Lu Thai Textile Co., Ltd. Annual Report 2023
LU THAI TEXTILE CO., LTD.
ANNUAL REPORT 2023
April 2024
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Lu Thai Textile Co., Ltd. Annual Report 2023
ANNUAL REPORT 2023
Part I Important Notes, Table of Contents and Definitions
The Board of Directors (or the “Board”), the Supervisory Committee as well as the directors,
supervisors and senior management of Lu Thai Textile Co., Ltd. (hereinafter referred to as the
“Company”) hereby guarantee the factuality, accuracy and completeness of the contents of
this Report and its summary, and shall be jointly and severally liable for any
misrepresentations, misleading statements or material omissions therein.
Liu Zibin, the Company’s legal representative, and Zhang Keming, head of accounting affairs
and head of the accounting department (equivalent to accounting manager) hereby guarantee
that the Financial Statements carried in this Report are factual, accurate and complete.
All the Company’s directors have attended the Board meeting for the review of this Report
and its summary.
The Company has described in detail in this Report the possible risks. Please refer to the
contents about the major risks and countermeasures in “Prospects” in “Part III Management
Discussion and Analysis” of this Report. Securities Times, Shanghai Securities News, China
Securities Journal, Ta Kung Pao (HK) and www.cninfo.com.cn have been designated by the
Company for its information disclosure in 2024. And all information about the Company shall
be subject to what’s disclosed by the Company on the aforesaid media. Investors are kindly
reminded to exercise caution when making investment decisions.
The Company is subject to the disclosure requirements for listed companies engaging in
textile and apparel as stated in Guideline No. 3 of the Shenzhen Stock Exchange for Self-
regulation of Listed Companies—Industry-specific Information Disclosure.
In 2023, global geopolitical tensions intensified, with frequent local conflicts and disturbances.
The world economy struggled to gain momentum and suffered from slow recovery, with
major developed economies experiencing high inflation and declining demand. The
exacerbating fragmentation of the global economy in turn hindered the development of global
trade. Facing a complex and severe international environment and slow recovery in consumer
market demand, central and local governments at all levels continuously introduced and
implemented policies to "stabilise foreign trade", leading to a rebound in the national
economy and an annual economic growth of 5.2%. The textile and apparel foreign trade
industry and enterprises, building on their industrial advantages, actively expanded into
emerging markets, with their export business overall showing a trend of stabilising and
improving quarter by quarter. Looking forward to 2024, the external environment remains
severe and complex, with the global geopolitical landscape continuing to be impacted. With
the ongoing stabilisation and improvement of China's economy, the textile industry stands to
benefit from leveraging the advantages inherent in China's comprehensive textile and apparel
industrial chain, as well as its stable supply chain. Domestically, the industry can enhance its
quality and efficiency through advancements in digital and intelligent transformation, while
simultaneously undertaking a green and low-carbon transition. Internationally, strategic
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Lu Thai Textile Co., Ltd. Annual Report 2023
global industrial layout and seamless supply chain integration will enable the industry to
actively address the diversification of the global consumer market, thereby achieving high-
quality development. For details, please refer to Part III Management Discussion and Analysis.
The Board has approved a final dividend plan as follows: based on the share capital of
817,431,206 shares (exclusive of repurchased and retired B-shares), a cash dividend of
RMB1.30 (tax inclusive) per 10 shares is to be distributed to the shareholders, with no bonus
issue from either profit or capital reserves.
This Report and its summary have been prepared in both Chinese and English. Should there
be any discrepancies or misunderstandings between the two versions, the Chinese versions
shall prevail.
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Lu Thai Textile Co., Ltd. Annual Report 2023
Table of Contents
Part I Important Notes, Table of Contents and Definitions........................................................... 2
Part II Corporate Information and Key Financial Information................................................... 7
Part III Management Discussion and Analysis..............................................................................11
Part IV Corporate Governance.......................................................................................................36
Part V Environmental and Social Responsibility.......................................................................... 64
Part VI Significant Events............................................................................................................... 68
Part VII Share Changes and Shareholder Information................................................................77
Part VIII Preferred Shares.............................................................................................................. 87
Part IX Bonds................................................................................................................................... 88
Part X Financial Statements............................................................................................................92
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Lu Thai Textile Co., Ltd. Annual Report 2023
Documents Available for Reference
1. The financial statements signed and stamped by the Company’s legal representative, Chief Accountant and
Financial Manager;
2. The original Independent Auditor’s Report stamped by the CPA firm, as well as signed and stamped by the
relevant certified public accountants; and
3. The originals of all the Company’s announcements and documents disclosed to the public during the Reporting
Period on Securities Times, Shanghai Securities News, China Securities Journal and Ta Kung Pao.
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Lu Thai Textile Co., Ltd. Annual Report 2023
Definitions
Term Definition
Lu Thai Textile Co., Ltd. and its consolidated subsidiaries, except where the
The “Company”, “LTTC”, “Issuer” or “we”
context otherwise requires
The Board of Directors The Board of Directors of Lu Thai Textile Co., Ltd.
The Supervisory Committee The Supervisory Committee of Lu Thai Textile Co., Ltd.
CSRC The China Securities Regulatory Commission
Expressed in the Chinese currency of Renminbi, expressed in ten thousand
RMB, RMB’0,000
Renminbi
The “Company Law” The “Company Law of the People‘s Republic of China”
The “Securities Law” The “Securities Law of the People‘s Republic of China”
The “Reporting Period” or “Current Period” The period from 1 January 2023 to 31 December 2023
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Lu Thai Textile Co., Ltd. Annual Report 2023
Part II Corporate Information and Key Financial Information
I Corporate Information
Stock name LTTC, LTTC-B Stock code 000726, 200726
Previous stock name (if any) N/A
Stock exchange for stock
Shenzhen Stock Exchange
listing
Company name in Chinese 鲁泰纺织股份有限公司
Abbr. 鲁泰纺织
Company name in English (if
LU THAI TEXTILE CO.，LTD
any)
Abbr. (if any) LTTC
Legal representative Liu Zibin
Registered address 61 Luthai Boulevard, High-tech Development Zone, Zibo City, Shandong Province, P.R.China
Zip code 255086
Past changes of registered
11 Mingbo Road, Zibo High-tech Development Zone, Shandong Province
address
Office address 81 Songling East Road, Zichuan District, Zibo City, Shandong Province, P.R.China
Zip code 255100
Company website www.lttc.com.cn
Email address lttc@lttc.com.cn
II Contact Information
Board Secretary Securities Representative
Name Zhang Keming Zheng Weiyin and Li Kun
81 Songling East Road, Zichuan District, 81 Songling East Road, Zichuan District,
Address
Zibo City, Shandong Province, P.R.China Zibo City, Shandong Province, P.R.China
Tel. 0533-5277008 0533-5285166
Fax 0533-5418805 0533-5418805
Email address zhangkeming@lttc.com.cn wyzheng@lttc.com.cn，likun@lttc.com.cn
III Media for Information Disclosure and Place where this Report Is Lodged
Stock exchange website where this Report is disclosed The Shenzhen Stock Exchange: http://www.szse.cn
Securities Times, Shanghai Securities News, China Securities Journal, Ta
Media and website where this Report is disclosed
Kung Pao (HK), and www.cninfo.com.cn
Place where this Report is lodged The Securities Department of the Company
IV Change to Company Registered Information
Unified social credit code 91370300613281175K
Change to principal activity of the Company
No change
since going public (if any)
Every change of controlling shareholder since No change
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Lu Thai Textile Co., Ltd. Annual Report 2023
incorporation (if any)
V Other Information
The independent audit firm hired by the Company:
Name Grant Thornton China
Office address 5th Floor, Scitech Palace 22 Jianguomen Wai Avenue, Chaoyang District, Beijing
Accountants writing signatures He Feng and Cui Xiaoli
The independent sponsor hired by the Company to exercise constant supervision over the Company in the Reporting Period:
□ Applicable Not applicable
The independent financial advisor hired by the Company to exercise constant supervision over the Company in the Reporting
Period:
□ Applicable Not applicable
VI Key Financial Information
Indicate by tick mark whether there is any retrospectively restated datum in the table below.
□ Yes No
2023-over-
2023 2022 2022 change 2021
(%)
Operating revenue (RMB) 5,961,477,252.98 6,938,342,135.90 -14.08% 5,238,262,348.85
Net profit attributable to the listed
403,444,254.42 963,864,819.43 -58.14% 347,609,693.30
company’s shareholders (RMB)
Net profit attributable to the listed
company’s shareholders before 386,135,437.00 795,473,953.21 -51.46% 190,492,580.40
exceptional gains and losses (RMB)
Net cash generated from/used in
854,864,537.42 1,422,310,774.26 -39.90% 348,137,005.48
operating activities (RMB)
Basic earnings per share (RMB/share) 0.47 1.10 -57.27% 0.39
Diluted earnings per share (RMB/share) 0.42 0.95 -55.79% 0.36
Weighted average return on equity (%) 4.40% 11.31% -6.91% 4.44%
Change of 31
December
31 December 2023 31 December 2022 2023 over 31 31 December 2021
December
2022 (%)
Total assets (RMB) 13,430,286,222.94 13,351,097,602.03 0.59% 12,987,221,271.63
Equity attributable to the listed
9,230,806,905.80 9,014,156,872.71 2.40% 7,983,307,400.03
company’s shareholders (RMB)
Indicate by tick mark whether the lower of the net profit attributable to the listed company’s shareholders before and after
exceptional gains and losses was negative for the last three accounting years, and the latest independent auditor’s report indicated
that there was uncertainty about the Company’s ability to continue as a going concern.
□ Yes No
Indicate by tick mark whether the lower of the net profit attributable to the listed company’s shareholders before and after
exceptional gains and losses was negative.
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Lu Thai Textile Co., Ltd. Annual Report 2023
□ Yes No
VII Accounting Data Differences under China’s Accounting Standards for Business
Enterprises (CAS) and International Financial Reporting Standards (IFRS) and Foreign
Accounting Standards
1. Net Profit and Equity under CAS and IFRS
□ Applicable Not applicable
No difference for the Reporting Period.
2. Net Profit and Equity under CAS and Foreign Accounting Standards
□ Applicable Not applicable
No difference for the Reporting Period.
VIII Key Financial Information by Quarter
Unit: RMB
Q1 Q2 Q3 Q4
Operating revenue 1,378,301,160.57 1,462,190,101.90 1,502,888,352.91 1,618,097,637.60
Net profit attributable to the
95,759,162.05 125,888,836.10 113,464,972.86 68,331,283.41
listed company’s shareholders
Net profit attributable to the
listed company’s shareholders
51,332,367.74 140,477,494.20 110,981,395.05 83,344,180.01
before exceptional gains and
losses
Net cash generated from/used in
-36,789,172.94 185,399,389.92 12,047,210.33 694,207,110.11
operating activities
Indicate by tick mark whether any of the quarterly financial data in the table above or their summations differs materially from
what have been disclosed in the Company’s quarterly or interim reports.
□ Yes No
IX Exceptional Gains and Losses
Applicable □ Not applicable
Unit: RMB
Item 2023 2022 2021 Note
Gain or loss on disposal of non-current assets (inclusive
-9,741,769.37 -228,367.44 50,868,019.96
of impairment allowance write-offs)
Government grants recognised in profit or loss (exclusive
of those that are closely related to the Company's normal
business operations and given in accordance with defined 45,294,185.95 50,298,092.20 58,686,874.90
criteria and in compliance with government policies, and
have a continuing impact on the Company's profit or loss)
Gain or loss on fair-value changes in financial assets and
liabilities held by a non-financial enterprise, as well as on
-18,190,072.86 154,877,757.70 77,620,424.02
disposal of financial assets and liabilities (exclusive of
the effective portion of hedges that is related to the
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Lu Thai Textile Co., Ltd. Annual Report 2023
Company's normal business operations)
Reversed portions of impairment allowances for
163,992.17 6,198,745.44
receivables which are tested individually for impairment
Non-operating income and expense other than the above 4,819,447.10 -1,810,393.39 -1,700,653.34
Less: Income tax effects 4,629,001.56 33,015,346.77 28,885,946.87
Non-controlling interests effects (net of tax) 407,964.01 1,730,876.08 5,670,351.21
Total 17,308,817.42 168,390,866.22 157,117,112.90 --
Particulars about other items that meet the definition of exceptional gain/loss:
□ Applicable Not applicable
No such cases for the Reporting Period.
Explanation of why the Company reclassifies as recurrent an exceptional gain/loss item listed in the Explanatory Announcement
No. 1 on Information Disclosure for Companies Offering Their Securities to the Public—Exceptional Gain/Loss Items:
□ Applicable Not applicable
No such cases for the Reporting Period.
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Lu Thai Textile Co., Ltd. Annual Report 2023
Part III Management Discussion and Analysis
I Industry Overview for the Reporting Period
The Company is subject to the disclosure requirements for listed companies engaging in textile and apparel as stated in Guideline
No. 3 of the Shenzhen Stock Exchange for Self-regulation of Listed Companies—Industry-specific Information Disclosure.
In 2023, Chinese textile and apparel export enterprises faced the dual pressures of order reduction and order transfer. On one hand,
the decline in demand from key markets, changes in the international trade landscape, and exchange fluctuation put continuous
pressure on the textile and apparel trade, leading to an overall decline in China's textile and apparel export value for the year.
According to data released by the China Customs Express, the total export volume of the domestic textiles and apparel reached
USD293.64 billion in 2023, representing a year-on-year decrease of 8.1%. On the other hand, looking at the trend for the whole
year, influenced by positive factors such as the continuous digestion of inventory in overseas markets and some recovery in
demand in the second half of the year, the production and trade of textiles and apparel in China showed signs of recovery in the
latter half of 2023, with the export situation stabilising and improving.
The current international political and economic environment is intricately complex. Under the effects of tightened monetary
policies in major developed economies, global economic and trade activities face challenges, and the pressure to improve market
demand remains significant. Nevertheless, the domestic economy exhibits remarkable resilience. Within the framework of China's
ongoing enhancement of the domestic market environment, the textile industry continues to find opportunities in the construction
of a modernised industrial system characterised by high-end capabilities, intelligence, environmental sustainability, and integration.
This undertaking will serve as a pivotal driving force propelling the textile industry towards high-quality development. At the
same time, China continues to promote the joint construction of the "Belt and Road" initiative and the development of high-
standard free trade zones, providing favourable conditions for the textile industry to further explore diversified international
markets and build an internationalised supply chain system. This is also beneficial for preventing and mitigating external risk
impacts.
II Principal Activity of the Company in the Reporting Period
The Company is subject to the disclosure requirements for listed companies engaging in textile and apparel as stated in Guideline
No. 3 of the Shenzhen Stock Exchange for Self-regulation of Listed Companies—Industry-specific Information Disclosure.
In 2023, global geopolitical tensions intensified, with frequent local conflicts and disturbances. The world economy struggled to
gain momentum, with major developed economies experiencing high inflation and declining demand. Textile industry enterprises
faced multiple challenges, including changes in the international trade landscape, regional conflicts, and exchange fluctuation. The
Company steadfastly adhered to a "customer-focused" philosophy, consolidating its position in the domestic market while
concurrently expanding into overseas markets. Continuously executing the strategies of "Improving Quality and Efficiency" and
"Overall Internationalization", the Company intensified its efforts in "expanding market, adjusting structure and building
capabilities". From the progress of projects to the steady operations of overseas production bases, and from the research and
development of new products to the exploration of new markets, the Company remained dedicated to high-quality development
and disciplined management practices. This unwavering commitment enabled the Company to deliver exceptional products and
services to both domestic and international customers.
For the Reporting Period, the Company achieved operating revenue of RMB5,961 million, operating profit of RMB433 million, a net
profit attributable to the Company as the parent of RMB403 million, and a net profit attributable to the Company as the parent before
exceptional gains and losses of RMB386 million, respectively down 14.08%, 59.99%, 58.14% and 51.46% when compared to last
year. No changes occurred to the Company’s principal operations, primary products, business models, or the primary factors driving
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Lu Thai Textile Co., Ltd. Annual Report 2023
the Company’s growth in the Reporting Period.
During the Reporting Period, the Company was successively selected as the "Chinese Textile and Apparel Brand of 2023 with
Competitive Edge" by the China National Textile and Apparel Council, named as an "Enterprise with Outstanding Contribution to
Technological Advancement" by the China Cotton Textile Industry Association, and awarded by the Shandong Textile and Apparel
Association the "Social Responsibility Contribution Award", among other honours. The Company mainly focused on the following
aspects:
(I) Enhance customer relations in an all-around way to improve the business quality and operational performance.
During the Reporting Period, the Company strengthened communication with customers, enhanced customer relationship
management, actively expanded into new markets and new customers, gradually established an integrated sales model, and
continuously improved integrated service capabilities. It deepened the execution of the big customer strategy and focused intensively
on the business apparel market; accurately grasped customer needs, optimised marketing strategies, made full use of digital product
platforms, and provided customers with "one-stop" solutions; leveraged the office's role at the forefront of the market, strengthened
the construction of overseas marketing teams; set foot on research and innovation, enhanced key technology and process research,
added female apparel, printed products, and new materials categories, offering customers products and services with greater
commercial value.
(II) Deepen the implementation of two major strategies to enhance delivery capability and operational efficiency.
During the Reporting Period, centred on production lines, the Company profoundly advanced two major strategies, and continuously
enhanced delivery capability and operational efficiency. The Company established an overseas operation management centre,
continuously enhancing the operational management of overseas production bases. The production capacity of domestic functional
fabric, multi-category apparel manufacturing, and other projects continued to be released. Each production line continuously
strengthened its operating awareness, focused on business strategic goals, bolstered overall planning ability, and constantly met
customers' differentiated needs. Each production line played a significant role in responsibility, continuously enhanced the
management of the product realisation process, ensuring market, research and development, marketing, manufacturing, procurement,
and delivery were synchronised, supporting the Company's high-quality development.
(III) Fully enhance systematic management to improve business support and operational capability.
During the Reporting Period, the Company focused on its core operations, fully enhanced its systematic management capability,
strengthened professional support, and provided management support and service guarantees. Centred on the integration of business
and finance, it deepened comprehensive budget management, continuously advanced organisational optimisation, process
optimisation, and IT support, and strengthened performance management. It ensured resource allocation, accelerated the building of
an international talent team, improved the training and management mechanisms for key positions, optimised incentive mechanisms,
and invigorated the organisation. The Company initiated a project to enhance corporate culture, systematically organising, refining,
and upgrading.
(IV) Continue to enhance innovation capability to consolidate and expand competitive advantages
During the Reporting Period, the Company successfully passed the re-certification of a National High-tech Enterprise and passed the
annual assessment and performance evaluation of innovative platforms such as the national enterprise technical centre, Shandong
Province Big Data Industry Innovation Centre, Shandong Provincial Engineering Technology Research Centre, and Shandong
Province Key Laboratory of Enterprises. It won one first prize for Scientific and Technological Progress from the China National
Textile and Apparel Council, three "Top Ten Innovative Products" awards, received authorisation for 69 patents, including 53
invention patents, participated in the formulation or revision of five industry standards, obtained one software copyright, and
undertook one key R&D project of Shandong Province in 2023.
III Core Competitiveness Analysis
1. The Company has a comprehensive vertical industrial chain and internationalized layout. It possesses the whole industrial chain
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Lu Thai Textile Co., Ltd. Annual Report 2023
integrating spinning, bleaching and dyeing, neatening, testing, and garment making, as well as excellent quality control capabilities
through various links of the production of high-end yarn-dyed fabrics. In order to leverage international resources, give play to the
advantage of internationalized industrial distribution and reinforce the leading international status in manufacturing the yarn-dyed
fabrics for shirts, the Company has put in place production bases, design agency, and market service offices overseas.
2. The Company has better integrated management capability and high-level management system architecture. Since 1995, the
Company has successively passed the certification of ISO9001 quality management system, ISO14001 environmental management
system, ISO45001 Occupation Health Safety Management System, SA8000 Social Responsibility Management System, The
Worldwide Responsible Apparel Production Standard (WRAP), Sustainable Textile Production (STeP), Global Organic Textile
Standard (GOTS), Global Recycle Standard (GRS), HIGG (FEM and FSLM) and China National Accreditation Service for
Conformity Assessment (CNAS), and realized the internationalization, standardization and normalization of the corporate
management. In order to make outstanding achievement in its operating management, better improve the Company’s business
performance and capabilities, the Company has introduced the GB/T19580 Criteria for Performance Excellence step by step, set up
the “big quality” system, promoted the management innovation and guaranteed the management quality.
3. The Company establishes its high-level technical cooperation platform by virtue of strong R&D capability. In fact, the Company
always insists on the independent innovation, enhances its technical cooperation and joint product development with various research
institutes, colleges and universities, strategic clients and important suppliers by relying on various technical platforms including the
national enterprise technical centre, the national industrial design centre, the national demonstration base for introducing talents, the
national post-doctoral scientific research station and Shandong Provincial Engineering Technology Research Centre. Emphasising
both cutting-edge technological reserves and the innovation of applied technologies, the Company continuously strengthens the
development of new products oriented towards realizing commercial value. Gradually enhancing its capability in technological
research and integrated product development, the Company continually contributes more green, low-carbon, and sustainable new
technologies and high-quality products to the industry, creating more value for customers and materialising low-carbon, green, and
sustainable development.
IV Core Business Analysis
1. Overview
For the Reporting Period, the Company recorded operating revenue of RMB5,961 million (a 14.08% year-on-year decrease); cost of
sales of RMB4,591 million (a 10.92% year-on-year decrease), selling expense of RMB148 million (an 8.42% year-on-year increase)
and administrative expense of RMB382 million (a 3.53% year-on-year decrease); research and development expense of RMB240
million (a 13.26% year-on-year decrease); and net cash generated from operating activities of RMB855 million (a 39.90% year-on-
year decrease).
2. Revenue and Cost Analysis
(1) Breakdown of Operating Revenue
Unit: RMB
2023 2022
As % of total As % of total Change
Operating revenue operating revenue Operating revenue operating revenue (%)
(%) (%)
Total 5,961,477,252.98 100% 6,938,342,135.90 100% -14.08%
By operating division
Textile and apparel 5,554,873,179.03 93.18% 6,500,959,077.16 93.70% -14.55%
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Lu Thai Textile Co., Ltd. Annual Report 2023
Electricity and
214,716,930.11 3.60% 219,789,458.76 3.16% -2.31%
steam
Others 191,887,143.84 3.22% 217,593,599.98 3.14% -11.81%
By product category
Fabric products 4,224,792,352.66 70.87% 5,141,344,925.82 74.10% -17.83%
Apparel 1,330,080,826.37 22.31% 1,359,614,151.34 19.60% -2.17%
Electricity and
214,716,930.11 3.60% 219,789,458.76 3.16% -2.31%
steam
Others 191,887,143.84 3.22% 217,593,599.98 3.14% -11.81%
By operating segment
Japan And South
363,082,297.41 6.09% 334,445,869.70 4.82% 8.56%
Korea
Southeast Asia 1,691,776,529.18 28.38% 2,356,718,298.83 33.96% -28.21%
Europe and
933,632,800.12 15.66% 1,199,472,122.97 17.29% -22.16%
America
Others 639,996,479.08 10.74% 729,808,402.63 10.52% -12.31%
Mainland China 2,332,989,147.19 39.13% 2,317,897,441.77 33.41% 0.65%
By sales model
Direct sales 5,961,477,252.98 100.00% 6,938,342,135.90 100.00% -14.08%
(2) Operating Division, Product Category, Operating Segment or Sales Model Contributing over 10% of
Operating Revenue or Operating Profit
□ Applicable Not applicable
(3) Whether Revenue from Physical Sales Is Higher than Service Revenue
Yes □ No
Operating division Item Unit 2023 2022 Change (%)
Unit sales 0,000 meters 18,092.94 22,580.48 -19.87%
Fabric Output 0,000 meters 20,230.04 23,634.84 -14.41%
Inventory 0,000 meters 4,036.91 3,763.43 7.27%
Unit sales 0,000 pieces 1,960.07 1,889.22 3.75%
Apparel Output 0,000 pieces 2,006.98 1,872.64 7.17%
Inventory 0,000 pieces 201.98 138.76 45.56%
Unit sales 000 KWH 173,716.42 153,637.52 13.07%
Electricity Output 000 KWH 406,726.09 414,202.18 -1.80%
Inventory 000 KWH
Unit sales Ton 268,048.41 310,410.00 -13.65%
Steam Output Ton 1,041,382.00 1,198,469.45 -13.11%
Inventory Ton
Any over 30% YoY movements in the data above and why:
Applicable □ Not applicable
Apparel inventory increased 45.56% year-on-year, mainly due to the increase in orders from new customers at the end of 2023,
which have not yet been shipped.
(4) Execution Progress of Major Signed Sales and Purchase Contracts in the Reporting Period
□ Applicable Not applicable
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Lu Thai Textile Co., Ltd. Annual Report 2023
(5) Breakdown of Cost of Sales
By operating division and product category
Unit: RMB
2023 2022
Operating Change
Item As % of total cost As % of total
division Cost of sales Cost of sales (%)
of sales (%) cost of sales (%)
Textile and Cost of
4,208,891,944.15 91.67% 4,689,861,379.28 90.99% -10.26%
apparel sales
Electricity Cost of
228,107,386.45 4.97% 290,205,024.76 5.63% -21.40%
and steam sales
Cost of
Other 154,389,584.80 3.36% 174,301,192.86 3.38% -11.42%
sales
Unit: RMB
2023 2022
Product Change
Item As % of total cost As % of total
category Cost of sales Cost of sales (%)
of sales (%) cost of sales (%)
Fabric Cost of
3,219,884,044.35 70.13% 3,698,671,468.56 71.76% -12.94%
products sales
Cost of
Apparel 989,007,899.80 21.54% 991,189,910.72 19.23% -0.22%
sales
Electricity Cost of
228,107,386.45 4.97% 290,205,024.76 5.63% -21.40%
and steam sales
Cost of
Other 154,389,584.80 3.36% 174,301,192.86 3.38% -11.42%
sales
Note:
Manufacture
Product Period Raw material Labor cost Depreciation Energy Total
expenses
2023 48.13% 17.66% 7.10% 17.59% 9.52% 100.00%
Fabric
2022 49.52% 17.01% 6.50% 17.44% 9.53% 100.00%
2023 59.65% 26.22% 2.42% 1.13% 10.58% 100.00%
Apparel
2022 62.67% 26.46% 1.90% 1.08% 7.89% 100.00%
(6) Changes in the Scope of Consolidated Financial Statements for the Reporting Period
□ Yes No
(7) Major Changes to the Business Scope or Product or Service Range in the Reporting Period
□ Applicable Not applicable
(8) Major Customers and Suppliers
Major customers:
Total sales to top five customers (RMB) 1,054,114,678.79
Total sales to top five customers as % of total sales of the
17.68%
Reporting Period (%)
Total sales to related parties among top five customers as % of
0.00%
total sales of the Reporting Period (%)
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Lu Thai Textile Co., Ltd. Annual Report 2023
Information about top five customers:
Sales revenue contributed for As % of total sales revenue
No. Customer
the Reporting Period (RMB) (%)
Total -- 1,054,114,678.79 17.68%
Other information about major customers:
□ Applicable Not applicable
Major suppliers:
Total purchases from top five suppliers (RMB) 688,378,062.07
Total purchases from top five suppliers as % of total purchases
15.79%
of the Reporting Period (%)
Total purchases from related parties among top five suppliers
0.00%
as % of total purchases of the Reporting Period (%)
Information about top five suppliers:
Purchase in the Reporting
No. Supplier As % of total purchases (%)
Period (RMB)
Total -- 688,378,062.07 15.79%
Other information about major suppliers:
□ Applicable Not applicable
3. Expense
Unit: RMB
Reason for any significant
2023 2022 Change (%)
change
Selling expense 148,454,814.21 136,929,096.72 8.42%
Administrative expense 382,327,532.79 396,309,634.39 -3.53%
Finance costs 5,448,844.47 -148,951,129.67 103.66% Decreased net exchange gain
R&D expense 239,775,343.18 276,424,812.26 -13.26%
4. Other Information Required by Information Disclosure Guide for Companies Engaged in Textile and
Garment Services
The Company is subject to the disclosure requirements for listed companies engaging in textile and apparel as stated in Guideline
No. 3 of the Shenzhen Stock Exchange for Self-regulation of Listed Companies—Industry-specific Information Disclosure.
(1) Capacity
The Company's own capacity
Industry
Item 2023 2022
Classification
Total capacity (fabric) (10,000
29,745.00 29,430.00
Fabric meters)
Rate of capacity utilization 74% 80%
16
Lu Thai Textile Co., Ltd. Annual Report 2023
The Company's convertible bond The Company's convertible bond
fundraising projects: The "Functional fundraising projects: The "Functional
Fabric Intelligent Eco-park Project Fabric Intelligent Eco-park Project
(Phase I)" with an annual capacity of 35 (Phase I)" with an annual capacity of 35
Plants under construction million meters of high-grade functional million meters of high-grade functional
fabrics and the "Overseas Product Line fabrics and the "Overseas Product Line
Project of High-grade Fabrics (Phase I)" Project of High-grade Fabrics (Phase I)"
were in progress. were in progress.
Total capacity (apparel)
2,230.00 2,030.00
(10,000 pieces)
Apparel
Rate of capacity utilization 84% 88%
Plants under construction
Year-on-year change in the rate of capacity utilization above 10%
□ Yes No
Overseas capacity
Yes □ No
Industry
Item Domestic Overseas
Classification
Percentage of capacity 80% 20%
Fabric Capacity layout Mainly in Shandong Province Mainly in Vietnam
Rate of capacity utilization 73% 81%
Percentage of capacity 40% 60%
Mainly in Vietnam, Cambodia, and
Apparel Capacity layout Mainly in Shandong Province
Myanmar
Rate of capacity utilization 81% 86%
The Company’s expansion plan on developing overseas production capacity
The Company is investing in the construction of overseas production bases, which are now in trial production.
(2) Sales model and channels
Product sales channels and operation methods
a. Sales model
The Company adopted the order-based sales model. With the self-owned trademark "Luthai" for its fabric sales, it provided
customers with development and design plans based on customer needs, fabrics and patterns leading the market, fashion and
technology, functions and environmental protection. In addition, it engaged in brand operation of spot fabric on the new retail e-
commerce platform. Shirts were mainly made according to the orders of customers at home and abroad, and sold by brand owners.
The Company's self-owned brand was operated through self-owned exclusive shops such as Lu Thai Exhibition and Sales Pavilion,
counters of affiliated stores in malls and e-networking marketing. Meanwhile, the Company could provide customers with high-end
customized shirts and customized business wear to meet the market demand of the high-end service industry.
b. Sales channels
17
Lu Thai Textile Co., Ltd. Annual Report 2023
Direct sales: The headquarters of the Company carried out direct investments and operation, and operated and managed a brand at the
headquarters or by setting up a branch company in other regions to conclude transactions with customers offline.
Online sales: Through self-developed platforms and large third-party online shopping platforms, the Company concluded transactions
with customers on the Internet and delivered goods to customers by express delivery services.
Unit: RMB
Gross YoY change in
Sales YoY change in YoY change in
Operating revenue Cost of sales profit gross profit
channels operating revenue cost of sales
margin margin
Online
3,326,275.46 1,490,476.55 55.19% 2.49% 20.81% -6.79%
sales
Direct
4,235,586,777.85 3,222,625,639.20 23.92% -17.73% -12.91% -4.20%
sales
OEM/OD
1,315,960,125.72 984,775,828.40 25.17% -2.47% -0.35% -1.60%
M
Total 5,554,873,179.03 4,208,891,944.15 24.23% -14.55% -10.26% -3.63%
(3) Franchise and distribution
Franchisees and distributors recorded more than 30% of sales revenue
□ Yes No
(4) Online sales
Online sales recorded more than 30% of sales revenue
□ Yes No
Self-developed sales platforms
Yes □ No
Start of operation 30 March 2009
Number of registered users 150,000
Average number of active monthly users (AMU) 3,000
Return rate of main brands 2.20%
Return rate of main types 2.20%
Cooperation with third-party sales platforms
Yes □ No
Online sales channels opened or closed by the Company
□ Applicable Not applicable
Impact on the Company in the current period and subsequent periods:
Not applicable.
18
Lu Thai Textile Co., Ltd. Annual Report 2023
(5) Agency operation model
Agency operation model involved
□ Yes No
(6) Inventory
Inventory
Days of
Quantity of Year-on-year change in
Main products turnover of Inventory age Reason
inventory inventory balance
inventories
Fabric (10,000
85 3,385.123 Within 1 year 10.18%
meters)
Fabric (10,000
651.784 Over 1 year -5.69%
meters)
Shirts (10,000
27 118.039 Within 1 year 21.43%
pieces)
Shirts (10,000
17.649 Over 1 year -3.19%
pieces)
Inventory valuation allowances:
2023.12.31
Item
Valuation allowance or provision for
Gross amount Carrying amount
impairment on contract performance cost
Raw materials 961,742,257.63 48,846,493.37 912,895,764.26
Goods in process 504,407,562.92 11,183,192.80 493,224,370.12
Products on hand 886,717,966.10 181,209,030.54 705,508,935.56
Commissioned
12,510,504.76 12,510,504.76
materials
Total 2,365,378,291.41 241,238,716.71 2,124,139,574.70
(7) Brand building
Production and sales of brand clothing, apparel and home textile products
Yes □ No
Self-owned brands:
Trademark Main product Chara Target Price zone of
Brand name Main sales areas City levels
name types cterist consumer main products
19
Lu Thai Textile Co., Ltd. Annual Report 2023
ics group
Classi Provincial
c East China, South capital cities
Business
LTGRFF LTGRFF Shirts and suits busine RMB500-3000 China and and other
people
ss Southwest China prefecture-
attire level cities
Trademark ownership disputes
□ Applicable Not applicable
(8) Other information
Engaged in business related to apparel design
□ Yes No
Whether the Company held meetings for the placement of orders
□ Yes No
5. R&D Investments
Applicable □ Not applicable
Estimated impact
Names of main on future
Goals of projects Progresses of projects Intended goals
R&D projects development of
the Company
Cotton/lyocell blend super The Company aims to achieve
This project is
ironing-free fabric and high high ironing-free stability of
Research and This project is aimed to expected to
ironing-free post-baking fabric grade 3.8 with its cotton/lyocell
development of conduct iterative enhance the
have completed trial weaving super ironing-free fabric and all-
key technology upgrading of existing performance
attestation; High thread count cotton, polyester-cotton series;
for functional ironing-free fabric quality of the
high ironing-free fabric, eco and targets attaining ironing-free
dyed fabrics processing technology, Company's
ironing-free fabric, functional stability of grade 3.5 or higher
with wet cross- enhance fabric quality flagship products
finishing ironing-free fabric, with its ECO-F!t, formaldehyde-
linking ironing- and meet customer and strengthen
and high whiteness ironing- free, and other eco ironing-free
free finishing. needs. core
free fabric have received buck fabrics, as well as functional
competitiveness.
orders. ironing-free fabrics.
Research and Ultrasonic and spray
development of technologies have successfully
This project is
multi- undergone experimental
This project is aimed to expected to
component cool- attestation and are now
actively explore new maintain the
feel, moisture- advancing into the equipment
technologies for green The Company aims to research Company's leading
absorbing, low- modification and procurement
dyeing and finishing more than five green ecological technological level
carbon phase, supported by the
processing and reduce finishing technologies. in the industry,
ecological generation of feasibility study
environmental and lead the
dyeing and reports. Concurrently,
pollution. industry
finishing attestation processes are
development.
technology for underway for ozone treatment
textiles. and other technologies.
Research and This project is aimed to Recycled fibre has completed The Company aims to develop This project is
development of use special processes preparation and process four-way stretch fabrics, where expected to meet
efficient, and environmentally optimisation, outputted the fabric's warp elasticity customer needs
20
Lu Thai Textile Co., Ltd. Annual Report 2023
energy-saving, friendly materials to different varieties with reaches 12.5% and above, and and expand market
stretch core-spun produce efficient, different setting temperatures reduce warp direction colour share.
yarn, using energy-saving, to improve elasticity stability. difference and bubbling to
recycled fibre environmentally improve the reproducibility of
preparation friendly products that trial weaving for bulk goods.
technology. align with market
consumption concepts
and lead market trends.
This project is
expected to
Research on key
This project is aimed to enhance the
technologies and The transformation of newly
save energy and reduce Company's dyeing
complete purchased related machinery
consumption, reduce technology level,
equipment and equipment has been
carbon emissions, and This type of order continues to enrich the
systems for completed, and the polyester-
give the product a grow into a new core product. Company's variety
polyester fabric related dyeing technology has
unique style with huge of casual wear
spot dyeing been optimised, enabling mass
market potential and fabrics, and
without water production.
broad prospects. strengthen the
washing.
Company's
competitiveness.
Details about R&D personnel:
2023 2022 Change (%)
Number of R&D personnel 1,396 1,474 -5.29%
R&D personnel as % of total
13.26% 13.17% 0.09%
employees
Educational background of R&D personnel
Bachelor’s degree 196 200 -2.00%
Master’s degree 28 29 -3.45%
Age structure of R&D personnel
Below 30 166 184 -9.78%
30~40 847 964 -12.14%
Above 40 383 326 17.48%
Details about R&D investments:
2023 2022 Change (%)
R&D investments (RMB) 239,775,343.18 276,424,812.26 -13.26%
R&D investments as % of operating
4.02% 3.98% 0.04%
revenue
Capitalized R&D investments (RMB) 0.00 0.00 0.00%
Capitalized R&D investments as %
0.00% 0.00% 0.00%
of total R&D investments
Reasons for any significant change to the composition of R&D personnel and the impact:
□ Applicable Not applicable
Reasons for any significant YoY change in the percentage of R&D expense in operating revenue:
□ Applicable Not applicable
Reason for any sharp variation in the percentage of capitalized R&D expense and rationale:
□ Applicable Not applicable
6. Cash Flows
Unit: RMB
Item 2023 2022 Change (%)
Subtotal of cash generated from 5,733,287,497.87 7,218,619,463.98 -20.58%
21
Lu Thai Textile Co., Ltd. Annual Report 2023
operating activities
Subtotal of cash used in operating
4,878,422,960.45 5,796,308,689.72 -15.84%
activities
Net cash generated from/used in
854,864,537.42 1,422,310,774.26 -39.90%
operating activities
Subtotal of cash generated from
9,682,671,841.39 264,146,692.28 3,565.64%
investing activities
Subtotal of cash used in investing
10,635,911,372.48 981,802,690.70 983.30%
activities
Net cash generated from/used in
-953,239,531.09 -717,655,998.42 -32.83%
investing activities
Subtotal of cash generated from
1,289,724,006.83 1,345,521,524.75 -4.15%
financing activities
Subtotal of cash used in financing
1,677,384,015.94 2,340,048,516.23 -28.32%
activities
Net cash generated from/used in
-387,660,009.11 -994,526,991.48 61.02%
financing activities
Net increase in cash and cash
-469,281,964.23 -147,109,614.73 -219.00%
equivalents
Explanation of why any of the data above varies significantly:
Applicable □ Not applicable
During the Reporting Period, net cash generated from operating activities decreased 39.90% year on year, primarily driven by the
decreased cash received from sale of goods; subtotal of cash generated from investing activities increased 3565.64% year on year,
primarily driven by the increase in withdrawn wealth management investments; subtotal of cash used in investing activities
increased 983.30% year on year, primarily driven by the increased payments to acquire wealth management investments; net cash
generated from investing activities decreased 32.83% year on year, primarily driven by the increased investment in the overseas
high-end fabric production line project; net cash generated from financing activities increased 61.02% year on year, primarily
driven by the decreased debt repayments; and net increase in cash and cash equivalents decreased 219.00% year on year, primarily
driven by the decreased net cash generated from operating activities.
Reason for any big difference between the net operating cash flow and the net profit for this Reporting Period
□ Applicable Not applicable
V Analysis of Non-Core Businesses
Applicable □ Not applicable
Unit: RMB
As % of total
Amount Source/Reason Recurrent or not
profit
Return on Return on held-for-trading financial
39,364,608.46 9.00% Not
investment assets
Loss on changes in fair value of held-
Gain/loss on
-65,020,725.14 -14.87% for-trading financial assets and Not
changes in fair value
liabilities
Asset impairments -105,876,786.52 -24.22% Inventory valuation allowances Not
Non-operating Income of non-operating
9,347,696.19 2.14% Not
income compensation, etc
Non-operating Loss on destruction and retirement of
5,146,681.99 1.18% Not
expense non-operating non-current assets, etc.
22
Lu Thai Textile Co., Ltd. Annual Report 2023
VI Analysis of Assets and Liabilities
1. Significant Changes in Asset Composition
Unit: RMB
31 December 2023 1 January 2023 Reason for
Change in
any
As % of total As % of total percentag
Amount Amount significant
assets assets e (%)
change
Monetary
1,558,252,048.03 11.60% 2,067,768,253.97 15.49% -3.89%
assets
Accounts
826,467,684.78 6.15% 660,427,526.19 4.95% 1.20%
receivable
Inventories 2,124,139,574.70 15.82% 2,107,849,708.33 15.79% 0.03%
Investment
19,578,175.93 0.15% 20,460,935.21 0.15% 0.00%
property
Long-term
equity 143,537,479.77 1.07% 184,168,625.69 1.38% -0.31%
investments
Fixed assets 5,597,692,505.07 41.68% 5,807,847,850.67 43.50% -1.82%
Construction in
868,496,878.41 6.47% 199,943,501.73 1.50% 4.97%
progress
Right-of-use
463,226,419.21 3.45% 481,420,505.31 3.61% -0.16%
assets
Short-term
580,704,772.27 4.32% 518,946,415.96 3.89% 0.43%
borrowings
Contract
188,073,335.89 1.40% 206,879,672.53 1.55% -0.15%
liabilities
Long-term
259,992,974.40 1.94% 186,431,096.24 1.40% 0.54%
borrowings
Lease liabilities 86,580,224.41 0.64% 98,501,303.83 0.74% -0.10%
Indicate whether overseas assets account for a large proportion of the total assets.
Applicable □ Not applicable
Control Material
Manage As % of the
Locatio measures to Return generated impairmen
Asset Source Asset value (RMB) ment Company’s
n protect asset (RMB) t risk
model equity
safety (yes/no)
Main
Hong management
Incorp Hong Marketi personnel sent
Kong 226,227,839.34 14,786,998.49 2.35% No
orated Kong ng by the
company Company as the
parent
Main
management
American Incorp New Marketi personnel sent
1,048,422.90 -607,861.01 0.01% No
company orated York ng by the
Company as the
parent
Main
Overseas management
Southe
Incorp Manufa personnel sent
productio 4,395,349,636.55 ast 129,414,556.53 45.70% No
orated cturing by the
n bases Asia
Company as the
parent
2. Assets and Liabilities at Fair Value
Applicable □ Not applicable
23
Lu Thai Textile Co., Ltd. Annual Report 2023
Unit: RMB
Impairm
Gain/loss
ent
on fair- Cumulative
allowan Purchased
value fair-value Sold in the
Beginning ce for in the Other
Item changes in changes Reporting Ending amount
amount the Reporting change
the recorded in Period
Reporti Period
Reporting equity
ng
Period
Period
Financial assets
1. Held-
for-trading
financial -
assets 239,522,65 9,871,689, 9,644,480,2 248,030,000
1,222,946.0 713,539,243.86
(excluding 0.65 747.48 08.20 .00
derivative 7
financial
assets)
2. -
Derivative 28,172,508. 7,521,532. 4,565,888.8
20,958,877. 10,261,031.53
financial 83 36 6
assets 30
5. Other -
non-current 337,110,00 -
248,030,000 88,750,000.00
financial 0.00 330,000.00
assets .00
Subtotal of -
604,805,15 9,879,211, 9,649,046,0
financial 22,511,823. 812,550,275.39
assets 9.48 279.84 97.06
37
11,208,304. 7,128,019.7
Others -88,118.79 18,248,205.76
78 7
-
Total of the 616,013,46 9,879,211, 9,649,046,0 7,128,019.7
22,511,823. -88,118.79 830,798,481.15
above 4.26 279.84 97.06 7
37
-
Financial 4,276,929.7 4,645,000. 4,645,000.0
42,508,901. 46,785,831.47
liabilities 0 00 0
77
Content of other change:
Changes in accounts receivable financing.
Significant changes to the measurement attributes of the major assets in the Reporting Period:
□Yes No
3. Restricted Asset Rights as at the Period-End
For details, see Part X. VII. 22. Assets with restricted ownership and using right in this Report.
VII Investments Made
1. Total Investment Amount
□ Applicable Not applicable
2. Major Equity Investments Made in the Reporting Period
□ Applicable Not applicable
24
Lu Thai Textile Co., Ltd. Annual Report 2023
3. Major Non-Equity Investments Ongoing in the Reporting Period
□ Applicable Not applicable
4. Financial Investments
(1) Securities Investments
□ Applicable Not applicable
No such cases in the Reporting Period.
(2) Investments in Derivative Financial Instruments
Applicable □ Not applicable
1) Derivative Investments for Hedging Purposes during the Reporting Period
Applicable □ Not applicable
Unit: RMB'0,000
Gain/loss Proportion of
on fair- Cumulative closing
Purchased in
Initial value fair-value Sold in the investment
Type of Beginning the Ending
investment changes in changes Reporting amount in the
derivative amount Reporting amount
amount the recorded in Period Company’s
Period
Reporting equity ending net
Period assets
Foreign
exchange 256,788.86 148,156.5 -2,398.55 0 108,632.36 200,388.86 56,400 6.11%
option
Total 256,788.86 148,156.5 -2,398.55 0 108,632.36 200,388.86 56,400 6.11%
Whether
significant
changes
occurred to
the
Company’s
accounting
policy and
specific
accounting No significant changes
principles of
derivatives
in the
Reporting
Period
compared to
the previous
Reporting
Period
1. As of 31 December 2023, the Company held 11 undue financial derivatives contracts, totaling USD94 million, all of
Actual
which were forex option contracts.
gain/loss in
2. From January to December 2023, the total amount of all due financial derivatives of the Company was equivalent to
the
USD298 million which were all implemented based on contracts. All these financial derivatives were forex option
Reporting
contracts, of which USD166 million was settled while USD132 million did not meet settlement conditions, generating
Period
gains of RMB10.9815 million.
Effectivenes The Company conducts foreign exchange (FX) derivative transactions with the intention of hedging. Specifically, the
25
Lu Thai Textile Co., Ltd. Annual Report 2023
s of hedges business is carried out to fix costs, avoid exchange rate risks and improve resistance against FX rate fluctuations. As a
result, the Company has gained better capabilities of avoiding and preventing the risks of FX rate fluctuations, and the
financial robustness of the Company has been enhanced.
Capital
source for
The Company’s own money
derivative
investment
The Company conducted derivatives products transaction in order for hedging. And the forward settlement hedging was
operated by installments, with the relevant amount not more than the planned derivatives products transactions. And all
derivatives products transaction was zero-deposit. Meanwhile, the Company had a complete risk control system for
sufficient analysis and prevention of possible risks such as market risk, liquidity risk and credit risk, operation risk and
risk of laws and regulation.
1. Market risk: When the international and domestic economic situations change, the corresponding changes in exchange
rates and interest rates may have an adverse impact on the financial derivative transactions of the Company. Precautions:
The Company chooses financial instruments with simple structures, high liquidity and controllable risk and strictly
Analysis on
controls the scale of derivative transactions, performing them by stages and in batches. Means such as extension and
risks and
balance settlement can be adopted to ensure contract performance after the contract expires.
control
2. Liquidity risk and credit risk: Credit risk arises when the Company or counterparties in transactions couldn’t perform
measures of
contracts due now, to liquidity or other factors that result in further economic loss. Precautions: The derivative
derivative
transactions can only be done with financial institutions qualified for derivative transactions, as authorized by relevant
products
national authorities or financial or foreign exchange authorities in the country or region where the Company operates.
held in the
Derivative transactions with other institutions or individuals are not allowed so as to control related risk concerning
Reporting
counterparties.
Period
3. Internal risk control: Derivative transactions are highly specialized and complex. Therefore, there is a risk of loss in
(including
derivative transactions due to the imperfect internal control system when business is performed. Precautions: The
but not
Company should strictly implement Management Policy for Investments in Securities and Derivative Transactions of Lu
limited to
Thai Textile Co., Ltd., continuously optimize the business operation process and authorization management system,
market risk,
strengthen professional ethics education and business training for relevant personnel, clarify job responsibilities, engage
liquidity
in derivative transaction business strictly within the scope of authorization, and establish a timely reporting system for
risk, credit
abnormal conditions to avoid operational risks.
risk,
4. Risk of laws and regulation: Derivative transactions of the Company must be strictly in compliance with relevant
operation
national laws and regulations. Otherwise, signed contracts, commitments and other legal documents may entail
risk, law
compliance risk and regulatory risk in terms of effectiveness and enforceability. Precautions: The Company should
risk, etc.)
strengthen the supervision and inspection of the standardization of derivative transactions, the effectiveness of internal
control mechanism, and the authenticity of information disclosure to avoid possible legal risks. The Company has
fulfilled relevant approval procedures for its derivative transactions business, which is in line with the relevant national
laws, regulations, the Articles of Association, the Management Rules for Securities Investments and Derivative Trading
of Lu Thai Textile Co., Ltd., the Proposal on the Company's Derivative Transaction Plan deliberated and adopted at the
33rd meeting of the 9th session of the Board of Directors held on 24 May 2022, and the Proposal on the Company's
Derivative Transaction Plan deliberated and adopted at the ninth meeting of the 10th session of the Board of Directors
held on 26 May 2023, and fulfilled the relevant information disclosure obligations.
Changes of
market
prices or
fair values
in the
Reporting
Period of
the invested
derivatives.
In accordance with the relevant provisions and guidelines of the Accounting Standards for Business Enterprises No. 22 -
And the
Recognition and Measurement of Financial Instruments and the Accounting Standards for Business Enterprises No. 37 -
analysis on
Presentation of Financial Instruments issued by the Ministry of Finance, the Company took the relevant accounting
the fair
measures for its business of FX derivative transactions to reflect the relevant items in the balance sheet and the income
value of the
statement. During the Reporting Period, the Company determined the fair value of FX options based on the bank’s
derivatives
forward option quotations at the end of the period.
should
include the
specific use
methods
and the
relevant
assumptions
and
parameters.
Lawsuit (if
N/A
applicable)
26
Lu Thai Textile Co., Ltd. Annual Report 2023
Disclosure 25 May 2022
date of
board of
directors
announcem
ent on 27 May 2023
approval of
derivative
investment
(if any)
Specific
opinion
The Company’s independent directors have issued the following professional advice on the Company's derivative
from
transaction business: We believe that the Company's foreign exchange derivative transaction business is performed on
independent
the condition of ensuring normal operations. Transactions using its own funds are beneficial to avoiding the risk of
directors on
exchange rate fluctuations, and are an effective tool to hedge exchange rate risk. By strengthening internal control,
the
implementing stop-loss and risk prevention measures, the Company can improve its ability to resist exchange rate
Company’s
fluctuations and improve its management level. The derivative transaction plan proposed by the Board of Directors is
derivatives
feasible, necessary, and the risks are manageable. There is no damage to the interests of the Company and all the
investment
shareholders.
and risk
control
2) Derivative Investments for Speculative Purposes during the Reporting Period
□ Applicable Not applicable
No such cases in the Reporting Period.
5. Use of Funds Raised
Applicable □ Not applicable
(1) Overall Use of Funds Raised
Applicable □ Not applicable
Unit: RMB’0,000
Cumula
Total of
tive Ratio of
raised
Cumula amount cumulat Amoun
capital
Total of tive of ive t of
Raisi which Total of Purpose and
Rais Total of raised amount raised amount raised
ng Net purpose raised direction of
ing raised capital of capital which capital
man proceeds is capital raised capital
year capital used in this raised which purpose unused
ner change unused unused
period capital purpose is for two
d in the
used is change years
report
change d
period
d
By 31
December
2023,
RMB46.562
Conv 2 million in
ertibl
134,497 26,371. 51,371. 9,656.2 the unused
2020 e 140,000 138,546 42,543.78 36.69% 0
bond .84 58 58 2 raised capital
s was
deposited in
the raised
capital
account, and
27
Lu Thai Textile Co., Ltd. Annual Report 2023
RMB50
million was
used for cash
management.
Tota 134,497 26,371. 51,371. 9,656.2
-- 140,000 138,546 42,543.78 36.69% -- 0
l .84 58 58 2
General use situation of raised capital
(I) Amount of actual raised capital and arrival date
Upon approval by China Securities Regulatory Commission in the document “ZJXK [2020]299”, the Company publically issued
14,000,000 convertible bonds on 9 April 2020 at par value RMB 100, the issued amount was RMB 1.4 billion, and the Company
actually received the amount of raised capital RMB 1.388 billion after deducted the underwriting fee RMB 12 million. The above
amount was remitted in cash in RMB. After deducted legal fee, accountant fee, credit rating fee, information disclosure fee, issuing
commission and other costs RMB 2.54 million in total from the above actually raised capital, the net amount of raised capital was
RMB 1385.46 million, which entered the account on 15 April 2020, and Grant Thornton International Ltd (Special General
Partnership) issued the capital verification report with reference No. Grant Thornton Verification [2020] 371ZC0090 for it after
verification.
(II) Use situation and balance of raised capital
As at 31 December 2023, the Company directly invested RMB1,344.9784 million in total from the raised capital for its raised capital
investment projects. The unused amount was RMB96.5622 million.
(2) Commitments on Projects with Funds Raised
Applicable □ Not applicable
Unit: RMB’0,000
Whether
Cumulat
the Date
Total of ive Investme
Committed projects when the Whether
committ Total Amount investme nt Benefit Whether
investment are project project
ed investme invested nt progress realized reached
projects and changed by the reached feasibility
investme nt after in this amount in this the
use direction (includin end of the changed
nt of modifica report by the report expected
of over raised g intended significantl
raised tion (1) period end of period (3) period benefit
capital partially available y
capital period ＝(2)/(1)
changed status
(2)
projects)
Committed investment projects
Functional
fabric smart 31
58,628.4 58,628.4
eco-park Yes 85,000 1,188.48 100.00% December 0 N/A No
project 2 2
2024
(Phase 1)
Overseas
high-end
31
fabric 30,981.4
Yes 25,000 34,000 25,272.9 91.12% December 0 N/A No
product line 3
2024
project
(Phase I)
Supplement
46,171.5 44,887.9
working Yes 28,800 16,082.4 97.22% 0 N/A No
capital 8 9
Subtotal of
committed 42,543.7 134,497.
-- 138,800 138,800 -- -- 0 -- --
investment 8 84
projects
Use direction of over raised capital
N/A
Repayment
-- 0 0 0 0 0.00% -- -- -- --
of bank loans
28
Lu Thai Textile Co., Ltd. Annual Report 2023
(if any)
Supplement
working
-- 0 0 0 0 0.00% -- -- -- --
capital (if
any)
Subtotal of
use director
-- 0 0 0 0 -- -- -- --
of over raised
capital
42,543.7 134,497.
Total -- 138,800 138,800 -- -- 0 -- --
8 84
Explain
project by
project
situation and
reasons that it
did not reach
the planned
progress or
expected The functional fabric smart eco-park project (Phase 1) is currently in the technology ramp-up stage, and has not yet formed a
return large-scale production or achieved the expected revenue.
(including
reason for
inputting
“N/A” for
“Whether
reached the
expected
benefit”)
Note for
significant
change of N/A
project
feasibility
Amount,
purpose and
use progress N/A
of over raised
capital
Change of
implementati
on site of
N/A
capital
raising
project
Adjustment
of
implementati
on mode of N/A
capital
raising
project
Advance Applicable
investment
and
By 30 April 2020, the total amount of displaced capital was RMB191.4288 million, including the amount RMB 189.8388
displacement
million invested in the project with the self-raised capital of the Company in advance, and payment of issuing cost RMB1.59
of capital
million with its self-raised capital.
raising
project
29
Lu Thai Textile Co., Ltd. Annual Report 2023
Temporary
supplement
to working
N/A
capital with
unused raised
capital
Balance of
raised capital
after
implement of N/A
project and
relevant
reasons
Purpose and
use direction By 31 December 2023, RMB46.5622 million in the unused raised capital was deposited in the raised capital account, and
of unused RMB50 million was used for cash management.
raised capital
Problems
existing in
use and
information
None
disclosure of
raised capital
or other
situation
(3) Changes in Projects with Funds Raised
Applicable □ Not applicable
Unit: RMB’0,000
Actual
Amount of Accumulat Whether
investme Investment Date of Realized Whether
Correspondi planned ive occurred
nt schedule as reaching income reached
Items after ng original funds investment significant
amount the period- intended in the anticipat
changes committed invested amount as changes in
in the end use of the Reportin ed
items after the period- project
Reportin (3)=(2)/(1) project g Period income
changes (1) end (2) feasibility
g Period
High-end
printing and
Overseas dyeing
high-end fabric
31
fabric production
34,000 25,272.9 30,981.43 91.12% December 0 N/A No
production line project,
2024
line project functional
(Phase I) fabric smart
eco-park
project
Total -- 34,000 25,272.9 30,981.43 -- -- 0 -- --
In accordance with the Company's global strategic layout and market demand, the Company
planned to adjust its capacity structure.
