2015 Semi-annual Report of Luthai Textile Co., Ltd.
LUTHAI TEXTILE CO., LTD.
2015 SEMI- ANNUAL REPORT
August 2015
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2015 Semi-annual Report of Luthai Textile Co., Ltd.
Section I. Important Reminders, Contents & Definitions
The Board of Directors, the Supervisory Committee, directors, supervisors and senior management
staff of Luthai Textile Co., Ltd. (hereinafter referred to as ―the Company‖) warrant that this report
does not contain any false record or misleading statement or omit any material fact and shall hereby
accept, individually and collectively, responsibility for the factuality, accuracy and completeness of
the contents carried in this report.
All directors have attended in person the board session for reviewing this report.
The Company plans not to distribute cash dividends or bonus shares or turn capital reserve into
share capital.
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 Report
enclosed in this report is factual, accurate and complete.
This report is prepared in both Chinese and English. Should there be any discrepancy between the
two versions, the Chinese version shall prevail.
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2015 Semi-annual Report of Luthai Textile Co., Ltd.
Contents
Section I. Important Reminders, Contents & Definitions ........................................................................................................................2
Section II. Company Profile ....................................................................................................................................................................5
Section III. Highlights of Accounting Data & Financial Indicators .........................................................................................................7
Section IV. Report of the Board of Directors .........................................................................................................................................10
Section V. Significant Events.................................................................................................................................................................22
Section VI. Changes in Shares & Particulars about Shareholders .........................................................................................................29
Section VII. Preference Shares ..............................................................................................................................................................33
Section VIII. Directors, Supervisors & Senior Management Staff ........................................................................................................34
Section IX. Financial Report .................................................................................................................................................................37
Section X. Documents Available for Reference ...................................................................................................................................146
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2015 Semi-annual Report of Luthai Textile Co., Ltd.
Definitions
Refers
Short form Definition
to
Refers
Issuer, Company, the Company Luthai Textile Co., Ltd.
to
Refers
The Board of Directors The Board of Directors of Luthai Textile Co., Ltd.
to
Refers
The Supervisory Committee The Supervisory Committee of Luthai Textile Co., Ltd.
to
Refers
CSRC China Securities Regulation Commission
to
Refers
Yuan, Ten thousand RMB Yuan, RMB Ten thousand
to
Refers
The ―Company Law‖ The ―Company Law of the People’s Republic of China‖
to
Refers
The ―Securities Law‖ The ―Securities Law of the People’s Republic of China‖
to
Refers
Reporting period 1 Jan. 2015-30 Jun. 2015
to
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2015 Semi-annual Report of Luthai Textile Co., Ltd.
Section II. Company Profile
I. Basic information of the Company
Stock abbreviation LTA, LTB Stock code 000726, 200726
Stock abbreviation after
N/A
change (if any)
Stock exchange listed with Shenzhen Stock Exchange
Chinese name of the Company 鲁泰纺织股份有限公司
Abbr. of the Chinese name of
鲁泰纺织
the Company (if any)
English name of the Company
LU THAI TEXTILE CO., LTD
(if any)
Abbr. of the English name of
LTTC
the Company (if any)
Legal representative of the
Liu Shizhen
Company
II. Contact information
Company Secretary Securities Affairs Representative
Name Qin Guiling Zheng Weiyin
No. 81, Songling East Road, Zichuan No. 81, Songling East Road, Zichuan
Contact address
District, Zibo, Shandong, P.R.China District, Zibo, Shandong, P.R.China
Tel. 0533-5266188 0533-5285166
Fax 0533-5418805；5282188-234 0533-5418805
E-mail qinguiling@lttc.com.cn wyzheng@lttc.com.cn
III. Other information
1. Ways to contact the Company
Did any change occur to the registered address, office address and their postal codes, website address and email address of the
Company during the reporting period?
□ Applicable √ Inapplicable
The registered address, office address and their postal codes, website address and email address of the Company did not change
during the reporting period. The said information can be found in the 2014 Annual Report.
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2015 Semi-annual Report of Luthai Textile Co., Ltd.
2. About information disclosure and where this report is placed
Did any change occur to information disclosure media and where this report is placed during the reporting period?
□ Applicable √ Inapplicable
The newspapers designated by the Company for information disclosure, the website designated by CSRC for disclosing this report
and the location where this report is placed did not change during the reporting period. The said information can be found in the 2014
Annual Report.
3. Changes in the registered information
Did any change occur to the registered information during the reporting period?
√ Applicable □ Inapplicable
Registration code of Organizatio
Registration date Registration place Business license No.
taxation nal code
Zibo Municipal
At the beginning of the
13 November 2014 Administration Bureau for 370300400002843 370302613281175 61328117-5
reporting period
Industry and Commerce
Zibo Municipal
At the end of the reporting
14 April 2015 Administration Bureau for 370300400002843 370302613281175 61328117-5
period
Industry and Commerce
Date when the relevant
announcement was
disclosed on the
designated website (if
any)
Website link for the
relevant announcement
disclosed on the None
designated website (if
any)
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2015 Semi-annual Report of Luthai Textile Co., Ltd.
Section III. Highlights of Accounting Data & Financial Indicators
I. Major accounting data and financial indicators
Does the Company adjust retrospectively or restate accounting data of previous years due to change of any accounting policy or
correction of any accounting error?
□ Yes √ No
Reporting period Same period of last year YoY +/- (%)
Operating revenues (RMB Yuan) 2,941,835,897.16 3,114,226,581.62 -5.54%
Net profit attributable to shareholders of
344,521,516.72 476,880,256.93 -27.76%
the Company (RMB Yuan)
Net profit attributable to shareholders of
the Company after extraordinary gains and 308,604,457.41 475,996,558.52 -35.17%
losses (RMB Yuan)
Net cash flows from operating activities
362,304,624.13 399,042,563.87 -9.21%
(RMB Yuan)
Basic EPS (RMB Yuan/share) 0.36 0.50 -28.00%
Diluted EPS (RMB Yuan/share) 0.36 0.50 -28.00%
Weighted average ROE (%) 5.10% 7.81% -2.71%
As at the end of the
As at the end of last year +/- (%)
reporting period
Total assets (RMB Yuan) 8,585,633,117.13 8,627,671,393.88 -0.49%
Net assets attributable to shareholders of
6,456,030,484.38 6,588,772,245.55 -2.01%
the Company (RMB Yuan)
II. Differences between accounting data under domestic and overseas accounting standards
1. Differences of net profit and net assets disclosed in financial reports prepared under international and
Chinese accounting standards
√Applicable □ Inapplicable
Unit: RMB Yuan
Net profit attributable to shareholders Net assets attributable to shareholders of
of the Company the Company
Same period of
Reporting period Closing amount Opening amount
last year
According to Chinese accounting standards 344,521,516.72 476,880,256.93 6,456,030,484.38 6,588,772,245.55
Items and amounts adjusted according to international accounting standards
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2015 Semi-annual Report of Luthai Textile Co., Ltd.
Impact on domestic equipments tax credit
recognized as deferred income under international 612,500.00 754,500.00 -1,456,500.00 -2,069,000.00
accounting standards
According to international accounting standards 345,134,016.72 477,634,756.93 6,454,573,984.38 6,586,703,245.55
2. Differences of net profit and net assets disclosed in financial reports prepared under overseas and
Chinese accounting standards
□ Applicable √ Inapplicable
No such cases for the reporting period.
3. Explain reasons for the differences between accounting data under domestic and overseas accounting
standards
√ Applicable □ Inapplicable
Effects of domestic equipment exempted from income tax
The Company exempted from income tax for buying domestic equipment. According to Chinese accounting standards, the income
tax expenses are directly reduced which are recognized as deferred income related to assets by the international accounting standards.
According to the regulations of the international accounting standards, this difference is amortized over the fixed using periods of
year of the fixed assets and adjusting net income and net assets.
III. Items and amounts of extraordinary gains and losses
√Applicable □ Inapplicable
Unit: RMB Yuan
Explanati
Item Amount
on
Gain/loss on the disposal of non-current assets (including the offset part of the asset impairment
-2,698,435.96
provisions)
Government grants recognized in the current period, except for those acquired in the ordinary course of
7,116,087.94
business or granted at certain quotas or amounts according to the country’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 assets and tradable financial liabilities
41,107,265.88
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 1,457,728.67
Less: income tax effects 10,018,509.04
Minority interests effects (after tax) 1,047,078.18
Total 35,917,059.31 --
Explain the reasons if the Company classifies an item as an extraordinary gain/loss according to the definition in the Explanatory
Announcement No. 1 on Information Disclosure for Companies Offering Their Securities to the Public—Extraordinary Gains and
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2015 Semi-annual Report of Luthai Textile Co., Ltd.
Losses, or classifies any extraordinary gain/loss item mentioned in the said explanatory announcement as a recurrent gain/loss item
□ Applicable √ Inapplicable
No such cases in the reporting period.
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2015 Semi-annual Report of Luthai Textile Co., Ltd.
Section IV. Report of the Board of Directors
I. Overview
In the first half of 2015, most textile enterprises operated steadily, but the environment for the industry was still harsh with a
decreased export volume of textiles and garments, a weak domestic demand and rising costs of production factors. All these together
with the depreciation in foreign currencies such as the Yen and the Euro created various unfavorable impacts on export-oriented
textile enterprises. Under the circumstances, we continued to deepen our excellent performance management model, vigorously
promoted our Lu Thai Production System (LTPS), proactively carried forward our global planning, accelerated the industrial and
informatization fusion, and enhanced corporate culture improvement. As a result, despite a drop in our operating results for the first
half of the year, we managed to maintain a healthy and steady development trend.
For the reporting period, the Company achieved operating revenues of RMB 2.942 billion, operating profit of RMB 407 million, net
profit attributable to common share holders of RMB 345 million and net profit attributable to shareholders of the Company of RMB
309 million after deducting extraordinary gains and losses, down 5.54%, 26.38%, 27.76% and 35.17% respectively from the same
period of last year.
During the reporting period, there were no change in the main business of the Company, main profit source and composition.
Within the reporting period, the Company gave to full play of its technical accumulation and brand advantage in yarn dyeing sector,
integrated advantageous resources from home and abroad highly efficiently, circumvented potential trade barriers effectively,
improved its global production scale and maintained its leading position in global yarn dyeing sector. The Company decided to
establish Lutai (Vietnam) Co., Ltd, with its planned production scale of 60,000 spindles of spun yarn and 30 million meters of
yarn-dyed fabric, and the project has entered the process of basic construction currently.
Within the reporting period, the Company was appraised as a Pilot Enterprise for Informatization Renovation and Improvement in
Textile Industry by China National Textile and Apparel Council and Information Promotion Division of the Ministry of Industry and
Information Technology respectively. It was awarded as a Five-star Enterprise for Performing Social Responsibilities of Chinese
Industrial Enterprises at the Press Conference of 2015 Enterprise Social Responsibility Report in Chinese Industrial Economics
Industry organized by United Nations Industrial Development Organization and China Federation of Industrial Economics，appraised
as one of top 100 enterprises in garment industry of China in 2014 by China National Garment Association, appraised a
Demonstration Base of Nationwide Enterprise Culture Construction by China Research Institute of Enterprise Culture, awarded a
Labor Certificate of Merit for Enriching People and Rejuvenating Shandong by Shandong Province Federation of Trade Unions and
appraised as one of Ten Best Elderly Respecting Enterprises of Shandong by Shandong Aging Industry Development Foundation.
Within the reporting period, facing with the severe international and domestic market situations, the Company insisted on practicing
its skills, conducted scientific and technological innovations continuously, studied new technologies and new techniques constantly,
and enhanced customer promotion and services and its market acceptance and customer recognition have been increased dramatically.
The complete set of technologies and equipment for digital automatic bobbin dyeing developed jointly by the Company with China
Academy of Machinery Science and Technology and Shandong Companion Group was awarded the first prize of National Scientific
and Technological Progress. By the end of the reporting period, the Company had 209 patent applications that had been agreed for
handling, of which 68 were invention patents, 134 were utility model patents and 7 were appearance design patents. 144 patents were
awarded formally, of which 21 were invention patents, 116 were utility model patents and 7 were appearance design patents.
Accumulatively 34 state-level, provincial-level and ministerial-level prizes were awarded, of which 1 was first prize and 2 were
second prize of national scientific and technological progress, 9 won prize of provincial scientific and technological progress, of
which 4 were first prize, 2 were second prize; 22 won prize of scientific and technological progress of China National Textile And
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2015 Semi-annual Report of Luthai Textile Co., Ltd.
Apparel Council, of which 3 were first prize and 9 were second prize. It undertook 8 scientific and technological plans of provincial
or ministerial level and 9 major research programs of state level or provincial or ministerial level, and participated or hosted in
enacting 21 standards, of which 5 were national standards and 16 were industrial standards.
Within the reporting period, the Company promoted its brand construction and marketing network construction continuously. The
successful launch of Beijing Lutai Youxian E-Commerce Co., Ltd, its subsidiary and UTAILOR, its high-end tailoring platform
(www.utailor.com.cn), completed a seamless connection from offline cutting one’s coat according to his cloth to online one-button
tailoring. Depending on our advantages in manufacturing technologies in the whole industrial chain and quality assurance, we
provided shirts that were of high performance-price ratio and personalized design and excellent services. In terms of fabrics of shirts,
within the reporting period, our designers, together with designers from Milan, launched nearly 3000 styles, and recommended to
clients in the markets of United States, Asia and Europe. To give to full play of the advantage and role of Milan Design Center, we
established good partnership with clients through holding product recommendation meetings in Shanghai, Milan and the United
States, and market share of our self-reliantly designed fabrics was improved. In terms of shirts, within the reporting period, we set up
a pattern study team for research and improvement of patterns to ensure garment samples to be more fit to body.
Now, the Company has developed a product system that majored natural fiber materials, led by multicomponent fiber material, cored
by ironing-free technology, oriented by world’s fashionable consumption and concentrated on functional health, to satisfy
personalized and diversified market demands.
II. Main business analysis
Overview
In the reporting period, operating revenues decreased 5.54% year on year. Operating costs, selling expenses, administrative expenses,
financial expenses and income tax expenses increased -0.23%, 4.87%, 5.56%, 21.24%, -23.38% respectively. Net cash flows from
investing activities increased 61.90% year on year mainly because the cash paid to acquire fixed assets decreased 56.65%. Net cash
flows from financing activities increased 27.87%. Net increase in cash and cash equivalents increased 71.71% year on year mainly
because the net cash flows from investing activities increased 61.90%.
YoY change of major financial data:
Unit: RMB Yuan
Reporting period Same period of last year YoY +/-% Main reasons for change
Operating revenues 2,941,835,897.16 3,114,226,581.62 -5.54%
Operating costs 2,133,022,201.07 2,137,850,293.37 -0.23%
Selling expenses 97,645,409.00 93,108,145.82 4.87%
Administrative expenses 311,323,333.58 294,932,674.63 5.56%
Financial expenses 9,021,706.88 7,441,307.46 21.24%
Income tax expenses 67,469,529.96 88,060,378.95 -23.38%
R&D input 141,009,183.42 148,094,648.52 -4.78%
Net cash flows from operating
362,304,624.13 399,042,563.87 -9.21%
activities
Net cash flows from investing Cash paid to acquire
-128,144,916.52 -336,371,410.80 61.90%
activities fixed assets decreased.
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2015 Semi-annual Report of Luthai Textile Co., Ltd.
Net cash flows from financing
-356,898,204.35 -494,775,481.22 27.87%
activities
Net cash flows from
Net increase in cash and cash
-120,982,414.33 -427,603,384.69 71.71% investing activities
equivalents
increased.
Major changes to the profit structure or sources of the Company during the reporting period:
□ Applicable √ Inapplicable
No major changes occurred to the profit structure or sources of the Company during the reporting period.
Reporting period progress of the future development planning in the disclosed documents of the Company such as share-soliciting
prospectuses, offering prospectuses, asset reorganization reports, etc.:
□ Applicable √ Inapplicable
The Company did not mention any future planning for the reporting period in its disclosed documents such as share-soliciting
prospectuses, offering prospectuses, asset reorganization reports, etc.
Review the progress of any previously disclosed business plan in the reporting period:
Inapplicable
III. Breakdown of main business
Unit: RMB Yuan
Increase/decrease Increase/decrease Increase/decrease
of operating of operating cost of gross profit
Operating Gross profit rate
Operating cost revenue over the over the same rate over the same
revenue (%)
same period of period of last year period of last year
last year (%) (%) (%)
Classified by industry:
Textile and
2,714,111,023.53 1,962,988,610.82 27.67% -0.37% 7.58% -5.35%
Apparel
Cotton 30,212,580.47 25,293,252.53 16.28% -81.05% -83.06% 9.95%
Electricity and
85,271,911.30 61,219,481.71 28.21% -28.41% -30.48% 2.14%
steam
Other 28,165,660.18 24,082,838.08 14.50% -24.04% -14.81% -9.26%
Classified by product:
Fabric products 2,142,265,098.63 1,551,397,939.75 27.58% 1.51% 10.17% -5.69%
Shirts 571,845,924.90 411,590,671.07 28.02% -6.87% -1.18% -4.15%
cotton 30,212,580.47 25,293,252.53 16.28% -81.05% -83.06% 9.95%
Electricity and
85,271,911.30 61,219,481.71 28.21% -28.41% -30.48% 2.14%
steam
Other 28,165,660.18 24,082,838.08 14.50% -24.04% -14.81% -9.26%
Classified by region:
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2015 Semi-annual Report of Luthai Textile Co., Ltd.
Hong Kong 164,312,876.82 118,985,253.75 27.59% -26.34% -20.08% -5.67%
Japan And South
174,565,387.20 125,933,416.50 27.86% -7.35% -0.83% -4.75%
Korea
Southeast Asia 848,509,846.77 614,443,480.93 27.59% 12.17% 21.71% -5.67%
Europe and
408,541,183.02 294,640,258.72 27.88% -13.31% -7.34% -4.65%
America
Other 362,677,515.77 262,479,174.27 27.63% -17.94% -11.11% -5.56%
China Mainland 899,154,365.90 657,102,598.97 26.92% -6.22% -5.63% -0.45%
IV. Core competitiveness analysis
The comprehensive management ability, research and development ability, technological accumulation and global planning of the
Company’s whole industry chain are the Company's core competitiveness, which did not change during the reporting period.
1. The Company boasts a complete industrial chain from cotton planting, yarning, dyeing, weaving and post-processing to cloth
manufacturing, and thus enjoys the cost advantage brought by complete steps for producing high-end dyed textile.
2. Relying on sound comprehensive management capacity, the Company has passed ISO9000 quality management system,
ISO14000 environmental management system, OHSAS18000 occupational health safety management system, and SA8000 social
accountability management system successively from 1995. Ever since 2007, the Company has also passed WRAP: 1999 global
garment production social accountability standard, C-TPAT: 2004 anti-terrorism standard, OE100 and GOTS organic cotton system
certification and CNAS national laboratory recognition, to realize the internationalization and standardization of the Company’s
management. In order to pursue the operational management of performance excellence and better the Company’s performance and
capability, the Company has gradually introduced GB/T19580-2004 -Standards for Performance Excellence Evaluation, created
―Great Quality‖ system and promoted management innovation, to ensure the Company’s business quality.
3. The Company has attached great importance to R&D investment, persisted independent innovation, and relied on Research
Academy of Luthai Textile Garment Engineering to continuously perfect a platform for scientific and research cooperation. It has
carried out cooperation with research academies, universities, strategic customers and important suppliers to gradually transfer from
product R&D to technology research, from overcoming key technology difficulties to mastering technology principles and
formulating industrial standards, and from focusing technology innovation to integration of new technology and creative mode,
enhanced low-carbon, green and recycled development, empowered the corporate growth and increased the contribution of
technology advance to industrial development.
4. Centered by customers, the Company has comprehensively enhanced quality management, stuck to high-standard services, and
successfully established a brand image that leads the industry, satisfies customers and wins market. It has actively utilized new
technologies to transform traditional industries, promoted technology and product innovation, and vigorously integrated brand
construction, textile technology and garment culture, for the purpose of improving corporate brand image. Besides, the Company has
paid close attention to the product diversification and reasonable adjustment to market structure, stressed both domestic and
international markets, integrated global market resources, explored international layout, and craving out a new road in terms of
manufacturing mode, production organization manner and marketing mode, to give full play to the Company’s comprehensive
management advantages in the industry.
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2015 Semi-annual Report of Luthai Textile Co., Ltd.
V. Investment analysis
1. Investment in the equities of external parties
(1) External investment
□Applicable √ Inapplicable
No such cases in the reporting period.
(2) Equity-holdings in financial enterprises
□ Applicable √ Inapplicable
There was no any equity-holding in financial enterprises of the Company in the reporting period.
(3) Investment in securities
□ Applicable √ Inapplicable
There was no investment in securities by the Company in the reporting period.
(4) Shareholdings in other listed companies
□ Applicable √ Inapplicable
No such cases in the reporting period.
2. Information of trust management, derivative investment and entrusted loan
(1) Trust management
□ Applicable √ Inapplicable
There was no trust management of the Company in the reporting period.
(2) Derivative investment
√ Applicable □ Inapplicable
Unit: RMB Ten Thousand Yuan
Proportion
Relate Type of the
Impairm
d-part of closing Actual
Initial Opening ent Closing
Operat Relati y derivat Beginning investment gain/loss in
investment Ending date investment provisio investment
or on transac ive date amount in reporting
amount amount n (if amount
tion or invest the period
any)
not ment Company’
s closing
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2015 Semi-annual Report of Luthai Textile Co., Ltd.
net assets
(%)
Forwa
rd
Comm
Non-re exchan 14 Nov.
ercial No 165,620.39 4 May 2016 21,213.88 56,219.98 8.18% 2,105.44
lated ge 2014
bank
settle
ment
Foreig
Comm n
Non-re 11 Feb.
ercial No exchan 6,763.94 15 Jun. 2015 0 0 7.89
lated 2015
bank ge
trading
Comm Option
Non-re 21 Oct. 20 May
ercial No portfol 205,627.31 31,835 173,986.2 25.31% 772.73
lated 2015 2016
bank io
Total 378,011.64 -- -- 53,048.88 230,206.18 33.49% 2,886.06
Capital source for derivative
Self-owned funds
investment
Cases involving lawsuit (if
No
applicable)
Disclosure date of the board
announcement approving the 27 Mar. 2014
derivative investment (if any)
Disclosure date of the general
meeting announcement
approving the derivative
investment (if any)
The Company conducted derivatives products transaction in order for hedging. And the forward
settlement hedging was operated by installments, with the relevant amount not more than the
planned derivatives products transactions. And all derivatives products transaction was zero-deposit.
Analysis on risks and control Meanwhile, the Company had a complete risk control system for sufficient analysis and prevention
measures of derivative of possible risks such as risk of laws and regulations, credit risk, operation risk and market risk.
products held in the reporting 1. Risk of laws and regulations:
period (including but not The Company conducted derivatives products transaction in strict accordance with relevant laws
limited to market risk, and rules as well as regulatory policies from government securities regulatory authorities, if there
liquidity risk, credit risk, were no standard operation procedures and strict approval procedures, it was easy to cause
operation risk, law risk, etc.) 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 forward
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2015 Semi-annual Report of Luthai Textile Co., Ltd.
settlement hedging business, standardized the operation procedures. And strengthened the compliant
examination on derivative products investment business, and strictly abided by 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., the Proposal on the Plan of Lu Thai Textile Co., Ltd. for
Derivative Transactions in 2014 approved at the 7th Session of the 7th Board of Directors on 25 Mar.
2014, 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 inter-bank spot RMB-dollar trading band from 1% to 2% since 17 Mar. 2014,
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
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2015 Semi-annual Report of Luthai Textile Co., Ltd.
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 Jun. 2015, the Company held 31 undue financial derivative product contracts, totaling
Changes of market prices or
US$ 398 million, including 19 forward settlement contracts worth US$ 88.5 million and 46 foreign
fair values in the reporting
exchange option contracts worth US$ 309.5 million (the latest expiration before May 2016). The
period of the invested
financial derivative products above accounted for 33.40% of the closing net assets.
derivatives. And the analysis
2. From Jan. 2015 to Jun. 2015, the due financial derivative products of the Company totally
on the fair value of the
equaled to US$ 237.0483 million, all delivered on time, and the gain generated was RMB 28.8606
derivatives should include the
million. To be specific, the due forward settlement was US$ 175 million, generating gain of RMB
specific use methods and the
21.0544 million; the due forward foreign exchange trading amount equaled to US$ 11.0483 million,
relevant assumptions and
which generated gain of RMB 78,900; and the due foreign exchange options equaled to US$ 51
parameters.
million, which generated a gain of RMB 7.7273 million.
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
The Company’s independent directors Zhou Zhiji, Zhang Chengzhu, Wang Lei, Xu Jianjun and
Zhao Yao, concerning conducting derivatives business, have issued the following professional
Specific opinion from advice: we were of the opinion that it would strengthen the Company’s competitiveness to use
independent directors on the derivative transactions with focus on forward settlement and purchase as an effective tool to avoid
Company’s derivatives foreign exchange risks, to strengthen the relevant internal control and to carry out the loss and risk
investment and risk control 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) Entrusted loan
□ Applicable √ Inapplicable
There was no entrusted loan of the Company in the reporting period.
3. Use of raised funds
□ Applicable √ Inapplicable
No such cases in the reporting period.
4. Analysis to main subsidiaries and stock-participating companies
√ Applicable □ Inapplicable
17
2015 Semi-annual Report of Luthai Textile Co., Ltd.
Main subsidiaries and stock-participating companies:
Unit: RMB Yuan
Main
Comp
Compan Industr produc Registered Operating Operating
any Total assets Net assets Net profit
y name y ts/serv capital revenues profit
variety
ices
Zibo
Xinshen
Electri
g Subsid Manuf
city, 162,435,600.00 540,167,259.26 485,536,763.07 227,136,627.35 65,818,763.57 52,008,490.72
Thermal iary acture
steam
Power
Co., Ltd.
5. Significant projects of investments with non-raised funds
√ Applicable □ Inapplicable
Unit: RMB Ten thousand Yuan
Total Cumulative actual Disclosure date (if
Input for Project Project Disclosure index (if any)
Project name investme input as at the any)
this period progress earnings
nt period-end
The ―Announcement on
A new Launching a New
230,000-spindl 230,000-spindle
e production Production Line Project
line project and and a New 35,000-ingot
a new Two-for-one Twisting
92,866 1,820.72 31,540.26 33.96% 23 Mar. 2012
35,000-ingot Production Line Project‖
two-for-one (announcement No.
twisting 2012-008) disclosed by
production line the Company on
project http://www.cninfo.com.c
n
Total 92,866 1,820.72 31,540.26 -- -- -- --
VI. Predict the operating results of Jan.-Sep. 2015
Warning of possible loss or considerable YoY change of the accumulated net profit made during the period-begin to the end of the
next reporting period according to prediction, as well as explanations on the reasons:
□ Applicable √ Inapplicable
18
2015 Semi-annual Report of Luthai Textile Co., Ltd.
VII. Explanation by the Board of Directors and the Supervisory Committee about the
“non-standard audit report” issued by the CPAs firm for the reporting period
□ Applicable √ Inapplicable
VIII. Explanation by the Board of Directors about the “non-standard audit report” for last
year
□ Applicable √ Inapplicable
IX. Implementation of profit allocation during the reporting period
Profit allocation plan implemented during the reporting period, especially execution and adjustment of the cash dividend plan and the
plan for turning capital reserve into share capital:
√ Applicable □ Inapplicable
Pursuant to the 2014 Profit Allocation Proposal reviewed and approved on the 2014 Annual Shareholders’ General Meeting on 20
May 2015, the Company carried out the cash dividend distribution plan in Jun 2015, which was in compliance with the articles
governing dividends in the Articles of Association of the Company. And the cash dividend policy did not change in the reporting
period.
Special statement about the cash dividend policy
In compliance with the Company’s Articles of Association and the resolution of the general
Yes
meeting
Specific and clear dividend standard and ratio Yes
Complete decision-making procedure and mechanism Yes
Independent directors fulfilled their responsibilities and played their due role. Yes
Minority shareholders have the chance to fully express their opinion and desire and their
Yes
legal rights and interests were fully protected.
In adjustment or alteration of the cash dividend policy, the conditions and procedure were
Inapplicable
in compliance with regulations and transparent.
X. Preplan for profit distribution and turning capital reserve into share capital for the
reporting period
□ Applicable √ Inapplicable
The Company planed not to distribute cash dividends or bonus shares or turn capital reserve into share capital for the reporting
period.
XI. Researches, visits and interviews received in the reporting period
√ Applicable □ Inapplicable
Way of Visitor Main discussion
Time Place Visitor
reception type and materials
19
2015 Semi-annual Report of Luthai Textile Co., Ltd.
provided by the
Company
Everbright Securities Company Limited Li Jie Tang Sh The Company’s
31 Mar. 2015 By phone Institution
uangshuang basic situation
The Company’s
31 Mar. 2015 By phone Institution Qilu Securities Han Liping
basic situation
The Company’s
31 Mar. 2015 By phone Institution Naturebridge Asset Hu Xin
basic situation
The Company’s
31 Mar. 2015 By phone Institution Shengwan Lingxing Co., Ltd. Liu Zongxun
basic situation
The Company’s
31 Mar. 2015 By phone Institution Sals Department of Jianghai Securities Liu Hua
basic situation
The Company’s
31 Mar. 2015 By phone Institution Hongdao Investment Ji Wei
basic situation
The Company’s
31 Mar. 2015 By phone Institution Chang Xin Asset Huang Wei
basic situation
The Company’s
31 Mar. 2015 By phone Institution Huijie Investment Xie Rui
basic situation
The Company’s
31 Mar. 2015 By phone Institution Jiuding Capital Chen Tao
basic situation
The Company’s
31 Mar. 2015 By phone Institution Jiangsu Xinye Shao Lei
basic situation
The Company’s
31 Mar. 2015 By phone Institution Yuancheng Investment Zeng Shang
basic situation
The Company’s
31 Mar. 2015 By phone Institution Minsheng Tonghui Asset Management Bai Fan
basic situation
The Company’s
31 Mar. 2015 By phone Institution Yintai Securities Zeng Liang
basic situation
The Company’s
31 Mar. 2015 By phone Institution Shanghai Right Share Xu Wenguang Han Ying
basic situation
The Company’s
31 Mar. 2015 By phone Institution Licheng Asset Weng Di
basic situation
The Company’s
31 Mar. 2015 By phone Institution Zongyi Runbang Liang Liang
basic situation
The Company’s
31 Mar. 2015 By phone Institution TF Securities Ding Lingxiao
basic situation
The Company’s
31 Mar. 2015 By phone Institution Zhong Ou Asset Zhang Bo
basic situation
31 Mar. 2015 By phone Institution BOC International Asset Management Department Yao The Company’s
20
2015 Semi-annual Report of Luthai Textile Co., Ltd.
Yonghua basic situation
The Company’s
31 Mar. 2015 By phone Institution Ping An Endowment Insurance Sun Haiqi
basic situation
21
2015 Semi-annual Report of Luthai Textile Co., Ltd.
Section V. Significant Events
I. Corporate governance
The Company continued to perfect the corporate governance structure, establish and perfect the modern enterprise
system and ensure the efficient and standardized operation of the Company’s Shareholders’ General Meeting,
Board of Directors, Board of Supervisors and Senior Executives strictly according to Company Law, Securities
Law and Governing Rules for Listed Company as well as relevant stipulations and requirements from CSRC. It
formed a relationship of clear division of rights and responsibilities, assuming each own functions and check and
balance each other between the management organ, decision-making organ, supervisory organ and management
layer, so as to provide a good internal operational environment for the Company’s standardized and efficient
operation. At present, there is no difference between the actual situation of the Company’s corporate governance
structure and the requirements on the corporate governance of CSRC and Shenzhen Stock Exchange.
