Stock code: 000726, 200726 Stock abbreviation: LTA, LTB Announcement No.: 2013-015
LU THAI TEXTILE CO., LTD.
ABSTRACT OF THE FIRST QUARTERLY REPORT FOR 2013
Section I. Important Reminders
The Board of Directors, the Supervisory Committee, directors, supervisors and senior management staff of Lu
Thai Textile Co., Ltd. (hereinafter referred to as “the Company”) warrant that the information carried in this report
is factual, accurate and complete, without any false record, misleading statement or material omission. And they
shall be jointly and severally liable for that.
Liu Shizhen, company principal, Zhang Hongmei, chief of the accounting work, and Zhang Keming, chief of the
accounting organ (chief of accounting), hereby confirm that the financial statements enclosed in this report are
factual, accurate and complete.
All directors have attended the board session for reviewing this report.
This report is prepared in both Chinese and English. Should there be any discrepancy between the two versions,
the Chinese version shall prevail.
Section II. Financial Highlights & Change of Shareholders
I. Financial highlights
Does the Company adjust retrospectively or restate any accounting data of previous years?
□ Yes √No
Jan.-Mar. 2013 Jan.-Mar. 2012 +/- (%)
Operating revenues (RMB Yuan) 1,501,664,061.00 1,320,451,250.50 13.72%
Net profit attributable to shareholders of the Company (RMB Yuan) 192,567,560.95 115,194,435.22 67.17%
Net profit attributable to shareholders of the Company after 188,001,855.13 106,051,635.51 77.27%
1
extraordinary gains and losses (RMB Yuan)
Net cash flows from operating activities (RMB Yuan) 105,086,762.40 99,375,806.73 5.75%
Basic EPS (RMB Yuan/share) 0.2 0.11 81.82%
Diluted EPS (RMB Yuan/share) 0.2 0.11 81.82%
Weighted average ROE (%) 3.59% 2.24% 1.35%
31 Mar. 2013 31 Dec. 2012 +/- (%)
Total assets (RMB Yuan) 7,837,915,665.27 8,153,279,084.33 -3.87%
Net assets attributable to shareholders of the Company (RMB Yuan) 5,463,486,856.24 5,268,701,258.26 3.7%
Items and amounts of extraordinary gains and losses
√ Applicable □ Inapplicable
Unit: RMB Yuan
Item 1 Jan. 2013-31 Mar. 2013 Explanation
Gain/loss on the disposal of non-current assets (including the offset part of the asset
276,699.46
impairment provisions)
Government grants recognized in the current period, except for those acquired in the
ordinary course of business or granted at certain quotas or amounts according to the 9,914,397.96
government’s unified standards
Gains and losses on change in fair value from tradable financial assets and tradable
financial liabilities, as well as investment income from disposal of tradable financial
-1,169,831.00
assets and tradable financial liabilities and financial assets available for sales except for
effective hedging related with normal businesses of the Company
Non-operating income and expense other than the above 504,629.84
Income tax effects 3,088,372.43
Minority interests effects (after tax) 1,871,818.01
Total 4,565,705.82 --
II. Total number of shareholders at the period-end and shareholdings of top 10 shareholders
Unit: share
Total number of shareholders at the
105,702
period-end
Shareholdings of top 10 shareholders
Pledged or frozen
Sharehol
Total shares Number of shares
Nature of ding
Name of shareholder held at the restricted Numbe
shareholder percenta Status of
period-end shares held r of
ge (%) shares
shares
Zibo Lucheng Textile Investment Co., Ltd. Domestic 12.22% 123,314,700 0
2
non-state-owned
corporation
Tailun (Thailand) Textile Co., Ltd. Foreign corporation 11.72% 118,232,400 118,232,400
DBS VICKERS (HONG KONG) LTD A/C
Foreign corporation 4.02% 40,528,642
CLIENTS
Bank of China—Franklin Templeton Sealand
Other 0.97% 9,810,288
Potential Portfolio Stock Fund
ICBC－GF Strategy Selected Mixed Type Fund Other 0.86% 8,666,661
China Life Insurance Co., Ltd.- dividend-
Other 0.77% 7,763,464
individual dividend-005L-FH002 Shen
HTHK-MANULIFE CHINA VALUE FUND Foreign corporation 0.51% 5,177,416
Agricultural Bank of China－Franklin Templeton
Other 0.41% 4,185,867
Sealand Deepening Value Stock Fund
Construction Bank of China－China Income
Other 0.36% 3,639,157
Stock Fund
Agricultural Bank of China－New China Fund
Other 0.33% 3,377,346
