Lu Thai Textile Co., Ltd. Semi-annual Report 2016
LU THAI TEXTILE CO., LTD.
SEMI-ANNUAL REPORT 2016
August 2016
1
Lu Thai Textile Co., Ltd. Semi-annual Report 2016
Section I Important Statements, Contents and Terms
The board of directors (the “Board”), the board of supervisors (the “Board of Supervisors”) as well
as the directors, supervisors and senior management of Lu Thai Textile Co., Ltd. (the “Company”)
hereby guarantee the factuality, accuracy and completeness of the contents of the Report, and shall
be jointly and severally liable for any false representation, misleading statements or material
omissions in the Report.
All the directors attended the board meeting for the review of the Report.
The Company plans not to distribute cash dividends or bonus shares or convert capital reserve into
share capital.
Liu Zibin, head of the Company, Zhang Hongmei, accounting head for the Report, and Zhang
Keming, head of the accounting organ (head of accounting), hereby guarantee that the Financial
Report carried in the Report is factual, accurate and complete.
The Report has been prepared in both Chinese and English. Should there be any discrepancies or
misunderstandings between the two versions, the Chinese version shall prevail.
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Lu Thai Textile Co., Ltd. Semi-annual Report 2016
Contents
Section I Important Statements, Contents and Terms ..............................................................................................................................2
Section II Corporate Profile .....................................................................................................................................................................5
Section III Highlights of Accounting Data and Financial Indicators .......................................................................................................7
Section IV Report by the Board of Directors ......................................................................................................................................... 10
Section VII Preference Shares ............................................................................................................................................................... 35
Section VIII Directors, Supervisors and Senior Management ............................................................................................................... 36
Section X Documents Available for Reference .................................................................................................................................... 153
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Lu Thai Textile Co., Ltd. Semi-annual Report 2016
Terms
Term Meaning
Issuer, Company, the Company Lu Thai Textile Co., Ltd.
The Board of Directors The Board of Directors of Lu Thai Textile Co., Ltd.
The Board of Supervisors The Board of Supervisors of Lu Thai Textile Co., Ltd.
CSRC China Securities Regulation Commission
RMB Renminbi
The Company Law The Company Law of the People’s Republic of China
The Securities Law The Securities Law of the People’s Republic of China
Reporting Period 1 January 2016-30 June 2016
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Lu Thai Textile Co., Ltd. Semi-annual Report 2016
Section II Corporate Profile
I Corporate information
Stock name Lu Thai A, Lu Thai B Stock code 000726, 200726
Changed stock name (if any) N/A
Stock exchange Shenzhen Stock Exchange
Company name in Chinese 鲁泰纺织股份有限公司
Abbr. (if any) 鲁泰纺织
Company name in English (if
LU THAI TEXTILE CO.，LTD
any)
Abbr. (if any) LTTC
Legal representative Liu Zibin
II Contact information
Board Secretary Securities Representative
Name Qin Guiling Zheng Weiyin, Li Kun
No. 81, Songling East Road, Zichuan No. 81, Songling East Road, Zichuan
Address
District, Zibo, Shandong, P.R.China District, Zibo, Shandong, P.R.China
Tel. 0533-5266188 0533-5285166
Fax 0533-5418805 0533-5418805
E-mail qinguiling@lttc.com.cn wyzheng@lttc.com.cn，likun@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 √ Not applicable
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 2015 Annual Report.
2. About information disclosure and the place where the Report is kept
Did any change occur to information disclosure media and the place where the Report is kept during the Reporting Period?
□ Applicable √ Not applicable
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Lu Thai Textile Co., Ltd. Semi-annual Report 2016
The newspapers designated by the Company for information disclosure, the website designated by the CSRC for disclosing the
Report and the location where the Report is placed did not change during the Reporting Period. The said information can be found in
the 2015 Annual Report.
3. Change of the registered information
Did any change occur to the registered information during the Reporting Period?
√ Applicable □ Not applicable
Registration Registration code of
Registration date Business license No. Organizational code
place taxation
Zibo
Opening registered Administration
2014-11-13 370300400002843 370302613281175 61328117-5
information for Industry &
Commerce
Zibo
Closing registered Administration
2015-12-07 91370300613281175K 91370300613281175K 91370300613281175K
information for Industry &
Commerce
Disclosure date of the
relevant announcement
(if any)
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Lu Thai Textile Co., Ltd. Semi-annual Report 2016
Section III Highlights of Accounting Data and Financial Indicators
I Major accounting data and financial indicators
Whether the Company performs any retroactive adjustments to or restatements of its accounting data of last year due to change in
accounting policies or correction of accounting errors
□ Yes √ No
Same period of last
Reporting Period +/- (%)
year
Operating revenues (RMB) 2,831,326,773.03 2,941,835,897.16 -3.76%
Net profit attributable to shareholders of the Company
344,641,184.73 344,521,516.72 0.03%
(RMB)
Net profit attributable to shareholders of the Company
333,236,862.51 308,604,457.41 7.98%
excluding exceptional profit and loss (RMB)
Net cash flows from operating activities (RMB) 563,407,347.43 362,304,624.13 55.51%
Basic earnings per share (RMB/share) 0.37 0.36 2.78%
Diluted earnings per share (RMB/share) 0.37 0.36 2.78%
Weighted average return on equity (%) 5.10% 5.10% 0.00%
As at the end of the As at the end of last
+/- (%)
Reporting Period year
Total assets (RMB) 9,021,235,390.97 9,091,170,499.22 -0.77%
Net assets attributable to shareholders of the Company
6,508,090,698.05 6,837,113,075.58 -4.81%
(RMB)
II Differences in accounting data under domestic and foreign accounting standards
1. Differences in the net profit and the net assets disclosed in the financial reports prepared under Chinese
and international accounting standards
√ Applicable □ Not applicable
Unit: RMB
Net profit attributable to shareholders of the Net assets attributable to shareholders of the
Company Company
Reporting Period Same period of last year Closing amount Opening amount
According to Chinese
344,641,184.73 344,521,516.72 6,508,090,698.05 6,837,113,075.58
accounting standards
Items and amounts adjusted according to international accounting standards
Impact on domestic
362,500.00 612,500.00 -691,500.00 -1,054,000.00
equipments tax credit
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Lu Thai Textile Co., Ltd. Semi-annual Report 2016
recognized as deferred income
under international accounting
standards
According to international
345,003,684.73 345,134,016.72 6,507,399,198.05 6,836,059,075.58
accounting standards
2. Differences in the net profit and the net assets disclosed in the financial reports prepared under Chinese
and foreign accounting standards
□ Applicable √ Not applicable
No such differences for the Reporting Period.
3. Reasons for the differences in accounting data under domestic and foreign accounting standards
√ Applicable □ Not applicable
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 Exceptional profit and loss
√ Applicable □ Not applicable
Unit: RMB
Item Reporting Period Note
Profit/loss on disposal of non-current assets (including offset asset impairment provisions) -5,183,811.95
Government grants charged to the profit/loss for the Reporting Period (except for the government
grants closely related to the business of the Company and given at a fixed quota or amount in 14,112,224.13
accordance with the State’s uniform standards)
Profit/loss on fair value changes of transactional financial assets and liabilities & investment
income from disposal of transactional financial assets and liabilities as well as financial assets
-2,694,651.82
available for sale, except for effective hedges related to normal business operations of the
Company
Non-operating revenue and expense other than the above 4,546,385.24
Less: Corporate income tax -2,743,698.15
Minority interests (after tax) 2,119,521.53
Total 11,404,322.22 --
Explanation of why the Company classified an item as exceptional profit/loss according to the definition in the Explanatory
Announcement No. 1 on Information Disclosure for Companies Offering Their Securities to the Public—Exceptional Profit and Loss,
or reclassified any exceptional profit/loss item given as an example in the said explanatory announcement to recurrent profit/loss
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Lu Thai Textile Co., Ltd. Semi-annual Report 2016
□ Applicable √ Not applicable
No such cases in the Reporting Period.
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Lu Thai Textile Co., Ltd. Semi-annual Report 2016
Section IV Report by the Board of Directors
I Overview
In the first half of 2016, affected by the macro economic environment, the textile & apparel sector saw a slow recovery in
fundamentals and export with weak consumer demand. Under such circumstances, we continued to base ourselves on the reality of
the industry and the Company, deepen our excellent performance management model, promote our Lu Thai Production System
(LTPS) and proactively carry forward our global planning. Meanwhile, we accelerated the in-depth fusion of industrialization and
informatization, pushed forward innovation as a driving force and strengthened corporate culture improvement. As a result, we
managed to maintain a healthy and steady development trend.
For the Reporting Period, the Company achieved operating revenues of RMB2.831 billion, operating profit of RMB419 million, net
profit attributable to the shareholders of the Company of RMB345 million and net profit attributable to the shareholders of the
Company of RMB333 million after excluding the exceptional profit and loss, down 3.76%, up 2.87%, 0.03% and 7.98% respectively
from the same period of last year. No changes occurred to the main business, the main profit sources and structure of the Company.
During the Reporting Period, the Company was named as “2015 Top 20 Enterprises in Chinese Printing and Dyeing Industry” by
China Dyeing and Printing Industry Association, “Chinese Exports Quality and Safety Demonstration Enterprise” by State General
Administration of the People’s Republic of China for Quality Supervision and Inspection and Quarantine, “Top 100 Enterprises in
Chinese Garment Industry in 2015” by China National Garment Association, “The Province's Trade Union Labor Protection
Demonstration Enterprise in Light Textile Industry” by Shandong Province Light Textile Industrial Trade Union Committee. “Lu
Thai” trademark was rated as a famous brand of Shandong Province by Administration for Industry and Commerce of Shandong
Province. Lu Thai Group was selected as China Cotton Textile Association top 100 enterprises of the main business revenues in
cotton textile industry in 2015 (fourth place), and top 10 enterprises of main business revenues in yarn-dyed fabric industry (first).
During the Reporting Period, the Company continually carried out scientific research and innovation, constantly developed new
technologies and processes, increased customer promotion and service, made researches on customized service for each key customer
in domestic and foreign markets, and regularly organized new product order meeting and review meeting, and also held new product
design and development seminars with business segments and brand promotion centers from time to time. With the end-market’s
continuously increased demand for leisure products, the Company utilized advantage resources to intensify the development of jeans,
casual washing products, and market acceptance and customer recognition substantially increased. During the Reporting Period, 28
patents were declared and accepted, of which 23 patents were authorized. The Company also participated in enacting 1 industry
standard. Up to now, it altogether won 44 prizes in the national and provincial level, including 1 first prize and 2 second prizes of
National Scientific and Technological Awards and 8 first prizes at the provincial stage. 341 patents were applied and accepted, of
which 234 were authorized; the Company also participated in or took charge of enacting 29 standards.
The Company popularizes the results of market services upgrading year to enhance the brand influence. The Company took full
advantage of its Milan Office in Italy and the subsidiary in America to internationalize its creativity and design, established
communication mechanism with strategic customers, and participated in the pre-trend planning actively and offered extended design
services. The Company established a direct connection with designers of key customers through the market promotion conferences
convened in Britain, Turkey, and continued to strengthen communication with designers of key customers in America and Asia so as
to promote closer cooperation between the two sides and to recommend natural fiber series of new products to customers. Through
New York and Milan promotion conferences and Shanghai fabric promotion conferences, it communicated adequately with
customers of OXFORD, TAG, TMW, SEIDENSTICKER United States, Itochu, PVH and so on, and maintained a good relationship
of cooperation. During Reporting Period, the Company designed 1568 patterns for key customers, provided 7368 colors, and
completed the 2017 spring and summer trend of design including a total of 100 series, 3751 colors.
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Lu Thai Textile Co., Ltd. Semi-annual Report 2016
During the Reporting Period, the Company continued promoting the brand-building and marketing network construction. Beijing
Lutai Youxian E-Commerce Co., Ltd, a subsidiary of Lu Thai (“UTAILOR Jun Yi” high-end custom platform
(www.utailor.com.cn)), took advantage of the Company’s manufacturing technology in the whole industry chain and quality
guarantee and so on, and adopted “place order online and conduct measurement by visiting the customers” O2O mode. With
convenient booking and order by Utailor, Vshop, Jingdong flagship stores and 400 calls and other means, it provides consumers with
tailor-made service for high-quality shirt .Since “UTAILORE”, one of its high-end men’s clothing was pushed to the market, the
number of customers and to re-purchase rate of old customers is rising consistently. Now, its business covers the first-tire cities,
including Beijing, Shanghai, Shenzhen and Guangzhou, which paves the way for the promotion of its garment brands.
At the current stage, Lu Thai, with natural fabric as its flagship, multi-component functional fiber fabric as its spearhead,
wash-and-wear non-ironing technology as its core competency, the latest consumption trend as its guidance and internationalized
industrial manufacturing as its basis, is sparing every effort to attain a global integrated development, so as to ensure its leading
position in the yarn-dyed shirt fabric sector.
II Analysis of main business
Overview:
For the Reporting Period, operating revenues, operating costs and selling expenses decreased 3.76%, 9.17% and 9.15% respectively
on a year-on-year basis; and administrative expenses, finance costs and the corporate income tax went up 9.78%, 119.59% and
32.68% respectively from a year earlier. Finance costs increased 119.59% mainly due to the increased net exchange loss caused by
exchange rate fluctuations. The corporate income tax grew 32.68% mainly due to the increased total profit of the Company and Lu
Feng, the changes in the tax policy and the fact that the R&D expenses were not allowed for quarterly over-deduction in the
calculation of the taxable income amount for the Reporting Period. Net cash flows from operating activities went up 55.51% mainly
due to the 24.63% decrease in the cash paid for goods and services. Net cash flows from investing activities dropped 271.78% mainly
because of the 177.57% increase in the cash paid to acquire fixed assets. Net cash flows from financing activities were up 22.17%.
And net increase in cash and cash equivalents fell 55.01% mainly owing to the 271.78% drop in the net cash flows from investing
activities.
YoY changes in major financial data
Unit: RMB
Same period of last
Reporting Period YoY +/-% Main reason for change
year
Operating revenues 2,831,326,773.03 2,941,835,897.16 -3.76%
Operating costs 1,937,399,591.08 2,133,022,201.07 -9.17%
Selling expenses 88,709,663.50 97,645,409.00 -9.15%
Administrative expenses 341,771,955.16 311,323,333.58 9.78%
Increased net exchange loss caused by exchange
Finance costs 19,810,742.68 9,021,706.88 119.59%
rate fluctuations
Increased total profit of the Company and Lu
Feng, the changes in the tax policy and the fact
Corporate income tax 89,518,494.52 67,469,529.96 32.68% that the R&D expenses were not allowed for
quarterly over-deduction in the calculation of the
taxable income amount for the Reporting Period
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Lu Thai Textile Co., Ltd. Semi-annual Report 2016
R&D expenses 161,055,249.75 141,009,183.42 14.22%
Net cash flows from 24.63% decrease in the cash paid for goods and
563,407,347.43 362,304,624.13 55.51%
operating activities services
Net cash flows from 177.57% increase in the cash paid to acquire
-476,416,586.86 -128,144,916.52 -271.78%
investing activities fixed assets
Net cash flows from
-277,760,450.21 -356,898,204.35 22.17%
financing activities
Net increase in cash and 271.78% drop in the net cash flows from
-187,529,531.30 -120,982,414.33 -55.01%
cash equivalents investing activities
Major changes to the profit structure or sources of the Company in the Reporting Period:
□ Applicable √ Not applicable
No such cases in 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 √ Not applicable
No such cases in the Reporting Period.
Review the progress of the previously disclosed business plan in the Reporting Period:
Not applicable
III Breakdown of main business
Unit: RMB
Operating Gross profit
Operating Gross profit Operating cost:
Operating cost revenue: YoY margin: YoY
revenue margin YoY +/-%
+/-% +/-%
By business segment
Textile and
2,665,326,663.01 1,815,353,586.47 31.89% -1.80% -7.52% 4.22%
Apparel
Cotton 2,598,199.11 2,767,206.66 -6.50% -91.40% -89.06% -22.79%
Electricity and
66,951,438.30 52,474,137.20 21.62% -21.48% -14.29% -6.58%
steam
Others 16,581,168.67 13,228,076.87 20.22% -41.13% -45.07% 5.73%
By product
Fabric products 2,089,428,333.69 1,412,580,279.95 32.39% -2.47% -8.95% 4.81%
Shirts 575,898,329.32 402,773,306.52 30.06% 0.71% -2.14% 2.04%
cotton 2,598,199.11 2,767,206.66 -6.50% -91.40% -89.06% -22.79%
Electricity and
66,951,438.30 52,474,137.20 21.62% -21.48% -14.29% -6.58%
steam
Others 16,581,168.67 13,228,076.87 20.22% -41.13% -45.07% 5.73%
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Lu Thai Textile Co., Ltd. Semi-annual Report 2016
By geographical segment
Hong Kong 186,387,057.70 126,229,953.86 32.28% 13.43% 6.09% 4.69%
Japan And South
201,050,440.35 138,101,714.86 31.31% 15.17% 9.66% 3.45%
Korea
Southeast Asia 671,359,493.52 454,020,681.23 32.37% -20.88% -26.11% 4.78%
Europe and
440,952,493.57 304,401,419.33 30.97% 7.93% 3.31% 3.09%
America
Others 403,030,470.21 273,162,527.78 32.22% 11.13% 4.07% 4.59%
China Mainland 848,677,513.74 587,906,710.14 30.73% -5.61% -10.53% 3.81%
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. A complete industrial chain and a global network: 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. The Company has set up production bases in Cambodia, Burma, Vietnam, etc., a design agency in
Italy and a market service agency in America, which helps give full play to its international resources, form a global business
network and solidify its internationally leading position as a yarn-dyed fabric maker.
2. The sound comprehensive management capacity and an efficient quality control system: 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. It enjoyed strong R&D capability and high-end technological platform for cooperation. The company highly valued self-dependent
innovation and made full use of various technology platforms, inclusive of the National Enterprise Technical Center, National
Talent-indraught Demonstration Base and Shandong Engineering and Technological Research Center. Moreover, Lu Thai also
reinforced its technical cooperation with scientific research institutes, colleges and universities, strategic clines and major suppliers.
It was committed to cutting-edge technical research, and transformed itself from product development to technical researches step by
step. What’s more, the company also upgraded itself from overcoming key technological difficulties to master technical principles
and set up industrial standards. In the past, it only focused on technical innovation, but now, it is exploring new technology on one
hand and boosting innovation on the other for better growth. Consequently, the company pushed forward its development in a green,
low-carbon and cyclic manner and strengthened its vitality and growing momentum. Meanwhile, the share of technology to its
development was also increased, which could push forward industrial upgradation.
4. It boasted considerate and efficient customer’s service. With customer-oriented principle as its guidance, the company
comprehensively enhanced its quality control so as to persistently provide high standard service and set up an industry-leading brand
image, which, in return, could help to win customer’s satisfaction and market recognition. Quality awareness was weaved into every
step of the manufacturing process and the impeccable quality traceability ensured product reputation. Objective analysis and thinking
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Lu Thai Textile Co., Ltd. Semi-annual Report 2016
in the customer’s perspective was the company’s service rule, which also helped to win the customers’ trust.
V Investment analysis
1. Investments in equities of external parties
(1) Investments in external parties
□ Applicable √ Not applicable
No such cases in the Reporting Period.
(2) Equity-holdings in financial enterprises
□ Applicable √ Not applicable
There was no any equity-holding in financial enterprises of the Company in the Reporting Period.