II. Litigations
Significant litigations and arbitrations
□ Applicable √ Inapplicable
No such cases in the reporting period.
Other litigations
□ Applicable √ Inapplicable
III. Media query
□Applicable √Inapplicable
The Company was not involved in any media query in the reporting period.
IV. Bankruptcy or Reorganization Events
□ Applicable √ Inapplicable
There Company was not involved in any bankruptcy or reorganization events in the reporting period.
V. Transaction in Assets
1. Purchase of assets
□ Applicable √ Inapplicable
There is no purchase of assets in the Company during the reporting period
2. Sale of assets
□ Applicable √ Inapplicable
22
2015 Semi-annual Report of Luthai Textile Co., Ltd.
There is no sale of assets in the Company during the reporting period.
3. Business combination
□ Applicable √ Inapplicable
There is no business combination in the Company during the reporting period.
VI. Implementation and Influence of Equity Incentive Plan of the Company
□ Applicable √ Inapplicable
There is no equity incentive plan and its implementation in the Company during the reporting period.
VII. Significant related-party transactions
1. Related-party transactions concerning routine operation
√ Applicable □ Inapplicable
Type
Approve Settleme
of Conte Similar
Proporti d nt
the nt of Pricing Transact
Transactio on in transacti Over method
Rela relat the principle of Transa ion Disclo
Relati n amount same on line approv of the Disclosure
ted ed-p related the ction market sure
onship (RMB Ten kind of (RMB ed line related-p index
party arty -party related-party price price date
thousand) transacti Ten or not arty
trans transac transaction receivab
ons (%) thousand transacti
actio tion le
) on
n
Please refer
to the
Floated Announceme
downward nt on the
Contro between 5% to Daily Related
lling 10% based on Transitions of
Luru
subsidi Purc the weighted No. 2015-010
i
ary of hase Purcha average price 31 that disclosed
Fine Cash
the of se of according to 3,396.11 15.73% 8,000 No Mar. on Securities
Che payment
control good goods the 2015 Times,
mica
ling s purchasement Shanghai
l
shareh of the similar Securities
older auxiliaries of News, Ta
the market of Kung Pao
the Company and
www.cninfo.c
om.cn
23
2015 Semi-annual Report of Luthai Textile Co., Ltd.
Total -- -- 3,396.11 -- 8,000 -- -- -- -- --
Details of large-amount
Naught
refunds
Where the total amount of
routine related-party
transactions to occur in
the reporting period had
Naught
been predicted by type,
give the actual execution
in the reporting period (if
any)
Explanation on significant
difference between the
Inapplicable
transaction price and the
market price (if any).
2. Related-party transactions arising from asset acquisition or sale
□ Applicable √ Inapplicable
The Company was not involved in any related-party transactions arising from asset acquisition or sale during the reporting period.
3. Related-party transitions with joint investments
□ Applicable √ Inapplicable
The Company was not involved in any related-party transaction with joint investments during the reporting period.
4. Credits and liabilities with related parties
□ Applicable √ Inapplicable
No such cases in the reporting period.
5. Other significant related-party transactions
□ Applicable √ Inapplicable
No such cases in the reporting period.
VIII. Particulars about the non-operating occupation of funds by the controlling shareholder
and other related parties of the Company
□ Applicable √ Inapplicable
The Company was not involved in the non-operating occupation of funds by the controlling shareholder and other related parties
during the reporting period.
24
2015 Semi-annual Report of Luthai Textile Co., Ltd.
IX. Particulars about significant contracts and their fulfillment
1. Particulars about trusteeship, contract and lease
(1) Trusteeship
□ Applicable √ Inapplicable
There was no any trusteeship of the Company in the reporting period.
(2) Contract
□ Applicable √ Inapplicable
There was no any contract of the Company in the reporting period.
(3) Leas
□ Applicable √ Inapplicable
There was no any lease of the Company in the reporting period.
2. Guarantees provided by the company
√ Applicable □ Inapplicable
Unit: RMB Ten Thousand Yuan
Guarantees provided by the Company for external parties (excluding those for subsidiaries)
Disclosure
date on Guarante
Actual
relevant Actual e for a
Amount for occurrence date Type of Period of Executed
Guaranteed party announcem guarantee related
guarantee (date of guarantee guarantee or not
ent of amount party or
agreement)
guaranteed not
amount
Guarantees provided by the Company for its subsidiaries
Disclosure date Guarante
Actual Actual
on relevant e for a
Amount for occurrence date guarante Type of Period of Executed
Guaranteed party announcement related
guarantee (date of e guarantee guarantee or not
of guaranteed party or
agreement) amount
amount not
From the date of
Guarantee
implementing loan
of joint
Lufeng Weaving & within credit line
13 May 2011 30,000 10 May 2011 332.85 and No Yes
Dyeing Co., Ltd. to the date of
several
clearing off loan
liability
principal and
25
2015 Semi-annual Report of Luthai Textile Co., Ltd.
interest
Guarantee
Two years since
of joint
Luthai (HK) Co., the approval of the
27 Mar. 2014 18,300 25 Mar. 2014 1,560.74 and No Yes
Ltd. board of the
several
Company
liability
Guarantee
Three years since
Xinjiang Lu Thai of joint
the approval of the
Harvest Cotton 10 Dec. 2014 25,000 9 Dec. 2014 0 and No Yes
board of the
Co., Ltd. several
Company
liability
Total actual
occurred amount of
Total guarantee line approved for
guarantee for the
the subsidiaries during the reporting 0 1,436.49
subsidiaries during
period (B1)
the reporting period
(B2)
Total actual
guarantee balance
Total guarantee line that has been
for the subsidiaries
approved for the subsidiaries at the 73,300 1,893.59
at the end of the
end of the reporting period (B3)
reporting period
(B4)
Guarantees provided by subsidiaries for subsidiaries
Disclosure
date on Guarante
Actual
relevant Actual e for a
Amount for occurrence date Type of Period of Executed
Guaranteed party announcem guarantee related
guarantee (date of guarantee guarantee or not
ent of amount party or
agreement)
guaranteed not
amount
Total guarantee amount provided by the Company (total of the above-mentioned three kinds of guarantees)
Total guarantee line approved Total actual occurred amount
during the reporting period 0 of guarantee during the 1,436.49
(A1+B1+C1) reporting period (A2+B2+C2)
Total guarantee line that has Total actual guarantee balance
been approved at the end of the 73,300 at the end of the reporting 1,893.59
reporting period (A3+B3+C3) period (A4+B4+C4)
Proportion of total guarantee amount (A4+B4+C4) to the net
0.29%
assets of the Company
Of which:
26
2015 Semi-annual Report of Luthai Textile Co., Ltd.
Amount of guarantee provide for shareholders, actual
0
controller and related parties (D)
Amount of guarantee provided directly or indirectly for
guarantee objects with asset-liability ratio reaching over 70% 0
(E)
Balance between 50% of net assets and total amount of
0
guarantee which exceeds 50% of net assets (F)
Sum total of the above three guaranteed amounts (D+E+F) 0
According to ―Agreement on Counter Guarantee‖ signed on 12
May 2011 between Lu Thai Company and Lu Feng Company, Lu
Feng Company , the warrantee provided the corresponding amount
Explanations about joint and several liability for repayment in of counter guarantee for Lu Thai Company. According to
respect of undue guarantee (if any) ―Agreement on Counter Guarantee‖ signed on 9 Dec. 2014
between Lu Thai Company and Xinjiang Lu Thai Company,
Xinjiang Lu Thai Company, the warrantee provided the
corresponding amount of counter guarantee for Lu Thai Company.
Explanation about external guarantee violating established The Company never provided guarantees for companies except
procedure (if any) controlling subsidiaries.
Explanations about guarantees provided with complex methods
Naught
(1) Particulars about illegal external guarantee
□ Applicable √ Inapplicable
There was no particular about illegal external guarantee of the Company in the reporting period.
3. Other significant contracts
□ Applicable √ Inapplicable
There was no other significant contract of the Company in the reporting period.
4. Other significant transactions
□ Applicable √ Inapplicable
There was no other significant transaction of the Company in the reporting period.
X. Commitments made by the Company or shareholders holding over 5% of the Company’s
shares in the reporting period or such commitments carried down into the reporting period
□ Applicable √ Inapplicable
There was no such situation of the Company in the reporting period.
27
2015 Semi-annual Report of Luthai Textile Co., Ltd.
XI. Particulars about engagement and disengagement of CPAs firm
Whether the semi-annual financial report had been audited?
□ Yes √ No
This semi-annual report is un-audited.
XII. Punishment and Rectification
□ Applicable √ Inapplicable
There was no any punishment and rectification of the Company in the reporting period.
XIII. Reveal of the delisting risks of illegal or violation
□ Applicable √ Inapplicable
There was no any delisting risk of illegal or violation of the Company in the reporting period.
XIV. Explanation about other significant matters
√ Applicable □ Inapplicable
1. On 12 Jul., the Company held the 22nd Session of the 7th Board of Directors, which reviewed and approved the Proposal on
Repurchasing Part of the A Share and B Share of the Company and at the same time published the Preplan on Repurchasing Part of
the A Share and B Share of the Company, as well as submitted to the 1 st 2015 Extraordinary General Meeting held on 5 Aug. 2015,
which reviewed and approved the Proposal on Repurchasing Part of the A Share and B Share. For the details, please refer to the
relevant announcements disclosed on the Securities Times, Shanghai Securities News, Ta Kung Pao and www.cninfo.com.cn on 14
Jul. 2015 and 6 Aug. 2015 by the Company..
2. The large shareholders and the Directors, Supervisors as well as the Senior Executives of the Company had promised on 10
Jul.that not to decrease the shareholding of the Company within 6 months since 10 Jul., and for the details, please refer to the relevant
announcements disclosed on the Securities Times, Shanghai Securities News, Ta Kung Pao and www.cninfo.com.cn on 10 Jul. 2015
by the Company.
28
2015 Semi-annual Report of Hubei Sanonda Co., Ltd.
Section VI. Changes in Shares and Particulars about Shareholders
I. Changes in share capital
Unit: Share
Before this change Increase/decrease (+, -) After the change
Capitali
Issuan zation
ce of Bonus of Proportio
Amount Proportion Other Subtotal Amount
new share public n
shares reserve
fund
I. Shares subject to trading
119,553,913 12.51% -155,423 -155,423 119,398,490 12.49%
moratorium
3. Other domestic shares 1,321,513 0.14% -155,423 -155,423 1,166,090 0.12%
Shares held by domestic
1,321,513 0.14% -155,423 -155,423 1,166,090 0.12%
individuals
4. Shares held by overseas
118,232,400 12.37% 118,232,400 12.37%
shareholders
Including: Shares held by
118,232,400 12.37% 118,232,400 12.37%
overseas legal persons
II. Shares not subject to
836,204,583 87.49% 155,423 155,423 836,360,006 87.51%
trading moratorium
1. Ordinary shares
560,643,787 58.66% 155,423 155,423 560,799,210 58.68%
denominated in RMB
2. Domestically listed
275,560,796 28.83% 275,560,796 28.83%
foreign shares
III. Total of shares 955,758,496 100.00% 955,758,496 100.00%
Reasons of changes in shares
√ Applicable □ Inapplicable
The ―Shares subject to trading moratorium - shares held by domestic individuals‖decreased 155,423 shares owning to the resignation
of the former Supervisory Board Chairman Zhu Lingwen and the adjustment on the locked shares of the Senior Executives by the
Shenzhen Branch of CSDCC at the year-begin.
Approval of share changes
□ Applicable √ Inapplicable
Transfers in share changes
□ Applicable √ Inapplicable
Influence of share changes towards financial indexes in the latest year and latest period such as basic EPS and diluted EPS, and net
29
2015 Semi-annual Report of Hubei Sanonda Co., Ltd.
assets per share belonging to shareholder with ordinary share
□ Applicable √ Inapplicable
Other contents that the Company thinks necessary or is asked by securities regulators to be disclosed
□ Applicable √ Inapplicable
Explanation of the changes in the sum of the shares and the structure of the shareholders and the structure of the assets as well as the
liabilities of the Company
□ Applicable √ Inapplicable
II. Number of shareholders and shareholding
Unit: Share
Total number of preferred
Total number of common
shareholders that had restored
shareholders at the end of the 82,035 0
the voting right at the end of the
reporting period
reporting period (if any) (note 8)
Shareholding of common shareholders holding more than 5% shares or the top 10 of common shareholders
Number of Increase and Number of Number of Pledged or frozen
Holding shareholding decrease of shares held shares held shares
Nature of
Name of shareholder percenta at the end of shares during not subject Status
subject to
shareholder Number of
ge (%) the reporting reporting tradingto trading of
shares
period period moratorium moratorium shares
Domestic
ZIBO LUCHENG TEXTILE Pledge
non-state-own 14.69% 140,353,583 - 140,353,583 13,000,000
INVESTMENT CO., LTD. d
ed corporation
TAILUN (THAILAND) Foreign
12.37% 118,232,400 - 118,232,400
TEXTILE CO., LTD. corporation
Foreign
LYNAS ASIA FUND 1.76% 16,864,475 500,000.00 16,864,475
corporation
VALUE PARTNERS
Foreign
HIGH-DIVIDEND STOCKS 1.72% 16,411,865 - 16,411,865
corporation
FUNDS
T.ROWE PRICE INTL Foreign
1.70% 16,213,718 16,213,718.00 16,213,718
DISCOVERY FUND corporation
NATIONAL ESTMINSTER
BANK PLC AS DEP OF FS Foreign
0.96% 9,211,092 9,211,092.00 9,211,092
GREATER CHINA GROWTH corporation
FUND
DBS VICKERS (HONG Foreign
0.95% 9,105,723 9,105,723.00 9,105,723
KONG) LTD A/C CLIENTS corporation
FIRST STATE CHINA A Foreign 0.86% 8,231,549 94,577.00 8,231,549
30
2015 Semi-annual Report of Hubei Sanonda Co., Ltd.
SHARES FUND corporation
VALUE PARTNERS CLASSIC Foreign
0.85% 8,156,383 - 8,156,383
FUND corporation
HUA AN NEW SILK ROAD
Domestic
THEME EQUITY
non-state-own 0.84% 8,016,900 8,016,900.00 8,016,900
SECURITIES INVESTMENT
ed corporation
FUNDS
Particulars about strategic investors or common
legal persons who became the top ten
N/A
shareholders because of the issuance of
additional shares (if any) (Notes 3)
Zibo Lucheng Textile Investment Co., Ltd. is the largest shareholder of the Company
and the actual controller. Tailun (Thailand) Textile Co., Ltd. is the second largest
Explanations about associated relationship or shareholder as well as sponsor of foreign capital of the Company. All of other
concerted action among the above shareholders shareholders are people holding circulating A share or circulating B share and the
Company is not able to confirm whether there is associated relationship or concerted
action among other shareholders.
Particulars about shares held by top 10 common shareholders not subject to trading moratorium
Number of shares held not Type of share
Name of shareholder subject to trading moratorium
Type of share Number
at the end of the period
RMB ordinary
ZIBO LUCHENG TEXTILE INVESTMENT CO., LTD. 140,353,583 140,353,583
share
Domestically
LYNAS ASIA FUND 16,864,475 listed foreign 16,864,475
share
Domestically
VALUE PARTNERS HIGH-DIVIDEND STOCKS FUNDS 16,411,865 listed foreign 16,411,865
share
Domestically
T.ROWE PRICE INTL DISCOVERY FUND 16,213,718 listed foreign 16,213,718
share
Domestically
NATIONAL WESTMINSTER BANK PLC AS DEP OF FS
9,211,092 listed foreign 9,211,092
GREATER CHINA GROWTH FUND
share
Domestically
DBS VICKERS (HONG KONG) LTD A/C CLIENTS 9,105,723 listed foreign 9,105,723
share
RMB ordinary
FIRST STATE CHINA A SHARES FUND 8,231,549 8,231,549
share
31
2015 Semi-annual Report of Hubei Sanonda Co., Ltd.
Domestically
VALUE PARTNERS CLASSIC FUND 8,156,383 listed foreign 8,156,383
share
HUA AN NEW SILK ROAD THEME EQUITY SECURITIES RMB ordinary
8,016,900 8,016,900
INVESTMENT FUNDS share
Domestically
HTHK-MANULIFE CHINA VALUE FUND 6,858,138 listed foreign 6,858,138
share
Zibo Lucheng Textile Investment Co., Ltd. is the largest shareholder
Explanation on associated relationship among the top ten of the Company and the actual controller. Tailun (Thailand) Textile
shareholders of tradable share not subject to trading moratorium, Co., Ltd. is the second largest shareholder as well as sponsor of
as well as among the top ten shareholders of tradable share not foreign capital of the Company. All of other shareholders are people
subject to trading moratorium and top ten shareholders, or holding circulating A share or circulating B share and the Company
explanation on acting-in-concert is not able to confirm whether there is associated relationship or
concerted action among other shareholders.
Particular about shareholder participate in the securities lending
N/A
and borrowing business (if any) (note 4)
Did any top 10 common shareholders or the top 10 common shareholders not subject to trading moratorium of the Company carry
out an agreed buy-back in the reporting period?
□ Yes √ No
The top 10 common shareholders or the top 10 common shareholders not subject to trading moratorium of the Company had not
carried out any agreed buy-back in the reporting period.
III. Change of the controlling shareholder or the actual controller
Change of the controlling shareholder in the reporting period
□ Applicable √ Inapplicable
There was no any change of the controlling shareholder of the Company in the reporting period.
Change of the actual controller in the reporting period
□ Applicable √ Inapplicable
There was no any change of the actual controller of the Company in the reporting period.
IV. Particulars on shareholding increase scheme during the reporting period proposed or
implemented by the shareholders and act-in-concert persons
□ Applicable √ Inapplicable
Within the scope known to the Company, there was no any shareholding increase scheme during the reporting period proposed or
implemented by the shareholders and act-in-concert persons.
32
2015 Semi-annual Report of Hubei Sanonda Co., Ltd.
Section VII. Preference Shares
□ Applicable √ Inapplicable
There was no any preference share of the Company during the reporting period.
33
2015 Semi-annual Report of Hubei Sanonda Co., Ltd.
Section VIII. Directors, Supervisors, Senior Management Staffs
I. Changes in shareholding of directors, supervisors and senior management staffs
√ Applicable □ Inapplicable
Increas
Shares held e of Restricted
Decrease Shares Restricted
at the shares stock Restricted stock
Incumb of shares held at the stock
beginning in this conferred at conferred at the
Name Title ent or in this end of the conferred in
the reporti the period-end
not reporting reporting this period
reporting ng period-begin (share)
period period (share)
period period (share)
(share)
Liu Chairman of the Incumb
437,295 437,295
Shizhen Board ent
Vice Chairman of Incumb
Xu Zhinan
the Board ent
Director/General Incumb
Liu Zibin 148,290 148,290
Manager ent
Fujiwara Director/Senior Incumb
Hidetoshi Consultant ent
Chen Incumb
Director
Ruimou ent
Zeng Incumb
Director
Facheng ent
Director/Deputy
Wang General Incumb
151,353 4,600 146,753
Fangshui Manager/Chief ent
Engineer
Director/Deputy
Qin General Manager/ Incumb
108,789 1,747 107,042
Guiling Secretary to the ent
Board
Independent Incumb
Zhou Zhiji
Director ent
Independent Incumb
Wang Lei
Director ent
Xu Jianjun Independent Incumb
34
2015 Semi-annual Report of Hubei Sanonda Co., Ltd.
Director ent
Zhang Independent Incumb
Chengzhu Director ent
Independent Incumb
Zhao Yao
Director ent
Li Supervisory Board Incumb
176,164 176,164
Tongmin Chairman ent
Incumb
Liu Zilong Supervisor
ent
Dong Incumb
Supervisor 5,000 5,000
Shibing ent
Zhang Incumb
Vice Chairman 63,400 11,250 52,150
Jianxiang ent
Zhang Incumb
Chief Accountant 88,100 88,100
Hongmei ent
Assistant of
General Manager,
Wang Incumb
Manager of 83,700 83,700
Jiabin ent
Production
Department
Assistant of
General Manager,
Zhang Incumb
Manager of 83,100 10,000 73,100
Shougang ent
Clothing-making
Department
Assistant of
General Manager,
Zhang Incumb
General Manager 80,300 0 80,300
Zhanqi ent
of Lufeng
Company
Zhang Financial Incumb
95,200 17,500 77,700
Kemin Manager ent
Manager of the
Third Department Incumb
Pan Pingli 126,096 126,096
of International ent
Business
Lu Vice President of Incumb
52,900 19,150 33,750
Yongchen Lufeng Company ent
Yu Manager of Incumb
83,100 83,100
Shouzheng Energy Business ent
35
2015 Semi-annual Report of Hubei Sanonda Co., Ltd.
Unit
Marketing Incumb
Quan Peng 37,000 9,250 27,750
Manager ent
Manager of the
Wang First Department Incumb
22,500 22,500
Changzhao of International ent
Business
Manager of the
Second
Fujiwara Incumb
Department of
Matsuzaka ent
International
Business
Manager of
Shang
Enterprises Incumb
Chenggan 30,000 30,000
Management ent
g
Department
Total -- -- 1,872,287 0 73,497 1,798,790 0 0 0
II. Changes in directors, supervisors and senior management staffs
□ Applicable √ Inapplicable
There was no change in directors, supervisors and senior management staffs, for the specific information please refer to the 2014
Annual Report.
36
2015 Semi-annual Report of Hubei Sanonda Co., Ltd.
IX. Financial Report
I. Audit report
Has this semi-annual report been audited?
□ Yes √ No
The semi-annual financial report has not been audited.
II. Financial statements
Currency unit for the statements in the notes to these financial statements: RMB Yuan
1. Consolidated balance sheet
Prepared by Luthai Textile Co., Ltd.
Unit: RMB Yuan
Item Closing balance Opening balance
Current Assets:
Monetary funds 617,438,330.66 666,293,798.30
Financial assets measured at fair value of which changes are
8,940,500.00
recorded in current profits and losses
Derivative financial assets
Notes receivable 156,152,198.91 113,804,477.43
Accounts receivable 226,051,838.68 211,970,554.10
Accounts paid in advance 103,892,791.25 174,865,932.88
Interests receivable 276,998.88
Dividend receivable
Other accounts receivable 52,707,824.63 63,378,909.28
Financial assets purchased under agreements to resell
Inventories 1,761,317,044.76 1,752,570,382.21
Assets held for sale
Non-current assets due within 1 year
Other current assets 42,693,828.68 5,167,324.98
Total current assets 2,969,471,356.45 2,988,051,379.18
Non-current assets:
Loans by mandate and advances granted
37
2015 Semi-annual Report of Hubei Sanonda Co., Ltd.
Available-for-sale financial assets 67,442,600.00 67,442,600.00
Held-to-maturity investments
Long-term accounts receivable 5,480,998.00 6,980,998.00
Long-term equity investment
Investing real estate 4,821,040,273.78 4,930,848,056.04
Fixed assets 169,986,070.61 123,585,226.80
Construction in progress 36,271,623.62 19,885,765.41
Engineering materials
Disposal of fixed assets 1,186,002.52 1,310,500.00
Production biological assets
Oil-gas assets 369,277,715.52 373,760,347.71
Intangible assets
R&D expense 20,613,803.29 20,613,803.29
Goodwill 62,915,183.57 28,319,033.27
Long-term deferred expenses 49,166,206.77 49,963,446.84
Deferred income tax assets 12,781,283.00 16,910,237.34
Other non-current assets 5,616,161,760.68 5,639,620,014.70
Total of non-current assets 8,585,633,117.13 8,627,671,393.88
Total assets
Current liabilities: 746,589,910.47 517,452,946.24
Short-term borrowings 3,306,200.00
Financial liabilities measured at fair value of which changes
are recorded in current profits and losses
Derivative financial liabilities 7,199,537.34 7,421,979.09
Notes payable 236,608,151.92 344,082,239.16
Accounts payable 91,532,874.42 82,176,191.45
Accounts received in advance
Financial assets sold for repurchase
Handling charges and commissions payable 233,026,460.79 261,539,206.93
Payroll payable 73,144,940.64 74,052,405.97
Tax payable 1,482,653.25 511,373.44
Interest payable 441,113.64 441,456.54
Dividend payable 68,269,754.38 58,075,873.18
Liabilities divided as held for sale
38
2015 Semi-annual Report of Hubei Sanonda Co., Ltd.
Non-current liabilities due within 1 year 96,900,005.44 100,733,898.72
Other current liabilities
Total current liabilities 1,555,195,402.29 1,449,793,770.72
Non-current liabilities:
Long-term borrowings 9,904,645.59
Long-term payables 220,000.00
Long-term payroll payables 86,564,776.96 80,360,457.97
Specific payables
Estimated liabilities
Deferred income 65,573,951.20 67,057,221.40
Deferred income tax liabilities 3,405,002.86 2,064,713.02
Other non-current liabilities 1,840,000.00 1,840,000.00
Total non-current liabilities 157,383,731.02 161,447,037.98
Total liabilities 1,712,579,133.31 1,611,240,808.70
Owners’ equity:
Share capital 955,758,496.00 955,758,496.00
Capital reserves 1,007,080,654.01 1,007,039,561.13
Less: Treasury stock
Other comprehensive income -7,865,301.14 -8,440,178.37
Specific reserves
Surplus reserves 742,347,832.47 742,347,832.47
Provisions for general risks
Retained profits 3,758,708,803.04 3,892,066,534.32
Total equity attributable to owners of the Company 6,456,030,484.38 6,588,772,245.55
Minority interests 417,023,499.44 427,658,339.63
Total owners’ equity 6,873,053,983.82 7,016,430,585.18
Total liabilities and owners’ equity 8,585,633,117.13 8,627,671,393.88
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
Unit: RMB Yuan
Item Closing balance Opening balance
39
2015 Semi-annual Report of Hubei Sanonda Co., Ltd.
Current Assets:
Monetary funds 241,963,936.23 250,409,717.93
Financial assets measured at fair value of which changes are
8,762,300.00
recorded in current profits and losses
Derivative financial assets
Notes receivable 127,273,673.23 87,341,876.69
Accounts receivable 259,499,016.39 321,897,074.61
Accounts paid in advance 143,781,552.70 193,383,406.51
Interest receivable
Dividend receivable
Other accounts receivable 77,139,936.18 28,049,517.79
Inventories 1,280,645,343.77 1,206,795,514.65
Assets held for sale
Non-current assets due within 1 year
Other current assets 18,083,658.35 1,017,648.28
Total current assets 2,157,149,416.85 2,088,894,756.46
Non-current assets:
Available-for-sale financial assets 55,282,600.00 55,282,600.00
Held-to-maturity investments
Long-term accounts receivable
Long-term equity investment 1,360,779,450.91 1,170,861,572.56
Investing real estate
Fixed assets 3,046,661,640.69 3,115,567,670.72
Construction in progress 97,797,817.70 77,701,863.38
Engineering materials 32,012,487.22 18,626,397.04
Disposal of fixed assets
Intangible assets 235,637,881.13 239,561,216.15
R&D expense
Goodwill
Long-term deferred expenses
Deferred income tax assets 30,118,819.09 31,683,250.78
Other non-current assets 5,406,401.00 5,406,401.00
Total of non-current assets 4,863,697,097.74 4,714,690,971.63
Total assets 7,020,846,514.59 6,803,585,728.09
40
2015 Semi-annual Report of Hubei Sanonda Co., Ltd.
Current liabilities:
Short-term borrowings 481,283,192.20 109,116,402.18
Financial liabilities measured at fair value of which changes are
3,075,000.00
recorded in current profits and losses
Derivative financial liabilities
Notes payable 1,779,687.93 4,126,949.64
Accounts payable 373,984,751.33 370,179,503.31
Accounts received in advance 61,500,042.12 42,230,252.30
Payroll payable 183,964,773.56 201,779,896.86
Tax payable 53,233,329.65 38,755,976.56
Interest payable 1,119,526.14 401,695.08
Dividend payable 441,113.64 441,456.54
Other accounts payable 25,812,886.00 22,996,300.29
Liabilities held for sale
Non-current liabilities due within 1 year 96,900,005.44 100,733,898.72
Other current liabilities
Total current liabilities 1,280,019,308.01 893,837,331.48
Non-current liabilities:
Long-term borrowings 9,904,645.59
Long-term payables
Long-term payroll payables 86,564,776.96 80,360,457.97
Specific payables
Estimated liabilities
Deferred income 30,131,911.45
Deferred income tax liabilities 1,314,345.00
Other non-current liabilities 30,469,481.47
Total non-current liabilities 118,011,033.41 120,734,585.03
Total liabilities 1,398,030,341.42 1,014,571,916.51
Owners’ equity:
Share capital 955,758,496.00 955,758,496.00
Capital reserves 1,013,432,562.79 1,013,392,242.22
Less: Treasury stock
Other comprehensive income
Specific reserves
41
2015 Semi-annual Report of Hubei Sanonda Co., Ltd.
Surplus reserves 742,347,832.47 742,347,832.47
Retained profits 2,911,277,281.91 3,077,515,240.89
Total owners’ equity 5,622,816,173.17 5,789,013,811.58
Total liabilities and owners’ equity 7,020,846,514.59 6,803,585,728.09
3. Consolidated income statement
Unit: RMB Yuan
Item Jan.-Jun. 2015 Jan.-Jun 2014
I. Total operating revenues 2,941,835,897.16 3,114,226,581.62
Including: Sales income 2,941,835,897.16 3,114,226,581.62
II. Total operating costs 2,575,938,766.41 2,551,640,524.67
Including: Cost of sales 2,133,022,201.07 2,137,850,293.37
Taxes and associate charges 24,644,712.24 23,543,589.95
Selling and distribution expenses 97,645,409.00 93,108,145.82
Administrative expenses 311,323,333.58 294,932,674.63
Financial expenses 9,021,706.88 7,441,307.46
Asset impairment loss 281,403.64 -5,235,486.56
Add: Gain/(loss) from change in fair value (―-‖ means loss) 12,246,700.00 -30,999,150.00
Gain/(loss) from investment (―-‖ means loss) 28,860,565.88 21,278,949.08
Including: share of profits in associates and joint ventures
Foreign exchange gains (―-‖ means loss)
III. Business profit (―-‖ means loss) 407,004,396.63 552,865,856.03
Add: non-operating income 10,120,794.71 19,826,768.24
Including: Gains on disposal of non-current assets 809,936.96 50,957.05
Less: non-operating expense 4,245,414.06 3,095,122.00
Including: Losses on disposal of non-current assets 3,508,372.92 2,054,591.12
IV. Total profit (―-‖ means loss) 412,879,777.28 569,597,502.27
Less: Income tax expense 67,469,529.96 88,060,378.95
V. Net profit (―-‖ means loss) 345,410,247.32 481,537,123.32
Net profit attributable to owners of the Company 344,521,516.72 476,880,256.93
Minority shareholders’ income 888,730.60 4,656,866.39
VI. After-tax net amount of other comprehensive incomes 574,877.23 -3,361.77
After-tax net amount of other comprehensive incomes
574,877.23 -3,361.77
attributable to owners of the Company
42
2015 Semi-annual Report of Hubei Sanonda Co., Ltd.
(I) Other comprehensive incomes that will not be
0.00 0.00
reclassified into gains and losses
1. Changes in net liabilities or assets with a defined
benefit plan upon re-measurement
2. Enjoyable shares in other comprehensive incomes in
investees that cannot be reclassified into gains and losses under the
equity method
(II) Other comprehensive incomes that will be reclassified
574,877.23 -3,361.77
into gains and losses
1. Enjoyable shares in other comprehensive incomes in
investees that will be reclassified into gains and losses under the
equity method
2. Gains and losses on fair value changes of
available-for-sale financial assets
3. Gains and losses on reclassifying held-to-maturity
investments into available-for-sale financial assets
4. Effective hedging gains and losses on cash flows
5. Foreign-currency financial statement translation
574,877.23 -3,361.77
difference
6. Other
After-tax net amount of other comprehensive incomes
0.00 0.00
attributable to minority shareholders
VII. Total comprehensive incomes 345,985,124.55 481,533,761.55
Attributable to owners of the Company 345,096,393.95 476,876,895.16
Attributable to minority shareholders 888,730.60 4,656,866.39
VIII. Earnings per share
(I) Basic earnings per share 0.36 0.50
(II) Diluted earnings per share 0.36 0.50
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 0.00, with the corresponding amount for the last period being RMB 0.00.