1. On 9 June 2022, the second extraordinary general meeting and the first bondholders' meeting
Notes of reasons for changes, decision- of 2022 deliberated and adopted the Proposal on Changing the Purpose of Partial Raised Capital
making procedures and information Unused. The aim was to terminate the "High-end printing and dyeing fabric production line
disclosure (by specific items) project" and leverage the raised capital of this project of RMB250 million for construction of
overseas high-end fabric production line project (Phase I), disclosed on 10 June 2022 on the
cninfo website ("www.cninfo.com.cn").
2. On 25 September 2023, the second extraordinary general meeting and the first bondholders'
30
Lu Thai Textile Co., Ltd. Annual Report 2023
meeting of 2023 deliberated and adopted the Proposal on Changing the Purpose of Partial
Raised Capital Unused. The Company decided to repurposed the remaining raised funds of the
“functional fabric smart eco-park project (Phase I) implemented by its majority-owned
subsidiary Shandong Lulian New Materials Co., Ltd., using RMB90 million of the remaining
raised funds for the “overseas high-end fabric production line project (Phase I)”, which have
been disclosed on the cninfo website ("www.cninfo.com.cn") dated 26 September 2023 and 27
September 2023, respectively.
Condition and reason for not reaching the
schedule and anticipated income (by N/A
specific items)
Notes of condition of significant changes
N/A
occurred in project feasibility after changes
VIII Sale of Major Assets and Equity Interests
1. Sale of Major Assets
□Applicable Not applicable
No such cases in the Reporting Period.
2. Sale of Major Equity Interests
□Applicable Not applicable
IX Major Subsidiaries
Applicable □ Not applicable
Major fully/majority-owned subsidiaries and those minority-owned subsidiaries with an over 10% effect on the Company’s net
profit:
Unit: RMB
Princi
Relationsh Register
pal Total
Name ip with the ed Net assets Operating revenue Operating profit Net profit
activit assets
Company capital
y
Lufeng
Weaving & 7061600 1,591,521,
Subsidiary Fabric 1,448,604,322.83 1,375,045,198.83 59,043,978.09 57,390,726.91
Dyeing Co., 00 376.13
Ltd.
Shandong
Lulian New 4000000 651,626,3
Subsidiary Fabric 102,902,356.55 165,702,046.24 -91,041,783.42 -90,776,733.25
Materials 00 73.52
Co., Ltd.
Subsidiaries obtained or disposed in the Reporting Period:
□Applicable Not applicable
Information about major majority- and minority-owned subsidiaries:
LuFeng Company Limited (hereinafter referred to as “LuFeng”) is the holding subsidiary of the Company. Registration place: Zibo,
Shandong; registered capital: RMB706.160 million. The mainly manufacturing and selling textile printing and dyeing products and
the products of clothing and garments, and it were authenticated to be high-tech enterprise in October 2014. During the Reporting
Period, with the weak consumer demand across the globe, LuFeng saw decreased export and high-added-value orders, leading to a
31
Lu Thai Textile Co., Ltd. Annual Report 2023
decline in both operating revenue and net profit.
Shandong Lulian New Materials Co., Ltd. (hereinafter referred to as "Lulian New Materials") is the holding subsidiary of the
Company. Registration place: Zibo, Shandong; registered capital: RMB 400 million. It was established in April 2019 and mainly
manufacturing and selling functional fabrics. During the Reporting Period, it was ramping up technology and production.
X Structured Bodies Controlled by the Company
Applicable □ Not applicable
See “X Interests in Other Entities” of Part X.
XI Prospects
1. Industry competition and development trend
The textile industry of China has certain strength in the global textile industry, mainly showing in industry chain, technology, labor
efficiency and other aspects. The global economic downturn has impacted the economy and trade of various countries since 2020, but
the competitive edge of the textile industry of China in the international market still remains. In recent years, when the domestic
environmental protection requirements are becoming more stringent, production costs are going up and the transformation and
upgrade policy is implemented in China, the textile industry may face structural adjustment, and fabric demand will change towards
small batch, multiple categories, diversification, functionality and leisure.
2. Development strategy of the Company
The Company is a large-scale textile enterprise with a complete industrial chain integrating spinning, dyeing, weaving, post-
treatment and garment manufacturing. It is the world's largest production base for yarn-dyed fabrics for shirts, providing blending of
three major series of fabrics of pure cotton and natural fiber, cotton and natural fiber as well as cotton and functional fiber. And the
newly developed knitted fabric and functional fabric are also popular in markets. In order to maintain the outstanding advantages of
the Company in global yarn-dyed fabrics, the Company is pushing intelligent manufacturing upgrades and integrating domestic and
foreign advantageous resources to deepen internationalization of the Company with regional advantages. The Company combines
quality innovation and customer needs, and innovates the marketing model with advantages of resources in each channel to meet
various needs of customers. Furthermore, the Company increases investment in innovation to improve R&D and design and develop
new fabrics. The Company holds the concept of low-carbon environmental protection for sustainable development.
3. Business plan (the following description does not constitute any commitment of the Company)
(1) In terms of corporate governance, in order to ensure the healthy, stable and sustainable development of the Company at the
institutional level, the Company will establish an internal control system to improve organizational structure, corporate governance
structure and risk prevention mechanism.
(2) In the aspect of market development, the Company actively develops emerging markets on the basis of maintaining the existing
market, accurately understands market trend and customers’ demand, and fully improves service capacity, so that the Company could
be a global dress solution supplier based on leading fabric.
(3) In the aspect of business administration, the Company continually implements the strategy of “quality and efficiency
improvement” and “comprehensive internationalization”, makes more efforts in developing market, adjusting structure and
improving capacity, promotes innovation while meeting market demand, integrates internal and external resources, deepens the
application of information technology and big data, builds up a flexible, rapid response, efficient and traceable supply system chain,
and effectively improves operational capabilities.
(4) In terms of industrial overall arrangement, in order to maintain the leading position of the Company in the global yarn-dyed
industry, the Company rationally allocates domestic and foreign resources and improves production efficiency while keeping product
quality relying on the advantages of U.S. companies, Milan and Japan Office in market development, design and R&D, customer
32
Lu Thai Textile Co., Ltd. Annual Report 2023
service and talent development, and the cost advantages of the overseas production bases.
4. Capital needs, sources and planning
By the end of the Reporting Period, the overseas high-end fabric production line project (phase I) was in trial production, and the
project fund is mainly from the Company’s own funds and the raised fund of the A Share convertible bonds issued by the Company.
5. Risks that bring adverse impact to company development strategy and business objectives and countermeasures of the Company
(1) Impact of economic environment: under the enormous uncertainty risk of the international trade, the geopolitical risk and the
weak global economic growth, the Company will face challenges in terms of international trade policies and market changes. In
response, the Company will grasp new opportunities arising in China’s transformation and double-cycle development at home and
abroad, further utilize various resources at home and abroad, and keep developing domestic and overseas markets.
(2) Price fluctuation of raw materials: cotton is the major production material of the Company, and the price of cotton is impacted
by market supply and demand, climate, policy, exchange rate and other factors. Therefore, the Company coordinates order
arrangements for domestic and overseas production bases in a rational way, deeply studies the information of global cotton market,
properly works out procurement strategy and gives full play to the convenient advantages of global procurement of high-quality
raw cotton through overseas production bases.
(3) Change of exchange rate: the Company has a large ratio in import and export business, which is mostly settled in USD. In
recent years, the bi-directional fluctuations in RMB exchange rate have become increasingly normal and flexible. The exchange
rate fluctuation will place a remarkable impact on its performance. To lower the impact of exchange rate fluctuations, the
Company stuck to the risk-neutral philosophy. Based on actual needs arising from production and operations, it incorporated
exchange rate risks into routine operations management, and took measures at proper timing to minimize the influence of
exchange rate risks on the operations. Firstly, the Company appropriately conducted foreign exchange hedging, using financial
derivatives such as forwards, swaps, and option portfolios to avoid currency risks. Secondly, the Company made reasonable
arrangement on settlement day and currency and vigorously promoted cross-border settlement with RMB to avoid exchange rate-
related risks. Thirdly, the Company adjusted the Renminbi and foreign-currency liabilities structure to actively prevent currency
fluctuation risks.
XII Communications with the Investment Community such as Researches, Inquiries and
Interviews during the Reporting Period
Applicable □ Not applicable
Contents and
Place of Way of Type of
Date of visit Visitor materials Index to main inquiry information
visit visit visitor
provided
The
Investor Relations Management
Compan About basic
Institutional Archive 20230110 disclosed on
6 January 2023 y’s By phone Institution information of the
investor Cninfo by the Company on 10
conferen Company
January 2023
ce room
The
Investor Relations Management
Compan About basic
Institutional Archive 20230207 disclosed on
3 February 2023 y’s By phone Institution information of the
investor Cninfo by the Company on 7
conferen Company
February 2023
ce room
The
Investor Relations Management
Compan About basic
Institutional Archive 20230210 disclosed on
8 February 2023 y’s By phone Institution information of the
investor Cninfo by the Company on 10
conferen Company
February 2023
ce room
The One-on- Institutional About basic Investor Relations Management
22 February 2023 Institution
Compan one investor information of the Archive 20230223 disclosed on
33
Lu Thai Textile Co., Ltd. Annual Report 2023
y’s meeting Company Cninfo by the Company on 23
conferen February 2023
ce room
The
Investor Relations Management
Compan About basic
Institutional Archive 20230413 disclosed on
12 April 2023 y’s By phone Institution information of the
investor Cninfo by the Company on 13
conferen Company
April 2023
ce room
The
Investor Relations Management
Compan About basic
Institutional Archive 20230504 disclosed on
28 April 2023 y’s By phone Institution information of the
investor Cninfo by the Company on 4 May
conferen Company
2023
ce room
The
Investor Relations Management
Compan About basic
Online Archive 20230515 disclosed on
15 May 2023 y’s Other Investor information of the
exchange Cninfo by the Company on 15 May
conferen Company
2023
ce room
The
Investor Relations Management
Compan One-on- About basic
Institutional Archive 20230523 disclosed on
18 May 2023 y’s one Institution information of the
investor Cninfo by the Company on 23 May
conferen meeting Company
2023
ce room
The
Investor Relations Management
Compan One-on- About basic
Institutional Archive 20230613 disclosed on
9 June 2023 y’s one Institution information of the
investor Cninfo by the Company on 13 June
conferen meeting Company
2023
ce room
The
Investor Relations Management
Compan About basic
Institutional Archive 20230822(1) disclosed on
21 August 2023 y’s By phone Institution information of the
investor Cninfo by the Company on 22
conferen Company
August 2023
ce room
The
Investor Relations Management
Compan About basic
Institutional Archive 20230822(2) disclosed on
21 August 2023 y’s By phone Institution information of the
investor Cninfo by the Company on 22
conferen Company
August 2023
ce room
The
Investor Relations Management
Compan About basic
Institutional Archive 20230822 disclosed on
22 August 2023 y’s By phone Institution information of the
investor Cninfo by the Company on 22
conferen Company
August 2023
ce room
The
Investor Relations Management
Compan About basic
Institutional Archive 20231031(1) disclosed on
30 October 2023 y’s By phone Institution information of the
investor Cninfo by the Company on 31
conferen Company
October 2023
ce room
The
Investor Relations Management
Compan About basic
Institutional Archive 20231031(2) disclosed on
30 October 2023 y’s By phone Institution information of the
investor Cninfo by the Company on 31
conferen Company
October 2023
ce room
XIII Implementation of the “Quality and Earnings Dual Improvement” Action Plan
Indicate whether the Company has disclosed the “Quality and Earnings Dual Improvement” Action Plan.
34
Lu Thai Textile Co., Ltd. Annual Report 2023
□ Yes No
35
Lu Thai Textile Co., Ltd. Annual Report 2023
Part IV Corporate Governance
I General Information of Corporate Governance
During the Reporting Period, the Company strictly conforms to Company Law, Securities Law (Revised in 2019), Governing Rules
for Listed Company, Guideline No. 1 of the Shenzhen Stock Exchange for the Self-regulation of Listed Companies—Operation
Compliance of Main Board Listed Companies (revised in December 2023) and Administrative Measures for Independent Directors
of Listed Companies as well as relevant stipulations and requirements from normative documents, continuously improves the
corporate governance structure, safeguards the standardized and efficient operation of three Committees and one Management, forms
a sound and effective internal control system so as to safeguard legitimate interests of the Company and investors. Within the
Reporting Period, the Company amended 24 systems including Articles of Association of Lu Thai Textile Co., Ltd., Rules of
Procedure of the General Meeting of Lutai Textile Co., Ltd., and Rules of Procedure of the Board of Directors of Lutai Textile Co.,
Ltd., and formulated Special Meeting System for Independent Directors of Lu Tai Textile Co., Ltd.
1. Shareholders and Shareholders’ General Meeting
The Company shall convene and hold the shareholders meeting in strict accordance with the Shareholders Meeting Procedural Rules,
and guarantee that all shareholders, especially the minority shareholders, could have equal status and fully execute their rights.
2. The relationship between the majority shareholders and the Company
The Company’s majority shareholders acted according to relevant standards without directly or indirectly intervening the Company’s
decision-making and operating activities; the Company was independent with its majority shareholders in business, personnel, assets,
organization, finance, and the Company’s Board of Directors, Supervisory Committee and Internal Organs could completely
independent to operate. There was no situation about annexing the assets or occupation of funds of the Company by principal
shareholders or other events on infringing the interest of the Company and other shareholders.
3. The directors and Board of Directors
The Company’s Board of Directors shall perform their duties in strict accordance with Articles of Association and the Board of
Directors Procedural Rules. Under the Board of Directors, the Company established the Strategy Committee, the Audit Committee,
the Nomination Committee and the Remuneration Committee. Various specialized committees would fully perform their functions
and further guarantee the high-efficient operation and the scientific decision-making of the Board of Directors.
4. Supervisors and Supervisory Committee
The Company’s Supervisory Committee will perform their duties in strict accordance with Articles of Association and the
Supervisory Committee Procedural Rules. The number of members and the composition of the Company’s Supervisory Committee
shall comply with applicable laws and regulations; the Company’s supervisors shall strictly abide by relevant provisions, seriously
execute their duties and supervise the Company’s financial status and the legal execution of duties of the directors, president and
other senior managers by adhering to the principle of being responsible for the shareholders and the listed company.
5. Information disclosure
The Company strictly, in accordance with the laws, regulations and the Articles of Association, disclosed relevant information in a
true, accurate, complete and timely manner. The Company has formulated the Information Disclosure Management System,
Information Insider Registration Management System and Investor Relations Management System, etc., to ensure the fairness,
openness and fairness of information disclosure.
6. Investor relations management
During the Reporting Period, as required by Investor Relations Management System, to maintain good communication with investors,
the Company accepted on-site investigations and consultations of investors through on-site investigations and telephone
consultations, and promptly answered questions asked by investors on the SZSE Easy-IR.
36
Lu Thai Textile Co., Ltd. Annual Report 2023
Indicate by tick market whether there is any material incompliance with the applicable laws, administrative regulations and the
CSRC rules for the governance of listed companies.
□ Yes No
No such cases in the Reporting Period.
II The Company’s Independence from Its Controlling Shareholder and Actual Controller in
Assets, Personnel, Financial Affairs, Organization and Business
1. As for the business: the Company shall establish its independent and complete business system with the market-oriented
independent management ability. In the respect of business operation, the Company is completely separated from the controlling
shareholders.
2. As for the personnel: the Company’s labor, personnel and remuneration management departments shall be independent with their
own sound systems, and separated from that of the substantial shareholder. The Company’s senior managers are not allowed to
simultaneously hold any office in any shareholder’s unit.
3. As for the assets: the Company possesses the entire and independent legal person property right with independent and perfect the
production system, auxiliary production systems and supporting facilities; and possesses the independent ownership of the intangible
assets such as the industrial property, trademarks, non-patented technology.
4. As for the institution: the Company’s Board of Directors, Supervisory Committee and other internal organization shall be sound
and involved in independent operation. The substantial shareholder shall legally execute its rights, fulfill corresponding obligations
and not surpass the shareholders meeting to directly or indirectly interfere the Company’s business activities.
5. As for the finance: the Company possesses independent financial departments with normative financial accounting system and
financial management system as well as internal control system with independent bank account.
III Horizontal Competition
□Applicable Not applicable
IV Annual and Special General Meetings Convened during the Reporting Period
1. General Meeting Convened during the Reporting Period
Investor
Meeting Type participati Date of the meeting Disclosure date Resolutions
on ratio
19 proposals, including the
The 2022
Annual General Proposal on 2022 Annual Work
Annual General 32.95% 12 May 2023 13 May 2023
Meeting Report of the Board of Directors,
Meeting
were deliberated and approved.
The 1st Proposal on Repurchase of the
Extraordinary
Extraordinary Company’s Domestically Listed
General 33.33% 6 July 2023 7 July 2023
General Meeting Foreign Shares (B Share), was
Meeting
of 2023 deliberated and approved.
The 2nd Proposal on Changing the Usage of
Extraordinary
Extraordinary
General 32.99% 25 September 2023 26 September 2023 Some Raised Funds was deliberated
General Meeting
Meeting and approved.
of 2023
37
Lu Thai Textile Co., Ltd. Annual Report 2023
2. Special General Meetings Convened at the Request of Preferred Shareholders with Resumed Voting
Rights
□Applicable Not applicable
V Directors, Supervisors and Senior Management
1. Basic Information
Increa Decre
Other
se in ase in
increa
the the
Ge Incum Start Beginning se/de Ending Reason
Ag End of Repor Repor
Name nde Office title bent/F of shareholdi creas shareholdin for
e tenure ting ting
r ormer tenure ng (share) e g (share) change
Period Period
(share
(share (share
)
) )
Ma Incum 6 June 8 June
59 Chairman 148,290 148,290
le bent 2016 2025
Liu Zibin
Ma Incum 6 June 8 June
59 President 148,290 148,290
le bent 2007 2025
Xu Ma Vice Incum 6 May 8 June
94
Zhinan le Chairman bent 2004 2025
Fe
Xu Incum 9 June 8 June
mal 49 Director
Jianlyu bent 2022 2025
e
Zheng Ma Incum 9 June 8 June
36 Director
Huisheng le bent 2022 2025
Director,
Vice
12
Liu Ma Controller of Incum 8 June
34 May
Deming le Global bent 2025
2017
Marketing
Department
Ma Incum 9 June 8 June
52 Director 580,300 580,300
le bent 2022 2025
Vice
Zhang president,
Zhanqi Ma Head of Incum 6 June 8 June
52 580,300 580,300
le Global bent 2016 2025
Marketing
Department
Ma Incum 9 June 8 June
56 Director 377,700 377,700
le bent 2022 2025
Board
Secretary,
Zhang Chief
Keming Ma Accountant, Incum 6 June 8 June
56 377,700 377,700
le Head of bent 2019 2025
Financial
Management
Department
Director,
Chief
Ma Incum 9 June 8 June
Du Lixin 49 Engineer, 250,000 250,000
le bent 2022 2025
Executive
Dean of Lu
38
Lu Thai Textile Co., Ltd. Annual Report 2023
Thai
Engineering
Technology
Research
Institute
10
Zhou Ma Independent Incum 8 June
61 March
Zhiji le Director bent 2025
2019
Fe 10
Qu Independent Incum 8 June
mal 55 June
Dongmei Director bent 2025
e 2019
Fe
Peng Independent Incum 9 June 8 June
mal 63
Yanli Director bent 2022 2025
e
Fe
Quan Independent Incum 9 June 8 June
mal 68
Yuhua Director bent 2022 2025
e
Chairman of 8
Zhang
Ma the Incum Februa 8 June
Shougan 54 73,100 73,100
le Supervisory bent ry 2025
g
Committee 2018
Liu Ma Incum 6 June 8 June
56 Supervisor 10,000 10,000
Zilong le bent 2007 2025
Supervisor,
Chairman of
the Labor
Dong Ma Union, Incum 6 June 8 June
55 5,000 5,000
Shibing le Manager of bent 2007 2025
Logistics
Management
Department
President
Shang Assistant,
Ma Incum 6 June 8 June
Chengga 51 Head of 330,000 330,000
le bent 2013 2025
ng Garment
Product Line
President
Assistant,
Yu Head of
Ma Incum 6 June 8 June
Shouzhe 56 Energy and 383,100 383,100
le bent 2007 2025
ng Environment
Protection
Department
9
Fujiwara
Ma GM of Japan Incum Decem 8 June
Matsuzak 51
le Office bent ber 2025
a
2014
Dean of Lu
Thai
Ma Engineering Incum 8 June 8 June
Li Wenji 57 260,000 260,000
le Technology bent 2016 2025
Research
Institute
Head of
18
Guo Ma Functional Incum 8 June
52 Januar 300,000 300,000
Heng le Fabric bent 2025
y 2018
Product Line
Deputy Head
of Yarn Dyed
Lyu Ma Incum 9 June 8 June
51 Fabric 200,000 200,000
Wenquan le bent 2022 2025
Product Line,
Manager of
39
Lu Thai Textile Co., Ltd. Annual Report 2023
Yarn Dyed
Fabric
Production
and
Management
Department
Deputy Head
of Yarn Dyed
Fabric
Product Line,
Ma Head of Incum 9 June 8 June
Xu Feng 47 190,000 190,000
le Overseas bent 2022 2025
Operation
and
Management
Center
Head of
Safety, 15
Wang Ma Forme 6 June
61 Chairman of July 313,700 313,700
Jiabin le r 2007
the Labor 2023
Union
Total -- -- -- -- -- -- 3,421,190 0 0 0 3,421,190 --
Indicate by tick mark whether any director, supervisor or senior management departed the Company before the expiry of their
tenures during the Reporting Period.
Yes □ No
Wang Jiabin, the Company’s former Head of Safety and Chairman of the Labor Union, resigned from his position as an executive
officer of the Company on 15 July 2023 due to his retirement and continues to remain as a consultant of the Company.
Change of Directors, Supervisors and Senior Management
Applicable □ Not applicable
Name Office title Type of change Date of change Reason for change
Head of Safety,
Wang Jiabin Chairman of the Labor Contract termination 15 July 2023 Retirement
Union
2. Biographical Information
Professional backgrounds, major work experience and current duties in the Company of the incumbent directors, supervisors and
senior management:
1. Mr. Liu Zibin: Chairman and President of the Company, born in 1965, with a master degree. He served as the GM and chairman
of Zibo Lucheng Textile Co., Ltd. And he currently serves as the chairman and president of Luthai Textile Co., Ltd., the chairman
of Lufeng Textile Dyeing Co., Ltd., the chairman of Zibo Xinsheng Thermoelectric Co., Ltd., the chairman of Zibo Lu Qun
Textile Co., Ltd., the chairman of Luthai (Hong Kong) Co., Ltd., the chairman of Shandong Lulian New Materials Co., Ltd., the
chairman of Shandong Lujia Import and Export Co., Ltd. and the chairman of Hainan Huilin International Holdings Co., Ltd.
2. Mr. Xu Zhinan: Vice chairman of the Company, born in 1930, Thai nationality. He used to be director and GM of Thai Fibre
Cloth Factory Co., Ltd., director of Thai Fibre Co., Ltd., director of Thai Fibre Printing and Dyeing Co., Ltd., director and deputy
GM of Lu Thai Textile Co., Ltd. And he currently serves as the director and deputy chairman of the Company and GM of Thailand
Fiber Co., Ltd.
3. Ms. Xu Jianlyu: Director of the Company, born in 1975, Thai nationality. She currently serves as president of Cassardi
International Co., Ltd.
4. Mr. Zheng Huisheng: Director of the Company, born in 1988, Thai nationality. He currently serves as director of Cassardi
40
Lu Thai Textile Co., Ltd. Annual Report 2023
International Co., Ltd.
5. Mr. Liu Deming: Director of the Company, deputy head of global marketing department, born in 1990, with a master degree.
Currently, he serves as chairman and GM of Zibo Lucheng Textile Investment Co., Ltd., director of Lu Thai Textile Co., Ltd. and
deputy head of global marketing department of Lu Thai Textile Co., Ltd.
6. Mr. Zhang Zhanqi: Director, vice president, and head of global marketing department of the Company and GM of LuFeng
Company Limited, born in 1972, with a master degree of business administration. Also, he serves as a senior engineer, once was
the factory director of fabric finishing factory and manager of quality management department of the Company.
7. Mr. Zhang Keming: Director, Board Secretary, Chief Accountant, and head of Financial Management Department of the
Company. Born in 1968, with a master degree of business administration, he is a senior accountant. Once he was deputy manager
and manager of the financial department of the Company.
8. Mr. Du Lixin: Director, chief engineer, and executive dean of Luthai Institute of Engineering and Technology of the Company.
Born in 1975, he served as spinning operator, a weaver's planner, a deputy director of the production department's dispatching
room, a weaver's factory director, a manager of the weaving department, and a deputy manager of the production department of Lu
Thai.
9. Mr. Zhou Zhiji: Independent director of the Company, born in 1963, with a bachelor degree. He is in possession of the
certificates of CPA and senior accountant. He served as a cadre of Shandong Provincial Department of Finance, director of
department of Shandong accounting firm, chief accountant of Shandong Zhengyuan Accounting Firm, director and manager of
Shandong Yingshida Enterprise Management Consulting Co., Ltd., chairman of Shandong Jinheng Consulting Co., Ltd. Now, he
serves as a supervisor of Shandong Jinheng Consulting Co., Ltd., director of Shandong Menglv Information Technology Co., Ltd.,
and director of Shandong Fabric Button Network Technology Co., Ltd.
10. Ms. Qu Dongmei: Independent director of the Company, born in 1969, with a doctor degree of economic law. She currently
serves as a professor at the School of Law of Shandong Normal University, a master's supervisor in Civil and Commercial Law,
member of Western Returned Scholars Association, a lawyer of Grandall Law Firm (Jinan) and an arbitrator of Jinan Arbitration
Commission.
11. Ms. Peng Yanli: Independent director of the Company, born in 1961, with a master degree of business administration. She is a
senior engineer. As a former official in the former Ministry of the Textile Industry and the former China Textile Federation, she
served as president of China Wool Textile Association, deputy secretary general of China National Textile and Apparel Council,
vice chairman of China Textile Engineering Society, and deputy director of China Textile Information Center.
12. Ms. Quan Yuhua: Independent director of the Company, born in 1956, with a bachelor degree. She is a senior accountant.
Moreover, she served as manager of the financing department of the CCB Shandong Branch Trust and Investment Company, the
director assistant in the information and research office, the entrusted loan office, and the fee-based business department of the
CCB Shandong Branch, and the level-5 customer manager in the Zhenzhuquan Branch of CCB in Jinan City.
13. Mr. Zhang Shougang: Chairman of the Board of Supervisors, born in 1970, with a master degree of business administration.
He is in possession of a certificate of senior engineer. And he served as director of the weaving factory, manager of the weaving
department, manager of the quality management department, manager of the garment production department, manager of the
enterprise management department and Director of Human Resources Department of the Company.
14. Mr. Liu Zilong: Supervisor of the Company, born in 1968, with a master degree of business administration. In addition, he has
served as the GM of Luthai (Hong Kong) since 2002.
15. Mr. Dong Shibing: Supervisor of the Company, born in 1969, with a diploma of technical secondary school. He once served as
deputy director of the GM's office of the Company. Currently, he served as the chairman of the Labor Union of the Company,
manager of the Company's logistics management department and GM of Zibo Banyang Villa Hotel Co., Ltd.
16. Mr. Shang Chenggang: President Assistant and head of apparel product line of the Company. Born in 1973, he served as
deputy director, director, manager of GM department, management representative and manager of garment production department,
head of garment manufacturing center & manager of garment production management department of the Company.
41
Lu Thai Textile Co., Ltd. Annual Report 2023
17. Mr. Yu Shouzheng: President Assistant, Head of the energy and environmental protection department of the Company, GM of
Zibo Xinsheng Thermal Power Co., Ltd., born in 1968, with a master degree of business administration. As an engineer, he once
worked as the director of the power department and manager of the energy division of the Company.
18. Mr. Fujiwara Matsuzaka: GM of branch office in Japan, Japanese with a bachelor degree. He is a special foreign expert of the
Company, and he once won the Qilu Friendship Award. In addition, he served as deputy manager of international business
department, manager of No.1 international business department, manager of No.2 international business department and manager
of clothing marketing department of Luthai Textile Co., Ltd.
19. Mr. Li Wenji: Dean of Lu Thai Engineering Technology Research Institute, born in 1967. Once he was a teacher of Shandong
University of Finance. He once served as the manager of the Company's information department, CIO and Controller of the
enterprise management department.
20. Mr. Guo Heng: Head of Functional Fabric Product Line. Born in 1972, he served as the deputy director of the spinning factory
of Lu Thai, the deputy manager of the yarn business department, and the manager of the yarn business department and head of
enterprise management department of Lu Thai.
21. Mr. Lyu Wenquan: Deputy Head of the yarn-dyed fabric product line, manager of the yarn-dyed production management
department, born in 1973. He serves as a senior engineer. Moreover, he is one of the middle-aged and young experts in Zibo City
and one of the “Torch Talents” for Zibo High-tech Zone. In addition, he served as a factory director and the manager of the fabric
finishing business department of Lu Thai.
22. Mr. Xu Feng: Deputy head of the yarn-dyed fabric product line, Head of Overseas Operation and Management Center, born in
1977. He is an engineer and served as assistant manager of the bleaching and dyeing business department.
Offices held concurrently in shareholding entities:
Applicable □ Not applicable
Remuneration or
Office held in the
Name Shareholding entity Start of tenure End of tenure allowance from the
shareholding entity
shareholding entity
Zibo Lucheng Textile
Liu Zibin Director 26 February 1999 No
Investment Co., Ltd.
Tailun (Thailand)
Xu Zhinan GM 29 January 1985 No
Textile Co., Ltd.
Zibo Lucheng Textile
Liu Deming Chairman and GM 1 February 2017 No
Investment Co., Ltd.
Mr. Liu Zibin is the Director of Zibo Lucheng Textile Investment Co., Ltd., holding 4% equities of Zibo
Lucheng Textile Investment Co., Ltd. Basic information of Mr. Liu Zibin: Chinese, no right of residence in
Explanations
other countries or regions. Mr. Liu Deming holds the post of Chairman and GM of Zibo Lucheng Textile
about holding
Investment Co., Ltd., holding 21% equities of Zibo Lucheng Textile Investment Co., Ltd. Basic information of
posts in
Mr. Liu Deming: Chinese, no right of residence in other countries or regions. Mr. Xu Zhinan is the sponsor of
shareholders’
foreign capital of the Company, shareholder of Tailun (Thailand) Textile Co., Ltd. and Tailun (Thailand)
companies
Textile Co., Ltd. is the second largest shareholder of the Company. Basic information about Mr. Xu Zhinan:
Thai.
Offices held concurrently in other entities:
Applicable □ Not applicable
Remunerati
on or
Office held in
Name Other entity Start of tenure End of tenure allowance
the entity
from the
entity
LuFeng Company Limited, Zibo
Luqun Textile Co., Ltd., Zibo Chairman of
Liu Zibin Xinsheng Thermal Power Co., Ltd., the Board, 7 December 2015 No
Lu Thai (HK) Textile Co., Ltd, Director, GM
Shandong Lulian New Materials Co.,
42
Lu Thai Textile Co., Ltd. Annual Report 2023
Ltd., Shandong Lujia Import and
Export Co., Ltd., Hainan Huilin
International Holdings Co., Ltd.
LuFeng Company Limited, Zibo
Xinsheng Thermal Power Co., Ltd.,
Zibo Luqun Textile Co., Ltd.,
Liu
Shandong Lulian New Materials Co., Director 21 August 2017 No
Deming
Ltd., Shanghai Zhinuo Textile New
Materials Co., Ltd., Beijing Zhishu
Management Consulting Co., Ltd.
Zhang Director and
LuFeng Company Limited 5 July 2014 No
Zhanqi GM
Zibo Luqun Textile Co., Ltd.,
Shandong Lulian New Materials Co.,
Zhang Ltd., LuFeng Company Limited, Director,
3 March 2022 No
Keming Shanghai Luthai Textile and Apparel Supervisor
Co., Ltd., Shanghai Zhinuo Textile
New Materials Co., Ltd.
Shandong Jinheng Consulting Co.,
Zhou Zhiji Supervisor 1 October 2015 Yes
Ltd
Qu Law School of Shandong Normal
Professor 1 July 2003 Yes
Dongmei University
Shandong High End Blueberry
Quan Biotechnology Co., Ltd., Shandong
Director 1 April 2008 Yes
Yuhua Spark International Education Group
Co., Ltd.
Lu Thai (Hong Kong) Textile Co.,
Liu Zilong GM 9 May 2005 No
Ltd.
Dong Director and
Zibo Banyang Villa Hotel Co., Ltd. 2 April 2021 No
Shibing GM
Yu Zibo Xinsheng Thermal Power Co., Director and
13 April 2021 No
Shouzheng Ltd. GM
Shandong Lulian New Materials Co., Director and
Guo Heng 28 August 2021 No
Ltd. GM
Explanatio
ns about
holding Except for independent directors, all other entities the Company’s directors, supervisors and senior management
posts in hold posts are majority-owned subsidiaries of the Company.
other
entities
Punishments imposed in the recent three years by the securities regulator on the incumbent directors, supervisors and senior
management as well as those who left in the Reporting Period:
□ Applicable Not applicable
3. Remuneration of Directors, Supervisors and Senior Management
Decision-making procedure, determination basis and actual payments of remuneration for directors, supervisors and senior
management:
The Remuneration and Appraisal Committee under the Board of Directors of the Company is liable to not only preparing appraisal
criteria for directors and senior management of the Company and appraising them, but also preparing and reviewing remuneration
policies and plans for directors and senior management of the Company, who is liable to the Board of Directors. The
Remuneration and Appraisal Committee shall propose the remuneration amount of directors and senior management according to
the Company's management condition and post performance results, and shall report to the Board of Directors for ratification after
the approval by voting.
The Controller of Financial Management Department, the Corporate Management Department and the HR Department of the
Company shall be liable to the preliminary preparation for the decision of the Remuneration and Appraisal Committee, including
but not limited to providing information such as the Company's main financial indicators and the completion of management
43
Lu Thai Textile Co., Ltd. Annual Report 2023
objectives. The Remuneration and Appraisal Committee shall confirm the annual appraisal results of directors and officers in
accordance with the completion of the Company's performance and the remuneration criteria for officers, and shall report to the
Board of Directors for ratification after the approval by voting.
The number of incumbent directors, supervisors and senior executives is 22, among which there are 19 persons actually receiving
remuneration from the Company during the Reporting Period. By 31 December 2023, the total amount of annual payment drawn
from the Company by directors, supervisors and senior executives is RMB12,214,100 (before tax).
Remuneration of directors, supervisors and senior management for the Reporting Period
Unit: RMB'0,000
Total before-
Incu Any
tax
Gend mbent remuneration
Name Age Office title remuneration
er /Form from related
from the
er party
Company
Incu
Liu Zibin Male 59 Chairman and President 146.75 No
mbent
Incu
Xu Zhinan Male 94 Vice Chairman 0 No
mbent
Fema Incu
Xu Jianlyu 49 Director 0 No
le mbent
Zheng Incu
Male 36 Director 0 No
Huisheng mbent
Liu Director, Vice Controller of Global Marketing Incu
Male 34 74.53 No
Deming Department mbent
Zhang Director, Vice president, Head of Global Marketing Incu
Male 52 76.97 No
Zhanqi Department mbent
Zhang Director, Board Secretary, Chief Accountant, Head Incu
Male 56 75.51 No
Keming of Financial Management Department mbent
Director, Chief Engineer, Executive Dean of Lu Incu
Du Lixin Male 49 75.04 No
Thai Engineering Technology Research Institute mbent
Incu
Zhou Zhiji Male 61 Independent Director 7 No
mbent
Qu Fema Incu
55 Independent Director 7 No
Dongmei le mbent
Peng Fema Incu
63 Independent Director 0 No
Yanli le mbent
Quan Fema Incu
68 Independent Director 7 No
Yuhua le mbent
Zhang Incu
Male 54 Chairman of the Supervisory Committee 60.15 No
Shougang mbent
Incu
Liu Zilong Male 56 Supervisor 76.44 No
mbent
Dong Supervisor, Manager of Logistics Management Incu
Male 55 76.94 No
Shibing Department mbent
Shang
Incu
Chenggan Male 51 President Assistant, Head of Garment Product Line 73.57 No
g mbent
Yu President Assistant, Head of Energy and Incu
Male 56 75.09 No
Shouzheng Environment Protection Department mbent
Fujiwara Incu
Male 51 GM of Japan Office 48.55 No
Matsuzaka mbent
Dean of Lu Thai Engineering Technology Research Incu
Li Wenji Male 57 78.24 No
Institute mbent
Incu
Guo Heng Male 52 Head of Functional Fabric Product Line 74.83 No
mbent
Lyu Male 51 Deputy Head of Yarn Dyed Fabric Product Line, Incu 73.39 No
44
Lu Thai Textile Co., Ltd. Annual Report 2023
Wenquan Manager of Yarn Dyed Fabric Production and mbent
Management Department
Deputy Head of Yarn Dyed Fabric Product Line.
Incu
Xu Feng Male 47 Head of Overseas Operation and Management 83.52 No
mbent
Center
Wang Form
Male 61 Head of Safety, Chairman of the Labor Union 30.89 No
Jiabin er
Total -- -- -- -- 1,221.41 --
Other notes:
□Applicable Not applicable
VI Performance of Duty by Directors in the Reporting Period
1. Board Meeting Convened during the Reporting Period
Meeting Date of the meeting Disclosure date Meeting resolutions
Three proposals, including the Proposal on Routine
5 Meeting of the 10 Board
th th
13 February 2023 14 February 2023 Related Transactions, were deliberated and
of Directors approved
Twenty-four proposals, including Proposal on
6th Meeting of the 10th Board Amending Certain Clauses of the Articles of
20 March 2023 21 March 2023
of Directors Association of Lu Thai Textile Co., Ltd. were
deliberated and approved
Nineteen proposals, including the Proposal on 2022
7th Meeting of the 10th Board
10 April 2023 12 April 2023 Annual Work Report of the Board of Directors were
of Directors deliberated and approved
8th Meeting of the 10th Board It deliberated and approved Proposal on the
26 April 2023 28 April 2023
of Directors Company’s 2023Q1 Report
Three proposals, including Proposal on the Delay
9th Meeting of the 10th Board
26 May 2023 27 May 2023 of the Functional Fabric Smart Eco-Park (Phase I)
of Directors Project were deliberated and approved
Three proposals, including the Proposal on
10th Meeting of the 10th Board Repurchase of the Company’s Domestically Listed
19 June 2023 20 June 2023
of Directors Foreign Shares (B Share) were deliberated and
approved
Two proposals, including Proposal on Not
11th Meeting of the 10th Board
30 June 2023 1 July 2023 Lowering the Conversion Price of Lu Thai
of Directors Convertible Bonds were deliberated and approved
Two proposals, including Proposal on Modifying
12th Meeting of the 10th Board Certain Clauses of the Company’s Articles of
19 July 2023 20 July 2023
of Directors Association According to the General Meeting's
Authorization were deliberated and approved
Five proposals, including Proposal on the Full Text
13th Meeting of the 10th Board
17 August 2023 19 August 2023 and Summary of the Company’s 2023 Semi-annual
of Directors Report were deliberated and approved
Three proposals, including the Proposal on
14th Meeting of the 10th Board
8 September 2023 9 September 2023 Changing the Purpose of Partial Raised Capital
of Directors Unused were deliberated and approved
15th Meeting of the 10th Board It deliberated and approved Proposal on the
26 October 2023 28 October 2023
of Directors Company’s 2023Q3 Report
It deliberated and approved Proposal on Not
16th Meeting of the 10th Board
6 November 2023 7 November 2023 Lowering the Conversion Price of Lu Thai
of Directors Convertible Bonds
Seventeen proposals, including Proposal on
17th Meeting of the 10th Board Amending Certain Clauses of the Articles of
26 December 2023 27 December 2023
of Directors Association of Lu Thai Textile Co., Ltd. were
deliberated and approved
45
Lu Thai Textile Co., Ltd. Annual Report 2023
2. Attendance of Directors at Board Meetings and General Meetings
Attendance of directors at board meetings and general meetings
Total number Board The director
Board Board
of board Board meetings failed to attend
meetings meetings the General
meetings the meetings attended by two
Director attended director meetings
director was attended on way of consecutive
through a failed to attended
eligible to site telecommuni board meetings
proxy attend
attend cation (yes/no)
Liu Zibin 13 13 0 0 0 No 3
Xu Zhinan 13 0 13 0 0 No 0
Liu Deming 13 13 0 0 0 No 2
Xu Jianlyu 13 0 13 0 0 No 0
Zheng
13 0 13 0 0 No 0
Huisheng
Zhang
13 13 0 0 0 No 2
Zhanqi
Zhang
13 13 0 0 0 No 3
Keming
Du Lixin 13 13 0 0 0 No 2
Zhou Zhiji 13 1 12 0 0 No 1
Qu Dongmei 13 1 12 0 0 No 0
Peng Yanli 13 0 13 0 0 No 0
Quan Yuhua 13 1 12 0 0 No 0
Why any director failed to attend two consecutive board meetings:
Not applicable.
3. Objections Raised by Directors on Matters of the Company
Indicate by tick mark whether any directors raised any objections on any matter of the Company.
□ Yes No
No such cases in the Reporting Period.
4. Other Information about the Performance of Duty by Directors
Indicate by tick mark whether any suggestions from directors were adopted by the Company.
Yes □ No
Suggestions from directors adopted or not adopted by the Company
During the Reporting Period, directors of the Company carried out their work conscientiously and responsibly in strict accordance
with the Company Law, Securities Law, Listed Company Governance Standards, Self-Regulatory Guidelines No. 1 for Companies
Listed on Shenzhen Stock Exchange - Standard Operation of Listed Companies on the Main Board, Articles of Association and
Rules of Procedure of the Board of Directors. Based on the Company's reality, they made scientifically sound and careful
decisions on the Company's various reviewed matters, and formed opinions through full communication and discussion. They
resolutely supervised and promoted the implementation of the resolutions of the Board of Directors to ensure scientific, timely and
efficient decision-making and fully safeguard the legitimate rights and interests of the Company and all shareholders.
VII Performance of Duty by Specialized Committees under the Board in the Reporting
Period
Number Important Other Details about
of Convened opinions and information issues with
Committee Members Content
meeting date suggestions about the objections
s raised performance (if any)
46
Lu Thai Textile Co., Ltd. Annual Report 2023
convene of duty
d
The opinions
were as
follows: (1)
Preparing the
Company's
financial
accounting
statements in
accordance
with the
Company's
accounting
policies and
applying
accounting
policies
properly, it
carried out
accounting
estimate fully
and
reasonably,
which
Mainly, the conformed to
Company's the New
financial Accounting
statements Standard for
submitted to Business
Grant Thornton Enterprises,
Certified Public accounting
Zhou Zhiji, Accountants LLP system for
for preliminary enterprises
Audit Qu Dongmei, 17 January
6 audit were and the -
Committee and Zhang 2023
reviewed, written requirements
Keming opinions were of relevant
expressed, and provisions
communication issued by the
with Leader of Ministry of
annual audit Finance; (2)
accountant Unit
project was statements of
conducted. the
Company's
financial
statements
that were
included in
the scope of
consolidation
were
complete,
while the
statement
consolidation
basis was
accurate; (3)
The financial
statements of
the Company
were
objective,
true and
accurate,
without any
major
47
Lu Thai Textile Co., Ltd. Annual Report 2023
misstatement
or omission;
(4) And due
to the fact
that there
still is a
period of
time from the
day for
review of the
financial
statements to
the day for
audit report
and financial
statement
release, the
Financial
Management
Department
of the
Company
was
submitted to
focus on and
cope with
post balance
sheet events,
so as to
ensure the
fairness,
authenticity
and integrity
of the
financial
statements.
The Audit
Committee
thought that
the financial
accounting
statements
could be
submitted to
Annual
Certified
Public
Accountant
for audit
according to
annual audit
plan.
The following (1)
matters were Regarding
mainly audited: the written
(1) The opinion
Company's 2022 issued after
Annual Financial the
Report audited accounting
10 April 2023 by the accounting firm's -
firm. (2) preliminary
Conclusion audit opinion
Report on the on the
Company's Audit Company's
Work for the financial
2022 Annual statements:
Financial Report The
48
Lu Thai Textile Co., Ltd. Annual Report 2023
conducted by procedure of
Grant Thornton financial
Certified Public statement
Accountants preparation
LLP. (3) was
Proposal on the reasonable
renewal of Grant and
Thornton normative as
Certified Public the Company
Accountants LLP conformed to
As the the New
Company's 2023 Accounting
Annual Financial Standard for
Audit and Business
Internal Control Enterprises
Audit Institution. and relevant
(4) 2022 Internal provisions of
Control the
Assessment Company's
Report and financial
issuance of system,
written which fairly
assessment reflected the
opinions (5) Company's
Report of the assets,
2022 Annual liabilities,
Deposit and Use shareholders'
of the Raised equity and
Funds. (6) Report operating
on the results by
Implementation 31December
of the 2022 2022, which
Annual Internal were true,
Audit Plan. (7) accurate and
2023 Annual complete.
Internal Audit The Audit
Plan. Committee
thought that
the
Company's
2022 Annual
Financial
Accounting
Report that
was
preliminarily
approved by
Grant
Thornton
Certified
Public
Accountants
LLP could be
submitted to
the 7th
Meeting of
the 10th
Board of
Directors for
review. (2)
Regarding
the written
opinion
issued on the
Company's
2022 internal
control self-
49
Lu Thai Textile Co., Ltd. Annual Report 2023
assessment
report:
According to
Fundamental
Norms for
Internal
Control of
Enterprises,
Supporting
Guidelines
for Internal
Control of
Enterprises
and relevant
provisions
prescribed by
securities
regulators for
the internal
control
establishmen
t of listed
companies,
combining
the actual
status of the
Company's
business, the
Company
established
the internal
control
system that
covers all
stages
including
production
and
management,
as well as
adapts to the
Company's
management
requirements
and
development
needs. It is
relatively
normative
and
complete, for
which its
organization
is complete
and
reasonably
designed, its
implementati
on is
basically
effective,
effectively
protecting
the
fundamental
interests of
all
50
Lu Thai Textile Co., Ltd. Annual Report 2023
shareholders
of the
Company.
We believe
that the
assessment
and
evaluation
process, as
well as the
format of the
2021 Annual
Internal
Control
Evaluation
Report,
comply with
the
requirements
of the
Supporting
Guidelines
for Internal
Control of
Enterprises
and
Regulations
on
Information
Disclosure
and
Compilation
for
Companies
Public
Offering
Securities
No. 21 --
General
Provisions
on Annual
Internal
Control
Assessment
Reports. The
report
content
comprehensi
vely,
objectively,
and truthfully
reflects the
actual
situation of
the
Company's
current
internal
control
system
construction,
operation,
system
implementati
on, and
supervision.
The
51
Lu Thai Textile Co., Ltd. Annual Report 2023
Company's
internal
control
system is
sound, and
internal
controls are
effective.
The Audit
Committee
thought that
the 2022
Internal
Control Self-
evaluation
Report could
be submitted
at the 7th
Meeting of
the 10th
Board of
Directors for
review.
The
following
proposals
The following were adopted
matters were by voting at
mainly audited: the meeting:
(1) 2023Q1 2023Q1
Report; (2) Report,
Report of the Special
Deposit and Use Report of the
25 April 2023 -
of the Raised Deposit and
Funds in Q1 Use of the
2023; (3) Report Raised Funds
on the in Q1 2023,
Implementation Report on the
of Internal Audit Implementati
Plan of 2023Q1. on of
Internal
Audit Plan of
Q1 2023.
The
following
proposals
were adopted
Mainly, the
by voting at
following matters
the meeting:
were deliberated:
Special
(1) Special
Interim
Interim Report
Report 2023
2023 of the
of the
Deposit and Use
Deposit and
of the Raised
7 August Use of the
Funds. (2) -
2023 Raised
Interim Report
Funds,
2023 on the
Interim
Implementation
Report 2023
of Internal Audit
on the
Plan (3) Interim
Implementati
Financial
on of
Statements
Internal
Report of 2023.
Audit Plan,
Interim
Financial
Statements
52
Lu Thai Textile Co., Ltd. Annual Report 2023
Report of
2023.
The
following
proposals
were adopted
Mainly, the
by voting at
following matters
the meeting:
were deliberated:
Special
(1) Special
Report on the
Report on the
Deposit and
Deposit and Use
Use of the
of the Raised
Raised Funds
Funds of 2023
19 October of 2023
Third Quarter. -
2023 Third
(2) Report on the
Quarter,
Implementation
Report on the
of Internal Audit
Implementati
Plan of 2023
on of
Third Quarter.
Internal
(3) Financial
Audit Plan of
Statements of
2023 Third
2023 Q3.
Quarter,
Financial
Statements of
2023 Q3.
The time
arrangement
plan for 2023
annual
financial
audit work
was
unanimously
The time determined at
arrangement for the meeting
the Company's through the
10 November
2023 annual negotiation -
2023
financial audit with the
work was 2023 annual
negotiated. audit
institution,
Grant
Thornton
Certified
Public
Accountants
LLP, of the
Company.
The main topic The
of the meeting following
was: (1) The proposals
Proposal of Lu were adopted
Thai Textile Co., by voting at
Ltd. on the the meeting:
Peng Yanli, Appraisal Results The Proposal
Liu Zibin, of Directors and of Lu Thai
Remuneratio Senior Textile Co.,
Zhou Zhiji, 2 10 April 2023 -
n Committee Management Ltd. on the
and Qu Personnel in Appraisal
Dongmei 2022. (2) The Results of
Appraisal Report Directors
on the and Senior
Performance of Management
the 2022 Personnel in
Restricted Share 2022, The
Incentive Appraisal
53
Lu Thai Textile Co., Ltd. Annual Report 2023
Scheme Report on the
(reserved Performance
portion). (3) The of the 2022
Proposal on the Restricted
Achievement of Share
Lifting the Incentive
Restriction Scheme
Conditions in the (reserved
First Restriction portion), The
Period for the Proposal on
Reserved Grant the
of the 2021 Achievement
Restricted Share of Lifting the
Incentive Restriction
Scheme. Conditions in
the First
Restriction
Period for
the Reserved
Grant of the
2021
Restricted
Share
Incentive
Scheme.
Meanwhile,
the
submission
of the first
and third
proposal to
the 7th
Meeting of
the 10th
Board of
Directors for
deliberation
was
approved.
The
following
proposals
The main topics were adopted
of the meeting by voting at
were: (1) The the meeting:
Appraisal Report The
on the Appraisal
Performance of Report on the
the 2022 Performance
Restricted Share of the 2022
Incentive Restricted
Scheme. (2) The Share
Proposal on the Incentive
22 May 2023 -
Achievement of Scheme and
Lifting the The Proposal
Restriction on the
Conditions in the Achievement
Second of Lifting the
Restriction Restriction
Period for the Conditions in
First Grant of the the Second
2021 Restricted Restriction
Share Incentive Period for
Scheme. the First
Grant of the
2021
Restricted
54
Lu Thai Textile Co., Ltd. Annual Report 2023
Share
Incentive
Scheme.
Meanwhile,
the
submission
of the second
proposal to
the 9th
Meeting of
the 10th
Board of
Directors for
deliberation
was
approved.
Liu Zibin,
Xu Zhinan, The
Liu Deming, following
Xu Jianlyu, proposal was
Zheng approved by
The Strategic
Huisheng, voting at the
Planning of Lu
Zhang meeting: The
Thai Textile of
Strategy Strategic
Zhanqi, 1 10 April 2023 2023 to 2026 -
Committee Planning of
Zhang (2023 Revised
Lu Thai
Keming, Du Version) was
Textile of
deliberated.
Lixin, Zhou 2023 to 2026
Zhiji, Qu (2023
Dongmei, Revised
Version).
Peng Yanli,
Quan Yuhua
Qu Dongmei,
Liu Zibin,
Nomination
Xu Zhinan, 0 - - -
Committee
Zhou Zhiji,
Peng Yanli
VIII Performance of Duty by the Supervisory Committee
Indicate by tick mark whether the Supervisory Committee found any risk to the Company during its supervision in the Reporting
Period.
□ Yes No
The Supervisory Committee raised no objections in the Reporting Period.
IX Employees
1. Number, Functions and Educational Backgrounds of Employees
Number of in-service employees of the Company as the parent
8,168
at the period-end
Number of in-service employees of major subsidiaries at the
15,354
period-end
Total number of in-service employees 23,522
Total number of paid employees in the Reporting Period 23,522
Number of retirees to whom the Company as the parent or its
0
major subsidiaries need to pay retirement pensions
Functions
55
Lu Thai Textile Co., Ltd. Annual Report 2023
Function Employees
Production 17,655
Sales 430
Technical 4,728
Financial 110
Administrative 599
Total 23,522
Educational backgrounds
Educational background Employees
Doctor 3
Master 88
Bachelor 1,456
College 4,362
High school and below 17,613
Total 23,522
2. Employee Remuneration Policy
The Company has formulated a remuneration management system with its principle being “payment according to one’s work and
more pay for more work”. Through post evaluation and through researches of Social salary levels carried out as multi-faceted, as
well as the formulation of the reasonable salary management system, fully demonstrates the internal fairness, self-fairness and
external fairness. It has greatly motivated the employees and enhanced the corporate management.
3. Employee Training Plans
Trainings will be carried out according to requirements of the Company’s strategic development planning, improvement of
employees’ capability, performance management, employees’ career planning, etc. The annual training plan is determined by
carrying out researches on training needs. And the training courses fall into three major categories, i.e. management, technical
skills and general knowledge. Through these trainings, the Company will improve the knowledge structure of its employees,
improve their job skills and increase their comprehensive quality to provide excellent human resources for the long-term, sustained
and stable development of the Company.
4. Labor Outsourcing
Applicable □ Not applicable
Total man-hours (hour) 286,649
Total rewards paid (RMB) 3,475,624.50
X Profit Distributions (in the Form of Cash and/or Stock)
How the profit distribution policy, especially the cash dividend policy, was formulated, executed or revised in the Reporting
Period:
□Applicable Not applicable
Indicate by tick mark whether the Company fails to put forward a cash dividend proposal for shareholders despite the facts that the
Company has made profits in the Reporting Period and the profits of the Company as the parent distributable to shareholders are
positive.
□Applicable Not applicable
Final dividend plan for the Reporting Period
56
Lu Thai Textile Co., Ltd. Annual Report 2023
Applicable □ Not applicable
Bonus shares for every 10 shares (share) 0
Dividend for every 10 shares (RMB) (tax inclusive) 1.30
Bonus issue from capital reserves (share/10 shares) 0
Total shares as the basis for the profit distribution proposal
817,431,206
(share)
Cash dividends (RMB) (tax inclusive) 106,266,056.78
Cash dividends in other forms (such as share repurchase)
172,571,885.18
(RMB)
Total cash dividends (including those in other forms) (RMB) 278,837,941.96
Distributable profit (RMB) 5,923,889,542.37
Total cash dividends (including those in other forms) as % of
100%
total profit distribution
Cash dividend policy
If the Company is in a mature development stage and has plans for any significant expenditure, in profit allocation, the ratio of
cash dividends in the profit allocation shall be 40% or above.
Details about the proposal for profit distribution and converting capital reserve into share capital
The Company plans to distribute a cash dividend of RMB1.30(inclusive of tax) for every 10 shares, based on a capital base of
817,431,206 shares following the completion of the repurchase and cancellation of B shares. The total amount of dividends
calculated on this basis is RMB106,266,056.78.The individual income tax for A Share shall be subject to related regulations under
CS [2015] No. 101 Notice on Certain Question about the Differentiated Individual Income Tax Policy for Cash Dividend of Listed
Companies jointly issued by Ministry of Finance, SAT, and CSRC; and that for B Share shall be conversed to HKD based on the
central parity rate on interbank exchange market released by the People’s Bank of China on the following day after shareholder’s
meeting (for domestic individual shareholders, tax is paid pursuant to CS [2015] No. 101; for foreign shareholders, tax is free
pursuant to CSZ (1994) No. 020 regulations; and non-residential corporate shareholders is entitled to a 10% reduction of
enterprise income tax according to related regulations under Enterprise Income Tax Law of the People’s Republic of China). Since
the Company is in the period of transferring convertible bonds into shares, the profit distribution will be conducted based on the
total share capital on the equity registration date for implementing this profit distribution plan with no change in the amount per
share.
XI Equity Incentive Plans, Employee Stock Ownership Plans or Other Incentive Measures
for Employees
Applicable □ Not applicable
1. Equity Incentive
Deliberation Relevant
No. Overview of execution Disclosure index
time meeting
The Board of Directors reviewed and approved the Proposal on the
Achievement of Lifting the Restriction Conditions in the First Restriction
Period for the Reserved Shares for Grant under the 2021 Restricted Share
7th Meeting of Incentive Scheme and the Proposal on Repurchase and Cancel Authorized but
the 10th Board Unlocked Restricted Share of the Incentive Personnel not Conforming to the
For details, see the
of Directors Incentive Condition. The independent directors consented independently to
relevant announcements
and 6th relevant matters. The Supervisory Committee reviewed and approved the
1 10 April 2023 disclosed on 12 April
Meeting of the foregoing two proposals and issued the written review opinions. Beijing DHH
2023 on
10th Law Firm Qingdao Office issued a legal opinion. The number of the subjects
www.cninfo.com.cn.