(3) Investment in securities
√ Applicable □ Not applicable
Variet Opening Opening Closing Closing
Code of Name of Initial Profit/loss in
y of securities-ho securitie securities-ho securitie Closing book Accountin Securitie
securitie securitie investment the Reporting
securit ldings s-holdin ldings s-holdin value (RMB) g title s source
s s cost (RMB) Period (RMB)
ies (share) gs (%) (share) gs (%)
Guotai Purchase
Tradable
Junan d from
Stock 01788 27,873,173.00 12,100,000 0.17% 12,100,000 0.17% 27,199,118.10 -930,768.30 financial
Internati second
assets
onal market
Purchase
Tradable
d from
Stock 02883 COSL 15,396,642.00 2,450,000 0.05% 3,000,000 0.06% 15,256,395.00 -1,609,466.39 financial
second
assets
market
Purchase
Lianhua Tradable
d from
Stock 00980 Superma 10,304,097.00 3,839,000 0.34% 5,411,000 0.48% 13,920,592.92 -977,497.14 financial
second
rket assets
market
Purchase
Tradable
Jinjiang d from
Stock 02006 9,045,570.00 3,380,000 0.06% 3,380,000 0.06% 7,308,881.58 -2,137,775.64 financial
Hotel second
assets
market
Chow Tradable Purchase
Stock 00116 Sang 3,735,591.00 40,000 0.01% 350,000 0.05% 4,098,286.50 358,380.14 financial d from
Sang assets second
14
Lu Thai Textile Co., Ltd. Semi-annual Report 2016
market
Tong
Purchase
Ren Tradable
d from
Stock 01666 Tong 3,165,712.00 300,000 0.02% 300,000 0.02% 3,287,176.20 25,641.00 financial
second
Technol assets
market
ogies
Purchase
Tradable
Wongtee d from
Stock 200056 1,937,707.00 200,000 0.02% 200,000 0.02% 1,770,938.40 -452,991.00 financial
B second
assets
market
Purchase
Guangsh Tradable
d from
Stock 00525 en 1,410,089.00 850,000 0.01% 500,000 0.01% 1,572,648.00 -151,602.89 financial
second
Railway assets
market
Purchase
Tradable
Chiwan d from
Stock 200053 695,728.00 50,000 0.02% 50,000 0.02% 702,136.05 -147,008.40 financial
Base B second
assets
market
Purchase
Tradable
Shenzhe d from
Stock 200058 492,049.00 100,000 0.01% 100,000 0.01% 439,315.80 -39,316.20 financial
n SEG B second
assets
market
Other securities
investment held at the 422,603.00 100,000 -- 100,000 -- 439,315.80 -8,547.00 -- --
period-end
Total 74,478,961.00 23,409,000 -- 25,491,000 -- 75,994,804.35 -6,070,951.82 -- --
Disclosure date of the
announcement about the
board’s consent for the
securities investment
Disclosure date of the
announcement about the
general meeting’s consent
for the securities
investment (if any)
(4) Shareholdings in other listed companies
□ Applicable √ Not applicable
No such cases in the Reporting Period.
15
Lu Thai Textile Co., Ltd. Semi-annual Report 2016
2. Cash management entrustment, derivative financial instrument investments and entrusted loans
(1) Cash management entrustment
□ Applicable √ Not applicable
No such cases in the Reporting Period.
(2) Derivative financial instrument investments
√ Applicable □ Not applicable
Unit: RMB’0,000
Proporti
on of the
Purcha closing
sed investme
Relate Type
amoun Impair nt Actual
d-part of Investment
Initial t Opening ment Closing amount gain/loss
Operat Rela y derivat Beginning Ending amount at
investment during investment provisi investment in the in
or tion transac ive date date the
amount the amount on (if amount Compan Reporting
tion or invest period-begin
Report any) y’s Period
not ment
ing closing
Period net
assets
(%)
Forwa
rd
Comm Non-
exchan 26 Jan. 29 Jul.
ercial relat No 79,386.21 79,386.21 44.3 60,429.21 0 19,001.3 2.73% -1,678.98
ge 2015 2016
bank ed
settle
ment
Comm Non- Option
23 Jan. 10 Jul.
ercial relat No portfol 104,300.00 104,300.00 0 102,800.00 0 1,500.00 0.22% -1,679.41
2015 2016
bank ed io
Total 183,686.21 -- -- 183,686.21 44.3 163,229.21 0 20,501.30 2.95% -3,358.39
Capital source for derivative
Self-owned funds
investment
Cases involving lawsuit (if
No
applicable)
Disclosure date of the board
announcement approving
25 Apr. 2015
the derivative investment (if
any)
16
Lu Thai Textile Co., Ltd. Semi-annual Report 2016
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. Meanwhile, the Company had a complete
risk control system for sufficient analysis and prevention of possible risks such as risk of laws and regulations,
credit risk, operation risk and market risk.
1. Risk concerning laws and regulations:
The Company conducted derivatives products transaction in strict accordance with relevant laws and rules as
well as regulatory policies from government securities regulatory authorities, if there were no standard operation
procedures and strict approval procedures, it was easy to cause compliant and regulatory risks existing in the
validity and feasibility of contract, commitments and other legal documents signed.
Risk control measures: The Company carefully studied and mastered laws, regulations and policies relevant to
derivative products transaction, formulated internal control rules for the forward 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.
Analysis on risks and 2. Credit risk and liquidity risk:
control measures of When the contract matures, the Company couldn’t deliver as scheduled due to insufficient liquidity, and the
derivative products held in counterparty or the Company couldn’t fulfill the contract due to other aspects except the liquidity, which would
the Reporting Period cause credit risk and further economic losses for the Company.
(including but not limited to Risk control measures: the Company chose the powerful financial institutions with good reputation as the
market risk, liquidity risk, counterparty, and signed standard derivative products transaction contract, as well as strictly controlled the credit
credit risk, operation risk, risk of counterparty. The Company conducted derivative investment transactions according to the relevant
law risk, etc.) approval procedure, which was in line with relevant laws, regulations, the Company’s Articles of Association,
the Management Rules for Derivative Investment of Lu Thai Textile Co., Ltd. and the Proposal on the Plan of Lu
Thai Textile Co., Ltd. for Derivative Transactions in 2015 approved at the 20th Session of the 7th Board of
Directors on 23 April 2015, 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.
Risk control measures: 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
17
Lu Thai Textile Co., Ltd. Semi-annual Report 2016
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:
Since the RMB exchange rate reform on 8 November 2015, the reform towards a market-based RMB exchange
rate regime has stepped into a new stage. In the short run, there is some depreciation pressure on the RMB, but a
sharp depreciation is considered unlikely. In the long run, the positive economic fundamentals of China, the large
surplus of the current accounts and the faster globalization of the RMB will enable the RMB to remain a strong
currency. In the near future, the RMB exchange rate is expected to be more flexible with a distinct feature of
bidirectional volatility and stable within a rational and balanced range. The forward settlement of exchange and
the option business is important derivative product transactions of the Company, which was significantly
affected by the exchange rate fluctuation. And the contract held by the Company would due in July 2016, if the
RMB is devalued by a large margin on the basis of the current situation before the contract is due, it won’t have
significant influence on the Company. Risk control measures: Although a more flexible RMB exchange rate and
the increased fluctuation range added to the operation difficulty, it provided a certain opportunity. Therefore, the
relevant personnel of the Company will actively analyze market changes, 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 June 2016, the Company held 6 undue financial derivative product contracts, totaling USD33
Changes of market prices or
million, including 5 forward settlement contracts worth USD30 million and 1 foreign exchange option contracts
fair values in the Reporting
worth USD3 million (the latest expiration before July 2016). The financial derivative products above accounted
Period of the invested
for 2.95% of the closing net assets.
derivatives. And the analysis
2. From January 2016 to December 2016, the due financial derivative products of the Company totally equaled
on the fair value of the
to USD293 million, and the loss generated was RMB33.5839 million. To be specific, the due forward settlement
derivatives should include
was USD95.5 million, generating loss of RMB16.7898 million; and the due foreign exchange options equaled to
the specific use methods and
USD197.5 million, of which USD171.5 million was delivered on time upon satisfaction of the delivery
the relevant assumptions
conditions, generating loss of RMB16.7941 million, and USD26 million was undelivered due to dissatisfaction
and parameters.
of the delivery conditions.
Whether significant changes
occurred to the Company’s
accounting policy and
specific accounting
No significant changes
principles of derivatives in
the Reporting Period
compared to the previous
Reporting Period
The Company’s independent directors Xu Jianjun, Zhao Yao, Bi Xiuli, Pan Ailing and Wang Xinyu concerning
conducting derivatives business, have issued the following professional advice: We are of the opinion that it will
Specific opinion from strengthen the Company’s competitiveness to use derivative transactions with focus on forward settlement and
independent directors on the purchase as an effective tool to avoid foreign exchange risks, to strengthen the relevant internal control and to
Company’s derivatives carry out the loss and risk prevention measures so as to improve the operation and management. In conducting
investment and risk control derivative transactions with focus on forward settlement and purchase, the Company follows a legal approval
procedure, has sound relevant institutions and keeps the risks relatively controllable. No harm has been done to
the interests of the Company’s shareholders.
18
Lu Thai Textile Co., Ltd. Semi-annual Report 2016
(3) Entrusted loans
□ Applicable √ Not applicable
No such cases in the Reporting Period.
3. Use of raised funds
□ Applicable √ Not applicable
No such cases in the Reporting Period.
4. Main controlled and joint stock companies
√ Applicable □ Not applicable
Main controlled and joint stock companies:
Unit: RMB
Relat
ionsh
ip Main
Company Indu Registered Operating Operating
with products/s Total assets Net assets Net profit
name stry capital revenues profit
the ervices
Com
pany
Zibo
Xinsheng Man
Subsi Electricity,
Thermal ufact 162,435,600.00 442,369,312.06 386,119,309.42 206,771,486.57 52,952,313.65 40,833,423.78
diary steam
Power Co., ure
Ltd.
Lufeng
Man
Weaving & Subsi
ufact Fabric 706,160,000.00 1,340,246,738.93 1,193,677,961.39 716,210,253.15 41,065,290.92 35,147,675.14
Dyeing Co., diary
ure
Ltd.
5. Significant projects invested with non-raised funds
√ Applicable □ Not applicable
Unit: RMB’0,000
Cumulative actual Disclosure
Project Total Input for this Project Project Disclosure index (if any)
input as at the
name investment period progress earnings date (if any)
period-end
Lu Thai See details on the announcement
(Vietnam) 99,468 8,007.99 21,962.68 22.08% 7 Mar. 2015 disclosed by the Company on
Project www.cninfo.com.cn on 7 March
19
Lu Thai Textile Co., Ltd. Semi-annual Report 2016
2015 (Announcement No.:
2015-005).
Total 99,468 8,007.99 21,962.68 -- -- -- --
VI Performance forecast for January-September 2016
Warning of possible loss or considerable YoY movement in the accumulated net profit made during the period-beginning to the end
of the next Reporting Period, as well as the reasons
□ Applicable √ Not applicable
VII Explanation of the Board of Directors and the Board of Supervisors on the
“non-standard” auditor’s report issued by the CPAs firm for the Reporting Period
□Applicable √ Not applicable
VIII Explanation of the Board of Directors on the issues mentioned in the “non-standard”
auditor’s report issued by the CPAs firm for last year
□Applicable √ Not applicable
IX Profit distribution in the Reporting Period
Profit distribution plan implemented in the Reporting Period, especially execution and adjustment of any cash dividend plan and any
plan for converting capital reserve into share capital
√ Applicable □ Not applicable
Accoridng to the 2015 profits distribution proposal reviewed and approved by the 2015 Annual General Meeting held on 29 April
2016, the Company executed the above cash distribution proposal in June 2016. The cash bonus proposal executed by the Company
met with the relevant regulations about bonus of the Articles of Association while the cash bonus policies had not adjusted during 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 meeting Yes
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 legal rights and
Yes
interests were fully protected.
In adjustment or alteration of the cash dividend policy, the conditions and procedure were in compliance with
Not applicable
regulations and transparent.
20
Lu Thai Textile Co., Ltd. Semi-annual Report 2016
X Preliminary plan for profit distribution and converting capital reserve into share capital for
the Reporting Period
□ Applicable √ Not applicable
The Company plans not to distribute cash dividends or bonus shares or convert capital reserve into share capital for the first half of
the year.
XI Visits paid to the Company for purposes of research, communication, interview, etc.
√ Applicable □ Not applicable
Main discussion
Place of and materials
Date of visit Way of visit Type of visitor Visitor
meeting provided by the
Company
Orient Securities Wang Xiaoli, Wang
Shujuan, Li Haixiao, China Life
Insurance Zhang Qi, AHZG Ying
Jinshuai, Liu Huan, KingTower Asset
Company Management Lv Weizhi, Rosefinch The Company’s
30 Mar. 2016 By phone Institution
meeting room Investment Zhang Yanpeng, Rong basic situation
Weida, HFT Fund Tao Min, Milestone
Asset Management Weng Di, The
Company’s basic situation Chen Yu,
Chongyang Investment Hu Min
Shenwan Hongyuan, Qin Cong,
Shanghai Tianze Investment Cheng
Ou, Shanghai Gaoyi Assets Jiang
Sichen, Orient Securities Wang
Youhong, Orient Securities Wang
Shuxian, AHZG Ying Jinshuai, AHZG
Asset Management Liu Huan, Shanghai
Guanjun Asset Management Wang
Juntao, KGI SITE Li Yaxuan, Ciwei
Company The Company’s
27 Apr. 2016 By phone Institution Fund Liu Xin, Qinyuan Investment
meeting room basic situation
Fu Zhenqing, Huabao Investment Xia
Yaqin, Hexi Fund Cang Yang, Guojin
Investment Zhu Jun, Tebon Securities
Li Sijun, China Merchants Fund Wang
Yanchu, China Merchants Securities
Asset Management Wang Yajie,
Tenbagger Capital Ouyang Jing, New
Times Securities He Minzhi, Wudang
Asset Investment Liu Runzhen,
21
Lu Thai Textile Co., Ltd. Semi-annual Report 2016
ABC-CA Fund Management Wu
Yuanyi, CIBA Shi Xintao, Haitong
Securities Asset Management Liu Yong,
Springs Capital Du Juan, Springs
Capital Jia Tingting, Shenzhen
Skyline Investment Wang Xiaolu,
Yuancheng Investment Zeng Shang,
Jingxing Investment Shi Meiling,
Shenwan Hongyuan Hong Kong
Liang Qingqing, Shenwan Hongyuan
Hong Kong Luo Zhenlong, Zhizhu
Investment Liu Ren, The First
Investment Liu Yifei, Golden Eagle
Wang Yibo, Meidu Qinyuan Asset
Management Chen Ningpu, Rongtong
Fund Management Li Tianning,
Chengsheng Investment Zhang Lei,
Yinhua Fund Xia Qing, Value Partners
Hong Kong Yu Chunmei, Gaoheng
Asset Tang Xiaobo
Company The Company’s
20 May 2016 Field research Institution GF Securities Hu Xiangyu
meeting room basic situation
22
Lu Thai Textile Co., Ltd. Semi-annual Report 2016
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 √ Not applicable
No such cases in the Reporting Period.
Other litigations
□ Applicable √ Not applicable
III Media query
□Applicable √Not applicable
The Company was not involved in any media query in the Reporting Period.
IV Bankruptcy or Reorganization Events
□ Applicable √ Not applicable
There Company was not involved in any bankruptcy or reorganization events in the Reporting Period.
V Transaction in Assets
1. Purchase of assets
□ Applicable √ Not applicable
There is no purchase of assets in the Company during the Reporting Period
2. Sale of assets
□ Applicable √ Not applicable
23
Lu Thai Textile Co., Ltd. Semi-annual Report 2016
There is no sale of assets in the Company during the Reporting Period.
3. Business combination
□ Applicable √ Not applicable
There is no business combination in the Company during the Reporting Period.
VI Implementation and Influence of Equity Incentive Plan of the Company
□ Applicable √ Not applicable
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 √ Not applicable
No such cases in the Reporting Period.
2. Related-party transactions arising from asset acquisition or sale
□ Applicable √ Not applicable
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 √ Not applicable
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 √ Not applicable
No such cases in the Reporting Period.
5. Other significant related-party transactions
□ Applicable √ Not applicable
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 √ Not applicable
The Company was not involved in the non-operating occupation of funds by the controlling shareholder and other related parties
24
Lu Thai Textile Co., Ltd. Semi-annual Report 2016
during the Reporting Period.
IX Particulars about significant contracts and their fulfillment
1. Particulars about trusteeship, contract and lease
(1) Trusteeship
□ Applicable √ Not applicable
There was no any trusteeship of the Company in the Reporting Period.
(2) Contract
□ Applicable √ Not applicable
There was no any contract of the Company in the Reporting Period.
(3) Lease
□ Applicable √ Not applicable
There was no any lease of the Company in the Reporting Period.
2. Guarantees provided by the company
√ Applicable □ Not applicable
Unit: RMB’0,000
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
on relevant Amount Actual occurrence Actual Type of e for a
Period of Execute
Guaranteed party announcement for date (date of guarantee guarante related
guarantee d or not
of guaranteed guarantee agreement) amount e party or
amount not
Guarant
Xinjiang Lu Thai Three years since
ee of
Harvest Cotton 10 Dec. 2014 25,000 9 Dec. 2014 0 the approval of the No Yes
joint and
Co., Ltd. board of the
several
25
Lu Thai Textile Co., Ltd. Semi-annual Report 2016
liability Company
Guarant
Two years since
ee of
Lu Thai (Vietnam) the approval of the
27 Aug. 2015 36,681.6 26 Aug. 2015 16,867.05 joint and No Yes
Co., Ltd. board of the
several
Company
liability
Guarant
Six years since the
ee of
Lu Thai (Vietnam) approval of the
25 Feb. 2016 47,025 24 Feb. 2016 0 joint and No Yes
Co., Ltd. board of the
several
Company
liability
New resolution
Guarant since the approval
ee of of the board of the
Lu Thai (Vietnam)
25 Feb. 2016 22,908.2 24 Feb. 2016 580.63 joint and Company till the No Yes
Co., Ltd.
several revocation,
liability modification or
replacement of it
Total actual
occurred amount of
Total guarantee line approved for
guarantee for the
the subsidiaries during the 69,933.2 17,447.68
subsidiaries during
Reporting 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 131,614.8 17,447.68
at the end of the
end of the Reporting Period (B3)
Reporting Period
(B4)
Guarantees provided by subsidiaries for subsidiaries
Guarante
Disclosure date on Amou
Actual occurrence Actual e for a
Guaranteed relevant nt for Type of Period of Executed
date (date of guarantee related
party announcement of guaran guarantee guarantee or not
agreement) amount party or
guaranteed amount tee
not
Xinjiang Lu Guarantee of
Thai Textile Co., 9 Sep. 2015 10,000 8 Sep. 2015 10,000 joint and 12 months No Yes
Ltd. several liability
Xinjiang Lu Guarantee of
10 Dec. 2015 10,000 8 Dec. 2015 10,000 12 months No Yes
Thai Textile Co., joint and
26
Lu Thai Textile Co., Ltd. Semi-annual Report 2016
Ltd. several liability
Total actual occurred
Total guarantee line approved for the
amount of guarantee for the
subsidiaries during the Reporting 0 15,000
subsidiaries during the
Period (C1)
Reporting Period (C2)
Total actual guarantee
Total guarantee line that has been
balance for the subsidiaries
approved for the subsidiaries at the 20,000 20,000
at the end of the Reporting
end of the Reporting Period (C3)
Period (C4)
Total guarantee amount provided by the Company (total of the above-mentioned three kinds of guarantees)
Total actual occurred
Total guarantee line approved during amount of guarantee
69,933.2 32,447.68
the Reporting Period (A1+B1+C1) during the Reporting
Period (A2+B2+C2)
Total actual guarantee
Total guarantee line that has been
balance at the end of the
approved at the end of the Reporting 151,614.8 37,447.68
Reporting Period
Period (A3+B3+C3)
(A4+B4+C4)
Proportion of total guarantee amount (A4+B4+C4) to the net assets
5.75%
of the Company
Of which:
Amount of guarantee for shareholders, actual controller and
0
related parties (D)
Amount of debt guarantee provided for the guaranteed party
whose asset-liability ratio is not less than 70% directly or 20,000
indirectly (E)
Part of the amount of the total guarantee over 50% of net
0
assets (F)
Total amount of the above three guarantees (D+E+F) 20,000
According to “Agreement on Counter Guarantee” signed on 9
Explanation on possibility to bear joint liability due to undue December 2014 between Lu Thai Company and Xinjiang Lu Thai
guarantees (if any) Company, Xinjiang Lu Thai Company, the warrantee provided the
corresponding amount of counter guarantee for Lu Thai Company.