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
Unit: RMB Yuan
Item Jan.-Jun. 2015 Jan.-Jun 2014
43
2015 Semi-annual Report of Hubei Sanonda Co., Ltd.
I. Total sales 2,349,612,417.89 2,318,199,524.10
Less: cost of sales 1,758,744,212.34 1,597,127,786.85
Business taxes and surcharges 19,480,809.00 18,087,930.63
Distribution expenses 45,373,972.47 42,177,311.93
Administrative expenses 219,608,083.56 207,830,441.84
Financial costs 3,375,063.52 -4,724,701.39
Impairment loss -134,329.66 -1,149,272.05
Add: gain/(loss) from change in fair value (―-‖ means loss) 11,837,300.00 -25,806,330.00
Gain/(loss) from investment (―-‖ means loss) 44,516,145.09 18,121,509.04
Including: income form investment on associates and joint
ventures
II. Business profit (―-‖ means loss) 359,518,051.75 451,165,205.33
Add: non-operating income 5,545,066.24 16,288,206.88
Including: Gains on disposal of non-current assets 387,422.95 14,336.05
Less: non-operating expense 3,678,908.31 2,695,250.29
Including: Losses on disposal of non-current assets 3,415,846.41 2,052,914.51
III. Total profit (―-‖ means loss) 361,384,209.68 464,758,161.92
Less: Income tax expense 49,742,920.66 66,308,533.24
IV. Net profit (―-‖ means loss) 311,641,289.02 398,449,628.68
V. After-tax net amount of other comprehensive incomes
(I) Other comprehensive incomes that will not be reclassified
into gains and losses
1. Changes in net liabilities or assets with a defined benefit
plan upon re-measurement
2. Enjoyable shares in other comprehensive incomes in
investees that cannot be reclassified into gains and losses under
the equity method
(II) Other comprehensive incomes that will be reclassified into
gains and losses
1. Enjoyable shares in other comprehensive incomes in
investees that will be reclassified into gains and losses under the
equity method
2. Gains and losses on fair value changes of
available-for-sale financial assets
3. Gains and losses on reclassifying held-to-maturity
investments into available-for-sale financial assets
44
2015 Semi-annual Report of Hubei Sanonda Co., Ltd.
4. Effective hedging gains and losses on cash flows
5. Foreign-currency financial statement translation
difference
6. Other
VI. Total comprehensive incomes 311,641,289.02 398,449,628.68
VII. Earnings per share
(I) Basic earnings per share 0.33 0.42
(II) Diluted earnings per share 0.33 0.42
5. Consolidated cash flow statement
Unit: RMB Yuan
Item Jan.-Jun. 2015 Jan.-Jun 2014
I. Cash flows from operating activities:
Cash received from sale of commodities and rendering of service 2,992,674,009.04 3,568,438,894.82
Tax refunds received 93,858,466.25 97,652,110.13
Other cash received relating to operating activities 25,282,652.25 34,150,812.11
Subtotal of cash inflows from operating activities 3,111,815,127.54 3,700,241,817.06
Cash paid for goods and services 1,691,745,901.39 2,273,582,667.90
Cash paid to and for employees 718,208,701.78 694,142,394.03
Various taxes paid 198,822,332.08 197,273,969.71
Other cash payment relating to operating activities 140,733,568.16 136,200,221.55
Subtotal of cash outflows from operating activities 2,749,510,503.41 3,301,199,253.19
Net cash flows from operating activities 362,304,624.13 399,042,563.87
II. Cash flows from investing activities:
Cash received from withdrawal of investments
Cash received from return on investments 120,000.00
Net cash received from disposal of fixed assets, intangible assets and
1,737,285.10 7,702,214.30
other long-term assets
Net cash received from disposal of subsidiaries or other business units
Other cash received relating to investing activities 30,578,737.15 25,956,477.08
Subtotal of cash inflows from investing activities 32,316,022.25 33,778,691.38
Cash paid to acquire fixed assets, intangible assets and other long-term
160,460,938.77 370,150,102.18
assets
Cash paid for investment
Net increase of pledged loans
45
2015 Semi-annual Report of Hubei Sanonda Co., Ltd.
Net cash paid to acquire subsidiaries and other business units
Other cash payments relating to investing activities
Subtotal of cash outflows from investing activities 160,460,938.77 370,150,102.18
Net cash flows from investing activities -128,144,916.52 -336,371,410.80
III. Cash Flows from Financing Activities:
Cash received from capital contributions 500,000.00 500,000.00
Including: Cash received from minority shareholder investments by
subsidiaries
Cash received from borrowings 993,805,040.42 532,825,398.05
Cash received from issuance of bonds
Other cash received relating to financing activities 16,000,000.00 12,000,000.00
Subtotal of cash inflows from financing activities 1,010,305,040.42 545,325,398.05
Repayment of borrowings 787,580,420.34 627,477,883.01
Cash paid for interest expenses and distribution of dividends or profit 490,595,877.74 374,793,800.40
Including: dividends or profit paid by subsidiaries to minority
shareholders
Other cash payments relating to financing activities 89,026,946.69 37,829,195.86
Sub-total of cash outflows from financing activities 1,367,203,244.77 1,040,100,879.27
Net cash flows from financing activities -356,898,204.35 -494,775,481.22
IV. Effect of foreign exchange rate changes on cash and cash equivalents 1,756,082.41 4,500,943.46
V. Net increase in cash and cash equivalents -120,982,414.33 -427,603,384.69
Add: Opening balance of cash and cash equivalents 649,393,798.30 869,909,505.89
VI. Closing balance of cash and cash equivalents 528,411,383.97 442,306,121.20
6. Cash flow statement of the Company
Unit: RMB Yuan
Item Jan.-Jun. 2015 Jan.-Jun 2014
I. Cash flows from operating activities:
Cash received from sale of commodities and rendering of service 2,336,436,365.15 2,383,169,213.86
Tax refunds received 73,075,990.33 73,631,880.88
Other cash received relating to operating activities 4,527,263.52 16,447,073.61
Subtotal of cash inflows from operating activities 2,414,039,619.00 2,473,248,168.35
Cash paid for goods and services 1,308,152,825.95 1,561,524,048.28
Cash paid to and for employees 539,106,972.54 514,917,192.50
46
2015 Semi-annual Report of Hubei Sanonda Co., Ltd.
Various taxes paid 79,761,593.87 109,178,916.64
Other cash payment relating to operating activities 139,312,208.90 75,754,434.35
Subtotal of cash outflows from operating activities 2,066,333,601.26 2,261,374,591.77
Net cash flows from operating activities 347,706,017.74 211,873,576.58
II. Cash flows from investing activities:
Cash received from retraction of investments
Cash received from return on investments
Net cash received from disposal of fixed assets, intangible assets and
1,256,075.10 7,701,414.30
other long-term assets
Net cash received from disposal of subsidiaries or other business
units
Other cash received relating to investing activities 27,204,025.23 22,068,024.08
Subtotal of cash inflows from investing activities 28,460,100.33 29,769,438.38
Cash paid to acquire fixed assets, intangible assets and other
70,584,062.37 276,799,324.68
long-term assets
Cash paid for investment 188,902,292.69 46,904,386.53
Net cash paid to acquire subsidiaries and other business units
Other cash payments relating to investing activities
Subtotal of cash outflows from investing activities 259,486,355.06 323,703,711.21
Net cash flows from investing activities -231,026,254.73 -293,934,272.83
III. Cash Flows from Financing Activities:
Cash received from capital contributions
Cash received from borrowings 582,862,081.60 385,959,946.25
Cash received from issuance of bonds
Other cash received relating to financing activities
Subtotal of cash inflows from financing activities 582,862,081.60 385,959,946.25
Repayment of borrowings 233,690,218.65 100,813,799.73
Cash paid for interest expenses and distribution of dividends or
473,634,519.64 366,017,598.04
profit
Other cash payments relating to financing activities 61,013,728.00 25,829,195.86
Sub-total of cash outflows from financing activities 768,338,466.29 492,660,593.63
Net cash flows from financing activities -185,476,384.69 -106,700,647.38
IV. Effect of foreign exchange rate changes on cash and cash
237,111.98 4,175,149.60
equivalents
V. Net increase in cash and cash equivalents -68,559,509.70 -184,586,194.03
47
2015 Semi-annual Report of Hubei Sanonda Co., Ltd.
Add: Opening balance of cash and cash equivalents 249,509,717.93 503,157,687.92
VI. Closing balance of cash and cash equivalents 180,950,208.23 318,571,493.89
48
2015 Semi-annual Report of Hubei Sanonda Co., Ltd.
7. Consolidated statement of changes in owners’ equity
Jan.-Jun. 2015
Unit: RMB Yuan
Jan.-Jun. 2015
Equity attributable to owners of the Company
Other equity instruments
Item Minority Total owners’
Less: Other General
Perpetual Specific
Share capital Preferred Capital reserve treasury comprehensive Surplus reserve risk Retained profit interests equity
capital Other reserve
shares stock income reserve
securities
I. Balance at the
end of the 955,758,496.00 1,007,039,561.13 -8,440,178.37 742,347,832.47 3,892,066,534.32 427,658,339.63 7,016,430,585.18
previous year
Add: change
of accounting
policy
Correction of
errors in
previous periods
Business
combination
under the same
control
Other
II. Balance at the
955,758,496.00 1,007,039,561.13 -8,440,178.37 742,347,832.47 3,892,066,534.32 427,658,339.63 7,016,430,585.18
period-begin
III. Increase/ 41,092.88 574,877.23 -133,357,731.28 -10,634,840.19 -143,376,601.36
49
2015 Semi-annual Report of Hubei Sanonda Co., Ltd.
decrease in the
period (―-‖
means decrease)
(I) Total
amount of the
574,877.23 344,521,516.72 888,730.60 345,985,124.55
comprehensive
income
(II) Capital
paid in and
41,092.88 500,000.00 541,092.88
reduced by
owners
1. Common
shares invested
500,000.00 500,000.00
by the
shareholders
2. Capital
invested by the
owners of other
equity
instruments
3. Amounts of
share-based
payments
recognized in
owners’ equity
4. Others 41,092.88 41,092.88
(III) Profit
-477,879,248.00 -12,023,570.79 -489,902,818.79
distribution
50
2015 Semi-annual Report of Hubei Sanonda Co., Ltd.
1.
Appropriations
to surplus
reserves
2.
Appropriations
to general risk
provisions
3.
Appropriations
-477,879,248.00 -12,023,570.79 -489,902,818.79
to owners (or
shareholders)
4. Other
(IV) Internal
carry-forward of
owners’ equity
1. New increase
of capital (or
share capital)
from capital
public reserves
2. New increase
of capital (or
share capital)
from surplus
reserves
3. Surplus
reserves for
51
2015 Semi-annual Report of Hubei Sanonda Co., Ltd.
making up losses
4. Other
(V) Specific
reserve
1. Withdrawn for
the period
2. Used in the
period
(VI) Other
IV. Closing
955,758,496.00 1,007,080,654.01 -7,865,301.14 742,347,832.47 3,758,708,803.04 417,023,499.44 6,873,053,983.82
balance
Jan.-Jun. 2014
Unit: RMB Yuan
Jan.-Jun. 2014
Equity attributable to owners of the Company
Other equity instruments
Item Minority Total owners’
Less: Other General
Perpetual Specific
Share capital Preferred Capital reserve treasury comprehensive Surplus reserve risk Retained profit interests equity
capital Other reserve
shares stock income reserve
securities
I. Balance at the
end of the 955,800,496.00 1,000,854,805.66 -7,494,320.36 659,538,411.25 3,379,354,741.18 426,545,843.68 6,414,599,977.41
previous year
Add: change
of accounting
policy
Correction of
52
2015 Semi-annual Report of Hubei Sanonda Co., Ltd.
errors in
previous periods
Business
combination
under the same
control
Other
II. Balance at the
955,800,496.00 1,000,854,805.66 -7,494,320.36 659,538,411.25 3,379,354,741.18 426,545,843.68 6,414,599,977.41
period-begin
III. Increase/
decrease in the
-42,000.00 6,184,755.47 -945,858.01 82,809,421.22 512,711,793.14 1,112,495.95 601,830,607.77
period (―-‖
means decrease)
(I) Total
amount of the
-945,858.01 958,725,402.84 20,651,778.73 978,431,323.56
comprehensive
income
(II) Capital
paid in and
-42,000.00 6,184,755.47 20,539,282.79 26,682,038.26
reduced by
owners
1. Common
shares invested
-42,000.00 -169,050.00 20,539,282.79 20,328,232.79
by the
shareholders
2. Capital
invested by the
owners of other
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2015 Semi-annual Report of Hubei Sanonda Co., Ltd.
equity
instruments
3. Amounts of
share-based
payments 6,041,853.38 6,041,853.38
recognized in
owners’ equity
4. Others 311,952.09 311,952.09
(III) Profit
82,809,421.22 -446,013,609.70 -40,078,565.57 -403,282,754.05
distribution
1.
Appropriations
82,809,421.22 -82,809,421.22
to surplus
reserves
2.
Appropriations
to general risk
provisions
3.
Appropriations
-363,204,188.48 -40,078,565.57 -403,282,754.05
to owners (or
shareholders)
4. Other
(IV) Internal
carry-forward of
owners’ equity
1. New increase
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2015 Semi-annual Report of Hubei Sanonda Co., Ltd.
of capital (or
share capital)
from capital
public reserves
2. New increase
of capital (or
share capital)
from surplus
reserves
3. Surplus
reserves for
making up losses
4. Other
(V) Specific
reserve
1. Withdrawn for
the period
2. Used in the
period
(VI) Other
IV. Closing
955,758,496.00 1,007,039,561.13 -8,440,178.37 742,347,832.47 3,892,066,534.32 427,658,339.63 7,016,430,585.18
balance
8. Statement of changes in owners’ equity of the Company
Jan.-Jun. 2015
Unit: RMB Yuan
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2015 Semi-annual Report of Hubei Sanonda Co., Ltd.
Jan.-Jun. 2015
Other equity instruments
Less: Other
Item Specific Total owners’
Perpetual
Share capital Preferred Capital reserve treasury comprehensive Surplus reserve Retained profit
capital Other reserve equity
shares stock income
securities
I. Balance at the end of the
955,758,496.00 1,013,392,242.22 742,347,832.47 3,077,515,240.89 5,789,013,811.58
previous year
Add: change of accounting
policy
Correction of errors in
previous periods
Other
II. Balance at the
955,758,496.00 1,013,392,242.22 742,347,832.47 3,077,515,240.89 5,789,013,811.58
period-begin
III. Increase/ decrease in the
40,320.57 -166,237,958.98 -166,197,638.41
period (―-‖ means decrease)
(I) Total amount of the
311,641,289.02 311,641,289.02
comprehensive income
(II) Capital paid in and
40,320.57 40,320.57
reduced by owners
1. Common shares invested
by the shareholders
2. Capital invested by the
owners of other equity
instruments
3. Amounts of share-based
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2015 Semi-annual Report of Hubei Sanonda Co., Ltd.
payments recognized in
owners’ equity
4. Others 40,320.57 40,320.57
(III) Profit distribution -477,879,248.00 -477,879,248.00
1. Appropriations to surplus
reserves
2. Appropriations to general
-477,879,248.00 -477,879,248.00
risk provisions
3. Appropriations to owners
(or shareholders)
4. Other
(IV) Internal
carry-forward of owners’
equity
1. New increase of capital (or
share capital) from capital
public reserves
2. New increase of capital (or
share capital) from surplus
reserves
3. Surplus reserves for
making up losses
4. Other
(V) Specific reserve
1. Withdrawn for the period
2. Used in the period
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2015 Semi-annual Report of Hubei Sanonda Co., Ltd.
(VI) Other 955,758,496.00 1,013,432,562.79 742,347,832.47 2,911,277,281.91 5,622,816,173.17
Jan.-Jun. 2014
Unit: RMB Yuan
Jan.-Jun. 2014
Other equity instruments
Less: Other
Item Specific Total owners’
Perpetual
Share capital Preferred Capital reserve treasury comprehensive Surplus reserve Retained profit
capital Other reserve equity
shares stock income
securities
I. Balance at the end of the
955,800,496.00 1,007,207,486.75 659,538,411.25 2,695,434,638.41 5,317,981,032.41
previous year
Add: change of accounting
policy
Correction of errors in
previous periods
Other
II. Balance at the
955,800,496.00 1,007,207,486.75 659,538,411.25 2,695,434,638.41 5,317,981,032.41
period-begin
III. Increase/ decrease in the
-42,000.00 6,184,755.47 82,809,421.22 382,080,602.48 471,032,779.17
period (―-‖ means decrease)
(I) Total amount of the
828,094,212.18 828,094,212.18
comprehensive income
(II) Capital paid in and
-42,000.00 6,184,755.47 6,142,755.47
reduced by owners
1. Common shares invested
-42,000.00 -169,050.00 -211,050.00
by the shareholders
2. Capital invested by the
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2015 Semi-annual Report of Hubei Sanonda Co., Ltd.
owners of other equity
instruments
3. Amounts of share-based
payments recognized in 6,041,853.38 6,041,853.38
owners’ equity
4. Others 311,952.09 311,952.09
(III) Profit distribution 82,809,421.22 -446,013,609.70 -363,204,188.48
1. Appropriations to surplus
82,809,421.22 -82,809,421.22
reserves
2. Appropriations to general
-363,204,188.48 -363,204,188.48
risk provisions
3. Appropriations to owners
(or shareholders)
4. Other
(IV) Internal
carry-forward of owners’
equity
1. New increase of capital (or
share capital) from capital
public reserves
2. New increase of capital (or
share capital) from surplus
reserves
3. Surplus reserves for
making up losses
4. Other
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2015 Semi-annual Report of Hubei Sanonda Co., Ltd.
(V) Specific reserve
1. Withdrawn for the period
2. Used in the period
(VI) Other 955,758,496.00 1,013,392,242.22 742,347,832.47 3,077,515,240.89 5,789,013,811.58
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2015 Semi-annual Report of Hubei Sanonda Co., Ltd.
III. Company Profile
Lu Thai Textile Co., Ltd. (hereinafter referred to as the Company) is a joint venture invested by Zibo Lucheng
Textile Investment Co., Ltd (originally named Zibo Lucheng Textile Co., Ltd, hereinafter referred to as Lucheng
Textile) and Thailand Tailun Textile Co., Ltd. On Feb. 3, 1993, the Company is approved by the former Ministry
of Foreign Trade and Economy of the State (1993) in WJMZEHZ No. 59 to convert into a joint-stock enterprise.
Zibo Administration for Industry and Commerce issued the Company corporate business license with the
registration No. of QGLZZZ No. 000066. In July 1997, the Company is approved by the Securities Committee of
the Department of the State in the ZWF (1997) No. 47 to issue 80 million shares of domestically listed foreign
share( B-shares) at the price of RMB 1.00 per share. Upon approved by Shenzhen Stock Exchange with No. (1997)
296 Listing Notice, the Company is listed on the Shenzhen Stock Exchange on August 19, 1997 with B-shares
stock code of 200726. On November 24, 2000, approved by ZJGSZ [2000] No.199 by CSRC, the Company
increased publication of 50 million shares of general share (A-shares) at the book value of RMB 1.00, which are
listed on the Shenzhen Stock Exchange on December 25, 2000 with A-shares stock code of 000726 through
approval by Shenzhen Stock Exchange with No. (2000) 162 Listing Notice. As approved by 2000 Shareholders’
General Meeting in May, 2001, the Company carried out the distribution plan that 10 shares of capital public
reserve are converted to 3 more shares for each 10 shares. As approved by Resolutions of 2001 Shareholders’
General Meeting in June 2002, the Company implemented the distribution plan that 10 shares of capital public
reserve are converted 3 more shares for each 10 shares again. As approved by 2002 Shareholders’ General
Meeting in May 2003, the Company implemented the distribution plan that 10 shares of capital public reserve are
2 more shares for each 10 shares, and inner employees’ shared increased to 40.56 million shares. After examined
and approved by ZJGSZ No. [2000] 199 of CSRC, the inner employees’ shares will start circulation 3 years later
since listing on the A-share market. On Dec. 25, 2003, the inner employees’ shares reach 3 years since listing on
the A-share stock market, and they set out circulation on Dec.26, 2003. As approved by the Shareholders’ General
Meeting 2006 held in June 2007, the Company implemented the plan on converting 10 shares to all its
shareholders with capital reserves for every 10 shares. After capitalization, the registered capital of the Company
was RMB 844.8648 million. The Company, in accordance with the official reply on approving Lu Thai Textile Co.,
Ltd. to issue additional shares (ZJXK [2008] No. 890 document) from CSRC, issued the Renminbi common
shares (A shares) amounting to 150 million shares on 8 Dec. 2008. According to the relevant resolution of the 2nd
Special Shareholders’ General Meeting for 2011, the relevant resolution of the 15th Session of the 6th Board of
Directors, the Opinion of China Securities Regulatory Commission on the Restricted Share Incentive Plan of Lu
Thai Textile Co., Ltd. (Shang-Shi-Bu-Han [2011] No. 206), the Company applied for a registered capital
increment of RMB 14.09 million, which was contributed by restricted share incentive receivers with monetary
funds. In accordance with the resolution of Proposal on Repurchasing and Canceling Partial Restricted Shares
already Granted for the Original Incentive Targets not Reaching the Incentive Conditions made at the 23rd Session
of the 6th Board of Directors on 13 Aug. 2012, the Company canceling a total of 60,000.00 shares already granted
for the original incentive targets not reaching the incentive conditions. According to the second temporary
resolution of Proposal on counter purchase of part of the domestic listed foreign share (B share) on 25 Jun. 2012,
the Company counter purchase domestic listed foreign share (B share) 48,837,300 shares. According to the
Proposal on Repurchase and Cancel Part of Unlocked Restricted Share of the Original Incentive Personnel not
Conforming to the Incentive Condition, Proposal on Repurchase and Cancel unlocked Restricted Share in Second
Unlocked Period of all the Incentive Personnel reviewed and approved by the 26th meeting of 6th session of the
board of the directors on 27 Mar. 2013, the Company repurchase and cancel 4,257,000 shares owned by original
people whom to motivate. According to the Proposal on Repurchase and Write-off of Partly of the Original
Incentive Targets Not Met with the Incentive Conditions but Granted Restricted Shares approved on the 11th
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2015 Semi-annual Report of Hubei Sanonda Co., Ltd.
Session of the 7th Board of Directors on 11 Jun. 2014, to execute repurchase and write-off of the whole granted
shares of 42,000 shares of the original incentive targets not met with the incentive targets of the Company. Up to
31 Dec. 2014, the registered capital of the Company was of RMB 955.7585 million.
The Company’s registered address: No. 11, Mingbo Road, Hi-tech Development Zone, Zibo, Shandong
The Company’s legal representative: Liu Shizhen
The Company’s business scope includes production of cotton yarn, yarn dyed fabrics, shirts, fashion accessories,
health underwear and other textile products and their mating products; domestic and overseas sale of the
Company’s self-produced products and provision of after-sales services; acquisition and export of products not
under exclusive rights or quota licenses; and hotel, guesthouses and catering services as well as the construction
and management of the purified water projects.
The Company’s financial statements have been approved for issue by the Board of Directors of the Company on
25 Aug. 2015.
There were 15 subsidiaries included into the consolidation scope of the Company in 2015, and for the details,
please refer to Notes IX. Equities among Other Entities. There was 1 subsidiaries increased of 2015 in the
consolidation scope over the last year, and please refer to Notes VIII. Changes in Consolidation Scope for details.
IV. Basis for the preparation of financial statements
1. Preparation basis
With the going-concern assumption as the basis and based on transactions and other events that
actually occurred, the Group prepared financial statements in accordance with issued by the Ministry of Finance with
Decree No. 33 and revised with Decree No. 76, the 41 specific accounting standards, the
Application Guidance of Accounting Standards for Business Enterprises, the Interpretation of
Accounting Standards for Business Enterprises and other regulations issued and revised from 15
Feb. 2006 onwards (hereinafter jointly referred to as ―the Accounting Standards for Business
Enterprises‖, ―China Accounting Standards‖ or ―CAS‖), as well as the Rules for Preparation
Convention of Disclosure of Public Offering Companies No.15 – General Regulations for Financial
Reporting (revised in 2014) by China Securities Regulatory Commission.
In accordance with relevant provisions of the Accounting Standards for Business Enterprises, the
Group adopted the accrual basis in accounting. Except for some financial instruments, where
impairment occurred on an asset, an impairment reserve was withdrawn accordingly pursuant to
relevant requirements.
2. Continuing operations
There was no any event or situation caused major concerns on the continuing operation ability of
the Company within 12 months from the period-end.
V. Significant accounting policies and estimates
Reminder of the specific accounting policies and estimates:
The Company and each subsidiary mainly engage in the production and operation of textile
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2015 Semi-annual Report of Hubei Sanonda Co., Ltd.
products. The Company and each subsidiary according to the actual production and operation
characteristics and the regulations of the relevant ASBE, formulated certain specific accounting
polices and accounting estimates of the transactions and events such as recognizing the revenues,
and please refer to each description of Notes V. for details. For the notes of the significant
accounting adjustment and estimates made by the management layer, please refer to the Changes in
Significant Accounting Adjustment and Estimates.
1. Statement of Compliance with the Accounting Standards for Business Enterprises
The financial statements prepared by the Company are in compliance with in compliance with the
Accounting Standards for Business Enterprises, which factually and completely present the
Company’s, and the Company’s financial positions as at 30 Jun. 2015, business results and cash
flows for the year of 2015, and other relevant information. In addition, the Company’s and the
Company’s financial statements meet the requirements of disclosing financial statements and notes
thereto stated in the Rules for Preparation Convention of Disclosure of Public Offering Companies
No.15 – General Regulations for Financial Reporting (revised in 2014) by China Securities
Regulatory Commission.
2. Fiscal period
The Company’s fiscal periods include fiscal years and fiscal periods shorter than a complete fiscal
year. The Company’s fiscal year starts on 1 Jan. and ends on 31 Dec. of every year according to the
Gregorian calendar.
3. Operating cycle
Normal operating cycle refers to the period from the Group purchases the assets for processing to
realize the cash or cash equivalents. The Group regards 12 months as an operating cycle and regards
which as the partition criterion of the mobility of the assets and liabilities.
4. Recording currency
Renminbi (RMB) is the prevailing currency used in the main economic circumstances of the
Company and its domestic subsidiaries. The Company and its domestic subsidiaries adopt RMB as
the recording currency. When preparing the financial statements for the reporting period, the
Company adopted RMB as the recording currency.
5. Accounting treatment methods for business combinations under the same control or not under the same
control
Business combinations, it is refer to two or more separate enterprises merge to form a reporting
entity transactions or events. Business combination is divided into under the same control and those
non under the same control.
(1) Business combinations under the same control
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2015 Semi-annual Report of Hubei Sanonda Co., Ltd.
A business combination under the same control is a business combination in which all of the
combining enterprises are ultimately controlled by the same party or the same parties both before
and after the business combination and on which the control is not temporary. In a business
combination under the same control, the party which obtains control of other combining enterprise(s)
on the combining date is the combining party, the other combining enterprise(s) is (are) the
combined party. The ―combining date‖ refers to the date on which the combining party actually
obtains control on the combined party.
The assets and liabilities that the combining party obtains in a business combination shall be
measured on the basis of their carrying amount in the combined party on the combining date. As for
the balance between the carrying amount of the net assets obtained by the combining party and the
carrying amount of the consideration paid by it (or the total par value of the shares issued), the
additional paid-in capital (share premium) shall be adjusted. If the additional paid-in capital (share
premium) is not sufficient to be offset, the retained earnings shall be adjusted.
The direct cost for the business combination of the combining party shall be recorded into the
profits and losses at the current period.
(2) Business combinations not under the same control
A business combination not under the same control is a business combination in which the
combining enterprises are not ultimately controlled by the same party or the same parties both
before and after the business combination. In a business combination not under the same control,
the party which obtains the control on other combining enterprise(s) on the purchase date is the
acquirer, and other combining enterprise(s) is (are) the acquiree.
For a business combination not under the same control, the combination costs shall include the fair
values, on the acquisition date, of the assets paid, the liabilities incurred or assumed and the equity
securities issued by the acquirer in exchange for the control on the acquiree, the expenses for audit,
legal services and assessment, and other administrative expenses, which are recorded into the
profits and losses in the current period. The trading expenses for the equity securities or debt
securities issued by the acquirer as the combination consideration shall be recorded into the amount
of initial measurement of the equity securities or debt securities. The involved contingent
consideration shall be recorded into the combination costs at its fair value on the acquiring date.
Where new or further evidences emerge, within 12 months since the acquiring date, against the
existing circumstances on the acquiring date and the contingent consideration thus needs to be
adjusted, the combined goodwill shall be adjusted accordingly. The combination costs of the
acquirer and the identifiable net assets obtained by it in the combination shall be measured
according to their fair values at the acquiring date. The acquirer shall recognize the positive balance
between the combination costs and the fair value of the identifiable net assets it obtains from the
acquiree as business reputation. Where the combination costs are less then the fair value of the
identifiable net assets it obtains from the acquiree, the acquirer shall re-examine the measurement of
the fair values of the identifiable assets, liabilities and contingent liabilities it obtains from the
acquiree as well as the combination costs. If, after the reexamination, the combination costs are still
less than the fair value of the identifiable net assets it obtains from the acquiree, the acquirer shall
record the balance into the profits and losses of the current period.
As for the deductible temporary differences the acquirer obtains from the acquiree which are not
recognized into deferred income tax liabilities due to their not meeting the recognition standards, if
new or further information shows that the relevant situation has existed on the acquiring date and
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2015 Semi-annual Report of Hubei Sanonda Co., Ltd.
the economic benefits brought by the deductible temporary differences the acquirer obtains from the
acquiree on the acquiring date can be realized, they shall be recognized into deferred income tax
assets and the relevant goodwill shall be reduced. Where the goodwill is not sufficient to be offset,
the difference shall be recognized into the profits and losses in the current period. In other
circumstances than the above, where the deductible temporary differences are recognized into
deferred income tax assets on the acquiring date, they shall be recorded into the profits and losses in
the current period.
In a business combination not under same control realized by two or more transactions of exchange,
according to about the 5th Notice about the Treasury Issuing the Accounting Standards for
Enterprises (Finance accounting) [2012] No. 19 Criterion about the ―package deal‖ (see Notes IV, 4
(2)), Whether the deals are ―package deal‖ or not, belong to the ―package deal‖, see the previous
paragraphs described in this section and Notes IV, 10 ―long term equity investment transaction‖ and
conduct accounting treatment, those not belong to the "package deal" distinguish between the
individual financial statements and the consolidated financial statements and conduct relevant
accounting treatment.
