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鲁 泰B:2012年第三季度报告全文(英文版)2012-10-25  

						                                    LU THAI TEXTILE CO., LTD.

                           THE THIRD QUARTERLY REPORT FOR 2012


I. Important Notes

The Board of Directors, the Supervisory Committee, directors, supervisors and other senior management
personnel of Lu Thai Textile Co., Ltd. (hereinafter referred to as “the Company”) hereby guarantee that this report
carries no false information, misleading statements or major omissions, and accept, individually and collectively,
the responsibility for the factuality, accuracy and completeness of the information set forth herein.
All directors attended the board session for reviewing this report.
Mr. Liu Shizhen, Principal of the Company, Ms. Zhang Hongmei, Person in charge of accounting work and Mr.
Zhang Keming, Person in charge of accounting organ (Financial Manager) hereby confirmed that the Financial
Report enclosed in the third quarterly report is true and complete.
The Financial Report in the third quarterly report has not been audited by a CPA firm.

II. Company Profile

(I)Major accounting data and financial indexes

Any retrospective adjustment in previous financial statements?
□ Yes √ No □ Inapplicable
                                        30 Sept. 2012                       31 Dec. 2011                Increase/decrease (%)
Total assets (RMB Yuan)                       7,694,438,414.93                  7,751,885,340.43                             -0.74%
Owners’ equity attributable to
shareholders of the Company                   5,141,176,016.41                  5,086,100,453.10                              1.08%
(RMB Yuan)
Share capital (Share)                         1,008,954,800.00                  1,008,954,800.00                                0%
Net      assets    per    share
attributable to shareholders of
                                                                 5.10                         5.04                            1.19%
the       Company        (RMB
Yuan/share)
                                                             YoY increase/decrease                            YoY increase/decrease
                                   Jul.-Sept. 2012                                    Jan.-Sept. 2012
                                                                     (%)                                              (%)
Gross operating         revenues
                                     1,398,771,930.43                       -5.72%         4,206,797,495.19                  -5.77%
(RMB Yuan)
Net profit attributable to
shareholders of the Company            159,815,718.16                      -28.97%          461,319,006.35                  -35.63%
(RMB Yuan)
Net cash flow from operating
                             --                             --                              732,296,823.97                  -19.74%
activities (RMB Yuan)
Net cash flow per share from
operating activities (RMB    --                             --                                        0.73                  -18.89%
Yuan/share)
Basic EPS (RMB Yuan/share)                           0.16                  -30.43%                    0.46                  -36.11%
Diluted     EPS           (RMB
                                                     0.16                  -30.43%                    0.46                  -36.11%
Yuan/share)
Weighted average ROE (%)                        3.06%                       -1.64%                    8.9%                   -6.43%
Weighted average ROE after
deducting non-recurring gains                   2.68%                       -1.73%                   8.55%                   -6.15%
and losses (%)



1
Items of non-recurring gains and losses
√Applicable □Inapplicable
                                                                    Amount during
                              Item                               Jan.-Sept. 2012 (RMB                         Notes
                                                                         Yuan)
Gains and losses on disposal of non-current assets                           199,165.76
Tax rebate, reduction or exemption due to un-authorized
approval or the lack of formal approval documents
Government grants recognized in the current year, except
for those acquired in the ordinary course of business or
                                                                          18,566,486.48
granted at certain quotas or amounts according to the
country’s unified standards
Gains and losses on fair value changes of transactional
financial assets and liabilities, and investment gains on
disposal of transactional financial assets and liabilities and             5,527,306.19
available-for-sale financial assets, except for the effective
hedging business related to the Company’s normal operation
Other non-operating incomes and expenses besides the
                                                                           4,127,305.76
items above
Other gain and loss items that meet the definition of
non-recurring gains and losses
Minority interests effects                                                -2,315,538.76
Income tax effects                                                        -7,697,071.90


Total                                                                     18,407,653.53                          --
“Other gain and loss items that meet the definition of non-recurring gains and losses” & non-recurring gain and
loss items recognized as recurring gain and loss items according to the natures and characteristics of the
Company’s normal business
                                     Involved amount (RMB
              Item                                                                                 Notes
                                             Yuan)
                                                          0.00


(IIII)Total number of shareholders and top 10 shareholders at the period-end

Total number of shareholders                                                                                                     114,841
                             Particulars about shares held by the top ten shareholders holding tradable shares
                                     Number of tradable shares held                         Type and number of shares
        Name of shareholder
                                            at period-end                            Type                             Number
ZIBO LUCHENG TEXTILE                                    123,314,700 RMB ordinary shares                                    123,314,700
INVESTMENT CO., LTD.
DBS   VICKERS     (HONG                                               Domestically     listed    foreign
                                                         40,528,642                                                            40,528,642
KONG) LTD A/C CLIENTS                                                 shares
FIRST         SHANGHAI                                                Domestically     listed    foreign
                                                          8,037,715                                                             8,037,715
SECURITIES LIMITED                                                    shares
AVIVA LIFE & PENSIONS                                                 Domestically     listed    foreign
                                                          3,930,923                                                             3,930,923
UK LIMITED                                                            shares
CHINA INCOME FUND                                         3,639,157 RMB ordinary shares                                         3,639,157
INDUSTRIAL      TREND                                     3,153,442 RMB ordinary shares                                         3,153,442
INVESTMENT MIXED TYPE
NATIONAL        SOCIAL                                    3,007,858 RMB ordinary shares                                         3,007,858
SECURITY         FUND
SINOCOT DEVELOPMENT                                                   Domestically     listed    foreign
                                                          2,981,000                                                             2,981,000
COMPANY LIMITED                                                       shares
CREDIT SUISSE            (HONG                                        Domestically     listed    foreign
                                                          2,962,887                                                             2,962,887
KONG) LIMITED                                                         shares




2
TOYO SECURITIES ASIA                                              Domestically   listed   foreign
                                                      2,958,112                                                         2,958,112
LIMITED-A/C CLIENT.                                               shares
                                Among the shareholders above, except ZIBO LUCHENG TEXTILE INVESTMENT CO., LTD. is
Explanation on particulars of
                                the first majority shareholder of the Company, the other shareholders are all tradable A-share and
shareholders
                                B-share holders.


