric
or expected return
Production Line Project” delayed in construction progress.
(based on specific
projects)
Note for significant
change of project N/A
feasibility
Amount, purpose N/A
and use progress of
over raised capital
Change of N/A
implementation site
of capital raising
project
Adjustment of N/A
implementation
mode of capital
raising project
Advance investment Applicable
and displacement of By 30 April 2020, the total amount of displaced capital was RMB 191.4288 million, including the
capital raising amount RMB 189.8388 million invested in the project with the self-raised capital of the Company in
project advance, and payment of issuing cost RMB 1.59 million with its self-raised capital
Temporary N/A
supplement to
working capital with
unused raised capital
Balance of raised N/A
capital after
implement of project
and relevant reasons
Purpose and use By 31 December 2021, RMB 1.0397 million in the unused raised capital was deposited in the raised
direction of unused capital account, and RMB 618.5909 million was used for cash management.
33
Lu Thai Textile Co., Ltd. Annual Report 2021
raised capital
Problems existing in
use and information
disclosure of raised None
capital or other
situation
(3) Changes in Projects with Funds Raised
□ Applicable √ Not applicable
No such cases in the Reporting Period.
VIII 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
IX 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
Relat
ionsh Pri
ip nci
pal Registered Operating Operating
Name with Total assets Net assets Net profit
acti capital revenue profit
the
Com vity
pany
Lufen
g
Weavi
Subsi Fab
ng & 706,160,000 1,885,678,911.54 1,249,487,228.93 1,400,185,935.63 -15,836,294.87 -7,534,683.42
diary ric
Dyein
g Co.,
Ltd.
34
Lu Thai Textile Co., Ltd. Annual Report 2021
Shand
ong
Lulia
n
Subsi Fab
New 400,000,000 998,361,420.15 288,875,133.91 44,524,344.91 -77,012,952.17 -79,511,556.10
diary ric
Mater
ials
Co.,
Ltd.
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 of the Company.
Registration place: Zibo, Shandong; registered capital: RMB706.160 million. The mainly manufacturing and selling textile printing
and dyeing products and the products of clothing and garments, and it were authenticated to be high-tech enterprise in October 2014.
During the Reporting Period, due to the impact of the recurrent COVID-19 epidemic, Lufeng Weaving & Dyeing’s export business and
high value-added orders were reduced, which had a greater impact on performance. Lufeng Weaving & Dyeing achieved operating
revenue of RMB 1.4 billion, up 6.84% year on-year and net profit of RMB -7.5347 million, down 134.15% year-on-year.
Shandong Lulian New Materials Co., Ltd. (hereinafter referred to as "Lulian New Materials") is the holding subsidiary of the Company.
Registration place: Zibo, Shandong; registered capital: RMB 400 million. It was established in April 2019 and mainly manufacturing
and selling functional fabrics. During the Reporting Period, it is still under construction, and production of some products has begun.
Lulian New Materials achieved operating revenue of RMB 44.5243 million, up 480.97% year on-year due to a low base comparison
and net profit of RMB -79.5116 million, down 169.64% year-on-year.
X Structured Bodies Controlled by the Company
□ Applicable √ Not applicable
XI Prospects
1. Industry competition and development trend
The textile industry of China has certain strength in the global textile industry, mainly showing in industry chain, technology, labor
efficiency and other aspects. The COVID-19 epidemic has impacted the economy and trade of various countries since 2020, but the
competitive edge of the textile industry of China in the international market still remains. In recent years, when the domestic
environmental protection requirements are becoming more stringent, production costs are going up and the transformation and upgrade
policy is implemented in China, the textile industry in the post-epidemic era may face structural adjustment, and the demand to
yarn-dyed fabric used for shirts will change as diversified products in small batch, functionality and leisure orientation.
2. Development strategy of the Company
The Company is a large-scale textile enterprise with a complete industrial chain integrating spinning, dyeing, weaving, post-treatment
and garment manufacturing. It is the world's largest production base for yarn-dyed fabrics for shirts, providing blending of three major
series of shirt fabrics of pure cotton and natural fiber, cotton and natural fiber as well as cotton and functional fiber. And the newly
developed shirt knitted fabric and elastic fabric are also popular in markets. In order to maintain the outstanding advantages of the
Company in global shirt-dyed fabrics, the Company is pushing intelligent manufacturing upgrades and integrating domestic and
foreign advantageous resources to deepen internationalization of the Company with regional advantages. The Company combines
35
Lu Thai Textile Co., Ltd. Annual Report 2021
quality innovation and customer needs, and innovates the marketing model with advantages of resources in each channel. High-end
shirt customization services are provided to meet various needs of customers. Furthermore, the Company increases investment in
innovation to improve R&D and design and develop new fabrics. The Company holds the concept of low-carbon environmental
protection for sustainable development.
3. Business plan (the following description does not constitute any commitment of the Company)
(1) In terms of corporate governance, in order to ensure the healthy, stable and sustainable development of the Company at the
institutional level, the Company will establish an internal control system to improve organizational structure, corporate governance
structure and risk prevention mechanism.
(2) In the aspect of market development, the Company actively develops emerging markets on the basis of maintaining the existing
market, accurately understands market trend and customers’ demand, and fully improves service capacity, so that the Company could
be a global dress solution supplier based on leading fabric.
(3) In the aspect of business administration, the Company continually Implements the strategy of “quality and efficiency improvement”
and “comprehensive internationalization”, makes more efforts in developing market, adjusting structure and improving capacity,
strengthens integrated product development (IPD), promotes innovation while meeting market demand and builds up a flexible, rapid
response, efficient and traceable supply system chain with internal and external resources.
(4) In terms of industrial overall arrangement, in order to maintain the leading position of the Company in the global yarn-dyed industry,
the Company rationally allocates domestic and foreign resources and improves production efficiency while keeping product quality
relying on the advantages of U.S. companies, Milan and Japan Office in market development, design and R&D, customer service and
talent development, and the cost advantages of Southeast Asian production bases.
4. Capital needs, sources and planning
Within the Reporting Period, the functional fabric intelligent ecological park project (phase I) of the Company’s holding subsidiary
Lulian New Materials and the high-end printing and dyeing fabrics production line project of Lufeng Weaving & Dyeing were under
construction. Corresponding equipment installation and trial production will be arranged successively, and the project fund is from the
raised fund of the A Share convertible bonds issued by the Company.
5. Risks that bring adverse impact to company development strategy and business objectives and countermeasures of the Company
(1) Impact of economic environment: under the enormous uncertainty risk of the international trade, the geopolitical risk and the
impact of the recurrent COVID-19 epidemic, the Company will face more challenges. In addition, the economic development of China
should be transformed and upgrade, therefore, the Company will continue to strictly execute coronavirus control measures, guarantee
production and safety and further utilize various resources at home and abroad to develop domestic and overseas markets, so as to catch
development opportunities after COVID-19 is controlled.
(2) Price fluctuation of raw materials: cotton is the major production material of the Company, and the price of cotton is impacted by
market supply and demand, climate, policy, exchange rate, quota and other factors, therefore, based on the production orders and
import quota, the Company seriously considers the information of global raw cotton market, properly works out procurement strategy
and actively reduces cost and gross profit margin fluctuations arising from price change of raw cotton.
(3) Change of exchange rate: The import and export business takes up a large proportion in the Company’s business. With greater
fluctuations in RMB, the exchange rate fluctuations will place a remarkable impact on the Company’s performance. In order to reduce
adverse influence of exchange rate fluctuation, the Company has established a risk-neutral philosophy to deal with exchange rate
fluctuations. Based on actual needs arising from production and operation, it will take appropriate measures at a proper timing to
avoid the risk of currency fluctuations. Firstly, the Company appropriately 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 prevent
the transaction risks in a proactive manner. Fourthly, according to the trends 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.
36
Lu Thai Textile Co., Ltd. Annual Report 2021
XII Communications with the Investment Community such as Researches, Inquiries and
Interviews during the Reporting Period
√ Applicable □ Not applicable
Contents and
Index to main inquiry
Date of visit Place of visit Way of visit Type of visitor Visitor materials
information
provided
Investor Relations
The Management Archive
About basic
31 March Company’s Institution 20210401 disclosed
By phone Institution information of
2021 conference investor on Cninfo by the
the Company
room Company on 1 April
2021
Investor Relations
The Management Archive
About basic
Company’s Institution 20210402 disclosed
1 April 2021 By phone Institution information of
conference investor on Cninfo by the
the Company
room Company on 2 April
2021
Results Briefing,
Roadshow
The
Institutional Information
Company’s Annual results
13 April 2021 Other Other and individual 20210413 disclosed
conference briefing
investors on Cninfo by the
room
Company on 14 April
2021
Investor Relations
The Management Archive
About basic
30 August Company’s Institution 20210830 disclosed
By phone Institution information of
2021 conference investor on Cninfo by the
the Company
room Company on 31
August 2021
Investor Relations
The Management Archive
About basic
2 September Company’s Institution 20210904 disclosed
By phone Institution information of
2021 conference investor on Cninfo by the
the Company
room Company on 4
September 2021
The Investor Relations
About basic
29 October Company’s Institution Management Archive
By phone Institution information of
2021 conference investor 20211101 disclosed
the Company
room on Cninfo by the
37
Lu Thai Textile Co., Ltd. Annual Report 2021
Company on 1
November 2021
Investor Relations
The Management Archive
About basic
29 December Company’s Institution 2021129 disclosed on
By phone Institution information of
2021 conference investor Cninfo by the
the Company
room Company on 30
December 2021
38
Lu Thai Textile Co., Ltd. Annual Report 2021
Part IV Corporate Governance
I General Information of Corporate Governance
During the Reporting Period, the Company strictly conforms to Company Law, Securities Law (Revised in 2019) and Governing Rules
for Listed Company, Guideline No. 1 of the Shenzhen Stock Exchange for the Self-regulation of Listed Companies—Operation
Compliance of Main Board Listed Companies as well as relevant stipulations and requirements from normative documents,
continuously improves the corporate governance structure, safeguards the standardized and efficient operation of three Committees and
one Management, forms a sound and effective internal control system so as to safeguard legitimate interests of the Company and
investors. Within the Reporting Period, the Company amended Articles of Association of Lu Thai Textile Co., Ltd., Management
Methods for External Investments of Lu Thai Textile Co., Ltd., Management Rules for Authorization of Lu Thai Textile Co., Ltd.
1. Shareholders and Shareholders’ General Meeting
The Company shall convene and hold the shareholders meeting in strict accordance with the Shareholders Meeting Procedural Rules,
and guarantee that all shareholders, especially the minority shareholders, could have equal status and fully execute their rights.
2. The relationship between the majority shareholders and the Company
The Company’s majority shareholders acted according to relevant standards without directly or indirectly intervening the Company’s
decision-making and operating activities; the Company was independent with its majority shareholders in business, personnel, assets,
organization, finance, and the Company’s Board of Directors, Supervisory Committee and Internal Organs could completely
independent to operate. There was no situation about annexing the assets or occupation of funds of the Company by principal
shareholders or other events on infringing the interest of the Company and other shareholders.
3. The directors and Board of Directors
The Company’s Board of Directors shall perform their duties in strict accordance with Articles of Association and the Board of
Directors Procedural Rules. Under the Board of Directors, the Company established the Strategy Committee, the Audit Committee, the
Nomination Committee and the Remuneration Committee. Various specialized committees would fully perform their functions and
further guarantee the high-efficient operation and the scientific decision-making of the Board of Directors.
4. Supervisors and Supervisory Committee
The Company’s Supervisory Committee will perform their duties in strict accordance with Articles of Association and the Supervisory
Committee Procedural Rules. The number of members and the composition of the Company’s Supervisory Committee shall comply
with applicable laws and regulations; the Company’s supervisors shall strictly abide by relevant provisions, seriously execute their
duties and supervise the Company’s financial status and the legal execution of duties of the directors, president and other senior
managers by adhering to the principle of being responsible for the shareholders and the listed company.
5. Information disclosure
The Company strictly, in accordance with the laws, regulations and the Articles of Association, disclosed relevant information in a true,
accurate, complete and timely manner. The Company has formulated the Information Disclosure Management System, Information
Insider Registration Management System and Investor Relations Management System, etc., to ensure the fairness, openness and
fairness of information disclosure.
6. Investor relations management
During the Reporting Period, as required by Investor Relations Management System, to maintain good communication with investors,
the Company accepted on-site investigations and consultations of investors through on-site investigations and telephone consultations,
and promptly answered questions asked by investors on the SZSE Easy-IR.
Indicate by tick market whether there is any material incompliance with the applicable laws, administrative regulations and the CSRC
rules for the governance of listed companies.
39
Lu Thai Textile Co., Ltd. Annual Report 2021
□ Yes √ No
No such cases in the Reporting Period.
II The Company’s Independence from Its Controlling Shareholder and Actual Controller in
Assets, Personnel, Financial Affairs, Organization and Business
1. As for the business: the Company shall establish its independent and complete business system with the market-oriented independent
management ability. In the respect of business operation, the Company is completely separated from the controlling shareholders.
2. As for the personnel: the Company’s labor, personnel and remuneration management departments shall be independent with their
own sound systems, and separated from that of the substantial shareholder. The Company’s senior managers are not allowed to
simultaneously hold any office in any shareholder’s unit.
3. As for the assets: the Company possesses the entire and independent legal person property right with independent and perfect the
production system, auxiliary production systems and supporting facilities; and possesses the independent ownership of the intangible
assets such as the industrial property, trademarks, non-patented technology.
4. As for the institution: the Company’s Board of Directors, Supervisory Committee and other internal organization shall be sound and
involved in independent operation. The substantial shareholder shall legally execute its rights, fulfill corresponding obligations and not
surpass the shareholders meeting to directly or indirectly interfere the Company’s business activities.
5. As for the finance: the Company possesses independent financial departments with normative financial accounting system and
financial management system as well as internal control system with independent bank account.
III Horizontal Competition
□ Applicable √ Not applicable
IV Annual and Special General Meetings Convened during the Reporting Period
1. General Meeting Convened during the Reporting Period
Investor
Date of the Disclosure
Meeting Type participati Resolutions
meeting date
on ratio
It deliberated and approved: 1. Proposal on 2020
Annual Work Report of the Board of Directors; 2.
Proposal on 2020 Annual Work Report of the
Board of Supervisors; 3. Proposal on the
The 2020
Annual Company's 2020 Annual Report and Its Abstracts;
Annual
General 34.24% 20 April 2021 21 April 2021 4. Proposal on the Company's 2020 Annual
General
Meeting Financial Accounting Report; 5. Proposal on the
Meeting
Company’s Profit Distribution Plan for 2020; 6.
Proposal on the Renewal of the Company's 2021
Annual Financial Audit and Internal Control Audit
Institution.
The 1st Extraordinar 34.50% 13 May 2021 14 May 2021 It deliberated and approved: 1. Proposal on the
40
Lu Thai Textile Co., Ltd. Annual Report 2021
Extraordin y General Company's 2021 Restricted Share Incentive
ary Meeting Scheme (Draft) and Its Abstracts; 2. Proposal on
General the Company's Implementation and Appraisal
Meeting Regulations on 2021 Restricted Share Incentive
of 2021 Scheme; 3. Proposal on Submitting the
Authorization for the Board of Directors to Handle
the Company's 2021 Restricted Share Incentive
Scheme to the General Meeting of Shareholders.
It deliberated and approved: 1. Proposal on
Amending Relevant Articles of the Foreign
Investment Regulations for Lu Thai Textile Co.,
The 2nd
Ltd.; 2. Proposal on Amending Relevant Articles
Extraordin
Extraordinar of the Authorization Management System for Lu
ary 13 September 14 September
y General 31.69% Thai Textile Co., Ltd.; 3. Proposal on Preparing
General 2021 2021
Meeting the Remuneration Plan for Directors, Supervisors
Meeting
and Officers; 4. Proposal on Repurchase and
of 2021
Cancel Authorized but Unlocked Restricted Share
of the Incentive Personnel not Conforming to the
Incentive Condition.
2. Special General Meetings Convened at the Request of Preferred Shareholders with Resumed Voting
Rights
□ Applicable √ Not applicable
V Directors, Supervisors and Senior Management
1. Basic Information
Increas Decrea
Beginn e in se in Other
Ending
Incum ing the the increas Reaso
Office Gende Start shareh
End of
Name bent/F Age of shareh Report Report e/decre n for
title r tenure olding
tenure
ormer olding ing ing ase change
(share)
(share) Period Period (share)
(share) (share)
Chair
man 10
Liu Incum 6 June 148,29 148,29
and Male 57 June
Zibin bent 2007 0 0
Presid 2022
ent
Xu Vice Incum 6 May 10
Male 92
Zhinan Chair bent 2004 June
41
Lu Thai Textile Co., Ltd. Annual Report 2021
man 2022
Fujiwa
10
ra Direct Incum 7 May
Male 82 June
Hideto or bent 1998
2022
shi
Chen 16 10
Direct Incum
Ruimo Male 78 April June
or bent
u 2000 2022
Zeng 10
Direct Incum 6 June
Fache Male 71 June
or bent 2007
ng 2022
Direct
or,
Vice
Contro
Liu 12 10
ller of Incum
Demin Male 32 May June
Global bent
g 2017 2022
Market
ing
Depart
ment
Qin 10
Direct Incum Femal 7 May 126,54 126,54
Guilin 56 June
or bent e 1998 2 2
g 2022
Direct Grante
Zhang or and 10 d
Incum Femal 6 June 300,00 392,50
Hong Chief 52 June 92,500 restrict
bent e 2016 0 0
mei Accou 2022 ed
ntant shares
Indepe
10 10
Zhou ndent Incum
Male 59 March June
Zhiji Direct bent
2019 2022
or
Indepe
10
Pan ndent Incum Femal 6 June
57 June
Ailing Direct bent e 2016
2022
or
Indepe
10
Wang ndent Incum 6 June
Male 55 June
Xinyu Direct bent 2016
2022
or
42
Lu Thai Textile Co., Ltd. Annual Report 2021
Indepe
Qu 10 10
ndent Incum Femal
Dong 53 June June
Direct bent e
mei 2019 2022
or
Chair
man of
18
Zhang the 10
Incum Februa
Shoug Superv Male 52 June 73,100 73,100
bent ry
ang isory 2022
2018
Comm
ittee
10
Liu Superv Incum 6 June
Male 54 June 10,000 10,000
Zilong isor bent 2007
2022
Superv
isor,
Manag
er of
Dong 10
Logisti Incum 6 June
Shibin Male 53 June 5,000 5,000
cs bent 2007
g 2022
Manag
ement
Depart
ment
Zhang 10
Couns Incum 6 June
Jianxia Male 54 June 52,150 52,150
elor bent 2007
2022
ng
Chair
man of
the Grante
Labor 10 d
Wang Incum 6 June 300,00 383,70
Union, Male 59 June 83,700 restrict
bent 2007 0 0
Jiabin Securit 2022 ed
y shares
Contro
ller
Vice
Grante
preside
10 d
Zhang nt, Incum 6 June 300,00 380,30
Male 50 June 80,300 restrict
Zhanqi Contro bent 2007 0 0
2022 ed
ller of
shares
Global
43
Lu Thai Textile Co., Ltd. Annual Report 2021
Market
ing
Depart
ment
Board
Secret
ary,
Contro Grante
Zhang ller of 10 d
Incum 6 June 200,00 277,70
Kemin Financ Male 54 June 77,700 restrict
bent 2007 0 0
g ial 2022 ed
Manag shares
ement
Depart
ment
Contro
ller of
Grante
Busine
10 d
Li ss Incum 8 June 200,00 210,00
Male 55 June 10,000 restrict
bent 2016 0 0
Wenji Manag 2022 ed
ement shares
Depart
ment
Assist
ant to
Chair
man of
the Grante
Board, 18 10 d
Zhang Incum 200,00 200,00
Contro Male 37 Januar June restrict
bent 0 0
Wei y 2018 2022 ed
ller of
shares
Strateg
y and
Market
Depart
ment
Fujiwa 9
GM of 10
ra Incum Decem
Japan Male 49 June
Matsu bent ber
Office 2022
zaka 2014
44
Lu Thai Textile Co., Ltd. Annual Report 2021
Presid
ent
Assist
ant,
Contro
Grante
ller of
Yu 10 d
Energy Incum 6 June 200,00 283,10
Shouz Male 54 June 83,100 restrict
and bent 2007 0 0
heng 2022 ed
Enviro
shares
nment
Protect
ion
Depart
ment
Presid
ent
Assist
Grante
ant,
Shang 10 d
Contro Incum 6 June 200,00 230,00
Cheng Male 49 June 30,000 restrict
ller of bent 2013 0 0
gang 2022 ed
Garme
shares
nt
Produc
t Line
Chief
Engine
er,
Execut
ive
Dean
Grante
of Lu
18 10 d
Du Thai Incum 200,00 200,00
Male 47 Januar June restrict
bent 0 0
Lixin Engine y 2018 2022 ed
ering shares
Techn
ology
Resear
ch
Institut
e
Guo Contro Incum Male 50 18 10 200,00 200,00 Grante
45
Lu Thai Textile Co., Ltd. Annual Report 2021
Heng ller of bent Januar June 0 0 d
Functi y 2018 2022 restrict
onal ed
Fabric shares
Produc
t Line
Presid
ent
Grante
Assist 14
Fu 10 d
ant, Incum Femal Decem 200,00 200,00
Guann 39 June restrict
Invest bent e ber 0 0
an 2022 ed
ment 2020
shares
Direct
or
26
Wang
Direct Forme 7 May Februa 146,75 146,75
Fangs Male 61
or r 1998 ry 3 3
hui
2021
Indepe 25
Bi ndent Forme Femal 6 June Februa
55
Xiuli Direct r e 2016 ry
or 2021
Execut
ive
Dean
of Lu
Thai
Wang Engine 29
Forme 6 June
Chang ering Male 48 June 22,500 22,500
r 2013
2021
zhao Techn
ology
Resear
ch
Institut
e
1,041, 2,500, 3,541,
Total -- -- -- -- -- -- 0 0 --
635 000 635
Indicate by tick mark whether any directors or supervisors left or any senior management were disengaged during the Reporting
Period
√ Yes □ No
46
Lu Thai Textile Co., Ltd. Annual Report 2021
Bi Xiuli, an independent director of the Company, due to personal work arrangements, resigned as an independent director and a
member of the Strategic Decision-making Committee of the Board of Directors, a member of the Nomination Committee and the
Remuneration Committee of the Company on 25 February 2021, and no longer held any post in the Company; Wang Fangshui, a
director of the Company, due to retirement, resigned as a director of the Company and a member of the Strategic Decision-making
Committee of the Board of Directors on 26 February 2021, and no longer held any post in the Company; Wang Changzhao, an
Executive Dean of the Company's Engineering Technology Research Institute, due to personal reasons, resigned as an officer on 29
June 2021, and no longer held any post in the Company.
Change of Directors, Supervisors and Senior Management
√Applicable □ Not applicable
Type of
Name Office title Date of change Reason for change
change
Wang
Director Left 26 February 2021 Retirement
Fangshui
Bi Xiuli Independent Director Left 25 February 2021 Left for job arrangement
Wang Executive Dean of Lu Thai
Contract
Changzh Engineering Technology Research 29 June 2021 Left for personal reason
termination
ao Institute
2. Biographical Information
Professional backgrounds, major work experience and current duties in the Company of the incumbent directors, supervisors and
senior management:
1. Mr. Liu Zibin: Chairman and President of the Company, born in 1965, with a master degree. He served as the GM and chairman of
Zibo Lucheng Textile Co., Ltd. And he currently serves as the chairman and president of Luthai Textile Co., Ltd., the chairman of
Lufeng Textile Dyeing Co., Ltd., the chairman of Zibo Xinsheng Thermoelectric Co., Ltd., the chairman of Zibo Lu Qun Textile Co.,
Ltd., the chairman of Shanghai Luthai Textile and Garment Co., Ltd., the chairman of Luthai Textile (USA) Co., Ltd., the chairman
of Luthai (Hong Kong) Co., Ltd., the chairman of Shanghai Zhinuo Textile New Materials Co., Ltd., the chairman of Shandong
Lulian New Materials Co., Ltd., the chairman of Shandong Lujia Import and Export Co., Ltd. and the chairman of Hainan Huilin
International Holdings Co., Ltd.
2. Mr. Xu Zhinan: Vice chairman of the Company, a Thailander born in 1930. He served as director and GM of Thailand Fiber Cloth
Factory Co., Ltd., director of Thailand Fiber Co., Ltd., director of Thailand Fiber Printing and Co., Ltd., director and deputy GM of
Luthai Textile Co., Ltd. And he currently serves as the director and deputy chairman of the Company and GM of Thailand Fiber Co.,
Ltd.
3. Mr. Fujiwara Hidetoshi: Director of the Company, a Japanese born in 1940. He served as director of Degang Weaving Factory in
Japan, director and senior consultant of Luthai Textile Co., Ltd. He currently serves as a director of Luthai Textile Co., Ltd. and a
director of Lufeng Textile Dyeing Co., Ltd.
4. Mr. Chen Ruimou: Director of the Company, born in 1944 with a university degree. He served as staff of Jinyuan Co., Ltd, staff of
Nissin Shokai Co., Ltd., supervisor and director of Luthai Textile Co., Ltd. And he currently serves as a director of the Company.
5. Mr. Zeng Facheng: Director of the Company, a Thailander born in 1951. He is currently the chairman of GOLD MINE
GARMENT CO., LTD. and BLOSSOM GARMENT MANUFACTURING (THAILAND) CO., LTD.; he also is the chairman of the
Thai Shipping and Transportation Association, the chairman of the standing committee of the Thai Garment Industry Development
Charity Foundation, the executive director of the Thai Chamber of Commerce, the Thai industry Director of the Association,
47
Lu Thai Textile Co., Ltd. Annual Report 2021
Chairman of the Thai Garment Industry Free Trade Association, and Director of Luthai.
6. Mr. Liu Deming: Director of the Company, vice director of global marketing department, born in 1990, with a master degree.
Currently, he serves as chairman and GM of Zibo Lucheng Textile Investment Co., Ltd., director of Luthai Textile Co., Ltd. and vice
director of global marketing department of the Luthai Textile Co., Ltd.
7. Ms. Qin Guiling: Director of the Company, born in 1966, with a master degree of business administration. He served as chief of
planning department, manager of securities department, financial assistant to GM, deputy GM and secretary of board of directors of
Luthai Textile Co., Ltd. In addition, he currently serves as a director of Luthai.
8. Ms. Zhang Hongmei: Director and chief accountant of the Company, born in 1970, with a master degree of business administration.
She is a senior accountant. She served as chief of cost department, chief of accounting department and deputy chief accountant of
Luthai Textile Co., Ltd., and currently serves as the director and chief accountant of the Company. He is also a supervisor of
Shanghai Zhinuo Textile New Materials Co., Ltd.
9. Ms. Pan Ailing: Independent director of the Company, born in 1965, with a doctor degree of economics; and she serves as a
postdoctor of financial management. She currently serves as a professor at the School of Management of Shandong University, a
doctoral supervisor, a leader in accounting discipline, a director of the Investment and Financing Research Center of Shandong
University, a non-practicing member of CICPA, a director of the Shandong Institute of Accounting, a managing director of the
Shandong Institute of Comparative Management, a visiting professor at Soochow University in Taiwan, a visiting scholar at the
UCONN, and a national candidate for the "New Century Talents Project". In addition, she is an outstanding talent of the Ministry of
Education of the People’s Republic of China in the new century and an expert specially posted by the State Council of the People's
Republic of China.
10. Mr. Wang Xinyu: Independent director of the Company, born in 1967, with a master's degree. He is in possession of the
certificates of CPA, CTA and CPV. He once taught at Jinan Vocational College, and successively worked as project manager &
department manager of Shandong Zhengyuan Hexin Accounting Firm and Zhonglei Certified Public Accountants, and deputy GM of
Shandong Branch. In addition, he currently serves as a senior partner of Reanda Certified Public Accountants LLP, Director of
Shandong Branch, and independent director of the Company.
11. Mr. Zhou Zhiji: Independent director of the Company, born in 1963, with a bachelor degree. He is in possession of the certificates
of CPA and senior accountant. He served as a cadre of Shandong Provincial Department of Finance, director of department of
Shandong accounting firm, chief accountant of Shandong Zhengyuan Accounting Firm, director and manager of Shandong Yingshida
Enterprise Management Consulting Co., Ltd., chairman of Shandong Jinheng Consulting Co., Ltd. Now, he serves as a supervisor of
Shandong Jinheng Consulting Co., Ltd.
12. Ms. Qu Dongmei: Independent director of the Company, born in 1969, with a doctor degree of economic law. She currently
serves as a professor at the School of Law of Shandong Normal University, a master's supervisor in Civil and Commercial Law, a
director of the Western Returned Scholars Association, a lawyer of Grandall Law Firm (Jinan) and an arbitrator of Jinan Arbitration
Commission. In addition, he holds the license of insurance broker in Illinois, USA.
13. Mr. Zhang Shougang: Chairman of the Board of Supervisors, born in 1970, with a master degree of business administration. He is
in possession of a certificate of senior engineer. And he served as director of the weaving factory, manager of the weaving department,
manager of the quality management department, manager of the garment production department, manager of the enterprise
management department and Director of Human Resources Department of the Company.
14. Mr. Liu Zilong: Supervisor of the Company, born in 1968, with a master degree of business administration. In addition, he has
served as the GM of Luthai (Hong Kong) since 2002.
15. Mr. Dong Shibing: Supervisor of the Company, born in 1969, with a diploma of technical secondary school. He once served as
deputy director of the GM's office of the Company. Currently, he served as the manager of the Company's logistics management
department and GM of Zibo Banyang Villa Hotel Co., Ltd.
16. Mr. Zhang Jianxiang: born in 1968, Counselor of the Company, with a master degree of business administration. He served as the
head of the weaving section of Binzhou No.2 Cotton Mill, the director of the expansion office, the director of the weaving factory,
48
Lu Thai Textile Co., Ltd. Annual Report 2021
the deputy manager of the production department, the manager of the quality management department and the director of the fabric
finishing factory of Luthai Textile Co., Ltd., the deputy director and the executive director of the Luthai Textile and Clothing
Engineering Research Institute, Vice President and director of the Functional Fabric Product Line of the Company.
17. Mr. Wang Jiabin: Chairman of the Labor Union and safety director of the Company. Born in 1963, with a master degree of
business administration, he served as workshop director of Zibo No. 1 Cotton Textile Mill, director of labor safety, weaving
workshop director of Luthai Textile Co., Ltd., director of power, director of bleaching and dyeing factory, manager of bleaching and
dyeing department, assistant to the GM, vice president and director of yarn-dyed fabric product line.
18. Mr. Zhang Zhanqi: Vice president of the Company, director of global marketing department and GM of LuFeng Company
Limited, born in 1972, with a master degree of business administration. Also, he serves as a senior engineer, once was the factory
director of fabric finishing factory and manager of quality management department of the Company.
19. Mr. Zhang Keming: Secretary of the board of directors of the Company, and director of Financial Management Department. Born
in 1968, with a master degree of business administration, he is a senior accountant. Once he was deputy manager and manager of the
financial department of the Company.
20. Mr. Li Wenji: Controller of the enterprise management department, born in 1967. Once he was a teacher of Shandong University
of Finance. He once served as the manager of the Company's information department and CIO.
21. Mr. Zhang Wei: Assistant to Chairman of the Board, director of the strategy and marketing department of the Company, born in
1985, with a doctor degree. He served as a researcher of Guotai Junan Securities Co., Ltd. and China Asset Management Co, Ltd.,
manager of the strategic planning department of the Company; he also serves as the director of Shanghai Zhinuo Textile New
Materials Co., Ltd.
22. Mr. Fujiwara Matsuzaka: GM of branch office in Japan, Japanese with a bachelor degree. He is a special foreign expert of the
Company, and he once won the Qilu Friendship Award. In addition, he served as deputy manager of international business
department, manager of No.1 international business department, manager of No.2 international business department and manager of
clothing marketing department of Luthai Textile Co., Ltd.
23. Mr. Yu Shouzheng: President Assistant, Director of the energy and environmental protection department of the Company, GM of
Zibo Xinsheng Thermal Power Co., Ltd., born in 1968, with a master degree of business administration. As an engineer, he once
worked as the director of the power department and manager of the energy division of the Company.
24. Mr. Shang Chenggang: President Assistant and the director of clothing product line of the Company. Born in 1973, he served as
deputy director, director, manager of GM department, management representative and manager of garment production department,
director of garment manufacturing center & manager of garment production management department of the Company.
25. Mr. Du Lixin: Chief engineer of the Company and executive dean of Luthai Institute of Engineering and Technology. Born in
1975, he served as spinning operator, a weaver's planner, a deputy director of the production department's dispatching room, a
weaver's factory director, a manager of the weaving department, and a deputy manager of the production department of Luthai, as
well as GM of Continental Textile Co., Ltd.
26. Mr. Guo Heng: Controller of Functional Fabric Product Line. Born in 1972, he served as the deputy director of the spinning
factory of Lu Thai, the deputy manager of the yarn business department, and the manager of the yarn business department and
Director of enterprise management department of Luthai.
27. Ms. Fu Guannan: President Assistant and Investment Director of the Company, GM of Beijing Zhishu Management Consulting
Co., Ltd. Born in 1983, with a master degree, she served as senior executive director of Investment Banking Department in Guotai
Junan Securities Co., Ltd.
Offices held concurrently in shareholding entities:
√Applicable □Not applicable
Office held in the End of Remuneration or
Name Shareholding entity Start of tenure allowance from
shareholding entity tenure
the shareholding
49
Lu Thai Textile Co., Ltd. Annual Report 2021
entity
Zibo Lucheng Textile
Liu Zibin Director 26 February 1999 No
Investment Co., Ltd.
Tailun (Thailand) Textile Co.,
Xu Zhinan GM 29 January 1985 No
Ltd.
Zibo Lucheng Textile
Liu Deming Chairman and GM 1 February 2017 No
Investment Co., Ltd.
Mr. Liu Zibin is the Director of Zibo Lucheng Textile Investment Co., Ltd., holding 4% equities of Zibo
Explanations Lucheng Textile Investment Co., Ltd. Basic information of Mr. Liu Zibin: Chinese, no right of residence in other
about holding countries or regions. Mr. Liu Deming holds the post of Chairman and GM of Zibo Lucheng Textile Investment
posts in Co., Ltd., holding 21% equities of Zibo Lucheng Textile Investment Co., Ltd. Basic information of Mr. Liu
shareholders’ Deming: Chinese, no right of residence in other countries or regions. Mr. Xu Zhinan is the sponsor of foreign
companies capital of the Company, shareholder of Tailun (Thailand) Textile Co., Ltd. and Tailun (Thailand) Textile Co.,
Ltd. is the second largest shareholder of the Company. Basic information about Mr. Xu Zhinan: Thai.
Offices held concurrently in other entities:
√Applicable □Not applicable
Remuneration
Office held Start of
Name Other entity End of tenure or allowance
in the entity tenure
from the entity
Lufeng Weaving & Dyeing Co., Ltd. Zibo
Luqun Textile Co., Ltd., Zibo Xinsheng
Thermal Power Co., Ltd., Shanghai Lu
Chairman
Thai Textile Garment Co., Ltd., Lu Thai
of the
(America) Textile Co., Ltd. Lu Thai (HK) 7 December
Liu Zibin Board, No
Textile Co., Ltd, Shanghai Zhinuo Textile 2015
Director,
New Material Co., Ltd, Shandong Lulian
GM
New Materials Co., Ltd., Shandong Lujia
Import and Export Co., Ltd., Hainan
Huilin International Holdings Co., Ltd.
LuFeng Company Limited, Zibo Luqun
Textile Co., Ltd., Shandong Lulian New
21 August
Liu Deming Materials Co., Ltd., Shanghai Zhinuo Director No
2017
Textile New Materials Co., Ltd., Beijing
Zhishu Management Consulting Co., Ltd.
Zhang Shanghai Zhinuo Textile New Materials 15 October
Supervisor No
Hongmei Co., Ltd. 2018
Dong Shibing Zibo Banyang Villa Hotel Co., Ltd. GM 2 April 2021 No
Zhang Shanghai Lu Thai Textile Garment Co., 30 December
Supervisor No
Jianxiang Ltd. 2010
Continental Textile Co., Ltd., Lu Thai 29 December
Du Lixin Director No
(Vietnam) Textile Co., Ltd. 2015
Zhang Wei Shanghai Zhinuo Textile New Materials Director 15 October No
50
Lu Thai Textile Co., Ltd. Annual Report 2021
Co., Ltd. 2018
Zhang Zibo Luqun Textile Co., Ltd., Shandong Director,
3 March 2022 No
Keming Lulian New Materials Co., Ltd. Supervisor
Shandong University School of
Pan Ailing Professor 1 July 1986 Yes
Management
Reanda Certified Public Accountants 1 August
Wang Xinyu Head Yes
Shandong Branch 2013
1 October
Zhou Zhiji Shandong Jinheng Consulting Co., Ltd Supervisor Yes
2015
Law School of Shandong Normal
Qu Dongmei Professor 1 July 2003 Yes
University
Zhang Zhanqi LuFeng Company Limited GM 5 July 2014 No
Yu
Zibo Xinsheng Thermal Power Co., Ltd. GM 13 April 2021 No
Shouzheng
28 August
Guo Heng Shandong Lulian New Materials Co., Ltd. GM No
2021
Beijing Zhishu Management Consulting
Fu Guannan GM 9 March 2022 No
Co., Ltd.
Explanations
about holding Except for independent directors, all other entities the Company’s directors, supervisors and senior management
posts in other hold posts are majority-owned subsidiaries of the Company.
entities
Punishments imposed in the recent three years by the securities regulator on the incumbent directors, supervisors and senior
management as well as those who left in the Reporting Period:
□ Applicable √ Not applicable
3. Remuneration of Directors, Supervisors and Senior Management
Decision-making procedure, determination basis and actual payments of remuneration for directors, supervisors and senior
management:
The Remuneration and Appraisal Committee under the Board of Directors of the Company is liable to not only preparing appraisal
criteria for directors and senior management of the Company and appraising them, but also preparing and reviewing remuneration
policies and plans for directors and senior management of the Company, who is liable to the Board of Directors. The Remuneration
and Appraisal Committee shall propose the remuneration amount of directors and senior management according to the Company's
management condition and post performance results, and shall report to the Board of Directors for ratification after the approval by
voting.
The Controller of Financial Management Department, the Corporate Management Department and the HR Department of the
Company shall be liable to the preliminary preparation for the decision of the Remuneration and Appraisal Committee, including but
not limited to providing information such as the Company's main financial indicators and the completion of management objectives.
The Remuneration and Appraisal Committee shall confirm the annual appraisal results of directors and officers in accordance with
the completion of the Company's performance and the remuneration criteria for officers, and shall report to the Board of Directors for
51
Lu Thai Textile Co., Ltd. Annual Report 2021
ratification after the approval by voting.
The number of incumbent directors, supervisors and senior executives is 27, among which there are 27 persons actually receiving
remuneration from the Company. Till 31 December 2021, the total amount of annual payment drawn from the Company by directors,
supervisors and senior executives is RMB14.1556 million (before tax).
Remuneration of directors, supervisors and senior management for the Reporting Period
Unit: RMB'0,000
Total
Any
before-tax
Gen Incumben remuneration
Name Office title Age remuneration
der t/Former from related
from the
party
Company
Incumben
Liu Zibin Chairman and President Male 57 90.71 No
t
Incumben
Xu Zhinan Vice Chairman Male 92 20.78 No
t
Fujiwara Incumben
Director Male 82 1.06 No
Hidetoshi t
Chen Incumben
Director Male 78 20.78 No
Ruimou t
Zeng Incumben
Director Male 71 1.06 No
Facheng t
Liu Director, Vice Controller of Global Incumben
Male 32 57.7 No
Deming Marketing Department t
Qin Fem Incumben
Director 56 69.54 No
Guiling ale t
Zhang Fem Incumben
Director and Chief Accountant 52 77.61 No
Hongmei ale t
Incumben
Zhou Zhiji Independent Director Male 59 5.9 No
t
Fem Incumben
Pan Ailing Independent Director 57 5.9 No
ale t
Wang Incumben
Independent Director Male 55 5.9 No
Xinyu t
Qu Fem Incumben
Independent Director 53 5.9 No
Dongmei ale t
Zhang Incumben
Chairman of the Supervisory Committee Male 52 53.03 No
Shougang t
Incumben
Liu Zilong Supervisor Male 54 59.96 No
t
52
Lu Thai Textile Co., Ltd. Annual Report 2021
Dong Supervisor, Manager of Logistics Incumben
Male 53 57.98 No
Shibing Management Department t
Zhang Incumben
Counselor Male 54 83.06 No
t
Jianxiang
Wang Chairman of the Labor Union, Security Incumben
Male 59 82.34 No
Controller t
Jiabin
Zhang Vice president, Controller of Global Incumben
Male 50 80.85 No
Zhanqi Marketing Department t
Zhang Board Secretary, Controller of Financial Incumben
Male 54 57.65 No
Keming Management Department t
Controller of Business Management Incumben
Li Wenji Male 55 60.12 No
t
Department
Assistant to Chairman of the Board,
Incumben
Zhang Wei Controller of Strategy and Market Male 37 92.22 No
t
Department
Fujiwara Incumben
GM of Japan Office Male 49 104.73 No
Matsuzaka t
Yu
President Assistant, Controller of Energy and Incumben
Shouzhen Male 54 57.54 No
Environment Protection Department t
g
Shang
President Assistant, Controller of Garment Incumben
Chenggan Male 49 56.05 No
Product Line t
g
Chief Engineer, Executive Dean of Lu Thai Incumben
Du Lixin Male 47 57.28 No
t
Engineering Technology Research Institute
Incumben
Guo Heng Controller of Functional Fabric Product Line Male 50 57.08 No
t
Fu Fem Incumben
President Assistant, Investment Director 39 92.83 No
Guannan ale t
Total -- -- -- -- 1,415.56 --
VI Performance of Duty by Directors in the Reporting Period
1. Board Meeting Convened during the Reporting Period
Meeting Date of the meeting Disclosure date Meeting resolutions
20th Meeting of the 9th Board It deliberated and approved:
2021-01-13 2021-01-15
of Directors 1. Proposal on Investing and
53
Lu Thai Textile Co., Ltd. Annual Report 2021
Establishing “Hainan Huilin
International Holdings Co.
Ltd”; 2. Proposal on
Providing Joint and Several
Liability Guarantee for the
Wholly-owned Subsidiary Lu
An Garments Co., Ltd. of
Obtaining a Comprehensive
Credit Limit of USD10
Million; 3. and Proposal on
Routine Related Transactions.
It deliberated and approved:
1. Proposal on 2020 Annual
Work Report of the Board of
Directors; 2. Proposal on
2020 Annual Work Report of
the President; 3. Proposal on
the Company's 2020 Annual
Report and Its Abstracts; 4.
Proposal on the Company's
2020 Annual Financial
Accounting; 5. Proposal on
the Company's 2021 Annual
Financial Budget; 6.
Proposal on the Company's
2020 Annual Profit
21st Meeting of the 9th Board Distribution Plan; 7.
of Directors 2021-03-29 2021-03-31 Proposal on the Company's
2020 Annual Appraisal
Results of Officers; 8.
Proposal on the Company's
2020 Annual Social
Responsibility Report; 9.
Proposal on the Company's
2020 Annual Assessment
Report for Internal Control;
10. Proposal on the Renewal
of the Company's 2021
Annual Financial Audit and
Internal Control Audit
Institution; 11. Proposal on
Changing Part of the
Accounting Policies; 12.
Proposal on Applying for a
54
Lu Thai Textile Co., Ltd. Annual Report 2021
Comprehensive Credit Limit
of RMB200 Million from
China Merchants Bank; 13.
Proposal on Providing Joint
and Several Liability
Guarantee for the
Wholly-owned Subsidiary
Continental Textile Co., Ltd.
of Obtaining a
Comprehensive Credit Limit
of USD60 Million; 14.
Proposal on the Special
Report of the 2020 Annual
Deposit and Use of the
Raised Funds; 15. Proposal
on Investing and Establishing
Zibo Banyang Mountain Villa
Hotel Co., Ltd.; 16. Proposal
on the Delay of the
Production Line Project of
High-grade Printed and Dyed
Fabrics; 17. Proposal on
Holding 2020 Annual
General Meeting.
It deliberated and approved:
1. Proposal on the Company's
'2021 Restricted Share
Incentive Scheme (Draft)' and
Its Abstracts; 2. Proposal on
the Company's
'Implementation and
Appraisal Regulations on
2021 Restricted Share
22nd Meeting of the 9th Board
Incentive Scheme'; 3.
of Directors 2021-04-12 2021-04-13
Proposal on Submitting the
Authorization for the Board
of Directors to Handle the
Company's 2021 Restricted
Share Incentive Scheme to the
General Meeting of
Shareholders; 4. Proposal on
Holding the 1st
Extraordinary General
Meeting of 2021.
55
Lu Thai Textile Co., Ltd. Annual Report 2021
It deliberated and approved:
1. Proposal on the Full Text
23rd Meeting of the 9th Board and Body of the 2021 First
of Directors 2021-04-28 2021-04-30 Quarter Report; 2. Proposal
on the Company's Using Part
of the Idle Raised Funds for
Cash Management.
It deliberated and approved:
1. Proposal on Adjusting the
List of the Name and Number
of Incentive Staff of 2021
Restricted Share Incentive
Scheme; 2. Proposal on
Granting Restrictive Stocks to
Incentive Staff for the First
24th Meeting of the 9th Board
2021-05-17 2021-05-18 Time; 3. and Proposal on
of Directors
Providing Guarantee for
Continental Textile Co., Ltd.
and Its Subsidiaries of
Obtaining a Comprehensive
Credit Limit of USD20.80
Million from the Ho Chi Minh
City Branch of China Trust
Commercial Bank Co, Ltd.
It deliberated and approved:
1. Proposal on the Company's
Plan for Derivative
Transaction; 2. Proposal on
Opening a Special Account
for Foreign Exchange
Purchase and Deposit of
25th Meeting of the 9th Board
2021-06-11 2021-06-15 Raised Funds and Signing a
of Directors
Supervision Agreement on
Raised Funds; 3. Proposal on
Amending Relevant Articles
of the 'Articles of
Incorporation' According to
the Authorization of the
General Meeting.
It deliberated and approved:
th th
26 Meeting of the 9 Board 1. Proposal on the Company's
2021-08-26 2021-08-28
of Directors Interim Report 2021 and Its
Abstracts; 2. Proposal on
56
Lu Thai Textile Co., Ltd. Annual Report 2021
Using Idle Equity Funds for
Cash Management; 3.
Proposal on the Special
Interim Report 2021 of the
Deposit and Use of the
Raised Funds; 4. Proposal on
Amending Relevant Articles
of the ‘Foreign Investment
Regulations for Lu Thai
Textile Co., Ltd.’; 5. Proposal
on Amending Relevant
Articles of the Authorization
Management System for Lu
Thai Textile Co., Ltd.; 6.
Proposal on Preparing the
Remuneration Plan for
Directors, Supervisors and
Senior Management; 7.
Proposal on the Additional
Investment on Hainan Huilin
International Holdings Co.,
Ltd.; 8. Proposal on
Repurchase and Cancel
Authorized but Unlocked
Restricted Share of the
Incentive Personnel not
Conforming to the Incentive
Condition; 9. Proposal on
Holding the 2nd
Extraordinary General
Meeting of 2021.