Supervisory of incentive participating in the assessment in the first restriction period for
Committee the reserved grant of the 2021 restricted share incentive scheme of the
Company were up to 343, all of them meet the conditions to be released, and
the total amount of restricted shares that can be released was 2,919,000. The
restricted shares released this time were listed and traded on 9 May 2023.
For details, see the
2 5 May 2023 - It issued the Indicative Announcement on the Trading on the Market of relevant announcement
Lifting the Restriction in the First Restriction Period for the Reserved Shares (No.: 2023-027)
disclosed on 5 May
57
Lu Thai Textile Co., Ltd. Annual Report 2023
for Grant of the 2021 Restricted Share Incentive Scheme. 2023 on
www.cninfo.com.cn.
It deliberated on and approved the Proposal on Repurchase and Cancel For details, see the
2022 Annual Authorized but Unlocked Restricted Share of the Incentive Personnel not relevant announcements
3 12 May 2023 General Conforming to the Incentive Condition and disclosed the Announcement of disclosed on 13 May
Meeting Capital Reduction on Repurchase and Cancel Partial Restricted Shares on 13 2023 on
May 2023. www.cninfo.com.cn.
The Board of Directors reviewed and approved the Proposal on the
Achievement of Lifting the Restriction Conditions in the Second Restriction
Period for the First Grant of the 2021 Restricted Share Incentive Scheme. The
9th Meeting of
Company's independent directors expressed their independent opinions on
the 10th Board
relevant matters. The Board of Supervisors reviewed and approved the For details, see the
of Directors
Proposal on the Achievement of Lifting the Restriction Conditions in the relevant announcements
and the 8th
4 26 May 2023 Second Restriction Period for the First Grant of the 2021 Restricted Share disclosed on 27 May
Meeting of the
Incentive Scheme and expressed its written review opinion. The number of 2023 on
10th
subjects of incentive meeting the restriction lifting conditions in the second www.cninfo.com.cn.
Supervisory
restriction period for the first grant under the 2021 Restricted Share Incentive
Committee
Scheme of the Company was up to 717, and a total of 6,979,500 restricted
shares were lifted out of restrictions. The foregoing shares were listed and
traded on 8 June 2023.
For details, see the
relevant announcement
It issued the Indicative Announcement on the Trading on the Market of
(No.: 2023-040)
5 1 June 2023 - Lifting the Restriction in the Second Restriction Period for the First Grant of
disclosed on 1 June
the 2021 Restricted Share Incentive Scheme.
2023 on
www.cninfo.com.cn.
For details, see the
As audited and confirmed by Shenzhen Stock Exchange and the Shenzhen relevant announcement
Branch of China Clear, the procedures of repurchasing and canceling 90,000 (No.: 2023-056)
6 13 July 2023 -
shares of authorized and unlocked restricted share of the incentive personnel disclosed on 13 July
not conforming to the incentive condition were completed. 2023 on
www.cninfo.com.cn.
Equity incentives for directors, supervisors and senior management in the Reporting Period:
Applicable □ Not applicable
Unit: share
Exerci
se
Numbe
Share price
Numb r of
Share s Share of Numb
Marke er of restrict The Number
option feasib s exerci er of
Share Share t price releas ed grant of
s le to exerci sed restric
option option at the ed shares price of restricte
grante exerci sed shares ted
Office s held s held period shares newly restrict d shares
Name d in se during during shares
title at the at the -end for granted ed held at
the during the the held
period period (RMB the during shares the
Repor the Repor Repor at the
-begin -end /share Repor the (RMB/ period-
ting Repor ting ting period
) ting Reporti share) end
Period ting Period Period -begin
Period ng
Period (RMB
Period
/share
)
Director
, Vice
Preside
Zhang nt, 380,0 190,0
190,000
Zhanqi Controll 00 00
er of
Global
Marketi
58
Lu Thai Textile Co., Ltd. Annual Report 2023
ng
Depart
ment
Director
, Board
Secretar
y,
Chief
Accoun
Zhang tant,
220,0 110,0
Kemin Controll 110,000
00 00
g er of
Financi
al
Manage
ment
Depart
ment
Director
, Chief
Enginee
r,
Executi
ve Dean
of Lu
Du 220,0 110,0
Thai 110,000
Lixin 00 00
Enginee
ring
Technol
ogy
Researc
h
Institute
Shang Senior
220,0 110,0
Chengg manage 110,000
ment 00 00
ang
Yu Senior
220,0 110,0
Shouzh manage 110,000
ment 00 00
eng
Senior
Li 220,0 110,0
manage 110,000
Wenji ment 00 00
Senior
Guo 220,0 110,0
manage 110,000
Heng ment 00 00
Lyu Senior
140,0 70,00
Wenqu manage 70,000
ment 00 0
an
Senior
Xu 190,0 95,00
manage 95,000
Feng ment 00 0
2,030, 1,015, 1,015,00
Total -- 0 0 0 0 -- 0 -- 0 --
000 000 0
Appraisal of and incentive for senior management
During the Reporting Period, the Company constantly improved the performance evaluation mechanism and made the evaluation
and incentive of the Senior Executives concerned with the Company’s performances and the individual working results. According
to the overall development strategy and the annual operating target of the Company at the period-begin, the Company confirms the
annual performance comprehensive indication and the management duty of each Senior Executives, and executes the performance
59
Lu Thai Textile Co., Ltd. Annual Report 2023
examination and the redemption of the rewards and punishment for the Senior Executives by the Remuneration and Examination
Committee affiliated to the Board of Directors at the year-end. The Company will constantly improve the evaluation and incentive
mechanism that to tightly concern the salary of the Senior Executives with the management level and the operating performance so
that to fully mobilize and inspire the initiative and creativity of them.
2. Implementation of Employee Stock Ownership Plans
□Applicable Not applicable
3. Other Incentive Measures for Employees
Applicable □ Not applicable
For the first restricted period of the reserved grant of shares of the 2021 restricted share incentive scheme, the restricted shares
were released for trading on 9 May 2023. Excluding directors and senior executives, the Company lifted the restrictions on
2,519,000 restricted shares for 336 mid-level managers and core personnel. For the second restricted period of the initial grant of
shares of the 2021 restricted share incentive scheme, the restricted shares were released for trading on 8 June 2023. Excluding
directors and senior executives, the Company lifted the restrictions on 6,349,500 restricted shares for 707 mid-level managers and
core personnel.
XII Establishment and Execution of the Internal Control System for the Reporting Period
1. Establishment and Execution of the Internal Control System
According to Fundamental Norms for Internal Control of Enterprises, Supporting Guidelines for Internal Control of Enterprises
and relevant provisions prescribed by securities regulators for the internal control establishment of listed companies, combining
the actual status of the Company's business, the Company established the internal control system that covers all stages including
production and management, as well as adapts to the Company's management requirements and development needs. It is relatively
normative and complete, for which its organization is complete and reasonably designed, its implementation is basically effective,
and there is no substantial omission, so as to ensure that the Company's operation and management is legal and compliant, the
assets are safe, and the financial reports and related information are true and complete, and maintain the fundamental interests of
all shareholders of the Company.
Within Reporting Period, relevant systems and procedures were timely streamlined and optimized and the sound operation of risk
management and internal control system was ensured by the Company in line with the change of all business procedures and audit
results, without any violation of laws, regulations or Articles of Incorporation.
2. Material Internal Control Weaknesses Identified for the Reporting Period
□Yes No
XIII Management and Control over Subsidiaries by the Company for the Reporting Period
Integration Countermeasur Settlement Follow-up
Subsidiary Integration plan Problem
progress es taken progress settlement plan
- - - - - - -
60
Lu Thai Textile Co., Ltd. Annual Report 2023
XIV Internal Control Evaluation Report or Independent Auditor’s Report on Internal
Control
1. Internal Control Evaluation Report
Disclosure date of the internal control
12 April 2024
self-evaluation report
For details, please refer to the Self-appraisal Report on Internal Control of Lu Thai
Index to the disclosed internal control
Textile Co., Ltd. simultaneously disclosed on www.cninfo.com.cn with the 2023
self-evaluation report
Annual Report of the Company.
Evaluated entities’ combined assets
82.15%
as % of consolidated total assets
Evaluated entities’ combined operating
revenue as % of consolidated operating 88.12%
revenue
Identification standards for internal control weaknesses
Weaknesses in internal control over Weaknesses in internal control not
Type
financial reporting related to financial reporting
Great defect: (1) seriously violated the
national laws and regulations; (2) the
Great defect: (1) malpractices of the
decision-making of the enterprise was
Directors, Supervisors and Senior
not scientific that led to the serious
Executives; (2) the CPA founded the
mistakes of itself; (3) outflow of the
current financial report occurred significant
management personnel or the technician
misstatement while during the
personnel was serious; (4) frequently
implementation process of the internal
appeared the negative news from the
control could not founded the
Media; (5) the significant business
misstatement; (3) the supervision of the
lacked of systematic control or the
Audit Committee and the internal audit
systematic control was invalid; (6) the
institution of the Company on the internal
result of the internal control assessment
control was invalid. (4) other defects that
which was the great defect event had not
may cause the Company to deviate
been revised. Significant defeat: (1)
significantly from its control objectives.
violated the enterprise internal
Nature standard Significant defeat: (1) had not abide by the
regulations that caused rather serious
generally accepted accounting principles to
losses; (2) significant business lacked of
choose and apply the accounting policies;
systematic control; (3) outflow of the
had not built up the anti-fraud and
rather important personnel was serious;
significant counterbalance mechanism and
(4) the Media reported the negative news
control measures; (2) during the financial
that caused rather serious negative
report process, there occurred single or
influence; (5) rather important business
multiple defects which not reached the
lacked of systematic control or the
recognition standard of the significant
systematic control was invalid; (6) the
defeat but influenced the true and accurate
results of the internal control assessment
target of the financial report. General
which as the significant defect had not
defect: other internal control defect which
been revised. General defect: other
had not constructed as the great defeat,
internal control defect which had not
significant defect.
constructed as the great defeat,
significant defect.
Great defect: misstatement≥0.4% of the Great defect: losses≥0.4% of the total
total operating income; misstatement≥0.4% operating income; losses≥0.4% of the
of the total owners’ equities amount; total owners’ equities amount;
misstatement≥0.3% of the total assets losses≥0.3% of the total assets amount.
amount. Not insignificant: 0.2% of the total Great defect: 0.2% of the total operating
operating income;≤misstatement＜0.4% of income≤losses ＜ 0.4% of the total
Quantitative standard the total operating income; 0.2% of the operating income; 0.2% of the total
total owners’ equities owners’ equities amount ≤losses ＜ 0.4%
amount≤misstatement ＜ 0.4% of the total of the total owners’ equities amount;
owners’ equities amount; 0.15% of the 0.15% of the total assets amount≤losses
total assets amount≤misstatement ＜ 0.3% ＜ 0.3% of the total assets amount.
of the total assets amount. Insignificant: General defect: losses <0.2% of the total
misstatement < 0.2% of the total operating operating income; losses < 0.2% of the
61
Lu Thai Textile Co., Ltd. Annual Report 2023
income; misstatement < 0.2% of the total total owners’ equities amount; losses <
owners’ equities amount; misstatement < 0.15% of the total assets amount.
0.15% of the total assets amount.
Number of material weaknesses in
internal control over financial 0
reporting
Number of material weaknesses in
internal control not related to financial 0
reporting
Number of serious weaknesses in
internal control over financial 0
reporting
Number of serious weaknesses in
internal control not related to financial 0
reporting
2. Independent Auditor’s Report on Internal Control
Applicable □ Not applicable
Opinion paragraph in the independent auditor’s report on internal control
All shareholders of Lu Thai Textile Co., Ltd.:
According to Audit Guidelines for Enterprise Internal Control and the relevant requirements of Auditing Standards for Chinese
Certified Public Accountants, we have audited the effectiveness of internal control in the financial report of Lu Thai Textile Co.,
Ltd. (Hereinafter referred to as "Lu Thai Textile”) by 31 December 2023.
I. Responsibilities of Lu Thai Textile for internal control
The Board of Directors of Lu Thai Textile is responsible for establishing, improving and implementation the internal controls and
evaluating its effectiveness in accordance with Standard for Enterprise Internal Control, Application Guidelines for Enterprise
Internal Control, Enterprise Internal Control Audit Guidelines.
II. Responsibilities of certified public accountants
It is our responsibility to issue an audit opinion on the effectiveness of internal controls in financial report on the basis of the
implementation of the audit, and to disclose significant deficiencies in the internal controls of non-financial reports that have been
noted.
III. Inherent limitations of internal control
Internal control has inherent limitations, and there is a possibility that misreporting cannot be prevented. In addition, because the
change of circumstances may cause the internal control to become inappropriate or the degree of compliance with the control
policies and procedures is reduced, it is risky to infer the effectiveness of the future internal control based on the audit results of
the internal control.
IV. Audit Opinion on Internal Control in Financial Report
We believe that Lu Thai Textile Co., Ltd. kept effectively internal control on financial reporting in all respects according to
Enterprise Internal Control Basic Specification and the relevant provisions on 31 December 2023.
Independent auditor’s report on internal control disclosed or
Disclosed
not
Disclosure date 12 April 2024
For details, please refer to the Auditor’s Report on Internal
Index to such report disclosed Control on www.cninfo.com.cn at the same time of disclosing
the Company’s 2023 Annual Report.
Type of the auditor’s opinion Unmodified unqualified opinion
Material weaknesses in internal control not related to financial
None
reporting
Indicate by tick mark whether any modified opinion is expressed in the independent auditor’s report on the Company’s internal
control.
□Yes No
Indicate by tick mark whether the independent auditor’s report on the Company’s internal control is consistent with the internal
control self-evaluation report issued by the Company’s Board.
Yes □No
62
Lu Thai Textile Co., Ltd. Annual Report 2023
XV Rectifications of Problems Identified by Self-inspection in the Special Action for Listed
Company Governance
Not applicable.
63
Lu Thai Textile Co., Ltd. Annual Report 2023
Part V Environmental and Social Responsibility
I Major Environmental Issues
Indicate by tick mark whether the Company or any of its subsidiaries is a heavily polluting business identified by the
environmental protection authorities of China.
Yes □No
Policies and industry standards pertaining to environmental protection
During production and operation, Lu Thai Textile Co., Ltd. and its holding subsidiaries, LuFeng Company Limited and Shandong
Lulian New Materials Co., Ltd., its wholly owned subsidiary, Zibo Xinsheng Thermal Power Co., Ltd., are subject to the following
laws and regulations and industry standards related to environmental protection: The Environmental Protection Law of the
People’s Republic of China, the Law of the People’s Republic of China on Prevention and Control of Water Pollution, the Law of
the People’s Republic of China on the Prevention and Control of Atmospheric Pollution, the Law of the People’s Republic of
China on the Prevention and Control of Solid Waste Pollution, the Contingency Management Measures for Environmental
Emergencies, the Emission Standards of Water Pollutants in Textile Dyeing and Finishing Industry (GB4287-2012), the Standard
for Pollution Control on the Municipal Solid Waste Incineration (GB18485-2014), and the Emission Standard of Air Pollutants of
Thermal Power Plants (DB37/664-2019).
Status of environmental protection administrative license
Lu Thai Textile Co., Ltd. and its holding subsidiaries, including LuFeng Company Limited, Shandong Lulian New Materials Co.,
Ltd., and Zibo Xinsheng Thermal Power Co., Ltd. carried out pollutant discharge permit management and were granted the
pollutant discharge permit by the Ecology and Environment Bureau of Zibo. The current pollutant discharge permit of Lu Thai
Textile Co., Ltd. is valid until 9 June 2026; that of LuFeng Company Limited is valid until 22 November 2026; that of Shandong
Lulian New Materials Co., Ltd. is valid until 25 October 2026; that of Zibo Xinsheng Thermal Power Co., Ltd. is valid until 22
June 2025.
The regulations for industrial emissions and the particular requirements for controlling pollutant emissions those are associated
with production and operational activities.
Discharg
Discharg
Type of Name of Number Distribut e Approve Excessiv
Way of e Total
Name of major major of ion of standard d total e
discharg concentr discharg
polluter pollutant pollutant discharg discharg s discharg discharg
e ation/int e
s s e outlets e outlets impleme e e
ensity
nted
Emissio
Chief
n
discharg
standard
e outlet
of water
of COD： COD:
COD≤20 pollutant
COD Huangjia 282.53t; 1495.08t
Continu 0mg/L;a s in
Lu Thai and pu ;
ous mmonia textile ammoni
Textile Sewage ammoni 2 Industria ammoni No
discharg nitrogen dyeing a
Co., Ltd a l Park ; a
e ≤20mg/ and nitrogen:
nitrogen chief nitrogen:
L finishing
discharg 3.15t 149.51t
industry
e outlet
GB
of East
4287-
Zone
2012
COD Chief COD≤20 Emissio COD： COD is
LuFeng Continu
and discharg 0mg/L;a n 653.53t;
Compan ous 153t;
Sewage ammoni 1 e outlet mmonia standard ammoni No
y discharg ammoni
a of nitrogen of water a
Limited e a
nitrogen LuFeng ≤20mg/ pollutant nitrogen
64
Lu Thai Textile Co., Ltd. Annual Report 2023
Compan L s in nitrogen: is 65.3t
y textile 2.44t
Limited dyeing
and
finishing
industry
GB
4287-
2012
Emissio
n
standard
Chief of water
COD≤20 COD：
Shandon discharg pollutant COD is
COD 0mg/L; 28.42t;
g Lulian Continu e outlet s in 175.30t;
and ammoni
New ous of textile ammoni ammoni
Sewage ammoni 1 a No
Material discharg Lulian dyeing a a
a nitrogen
s Co., e New and nitrogen: nitrogen
nitrogen ≤20mg/
Ltd. Material finishing is 17.5t
L 0.44t
s industry
GB
4287-
2012
Emissio
n
SO2： standard
≤35mg/ of air
Zibo Organize pollutant SO2: SO2 is
m3、 34.92t、
Xinshen d s of 236.13t/
SO2, NQx：
g Waste continuo Producti Thermal NQx :12 a, NQx :
NQx, 4 ≤50mg/ No
Thermal gas us on plant Power 2.4t, 674.63t/
and PM m3,
Power discharg Plant in PM: a, PM:
Co., Ltd. e PM： Shandon 67.47t/a.
≤5mg/m 4.99t
g
3 Province
DB37/6
64-2019
Treatment of pollutants
Lu Thai Textile Co., Ltd. (hereinafter referred to as “the Company”) and its majority-owned subsidiary Lufeng Weaving & Dyeing
Co., Ltd. (hereinafter referred to as “Lufeng Weaving & Dyeing”) and Shandong Lulian New Materials Co., Ltd. (hereinafter
referred to as “Lulian New Materials”) strictly implement the “Three Simultaneous” management system for environmental
protection in project constructions. The companies are equipped with complete facilities for waste gas and waste water treatment.
Lu Thai Textile Co., Ltd. and its majority-owned subsidiary Lufeng Weaving & Dyeing Co., Ltd. and Shandong Lulian New
Materials Co., Ltd. continuously optimize the dyeing waste water treatment progress, improve the treated water quality, ensure that
the pollutant emission concentration is better than the national standard, further improve the river water quality and local
ecological environment. The Company and Lufeng Weaving & Dyeing centralizedly collected and coped with the dyeing and
finishing waste gas, so as to greatly reduce the pollutant emission concentration. Online supporting monitoring facilities were built,
whose data was uploaded to the government environmental monitoring system, to comprehensively monitor the Company's
emission pollutants such as waste water and waste gas. Support teams were set up to be responsible for daily operation
maintenance and inspection to guarantee the normal operation of facilities. Both the exhaust emission and waste water discharge
meet the emission standards.
The wholly-owned subsidiary Zibo Xinsheng Thermal Power Co., Ltd. (hereinafter referred to as “Xinsheng Thermal Power”)
enforces the “Three Simultaneous” management system for environmental protection in extension project construction in
accordance with the government requirements, and adopts the “limestone-gypsum method” to reduce emission concentration of
sulfur dioxide, the “Low-nitrogen combustion + SNCR” and “SNCR+SCR method” to reduce emission concentration of nitrogen
oxides, and the “electric-bag electrostatic precipitator + wet electrostatic precipitator” to reduce soot emission concentration. The
overall system works well.
65
Lu Thai Textile Co., Ltd. Annual Report 2023
Emergency plan for environmental incidents
In order to prevent environmental pollution accidents, the Company and the holding subsidiary Lufeng Weaving & Dyeing and
Lulian New Materials respectively prepared the Emergency Plan for Environmental Incidents, which were filed with Zibo
Environmental Protection Bureau Zichuan Branch. The Plan includes contents such as environmental risk sources identification
and risk assessment, prevention and early warning mechanism, emergency security, and supervision and management.
The wholly-owned subsidiary Zibo Xinsheng Thermal Power Co., Ltd. has formulated the “Emergency Plan for Environmental
Incidents” and filed it with the ecological and environmental management department. The identification and risk assessment of
environmental risk sources, prevention and early warning mechanisms, emergency protection and supervision and management
were included in the plan.
Environmental self-monitoring program
In accordance with the requirements of the competent environment authorities, the Company and the holding subsidiary Lufeng
Weaving & Dyeing and Lulian New Materials observed the requirements of the superior environmental protection department to
install automatic wastewater monitoring facilities and achieve real-time monitoring of wastewater discharge. Besides, the
automatic environment monitoring plan was prepared as required by emission permit. In addition, they invited a qualified testing
institution to conduct tests on sewage and waste gas based on the frequency of monitoring, disclosed the monitoring data in time,
and submitted the test reports to the competent environment authorities ensuring the monitoring data is true and valid.
The wholly-owned subsidiary Zibo Xinsheng Thermal Power Co., Ltd. has implemented online real-time monitoring of
environmental data in accordance with the requirements of the superior environmental protection department, and has achieved
emission standards.
Input in environment governance and protection and payment of environmental protection tax
During the Reporting Period, the input in environment governance and protection and payment of environmental protection tax for
the Company and the holding subsidiary Lufeng Weaving & Dyeing and Lulian New Materials are RMB49,367,700 in total,
among which, RMB48,367,000 for input in environment governance and protection and RMB1,000,700 for payment of
environmental protection tax.
Measures taken to decrease carbon emission in the Reporting Period and corresponding effects
Applicable □ Not applicable
None.
Administrative penalties imposed for environmental issues during the Reporting Period
Influence on
Rectification
Name Reason Case Result production and
measures
operation
N/A N/A N/A N/A N/A N/A
Other environment information that should be disclosed
No
Other related environment protection information
No
The Company shall abide by relevant disclosure requirements of the Self-Regulatory Guidelines of Shenzhen Stock Exchange for
Listed Companies No.3 - Industry Information Disclosure on textile and garment industry.
Related environmental accidents information
No
66
Lu Thai Textile Co., Ltd. Annual Report 2023
II Social Responsibility
The Company has prepared the Sustainability Report 2022, and for more details, please refer to the Sustainability Report 2023
simultaneously disclosed with the Annual Report 2023.
III Consolidation and Expansion of Poverty Alleviation Outcomes, and Rural Revitalization
Not applicable
67
Lu Thai Textile Co., Ltd. Annual Report 2023
Part VI Significant Events
I Fulfillment of Commitments
1. Commitments of the Company’s De Facto Controller, Shareholders, Related Parties and Acquirers, as
well as the Company Itself and Other Entities Fulfilled in the Reporting Period or Ongoing at the Period-
End
Applicable □ Not applicable
Type of Date of Term of
Commitme Promiso Fulfillme
commitm Details of commitment commitme commitme
nt r nt
ent nt making nt
1. Not intervene the Company’s operation and
management beyond the authority and not occupy
the Company’s interests. 2. From the issuance
date of this commitment to the completion of the
implementation of the Company's public offering
Dilution
of A-share convertible corporate bonds, if the
of at
CSRC makes other new regulatory provisions on
Controll sight
remedial measures for returns and the commitment,
ing returns
and the above commitment fails to meet the From 23
shareho on public
requirements of the CSRC, the company / I 23 May May 2019
lder, offering On-going
promise to issue supplementary commitment then 2019 to 8 April
actual A-share
Commitme in accordance with the latest regulations of CSRC. 2026
nts made in controll convertib
3. Commitment is made to fulfill the Company's
time of er le
IPO or relevant remedial measures for returns and any
refinancing corporate
commitment made herein by the company / me. If
bonds
the company / I violate(s) such commitment and
cause(s) losses to the Company or investors, the
company / I will bear the compensation
responsibility to the Company or investors in
accordance with the law.
Director Dilution 1. Commitment is made not to transfer benefits
s and of at to other units or individuals free of charge or under From 23
senior sight unfair conditions, and no other ways damaging the 23 May May 2019
On-going
manage returns interests of the Company will be taken. 2. I will 2019 to 8 April
ment of on public strictly abide by the budget management of the 2026
the offering Company, and accept the strict supervision and
68
Lu Thai Textile Co., Ltd. Annual Report 2023
Compa A-share management of the Company to avoid waste or
ny convertib excessive consumption. Any position-related
le consumption behaviors of me will occur within the
corporate scope necessary for the performance of my duties.
bonds 3. Commitment is made not to use the Company's
assets to engage in investment and consumption
activities unrelated to the performance of duties. 4.
Commitment is made that the remuneration system
developed by the Board of Directors or the
Remuneration Committee is linked to the
implementation of the Company's remedial
measures for returns. 5. Commitment is made that
the conditions for exercising the Equity Incentive
Plan to be issued in the future will be linked to the
implementation of the Company's remedial
measures for returns. 6. From the issuance date of
this commitment to the completion of the
implementation of the Company's public offering
of A-share convertible corporate bonds, if the
CSRC makes other new regulatory provisions on
remedial measures for returns and the commitment,
and the above commitment fails to meet the
requirements of the CSRC, I promise to issue
supplementary commitment then in accordance
with the latest regulations of CSRC. 7.
Commitment is made to fulfill the Company's
relevant remedial measures for returns and any
commitment made herein by me. If I violate such
commitment and causes losses to the Company or
investors, I will bear the compensation
responsibility to the Company or investors in
accordance with the law.
Commit Based on confidence in the Company's future
Controll ment to development and value judgment, to maintain 23 August
Other
ing not stability in the capital market, and to promote the 23 August 2023 to 22
commitme On-going
nts shareho reduce Company's continuous, stable, and healthy 2023 August
lder company development, as well as to protect the interests of 2024
share the vast number of investors, the Company's
69
Lu Thai Textile Co., Ltd. Annual Report 2023
holdings controlling shareholders commit: From the date of
within signing this commitment, not to reduce their
the next holdings of the Company's shares for a period of
year one year, including any additional shares arising
during the commitment period due to capital
reserve capitalisation, distribution of stock
dividends, rights issues, or additional issues, etc.
Executed
on time or Yes
not
2. Where there had been an earnings forecast for an asset or project and the Reporting Period was still
within the forecast period, explain why the forecast has been reached for the Reporting Period.
□Applicable Not applicable
II Occupation of the Company’s Capital by the Controlling Shareholder or any of Its
Related Parties for Non-Operating Purposes
□Applicable Not applicable
No such cases in the Reporting Period.
III Irregularities in the Provision of Guarantees
□Applicable Not applicable
No such cases in the Reporting Period.
IV Explanations Given by the Board of Directors Regarding the Latest “Modified Opinion”
on the Financial Statements
□Applicable Not applicable
V Explanations Given by the Board of Directors, the Supervisory Board and the
Independent Directors (if any) Regarding the Independent Auditor's “Modified Opinion”
on the Financial Statements of the Reporting Period
□Applicable Not applicable
VI YoY Changes to Accounting Policies, Estimates or Correction of Material Accounting
Errors
Applicable □ Not applicable
In November 2022, MOF issued the Interpretation No. 16 of the Accounting Standards for Business Enterprises (C.K. [2022] No.
31) (hereinafter referred to as the "Interpretation No. 16").
Interpretation No. 16 stipulates that for single transactions that are not business combinations, that affect neither accounting profit
70
Lu Thai Textile Co., Ltd. Annual Report 2023
nor taxable income (or deductible losses) at the time the transaction occurs, and where the initial recognition of assets and
liabilities results in taxable temporary differences and deductible temporary differences of equal amounts should, in accordance
with the No. 18 of the Accounting Standards for Business Enterprises - Income Taxes and other relevant regulations, be recognized
as deferred income tax liabilities and deferred income tax assets, respectively, at the time of the transaction. For transactions that
occurred between the beginning of the earliest period presented in the financial statements and the date of implementation of the
aforementioned regulations, enterprises should, in accordance with the said regulations, adjust the cumulative effect on the
opening retained earnings of the earliest period presented in the financial statements and other related financial statement items.
The aforementioned accounting treatment regulations shall come into force from 1 January 2023.
For the lease liabilities and right-of-use assets recognised by the Company in its leasing operations, as well as the recognised
provisions for obligations to dismantle and the corresponding assets, which generate taxable temporary differences and deductible
temporary differences, adjustments are made in accordance with the provisions of Interpretation No. 16.
The impact of implementing the aforementioned accounting policies on the consolidated balance sheet as at 31 December 2023,
and the consolidated income statement for the year 2023 is as follows:
Item of consolidated balance sheet
Amount affected
(31 December 2023)
Deferred income tax assets 14,380,843.22
Deferred income tax liabilities 14,380,843.22
The impact of implementing the aforementioned accounting policies on the consolidated balance sheet as at 31 December 2022,
and the consolidated income statement for the year 2022 is as follows:
Item of consolidated balance
sheet Before Amount adjusted After
(31 December 2022)
Deferred income tax assets 155,774,523.25 16,366,350.08 172,140,873.33
Deferred income tax liabilities 151,243,432.80 16,366,350.08 167,609,782.88
VII YoY Changes to the Scope of the Consolidated Financial Statements
□Applicable Not applicable
No such cases in the Reporting Period.
VIII Engagement and Disengagement of Independent Auditor
Current independent auditor:
Name of the domestic independent auditor Grant Thornton China (Special General Partnership)
The Company’s payment to the domestic independent auditor
173.5
(RMB’0,000)
How many consecutive years the domestic independent auditor
5
has provided audit service for the Company
Names of the certified public accountants from the domestic
Cui Xiaoli, He Feng
independent auditor writing signatures on the auditor’s report
How many consecutive years the certified public accountants
4
have provided audit service for the Company
Indicate by tick mark whether the independent auditor was changed for the Reporting Period.
□Yes No
Independent auditor, financial advisor or sponsor engaged for the audit of internal controls:
Applicable □ Not applicable
71
Lu Thai Textile Co., Ltd. Annual Report 2023
The Company held the 2022 Annual General Meeting on 12 May 2023 and approved the Proposal on Renewal Engagement of the
2023 Financial Audit and Internal Control Auditor and decided to renew the contract with Grant Thornton China (Special General
Partnership) for 2023 financial audit and internal control affairs and paid RMB1.735 million in total for 2022 financial report audit
and the internal control audit.
IX Possibility of Delisting after Disclosure of this Report
□Applicable Not applicable
X Insolvency and Reorganization
□Applicable Not applicable
No such cases in the Reporting Period.
XI Major Legal Matters
□Applicable Not applicable
No such cases in the Reporting Period.
XII Punishments and Rectifications
□Applicable Not applicable
No such cases in the Reporting Period.
XIII Credit Quality of the Company as well as Its Controlling Shareholder and Actual
Controller
□Applicable Not applicable
XIV Major Related-Party Transactions
1. Continuing Related-Party Transactions
□Applicable Not applicable
No such cases in the Reporting Period.
2. Related-Party Transactions Regarding Purchase or Sales of Assets or Equity Interests
□Applicable Not applicable
No such cases in the Reporting Period.
3. Related-Party Transactions Regarding Joint Investments in Third Parties
□Applicable Not applicable
No such cases in the Reporting Period.
72
Lu Thai Textile Co., Ltd. Annual Report 2023
4. Credits and Liabilities with Related Parties
□Applicable Not applicable
No such cases in the Reporting Period.
5. Transactions with Related Finance Companies
□Applicable Not applicable
The Company did not make deposits in, receive loans or credit from and was not involved in any other finance business with any
related finance company or any other related parties.
6. Transactions with Related Parties by Finance Companies Controlled by the Company
□Applicable Not applicable
The finance company controlled by the Company did not make deposits, receive loans or credit from and was not involved in any
other finance business with any related parties.
7. Other Major Related-Party Transactions
□Applicable Not applicable
No such cases in the Reporting Period.
XV Major Contracts and Execution thereof
1. Entrustment, Contracting and Leases
(1) Entrustment
□Applicable Not applicable
No such cases in the Reporting Period.
(2) Contracting
□Applicable Not applicable
No such cases in the Reporting Period.
(3) Leases
□Applicable Not applicable
No such cases in the Reporting Period.
2. Major Guarantees
Applicable □ Not applicable
Unit: RMB'0,000
Guarantees provided by the Company as the parent and its subsidiaries for external parties (exclusive of those for subsidiaries)
73
Lu Thai Textile Co., Ltd. Annual Report 2023
Disclosu
re date Guarante
Actual
of the Line of Actual Type of Counter- Term of Having e for a
guarante Collatera
Obligor guarante guarante occurren guarante guarante guarante expired related
e l (if any)
e line e ce date e e (if any) e or not party or
amount
announc not
ement
Guarantees provided by the Company for its subsidiaries
Disclosu
re date Guarante
Actual
of the Line of Actual Type of Counter- Term of Having e for a
guarante Collatera
Obligor guarante guarante occurren guarante guarante guarante expired related
e l (if any)
e line e ce date e e (if any) e or not party or
amount
announc not
ement
Three
years
since the
Wholly-
26 24 approval
owned 23,372.9 Joint-
August August 280.12 N/A N/A of the No Yes
subsidiar 1 liability
2022 2022 board of
y
the
Compan
y
Three
years
since the
Wholly-
approval
owned 1 July 30 June Joint-
7,082.7 6,798.72 N/A N/A of the No Yes
subsidiar 2023 2023 liability
board of
y
the
Compan
y
Total approved line Total actual amount
for such guarantees of such guarantees in
7,082.7 6,872.88
in the Reporting the Reporting Period
Period (B1) (B2)
Total approved line Total actual balance
for such guarantees of such guarantees at
at the end of the 30,455.61 the end of the 7,078.84
Reporting Period Reporting Period
(B3) (B4)
Guarantees provided between subsidiaries
Disclosu Guarante
Actual
re date Line of Actual Type of Counter- Term of Having e for a
guarante Collatera
Obligor of the guarante occurren guarante guarante guarante expired related
e l (if any)
guarante e ce date e e (if any) e or not party or
amount
e line not
74
Lu Thai Textile Co., Ltd. Annual Report 2023
announc
ement
Total guarantee amount (total of the three kinds of guarantees above)
Total guarantee line Total actual
approved in the guarantee amount in
7,082.7 6,872.88
Reporting Period the Reporting Period
(A1+B1+C1) (A2+B2+C2)
Total actual
Total approved
guarantee balance at
guarantee line at the
30,455.61 the end of the 7,078.84
end of the Reporting
Reporting Period
Period (A3+B3+C3)
(A4+B4+C4)
Total actual guarantee amount (A4+B4+C4)
0.77%
as % of the Company’s net assets
Of which:
Balance of guarantees provided for
shareholders, actual controller and their 0
related parties (D)
Balance of debt guarantees provided directly
or indirectly for obligors with an over 70% 0
debt/asset ratio (E)
Amount by which the total guarantee amount
0
exceeds 50% of the Company’s net assets (F)
Total of the three amounts above (D+E+F) 0
Joint responsibilities possibly borne or
already borne in the Reporting Period for N/A
undue guarantees (if any)
Explanation about external guarantee
violating established procedure (if any) N/A
Compound guarantees:
N/A
The Company shall abide by relevant disclosure requirements of the Self-Regulatory Guidelines of Shenzhen Stock Exchange for
Listed Companies No.3 - Industry Information Disclosure on textile and garment industry.
Whether the Company provides guarantees or financial assistance for dealers
□Yes No
3. Cash Entrusted for Wealth Management
(1) Cash Entrusted for Wealth Management
Applicable □ Not applicable
Overviews of cash entrusted for wealth management during the Reporting Period
RMB’0,000
Overdue amount
Undue
Specific type Capital resources Amount incurred Overdue amount with provision for
Balance
impairment
Bank financial
Self-owned funds 18,150 10,000 0 0
products
Bank financial
Raised funds 21,700 5,000 0 0
products
Brokerage
financial Self-owned funds 38,050 5,096.1 0 0
products
Brokerage
Raised funds 12,010.7 0 0 0
financial
75
Lu Thai Textile Co., Ltd. Annual Report 2023
products
Others Self-owned funds 40,000 40,000 0 0
Total 129,910.7 60,096.1 0 0
Particulars of entrusted cash management with single significant amount or low security, bad liquidity, and no capital preservation
□Applicable Not applicable
Whether there is the case where the principal cannot be recovered at maturity or other case which may cause impairment for
entrusted asset management
□Applicable Not applicable
(2) Entrusted Loans
□Applicable Not applicable
No such cases in the Reporting Period.
4. Other Major Contracts
□Applicable Not applicable
No such cases in the Reporting Period.
XVI Other Significant Events
Applicable □ Not applicable
The Proposal on Repurchase of Domestically Listed Foreign Shares (B-Stock) was approved at the 10th Meeting of the 10th Board
of Directors and the First Extraordinary General Meeting of 2023. As such, an amount of no more than RMB200 million would be
used to repurchase shares, with a price limit of HKD4.80 per share, within 12 months from the date when the share repurchase
plan was approved at the general meeting. For details, see the relevant announcements (No.: 2023-043, 2023-044, 2023-053, 2023-
054 and 2023-055) and documents disclosed on 20 June 2023 and 7 July 2023 on www.cninfo.com.cn.
XVII Significant Events of Subsidiaries
□Applicable Not applicable
76
Lu Thai Textile Co., Ltd. Annual Report 2023
Part VII Share Changes and Shareholder Information
I Share Changes
1. Share Changes
Unit: share
Before Increase/decrease in the Reporting Period (+/-) After
Shar
es as Shares
divi as
dend dividen
Percenta New conv d Percenta
Shares Other Subtotal Shares
ge (%) issues erte convert ge (%)
d ed from
from capital
profi reserves
t
I. Restricted
20,647,892 2.33% -9,180,075 -9,180,075 11,467,817 1.33%
shares
1. Shares held
by State
2. Shares held
by state-owned
legal person
3. Shares held
by other
20,647,892 2.33% -9,180,075 -9,180,075 11,467,817 1.33%
domestic
investors
Among which:
Shares held by
domestic legal
person
Shares held by
domestic 20,647,892 2.33% -9,180,075 -9,180,075 11,467,817 1.33%
natural person
4. Shares held
by other
0
foreign
investors
Among which:
Shares held by
0
foreign
corporations
Shares
held by foreign 0
natural person
II. Unrestricted
866,985,259 97.67% -14,845,442 -14,845,442 852,139,817 98.67%
shares
1. RMB
570,804,568 64.31% 9,090,306 9,090,306 579,894,874 67.15%
ordinary shares
2.
Domestically
296,180,691 33.37% -23,935,748 -23,935,748 272,244,943 31.52%
listed foreign
shares
3. Overseas
listed foreign 0
shares
4. Other 0
77
Lu Thai Textile Co., Ltd. Annual Report 2023
III. Total 100.00
887,633,151 -24,025,517 -24,025,517 863,607,634 100.00%
shares %
Reasons for share changes:
Applicable □ Not applicable
①Due to the fact that the Company had issued convertible A-share bonds on 9 April 2020, convertible bonds were converted to
231 shares in the period from the beginning of 2023 to 31 December 2023.
②On 9 May and 8 June 2023, 2,919,000 and 6,979,500 shares of equity incentive restricted shares were lifted from restriction,
respectively.
③On 25 May 2023, 23,935,748 domestically listed foreign shares (B shares) were repurchased and canceled.
④90,000 shares of equity incentive restricted shares were repurchased and cancelled.
⑤The shares held by the directors, supervisors and senior management shall be unlocked and adjusted in accordance with relevant
regulations on executive share management.
Approval of share changes:
Applicable □ Not applicable
①On 10 April 2023, the Company held the 7th Meeting of the 10th Board of Directors and the 6th Meeting of the 10th
Supervisory Committee, and reviewed and approved the Proposal on the Achievement of Lifting the Restriction Conditions in the
First Restriction Period for the Reserved Shares for Grant under the 2021 Restricted Share Incentive Scheme. Also, the Company
agreed to process the restriction lifting matters for 2,919,000 restricted shares held by 343 incentive personnel who met the
restriction lifting conditions in the first restriction period for the reserved shares for grant under the 2021 Restricted Share
Incentive Scheme.
②On 26 May 2023, the Company held the 9th Meeting of the 10th Board of Directors and the 8th Meeting of the 10th Supervisory
Committee, and reviewed and approved the Proposal on the Achievement of the Lifting Restriction Conditions in the Second
Restriction Period for the First Grant of the 2021 Restricted Share Incentive Scheme. Also, the Company agreed to process the
restriction lifting matters for 6,979,500 restricted shares held by 717 incentive personnel who met the restriction lifting conditions
in the second restriction period for the first grant of the 2021 Restricted Share Incentive Scheme.
③The Company held the 2nd Meeting of the 10th Board of Directors on 29 June 2022 and the 3rd Extraordinary General Meeting
of 2022 on 15 July 2022, reviewing and approving the Proposal on Repurchase of the Company’s Domestically Listed Foreign
Shares (B Share). The Company repurchased 23,935,748 B shares in total through call auction via its securities account for
repurchase and completed the formalities for cancellation of the foregoing repurchased shares at the Shenzhen Branch of China
Securities Depository and Clearing Corporation Limited on 25 May 2023.
④On 10 April 2023, the Proposal on Repurchase and Cancel Authorized but Unlocked Restricted Share of the Incentive
Personnel not Conforming to the Incentive Condition was deliberated and approved at the 7th Meeting of the 10th Board of
Directors of the Company, as seven of the incentive personnel of the 2021 restricted share incentive scheme no longer met the
condition of being incentive personnel due to resignation, retirement, or position changes. The restricted shares held by the seven
personnel with a volume of 90,000 shares, which were authorized but not lifted from restricted sales, shall be repurchased and
cancelled by the Company in accordance with the 2021 Restricted Share Incentive Scheme (hereinafter referred to as the
"Incentive Scheme") of the Company and relevant provisions of laws and regulation. The aforesaid matters were deliberated and
approved at the General Meeting of the Company in 2022 that was held on 12 May 2023.
Transfer of share ownership:
Applicable □ Not applicable
The Company completed the formalities for cancellation of the 23,935,748 repurchased B-shares and 90,000 shares of equity
incentive restricted shares at the Shenzhen Branch of China Securities Depository and Clearing Corporation Limited respectively
on 25 May 2023 and 12 July 2023.
Effects of share changes on the basic and diluted earnings per share, equity per share attributable to the Company’s ordinary
shareholders and other financial indicators of the prior year and the prior accounting period, respectively:
78
Lu Thai Textile Co., Ltd. Annual Report 2023
Applicable □ Not applicable
See relevant contents of "VI Key Financial Information" under "Part II Corporate Information and Key Financial Information".
Other information that the Company considers necessary or is required by the securities regulator to be disclosed:
□Applicable Not applicable
2. Changes in Restricted Shares
Applicable □ Not applicable
Unit: share
Restricted
Restricted Restricted Restricted
shares
Name of the shares shares shares Restricted
increased Restricted shares relieved date
shareholders amount at the relieved of amount at the reasons
period-begin of the period-end
the period
period
Locked public
shares held by
senior 100000 shares on 9 May 2023
Zhang Zhanqi 485,225 140,000 190,000 435,225 management and and 90000 shares on 8 June
Restricted shares 2023
from equity
incentive
Locked public
shares held by
senior
Wang Jiabin 287,775 115,925 90,000 313,700 management and 90000 shares on 8 June 2023
Restricted shares
from equity
incentive
Locked public
shares held by
senior 50000 shares on 9 May 2023
Yu Shouzheng 312,325 85,000 110,000 287,325 management and and 60000 shares on 8 June
Restricted shares 2023
from equity
incentive
Locked public
shares held by
senior 50000 shares on 9 May 2023
Zhang Keming 308,275 85,000 110,000 283,275 management and and 60000 shares on 8 June
Restricted shares 2023
from equity
incentive
Locked public
shares held by
senior 50000 shares on 9 May 2023
Shang
272,500 85,000 110,000 247,500 management and and 60000 shares on 8 June
Chenggang
Restricted shares 2023
from equity
incentive
Locked public
shares held by 50000 shares on 9 May 2023
Guo Heng 250,000 85,000 110,000 225,000 senior and 60000 shares on 8 June
management and 2023
Restricted shares
79
Lu Thai Textile Co., Ltd. Annual Report 2023
from equity
incentive
Locked public
shares held by
senior 50000 shares on 9 May 2023
Li Wenji 257,500 47,500 110,000 195,000 management and and 60000 shares on 8 June
Restricted shares 2023
from equity
incentive
Locked public
shares held by
senior 50000 shares on 9 May 2023
Du Lixin 250,000 47,500 110,000 187,500 management and and 60000 shares on 8 June
Restricted shares 2023
from equity
incentive
Locked public
shares held by
senior 25000 shares on 9 May 2023
Lyu Wenquan 150,000 70,000 70,000 150,000 management and and 45000 shares on 8 June
Restricted shares 2023
from equity
incentive
Locked public
shares held by
senior 50000 shares on 9 May 2023
Xu Feng 190,000 47,500 95,000 142,500 management and and 45000 shares on 8 June
Restricted shares 2023
from equity
incentive
Locked public
shares held by
2444000 shares on 9 May 2023
senior
Other restricted and 6349500 shares on 8 June
17,884,292 8,793,500 9,000,792 management and
shareholders 2023; while 90000 shares were
Restricted shares
cancelled on 12 July 2023
from equity
incentive
Total 20,647,892 808,425 9,898,500 11,467,817 -- --
II. Issuance and Listing of Securities
1. Securities (Exclusive of Preferred Shares) Issued in the Reporting Period
□Applicable Not applicable
2. Changes to Total Shares, Shareholder Structure and Asset and Liability Structures
Applicable □ Not applicable
At the beginning of 2023, the Company possessed 887,633,151 shares in total (591,395,010 A shares and 296,238,141 B shares
inclusive). 23,935,748 domestically listed foreign shares (B shares) were repurchased and cancelled On 25 May 2023. The
repurchasing and cancelling 90,000 shares of equity incentive restricted stock was completed on 12 July 2023. Because of Lu Thai
convertible bonds were cumulatively converted into 231 A-shares from 1 January 2023 to 31 December 2023. By 31 December
80
Lu Thai Textile Co., Ltd. Annual Report 2023
2023, the Company possessed 863,607,634 shares in total (591,305,241 A shares and 272,302,393 B shares inclusive), which had
no significant impact on the Company's assets and liability structure.
3. Existing Staff-Held Shares
□Applicable Not applicable
III Shareholders and Actual Controller
1. Total Number of Shareholders and Their Shareholdings
Unit: share
Number of Number of
ordinary preferred Number of preferred
shareholders shareholders shareholders with resumed
Number of
at the with voting rights at the month-
ordinary 49,725 48,031 0 0
month-end resumed end prior to the disclosure of
shareholders
prior to the voting rights this Report (if any) (see note
disclosure of (if any) (see 8)
this Report note 8)
5% or greater shareholders or top 10 shareholders (exclusive of shares lent in refinancing)
Increase/dec Shares in pledge, marked or
Total shares frozen
Name of Nature of Shareholdin rease in the Restricted Unrestricted
held at the
shareholder shareholder g percentage Reporting shares held shares held
period-end Status Shares
Period
Zibo Lucheng Domestic
Textile non-state-
16.25% 140,353,583 0 0 140,353,583 N/A 0
Investment Co., owned legal
Ltd. person
Tailun
(Thailand) Foreign
13.69% 118,232,400 0 0 118,232,400 N/A 0
Textile Co., legal person
Ltd.
Central Huijin
Assets State-owned
2.30% 19,884,100 0 0 19,884,100 N/A 0
Management legal person
Co., Ltd.
National Social
Security Fund Other 1.64% 14,190,051 930,000 0 14,190,051 N/A 0
Portfolio 413
ICBC Credit
Suisse
Innovation
Power Stock Other 1.38% 11,910,000 6,810,000 0 11,910,000 N/A 0
Type Securities
Investment
Fund
ICBC Credit
Suisse Selected
Balanced
Mixed Other 0.84% 7,230,000 7,230,000 0 7,230,000 N/A 0
Securities
Investment
Fund
81
Lu Thai Textile Co., Ltd. Annual Report 2023
Dongfanghong
Zhihua Three-
Year Holding
Mixed Other 0.75% 6,451,750 6,451,750 0 6,451,750 N/A 0
Securities
Investment
Fund
FEDERATED
HERMES
GLOBAL
INVESTMENT
FD
(CAYMAN)
Foreign
MASTER, SPC 0.72% 6,200,183 1,576,809 0 4,623,374 N/A 0
legal person
OBOAFTAO
FEDERATED
HERMES
EMG ASIA
EQUITY FD
MASTER S.P.
Dongfanghong
Dingyuan 3-
Month Fixed
Term Open
Mixed Other 0.61% 5,276,400 5,276,400 0 5,276,400 N/A 0
Initiating
Securities
Investment
Fund
Dacheng China
Securities Asset
Other 0.60% 5,144,200 -91,700 0 5,144,200 N/A 0
Management
Plan
Strategic investors or general
corporations becoming top-ten
Naught
shareholders due to placing of
new shares (if any) (see Note 3)
Zibo Lucheng Textile Investment Co., Ltd. is the largest shareholder of the Company and the actual
Related or acting-in-concert controller. Tailun (Thailand) Textile Co., Ltd. is the second largest shareholder as well as sponsor of foreign
parties among the shareholders capital of the Company. All of other shareholders are people holding public A share or public B share and
above the Company is not able to confirm whether there is associated relationship or concerted action among other
shareholders.
Explain if any of the
shareholders above was
involved in entrusting/being Naught
entrusted with voting rights or
waiving voting rights
Special account for share
repurchases (if any) among the
As of 31 December 2023, there are 37,723,945 shares in the special repurchase account of the Company
top 10 shareholders (see note
10)
Top 10 unrestricted shareholders
Shares by type
Name of shareholder Unrestricted shares held at the period-end
Type Shares
RMB
Zibo Lucheng Textile
140,353,583 ordinary 140,353,583
Investment Co., Ltd.
share
Tailun (Thailand) Textile Co., Domesticall
118,232,400 118,232,400
Ltd. y listed
82
Lu Thai Textile Co., Ltd. Annual Report 2023
foreign
shares
RMB
Central Huijin Assets
19,884,100 ordinary 19,884,100
Management Co., Ltd.
share
RMB
National Social Security Fund
14,190,051 ordinary 14,190,051
Portfolio 413 share
ICBC Credit Suisse Innovation RMB
Power Stock Type Securities 11,910,000 ordinary 11,910,000
Investment Fund share
ICBC Credit Suisse Selected RMB
Balanced Mixed Securities 7,230,000 ordinary 7,230,000
Investment Fund share
Dongfanghong Zhihua Three- RMB
Year Holding Mixed Securities 6,451,750 ordinary 6,451,750
Investment Fund share
FEDERATED HERMES
GLOBAL INVESTMENT FD Domesticall
(CAYMAN) MASTER, SPC y listed
6,200,183 6,200,183
OBOAFTAO FEDERATED foreign
HERMES EMG ASIA shares
EQUITY FD MASTER S.P.
Dongfanghong Dingyuan 3-
RMB
Month Fixed Term Open Mixed
5,276,400 ordinary 5,276,400
Initiating Securities Investment share
Fund
RMB
Dacheng China Securities Asset
5,144,200 ordinary 5,144,200
Management Plan share
Related or acting-in-concert
parties among top 10 Zibo Lucheng Textile Investment Co., Ltd. is the largest shareholder and the actual controller of the
unrestricted public
Company. Tailun (Thailand) Textile Co., Ltd. is the second largest shareholder and the foreign sponsor of
shareholders, as well as
between top 10 unrestricted the Company. All the other shareholders are holding tradable A-shares or B-shares. And it is unknown
public shareholders and top 10 whether there is any related party or acting-in-concert party among them.
shareholders
Top 10 ordinary shareholders
involved in securities margin Naught
trading (if any) (see note 4)
Top 10 shareholders involved in refinancing shares lending
□Applicable Not applicable
Changes in shares that the top 10 shareholders lend in refinancing compared with the prior period
Applicable □ Not applicable
Unit: share
Changes in shares that the top 10 shareholders lend in refinancing compared with the end of the prior period
Increase/de Shares in the common account and credit
Shares lent in refinancing and not yet
crease in account plus shares lent in refinancing and
returned at the period-end
Full name of shareholder the not yet returned at the period-end
Reporting As % of total share As % of total share
Period Total shares Total shares
capital capital
GF Fund-ABC- GF China
Securities Asset Decrease 0 0.00% 4,833,300 0.56%
Management Plan
Harvest Fund-ABC- Decrease 0 0.00% 3,674,700 0.43%
83
Lu Thai Textile Co., Ltd. Annual Report 2023
Harvest China Securities
Asset Management Plan
Yinhua Fund-ABC- Yinhua
China Securities Asset Decrease 0 0.00% 4,320,212 0.50%
Management Plan
CCB- ICBC Credit Suisse
Selected Balanced Mixed Increase 0 0.00% 7,230,000 0.84%
Securities Investment Fund
CCB- Dongfanghong
Zhihua Three-Year
Increase 0 0.00% 6,451,750 0.75%
Holding Mixed Securities
Investment Fund
Shanghai Pudong
Development Bank Co.,
Ltd.- Dongfanghong
Dingyuan 3-Month Fixed Increase 0 0.00% 5,276,400 0.61%
Term Open Mixed
Initiating Securities
Investment Fund
Indicate by tick mark whether any of the top 10 ordinary shareholders or the top 10 unrestricted ordinary shareholders of the
Company conducted any promissory repo during the Reporting Period.
□Yes No
No such cases in the Reporting Period.
2. Controlling Shareholder
Nature of the controlling shareholder: Controlled by a natural person
Type of the controlling shareholder: legal person
Legal
Name of controlling representative Date of Unified social credit
Principal activity
shareholder /person in establishment code
charge
Investment on textile, electricity
Zibo Lucheng Textile and chemical; purchase, process
Liu Deming 25 September 1998 91370303164200391J
Investment Co., Ltd. and sale of cotton; retail service
etc.
Particulars about
shareholding of
controlling shareholders
controlling and holding N/A
shares of other listed
companies during the
Reporting Period
Change of the controlling shareholder in the Reporting Period:
□Applicable Not applicable
No such cases in the Reporting Period.
3. Actual Controller and Its Acting-in-Concert Parties
Nature of the actual controller: Domestic natural person
Type of the actual controller: natural person
Name of the actual National Whether gain the right of residence
Relations with the actual controller
controller ity in other countries or regions or not
Liu Zibin In person China No
84
Lu Thai Textile Co., Ltd. Annual Report 2023
Concerted action (including agreement, relatives,
Liu Deming China No
and same control)
Liu Zibin is the Chairman of the Board and President of Lu Thai Textile Co., Ltd. , Liu Deming is the
Professions and titles
Chairman of the Board and GM of Zibo Lucheng Textile Investment Co., Ltd.
Particulars about listed
companies with shares
ever held by the actual N/A
controller over the past
10 years
Change of the actual controller during the Reporting Period:
□Applicable Not applicable
No such cases in the Reporting Period.
Ownership and control relations between the actual controller and the Company:
Indicate by tick mark whether the actual controller controls the Company via trust or other ways of asset management.
□Applicable Not applicable
4. Number of Accumulative Pledged Shares held by the Company’s Controlling Shareholder or the
Largest Shareholder as well as Its Acting-in-Concert Parties Accounts for 80% of all shares of the
Company held by Them
□Applicable Not applicable
5. Other 10% or Greater Corporate Shareholders
□Applicable Not applicable
6. Limitations on Shareholding Decrease by the Company’s Controlling Shareholder, Actual Controller,
Reorganizer and Other Commitment Makers
□Applicable Not applicable
IV Specific Implementation of Share Repurchase during the Reporting Period
Progress on any share repurchase
Applicable □ Not applicable
Disclosure Shares As % of total Amount Period Usage Shares Number of
85
Lu Thai Textile Co., Ltd. Annual Report 2023
time of the intended to share capital repurchased repurchased
plan be (share) shares as a
repurchased percentage of the
(share) underlying shares
covered by the
equity incentive
plan (if any)
Not
27000000- 3.13%- 6 July 2023 to 5 Cancell
7 July 2023 exceeding 37,723,945 0.00%
54000000 6.25% July 2024 ed
RMB20,000
Progress on reducing the repurchased shares by means of centralized bidding
□Applicable Not applicable
86
Lu Thai Textile Co., Ltd. Annual Report 2023
Part VIII Preference Shares
□Applicable Not applicable
No preference shares in the Reporting Period.