Explanation on the external guarantees in violation of The Company never provided guarantees for companies except
stipulated procedures (if any) controlling subsidiaries.
Explanations about guarantees provided with complex methods
27
Lu Thai Textile Co., Ltd. Semi-annual Report 2016
(1) Particulars about illegal external guarantee
□ Applicable √ Not applicable
There was no particular about illegal external guarantee of the Company in the Reporting Period.
3. Other significant contracts
□ Applicable √ Not applicable
There was no other significant contract of the Company in the Reporting Period.
4. Other significant transactions
□ Applicable √ Not applicable
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 □ Not applicable
Date of
Commitment
Commitment Type of commitment Contents making Period of commitment
maker
commitment
Commitments made in
share reform
Commitments made in
acquisition reports or
reports on equity changes
Commitments made in
asset reorganization
Commitments made in
IPO or refinancing
The biggest shareholder The biggest shareholder Zibo
Zibo Lucheng Zibo Lucheng Textile Lucheng Textile Investment
Textile Investment Co., Ltd. and the Co., Ltd. and the Directors,
Investment Directors, Supervisors and Supervisors and Senior
Co., Ltd. and Senior Executives of the Executives of the Company
Other commitments made 10 Jul. 10 Jul. 2015 to
Directors, Company committed that didn’t decrease the
to minority shareholders 2015 10 Jan. 2016
Supervisors the shares of the Company shareholding of the Company’s
and Senior held by them would not be stocks since 10 July 2015 to 10
Executives of decreased within the six January 2016. And the
the Company months starting from 10 commitment had completed the
July 2015. execution.
28
Lu Thai Textile Co., Ltd. Semi-annual Report 2016
Executed on time Yes
Specific reasons for
failing to fulfill
Naught
commitments on time and
plans for next step
XI Engagement and disengagement of the CPAs firm
Has the semi-annual financial report been audited?
□Yes √ No
This semi-annual report is not audited.
XII Punishments and rectifications
□ Applicable √ Not applicable
No such cases in the Reporting Period.
XIII Delisting risk due to violation of any law or regulation
□ Applicable √ Not applicable
No such cases in the Reporting Period.
XIV Other significant events
√ Applicable □ Not applicable
On 5 August 2015, the Company held the 2015 1st Extraordinary General Meeting, which reviewed and approved the Proposal on the
Buy-back of Part of the A Shares and B Shares of the Company and issued the Report of the Buy -back of Part of the A Shares and B
Shares of the Company on 10 October 2015, and as for their details please refer to the announcemet (Announcement No.: 2015-029)
and the share buy-back report disclosed by the Company on www.cninfo.com.cn respectively on 6 August 2015 and 10 October 2015.
The Company began to execute the buy-back proposal since 10 November 2015 and had accumulatively bought back the B shares of
33,156,185 shares up to the buy-back period expired on 4 August 2016 and as for the specific information, please refer to the
announcement (Announcement No.: 2016-039) disclosed by the Company on www.cninfo.com.cn 5 August 2016. On 22 August
2016, the Company had completed the shares cancellation matters in Shenzhen Branch of CSDCC with the details on the
announcement (Announcement No.: 2016-040) disclosed by the Company on www.cninfo.com.cn on 24 August 2016.
XV Corporate bonds
Corporate bonds publicly offered and listed on the stock exchange which were undue before the approval date of the Report or were
due but could not be redeemed in full
No
29
Lu Thai Textile Co., Ltd. Semi-annual Report 2016
Section VI Share Changes and Shareholders’ Profile
I Changes in shares
Unit: Share
Before Increase/decrease (+/-) After
Increase
Percenta New Bonus from Percenta
Number Other Subtotal Number
ge issues shares capital ge
reserve
I. Shares subject to trading
119,398,490 12.49% -23,250 -23,250 119,375,240 12.49%
moratorium
3. Other domestic shares 1,166,090 0.12% -23,250 -23,250 1,142,840 0.12%
Shares held by domestic
1,166,090 0.12% -23,250 -23,250 1,142,840 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
836,360,006 87.51% 23,250 23,250 836,383,256 87.51%
trading moratorium
1. Ordinary shares
560,799,210 58.68% 23,250 23,250 560,822,460 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% 0 0 955,758,496 100.00%
Reasons for share changes
√ Applicable □ Not applicable
The “Shares subject to trading moratorium - shares held by domestic individuals” decreased 23,250 shares owning to the engagement
of the Senior Executive Staffs and the adjustment on the locked shares of the Senior Executives by the Shenzhen Branch of CSDCC
at the year-begin.
Approval for share changes
□ Applicable √ Not applicable
Transfer of share ownership
□ Applicable √ Not applicable
Effects of share changes on the basic earnings per share, diluted earnings per share, net assets per share attributable to ordinary
shareholders of the Company and other financial indicators over last year and the last Reporting Period
30
Lu Thai Textile Co., Ltd. Semi-annual Report 2016
□ Applicable √ Not applicable
Other information that the Company considers necessary or is required by the securities regulatory authorities to disclose
□ Applicable √ Not applicable
Changes in the total shares, shareholder structure, asset structure and liability structure
□ Applicable √ Not applicable
II Total number of shareholders and their shareholdings
Unit: share
Total number of preference
Total number of ordinary shareholders who had resumed
shareholders at the end of the 64,672 their voting right at the end of 0
Reporting Period the Reporting Period (if any)
(see note 8)
Shareholdings of ordinary shareholders with a stake over 5% or top 10 ordinary shareholders
Number of Increase/d Pledged or frozen
Shareholdi ordinary ecrease of Number of Number of shares
Name of Nature of ng shares held at shares restricted non-restricted
shareholder shareholder percentage the end of the during the ordinary ordinary Numbe
Status
(%) Reporting Reporting shares held shares held r
Period Period
ZIBO LUCHENG
Domestic
TEXTILE
non-state-owned 14.69% 140,353,583 0 0 140,353,583
INVESTMENT
corporation
CO., LTD.
TAILUN
(THAILAND) Foreign
12.37% 118,232,400 0 118,232,400
TEXTILE CO., corporation
LTD.
CENTRAL HUIJIN
ASSETS State-owned
2.13% 20,315,300 0 20,315,300
MANAGEMENT corporation
CO., LTD.
T.ROWE PRICE
Foreign
INTL DISCOVERY 2.09% 19,948,219 0 19,948,219
corporation
FUND
CHINA
SECURITIES Domestic
FINANCE non-stated-owned 1.64% 15,679,091 0 15,679,091
CORPORATION corporation
LIMITED
LYNAS ASIA Foreign
1.46% 14,000,000 -413375 14,000,000
FUND corporation
31
Lu Thai Textile Co., Ltd. Semi-annual Report 2016
HUA’AN NEW
SILK ROAD
Domestic
THEME EQUITY
non-stated-owned 1.06% 10,110,000 0 10,110,000
SECURITIES
corporation
INVESTMENT
FUND
FIRST STATE
INVESTMENTS
ICVC-FIRST Foreign
0.96% 9,215,168 -1,499,200 9,215,168
STATE GREATER corporation
CHINA GROWTH
FUND
CENTRAL
EUROPE VALUE
Domestic
FOUND EQUITY
non-stated-owned 0.73% 6,949,763 6,949,763 6,949,763
SECURITIES
corporation
INVESTMENT
FUND
HTHK-MANULIFE
Foreign
CHINA VALUE 0.72% 6,858,138 6,858,138 6,858,138
corporation
FUND
Particulars about strategic investors or
common legal persons who became the
top ten shareholders because of the N/A
issuance of additional shares (if any)
(Notes 3)
Zibo Lucheng Textile Investment Co., Ltd. is the largest shareholder of the Company and
Explanations about associated the actual controller. Tailun (Thailand) Textile Co., Ltd. is the second largest shareholder
relationship or concerted action among as well as sponsor of foreign capital of the Company. All of other shareholders are people
the above shareholders 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 subject to Type of share
Name of shareholder trading moratorium at the end of the
Type of share Number
period
ZIBO LUCHENG TEXTILE INVESTMENT CO., RMB ordinary
140,353,583 140,353,583
LTD. share
CENTRAL HUIJIN ASSETS MANAGEMENT RMB ordinary
20,315,300 20,315,300
CO., LTD. share
Domestically
T.ROWE PRICE INTL DISCOVERY FUND 19,948,219 19,948,219
listed foreign
32
Lu Thai Textile Co., Ltd. Semi-annual Report 2016
share
CHINA SECURITIES FINANCE CORPORATION RMB ordinary
15,679,091 15,679,091
LIMITED share
Domestically
LYNAS ASIA FUND 14,000,000 listed foreign 14,000,000
share
HUA’AN NEW SILK ROAD THEME EQUITY RMB ordinary
10,110,000 10,110,000
SECURITIES INVESTMENT FUND share
Domestically
FIRST STATE INVESTMENTS ICVC-FIRST
9,215,168 listed foreign 9,215,168
STATE GREATER CHINA GROWTH FUND
share
CENTRAL EUROPE VALUE FOUND EQUITY RMB ordinary
6,949,763 6,949,763
SECURITIES INVESTMENT FUND share
Domestically
HTHK-MANULIFE CHINA VALUE FUND 6,858,138 listed foreign 6,858,138
share
RMB ordinary
HONG KONG MONETARY AUTHORITY 6,478,160 6,478,160
share
Explanation on associated relationship among the Zibo Lucheng Textile Investment Co., Ltd. is the largest shareholder of the
top ten shareholders of tradable share not subject to Company and the actual controller. Tailun (Thailand) Textile Co., Ltd. is the
trading moratorium, as well as among the top ten second largest shareholder as well as sponsor of foreign capital of the
shareholders of tradable share not subject to trading Company. All of other shareholders are people holding circulating A share or
moratorium and top ten shareholders, or circulating B share and the Company is not able to confirm whether there is
explanation on acting-in-concert associated relationship or concerted action among other shareholders.
Particular about shareholder participate in the
securities lending and borrowing business (if any) N/A
(note 4)
Did any of the top 10 ordinary shareholders or the top 10 non-restricted ordinary shareholders of the Company conduct any
promissory repo during the Reporting Period?
□ Yea √ No
No such cases in the Reporting Period.
III Change of the controlling shareholder or the actual controller
Change of the controlling shareholder in the Reporting Period
□ Applicable √ Not applicable
No such cases in the Reporting Period.
Change of the actual controller in the Reporting Period
□ Applicable √ Not applicable
No such cases in the Reporting Period.
33
Lu Thai Textile Co., Ltd. Semi-annual Report 2016
IV Any shareholding increase plan proposed or implemented by any shareholder or its
act-in-concert parties during the Reporting Period
□ Applicable √ Not applicable
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.
34
Lu Thai Textile Co., Ltd. Semi-annual Report 2016
Section VII Preference Shares
□ Applicable √ Not applicable
No preference shares in the Reporting Period.
35
Lu Thai Textile Co., Ltd. Semi-annual Report 2016
Section VIII Directors, Supervisors and Senior Management
I Shareholding changes of Directors, Supervisors and Senior Management
√ Applicable □ Not applicable
Number of
Number of
Decrease restricted Number of
Incu Increase in granted
Opening in the Closing shares granted restricted
mben the Current restricted
Name Office title shareholdi Current shareholdi granted in the shares at the
t/for Period shares at the
ng (share) Period ng (share) Current period-end
mer (share) period-begin
(share) Period (share)
ning (share)
(share)
Curre
Liu Zibin Chairman/GM 148,290 148,290
nt
Liu Curre
Director 437,295 437,295
Shizhen nt
Curre
Xu Zhinan Vice President
nt
Fujiwara Director /Senior Curre
Hidetoshi Consultant nt
Chen Curre
Director
Ruimou nt
Zeng Curre
Director
Facheng nt
Director /Vice
Wang Curre
GM/Chief 146,753 146,753
Fangshui nt
Engineer
Director / Vice
Qin Curre
GM /Chairman 107,042 107,042
Guiling nt
Secretary
Zhang Director /Chief Curre
92,500 92,500
Hongmei Accountant nt
Independent Curre
Xu Jianjun
Director nt
Independent Curre
Zhao Yao
Director nt
Independent Curre
Bi Xiuli
Director nt
36
Lu Thai Textile Co., Ltd. Semi-annual Report 2016
Independent Curre
Pan Ailing
Director nt
Wang Independent Curre
Xinyu Director nt
Li Supervisory Curre
176,164 176,164
Tongmin Board Chairman nt
Curre
Liu Zilong Supervisor
nt
Dong Curre
Supervisor 5,000 5,000
Shibing nt
Zhang Curre
Vice GM 52,150 52,150
Jianxiang nt
Vice GM,
Wang Curre
Product 83,700 83,700
Jiabin nt
Manager
Vice GM,
Zhang Clothing Curre
73,100 73,100
Shougang Business nt
Manager
Vice GM, GM
Zhang Curre
of Lufeng 80,300 80,300
Zhanqi nt
Company
Manager of the
Second
Fujiwara Curre
Department of
Matsuzaka nt
International
Business
Zhang Financial Curre
77,700 77,700
Keming Manager nt
Curre
Li Wenji CIO 10,000 10,000
nt
Manager of the
Third
Curre
Pan Pingli Department of 126,096 2,100 128,196
nt
International
Business
Vice GM of
Lv Curre
Lufeng 33,750 33,750
Yongchen nt
Company
Yu Energy Curre 83,100 83,100
37
Lu Thai Textile Co., Ltd. Semi-annual Report 2016
Shouzheng Business nt
Manager
Manager of the
First
Wang Curre
Department of 22,500 22,500
Changzhao nt
International
Business
Marketing Curre
Quan Peng 27,750 27,750
Manager nt
Shang
Management Curre
Chenggan 30,000 30,000
Manager nt
g
Zhang Independent Form
Chengzhu Director er
Independent Form
Zbou Zhiji
Director er
Independent Form
Wang Lei
Director er
Total -- -- 1,813,190 2,100 0 1,815,290 0 0 0
II Changes in Directors, Supervisors and Senior Management
√ Applicable □ Not applicable
Type of
Name Office title Date Reason
change
Zhang
Director Elected 6 Jun. 2016 Be elected as the Director of the 8th Board of Directors.
Hongmei
Independent Be elected as the Independent Director of the 8th Board
Bi Xiuli Elected 6 Jun. 2016
Director of Directors.
Independent Be elected as the Independent Director of the 8th Board
Pan Ailing Elected 6 Jun. 2016
Director of Directors.
Independent Be elected as the Independent Director of the 8th Board
Wang Xinyu Elected 6 Jun. 2016
Director of Directors.
Other Senior Be engaged as the other Senior Executive Staff by the
Li Wenji Engaged 8 Jun. 2016
Executive Staff 8th Board of Directors.
Zhang Independent Left as term
6 Jun. 2016 The service term of the 7th Board of Directors expired.
Chengzhu Director expired
Independent Left as term
Zhou Zhiji 6 Jun. 2016 The service term of the 7th Board of Directors expired.
Director expired
38
Lu Thai Textile Co., Ltd. Semi-annual Report 2016
Independent Left as term
Wang Lei 6 Jun. 2016 The service term of the 7th Board of Directors expired.
Director expired
39
Lu Thai Textile Co., Ltd. Semi-annual Report 2016
Section IX Financial Report
I Auditor’s report
Has this semi-annual report been audited?
□ Yes √ No
This semi-annual financial report has not been audited.
II Financial statements
Currency unit for the statements in the notes to these financial statements: RMB
1. Consolidated balance sheet
Prepared by Lu Thai Textile Co., Ltd.