It deliberated and approved:
27th Meeting of the 9th Board
2021-10-27 2021-10-29 Proposal on the 2021 Third
of Directors
Quarter Report.
It deliberated and approved:
1. Proposal on Amending
Relevant Articles of the
'Articles of Incorporation'
th th
28 Meeting of the 9 Board According to the
2021-12-13 2021-12-14
of Directors Authorization of the General
Meeting; 2. Proposal on
Designedly Providing Pledge
of Deposit of RMB40 Million
to the Holding Subsidiary
57
Lu Thai Textile Co., Ltd. Annual Report 2021
Shandong Lulian New
Materials Co., Ltd. for
Opening Letter of Credit
("l/C") for Import Equipment
in Bank of Qingdao Co, Ltd.
2. Attendance of Directors at Board Meetings and General Meetings
Attendance of directors at board meetings and general meetings
Total The director
Board
number of Board Board failed to attend
Board meetings
board meetings meetings the two General
meetings attended by
Director meetings the attended director consecutive meetings
attended on way of
director was through a failed to board attended
site telecommuni
eligible to proxy attend meetings
cation
attend (yes/no)
Liu Zibin 9 9 0 0 0 No 3
Xu Zhinan 9 0 9 0 0 No 0
Fujiwara
9 0 9 0 0 No 0
Hidetoshi
Chen Ruimou 9 0 9 0 0 No 0
Zeng Facheng 9 0 9 0 0 No 0
Wang Fangshui 1 1 0 0 0 No 0
Liu Deming 9 9 0 0 0 No 0
Qin Guiling 9 9 0 0 0 No 2
Zhang Hongmei 9 9 0 0 0 No 3
Bi Xiuli 1 0 1 0 0 No 0
Zhou Zhiji 9 1 8 0 0 No 2
Pan Ailing 9 1 8 0 0 No 0
Wang Xinyu 9 1 8 0 0 No 2
Qu Dongmei 9 1 8 0 0 No 0
Why any director failed to attend two consecutive board meetings:
Not applicable.
3. Objections Raised by Directors on Matters of the Company
Indicate by tick mark whether any directors raised any objections on any matter of the Company.
□ Yes √ No
No such cases in the Reporting Period.
58
Lu Thai Textile Co., Ltd. Annual Report 2021
4. Other Information about the Performance of Duty by Directors
Indicate by tick mark whether any suggestions from directors were adopted by the Company.
√ Yes □ No
Suggestions from directors adopted or not adopted by the Company
Naught
VII Performance of Duty by Specialized Committees under the Board in the Reporting Period
Other
Important Details about
Number of information
Convened opinions and issues with
Committee Members meetings Content about the
date suggestions objections
convened performance
raised (if any)
of duty
The opinions
were as
Mainly, the
follows: (1)
Company's
Preparing the
financial
Company's
statements
financial
submitted to
accounting
Grant
statements in
Thornton
accordance
Certified
with the
Public
Company's
Accountants
accounting
LLP for
policies and
Audit preliminary
Wang Xinyu, applying
Committee audit were
Zhou Zhiji, 7 2021-01-20 accounting
under the reviewed,
Qin Guiling policies
Board written
properly, it
opinions
carried out
were
accounting
expressed,
estimate
and
fully and
communicati
reasonably,
on with
which
Leader of
conformed to
annual audit
the New
accountant
Accounting
project was
Standard for
conducted.
Business
Enterprises,
59
Lu Thai Textile Co., Ltd. Annual Report 2021
accounting
system for
enterprises
and the
requirements
of relevant
provisions
issued by the
Ministry of
Finance; (2)
Unit
statements of
the
Company's
financial
statements
that were
included in
the scope of
consolidation
were
complete,
while the
statement
consolidation
basis was
accurate; (3)
The financial
statements of
the Company
were
objective,
true and
accurate,
without any
major
misstatement
or omission;
(4) And due
to the fact
that there
still is a
period of
time from the
60
Lu Thai Textile Co., Ltd. Annual Report 2021
day for
review of the
financial
statements to
the day for
audit report
and financial
statement
release, the
Financial
Management
Department
of the
Company
was
submitted to
focus on and
cope with
post balance
sheet events,
so as to
ensure the
fairness,
authenticity
and integrity
of the
financial
statements.
The Audit
Committee
thought that
the financial
accounting
statements
could be
submitted to
Annual
Certified
Public
Accountant
for audit
according to
annual audit
plan.
61
Lu Thai Textile Co., Ltd. Annual Report 2021
The The opinions
following were as
matters were follows: The
mainly procedure of
audited: (1) financial
The statement
Company's preparation
2020 Annual was
Financial reasonable
Report and
audited by normative as
the the Company
accounting conformed to
firm. (2) the New
Conclusion Accounting
Report on the Standard for
Company's Business
Audit Work Enterprises
for the 2020 and relevant
Annual provisions of
Financial the
Report Company's
2021-03-29
conducted by financial
Grant system,
Thornton which fairly
Certified reflected the
Public Company's
Accountants assets,
LLP. (3) liabilities,
Proposal on shareholders'
the renewal equity and
of Grant operating
Thornton results by 31
Certified December
Public 2020, which
Accountants were true,
LLP As the accurate and
Company's complete.
2021 Annual The Audit
Financial Committee
Audit and thought that
Internal the
Control Company's
Audit 2020 Annual
62
Lu Thai Textile Co., Ltd. Annual Report 2021
Institution. Financial
(4) Special Accounting
Report of the Report that
2020 Annual was
Deposit and preliminarily
Use of the approved by
Raised Grant
Funds. (5) Thornton
Report on the Certified
Implementati Public
on of the Accountants
2020 Annual LLP could be
Internal submitted to
Audit Plan the 21st
by the Meeting of
Company's the 9th Board
Audit of Directors
Department. for review.
Report on The
Implementati following
on of proposals
Internal were adopted
Audit Plan of by voting at
2021 First the meeting:
Quarter and Report on
Special Implementati
Report of on of
Deposit and Internal
2021-04-20 Use of the Audit Plan of
Raised 2021 First
Funds of Quarter and
2021 First Special
Quarter by Report of
the Deposit and
Company's Use of the
Audit Raised
Department Funds of
were 2021 First
deliberated. Quarter.
The Proposal The Plan for
on the Derivative
2021-06-08 Company's Transaction
Plan for of Lu Thai
Derivative Textile Co.,
63
Lu Thai Textile Co., Ltd. Annual Report 2021
Transaction Ltd. was
was mainly audited and
deliberated. the following
opinions
were
expressed:
Facing the
exchange
rate
fluctuation of
RMB against
USD in the
foreign
exchange
market, the
Financial
Management
Department
of the
Company
proposed the
Plan for
Derivative
Transaction,
which was an
effective tool
to avoid
exchange
rate risk. By
strengthening
internal
control and
implementin
g stop-loss
management
and risk
prevention
measures, the
management
level could
be improved,
which was
conducive to
giving full
64
Lu Thai Textile Co., Ltd. Annual Report 2021
play to the
Company's
competitive
edge. On the
premise of
ensuring
normal
operation,
the Company
utilized
equity funds
to carry out
derivative
transactions,
which was
conducive to
avoiding the
risk of RMB
exchange
rate
fluctuations,
enhancing
the ability to
withstand
exchange
rate
fluctuations
and
operating
level, and
giving full
play to the
Company's
competitive
edge, without
damaging the
interests of
the Company
and all
shareholders.
We think that
the Plan for
Derivative
Transaction
65
Lu Thai Textile Co., Ltd. Annual Report 2021
is feasible,
necessary
and
risk-controll
able, and
agree to
submit the
Plan for
Derivative
Transaction
of Lu Thai
Textile Co.,
Ltd. to the
25th Meeting
of the 9th
Board of
Directors for
deliberation.
The
following
Mainly, the
proposals
following
were adopted
matters were
by voting at
deliberated:
the meeting:
(1) Special
Special
Interim
Interim
Report 2021
Report 2021
of the
of the
Deposit and
2021-08-16 Deposit and
Use of the
Use of the
Raised
Raised
Funds. (2)
Funds and
Interim
Interim
Report 2021
Report 2021
on the
on the
Implementati
Implementati
on of Internal
on of
Audit Plan.
Internal
Audit Plan.
Mainly, the The
following following
2021-10-20 matters were proposals
deliberated at were adopted
the meeting: by voting at
66
Lu Thai Textile Co., Ltd. Annual Report 2021
(1) Special the meeting:
Report on the Special
Deposit and Report on the
Use of the Deposit and
Raised Funds Use of the
of 2021 Raised
Third Funds of
Quarter. (2) 2021 Third
Report on the Quarter and
Implementati Report on the
on of Internal Implementati
Audit Plan of on of
2021 Third Internal
Quarter. Audit Plan of
2021 Third
Quarter.
The time
arrangement
plan for 2021
annual
financial
audit work
was
unanimously
The time
determined
arrangement
at the
for the
meeting
Company's
through the
2021-11-11 2021 annual
negotiation
financial
with the
audit work
2021 annual
was
audit
negotiated.
institution,
Grant
Thornton
Certified
Public
Accountants
LLP, of the
Company.
The main The
Liu Zibin,
Remuneratio topic of the following
Zhou Zhiji, 4 2021-03-29
n Committee meeting was: proposal was
Wang Xinyu,
Proposal on deliberated
67
Lu Thai Textile Co., Ltd. Annual Report 2021
Pan Ailing 2020 Annual and approved
Appraisal by voting at
Results of the meeting:
the Proposal on
Company's 2020 Annual
Officers. Appraisal
Results of the
Company's
Officers. We
agree to
submit the
above
proposal to
the 21st
Meeting of
the 9th Board
of Directors
of the
Company for
deliberation.
The main The
topics of the following
meeting proposals
were: (1) the were
Proposal on deliberated
the and approved
Company's through
2021 on-site
Restricted voting and
Share communicati
Incentive on voting at
Scheme the meeting:
2021-04-11
(Draft) and the Proposal
Its Abstracts. on the
(2) the Company's
Proposal on '2021
the Restricted
Company's Share
Implementati Incentive
on and Scheme
Appraisal (Draft)' and
Regulations Its Abstracts
on 2021 and the
Restricted Proposal on
68
Lu Thai Textile Co., Ltd. Annual Report 2021
Share the
Incentive Company's
Scheme. 'Implementat
ion and
Appraisal
Regulations
on 2021
Restricted
Share
Incentive
Scheme'.
The
following
proposal was
deliberated
The main and approved
topic of the through
meeting was: on-site
the Proposal voting and
on 2020 communicati
2021-05-13 Annual on voting at
Appraisal the meeting:
Results and the Proposal
Distribution on 2020
Quota of Annual
Risk Funds. Appraisal
Results and
Distribution
Quota of
Risk Funds.
The
The main
following
topic of the
proposal was
meeting was:
deliberated
the Proposal
and approved
on Preparing
through
the
on-site
2021-08-16 Remuneratio
voting and
n Plan for
communicati
Directors,
on voting at
Supervisors
the meeting:
and Senior
the Proposal
Management
on Preparing
.
the
69
Lu Thai Textile Co., Ltd. Annual Report 2021
Remuneratio
n Plan for
Directors,
Supervisors
and Senior
Management
.
Liu Zibin,
Xu Zhinan,
Chen The
Ruimou, following
Zeng proposal was
Deliberate
Facheng, approved by
the Strategic
Fujiwara voting at the
Planning of
Strategy Hidetoshi, meeting: the
1 2021-03-29 Lu Thai
Committee Liu Deming, Strategic
Textile of
Qin Guiling, Planning of
2021 to
Zhang Lu Thai
2025.
Hongmei, Textile of
Zhou Zhiji, 2021 to
Wang Xinyu, 2025.
Pan Ailing,
Qu Dongmei
Liu Zibin,
Xu Zhinan,
Nomination
Zhou Zhiji, 0
Committee
Wang Xinyu,
Pan Ailing
VIII Performance of Duty by the Supervisory Committee
Indicate by tick mark whether the Supervisory Committee found any risk to the Company during its supervision in the Reporting
Period.
□ Yes √ No
The Supervisory Committee raised no objections in the Reporting Period.
V Employees
1. Number, Functions and Educational Backgrounds of Employees
Number of in-service employees of the Company as the parent
8,807
at the period-end
Number of in-service employees of major subsidiaries at the 13,825
70
Lu Thai Textile Co., Ltd. Annual Report 2021
period-end
Total number of in-service employees 22,632
Total number of paid employees in the Reporting Period 22,632
Number of retirees to whom the Company as the parent or its
0
major subsidiaries need to pay retirement pensions
Functions
Function Employees
Production 16,877
Sales 515
Technical 4,581
Financial 107
Administrative 552
Total 22,632
Educational backgrounds
Educational background Employees
Doctor 5
Master 90
Bachelor 1,241
College 4,576
High school and below 16,720
Total 22,632
2. Employee Remuneration Policy
The Company has formulated a remuneration management system with its principle being “payment according to one’s work and
more pay for more work”. Through post evaluation and through researches of Social salary levels carried out as multi-faceted, as well
as the formulation of the reasonable salary management system, fully demonstrates the internal fairness, self-fairness and external
fairness. It has greatly motivated the employees and enhanced the corporate management.
3. Employee Training Plans
Trainings will be carried out according to requirements of the Company’s strategic development planning, improvement of employees’
capability, performance management, employees’ career planning, etc. The annual training plan is determined by carrying out
researches on training needs. And the training courses fall into three major categories, i.e. management, technical skills and general
knowledge. Through these trainings, the Company will improve the knowledge structure of its employees, improve their job skills and
increase their comprehensive quality to provide excellent human resources for the long-term, sustained and stable development of the
Company.
71
Lu Thai Textile Co., Ltd. Annual Report 2021
4. Labor Outsourcing
√ Applicable □ Not applicable
Total man-hours (hour) 412,473
Total rewards paid (RMB) 10,614,943.76
X Profit Distributions (in the Form of Cash and/or Stock)
How the profit distribution policy, especially the cash dividend policy, was formulated, executed or revised in the Reporting Period:
□ Applicable √ Not applicable
Indicate by tick mark whether the Company fails to put forward a cash dividend proposal for shareholders despite the facts that the
Company has made profits in the Reporting Period and the profits of the Company as the parent distributable to shareholders are
positive.
□ Applicable √ Not applicable
Final dividend plan for the Reporting Period
√ Applicable □ Not applicable
Bonus shares for every 10 shares (share) 0
Dividend for every 10 shares (RMB) (tax 0.70
inclusive)
Bonus issue from capital reserves (share/10 0
shares)
Total shares as the basis for the profit distribution 882,341,295
proposal (share)
Cash dividends (RMB) (tax inclusive) 61,763,890.65
Cash dividends in other forms (such as share
0.00
repurchase) (RMB)
Total cash dividends (including those in other
61,763,890.65
forms) (RMB)
Distributable profit (RMB) 4,887,481,100.66
Total cash dividends (including those in other
100%
forms) as % of total profit distribution
Cash dividend policy
If the Company is in a mature development stage and has plans for any significant expenditure, in profit allocation, the ratio of
cash dividends in the profit allocation shall be 40% or above.
Details about the proposal for profit distribution and converting capital reserve into share capital
Based on 882,341,295 shares (including shares transferred from convertible bonds for the Reporting Period) on 31 December
2021, the cash allocated per 10 shares is RMB0.70(including tax). The individual income tax for A Share shall be subject to
related regulations under CS [2015] No. 101 Notice on Certain Question about the Differentiated Individual Income Tax Policy
72
Lu Thai Textile Co., Ltd. Annual Report 2021
for Cash Dividend of Listed Companies jointly issued by Ministry of Finance, SAT, and CSRC; and that for B Share shall be
conversed to HKD based on the central parity rate on interbank exchange market released by the People’s Bank of China on the
following day after shareholder’s meeting (for domestic individual shareholders, tax is paid pursuant to CS [2015] No. 101; for
foreign shareholders, tax is free pursuant to CSZ (1994) No. 020 regulations; and non-residential corporate shareholders is
entitled to a 10% reduction of enterprise income tax according to related regulations under Enterprise Income Tax Law of the
People’s Republic of China). Since the Company is in the period of transferring convertible bonds into shares, the profit
distribution will be conducted based on the total share capital on the equity registration date for implementing this profit
distribution plan with no change in the amount per share.
XI Equity Incentive Plans, Employee Stock Ownership Plans or Other Incentive Measures for
Employees
√ Applicable □ Not applicable
1. Equity Incentive
Relevant
No. Deliberation time Overview of execution Disclosure index
meeting
1 12 April 2021 The 22nd Deliberated and approved were Proposal on the Company's Announcement of
Meeting of '2021 Restricted Share Incentive Scheme (Draft)' and Its Resolution (No.
the 9th Abstracts, Proposal on the Company's 'Implementation and 2021-024) published
Board of Appraisal Regulations on 2021 Restricted Share Incentive on
Directors Scheme', and Proposal on Submitting the Authorization for http://www.cninfo.co
the Board of Directors to Handle the Company's 2021 on 13 April 2021 and
Restricted Share Incentive Scheme to the General Meeting relevant documents
of Shareholders. The Company's independent directors
expressed their independent opinions on this share
incentive scheme.
2 12 April 2021 The 13th Deliberated and approved were Proposal on the Company's Announcement of
Meeting of '2021 Restricted Share Incentive Scheme (Draft)' and Its Resolution (No.
th
the 9 Abstracts, Proposal on the Company's 'Implementation and 2021-025) published
Supervisory Appraisal Regulations on 2021 Restricted Share Incentive on
Committee Scheme', and Proposal on the Verification of the Company's http://www.cninfo.co
Staff List of 2021 Restricted Share Incentive Scheme. on 13 April 2021
3 16 April 2021 to 26 - The Company internally announced the names and -
April 2021 positions on the list of incentive staff. During the publicity
period, the Board of Supervisors has not received any
objections related to the planned subjects of the incentive
scheme.
73
Lu Thai Textile Co., Ltd. Annual Report 2021
4 8 May 2021 - The Ninth Board of Supervisors issued the Explanation of Relevant documents
the Board of Supervisors on the Review and Publicity of the published on
Staff List of 2021 Restricted Share Incentive Scheme on the http://www.cninfo.co
basis of the list review and publicity. on 8 May 2021
5 13 May 2021 The First Deliberated and approved were Proposal on the Company's Relevant
Extraordina '2021 Restricted Share Incentive Scheme (Draft)' and Its announcements (No.
ry General Abstracts, Proposal on the Company's 'Implementation and 2021-035, 2021-036)
Meeting of Appraisal Regulations on 2021 Restricted Share Incentive published on
2021 Scheme', and Proposal on Submitting the Authorization for http://www.cninfo.co
the Board of Directors to Handle the Company's 2021 on 14 May 2021
Restricted Share Incentive Scheme to the General Meeting
of Shareholders. Self-inspection Report on the Company's
2021 Restricted Share Incentive Plan Insiders and
Incentive Subjects' Trading of the Company's Shares was
disclosed.
6 17 May 2021 The 24th Deliberated and approved were Proposal on Adjusting the Relevant
Meeting of List of the Name and Number of Incentive Staff of 2021 announcements (No.
th
the 9 Restricted Share Incentive Scheme and Proposal on 2021-037, 2021-038,
Board of Granting Restrictive Stocks to Incentive Staff. The Board of 2021-039, 2021-040)
Directors, Directors believed that the granting conditions specified in published on
th
the 15 the incentive scheme had been fulfilled, and agreed to http://www.cninfo.co
Meeting of designate 17 May 2021 as the granting date. Except for 5 on 18 May 2021
the 9th incentive staff who had been no longer qualified for the
Supervisory incentive due to resignation, and 47 incentive targets who
Committee had abandoned their subscription of all restricted stocks to
be granted by the Company due to personal reasons, the
number of incentive staff obtaining the first-granted
restricted stocks were adjusted from 802 to 750, and the
volume of the first restricted stocks from 25.965 million to
24.285 million shares. The independent directors consented
independently to the matter. They believed that the
qualification of granting incentive staff to some entities are
legal and effective, and that the determined granting date
complies with relevant regulations. The Board of
Supervisors reviewed the list of incentive staff as of the
grant date and expressed its verification opinions.
7 7 June 2021 - As audited and confirmed by Shenzhen Stock Exchange Relevant
74
Lu Thai Textile Co., Ltd. Annual Report 2021
and the Shenzhen branch of China Securities Depository announcements
and Clearing Corporation Limited, the registration of published on
first-granted restricted stocks was completed. http://www.cninfo.co
on 4 June 2021
th
8 26 August 2021 The 26 It deliberated and approved the Proposal on Repurchase Relevant
Meeting of and Cancel Authorized but Unlocked Restricted Share of announcements
the 9th the Incentive Personnel not Conforming to the Incentive published on
Board of Condition when agreeing to adjust the restricted share http://www.cninfo.co
Directors, repurchase price according to the equity distribution plan, on 28 August 2021
th
16 as well as repurchase and cancel authorized but unlocked
Meeting of restricted share of the incentive personnel not conforming
the 9th to the incentive condition, while the Company's
Supervisory independent directors expressed independent opinions.
Committee The Supervisory Committee deliberated and approved the
Proposal on Repurchase and Cancel Authorized but
Unlocked Restricted Share of the Incentive Personnel not
Conforming to the Incentive Condition and expressed its
written review opinions.
9 13 Septermber The Second Deliberate and approve the Proposal on Repurchase and Relevant
2021 Extraordina Cancel Authorized but Unlocked Restricted Share of Part announcements
ry General of the Incentive Personnel. (No.2021-061)
Meeting of published on
2021 http://www.cninfo.co
on 14 September 2021
10 27 November 2021 - As audited and confirmed by Shenzhen Stock Exchange Relevant
and the Shenzhen Branch of China Securities Depository announcements
and Clearing Corporation Limited, the procedures of (No.2021-068)
repurchasing and canceling 80,000 shares of authorized published on
and unlocked restricted share of the incentive personnel http://www.cninfo.co
not conforming to the incentive condition were completed. on 27 November 2021
Equity incentives for directors, supervisors and senior management in the Reporting Period:
√Applicable □Not applicable
Unit: share
Share Share Share Exerc Mark Numb Numb Numb The Numb
Share option s s ise Share et er of er of er of grant er of
option s feasib exerci price option price restric releas restric price restric
Office s held grante le to sed of s held at the ted ed ted of ted
Name
title at the d in exerci durin exerci at the period shares shares shares restric shares
period the se g the sed period -end held for newly ted held
-begin Repor durin Repor shares -end (RMB at the the grante shares at the
ting g the ting durin /share period Repor d (RMB period
75
Lu Thai Textile Co., Ltd. Annual Report 2021
Perio Repor Perio g the ) -begin ting durin /share -end
d ting d Repor Perio g the )
Perio ting d Repor
d Perio ting
d Perio
(RMB d
/share
)
Direct
Zhang or and
300,0 300,0
Hong Chief 0 3.31
00 00
mei Acco
untant
Zhang Vice
300,0 300,0
Zhanq presid 0 3.31
00 00
i ent
Senio
r
Wang 300,0 300,0
mana 0 3.31
00 00
Jiabin
geme
nt
Board
Secret
ary,
Zhang
Senio 200,0 200,0
Kemi 0 3.31
00 00
r
ng
mana
geme
nt
Senio
Yu r
200,0 200,0
Shouz mana 0 3.31
00 00
geme
heng
nt
Senio
Shang r
200,0 200,0
Chen mana 0 3.31
00 00
geme
ggang
nt
76
Lu Thai Textile Co., Ltd. Annual Report 2021
Senio
r
Li 200,0 200,0
mana 0 3.31
Wenji 00 00
geme
nt
Senio
r
Zhang 200,0 200,0
mana 0 3.31
Wei 00 00
geme
nt
Senio
r
Du 200,0 200,0
mana 0 3.31
00 00
Lixin geme
nt
Senio
r
Guo 200,0 200,0
mana 0 3.31
00 00
Heng geme
nt
Senio
Fu r
200,0 200,0
Guan mana 0 3.31
00 00
geme
nan
nt
2,500, 2,500,
Total -- 0 0 0 0 -- 0 -- 0 0 --
000 000
Appraisal of and incentive for senior management
Within Reporting Period, the Remuneration Committee of the Board of Directors researched and prepared the Remuneration Plan for
Directors, Supervisors and Senior Management of Lu Thai Textile Co., Ltd. in accordance with relevant systems such as Articles of
Incorporation and Working Instructions of Remuneration and Appraisal Committee of the Board of Directors, which was
implemented as deliberated and approved through the Company's 2 nd Extraordinary General Meeting of 2021 held on 13 September
2021. During the Reporting Period, the Company constantly improved the performance evaluation mechanism and made the
evaluation and incentive of the Senior Executives concerned with the Company’s performances and the individual working results.
According to the overall development strategy and the annual operating target of the Company at the period-begin, the Company
confirms the annual performance comprehensive indication and the management duty of each Senior Executives, and executes the
performance examination and the redemption of the rewards and punishment for the Senior Executives by the Remuneration and
Examination Committee affiliated to the Board of Directors at the year-end. The Company will constantly improve the evaluation
and incentive mechanism that to tightly concern the salary of the Senior Executives with the management level and the operating
performance so that to fully mobilize and inspire the initiative and creativity of them.
77
Lu Thai Textile Co., Ltd. Annual Report 2021
2. Implementation of Employee Stock Ownership Plans
□ Applicable √ Not applicable
3. Other Incentive Measures for Employees
√Applicable □Not applicable
On 7 June 2021, the Company completed the first-granted registration of restricted share incentive scheme, and also granted
21,785,000 restricted shares to 739 middle management and core members in addition to the above directors and senior management.
XII Establishment and Execution of the Internal Control System for the Reporting Period
1. Establishment and Execution of the Internal Control System
According to Fundamental Norms for Internal Control of Enterprises, Supporting Guidelines for Internal Control of Enterprises and
relevant provisions prescribed by securities regulators for the internal control establishment of listed companies, combining the actual
status of the Company's business, the Company established the internal control system that covers all stages including production and
management, as well as adapts to the Company's management requirements and development needs. It is relatively normative and
complete, for which its organization is complete and reasonably designed, its implementation is basically effective, and there is no
substantial omission, so as to ensure that the Company's operation and management is legal and compliant, the assets are safe, and
the financial reports and related information are true and complete, and maintain the fundamental interests of all shareholders of the
Company.
Within Reporting Period, relevant systems and procedures were timely streamlined and optimized and the sound operation of risk
management and internal control system was ensured by the Company in line with the change of all business procedures and audit
results, without any violation of laws, regulations or Articles of Incorporation.
2. Material Internal Control Weaknesses Identified for the Reporting Period
□ Yes √ No
XIII Management and Control over Subsidiaries by the Company for the Reporting Period
Integration Countermeasur Settlement Follow-up
Subsidiary Integration plan Problem
progress es taken progress settlement plan
- - - - - - -
XIV Internal Control Self-Evaluation Report or Independent Auditor’s Report on Internal
Control
1. Internal Control Self-Evaluation Report
Disclosure date of the internal control
29 April 2022
self-evaluation report
78
Lu Thai Textile Co., Ltd. Annual Report 2021
For details, please refer to the Self-appraisal Report on Internal Control of Lu Thai
Index to the disclosed internal control
Textile Co., Ltd. simultaneously disclosed on www.cninfo.com.cn with the 2021
self-evaluation report
Annual Report of the Company.
Evaluated entities’ combined assets as %
89.33%
of consolidated total assets
Evaluated entities’ combined operating
revenue as % of consolidated operating 91.99%
revenue
Identification standards for internal control weaknesses
Weaknesses in internal control over Weaknesses in internal control not
Type
financial reporting related to financial reporting
Great defect: violated the national laws
and regulations; the decision-making
Great defect: malpractices of the of the enterprise was not scientific that
Directors, Supervisors and Senior led to the mistakes of itself; outflow of
Executives; the Company revised the the management personnel or the
published financial report; the CPA technician personnel was serious;
founded the current financial report frequently appeared the negative news
occurred significant misstatement while from the Media; the significant
during the operating process of the internal business lacked of systematic control
control could not founded the or the systematic control was invalid;
misstatement; the supervision of the Audit the result of the internal control
Committee and the internal audit assessment which was the great defect
institution of the Company on the internal event had not been revised. Significant
control was invalid. Significant defeat: had defeat: violated the enterprise internal
not abide by the generally accepted regulations that caused rather serious
Nature standard
accounting principles to choose and apply losses; significant business lacked of
the accounting policies; had not built up systematic control; outflow of the
the anti-fraud and significant rather important personnel was
counterbalance mechanism and control serious; the Media reported the
measures; during the financial report negative news that caused rather
process, there occurred single or multiple serious negative influence; rather
defects which not reached the recognition important business lacked of
standard of the significant defeat but systematic control or the systematic
influenced the true and accurate target of control was invalid; the results of the
the financial report. General defect: other internal control assessment which as
internal control defect which had not the significant defect had not been
constructed as the great defeat, significant revised. General defect: other internal
defect. control defect which had not
constructed as the great defeat,
significant defect.
Great defect: misstatement≥2% of the total Great defect: the direct financial losses
Quantitative standard
profits amount; misstatement≥0.3% of the were RMB6 million and above
79
Lu Thai Textile Co., Ltd. Annual Report 2021
total assets amount; misstatement≥0.3% of Significant defect: RMB3 million
the total operating income; (including RMB3 million)-RMB6
misstatement≥0.4% of the total owners’ million General defect: RMB0.5
equities amount. Significant defect: 1% of million (including RMB0.5
the total profits amount million)-RMB 3 million
≤misstatement<2% of the total profits
amount; 0.15% of the total assets amount
≤misstatement<0.3% of the total assets
amount; 0.15% of the total operating
amount ≤misstatement<0.3% of the total
operating amount; 0.2% of the total
owners’ equities amount
≤misstatement<0.4% of the total owners’
equities amount. General defect:
misstatement<1% of the total profits
amount; misstatement<0.15% of the total
assets amount; misstatement<0.15% of the
total operating income;
misstatement<0.2% of the total owners’
equities amount.
Number of material weaknesses in
0
internal control over financial reporting
Number of material weaknesses in
internal control not related to financial 0
reporting
Number of serious weaknesses in
0
internal control over financial reporting
Number of serious weaknesses in
internal control not related to financial 0
reporting
2. Independent Auditor’s Report on Internal Control
√ Applicable □ Not applicable
Opinion paragraph in the independent auditor’s report on internal control
All shareholders of Lu Thai Textile Co., Ltd.:
According to Audit Guidelines for Enterprise Internal Control and the relevant requirements of Auditing Standards for Chinese
Certified Public Accountants, we have audited the effectiveness of internal control in the financial report of Lu Thai Textile Co.,
Ltd. (Hereinafter referred to as "Lu Thai Textile”) by 31 December 2021.
I. Responsibilities of Lu Thai Textile for internal control
The Board of Directors of Lu Thai Textile is responsible for establishing, improving and implementation the internal controls and
evaluating its effectiveness in accordance with Standard for Enterprise Internal Control, Application Guidelines for Enterprise
Internal Control, Enterprise Internal Control Audit Guidelines.
80
Lu Thai Textile Co., Ltd. Annual Report 2021
II. Responsibilities of certified public accountants
It is our responsibility to issue an audit opinion on the effectiveness of internal controls in financial report on the basis of the
implementation of the audit, and to disclose significant deficiencies in the internal controls of non-financial reports that have
been noted.
III. Inherent limitations of internal control
Internal control has inherent limitations, and there is a possibility that misreporting cannot be prevented. In addition, because the
change of circumstances may cause the internal control to become inappropriate or the degree of compliance with the control
policies and procedures is reduced, it is risky to infer the effectiveness of the future internal control based on the audit results of
the internal control.
IV. Audit Opinion on Internal Control in Financial Report
We believe that Lu Thai Textile Co., Ltd. kept effectively internal control on financial reporting in all respects according to
Enterprise Internal Control Basic Specification and the relevant provisions on 31 December 2021.
Independent auditor’s report on
Disclosed
internal control disclosed or not
Disclosure date 29 April 2022
For details, please refer to the Auditor’s Report on Internal Control on www.cninfo.com.cn
Index to such report disclosed
at the same time of disclosing the Company’s 2021 Annual Report.
Type of the auditor’s opinion Unmodified unqualified opinion
Material weaknesses in internal
control not related to financial None
reporting
Indicate by tick mark whether any modified opinion is expressed in the independent auditor’s report on the Company’s internal
control.
□ Yes √ No
Indicate by tick mark whether the independent auditor’s report on the Company’s internal control is consistent with the internal
control self-evaluation report issued by the Company’s Board.
√ Yes □ No
XV Rectifications of Problems Identified by Self-inspection in the Special Action for Listed
Company Governance
Not applicable.
81
Lu Thai Textile Co., Ltd. Annual Report 2021
Part V Environmental and Social Responsibility
I Major Environmental Issues
Indicate by tick mark whether the Company or any of its subsidiaries is a heavily polluting business identified by the environmental
protection authorities of China.
√ Yes □ No
Number Distributi Discharge
Name of Discharge Approved
Name of Way of of on of standards Total Excessive
major concentra total
polluter discharge discharge discharge implemen discharge discharge
pollutants tion discharge
outlets outlets ted
Emission
Chief
standard
discharge
of water
outlet of
pollutants
Huangjia COD≤20 COD： COD:
in textile
Lu Thai COD and Continuo pu 0mg/L;a 345.04t； 1495.08t；
dyeing
Textile ammonia us 2 Industrial mmonia ammonia ammonia No
and
Park ; nitrogen≤ nitrogen： nitrogen:
Co., Ltd nitrogen discharge finishing
chief 20mg/L 7.93t 149.51t
industry
discharge
GB
outlet of
4287-201
East Zone
2
Emission
standard
of water
Chief pollutants
COD≤20 COD： COD is
discharge in textile
LuFeng COD and Continuo 0mg/L;a 250.75t； 653.53t；
outlet of dyeing
Company ammonia us 1 mmonia ammonia ammonia No
LuFeng and
nitrogen≤ nitrogen： nitrogen
Limited nitrogen discharge Company finishing
20mg/L 8.15t is 65.3t
Limited industry
GB
4287-201
2
SO2： Emission SO2 is
Zibo Organize SO2:
≤35mg/m standard 236.13t/a,
Xinsheng SO2, d 39.87t,
Productio 3、NQx： of air NQx :
Thermal NQx, and continuou 4 NQx : No
n plant ≤50mg/m pollutants 674.63t/a,
143.1t,
Power PM s 3, PM： of PM:
PM: 5.42t
Co., Ltd. discharge ≤5mg/m3 Thermal 67.47t/a.
82
Lu Thai Textile Co., Ltd. Annual Report 2021
Power
Plant in
Shandong
Province
DB37/66
4-2019
Discharge
into the
COD≤50 Sewage
ecological QCVN40
Continent Beside mg/L;am discharge
pond in ：
al Textile Sewage 1 sewage monia is / No
2011/BT
the park nitrogen≤ 1,273,400
Co., Ltd. plant NMT
district 1.0mg/L t
after
treatment
Gas
Direct QCVN19
Continent Beside emission
Exhaust discharge ：
al Textile 2 boiler / is 285 / No
2009/BT
gas after million
Co., Ltd. room NMT
treatment m3
Construction of pollution prevention equipment and operation condition
Lu Thai Textile Co., Ltd. (hereinafter referred to as “the Company”) and its majority-owned subsidiary Lufeng Weaving & Dyeing
Co., Ltd. (hereinafter referred to as “Lufeng Weaving & Dyeing”) 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. The Company and Lufeng Weaving & Dyeing
centralizedly collected and coped with the dyeing and finishing waste gas, so as to greatly reduce the pollutant emission
concentration. Online supporting monitoring facilities were built, whose data was uploaded to the government environmental
monitoring system, to comprehensively monitor the Company's emission pollutants such as waste water and waste gas. 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. In terms of energy saving, the Company won the
Ministry of Industry and Information Technology's 2020 Water Efficiency Leader in Key Water-using Enterprises, China National
Textile and Apparel Council's 2020 Textile Industry Water-saving Enterprise Award and Benchmarking Unit of Water-Saving in
Shandong Province in 2021, making outstanding contributions to the company's energy-saving development.
The wholly-owned subsidiary Zibo Xinsheng Thermal Power Co., Ltd. (hereinafter referred to as “Xinsheng Thermal Power”)
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 Continental Textile Co., Ltd. (hereinafter referred to as
“Continental Textile”), located in the KCN Phuoc Dong, Tay Ninh, Vietnam, is designed to treat 6,500 tons of sewage water daily,
83
Lu Thai Textile Co., Ltd. Annual Report 2021
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. Continental Textile 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 2021: The COD (mean value) was
48.1 mg/L, the chrominance (mean value) was 26, the ammonia nitrogen (mean value) was 0.16 mg/L, and the total phosphorus
(mean value) was 0.15 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 2021 was 1,273,400 tons, among which, the chemical oxygen demand
(COD) was 61.19 tons, ammonia nitrogen (NH3-N) was 0.197 tons and total phosphorus (TP) was 0.173 ton. Continental Textile is
equipped with multi-pipe and water film dust-separation devices to process the exhaust gas discharged from boilers. In 2021, 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 2021, the total amount of sulfur dioxide emissions was 50.05 tons, and the total
amount of nitrogen oxides emissions was 47.5 tons.
Project Environmental Impact Assessment and Other Administrative Permission for Environmental Protection
In 2021, the “Lu Thai Textile Co., Ltd. Intelligent Technology Upgrading Project of 25 million-meter High-grade Fabric Production
Line”, the “Engineering Technology Research Institute Project”, the “Technology Upgrading Project of High-end Printing and
Dyeing Fabric Finishing Production Process” and the “Technology Upgrading Project of Regenerated Fibre Production Line and
Colored Spun Yarn Production Line” has completed the acceptance check. The “Lufeng Weaving and Dyeing’s 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” (Luhuanjian [2015] No. 241), the phase II of the expansion project has been completed and been put into
production. The wholly-owned subsidiary Continental Textile’s 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
In order to prevent environmental pollution accidents, the Company and the holding subsidiary Lufeng Weaving & Dyeing
respectively prepared the Emergency Plan for Environmental Incidents, which were filed with Zibo Environmental Protection Bureau
Zichuan Branch. The Plan includes contents such as environmental risk sources identification and risk assessment, prevention and
early warning mechanism, emergency security, and supervision and management.
The wholly-owned subsidiary Zibo Xinsheng Thermal Power Co., Ltd. has formulated the “Emergency Plan for Environmental
Incidents” and filed it with the ecological and environmental 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 Continental Textile Co., Ltd. has prepared emergency plans for different environmental incidents to
reduce their impacts.
Environmental self-monitoring program
In accordance with the requirements of the competent environment authorities, the Company and the holding subsidiary Lufeng
Weaving & Dyeing observed the requirements of the superior environmental protection department to install automatic wastewater
monitoring facilities and achieve real-time monitoring of wastewater discharge. Besides, the automatic environment monitoring plan
was prepared. In addition, they invited a qualified testing institution quarterly to conduct tests on sewage and waste gas according to
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 ensuring the monitoring data is true and valid.
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Lu Thai Textile Co., Ltd. Annual Report 2021
The wholly-owned subsidiary Zibo Xinsheng Thermal Power Co., Ltd. has implemented online real-time monitoring of
environmental data in accordance with the requirements of the superior environmental protection department, and has achieved
emission standards.
The wholly-owned subsidiary Continental Textile 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; while the automatic online
waste gas monitoring system was installed to monitor waste gas emission in real-time after debugging. 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.
Administrative penalties imposed for environmental issues during the Reporting Period
Influence on
Rectification
Name Reason Case Result production and
measures
operation
- - - - - -
Other environment information that should be disclosed
No
Measures taken to decrease carbon emission in the Reporting Period and corresponding effects
√ Applicable □ Not applicable
The annual coal consumption for power generation of the wholly-owned subsidiary Xinsheng Thermal Power in 2021 was reduced
from 283g/kWh in 2020 to 262g/kWh through operation mode adjustment, energy conservation improvement and unit efficiency
enhancement. At the end of the Reporting Period, which was the heating season, Xinsheng Thermal Power, who independently cut
emission by 13% on the basis of benchmarking the lowest pollutant emission over the years, dug deeply into contributing to green
environmental protection and energy conservation and emission reduction.
Other related environment protection information
No
The Company shall abide by relevant disclosure requirements of the Self-Regulatory Guidelines of Shenzhen Stock Exchange for
Listed Companies No.3 - Industry Information Disclosure on textile and garment industry.
Environmental protection conformity situation of the Company in the report period
The Company and its majority-owned subsidiary Lufeng Weaving & Dyeing strictly implement the “Three Simultaneous”
management system for environmental protection in project construction. The companies are equipped with complete facilities for
waste gas and waste water treatment, wastewater is treated with hydrolysis and acidification technique + AO treatment process and
finally discharged according to GB4287-2012 the Discharge Standard of Water Pollutants for Dyeing and Finishing of Textile
Industry; the boiler exhaust is treated with low nitrogen combustion technology and meets DB37/2374-2018 the Emission Standards
of Air Pollutants for Boilers in Shandong Province. The spray + electrostatic technology is adopted in the waste gas treatment, which
meets the requirement in Regional Comprehensive Standards for the Discharge of Air Pollutants DB37/2376-2019 and Volatile
Organic Emission Standard of Shandong Province: Part 7 - Other Industries DB37/2801.7-2019. Temporary storage room of
common solid waste and hazardous waste is constructed in accordance with environmental protection requirements, and the
Company signs hazardous waste disposal contracts with third party qualified companies every year to dispose the hazardous waste of
the Company on basis of conformity. The Company strictly observes environmental protection laws and regulations, and its projects
have complete formalities and its environmental protection facilities are in normal operation; in 2021, the environmental protection
departments of governments at various levels checked the Company more than 30 times but nonconformity was found.
Zibo Xinsheng Thermal Power utilizes neutralization basin to teat acidic and alkali wastewater, and reduces pH value to 6-9 after
precipitation and neutralization. The treated wastewater and reverse osmosis water are used as desulfurizing water, coal feeding
85
Lu Thai Textile Co., Ltd. Annual Report 2021
system rinsing water, road sprinkling water and coal yard water. Desulfurizing wastewater is treated with flocculation sedimentation
purification process and the design output of wastewater treatment system is 10m3/h, and the water quality after treatment will meet
the requirements of Discharge Standard of Wastewater from Limestone-gypsum Flue Gas Desulfurization System In Fossil Fuel
Power Plant DL/T997-2006, and also meet the wastewater recycling requirement of the plant. The treated wastewater is used for
damping dry dust. The stove ash generating from coal burning and gypsum generating from ultralow emission in Zibo Xinsheng
Thermal Power. are general solid waste, the Company signs boiler ash and desulfurized gypsum supply and distribution agreements
with building material factory, cement factory for full comprehensive utilization.
Intercontinental Textile uses the comprehensive treatment process “pre-materialization +A2O biochemistry + post-materialization +
ozone treatment + activated sand filtration” to treat the industrial wastewater of the Company, and the relevant equipment has been
properly operated for six years after installation, and the discharged wastewater meets the level A discharge standard in the Technical
Specifications of Vietnam on Industrial Wastewater Discharge (QCVN40: 2011/BTNMT). the boiler exhaust of the Company is
treated with heat exchange and temperature reduction, dust separation, spraying, water film dust collection, absorption, chemical
reaction and etc. Now the equipment has been installed and properly operated for six years. Exhaust discharge meets the discharge
standard of Vietnam, “State Technical Specifications on Discharge of Industrial Inorganic Substances and Dust” (Circular
36/2015/TT-BTNMT). Hazardous waste and industrial waste warehouses are built up for separated storage of hazardous waste and
industrial waste in accordance with the Vietnamese regulations, Regulations on Administration of Hazardous Waste (Circular
36/2015/TT-BTNMT) and Decision on Administration of Waste (Decree 38/2015/N-CP), and waste transportation and disposal
contracts are signed with local qualified treatment organizations, and relevant treatment records of waste are reported the
environmental protection authority of Vietnam annually.
II Social Responsibility
The Company has prepared the Sustainability Report 2021, and for more details, please refer to the Sustainability Report 2021
simultaneously disclosed with the Annual Report 2021.
III Consolidation and Expansion of Poverty Alleviation Outcomes, and Rural Revitalization
Not applicable
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Lu Thai Textile Co., Ltd. Annual Report 2021
Part VI Significant Events
I Fulfillment of Commitments
1. Commitments of the Company’s De Facto Controller, Shareholders, Related Parties and Acquirers, as
well as the Company Itself and Other Entities Fulfilled in the Reporting Period or Ongoing at the
Period-End
√ Applicable □ Not applicable
Date of Term of
Type of Details of
Commitment Promisor commitment commitmen Fulfillment
commitment commitment
making t
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
Dilution of
and
at sight
managemen
returns on
Controlling t beyond the
public From 23
Commitments made in time of IPO shareholder, authority 23 May
offering May 2019 to On-going
or refinancing actual and not 2019
A-share 8 April 2026
controller occupy the
convertible
Company’s
corporate
interests. 2.
bonds
From
the issuance
date of this
commitment
to the
87
Lu Thai Textile Co., Ltd. Annual Report 2021
completion
of the
implementat
ion 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
requirement
s of the
CSRC, the
company / I
promise to
issue
supplementa
ry
commitment
then in
accordance
with the
88
Lu Thai Textile Co., Ltd. Annual Report 2021
latest
regulations
of CSRC. 3.
Commitmen
t 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
compensatio
n
responsibilit
y to the
Company or
investors in
accordance
with the law.
Directors Dilution of 1. 23 May From 23
On-going
and senior at sight Com 2019 May 2019 to
89
Lu Thai Textile Co., Ltd. Annual Report 2021
managemen returns on mitment is 8 April 2026
t of the public made not to
Company offering transfer
A-share benefits to
convertible other units
corporate or
bonds 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
managemen
t of the
Company,
and accept
the strict
supervision
and
managemen
t of the
Company to
avoid waste
or excessive
consumptio
n. Any
position-rela
ted
90
Lu Thai Textile Co., Ltd. Annual Report 2021
consumptio
n behaviors
of me will
occur within
the scope
necessary
for the
performance
of my
duties. 3.
Commitmen
t is made not
to use the
Company's
assets to
engage in
investment
and
consumptio
n activities
unrelated to
the
performance
of duties. 4.
Commitmen
t is made
that the
remuneratio
n system
developed
by the
Board of
Directors or
the
Remunerati
on
Committee
is linked to
91
Lu Thai Textile Co., Ltd. Annual Report 2021
the
implementat
ion of the
Company's
remedial
measures
for returns.
5.
Commitmen
t is made
that the
conditions
for
exercising
the Equity
Incentive
Plan to be
issued in the
future will
be linked to
the
implementat
ion of the
Company's
remedial
measures
for returns.
6. From the
issuance
date of this
commitment
to the
completion
of the
implementat
ion of the
Company's
public
92
Lu Thai Textile Co., Ltd. Annual Report 2021
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
requirement
s of the
CSRC, I
promise to
issue
supplementa
ry
commitment
then in
accordance
with the
latest
regulations
of CSRC. 7.
Commitmen
t is made to
fulfill the
Company's
93
Lu Thai Textile Co., Ltd. Annual Report 2021
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
compensatio
n
responsibilit
y to the
Company or
investors in
accordance
with the law.
Equity incentive commitments
Other commitments made to
minority interests
Executed on time or not Not
2. Where there had been an earnings forecast for an asset or project and the Reporting Period was still
within the forecast period, explain why the forecast has been reached for the Reporting Period.