III. Significant Events

I ) Significant changes in major accounting data, financial highlights and reasons for these
changes

√Applicable □Inapplicable
(1) Monetary funds stood at RMB 498,070,581.88 on 30 Sept. 2012, down 38.60% over the opening amount,
which was mainly because the Company paid for the B-share buyback and unginned cotton.
(2) Transactional financial assets stood at RMB 6,321,347.70 on 30 Sept. 2012, down 69.81% over the opening
amount, which was mainly because transactional financial assets were delivered upon maturity and gains on fair
value changes decreased.
(3) Prepayments stood at RMB 151,219,291.17 on 30 Sept. 2012, down 50.33% over the opening amount, which
was mainly because the accounts prepaid for purchases in the last period were settled in this period.
(4) Other receivables stood at RMB 127,434,551.45 on 30 Sept. 2012, up 70.97% over the opening amount, which
was mainly because of the increase of the export tax rebates receivable.
(5) Construction in progress stood at RMB 297,561,248.81 on 30 Sept. 2012, down 40.74% over the opening
amount, which was mainly because the 50-million-meter high-quality piece-dyed fabric project and the
40-million-meter high-quality yarn-dyed fabric production line project partly went into production and the
relevant construction in progress turned into fixed assets.
(6) Other non-current assets stood at RMB 7,890,690.00 on 30 Sept. 2012, down 68.94% over the opening amount,
which was mainly because the prepayments for land turned into intangible assets.
(7) Notes payable stood at RMB 16,230,868.14 on 30 Sept. 2012, up 35.46% over the opening amount, which was
mainly because notes were adopted more often in settlement.
(8) Taxes and fares payable stood at RMB 5,657,428.35 on 30 Sept. 2012, down 81.50% over the opening amount,
which was mainly because of the increase of input VAT deductions.
(9) Interest payable stood at RMB 3,409,471.91 on 30 Sept. 2012, up 61.35% over the opening amount, which
was mainly because of the increase of interest provisions.
(10) Non-current liabilities due within one year stood at RMB 17,257,250.00 on 30 Sept. 2012, down 75.01%
over the opening amount, which was mainly because of the decrease of long-term borrowings due within one
year.
(11) Long-term borrowings stood at RMB 0.00 on 30 Sept. 2012, down 100.00% over the opening amount, which
was mainly because mature borrowings were repaid.
(12) Deferred income tax liabilities stood at RMB 3,088,552.41 on 30 Sept. 2012, down 41.31% over the opening
amount, which was mainly because of the decrease of the taxable temporary difference resulted from the fair
value changes of transactional financial assets.
(13) Treasury stock stood at RMB 167,604,401.19 on 30 Sept. 2012, up 100% over the opening amount, which
was mainly because of the buyback of B-shares.
(14) Business taxes and surtaxes for the reporting period stood at RMB 12,292,119.83, down 55.47% over the
same period of last year, which was mainly because of the decrease of the city maintenance & development tax
and the educational surcharge payable.
(15) Financial expenses for the reporting period stood at RMB 52,047,616.39, up 47.08% over the same period of
last year, which was mainly because of the decrease of exchange gains.
(16) Asset impairment loss for the reporting period stood at RMB 229,769.28, down 84.91% over the same period
of last year, which was mainly because bad-debt provisions decreased as assets changed.
(17) Investment income for the reporting period stood at RMB 19,596,338.49, down 64.59% over the same period
of last year, which was mainly because of the decrease of the investment income from transactional financial
assets.



3
(18) Non-operating expenses for the reporting period stood at RMB 3,559,910.03, down 75.84% over the same
period of last year, which was mainly because of the decrease of the loss on non-current asset disposal.
(19) Income tax expenses for the reporting period stood at RMB 77,844,369.77, down 47.45% over the same
period of last year, which was mainly because of the decrease of the total profit.
(20) Total profit for the reporting period stood at RMB 544,604,740.28, down 39.49% over the same period of last
year, which was mainly because the operating revenues decreased 5.77% and the operating costs increased 3.40%
on a year-on-year basis.
(21) Net cash flows from investing activities for the reporting period stood at RMB -510,472,041.17, down
74.79% over the same period of last year, which was mainly because of a greater input to the 50-million-meter
high-quality piece-dyed fabric project and the 40-million-meter high-quality yarn-dyed fabric production line
project.

II Progress of significant events and its influence, as well as the analysis and explanation on solutions

1. About non-standard audit opinion

□Applicable √Inapplicable

2. The Company offers capital to the controlling shareholder or its related parties or provides
external guarantees in violation of the prescribed procedures.

□Applicable √Inapplicable

3. Signing and execution of significant contracts concerning routine operation

□Applicable √Inapplicable

4. Others

√Applicable □Inapplicable
1. The Proposal on Repurchase of Partial Domestically Listed Foreign Shares (B-share) of the Company and the
Preplan on Repurchase of Partial Domestically Listed Foreign Shares (B-share) of the Company were reviewed
and approved at the 21st Session of the 6th Board of Directors on 6 Jun. 2012 and the 2nd Special Shareholders’
General Meeting for 2012 on 25 Jun. 2012 held by the Company. The Company decided to, within 12 months
since the repurchase resolution was made at the shareholders’ general meeting, repurchase domestically listed
foreign shares (B-shares) not exceeding 100 million shares (it’s subject to the actual amount of repurchased shares
upon the repurchase expires) with its self-owned funds. And the repurchase price should not be higher than HK$
7.38/share (after adjustment), the Company also authorized the Board of Directors to write off the repurchased
shares after completing the repurchase event. The Company has finished all the approval procedures for
repurchasing B-share on 8 Sept. 2012 and implemented the repurchase on 10 Sept. 2012. Up to the period-end,
29,749,762 B-shares have been repurchased, accounting for 2.95% of the total share capital of the Company,
buying at the maximum price of HK$ 6.94/share and the minimum price of HK$ 6.80/share, and a total amount of
HK$ 204,976,962.04 (including stamp duty and commission) were paid.
2. The Proposal on Adjusting the Depreciation Period for Fixed Assets was reviewed and approved at the 24th
Session of the 6th Board of Directors held by the Company on 24 Sept. 2012, at which the Company decided to
adjust the depreciation period of fixed assets since 1 Oct. 2012, relevant announcement has been published on
Securities Times, Shanghai Securities News and Ta Kung Pao as well as www.cninfo.com.cn dated 25 Sept. 2012.

( III Commitments of the Company or shareholders with an over 5% shareholding made in or carried
down into the reporting period

√Applicable □Inapplicable
                Event                   Commitment     Commitment     Commitment      Commitment      Execution



