LU THAI TEXTILE CO., LTD.
SEMI-ANNUAL REPORT
==2009==
Shandong · Zibo
19 Aug. 2009Contents
Section I Important Notice………………………………………………………….3
Section II Company Profile…………………………………………………...…….3
Section III Changes in Share Capital and Shares Held by Shareholders………...…5
Section IV Particulars about Directors, Supervisors and Senior Executives……….7
Section V Report of the Board of Directors…………………………….……..……7
Section VI Significant Events…………………………………………………….. .9
Section VII Financial Report………………………………………………………12
Section VIII Documents Available for Reverence………………………………...68Section I Important Notice
The Board of Directors, the Supervisory Committee as well as directors, supervisors
and senior executives of the Company guarantee that there are no any omissions,
fictitious or serious misleading statements carried in the report and will take all
responsibilities, individual and/or joint for the authenticity, accuracy and integrality of
the whole contents.
All directors of the Company voted at the Board meeting.
Chairman of the Board of the Company Mr. Liu Shizhen, Chief in Charge of
Accounting and Person in Charge of Accounting Organ Ms. Zhang Hongmei hereby
declared that the Financial Report enclosed in the Semi-Annual Report is true and
complete.
The Semi-annual Financial Report 2009 has not been audited.
Section II Company Profile
I. Basic Information of the Company
1. Legal name of the Company
In Chinese: 鲁泰纺织股份有限公司
In English: LU THAI TEXTILE CO., LTD.
2. Legal Representative: Liu Shizhen
3. Contact methods of Secretary of the Board of Directors and Securities Affairs
Representative
Secretary of the Board of Directors Securities Affairs Representative
Name Qin Guilin Zheng Weiyin
Address
No. 81, Songling East Road, Zichuan
District, Zibo
No. 81, Songling East Road, Zichuan
District, Zibo
Telephone 0533-5285166 5418361 0533-5285166 5418361
Fax 0533-5418833 5282188 0533-5418833 5282188
E-mail qingguilin@lttc.com.cn wyzheng@lttc.com.cn
4. Registered address: No. 11, Mingbo Road, High-tech Development Zone, Zibo,
Shandong
Postal code: 255086
Office address: No. 81, Songling East Road, Zichuan District, Zibo
No. 11, Mingbo Road, High-tech Development Zone, Zibo
Postal code: 255100
E-mail: lttc@public.zbptt.sd.cn
Internet website: www.lttc.com.cn
5. Newspapers designated for disclosing information of the Company: Securities
Times, Shanghai Securities News and Ta Kung Pao
Internet website designated by CSRC for publishing the Interim Report:
www.cninfo.com.cn
The place where the Interim Report is prepared and placed: Securities Department
of the Company6. Stock Exchange Listed with: Shenzhen Stock Exchange
Short Form of the Stock: LUTHAI A, LUTHAI B
Stock Code: 000726, 200726
7. Other Relevant Information of the Company
Registration date after change: 13 Aug. 2007
Place: Zibo Municipal Administration Bureau for Industry and Commerce
Registered number of enterprise legal person’s business license: QGLZZ Zi No.
000066
Registered number of taxation: 370302613281175
II. Main financial data and indices
1. Accounting data in current year
Unit: RMB Yuan
At the end of the
report period
At the period-end
of last year
Increase/decrease compared with
the period-end of last year (%)
Total assets 6,249,509,789.92 7,091,853,104.80 -11.88%
Owners’ equity attributable to shareholders of list
companies
3,613,035,342.98 3,541,234,661.44 2.03%
Share capital 994,864,800.00 994,864,800.00 0.00%
Net asset per share attributable to shareholders of
list companies (Yuan/share)
3.63 3.56 1.97%
In the report period
(from Jan. to Jun.)
The same period
of last year
Increase/decrease compared with
the end of last year (%)
Operating revenue 1,842,366,191.98 1,858,214,518.45 -0.85%
Operating profit 294,436,470.67 370,012,442.68 -20.43%
Total profit 302,253,103.63 383,432,813.21 -21.17%
Net profit attributable to shareholders of listed
companies
263,569,483.82 328,129,841.94 -19.68%
Net profit attributable to shareholders of listed
companies after deducting non-recurring gains and
losses
261,863,605.05 317,340,227.52 -17.48%
Basic earnings per share (Yuan/share) 0.26 0.39 -33.33%
Diluted earnings per share (Yuan/share) 0.26 0.39 -33.33%
Net return on equity (%) 7.29% 13.83% -6.54%
Net cash flow from operating activities 274,388,805.35 359,391,319.09 -23.65%
Net cash flow from operating activities per share
(Yuan/share)
0.28 0.43 -34.88%
Note: Impact amount of non-recurring gains and losses on net profit was RMB
1,705,878.77, of which composing was as follows:
Items Jan.–Jun. 2009 Jan.–Jun. 2008
Gains and losses from disposal of non-recurring asset, including offset
recorded as impairment reserve
-358,620.23 33,216.35Government subsidy recognized in current period, Government subsidies
recorded into current gains and losses, excluding government subsidies with
close relationship with the Company’s business and rationed government
grants in line with unified standard
7,476,729.26 12,892,870.98
Gains and losses from changes in fair value of transaction financial assets and
transaction financial responsibilities, and investment income from disposal of
transaction financial assets/responsibilities and financial assets available for
sale, excluding valid hedging business relating to normal operation.
327,000.00 194,000.00
Other non-operating income/expenses 698,523.93 494,283.20
Other items conformed to the definition of non-recurring gains and losses
Subtotal 8,143,632.96 13,614,370.53
Less: impact on income tax 5,123,051.14 3,023,692.86
Net non-current gains and losses 3,020,581.82 10,590,677.67
Net non-current gains and losses attributable to minority 1,314,703.05 -198,936.75
Net non-current gains and losses attributable to common shareholders of
listed companies
1,705,878.77 10,789,614.42
Net profit attributable to common shareholders of listed companies after
deducting non-current gains and losses
261,863,605.05 317,340,227.52
2. Explanation on the difference in net profit and net assets under IAS and CAS
Unit: RMB’000 Yuan
Net profit attributable to
shareholders of listed companies
Owners’ equity attributable to
shareholders of listed companies
Amount in
this period
Amount at the same
period of last year
Amount at the
period-end
Amount at the
period- begin
Data under IAS 264,694 316,932 3,588,876 3,515,950
Data under CAS 263,569 328,130 3,613,035 3,541,234
Items and total adjusted under IAS
Increase of fixed assets arising from translating the USD statements
into RMB statements in 1996 not recognized under IFRSs
-3,230 -3,230
Switching back of evaluation increment of Luqun, which
recognized as effect of current period
266 266 -6,534 -6,800
Tax deduction due to the domestically-manufactured equipment
purchased by the parent company recognized as deferred income
859 -11,464 -14,395 -15,254
Total of difference under IAS and CAS 1,125 -11,198 -24,159 -25,284
III. Relevant financial indices
Net assets earning ratio (%) Earnings per share (RMB/share)
Fully diluted
Weighted
average
Basic earnings
per share
Diluted earnings
per share
Net profit attributable to ordinary shareholders of the
Company
7.29% 7.37% 0.26 0.26
Net profit attributable to shareholders of parent
Company after deducting non-recurring profit and loss
7.25% 7.32% 0.26 0.26Section III Changes in Share Capital and Shares Held by Shareholders
I. Statement on changes in shares
Unit: Share
Before the change Increase/decrease during the change (+/-) After the change
Amount
Proporti
on
Issuance of
new shares
Bonus
shares
Capitalizatio
n of public
reserve
Others Subtotal Amount
Proporti
on
I. Shares subject to trading
moratorium
218,099,409 21.92% -175,664 -175,664
217,923,74
5
21.90%
1. Shares held by state
2. Shares held by state-owned
corporation
3. Shares held by domestic investors 98,358,000 9.89% 98,358,000 9.89%
Including: shares held by domestic
non-state-owned corporation
98,358,000 9.89% 98,358,000 9.89%
Shares held by domestic natural
person
4. Shares held by foreign investors 118,232,400 11.88% 118,232,400 11.88%
Including: shares held by foreign
corporation
118,232,400 11.88% 118,232,400 11.88%
Shares held by foreign natural
person
5. Shares held by senior executives 1,509,009 0.15% -175,664 -175,664 1,333,345 0.13%
II. Shares not subject to trading
moratorium
776,765,391 78.08% 175,664 175,664
776,941,05
5
78.10%
1. RMB ordinary shares 452,776,211 45.51% 175,664 175,664
452,951,87
5
45.53%
2. Domestically listed foreign shares 323,989,180 32.57%
323,989,18
0
32.57%
3. Overseas listed foreign shares
4. Others
III. Total shares 994,864,800 100.00% 0 0
994,864,80
0
100.00%
Note: “Others” in “Increase or decrease during the change” is the number of released
shares held by senior executives of the Company in the report period.
II. Shares held by the top ten shareholders at the at of report period
Unit: ShareTotal shareholders 136,655
Particulars about shares held by the top ten shareholders
Name of shareholders Nature of shareholders
Proporti
on
Total shares
held
Shares subject
to trading
moratorium
Shares pledged
or frozen
Zibo Lucheng Textile Investment Co., Ltd
Domestic non-state-owned
corporation
12.40% 123,314,700 98,358,000
Tailun Co., Ltd Foreign corporation 11.88% 118,232,400 118,232,400
DBS VICKBRS (HONG KONG) LTD A/C CLIENTS Foreign corporation 4.12% 40,986,252
Guotai Jinma Stable Return Securities Investment Fund
Domestic non-state-owned
corporation
1.68% 16,685,098
Industrial Social Responsibility Securities Investment
Fund
Domestic non-state-owned
corporation
0.99% 9,828,529
Fullgoal Tianrui strong regions selected hybrid open
securities investment fund
Domestic non-state-owned
corporation
0.78% 7,776,032
DAIWA SECS EMBC AC ITOCHU HONG KONG LTD Foreign corporation 0.60% 6,000,000
Li Minggong Foreign nature person 0.59% 5,903,642
Industrial Trend Investment Hybrid Securities Investment
Fund
Domestic non-state-owned
corporation
0.56% 5,542,625
Great Wall Jiufu Core Growth Stock Securities
Investment Fund
Domestic non-state-owned
corporation
0.53% 5,250,000
Particulars about shares held by the top ten shareholders not subject to trading moratorium
Name of shareholders
Shares not subject to trading
moratorium held
Type of shares
Zibo Lucheng Textile Investment Co., Ltd 24,956,700 RMB ordinary shares
DBS VICKBRS(HONG KONG)LTD A/C CLIENTS 40,986,252 Domestically listed foreign shares
Guotai Jinma Stable Return Securities Investment Fund 16,685,098 RMB ordinary shares
Industrial Social Responsibility Securities Investment Fund 9,828,529 RMB ordinary shares
Fullgoal Tianrui strong regions selected hybrid open securities
investment fund
7,776,032 RMB ordinary shares
DAIWA SECS EMBC AC ITOCHU HONG KONG LTD 6,000,000 Domestically listed foreign shares
Li Minggong 5,903,642 Domestically listed foreign shares
Industrial Trend Investment Hybrid Securities Investment Fund 5,542,625 RMB ordinary shares
Great Wall Jiufu Core Growth Stock Securities Investment Fund 5,250,000 RMB ordinary shares
GUOTAI JUNAN SECURITIES(HONG KONG) LIMITED 4,976,607 Domestically listed foreign shares
Explanation on associated relationship
among the aforesaid shareholders or
acting-in-concert
Among the aforesaid shareholders, Zibo Lucheng Textile Investment Co., Ltd is the first principal
shareholder and Tailun Co., Ltd is the sponsor of foreign shares. Other shareholders were shareholders
holding circulation shares. The Company was unknown whether there exists associated relationship
among the top ten shareholders of tradable share.
III. Particulars about changes in controlling shareholder or the actual controller during
the report period.
The principal shareholder and the actual controller of the Company remained
unchanged in the report period.Section IV Directors, Supervisors and Senior Executives
I. Particulars about changes in shares held by directors, supervisor and senior
executives
Name Office title
Shares held at
period-begin
Increased
shares in
current period
Decreased
shares in current
period
Shares held at
the
period-end
Of which: shares
subject to trading
moratorium
Stock option
held at the
period-end
Liu Shizhen
Chairman of the
Board
583,060 0 145,765 437,295 437,295 0
Liu Zhibin Director/GM 100,987 0 22,697 78,290 75741 0
Sun Zhigang Director 28,806 0 7,202 21,604 21,604 0
Note: changes in the aforesaid shares were caused by sales of shares held by the
senior managements of the Company after frozen.
II Particulars about new engagement and dismissal of directors, supervisors and
senior executives
In the report period, the Annual Shareholders’ General Meeting 2008 elected Zhou
Zhiji, Li Zhixian and Wang Lei as independent directors of the 5th Board of Directors,
the former independent directors Hong Xiaobing, You Shisong and Wang Yonggui
left off their post due to maturity of office term with 6 years.
Section V Report of the Board of Directors
I. Discussion and analysis of the Board of Directors
(I) Discussion and analysis of operation status in the report period
Owing to continual influence of international financial crisis, sales price of products
dropped and operating performance was influenced during the report period. In the
report period, the Company realized operating income RMB 1,842,366,200,
operating profit amounting to RMB 294,436,500 and net profit attributable to
owners of parent company amounting to RMB 263,569,500, with a respective
decrease of 0.85%, 20.43% and 19.68% year-on-year.
During the report period, in the scientific research aspect, the Company engaged in
scheme, development and generalization of eight series new products, that is
development and generalization of FREENFIT fabric; development of cotton/nylon
stretch fabric; development and generalization of cotton CVP fabric; development of
special handle fabric; development of other regenerated cellulose fiber (including
further development of Tencel fabric, bamboo fabric, Shengma fabric and outlast
fiber fabric); development of Anti-UV fabric; development of Kuraray stretch
terylene fabric; development of thermerlite fabric. Research and development of the
new products will further enriched products structure and settled foundation for
durative development of the Company.
(II) Induction on operation of the Company in the report periodItems Unit
Amount in
this period
Amount at the
same period of last
year
Increase/decre
ase
year-on-year
Operating income RMB’0000 184,236.62 185,821.45 -0.85%
Foreign exchange from export USD’0000 20,172.73 21,557.17 -6.42%
Operating profit RMB’0000 29,443.65 37,001.24 -20.43%
Net profit RMB’0000 26,734.58 32,679.67 -18.19%
Net cash flow per share arising from
operating activities
Yuan/share 0.28 0.43 -34.88%
Return on equity % 7.29% 13.83% -6.54%
Amount at
period-end
Amount at
period-beginning
Total assets RMB’0000 624.950.98 709,185.31 -11.88%
Owner’ equity attributable to parent company RMB’0000 361,303.53 354,123.47 2.03%
(III) Main business scope and operation status
1. Main business scope
The Company is of comprehensive produce textile enterprise with mixture of cotton
planting, pinning, dyeing with color, weaving, after-finishing and making clothing,
main products is yarn-dyed of fabric for making shirts. 80% products of the Company
exported outside, market covering Japan, Korea, America, England and Italy, etc. 30
countries and areas, is the largest production base for yarn-dyed fabric cloth.
2. The operation of the Company classified according to products
Unit: RMB’0000
Products Operating income Operating cost
Products The report
period
The same period
of last year
The report
period
The same period
of last year
The report
period
The same period
of last year
Yarn-dyed fabric
cloth products
119,062.82 124,613.46 86,511.89 87,585.40 27.34% 29.71%
Shirts 49,668.44 45,990.44 33,974.64 31,718.65 31.60% 31.03%
Lint 3,356.84 1,472.19 2,829.82 1,239.29 15.70% 15.82%
Chinese patent
medicine
839.70 1,053.35 763.30 817.29 9.10% 22.41%
Electricity and gas 3,459.53 2,552.64 2,904.27 3,383.27 16.05% -32.54%
Others 7,849.29 10,139.37 5,253.50 7,117.27 33.07% 29.81%
Total 184,236.62 185,821.45 132,237.42 131,861.17 28.22% 29.04%
3. Sales of products classified according to regions
Unit: RMB’0000Region
In the report
period
Proportion
(%)
The same period
of last year
Proportion
(%)
Japan, South Korea 21,548.29 11.70 26,596.13 14.31
Hong Kong 14,157.24 7.68 19,876.48 10.70
Southeast Asia 41,399.84 22.47 35,436.12 19.07
Europe, America 48,732.61 26.45 48,240.77 25.96
Others 11,401.06 6.19 29,266.08 15.75
Homeland 46,997.58 25.51 26,405.87 14.21
Total 184,236.62 100.00 185,821.45 100.00
(IV) Profit composing and main business of the Company remained unchanged in the
report period.
(V) There were no other operating activities that had greatly influenced the profit of
the Company.
(VI) Investment income from no single share-holding company has influenced the
Company’s net profit by 10%.
(VII) Problems and difficulties met in operation
In the report period, export of products of the Company was influenced by financial
crisis. Although the Company was at full capacity, export with high added value
reduced, which cause drop of average sales price of products, and operating
performance decreased over the same period of last year. Along with stability and
revival of the economy, sales environment of products of the Company would be
improved.
II. Introduction of investments in the report period
1. Continued use of raised proceeds in the report period
In 2008, the Company raised RMB 973.50 million through the public listing of
additional 150 million A-shares. And the actual net amount of the raised capital after
deducting all the issuance expenses stood at RMB 950,814,500, of which the use in
the reporting period was detailed as follows:
(1) About the Production Project for 150-thousand Ingot Top-grade Fine Combed
Yarns. The original planned investment amount was RMB 264,609,300. The
Company invested RMB 11,457,900 in the report period, and accumulative
investment amounted to RMB 254,790,300, which meant that 91.96% of the planned
investment has been accomplished. And the project was basically put into production
and run in Aug. 2008.
(2) About the Two-for-one Twisting Production Line Project. The original planned
investment amount was RMB 40,868,300. The Company invested RMB 4,712,900
in the report period, and accumulative investment amounted to RMB 21,317,700,
which meant that 52.16% of the planned investment has been accomplished. Part
project put into production and run in the report period.
(3) About the Project for Brand and Marketing Network Development. The original
planned investment amount was RMB 200 million. The Company invested RMB
1,898,100 in the report period, and accumulative investment amounted to RMB
6,822,500, which meant that 3.41% of the planned investment has been
accomplished. At present, the Company built 20 exclusive shirt shops in domesticmajor cities such as Beijing, Shanghai, Chengdu, Kunming, Ji’nan and so on, and
has operated formally. In the report period, sales business in internet has been in trial
period.
(4) About the Project for Supplementing the Working Capital. The Company planned
to supplement RMB 300 million for working capital, which has been come into
service.
(5) About the Production Line Project for 10-million-meter Top-grade Jacquard
Fabrics for Women’s Wear. RMB 145,336,900 was originally planned to be put into
the project. The Company invested RMB 6,842,900 in the report period, and
accumulative investment amounted to RMB 6,842,900, which meant that 4.70% of
the planned investment has been accomplished. At present, construction of workshop
and foundation facilities was in progress.
2. Investment with non-raised capital in the reporting period
Project of 50-million-meter Yarn Dyed Fabrics and 5-million Pieces of Shirts which
was invested and constructed with non-raised capital has been completed before the
report period.
III. In the report period, no adjustment has been made to the annual plan indices of
the Company
Section VI Significant Events
Ⅰ. Corporate governance
In the report period, the Company modified relevant provisions of its Articles of
Association according to Decree No.57 of CSRC—Decisions on Amending Some
Provisions on Cash Dividends by Listed Companies. And the modified Articles of
Association was reviewed and approved at 2008 Annual Shareholders’ General
Meeting.
Ⅱ. Implementation of profit distribution and interim profit distribution pre-plan of
2009
1. Profit distribution and capitalization of public reserves plans drafted in previous
periods and implemented in report period
The profit distribution plan of the Company for the year 2008: based on the total
shares of 994,864,800 shares as at 31 Dec. 2008, a cash dividend of RMB 2.00 (tax
included) was distributed for every 10 shares. After deducting 10% for individual
income tax, the cash dividend distributed for every 10 shares stood at RMB 1.8. And
the dividends for B-share holders were paid in HKD converted according to the
middle price of the reference exchange rate announced by People’s Bank of China on
the following day of the 2008 Annual Shareholders’ General Meeting.
Particulars about implementation of the aforesaid distribution plan: the Board ofDirectors of the Company disclosed the Public Notice on Implementation of
Dividend Distribution for 2008 dated 19 Jun. 2009, which recognized the date of
record for A shares on 24 Jun. 2009, the ex-dividend day on 25 Jun. 2009; the last
trading date for B shares on 24 Jun. 2009, and the ex-dividend date on 25 Jun. 2009.
2. Interim profit distribution preplan for 2009
The Company would not conduct profit distribution or capitalization of public
reserves in the interim of 2009.
Ⅲ. In the report period, the Company was not involved in any significant lawsuits
and arbitrations. And there existed no such lawsuits or arbitrations carried down
from previous periods to the report period.
Ⅳ. In the report period, the Company held no equity of other listed companies,
financial enterprises such as commercial banks, securities companies, insurance
companies, trust companies and futures companies, or companies to be listed.
Ⅴ. In the report period, the Company conducted no significant asset acquisition, sale
or reorganization.
Ⅵ. In the report period, there occurred no significant asset acquisition, sale or
mergers of the Company. Nor there existed such transactions carried down from
previous period to the report period.
Ⅶ. There occurred no material related transactions in the report period, and the
routine related transactions were detailed in Note Ⅸ Related Party Relationship and
Transactions to the financial report of this report.
Ⅷ. Significant contracts and their implementation
1. In the report period, the Company was involved in holding in trust, contracting
and leasing assets of other companies.
In the report period, the Company leased from Zibo Lucheng Textile Investment Co.,
Ltd. a land of 81.27 mu, machinery equipments, housing properties of 6,484.71
square meters and a gas station, with the rent paid in the report period standing at
RMB 4,420,164.42.
2. Major guarantees provided by the Company
In the report period, the Company did not provide any external or irregular
guarantees. It only provided some guarantees for its holding subsidiaries, and the
relevant guarantee amount in the report period and guarantee balance at theperiod-end were specified in Note Ⅹ Contingencies to the financial report of this
report.
3. Particulars about entrusting other parties with cash asset management in report
period or such entrustment carried down from previous periods to report period
The Company had not entrusted, did not and will not entrust other parties with cash
asset management.
Ⅸ. Implementation of commitments made by the Company or shareholders holding
over 5% of the Company’s shares in report period, and those carried down from
previous periods to report period
In the report period, the profit distribution plan for 2008 committed by the Company
had been implemented in Jun. 2009.
The commitments made by Zibo Lucheng Textile Investment Co., Ltd., a
shareholder holding over 5% of the Company’s shares, are presently in the process
of implementation. And the commitment made by the major shareholder—Lucheng
Co., Ltd.—involving increasing its shareholding in the Company with dividends
received in 2005 and 2006 have been implemented. Meanwhile, the commitment of
“a growth rate not lower than 30%” was overfulfilled due to the fact that the total
profit of 2008 increased by 58.06% over that of 2005. Up until now, no violation of
relevant commitments has been found.
Ⅹ. In the report period, the Company, its directors, supervisors, senior management
staff, shareholders, actual controller, purchaser received no investigations from
relevant authorities, enforcement actions from judicial and disciplinary departments,
being transferred to judicial bodies, investigations for criminal responsibilities,
investigations from CSRC, administrative punishment from CSRC, bans on entry
into the securities market, criticism by circular, being recognized as an inappropriate
individual, punishment from other administrative authorities or open criticism from
stock exchanges.