Unit: RMB
Item Closing balance Opening balance
Current assets:
Monetary funds 578,366,000.68 795,501,196.07
Settlement reserve 75,994,804.35 71,696,678.70
Interbank lendings
Financial assets at fair value through profit/loss 87,934,778.60 133,145,518.39
Derivative financial assets 231,418,989.53 262,848,042.62
Notes receivable 131,903,289.37 196,809,904.13
Accounts receivable 653,075.08
Accounts paid in advance
Premiums receivable 48,735,449.13 70,821,406.28
Reinsurance premiums receivable
Receivable reinsurance contract reserve 1,791,392,840.17 1,743,963,973.24
Interest receivable
Dividends receivable
Other accounts receivable 51,746,169.81 57,391,316.34
Financial assets purchased under agreements to resell 2,997,492,321.64 3,332,831,110.85
Inventories
Assets held for sale
Non-current assets due within one year 67,442,600.00 67,442,600.00
40
Lu Thai Textile Co., Ltd. Semi-annual Report 2016
Other current assets
Total current assets 4,980,998.00 4,980,998.00
Non-current assets:
Loans and advances to customers 4,878,964,551.16 4,907,575,469.84
Available-for-sale financial assets 306,480,915.93 205,094,029.50
Held-to-maturity investments 181,069,950.50 6,319,783.17
Long-term accounts receivable
Long-term equity investments 1,231,394.73 1,177,113.89
Investment property 366,951,254.67 363,385,986.63
Fixed assets
Construction in progress 20,613,803.29 20,613,803.29
Engineering materials 103,876,416.65 85,124,145.25
Disposal of fixed assets 51,169,754.41 62,123,091.53
Productive living assets 40,961,429.99 34,502,367.27
Oil-gas assets 6,023,743,069.33 5,758,339,388.37
Intangible assets 9,021,235,390.97 9,091,170,499.22
R&D expenses
Goodwill 1,068,119,117.17 802,766,318.90
Long-term deferred expenses 9,735,700.00 46,695,875.00
Deferred tax assets
Other non-current assets 8,101,392.00 3,109,149.48
Total non-current assets 229,691,043.15 248,570,405.57
Total assets 88,800,955.69 95,077,531.32
Current liabilities: 222,408,928.52 291,263,599.62
Short-term borrowings 75,328,930.79 80,615,008.14
Borrowings from the Central Bank 1,957,379.70 1,851,876.78
Money deposits accepted and inter-bank deposits 441,113.64 441,113.64
Interbank borrowings 75,959,713.17 62,514,814.53
Financial liabilities at fair value through profit/loss
Derivative financial liabilities
Notes payable 1,780,544,273.83 1,632,905,692.98
Accounts payable
Accounts received in advance 111,928,541.12
Financial assets sold for repurchase 83,459,553.02 81,499,403.98
41
Lu Thai Textile Co., Ltd. Semi-annual Report 2016
Fees and commissions payable
Payroll payable
Taxes and fares payable 95,634,944.71 96,135,077.91
Interest payable 2,236,925.11 2,192,694.35
Dividends payable 1,840,000.00 1,840,000.00
Other accounts payable 295,099,963.96 181,667,176.24
Reinsurance premiums payable 2,075,644,237.79 1,814,572,869.22
Insurance contract reserve
Payables for acting trading of securities 955,758,496.00 955,758,496.00
Payables for acting underwriting of securities 1,007,146,836.95 1,007,146,166.97
Liabilities held for sale 232,139,337.04 11,610,721.68
Non-current liabilities due within one year 29,480,528.93 17,090,772.31
Other current liabilities
Total current liabilities 815,648,504.28 815,648,504.28
Non-current liabilities:
Long-term borrowings 3,932,195,668.93 4,053,079,857.70
Bonds payable 6,508,090,698.05 6,837,113,075.58
Of which: Preference shares 437,500,455.13 439,484,554.42
Perpetual bonds 6,945,591,153.18 7,276,597,630.00
Long-term accounts payable 9,021,235,390.97 9,091,170,499.22
Legal representative: Liu Zibin Accounting head for the Report: Zhang Hongmei
Head of the accounting organ: Zhang Keming
2. Balance sheet of the Company
Unit: RMB
Item Closing balance Opening balance
Current assets:
Monetary funds 213,191,752.14 361,326,403.14
Financial assets at fair value through profit/loss 54,519,412.38 100,449,603.66
Derivative financial assets 283,274,302.32 235,128,453.94
Notes receivable 56,039,562.55 194,884,351.36
Accounts receivable
Accounts paid in advance
Interest receivable 92,709,439.00 33,540,540.54
42
Lu Thai Textile Co., Ltd. Semi-annual Report 2016
Dividends receivable 1,302,494,679.10 1,194,474,541.81
Other accounts receivable
Inventories
Assets held for sale 28,192,814.81 20,665,251.54
Non-current assets due within one year 2,030,421,962.30 2,140,469,145.99
Other current assets
Total current assets 55,282,600.00 55,282,600.00
Non-current assets:
Available-for-sale financial assets
Held-to-maturity investments 1,698,609,000.04 1,577,704,740.04
Long-term accounts receivable
Long-term equity investments 3,072,847,324.99 3,086,026,962.51
Investment property 54,871,318.93 47,195,873.42
Fixed assets 3,255,441.21 4,752,722.48
Construction in progress
Engineering materials
Disposal of fixed assets 227,791,211.09 231,714,546.11
Productive living assets
Oil-gas assets
Intangible assets
R&D expenses 52,987,486.53 56,039,573.79
Goodwill 21,309,142.66 25,733,137.67
Long-term deferred expenses 5,186,953,525.45 5,084,450,156.02
Deferred tax assets 7,217,375,487.75 7,224,919,302.01
Other non-current assets
Total non-current assets 849,194,676.67 509,321,176.41
Total assets 9,735,700.00 39,527,800.00
Current liabilities:
Short-term borrowings 5,300,000.00 400,000.00
Financial liabilities at fair value through profit/loss 243,639,259.65 156,939,081.65
Derivative financial liabilities 49,469,200.09 52,388,447.07
Notes payable 168,252,435.34 225,146,911.56
Accounts payable 52,731,791.29 44,647,234.36
Accounts received in advance 1,957,379.70 830,073.23
43
Lu Thai Textile Co., Ltd. Semi-annual Report 2016
Payroll payable 441,113.64 441,113.64
Taxes and fares payable 27,151,433.20 19,453,519.54
Interest payable
Dividends payable
Other accounts payable
Liabilities held for sale 1,407,872,989.58 1,049,095,357.46
Non-current liabilities due within one year
Other current liabilities
Total current liabilities
Non-current liabilities: 83,459,553.02 81,499,403.98
Long-term borrowings
Bonds payable
Of which: Preference shares 62,140,200.53 61,687,374.76
Perpetual bonds
Long-term payables
Long-term payroll payable 145,599,753.55 143,186,778.74
Special payables 1,553,472,743.13 1,192,282,136.20
Provisions
Deferred income 955,758,496.00 955,758,496.00
Deferred tax liabilities 1,013,499,518.04 1,013,498,848.06
Other non-current liabilities 232,139,337.04 11,610,721.68
Total non-current liabilities
Total liabilities
Owners’ equity: 815,648,504.28 815,648,504.28
Share capital 3,111,135,563.34 3,259,342,039.15
Other equity instruments 5,663,902,744.62 6,032,637,165.81
Of which: Preference shares 7,217,375,487.75 7,224,919,302.01
3. Consolidated income statement
Unit: RMB
Item Reporting Period Same period of last year
1. Operating revenues 2,831,326,773.03 2,941,835,897.16
Including: Sales income 2,831,326,773.03 2,941,835,897.16
Interest income 2,409,931,338.67 2,575,938,766.41
44
Lu Thai Textile Co., Ltd. Semi-annual Report 2016
Premium income 1,937,399,591.08 2,133,022,201.07
Fee and commission income 24,800,728.52 24,644,712.24
2. Operating costs 88,709,663.50 97,645,409.00
Including: Cost of sales 341,771,955.16 311,323,333.58
Interest expenses 19,810,742.68 9,021,706.88
Fee and commission expenses -2,561,342.27 281,403.64
Surrenders 30,946,569.40 12,246,700.00
Net claims paid -33,641,221.22 28,860,565.88
Net amount provided as insurance contract reserve
Expenditure on policy dividends
Reinsurance premium 418,700,782.54 407,004,396.63
Business tax and surtaxes 21,193,437.32 10,120,794.71
Selling expenses 228,313.30 809,936.96
Administrative expenses 7,718,639.90 4,245,414.06
Finance costs 5,412,125.25 3,508,372.92
Asset impairment loss 432,175,579.96 412,879,777.28
Add: Profit on fair value changes (“-” means loss) 89,518,494.52 67,469,529.96
Return on investment (“-” means loss) 342,657,085.44 345,410,247.32
Including: Share of profit/loss of associates and joint ventures 344,641,184.73 344,521,516.72
Foreign exchange profit (“-” means loss) -1,984,099.29 888,730.60
3. Operating profit (“-” means loss) 12,389,756.62 574,877.23
Add: Non-operating income 12,389,756.62 574,877.23
Including: Profit on disposal of non-current assets
Less: Non-operating expense
Including: Loss on disposal of non-current assets
4. Total profit (“-” means loss) 12,389,756.62 574,877.23
Less: Corporate income tax
5. Net profit (“-” means loss)
Net profit attributable to owners of the Company
Minority interests’ income
6. After-tax net amount of other comprehensive income 12,389,756.62 574,877.23
After-tax net amount of other comprehensive income
attributable to owners of the Company
6.1 Other comprehensive income that will not be
reclassified into profit/loss
45
Lu Thai Textile Co., Ltd. Semi-annual Report 2016
6.1.1 Changes in net liabilities or assets with a defined
355,046,842.06 345,985,124.55
benefit plan upon re-measurement
6.1.2 Share of other comprehensive income of investees
357,030,941.35 345,096,393.95
that cannot be reclassified into profit/loss under the equity method
6.2 Other comprehensive income to be subsequently
-1,984,099.29 888,730.60
reclassified into profit/loss
6.2.1 Share of other comprehensive income of investees
that will be reclassified into profit/loss under the equity method
6.2.2 Profit/loss on fair value changes of
0.37 0.36
available-for-sale financial assets
6.2.3 Profit/loss on reclassifying held-to-maturity
0.37 0.36
investments into available-for-sale financial assets
Where business mergers under the same control occurred in the Reporting Period, the net profit achieved by the merged parties
before the business mergers was RMB0.00, with the corresponding amount for the last period being RMB0.00.
Legal representative: Liu Zibin Person-in-charge of the accounting work: Zhang Hongmei
Chief of the accounting division: Zhang Keming
4. Income statement of the Company
Unit: RMB
Item Reporting Period Same period of last year
1. Operating revenues 2,368,661,868.37 2,349,612,417.89
Less: Operating costs 1,694,641,982.80 1,758,744,212.34
Business tax and surtaxes 16,485,789.46 19,480,809.00
Selling expenses 41,443,498.62 45,373,972.47
Administrative expenses 240,628,498.30 219,608,083.56
Finance costs 16,938,533.41 3,375,063.52
Asset impairment loss 28,282,906.69 -134,329.66
Add: profit on fair value changes (“-” means loss) 29,792,100.00 11,837,300.00
Return on investment (“-” means loss) 10,374,629.30 44,516,145.09
Including: Share of profit/loss of associates and joint ventures
2. Operating profit (“-” means loss) 370,407,388.39 359,518,051.75
Add: Non-operating income 8,189,519.23 5,545,066.24
Including: Profit on disposal of non-current assets 182,382.68 387,422.95
Less: Non-operating expense 1,508,061.31 3,678,908.31
Including: Loss on disposal of non-current assets 69,815.52 3,415,846.41
3. Total profit (“-” means loss) 377,088,846.31 361,384,209.68
Less: Corporate income tax 59,769,948.62 49,742,920.66
46
Lu Thai Textile Co., Ltd. Semi-annual Report 2016
4. Net profit (“-” means loss) 317,318,897.69 311,641,289.02
5. After-tax net amount of other comprehensive income
5.1 Other comprehensive income that will not be reclassified into
profit and loss
5.1.1 Changes in net liabilities or assets with a defined benefit
plan upon re-measurement
5.1.2 Share of other comprehensive income of investees that
cannot be reclassified into profit/loss under the equity method
5.2 Other comprehensive income to be subsequently reclassified
into profit/loss
5.2.1 Share of other comprehensive income of investees that
will be reclassified into profit/loss under the equity method
5.2.2 Profit/loss on fair value changes of available-for-sale
financial assets
5.2.3 Profit/loss on reclassifying held-to-maturity investments
into available-for-sale financial assets
5.2.4 Effective profit/loss on cash flow hedges
5.2.5 Currency translation differences
5.2.6 Other
6. Total comprehensive income 317,318,897.69 311,641,289.02
7. Earnings per share
7.1 Basic earnings per share 0.33 0.33
7.2 Diluted earnings per share 0.33 0.33
5. Consolidated cash flow statement
Unit: RMB
Same period of last
Item Reporting Period
year
1. Cash flows from operating activities:
Cash received from sale of commodities and rendering of service 2,812,336,711.92 2,992,674,009.04
Net increase in money deposits from customers and interbank placements 101,275,470.39 93,858,466.25
Net increase in loans from the Central Bank 35,139,448.72 25,282,652.25
Net increase in funds borrowed from other financial institutions 2,948,751,631.03 3,111,815,127.54
Cash received from premium of original insurance contracts 1,274,986,141.87 1,691,745,901.39
Net cash received from reinsurance business 799,339,164.59 718,208,701.78
Net increase in deposits of policy holders and investment fund 192,415,372.94 198,822,332.08
Net increase in disposal of financial assets at fair value through profit/loss 118,603,604.20 140,733,568.16
47
Lu Thai Textile Co., Ltd. Semi-annual Report 2016
Interest, fees and commissions received 2,385,344,283.60 2,749,510,503.41
Net increase in interbank borrowings 563,407,347.43 362,304,624.13
Net increase in funds in repurchase business
Tax refunds received
Cash received from other operating activities
Subtotal of cash inflows from operating activities 746,129.22 1,737,285.10
Cash paid for goods and services
Net increase in loans and advances to customers 5,852,642.02 30,578,737.15
Net increase in funds deposited in the Central Bank and interbank
6,598,771.24 32,316,022.25
placements
Cash paid for claims of original insurance contracts 445,389,460.81 160,460,938.77
Interest, fees and commissions paid
Cash paid as policy dividends
Cash paid to and for employees
Taxes and fares paid 37,625,897.29 0.00
Cash paid for other operating activities 483,015,358.10 160,460,938.77
Subtotal of cash outflows from operating activities -476,416,586.86 -128,144,916.52
Net cash flows from operating activities
2. Cash flows from investing activities: 500,000.00
Cash received from retraction of investments
Cash received as return on investments 1,150,565,513.31 993,805,040.42
Net cash received from disposal of fixed assets, intangible assets and other
long-term assets
Net cash received from disposal of subsidiaries or other business units 29,805,722.42 16,000,000.00
Cash received from other investing activities 1,180,371,235.73 1,010,305,040.42
Subtotal of cash inflows from investing activities 793,831,444.36 787,580,420.34
Cash paid to acquire fixed assets, intangible assets and other long-term
460,834,827.15 490,595,877.74
assets
Cash paid for investment
Net increase in pledged loans 203,465,414.43 89,026,946.69
Net cash paid to acquire subsidiaries and other business units 1,458,131,685.94 1,367,203,244.77
Cash paid for other investing activities -277,760,450.21 -356,898,204.35
Subtotal of cash outflows from investing activities 3,240,158.34 1,756,082.41
Net cash flows from investing activities -187,529,531.30 -120,982,414.33
3. Cash flows from financing activities: 765,695,473.65 649,393,798.30
48
Lu Thai Textile Co., Ltd. Semi-annual Report 2016
Cash received from capital contributions 578,165,942.35 528,411,383.97
6. Cash flow statement of the Company
Unit: RMB
Item Reporting Period Same period of last year
1. Cash flows from operating activities:
Cash received from sale of commodities and rendering of service 2,319,086,273.65 2,336,436,365.15
Tax refunds received 79,077,492.94 73,075,990.33
Cash received from other operating activities 8,476,623.71 4,527,263.52
Subtotal of cash inflows from operating activities 2,406,640,390.30 2,414,039,619.00
Cash paid for goods and services 1,170,201,165.76 1,308,152,825.95
Cash paid to and for employees 591,944,379.31 539,106,972.54
Taxes and fares paid 87,975,686.65 79,761,593.87
Cash paid for other operating activities 65,775,345.61 139,312,208.90
Subtotal of cash outflows from operating activities 1,915,896,577.33 2,066,333,601.26
Net cash flows from operating activities 490,743,812.97 347,706,017.74
2. Cash flows from investing activities:
Cash received from retraction of investments
Cash received as return on investments 37,201,249.06
Net cash received from disposal of fixed assets, intangible assets and other
617,126.22 1,256,075.10
long-term assets
Net cash received from disposal of subsidiaries or other business units
Cash received from other investing activities 1,982,456.23 27,204,025.23
Subtotal of cash inflows from investing activities 39,800,831.51 28,460,100.33
Cash paid to acquire fixed assets, intangible assets and other long-term
108,131,817.43 70,584,062.37
assets
Cash paid for investment 125,429,260.00 188,902,292.69
Net cash paid to acquire subsidiaries and other business units
Cash paid for other investing activities 27,632,600.00
Subtotal of cash outflows from investing activities 261,193,677.43 259,486,355.06
Net cash flows from investing activities -221,392,845.92 -231,026,254.73
3. Cash flows from financing activities:
Cash received from capital contributions
Cash received as borrowings 830,324,835.12 582,862,081.60
Cash received from issuance of bonds
49
Lu Thai Textile Co., Ltd. Semi-annual Report 2016
Cash received from other financing activities
Subtotal of cash inflows from financing activities 830,324,835.12 582,862,081.60
Repayment of borrowings 508,528,371.67 233,690,218.65
Cash paid for interest expenses and distribution of dividends or profit 455,604,710.53 473,634,519.64
Cash paid for other financing activities 281,215,324.43 61,013,728.00
Sub-total of cash outflows from financing activities 1,245,348,406.63 768,338,466.29
Net cash flows from financing activities -415,023,571.51 -185,476,384.69
4. Effect of foreign exchange rate changes on cash and cash equivalents -2,662,104.87 237,111.98
5. Net increase in cash and cash equivalents -148,334,709.33 -68,559,509.70
Add: Opening balance of cash and cash equivalents 361,326,403.14 249,509,717.93
6. Closing balance of cash and cash equivalents 212,991,693.81 180,950,208.23
50
Lu Thai Textile Co., Ltd. Semi-annual Report 2016
7. Consolidated statement of changes in owners’ equity
Reporting Period
Unit: RMB
Reporting Period
Equity attributable to owners of the Company
Other equity Gen
Speci
Item instruments Other eral Minority Total owners’
Less: Treasury al
Share capital Prefer Perpet Ot Capital reserve comprehensive Surplus reserve risk Retained earnings interests equity
shares reserv
ence ual he income reser
e
shares bonds r ve
1. Balance at the end of the prior
955,758,496.00 1,007,146,166.97 11,610,721.68 17,090,772.31 815,648,504.28 4,053,079,857.70 439,484,554.42 7,276,597,630.00
year
Add: Changes in accounting
policies
Correction of errors in prior
periods
Business mergers under the
same control
Other
2. Balance at the beginning of the
955,758,496.00 1,007,146,166.97 11,610,721.68 17,090,772.31 815,648,504.28 4,053,079,857.70 439,484,554.42 7,276,597,630.00
year
3. Increase/ decrease in the Period
669.98 220,528,615.36 12,389,756.62 -120,884,188.77 -1,984,099.29 -331,006,476.82
(“-” means decrease)
3.1 Total comprehensive
12,389,756.62 344,641,184.73 -1,984,099.29 355,046,842.06
income
3.2 Capital increased and
669.98 220,528,615.36 -220,527,945.38
reduced by owners
3.2.1 Ordinary shares 220,528,615.36 -220,528,615.36
51
Lu Thai Textile Co., Ltd. Semi-annual Report 2016
increased by shareholders
3.2.2 Capital increased by
holders of other equity
instruments
3.2.3 Amounts of
share-based payments charged to
owners’ equity
3.2.4 Other 669.98 669.98
3.3 Profit distribution -465,525,373.50 -465,525,373.50
3.3.1 Appropriation to
surplus reserve
3.3.2 Appropriation to
general risk provisions
3.3.3 Appropriation to
-465,525,373.50 -465,525,373.50
owners (or shareholders)
3.3.4 Other
3.4 Internal carry-forward of
owners’ equity
3.4.1 New increase of capital
(or share capital) from capital
reserve
3.4.2 New increase of capital
(or share capital) from surplus
reserve
3.4.3 Surplus reserve for
making up loss
3.4.4 Other
52
Lu Thai Textile Co., Ltd. Semi-annual Report 2016
3.5 Special reserve
3.5.1 Withdrawn for the
period
3.5.2 Used in the Period
3.6 Other
4. Closing balance 955,758,496.00 1,007,146,836.95 232,139,337.04 29,480,528.93 815,648,504.28 3,932,195,668.93 437,500,455.13 6,945,591,153.18
Same period of last year
Unit: RMB
Same period of last year
Equity attributable to owners of the Company
Other equity Gen
Specifi
Item instruments Other eral Minority Total owners’
Less: Treasury c
Share capital Preferen Perpet Capital reserve comprehensiv Surplus reserve risk Retained earnings interests equity
Oth shares reserv
ce ual e income reser
er e
shares bonds ve
1. Balance at the end of the prior year 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
Add: Changes in accounting
policies
Correction of errors in prior
periods
Business mergers under the same
control
Other
2. Balance at the beginning of the year 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
3. Increase/ decrease in the period (“-”
106,605.84 11,610,721.68 25,530,950.68 73,300,671.81 161,013,323.38 11,826,214.79 260,167,044.82
means decrease)
53
Lu Thai Textile Co., Ltd. Semi-annual Report 2016
3.1 Total comprehensive income 25,530,950.68 712,193,243.19 23,349,785.58 761,073,979.45
3.2 Capital increased and reduced
106,605.84 11,610,721.68 500,000.00 -11,004,115.84
by owners
3.2.1 Ordinary shares increased
11,610,721.68 500,000.00 -11,110,721.68
by shareholders
3.2.2 Capital increased by
holders of other equity instruments
3.2.3 Amounts of share-based
payments charged to owners’ equity
3.2.4 Other 106,605.84 106,605.84
3.3 Profit distribution 73,300,671.81 -551,179,919.81 -12,023,570.79 -489,902,818.79
3.3.1 Appropriation to surplus
73,300,671.81 -73,300,671.81
reserve
3.3.2 Appropriation to general
risk provisions
3.3.3 Appropriation to owners
-477,879,248.00 -12,023,570.79 -489,902,818.79
(or shareholders)
3.3.4 Other
3.4 Internal carry-forward of
owners’ equity
3.4.1 New increase of capital (or
share capital) from capital reserve
3.4.2 New increase of capital (or
share capital) from surplus reserve
3.4.3 Surplus reserve for making
up loss
3.4.4 Other
54
Lu Thai Textile Co., Ltd. Semi-annual Report 2016
3.5 Special reserve
3.5.1 Withdrawn for the Period
3.5.2 Used in the Period
3.6 Other
4. Closing balance 955,758,496.00 1,007,146,166.97 11,610,721.68 17,090,772.31 815,648,504.28 4,053,079,857.70 439,484,554.42 7,276,597,630.00
8. Statement of changes in owners’ equity of the Company
Reporting Period
Unit: RMB
Reporting Period
Other equity instruments Other
Item Less: Treasury compre Special
Share capital Preference Perpetual Capital reserve Surplus reserve Retained earnings Total owners’ equity
Other shares hensive reserve
shares bonds
income
1. Balance at the end of the prior year 955,758,496.00 1,013,498,848.06 11,610,721.68 815,648,504.28 3,259,342,039.15 6,032,637,165.81
Add: Changes in accounting policies
Correction of errors in prior
periods
Other
2. Balance at the beginning of the year 955,758,496.00 1,013,498,848.06 11,610,721.68 815,648,504.28 3,259,342,039.15 6,032,637,165.81
3. Increase/ decrease in the period (“-”
669.98 220,528,615.36 -148,206,475.81 -368,734,421.19
means decrease)
3.1 Total comprehensive income 317,318,897.69 317,318,897.69
3.2 Capital increased and reduced by
669.98 220,528,615.36 -220,527,945.38
owners
55
Lu Thai Textile Co., Ltd. Semi-annual Report 2016
3.2.1 Ordinary shares increased by
220,528,615.36 -220,528,615.36
shareholders
3.2.2 Capital increased by holders
of other equity instruments
3.2.3 Amounts of share-based
payments charged to owners’ equity
3.2.4 Other 669.98 669.98
3.3 Profit distribution -465,525,373.50 -465,525,373.50
3.3.1 Appropriation to surplus
reserve
3.3.2 Appropriation to owners (or
-465,525,373.50 -465,525,373.50
shareholders)
3.3.3 Other
3.4 Internal carry-forward of owners’
equity
3.4.1 New increase of capital (or
share capital) from capital reserve
3.4.2 New increase of capital (or
share capital) from surplus reserve
3.4.3 Surplus reserve for making
up loss
3.4.4 Other
3.5 Special reserve
3.5.1 Withdrawn for the Period
3.5.2 Used in the Period
3.6 Other
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Lu Thai Textile Co., Ltd. Semi-annual Report 2016
4. Closing balance 955,758,496.00 1,013,499,518.04 232,139,337.04 815,648,504.28 3,111,135,563.34 5,663,902,744.62
Same period of last year
Unit: RMB
Same period of last year
Other equity instruments Other Specia
Item Less: Treasury compreh l Total owners’
Share capital Preference Perpetual Capital reserve Surplus reserve Retained earnings
Other shares ensive reserv equity
shares bonds
income e
1. Balance at the end of the prior year 955,758,496.00 1,013,392,242.22 742,347,832.47 3,077,515,240.89 5,789,013,811.58
Add: Changes in accounting policies
Correction of errors in prior periods
Other
2. Balance at the beginning of the year 955,758,496.00 1,013,392,242.22 742,347,832.47 3,077,515,240.89 5,789,013,811.58
3. Increase/ decrease in the period (“-” means
106,605.84 11,610,721.68 73,300,671.81 181,826,798.26 243,623,354.23
decrease)
3.1 Total comprehensive income 733,006,718.07 733,006,718.07
3.2 Capital increased and reduced by owners 106,605.84 11,610,721.68 -11,504,115.84
3.2.1 Ordinary shares increased by
11,610,721.68 -11,610,721.68
shareholders
3.2.2 Capital increased by holders of other
equity instruments
3.2.3 Amounts of share-based payments
charged to owners’ equity
3.2.4 Other 106,605.84 106,605.84
3.3 Profit distribution 73,300,671.81 -551,179,919.81 -477,879,248.00
57
Lu Thai Textile Co., Ltd. Semi-annual Report 2016
3.3.1 Appropriation to surplus reserve 73,300,671.81 -73,300,671.81
3.3.2 Appropriation to owners (or
-477,879,248.00 -477,879,248.00
shareholders)
3.3.3 Other
3.4 Internal carry-forward of owners’ equity
3.4.1 New increase of capital (or share
capital) from capital reserve
3.4.2 New increase of capital (or share
capital) from surplus reserve
3.4.3 Surplus reserve for making up loss
3.4.4 Other
3.5 Special reserve
3.5.1 Withdrawn for the Period
3.5.2 Used in the Period
3.6 Other
4. Closing balance 955,758,496.00 1,013,498,848.06 11,610,721.68 815,648,504.28 3,259,342,039.15 6,032,637,165.81
58
Lu Thai Textile Co., Ltd. Semi-annual Report 2016
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 February 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 RMB1.00 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 RMB1.00, which are listed on the Shenzhen
Stock Exchange on December 25, 2000 with A-shares stock code of 000726 through approval by
Shenzhen Stock Exchange with No. (2000) 162 Listing Notice. As approved by 2000 Shareholders’
General Meeting in May, 2001, the Company carried out the distribution plan that 10 shares of
capital public reserve are converted to 3 more shares for each 10 shares. As approved by
Resolutions of 2001 Shareholders’ General Meeting in June 2002, the Company implemented the
distribution plan that 10 shares of capital public reserve are converted 3 more shares for each 10
shares again. As approved by 2002 Shareholders’ General Meeting in May 2003, the Company
implemented the distribution plan that 10 shares of capital public reserve are 2 more shares for each
10 shares, and inner employees’ shared increased to 40.56 million shares. As examined and
approved by ZJGSZ No. [2000] 199 of CSRC, the inner employees’ shares will start circulation 3
years later since listing on the A-share market. On December 25, 2003, the inner employees’ shares
reach 3 years since listing on the A-share stock market, and they set out circulation on December 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 RMB844.8648 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 December 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 RMB14.09 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 August 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 June 2012, the Company counter purchase domestic listed foreign
59
Lu Thai Textile Co., Ltd. Semi-annual Report 2016
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 March 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 Session of the 7th Board of Directors on 11 June
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 30 June 2016,
the registered capital of the Company was of RMB955.7585 million.