4
                                                maker           contents            time           period
                                                          Zibo Lucheng
                                                          will not reduce
                                                          its shareholding
                                                          within          60
                                                          months       after
                                                          share      merger
                                                          reform        and,
                                                          within          24
                                                          months       after
                                                          that, the price of
                                                          selling holding
                                                          shares shall not
                                                          be lower than
                                                          RMB 15 per
                                                          share (if the
                                                          share      capital
                                                          changes,
                                                                                                                 Lucheng
                                                          ex-rights will be
                                                                                                                 fulfilled     the
                                                          conducted);       it
                                                                                                                 commitment of
                                                          proposed       and
                                                                                              Zibo Lucheng increasing           its
                                                          voted for a cash
                                                                                              will not reduce shareholding
                                                          distribution not
                                                                                              its shareholding with            the
                                                          lower than 50%
                                                                                              within         60 dividends        it
                                                          of the profit
                                                                                              months       after received in 2005
                                                          available       for
                                                                                              share      merger and 2006. The
                                                          distribution in
                                                                                              reform        and, total profit for
                                                          the year at the
                                                                                              within         24 2008 went up
                                          Zibo Lucheng 2006
                                                                                              months       after 58.06%      over
                                          Textile         Shareholders’
Commitment made in a share reform                                              12 Jun. 2006   that, the price of 2005. Up to 12
                                          Investment Co., General Meeting
                                                                                              selling holding Jun. 2011, the
                                          Ltd.            and          2007
                                                                                              shares shall not trading
                                                          Shareholders’
                                                                                              be lower than moratorium on
                                                          General
                                                                                              RMB 15 per the 98,358,000
                                                          Meeting; it will
                                                                                              share (if the shares held by
                                                          increase the LU
                                                                                              share      capital Lucheng
                                                          THAI A shares
                                                                                              changes,           expired, which
                                                          held     by       it
                                                                                              ex-rights will be became tradable
                                                          through trading
                                                                                              conducted)         on 24 Jun. 2011.
                                                          at the secondary
                                                                                                                 No shareholding
                                                          market with the
                                                                                                                 decrease     has
                                                          dividends
                                                                                                                 taken place yet.
                                                          received in 2005
                                                          and 2006, and
                                                          the increase of
                                                          the LU THAI A
                                                          shares held shall
                                                          be accomplished
                                                          within          12
                                                          months after the
                                                          dividend         is
                                                          transferred to its
                                                          account.         In
                                                          2008, the total
                                                          profit increased
                                                          by not less than
                                                          30% compared
                                                          with that in
                                                          2005.
Commitment made in an acquisition report Naught            Naught                             Naught            Naught
    a report changes of exchange
orCommitmenton made in assetowners’ equity Naught         Naught                             Naught            Naught

                                                          Raised     funds                                      The
                                          Lu Thai Textile                                                       150,000-Ingot
Commitment made in share issuance                         investment       19 Dec. 2008
                                          Co., Ltd.                                                             Top-grade Fine
                                                          projects
                                                                                                                Combed Yarn



5
                                                                                     Project,        the
                                                                                     50-thousand
                                                                                     Ingot
                                                                                     Two-for-one
                                                                                     Twisting
                                                                                     Production Line
                                                                                     Project,        the
                                                                                     Project          for
                                                                                     Supplementing
                                                                                     the      Working
                                                                                     Capital and the
                                                                                     Production Line
                                                                                     Project          for
                                                                                     10-million-mete
                                                                                     r       Top-grade
                                                                                     Jacquard
                                                                                     Fabrics          for
                                                                                     Women’s Wear
                                                                                     among        raised
                                                                                     funds
                                                                                     investment
                                                                                     projects      have
                                                                                     been completed.
                                                                                     On 18 Oct.
                                                                                     2011,             as
                                                                                     reviewed        and
                                                                                     approved at the
                                                                                     3rd        Special
                                                                                     Shareholders’
                                                                                     General
                                                                                     Meeting          for
                                                                                     2011,        raised
                                                                                     funds of RMB
                                                                                     140 million for
                                                                                     the Marketing
                                                                                     Network
                                                                                     Development
                                                                                     Project       were
                                                                                     transferred to a
                                                                                     new production
                                                                                     line project for
                                                                                     40-million
                                                                                     Meter top-grade
                                                                                     yarn-dyed
                                                                                     fabric. By the
                                                                                     end      of     the
                                                                                     reporting period,
                                                                                     the yarn-dyed
                                                                                     fabric      project
                                                                                     had           been
                                                                                     completed and
                                                                                     the Brand and
                                                                                     Marketing
                                                                                     Network
                                                                                     Development is
                                                                                     still going on.
Commitments        made      to     minority Naught             Naught      Naught   Naught
shareholders fulfilled in time or not
Commitment                                   √ Yes □ No □ Inapplicable
Specific reasons for failing to fulfill the
                                            Naught
commitment and plan for the next step
Make      commitments      regarding the
horizontal competition and related-party √ Yes □ No □ Inapplicable
transactions caused or not
Promised deadline for solving the problem Naught




6
Ways of solving the problem                   Naught
Execution of the commitment                   Naught


(IV Predict the 2012 annual operating results

Warnings of possible loss or large-margin change of the accumulated net profit made during the period from the
beginning of the year to the end of the next reporting period compared with the same period of the last year
according to prediction, as well as explanations on the reasons
□Applicable √Inapplicable

(V)Other significant events that need to be explained

1. Securities investment

□Applicable √Inapplicable

2. Investments in derivatives

√Applicable □Inapplicable
                                                                    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 risk of laws and regulations, credit risk,
                                                                    operation risk and market risk.
                                                                    1. Risk of laws and regulations
                                                                    The Company conducted derivatives products transaction in strict
                                                                    accordance with relevant laws and rules as well as regulatory
                                                                    policies from government securities regulatory authorities, if there
                                                                    were no standard operation procedures and strict approval
                                                                    procedures, it was easy to cause compliant and regulatory risks
                                                                    existing in the validity and feasibility of contract, commitments and
                                                                    other legal documents signed.
                                                                    Precautionary measures: The Company carefully studied and
                                                                    mastered laws, regulations and policies relevant to derivative
                                                                    products transaction, formulated internal control rules for the
Analysis on risks and control measures of derivative products
                                                                    forward settlement hedging business, standardized the operation
held in the reporting period (including but not limited to
                                                                    procedures. And strengthened the compliant examination on
market risk, liquidity risk, credit risk, operation risk, law risk,
                                                                    derivative products investment business, and strictly abided by
etc.)
                                                                    relevant laws, regulations and the Company’s internal management
                                                                    rules.
                                                                    2. Credit risk and liquidity risk
                                                                    When the contract matures, the Company couldn’t deliver as
                                                                    scheduled due to insufficient liquidity, and the counterparty or the
                                                                    Company couldn’t fulfill the contract due to other aspects except the
                                                                    liquidity, which would cause credit risk and further economic losses
                                                                    for the Company.
                                                                    Precaution measure: the Company chose the powerful financial
                                                                    institutions with good reputation as the counterparty, and signed
                                                                    standard derivative products transaction contract, as well as strictly
                                                                    controlled the credit risk of counterparty. The Company conducted
                                                                    derivative investment transactions according to the relevant
                                                                    approval procedure, which was in line with relevant laws,
                                                                    regulations, the Company’s Articles of Association, the Management
                                                                    Rules for Derivative Investment of Lu Thai Textile Co., Ltd. and the
                                                                    Plan for Derivative Transactions in 2012 approved at the First
                                                                    Special Session of the Shareholders’ General Meeting for 2012 on 5
                                                                    Mar. 2012, and performed relevant information disclosure