Selected Dividend Mixed Type Fund
Shareholdings of top 10 non-restricted shareholders
Number of Variety of shares
Name of shareholder non-restricted shares
Variety Number
held
Zibo Lucheng Textile Investment Co., Ltd. 123,314,700 RMB ordinary shares 123,314,700
Domestically listed
DBS VICKERS (HONG KONG) LTD A/C CLIENTS 40,528,642 40,528,642
foreign shares
Bank of China—Franklin Templeton Sealand Potential Portfolio
9,810,288 RMB ordinary shares 9,810,288
Stock Fund
ICBC－GF Strategy Selected Mixed Type Fund 8,666,661 RMB ordinary shares 8,666,661
China Life Insurance Co., Ltd.- dividend- individual
7,763,464 RMB ordinary shares 7,763,464
dividend-005L-FH002 Shen
Domestically listed
HTHK-MANULIFE CHINA VALUE FUND 5,177,416 5,177,416
foreign shares
Agricultural Bank of China－Franklin Templeton Sealand
4,185,867 RMB ordinary shares 4,185,867
Deepening Value Stock Fund
Construction Bank of China－China Income Stock Fund 3,639,157 RMB ordinary shares 3,639,157
Agricultural Bank of China－New China Fund Selected Dividend
3,377,346 RMB ordinary shares 3,377,346
Mixed Type Fund
Domestically listed
VALUE PARTNERS HIGH-DIVIDEND STOCKS FUNDS 3,292,186 3,292,186
foreign shares
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Zibo Lucheng Textile Investment Co., Ltd. is the largest
shareholder of the Company and the actual controller. Tailun
(Thailand) Textile Co., Ltd. is the sponsor of foreign capital as
Explanation on associated relationship or persons acting in well as the second largest shareholder of the Company. All of
concert among the above-mentioned shareholders other shareholders are ones holding circulating A share or
circulating B share and the Company is not able to confirm
whether there exists associated relationship or concerted action
among other shareholders.
Section III. Significant Events
I. Significant changes of the major accounting statement items and financial indicators for the
reporting period, as well as the reasons for these changes
1. Monetary funds stood at RMB 602,230,271.64 as at 31 Mar. 2013, down 34.52% over the opening amount,
which was mainly because the Company used monetary funds to repay the loans of bank.
2. Transactional financial assets stood at RMB 11,570,060.00 as at 31 Mar. 2013, down 37.08% over the opening
amount, which was mainly because the fair value of transactional financial assets was changed.
3. Notes receivable stood at RMB 89,183,187.02 as at 31 Mar. 2013, down 43.82% over the opening amount,
which was mainly because the Company indorsed the received bank acceptance bills, and transferred them to pay
for the materials.
4. Prepayments stood at RMB 162,581,203.19 as at 31 Mar. 2013, up 68.98% over the opening amount, which
was mainly because the prepayment for raw materials increased.
5. Engineering materials stood at RMB 1,612,741.92 as at 31 Mar. 2013, down 86.62% over the opening amount,
which was mainly because the special equipments were transferred to fixed assets.
6. Payroll payable stood at RMB 232,328,260.13 as at 31 Mar. 2013, down 33.16% over the opening amount,
which was mainly because year-end bonuses withdrawn in 2012 were paid in this period.
7. Interest payable stood at RMB 1,682,293.18 as at 31 Mar. 2013, down 37.00% over the opening amount, which
was mainly because the accrued interest was decreased.
8. Non-current liabilities due within one year stood at RMB 0.00 as at 31 Mar. 2013, down 100.00% over the
opening amount, which the non-current liabilities due within one year were repaid for maturity.
9. Business taxes and surchanges stood at RMB 5,571,295.31 in the reporting period, up 336.39% over the same
period of last year, which was mainly because the urban maintenance & construction tax and education surcharge,
etc. increased.
10. Financial expense stood at RMB 13,430,601.61 in the reporting period, down 30.65% over the same period of
last year, which was mainly because the interest expenses decreased in the reporting period.
11. Assets impairment losses stood at RMB -3,325,479.95 in the reporting period, down 493.41% over the same
period of last year, which was mainly because the accounts receivable and other receivables decreased, and the
corresponding withdrawal amount of provision for bad debts decreased.