Ⅺ. Field researches, interviews and visits received in report period
Reception time
Reception
place
Reception
way
Visitor
Main discussion and materials
provided
13 Jan. 2009
Reception
room of the
Company
Field
research
Zhang Dongyi from R&D Department of GF
Fund Management Co., Ltd.
Basic information of the
Company and field-visiting
the Company
3 Feb. 2009
Reception
room of the
Company
Field
research
Cheng Zhou and Li Jie, Fund Manager and
Vice Director of Research of Guotai Fund
Management Co., Ltd.
Basic information of the
Company and field-visiting
the Company
10 Feb. 2009 Reception Field Wang Yan, Researcher of Research Basic information of theroom of the
Company
research Department of Boshi Fund Management Co.,
Ltd.
Company and field-visiting
the Company
10 Feb. 2009
Reception
room of the
Company
Field
research
Wang Jiaqin, Researcher of Research
Department of Boshi Fund Management Co.,
Ltd.
Basic information of the
Company and field-visiting
the Company
10 Feb. 2009
Reception
room of the
Company
Field
research
Shun Zhanjun, Fund Manager of Boshi Fund
Management Co., Ltd.
Basic information of the
Company and field-visiting
the Company
10 Feb. 2009
Reception
room of the
Company
Field
research
Xia Chun, Fund Manager and Chief Director
of Research of Boshi Fund Management Co.,
Ltd.
Basic information of the
Company and field-visiting
the Company
11 Feb. 2009
Reception
room of the
Company
Field
research
Wang Wei, Researcher of China Merchants
Securities
Basic information of the
Company and field-visiting
the Company
11 Feb. 2009
Reception
room of the
Company
Field
research
Wang Liang, Researcher of Shanxi Securities
Basic information of the
Company and field-visiting
the Company
11 Feb. 2009
Reception
room of the
Company
Field
research
Wang Ran, Researcher of Yimin Asset
Management
Basic information of the
Company and field-visiting
the Company
11 Feb. 2009
Reception
room of the
Company
Field
research
Li Mei, Researcher of Tianhong Asset
Management
Basic information of the
Company and field-visiting
the Company
11 Feb. 2009
Reception
room of the
Company
Field
research
Zhu Yu, Researcher of China General
Technology (Group) Investment &
Management Co., Ltd.
Basic information of the
Company and field-visiting
the Company
17 Feb. 2009
Reception
room of the
Company
Field
research
Xu Yun, Director of Research in China of
Changfeng China Research Co., Ltd.
Basic information of the
Company and field-visiting
the Company
17 Feb. 2009
Reception
room of the
Company
Field
research
Liang Qingxin from Shenyin Wanguo
Securities (HK) Co., Ltd.
Basic information of the
Company and field-visiting
the Company
19 Feb. 2009
Reception
room of the
Company
Field
research
Wang Xuesong, Researcher of Changsheng
Fund Management Co., Ltd.
Basic information of the
Company and field-visiting
the Company
19 Feb. 2009
Reception
room of the
Company
Field
research
Zhang Xinhong, Researcher of Hongyuan
Securities
Basic information of the
Company and field-visiting
the Company
5 Mar. 2009
Reception
room of the
Company
Field
research
Liu Xinyu, Senior Manager of Proprietary
Trading Department of Citic Securities Co.,
Ltd.
Basic information of the
Company and field-visiting
the Company
5 Mar. 2009
Reception
room of the
Company
Field
research
Li Junsong from China Securities Co., Ltd.
Basic information of the
Company and field-visiting
the Company6 Mar. 2009
Reception
room of the
Company
Field
research
Zhang Qi from Southwest Securities Co., Ltd.
Basic information of the
Company and field-visiting
the Company
6 Apr. 2009 Office
By
telephone
He Minji, Senior Fund Manager of Value
Partners
Basic information of the
Company
6 Apr. 2009 Office
By
telephone
Zhang Qilian, Investment Analyst of Value
Partners
Basic information of the
Company
15 Apr. 2009
Reception
room of the
Company
Field
research
Chen Yuan, Researcher of Huaan Fund
Management Co., Ltd.
Basic information of the
Company and field-visiting
the Company
16 Apr. 2009
Reception
room of the
Company
Field
research
Tan Li, Researcher of Harvest Fund
Management
Basic information of the
Company and field-visiting
the Company
16 Apr. 2009
Reception
room of the
Company
Field
research
Fan Fanghua, Researcher of New China Asset
Management Co., Ltd.
Basic information of the
Company and field-visiting
the Company
16 Apr. 2009
Reception
room of the
Company
Field
research
Yun Cui, Director Assistant of Research
Center of Qilu Securities
Basic information of the
Company and field-visiting
the Company
16 Apr. 2009
Reception
room of the
Company
Field
research
Xu Xiaoyan, Researcher of Research Center
of Qilu Securities
Basic information of the
Company and field-visiting
the Company
21 Apr. 2009
Reception
room of the
Company
Field
research
Zhu Libin, Director Assistant of Research
Department of China International Fund
Management
Basic information of the
Company and field-visiting
the Company
21 Apr. 2009
Reception
room of the
Company
Field
research
Xiu Shiyu from ICBC Suisse Asset
Management Co., Ltd.
Basic information of the
Company and field-visiting
the Company
21 Apr. 2009
Reception
room of the
Company
Field
research
Xu Xionghui, Research Assistant of Da
Cheng Fund Management Co., Ltd.
Basic information of the
Company and field-visiting
the Company
21 Apr. 2009
Reception
room of the
Company
Field
research
Cao Lu, Researcher of China Life Insurance
Asset Management Co., Ltd.
Basic information of the
Company and field-visiting
the Company
21 Apr. 2009
Reception
room of the
Company
Field
research
Yan Lei from Yaxin Investment
Basic information of the
Company and field-visiting
the Company
21 Apr. 2009
Reception
room of the
Company
Field
research
Situ Fanghua from DAIWA Asset
Management Co., Ltd.
Basic information of the
Company and field-visiting
the Company
21 Apr. 2009
Reception
room of the
Company
Field
research
Xiao Haiyan from Trust Bridge Partners
Basic information of the
Company and field-visiting
the Company
21 Apr. 2009 Reception Field Huang Fang, Assistant of China International Basic information of theroom of the
Company
research Capital Corporation Limited Company and field-visiting
the Company
21 Apr. 2009
Reception
room of the
Company
Field
research
Sun Bo from Asset Management Department
of China International Capital Corporation
Limited
Basic information of the
Company and field-visiting
the Company
21 Apr. 2009
Reception
room of the
Company
Field
research
Luo Wenwen from Trading Department of
China International Capital Corporation
Limited
Basic information of the
Company and field-visiting
the Company
21 Apr. 2009
Reception
room of the
Company
Field
research
Guo Haiyan, Deputy GM of Research
Department of China International Capital
Corporation Limited
Basic information of the
Company and field-visiting
the Company
21 Apr. 2009
Reception
room of the
Company
Field
research
Xue Jianmin from Trading Department of
China International Capital Corporation
Limited
Basic information of the
Company and field-visiting
the Company
23 Apr. 2009
Reception
room of the
Company
Field
research
Fang Junping, Researcher of Guoxin
Securities
Basic information of the
Company and field-visiting
the Company
23 Apr. 2009
Reception
room of the
Company
Field
research
Lu Yiqiao, a researcher of a bank fund
Basic information of the
Company and field-visiting
the Company
28 Apr. 2009
Reception
room of the
Company
Field
research
Wang Jing, Researcher of China Asset
Management Co., Ltd.
Basic information of the
Company and field-visiting
the Company
28 Apr. 2009
Reception
room of the
Company
Field
research
Wen Wenfeng, Researcher of Huashang Fund
Management Co., Ltd.
Basic information of the
Company and field-visiting
the Company
28 Apr. 2009
Reception
room of the
Company
Field
research
Ma Li, Researcher of China Galaxy Securities
Co., Ltd.
Basic information of the
Company and field-visiting
the Company
13 May 2009
Reception
room of the
Company
Field
research
Li Zhixian and Zhang Wei, both researchers
from Guotai Junan Securities Research
Center
Basic information of the
Company and field-visiting
the Company
13 May 2009
Reception
room of the
Company
Field
research
Jiang Zheng, Fund Manager from Fortis
Haitong Investment Management Co., Ltd.
Basic information of the
Company and field-visiting
the Company
13 May 2009
Reception
room of the
Company
Field
research
Tong Dongcai, Researcher of Fortis Haitong
Investment Management Co., Ltd.
Basic information of the
Company and field-visiting
the Company
13 May 2009
Reception
room of the
Company
Field
research
Yu Jiangyong, Fund Manager of Fullgoal
Fund Management Co., Ltd.
Basic information of the
Company and field-visiting
the Company
13 May 2009
Reception
room of the
Company
Field
research
Chen Le, Researcher of China Southern Fund
Management Co., Ltd.
Basic information of the
Company and field-visiting
the Company13 May 2009
Reception
room of the
Company
Field
research
Chang Zhen from CCB Principal Asset
Management Co., Ltd.
Basic information of the
Company and field-visiting
the Company
18 May 2009
Reception
room of the
Company
Field
research
Wang Wei, Analyst of China Merchants
Securities
Basic information of the
Company and field-visiting
the Company
18 May 2009
Reception
room of the
Company
Field
research
Liu Lili, Researcher of Fullgoal Fund
Management Co., Ltd.
Basic information of the
Company and field-visiting
the Company
18 May 2009
Reception
room of the
Company
Field
research
Zhu Xiaoliang, Analyst of China Universal
Asset Management Co., Ltd.
Basic information of the
Company and field-visiting
the Company
25 May 2009
Reception
room of the
Company
Field
research
Hua Yanyan from Asset Management Head
Office of Guoxin Securities
Basic information of the
Company and field-visiting
the Company
25 May 2009
Reception
room of the
Company
Field
research
Wang Fuxiao from Huatai Securities Co., Ltd.
Basic information of the
Company and field-visiting
the Company
25 May 2009
Reception
room of the
Company
Field
research
Gao Guo from Huatai Securities Co., Ltd.
Basic information of the
Company and field-visiting
the Company
5 Jun. 2009
Reception
room of the
Company
Field
research
Lin Hai, Fund Manager of Guotai Asset
Management Co., Ltd.
Basic information of the
Company and field-visiting
the Company
5 Jun. 2009
Reception
room of the
Company
Field
research
Li Jie, Deputy Director of Research from
Guotai Asset Management Co., Ltd.
Basic information of the
Company and field-visiting
the Company
11 Jun. 2009
Reception
room of the
Company
Field
research
Wang Liping, Researcher of Shenyin Wanguo
Securities Co., Ltd.
Basic information of the
Company and field-visiting
the Company
11 Jun. 2009
Reception
room of the
Company
Field
research
Bao Lihua, Researcher of Industrial Securities
Co., Ltd.
Basic information of the
Company and field-visiting
the Company
Ⅻ. Other significant events
There existed no other significant events in the report period.Section Ⅶ Financial Report (Un-audited)
Financial Statements
Balance Sheet
Prepared by Lu Thai Textile Co., Ltd. 30 June 2009 Unit: RMB Yuan
Amount as at 30 Jun. 2009 Amount as at 31 Dec. 2008
Items
Consolidation Parent company Consolidation Parent company
Current Assets:
Monetary funds 579,910,636.42 326,393,925.60 1,141,056,407.10 884,493,526.89
Transaction financial assets
Notes receivable 129,837,742.53 111,719,831.47 115,766,743.82 88,437,756.14
Accounts receivable 156,751,874.63 153,540,568.98 134,272,568.99 137,704,448.03
Accounts paid in advance 135,459,975.70 469,847,350.44 86,680,244.30 442,840,255.08
Interest receivable
Dividends receivable 22,722,410.66 552,121.45
Other receivables 55,436,296.21 44,038,698.79 66,112,475.26 57,153,026.22
Inventories 1,115,140,985.79 827,186,078.91 1,370,058,113.59 966,434,830.65
Non-current assets due within 1
year
Other current assets
Total current assets 2,172,537,511.28 1,955,448,864.85 2,913,946,553.06 2,577,615,964.46
Non-current assets:
Available-for-sale financial
assets
Held-to-maturity investments
Long-term receivables
Long-term equity investment 869,312,463.64 840,477,933.96
Investment real estate
Fixed assets 3,646,435,646.90 2,102,691,588.96 3,728,662,446.22 2,137,168,614.91
Construction in progress 143,694,012.57 138,003,794.18 161,798,386.96 152,673,189.70
Engineering materials 3,145,362.05 3,145,362.05 5,976,824.75 5,976,824.75
Disposal of fixed assets
Intangible assets 228,355,063.32 118,489,519.83 227,300,618.82 120,808,081.41
Goodwill 20,563,803.29 20,563,803.29
Long-term deferred expenses
Deferred income tax assets 34,778,390.51 13,315,688.86 33,604,471.70 9,343,313.86
Other non-current assets
Total of non-current assets 4,076,972,278.64 3,244,958,417.52 4,177,906,551.74 3,266,447,958.59
Total assets 6,249,509,789.92 5,200,407,282.37 7,091,853,104.80 5,844,063,923.05
Legal Representative: Liu Shizhen Person-in-charge of Accounting: Zhang Hongmei
Person-in-charge of Accounting Agency: Zhang Hongmei
Balance Sheet (Continued)Prepared by Lu Thai Textile Co., Ltd. 30 June 2009 Unit: RMB Yuan
Amount as at 30 Jun. 2009 Amount as at 31 Dec. 2008
Items
Consolidation Parent company Consolidation Parent company
Current liabilities:
Short-term borrowings 1,249,901,660.49 473,141,660.49 1,974,333,875.02 924,333,875.02
Transaction financial liabilities 39,628,900.00 32,322,900.00 19,175,600.00 5,840,400.00
Notes payable 111,749,625.71 371,220,269.44 326,906,148.43 764,122,919.05
Accounts payable 321,955,485.38 331,644,430.09 309,404,705.97 177,966,339.10
Accounts received in advance 70,565,258.40 19,201,513.35 31,742,845.89 14,267,650.87
Payroll payable 158,032,621.71 132,125,823.84 225,950,673.18 193,302,167.29
Taxes payable 10,016,745.53 9,837,353.03 -26,278,169.38 -37,631,581.33
Interest payable 10,471.29 10,471.29 84,631.63 84,631.63
Dividends payable
Other accounts payable 113,134,423.43 34,934,955.18 86,031,960.95 16,770,298.20
Non-current liabilities due
within 1 year
156,601,100.00 156,601,100.00 52,183,370.00 52,183,370.00
Other current liabilities
Total current liabilities 2,231,596,291.94 1,561,040,476.71 2,999,535,641.69 2,111,240,069.83
Non-current liabilities:
Long-term borrowings 172,814,890.00 172,814,890.00 298,510,560.00 298,510,560.00
Bonds payable
Long-term payables 9,735,560.00 9,735,560.00
Specific payables
Deferred income tax liabilities 407,264.46 407,449.26
Other non-current liabilities 2,673,445.33 2,673,445.33
Total non-current liabilities 185,631,159.79 172,814,890.00 311,327,014.59 298,510,560.00
Total liabilities 2,417,227,451.73 1,733,855,366.71 3,310,862,656.28 2,409,750,629.83
Owners’ equity (or shareholders’
equity)
Paid-in capital (or share capital) 994,864,800.00 994,864,800.00 994,864,800.00 994,864,800.00
Capital reserves 1,135,350,952.80 1,125,522,201.27 1,128,135,713.77 1,125,522,201.27
Less: treasury stock
Surplus reserves 330,662,535.20 330,662,535.20 330,662,535.20 330,662,535.20
Provision for general risks
Retained profits 1,155,586,837.04 1,015,502,379.19 1,090,990,313.22 983,263,756.75
Foreign exchange difference -3,429,782.06 -3,418,700.75
Total owners' equity attributable
to parent company
3,613,035,342.98 3,466,551,915.66 3,541,234,661.44 3,434,313,293.22
Minority interest 219,246,995.21 239,755,787.08
Total owners’ equity 3,832,282,338.19 3,466,551,915.66 3,780,990,448.52 3,434,313,293.22
Total liabilities and owners’ 6,249,509,789.92 5,200,407,282.37 7,091,853,104.80 5,844,063,923.05equity
Legal Representative: Liu Shizhen Person-in-charge of Accounting: Zhang Hongmei
Person-in-charge of Accounting Agency: Zhang Hongmei
Income Statement
Prepared by Lu Thai Textile Co., Ltd. Jan.-Jun. 2009 Unit: RMB Yuan
Current period Same period of last year
Items
Consolidation Parent company Consolidation Parent company
I. Total operation revenue 1,842,366,191.98 1,518,204,839.23 1,858,214,518.45 1,576,981,132.32
Including: Sales 1,842,366,191.98 1,518,204,839.23 1,858,214,518.45 1,576,981,132.32
Interest income
Premium income
Handling charges and commission
income
II. Total operation cost 1,548,256,721.31 1,279,722,976.56 1,488,396,075.77 1,251,481,192.28
Including: Cost of sales 1,322,374,198.75 1,164,999,278.44 1,318,611,732.85 1,189,165,438.45
Business taxes and surcharges 1,585,216.04 1,637,369.51
Selling expenses 67,585,100.30 21,205,550.70 60,948,729.73 20,476,173.42
Administrative expenses 119,323,395.86 73,400,457.30 81,624,471.33 45,796,576.47
Financial expenses 37,604,091.92 20,117,690.12 17,143,880.78 -3,956,996.06
Asset impairment loss -215,281.56 8,429,891.57
Add: gains from changes in fair value -20,453,300.00 -26,482,500.00 -2,229,300.00
Investment gains 20,780,300.00 48,867,789.21 2,423,300.00
Including: income form investment in
affiliated enterprises and joint ventures
Foreign exchange difference
III. Operation profit 294,436,470.67 260,867,151.88 370,012,442.68 325,499,940.04
Plus: non-operation income 10,639,026.77 3,704,977.35 15,808,278.20 8,783,297.11
Less: non-operation expenses 2,822,393.81 1,158,378.43 2,387,907.67 901,174.08
Including: loss from non-current asset
disposal
IV. Total profit 302,253,103.63 263,413,750.80 383,432,813.21 333,382,063.07
Less: Income tax expenses 34,907,267.06 32,202,168.36 56,636,091.34 39,863,137.56
V. Net profit 267,345,836.57 231,211,582.44 326,796,721.87 293,518,925.51
Attributable to owners of parent
company
263,569,483.82 231,211,582.44 328,129,841.94 293,518,925.51
Minority interest 3,776,352.75 -1,333,120.07
VI. Earnings per share:
(I) Basic earnings per share 0.26 0.23 0.39 0.35
(II) Diluted earnings per share 0.26 0.23 0.39 0.35
Legal Representative: Liu Shizhen Person-in-charge of Accounting: Zhang Hongmei
Person-in-charge of Accounting Agency: Zhang HongmeiCash Flow Statement
Prepared by Lu Thai Textile Co., Ltd. Jan.-Jun. 2009 Unit: RMB Yuan
Current period Same period of last year
Items
Consolidation Parent company Consolidation Parent company
Ⅰ.Cash flows from operating activities:
Cash received from sale of commodities and rendering of
service
1,801,140,682.35 1,500,536,818.89 2,018,933,504.76 1,625,410,933.83
Tax refunds received 56,288,073.28 43,465,816.14 33,619,217.82 20,487,082.63
Other cash received relating to operating activities 30,888,575.57 11,724,555.27 109,784,267.27 103,158,304.72
Subtotal of cash inflows from operating activities 1,888,317,331.20 1,555,727,190.30 2,162,336,989.85 1,749,056,321.18
Cash paid for purchase of commodities and reception of
service
1,126,222,497.37 1,086,507,081.46 1,343,528,176.11 1,175,775,455.03
Cash paid to and for employees 315,319,175.97 245,286,469.82 295,734,832.68 227,383,050.42
Various taxes paid 64,055,763.69 18,143,110.12 95,570,380.83 61,656,494.57
Other cash paid relating to operating activities 108,331,088.82 48,300,216.67 68,112,281.14 97,397,341.55
Subtotal of cash outflows from operating activities 1,613,928,525.85 1,398,236,878.07 1,802,945,670.76 1,562,212,341.57
Net cash flows from operating activities 274,388,805.35 157,490,312.23 359,391,319.09 186,843,979.61
Ⅱ. Cash flows from investment activities:
Cash received from disposal of investments
Investment income 20,780,300.00 26,697,500.00
Net cash received from disposal of fixed assets, intangible
assets and other long-term assets
151,100.18 151,100.18 29,278.56 29,278.56
Net cash received from disposal of subsidiaries or other
business units
Other cash received relating to investment activities 2,912,504.19 31,988,356.84 1,910,630.94 1,398,486.20
Subtotal of cash inflows from investment activities 23,843,904.37 58,836,957.02 1,939,909.50 1,427,764.76
Cash paid to acquire fixed assets, intangible assets and other
long-term assets
91,718,732.97 53,539,105.66 310,557,387.89 151,921,511.61
Cash paid for investment 27,000,000.00 100,000,000.00
Net cash paid for acquiring subsidiaries and other business
units
Other cash paid relating to investment activities 15,000,000.00 3,000,000.00
Subtotal of cash outflows from investment activities 91,718,732.97 95,539,105.66 310,557,387.89 254,921,511.61
Net cash flows from investment activities -67,874,828.60 -36,702,148.64 -308,617,478.39 -253,493,746.85
Ⅲ. Cash flows from financing activities
Cash received from capital contribution 1,005,685.30
Of which: cash received from capital contribution to
subsidiaries by minority shareholders
Cash received from borrowings 624,960,484.37 375,960,484.37 944,625,222.04 738,633,222.04
Cash received from issuance of bonds
Other cash received relating to financing activities 3,000,000.00
Subtotal of cash inflows from financing activities 628,966,169.67 375,960,484.37 944,625,222.04 738,633,222.04
Cash paid for repaying debts 1,194,634,291.70 866,394,291.70 695,863,155.32 398,153,155.32Cash paid for interest expenses and distribution of dividends
or profit
201,700,325.94 188,264,011.49 239,379,755.51 213,521,385.76
Of which: dividends and profits paid to minority
shareholders by subsidiaries
Other cash paid relating to financing activities
Subtotal of cash outflows from financing activities 1,396,334,617.64 1,054,658,303.19 935,242,910.83 611,674,541.08
Net cash flows from financing activities -767,368,447.97 -678,697,818.82 9,382,311.21 126,958,680.96
Ⅳ. Effect of foreign exchange changes on cash and cash
equivalents
-291,299.46 -189,946.06 56,225,818.89 48,890,633.79
Ⅴ. Net increase of cash and cash equivalents -561,145,770.68 -558,099,601.29 116,381,970.80 109,199,547.51
Plus: beginning balance of cash and cash equivalents 1,141,056,407.10 884,493,526.89 330,766,143.96 177,334,931.66
Ⅵ.Closing balance of cash and cash equivalents 579,910,636.42 326,393,925.60 447,148,114.76 286,534,479.17
Legal Representative: Liu Shizhen Person-in-charge of Accounting: Zhang Hongmei
Person-in-charge of Accounting Agency: Zhang HongmeiStatement of Changes in Owners’ Equity (Consolidated)
Prepared by Lu Thai Textile Co., Ltd. 30 Jun. 2009 Unit: RMB Yuan
Current period
Owners’ equity attributable to parent company
Items
Paid-in capital (or
share capital)
Capital reserve
Less:
treasur
y stock
Specifi
c
reserv
es
Surplus public
reserve
General
risk
reserve
Retained profits Others
Minority interest Total owners’ equity
I. balance at the end of last year 994,864,800.00 1,128,135,713.77 330,662,535.20 1,090,990,313.22 -3,418,700.75 239,755,787.08 3,780,990,448.52
Add: change of accounting policy
Correction of errors in previous periods
Others
II. balance at the beginning of this year 994,864,800.00 1,128,135,713.77 330,662,535.20 1,090,990,313.22 -3,418,700.75 239,755,787.08 3,780,990,448.52
III. Increase/ decrease of amount in this
year
7,215,239.03 64,596,523.82 -11,081.31 -20,508,791.87 51,291,889.67
(I) Net profit 263,569,483.82 3,776,352.75 267,345,836.57
(II) Gain/loss listed to owners’ equity
directly
-11,081.31 -11,081.31
1. Net amount of changes in fair value of
financial assets available for sale
2. Effect of changes in other owners’ equity
of invested units under equity method
3. Effect on income tax related to items
listed to owners’ equity
4. Others -11,081.31 -11,081.31Subtotal of (I) and (II) 263,569,483.82 -11,081.31 3,776,352.75 267,334,755.26
(III) Capital input and reduction by owners 7,215,239.03 -9,049768.71 -1,834,529.68
1. Capital input of owners
2. Amount of stock payment included in
owners’ equity
3. Others 7,215,239.03 -9,049768.71 -1,834,529.68
(IV) Profit distribution -198,972,960.00 -15,235,375.91 -214,208,335.91
1. Withdrawing surplus public reserve
2. Withdrawing general risk reserve
3．Distribution to owners (shareholders) -198,972,960.00 -15,235,375.91 -214,208,335.91
4．Others
(V) Internal carrying forward of owners’
equity
1. New increase of capital (or share
capital) from capital reserves
2. Converting surplus reserves to capital
(or share capital)
3. Surplus reserves make up losses
4. Others
IV. Balance at the end of this period 994,864,800.00 1,135,350,952.80 330,662,535.20 1,155,586,837.04 -3,429,782.06 219,246,995.21 3,832,282,338.19Statement of Changes in Owners’ Equity (Consolidated) (Continued)
Prepared by Lu Thai Textile Co., Ltd. 30 Jun. 2009 Unit: RMB Yuan
Same period of last year
Owners’ equity attributable to parent company
Items
Paid-in capital (or
share capital)
Capital reserve
Less:
treasur
y stock
Specifi
c
reserv
es
Surplus public
reserve
General
risk
reserve
Retained profits Others
Minority interest Total owners’ equity
I. balance at the end of last year 844,864,800.00 327,320,708.88 281,647,264.07 814,815,210.77 -2,623,778.53 238,797,699.02 2,504,821,904.21
Add: change of accounting policy
Correction of errors in previous periods
Others
II. balance at the beginning of this year 844,864,800.00 327,320,708.88 281,647,264.07 814,815,210.77 -2,623,778.53 238,797,699.02 2,504,821,904.21
III. Increase/ decrease of amount in this
year
504.89 107,037,331.13 -850,702.98 -1,333,120.07 104,854,012.97
(I) Net profit 294,791,635.63 -1,333,120.07 293,458,515.56
(II) Gain/loss listed to owners’ equity
directly
-850,702.98 -850,702.98
1. Net amount of changes in fair value of
financial assets available for sale
2. Effect of changes in other owners’ equity
of invested units under equity method
3. Effect on income tax related to items
listed to owners’ equity
4. Others -850,702.98 -850,702.98Subtotal of (I) and (II) 294,791,635.63 -850,702.98 -1,333,120.07 292,607,812.58
(III) Capital input and reduction by owners 504.89 504.89
1. Capital input of owners
2. Amount of stock payment included in
owners’ equity
3. Others 504.89 504.89
(IV) Profit distribution -187,754,304.50 -187,754,304.50
1. Withdrawing surplus public reserve
2. Withdrawing general risk reserve
3．Distribution to owners (shareholders) -187,754,304.50 -187,754,304.50
4．Others
(V) Internal carrying forward of owners’
equity
1. New increase of capital (or share
capital) from capital reserves