7
                                                                responsibilities. The Company decided the up limit for the amount
                                                                of derivative products transaction according to the production and
                                                                operation scale and the progress of foreign exchange income for the
                                                                Company, and delivered by phases. It was also possible to use
                                                                extension of term and other ways to ensure the fulfillment of
                                                                contract as schedules upon the mature of contract, and wouldn’t
                                                                cause any loss of credit risk for the Company due to insufficient
                                                                liquidity or other reasons.
                                                                3. Operation risk
                                                                The derivative financial transactions had high specialty and
                                                                complexity, so imperfect internal operation procedures, staffs and
                                                                external events would make the Company to undertake risks during
                                                                the transaction.
                                                                Precaution measure: The Company promulgated strict authorization
                                                                and approval system and perfect regulatory mechanism, fixed the
                                                                departments, operation procedures and approval procedures system
                                                                to conduct derivative products transaction, established special risk
                                                                control positions, implemented strict authorization and post checks
                                                                and balances system, meanwhile, it improved the overall quality of
                                                                relevant personnel through strengthening the business training and
                                                                professional ethics education for them. Besides, it established the
                                                                System of Reporting the Abnormal Situation Timely, formed an
                                                                efficient risk management procedures, so as to ensure to lower the
                                                                operation risks to the maximum.
                                                                4. Market risk
                                                                The forward settlement of exchange is an important derivative
                                                                products transaction, which was significantly affected by the
                                                                exchange rate fluctuation due to its large amount. The Central Bank
                                                                decided to expand the fluctuation range of RMB exchange rate from
                                                                bidirectional 0.5% to bidirectional 1% since 16 Apr. 2012, which
                                                                would increase the difficulty in the operation of forward settlement
                                                                of exchange. Besides, if the RMB is devalued by a large margin on
                                                                the basis of the current situation before the contract is due, so then,
                                                                the larger losses shall incur in the contract on forward settlement of
                                                                exchange signed by the Company.
                                                                Risk analysis and precaution measure: Renminbi appreciated
                                                                significantly compared with that before the exchange rate reform,
                                                                but Renminbi internationalization would be a long-term goal, which
                                                                decided that Renminbi would not depreciated significantly.
                                                                Although the increased fluctuation range added the operation
                                                                difficulty, it provided a certain opportunity, which required relevant
                                                                personnel of the Company actively master the market trend,
                                                                carefully operate and hold positive opportunity, so as to try the best
                                                                to reduce the market risks under the condition of increased market
                                                                difficulty.
                                                                1. Up to 30 Sept. 2012, the Company held 31 undue financial
                                                                derivative product contracts, totaled US$ 246 million, of which
                                                                there were 30 forward settlement contracts valuing US$ 240 million;
                                                                1 forward purchase foreign exchange contract valuing US$ 6 million
                                                                (all due before Mar. 2013). The above financial derivative products
                                                                accounted for 30.34% of the closing net assets attributable to
Changes of market prices or fair values in the reporting period shareholders of the Company.
of the invested derivatives. And the analysis on the fair value 2. From Jan. 2012 to Sept. 2012, the due financial derivative
of the derivatives should include the specific use methods and products of the Company totally equaled to US$ 516,003,200, of
the relevant assumptions and parameters.                        which US$ 376,003,200 was actually delivered and the gain
                                                                generated was RMB 20,145,300. The due forward settlement was
                                                                US$ 459.5 million, of which US$ 319.5 million was delivered as
                                                                scheduled, generating gain of RMB 19,759,500; US$ 140 million
                                                                was extended; and the due forward foreign exchange trading amount
                                                                equaled to US$ 56,503,200, which was all delivered as scheduled
                                                                and generated gain of RMB 385,800.
Whether significant changes occurred to the Company’s
accounting policy and specific accounting principles of
                                                                Unchanged
derivatives in the reporting period compared to the previous
reporting period
Specific opinion from independent directors on the Concerning the Company’s derivative transactions, the Company’s
Company’s derivatives investment and risk control              independent directors Zhou Zhiji, Hong Xiaobin, Qi Haodong, Bi



8
                                                             Xiuli and Wang Lei issued their professional opinions as follows:
                                                             1. Up to 30 Sept. 2012, the Company held 31 undue financial
                                                             derivative product contracts, totaled US$ 246 million, of which
                                                             there were 30 forward settlement contracts valuing US$ 240 million;
                                                             1 forward purchase foreign exchange contract valuing US$ 6 million
                                                             (all due before Mar. 2013). The above financial derivative products
                                                             accounted for 30.34% of the closing net assets attributable to
                                                             shareholders of the Company.
                                                             2. From Jan. 2012 to Sept. 2012, the due financial derivative
                                                             products of the Company totally equaled to US$ 516,003,200, of
                                                             which US$ 376,003,200 was actually delivered and the gain
                                                             generated was RMB 20,145,300. The due forward settlement was
                                                             US$ 459.5 million, of which US$ 319.5 million was delivered as
                                                             scheduled, generating gain of RMB 19,759,500; US$ 140 million
                                                             was extended; and the due forward foreign exchange trading amount
                                                             equaled to US$ 56,503,200, which was all delivered as scheduled
                                                             and generated gain of RMB 385,800.
                                                             3. The Company conducted derivative investment transactions
                                                             according to the relevant approval procedure, which was in line with
                                                             relevant laws, regulations, the Company’s Articles of Association,
                                                             the Management Rules for Derivative Investment of Lu Thai Textile
                                                             Co., Ltd. and the Plan for Derivative Transactions in 2012 approved
                                                             at the First Special Session of the Shareholders’ General Meeting for
                                                             2012 on 5 Mar. 2012
                                                             4. The Company has formulated and improved the organizational
                                                             structure, business operation flow chart, approval flow chart and
                                                             other internal control rules for derivative transactions, which are
                                                             executed effectively.
                                                             5. On the basis of its normal operation, the Company used its own
                                                             funds to conduct derivative investment transactions, which could
                                                             help the Company avoid the risk of RMB exchange rate changes and
                                                             improve the Company’s resistance ability to exchange rate
                                                             fluctuations. Such a move of the Company would do no harm to the
                                                             interest of the Company and its shareholders.
                                                             6. In accordance with the Article 26 of the Memorandum of the
                                                             Shenzhen Stock Exchange for Information Disclosure - Derivative
                                                             Investment, the Company performed the relevant information
                                                             disclosure duty in its report for the third quarter of 2012.
                                                             To sum up, we were of the opinion that it would strengthen the
                                                             Company’s competitiveness to use derivative transactions with
                                                             focus on forward settlement and purchase as an effective tool to
                                                             avoid foreign exchange risks, to strengthen the relevant internal
                                                             control and to carry out the loss and risk prevention measures so as
                                                             to improve the operation and management. It was considered
                                                             feasible for the Company to conduct derivative transactions with
                                                             focus on forward settlement and purchase, and no harm was done to
                                                             interests of the Company’s shareholders.