The Company’s registered address: No. 11, Mingbo Road, Hi-tech Development Zone, Zibo,
Shandong
The Company’s legal representative: Liu Zibin
The Company’s business scope includes the production, processing and sales business of cotton
yarn, yarn dyed fabrics, shirts, fashion accessories, health underwear and other textile products and
their mating products; design, R&D and technology services of the textile and garment products;
acquisition and export of products not under exclusive rights or quota licenses; and hotel,
guesthouses, catering, conferences, and training services; rental business of the self-owned houses
and land; 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 29 August 2016.
There were 16 subsidiaries included into the consolidation scope of the Company from January to
June 2016, and for the details, please refer to Notes IX. Equities among Other Entities. There was 1
subsidiary increased of 2016 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
February 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
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Lu Thai Textile Co., Ltd. Semi-annual Report 2016
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
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 June 2016, business results and cash
flows for the January to June of 2016, 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 December 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 regarded as the prevailing currency used in the main economic circumstances
of the Company and its domestic subsidiaries. The Company and its domestic subsidiaries adopt
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Lu Thai Textile Co., Ltd. Semi-annual Report 2016
RMB as the recording currency. The Company and its overseas subsidiaries confirm to adopt HK
Dollar, US Dollar and Vietnamese Dong as the recording currency according their major economic
environment of the operating. When preparing the financial statements for the Reporting Period, the
Company adopted RMB as the recording currency.
5. 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
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
62
Lu Thai Textile Co., Ltd. Semi-annual Report 2016
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
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
63
Lu Thai Textile Co., Ltd. Semi-annual Report 2016
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
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.
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Lu Thai Textile Co., Ltd. Semi-annual Report 2016
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
Enterprises—Recognition and Measurement of Financial Instruments. For details, see “Long Term
Equity Investment” or “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 de
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 occ
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 “Long Term Equity Investment”) 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.
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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
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
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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
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.
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(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
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
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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
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
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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
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
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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
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
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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
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.
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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 RMB5 million or more than RMB5 million should recognize as the
debts of the individually
receivables with significant single amount.
significant accounts
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 □ Not applicable
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 √ Not applicable
In the groups, adopting other methods to withdraw bad debt provision:
□ Applicable √ Not applicable
(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
Reason of individually withdrawing bad debt provision lawsuit and arbitration; receivables have obvious indication
showing that the debtors are likely to fail to perform the duty of
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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.
11. Inventory
(1) Classification
Inventories mainly include raw materials, work-in-progress, product processed on entrustment,
consumptive biological assets and 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
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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.
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
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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
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
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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
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.
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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
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
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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
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
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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
Category of fixed assets Method Useful life Salvage value Annual deprecation
Average method of
Housing and building 5 years -30 years 5%-10% 3.00%-19.00%
useful life
Average method of
Machinery equipments 10 years -18 years 5%-10% 5.00%-9.50%
useful life
Average method of
Transportation vehicle 5 years 5%-10% 18.00%-19.00%
useful life
Electronic equipments Average method of
5 years 5%-10% 18.00%-19.00%
and others useful life
(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. The amortization periods of each intangible asset
were as follows:
Category Amortization method Amortization life (years)
Straight-line method Stipulated the term according to the
Land use right regulations of the land transfer
contract
Patent use right Straight-line method 10
Software use right Straight-line method 10
Brand use right Straight-line method 10
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;
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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.
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.
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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. The amortization term is the term
stipulated by the land contracts and the land rental contracts.
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 departure
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 after dismission
The Company relieves the labor relation with the employees before the due date of the labor
contacts or puts forward the advice of providing the compensation for urging the employees
volunteered to receive the downsizing and when the Company could not unilaterally withdraw the
dismiss ion welfare owning to the relieving plan of the labor relation or the downsizing advice,
should confirm the liabilities of the employees’ salary from the dismission welfare on the earlier
day between the cost confirmed by the Company and the cost related to the reorganization of the
payment of the dismission welfare and includes which in the current gains and losses. But as for the
dismission welfare be estimated that could not be completed paid within 12 months after the end of
the annual report period, should be handled according to the other long-term employee’s salary.
The internal retire plan of the employees should be handled by adopting the same principles of the
above dismission welfare. The Company includes the salary and the paid social insurance charges
planed to pay by the personnel retreated inside during the period from the date when ceased the
services to the normal retire date in the current gains and losses (dismission welfare) when met with
the recognization conditions of the estimated liabilities.
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(4) 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. Share-based payment
(1) Accounting treatment of share-based payment
Share-based payment refers to the transaction in order to require the service offered by the
employees and other parties that grants the equity instruments or responsible for the liabilities
recognized on the basis of the equity instruments. Share-based payment divided into equity-settled
share-based payment and cash-settled share-based payment.
①Equity-settled share-based payment
It is a share-based payment settled by equity used for exchange the service offered by the staffs and
be measured by the fair value on the grant date of granting the equity instrument for the staffs.
When the services are fully rendered during vesting period or specified performance targets are met,
based on the best estimate of the number of the vesting equity instruments during vesting period and
according to the straight-line method to calculate and to include into the relevant cost or
expenses/when using the vesting power immediately after the granting, should include the relevant
cost or expenses on the grant date and correspondingly increase the capital reserve.
On each balance sheet date within the vesting period, the Company makes the best estimate base on
the subsequent information newly required such as the changes of the vesting staffs’ number to
modify the number of the estimated vesting equity instrument. The above influences of the
estimation should be included into the current relevant cost or expenses and correspondingly adjust
the capital surplus.
For equity-settled share-based payment made in return of other parties' services and the fair value of
the other parties' services can be reliably measured, it will be measured based on the fair value of
the other parties' services on the date of grant; if the fair value of the other parties' services cannot
be reliably measured but the fair value of equity instruments can be reliably measured, it will be
recognized in relevant costs or expenses and the capital reserves shall be adjusted accordingly at the
fair value of such instruments on the date of the grant.
② Cash-settled share-based payment
The cash-settled share-based payment should be measured according to the fair value of the
liabilities recognized based on the shares or other equity instrument undertaken by the Company.
For the cash-settled share-based payment made in return for the rendering of employee services that
may be exercised immediately after the grant, the fair value of the liability incurred by the
Company shall, on the date of the grant, be recognized in relevant costs or expenses and the
liabilities shall be increased accordingly. For cash-settled share-based payment made in return for
the rendering of employee services that cannot be exercised until the services are fully provided
during the vesting period or specified performance targets are met, on each balance sheet date
within the vesting period, the services acquired in the current period shall, based on the best
estimate of the number of exercisable instruments, be recognized in relevant costs or expenses and
the corresponding liabilities at the fair value of the liability incurred by the Company.
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On each balance sheet date and the settlement date before the settlement of the relevant liabilities,
the Company should re-measure the fair value of the liabilities and its changes should be included
in the current gains and losses.
(2) Relevant accounting treatment about revision and termination of share-based payment plans
As to the revision on the share-based payment plan made by the Company, if the fair value of the
granted equity instrument increases after the revision, it shall recognize the increase of the service
gained according to the increase of the fair value of equity instrument. The increase of the fair value
of equity instrument refers to the balance between the fair value on the revising date of the equity
instruments before and after the revision. If the total fair value of share-base payment decreases
after the revision or adopting other ways against the staffs in the revision, it shall continue to
conduct accounting treatment on the service gained as if the revision never happens, only if the
Company p cancel partial or total granted equity instrument.
During the vesting period, if the Company cancels the granted equity instrument, the Company shall
treat the cancel of granted equity instrument as accelerating the vesting, and includes the amount
shall be recognized during the remained vesting period into current profit and loss, and also
recognize the capital reserves. If staffs or other party can choose to meet the non-vesting conditions
but not meets with them during the vesting period, which will be treated as the cancel of granted
equity instrument by the Company.
22. 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.
As for the revenues from the domestic sales products, the Company deliveries the products to the
buyers according to the contracts agreement, and the revenues amount of the products sales had
been confirmed with the goods payment had been withdrawn or had received the receipt voucher of
which the relevant economic benefits probably flow into the enterprise as well as the relevant costs
of the products could be reliable measured when being confirming as the revenues.
As for the revenues from the export sales products, the Company executes the customs declaration
and the products departure according to the contracts agreement, and the Company had acquired the
bill of lading with the revenues amount of the products sale had been confirmed and the goods
payment had been withdrawn or had had received the receipt voucher of which the relevant
economic benefits probably flow into the enterprise as well as the relevant costs of the products
could be reliable measured when being confirming as the revenues.
(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
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Lu Thai Textile Co., Ltd. Semi-annual Report 2016
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
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.
23. 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
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Lu Thai Textile Co., Ltd. Semi-annual Report 2016
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.
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.
24. 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
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according to the regulations of the tax law, the deferred income tax assets and the deferred income
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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Lu Thai Textile Co., Ltd. Semi-annual Report 2016
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.
25. 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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Lu Thai Textile Co., Ltd. Semi-annual Report 2016
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.
26. 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
or reversed.
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(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) Long-term assets impairment provision
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
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.
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Lu Thai Textile Co., Ltd. Semi-annual Report 2016
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.
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 income
VAT and paid the VAT by the amount after deducting the deductible 17%, 13%, 6%, 3%, 0%
withholding VAT at current period.
Business tax Paid by 3%, 5% of taxable business income 3%, 5%
Urban maintenance and
Paid at 7%, 5%, 1% of the circulating tax actually paid 7%, 5%, 1%
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
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Lu Thai Textile Co., Ltd. Semi-annual Report 2016
Name of taxpaying bodies Rate of income tax
The Company 15%
Lufeng Weaving & Dyeing Co., Ltd. (hereinafter refer to as
15%
“Lufeng Weaving & Dyeing”)
Lu Thai (Hong Kong) Textile Co., Ltd. (hereinafter refer to as
16.50%
“Lu Thai Hong Kong”)
Xinjiang Lu Thai 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 Lu Thai Textile & Garments Co., Ltd. (hereinafter
25%
referred to as “Shanghai Lu Thai”)
Beijing Lu Thai 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) Textile Co., Ltd. (hereinafter referred to as
0%
“Lu Thai Cambodia”)
Lu Thai (Burma) Textile Co., Ltd. (hereinafter referred to as “Lu
0%
Thai Burma”)
Lu Thai (Vietnam) Co., Ltd. (hereinafter referred to as “Lu Thai
0%
Vietnam”)
Luan Tailoring Co., Ltd. (hereinafter referred to as “Luan
0%
Tailoring”)
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 October 2011. The Company shall, in line with the Article 28 of
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Lu Thai Textile Co., Ltd. Semi-annual Report 2016
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
November 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.
Lu Thai (Hong Kong) Textile Co., Ltd. (hereinafter refers as Lu Thai (Hong Kong) Textile), 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%.
The wholly own subsidiary Lu Thai Burma, according to the Burma’s Special Economic Zone Law
issued by Pyidaungsu Hluttaw, Lu Thai 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 Lu Thai Vietnam, according to the investment license issued by the
Vietnam Fudong Industrial Park Management Committee, Lu Thai 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 any year among the 3 years start-up period
should transfer which in the tax holiday. And the Company enjoys 17% of the preferential tax rate
within 10 years since the year acquired the first production and operating revenue attributed to the
taxable year. After grace period, enterprise income tax rate was of 20%.
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Lu Thai Textile Co., Ltd. Semi-annual Report 2016
The wholly own subsidiary Luan Tailoring, according to the investment license issued by the
Vietnam Anjiang Province Economic Zone Management Committee, 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 any year among the 3 years start-up period
should transfer which in the tax holiday. And the Company enjoys 17% of the preferential tax rate
within 10 years since the year acquired the first production and operating revenue attributed to the
taxable year. After grace period, enterprise income tax rate was of 20%.
VII. Notes on major items in consolidated financial statements of the Company
1. Monetary funds
Unit: RMB
Item Closing balance Opening balance
Cash on hand 3,116,248.37 2,111,348.02
Bank deposits 574,977,343.50 742,998,281.72
Other monetary funds 272,408.81 50,391,566.33
Total 578,366,000.68 795,501,196.07
Of which total amount of deposited
71,656,381.14 81,371,297.43
abroad
Other notes:
On 30 June 2016, the monetary capital with restricted ownership of the Company was of
RMB200,058.33 (31 December 2015: RMB29,805,722.42), which were the bank acceptance deposit
of the Company.
2. Financial assets measured by fair value and the changes be included in the current gains and losses
Unit: RMB
Item Closing balance Opening balance
Tradable financial assets 75,994,804.35 71,696,678.70
Derivative financial assets 75,994,804.35 71,696,678.70
Total 75,994,804.35 71,696,678.70
3. Derivative financial assets
□ Applicable √ Not applicable
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4. Notes receivable
(1) Notes receivable listed by category
Unit: RMB
Item Closing balance Opening balance
Bank acceptance bill 1,950,000.00 31,611,924.20
Letter of credit 85,984,778.60 101,533,594.19
Total 87,934,778.60 133,145,518.39
(3) Notes receivable which had endorsed by the Company or had discounted and had not due on the
balance sheet date at the period-end
Unit: RMB
Amount of recognition termination at the Amount of not terminated recognition at
Item
period-end the period-end
Bank acceptance bill 136,254,137.14
Total 136,254,137.14
5. Accounts receivable
(1)Accounts receivable disclosed by category
Unit: RMB
Closing balance Opening balance
Book balance Bad debt provision Book balance Bad debt provision
With
Category Withd draw
Proporti rawal Book value Propor al Book value
Amount Amount Amount Amount
on propo tion prop
rtion ortio
n
Accounts
receivable
withdrawal of
5.02 100.00 5.04
bad debt 243,661,194.92 100.00% 12,242,205.39 231,418,989.53 276,788,146.79 13,940,104.17 262,848,042.62
% % %
provision of by
credit risks
characteristics:
5.02 100.00 5.04
Total 243,661,194.92 100.00% 12,242,205.39 231,418,989.53 276,788,146.79 13,940,104.17 262,848,042.62
% % %
98
Lu Thai Textile Co., Ltd. Semi-annual Report 2016
Accounts receivable with single significant amount and withdrawal bad debt provision separately at end of Period
□ Applicable √ Not applicable
In the groups, accounts receivable adopting aging analysis method to withdraw bad debt provision:
√ Applicable □ Not applicable
Unit: RMB
Closing balance
Aging
Account receivable Bad debt provision Withdrawal proportion
Subentry within 1 year
Within 1 year 242,687,068.39 12,134,353.43 5.00%
Subtotal within 1 year 242,687,068.39 12,134,353.43 5.00%
1 to 2 years 869,733.37 86,973.33 10.00%
2 to 3 years 104,393.16 20,878.63 20.00%
Total 243,661,194.92 12,242,205.39 5.02%
Notes:
In the groups, accounts receivable adopting balance percentage method to withdraw bad debt provision:
□ Applicable √ Not applicable
(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-1,445,399.43; the amount of the reversed
or collected part during the Reporting Period was of RMB0.00.
(3) The actual write-off accounts receivable
Unit: RMB
Item Amount
Actual write-off accounts receivable 252,499.35
(4) 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 RMB107, 282,619.52,
44.03% of total closing balance of account receivable, the relevant closing balance of bad debt provision withdrawn was RMB5,
364,130.98.