2. Converting surplus reserves to capital
(or share capital)
3. Surplus reserves make up losses
4. Others
IV. Balance at the end of this period 844,864,800.00 327,321,213.77 281,647,264.07 921,852,541.90 -3,474,481.51 237,464,578.95 2,609,675,917.18Statement of Changes in Owners’ Equity (Parent Company)
Prepared by Lu Thai Textile Co., Ltd. 30 Jun. 2009 Unit: RMB Yuan
Current period
Items Paid-in capital (or share
capital)
Capital reserve
Less: treasury
stock
Specific
reserves
Surplus public
reserve
Retained profit Total owners’ equity
I. balance at the end of last year 994,864,800.00 1,125,522,201.27 330,662,535.20 983,263,756.75 3,434,313,293.22
Add: change of accounting policy
Correction of errors in previous periods
Others
II. balance at the beginning of this year 994,864,800.00 1,125,522,201.27 330,662,535.20 983,263,756.75 3,434,313,293.22
III. Increase/ decrease of amount in this year 32,238,622.44 32,238,622.44
(I) Net profit 231,211,582.44 231,211,582.44
(II) Gain/loss listed to owners’ equity directly
1. Net amount of changes in fair value of financial assets available for
sale
2. Effect of changes in other owners’ equity of invested units under
equity method
3. Effect on income tax related to items listed to owners’ equity
4. Others
Subtotal of (I) and (II) 231,211,582.44 231,211,582.44
(III) Capital input and reduction by owners
1. Capital input of owners
2. Amount of stock payment included in owners’ equity
3. Others
(IV) Profit distribution -198,972,960.00 -198,972,960.001. Withdrawing surplus public reserve
2. Distribution to owners (shareholders) -198,972,960.00 -198,972,960.00
3. Others
(V) Internal carrying forward of owners’ equity
1. New increase of capital (or share capital) from capital reserves
2. Converting surplus reserves to capital (or share capital)
3. Surplus reserves make up losses
4. Others
IV. Balance at the end of this period 994,864,800.00 1,125,522,201.27 330,662,535.20 1,015,502,379.19 3,466,551,915.66
Statement of Changes in Owners’ Equity (Parent Company) (Continued)
Prepared by Lu Thai Textile Co., Ltd. 30 Jun. 2009 Unit: RMB Yuan
Same period of last year
Items Paid-in capital (or share
capital)
Capital reserve
Less: treasury
stock
Specific
reserves
Surplus public
reserve
Retained profit Total owners’ equity
I. balance at the end of last year 844,864,800.00 324,707,196.38 281,647,264.07 729,880,621.12 2,181,099,881.57
Add: change of accounting policy
Correction of errors in previous periods
Others
II. balance at the beginning of this year 844,864,800.00 324,707,196.38 281,647,264.07 729,880,621.12 2,181,099,881.57
III. Increase/ decrease of amount in this year (“-” for loss) 504.89 72,426,414.70 72,426,919.59
(I) Net profit 260,180,719.20 260,180,719.20
(II) Gain/loss listed to owners’ equity directly
1. Net amount of changes in fair value of financial assets available for
sale2. Effect of changes in other owners’ equity of invested units under
equity method
3. Effect on income tax related to items listed to owners’ equity
4. Others
Subtotal of (I) and (II) 260,180,719.20 260,180,719.20
(III) Capital input and reduction by owners 504.89 504.89
1. Capital input of owners
2. Amount of stock payment included in owners’ equity
3. Others 504.89 504.89
(IV) Profit distribution -187,754,304.50 -187,754,304.50
1. Withdrawing surplus public reserve
2. Distribution to owners (shareholders) -187,754,304.50 -187,754,304.50
3. Others
(V) Internal carrying forward of owners’ equity
1. New increase of capital (or share capital) from capital reserves
2. Converting surplus reserves to capital (or share capital)
3. Surplus reserves make up losses
4. Others
IV. Balance at the end of this period 844,864,800.00 324,707,701.27 281,647,264.07 802,307,035.82 2,253,526,801.16Lu Thai Textile Co., Ltd.
Notes to Financial Statement
For the First Six Months of 2009
（The following amount is expressed in RMB unless otherwise special explanation）
I. 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 Feb. 3, 1993, the Company is approved by the former Ministry of Foreign Trade and
Economy of the State (1993) in WJMZEHZ No. 59 to convert into a joint-stock enterprise. Zibo Administration for
Industry and Commerce issued the Company corporate business license with the registration No. of QGLZZZ No. 000066.
In July 1997, the Company is approved by the Securities Committee of the Department of the State in the ZWF (1997) No.
47 to issue 80 million shares of domestically listed foreign share( B-shares) at the price of RMB 1.00 per share. Upon
approved by Shenzhen Stock Exchange with No. (1997) 296 Listing Notice, the Company is listed on the Shenzhen Stock
Exchange on August 19, 1997 with B-shares stock code of 200726. On November 24, 2000, approved by ZJGSZ [2000]
No.199 by CSRC, the Company increased publication of 50 million shares of general share (A-shares) at the book value of
RMB 1.00, which are listed on the Shenzhen Stock Exchange on December 25, 2000 with A-shares stock code of 000726
through approval by Shenzhen Stock Exchange with No. (2000) 162 Listing Notice. As approved by 2000 Shareholders’
General Meeting in May, 2001, the Company carried out the distribution plan that 10 shares of capital public reserve are
converted to 3 more shares for each 10 shares. As approved by Resolutions of 2001 Shareholders’ General Meeting in June
2002, the Company implemented the distribution plan that 10 shares of capital public reserve are converted 3 more shares
for each 10 shares again. As approved by 2002 Shareholders’ General Meeting in May 2003, the Company implemented the
distribution plan that 10 shares of capital public reserve are 2 more shares for each 10 shares, and inner employees’ shared
increased to 40.56 million shares. As examined and approved by ZJGSZ No. [2000] 199 of CSRC, the inner employees’
shares will start circulation 3 years later since listing on the A-share market. On Dec. 25, 2003, the inner employees’ shares
reach 3 years since listing on the A-share stock market, and they set out circulation on Dec.26, 2003. As approved by the
Shareholders’ General Meeting 2006 held in June 2007, the Company implemented the plan on converting 10 shares to all
its shareholders with capital reserves for every 10 shares. After capitalization, the registered capital of the Company was
RMB 844.8648 million. The Company, in accordance with the official reply on approving Lu Thai Textile Co., Ltd. to issue
additional shares (ZJXK [2008] No. 890 document) from CSRC, issued the Renminbi common shares (A shares)
amounting to 150 million shares on 8 Dec. 2008. As at 31 December 2008, the Company’s registered capital was RMB
994.8648 million.
The Company’s registered address: No. 11, Mingbo Road, Hi-tech Development Zone, Zibo, Shandong
The Company’s legal representative: Liu Shizhen
The Company’s business scope includes production and sales of cotton yarn, yarn dyed fabrics, shirts, fashion accessories,
health underwear and other textile products and their supporting series products.
The Company’s financial statement has been approved by the Board of Directors of the Company on 18 August 2009.
II. Statement for complying with the accounting standard for business enterprise
The financial statements prepared by the Company are in compliance with the requirements of the accounting standard for
business enterprise-basic standard and other accounting standards promulgated by the Ministry of Finance of PRC, andhave reflected the Company’s financial status, operating results and cash flows in an accurate and complete way.
III. Preparation basis of financial statement
With going-concern assumption as the basis, the Company prepares its financial statement in light of the actual transactions
and matters, as well as recognition and measurement in line with the accounting standard for business enterprise-basic
standard and other accounting standards promulgated by the Ministry of Finance of PRC.
IV. Major accounting policies and accounting estimates
1. Fiscal period
The Company’s fiscal year is from Jan. 1 to Dec. 31 the Gregorian calendar.
2. Bookkeeping base currency
The Company adopts Renminbi as a bookkeeping base currency. But Lu Thai (Hong Kong) Co., Ltd. (hereinafter referred
to as “Lu Thai Hong Kong”), a subsidiary company of the Company, adopts Hong Kong dollars as a bookkeeping base
currency. Such HKD shall be translated into Renminbi according to accounting policies related to foreign currency
translation when consolidating financial statement.
3. Accounting basis and pricing principles.
Accrual basis shall be adopted by the Company as accounting basis when accounting. Generally, historical cost shall be
adopted as measurement attributes. Replacement cost, net realizable value, present value and fair value shall be adopted
when the identified accounting elements are in line with the requirements of the accounting standard for business enterprise
and can be reliably measured.
4. Recognition standard for cash equivalents
Cash equivalents are short-term (usually due within 3 months since the day of purchase) and high circulating investments,
which are easily convertible into known amount of cash and whose risks in change of value are minimal.
5. Accounting methods for foreign currency
(1) Translation methods of foreign currency transaction
At the time of initial recognition of a foreign currency transaction, the Company shall convert the amount in a foreign
currency into amount in its Renminbi at the spot exchange rate (generally refer to the middle price of market exchange rate
published by the People’s Bank of China, the same below) on the day the transaction is occurred. Of which, as for such
transactions as foreign exchange or involving in foreign exchange, the Company shall converted into amount in the
Renminbi at actual exchange rate the transaction is occurred.
(2) On the balance sheet date, treatment method for the foreign currency monetary items and foreign currency non-monetary
items:
The Company shall, on the balance sheet date, converted the account balance of foreign currency monetary items into
amount in its bookkeeping base currency at the spot exchange rate on the balance sheet date, from which the exchange
differences shall be recorded into the profits and losses at the current period except such exchange differences arising from
foreign currency loans for the purchase and construction or production of qualified assets shall be capitalized in accordance
with the regulation of the Accounting Standards for Business Enterprises No. 17 - Borrowing Costs.
The foreign currency non-monetary items measured at the historical cost shall still be translated at the spot exchange rate onthe transaction date, of which the amount of functional currency shall not be changed.
The foreign currency non-monetary items measured at the fair value shall be translated at the spot exchange rate on the fair
value confirming date, from which the exchange difference shall be recorded in the profit and loss of the current period or
capital reserve.
(3) Translation of Foreign Currency Financial Statements
The Company shall, on the basis of the following provisions, translate its foreign currency financial statements into RMB
financial statements.
The assets and liabilities in the balance sheets shall be translated at a spot exchange rate on the balance sheet date. Among
the owner's equity items, except for the ones as "retained profits", others shall be translated at the spot exchange rate at the
time when they are incurred.
The income and expense in the income statements shall be translated at the average exchange rate of current period on the
transaction date.
The balance arisen from the translation of foreign currency financial statements in compliance with the aforesaid two items
shall be presented separately under the owner's equity item of the balance sheets.
Cash flow statement expressed by foreign currency shall be translated at the average exchange rate of current period on the
cash flow date. The influence on cash due to change of exchange rate shall be presented separately under the cash flow
statement.
6. Financial assets and financial liabilities
(1) Classification of Financial assets and financial liabilities
Financial assets acquired by or financial liabilities undertaken by the Company shall, combining its business characteristic
and risk management, be classified into the following four categories when they are initially recognized: (a) the financial
assets which are measured at their fair values and the variation of which is recorded into the profits and losses of the current
period, including transactional financial assets and the financial assets which are measured at their fair values and of which
the variation is included in the current profits and losses; (b) the investments which will be held to their maturity; (c) loans
and the account receivables; and (d)financial assets available for sale; (e) other financial liabilities.
(2) Recognition basis of financial instruments and measurement
When the Company becomes a party to a financial instrument, it shall recognize a financial asset or financial liability. The
financial assets and financial liabilities initially recognized by the Company shall be measured at their fair values.
The financial assets and financial liabilities initially recognized by the Company shall be measured at their fair values. For
the financial assets and liabilities measured at their fair values and of which the variation is recorded into the profits and
losses of the current period, the transaction expenses thereof shall be directly recorded into the profits and losses of the
current period; for other categories of financial assets and financial liabilities, the transaction expenses thereof shall be
included into the initially recognized amount.
Subsequent measurement to financial asset and financial liability:
① For the financial assets and financial liabilities measured at their fair values and of which the variation is recorded into
the profits and losses of the current period, they shall be measured at their fair values, all realized and unrealized gains
and losses shall be measured into the profits and losses of the current period.
② The investments held until their maturity and accounts receivable shall be measured on the basis of the
post-amortization costs by adopting the effective interest method. Gains and losses arising from termination from
recognition, impairment or amortization shall be recorded into the profits and losses of the current period.③ Financial assets available for sale shall be measured at their fair values, the profits and losses arising from the change
in the fair value of a sellable financial asset shall be included directly in the owner’s equity with the exception of
impairment losses and the gap arising from foreign exchange conversion of cash financial assets in any foreign
currency, and when the said financial asset is stopped from recognition and is transferred out, it shall be recorded into
the profits and losses of the current period. The gap arising from the foreign exchange conversion of a sellable cash
financial asset in any foreign currency shall be recorded into the profits and losses of the current period. The interests
of the sellable financial assets calculated according to the actual interest rate method shall be recorded into the profits
and losses of the current period. The cash dividends of the sellable equity instrument investments shall be recorded
into the profits and losses of the current period when the investee announces the distribution of dividends.
④ The derivative financial assets which are connected with the equity instrument investments for which there is no
quoted price in the active market, whose fair value cannot be reliably measured, and which shall be settled by
delivering the said equity instruments, shall be measured at their costs.
⑤ Other financial liabilities shall be made the subsequent measurement on the basis of their costs. But except for the
following situations:
A. The equity instrument investments for which there is no quotation in the active market and whose fair value cannot be
measured reliably, and the derivative financial assets which are connected with the said equity instrument and must be
settled by delivering the said equity instrument shall be measured on the basis of their costs.
B. For the financial guarantee contracts which are not designated as a financial liability measured at its fair value and the
variation thereof is recorded into the profits and losses of the current period, and for the commitments to grant loans which
are not designated to be measured at the fair value and of which the variation is recorded into the profits and losses of the
current period and which will enjoy an interest rate lower than that of the market, a subsequent measurement shall be made
after they are initially recognized according to the higher one of the following:
a. The amount as determined according to the Accounting Standards for Enterprises No. 13 - Contingencies; or
b. The surplus after accumulative amortization as determined according to the principles of the Accounting Standards for
Enterprises No. 14 - Revenues is subtracted from the initially recognized amount.
(3) Determination of the fair value of financial assets and financial liabilities
i. As for the financial assets or financial liabilities for which there is an active market, the quoted prices in the active
market shall be used to determine the fair values thereof.
ii. Where there is no active market for a financial assets and financial liabilities, the Company concerned shall adopt value
appraisal techniques to determine its fair value.
(4) Recognition of transfer of financial assets
Where the Company has transferred nearly all of the risks and rewards related to the ownership of the financial asset to the
transferee, the financial assets shall be terminated from recognizing. If the Company retained nearly all of the risks and
rewards related to the ownership of the financial asset, it shall continue to recognize transferred financial assets, and the
consideration received shall be recognized as a financial liabilities. Where the Company does not transfer or retain nearly
all of the risks and rewards related to the ownership of a financial asset, it shall deal with it according to the circumstances
as follows, respectively:
(a) If the Company gives up its control over the financial asset, the financial assets shall be terminated from recognizing;
(b) If the Company does not give up its control over the financial asset, the financial assets shall, according to the extent of
its continuous involvement in the transferred financial asset, be recognized, and relevant liabilities shall be recognized.If the transfer of an entire financial asset satisfies the conditions for stopping recognition, the difference between the
amounts of the following two items shall be recorded in the profits and losses of the current period:
(a)The book value of the transferred financial asset;
(b) The sum of consideration received from the transfer, and the accumulative amount of the changes of the fair value
originally recorded in the owner's equities.
If the transfer of partial financial asset satisfies the conditions to stop the recognition, the entire book value of the
transferred financial asset shall, between the portion whose recognition has been stopped and the portion whose recognition
has not been stopped, be apportioned according to their respective relative fair value, and the difference between the
amounts of the following two items shall be included into the profits and losses of the current period:
(a) The book value of the portion whose recognition has been stopped;
(b) The sum of consideration of the portion whose recognition has been stopped, and the portion of the accumulative
amount of the changes in the fair value originally recorded in the owner's equities which are corresponding to the portion
whose recognition has been stopped.
(5) Testing method and withdrawal methods of financial assets impairment
① The scope of impairment of financial assets and objective evidence
The Company shall carry out an inspection, on the balance sheet day, on the carrying amount of the financial assets other
than those measured at their fair values and of which the variation is recorded into the profits and losses of the current
period. Where there is any objective evidence proving that such financial asset has been impaired, an impairment provision
shall be made. The expression "objective evidence proving that the financial asset has been impaired" refers to the actually
incurred events which, after the financial asset is initially recognized, have an impact on the predicted future cash flow of
the said financial asset that can be reliably measured by the enterprise.
② Testing method and withdrawal methods of impairment of financial assets
A. Financial asset measured on the basis of post-amortization costs
Where a financial asset measured on the basis of post-amortization costs is impaired, the carrying amount of the said
financial asset shall be written down to the current value of the predicted future cash flow (excluding the loss of future
credits not yet occurred), and the amount as written down shall be recognized as loss of the impairment of the asset and
shall be recorded into the profits and losses of the current period. The current value of the predicted future cash flow shall
be determined according to the capitalization of the original actual interest rate of the said financial asset, taking into
account the value of the relevant guarantee.
An impairment test shall be made on the financial assets with significant single amounts. If any objective evidence shows
that it has been impaired, the impairment-related losses shall be recognized and shall be recorded into the profits and losses
of the current period. With regard to the financial assets with insignificant single amounts, an independent impairment test
shall be included in a combination of financial assets with similar credit risk features so as to carry out an
impairment-related test. Where, upon independent test, the financial asset (including those financial assets with significant
single amounts and those with insignificant amounts) has not been impaired, it shall be included in a combination of
financial assets with similar risk features so as to conduct another impairment test. The financial assets which have suffered
from an impairment loss in any single amount shall not be included in any combination of financial assets with similar risk
features for any impairment test. Where any financial asset measured on the basis of post-amortization costs is recognizedas having suffered from any impairment loss, if there is any objective evidence proving that the value of the said financial
asset has been restored, and it is objectively related to the events that occur after such loss is recognized (e.g., the credit
rating of the debtor has been elevated, etc.), the impairment-related losses as originally recognized shall be reversed and be
recorded into the profits and losses of the current period. However, the reversed carrying amount shall not be any more than
the post-amortization costs of the said financial asset on the day of reverse under the assumption that no provision is made
for the impairment. With regard to impairment testing and withdrawal method for accounts receivable, please see Note IV.
Account receivable.
B. Financial asset measured on the basis of cost
If any objective evidence shows that the financial assets has been impaired, the gap between the carrying amount of
financial asset and the current value of the future cash flow of similar financial assets capitalized according to the returns
ratio of the market at the same time shall be recognized as impairment-related losses and be recorded into the profits and
losses of the current period. Once impairment-related losses incurred to financial assets is recognized, it shall not be
reversed.
Where long-term equity investment measured at cost method in line with the Accounting Standard for Business Enterprise
No. 2 – Long-term Equity Investment, for which there is no quoted price in the active market, and whose fair value cannot
be reliably measured, shall be treated on the basis of the above-mentioned principle.
C. Financial assets available for sales
If any objective evidence shows that the financial assets available for sales has been impaired, the accumulative losses
arising from the decrease of the fair value of the capital reserve which was directly included shall be transferred out and
recorded into the profits and losses of the current period. The accumulative losses that are transferred out shall be the
balance obtained from the initially obtained costs of the sold financial asset after deducting the principals as taken back, the
current fair value and the impairment-related losses as was recorded into the profits and losses of the current period.
D. As for the sellable debt instruments whose impairment-related losses have been recognized, if, within the accounting
period thereafter, the fair value has risen and are objectively related to the subsequent events that occur after the originally
impairment-related losses were recognized, the originally recognized impairment-related losses shall be reversed and be
recorded into the profits and losses of the current period. The impairment-related losses incurred to a sellable equity
instrument investment shall not be reversed through profits and losses.