3. Derivative investments held at the period-end

√Applicable □Inapplicable
                                                                                                           Proportion of the closing
                           Opening contract amount Closing contract amount          Gain or loss in the     contract amount in the
      Type of contract
                                (RMB Yuan)              (RMB Yuan)                   reporting period      closing net assets of the
                                                                                                                Company (%)
Forward settlement and
purchase   of exchange             3,367,888,570.00        1,559,936,250.00                20,145,338.49                    30.34%
contract
Total                              3,367,888,570.00        1,559,936,250.00                20,145,338.49                    30.34%


4. Researches, visits and interviews received in the reporting period

    Time of reception    Place of reception   Way of reception       Visitor type               Visitor        Main discussion and



9
                                                                                                                materials provided
                                                                                                                 by the Company
                                                                                        Deng Yafeng from
                                                                                        Shanghai Chaos
                         Reception Room of                                                                     Basic     information
12 Jan. 2012                                 Field research      Institution            Daoran Asset
                         the Company                                                                           about the Company
                                                                                        Management Co.,
                                                                                        Ltd.
                                                                                        Zhao Bing and Zhao
                         Reception Room of                                                                     Basic     information
12 Jan. 2012                                 Field research      Institution            Duo from Sealand
                         the Company                                                                           about the Company
                                                                                        Securities Co., Ltd.
                                                                                        Wang Bing and Xu
                         Reception Room of                                              Wenfeng from           Basic     information
12 Jan. 2012                                 Field research      Institution
                         the Company                                                    Rising Securities      about the Company
                                                                                        Co., Ltd.
                                                                                        Zhou Ying and
                                                                                        Huang Ruiqing from
                         Reception Room of                                                                     Basic     information
12 Jan. 2012                                 Field research      Institution            Caitong Fund
                         the Company                                                                           about the Company
                                                                                        Management Co.,
                                                                                        Ltd.
                                                                                        Dong Lanfeng from
                         Reception Room of                                              Yinhua Fund            Basic     information
19 Jan. 2012                                 Field research      Institution
                         the Company                                                    Management Co.,        about the Company
                                                                                        Ltd.
                         Reception Room of                                              Jin Ge and Liu Bing    Basic     information
2 Feb. 2012                                  Field research      Institution
                         the Company                                                    from CICC              about the Company
                                                                                        Yuan Li and Ma Tao
                         Reception Room of                                                                     Basic     information
15 Feb. 2012                                 Field research      Institution            from GF Securities
                         the Company                                                                           about the Company
                                                                                        Co., Ltd.
                                                                                        Shan Huijin from
                         Reception Room of                                              China Asset            Basic     information
15 Feb. 2012                                 Field research      Institution
                         the Company                                                    Management Co.,        about the Company
                                                                                        Ltd.
                                                                                        Gao Yuanyuan from
                         Reception Room of                                              ICBC Credit Suisse     Basic     information
15 Feb. 2012                                 Field research      Institution
                         the Company                                                    Asset Management       about the Company
                                                                                        Co., Ltd.


5. Corporate bonds issued

Any corporate bonds issued?
□ Yes √ No

IV. Appendix

(I) Financial statements

Consolidated statements or not?
√ Yes □ No □ Inapplicable
The currency unit for data of the financial statements below is RMB Yuan unless otherwise specified.

1. Consolidated balance sheet

Prepared by Lu Thai Textile Co., Ltd.
                                                                                                                    Unit: RMB Yuan
                      Item                          Balance as at 30 Sept. 2012                 Balance as at 30 Jun. 2012
Current Assets:
     Monetary funds                                                    498,070,581.88                               811,148,146.93
     Transactional financial assets                                      6,321,347.70                                20,939,380.00




10
     Notes receivable                               131,037,353.44     160,499,797.76
     Accounts receivable                            171,519,752.82     201,327,903.05
     Accounts paid in advance                       151,219,291.17     304,469,373.14
     Interest receivable
     Dividend receivable
     Other accounts receivable                      127,434,551.45      74,534,378.60
  Financial assets          purchased      under
agreements to resell
     Inventories                                   1,728,513,630.12   1,666,911,255.92
     Non-current assets due within 1 year
     Other current assets
Total current assets                               2,814,116,508.58   3,239,830,235.40
Non-current assets:
     Available-for-sale financial assets
     Held-to-maturity investments
     Long-term accounts receivable
     Long-term equity investment                     67,442,600.00      68,942,600.00
     Investing property
     Fixed assets                                  4,065,694,194.07   3,486,072,973.42
     Construction in progress                       297,561,248.81     502,165,921.54
     Engineering materials                           43,492,287.45      39,746,597.82
     Disposal of fixed assets
     Intangible assets                              323,498,678.61     309,099,281.13
     R&D expense
     Goodwill                                        20,613,803.29      20,563,803.29
     Long-term deferred expenses
     Deferred income tax assets                      54,128,404.12      60,061,475.83
     Other non-current assets                         7,890,690.00      25,402,452.00
Total of non-current assets                        4,880,321,906.35   4,512,055,105.03
Total assets                                       7,694,438,414.93   7,751,885,340.43
Current liabilities:
     Short-term borrowings                         1,145,243,257.70   1,151,414,422.38
     Transactional financial liabilities
     Notes payable                                   16,230,868.14      11,981,603.44
     Accounts payable                               327,765,270.15     284,362,673.51
     Accounts received in advance                    97,331,403.74      91,026,359.71
     Employee’s compensation payable               338,368,656.34     435,106,415.39
     Tax payable                                      5,657,428.35      30,576,451.34
     Interest payable                                 3,409,471.91        2,113,143.22
     Dividend payable                                   459,109.44         442,309.44
     Other accounts payable                         138,850,353.63     110,780,795.92
     Non-current liabilities due within 1 year       17,257,250.00      69,058,740.00
     Other current liabilities
Total current liabilities                          2,090,573,069.40   2,186,862,914.35
Non-current liabilities:
     Long-term borrowings                                               12,675,030.00
     Long-term payables                               9,735,560.00       9,735,560.00



11
     Deferred income tax liabilities                                   3,088,552.41                              5,262,675.09
     Other non-current liabilities                                    66,425,915.61                             67,441,604.49
Total non-current liabilities                                         79,250,028.02                             95,114,869.58
Total liabilities                                                  2,169,823,097.42                           2,281,977,783.93
Owners’ equity (or shareholders’ equity)
     Paid-up capital (or share capital)                            1,008,954,800.00                           1,008,954,800.00
     Capital reserves                                              1,243,637,832.04                           1,200,110,642.06
     Less: Treasury stock                                            167,604,401.19
     Surplus reserves                                                515,895,752.76                            515,895,752.76
     Retained profits                                              2,546,001,430.11                           2,367,189,767.76
     Foreign exchange difference                                       -5,709,397.31                             -6,050,509.48
Total equity attributable to owners of the
                                                                   5,141,176,016.41                           5,086,100,453.10
Company
     Minority interests                                              383,439,301.10                            383,807,103.40
Total owners’ (or shareholders’) equity                          5,524,615,317.51                           5,469,907,556.50
Total liabilities and            owners’   (or
                                                                   7,694,438,414.93                           7,751,885,340.43
shareholders’) equity


Legal representative: Liu Shizhen                    Person-in-charge of the accounting work: Zhang Hongmei
Chief of the accounting division: Zhang Keming