6. Prepayment
(1) List by aging analysis:
Unit: RMB
Aging Closing balance Opening balance
99
Lu Thai Textile Co., Ltd. Semi-annual Report 2016
Amount Proportion Amount Proportion
Within 1 year 129,109,573.45 97.88% 194,103,626.51 98.63%
1 to 2 years 686,732.24 0.52% 1,693,651.78 0.86%
2 to 3 years 1,226,751.34 0.93% 339,302.71 0.17%
Over 3 years 880,232.34 0.67% 673,323.13 0.34%
Total 131,903,289.37 -- 196,809,904.13 --
(2) Top 5 of the closing balance of the prepayment collected according to the prepayment target
The total amount of top five of account receivable of closing balance collected by arrears party was RMB53, 991,485.28,
40.93% of total closing balance of account receivable.
7. Interest receivable
(1) Category of interest receivable
Unit: RMB
Item Closing balance Opening balance
Fixed term deposit interest 653,075.08
Total 653,075.08
8. Other accounts receivable
(1) Other accounts receivable disclosed by category
Unit: RMB
Closing balance Opening balance
Book balance Bad debt provision Book balance Bad debt provision
Category Withdra Withdra
Proporti wal Book value Proporti wal Book value
Amount Amount Amount Amount
on proporti on proporti
on on
Other accounts
receivable
withdrawn bad
debt provision 56,829,006.51 100.00% 8,093,557.38 14.24% 48,735,449.13 80,678,238.51 100.00% 9,856,832.23 12.22% 70,821,406.28
according to
credit risks
characteristics
100
Lu Thai Textile Co., Ltd. Semi-annual Report 2016
Total 56,829,006.51 100.00% 8,093,557.38 14.24% 48,735,449.13 80,678,238.51 100.00% 9,856,832.23 12.22% 70,821,406.28
Other receivable with single significant amount and withdrawal bad debt provision separately at end of Period：
□ Applicable √ Not applicable
In the groups, other accounts receivable adopting aging analysis method to withdraw bad debt provision:
√ Applicable □ Not applicable
Unit: RMB
Closing balance
Aging
Other accounts receivable Bad debt provision Withdrawal proportion
Subentry within 1 year
Within 1 year 26,247,696.60 1,312,384.81 5.00%
Subtotal within 1 year 26,247,696.60 1,312,384.81 5.00%
1 to 2 years 6,133,169.85 613,317.00 10.00%
2 to 3 years 11,665,864.47 2,333,172.90 20.00%
Over 3 years 12,782,275.59 3,834,682.67 30.00%
Total 56,829,006.51 8,093,557.38 14.24%
Notes:
In the groups, other accounts receivable adopting balance percentage method to withdraw bad debt provision:
□ Applicable √ Not applicable
In the groups, other accounts receivable adopting other methods to withdraw bad debt provision:
□ Applicable √ Not applicable
(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-1,758,274.85; the amount of the reversed
or collected part during the Reporting Period was of RMB0.00.
(3) The actual write-off other accounts receivable
Unit: RMB
Item Amount
Actual write-off other accounts receivable 5,000.00
(4) Other accounts receivable classified by the nature of accounts
Unit: RMB
Nature Closing book balance Opening book balance
Export rebates 2,665,685.60 23,876,307.85
101
Lu Thai Textile Co., Ltd. Semi-annual Report 2016
Payment on behalf 34,220,472.84 33,467,444.93
The cash pledge and guarantee 8,120,365.07 6,956,093.54
Borrowings and deposit 2,308,884.29 3,811,593.38
Others 9,513,598.71 12,566,798.81
Total 56,829,006.51 80,678,238.51
(5) Top 5 of the closing balance of the other accounts receivable collected according to the arrears party
Unit: RMB
Closing
balance of
Name of the entity Nature Closing balance Aging Proportion%
bad debt
provision
Advance money
Within 1 year ,1-2years, 2-3
receivable of the Payment on behalf 16,551,717.77 29.13% 2,680,976.76
years
fundraising houses
Accounts receivable of
Advance money for
advance money for the
the social security
social security
undertake by the 9,627,971.26 Within 1 year 16.94% 481,398.56
undertake by the
individual of the
individual of the
employee
employee
Farmland premium Premium advanced 3,812,517.28 Within 1 year 6.71% 190,625.86
Deposits for wages paid Deposits for wages
to migrant workers of paid to migrant
2,955,620.10 Over 3 years 5.20% 886,686.03
Zichuan District, Zibo workers of
city infrastructure works
Finance Bureau of Export tax refunds of
2,665,685.60 Over 3 years 4.69% 799,705.68
Zichuan District, Zibo the local government
Total -- 35,613,512.01 -- 62.67% 5,039,392.89
9. Inventory
(1) Category of inventory
Unit: RMB
Closing balance Opening balance
Item Falling price Falling price
Book balance Book value Book balance Book value
reserves reserves
Raw materials 629,152,722.47 629,152,722.47 608,670,473.36 1,635,229.99 607,035,243.37
102
Lu Thai Textile Co., Ltd. Semi-annual Report 2016
Goods in process 503,650,220.42 503,650,220.42 445,688,953.21 445,688,953.21
Inventory goods 666,621,376.44 29,157,089.56 637,464,286.88 714,280,833.84 43,608,998.71 670,671,835.13
Consumable
891,063.05 238,188.18 652,874.87 869,404.33 392,309.29 477,095.04
biological assets
Products for
consigned 20,472,735.53 20,472,735.53 20,090,846.49 20,090,846.49
processing
Total 1,820,788,117.91 29,395,277.74 1,791,392,840.17 1,789,600,511.23 45,636,537.99 1,743,963,973.24
(2) Impairment of inventories
Unit: RMB
Increased amount Decrease
Item Opening balance Reverse or Closing balance
Withdrawal Others Others
write-off
Raw materials 1,635,229.99 1,635,229.99
Inventory goods 43,608,998.71 642,332.01 15,094,241.16 29,157,089.56
Consumable
392,309.29 154,121.11 238,188.18
biological assets
Total 45,636,537.99 642,332.01 16,883,592.26 29,395,277.74
Item Specific basis of withdrawal of Reasons for reversal Reasons for write-off
falling price reserves of
inventory
Raw materials The lower one between cost of Sale in this year
each item of inventory and its
realizable net value
Inventory goods The lower one between cost of Sale in this year
each item of inventory and its
realizable net value
Consumable biological The lower one between cost of Sale in this year
assets each item of inventory and its
realizable net value
10. Other current assets
Unit: RMB
Item Closing balance Opening balance
Prepaid income tax to be deducted 430,945.88 3,108,886.97
VAT input tax to be deducted 37,986,547.88 16,640,924.10
103
Lu Thai Textile Co., Ltd. Semi-annual Report 2016
Buy-back amount of B Share 4,340,633.04 20,634,142.65
Payment of the shares 8,988,043.01 17,007,362.62
Total 51,746,169.81 57,391,316.34
11. Available-for-sale financial assets
(1) List of available-for-sale financial assets
Unit: RMB
Closing balance Opening balance
Item Depreciation Depreciation
Book balance Book value Book balance Book value
reserves reserves
Available-for-sale equity
67,442,600.00 67,442,600.00 67,442,600.00 67,442,600.00
instruments
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
Book balance Depreciation reserves Cash
Shareholding bonus
Openi Closin proportion of the
Investee Opening
Increase Decrease Closing period ng Increase Decrease g among the Reporti
period
period period investees ng
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
104
Lu Thai Textile Co., Ltd. Semi-annual Report 2016
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 --
12. Long-term accounts receivable
(1) Long-term accounts receivable
Unit: RMB
Closing balance Opening balance
Discount rate
Item Bad debt Bad debt
Book balance Book value Book balance Book value range
provision provision
Finance lease 4,980,998.00 4,980,998.00 4,980,998.00 4,980,998.00 10.54%
Of which:
unrealized 165,509.42 165,509.42 332,959.49 332,959.49
financing income
Total 4,980,998.00 4,980,998.00 4,980,998.00 4,980,998.00 --
13. Fixed assets
(1) List of fixed assets
Unit: RMB
Houses and Machinery Transportation Electronic equipment
Item Total
buildings equipment equipment and other
I. Original book value
1. Opening balance 2,678,346,700.26 5,590,479,536.09 72,011,120.11 111,875,276.29 8,452,712,632.75
2. Increased amount of
32,638,344.23 113,332,528.85 1,640,655.97 6,015,861.81 153,627,390.86
the Period
(1) Purchase 652,777.73 81,757,788.51 1,640,655.97 5,141,958.01 89,193,180.22
(2) Transfer of project
31,985,566.50 31,574,740.34 873,903.80 64,434,210.64
under construction
(3) Enterprise
combination increase
3. Decreased amount of 1,448,144.93 6,783,959.58 2,785,944.50 15,856,969.65 26,875,018.66
105
Lu Thai Textile Co., Ltd. Semi-annual Report 2016
the Period
(1) Disposal or Scrap 1,448,144.93 6,783,959.58 2,785,944.50 15,856,969.65 26,875,018.66
4. Closing balance 2,709,536,899.56 5,697,028,105.36 70,865,831.58 102,034,168.45 8,579,465,004.95
II. Accumulative
depreciation
1. Opening balance 743,043,738.02 2,643,463,604.14 52,009,768.71 79,137,398.87 3,517,654,509.74
2. Increased amount of
41,397,306.48 127,773,316.55 2,294,207.95 5,163,335.31 176,628,166.29
the Period
(1) Withdrawal 41,397,306.48 127,773,316.55 2,294,207.95 5,163,335.31 176,628,166.29
3. Decreased amount of
928,951.56 6,149,354.70 2,184,154.63 11,999,211.19 21,261,672.08
the Period
(1) Disposal or Scrap 928,951.56 6,149,354.70 2,184,154.63 11,999,211.19 21,261,672.08
4. Closing balance 783,512,092.94 2,765,087,565.99 52,119,822.03 72,301,522.99 3,673,021,003.95
III. Depreciation reserves
1. Opening balance 4,823,890.00 22,535,428.59 53,835.13 69,499.45 27,482,653.17
2. Increased amount of
the Period
(1) Withdrawal
3. Decreased amount of
3,203.33 3,203.33
the Period
(1) Disposal or Scrap 3,203.33 3,203.33
4. Closing balance 4,823,890.00 22,532,225.26 53,835.13 69,499.45 27,479,449.84
IV. Book value
1. Closing book value 1,921,200,916.62 2,909,408,314.11 18,692,174.42 29,663,146.01 4,878,964,551.16
2. Opening book value 1,930,479,072.24 2,924,480,503.36 19,947,516.27 32,668,377.97 4,907,575,469.84
(2) Fixed assets leased out from operation lease
Unit: RMB
Item Closing book value
Houses and buildings 22,852,560.80
(3) Details of fixed assets failed to accomplish certification of property
Unit: RMB
Item Book value Reason
Weaving and yarn dying 111,113,050.06 Ongoing inspection, surveying, verification to application procedures
106
Lu Thai Textile Co., Ltd. Semi-annual Report 2016
workshop by Housing authorities
Employee’s dormitory building of Ongoing inspection, surveying, verification to application procedures
46,088,082.12
eastern area of industrial park by Housing authorities
Ongoing inspection, surveying, verification to application procedures
Spinning Fourth factory workshop 71,592,080.87
by Housing authorities
Dormitory building of north yard Ongoing inspection, surveying, verification to application procedures
130,604,808.33
in western area by Housing authorities
Sample testing factory in western Ongoing inspection, surveying, verification to application procedures
44,025,073.82
area by Housing authorities
Ongoing inspection, surveying, verification to application procedures
Lufeng weaving dye workshop 137,243,923.48
by Housing authorities
Other notes:
14. Construction in progress
(1) List of construction in progress
Unit: RMB
Closing balance Opening balance
Item Depreciation Depreciation
Book balance Book value Book balance Book value
reserves reserves
Complex building and
employee’s dormitory
849,549.02 849,549.02 849,549.02 849,549.02
building in western area of
Lu Thai
Newly increase 23 thousand
spindle and 35 thousand
14,209,610.75 14,209,610.75 4,337,162.70 4,337,162.70
spindle two-for-one twisting
production line
Factory project of Xinjiang
10,389,213.18 10,389,213.18 1,153,723.06 1,153,723.06
Lu Thai
Reform project of Xinsheng
34,781,359.30 34,781,359.30 30,335,215.53 30,335,215.53
Thermal Power
Expending project of
16,031,439.95 16,031,439.95
Xinsheng Thermal Power
Energy conservation project
10,746,671.25 10,746,671.25 9,445,960.77 9,445,960.77
of Helijie
Lu Thai (Cambodia)
372,241.62 372,241.62 3,202,357.80 3,202,357.80
garment project
Lu Thai (Burma) project 0.00 0.00 27,134,693.98 27,134,693.98
107
Lu Thai Textile Co., Ltd. Semi-annual Report 2016
Lu Thai (Vietnam) project 145,820,890.97 145,820,890.97 86,589,660.94 86,589,660.94
Lu Thai Garment project 32,825,470.82 32,825,470.82
Other small projects 40,454,469.07 40,454,469.07 42,045,705.70 42,045,705.70
Total 306,480,915.93 306,480,915.93 205,094,029.50 205,094,029.50
(2) Changes of significant construction in progress
Unit: RMB
Accumu
Amount Other Proportion Of which: Capitaliz
lative
that decreas estimated the amount ation rate Capit
amount
Estimated Opening Increased transferred ed Closing of the Project of the of the al
Name o f item of
number balance amount to fixed amount balance project progress capitalized interests resour
capitaliz
assets of of the accumulati interests of of the ces
ed
the period period ve input the period period
interests
Complex
building and
employee’s
106,500,00 Other
dormitory 849,549.02 849,549.02 99.50% 99.50%
0.00 s
building in
western area of
Lu Thai
Newly increase
23 thousand
spindle and 35
thousand 928,660,00 4,337,162. 10,626,26 753,821.0 14,209,610 Other
35.50% 35.50%
spindle 0.00 70 9.07 2 .75 s
two-for-one
twisting
production line
Factory project
32,650,000 1,153,723. 10,678,28 1,442,793. 10,389,213 Other
of Xinjiang Lu 58.00% 58.00%
.00 06 3.18 06 .18 s
Thai
Reform project
40,000,000 30,335,215 4,446,143 34,781,359 Other
of Xinsheng 90.00% 90.00%
.00 .53 .77 .30 s
Thermal Power
Expending
project of 240,000,00 16,031,43 16,031,439 Other
7.00% 7.00%
Xinsheng 0.00 9.95 .95 s
Thermal Power
108
Lu Thai Textile Co., Ltd. Semi-annual Report 2016
Energy
conservation 28,930,000 9,445,960. 1,300,710 10,746,671 Other
30.00% 30.00%
project of .00 77 .48 .25 s
Helijie
Lu Thai
123,056,00 3,202,357. 612,701.9 3,442,818. Other
(Cambodia) 372,241.62 91.00% 91.00%
0.00 80 3 11 s
garment project
Lu
61,136,000 27,134,693 6,551,587 33,686,28 100.00 Other
Thai(Burma) 0.00 100.00%
.00 .98 .79 1.77 % s
project
Lu
242,282,30 86,589,660 78,618,12 19,386,89 145,820,89 Other
Thai(Vietnam) 68.00% 68.00%
0.00 .94 4.70 4.67 0.97 s
project
Lu Thai 93,035,700 32,825,47 32,825,470 Other
35.00% 35.00%
Garment project .00 0.82 .82 s
Other small 42,045,705 4,130,365 5,721,602. 40,454,469 Other
projects .70 .38 01 .07 s
1,896,250, 205,094,02 165,821,0 64,434,21 306,480,91
Total -- -- --
000.00 9.50 97.07 0.64 5.93
15. Engineering material
Unit: RMB
Item Closing balance Opening balance
Specific materials 187,384.85
Specific equipments 181,069,950.50 6,132,398.32
Total 181,069,950.50 6,319,783.17
16. Productive biological assets
(1) Productive biological assets adopted cost measurement mode
√ Applicable □ Not applicable
Unit: RMB
Item Planting industry Livestock Forestry Aquaculture Total
Hu sheep
I. Original book
value
1. Opening
1,398,871.02 1,398,871.02
balance
109
Lu Thai Textile Co., Ltd. Semi-annual Report 2016
2. Increased
309,668.58 309,668.58
amount of the Period
(1) Outsourcing 35,350.00 35,350.00
(2) Self
274,318.58 274,318.58
cultivate
3. Decreased
149,203.35 149,203.35
amount of the Period
(1) Disposal 58,903.35 58,903.35
(2) Other 90,300.00 90,300.00
4. Closing balance 1,559,336.25 1,559,336.25
II. Accumulative
depreciation
1. Opening
221,757.13 221,757.13
balance
2. Increased
135,169.79 135,169.79
amount of the Period
(1) Withdrawal 135,169.79 135,169.79
3. Decreased
28,985.40 28,985.40
amount of the period
(1) Disposal 9,772.15 9,772.15
(2) Other 19,213.25 19,213.25
4. Closing balance 327,941.52 327,941.52
III. Depreciation
reserves
1. Opening
balance
2. Increased
amount of the Period
(1) Withdrawal
3. Decreased
amount of the Period
(1) Disposal
(2) Other
4. Closing balance
IV. Book value
1. Closing book
1,231,394.73 1,231,394.73
value
110
Lu Thai Textile Co., Ltd. Semi-annual Report 2016
2. Opening book
1,177,113.89 1,177,113.89
value
17. Intangible assets
(1) List of intangible assets
Unit: RMB
Item Land use right Patent right Non-patent right Total
I. Original book value
1. Opening balance 446,803,403.64 1,985,176.47 480,000.00 449,268,580.11
2. Increased amount of the Period 9,628,240.00 9,628,240.00
(1) Purchase 9,628,240.00 9,628,240.00
(2) Internal R&D
(3) Enterprise combination increase
3. Decreased amount of the Period
(1) Disposal
4. Closing balance 456,431,643.64 1,985,176.47 480,000.00 458,896,820.11
II. Accumulated amortization
1. Opening balance 84,646,918.80 1,025,674.68 210,000.00 85,882,593.48
2. Increased amount of the Period 5,948,713.12 99,258.84 15,000.00 6,062,971.96
(1) Withdrawal 5,948,713.12 99,258.84 15,000.00 6,062,971.96
3. Decreased amount of the Period
(1) Disposal
4. Closing balance 90,595,631.92 1,124,933.52 225,000.00 91,945,565.44
III. Depreciation reserves
1. Opening balance
2. Increased amount of the Period
(1) Withdrawal
3. Decreased amount of the Period
(1) Disposal
4. Closing balance
111
Lu Thai Textile Co., Ltd. Semi-annual Report 2016
IV. Book value
1. Closing book value 365,836,011.72 860,242.95 255,000.00 366,951,254.67
2. Opening book value 362,156,484.84 959,501.79 270,000.00 363,385,986.63
The proportion of the intangible assets formed from the internal R&D through the Company amount the balance of the intangible
assets at the period-end was 0.00%.