7. Accounts receivable
(1) Recognition of provision for bad debts:
The Company shall test the book value of accounts receivable on the balance sheet date. Where there is any objective
evidence proving that such accounts receivable has been impaired, an impairment provision shall be made.
① debtor has serious financial difficult;
② debtor goes against the contract clause (for instance, breach of faith or overdue paying interests or principal);
③ debtors has a great probability of bankruptcy or other financial reorganization;
④ other objective evidence proving such accounts receivable has been impaired;
(2) Withdrawal method of provision for bad debt
On the balance sheet date, an independent impairment test shall be carried out on the accounts receivable with significant
single amounts (the balance over RMB 5 million) and accounts receivable with insignificant single amounts but with high
credit risk Group. If any objective evidence shows that the accounts receivable has been impaired, impairment loss shall berecognized on the basis of the gap between the current values of the future cash flow lower than its carrying value so as to
withdraw provision for bad debts. Accounts receivable with insignificant single amounts and ones that has not be impaired
through independent impairment test shall be divided into several combinations in the light of aging, and then the
impairment loss shall be recognized on the basis of a certain proportion of closing balance of accounts receivable
combination so as to withdraw provision for bad debts. If there is small difference between predicted future cash flow of
short-term accounts receivable and its current value, the predicted future cash flow shall not be discounted when confirming
relevant impairment loss Withdrawing proportion of bad debts are as below:
Aging Proportion
Within 1 year (including 1 year, the same below) 5%
1-2 years 10%
2-3 years 20%
Over 3 years 30%
8. Inventory
(1) Category of inventory
The inventories of the Company include raw materials, turnover materials, goods in process, consigned processing products,
merchandise on hand, etc.
(2) Pricing method of outgoing and obtaining inventories
The inventories shall be measured in light of their cost when obtained. The cost of inventory consists of purchase costs,
processing costs and other costs. A raw material is accounted as per the planned cost. The difference between a raw
material’s planned cost and actual cost is accounted through the cost variance item, and the planned cost is adjusted to the
actual cost according to the cost difference which the carryover and given-out inventory should shoulder in the period.
Other inventories shall be measured in line with weighted average method when obtained and outgone.
(3) Amortization method of the easily consumed products of low value and packing articles
The Company shall amortize the easily consumed products of low value and packing the one-off amortization method.
(4) Inventory system for inventories: Perpetual inventory system is adopted.
(5) Recognition standard and withdrawal method of depreciation reserves for inventories
On the date of balance sheet, the inventories shall be measured whichever is lower in accordance with the cost and the net
realizable value.
The net realizable value refers to in the daily business activity the amount after deducting the estimated cost of completion,
estimated sale expense and relevant taxes from the estimated sale price of inventories. Of which, ① the inventories for
sale directly such as finished goods, commodities and materials for sale, in the course of normal production and operation,
the net realizable value of such inventories is an amount after deducting estimated sale expense and relevant taxes from the
estimated sale price of inventories; ② materials inventory that need to go through processing, in the course of normal
production and operation, the net realizable value of such inventories is an amount after deducting the estimated cost of
completion, estimated sale expense and relevant taxes from the estimated sale price of products manufactured by the
Company; ③As for an inventory held for execution of a sales contract or a service contract, its net realizable value should
be accounted based on the contract price; when the Company holds number of inventories more than number of
subscription of sales contracts, the net realizable values of the exceeding part of inventories should be accounted based on
general sales prices.Provision for falling price of inventories shall be withdrawn in light of single inventory item.
If the cost of inventories is higher than the net realizable value, the provision for the loss on decline in value of inventories
shall be made and be included in the current profits and losses. If the factors causing any write-down of the inventories
have disappeared, the amount of write-down shall be resumed and be reversed from the provision for the loss on decline in
value of inventories that has been made. The reverse amount shall be included in the current profits and losses.
9. Long-term equity investment
(1) Initial measurement of long-term equity investment
With regard to long-term equity investment formed in the merger of enterprise under the same control, its initial investment
cost shall be regard as the share of the carrying value of the owner's equity of the merged enterprise; With regard to
long-term equity investment formed in the merger of enterprise under the different control, the Company shall regard the
merger costs as the initial cost of the long-term equity investment.
The initial cost of a long-term equity investment obtained by other means shall be ascertained in light of different mode of
acquisition, for instance, by actual cash payments, fair value of the equity securities issued or the value stipulated in the
investment contract or agreement. The initial cost consists of the expenses directly relevant to the obtainment of the
long-term equity investment, taxes and other necessary expenses.
With regard to long-term equity investment formed in the merger of enterprise under the same control, its initial investment
cost shall, be regard as the share of the carrying value of the owner's equity of the merged enterprise on the date of merger;
With regard to long-term equity investment formed in the merger of enterprise under the different control, the Company
shall regard the merger costs as the initial cost of the long-term equity investment. The difference between the initial cost of
long-term equity investment and carrying value of merger consideration paid (the total par value of shares issued) shall
offset against the capital reserve. If the capital reserve is insufficient to dilute, the retained earnings shall be adjusted. The
direct cost for the business combination of the merging enterprise shall be recorded into the profits and losses at the current
period when happening. The bonds issued for a business combination or the handling fees, commissions and other expenses
for assuming other liabilities shall be recorded into the amount of initial measurement of the bonds or other debts. The
handling fees, commissions and other expenses for the issuance of equity securities for the business combination shall be
credited against the surplus of equity securities; if the surplus is not sufficient, the retained earnings shall be offset.
With regard to long-term equity investment formed in the merger of enterprise under the different control, its initial
investment cost shall be regard as the combined costs determined on the acquisition date. Combined cost shall be the fair
values, on the acquisition date, of the assets paid, the liabilities incurred or assumed and the equity securities issued by the
acquirer in exchange for the control on the acquiree, and all relevant direct costs incurred to the acquirer for the merger of
enterprise. For a business combination realized by two or more transactions of exchange, the combination costs shall be the
summation of the costs of all separate transactions. Where any future event that is likely to affect the combination costs is
stipulated in the combination contract or agreement, if it is likely to occur and its effects on the combination costs can be
measured reliably, the Company shall record the said amount into the combination costs. The bonds issued for a business
combination or the handling fees, commissions and other expenses for assuming other liabilities shall be recorded into the
amount of initial measurement of the bonds or other debts. The handling fees, commissions and other expenses for the
issuance of equity securities for the business combination shall be credited against the surplus of equity securities; if the
surplus is not sufficient, the retained earnings shall be offset.
The initial cost of a long-term equity investment obtained by making payment in cash shall be the purchase cost which is
actually paid. The initial cost consists of the expenses directly relevant to the obtainment of the long-term equity investment,
taxes and other necessary expenses.The initial cost of a long-term equity investment obtained on the basis of issuing equity securities shall be the fair value of
the equity securities issued.
The initial cost of a long-term equity investment of an investor shall be the value stipulated in the investment contract or
agreement except the unfair value stipulated in the contract or agreement.
The initial cost of a long-term investment obtained by the exchange of non-monetary assets shall be ascertained in
accordance with the Accounting Standards for Enterprises No. 7 - Exchange of Non-monetary Assets.
The initial cost of a long-term equity investment obtained by recombination of liabilities shall be ascertained in accordance
with Accounting Standards for Enterprises No. 12 - Debt Restructuring.
Where the Company adjusts carrying values of assets and liabilities in light of appraisal value for corporate reconstruction,
the initial investment cost of long-term equity investment shall be recognized at the appraisal value.
Besides the long-term equity investments formed by the merger of enterprises, the initial investment cost of a long-term
equity investment obtained by other means consists of the expenses directly relevant to the obtainment of the long-term
equity investment, taxes and other necessary expenses.
When it obtains the investment, if the consideration paid consists of cash dividend or profit that has been declared but not
yet paid, such consideration shall be recognized as receivables, do not constitute the initial cost of long-term equity
investment.
(2) Subsequent measurement of long-term equity investment and recognized method of investment income
① The following long-term equity investment shall be measured by employing the cost method: a. a long-term equity
investment of the Company that is able to control the invested entity; and b. a long-term equity investment of investment of
the Company that does not do joint control or does not have significant influences on the invested entity, and entity, and has
no offer in the active market and its fair value cannot be reliably measured.
The price of a long-term equity investment measured by employing the cost method shall be included at its initial
investment cost. If there are additional investments or disinvestments, the cost of the long-term equity investment shall be
adjusted. The dividends or profits declared to distribute by the invested entity shall be recognized as the current investment
income. The investment income recognized by the Company shall be limited to the amount received from the accumulative
net profits that arise after the invested entity has accepted the investment. Where the amount of profits or cash dividends
obtained by the investing entity exceeds the aforesaid amount, it shall be regarded as recovery of initial investment cost.
② A long-term equity investment of the Company that does joint control or significant influences over the invested
entity shall be measured by employing the equity method. If the initial cost of a long-term equity investment is more than
the Company's attributable share of the fair value of the invested entity's identifiable net assets for the investment, the
initial cost of the long-term equity investment may not be adjusted. If the initial cost of a long-term equity investment is
less than the Company's attributable share of the fair value of the invested entity's identifiable net assets for the investment,
the difference shall be included in the current profits and losses and the cost of the long-term equity investment shall be
adjusted simultaneously.
By employing equity method, after the Company obtains a long-term equity investment, it shall, in accordance with the
attributable share of the net profits or losses of the invested entity, recognize the investment profits or losses and adjust the
book value of the long-term equity investment. The Company shall, on the ground of the fair value of all identifiable
assets of the invested entity when it obtains the investment, recognize the attributable share of the net profits and losses of
the invested entity after it adjusts the net profits of the invested entity in accordance with accounting policies and
accounting period of the Company, and offsetting the gains and losses attributable to the investment enterprise arising
from internal transaction between the Company and affiliated enterprises and joint-venture enterprises calculated at
shareholding proportion (however losses on internal transaction is part of loss on assets impairment, it shall be recognizedfully). As for a long-term equity investment of affiliated enterprises and joint-venture enterprise held by the Company
before date of first time adoption, if there is debit balance of equity investment related with such investment, gains and
losses of investment shall be recognized after deducting debit balance of equity investment amortized at straight-line
method in light of original remaining period. The Company shall, in the light of the profits or cash dividends declared to
distribute by the invested entity, calculate the proportion it shall obtain, and shall reduce the book value of the long-term
equity investment correspondingly. The Company shall recognize the net losses of the invested enterprise until the book
value of the long-term equity investment and other long-term rights and interests which substantially form the net
investment made to the invested entity are reduced to zero, unless the Company has the obligation to undertake extra
losses. Where any change is made to the owner's equity other than the net profits and losses of the invested entity, the
book value of the long-term equity investment shall be adjusted and be included in the owner's equity, be transferred to the
current profits and losses according to a certain proportion.
(3) Recognition basis of joint control and significant influences
①Recognition basis of joint control: any a joint venture party can not individually control production and operation
activities of the joint venture enterprise. The decision-making involved in basic operation activities of the joint venture
enterprise shall be needed to make consensus of opinion by each joint venture party.
② Recognition basis of significant influences: where the Company directly or indirectly through subsidiary company holds
over 20% (including 20%) but no more than 50% of voting shares of invested enterprise shall be confirmed the significant
influence on the invested enterprise except that there is any evidence proving that the Company can not enjoy the
production and operation decision-making of invested enterprise under such situation. Where the Company holds no more
than 20% (excluding 20%) of voting shares of invested enterprise shall be confirmed the no significant influence on
invested enterprise. But the Company shall be confirmed as significant influence on invested enterprise when the following
situations are accorded with:
A. appointed representative in the Board of Directors and power department;
B. participated in the course of policies establishment of invested enterprise;
C. the material transaction occurred between the Company and invested enterprise;
D. appointed management person to invested enterprise;
E. provided the key technology information to invested enterprise.
10. Investment properties
The Company’s investment properties consist of the right to use any land which has already been rented; the right to use
any land which is held and prepared for transfer after appreciation; and the right to use any building which has already been
rented.
The Company shall make a follow-up measurement to the investment properties through the cost pattern. As for investment
properties that its follow-up measurement shall be made by employing the cost pattern, its depreciation policy and
amortization shall be the same as ones of same or similar fixed assets and intangible assets. For the basis and method of
impairment reserve, please refer to “Note IV. Assets impairment”.
11. Fixed assets
(1)Recognized standard of fixed assets
The term "fixed assets" refers to the tangible assets that simultaneously possess the features as follows: they are held for the
sake of producing commodities, rendering labor service, renting or business management; and their useful life is in excess
of one fiscal year. No fixed asset may be recognized unless it simultaneously meets the conditions as follows: ① The
economic benefits pertinent to the fixed asset are likely to flow into the enterprise; and ② The cost of the fixed asset canbe measured reliably.
(2) Category of fixed assets and depreciation
The Company shall withdraw the depreciation of fixed assets by adopting the straight-line method. Useful life, expected net
salvage value and annual depreciation rate of each fixed assets are as below:
Category of fixed assets Useful life (Y) Expected net salvage value（%） Annual deprecation rate（%）
Housing and building 5-20 5-10% 19.00-4.50
Machinery equipments 10-13 5-10% 6.92-9.50
Transportation vehicle 5 5-10% 19.00-18.00
Electronic equipments and other 5 5-10% 19.00-18.00
As for the fixed assets, the provision for depreciation has been made, its withdrawal method of depreciation: For a fixed
asset, the provision for depreciation has been made, it shall be withdrawn depreciation in the light of the amount after
deducting expected net salvage value, depreciation withdrawn and impairment provision from original value of such fixed
assets and the remained useful life. As for the fixed assets, its expected conditions for use has been reached but not handle
completion settlement, its cost shall be confirmed in the light of estimated value and withdrew depreciation; after
completion settlement, the original estimated value shall be adjusted in line with the actual cost, but original depreciation
withdrawn shall not be adjusted.
At least, the Company shall make recheck to useful life, expected net salvage value and depreciation method of the fixed
assets when the end of each accounting year, if necessary, the Company shall make adjustment.
(3) Fixed assets by financing leased
For recognized basis, pricing method and depreciation method of fixed assets by financing lease, please refer to “Note IV.
Lease”.
12. Constructions in progress
The Company’s constructions in progress include the preliminary works, constructional engineering, erection works and
technical innovation projects, as well as major repair works etc., which shall be priced in the light of the actual cost.
Constructions in progress are carried down to fixed assets according to their actual costs when completing and achieving
estimated usable status. The fixed assets that have been completed and reached estimated usable status but have not yet
been through completion and settlement procedures are charged to an account according to their estimate values;
adjustment will be conducted upon confirmation of their actual values.
13. Intangible assets
(1) Initial measurement of intangible assets
The intangible assets shall be initially measured according to its cost.
(2) Subsequent measurement of intangible assets
① The estimation about the service life of intangible asset
Being derived from any contractual right or other statutory rights, the useful life of intangible assets can not exceed the time
limit regulated by contractual right or other statutory rights. If useful life is not be regulated by contractual right or other
statutory rights, the Company shall synthesize each factors to determine term of economic benefit is expected to be brought
by some intangible assets to the Company. If term of economic benefit is expected to be brought by some intangible assets
to the Company is still not be confirmed according to the above method, such intangible assets shall be regarded as
intangible asset with uncertain useful life.
② Recheck of service life of intangible assetsAt least, the Company shall make recheck to useful life and amortization method of the fixed assets when the end of each
accounting year, if necessary, the Company shall make adjustment.
③ Amortization of intangible assets
Intangible assets with limited service life shall be amortized at the straight-line method within its expected service life since
the current period as obtained. Intangible assets with uncertain service life may not be amortized, but shall be made an
impairment testing at the end of every accounting year.
14. Research and development expenditures
The expenditures for its internal research and development projects of the Company shall be classified into research
expenditures and development expenditures. The term "research expenditures" refers to an expense incurred that the
creative and planned investigation to acquire and understand new scientific or technological knowledge. The research
expenditures for its internal research and development projects of the Company shall be recorded into the profit or loss for
the current period.
The term "development expenditures" refers to an expense incurred that the application of research achievements and other
knowledge to a certain plan or design, prior to the commercial production or use, so as to produce any new material, device
or product, or substantially improved material, device and product. The development expenditures for its internal research
and development projects of the Company may be confirmed as intangible assets 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; and (5) The development expenditures of the intangible
assets can be reliably measured. If development expenditures fail to meet the above-mentioned conditions, such
development expenditures shall be measured into the gains and losses of the current period as happened.
15. Long-term deferred expenses
Long-term deferred expenses refer to general expenses with the apportioned period over one year (one year excluded) that
have occurred but attributable to the current and future periods. Long-term deferred expense shall be recoded into book
in the light of the actual expenditure, and amortized averagely within benefit period.
16. Assets impairment
(1) Scope of application
Impairment of assets mentioned in this Note shall include long-term equity investment (excluding such long-term equity
investment without jointly control or impose significant influence on invested enterprises, without quotation in the active
market, whose fair values cannot be reliably measured.), investment real estate (excluding such investment real estate
measured in the light of fair value pattern), fixed assets, construction in progress, engineering materials, intangible assets
(including capitalization development expenditure), goodwill, group assets and combination of assets and etc.
(2) Recognition of impairment of assets
The Company shall, on the balance sheet date, make a judgment on whether there is any sign of possible assets impairment.
No matter whether there is any sign of possible assets impairment, the business reputation formed by the merger of
enterprises and intangible assets with uncertain service lives shall be subject to impairment test every year. There may be an
impairment of assets when one of the following signs occurs:
① The current market price of assets falls, and its decrease is obviously higher than the expected drop over time or due to
the normal use;
② The economic, technological or legal environment in which the Company operates, or the market where the assets is
situated will have any significant change in the current period or in the near future, which will cause adverse impact on the
Company;
③ The market interest rate or any other market investment return rate has risen in the current period, and thus the discount
rate of the Company for calculating the expected future cash flow of the assets will be affected, which will result in greatdecline of the recoverable amount of the assets;
④ Any evidence shows that the assets have become obsolete or have been damaged substantially;
⑤ The assets have been or will be left unused, or terminated for use, or disposed ahead of schedule;
⑥ Any evidence in the internal report of the Company shows that the economic performance of the assets have been or
will be lower than the expected performance, for example, the net cash flow created by assets or the operating profit (or loss)
realized is lower (higher) than the excepted amount, etc.; and
⑦ Other evidence indicates that the impairment of assets has probably occurred.
(3) Measurement of Recoverable Amount of Assets
Where any evidence shows that there is possible assets impairment, the recoverable amount of the assets shall be estimated.
The recoverable amount shall be determined in light of the higher one of the net amount of the fair value of the assets minus
the disposal expenses and the current value of the expected future cash flow of the assets.
(4) Determination of Losses of Asset Impairment
Where the measurement result of the recoverable amount indicates that an asset's recoverable amount is lower than its
carrying value, the carrying value of the asset shall be recorded down to the recoverable amount, and the reduced amount
shall be recognized as the loss of asset impairment and be recorded as the profit or loss for the current period.
Simultaneously, a provision for the asset impairment shall be made accordingly. After the loss of asset impairment has been
recognized, the depreciation or amortization expenses of the impaired asset shall be adjusted accordingly in the future
periods so as to amortize the post-adjustment carrying value of the asset systematically (deducting the expected net salvage
value) within the residual service life of the asset. Once any loss of asset impairment is recognized, it shall not be switched
back in the future accounting periods.
(5) Recognition of group assets and treatments of impairment
Where there is any evidence indicating a possible impairment of assets, the Company shall, on the basis of single item
assets, estimate the recoverable amount. Where it is difficult to do so, it shall determine the recoverable amount of the
group assets on the basis of the asset group to which the asset belongs. The recognition of an asset group shall base on
whether the main cash inflow generated by the asset group is independent of those generated by other assets or other group
assets.
Where the recoverable amount of an asset group or a combination of asset groups is lower than its carrying value (where
the headquarter' assets and business reputation are apportioned to a certain asset group or a combination of asset groups, the
carrying value of the asset group or the combination of asset groups shall include the amount of the relevant assets of the
headquarter and business reputation that have been apportioned to), it shall be recognized as the corresponding impairment
loss. The amount of the impairment loss shall first charge against the carrying value of the headquarter' assets and business
reputation which are apportioned to the asset group or combination of asset groups, then charge it against the carrying value
of other assets in proportion to the weight of other assets in the asset group or combination of asset groups with the business
reputation excluded.
(6) Goodwill impairment
Goodwill formed by merger of enterprise shall be subject to an impairment test at least at the end of each year. When the
Company makes an impairment test of assets, it shall, as of the purchasing day, apportion the carrying value of the business
reputation formed by merger of enterprises to the relevant asset groups by a reasonable method. Where it is difficult to do
so, it shall be apportioned to the relevant combinations of asset groups. The related asset group or combination of asset
groups shall be the asset group or combination of asset groups that can benefit from the synergy effect of enterprise merger,
and shall be smaller than the reporting segments as determined by the Company.
When making an impairment test on the relevant asset groups or combination of asset groups containing business reputation,
if any evidence shows that the impairment of asset groups or combinations of asset groups is possible, the enterprise shall
first make an impairment test on the asset groups or combinations of asset groups not containing business reputation,
calculate the recoverable amount, compare it with the relevant carrying value and recognize the corresponding impairment
loss. Then the enterprise shall make an impairment test of the asset groups or combinations of asset groups containing
business reputation, and compare the carrying value of these asset groups or combinations of asset groups (including the
carrying value of the business reputation apportioned thereto) with the recoverable amount. Where the recoverable amount
of the relevant assets or combinations of the asset groups is lower than the carrying value thereof, it shall recognize the
impairment loss of the business reputation, and treat them according to the provisions of impairment of assets mentioned inthis Note.
17. Borrowing costs
(1) Recognized principles of capitalization of borrowing costs
The borrowing costs shall include interest on borrowings, amortization of discounts or premiums on borrowings, ancillary
expenses, and exchange balance on foreign currency borrowings. Where the borrowing costs incurred to an enterprise can
be directly attributable to the acquisition and construction or production of assets eligible for capitalization, it shall be
capitalized and recorded into the costs of relevant assets. Other borrowing costs shall be recognized as expenses on the
basis of the actual amount incurred, and shall be recorded into the current profits and losses.
The borrowing costs shall not be capitalized unless they simultaneously meet the following requirements:(1)The asset
disbursements have already incurred, which shall include the cash, transferred non-cash assets or interest bearing debts paid
for the acquisition and construction or production activities for preparing assets eligible for capitalization;(2)The borrowing
costs has already incurred; and(3)The acquisition and construction or production activities which are necessary to prepare
the asset for its intended use or sale have already started.
(2) Period of capitalization
The borrowing costs incurred before the qualified asset under acquisition and construction or production is ready for the
intended use or sale shall be cost of such assets. The borrowing costs incurred after the qualified asset under acquisition and
construction or production is ready for the intended use or sale shall be recognized as expenses at the incurred amount when
they are incurred, and shall be recorded into the profits and losses of the current period. Where the acquisition and
construction or production of a qualified asset is interrupted abnormally and the interruption period lasts for more than 3
months, the capitalization of the borrowing costs shall be suspended, excluding the period of suspension of capitalization of
the borrowing costs.
(3) Measurement of capitalization of borrowing costs
During the period of capitalization, the to-be-capitalized amount of interests (including the amortization of discounts or
premiums) in each accounting period shall be determined according to the following provisions:
① As for specifically borrowed loans for the acquisition and construction or production of assets eligible for capitalization,
the to-be-capitalized amount of interests shall be determined in light of the actual cost incurred of the specially
borrowed loan at the present period minus the income of interests earned on the unused borrowing loans as a deposit in
the bank or as a temporary investment.