87
Lu Thai Textile Co., Ltd. Annual Report 2023
Part IX Bonds
Applicable □ Not applicable
I Enterprise Bonds
□Applicable Not applicable
No enterprise bonds in the Reporting Period.
II Corporate Bonds
□Applicable Not applicable
No corporate bonds in the Reporting Period.
III Debt Financing Instruments of Non-financial Enterprises
□Applicable Not applicable
No such cases in the Reporting Period.
IV Convertible Corporate Bonds
Applicable □ Not applicable
1. Previous Adjustments of Conversion Price
On 9 April 2020, the Company publicly issued 14 million A-share convertible corporate bonds (short name: Lu Thai Convertible
Bonds, bond code: 127016) on Shenzhen Stock Exchange with an issue price of RMB100 per share and a share conversion price of
RMB9.01 per share. The bonds were listed on Shenzhen Stock Exchange on 13 May 2020. In accordance with related terms of the
“Prospectus for the Public Offering of A-Share Convertible Corporate Bonds of Lu Thai Textile Co., Ltd.”, as well as the regulations
of China Securities Regulatory Commission on the public offering of convertible corporate bonds, if the Company has any
distribution of share dividends, conversion into share capital, additional issue of new shares (excluding share capital increase due to
conversion into shares from the convertible corporate bonds issued this time), share allotment and distribution of cash dividends after
the issue of “Lu Thai Convertible Bonds”, adjustment shall be made to the share conversion price.
On 21 May 2020, the Company held the Annual General Meeting of 2019, where the “Proposal on the Company’s Profit Distribution
Plan for 2019” was considered and approved. According to the Proposal, a cash amount of RMB 1.00 (inclusive of tax) would be
distributed to every 10 shares, with the 858,121,541 shares of share capital on 31 December 2019 as the base. The share registration
date for the Company’s equity distribution of 2019 was 8 July 2020 and the ex-rights and ex-dividend date was 9 July 2020.
Therefore, the share conversion price of “Lu Thai Convertible Bonds” was adjusted from RMB9.01 per share to RMB8.91 per share,
and the new price after the adjustment took effect on and as of 9 July 2020 (the ex-rights and ex-dividend date).
On 3 June 2021, the Company completed the registration of first-granted restricted stocks of restricted share incentive scheme at the
Shenzhen Branch of China Securities Depository and Clearing Corporation Limited (China Clear). 7 June 2021 is designated as the
88
Lu Thai Textile Co., Ltd. Annual Report 2023
listing date of first-granted restricted stocks of the Company in 2021. The Company grants 750 subjects of incentive 24,285,000
restricted shares at a price of RMB3.31 per share, accounting for 2.83% of total share capital of the Company. The source of the
stock is RMB A-share ordinary shares issued by the Company to subjects of incentive. Therefore, the conversion price of Lu Thai
Convertible Bond will be adjusted from RMB8.91 per share to RMB8.76 per share, with the adjusted conversion price coming into
force from 7 June 2021.
The 2020 annual general meeting convened on 20 April 2021 deliberated on and adopted the Company's Proposal on Profit
Appropriation Plan in 2020, which distributes cash of RMB0.50 per 10 shares (including tax) with total share capital at the record
date of this distribution scheme as base. The record date of the Company's interest distribution in 2020 is set on 17 June 2021. The
ex-date is set on 18 June 2021. Therefore, the conversion price of Lu Thai Convertible Bond will be adjusted from RMB8.76 per
share to RMB8.71 per share, with the adjusted conversion price coming into force from 18 June 2021 (the ex-date).
On 22 March 2022, the Company completed the registration of granting reserved shares under the 2021 restricted share incentive
scheme at the Shenzhen Branch of China Clear. 22 March 2022 was designated as the listing date for granting reserved restricted
shares of the Company. The Company granted 343 incentive personnel 5,838,000 restricted shares at a price of RMB3.56 per share,
accounting for 0.66% of total share capital of the Company. The source of the stock is RMB A-share ordinary shares issued by the
Company to incentive personnel. Therefore, the conversion price of Lu Thai convertible bond will be adjusted from RMB8.71 per
share to RMB8.68 per share, with the adjusted conversion price coming into force from 22 March 2022.
The 2021 annual general meeting convened on 20 May 2022 deliberated and adopted the Company's Proposal on Profit
Appropriation Plan in 2021, which distributes cash of RMB0.70 per ten shares (including tax) with total share capital at the record
date of this distribution scheme as base. The record date of the Company's interest distribution in 2021 was set on 22 June 2022. The
ex-date was set on 23 June 2022. Therefore, the conversion price of Lu Thai convertible bond will be adjusted from RMB8.68 per
share to RMB8.61 per share, with the adjusted conversion price coming into force from 23 June 2022.
The Company completed the formalities for cancellation of the 23,935,748 repurchased B shares at the Shenzhen Branch of China
Securities Depository and Clearing Corporation Limited on 25 May 2023. In accordance with the issuance clauses in the Company’s
Prospectus and relevant regulations of the China Securities Regulatory Commission (CSRC) on the issuance of convertible bonds,
the conversion price of Lu Thai convertible bond shall be adjusted from RMB8.61 per share to RMB8.73 per share. The adjusted
conversion price came into force on 26 May 2023.
The Company implemented the 2022 Equity Distribution Plan on 16 June 2023. In accordance with the issuance clauses in the
Company’s Prospectus and relevant regulations of the CSRC on the issuance of convertible bonds, the conversion price of Lu Thai
convertible bond shall be adjusted from RMB8.73 per share to RMB8.63 per share. The adjusted conversion price came into force on
16 June 2023.
The Company completed the formalities for cancellation of the 46,176,428 repurchased B shares at the Shenzhen Branch of China
Securities Depository and Clearing Corporation Limited on 1 March 2024. In accordance with the issuance clauses in the Company's
Prospectus and relevant regulations of the China Securities Regulatory Commission (CSRC) on the issuance of convertible bonds,
the conversion price of Lu Thai convertible bond shall be adjusted from RMB8.63 per share to RMB8.87 per share. The adjusted
conversion price came into force on 4 March 2024.
89
Lu Thai Textile Co., Ltd. Annual Report 2023
2. Accumulative Conversion
Applicable □ Not applicable
Converted shares
Accumu Unconverte
Accumulati as % of total shares Unconverte
Abbre Total lative d amount
Total amount ve amount issued by the d amount
viatio Start date circulation shares as % of
(RMB) converted Company before the (RMB)
n (piece) converte total
(RMB) start date of
d (share) amount
conversion
Lu
Thai
1,400,000,000. 1,399,849,4
Conve 2020-10-15 14,000,000 150,600.00 16,841 0.00% 99.99%
00 00.00
rtible
Bonds
3. Top 10 Convertible Bond Holders
Number of
Amount of As % of
convertible bonds
Nature of convertible bonds convertible
No. Name of holders held at the
holders held at the period- bonds held at
period-end
end (RMB) the period-end
(share)
China Construction Bank - E Fund Enhanced
1 Other 694,212 69,421,200.00 4.96%
Income Bond Securities Investment Fund
Fuguo Fumin Fixed Income Pension Product -
2 Other 673,269 67,326,900.00 4.81%
China Construction Bank Corporation
Shanghai Pudong Development Bank Co., Ltd. - E
3 Fund Yuxiang Return Bond Securities Investment Other 485,552 48,555,200.00 3.47%
Bond
China Merchants Bank Co., Ltd. - Dongfanghong
4 Other 347,356 34,735,600.00 2.48%
Juli Bond Securities Investment Fund
Agricultural Bank of China - Essence Target
5 Other 255,699 25,569,900.00 1.83%
Income Bond Securities Investment Fund
Industrial and Commercial Bank of China- Fuguo
6 Other 239,115 23,911,500.00 1.71%
Tianli Growth Bond Investment Fund
Industrial and Commercial Bank of China-
7 Huitianfu Dual-Profit Bond-Type Securities Other 236,709 23,670,900.00 1.69%
Investment Fund
8 Basic Endowment Insurance Fund (Portfolio 102) Other 232,561 23,256,100.00 1.66%
Huatai Yousheng Convertible Bond Fixed Income
9 Pension Product － China Merchants Bank Co., Other 228,990 22,899,000.00 1.64%
Ltd.
China Asset Management Living Longer No. 9
10 Fixed Income Pension Product- China Merchants Other 211,147 21,114,700.00 1.51%
Bank Co., Ltd.
4. Significant Changes in Profitability, Assets Condition and Credit Status of Guarantors
□Applicable Not applicable
5. The Company’s Liabilities, Credit Changes at the Period-end and Cash Arrangements to Repay Debts
in Future Years
For the relevant indicators, please refer to the Part IX Bonds- VIII The Major Accounting Data and the Financial Indicators of the
Recent 2 Years of the Company up the Period-end.
90
Lu Thai Textile Co., Ltd. Annual Report 2023
The credit rating of the Company's convertible bonds for the Reporting Period is AA+, which has not changed compared with that of
the same period of last year.
V Losses of Scope of Consolidated Financial Statements during the Reporting Period
Exceeding 10% of Net Assets up the Period-end of Last Year
□Applicable Not applicable
VI Matured Interest-bearing Debt excluding Bonds up the Period-end
□Applicable Not applicable
VII Whether there was any Violation of Rules and Regulations during the Reporting Period
□Yes No
VIII The Major Accounting Data and the Financial Indicators of the Recent 2 Years of the
Company up the Period-end
Unit: RMB’0,000
Item Period-end The end of last year Increase/decrease
Current ratio 3.43 2.99 14.72%
Asset-liability ratio 28.39% 29.53% -1.14%
Quick ratio 2.12 1.86 13.98%
Reporting Period Same period of last year YoY increase/decrease
Net profit after deducting
38,613.54 79,547.4 -51.46%
non-recurring profit or loss
Debt/EBITDA ratio 41.97% 66.20% -24.23%
Interest cover (times) 5.29 11.25 -52.98%
Cash-to-interest cover (times) 8.82 14.43 -38.88%
EBITDA interest coverage
10.40 15.94 -34.76%
ratio
Rate of redemption 100.00% 100.00% 0.00%
Interest coverage 100.00% 100.00% 0.00%
91
Lu Thai Textile Co., Ltd. Annual Report 2023
Part X Financial Statements
I Independent Auditor’s Report
Type of the independent auditor’s opinion Unmodified unqualified opinion
Date of signing this report 10 April 2024
Name of the independent auditor Grant Thornton China (Special General Partnership)
No. of independent auditor’s report Grant Thornton SZ (2024) No. 371A008683
Name of the certified public accountants He Feng, Cui Xiaoli
Text of the Independent Auditor’s Report
To the shareholders of Lu Thai Textile Co., Ltd:
I Opinion
We have audited the financial statements of Lu Thai Textile Co., Ltd. (hereinafter referred to as the “Company”), which comprise the
consolidated and parent company balance sheets as of 31 December 2023, the consolidated and parent company statements of
income, cash flows and changes in owners’ equity for the year then ended, as well as the notes to the financial statements.
In our opinion, the financial statements referred to above present fairly, in all material respects, the consolidated and parent company
financial position of the Company at 31 December 2023, and the consolidated and parent company operating results and cash flows
for the year then ended, in conformity with the Chinese Accounting Standards (CAS).
II Basis for Opinion
We conducted our audits in accordance with the Audit Standards for Chinese Registered Accountants. Our responsibilities under
those standards are further described in the Auditor’s Responsibilities for Audit of Financial Statements section of our report. We are
independent of the Company in accordance with the China Code of Ethics for Certified Public Accountants, and we have fulfilled our
other ethical responsibilities in accordance with the said Code of Ethics. We believe that the audit evidence we have obtained is
sufficient and appropriate to provide a basis for our opinion.
III Key Audit Matters
Key audit matters are those matters that, in our professional judgment, were of most significance in our audit of the financial
statements of the current period. These matters were addressed in the context of our audit of the financial statements as a whole, and
in forming our opinion thereon, and we do not provide a separate opinion on these matters.
(I) Recognition of revenue
For details, please refer to the Note III-27 and the Note V-46 of the financial report.
1. Item description
The businesses of Lu Thai Textile Co., Ltd. mainly are production and sales of yarn-dyed fabrics and shirts. The operation revenue of
the Company in 2023 was RMB5,961,477,300, of which export income accounted for over 50%. For the income from domestic sales,
the amount of product sales income is recognized when the products are delivered to and confirmed by the purchaser according to the
contract. The income is recognized when the purchaser obtains control of the product. For the income from export sales, the amount
of sales income is recognized when products are declared and depart from port according to the contract, and the bill of lading is
received. The income is recognized when the purchaser obtains control of the product.
Since income is one of the key performance indicators of Lu Thai Textile Co., Ltd., there is an inherent risk that the management
manipulates income to achieve specific goals or expectations, therefore, we identify income recognition as a key audit item.
92
Lu Thai Textile Co., Ltd. Annual Report 2023
2. Audit response
The audit procedures for revenue recognition mainly include:
(1) Understand and evaluate the design effectiveness of internal control related to revenue recognition, and test the effectiveness of
operation;
(2) Through interviewing the management and reviewing the relevant contract terms, understand and evaluate whether the income
confirmation accounting policy meets the requirements of the enterprise accounting standards;
(3) Perform analytical procedures on revenue and costs to analyze the rationality of fluctuations in sales volume, unit price, and gross
profit in each month, current year, and previous year of the current period;
(4) Check the supporting evidence such as sales contract, product delivery order, invoice, customs declaration, shipping order, and
signing receipt;
(5) Select samples to verify the balance and transaction amount;
(6) It shall verify the amounts related to export sales revenue, export tax refund declarations, and China E-Port export data, among
other relevant information, by selecting samples for spot-check verification.
(7) Perform a cut-off test on the revenue recognized before and after the balance sheet date, and check the product delivery slip,
invoice, customs declaration, shipping bill, signing receipt, etc., to assess whether the revenue is recognized within the appropriate
period.
(II) Inventory falling price reserves
For details, please refer to the Note III-13 and the Note V-8 of the financial report.
1. Item description
As of 31 December 2023, the inventory balance of Lu Thai Textile Co., Ltd. was RMB2,365,378,300 and the inventory depreciation
reserve was RMB241,238,700. The management withdrew the inventory falling price reserves with significant judgments and
estimates, and therefore, we identify inventory falling price reserves as a key audit item.
2. Audit response
The audit procedures for inventory falling price reserves mainly include:
(1) Understand and evaluate the design effectiveness of the internal control related to the provision of inventory decline price, and
test the effectiveness of operation;
(2) Understand and evaluate the appropriateness of the company's inventory depreciation reserve provision policy;
(3) Monitor the inventory and pay attention to the status of the inventory, check whether the defective and inventory with long aging
have been identified;
(4) Obtain the inventory age table, and conduct an analytical review of the long-age inventory status and turnover;
(5) Check the changes in the inventory depreciation reserves accrued in previous years and evaluate the rationality of the changes in
inventory depreciation reserves;
(6) Obtain the inventory falling price reserves calculation sheet; recheck and evaluate the rationality of major estimations made by
the management during the determination of net realizable value; conduct the recalculation, check the selling price after the period
and analyze the rationality of the predicted selling price.
(III) Assessment of fair value of financial assets measured at fair value and changes included in current profit or loss
93
Lu Thai Textile Co., Ltd. Annual Report 2023
Please refer to Notes to Financial Statements (Note III 11 and Note V 2, 11 and 54) for details about relevant information disclosure.
1. Event Description
Up to 31 December 2023, the balance of financial asset measured based on the fair value whose variations were included the current
profit and loss of Lu Thai Textiles was RMB812,550,300, of which, the fair value of financial assets, which are classified as Level 1
input values using quotations from active markets for identical assets, was RMB294,181,300, the fair value of financial asset
classified into the tier-2 input value by adopting the observable input value was RMB429,619,000, and the fair value of financial
asset classified into the tier-3 input value by adopting the non-observable input value was RMB88,750,000. Considering that the
financial asset’s fair value variations had significant impact on the profit and loss of Lu Thai Textiles in 2023, and Lu Thai Textiles
adopted the valuation technique to determine its fair value (usually, the valuation technique involves various assumptions and
estimations based on subjective judgment, and huge difference in the estimated fair value of financial instrument may be caused by
adopting different valuation techniques or assumptions), we recognized the event as the key audit event.
2. Audit response
Our audit procedures geared to the evaluation of the withdrawal of financial instrument’s fair value mainly include:
(1) Study and evaluate the effectiveness of the designed internal control for the valuation of financial instruments and test the
operational effectiveness;
(2) Assess the professional quality, competence and objectiveness of the independent appraiser employed by the Company’s
management; evaluate the rationality of various assumptions applied by the independent appraiser in the evaluation report and the
appropriateness of the financial instrument valuation models;
(3) Assess the rationality and appropriateness of the observable key input value applied during the valuation of the tier-2 fair value;
(4) Recheck the rationality, appropriateness and calculation accuracy of the key input value during the fair value assessment for the
tier-3 financial instrument measured based the fair value and involving the management’s major judgment.
IV Other Information
The Company’s management is responsible for the other information. The other information comprises all of the information
included in the Company’s 2023 Annual Report other than the financial statements and our auditor’s report thereon.
Our opinion on the financial statements does not cover the other information and we do not express any form of assurance conclusion
thereon.
In connection with our audit of the financial statements, our responsibility is to read the other information and, in doing so, consider
whether the other information is materially inconsistent with the financial statements or our knowledge obtained in the audit or
otherwise appears to be materially misstated.
If, based on the work we have performed, we conclude that there is a material misstatement of this other information, we are required
to report that fact. We have nothing to report in this regard.
V Responsibilities of Management and Those Charged with Governance for Financial Statements
The Company’s management (hereinafter referred to as the “Management”) is responsible for the preparation of the financial
statements that give a fair view in accordance with CAS, and for designing, implementing and maintaining such internal control as
the management determines is necessary to enable the preparation of financial statements that are free from material misstatement,
whether due to fraud or error.
In preparing the financial statements, the management is responsible for assessing the Company’s ability to continue as a going
concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless the
94
Lu Thai Textile Co., Ltd. Annual Report 2023
management either intends to liquidate the Company or to cease operations, or have no realistic alternative but to do so.
Those charged with governance are responsible for overseeing the Company’s financial reporting process.
VI Auditor’s Responsibilities for Audit of Financial Statements
Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material
misstatement, whether due to fraud or error, and to issue an auditor’s report that includes our opinion. Reasonable assurance is a high
level of assurance, but is not a guarantee that an audit conducted in accordance with CAS will always detect a material misstatement
when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could
reasonably be expected to influence the economic decisions of users taken on the basis of these financial statements.
As part of an audit in accordance with CAS, we exercise professional judgment and maintain professional skepticism throughout the
audit. We also:
(1) Identify and assess the risks of material misstatement of the financial statements, whether due to fraud or error, design and
perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for
our opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as
fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control.
(2) Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the
circumstances.
(3) Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures
made by the management.
(4) Conclude on the appropriateness of the management’s use of the going concern basis of accounting and, based on the audit
evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on the
Company’s ability to continue as a going concern. If we conclude that a material uncertainty exists, we are required by CAS to draw
users’ attention in our auditor’s report to the related disclosures in the financial statements or, if such disclosures are inadequate, we
should modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of our auditor’s report. However,
future events or conditions may cause the Company to cease to continue as a going concern.
(5) Evaluate the overall presentation, structure and content of the financial statements, and whether the financial statements represent
the underlying transactions and events in a manner that achieves fair presentation.
(6) Obtain sufficient appropriate audit evidence regarding the financial information of the entities or business activities within the
Company to express an opinion on the financial statements. We are responsible for the direction, supervision and performance of the
Company audit. We remain solely responsible for our audit opinion.
We communicate with those charged with governance of the Company regarding the planned scope and timing of the audit and
significant audit findings, including any noteworthy deficiencies in internal control that we identify during our audit.
We also provide those charged with governance with a statement that we have complied with relevant ethical requirements regarding
independence, and communicate with them all relationships and other matters that may reasonably be thought to bear on our
independence, and where applicable, related safeguards (if applicable).
From the matters communicated with those charged with governance, we determine those matters that were of most significance in
the audit of the financial statements of the current period and are therefore the key audit matters. We describe these
matters in our auditor’s report unless law or regulation precludes public disclosure about the matter or when, in
extremely rare circumstances, we determine that a matter should not be communicated in our report because the
adverse consequences of doing so would reasonably be expected to outweigh the public interest benefits of such
95
Lu Thai Textile Co., Ltd. Annual Report 2023
communication.
Grant Thornton China Chinese CPA
(Special General Partnership) (Engagement Partner):
Chinese CPA:
Beijing China 10 April 2024
II Financial Statements
Currency unit for the financial statements and the notes thereto: RMB
1. Consolidated Balance Sheet
Prepared by Lu Thai Textile Co., Ltd.
31 December 2023
Unit: RMB
Item 31 December 2023 1 January 2023
Current assets:
Monetary assets 1,558,252,048.03 2,067,768,253.97
Held-for-trading financial assets 723,800,275.39 267,695,159.48
Notes receivable 99,642,708.67 168,755,715.84
Accounts receivable 826,467,684.78 660,427,526.19
Accounts receivable financing 18,248,205.76 11,208,304.78
Prepayments 51,863,447.56 95,021,598.32
Other receivables 22,168,807.43 89,855,659.99
Including: Interest receivable
Dividends receivable 18,563,298.39
Inventories 2,124,139,574.70 2,107,849,708.33
Contract assets
Assets held for sale
Current portion of non-current assets
Other current assets 145,112,114.03 76,847,903.07
Total current assets 5,569,694,866.35 5,545,429,829.97
Non-current assets:
Long-term receivables
Long-term equity investments 143,537,479.77 184,168,625.69
Investments in other equity
instruments
Other non-current financial assets 88,750,000.00 337,110,000.00
Investment property 19,578,175.93 20,460,935.21
96
Lu Thai Textile Co., Ltd. Annual Report 2023
Fixed assets 5,597,692,505.07 5,807,847,850.67
Construction in progress 868,496,878.41 199,943,501.73
Right-of-use assets 463,226,419.21 481,420,505.31
Intangible assets 343,347,879.42 352,889,578.06
Development costs
Goodwill 20,563,803.29 20,563,803.29
Long-term prepaid expense 1,815,838.60 2,948,981.97
Deferred income tax assets 157,892,110.06 155,774,523.25
Other non-current assets 155,690,266.83 242,539,466.88
Total non-current assets 7,860,591,356.59 7,805,667,772.06
Total assets 13,430,286,222.94 13,351,097,602.03
Current liabilities:
Short-term borrowings 580,704,772.27 518,946,415.96
Held-for-trading financial liabilities 46,785,831.47 4,276,929.70
Notes payable 55,450,000.00
Accounts payable 275,502,915.05 246,588,463.74
Advances from customers
Contract liabilities 188,073,335.89 206,879,672.53
Employee benefits payable 284,344,973.72 330,027,159.72
Taxes payable 42,633,232.55 31,483,442.06
Other payables 47,549,373.52 83,357,296.71
Including: Interest payable
Dividends payable 441,113.64 441,113.64
Current portion of non-current
96,207,192.49 307,921,837.35
liabilities
Other current liabilities 63,646,908.11 66,889,025.17
Total current liabilities 1,625,448,535.07 1,851,820,242.94
Non-current liabilities:
Long-term borrowings 259,992,974.40 186,431,096.24
Bonds payable 1,476,572,070.79 1,438,162,231.27
Lease liabilities 86,580,224.41 98,501,303.83
Long-term payables
Long-term employee benefits payable 57,276,675.61 57,417,997.65
Provisions
Deferred income 151,768,947.92 159,615,037.36
Deferred income tax liabilities 155,178,797.04 151,243,432.80
Other non-current liabilities
Total non-current liabilities 2,187,369,690.17 2,091,371,099.15
Total liabilities 3,812,818,225.24 3,943,191,342.09
Owners’ equity:
Share capital 863,607,634.00 887,633,151.00
97
Lu Thai Textile Co., Ltd. Annual Report 2023
Other equity instruments 71,383,677.78 71,383,830.75
Including: Preferred shares
Perpetual bonds
Capital reserves 334,792,614.76 395,872,135.71
Less: Treasury stock 193,438,720.78 154,396,198.73
Other comprehensive income 131,343,141.63 107,628,898.09
Specific reserve
Surplus reserves 1,260,661,015.34 1,215,124,336.54
General reserve
Retained earnings 6,762,457,543.07 6,490,910,719.35
Total equity attributable to owners of the
9,230,806,905.80 9,014,156,872.71
Company as the parent
Non-controlling interests 386,661,091.90 393,749,387.23
Total owners’ equity 9,617,467,997.70 9,407,906,259.94
Total liabilities and owners’ equity 13,430,286,222.94 13,351,097,602.03
Legal representative: Liu Zibin Chief Accountant: Zhang Keming Financial Manager: Zhang Keming
2. Balance Sheet of the Company as the Parent
Unit: RMB
Item 31 December 2023 1 January 2023
Current assets:
Monetary assets 932,232,103.80 1,493,189,218.38
Held-for-trading financial assets 446,874,251.41 14,782,050.00
Derivative financial assets
Notes receivable 54,622,178.42 99,348,764.36
Accounts receivable 356,483,425.59 357,917,050.71
Accounts receivable financing 11,214,873.48 4,977,876.31
Prepayments 21,426,761.45 52,932,385.24
Other receivables 2,064,459,414.54 1,982,595,534.99
Including: Interest receivable
Dividends receivable 18,563,298.39
Inventories 955,634,154.13 1,032,571,546.29
Contract assets
Available-for-sale assets
Current portion of non-current assets
Other current assets 2,443,246.51 12,117,078.06
Total current assets 4,845,390,409.33 5,050,431,504.34
Non-current assets:
Long-term receivables
Long-term equity investments 3,579,497,806.27 3,069,423,182.09
Investments in other equity instruments
98
Lu Thai Textile Co., Ltd. Annual Report 2023
Other non-current financial assets 76,750,000.00 325,110,000.00
Investment property 64,745,052.00 68,234,288.24
Fixed assets 2,048,332,131.98 2,239,204,199.53
Construction in progress 3,320,771.05 14,457,725.94
Right-of-use assets 90,043,845.90 102,526,417.74
Intangible assets 197,852,690.71 203,872,938.32
Development costs
Goodwill
Long-term deferred expenses 689,403.73 1,124,816.52
Deferred income tax assets 80,728,077.79 70,230,669.83
Other non-current assets 153,767,959.47 180,305,870.74
Total non-current assets 6,295,727,738.90 6,274,490,108.95
Total assets 11,141,118,148.23 11,324,921,613.29
Current liabilities:
Short-term borrowings 3,180,000.00 73,701,088.21
Notes payable 213,094,435.63
Accounts payable 108,266,517.50 100,586,843.48
Advances from customers
Contract liabilities 106,140,758.76 91,983,662.84
Payroll payable 188,784,236.01 231,917,717.02
Taxes payable 23,490,180.58 9,698,693.68
Other payables 133,819,575.89 164,914,178.73
Including: Interest payable
Dividends payable 441,113.64 441,113.64
Held-for-sale liabilities
Current portion of non-current
95,832,728.97 307,273,908.99
liabilities
Other current liabilities 44,293,993.88 42,075,638.45
Total current liabilities 703,807,991.59 1,235,246,167.03
Non-current liabilities:
Long-term borrowings 259,992,974.40 186,431,096.24
Bonds payable 1,476,572,070.79 1,438,162,231.27
Lease liabilities 89,388,836.15 100,877,929.66
Long-term payables
Long-term payroll payable 57,276,675.61 57,417,997.65
Provisions
Deferred income 114,149,056.16 119,562,568.94
Deferred income tax liabilities 120,804,925.25 112,945,049.91
Other non-current liabilities
Total non-current liabilities 2,118,184,538.36 2,015,396,873.67
Total liabilities 2,821,992,529.95 3,250,643,040.70
99
Lu Thai Textile Co., Ltd. Annual Report 2023
Owners’ equity:
Share capital 863,607,634.00 887,633,151.00
Other equity instruments 71,383,677.78 71,383,830.75
Including: Preferred shares
Perpetual bonds
Capital reserves 396,172,649.00 457,252,169.95
Less: Treasury stock 193,438,720.78 154,396,198.73
Other comprehensive income -41,439.79 -30,162.34
Specific reserve
Surplus reserves 1,257,552,275.70 1,212,015,596.90
Retained earnings 5,923,889,542.37 5,600,420,185.06
Total owners’ equity 8,319,125,618.28 8,074,278,572.59
Total liabilities and owners’ equity 11,141,118,148.23 11,324,921,613.29
3. Consolidated Income Statement
Unit: RMB
Item 2023 2022
1. Revenue 5,961,477,252.98 6,938,342,135.90
Including: Operating revenue 5,961,477,252.98 6,938,342,135.90
2. Costs and expenses 5,430,655,421.05 5,884,547,175.68
Including: Cost of sales 4,591,388,915.40 5,154,367,596.90
Taxes and surcharges 63,259,971.00 69,467,165.08
Selling expense 148,454,814.21 136,929,096.72
Administrative expense 382,327,532.79 396,309,634.39
Development cost 239,775,343.18 276,424,812.26
Finance costs 5,448,844.47 -148,951,129.67
Including: Interest expense 86,305,243.50 88,644,208.75
Interest income 51,052,872.64 49,863,731.95
Add: Other income 45,126,894.28 49,142,717.20
Return on investment (“-” for loss) 39,364,608.46 13,734,073.31
Including: Share of profit or loss of joint ventures and associates -9,556,170.35 28,049,040.53
Income from the derecognition of financial assets at amortized
cost (“-” for loss)
Exchange gain (“-” for loss)
Net gain on exposure hedges (“-” for loss)
Gain on changes in fair value (“-” for loss) -65,020,725.14 169,192,724.92
Credit impairment loss (“-” for loss) -2,300,057.75 -18,134,328.11
Asset impairment loss (“-” for loss) -105,876,786.52 -186,305,963.36
Asset disposal income (“-” for loss) -9,123,336.47 912,625.90
3. Operating profit (“-” for loss) 432,992,428.79 1,082,336,810.08
100
Lu Thai Textile Co., Ltd. Annual Report 2023
Add: Non-operating income 9,347,696.19 8,056,548.73
Less: Non-operating expense 5,146,681.99 11,007,935.46
4. Profit before tax (“-” for loss) 437,193,442.99 1,079,385,423.35
Less: Income tax expense 40,841,005.37 105,623,060.81
5. Net profit (“-” for net loss) 396,352,437.62 973,762,362.54
5.1 By operating continuity
5.1.1 Net profit from continuing operations (“-” for net loss) 396,352,437.62 973,762,362.54
5.1.2 Net profit from discontinued operations (“-” for net loss)
5.2 By ownership
5.2.1 Net profit attributable to shareholders of the Company as the
403,444,254.42 963,864,819.43
parent
5.2.2 Net profit attributable to non-controlling interests -7,091,816.80 9,897,543.11
6. Other comprehensive income, net of tax 23,717,765.01 144,092,458.68
Attributable to owners of the Company as the parent 23,714,243.54 144,052,646.46
6.1 Items that will not be reclassified to profit or loss
6.1.1 Changes caused by re-measurements on defined benefit
schemes
6.1.2 Other comprehensive income that will not be reclassified to
profit or loss under the equity method
6.1.3 Changes in the fair value of investments in other equity
instruments
6.1.4 Changes in the fair value arising from changes in own credit
risk
6.1.5 Other
6.2 Items that will be reclassified to profit or loss 23,714,243.54 144,052,646.46
6.2.1 Other comprehensive income that will be reclassified to
profit or loss under the equity method
6.2.2 Changes in the fair value of investments in other debt
obligations
6.2.3 Other comprehensive income arising from the
reclassification of financial assets
6.2.4 Credit impairment allowance for investments in other debt
obligations
6.2.5 Reserve for cash flow hedges
6.2.6 Differences arising from the translation of foreign currency-
23,714,956.57 143,850,902.02
denominated financial statements
6.2.7 Other -713.03 201,744.44
Attributable to non-controlling interests 3,521.47 39,812.22
7. Total comprehensive income 420,070,202.63 1,117,854,821.22
Attributable to owners of the Company as the parent 427,158,497.96 1,107,917,465.89
Attributable to non-controlling interests -7,088,295.33 9,937,355.33
8. Earnings per share
8.1 Basic earnings per share 0.47 1.10
8.2 Diluted earnings per share 0.42 0.95
Where business combinations under common control occurred in the current period, the net profit achieved by the acquirees before
the combinations was RMB0.00, with the amount for the same period of last year being RMB0.00.
Legal representative: Liu Zibin Chief Accountant: Zhang Keming Financial Manager: Zhang Keming
101
Lu Thai Textile Co., Ltd. Annual Report 2023
4. Income Statement of the Company as the Parent
Unit: RMB
Item 2023 2022
1. Operating revenue 3,427,661,629.75 4,207,250,282.21
Less: Cost of sales 2,657,436,337.48 3,167,800,915.91
Taxes and surcharges 40,216,738.61 48,152,045.75
Selling expense 100,621,317.61 98,346,509.45
Administrative expense 201,565,813.64 273,742,666.38
R&D expense 157,866,751.74 186,084,341.76
Finance costs -19,059,608.38 -171,451,099.25
Including: Interest expense 44,494,486.25 21,891,357.83
Interest income 33,971,447.09 34,599,913.21
Add: Other income 20,954,801.42 22,189,971.41
Return on investment (“-” for loss) 217,442,278.85 149,933,954.32
Including: Share of profit or loss of joint ventures and associates -9,556,170.35 28,049,040.53
Income from the derecognition of financial assets at amortized
cost (“-” for loss)
Net gain on exposure hedges (“-” for loss)
Gain on changes in fair value (“-” for loss) -17,222,836.45 160,554,050.00
Credit impairment loss (“-” for loss) 6,673,149.93 -2,217,796.79
Asset impairment loss (“-” for loss) -48,963,959.94 -81,729,018.43
Asset disposal income (“-” for loss) -43,734.52 182,029.49
2. Operating profit (“-” for loss) 467,853,978.34 853,488,092.21
Add: Non-operating income 7,022,950.83 6,621,289.52
Less: Non-operating expense 1,850,658.24 6,748,987.44
3. Profit before tax (“-” for loss) 473,026,270.93 853,360,394.29
Less: Income tax expense 17,659,482.92 78,265,437.44
4. Net profit (“-” for net loss) 455,366,788.01 775,094,956.85
4.1 Net profit from continuing operations (“-” for net loss) 455,366,788.01 775,094,956.85
4.2 Net profit from discontinued operations (“-” for net loss)
5. Other comprehensive income, net of tax -11,277.45 263,417.90
5.1 Items that will not be reclassified to profit or loss
5.1.1 Changes caused by re-measurements on defined benefit
schemes
5.1.2 Other comprehensive income that will not be reclassified to
profit or loss under the equity method
5.1.3 Changes in the fair value of investments in other equity
instruments
5.1.4 Changes in the fair value arising from changes in own credit
risk
5.1.5 Other
5.2 Items that will be reclassified to profit or loss -11,277.45 263,417.90
5.2.1 Other comprehensive income that will be reclassified to
profit or loss under the equity method
102
Lu Thai Textile Co., Ltd. Annual Report 2023
5.2.2 Changes in the fair value of investments in other debt
obligations
5.2.3 Other comprehensive income arising from the
reclassification of financial assets
5.2.4 Credit impairment allowance for investments in other debt
obligations
5.2.5 Reserve for cash flow hedges
5.2.6 Differences arising from the translation of foreign currency-
denominated financial statements
5.2.7 Other -11,277.45 263,417.90
6. Total comprehensive income 455,355,510.56 775,358,374.75
7. Earnings per share
7.1 Basic earnings per share 0.53 0.88
7.2 Diluted earnings per share 0.49 0.79
5. Consolidated Cash Flow Statement
Unit: RMB
Item 2023 2022
1. Cash flows from operating activities:
Proceeds from sale of commodities and rendering
5,492,424,305.68 7,001,597,756.89
of services
Tax rebates 125,496,730.53 166,814,030.33
Cash generated from other operating activities 115,366,461.66 50,207,676.76
Subtotal of cash generated from operating
5,733,287,497.87 7,218,619,463.98
activities
Payments for commodities and services 3,008,274,838.63 3,927,652,179.15
Cash paid to and for employees 1,565,653,879.04 1,548,156,910.96
Taxes paid 146,230,769.74 182,308,141.79
Cash used in other operating activities 158,263,473.04 138,191,457.82
Subtotal of cash used in operating activities 4,878,422,960.45 5,796,308,689.72
Net cash generated from/used in operating
854,864,537.42 1,422,310,774.26
activities
2. Cash flows from investing activities:
Proceeds from disinvestment 9,465,141,937.71 133,323,521.50
Return on investment 57,805,732.66 34,285,319.99
Net proceeds from the disposal of fixed assets,
6,391,414.47 7,324,525.46
intangible assets and other long-lived assets
Net proceeds from the disposal of subsidiaries
and other business units
Cash generated from other investing activities 153,332,756.55 89,213,325.33
Subtotal of cash generated from investing
9,682,671,841.39 264,146,692.28
activities
Payments for the acquisition of fixed assets,
846,768,782.56 503,584,860.31
intangible assets and other long-lived assets
Payments for investments 9,664,068,682.71 359,556,504.86
Cash used in other investing activities 125,073,907.21 118,661,325.53
Subtotal of cash used in investing activities 10,635,911,372.48 981,802,690.70
Net cash generated from/used in investing
-953,239,531.09 -717,655,998.42
activities
103
Lu Thai Textile Co., Ltd. Annual Report 2023
3. Cash flows from financing activities:
Capital contributions received 19,086,927.80
Including: Capital contributions by non-
controlling interests to subsidiaries
Borrowings raised 1,289,625,206.43 1,326,434,596.95
Cash generated from other financing activities 98,800.40
Subtotal of cash generated from financing
1,289,724,006.83 1,345,521,524.75
activities
Repayment of borrowings 1,345,902,236.09 2,118,703,417.56
Interest and dividends paid 140,337,440.33 114,018,478.84
Including: Dividends paid by subsidiaries to non-
controlling interests
Cash used in other financing activities 191,144,339.52 107,326,619.83
Subtotal of cash used in financing activities 1,677,384,015.94 2,340,048,516.23
Net cash generated from/used in financing
-387,660,009.11 -994,526,991.48
activities
4. Effect of foreign exchange rates changes on
16,753,038.55 142,762,600.91
cash and cash equivalents
5. Net increase in cash and cash equivalents -469,281,964.23 -147,109,614.73
Add: Cash and cash equivalents, beginning of the
1,822,897,270.16 1,970,006,884.89
period
6. Cash and cash equivalents, end of the period 1,353,615,305.93 1,822,897,270.16
6. Cash Flow Statement of the Company as the Parent
Unit: RMB
Item 2023 2022
1. Cash flows from operating activities:
Proceeds from sale of commodities and
3,400,282,767.04 4,230,164,898.24
rendering of services
Tax rebates 18,736,021.12 35,115,485.51
Cash generated from other operating
104,254,111.11 46,602,876.06
activities
Subtotal of cash generated from
3,523,272,899.27 4,311,883,259.81
operating activities
Payments for commodities and services 2,159,792,398.75 2,204,442,463.82
Cash paid to and for employees 800,852,277.47 867,417,441.71
Taxes paid 76,441,020.56 124,452,272.83
Cash used in other operating activities 81,704,187.26 87,964,680.84
Subtotal of cash used in operating
3,118,789,884.04 3,284,276,859.20
activities
Net cash generated from/used in
404,483,015.23 1,027,606,400.61
operating activities
2. Cash flows from investing activities:
Proceeds from disinvestment 9,682,135,302.71 473,611,167.77
Return on investment 224,820,810.27 186,817,055.74
Net proceeds from the disposal of fixed
assets, intangible assets and other long- 27,474,017.14 32,427,869.91
lived assets
Net proceeds from the disposal of
subsidiaries and other business units
104
Lu Thai Textile Co., Ltd. Annual Report 2023
Cash generated from other investing
2,278,859,489.72 2,254,482,395.37
activities
Subtotal of cash generated from
12,213,289,619.84 2,947,338,488.79
investing activities
Payments for the acquisition of fixed
assets, intangible assets and other long- 39,152,926.47 143,565,978.32
lived assets
Payments for investments 10,390,555,710.00 662,467,290.00
Net payments for the acquisition of
subsidiaries and other business units
Cash used in other investing activities 2,206,901,511.31 2,002,472,544.95
Subtotal of cash used in investing
12,636,610,147.78 2,808,505,813.27
activities
Net cash generated from/used in
-423,320,527.94 138,832,675.52
investing activities
3. Cash flows from financing activities:
Capital contributions received 19,086,927.80
Borrowings raised 287,145,597.90 592,777,524.65
Cash generated from other financing
90,098,800.40 154,870,600.00
activities
Subtotal of cash generated from
377,244,398.30 766,735,052.45
financing activities
Repayment of borrowings 485,589,548.34 1,357,097,218.44
Interest and dividends paid 119,661,804.52 100,075,384.31
Cash used in other financing activities 274,154,122.94 191,679,488.04
Subtotal of cash used in financing
879,405,475.80 1,648,852,090.79
activities
Net cash generated from/used in
-502,161,077.50 -882,117,038.34
financing activities
4. Effect of foreign exchange rates
2,858,399.67 21,810,782.76
changes on cash and cash equivalents
5. Net increase in cash and cash
-518,140,190.54 306,132,820.55
equivalents
Add: Cash and cash equivalents,
1,283,846,116.80 977,713,296.25
beginning of the period
6. Cash and cash equivalents, end of the
765,705,926.26 1,283,846,116.80
period
7. Consolidated Statements of Changes in Owners’ Equity
2023
105
Lu Thai Textile Co., Ltd. Annual Report 2023
Unit: RMB
2023
Equity attributable to owners of the Company as the parent
Non-
Item Other equity instruments Other Total
Less: controllin
Capital comprehe Specific Surplus General Retained Oth owners’
Share capital Prefer Perpe Treasury Subtotal g
reserves nsive reserve reserves reserve earnings er equity
red tual Other stock interests
shares bonds income
1.
Balances
71,383,83 395,872,1 154,396,1 107,628,8 1,215,124 6,490,910 9,014,156,872. 393,749,3 9,407,906
as at the 887,633,151.00
end of the 0.75 35.71 98.73 98.09 ,336.54 ,719.35 71 87.23 ,259.94
prior year
Add:
Adjustme
nts for
changed
accountin
g policies
Adjustme
nts for
correction
s of
previous
errors
Other
adjustme
nts
2.
Balances
as at the 71,383,83 395,872,1 154,396,1 107,628,8 1,215,124 6,490,910 9,014,156,872. 393,749,3 9,407,906
887,633,151.00
beginning 0.75 35.71 98.73 98.09 ,336.54 ,719.35 71 87.23 ,259.94
of the
year
106
Lu Thai Textile Co., Ltd. Annual Report 2023
3.
Increase/
decrease - -
39,042,52 23,714,24 45,536,67 271,546,8 209,561,7
in the -24,025,517.00 -152.97 61,079,52 216,650,033.09 7,088,295
period (“- 2.05 3.54 8.80 23.72 37.76
0.95 .33
” for
decrease)
3.1
Total -
23,714,24 403,444,2 420,070,2
comprehe 427,158,497.96 7,088,295
nsive 3.54 54.42 02.63
.33
income
3.2
Capital
increased - -
39,042,52 -
and -24,025,517.00 -152.97 61,079,52 124,147,7
reduced 2.05 124,147,712.97
0.95 12.97
by
owners
3.2.1
Ordinary
shares - -
-
increased -24,025,517.00 76,058,49 100,084,0
by 100,084,009.62
2.62 09.62
sharehold
ers
3.2.2
Capital
increased
by
holders of
other
equity
instrumen
ts
3.2.3
Share-
based
payments 16,824,11 16,824,11
16,824,114.86
included 4.86 4.86
in
owners’
equity
3.2.4 -152.97 - 39,042,52 -40,887,818.21 -
107
Lu Thai Textile Co., Ltd. Annual Report 2023
Other 1,845,143 2.05 40,887,81
.19 8.21
3.3 Profit - -
45,536,67
distributi 131,897,4 -86,360,751.90 86,360,75
on 8.80
30.70 1.90
3.3.1
Appropri -
45,536,67
ation to 45,536,67
surplus 8.80
8.80
reserves
3.3.2
Appropri
ation to
general
reserve
3.3.3
Appropri
ation to - -
owners 86,360,75 -86,360,751.90 86,360,75
(or 1.90 1.90
sharehold
ers)
3.3.4
Other
3.4
Transfers
within
owners’
equity
3.4.1
Increase
in capital
(or share
capital)
from
capital
reserves
3.4.2
Increase
in capital
(or share
capital)
from
108
Lu Thai Textile Co., Ltd. Annual Report 2023
surplus
reserves
3.4.3
Loss
offset by
surplus
reserves
3.4.4
Changes
in defined
benefit
pension
schemes
transferre
d to
retained
earnings
3.4.5
Other
comprehe
nsive
income
transferre
d to
retained
earnings
3.4.6
Other
3.5
Specific
reserve
3.5.1
Increase 6,075,563 6,075,563
6,075,563.41
in the .41 .41
period
3.5.2 - -
Used in 6,075,563 -6,075,563.41 6,075,563
the period .41 .41
3.6 Other
109
Lu Thai Textile Co., Ltd. Annual Report 2023
4.
Balances
71,383,67 334,792,6 193,438,7 131,343,1 1,260,661 6,762,457 9,230,806,905. 386,661,0 9,617,467
as at the 863,607,634.00
end of the 7.78 14.76 20.78 41.63 ,015.34 ,543.07 80 91.90 ,997.70
period
2022
Unit: RMB
2022
Equity attributable to owners of the Company as the parent
Non-
Item Other equity instruments Other Total
Less: controllin
Capital comprehe Specific Surplus General Retained owners’
Share capital Preferr Perpet Treasury Other Subtotal g
reserves nsive reserve reserves reserve earnings equity
ed ual Other stock interests
shares bonds income
1.
Balances
-
as at the 882,341,295.0 71,384,6 340,587, 78,908,3 1,215,12 5,589,20 7,983,307,40 383,812, 8,367,11
36,423,7
end of 0 56.84 387.65 00.00 4,336.54 1,772.37 0.03 031.90 9,431.93
48.37
the prior
year
Add:
Adjustme
nts for
changed
accountin
g policies
Adjustme
nts for
correctio
ns of
previous
errors
Other
adjustme
nts
2.
Balances
-
as at the 882,341,295.0 71,384,6 340,587, 78,908,3 1,215,12 5,589,20 7,983,307,40 383,812, 8,367,11
36,423,7
beginnin 0 56.84 387.65 00.00 4,336.54 1,772.37 0.03 031.90 9,431.93
48.37
g of the
year
110
Lu Thai Textile Co., Ltd. Annual Report 2023
3.
Increase/
decrease
55,284,7 75,487,8 144,052, 901,708, 1,030,849,47 9,937,35 1,040,78
in the 5,291,856.00 -826.09
48.06 98.73 646.46 946.98 2.68 5.33 6,828.01
period (“-
” for
decrease)
3.1
Total
144,052, 963,864, 1,107,917,46 9,937,35 1,117,85
comprehe
646.46 819.43 5.89 5.33 4,821.22
nsive
income
3.2
Capital
increased - -
55,284,7 75,487,8
and 5,291,856.00 -826.09 14,912,120.7 14,912,1
48.06 98.73
reduced 6 20.76
by
owners
3.2.1
Ordinary
shares
13,743,1 19,035,049.1 19,035,0
increased 5,291,856.00
93.13 3 49.13
by
sharehold
ers
3.2.2
Capital
increased
by
holders
of other
equity
instrume
nts
3.2.3
Share-
based
39,975,6 39,975,678.0 39,975,6
payments
78.06 6 78.06
included
in
owners’
111
Lu Thai Textile Co., Ltd. Annual Report 2023
equity
- -
3.2.4 1,565,87 75,487,8
-826.09 73,922,847.9 73,922,8
Other 6.87 98.73
5 47.95
3.3
- - -
Profit
62,155,8 62,155,872.4 62,155,8
distributi
72.45 5 72.45
on
3.3.1
Appropri
ation to
surplus
reserves
3.3.2
Appropri
ation to
general
reserve
3.3.3
Appropri
ation to - - -
owners 62,155,8 62,155,872.4 62,155,8
(or 72.45 5 72.45
sharehold
ers)
3.3.4
Other
3.4
Transfers
within
owners’
equity
3.4.1
Increase
in capital
(or share
capital)
from
capital
112
Lu Thai Textile Co., Ltd. Annual Report 2023
reserves
3.4.2
Increase
in capital
(or share
capital)
from
surplus
reserves
3.4.3
Loss
offset by
surplus
reserves
3.4.4
Changes
in
defined
benefit
pension
schemes
transferre
d to
retained
earnings
3.4.5
Other
comprehe
nsive
income
transferre
d to
retained
earnings
3.4.6
Other
3.5
Specific
reserve
113
Lu Thai Textile Co., Ltd. Annual Report 2023
3.5.1
Increase 5,414,40 5,414,40
5,414,407.96
in the 7.96 7.96
period
3.5.2
- -
Used in -
5,414,40 5,414,40
the 5,414,407.96
7.96 7.96
period
3.6 Other
4.
Balances
as at the 887,633,151.0 71,383,8 395,872, 154,396, 107,628, 1,215,12 6,490,91 9,014,156,87 393,749, 9,407,90
end of 0 30.75 135.71 198.73 898.09 4,336.54 0,719.35 2.71 387.23 6,259.94
the
period
8. Statements of Changes in Owners’ Equity of the Company as the Parent
2023
Unit: RMB
2023
Other equity instruments Specif
Item Less: Other
Capital ic Surplus Retained Total owners’
Share capital Preferre Perpetua Treasury comprehensive Other
Other reserves reserv reserves earnings equity
d shares l bonds stock income
e
1. Balances
as at the end 457,252,169. 154,396,198. 1,212,015,59 5,600,420,18
887,633,151.00 71,383,830.75 -30,162.34 8,074,278,572.59
of the prior 95 73 6.90 5.06
year
Add:
Adjustments
for changed
accounting
policies
Adjustments
for
corrections
of previous
114
Lu Thai Textile Co., Ltd. Annual Report 2023
errors
Other
adjustments
2. Balances
as at the 457,252,169. 154,396,198. 1,212,015,59 5,600,420,18
887,633,151.00 71,383,830.75 -30,162.34 8,074,278,572.59
beginning of 95 73 6.90 5.06
the year
3. Increase/
decrease in -
39,042,522.0
the period -24,025,517.00 -152.97 61,079,520.9 -11,277.45 45,536,678.8 323,469,357. 244,847,045.69
(“-” for 5
5 0 31
decrease)
3.1 Total
455,366,788.
comprehensi -11,277.45 455,355,510.56
ve income 01
3.2 Capital -
increased 39,042,522.0
-24,025,517.00 -152.97 61,079,520.9 -124,147,712.97
and reduced 5
by owners 5
3.2.1
Ordinary -
shares -24,025,517.00 76,058,492.6 -100,084,009.62
increased by 2
shareholders
3.2.2 Capital
increased by
holders of
other equity
instruments
3.2.3 Share-
based
payments 16,824,114.8
16,824,114.86
included in 6
owners’
equity
- 39,042,522.0
3.2.4 Other -152.97 -40,887,818.21
1,845,143.19 5
-
3.3 Profit
45,536,678.8 131,897,430. -86,360,751.90
distribution
0 70
115
Lu Thai Textile Co., Ltd. Annual Report 2023
3.3.1 -
Appropriatio
45,536,678.8 45,536,678.8
n to surplus
reserves 0 0
3.3.2
Appropriatio -
n to owners
86,360,751.9 -86,360,751.90
(or
shareholders 0
)
3.3.3
Other
3.4
Transfers
within
owners’
equity
3.4.1
Increase in
capital (or
share
capital) from
capital
reserves
3.4.2
Increase in
capital (or
share
capital) from
surplus
reserves
3.4.3 Loss
offset by
surplus
reserves
3.4.4
Changes in
defined
benefit
pension
schemes
transferred
to retained
earnings
116
Lu Thai Textile Co., Ltd. Annual Report 2023
3.4.5
Other
comprehensi
ve income
transferred
to retained
earnings
3.4.6
Other
3.5 Specific
reserve
3.5.1
Increase in
the period
3.5.2
Used in the
period
3.6 Other
4. Balances
396,172,649. 193,438,720. 1,257,552,27 5,923,889,54
as at the end 863,607,634.00 71,383,677.78 -41,439.79 8,319,125,618.28
of the period 00 78 5.70 2.37
2022
Unit: RMB
2022
Item Other equity instruments Specifi
Less: Other
Capital c Surplus Retained
Share capital Preferre Perpetu Treasury comprehensive Other Total owners’ equity
reserves reserv reserves earnings
d al Other stock income
e
shares bonds
1. Balances as at
401,967,421 78,908,300. 1,212,015,5 4,887,481,1
the end of the prior 882,341,295.00 71,384,656.84 -293,580.24 7,375,988,191.05
.89 00 96.90 00.66
year
Add: Adjustments
for changed
accounting policies
117
Lu Thai Textile Co., Ltd. Annual Report 2023
Adjustments for
corrections of
previous errors
Other
adjustments
2. Balances as at
401,967,421 78,908,300. 1,212,015,5 4,887,481,1
the beginning of 882,341,295.00 71,384,656.84 -293,580.24 7,375,988,191.05
.89 00 96.90 00.66
the year
3. Increase/
decrease in the 55,284,748. 75,487,898. 712,939,084
5,291,856.00 -826.09 263,417.90 698,290,381.54
period (“-” for 06 73 .40
decrease)
3.1 Total
775,094,956
comprehensive 263,417.90 775,358,374.75
.85
income
3.2 Capital
55,284,748. 75,487,898.
increased and 5,291,856.00 -826.09 -14,912,120.76
06 73
reduced by owners
3.2.1 Ordinary
13,743,193.
shares increased by 5,291,856.00 19,035,049.13
13
shareholders
3.2.2 Capital
increased by
holders of other
equity instruments
3.2.3 Share-based
39,975,678.
payments included 39,975,678.06
06
in owners’ equity
1,565,876.8 75,487,898.
3.2.4 Other -826.09 -73,922,847.95
7 73
-
3.3 Profit
62,155,872. -62,155,872.45
distribution
45
3.3.1
Appropriation to
surplus reserves
3.3.2
-
Appropriation to
62,155,872. -62,155,872.45
owners (or
45
shareholders)
3.3.3 Other
3.4 Transfers
within owners’
equity
118
Lu Thai Textile Co., Ltd. Annual Report 2023
3.4.1 Increase in
capital (or share
capital) from
capital reserves
3.4.2 Increase in
capital (or share
capital) from
surplus reserves
3.4.3 Loss offset
by surplus reserves
3.4.4 Changes in
defined benefit
pension schemes
transferred to
retained earnings
3.4.5 Other
comprehensive
income transferred
to retained
earnings
3.4.6 Other
3.5 Specific
reserve
3.5.1 Increase in
the period
3.5.2 Used in
the period
3.6 Other
4. Balances as at
457,252,169 154,396,198 1,212,015,5 5,600,420,1
the end of the 887,633,151.00 71,383,830.75 -30,162.34 8,074,278,572.59
.95 .73 96.90 85.06
period
119
Lu Thai Textile Co., Ltd. Annual Report 2023
III Company Profile
Lu Thai Textile Co., Ltd. (hereinafter referred to as "the Company"), originally Lu Thai Textile Ltd., was a Sino-foreign joint
venture established by Zibo Lucheng Textile Investment Co., Ltd. (formerly Zibo Lucheng Textile Co., Ltd., hereinafter referred
to as "Lucheng Textile") and Tailun (Thailand) Textile Co., Ltd. In February 1993, it was restructured into a joint-stock company.
In July 1997, with the approval of the Securities Committee of the State Council, 80,000,000 foreign shares (B-shares) were listed
domestically. On 19 August 1997, it was listed on the Shenzhen Stock Exchange, with the B-share stock code being 200726. On
24 November 2000, the CSRC approved the issuance of an additional 50,000,000 ordinary shares (A-shares), which were listed on
the Shenzhen Stock Exchange on 25 December 2000, with the A-share stock code being 000726.
In conformity with the resolution of the 7th Meeting of the 10th Board of Directors on 10 April 2023 and the resolution of the
General Meeting of the Company on 12 May 2023, the Proposal on Repurchase and Cancel Authorized but Unlocked Restricted
Share of the Incentive Personnel not Conforming to the Incentive Condition, all the 90,000 shares authorized to the original
incentive personnel who did not conform to the incentive condition of the Company were repurchased and cancelled.
After several rounds of capital increase and repurchase, as at 31 December 2023, the Company's registered capital stood at
RMB863,607,600. This includes 591,362,700 A-shares and 272,244,900 B-shares.
The Company’s registered address: No. 61, Luthai Avenue, Hi-tech Development Zone, Zibo, Shandong
The Company’s unified social credit code: 91370300613281175K
The Company’s legal representative: Liu Zibin.
The scope of business of the Company and its subsidiaries shall include general projects: Fabric printing and dyeing processing;
garment manufacturing, wholesale; procurement of primary agricultural products; power generation and transmission business.
The Company’s financial statements and Notes thereof have been approved by the 20th Meeting of the 10th Board of Directors
held on 10 April 2024.