□ Applicable √ Not applicable
II Occupation of the Company’s Capital by the Controlling Shareholder or any of Its Related
Parties for Non-Operating Purposes
□ Applicable √ Not applicable
No such cases in the Reporting Period.
94
Lu Thai Textile Co., Ltd. Annual Report 2021
III Irregularities in the Provision of Guarantees
□ Applicable √ Not applicable
No such cases in the Reporting Period.
IV Explanations Given by the Board of Directors Regarding the Latest “Modified Opinion”
on the Financial Statements
□ Applicable √ Not applicable
V Explanations Given by the Board of Directors, the Supervisory Board and the Independent
Directors (if any) Regarding the Independent Auditor's “Modified Opinion” on the Financial
Statements of the Reporting Period
□ Applicable √ Not applicable
VI YoY Changes to Accounting Policies, Estimates or Correction of Material Accounting
Errors
□ Applicable √ Not applicable
No such cases in the Reporting Period.
VII YoY Changes to the Scope of the Consolidated Financial Statements
√ Applicable □ Not applicable
During the Reporting Period, three subsidiaries were newly established by the Company. They are Hainan Huilin International
Holdings Co., Ltd., Libra International Investment Pet. Ltd. and Zibo Banyang Villa Hotel Co., Ltd.
VIII Engagement and Disengagement of Independent Auditor
Current independent auditor:
Name of the domestic independent auditor Grant Thornton China (Special General Partnership)
The Company’s payment to the domestic independent auditor
173.5
(RMB’0,000)
How many consecutive years the domestic independent auditor
3
has provided audit service for the Company
Names of the certified public accountants from the domestic
Cui Xiaoli, He Feng
independent auditor writing signatures on the auditor’s report
How many consecutive years the certified public accountants
2
have provided audit service for the Company
Indicate by tick mark whether the independent auditor was changed for the Reporting Period.
□ Yes √ No
95
Lu Thai Textile Co., Ltd. Annual Report 2021
Independent auditor, financial advisor or sponsor engaged for the audit of internal controls:
√ Applicable □ Not applicable
The Company held the 2020 Annual General Meeting on 20 April 2021 and approved the Proposal on Renewal Engagement of the
2021 Financial Audit and Internal Control Auditor and decided to renew the contract with Grant Thornton China (Special General
Partnership) for 2021 financial audit and internal control affairs and paid RMB1.735 million in total for 2020 financial report audit
and the internal control audit.
IX Possibility of Delisting after Disclosure of this Report
□ Applicable √ Not applicable
X Insolvency and Reorganization
□ Applicable √ Not applicable
No such cases in the Reporting Period.
XI Major Legal Matters
□ Applicable √ Not applicable
No such cases in the Reporting Period.
XII Punishments and Rectifications
□ Applicable √ Not applicable
No such cases in the Reporting Period.
XIII Credit Quality of the Company as well as Its Controlling Shareholder and Actual
Controller
□ Applicable √ Not applicable
XIV Major 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.
96
Lu Thai Textile Co., Ltd. Annual Report 2021
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
No such cases in the Reporting Period.
5. Transactions with Related Finance Companies
□ Applicable √ Not applicable
The Company did not make deposits in, receive loans or credit from and was not involved in any other finance business with any
related finance company or any other related parties.
6. Transactions with Related Parties by Finance Companies Controlled by the Company
□ Applicable √ Not applicable
The finance company controlled by the Company did not make deposits, receive loans or credit from and was not involved in any
other finance business with any related parties.
7. Other Major Related-Party Transactions
□ 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
97
Lu Thai Textile Co., Ltd. Annual Report 2021
No such cases in the Reporting Period.
2. Major guarantees
√ Applicable □ Not applicable
Unit: RMB'0,000
Guarantees provided by the Company as the parent and its subsidiaries for external parties (exclusive of those for subsidiaries)
Disclosur
e date of Count Guaran
the Actual Actual er-gu Term of Having tee for a
Line of Type of Collateral
Obligor guarantee occurrenc guarantee arante guarant expired related
guarantee guarantee (if any)
line e date amount e (if ee or not party or
announce any) not
ment
Guarantees provided by the Company for its subsidiaries
Disclosur
e date of Count Guaran
the Actual Actual er-gu Term of Having tee for a
Line of Type of Collateral
Obligor guarantee occurrenc guarantee arante guarant expired related
guarantee guarantee (if any)
line e date amount e (if ee or not party or
announce any) not
ment
Five
years
since
the
Continent 25 20
10,201.1 Joint-liab approva
al Textile January January 993.95 No Yes
2
ility l of the
Co., Ltd. 2017 2017
board
of the
Compa
ny
Five
years
Continent 25 20
17,533.1 Joint-liab since
al Textile January January 0 No Yes
8
ility the
Co., Ltd. 2017 2017
approva
l of the
98
Lu Thai Textile Co., Ltd. Annual Report 2021
shareho
lders
meeting
of the
Compa
ny
Five
years
since
the
approva
Continent 27 25
26,777.9 Joint-liab l of the
al Textile October October 6,658.79 No Yes
4
ility shareho
Co., Ltd. 2017 2017
lders
meeting
of the
Compa
ny
Three
years
since
the
Continent 22 20
Joint-liab approva
al Textile August 7,013.27 August 2,681.92 No Yes
ility l of the
Co., Ltd. 2018 2018
board
of the
Compa
ny
Three
years
since
Continent the
29 March 27 March Joint-liab
al Textile 3,825.42 3,825.42 No Yes
approva
2019 2019 ility
Co., Ltd. l of the
board
of the
Compa
99
Lu Thai Textile Co., Ltd. Annual Report 2021
ny
Three
Continent years
al Textile since
Co., Ltd./ the
Lu Thai 17 May 17 May Joint-liab approva
11,986.32 8,666.16 No Yes
2021 ility
(Tan 2021 l of the
Chau) board
Textile of the
Co., Ltd. Compa
ny
Three
years
since
Lu Thai
the
(Tan 28 27
Joint-liab approva
Chau) Septembe 6,375.7 Septembe 0 No Yes
ility l of the
Textile r 2019 r 2019
board
Co., Ltd.
of the
Compa
ny
Three
years
since
the
Continent 28 27
10,838.6 Joint-liab approva
al Textile Septembe Septembe 0 No Yes
9
ility l of the
Co., Ltd. r 2019 r 2019
board
of the
Compa
ny
Three
years
Continent 28 27
Joint-liab since
al Textile Septembe 2,869.07 Septembe 0 No Yes
ility the
Co., Ltd. r 2019 r 2019
approva
l of the
100
Lu Thai Textile Co., Ltd. Annual Report 2021
board
of the
Compa
ny
Three
years
since
the
Continent 28 26
Joint-liab approva
al Textile August 12,751.4 August 0 No Yes
ility l of the
Co., Ltd. 2020 2020
board
of the
Compa
ny
Four
years
since
Lu Thai
the
(Tan 15 14
Joint-liab approva
Chau) Decembe 8,925.98 Decembe 938.51 No Yes
ility l of the
Textile r 2020 r 2020
board
Co., Ltd.
of the
Compa
ny
Three
years
since
Lu Thai
the
(Tan 15 14
Joint-liab approva
Chau) Decembe 3,825.42 Decembe 0 No Yes
ility l of the
Textile r 2020 r 2020
board
Co., Ltd.
of the
Compa
ny
Lu An 15 13 Two
Joint-liab
Garments January 3,187.85 January 112.15 No Yes
years
ility
Co., Ltd. 2021 2021 since
101
Lu Thai Textile Co., Ltd. Annual Report 2021
the
approva
l of the
board
of the
Compa
ny
One
year
since
Shandong
the
Lulian 14 13
Joint-liab approva
New Decembe 4,000 Decembe 3,020.72 No Yes
ility
Materials r 2021 r 2022 l of the
Co., Ltd. board
of the
Compa
ny
Total approved line for Total actual amount of
such guarantees in the 19,174.17 such guarantees in the 64,500.33
Reporting Period (B1) Reporting Period (B2)
Total approved line for Total actual balance of
such guarantees at the such guarantees at the
130,111.36 26,897.62
end of the Reporting end of the Reporting
Period (B3) Period (B4)
Guarantees provided between subsidiaries
Disclosur
e date of Count Guaran
the Actual Actual er-gu Term of Having tee for a
Line of Type of Collateral
Obligor guarantee occurrenc guarantee arante guarant expired related
guarantee guarantee (if any)
line e date amount e (if ee or not party or
announce any) not
ment
Total guarantee amount (total of the three kinds of guarantees above)
Total actual guarantee
Total guarantee line approved
amount in the
in the Reporting Period 19,174.17 64,500.33
Reporting Period
(A1+B1+C1)
(A2+B2+C2)
102
Lu Thai Textile Co., Ltd. Annual Report 2021
Total actual guarantee
Total approved guarantee line
balance at the end of
at the end of the Reporting 130,111.36 26,897.62
the Reporting Period
Period (A3+B3+C3)
(A4+B4+C4)
Total actual guarantee amount (A4+B4+C4) as
3.37%
% of the Company’s net assets
Of which:
Balance of guarantees provided for shareholders,
0
actual controller and their related parties (D)
Balance of debt guarantees provided directly or
indirectly for obligors with an over 70% 0
debt/asset ratio (E)
Amount by which the total guarantee amount
0
exceeds 50% of the Company’s net assets (F)
Total of the three amounts above (D+E+F) 0
Joint responsibilities possibly borne or already
borne in the Reporting Period for undue N/A
guarantees (if any)
Explanation about external guarantee violating
N/A
established procedure (if any)
Compound guarantees:
The Company shall abide by relevant disclosure requirements of the Self-Regulatory Guidelines of Shenzhen Stock Exchange for
Listed Companies No.3 - Industry Information Disclosure on textile and garment industry.
Whether the Company provides guarantees or financial assistance for dealers
□ Yes √ No
3. Cash Entrusted for Wealth Management
(1) Cash Entrusted for Wealth Management
√ Applicable □ Not applicable
Overviews of cash entrusted for wealth management during the Reporting Period
RMB’0,000
Overdue amount
Specific type Capital resources Amount incurred Undue Balance Overdue amount with provision for
impairment
Raised funds 69,954 0 0 0
Bank financial
103
Lu Thai Textile Co., Ltd. Annual Report 2021
products
Bank financial
Self-owned funds 52,143 0 0 0
products
Brokerage
Raised funds 5,990 0 0 0
financial products
Brokerage
Self-owned funds 3,000 0 0 0
financial products
Total 131,087 0 0 0
Particulars of entrusted cash management with single significant amount or low security and bad liquidity
√ Applicable □ Not applicable
RMB’0,000
Wh
ethe
r Ove
Am Act
ther rvie
ount ual
Am e is w of
of reco
Met ount Wh wea the
actu very
hod with ethe lth item
al of
of Ann Esti dra r go man and
Nam Type Type Res prof prof
pay ual mat wn thro age the
e of of of ourc Initi End Use its its
Am men yiel e imp ugh men relat
the the the e of al ed of or or
ount t d for prof airm stat t ed
trust trust prod fund date Date fund loss loss
dete refer it (if ent or entr inde
ee ee uct s es in es in
rmin ence any) prov proc ust x
Rep Rep
atio isio edur men for
ortin ortin
n n (if es t inqu
g g
any) plan irin
Peri Peri
in g (if
od od
futu any)
re or
not
Co One Ref
Agri mm -off
Rec er
cult Princ Rais odit repa
202 202 over to
ural Ban ipal- 10,0 ed y yme 3.50 171. 171. Not
0/07 1/01 y on 0 Yes
00 fund and nt of % 88 88 yet the
Ban k prote /02 /08 sche
s fina prin relat
k of cted dule
ncia cipa ed
Chin
l l ann
104
Lu Thai Textile Co., Ltd. Annual Report 2021
deri and
a oun
vati inter
cem
ve ests
ent
asse at
ts mat (No
urity .:
202
0-0
51)
disc
lose
d on
Cni
nfo
on
23
Ma
y
202
0
Ref
er
to
One the
-off relat
repa ed
yme
ann
nt of
Rec oun
Qish Princ Rais Cre prin
202 202 over cem
ang Ban ipal- 5,00 ed dit cipa 3.50 40.7 40.7 Not
0/10 1/01 y on 0 Yes
0 fund asse l % 1 1 yet ent
Ban k prote /16 /14 sche
s ts and (No
k cted dule
inter .:
ests 202
at
0-0
mat
51)
urity
disc
lose
d on
Cni
105
Lu Thai Textile Co., Ltd. Annual Report 2021
nfo
on
23
Ma
y
202
0
Ref
er
to
the
relat
ed
ann
One
oun
-off
cem
repa
ent
yme
nt of (No
Rec
Qish Princ Rais Cre prin .:
202 202 over
ang Ban ipal- 2,75 ed dit cipa 3.50 22.6 22.6 Not 202
0/12 1/03 y on 0 Yes
4 fund asse l % 7 7 yet
Ban k prote /10 /11 sche 0-0
s ts and
k cted dule 51)
inter
disc
ests
at lose
mat d on
urity Cni
nfo
on
23
Ma
y
202
0
One
Rec Ref
Qish Princ Rais Cre -off
202 202 over er
ang Ban ipal- 5,00 ed dit repa 3.50 41.1 41.1 Not
0/12 1/03 y on 0 Yes
0 fund asse yme % 6 6 yet to
Ban k prote /10 /11 sche
s ts nt of the
k cted dule
prin relat
106
Lu Thai Textile Co., Ltd. Annual Report 2021
cipa
ed
l
ann
and
oun
inter
ests cem
at ent
mat (No
urity .:
202
0-0
51)
disc
lose
d on
Cni
nfo
on
23
Ma
y
202
0
Ref
er
One to
Co
-off the
mm
repa relat
odit
Agri yme
y ed
nt of
cult and Rec ann
Princ Rais prin
ural 202 202 fina over oun
Ban ipal- 10,0 ed cipa 3.15 68.3 68.3 Not
Ban 0/12 1/03 ncia y on 0 Yes
00 fund l % 9 9 yet cem
k prote /31 /25 l sche
k of s and ent
cted deri dule
Chin inter (No
vati
a ests .:
ve
at
asse 202
mat
ts 0-0
urity
51)
disc
lose
107
Lu Thai Textile Co., Ltd. Annual Report 2021
d on
Cni
nfo
on
23
Ma
y
202
0
Ref
er
to
the
relat
ed
ann
One
oun
-off
cem
repa
ent
yme
nt of (No
Rec
Qish Princ Rais Cre prin .:
202 202 over
ang Ban ipal- 2,50 ed dit cipa 3.70 22.7 22.7 Not 202
1/03 1/06 y on 0 Yes
0 fund asse l % 1 1 yet
Ban k prote /19 /22 sche 0-0
s ts and
k cted dule 51)
inter
disc
ests
at lose
mat d on
urity Cni
nfo
on
23
Ma
y
202
0
Agri Princ Rais 202 202 Co One Rec Ref
Ban 10,0 3.30 71.6 71.6 Not
ed 1/01 1/04 mm -off over 0 Yes
cult ipal- 00 % 5 5 yet er
k fund /22 /16 odit repa y on
ural prote to
108
Lu Thai Textile Co., Ltd. Annual Report 2021
s y yme sche
Ban cted the
and nt of dule
k of relat
fina prin
Chin ed
ncia cipa
a l l ann
deri and oun
vati inter cem
ve ests ent
asse at
(No
ts mat
.:
urity
202
0-0
51)
disc
lose
d on
Cni
nfo
on
23
Ma
y
202
0
Ref
One er
Co
-off to
mm
repa the
odit
Agri yme
y relat
nt of
cult and Rec ed
Princ Rais prin
ural 202 202 fina over ann
Ban ipal- 10,0 ed cipa 3.70 Not
Ban 1/03 1/06 ncia 83.2 83.2 y on 0 Yes
00 fund l % yet oun
k prote /30 /25 l sche
k of s and cem
cted deri dule
Chin inter ent
vati
a ests (No
ve
at
asse .:
mat
ts 202
urity
0-0
51)
109
Lu Thai Textile Co., Ltd. Annual Report 2021
disc
lose
d on
Cni
nfo
on
23
Ma
y
202
0
Ref
er
to
the
relat
ed
ann
One
Co oun
-off
mm cem
repa
odit ent
Agri yme
y
nt of (No
cult and Rec
Princ Rais prin .:
ural 202 202 fina over
Ban ipal- 5,00 ed cipa 3.70 Not 202
Ban 1/03 1/06 ncia 41.6 41.6 y on 0 Yes
0 fund l % yet
k prote /30 /25 l sche 0-0
k of s and
cted deri dule 51)
Chin inter
vati disc
a ests
ve lose
at
asse
mat d on
ts
urity Cni
nfo
on
23
Ma
y
202
0
9,70 Rais 202 202 Co One 3.50 76.3 76.3 Rec 0 Yes Not
Agri Ban Princ Ref
110
Lu Thai Textile Co., Ltd. Annual Report 2021
0 ed 1/04 1/07 mm -off % 4 4 over yet
cult k ipal- er
fund /27 /23 odit repa y on
ural prote to
s y yme sche
Ban cted the
and nt of dule
k of fina prin relat
Chin ncia cipa ed
a l l ann
deri and oun
vati inter
cem
ve ests
ent
asse at
(No
ts mat
urity .:
202
0-0
51)
disc
lose
d on
Cni
nfo
on
23
Ma
y
202
0
Ref
One
er
-off
to
repa
the
Zho yme
relat
ngta nt of
Rec ed
i Princ Rais prin
202 202 over ann
Secu Secu ipal- 1,50 ed Oth cipa 4.25 Not
1/08 1/10 9.89 9.89 y on 0 Yes oun
ritie rities prote 0 fund er l % yet
/26 /25 sche cem
s cted s and
dule ent
Co., inter
(No
Ltd. ests
.:
at
202
mat
1-0
urity
33)
111
Lu Thai Textile Co., Ltd. Annual Report 2021
disc
lose
d on
Cni
nfo
on
30
Apr
il
202
1
Ref
er
to
the
relat
ed
One ann
-off oun
repa cem
Zho yme ent
ngta nt of (No
Rec
i Princ Rais prin .:
202 202 over
Secu Secu ipal- 1,50 ed Oth cipa 3.95 13.6 13.6 Not 202
1/08 1/11 y on 0 Yes
ritie rities prote 0 fund er l % 3 3 yet 1-0
/26 /23 sche
s cted s and 33)
dule
Co., inter disc
Ltd. ests lose
at d on
mat Cni
urity nfo
on
30
Apr
il
202
1
Zho One Ref
ngta -off Rec er
Princ Rais
i 202 202 repa over to
Secu ipal- 1,49 ed Oth 4.25 Not
Secu 1/08 1/10 yme 9.82 9.82 y on 0 Yes the
rities prote 0 fund er % yet
ritie /26 /25 nt of sche relat
cted s
s prin dule ed
Co., cipa ann
112
Lu Thai Textile Co., Ltd. Annual Report 2021
Ltd. l oun
and cem
inter ent
ests (No
at .:
mat 202
urity 1-0
33)
disc
lose
d on
Cni
nfo
on
30
Apr
il
202
1
Ref
er
to
the
relat
ed
One
ann
-off
oun
repa
cem
Zho yme
ent
ngta nt of
Rec (No
i Princ Rais prin
202 202 over .:
Secu Secu ipal- 1,50 ed Oth cipa 3.95 13.6 13.6 Not
1/08 1/11 y on 0 Yes 202
ritie rities prote 0 fund er l % 3 3 yet
/26 /23 sche 1-0
s cted s and
dule 33)
Co., inter
disc
Ltd. ests
lose
at
d on
mat
Cni
urity
nfo
on
30
Apr
il
202
113
Lu Thai Textile Co., Ltd. Annual Report 2021
1
Ref
er
to
the
relat
ed
One ann
-off oun
repa cem
yme ent
nt of (No
Self Rec
Qish Princ Cre prin .:
-ow 202 202 over
ang Ban ipal- 3,00 dit cipa 3.50 24.4 24.4 Not 202
ned 0/10 1/01 y on 0 Yes
prote 0 asse l % 2 2 yet 0-0
Ban k fund /16 /14 sche
cted ts and 59)
k s dule
inter disc
ests lose
at d on
mat Cni
urity nfo
on
14
Aug
ust
202
0
Ref
er
One
to
-off
the
repa
relat
yme
ed
nt of
Self Rec ann
Qish Princ Cre prin
-ow 202 202 over oun
ang Ban ipal- 5,00 dit cipa 3.50 40.7 40.7 Not
ned 0/11 1/02 y on 0 Yes cem
prote 0 asse l % 1 1 yet
Ban k fund /04 /02 sche ent
cted ts and
k s dule (No
inter
.:
ests
202
at
0-0
mat
59)
urity
disc
lose
114
Lu Thai Textile Co., Ltd. Annual Report 2021
d on
Cni
nfo
on
14
Aug
ust
202
0
Ref
er
to
the
relat
ed
One ann
-off oun
repa cem
yme ent
nt of (No
Self Rec
Qish Princ Cre prin .:
-ow 202 202 over
ang Ban ipal- 5,00 dit cipa 3.50 40.7 40.7 Not 202
ned 0/11 1/02 y on 0 Yes
prote 0 asse l % 1 1 yet 0-0
Ban k fund /11 /09 sche
cted ts and 59)
k s dule
inter disc
ests lose
at d on
mat Cni
urity nfo
on
14
Aug
ust
202
0
One Ref
-off er
Self repa Rec to
Qish Princ Cre
-ow 202 202 yme over the
ang Ban ipal- 6,24 dit 3.50 51.4 51.4 Not
ned 0/12 1/03 nt of y on 0 Yes relat
prote 6 asse % 2 2 yet
Ban k fund /10 /11 prin sche ed
cted ts
k s cipa dule ann
l oun
and cem
115
Lu Thai Textile Co., Ltd. Annual Report 2021
inter ent
ests (No
at .:
mat 202
urity 0-0
59)
disc
lose
d on
Cni
nfo
on
14
Aug
ust
202
0
Ref
er
to
the
relat
ed
One ann
-off oun
repa cem
yme ent
nt of (No
Self Rec
Qish Princ Cre prin .:
-ow 202 202 over
ang Ban ipal- 3,00 dit cipa 3.40 10.5 10.5 Not 202
ned 0/12 1/01 y on 0 Yes
prote 0 asse l % 5 5 yet 0-0
Ban k fund /11 /20 sche
cted ts and 59)
k s dule
inter disc
ests lose
at d on
mat Cni
urity nfo
on
14
Aug
ust
202
0
116
Lu Thai Textile Co., Ltd. Annual Report 2021
Ref
er
to
the
relat
ed
One ann
Co
-off oun
mm
repa cem
odit
yme ent
y
nt of (No
Ever Self and Rec
Princ prin .:
brig -ow 202 202 fina over
Ban ipal- 5,00 cipa 2.70 10.6 10.6 Not 202
ht ned 0/12 1/01 ncia y on 0 Yes
k prote 0 l % 1 1 yet 0-0
Ban fund /18 /18 l sche
cted and 59)
k s deri dule
inter disc
vati
ests lose
ve
at d on
asse
mat Cni
ts
urity nfo
on
14
Aug
ust
202
0
Ref
er
One to
-off the
repa relat
yme ed
nt of ann
Self Rec
Qish Princ Cre prin oun
-ow 202 202 over
ang Ban ipal- 2,60 dit cipa 3.40 Not cem
ned 1/01 1/02 9.82 9.82 y on 0 Yes
prote 0 asse l % yet ent
Ban k fund /07 /19 sche
cted ts and (No
k s dule
inter .:
ests 202
at 0-0
mat 59)
urity disc
lose
d on
117
Lu Thai Textile Co., Ltd. Annual Report 2021
Cni
nfo
on
14
Aug
ust
202
0
Ref
er
to
the
relat
ed
One ann
-off oun
repa cem
yme ent
nt of (No
Self Rec
Qish Princ Cre prin .:
-ow 202 202 over
ang Ban ipal- 2,00 dit cipa 3.40 Not 202
ned 1/01 1/03 6.15 6.15 y on 0 Yes
prote 0 asse l % yet 0-0
Ban k fund /27 /03 sche
cted ts and 59)
k s dule
inter disc
ests lose
at d on
mat Cni
urity nfo
on
14
Aug
ust
202
0
One Ref
-off er
repa to
Self Rec
Qish Princ Cre yme the
-ow 202 202 over
ang Ban ipal- 3,69 dit nt of 3.50 32.7 32.7 Not relat
ned 1/02 1/05 y on 0 Yes
prote 7 asse prin % 8 8 yet ed
Ban k fund /09 /18 sche
cted ts cipa ann
k s dule
l oun
and cem
inter ent
118
Lu Thai Textile Co., Ltd. Annual Report 2021
ests (No
at .:
mat 202
urity 0-0
59)
disc
lose
d on
Cni
nfo
on
14
Aug
ust
202
0
Ref
er
to
the
relat
ed
One ann
-off oun
repa cem
yme ent
nt of (No
Self Rec
Qish Princ Cre prin .:
-ow 202 202 over
ang Ban ipal- 7,00 dit cipa 3.60 81.4 81.4 Not 202
ned 1/02 1/06 y on 0 Yes
prote 0 asse l % 2 2 yet 0-0
Ban k fund /24 /29 sche
cted ts and 59)
k s dule
inter disc
ests lose
at d on
mat Cni
urity nfo
on
14
Aug
ust
202
0
Princ Self 202 202 Cre One Rec Ref
2,60 3.50 8.23 8.23 0 Yes Not
Qish Ban ipal- -ow 1/02 1/03 dit -off over er
119
Lu Thai Textile Co., Ltd. Annual Report 2021
prote 0 ned /24 /31 asse repa % y on yet to
ang k
cted fund ts yme sche the
Ban
s nt of dule relat
k
prin ed
cipa ann
l oun
and cem
inter ent
ests (No
at .:
mat 202
urity 0-0
59)
disc
lose
d on
Cni
nfo
on
14
Aug
ust
202
0
Ref
er
to
One the
-off relat
repa ed
yme ann
nt of oun
Self Rec
Qish Princ Cre prin cem
-ow 202 202 over
ang Ban ipal- 2,00 dit cipa 3.60 17.8 17.8 Not ent
ned 1/03 1/06 y on 0 Yes
prote 0 asse l % 7 7 yet (No
Ban k fund /11 /15 sche
cted ts and .:
k s dule
inter 202
ests 0-0
at 59)
mat disc
urity lose
d on
Cni
nfo
120
Lu Thai Textile Co., Ltd. Annual Report 2021
on
14
Aug
ust
202
0
Ref
er
to
the
relat
ed
One ann
-off oun
repa cem
yme ent
nt of (No
Self Rec
Qish Princ Cre prin .:
-ow 202 202 over
ang Ban ipal- 5,00 dit cipa 3.70 45.4 45.4 Not 202
ned 1/03 1/06 y on 0 Yes
prote 0 asse l % 3 3 yet 0-0
Ban k fund /19 /22 sche
cted ts and 59)
k s dule
inter disc
ests lose
at d on
mat Cni
urity nfo
on
14
Aug
ust
202
0
One Ref
-off er
Zho repa to
ngta yme the
Self Rec
i Princ nt of relat
-ow 202 202 over
Secu Secu ipal- 1,90 Oth prin 2.50 Not ed
ned 1/07 1/08 3.92 3.92 y on 0 Yes
ritie rities prote 0 er cipa % yet ann
fund /02 /02 sche
s cted l oun
s dule
Co., and cem
Ltd. inter ent
ests (No
at .:
121
Lu Thai Textile Co., Ltd. Annual Report 2021
mat 202
urity 0-0
59)
disc
lose
d on
Cni
nfo
on
14
Aug
ust
202
0
Ref
er
to
the
relat
ed
One ann
-off oun
repa cem
Zho yme ent
ngta nt of (No
Self Rec
i Princ prin .:
-ow 202 202 over
Secu Secu ipal- 1,10 Oth cipa 4.35 11.0 11.0 Not 202
ned 1/07 1/09 y on 0 Yes
ritie rities prote 0 er l % 1 1 yet 0-0
fund /02 /28 sche
s cted and 59)
s dule
Co., inter disc
Ltd. ests lose
at d on
mat Cni
urity nfo
on
14
Aug
ust
202
0
131, 1,08 1,08
Total -- -- -- -- -- -- -- 0 -- -- --
087 2.33 2.33
Whether there is the case where the principal cannot be recovered at maturity or other case which may cause impairment for
entrusted asset management
122
Lu Thai Textile Co., Ltd. Annual Report 2021
□ Applicable √ Not applicable
(2) Entrusted Loans
□ Applicable √ Not applicable
No such cases in the Reporting Period.
4. Other Major Contracts
□ Applicable √ Not applicable
No such cases in the Reporting Period.
XVI Other Significant Events
□ Applicable √ Not applicable
No such cases in the Reporting Period.
XVII Significant Events of Subsidiaries
□ Applicable √ Not applicable
123
Lu Thai Textile Co., Ltd. Annual Report 2021
Part VII Share Changes and Shareholder Information
I Share Changes
1. Share Changes
Unit: share
Before Increase/decrease in the Reporting Period (+/-) After
Shares
Shares
as
as
dividen
dividen
Percent New d Percent
Shares d Other Subtotal Shares
age (%) issues convert age (%)
convert
ed from
ed from
capital
profit
reserves
119,038 24,285, -118,31 -94,033, 25,005,
13.87% 2.83%
I. Restricted shares ,937 000 8,700 700 237
1. Shares held by State
2. Shares held by
state-owned legal person
3. Shares held by other 24,285, 24,198, 25,005,
806,537 0.09% -86,300 2.83%
000 700 237
domestic investors
Among which: Shares held
by domestic legal person
Shares held by domestic 24,285, 24,198, 25,005,
806,537 0.09% -86,300 2.83%
000 700 237
natural person
4. Shares held by other 118,232 -118,23 -118,23
13.78%
,400 2,400 2,400
foreign investors
Among which: Shares held 118,232 -118,23 -118,23
13.78%
,400 2,400 2,400
by foreign corporations
Shares held by
foreign natural person
739,093 118,242 118,242 857,33
86.13% 97.17%
II. Unrestricted shares ,385 ,673 ,673 6,058
1. RMB ordinary shares 561,275 65.41% 10,273 10,273 561,28 63.61%
124
Lu Thai Textile Co., Ltd. Annual Report 2021
,069 5,342
2. Domestically listed 177,818 118,232 118,232 296,05
20.72% 33.55%
,316 ,400 ,400 0,716
foreign shares
3. Overseas listed foreign
shares
4. Other
858,132 100.00 24,285, 24,208, 882,34 100.00
III. Total shares -76,027
,322 % 000 973 1,295 %
Reasons for share changes:
√ Applicable □ Not applicable
①According to its 2021 restricted share incentive scheme, the Company have firstly granted 24,285,000 restricted ordinary A shares
that were directly issued to the incentive staff on 7 June 2021.
②Due to the fact that the Company had issued convertible A-share bonds on 9 April 2020, convertible bonds were converted to
3,973 shares in the period from the beginning of 2021 to 31 December 2021.
③80,000 shares of equity incentive restricted stock were repurchased and canceled.
④The Company's restricted B shares held by Tailun (Thailand) Textile Co., Ltd., with a volume of 118,232,400 shares, were
amended and registered as tradable B shares on 12 July 2021.
⑤Due to the retirement of directors and the resignation of executives, the shares held by former directors or executives will be
unlocked and adjusted in accordance with relevant regulations on the executive share management.
Approval of share changes:
√ Applicable □ Not applicable
①On 13 May 2021, the first Extraordinary General Meeting of this year was held in the Company. Deliberated and approved were
Proposal on the Company's '2021 Restricted Share Incentive Scheme (Draft)' and Its Abstracts, Proposal on the Company's
'Implementation and Appraisal Regulations on 2021 Restricted Share Incentive Scheme', and Proposal on Submitting the
Authorization for the Board of Directors to Handle the Company's 2021 Restricted Share Incentive Scheme to the General Meeting of
Shareholders. Self-inspection Report on the Company's 2021 Restricted Share Incentive Plan Insiders and Incentive Subjects'
Trading of the Company's Shares was disclosed. On 17 May 2021, the Company convened the 24th Meeting of the 9th Board of
Directors and the 15th Meeting of the 9th Supervisory Committee. Deliberated and approved were Proposal on Adjusting the List of
the Name and Number of Incentive Staff of 2021 Restricted Share Incentive Scheme and Proposal on Granting Restrictive Stocks to
Incentive Staff. The Board of Directors believed that the granting conditions specified in the incentive scheme had been fulfilled, and
agreed to designate 17 May 2021 as the granting date. 24,285,000 restricted shares were effectively granted to 750 incentive staff.
②On 26 August 2021, the Proposal on Repurchase and Cancel Authorized but Unlocked Restricted Share of Part of the Incentive
Personnel was deliberated and approved at the 26th Meeting of the 9th Board of Directors of the Company, as four of the incentive
personnel of the 2021 restricted share incentive scheme resigned due to personal reasons, who no longer met the condition of being
incentive personnel. The restricted shares held by the four personnel with a volume of 80,000 shares, which were authorized but not
lifted from restricted sales, shall be repurchased and canceled by the Company in accordance with the 2021 Restricted Share
Incentive Scheme and relevant provisions of laws and regulations. The aforesaid matters were deliberated and approved at the 2nd
Extraordinary General Meeting of the Company in 2021 that was held on 13 September 2021.
③118,232,400 shares of non-listed foreign share of the Company held by the shareholder and sponsor of foreign capital Tailun
(Thailand) Textile Co., Ltd. were amended and registered as restricted B shares at Shenzhen Branch of China Securities Depository
and Clearing Corporation Limited on 30 June 2020, whose restricted term was one year and expiration was on 29 June 2021. As
examined and approved by Shenzhen Stock Exchange, the Company's restricted B shares held by Tailun (Thailand) Textile Co., Ltd.,
125
Lu Thai Textile Co., Ltd. Annual Report 2021
with a volume of 118,232,400 shares, were amended and registered as tradable B shares at Shenzhen Branch of China Securities
Depository and Clearing Corporation Limited on 12 July 2021.
Transfer of share ownership:
√ Applicable □ Not applicable
On 7 June 2021, the first-granted restricted shares in the Company's 2021 Restricted Share Incentive Scheme were registered, as
audited and confirmed by Shenzhen Stock Exchange and the Shenzhen branch of China Securities Depository and Clearing
Corporation Limited. The Company completed the procedures of repurchasing and canceling 80,000 shares of restricted share at the
Shenzhen Branch of China Securities Depository and Clearing Corporation Limited on 27 November 2021.
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
See relevant contents of "VI Key Financial Information" under "Part II Corporate Information and Key Financial Information".
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
Restricted Restricted Restricted
Restricted Restricted
Name of the shares amount shares shares amount Restricted
shares relieved shares relieved
shareholders at the increased of at the reasons
of the period date
period-begin the period period-end
Restricted
Tailun (Thailand)
118,232,400 118,232,400 0 shares relieved 12 July 2021
Textile Co., Ltd. before the IPO
The Company
shall
implement the
Locked public provisions on
shares held by restricted sale
Liu Zibin 111,217 111,217
senior by directors,
management supervisors and
senior
management
within tenure
Locked public The Company
Wang Fangshui 110,065 110,065
shares held by shall
senior implement the
126
Lu Thai Textile Co., Ltd. Annual Report 2021
management provisions on
restricted sale
by directors,
supervisors and
senior
management
The Company
shall
implement the
Locked public provisions on
shares held by restricted sale
Qin Guiling 94,906 94,906
senior by directors,
management supervisors and
senior
management
within tenure
The Company
shall
implement the
provisions on
Locked public
restricted sale
shares held by
by directors,
senior
supervisors and
management:
senior
69375 shares;
Zhang Hongmei 69,375 300,000 369,375 management
restricted
within tenure,
shares from
and lift the
equity
lock-up in
incentive:
batches
300000 shares
according to
the share
incentive
scheme
Locked public The Company
62,775 300,000 362,775 shares held by shall
Wang Jiabin
senior implement the
management: provisions on
127
Lu Thai Textile Co., Ltd. Annual Report 2021
62775 shares; restricted sale
restricted by directors,
shares from supervisors and
equity senior
incentive: management
300000 shares within tenure,
and lift the
lock-up in
batches
according to
the share
incentive
scheme
The Company
shall
implement the
provisions on
Locked public
restricted sale
shares held by
by directors,
senior
supervisors and
management:
senior
62325 shares;
Yu Shouzheng 62,325 200,000 262,325 management
restricted
within tenure,
shares from
and lift the
equity
lock-up in
incentive:
batches
200000 shares
according to
the share
incentive
scheme
Locked public The Company
shares held by shall
senior implement the
60,225 300,000 360,225 management: provisions on
Zhang Zhanqi
60225 shares; restricted sale
restricted by directors,
shares from supervisors and
equity senior
128
Lu Thai Textile Co., Ltd. Annual Report 2021
incentive: management
300000 shares within tenure,
and lift the
lock-up in
batches
according to
the share
incentive
scheme
The Company
shall
implement the
provisions on
Locked public
restricted sale
shares held by
by directors,
senior
supervisors and
management:
senior
58275 shares;
Zhang Keming 58,275 200,000 258,275 management
restricted
within tenure,
shares from
and lift the
equity
lock-up in
incentive:
batches
200000 shares
according to
the share
incentive
scheme
The Company
shall
implement the
Locked public provisions on
shares held by restricted sale
Zhang Shougang 54,825 54,825
senior by directors,
management supervisors and
senior
management
within tenure
Zhang Jianxiang 39,112 39,112
Locked public The Company
129
Lu Thai Textile Co., Ltd. Annual Report 2021
shares held by shall
senior implement the
management provisions on
restricted sale
by directors,
supervisors and
senior
management
within tenure
The Company
shall
implement the
Locked public
provisions on
shares held by
Lyu Yongchen 25,312 6,300 19,012 restricted sale
senior
by directors,
management
supervisors and
senior
management
The Company
shall
implement the
provisions on
Locked public
restricted sale
shares held by
by directors,
senior
supervisors and
management:
senior
Shang 22500 shares;
22,500 200,000 222,500 management
Chenggang restricted
within tenure,
shares from
and lift the
equity
lock-up in
incentive:
batches
200000 shares
according to
the share
incentive
scheme
Wang Locked public The Company
16,875 16,875
Changzhao shares held by shall
130
Lu Thai Textile Co., Ltd. Annual Report 2021
senior implement the
management provisions on
restricted sale
by directors,
supervisors and
senior
management
The Company
shall
implement the
provisions on
Locked public
restricted sale
shares held by
by directors,
senior
supervisors and
management:
senior
7500 shares;
Li Wenji 7,500 200,000 207,500 management
restricted
within tenure,
shares from
and lift the
equity
lock-up in
incentive:
batches
200000 shares
according to
the share
incentive
scheme
The Company
shall
implement the
Locked public provisions on
shares held by restricted sale
Liu Zilong 7,500 7,500
senior by directors,
management supervisors and
senior
management
within tenure
Locked public The Company
Dong Shibing 3,750 3,750
shares held by shall
senior implement the
131
Lu Thai Textile Co., Ltd. Annual Report 2021
management provisions on
restricted sale
by directors,
supervisors and
senior
management
within tenure
Lift the lock-up
Restricted in batches
shares from according to
Du Lixin 200,000 200,000
equity the share
incentive incentive
scheme
Lift the lock-up
Restricted in batches
shares from according to
Zhang Wei 200,000 200,000
equity the share
incentive incentive
scheme
Lift the lock-up
Restricted in batches
shares from according to
Fu Guannan 200,000 200,000
equity the share
incentive incentive
scheme
Lift the lock-up
Restricted in batches
shares from according to
Guo Heng 200,000 200,000
equity the share
incentive incentive
scheme
Other subjects of Lift the lock-up
first-granted Restricted in batches
incentive of shares from according to
21,705,000 21,705,000
restricted share equity the share
incentive scheme incentive incentive
in 2021 scheme
132
Lu Thai Textile Co., Ltd. Annual Report 2021
Total 119,038,937 24,205,000 118,238,700 25,005,237 -- --
II. Issuance and Listing of Securities
1. Securities (Exclusive of Preferred Shares) Issued in the Reporting Period
√ Applicable □ Not applicable
Name of
Stock and Approved Terminatio
issue price Issue Listing Disclosure Disclosure
derivative Issue date amount for n date for
(interest) amount date index date
securities listing trading
thereof
Stock
Refer to
the
announcem
ent (No.:
2021-040)
7 June 7 June 4 June
LTTC 3.31 24,285,000 24,285,000 disclosed
2021 2021 2021
on
http://www
.cninfo.co
m.cn/ on 4
June 2021.
Convertible corporate bonds, convertible corporate bonds separately traded and corporate bonds
Other derivative securities
Notes:
The 2021 Restricted Share Incentive Scheme and relevant proposals were deliberated and approved through the 22nd Meeting of the
9th Supervisory Committee, the 13th Meeting of the 9th Board of Supervisors and the 1st Extraordinary General Meeting in 2021.
On 7 June 2021, as audited and confirmed by Shenzhen Stock Exchange and the Shenzhen Branch of China Securities Depository
and Clearing Corporation Limited, the registration of granting 24,285,000 shares of restricted share to 750 incentive personnel was
completed. For details, see relevant announcement disclosed on Securities Times, Shanghai Securities News, China Securities
Journal, Ta Kung Pao and the cninfo website (www.cninfo.com.cn).
2. Changes to Total Shares, Shareholder Structure and Asset and Liability Structures
√ Applicable □ Not applicable
At the beginning of 2021, the Company possessed 858,132,322 shares in total (561,894,181 A shares and 296,238,141 B shares
inclusive). 24,285,000 restricted ordinary A shares issued directly to the incentive personnel were firstly granted and completed by
the Company on 7 June 2021. As convertible bonds of Lu Thai were converted to 3,973 A shares cumulatively from 1 January 2021
to 31 December 2021, the repurchasing and canceling 80,000 shares of equity incentive restricted stock was completed on 27
November 2021. By 31 December 2021, the Company possessed 882,341,295 shares in total (586,103,154 A shares and 296,238,141
133
Lu Thai Textile Co., Ltd. Annual Report 2021
B shares inclusive), which had no significant impact on the Company's assets and liability structure.
3. Existing Staff-Held Shares
□ Applicable √ Not applicable
III Shareholders and Actual Controller
1. Total Number of Shareholders and Their Shareholdings
Unit: share
Number of
preferred
Number of shareholders
Number of
ordinary with resumed
preferred
Number of shareholders at voting rights at
shareholders
ordinary 57,722 the month-end 55,183 0 the month-end 0
with resumed
shareholders prior to the prior to the
voting rights (if
disclosure of disclosure of
any) (see note 8)
this Report this Report (if
any) (see note
8)
5% or greater shareholders or top 10 shareholders
Increas Shares in pledge, marked or
Total
e/decre frozen
Shareh shares Restrict Unrestri
ase in
Name of Nature of olding held at ed cted
the
shareholder shareholder percent the shares shares
Reporti Status Shares
age period- held held
ng
end
Period
Zibo Lucheng
Domestic
Textile 140,35 140,353
non-state-owne 15.91% 0
Investment Co., 3,583 ,583
d legal person
Ltd.
Tailun
Foreign legal 118,23 118,232,
(Thailand) 13.40% 0
person 2,400 400
Textile Co., Ltd.
Central Huijin
Assets State-owned 19,884, -431,20 19,884,
2.25%
Management legal person 100 0 100
Co., Ltd.
National Social Domestic 1.11% 9,810,0 360,00 9,810,0
134
Lu Thai Textile Co., Ltd. Annual Report 2021
Security Fund non-state-owne 51 0 51
Portfolio 413 d legal person
Zhong Ou China
Securities Asset 5,235,9 5,235,9
Other 0.59% 0
Management 00 00
Plan
Dacheng China
Securities Asset 5,235,9 5,235,9
Other 0.59% 0
Management 00 00
Plan
Harvest China
Securities Asset 5,235,9 5,235,9
Other 0.59% 0
Management 00 00
Plan
GF China
Securities Asset 5,235,9 5,235,9
Other 0.59% 0
Management 00 00
Plan
Yinhua China
Securities Asset 5,235,9 5,235,9
Other 0.59% 0
Management 00 00
Plan
Domestic 5,142,2 5,142,2 5,142,2
Liao Cuimeng 0.58%
natural person 00 00 00
Strategic investor or general legal
person becoming a top-10 ordinary
Naught
shareholder due to rights issue (if
any) (see note 3)
Zibo Lucheng Textile Investment Co., Ltd. is the largest shareholder of the Company and
Related or acting-in-concert parties the actual controller. All of other shareholders are people holding public A share or public
among the shareholders above B share and the Company is not able to confirm whether there is associated relationship
or concerted action among other shareholders.
Above shareholders involved in
Entrusting/being entrusted voting Naught
rights and giving up voting rights
Special account for share
repurchases (if any) among the top Naught
10 shareholders (see note 10)
Top 10 unrestricted shareholders
Name of shareholder Unrestricted shares held at the period-end Shares by type
135
Lu Thai Textile Co., Ltd. Annual Report 2021
Type Shares
Zibo Lucheng Textile Investment RMB ordinary
140,353,583 140,353,583
Co., Ltd. share
Domestically
Tailun (Thailand) Textile Co., Ltd. 118,232,400 listed foreign 118,232,400
shares
Central Huijin Assets Management RMB ordinary
19,884,100 19,884,100
Co., Ltd.
share
National Social Security Fund RMB ordinary
9,810,051 9,810,051
Portfolio 413
share
Zhong Ou China Securities Asset RMB ordinary
5,235,900 5,235,900
Management Plan
share
Dacheng China Securities Asset RMB ordinary
5,235,900 5,235,900
Management Plan
share
Harvest China Securities Asset RMB ordinary
5,235,900 5,235,900
Management Plan
share
GF China Securities Asset RMB ordinary
5,235,900 5,235,900
Management Plan
share
Yinhua China Securities Asset RMB ordinary
5,235,900 5,235,900
Management Plan
share
RMB ordinary
Liao Cuimeng 5,142,200 5,142,200
share
Related or acting-in-concert parties
Zibo Lucheng Textile Investment Co., Ltd. is the largest shareholder of the Company and
among top 10 unrestricted public
the actual controller. All of other shareholders are people holding public A share or public
shareholders, as well as between top
B share and the Company is not able to confirm whether there is associated relationship
10 unrestricted public shareholders
or concerted action among other shareholders.
and top 10 shareholders
Top 10 ordinary shareholders
involved in securities margin trading N/A
(if any) (see 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.
□ Yes √ No
No such cases in the Reporting Period.
2. Controlling Shareholder
Nature of the controlling shareholder: Controlled by a natural person
136
Lu Thai Textile Co., Ltd. Annual Report 2021
Type of the controlling shareholder: legal person
Legal
Name of controlling Date of Unified social credit
representative/pers Principal activity
shareholder establishment code
on in charge
Investment on textile,
electricity and chemical;
Zibo Lucheng Textile
Liu Deming 25 September 1998 91370303164200391J purchase, process and
Investment Co., Ltd.
sale of cotton; retail
service etc.
Particulars about
shareholding of controlling
shareholders controlling
N/A
and holding shares of other
listed companies during the
Reporting Period
Change of the controlling shareholder in the Reporting Period:
□ Applicable √ Not applicable
No such cases in the Reporting Period.
3. Actual Controller and Its Acting-in-Concert Parties
Nature of the actual controller: Domestic natural person
Type of the actual controller: natural person
Relations with the Whether gain the right of residence in other
Name of the actual controller Nationality
actual controller countries or regions or not
Liu Zibin In person China No
Concerted action
(including
Liu Deming agreement, China No
relatives, and same
control)
Liu Zibin is the Chairman of the Board and President of Lu Thai Textile Co., Ltd. , Liu
Professions and titles Deming is the Chairman of the Board and GM of Zibo Lucheng Textile Investment Co.,
Ltd.