② Where a general borrowing is used for the acquisition and construction or production of assets eligible for
capitalization, the enterprise shall calculate and determine the to-be-capitalized amount of interests on the general
borrowing by multiplying the weighted average asset disbursement of the part of the accumulative asset disbursements
minus the general borrowing by the capitalization rate of the general borrowing used.
18. Share-based payment
(1) Category of share-based payment
The share-based payments shall consist of equity-settled share-based payments and cash-settled share-based payments.
(2) Recognition of the fair value of the equity instruments
The equity-settled share-based payment in return for employee services shall be measured at the fair value of the equity
instruments granted to the employees.
① The fair value of equity instruments for which there is an active market shall be recognized at quotation in the activemarket;
② Where there is no active market for a equity instruments, the Company shall adopt value appraisal techniques to
determined its fair value. The value appraisal techniques mainly include the prices adopted by the parties, who are
familiar with the condition, in the latest market transaction upon their own free will, the current fair value obtained by
referring to other financial instruments of the same essential nature, the cash flow capitalization method and the option
pricing model, etc.
19. Estimated debts
(1) Recognition principle of estimated debts
The obligation such as external guaranty, pending litigation or arbitration, product quality assurance, layoff plan,
loss contract, restructuring and disposal of fixed assets, pertinent to a contingencies shall be recognized as an estimated
debts when the following conditions are satisfied simultaneously: (a) That obligation is a current obligation of the enterprise;
(b) It is likely to cause any economic benefit to flow out of the enterprise as a result of performance of the obligation; and (c)
The amount of the obligation can be measured in a reliable way.
(2) Measurement method of estimated debts
The estimated debts shall be initially measured in accordance with the best estimate of the necessary expenses for the
performance of the current obligation. To determine the best estimate, the Company shall take into full consideration of the
risks, uncertainty, time value of money, and other factors pertinent to the Contingencies. The Company shall check the
book value of the estimated debts on the balance sheet date. If there is any exact evidence indicating that the book value
cannot really reflect the current best estimate, the Company shall adjust the book value in accordance with the current best
estimate.
20. Revenue
(1) Recognition method of revenue from selling goods
No revenue from selling goods may be recognized unless the following conditions are met simultaneously:(1)The
significant risks and rewards of ownership of the goods have been transferred to the buyer by the enterprise;(2)The
enterprise retains neither continuous management right that usually keeps relation with the ownership nor effective control
over the sold goods;(3)The relevant amount of revenue can be measured in a reliable way;(4)The relevant economic
benefits may flow into the enterprise; and(5)The relevant costs incurred or to be incurred can be measured in a reliable way.
(2) Recognition method of revenue from providing labor services
The Company can, on the date of the balance sheet, reliably estimate the outcome of a transaction concerning the labor
services it provides, it shall recognize the revenue from providing services by employing the percentage-of-completion
method. The schedule of completion under the transaction concerning the providing of labor services shall be recognized in
the light of the proportion of the costs incurred against the estimated total costs.
If the Company can not, on the date of the balance sheet, measure the result of a transaction concerning the providing of
labor services in a reliable way, it shall be conducted in accordance with the following circumstances, respectively:
① If the cost of labor services incurred is expected to be compensated, the revenue from the providing of labor services
shall be recognized in accordance with the amount of the cost of labor services incurred, and the cost of labor services shall
be carried forward at the same amount; or② If the cost of labor services incurred is not expected to compensate, the cost incurred should be included in the current
profits and losses, and no revenue from the providing of labor services may be recognized.
(3) Recognition method of revenue from abalienating the right to use assets
① Recognition principle of revenue from abalienating the right to use assets
The revenue from abalienating of right to use assets consists of interest revenue and royalty revenue. No revenue from
abalienating of right to use assets may be recognized unless the following conditions are met simultaneously: A. The
relevant economic benefits are likely to flow into the enterprise; and B.The amount of revenues can be measured in a
reliable way.
② Recognition method
A. The amount of interest revenue should be measured and confirmed in accordance with the length of time for which the
enterprise's cash is used by others and the actual interest rate; or
B. The amount of royalty revenue should be measured and confirmed in accordance with the period and method of charging
as stipulated in the relevant contract or agreement.
21. Leases
(1) Category of leases
The Company shall classify a lease as a financing lease or an operating lease on the lease beginning date.
(2) Recognition standard of financing leases and operating leases
Where a lease satisfies one or more of the following criteria, it shall be recognized as a finance lease: ① The ownership of
the leased asset is transferred to the lessee when the term of lease expires; ② The lessee has the option to buy the leased
asset at a price which is expected to be far lower than the fair value of the leased asset at the date when the option becomes
exercisable. Thus, on the lease beginning date, it can be reasonably determined that the option will be exercised; ③Even if
the ownership of the asset is not transferred, the lease term covers the major part of the use life (generally refer to 75% or
over 75%) of the leased asset; ④ In the case of the lessee, the present value of the minimum lease payments on the lease
beginning date amounts to substantially all of the fair value of the leased asset on the lease beginning date (generally refer
to 90% or over 90%); in the case of the lessor, the present value of the minimum lease receipts on the lease beginning date
amounts to substantially all of the fair value of the leased asset on the lease beginning date; and ⑤ The leased assets are of
a specialized nature that only the Company (the lessee) can use them without making major modifications. The term
"operating lease" shall refer to a lease other than a financing lease.
(3) Accounting treatment of financing leases
① Accounting treatment of lessee of financing leases
On the lease beginning date, the Company shall record the lower one of the fair value of the leased asset and the present
value of the minimum lease payments on the lease beginning date as the entering value in an account, recognize the amount
of the minimum lease payments as the entering value in an account of long-term account payable, and treat the balance
between the recorded amount of the leased asset and the long-term account payable as unrecognized financing charges. The
initial direct costs such as commissions, attorney's fees and traveling expenses, stamp duties directly attributable to the
leased item incurred during the process of lease negotiating and signing the leasing agreement shall be recorded in the asset
value of the current period. When the Copany calculates the present value of the minimum lease payments, it shall adopt theinterest rate implicit in the lease as the discount rate.
As for the unrecognized financing charge, the Company shall adopt the effective interest rate method to calculate and
recognize the financing charge in the current period.
In calculating the depreciation of a leased asset, the Company should adopt a depreciation policy for leased assets
consistent with that for depreciable assets which are owned by the Company. If it is reasonable to be certain that the
Company will obtain the ownership of the leased asset when the lease term expires, the leased asset shall be fully
depreciated over its useful life. If it is not reasonable to be certain that the Company will obtain the ownership of the leased
asset at the expiry of the lease term, the leased asset shall be fully depreciated over the shorter one of the lease term or its
useful life.
Contingent rents shall be recognized as a profits and losses of the current period in which they are actually incurred.
② Accounting treatments of lessors in financing leases
On the beginning date of the lease term, a lessor shall recognize the sum of the minimum lease receipts on the lease
beginning date and the initial direct costs as the entering value in an account of the financing lease values receivable, and
record the unguaranteed residual value at the same time. The balance between the sums of the minimum lease receipts, the
initial direct costs and the unguaranteed residual value, and the sum of their present values shall be recognized as unrealized
financing income.
As for the unrealized financing income, the Company shall calculate the financing income at the current period by adopting
the effective interest rate method.
Contingent rents shall be recorded into the profits and losses of the period in which they actually arise.
(4) Accounting treatment of lessees in operating leases
The rents from operating leases shall be recorded by the lessor or lessee in the profits and losses of the current period by
using the straight-line method. The initial direct costs incurred by the lessor or lessee shall be recognized as the profits and
losses of the current period. The contingent rents shall be recorded into the profits and losses of the current period in which
they actually arise.
22. Government grants
(1) Recognized conditions of government grants
No government grant may be recognized unless the following conditions are met simultaneously as follows:
① The Company can meet the conditions for the government grants; and
② The Company can obtain the government grants.
(2) Measurement of government grants
① If a government grant is a monetary asset, it shall be measured in the light of the received or receivable amount. If a
government grant is a non-monetary asset, it shall be measured at its fair value. If its fair value cannot be obtained in a
reliable way, it shall be measured at its nominal amount (RMB 1).
② The government subsidies pertinent to assets shall be recognized as deferred income, equally distributed within the
useful lives of the relevant assets, and included in the current profits and losses. But the government subsidies measured at
their nominal amounts shall be directly included in the current profits and losses. The government subsidies pertinent to
incomes shall be treated respectively in accordance with the circumstances as follows: Those subsidies used for
compensating the related future expenses or losses of the enterprise shall be recognized as deferred income and shall
included in the current profits and losses during the period when the relevant expenses are recognized; or Those subsidies
used for compensating the related expenses or losses incurred to the enterprise shall be directly included in the current
profits and losses.
③ If it is necessary to refund any government subsidy which has been recognized, it shall be treated respectively inaccordance with the circumstances as follows: If there is the deferred income concerned, the book balance of the deferred
income shall be offset against, but the excessive part shall be included in the current profits and losses; and If there is no
deferred income concerned to the government subsidy, it shall be directly included in the current profits and losses.
23. Income tax
(1) Measurement method of income tax
The Company shall calculate income taxes by balance sheet liability method.
(2) Temporary differences
The "temporary difference" shall refer to the difference between the carrying amount of an asset or liability and its tax base.
As for an item that has not been recognized as an asset or liability, if its tax base can be determined in light of the tax law,
the difference between the tax base and its carrying amount shall also be a temporary difference. Temporary difference can
be classified into taxable temporary differences and deductible temporary differences.
(3) Recognition of deferred income tax assets
As for the deductible temporary difference, any deductible loss or tax deduction that can be carried forward to the next year,
the Company shall recognize the deferred income tax assets arising from a deductible temporary difference, any deductible
loss or tax deduction to the extent of the amount of the taxable income, otherwise, the deductible temporary difference
occurred in the following transactions:
①This transaction is not business combination, and at the time of transaction, the accounting profits will not be affected,
nor will the taxable amount be affected.
②Where the deductible temporary difference related to the investments of the subsidiary companies, associated enterprises
and joint enterprises can meet the following requirements simultaneously, the enterprise shall recognize the corresponding
deferred income tax assets: A. The temporary differences are likely to be reversed in the expected future; and B. It is likely
to acquire any amount of taxable income tax that may be used for making up the deductible temporary differences.
(4) Recognition of deferred income tax liabilities
Except for the deferred income tax liabilities arising from the following transactions, an enterprise shall recognize the
deferred income tax liabilities arising from all taxable temporary differences: ① the initial recognition of business
reputation, and the initial recognition of assets or liabilities arising from the following transactions which are
simultaneously featured by the following: (a) The transaction is not business combination; (b) At the time of transaction,
the accounting profits will not be affected, nor will the taxable amount be affected. ② The taxable temporary differences
related to the investments of subsidiary companies, associated enterprises and joint enterprises shall recognize
corresponding deferred income tax liabilities. However, those that can simultaneously meet the following conditions shall
be excluded: (a) The investing enterprise can control the time of the reverse of temporary differences; and (b) The
temporary differences are unlikely to be reversed in the excepted future.
(5) Impairment of deferred income tax assets
The carrying amount of deferred income tax assets shall be reexamined on balance sheet day. If it is unlikely to obtain
sufficient taxable income taxes to offset the benefit of the deferred income tax assets, the carrying amount of the deferred
income tax assets shall be written down. The income taxes of the current period and deferred income tax related to the
transactions or events directly recorded in the owner's rights and interests shall be recorded into the owner's rights and
interests. When it is probable to obtain sufficient taxable income taxes, such write-down amount shall be subsequently
reversed.
24. Segment reportingThe Company shall take business segment reporting as a main report form.
25. Business combinations and consolidated financial statement
For major accounting policies of business combinations and consolidated financial statement, please see Note VI.
26. Explanation on change in major accounting policies and accounting estimates
There is no matter related to change in accounting policies and accounting estimates.
27. Prior-period errors
The Company has no matter related to correction of prior-period errors.
V. Taxes
1. Value-added tax (VAT)
The Company is a VAT General Taxpayer. VAT payable shall be the balance that the output tax of the current period set
off against input tax that can be offset. As for products to be sold in China, such as yarn-dyed fabric cloth and garments,
their output VAT rate shall be 17%, while such as cotton and steam, their output VAT rate shall be 13%.
As for the export products, the Company shall, in accordance with the provision of CS [2007] No. 7 document, perform
“tax exemption, deduction and rebate”. With regard to garment material and garment exported by the Company, their
export rebate rate shall be 11%. In accordance with the Circular on Raising the Export Rebate Rates for Textiles and
Clothing (CS [2009] No. 14 document) jointly released by the Ministry of Finance and the State Administration of Taxation
of the People’s Republic of China, the export tax rebate rate of face fabrics and clothing exported by the Company
increased to 15%. Moreover, in the light of the Circular on Raising the Export Rebate Rates for Textiles and Other Light
Industries and Electronic Information and Other Products (CS [2009] No. 43 document) issued on 27 Mar. 2009, the export
tax rebate rate of face fabrics and clothing exported by the Company increased to 16% since 1 Feb. 2009.
2. Business tax
Business tax shall be paid at applicable tax rate in light of taxable income of object of taxation.
3. Tax for municipal maintenance and construction and educational surtax
The said two taxes shall be paid at circulating tax and applicable tax rates of each region regulated in the National Laws and
Regulations on Taxation.
4. Enterprise income tax
(1) The Company, in accordance with the Notice on Recognition of the First Batch of New High-tech Enterprise for the
Year 2008 (LJGZ [2009] No. 12 document) from Department of Science & Technology of Shandong Province, Finance
Bureau of Shandong Province, National Taxation Bureau of Shandong and Local Taxation Bureau of Shandong Province,
was recognized as a New High-tech Enterprise and obtained the Certificate of New High-tech Enterprise on 5 Dec. 2008.
The Company shall, in line with the Article 28 of Enterprise Income Tax Law of the People’s Republic of China and Notice
of the State Administration of Taxation on the Issues concerning the Administration of Enterprise Income Tax Deduction
and Exemption (GSF [2008] No. 111 document), enjoy a 15-percent rate for enterprise income tax.
(2) The shareholding subsidiaries included in the consolidated financial statement shall, when they enjoy preferentialincome tax deduction and exemption, pay enterprise income tax at effective tax rate authorized by the local tax authorities.
Of which:
① Lufeng Weaving & Dyeing Co., Ltd. (hereinafter called “Lufeng Weaving & Dyeing”) is productive foreign funded
enterprise, therefore, it shall enjoy a preferential enterprise income tax policy of “Two plus three” (Exemption of enterprise
income tax for the first two years of making profit, and 50% tax reduction for following three years). Between 2006 and
2007, Lufeng Weaving & Dyeing enjoyed exemption from the enterprise income tax, and shall pay half of the enterprise
income tax from 2008 to 2010. In accordance with the provisions of the Notice of the State Council on Carrying out the
Transitional Preferential Policies on Enterprise Income Tax (GF [2007] No. 39 document), Lufeng Weaving & Dyeing paid
the enterprise income tax at tax rate of 12.5% in 2009.
② Luthai (Hong Kong) shall pay the profit tax at tax rate of 16.5%.
5. Other taxes
At relevant State stipulations
VI. Business combination and consolidated financial statement
1. Business combinations
(1) Business combinations under the same control
① Definition of business combinations under the same control
Judgment basis of business combinations under the same control: A business ① combination under the same control is a
business combination in which all of the combining enterprises are ultimately controlled by the Group both before and after
the business combination; ② Before the combinations, the time that all of the combining enterprises are controlled by the
Group is over one year (including one year) generally. Moreover, after combinations, the time that the reporting entity
formed is controlled by the Group is also over one year (including one year). The above-mentioned two conditions are only
met simultaneously, the Company shall definite the business combinations under the same control.
②Recognized gist of combining date
The "combining date" refers to the date on which the combining party actually obtains control on the combined party, that
date on which the control right related to the combined party’s net assets or production and operation decision-making is
transferred to the Company. Determination basis of acquisition date is the same as one of combining date. The following
conditions are only met simultaneously, the Company shall determine the transfer of the control right. A. Business
Combination Agreement has been approved by the Shareholders’ General Meeting; B. Business combination matters that
need to make substantive review and approval by relevant State department has obtained the approval from relevant State
department; C. all the combining parties has handled necessary property transfer procedures; D. the Company has paid the
most of merger payments (generally shall be over 50%), and the Company with the ability to pay the remaining payments;
E. actually, the Company has controlled the finance and operation policies of the combined party, and enjoyed the
corresponding interests and undertook the risk.
③The assets and liabilities that the combining party obtains in a business combination shall be measured on the basis of
their carrying amount in the combined party on the combining date. As for the balance between the carrying amount of the
net assets obtained by the combining party and the carrying amount of the consideration paid by it (or the total par value of
the shares issued), the additional paid-in capital shall be adjusted. If the additional paid-in capital is not sufficient to be
offset, the retained earnings shall be adjusted.④ Disposal of combination cost
The direct cost for the business combination of the combining party shall, including the expenses for audit, assessment and
legal services, be recorded into the profits and losses at the current period. The bonds issued for a business combination or
the handling fees, commissions and other expenses for assuming other liabilities shall be recorded into the amount of initial
measurement of the bonds or other debts. The handling fees, commissions and other expenses for the issuance of equity
securities for the business combination shall be credited against the surplus of equity securities; if the surplus is not
sufficient, the retained earnings shall be offset.
⑤ Actual control of the same control
For details of the actual control of the same control, please refer to Note VI. 2 (1).
(2) Business combination not under the same control
① A business combination not under the same control is a business combination in which the combining enterprises are
not ultimately controlled by the same party or the same parties both before and after the business combination. In a business
combination not under the same control, the party which obtains the control on other combining enterprise(s) on the
purchase date is the acquirer (the Company), and other combining enterprise(s) is (are) the acquiree.
② The "acquisition date" refers to the date on which the acquirer actually obtains the control on the acquiree, also that date
on which the control right related to the acquirer’s net assets or production and operation decision-making is transferred to
the Company. Determination basis of acquisition date is the same as one of combining date.
③ Recognition of the combination costs
The combination costs shall be the fair values, on the acquisition date, of the assets paid, the liabilities incurred or assumed
and the equity securities issued by the acquirer in exchange for the control on the acquiree and all relevant direct costs
incurred to the acquirer for the business combination. For a business combination realized by two or more transactions of
exchange, the combination costs shall be the summation of the costs of all separate transactions. Where any future event
that is likely to affect the combination costs is stipulated in the combination contract or agreement, if it is likely to occur
and its effects on the combination costs can be measured reliably, the Company shall record the said amount into the
combination costs.
On the acquisition date, the identifiable assets, liabilities and contingent liabilities acquired in the combination not under the
same control shall be measured at their fair values.
The acquirer shall recognize the positive balance between the combination costs and the fair value of the identifiable net
assets it obtains from the acquiree as goodwill. The acquirer shall, pursuant to the following provisions, treat the balance
between the combination costs and the fair value of the identifiable net assets it obtains from the acquiree: at first, it shall
reexamine the measurement of the fair values of the identifiable assets, liabilities and contingent liabilities it obtains from
the acquiree as well as the combination costs; If, after the reexamination, the combination costs are still less than the fair
value of the identifiable net assets it obtains from the acquiree, it shall record the balance into the profits and losses of the
current period.
④ Treatment method of combination expense
The direct cost for the business combination of the Company shall, including the expenses for audit, assessment and legal
services, be recorded into the cost of business combination. The bonds issued for a business combination or the handling
fees, commissions and other expenses for assuming other liabilities shall be recorded into the amount of initialmeasurement of the bonds or other debts. The handling fees, commissions and other expenses for the issuance of equity
securities for the business combination shall be credited against the surplus of equity securities; if the surplus is not
sufficient, the retained earnings shall be offset.
⑤ Amount of good will recognition method
Goodwill is the positive balance between the combination costs and the fair value of the identifiable net assets it obtains
from the acquire. After the reexamination, the combination costs are still less than the fair value of the identifiable net
assets it obtains from the acquiree, it shall record the balance into the profits and losses of the current period.
2. Consolidated financial statement
(1) Consolidation scope
① Recognition principle
The consolidated scope of consolidated financial statement shall be recognized on the basis of control. The term "control"
means having the power to decide an enterprise's financial and operating policy and obtains benefits from its business
activities. The Company shall bring the investing enterprise (the Company’s investment takes over 50% of voting total
capital of the investing enterprise or no more than 50% but the Company has the actual control right) into
the consolidated scope.
② Major subsidiaries and consolidated scope in the first half of 2009.
Name of company Registered
address
Natural of business Registered
capital
Business scope Legal
represent
ative
Organization
code
I. Subsidiaries obtained
through combination
under the same control
II. Subsidiaries
obtained through
combination not under
the same control
III. Subsidiaries
obtained through other
ways
Beijing Luthai Shirt Co.,
Limited (“Beijing
Luthai”)
Beijing Limited Company
RMB
5600000
Design and manufacturing and
sale of garment
Tian
Cheng
70022622-X
Beijing Sichuang Beijing
Limited Company
（Chineseforeign
joint
venture）
USD
2000000 Design and manufacturing and
sale of garment
Liu
Shizhen
71774843-8
Luthai (Hongkong)
Hong
Kong
Limited company
HKD
6000000
Import & export trade, collection
of market information,
Liu
Shizheninformation consultation
Beijing Luthai Shirt Co.,
Limited (“Beijing
Luthai”)
Beijing Limited Company
RMB
5600000
Design and manufacturing and
sale of garment
Tian
Cheng
75353600-2
Xinjiang Luthai
Fengshou Cotton Co.,
Ltd. (“Xinjiang Luthai”)
Xinjiang Limited company
RMB
89463000
Planting, processing and sale of
Economic Crops, cooking oil
crops; purchase, processing and
sale of cotton and cotton-by
products; production and sale of
cotton textile products
Liu
Shizhen
75165238-4
Lufeng Weaving &
Dyeing Co., Ltd. (Lufeng
Weaving & Dyeing)
Zibo
Limited company
(Joint Ventures
Funded by
Hongkong Macao
and Taiwan)
RMB
486160000
Production and sale of textile and
printing and dyeing products
Liu
Shizhen
76001835-0
Zibo Luqun Textile Co.,
Ltd. (Luqun Textile)
Zibo
Limited company
(sole corporation)
RMB
168220000
Sale of cotton yarn
Liu
Shizhen
76870633-4
Zibo Xinsheng Power
Co., Ltd. (Xinsheng
Power)
Zibo
Limited company
(sole corporation)
RMB
162435600 Power, steam and hot water
Liu
Shizhen
61329023-1
（Con.）
Name of company
Actual amount invested
by the Company
Balance of net investment for
subsidiaries in fact
Proportion
of shares
held by
the
Company
Proportion of
voting right
Merger
(Yes
or Not)
I. Subsidiaries obtained through
combination under the same
control
II. Subsidiaries obtained through
combination not under the same
control
III. Subsidiaries obtained
through other ways
Beijing Luthai RMB 3360000 RMB 3360000 60% 60% Y
Beijing Sichuang USD 1200000 USD 1200000 60% 60% Y
Luthai (Hong kong) HKD 6000000 HKD 6000000 100% 100% Y
Luthai Huanzhong RMB 88834500 RMB 107000000 100% 100% Y
Luthai Xinjiang RMB 48072000 RMB 51006900 57.01% 57.01% YLufeng Weaving & Dyeing RMB 364620000 RMB 364620000 75% 75% Y
Luqun Textile RMB 171784600 RMB 168220000 100% 100% Y
Xinsheng Power RMB 176340700 RMB 162435600 100% 100% Y
(2) Preparing methods of consolidated financial statement
① General preparing methods of consolidated financial statement
The consolidated financial statements shall, on the basis of the financial statements of the parent company and its
subsidiaries incorporated into the consolidation scope, be prepared after the long term equity investments in the subsidiaries
are adjusted through the equity method, the equity capital investments of a parent company in its subsidiaries shall be offset
against its portion of owner’s equities in the subsidiaries, and significant transactions and internal come-and-go within the
Company are offset. Minority interests shall be presented in the sub-item of “Minority interests” under the item of the
owner’s equities in the consolidated balance sheets, while gains and losses of minority shareholders shall be presented in
the sub-item of “Minority shareholders’ gains” under the item of the net profit in the consolidated income statement.