2. Balance sheet of the Company

Prepared by Lu Thai Textile Co., Ltd.
                                                                                                               Unit: RMB Yuan
                        Item                      Balance as at 30 Sept. 2012              Balance as at 30 Jun. 2012
Current Assets:
     Monetary funds                                                  299,641,817.38                            443,347,389.73
     Transactional financial assets                                    5,382,918.70                             15,609,030.00
     Notes receivable                                                114,784,229.95                            123,468,955.42
     Accounts receivable                                             202,319,835.06                            286,596,629.41
     Accounts paid in advance                                        149,563,107.73                            390,452,279.69
     Interest receivable
     Dividend receivable
     Other accounts receivable                                        66,677,255.80                             36,382,500.69
     Inventories                                                   1,096,145,890.24                           1,089,685,685.73
     Non-current assets due within 1 year
     Other current assets
Total current assets                                               1,934,515,054.86                           2,385,542,470.67
Non-current assets:
     Available-for-sale financial assets
     Held-to-maturity investments
     Long-term accounts receivable
     Long-term equity investment                                   1,101,936,804.88                           1,063,495,189.90
     Investing property
     Fixed assets                                                  2,438,572,204.88                           2,216,930,369.90
     Construction in progress                                        165,239,100.65                            139,596,130.53
     Engineering materials                                            43,329,894.29                             37,171,903.43



12
     Disposal of fixed assets
     Intangible assets                                           192,845,892.25                             176,687,021.73
     R&D expense
     Goodwill
     Long-term deferred expenses
     Deferred income tax assets                                   30,562,562.79                              30,180,069.34
     Other non-current assets                                      7,890,690.00                              25,402,452.00
Total of non-current assets                                    3,980,377,149.74                            3,689,463,136.83
Total assets                                                   5,914,892,204.60                            6,075,005,607.50
Current liabilities:
     Short-term borrowings                                       622,039,819.90                             687,511,722.38
     Transactional financial liabilities
     Notes payable                                                 9,300,868.14                               9,531,302.09
     Accounts payable                                            155,200,281.92                              91,559,699.03
     Accounts received in advance                                 43,690,015.75                              41,115,833.49
     Employee’s compensation payable                            291,442,960.84                             379,732,952.85
     Tax payable                                                  36,322,073.43                              44,571,730.86
     Interest payable                                              2,345,364.68                                2,113,143.22
     Dividend payable                                                459,109.44                                 442,309.44
     Other accounts payable                                       19,020,618.89                              16,585,657.28
     Non-current liabilities due within 1 year                    17,257,250.00                              69,058,740.00
     Other current liabilities
Total current liabilities                                      1,197,078,362.99                            1,342,223,090.64
Non-current liabilities:
     Long-term borrowings                                                                                    12,675,030.00
     Long-term payables
     Estimated liabilities
     Deferred income tax liabilities                                 807,437.81                               2,341,354.50
     Other non-current liabilities                                31,988,546.56                              32,494,901.59
Total non-current liabilities                                     32,795,984.37                              47,511,286.09
Total liabilities                                              1,229,874,347.36                            1,389,734,376.73
Owners’ equity (or shareholders’ equity)
     Paid-up capital (or share capital)                        1,008,954,800.00                            1,008,954,800.00
     Capital reserves                                          1,249,990,513.13                            1,206,463,323.15
     Less: Treasury stock                                        167,604,401.19
     Surplus reserves                                            515,895,752.76                             515,895,752.76
     Retained profits                                          2,077,781,192.54                            1,953,957,354.86
     Foreign exchange difference
Total owners’ (or shareholders’) equity                      4,685,017,857.24                            4,685,271,230.77
Total liabilities and            owners’   (or
                                                               5,914,892,204.60                            6,075,005,607.50
shareholders’) equity


Legal representative: Liu Shizhen                 Person-in-charge of the accounting work: Zhang Hongmei
Chief of the accounting division: Zhang Keming

3. Consolidated income statement for the reporting period

Prepared by Lu Thai Textile Co., Ltd.



13
                                                                                                                   Unit: RMB Yuan
                      Item                                Jul.-Sept. 2012                             Jul.-Sept. 2011
I. Total operating revenues                                          1,398,771,930.43                            1,483,566,032.99
Including: Sales income                                              1,398,771,930.43                            1,483,566,032.99
II. Total operating cost                                             1,234,138,524.76                            1,230,292,674.90
Including: Cost of sales                                             1,025,358,240.45                            1,012,327,690.00
          Business taxes and surcharges                                     9,931,184.90                            17,419,527.01
          Selling and distribution expenses                              41,772,534.98                              37,155,185.35
          Administrative expenses                                      144,692,946.98                              154,597,082.53
          Financial expenses                                             15,309,785.44                              10,467,508.48
          Asset impairment loss                                             -2,926,167.99                               -1,674,318.47
Add: Gain/(loss) from change in fair value
                                                                         16,428,997.70                                  1,895,055.00
(“-” means loss)
       Gain/(loss) from investment (“-”
                                                                              543,700.00                            14,879,900.00
means loss)
          Foreign exchange gains (“-” means
loss)
III. Business profit (“-” means loss)                                181,606,103.37                              270,048,313.09
        Add: non-operating income                                           6,299,925.96                                5,543,864.18
        Less: non-operating expense                                         1,417,101.47                                3,463,627.25
          Including: loss from non-current
                                                                               30,679.93                                1,039,001.06
asset disposal
IV. Total profit (“-” means loss)                                    186,488,927.86                              272,128,550.02
        Less: Income tax expense                                         28,078,150.98                              45,355,704.85
V. Net profit (“-” means loss)                                       158,410,776.88                              226,772,845.17
   Attributable        to    owners       of   the
                                                                       159,815,718.16                              225,012,704.00
Company
        Gains/losses of minority shareholders                               -1,404,941.28                               1,760,141.17
VI. Earnings per share                                          --                                          --
        (I) Basic earnings per share                                                0.16                                        0.23
        (II) Diluted earnings per share                                             0.16                                        0.23
VII. Other comprehensive incomes                                              133,122.26                                 -654,686.42
VIII. Total comprehensive incomes                                      158,543,899.14                              226,118,158.75
   Attributable        to    owners       of   the
                                                                       159,948,840.42                              224,358,017.58
Company
        Attributable to minority shareholders                               -1,404,941.28                               1,760,141.17
Where business mergers under the same control occurred in this reporting period, the net profit achieved by the merged parties before
the business mergers was RMB 0.