Particulars about listed companies
with shares ever held by the actual N/A
controller over the past 10 years
Change of the actual controller during the Reporting Period:
□ Applicable √ Not applicable
No such cases in the Reporting Period.
Ownership and control relations between the actual controller and the Company:
137
Lu Thai Textile Co., Ltd. Annual Report 2021
Indicate by tick mark whether the actual controller controls the Company via trust or other ways of asset management.
□ Applicable √ Not applicable
4. Number of Accumulative Pledged Shares held by the Company’s Controlling Shareholder or the Largest
Shareholder as well as Its Acting-in-Concert Parties Accounts for 80% of all shares of the Company held
by Them
□ Applicable √ Not applicable
5. Other 10% or Greater Corporate Shareholders
□ Applicable √ Not applicable
6. Limitations on Shareholding Decrease by the Company’s Controlling Shareholder, Actual Controller,
Reorganizer and Other Commitment Makers
□ Applicable √ Not applicable
IV Specific Implementation of Share Repurchase during the Reporting Period
Progress on any share repurchase
□ Applicable √ Not applicable
Progress on reducing the repurchased shares by means of centralized bidding
□ Applicable √ Not applicable
138
Lu Thai Textile Co., Ltd. Annual Report 2021
Part VIII Preference Shares
□ Applicable √ Not applicable
No preference shares in the Reporting Period.
139
Lu Thai Textile Co., Ltd. Annual Report 2021
Part IX Bonds
√ Applicable □ Not applicable
I Enterprise Bonds
□ Applicable √ Not applicable
No enterprise bonds in the Reporting Period.
II Corporate Bonds
□ Applicable √ Not applicable
No corporate bonds in the Reporting Period.
III Debt Financing Instruments of Non-financial Enterprises
□ Applicable √ Not applicable
No such cases in the Reporting Period.
IV Convertible Corporate Bonds
√ Applicable □ Not applicable
1. 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
140
Lu Thai Textile Co., Ltd. Annual Report 2021
price after the adjustment took effect on and as of 9 July 2020 (the ex-rights and ex-dividend date).
On 3 June 2021, the Company completed the registration of first-granted restricted stocks of restricted share incentive scheme at the
Shenzhen Branch of China Securities Depository and Clearing Corporation Limited (China Clear). 7 June 2021 is designated as the
listing date of first-granted restricted stocks of the Company in 2021. The Company grants 750 subjects of incentive 24,285,000
restricted shares at a price of RMB3.31 per share, accounting for 2.83% of total share capital of the Company. The source of the stock
is RMB A-share ordinary shares issued by the Company to subjects of incentive. Therefore, the conversion price of Lu Thai
Convertible Bond will be adjusted from RMB8.91 per share to RMB8.76 per share, with the adjusted conversion price coming into
force from 7 June 2021.
The 2020 annual general meeting convened on 20 April 2021 deliberated on and adopted the Company's Proposal on Profit
Appropriation Plan in 2020, which distributes cash of RMB0.50 per 10 shares (including tax) with total share capital at the record date
of this distribution scheme as base. The record date of the Company's interest distribution in 2020 is set on 17 June 2021. The ex-date is
set on 18 June 2021. Therefore, the conversion price of Lu Thai Convertible Bond will be adjusted from RMB8.76 per share to
RMB8.71 per share, with the adjusted conversion price coming into force from 18 June 2021 (the ex-date).
2. Accumulative Conversion
√ Applicable □ Not applicable
Converted
shares as %
of total
Unconverte
Accumulati Accumulati shares Unconverte
Total d amount
Abbreviati Total ve amount ve shares issued by d amount
Start date circulation as % of
on amount converted converted the (RMB)
(piece) total
(RMB) (share) Company
amount
before the
start date of
conversion
Lu Thai
15 October 1,400,000, 1,399,868,
Convertibl 14,000,000 131,400.00 14,754 0.00% 99.99%
000.00 600.00
2020
e Bonds
3. Top 10 Convertible Bond Holders
Unit: share
Number of Amount of As % of
convertible bonds convertible bonds convertible bonds
No. Name of holders Nature of holders
held at the held at the held at the
period-end (share) period-end (RMB) period-end
1 Other 675,551 67,555,100.00 4.83%
ICBC Credit
141
Lu Thai Textile Co., Ltd. Annual Report 2021
Suisse Tianxiang
Hybrid Pension
Products-Industria
l and Commercial
Bank of China
National Social Domestic
2 Security Fund non-state-owned 665,778 66,577,800.00 4.76%
Portfolio 1005 legal person
Industrial and
Commercial Bank
of China － China
3 Universal Other 647,295 64,729,500.00 4.62%
Convertible Bond
Securities
Investment Fund
Guosen Securities State-owned legal
4 568,528 56,852,800.00 4.06%
Co., Ltd. person
National Social Domestic
5 Security Fund non-state-owned 493,247 49,324,700.00 3.52%
Portfolio 1002 legal person
Shanghai Pudong
Development
Bank － E Fund
6 Other 492,427 49,242,700.00 3.52%
Yuxiang Return
Bond Securities
Investment Fund
ICBC Credit
Suisse Ruixi Fixed
7 Benefit Pension Other 456,604 45,660,400.00 3.26%
Product-Bank of
China
Fullgoal Fuyi
Progressive Fixed
Benefit Pension
8 Other 444,112 44,411,200.00 3.17%
Product- Industrial
and Commercial
Bank of China
Agricultural Bank
of China-Essence
9 Other 439,291 43,929,100.00 3.14%
Target Income
Bond Securities
142
Lu Thai Textile Co., Ltd. Annual Report 2021
Investment Fund
Genertec
Investment State-owned legal
10 434,645 43,464,500.00 3.10%
Management Co., person
Ltd.
4. Significant Changes in Profitability, Assets Condition and Credit Status of Guarantors
□ Applicable √ Not applicable
5. The Company’s Liabilities, Credit Changes at the Period-end and Cash Arrangements to Repay Debts in
Future Years
For the relevant indicators, please refer to the Part IX Bonds- VIII The Major Accounting Data and the Financial Indicators of the
Recent 2 Years of the Company up the Period-end.
The credit rating of the Company's convertible bonds for the Reporting Period is AA+, which has not changed compared with that of
the same period of last year.
V Losses of Scope of Consolidated Financial Statements during the Reporting Period
Exceeding 10% of Net Assets up the Period-end of Last Year
□ Applicable √ Not applicable
VI Matured Interest-bearing Debt excluding Bonds up the Period-end
□ Applicable √ Not applicable
VII Whether there was any Violation of Rules and Regulations during the Reporting Period
□ Yes √ No
VIII The Major Accounting Data and the Financial Indicators of the Recent 2 Years of the
Company up the Period-end
Unit: RMB’0,000
Item Period-end The end of last year Increase/decrease
Current ratio 2.62 2.68 -2.24%
Asset-liability ratio 35.57% 33.29% 2.28%
Quick ratio 1.49 1.62 -8.02%
Reporting Period Same period of last year YoY increase/decrease
143
Lu Thai Textile Co., Ltd. Annual Report 2021
Net profit after deducting
19,049.26 2,003.91 850.60%
non-recurring profit or loss
Debt/EBITDA ratio 28.94% 22.44% 6.50%
Interest cover (times) 4.49 1.84 144.02%
Cash-to-interest cover (times) 4.03 7.37 -45.32%
EBITDA interest coverage
9.39 7.81 20.23%
ratio
Rate of redemption 100.00% 100.00% 0.00%
Interest coverage 100.00% 100.00% 0.00%
144
Lu Thai Textile Co., Ltd. Annual Report 2021
Part X Financial Statements
I Independent Auditor’s Report
Type of the independent auditor’s opinion Unmodified unqualified opinion
Date of signing this report 27 April 2022
Name of the independent auditor Grant Thornton China (Special General Partnership)
Name of the certified public accountants He Feng, Cui Xiaoli
Text of the Independent Auditor’s Report
To the shareholders of Lu Thai Textile Co., Ltd:
I Opinion
We have audited the financial statements of Lu Thai Textile Co., Ltd. (hereinafter referred to as the “Company”), which comprise the
consolidated and parent company balance sheets as of 31 December 2021, the consolidated and parent company statements of
income, cash flows and changes in owners’ equity for the year then ended, as well as the notes to the financial statements.
In our opinion, the financial statements referred to above present fairly, in all material respects, the consolidated and parent company
financial position of the Company at 31 December 2021, and the consolidated and parent company operating results and cash flows
for the year then ended, in conformity with the Chinese Accounting Standards (CAS).
II Basis for Opinion
We conducted our audits in accordance with the Audit Standards for Chinese Registered Accountants. Our responsibilities under
those standards are further described in the Auditor’s Responsibilities for Audit of Financial Statements section of our report. We are
independent of the Company in accordance with the China Code of Ethics for Certified Public Accountants, and we have fulfilled our
other ethical responsibilities in accordance with the said Code of Ethics. We believe that the audit evidence we have obtained is
sufficient and appropriate to provide a basis for our opinion.
III Key Audit Matters
Key audit matters are those matters that, in our professional judgment, were of most significance in our audit of the financial
statements of the current period. These matters were addressed in the context of our audit of the financial statements as a whole, and
in forming our opinion thereon, and we do not provide a separate opinion on these matters.
(I) Recognition of revenue
For details, please refer to the Note III-26 and the Note V-44 of the financial report.
1. Item description
The businesses of Lu Thai Textile Co., Ltd. mainly are production and sales of yarn-dyed fabrics and shirts. The operation revenue of
the Company in 2021 was RMB 5,238,262,300, of which export income accounted for over 50%. For the income from domestic
sales, the amount of product sales income is recognized when the products are delivered to and confirmed by the purchaser according
to the contract. The income is recognized when the purchaser obtains control of the product. For the income from export sales, the
amount of sales income is recognized when products are declared and depart from port according to the contract, and the bill of
lading is received. The income is recognized when the purchaser obtains control of the product.
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Since income is one of the key performance indicators of Lu Thai Textile Co., Ltd., there is an inherent risk that the management
manipulates income to achieve specific goals or expectations, therefore, we identify income recognition as a key audit item.
2. Audit response
The audit procedures for revenue recognition mainly include:
(1) Understand and evaluate the design effectiveness of internal control related to revenue recognition, and test the effectiveness of
operation;
(2) Through interviewing the management and reviewing the relevant contract terms, understand and evaluate whether the income
confirmation accounting policy meets the requirements of the enterprise accounting standards;
(3) Perform analytical procedures on revenue and costs to analyze the rationality of fluctuations in sales volume, unit price, and gross
profit in each month, current year, and previous year of the current period;
(4) Check the supporting evidence such as sales contract, product delivery order, invoice, customs declaration, shipping order, and
signing receipt;
(5) Select samples to verify the balance and transaction amount;
(6) Select samples and conduct spot checks on relevant information such as export sales revenue, export tax rebate declaration forms,
and China electronic port export data;
(7) Perform a cut-off test on the revenue recognized before and after the balance sheet date, and check the product delivery slip,
invoice, customs declaration, shipping bill, signing receipt, etc., to assess whether the revenue is recognized within the appropriate
period.
(II) Inventory falling price reserves
For details, please refer to the Note III-12 and the Note V-8 of the financial report.
1. Item description
As of 31 December 2021, the inventory balance of Lu Thai Textile Co., Ltd. was RMB2,509,578,300 and the inventory depreciation
reserve was RMB164,231,500. The management withdrew the inventory falling price reserves with significant judgments and
estimates, and therefore, we identify inventory falling price reserves as a key audit item.
2. Audit response
The audit procedures for inventory falling price reserves mainly include:
(1) Understand and evaluate the design effectiveness of the internal control related to the provision of inventory decline price, and
test the effectiveness of operation;
(2) Understand and evaluate the appropriateness of the company's inventory depreciation reserve provision policy;
(3) Monitor the inventory and pay attention to the status of the inventory, check whether the defective and inventory with long aging
have been identified;
(4) Obtain the inventory age table, and conduct an analytical review of the long-age inventory status and turnover;
(5) Check the changes in the inventory depreciation reserves accrued in previous years and evaluate the rationality of the changes in
inventory depreciation reserves;
(6) Obtain the inventory falling price reserves calculation sheet; recheck and evaluate the rationality of major estimations made by
the management during the determination of net realizable value; conduct the recalculation, check the selling price after the period
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Lu Thai Textile Co., Ltd. Annual Report 2021
and analyze the rationality of the predicted selling price.
(III) Assessment of fair value of financial assets measured at fair value and changes included in current profit or loss
Please refer to Notes to Financial Statements (Note III 10 and Note V 2, 13 and 52) for details about relevant information disclosure.
1. Event Description
Up to 31 December 2021, the balance of financial asset measured based on the fair value whose variations were included the current
profit and loss of Lu Thai Textiles was RMB191.779 million, of which, the fair value of financial asset classified into the tier-2 input
value by adopting the observable input value was RMB1.727 million, and the fair value of financial asset classified into the tier-3 input
value by adopting the non-observable input value was RMB190.052 million. Considering that the financial asset’s fair value variations
had significant impact on the profit and loss of Lu Thai Textiles in 2021, and Lu Thai Textiles adopted the valuation technique to
determine its fair value (usually, the valuation technique involves various assumptions and estimations based on subjective judgment,
and huge difference in the estimated fair value of financial instrument may be caused by adopting different valuation techniques or
assumptions), we recognized the event as the key audit event.
2. Audit response
Our audit procedures geared to the evaluation of the financial instrument’s fair value mainly include:
(1) Study and evaluate the effectiveness of the designed internal control for the valuation of financial instruments and test the
operational effectiveness;
(2) Assess the professional quality, competence and objectiveness of the independent appraiser employed by the Company’s
management; evaluate the rationality of various assumptions applied by the independent appraiser in the evaluation report and the
appropriateness of the financial instrument valuation models;
(3) Assess the rationality and appropriateness of the observable key input value applied during the valuation of the tier-2 fair value;
(4) Recheck the rationality, appropriateness and calculation accuracy of the key input value during the fair value assessment for the
tier-3 financial instrument measured based the fair value and involving the management’s major judgment.
IV Other Information
The Company’s management is responsible for the other information. The other information comprises all of the information included
in the Company’s 2021 Annual Report other than the financial statements and our auditor’s report thereon.
Our opinion on the financial statements does not cover the other information and we do not express any form of assurance conclusion
thereon.
In connection with our audit of the financial statements, our responsibility is to read the other information and, in doing so, consider
whether the other information is materially inconsistent with the financial statements or our knowledge obtained in the audit or
otherwise appears to be materially misstated.
If, based on the work we have performed, we conclude that there is a material misstatement of this other information, we are required to
report that fact. We have nothing to report in this regard.
V Responsibilities of Management and Those Charged with Governance for Financial Statements
The Company’s management (hereinafter referred to as the “Management”) is responsible for the preparation of the financial
statements that give a fair view in accordance with CAS, and for designing, implementing and maintaining such internal control as the
management determines is necessary to enable the preparation of financial statements that are free from material misstatement, whether
due to fraud or error.
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In preparing the financial statements, the management is responsible for assessing the Company’s ability to continue as a going concern,
disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless the management
either intends to liquidate the Company or to cease operations, or have no realistic alternative but to do so.
Those charged with governance are responsible for overseeing the Company’s financial reporting process.
VI Auditor’s Responsibilities for Audit of Financial Statements
Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement,
whether due to fraud or error, and to issue an auditor’s report that includes our opinion. Reasonable assurance is a high level of
assurance, but is not a guarantee that an audit conducted in accordance with CAS will always detect a material misstatement when it
exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could
reasonably be expected to influence the economic decisions of users taken on the basis of these financial statements.
As part of an audit in accordance with CAS, we exercise professional judgment and maintain professional skepticism throughout the
audit. We also:
(1) Identify and assess the risks of material misstatement of the financial statements, whether due to fraud or error, design and perform
audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion.
The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve
collusion, forgery, intentional omissions, misrepresentations, or the override of internal control.
(2) Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the
circumstances.
(3) Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures
made by the management.
(4) Conclude on the appropriateness of the management’s use of the going concern basis of accounting and, based on the audit evidence
obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on the Company’s ability
to continue as a going concern. If we conclude that a material uncertainty exists, we are required by CAS to draw users’ attention in our
auditor’s report to the related disclosures in the financial statements or, if such disclosures are inadequate, we should modify our
opinion. Our conclusions are based on the audit evidence obtained up to the date of our auditor’s report. However, future events or
conditions may cause the Company to cease to continue as a going concern.
(5) Evaluate the overall presentation, structure and content of the financial statements, and whether the financial statements represent
the underlying transactions and events in a manner that achieves fair presentation.
(6) Obtain sufficient appropriate audit evidence regarding the financial information of the entities or business activities within the
Company to express an opinion on the financial statements. We are responsible for the direction, supervision and performance of the
Company audit. We remain solely responsible for our audit opinion.
We communicate with those charged with governance of the Company regarding the planned scope and timing of the audit and
significant audit findings, including any noteworthy deficiencies in internal control that we identify during our audit.
We also provide those charged with governance with a statement that we have complied with relevant ethical requirements regarding
independence, and communicate with them all relationships and other matters that may reasonably be thought to bear on our
independence, and where applicable, related safeguards (if applicable).
From the matters communicated with those charged with governance, we determine those matters that were of most significance in the
audit of the financial statements of the current period and are therefore the key audit matters. We describe these matters in our auditor’s
report unless law or regulation precludes public disclosure about the matter or when, in extremely rare circumstances, we determine
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Lu Thai Textile Co., Ltd. Annual Report 2021
that a matter should not be communicated in our report because the adverse consequences of doing so would reasonably be expected to
outweigh the public interest benefits of such communication.
Grant Thornton China Chinese CPA
(Special General Partnership) (Engagement Partner):
Chinese CPA:
Beijing China 27 April 2022
II Financial Statements
Currency unit for the financial statements and the notes thereto: RMB
1. Consolidated Balance Sheet
Prepared by Lu Thai Textile Co., Ltd.
31 December 2021
Unit: RMB
Item 31 December 2021 31 December 2020
Current assets:
Monetary assets 1,999,712,889.35 1,400,478,034.81
Held-for-trading financial assets 1,727,000.00 268,456,216.98
Notes receivable 227,740,247.89 182,994,110.86
Accounts receivable 647,277,198.51 522,425,219.87
Accounts receivable financing 34,663,071.88 55,150,926.34
Prepayments 54,545,954.20 19,611,775.28
Other receivables 74,191,613.22 105,710,818.69
Including: Interest receivable
Dividends receivable 47,025,975.44 75,488,652.49
Inventories 2,345,346,794.28 1,988,968,681.64
Contract assets
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Lu Thai Textile Co., Ltd. Annual Report 2021
Held-for-sale assets
Current portion of non-current
45,750,018.30
assets
Other current assets 55,992,522.81 433,432,258.63
Total current assets 5,441,197,292.14 5,022,978,061.40
Non-current assets:
Long-term receivables 41,053,183.15
Long-term equity investment 169,443,106.66 138,079,577.25
Other equity instrument investment
Other non-current financial assets 190,052,000.00 156,915,620.25
Investment property 21,362,302.03 22,263,668.85
Fixed assets 5,561,601,374.44 5,661,592,991.66
Construction in progress 237,579,082.99 356,273,197.49
Right-of-use assets 257,019,286.15
Intangible assets 363,130,978.14 373,543,480.84
Development costs
Goodwill 20,563,803.29 20,563,803.29
Long-term deferred expenses 672,601.04 118,340,494.60
Deferred income tax assets 138,516,136.50 122,865,841.69
Other non-current assets 586,083,308.25 95,434,040.18
Total non-current assets 7,546,023,979.49 7,106,925,899.25
Total assets 12,987,221,271.63 12,129,903,960.65
Current liabilities:
Short-term borrowings 1,011,034,138.32 930,871,008.19
Held-for-trading financial liabilities
Derivative financial liabilities
Notes payable
Accounts payable 335,401,371.30 243,262,473.69
Advances from customers
Contract liabilities 204,967,348.96 141,339,705.62
Payroll payable 272,014,296.09 265,648,198.38
Taxes payable 29,457,702.72 36,468,978.77
Other payables 97,200,565.31 17,587,470.79
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Including: Interest payable
Dividends payable 441,113.64 441,113.64
Current portion of non-current
8,877,404.52 43,149,400.13
liabilities
Other current liabilities 120,434,721.81 192,574,674.68
Total current liabilities 2,079,387,549.03 1,870,901,910.25
Non-current liabilities:
Long-term borrowings 684,962,473.24 495,520,342.78
Bonds payable 1,395,480,652.71 1,350,171,526.97
Lease liabilities 121,357,658.41
Long-term payables
Long-term payroll payable 57,384,062.39 62,137,656.00
Provisions
Deferred income 188,958,133.78 173,862,983.31
Deferred income tax liabilities 92,571,310.14 85,633,161.44
Other non-current liabilities
Total non-current liabilities 2,540,714,290.67 2,167,325,670.50
Total liabilities 4,620,101,839.70 4,038,227,580.75
Owners’ equity:
Share capital 882,341,295.00 858,132,322.00
Other equity instruments 71,384,656.84 71,386,451.81
Capital reserves 340,587,387.65 255,912,488.01
Less: Treasury stock 78,908,300.00
Other comprehensive income -36,423,748.37 1,308,922.89
Specific reserve
Surplus reserves 1,215,124,336.54 1,154,017,457.79
General reserve
Retained earnings 5,589,201,772.37 5,346,819,948.22
Total equity attributable to owners of
7,983,307,400.03 7,687,577,590.72
the Company as the parent
Non-controlling interests 383,812,031.90 404,098,789.18
Total owners’ equity 8,367,119,431.93 8,091,676,379.90
Total liabilities and owners’ equity 12,987,221,271.63 12,129,903,960.65
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Lu Thai Textile Co., Ltd. Annual Report 2021
Legal representative: Liu Zibin Chief Accountant: Zhang Hongmei
Financial Manager: Zhang Keming
2. Balance Sheet of the Company as the Parent
Unit: RMB
Item 31 December 2021 31 December 2020
Current assets:
Monetary assets 977,713,296.25 729,437,231.33
Held-for-trading financial assets 1,286,000.00 163,636,075.34
Derivative financial assets
Notes receivable 132,028,322.80 108,863,689.79
Accounts receivable 425,711,738.27 326,166,935.10
Accounts receivable financing 29,361,263.86 48,764,088.05
Prepayments 31,580,697.18 13,059,806.74
Other receivables 2,060,180,025.87 1,500,882,682.19
Including: Interest receivable
Dividends receivable 94,525,975.44 75,488,652.49
Inventories 1,230,487,585.69 1,097,438,610.46
Contract assets
Available-for-sale assets
Current portion of non-current
45,750,018.30
assets
Other current assets 205,568.38 247,860,882.02
Total current assets 4,888,554,498.30 4,281,860,019.32
Non-current assets:
Long-term receivables 41,053,183.15
Long-term equity investments 2,818,047,993.16 2,555,150,859.13
Investments in other equity
instruments
Other non-current financial assets 178,052,000.00 144,915,620.25
Investment property 65,888,260.77 29,734,239.22
Fixed assets 2,305,059,429.29 2,471,686,117.72
Construction in progress 12,268,416.12 48,694,822.74
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Right-of-use assets 116,279,075.24
Intangible assets 209,970,392.83 225,128,308.75
Development costs
Goodwill
Long-term deferred expenses 672,601.04 1,406,347.76
Deferred income tax assets 56,003,944.38 65,729,304.26
Other non-current assets 366,112,002.79 7,936,745.28
Total non-current assets 6,128,354,115.62 5,591,435,548.26
Total assets 11,016,908,613.92 9,873,295,567.58
Current liabilities:
Short-term borrowings 615,181,318.98 332,466,931.13
Held-for-trading financial liabilities
Derivative financial liabilities
Notes payable
Accounts payable 146,714,973.77 132,231,596.74
Advances from customers
Contract liabilities 58,280,121.24 56,841,289.66
Payroll payable 190,277,420.32 202,694,515.93
Taxes payable 15,288,956.94 21,896,035.49
Other payables 92,914,225.42 79,668,657.80
Including: Interest payable
Dividends payable 441,113.64 441,113.64
Current portion of non-current
8,605,336.67 4,000,000.00
liabilities
Other current liabilities 64,202,247.99 166,257,466.30
Total current liabilities 1,191,464,601.33 996,056,493.05
Non-current liabilities:
Long-term borrowings 684,962,473.24 495,520,342.78
Bonds payable 1,395,480,652.71 1,350,171,526.97
Lease liabilities 118,780,465.67
Long-term payables
Long-term payroll payable 57,384,062.39 62,137,656.00
Provisions
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Deferred income 125,360,026.35 131,546,549.87
Deferred income tax liabilities 67,488,141.18 58,927,115.71
Other non-current liabilities
Total non-current liabilities 2,449,455,821.54 2,098,303,191.33
Total liabilities 3,640,920,422.87 3,094,359,684.38
Owners’ equity:
Share capital 882,341,295.00 858,132,322.00
Other equity instruments 71,384,656.84 71,386,451.81
Capital reserves 401,967,421.89 317,292,522.25
Less: Treasury stock 78,908,300.00
Other comprehensive income -293,580.24 -424,313.33
Specific reserve
Surplus reserves 1,212,015,596.90 1,150,908,718.15
Retained earnings 4,887,481,100.66 4,381,640,182.32
Total owners’ equity 7,375,988,191.05 6,778,935,883.20
Total liabilities and owners’ equity 11,016,908,613.92 9,873,295,567.58
3. Consolidated Income Statement
Unit: RMB
Item 2021 2020
1. Revenue 5,238,262,348.85 4,751,222,464.14
Including: Operating revenue 5,238,262,348.85 4,751,222,464.14
2. Costs and expenses 4,965,632,056.69 4,631,408,764.38
Including: Cost of sales 4,152,981,075.85 3,737,984,083.45
Taxes and surcharges 59,485,640.58 66,238,984.28
Selling expense 119,883,494.68 125,717,288.31
Administrative expense 335,380,025.54 360,656,722.39
Development cost 252,912,911.63 231,265,031.12
Finance costs 44,988,908.41 109,546,654.83
Including: Interest expense 65,526,817.38 67,914,115.97
Interest income 40,686,077.22 25,174,851.32
Add: Other income 58,686,029.71 59,711,274.11
Return on investment (“-” for loss) 50,449,943.70 145,968,403.88
Including: Share of profit or loss of joint ventures and -10,755,175.91 -5,146,737.73
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Lu Thai Textile Co., Ltd. Annual Report 2021
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) 16,415,304.41 -107,002,594.56
Credit impairment loss (“-” for loss) 1,590,092.00 -21,892,753.70
Asset impairment loss (“-” for loss) -85,623,858.26 -113,460,308.96
Asset disposal income (“-” for loss) 57,175,147.62 -317,803.17
3. Operating profit (“-” for loss) 371,322,951.34 82,819,917.36
Add: Non-operating income 5,417,119.07 6,466,024.36
Less: Non-operating expense 13,424,054.88 4,468,911.08
4. Profit before tax (“-” for loss) 363,316,015.53 84,817,030.64
Less: Income tax expense 35,993,079.51 -4,273,027.75
5. Net profit (“-” for net loss) 327,322,936.02 89,090,058.39
5.1 By operating continuity
5.1.1 Net profit from continuing operations (“-” for net
327,322,936.02 89,090,058.39
loss)
5.1.2 Net profit from discontinued operations (“-” for net
loss)
5.2 By ownership
5.2.1 Net profit attributable to shareholders of the Company as
347,609,693.30 97,308,593.36
the parent
5.2.2 Net profit attributable to non-controlling interests -20,286,757.28 -8,218,534.97
6. Other comprehensive income, net of tax -37,732,671.26 -90,369,605.96
Attributable to owners of the Company as the parent -37,732,671.26 -90,317,648.86
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
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Lu Thai Textile Co., Ltd. Annual Report 2021
6.1.5 Other
6.2 Items that will be reclassified to profit or loss -37,732,671.26 -90,317,648.86
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
-37,716,717.19 -90,065,261.51
currency-denominated financial statements
6.2.7 Other -15,954.07 -252,387.35
Attributable to non-controlling interests -51,957.10
7. Total comprehensive income 289,590,264.76 -1,279,547.57
Attributable to owners of the Company as the parent 309,877,022.04 6,990,944.50
Attributable to non-controlling interests -20,286,757.28 -8,270,492.07
8. Earnings per share
8.1 Basic earnings per share 0.39 0.11
8.2 Diluted earnings per share 0.36 0.11
Where business combinations under common control occurred in the current period, the net profit achieved by the acquirees before the
combinations was RMB0.00, with the amount for the same period of last year being RMB0.00.
Legal representative: Liu Zibin Chief Accountant: Zhang Hongmei
Financial Manager: Zhang Keming
4. Income Statement of the Company as the Parent
Unit: RMB
Item 2021 2020
1. Operating revenue 3,647,402,509.21 3,275,667,055.94
Less: Cost of sales 2,824,451,867.80 2,594,772,449.08
Taxes and surcharges 39,686,908.16 43,852,034.14
Selling expense 85,257,586.04 90,924,780.86
Administrative expense 212,434,986.88 223,829,705.58
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Lu Thai Textile Co., Ltd. Annual Report 2021
R&D expense 178,176,401.25 155,781,784.46
Finance costs 14,374,893.63 63,053,311.41
Including: Interest expense 33,309,727.39 29,507,836.33
Interest income 33,021,266.87 12,603,128.63
Add: Other income 33,778,765.18 40,725,385.28
Return on investment (“-” for loss) 298,576,196.15 438,956,821.28
Including: Share of profit or loss of joint ventures and
-10,755,175.91 -5,146,737.73
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) 20,786,304.41 -111,822,736.20
Credit impairment loss (“-” for loss) 3,935,670.51 -20,099,155.46
Asset impairment loss (“-” for loss) -34,971,247.79 -78,930,638.97
Asset disposal income (“-” for loss) 57,897,322.56 -557,994.15
2. Operating profit (“-” for loss) 673,022,876.47 371,724,672.19
Add: Non-operating income 4,866,312.90 4,554,095.15
Less: Non-operating expense 11,591,362.60 1,671,120.09
3. Profit before tax (“-” for loss) 666,297,826.77 374,607,647.25
Less: Income tax expense 55,229,039.28 7,106,585.68
4. Net profit (“-” for net loss) 611,068,787.49 367,501,061.57
4.1 Net profit from continuing operations (“-” for net loss) 611,068,787.49 367,501,061.57
4.2 Net profit from discontinued operations (“-” for net loss)
5. Other comprehensive income, net of tax 130,733.09 -424,313.33
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 130,733.09 -424,313.33
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Lu Thai Textile Co., Ltd. Annual Report 2021
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 130,733.09 -424,313.33
6. Total comprehensive income 611,199,520.58 367,076,748.24
7. Earnings per share
7.1 Basic earnings per share 0.71 0.43
7.2 Diluted earnings per share 0.64 0.41
5. Consolidated Cash Flow Statement
Unit: RMB
Item 2021 2020
1. Cash flows from operating activities:
Proceeds from sale of commodities and rendering of services 4,877,137,793.95 4,549,188,241.18
Tax rebates 118,978,037.24 106,212,520.44
Cash generated from other operating activities 99,760,735.48 119,614,464.43
Subtotal of cash generated from operating activities 5,095,876,566.67 4,775,015,226.05
Payments for commodities and services 3,075,758,673.05 2,382,593,861.18
Cash paid to and for employees 1,394,301,069.51 1,443,277,224.36
Taxes paid 139,250,588.74 144,996,754.22
Cash used in other operating activities 138,429,229.89 210,611,463.40
Subtotal of cash used in operating activities 4,747,739,561.19 4,181,479,303.16
Net cash generated from/used in operating activities 348,137,005.48 593,535,922.89
2. Cash flows from investing activities:
Proceeds from disinvestment 1,318,751,294.68 460,131,152.08
Return on investment 41,433,282.80 149,130,790.55
Net proceeds from the disposal of fixed assets, intangible assets 4,645,043.40 102,560,031.90
158
Lu Thai Textile Co., Ltd. Annual Report 2021
and other long-lived assets
Net proceeds from the disposal of subsidiaries and other business
95,860,000.00 76,625,459.68
units
Cash generated from other investing activities 98,294,038.33 62,232,909.13
Subtotal of cash generated from investing activities 1,558,983,659.21 850,680,343.34
Payments for the acquisition of fixed assets, intangible assets and
430,591,025.71 580,156,640.57
other long-lived assets
Payments for investments 760,870,000.00 1,052,215,000.00
Cash used in other investing activities 339,043,598.92 6,483,653.47
Subtotal of cash used in investing activities 1,530,504,624.63 1,638,855,294.04
Net cash generated from/used in investing activities 28,479,034.58 -788,174,950.70
3. Cash flows from financing activities:
Capital contributions received 80,122,550.00 50,000,000.00
Including: Capital contributions by non-controlling interests to
50,000,000.00
subsidiaries
Borrowings raised 1,631,139,389.49 3,398,339,439.58
Cash generated from other financing activities 174,000,000.00
Subtotal of cash generated from financing activities 1,711,261,939.49 3,622,339,439.58
Repayment of borrowings 1,359,634,451.98 2,529,112,565.20
Interest and dividends paid 84,499,928.33 199,362,285.43
Including: Dividends paid by subsidiaries to non-controlling
59,618,853.07
interests
Cash used in other financing activities 63,817,316.19 160,200,000.00
Subtotal of cash used in financing activities 1,507,951,696.50 2,888,674,850.63
Net cash generated from/used in financing activities 203,310,242.99 733,664,588.95
4. Effect of foreign exchange rates changes on cash and cash
-6,449,805.63 -21,054,172.59
equivalents
5. Net increase in cash and cash equivalents 573,476,477.42 517,971,388.55
Add: Cash and cash equivalents, beginning of the period 1,396,530,407.47 878,559,018.92
6. Cash and cash equivalents, end of the period 1,970,006,884.89 1,396,530,407.47
6. Cash Flow Statement of the Company as the Parent
Unit: RMB
Item 2021 2020
1. Cash flows from operating activities:
159
Lu Thai Textile Co., Ltd. Annual Report 2021
Proceeds from sale of commodities and rendering of services 3,312,220,027.60 3,132,082,316.96
Tax rebates 24,444,047.02 37,614,591.44
Cash generated from other operating activities 51,752,143.18 77,891,597.93
Subtotal of cash generated from operating activities 3,388,416,217.80 3,247,588,506.33
Payments for commodities and services 2,128,657,555.64 2,217,942,543.44
Cash paid to and for employees 837,615,352.93 889,963,420.68
Taxes paid 83,471,328.14 79,127,361.47
Cash used in other operating activities 97,694,765.19 154,885,854.59
Subtotal of cash used in operating activities 3,147,439,001.90 3,341,919,180.18
Net cash generated from/used in operating activities 240,977,215.90 -94,330,673.85
2. Cash flows from investing activities:
Proceeds from disinvestment 587,311,294.68 514,020,256.94
Return on investment 255,233,323.75 316,780,237.87
Net proceeds from the disposal of fixed assets, intangible assets
6,091,843.79 114,941,392.08
and other long-lived assets
Net proceeds from the disposal of subsidiaries and other business
263,014,351.00
units
Cash generated from other investing activities 970,377,365.78 1,484,210,870.85
Subtotal of cash generated from investing activities 2,082,028,179.00 2,429,952,757.74
Payments for the acquisition of fixed assets, intangible assets and
68,414,055.96 70,577,315.74
other long-lived assets
Payments for investments 640,977,947.65 955,125,000.00
Net payments for the acquisition of subsidiaries and other
business units
Cash used in other investing activities 1,729,113,808.44 2,085,396,649.29
Subtotal of cash used in investing activities 2,438,505,812.05 3,111,098,965.03
Net cash generated from/used in investing activities -356,477,633.05 -681,146,207.29
3. Cash flows from financing activities:
Capital contributions received 80,122,550.00
Borrowings raised 800,983,356.71 2,225,619,549.50
Cash generated from other financing activities 58,215,720.00 168,980,600.00
Subtotal of cash generated from financing activities 939,321,626.71 2,394,600,149.50
Repayment of borrowings 312,407,315.63 791,236,980.16
Interest and dividends paid 75,954,642.88 112,547,531.31
Cash used in other financing activities 182,836,702.32 236,619,700.00
160
Lu Thai Textile Co., Ltd. Annual Report 2021
Subtotal of cash used in financing activities 571,198,660.83 1,140,404,211.47
Net cash generated from/used in financing activities 368,122,965.88 1,254,195,938.03
4. Effect of foreign exchange rates changes on cash and cash
-3,255,947.76 -9,693,224.69
equivalents
5. Net increase in cash and cash equivalents 249,366,600.97 469,025,832.20
Add: Cash and cash equivalents, beginning of the period 728,346,695.28 259,320,863.08
6. Cash and cash equivalents, end of the period 977,713,296.25 728,346,695.28
7. Consolidated Statements of Changes in Owners’ Equity
161
Lu Thai Textile Co., Ltd. Annual Report 2021
2021
Unit: RMB
2021
Equity attributable to owners of the Company as the parent
Other equity instruments Other Non-co Total
Item
Less: Retaine
Share Capital compre Specific Surplus General ntrolling owners’
Prefer Perpe
Treasur d Other Subtotal
capital reserves hensive reserve reserves reserve interests equity
red tual Other
y stock earnings
shares bonds income
858,1 71,38 1,154,0 5,346,8 7,687,5 8,091,6
1. Balances as at the 255,912 1,308,9 404,098
32,32 6,451. 17,457. 19,948. 77,590. 76,379.
,488.01 22.89 ,789.18
end of the prior year 2.00 81 79 22 72 90
Add: Adjustments for
changed accounting
policies
Adjustments for
corrections of
previous errors
Adjustments for
business
combinations under
common control
Other adjustments
858,1 71,38 1,154,0 5,346,8 7,687,5 8,091,6
2. Balances as at the 255,912 1,308,9 404,098
32,32 6,451. 17,457. 19,948. 77,590. 76,379.
,488.01 22.89 ,789.18
beginning of the year 2.00 81 79 22 72 90
162
Lu Thai Textile Co., Ltd. Annual Report 2021
3. Increase/ decrease 24,20
-1,79 84,674, 78,908, -37,732, 61,106, 242,381 295,729 -20,286, 275,443
in the period (“-” for 8,973.
4.97 899.64 300.00 671.26 878.75 ,824.15 ,809.31 757.28 ,052.03
00
decrease)
3.1 Total
-37,732, 347,609 309,877 -20,286, 289,590
comprehensive 671.26 ,693.30 ,022.04 757.28 ,264.76
income
3.2 Capital 24,20
-1,79 84,674, 78,908, 29,973, 29,973,
increased and 8,973.
4.97 899.64 300.00 777.67 777.67
00
reduced by owners
3.2.1 Ordinary shares 24,20
55,949, 80,158, 80,158,
increased by 8,973.
334.21 307.21 307.21
00
shareholders
3.2.2 Capital
increased by holders
0.00
of other equity
instruments
3.2.3 Share-based
28,325, 28,325, 28,325,
payments included in 788.60 788.60 788.60
owners’ equity
-1,79 399,776 78,908, -78,510, -78,510,
3.2.4 Other 4.97 .83 300.00 318.14 318.14
--105,22
3.3 Profit 61,106, -44,120, -44,120,
7,869.1
878.75 990.40 990.40
distribution 5
3.3.1 61,106, -61,106,
878.75 878.75
Appropriation to
163
Lu Thai Textile Co., Ltd. Annual Report 2021
surplus reserves
3.3.2
Appropriation to
general reserve
3.3.3
Appropriation to -44,120, -44,120, -44,120,
990.40 990.40 990.40
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
defined benefit
pension schemes
transferred to retained
164
Lu Thai Textile Co., Ltd. Annual Report 2021
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
882,3 71,38 1,215,1 5,589,2 7,983,3 8,367,1
4. Balances as at the 340,587 78,908, -36,423, 383,812
41,29 4,656. 24,336. 01,772. 07,400. 19,431.
,387.65 300.00 748.37 ,031.90
end of the period 5.00 84 54 37 03 93
2020
Unit: RMB
2020
Equity attributable to owners of the Company as the parent
Other equity instruments
Item Other Non-cont Total
Prefe Less: Retaine
Share Perpe Capital compre Specific Surplus General rolling owners’
rred Treasur d Other Subtotal
capital tual Other reserves hensive reserve reserves reserve interests equity
share y stock earnings
bonds income
s
165
Lu Thai Textile Co., Ltd. Annual Report 2021
858,1 1,117,2 7,697,1
1. Balances as at the 258,046 91,626, 5,372,07 602,169, 8,299,304
21,54 67,351. 35,324.
,245.42 571.75 3,615.12 223.52 ,548.44
end of the prior year 1.00 63 92
Add: Adjustments
for changed
accounting policies
Adjustments for
corrections of
previous errors
Adjustments for
business
combinations under
common control
Other adjustments
858,1 1,117,2 7,697,1
2. Balances as at the 258,046 91,626, 5,372,07 602,169, 8,299,304
21,54 67,351. 35,324.
,245.42 571.75 3,615.12 223.52 ,548.44
beginning of the year 1.00 63 92
3. Increase/ decrease 71,38
10,78 -2,133,7 -90,317, 36,750, -25,253, -9,557,7 -198,070, -207,628,
in the period (“-” for 6,451.
1.00 57.41 648.86 106.16 666.90 34.20 434.34 168.54
81
decrease)
3.1 Total
-90,317, 97,308,5 6,990,9 -8,270,49 -1,279,54
comprehensive 648.86 93.36 44.50 2.07 7.57
income
3.2 Capital 71,38
10,78 -2,133,7 69,263, -74,628,2 -5,364,76
increased and 6,451.
1.00 57.41 475.40 39.47 4.07
81
reduced by owners
166
Lu Thai Textile Co., Ltd. Annual Report 2021
3.2.1 Ordinary shares
10,78 86,234. 97,015. 50,000,0 50,097,01
increased by 1.00 48 48 00.00 5.48
shareholders
3.2.2 Capital
increased by holders
0.00
of other equity
instruments
3.2.3 Share-based
payments included in 0.00
owners’ equity
71,38
-2,219,9 69,166, -124,628, -55,461,7
3.2.4 Other 6,451.
91.89 459.92 239.47 79.55
81
3.3 Profit 36,750, -122,56 -85,812, -115,171, -200,983,
106.16 2,260.26 154.10 702.80 856.90
distribution
3.3.1
36,750, -36,750,
Appropriation to 0.00
106.16 106.16
surplus reserves
3.3.2
Appropriation to
general reserve
3.3.3
Appropriation to -85,812, -85,812, -115,171, -200,983,
154.10 154.10 702.80 856.90
owners (or
shareholders)
3.3.4 Other
167
Lu Thai Textile Co., Ltd. Annual Report 2021
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
168
Lu Thai Textile Co., Ltd. Annual Report 2021
the period
3.5.2 Used in the
period
3.6 Other
858,1 71,38 1,154,0 7,687,5
4. Balances as at the 255,912 1,308,9 5,346,81 404,098, 8,091,676
32,32 6,451. 17,457. 77,590.
,488.01 22.89 9,948.22 789.18 ,379.90
end of the period 2.00 81 79 72
8. Statements of Changes in Owners’ Equity of the Company as the Parent
2021
Unit: RMB
2021
Other equity instruments Other
Less:
Item Share Capital comprehen Specific Surplus Retained Total owners’
Preferre Perpetua Treasury Other
capital Other reserves sive reserve reserves earnings equity
d shares l bonds stock
income
1. Balances as at the 858,132, 71,386,4 317,292,52 -424,313.3 1,150,908, 4,381,64 6,778,935,88
322.00 51.81 2.25 3 718.15 0,182.32 3.20
end of the prior year
Add: Adjustments for
changed accounting
policies
Adjustments for
corrections of previous
169
Lu Thai Textile Co., Ltd. Annual Report 2021
errors
Other adjustments
2. Balances as at the 858,132, 71,386,4 317,292,52 -424,313.3 1,150,908, 4,381,64 6,778,935,88
322.00 51.81 2.25 3 718.15 0,182.32 3.20
beginning of the year
3. Increase/ decrease in
24,208,9 -1,794.9 84,674,899 78,908,300 61,106,878 505,840, 597,052,307.
the period (“-” for 130,733.09
73.00 7 .64 .00 .75 918.34 85
decrease)
3.1 Total
611,068, 611,199,520.5
comprehensive 130,733.09
787.49 8
income
3.2 Capital increased 24,208,9 -1,794.9 84,674,899 78,908,300 29,973,777.6
73.00 7 .64 .00 7
and reduced by owners
3.2.1 Ordinary shares
24,208,9 55,949,334 80,158,307.2
increased by 73.00 .21 1
shareholders
3.2.2 Capital increased
by holders of other
equity instruments
170
Lu Thai Textile Co., Ltd. Annual Report 2021
3.2.3 Share-based
28,325,788 28,325,788.6
payments included in .60 0
owners’ equity
-1,794.9 78,908,300 -78,510,318.1
3.2.4 Other 399,776.83
7 .00 4
3.3 Profit 61,106,878 -105,227 -44,120,990.4
.75 ,869.15 0
distribution
3.3.1
61,106,878 -61,106,
Appropriation to .75 878.75
surplus reserves
3.3.2
Appropriation to -44,120, -44,120,990.4
990.40 0
owners (or
shareholders)
3.3.3 Other
3.4 Transfers within
owners’ equity
3.4.1 Increase in
capital (or share
capital) from capital
reserves
171
Lu Thai Textile Co., Ltd. Annual Report 2021
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
172
Lu Thai Textile Co., Ltd. Annual Report 2021
4. Balances as at the 882,341, 71,384,6 401,967,42 78,908,300 -293,580.2 1,212,015, 4,887,48 7,375,988,19
295.00 56.84 1.89 .00 4 596.90 1,100.66 1.05
end of the period
2020
Unit: RMB
2020
Other equity instruments Other
Less:
Item Share Capital comprehe Specific Surplus Retained Total owners’
Preferre Perpetu Treasury Other
capital Other reserves nsive reserve reserves earnings equity
d shares al bonds stock
income
1. Balances as at the 858,121, 317,206,2 1,114,158 4,136,701,3 6,426,187,766.
541.00 32.47 ,611.99 81.01 47
end of the prior year
Add: Adjustments for
changed accounting
policies
Adjustments for
corrections of
previous errors
Other adjustments
2. Balances as at the 858,121, 317,206,2 1,114,158 4,136,701,3 6,426,187,766.
541.00 32.47 ,611.99 81.01 47
beginning of the year
3. Increase/ decrease
10,781.0 71,386, -424,313. 36,750,10 244,938,801
in the period (“-” for 86,289.78 352,748,116.73
0 451.81 33 6.16 .31
decrease)
173
Lu Thai Textile Co., Ltd. Annual Report 2021
3.1 Total
-424,313. 367,501,061
comprehensive 367,076,748.24
33 .57
income
3.2 Capital
10,781.0 71,386,
increased and 86,289.78 71,483,522.59
0 451.81
reduced by owners
3.2.1 Ordinary shares
10,781.0
increased by 86,234.48 97,015.48
0
shareholders
3.2.2 Capital
increased by holders
of other equity
instruments
3.2.3 Share-based
payments included in
owners’ equity
71,386,
3.2.4 Other 55.30 71,386,507.11
451.81
3.3 Profit 36,750,10 -122,562,26
-85,812,154.10
6.16 0.26
distribution
3.3.1
36,750,10 -36,750,106.