In the individual financial statements, the sum of the book value and new investment cost of the
Company holds in the acquiree before the acquiring date shall be considered as initial cost of the
investment. Other related comprehensive gains in relation to the equity interests that the Company
holds in the acquiree before the acquiring date shall be treated on the same basis as the acquiree
directly disposes the related assets or liabilities when disposing the investment (that is, except for
the corresponding share in the changes in the net liabilities or assets with a defined benefit plan
measured at the equity method arising from the acquiree’s re-measurement, the others shall be
transferred into current investment gains).
In the Company’s consolidated financial statements, as for the equity interests that the Company
holds in the acquiree before the acquiring date, they shall be re-measured according to their fair
values at the acquiring date; the positive difference between their fair values and carrying amounts
shall be recorded into the investment gains for the period including the acquiring date. Other related
comprehensive gains in relation to the equity interests that the Company holds in the acquiree
before the acquiring date shall be treated on the same basis as the acquiree directly disposes the
related assets or liabilities when disposing the investment (that is, except for the corresponding
share in the changes in the net liabilities or assets with a defined benefit plan measured at the equity
method arising from the acquiree’s re-measurement, the others shall be transferred into current
investment gains on the acquiring date).
6. Methods for preparing consolidated financial statements
(1) Principle for determining the consolidation scope
The consolidation scope for financial statements is determined on the basis of control. The term
―control‖ is the power of the Company upon an investee, with which it can take part in relevant
activities of the investee to obtain variable returns and is able to influence the amount of returns.
The consolidated financial statements comprise the financial statements of the Company and its
subsidiaries. A subsidiary is an enterprise or entity controlled by the Company.
(2) Methods for preparing the consolidated financial statements
Subsidiaries are fully consolidated from the date on which the Company obtains control on their net
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2015 Semi-annual Report of Hubei Sanonda Co., Ltd.
assets and operation decision-making and are de-consolidated from the date when such control
ceases. As for a disposed subsidiary, its operating results and cash flows before the disposal date has
been appropriately included in the consolidated income statement and cash flow statement; and as
for subsidiaries disposed in the current period, the opening items in the consolidated balance sheet
are not adjusted. For a subsidiary acquired in a business combination not under the same control, its
operating results and cash flows after the acquiring date have been appropriately included in the
consolidated income statement and cash flow statement, and the opening items and comparative
items in the consolidated financial statements are not adjusted. For a subsidiary acquired in a
business combination under the same control or a combined party obtained in a takeover, its
operating results and cash flows from the beginning of the reporting period of the combination to
the combination date have been appropriately included in the consolidated income statement and
cash flow statement, and the comparative items in the consolidated financial statements are adjusted
at the same time.
The financial statements of subsidiaries are adjusted in accordance with the accounting policies and
accounting period of the Company during the preparation of the consolidated financial statements,
where the accounting policies and the accounting periods are inconsistent between the Company
and subsidiaries. For a subsidiary acquired from a business combination not under the same control,
the individual financial statements of the subsidiary are adjusted based on the fair value of the
identifiable net assets at the acquisition date.
All significant inter-group balances, transactions and unrealized profits are offset in the
consolidated financial statements.
The portion of a subsidiary’s shareholders’ equity and the portion of a subsidiary’s net profits and
losses for the period not held by the Company are recognized as minority interests and minority
shareholder profits and losses respectively and presented separately under shareholders’ equity and
net profits in the consolidation financial statements. The portion of a subsidiary’s net profits and
losses for the period that belong to minority interests is presented as the item of ―minority
shareholder profits and losses‖ under the bigger item of net profits in the consolidated financial
statements. Where the loss of a subsidiary shared by minority shareholders exceeds the portion
enjoyed by minority shareholders in the subsidiary’s opening owners’ equity, minority interests are
offset.
Where the Company losses control on its original subsidiaries due to disposal of some equity
investments or other reasons, the residual equity interests are re-measured according to the fair
value on the date when such control ceases. The summation of the consideration obtained from the
disposal of equity interests and the fair value of the residual equity interests, minus the portion in
the original subsidiary’s net assets measured on a continuous basis from the acquisition date that is
enjoyable by the Company according to the original shareholding percentage in the subsidiary, is
recorded in investment gains for the period when the Company’s control on the subsidiary ceases.
Other comprehensive incomes in relation to the equity investment in the original subsidiary are
treated on the same accounting basis as the acquiree directly disposes the relevant assets or
liabilities (that is, except for the changes in the net liabilities or assets with a defined benefit plan
resulted from re-measurement of the original subsidiary, the rest shall all be transferred into current
investment gains) when such control ceases. And subsequent measurement is conducted on the
residual equity interests according to the No.2 Accounting Standard for Business Enterprises
—Long-term Equity Investments or the No.22 Accounting Standard for Business
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2015 Semi-annual Report of Hubei Sanonda Co., Ltd.
Enterprises—Recognition and Measurement of Financial Instruments. For details, see Notes IV, 13
―long term equity investment‖ or 9 ―financial instruments‖.
Where the Company losses control on its original subsidiaries due to step by step disposal of equity
investments through multiple transactions, it need to distinguish the Group losses control on its
subsidiaries due to disposal of equity investments whether belongs to a package deal. All the
transaction terms, conditions and economic impact of the disposal of subsidiaries’ equity investment
are in accordance with one or more of the following conditions, which usually indicate the multiple
transactions, should be considered as a package deal for accounting treatment. ① These deals are
at the same time or under the condition of considering the influence of each other to concluded; ②
These transactions only be as a whole can achieve a complete business result; ③ The occurrence
of a deal depends on at least one other transactions；④ A deal alone is not economical, it is
economical with other trading together. Those not belong to a package deal, each of them a deal
depends on circumstances respectively conduct accounting treatment in accordance with the
applicable principles of ―part disposal of subsidiaries of a long-term equity investment under the
condition of not losing control on its subsidiaries‖ (see Notes IV 13, (2) ④) and ―Where the
Company losses control on its original subsidiaries due to disposal of some equity investments or
other reasons‖ (see the front paragraph) relevant transactions of the Company losses control on its
subsidiaries due to disposal of equity investments belonging to a package deal, considered as a
transaction and conduct accounting treatment. However, Before losing control, every disposal cost
and corresponding net assets balance of subsidiary of disposal investment are confirmed as other
comprehensive income in consolidated financial statements, which together transferred into the
current profits and losses in the lose of control, when the Company losing control on its subsidiary.
7. Recognition standard for cash and cash equivalents
The term ―cash‖ refers to cash on hand and deposits that are available for payment at any time. The
term ―cash equivalents‖ refers to short-term (within 3 months from the purchase date) and highly
liquid investments that are readily convertible to known amounts of cash and which are subject to
an insignificant risk of change in value.
8. Foreign currency businesses and translation of foreign currency financial statements
(1) Accounting treatments for translation of foreign currency transactions
As for a foreign currency transaction, the Company shall convert the amount in a foreign currency
into amount in its bookkeeping base at the spot exchange rate (usually referring to the central parity
rate announced by the People’s Bank of China, the same below) of the transaction date, while as for
such transactions as foreign exchange or involving in foreign exchange, the Company shall
converted into amount in the bookkeeping base currency at actual exchange rate the transaction is
occurred.
(2) Accounting treatments for translation of foreign currency monetary items and non-monetary
items
On the balance sheet date, the foreign currency monetary items shall be translated at the spot
exchange rate on the balance sheet date. The exchange difference arising from the difference
between the spot exchange rate on the balance sheet date and the spot exchange rate at the time of
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2015 Semi-annual Report of Hubei Sanonda Co., Ltd.
initial recognition or prior to the balance sheet date shall be recorded in the profits and losses in the
current period, excluding the following situations: ① the exchange difference arising from foreign
currency loans related to acquisition of fixed assets shall be treated at the principle of capitalization
of borrowing costs; ② the exchange difference arising from the hedging instruments used for
effective hedging of net overseas operation investments shall be recorded into other comprehensive
incomes, and shall be recognized into current gains and losses when the net investments are
disposed; and ③ the exchange difference arising from change in the book balance of foreign
currency monetary items available for sale except the amortized costs shall be recorded into other
comprehensive gains and losses.
A foreign currency non-monetary item measured at the historical costs shall still be translated at the
spot exchange rate on the transaction date. Where the foreign non-monetary items measured at the
fair value shall be converted into amount in its bookkeeping base currency at spot exchange rate,
the exchange gains and losses arising thereof shall be treated as change in fair value, and recorded
into the current period gains and losses or as other comprehensive incomes.
(3) Translation of foreign currency financial statements
When it involves overseas business in preparing the consolidated financial statement, for the
translation difference of foreign currency monetary items of net investment in overseas business
arising from the change in exchange rate, it shall be recorded into the item of ―difference of foreign
currency financial statement translation‖ under the owners’ equity; and be recorded into disposal
gains and losses at current period when disposing overseas business.
The foreign currency financial statement of overseas business should be translated in to RMB
financial statement by the following methods: The asset and liability items in the balance sheets
shall be translated at a spot exchange rate on the balance sheet date. Among the owner’s equity
items, except for the items as ―undistributed profits‖, other items shall be translated at the spot
exchange rate at the time when they are incurred. The income and expense items in the profit
statements shall be translated at the spot exchange rate of the transaction date. The undistributed
profits at year-begin is the undistributed profits at the end of last year after the translation;
undistributed profits at year-end shall be listed as various distribution items after the translation;
after the translation, the balance between assets and the sum of liabilities and owners’ equities shall
be recorded into other comprehensive gains and losses as difference of foreign currency translation.
Where an enterprise disposes of an overseas business without the control right, it shall shift the
differences, which is presented under the items of the owner’s equities in the balance sheet and
which arises from the translation of foreign currency financial statements relating to this overseas
business, into the disposal profits and losses of the current period by all or proportion of the
disposed overseas business.
Foreign cash flow shall be translated at the spot exchange rate of the date of cash flow incurred. The
influence of exchange rate on the cash flow shall be adjustment item and individually listed in the
cash flow statement.
And the opening balance and the actual balance of last year shall be listed at the amounts after
translation of foreign currency financial statement in last year.
Where the control of the Company over an overseas operation ceases due to disposal of all or some
of the Company’s owner’s equity in the overseas operation or other reasons, the foreign-currency
statement translation difference belonging to the parent company’s owner’s equity in relation to the
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overseas operation which is stated under the shareholders’ equity in the balance sheet shall be all
restated as gains and losses of the disposal period.
Where the Company’s equity in an overseas operation decreases due to disposal of some equity
investment or other reasons but the Company still has control over the overseas operation, the
foreign-currency statement translation difference in relation to the disposed part of the overseas
operation shall be recorded into minority interests instead of current gains and losses. If what’s
disposed is some equity in an overseas associated enterprise or joint venture, the foreign-currency
statement translation difference related to the overseas operation shall be recorded into the gains
and losses of the current period of the disposal according to the disposal ratio.
9. Financial instruments
The Company recognizes a financial asset or liability when it becomes a party of the relevant
financial instrument contract. Financial assets and liabilities are measured at fair value in initial
recognition. As for the financial assets and liabilities measured at fair value of which changes are
recorded into current gains and losses, the relevant dealing expenses are directly recorded into gains
and losses; and the dealing expenses on other kinds of financial assets and liabilities are included in
the amounts initially recognized.
(1) Determination of the fair value of main financial assets and financial liabilities
Fair value refers to the price that a market participant shall receive for selling an asset or shall pay
for transferring a liability in an orderly transaction on the measurement date. As for the financial
assets or financial liabilities for which there is an active market, the quoted prices in the active
market shall be used to determine the fair values thereof. The quoted prices in the active market
refers to the prices available from stock exchange, broker’s agencies, guilds, pricing organization
and etc., which represent the actual trading price under equal transaction. Where there is no active
market for a financial instrument, the enterprise concerned shall adopt value appraisal techniques,
including the prices adopted by the parties, who are familiar with the condition, in the latest market
transaction upon their own free will, the current fair value obtained by referring to other financial
instruments of the same essential nature, the cash flow capitalization method and the option pricing
model, etc., to determine its fair value.
(2) Classification, recognition and measurement of financial assets
The purchase and sale of financial assets under the normal ways shall be recognized and stopped to
be recognized respectively at the price of transaction date. Financial assets shall be classified into
the following four categories when they are initially recognized: (a) the financial assets which are
measured at their fair values and the variation of which is recorded into the profits and losses of the
current period, (b) the investments which will be held to their maturity; (c) loans and the account
receivables; and (d) financial assets available for sale.
① The financial assets which are measured at their fair values and the variation of which is
recorded into the profits and losses of the current period
Including transactional financial assets and the financial assets which are designated to be measured
at their fair value when they are initially recognized and of which the variation is recorded into the
profits and losses of the current period;
The financial assets meeting any of the following requirements shall be classified as transactional
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financial assets：A. The purpose to acquire the said financial assets is mainly for selling them in the
near future; B. Forming a part of the identifiable combination of financial instruments which are
managed in a centralized way and for which there are objective evidences proving that the
enterprise may manage the combination by way of short-term profit making in the near future; C.
Being a derivative instrument, excluding the designated derivative instruments which are effective
hedging instruments, or derivative instruments to financial guarantee contracts, and the derivative
instruments which are connected with the equity instrument investments for which there is no
quoted price in the active market, whose fair value cannot be reliably measured, and which shall be
settled by delivering the said equity instruments.
A transactional financial asset is subsequently measured at the fair value. The gains and losses
arising from the fair value changes, as well as the dividend and interest incomes from the financial
asset, are recorded in the gains and losses for the current period.
② Held-to-maturity investment
The term "held-to-maturity investment" refers to a non-derivative financial asset with a fixed date
of maturity, a fixed or determinable amount of repo price and which the enterprise holds for a
definite purpose or the enterprise is able to hold until its maturity.
For the held-to-maturity investment adopting actual interest rate method, which is measured at the
post-amortization costs, the profits and losses that arise when such financial assets or financial
liabilities are terminated from recognition, or are impaired or amortized, shall be recorded into the
profits and losses of the current period.
The actual interest rate method refers to the method by which the post-amortization costs and the
interest incomes of different installments or interest expenses are calculated in light of the actual
interest rates of the financial assets or financial liabilities (including a set of financial assets or
financial liabilities). The actual interest rate refers to the interest rate adopted to cash the future cash
flow of a financial asset or financial liability within the predicted term of existence or within a
shorter applicable term into the current carrying amount of the financial asset or financial liability.
When the actual interest rate is determined, the future cash flow shall be predicted on the basis of
taking into account all the contractual provisions concerning the financial asset or financial liability
(the future credit losses shall not be taken into account).and also the various fee charges, trading
expenses, premiums or reduced values, etc., which are paid or collected by the parties to a financial
asset or financial liability contract and which form a part of the actual interest rate.
③ Loans and the accounts receivables
Loans and the accounts receivables refer to non-derivative financial assets, which there is no
quotation in the active market, with fixed recovery cost or recognizable.
Financial assets that are defined as loans and the accounts receivables by the Company including
notes receivables, accounts receivables, interest receivable, dividends receivable and other
receivables etc..
Loans and the accounts receivables are made follow-up measurement on the basis of
post-amortization costs employing the effective interest method. Gains or loss arising from the
termination recognition, impairment occurs or amortization shall be recorded into the profits and
losses of the current period.
④ Assets available for sales
Assets available for sales including non-derivative financial asset that has been assigned as assets
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available for sales on the initial recognition and financial assets excluded those measured at fair
value and of which the variation into profits and losses of the current period, they are some financial
assets, loans and accounts receivables, held-to-maturity investment.
The cost at the period-end of the available-for-sale liabilities instruments should be confirmed
according to its amortized cost method, that is the initially recognized amount which deduct the
principal that had been repaid, to plus or minus the accumulative amortization amount formed by
the amortization between the difference of the initially recognized amount and the amount on the
due date that adopted the actual interest rate method, and at the same time deduct the amount after
the impairment loss happened. The cost at the period-end of the available-for-sale liabilities
instruments is its initial cost.
Financial assets available-for-trade are subsequently measured at fair value, and gains or losses
arising from changes in the fair value are recognized as other comprehensive income，and be carried
forward when the said financial assets stopped recognition, then it shall be recorded into the profits
and losses of the current period. But, the equity instrument investment which neither have quotation
in the active market nor its fair value could not be reliable measured, as well as the derivative
financial assets that concern with the equity instruments and should be settled through handing over
to its equity instruments, should take the follow-up measurement according to the cost.
Interest receive during the holding of assets available for sales and cash dividends with distribution
announcement by invested companies, it shall be recorded into the profits and losses of the current
period.
(3) Impairment of financial assets
The Company assesses at the balance sheet date the carrying amount of every financial asset except
for the financial assets that measured by the fair value. If there is objective evidence indicating a
financial asset may be impaired, a provision is provided for the impairment.
The Company carries out a separate impairment test for every financial asset which is individually
significant. As for a financial asset which is individually insignificant, an impairment test is carried
out separately or in the financial asset group with similar credit risk. Where the financial asset
(individually significant or insignificant) is found not impaired after the separate impairment test, it
is included in the financial asset group with similar credit risk and tested again on the group basis.
Where the impairment loss is recognized for an individual financial asset, it is not included in the
financial asset group with similar credit risk for an impairment test.
① Impairment on held-to maturity investment, loans and receivables
The financial assets measured by cost or amortized cost write down their carrying value by the
estimated present value of future cash flow. The difference is recorded as impairment loss. If there
is objective evidence to indicate the recovery of value of financial assets after impairment, and it is
related with subsequent event after recognition of loss, the impairment loss recorded originally can
be reversed. The carrying value of financial assets after impairment loss reversed shall not exceed
the amortized cost of the financial assets without provisions of impairment loss on the reserving
date.
② Impairment of available-for-sale financial assets
When it judged that the decrease of fair value of the available-for-sale equity instrument investment
is serious and not temporarily after comprehensive considering relevant factors, it reflected that the
available-for-sale equity instrument investment occurred impairment. Of which, the ―serious
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decline‖ refers to the accumulative decline range of the fair value over 20%; while the
―non-temporary decline‖ refers to the consecutive decline time of the fair value over 12 months.
Where an available-for-sale financial asset is impaired, the accumulative losses arising from the
decrease of the fair value of the capital reserve which is directly included are transferred out and
recorded in the profits and losses for the current period. The accumulative losses transferred out are
the balance obtained from the initially obtained cost of the said financial asset after deducting the
principals as taken back, the amortized amount, the current fair value and the impairment loss
originally recorded in the profits and losses.
Where the impairment loss has been recognized for an available-for-sale financial asset, if, within
the accounting periods thereafter, there is any objective evidence proving that the value of the said
financial asset has been restored and the restoration is objectively related to the events that occur
after the impairment loss was recognized, the originally recognized impairment loss is reversed.
The impairment losses on the available-for-sale equity instrument investments are reversed and
recognized as other comprehensive incomes, and the impairment losses on the available-for-sale
liability instruments are reversed and recorded in the profits and losses for the current period.
The impairment loss incurred to an equity instrument investment for which there is no quoted price
in the active market and whose fair value cannot be reliably measured, or incurred to a derivative
financial asset which is connected with the said equity instrument investment and which must be
settled by delivering the said equity investment, is not reversed.
(4) Recognition and measurement of financial asset transfers
Where a financial asset satisfies any of the following requirements, the recognition of it is
terminated: ① The contractual rights for collecting the cash flow of the said financial asset are
terminated; ② The said financial asset has been transferred and nearly all of the risks and rewards
related to the ownership of the financial asset to the transferee; or ③ The said financial asset has
been transferred. And the Company has ceased its control on the said financial asset though it
neither transfers nor retains nearly all of the risks and rewards related to the ownership of the
financial asset.
Where the Company neither transfers nor retains nearly all of the risks and rewards related to the
ownership of a financial asset, and it does not cease its control on the said financial asset, it
recognizes the relevant financial asset and liability accordingly according to the extent of its
continuous involvement in the transferred financial asset. The term "continuous involvement in the
transferred financial asset" refers to the risk level that the enterprise faces resulting from the change
of the value of the financial asset.
If the transfer of an entire financial asset satisfies the conditions for stopping recognition, the
difference between the amounts of the following 2 items is recorded in the profits and losses of the
current period: (1) The book value of the transferred financial asset; and (2) The sum of
consideration received from the transfer, and the accumulative amount of the changes of the fair
value originally recorded in other comprehensive incomes.
If the transfer of partial financial asset satisfies the conditions to stop the recognition, the book
value of the transferred financial asset is apportioned between the portion whose recognition has
been stopped and the portion whose recognition has not been stopped according to their respective
relative fair value, and the difference between the amounts of the following 2 items is included into
the profits and losses of the current period: (1) The summation of the consideration received from
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the transfer and the portion of the accumulative amount of changes in the fair value originally
recorded in other comprehensive incomes which corresponds to the portion whose recognition has
been stopped; and (2) The amortized carrying amounts of the aforesaid amounts.
In respect of the assets using recourse to sell or using endorsement to transfer, the Company needs
to determine whether almost all of the risks and rewards of the financial asset ownership are
transferred. If almost all of the risks and rewards of the financial asset ownership had been
transferred to the transferee, derecognize the financial assets. For almost all of the risks and rewards
of the financial asset ownership retained, do not end to recognize the financial assets. For which
neither transfer or retain almost all of the risks and rewards of the financial asset ownership,
continuously judge whether the Company retain the control of the assets, and conduct accounting
treatment according to the principle of mentioned in the previous paragraphs.
(5) Classification and measurement of financial liabilities
In the initial recognition, financial liabilities are divided into the financial liabilities measured at fair
values and whose changes are recorded in current gains and losses and other financial liabilities.
Financial liabilities are initially recognized at their fair values. As for a financial liability measured
at fair value and whose changes are recorded in current gains and losses, the relevant trading
expense is directly recorded in the profits and losses for the current period. As for other financial
liabilities, the relevant trading expenses are recorded in the initially recognized amounts.
① Financial liabilities measured at fair values and whose changes are recorded in current gains and
losses
Such financial liabilities are divided into transactional financial liabilities and financial liabilities
designated to be measured at fair values and whose changes are recorded in current gains and losses
in the initial recognition under the same conditions where such financial assets are divided into
transactional financial assets and financial assets designated to be measured at fair values and
whose changes are recorded in current gains and losses in the initial recognition.
Financial liabilities measured at fair values and whose changes are recorded in current gains and
losses are subsequently measured at their fair values. Gains or losses arising from the fair value
changes, as well as the dividend and interest expenses in relation to the said financial liabilities, are
recorded in the profits and losses for the current period.
② Other financial liabilities
As for a derivative financial liability connected to an equity instrument for which there is not quoted
price in an active market and whose fair value cannot be reliably measured and which must be
settled by delivering the equity instrument, it is subsequently measured on the basis of costs. Other
financial liabilities are subsequently measured according to the amortized cost using the actual
interest rate method. Gains or losses arising from de-recognition or amortization of the said
financial liabilities is recorded in the profits and losses for the current period.
(6) De-recognition of financial liabilities
Only when the prevailing obligations of a financial liability are relieved in all or in part may the
recognition of the financial liability be terminated in all or partly. Where the Company (debtor)
enters into an agreement with a creditor so as to substitute the existing financial liabilities by way of
any new financial liability, and if the contractual stipulations regarding the new financial liability is
substantially different from that regarding the existing financial liability, it terminates the
recognition of the existing financial liability, and at the same time recognizes the new financial
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liability.
Where the recognition of a financial liability is totally or partially terminated, the enterprise
concerned shall include into the profits and losses of the current period for the gap between the
book value which has been terminated from recognition and the considerations it has paid
(including the non-cash assets it has transferred out and the new financial liabilities it has assumed)
(7) Derivatives and embedded derivatives
Derivative financial instruments include derivatives are initially measured at fair value at the date
when the derivative contracts are entered into and are substantially re-measured at fair value. The
resulting gain and loss is recognized in profit or loss.
An embedded derivative is separated from the hybrid instrument, where the hybrid instrument is not
designated as a financial asset or financial liability at fair value though profit or loss, and the treated
as a standalone derivative if (a) the economic characteristics and risks of the embedded derivative
are not closely related to the economic characteristics and risks of the host contract; and (b) a
separate instrument with the same terms as the embedded derivative would meet the definition of a
derivative. If the Company is unable to measure the embedded derivative separately either at
acquisition or at a subsequent balance sheet date, it designates the entire hybrid instrument as a
financial asset or financial liability at fair value through profit or loss.
(8) Offsetting financial assets and financial liabilities
When the Company has a legal right that is currently enforceable to set off the recognized financial
assets and financial liabilities, and intends either to settle on a net basis, or to realize the financial
asset and settle the financial liability simultaneously, a financial asset and a financial liability shall
be offset and the net amount is presented in the balance sheet. Except for the above circumstances,
financial assets and financial liabilities shall be presented separately in the balance sheet and shall
not be offset.
(9) Equity instruments
An equity instrument is any contract that evidences a residual interest in the assets of the Company
after deducting all of its liabilities. The Company issues (including refinancing), re-purchases, sells
or written-offs the equity instrument as the disposing of the changes of the equity. The Group not
recognized the changes of the fair value of the equity instrument. The transaction expenses related
to the equity transaction would be deducted from the equity.
All types of distribution (excluding stock dividends) made by the Company to holders of equity
instruments are deducted from shareholders’ equity. The Company does not recognize any changes
in the fair value of equity instruments.
10. Receivables
(1) Accounts receivable with significant single amount for which the bad debt provision is made
individually
Judgement basis or monetary
standards of provision for bad Receivables with the amount of RMB 5 million or more than RMB 5 million should recognize as
debts of the individually the receivables with significant single amount.
significant accounts
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receivable
The Company made an independent impairment test on receivables with significant single amounts;
Method of individual
the financial assets without impairment by independent impairment test should be included in
provision for bad debts of the
financial assets portfolio with similar credit risk to take the impairment test. Receivables was
individually significant
recognized with impairment should no longer be included in receivables portfolio with similar credit
accounts receivable
risk to take the impairment test.
(2) Accounts receivable which the bad debt provision is withdrawn by credit risk characteristics
Name of portfolios Bad debt provision method
Aging group Aging analysis method
In the groups, adopting aging analysis method to withdraw bad debt provision:
√ Applicable □ Inapplicable
Withdrawal proportion for accounts Withdrawal proportion for other accounts
Age
receivable (%) receivable (%)
Within 1 year (including 1 year) 5.00% 5.00%
1-2 years 10.00% 10.00%
2-3 years 20.00% 20.00%
Over 3 years 30.00% 30.00%
In the groups, adopting balance percentage method to withdraw bad debt provision:
□ Applicable √ Inapplicable
In the groups, adopting other methods to withdraw bad debt provision:
□ Applicable √ Inapplicable
(3) Accounts receivable with an insignificant single amount but for which the bad debt provision is made
individually
Receivables have dispute with the other parties or involving
lawsuit and arbitration; receivables have obvious indication
Reason of individually withdrawing bad debt provision
showing that the debtors are likely to fail to perform the duty of
repayment, etc.
The Company made independent impairment test on receivables
with insignificant amount but with the following characteristics,
if any objective evidence shows that the accounts receivable has
Withdrawal method for bad debt provision been impaired, impairment loss shall be recognized on the basis
of the gap between the current values of the future cash flow
lower than its book value so as to withdraw provision for bad
debts.
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11. Inventory
(1) Classification
Inventories mainly include raw materials, work-in-progress and self-made semi-manufactured
goods, revolving materials, finished products as well as stock products etc.
(2) Valuation method of inventories acquiring and issuing
The inventories should be measured by the actual cost when acquired, and the cost of the
inventories including the procurement cost, processing cost and other cost. Bulk chemical raw
materials, work-in-progress goods and finished products should be measured by the actual cost and
should carry forward the cost by weighted average method when issuing; auxiliary materials,
packing materials should be measured by actual cost and adopt the planned cost for accounting as
well as included the difference between the actual cost and the planned cost into the material cost
variance and according the material cost variance rate, work out the material cost variance which
should be shared at the end of the month, and to adjust the planned cost that had issued the materials
as the actual cost; low priced and easily worn articles should be recorded by actual cost and should
adopt the one-time amortization method for accounting when consuming.
(3) Basis for determining net realizable value of inventories and provision methods for decline in
value of inventories
Net realizable value is the estimated selling price in the ordinary course of business less the
estimated costs of completion, the estimated costs necessary to make the sale and relevant taxes.
Net realizable value is determined on the basis of clear evidence obtained, and takes into
consideration the purpose of holding inventories and effect of post balance sheet events.
At the balance sheet date, inventories are measured at the lower of the cost and net realizable value.
If the net realizable value is below the cost of inventories, a provision for decline in value of
inventories is made. The provision for inventories decline in value is determined normally by the
difference of the cost of individual item less its realizable value. For large quantity and low value
items of inventories, provision for decline in value is made based on categories of inventories. For
items of inventories relating to a product line that are produced and marketed in the same
geographical area, have the same or similar end users or purposes, and cannot be practicably
evaluated separately from other items in that product line provision for decline in value is
determined on an aggregate basis.
After the provision for decline in value of inventories is made, if the circumstances that previously
caused inventories to be written down below cost no longer exist so that the net realizable value of
inventories is higher than their cost, the original provision for decline in value is reversed and the
reversal is included in profit or loss for the period.
(4) The perpetual inventory system is maintained for stock system.
(5) Amortization method of the low-value consumption goods and packing articles
For the low-value consumption goods, should be amortized by one-off amortization method when
consuming; and for the packing articles, should be amortized by one-off amortization method when
consuming.
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12. Long-term equity investments
The long-term equity investments of this part refer to the long-term equity investments that the
Company has control, joint control or significant influence over the investees. The long-term equity
investment that the Company does not have control, joint control or significant influence over the
investees, should be recognized as available-for-sale financial assets or be measured by fair value
with the changes should be included in the financial assets accounting of the current gains and
losses, and please refer the details of the accounting polices to ―financial instrument‖.
Joint control, refers to the control jointly owned according to the relevant agreement on an
arrangement by the Company and the relevant activities of the arrangement should be decided only
after the participants which share the control right make consensus. Significant influence refers to
the power of the Company which could anticipate in the finance and the operation polices of the
investees, but could not control or jointly control the formulation of the policies with the other
parties.
(1) Recognition of investment costs
As for long-term equity investments acquired by enterprise merger, if the merger is under the same
control, the share of the book value of the owner’s equity of the merged enterprise, on the date of
merger, is regarded as the initial cost of the long-term equity investment. The difference between
the initial cost of the long-term equity investment and the payment in cash, non-cash assets
transferred as well as the book value of the debts borne by the merging party shall offset against the
capital reserve. If the capital reserve is insufficient to dilute, the retained earnings shall be adjusted.
If the consideration of the merging enterprise is that it issues equity securities, it shall, on the date of
merger, regard the share of the book value of the shareholder's equity of the merged enterprise on
the consolidated financial statement of the ultimate control party as the initial cost of the long-term
equity investment. The total face value of the stocks issued shall be regarded as the capital stock,
while the difference between the initial cost of the long-term equity investment and total face value
of the shares issued shall offset against the capital reserve. If the capital reserve is insufficient to
dilute, the retained earnings shall be adjusted. The equities of the combined party which
respectively acquired through multiple transaction under the same control that ultimately form into
the combination of the enterprises under the same control, should be disposed according whether
belongs to package deal; if belongs to package deal, each transaction would be executed accounting
treatment by the Company as a transaction of acquiring the control right. If not belongs to package
deal, it shall, on the date of merger, regard the enjoyed share of the book value of the shareholder's
equity of the merged enterprise on the consolidated financial statement of the ultimate control party
as the initial cost of the long-term equity investment, and as for the difference between the initial
investment cost of the long-term equity investment and sum of the book value of the long-term
equity investment before the combination and the book value of the consideration of the new
payment that further required on the combination date, should adjust the capital reserve; if the
capital reserve is insufficient to dilute, the retained earnings shall be adjusted. The equity
investment held before the combination date which adopted the equity method for accounting, or
the other comprehensive income confirmed for the available-for-sale financial assets, should not
have any accounting disposal for the moment.