IV Basis for Preparation of Financial Statements
1. Preparation Basis
This financial statement is prepared in accordance with the accounting standards for business enterprises, and the application guide,
interpretation and other relevant regulations (hereinafter collectively referred to as “Accounting Standards for Business Enterprises”)
issued by the Ministry of Finance. In addition, the Company also disclosed relevant financial information in accordance with the
Regulations on Information Disclosure and Compilation for Companies Public Offering Securities No. 15-General Provisions on
Financial Report (revised in 2023) issued by China Securities Regulatory Commission.
The Company's accounting is based on the accrual basis. Except for certain financial instruments, this financial statement is
measured on the basis of historical cost. If the asset is impaired, the corresponding impairment provision shall be made in accordance
with relevant regulations.
2. Going-concern
The financial statements are presented on the basis of continuing operations.
V Significant Accounting Policies and Estimates
Specific accounting policies and accounting estimates indicators:
The Company determines income recognition policy according to its production and operation characteristics, and the specific
accounting policies are shown in Note V (27).
120
Lu Thai Textile Co., Ltd. Annual Report 2023
1. Statement of Compliance with the Accounting Standards for Business Enterprises
The financial statements prepared by the Company are in compliance with in compliance with the Accounting Standards for Business
Enterprises, which factually and completely present the consolidated, and the Company’s financial positions as at 31 December 2023,
business results and cash flows for 2023, and other relevant information.
2. Fiscal Year
The Company’s fiscal year starts on 1 January and ends on 31 December of every year according to the Gregorian calendar.
3. Operating Cycle
The Company regards 12 months as an operating cycle.
4. Recording Currency
The Company and its domestic subsidiaries adopt RMB as the recording currency. The Company’s overseas subsidiaries confirm
to adopt HK Dollar and US Dollar as the recording currency according their major economic environment of the operating. When
preparing the financial statements for the Reporting Period, the Company adopted RMB as the recording currency.
5. Methods for Determining Materiality Standards and Selection Criteria
Applicable □ Not applicable
Item Materiality criteria
Significant receivables withdrawal of bad
Individual receivables exceeding 0.3% of total assets
debt provision separately accrued
Significant receivables reversed or recovered
Individual receivables exceeding 0.3% of total assets
during the Reporting Period
Significant written-off of receivables during
Individual receivables exceeding 0.3% of total assets
the Reporting Period
Significant prepayments aging over one year Individual prepayment amounts exceeding 0.3% of total assets
Significant construction in progress Individual investment amounts exceeding 1% of total assets
Significant accounts payable aging over one
Individual accounts payable amounts exceeding 0.3% of total assets
year
A subsidiary whose total assets, operating income, or total profit (or absolute loss
Significant non-wholly-owned subsidiary amount) exceeds 10% of the corresponding item in the consolidated financial
statements is considered a significant non-wholly owned subsidiary
Significant investment activity projects Individual investment amounts exceeding 5% of total assets
6. Accounting Treatment for Business Combinations under the Common Control and Not under the
Common Control
(1) Business combinations under the same control
For business combinations under the same control, the assets and liabilities of the merged party acquired by the merger party in the
merger, shall be measured at the carrying value of the merged party in the consolidated financial statement of the final controller
on the combination date. As for the difference between the carrying value of the merger consideration and carrying value of the net
assets obtained in the merger, the capital reserve (capital stock premium) shall be adjusted, and if the capital reserve (capital stock
premium) is insufficient to offset, the retained earnings shall be adjusted.
Realize business combination under the same control in steps by transaction several times
121
Lu Thai Textile Co., Ltd. Annual Report 2023
The assets and liabilities of the combined party acquired by the combining party in the combination, shall be measured at the book
value of the combined party in the consolidated financial statement of the final controller on the combination date; the difference
between the sum of the book value of investment held before combination plus the book value newly paid on the combination date,
and the book value of the net assets acquired in combination, is used for adjusting the capital reserve (capital stock premium), and
if the capital reserve (capital stock premium) is insufficient to offset, the retained earnings shall be adjusted. The long-term equity
investment held by the combining party before acquiring the control right of the combined party, if relevant gains and losses, other
comprehensive revenues and changes in other owner’s equity have been confirmed from the date of acquiring equity and the date
when the combining party and the combined party under the final control of the same party, whichever is later, to the combination
date, shall offset the retained earnings at the beginning or current profits and losses in the period of comparing statements.
(2) Business combinations not under the same control
For a business combination not under the same control, the cost of the combination is the assets paid, liabilities incurred or
assumed, and the fair value of the equity securities issued on the acquisition date to obtain control over the purchased party. On the
purchase date, the acquired assets, liabilities and contingent liabilities of the purchased party are recognized at fair value.
The difference between the merger cost and the fair value of the identifiable net assets of the acquired party acquired in the merger
(the former is greater than the latter) is recognized as goodwill, and subsequent measurement is made based on the cost deducting
the accumulated impairment provision; the difference between the merger cost and the fair value of the identifiable net assets of
the acquired party acquired in the merger (the former is less than the latter) shall be recorded into the current profit or loss after the
recheck.
Achieve business combination not under the same control step by step through multiple transactions
The cost of consolidation is the sum of the consideration paid at the purchase date and the fair value at the purchase date of the
equity already held by the acquired party before the purchase date. For equity of the acquired party that is already held before the
purchase date, it shall be re-measured according to the fair value of the equity on the purchase date, and the difference between the
fair value and its book value shall be included in the current investment income. If the equity of the acquired party held before the
purchase date involves other comprehensive income and the changes of other owner's equity, it shall be transferred to current
income on the purchase date, other comprehensive income arising from the remeasurement of the net liability or net asset of a
defined benefit plan by the investee, as well as other comprehensive income related to investments in non-trading equity
instruments designated at fair value through other comprehensive income, are excluded.
(3) Treatment of transaction costs in business combinations
Intermediary expenses such as auditing, legal services, evaluation and consulting and other related management expenses incurred
for the business combination shall be included in the current profit and loss when incurred. The transaction costs of equity
securities or debt securities issued as the merger consideration shall be included in the initial recognition amount of equity
securities or debt securities.
7. Criteria for Judging Control and Methods for Preparing Consolidated Financial Statements
(1) Criteria for judging control
The consolidation scope of the consolidated financial statements is determined on the basis of control. Control means that the
Company has the power over the invested unit, enjoys variable returns by participating in the related activities of the invested unit,
and has the ability to use the power over the invested unit to influence the amount of its return. When changes in relevant facts and
circumstances lead to changes in the elements involved in the definition of control, the Company will reassess.
In determining whether to include a structured entity within the consolidation scope, the Company considers all facts and
circumstances, including assessing the purpose and design of the structured entity's establishment, identifying the types of variable
returns, and evaluating whether the Company controls the structured entity based on whether it has assumed some or all of the
variability in returns by participating in its relevant activities.
(2) Preparation method of consolidated financial statements
122
Lu Thai Textile Co., Ltd. Annual Report 2023
The consolidated financial statements are prepared by the Company based on the financial statements of the Company and its
subsidiaries and other relevant materials. When preparing the consolidated financial statements, the accounting policies and
accounting fiscal of the Company and those of subsidiaries shall be consistent and the large transactions and intercourse balance
among companies shall be offset. Subsidiaries and businesses increased due to business combinations under the same control
during the Reporting Period shall be included into the Company’s combination scope since the date when they are jointly
controlled by the final controller, and the operating result and cash flow since then shall be respectively included into the
consolidated income statement and consolidated cash flow statement. As for subsidiaries and businesses increase due to business
combinations not under the same control during the Reporting Period, the revenue, expenses and profit or those subsidiaries and
businesses from the purchase date to the end of the Reporting Period shall be included into the consolidated income statement and
the cash flow thereof shall be included into the consolidated cash flow statement. The share of shareholders’ equity in subsidiaries
not belonging to the Company shall be regarded as the minority interests and separately listed under the item of shareholders’
equity in the consolidated balance sheet. The share of current portion of net profit or loss in subsidiaries belonging to minority
interests shall presented as the item of minority interests under the item of net profit in the consolidated income statement. The
difference between the losses of subsidiaries born by not-controlling shareholders and the share of the company’s owners’ equity
at the period-beginning the not-controlling shareholders enjoy (the former is larger than the latter) shall be offset the minority
interests.
8. Classification of Joint Arrangements and Accounting Treatment of Joint Operations
Joint arrangement refers to an arrangement under the joint control of two or more participants. The Company's joint arrangements are
divided into joint operations and joint ventures.
(1) Joint operations
A joint operation refers to a joint arrangement whereby the Company enjoys relevant assets of the arrangement, and assumes
obligations relevant liabilities of the arrangement.
The Company recognizes the following items related to the interest share in joint operation, and conducts accounting treatment in
accordance with relevant provisions of the Accounting Standard for Business Enterprises:
A. It recognizes separately held assets and jointly held assets according to the proportion;
B. It recognizes separately assumed liabilities and jointly assumed liabilities according to the proportion;
C. Income from the sale of the proportion of joint operation output is recognized;
D. Income from the sale of the joint operation output is recognized according to the proportion.
E. While the separately incurred fee is recognized, the incurred fee for joint operation is recognized according to the proportion.
(2) Joint ventures
A joint venture refers to a joint arrangement whereby the Company enjoys the right of the net assets of the arrangement only.
Accounting treatment of the investment of a joint venture is conducted by the Company in line with the provisions of relevant equity
method of accounting for long-term equity investment.
9. Confirmation Standard for Cash and Cash Equivalent
The term “cash” refers to cash on hand and deposits that are available for payment at any time. Cash equivalents refer to
investments held by the Company that are short-term, highly liquid, easily convertible into known amounts of cash, and have little
risk of change in value.
10. Foreign Currency Businesses and Translation of Foreign Currency Financial Statements
(1) Foreign currency business
123
Lu Thai Textile Co., Ltd. Annual Report 2023
The Company's foreign currency business is translated into the amount of the recording currency at the approximate exchange rate of
the spot exchange rate on the transaction date.
On the balance sheet date, foreign currency monetary items are translated at the spot exchange rate on the balance sheet date. The
exchange difference arising from the difference between the spot exchange rate on the balance sheet date and the spot exchange rate
at the time of initial recognition or the previous balance sheet date is included in the current profit and loss; for foreign currency non-
monetary items measured at historical cost, the translation adopts the spot exchange rate on the day the transaction occurs; for foreign
currency non-monetary items measured at fair value, the translation adopts the spot exchange rate on the day when the fair value is
confirmed, and the difference between the amount of recording currency and the amount of original recording currency shall be
included into the current profit or loss or other comprehensive income based on the nature of non-monetary items.
(2) Conversion of foreign currency financial statements
When converting the foreign currency financial statements of overseas subsidiaries on the balance sheet date, the assets and liabilities
items in the balance sheet shall be converted at the spot exchange rate on the balance sheet date. Other items of shareholders' equity
except for "undistributed profits" shall be converted at the spot exchange rate on the occurrence date.
Income and expense items in the income statement shall be converted using the approximate spot exchange rate on the transaction
date.
All items in the cash flow statement are converted according to the approximate spot exchange rate on the occurrence date of cash
flow. The impact of exchange rate changes on cash is taken as a reconciling item, and the item "impact of exchange rate changes on
cash and cash equivalents" is separately listed in the cash flow statement to reflect.
The difference arising from the conversion of financial statements is reflected in the "other comprehensive income" under the
shareholders' equity in the balance sheet.
When disposing of the overseas operation and losing control rights, the foreign currency statement conversion difference related to
the overseas operation shown under the shareholders' equity in the balance sheet shall be transferred to current profit and loss of
disposal in whole or in proportion to the disposal of overseas operation.
11. Financial Instruments
Financial instruments refer to contracts that form one party’s financial assets and form other parties’ financial liabilities or equity
instruments.
(1) Recognition and derecognition of financial instruments
The Company recognizes a financial asset or liability when it becomes a party of the relevant financial instrument contract.
Where a financial asset satisfies any of the following requirements, the recognition of it is terminated:
① The contractual rights for collecting the cash flow of the said financial asset are terminated;
② The said financial asset has been transferred and meet the following derecognition conditions for transfer of financial assets.
Only when the prevailing obligations of a financial liability are relieved in all or in part may the recognition of the financial
liability be terminated in all or partly. Where the Company (debtor) enters into an agreement with a creditor so as to substitute the
existing financial liabilities by way of any new financial liability, and if the contractual stipulations regarding the new financial
liability is substantially different from that regarding the existing financial liability, it terminates the recognition of the existing
financial liability, and at the same time recognizes the new financial liability.
The purchase and sale of financial assets under the normal ways shall be recognized and stopped to be recognized respectively at
the price of transaction date.
(2) Classification and measurement of financial assets
The Company classifies financial assets into the following three categories according to the business mode of managing financial
assets and the contractual cash flow characteristics of financial assets upon initial recognition: financial assets measured at
amortized cost, financial assets measured at fair value and whose changes are included in other comprehensive income, and
financial assets measured at fair value and whose changes are included in current profit and loss.
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Financial assets are measured at fair value upon initial recognition. For financial assets measured at fair value and whose changes
are included in current profit and loss, relevant transaction expenses are directly included in current profit and loss; for other types
of financial assets, relevant transaction expenses are included in the initial recognition amount. For accounts receivable arising
from the sale of products or the provision of labor services, which do not include or do not consider significant financing
components, the amount of consideration the Company is expected to be entitled to receive is taken as the initial recognition
amount.
Financial assets measured at amortized cost
The Company classifies financial assets that meet the following conditions and are not designated to be measured at fair value and
whose changes are included in current profit and loss as financial assets measured at amortized cost:
The Company's business model for managing this financial asset is aimed at collecting contractual cash flow;
The contractual terms of this financial asset stipulate that the cash flow generated on the specific date is only the payment of
principal and interest based on the principal amount outstanding.
Such financial assets are measured in amortized cost by the effective interest method after initial recognition. Gains or losses
arising from financial assets measured in amortized cost that are not part of any hedging relationship are included in current profit
and loss when derecognition, amortization according to the effective interest method, or impairment is recognized.
Financial assets measured at fair value and whose changes are included in other comprehensive income
The Company classifies financial assets that meet the following conditions and are not designated to be measured at fair value and
whose changes are included in current profit and loss as financial assets measured at fair value and whose changes are included in
other comprehensive income:
The Company's business model for managing this financial asset is aimed at both collecting the contractual cash flow and selling
this financial asset;
The contractual terms of this financial asset stipulate that the cash flow generated on the specific date is only the payment of
principal and interest based on the principal amount outstanding.
Such financial assets are subsequently measured at fair value after initial recognition. Interest, impairment losses or gains and
exchange gains and losses calculated by the effective interest method are included in current profit and loss, while other gains or
losses are included in other comprehensive income. When the financial asset is derecognized, the accumulated gains or losses
previously included in other comprehensive income are transferred out and included in current profit and loss.
Financial assets measured at fair value and whose changes are included in current profit and loss
Except for the above financial assets measured at amortized cost and at fair value with changes included in other comprehensive
income, the Company classifies all other financial assets as financial assets measured at fair value with changes included in current
profit and loss. Upon initial recognition, in order to eliminate or significantly reduce accounting mismatches, the Company
irrevocably designates some financial assets that should have been measured at amortized cost or at fair value and whose changes
are included in other comprehensive income as financial assets measured at fair value and whose changes are included in current
profit and loss.
Such financial assets are subsequently measured at fair value after initial recognition, and the resulting gains or losses (including
interest and dividend income) are included in current profit and loss unless the financial assets are part of the hedging relationship.
The business model of managing financial assets refers to how the Company manages financial assets to generate cash flow. The
business model determines whether the cash flow of the financial assets managed by the Company comes from the collection of
contractual cash flow, the sale of financial assets or both. The Company determines the business model for managing financial
assets on the basis of objective facts and specific business objectives decided by key management personnel to manage financial
assets.
The Company evaluates the contractual cash flow characteristics of financial assets to determine whether the contractual cash flow
generated by the relevant financial assets on the specific date is only the payment of principal and interest based on the principal
amount outstanding. Among them, the principal refers to the fair value of financial assets upon initial recognition; interest includes
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consideration for the time value of money, credit risks related to the principal amount outstanding in the specific period, and other
basic lending risks, costs and profits. In addition, the Company evaluates the contract terms that may lead to changes in the time
distribution or amount of contractual cash flow of financial assets to determine whether they meet the requirements of the above-
mentioned contractual cash flow characteristics.
Only when the Company changes the business mode of managing financial assets will all affected related financial assets be
reclassified on the first day of the first reporting period after business model changes, otherwise financial assets cannot be
reclassified after initial recognition.
(3) Classification and measurement of financial liabilities
The Company's financial liabilities are classified upon initial recognition as: financial liabilities measured at fair value and whose
changes are included in current profit and loss, and financial liabilities measured at amortized cost. For financial liabilities that are
not classified as measured at fair value and whose changes are included in current profit and loss, relevant transaction costs are
included in the initial recognition amount.
Financial liabilities measured at fair value and whose changes are included in current profit and loss
Financial liabilities measured at fair value and whose changes are included in current profit and loss include transactional financial
liabilities and financial liabilities designated as measured at fair value upon initial recognition and whose changes are included in
current profit and loss. Subsequent measurement shall be carried out according to fair value for such financial liabilities. Gains or
losses resulting from changes in fair value and dividends and interest expenses related to such financial liabilities shall be included
in current profit and loss.
Financial liabilities measured at amortized cost
Other financial liabilities are subsequently measured at amortized cost by using the effective interest method. Gains or losses
resulting from derecognition or amortization are included in current profit and loss.
Distinction between financial liabilities and equity instruments
Financial liabilities refer to liabilities that meet one of the following conditions:
① The contractual obligation to deliver cash or other financial assets to other parties.
② The contractual obligation to exchange financial assets or financial liabilities with other parties under potentially unfavorable
conditions.
③ Non-derivative contracts that must be or can be settled with the enterprise's own equity instruments in the future, and the
enterprise will deliver a variable number of its own equity instruments according to the contract.
④ Derivative contracts that must be or can be settled with the enterprise's own equity instruments in the future, except derivatives
contracts that exchange a fixed amount of cash or other financial assets with a fixed amount of its own equity instruments.
Equity instruments refer to contracts that can prove that an enterprise has the residual equity in its assets after deducting all
liabilities.
If the Company cannot unconditionally avoid performing a contractual obligation by delivering cash or other financial assets, the
contractual obligation meets the definition of financial liability.
If a financial instrument must be or can be settled with the Company's own equity instruments, it is necessary to consider whether
the Company's own equity instruments used to settle the instrument are used as substitutes for cash or other financial assets or to
enable the holder of this instrument to enjoy the residual equity in the assets after deducting all liabilities from the issuer. If it is
the former, this instrument is the Company's financial liability; if the latter is the case, this instrument is the Company's equity
instrument.
(4) Derivative financial instruments and embedded derivatives
The Company's derivative financial instruments include forward foreign exchange contracts and exchange option contracts, etc.
Initially, the fair value on the date when the derivative transaction contract is signed shall be used for measurement, and the fair
value shall be used for subsequent measurement. Derivative financial instruments with positive fair value are recognized as an
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asset, while those with negative fair value are indeed recognized as a liability. Any gains or losses arising from changes in fair
value that do not conform to the provisions of hedge accounting are directly included in current profit and loss.
For hybrid instruments containing embedded derivatives, such as the main contract is a financial asset, the relevant provisions on
classification of financial assets shall apply to the hybrid instruments as a whole. If the main contract is not a financial asset, and
the hybrid instrument is not measured at fair value and its changes are included in current profit and loss for accounting treatment,
the embedded derivative instrument has no close relationship with the main contract in terms of economic characteristics and risks,
and has the same conditions as the embedded derivative instrument, and the separate existing instrument meets the definition of
derivative instrument, the embedded derivative instrument shall be separated from the hybrid instrument and treated as a separate
derivative financial instrument. If it is not possible to separately measure embedded derivative instruments at the time of
acquisition or the subsequent balance sheet date, the hybrid instruments as a whole are designated as financial assets or financial
liabilities measured at fair value and their changes are included in current profit and loss.
(5) Fair value of financial instruments
See Note V(12) for the method of determining the fair value of financial assets and liabilities.
(6) Impairment of financial assets
The Company conducts impairment accounting treatment for the following items and confirms the loss provision based on the
expected credit losses:
Financial assets measured at amortized cost;
Receivables and debt instrument investments measured at fair value and whose changes are included in other comprehensive
income;
Contract assets defined in the Accounting Standards for Business Enterprises No. 14-Revenue;
Lease receivables;
Financial guarantee contracts (except those that are measured at fair value and whose changes are included in current profit and
loss, the transfer of financial assets does not meet the conditions for derecognition or continue to involve in the transferred
financial assets).
Measurement of expected credit loss
Expected credit loss refers to the weighted average of the credit losses of financial instruments weighted by the risk of default.
Credit loss refers to the difference between all contractual cash flows discounted at the original effective interest rate and
receivable according to the contract and all cash flows expected to be collected of the Company, i.e. the present value of all cash
shortfalls.
Considering the reasonable and reliable information about past events, current situation and the forecast of future economic
situation, the company takes the risk of default as the weight, calculates the probability weighted amount of the present value of
the difference between the cash flow receivable from the contract and the cash flow expected to be received, and confirms the
expected credit loss.
The Company separately measures the expected credit losses of financial instruments at different stages. If the credit risk of
financial instruments has not increased significantly since the initial recognition, it is in the first stage. The Company measures the
loss reserve according to the expected credit loss in the next 12 months; if the credit risk of financial instruments has increased
significantly since its initial recognition but no credit impairment has occurred, it is in the second stage. The Company measures
the loss reserve according to the expected credit loss during the whole duration of this instrument; if the financial instrument has
suffered credit impairment since its initial recognition, it is in the third stage. The Company measures the loss reserve according to
the expected credit loss during the whole duration of this instrument.
For financial instruments with low credit risk on the balance sheet date, the Company assumes that their credit risk has not
increased significantly since the initial recognition, and measures the loss reserve according to the expected credit loss in the next
12 months.
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The expected credit loss during the whole duration refers to the expected credit loss caused by all possible default events during
the whole expected duration of financial instruments. The expected credit loss in the next 12 months refers to the expected credit
loss caused by the possible default events of financial instruments within 12 months (or the expected duration if the expected
duration of financial instruments is less than 12 months) after the balance sheet date, which is part of the expected credit loss in the
whole duration.
When measuring the expected credit loss, the longest term that the Company needs to consider is the longest contract term that the
enterprise faces credit risk (including the option to renew the contract).
The Company calculates interest income based on the book balance before deducting impairment provisions and the effective
interest rate for financial instruments in the first and second stages and with low credit risk. The interest income shall be calculated
according to their book balance minus the amortized cost after impairment provision and the effective interest rate for financial
instruments in the third stage.
For receivables such as notes receivable, accounts receivable, accounts receivable financing, other receivables, and contract assets,
if the credit risk characteristics of a particular customer significantly differ from those of other customers in the portfolio, or if
there is a significant change in the customer's credit risk characteristics, the Company will make receivables withdrawal of bad
debt provision separately accrued. Apart from receivables withdrawal of bad debt provision separately accrued are made, the
Company classifies receivables into portfolios based on credit risk characteristics and calculates the allowance for doubtful debts
on a portfolio basis.
Notes receivable, accounts receivable and contract assets
The Company always measures its loss reserves at an amount equivalent to the expected credit loss during the entire duration for
notes receivable, contract assets and accounts receivable, regardless of whether there is any significant financing component.
If a single financial asset or contract assets cannot be used to evaluate the expected credit loss information at a reasonable cost, the
Company will divide the notes receivable, accounts receivable and contract assets into portfolio on the basis of the credit risk
features, and calculate the expected credit loss based on the portfolio. The basis for determining the portfolio is as follows:
A. Notes receivable
Notes receivable portfolio 1: bank acceptance bills with low credit rating
Notes receivable portfolio 2: commercial acceptance bills
B. Accounts receivable
Accounts receivable portfolio 1: payment not overdue (with L/C)
Accounts receivable portfolio 2: payment not overdue (with credit insurance)
Accounts receivable portfolio 3: payment overdue (without credit insurance)
Accounts receivable portfolio 4: payment overdue (with credit insurance)
Accounts receivable portfolio 5: payment overdue (without credit insurance)
For notes receivable and contract assets divided into portfolios, with reference to historical credit loss experience, combined with
current conditions and predictions of future economic conditions, the Company has calculated expected credit losses through
default risk exposure and expected credit loss rate for the entire duration.
For accounts receivable divided into portfolios, with reference to historical credit loss experience, combined with current
conditions and predictions of future economic conditions, the Company has prepared a comparison table between the number of
aging/overdue days of accounts receivable and the expected credit loss rate over the entire duration, and has calculated the
expected credit loss. The aging of accounts receivable is calculated from the date of recognition/the number of days overdue is
calculated from the expiry date of the credit period.
Other receivables
The Company divides other receivables into several portfolios based on the features of credit risk, and calculates the expected
credit losses on the basis of the combination. The basis for determining the portfolio is as follows:
Other receivables portfolio 1: Receivables from related parties within the scope of consolidation
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Other receivables portfolio 2: Tax refund receivable
Other receivables portfolio 3: Deposit receivable and security deposit
Other receivables portfolio 4: other receivables
For other receivables that are divided into portfolios, the Company calculates the expected credit loss with the default risk
exposure and the expected credit loss rate within the next 12 months or the entire duration. For other receivables classified into
portfolios by aging, the aging is calculated from the date of recognition.
Creditors' investment and other creditors' investment
For creditors' investment and other creditors' investment, the Company calculates the expected credit based on the nature of the
investment, as well as kinds of types of counterparties and risk exposures, the default risk exposure and the expected credit loss
rate within the next 12 months or the entire duration loss.
Assessment on significant increase of credit risk
In order to determine the relative changes in the default risk of financial instruments during their expected life and to assess
whether the credit risk of financial instruments has increased significantly since initial recognition, the Company compares the
default risk of financial instruments on the balance sheet date with the default risk on the initial recognition date.
When determining whether the credit risk has risen greatly since the initial recognition, the Company considers reasonable and
reliable information (forward-looking information inclusive) that can be obtained without unnecessary extra costs or efforts. The
information the Company considers shall include:
The debtor fails to pay the principal and interest according to the contract expiration date;
The external or internal credit ratings (if any) of financial instruments, which have occurred or are expected, deteriorate
significantly;
The debtor’s operating results, which have occurred or are expected, deteriorate significantly;
Existing or expected changes in technology, market, economy or legal environment will lead to a great adverse effect on the
debtor's ability to repay the Company.
Based on the nature of financial instruments, the Company assesses whether there is great risk in credit risk on the basis of
individual financial instruments or financial instrument portfolios. During assessment based on financial instrument portfolios, the
Company can divide financial instruments on the basis of common credit risk characteristics, such as overdue information and
credit risk ratings.
In case that the period overdue exceeds 30 days, the Company determines that there is a significant increase in the credit risk of
financial instruments.
Financial assets with depreciation of credit
The Company assesses, on the balance sheet date, whether there is any credit impairment to financial assets measured at amortized
cost and creditors' investment measured at fair value and whose changes are included in other comprehensive income. In case of
one or more events that adversely affect the expected future cash flow of a financial asset occur, the financial asset will become
financial assets with depreciation of credit. The observable information below can be treated as evidence for credit impairment to
financial assets:
The issuer or debtor is caught in a serious financial difficulty;
The debtor breaches the agreement of contract, such as default or overdue payment of interest or principal, or other default;
Due to economic or contractual considerations related to the debtor's financial difficulties, the Company gives concessions to the
debtor; and the concessions will not be made under any other circumstances;
There lies a great probability of bankruptcy or other financial restructuring for the debtor;
The issuer or debtor is caught in financial difficulties, which leads to the disappearance of the active market of the financial asset;
Presentation of expected credit loss provision
The Company remeasures expected credit losses on each balance sheet date to reflect the changes in the credit risk of financial
instruments since initial recognition; the increase or reversal amount of the loss reserve formed there from shall be included in the
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current profit and loss as impairment losses or gains. For financial assets measured at amortized cost, the loss allowance offsets the
carrying amount of the financial asset listed in the balance sheet; for creditors’ investment that are measured at fair value and its
changes are included in other comprehensive income, the Company recognizes its loss reserve in other comprehensive income and
will not offset the carrying amount of the financial asset.
Write-offs
In case that the Company fails to reasonably expect the contract cash flow of the financial asset to be recovered in a full or partial
scale, the book balance of the financial asset will be written off directly. Such write-downs may constitute the derecognition for
related financial assets. This situation occurs frequently when the Company determines that the debtor does not have any assets or
any source of income to generate sufficient cash flow to repay the amount that will be written off. However, in accordance with
the procedures for recovering due payments of the Company, the written-off financial assets may still be affected by the execution
activities.
In case that the financial asset written off is recovered later, it shall be included in the current profit and loss as the reversal of the
impairment loss.
(7) Transfer of financial assets
The transfer of financial assets refers to the transfer or delivery of financial assets to another party (transferee) other than the issuer
of the financial asset.
If the Company has transferred almost all the risks and rewards of the ownership of financial assets to the transferee, derecognize
the financial asset; if it retains almost all the risks and rewards of the ownership of financial assets, the financial asset will not be
derecognized.
If the Company has neither transferred nor retained almost all the risks and rewards of the ownership of financial assets, it shall be
dealt with in the following situations: if the control of the financial asset is abandoned, the confirmation of the financial asset shall
be terminated and the generated assets and liabilities shall be confirmed; If the financial assets are controlled, the relevant financial
assets shall be recognized according to the extent of their continued involvement in the transferred financial assets, and the
relevant liabilities shall be recognized accordingly.
(8) Offsetting financial assets and financial liabilities
When the Company has a legal right that is currently enforceable to set off the recognized financial assets and financial liabilities,
and intends either to settle on a net basis, or to realize the financial asset and settle the financial liability simultaneously, a financial
asset and a financial liability shall be offset and the net amount is presented in the balance sheet. Except for the above
circumstances, financial assets and financial liabilities shall be presented separately in the balance sheet and shall not be offset.
12. Measurement of Fair Value
Fair value refers to the price that market participants can receive from sales of a asset or shall pay for transfer of a liability in the
orderly transaction that occurs on the measurement date.
The Company measures related assets or liabilities at fair value, assuming that the orderly transaction of selling assets or
transferring liabilities is conducted in the main market of related assets or liabilities; if there is no main market, the Company
assumes that the transaction is conducted in the most beneficial market. The main market (or the most favorable market) is the
trading market that the Company can enter on the measurement date. The Company uses the assumptions used by market
participants to maximize their economic benefits when pricing the asset or liability.
For financial assets or financial liabilities with active markets, the Company uses the quotation in active markets to determine its
fair value. If there is no active market for financial instruments, the Company uses valuation techniques to determine its fair value.
When measuring non-financial assets at fair value, the ability of market participants to best use the asset for generating economic
benefits, or the ability to sell the asset to other market participants that can best use the asset to generate economic benefits shall be
considered.
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The Company adopts valuation techniques that are applicable in the current situation and have sufficient available data and other
information to support it. Priority is given to using relevant observable input values. Only when observable input values are
unavailable or are not feasible to obtain, the unobservable input values can be used. For assets and liabilities measured or disclosed
at fair value in the financial statements, the fair value hierarchy to which they belong is determined based on the lowest level input
value that is important to the fair value measurement as a whole: the first level input value is the unadjusted quotation of the same
assets or liabilities able to be obtained in an active market on the measurement date; the second level input value is the directly or
indirectly observable input value of the relevant asset or liability except the first level input value; the third level input value is
unobservable input value of related assets or liabilities.
On each balance sheet date, the Company reassessed the assets and liabilities continuously measured at fair value confirmed in the
financial statements to determine whether there is a transition among levels of fair value measurement.
13. Inventory
(1) Classification
Inventories mainly include raw materials, work-in-progress, stock products, products processed on entrustment and etc.
(2) Valuation method of inventories acquiring and issuing
Inventories shall be measured at actual cost when acquired, and the cost of the inventories including the procurement cost,
processing cost and other costs. Grey yarn, dyed yarn, and plus material shall be measured at first-in first-out method when
acquired and delivered; other inventories shall be measured as per the weighted average method
(3) Basis for determining net realizable value of inventories and provision methods for decline in value of inventories
On the balance sheet date, the inventories shall be measured at the lower of cost and net realizable value. When their net realizable
value falls below cost, an allowance for inventory impairment is provided.
Net realizable value is the estimated selling price in the ordinary course of business less the estimated costs of completion, the
estimated costs necessary to make the sale and relevant taxes. Net realizable value is determined on the basis of clear evidence
obtained, and takes into consideration the purpose of holding inventories and effect of post balance sheet events.
The Company generally provides for inventory depreciation on a per-item basis. For inventories that are numerous in quantity and
low in unit price, an allowance for inventory impairment is provided based on inventory categories. On the balance sheet date, if
the factors affecting the value of inventories previously written down have disappeared, the provision for inventory write-downs is
reversed to the extent of the original amount provided.
(4) The perpetual inventory system is maintained for stock system.
(5) Amortization method of the low-value consumption goods and packing articles
For the Low-value consumption goods and the packing articles should be amortized by one-off amortization method when
consuming.
14. Long-term Equity Investments
Long-term equity investments include equity investments in subsidiaries, joint ventures and associated enterprises. The investee
that the Company is able to exert significant influence is an associated enterprise of the Company.
(1) Determination of initial investment cost
Long-term equity investment that forms a business combination: Long-term equity investment obtained by business combination
under the same control, on the merger date, based on the book value share of the merged party’s owners’ equity in the final
controller’s consolidated financial statements as investment cost; The long-term equity investment acquired by a business
combination shall be the investment cost of the long-term equity investment according to the cost of the combination.
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For long-term equity investments obtained by other means: the long-term equity investment obtained by paying cash shall be the
initial investment cost according to the actual purchase price; the long-term equity investment obtained by issuing equity securities
shall be the initial investment cost of the fair value of the equity securities issued.
(2) Subsequent measurement and profit and loss confirmation method
Investment in subsidiaries is accounted for using the cost method unless the investment meets the conditions for holding for sale;
investment in associates and joint ventures is accounted for using the equity method.
For long-term equity investments that are accounted for using the cost method, in addition to the cash dividends or profits that
have been declared but not yet included in the actual payment or consideration included in the investment, the cash dividends or
profits declared by the invested entity are recognized as investment income and recorded into the current profit and loss.
For long-term equity investments accounted for using the equity method, where the initial investment cost is greater than the fair
value share of the investee’s identifiable net assets at the time of investment, the investment cost of the long-term equity
investment is not adjusted; when the initial investment cost is less than the investment, the investee ’s If the fair value share of net
assets is identified, the book value of the long-term equity investment is adjusted, and the difference is included in the current
profit and loss of the investment.
When using the equity method of accounting, the investment income and other comprehensive income are recognized separately
according to the share of net profit and loss and other comprehensive income realized by the invested unit that should be enjoyed
or shared, and the book value of the long-term equity investment is adjusted at the same time; The distribution of profits or cash
dividends should be calculated to reduce the book value of long-term equity investment; the investee's other changes in owner's
equity other than net profit and loss, other comprehensive income and profit distribution, adjust the book value of long-term equity
investment and Included in capital reserves (other capital reserves). When confirming the share of the investee’s net profit or loss,
based on the fair value of the investee’s identifiable assets at the time of investment, and in accordance with the Company’s
accounting policies and accounting period, the net profit of the investee Confirm after making adjustments.
If the additional investment and other reasons can exert significant influence on the investee or exercise joint control but do not
constitute control, on the conversion date, the sum of the fair value of the original equity plus the additional investment cost will
be used as the initial accounting for the equity method cost of investment. If the original equity is classified as non-trading equity
instrument investment measured at fair value whose changes are included in other comprehensive income, the relevant original
and accumulative changes in fair value included in other comprehensive income shall be transferred to retained earnings when
accounting by equity method.
If the joint control or significant influence on the invested unit is lost due to the disposal of part of the equity investment, etc., the
remaining equity after the disposal shall be changed to the Accounting Standards for Business Enterprises No. 22-Recognition and
Measurement of Financial Instruments is performed, and the difference between fair value and book value is included in the
current profit and loss. Other comprehensive income recognized by the original equity investment due to the equity method of
accounting shall be accounted for on the same basis as the investee’s direct disposal of related assets or liabilities when the equity
method of accounting is terminated; changes in other owners ’equity related to the original equity investment Transfer to current
profit and loss.
If the control of the invested unit is lost due to the disposal of part of the equity investment, if the remaining equity after the
disposal can exercise joint control or exert significant influence on the invested unit, the equity method is used for accounting and
the remaining equity is treated as When acquiring, the equity method is adopted for adjustment; if the remaining equity after
disposal cannot exercise joint control or exert significant influence on the investee, the accounting shall be changed according to
the relevant provisions of "Accounting Standards for Business Enterprises No. 22-Recognition and Measurement of Financial
Instruments The difference between the fair value and the book value on the date of loss of control is included in the current profit
and loss.
If the shareholding ratio of the company decreases due to the capital increase of other investors, thereby losing control but being
able to exercise joint control or exert significant influence on the investee, the new shareholding ratio shall be used to confirm that
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the company should enjoy the capital increase of the investee. The difference between the increase in share and the increase in the
share of net assets and the original book value of the long-term equity investment corresponding to the decrease in the proportion
of the shareholding that should be carried forward are included in the current profit and loss; That is, adjustments are made using
the equity method of accounting.
The unrealized internal transaction gains and losses that occur between the Company and associates and joint ventures are
calculated according to the shareholding ratio and are attributed to the Company, and the investment gains and losses are
recognized on the basis of offset. However, the unrealized internal transaction losses incurred by the Company and the investee are
the impairment losses of the transferred assets and shall not be offset.
(3) Determine the basis for joint control and significant influence on the invested unit
Joint control refers to the common control of an arrangement in accordance with the relevant agreement, and related activities of
the arrangement must be agreed upon by the parties sharing control rights before they can make decisions. When judging whether
there is joint control, first determine whether all participants or a combination of participants collectively control the arrangement,
and secondly determine whether the decision-making related activities of the arrangement must be unanimously agreed by the
participants who collectively control the arrangement. If all participants or a Company of participants must act in concert to
determine the relevant activities of an arrangement, it is considered that all participants or a Company of participants collectively
control the arrangement; if there is a combination of two or more participants can collectively Controlling an arrangement does not
constitute joint control. When judging whether there is joint control, the protective rights enjoyed are not considered.
Significant influence means that the investor has the right to participate in the decision-making of the financial and operating
policies of the invested unit, but cannot control or jointly control the formulation of these policies with other parties. When
determining whether it can exert significant influence on the invested unit, consider that the investor directly or indirectly holds the
voting shares of the invested unit and the current executable potential voting rights held by the investor and other parties are
assumed to be converted into the invested unit After the equity of the company, the impact includes the current convertible
warrants, stock options and convertible corporate bonds issued by the investee.
When the Company directly or indirectly owns more than 20% (including 20%) but less than 50% of the voting shares of the
invested unit, it is generally considered to have a significant impact on the invested unit, unless there is clear evidence that such
circumstances cannot participate in the production and operation decisions of the invested unit, and does not have a significant
impact; when the Company owns less than 20% (excluding) voting rights of the invested unit, it generally does not consider it to
have a significant impact on the invested unit unless there is clear evidence that Under these circumstances, it can participate in the
production and operation decisions of the invested unit and have a significant impact.
(4) Impairment test method and impairment provision method
For the investments in subsidiaries, associates and joint ventures, the method of accruing asset impairment is shown in the Note V-
22.
15. Investment Property
Measurement model of investment real estate
Costing method measurement
Depreciation or amortization method
The investment real estate refers to the real estate gaining the rent or capital appreciation or both. It includes rented land use right,
holding land use right to be transferred after the appreciation and rented building, etc.
The investment real estate is measured initially according to the cost and withdrawn depreciation or amortization as regulations of
fixed assets or intangible assets.
The Company adopts the cost mode to conduct the subsequent measurement on the investment real estate, see the Note V-22 for
the method of withdrawing asset impairment provision.
The difference between the disposal income of investment real estate sales, transfer, scrap or damage after deducting its book
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value and related taxes is included in the current profit and loss.
16. Fixed Assets
(1) Conditions for Recognition
The term “fixed assets” refers to the tangible assets that simultaneously possess the features as follows: (a) they are held for the
sake of producing commodities, rendering labor service, renting or business management; and (b) their useful life is in excess of
one fiscal year.
The fixed assets are only recognized when the relevant economic benefits probably flow in the Company and its cost could be
reliable measured.
The fixed assets of the Company are initially measured at the actual cost at the time of acquisition.
The subsequent expenditures related to the fixed assets shall be included in the cost of the fixed assets when the economic benefits
related to the fixed assets are likely to flow into the Company and the costs can be measured reliably. The daily repair expenses of
fixed assets that do not meet the conditions of capitalized subsequent expenditures of fixed assets shall be included in the current
profit and loss or the cost of relevant assets according to the beneficiaries when incurred. The book value of the replaced part shall
be terminated.
(2) Depreciation Methods
Category of fixed Annual deprecation
Method Useful life Salvage value (%)
assets (%)
Average method of
Housing and building 5-30 0-10 20.00-3.00
useful life
Average method of
Machinery equipments 10-18 0-10 10.00-5.00
useful life
Average method of
Transportation vehicle 5 0-10 20.00-18.00
useful life
Electronic equipments Average method of
5 0-10 20.00-18.00
and others useful life
(3) Recognition Basis, Pricing and Depreciation Method of Fixed Asset under Finance Lease
See the Note V-22 for details.
(4) At the end of each year, review is carried out by the Company for the service life, estimated net
residual value and depreciation method of fixed assets.
If there is any difference between the expected service life and the original estimated service life, the service life of fixed assets
will be adjusted; if there is any difference between the expected net residual value and the original estimated net residual value, the
expected net residual value will be adjusted
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(5) Disposal of Fixed Assets
A fixed asset shall be derecognized when it is disposed of or it is expected that no economic benefit can be generated by using or
disposing of it. The amount of the disposal income of sales, transfer, scrap or damage of the fixed asset after deducting its book
value and related taxes is included in the current profit and loss.
17. Construction in Progress
Construction in process is measured at actual cost. Actual cost comprises construction costs, borrowing costs that are eligible for
capitalization before the fixed assets being ready for their intended us and other relevant costs.
Construction in process is transferred to fixed assets when the assets are ready for their intended use.
See the details of the impairment provision withdrawal method of the construction in progress to Notes V-22.
18. Engineering Materials
Engineering materials of the Company refer to various materials prepared for projects under construction, including engineering
materials, equipment not yet installed, tools and instruments prepared for production, etc.
The purchased engineering materials will be measured according to the cost. The received engineering materials will be transferred
to the project under construction, and the remaining engineering materials after the completion of the project will be stored as
inventory.
Please refer to Note V (22) for the method of provision for impairment of assets for engineering materials.
In the balance sheet, the ending balance of engineering materials is listed in the "project under construction" item.
19. Borrowing Costs
(1) Confirmation principle of Capitalized Borrowing Expense
The borrowing expenses incurred by the Company, if can directly belong to acquisition, construction or production of assets meeting
capitalization conditions, are capitalized and included in relevant asset cost; other borrowing expenses are confirmed as expense
according to its amount at the time of occurrence and included in the current profits and losses. If the borrowing expenses meet the
following conditions, capitalization starts:
① Assets expenditure has occurred, and asset expenditure includes the expenditure occurring in the form of payment in cash,
transferring noncash asset or assuming interest bearing debt for acquiring, constructing or producing the assets meeting capitalization
conditions;
② Borrowing expenses have occurred;
③The acquisition, construction or production activities required for making assets usable or saleable as intended have started.
(2) Capitalization period of borrowing expenses
When the Company acquires, constructs or produces assets, which meet capitalization conditions and reach the intended usable or
saleable status, the borrowing expenses stop capitalization. The borrowing expenses that occur after the assets meeting capitalization
conditions reach the intended usable or saleable status are confirmed as expenses according to its amount at the time of occurrence
and are included in the current profits and losses.
If the assets meeting capital conditions generate improper interruption in the course of acquisition, construction or production, and
the interruption time continuously exceeds three months, capitalization of borrowing expenses suspends; the borrowing expenses in
the normal interruption period are continually capitalized.
(3) Capitalization rate of borrowing expenses and calculation method of capitalized amount
The interest expenses of special borrowing actually occurring in the current period, minus the interest income of the unused borrowed
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capital obtained from depositing in bank or the gain on temporary investment, are capitalized; for common borrowing, the weighted
average of asset expenditure of the part that the cumulative asset expenditure exceeds special borrowing is multiplied by the
capitalization rate of the occupied common borrowing to determine capitalization amount. Capitalization rate is calculated and
determined according to the weighted average rate of common borrowing. In the period of capitalization, the exchange difference of
special borrowing in foreign currency is fully capitalized; the exchange difference of special borrowing in foreign currency is
included in the current profits and losses.
20. Intangible Assets
The intangible assets of the Company include land use right, patent right, etc.
Intangible assets are initially measured at cost, and their service life is analyzed and determined when intangible assets are
acquired. If the service life of intangible assets is limited, the intangible assets shall be amortized by the method that can reflect the
expected realization method of the economic benefits related to the assets within the expected service life since they are available
for use. The straight-line method shall be used for amortization if no expected realization method can be determined reliably.
Intangible assets with uncertain service life shall not be amortized.
The amortization method of intangible assets with limited service life is as follows:
Amortization
Category Service life Note
method
Land use right Stipulated in the land certificate Method of line
Patent use right 10 years Method of line
Software use right 1-3 years Method of line
At the end of each year, the Company reviews the service life and amortization method of intangible assets with limited service
life. If the estimate is different from the previous one, the original estimate shall be adjusted and treated as per accounting estimate
change.
If it is estimated that an intangible asset can no longer bring future economic benefits to the enterprise on the date of balance sheet,
this carrying amount of the intangible asset shall be transferred into the current profit and loss.
The method of withdrawing impairment on intangible assets was stated in the Note V-22.
21. Research and Development Expenditures
The Company's R&D expenditure relates directly to R&D activities, including R&D personnel's employee remuneration, direct
input expenses, depreciation expenses and long-term amortization expenses, design expenses, equipment commissioning expenses,
amortization expenses of intangible assets, commissioned external research and development expenses, and other expenses, etc.
The wages of R&D personnel are allocated to R&D expenditure based on project hours. R&D activities that share equipment,
production lines, or sites with other production and operational activities are allocated to R&D expenditure based on the
proportion of hours or area used.
The expenditures for internal research and development projects of an enterprise shall be classified into research expenditures and
development expenditures.
The research expenditures shall be recorded into the profit or loss for the current period.
The development expenditures can be capitalized only when they satisfy the following conditions simultaneously: ① It is feasible
technically to finish intangible assets for use or sale; ② It is intended to finish and use or sell the intangible assets; ③ The
usefulness of methods for intangible assets to generate economic benefits shall be proved, including being able to prove that there
is a potential market for the products manufactured by applying the intangible assets or there is a potential market for the
intangible assets itself or the intangible assets will be used internally; ④ It is able to finish the development of the intangible assets,
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and able to use or sell the intangible assets, with the support of sufficient technologies, financial resources and other resources; ⑤
The development expenditures of the intangible assets can be reliably measured. The development expenditures shall be recorded
into profit or loss for the current period when they don’t satisfy the following conditions.
The research and development project of the Company will enter the development stage after meeting the above conditions and the
project is approved and initiated through technical feasibility and economic feasibility study.
The capitalized expenditure in the development stage is listed as expenditure for development on the balance sheet, and it will be
transferred to intangible assets from the date when the project reaches the intended purpose.
22. Impairment of Long-term Assets
For long term equity investment in subsidiaries, associated enterprises and joint ventures, investment real estate which follow-up
measurement is carried out by cost pattern, fixed assets, construction in progress, right-of-use assets, intangible assets, business
reputation, etc. (excluding inventory, investment property measured at fair value pattern, deferred income tax assets, financial assets),
the impairment of assets shall be determined according to the following methods:
On the date of the balance sheet, determination shall be made to see whether there is any sign of possible impairment of assets. If
there is, the Company will estimate its recoverable amount and conduct impairment test. For goodwill, intangible assets with
uncertain service life and intangible assets that have not reached the serviceable state due to business merger, impairment test shall be
carried out every year regardless of whether there is any sign of impairment.
The recoverable amount is determined according to the net amount of the fair value of the asset minus the disposal expenses and the
present value of the expected future cash flow of the asset, the higher amount shall be prevail. The Company estimates the
recoverable amount on the basis of a single asset. If it is difficult to estimate the recoverable amount of a single asset, the recoverable
amount of the asset group shall be determined based on the asset group to which the asset belongs. The asset group is determined on
the basis of whether the main cash inflow generated by the asset group is independent of the cash inflow of other assets or asset
groups.
When the recoverable amount of an asset or asset group is lower than its carrying amount, the group will write down its carrying
amount to the recoverable amount, and the written down amount will be included in the current profit and loss, and the corresponding
asset impairment reserve will be accrued.
Regarding the impairment test of business reputation, the carrying amount of business reputation formed by business merger shall be
apportioned to the relevant asset group in a reasonable way from the date of purchase. If it is difficult to apportion to the relevant
asset group, it shall be apportioned to the relevant combination of asset group. The relevant asset group or combination of asset
groups is the one that can benefit from the synergy effect of business merger, and is the one smaller than the reportable segment
determined by the Company.
In the impairment test, if there is any sign of impairment in the asset group or combination of asset groups related to business
reputation, first, impairment test shall be carried out on the asset group or combination of asset groups not containing business
reputation, to calculate the recoverable amount and recognize the corresponding impairment loss. Then impairment test shall be
carried out on the asset group or combination of asset group containing business reputation to compare the carrying amount with the
recoverable amount. If the recoverable amount is lower than the carrying amount, the impairment loss of business reputation shall be
recognized.
Once the impairment loss of assets is recognized, it will not be reversed in the future accounting period.
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23. Long-term Deferred Expenses
The long-term expenses to be amortized incurred by the Company are valued at the actual cost and amortized averagely according
to the expected benefit period. For long-term expenses to be amortized, the amortized value that cannot benefit the future
accounting period shall be included in the current profit and loss.
24. Payroll
(1) Scope of Employee Remuneration
Payroll refers to the various forms of remuneration or compensation given by an enterprise for services provided by employees or
for the termination of employment relations. Payroll mainly includes short-term salary, welfare after departure, demission welfare,
and other long-term staff welfare. Benefits provided to employees' spouses, children, dependents, survivors of deceased employees,
and other beneficiaries also belong to the payroll.
Based on liquidity, payroll is presented in the balance sheet under the items "payroll payable" and "long-term payroll payable".
(2) Accounting Treatment of Short-term Compensation
During the accounting period in which employees provide services, the Company recognizes the actual employee wages, bonuses,
social insurance premiums such as medical insurance premiums, industrial injury insurance premiums, and maternity insurance
premiums and housing provident funds paid to employees according to the prescribed standards and proportions as liabilities and
included them in the current profit and loss or related asset costs.
(3) Accounting Treatment of the Welfare after Departure
The post-employment benefit plan includes a defined contribution plan and a defined benefit plan. Among them, the defined
contribution plan refers to the post-employment benefit plan that the enterprise no longer assumes further payment obligations after
the fixed fund has paid a fixed fee; the defined benefit plan refers to the post-employment benefit plan other than the established
contribution plan.
Set withdrawal plan
The set contribution plan includes basic pension insurance and unemployment insurance.
During the accounting period in which employees provide services, the amount of deposit payable calculated according to the set
withdrawal plan is recognized as a liability and included in the current profit and loss or related asset costs.
(4) Accounting Treatment of the Demission Welfare
The Company relieves the labor relation with the employees before the due date of the labor contacts or puts forward the advice of
providing the compensation for urging the employees volunteered to receive the downsizing and when the Company could not
unilaterally withdraw the demission welfare owning to the relieving plan of the labor relation or the downsizing advice, should
confirm the liabilities of the employees’ salary from the demission welfare on the earlier day between the cost confirmed by the
Company and the cost related to the reorganization of the payment of the demission welfare and includes which in the current gains
and losses.
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(5) Accounting Treatment of the Welfare of Other Long-term Staffs
Other long-term employee benefits provided by the Company to employees that meet the conditions of defined contribution plans
shall be handled in accordance with the above-mentioned relevant provisions on defined contribution plans. Those in line with the
defined benefit plan shall be handled in accordance with the above-mentioned relevant provisions on the defined benefit plan.
However, the part of "changes caused by remeasuring the net liabilities or net assets of the defined benefit plan" in the salary cost
of relevant employees shall be included in the current profit and loss or the relevant asset cost.
25. Provisions
If the obligation related to contingency meets the following conditions at the same time, the Company will recognize it as a
provision.
(1) The obligation is the current obligation assumed by the Company;
(2) The performance of the obligation is likely to cause an outflow of economic benefits of the Company;
(3) The amount of the obligation can be measured reliably.
The provisions are initially measured in accordance with the optimal estimate of the necessary expenditures for the fulfillment of
the current obligation, with factors such as risks, uncertainty and the time value of money related to contingencies taken into
consideration comprehensively. Where the time value of money has a significant impact, the best estimate is determined by
discounting the relevant future cash outflow. The Company re-checks the book value of the provisions on the balance sheet date
and adjusts the book value to reflect the current best estimate.
If all or part of the expenditure required to settle recognized provisions is expected to be compensated by a third party or other
parties, the amount of compensation shall be recognized separately as an asset only when it is substantially certain that it will be
received. The recognized amount of compensation shall not exceed the book value of the recognized liabilities.
26. Share-based Payments and Equity Instruments
(1) Category of share-based payment
The share-based payments of the Company are divided into equity-settled share payments and cash-settled share payments.
(2) Method of determining the fair value of equity instruments
The Company shall determine the fair value of equity instruments such as options granted in active markets according to the
quotations in active markets. For granted equity instruments such as options without active markets, the fair value is determined by
option pricing model. The following factors shall be considered for the selected option pricing model: A. Exercise price of the
option; B. Expiration date of the option; C. Current price of the object shares; D. Expected fluctuation rate of stock price; E.
Estimated dividends of shares; F. Risk-free interest rate within the option term.
(3) Ground for recognizing the optimal estimation of feasible right equity instruments
On each balance sheet date during the waiting period, the Company shall make the optimal estimate based on subsequent
information such as the latest change in the number of employees with feasible rights, and revise the number of equity instruments
for the estimated feasible rights. On the feasible right date, the final estimated number of feasible right equity instruments shall be
the same as the actual number of feasible rights.
(4) Relevant accounting treatment for implementing, modifying and terminating share-based payment plan
Equity-settled share-based payments shall be measured at the fair value of the equity instruments granted to employees. Where the
right is exercised immediately after the grant, relevant costs or fees shall be included in accordance with the fair value of the
equity instruments on the grant date to accordingly increase the capital reserve. Where the right is exercised upon the completion
of the services during the waiting period or the achievement of the specified result conditions, the services obtained in the current
period shall be included in the relevant costs or fees and the capital reserve according to the fair value of the equity instruments on
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the grant date based on the optimal estimate of the number of feasible right equity instruments on each balance sheet date during
the waiting period. The recognized related costs or fees and total owner's equity after the feasible right date shall not be adjusted
any more.
When the Company modifies a share-based payment plan, if the modification increases the fair value of the equity instruments
granted, the increase in the services acquired shall be recognized accordingly according to the increase in the fair value of the
equity instruments; if the modification increases the number of equity instruments granted, the fair value of the increased equity
instruments shall be recognized accordingly as the increase in the services acquired. The increase in the fair value of the equity
instruments refers to the difference between the fair values of the equity instruments before and after the modification on the
modification date. If the modification reduces the total fair value of the share-based payment or any other method not conducive to
the employees is adopted to modify the terms and conditions of the share-based payment plan, the accounting treatment of the
services acquired would continue, as if such change had never occurred, unless the Company cancels some or all of the granted
equity instruments.
During the waiting period, if the granted equity instrument is canceled (Excluding those cancelled due to failure to meet non-
market-based vesting conditions, such as service conditions or non-market-based performance conditions.), the Company shall
treat the canceled equity instrument as an accelerated exercise, immediately include the left amount to be recognized during the
waiting period in the current profit and loss, and recognize the capital reserve at the same time. Where the employee or other party
can choose to meet the non-feasible right condition but fails during the waiting period, it shall be treated as the cancellation of the
granted equity instrument.
(5) Restricted Shares
In the equity incentive plan, the Company grants restricted stocks to the incentive personnel, who firstly subscribe the stocks. If
the unlocking conditions specified in the equity incentive plan are not met, the Company will repurchase the stocks at the
previously agreed price. Where the restricted stocks issued to the employees has gone through capital increase procedures such as
registration in accordance with relevant provisions, the Company shall, on the grant date, recognize the share capital and the
capital reserve in conformity with the subscription payment received from the employees. Meanwhile, it shall recognize the
treasury stocks and other payables with respect to repurchase obligations.
27. Revenue
Accounting policies adopted for the recognition and measurement of revenue disclosed by type of business
(1) General principle
The Company recognizes revenue when it has fulfilled its contract performance obligation in a contract, namely, when the customer
obtains the control over the related commodity or service.
If a contract contains two or more performance obligations, the Company allocates transaction price to single performance
obligations on the contract commencement date according to the relative ratio of separate price of goods or services committed by
single performance obligation, and income is measured according to the transaction price allocated to single performance obligation.