Appropriation to 6.16 16
surplus reserves
3.3.2
-85,812,154.
Appropriation to -85,812,154.10
10
owners (or
174
Lu Thai Textile Co., Ltd. Annual Report 2021
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
175
Lu Thai Textile Co., Ltd. Annual Report 2021
3.5.1 Increase in
the period
3.5.2 Used in the
period
3.6 Other
4. Balances as at the 858,132, 71,386, 317,292,5 -424,313. 1,150,908 4,381,640,1 6,778,935,883.
322.00 451.81 22.25 33 ,718.15 82.32 20
end of the period
176
Lu Thai Textile Co., Ltd. Annual Report 2021
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 15th
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 23rd Session of the 6th Board of Directors on 13 August 2012, the
177
Lu Thai Textile Co., Ltd. Annual Report 2021
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
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).
There were 10,800 shares of the Company which were converted from the convertible bonds in 2020.
In line with the resolution of the 1st Extraordinary General Meeting of the Company on 13 May 2021 and the resolution of the 24th
Meeting of the 9th Board of Directors on 17 May 2021, the Company implemented the restricted share incentive scheme and applied
for a registered capital increment of RMB24,285,000 which was contributed by restricted share incentive receivers with monetary
funds.
In conformity with the resolution of the 26th Meeting of the 9th Board of Directors of the Company on 26 August 2021, the Proposal
on Repurchase and Cancel Authorized but Unlocked Restricted Share of the Incentive Personnel not Conforming to the Incentive
Condition, the Company applied for a registered capital decrease of RMB80,000.
There were 4,000 shares of the Company which were converted from the convertible bonds in 2021.
As of 31 December 2021, the registered capital of the Company was RMB882.3413 million.
The Company’s registered address: No. 61, Luthai Avenue, 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 Yarn-dyed Fabric Product Line,
Garment Product Line, the Clothing Marketing Department, the Global Marketing Department, the Supply Chain Department, Lu
Thai Engineering Technology Institute, the Enterprise Management Department, the Financial Management Department and the
Strategy and Market Department etc.
The scope of business of the Company and its subsidiaries shall include general projects: Fabric textile processing; fabric printing
and dyeing processing; garment manufacturing; the sales of textiles and raw materials; clothing wholesale; clothing retail; Internet
178
Lu Thai Textile Co., Ltd. Annual Report 2021
sales (except for the sale of goods requiring a license); the production of Class I medical devices; the production of routine masks
(non-medical); the production of labour protection appliances; software development; technical services, development of technology,
technology consulting, technical exchange, technology transfer and technology promotion; the sales of textile special equipment; the
sales of mechanical and electrical equipment; the procurement of primary agricultural products; business training (trainings that
require approval such as educational training and vocational skill training exclusive); housing lease; the lease of non-residential real
estate; the lease of land usage right; the sales of special chemical products (dangerous chemicals exclusive); and the sales of building
materials. It shall also include licensed projects (business activities can be carried out legally and independently with business license
in addition to projects that must be approved by law): Inspection and testing service; catering service; power generation business,
power transmission business, and power supply (distribution) business. (For projects that must be approved by law, the business
activities can only be carried out upon approval by the relevant departments, and the specific business projects shall be subject to the
approval document or license of relevant departments)
The Company’s financial statements and Notes thereof have been approved by the 32 nd Meeting of the 9th Board of Directors held on
27 April 2022.
There were 19 subsidiaries included into the consolidation scope of the Company in 2021, and for the details, please refer to Note
VIII. “Changes of Consolidation Scope” and Notes IX. “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 Company 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 Company'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.
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:
The Company determines income recognition policy according to its production and operation characteristics, and the specific
accounting policies are shown in Note V (27).
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 consolidated, and the Company’s financial positions as at 31 December 2021,
business results and cash flows for 2021, and other relevant information.
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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 Company 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 Company 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.
Realize business combination under the same control in steps by transaction several times
In specific financial statements, the share of book value of the net assets of the combined party that shall be enjoyed in the combined
financial statements of the final control party on the combination date as calculated according to the shareholding ratio of the
combination date is regarded as the initial investment cost of the investment; the difference between the initial investment cost and
the sum of book value of investment held before combination plus the book value of the consideration newly paid on the combination
date is used for adjusting the capital reserve (capital stock premium), and if the capital reserve is insufficient to offset, the retained
earnings shall be adjusted.
In the combined financial statements, the assets and liabilities of the combined party acquired by the combining party in the
combination, except for adjustments due to different accounting policies, shall be measured at the book value of the combined party
in the consolidated financial statement of the final controller on the combination date; the difference between the sum of the book
value of investment held before combination plus the book value newly paid on the combination date, and the book value of the net
assets acquired in combination, is used for adjusting the capital reserve (capital stock premium), and if the capital reserve (capital
stock premium) is insufficient to offset, the retained earnings shall be adjusted. The long-term equity investment held by the
combining party before acquiring the control right of the combined party, if relevant gains and losses, other comprehensive revenues
and changes in other owner’s equity have been confirmed from the date of acquiring equity and the date when the combining party
and the combined party under the final control of the same party, whichever is later, to the combination date, shall offset the retained
earnings at the beginning or current profits and losses in the period of comparing statements.
(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
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(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
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.
Achieve business combination not under the same control step by step through multiple transactions
In specific financial statements, the sum of book value of the acquired party's equity investment held before the purchase date and the
investment cost newly paid on the purchase date is regarded as the initial investment cost of the investment. The other comprehensive
income recognized by using the equity method of accounting of the equity investment held before the purchase date, is not disposed
on the purchase date, and the same basis as the direct disposal of relevant assets or liabilities of the investee is used to conduct
accounting treatment when disposing the investment; the owner's equity recognized as a result of the changes of the other owner's
equity except for the net profit and loss of the investee, other comprehensive income and profit distribution shall be transferred to the
current profit and loss during the disposal period when disposing the investment. If the equity investment held before the purchase
date is measured at fair value, the accumulative changes in fair value originally included in other comprehensive income shall be
transferred to retained earnings when accounting by cost method.
In consolidated financial statements, the cost of consolidation is the sum of the consideration paid at the purchase date and the fair
value at the purchase date of the equity already held by the acquired party before the purchase date. For equity of the acquired party
that is already held before the purchase date, it shall be re-measured according to the fair value of the equity on the purchase date,
and the difference between the fair value and its book value shall be included in the current income. If the equity of the acquired
party held before the purchase date involves other comprehensive income and the changes of other owner's equity, it shall be
transferred to current income on the purchase date, except for other comprehensive income caused by changes in net liabilities or net
assets of the income plan remeasured and reset by the investee.
(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
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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
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. Classification of Joint Arrangements and Accounting Treatment of Joint Operations
Joint arrangement refers to an arrangement under the joint control of two or more participants. The Company's joint arrangements are
divided into joint operations and joint ventures.
(1) Joint operations
A joint operation refers to a joint arrangement whereby the Company enjoys relevant assets of the arrangement, and assumes
obligations relevant liabilities of the arrangement.
The Company recognizes the following items related to the interest share in joint operation, and conducts accounting treatment in
accordance with relevant provisions of the Accounting Standard for Business Enterprises:
A. It recognizes separately held assets and jointly held assets according to the proportion;
B. It recognizes separately assumed liabilities and jointly assumed liabilities according to the proportion;
C. Income from the sale of the proportion of joint operation output is recognized;
D. Income from the sale of the joint operation output is recognized according to the proportion.
E. While the separately incurred fee is recognized, the incurred fee for joint operation is recognized according to the proportion.
(2) Joint ventures
A joint venture refers to a joint arrangement whereby the Company enjoys the right of the net assets of the arrangement only.
Accounting treatment of the investment of a joint venture is conducted by the Company in line with the provisions of relevant equity
method of accounting for long-term equity investment.
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8. 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 Company that are short-term, highly liquid, easily convertible into known amounts of cash, and have little risk of change
in value.
9. Foreign Currency Businesses and Translation of Foreign Currency Financial Statements
(1) Foreign currency business
The Company'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 or other comprehensive income based on the nature of non-monetary items.
(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 spot exchange rate on the transaction date.
All items in the cash flow statement are converted according to the spot 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.
10. 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;
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
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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 Company 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 Company 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 Company'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 Company 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 Company'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 Company 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 Company
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.
The business model of managing financial assets refers to how the Company manages financial assets to generate cash flow. The
business model determines whether the cash flow of the financial assets managed by the Company comes from the collection of
contractual cash flow, the sale of financial assets or both. The Company 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 Company 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
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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 Company 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 Company 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 Company is expected to be entitled to receive is taken as the initial recognition amount.
(3) Classification and measurement of financial liabilities
The Company'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.
Equity instruments refer to contracts that can prove that an enterprise has the residual equity in its assets after deducting all liabilities.
If the Company 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 Company's own equity instruments, it is necessary to consider whether the
Company'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 Company's financial liability; if the latter is the case, this instrument is the Company's equity instrument.
(4) Derivative financial instruments and embedded derivatives
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The Company'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(11) for the method of determining the fair value of financial assets and liabilities.
(6) Impairment of financial assets
The Company 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;
Contract assets defined in the Accounting Standards for Business Enterprises No. 14-Revenue;
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 Company, 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 Company 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 Company measures the loss reserve
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 Company 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 Company 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 Company 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
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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 Company needs to consider is the longest contract term that the
enterprise faces credit risk (including the option to renew the contract).
The Company 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.
Notes receivable, accounts receivable and contract assets
The Company always measures its loss reserves at an amount equivalent to the expected credit loss during the entire duration for
notes receivable, contract assets 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 Company 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)
C. Contract assets
Contract assets portfolio 1: product sales
Contract assets portfolio 2: engineering construction
For notes receivable and contract assets divided into portfolios, with reference to historical credit loss experience, combined with
current conditions and predictions of future economic conditions, the Company 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 Company has prepared a comparison table between the number of aging/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 Company 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
Other receivables portfolio 3: Deposit receivable and security deposit
Other receivables portfolio 4: other receivables
For other receivables that are divided into portfolios, the Company 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.
Creditors' investment and other creditors' investment
For creditors' investment and other creditors' investment, the Company 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
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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 Company 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 Company considers reasonable and reliable
information (forward-looking information inclusive) that can be obtained without unnecessary extra costs or efforts. The information
the Company 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 Company.
Based on the nature of financial instruments, the Company 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 Company 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 Company determines that there is a significant increase in the credit risk of
financial instruments.
Financial assets with depreciation of credit
The Company 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:
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 Company 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 Company 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 Company 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 Company 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 Company 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 Company, 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.
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(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 Company 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 Company 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.
11. 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 Company measures related assets or liabilities at fair value, assuming that the orderly transaction of selling assets or transferring
liabilities is conducted in the main market of related assets or liabilities; if there is no main market, the Company 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
Company can enter on the measurement date. The Company 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 Company uses the quotation in active markets to determine its fair
value. If there is no active market for financial instruments, the Company 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 Company 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 Company 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.
12. Inventory
(1) Classification
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Inventories mainly include raw materials, work-in-progress, stock products, materials processed on entrustment 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 and the packing articles should be amortized by one-off amortization method when
consuming.
13. Contract Costs
Contract cost includes the incremental cost incurred for acquiring contract and contract performance cost.
The incremental cost incurred for acquiring contract refers to the cost that will not occur if the Company has not acquired contract (for
example, sales commission). If the cost is expected to be recovered, the Company regards it as contract acquiring cost and confirms it as
an asset. The expenses incurred by the Company for acquiring contract, other than the incremental cost expected to be recovered, are
included in the current profits and losses at the time of occurrence.
If the cost incurred for performance of contract does not belong to inventory and other scope of other corporate accounting standards
and meets the following conditions, the Company will regard it as contract performance cost and confirm it as an asset:
①The cost is directly related to a copy of contract currently acquired or expected to be acquired, including direct labor, direct materials,
manufacture expenses (or similar expenses), cost determined to be undertaken by the customer and other cost incurred due to the
contract;
②The cost increases the resources of the Company that will be used for performance of contract obligations in the future;
③The cost is expected to be recovered.
The assets confirmed by the contract acquiring cost and the assets confirmed by the contract performance cost (“assets related to
contract cost”) are amortized according to the same basis as confirmation of goods or service income related to the asset and are
included in the current profits and losses. If the amortization term does not exceed one year, it will be included in the current profits and
losses at the time of occurrence.
When the book value of an asset related to contract cost is higher than the difference between the following two items, the Company
accrues provision for impairment to the excessive part and confirms it as impairment loss:
①The remaining consideration that the Company expects to acquire from transfer of goods or services related to the asset;
②The cost that will occur for transfer of such related goods or services as estimated.
The contract performance cost confirmed as asset, if amortization term does not exceed one year or a normal business cycle at the time
of initial confirmation, is listed in the item of “inventory”; if amortization term exceeds one year or a normal business cycle at the time
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of initial confirmation, is listed in the item of “other non-current assets”.
The contract acquiring cost that is confirmed as asset, if amortization term does not exceed one year or a normal business cycle at the
time of initial confirmation, is listed in the item of “other current assets”; if amortization term exceeds one year or a normal business
cycle at the time of initial confirmation, is listed in the item of “other non-current assets”.
14. Long-term Equity Investments
Long-term equity investments include equity investments in subsidiaries, joint ventures and associated enterprises. The investee that
the Company is able to exert significant influence is an associated enterprise of the Company.
(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 Company’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. If the original equity is classified as non-trading equity
instrument investment measured at fair value whose changes are included in other comprehensive income, the relevant original and
accumulative changes in fair value included in other comprehensive income shall be transferred to retained earnings when accounting
by 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
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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.
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 Company and associates and joint ventures are calculated
according to the shareholding ratio and are attributed to the Company, and the investment gains and losses are recognized on the
basis of offset. However, the unrealized internal transaction losses incurred by the Company 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 Company of participants must act in concert to
determine the relevant activities of an arrangement, it is considered that all participants or a Company 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
Company 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-22.
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15. Investment Property
Measurement model of investment real estate
Costing method measurement
Depreciation or amortization method
The investment real estate refers to the real estate gaining the rent or capital appreciation or both. It includes rented land use right,
holding land use right to be transferred after the appreciation and rented building, etc.
The investment real estate is measured initially according to the cost and withdrawn 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-22 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.
16. 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 Company are initially measured at the actual cost at the time of acquisition.
The subsequent expenditures related to the fixed assets shall be included in the cost of the fixed assets when the economic benefits
related to the fixed assets are likely to flow into the Company and the costs can be measured reliably. The daily repair expenses of
fixed assets that do not meet the conditions of capitalized subsequent expenditures of fixed assets shall be included in the current
profit and loss or the cost of relevant assets according to the beneficiaries when incurred. The book value of the replaced part shall be
terminated.
(2) Test Method of Impairment of Fixed Assets and Method of Impairment Provision
Please refer to Note V-22 for details.
(3) Depreciation Methods
Category of fixed Annual deprecation
Method Useful life Salvage value (%)
assets (%)
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
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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
(4) At the end of each year, review is carried out by the Company 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.
(5) Disposal of Fixed Assets
A fixed asset shall be derecognized when it is disposed of or it is expected that no economic benefit can be generated by using or
disposing of it. The amount of the disposal income of sales, transfer, scrap or damage of the fixed asset after deducting its book value
and related taxes is included in the current profit and loss.
17. 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-22.
18. Engineering Materials
Engineering materials of the Company refer to various materials prepared for projects under construction, including engineering
materials, equipment not yet installed, tools and instruments prepared for production, etc.
The purchased engineering materials will be measured according to the cost. The received engineering materials will be transferred
to the project under construction, and the remaining engineering materials after the completion of the project will be stored as
inventory.
Please refer to Note V (22) for the method of provision for impairment of assets for engineering materials.
In the balance sheet, the ending balance of engineering materials is listed in the "project under construction" item.
19. Borrowing Costs
(1) Confirmation principle of Capitalized Borrowing Expense
The borrowing expenses incurred by the Company, if can directly belong to acquisition, construction or production of assets meeting
capitalization conditions, are capitalized and included in relevant asset cost; other borrowing expenses are confirmed as expense
according to its amount at the time of occurrence and included in the current profits and losses. If the borrowing expenses meet the
following conditions, capitalization starts:
①Assets expenditure has occurred, and asset expenditure includes the expenditure occurring in the form of payment in cash,
transferring noncash asset or assuming interest bearing debt for acquiring, constructing or producing the assets meeting capitalization
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conditions;
② Borrowing expenses have occurred;
③The acquisition, construction or production activities required for making assets usable or saleable as intended have started.
(2) Capitalization period of borrowing expenses
When the Company acquires, constructs or produces assets, which meet capitalization conditions and reach the intended usable or
saleable status, the borrowing expenses stop capitalization. The borrowing expenses that occur after the assets meeting capitalization
conditions reach the intended usable or saleable status are confirmed as expenses according to its amount at the time of occurrence and
are included in the current profits and losses.
If the assets meeting capital conditions generate improper interruption in the course of acquisition, construction or production, and the
interruption time continuously exceeds three months, capitalization of borrowing expenses suspends; the borrowing expenses in the
normal interruption period are continually capitalized.
(3) Capitalization rate of borrowing expenses and calculation method of capitalized amount
The interest expenses of special borrowing actually occurring in the current period, minus the interest income of the unused borrowed
capital obtained from depositing in bank or the gain on temporary investment, are capitalized; for common borrowing, the weighted
average of asset expenditure of the part that the cumulative asset expenditure exceeds special borrowing is multiplied by the
capitalization rate of the occupied common borrowing to determine capitalization amount. Capitalization rate is calculated and
determined according to the weighted average rate of common borrowing.
In the period of capitalization, the exchange difference of special borrowing in foreign currency is fully capitalized; the exchange
difference of special borrowing in foreign currency is included in the current profits and losses.
20. Right-of-use Assets
(1) Recognition conditions for right-of-use assets
The term "right-of-use assets" refers to the right of the lessee to use the leased assets during the lease term. At the start date of the
lease term. The Company initially measures the right-of-use assets at cost. The cost includes: a) the initial measurement amount of
lease obligations; b) the lease payment amount paid on or prior to the inception of the lease (less the related amount of lease
incentives already enjoyed if any); c) the initial direct cost incurred by the lessee; and d) the anticipated cost of dismantling and
removing the leasehold property, restoring the site where the leasehold property is located, or bringing the leasehold property back to
the state agreed upon in the lease terms. As the lessee, the Company shall recognize and measure the cost of demolition and
restoration in accordance with the Accounting Standards for Business Enterprises No.13 - Contingencies. Subsequent adjustments are
made for any re-measurement of the lease liabilities.
(2) Depreciation method of right-of-use assets
The company uses the straight-line method for depreciation. Where it can be reasonably certain that the Company, the lessee, can
obtain ownership of the leased assets at the expiry of the lease term, the leased assets are depreciated over the residual service life.
Where it cannot be reasonably certain that the Company can obtain ownership of the leased assets at the end of the lease term, the
leased assets are depreciated at the shorter of the lease term and the residual service life of the leased assets.
(3) Impairment test method and impairment provision method of right-of-use assets
See Note V-22.
21. Intangible Assets
(1) Pricing Method, Useful Life and Impairment Test
The intangible assets of the Company 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.
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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
Software use right 1-3 years Method of line
Brand use right 10 years Method of line
At the end of each year, the Company 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-22.
(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 Company 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.
22. 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, construction in progress, right-of-use assets, intangible assets, business
reputation, etc. (excluding inventory, investment property measured at fair value, 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 Company will estimate its recoverable amount and conduct impairment test. For goodwill, intangible assets with uncertain
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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 Company 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.
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
Company.
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.
23. Long-term Deferred Expenses
The long-term expenses to be amortized incurred by the Company 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.
24. Payroll
(1) Accounting Treatment of Short-term Compensation
During the accounting period in which employees provide services, the Company 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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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
Company'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 Company 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.
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(4) Accounting Treatment of the Welfare of Other Long-term Staffs
Other long-term employee benefits provided by the Company 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.
25. Provisions
If the obligation related to contingency meets the following conditions at the same time, the Company will recognize it as a
provision.
(1) The obligation is the current obligation assumed by the Company;
(2) The performance of the obligation is likely to cause an outflow of economic benefits of the Company;
(3) The amount of the obligation can be measured reliably.
The provisions are initially measured in accordance with the optimal estimate of the necessary expenditures for the fulfillment of the
current obligation, with factors such as risks, uncertainty and the time value of money related to contingencies taken into
consideration comprehensively. Where the time value of money has a significant impact, the best estimate is determined by
discounting the relevant future cash outflow. The Company re-checks the book value of the provisions on the balance sheet date and
adjusts the book value to reflect the current best estimate.
If all or part of the expenditure required to settle recognized provisions is expected to be compensated by a third party or other parties,
the amount of compensation shall be recognized separately as an asset only when it is substantially certain that it will be received.
The recognized amount of compensation shall not exceed the book value of the recognized liabilities.
26. Share-based Payments and Equity Instruments
(1) Category of share-based payment
The share-based payments of the Company are divided into equity-settled share payments and cash-settled share payments.
(2) Method of determining the fair value of equity instruments
The Company shall determine the fair value of equity instruments such as options granted in active markets according to the
quotations in active markets. For granted equity instruments such as options without active markets, the fair value is determined by
option pricing model. The following factors shall be considered for the selected option pricing model: A. Exercise price of the option;
B. Expiration date of the option; C. Current price of the object shares; D. Expected fluctuation rate of stock price; E. Estimated
dividends of shares; F. Risk-free interest rate within the option term.
(3) Ground for recognizing the optimal estimation of feasible right equity instruments
On each balance sheet date during the waiting period, the Company shall make the optimal estimate based on subsequent information
such as the latest change in the number of employees with feasible rights, and revise the number of equity instruments for the
estimated feasible rights. On the feasible right date, the final estimated number of feasible right equity instruments shall be the same
as the actual number of feasible rights.
(4) Relevant accounting treatment for implementing, modifying and terminating share-based payment plan
Equity-settled share-based payments shall be measured at the fair value of the equity instruments granted to employees. Where the
right is exercised immediately after the grant, relevant costs or fees shall be included in accordance with the fair value of the equity
instruments on the grant date to accordingly increase the capital reserve. Where the right is exercised upon the completion of the
services during the waiting period or the achievement of the specified result conditions, the services obtained in the current period
shall be included in the relevant costs or fees and the capital reserve according to the fair value of the equity instruments on the grant
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date based on the optimal estimate of the number of feasible right equity instruments on each balance sheet date during the waiting
period. The recognized related costs or fees and total owner's equity after the feasible right date shall not be adjusted any more.
The cash-settled share-based payments shall be measured according to the fair value of liabilities calculated and determined on the
basis of shares or other equity instruments, which are assumed by the Company. Where the right is exercised immediately after the
grant, the fair value of the liabilities assumed by the Company shall be included in the relevant costs or fees on the grant date, so as to
accordingly increase the liabilities. For the cash-settled share-based payments, for which the right is exercised upon the completion of
the services during the waiting period or the achievement of the specified result conditions, the services obtained in the current period
shall be included in costs or fees and corresponding liabilities according to the fair value amount of liabilities assumed by the
Company based on the optimal estimate of feasible status on each balance sheet date during the waiting period. On each balance
sheet date and settlement date before the relevant liabilities are settled, the fair value of the liabilities shall be re-measured, and the
changes shall be included in the current profit and loss.
When the Company modifies a share-based payment plan, if the modification increases the fair value of the equity instruments
granted, the increase in the services acquired shall be recognized accordingly according to the increase in the fair value of the equity
instruments; if the modification increases the number of equity instruments granted, the fair value of the increased equity instruments
shall be recognized accordingly as the increase in the services acquired. The increase in the fair value of the equity instruments refers
to the difference between the fair values of the equity instruments before and after the modification on the modification date. If the
modification reduces the total fair value of the share-based payment or any other method not conducive to the employees is adopted
to modify the terms and conditions of the share-based payment plan, the accounting treatment of the services acquired would
continue, as if such change had never occurred, unless the Company cancels some or all of the granted equity instruments.
During the waiting period, if the granted equity instrument is canceled (except for the cancellation due to non-market conditions that
do not meet the feasible conditions), the Company shall treat the canceled equity instrument as an accelerated exercise, immediately
include the left amount to be recognized during the waiting period in the current profit and loss, and recognize the capital reserve at
the same time. Where the employee or other party can choose to meet the non-feasible right condition but fails during the waiting
period, it shall be treated as the cancellation of the granted equity instrument.
27. 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.
If a contract contains two or more performance obligations, the Company allocates transaction price to single performance
obligations on the contract commencement date according to the relative ratio of separate price of goods or services committed by
single performance obligation, and income is measured according to the transaction price allocated to single performance obligation.
When meeting one of the following conditions, the Company belongs to performance of contract performing obligations in a period,
or otherwise, the Company belongs to performance of contract performing obligations at a point of time:
①While the Company is performing the contract, the customer acquires and consumes the economic benefit arising from
performance by the Company.
②The customer can control the goods in construction in the course of performance by the Company.
③The goods outputted in the course of performance by the Company have irreplaceable purpose, and the Company has the right to
collection of money for the completed performance part cumulative up to now in the whole term of contract.
For the performance obligation performed in a period, the Company confirms income according to the performance progress in such
period. When the performance progress cannot be reasonably determined, if the cost that the Company has incurred is expected to be
compensated, income is confirmed according to the cost amount that has occurred, until the performance progress can be reasonably
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determined.
For the performance obligation performed at a point of time, income is confirmed at the point of time when the customer acquires the
control right to relevant goods or services. When it judges whether the customer has acquired the control right to the goods or
services, the Company will consider the following indications:
①The Company enjoys the current collection right to the goods or services, i.e. the customer undertakes current payment obligation
to the goods.
②The Company has transferred the legal ownership of the goods to the customer, that is, the customer has owned the legal
ownership of the goods.
③The Company has transferred the kind of the goods to the customer, namely, the customer has possessed the good in kind.
④The Company has transferred the major risks and remuneration on the ownership of the goods, i.e. the customer has acquired the
major risks and remuneration on the ownership of the goods.
④The customer has accepted the goods or services.
⑤Other indications showing that the customer has acquired the control right to the goods.
The Company has transferred goods or services and has the right to collect consideration (and the right depends on factors other than
time elapse) as contract assets, and contract asset is accrued impairment on the basis of expected credit loss (refer to Note V 10(6)).
The right of the Company, unconditionally (only depending on time elapse) charging consideration from the customer, is listed as
receivable. The obligation of the Company that shall transfer goods or services to the customer for the consideration that has been or
shall be collected is liability to the contract.
The contract assets and contract liabilities under the same contract are listed in net amount. If net amount is debit balance, it is listed
in the items “contract asset” or “other non-current asset” according to its fluidity; if net amount is credit balance, it is listed in the
items “contract liability” or “other non-current liability” according to its fluidity.
(2) Specific methods
The specific income confirming methods of the Company are following:
For income of domestic products, after the Company delivers products to the purchaser according to the provisions of the contract
and the purchaser confirms receipt, the purchaser acquires the control right of products, and the Company confirms income.
For income of exportable products, after the Company completes customs declaration of products, departure and obtains bill of
lading according to the provisions of the contract, the purchaser acquires the control right of products, and the Company confirms
income.
Differences in accounting policies for revenue recognition due to different business models of the same type of business
28. 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
cannot be obtained reliably. Asset related government grants refer to the government grants obtained by the Company 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
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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 Company.
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, and are used to offset the carrying value of related assets when initially
recognized, the carrying value of the assets shall be adjusted; 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
Company, the interest subsidy will offset the borrowing costs.
29. 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 Company 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 Company 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 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 Company 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.
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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.
30. Lease
(1) As the lessee
On the commencement date of the lease term, the Company recognizes the right-of-use assets and lease liabilities for all leases,
except for short-term leases and low-value asset leases with simplified treatment.
For accounting policies for the right-of-use assets, see Note V-20.
Lease liabilities are initially measured in line with the lease payments not yet paid on the commencement date of the lease term using
the present value calculated by the interest rate implicit in lease. If the interest rate implicit in lease cannot be determined, the
incremental borrowing rate shall be used as the discount rate. Lease payments include: Fixed payment and substantial fixed payment,
and the relevant amount after deducting the lease incentive if any; variable lease payments depending on index or ratio; exercise price
of the purchased option, provided that the lessee reasonably determines that the option will be exercised; the amount to be paid for
the exercise of the lease termination options, provided that the lease term reflects that the lessee will exercise the options to terminate
the lease; and estimated payments due to the guaranteed residual value provided by the lessee. Subsequently, it calculates the interest
expenses of the lease liabilities during each period of the lease term at a fixed periodic interest rate, and includes them in current
profit and loss. Variable lease payments that are not covered in the measurement of the lease liabilities are included in current profit
or loss when actually incurred.
Short-term lease
A short-term lease refers to a lease for a period not exceeding 12 months on the commencement date of the lease, except for leases
with a purchase option.
The Company includes the short-term lease payment in the cost of relevant assets or the current profit and loss in each period of the
lease term by the straight-line method.
Low-value asset lease
A low-value asset lease refers to a lease where the value is lower than RMB40,000 and a single leased asset is a new asset.
The Company includes the lease payment of the low-value asset lease in the cost of relevant assets or the current profit and loss in
each period of the lease term by the straight-line method.
For low-value asset lease, it chooses to adopt the aforesaid simplified treatment method in line with the specific status of each lease.
Lease change
If a lease changes and meets the following conditions simultaneously, the lease change shall be regarded as a separate lease for
accounting treatment: a) The lease change expands its lease cope by increasing one or multiple use rights of lease assets; and b) The
increased consideration is equivalent to the amount of the separate price for the expanded part of the lease, which is adjusted
according to the contract.
Where the lease change is not regarded as a separate lease for accounting treatment, on the effective date of the lease change, by the
Company, the consideration of the contract is amortized again upon change, the lease term is redetermined, and the lease liabilities
are remeasured according to the present value that is calculated by the lease payments and the revised discount rate upon change.
The Company shall correspondingly reduce the book value of the right-of-use assets and include the profit or loss of the lease
terminated in part or whole in the current profit or loss, if the lease change narrows the scope of lease or shortens the lease term.
The Company shall correspondingly adjust the book value of the right-of-use assets, if other lease changes result in the re-calculation
of the lease liability.
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(2) As the lessor
When the Company is a lessor, it shall recognize leases that substantially transfer all risks and remuneration related to the ownership
of assets as finance leases, and leases other than finance leases as operating leases.
Financial lease
In a finance lease, the Company recognizes the net lease investment as the book value of finance lease receivables on the
commencement date of the lease term. The net lease investment is the sum of the unguaranteed residual value and the present value
of lease receivables not yet received on the commencement date of the lease term at the interest rate implicit in lease. The Company
calculates and confirms the interest income at a fixed periodic interest rate in each period in the lease term. Variable lease payments
obtained that are not included in the net lease investment for measurement, where the Company is the lessor, are included in the
profit or loss of the current period when actually incurred.
Accounting treatment shall be conducted for the derecognition and impairment of finance lease receivables in accordance with the
provisions of the Accounting Standard for Business Enterprises No.22 - Recognition and Measurement of Financial Instruments and
the Accounting Standard for Business Enterprises No.23 - Transfer of Financial Assets.
Operating leases
The Company shall recognize the current profit and loss of the rent of the operating lease in each period of the lease term by the
straight-line method. The initial direct costs related to the operating lease shall be capitalized, amortized within the lease term on the
same basis as the recognition of rental earning, and included in profit or loss for the current period. The received variable lease
payments related to the operating lease that are not included in the lease payments receivable are included in profit or loss for the
current period when they are actually incurred.
Lease change
Where an operating lease changes, the accounting treatment is conducted for it which is regarded as a new lease from the effective
date of the change, and receivables in advance or lease receivables related to lease before change are deemed as the receivables in the
new lease.
Where a finance lease changes and meets the following conditions simultaneously, the change is regarded as a separate lease by the
Company for accounting treatment: a) The change expands its lease cope by increasing one or multiple use rights of lease assets; and
b) The increased consideration is equivalent to the amount of the separate price for the expanded part of the lease, which is adjusted
according to the contract.
Where a finance lease changes and is not regarded as a separate lease for accounting treatment, the Company treats the changed lease
under the following circumstances: a) If the change comes into force on the commencement date of the lease term, the lease will be
clarified as an operating lease, while it will be regarded as a new lease for accounting treatment by the Company on the effective date
of the lease change, and the net lease investment before the effective date of lease change will be regarded as the book value of lease
assets; and b) If the change comes into force on the commencement date of the lease term, the lease will be clarified as a finance
lease, the Company will carry out accounting treatment in accordance with the provisions on modification or renegotiation of a
contract of the Accounting Standard for Business Enterprises No. 22 - Recognition and Measurement of Financial Instruments.
31. Repurchase of Shares
Before the shares repurchased by the Company are cancelled or transferred, they are managed as treasury shares, and all expenditures
for the repurchase of shares are transferred to the cost of treasury shares. Consideration and transaction costs paid in share repurchase
reduce shareholders' equity. When buying back, transferring or cancelling shares in the Company, no profits or losses are recognized.
The transfer of inventory shares shall be credited to the capital reserve on the basis of the difference between the amount actually
received and the carrying amount of the treasury stock. Write off surplus reserves and undistributed profits if capital reserves are
insufficient to offset. Write-off of treasury stocks can reduce shares in par with par value and number of write-out stocks. The capital
reserve is offset based on the difference between book balance and face value of cancelled treasury stocks. Write off surplus reserves
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and undistributed profits if capital reserves are insufficient to offset.
32. Restricted Shares
In the equity incentive plan, the Company grants restricted stocks to the incentive personnel, who firstly subscribe the stocks. If the
unlocking conditions specified in the equity incentive plan are not met, the Company will repurchase the stocks at the previously
agreed price. Where the restricted stocks issued to the employees has gone through capital increase procedures such as registration in
accordance with relevant provisions, the Company shall, on the grant date, recognize the share capital and the capital reserve (share
capital premium) in conformity with the subscription payment received from the employees. Meanwhile, it shall recognize the
treasury stocks and other payables with respect to repurchase obligations.
33. Changes in Main Accounting Policies and Estimates
(1) Significant Changes in Accounting Policies
√ Applicable □ Not applicable
Contents of changes in accounting
Approval procedures Note
policies and reasons thereof
The Ministry of Finance issued the
Accounting Standards for Business
Enterprise No.21-Leases (Revised) in
2018 and required that those enterprises
that are listed both at home and abroad
and those enterprises that are listed
overseas and adopt the International
Financial Reporting Standards or the
Accounting Standards for Business
Enterprises for preparation of financial
statements should implement it from 1 The Company held the 21st Meeting of
January 2019; the other enterprises that the 9th Board of Directors on 29 March
adopt the Accounting Standards for 2021 and approved the implementation Refer to Note V. 20 and 30 for details
Business Enterprises should implement of the new standards governing leases about new accounting policies.
it from 1 January 2021. Main changes since 1 January 2021 and adjusted
are: 1. Under the New Lease Standards, related contents of accounting policies.
except for short-term leases and
low-value asset leases, the lessees will
no longer distinguish finance leases from
operating leases. All leases are subject to
the same accounting treatment, and the
right-of-use assets and lease liabilities
must be both recognized; 2. For the
right-of-use assets, if the lessee
reasonably recognizes that it can obtain
the ownership of the leased assets at the
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Lu Thai Textile Co., Ltd. Annual Report 2021
expiration of the lease term, the
depreciation shall be accrued within the
remaining service life of the leased
assets. If it is impossible to reasonably
recognize that the right-of-use of the
leased asset can be obtained at the
expiration of the lease term, the
depreciation shall be accrued within the
lease term or the remaining service life,
whichever is shorter. At the same time,
the lessee shall recognize whether the
right-of-use assets are impaired and
account for the identified impairment
losses; 3. For lease liabilities, the lessee
shall calculate the interest expense of the
lease liabilities in each period of the
lease term and count it into the current
profit and loss; 4. In accordance with the
requirements of the New Leasing
Standards and Listing Rules, the relevant
contents of the leasing business should
be adjusted in the disclosed financial
statements. According to the New
Leasing Standards and from 1 January
2021, except for short-term leases and
low-value asset leases whose treatment
is chosen to be simplified, the Company
will recognize the right-of-use assets and
lease liabilities for all leased assets with
the present value of the minimum lease
payment based on the future rent
payable, and recognize the depreciation
and unrecognized financing expenses
respectively. The information of
comparable periods will not be adjusted.
For contracts that have existed before the first execution date, the Company chooses not to re-evaluate whether they are leases or
leases inclusive on the first execution date. For contracts that are signed or changed after the first execution date, the Company
evaluates whether they are leases or leases inclusive in conformity with the definition of lease in the New Leasing Standards.
The definition of lease in the New Leasing Standards does not have a material impact on the scope of the Company's contracts that
meet the definition of lease.
As a lessee
The New Leasing Standards requires that the lessor shall recognize right-of-use assets and lease liabilities of all leases, except for
simplified short-term leases and low-value asset leases, and ensure depreciation and interest expenses separately.
The New Leasing Standards allows the lessor to select one of the following methods for bridging accounting treatment of the lease.
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Lu Thai Textile Co., Ltd. Annual Report 2021
In accordance with the provisions of the Accounting Standard for Business Enterprises No.28 - Accounting Policies, Accounting
Estimated Changes and Error Correction (hereinafter referred to as "the Standard"), the retrospective adjustment method is adopted
for treatment.
The retained earnings at the beginning of the year and the amount of relevant projects of financial statements for the first
execution of the Standard are adjusted based on the cumulative impact of the first execution of the Standard, without adjusting
comparable period information.
The difference between the New Leasing Standards and the current leasing standards on the first execution date is included in the
retained earnings at the beginning of 2021 through retroactive adjustment by the Company, in accordance with the provisions of the
New Leasing Standards. Simultaneously, it does not adjust the data of comparable financial statements.
For finance leases before the first execution date, it respectively measures the right-of-use assets and lease liabilities in line with
the original book value of the finance lease assets and the finance lease payables.
For operating leases before the first execution date, when measuring the lease liabilities in conformity with the present value of
the residual lease payments discounted by the incremental borrowing rate on the first execution date, with the amount of all leases
being equivalent to lease liabilities, it necessarily adjusts and measures the right-of-use assets according to the advance rental
payments.
On the first execution date, the Company carries out impairment test and corresponding accounting treatment for the
right-of-use assets in line with Note V-20.
For operating leases in which the lease assets are low-value assets before the first execution date or operating leases to be completed
within 12 months, the Company adopts simplified treatment without recognizing the right-of-use assets or lease liabilities.
For operating leases before the first execution date, it adopts the following simplified treatment:
The same discount rate is utilized for leases with similar features when measuring lease liabilities, where the used incremental
borrowing rates are 3.85% and 4.65%; the measurement for right-of-use assets does not include the initial direct fees.
Where there is renewal option or termination option, the lease term is determined by the Company based on the actual exercise
of option and the latest other status before the first execution date.
As the substitute for the impairment test of right-of-use assets, the Company evaluates whether the contract containing lease is a
loss-making contract before the first execution date, and adjusts the right-of-use assets in conformity with the loss reserve amount
included in the balance sheet before the first execution date.
The accounting treatment is implemented for the lease change before the first execution date according to the final arrangement
of the lease change.
The impact of exercising the New Leasing Standards on the project of consolidated balance sheet is as follows:
Carrying amount before Carrying amount after
Item adjustment (31 December Reclassified Remeasured adjustment (1 January
2020) 2021)
Assets:
Fixed assets 23,612,984.97 -23,612,984.97
Right-of-use — 140,547,131.81 128,815,114.07 269,362,245.88
assets
Long-term 116,934,146.84 -116,934,146.84
prepaid expense
Total assets 140,547,131.81 128,815,114.07 269,362,245.88
Liabilities:
Lease liabilities — 128,815,114.07 128,815,114.07
Total liabilities 128,815,114.07 128,815,114.07
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Lu Thai Textile Co., Ltd. Annual Report 2021
For the minimum lease payment unpaid under a significant operating lease in the 2020 annual financial statements, the Company
adjusts the minimum operating lease payment unpaid under the original lease standards to the reconciliation statement of lease
liabilities recognized under the New Leasing Standards at the incremental borrowing rate of 1 January 2021 as a lessee, as follows:
Minimum lease payments under significant operating leases on 31 A 181,920,500.41
December 2020
Less: Simplified short-term lease payments B
Less: Simplified low-value asset leases C
Add (or less): Adjustment of minimum lease payments due to D
re-evaluation of lease terms
Add (or less): Adjustment of variable lease payments depending on index E
or ratio
Subtotal F=A-B-C+/-D+/-E 181,920,500.41
Less: VAT G 8,662,880.97
Adjusted commitments on operating leases H=F-G 173,257,619.44
Present value of operating lease payments on 1 January 2021 I 128,815,114.07
Add: Financing lease payable on 31 December 2020 J
Lease liabilities on 1 January 2021 K=I+J 128,815,114.07
Of which: Current portion of non-current liabilities
The composition of carrying value of right-of-use assets on 1 January 2021 is as follows:
Item 1 January 2021
Right-of-use assets:
Right-of-use assets recognized from the operating lease before the 269,362,245.88
first execution date
Financing lease assets recognized based on original lease
standards
Total: 269,362,245.88
Influence of implementation of the new lease standards on items of financial statements for 2021 is as follows:
Consolidated balance sheet 31 December 2021 Based on original lease Increase/decrease (-)
standards assumed
Assets:
Fixed assets 5,559,649,164.65 5,581,837,140.31 -22,187,975.66
Right-of-use assets 257,019,286.15 -- 257,019,286.15
Long-term prepaid expense 672,601.04 121,424,154.46 -120,751,553.42
Total assets 12,994,654,820.09 12,880,575,063.02 114,079,757.07
Liabilities:
Current portion of non-current 8,877,404.52 8,500,000.00 377,404.52
liabilities
Lease libilities 121,357,658.41 121,357,658.41
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Lu Thai Textile Co., Ltd. Annual Report 2021
Total liabilities 4,621,177,426.73 4,499,442,363.80 121,735,062.93
Consolidated income statement 2021 Based on original lease Increase/decrease (-)
standards assumed
Finance costs 44,988,908.41 39,524,885.66 5,464,022.75
Administrative expense 335,380,025.54 333,188,742.43 2,191,283.11
As a lessor
In accordance with the New Leasing Standards, it is not necessary for the Company to adjust its lease as a lessor according to the
bridging provisions, but it is necessary to conduct accounting treatment in line with the New Leasing Standards on the first execution
date for the New Leasing Standards.
(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 Leases since 2021
√ Applicable □ Not 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 2020 1 January 2021 Adjusted
Current assets:
Monetary assets 1,400,478,034.81 1,400,478,034.81
Held-for-trading financial assets 268,456,216.98 268,456,216.98
Derivative financial assets
Notes receivable 182,994,110.86 182,994,110.86
Accounts receivable 522,425,219.87 522,425,219.87
Accounts receivable financing 55,150,926.34 55,150,926.34
Prepayments 19,611,775.28 19,611,775.28
Other receivables 105,710,818.69 105,710,818.69
Including: Interest receivable
Dividends
75,488,652.49 75,488,652.49
receivable
Financial assets purchased
under resale agreements
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Inventories 1,988,968,681.64 1,988,968,681.64
Contract assets
Assets held for sale
Current portion of non-current
45,750,018.30 45,750,018.30
assets
Other current assets 433,432,258.63 433,432,258.63
Total current assets 5,022,978,061.40 5,022,978,061.40
Non-current assets:
Long-term receivables 41,053,183.15 41,053,183.15
Long-term equity investments 138,079,577.25 138,079,577.25
Investments in other equity
instruments
Other non-current financial
156,915,620.25 156,915,620.25
assets
Investment property 22,263,668.85 22,263,668.85
Fixed assets 5,661,592,991.66 5,637,980,006.69 -23,612,984.97
Construction in progress 356,273,197.49 356,273,197.49
Right-of-use assets 269,362,245.88 269,362,245.88
Intangible assets 373,543,480.84 373,543,480.84
Development costs
Goodwill 20,563,803.29 20,563,803.29
Long-term prepaid expense 118,340,494.60 1,406,347.76 -116,934,146.84
Deferred income tax assets 122,865,841.69 122,865,841.69
Other non-current assets 95,434,040.18 95,434,040.18
Total non-current assets 7,106,925,899.25 7,235,741,013.32 128,815,114.07
Total assets 12,129,903,960.65 12,258,719,074.72 128,815,114.07
Current liabilities:
Short-term borrowings 930,871,008.19 930,871,008.19
Notes payable
Accounts payable 243,262,473.69 243,262,473.69
Advances from customers
Contract liabilities 141,339,705.62 141,339,705.62
Employee benefits payable 265,648,198.38 265,648,198.38
Taxes payable 36,468,978.77 36,468,978.77
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Lu Thai Textile Co., Ltd. Annual Report 2021
Other payables 17,587,470.79 17,587,470.79
Including: Interest payable
Dividends
441,113.64 441,113.64
payable
Current portion of non-current
43,149,400.13 43,149,400.13
liabilities
Other current liabilities 192,574,674.68 192,574,674.68
Total current liabilities 1,870,901,910.25 1,870,901,910.25
Non-current liabilities:
Insurance contract reserve
Long-term borrowings 495,520,342.78 495,520,342.78
Bonds payable 1,350,171,526.97 1,350,171,526.97
Lease liabilities 128,815,114.07 128,815,114.07
Long-term payables
Long-term employee benefits
62,137,656.00 62,137,656.00
payable
Provisions
Deferred income 173,862,983.31 173,862,983.31
Deferred income tax liabilities 85,633,161.44 85,633,161.44
Other non-current liabilities
Total non-current liabilities 2,167,325,670.50 2,296,140,784.57 128,815,114.07
Total liabilities 4,038,227,580.75 4,167,042,694.82 128,815,114.07
Owners’ equity:
Share capital 858,132,322.00 858,132,322.00
Other equity instruments 71,386,451.81 71,386,451.81
Capital reserves 255,912,488.01 255,912,488.01
Less: Treasury stock
Other comprehensive income 1,308,922.89 1,308,922.89
Specific reserve
Surplus reserves 1,154,017,457.79 1,154,017,457.79
General reserve
Retained earnings 5,346,819,948.22 5,346,819,948.22
Total equity attributable to owners
7,687,577,590.72 7,687,577,590.72
of the Company as the parent
Non-controlling interests 404,098,789.18 404,098,789.18
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Lu Thai Textile Co., Ltd. Annual Report 2021
Total owners’ equity 8,091,676,379.90 8,091,676,379.90
Total liabilities and owners’ equity 12,129,903,960.65 12,258,719,074.72 128,815,114.07
Balance Sheet of the Company as the Parent
Unit: RMB
Item 31 December 2020 1 January 2021 Adjusted
Current assets:
Monetary assets 729,437,231.33 729,437,231.33
Held-for-trading financial assets 163,636,075.34 163,636,075.34
Derivative financial assets
Notes receivable 108,863,689.79 108,863,689.79
Accounts receivable 326,166,935.10 326,166,935.10
Accounts receivable financing 48,764,088.05 48,764,088.05
Prepayments 13,059,806.74 13,059,806.74
Other receivables 1,500,882,682.19 1,500,882,682.19
Including: Interest receivable
Dividends
75,488,652.49 75,488,652.49
receivable
Inventories 1,097,438,610.46 1,097,438,610.46
Contract assets
Assets held for sale
Current portion of non-current
45,750,018.30 45,750,018.30
assets
Other current assets 247,860,882.02 247,860,882.02
Total current assets 4,281,860,019.32 4,281,860,019.32
Non-current assets:
Investments in debt obligations
Investments in other debt
obligations
Long-term receivables 41,053,183.15 41,053,183.15
Long-term equity investments 2,555,150,859.13 2,555,150,859.13
Investments in other equity
instruments
Other non-current financial
144,915,620.25 144,915,620.25
assets
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Lu Thai Textile Co., Ltd. Annual Report 2021
Investment property 29,734,239.22 29,734,239.22
Fixed assets 2,471,686,117.72 2,471,686,117.72
Construction in progress 48,694,822.74 48,694,822.74
Right-of-use assets 130,978,971.80 130,978,971.80
Intangible assets 225,128,308.75 225,128,308.75
Development costs
Goodwill
Long-term prepaid expense 1,406,347.76 1,406,347.76
Deferred income tax assets 65,729,304.26 65,729,304.26
Other non-current assets 7,936,745.28 7,936,745.28
Total non-current assets 5,591,435,548.26 5,722,414,520.06 130,978,971.80
Total assets 9,873,295,567.58 10,004,274,539.38 130,978,971.80
Current liabilities:
Short-term borrowings 332,466,931.13 332,466,931.13
Held-for-trading financial
liabilities
Derivative financial liabilities
Notes payable
Accounts payable 132,231,596.74 132,231,596.74
Advances from customers
Contract liabilities 56,841,289.66 56,841,289.66
Employee benefits payable 202,694,515.93 202,694,515.93
Taxes payable 21,896,035.49 21,896,035.49
Other payables 79,668,657.80 79,668,657.80
Including: Interest payable
Dividends payable 441,113.64 441,113.64
Liabilities directly associated
with assets held for sale
Current portion of non-current
4,000,000.00 4,000,000.00
liabilities
Other current liabilities 166,257,466.30 166,257,466.30
Total current liabilities 996,056,493.05 996,056,493.05
Non-current liabilities:
Long-term borrowings 495,520,342.78 495,520,342.78
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Lu Thai Textile Co., Ltd. Annual Report 2021
Bonds payable 1,350,171,526.97 1,350,171,526.97
Lease liabilities 130,978,971.80 130,978,971.80
Long-term payables
Long-term employee benefits
62,137,656.00 62,137,656.00
payable
Provisions
Deferred income 131,546,549.87 131,546,549.87
Deferred income tax liabilities 58,927,115.71 58,927,115.71
Other non-current liabilities
Total non-current liabilities 2,098,303,191.33 2,229,282,163.13 130,978,971.80
Total liabilities 3,094,359,684.38 3,225,338,656.18 130,978,971.80
Owners’ equity:
Share capital 858,132,322.00 858,132,322.00
Other equity instruments 71,386,451.81 71,386,451.81
Capital reserves 317,292,522.25 317,292,522.25
Less: Treasury stock
Other comprehensive income -424,313.33 -424,313.33
Specific reserve
Surplus reserves 1,150,908,718.15 1,150,908,718.15
Retained earnings 4,381,640,182.32 4,381,640,182.32
Total owners’ equity 6,778,935,883.20 6,778,935,883.20
Total liabilities and owners’ equity 9,873,295,567.58 10,004,274,539.38 130,978,971.80
(4) Retroactive Adjustments to Comparative Data of Prior Years when First Execution of any New
Standards Governing Leases since 2021
□Applicable √ Not applicable
34. Material Accounting Judgments and Estimates
The Company evaluates the important accounting estimates and key assumptions adopted on an ongoing basis, based on historical
experience and other factors, including reasonable expectations of future events. Important accounting estimates and critical
assumptions that have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the
next fiscal year are listed as follows:
Classification of financial assets
The significant judgments involved when the Company determines the classification of financial assets include analysis of business
models and contractual cash flow characteristics. The Company determines the business model for managing financial assets at the
level of the financial asset portfolio, taking into account factors such as the approach of evaluating and reporting the performance of
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Lu Thai Textile Co., Ltd. Annual Report 2021
financial assets to key management personnel, the risks affecting the performance of financial assets and the manner in which they
are managed, and way in which the relevant business management personnel are compensated.