For the long-term investment required from the business combination under different control, the
initial investment cost regarded as long-term equity investment on the purchasing date according to
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the combination cost, the combination costs shall be the sum of the fair values of the assets paid, the
liabilities incurred or assumed and the equity securities issued by the Company. The equities of the
acquirees which respectively acquired through multiple transaction that ultimately form into the
combination of the enterprises under the different control, should be disposed according whether
belongs to package deal; if belongs to package deal, each transaction would be executed accounting
treatment by the Company as a transaction of acquiring the control right. If not belongs to package
deal, the sum of the book value of the original held equity investment of the acquirees and the
newly added investment cost should be regarded as the initial investment cost of the long-term
equity investment that changed to be accounted by cost method. If the original held equity is
calculated by cost method, the other relevant comprehensive income would not have any accounting
disposal for the moment. If the original held equity investment is the financial assets available for
sale, its difference between the fair value and the book value as well as the accumulative changes of
the fair value that include in the other comprehensive income, should transfer into the current gains
and losses.
The commission fees for audit, law services, assessment and consultancy services and other
relevant expenses occurred in the business combination by the combining party or the purchase
party, shall be recorded into current profits and losses upon their occurrence; the transaction
expense from the issuance of equity securities or bonds securities which are as consideration for
combination by the combining party, should be recorded as the initial amount of equity securities
and bonds securities.
Besides the long-term equity investments formed by business combination, the other long-term
equity investments shall be initially measured by cost, the cost is fixed in accordance with the ways
of gaining, such as actual cash payment paid by the Company, the fair value of equity securities
issued by the Company, the agreed value of the investment contract or agreement, the fair value or
original carrying amount of exchanged assets from non-monetary assets exchange transaction, the
fair value of the long-term equity investments, etc. The expenses, taxes and other necessary
expenditures directly related with gaining the long-term equity investments shall also be recorded
into investment cost.
(2) Subsequent measurement and recognition of gains or losses
A long-term equity investment where the investing enterprise has joint control (except for which
forms into common operators) or significant influence over the investors should be measured by
equity method. Moreover, long-term equity investment adopting the cost method in the financial
statements, and which the Company has control on invested entity.
① Long-term equity investment measured by adopting cost method
The price of a long-term equity investment measured by adopting the cost method shall be included
at its initial investment cost and append as well as withdraw the cost of investing and adjusting the
long-term equity investment. The return on investment at current period shall be recognized in
accordance with the cash dividend or profit announced to distribute by the invested entity, except
the announced but not distributed cash dividend or profit included in the actual payment or
consideration upon gaining the investment.
② Long-term equity investment measured by adopting equity method
If the initial cost of a long-term equity investment is more than the Company's attributable share of
the fair value of the invested entity's identifiable net assets for investment, the initial cost of the
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long-term equity investment may not be adjusted. If the initial cost of a long-term equity investment
is less than the Company's attributable share of the fair value of the invested entity's identifiable net
assets for the investment, the difference shall be included in the current profits and losses and the
cost of the long-term equity investment shall be adjusted simultaneously.
When measured by adopting equity method, respectively recognize investment income and other
comprehensive income according to the net gains and losses as well as the portion of other
comprehensive income which should be enjoyed or be shared, and at the same time adjust the book
value of the long-term equity investment; corresponding reduce the book value of the long-term
equity investment according to profits which be declared to distribute by the investees or the portion
of the calculation of cash dividends which should be enjoyed; for the other changes except for the
net gains and losses, other comprehensive income and the owners’ equity except for the profits
distribution of the investees, should adjust the book value of the long-term equity investment as
well as include in the capital reserve. The investing enterprise shall, on the ground of the fair value
of all identifiable assets of the invested entity when it obtains the investment, recognize the
attributable share of the net profits and losses of the invested entity after it adjusts the net profits of
the invested entity. If the accounting polices adopted by the investees is not accord with that of the
Company, should be adjusted according to the accounting policies of the Company and the financial
statement of the investees during the accounting period and according which to recognize the
investment income as well as other comprehensive income. For the transaction happened between
the Company and associated enterprises as well as joint ventures, if the assets launched or sold not
form into business, the portion of the unrealized gains and losses of the internal transaction, which
belongs to the Company according to the calculation of the enjoyed proportion, should recognize
the investment gains and losses on the basis. But the losses of the unrealized internal transaction
happened between the Company and the investees which belongs to the impairment losses of the
transferred assets, should not be neutralized. The assets launched by the Company to the associated
enterprises or the joint ventures if could form into business, the long-term equity investment
without control right which acquired by the investors, should regard the fair value of the launched
business as the initial investment cost the newly added long-term equity investment, and for the
difference between the initial investment cost and the book value of the launched business, should
be included into the current gains and losses with full amount. The Company shall recognize the net
losses of the invested enterprise until the book value of the long-term equity investment and other
long-term rights and interests which substantially form the net investment made to the invested
entity are reduced to zero. However, if the Company has the obligation to undertake extra losses, it
shall be recognized as the estimated liabilities in accordance with the estimated duties and then
recorded into investment losses at current period. If the invested entity realizes any net profits later,
the Company shall, after the amount of its attributable share of profits offsets against its attributable
share of the un-recognized losses, resume recognizing its attributable share of profits.
For the long-term equity investment held by the Company before the first execution of the new
accounting criterion on 1 Jan. 2007 of the associated enterprises and joint ventures, if there is debit
difference of the equity investment related to the investment, should be included in the current gains
and losses according to the amount of the straight-line amortization during the original remained
period.
③ Acquiring shares of minority interest
In the preparation for the financial statements, the balance existed between the long-term equity
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investment increased by acquiring shares of minority interest and the attributable net assets on the
subsidiary calculated by the increased shares held since the purchase date (or combination date), the
capital reserves shall be adjusted, if the capital reserves are not sufficient to offset, the retained
profits shall be adjusted.
④ Disposal of long-term equity investment
In the preparation of financial statements, the Company disposed part of the long-term equity
investment on subsidiaries without losing its controlling right on them, the balance between the
disposed price and attributable net assets of subsidiaries by disposing the long-term equity
investment shall be recorded into owners’ equity; where the Company losses the controlling right by
disposing part of long-term equity investment on such subsidiaries, it shall treated in accordance
with the relevant accounting policies in Method on preparation of combined financial statements.
For other ways on disposal of long-term equity investment, the balance between the book value of
the disposed equity and its actual payment gained shall be recorded into current profits and losses.
For the long-term equity investment measured by adopting equity method, if the remained equity
after disposal still adopts the equity method for measurement, the other comprehensive income
originally recorded into owners’ equity should adopt the same basis of the accounting disposal of
the relevant assets or liabilities directly disposed by the investees according to the corresponding
proportion. The owners’ equity recognized owning to the changes of the other owners’ equity except
for the net gains and losses, other comprehensive income and the profits distribution of the
investees, should be transferred into the current gains and losses according to the proportion.
For the long-term equity investment which adopts the cost method of measurement, if the remained
equity still adopt the cost method, the other comprehensive income recognized owning to adopting
the equity method for measurement or the recognition and measurement standards of financial
instrument before acquiring the control of the investees, should adopt the same basis of the
accounting disposal of the relevant assets or liabilities directly disposed by the investees and should
be carried forward into the current gains and losses according to the proportion; the changes of the
other owners’ equity except for the net gains and losses, other comprehensive income and the
profits distribution among the net assets of the investees which recognized by adopting the equity
method for measurement, should be carried forward into the current gains and losses according to
the proportion.
For those the Company lost the control of the investees by disposing part of the equity investment
as well as the remained equity after disposal could execute joint control or significant influences on
the investees, should change to measure by equity method when compiling the individual financial
statement and should adjust the measurement of the remained equity to equity method as adopted
since the time acquired; if the remained equity after disposal could not execute joint control or
significant influences on the investees, should change the accounting disposal according to the
relevant regulations of the recognition and measurement standards of financial instrument, and its
difference between the fair value and book value on the date lose the control right should be
included in the current gains and losses. For the other comprehensive income recognized by
adopting equity method for measurement or the recognition and measurement standards of financial
instrument before the Company acquired the control of the investees, should execute the accounting
disposal by adopting the same basis of the accounting disposal of the relevant assets or liabilities
directly disposed by the investees when lose the control of them, while the changes of the other
owners’ equity except for the net gains and losses, other comprehensive income and the profits
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distribution among the net assets of the investees which recognized by adopting the equity method
for measurement, should be carried forward into the current gains and losses according to the
proportion. Of which, for the disposed remained equity which adopted the equity method for
measurement, the other comprehensive income and the other owners’ equity should be carried
forward according to the proportion; for the disposed remained equity which changed to execute the
accounting disposal according to the recognition and measurement standards of financial instrument,
the other comprehensive income and the other owners’ equity should be carried forward in full
amount.
For those the Company lost the control of the investees by disposing part of the equity investment,
the disposed remained equity should change to calculate according to the recognition and
measurement standards of financial instrument, and difference between the fair value and book
value on the date lose the control right should be included in the current gains and losses. For the
other comprehensive income recognized from the original equity investment by adopting the equity
method, should execute the accounting disposal by adopting the same basis of the accounting
disposal of the relevant assets or liabilities directly disposed by the investees when terminate the
equity method for measurement, while for the owners’ equity recognized owning to the changes of
the other owner’s equity except for the net gains and losses, other comprehensive income and the
profits distribution of the investees, should be transferred into the current investment income with
full amount when terminate adopting the equity method.
The Company respectively disposes the equity investment of the subsidiaries through multiple
transactions until lose the control right, if the above transactions belongs to the package deal, should
execute the accounting disposal by regarding each transaction as a deal of disposing the equity
investment of the subsidiaries until lose the control right, while the difference between each
expenses of the disposal and the book value of the long-term equity investment in accord with the
disposed equity before losing the control right, should firstly be recognized as other comprehensive
income then be transferred into the current gains and losses of losing the control right along until
the time when lose it.
13. Fixed assets
(1) Conditions for recognition
The term ―fixed assets‖ refers to the tangible assets that simultaneously possess the features as
follows: (a) they are held for the sake of producing commodities, rendering labor service, renting or
business management; and (b) their useful life is in excess of one fiscal year. The fixed assets are
only recognized when the relevant economic benefits probably flow in the Company and its cost
could be reliable measured. The fixed assets should take the initial measurement according to the
cost and at the same time consider the influences of the factors of the estimated discard expenses.
(2) Depreciation methods
The Company shall withdraw the depreciation of fixed assets by adopting the straight-line method
since the second month of its useful life. Useful life, expected net salvage value and annual
depreciation rate of each fixed assets are as below:
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Annual deprecation
Category of fixed assets Method Useful life (Year) Salvage value (%)
(%)
Average method of 5-30 5-10 3.00-19.00
Housing and building
useful life
Average method of 10-18 5-10 5.00-9.50
Machinery equipments
useful life
Average method of 5 5-10 19.00-18.00
Transportation vehicle
useful life
Electronic equipments and others Average method of 5 5-10 19.00-18.00
useful life
Net Salvage is refer to the assumption of fix assets estimated service life is full and is in the
estimated state that the service life is in the end, the Group. The group currently obtained amount
from the disposal amount after deducting the estimated disposal expense.
(3) Recognition basis, pricing and depreciation method of fixed assets by finance lease
The ―finance lease‖ shall refer to a lease that has transferred in substance all the risks and rewards
related to the ownership of an asset. Its ownership may or may not eventually be transferred. The
fixed assets by finance lease shall adopt the same depreciation policy for self-owned fixed assets. If
it is reasonable to be certain that the lessee will obtain the ownership of the leased asset when the
lease term expires, the leased asset shall be fully depreciated over its useful life. If it is not
reasonable to be certain that the lessee will obtain the ownership of the leased asset at the expiry of
the lease term, the leased asset shall be fully depreciated over the shorter one of the lease term or its
useful life.
14. Construction in progress
Construction in process is measured at actual cost. Actual cost comprises construction costs,
borrowing costs that are eligible for capitalization before the fixed assets being ready for their
intended us and other relevant costs. Construction in process is transferred to fixed assets when the
assets are ready for their intended use.
See the details of the impairment test method of the impairment provision withdrawal method of the
construction in progress to ―Long-term assets impairment‖.
15. Borrowing costs
The borrowing costs shall include interest on borrowings, amortization of discounts or premiums on
borrowings, ancillary expenses, and exchange balance on foreign currency borrowings. When the
borrowing costs can be directly attributable to the construction or production of assets eligible for
capitalization, and the asset disbursements or the borrowing costs have already incurred, and the
construction or production activities which are necessary to prepare the asset for its intended use or
sale have already started, the capitalization of borrowing costs begins. When the asset eligible for
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capitalization under acquisition and construction or production is ready for the intended use or sale,
the capitalization of the borrowing costs shall be ceased. Other borrowing costs shall be recognized
as expenses when incurred.
The to-be-capitalized amount of interests shall be determined in light of the actual interests incurred
of the specially borrowed loan at the present period minus the income of interests earned on the
unused borrowing loans as a deposit in the bank or as a temporary investment; the enterprise shall
calculate and determine the to-be-capitalized amount on the general borrowing by multiplying the
weighted average asset disbursement of the part of the accumulative asset disbursements minus the
general borrowing by the capitalization rate of the general borrowing used. The capitalization rate
shall be calculated and determined in light of the weighted average interest rate of the general
borrowing.
During the period of capitalization, the exchange balance on foreign currency special borrowings
shall be capitalized; the exchange balance on foreign currency general borrowings shall be recorded
into current profits and losses.
The term ―assets eligible for capitalization‖ refers to the fixed assets, investment real estate,
inventories and other assets, of which the acquisition and construction or production may take quite
a long time to get ready for its intended use or for sale.
Where the acquisition and construction or production of a qualified asset is interrupted abnormally
and the interruption period lasts for more than 3 months, the capitalization of the borrowing costs
shall be suspended.
16. Biological assets
(1) Consumptive biological assets
Consumptive biological assets refer to the biological assets held for sale or to be harvested as
agricultural products in future, including crops, vegetables under growing, timber production forest
and domestic animals for sale. The consumptive biological assets shall be measured based on cost.
All costs for planting, creating, cultivating or raising of consumptive biological assets shall be the
necessary expenses directly added to such assets that accrued before harvest, including any loan that
satisfies capitalization conditions. Subsequent expenses for keeping and feeding the consumptive
biological assets after the harvest should be recognized as the losses and gains of the current period.
Upon harvest or sale, the cost of consumptive biological assets shall be based on its book value
through weighted average.
On the date of Balance Sheet, the consumptive biological assets shall be measured with lower of
cost and net realizable value, and the method for confirming the reserve for inventory price drop
shall be adopted to confirm the reserve for price drop of consumptive biological assets. If the
impacts of depreciation disappear, the depreciation amount shall be recovered, and the reserve for
price drop originally accrued shall be reversed. Such amount reversed shall be recognized as loss
and gain for the current period.
If consumptive biological assets change its usage to be as productive biological assets, the cost after
such change shall be confirmed based on the book value when the usage is changed. If consumptive
biological assets are changed as public biological assets, depreciation shall be taken into
consideration pursuant to Corporate Accounting Rules No.8 – Assets Depreciation. When
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depreciation occur, accrued the depreciation reserve first and then confirm based on the book value
after such accrual.
(2) Productive biological assets
Productive biological assets refer to agricultural products produced, and biological assets held for
labor provision or lease, including economic forest, firewood forest, productive animals and labor
animals. The productive biological assets shall be measured based on cost. All costs for creating or
fostering productive biological assets shall be the necessary expenses directly added to such assets
that accrued before it reaches expected production purpose, including any loan that satisfies
capitalization conditions.
The Company shall withdraw the depreciation of the productive biological assets by adopting the
straight-line method since the second month of its useful life. Useful life, expected net salvage
value and annual depreciation rate of each productive biological assets are as below:
Category Useful life (Year) Expected net salvage value Annual deprecation (%)
(%)
Livestock 5 5% 19
The Company shall review the service life, expected net residuals and depreciation method of the
productive biological assets at least by the end of the year. In case of any change, it shall be deemed
as accounting estimate change.
The difference between proceedings from disposal (sale, loss, death or damage) of the productive
biological assets deducted by book value and related tax shall be recognized as loss and gain for the
current period.
The Company shall check on the date of Balance Sheet whether there is a depreciation sign for the
productive biological assets. If yes, estimate the recoverable amount. Such recoverable amount shall
be estimated based on single asset item. If it is difficult, the recoverable amount of the portfolio
shall be confirmed based on the portfolio such assets belong to. If the recoverable amount of the
assets is lower than book value, reserve for asset depreciation shall be accrued based on such
difference, and recognized as loss and gain for the current period.
The above assets impairment losses once be recognized should not be reversed during the
accounting periods afterwards.
If the productive biological assets changed the usage as the consumptive biological assets, the cost
after the change should be recognized as the book value when changing the usage; of the productive
biological assets changed the usage as non-profit living assets, should be recognized according to
the book value after the withdrawal of the impairment provision in accord with the regulation of No.
8 of ASBE - Assets Impairment for considering whether there was impairment and should withdraw
the impairment provision in ahead of it.
17. Intangible assets
(1) Pricing method, useful life and impairment test
The term ―intangible asset‖ refers to the identifiable non-monetary assets possessed or controlled by
enterprises which have no physical shape.
The intangible assets shall be initially measured according to its cost. The costs related with the
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intangible assets, if the economic benefits related to intangible assets are likely to flow into the
enterprise and the cost of intangible assets can be measured reliably, shall be recorded into the costs
of intangible assets; otherwise, it shall be recorded into current profits and losses upon the
occurrence.
The use right of land gained is usually measured as intangible assets. For the self-developed and
constructed factories and other constructions, the related expenditures on use right of land and
construction costs shall be respectively measured as intangible assets and fixed assets. For the
purchased houses and buildings, the related payment shall be distributed into the payment for use
right of land and the payment for buildings, if it is difficult to be distributed, the whole payment
shall be treated as fixed assets.
For intangible assets with a finite service life, from the time when it is available for use, the cost
after deducting the sum of the expected salvage value and the accumulated impairment provision
shall be amortized by straight line method during the service life. While the intangible assets
without certain service life shall not be amortized.
At the end of period, the Company shall check the service life and amortization method of
intangible assets with finite service life, if there is any change, it shall be regarded as a change of
the accounting estimates. Besides, the Company shall check the service life of intangible assets
without certain service life, if there is any evidence showing that the period of intangible assets to
bring the economic benefits to the enterprise can be prospected, it shall be estimated the service life
and amortized in accordance with the amortization policies for intangible assets with finite service
life.
(2) Accounting polices of internal R & D expenses
The expenditures for internal research and development projects of an enterprise shall be classified
into research expenditures and development expenditures.
The research expenditures shall be recorded into the profit or loss for the current period.
The development expenditures shall be confirmed as intangible assets when they satisfy the
following conditions simultaneously, and shall be recorded into profit or loss for the current period
when they don’t satisfy the following conditions.
① It is feasible technically to finish intangible assets for use or sale;
② It is intended to finish and use or sell the intangible assets;
③ The usefulness of methods for intangible assets to generate economic benefits shall be proved,
including being able to prove that there is a potential market for the products manufactured by
applying the intangible assets or there is a potential market for the intangible assets itself or the
intangible assets will be used internally;
④ It is able to finish the development of the intangible assets, and able to use or sell the intangible
assets, with the support of sufficient technologies, financial resources and other resources;
⑤ The development expenditures of the intangible assets can be reliably measured.
As for expenses that can’t be identified as research expenditures or development expenditures, the
occurred R & D expenses shall be all included in current profits and losses.
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18. Impairment of long-term assets
For non-current financial Assets of fixed Assets, projects under construction, intangible Assets with
limited service life, investing real estate with cost model, long-term equity investment of
subsidiaries, cooperative enterprises and joint ventures, the Company should judge whether
decrease in value exists on the date of balance sheet. Recoverable amounts should be tested for
decrease in value if it exists. Other intangible Assets of reputation and uncertain service life and
other non-accessible intangible assets should be tested for decrease in value no matter whether it
exists.
If the recoverable amount is less than book value in impairment test results, the provision for
impairment of differences should include in impairment loss. Recoverable amounts would be the
higher of net value of asset fair value deducting disposal charges or present value of predicted cash
flow. Asset fair value should be determined according to negotiated sales price of fair trade. If no
sales agreement exists but with asset active market, fair value should be determined according to the
Buyer’s price of the asset. If no sales agreement or asset active market exists, asset fair value could
be acquired on the basis of best information available. Disposal expenses include legal fees, taxes,
cartage or other direct expenses of merchantable Assets related to asset disposal. Present value of
predicted asset cash flow should be determined by the proper discount rate according to Assets in
service and predicted cash flow of final disposal. Asset depreciation reserves should be calculated
on the basis of single Assets. If it is difficult to predict the recoverable amounts for single Assets,
recoverable amounts should be determined according to the belonging asset group. Asset group is
the minimum asset combination producing cash flow independently.
In impairment test, book value of the business reputation in financial report should be shared to
beneficial asset group and asset group combination in collaboration of business merger. It is shown
in the test that if recoverable amounts of shared business reputation asset group or asset group
combination are lower than book value, it should determine the impairment loss. Impairment loss
amount should firstly be deducted and shared to the book value of business reputation of asset
group or asset group combination, then deduct book value of all assets according to proportions of
other book value of above assets in asset group or asset group combination except business
reputation.
After the asset impairment loss is determined, recoverable value amounts would not be returned in
future.
19. Amortization method of long-term deferred expenses
Long-term deferred expenses refer to general expenses with the apportioned period over one year
(one year excluded) that have occurred but attributable to the current and future periods. The
long-term deferred expenses mainly including the land contract fee. And the long-term deferred
expense shall be amortized averagely within benefit period.
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20. Payroll
(1) Accounting treatment of short-term compensation
Short-term compensation mainly including salary, bonus, allowances and subsidies, employee
services and benefits, medical insurance premiums, birth insurance premium, industrial injury
insurance premium, housing fund, labor union expenditure and personnel education fund,
non-monetary benefits etc. The short-term compensation actually happened during the accounting
period when the active staff offering the service for the Company should be recognized as liabilities
and is included in the current gains and losses or relevant assets cost. Of which the non-monetary
benefits should be measured according to the fair value.
(2) Accounting treatment of the welfare after demission
Welfare after demission mainly includes setting drawing plan. Of which setting the drawing plan
mainly includes basic endowment insurance, unemployment insurance and annuity etc, and the
corresponding payable and deposit amount should be included into the relevant assets cost or the
current gains and losses when happen.
(3) Accounting treatment of the welfare of other long-term staffs
The other long-term welfare that the Company offers to the staffs, if met with the setting drawing
plan, should be accounting disposed according to the setting drawing plan, while the rest should be
disposed according to the setting revenue plan.
21. Revenue
(1) Selling products
No revenue from selling goods may be recognized unless the following conditions are met
simultaneously: the significant risks and rewards of ownership of the goods have been transferred to
the buyer by the enterprise; the enterprise retains neither continuous management right that usually
keeps relation with the ownership nor effective control over the sold goods; the relevant amount of
revenue can be measured in a reliable way; the relevant economic benefits may flow into the
enterprise; and the relevant costs incurred or to be incurred can be measured in a reliable way.
(2) Providing labor services
If the Company can reliably estimate the outcome of a transaction concerning the labor services it
provides, it shall recognize the revenue from providing services employing the
percentage-of-completion method on the date of the balance sheet. The completed proportion of a
transaction concerning the providing of labor services shall be decided by the proportion of the
labor service already provided to the total labor service to provide.
The outcome of a transaction concerning the providing of labor services can be measured in a
reliable way, means that the following conditions shall be met simultaneously: ① The amount of
revenue can be measured in a reliable way; ② The relevant economic benefits are likely to flow
into the enterprise; ③ The schedule of completion under the transaction can be confirmed in a
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reliable way; and ④ The costs incurred or to be incurred in the transaction can be measured in a
reliable way.
If the outcome of a transaction concerning the providing of labor services can not be measured in a
reliable way, the revenue from the providing of labor services shall be recognized in accordance
with the amount of the cost of labor services incurred and expected to be compensated, and make
the cost of labor services incurred as the current expenses. If it is predicted that the cost of labor
services incurred couldn’t be compensated, thus no revenue shall be recognized.
Where a contract or agreement signed between Company and other enterprises concerns selling
goods and providing of labor services, if the part of sale of goods and the part of providing labor
services can be distinguished from each other and can be measured respectively, the part of sale of
goods and the part of providing labor services shall be treated respectively. If the part of selling
goods and the part of providing labor services can not be distinguished from each other, or if the
part of sale of goods and the part of providing labor services can be distinguished from each other
but can not be measured respectively, both parts shall be conducted as selling goods.
(3) Royalty revenue
In accordance with relevant contract or agreement, the amount of royalty revenue should be
recognized as revenue on accrual basis.
(4) Interest revenue
The amount of interest revenue should be measured and confirmed in accordance with the length of
time for which the Company’s monetary fund is used by others and the agreed interest rate.
22. Government subsidies
(1) Judgment basis and accounting treatment of government subsidies related to assets
Government subsidies consist of the government subsidies pertinent to assets and government
subsidies pertinent to income. The Company defines the acquisition of government subsidy of long
term assets using in construction or formed in other ways as government subsidiary related to
income. If the government document not clearly regulate the subsidy acquirees then adopt the
following method to divide the government subsidy into government subsidy related to income and
government subsidy related to assets; (1) If the government document clearly regulate the specific
project, according to the budget project will form the spending amount of assets and the cost
included of spending amount ratio to divide, and division ratio shall be reexamine in every balance
sheet date, renew if necessary. (2) The usage in government documents is for general description
only, for which do not identify a particular project, consider as government subsidy related to
income.
The government subsidies pertinent to assets shall be recognized as deferred income, equally
distributed within the useful lives of the relevant assets, and included in the current profits and
losses. The government subsidies pertinent to incomes shall be treated respectively in accordance
with the circumstances as follows: those subsidies used for compensating the related future
expenses or losses of the enterprise shall be recognized as deferred income and shall included in the
current profits and losses during the period when the relevant expenses are recognized; or those
subsidies used for compensating the related expenses or losses incurred to the enterprise shall be
directly included in the current profits and losses.
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Where it is necessary to refund any government subsidy which has been recognized, it shall be
treated respectively in accordance with the circumstances as follows: if there is the deferred income
concerned, the book balance of the deferred income shall be offset against, but the excessive part
shall be included in the current profits and losses; or if there is no deferred income concerned to the
government subsidy, it shall be directly included in the current profits and losses.
(2) Judgment basis and accounting treatment of government subsidies related to profits
Government subsidies consist of the government subsidies pertinent to assets and government
subsidies pertinent to income and the rest should be recognized as the government subsidy related
to the revenue. The Company defines the acquisition of government subsidy of long term assets
using in construction or formed in other ways as government subsidiary related to income. If the
government document not clearly regulate the subsidy acquirees then adopt the following method to
divide the government subsidy into government subsidy related to income and government subsidy
related to assets; (1) If the government document clearly regulate the specific project, according to
the budget project will form the spending amount of assets and the cost included of spending
amount ratio to divide, and division ratio shall be reexamine in every balance sheet date, renew if
necessary. (2) The usage in government documents is for general description only, for which do not
identify a particular project, consider as government subsidy related to income.
The government subsidies pertinent to incomes shall be treated respectively in accordance with the
circumstances as follows: those subsidies used for compensating the related future expenses or
losses of the enterprise shall be recognized as deferred income and shall included in the current
profits and losses during the period when the relevant expenses are recognized; or those subsidies
used for compensating the related expenses or losses incurred to the enterprise shall be directly
included in the current profits and losses.
When it is necessary to refund any government subsidy which has been recognized, if there is the
deferred income concerned, the book balance of the deferred income shall be offset against, but the
excessive part shall be included in the current profits and losses; and if there is no deferred income
concerned to the government subsidy, it shall be directly included in the current profits and losses.
23. Deferred income tax assets/deferred income tax liabilities
(1) Income tax of the current period
On the balance sheet date, for the current income tax liabilities (or assets) of the current period as
well as the part formed during the previous period, should be measured by the income tax of the
estimated payable (returnable) amount which be calculated according to the regulations of the tax
law. The amount of the income tax payable which is based by the calculation of the current income
tax expenses, are according to the result measured from the corresponding adjustment of the pre-tax
accounting profit of 2014 which in accord to the relevant regulations of the tax law.
(2) Deferred income tax assets and deferred income tax liabilities
The difference between the book value of certain assets and liabilities and their tax assessment basis,
as well as the temporary difference occurs from the difference between the book value of the items
which not be recognized as assets and liabilities but could confirm their tax assessment basis
according to the regulations of the tax law, the deferred income tax assets and the deferred income
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tax liabilities should be recognized by adopting liabilities law of the balance sheet.
No deferred tax liability is recognized for a temporary difference arising from the initial recognition
of goodwill, the initial recognition of assets or liabilities due to a transaction other than a business
combination, which affects neither accounting profit nor taxable profit (or deductible loss). Besides,
no deferred tax assets is recognized for the taxable temporary differences related to the investments
of subsidiary companies, associated enterprises and joint enterprises, and the investing enterprise
can control the time of the reverse of temporary differences as well as the temporary differences are
unlikely to be reversed in the excepted future. Otherwise, the Group should recognize the deferred
income tax liabilities arising form other taxable temporary difference.
No deferred taxable assets should be recognized for the deductible temporary difference of initial
recognition of assets and liabilities arising from the transaction which is not business combination,
the accounting profits will not be affected, nor will the taxable amount or deductible loss be affected
at the time of transaction. Besides, no deferred taxable assets should be recognized for the
deductible temporary difference related to the investments of the subsidiary companies, associated
enterprises and joint enterprises, which are not likely to be reversed in the expected future or is not
likely to acquire any amount of taxable income tax that may be used for making up such deductible
temporary differences. Otherwise, the Company shall recognize the deferred income tax assets
arising from a deductible temporary difference basing on the extent of the amount of the taxable
income that is likely to be acquired to make up such deductible temporary differences
For any deductible loss or tax deduction that can be carried forward to the next year, the
corresponding deferred income tax asset shall be determined to the extent that the amount of future
taxable income to be offset by the deductible loss or tax deduction to be likely obtained.
On the balance sheet date, the deferred income tax assets and the deferred income tax liabilities
shall be measured at the tax rate applicable to the period during which the assets are expected to be
recovered or the liabilities are expected to be settled.
The book value of deferred income tax assets shall be reviewed at each balance sheet date. If it is
unlikely to obtain sufficient taxable income to offset against the benefit of the deferred income tax
asset, the book value of the deferred income tax assets shall be written down. Any such write-down
should be subsequently reversed where it becomes probable that sufficient taxable income will be
available.
(3) Income tax expenses
Income tax expenses include current income tax and deferred income tax.
The rest current income tax and the deferred income tax expenses or revenue should be included
into current gains and losses except for the current income tax and the deferred income tax related
to the transaction and events that be confirmed as other comprehensive income or be directly
included in the shareholders’ equity which should be included in other comprehensive income or
shareholders’ equity as well as the book value for adjusting the goodwill of the deferred income tax
occurs from the business combination.