② Treatment method to increase or disposal subsidiaries in the reporting period
If the parent company has a new subsidiary due to business combination under a same control during a reporting period, it
shall adjust the beginning balance in the consolidated balance sheets when preparing consolidated balance sheets. If it is not
for the reason of business combination under a same control that the parent company has a new subsidiary, it shall not
adjust the beginning balance in the consolidated balance sheets when preparing consolidated balance sheets. If the parent
company disposes of a subsidiary within a reporting period, when it prepares consolidated balance sheets, it shall adjust the
beginning balance in the consolidated balance sheets.
If the parent company has a new subsidiary due to business combination under a same control during a reporting period, the
parent company shall consolidate the said subsidiary’s revenue, expense and profit as of the current period into the
consolidated income statement. If it is not for the reason of business combination under a same control that the parent
company has a new subsidiary, the parent company shall consolidate the said subsidiary’s revenue, expense and profit from
the acquisition date to the end of period into the consolidated income statement. If the parent company disposes of a
subsidiary within a reporting period, the parent company shall incorporate the said subsidiary’s revenue, expense and profit
from the beginning of period to the disposal date into the consolidated income statement.
If the parent company has a new subsidiary due to business combination under a same control during a reporting period, the
parent company shall consolidate the said subsidiary’s cash flow as of the current period into the consolidated cash flow
statement. If it is not for the reason of business combination under a same control that the parent company has a new
subsidiary, the parent company shall consolidate the said subsidiary’s cash flow from the acquisition date to the end of
period into the consolidated cash flow statement. If the parent company disposes of a subsidiary within a reporting period,
the parent company shall incorporate the said subsidiary’s cash flow from the beginning of period to the disposal date into
the consolidated cash flow statement.
③ Accounting treatment of different in accounting policies and accounting period between parent company and its
subsidiaries
If the accounting policies and accounting period adopted by a subsidiary are different from those adopted by the parent
company when preparing consolidated financial statement, the subsidiary shall be required to re-prepare financial
statements under the accounting policies and accounting period adopted by the parent company.
④ Translation of foreign currency financial statements
The Company shall, in accordance with the following provisions, convert the financial statement in foreign currency into
the financial statement in Renminbi.When the consolidated financial statement includes foreign business entity, for translation of foreign currency financial
statements, please refer to Note IV. 5.
(3) Minority interests
① Minority interests of each subsidiary company
Name of subsidiaries Closing amount Opening amount
Beijing Luthai 3,332,264.10 3,288,670.14
Beijing Sichuang 10,537,772.50 13,360,422.16
Xinjiang Luthai 60,146,186.21 71,066,232.08
Lufeng Weaving & Dyeing 145,230,772.40 142,502,089.85
Lutai Huanzhong - 9,538,372.85
Total 219,246,995.21 239,755,787.08
VII. Notes to consolidated financial statement
Unless otherwise stated in the following items, amount at the closing balance refers to data as at 30 June 2009, opening
balance refers to data as at 1 January 2009, amount of the current period refers to data from 1 January to 30 June 2009, the
amount of last period refers to data from 1 January to 30 June 2008.
1. Monetary fund
(1) Breakdown of monetary fund
Closing amount Opening amount
Items
Amount of
original
currency
conversion
rate
Converted in
RMB
Amount of
original
currency
conversion
rate
Converted in
RMB
Cash-RMB 1,442,471.88 1.0000 1,442,471.88 1,450,297.02 1.0000 1,450,297.02
-USD 29,349.71 6.8319 200,514.27 25,534.48 6.8346 174,517.96
-EURO 1,483.33 9.6408 14,300.49 1,400.03 9.6590 13,522.89
-JPY 131,938.00 0.0711 9,380.79 90,503.00 0.0757 6,851.08
-HKD 56,432.33 0.8815 49,745.10 2,286.60 0.8819 2,016.54
-THB 120.19 0.2005 24.10 120.19 0.1955 23.50
- SGD 0.20 4.7139 0.94 0.20 4.7530 0.95
Subtotal 1,716,437.57 1,647,229.94
Bank deposit-RMB 400,037,677.16 1.0000 400,037,677.16 911,030,094.89 1.0000 911,030,094.89
-USD 20,428,351.56 6.8319 139,564,455.01 21,102,470.11 6.8346 144,227,096.03
-EURO 523,730.28 9.6408 5,049,178.88 1,519,641.15 9.6590 14,678,213.87
-JPY 7,832,309.00 0.0711 556,877.17 12,182,826.00 0.0757 922,239.93
-HKD 25,896,406.63 0.8815 22,827,682.45 17,837,032.14 0.8819 15,730,478.64
-SF 63,946.68 6.3228 404,322.07 297,587.42 6.4624 1,923,128.94
Subtotal 568,440,192.74 1,088,511,252.30
Other-RMB 34,000,000.00 1.0000 34,000,000.00
-USD 1,427,715.00 6.8319 9,754,006.11 2,472,406.62 6.8346 16,897,910.27
-EURO 1.51 9.6590 14.59Subtotal 9,754,006.11 50,897,924.86
Total 579,910,636.42 1,141,056,407.10
(2) The ending amount of monetary fund is reduced by 49.18% than the opening amount, which is attributable to: the
Company issued 150,000,000 A shares (Renminbi common shares) on 8 Dec. 2008, from which the raised funds were
mostly used up.
(3) Item “US Dollar” under the other monetary fund is mainly deposit in foreign currency deposit being in verification stage
in accordance with the state provisions for foreign exchange control.
2. Notes receivable
(1) Breakdown of notes receivable
Category of notes receivable Closing balance Opening balance
Bank acceptance bill 11,507,120.75 18,285,935.20
Letter of credit 118,330,621.78 97,480,808.62
Total 129,837,742.53 115,766,743.82
(2) No mortgaged note exists in the reporting period.
(3) Endorsed notes receivable but not yet due
Day of maturity Amount Remark
Jul. 2009 1,694,177.00 Bank acceptance bill
Aug. 2009 6,379,535.00 Bank acceptance bill
Sep. 2009 1,850,000.00 Bank acceptance bill
Oct. 2009 3,264,130.00 Bank acceptance bill
Nov. 2009 3,550,000.00 Bank acceptance bill
Dec. 2009 600,000.00 Bank acceptance bill
Total 17,337,842.00
3. Accounts receivable
(1) Breakdown of accounts receivable listed by category
Closing balance
Items
Carrying balance
Proportion of
total accounts
receivable
Provision for
bad debts
Carrying value
Withdrawal
proportion
of bad debt
Significant
single amount 79,908,567.96 48.68% 3,603,815.73 76,304,752.23 5%
Insignificant
single amount 84,246,579.13 51.32% 3,799,456.73 80,447,122.40 5%-30%
Total 164,155,147.09 100.00% 7,403,272.46 156,751,874.63
（Con.）
Opening balance
Items
Carrying balance
Proportion of
total accounts
receivable
Provision for
bad debts
Carrying value
Withdrawal
proportion
of bad debtSignificant
single amount 55,187,878.31 38.92% 2,759,393.92 52,428,484.39 5%
Insignificant
single amount 86,602,994.03 61.08% 4,758,909.43 81,844,084.60 5%-30%
Total 141,790,872.34 100.00% 7,518,303.35 134,272,568.99
Accounts receivable with significant single amount refer to accounts receivable that the Closing balance is over RMB 5
million.
(2) Breakdown of accounts receivable listed by aging
Closing balance Opening balance
Aging
Book balance
Proportion
of total
accounts
receivable
Provision for
bad debts
Book balance
Proportion
of total
accounts
receivable
Provision for
bad debts
Within 1 year 157,150,728.55 95.73% 7,087,378.50 139,824,419.83 98.61% 6,991,221.00
1–2 years 5,179,577.64 3.16% 233,595.02 175,169.47 0.12% 17,516.95
2 -3years 243,672.41 0.15% 10,989.44 278,195.14 0.20% 55,639.03
Over 3 years 1,581,168.49 0.96% 71,309.50 1,513,087.90 1.07% 453,926.37
Total 164,155,147.09 100.00% 7,403,272.46 141,790,872.34 100.00% 7,518,303.35
(3) The top five units in the Closing balance of accounts receivable
Debtors Amount
Proportion of total
accounts receivable
Term in arrearage
Chenfeng (Jintan) Garment Co.,
Ltd.
18,295,399.49 11.15% Within 1 year
OXFORD 18,010,292.89 10.97% Within 1 year
TAL 16,993,052.76 10.35% Within 1 year
OLYMP 8,119,055.61 4.95% Within 1 year
PVH 6,772,228.63 4.13% Within 1 year
Total 68,190,029.38 41.54%
(4) No arrearage from the shareholders holding over 5% (including 5%) of the equity of the Company existed in the balance
of accounts receivable.
4. Prepayment
(1) Breakdown of prepayment
Closing balance Opening balance
Aging
Amount Proportion Amount Proportion
Within 1 year 133,893,419.63 98.85% 85,191,947.94 98.28%
1–2 years 587,410.24 0.43% 820,617.31 0.95%
2 -3years 858,392.92 0.63% 644,626.14 0.74%
Over 3 years 120,752.91 0.09% 23,052.91 0.03%
Total 135,459,975.70 100.00% 86,680,244.30 100.00%
(2) The ending balance of prepayment is increased by 56.28% than the opeing balance, which is attributable to increase in
prepayment for contton as at the end of reporting period.(3) No arrearage from the shareholders holding over 5% (including 5%) of the equity of the Company existed in the balance
of prepayment.
5. Other receivable
(1) Breakdown of other receivable listed by category
Closing balance
Items
Carrying balance
Proportion of
total other
receivables
Provision for
bad debts
Carrying
value
Withdrawal
proportion
of bad debt
Significant
single amount 17,026,634.40 26.02% 2,602,291.49 14,424,342.91 5%-30%
Insignificant
single amount 48,410,907.81 73.98% 7,398,954.51 41,011,953.30 5%-30%
Total 65,437,542.21 100.00% 10,001,246.00 55,436,296.21
（Con.）
Opening balance
Items
Carrying balance
Proportion of
total other
receivables
Provision for
bad debts
Carrying
value
Withdrawal
proportion
of bad debt
Significant
single amount 40,347,449.55 52.94% 5,984,364.11 34,363,085.44 5%-30%
Insignificant
single amount 35,866,522.38 47.06% 4,117,132.56 31,749,389.82 5%-30%
Total 76,213,971.93 100.00% 10,101,496.67 66,112,475.26
Other receivables with significant single amount refer to other receivables that the Closing balance is over RMB 5 million.
(2) Breakdown of other receivables listed by aging
Closing balance Opening balance
Aging
Book balance
Proportion
of total
other
receivables
Provision for
bad debts
Book balance
Proportion
of total
other
receivables
Provision for
bad debts
Within 1
year
28,501,848.65 43.56% 4,356,123.26 40,767,466.83 53.49% 2,038,373.35
1–2 years 7,256,206.57 11.09% 1,109,013.34 9,055,596.62 11.88% 905,559.66
2 -3years 5,820,397.42 8.89% 889,569.27 7,597,088.67 9.97% 1,519,417.72
Over 3 years 23,859,089.57 36.46% 3,646,540.14 18,793,819.81 24.66% 5,638,145.94
Total 65,437,542.21 100.00% 10,001,246.00 76,213,971.93 100.00% 10,101,496.67
(3) The top five units in the Closing balance of other receivables
Debtors Amount
Proportion of
total accounts
receivable
Term in arrearage
Awat County Tian Hong
State-owned Assets Investment
Operation Co., Ltd
17,026,634.40 26.02% Over 3 yearsBureau of Finance of Zichuan
District of Zibo
2,665,685.60 4.07% 1-2 years
CNPC Transportation Company
Limited
1,300,000.00 1.99% 2- 3 years
Bureau of Land and Resources
of Awat County
1,230,549.50 1.88% 1- 3 years
Silu Fruit Holdings Limited of
Awat County
1,003,601.72 1.53% Over 3 years
Total 23,226,471.22 35.49%
(4) No arrearage from the shareholders holding over 5% (including 5%) of the equity of the Company existed in the balance
of other receivable.
6. Inventory
(1) Breakdown of inventory
Closing balance
Items
Carrying balance
Including:
capitalization
of borrowing
costs
Provision for
falling price of
inventory
Carrying value
Raw material 514,606,626.44 61,545.96 514,545,080.48
Goods in
process
305,349,576.86 3,524,867.49 301,824,709.37
merchandise
inventory
333,790,797.36 49,065,899.52 284,724,897.84
Consigned
materials
for
processing
14,046,298.10 14,046,298.10
Total 1,167,793,298.76 52,652,312.97 1,115,140,985.79
（Con.）
Opening balance
Items
Carrying balance
Including:
capitalization
of borrowing
costs
Provision for
falling price of
inventory
Carrying value
Raw material 675,901,000.82 61,545.96 675,839,454.86
Goods in
process
318,305,947.57 3,524,867.49 314,781,080.08
merchandise
inventory
432,291,978.43 68,472,475.52 363,819,502.91
Consigned
materials
for
processing
15,618,075.74 15,618,075.74Total 1,442,117,002.56 72,058,888.97 1,370,058,113.59
(2) Provision for falling price of inventory
Current decrease
Items
Opening
balance
Current
withdrawal
Switching
back
Writing-off Total
Closing
balance
Raw
material
61,545.96 61,545.96
Goods in
process
3,524,867.49 3,524,867.49
Merchandise
inventory
68,472,475.52
19,406,576.00
49,065,899.52
Total 72,058,888.97 19,406,576.00 52,652,312.97
(3) Basis of withdrawal of provision for falling price of inventory
On the balance sheet date, the provision for falling price of inventory shall be withdrawn at cost and net realizable value.
Where the cost of inventory is higher than its net realizable value, the inventory shall be measured at the net realizable
value, meanwhile, the provision for falling price of inventory shall be withdrawn at the balance of the cost higher than the
net realizable value. The net realizable value shall be recognized as below:
① the inventories for sale directly such as finished goods, commodities and materials for sale, in the course of normal
production and operation, the net realizable value of such inventories is an amount after deducting estimated sale expense
and relevant taxes from the estimated sale price of inventories;
② materials inventory that need to go through processing, in the course of normal production and operation, the net
realizable value of such inventories is an amount after deducting the estimated cost of completion, estimated sale expense
and relevant taxes from the estimated sale price of products manufactured by the Company.
(4) Inventories used for debt guarantee at the year-end
Items Carrying value Remark
Merchandise
inventory
112,100,275.22 Mortgage
Total 112,100,275.22
The lint cotton and seed cotton are used for mortgage by Xinjiang Luthai for short-term bank loans of RMB 116 million.
Please see “Note X. 2” for details.
(5) The ending balance of inventory is decreased by 18.61% than the opening balance, which was mainly because the raw
materials at the beginning of period were used up in the reporting period.
7. Long-term equity investment
(1) Breakdown of long-term equity investment
Items
Opening
balance
Current
increase
Current
decrease
Closing balance
Investment in joint
venture enterprises
800,000.00 800,000.00
Investment in
affiliated enterprises
Less: provision for
impairment of
long-term equity
investment
800,000.00 800,000.00
Total(2) Provision for impairment of long-term equity investment
Current decrease
Name of invested
entities
Opening
balance
Current
withdrawal
Switching
back
Writing
off
Total
Closing
balance
Silu Fruit Holdings
Limited of Awat
County
800,000.00 800,000.00
Total 800,000.00 800,000.00
8. Fixed assets
(1) Breakdown of fixed assets
Items Opening balance Current increase Current decrease Closing balance
Original price
House and building 1,370,382,764.76 52,616,691.47 9,237,360.21 1,413,762,096.02
Machinery equipment 3,844,239,866.84 43,736,683.83 1,884,974.89 3,886,091,575.78
Transportation vehicles 44,857,322.97 2,182,266.24 224,357.04 46,815,232.17
Electronic equipment
and other
65,393,709.79 2,535,341.01 3,350.00 67,925,700.80
Total 5,324,873,664.36 101,070,982.55 11,350,042.14 5,414,594,604.77
Accumulative
depreciation
House and building 269,980,002.42 32,850,856.08 596,290.46 302,234,568.04
Machinery equipment 1,247,722,661.90 135,577,151.37 1,106,470.36 1,382,193,342.91
Transportation vehicles 31,114,255.74 1,948,058.14 201,920.44 32,860,393.44
Electronic equipment
and other
40,890,451.00 3,496,856.26 2,333.76 44,384,973.50
Total 1,589,707,371.06 173,872,921.85 1,907,015.02 1,761,673,277.89
Provision for
impairment
House and building
Machinery equipment 6,379,082.25 10,328.80 6,368,753.45
Transportation vehicles 107,091.50 7,838.30 99,253.20
Electronic equipment
and other
17,673.33 17,673.33
Total 6,503,847.08 18,167.10 6,485,679.98
Carrying value
House and building 1,100,402,762.34 1,111,527,527.98
Machinery equipment 2,590,138,122.69 2,497,529,479.42
Transportation vehicles 13,635,975.73 13,855,585.53
Electronic equipment
and other
24,485,585.46 23,523,053.97
Total 3,728,662,446.22 3,646,435,646.90(2) Fixed assets transferred from construction in progress
Items Time Amount
Lu Thai Industry Park Feb. 2009 5,863,987.22
Other small projects Feb. and Jun. 2009 6,308,388.52
50 million-meter yarn-dyed
fabric
Feb. 2009 5,139,293.89
Doubling plant project Jun. 2009 22,122,538.16
Piece dyeing project Jan– Jun. 2009 14,647,772.16
Spinning project of Xinjiang
Lu Thai
Feb. 2009 2,563,217.78
Renovation project of
Two-for-one twister plant
Feb. 2009 8,086,165.40
Total 64,731,363.13
(3) Fixed assets used for mortgage
Item
Original value of
the book
Accumulative
depreciation
Provision for
impairment
Carrying value
Machinery
equipment
72,836,094.53 30,249,628.97 42,586,465.56
House and
building
46,913,675.16 10,584,679.18 36,328,995.98
合 计 119,749,769.69 40,834,308.15 78,915,461.54
Xinjiang Luthai mortgaged its machinery equipment, house and building and land use right worth of original book value
amounting to RMB 119,749,769.69 and net value of RMB 78,915,461.54 for short-term bank loans of RMB 100.76 million.
Please see “Note X. 2” for details.
(4) Provision for impairment of fixed assets
Current decrease
Item
Opening
balance
Current
withdrawal
Switching
back
Writing off Total
Closing balance
Machinery
equipment
6,379,082.25 10,328.80 10,328.80 6,368,753.45
Transportation
vehicles
107,091.50 7,838.30 7,838.30 99,253.20
Electronic
equipment
and other
17,673.33 - 17,673.33
Total 6,503,847.08 18,167.10 18,167.10 6,485,679.98
9. Construction in progress
a) Breakdown of construction in progress
Name of
project
Budget
(RMB ten
thousand)
Opening
balance
Current increase
Transferring
into fixed
assets
Other
decrease
Closing balance
Resource
of
capital
% of
budget
by
project
inputLu Thai
Industry Park
1000 7,642,808.26 1,910,166.71 5,863,987.22 3,688,987.75 Other 96.00%
Other small
projects
2,900 9,626,243.10 2,405,848.15 6,308,388.52 5,723,702.73 Other 95.00%
50
million-meter
yarn-dyed
fabric
27,007 26,705,822.47 13,624,235.24 5,139,293.89 35,190,763.82
Loan
and
other
96.00%
5 million
shirts project
1,200 190,000.00 - - 190,000.00 Other 99.00%
Doubling
plant project
11,921 56,910,566.65 22,122,538.16 34,788,028.49 Other 95.00%
Piece dyeing
project
29,187 2,753,018.64 12,620,793.77 14,647,772.16 726,040.25 Other 99.00%
Spinning
project of
Xinjiang Lu
thai
1,565 4,118,269.86 2,249,750.70 2,563,217.78 3,804,802.78 Other 96.00%
Renovation
project of
Two-for-one
twister plant
6,300 1,715,646.76 2,086,074.52 3,314,286.28 487,435.00 Other 98.00%
150000-ingot
high-grade
heckling yarn
project
26,461 37,411,403.58 9,380,373.25 4,771,879.12 42,019,897.71
Raised
fund
94.00%
50000-ingot
two-for-one
twister
project
4,086 14,724,607.64 2,349,746.40 17,074,354.04
Raised
fund
41.00%
Total 111,627 161,798,386.96 46,626,988.74 64,731,363.13 143,694,012.57
(5) Ended 30 Jun. 2009, there was no situation that carrying value of the construction in progress is higher than its
recoverable amount.
10. Engineering material
(11) Breakdown of engineering material
Closing balance Opening balance
Items
Balance
Provision
for
impairment
Net value Balance
Provision for
impairment
Net value
Engineering
material
3,145,362.05 3,145,362.05 5,976,824.75 5,976,824.75
Total 3,145,362.05 3,145,362.05 5,976,824.75 5,976,824.75
(2) The closing balance of engineering material is reduced by 47.37% than the opening balance, which was due to that the
equipments are put into service.(3) Ended 30 Jun. 2009, there was no situation that carrying value of the engineering material is higher than its recoverable
amount.
11. Intangible assets
(1) Breakdown of intangible assets
Items Initial cost
Opening
balance
Current
increase
Current
transferred
out
Current
amortization
Accumulative
amortization
Closing
balance
Land use
right
173,828,868.33 161,632,993.92 3,099,022.32 15,294,896.73 158,533,971.60
Land use
right of
Xinsheng
Power
12,155,433.14 10,729,030.16 17,840.00 253,671.66 1,662,234.64 10,493,198.50
Water use
right
280,000.04 280,000.04 - 280,000.04
Drugs royalty 5,599,999.96 5,599,999.96 - 5,599,999.96
Nonpatented
technology of
Luthai
Huanzhong
996,333.26 996,333.26 - 996,333.26
Land use
right of
Lufeng
Weaving &
Dyeing
12,204,217.94 11,701,375.75 128,119.16 630,961.35 11,573,256.59
Land use
right of
Luqun Textile
34,990,861.00 28,893,830.47 5,000,000.00 333,241.22 1,430,271.75 33,560,589.25
Land use
right of
Luthai
Huanzhong
8,064,419.82 7,467,055.26 149,341.14 746,705.70 7,317,714.12
Total 248,120,133.49 227,300,618.82 5,017,840.00 3,963,395.50 19,765,070.17 228,355,063.32
(3) Ended 30 Jun. 2009, there was no situation that carrying value of the intangible assets is higher than its recoverable
amount.
(4) Land use right and equipment with book net value worth of RMB 34,789,240.84 are mortgaged by Xinjiang Luthai for a
short-term bank loan of RMB 91.76 million. Please refer to “Note X. 2” for details.
12. Goodwill
(1) Breakdown of goodwill
Closing balance Opening balance
Items
Balance Net value Balance Net value
Combination goodwill 20,563,803.29 20,563,803.29 20,563,803.29 20,563,803.29
Total 20,563,803.29 20,563,803.29 20,563,803.29 20,563,803.29(2) Goodwill of the Company refers to the balance of initial investment cost higher fair value of realizable net assets of
investing enterprise enjoyed by the Company when invested.