The following main judgments exist in assessing whether the contractual cash flows of financial assets are consistent with the basic
lending arrangements:
Whether the time distribution or amount of the principal amount during the duration may change due to early repayment or for other
reasons; whether the interest includes only the time value of money, credit risk, other basic lending risks and consideration against
costs and profits. For example, whether the amount of early repayment reflects only the outstanding principal and interest based on
the outstanding principal, as well as reasonable compensation paid for early termination of the contract.
Measurement of expected credit losses of accounts receivable
The Company calculates the expected credit loss of accounts receivable using the exposure to default risk of accounts receivable and
the expected credit loss ratio, and determines the expected credit loss ratio based on the probability of default and the default loss
ratio. When determining the expected credit loss ratio, the Company uses data such as internal historical credit loss experience and
adjusts historical data to take into account current conditions and forward-looking information. When considering forward-looking
information, the Company uses indicators such as the risk of economic downturn and changes in the external market environment,
technological environment and customer profile. The Company regularly monitors and reviews the assumptions related to the
calculation of expected credit losses.
Goodwill impairment
We shall assess whether there is impairment of goodwill at least annually. This requires estimating the use value of the asset group to
which goodwill has been assigned. When estimating the use value, the Company shall estimate the future cash flows from the asset
group and select the appropriate discount rate to calculate the present value of future cash flows at the same time.
Deferred income tax assets
To the extent that it is probable that sufficient taxable profit will be available to offset the losses, the Company recognizes deferred
income tax assets for all unused tax losses. This requires the Company's management to use many judgments to estimate the timing
and amount of future taxable profits, taking into account tax planning strategies, so as to determine the amount of deferred income
tax assets to be recognized.
Determination of fair value of unlisted equity investment
The fair value of unlisted equity investment is the expected future cash flows discounted at the current discount rate for items with
similar terms and risk characteristics. Such valuation requires the Company to estimate expected future cash flows and discount rates
and is therefore subject to uncertainty. Under limited circumstances, if the information used to determine fair value is insufficient, or
if the range of possible estimates of fair value is wide and the cost represents the best estimate of fair value within that range, the cost
may represent its appropriate estimate of fair value within that range of distribution.
VI Taxation
1. Main Taxes and Tax Rate
Category of taxes Tax basis Tax rate
VAT Taxable income 13%、9%、6%、5%、3%、0
Urban maintenance and construction tax Turnover tax payable 7%、5%
Enterprise income tax Income tax payable 0、8.5%、15%、16.5%、17%、20%、25%
Notes of the disclosure situation of the taxpaying bodies with different enterprises income tax rate
Taxpayer Income tax rate
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Lu Thai Textile Co., Ltd. Annual Report 2021
The Company 15%
Lufeng Weaving & Dyeing 15%
Lu Thai Hong Kong 16.50%
Luqun Textile 25%
Xinsheng Power 25%
Shanghai Lu Thai 20%
Shanghai Zhinuo 20%
Lulian New Materials 25%
Lujia Import & Export 20%
Zhishu Trading 20%
Lu Thai Vocational Training School 0%
Banyang Villa 20%
Huilin International 15%
Libra International 17%
Qiming Apparel 20%
Vanguard Apparel 0%
Continental Textile 0%
Lu Thai Tan Chau 0%
Lu An Garments 8.5%
2. Tax Preference
In accordance with the Reply on Filing of the Second Batch of Hi-tech Enterprises of Shandong Province in 2020 with Reference No.
Guo Ke Huo Zi [2021]25, the Company was identified as a hi-tech enterprise and the certificate issuing date was December 8, 2020;
in accordance with the Notice for Announcing the First Batch of Hi-tech Enterprise Identification List of Shandong Province in 2020
with reference No. Lu Ke Zi [2020]136, the majority-owned subsidiary Lufeng Weaving & Dyeing was identified as a hi-tech
enterprise, and the certificate issuing date was August 17, 2020. 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) 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 Announcement of the State Taxation Administration on Issues Concerning the Implementation of the Inclusive Income
Tax Reduction and Exemption Policy for Small and Low-profit Enterprises (Announcement No. 2 [2019] of the State Taxation
Administration) and Announcement of the State Taxation Administration on Issues Concerning the Implementation of Preferential
Income Tax Policies to Support the Development of Small and Low-profit Enterprises and Individual Businesses (Announcement No.
8 [2021] of the State Taxation Administration), the portion of annual taxable income of within RMB1 million of the wholly-owned
216
Lu Thai Textile Co., Ltd. Annual Report 2021
subsidiaries of the Company, including Shanghai Luthai, Shanghai Zhinuo Textile New Materials Co., Ltd., Lu Jia Import & Export
Co., Ltd., Beijing Zhishu Trading Co., Ltd. and Zibo Banyang Villa Hotel Co., Ltd. shall be included in taxable income by reduction
of 12.5% 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%.
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 Vanguard Apparel, according to the Burma’s Special Economic Zone Law issued by Pyidaungsu Hluttaw,
Vanguard Apparel enjoys tax preference on corporate income tax of 7 (7 years tax holiday) + 5 (5 years tax revenues drop by half) +
5 (re-invest the profits within 1 year and continues to enjoy the half tax revenues 5 years afterwards). After grace period, enterprise
income tax rate was of 25%. Year 2021 is the sixth year of tax holiday.
The wholly-owned subsidiary Continental Textile 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. Continental
Textile 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 2021 is the fourth year of the duty-free term.
The wholly-owned subsidiary of Continental Textile, 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 2021 is the first 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 fixed tax rate of 21%, and imposed the New York Enterprise income tax at the fixed tax rate of 6.5%. If the tax payable
exceeds USD5 million, the tax rate is 7.25%.
The wholly-owned subsidiary Lu Thai Vocational Training School Co., Ltd. enjoys the preferential policy for non-profit organization
income exemption from corporate income tax according to Article 26, Item 4 of the Enterprise Income Tax Law of the People's
Republic of China and Article 84 and Article 85 of Regulations for the Implementation of the Enterprise Income Tax Law of the
People's Republic of China and CS (2018) No. 13.
The Wholly-owned subsidiary Huilin International, which is registered in Hainan Pilot Free Zone and operates the encouraged
industry, pays corporate income tax at a reduced tax rate of 15% according to Announcement of the Ministry of Finance and the State
Taxation Administration on the Corporate Income Tax Preferential Policies of Hainan Pilot Free Zone (Announcement No.31 [2020]
of the Ministry of Finance and the State Taxation Administration)
The Wholly-owned subsidiary Libra International of Huilin International is registered in Singapore and pays the corporate income
tax at a rate of 17%.
The enterprise income tax rate of Qiming Apparel, the wholly-owned subsidiary of Libra International, is 20% based on the
provisions of the Tax Law of Kingdom of Cambodia on income tax.
The wholly-owned subsidiary of Libra International-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 2021
is the first year of the halving collection period.
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Lu Thai Textile Co., Ltd. Annual Report 2021
VII. Notes to Major Items in the Consolidated Financial Statements of the Company
1. Monetary capital
Unit: RMB
Item Ending balance Beginning balance
Cash on hand 3,475,164.56 7,009,891.16
Bank deposits 1,994,544,688.81 1,390,809,492.44
Other monetary capital 1,693,035.98 2,658,651.21
Total 1,999,712,889.35 1,400,478,034.81
Of which: The total amount deposited
124,950,227.06 131,075,580.22
overseas
Other notes
(1) On December 31, 2021, the monetary capital with restricted ownership was RMB1,693,035.98, which included USD6,750.00
(RMB43,035.98) L/C guarantee deposit for the Company's subsidiary Continental Textile Co., Ltd., RMB550,000.00 L/C guarantee
deposit and RMB1.1 million guarantee deposit of long-term settlement of exchange for the Company's subsidiary Lulian New
Materials Co., Ltd.
(2) The interest receivable in bank deposits was RMB519,369.56.
2. Trading financial assets
Unit: RMB
Item Ending balance Beginning balance
Financial assets at fair value through profit or loss 1,727,000.00 268,456,216.98
Of which:
Debt instrument investment 251,814,716.98
Derivative financial assets 1,727,000.00 16,641,500.00
Of which:
Total 1,727,000.00 268,456,216.98
3. Notes receivable
(1) Notes receivable listed by category
Unit: RMB
Item Ending balance Beginning balance
Bank acceptance bill 129,359,621.79 141,168,447.70
Trade acceptance bill 121,492.55
L/C 98,259,133.55 41,825,663.16
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Lu Thai Textile Co., Ltd. Annual Report 2021
Total 227,740,247.89 182,994,110.86
Unit: RMB
Ending balance Beginning balance
Carrying amount Bad debt provision Carrying amount Bad debt provision
Category Withdra Withdra
Carrying Carrying
Proporti wal Proportio wal
Amount Amount amount Amount Amount amount
on proporti n proportio
on n
Of which:
Notes receivable of
227,746,64 100.00 227,740, 182,994,
bad debt provision 6,394.34 100.00% 182,994,110.86
2.23 % 247.89 110.86
withdrawn by groups
Of which:
Commercial 121,492.
127,886.89 0.06% 6,394.34 5.00%
acceptance bill 55
Bank acceptance bill 227,618,75 227,618, 182,994,
99.94% 100.00% 182,994,110.86
and L/C 5.34 755.34 110.86
227,746,64 100.00 227,740, 182,994,
Total 6,394.34 100.00% 182,994,110.86
2.23 % 247.89 110.86
If the bad debt provision for notes receivable was withdrawn in accordance with the general model of expected credit losses,
information related to bad debt provision shall be disclosed by reference to the disclosure method of other receivables:
□ Applicable √ Not applicable
(2) Bad debt provision withdrawn, reversed or collected during the Reporting Period
Bad debt provision withdrawn in the Reporting Period:
Unit: RMB
Changes in the reporting period
Beginning
Category Reversal or Ending balance
balance Withdrawal Write-off Other
recovery
Commercial
0.00 6,394.34 0.00 0.00 0.00 6,394.34
acceptance bill
Total 0.00 6,394.34 0.00 0.00 0.00 6,394.34
Of which significant amount of reversal or recovery bad debt provision in the Reporting Period:
□ Applicable √ Not applicable
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Lu Thai Textile Co., Ltd. Annual Report 2021
(3) 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
Non-derecognized amount at the
Item Derecognized amount at the period-end
period-end
Bank acceptance bill 0.00 112,995,745.69
Trade acceptance bill 0.00 0.00
Total 0.00 112,995,745.69
4. Accounts receivable
(1) Accounts receivable classified by category
Unit: RMB
Ending balance Beginning balance
Carrying amount Bad debt provision Carrying amount Bad debt provision
Category Withdra Withdra
Carrying Carrying
Proporti wal Proportio wal
Amount Amount amount Amount Amount amount
on proporti n proportio
on n
Accounts receivable
of bad debt 2,179,97 2,179,97 8,378,71 8,378,71
0.31% 100.00% 1.48% 100.00%
provision separately 0.77 0.77 6.21 6.21
accrued
Of which:
Accounts receivable
of bad debt 692,042, 44,764,9 647,277, 558,478, 36,053,0 522,425,21
99.69% 6.47% 98.52% 6.46%
provision withdrawn 157.38 58.87 198.51 267.74 47.87 9.87
by groups
Of which:
Group 1: Undue
99,484,4 1,044,58 98,439,9 166,997, 1,753,47 165,244,23
accounts (credit 14.33% 1.05% 29.46% 1.05%
89.32 7.17 02.15 706.03 5.92 0.11
insurance insured)
Group 2: Undue
508,102, 25,405,1 482,696, 269,999, 13,499,9 256,499,72
accounts (no credit 73.19% 5.00% 47.63% 5.00%
078.32 03.98 974.34 707.80 85.39 2.41
insurance)
Group 3: Overdue
20,932,2 2,239,75 18,692,5 46,514,8 4,977,08 41,537,722
accounts (credit 3.02% 10.70% 8.21% 10.70%
98.93 5.99 42.94 06.33 4.28 .05
insurance insured)
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Lu Thai Textile Co., Ltd. Annual Report 2021
Group 4: Overdue
63,523,2 16,075,5 47,447,7 74,966,0 15,822,5 59,143,545
accounts (no credit 9.15% 25.31% 13.22% 21.11%
90.81 11.73 79.08 47.58 02.28 .30
insurance)
694,222, 46,944,9 647,277, 566,856, 44,431,7 522,425,21
Total 100.00% 6.76% 100.00% 7.84%
128.15 29.64 198.51 983.95 64.08 9.87
Bad debt provision separately accrued: Y2021
Unit: RMB
Ending balance
Name
Carrying amount Bad debt provision Withdrawal proportion Provision reason
Customer filed for
Customer 1 1,347,066.83 1,347,066.83 100.00%
bankruptcy protection
Customer filed for
Customer 2 273,384.76 273,384.76 100.00%
bankruptcy protection
Customer financial
Other customer 559,519.18 559,519.18 100.00% difficulties or filed for
bankruptcy protection
Total 2,179,970.77 2,179,970.77 -- --
Bad debt provision separately accrued: Y2020
Unit: RMB
Ending balance
Name
Carrying amount Bad debt provision Withdrawal proportion Provision reason
Customer filed for
Customer 1 4,493,505.62 4,493,505.62 100.00%
bankruptcy protection
Customer filed for
Customer 2 1,944,326.18 1,944,326.18 100.00%
bankruptcy protection
Customer financial
Other customer 1,940,884.41 1,940,884.41 100.00% difficulties or filed for
bankruptcy protection
Total 8,378,716.21 8,378,716.21 -- --
Bad debt provision withdrawn by groups: Y2021
Unit: RMB
Ending balance
Name
Carrying amount Bad debt provision Withdrawal proportion
Group 1: Undue accounts
99,484,489.32 1,044,587.17 1.05%
(credit insurance insured)
Group 2: Undue accounts (no
508,102,078.32 25,405,103.98 5.00%
credit insurance)
221
Lu Thai Textile Co., Ltd. Annual Report 2021
Group 3: Overdue accounts
20,932,298.93 2,239,755.99 10.70%
(credit insurance insured)
Group 4: Overdue accounts
63,523,290.81 16,075,511.73 25.31%
(no credit insurance)
Total 692,042,157.38 44,764,958.87 --
Bad debt provision withdrawn by groups: Y2020
Unit: RMB
Ending balance
Name
Carrying amount Bad debt provision Withdrawal proportion
Group 1: Undue accounts
166,997,706.03 1,753,475.92 1.05%
(credit insurance insured)
Group 2: Undue accounts (no
269,999,707.80 13,499,985.39 5.00%
credit insurance)
Group 3: Overdue accounts
46,514,806.33 4,977,084.28 10.70%
(credit insurance insured)
Group 4: Overdue accounts
74,966,047.58 15,822,502.28 21.11%
(no credit insurance)
Total 558,478,267.74 36,053,047.87 --
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 Carrying amount
Within 1 year (including 1 year) 680,519,446.98
1 to 2 years 5,246,083.66
2 to 3 years 7,459,352.83
Over 3 years 997,244.68
3 to 4 years 704,998.61
4 to 5 years 292,246.07
Total 694,222,128.15
(2) Bad debt provision withdrawn, reversed or collected during the Reporting Period
Bad debt provision withdrawn in the Reporting Period:
Unit: RMB
Category Beginning Changes in the reporting period Ending balance
222
Lu Thai Textile Co., Ltd. Annual Report 2021
balance Reversal or
Withdrawal Write-off Other
recovery
Bad debt
44,431,764.08 4,661,497.52 0.00 2,148,331.96 0.00 46,944,929.64
provision
Total 44,431,764.08 4,661,497.52 0.00 2,148,331.96 0.00 46,944,929.64
(3) Particulars of the actual verification of accounts receivable during the Reporting Period
Unit: RMB
Item Amount
Accounts receivable actually verified 2,148,331.96
(4) Top 5 of accounts receivable of ending balance collected by arrears party
Unit: RMB
Proportion to total ending
Ending balance of bad debt
Name of Entity Ending balance balance of accounts
provision
receivable
Aggregate amount of top 5 of
accounts receivable of ending
207,105,932.07 29.83% 12,168,821.23
balance collected by arrears
party
Total 207,105,932.07 29.83%
5. Accounts receivable financing
Unit: RMB
Item Ending balance Beginning balance
Notes receivable 35,042,339.23 55,508,978.63
Less: Other comprehensive income -
-379,267.35 -358,052.29
changes in fair value
Total 34,663,071.88 55,150,926.34
Changes in accounts receivable financing and fair value in the Reporting Period
□ Applicable √ Not applicable
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 financing.
□ Applicable √ Not applicable
Other notes:
There was no bank acceptance bill for which bad debt provision accrued separately in the Company. On 31 December 2021, the
Company believed that there was no significant credit risk in the bank acceptance bill held by the Company, and no significant loss
223
Lu Thai Textile Co., Ltd. Annual Report 2021
caused by bank defaults.
(1) Notes receivable endorsed by the Company or discounted and not due on the balance sheet date at the period-end
Category Derecognized amount at the Non-derecognized amount at the
period-end period-end
Bank acceptance bill 335,172,057.08
Trade acceptance bill
Total 335,172,057.08
The bank acceptance bill used for discount is accepted by a bank with high credit grade, the credit risk and deferred payment risk are
low, and the interest rate risk related to the bill has been transferred to the bank. It can be judged that the main risk and reward on the
ownership of the bill have been transferred, so the bank acceptance bill was derecognized at the period-end.
6. Prepayment
(1) List by aging analysis
Unit: RMB
Ending balance Beginning balance
Aging
Amount Proportion Amount Proportion
Within 1 year 54,395,566.77 99.73% 19,462,310.59 99.24%
1 to 2 years 80,046.79 0.15% 113,434.12 0.58%
2 to 3 years 57,065.73 0.10% 36,030.57 0.18%
Over 3 years 13,274.91 0.02%
Total 54,545,954.20 -- 19,611,775.28 --
(2) Top 5 of the ending balance of the prepayment collected according to the prepayment target
The advances to suppliers from the top five of prepaid parties classified based on the ending balance totals RMB36,049,753.17 in the
current period, accounting for 66.90% of the total ending balance of the advances to suppliers.
7. Other receivables
Unit: RMB
Item Ending balance Beginning balance
Dividends receivable 47,025,975.44 75,488,652.49
Other receivables 27,165,637.78 30,222,166.20
Total 74,191,613.22 105,710,818.69
224
Lu Thai Textile Co., Ltd. Annual Report 2021
(1) Dividends receivable
1) Category of dividends receivable
Unit: RMB
Item (or Investee) Ending balance Beginning balance
Sanchang Fengshou Cotton Industry Co., Ltd.
49,501,026.78 79,461,739.46
(hereinafter referred to as "Fengshou Cotton")
Less: Bad debt provision -2,475,051.34 -3,973,086.97
Total 47,025,975.44 75,488,652.49
2) Significant dividends receivable aging over 1 year
Unit: RMB
Whether occurred impairment
Item (or investee) Ending balance Aging Reason
and its judgment basis
1 to 2 Collect in accordance with
Fengshou Cotton 49,501,026.78 Not past due
years agreed dividend payment plan
Total 49,501,026.78 -- -- --
3) Withdrawal of bad debt provision
√ Applicable □ Not applicable
Unit: RMB
First stage Second stage Third stage
Expected credit Expected loss in the Expected loss in the
Bad debt provision Total
loss of the next 12 duration (credit duration (credit
months impairment not occurred) impairment occurred)
Balance of 1 January
3,973,086.97 3,973,086.97
2021
Balance of 1 January
2021 in the Reporting —— —— —— ——
Period
Withdrawal of the
-1,498,035.63 -1,498,035.63
current period
Balance of 31
2,475,051.34 2,475,051.34
December 2021
Changes of carrying amount with significant amount changed of loss provision in the current period
□ Applicable √ Not applicable
Other notes:
225
Lu Thai Textile Co., Ltd. Annual Report 2021
The Company did not have dividends receivable in the second and third stages at the Period-end.
(2) Other receivables
1) Other receivables classified by category
Unit: RMB
Nature Ending carrying amount Beginning carrying amount
Export rebates 1,384,112.79
VAT to be returned 8,486,685.52 9,341,623.77
Payment on behalf 11,917,827.00 13,868,814.75
Guarantee deposit and cash deposit 6,586,697.20 5,163,865.78
Borrowings and petty cash 1,051,186.48 4,483,805.85
Other 402,457.40 218,743.34
Total 29,828,966.39 33,076,853.49
2) Withdrawal of bad debt provision
Unit: RMB
First stage Second stage Third stage
Expected credit Expected loss in the Expected loss in the
Bad debt provision Total
loss of the next 12 duration (credit duration (credit
months impairment not occurred) impairment occurred)
Balance of 1 January
1,516,853.79 1,337,833.50 2,854,687.29
2021
Balance of 1 January
2021 in the Reporting —— —— —— ——
Period
Withdrawal of the
-159,090.16 -32,268.52 -191,358.68
current period
Balance of 31
1,357,763.63 1,305,564.98 2,663,328.61
December 2021
Changes of carrying amount with significant amount changed of loss provision in the current period
□ Applicable √ Not applicable
Disclosure by aging
Unit: RMB
Aging Carrying amount
Within 1 year (including 1 year) 24,927,281.70
1 to 2 years 745,274.93
226
Lu Thai Textile Co., Ltd. Annual Report 2021
2 to 3 years 273,773.82
Over 3 years 3,882,635.94
3 to 4 years 164,144.98
4 to 5 years 0.00
Over 5 years 3,718,490.96
Total 29,828,966.39
3) Bad debt provision withdrawn, reversed or collected during the Reporting Period
Bad debt provision withdrawn in the Reporting Period:
Unit: RMB
Changes in the Reporting Period
Beginning
Category Reversal or Ending balance
balance Withdrawal Write-off Other
recovery
Expected credit
loss in the next 1,516,853.7
-159,090.16 1,357,763.63
12 months in 9
the first stage
Expected loss in
the duration
(credit 1,337,833.5
-32,268.52 1,305,564.98
impairment not 0
occurred) in the
second stage
Expected loss in
the duration
(credit
impairment
occurred) in the
third stage
2,854,687.2
Total -191,358.68 2,663,328.61
9
4) Top 5 of the ending balance of the other receivables collected according to the arrears party
Unit: RMB
Proportion to
ending balance of Ending balance of
Name of entity Nature Ending balance Aging
total other bad debt provision
receivables
227
Lu Thai Textile Co., Ltd. Annual Report 2021
VAT receivable to
be returned from Input VAT 4,849,187.44 Within 1 year 16.26% 242,459.37
Polaris Apparel
VAT receivable to
be returned from Input VAT 3,637,498.08 Within 1 year 12.20% 181,874.89
Lu Thai Tan Chau
Withheld personal
endowment Advance payments 4,642,678.84 Within 1 year 15.56% 232,133.94
insurance
Receivable export
Export rebates 1,384,112.79 Within 1 year 4.64% 69,205.64
rebates
Zibo Customs,
People's Republic Margin 1,182,146.29 Within 1 year 3.96% 59,107.31
of China
Total -- 15,695,623.44 -- 52.62% 784,781.15
8. Inventory
Whether the Company needs to comply with the disclosure requirements for real estate industry
Not
(1) Category of inventory
Unit: RMB
Ending balance Beginning balance
Falling price Falling price
reserves of reserves of
inventory or inventory or
Item Carrying depreciation Carrying Carrying depreciation Carrying
amount reserves of amount amount reserves of amount
contract contract
performance performance
cost cost
Raw materials 928,078,106.34 17,925,640.41 910,152,465.93 849,455,158.83 2,547,151.31 846,908,007.52
Goods in
611,695,332.97 2,538,846.30 609,156,486.67 393,404,083.58 5,437,464.35 387,966,619.23
process
Inventory
939,550,089.36 143,767,058.72 795,783,030.64 877,507,714.63 136,403,191.01 741,104,523.62
goods
Assigned
processing 30,254,811.04 30,254,811.04 12,989,531.27 12,989,531.27
products
228
Lu Thai Textile Co., Ltd. Annual Report 2021
2,509,578,339.7 2,345,346,794. 2,133,356,488. 1,988,968,681.
Total 164,231,545.43 144,387,806.67
1 28 31 64
(2) Falling price reserves of inventory and depreciation reserves of contract performance cost
Unit: RMB
Increased amount of the period Decreased amount of the period
Beginning
Item Reverse or Ending balance
balance Withdrawal Other Other
write-off
Raw materials 2,547,151.31 15,378,489.10 17,925,640.41
Goods in
5,437,464.35 2,538,846.30 5,437,464.35 2,538,846.30
process
Inventory
136,403,191.01 66,275,284.27 58,911,416.56 143,767,058.72
goods
Total 144,387,806.67 84,192,619.67 64,348,880.91 164,231,545.43
9. Current portion of non-current assets
Unit: RMB
Item Ending balance Beginning balance
Long-term accounts receivable due
45,750,018.30
within 1 year
Total 45,750,018.30
10. Other current assets
Unit: RMB
Item Ending balance Beginning balance
Input tax 53,076,859.19 69,924,309.37
Prepaid income tax 2,589,285.09 8,268,591.39
Other prepaid taxes 126,618.09 3,161,080.82
Short-term debt investments 351,379,736.36
Convertible bond fractional share funds 199,760.44 199,858.61
Short-term prepaid expense 498,682.08
Total 55,992,522.81 433,432,258.63
229
Lu Thai Textile Co., Ltd. Annual Report 2021
11. Long-term receivables
(1) List of long-term receivables
Unit: RMB
Ending balance Beginning balance
Interval of
Item Carrying Bad debt Carrying Carrying Bad debt Carrying
discount rate
amount provision amount amount provision amount
Equity transfer 91,371,791.0 86,803,201.4
4,568,589.55 3.85%
fee receivable 0 5
Less:
Long-term
-48,157,914. -2,407,895.7 -45,750,018.
accounts
00 0 30
receivable due
within one year
43,213,877.0 41,053,183.1
Total 2,160,693.85 --
0 5
Impairment of bad debt provision
Unit: RMB
First stage Second stage Third stage
Expected credit Expected loss in the Expected loss in the
Bad debt provision Total
loss of the next 12 duration (credit duration (credit
months impairment not occurred) impairment occurred)
Balance of 1 January
4,568,589.55
2021
Balance of 1 January
2021 in the Reporting —— —— —— ——
Period
Withdrawal of the
-4,568,589.55
current period
Balance of 31
0.00
December 2021
Changes of carrying amount with significant amount changed of loss provision in the current period
□ Applicable √ Not applicable
12. Long-term equity investment
Unit: RMB
Beginnin Increase/decrease Ending Ending
Investee
g Addition Reduced Gains Adjustm Changes Cash Withdra Other balance balance
230
Lu Thai Textile Co., Ltd. Annual Report 2021
balance al investme and ent of of other bonus or wal of (carrying of
(carrying investme nt losses other equity profits impairm value) depreciat
value) nt recogniz compreh announc ent ion
ed under ensive ed to provision reserve
the income issue
equity
method
I. Joint ventures
II. Associated enterprises
Ningbo
Meishan
Bonded
Port
Area
Haohong
Equity
Investme
nt
88,329,9 7,881,29 -12,791, 67,657,6
Partnersh
22.16 4.68 000.83 26.65
ip (L.P.)
(hereinaf
ter
referred
to as
"Haohon
g
Investme
nt")
Haohong
Equity
Investme
nt
Partnersh
ip (L.P.)
(hereinaf 49,749,6 50,000,0 2,035,82 101,785,
ter 55.09 00.00 4.92 480.01
referred
to as
"Haohon
g
Investme
nt")
Subtotal 138,079, 50,000,0 7,881,29 -10,755, 169,443,
231
Lu Thai Textile Co., Ltd. Annual Report 2021
577.25 00.00 4.68 175.91 106.66
138,079, 50,000,0 7,881,29 -10,755, 169,443,
Total
577.25 00.00 4.68 175.91 106.66
13. Other non-current financial assets
Unit: RMB
Item Ending balance Beginning balance
Debt instrument investment
Equity instrument investment 178,052,000.00 144,915,620.25
Financial assets designated to be measured at fair value with the
12,000,000.00 12,000,000.00
changes in fair value included in current profits and losses
Other
Total 190,052,000.00 156,915,620.25
14. Investment property
(1) Investment property adopting the cost measurement mode
√ Applicable □ Not applicable
Unit: RMB
Construction in
Item Houses and buildings Land use right Total
progress
I. Original carrying value
1. Beginning balance 33,577,852.12 33,577,852.12
2. Increased amount of
the period
(1) Outsourcing
(2) Transfer from
inventories/fixed
assets/construction in progress
(3) Enterprise
combination increase
3. Decreased amount of
the period
(1) Disposal
(2) Other transfer
4. Ending balance 33,577,852.12 33,577,852.12
232
Lu Thai Textile Co., Ltd. Annual Report 2021
II. Accumulative depreciation
and accumulative
amortization
1. Beginning balance 11,314,183.27 11,314,183.27
2. Increased amount of
901,366.82 901,366.82
the period
(1) Withdrawal or
901,366.82 901,366.82
amortization
3. Decreased amount of
the period
(1) Disposal
(2) Other transfer
4. Ending balance 12,215,550.09 12,215,550.09
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 21,362,302.03 21,362,302.03
2. Beginning carrying
22,263,668.85 22,263,668.85
value
(2) Investment property adopting the fair value measurement mode
□ Applicable √ Not applicable
15. Fixed assets
Unit: RMB
Item Ending balance Beginning balance
Fixed assets 5,559,649,164.65 5,600,022,186.24
Proceeds from disposal of fixed assets 1,952,209.79 37,957,820.45
233
Lu Thai Textile Co., Ltd. Annual Report 2021
Total 5,561,601,374.44 5,637,980,006.69
(1) List of fixed assets
Unit: RMB
Electronic
Houses and Machinery Transportation
Item equipment and Total
buildings equipment equipment
others
I. Original
carrying value
1. Beginning
3,300,178,588.71 6,830,302,709.90 53,794,437.30 129,442,986.01 10,313,718,721.92
balance
2. Increased
amount of the 143,776,655.08 302,038,943.88 1,885,548.07 5,456,406.98 453,157,554.01
period
(1) Purchase 71,188.12 264,071,138.32 1,885,548.07 5,456,406.98 271,484,281.49
(2) Transfer
from construction 143,705,466.96 37,967,805.56 181,673,272.52
in progress
(3) Enterprise
combination
increase
3. Decreased
amount of the 42,958,593.06 128,195,630.23 7,014,364.59 4,747,895.57 182,916,483.45
period
(1) Disposal
11,116,914.87 102,893,321.05 6,797,297.62 4,618,814.53 125,426,348.07
or scrap
(2) Transferred to
construction in 11,406,001.81 11,406,001.81
progress
(3) Other
20,435,676.38 25,302,309.18 217,066.97 129,081.04 46,084,133.57
decreases
4. Ending
3,400,996,650.73 7,004,146,023.55 48,665,620.78 130,151,497.42 10,583,959,792.48
balance
II. Accumulative
depreciation
1. Beginning
995,997,040.59 3,533,778,199.66 36,975,373.50 97,668,147.56 4,664,418,761.31
balance
2. Increased
111,658,120.66 307,490,406.98 4,594,796.87 13,355,956.78 437,099,281.29
amount of the
234
Lu Thai Textile Co., Ltd. Annual Report 2021
period
(1)
111,658,120.66 307,490,406.98 4,594,796.87 13,355,956.78 437,099,281.29
Withdrawal
3. Decreased
amount of the 16,854,384.20 82,885,340.86 5,758,817.75 4,241,291.43 109,739,834.24
period
(1) Disposal
3,599,754.43 77,115,764.67 5,638,899.45 4,144,702.28 90,499,120.83
or scrap
(2) Transferred to
construction in 9,101,573.57 9,101,573.57
progress
(3) Other
4,153,056.20 5,769,576.19 119,918.30 96,589.15 10,139,139.84
decreases
4. Ending
1,090,800,777.05 3,758,383,265.78 35,811,352.62 106,782,812.91 4,991,778,208.36
balance
III. Depreciation
reserves
1. Beginning
1,574,730.45 47,619,177.12 5,671.30 78,195.50 49,277,774.37
balance
2. Increased
amount of the 1,429,523.09 1,715.50 1,431,238.59
period
(1)
1,429,523.09 1,715.50 1,431,238.59
Withdrawal
3. Decreased
amount of the 1,145,314.29 17,018,765.51 12,513.69 18,176,593.49
period
(1) Disposal
1,145,314.29 17,018,765.51 12,513.69 18,176,593.49
or scrap
(2) Other
decreases
4. Ending
429,416.16 32,029,934.70 5,671.30 67,397.31 32,532,419.47
balance
IV. Carrying value
1. Ending
2,309,766,457.52 3,213,732,823.07 12,848,596.86 23,301,287.20 5,559,649,164.65
carrying value
2. Beginning
2,326,219,802.64 3,248,905,333.12 16,813,392.50 31,696,642.95 5,623,635,171.21
carrying value
235
Lu Thai Textile Co., Ltd. Annual Report 2021
(2) Fixed assets leased out by operation lease
Unit: RMB
Item Ending carrying value
Houses and buildings 3,707,101.82
(3) Fixed assets failed to accomplish certification of property
Unit: RMB
Item Carrying amount Reason of certificate of titles have not yet been obtained
Lufeng weaving dye gray Under the relevant certificate procedures of acceptance, measurement,
10,857,920.88
yarn warehouse examination by the real estate trading center and other departments
Yarn dyeing workshop of
Lulian New Materials Co., 45,875,873.52 Ditto
Ltd.
Slashing workshop of
Lulian New Materials Co., 11,662,166.57 Ditto
Ltd.
Dyeing and finishing
workshop of Lulian New 44,211,118.84 Ditto
Materials Co., Ltd.
Power workshop of Lulian
22,914,071.91 Ditto
New Materials Co., Ltd.
(4) Proceeds from disposal of fixed assets
Unit: RMB
Item Ending balance Beginning balance
Zhangdian Industrial Park houses and
37,957,820.45
buildings
Boiler and ancillary equipment 1,952,209.79
Total 1,952,209.79 37,957,820.45
16. Construction in progress
Unit: RMB
Item Ending balance Beginning balance
Construction in progress 157,651,325.17 201,339,271.24
Engineering materials 79,927,757.82 154,933,926.25
236
Lu Thai Textile Co., Ltd. Annual Report 2021
Total 237,579,082.99 356,273,197.49
(1) List of construction in progress
Unit: RMB
Ending balance Beginning balance
Item Carrying Depreciation Carrying Carrying Depreciation Carrying
amount reserve amount amount reserve amount
Reform project
of Xinsheng 33,240,957.43 33,240,957.43 15,024,257.20 15,024,257.20
Thermal Power
Expansion
project of
Xinsheng 24,901,015.93 24,901,015.93
Thermal Power
(Phase II)
Dormitory
project of Lu 19,083,725.35 19,083,725.35
Thai (Vietnam)
Spinning
project of Lu
5,296,923.55 5,296,923.55
Thai (Tan
Chau)
Functional
Fabric
Intelligent
84,984,974.35 84,984,974.35 95,803,812.78 95,803,812.78
Ecological Park
Project (Phase
I)
Other sporadic
39,425,393.39 39,425,393.39 41,229,536.43 41,229,536.43
projects
Total 157,651,325.17 157,651,325.17 201,339,271.24 201,339,271.24
(2) Changes in significant construction in progress during the Reporting Period
Unit: RMB
Increase Proporti Accumu Includin Capitali
Transfer Other
Beginni d on of Job lated g: zation Capital
red in decrease Ending
Item Budget ng amount accumul schedul amount Amount rate of resource
fixed d balance
balance of the ated e of of interests s
assets amount
period investm interest capitaliz for the
237
Lu Thai Textile Co., Ltd. Annual Report 2021
ent in capitaliz ed reportin
construc ation interests g period
tions to for the
budget reportin
g period
Reform
project
of
54,380, 15,024, 21,679, 3,462,3 33,240,
Xinshen 67.49% 67.49 Other
000.00 257.20 011.56 11.33 957.43
g
Thermal
Power
Expansi
on
project
of
Xinshen 110,690 24,901, 1,260,1 26,161, 116.00
100 Other
g ,000.00 015.93 27.41 143.34 %
Thermal
Power
(Phase
II)
Dormito
ry
project
21,626, 19,083, 6,406,0 25,280, 209,414 117.00
of Lu 100 Other
200.00 725.35 53.04 363.93 .46 %
Thai
(Vietna
m)
Spinnin
g
project
153,470 5,296,9 4,126,4 9,364,4 58,988.
of Lu 95.00% 100 Other
,000.00 23.55 73.87 08.54 88
Thai
(Tan
Chau)
Functio
nal
Fabric Public
217,211 95,803, 70,865, 81,683, 84,984, 120.00 30,996, 15,968,
Intellige 93 3.68% offering
,000.00 812.78 083.91 922.34 974.35 % 506.59 307.04
nt fund
Ecologi
cal Park
238
Lu Thai Textile Co., Ltd. Annual Report 2021
Project
(Phase
I)
Other
41,229, 34,422, 35,721, 505,847 39,425,
sporadic Other
536.43 827.72 123.04 .72 393.39
projects
557,377 201,339 138,759 181,673 774,251 157,651 30,996, 15,968,
Total -- -- --
,200.00 ,271.24 ,577.51 ,272.52 .06 ,325.17 506.59 307.04
(3) Engineering materials
Unit: RMB
Ending balance Beginning balance
Item Carrying Depreciation Carrying Carrying Depreciation Carrying
amount reserve amount amount reserve amount
Special materials
79,927,757.8 154,933,926. 154,933,926.
Special equipment 79,927,757.82
2 25 25
79,927,757.8 154,933,926. 154,933,926.
Total 79,927,757.82
2 25 25
17. Right-of-use assets
Unit: RMB
Item Houses and buildings Land use right Total
I. Original carrying value
1. Beginning balance 72,833,229.83 196,529,016.05 269,362,245.88
2. Increased amount of the period 9,729,395.18 9,729,395.18
(1) Rent 9,729,395.18 9,729,395.18
(2) Lease liabilities adjustment
3. Decreased amount of the period 96,330.54 3,435,058.49 3,531,389.03
(1) Sublease is a financial lease
(2) Transfer or hold for sale
(3) Other decreases 96,330.54 3,435,058.49 3,531,389.03
4. Ending balance 72,736,899.29 202,823,352.74 275,560,252.03
II. Accumulative depreciation
1. Beginning balance
2. Increased amount of the period 11,237,313.49 7,352,272.48 18,589,585.97
239
Lu Thai Textile Co., Ltd. Annual Report 2021
(1) Withdrawal 11,237,313.49 7,352,272.48 18,589,585.97
(2) Other increases
3. Decreased amount of the period 10,227.12 38,392.97 48,620.09
(1) Disposal
(2) Other decreases 10,227.12 38,392.97 48,620.09
4. Ending balance 11,227,086.37 7,313,879.51 18,540,965.88
III. Depreciation reserves
1. Beginning balance
2. Increased amount of the period
(1) Withdrawal
3. Decreased amount of the period
(1) Disposal
4. Ending balance
IV. Carrying value
1. Ending carrying value 61,509,812.92 195,509,473.23 257,019,286.15
2. Beginning carrying value 72,833,229.83 196,529,016.05 269,362,245.88
18. Intangible assets
(1) List of intangible assets
Unit: RMB
Non-patent
Item Land use right Patent right Software use right Total
technology
I. Original carrying
value
1. Beginning
470,338,494.00 3,627,343.66 473,965,837.66
balance
2. Increased
409,550.00 300,088.49 709,638.49
amount of the period
(1) Purchase 409,550.00 300,088.49 709,638.49
(2) Internal
R&D
(3) Enterprise
combination increase
3. Decreased
1,796,044.79 1,796,044.79
amount of the period
240
Lu Thai Textile Co., Ltd. Annual Report 2021
(1) Disposal
(2) Invalid and
recognition terminated 1,792,749.64 1,792,749.64
portion
(3) Other decreases 3,295.15 3,295.15
4. Ending balance 470,338,494.00 409,550.00 2,131,387.36 472,879,431.36
II. Accumulated
amortization
1. Beginning
98,250,066.12 2,172,290.70 100,422,356.82
balance
2. Increased
10,096,399.24 30,716.28 992,423.65 11,119,539.17
amount of the period
(1) Withdrawal 10,096,399.24 30,716.28 992,423.65 11,119,539.17
3. Decreased
1,793,442.77 1,793,442.77
amount of the period
(1) Disposal
(2) Invalid and
recognition terminated 1,792,749.64 1,792,749.64
portion
(3) Other decreases 693.13 693.13
4. Ending balance 108,346,465.36 30,716.28 1,371,271.58 109,748,453.22
III. Depreciation
reserves
1. Beginning
balance
2. Increased
amount of the period
(1) Withdrawal
3. Decreased
amount of the period
(1) Disposal
4. Ending balance
IV. Carrying value
1. Ending
361,992,028.64 378,833.72 760,115.78 363,130,978.14
carrying value
2. Beginning 372,088,427.88 1,455,052.96 373,543,480.84
241
Lu Thai Textile Co., Ltd. Annual Report 2021
carrying value
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%.