18. R&D expenses
Unit: RMB
Increased amount Decrease
Opening Transferred in Closing
Item Internal R&D Recognized as
balance Others current gains and balance
expenses intangible assets
losses
Product
161,055,249.75 161,055,249.75
research
Total 161,055,249.75 161,055,249.75
19. Goodwill
(1) Original book value of goodwill
Unit: RMB
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
20. Long-term unamortized expenses
Unit: RMB
Amortization
Item Opening balance Increased amount Decrease Closing balance
amount
Land contracting fee of 27,639,383.04 200,000.00 522,223.50 27,317,159.54
112
Lu Thai Textile Co., Ltd. Semi-annual Report 2016
Xinjiang Lu Thai
Land rent of overseas
57,484,762.21 19,735,609.76 661,114.86 76,559,257.11
subsidiaries
Total 85,124,145.25 19,935,609.76 1,183,338.36 103,876,416.65
21. Deferred income tax assets/deferred income tax liabilities
(1) Deferred income tax assets had not been off-set
Unit: RMB
Closing balance Opening balance
Deductible
Item Deferred income tax Deductible temporary Deferred income tax
temporary
assets difference assets
difference
Assets impairment provision 71,718,934.32 10,550,996.85 88,791,730.93 14,770,956.88
Unrealized internal sales gain and loss 57,708,935.47 7,748,574.09 62,610,524.74 8,953,164.62
Payroll payable 113,279,841.30 17,414,870.28 113,279,841.30 17,414,870.28
Deferred income 94,038,935.27 13,994,958.19 93,945,118.42 13,979,718.50
Change of fair value of trading financial
9,735,700.00 1,460,355.00 46,695,875.00 7,004,381.25
liabilities
Total 346,482,346.36 51,169,754.41 405,323,090.39 62,123,091.53
(2) Deferred income tax liabilities had not been off-set
Unit: RMB
Closing balance Opening balance
Item Deductible temporary Deferred income tax Deductible temporary Deferred income tax
difference liabilities difference liabilities
Depreciation of fixed
13,557,121.88 2,236,925.11 13,289,056.67 2,192,694.35
assets
Total 13,557,121.88 2,236,925.11 13,289,056.67 2,192,694.35
(3) Deferred income tax assets or liabilities listed by net amount after off-set
Unit: RMB
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
113
Lu Thai Textile Co., Ltd. Semi-annual Report 2016
Deferred income tax
51,169,754.41 62,123,091.53
assets
Deferred income tax
2,236,925.11 2,192,694.35
liabilities
(4) List of unrecognized deferred income tax assets
Unit: RMB
Item Closing balance Opening balance
Deductible temporary difference 5,491,556.03 8,124,396.63
Deductible losses 31,771,903.16 134,950,376.05
Total 37,263,459.19 143,074,772.68
(5) Deductible losses of unrecognized deferred income tax assets will due the following years
Unit: RMB
Years Closing amount Opening amount Notes
Y2016 0.00 9,542,681.08
Y2017 1,112,905.87 20,826,906.25
Y2018 125,946.78 23,670,032.23
Y2019 1,456,659.23 23,798,042.42
Y2020 24,488,754.73 57,112,714.07
Y2021 4,587,636.55
Total 31,771,903.16 134,950,376.05 --
22. Other non-current assets
Unit: RMB
Item Closing balance Opening balance
Prepayment for equipment 18,930,146.99 21,721,084.27
Prepayment for land 22,031,283.00 12,781,283.00
Total 40,961,429.99 34,502,367.27
23. Short-term loans
(1) Category of short-term loans
Unit: RMB
114
Lu Thai Textile Co., Ltd. Semi-annual Report 2016
Item Closing balance Opening balance
Pledge loan 28,266,701.32
Mortgage loan 100,000,000.00 180,000,000.00
Guaranteed loan 118,924,440.50 50,000,000.00
Credit loan 849,194,676.67 544,499,617.58
Total 1,068,119,117.17 802,766,318.90
24. Financial liabilities measured by fair value and the changes included in the current gains and losses
Unit: RMB
Item Closing balance Opening balance
Transaction financial liabilities 9,735,700.00 46,695,875.00
Derivative financial liabilities 9,735,700.00 46,695,875.00
Total 9,735,700.00 46,695,875.00
25. Notes payable
Unit: RMB
Category Closing balance Opening balance
Trade acceptance 2,801,392.00 2,709,149.48
Bank acceptance bill 5,300,000.00 400,000.00
Total 8,101,392.00 3,109,149.48
The total amount of the due but not pay notes payable at the period-end was of RMB000.
26. Accounts payable
(1) List of accounts payable
Unit: RMB
Item Closing balance Opening balance
Purchase of goods 135,191,178.09 163,649,100.70
Engineering equipments 88,941,017.39 79,077,530.07
Others 5,558,847.67 5,843,774.80
Total 229,691,043.15 248,570,405.57
115
Lu Thai Textile Co., Ltd. Semi-annual Report 2016
27. Advance from customers
(1) List of advance from customers
Unit: RMB
Item Closing balance Opening balance
Advance from goods 88,800,955.69 95,077,531.32
Total 88,800,955.69 95,077,531.32
28. Payroll payable
(1) List of Payroll payable
Unit: RMB
Item Opening balance Increase Decrease Closing balance
I. Short-term salary 290,779,347.63 744,322,029.13 812,744,864.63 222,356,512.13
II. Post-employment benefit-defined
484,251.99 106,674,732.22 107,106,567.82 52,416.39
contribution plans
Total 291,263,599.62 850,996,761.35 919,851,432.45 222,408,928.52
(2) List of Short-term salary
Unit: RMB
Item Opening balance Increase Decrease Closing balance
1. Salary, bonus, allowance,
253,024,097.84 653,668,920.55 724,692,423.06 182,000,595.33
subsidy
2. Employee welfare 27,305,867.84 27,305,867.84
3. Social insurance 254,795.56 41,256,648.91 41,466,463.11 44,981.36
Of which: 1. Medical insurance
227,380.70 35,466,938.03 35,655,117.44 39,201.29
premiums
Work-related injury insurance 12,394.93 3,218,569.03 3,225,804.29 5,159.67
Maternity insurance 15,019.93 2,571,141.85 2,585,541.38 620.40
4. Housing fund 22,460.32 9,190,956.10 9,212,538.85 877.57
5. Labor union budget and
37,477,993.91 12,899,635.73 10,067,571.77 40,310,057.87
employee education budget
Total 290,779,347.63 744,322,029.13 812,744,864.63 222,356,512.13
116
Lu Thai Textile Co., Ltd. Semi-annual Report 2016
(3) List of drawing scheme
Unit: RMB
Item Opening balance Increase Decrease Closing balance
1. Basic pension benefits 458,648.69 101,075,494.73 101,484,737.50 49,405.92
2. Unemployment
25,603.30 5,599,237.49 5,621,830.32 3,010.47
insurance
Total 484,251.99 106,674,732.22 107,106,567.82 52,416.39
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 26% 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.
29. Taxes payable
Unit: RMB
Item Closing balance Opening balance
VAT 7,232,285.48 8,095,634.56
Business tax 14,151.04 346,838.39
Corporate income tax 48,772,824.46 54,874,320.89
Personal income tax 2,455,089.68 677,155.21
Urban maintenance and construction tax 3,486,248.52 3,706,913.14
Stamp tax 314,825.48 452,140.04
Property tax 5,067,905.64 4,554,321.87
Land use tax 4,848,528.90 4,592,696.80
Education Surcharge 1,586,246.37 1,668,460.01
Local education surtax 1,057,460.46 1,112,306.69
Local water conservancy facility
493,364.76 534,220.54
construction fund
Total 75,328,930.79 80,615,008.14
30. Interest payable
Unit: RMB
Item Closing balance Opening balance
Interest payable on short-term borrowings 1,957,379.70 1,851,876.78
117
Lu Thai Textile Co., Ltd. Semi-annual Report 2016
and long term borrowings
Total 1,957,379.70 1,851,876.78
31. Dividends payable
Unit: RMB
Item Closing balance Opening balance
Common stock dividends of the Group 441,113.64 441,113.64
Total 441,113.64 441,113.64
32. Other accounts payable
(1) Other accounts payable listed by nature of the account
Unit: RMB
Item Closing balance Opening balance
The deposit and guarantee 19,126,747.44 19,946,789.66
Collecting payment on behalf of others 33,089,795.50 16,801,587.86
Intercourse funds 3,955,917.74 2,941,300.16
Others 19,787,252.49 22,825,136.85
Total 75,959,713.17 62,514,814.53
(2) Other significant accounts payable with aging over one year
Unit: RMB
Item Closing balance Unpaid/ Un-carry-over reason
Cotton and Linen Company 11,925,000.00 Received deposit of sale contract
Total 11,925,000.00 --
33. Long-term loan
(1) Category of long-term loan
Unit: RMB
Item Closing balance Opening balance
Guaranteed loan 111,928,541.12
Total 111,928,541.12
118
Lu Thai Textile Co., Ltd. Semi-annual Report 2016
34. Long-term payroll payable
(1) Long-term payroll payable
Unit: RMB
Item Closing balance Opening balance
III. Other long term welfare 83,459,553.02 81,499,403.98
Total 83,459,553.02 81,499,403.98
35. Deferred revenue
Unit: RMB
Item Opening balance Increase Decrease Closing balance Formed reason
Government Government
95,802,118.42 901,700.00 1,234,383.13 95,469,435.29
subsidies subsidies
Unrealized financing
332,959.49 167,450.07 165,509.42 Finance lease
incomes
Total 96,135,077.91 901,700.00 1,401,833.20 95,634,944.71 --
Item involving government subsidies:
Unit: RMB
Amount recorded
into Related to
Amount of
Item Opening balance non-operating Other changes Closing balance assets/related
newly subsidy
income in Report income
Period
Related to the
Land 62,052,085.09 696,578.94 61,355,506.15
assets
Related to the
Equipment 32,793,033.33 901,700.00 471,304.21 33,223,429.12
assets
Production biological Related to the
957,000.00 66,499.98 890,500.02
assets assets
Total 95,802,118.42 901,700.00 1,234,383.13 95,469,435.29 --
36. Other non-current liabilities
Unit: RMB
Item Closing balance Opening balance
Others 1,840,000.00 1,840,000.00
Total 1,840,000.00 1,840,000.00
119
Lu Thai Textile Co., Ltd. Semi-annual Report 2016
37. Share capital
Unit: RMB
Increase/decrease (+/-)
Opening Capitalized Closing
New shares
balance Bonus shares Capital Others Subtotal balance
issued
reserves
The sum of
955,758,496.00 955,758,496.00
shares
38. Capital surplus
Unit: RMB
Item Opening balance Increase Decrease Closing balance
Capital premium 948,167,616.39 948,167,616.39
Other capital reserves 58,978,550.58 669.98 58,979,220.56
Total 1,007,146,166.97 669.98 1,007,146,836.95
39. Treasury stock
Unit: RMB
Item Opening balance Increase Decrease Closing balance
The Company’s shared acquired due to
11,610,721.68 220,528,615.36 232,139,337.04
the reduce of registered capital
Total 11,610,721.68 220,528,615.36 232,139,337.04
40. Other comprehensive income
Unit: RMB
Reporting Period
Less: recorded
in other Attributa
Less:
comprehensive Attributable to ble to
Opening Amount before Incom Closing
Item income in prior owners of the minority
balance income tax in e tax balance
period and Company after sharehol
current period expens
transferred to tax ders
e
profit or loss in after tax
current period
II. Other comprehensive reclassified into
17,090,772.31 12,389,756.62 12,389,756.62 29,480,528.93
profits or losses
120
Lu Thai Textile Co., Ltd. Semi-annual Report 2016
Converted difference of the foreign currency
17,090,772.31 12,389,756.62 12,389,756.62 29,480,528.93
financial statement
Total 17,090,772.31 12,389,756.62 12,389,756.62 29,480,528.93
41. Surplus reserves
Unit: RMB
Item Opening balance Increase Decrease Closing balance
Statutory surplus
812,306,931.70 812,306,931.70
reserves
Discretionary surplus
3,341,572.58 3,341,572.58
reserves
Total 815,648,504.28 815,648,504.28
42. Retained profits
Unit: RMB
Item Reporting Period Last period
Opening balance of retained profits before
4,053,079,857.70 3,892,066,534.32
adjustments
Opening balance of retained profits after
4,053,079,857.70 3,892,066,534.32
adjustments
Add: Net profit attributable to owners of the
344,641,184.73 712,193,243.19
Company
Less: Withdrawal of statutory surplus reserves 73,300,671.81
Dividend of common stock payable 465,525,373.50 477,879,248.00
Closing retained profits 3,932,195,668.93 4,053,079,857.70
List of adjustment of opening retained profits:
1) RMB 0.00 opening retained profits was affected by retrospective adjustment conducted according to the Accounting Standards for
Business Enterprises and relevant new regulations.
2) RMB0.00 opening retained profits was affected by changes on accounting policies.
3) RMB0.00 opening retained profits was affected by correction of significant accounting errors.
4) RMB0.00 opening retained profits was affected by changes in combination scope arising from same control.
5) RMB0.00 opening retained profits was affected totally by other adjustments.
43. Revenue and Cost of Sales
Unit: RMB
121
Lu Thai Textile Co., Ltd. Semi-annual Report 2016
Reporting Period Same period of last year
Item
Sales revenue Cost of sales Sales revenue Cost of sales
Main operations 2,751,457,469.09 1,883,823,007.20 2,857,761,175.48 2,073,584,183.14
Other operations 79,869,303.94 53,576,583.88 84,074,721.68 59,438,017.93
Total 2,831,326,773.03 1,937,399,591.08 2,941,835,897.16 2,133,022,201.07
44. Business tax and surcharges
Unit: RMB
Item Reporting Period Same period of last year
Business tax 593,989.16 595,514.62
Urban maintenance and construction tax 12,773,141.80 12,558,301.56
Education Surcharge 5,766,081.36 5,820,356.34
Local education surtax 3,844,052.89 3,880,267.32
Local water conservancy facility
1,823,463.31 1,790,272.40
construction fund
Total 24,800,728.52 24,644,712.24
45. Sales expenses
Unit: RMB
Item Reporting Period Same period of last year
Salary 29,504,903.71 26,853,576.60
Transport fees 15,982,535.64 12,940,803.21
Mall costs 9,533,886.96 10,679,224.59
Advertising expense 6,756,908.41 13,219,366.15
Terminal Handing charges 3,220,637.85 3,602,696.66
Depreciation charge 3,183,927.54 3,831,147.87
Business travel charges 2,370,210.27 2,360,702.30
Rental charges 1,275,879.18 1,932,585.56
Copyright royalty 891,154.41 1,501,650.54
Others 15,989,619.53 20,723,655.52
Total 88,709,663.50 97,645,409.00
46. Administrative expenses
Unit: RMB
122
Lu Thai Textile Co., Ltd. Semi-annual Report 2016
Item Reporting Period Same period of last year
R&D expenses 161,055,249.75 141,009,183.42
Salary 52,531,501.43 51,011,581.40
Taxes 22,890,567.34 20,801,623.45
Depreciation charge 12,457,685.52 17,325,002.91
Warehouse funding 11,335,036.99 10,027,719.85
Labor-union expenditure 7,485,349.25 7,014,804.43
Rental charges 7,465,489.25 8,532,189.82
Employee education budget 5,414,286.48 5,187,207.56
Amortization of intangible assets 5,132,925.98 5,188,655.42
Transport fees 3,391,774.21 3,448,371.74
Premium 1,896,503.23 2,892,577.06
Others 50,715,585.73 38,884,416.52
Total 341,771,955.16 311,323,333.58
47. Financial expenses
Unit: RMB
Item Reporting Period Same period of last year
Interest expenses 8,741,653.03 10,987,533.82
Less: Interest income 3,040,662.29 1,998,321.40
Less: Amount of capitalized interest
Exchange gains and losses 10,815,487.46 -4,051,845.74
Less: capitalization of foreign currency
exchange gains and losses
Others 3,294,264.48 4,084,340.20
Total 19,810,742.68 9,021,706.88
48. Asset impairment loss
Unit: RMB
Item Reporting Period Same period of last year
I. Bad debt loss -3,203,674.28 281,403.64
II. Inventory falling price loss 642,332.01
Total -2,561,342.27 281,403.64
123
Lu Thai Textile Co., Ltd. Semi-annual Report 2016
49. Gains and losses from changes in fair value
Unit: RMB
Sources Reporting Period Same period of last year
2. Financial assets measured by fair value and the changes be
-6,013,605.60 8,940,500.00
included in the current profits and losses
Of which, gains on the changes in the fair value of derivative
8,940,500.00
financial instruments
Financial liabilities measured by fair value and the changes
36,960,175.00 3,306,200.00
included in the current gains and losses
Total 30,946,569.40 12,246,700.00
50. Investment income
Unit: RMB
Item Reporting Period Same period of last year
Investment income received from disposal of financial assets measured by
fair value and the changes be included in the current profits and losses during -33,641,221.22 28,860,565.88
holding period
Total -33,641,221.22 28,860,565.88
51. Non-operating gains
Unit: RMB
Recorded in the amount of the
Item Reporting Period Same period of last year
non-recurring gains and losses
Total gains from disposal of
228,313.30 809,936.96 228,313.30
non-current assets
Including: Gains from disposal
228,313.30 809,936.96 228,313.30
of fixed assets
Government subsidies 14,112,224.13 7,116,087.94 14,112,224.13
Others 6,852,899.89 2,194,769.81 6,852,899.89
Total 21,193,437.32 10,120,794.71 21,193,437.32
Government subsidies recorded into current profits and losses
Unit: RMB
Whether
Distrib Special Related to
Distribution subsidies Reporting Same period
Item ution Nature subsidy assets/related
entity influence the Period of last year
reason or not income
current
124
Lu Thai Textile Co., Ltd. Semi-annual Report 2016
profits and
losses or not
Due to engaged in special
Funds for
industry that the state
development
Finance encouraged and
of center Subsid Related to the
Bureau of supported, gained subsidy Yes No 600,000.00
foreign trade y income
Zibo (obtaining in line with the
and economic
law and the regulations of
cooperation
national policy)
Due to engaged in special
industry that the state
Export credit Finance encouraged and
Subsid Related to the
insurance Bureau of supported, gained subsidy Yes No 200,000.00
y income
premiums Zibo (obtaining in line with the
law and the regulations of
national policy)
Foreign
Due to engaged in special
economy
industry that the state
trade
Finance encouraged and
cooperation Subsid Related to the
Bureau of supported, gained subsidy Yes No 208,000.00
(foreign y income
Zibo (obtaining in line with the
investment)-
law and the regulations of
Vietnam
national policy)
subsidy
Foreign
Due to engaged in special
economy
industry that the state
trade
Finance encouraged and
cooperation Subsid Related to the
Bureau of supported, gained subsidy Yes No 208,000.00
(foreign y income
Zibo (obtaining in line with the
investment)-
law and the regulations of
Cambodia
national policy)
subsidy
Foreign
Due to engaged in special
economy
industry that the state
trade
Finance encouraged and
cooperation Subsid Related to the
Bureau of supported, gained subsidy Yes No 180,400.00
(foreign y income
Zibo (obtaining in line with the
investment)-
law and the regulations of
Buma
national policy)
subsidy
Equipment Finance Subsid Due to engaged in special Related to the
Yes No 52,000.00
import Bureau of y industry that the state income
125
Lu Thai Textile Co., Ltd. Semi-annual Report 2016
discount Zibo encouraged and
interest funds supported, gained subsidy
(obtaining in line with the
law and the regulations of
national policy)
Subsidy gained due to
Subsidies of Career
confirming with local
unemployme Company of Subsid Related to the
government attracting Yes No 1,200.00
nt dynamic Zichuan y income
investment and local
monitoring District
supportive policy etc.
"Top 50 Economic
Enterprises" and
Subsidy gained due to
management Information
confirming with local
consulting Commission Subsid Related to the
government attracting Yes No 500,000.00
subsidy-perfo of Zibo, y income
investment and local
rmance Finance
supportive policy etc.
excellence Bureau of
project Zibo
"Top 50
Enterprises" Economic
management and
Subsidy gained due to
consulting Information
confirming with local
subsidy-TPS Commission Subsid Related to the
government attracting Yes No 150,000.00
Toyota of Zibo, y income
investment and local
producing Finance
supportive policy etc.
method Bureau of
consulting Zibo
project
Economic
and
Subsidy gained due to
Information
Special fund confirming with local
Commission Subsid Related to the
for government attracting Yes No 100,000.00
of Zibo, y income
E-commerce investment and local
Finance
supportive policy etc.
Bureau of
Zibo
Due to engaged in special
industry that the state
Export credit Finance encouraged and
Subsid Related to the
insurance Bureau of supported, gained subsidy Yes No 73,500.00
y income
premiums Zibo (obtaining in line with the
law and the regulations of
national policy)
126
Lu Thai Textile Co., Ltd. Semi-annual Report 2016
People's
Energy Government Subsidy from R&D
1,000,000.0 Related to the
saving award Office of Award Technical updating and Yes No
0 income
capital Shandong transformation, etc.