(4) Offset of income tax
The current income tax assets and liabilities of the Company should be listed by the written-off net
amount which intend to executes the net amount settlement as well as the assets acquiring and
liabilities liquidation at the same time while owns the legal rights of settling the net amount.
The deferred income tax assets and liabilities of the Company should be listed as written-off net
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amount when having the legal rights of settling the current income tax assets and liabilities by net
amount and the deferred income tax and liabilities is relevant to the income tax which be collected
from the same taxpaying bodies by the same tax collection and administration department or is
relevant to the different taxpaying bodies but during each period which there is significant reverse
of the deferred income assets and liabilities in the future and among which the involved taxpaying
bodies intend to settle the current income tax and liabilities by net amount or are at the same time
acquire the asset as well as liquidate the liabilities.
24. Lease
(1) Accounting treatment of operating lease
(1) Business of operating leases recorded by the Group as the lessee
The rent expenses from operating leases shall be recorded by the lessee in the relevant asset costs or
the profits and losses of the current period by using the straight-line method over each period of the
lease term. The initial direct costs shall be recognized as the profits and losses of the current period.
The contingent rents shall be recorded into the profits and losses of the current period in which they
actually arise.
(2) Business of operating leases recorded by the Group as the lessor
The rent incomes from operating leases shall be recognized as the profits and losses of the current
period by using the straight-line method over each period of the lease term. The initial direct costs
of great amount shall be capitalized when incurred, and be recorded into current profits and losses
in accordance with the same basis for recognition of rent incomes over the whole lease term. The
initial direct costs of small amount shall be recorded into current profits and losses when incurred.
The contingent rents shall be recorded into the profits and losses of the current period in which they
actually arise.
(2) Accounting treatments of financial lease
(1) Business of finance leases recorded by the Company as the lessee
On the lease beginning date, the Company shall record the lower one of the fair value of the leased
asset and the present value of the minimum lease payments on the lease beginning date as the
entering value in an account, recognize the amount of the minimum lease payments as the entering
value in an account of long-term account payable, and treat the balance between the recorded
amount of the leased asset and the long-term account payable as unrecognized financing charges.
Besides, the initial direct costs directly attributable to the leased item incurred during the process of
lease negotiating and signing the leasing agreement shall be recorded in the asset value of the
current period. The balance through deducting unrecognized financing charges from the minimum
lease payments shall be respectively stated in long-term liabilities and long-term liabilities due
within 1 year.
Unrecognized financing charges shall be adopted by the effective interest rate method in the lease
term, so as to calculate and recognize current financing charges. The contingent rents shall be
recorded into the profits and losses of the current period in which they actually arise.
(2) Business of finance leases recorded by the Company as the lessor
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On the beginning date of the lease term, the Company shall recognize the sum of the minimum
lease receipts on the lease beginning date and the initial direct costs as the entering value in an
account of the financing lease values receivable, and record the unguaranteed residual value at the
same time. The balance between the sum of the minimum lease receipts, the initial direct costs and
the unguaranteed residual value and the sum of their present values shall be recognized as
unrealized financing income. The balance through deducting unrealized financing incomes from the
finance lease accounts receivable shall be respectively stated in long-term claims and long-term
claims due within 1 year.
Unrecognized financing incomes shall be adopted by the effective interest rate method in the lease
term, so as to calculate and recognize current financing revenues. The contingent rents shall be
recorded into the profits and losses of the current period in which they actually arise.
25. Significant accounting judgments and estimates
Due to the internal uncertainty of operating activities, the Company needs to make judgments,
estimates and assumptions for carrying amounts of statement items that can’t be measured
accurately during the process of applying accounting policies. Such judgments, estimates and
assumptions are made on the basis of the past experience of Company’s management staffs and on
the consideration of other relevant factors. Such judgments, estimates and assumptions have effect
on reporting amount of incomes, expense, assets and liabilities, as well as disclosure of contingent
liabilities on the balance sheet date. However, the uncertainty of such estimates may results in major
adjustments of carrying amounts of assets or liabilities that will be influenced in future.
The Company shall have a check on the aforesaid judgments, estimates and assumptions at fixed
intervals on the basis of sustainable operation. As for the change in accounting estimates that only
effects on the current period of the change, the affected amount thereof shall be recognized at
current period of the change. As for accounting estimates that effects on both the current period of
the change and future periods, the affected amount thereof shall be recognized at current period of
the change and future periods.
On balance sheet date, major fields requiring judgments, estimates and assumptions on amounts of
financial statement items by the Company are as follows:
(1) Classification of leases
In line with rules in Accounting Standards for Enterprises No. 21 – Leases, the Company classifies
leases into operating leases and finance leases. Upon the classification, the management staffs need
to make analysis and judgments on whether to essentially transfer all risks and remuneration
relating to the ownership of leased-out assets to the lessee, or whether the Company has essentially
undertaken all risks and remuneration relating to the ownership of leased-in assets.
(2) Withdrawal of bad debt provisions
The Company shall, in accordance with accounting policies of receivables, calculate bad debt
provisions by adopting allowance method. Impairment of accounts receivable is based on the
assessment of the recovery of accounts receivable. Identification of impairment of accounts
receivable requires judgments and estimates by management staffs. The difference between actual
outcomes and originally estimated outcomes, which will influence the carrying amount of accounts
receivable and bad debt provisions thereof in the estimated period of the change, shall be withdrawn
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2015 Semi-annual Report of Hubei Sanonda Co., Ltd.
or reversed.
(3) Inventory depreciation reserves
The Company shall calculate whichever is lower between the cost and realizable net value in light
of inventory accounting policies. As for inventories of which the cost is higher than the realizable
net value and inventories which are obsolete and unsalable inventory depreciation reserves shall be
withdrawn. Impairment of inventories to realizable net value is based on the assessment of the
marketing of inventories and realizable net value thereof. Identification of inventory impairment
requires well-established evidences by management staffs, as well as judgments and estimates
based on consideration of the purpose of holding inventories and other factors such as events
occurring after the date of balance sheet. The difference between actual outcomes and originally
estimated outcomes, which will influence the carrying amount of inventories and inventory
depreciation reserves in the estimated period of the change, shall be withdrawn or reversed.
(4) Fair values of financial instruments
As for financial instruments not existing in active trading market, the Company shall determine
their fair values by all kinds of assessment methods, which include model analysis of discounted
cash flow and etc. During the assessment, the Company needs to assess for respects such as future
cash flows, credit risks, market volatility, correlation, and choose appropriate discount rate. Such
related assumptions have uncertainty, of which the change will effect on fair values of financial
instruments.
(5) Impairment of financial assets available for sale
To a large extent, whether the impairment of financial assets available for sale is recognized or not
relies on the judgments and assumptions of the management staffs. In that way, the Company shall
be certain about whether to recognize impairment losses of financial assets available for sale in the
profit statement. During the process of making judgments and assumptions, the Company needs to
evaluate how much the fair value of such investment is less than its cost, how long such investment
will last, and the financial condition and short-term business outlook of the invested parties, which
include industry status, technology transform, credit rating, default rate and risks from the opposite
parties.
(6) Impairment provisions of non-financial non-current assets
The Company shall judge whether there is sign of impairment of non-current assets other than
financial assets on balance sheet date. Intangible assets with uncertain service lives, besides being
conducted with annual impairment test every year, have to accept impairment tests when there is
sign of impairment. Other non-current assets except for financial assets have to accept impairment
tests when there is sign indicating the carrying amount thereof is unrecoverable.
When the carrying amounts of the asset or group assets are higher than the recoverable amounts,
namely whichever is higher between the net amount through deducting disposal charges from the
fair value and the present value of the estimated future cash flow, impairment occurs.
The net amount of the fair value of an asset minus the disposal expenses shall be determined in light
of the amount of the basis of the price as stipulated in the sales agreement or the observable market
price in the fair transaction minus the incremental cost directly subject to the disposal of the asset.
When estimating present value of future cash flows, it is necessary to make significant judgments
on characters of the asset or asset group, such as output, sales price, related operating costs, and
discount used to calculate the present value. When estimating recoverable amount, the Company
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2015 Semi-annual Report of Hubei Sanonda Co., Ltd.
shall adopt all relevant materials that can be required, including estimates relating to output, sales
price and relevant operating costs judged by rational and supportable assumptions.
The Company tests whether there is impairment of good will at least for every year, which requires
itself to estimate the present value of the future cash flow of group assets or combination of group
assets. When estimating the present value of the future cash flow, the Company needs to estimate
the cash flow arising from future group assets or combination of group assets, and at the same time
choose appropriate discount rate to determine the present value of the future cash flow.
(7) Depreciation and amortization
Upon consideration on the salvage value of investment real estates, fixed assets and intangible
assets, the Company shall withdraw depreciation and amortization by straight-line method over
their service lives. The Company checks on service lives at fixed intervals, so as to determine the
amounts of depreciation expenses and amortization expenses at each period. Service lives are
confirmed in accordance with the past experience on similar assets of the Company, along with
renewed technology of expectation. If any significant change occurred to previous estimated,
depreciation expenses and amortization expenses will be adjusted in future period.
(8) Development expenditure
When recognizing the capitalized amount, the management layer of the Company needs to make
suppose about the estimated future cash flow, the appropriate discounts rate and the estimated
benefit period related to the assets.
(9) Deferred income tax assets
In a limit providing large possibility of offset losses from sufficient taxable profits, the Group shall
recognize deferred income tax assets in line with all unused tax losses, which requires management
staffs of the Group to estimate the time when future taxable profits occurs and the amount thereof
by applying plenty of judgments and combining tax planning strategies, so as to determine the
amount of the recognizable deferred income tax assets.
(10) Income taxes
There’s certain uncertainty of disposal and calculation of taxes of partial transactions in normal
operating activities. It is uncertain whether some pre-taxed items can set aside the approvals by tax
authorities or not. If there are differences between the ultimate recognition outcomes and the
originally estimated amounts of such tax issues, then such differences shall effect on the current
income tax and deferred income tax during the ultimate recognition period.
26. Changes in main accounting policies and estimates
(1) Change of accounting policies
□ Applicable √ Inapplicable
(2) Change of main accounting estimates
□ Applicable √ Inapplicable
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VI. Taxation
1. Main taxes and tax rate
Category of taxes Tax basis Tax rate
Calculated the output tax at 17%, 13%, 6%, and 0% of taxable
VAT income and paid the VAT by the amount after deducting the 17%, 13%, 6%, 3%, 0%
deductible withholding VAT at current period.
Business tax Paid by 3%, 5% of taxable business income 3%, 5%
Urban maintenance
Paid at 7%, 5%, 1% of the circulating tax actually paid 7%, 5%, 1%
and construction tax
Enterprise income tax Paid at 15%, 16.5%, 25% of taxable income respectively 0%, 9%, 15%, 16.5%, 25%
Notes to the disclosure of taxpaying bodies in different corporate tax rate
Name of taxpaying bodies Rate of income tax
The Company 15%
Lufeng Weaving & Dyeing Co., Ltd. (hereinafter refer to as
15%
―Lufeng Weaving & Dyeing‖)
Luthai (Hong Kong) Co., Ltd. (hereinafter refer to as ―Luthai
16.50%
Hong Kong‖)
Xinjiang Luthai Harvest Cotton Co., Ltd. (―Xinjiang Lu Thai‖) 25%
Zibo Luqun Textile Co., Ltd. (hereinafter refer to as ―Luqun
25%
Textile‖)
Zibo Xinsheng Power Co., Ltd. hereinafter refer to as ―Xinsheng
25%
Power‖)
Zibo Helijie Energy Saving Technology & Services Co., Ltd.
25%
(hereinafter referred to as ―Helijie‖)
Beijing Lufeng Sunshine Garments Co., Ltd. (hereinafter
25%
referred to as ―Lufeng Sunshine‖)
Beijing Innovative Garment Co., Ltd. (hereinafter referred to as
25%
―Beijing Innovative‖
Shanghai Luthai Textile & Garments Co., Ltd. (hereinafter
25%
referred to as ―Shanghai Luthai‖)
Beijing Luthai Youxian Electronic Commerce Co., Ltd.
25%
(hereinafter referred to as ―Beijing Youxian‖)
Xinjiang Lu Thai Textile Co., Ltd. (―Xinjiang Lu Thai Textile‖) 9%
Lu Thai (Cambodia) Co., Ltd. (hereinafter referred to as ―Lu
0%
Thai Cambodia‖)
Lu Thai (Burma) Co., Ltd. (hereinafter referred to as ―Lu Thai 0%
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2015 Semi-annual Report of Hubei Sanonda Co., Ltd.
Burma‖)
Lu Thai (Vietnam) Co., Ltd. (hereinafter referred to as ―Lu Thai
0%
Vietnam‖)
2. Tax preference
The Company, in accordance with the Notice on Passing the Re-examination of New High-tech
Enterprise for 504 Companies Including Jinan Shengquan Group Co., Ltd. (Lu-Ke-Gao-Zi [2012]
No. 19) from Department of Science & Technology of Shandong Province, Finance Bureau of
Shandong Province, National Taxation Bureau of Shandong and Local Taxation Bureau of
Shandong Province, was recognized as a New High-tech Enterprise and obtained the Certificate of
New High-tech Enterprise on 31 Oct. 2011. The Company shall, in line with the Article 28 of
Enterprise Income Tax Law of the People’s Republic of China and Notice of the State
Administration of Taxation on the Issues concerning the Administration of Enterprise Income Tax
Deduction and Exemption (GSF [2008] No. 111 document), enjoy a 15-percent rate for enterprise
income tax.
The Company’s controlled subsidiary— Lufeng Weaving & Dyeing Co., Ltd., in accordance with
the Notice on Confirmation of New High-tech Enterprise for 430 Companies Including Jinan
Feshen Xinng’an Technologies Co., Ltd. (Lu-Ke-Gao-Zi [2012] No. 38) from Department of
Science & Technology of Shandong Province, Finance Bureau of Shandong Province, National
Taxation Bureau of Shandong and Local Taxation Bureau of Shandong Province, was recognized as
a New High-tech Enterprise and obtained the Certificate of New High-tech Enterprise on 30 Nov.
2011.. The above subsidiary shall, in line with the Article 28 of Enterprise Income Tax Law of the
People’s Republic of China and Notice of the State Administration of Taxation on the Issues
concerning the Administration of Enterprise Income Tax Deduction and Exemption (GSF [2008] No.
111 document), enjoy a 15-percent rate for enterprise income tax.
Luthai (Hong Kong) Co., Ltd. (hereinafter refers as Luthai (Hong Kong)), the wholly-owned
subsidiary company of the Company, was incorporated in Hong Kong SAR, whose profit tax shall
be paid at tax rate of 16.5%.
According to the ―Announcement of the State Administration of Taxation on Issues of Enterprise
Income Tax Concerning In-depth Implementation of the Western Development Strategy‖ (SAT
[2012] No. 12), as well as the ―Circular of Xinjiang Uygur Autonomous Region on Tax Policies
Concerning Acceleration of the Development of the Textile Industry‖ (XZF [2010] No. 99),
Xinjiang Lu Thai Textile Co., Ltd. (―Xinjiang Lu Thai Textile‖), a wholly-funded subsidiary of the
Company’s controlled subsidiary Xinjiang Lu Thai Fengshou Cotton Co., Ltd. (―Xinjiang Lu Thai‖),
enjoys a preferential enterprise income tax rate of 15% as an enterprise under the Western
Development Strategy. And the local enjoyable tax is exempted for five years, i.e. a preferential
enterprise income tax rate of 9% for the five years.
The wholly own subsidiary Lu Thai Cambodia, according to the Lu Thai Cambodia Profits tax free
approval issued by Investment Committee of Cambodia, Lu Thai Cambodia enjoys tax preference
of tax free on corporate income tax of 3 (3 years start-up period) + 3 (3 years tax holiday)+1 (1 year
grace period). If profit during the 3 year start-up period then turn into 3 years tax holiday, after
grace period, enterprise income tax rate was of 20%.
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2015 Semi-annual Report of Hubei Sanonda Co., Ltd.
The wholly own subsidiary Lu Thai Burma, according to the Burma’s Special Economic Zone Law
issued by Pyidaungsu Hluttaw, Luthai Burma enjoys tax preference on corporate income tax of 7 (7
years tax holiday) + 5 (5 years tax revenues drop by half) + 5 (re-invest the profits within 1 year and
continues to enjoy the half tax revenues 5 years afterwards). After grace period, enterprise income
tax rate was of 25%.
The wholly own subsidiary Luthai Vietnam of the wholly own subsidiary Luthai Hong Kong, the
investment license issued by the Vietnam Fudong Industrial Park Management Committee, Luthai
Vietnam enjoys tax preference on corporate income tax of 3 (3 years start-up period) + 2 (2 years
tax holiday) + 4 half (4 years 50%-reductions period) and if there are profits within the 3 years
start-up period should transfer which in the 2 years tax holiday. After grace period, enterprise
income tax rate was of 25%.
VII. Notes on major items in consolidated financial statements of the Company
1. Monetary funds
Unit: RMB Yuan
Item Closing balance Opening balance
Cash on hand 3,573,971.14 1,190,565.56
Bank deposits 504,903,198.29 631,971,943.96
Other monetary funds 108,961,161.23 33,131,288.78
Total 617,438,330.66 666,293,798.30
Of which total amount of deposited
249,815,842.63 22,970,300.95
abroad
Other notes:
(1) On 30 Jun. 2015, the monetary capital with restricted ownership of the Company was of RMB 89,026,946.69
(31 Dec. 2014: RMB 16,900,000.00), which was the the fixed deposit receipt of USD 4,582,115.07 in order to
pledge and obtain short term loan by the Company’s subsidiary Lufeng Weaving & Dyeing and the fixed deposit
receipt of USD 9,980,000.00 in order to pledge and obtain short term loan by the Company.
(2) On 30 Jun. 2015, the monetary capital the Company deposited in overseas was of RMB 249,815,842.63 (31
Dec. 2014: RMB 22,970,300.95).
2. Financial assets measured by fair value and the changes be included in the current gains and losses
Unit: RMB Yuan
Item Closing balance Opening balance
Tradable financial assets 8,940,500.00
Derivative financial assets 8,940,500.00
Total 8,940,500.00
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2015 Semi-annual Report of Hubei Sanonda Co., Ltd.
3. Notes receivable
(1) Notes receivable listed by category
Unit: RMB Yuan
Item Closing balance Opening balance
Bank acceptance bill 34,001,787.10 21,795,315.09
Letter of credit 122,150,411.81 92,009,162.34
Total 156,152,198.91 113,804,477.43
(2) Notes receivable pledged by the Company at the period-end
Unit: RMB Yuan
Item Amount Item
Bank acceptance bill 118,533,317.60
Total 118,533,317.60
4. Accounts receivable
(1) Accounts receivable disclosed by category
Unit: RMB Yuan
Closing balance Opening balance
Book balance Bad debt provision Book balance Bad debt provision
Category Withdra
Book
Proportio wal Proportio Withdrawal Book value
Amount Amount value Amount Amount
n proportio n proportion
n
Accounts receivable
withdrawn bad debt
238,122, 12,071,0 226,051,8 223,311 11,340,99 211,970,55
provision according 99.45% 5.07% 99.42% 5.08%
879.27 40.59 38.68 ,549.51 5.41 4.10
to credit risks
characteristics
Accounts receivable
with insignificant
single amount for 1,313,78 1,313,78 1,313,7 1,313,784
0.55% 100.00% 0.58% 100.00%
which bad debt 4.00 4.00 84.00 .00
provision separately
accrued
Total 239,436, 100.00% 13,384,8 5.59% 226,051,8 224,625 100.00% 12,654,77 5.63% 211,970,55
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2015 Semi-annual Report of Hubei Sanonda Co., Ltd.
663.27 24.59 38.68 ,333.51 9.41 4.10
Accounts receivable with significant single amount for which bad debt provision separately accrued at the period-end
□ Applicable √ Inapplicable
In the groups, accounts receivable adopting aging analysis method to accrue bad debt provision:
√Applicable □ Inapplicable
Unit: RMB Yuan
Closing balance
Aging
Accounts receivable Bad debt provision Withdrawal proportion
Subitem within 1 year
Within 1 year 236,578,395.21 11,828,919.76 5.00%
Subtotal within 1 year 236,578,395.21 11,828,919.76 5.00%
1 to 2 years 913,307.96 91,330.80 10.00%
2 to 3 years 385,628.03 77,125.61 20.00%
Over 3 years 245,548.07 73,664.42 30.00%
Total 238,122,879.27 12,071,040.59 5.07%
Notes of the basis of recognizing the group:
In the groups, accounts receivable adopting balance percentage method to withdraw bad debt provision
□ Applicable √ Inapplicable
In the groups, accounts receivable adopting other methods to accrue bad debt provision:
(2) Accounts receivable withdraw, reversed or collected during the reporting period
The withdrawal amount of the bad debt provision during the reporting period was of RMB 730,902.18; the amount of the reversed or
collected part during the reporting period was of RMB 000.
(3) The actual write-off accounts receivable
Unit: RMB Yuan
Item Amount
Actual write-off accounts receivable 857.00
(4) Top 5 of the closing balance of the accounts receivable colleted according to the arrears party
The total amount of the Company’s top 5 of the closing balance of the accounts receivable colleted
according to the arrears party was RMB 81,750,939.59, % of the total balance of account receivable
at period-end. The relevant total balance of bad debt provision was RMB 4,087,546.98.
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2015 Semi-annual Report of Hubei Sanonda Co., Ltd.
5. Prepayment
(1) List by aging analysis:
Unit: RMB Yuan
Closing balance Opening balance
Aging
Amount Proportion Amount Proportion
Within 1 year 100,678,967.15 96.91% 172,016,638.95 98.37%
1 to 2 years 1,776,785.90 1.71% 1,937,764.69 1.11%
2 to 3 years 527,261.10 0.51% 1,752.14 0.00%
Over 3 years 909,777.10 0.87% 909,777.10 0.52%
Total 103,892,791.25 -- 174,865,932.88 --
Notes of the reasons of the prepayment ages over 1 year with significant amount but failed settled in time:
(2) Top 5 of the closing balance of the prepayment colleted according to the prepayment target
The total amount of top 5 of the closing balance of the prepayment collected according to the
prepayment target was RMB 44,656,286.36, 42.98% of total balance of prepayment at period-end.
6. Interest receivable
(1) Category of interest receivable
Unit: RMB Yuan
Item Closing balance Opening balance
Fixed time deposit 276,998.88
Total 276,998.88
7. Other accounts receivable
(1) Other accounts receivable disclosed by category
Unit: RMB Yuan
Closing balance Opening balance
Book balance Bad debt provision Book balance Bad debt provision
Category Withdra
Book
Proportio wal Proportio Withdrawal Book value
Amount Amount value Amount Amount
n proportio n proportion
n
Other accounts 60,218,8 100.00% 7,511,03 12.47% 52,707,82 71,349, 100.00% 7,971,030 11.17% 63,378,909.
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2015 Semi-annual Report of Hubei Sanonda Co., Ltd.
receivable withdrawn 56.86 2.23 4.63 940.05 .77 28
bad debt provision
according to credit
risks characteristics
60,218,8 7,511,03 52,707,82 71,349, 7,971,030 63,378,909.
Total 100.00% 12.47% 100.00% 11.17%
56.86 2.23 4.63 940.05 .77 28
Other accounts receivable with significant single amount for which bad debt provision separately accrued at the period-end
□ Applicable √ Inapplicable
In the groups, other accounts receivable adopting aging analysis method to accrue bad debt provision:
√Applicable □ Inapplicable
Unit: RMB Yuan
Closing balance
Aging
Other accounts receivable Bad debt provision Withdrawal proportion
Subitem within 1 year
Within 1 year 29,346,845.63 1,467,342.29 5.00%
Subtotal within 1 year 29,346,845.63 1,467,342.29 5.00%
1 to 2 years 14,337,376.30 1,433,737.64 10.00%
2 to 3 years 3,504,381.68 700,876.33 20.00%
Over 3 years 13,030,253.25 3,909,075.97 30.00%
Total 60,218,856.86 7,511,032.23 12.47%
Notes of the basis of recognizing the group:
In the groups, other accounts receivable adopting balance percentage method to withdraw bad debt provision
□ Applicable √ Inapplicable
In the groups, other accounts receivable adopting other methods to accrue bad debt provision:
□ Applicable √ Inapplicable
(2) Accounts receivable withdraw, reversed or collected during the reporting period
The withdrawal amount of the bad debt provision during the reporting period was of RMB -449,498.54; the amount of the reversed
or collected part during the reporting period was of RMB 0.00
Unit: RMB Yuan
Item Amount
Actual write-off other accounts receivable 10,500.00
(4) Other accounts receivable classified by the nature of accounts
Unit: RMB Yuan
Nature Closing book balance Opening book balance
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2015 Semi-annual Report of Hubei Sanonda Co., Ltd.
Export taxes refund 2,665,685.60 11,213,575.08
Advance payment 27,809,773.50 37,058,192.64
Pledge and guarantee 9,914,626.78 8,062,219.86
Lending and deposit 4,876,823.14 4,777,623.60
Other 14,951,947.84 10,238,328.87
Total 60,218,856.86 71,349,940.05
(5) Top 5 of the closing balance of the other accounts receivable colleted according to the arrears party
Unit: RMB Yuan
Proportion of the Closing
total year end balance of
Name of units Nature Closing balance Aging balance of the bad debt
accounts provision
receivable (%)
Other accounts receivable Within 1 year, 1 to 2
Advance money 15,754,552.97 26.15% 1,423,419.26
A years, 2 to 3 years
Account receivable of
the withheld dividend
Other accounts receivable taxation of B Share by
6,928,375.47 Within 1 year 11.51% 346,418.77
B securities registration
and settlement
companies
Other accounts receivable
Insurance expenses 3,610,373.69 Within 1 year 6.00% 180,518.68
C
Deposits for wages paid
Other accounts receivable
to migrant workers of 2,955,620.10 Over 3 years 4.91% 886,686.03
D
infrastructure works
Other accounts receivable Export tax refunds of
2,665,685.60 Over 3 years 4.43% 799,705.68
E the local government
Total -- 31,914,607.83 -- 53.00% 3,636,748.42
8. Inventory
(1) Category of inventory
Unit: RMB Yuan
Closing balance Opening balance
Item Falling price Falling price
Book balance Book value Book balance Book value
reserves reserves
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2015 Semi-annual Report of Hubei Sanonda Co., Ltd.
Raw materials 624,984,465.95 1,635,229.99 623,349,235.96 661,246,109.89 1,635,229.99 659,610,879.90
Products in
507,690,850.45 507,690,850.45 478,624,419.09 478,624,419.09
process
Inventory goods 642,245,808.55 33,260,845.40 608,984,963.15 636,626,434.14 40,267,108.49 596,359,325.65
Consumptive
582,322.08 582,322.08
biological assets
Assigned
processing 20,709,673.12 20,709,673.12 17,975,757.57 17,975,757.57
products
Total 1,796,213,120.15 34,896,075.39 1,761,317,044.76 1,794,472,720.69 41,902,338.48 1,752,570,382.21
(2) Falling price reserves of inventory
Unit: RMB Yuan
Increased amount Decreased amount
Item Opening balance Reverse or Closing balance
Withdrawal Other Other
write-off
Raw materials 1,635,229.99 1,635,229.99
Inventory goods 40,267,108.49 7,006,263.09 33,260,845.40
Total 41,902,338.48 7,006,263.09 34,896,075.39
9. Other current assets
Unit: RMB Yuan
Item Closing balance Opening balance
Prepaid income tax to be deducted 11,079,402.93 3,658,894.10
VAT input tax to be deducted 31,614,425.75 1,508,430.88
Total 42,693,828.68 5,167,324.98
10. Available-for-sale financial assets
(1) List of available-for-sale financial assets
Unit: RMB Yuan
Closing balance Opening balance
Item Depreciation Depreciation
Book balance Book value Book balance Book value
reserves reserves
Available-for-sale debt
instruments：
103
2015 Semi-annual Report of Hubei Sanonda Co., Ltd.
Available-for-sale equity
67,442,600.00 67,442,600.00 67,442,600.00 67,442,600.00
instruments
Measured by fair
value
Measured by cost 67,442,600.00 67,442,600.00 67,442,600.00 67,442,600.00
Total 67,442,600.00 67,442,600.00 67,442,600.00 67,442,600.00
(2) Available-for-sale financial assets measured by cost at the period-end
Unit: RMB Yuan
Book balance Impairment provision Cash
Shareholding
bonus of
proportion
Investee the
Period-begin Increase Decrease Period-end Period-begin Increase Decrease Period-end among the
reporting
investees
period
Zibo
Chengshun
Heating Co.,
Ltd.
160,000.00 160,000.00 2.00%
(hereinafter
refer to as
―Chengshun
Heating‖ )
Yantai
Rongchang
Pharmacy
Co., Ltd.
55,282,600.00 55,282,600.00 5.56%
(hereinafter
refer to as
―Rongchang
Pharmacy‖)
Gaoqing
Hongqiao
Power Co.,
12,000,000.00 12,000,000.00 20.68%
Ltd.
(Hongqiao
Power)
Total 67,442,600.00 67,442,600.00 --
11. Long-term accounts receivable
(1) List of long-term accounts receivable
Unit: RMB Yuan
104
2015 Semi-annual Report of Hubei Sanonda Co., Ltd.
Closing balance Opening balance
Discount rate
Item Bad debt Bad debt
Book balance Book value Book balance Book value range
provision provision
Financing lease
5,480,998.00 5,480,998.00 6,980,998.00 6,980,998.00 10.54%
receivables
Of which:
unrealized 557,787.17 557,787.17 901,978.43 901,978.43
financing income
Total 5,480,998.00 5,480,998.00 6,980,998.00 6,980,998.00 --
12. Fixed assets
(1) List of fixed assets
Unit: RMB Yuan
Houses and Machinery Transportation
Item Other Total
buildings equipment equipment
I. Original book value
1. Opening balance 2,550,640,277.33 5,419,397,227.53 68,406,645.05 103,129,923.73 8,141,574,073.64
2. Increased amount
14,386,282.02 49,415,264.91 2,369,878.31 4,027,843.44 70,199,268.68
of the period
(1) Outsourcing 1,054,916.96 33,166,357.57 2,308,742.31 3,913,593.14 40,443,609.98
(2) Transfer of
inventory\fixed
13,331,365.06 16,248,907.34 61,136.00 114,250.30 29,755,658.70
assets\project under
construction
(3) Increased from
enterprise merger
3. Decreased amount
4,720,915.21 9,219,953.48 1,348,978.83 505,877.14 15,795,724.66
of the period
(1) Disposal or Scrap 4,720,915.21 9,219,953.48 1,348,978.83 505,877.14 15,795,724.66
4. Closing balance 2,560,305,644.14 5,459,592,538.96 69,427,544.53 106,651,890.03 8,195,977,617.66
II. Accumulative
depreciation
1.Opening balance 664,880,219.81 2,404,560,228.35 47,741,021.91 66,140,558.20 3,183,322,028.27
2. Increased amount
39,478,595.62 123,991,697.54 2,915,814.55 8,827,973.34 175,214,081.05
of the period
(1) Withdrawal 39,478,595.62 123,991,697.54 2,915,814.55 8,827,973.34 175,214,081.05
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2015 Semi-annual Report of Hubei Sanonda Co., Ltd.