Legal representative: Liu Shizhen                      Person-in-charge of the accounting work: Zhang Hongmei
Chief of the accounting division: Zhang Keming

4. Income statement of the Company for the reporting period

Prepared by Lu Thai Textile Co., Ltd.
                                                                                                                   Unit: RMB Yuan
                      Item                                Jul.-Sept. 2012                             Jul.-Sept. 2011
I. Total sales                                                       1,104,690,533.54                            1,253,073,223.08
     Less: cost of sales                                               809,243,308.96                              895,692,345.48
          Business taxes and surcharges                                     9,017,860.60                            14,410,854.40



14
          Distribution expenses                                  14,857,809.51                              16,665,839.07
          Administrative expenses                               107,957,950.39                             121,480,380.13
          Financial costs                                            6,683,900.73                               644,912.97
          Impairment loss                                            -2,100,700.89                            -1,969,523.71
  Add: gain/(loss) from change in fair
                                                                 14,471,618.70                                  850,380.00
value (“-” means loss)
       Gain/(loss) from investment (“-”
                                                                 35,171,514.98                              12,853,400.00
means loss)
II. Business profit (“-” means loss)                          208,673,537.92                             219,852,194.74
     Add: non-business income                                        2,589,163.44                             4,758,424.40
     Less: non-business expense                                        295,197.62                             2,260,338.38
        Including: loss from non-current
                                                                        24,617.74                                31,446.80
asset disposal
III. Total profit (“-” means loss)                            210,967,503.74                             222,350,280.76
     Less: income tax expense                                    23,280,045.49                              33,503,948.49
IV. Net profit (“-” means loss)                               187,687,458.25                             188,846,332.27
V. Earnings per share                                    --                                       --
     (I) Basic earnings per share                                            0.18                                     0.19
     (II) Diluted earnings per share                                         0.18                                     0.19
VI. Other comprehensive income
VII. Total comprehensive income                                 187,687,458.25                             188,846,332.27


Legal representative: Liu Shizhen                Person-in-charge of the accounting work: Zhang Hongmei
Chief of the accounting division: Zhang Keming

5. Consolidated income statement from 1 Jan. 2012 to 30 Sept. 2012

Prepared by Lu Thai Textile Co., Ltd.
                                                                                                           Unit: RMB Yuan
                      Item                         Jan.-Sept. 2012                          Jan.-Sept. 2011
I. Total operating revenues                                   4,206,797,495.19                            4,464,379,130.19
     Including: Sales income                                  4,206,797,495.19                            4,464,379,130.19
II. Total operating cost                                      3,690,064,019.10                            3,607,886,092.01
     Including: Cost of sales                                 3,080,464,968.97                            2,979,098,155.74
          Taxes and associate charges                            12,292,119.83                              27,603,473.30
         Selling and distribution expenses                      118,932,826.07                             106,805,780.83
         Administrative expenses                                426,096,718.56                             457,468,203.51
         Financial expenses                                      52,047,616.39                              35,387,456.57
         Asset impairment loss                                         229,769.28                             1,523,022.06
  Add: Gain/(loss) from change in fair
                                                                -14,618,032.30                              -18,733,931.72
value (“-” means loss)
       Gain/(loss) from investment (“-”
                                                                 19,596,338.49                              55,348,967.77
means loss)
          Foreign exchange gains (“-” means
loss)
III. Business profit (“-” means loss)                         521,711,782.28                             893,108,074.23
     Add: non-operating income                                   26,452,868.03                              21,676,511.86
     Less: non-operating expense                                     3,559,910.03                           14,733,777.72
        Including: loss from non-current
                                                                       657,200.55                             9,249,096.93
asset disposal



15
IV. Total profit (“-” means loss)                                 544,604,740.28                             900,050,808.37
     Less: Income tax expense                                        77,844,369.77                             148,134,647.59
V. Net profit (“-” means loss)                                    466,760,370.51                             751,916,160.78
     Attributable to owners of the Company                          461,319,006.35                             716,659,769.96
     Minority shareholders’ income                                      5,441,364.16                           35,256,390.82
VI. Earnings per share                                        --                                       --
       (I) Basic earnings per share                                              0.46                                      0.72
       (II) Diluted earnings per share                                           0.46                                      0.72
VII. Other comprehensive incomes                                          341,112.17                                199,755.89
VIII. Total comprehensive incomes                                   467,101,482.68                             752,115,916.67
   Attributable         to    owners      of   the
                                                                    461,660,118.52                             716,859,525.85
Company
       Attributable to minority shareholders                             5,441,364.16                           35,256,390.82
Where business mergers under the same control occurred from 1 Jan. 2012 to 30 Sept. 2012, the net profit achieved by the merged
parties before the business mergers was RMB 0.

Legal representative: Liu Shizhen                    Person-in-charge of the accounting work: Zhang Hongmei
Chief of the accounting division: Zhang Keming

6. Income statement of the Company from 1 Jan. 2012 to 30 Sept. 2012

Prepared by Lu Thai Textile Co., Ltd.
                                                                                                               Unit: RMB Yuan
                       Item                            Jan.-Sept. 2012                           Jan.-Sept. 2011
I. Total sales                                                     3,301,306,015.59                           3,699,110,303.48
     Less: cost of sales                                           2,488,425,975.64                           2,554,814,764.34
          Business taxes and surcharges                                  9,176,999.11                           21,427,438.98
          Distribution expenses                                      44,805,496.22                              41,192,622.84
          Administrative expenses                                   314,274,476.87                             355,585,477.43
          Financial costs                                            22,261,994.38                                 4,607,584.62
          Impairment loss                                                -273,666.92                               1,833,529.77
  Add: gain/(loss) from change in fair
                                                                     -10,226,111.30                             -17,303,306.72
value (“-” means loss)
       Gain/(loss) from investment (“-”
                                                                     49,626,749.47                             211,443,467.77
means loss)
II. Business profit (“-” means loss)                              462,035,378.46                             913,789,046.55
     Add: non-business income                                        13,024,305.73                                 9,125,918.66
     Less: non-business expense                                           649,987.36                            10,860,526.73
        Including: loss from non-current
                                                                           26,377.61                               5,801,925.69
asset disposal
III. Total profit    (“-” means loss)                             474,409,696.83                             912,054,438.48
     Less: income tax expense                                        68,078,515.15                             109,648,111.24
IV. Net profit      (“-” means loss)                              406,331,181.68                             802,406,327.24
V. Earnings per share                                         --                                       --
     (I) Basic earnings per share                                                 0.4                                      0.81
     (II) Diluted earnings per share                                              0.4                                      0.81
VI. Other comprehensive income                                                                                     1,570,000.00
VII. Total comprehensive income                                     406,331,181.68                             803,976,327.24




16
Legal representative: Liu Shizhen                Person-in-charge of the accounting work: Zhang Hongmei
Chief of the accounting division: Zhang Keming