19. Development costs
Unit: RMB
Increased amount of the period Decreased amount of the period
Beginning Transfer to
Item Internal Recognized as Ending balance
balance Other current gains
development intangible assets
and losses
Product R&D 252,912,911.63 252,912,911.63
Total 252,912,911.63 252,912,911.63
20. Goodwill
(1) Original carrying value of goodwill
Unit: RMB
Name of the invested Increase Decrease
units or events Beginning balance Formed by business Ending balance
Disposal
generating goodwill combination
Xinsheng Power 20,563,803.29 20,563,803.29
Total 20,563,803.29 20,563,803.29
21. Long-term prepaid expense
Unit: RMB
Amortization
Increased amount Other decreased
Item Beginning balance amount of the Ending balance
of the period amount
period
Renovation costs 1,406,347.76 733,746.72 672,601.04
Total 1,406,347.76 733,746.72 672,601.04
22. Deferred income tax assets/deferred income tax liabilities
(1) Deferred income tax assets that had not been off-set
Unit: RMB
242
Lu Thai Textile Co., Ltd. Annual Report 2021
Ending balance Beginning balance
Item Deductible temporary Deferred income tax Deductible temporary Deferred income tax
difference assets difference assets
Depreciation reserves
211,902,261.84 32,571,574.68 232,609,684.18 37,624,855.86
of assets
Unrealized profit of
154,652,429.83 23,546,803.59 109,437,547.23 17,073,399.27
internal transactions
Deductible losses 125,211,374.31 23,469,558.56 80,123,710.98 16,776,355.64
One-time listed
93,446.60 23,361.65
decoration expenses
Payroll payable 62,871,779.73 9,443,195.07 118,015,305.73 17,802,836.18
Deferred income 188,769,454.53 31,627,668.49 173,862,983.31 27,188,106.81
Contract liability 50,555,810.44 12,638,952.61 16,596,721.35 4,149,180.34
Changes in the fair
value of other
160,000.00 24,000.00 14,493,587.33 2,174,038.10
non-current financial
assets
Changes in fair value
379,267.35 58,968.83 358,052.29 53,707.84
of receivable financing
Operating leases 3,105,101.78 486,827.11
Restricted stock
30,990,583.74 4,648,587.56
incentive fees
Total 828,598,063.55 138,516,136.50 745,591,039.00 122,865,841.69
(2) Deferred income tax liabilities had not been off-set
Unit: RMB
Ending balance Beginning balance
Item Deductible temporary Deferred income tax Deductible temporary Deferred income tax
difference liabilities difference liabilities
Depreciation of fixed
462,125,128.72 74,185,425.08 417,366,245.56 67,382,126.00
assets
Changes in fair value
1,727,000.00 259,050.00 18,456,216.98 2,768,432.55
of trading assets
Changes in the fair
value of other
120,845,567.06 18,126,835.06 102,042,774.64 15,306,416.20
non-current financial
assets
243
Lu Thai Textile Co., Ltd. Annual Report 2021
Accrued interests on
1,174,577.93 176,186.69
creditors' investment
Total 584,697,695.78 92,571,310.14 539,039,815.11 85,633,161.44
(3) Deferred income tax assets or liabilities had been off-set listed in net amount
Unit: RMB
Beginning off-set
Ending off-set amount Ending balance of Beginning balance of
amount of deferred
Item of deferred income tax deferred income tax deferred income tax
income tax assets and
assets and liabilities assets and liabilities assets and liabilities
liabilities
Deferred income tax
138,516,136.50 122,865,841.69
assets
Deferred income tax
97,442,412.65 85,633,161.44
liabilities
(4) List of unrecognized deferred income tax assets
Unit: RMB
Item Ending balance Beginning balance
Deductible temporary difference 9,031,432.71 16,884,024.75
Deductible losses 73,702,292.27 586,187.49
Total 82,733,724.98 17,470,212.24
(5) Deductible losses of unrecognized deferred income tax assets will due in the following years
Unit: RMB
Years Ending amount Beginning amount Note
Y2022
Y2023
Y2024 1,344.62 1,344.62
Y2025 584,842.87 584,842.87
Y2026 73,116,104.78
Total 73,702,292.27 586,187.49 --
23. Other non-current assets
Unit: RMB
Item Ending balance Beginning balance
244
Lu Thai Textile Co., Ltd. Annual Report 2021
Depreciat
Carrying Carrying Carrying Depreciati Carrying
ion
amount amount amount on reserve amount
reserve
Prepaid land transfer fee 214,131,583.94 214,131,583.94 86,515,839.05 86,515,839.05
Prepayment of equipment 11,691,427.91 11,691,427.91 6,195,947.23 6,195,947.23
Term deposits over 1 year 351,000,000.00 351,000,000.00
Interest receivable from term
9,260,296.40 9,260,296.40
deposits over 1 year
Land use rights to be
2,722,253.90 2,722,253.90
recovered by the government
Total 586,083,308.25 586,083,308.25 95,434,040.18 95,434,040.18
24. Short-term borrowings
(1) Category of short-term borrowings
Unit: RMB
Item Ending balance Beginning balance
Pledged borrowings 11,763,977.73
Guaranteed borrowings 238,770,866.65 550,258,596.41
Credit borrowings 772,263,271.67 368,848,434.05
Total 1,011,034,138.32 930,871,008.19
Notes of short-term borrowings category:
(1) The period-end guaranteed borrowing is the guarantee provided by the Company for the bank borrowings of its subsidiaries
Continental Textile Co., Ltd., Lu Thai (Tan Chau) and Lu An Garments. Refer to Note XIV-2 for details.
(2) The short-term borrowing includes interest payable of RMB764,283.57.
25. Accounts payable
(1) List of accounts payable
Unit: RMB
Item Ending balance Beginning balance
Payment for goods 217,076,555.49 137,003,680.16
Payment for engineering equipment 73,998,453.07 80,349,348.21
Other 44,326,362.74 25,909,445.32
Total 335,401,371.30 243,262,473.69
245
Lu Thai Textile Co., Ltd. Annual Report 2021
26. Contract liabilities
Unit: RMB
Item Ending balance Beginning balance
Proceeds from sale received in advance 218,008,930.11 152,333,217.97
Less: Contract liabilities included in
-13,041,581.15 -10,993,512.35
other current liabilities
Total 204,967,348.96 141,339,705.62
27. Payroll payable
(1) List of payroll payable
Unit: RMB
Item Beginning balance Increase Decrease Ending balance
I. Short-term salary 265,648,198.38 1,312,885,066.50 1,307,364,468.10 271,168,796.78
II. Post-employment
127,587,983.68 126,742,484.37 845,499.31
benefit-defined contribution plans
III. Termination benefits 212,789.00 212,789.00
Total 265,648,198.38 1,440,685,839.18 1,434,319,741.47 272,014,296.09
(2) List of short-term salary
Unit: RMB
Item Beginning balance Increase Decrease Ending balance
1. Salary, bonus, allowance
202,510,898.31 1,164,539,273.15 1,153,327,689.71 213,722,481.75
and subsidy
2. Employee welfare 52,568,401.16 52,568,401.16
3. Social insurance 24,203.32 62,831,450.23 62,415,264.01 440,389.54
Including: Medical
17,079.14 56,722,725.72 56,340,808.78 398,996.08
insurance premiums
Work-related
6,854.60 6,103,154.04 6,068,927.64 41,081.00
injury insurance
Maternity
269.58 5,570.47 5,527.59 312.46
insurance
4. Housing fund 10,658,244.20 10,658,244.20
5. Labor union budget and
63,113,096.75 22,287,697.76 28,394,869.02 57,005,925.49
employee education budget
246
Lu Thai Textile Co., Ltd. Annual Report 2021
Total 265,648,198.38 1,312,885,066.50 1,307,364,468.10 271,168,796.78
(3) List of defined contribution plans
Unit: RMB
Item Beginning balance Increase Decrease Ending balance
1. Basic pension
121,808,946.14 120,998,491.93 810,454.21
benefits
2. Unemployment
5,779,037.54 5,743,992.44 35,045.10
insurance
Total 127,587,983.68 126,742,484.37 845,499.31
28. Taxes payable
Unit: RMB
Item Ending balance Beginning balance
VAT 5,534,817.32 12,077,311.75
Corporate income tax 8,173,413.58 11,531,626.63
Personal income tax 607,463.91 422,663.35
Urban maintenance and construction tax 3,645,871.40 3,390,064.57
Stamp duty 320,584.10 441,946.14
Property tax 5,200,898.00 4,868,121.51
Land use tax 2,651,253.23 900,240.84
Education surcharge 1,585,262.09 1,338,871.23
Local education surcharge 1,056,841.39 876,371.30
Local water conservancy facility
218,962.12
construction fund
Resources tax 179,258.00 70,554.00
Environmental protection tax 502,039.70 332,245.33
Total 29,457,702.72 36,468,978.77
29. Other payables
Unit: RMB
Item Ending balance Beginning balance
Dividends payable 441,113.64 441,113.64
Other Payables 96,759,451.67 17,146,357.15
247
Lu Thai Textile Co., Ltd. Annual Report 2021
Total 97,200,565.31 17,587,470.79
(1) Dividends payable
Unit: RMB
Item Ending balance Beginning balance
Dividends payable to individual
441,113.64 441,113.64
shareholders
Total 441,113.64 441,113.64
Other notes, including significant dividends payable unpaid for over 1 year, the unpaid reason shall be disclosed:
The cash dividend of the previous year not received by individual shareholders
(2) Other payables
1) Other payables listed by nature
Unit: RMB
Item Ending balance Beginning balance
Deposits and cash deposits etc. 4,544,176.56 5,571,490.73
Withholding costs 3,148,636.19 1,266,624.26
Intercourse funds 73,371.05
Restricted stock repurchase obligations 78,908,300.00
Other 10,158,338.92 10,234,871.11
Total 96,759,451.67 17,146,357.15
30. Current portion of non-current liabilities
Unit: RMB
Item Ending balance Beginning balance
Current portion of long-term borrowings 8,500,000.00 43,149,400.13
Current portion of lease liabilities 377,404.52
Total 8,877,404.52 43,149,400.13
31. Other current liabilities
Unit: RMB
Item Ending balance Beginning balance
Taxes to be written off 13,041,581.15 10,993,512.35
248
Lu Thai Textile Co., Ltd. Annual Report 2021
Relocation compensation received 95,751,465.00
Endorsed and undue notes that have not
107,393,140.66 85,829,697.33
been terminated recognition
Total 120,434,721.81 192,574,674.68
32. Long-term borrowings
(1) Category of long-term borrowings
Unit: RMB
Item Ending balance Beginning balance
Guaranteed borrowings 39,149,400.13
Credit borrowings 693,462,473.24 499,520,342.78
Less: Current portion of long-term
-8,500,000.00 -43,149,400.13
borrowings
Total 684,962,473.24 495,520,342.78
Notes to the category of long-term borrowings:
The long-term borrowing includes interest payable of RMB732,473.24.
Other notes, including the interval of interest rate:
Item Ending balance Rate range (%) Beginning balance Rate range (%)
Guaranteed borrowings 39,149,400.13 2.89-3.10
Credit borrowings 693,462,473.24 3.06-3.65 499,520,342.78 3.06-3.50
33. Bonds payable
(1) Bonds payable
Unit: RMB
Item Ending balance Beginning balance
Convertible corporate bond 1,395,480,652.71 1,350,171,526.97
Total 1,395,480,652.71 1,350,171,526.97
(2) Changes of bonds payable (excluding other financial instruments divided as financial liabilities such as
preferred shares and perpetual bonds)
Unit: RMB
Bonds Issuing Issuing Beginnin The Withdrawal Amortiza Repayme Transferr Ending
Par value Duration
name date amount g curren of interest tion of nt in the ed shares balance
249
Lu Thai Textile Co., Ltd. Annual Report 2021
balance t issue by par premium reporting in
value and period reporting
depreciat period
ion
Lu Thai
Converti
1,400,00 9 April 1,400,00 1,350,17 7,272,210.6 42,271,8 4,199,72 35,200.0 1,395,48
ble 6 years
0,000.00 2020 0,000.00 1,526.97 8 41.48 6.42 0 0,652.71
Bonds
(127016)
1,400,00 1,350,17 7,272,210.6 42,271,8 4,199,72 35,200.0 1,395,48
Total -- -- --
0,000.00 1,526.97 8 41.48 6.42 0 0,652.71
(3) Notes to the conditions and time of the shares transfer of the convertible corporate bonds
Based on the Reply on Approving Luthai Textile Co., Ltd. to Issue Convertible Bonds to the Public (ZJXK (2020) No. 299) of CSRC,
the Company issued 14 million convertible corporate bonds, each with a par value of RMB100, with a total amount of RMB1.4
billion and a duration of 6 years, from 9 April 2020 to 8 April 2026.
The coupon rates of convertible corporate bonds issued by the Company are 0.3%, 0.6%, 1%, 1.5%, 1.8% and 2% in the first six
periods, with an annually paid interest. The conversion period starts on 15 October 2020 (including the same day), the first trading
day six months after the issuance date, and ends on the trading day before the due date of corporate convertible bonds (8 April 2026)
(including the same day). The holder may apply for bond conversion within the conversion period.
The initial conversion price of convertible corporate bonds was RMB9.01 per share when it was issued but was adjusted to RMB8.91
per share since 9 July 2020, after the Company implemented the 2019 profit sharing agreement on 8 July 2020. After the Company
implemented the restricted stock incentive plan in 2021, the price was adjusted to RMB8.76 per share accordingly since 7 June 2021.
Upon the implementation of the 2020 profit sharing agreement by the Company on 18 June 2021, it was adjusted to RMB8.71 per
share accordingly again since 18 June 2021.
34. Lease liabilities
Unit: RMB
Item Ending balance Beginning balance
Lease payments 160,713,545.55 173,257,619.44
Unrecognized financing costs -38,978,482.62 -44,442,505.37
Less: Current portion of lease liabilities -377,404.52
Total 121,357,658.41 128,815,114.07
Other notes
The amount of interest expense on lease liabilities accrued in 2021 was RMB5,464,022.75, which was included in financial costs -
interest expense.
250
Lu Thai Textile Co., Ltd. Annual Report 2021
35. Long-term payroll payable
(1) List of long-term payroll payable
Unit: RMB
Item Ending balance Beginning balance
III. Other long-term welfare 57,384,062.39 62,137,656.00
Total 57,384,062.39 62,137,656.00
36. Deferred income
Unit: RMB
Reason for
Item Beginning balance Increase Decrease Ending balance
formation
Government Government
173,862,983.31 40,581,979.25 25,486,828.78 188,958,133.78
subsidy subsidy
Total 173,862,983.31 40,581,979.25 25,486,828.78 188,958,133.78 --
37. Share capital
Unit: RMB
Increase/decrease (+/-)
Capital
Beginning reserve Ending
New shares
balance Bonus shares transferred Other Subtotal balance
issued
into share
capital
The sum of 858,132,322. 24,285,000.0 24,208,973.0 882,341,295.
-76,027.00
shares 00 0 0 00
Other notes:
(1) In line with the resolution of the first Extraordinary General Meeting of the Company on 13 May 2021 and the resolution of the
24th session of the Ninth Board of Directors on 17 May 2021, the Company implemented the restricted share incentive scheme to
increase its share capital by RMB24,285,000. This change in share capital has been audited by Zhitong Accounting Firm (Special
General Partnership) and the capital verification report ZTYZ (2021) No. 371C000287 was issued on 30 May 2021.
(2) In conformity with the resolution of the 26th session of the Ninth Board of Directors of the Company on 26 August 2021, the
Proposal on Repurchase and Cancel Authorized but Unlocked Restricted Share of the Incentive Personnel not Conforming to the
Incentive Condition, all the 80,000 shares authorized to the original incentive personnel who did not conform to the incentive
condition of the Company were repurchased and canceled. This change in share capital has been audited by Zhitong Accounting Firm
(Special General Partnership) and the capital verification report ZTYZ (2021) No. 371C000779 was issued on 16 November 2021.
(3) A total of 3,973.00 shares of convertible bonds of the Company can be converted in the Reporting Period.
251
Lu Thai Textile Co., Ltd. Annual Report 2021
38. 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 RMB100 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
Outstanding Period-beginning Increase Decrease Period-end
financial Numbe Carrying Carrying Carrying Numbe Carrying
Number Number
instruments r amount amount amount r amount
Convertible debt
71,386,451.81 1,794.97 71,384,656.84
to equity
Total 71,386,451.81 1,794.97 71,384,656.84
Other notes:
The decrease in other equity instruments in the current period was due to the conversion of convertible bonds.
39. Capital reserves
Unit: RMB
Item Beginning balance Increase Decrease Ending balance
Capital premium
197,695,880.68 56,130,134.21 180,800.00 253,645,214.89
(premium on stock)
Other capital reserves 58,216,607.33 28,725,565.43 86,942,172.76
Total 255,912,488.01 84,855,699.64 180,800.00 340,587,387.65
Other notes: including increase and decrease in the Reporting Period and the reasons for changes:
(1) In line with the resolution of the first Extraordinary General Meeting of the Company on 13 May 2021 and the resolution of the
24th session of the Ninth Board of Directors on 17 May 2021, the Company implemented the restricted share incentive scheme to
increase its share capital by RMB24,285,000.00 and increase its capital reserve-capital premium by RMB56,098,350.00. In
conformity with the resolution of the 26th session of the Ninth Board of Directors of the Company on 26 August 2021, the Proposal
on Repurchase and Cancel Authorized but Unlocked Restricted Share of the Incentive Personnel not Conforming to the Incentive
Condition, all the 80,000 shares authorized to the original incentive personnel who did not conform to the incentive condition of the
Company were repurchased and canceled, reducing the capital reserve-capital premium by RMB180,800.00.
(2) In terms of the restricted stock incentive fees in the Reporting Period, the capital reserves-other capital reserves increased by
RMB28,325,788.60. As for deferred income tax assets arising from the restricted stock incentive fees, the capital reserves-other
capital reserves increased by RMB399,719.27.
252
Lu Thai Textile Co., Ltd. Annual Report 2021
(3) The capital reserves—capital premium arising from the conversion of convertible bonds increased by RMB31,784.21 in the
Reporting Period.
40. Treasury stocks
Unit: RMB
Item Beginning balance Increase Decrease Ending balance
Restricted stock
78,908,300.00 78,908,300.00
repurchase
Total 78,908,300.00 78,908,300.00
Other notes: including increase and decrease in the Reporting Period and the reasons for changes:
The Company recognized the restricted stock repurchase obligations and increased the treasury stocks by RMB78,908,300.00.
41. Other comprehensive income
Unit: RMB
Reporting period
Less:
Recorde
Less: d in
Recorded other
in other compreh
Attribut
comprehen ensive
Income able to Attribut
sive income Endin
before Less: owners able to
Beginning income in in prior g
Item taxation Income of the non-con
balance prior period balanc
in the tax Compan trolling
period and and e
Current expense y as the interests
transferred transferr
Period parent after tax
in profit or ed in
after tax
loss in the retained
Current earnings
Period in the
Current
Period
II. Other comprehensive income -36,42
1,308,922 -37,737, -5,260.9 -37,732,
that may subsequently be 3,748.
.89 932.25 9 671.26
reclassified to profit or loss 37
Differences arising from
-36,15
translation of foreign 1,561,310 -37,716, -37,716,
5,406.
currency-denominated financial .24 717.19 717.19
95
statements
253
Lu Thai Textile Co., Ltd. Annual Report 2021
Changes in fair value of -252,387. -21,215. -5,260.9 -15,954. -268,3
receivable financing 35 06 9 07 41.42
-36,42
Total of other comprehensive 1,308,922 -37,737, -5,260.9 -37,732,
3,748.
income .89 932.25 9 671.26
37
42. Surplus reserves
Unit: RMB
Item Beginning balance Increase Decrease Ending balance
Statutory surplus
1,150,675,885.21 61,106,878.75 1,211,782,763.96
reserves
Discretional surplus
3,341,572.58 3,341,572.58
reserves
Total 1,154,017,457.79 61,106,878.75 1,215,124,336.54
Notes, including increase and decrease in the Reporting Period and the reasons for changes:
According to the Company Law and Articles of Association, the Company has withdrawn the statutory surplus reserves on the basis
of 10% of net profit.
43. Retained profits
Unit: RMB
Item Reporting period Same period of last year
Beginning balance of retained profits before
5,346,819,948.22 5,372,073,615.12
adjustments
Beginning balance of retained profits after
5,346,819,948.22 5,372,073,615.12
adjustments
Add: Net profit attributable to owners of the
347,609,693.30 97,308,593.36
Company as the parent
Less: Withdrawal of statutory surplus reserves 61,106,878.75 36,750,106.16
Dividend of ordinary shares payable 44,120,990.40 85,812,154.10
Ending retained profits 5,589,201,772.37 5,346,819,948.22
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.
254
Lu Thai Textile Co., Ltd. Annual Report 2021
44. 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 5,104,372,856.43 4,051,960,658.77 4,617,041,425.50 3,626,523,021.96
Other operations 133,889,492.42 101,020,417.08 134,181,038.64 111,461,061.49
Total 5,238,262,348.85 4,152,981,075.85 4,751,222,464.14 3,737,984,083.45
Whether the lower of the audited net profit before and after deduction of non-recurring gains and losses was negative
□ Yes √ No
Other notes
Not applicable
45. Taxes and surtaxes
Unit: RMB
Item Reporting period Same period of last year
Urban maintenance and construction tax 14,381,696.21 16,267,317.58
Education surcharge 6,290,701.80 7,130,143.42
Resources tax 549,706.00 505,772.00
Property tax 20,100,901.40 20,777,433.63
Land use tax 9,909,346.19 10,840,949.57
Vehicle and vessel usage tax 76,140.82 117,267.16
Stamp duty 2,859,516.00 3,613,573.57
Local education surcharge 4,193,801.19 4,753,426.83
Local water conservancy facility
1,160,401.18
construction fund
Environmental protection tax 1,123,830.97 1,072,699.34
Total 59,485,640.58 66,238,984.28
Other notes:
Please refer to Note VI. Taxes for details of various taxes and additional standards for calculation and payment.
46. Selling expense
Unit: RMB
Item Reporting period Same period of last year
Salary 57,662,873.54 50,666,138.45
255
Lu Thai Textile Co., Ltd. Annual Report 2021
Sales service fee 21,639,487.21 20,798,085.79
Advertising expense 14,810,042.91 18,067,874.04
Depreciation charge 5,622,896.50 6,780,645.30
Repair material consumption 4,215,335.36 7,360,671.96
Business entertainment expenses 2,902,178.36 1,145,955.38
Insurance 1,725,564.05 1,392,889.17
Travel expense 1,450,850.24 2,313,778.38
Office expense 1,317,861.12 2,030,701.54
Other 8,536,405.39 15,160,548.30
Total 119,883,494.68 125,717,288.31
47. Administrative expense
Unit: RMB
Item Reporting period Same period of last year
Salary 131,684,437.04 133,834,030.11
Depreciation charge 39,245,353.92 35,613,188.28
Warehouse funding 37,711,640.44 33,864,462.81
Travel expense 25,162,377.20 21,654,390.78
Labor-union expenditure 12,176,204.31 11,783,103.47
Amortization of intangible assets 10,997,114.25 12,415,037.36
Business entertainment expenses 8,995,348.15 9,403,372.91
Employee education budget 8,570,709.45 8,330,662.45
Vehicle costs 6,771,148.79 5,896,177.70
Labor cost 6,249,981.95 10,480,835.36
Energy cost 6,042,018.37 4,051,585.48
Office expense 5,690,554.65 7,536,785.41
Environmental protection cost 3,139,516.50 7,005,973.46
Audit and assessment fees 3,110,755.89 2,987,938.06
Security and firefighting fees 3,100,553.74 3,663,515.33
Information development cost 2,987,855.62 3,578,952.66
Repair material consumption 2,874,837.88 4,610,678.89
Decoration & repair expenses 2,789,399.86 2,863,836.66
Insurance 2,729,563.84 4,219,512.50
Rental charges 13,250,044.64
256
Lu Thai Textile Co., Ltd. Annual Report 2021
Other 15,350,653.69 23,612,638.07
Total 335,380,025.54 360,656,722.39
48. R&D expense
Unit: RMB
Item Reporting period Same period of last year
Labor cost 150,169,732.63 119,008,873.85
Material expense 71,155,134.23 90,657,026.38
Depreciation charge 12,291,606.38 12,610,517.42
Other 19,296,438.39 8,988,613.47
Total 252,912,911.63 231,265,031.12
49. Financial costs
Unit: RMB
Item Reporting period Same period of last year
Interest expense 95,549,947.27 82,942,315.52
Less: Capitalized interest expense 30,023,129.89 15,028,199.55
Interest income 53,773,124.16 25,174,851.32
Add: Capitalized interest income 13,087,046.94
Foreign exchange gains or losses 12,488,479.34 59,912,996.06
Less: Capitalized foreign exchange gains
or losses
Commission charge and other 7,659,688.91 6,894,394.12
Total 44,988,908.41 109,546,654.83
Other notes:
The amount of interest capitalization has been included in the construction. The capitalization rate used to calculate and determine
the capitalization amount of borrowing expenses during the period was 3.68%.
50. Other income
Unit: RMB
Sources Reporting period Same period of last year
Subsidies for the price of heating coal 11,000,000.00
Strengthen the enterprise government subsidy 10,822,100.00 13,321,100.00
Subsidies for work-based training 4,055,500.00 38,000.00
257
Lu Thai Textile Co., Ltd. Annual Report 2021
Preferential policy subsidy of developing local enterprises 3,613,100.00 3,048,500.00
Subsidies for multi-purpose pavilions 3,600,000.00
Transformation subsidy of garden greens 3,329,374.13 6,530,776.86
Subsidies for key technology projects for the preparation of
2,745,000.00
high-conformity textiles
Vocational training subsidies 2,477,050.00
Post subsidies 1,988,888.91 4,970,305.36
New enterprise apprenticeship training subsidy 1,306,800.00 2,118,480.00
Subsidies for key technology and application projects for the
1,030,000.00
preparation of moisture-wicking, cool and comfortable fabric
Talent incentive funds 900,000.00
One-off absorption of employment subsidies for college graduates 822,158.52 208,000.00
Special subsidies for green factory 500,000.00
Refund of withholding tax handling fee 494,750.80 903,449.95
Tax relief 431,893.85 680,073.81
Special subsidies for 2020 National Water Efficiency Frontrunner 300,000.00
2019 Provincial Technological Innovation Demonstration
250,000.00
Enterprise Award Fund
Special funds for the conversion of new and old industrial kinetic
240,000.00 336,600.00
energy in 2019
2019 Provincial Innovation Platform Award Fund 200,000.00 500,000.00
Prize for winning projects in the 2020 Science and Technology
200,000.00
Awards
Second prize of Shandong Province Science and Technology
200,000.00
Awards
Probation subsidy of youth 164,717.00
Shandong Province financial development subsidy in 2021 140,000.00
Subsidy for order skilled talents training 120,000.00
R&D subsidy 87,050.00 19,750.00
Social insurance subsidy 71,053.81 954,720.99
Special fund of Zibo Talents Plan 60,000.00 400,000.00
Taishan effective declaration area support subsidy 50,000.00
Occupational skills appraisal subsidy 30,430.00
Subsidy for scrapped trucks with China III Emission Standard 25,600.00
Banyang Talent Program Subsidy 20,000.00 40,000.00
Employment and apprenticeship subsidy fund 19,508.04 500,038.00
258
Lu Thai Textile Co., Ltd. Annual Report 2021
Prize for the Best Eco-friendly Award 5,000.00
Foreign trade premium stand subsidy 2,400.00
Unemployment dynamic monitoring subsidy 1,200.00 1,200.00
Special awards and subsidies for stabilizing employment 4,837,950.00
Freight allowance of cotton yarn 4,054,494.88
Rewards for R&D projects 1,700,000.00
Electricity fee subsidy 1,168,761.00
Reward for key technologies of high-quality textiles 1,150,000.00
2019 National and Provincial Science and Technology Awards
1,000,000.00
Supporting Funds
2019 State Science and Technology Award supporting subsidies 800,000.00
Subsidy for leading persons project of Mount Tai industry 850,000.00
2019 Municipal Special Fund Subsidy in the Field of Commerce 289,900.00
Municipal subsidy for overseas engineer introduction project 270,000.00
Provincial subsidies for commercial development and market
256,300.00
development
Talent subsidy 200,000.00
Central Foreign Trade and Economic Development Fund 198,000.00
One-off subsidy for new employment 196,000.00
Special fund subsidy for the conversion of new and old industrial
180,000.00
kinetic energy in 2019
Vocational Skills Subsidy Fund 160,000.00
Subsidies and awards for patent funding 152,000.00
The 2019 State Science and Technology Award 150,000.00
Award of the 3rd "Governor Cup" Industrial Design Competition 150,000.00
Municipal Foreign Economic and Trade Development Special
123,400.00
Fund
Subsidy for the new enterprise apprenticeship in 2020 99,000.00
Workstation subsidy to the payment to technicians 80,000.00
Subsidy award of project research and development 67,300.00
Supporting funds and government subsidies for Zibo Talents
60,000.00
Program
Employee training subsidy 58,316.18
2019 Municipal Special Funds for Commercial Fields 55,500.00
2019 provincial special fund for business development and market
53,100.00
expansion
259
Lu Thai Textile Co., Ltd. Annual Report 2021
Shandong Province Enterprise Research and Development
31,000.00
Financial Subsidy Funds in 2020
Excellent system innovation subsidy 30,000.00
Talent project support subsidies 30,000.00
Support funds for domestic private enterprises 20,000.00
"Top Ten Technologies" Prize 3,000.00
Land subsidies 1,354,251.84 1,380,189.20
Low-torque high energy-saving and high-quality new spinning
349,473.60 349,473.60
projects
Intelligent dyeing production and energy and water conservation
2,081,140.68 1,941,303.27
renovation projects
Recycled water reuse project 451,376.16 451,376.16
Technical transformation project of high grade yarn-dyed fabric 112,144.32 112,144.32
Technical transformation project of high-grade grey cloth
587,840.49 176,767.71
production line
Support funds for sewage treatment and reuse of recycled water 103,083.72 103,083.72
Technical improvement project of bobbin yarn dyeing 593,406.60 593,406.60
Subsidy for public rental housing 48,231.48 48,231.48
Subsidy of green power 1,022,818.80 1,022,818.80
Subsidies for ultra-low emission technical upgrading projects 105,109.44 105,109.44
Hu sheep subsidies 56,666.64
Subsidy of cotton seed reproduction 46,666.64
Technical Transformation Project of Garment Automation
38,814.66 15,589.98
Equipment
Subsidy for investment in technical renovation equipment 262,162.86 263,429.52
Investment subsidy 272,600.00
Total 58,686,029.71 59,711,274.11
51. Investment income
Unit: RMB
Item Reporting period Same period of last year
Long-term equity investment income
-10,755,175.91 -5,146,737.73
accounted by equity method
Investment income from disposal of
-2,571,504.38
long-term equity investment
Investment income from holding of trading 5,196,411.23 6,793,854.87
260
Lu Thai Textile Co., Ltd. Annual Report 2021
financial assets
Investment income from disposal of trading
52,737,594.16 144,480,875.90
financial assets
Interest income from debt investment during
3,271,114.22 2,411,915.22
the holding period
Total 50,449,943.70 145,968,403.88
52. Gain on changes in fair value
Unit: RMB
Sources Reporting period Same period of last year
Trading financial assets 16,415,304.41 -107,002,594.56
Of which: Income from changes in
fair value generated by derivative -14,914,500.00 16,641,500.00
financial instruments
Total 16,415,304.41 -107,002,594.56
53. Credit impairment loss
Unit: RMB
Item Reporting period Same period of last year
Bad debt loss of other receivables 191,358.68 718,398.77
Bad debt loss of long-term receivables 4,568,589.55 -4,633,230.30
Bad debt loss of notes receivable ("-" indicates
-6,394.34
loss)
Bad debt loss of accounts receivable ("-"
-4,661,497.52 -14,004,835.20
indicates loss)
Bad debt loss of dividends receivable ("-"
1,498,035.63 -3,973,086.97
indicates loss)
Total 1,590,092.00 -21,892,753.70
54. Asset impairment loss
Unit: RMB
Item Reporting period Same period of last year
II. Inventory falling price loss and impairment
-84,192,619.67 -112,327,808.51
provision for contract performance costs
V. Impairment loss on fixed assets -1,431,238.59 -1,132,500.45
Total -85,623,858.26 -113,460,308.96
261
Lu Thai Textile Co., Ltd. Annual Report 2021
55. Asset disposal income
Unit: RMB
Sources Reporting period Same period of last year
Fixed asset disposal income ("-" for loss) 37,736,401.52 -317,803.17
Intangible asset disposal income ("-" for
19,438,746.10
loss)
Total 57,175,147.62 -317,803.17
56. Non-operating income
Unit: RMB
Amount recorded in the current
Item Reporting period Same period of last year
non-recurring profit or loss
Government subsidy 845.19 845.19
Claim income 3,882,284.18 5,032,951.79 3,882,284.18
Other 1,533,989.70 1,433,072.57 1,533,989.70
Total 5,417,119.07 6,466,024.36 5,417,119.07
Government subsidies recorded into current profit or loss:
Unit: RMB
Distr Whether
ibuti subsidies Special Same Related to
Distribution Natu Reporting
Item on influence the subsidy or period of assets/related
entity re period
reaso current profits not last year to income
n and losses or not
Labor People's
safety and Committee of An Rew Related to
Not Not 845.19
health Giang Province, ard income
incentives Vietnam
57. Non-operating expense
Unit: RMB
Amount recorded in the current
Item Reporting period Same period of last year
non-recurring profit or loss
Donations 5,427,805.35 1,752,876.18 5,427,805.35
Losses from damage and
6,307,127.66 376,456.28 6,307,127.66
scrap of non-current assets
Other 1,689,121.86 2,339,578.62 1,689,121.86
262
Lu Thai Textile Co., Ltd. Annual Report 2021
Total 13,424,054.88 4,468,911.08 13,424,054.88
58. Income tax expense
(1) List of income tax expense
Unit: RMB
Item Reporting period Same period of last year
Current income tax expense 44,300,245.37 38,469,209.70
Deferred income tax expense -8,307,165.86 -42,742,237.45
Total 35,993,079.51 -4,273,027.75
(2) Adjustment process of accounting profit and income tax expense
Unit: RMB
Item Reporting period
Profit before taxation 363,316,015.53
Current income tax expense accounted at statutory/applicable tax rate 54,497,402.33
Influence of applying different tax rates by subsidiaries -15,238,189.47
Influence of income tax before adjustment 820,327.33
Influence of non-taxable income -17,138,395.05
Influence of not deductable costs, expenses and losses 15,399,653.28
Influence of deductable losses of unrecognized deferred income tax assets at
-2,436,584.32
the beginning of the Reporting Period
Influence of deductible temporary difference or deductable losses of
unrecognized deferred income tax assets at the beginning of the Reporting 24,611,274.88
Period
Profit/loss of associated enterprises and joint ventures accounted by equity
1,613,276.39
method
Influence of additional deduction of R&D expenses (filled in with "-") -26,061,699.54
Influence of other expense deduction (filled in with "-") -73,986.32
Income tax expense 35,993,079.51
59. Other comprehensive income
Refer to Note VII. 41 for details.
263
Lu Thai Textile Co., Ltd. Annual Report 2021
60. Cash flow statement
(1) Cash generated from other operating activities
Unit: RMB
Item Reporting period Same period of last year
Government subsidy 73,782,025.37 80,076,898.17
Claim income 1,868,220.21 3,931,883.43
Recovery of employee borrowings, petty cash
17,533,544.43 19,948,308.54
and deposit
Collection for employees 3,269,342.35 15,442,855.96
Other 3,307,603.12 214,518.33
Total 99,760,735.48 119,614,464.43
(2) Cash used in other operating activities
Unit: RMB
Item Reporting period Same period of last year
Business travel charges 27,609,515.01 24,029,920.48
Insurance 5,399,989.92 3,271,534.17
Audit advisory announcement fee 6,968,624.27 10,381,102.45
Decoration & repair expenses 2,551,270.42 8,348,948.84
Donation 5,427,805.35 1,752,876.18
Pre-payment 2,540,000.00 10,400,000.00
Payment of employee borrowings, petty
20,293,286.72 15,750,161.05
cash and deposit
Agency service fee 6,934,810.71 9,055,676.53
Advertising expense 837,155.92 1,540,564.49
Freight and miscellaneous charges 51,802,597.09
Rental charges 15,537,996.80
Other 59,866,771.57 58,740,085.32
Total 138,429,229.89 210,611,463.40
(3) Cash generated from other investing activities
Unit: RMB
Item Reporting period Same period of last year
264
Lu Thai Textile Co., Ltd. Annual Report 2021
Interest income 40,794,225.34 26,063,185.14
Income from forward foreign exchange 52,737,594.16 6,312,453.22
Cash deposit of L/C for purchasing
1,515,615.23 28,897,270.77
equipment
Recovery of intercourse funds 3,246,603.60
Option cost 960,000.00
Total 98,294,038.33 62,232,909.13
(4) Cash used in other investing activities
Unit: RMB
Item Reporting period Same period of last year
Forward settlement exchange loss 3,825,002.26
Term deposit 338,493,598.92
Payment of deposit for the L/C of
550,000.00 1,558,651.21
equipment purchase
Payment of forward settlement deposit 1,100,000.00
Total 339,043,598.92 6,483,653.47
(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
Recovery of intercourse accounts 160,000,000.00
Total 174,000,000.00
(6) Cash used in other financing activities
Unit: RMB
Item Reporting period Same period of last year
Repayment of lease liabilities and
23,817,316.19
prepaid rent
Time deposit certificates pledged 40,000,000.00
Payment for intercourse accounts 160,000,000.00
Payment of convertible bond fractional
200,000.00
stock funds
Total 63,817,316.19 160,200,000.00
265
Lu Thai Textile Co., Ltd. Annual Report 2021
61. Supplemental information for cash flow statement
(1) Supplemental information for cash flow statement
Unit: RMB
Supplementary materials Reporting period Same period of last year
1. Reconciliation of net profit to net cash flows generated from
-- --
operating activities
Net profit 327,322,936.02 89,090,058.39
Add: Provision for impairment of assets 84,033,766.26 135,353,062.66
Depreciation of fixed assets, oil-gas assets, and productive
438,000,648.11 457,209,289.42
living assets
Depreciation of right-of-use assets 18,589,585.97
Amortization of intangible assets 11,119,539.17 15,282,546.20
Amortization of long-term prepaid expenses 733,746.72 7,623,370.94
Losses from disposal of fixed assets, intangible assets and
-57,175,147.62 317,803.17
other long-lived assets (gains: negative)
Losses from scrap of fixed assets (gains: negative) 6,307,127.66 376,456.28
Losses from changes in fair value (gains: negative) -16,415,304.41 107,002,594.56
Finance costs (gains: negative) 35,591,822.80 101,349,136.17
Investment loss (gains: negative) -50,449,943.70 -145,968,403.88
Decrease in deferred income tax assets (gains: negative) -15,245,314.55 -35,935,040.48
Increase in deferred income tax liabilities (“-” means
6,938,148.70 -6,807,196.97
decrease)
Decrease in inventory (gains: negative) -376,221,851.40 183,611,561.73
Decrease in accounts receivable generated from operating
-183,550,625.67 -59,283,977.32
activities (gains: negative)
Increase in accounts payable used in operating activities
118,557,871.42 -255,685,337.98
(decrease: negative)
Other
Net cash generated from/used in operating activities 348,137,005.48 593,535,922.89
2. Significant investing and financing activities without involvement
-- --
of cash receipts and payments
Conversion of debt into capital
Convertible corporate bonds due within one year
Fixed assets under financing lease
3. Net increase/decrease of cash and cash equivalent: -- --
266
Lu Thai Textile Co., Ltd. Annual Report 2021
Ending balance of cash 1,970,006,884.89 1,396,530,407.47
Less: Beginning balance of cash 1,396,530,407.47 878,559,018.92
Add: ending balance of cash
Less: Beginning balance of cash equivalents
Net increase in cash and cash equivalents 573,476,477.42 517,971,388.55
(2) Cash and cash equivalents
Unit: RMB
Item Ending balance Beginning balance
I. Cash 1,970,006,884.89 1,396,530,407.47
Including: Cash on hand 3,475,164.56 7,009,891.16
Bank deposit on demand 1,966,531,720.33 1,389,520,516.31
III. Ending balance of cash and cash
1,970,006,884.89 1,396,530,407.47
equivalents
62. Assets with restricted ownership or right to use
Unit: RMB
Item Ending carrying value Reason for restriction
Monetary capital 1,693,035.98 Margin
Other Non-current Assets 40,000,000.00 Time deposit certificates pledge
Total 41,693,035.98 --
63. Foreign currency monetary items
(1) Foreign currency monetary items
Unit: RMB
Ending foreign currency Ending balance converted to
Item Exchange rate
balance RMB
Monetary capital -- --
Of which: USD 55,572,448.31 6.3757 354,313,258.69
EUR 503,879.03 7.2197 3,637,855.43
HKD 4,855,897.76 0.8176 3,970,182.01
JPY 1,064,347.00 0.0554 58,964.82
GBP 1,957.18 8.6064 16,844.27
CHF 14,787.87 6.9776 103,183.84
267
Lu Thai Textile Co., Ltd. Annual Report 2021
Dong 109,127,146,496.00 0.00028 30,443,218.78
MMK 657,459,135.18 0.0036 2,357,571.56
Riel 30,482,639.00 0.0016 47,704.51
Notes receivable:
Of which: USD 15,411,505.22 6.3757 98,259,133.55
Accounts receivable -- --
Of which: USD 67,838,770.47 6.3757 432,519,648.89
EUR 310,320.35 7.2197 2,240,419.83
HKD
Dong 12,700,133,886.00 0.00028 3,542,958.53
MMK 14,108,400.00 0.0036 50,591.07
Other receivables:
Of which: USD 1,675,733.86 6.3757 10,683,976.37
JPY 1,395,040.00 0.0554 77,285.22
HKD 140,749.00 0.8176 115,076.38
Dong 22,790,000.00 0.00028 6,357.73
GBP 7,250.00 8.6064 62,396.40
MMK 1,200,000.00 0.0036 4,303.06
Accounts payable:
Of which: USD 30,120,694.27 6.3757 192,040,510.46
JPY 14,210,028.00 0.0554 787,235.55
EUR 500,208.06 7.2197 3,611,352.13
CHF 20,100.00 6.9776 140,249.76
Dong 24,704,657,463.00 0.00028 6,891,862.53
MMK 8,439,074.40 0.0036 30,261.53
Other payables:
Of which: USD 5,448.60 6.3757 34,738.64
Dong 1,078,493,475.00 0.00028 300,867.51
MMK 1,030,000.00 0.0036 3,693.46
Short-term borrowings:
Of which: USD 145,926,410.93 6.3757 930,383,018.17
Dong 93,763,475,075.00 0.00028 26,231,805.75
268
Lu Thai Textile Co., Ltd. Annual Report 2021
(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 the Company’s subsidiaries Lu Thai (Hong Kong), Vanguard Apparel, Lu Thai (America) and Continental
Textile, as well as the sub-subsidiaries Lu Thai Tan Chau, Libra International, Polaris Apparel and Lu An Garment Co., Ltd. were
Hong Kong, Burma, America, Vietnam, Vietnam, Singapore, Cambodia and Vietnam respectively, and the recording currency was
HKD for Lu Thai (Hong Kong), and USD for other overseas companies.
64. Government subsidy
(1) Basic information on government subsidy
Unit: RMB
Amount recorded in the
Category Amount Listed items
current profit or loss
Equipment subsidy 7,293,300.00 Deferred income 5,707,371.33
R&D subsidy 288,679.25 Deferred income 3,775,000.00
Subsidies for the price of
33,000,000.00 Deferred income 11,000,000.00
heating coal
Strengthen the enterprise
10,822,100.00 Other income 10,822,100.00
government subsidy
Subsidies for work-based
4,055,500.00 Other income 4,055,500.00
training
Preferential policy subsidy of
3,613,100.00 Other income 3,613,100.00
developing local enterprises
Subsidies for multi-purpose
3,600,000.00 Other income 3,600,000.00
pavilions
Vocational training subsidies 2,477,050.00 Other income 2,477,050.00
Post subsidies 1,988,888.91 Other income 1,988,888.91
New enterprise
apprenticeship training 1,306,800.00 Other income 1,306,800.00
subsidy
Talent incentive funds 900,000.00 Other income 900,000.00
One-off absorption of
employment subsidies for 822,158.52 Other income 822,158.52
college graduates
Special subsidies for green
500,000.00 Other income 500,000.00
factory
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Lu Thai Textile Co., Ltd. Annual Report 2021
Refund of withholding tax
494,750.80 Other income 494,750.80
handling fee
Tax relief 431,893.85 Other income 431,893.85
Special subsidies for 2020
National Water Efficiency 300,000.00 Other income 300,000.00
Frontrunner
2019 Provincial
Technological Innovation
250,000.00 Other income 250,000.00
Demonstration Enterprise
Award Fund
Special funds for the
conversion of new and old
240,000.00 Other income 240,000.00
industrial kinetic energy in
2019
2019 Provincial Innovation
200,000.00 Other income 200,000.00
Platform Award Fund
Prize for winning projects in
the 2020 Science and 200,000.00 Other income 200,000.00
Technology Awards
Second prize of Shandong
Province Science and 200,000.00 Other income 200,000.00
Technology Awards
Probation subsidy of youth 164,717.00 Other income 164,717.00
Shandong Province financial
140,000.00 Other income 140,000.00
development subsidy in 2021
Subsidy for order skilled
120,000.00 Other income 120,000.00
talents training
R&D subsidy 87,050.00 Other income 87,050.00
Social insurance subsidy 71,053.81 Other income 71,053.81
Special fund of Zibo Talents
60,000.00 Other income 60,000.00
Plan
Taishan effective declaration
50,000.00 Other income 50,000.00
area support subsidy
Occupational skills appraisal
30,430.00 Other income 30,430.00
subsidy
Subsidy for scrapped trucks
with China III Emission 25,600.00 Other income 25,600.00
Standard
Panyang Talent Program 20,000.00 Other income 20,000.00
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Lu Thai Textile Co., Ltd. Annual Report 2021
Subsidy
Employment and
19,508.04 Other income 19,508.04
apprenticeship subsidy fund
Prize for the Best
5,000.00 Other income 5,000.00
Eco-friendly Award
Foreign trade premium stand
2,400.00 Other income 2,400.00
subsidy
Unemployment dynamic
1,200.00 Other income 1,200.00
monitoring subsidy
Labor safety and health
845.19 Non-operating Income 845.19
incentives
Total 73,782,025.37 53,682,417.45
(2) Return of government subsidy
□ Applicable √ Not applicable
VIII. Change of Consolidation Scope
1. Other reasons for changes of consolidation scope
Note to changes in combination scope for other reasons (such as newly establishment or liquidation of subsidiaries, etc.) and relevant
information:
The newly-established subsidiaries of the Company in the Reporting Period included Hainan Huilin International Holdings Co., Ltd.,
Libra International Investment Pet. Ltd. and Zibo Banyang Mountain Villa Hotel Co., Ltd.
IX. Equity in Other Entities
1. Equity in subsidiary
(1) Subsidiaries
Main operating Registration Nature of Holding percentage (%)
Name Way of gaining
place place business Directly Indirectly
Luthai (Hong Wholesale and
Hong Kong Hong Kong 100.00% Set-up
Kong) retail industry
Shanghai Wholesale and
Shanghai Shanghai 100.00% Set-up
Luthai retail industry
Lufeng
Manufacturing
Company Zibo Zibo 75.00% Set-up
industry
Limited
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Lu Thai Textile Co., Ltd. Annual Report 2021
Manufacturing
Luqun Textile Zibo Zibo 100.00% Set-up
industry
Business
Xinsheng Manufacturing combination
Zibo Zibo 100.00%
Power industry not under the
same control
Technology
development,
Shanghai technical
Shanghai Shanghai 100.00% Set-up
Zhinuo consultancy
and transfer of
technologies
Lulian New Manufacturing
Zibo Zibo 75.00% Set-up
Materials industry
Lujia Import & Import and
Zibo Zibo 100.00% Set-up
Export export trade
Wholesale and
Zhishu Trading Beijing Beijing 100.00% Set-up
retail industry
Lu Thai
Occupational
Zibo Zibo Skill training 100.00% Set-up
Training
School
Banyang Catering
Zibo Zibo 100.00% Set-up
Mountain Villa services
Huilin Modern service
Wenchang Wenchang 100.00% Set-up
International industry
Libra Wholesale
International textiles and
Singapore Singapore 100.00% Set-up
(sub-subsidiary leather, holding
) company
Polaris Apparel
Manufacturing
(sub-subsidiary Cambodia Cambodia 100.00% Set-up
industry
)
Vanguard Manufacturing
Burma Burma 100.00% Set-up
Apparel industry
Lu Thai Wholesale and
America America 100.00% Set-up
(America) retail industry
Continental Manufacturing
Vietnam Vietnam 100.00% Set-up
Textile industry
Lu Thai Tan Vietnam Vietnam Manufacturing 100.00% Set-up
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Chau industry
(sub-subsidiary
)
Lu An
Garments Manufacturing
Vietnam Vietnam 100.00% Set-up
(sub-subsidiary industry
)
Notes to holding proportion in subsidiary different from voting proportion:
Not applicable.
Basis of holding half or less voting rights but still controlling the investee and holding more than half of the voting rights but not
controlling the investee:
Not applicable
Significant structural entities and controlling basis in the scope of combination:
Not applicable.
Basis of determining whether the Company is the agent or the principal:
Not applicable.