3. Decreased amount
1,273,515.72 7,063,250.48 1,233,406.57 454,730.99 10,024,903.76
of the period
(1) Disposal or scrap 1,273,515.72 7,063,250.48 1,233,406.57 454,730.99 10,024,903.76
4. Closing balance 703,085,299.71 2,521,488,675.41 49,423,429.89 74,513,800.55 3,348,511,205.56
III. Depreciation reserves
1.Opening balance 4,823,890.00 22,457,499.57 53,835.13 68,764.63 27,403,989.33
2. Increased amount
of the period
(1) Withdrawal
3. Decreased amount
977,851.01 977,851.01
of the period
(1) Disposal or scrap 977,851.01 977,851.01
4. Closing balance 4,823,890.00 21,479,648.56 53,835.13 68,764.63 26,426,138.32
IV. Book value
1. Closing book
1,852,396,454.43 2,916,624,214.99 19,950,279.51 32,069,324.85 4,821,040,273.78
value
2. Opening book
1,880,936,167.52 2,992,379,499.61 20,611,788.01 36,920,600.90 4,930,848,056.04
value
(2) Fixed assets leased out from operation lease
Unit: RMB Yuan
Item Closing book value
Houses and buildings 23,443,261.49
(3) Details of fixed assets failed to accomplish certification of property
Unit: RMB Yuan
Item Book value Reason
Ongoing inspection, surveying, verification to application
Weaving and yarn dying workshop 113,954,603.74
procedures by Housing authorities
Employee’s dormitory building of eastern
28,696,136.84 Same with above
area of industrial park
Spinning Fourth factory workshop 72,586,597.32 Same with above
Lufeng weaving dye workshop 141,936,584.26 Same with above
Other notes
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13. Construction in progress
(1) List of construction in progress
Unit: RMB Yuan
Closing balance Opening balance
Item Impairment Impairment
Book balance Book value Book balance Book value
provision provision
Complex building and
employee’s dormitory building 13,480,283.20 13,480,283.20 12,939,182.17 12,939,182.17
in western area of Luthai
A new 230,000-spindle
production line project and a
6,984,206.17 6,984,206.17 4,850,066.53 4,850,066.53
new 35,000-ingot two-for-one
twisting production line project
East sample factory 26,538,538.03 26,538,538.03 17,204,613.50 17,204,613.50
Factory project of Xinjiang
1,039,800.00 1,039,800.00 423,132.50 423,132.50
Luthai
Reform project of Xinsheng
24,222,084.06 24,222,084.06 22,032,798.42 22,032,798.42
Thermal Power
Energy conservation project of
6,423,346.54 6,423,346.54 10,301,098.08 10,301,098.08
Helijie
Lu Thai (Cambodia) garment
17,311,996.27 17,311,996.27 12,450,194.68 12,450,194.68
project
Lu Thai (Burma) garment 13,183,657.20 13,183,657.20 0.00 0.00
Lu Thai (Vietnam) yarn-dyed
9,096,140.18 9,096,140.18 0.00 0.00
fabric projects
Other small projects 51,706,018.96 51,706,018.96 43,384,140.92 43,384,140.92
Total 169,986,070.61 169,986,070.61 123,585,226.80 123,585,226.80
(2) Changes of significant construction in progress
Unit: RMB Yuan
Proportio Of
Other Accumul
Amount n which: Capitaliz
decrea ative
that estimate Proje the ation rate Capita
Increased sed amount
Name o f Estimated Opening transferre Closing d of the ct amount of the l
amount of amoun of
item number balance d to fixed balance project progr of the interests resour
the period t of capitalize
assets of accumul ess capitali of the ces
the d
the period ative zed period
period interests
input interest
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2015 Semi-annual Report of Hubei Sanonda Co., Ltd.
s of the
period
Complex
building
and
employee’s
106,500,000 12,939,18 541,101.0 13,480,28 99.00
dormitory 99.00% Other
.00 2.17 3 3.20 %
building in
western
area of
Luthai
A new
230,000-sp
indle
production
line project
and a new 928,660,000 4,850,066. 2,134,139 6,984,206. 33.96
33.96% Other
35,000-ing .00 53 .64 17 %
ot
two-for-on
e twisting
production
line project
East
30,000,000. 17,204,61 9,333,924 26,538,53 88.50
sample 88.50% Other
00 3.50 .53 8.03 %
factory
Factory
project of 4,000,000.0 423,132.5 2,828,293 2,211,626 1,039,800. 81.00
81.00% Other
Xinjiang 0 0 .76 .26 00 %
Luthai
Reform
project of
30,000,000. 22,032,79 2,189,285 24,222,08 80.00
Xinsheng 80.00% Other
00 8.42 .64 4.06 %
Thermal
Power
Energy
conservatio 34,235,000. 10,301,09 2,674,462 6,552,214 6,423,346. 91.10
91.10% Other
n project of 00 8.08 .93 .47 54 %
Helijie
Lu Thai
123,056,000 12,450,19 22,347,81 17,486,01 17,311,996 66.80
(Cambodia 66.80% Other
.00 4.68 9.80 8.21 .27 %
) garment
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project
Lu Thai
61,136,000. 13,183,65 13,183,65 21.50
(Burma) 0.00 21.50% Other
00 7.20 7.20 %
garment
Lu Thai
(Vietnam)
242,282,300 9,096,140 9,096,140. 3.75
yarn-dyed 0.00 3.75% Other
.00 .18 18 %
fabric
projects
Other
43,384,14 11,827,67 3,505,799 51,706,01
small Other
0.92 7.80 .76 8.96
projects
1,559,869,3 123,585,2 76,156,50 29,755,65 169,986,0
Total 0.00 -- -- --
00.00 26.80 2.51 8.70 70.61
14. Engineering material
Unit: RMB Yuan
Item Closing balance Opening balance
Specific materials 678,493.72 587,256.00
Specific equipments 35,593,129.90 19,298,509.41
Total 36,271,623.62 19,885,765.41
15. Productive biological assets
(1) Productive biological assets adopted cost measurement mode
√Applicable □ Inapplicable
Unit: RMB Yuan
Item Planting industry Livestock Forestry Aquaculture Total
I. Total original book
value
1. Opening
1,310,500.00 1,310,500.00
balance
2. Increased
amount of the period
(1) Outsourcing
(2) Self
cultivate
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2015 Semi-annual Report of Hubei Sanonda Co., Ltd.
3. Decrease
amount of the period
(1) Disposal
(2) Other
4.Closing balance 1,310,500.00 1,310,500.00
II. Accumulated
depreciation
1.Opening
balance
2. Increased
124,497.48 124,497.48
amount of the period
(1) Withdrawal
3. Decrease
amount of the period
(1) Disposal
(2) Other
4.Closing balance 124,497.48 124,497.48
III. Impairment
provision
1.Opening
balance
2. Increased
amount of the period
(1) Withdrawal
3. Decrease
amount of the period
(1) Disposal
(2) Other
4.Closing balance
IV. Book value
1.Closing book
1,186,002.52 1,186,002.52
value
2.Opening book
1,310,500.00 1,310,500.00
value
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16. Intangible assets
(1) List of intangible assets
Unit: RMB Yuan
Item Land use right Patent Non-patents Total
I. Total original book value
1. Opening balance 445,235,221.44 1,985,176.47 180,000.00 447,400,397.91
2. Increase in the
1,335,244.20 300,000.00 1,635,244.20
reporting period
(1) Purchase 1,335,244.20 300,000.00 1,635,244.20
(2) Internal R &D
(3) Increase from
enterprise combination
3. Decrease in the
reporting period
(1) Purchase
4. Closing balance 446,570,465.64 2,285,176.47 180,000.00 449,035,642.11
II. Total accrued
amortization
1. Opening balance 72,632,893.20 827,157.00 180,000.00 73,640,050.20
2. Increase in the
6,003,617.55 114,258.84 6,117,876.39
reporting period
(1) Withdrawal 6,003,617.55 114,258.84 6,117,876.39
3. Decrease in the
reporting period
(1) Disposal
4. Closing balance 78,636,510.75 941,415.84 180,000.00 79,757,926.59
III. Total impairment
provision
1. Opening balance
2. Increase in the
reporting period
(1) Withdrawal
3. Decrease in the
reporting period
(1) Disposal
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4. Closing balance
IV. Total book value of
intangible assets
1. Book value of the
367,933,954.89 1,343,760.63 369,277,715.52
period-end
2. Book value of the
372,602,328.24 1,158,019.47 373,760,347.71
period-begin
The proportion the intangible assets formed from the internal R&D through the Company amount the balance of the intangible assets
at the period-end.
17. Goodwill
(1) Original book value of goodwill
Unit: RMB Yuan
Name of the
investees or the
Opening balance Increase Decrease Closing balance
events formed
goodwill
Xinsheng Power 20,563,803.29 20,563,803.29
Helijie 50,000.00 50,000.00
Total 20,613,803.29 20,613,803.29
18. Long-term unamortized expenses
Unit: RMB Yuan
Item Opening balance Increase Amortization amount Decrease Closing balance
Land contracting fee of Xinjiang Luthai 28,319,033.27 360,000.00 519,093.41 28,159,939.86
Land rental fee of Luthai (Cambodia) 4,369,894.59 43,738.70 4,326,155.89
Land rental fee of (Burma) 9,517,391.13 48,437.63 9,468,953.50
Land rental fee of (Vietnam) 20,960,134.32 20,960,134.32
Total 28,319,033.27 35,207,420.04 611,269.74 62,915,183.57
Other notes
19. Deferred income tax assets/deferred income tax liabilities
(1) Deferred income tax assets had not been off-set
Unit: RMB Yuan
112
2015 Semi-annual Report of Hubei Sanonda Co., Ltd.
Closing balance Opening balance
Item Deductible temporary Deferred income tax Deductible temporary Deferred income tax
difference assets difference assets
Provision for assets impairment 74,049,565.75 12,771,714.65 80,747,882.90 13,938,629.38
Internal transaction unrealized
61,242,891.65 8,864,798.42 54,548,472.47 7,895,874.08
internal profit
One-time listed decoration
1,924,508.40 288,676.26 1,924,508.40 288,676.26
expenses
Employee’s payroll payable 114,961,700.46 17,941,934.29 114,961,700.46 17,941,934.30
Deferred income 62,748,664.03 9,299,083.15 63,445,242.97 9,402,402.82
Change of fair value of trading
3,306,200.00 495,930.00
financial liabilities
Total 314,927,330.29 49,166,206.77 318,934,007.20 49,963,446.84
(2) Deferred income tax liabilities had not been off-set
Unit: RMB Yuan
Closing balance Opening balance
Item Deductible temporary Deferred income tax Deductible temporary Deferred income tax
difference liabilities difference liabilities
Depreciation of fixed assets 12,508,653.70 2,063,927.86 12,513,412.24 2,064,713.02
Change of fair value of trading
8,940,500.00 1,341,075.00
financial liabilities
Total 21,449,153.70 3,405,002.86 12,513,412.24 2,064,713.02
(3) Deferred income tax assets or liabilities listed by net amount after off-set
Unit: RMB Yuan
Mutual set-off amount of Amount of deferred Mutual set-off amount of Amount of deferred
deferred income tax income tax assets or deferred income tax income tax assets or
Item
assets and liabilities at liabilities after off-set at assets and liabilities at liabilities after off-set at
the period-end the period-end the period-begin the period-begin
Deferred income tax
49,166,206.77 49,963,446.84
assets
Deferred income tax
3,405,002.86 2,064,713.02
liabilities
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(4) List of unrecognized deferred income tax assets
Unit: RMB Yuan
Item Closing amount Opening amount
Deductible temporary difference 8,168,504.78 9,184,255.09
Deductible losses 100,886,101.97 86,677,173.05
Total 109,054,606.75 95,861,428.14
(5) Deductible losses of unrecognized deferred income tax assets will due the following years
Unit: RMB Yuan
Years Closing amount Opening amount Note
Y2016 9,735,028.99 9,735,028.99
Y2017 22,207,758.19 22,207,758.19
Y2018 27,926,362.05 27,926,362.05
Y2019 26,808,023.82 26,808,023.82
Y2020 14,208,928.92
Total 100,886,101.97 86,677,173.05 --
20. Other non-current assets
Unit: RMB Yuan
Item Closing balance Opening balance
Prepayment for land 12,781,283.00 16,910,237.34
Total 12,781,283.00 16,910,237.34
21. Short-term loans
(1) Category of short-term loans
Unit: RMB Yuan
Item Closing balance Opening balance
Pledge loan 89,026,946.69 70,000,000.00
Mortgage loan 71,000,000.00 288,230,000.00
Credit loan 586,562,963.78 159,222,946.24
Total 746,589,910.47 517,452,946.24
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22. Financial liabilities measured by fair value and the changes included in the current gains and losses
Unit: RMB Yuan
Item Closing balance Opening balance
Transaction financial liabilities 3,306,200.00
Derivative financial liabilities 3,306,200.00
Total 3,306,200.00
23. Derivative financial liabilities
□ Applicable √ Inapplicable
24. Notes payable
Unit: RMB Yuan
Category Closing balance Opening balance
Trade acceptance 7,199,537.34 7,421,979.09
Total 7,199,537.34 7,421,979.09
The total amount of the due but not pay notes payable at the period-end was of RMB 000.
25. Accounts payable
(1) List of accounts payable
Unit: RMB Yuan
Category Closing balance Opening balance
Purchase of goods 171,139,072.94 257,834,663.07
Engineering equipments 55,995,879.17 80,701,856.84
Other 9,473,199.81 5,545,719.25
Total 236,608,151.92 344,082,239.16
26. Advance from customers
(1) List of advance from customers
Unit: RMB Yuan
Item Closing balance Opening balance
Prepayment for goods 91,532,874.42 82,176,191.45
Total 91,532,874.42 82,176,191.45
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27. Payroll payable
(1) List of Payroll payable
Unit: RMB Yuan
Item Opening balance Increase Decrease Closing balance
I. Short-term salary 261,086,385.47 671,623,763.25 715,573,067.13 217,137,081.59
III. Termination benefits-defined contribution plans 452,821.46 101,380,632.22 85,944,074.48 15,889,379.20
Total 261,539,206.93 773,004,395.47 801,517,141.61 233,026,460.79
(2) List of Short-term salary
Unit: RMB Yuan
Item Opening balance Increase Decrease Closing balance
1. Salary, bonus, allowance, subsidy 230,521,560.35 584,614,052.72 639,977,887.46 175,157,725.61
2. Employee welfare 26,058,550.08 26,058,550.08
3. Social insurance 155,792.81 39,054,779.72 33,582,467.82 5,628,104.71
Including: 1. Medical insurance premiums 90,003.82 33,886,362.08 28,636,495.68 5,339,870.22
Work-related injury insurance 19,076.12 3,049,824.44 2,919,780.81 149,119.75
Maternity insurance 46,712.87 2,118,593.20 2,026,191.33 139,114.74
4. Housing fund 29,662.62 9,694,368.74 8,997,179.15 726,852.21
5. Labor union budget and employee education budget 30,379,369.69 12,202,011.99 6,956,982.62 35,624,399.06
Total 261,086,385.47 671,623,763.25 715,573,067.13 217,137,081.59
(3) List of drawing scheme
Unit: RMB Yuan
Item Opening balance Increase Decrease Closing balance
1. Basic endowment
351,444.86 96,084,151.61 81,416,004.18 15,019,592.29
insurance
2. Unemployment
101,376.60 5,296,480.61 4,528,070.30 869,786.91
insurance
Total 452,821.46 101,380,632.22 85,944,074.48 15,889,379.20
Other notes:
The Company, in line with the requirement, participate the endowment insurance, unemployment insurance scheme and so on,
according to the scheme, the Company monthly pay to the scheme in line with 27% and 1.5% of the endowment insurance base,
except the monthly payment, the Company no longer shoulder the further payment obligation, the relevant expense occurred was
recorded into current profits and losses or related assets costs.
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28. Taxes payable
Unit: RMB Yuan
Item Closing balance Opening balance
Value-added tax 6,275,256.60 6,300,150.34
Business tax 161,706.34 437,293.48
Corporate income tax 35,073,233.25 47,179,155.84
Personal income tax 13,544,513.37 1,327,131.46
Urban maintenance and construction tax 4,476,486.72 5,117,786.89
Stamp tax 290,347.47 383,843.12
Property tax 4,540,294.52 4,256,461.03
Land use tax 4,767,563.47 4,556,076.61
Education surtax 2,025,762.57 2,254,623.77
Local education surtax 1,350,505.19 1,503,725.02
Local water conservancy facility
639,271.14 736,158.41
construction fund
Total 73,144,940.64 74,052,405.97
29. Interest payable
Unit: RMB Yuan
Item Closing balance Opening balance
Interest payable on short-term borrowings
1,482,653.25 511,373.44
and long term borrowings
Total 1,482,653.25 511,373.44
30. Dividends payable
Unit: RMB Yuan
Item Closing balance Opening balance
Common stock dividends 441,113.64 441,456.54
Total 441,113.64 441,456.54
Notes: Including significant unpaid dividends payable over one year, the unpaid reason shall be disclosed:
Dividends payables unpaid over one year were the cash dividends of individual shareholders not drawn in previous years.
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31. Other accounts payable
(1) Other accounts payable listed by nature of the account
Unit: RMB Yuan
Item Closing balance Opening balance
The deposit and guarantee 19,643,408.65 18,533,942.00
Collecting payment on behalf of others 12,083,560.70 11,481,319.14
Turnover account 11,588,800.73 10,383,779.31
Other 24,953,984.30 17,676,832.73
Total 68,269,754.38 58,075,873.18
(2) Other significant accounts payable with aging over one year
Unit: RMB Yuan
Item Closing balance Unpaid/ Un-carry-over reason
Cotton and hemp Company 11,925,000.00 Received deposit of sale contract
Total 11,925,000.00 --
32. Non-current liabilities due within 1 year
Unit: RMB Yuan
Item Closing balance Opening balance
Long-term loans due within 1 year 96,900,005.44 100,733,898.72
Total 96,900,005.44 100,733,898.72
33. Long-term loan
(1) Category of long-term loan
Unit: RMB Yuan
Item Closing balance Opening balance
Debt of honour 96,900,005.44 110,638,544.31
Less: Long-term loans due within 1 year -96,900,005.44 -100,733,898.72
Total 9,904,645.59
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34. Long-term payable
(1) Long-term payable listed by nature of the account
Unit: RMB Yuan
Item Closing balance Opening balance
Power bonds payable 220,000.00
35. Long term payroll payable
(1) List of long term payroll payable
Unit: RMB Yuan
Item Closing balance Opening balance
III. Other long term welfare 86,564,776.96 80,360,457.97
Total 86,564,776.96 80,360,457.97
36. Deferred income
Unit: RMB Yuan
Item Opening balance Increase Decrease Closing balance Formation reasons
Government Government
66,155,242.97 1,139,078.94 65,016,164.03
subsidies subsidies
Unrealized financing
901,978.43 344,191.26 557,787.17 Financing lease
incomes
Total 67,057,221.40 1,483,270.20 65,573,951.20 --
Items involved in government subsidies:
Unit: RMB Yuan
Amount of Amount accrued
Related to the
Item Opening balance newly in non-business Other changes Closing balance
assets/ income
subsidy income
Related to the
Land 63,445,242.97 696,578.94 62,748,664.03
assets
Related to the
Equipment 1,620,000.00 360,000.00 1,260,000.00
assets
Productive biological Related to the
1,090,000.00 82,500.00 1,007,500.00
asset assets
Total 66,155,242.97 1,139,078.94 65,016,164.03 --
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2015 Semi-annual Report of Hubei Sanonda Co., Ltd.
37. Other non-current liabilities
Unit: RMB Yuan
Item Closing balance Opening balance
Other 1,840,000.00 1,840,000.00
Total 1,840,000.00 1,840,000.00
38. Share capital
Unit: RMB Yuan
Increase/decrease (+/-)
Opening Capitalization Closing
Newly issue
balance Bonus shares of public Other Subtotal balance
share
reserves
The sum of
955,758,496.00 955,758,496.00
shares
39. Capital reserves
Unit: RMB Yuan
Item Opening balance Increase Decrease Closing balance
Capital premium 948,167,616.39 948,167,616.39
Other capital reserves 58,871,944.74 41,092.88 58,913,037.62
Total 1,007,039,561.13 41,092.88 1,007,080,654.01
40. Other comprehensive income
Unit: RMB Yuan
Reporting period
Less: Amount
transferred into
profit and loss
Amount in the current Less: After-tax After-tax
Opening Closing
Item incurred period that income attribute to attribute to
balance balance
before income recognized into tax the parent minority
tax other expense company shareholder
comprehensive
income in prior
period
I. Other comprehensive income can
0.00
not be reclassify into profits and
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2015 Semi-annual Report of Hubei Sanonda Co., Ltd.
losses
II. Other comprehensive income
-8,440,178.37 574,877.23 574,877.23 -7,865,301.14
reclassify into profits and losses
Converted amount of foreign
-8,440,178.37 574,877.23 574,877.23 -7,865,301.14
currency financial statements
Total -8,440,178.37 574,877.23 574,877.23 0.00 -7,865,301.14
Other notes, including the adjustment of the recognition of initial amount of effective part of the cash flow hedging gains and losses
transfer into arbitraged items:
41. Surplus reserves
Unit: RMB Yuan
Item Opening balance Increase Decrease Closing balance
Statutory surplus
739,006,259.89 739,006,259.89
reserves
Discretional surplus
3,341,572.58 3,341,572.58
reserves
Total 742,347,832.47 742,347,832.47
Other note, including changes and reason of change
42. Retained profits
Unit: RMB Yuan
Item Reporting period Same period of last year
Opening balance of retained profits before
3,892,066,534.32 3,379,354,741.18
adjustments
Opening balance of retained profits after
3,892,066,534.32 3,379,354,741.18
adjustments
Add: Net profit attributable to owners of the
344,521,516.72 958,725,402.84
Company
Less: Withdrawal of statutory surplus reserves 82,809,421.22
Dividend of common stock payable 477,879,248.00 363,204,188.48
Closing retained profits 3,758,708,803.04 3,892,066,534.32
List of adjustment of opening retained profits:
1) RMB 000 opening retained profits was affected by retrospective adjustment conducted according to the Accounting Standards for
Business Enterprises and relevant new regulations.
2) RMB 000 opening retained profits was affected by changes on accounting policies.
3) RMB 000 opening retained profits was affected by correction of significant accounting errors.
4) RMB 000 opening retained profits was affected by changes in combination scope arising from same control.
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5) RMB 000 opening retained profits was affected totally by other adjustments.
43. Revenue and Cost of Sales
Unit: RMB Yuan
Reporting period Same period of last year
Item
Revenue Cost Revenue Cost
Main operation 2,857,761,175.48 2,073,584,183.14 3,039,920,640.88 2,090,290,672.19
Other operation 84,074,721.68 59,438,017.93 74,305,940.74 47,559,621.18
Total 2,941,835,897.16 2,133,022,201.07 3,114,226,581.62 2,137,850,293.37
44. Business tax and surcharges
Unit: RMB
Item Reporting period Same period of last year
Business tax 595,514.62 617,475.60
Urban maintenance and construction tax 12,558,301.56 12,253,415.71
Education surtax 5,820,356.34 5,353,843.11
Local education surtax 3,880,267.32 3,569,237.62
Local water conservancy construction fund 1,790,272.40 1,749,617.91
Total 24,644,712.24 23,543,589.95
45. Sales expenses
Unit: RMB Yuan
Item Reporting period Same period of last year
Transportation fee 12,940,803.21 16,454,022.50
Salary 26,853,576.60 27,103,133.51
Mall costs 10,679,224.59 11,438,534.62
Advertising expense 13,219,366.15 11,884,726.86
Terminal Handing charges 3,602,696.66 3,169,415.15
Copyright royalty 1,501,650.54 1,411,714.95
Rental charges 1,932,585.56 2,982,934.22
Inspection fee 133,714.31
Patent fee 1,042,079.41
Other 26,915,505.69 17,487,870.29
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Total 97,645,409.00 93,108,145.82
46. Administrative expenses
Unit: RMB Yuan
Item Reporting period Same period of last year
R&D expenses 141,009,183.42 148,094,648.52
Salary 51,011,581.40 41,604,372.05
Depreciation fee 17,325,002.91 12,075,385.41
Taxes 20,801,623.45 15,345,715.98
Share-based expenses 4,747,007.52
Warehouse funding 10,027,719.85 8,782,718.18
Decoration repair expense 960,953.58 1,833,072.82
Amortization of intangible assets 5,188,655.42 5,010,321.66
Labor-union expenditure 7,014,804.43 6,536,835.39
Insurance fee 2,892,577.06 3,706,582.55
Transportation fee 3,448,371.74 3,604,235.55
Rental fee 8,532,189.82 6,227,783.79
Other 43,110,670.50 37,363,995.21
Total 311,323,333.58 294,932,674.63
47. Financial expenses
Unit: RMB Yuan
Item Reporting period Same period of last year
Interest expenditures 10,987,533.82 13,605,979.71
Less: interest income 1,998,321.40 4,797,528.00
Foreign currency exchange gains and
-4,051,845.74 -4,943,357.38
losses
Other 4,084,340.20 3,576,213.13
Total 9,021,706.88 7,441,307.46
48. Assets impairment losses
Unit: RMB Yuan
Item Reporting period Same period of last year
I. Bad debt loss 281,403.64 -5,235,486.56
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Total 281,403.64 -5,235,486.56
49. Gains on the changes in the fair value
Unit: RMB Yuan
Reporting Same period of last
Source
period year
Financial assets calculated by fair value and its changes recorded into current profits
8,940,500.00 -29,949,120.00
and losses
Including: gains from the changes in fair value of derivative financial instruments 8,940,500.00 -29,949,120.00
Financial liabilities calculated by fair value and its changes recorded into current
3,306,200.00 -1,050,030.00
profits and losses
Total 12,246,700.00 -30,999,150.00
50. Investment incomes
Unit: RMB Yuan
Item Reporting period Same period of last year
Investment income from the disposal of long-term equity investment 28,860,565.88 21,158,949.08
Investment income during the period of the held of available for sale
120,000.00
financial assets
Total 28,860,565.88 21,278,949.08
51. Non-operating gains
Unit: RMB Yuan
Recorded in the amount of the
Item Reporting period Same period of last year
non-recurring gains and losses
Total gains from disposal of
809,936.96 50,957.05 809,936.96
non-current assets
Including: Gains from disposal
809,936.96 50,957.05 809,936.96
of fixed assets
Government grants 7,116,087.94 17,088,515.19 7,116,087.94
Other 2,194,769.81 2,687,296.00 2,194,769.81
Total 10,120,794.71 19,826,768.24 10,120,794.71
Government subsidies recorded into current profits and losses
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Unit: RMB Yuan
Item Reporting period Same period of last year Related to the assets/ income
Energy saving subsidy funds 330,000.00 Related to the incomes
Special fund for encouraging foreign
422,000.00 Related to the incomes
trade development
Special fund for encouraging foreign
100,000.00 Related to the incomes
trade development
Special fund for Science and
111,000.00 Related to the incomes
technology
Special fund for Science and
46,000.00 Related to the incomes
technology
Subsidy for Science and technology
1,000,000.00 Related to the incomes
innovation
Subsidy for Science and technology
200,000.00 Related to the incomes
innovation
Famous brand trademark bounty 200,000.00 Related to the incomes
Special fund for Patent Development 102,400.00 Related to the incomes
Subsidy fund for import and export
417,509.00 Related to the incomes
credit insurance premium
Talent support award fund 300,000.00 Related to the incomes
Special fund for Patent Development 80,000.00 Related to the incomes
Special fund for encouraging foreign
105,600.00 Related to the incomes
trade development
Contract energy management award
2,300,000.00 Related to the incomes
fund
Financial discount interest funds for
262,500.00 Related to the incomes
loan of anti-poverty project
Energy saving subsidy funds 1,000,000.00 Related to the incomes
Industry development assistance 200,000.00 Related to the incomes
Energy saving subsidy funds 1,500,000.00 Related to the incomes
Special fund for Patent Development 30,000.00 Related to the incomes
Emerging industry development
9,000,000.00 Related to the incomes
subsidy
Energy saving subsidy funds 100,000.00 Related to the incomes
Subsidy for Science and technology
2,680,000.00 Related to the incomes
innovation
Special fund for Patent Development 50,000.00 Related to the incomes
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Social insurance subsidies in the
387,607.27 Related to the incomes
fourth quarter of 2012
Financial discount interest funds for
187,500.00 Related to the incomes
loan of anti-poverty project
Subsidy for the development of
modern agricultural production 850,000.00 Related to the incomes
project
Imported products discount 60,000.00 Related to the incomes
Export credit insurance 38,500.00 Related to the incomes
Export credit insurance 39,822.00 Related to the incomes
Imported equipment discount 147,960.00 Related to the incomes
Deferred revenue amortization 1,139,078.94 817,125.92 Related to the assets
Total 7,116,087.94 17,088,515.19 --
52. Non-operating expenses
Unit: RMB Yuan
Amount recorded in current
Item Reporting period Same period of last year
non-recurring gains and losses
Total loss on disposal of
3,508,372.92 2,054,591.12 3,508,372.92
non-current assets
Including: Loss on disposal of
3,508,372.92 2,054,591.12 3,508,372.92
fixed assets
External donation 13,242.02 209,994.80 13,242.02
Other 723,799.12 830,536.08 723,799.12
Total 4,245,414.06 3,095,122.00 4,245,414.06
53. Income tax expense
(1) Lists of income tax expense
Unit: RMB Yuan
Item Reporting period Last period
Current income tax expense 65,332,000.05 89,668,858.22
Deferred income tax expense 2,137,529.91 -1,608,479.27
Total 67,469,529.96 88,060,378.95
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(2) Adjustment process of accounting profit and income tax expense
Unit: RMB Yuan
Item Reporting period
Total profits 412,879,777.28
Current income tax expense accounted by tax and relevant regulations 61,931,966.59
Influence of different tax rate suitable to subsidiary 8,944,435.39
Influence of income tax before adjustment 148,531.03
Influence of non taxable income 756,770.65
Influence of not deductable costs, expenses and losses 305,797.94
Influence of deductible temporary difference or deductible losses of deferred income tax assets
3,552,232.23
derecognized in reporting period.