When meeting one of the following conditions, the Company belongs to performance of contract performing obligations in a period,
or otherwise, the Company belongs to performance of contract performing obligations at a point of time:
① While the Company is performing the contract, the customer acquires and consumes the economic benefit arising from
performance by the Company.
②The customer can control the goods in construction in the course of performance by the Company.
③The goods outputted in the course of performance by the Company have irreplaceable purpose, and the Company has the right to
collection of money for the completed performance part cumulative up to now in the whole term of contract.
For the performance obligation performed in a period, the Company confirms income according to the performance progress in such
period. When the performance progress cannot be reasonably determined, if the cost that the Company has incurred is expected to be
compensated, income is confirmed according to the cost amount that has occurred, until the performance progress can be reasonably
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determined.
For the performance obligation performed at a point of time, income is confirmed at the point of time when the customer acquires the
control right to relevant goods or services. When it judges whether the customer has acquired the control right to the goods or
services, the Company will consider the following indications:
①The Company enjoys the current collection right to the goods or services, i.e. the customer undertakes current payment obligation
to the goods.
② The Company has transferred the legal ownership of the goods to the customer, that is, the customer has owned the legal
ownership of the goods.
③The Company has transferred the kind of the goods to the customer, namely, the customer has possessed the good in kind.
④The Company has transferred the major risks and remuneration on the ownership of the goods, i.e. the customer has acquired the
major risks and remuneration on the ownership of the goods.
⑤The customer has accepted the goods or services.
⑥Other indications showing that the customer has acquired the control right to the goods.
The Company has transferred goods or services and has the right to collect consideration (and the right depends on factors other than
time elapse) as contract assets, and contract asset is accrued impairment on the basis of expected credit loss (refer to Note V-11. The
right of the Company, unconditionally (only depending on time elapse) charging consideration from the customer, is listed as
receivable. The obligation of the Company that shall transfer goods or services to the customer for the consideration that has been or
shall be collected is liability to the contract.
The contract assets and contract liabilities under the same contract are listed in net amount. If net amount is debit balance, it is listed
in the items “contract asset” or “other non-current asset” according to its fluidity; if net amount is credit balance, it is listed in the
items “contract liability” or “other non-current liability” according to its fluidity.
(2) Specific methods
The specific income confirming methods of the Company are following:
For income of domestic products, after the Company delivers products to the purchaser according to the provisions of the contract
and the purchaser confirms receipt, the purchaser acquires the control right of products, and the Company confirms income.
For income of exportable products, after the Company completes customs declaration of products, departure and obtains bill of
lading according to the provisions of the contract, the purchaser acquires the control right of products, and the Company confirms
income.
Differences in methods for the recognition and measurement of revenue caused by different business models for the same type of
business
28. Contract Costs
Contract cost includes the incremental cost incurred for acquiring contract and contract performance cost.
The incremental cost incurred for acquiring contract refers to the cost that will not occur if the Company has not acquired contract
(for example, sales commission). If the cost is expected to be recovered, the Company regards it as contract acquiring cost and
confirms it as an asset. The expenses incurred by the Company for acquiring contract, other than the incremental cost expected to
be recovered, are included in the current profits and losses at the time of occurrence.
If the cost incurred for performance of contract does not belong to inventory and other scope of other corporate accounting
standards and meets the following conditions, the Company will regard it as contract performance cost and confirm it as an asset:
① The cost is directly related to a copy of contract currently acquired or expected to be acquired, including direct labor, direct
materials, manufacture expenses (or similar expenses), cost determined to be undertaken by the customer and other cost incurred
due to the contract;
②The cost increases the resources of the Company that will be used for performance of contract obligations in the future;
③The cost is expected to be recovered.
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The assets confirmed by the contract acquiring cost and the assets confirmed by the contract performance cost (“assets related to
contract cost”) are amortized according to the same basis as confirmation of goods or service income related to the asset and are
included in the current profits and losses. If the amortization term does not exceed one year, it will be included in the current
profits and losses at the time of occurrence.
When the book value of an asset related to contract cost is higher than the difference between the following two items, the
Company accrues provision for impairment to the excessive part and confirms it as impairment loss:
①The remaining consideration that the Company expects to acquire from transfer of goods or services related to the asset;
②The cost that will occur for transfer of such related goods or services as estimated.
29. Government Grants
Government grants are recognized when they meet the conditions attached to government grants and when they can be received.
Government grants for monetary assets shall be measured according to the amount received or receivable. Government grants for
non-monetary assets shall be measured by fair value.
Asset related government grants refer to the government grants obtained by the Company for acquisition and construction or other
forms of long-term assets. In addition, they are government grants related to income.
Regarding the government grants that the government document does not specify the object of subsidy and can form long-term
assets, the part of government subsidy corresponding to the asset value shall be regarded as the asset-related government subsidy
and the rest shall be regarded as income-related government subsidy. If it is difficult to distinguish, the government subsidy shall
be regarded as the income-related government subsidy.
The government grants related to assets shall be recognized as the deferred income, which shall be included in the profit and loss
in installment in a reasonable and systematic way within the service life of the relevant assets. Income-related government grants
which are used to compensate the relevant costs or losses incurred shall be included in the current profit and loss. Those used to
compensate the relevant costs or losses in the later period shall be included in the deferred income, and shall be included in the
current profit and loss during the recognition period of the relevant costs or losses. The government grants measured according to
the nominal amount shall be directly included in the current profit and loss. The same method is adopted for the same or similar
government subsidy businesses of the Company.
Government grants related to daily activities shall be included in other incomes according to the essence of business transactions.
Government grants irrelevant to daily activities are included in non-business income.
When the recognized government grants need to be returned, and are used to offset the carrying value of related assets when
initially recognized, the carrying value of the assets shall be adjusted; the book balance of relevant deferred income shall be offset
if there is a balance of relevant deferred income, and the excess part shall be included in the current profit and loss. Otherwise, it
shall be directly included in the current profit and loss.
Regarding the interest subsidy of the policy preferential loan obtained, if the Ministry of Finance allocates the interest subsidy to
the loan bank, the actual received loan amount shall be taken as the entry value of the loan, and the loan cost shall be calculated
according to the loan principal and the policy preferential interest rate. If the Ministry of Finance allocates the interest subsidy
directly to the Company, the interest subsidy will offset the borrowing costs.
30. Deferred Income Tax Assets/Deferred Income Tax Liabilities
Income tax includes current income tax and deferred income tax. All shall be included in the current profit and loss as income tax
expense except the adjustment business reputation arising from business merger, or the deferred income tax related to the
transactions or events directly included in the owner's equity is included in the owner's equity.
Pursuant to the temporary difference between the carrying amount of assets and liabilities on the date of balance sheet and the tax
basis, the Company recognizes the deferred income tax by balance sheet liability method.
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For all taxable temporary differences, related deferred income tax liabilities are recognized, unless the taxable temporary
differences are generated in the following transactions:
(1) The initial recognition of business reputation or the initial recognition of assets or liabilities arising from transactions with the
following characteristics: The transaction is not a business merger, and does not affect the accounting profit or taxable income
when it occurs (Excluding transactions that initially recognised assets and liabilities resulting in equal taxable temporary
differences and deductible temporary differences.);
(2) Regarding the taxable temporary difference related to the investment of subsidiaries, joint ventures and associated enterprises,
the time of reversal of the temporary difference can be controlled and the temporary difference is unlikely to be reversed in the
foreseeable future.
For deductible temporary differences, deductible losses and tax credits that can be carried forward in subsequent years, the
Company is likely to obtain the future taxable income as the limit to offset the deductible temporary differences, deductible losses
and tax credits, in which way to recognize the deferred income tax assets arising from the deductible temporary differences,
deductible losses and tax credits, unless the deductible temporary differences are generated in the following transactions:
(1) The transaction is not a business merger, and does not affect the accounting profit nor taxable income when it occurs
(Excluding transactions that initially recognised assets and liabilities resulting in equal taxable temporary differences and
deductible temporary differences.);
(2) The corresponding deferred income tax assets shall be recognized if the deductible temporary differences related to the
investment of subsidiaries, joint ventures and associated enterprises meet the following conditions simultaneously: The temporary
differences are likely to be reversed in the foreseeable future, and the taxable income used to deduct the deductible temporary
differences is likely to be obtained in the future.
On the date of the balance sheet, the income tax assets and deferred income tax liabilities shall be measured by the Company on
the basis of the applicable tax rate during the period when the assets are expected to be recovered or the liabilities are expected to
be paid off, and the income tax impact on the expected recovery of assets on the date of the balance sheet or on the method to pay
off the liabilities shall be reflected.
The book value of deferred income tax assets shall be reviewed at each balance sheet date. If it is unlikely to obtain sufficient
taxable income to offset against the benefit of the deferred income tax asset, the book value of the deferred income tax assets shall
be written down. Any such write-down should be subsequently reversed where it becomes probable that sufficient taxable income
will be available.
As at the balance sheet date, deferred income tax assets and deferred income tax liabilities are presented as a net amount when the
following conditions are simultaneously met:
(1) The tax entity within the Company has a legally enforceable right to set off current income tax assets against current income
tax liabilities;
(2) The deferred income tax assets and deferred income tax liabilities are related to income taxes levied by the same taxation
authority on the same taxable entity within the Company.
31. Lease
(1) Identification of lease
On the start date of the contract, the Company assessed as the lessee or the lessor whether the customers in the contract are entitled
to obtain almost all the economic benefits arising from the use of the identified assets during the use period, and have the right to
dominate the use of the identified assets during the use period. If a party to the contract transferred the right allowing the control
over the use of one or more assets that have been identified within a certain period, in exchange for a consideration, such contract
is determined by the Company to be a lease or includes a lease.
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Lu Thai Textile Co., Ltd. Annual Report 2023
(2) As the lessee
On the commencement date of the lease term, the Company recognizes the right-of-use assets and lease liabilities for all leases,
except for short-term leases and low-value asset leases with simplified treatment.
For accounting policies for the right-of-use assets, see Note V-32.
Lease liabilities are initially measured in line with the lease payments not yet paid on the commencement date of the lease term using
the present value calculated by the interest rate implicit in lease. If the interest rate implicit in lease cannot be determined, the
incremental borrowing rate shall be used as the discount rate. Lease payments include: Fixed payment and substantial fixed payment,
and the relevant amount after deducting the lease incentive if any; variable lease payments depending on index or ratio; exercise price
of the purchased option, provided that the lessee reasonably determines that the option will be exercised; the amount to be paid for
the exercise of the lease termination options, provided that the lease term reflects that the lessee will exercise the options to terminate
the lease; and estimated payments due to the guaranteed residual value provided by the lessee. Subsequently, it calculates the interest
expenses of the lease liabilities during each period of the lease term at a fixed periodic interest rate, and includes them in current
profit and loss. Variable lease payments that are not covered in the measurement of the lease liabilities are included in current profit
or loss when actually incurred.
Short-term lease
A short-term lease refers to a lease for a period not exceeding 12 months on the commencement date of the lease, except for leases
with a purchase option.
The Company includes the short-term lease payment in the cost of relevant assets or the current profit and loss in each period of the
lease term by the straight-line method.
Low-value asset lease
A low-value asset lease refers to a lease where the value is lower than RMB40,000 and a single leased asset is a new asset.
The Company includes the lease payment of the low-value asset lease in the cost of relevant assets or the current profit and loss in
each period of the lease term by the straight-line method.
For low-value asset lease, it chooses to adopt the aforesaid simplified treatment method in line with the specific status of each lease.
Lease change
If a lease changes and meets the following conditions simultaneously, the lease change shall be regarded as a separate lease for
accounting treatment: a) The lease change expands its lease cope by increasing one or multiple use rights of lease assets; and b) The
increased consideration is equivalent to the amount of the separate price for the expanded part of the lease, which is adjusted
according to the contract.
Where the lease change is not regarded as a separate lease for accounting treatment, on the effective date of the lease change, by the
Company, the consideration of the contract is amortized again upon change, the lease term is redetermined, and the lease liabilities
are remeasured according to the present value that is calculated by the lease payments and the revised discount rate upon change.
The Company shall correspondingly reduce the book value of the right-of-use assets and include the profit or loss of the lease
terminated in part or whole in the current profit or loss, if the lease change narrows the scope of lease or shortens the lease term.
The Company shall correspondingly adjust the book value of the right-of-use assets, if other lease changes result in the re-calculation
of the lease liability.
(3) As the lessor
When the Company is a lessor, it shall recognize leases that substantially transfer all risks and remuneration related to the ownership
of assets as finance leases, and leases other than finance leases as operating leases.
Financial lease
In a finance lease, the Company recognizes the net lease investment as the book value of finance lease receivables on the
commencement date of the lease term. The net lease investment is the sum of the unguaranteed residual value and the present value
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Lu Thai Textile Co., Ltd. Annual Report 2023
of lease receivables not yet received on the commencement date of the lease term at the interest rate implicit in lease. The Company
calculates and confirms the interest income at a fixed periodic interest rate in each period in the lease term. Variable lease payments
obtained that are not included in the net lease investment for measurement, where the Company is the lessor, are included in the
profit or loss of the current period when actually incurred.
Accounting treatment shall be conducted for the derecognition and impairment of finance lease receivables in accordance with the
provisions of the Accounting Standard for Business Enterprises No.22 - Recognition and Measurement of Financial Instruments and
the Accounting Standard for Business Enterprises No.23 - Transfer of Financial Assets.
Operating leases
The Company shall recognize the current profit and loss of the rent of the operating lease in each period of the lease term by the
straight-line method. The initial direct costs related to the operating lease shall be capitalized, amortized within the lease term on the
same basis as the recognition of rental earning, and included in profit or loss for the current period. The received variable lease
payments related to the operating lease that are not included in the lease payments receivable are included in profit or loss for the
current period when they are actually incurred.
Lease change
Where an operating lease changes, the accounting treatment is conducted for it which is regarded as a new lease from the effective
date of the change, and receivables in advance or lease receivables related to lease before change are deemed as the receivables in the
new lease.
Where a finance lease changes and meets the following conditions simultaneously, the change is regarded as a separate lease by the
Company for accounting treatment: a) The change expands its lease cope by increasing one or multiple use rights of lease assets; and
b) The increased consideration is equivalent to the amount of the separate price for the expanded part of the lease, which is adjusted
according to the contract.
Where a finance lease changes and is not regarded as a separate lease for accounting treatment, the Company treats the changed lease
under the following circumstances: a) If the change comes into force on the commencement date of the lease term, the lease will be
clarified as an operating lease, while it will be regarded as a new lease for accounting treatment by the Company on the effective date
of the lease change, and the net lease investment before the effective date of lease change will be regarded as the book value of lease
assets; and b) If the change comes into force on the commencement date of the lease term, the lease will be clarified as a finance
lease, the Company will carry out accounting treatment in accordance with the provisions on modification or renegotiation of a
contract of the Accounting Standard for Business Enterprises No. 22 - Recognition and Measurement of Financial Instruments.
32. Right-of-Use Assets
(1) Recognition conditions for right-of-use assets
The term “right-of-use assets” refers to the right of the lessee to use the leased assets during the lease term.
At the start date of the lease term, the Company initially measures the right-of-use assets at cost. The cost includes: the initial
measurement amount of lease obligations; the lease payment amount paid on or prior to the inception of the lease (less the related
amount of lease incentives already enjoyed if any); the initial direct cost incurred by the lessee; and the anticipated cost of
dismantling and removing the leasehold property, restoring the site where the leasehold property is located, or bringing the
leasehold property back to the state agreed upon in the lease terms. As the lessee, the Company shall recognize and measure the
cost of demolition and restoration in accordance with the Accounting Standards for Business Enterprises No.13 - Contingencies.
Subsequent adjustments are made for any re-measurement of the lease liabilities.
(2) Depreciation method of right-of-use assets
The Company uses the straight-line method for depreciation. Where it can be reasonably certain that the Company, the lessee, can
obtain ownership of the leased assets at the expiry of the lease term, the leased assets are depreciated over the residual service life.
Where it cannot be reasonably certain that the Company can obtain ownership of the leased assets at the end of the lease term, the
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Lu Thai Textile Co., Ltd. Annual Report 2023
leased assets are depreciated at the shorter of the lease term and the residual service life of the leased assets.
(3) Impairment test method and impairment provision method of right-of-use assets See Note V-22.
33. Cost of Safety Production and Maintenance
In accordance with the regulations of the Notice on Issuing the Management Measures for the Provision and Use of Enterprise
Production Safety Costs (C.Z. [2022] No. 136) issued by the Ministry of Finance and the Ministry of Emergency, and based on the
above actual annual operating revenue of power generation and supply enterprises, the Company adopts the method where the
deduction rate declines when the operating revenue increases to deduct safety production costs according to the following
standards:
Annual actual sales revenue standard Proportion of safety production cost (%)
Not exceeding RMB10 million 3
RMB10 million to RMB100 million 1.5
RMB100 million to RMB1 billion 1
RMB1 billion to RMB5 billion 0.8
Safety production costs and costs for sustaining simple reproduction are included in the cost of relevant production or current loss
and profit when deducted, and are simultaneously included in the “specific reserve”.
When using the deducted safety production costs and the costs for sustaining simple reproduction in conformity with regulations,
the outgoing expenditures shall directly be used to offset the specific reserve; the costs becoming fixed assets shall be aggregated
under “construction in progress” and then be recognized as fixed assets when the safety project is completed and reaches the
intended available status; The aforesaid fixed assets will not be depreciated as accrued in the future period.
34. Repurchase of Shares
Before the shares repurchased by the Company are cancelled or transferred, they are managed as treasury shares, and all
expenditures for the repurchase of shares are transferred to the cost of treasury shares. Consideration and transaction costs paid in
share repurchase reduce shareholders' equity. When buying back, transferring or cancelling shares in the Company, no profits or
losses are recognized.
The transfer of inventory shares shall be credited to the capital reserve on the basis of the difference between the amount actually
received and the carrying amount of the treasury stock. Write off surplus reserves and undistributed profits if capital reserves are
insufficient to offset. Write-off of treasury stocks can reduce shares in par with par value and number of write-out stocks. The
capital reserve is offset based on the difference between book balance and face value of cancelled treasury stocks. Write off
surplus reserves and undistributed profits if capital reserves are insufficient to offset.
35. Material Accounting Judgments and Estimates
The Company evaluates the important accounting estimates and key assumptions adopted on an ongoing basis, based on historical
experience and other factors, including reasonable expectations of future events. Important accounting estimates and critical
assumptions that have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the
next fiscal year are listed as follows:
Classification of financial assets
The significant judgments involved when the Company determines the classification of financial assets include analysis of
business models and contractual cash flow characteristics. The Company determines the business model for managing financial
assets at the level of the financial asset portfolio, taking into account factors such as the approach of evaluating and reporting the
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Lu Thai Textile Co., Ltd. Annual Report 2023
performance of financial assets to key management personnel, the risks affecting the performance of financial assets and the
manner in which they are managed, and way in which the relevant business management personnel are compensated.
The following main judgments exist in assessing whether the contractual cash flows of financial assets are consistent with the
basic lending arrangements:
Whether the time distribution or amount of the principal amount during the duration may change due to early repayment or for
other reasons; whether the interest includes only the time value of money, credit risk, other basic lending risks and consideration
against costs and profits. For example, whether the amount of early repayment reflects only the outstanding principal and interest
based on the outstanding principal, as well as reasonable compensation paid for early termination of the contract.
Measurement of expected credit losses of accounts receivable
The Company calculates the expected credit loss of accounts receivable using the exposure to default risk of accounts receivable
and the expected credit loss ratio, and determines the expected credit loss ratio based on the probability of default and the default
loss ratio. When determining the expected credit loss ratio, the Company uses data such as internal historical credit loss experience
and adjusts historical data to take into account current conditions and forward-looking information. When considering forward-
looking information, the Company uses indicators such as the risk of economic downturn and changes in the external market
environment, technological environment and customer profile. The Company regularly monitors and reviews the assumptions
related to the calculation of expected credit losses.
Goodwill impairment
We shall assess whether there is impairment of goodwill at least annually. This requires estimating the use value of the asset group
to which goodwill has been assigned. When estimating the use value, the Company shall estimate the future cash flows from the
asset group and select the appropriate discount rate to calculate the present value of future cash flows at the same time.
Deferred income tax assets
To the extent that it is probable that sufficient taxable profit will be available to offset the losses, the Company recognizes deferred
income tax assets for all unused tax losses. This requires the Company's management to use many judgments to estimate the
timing and amount of future taxable profits, taking into account tax planning strategies, so as to determine the amount of deferred
income tax assets to be recognized.
Determination of fair value of unlisted equity investment
The fair value of unlisted equity investment is the expected future cash flows discounted at the current discount rate for items with
similar terms and risk characteristics. Such valuation requires the Company to estimate expected future cash flows and discount
rates and is therefore subject to uncertainty. Under limited circumstances, if the information used to determine fair value is
insufficient, or if the range of possible estimates of fair value is wide and the cost represents the best estimate of fair value within
that range, the cost may represent its appropriate estimate of fair value within that range of distribution.
36. Changes in Main Accounting Policies and Estimates
(1) Significant Changes in Accounting Policies
In November 2022, MOF issued the Interpretation No. 16 of the Accounting Standards for Business Enterprises (C.K. [2022] No.
31) (hereinafter referred to as the "Interpretation No. 16").
Interpretation No. 16 stipulates that for single transactions that are not business combinations, that affect neither accounting profit
nor taxable income (or deductible losses) at the time the transaction occurs, and where the initial recognition of assets and
liabilities results in taxable temporary differences and deductible temporary differences of equal amounts should, in accordance
with the No. 18 of the Accounting Standards for Business Enterprises - Income Taxes and other relevant regulations, be recognized
as deferred income tax liabilities and deferred income tax assets, respectively, at the time of the transaction. For transactions that
occurred between the beginning of the earliest period presented in the financial statements and the date of implementation of the
aforementioned regulations, enterprises should, in accordance with the said regulations, adjust the cumulative effect on the
147
Lu Thai Textile Co., Ltd. Annual Report 2023
opening retained earnings of the earliest period presented in the financial statements and other related financial statement items.
The aforementioned accounting treatment regulations shall come into force from 1 January 2023.
For the lease liabilities and right-of-use assets recognised by the Company in its leasing operations, as well as the recognised
provisions for obligations to dismantle and the corresponding assets, which generate taxable temporary differences and deductible
temporary differences, adjustments are made in accordance with the provisions of Interpretation No. 16.
The impact of implementing the aforementioned accounting policies on the consolidated balance sheet as at 31 December 2023,
and the consolidated income statement for the year 2023 is as follows:
Item of consolidated balance sheet
Amount affected
(31 December 2023)
Deferred income tax assets 14,380,843.22
Deferred income tax liabilities 14,380,843.22
The impact of implementing the aforementioned accounting policies on the consolidated balance sheet as at 31 December 2022,
and the consolidated income statement for the year 2022 is as follows:
Item of consolidated balance
sheet Before Amount adjusted After
(31 December 2022)
Deferred income tax assets 155,774,523.25 16,366,350.08 172,140,873.33
Deferred income tax
151,243,432.80 16,366,350.08 167,609,782.88
liabilities
(2) Significant Changes in Accounting Estimates
□Applicable Not applicable
(3) Adjustments to Financial Statement Items at the Beginning of the Year of the First Implementation of the New
Accounting Standards Implemented since 2023
□Applicable Not applicable
VI Taxation
1. Main Taxes and Tax Rate
Category of taxes Tax basis Tax rate
Taxable value-added amount (the taxable amount is
calculated by multiplying the taxable sales by the
VAT 13%, 9%, 6%, 5%, 3%, 0
applicable tax rate and deducting the input tax allowed to
be deducted in the current period)
Urban maintenance
Turnover tax actually paid 7%, 5%
and construction tax
Enterprise income tax Income tax payable 0, 11%, 15%, 16.5%, 20%, 25%
Notes of the disclosure situation of the taxpaying bodies with different enterprises income tax rate
Taxpayer Income tax rate
The Company 15%
Lufeng Weaving & Dyeing 15%
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Lu Thai Textile Co., Ltd. Annual Report 2023
Lulian New Materials 15%
Lu Thai Hong Kong 16.50%
Luqun Textile 25%
Xinsheng Power 25%
Shanghai Lu Thai 20%
Shanghai Zhinuo 20%
Lujia Import & Export 25%
Zhishu Consulting 20%
Lu Thai Vocational Training School 0%
Banyang Villa 20%
Huilin International 15%
VACL 11%
2. Tax Preference
In accordance with the Notice for Announcing the First Batch of Hi-tech Enterprise Identification List of Shandong Province in
2023 with reference No. Lu Ke Zi [2024]4, the Company was identified as a hi-tech enterprise, and the certificate issuing date was
29 November 2023; the majority-owned subsidiary LuFeng Company Limited was identified as a hi-tech enterprise, and the
certificate issuing date was 29 November 2023. In accordance with the Notice for Announcing Hi-tech Enterprise List of Shandong
Province in 2022, the majority-owned subsidiary Lulian New Materials was identified as a hi-tech enterprise, and the certificate
issuing date was 12 December 2022. Therefore, in accordance with Article 28 of the Enterprise Income Tax Law of the People’s
Republic of China and the Announcement of the State Administration of Taxation on Issues Concerning the Implementation of
Preferential Income Tax Policies for High-tech Enterprises (Announcement No. 24 [2017] of the State Administration of
Taxation), the applicable enterprise income tax rate shall be 15%.
The wholly-owned subsidiaries, including Shanghai Luthai, Shanghai Zhinuo, Zhishu Consulting, and Banyang Villa, have been
recognized as small, low-profit enterprises. According to the Announcement of the Ministry of Finance and the State Taxation
Administration on Preferential Income Tax Policies for Small, Low-profit Enterprises and Privately or Individually-owned
Businesses (Announcement No. 6 [2023] of the Ministry of Finance and the State Taxation Administration) and Announcement of
the Ministry of Finance and the State Taxation Administration on Further Implementing the Preferential Income Tax Policies for
Micro and Small Enterprises (Announcement No. 13 [2022] of the Ministry of Finance and the State Taxation Administration),
the portion of the annual taxable income of small, low-profit enterprises not exceeding RMB3 million shall be included in the
taxable income at a reduced rate of 25%, and the enterprise income tax shall be paid at the tax rate of 20%.
The wholly-owned subsidiary, Lu Thai Vocational Training School, has been recognized as a non-profit making organization
exempt from tax between 2021 and 2025. According to Article 26, Item 4 of the Enterprise Income Tax Law of the People’s
Republic of China, the policy whereby eligible non-profit making organizations are exempt from enterprise income tax shall apply
to the foregoing subsidiary.
Lu Thai (Hong Kong) Textile Co., Ltd. (hereinafter refers as Lu Thai (Hong Kong) Textile), the wholly-owned subsidiary of the
Company, was incorporated in Hong Kong SAR, whose profit tax shall be paid at tax rate of 16.5%.
The wholly own subsidiary VACL, according to the Burma’s Special Economic Zone Law issued by Pyidaungsu Hluttaw, VACL
enjoys tax preference on corporate income tax of 7 (7 years tax holiday) + 5 (5 years tax revenues drop by half) + 5 (re-invest the
profits within 1 year and continues to enjoy the half tax revenues 5 years afterwards). After grace period, enterprise income tax
rate was of 22%. Year 2023 is the first year of tax halving period with the enterprise income tax rate at 11%.
The wholly-owned subsidiary, Huilin International, which was registered in the Hainan Free Trade Port and operates in the
149
Lu Thai Textile Co., Ltd. Annual Report 2023
encouraged industry, shall pay enterprise income tax at a reduced tax rate of 15% between 1 January 2020 and 31 December 2024,
according to the Announcement of the Ministry of Finance and the State Taxation Administration on the Preferential Income Tax
Policies for Enterprises Registered in the Hainan Free Trade Port (Announcement No. 31 [2020] of the Ministry of Finance and
the State Taxation Administration).
VII. Notes to Main Items of Consolidated Financial Statements
1. Monetary Assets
Unit: RMB
Item Ending balance Beginning balance
Cash on hand 2,633,018.72 2,360,089.79
Bank deposits 1,280,487,534.58 2,054,133,036.04
Other monetary funds 275,131,494.73 11,275,128.14
Total 1,558,252,048.03 2,067,768,253.97
Of which: total amount deposited overseas 271,126,295.17 246,365,368.50
Other notes:
(1) On 31 December 2023, the monetary assets with restricted ownership were of RMB4,024,123.14, which were the deposit for
foreign guarantee business of DONG 9,890,410,485.00 (equivalent to RMB2,967,123.14), and litigation freezes of
RMB1,057,000.00.
(2) The interest receivable in bank deposits was RMB16,142,334.69.
2. Trading Financial Assets
Unit: RMB
Item Ending balance Beginning balance
Financial assets at fair value through profit or loss 723,800,275.39 267,695,159.48
Of which:
Of which: Debt instrument investment 203,706,725.51 90,644,869.48
Equity instrument investment 509,832,518.35 148,877,781.17
Derivative financial assets 10,261,031.53 28,172,508.83
Of which:
Total 723,800,275.39 267,695,159.48
Other notes:
As at the end of the Reporting Period, the Company lent 1,425,000 shares of Remegen Co., Ltd. held by the Company by way of
transfer facility.
3. Notes Receivable
(1) Notes Receivable Listed by Category
Unit: RMB
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Lu Thai Textile Co., Ltd. Annual Report 2023
Item Ending balance Beginning balance
Bank acceptance bill 99,642,708.67 95,123,874.32
L/C 73,631,841.52
Total 99,642,708.67 168,755,715.84
(2) Disclosure by Withdrawal Methods for Bad Debts
Unit: RMB
Ending balance Beginning balance
Carrying amount Bad debt provision Carrying amount Bad debt provision
Category
Carrying value Carrying value
Withdrawal Withdrawal
Amount Proportion Amount Amount Proportion Amount
proportion proportion
Of
which:
Notes
receivable
of bad
debt 99,642,708.67 100.00% 99,642,708.67 168,755,715.84 100.00% 168,755,715.84
provision
withdrawn
by groups
Of
which:
Trade
acceptance
Bank
acceptance
bills with 99,642,708.67 100.00% 99,642,708.67 99,642,708.67 100.00% 168,755,715.84
low credit
ratings
Total 99,642,708.67 100.00% 99,642,708.67 99,642,708.67 100.00% 168,755,715.84
If adopting the general mode of expected credit loss to withdraw bad debt provision of notes receivable:
□Applicable Not applicable
4. Accounts Receivable
(1) Disclosure by Aging
Unit: RMB
Aging Ending carrying amount Beginning carrying amount
Within one year (including 1 year) 878,555,822.01 710,248,142.12
One to two years 3,129,451.20 1,413,758.76
Two to three years 143,033.80 3,516,929.18
More than three years 7,777,701.22 6,724,339.34
Three to four years 3,717,366.06 6,330,795.56
Four to five years 4,037,499.15 391,883.77
Over 5 years 22,836.01 1,660.01
Total 889,606,008.23 721,903,169.40
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Lu Thai Textile Co., Ltd. Annual Report 2023
(2) Disclosure by Withdrawal Methods for Bad Debts
Unit: RMB
Ending balance Beginning balance
Carrying amount Bad debt provision Carrying amount Bad debt provision
Categor
y Withdra Carrying Withdra Carrying
Proporti wal value Proporti wal value
amount amount amount amount
on proportio on proportio
n n
Account
s
receivab
le
withdra
wal of 5,481,360.7 5,481,360. 5,137,500.4 5,137,500.
0.62% 100.00% 0.71% 100.00%
Bad debt 0 70 4 44
provisio
n
separatel
y
accrued
Of
which:
Account
s
receivab
le
withdra 884,124,647 57,656,962 826,467,684 716,765,668 56,338,142 660,427,526
99.38% 6.52% 99.29% 7.86%
wal of .53 .75 .78 .96 .77 .19
bad debt
provisio
n of by
group
Of
which:
Group 1:
Undue 158,223,236 158,223,236
17.79%
accounts .80 .80
(L/C)
Group 2:
Undue
accounts
137,080,593 1,439,346. 135,641,246 166,814,345 1,751,550. 165,062,795
(credit 15.41% 1.05% 23.11% 1.05%
.18 21 .97 .91 62 .29
insuranc
e
insured)
Group 3:
Undue
accounts
447,692,502 22,384,625 425,307,877 395,429,681 19,771,484 375,658,197
(no 50.32% 5.00% 54.78% 5.00%
.26 .09 .17 .72 .04 .68
credit
insuranc
e)
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Lu Thai Textile Co., Ltd. Annual Report 2023
Group 4:
Overdue
accounts
47,975,300. 7,532,122. 40,443,178. 73,996,751. 11,617,489 62,379,261.
(credit 5.39% 15.70% 10.25% 15.70%
48 16 32 59 .99 60
insuranc
e
insured)
Group 5:
Overdue
accounts
93,153,014. 26,300,869 66,852,145. 80,524,889. 23,197,618 57,327,271.
(no 10.47% 28.23% 11.15% 28.81%
81 .29 52 74 .12 62
credit
insuranc
e)
889,606,008 100.00 63,138,323 826,467,684 721,903,169 100.00 61,475,643 660,427,526
Total 7.10% 8.52%
.23 % .45 .78 .40 % .21 .19
Bad debt provision separately accrued: 2023
Unit: RMB
Beginning balance Ending balance
Name Bad debt Withdrawal Reason for
Carrying amount Bad debt provision Carrying amount
provision proportion withdraw
Customer in
Customer 1 2,705,609.83 2,705,609.83 2,751,489.34 2,751,489.34 100.00% financial
difficulty
Customer in
Customer 2 1,986,544.97 1,986,544.97 2,729,871.36 2,729,871.36 100.00% financial
difficulty
Customer 3 281,353.47 281,353.47
Customer 4 90,959.35 90,959.35
Customer 5 73,032.82 73,032.82
Total 5,137,500.44 5,137,500.44 5,481,360.70 5,481,360.70
If adopting the general mode of expected credit loss to withdraw bad debt provision of accounts receivable:
□Applicable Not applicable
(3) Bad Debt Provision Withdrawal, Reversed or Recovered in the Reporting Period
Withdrawal of bad debt provision:
Unit: RMB
Changes in the Reporting Period
Beginning
Category Reversed or Ending balance
balance Withdrawal Verification Others
recovered
Bad debt provision 61,475,643.21 1,998,736.62 336,056.38 63,138,323.45
Total 61,475,643.21 1,998,736.62 336,056.38 63,138,323.45
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Lu Thai Textile Co., Ltd. Annual Report 2023
(4) Accounts Receivable Written-off in Current Period
Unit: RMB
Item Written-off amount
Written-off accounts receivable 336,056.38
Notes to verification of accounts receivable:
There were no write-offs of significant accounts receivable.
(5) Top 5 of the Ending Balance of the Accounts Receivable and the Contract Assets Collected according to
Arrears Party
Unit: RMB
Ending balance of
bad debt provision
Ending balance of Ending balance of Proportion to total
of accounts
Ending balance of ending balance of
Name of the entity the Accounts accounts receivable and receivable and
contract assets accounts receivable
Receivable contract assets impairment
and contract assets
provision for
contract assets
Customer 1 82,707,168.69 82,707,168.69 9.30% 10,761.24
Customer 2 39,769,934.18 39,769,934.18 4.47% 1,988,496.71
Customer 3 36,927,681.40 36,927,681.40 4.15% 5,151,015.88
Customer 4 34,601,434.87 34,601,434.87 3.89% 2,129,403.80
Customer 5 26,638,626.82 26,638,626.82 2.99% 1,859,490.69
Total 220,644,845.96 220,644,845.96 24.80% 11,139,168.32
5. Accounts Receivable Financing
(1) Accounts Receivable Financing Listed by Category
Unit: RMB
Item Ending balance Beginning balance
Notes Receivable 18,336,324.55 11,300,942.26
Less: Other comprehensive income-fair
-88,118.79 -92,637.48
value change
Total 18,248,205.76 11,208,304.78
(2) Other Notes
There was no bank acceptance bill for which bad debt provision accrued separately in the Company. On December 31, 2021, the
Company believed that there was no significant credit risk in the bank acceptance bill held by the Company, and no significant loss
caused by bank defaults.
(1) The Company had no pledged notes receivable at the end of the period.
(2) The Company had notes receivable endorsed or discounted but not yet due at the end of the period.
Amount of recognition termination at the Amount of not terminated recognition at the
Category_110075
period-end period-end
154
Lu Thai Textile Co., Ltd. Annual Report 2023
Bank acceptance bills 151,938,439.51
Trade acceptance notes
Total 151,938,439.51
The bank acceptance bill used for discount is accepted by a bank with high credit grade, the credit risk and deferred payment risk are
low, and the interest rate risk related to the bill has been transferred to the bank. It can be judged that the main risk and reward on the
ownership of the bill have been transferred, so the bank acceptance bill was derecognized at the period-end.
6. Other Receivables
Unit: RMB
Item Ending balance Beginning balance
Dividend receivable 18,563,298.39
Other receivables 22,168,807.43 71,292,361.60
Total 22,168,807.43 89,855,659.99
(1) Dividend Receivable
1) Dividend Receivable Classification
Unit: RMB
Project (or investee) Ending balance Beginning balance
Sanchang Fengshou Cotton Industry Co.,
Ltd. (hereinafter referred to as " 19,540,314.10
Fengshou Cotton")
Less: Bad debt provision -977,015.71
Total 18,563,298.39
2) Disclosure by Withdrawal Methods for Bad Debts
Applicable □Not applicable
Withdrawal of bad debt provision by adopting the general mode of expected credit loss:
Unit: RMB
First stage Second stage Third stage
Bad debt provision Expected credit loss Expected loss in the Total
Expected loss in the duration
in the next 12 duration (credit impairment
(credit impairment occurred)
months not occurred)
Balance of 1 January 2023 977,015.71 977,015.71
Balance of 1 January 2023 in
the Current Period
Withdrawal of the Current
-977,015.71 -977,015.71
Period
Balance of 31 December 2023 0.00 0.00
155
Lu Thai Textile Co., Ltd. Annual Report 2023
The basis for the division of each stage and the withdrawal proportion of bad debt provision
Changes of carrying amount with significant amount changed of loss provision in the current period
□Applicable Not applicable
(2) Other Receivables
1) Other Receivables Classified by Nature
Unit: RMB
Nature Ending carrying amount Beginning carrying amount
Export rebates 3,798,857.69 14,027,493.50
VAT to be returned 7,283,733.09 8,307,493.84
Payment on behalf 8,669,608.81 11,897,474.75
Guarantee deposit and cash deposit 1,613,961.78 4,220,014.58
Borrowings and petty cash 1,962,604.48 1,543,080.24
Others 5,078,173.43 36,256,599.70
Total 28,406,939.28 76,252,156.61
2) Disclosure by Aging
Unit: RMB
Aging Ending balance Beginning carrying amount
Within one year (including 1 year) 17,090,150.86 70,961,586.97
One to two years 7,685,279.13 1,080,590.18
Two to three years 177,000.00 678,244.85
More than three years 3,454,509.29 3,531,734.61
Three to four years 35,020.00 131,544.46
Four to five years 78,300.00 101,101.14
Over 5 years 3,341,189.29 3,299,089.01
Total 28,406,939.28 76,252,156.61
(3) Disclosure by Withdrawal Methods for Bad Debts
√Applicable □Not Applicable
Withdrawal of bad debt provision by adopting the general mode of expected credit loss:
Unit: RMB
First stage Second stage Third stage
Bad debt provision Expected loss in the Expected loss in the Total
Expected credit loss in the
duration (credit impairment duration (credit
next 12 months
not occurred) impairment occurred)
Balance of 1 3,681,740.03 1,278,054.98 0.00 4,959,795.01
156
Lu Thai Textile Co., Ltd. Annual Report 2023
January 2023
Balance of 1
January 2023 in
the Current Period
Withdrawal of the
-2,801,476.59 3,916,801.38 163,012.05 1,278,336.84
Current Period
Balance of 31
880,263.44 5,194,856.36 163,012.05 6,238,131.85
December 2023
The basis for the division of each stage and the withdrawal proportion of bad debt provision
Bad debt provision in the first stage at the period-end:
Expected rate of credit
Category Carrying amount losses in the next 12 Bad debt provision Carrying value Reason
months (%)
Bad debt provision
separately accrued
Withdrawal of bad debt
17,605,269.82 880,263.44 16,725,006.38
provision by group
Not past
Tax receivable 3,798,857.69 5 189,942.89 3,608,914.80
due
Security deposit and Not past
1,613,961.78 5 80,698.09 1,533,263.69
margin receivable due
Not past
VAT to be returned 303,857.45 5 15,192.87 288,664.58
due
Not past
Other receivables 11,888,592.90 5 594,429.59 11,294,163.31
due
Total 17,605,269.82 5 880,263.44 16,725,006.38
Bad debt provision in the second stage at the period-end:
Expected credit loss
Category Carrying amount rate for the entire Bad debt provision Carrying value Reason
duration (%)
Bad debt provision
separately accrued
Withdrawal of bad debt
10,638,657.41 5,194,856.36 5,443,801.05
provision by group
VAT to be returned 6,979,875.64 48.83 3,408,273.28 3,571,602.36 over due
Other receivables 3,658,781.77 48.83 1,786,583.08 1,872,198.69 over due
Total 10,638,657.41 48.83 5,194,856.36 5,443,801.05
Other receivables in the third stage at the period-end:
Expected credit loss rate
Category Carrying amount for the entire duration Bad debt provision Carrying value Reason
(%)
Bad debt
provision
163,012.05 163,012.05
separately
accrued
Customer in financial
Customer 1 163,012.05 100 163,012.05
difficulty
Total 163,012.05 100 163,012.05
157
Lu Thai Textile Co., Ltd. Annual Report 2023
Bad debt provision in the first stage at the end of the previous year:
Expected rate of
Category_110104 Carrying amount credit losses in the Bad debt provision Carrying value Division basis
next 12 months (%)
Withdrawal of bad debt
73,634,800.53 3,681,740.03 69,953,060.50
provision by group
Tax receivable 22,334,987.34 5 1,116,749.36 21,218,237.98 Not past due
Security deposit and
4,220,014.58 5 211,000.75 4,009,013.83 Not past due
margin receivable
Other receivables 47,079,798.61 5 2,353,989.92 44,725,808.69 Not past due
Total 73,634,800.53 5 3,681,740.03 69,953,060.50
Bad debt provision in the second stage at the end of the previous year:
Expected credit loss
Category_110106 Carrying amount rate for the entire Bad debt provision Carrying value Division basis
duration (%)
Withdrawal of bad debt
2,617,356.08 1,278,054.98 1,339,301.10
provision by group
Other receivables 2,617,356.08 48.83 1,278,054.98 1,339,301.10 Over due
Total 2,617,356.08 48.83 1,278,054.98 1,339,301.10
Bad debt provision in the third stage at the end of the previous year:
At the end of the previous year, the Company had no other receivables in the third stage.
Changes of carrying amount with significant amount changed of loss provision in the current period
□Applicable Not applicable
Unit: RMB
4) Bad Debt Provision Withdrawn, Reversed or Recovered in the Reporting Period
Withdrawal of bad debt provision:
Unit: RMB
Changes in the Reporting Period
Category Beginning balance Reversed or Charged-off/ Ending balance
Withdrawal Others
recovered Verification
Expected credit loss
of the next 12
3,681,740.03 -2,801,476.59 880,263.44
months at the first
stage
Expected loss in the
duration (credit
impairment not 1,278,054.98 3,916,801.38 5,194,856.36
occurred) at the
second stage
Expected loss in the
duration (credit
impairment 163,012.05 163,012.05
occurred) at the third
stage
158
Lu Thai Textile Co., Ltd. Annual Report 2023
Total 4,959,795.01 1,278,336.84 6,238,131.85
5) Top 5 Other Accounts Receivable in Ending Balance Collected according to the Arrears Party
Unit: RMB
Proportion to total
Name of the Ending balance of bad debt
Nature Ending balance Aging ending balance of
entity provision
other receivables %
Within 1 year and 1 to
Customer 1 Rebate of VAT 7,283,733.09 25.64% 3,423,466.15
2 years
Advance
Customer 2 5,982,874.78 Within 1 year 21.06% 299,143.74
payments
Customer 3 Export rebates 3,798,857.69 Within 1 year 13.37% 189,942.88
Advance
Customer 4 1,446,209.23 Within 1 year 5.09% 72,310.46
payments
Advance
Customer 5 1,197,960.40 Within 1 year 4.22% 59,898.02
payments
Total 19,709,635.19 69.38% 4,044,761.25
7. Prepayment
(1) Prepayment Listed by Aging Analysis
Aging Ending balance Beginning balance
amount Proportion amount Proportion
Within 1 year 51,843,880.46 99.96% 94,608,438.10 99.57%
One to two years 17,437.82 0.04% 411,030.94 0.43%
Two to three years 2,129.28
More than three years 2,129.28
Total 51,863,447.56 95,021,598.32
Notes of the reasons of the prepayment aging over 1 year with significant amount but failed settled in time:
There were no significant prepayments aged over one year during the year.
(2) Top 5 Prepayment in Ending Balance Collected according to the Prepayment Target
Percentage of total advances to suppliers
Name of the entity Closing balance of prepayments
(%)
Supplier 1 7,859,205.06 15.15
Supplier 2 7,845,351.21 15.13
Supplier 3 7,084,533.57 13.66
Supplier 4 6,647,230.33 12.82
Supplier 5 4,722,637.93 9.11
Total 34,158,958.10 65.87
159
Lu Thai Textile Co., Ltd. Annual Report 2023
Other notes: The advances to suppliers from the top five of prepaid parties classified based on the ending balance totals
RMB34,158,958.10 in the current period, accounting for 65.87% of the total ending balance of the advances to suppliers.
8. Inventory
Whether the Company needs to comply with the disclosure requirements for the real estate industry
No
(1) Category of Inventory
Unit: RMB
Ending balance Beginning balance
Depreciation
Depreciation
reserves of
reserves of
inventories or
Item inventories or
impairment
Carrying amount impairment Carrying value Carrying amount Carrying value
provision for
provision for
contract
contract
performance
performance costs
costs
Raw materials 961,742,257.63 48,846,493.37 912,895,764.26 964,638,749.13 47,996,904.87 916,641,844.26
Goods in
504,407,562.92 11,183,192.80 493,224,370.12 502,282,021.10 12,926,711.64 489,355,309.46
process
Inventory
886,717,966.10 181,209,030.54 705,508,935.56 869,338,282.54 181,010,948.47 688,327,334.07
goods
Commissioned
12,510,504.76 12,510,504.76 13,525,220.54 13,525,220.54
products
Total 2,365,378,291.41 241,238,716.71 2,124,139,574.70 2,349,784,273.31 241,934,564.98 2,107,849,708.33
(2) Falling Price Reserves of Inventory and Impairment Reserves for Contract Performance Costs
Unit: RMB
Increased amount of the current Decreased amount for the current
period period
Item Beginning balance Ending balance
Transferred-back or
Withdrawal Others Others
charged-off
Raw
47,996,904.87 4,495,359.90 3,645,771.40 48,846,493.37
materials
Goods in
12,926,711.64 7,398,390.95 9,141,909.79 11,183,192.80
process
Inventory
181,010,948.47 76,851,579.36 76,653,497.29 181,209,030.54
goods
Total 241,934,564.98 88,745,330.21 89,441,178.48 241,238,716.71
Reasons for charge-off/write-off of inventory
Items The specific basis for determining the net realizable value
falling price reserves in the current period
160
Lu Thai Textile Co., Ltd. Annual Report 2023
Estimated selling price deducts the estimated selling expense
Raw materials Sales
and the relevant taxes
Estimated selling price deducts the estimated selling expense
Inventory goods Sales
and the relevant taxes
Estimated selling price of finished goods deducts the cost
Work-in-
estimated until completion, estimated sales taxes and relevant Sales
progress
taxes
9. Other Current Assets
Unit: RMB
Item Ending balance Beginning balance
Other tax 801,750.09 9,813,869.63
Prepaid income tax 2,774,815.63 14,983,737.42
Prepaid other taxes 3,453,982.70 432,344.55
Convertible broken lot fund 199,680.79 199,689.59
Refundable deposits 137,881,884.82 51,418,261.88
Total 145,112,114.03 76,847,903.07
10. Long-term Equity Investment
Unit: RMB
Beginni
Increase/decrease for the current period
ng
balance Cash Ending
Beginning of Gains and Withdra Ending balance
Adjustme Chan bonus
balance deprecia Additio Reduced losses
nt of other ges of or
wal of Balance of
Investee
(carrying tion nal
investme
recognize
comprehe other profits
impair Oth (Carrying deprecia
reserve invest d under ment ers
value) nt nsive equit announ Value) tion
ment the equity provisio reserve
income y ced to
method n
issue
I. Joint ventures
II. Associated enterprises
Ningbo
Mei shan
Bonded
Port
Area
Haohong
Equity
Investme
60,547,74 20,156,31 7,866,263 48,257,69
nt
9.28 3.56 .99 9.71
Partners
hip (L.P)
(hereinaf
ter
referred
to as
“Haohon
g
161
Lu Thai Textile Co., Ltd. Annual Report 2023
Investme
nt”)
Ningbo
Haoying
Equity
Investme
nt
Partners
hip (L.P) -
123,620,8 10,918,66 95,279,78
(hereinaf 17,422,43
76.41 2.01 0.06
ter 4.34
referred
to as
“Haoyin
g
Investme
nt”)
-
184,168,6 31,074,97 143,537,4
Subtotal 9,556,170
25.69 5.57 79.77
.35
-
184,168,6 31,074,97 143,537,4
Total 9,556,170
25.69 5.57 79.77
.35
The recoverable amount is determined based on the net amount of the fair value minus disposal costs
□Applicable Not applicable
The recoverable amount is determined by the present value of the forecasted future cash flow.
□Applicable Not applicable
11. Other Non-current Financial Assets
Unit: RMB
Item Ending balance Beginning balance
Equity instrument investment 76,750,000.00 325,110,000.00
Financial assets assigned measured by fair value and the changes be
12,000,000.00 12,000,000.00
included in the current gains and losses
Total 88,750,000.00 337,110,000.00
12. Investment Property
(1) Investment Property Adopting the Cost Measurement Mode
Applicable □Not applicable
Unit: RMB
Land use Construction
Item Houses and buildings Total
right in progress
I. Original carrying value
1. Beginning balance 33,577,852.12 33,577,852.12
2. Increased amount for the
130,806.00 130,806.00
current period
162
Lu Thai Textile Co., Ltd. Annual Report 2023
(1) Outsourcing
(2) Transfer from inventory/fixed
130,806.00 130,806.00
assets/construction in progress
(3) Business combination
increase
3. Decreased amount for the
current period
(1) Disposal
(2) Other transfer
4. Ending balance 33,708,658.12 33,708,658.12
II. Accumulative depreciation
and accumulative amortization
1. Beginning balance 13,116,916.91 13,116,916.91
2. Increased amount for the
1,013,565.28 1,013,565.28
current period
(1) Withdrawal or amortization 901,791.98 901,791.98
(2) Transfer from inventory/fixed
111,773.30 111,773.30
assets/construction in progress
3. Decreased amount for the
current period
(1) Disposal
(2) Other transfer
4. Ending balance 14,130,482.19 14,130,482.19
III. Depreciation reserves
1. Beginning balance
2. Increased amount for the
current period
(1) Withdrawal
3. Decreased amount for the
current period
(1) Disposal
(2) Other transfer
4. Ending balance
IV. Carrying value
1. Ending carrying value 19,578,175.93 19,578,175.93
2. Beginning carrying value 20,460,935.21 20,460,935.21
The recoverable amount is determined based on the net amount of the fair value minus disposal costs
□Applicable Not applicable
The recoverable amount is determined by the present value of the forecasted future cash flow.
□Applicable Not applicable
163
Lu Thai Textile Co., Ltd. Annual Report 2023
(2) Investment Property Adopting the Fair Value Measurement Mode
□Applicable Not applicable
13. Fixed Assets
Unit: RMB
Item Ending balance Beginning balance
Fixed assets 5,597,692,505.07 5,807,847,850.67
Liquidation of fixed assets
Total 5,597,692,505.07 5,807,847,850.67
(1) List of Fixed Assets
Unit: RMB
Electronic
Houses and Machinery Transportation
Item equipment and Total
buildings equipment equipment
others
I. Original carrying
value:
1. Beginning
3,652,101,893.21 7,427,223,782.49 53,341,156.82 133,738,892.88 11,266,405,725.40
balance
2. Increased amount
for the current 124,150,251.95 201,949,303.23 2,444,622.95 2,152,130.10 330,696,308.23
period
(1) Purchase 143,472,298.75 2,256,680.85 2,040,376.59 147,769,356.19
(2) Transfer from
construction in 107,969,731.75 35,029,695.21 142,999,426.96
progress
(3) Business
combination
increase
(4) Other increase 16,180,520.20 23,447,309.27 187,942.10 111,753.51 39,927,525.08
3. Decreased
amount for the 4,842,788.55 130,822,767.06 308,974.36 5,062,921.21 141,037,451.18
current period
(1) Disposal or scrap 4,711,982.55 94,472,487.96 308,974.36 5,062,921.21 104,556,366.08
(2) Transfer from
construction in 36,350,279.10 36,350,279.10
progress
(3) Transfer from
investment 130,806.00 130,806.00
properties
4. Ending balance 3,771,409,356.61 7,498,350,318.66 55,476,805.41 130,828,101.77 11,456,064,582.45
II. Accumulative
depreciation
1. Beginning 1,217,812,756.74 4,048,548,925.66 39,994,380.21 114,073,387.92 5,420,429,450.53
164
Lu Thai Textile Co., Ltd. Annual Report 2023
balance
2. Increased amount
for the current 129,838,753.47 332,896,533.06 3,663,533.53 7,348,030.47 473,746,850.53
period
(1) Withdrawal 127,206,159.07 325,659,023.01 3,527,105.19 7,253,684.90 463,645,972.17
(2) Other Increases 2,632,594.40 7,237,510.05 136,428.34 94,345.57 10,100,878.36
3. Decreased
amount for the 4,136,059.87 69,927,446.83 278,076.92 4,624,151.85 78,965,735.47
current period
(1) Disposal or scrap 4,024,286.57 66,823,047.25 278,076.92 4,624,151.85 75,749,562.59
(2) Transfer from
construction in 3,104,399.58 3,104,399.58
progress
(3) Transfer from
investment 111,773.30 111,773.30
properties
4. Ending balance 1,343,515,450.34 4,311,518,011.89 43,379,836.82 116,797,266.54 5,815,210,565.59
III. Depreciation
reserves
1. Beginning
429,416.16 37,631,204.93 5,671.30 62,131.81 38,128,424.20
balance
2. Increased amount
for the current 17,131,456.31 17,131,456.31
period
(1) Withdrawal 17,131,456.31 17,131,456.31
3. Decreased
amount for the 12,070,957.69 27,411.03 12,098,368.72
current period
(1) Disposal or scrap 12,070,957.69 27,411.03 12,098,368.72
4. Ending balance 429,416.16 42,691,703.55 5,671.30 34,720.78 43,161,511.79
IV. Carrying value
1. Ending carrying
2,427,464,490.11 3,144,140,603.22 12,091,297.29 13,996,114.45 5,597,692,505.07
value
2. Beginning
2,433,859,720.31 3,341,043,651.90 13,341,105.31 19,603,373.15 5,807,847,850.67
carrying value
(2) Fixed Assets Leased out by Operation Lease
Unit: RMB
Item Ending carrying amount
Houses and buildings 4,704,074.57
165
Lu Thai Textile Co., Ltd. Annual Report 2023
(3) Fixed Assets Failed to Accomplish Certification of Property
Unit: RMB
Item Carrying value Reason
Under the relevant certificate procedures of acceptance,
Lufeng weaving dye gray
11,917,191.06 measurement, examination by the real estate trading center and
yarn warehouse
other departments
Lu Thai Textile Warehouse
6,144,662.12 The same as above
01, 02
Lulian New Materials Yarn
7,806,406.97 The same as above
Warehouse
Fabric Inspection Workshop
82,360,714.56 The same as above
of Lulian New Materials
14. Construction in Progress
Unit: RMB
Item Ending balance Beginning balance
Construction in progress 383,113,337.09 162,197,188.04
Engineering materials 485,383,541.32 37,746,313.69
Total 868,496,878.41 199,943,501.73
(1) List of Construction in Progress
Unit: RMB
Ending balance Beginning balance
Item Depreciation Depreciation
Carrying amount Carrying value Carrying amount Carrying value
reserves reserves
Production
line project of
high-grade 375,973,427.49 375,973,427.49 110,653,801.45 110,653,801.45
fabrics (Phase
I)
Reform
project of
Xinsheng 4,783,916.38 4,783,916.38 18,548,362.41 18,548,362.41
Thermal
Power
Other
sporadic 2,355,993.22 2,355,993.22 32,995,024.18 32,995,024.18
projects
Total 383,113,337.09 383,113,337.09 162,197,188.04 162,197,188.04
(2) Changes in Significant Construction in Progress during the Reporting Period
Unit: RMB
Increased Transferr Other Proporti Job Accumul Of Capitaliz Capit
Project Beginnin Ending
Budget amount of ed in decrea on of sched ated which: ation al
Name g balance balance
the fixed sed accumul ule amount amount rate of resour
166
Lu Thai Textile Co., Ltd. Annual Report 2023
current assets amou ated of of interests ces
period nt for investm interest capitaliz for the
the ent in capitaliz ed Reportin
curren construc ation interests g Period
t tions to for the
period budget Reportin
g Period
Produc
Publi
tion
c
line
offeri
project
ng
of 464,800,0 110,653,8 334,696,0 69,376,43 375,973,4 87.00 11,598,1 11,598,1
95.00% 3.68% fund
high- 00.00 01.45 65.24 9.20 27.49 % 84.16 84.16
and
grade
self-
fabrics
raised
(Phase
fund
I)
Refor
m
project
of
8,000,000 18,548,36 6,543,754 20,308,20 4,783,916 80.00
Xinshe 60.00%
.00 2.41 .69 0.72 .38 % Other
ng
Therm
al
Power
Other
sporad
32,995,02 22,675,75 53,314,78 2,355,993
ic Other
project 4.18 6.08 7.04 .22
s
472,800,0 162,197,1 363,915,5 142,999,4 383,113,3 11,598,1 11,598,1
Total
00.00 88.04 76.01 26.96 37.09 84.16 84.16
(3) Impairment Test of Construction in Progress
□Applicable Not applicable
(4) Engineering Materials
Unit: RMB
Ending balance Beginning balance
Item Depreciation Depreciation
Carrying amount Carrying value Carrying amount Carrying value
reserves reserves
Special
871,768.43 871,768.43
materials
Special
equipment to 484,511,772.89 484,511,772.89 37,746,313.69 37,746,313.69
be installed
Total 485,383,541.32 485,383,541.32 37,746,313.69 37,746,313.69
167
Lu Thai Textile Co., Ltd. Annual Report 2023
15. Right-of-use Assets
(1) List of Right-of-use Assets
Item Houses and buildings Land use right Total
I. Original carrying
value
1. Beginning balance 74,496,696.93 445,512,889.01 520,009,585.94
2. Increased amount
2,478,079.64 6,983,277.64 9,461,357.28
for the current period
(1) Rent 2,447,032.05 23,890.12 2,470,922.17
(2) Lease Liabilities
Adjustment
(3) Other Increase 31,047.59 6,959,387.52 6,990,435.11
3. Decreased amount
19,123,073.88 19,123,073.88
for the current period
(1) Sublease is a
financial lease
(2) Transfer or hold
for sale
(3) Maturity 19,123,073.88 19,123,073.88
(4) Other decrease
4. Ending balance 57,851,702.69 452,496,166.65 510,347,869.34
II. Accumulative
depreciation
1. Beginning balance 22,293,617.24 16,295,463.39 38,589,080.63
2. Increased amount
11,453,148.15 16,202,295.23 27,655,443.38
for the current period
(1) Withdrawal 11,431,910.42 15,585,545.10 27,017,455.52
(2) Other Increases 21,237.73 616,750.13 637,987.86
3. Decreased amount
19,123,073.88 19,123,073.88
for the current period
(1) Disposal
(2) Maturity 19,123,073.88 19,123,073.88
4. Ending balance 14,623,691.51 32,497,758.62 47,121,450.13
III. Depreciation
reserves
1. Beginning balance
2. Increased amount
for the current period
(1) Withdrawal
168
Lu Thai Textile Co., Ltd. Annual Report 2023
3. Decreased amount
for the current period
(1) Disposal
4. Ending balance
IV. Carrying value
1. Ending carrying
43,228,011.18 419,998,408.03 463,226,419.21
value
2. Beginning
52,203,079.69 429,217,425.62 481,420,505.31
carrying value
16. Intangible assets
(1) List of intangible assets
Unit: RMB
Non-patent
Item Land use right Patent right Software use rights Total
technologies
I. Original
carrying value
1. Beginning
470,338,494.00 409,550.00 1,372,816.75 472,120,860.75
balance
2. Increased
amount for the 1,036,665.83 1,036,665.83
current period
(1) Purchase 1,034,057.53 1,034,057.53
(2) Internal
R&D
(3) Business
combination
increase
(4) Other
2,608.30 2,608.30
increase
3. Decreased
amount for the 272,359.86 272,359.86
current period
(1) Disposal 272,359.86 272,359.86
4. Ending
470,338,494.00 409,550.00 2,137,122.72 472,885,166.72
balance
II. Accumulated
amortization
1. Beginning
118,321,920.63 71,671.98 837,690.08 119,231,282.69
balance
2. Increased
amount for the 10,096,399.24 40,954.38 441,010.85 10,578,364.47
current period
(1) Withdrawal 10,096,399.24 40,954.38 440,001.32 10,577,354.94
169
Lu Thai Textile Co., Ltd. Annual Report 2023
(2) Other
1,009.53 1,009.53
Increases
3. Decreased
amount for the 272,359.86 272,359.86
current period
(1) Disposal 272,359.86 272,359.86
4. Ending
128,418,319.87 112,626.36 1,006,341.07 129,537,287.30
balance
III. Depreciation
reserves
1. Beginning
balance
2. Increased
amount for the
current period
(1) Withdrawal
3. Decreased
amount for the
current period
(1) Disposal
4. Ending
balance
IV. Carrying
value
1. Ending
341,920,174.13 296,923.64 1,130,781.65 343,347,879.42
carrying value
2. Beginning
352,016,573.37 337,878.02 535,126.67 352,889,578.06
carrying value
The proportion of intangible assets formed from the internal R&D of the Company at the Period-end to the ending balance of
intangible assets was 0.00%.