7. Consolidated cash flow statement from 1 Jan. 2012 to 30 Sept. 2012

Prepared by Lu Thai Textile Co., Ltd.
                                                                                                           Unit: RMB Yuan
                     Item                          Jan.-Sept. 2012                          Jan.-Sept. 2011
I. Cash flows from operating activities:
  Cash received from sale of commodities
                                                              4,107,295,281.30                            4,481,585,423.26
and rendering of service
     Tax refunds received                                       125,546,066.56                             193,331,421.72
  Other cash received relating to operating
                                                                 43,373,629.01                              63,060,906.00
activities
Subtotal of cash inflows from operating
                                                              4,276,214,976.87                            4,737,977,750.98
activities
     Cash paid for goods and services                         2,319,321,904.77                            2,683,764,197.49
     Cash paid to and for employees                             837,281,504.97                             729,048,411.27
     Various taxes paid                                         176,239,257.42                             222,115,998.92
  Other cash payment relating to operating
                                                                211,075,485.74                             190,662,666.44
activities
Subtotal of cash outflows from operating
                                                              3,543,918,152.90                            3,825,591,274.12
activities
Net cash flows from operating activities                        732,296,823.97                             912,386,476.86
II. Cash flows from investing activities:
  Cash received from withdrawal of
investments
  Cash received           from   return     on
investments
  Net cash received from disposal of fixed
assets, intangible assets and other                                  1,378,946.15                             2,083,765.33
long-term assets
  Net cash received from disposal of
                                                                      951,000.00
subsidiaries or other business units
  Other cash received relating to investing
                                                                 23,511,937.33                              60,001,566.53
activities
Subtotal of cash inflows from investing
                                                                 25,841,883.48                              62,085,331.86
activities
   Cash paid to acquire fixed assets,
                                                                536,263,924.65                             354,126,661.31
intangible assets and other long-term assets
     Cash paid for investment
  Net cash paid to acquire subsidiaries and
                                                                       50,000.00
other business units
  Other cash payments            relating   to
investing activities
Subtotal of cash outflows from investing
                                                                536,313,924.65                             354,126,661.31
activities
Net cash flows from investing activities                       -510,472,041.17                            -292,041,329.45
III. Cash Flows from Financing Activities:
     Cash received from capital contributions                    19,249,218.56                              70,802,250.00
  Including: Cash received from minority
shareholder investments by subsidiaries
     Cash received from borrowings                            1,316,561,060.88                            1,121,885,167.43



17
     Cash received from issuance of bonds
  Other cash received relating to financing
                                                                      36,000,000.00                             107,790,000.00
activities
Subtotal of cash inflows from financing
                                                                   1,371,810,279.44                            1,300,477,417.43
activities
     Repayment of borrowings                                       1,390,227,588.90                            1,142,503,972.99
   Cash paid for interest expenses and
                                                                     343,326,414.61                             282,390,869.34
distribution of dividends or profit
  Including: dividends or profit paid by
subsidiaries to minority shareholders
   Other cash payments                relating   to
                                                                     175,904,401.19                              20,460,000.00
financing activities
Sub-total of cash outflows from financing
                                                                   1,909,458,404.70                            1,445,354,842.33
activities
Net cash flows from financing activities                            -537,648,125.26                            -144,877,424.90
IV. Effect of foreign exchange rate
                                                                          2,745,777.41                             -2,683,967.79
changes on cash and cash equivalents
V. Net increase           in   cash     and cash
                                                                    -313,077,565.05                             472,783,754.72
equivalents
  Add: Opening balance of cash and cash
                                                                     811,148,146.93                             522,955,236.37
equivalents
VI. Closing balance of cash and cash
                                                                     498,070,581.88                             995,738,991.09
equivalents


Legal representative: Liu Shizhen                     Person-in-charge of the accounting work: Zhang Hongmei
Chief of the accounting division: Zhang Keming

8. Cash flow statement of the Company from 1 Jan. 2012 to 30 Sept. 2012

Prepared by Lu Thai Textile Co., Ltd.
                                                                                                                Unit: RMB Yuan
                     Item                               Jan.-Sept. 2012                          Jan.-Sept. 2011
I. Cash flows from operating activities:
  Cash received from sale of commodities
                                                                   3,381,590,117.40                            3,658,909,852.77
and rendering of service
     Tax refunds received                                             82,373,642.84                             145,528,035.36
  Other cash received relating to operating
                                                                      12,518,689.73                              35,644,777.16
activities
Subtotal of cash inflows from operating
                                                                   3,476,482,449.97                            3,840,082,665.29
activities
     Cash paid for goods and services                              1,858,985,788.02                            2,319,678,241.68
     Cash paid to and for employees                                  647,634,486.61                             576,809,098.53
     Various taxes paid                                               98,433,076.87                             130,202,880.89
  Other cash payment relating to operating
                                                                     102,031,275.37                             103,351,891.51
activities
Subtotal of cash outflows from operating
                                                                   2,707,084,626.87                            3,130,042,112.61
activities
Net cash flows from operating activities                             769,397,823.10                             710,040,552.68
II. Cash flows from investing activities:
  Cash received           from    retraction     of
investments
  Cash received            from       return     on
                                                                      25,000,000.00
investments



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  Net cash received from disposal of fixed
assets, intangible assets and other                                   978,946.15                               2,076,735.72
long-term assets
  Net cash received from disposal of
                                                                      951,000.00
subsidiaries or other business units
  Other cash received relating to investing
                                                                   17,504,139.16                             50,621,898.51
activities
Subtotal of cash inflows from investing
                                                                   44,434,085.31                             52,698,634.23
activities
   Cash paid to acquire fixed assets,
                                                                  317,222,587.89                            165,265,464.41
intangible assets and other long-term assets
     Cash paid for investment                                      39,941,614.98
  Net cash paid to acquire subsidiaries and
other business units
  Other cash payments              relating   to
investing activities
Subtotal of cash outflows from investing
                                                                  357,164,202.87                            165,265,464.41
activities
Net cash flows from investing activities                         -312,730,117.56                            -112,566,830.18
III. Cash flows from financing activities:
   Cash       received      from         capital
                                                                                                             70,802,250.00
contributions
      Cash received from borrowings                               559,030,956.56                            635,421,850.55
      Cash received from issuance of bonds
    Other cash received            relating   to
                                                                                                             82,790,000.00
financing activities
Subtotal of cash inflows from financing
                                                                  559,030,956.56                            789,014,100.55
activities
      Repayment of borrowings                                     690,702,932.18                            673,671,836.31
    Cash paid for interest expenses and
                                                                  302,289,518.99                            267,046,504.87
distribution of dividends or profit
    Other cash payments            relating   to
                                                                  167,604,401.19
financing activities
Sub-total of cash outflows from financing
                                                                1,160,596,852.36                            940,718,341.18
activities
Net cash flows from financing activities                         -601,565,895.80                            -151,704,240.63
IV. Effect of foreign exchange rate
                                                                    1,192,617.91                                277,815.28
changes on cash and cash equivalents
V. Net increase        in   cash     and cash
                                                                 -143,705,572.35                            446,047,297.15
equivalents
     Add: Opening balance of cash and
                                                                  443,347,389.73                            280,772,869.89
cash equivalents
VI. Closing balance of cash and cash
                                                                  299,641,817.38                            726,820,167.04
equivalents


Legal representative: Liu Shizhen                  Person-in-charge of the accounting work: Zhang Hongmei
Chief of the accounting division: Zhang Keming

(II) Audit report

Auditor’s opinion                 Un-audited
Summary of audit report




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