13. Deferred income tax assets
(1) Breakdown of deferred income tax assets
Items Closing balance Opening balance
Deferred income tax assets formed arising from
the difference between carrying value of assets
and tax basis
29,016,705.51 31,061,511.70
Deferred income tax assets formed arising from
the difference between carrying value of
liabilities and tax basis
5,761,685.00 2,542,960.00
Total 34,778,390.51 33,604,471.70
14. Breakdown of assets impairment
Current decrease
Items
Opening
balance
Current
withdrawal Switching
back
Writing off Total
Closing balance
I. Total provision for bad debts 17,619,800.02 215,281.56 215,281.56 17,404,518.46
Of which: accounts
receivable
7,518,303.35 115,030.89 115,030.89 7,403,272.46
Other receivables 10,101,496.67 100,250.67 100,250.67 10,001,246.00
II. Total of provision for falling
price of inventory
72,058,888.97 19,406,576.00 19,406,576.00 52,652,312.97
Of which: Goods in stock 68,472,475.52 19,406,576.00 19,406,576.00 49,065,899.52
Raw materials 61,545.96 61,545.96
Goods in process 3,524,867.49 3,524,867.49
III. Provision for impairment of
long-term equity investment
800,000.00 800,000.00
IV. Total of provision for
impairment of fixed assets
6,503,847.08 18,167.10 18,167.10 6,485,679.98
House and building 0
Machinery equipment 6,379,082.25 10,328.80 10,328.80 6,368,753.45
Transportation vehicles 107,091.50 7,838.30 7,838.30 99,253.20
Electronic equipment and other 17,673.33 17,673.33
Total 96,982,536.07 215,281.56 19,424,743.10 19,640,024.66 77,342,511.41
15. Short-term loan
(1) Breakdown of short-term loan
Category Closing balance Opening balance
Credit loan 844,141,660.49 1,631,633,875.02
Guaranteed loan 154,000,000.00 95,000,000.00
Mortgage loan 251,760,000.00 247,700,000.00
Total 1,249,901,660.49 1,974,333,875.02
(2) The closing credit loan includes foreign currency loan of USD 23,879,398.19, converting into RMB 163,141,660.49.(3) All the ending guaranteed loan is the one that the Company provide guarantee for subsidiary company, Lufeng Weaving
& Dyeing and Xinjiang Luthai.
(4) As to Guarantee loan, guaranty and mortgage of mortgage loan, please refer to “Note X. 1 and 2”.
16. Tradable financial liabilities
(1) Breakdown of tradable financial liabilities
Items Closing balance Opening balance
Tradable financial liabilities 39,628,900.00 19,175,600.00
Total 39,628,900.00 19,175,600.00
(2) The closing tradable financial liabilities is increased by RMB 20,453,300.00 than the opening balance, which was due to
change in fair value of tradable financial liabilities.
17. Notes payable
(1) Breakdown of notes payable
Category Closing balance Opening balance
Maturing amount in
the next accounting
year
Bank acceptance
bill
54,530,380.03 209,536,950.08 54,530,380.03
Trade acceptance
bill
57,219,245.68 117,369,198.35 57,219,245.68
Total 111,749,625.71 326,906,148.43 111,749,625.71
(2) The ending balance of notes payable is reduced by 65.82% than the opening balance, which was because the Company
paid matured note in the reporting period.
18. Accounts payable
(1) Breakdown of accounts payable
Closing balance Opening balance
Aging
Amount Proportion Amount Proportion
Within 1
year
298,993,178.23 92.87% 298,837,036.64 96.58%
1–2 years 13,835,988.60 4.30% 5,770,986.63 1.87%
2 -3years 5,922,969.82 1.84% 1,948,313.29 0.63%
Over 3
years
3,203,348.73 0.99% 2,848,369.41 0.92%
Total 321,955,485.38 100.00% 309,404,705.97 100.00%
(2) No arrearage from the shareholders holding over 5% (including 5%) of the equity of the Company existed in the balance
of accounts payable.
19. Accounts collected in advance
(1) Breakdown of accounts collected in advance
Closing balance Opening balance
Aging
Amount Proportion Amount Proportion
Within 1
year
68,991,556.87 97.77% 30,495,414.75 96.07%
1–2 years 1,133,517.52 1.61% 495,573.10 1.56%2 -3years 326,197.11 0.46% 532,219.81 1.68%
Over 3
years
113,986.90 0.16% 219,638.23 0.69%
Total 70,565,258.40 100.00% 31,742,845.89 100.00%
(2) The closing balance of accounts collected in advance is increased by 122.30% than the opening balance, which was
because of increase in accounts collected in advance by Xingjiang Luthai at the end of reporting period.
(3) No arrearage from the shareholders holding over 5% (including 5%) of the equity of the Company existed in the balance
of accounts collected in advance.
20. Payable for employee
(1) The details of staff salaries payable are as below:
Items
Opening
balance
Current
increase
Current
payment
Opening
balance
Wages and bonuses
for the employees
200,369,284.90 212,311,445.02 279,899,067.81 132,781,662.11
Welfare expenses for
the employees
20,095,888.68 20,095,888.68 -
Social insurances 13,560,237.94 62,117,312.98 64,653,472.49 11,024,078.43
Housing
accumulation fund
2,477,809.10 6,700,442.50 5,822,367.50 3,355,884.10
Labor union
expense and
educational
appropriations
9,543,341.24 5,456,613.03 4,128,957.20 10,870,997.07
Total 225,950,673.18 306,681,702.21 374,599,753.68 158,032,621.71
(2) The closing balance of staff salaries payable is reduced by 30.06% than the opening balance, which is attributable to: the
year-end bonus withdrawn in 2008 is paid in the reporting period.
21. Due taxes and fees
(1) Breakdown of due taxes and fees
Items Tax rate Closing balance Opening balance
VAT 17%、13%、7% -7,400,640.01 -7,857,803.72
Business tax 3%、5% 98,389.08 877,355.26
Tax for
municipal
maintenance
and
construction
5%、7% 164,466.67 668,544.78
Corporate
income tax
25%、12.5%、15%、16.5% 840,087.39 -26,038,039.27
Individual income
tax
10,382,238.32 506,086.06
Stamp tax 495,144.09 2,141,475.87Housing property
tax
1.2% 2,455,200.94 1,181,060.04
Land holding tax
RMB 6, RMB 7 and RMB
8/M2
2,767,028.21 1,740,022.41
Educational surtax 3% 111,120.75 391,760.03
Local educational
surcharge
1% 103,710.09 111,369.16
Total 10,016,745.53 -26,278,169.38
(2) The closing balance of taxes payable is increased by 138.12% than the opening balance, which is due to increase in
individual income tax and enterprise income tax.
22. Other payables
(1) Breakdown of other payable
Closing balance Opening balance
Aging Amount Proportion Amount Proportion
Within 1 year 70,046,975.87 61.92% 45,989,259.21 53.46%
1–2 years 11,609,808.83 10.26% 14,376,874.42 16.71%
2 -3years 13,634,443.27 12.05% 9,393,487.77 10.92%
Over 3 years 17,843,195.46 15.77% 16,272,339.55 18.91%
Total 113,134,423.43 100.00% 86,031,960.95 100.00%
(2) The closing balance of other payables is increased by 31.50% than the opening balance, which is because the part of
cash dividend fails to pay at the end of reporting period.
(3) The closing balance of other payable includes the payment for cash dividend amounting to RMB 19,671,600.00 to
Lucheng Textile who holds 12.4% equities of the Company.
23. Non-current liabilities due within one year
(1) Breakdown of non-current liabilities due within one year
Items Closing balance Opening balance
Long-term loan due within one year 156,601,100.00 52,183,370.00
Total 156,601,100.00 52,183,370.00
(2) Of which: Long-term loan in foreign currency due within one year
Items Condition of loan Closing balance Opening balance
Loan-USD Credit 148,935,400.00 33,831,270.00
Loan-EURO Credit 4,820,400.00 18,352,100.00
Loan-SF Credit 2,845,300.00
Total 156,601,100.00 52,183,370.00
(3) The closing balance of non-current liabilities due within one year is increased by 200.10% than the opening balance,
which is because of increase in long-term borrowing due within one year.
24. Long-term loan
(1) The details of long-term liabilities
Closing balance Opening balance
Items
Amount in foreign
currency (USD,
Exchange
rate
RMB Yuan
Amount in foreign
currency (USD,
Exchange
rate
RMB YuanEURO, SF) EURO, SF)
Credit loan-USD 19,500,000.00 6.8319 133,222,030.00 36,600,000.00 6.8346 250,146,360.00
Guaranteed
loan-RMB
Credit loan-EURO 2,500,000.00 9.6408 24,102,000.00 3,000,000.00 9.6590 28,977,000.00
Credit loan-SF 2,450,000.00 6.3228 15,490,860.00 3,000,000.00 6.4624 19,387,200.00
Total 172,814,890.00 298,510,560.00
(2) The closing balance of long-term loan is decreased by 42.11% than the opening balance, which is because the said loan
to be matured within one year is transferred into non-current liabilities due within one year.
26. Deferred income tax liabilities
(1) Breakdown of deferred income tax liabilities
Items Closing balance Opening balance
Deferred income tax liabilities due to the
difference between book value of assets and tax
basis
407,264.46 407,449.26
Total 407,264.46 407,449.26
26. Share capital
(1) Breakdown of share capital
Before the change Increase/decrease（+，-） After the change
Number Ratio
Issuance of
new shares
Bonus
Capitalization
of capital
reserve
Other Sub-total Number Ratio
I. Shares subject to
trading
moratorium
218,099,409 21.92% -175,664 -175,664 217,923,745 21.90%
1. Shares held by
the State
2. Share held by
state-owned
corporation
3. Shares held by
other domestic
investors
98,358,0009.89% 98,358,000 9.89%
Among which:
Shares held by
domestic
non-state-owned
corporation
98,358,0009.89% 98,358,000 9.89%
Shares held by
domestic natural
persons
4. Shares held by 118,232,400 11.88% 118,232,400 11.88%foreign investors
Among which:
Shares held by
foreign corporation
118,232,400 11.88% 118,232,400 11.88%
Shares held by
foreign natural
persons
5. Shares held by
senior management
1,509,009 0.15% -175,664 -175,664 1,333,345 0.13%
II. Shares not
subject to
moratorium
776,765,391 78.08% 175,664 175,664 776,941,055 78.10%
1. RMB ordinary
shares
452,776,211 45.51% 175,664 175,664 452,951,875 45.53%
2. Domestically
listed foreign shares
323,989,18032.57% 323,989,180 32.57%
3. Overseas listed
foreign shares
4. Others
III. Total shares 994,864,800100.00% 994,864,800 100.00%
27. Capital reserve
(1) Breakdown of capital reserve
Items Opening balance
Current
increase
Current decrease Closing balance
Premium on share
capital
1,065,164,874.44 1,065,164,874.44
Other 62,970,839.33 7,215,239.03 70,186,078.36
Total 1,128,135,713.77 7,215,239.03 1,135,350,952.80
28. Surplus reserve
(1) Breakdown of surplus reserve
Items Opening balance
Current
increase
Current
decrease
Closing balance
Statutory surplus
reserve
327,320,962.62 327,320,962.62
Discretionary
surplus reserve
3,341,572.58 3,341,572.58
Total 330,662,535.20 330,662,535.20
29. Retained profit
(1) Change in retained profit
Items
Amount for the current
period
Amount in the last
period
Balance as at 31 Dec. 2008 1,090,990,313.22 814,815,210.77
Add: change in accounting policies -Balance as at 1 Jan. 2009 1,090,990,313.22 814,815,210.77
Add: consolidated net profit 267,345,836.57 326,796,721.87
Other transfer-in
Less: appropriating statutory
surplus reserve
Distribution to shareholders 198,972,960.00 187,754,304.50
Gains and losses of minority
shareholders
3,776,352.75 -1,333,120.07
Balance as at 30 Jun. 2009 1,155,586,837.04 955,190,748.21
30. Operating income and operating cost
a) Income from main operation and other operation income
Items
Amount for the current
period
Amount in the last period
Income from main operation 1,787,904,396.36 1,775,087,006.71
Other operating income 54,461,795.62 83,127,511.74
Total operating income 1,842,366,191.98 1,858,214,518.45
Cost of main operation 1,286,667,954.35 1,258,755,201.10
Other operating cost 35,706,244.40 59,856,531.75
Total operating cost 1,322,374,198.75 1,318,611,732.85
(2) Main operation income, main operation cost and main operation profit of segment
Amount for the current period
Business segment
Main operation income Main operation cost Main operation profit
Yarn-dyed fabric 1,190,628,201.99 865,118,879.22 325,509,322.77
Shirt 496,684,395.25 339,746,436.13 156,937,959.12
Cotton 33,568,420.65 28,298,178.61 5,270,242.04
Drugs 8,396,980.09 7,633,045.65 763,934.44
Power and steam 34,595,287.41 29,042,743.78 5,552,543.63
Other 24,031,110.97 16,828,670.96 7,202,440.01
Total 1,787,904,396.36 1,286,667,954.35 501,236,442.01
（con.）
Amount in the last period
Business segment
Main operation income Main operation cost Main operation profit
Yarn-dyed fabric 1,246,134,649.83 875,854,040.95 370,280,608.88
Shirt 459,904,378.62 317,186,465.63 142,717,912.99
Cotton 14,721,916.72 12,392,909.49 2,329,007.23
Drugs 10,533,463.56 8,172,862.61 2,360,600.95
Power and steam 25,526,413.98 33,832,709.09 -8,306,295.11
Other 18,266,184.00 11,316,213.33 6,949,970.67
Total 1,775,087,006.71 1,258,755,201.10 516,331,805.61(3) Item “Other” under the main operation income is revenue from boiled oil, cotton seed, cotton piece goods and cotton
dregs sold by Xinjiang Luthai.
(4) During from Jan. to Jun. 2009, the sales revenue from the top five clients amounted to RMB 594,983,524.22, taking up
32.29% of the Company’s total sales revenue.
31. Sales expense
Items
Amount for the current
period
Amount in the last period
Sales expense 67,585,100.30 60,948,729.73
The amount incurred for the current period is increased by 10.89% than that of last period.
32. Administrative expense
Items
Amount for the current
period
Amount in the last period
Administrative expense 119,323,395.86 81,624,471.33
The amount incurred for the current period is increased by 46.19% than that of last period, which is caused by increase in
R&D input.
33. Financial expense
(1) Breakdown of financial expense
Items
Amount for the current
period
Amount in the last period
Interest expenditure 36,141,414.98 79,935,418.46
Less: interest income 2,898,074.64 2,155,931.18
Exchange loss 9,923,857.10 33,801,602.95
Less: Exchange gain 9,935,654.03 99,907,868.23
Service charge 4,372,548.51 5,470,658.78
Total 37,604,091.92 17,143,880.78
(2) The amount incurred for the current period is increased by 119.34% than that of last period, which is caused by decrease
in exchange gain.
34. Loss on assets impairment
(1) Breakdown of assets impairment
Items
Amount for the
current period
Amount in the last period
Loss on bad debts -215,281.56
Loss on falling price of inventory 8,429,891.57
Total -215,281.56 8,429,891.57
35. Gain from change in fair value
(1) Breakdown of gain from change in fair value
Items
Amount for the
current period
Amount in the last period
Tradable financial assets -2,229,300.00
Tradable financial liabilities -20,453,300.00
Total -20,453,300.00 -2,229,300.00(2) Gain from change in fair value for the reporting period has decrease by RMB 18,224,000.00 than that of last period,
which was due to change of fair value of tradable financial liabilities.
36. Investment income
(1) Breakdown of investment income
Items
Amount for the
current period
Amount in the last period
Investment income from
tradable financial assets
20,780,300.00 2,423,300.00
Total 20,780,300.00 2,423,300.00
(2) The amount incurred for the current period is increased by RMB 18,357,000.00 than that of last period, which is caused
by increase in investment income from tradable financial assets.
(3) There exists no major limitation to repatriation of investment income.
37. Non-operating income
(1) Breakdown of non-operating income
Items
Amount for the current
period
Amount in the last
period
Profit from disposal of
non-current assets
199,220.21 144,430.99
Of which: Profit from disposal of
fixed assets
199,220.21 144,430.99
Income from claim for
compensation
461,136.11 1,561,566.81
Income from penalty 587,141.98 601,622.85
Government grants 7,476,729.26 12,892,870.98
Other 1,914,799.21 607,786.57
Total 10,639,026.77 15,808,278.20
(2) The amount incurred for the current period is decreased by 32.70% than that of last period, which is caused by decrease
in government grants received by the Company.
(3) Government grants
Amount for the current period Amount in the last period
Items
Amount
Of which: amount
calculated into profit
and loss of current
period
Amount
Of which: amount
calculated into
profit and loss of
current period
Financial appropriations 4,180,000.00 4,180,000.00 10,748,947.02 10,748,947.02
Financial discount 3,296,729.26 3,296,729.26
Tax revenue return 2,143,923.96 2,143,923.96
Total 7,476,729.26 7,476,729.26 12,892,870.98 12,892,870.98
(4) Explanation on government grants received by the Company in the reporting period:Items
Amount for the
current period
Document
Fiscal interest discount for
import of electromechanical
products
3,296,729.26
The Circular of Shandong Provincial Department of
Finance on Issuing Budget Indicators of Import Interest
Discount Capital for 2007 (LCQZ〔2008〕No. 105)
Science and Technology
Awards
30,000.00
The Decision of Zibo Municipal People’s Government
on Zibo Municipal Science and Technology Awards for
the Year 2007 and 2008(ZZF〔2009〕No. 14)
Subsidy for expense of stock
transfer of cotton out from
Xinjiang
4,050,000.00
The Circular of the Ministry of Finance on Provisional
Measures on Administration of Subsidy for Expense of
Stock Transfer of Cotton out from Xinjiang
Subsidy from Science &
Technology Bureau
100,000.00
Science & Technology Bureau of Awat County, the
Plan for Distribution of Special Funds on Richening
Farmer & Strengthening County by Sci-Tech
38. Non-operating expense
(1) Breakdown of non-operating expense
Items
Amount for the
current period
Amount in the last
period
Loss from disposal of non-current
assets
557,840.44 111,214.64
Of which: Loss from disposal of
fixed assets
557,840.44 111,214.64
Expenditure for penalty 7,927.07 223,772.32
Expenditure for compensation 2,037,345.04 1,706,149.00
Expenditure for donation 48,640.87 281,574.33
Other 170,640.39 65,197.38
Total 2,822,393.81 2,387,907.67
39. Income tax expense
(1) Composing of income tax expense (income)
Items
Amount for the
current period
Amount in the last
period
Income tax expense of the
current period
36,081,001.07 48,756,908.43
Deferred income tax expense -1,173,734.01 7,879,182.91
Total 34,907,267.06 56,636,091.34
(2) The amount incurred for the current period is decreased by 38.37% than that of last period, which is caused by decrease in
total profit for the current period, resulting in decrease of income tax expense.
40. Basic earnings per share and diluted earnings per share
Items
Amount for the
current period
Amount in the last
period
Basic EPS 0.26 0.39
Diluted EPS 0.26 0.39Note: Calculation method for earnings per share-basis
EPS-basis = net profit attributable to shareholders holding ordinary shares/weighted average amount of ordinary shares
issued out
Weighted average amount of ordinary shares issued = S0＋S1＋Si×Mi÷M0-Sj×Mj÷M0-Sk
Of which: S0 refers to total number of shares at the period-begin; S1 refers to the number of shares increased due to
transferring capital reserve into share capital or dividend distribution of shares during the report period; Si refers to the
number of shares increased due to issuance of new shares or debt for equity swap during the report period; Sj refers to the
number of shares decreased due to stock repurchase during the report period; Sk refers to the number of split-share during
the report period; M0 refers to the number of months during the report period; Mi refers to the number of months from the
next month to the end of the report period for increase of shares; Mj refers to the number of months from the next month to
the end of the report period for decrease of shares.
Calculation method for earnings per share-diluted
EPS-diluted = [net profit attributable to shareholders holding ordinary shares +(potential diluted interests of ordinary shares
recognized as expense－transfer fee)×(1-income tax rate)]/(S0＋S1＋Si×Mi÷M0-Sj×Mj÷M0-Sk + weighted average
amount of ordinary shares increased due to warrant, share options、convertible bond)
Of which: S0 refers to total number of shares at the period-begin; S1 refers to the number of shares increased due to
transferring capital reserve into share capital or dividend distribution of shares during the report period; Si refers to the
number of shares increased due to issuance of new shares or debt for equity swap during the report period; Sj refers to the
number of shares decreased due to stock repurchase during the report period; Sk refers to the number of split-share during
the report period; M0 refers to the number of months during the report period; Mi refers to the number of months from the
next month to the end of the report period for increase of shares; Mj refers to the number of months from the next month to
the end of the report period for decrease of shares.
41. Supplementary information to consolidated cash flow statement
1) Adjusting net profit into cash flow arising from operating activities
Items
Amount for the
current period
Amount in the last
period
1. Adjusting net profit into cash flow arising from
operating activities
Net profit 267,345,836.57 326,796,721.87
Plus: Provision for assets impairment -215,281.56 8,429,891.57
Depreciation of fixed assets 173,872,921.85 157,158,018.02
Amortization of intangible assets 3,963,395.50 2,461,696.66
Amortization of long-term deferred expense -
Loss on disposal of fixed assets, intangible assets
and other long-term assets (income is listed as “-”)
-199,220.21 30,075.34
Loss on retirement of fixed assets (income is
listed as “-”)
557,840.44
Losses on change in fair value （income is listed
as “-”）
20,453,300.00
Financial expense（income is listed as “-”） 36,522,950.18 -1,353,517.58Items
Amount for the
current period
Amount in the last
period
Investment losses（income is listed as “-”） -20,780,300.00 -194,000.00
Decrease in deferred income tax assets（increase
is listed as “-”）
-1,173,918.81 8,114,225.74
Increase in deferred income tax liabilities
（decrease is listed as “-”）
-184.80 -305,080.40
Decrease of inventories (increase is listed as “-”) 237,637,410.30 -167,276,733.66
Decrease in operating receivables (increase is
listed as “-”)
271,362,292.46 44,585,589.78
Increase in operating payables (decrease is listed
as “-”)
-714,958,236.57 -19,055,568.25
Other
Net cash flows arising from operating activities 274,388,805.35 359,391,319.09
2. Net increase in cash and cash equivalents:
Closing balance of cash 579,910,636.42 447,148,114.76
Less: Opening balance of cash 1,141,056,407.10 330,766,143.96
Add: closing balance of cash equivalents
Less: Opening balance of cash equivalents
Net increase in cash and cash equivalents -561,145,770.68 116,381,970.80
2) Cash and cash equivalents
Items
Amount for the
current period
Amount in the last
period
1. Cash 579,910,636.42 447,148,114.76
Of which: Cash in hand 1,716,437.57 3,020,135.93
Callable bank deposit 568,440,192.74 444,127,978.83
Callable other monetary 9,754,006.11
2. Cash equivalents
Of which: bond investment due within three
months
3. Ending balance of cash and cash equivalents 579,910,636.42 447,148,114.76
Of which: restricted cash and cash equivalent
used by parent company or subsidiaries under the
Group
VIII. Notes to the parent company
1. Accounts receivable
(1) Breakdown of accounts receivable listed by categoryClosing balance
Items
Carrying balance
Proportion of
total accounts
receivable
Provision for
bad debts
Carrying value
Withdrawal
proportion
of bad debt
Significant
single amount 111,783,050.19 69.52% 5,038,673.61 106,744,376.58 5%
Insignificant
single amount 49,005,121.32 30.48% 2,208,928.92 46,796,192.40 5%
Total 160,788,171.51 100.00% 7,247,602.53 153,540,568.98
（Con.）
Opening balance
Items
Carrying balance
Proportion of
total accounts
receivable
Provision for
bad debts
Carrying value
Withdrawal
proportion
of bad debt
Significant
single amount 77,173,554.17 53.24% 3,858,677.71 73,314,876.46 5%
Insignificant
single amount 67,778,496.39 46.76% 3,388,924.82 64,389,571.57 5%
Total 144,952,050.56 100.00% 7,247,602.53 137,704,448.03
Accounts receivable with significant single amount refer to accounts receivable that the Closing balance is over RMB 5
million.