(2) Impairment Test of Intangible Assets
□Applicable Not applicable
17. Development costs
Unit: RMB
Beginning Ending
Item Increased amount of the current period Decreased amount for the current period
balance balance
R&D of
239,775,343.18 239,775,343.18
products
Total 239,775,343.18 239,775,343.18
170
Lu Thai Textile Co., Ltd. Annual Report 2023
For details, refer to Note VIII. Research and Development Expenditure with restricted ownership or use right.
18. Goodwill
(1) Original Carrying Value of Goodwill
Unit: RMB
Decrease for the
Increase for the current period
Name of the invested units or events Beginning current period
Ending balance
generating goodwill balance Formed by business
Disposal
combination
Xinsheng Power 20,563,803.29 20,563,803.29
Total 20,563,803.29 20,563,803.29
19. Long-term Prepaid Expense
Unit: RMB
Increased amount of Amortization amount Other decreased
Item Beginning balance Ending balance
the current period of the current period amount
Decoration
2,869,384.57 2,593,178.84 3,768,137.83 1,694,425.58
fee
Technical
service 79,597.40 35,376.60 44,220.80
charges
Other
prepaid 264,659.22 187,467.00 77,192.22
expense
Total 2,948,981.97 2,857,838.06 3,990,981.43 1,815,838.60
20. Deferred Income Tax Assets/Deferred Income Tax Liabilities
(1) Deferred Income Tax Assets Had Not Been Off-set
Unit: RMB
Ending balance Beginning balance
Item Deductible temporary Deductible temporary Deferred income tax
Deferred income tax assets
differences differences assets
Provision for
impairment of 230,431,449.02 36,029,044.63 255,841,124.12 38,889,866.26
assets
Internal
107,060,058.13 14,691,107.03 131,224,111.61 17,495,580.49
unrealized profit
Deductible
109,351,504.69 19,934,589.31 152,699,543.87 28,176,066.84
losses
Payroll payable 67,324,258.61 10,109,806.74 73,899,001.83 11,096,607.07
Deferred
151,500,472.11 23,556,894.11 159,284,848.68 24,863,045.77
income
Contract 89,450,421.20 22,157,141.99 81,088,515.08 20,272,128.77
171
Lu Thai Textile Co., Ltd. Annual Report 2023
liabilities
Changes in fair
value of other
0.00 330,000.00 49,500.00
non-current
financial assets
The changes of
accounts
receivable 81,235.81 12,185.37 92,637.48 13,895.62
financing in fair
value
Lease liabilities 93,523,870.95 14,028,580.65 6,274,343.07 1,002,949.03
Restricted stock
27,488,845.13 4,123,326.77 53,367,269.88 8,005,090.48
incentive fees
Convertible
46,083,362.71 6,912,504.41 17,827,648.45 2,674,147.27
corporate bonds
Associate 13,704,707.03 2,055,706.05 21,570,971.02 3,235,645.65
Fund losses 28,541,486.65 4,281,223.00
Total 964,541,672.04 157,892,110.06 953,500,015.09 155,774,523.25
(2) Deferred Income Tax Liabilities Had Not Been Off-set
Unit: RMB
Ending balance Beginning balance
Item Taxable Deferred
Taxable temporary difference Deferred income tax liabilities temporary income tax
difference liabilities
Depreciation of
632,363,989.77 99,342,402.95 643,426,505.04 101,589,274.02
fixed assets
Changes in fair
value of trading 245,835,380.61 36,875,307.09 23,985,450.00 3,597,817.50
financial assets
Changes in the fair
value of other non-
19,467,400.00 2,920,110.00 268,073,567.06 40,211,035.06
current financial
assets
Associated
19,521,963.57 2,928,294.54 36,944,397.91 5,541,659.69
enterprises
Right-of-use assets
87,417,883.01 13,112,682.46 2,024,310.22 303,646.53
Total 1,004,606,616.96 155,178,797.04 974,454,230.23 151,243,432.80
(3) Deferred income tax assets or liabilities had been off-set listed in net amount
Unit: RMB
Ending off-set Beginning off-set
Beginning balance of
amount of deferred Ending balance of deferred income amount of deferred
Item deferred income tax
income tax assets and tax assets and liabilities income tax assets and
assets and liabilities
liabilities liabilities
Deferred income tax
157,892,110.06 155,774,523.25
assets
Deferred income tax
155,178,797.04 151,243,432.80
liabilities
172
Lu Thai Textile Co., Ltd. Annual Report 2023
(4) List of unrecognized deferred income tax assets
Unit: RMB
Item Ending balance Beginning balance
Deductible temporary difference 65,448,810.95 49,938,675.28
Deductible losses 257,150,469.99 170,560,094.42
Total 322,599,280.94 220,498,769.70
(5) Deductible losses of unrecognized deferred income tax assets will due in the following years
Unit: RMB
Years Ending amount Beginning amount Note
Y2024 646.08
Y2025 299.83 52,127.16
Y2026 71,235,558.18 71,952,021.26
Y2027 96,904,257.37 98,555,299.92
Y2028 89,010,354.61
Total 257,150,469.99 170,560,094.42
21. Other Non-current Assets
Unit: RMB
Ending balance Beginning balance
Item Depreciation Carrying Depreciation
Carrying amount Carrying value Carrying value
reserves amount reserves
Project
672,659.25 672,659.25
prepayment
Prepayment
for 2,008,677.98 2,008,677.98 80,902,453.33 80,902,453.33
equipment
Term
deposits 150,000,000.00 150,000,000.00 151,000,000.00 151,000,000.00
over 1 year
Interest
receivable
from term 3,008,929.60 3,008,929.60 10,637,013.55 10,637,013.55
deposits
over 1 year
Total 155,690,266.83 155,690,266.83 242,539,466.88 242,539,466.88
22. Assets with Restricted Ownership or Right to Use
Unit: RMB
Period-end Period-beginning
Item Type of Status of Carrying Carrying Type of Status of
Carrying amount Carrying value
restriction restriction amount value restriction restriction
173
Lu Thai Textile Co., Ltd. Annual Report 2023
Monetary
4,024,123.14 4,024,123.14 Deposit, frozen 1,328,577.85 1,328,577.85 Deposit
capital
Endorsed or
Notes discounted but
51,979,653.25 51,979,653.25
receivable not yet due for
derecognization
Other
Refundable Refundable
current 137,881,884.82 137,881,884.82 51,418,261.88 51,418,261.88
deposits deposits
assets
Total 193,885,661.21 193,885,661.21 52,746,839.73 52,746,839.73
23. Short-term Borrowings
(1) Category of Short-term Borrowings
Unit: RMB
Item Ending balance Beginning balance
Borrowings secured by guarantee 68,275,604.36
Credit loan 512,429,167.91 518,946,415.96
Total 580,704,772.27 518,946,415.96
Notes of the category for short-term loans:
The short-term borrowing includes interest payable of RMB1,116,261.00.
24. Trading financial liabilities
Unit: RMB
Item Ending balance Beginning balance
Trading financial liabilities 46,785,831.47 4,276,929.70
Of which:
Derivative financial liabilities 46,785,831.47 4,276,929.70
Of which:
Total 46,785,831.47 4,276,929.70
25. Notes payable
Unit: RMB
Category Ending balance Beginning balance
Bank acceptance bill 55,450,000.00
Total 55,450,000.00
The total amount of notes payable due but unpaid was RMB0.00 without the reason for non-payment.
174
Lu Thai Textile Co., Ltd. Annual Report 2023
26. Accounts Payable
(1) List of accounts payable
Unit: RMB
Item Ending balance Beginning balance
Payment for goods 127,198,717.36 112,354,158.59
Engineering equipment 106,150,377.55 91,747,417.03
Others 42,153,820.14 42,486,888.12
Total 275,502,915.05 246,588,463.74
(2) Significant Accounts Payable Aging over One Year or Overdue
Other notes:
No significant accounts payable over one year old at the end of the Current Period.
27. Other Payables
Unit: RMB
Item Ending balance Beginning balance
Dividends payable 441,113.64 441,113.64
Other payables 47,108,259.88 82,916,183.07
Total 47,549,373.52 83,357,296.71
(1) Dividends payable
Unit: RMB
Item Ending balance Beginning balance
Dividends payable to individual
441,113.64 441,113.64
shareholders
Total 441,113.64 441,113.64
(2) Other Payables
1) Other payables listed by nature
Unit: RMB
Item Ending balance Beginning balance
Deposits and cash deposits etc. 5,026,687.70 4,246,108.66
Collecting payment on behalf of others 213,812.12
Restricted stock repurchase obligations 31,556,265.00 65,286,630.00
175
Lu Thai Textile Co., Ltd. Annual Report 2023
Others 10,311,495.06 13,383,444.41
Total 47,108,259.88 82,916,183.07
28. Contract Liabilities
Unit: RMB
Item Ending balance Beginning balance
Advance from sales 203,270,689.03 221,918,730.24
Less: contract liability recorded in other
-15,197,353.14 -15,039,057.71
current liabilities
Total 188,073,335.89 206,879,672.53
Significant contract liabilities aging over one year
Item Ending balance Unpaid/Un-carry-over reason
Heating facilities supporting fees not yet
Customer 1 19,560,409.21
carried forward
Heating facilities supporting fees not yet
Customer 2 18,808,502.64
carried forward
Total 38,368,911.85
29. Payroll Payable
(1) List of payroll payable
Unit: RMB
Increase for the Decrease for the
Item Beginning balance Ending balance
current period current period
I. Short-term salary 329,320,005.76 1,380,521,850.73 1,425,512,351.86 284,329,504.63
II. Post-employment benefit-defined
707,153.96 167,306,350.87 167,998,035.74 15,469.09
contribution plans
III. Termination benefits 1,370,190.45 1,370,190.45
Total 330,027,159.72 1,549,198,392.05 1,594,880,578.05 284,344,973.72
(2) List of Short-term Salary
Unit: RMB
Increase for the Decrease for the
Item Beginning balance Ending balance
current period current period
1. Salary, bonus, allowance, subsidy 264,765,901.82 1,232,900,966.76 1,284,241,350.60 213,425,517.98
2. Employee welfare 40,393,339.27 40,181,656.19 211,683.08
3. Social insurance 35,064.83 76,075,327.71 76,077,856.04 32,536.50
Of which: Medical insurance
17,115.51 68,938,742.30 68,924,446.33 31,411.48
premiums
Work-related injury insurance 6,185.58 7,128,808.57 7,134,619.14 375.01
176
Lu Thai Textile Co., Ltd. Annual Report 2023
premiums
Maternity insurance 11,763.74 7,776.84 18,790.57 750.01
4. Housing fund 10,218,812.40 10,218,812.40
5. Labor union budget and
64,519,039.11 20,933,404.59 14,792,676.63 70,659,767.07
employee education budget
Total 329,320,005.76 1,380,521,850.73 1,425,512,351.86 284,329,504.63
(3) List of defined contribution plans
Unit: RMB
Increase for the current Decrease for the current
Item Beginning balance Ending balance
period period
1. Basic pension
444,238.10 159,190,927.09 159,620,164.87 15,000.32
insurance
2. Unemployment
262,915.86 8,115,423.78 8,377,870.87 468.77
insurance premiums
Total 707,153.96 167,306,350.87 167,998,035.74 15,469.09
Other notes:
The Company, in line with the requirement, participates in endowment insurance, unemployment insurance plans, and so on. Under
these plans, the Company makes monthly contributions to these plans at 16% and 0.7% of the social security contribution base,
respectively. No further payment obligations will be incurred by the Company beyond the above monthly contribution fees. The
relevant expense occurred was recorded into current profits and losses or related asset costs.
30. Taxes Payable
Unit: RMB
Item Ending balance Beginning balance
VAT 15,261,850.74 8,191,703.94
Enterprise income tax 14,347,230.63 7,853,201.82
Personal income tax 1,266,426.62 1,070,729.43
Urban maintenance and construction tax 2,753,492.14 3,625,674.57
Stamp duty 848,769.75 760,689.83
Real estate tax 5,059,177.21 5,023,343.97
Land use tax 668,899.85 1,980,295.59
Educational fee 1,253,814.31 1,602,333.55
Local education surcharge 843,626.22 1,068,222.36
Tax on natural resources 31,938.00 99,406.00
Environmental protection tax 298,007.08 207,841.00
Total 42,633,232.55 31,483,442.06
177
Lu Thai Textile Co., Ltd. Annual Report 2023
31. Current Portion of Non-current Liabilities
Unit: RMB
Item Ending balance Beginning balance
Long-term borrowings matured within 1
88,930,000.00 300,800,000.00
year
Lease obligation matured within 1 year 7,277,192.49 7,121,837.35
Total 96,207,192.49 307,921,837.35
32. Other current liabilities
Unit: RMB
Item Ending balance Beginning balance
Tax to be charged off 15,197,353.14 15,039,057.71
Endorsed undue bill under non-
48,449,554.97 51,849,967.46
derecognition
Total 63,646,908.11 66,889,025.17
33. Long-term Borrowings
(1) Category of long-term borrowings
Unit: RMB
Item Ending balance Beginning balance
Credit loan 348,922,974.40 487,231,096.24
Less: current portion of long-term
-88,930,000.00 -300,800,000.00
borrowings
Total 259,992,974.40 186,431,096.24
34. Bonds Payable
(1) Bonds payable
Unit: RMB
Item Ending balance Beginning balance
Convertible corporate bonds 1,476,572,070.79 1,438,162,231.27
Total 1,476,572,070.79 1,438,162,231.27
178
Lu Thai Textile Co., Ltd. Annual Report 2023
(2) Changes of bonds payable (excluding other financial instruments divided as financial liabilities such as
preferred shares and perpetual bonds)
Unit: RMB
Issued Amortiz
Curre
Iss in the Interest ation of Repaid Defa
Cou Bond nt
ue Issue Beginning Repor accrued premium in the Ending ult
Name Par value pon durat shares
rate dat ion amount balance ting at par and Reportin
conve
balance or
e Perio value depreciat g Period not
rted
d ion
LuThai
9
Conver
Ap
tible 1,400,000, 6 1,400,000, 1,438,162, 19,077,0 33,334,2 13,998,5 3,000. 1,476,572,
ril No
Bond 000.00 years 000.00 231.27 97.64 76.89 35.01 00 070.79
20
(12701
20
6)
1,476,572, --
1,400,000, 1,438,162, 19,077,0 33,334,2 13,998,5 3,000.
Total -- 070.79
000.00 231.27 97.64 76.89 35.01 00
(3) Notes to the convertible corporate bonds
According to the Approval of the Public Issue of Convertible Corporate Bonds of Lu Thai Textile Co., Ltd. (ZH.J.X.K [2020] No.
299) of the China Securities Regulatory Commission, the Company issued 14 million convertible bonds with a face value of
RMB100 each for a total issue amount of RMB1.4 billion with a maturity of 6 years, i.e. from 9 April 2020 to 8 April 2026.
The coupon rates of the convertible bonds issued by the Company are 0.3%, 0.6%, 1%, 1.5%, 1.8% and 2% in the following order
from the first stage to the sixth stage, with interest payable annually. The conversion period shall commence from (and include) the
first trading day on 15 October 2020, six months after the date of issue, and shall end on (and include) the trading day prior to the
maturity date of the convertible bonds (8 April 2026). Holders may apply for conversion during the conversion period.
The initial conversion price of convertible corporate bonds was RMB9.01 per share when it was issued but was adjusted to RMB8.91
per share since July 9, 2020, after the Company implemented the 2019 profit sharing agreement on July 8, 2020. After the Company
implemented the restricted stock incentive plan in 2021, the price was adjusted to RMB8.76 per share accordingly since June 7, 2021.
Upon the implementation of the 2020 profit sharing agreement by the Company on June 18, 2021, it was adjusted to RMB8.71 per
share accordingly again since June 18, 2021. Upon the implementation of the 2021 profit sharing agreement by the Company on June
23, 2022, it was adjusted to RMB8.61 per share accordingly again since June 23, 2022. The Company completed the formalities for
cancellation of the repurchased shares on 25 May 2023, and the conversion price of the convertible bond was adjusted accordingly to
RMB8.73 per share on 26 May 2023. Upon the implementation of the 2021 Profit Distribution Plan by the Company on 16 June
2023, the conversion price of the convertible bond was adjusted to RMB8.63 per share accordingly on 16 June 2023.
35. Lease obligation
Unit: RMB
Item Ending balance Beginning balance
Lease payments 123,608,615.06 139,634,635.96
Unrecognized financing costs -29,751,198.16 -34,011,494.78
Less: Current portion of lease liabilities -7,277,192.49 -7,121,837.35
Total 86,580,224.41 98,501,303.83
Other notes
The amount of interest expense on lease liabilities accrued in 2023 was RMB4,548,154.54, which was included in financial costs -
interest expense.
179
Lu Thai Textile Co., Ltd. Annual Report 2023
36. Long-term Payroll Payable
(1) List of long-term payroll payable
Unit: RMB
Item Ending balance Beginning balance
III. Other long-term welfare 57,276,675.61 57,417,997.65
Total 57,276,675.61 57,417,997.65
37. Deferred Income
Unit: RMB
Beginning Increase for the Decrease for the current Reason for
Item Ending balance
balance current period period formation
Government Government
159,615,037.36 16,710,000.00 24,556,089.44 151,768,947.92
grants grants
Total 159,615,037.36 16,710,000.00 24,556,089.44 151,768,947.92 --
38. Share Capital
Unit: RMB
Increase/decrease (+/-)
Shares
Beginning New converted
Bonus Ending balance
balance shares from Others Subtotal
shares
issued capital
reserve
Total
887,633,151.00 -24,025,517.00 -24,025,517.00 863,607,634.00
shares
Other notes:
(1) In accordance with the Proposal on Repurchase of the Company’s Domestically Listed Foreign Shares (B Share). reviewed and
approved by the Company at the 2nd Meeting of the 10th Board of Directors on 29 June 2022 and the 3rd Extraordinary General
Meeting of 2022 on 15 July 2022, the Company repurchased 23,935,748 B shares and completed the formalities for cancellation of
the foregoing repurchased shares at the Shenzhen Branch of China Securities Depository and Clearing Corporation Limited on 25
May 2023. This change in share capital has been audited by Zhitong Accounting Firm (Special General Partnership) and the capital
verification report ZTYZ (2023) No. 371C000235 was issued on 25 May 2023.
(2) In conformity with the resolution of the 7th Meeting of the Tenth Board of Directors on 10 April 2023 and the resolution of the
General Meeting of the Company on 12 May 2023, the Proposal on Repurchase and Cancel Authorized but Unlocked Restricted
Share of the Incentive Personnel not Conforming to the Incentive Condition, all the 90,000 shares authorized to the original incentive
personnel who did not conform to the incentive condition of the Company were repurchased and cancelled.
(3) A total of 231.00 shares of convertible bonds of the Company can be converted in the Reporting Period.
39. Other Equity Instruments
(1) Changes of outstanding financial instruments such as preferred shares and perpetual bonds at the period-end
Unit: RMB
180
Lu Thai Textile Co., Ltd. Annual Report 2023
Period-beginning Increase Decrease Period-end
Outstanding financial
instruments Carrying Carrying
Number Carrying value Number Number Number Carrying value
value value
Convertible debt to
71,383,830.75 152.97 71,383,677.78
equity
Total 71,383,830.75 152.97 71,383,677.78
40. Capital Reserves
Unit: RMB
Increase for the current Decrease for the current
Item Beginning balance Ending balance
period period
Capital premium
294,877,268.02 30,337,092.51 76,060,350.13 249,154,010.40
(premium on stock)
Other capital
100,994,867.69 14,978,971.67 30,335,235.00 85,638,604.36
reserves
Total 395,872,135.71 45,316,064.18 106,395,585.13 334,792,614.76
Other notes, including a description of the increase or decrease for the current period and the reasons for the change:
(1) According to the Proposal on Repurchase of the Company's Domestically Listed Foreign Shares (B Share) reviewed and
approved by the 2nd Meeting of the 10th Board of Directors held on 29 June 2022 and the 3rd Extraordinary General Meeting of
2022 held on 15 July 2022, the Company repurchased 23,935,748 B Shares, reducing the capital reserve - capital premium by
RMB75,863,250.13.
(2) In conformity with the resolution of the 7th session of the Tenth Board of Directors on 10 April 2023 and the resolution of the
General Meeting of the Company on 12 May 2023, the Proposal on Repurchase and Cancel Authorized but Unlocked Restricted
Share of the Incentive Personnel not Conforming to the Incentive Condition, all the 90,000 shares authorized to the original incentive
personnel who did not conform to the incentive condition of the Company were repurchased and cancelled, reducing the capital
reserve - capital premium by RMB197,100.00.
(3) In terms of the restricted stock incentive fees in the Reporting Period, the capital reserve - other capital reserve increased by
RMB16,824,114.86. As for deferred income tax assets arising from the restricted stock incentive fees, the capital reserve - other
capital reserves increased by RMB1,845,188.04. The portion of restricted shares of RMB30,335,235.00 due to be unlocked was
transferred from the capital reserve - other capital reserve to the capital reserve - capital premium.
(4) The capital reserves—capital premium arising from the conversion of convertible bonds increased by RMB1,857.51 in the
Reporting Period.
41. Treasury stocks
Unit: RMB
Increase for the current Decrease for the current
Item Beginning balance Ending balance
period period
Restricted stock
65,286,630.00 33,730,365.00 31,556,265.00
repurchase
B shares repurchase 89,109,568.73 172,571,885.18 99,798,998.13 161,882,455.78
Total 154,396,198.73 172,571,885.18 133,529,363.13 193,438,720.78
Other notes, including a description of the increase or decrease for the current period and the reasons for the change:
(1) RMB33,730,365.00 was reduced due to the restricted stock expiration unlock and repurchase during the Reporting Period.
(2) According to the Proposal on Repurchase of the Company's Domestically Listed Foreign Shares (B Share) reviewed and
approved by the 2nd Meeting of the 10th Board of Directors held on 29 June 2022 and the 3rd Extraordinary General Meeting of
181
Lu Thai Textile Co., Ltd. Annual Report 2023
2022 held on 15 July 2022, the Company repurchased 23,935,748 B Shares and completed the formalities for cancellation of the
foregoing repurchased shares at the Shenzhen Branch of China Securities Depository and Clearing Corporation Limited on 25 May
2023, with an increase of treasury B shares repurchased by RMB10,689,429.40 and a decrease of treasury B shares repurchased by
RMB99,798,998.13 for the Current Period.
(3) The Company held the first extraordinary general meeting of 2023 on 6 July 2023, and deliberated and approved the Company's
Domestically Listed Foreign Shares (B Share), which resulted in the repurchase of 37,490,645 B Shares and the increase of Treasury
B Shares by RMB161,882,455.78.
42. Other comprehensive income
Unit: RMB
Amount of the current period
Less:
Less:
recorded in
recorded in
other
Amount other
comprehensiv
before comprehensiv Attributable
Beginning e income in Less: Attributable Ending
Item deducting e income in to the
balance prior period Income minority balance
income tax prior period Company as
and tax shareholder
for the and the parent
transferred in expense s after tax
current transferred in after tax
retained
period profit or loss
earnings in
in the Current
the Current
Period
Period
II. Other
comprehensiv
e income that
may 107,628,898.0 23,715,953.7 1,710.2 23,714,243.5 131,343,141.6
3,521.47
subsequently 9 9 5 4 3
be reclassified
to profit or
loss
Differences
arising from
translation of
foreign 107,695,495.0 23,714,956.5 23,714,956.5 131,410,451.6
currency- 7 7 7 4
denominated
financial
statements
The changes
of accounts
1,710.2
receivable -66,596.98 997.22 -713.03 3,521.47 -67,310.01
5
financing in
fair value
Total of other
107,628,898.0 23,715,953.7 1,710.2 23,714,243.5 131,343,141.6
comprehensiv 3,521.47
9 9 5 4 3
e income
43. Special Reserve
Unit: RMB
Item Beginning balance Increase for the current Decrease for the current Ending balance
182
Lu Thai Textile Co., Ltd. Annual Report 2023
period period
Safety production costs 6,075,563.41 6,075,563.41
Total 6,075,563.41 6,075,563.41
44. Surplus reserves
Unit: RMB
Increase for the current Decrease for the current
Item Beginning balance Ending balance
period period
Statutory surplus
1,211,782,763.96 45,536,678.80 1,257,319,442.76
reserves
Discretional surplus
3,341,572.58 3,341,572.58
reserves
Total 1,215,124,336.54 45,536,678.80 1,260,661,015.34
45. Retained Earnings
Unit: RMB
Item Reporting period Same period of last year
Beginning balance of retained profits before
6,490,910,719.35 5,589,201,772.37
adjustments
Beginning balance of total retained earnings of
adjustments (“+” for increase, “-“ for decrease)
Beginning balance of retained profits after
6,490,910,719.35 5,589,201,772.37
adjustments
Add: Net profit attributable to owners of the
403,444,254.42 963,864,819.43
Company as the parent
Less: Withdrawal of statutory surplus reserves 45,536,678.80
Withdrawal of discretionary surplus reserves
Withdrawal of general risk reserve
Dividends of common shares payable 86,360,751.90 62,155,872.45
Dividends of common shares transferred to
share capital
Ending retained profits 6,762,457,543.07 6,490,910,719.35
List of adjustment of beginning retained profits:
1) RMB0.00 beginning retained profits was affected by retrospective adjustment conducted according to the Accounting Standards
for Business Enterprises and relevant new regulations.
2) RMB0.00 beginning retained profits was affected by changes in accounting policies.
3) RMB0.00 beginning retained profits was affected by correction of significant accounting errors.
4) RMB0.00 beginning retained profits was affected by changes in combination scope arising from same control.
5) RMB0.00 beginning retained profits was affected totally by other adjustments.
46. Operating revenue and cost of sales
Unit: RMB
183
Lu Thai Textile Co., Ltd. Annual Report 2023
Reporting period Same period of last year
Item
Operating Revenue Cost of Sales Operating Revenue Cost of Sales
Main
5,769,590,109.14 4,436,999,330.60 6,720,748,535.92 4,980,066,404.04
operations
Other
191,887,143.84 154,389,584.80 217,593,599.98 174,301,192.86
operations
Total 5,961,477,252.98 4,591,388,915.40 6,938,342,135.90 5,154,367,596.90
Whether the lower of the net profit before and after deduction of non-recurring gains and losses through audit is negative
□ Yes √ No
47. Taxes and surtaxes
Unit: RMB
Item Reporting period Same period of last year
Urban maintenance and construction tax 16,393,990.50 21,551,569.33
Educational fee 7,007,721.81 9,360,764.03
Tax on natural resources 554,816.00 617,924.00
Real estate tax 21,199,515.92 19,206,856.99
Land use tax 9,265,984.60 8,259,276.46
Vehicle and vessel usage tax 76,087.36 75,267.28
Stamp duty 2,878,128.65 3,318,063.77
Local education surcharge 4,883,047.87 6,240,509.35
Environmental protection tax 1,000,678.29 836,933.87
Total 63,259,971.00 69,467,165.08
Other notes:
Please refer to Note VI. Taxes for details of various taxes and additional standards for calculation and payment.
48. Administrative expense
Unit: RMB
Item Reporting period Same period of last year
Salary 150,508,460.24 152,944,880.74
Warehouse funding 37,027,435.82 39,954,757.25
Depreciation charge 43,284,146.75 39,274,834.40
Office operating fee 22,400,178.37 23,920,159.03
Start-up costs 20,703,414.66
Restricted stock incentive fees 16,758,063.86 39,975,678.06
Amortization of intangible assets 10,016,272.55 10,319,191.27
Labor-union expenditure 11,144,934.24 12,128,110.20
184
Lu Thai Textile Co., Ltd. Annual Report 2023
Travel expense 10,821,318.60 24,305,825.05
Security service charges 8,977,477.55 8,697,194.36
Decoration & repair expenses 8,198,163.75 9,477,943.54
Employee education budget 7,863,725.72 8,416,818.94
Energy cost 5,724,113.91 5,940,431.82
Insurance 3,383,248.24 3,211,971.72
Audit and assessment fees 3,307,933.56 3,330,698.66
Others 22,208,644.97 14,411,139.35
Total 382,327,532.79 396,309,634.39
49. Selling expense
Item Amount for the current period Amount for the previous period
Salary 67,286,568.27 73,759,174.53
Sales service expenses 20,406,411.01 18,327,334.31
Advertising expense 19,238,310.32 15,425,043.50
Depreciation charge 7,009,619.02 6,866,294.03
Expense for repairmen and loss 8,413,985.12 4,276,970.89
Business entertainment expenses 3,958,206.27 3,128,859.41
Travel expenses 8,462,597.19 2,886,260.00
Insurance 3,063,096.84 2,658,882.85
Office cost 1,842,252.81 1,628,158.22
Express fees 2,458,673.29 1,557,023.97
Inspection fees 1,826,450.84 1,109,761.81
Others 4,488,643.23 5,305,333.20
Total 148,454,814.21 136,929,096.72
50. R&D expense
Unit: RMB
Item Reporting period Same period of last year
Labor cost 127,993,607.00 148,381,734.76
Material expense 79,121,927.42 94,170,080.52
Depreciation charge 17,240,537.12 18,475,905.83
Other 15,419,271.64 15,397,091.15
Total 239,775,343.18 276,424,812.26
185
Lu Thai Textile Co., Ltd. Annual Report 2023
50. Financial costs
Unit: RMB
Item Reporting period Same period of last year
Interest expense 99,033,706.35 103,785,745.79
Less: Capitalized interest -12,728,462.85 -15,141,537.04
Interest income -52,183,151.33 -56,856,571.04
Add: Capitalized interest income 1,130,278.69 6,992,839.09
Foreign exchange gains or losses -37,916,375.66 -197,850,382.46
Less: Capitalized foreign exchange gains
or losses
Commission charge and other 8,112,849.27 10,118,775.99
Total 5,448,844.47 -148,951,129.67
52. Other income
Unit: RMB
Sources Reporting period Same period of last year
Subsidies for the price of heating coal 12,000,000.00 22,000,000.00
Subsidies for equipment 5,871,101.54 5,865,271.93
Subsidy for environmental protection 5,283,018.87 36,800.00
Human resources subsidy 4,382,702.42 1,856,682.75
Tax relief 4,209,600.05 385,950.34
R&D subsidy 3,565,104.58 2,783,850.60
Special funds for the conversion of new
3,500,000.00
and old industrial kinetic energy
Special fund for foreign trade and
2,753,789.50 162,000.00
commerce and circulation
Land subsidy 1,354,251.84 1,354,251.84
Financing subsidy 952,000.00 1,554,100.00
Strengthen the enterprise government
768,900.00 136,600.00
subsidy
Rebate of surcharges for withholding taxes 268,194.00 228,778.26
Reward for science and technology 150,000.00 500,000.00
Subsidy for public rental housing 48,231.48 48,231.48
Reward or funding for supporting high-
10,000.00 12,000,000.00
quality development
Design reward 10,000.00 127,000.00
Export credit insurance subsidies 53,200.00
Subsidy for intellectual property rights 50,000.00
Total 45,126,894.28 49,142,717.20
186
Lu Thai Textile Co., Ltd. Annual Report 2023
53. Gain on changes in fair value
Unit: RMB
Sources Reporting period Same period of last year
Trading financial assets -22,511,823.37 170,253,095.79
Of which: Income from changes in fair value generated
-20,958,877.30 22,258,450.00
by derivative financial instruments
Trading financial liabilities -42,508,901.77 -1,060,370.87
Total -65,020,725.14 169,192,724.92
54. Investment income
Unit: RMB
Item Reporting period Same period of last year
Long-term equity investment income
-9,556,170.35 28,049,040.53
accounted by equity method
Investment income from holding of held-
10,537,021.78 2,869,023.84
for-trading financial asset
Investment income from disposal of held-
38,383,757.03 -17,183,991.06
for-trading financial asset
Total 39,364,608.46 13,734,073.31
55. Credit impairment loss
Unit: RMB
Item Reporting period Same period of last year
Loss on uncollectible notes receivable 6,394.34
Loss on uncollectible accounts receivable -1,998,736.62 -17,054,611.68
Loss on uncollectible other receivables -1,278,336.84 -2,584,146.40
Impairment losses on dividend receivable 977,015.71 1,498,035.63
Total -2,300,057.75 -18,134,328.11
56. Asset impairment loss
Unit: RMB
Item Reporting period Same period of last year
I. Inventory falling price loss and impairment
-88,745,330.21 -176,034,078.18
provision for contract performance costs
IV. Impairment loss on fixed assets -17,131,456.31 -10,271,885.18
Total -105,876,786.52 -186,305,963.36
187
Lu Thai Textile Co., Ltd. Annual Report 2023
57. Asset disposal income
Unit: RMB
Sources Reporting period Same period of last year
Fixed asset disposal income ("-" for loss) -9,123,336.47 912,625.90
58. Non-operating income
Unit: RMB
Amount recorded in the current non-
Item Reporting period Same period of last year
recurring profit or loss
Claim income 4,451,354.70 5,768,083.06 4,451,354.70
Gains on damage and scrap of
non-current assets
Other 1,250,000.00 1,250,000.00
Total 3,646,341.49 2,288,465.67 3,646,341.49
59. Non-operating expense
Unit: RMB
Amount recorded in the current non-
Item Reporting period Same period of last year
recurring profit or loss
Donations 1,054,579.52 3,002,742.26 1,054,579.52
Losses from damage and scrap
1,868,432.90 1,140,993.34 1,868,432.90
of non-current assets
Other 2,223,669.57 6,864,199.86 2,223,669.57
Total 5,146,681.99 11,007,935.46 5,146,681.99
60. Income tax expense
(1) List of income tax expense
Unit: RMB
Item Reporting period Same period of last year
Current income tax expense 40,870,126.23 62,770,917.90
Deferred income tax expense -29,120.86 42,852,142.91
Total 40,841,005.37 105,623,060.81
(2) Adjustment process of accounting profit and income tax expense
Unit: RMB
Item Reporting period
Profit before taxation 437,193,442.99
188
Lu Thai Textile Co., Ltd. Annual Report 2023
Current income tax expense accounted at statutory/applicable tax
65,579,016.45
rate
Influence of applying different tax rates by subsidiaries 23,428,347.10
Influence of income tax before adjustment -3,002,523.22
Influence of non-taxable income -40,122,700.94
Influence of not deductable costs, expenses and losses 4,778,853.66
Influence of utilizing deductable losses of unrecognized deferred
-911,104.31
income tax assets from prior years
Effect of deductible temporary differences or deductible losses on
15,964,538.16
deferred income tax assets not recognized in the period
Effect of changes in tax rates on the balance of deferred income
-6,749.94
taxes at the beginning of the period
Influence of additional deduction of R&D expenses (filled in with
-24,790,004.66
"-")
Influence of other expense deduction (filled in with "-") -76,666.93
Income tax expense 40,841,005.37
61. Cash flow statement
(1) Cash related to operating activities
Cash generated from other operating activities
Unit: RMB
Item Reporting period Same period of last year
Government subsidy 37,448,096.51 20,954,995.78
Claim income 40,162,446.43 4,139,336.63
Refund of prepaid income tax 18,522,628.85
Recovery of employee borrowings, petty cash
11,200,463.32 17,611,761.21
and deposit
Collection for employees 7,302,950.37 6,075,612.73
Others 729,876.18 1,425,970.41
Total 115,366,461.66 50,207,676.76
Cash used in other operating activities
Unit: RMB
Item Reporting period Same period of last year
Business travel charges 43,118,560.30 35,421,625.76
Insurance 4,041,804.87 5,836,194.04
Audit advisory announcement fee 5,707,687.46 5,987,087.33
Decoration & repair expenses 4,645,997.08 4,600,193.71
Donation 1,054,579.52 2,669,896.97
189
Lu Thai Textile Co., Ltd. Annual Report 2023
Payment of employee borrowings, petty
10,900,343.11 6,835,985.20
cash and deposit
Agency service fee 21,262,143.20 17,283,324.08
Others 67,532,357.50 59,557,150.73
Total 158,263,473.04 138,191,457.82
(2) Cash related to investing activities
Cash generated from other investing activities
Unit: RMB
Item Reporting period Same period of last year
Interest income 52,875,557.97 46,470,970.15
Income from forward foreign exchange 16,121,450.00 13,555,720.28
Cash deposit of L/C for purchasing
593,035.98
equipment
Resumption of forward settlement deposit 1,100,000.00
Time deposit maturity 84,335,748.58 27,493,598.92
Total 153,332,756.55 89,213,325.33
Cash generated from important investing activities
Unit: RMB
Item Reporting period Same period of last year
Government bond reverse repo 8,566,561,000.00
Structural deposits 777,500,000.00
Wealth management products 90,000,000.00 120,000,000.00
Total 9,434,061,000.00 120,000,000.00
Cash used in other investing activities
Unit: RMB
Item Amount for the current period Amount for the previous period
Forward settlement exchange loss 5,140,000.00 31,709,481.57
Term deposits 33,470,284.27 34,335,748.58
Payment of deposit for the L/C of
813,117.05
equipment purchase
Deposit for recognisance 86,463,622.94 51,418,261.88
Fund management and custodian fees 384,716.45
Total 125,073,907.21 118,661,325.53
Significant cash paid related to investing activities
190
Lu Thai Textile Co., Ltd. Annual Report 2023
Unit: RMB
Item Amount for the current period Amount for the previous period
Government bond reverse repo 8,617,522,000.00
Structural deposits 927,500,000.00
Wealth management products 210,000,000.00
Total 9,545,022,000.00 210,000,000.00
(3) Cash Related to Financing Activities
Cash Generated from Other Financing Activities
Unit: RMB
Item Amount for the current period Amount for the previous period
Others 98,800.40
Total 98,800.40
Cash used in other financing activities
Unit: RMB
Item Reporting period Same period of last year
Repayment of lease liabilities and prepaid
18,746,507.86 18,808,301.14
rent
Time deposit certificates pledged
Repurchase of B-shares 172,397,831.66 88,518,318.69
Total 191,144,339.52 107,326,619.83
Changes in liabilities arising from financing activities
Applicable □ Not applicable
Unit: RMB
Increase for the current period Decrease for the current period
Beginning
Item Non-cash Non-cash Ending balance
balance Cash fluctuations Cash fluctuations
fluctuations fluctuations
Short-term loan 518,946,415.96 1,025,659,608.53 26,306,004.60 969,094,904.70 -21,112,352.12 580,704,772.27
Long-term loans 487,231,096.24 263,965,597.90 14,511,765.07 416,785,484.81 348,922,974.40
Bonds payable 1,438,162,231.27 52,411,374.53 13,998,535.01 -3,000.00 1,476,572,070.79
Lease liabilities 105,623,141.18 6,980,783.58 18,746,507.86 93,857,416.90
Total 2,549,962,884.65 1,289,625,206.43 100,209,927.78 1,418,625,432.38 -21,115,352.12 2,500,057,234.36
62. Supplemental information for cash flow statement
(1) Supplemental information for cash flow statement
Unit: RMB
191
Lu Thai Textile Co., Ltd. Annual Report 2023
Amount during the current
Supplemental information Same period of last year
period
1. Reconciliation of net profit to net cash flows generated from
operating activities
Net Profit 396,352,437.62 973,762,362.54
Add: Provision for impairment of assets 108,176,844.27 204,440,291.47
Depreciation of fixed assets, oil-gas assets, and productive
464,547,764.15 452,490,037.00
biological assets
Depreciation of right-of-use assets 27,017,455.52 20,019,266.79
Amortization of intangible assets 10,577,354.94 10,743,417.28
Amortization of long-term prepaid expenses 3,990,981.43 3,477,274.40
Losses from disposal of fixed assets, intangible assets and
9,123,336.47 -912,625.90
other long-lived assets (gains: negative)
Losses from scrap of fixed assets (gains: negative) 618,432.90 1,140,993.34
Losses from changes in fair value (gains represented by "-") 65,020,725.14 -169,192,724.92
Finance costs (gains: negative) -3,920,412.41 -164,912,714.11
Investment loss (gains represented by "-") -39,364,608.46 -13,734,073.31
Decrease in deferred income tax assets (gains: negative) -3,964,485.10 -15,819,979.75
Increase in deferred income tax liabilities ("-" means decrease) 3,935,364.24 58,672,122.66
Decrease in inventory (gains: negative) -15,594,018.10 159,794,066.40
Decrease in accounts receivable generated from operating
-38,266,103.45 -31,919,160.89
activities (gains represented by "-")
Increase in accounts payable used in operating activities
-133,386,531.74 -65,737,778.74
(decrease represented by "-")
Others
Net cash flow from operating activities 854,864,537.42 1,422,310,774.26
2. Significant investing and financing activities without
involvement of cash receipts and payments
Conversion of debt to capital
Convertible corporate bonds matured within one year
Fixed asset under finance lease
3. Net increase/decrease of cash and cash equivalent:
Closing balance of cash 1,353,615,305.93 1,822,897,270.16
Less: Opening balance of cash 1,822,897,270.16 1,970,006,884.89
Plus: Closing balance of cash equivalents
Less: Opening balance of cash equivalents
Net increase in cash and cash equivalents -469,281,964.23 -147,109,614.73
192
Lu Thai Textile Co., Ltd. Annual Report 2023
(2) Cash and cash equivalents
Unit: RMB
Item Ending balance Beginning balance
I. Cash 1,353,615,305.93 1,822,897,270.16
Including: Cash on hand 2,633,018.72 2,360,089.79
Bank deposits on demand 1,079,820,776.67 1,810,590,630.08
Other monetary assets on demand 271,161,510.54 9,946,550.29
III. Ending balance of cash and cash
1,353,615,305.93 1,822,897,270.16
equivalents
(3) Monetary assets not classified as cash and cash equivalents
Unit: RMB
Amount during the Reason for not classifying the item as cash and
Item Previous period
current period cash equivalents
Bank deposits -- time deposits of The Company will hold time deposits to
more than three months and less 184,470,284.27 234,335,748.58 maturity, not for the purpose of meeting short-
than one year term cash needs for external payments.
Other monetary funds – deposits,
4,024,123.14 1,328,577.85 Restriction on use
etc.
Bank deposits -- interest receivable 16,142,334.69 9,206,657.38 Interests receivable
Total 204,636,742.10 244,870,983.81
63. Foreign currency monetary items
(1) Foreign currency monetary items
Unit: RMB
Closing foreign currency Ending balance converted to
Item Exchange rate
balance RMB
Monetary capital
Of which: USD 85,065,029.96 7.0827 602,490,087.69
EUR 439,918.26 7.8592 3,457,405.59
HKD 23,446,306.08 0.9062 21,247,042.57
JPY 22,373,205.00 0.0502 1,123,134.89
GBP 57.18 9.0411 516.97
CHF 16.44 8.4184 138.40
Dong 207,595,636,181.40 0.0003 60,636,723.13
MMK 780,934,830.92 0.0037 2,922,738.65
Riel 606,878,911.00 0.0002 132,664.45
Accounts receivable
193
Lu Thai Textile Co., Ltd. Annual Report 2023
Of which: USD 85,886,215.38 7.0827 608,306,297.66
EUR 39,766.01 7.8592 312,529.03
HKD
Dong 8,763,599,481.00 0.0003 2,559,764.57
Other receivables:
Of which: USD 1,205,390.66 7.0827 8,537,420.41
EUR 12,500.00 7.8592 98,240.00
JPY 2,295,040.00 0.0502 115,211.01
Dong 1,091,424,231.08 0.0003 318,794.70
MMK 2,000,000.00 0.0037 7,485.23
Accounts payable:
Of which: USD 12,437,691.67 7.0827 88,092,438.77
JPY 49,447,531.90 0.0502 2,482,266.10
EUR 196,402.00 7.8592 1,543,562.60
Dong 28,486,049,981.61 0.0003 8,320,505.95
MMK 60,335,790.00 0.0037 225,813.65
Other payables:
Of which: USD 4,048.80 7.0827 28,676.43
Dong 1,038,335,423.00 0.0003 303,287.96
MMK 1,030,000.00 0.0037 3,854.89
Short-term
borrowings:
Of which: USD 75,028,363.07 7.0827 531,403,387.12
Dong 156,702,389,907.00 0.0003 45,771,286.94
Long-term borrowings
Of which: USD
EUR
HKD
(2) Notes to overseas entities including: for significant oversea entities, main operating place, recording
currency and selection basis shall be disclosed; if there are changes in recording currency, relevant reasons
shall be disclosed.
Applicable □Not applicable
The operating places of the Company's subsidiaries were Hong Kong, Burma, America, Vietnam, Singapore and Cambodia, and the
recording currency was HKD for Hong Kong and USD for other overseas companies.
194
Lu Thai Textile Co., Ltd. Annual Report 2023
64. Leases
(1) The Company Was Lessee:
Applicable □ Not applicable
Variable lease payments that are not covered in the measurement of the lease liabilities
□Applicable Not applicable
Simplified short-term lease or lease expense for low-value assets
Applicable □ Not applicable
Item Amount for the current period
Expense relating to short-term leases 316,024.16
Low-value lease expenses
Variable lease payments that are not covered in the measurement of the lease liabilities
Total 316,024.16
(2) The Company Was Lessor:
Operating leases with the Company as lessor
Applicable □ Not applicable
Unit: RMB
Of which: Income related to variable lease
Item Rental income
payments not included in lease receipts
Rental income 3,696,885.97 0.00
Total 3,696,885.97 0.00
Finance leases with the Company as lessor
□Applicable Not applicable
Undiscounted lease receipts for each of the next five years
Applicable □ Not applicable
Unit: RMB
Undiscounted lease receipts per year
Item
Investments at the end of the period Investments at the beginning of the period
The first year 1,215,336.80 1,814,118.30
The second year 310,390.00 1,215,336.80
The third year 310,390.00
(3) Recognition of Gain or Loss on Sales under Finance Leases with the Company as a Manufacturer or
Distributor
□Applicable Not applicable
195
Lu Thai Textile Co., Ltd. Annual Report 2023
VIII. Research and Development Expenditure
Unit: RMB
Item Amount for the current period Amount for the previous period
Labor cost 127,993,607.00 148,381,734.76
Material expense 79,121,927.42 94,170,080.52
Depreciation charge 17,240,537.12 18,475,905.83
Others 15,419,271.64 15,397,091.15
Total 239,775,343.18 276,424,812.26
Of which: Expensed research and
239,775,343.18 276,424,812.26
development expenditure
Capitalized research and
development expenditure
IX. Change of Consolidation Scope
1. Other reasons for changes of consolidation scope
Notes of other changes in the combination scope (e.g., new subsidiaries, liquidation of subsidiaries, etc.) and relevant situations:
There were no changes in the consolidation scope of the Company during the year.
X. Equity in Other Entities
1. Equity in Subsidiary
(1) Compositions of the Group
Unit: RMB
Registered capital
Main Holding percentage (%)
Registration
Name operating Nature of business Way of gaining
place
place Directly Indirectly
Lu Thai (Hong
Kong) Textile
Co., Ltd. Wholesale and
128,771,800.00 Hong Kong Hong Kong 100.00% Set-up
(hereinafter retail industry
referred to as
"Lu Thai (HK)")
Shanghai Lu
Thai Textile
Garment Co.,
Wholesale and
Ltd. (hereinafter 20,000,000.00 Shanghai Shanghai 100.00% Set-up
retail industry
referred to as
"Shanghai Lu
Thai")
LuFeng
Company
Limited
Manufacturing
(hereinafter 706,160,000.00 Zibo Zibo 75.00% Set-up
industry
referred to as
"LuFeng
Company")
196
Lu Thai Textile Co., Ltd. Annual Report 2023
Zibo Luqun
Textile Co., Ltd.
Manufacturing
(hereinafter 168,220,000.00 Zibo Zibo 100.00% Set-up
industry
referred to as
"Luqun Textile")
Zibo Xinsheng
Thermal Power
Business
Co., Ltd.
Manufacturing combination not
(hereinafter 162,435,600.00 Zibo Zibo 100.00%
industry under the same
referred to as
control
"Xinsheng
Thermal Power")
Shanghai Zhinuo
Technology
Textile New
development,
Materials Co.,
technical
Ltd. (hereinafter 100,000,000.00 Shanghai Shanghai 100.00% Set-up
consultancy and
referred to as
transfer of
"Shanghai
technologies
Zhinuo")
Shandong Lulian
New Materials
Co., Ltd.
Manufacturing
(hereinafter 400,000,000.00 Zibo Zibo 75.00% Set-up
industry
referred to as
"Lulian New
Materials")
Shandong Lujia
IMP. & EXP.
Co., Ltd.
Import and export
(hereinafter 10,000,000.00 Zibo Zibo 100.00% Set-up
trade
referred to as
"Lujia IMP. &
EXP.")
Beijing Zhishu
Management
Consulting Co., Wholesale and
Ltd. (hereinafter 3,000,000.00 Beijing Beijing retail industry 100.00% Set-up
referred to as
"Zhishu
Consulting")
Lu Thai
Occupational 100,000.00 Zibo Zibo Skill training 100.00% Set-up
Training School
Zibo Banyang
Villa Hotel Co.,
Ltd. (hereinafter 5,000,000.00 Zibo Zibo Catering services 100.00% Set-up
referred to as
"Banyang Villa")
Hainan Huilin
International
Modern service
Holdings Co., 880,000,000.00 Wenchang Wenchang 100.00% Set-up
industry
Ltd. ("Huilin
International")
Wholesale textiles
TP Company 398,203,876.00 Singapore Singapore and leather, holding 100.00% Set-up
company
Vanguard
Apparel Co.,
Ltd. (hereinafter Manufacturing
62,337,887.93 Burma Burma 100.00% Set-up
referred to as industry
"Vanguard
Apparel")
Lu Thai (USA)
Textile Co., Ltd. Wholesale and
6,139,710.00 America America 100.00% Set-up
(hereinafter retail industry
referred to as
197
Lu Thai Textile Co., Ltd. Annual Report 2023
"Lu Thai
(USA)")
Yuanhui
Dividend No. 2
Private
Securities 100.00% Subscribe
Investment Fund
("Yuanhui
Fund")
Basis of controlling significant structural entities incorporated in the scope of combination:
The structural entity incorporated in the scope of consolidation of the Group is Yuanhui Dividend No. 2 Private Securities
Investment Fund. The Group assesses its share of investment holdings, the power it enjoys and variable returns comprehensively and
includes the structural entity that the Company has control power into the consolidation scope.
(2) Significant non-wholly-owned subsidiary
Unit: RMB
The profit or loss
Shareholding proportion of Declaring dividends distributed Balance of non-controlling
Name attributable to the non-
non-controlling interests to non-controlling interests interests at the period-end
controlling interests
Lufeng
Company 15,654,746.93 360,911,320.33 15,654,746.93
Limited
Lulian New
-22,746,563.73 25,749,771.57 -22,746,563.73
Materials
(3) The main financial information of significant not wholly-owned subsidiary
Unit: RMB
Ending balance Beginning balance
Nam
Non- Current Non- Total Non- Current Non- Total
e Current Total Current Total
current liabilitie current liabilitie current liabilitie current liabilitie
assets assets assets assets
assets s liability s assets s liability s
Lufe
ng
Com 925,170, 666,351, 1,591,521 89,644,2 53,272, 142,917, 977,751, 736,108, 1,713,860 264,894, 57,773, 322,668,
pany 025.16 350.97 ,376.13 74.83 778.47 053.30 666.75 963.24 ,629.99 436.41 566.53 002.94
Limit
ed
Lulia
n
83,522,3 568,103, 651,626,3 545,641, 3,082,5 548,724, 194,594, 590,738, 785,333,0 588,315, 3,331,5 591,647,
New
Mate 89.78 983.74 73.52 487.47 29.50 016.97 378.81 673.35 52.16 533.14 46.24 079.38
rials
Unit: RMB
Reporting period Same period of last year
Cash flows Cash flows
Name Total Total
Operating from Operating from
Net profit comprehensi Net profit comprehensi
revenue operating revenue operating
ve income ve income
activities activities
Lufeng -
Compan 1,375,045,198. 57,390,726. 57,411,695.7 1,813,342,589. 141,742,849. 141,705,398. 377,784,772.