Influence of plus deducting costs -8,170,203.87
Deferred income tax 67,469,529.96
Other notes
54. Supplementary information to cash flow statement
(1) Other cash received relevant to operating activities
Unit: RMB Yuan
Item Reporting period Last period
Government grants 5,977,009.00 18,671,389.27
Collection for employees 32,154.44 516,545.65
Claim income 718,980.59 434,310.44
Penalty income 80,266.42 27,002.62
Recovery of employee borrowings, petty
6,823,524.97 702,797.55
cash and deposit
Other 11,650,716.83 13,798,766.58
Total 25,282,652.25 34,150,812.11
Notes:
(2) Other cash paid relevant to operating activities
Unit: RMB Yuan
Item Reporting period Last period
Freight and miscellaneous charges 30,884,815.22 30,121,059.73
Rental charges and management expenses 13,278,057.78 12,133,489.36
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2015 Semi-annual Report of Hubei Sanonda Co., Ltd.
of the shops
Rental charges 13,352,190.56 12,894,780.90
Advertising expenses 5,014,183.65 9,760,845.31
Official travel expenses 6,390,846.47 6,008,384.69
Insurance fee 3,762,698.73 3,614,037.61
Copyright royalties 1,501,650.54 4,222,631.59
Audit advisory announcement fee 1,347,778.95 972,710.82
Decoration & repair expenses 1,061,222.18 911,517.51
External donation 13,242.02 645,929.00
Other 64,126,882.06 54,914,835.03
Total 140,733,568.16 136,200,221.55
Notes:
(3) Other cash received relevant to investment activity
Unit: RMB Yuan
Item Reporting period Last period
Interest income 1,718,171.27 4,797,528.00
Trading financial assets investment income 28,860,565.88 21,158,949.08
Total 30,578,737.15 25,956,477.08
Notes:
(4) Other cash received relevant to financing activities
Unit: RMB Yuan
Item Reporting period Last period
Borrowing from related parties 12,000,000.00
the certificates of deposit pledged of
16,000,000.00
Xinjiang Luthai
Total 16,000,000.00 12,000,000.00
Notes:
(5) Other cash paid relevant to financing activities
Unit: RMB Yuan
Item Reporting period Last period
Returning from related parties 12,000,000.00
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The short-term borrowing deposit 89,026,946.69 25,829,195.86
Total 89,026,946.69 37,829,195.86
Notes:
55. Supplemental information for Cash Flow Statement
(1) Supplemental information for Cash Flow Statement
Unit: RMB Yuan
Item 2015 2014
1. Reconciliation of net profit to net cash flows generated from operations： -- --
Net profit 345,410,247.32 481,537,123.32
Add: Provision for assets impairments 281,403.64 -5,235,486.56
Depreciation of fixed assets, oil-gas assets and productive biological assets 175,214,081.05 145,594,825.78
Amortization of intangible assets 6,117,876.39 5,699,474.24
Amortization of long-term deferred expense 611,269.74 56,911.26
Losses/gains on disposal of fixed assets, intangible asset and other long-term assets (gains:
2,698,435.96 2,003,634.07
negative)
Losses/gains on scrapped of fixed assets (gains: negative) 0.00
Losses/gains from variation of fair value (gains: negative) -12,246,700.00 30,999,150.00
Financial cost (income: negative) 4,937,366.68 4,307,508.25
Investment loss (gains: negative) -28,860,565.88 -21,278,949.08
Decrease in deferred tax assets (increase: negative) 797,240.07 2,883,888.73
Increase in deferred tax liabilities (decrease: negative) 1,340,289.84 -4,472,477.24
Decrease in inventory (increase: negative) -1,740,399.46 -137,401,684.55
Decrease in accounts receivable from operating activities (increase: negative) 21,908,518.27 89,612,169.08
Increase in accounts payable from operating activities (decrease: negative) -154,164,439.49 -195,263,523.43
Net cash flows generated from operating activities 362,304,624.13 399,042,563.87
2. Significant investing and financing activities without involvement of cash receipts and
-- --
payments
3. Change of cash and cash equivalent: -- --
Closing balance of Cash 528,411,383.97 442,306,121.20
Less: opening balance of cash 649,393,798.30 869,909,505.89
The net increase in cash and cash equivalents -120,982,414.33 -427,603,384.69
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2015 Semi-annual Report of Hubei Sanonda Co., Ltd.
(2) Cash and cash equivalents
Unit: RMB Yuan
Item Closing balance Opening balance
I. Cash 528,411,383.97 649,393,798.30
Including: Cash on hand 3,573,971.14 1,190,565.56
Bank deposit on demand 504,903,198.29 631,971,943.96
Other monetary funds on demand 19,934,214.54 16,231,288.78
III. Closing balance of cash and cash
528,411,383.97 649,393,798.30
equivalents
56. The assets with the ownership or use right restricted
Unit: RMB Yuan
Item Closing book value Restricted reason
Monetary capital 89,026,946.69 Short term loan pledged
Inventory 10,292,793.16 Short term loan pledged
Intangible assets 588,888.57 Short term loan pledged
Total 99,908,628.42 --
57. Foreign currency monetary items
(1) Foreign currency monetary items
Unit: RMB Yuan
Closing foreign currency Closing convert to RMB
Item Exchange rate
balance balance
Of which: USD 56,841,179.30 6.1136 347,504,235.51
EUR 52,022.29 6.8699 357,387.94
HKD 181,510,694.50 0.7886 143,139,333.68
JPY 8,863,201.00 0.0501 444,046.37
THB 120.19 0.1837 22.08
SGD 91.90 4.5580 418.88
GBP 1,503.36 9.6422 14,495.70
AUD 2,821.03 4.6993 13,256.87
CHF 787.68 6.6987 5,276.44
SEK 920.00 0.7534 693.13
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2015 Semi-annual Report of Hubei Sanonda Co., Ltd.
Kyats 28,434,380.00 0.0055 156,609.40
dong 98,575,148,550.60 0.0003 27,695,267.84
Note receivable
Of which: USD 19,980,111.85 6.1136 122,150,411.81
Of which: USD 24,659,514.44 6.1136 150,758,407.49
Other receivable
Of which: USD 186,326.77 6.1136 1,139,127.35
HKD 531,145.56 0.7886 418,861.39
EUR 6,765.00 6.8699 46,474.87
Kyats 7,800,000.00 0.0055 42,960.45
dong 151,116,640.00 0.0003 42,375.32
Account payable
Of which: USD 121,513.44 6.1136 742,884.57
JPY 58,262,880.00 0.0501 2,918,970.29
EUR 589,043.77 6.8699 4,046,671.79
Other payable
Of which: USD 50,155.73 6.1136 306,632.07
HKD 524,145.56 0.7886 413,341.19
Short term loan
Of which: USD 99,929,011.39 6.1136 610,926,004.05
HKD 77,600,000.00 0.7886 61,195,360.00
EUR 504,890.38 6.8699 3,468,546.42
(2) Note to oversea entities including: for significant oversea entities, shall disclose main operating place,
recording currency and selection basis, if there are changes into recording currency, shall also disclose the
reason.
√ Applicable □ Inapplicable
The operating places of Company’s subsidiaries Lu Thai (Hong Kong), Lu Thai (Cambodia), Lu Thai (Burma)
Co., Ltd. (hereinafter referred to as ―Lu Thai (Burma)‖) Lu Thai(America) Co., Ltd. (hereinafter referred to as ―Lu
Thai (America)‖) Lu Thai (Vietnam) were；Hong Kong，Cambodia, Burma, America and Vietnam, and the
recording currency respectively was HKD, USD, USD, USD and dong.
VIII. Changes of merge scope
1. Other reasons for the changes in combination scope
Note to reasons for the changes in combination scope (Newly established subsidiary and subsidiary of liquidation) and relevant
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2015 Semi-annual Report of Hubei Sanonda Co., Ltd.
information:
The Company newly set wholly owned sub-subsidiary was Lu Thai (Vietnam) which was the wholly owned
subsidiary of Lu Thai (Hong Kong).
IX. Equity in other entities
1. Equity in subsidiary
(1) The structure of the enterprise group
Name of the Main operating Registration Nature of Proportion of shareholding
Way of gaining
subsidiary place place business Directly Indirectly
Wholesale and
Lufeng Sunshine Beijing Beijing 100.00% Establish
retail industry
Beijing Wholesale and
Beijing Beijing 60.00% Establish
Innovative retail industry
Luthai (Hong Wholesale and
Hong Kong Hong Kong 100.00% Establish
Kong) retail industry
Wholesale and
Shanghai Luthai Shanghai Shanghai 100.00% Establish
retail industry
Manufacturing Enterprise combination not
Xinjiang Luthai Xinjiang Xinjiang 59.92%
industry under same control
Lufeng Weaving Manufacturing
Zibo Zibo 75.00% Establish
& Dyeing industry
Manufacturing
Luqun Textile Zibo Zibo 100.00% Establish
industry
Manufacturing Enterprise combination not
Xinsheng Power Zibo Zibo 100.00%
industry under same control
Xinjiang Luthai
Manufacturing
Textile Xinjiang Xinjiang 100.00% Establish
industry
(sub-subsidiary)
Helijie Enterprise combination not
Zibo Zibo Service industry 100.00%
(sub-subsidiary) under same control
Wholesale and
Beijing Youxian Beijing Beijing 90.00% Establish
retail industry
Lu Manufacturing
Cambodia Cambodia 100.00% Establish
Thai(Cambodia) industry
Manufacturing
Lu Thai(Burma) Burma Burma 100.00% Establish
industry
Lu Thai(America) America America Wholesale and 100.00% Establish
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2015 Semi-annual Report of Hubei Sanonda Co., Ltd.
retail industry
Lu Thai
Manufacturing
(Vietnam) Vietnam Vietnam 100.00% Establish
industry
(sub-subsidiary)
Notes: holding proportion in subsidiary different from voting proportion:
Basis of holding half or less voting rights but still been controlled investee and holding more than half of the voting rights not been
controlled investee:
Significant structure entities and controlling basis in the scope of combination:
Basis of determine whether the Company is the agent or the principal:
(2) Significant not wholly owned subsidiary
Unit: RMB Yuan
Shareholding The profits and losses Declaring dividends Balance of minority
Name proportion of minority arbitrate to the minority distribute to minority shareholder at closing
shareholder shareholders shareholder period
Xinjiang Luthai 40.08% 3,457,355.39 12,023,570.79 158,591,840.93
Lufeng Weaving &
25.00% 2,038,509.13 278,360,684.97
Dyeing
Holding proportion of minority shareholder in subsidiary different from voting proportion:
(3) The main financial information of significant not wholly owned subsidiary
Unit: RMB Yuan
Closing balance Opening balance
Nam Non-cur Non-curr Non-curr
Current Total Current Total current Non-curre Total Current Total
e rent ent ent
assets assets liabilities liability assets nt assets assets liabilities liability
assets liability liability
Xinj
iang 185,745, 328,776, 514,522,10 119,171,9 6,552,22 125,724,1 565,642,4 336,357,8 902,000,34 484,470,1 7,358,37 491,828,5
Luth 701.37 406.65 8.02 26.98 8.15 55.13 62.56 86.37 8.93 59.82 2.43 32.25
ai
Lufe
ng
Wea
519,958, 921,130, 1,441,089,0 296,889,7 30,756,5 327,646,2 432,310,1 947,299,5 1,379,609,6 243,251,6 31,069,3 274,320,9
ving
742.93 295.80 38.73 57.19 41.60 98.79 38.16 41.89 80.05 09.13 67.50 76.63
&
Dyei
ng
Unit: RMB Yuan
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2015 Semi-annual Report of Hubei Sanonda Co., Ltd.
2015 2014
Total Total
Name Operation Operating cash Operation Operating
Net profit comprehensiv Net profit comprehensiv
revenue flow revenue cash flow
e income e income
Xinjiang 235,279,759.4 8,626,136.2 174,168,584.8 325,430,583.4 11,598,662.2
8,626,136.21 11,598,662.25 95,983,434.41
Luthai 2 1 1 0 5
Lufeng
Weavin 677,791,081.3 8,154,036.5 657,933,121.0 21,324,978.1 -42,146,689.3
8,154,036.52 -71,026,693.01 21,324,978.18
g & 6 2 5 8 0
Dyeing
X. The risk related financial instruments
Main financial instruments of the Company included: Loans, accounts receivable, accounts payable, etc., all the
details of the financial instruments, see related projects of ―section VII". The risk associated with these financial
instruments, as well as the Company’s risk management policy to reduce these risks which were described below.
The Company's management managed and supervised these risks to ensure that the above risk was controlled in a
limited scope.
The Company use sensitivity analysis technology to analyze the reasonable of risk variables, influence of probable
changes to the current profits and Stockholders' equity. Because rarely any risk variables change in isolation, and
the correlation between variables for the eventual impact of the change of a risk variables will have a significant
effect, thus, the aforesaid content was processing under the assumption of the change of each variable was
conducted independently
Risk management objectives and policies
The goals of Company engaged in the risk management is to achieve the proper balance between the risks and
benefits, reduced the negative impact to the Company operating performance risk to a minimum, maximized the
profits of shareholders and other equity investors.
Based on the risk management goal, the basic strategy of the Company's risk management is determine and
analyze the various risks faced by the Company, set up the bottom line of risk and conducted appropriate risk
management, and timely supervised various risks in a reliable way and controlled the risk within the range of
limit.
(1) Foreign exchange risk
Foreign exchange risk is referred to the risk incurred due to loss of changes in exchange rate. The Company’s
foreign exchange risk was mainly related to USD, HKD and EUR, the Company’s several subsidiaries purchase
and sale, in USD, HKD and EUR, the main sale business, part of purchase business and loan transaction of the
Company’s subsidiary Lufeng Weaving & Dyeing settled by USD, other business settled by RMB. On 30 Jun.
2015, in addition to the following assets or liabilities in statement was USD , HKD and EUR, the Company’s
assets or liabilities was RMB balance, the foreign exchange risk incurred by assets and liabilities of foreign
balance may had impact to the operation results of the Company.
Item Closing amount Opening amount
Cash and cash equivalents 519,331,043.84 289,133,077.73
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Note receivable 122,150,411.81 92,009,162.34
Account receivable 150,758,407.49 138,557,390.08
Other account receivable 1,689,799.38 5,792,541.34
Account payable 7,708,526.65 18,451,521.14
Other account payable 719,973.26 1,172,287.39
Short term borrowings 675,589,910.47 159,222,946.24
Long term borrowings due with one year 96,900,005.44 100,733,898.72
Long term borrowings - 9,904,645.59
(2) Interest rate risk
The risk of cash flow changes of financial instruments due to change of interest rate mainly was related bank loan
Sensitive analysis of interest rate risk:
Influence of interest increasing 100 BP to current profits and losses and equity of shareholders before tax was
followed:
Change 2015 2014
Influence to the profits Influence to equity of Influence to the profits Influence to equity of
shareholders shareholders
Increase 100 BP -2,482,939.38 -2,128,707.94 -2,443,677.62 -2,105,286.41
Decrease 100 BP 2,482,939.38 2,128,707.94 2,443,677.62 2,105,286.41
2. Credit risk
On 30 Jun. 2015, credit risk what may lead to the financial losses was the other party of the contract failed to
fulfill the obligations and causes loss of the Company’s financial assets, which including: book value of financial
assets recognized in consolidated balance sheet.
In order to reduce the credit risk, the Company established a special team be responsible for the determination of
credit limit to conduct credit approval, and perform other supervising procedures to ensure that taking necessary
measures to recycle expired claims. In addition, the Company at each balance sheet date, review every single
receivables recycling situation, to ensure that the money unable to recycle withdrawn provision for bad debt fully.
Thus, the Company management believed that have assume the credit risk the Company shouldered had been
greatly reduced.
The company's working capital was in bank with higher credit rating, so credit risk of working capital was low.
On balance sheet date, account receivables single recognized had occurred bad debt provision Zichuan Liaozhai
Hotel Co., Ltd., ZIBO HUAYANG BLANKET CO., LTD, due to the company long-term arrear and was unable to
pay, the Company had withdraw bad debt provision.
3. Liquidity Risk
When manage liquidity risk, the Company keep administrators deemed sufficient cash and cash equivalents and
supervised it to meet the need of the operation of the Company and reduce the influence of cash flow volatility.
The Company management supervised the usage of bank loan and ensured to comply with the loan agreement.
In the end of reporting period, the Company held cash and bank deposit of RMB 617 million. In recent two years,
the average of net cash flow of operation activities was RMB 1.283 billion; the Company believed that the
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liquidity risk was insignificant.
XI. The disclosure of the fair value
1. Closing fair value of assets and liabilities calculated by fair value
Unit: RMB Yuan
Closing fair value
Fair value
Fair value Fair value
Item measurement
measurement measurement items Total
items at level
items at level 1 at level 3
2
I. Consistent fair value measurement -- -- -- --
(I) Financial assets measured by fair value and changes
8,940,500.00 8,940,500.00
recorded into current profits and losses
1. Tradable financial assets 8,940,500.00 8,940,500.00
(3) Derivative financial assets 8,940,500.00 8,940,500.00
Total assets consistently calculated by fair value 8,940,500.00 8,940,500.00
II. Inconsistent fair value measurement -- -- -- --
2. Market price recognition basis for consistent and inconsistent fair value measurement items at level 1
The Company recognized in line with the forward settlement of exchange offer of the bank fair value measurement items at level 1.
XII. Related party and related Transaction
1. Information related to parent company of the Company
Proportion of voting
Proportion of share
rights owned by
Name of parent held by parent
Registered place Business scope Registered capital parent company
company company against the
against the Company
Company (%)
(%)
Zibo Lucheng Textile, electrical
Textile Investment Zibo power and 63,260,000 14.69% 14.69%
Co., Ltd investment
Notes:
The finial control of the Company was Liu Shizhen
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2. Subsidiaries of the Company
See details to Notes 1. Equity in subsidiary, IV.
3. Information on other related parties of the Company
Name Relationship
Zibo Stanluian Cosmetics Co., Ltd. (hereinafter called Affiliated person (the same chairman of the Board with the
―Stanluian‖) Company)
Zibo Taimei Ties Co., Ltd. (hereinafter called Taimei Ties) Controlled subsidiary of the parent company
Zibo Limin Purified Water Co., Ltd. (hereinafter called Limin
Wholly-owned subsidiary of the parent company
Purified Water)
Zibo Luqun Land Co., Ltd (hereinafter called Luqun Land) Wholly-owned subsidiary of the parent company
Chengshun Heating Controlled subsidiary of the parent company
Zibo Limin Walling Material Co., Ltd. (hereinafter referred to as Controlled subsidiary of the wholly-owned subsidiary of the
Limin Walling) Company
Zibo Lurui Fine Chemical Co., Ltd. (hereinafter referred to as
Controlled subsidiary of the parent company
Lurui Chemical)
Zibo Lujia Property Management Co. , Ltd. (hereinafter referred
Wholly owned subsidiary of the parent company
to as Lujia Property)
5. List of related-party transactions
(1) Information on acquisition of goods and reception of labor service
Acquisition of goods and reception of labor service
Unit: RMB Yuan
Trading limit Over the trading limit or
Related-party Content 2015 2014
approved not?
Lucheng Textile Towel, sock, oil product, etc. 5,741,300.22 6,300,000.00 No 4,221,104.20
Purchase of gift box for
Stanluian
cosmetic, lotion, washing-up 84,371.37 66,786.34
Company
liquid, Liquid soap, etc.
Goods processing, quilt cover
Taimei Ties 479,818.63 483,524.44
processing fee
Limin Purified
Sewage treatment 4,856,374.44 14,423,200.00 No 4,878,775.80
Water
Limin Walling Building materials 202,728.21
Lurui Fine Equipment 29,059.83
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Chemical
Lurui Fine
Auxiliaries 33,961,091.09 80,000,000.00 No 14,665,304.59
Chemical
Sales of goods and rendering of labor service
Unit: RMB Yuan
Related-part
Content 2015 2014
y
Lucheng Sales of materials, electricity, running water,
103,229.76 107,862.89
Textile steam and LED lamp
Lucheng
Sales of dyed yarn, fabric and garments 376,771.28 289,896.20
Textile
Taimei Ties Sales of electricity, heating charges, garment etc. 11,878.01 13,022.39
Stanluian Sales of materials, garments, electricity, running
20,891.49 29,497.96
Company water and heating charges
Limin Sales of materials, garment, equipment and LED
Purified 2,496.96 4,439.53
Water lamp
Lurui Sales of garments, equipment and LED lamp
232,519.66 123,141.44
Chemical working meal
Chengshun Sales of materials, heating water, heating power,
2,401,125.83 1,691,084.42
Power water, electricity and garment
Lujia
Sales of materials and recycled water 48,070.08
Property
Notes:
(2) Information of related-party lease
The Company was lessor:
Unit: RMB Yuan
The lease income confirmed in The lease income confirmed in
Name of lessee Category of leased assets
reporting period same period of last year
Lucheng Textile Building &construction 195,200.00 195,200.00
Chengshun Power Building &construction 900.00
The Company was lessee:
Unit: RMB Yuan
The lease income confirmed in The lease income confirmed in
Name of lessee Category of leased assets
reporting period same period of last year
Lucheng Textile Rent of land 2,313,000.00 2,313,000.00
Lucheng Textile Rent of gas station 263,400.00 263,400.00
Lucheng Textile Rent of land and buildings 5,543,400.00 5,543,400.00
Luqun Property Rent of land and buildings 901,200.00 901,200.00
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Lucheng Textile Rent of houses 348,600.00 348,600.00
Notes:
(3) Related party asset transfer and debt restructuring
Unit: RMB Yuan
Related party Content 2015 2014
Luqun Property Building &construction 31,416,086.66
5. Receivables and payables of related parties
(1) Receivables
Unit: RMB Yuan
Item Related party Closing period Opening period
Account payables Lucheng Textile 400,961.00 391,531.00
Account payables Taimei Ties 197,185.00 100,485.00
XIII. Commitments and contingency
1. Significant commitments
Significant commitments at balance sheet date
Item Closing balance (Ten thousand Opening balance (Ten thousand
Yuan) Yuan)
Commitments signed but hasn’t been recognized in
financial statements
- Commitment for constructing and purchasing long-term 9,539.56 4,234.11
assets
Total 9,539.56 4,234.11
XIV. Notes of main items in the financial statements of the Company
1. Accounts receivable
(1) Accounts receivable classified by category
Unit: RMB Yuan
Closing balance Opening balance
Category
Provision for bad Provision for bad
Book balance Book value Book balance Book value
debts debts
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Propor Propor
Proporti Proporti
Amount Amount tion Amount Amount tion
on (%) on (%)
(%) (%)
Accounts
receivable
withdrawal of
bad debt 283,471,246.94 100.00% 23,972,230.55 8.46% 259,499,016.39 348,586,979.40 100.00% 26,689,904.79 7.66% 321,897,074.61
provision of by
credit risks
characteristics:
Total 283,471,246.94 100.00% 23,972,230.55 8.46% 259,499,016.39 348,586,979.40 100.00% 26,689,904.79 7.66% 321,897,074.61
Accounts receivable with insignificant single amount but large risks of groups after grouping by credit risks characteristics at the end
of reporting period.
□ Applicable √ Inapplicable
In the groups, accounts receivable adopting aging analysis method to withdraw bad debt provision:
√Applicable □ Inapplicable
Unit: RMB Yuan
Closing balance
Aging
Accounts receivable Provision for bad debts Proportion (%)
Subentry within 1 year
Within 1 year 204,184,290.56 10,209,214.53 5.00%
Subtotal of within 1 year 204,184,290.56 10,209,214.53 5.00%
1-2 years 37,829,313.47 3,782,931.35 10.00%
2-3 years 24,572,081.97 4,914,416.39 20.00%
Over 3 years 16,885,560.94 5,065,668.28 30.00%
Total 283,471,246.94 23,972,230.55 8.46%
Notes:
In the groups, accounts receivable adopting balance percentage method to withdraw bad debt provision:
□ Applicable √ Inapplicable
(2) Bad debt provision withdrawal, reversed or recovered in the report period
The amount of bad debt provision was RMB -2,717,674.24; the amount of reversed or recovered bad debt
provision in the report period was of RMB 000.
(3) Top five of account receivable of closing balance collected by arrears party
The total amount of top five of account receivable of closing balance collected by arrears party was EMB
146,733,614.96, 51.76% of total closing balance of account receivable, the relevant closing balance of bad debt
provision withdrawn was RMB17, 130,098.95.
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2. Other account receivable
(1) Other account receivable classified by category
Unit: RMB Yuan
Closing balance Opening balance
Provision for bad
Book balance Book balance Provision for bad debts
debts
Withdr
Category Withdra
aw Book value Book value
Proporti Proporti w
Amount Amount Propor Amount Amount
on (%) on (%) Proporti
tion
on (%)
(%)
Accounts
receivable
withdrawal of
bad debt 82,500,420.18 100.00% 5,360,484.00 6.50% 77,139,936.18 30,826,657.21 100.00% 2,777,139.42 9.01% 28,049,517.79
provision of by
credit risks
characteristics:
Total 82,500,420.18 100.00% 5,360,484.00 6.50% 77,139,936.18 30,826,657.21 100.00% 2,777,139.42 9.01% 28,049,517.79
Other accounts receivable with insignificant single amount but large risks of groups after grouping by credit risks characteristics at
the end of reporting period
□ Applicable √ Inapplicable
In the groups, other accounts receivable adopting aging analysis method to withdraw bad debt provision:
√Applicable □ Inapplicable
Unit: RMB Yuan
Closing balance
Aging
Other account receivable Provision for bad debts Proportion (%)
Subentry within 1 year
Within 1 year 76,873,990.97 3,843,699.55 5.00%
Subtotal of within 1 year 76,873,990.97 3,843,699.55 5.00%
1-2 years 537,720.69 53,772.07 10.00%
2-3 years 636,001.78 127,200.36 20.00%
Over 3 years 4,452,706.74 1,335,812.02 30.00%
Total 82,500,420.18 5,360,484.00 6.50%
Notes:
In the groups, other accounts receivable adopting balance percentage method to withdraw bad debt provision:
□ Applicable √ Inapplicable
In the groups, other accounts receivable adopting other methods to withdraw bad debt provision:
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√Applicable □ Inapplicable
(2) Bad debt provision withdrawal, reversed or recovered in the report period
The amount of bad debt provision was RMB 2,583,344.58, the amount of reversed or recovered bad debt
provision in the report period RMB 0.00 Yuan。
(3) Other account receivable classified by account nature
Unit: RMB Yuan
Nature Closing book value Opening book value
Turnover amount 64,990,187.68 2,861,317.03
Export taxes refund 8,218,844.96
Advance payment 3,098,507.00 13,311,113.23
Pledge and guarantee 3,102,445.36 2,191,658.50
Lending and deposit 1,640,585.32 2,121,376.44
Other 9,668,694.82 2,122,347.05
Total 82,500,420.18 30,826,657.21
(4)The top five other account receivable classified by debtor at period end
Unit: RMB Yuan
Closing balance of
Entity Nature Closing balance Aging Proportion%
bad debt provision
Lu Thai (Hong Kong) Turnover amount 61,136,000.00 Within 1 year 74.10% 3,056,800.00
Receivable of
dividend tax Receivable of dividend
withholding of B tax withholding of B
shares of Securities shares of Securities 6,928,375.47 Within 1 year 8.40% 346,418.77
Clearing and Clearing and
Registration Registration Corporation
Corporation
Lu Thai (Cambodia) Turnover amount 2,704,508.10 Within 1 year 3.28% 135,225.41
Deposits for wages
Deposits for wages paid
paid to migrant
to migrant workers of 1,458,593.50 Over 3 years 1.77% 437,578.05
workers of Zichuan
infrastructure works
District, Zibo city
Lu Thai (Vietnam) Turnover amount 732,323.69 Within 1 year 0.89% 36,616.18
Total -- 72,959,800.76 -- 88.44% 4,012,638.41
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2015 Semi-annual Report of Hubei Sanonda Co., Ltd.
3. Long term equity investment
Unit: RMB Yuan
Closing balance Opening balance
Item bad debt bad debt
Book balance Book value Book balance Book value
provision provision
Investment to the
1,360,779,450.91 1,360,779,450.91 1,170,861,572.56 1,170,861,572.56
subsidiary
Total 1,360,779,450.91 1,360,779,450.91 1,170,861,572.56 1,170,861,572.56
(1) Investment to the subsidiary
Unit: RMB Yuan
Withdrawn
Closing balance
impairment
Entity Opening balance Increase Decrease Closing balance of impairment
provision in the
provision
reporting period
Beijing Innovative 25,200,000.00 25,200,000.00
Xinjiang Luthai 147,303,034.16 147,303,034.16
Xinsheng Power 176,340,737.93 176,340,737.93
Lufeng Weaving &
529,620,000.00 529,620,000.00
Dyeing
Luqun Textile 171,784,550.00 171,784,550.00
Luthai (Hong
6,366,600.00 122,405,200.00 128,771,800.00
Kong)
Lufeng Sunshine 15,000,000.00 15,000,000.00
Shanghai Luthai 20,000,000.00 20,000,000.00
Luthai (Cambodia) 70,585,030.47 36,586,545.04 107,171,575.51
Luthai (America) 3,670,380.00 1,834,740.00 5,505,120.00
Luthai (Burma ) 491,240.00 24,591,393.31 25,082,633.31
Beijing Youxian 4,500,000.00 4,500,000.00 9,000,000.00
Total 1,170,861,572.56 189,917,878.35 1,360,779,450.91
4. Revenues and operating costs
Unit: RMB Yuan
Reporting period Same period of last year
Item
Revenues Operating costs Revenues Operating costs
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2015 Semi-annual Report of Hubei Sanonda Co., Ltd.
Main operations 2,271,611,588.70 1,695,745,675.96 2,245,002,336.27 1,544,161,311.27
Other operations 78,000,829.19 62,998,536.38 73,197,187.83 52,966,475.58
Total 2,349,612,417.89 1,758,744,212.34 2,318,199,524.10 1,597,127,786.85
5. Investment income
Unit: RMB Yuan
Same period of last
Item Reporting period
year
Long-term equity investment income accounted by cost method 17,976,429.21
Investment income received from disposal of long-term equity investment calculated by
26,539,715.88 18,121,509.04
fair value
Total 44,516,145.09 18,121,509.04
XV. Supplementary materials
1. Items and amounts of extraordinary gains and losses
√ Applicable □ Inapplicable
Unit: RMB Yuan
Item Amount Note
Gains/losses on the disposal of non-current assets -2,698,435.96
Government grants recognized in the current period, except for those acquired in the ordinary course of
7,116,087.94
business or granted at certain quotas or amounts according to the 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 assets and tradable financial liabilities
41,107,265.88
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 1,457,728.67
Less: Income tax effects 10,018,509.04
Minority interests effects (after tax) 1,047,078.18
Total 35,917,059.31 --
Explain the reasons if the Company classifies an item as an extraordinary gain/loss according to the definition in the Explanatory
Announcement No. 1 on Information Disclosure for Companies Offering Their Securities to the Public—Extraordinary Gains and
Losses, or classifies any extraordinary gain/loss item mentioned in the said explanatory announcement as a recurrent gain/loss item
□ Applicable √ Inapplicable
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2015 Semi-annual Report of Hubei Sanonda Co., Ltd.
2. Return on equity (ROE) and earnings per share (EPS)
Weighted average EPS（Yuan/share）
Profit as of reporting period
ROE (%) EPS-basic EPS-diluted
Net profit attributable to common shareholders of the
5.10% 0.36 0.36
Company
Net profit attributable to common shareholders of the
4.56% 0.32 0.32
Company after deduction of non-recurring profit and loss
3. Differences between accounting data under domestic and overseas accounting standards
(1) Differences of net profit and net assets disclosed in financial reports prepared under international and
Chinese accounting standards
√Applicable □ Inapplicable
Unit: RMB Yuan
Net profit attributable to shareholders Net assets attributable to shareholders of
of the Company the Company
2015 2014 Closing amount Opening amount
According to Chinese accounting standards 344,521,516.72 476,880,256.93 6,456,030,484.38 6,588,772,245.55
Items and amounts adjusted according to international accounting standards
Impact on domestic equipments tax credit
recognized as deferred income under 612,500.00 754,500.00 -1,456,500.00 -2,069,000.00
international accounting standards
According to international accounting standards 345,134,016.72 477,634,756.93 6,454,573,984.38 6,586,703,245.55
(2) Explain reasons for the differences between accounting data under domestic and overseas accounting
standards, for audit data adjusting differences had been foreign audited, should indicate the name of the
foreign institutions
Effects of domestic equipment exempted from income tax
The Company exempted from income tax for buying domestic equipment. According to Chinese accounting
standards, the income tax expenses are directly reduced which are recognized as deferred income related to assets
by the international accounting standards. According to the regulations of the international accounting standards,
this difference is amortized over the fixed using periods of year of the fixed assets and adjusting net income and
net assets.
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Section X. Documents for Reference
I. Accounting statement signed by legal representative, responsible person in charge of accounting work and responsible person of
accounting department;
II. The originals of all documents and manuscripts of Public Notices of the Company disclosed publicly on Securities Times,
Shanghai Securities News and Ta Kung Pao.
Signature of the Chairman of the Board: Liu Shizhen
Lu Thai Textile Co., Ltd.
27 Aug. 2015
146