(2) Breakdown of accounts receivable listed by aging
Closing balance Opening balance
Aging
Book balance
Proportion
of total
accounts
receivable
Provision for
bad debts
Book balance
Proportion
of total
accounts
receivable
Provision for
bad debts
Within 1 year 160,788,171.51 100.00% 7,247,602.53 144,952,050.56 100.00% 7,247,602.53
Total 160,788,171.51 100.00% 7,247,602.53 144,952,050.56 100.00% 7,247,602.53
(3) The top five units in the Closing balance of accounts receivable
Debtors Amount
Proportion of total
accounts receivable
Term in arrearage
Beijing Sichuang 31,874,482.23 19.82% Within 1 year
Chenfeng (Jintan) Garment Co., Ltd. 18,295,399.49 11.38% Within 1 year
OXFORD 18,010,292.89 11.20% Within 1 year
TAL 16,993,052.76 10.57% Within 1 year
OLYMP 8,119,055.61 5.05% Within 1 year
Total 93,292,282.98 58.02%
(4) No arrearage from the shareholders holding over 5% (including 5%) of the equity of the Company existed in the balance
of accounts receivable.
2. Other receivable
(1) Breakdown of other receivable listed by categoryClosing balance
Items
Carrying balance
Proportion of
total other
receivables
Provision for
bad debts
Carrying value
Withdrawal
proportion
of bad debt
Significant
single amount 24,284,389.07 48.91% 2,743,756.02 21,540,633.05 5%-30%
Insignificant
single amount 25,363,775.55 51.09% 2,865,709.81 22,498,065.74 5%-30%
Total 49,648,164.62 100.00% 5,609,465.83 44,038,698.79
（Con.）
Opening balance
Items
Carrying balance
Proportion of
total other
receivables
Provision for
bad debts
Carrying value
Withdrawal
proportion
of bad debt
Significant
single amount 46,538,501.01 74.15% 4,169,950.28 42,368,550.73 5%-10%
Insignificant
single amount 16,223,991.04 25.85% 1,439,515.55 14,784,475.49 5%-30%
Total 62,762,492.05 100.00% 5,609,465.83 57,153,026.22
Other receivables with significant single amount refer to other receivables that the Closing balance is over RMB 5 million.
(2) Breakdown of other receivables listed by aging
Closing balance Opening balance
Aging
Book balance
Proportion
of total
other
receivables
Provision for
bad debts
Book balance
Proportion
of total
other
receivables
Provision for
bad debts
Within 1 year 28,259,520.46 56.93% 3,192,883.68 38,792,887.95 61.81% 1,939,644.40
1–2 years 6,008,777.81 12.10% 678,897.88 12,190,751.64 19.43% 1,219,075.16
2 -3years 8,144,052.88 16.40% 920,150.56 10,829,094.66 17.25% 2,165,818.93
Over 3 years 7,235,813.47 14.57% 817,533.71 949,757.80 1.51% 284,927.34
Total 49,648,164.62 100.00% 5,609,465.83 62,762,492.05 100.00% 5,609,465.83
(3) The top five units in the Closing balance of other receivables
Debtors Amount
Proportion of
total accounts
receivable
Term in arrearage
Luthai Huanzhong 24,284,389.07 48.91% 1-3 years, over 3 years
Zibo Municipal Bureau of
Land and Resources, Zichuan
Branch
1,216,500.00 2.45% Within 1 year
China Mobile Communications
Corporation Shandong Ltd.
Zichan Branch
552,400.00 1.11% Within 1 yearZibo Power Bureau 306,311.56 0.62% 2-3 years, over 3 years
Advance reserve funds for
business to international
business department.
229,058.60 0.46% Within 1 year
26,588,659.23 53.55%
(4) Breakdown of other receivables with the larger amount
Debtors Amount
Proportion of
total other
receivables
Nature of money
Luthai Huanzhong 24,284,389.07 48.91% Come-and-go payment
Total 24,284,389.07 48.91%
(5) No arrearage from the shareholders holding over 5% (including 5%) of the equity of the Company existed in the balance
of other receivable.
3. Long-term equity investment
(1) Breakdown of long-term equity investment
Items Opening balance Current increase Current decrease Closing balance
Investment in
subsidiaries
840,477,933.96 28,834,529.68 869,312,463.64
Investment in joint
venture enterprises
Investment in affiliated
enterprises
Total 840,477,933.96 28,834,529.68 869,312,463.64
(2) Long-term equity investment measured at cost method
Name of
invested entities
Initial investment
amount
Opening
balance
Current
increase
Current
decrease
Closing balance
Beijing Luthai 3,360,000.00 3,360,000.00 3,360,000.00
Beijing
Sichuang
9,934,085.00 9,934,085.00 9,934,085.00
Xinjiang Luthai 48,071,961.03 48,071,961.03 48,071,961.03
Xinsheng
Power
176,340,737.93 176,340,737.93 176,340,737.93
Lufeng
Weaving &
Dyeing
364,620,000.00 364,620,000.00 364,620,000.00
Luqun Textile 171,784,550.00 171,784,550.00 171,784,550.00
Luthai
Huanzhong
88,834,529.68 60,000,000.00 28,834,529.68 88,834,529.68
Luthai Hong
Kong
6,366,600.00 6,366,600.00 6,366,600.00
Total 869,312,463.64 840,477,933.96 28,834,529.68 869,312,463.64(3) Ended 30 Jun. 2009, there was no situation that carrying value of the long-term equity investment is higher than its
recoverable amount.
4. Operating income and operating cost
(1) Income from main operation and other operation income
Items
Amount for the current
period
Amount in the last period
Income from main operation 1,464,784,222.90 1,489,199,570.39
Other operating income 53,420,616.33 87,781,561.93
Total operating income 1,518,204,839.23 1,576,981,132.32
Cost of main operation 1,126,279,795.65 1,119,277,193.23
Other operating cost 38,719,482.79 69,888,245.22
Total operating cost 1,164,999,278.44 1,189,165,438.45
(2) Main operation income, main operation cost and main operation profit of segment
Amount for the current
Business segment
Main operation income Main operation cost Main operation profit
Yarn-dyed fabric 1,057,260,008.83 837,898,654.42 219,361,354.41
Shirt 407,524,214.07 288,381,141.23 119,143,072.84
Total 1,464,784,222.90 1,126,279,795.65 338,504,427.25
（Con.）
Amount in the last period
Business segment
Main operation income Main operation cost Main operation profit
Yarn-dyed fabric 1,092,918,330.56 825,810,423.93 267,107,906.63
Shirt 396,281,239.83 293,466,769.30 102,814,470.53
Total 1,489,199,570.39 1,119,277,193.23 369,922,377.16
(3) In the reporting period, total sales revenue from the top five clients is RMB 551,182,965.04, accounting for 36.30% of
total sales revenues of the Company.
5. Investment income
(1) Breakdown of investment income
Name of invested unit
Amount for the current
period
Amount in the last period
Investment income from tradable
financial assets
22,697,500.00
Cash dividend received from
Xinjiang Luthai
17,104,374.21
Cash dividend received from
Beijing Sichuang
5,065,915.00
Total 44,867,789.21
(2) The amount incurred for the current period is increased by RMB 44,867,789.21 than that of last period, which is caused
by increase in investment income from tradable financial assets and cash dividends received from Xinjiang Luthai and
Beijing Sichuang.(3) There exists no major limitation to repatriation of investment income.
6. Breakdown of assets impairment
Current decrease
Items
Opening
balance
Current
withdrawal
Switching
back
Writing off Total
Closing
balance
I. Total provision for bad debts 12,857,068.36 12,857,068.36
Of which: accounts receivable 7,247,602.53 7,247,602.53
Other receivables 5,609,465.83 5,609,465.83
II. Total of provision for falling
price of inventory
35,301,076.90 35,301,076.90
Of which: Goods in stock 32,330,558.11 32,330,558.11
Raw materials
Goods in process 2,970,518.79 2,970,518.79
III. Total of provision for
impairment of fixed assets
6,229,718.16 18,167.10 18,167.10 6,211,551.06
Of which: House and building - -
Machinery equipment 6,119,917.62 10,328.80 10,328.80 6,109,588.82
Transportation vehicles 107,091.50 7,838.30 7,838.30 99,253.20
Electronic equipment
and other
2,709.04 - 2,709.04
Total 54,387,863.42 18,167.10 18,167.10 54,369,696.32
7. Supplementary information to consolidated cash flow statement
(1) Adjusting net profit into cash flow arising from operating activities
Items
Amount for the
current period
Amount in the
last period
1. Adjusting net profit into cash flow arising from
operating activities
Net profit 231,211,582.44 293,518,925.51
Plus: Provision for assets impairment
Depreciation of fixed assets 96,635,387.32 89,759,061.73
Amortization of intangible assets 2,318,561.58 1,016,475.39
Amortization of long-term deferred expense
Loss on disposal of fixed assets, intangible assets
and other long-term assets (income is listed as “-”)
-147,178.06 30,075.34
Loss on retirement of fixed assets (income is
listed as “-”)
505,274.49
Losses on change in fair value （income is listed
as “-”）
26,482,500.00
Financial expense（income is listed as “-”） 18,995,122.38 -19,856,445.75
Investment losses（income is listed as “-”） -48,867,789.21Items
Amount for the
current period
Amount in the
last period
Decrease in deferred income tax assets（increase
is listed as “-”）
-3,972,375.00
Increase in deferred income tax liabilities
（decrease is listed as “-”）
-
Decrease of inventories (increase is listed as “-”) 139,248,023.08 -89,134,152.37
Decrease in operating receivables (increase is
listed as “-”)
109,856,762.17 -15,204,508.04
Increase in operating payables (decrease is listed
as “-”)
-414,775,558.96 -73,285,452.20
Other
Net cash flows arising from operating activities 157,490,312.23 - 186,843,979.61
2. Net increase in cash and cash equivalents:
Closing balance of cash 326,393,925.60 286,534,479.17
Less: Opening balance of cash 884,493,526.89 177,334,931.66
Add: closing balance of cash equivalents
Less: Opening balance of cash equivalents
Net increase in cash and cash equivalents -558,099,601.29 109,199,547.51
(2) Cash and cash equivalents
Items
Amount for the
current period
Amount in the
last period
1. Cash 326,393,925.60 286,534,479.17
Of which: Cash in hand 831,623.95 1,814,765.82
Callable bank deposit 321,572,185.80 284,719,713.35
Callable other monetary 3,990,115.85
2. Cash equivalents
Of which: bond investment due within three
months
3. Balance of cash and cash equivalents as at 30 Jun.
2009
326,393,925.60 286,534,479.17
IX. Relationship of related parties and their related transactions
(I) Relationship of related parties
1. Recognized standard of related party
When a party controls, jointly controls or exercises significant influence over another party, or when two or more parties are
under the control, joint control or significant influence of the same party, the affiliated party relationships are constituted.
2. Parent company of the Company
Name Code
Registered
address
Nature of business
Registered
capital
Proportion of
share of the
Company held
Proportion of
voting right to
the Company
Lucheng Textile 16420039-1 Zibo
Investment of textile, power
and pharmacy
63,260,000 12.4% 12.4%The actual controller: Mr. Liu Shizhen is the principal shareholder of Lucheng Textile, as well as the actual controller of the
Company.
3. Subsidiaries of the Company
For information related to subsidiaries of the Company, please see Note VI. 2. (1).
4. Related parties without controlling relationship
Name of related parties Organization Code
Relationship with the
Company
Zibo Stanluian Cosmetics Co., Ltd.
(hereinafter called “Stanluian”)
61329036-2
Shareholding subsidiary
controlled by Parent
company
Zibo Taimei Ties Co., Ltd.
(hereinafter called Taimei Ties)
61329035-4
Shareholding subsidiary
controlled by Parent
company
Zibo Limin Purified Water Co.,
Ltd. (hereinafter called Limin
Purified Water)
76575998-3
Shareholding subsidiary
controlled by Parent
company
Zibo Luqun Land Co., Ltd
(hereinafter Luqun Land)
77630667-2
Shareholding subsidiary
controlled by Parent
company
(II) Pricing policy
1. Related transactions of purchasing commodity and receiving labor service, as well as related transactions of selling
commodity and providing labor service are priced at the market price.
2. Related transactions of selling equities and purchasing equities are priced at the appraisal value of equity.
3. As for related transaction of proving capital, its transaction price of interest payment is recognized according to the
benchmark interest rate of bank loans for the same term.
(III) Related transaction
1. Purchasing goods commodity
Amount for the current period Amount in the last period
Related party
Related transaction
Amount
Proportion of the
same transaction
amount (%)
Amount
Proportion of the
same transaction
amount (%)
Lucheng Textile Purchasing cotton 2,316,323.00 0.51% 569,588.76 0.13%
Lucheng Textile
Purchasing towel, oil and
socks, electronic products 1,489,923.32 100.00% 691,325.47 100.00%
Stanluian Company
Purchasing cleanser
essence
306,796.59 100.00% 605,606.07 100.00%
Total 4,113,042.91 1,866,520.30
2. Receiving labor serviceAmount for the current period Amount in the last period
Related party
Related
transaction Amount
Proportion of the
same transaction
amount (%)
Amount
Proportion of
the same
transaction
amount (%)
Lucheng Textile
Processing
charges for
embroidery
17,434.79 0.02% 12,765.13 0.01%
Taimei Ties
Processing
charges for
commodity
241,225.30 0.23% 384,200.3 0.45%
Limin Purified Water
Sewage
disposal
2,397,685.37 98.48% 2,374,402.72 100.00%
Total 2,656,345.46 2,771,368.15
3. Related transaction for selling goods
Amount for the current period Amount in the last period
Related party
Related
transaction Amount
Proportion of
the same
transaction
amount (%)
Amount
Proportion of
the same
transaction
amount (%)
Lucheng Textile
Sales of
material,
power and gas
106,730.51 1.43% 235,273.62 1.93%
Lucheng Textile
Sales of
colored yarn,
fabrics and
garment
533,856.74 0.00%
Taimei Ties
Sales of
material,
power and gas
6,817.59 0.09% 5,609.29 0.07%
Stanluian Company
Sales of
material and
gas
6,026.43 0.08% 4,700.83 0.05%
Limin Purified Water
Sales of
material and
garment
65,050.06 0.00% 86,349.17 0.01%
Luqun Land
Sales of
material,
power and gas
34,899.76 0.47%
Total 753,381.09 331,932.91
4. Other significant related transactionAmount for the current
period
Amount in the last period
Related party
Related
transaction
Amount
Proportion of
the same
transaction
amount (%)
Amount
Proportion of
the same
transaction
amount (%)
Lucheng Textile (lessor)
Leasing land,
property and
equipment
4,420,164.42 100.00% 2,622,330.86 100.00%
Lucheng Textile（leaseholder） house rent 76,818.00 100.00%
Total 4,496,982.42 2,622,330.86
X. Contingent Events
1. As at 30 Jun. 2009, credit guarantees that the Company provides the joint responsibility for the loan obtained by its
shareholding subsidiaries are as follows:
Guaranteed party
Occurred
amount of
guarantee
(RMB’0000)
Guarantee
balance
(RMB’
0000)
Date of
guarantee
Beginning
date of
guarantee
Maturity date
of guarantee
Type of guarantee
Lufeng Weaving & Dyeing 2,900 1,900 2009.1.06 2009.1.06 2010.1.05 Short-term guarantee loan
Lufeng Weaving & Dyeing 2,500 2,500 2009.5.05 2009.5.05 2010.1.02 Short-term guarantee loan
Lufeng Weaving & Dyeing 1,000 1,000 2009.1.04 2009.1.04 2009.12.3 Short-term guarantee loan
Xinjiang Luthai 10,000 10,000 2009.1.14 2009.1.14 2010.1.2 Short-term guarantee loan
Subtotal of short-term
guarantee loan
16,400 15,400
2. As at 30 Jun. 2009, matters that of shareholding subsidiaries of the Company makes mortgage by physical assets for bank
loan.
Mortgage
units
Article
deposited
Original value of
assets
Accumulative
depreciation or
accumulative
amortization
Net value of
assets
Obtaining
loan
(RMB’0000)
Loan term
Xinjiang
Luthai
Land 12,826,051.90 2,560,857.01 10,265,194.89 3,500.00 2008.9.28-2009.9.27
Xinjiang
Luthai
Machinery
equipment
and Land
72,931,515.98 23,365,256.92 49,566,259.06 5,676.00 2008.10.21-2009.8.13
Xinjiang
Luthai
Machinery
equipment,
house and
building
77,905,072.41 24,031,823.98 53,873,248.43 4,400.00 2009.3.20-2009.12.15
Xinjiang
Luthai
Inventories 112,100,275.22 112,100,275.22 11,600.00 2008.12.12-2009.12.21
Total 275,762,915.51 49,957,937.91 225,804,977.60 25,176.003. As at 30 Jun. 2009, credit guarantees that the Company provides the joint responsibility for the letter of credit obtained
by shareholding subsidiaries are as follows:
Guaranteed
party
Guarantee
amount
Guarantee balance
Date of
guarantee
Beginning
date of
guarantee
Maturity
date of
guarantee
Type of
guarantee
Lufeng
Weaving &
Dyeing
SF 563600 SF 28180 2008.9.22 2008.9.22 2009.7.15 Guarantee L/C
Lufeng
Weaving &
Dyeing
EURO 555500 EURO 27775 2008.9.16 2008.9.16 2009.8.30 Guarantee L/C
XI. Commitment Events
As at 30 Jun. 2009, significant contracts that are signed by the Company but failed to implement are as follows:
Item
Contract amount
(RMB’0000)
Fundamental construction project of 50
million-meter yarn-dyed fabric
300
Purchase of bleaching and dyeing and
weaving equipment
573
Extension project of machine I of stove II in
Xinsheng Power
165
Desulfurization project of Xinsheng Power 530
Total 1,568Supplemental Information
I. Extraordinary gains and losses
1. In accordance with the provisions of Explanatory Notice for Information Disclosure by Companies Offering Securities to
the Public No. 1— Extraordinary Gains and Losses (2008) promulgated by CSRC, the amount of extraordinary gains and
losses occurred from Jan. to Jun. 2009 as below:
Unit: RMB
Items
Jan. – Jun.
2009
Jan. – Jun.
2008
Gains and losses on disposal of non-current assets, including partial write-offs of the provision for assets
impairment withdrawn
-358,620.23 33,216.35
Tax revenue return and tax deduction and exemption by examination and approval beyond the authorities,
or without official approval document, or with sporadic
Government grant included into the profits and losses of the current period, excluding those government
grants closely related to the Company’s business that the Company enjoyed continually at the certain
standard rating and in conformity with provisions of policies of the State
7,476,729.26 12,892,870.98
Fees for possession of funds received from non-financing enterprises recorded into the profits and losses of
the current period
Income from investment cost that the Company acquires subsidiaries, affiliated enterprises and joint
venture enterprises less than a share in the fair value of net identifiable assets of invested units when
obtaining investment
Gains and losses from exchange of non-monetary assets
Gains and losses from entrusted investment and assets management
Provision for impairment of each asset withdrawn due to force majeure such as natural disaster
Gains and losses from debts restructuring
Cost of enterprise restructuring, such as expenditure for settling employees and integration
Gains and losses arising from the amount of transactions with obviously unfair price exceeding the fair
value
Net gains and losses of the current period of subsidiaries formed due to the business combination under the
same control from the beginning period to combination date
Gains and losses arising from contingencies nonrelated to normal operation business
Gains and losses on change in fair value of tradable financial asses and tradable financial liabilities except
for effective hedging business related with normal operation and business of the Company, and investment
income from disposal of tradable financial asses and tradable financial liabilities and available-for-sale
financial assets
327,000.00 194,000.00
Switching back of provision for impairment of accounts receivable that separate impairment test is made
Gains and losses from external entrusted loans
Gains and losses from change in fair value of investment properties that the subsequent measurement is
made by employing fair value model
Influence on profits and losses of the current period after one-time adjustment to the profits and losses of
the current period in accordance with the requirement of laws and regulations related with tax and
accounting
Income from trustee fees
Other non-operating income and expense 698,523.93 494,283.20Other items being in conformity with the definition of extraordinary gains and losses
Subtotal 8,143,632.96 13,614,370.53
Less: Impact on income tax 5,123,051.14 3,023,692.86
Net amount of extraordinary gains and losses 3,020,581.82 10,590,677.67
Net amount of extraordinary Gains and Losses attributable to minority shareholders 1,314,703.05 -198,936.75
Net amount of extraordinary Gains and Losses attributable to common shareholders of the Company 1,705,878.77 10,789,614.42
Net profit attributable to common shareholders of the Company after deducting extraordinary gains and
losses
261,863,605.05 317,340,227.52
Influence on net profit for net amount of extraordinary gains and losses 1.13% 3.24%
Note: Date mentioned above table, “+” shows profit or income, “-” shows loss or expenditure.
II. The relevant financial indexes
In accordance with the requirements of the Compilation Rules for Information Disclosure by Companies Offering
Securities to the Public No. 9----Calculation and Disclosure of Return on Equity and Earnings Per Share promulgated by
CSRC, the return on equity and earnings per share from Jan. to Jun. 2009 calculated by the Company as below:
Return on equity Earnings per share (RMB/share)
Profit as of reporting period Reporting period
Fully diluted Weighted average Basic EPS Diluted EPS
Net profit attributable to common shareholders of Jan. – Jun. 2009 7.29% 7.37% 0.26 0.26
the Company Jan. – Jun. 2008 13.83% 14.15% 0.39 0.39
Net profit attributable to common shareholders of Jan. – Jun. 2009 7.25% 7.32% 0.26 0.26
the Company after deducting non-recurring gains
and losses
Jan. – Jun. 2008 13.38% 13.68% 0.38 0.38
III. Difference in net assets and net profit under IAS and PRC GAAP
Unit: RMB’000
Net assets Net profit
Items
31 Jun. 2009 31 Dec. 2008
Jan. – Jun.
2009
Jan. – Jun.
2008
Data under PRC GAAP 3,613,035 3,541,234 263,569 328,130
Increase of fixed assets arising from translating
the USD statements into RMB statements in
1996 not recognized under IFRSs
-3,230 -3,230
Switching back of evaluation increment of
Luqun, which recognized as effect of current
period
-6,534 -6,800
266
266
Tax deduction due to the
domestically-manufactured equipment
purchased by the parent company recognized as
deferred income
-14,395 -15,254 859 -11,464
Data under IAS 3,588,876 3,515,950 264,694 316,932Section VIII. Documents for Reference
1. Accounting statements carried with personal signatures and seals of legal representative, Chief Financial
Officer and Person in charge of accounting office;
2. Original of Interim Report 2009 carried with the seal of the Chairman of the Board of the Company;
3. Originals of all documents and manuscripts of Public Notices of the Company disclosed publicly on
Securities Times, Shanghai Securities News and Ta Kung Pao.
Board of Directors of
Lu Thai Textile Co., Ltd.
19 August 2009