12. Investment income stood at RMB 5,648,750.00 in the reporting period, down 57.91% over the same period of
last year, which was mainly because the investment income gained from disposal of transactional financial assets
decreased over the same period of last year.
13. Income taxes expenses stood at RMB 38,120,330.75 in the reporting period, up 68.94% over the same period
4
of last year, which was mainly because the taxable income increased in the year.
II. Commitments made by the Company or any shareholder with a shareholding over 5% in
the reporting period or such commitments carried down into the reporting period
Party
making Date of
Term for
Commitment the Content of commitment making Fulfillment of commitment
acceptance
commitme commitment
nt
Zibo Lucheng will not reduce its
shareholding within 60 months
after reform of non-tradable
Not reduce the
shares and, within 24 months after
shareholding
the term of 60 months, the price
within 60
of selling holding shares shall not
months after
be lower than RMB 15 per share
reform of
(if the share capital changes, Increase of bonus share for 2005
non-tradable
ex-rights and ex-dividend will be and 2006 has been fulfilled. The
shares and,
conducted); it proposed and voted total profit of 2008 increased by
within 24
for a cash distribution not lower 58.06% compared to that of 2005.
Zibo months after the
than 50% of the profit available Till 12 June 2011, the non-tradable
Commitments Lucheng term of 60
for distribution in the year at the term of 9835.80 ten thousand shares
made in a share Textile months, the
2006 Shareholders’ General 12 June 2006 held by Lu Cheng Company came
reform Investmen price of selling
Meeting and 2007 Shareholders’ to an end and the above shares came
t Co., Ltd. holding shares
General Meeting; it will increase into market on 24 June 2011 and are
shall not be
the LU THAI A shares held by it not reduced at present.
lower than RMB
through trading at the secondary
15 per share (if
market with the dividends
the share capital
received in 2005 and 2006, and
changes,
the increase of the LU THAI A
ex-rights and
shares held shall be accomplished
ex-dividend will
within 12 months after the
be conducted)
dividend is transferred to its
account. In 2008, the total profit
increased by not less than 30%
compared with that in 2005.
Commitments
made in
acquisition None None None None
reports or report
on changes in
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equity
Commitments
made at the time
None None None None
of assets
reorganization
Investment projects of raised funds
including project on 150 thousand
ingots of high-end combed yarn,
project on production line of 50
thousand ingots of two-for-one
twisting, project on complementing
circulating funds of the company,
project on production line of 10
million meters of high-end jacquard
Commitments at for female garments have already
the time of Lu Thai been fulfilled. On 18 Oct. 2011, the
initial public Textile Investment project of raised funds 19 Dec. 2008 3rd temporary shareholders’ general
issuance or Co., Ltd. meeting approved that RMB 140
re-financing million raised funds of this project
were transferred into project on
increasing 40 million meters of
high-end yarn-dyed fabric
production line. Till the end of the
reporting period, this project has
already been finished. And project
on network construction of brand
and marketing is under the
implementation.
Other
commitments
made for
medium and None None None None
small
shareholders of
the Company
Whether
commitments
Yes
were fulfilled in
time
Specific reasons
of unfinished
None
fulfillment and
further plan
6
Whether
commitments
about horizontal
competition and No
related
transactions
were made
Term of settling
None
commitments
Methods of
None
settlement
Fulfillment of
None
commitments
III. Derivative investments
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
Analysis on risks and regulatory risks existing in the validity and feasibility of contract, commitments and other legal
control measures of documents signed.
derivative products held in Precautionary measures: The Company carefully studied and mastered laws, regulations and policies
the reporting period relevant to derivative products transaction, formulated internal control rules for the forward settlement
(including but not limited to hedging business, standardized the operation procedures. And strengthened the compliant examination
market risk, liquidity risk, on derivative products investment business, and strictly abided by relevant laws, regulations and the
credit risk, operation risk, Company’s internal management rules.
law risk, etc.) 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
7
Session of the Shareholders’ General Meeting for 2012 on 5 Mar. 2012, and performed relevant
information disclosure 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.
Changes of market prices or
fair values in the reporting 1. Up to 31 Mar. 2013, the Company held 31 undue financial derivative product contracts, totaling
period of the invested US$ 299 million, with all being forward settlement contracts (all due before Apr. 2014). The above
derivatives. And the analysis financial derivative products accounted for 32.18% of the closing net assets.
on the fair value of the 2. From Jan. 2013 to Mar. 2013, the due financial derivative products of the Company totally equaled
derivatives should include to US$ 143.50 million, all of them were forward exchange settlement; of which US$ 103.50 million
the specific use methods and was actually delivered and the gain generated was RMB 5.6488 million, US$ 40 million was
the relevant assumptions extended.
and parameters.