(2) Significant non-wholly-owned subsidiary
Unit: RMB
Shareholding The profit or loss Declaring dividends Balance of
proportion of attributable to the distributed to non-controlling
Name
non-controlling non-controlling non-controlling interests at the
interests interests interests period-end
LuFeng Company
25.00% -593,259.31 311,408,857.37
Limited
Lulian New Materials 25.00% -19,693,497.97 72,403,174.53
(3) The main financial information of significant not wholly-owned subsidiary
Unit: RMB
Ending balance Beginning balance
Non-cur Current Non-cur Total Non-cur Current Non-cur Total
Name Current Total Current Total
rent liabilitie rent liabilitie rent liabilitie rent liabilitie
assets assets assets assets
assets s liability s assets s liability s
Lufeng
1,126,3 1,885,6 1,666,3
Compan 759,362 586,526 49,665, 636,191 900,603 765,771 365,567 43,982, 409,549
16,837. 78,911. 75,062.
y ,074.19 ,434.78 247.83 ,682.61 ,950.86 ,111.19 ,492.89 357.41 ,850.30
35 54 05
Limited
Lulian 474,526 523,835 998,361 706,300 3,185,3 709,486 508,510 414,671 923,182 551,639 3,156,4 554,795
New ,303.81 ,116.34 ,420.15 ,975.36 10.88 ,286.24 ,155.05 ,978.33 ,133.38 ,028.01 15.36 ,443.37
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Lu Thai Textile Co., Ltd. Annual Report 2021
Material
s
Unit: RMB
Reporting period Same period of last year
Cash flows Cash flows
Total Total
Name Operating from Operating from
Net profit comprehensi Net profit comprehensi
revenue operating revenue operating
ve income ve income
activities activities
Lufeng
1,400,185,93 -7,534,683.4 -7,337,982.8 -186,015,89 1,310,505,31 22,061,576.9 21,853,748.5 -11,925,802.
Company
5.63 2 2 9.52 0.08 3 5 56
Limited
Lulian New 44,524,344.9 -79,511,556. -79,511,556. -54,085,659. -29,488,362. -29,488,362. -62,887,712.
7,663,754.58
Materials 1 10 10 40 76 76 36
2. Equity in joint ventures or associated enterprises
(1) Significant joint ventures or associated enterprises
Holding percentage (%) Accounting
treatment of the
Main operating Registration Nature of investment to
Name
place place business Directly Indirectly joint venture or
associated
enterprise
I. Joint ventures
II. Associated
enterprises
Haohong Equity
Ningbo Ningbo 33.33% Equity method
Investment investment
Haoing 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 Haoying
Haohong Investment Haoying Investment
Investment Investment
Current assets 206,401,708.32 214,686,791.30 265,506,727.38 104,472,061.07
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Lu Thai Textile Co., Ltd. Annual Report 2021
Non-current assets
Total assets 206,401,708.32 214,686,791.30 265,506,727.38 104,472,061.07
Current liabilities 3,433,167.13 517,461.99
Non-current liability
Total liabilities 3,433,167.13 517,461.99
Net assets 202,968,541.19 214,686,791.30 264,989,265.39 104,472,061.07
Equity of non-controlling
interests
Equity attributable to
shareholders of the Company as 202,968,541.19 214,686,791.30 264,989,265.39 104,472,061.07
the parent
Net assets shares calculated at
67,657,626.65 102,231,850.02 88,329,922.16 49,749,655.09
the shareholding proportion
Adjusted items
- Goodwill
- Unrealized profit of internal
transactions
- Others -446,370.01
Carrying value of investment to
67,657,626.65 101,785,480.01 88,329,922.16 49,749,655.09
associated enterprises
Fair value of equity investments
in associated enterprises with
publicly quoted prices
Operating revenue
Net profit -38,376,840.16 5,214,730.23 -17,110,725.89 -525,713.80
Total comprehensive income -38,376,840.16 5,214,730.23 -17,110,725.89 -525,713.80
X. The Risk Related to Financial Instruments
The Company's major financial instruments include monetary capital, notes receivable, accounts receivable, accounts receivable
financing, other receivables, other current assets, trading financial assets, investment in debt obligations, other non-current financial
assets, long-term receivables, notes payable, accounts payable, other payables, short-term borrowings, current portion of non-current
liabilities, long-term borrowings, bonds payable, and lease liabilities. 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 Company’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 Company 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 Company’s financial performance. According to such risk management
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Lu Thai Textile Co., Ltd. Annual Report 2021
objective, the Company has formulated corresponding risk management policy to recognize and analyze possible risks encountered
by the Company, set the appropriate acceptable risk level and designed corresponding internal control procedures to monitor the
Company’s risk level. Meanwhile, the Company 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 Company’s business operations. Accordingly, the Company’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 Company 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 Company,
determining the Company’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 Company. 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 Company will evaluate the specific
marketing environment and various changes in the Company’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 Company will suffer any financial losses due to the counter party’s failure in fulfilling the contract
obligations.
The Company 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.
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 Company 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 Company will evaluate the client’s credit qualification and set corresponding credit
period. In addition, the Company will regularly monitor the client’s credit record. For clients with poor credit records, the Company
will issue the written Reminder Notice, shorten the credit period or cancel the credit period to guarantee the Company’s overall credit
risk under control.
The hugest credit risk exposure borne by the Company is the book value of each financial asset reflected in the balance sheet, and the
Company also faces credit risk due to the provision of financial guarantee, as detailed in Note XII 2.
In terms of accounts receivable, the top 5 customers in accounts receivable were accounted for 29.83% of the total amount of
accounts receivable of the Company (29.49% in 2020). As for other receivables, the top 5 of the ending balance according to the
arrears party was accounted for 52.62% of the total amount of other receivables of the Company (65.27% in 2020).
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 Company 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 Company are listed as follows according to
report items (Unit: RMB’0,000).
31 December 2021 31 December 2020
Trading financial assets 25,181.47
Available-for-sale financial assets 35,137.97
Total 60,319.44
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Lu Thai Textile Co., Ltd. Annual Report 2021
(2) Liquidity risk
Liquidity Risk refers to the risk of capital shortage encountered by the Company during the cash payment or the settlement of other
financial assets.
During the management of liquidity risk, the Company shall reserve and monitor corresponding cash and cash equivalent deemed
sufficient by the management so as to meet the Company’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.
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 Company, and financial liabilities based on the fixed interest rate the fair value interest rate risk.
However, the Company has paid close attention the impact of interest rate fluctuations on the Company’s interest rate risk. At present,
the Company 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 Company’s unsettled interest-bearing debts based on the floating interest rate, and
cause major adverse influence on the Company’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.
The interest-bearing financial liabilities held by the Company are as follows (Unit: RMB’0,000):
Item Amount of current year Amount of last year
Financial liabilities with fixed interest
rate
Of which: Short-term borrowings 101,026.99 34,385.82
Current portion of long-term
850.00 400.00
borrowings
Long-term borrowings 58,523.00 20,000.00
Bonds payable 139,548.07 135,017.15
Total 299,948.05 189,802.97
Financial liabilities with floating
interest rate
Of which: Short-term borrowings 58,452.36
Current portion of long-term
3,914.94
borrowings
Long-term borrowings 9,900.00 29,500.00
Total 9,900.00 86,029.29
On 31 December 2021, 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 RMB990,000.
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Lu Thai Textile Co., Ltd. Annual Report 2021
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 31 December 2021, 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 112,245.83 100,434.65 89,577.60 54,643.66
EUR 361.14 136.74 587.83 894.96
JPY 78.72 195.5 13.63 64.2
HKD 29.49 408.53 328.79
GBP 7.92 8.19
CHF 14.02 24.32 10.32 5.18
SEK 0.00 0.06
Dong 3,342.45 1,583.90 3,399.25 3,110.91
MMK 3.40 28.21 241.25 30.99
Riel 4.77 46.39
Total 116,045.56 102,432.81 94,251.09 59,133.34
The Group pays close attention on the influence of foreign exchange risk due to the changes in exchange rate. At the end of each
reporting periods, for the monetary capital, notes receivable, accounts receivable, accounts payable, short-term borrowings and
long-term borrowings denominated in foreign currency, if renminbi to foreign currency up or down 10% with other variables
unchanged, the influence on the shareholders’ equity and net profit of the Company is as follows (Unit: RMB’0,000):
Reporting period Same period of last year
Exchange rate Influence on
Influence on the Influence on the Influence on
changes shareholders’
profits profits shareholders’ equity
equity
Up 10% against
2,179.45 2,179.45 4,329.95 4,329.95
RMB
Down 10%
-2,179.45 -2,179.45 -4,329.95 -4,329.95
against RMB
2. Capital management
The objectives of capital management policies of the Company are to ensure the continuous operation of the Company 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 Company 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 31
December 2021, the asset-liability ratio was 35.57% of the Company (33.29% on 31 December 2020).
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Lu Thai Textile Co., Ltd. Annual Report 2021
XI. The Disclosure of Fair Value
1. Ending fair value of assets and liabilities at fair value
Unit: RMB
Ending fair value
Fair value Fair value Fair value
Item
measurement items measurement items measurement items Total
at level 1 at level 2 at level 3
I. Consistent fair value
-- -- -- --
measurement
i. Trading financial assets 1,727,000.00 1,727,000.00
(3) Derivative financial
1,727,000.00 1,727,000.00
assets
vi. Accounts receivable
34,663,071.88 34,663,071.88
financing
vii. Other non-current
190,052,000.00 190,052,000.00
financial assets
The total amount of assets
consistently measured at fair 1,727,000.00 224,715,071.88 226,442,071.88
value
II. Non-consistent fair value
-- -- -- --
measurement
2. Valuation technique adopted and nature and amount determination of important parameters for
consistent and inconsistent fair value measurement items at level 2
The Company determines the fair value of forward foreign exchange settlement based on the bank's forward foreign exchange
quotation at the end of the 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 unlisted equity investment, 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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Lu Thai Textile Co., Ltd. Annual Report 2021
XII. Related Party and Related-party Transactions
1. Information related to the company as the parent of the Company
Proportion of
voting rights
Proportion of share held by the
Registratio Registered owned by the
Name Nature of business company as the parent against
n place capital company as the
the company (%)
parent against the
company (%)
Textile, chemistry
Lucheng Textile Zibo 6,326 15.91% 15.91%
and investment
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-2.
4. Information on other related parties
Name Relationship with the company
Zibo Limin Purified Water Co., Ltd. (hereinafter referred to as
Wholly-owned subsidiary of the Company as the parent
"Limin Purified Water")
Zibo Luqun Land Co., Ltd (hereinafter referred to as "Luqun
Wholly-owned subsidiary of the Company as the parent
Land")
Zibo Lurui Fine Chemical Co., Ltd. (hereinafter referred to as
Wholly-owned subsidiary of the Company as the parent
"Lurui Chemical")
Zibo Lujia Property Management Co., Ltd. (hereinafter
Wholly-owned subsidiary of the Company as the parent
referred to as "Lujia Property")
Hong Kong Tung Hoi International Company Limited
Wholly-owned subsidiary of the Company as the parent
(hereinafter referred to as "Tung Hoi International")
Shandong Chengshun Petrochemical Co., Ltd. (hereinafter
Wholly-owned subsidiary of the Company as the parent
referred to as "Chengshun Petro")
Zibo Chengshun Hosiery Co., Ltd. (hereinafter referred to as
Wholly-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
280
Lu Thai Textile Co., Ltd. Annual Report 2021
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
Wholly-owned subsidiary of the Company as the parent
referred to as "Lucheng Petrochemical")
Shanghai Hengjiu Textile New Materials Co., Ltd. (hereinafter
Wholly-owned subsidiary of the Company as the parent
referred to as "Hengjiu Textile")
Shandong Xirui New Material Co., Ltd. (hereinafter referred to Wholly-owned subsidiary of the parent company's
as "Xirui New Material") wholly-owned subsidiary
Zibo Lumei Economic and Trade Co., Ltd. (hereinafter
Wholly-owned subsidiary of the Company as the parent
referred to as "Lumei Economic and Trade")
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 Same period of last
Related party Content Reporting period
credit trade credit or not year
Recycled water,
Limin Purified sewage treatment,
26,328,581.68 33,374,000.00 Not 28,125,943.88
Water materials and
equipment
Lurui Fine
Auxiliaries 91,043,342.61 103,500,000.00 Not 72,807,066.89
Chemical
Paper core,
hosiery, hosiery
processing fees,
Chengshun
purchase of 8,979,576.69 14,100,000.00 Not 7,770,989.74
Hosiery
hosiery,
accessories and
other materials
Chengshun
Supermarket retail 2,013,167.16 3,580,000.00 Not 2,333,060.60
Trading
Lucheng
Oils 3,338,571.42 5,140,000.00 Not 2,232,371.95
Petrochemical
Chengshun Natural gas and oil
40,436,209.23 49,755,000.00 Not 31,169,896.80
Petrochemical products
Xirui New Fabrics and face 829,157.05 Not 6,187.61
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Lu Thai Textile Co., Ltd. Annual Report 2021
Materials masks
Information of sales of goods and provision of labor service
Unit: RMB
Same period of last
Related party Content Reporting period
year
Lucheng Textile Tap water 1,093.19
Materials, electricity, running water, heating,
Chengshun Hosiery 280,543.32 152,705.47
steam
Chengshun Hosiery Grey yarn, dyed yarn and garments 682,514.98 331,813.72
Chengshun Hosiery Processing fee for woven towels 1,031.86
Materials, electricity, tap water, garments,
Chengshun Trading 133,676.54 131,430.59
steamed buns and heat charges
Lucheng Petrochemical Electricity, garments and materials 16,228.55 22,952.62
Materials, garments, lunch components and
Limin Purified Water 3,483,636.46 2,155,963.97
electricity
Garments, shell fabric, yarn, water &
Lurui Fine Chemical 158,981.84 164,690.07
electricity, lunch components and materials
Lujia Property Reclaimed water, materials and heat charges 141,800.60 151,056.88
Xirui New Materials Fabric, material, isolation clothing, etc. 1,169,150.35 45,881,242.54
Catering service fees and sales of alcoholic
Xirui New Materials 13,854.72 1,024.38
beverages
Lumei Economic and
Garments and computer supplies 123.36
Trade
Luqun Property Apparel 38.62
Luqun Property Copy paper, etc. 652.26
Luqun Property Heating facilities supporting fee 1,720,174.32
(2) Information on related-party lease
The Company was lessor:
Unit: RMB
The lease income confirmed The lease income confirmed
Name of lessee Category of leased assets
in the reporting period in the same period of last year
Chengshun Trading Houses and buildings 36,108.00 36,108.00
Lurui Fine Chemical Houses and buildings 6,819.70
The Company was lessee:
Unit: RMB
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Lu Thai Textile Co., Ltd. Annual Report 2021
The lease fee confirmed in The lease fee confirmed in
Name of lessor Category of leased assets
the reporting period the same period of last year
Lucheng Textile Rent of land 3,614,857.20 3,614,857.20
Lucheng Textile Rent of gas station 233,142.84 233,142.84
Lucheng Textile Rent of buildings 11,022,228.60 11,022,228.60
Luqun Property Rent of land and buildings 1,971,428.52 1,971,428.52
The right-of-use assets newly added by the Company as a lessee in the current year:
Name of lessor Category of Increase Increase in previous
leased assets period
Lucheng Textile Rent of land 29,675,587.49
Lucheng Textile Rent of gas station 2,589,219.21
Lucheng Textile Rent of buildings 62,292,894.06
Luqun Property Rent of land and
26,379,793.30
buildings
Interest expense on lease liabilities borne by the Company as a lessee in the current year:
Name of lessor Category of Interest expense in the Interest expense in the
leased assets reporting period last period
Lucheng Textile Rent of land 1,317,351.96
Lucheng Textile Rent of gas station 117,041.60
Lucheng Textile Rent of buildings 2,551,333.93
Luqun Property Rent of land and
1,202,776.50
buildings
(3) Information on remuneration for key management personnel
Unit: RMB
Item Reporting period Same period of last year
Remuneration for key management
14,155,635.36 17,485,446.61
personnel
6. Accounts receivable and payable of related party
(1) Accounts payable
Unit: RMB
Item Related party Ending carrying amount Beginning carrying amount
Accounts payable Chengshun Trading 7,720.00
Accounts payable Lurui Fine Chemical 6,022,580.15 988,293.00
283
Lu Thai Textile Co., Ltd. Annual Report 2021
Contract liability Luqun Property 649,676.55 649,676.55
XIII. Stock Payment
1. The overall situation of share-based payments
√ Applicable □ Not applicable
Unit: RMB
The total amount of equity instruments granted by the Company for the
24,205,000.00
current period
The total amount of the Company's equity instruments exercised for the
0.00
current period
The total amount of equity instruments of the Company losing efficacy
0.00
for the current period
2. Equity-settled share-based payments
√ Applicable □ Not applicable
Unit: RMB
Methods for determining the fair value of equity instruments on Difference between the market price of the stock and the
the grant date grant price on the grant date
Basis for determining the number of feasible right equity
Optimal estimation of expected feasible right in the future
instruments
Reasons for the significant discrepancy between the current
No
period estimates and the previous estimates
Accumulated amount of equity-settled share-based payment
28,325,788.60
included in capital reserves
The total amount of the expense recognized for the current period
28,325,788.60
paid on equity-settled shares
XIV. Commitments and Contingency
1. Significant commitments
Significant commitments on balance sheet date
(1) Capital commitments
Commitments signed but have not been recognized in
31 December 2021 31 December 2020
financial statements
Commitment on constructing and purchasing long-lived
10,006.86 9,864.22
assets (RMB’0,000)
284
Lu Thai Textile Co., Ltd. Annual Report 2021
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 at 31 December 2021, the Company provided guarantee to loans of the following entities:
Amount
Curren Foreign currency Not
Name Item converted to Start date Due date
cy amount e
RMB
I. Subsidiary
Short-ter
Continental m 6 January
USD 933,705.38 5,953,025.39 9 July 2021
Textile borrowin 2022
gs
Short-ter
Continental m 11 January
USD 450,190.40 2,870,278.93 15 July 2021
Textile borrowin 2022
gs
Short-ter
Continental m 16 August 12 February
USD 1,062,314.44 6,772,998.18
Textile borrowin 2021 2022
gs
Short-ter
Continental m 17 August 13 February
USD 446,578.71 2,847,251.88
Textile borrowin 2021 2022
gs
Short-ter
Continental m 18 August 14 February
USD 236,300.76 1,506,582.76
Textile borrowin 2021 2022
gs
Short-ter
Continental m 18 August 14 February
USD 1,227,876.98 7,828,575.26
Textile borrowin 2021 2022
gs
Short-ter
Continental m 23 August 19 February
USD 371,427.46 2,368,110.06
Textile borrowin 2021 2022
gs
Short-ter
Continental m 27 August 23 February
USD 297,239.42 1,895,109.37
Textile borrowin 2021 2022
gs
Continental Short-ter USD 250,841.66 1,599,291.17 7 September 7 March
285
Lu Thai Textile Co., Ltd. Annual Report 2021
Textile m 2021 2022
borrowin
gs
Short-ter
Continental m 7 September 7 March
USD 200,235.73 1,276,642.94
Textile borrowin 2021 2022
gs
Short-ter
Continental m 15 September 14 March
USD 584,194.94 3,724,651.68
Textile borrowin 2021 2022
gs
Short-ter
Continental m 15 September 14 March
USD 217,805.53 1,388,662.72
Textile borrowin 2021 2022
gs
Short-ter
Continental m 27 September 26 March
USD 455,548.00 2,904,437.38
Textile borrowin 2021 2022
gs
Short-ter
Continental m 4 October
USD 1,413,237.83 9,010,380.43 2 April 2022
Textile borrowin 2021
gs
Short-ter
Continental m 5 October
USD 410,431.44 2,616,787.73 4 April 2022
Textile borrowin 2021
gs
Short-ter
Continental m 22 October 20 April
USD 241,460.00 1,539,476.52
Textile borrowin 2021 2022
gs
Short-ter
Continental m 22 October 20 April
USD 289,667.93 1,846,835.82
Textile borrowin 2021 2022
gs
Short-ter
Continental m 27 October 25 April
USD 201,452.56 1,284,401.09
Textile borrowin 2021 2022
gs
Short-ter
Continental m 26 November 25 May
USD 161,021.67 1,026,625.86
Textile borrowin 2021 2022
gs
286
Lu Thai Textile Co., Ltd. Annual Report 2021
Short-ter
Continental m 16 December 14 June
USD 754,945.56 4,813,306.41
Textile borrowin 2021 2022
gs
Short-ter
Continental m 8 January
USD 1,040,488.12 6,633,840.11 12 July 2021
Textile borrowin 2022
gs
Short-ter
Continental m 10 January
USD 838,942.30 5,348,844.42 14 July 2021
Textile borrowin 2022
gs
Short-ter
Continental m 10 January
USD 449,323.01 2,864,748.71 14 July 2021
Textile borrowin 2022
gs
Short-ter
Continental m 4 November
USD 925,498.63 5,900,701.62 3 May 2022
Textile borrowin 2021
gs
Short-ter
Continental m 5 November
USD 322,819.69 2,058,201.50 4 May 2022
Textile borrowin 2021
gs
Short-ter
Continental m 5 November
USD 171,821.68 1,095,483.49 4 May 2022
Textile borrowin 2021
gs
Short-ter
Continental m 23 November 22 May
USD 1,097,387.49 6,996,613.42
Textile borrowin 2021 2022
gs
Short-ter
Continental m 26 November 25 May
USD 378,408.20 2,412,617.16
Textile borrowin 2021 2022
gs
Short-ter
Continental m 1 December 30 May
USD 1,095,757.42 6,986,220.58
Textile borrowin 2021 2022
gs
Short-ter
Continental 3 December
m USD 1,099,357.33 7,009,172.53 1 June 2022
Textile 2021
borrowin
287
Lu Thai Textile Co., Ltd. Annual Report 2021
gs
Short-ter
Continental m 6 December
USD 1,111,971.83 7,089,598.80 4 June 2022
Textile borrowin 2021
gs
Short-ter
Continental m 7 December
USD 615,700.19 3,925,519.70 5 June 2022
Textile borrowin 2021
gs
Short-ter
Continental m 7 December
USD 201,753.39 1,286,319.09 5 June 2022
Textile borrowin 2021
gs
Short-ter
Continental m 14 December 12 June
USD 1,094,786.56 6,980,030.67
Textile borrowin 2021 2022
gs
Short-ter
Continental m 20 January
USD 1,577,491.36 10,057,611.66 20 July 2021
Textile borrowin 2022
gs
Short-ter
Continental m 23 January
USD 303,367.65 1,934,181.13 23 July 2021
Textile borrowin 2022
gs
Short-ter
Continental m 25 January
USD 749,535.00 4,778,810.30 29 July 2021
Textile borrowin 2022
gs
Short-ter
Continental m 30 January
USD 1,039,901.84 6,630,102.16 3 August 2021
Textile borrowin 2022
gs
Short-ter
Continental m 31 January
USD 1,324,222.00 8,442,842.21 4 August 2021
Textile borrowin 2022
gs
Short-ter
Continental m 1 February
USD 151,960.00 968,851.37 5 August 2021
Textile borrowin 2022
gs
Continental Short-ter 2 February
USD 446,282.00 2,845,360.15 6 August 2021
Textile m 2022
288
Lu Thai Textile Co., Ltd. Annual Report 2021
borrowin
gs
Short-ter
Continental m 10 August 6 February
USD 627,475.38 4,000,594.78
Textile borrowin 2021 2022
gs
Short-ter
Continental m 10 August 6 February
USD 2,102,632.54 13,405,754.29
Textile borrowin 2021 2022
gs
Short-ter
Continental m 11 August 7 February
USD 392,468.62 2,502,262.18
Textile borrowin 2021 2022
gs
Short-ter
Continental m 7 January
Dong 28,492,025,317.00 7,971,091.86 5 July 2021
Textile borrowin 2022
gs
Short-ter
Continental m 24 January
Dong 5,010,041,160.00 1,401,637.75 28 July 2021
Textile borrowin 2022
gs
Short-ter
Continental m 27 August 23 February
Dong 5,100,504,313.00 1,426,946.24
Textile borrowin 2021 2022
gs
Short-ter
Continental m 23 September 22 March
Dong 1,265,060,542.00 353,920.57
Textile borrowin 2021 2022
gs
Short-ter
Continental m 24 September 23 March
Dong 2,680,197,866.00 749,827.48
Textile borrowin 2021 2022
gs
Short-ter
Continental m 11 October
Dong 4,208,289,534.00 1,177,335.13 8 April 2022
Textile borrowin 2021
gs
Short-ter
Continental m 21 October 19 April
Dong 6,087,019,685.00 1,702,939.42
Textile borrowin 2021 2022
gs
Continental Short-ter Dong 4,914,041,560.00 1,374,780.36 27 October 25 April
289
Lu Thai Textile Co., Ltd. Annual Report 2021
Textile m 2021 2022
borrowin
gs
Short-ter
Continental m 29 October 27 April
Dong 6,262,630,846.00 1,752,069.40
Textile borrowin 2021 2022
gs
Short-ter
Lu Thai Tan m 29 January
USD 1,043,907.65 6,655,642.00 2 August 2021
Chau borrowin 2022
gs
Short-ter
Lu Thai Tan m 4 November
USD 260,231.78 1,659,159.76 3 May 2022
Chau borrowin 2021
gs
Short-ter
Lu Thai Tan m 16 November 15 May
USD 167,878.80 1,070,344.87
Chau borrowin 2021 2022
gs
Short-ter
Lu Thai Tan m 9 January
USD 186,483.00 1,188,959.66 13 July 2021
Chau borrowin 2022
gs
Short-ter
Lu Thai Tan m 18 January
USD 186,627.00 1,189,877.76 22 July 2021
Chau borrowin 2022
gs
Short-ter
Lu Thai Tan m 30 January
USD 125,059.44 797,341.47 3 August 2021
Chau borrowin 2022
gs
Short-ter
Lu Thai Tan m 31 January
USD 422,099.00 2,691,176.59 4 August 2021
Chau borrowin 2022
gs
Short-ter
Lu Thai Tan m 1 February
USD 202,284.00 1,289,702.10 5 August 2021
Chau borrowin 2022
gs
Short-ter
Lu Thai Tan m 17 August 13 February
USD 1,039,223.81 6,625,779.25
Chau borrowin 2021 2022
gs
290
Lu Thai Textile Co., Ltd. Annual Report 2021
Short-ter
Lu Thai Tan m 23 September 22 March
USD 159,989.50 1,020,045.06
Chau borrowin 2021 2022
gs
Short-ter
Lu Thai Tan m 7 January
Dong 8,679,496,797.00 2,428,225.65 5 July 2021
Chau borrowin 2022
gs
Short-ter
Lu Thai Tan m 22 January
Dong 1,426,118,356.00 398,979.02 22 July 2021
Chau borrowin 2022
gs
Short-ter
Lu Thai Tan m 4 February
Dong 4,039,940,300.00 1,130,236.79 29 July 2021
Chau borrowin 2022
gs
Short-ter
Lu Thai Tan m 23 August 23 February
Dong 1,427,162,237.00 399,271.07
Chau borrowin 2021 2022
gs
Short-ter
Lu Thai Tan m 23 September 23 March
Dong 1,013,341,681.00 283,498.26
Chau borrowin 2021 2022
gs
Short-ter
Lu Thai Tan m 23 September 23 March
Dong 3,532,199,220.00 988,188.24
Chau borrowin 2021 2022
gs
Short-ter
Lu Thai Tan m 29 September 29 March
Dong 3,375,788,790.00 944,429.97
Chau borrowin 2021 2022
gs
Short-ter
Lu Thai Tan m 4 October
Dong 5,334,234,404.00 1,492,335.91 4 April 2022
Chau borrowin 2021
gs
Short-ter
Lu Thai Tan m 26 October 26 April
Dong 915,382,467.00 256,092.63
Chau borrowin 2021 2022
gs
Short-ter
Lu An 29 October 26 February
m USD 120,974.78 771,298.90
Garments 2021 2022
borrowin
291
Lu Thai Textile Co., Ltd. Annual Report 2021
gs
Short-ter
Lu An m 13 December 12 April
USD 54,895.55 349,997.56
Garments borrowin 2021 2022
gs
Total 238,768,844.34
As at 31 December 2021, there was no other significant contingency in the Company to disclose.
XV. Events after Balance Sheet Date
1. Significant non-adjustment matters
Unit: RMB
Reason of
Influence number to inability to
Item Contents the financial position estimate
and operating results influence
number
On 18 February 2022, the Proposal on Granting the Reserved Restricted
Shares under the 2021 Incentive Plan to the Incentive Personnel was
Issuance
deliberated and approved at the 30th session of the Ninth Board of
of stocks
Directors of the Company. The grant date of the reserved shares was 18 13,423,520.33
and
February 2022, and 5.838 million reserved restricted shares were granted
bonds
to the incentive personnel who met the grant conditions at the grant price
of RMB3.56 per share.
2. Profit distribution
Unit: RMB
Profits or dividends to be distributed 61,763,890.65
Profits or dividends announced to be distributed after the
61,763,890.65
approval
3. Notes to other events after balance sheet date
As at 27 April 2022, the Company has no other events after balance sheet date that should be disclosed.
292
Lu Thai Textile Co., Ltd. Annual Report 2021
XVI. Notes of Main Items in the Financial Statements of the Company as the Parent
1. Accounts receivable
(1) Accounts receivable classified by category
Unit: RMB
Ending balance Beginning balance
Carrying amount Bad debt provision Carrying amount Bad debt provision
Category Withdra Withdra
Carrying Carrying
Proporti wal Proportio wal
Amount Amount amount Amount Amount amount
on proporti n proportio
on n
Accounts receivable
of bad debt 1,788,43 1,788,43 5,730,13 5,730,13
0.39% 100.00% 1.60% 100.00%
provision separately 2.20 2.20 2.44 2.44
accrued
Of which:
Accounts receivable
of bad debt 453,937, 28,225,8 425,711, 352,666, 26,499,4 326,166,93
99.61% 6.22% 98.40% 7.51%
provision withdrawn 579.34 41.07 738.27 401.84 66.74 5.10
by groups
Of which:
Group 1: Undue
45,299,1 475,640. 44,823,4 29,328,6 307,951. 29,020,719
accounts (credit 9.94% 1.05% 8.18% 1.05%
17.13 73 76.40 70.49 04 .45
insurance insured)
Group 2: Undue
366,082, 18,304,1 347,778, 242,017, 12,100,8 229,917,05
accounts (no credit 80.33% 5.00% 67.53% 5.00%
322.24 16.12 206.12 947.74 97.39 0.35
insurance)
Group 3: Overdue
11,631,2 1,244,54 10,386,7 23,520,7 2,516,72 21,004,043
accounts (credit 2.55% 10.70% 6.56% 10.70%
78.80 6.83 31.97 65.79 1.94 .85
insurance insured)
Group 4: Overdue
30,924,8 8,201,53 22,723,3 57,799,0 11,573,8 46,225,121
accounts (no credit 6.79% 26.52% 16.13% 20.02%
61.17 7.39 23.78 17.82 96.37 .45
insurance)
455,726, 30,014,2 425,711, 358,396, 32,229,5 326,166,93
Total 100.00% 6.59% 100.00% 8.99%
011.54 73.27 738.27 534.28 99.18 5.10
Bad debt provision separately accrued: Y2021
Unit: RMB
Name Ending balance
293
Lu Thai Textile Co., Ltd. Annual Report 2021
Withdrawal
Carrying amount Bad debt provision Provision reason
proportion
Customer filed for bankruptcy
Customer 1 967,724.98 967,724.98 100.00%
protection
Customer filed for bankruptcy
Customer 2 273,384.76 273,384.76 100.00%
protection
Customer financial difficulties or
Other customer 547,322.46 547,322.46 100.00%
filed for bankruptcy protection
Total 1,788,432.20 1,788,432.20 -- --
Bad debt provision separately accrued: Y2020
Unit: RMB
Ending balance
Name Bad debt Withdrawal
Carrying amount Provision reason
provision proportion
Customer filed for bankruptcy
Customer 1 3,410,632.89 3,410,632.89 100.00%
protection
Customer filed for bankruptcy
Customer 2 1,565,397.64 1,565,397.64 100.00%
protection
Customer financial difficulties or
Other customer 754,101.91 754,101.91 100.00%
filed for bankruptcy protection
Total 5,730,132.44 5,730,132.44 -- --
Bad debt provision withdrawn by groups: Y2021
Unit: RMB
Ending balance
Name
Carrying amount Bad debt provision Withdrawal proportion
Group 1: Undue accounts (credit
45,299,117.13 475,640.73 1.05%
insurance insured)
Group 2: Undue accounts (no credit
366,082,322.24 18,304,116.12 5.00%
insurance)
Group 3: Overdue accounts (credit
11,631,278.80 1,244,546.83 10.70%
insurance insured)
Group 4: Overdue accounts (no credit
30,924,861.17 8,201,537.39 26.52%
insurance)
Total 453,937,579.34 28,225,841.07 --
Bad debt provision withdrawn by groups: Y2020
Unit: RMB
Name Ending balance
294
Lu Thai Textile Co., Ltd. Annual Report 2021
Carrying amount Bad debt provision Withdrawal proportion
Group 1: Undue accounts (credit
29,328,670.49 307,951.04 1.05%
insurance insured)
Group 2: Undue accounts (no credit
242,017,947.74 12,100,897.39 5.00%
insurance)
Group 3: Overdue accounts (credit
23,520,765.79 2,516,721.94 10.70%
insurance insured)
Group 4: Overdue accounts (no credit
57,799,017.82 11,573,896.37 20.02%
insurance)
Total 352,666,401.84 26,499,466.74 --
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 Carrying amount
Within 1 year (including 1 year) 447,209,201.62
1 to 2 years 2,511,805.71
2 to 3 years 5,264,224.44
Over 3 years 740,779.77
3 to 4 years 448,533.70
4 to 5 years 292,246.07
Total 455,726,011.54
(2) Bad debt provision withdrawn, reversed or collected during the Reporting Period
Bad debt provision withdrawn in the Reporting Period:
Unit: RMB
Changes in the reporting period
Beginning
Category Reversal or Ending balance
balance Withdrawal Write-off Other
recovery
Bad debt
32,229,599.18 -2,015,565.96 199,759.95 30,014,273.27
provision
Total 32,229,599.18 -2,015,565.96 199,759.95 30,014,273.27
(3) Particulars of the actual verification of accounts receivable during the Reporting Period
Unit: RMB
295
Lu Thai Textile Co., Ltd. Annual Report 2021
Item Amount
Accounts receivable actually verified 199,759.95
(4) Top 5 of accounts receivable of ending balance collected by arrears party
Unit: RMB
Proportion to total ending balance of Ending balance of bad
Name of entity Ending balance
accounts receivable debt provision
Customer A 46,292,727.15 10.16% 2,650,707.30
Customer B 37,055,066.08 8.13% 2,874,415.80
Customer C 25,674,099.30 5.63% 1,329,121.55
Customer D 24,860,977.60 5.46% 1,243,048.88
Customer E 22,441,812.72 4.92% 1,122,090.64
Total 156,324,682.85 34.30% --
2. Notes receivable
31 December 2021 31 December 2020
Notes
Carrying Bad debt Carrying Carrying Bad debt Carrying
Category
amount provision amount amount provision amount
Bank
acceptance 70,946,803.29 70,946,803.29 75,987,373.12 75,987,373.12
bill
Commercial
acceptance 127,886.89 6,394.34 121,492.55
bill
L/C 60,960,026.96 60,960,026.96 32,876,316.67 32,876,316.67
Total 132,034,717.14 6,394.34 132,028,322.80 108,863,689.79 108,863,689.79
(1) Notes receivable endorsed by the Company or discounted and not due on the balance sheet date at the period-end
Derecognized amount at the Non-derecognized amount at the
Category
period-end period-end
Bank acceptance bill 59,223,996.79
Trade acceptance bill
Total 59,223,996.79
If the bank acceptance bill used for endorsement and discount is accepted by a bank with low credit grade, the endorsement and
discount do not affect the right of recourse, and the credit risk and deferred payment risk related to the bill have not been transferred,
so the bank acceptance bill was not derecognized at the period-end.
31 December 2021
Category Carrying amount Bad debt provision Carrying
Amount Proportion Amount Expected amount
296
Lu Thai Textile Co., Ltd. Annual Report 2021
(%) credit loss
rate (%)
Bad debt provision
separately accrued
Bad debt provision
132,034,717.14 100.00 6,394.34 132,028,322.80
withdrawn by groups
Of which:
Commercial acceptance
127,886.89 0.10 6,394.34 5 121,492.55
bill
Bank acceptance bill and
131,906,830.25 99.90 131,906,830.25
L/C
Total 132,034,717.14 100.00 6,394.34 132,028,322.80
31 December 2020
Carrying amount Bad debt provision
Category Expected Carrying
Proportion
Amount Amount credit loss amount
(%)
rate (%)
Bad debt provision
separately accrued
Bad debt provision
108,863,689.79 100.00 108,863,689.79
withdrawn by groups
Of which:
Commercial acceptance
bill
Bank acceptance bill
108,863,689.79 100.00 108,863,689.79
and L/C
Total 108,863,689.79 100.00 108,863,689.79
(3) Bad debt provision withdrawn, reversed or collected during the Reporting Period
Amount of bad debt provision
31 December 2020
Withdrawal of the current period 6,394.34
Reversal or recovery in the Reporting Period
Amount written-off for the Reporting Period
Write-off in the current period
Other
31 December 2021 6,394.34
297
Lu Thai Textile Co., Ltd. Annual Report 2021
3. Other accounts receivable
Unit: RMB
Item Ending balance Beginning balance
Dividends receivable 94,525,975.44 75,488,652.49
Other receivables 1,965,654,050.43 1,425,394,029.70
Total 2,060,180,025.87 1,500,882,682.19
(1) Dividends receivable
1) Category of dividends receivable
Unit: RMB
Item (or investee) Ending balance Beginning balance
Fengshou Cotton 49,501,026.78 79,461,739.46
Luqun Textile 50,000,000.00
Less: Bad debt provision -4,975,051.34 -3,973,086.97
Total 94,525,975.44 75,488,652.49
2) Significant dividends receivable aging over 1 year
Unit: RMB
Whether occurred impairment
Item (or investee) Ending balance Aging Reason
and its judgment basis
Collect in accordance with
Fengshou Cotton 49,501,026.78 1 to 2 years Not past due
agreed dividend payment plan
Total 49,501,026.78 -- -- --
3) Withdrawal of bad debt provision
√ Applicable □ Not applicable
Unit: RMB
First stage Second stage Third stage
Expected loss in the
Expected credit loss Expected loss in the
Bad debt provision duration (credit Total
of the next 12 duration (credit
impairment not
months impairment occurred)
occurred)
Balance of 1 January2021 3,973,086.97 3,973,086.97
Balance of 1 January 2021 in —— —— —— ——
298
Lu Thai Textile Co., Ltd. Annual Report 2021
the Reporting Period
Withdrawal of the current
1,001,964.37 1,001,964.37
period
Balance of 31 December 2021 4,975,051.34 4,975,051.34
Changes of carrying amount with significant amount changed of loss provision in the current period
□ Applicable √ Not applicable
(2) Other receivables
1) Other receivables classified by category
Unit: RMB
Nature Ending carrying amount Beginning carrying amount
Intercourse funds 1,958,920,668.29 1,415,868,182.84
Payment on behalf 9,591,346.65 11,567,504.63
Guarantee deposit and cash deposit 3,764,642.06 3,119,958.81
Borrowings and petty cash 737,517.66 859,406.80
Other 399,089.06 98,063.62
Total 1,973,413,263.72 1,431,513,116.70
2) Withdrawal of bad debt provision
Unit: RMB
First stage Second stage Third stage
Expected credit loss Expected loss in the Expected loss in the
Bad debt provision Total
of the next 12 duration (credit duration (credit
months impairment not occurred) impairment occurred)
Balance of 1 January 2021 4,905,594.37 1,213,492.63 6,119,087.00
Balance of 1 January 2021 in
—— —— —— ——
the Reporting Period
Withdrawal of the current
1,563,716.47 76,409.82 1,640,126.29
period
Balance of 31 December
6,469,310.84 1,289,902.45 7,759,213.29
2021
Changes of carrying amount with significant amount changed of loss provision in the current period
□ Applicable √ Not applicable
Disclosure by aging
Unit: RMB
299
Lu Thai Textile Co., Ltd. Annual Report 2021
Aging Carrying amount
Within 1 year (including 1 year) 1,304,815,450.41
1 to 2 years 665,685,512.92
2 to 3 years 270,396.40
Over 3 years 2,641,903.99
3 to 4 years 164,144.98
Over 5 years 2,477,759.01
Total 1,973,413,263.72
3) Top 5 of the Ending Balance of the Other Receivables Collected according to the Arrears Party
Unit: RMB
Proportion to ending
Ending balance of
Name of entity Nature Ending balance Aging balance of total other
bad debt provision
receivables
Lulian New Intercourse Within 1 year and
678,605,801.54 34.39% 2,035,817.40
Materials funds 1 to 2 years
Continental Intercourse Within 1 year and
606,806,381.11 30.75% 1,820,419.14
Textile funds 1 to 2 years
Lufeng
Intercourse Within 1 year and
Company 344,179,136.19 17.44% 1,032,537.41
funds 1 to 2 years
Limited
Lu Thai Tan Intercourse
217,039,055.64 Within 1 year 11.00% 651,117.17
Chau funds
Lu An Intercourse
92,240,293.81 Within 1 year 4.67% 276,720.88
Garments funds
Total -- 1,938,870,668.29 -- 98.25% 5,816,612.00
4. Long-term equity investment
Unit: RMB
Ending balance Beginning balance
Item Depreciati Depreciati
Carrying amount Carrying amount Carrying amount Carrying amount
on reserve on reserve
Investment to
2,648,604,886.50 2,648,604,886.50 2,417,071,281.88 2,417,071,281.88
Subsidiaries
Investment to
Joint Ventures 169,443,106.66 169,443,106.66 138,079,577.25 138,079,577.25
and Associated
300
Lu Thai Textile Co., Ltd. Annual Report 2021
Enterprises
Total 2,818,047,993.16 2,818,047,993.16 2,555,150,859.13 2,555,150,859.13
(1) Investment to subsidiaries
Unit: RMB
Increase/decrease
Withdra
Ending
Beginning wal of
Ending balance balance of
Investee balance (carrying Additional Reduced impair
Other (carrying value) depreciatio
value) investment investment ment
n reserve
provisio
n
Xinsheng Power 176,340,737.93 176,340,737.93
Lufeng Company
529,620,000.00 529,620,000.00
Limited
Luqun Textile 171,784,550.00 171,784,550.00
Luthai (Hong Kong) 128,771,800.00 128,771,800.00
Shanghai Luthai 20,000,000.00 20,000,000.00
Polaris Apparel 108,242,335.38 2,947.65 108,245,283.03
Lu Thai (America) 10,209,050.00 10,209,050.00
Vanguard Apparel 62,337,238.57 62,337,238.57
Continental Textile 834,936,510.00 834,936,510.00
Lu An Garments 64,229,060.00 64,229,060.00
Lulian New
300,000,000.00 300,000,000.00
Materials
Lujia Import &
10,000,000.00 10,000,000.00
Export
Lu Thai
Occupational 100,000.00 100,000.00
Training School
Shanghai Zhinuo 5,000.00 5,000.00
Zhishu Trading 500,000.00 500,000.00 1,000,000.00
Huilin International 400,000,000.00 400,000,000.00
Banyang Mountain
3,500,000.00 3,500,000.00
Villa
Total 2,417,071,281.88 404,007,947.65 172,474,343.03 2,648,604,886.50
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Lu Thai Textile Co., Ltd. Annual Report 2021
(2) Investment to joint ventures and associated enterprises
Unit: RMB
Increase/decrease
Gains
Ending
Beginnin and Adjustm Cash
Withdra Ending balance
g Addition losses ent of bonus or
Reduced Changes wal of balance of
Investee balance al recogniz other profits
investme of other impairm Other (carrying depreciat
(carrying investme ed under compreh announc
nt equity ent value) ion
value) nt the ensive ed to
provision reserve
equity income issue
method
I. Joint ventures
II. Associated enterprises
Haohong
88,329,9 7,881,29 -12,791, 67,657,6
Investme
22.16 4.68 000.83 26.65
nt
Haoying
49,749,6 50,000,0 2,035,82 101,785,
Investme
55.09 00.00 4.92 480.01
nt
138,079, 50,000,0 7,881,29 -10,755, 169,443,
Subtotal
577.25 00.00 4.68 175.91 106.66
138,079, 50,000,0 7,881,29 -10,755, 169,443,
Total
577.25 00.00 4.68 175.91 106.66
5. 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 3,452,380,376.61 2,643,956,373.18 3,097,396,791.67 2,431,256,287.15
Other operations 195,022,132.60 180,495,494.62 178,270,264.27 163,516,161.93
Total 3,647,402,509.21 2,824,451,867.80 3,275,667,055.94 2,594,772,449.08
6. Investment income
Unit: RMB
Item Reporting period Same period of last year
Long-term equity investment income
274,015,922.61 247,438,173.08
accounted by cost method
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Lu Thai Textile Co., Ltd. Annual Report 2021
Long-term equity investment income
-10,755,175.91 -5,146,737.73
accounted by equity method
Investment income from disposal of
-5,319,992.03 43,068,687.97
long-term equity investment
Investment income from holding of
1,974,280.18 6,793,854.87
trading financial assets
Investment income from disposal of
36,259,900.00 144,809,578.16
trading financial assets
Interest income from debt investment
2,401,261.30 1,993,264.93
during the holding period
Total 298,576,196.15 438,956,821.28
XVII. Supplemental Information
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 50,868,019.96
Government grants recorded in the current profit or loss (except for those
acquired in the ordinary course of company's business, or granted at
58,686,874.90
certain quotas or amounts continuously in line with national policies and
regulations)
Gain/loss from change of fair value of trading financial assets and
liabilities, and investment gains from disposal of trading financial assets
77,620,424.02
and liabilities as well as financial assets available for sale, other than valid
hedging related to the Company’s common businesses
Reversal of provision for impairment of receivables separately tested for
6,198,745.44
impairment
Other non-operating income and expense other than the above -1,700,653.34
Investment income from disposal of trading financial assets, financial
liabilities and investment in debt obligations
Less: Income tax effects 28,885,946.87
Non-controlling interests effects 5,670,351.21
Total 157,117,112.90 --
Details of other profit and loss items in line with the definition of non-recurring gains and losses:
□ Applicable √ Not applicable
There are no other profit and loss items in line with the definition of non-recurring gains and losses in the Company.
303
Lu Thai Textile Co., Ltd. Annual Report 2021
Note to define the non-recurring profit and loss items listed in the Explanatory Announcement No. 1 on Information Disclosure for
Companies Offering Their Securities to the Public—Non-recurring Gains and Losses as recurring profit and loss items.
□ Applicable √ Not applicable
2. Return on equity and earnings per share
Weighted EPS (Yuan/share)
Profit as of reporting period average roe
EPS-basic EPS-diluted
(%)
Net profit attributable to ordinary shareholders of the
4.44% 0.39 0.36
Company
Net profit attributable to ordinary shareholders of the
2.44% 0.21 0.21
Company after deduction of non-recurring profit or loss
3. Differences between accounting data under domestic and overseas accounting standards
(1) Differences of net profit and net assets disclosed in financial reports prepared under international and
Chinese accounting standards
□ Applicable √ Not applicable
(2) Differences of net profit and net assets disclosed in financial reports prepared under overseas and
Chinese accounting standards
□ Applicable √ Not applicable
Chairman of the Board: Liu Zibin
Lu Thai Textile Co., Ltd.
29 April 2022
304