79,614,020.
y 83 91 8 95 86 12 57
Limited 15
Lulian
165,702,046.24 - - - 90,195,368.38 - - -
New
198
Lu Thai Textile Co., Ltd. Annual Report 2023
Material 90,776,733. 90,783,616.2 54,812,568. 95,189,161.1 95,189,161.1 36,509,858.7
s 25 3 23 3 3 4
2. Equity in joint ventures or associated enterprises
(1) Significant joint ventures or associated enterprises
Accounting treatment of
Holding percentage (%)
Main operating Registration Nature of the investment to joint
Name
place place business venture or associated
Directly Indirectly
enterprise
I. Joint ventures
II. Associated
enterprises
Haohong Equity
Ningbo Ningbo 33.33% Equity method
Investment investment
Haoying Equity
Ningbo Ningbo 47.62% Equity method
Investment investment
(2) Main financial information of significant associated enterprises
Unit: RMB
Ending balance/reporting period Beginning balance/the same period of last year
Haohong
Haohong Investment Haoying Investment Haoying Investment
Investment
Current assets 148,022,853.32 210,335,493.18 184,892,005.99 278,997,681.82
Non-current
assets
Total assets 148,022,853.32 210,335,493.18 184,892,005.99 278,997,681.82
Current liabilities 3,253,866.05 3,255,230.09
Non-current
liability
Total liabilities 3,253,866.05 3,255,230.09
Net assets 144,768,987.27 210,335,493.18 181,636,775.90 278,997,681.82
Equity of non-
controlling
interests
Equity
attributable to
shareholders of 144,768,987.27 210,335,493.18 181,636,775.90 278,997,681.82
the Company as
the parent
Net assets shares
calculated at the
48,257,699.71 100,161,761.85 60,547,749.28 132,856,975.88
shareholding
proportion
Adjusted items
- Goodwill
- Unrealized
profit of internal
transactions
- Others -4,881,981.79 -9,236,099.47
199
Lu Thai Textile Co., Ltd. Annual Report 2023
Carrying value of
investment to
48,257,699.71 95,279,780.06 60,547,749.28 123,620,876.41
associated
enterprises
Fair value of
equity
investments in
associated
enterprises with
publicly quoted
prices
Operating
Revenue
Net profit 23,601,152.08 -45,732,975.48 -21,331,765.29 92,290,313.66
Net profit from
discontinued
operations
Other
comprehensive 23,601,152.08 -45,732,975.48 -21,331,765.29 92,290,313.66
income
Total
comprehensive
income
Dividends
received from the
associates in the
current period
XI. Government Grants
1. Government Grants Included in Deferred Income
Increase for the current Decrease for the current Reason for
Item Beginning balance Ending balance
period period formation
Government Government
159,615,037.36 16,710,000.00 24,556,089.44 151,768,947.92
grants grants
Total 159,615,037.36 16,710,000.00 24,556,089.44 151,768,947.92
(1) Government grants included in deferred income and subsequently measured using the gross method
Listed items
Amounts carried
Amount of
carried forward forward to
Beginning newly subsidy Other Related to
Item Category to profit or loss Ending balance profit or loss
balance for the current changes assets/income
for the current for the
period
period current
period
Land Financial Related to
50,704,834.25 1,354,251.84 49,350,582.41 Other gains
subsidy appropriation assets
Subsidies
Financial Related to
for 98,991,448.82 5,871,101.54 93,120,347.28 Other gains
appropriation assets
equipment
Overseas
Financial Related to
investment 1,927,400.00 1,927,400.00 Other gains
appropriation assets
subsidies
R&D Financial Related to
6,946,338.08 4,710,000.00 3,355,104.58 8,301,233.50 Other gains
subsidies appropriation income
200
Lu Thai Textile Co., Ltd. Annual Report 2023
Subsidy for
public Financial Related to
1,045,016.21 48,231.48 996,784.73 Other gains
rental appropriation assets
housing
Subsidies
for the
Financial Related to
price of 12,000,000.00 12,000,000.00 Other gains
appropriation income
heating
coal
Total 159,615,037.36 16,710,000.00 24,556,089.44 151,768,947.92
2. Government Grants Included in Current Profit or Loss Using the Gross Method
Amounts included Amounts included in Listed items
Related to
Item Category in profit or loss in profit or loss for the included in profit
assets/income
the prior period current period or loss
Subsidy for environmental Financial
36,800.00 5,283,018.87 Other gains Related to income
protection appropriation
Financial
Human resources subsidy 1,856,682.75 4,382,702.42 Other gains Related to income
appropriation
Financial
Tax relief 385,950.34 4,209,600.05 Other gains Related to income
appropriation
Special funds for the
Financial
conversion of new and old 3,500,000.00 Other gains Related to income
appropriation
industrial kinetic energy
Financial
Financing subsidy 1,554,100.00 952,000.00 Other gains Related to income
appropriation
Special fund for foreign
Financial
trade and commerce and 162,000.00 826,389.50 Other gains Related to income
appropriation
circulation
Strengthen the enterprise Financial
136,600.00 768,900.00 Other gains Related to income
government subsidy appropriation
Rebate of surcharges for Financial
228,778.26 268,194.00 Other gains Related to income
withholding taxes appropriation
Financial
R&D subsidy 210,000.00 Other gains Related to income
appropriation
Reward for science and Financial
500,000.00 150,000.00 Other gains Related to income
technology appropriation
Reward for supporting Financial
12,000,000.00 10,000.00 Other gains Related to income
high-quality development appropriation
Financial
Design reward 127,000.00 10,000.00 Other gains Related to income
appropriation
Financial
Credit insurance subsidy 53,200.00 Other gains Related to income
appropriation
Subsidy for intellectual Financial
50,000.00 Other gains Related to income
property rights appropriation
Total 17,091,111.35 20,570,804.84
3. Government Grants Using the Net Method to Reduce Related Costs
Amounts of offsetting Amounts of offsetting Listed items of
Related to
Item Category related costs in the related costs in the offsetting related
assets/income
previous period current period costs
2021 Central foreign trade
Financial
and economic development 1,110,000.00 Financial expenses Related to income
discount
fund
Financial discount funds Financial
45,375.00 167,291.67 Financial expenses Related to income
for loans discount
201
Lu Thai Textile Co., Ltd. Annual Report 2023
Total 1,155,375.00 167,291.67
XII. Risks Associated with Financial Instruments
1. Various Types of Risks Arising from Financial Instruments
The Company's major financial instruments include monetary capital, notes receivable, accounts receivable, accounts receivable
financing, other receivables, trading financial assets, other non-current financial assets, other non-current assets - time deposits over
one year, accounts payable, other payables, short-term borrowings, current portion of non-current liabilities, other current liabilities -
endorsed outstanding notes, long-term borrowings, bonds payable, lease liabilities, and other equity instruments. Details of various
financial instruments are disclosed in relevant Notes. Risks related to these financial instruments, and risk management policies the
Company has adopted to reduce these risks are described as follows. The Company management manages and monitors the risk
exposure to ensure the above risks are controlled in a limited scope.
1. Risk management objectives and policies
The Company has conducted the risk management to achieve an appropriate balance between the risk and the income and to
minimize the adverse influence of financial risks on the Company’s financial performance. According to such risk management
objective, the Company has formulated corresponding risk management policy to recognize and analyze possible risks encountered
by the Company, set the appropriate acceptable risk level and designed corresponding internal control procedures to monitor the
Company’s risk level. Meanwhile, the Company will regularly review these risk management policies and relevant internal control
system so as to cater for the market or respond to any change in the Company’s business operations. Accordingly, the Company’s
internal audit department will also regularly or randomly check whether the internal control system is implemented in conformity
with relevant risk management policies.
The major risks caused by financial instruments of the Company are credit risk, liquidity risk and market risk (including foreign
exchange risk, interest rate risk and commodity price risk).
The Board of Directors shall be responsible for planning and establishing the risk management framework for the Company,
determining the Company’s risk management policies and relevant guidelines and monitoring the implementation of various risk
management measures. However, the Company has established corresponding risk management policies to recognize and analyze
possible risks encountered by the Company. Besides, various risks are specified in these risk management policies, including the
credit risk, the liquidity risk and the market risk management etc. On a regular basis, the Company will evaluate the specific
marketing environment and various changes in the Company’s business operations so as to determine whether any risk management
policy and system need be updated.
(1) Credit risk
Credit Risk means that the Company will suffer any financial losses due to the counter party’s failure in fulfilling the contract
obligations.
The Company shall manage the credit risk based on the specific Group Classification, and the credit risk mainly arises from bank
deposit, notes receivable, accounts receivable, other receivables and investment in debt obligations etc.
The Group’s bank deposits are mainly saved in state-owned banks and other large and medium-sized banks. The Group’s bank
deposits are expected not to suffer any major credit risks.
For notes receivable, accounts receivable, and other accounts receivable, the Company has established relevant policies to control the
credit risk exposure. According to the client’s financial status, credit record and other factors (including the current market condition),
the Company will evaluate the client’s credit qualification and set corresponding credit period. The Company regularly monitors the
credit records of customers. For customers with bad credit records, the Company adopted corresponding methods, such as written
pressing for payment, shortening credit period, and canceling credit period, so as to ensure the Company's overall credit risk is
controllable.
The hugest credit risk exposure borne by the Company is the book value of each financial asset reflected in the balance sheet.
In terms of accounts receivable, the top 5 customers in accounts receivable were accounted for 24.80% of the total amount of
accounts receivable of the Company (21.75% in 2022). As for other receivables, the top 5 of the ending balance according to the
arrears party was accounted for 69.38% of the total amount of other receivables of the Company (85.42% in 2022).
Investment in debt obligations
The Company generally limits its exposure to credit risk by investing only in securities for which there is an active market (other
than long-term strategic investments) and for which the counterpart has a high credit rating.
The Group supervised the changes of credit risk through tracking the published external credit ratings. In order to make sure whether
the credit rating was the latest, and whether the credit risk has increased obviously of evaluation report date but not been reflected in
the published external ratings, the Company has supplemented through examining the changes of bond yield and the available news
and supervision information.
On the balance sheet date, the carrying value of investment in debt obligations of the Company are listed as follows according to
report items.
Ending balance Closing balance of last year
Trading Financial Assets 203,706,725.51 90,644,869.48
Total 203,706,725.51 90,644,869.48
(2) Liquidity risk
202
Lu Thai Textile Co., Ltd. Annual Report 2023
Liquidity Risk refers to the risk of capital shortage encountered by the Company during the cash payment or the settlement of other
financial assets.
During the management of liquidity risk, the Company shall reserve and monitor corresponding cash and cash equivalent deemed
sufficient by the management so as to meet the Company’s operational requirements and mitigate the impact caused by the cash flow
fluctuation. The Group’s management will monitor the use of bank loans and guarantee the fulfillment of loan agreement. Meanwhile,
major financial institutions shall promise to provide the Group with sufficient reserve funds in order to satisfy the short-term and
long-term fund demand. The Group shall raise its working capital based on the capital generated from business operations and bank
loans.
At the end of the period, the analysis of financial liabilities and off-balance sheet guarantee items held by the Company based on the
maturity period of the undiscounted remaining contractual cash flows is as follows:
Ending balance
Item
Within one year Within one to five years Over 5 years Total
Financial
liabilities:
Short-term loan 586,472,143.14 586,472,143.14
Accounts payable 275,502,915.05 275,502,915.05
Other payables 47,549,373.52 47,549,373.52
Long-term loans 96,845,778.69 269,810,195.43 366,655,974.12
Bonds payable 1,399,849,400.00 1,399,849,400.00
Lease liabilities 11,078,329.78 56,966,108.73 55,230,630.61 123,275,069.12
Total 1,017,448,540.18 1,726,625,704.16 55,230,630.61 2,799,304,874.95
At the end of the previous year, the analysis of financial liabilities and off-balance sheet guarantee items held by the Company based
on the maturity period of the undiscounted remaining contractual cash flows is as follows:
Closing balance of last year
Item
Within one year Within one to five years Over 5 years Total
Financial
liabilities:
Short-term loan 521,553,880.91 521,553,880.91
Notes payable 55,450,000.00 55,450,000.00
Accounts payable 246,588,463.74 246,588,463.74
Other payables 83,357,296.71 83,357,296.71
Long-term loans 313,817,516.92 187,722,213.76 501,539,730.68
Bonds payable 1,399,852,400.00 1,399,852,400.00
Lease liabilities 17,690,901.37 54,799,929.03 66,144,470.85 138,635,301.25
Total 1,238,458,059.65 1,642,374,542.79 66,144,470.85 2,946,977,073.29
The amounts of financial liabilities disclosed in the table above represent undiscounted contractual cash flows and may differ from
the carrying amounts in the balance sheet.
(3) Market risk
The financial instrument’s market risk refers to the fluctuation risk of fair value of financial instrument or future cash flow caused by
the changes of market price, including the interest rate risk, the exchange rate risk and other price risk.
Interest rate risk
Interest rate risk refers to the risk of fluctuations in the fair value or future cash flows of financial instruments arising from changes in
market interest rates. The interest rate can derive from the recognized interest-bearing financial instruments and unrecognized
financial instruments (including certain loan commitment).
The Group’s interest rate risk mainly arises from the long-term interest-bearing debt, such as the bank loan. Financial liabilities based
on the floating interest rate will cause the cash flow interest rate risk to the Company, and financial liabilities based on the fixed
interest rate the fair value interest rate risk.
However, the Company has paid close attention the impact of interest rate fluctuations on the Company’s interest rate risk. At present,
the Company has not taken any interest rate hedging measures. The rise of interest rate will increase the cost of newly-added interest-
bearing debts and the interest cost of the Company’s unsettled interest-bearing debts based on the floating interest rate, and cause
major adverse influence on the Company’s financial performance. The management will timely make corresponding adjustment
according to the latest market situation, and corresponding interest rate swap will be arranged to reduce the interest rate risk.
The interest-bearing financial instruments held by the Company are as follows (Unit: RMB’0,000):
203
Lu Thai Textile Co., Ltd. Annual Report 2023
Amount of Current Amount of the
Item
Period Previous Period
Fixed-interest financial instruments
Including: short-term borrowings 46,535.28 49,811.77
Current portion of long-term borrowings 230 19,880.00
Long-term borrowings 6,174.19 10,330.00
Bonds Payable 147,657.21 143,816.22
Total 200,596.68 223,837.99
Floating-interest financial instruments
Financial assets 20,370.67 23,952.27
Including: trading financial assets 20,370.67 23,952.27
Financial liabilities 40,023.31 20,540.58
Including: short-term borrowings 11,535.20 2,077.58
Current portion of long-term borrowings 8,663.00 10,200.00
Long-term borrowings 19,825.11 8,263.00
Total 60,393.98 44,492.85
On 31 December 2023, if the lending rate calculated at floating interest rate up or down 100 basis points with other variables
unchanged, the net profit and shareholders’ equity will be decreased or increased about RMB3,479,700 (compared to RMB1,768,200
as of the end of last year).
For financial instruments held at the balance sheet date that expose the Company to fair value interest rate risk, the impact on net
income and shareholders' equity in the sensitivity analysis above is the impact of re-measuring the above financial instruments at the
new interest rate, assuming that there is a change in interest rates at the balance sheet date. For floating rate non-derivative
instruments held at the balance sheet date that expose the Company to cash flow interest rate risk, the impact on net income and
shareholders' equity in the above sensitivity analysis is the impact of changes in the above interest rates on interest expense or income
estimated on an annualized basis. The previous year's analysis was based on the same assumptions and methodology.
Foreign exchange risk
Foreign exchange risk is referred to the fluctuation risk of fair value of financial instruments or future cash flows resulted from the
change of foreign exchange rate. The foreign exchange rate was originated from the financial instruments denominated in foreign
currencies other than the recording currency.
The Company's recognised foreign currency assets and liabilities as well as future foreign currency transactions (the denomination
currencies of foreign currency assets and liabilities and foreign currency transactions are mainly USD, Dong, EUR, and HKD) are
exposed to foreign exchange risk.
On 31 December 2023, the amount of foreign currency financial assets and foreign currency financial liabilities converted to
renminbi is as follows (Unit: RMB’0,000):
Foreign currency liabilities Foreign currency assets
Item
Ending balance Closing balance of last year Ending balance Closing balance of last year
USD 61,952.45 16,573.86 121,933.38 105,905.57
EUR 154.36 108.42 386.82 2,061.26
JPY 248.23 30.43 123.83 29.81
HKD 2,124.70 234.03
GBP 0.05 0.05
CHF 0.01 0.10
Dong 5,439.51 4,068.90 6,351.53 5,883.56
MMK 22.97 20.55 292.27 72.24
Riel 13.27 21.74
Total 67,817.52 20,802.16 131,225.86 114,208.36
The Group has paid close attention the impact of exchange rate fluctuations on the Group’s exchange rate risk. The Company has
signed contracts of futures exchange for the purpose of the aversion of foreign exchange risk. As at the end of each reporting period,
for the Group's monetary capital, bills receivable, accounts receivable, accounts payable, short-term borrowings and other payables
denominated in foreign currencies, assuming a 10% appreciation or depreciation of RMB against foreign currencies, while other
factors remain unchanged, the impact of possible reasonable changes in the Company's foreign currency exchange rate against RMB
on the Company's profit and loss for the current period is as follows (Unit: RMB’0,000):
204
Lu Thai Textile Co., Ltd. Annual Report 2023
This year Last year
Exchange rate
fluctuations Impact on after-tax Impact on shareholders' Impact on after-tax Impact on shareholders'
profit equity profit equity
10% appreciation against
-5,101.33 -5,101.33 -8,224.66 -8,224.66
RMB
10% depreciation against
5,101.33 5,101.33 8,224.66 8,224.66
RMB
Other price risks
Other price risks are the risks of fluctuations due to changes in market prices other than exchange rate risk and interest rate risk,
whether these changes result from factors relating to a single financial instrument or its issuer, or from those relating to all similar
financial instruments traded within the market. Other price risks can arise from changes in commodity prices, stock market index,
equity instrument prices, and other risk variables.
Investments in listed equity instruments held by the Company, which are classified as transactional financial assets are measured at
fair value at the balance sheet date. As a consequence, the Company is undertaking the risk of changes in equity markets.
The Company closely monitors the impact of price changes on the price risk of the Company's investments in equity and securities.
The Company does not currently take any steps for other price risk aversion. Nevertheless, the management is liable for supervisory
control on other price risks and shall consider reducing the price risk of investments in equity and securities by holding a diversified
portfolio investment in equity and securities when required.
With all other variables being constant, the pre-tax impact on the Company's profit or loss for the current period and other
comprehensive income of a 10% change in the price of investments in equity and securities for the year is as follows (Unit:
RMB’0,000):
After-tax profits up (down) Other comprehensive income up (down)
Item
Amount of Current Amount of the Amount of Current Amount of the
Period Previous Period Period Previous Period
Due to increase in the price of
4,333.58 3,373.72
investments in equity securities
Due to a decline in the price of
-4,333.58 -3,373.72
investments in equity securities
2. Capital management
The objectives of capital management policies of the Company are to ensure the continuous operation of the Company so as to
provide return to shareholders and benefit other stakeholders, as well as to reduce capital cost by maintaining the optimal capital
structure.
In order to maintain or adjust capital structure, the Company might adjust financing method and the dividends paid to shareholders,
return capital to shareholders, issue new shares and other equity instrument or sell assets to reduce debts.
The Group supervised the capital structure based on the asset-liability ratio (namely total liabilities divide total assets). On 31
December 2023, the asset-liability ratio was 28.39% of the Company (29.53% on 31 December 2022).
3. Financial asset transfer
(1) Classification of transfer methods
Nature of
Amount of financial
Transfer methods financial assets Derecognition Basis for determining derecognition
assets transferred
transferred
Receivables Almost all risks and remuneration have been
Bills endorsement 104,758,467.20 Derecognition
financing transferred.
Receivables Almost all risks and remuneration have been
Bills discounting 47,179,972.31 Derecognition
financing transferred.
205
Lu Thai Textile Co., Ltd. Annual Report 2023
Bills endorsement Notes receivable 48,449,554.97 Not derecognized
Bills discounting Notes receivable 3,530,098.28 Not derecognized
Lending securities Financial asset
88,435,500.00 Not derecognized
on refinancing held for trading
Total 292,353,592.76
(2) Financial assets derecognized due to transfer
Gains or losses related to
Item Transfer methods Derecognized amount
derecognition
Receivables financing Bills endorsement 104,758,467.20
Receivables financing Bills discounting 47,179,972.31 -237,740.17
Total 151,938,439.51 -237,740.17
The total carrying value of the bank acceptance bills endorsed by the Company to the supplier but not due and bank acceptance
bills discounted to the bank but not due amounted to RMB203,918,092.76, of which the Company believed that the notes
receivable with a carrying value of RMB151,938,439.51 (31 December 2022: RMB470,254,140.70) had transferred almost all
risks and rewards at the time of discounting, meeting the conditions for derecognition of financial assets. Therefore, the related
notes receivable were derecognised. The maximum exposure to risk that continues to be associated with these derecognized notes
receivable is equal to the undiscounted cash flows from the repurchase of the notes, which is equal to the carrying value of the
notes receivable. The Company does not consider the continued involvement in the fair value of the derecognized notes receivable
to be material.
(3) Amount of assets and liabilities formed due to transfer of financial assets and continuous involvement
Amount of assets formed due to Amount of liabilities formed
Item Asset transfer methods
continuous involvement due to continuous involvement
Notes receivable Bills endorsement 48,449,554.97 48,449,554.97
Notes receivable Bills discounting 3,530,098.28 3,530,098.28
Lending securities on
Financial asset held for trading 88,435,500.00
refinancing
Total 140,415,153.25 51,979,653.25
XIII. Disclosure of Fair Value
1. Ending Fair Value of Assets and Liabilities at Fair Value
Unit: RMB
Closing fair value
Item Fair value measurement Fair value measurement Fair value measurement
Total
items at level 1 items at level 2 items at level 3
I. Consistent fair value
-- -- -- --
measurement
(I) Trading financial assets 294,181,265.07 429,619,010.32 723,800,275.39
1. Financial assets at fair
294,181,265.07 429,619,010.32 723,800,275.39
value through profit or loss
206
Lu Thai Textile Co., Ltd. Annual Report 2023
(1) Investment in debt
51,013,739.17 152,692,986.34 203,706,725.51
instruments
(2) Equity investments 243,167,525.90 266,664,992.45 509,832,518.35
(3) Derivative financial
10,261,031.53 10,261,031.53
assets
(II) Accounts receivable
18,248,205.76 18,248,205.76
financing
(III) Other non-current
88,750,000.00 88,750,000.00
financial assets
Of which: Derivative
46,785,831.47 46,785,831.47
financial liabilities
II. Inconsistent Fair Value
-- -- -- --
Measurement
2. Market Price Recognition Basis for Consistent and Inconsistent Fair Value Measurement Items at Level
1
Quoted prices in active markets for identical assets or liabilities (unadjusted).
3. Valuation technique adopted and nature and amount determination of important parameters for
consistent and inconsistent fair value measurement items at level 2
The Company determines the fair value of structured deposits and wealth management products based on the prospective earning rate
as agreed in the contract.
The Company determines the fair value of fund products based on the changes in net value published by the private equity funds.
The Company determines the fair value of option-based products based on bank forward foreign exchange quotations at the end of
the period.
4. Valuation technique adopted and nature and amount determination of important parameters for
consistent and inconsistent fair value measurement items at level 3
For the unlisted equity investment, the Company adopts the comparable listed company comparison method, and the non-observable
input value of the comparable listed company comparison method includes the liquidity discount.
The investment into Shandong Hongqiao Thermoelectric Co., Ltd. made by Luqun Textile (the Company’s subsidiary) is expected to
be held in the long run for obtaining the discount on power purchase. As no revenue distribution right is vested in the investment, the
invested unit’s operating profit and loss are not shared or borne, and the equity transfer is not proposed, the Company regards it as
the financial asset which shall be measured based on the fair value and whose variations are included in the current profit and loss,
and the investment cost is deemed as the fair value of the financial asset.
For accounts receivables financing at fair value and the changes included in other comprehensive income, its fair value shall be
determined by the discount cash flow method.
5. Explain the Reason for Conversion and the Governing Policy when the Conversion Happens if
Conversion Happens among Consistent Fair Value Measurement Items at Different Levels
The Company recognises the point at which the transition between levels based on the date of the event giving rise to the transition
between levels. During this year, the restricted shares of Remegen Co., Ltd. held by the Company were released from lock-up and
put on the market, therefore the fair value measurement of this transactional financial asset has been converted from level 2 to level 1.
In addition to this transactional financial asset, there was no conversion between level 1 and level 2 in the fair value measurement of
the Company's other current assets and other financial liabilities, and there was no transfer to or from level 3.
207
Lu Thai Textile Co., Ltd. Annual Report 2023
For a financial instrument with an active market, its fair value is determined by its quoted price in the active market; for a financial
instrument without an active market, its fair value is determined by valuation techniques. The valuation models are mainly
discounted cash flow models and market comparable company models, among others. The inputs to the valuation technique mainly
include risk-free interest rate, benchmark interest rate, exchange rate, credit spreads, liquidity premium, and illiquidity discount.
6. Fair Value of Financial Assets and Liabilities Not Measured at Fair Value
The financial assets and financial liabilities measured at amortized cost mainly include monetary assets, other non-current assets -
time deposits, notes receivable, accounts receivable, other receivables, short-term borrowings, notes payable, accounts payables,
other payables, current portion of long-term borrowings, long-term borrowings, and bonds payable.
XIV. Related Party and Related-party Transactions
1. Information related to the company as the parent of the Company
Proportion of voting rights
Proportion of share held by
Registration Registered owned by the company as the
Name Nature of business the company as the parent
place capital parent against the company
against the company (%)
(%)
Lucheng Textile, chemistry
Zibo RMB63,260,000 16.25% 16.25%
Textile and investment
Notes: information on the Company as the parent
The final controllers of the Company are Mr. Liu Zibin and Mr. Liu Deming.
2. Subsidiaries of the Company
Refer to Note X-1.
3. Information on the joint ventures and associated enterprises of the Company
Refer to Note X-2.
4. Information on other related parties
Name Relationship with the company
Zibo Limin Purified Water Co., Ltd. (hereinafter referred to as "Limin
Wholly-owned subsidiary of the Company as the parent
Purified Water")
Zibo Luqun Land Co., Ltd (hereinafter referred to as "Luqun Land") Wholly-owned subsidiary of the Company as the parent
Zibo Lurui Fine Chemical Co., Ltd. (hereinafter referred to as "Lurui
Wholly-owned subsidiary of the Company as the parent
Chemical")
Zibo Lujia Property Management Co., Ltd. (hereinafter referred to as
Wholly-owned subsidiary of the Company as the parent
"Lujia Property")
Hong Kong Tung Hoi International Company Limited (hereinafter
Wholly-owned subsidiary of the Company as the parent
referred to as "Tung Hoi International")
Zibo Chengshun Hosiery Co., Ltd. (hereinafter referred to as
Wholly-owned subsidiary of the Company as the parent
"Chengshun Hosiery")
Zibo Chengshun Economic and Trade Co., Ltd. (hereinafter referred to
Wholly-owned subsidiary of the Company as the parent
as "Chengshun Economic and Trade")
Chengshun Petrochemical (Zhejiang Zhoushan) Co., Ltd. (hereinafter
Wholly-owned subsidiary of the Company as the parent
referred to as "Chengshun Petrochemical")
Zibo Lucheng Petrochemical Sales Co., Ltd. (hereinafter referred to as
Wholly-owned subsidiary of the Company as the parent
"Lucheng Petrochemical")
Shanghai Hengjiu Textile New Materials Co., Ltd. (hereinafter referred
Wholly-owned subsidiary of the Company as the parent
to as "Hengjiu Textile")
Shandong Xirui New Material Co., Ltd. (hereinafter referred to as "Xirui Wholly-owned subsidiary of the parent company's wholly-
New Material") owned subsidiary
208
Lu Thai Textile Co., Ltd. Annual Report 2023
Zibo Lumei Economic and Trade Co., Ltd. (hereinafter referred to as
Wholly-owned subsidiary of the Company as the parent
"Lumei Economic and Trade")
5. List of related-party transactions
(1) Information on acquisition of goods and reception of labor service
Information on acquisition of goods and reception of labor service
Unit: RMB
Whether
Same period of last
Related party Content Reporting period The approval trade credit exceed trade
year
credit or not
Chengshun Paper core,
Hosiery and hosiery, hose,
7,193,988.38 10,916,666.67 Not 8,391,376.29
Unikorn accessories,
Nonwovens masks, etc.
Recycled
Limin Purified
water, sewage 28,246,470.62 38,800,000.00 Not 27,043,524.89
Water
treatment
Lurui Fine
Chemical and 98,968,301.33
Auxiliaries 101,314,234.28 123,600,000.00 Not
Tung Hoi
International
Chengshun
Supermarket
Economic and 2,468,796.20 3,760,000.00 Not 5,306,076.78
retail
Trade
Lucheng
Petrochemical Oil, natural
55,480,873.42 82,577,333.33 Not 58,883,721.33
and Chengshun gas
Petrochemical
Luqun Property electrical 150,295.22 0.00
Information of sales of goods and provision of labor service
Unit: RMB
Related party Content Reporting period Same period of last year
Chengshun
Materials, electricity, running water, heating, steam 255,336.33 308,201.04
Hosiery
Chengshun
Yarn, garments, fabrics 552,386.10 638,004.63
Hosiery
Chengshun Materials, electricity, running water, yarn, garments,
200,452.64 219,216.70
Trading fabrics, food, heating, steam
Lucheng
Materials, electricity, garments, fabrics 14,104.15 17,310.31
Petrochemical
Limin Purified Materials, electricity, garments, fabrics, meal service in
5,611,202.34 5,363,626.64
Water classes, foods
Limin Purified
Sludge treatment 283,018.87
Water
Lurui Fine
Materials, yarns, garments, fabrics, foods 295,841.93 165,895.59
Chemical
Lujia Property Materials, garments, fabrics, heating, steam 28,133.85 81,109.42
Xirui New
Materials, garments, fabrics, waste cotton 114,574.26
Materials
Xirui New
Catering service, drinks, benefits 114,555.82 271.70
Materials
Lumei Economic
Garments, fabrics, computer supplies 63.72 106.19
and Trade
209
Lu Thai Textile Co., Ltd. Annual Report 2023
Luqun Property Garments, fabrics, catering services 365,076.11 3,387.06
Luqun Property Heating unit account opening 3,292,155.06
(2) Information on related-party lease
The Company was lessor:
Unit: RMB
The lease income confirmed in The lease income confirmed in
Name of lessee Category of leased assets
the current period the same period of last year
Chengshun Economic and
Rent of houses and buildings 36,108.00 36,108.00
Trade
16,800.00
Chengshun Hosiery Rent of houses and buildings
The Company was lessee:
Unit: RMB
Variable lease
Rental expense payments that
of simplified are not covered
short-term leases in the Interest expense on lease Added right-of-
Rent payable
Categor and low-value measurement of liabilities borne use assets
Name asset leases (if the lease
y of
of applicable) liabilities (if
leased
lessor applicable)
assets
Amoun Amoun Amoun Amoun Amoun Amoun
Amount of Amount of Amount of Amount of
t of the t of the t of the t of the t of the t of the
the current the previous the current the previous
current previou current previou current previou
period period period period
period s period period s period period s period
Luchen
Rent of 1,093,886.2 1,208,211.3
g 3,614,857.20 3,614,857.20
land 4 9
Textile
Luchen Rent of
g gas 233,142.84 233,142.84 105,749.06 111,526.32
Textile station
Luchen Rent of
11,022,228.6 11,022,228.6 1,831,460.6 2,198,793.8
g building
0 0 6 2
Textile s
Rent of
Luqun
land and 1,128,013.8 1,166,262.4
Propert 1,971,428.52 1,971,428.52
building 8 5
y
s
(3) Information on remuneration for key management personnel
Unit: RMB
Item Amount for the current period Amount for the previous period
Remuneration for key management
12,214,104.92 12,453,347.54
personnel
210
Lu Thai Textile Co., Ltd. Annual Report 2023
6. Accounts receivable and payable of related party
(1) Accounts receivable
Unit: RMB
Ending balance Beginning balance
Item Related party
Carrying amount Bad debt provision Carrying amount Bad debt provision
Prepayments Lurui Fine Chemical 197,267.31
(2) Accounts payable
Unit: RMB
Item Related party Ending carrying amount Beginning carrying amount
Accounts payable Lurui Fine Chemical 398,433.04
Accounts payable Tung Hoi International 5,597,739.70 976,966.23
Contract liability Luqun Property 649,676.55
XV. Stock Payment
1. The overall situation of share-based payments
Applicable □Not applicable
Unit: RMB
Option exercise
Category of Unlocked in the current Lapsed in the current
Awarded in the current period in the current
grant period period
period
recipients
Number Amount Number Amount Number Amount Number Amount
Management,
core technical
9,898,500.00 9,898,500.00 90,000.00 90,000.00
and business
backbone
Total 9,898,500.00 9,898,500.00 90,000.00 90,000.00
Stock options or other equity instruments outstanding at the end of the period
□Applicable Not applicable
2. Equity-settled share-based payments
Applicable □Not applicable
Unit: RMB
Methods for determining the fair value of equity instruments on the Difference between the market price of the stock and the
grant date grant price on the grant date
Basis for determining the number of feasible right equity instruments Optimal estimation of expected feasible right in the future
Reasons for the significant discrepancy between the current period N/A
211
Lu Thai Textile Co., Ltd. Annual Report 2023
estimates and the previous estimates
Accumulated amount of equity-settled share-based payment included in
85,059,530.52
capital reserves
The total amount of the expense recognized for the current period paid
16,758,063.86
on equity-settled shares
3. Cash-settled share-based payments
□Applicable Not applicable
4. Share-Based Payment Expenses for the Period
Applicable □ Not applicable
Unit: RMB
Category of grant recipients Equity-settled share-based payments Cash-settled share-based payments
Management, core technical and business
16,758,063.86
backbone
Total 16,758,063.86
XVI. Commitments and Contingency
1. Significant Commitments
Significant commitments on balance sheet date
(1) Capital commitments
Commitments signed but hasn’t been recognized in financial
Ending balance Closing balance of last year
statements
Commitment on constructing and purchasing long-lived assets
5,147.75 50,131.58
(RMB’0,000)
2. Contingency
(1) Significant Contingency on Balance Sheet Date
As at 31 December 2021, the Company provided guarantee to loans of the following subsidiaries:
Name Item Amount (USD) Amount (RMB) Duration Notes
Wholly-owned Short-term
3,031,570.00 21,471,700.84 2023.9.8-2024.9.4
Subsidiaries loan
Wholly-owned Short-term
297,333.00 2,105,920.44 2023.9.15-2024.9.9
Subsidiaries loan
Wholly-owned Short-term
1,309,320.00 9,273,520.76 2023.9.29-2024.9.23
Subsidiaries loan
Wholly-owned Short-term
1,711,480.00 12,121,899.40 2023.10.5-2024.9.30
Subsidiaries loan
212
Lu Thai Textile Co., Ltd. Annual Report 2023
Wholly-owned Short-term
170,429.00 1,207,097.48 2023.10.5-2024.9.30
Subsidiaries loan
Wholly-owned Short-term
320,733.00 2,271,655.62 2023.10.10-2024.10.4
Subsidiaries loan
Wholly-owned Short-term
102,204.85 723,886.29 2023.10.30-2024.10.24
Subsidiaries loan
Wholly-owned Short-term
122,486.00 867,531.59 2023.11.2-2024.10.28
Subsidiaries loan
Wholly-owned Short-term
2,188,363.67 15,499,523.37 2023.9.8-2024.9.4
Subsidiaries loan
Wholly-owned Short-term
345,131.00 2,444,459.33 2023.9.15-2024.9.9
Subsidiaries loan
Total 9,599,050.52 67,987,195.12
(2) Explanation shall be given even if there is no significant contingency for the Company to disclose
There was no significant contingency in the Company to disclose.
XVII. Events after Balance Sheet Date
1. Distribution of Profit
Amount to be distributed for every ten shares
1.30
(RMB)
Dividend shares to be distributed for every ten
0
shares (share)
Number of shares to be converted into share capital
0
for every ten shares (share)
Amount to be distributed for every ten shares after
1.30
consideration and approval (RMB)
Dividend shares to be distributed for every ten
0
shares after consideration and approval (share)
Number of shares to be converted into share capital
for every ten shares after consideration and 0
approval (share)
On 10 April 2024, the 20th meeting of the 10th Board of Directors of the
Company approved the profit distribution plan for 2023 as follows: Based on
the share capital of 817,431,206 shares after the completion of the repurchase
and cancellation of the B Shares, it was proposed that cash dividends in the
Profit distribution plan
amount of RMB 106,266,056.78 would be distributed at the rate of RMB1.30
per 10 shares (inclusive of tax). The above distribution plan will be
implemented after it is submitted to the 2023 Annual General Meeting of
Shareholders for consideration and approval.
2. Notes to other events after balance sheet date
As at 10 April 2024, the Company has no other events after balance sheet date that should be disclosed.
213
Lu Thai Textile Co., Ltd. Annual Report 2023
XVIII. Notes of Main Items in the Financial Statements of the Company as the Parent
1. Accounts Receivable
(1) Disclosure by aging
Unit: RMB
Aging Ending carrying amount Beginning carrying amount
Within one year (including 1 year) 380,684,242.95 386,580,998.61
One to two years 2,423,615.15 536,914.02
Two to three years 13,571.80 224,827.57
More than three years 3,026,023.60 4,460,653.98
Three to four years 20,913.49 4,150,455.06
Four to five years 3,005,110.11 310,198.92
Over 5 years 0.00
Total 386,147,453.50 391,803,394.18
(2) Disclosure by Withdrawal Methods for Bad Debts
Unit: RMB
Ending balance Beginning balance
Carrying amount Bad debt provision Carrying amount Bad debt provision
Categor
y Withdra Carrying Withdra Carrying
Proporti wal value Proporti wal value
amount amount amount amount
on proportio on proportio
n n
Account
s
receivab
le
withdra
wal of 5,481,360.7 5,481,360. 4,856,146.9 4,856,146.
1.42% 100.00% 1.24% 100.00%
Bad debt 0 70 7 97
provisio
n
separatel
y
accrued
Of
which:
Account
s
receivab
le
withdra 380,666,092 24,182,667 356,483,425 386,947,247 29,030,196 357,917,050
98.58% 6.35% 98.76% 7.50%
wal of .80 .21 .59 .21 .50 .71
bad debt
provisio
n of by
group
Of
which:
214
Lu Thai Textile Co., Ltd. Annual Report 2023
Group 1:
Undue 35,791,868. 35,791,868.
9.27%
accounts 54 54
(L/C)
Group 2:
Undue
accounts
23,003,716. 22,762,177. 45,947,651. 45,465,201.
(credit 5.96% 241,539.03 1.05% 11.73% 482,450.35 1.05%
87 84 98 63
insuranc
e
insured)
Group 3:
Undue
accounts
275,912,255 13,795,612 262,116,642 272,913,162 13,645,658 259,267,504
(no 71.45% 5.00% 69.66% 5.00%
.37 .77 .60 .58 .14 .44
credit
insuranc
e)
Group 4:
Overdue
accounts
15,309,159. 2,403,538. 12,905,621. 31,716,529. 4,979,495. 26,737,034.
(credit 3.96% 15.70% 8.09% 15.70%
83 09 74 93 20 73
insuranc
e
insured)
Group 5:
Overdue
accounts
30,649,092. 7,741,977. 22,907,114. 36,369,902. 9,922,592. 26,447,309.
(no 7.94% 25.26% 9.28% 27.28%
19 32 87 72 81 91
credit
insuranc
e)
386,147,453 100.00 29,664,027 356,483,425 391,803,394 100.00 33,886,343 357,917,050
Total 7.68% 8.65%
.50 % .91 .59 .18 % .47 .71
Bad debt provision separately accrued: 2023
Unit: RMB
Beginning balance Ending balance
Name Carrying amount Bad debt Withdrawal Reason for
Carrying amount Bad debt provision
provision proportion withdraw
Customer in
Customer 1 2,705,609.83 2,705,609.83 2,751,489.34 2,751,489.34 100.00% financial
difficulty
Customer in
Customer 2 1,986,544.97 1,986,544.97 2,729,871.36 2,729,871.36 100.00% financial
difficulty
Customer 3 90,959.35 90,959.35
Customer 4 73,032.82 73,032.82
Total 4,856,146.97 4,856,146.97 5,481,360.70 5,481,360.70
If adopting the general mode of expected credit loss to withdraw bad debt provision of accounts receivable.
□ApplicableNot applicable
215
Lu Thai Textile Co., Ltd. Annual Report 2023
(3) Bad Debt Provision Withdrawal, Reversed or Recovered in the Reporting Period
Withdrawal of bad debt provision:
Unit: RMB
Changes in the Reporting Period
Category Beginning balance Reversed or Ending balance
Withdrawal Verification Others
recovered
Bad debt
33,886,343.47 -4,099,047.34 123,268.22 29,664,027.91
provision
Total 33,886,343.47 -4,099,047.34 123,268.22 29,664,027.91
(4) Accounts Receivable Written-off in Current Period
Unit: RMB
Item Written-off amount
123,268.22
Written-off accounts receivable
Notes to verification of accounts receivable:
There were no write-offs of significant accounts receivable.
(5) Top 5 of the Ending Balance of the Accounts Receivable and the Contract Assets Collected according to
Arrears Party
Unit: RMB
Proportion to Ending balance of bad
Ending balance of total ending debt provision of
Ending
Name of the Ending balance of accounts accounts balance of accounts receivable
balance of
entity receivable receivable and accounts and impairment
contract assets
contract assets receivable and provision for contract
contract assets assets
Customer 1 28,876,425.29 28,876,425.29 7.48% 1,443,821.26
Customer 2 27,146,545.63 27,146,545.63 7.03% 1,357,327.28
Customer 3 25,324,312.06 25,324,312.06 6.56% 1,266,215.60
Customer 4 14,010,862.76 14,010,862.76 3.63% 439,469.81
Customer 5 12,808,372.92 12,808,372.92 3.31% 640,418.65
Total 108,166,518.66 0.00 108,166,518.66 28.01% 5,147,252.60
2. Notes Receivable
Ending balance Closing balance of last year
Category Bad debt Bad debt
Carrying amount Carrying value Carrying amount Carrying value
provision provision
Bank acceptance
54,622,178.42 54,622,178.42 49,401,876.98 49,401,876.98
bills
216
Lu Thai Textile Co., Ltd. Annual Report 2023
Commercial
acceptance bills
L/C 49,946,887.38 49,946,887.38
Total 54,622,178.42 54,622,178.42 99,348,764.36 99,348,764.36
(1) The Company had no pledged notes receivable at the end of the period.
(2) Notes receivable endorsed by the Company or discounted and not due on the balance sheet date at the period-end
Amount of recognition termination at the Amount of not terminated recognition at
Category
period-end the period-end
Bank acceptance bills 36,529,780.40
Trade acceptance notes
Total 36,529,780.40
(3) Disclosure by withdrawal methods for bad debts
Ending balance Closing balance of last year
Bad debt Bad debt
Carrying amount Carrying amount
Category provision provision
Carrying Carrying
Expected value Expected value
Percentag Amoun Percentag Amoun
Amount credit loss Amount credit loss
e (%) t e (%) t
rate (%) rate (%)
Bad debt
provision
separately
accrued
Withdrawal
of bad debt 54,622,178.4 54,622,178.4 99,348,764.3 99,348,764.3
100 100
provision 2 2 6 6
by group
Of which:
Commercia
l
acceptance
bills
Bank
acceptance
54,622,178.4 54,622,178.4 99,348,764.3 99,348,764.3
bills with 100 100
2 2 6 6
low credit
ratings
54,622,178.4 54,622,178.4 99,348,764.3 99,348,764.3
Total 100 100
2 2 6 6
Notes receivable of bad debt provision withdrawn by groups
Grouping-based provision item: Bank acceptance bills with low credit ratings
Ending balance
Name
Expected credit loss rate
Notes receivable Bad debt provision
(%)
Bank acceptance bills with low
54,622,178.42
credit ratings
Total 54,622,178.42
217
Lu Thai Textile Co., Ltd. Annual Report 2023
Note: Based on the fact that the likelihood of loss on the notes receivable is minimal and the amount of expected credit losses on the
notes receivable is not material, the Company has not provided for bad debts on the notes receivable.
3. Other Receivables
Unit: RMB
Item Ending balance Beginning balance
Dividend receivable 18,563,298.39
Other receivables 2,064,459,414.54 1,964,032,236.60
Total 2,064,459,414.54 1,982,595,534.99
(1) Dividend Receivable
1) Dividend Receivable Classification
Unit: RMB
Project (or investee) Ending balance Beginning balance
Sanchang Fengshou Cotton Industry Co.,
Ltd. (hereinafter referred to as "Fengshou 19,540,314.10
Cotton")
Less: bad debt provision -977,015.71
Total 18,563,298.39
2) Disclosure by Withdrawal Methods for Bad Debts
Applicable □Not applicable
Withdrawal of bad debt provision by adopting the general mode of expected credit loss:
Unit: RMB
First stage Second stage Third stage
Bad debt provision Expected loss in the Total
Expected credit loss in Expected loss in the duration
duration (credit impairment
the next 12 months (credit impairment occurred)
not occurred)
Balance of 1 January
977,015.71 977,015.71
2023
Balance of 1 January
2023 in the Current
Period
Withdrawal of the
-977,015.71 -977,015.71
Current Period
Changes of carrying amount with significant amount changed of loss provision in the Current Period
□Applicable Not applicable
218
Lu Thai Textile Co., Ltd. Annual Report 2023
(2) Other Receivables
1) Other receivables classified by category
Unit: RMB
Nature Ending carrying amount Beginning carrying amount
Intercourse funds 2,060,091,836.09 1,914,694,616.18
Export rebates 9,934,992.64
Payment on behalf 6,736,525.76 9,769,724.73
Guarantee deposit and cash deposit 1,549,661.78 3,278,418.46
Borrowings and petty cash 1,533,557.54 968,504.94
Other 2,720,459.54 35,155,692.70
Total 2,072,632,040.71 1,973,801,949.65
2) Disclosure by aging
Unit: RMB
Aging Ending balance Beginning carrying amount
Within one year (including 1 year) 1,629,128,024.64 1,617,443,472.58
One to two years 184,755,200.00 176,434,854.82
Two to three years 79,555,623.95 177,216,762.10
More than three years 179,193,192.12 2,706,860.15
Three to four years 176,599,422.10 128,000.00
Four to five years 78,000.00 101,101.14
Over 5 years 2,515,770.02 2,477,759.01
Total 2,072,632,040.71 1,973,801,949.65
(3) Disclosure by Withdrawal Methods for Bad Debts
Unit: RMB
Ending balance Beginning balance
Carrying amount Bad debt provision Carrying amount Bad debt provision
Category Withdra Carrying Withdra Carrying
Proport wal value Proport wal value
Amount Amount Amount Amount
ion proporti ion proporti
on on
Bad debt
provision 163,012.0
163,012.05 0.01% 100.00% 0.00
separately 5
accrued
Of which:
Customer 163,012.0
163,012.05 0.01% 100.00% 0.00
1 5
219
Lu Thai Textile Co., Ltd. Annual Report 2023
Withdraw
al of bad
2,072,469,02 8,009,614 2,064,459,41 1,973,801,94 100.00 9,769,713 1,964,032,23
debt 99.99% 0.39% 0.50%
8.66 .12 4.54 9.65 % .05 6.60
provision
by group
Of which:
Receivabl
es from
related
parties 2,060,091,83 6,180,275 2,053,911,56 1,914,694,61 5,744,083 1,908,950,53
99.40% 0.30% 97.00% 0.30%
within the 6.09 .51 0.58 6.18 .85 2.33
scope of
consolida
tion
Tax
496,749.6
receivabl 9,934,992.64 0.50% 5.00% 9,438,243.01
3
e
Security
deposit
and 163,920.9
1,549,661.78 0.07% 77,483.09 5.00% 1,472,178.69 3,278,418.46 0.17% 5.00% 3,114,497.54
margin 2
receivabl
e
Other
10,827,530.7 1,751,855 45,893,922.3 3,364,958 42,528,963.7
receivabl 0.52% 16.18% 9,075,675.27 2.33% 7.33%
9 .52 7 .65 2
es
2,072,632,04 100.00 8,172,626 2,064,459,41 1,973,801,94 100.00 9,769,713 1,964,032,23
Total 0.39% 0.50%
0.71 % .17 4.54 9.65 % .05 6.60
Bad debt provision separately accrued: Y2023
Unit: RMB
Beginning balance Ending balance
Name Carrying Bad debt Bad debt Withdrawal
Carrying amount Reason for withdraw
amount provision provision proportion
Customer in financial
Customer 1 0.00 0.00 163,012.05 163,012.05 100.00%
difficulty
Total 163,012.05 163,012.05
Withdrawal of bad debt provision by adopting the general mode of expected credit loss:
First stage Second stage Third stage
Bad debt provision Expected loss in the Expected loss in the Total
Expected credit loss of
duration (credit impairment duration (credit
the next 12 months
not occurred) impairment occurred)
Balance of 1 January
8,577,358.06 1,192,354.99 9,769,713.05
2023
Balance of 1 January
2023 in the Current
Period
Withdrawal of the
-1,916,310.87 156,211.94 163,012.05 -1,597,086.88
Current Period
Balance of 31
6,661,047.19 1,348,566.93 163,012.05 8,172,626.17
December 2023
Changes of carrying amount with significant amount changed of loss provision in the current period
220
Lu Thai Textile Co., Ltd. Annual Report 2023
□Applicable Not applicable
4) Bad Debt Provision Withdrawn, Reversed or Recovered in the Current Period
Withdrawal of bad debt provision:
Unit: RMB
Category Beginning balance Changes in the current period Ending balance
Reversed or Charged-
Withdrawal Others
recovered off/Written-off
Bad debt
9,769,713.05 -1,597,086.88 8,172,626.17
provision
Total 9,769,713.05 -1,597,086.88 8,172,626.17
5) Top 5 of the Ending Balance of the Other Receivables Collected according to the Arrears Party
Unit: RMB
Proportion to ending
Name of Ending balance of
Nature Ending balance Aging balance of total other
entity bad debt provision
receivables
Intercourse
Unit 1 822,828,423.87 Within 1 year and 1 to 2 years 39.70% 2,468,485.27
funds
Intercourse
Unit 2 576,957,860.36 Within 1 year 27.84% 1,730,873.58
funds
Intercourse Within 1 year, 2 to 3 years
Unit 3 524,945,598.64 25.33% 1,574,836.80
funds and over 3 years
Intercourse
Unit 4 135,330,898.54 Within 1 year 6.53% 405,992.70
funds
Withholding
and
remitting of Payment on
3,540,114.13 Within 1 year 0.17% 177,005.71
personal behalf
endowment
insurance
Total 2,063,602,895.54 99.57% 6,357,194.06
4. Long-term Equity Investment
Unit: RMB
Ending balance Beginning balance
Item Depreciation Depreciation
Carrying amount Carrying value Carrying amount Carrying value
reserves reserves
Investment
to 3,446,169,376.50 10,209,050.00 3,435,960,326.50 2,885,254,556.40 2,885,254,556.40
subsidiaries
Investment
to joint
ventures and 143,537,479.77 143,537,479.77 184,168,625.69 184,168,625.69
associated
enterprises
Total 3,589,706,856.27 10,209,050.00 3,579,497,806.27 3,069,423,182.09 3,069,423,182.09
221
Lu Thai Textile Co., Ltd. Annual Report 2023
(1) Investment to subsidiaries
Unit: RMB
Increase/decrease
Beginning Ending
Beginning
balance of Withdrawal Ending balance balance of
Investee balance
depreciatio Additional Reduced of Othe (carrying value) depreciation
(carrying value)
n reserve investment investment impairment r reserve
provision
Xinsheng
176,340,737.93 176,340,737.93
Power
Lufeng
Company 529,620,000.00 529,620,000.00
Limited
Luqun
171,784,550.00 171,784,550.00
Textile
Luthai
(Hong 128,771,800.00 128,771,800.00
Kong)
Shanghai
20,000,000.00 20,000,000.00
Luthai
Lu Thai 10,209,050.0 10,209,050.0
10,209,050.00 0.00
(America) 0 0
VACL 62,337,238.57 62,337,238.57
409,118,889.9
ZJ Textile 409,118,889.90
0
Lulian New
300,000,000.00 300,000,000.00
Materials
Lujia Import
10,000,000.00 10,000,000.00
& Export
Lu Thai
Occupationa
100,000.00 100,000.00
l Training
School
Shanghai 6,000.00
5,000.00 1,000.00
Zhinuo
Zhishu
2,000,000.00 2,000,000.00
Consulting
Huilin 770,032,710.0 1,630,000,000.0
859,967,290.00
International 0 0
Banyang
Mountain 5,000,000.00 5,000,000.00
Villa
Yuanhui 200,000,000.0
200,000,000.00 400,000,000.00
Fund 0
10,209,050.0 10,209,050.0
2,885,254,556.4 970,033,710.0 409,118,889.9 3,435,960,326.5
Total 0 0
0 0 0 0
(2) Investment to joint ventures and associated enterprises
Unit: RMB
Increase/decrease
Beginni
Ending
ng Cash
Beginning Gains and Withdra Ending balance
balance Adjustme Chan bonus
Investe balance Additio losses wal of balance of
of Reduced nt of other ges of or
e (carrying nal recognize impairm Oth (carrying deprecia
deprecia investmen comprehe other profits
value) investm d under ent er value) tion
tion t nsive equit announ
ent the equity provisio reserve
reserve income y ced to
method n
issue
222
Lu Thai Textile Co., Ltd. Annual Report 2023
I. Joint ventures
II. Associated enterprises
Haohon
g 60,547,749 20,156,31 7,866,263 48,257,699
Invest .28 3.56 .99 .71
ment
Haoyin -
g 123,620,87 10,918,66 95,279,780
17,422,43
Invest 6.41 2.01 .06
ment 4.34
-
Subtota 184,168,62 31,074,97 143,537,47
9,556,170
l 5.69 5.57 9.77
.35
-
184,168,62 31,074,97 143,537,47
Total 9,556,170
5.69 5.57 9.77
.35
The recoverable amount is determined based on the net amount of the fair value minus disposal costs
□Applicable Not applicable
The recoverable amount is determined by the present value of the forecasted future cash flow.
□Applicable Not applicable
5. Operating Revenue and Cost of Sales
Unit: RMB
Amount of the current period Amount of the previous period
Item
Revenue Cost Revenue Cost
Principal
3,147,505,850.27 2,471,357,276.44 3,907,554,376.70 2,899,728,853.91
business
Others 280,155,779.48 186,079,061.04 299,695,905.51 268,072,062.00
Total 3,427,661,629.75 2,657,436,337.48 4,207,250,282.21 3,167,800,915.91
6. Investment Income
Unit: RMB
Item Amount of the current period Amount of the previous period
Long-term equity investment income
170,639,188.72 106,856,787.62
accounted by cost method
Long-term equity investment income
-9,556,170.35 28,049,040.53
accounted by equity method
Investment income from disposal of long-
22,374,515.10 34,470,026.17
term equity investment
Investment income from holding of held-
3,837,780.60
for-trading financial asset
Investment income from disposal of
30,146,964.78 -19,441,900.00
trading financial assets
Total 217,442,278.85 149,933,954.32
223
Lu Thai Textile Co., Ltd. Annual Report 2023
XIX. Supplementary Materials
1. Items and Amounts of Non-recurring Profit or Loss
Applicable □Not applicable
Unit: RMB
Item amount Note
Gains and losses on disposal of non-current assets -9,741,769.37
Government grants recognized in profit or loss for the current period
(except for government grants closely related to the Company's normal
operating business, in compliance with national policies and in 45,294,185.95
accordance with defined criteria, and having a continuous impact on the
Company's profit or loss)
Gains and losses arising from changes in fair value of financial assets and
financial liabilities held by non-financial enterprises and gains and losses
arising from the disposal of financial assets and financial liabilities, other -18,190,072.86
than effective hedging business related to the Company's normal
operating business
Reversal of provision for impairment of receivables separately tested for
163,992.17
impairment
Other non-operating income and expense other than the above 4,819,447.10
Less: Income tax effects 4,629,001.56
Non-controlling interests effects (after tax) 407,964.01
Total 17,308,817.42 --
Details of other profit and loss items in line with the definition of non-recurring gains and losses:
□Applicable Not applicable
There are no other profit and loss items in line with the definition of non-recurring gains and losses in the Company.
Note to define the non-recurring profit and loss items listed in the Explanatory Announcement No. 1 on Information Disclosure for
Companies Offering Their Securities to the Public—Non-recurring Gains and Losses as recurring profit and loss items.
□Applicable Not applicable
2. Return on Equity and Earnings Per Share
Weighted EPS
Profit as of Reporting Period average
ROE (%) EPS-basic EPS-diluted
Net profit attributable to ordinary shareholders of the
4.40% 0.47 0.42
Company
Net profit attributable to ordinary shareholders of the
4.21% 0.45 0.41
Company after deduction of non-recurring profit or loss
Chairman of the Board: Liu Zibin
224
Lu Thai Textile Co., Ltd. Annual Report 2023
Lu Thai Textile Co., Ltd.
12 April 2024
225