Whether significant changes
occurred to the Company’s Unchanged
accounting policy and
8
specific accounting
principles of derivatives in
the reporting period
compared to the previous
reporting period
Concerning the Company’s derivative transactions, the Company’s independent directors Zhou Zhiji,
Hong Xiaobin, Qi Haodong, Bi Xiuli and Wang Lei issued their professional opinions as follows:
1. Up to 31 Mar. 2013, the Company held 31 undue financial derivative product contracts, totaling
US$ 299 million, with all being forward settlement contracts (all due before Apr. 2014). The above
financial derivative products accounted for 32.18% of the closing net assets.
2. From Jan. 2013 to Mar. 2013, the due financial derivative products of the Company totally equaled
to US$ 143.50 million, all of them were forward exchange settlement; of which US$ 103.50 million
was actually delivered and the gain generated was RMB 5.6488 million, US$ 40 million was
extended.
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
Specific opinion from chart, approval flow chart and other internal control rules for derivative transactions, which are
independent directors on the executed effectively.
Company’s derivatives 5. On the basis of its normal operation, the Company used its own funds to conduct derivative
investment and risk control 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. When making derivative investments in the reporting period, the Company strictly abided by
relevant laws, regulations, the Company’s Articles of Association and the “Management Rules of Lu
Thai Textile for Derivative Trading”, with the operation process in line with laws and regulations.
7. 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 the Report for First Quarter of 2013.
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, which was good for the
Company to display its competitive advantage. The Company conducted derivative transactions with
focus on forward settlement and purchase has legal approval procedures, perfect institution and
controllable risks, and no harm was done to interests of the Company’s shareholders.
Position holdings of derivative investments at the end of the reporting period:
√ Applicable □ Inapplicable
Proportion of the closing
Opening contract amount Closing contract amount Gain or loss in the
Type of contract contract amount in the
（RMB Yuan） （RMB Yuan） reporting period
closing net assets of the
9
Company (%)
Forward settlement
954,842,259.00 1,884,782,100.00 5,648,750.00 32.18%
contracts
Total 954,842,259.00 1,884,782,100.00 -- 32.18%
Note
IV. Researches, visits and interviews received in the reporting period
Main discussion and
Time of Way of
Place of reception Visitor type Visitor materials provided by
reception reception
the Company
Reception Room of Hua Xiaowei and Yang Lan from China Basic information
23 Jan. 2013 Field research Institution
the Company Galaxy Securities Co., Ltd. about the Company
Reception Room of Lv Liping from First Capital Securities Basic information
23 Jan. 2013 Field research Institution
the Company Co.,Ltd. about the Company
Reception Room of Weng Di from Shanghai Milestone Asset Basic information
23 Jan. 2013 Field research Institution
the Company Management Co., Ltd. about the Company
Reception Room of Basic information
23 Jan. 2013 Field research Institution Su Linhao from Sealand Securities Co., Ltd.
the Company about the Company
Reception Room of Tang Shuangshuang from HuaChuang Basic information
23 Jan. 2013 Field research Institution
the Company Securities Co., Ltd. about the Company
Reception Room of Liu Yang from Da Cheng Fund Basic information
23 Jan. 2013 Field research Institution
the Company Management Co., Ltd. about the Company
Reception Room of Fu Fangbao from Tianhong Asset Basic information
23 Jan. 2013 Field research Institution
the Company Management Co., Ltd. about the Company
Reception Room of Zhang Hao from Harvest Fund Basic information
23 Jan. 2013 Field research Institution
the Company Management Co., Ltd. about the Company
Reception Room of Chen Yao from Beijing Star Rock Basic information
23 Jan. 2013 Field research Institution
the Company Investment Management Co., Ltd. about the Company
Reception Room of Basic information
20 Feb. 2013 Field research Institution Li Yiguang from Haitong International
the Company about the Company
Reception Room of Lyhas capital:Jon Ogden and David Basic information
20 Feb. 2013 Field research Institution
the Company N.Devine about the Company
Lu Thai Textile Co., Ltd.
Chairman of the Board: Liu Shizhen
25 Apr. 2013
10
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