Province
Zibo
High-tech
Science and
Industrial Subsidy from R&D
technology Related to the
Development Award Technical updating and Yes No 120,000.00
innovation income
Zone transformation, etc.
award
Management
Committee
Progress of
People's Subsidy from R&D
science and Related to the
Government Award Technical updating and Yes No 50,000.00
technology income
of Zibo City transformation, etc.
award
Bureau of
Energy Housing and Subsidy from R&D
Related to the
saving reform Urban of Award Technical updating and Yes No 171,850.00
income
award Zichuan transformation, etc.
District, Zibo
Finance
Special fund Subsidy from R&D
Bureau of Subsid 1,000,000.0 Related to the
for energy Technical updating and Yes No
Zichuan y 0 income
saving reform transformation, etc.
District
Subsidy gained due to
Pollution Environment
confirming with local
source video al monitor Subsid Related to the
government attracting Yes No 21,800.00
monitoring station of y income
investment and local
subsidy Zibo
supportive policy etc.
Science and
Department Subsidy from R&D
technology Subsid Related to the
of Finance of Technical updating and Yes No 12,000.00
innovation y income
Shandong transformation, etc.
fund
Due to engaged in special
industry that the state
Finance
Export award encouraged and
Bureau of Related to the
liquidation Award supported, gained subsidy Yes No 42,400.00
Zichuan income
fund (obtaining in line with the
District
law and the regulations of
national policy)
Special funds Finance Subsid Due to engaged in special Yes No 67,700.00 Related to the
127
Lu Thai Textile Co., Ltd. Semi-annual Report 2016
for Bureau of y industry that the state income
encouraging Zichuan encouraged and
foreign trade District supported, gained subsidy
development (obtaining in line with the
law and the regulations of
national policy)
Due to engaged in special
industry that the state
Finance
Export credit encouraged and
Bureau of Subsid Related to the
insurance supported, gained subsidy Yes No 22,700.00
Zichuan y income
subsidy (obtaining in line with the
District
law and the regulations of
national policy)
Science and
technology Subsidy from R&D
Related to the
Patent award bureau of Award Technical updating and Yes No 92,600.00
income
Zichuan transformation, etc.
District
Science and
Award for Subsidy from R&D
technology Related to the
Science and Award Technical updating and Yes No 50,000.00
bureau of income
Technology transformation, etc.
Zibo
Finance Subsidy from R&D
Related to the
Patent award Bureau of Award Technical updating and Yes No 200,000.00
income
Zibo transformation, etc.
Subsidy gained due to
Pollution Environment
confirming with local
source video al monitor Subsid Related to the
government attracting Yes No 10,900.00
monitoring station of y income
investment and local
subsidy Zibo
supportive policy etc.
Subsidy gained due to
Akesu
Electricity confirming with local
Prefecture Subsid Related to the
Finance government attracting Yes No 318,191.00
Bureau of y income
subsidies investment and local
Finance
supportive policy etc.
Subsidy gained due to
Akesu
Enterprise confirming with local
Prefecture Subsid 7,000,000.0 Related to the
paying VAT government attracting Yes No
Bureau of y 0 income
subsidy investment and local
Finance
supportive policy etc.
Spinning Finance Subsid Subsidy from R&D Related to the
Yes No 100,000.00
reform Bureau of y Technical updating and income
128
Lu Thai Textile Co., Ltd. Semi-annual Report 2016
project fund Awati transformation, etc.
Home of staff
Subsidy gained due to
of textile and
Finance confirming with local
garment Subsid Related to the
Bureau of government attracting Yes No 70,000.00
enterprise y income
Awati investment and local
creating
supportive policy etc.
subsidy funds
Due to engaged in special
industry that the state
Returning Forestry encouraged and
Subsid Related to the
farmland to Bureau of supported, gained subsidy Yes No 39,600.00
y income
forest subsidy Awati (obtaining in line with the
law and the regulations of
national policy)
Subsidy gained due to
Pollution Environment
confirming with local
source video al monitor Subsid Related to the
government attracting Yes No 21,800.00
monitoring station of y income
investment and local
subsidy Zibo
supportive policy etc.
Due to engaged in special
Special funds industry that the state
Finance
for encouraged and
Bureau of Subsid Related to the
encouraging supported, gained subsidy Yes No 15,200.00
Zichuan y income
foreign trade (obtaining in line with the
District
development law and the regulations of
national policy)
Subsidy gained due to
Purchase of Finance confirming with local
Subsid Related to the
equipment Bureau of government attracting Yes No 178,000.00
y income
subsidy Gaoqing investment and local
supportive policy etc.
Due to engaged in special
industry that the state
Finance
encouraged and
Saving Bureau of Subsid Related to the
supported, gained subsidy Yes No 330,000.00
energy funds Zichuan y income
(obtaining in line with the
District
law and the regulations of
national policy)
Funds for Finance Due to engaged in special
encouraging Bureau of Subsid industry that the state Related to the
Yes No 422,000.00
foreign trade Zichuan y encouraged and income
development District supported, gained subsidy
129
Lu Thai Textile Co., Ltd. Semi-annual Report 2016
(obtaining in line with the
law and the regulations of
national policy)
Due to engaged in special
Funds for
industry that the state
development Finance
encouraged and
of center Bureau of Subsid Related to the
supported, gained subsidy Yes No 100,000.00
foreign trade Zichuan y assets
(obtaining in line with the
and economic District
law and the regulations of
cooperation
national policy)
Subsidy for
National Subsidy from R&D
development Subsid Related to the
Technology Technical updating and Yes No 111,000.00
of y income
Department transformation, etc.
industries
National Subsidy from R&D
Project funds Subsid Related to the
Technology Technical updating and Yes No 46,000.00
allowance y income
Department transformation, etc.
Subsidy for
independent
innovation Finance Subsidy from R&D
Subsid Related to the
and Bureau of Technical updating and Yes No 1,000,000.00
y income
achievements Zibo transformation, etc.
transformatio
n
Zibo
High-tech
Industrial
Development
Award for Zone Subsidy from R&D
Related to the
Science and Management Award Technical updating and Yes No 200,000.00
income
Technology Committee, transformation, etc.
Finance
Bureau of
Gaoxin
District
Zibo
High-tech
Patent Industrial Subsidy from R&D
Related to the
development Development Award Technical updating and Yes No 200,000.00
income
subsidy Zone transformation, etc.
Management
Committee,
130
Lu Thai Textile Co., Ltd. Semi-annual Report 2016
Finance
Bureau of
Gaoxin
District
Zibo
High-tech
Industrial
Development
Patent Zone Subsidy from R&D
Related to the
development Management Award Technical updating and Yes No 102,400.00
income
subsidy Committee, transformation, etc.
Finance
Bureau of
Gaoxin
District
Due to engaged in special
industry that the state
Finance
Import credit encouraged and
Bureau of Subsid Related to the
insurance supported, gained subsidy Yes No 372,024.00
Zichuan y income
premiums (obtaining in line with the
District
law and the regulations of
national policy)
Shandong
Provincial
Party
Committee
Organization
Department
of the
Communist
Party of Subsidy gained due to
Talent China, Talent confirming with local
Related to the
supporting work leading Award government attracting Yes No 300,000.00
income
award fund group office investment and local
of Shandong, supportive policy etc.
Finance
Department
of Shandong,
Education
Department
of Shandong
and Science
and
131
Lu Thai Textile Co., Ltd. Semi-annual Report 2016
Technology
Department
of Shandong
Due to engaged in special
Special funds industry that the state
Finance
for encouraged and
Bureau of Subsid Related to the
encouraging supported, gained subsidy Yes No 105,600.00
Zichuan y income
foreign trade (obtaining in line with the
District
development law and the regulations of
national policy)
Due to engaged in special
industry that the state
Finance
Export credit encouraged and
Bureau of Subsid Related to the
insurance supported, gained subsidy Yes No 45,485.00
Zichuan y income
subsidy (obtaining in line with the
District
law and the regulations of
national policy)
Finance
Special fund Subsidy from R&D
Bureau of Subsid Related to the
for Patent Technical updating and Yes No 80,000.00
Zichuan y income
Development transformation, etc.
District
Due to engaged in special
industry that the state
Contract Finance
encouraged and
energy Bureau of Related to the
Award supported, gained subsidy Yes No 2,300,000.00
management Zichuan income
(obtaining in line with the
reward District
law and the regulations of
national policy)
Fiscal interest
Akesu
discount Subsidy from R&D
Prefecture Subsid Related to the
funds of Technical updating and Yes No 262,500.00
Bureau of y income
anti-poverty transformation, etc.
Finance
project
Deferred
1,234,383.1 Related to the
revenue 1,139,078.94
3 assets
amortization
14,112,224.
Total -- -- -- -- -- 7,116,087.94 --
13
52. Non-operating expenses
Unit: RMB
132
Lu Thai Textile Co., Ltd. Semi-annual Report 2016
Recorded in the amount of the
Item Reporting Period Same period of last year
non-recurring gains and losses
Loss on disposal of non-current
5,412,125.25 3,508,372.92 5,412,125.25
assets
Including: Loss on disposal of
5,412,125.25 3,508,372.92 5,412,125.25
fixed assets
Donation 806,408.43 13,242.02 806,408.43
Others 1,500,106.22 723,799.12 1,500,106.22
Total 7,718,639.90 4,245,414.06 7,718,639.90
53. Income tax expense
(1) Lists of income tax expense
Unit: RMB
Item Reporting Period Same period of last year
Current income tax expense 78,609,388.16 65,332,000.05
Deferred income tax expense 10,909,106.36 2,137,529.91
Total 89,518,494.52 67,469,529.96
(2) Adjustment process of accounting profit and income tax expense:
Unit: RMB
Item Reporting Period
Total profits 432,175,579.96
Current income tax expense accounted by tax and relevant
64,826,336.99
regulations
Influence of different tax rate suitable to subsidiary 13,259,794.39
Influence of income tax before adjustment -814,680.65
Influence of non taxable income -4,192,925.82
Influence of not deductable costs, expenses and losses 8,385,283.56
Influence of deductible temporary difference or deductible losses
8,054,686.05
of deferred income tax assets derecognized in Reporting Period.
Income tax expense 89,518,494.52
54. Other comprehensive income
See note.
133
Lu Thai Textile Co., Ltd. Semi-annual Report 2016
55. Supplementary information to cash flow statement
(1) Other cash received relevant to operating activities:
Unit: RMB
Item Reporting Period Same period of last year
Government subsidies 13,779,541.00 5,977,009.00
Collection for employees 943,338.62 32,154.44
Claim income 1,598,909.74 718,980.59
Penalty income 85,482.93 80,266.42
Recovery of employee borrowings, petty
4,649,690.95 6,823,524.97
cash and deposit
Others 14,082,485.48 11,650,716.83
Total 35,139,448.72 25,282,652.25
(2) Other cash paid relevant to operating activities:
Unit: RMB
Item Reporting Period Same period of last year
Freight and miscellaneous charges 26,496,789.77 30,884,815.22
Rental charges and management expenses
8,711,587.87 13,278,057.78
of the shops
Rental charges 13,176,835.37 13,352,190.56
Advertising expense 3,244,875.81 5,014,183.65
Business travel charges 11,682,937.78 6,390,846.47
Premium 3,564,970.67 3,762,698.73
Copyright royalty 891,154.41 1,501,650.54
Audit advisory announcement fee 3,479,711.34 1,347,778.95
Decoration & repair expenses 3,919,826.15 1,061,222.18
Donation 806,408.43 13,242.02
Others 42,628,506.60 64,126,882.06
Total 118,603,604.20 140,733,568.16
(3) Other cash received relevant to investment activities
Unit: RMB
Item Reporting Period Same period of last year
134
Lu Thai Textile Co., Ltd. Semi-annual Report 2016
Interest income 3,693,737.37 1,718,171.27
Sale of securities 2,158,904.65
Investment income from trading financial
28,860,565.88
assets
Total 5,852,642.02 30,578,737.15
(4) Other cash paid relevant to investment activity
Unit: RMB
Item Reporting Period Same period of last year
Losses from forward foreign exchange 34,587,575.00
Purchase of securities 3,038,322.29
Total 37,625,897.29 0.00
(5) Other cash received relevant to financing activities
Unit: RMB
Item Reporting Period Same period of last year
Received pledged margin 29,805,722.42
Return of loan guarantees 16,000,000.00
Total 29,805,722.42 16,000,000.00
(6) Other cash paid relevant to financing activities
Unit: RMB
Item Reporting Period Same period of last year
Return of the B-share buy-back amount 203,465,414.43
Short-term loans guarantee 89,026,946.69
Total 203,465,414.43 89,026,946.69
56. Supplemental information for Cash Flow Statement
(1) Information of net profit to net cash flows generated from operating activities
Unit: RMB
Supplemental information Reporting Period Same period of last year
1. Reconciliation of net profit to net cash flows generated from operating
-- --
activities
135
Lu Thai Textile Co., Ltd. Semi-annual Report 2016
Net profit 342,657,085.44 345,410,247.32
Add: Provision for impairment of assets -2,561,342.27 281,403.64
Depreciation of fixed assets, of oil-gas assets, of productive biological assets 176,763,336.08 175,214,081.05
Amortization of intangible assets 6,062,971.96 6,117,876.39
Long-term unamortized expenses 1,183,338.36 611,269.74
Losses on disposal of fixed assets, intangible assets and other long-term
5,183,811.95 2,698,435.96
assets (gains: negative)
Losses from variation of fair value (gains: negative) -30,946,569.40 -12,246,700.00
Financial cost (gains: negative) 16,516,478.20 4,937,366.68
Investment loss (gains: negative) 33,641,221.22 -28,860,565.88
Decrease in deferred income tax assets (gains: negative) 10,953,337.12 797,240.07
Increase in deferred income tax liabilities
44,230.76 1,340,289.84
(“-” means decrease)
Decrease in inventory (gains: negative) -31,187,606.68 -1,740,399.46
Decrease in accounts receivable from operating activities (gains: negative) 167,746,613.50 21,908,518.27
Increase in payables from operating activities (decrease: negative) -132,649,558.81 -154,164,439.49
Net cash flows generated from operating activities 563,407,347.43 362,304,624.13
2. Significant investing and financing activities without involvement of cash
-- --
receipts and payments
3. Net increase in cash and cash equivalents: -- --
Closing balance of cash 578,165,942.35 528,411,383.97
Less: Opening balance of cash 765,695,473.65 649,393,798.30
Net increase in cash and cash equivalents -187,529,531.30 -120,982,414.33
(2) Cash and cash equivalents
Unit: RMB
Item Closing balance Opening balance
I. Cash 578,165,942.35 765,695,473.65
Including: Cash on hand 3,116,248.37 2,111,348.02
Bank deposit on demand 574,977,343.50 742,998,281.72
Other monetary funds on demand 72,350.48 20,585,843.91
III. Closing balance of cash and cash
578,165,942.35 765,695,473.65
equivalents
136
Lu Thai Textile Co., Ltd. Semi-annual Report 2016
57. The assets with the ownership or use right restricted
Unit: RMB
Item Closing book value Restricted reason
Monetary capital 200,058.33 Bank acceptance deposit
Inventories 68,801,593.52 Short-term loan pledged
Total 69,001,651.85 --
58. Foreign currency monetary items
(1) Foreign currency monetary items
Unit: RMB
Closing foreign currency Closing convert to RMB
Item Exchange rate
balance balance
Including: USD 21,902,879.81 6.6312 145,242,376.62
EUR 43,110.69 7.3750 317,941.34
HKD 25,989,587.34 0.8547 22,213,300.30
JPY 42,502.00 0.0645 2,741.37
THB 120.19 0.1888 22.69
SGD 91.90 4.9239 452.51
GBP 970.36 8.9212 8,656.77
AUD 2,821.03 4.9452 13,950.56
CHF 695.08 6.7730 4,707.79
SEK 920.00 0.7836 720.91
KHR 24,741,900.00 0.0016233 40,163.64
Kyats 28,529,289.43 0.0056149 160,189.18
Dong 10,620,573,406.00 0.0002972 3,156,752.44
Including: USD 25,839,486.82 6.6312 171,346,805.00
HKD 2,822,660.11 0.8547 2,412,527.60
Including: USD 8,037,866.34 6.6312 53,300,699.27
EUR 4,102,182.80 7.3750 30,253,598.15
JPY 439,910,755.00 0.0645 28,374,243.70
137
Lu Thai Textile Co., Ltd. Semi-annual Report 2016
(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 □ Not applicable
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)”) and Lu Thai(Vietnam) Co., Ltd. Lu An
Garment Co., Ltd. were Hong Kong, Cambodia, Burma, America, Vietnam and Vietnam, and the
recording currency respectively was HKD, USD, USD, USD, Dong and Dong.
VIII. Changes of merge scope
1. Other reasons for the changes in combination scope
Notes to reasons for the changes in combination scope (Newly established subsidiary and subsidiary of liquidation) and relevant
information:
The Company newly set up subsidiary, Lu An Garment Co., Ltd.
IX. Equity in other entities
1. Equity in subsidiary
(1) The structure of the enterprise group
Holding percentage
Main operating Registration (%)
Name Nature of business Way of gaining
place place Indirec
Directly
tly
Wholesale and
Lufeng Sunshine Beijing Beijing 100.00% Set-up
retail industry
Wholesale and
Beijing Innovative Beijing Beijing 60.00% Set-up
retail industry
Wholesale and
Lu Thai (Hong Kong) Hong Kong Hong Kong 100.00% Set-up
retail industry
Wholesale and
Shanghai Lu Thai Shanghai Shanghai 100.00% Set-up
retail industry
Manufacturing Business combination not
Xinjiang Lu Thai Xinjiang Xinjiang 59.92%
industry under the same control
Manufacturing
Lufeng Weaving & Dyeing Zibo Zibo 75.00% Set-up
industry
Luqun Textile Zibo Zibo Manufacturing 100.00% Set-up
138
Lu Thai Textile Co., Ltd. Semi-annual Report 2016
industry
Manufacturing Business combination not
Xinsheng Power Zibo Zibo 100.00%
industry under the same control
Xinjiang Lu Thai Textile Manufacturing
Xinjiang Xinjiang 100.00% Set-up
(sub-subsidiary) industry
Business combination not
Helijie (sub-subsidiary) Zibo Zibo Service 100.00%
under the same control
Wholesale and
Beijing Youxian Beijing Beijing 90.00% Set-up
retail industry
Manufacturing
Lu Thai(Cambodia) Cambodia Cambodia 100.00% Set-up
industry
Manufacturing
Lu Thai(Burma) Burma Burma 100.00% Set-up
industry
Wholesale and
Lu Thai(America) America America 100.00% Set-up
retail industry
Manufacturing
Lu Thai(Vietnam) Vietnam Vietnam 100.00% Set-up
industry
Manufacturing
Lu An Garment Vietnam Vietnam 100.00% Set-up
industry
(2) Significant not wholly owned subsidiary
Unit: RMB
Shareholding
The profits and losses Balance of minority
proportion of Declaring dividends distribute to
Name arbitrate to the minority shareholder at closing
minority minority shareholder
shareholders period
shareholder
Xinjiang Lu
40.08% 1,381,411.72 180,303,896.49
Thai
Lufeng
Weaving & 25.00% 8,786,918.78 298,419,490.33
Dyeing
(3) The main financial information of significant not wholly owned subsidiary
Unit: RMB
Closing balance Opening balance
Non-curr Non-curr Non-curr Non-curr
Name Current Total Current Total Current Total Current Total
ent ent ent ent
assets assets liabilities liabilities assets assets liabilities liabilities
assets liability assets liability
139
Lu Thai Textile Co., Ltd. Semi-annual Report 2016
Xinjiang 384,509, 325,819, 710,329, 262,075, 5,284,04 267,359, 441,261, 327,696, 768,958, 323,538, 5,897,44 329,435,
Lu Thai 909.47 805.15 714.62 922.04 4.38 966.42 937.21 846.84 784.05 224.44 7.45 671.89
Lufeng
Weaving 478,825, 861,420, 1,340,24 116,518, 30,050,6 146,568, 497,062, 887,529, 1,384,59 195,671, 30,390,2 226,061,
& 787.74 951.19 6,738.93 077.74 99.80 777.54 573.74 106.38 1,680.12 138.17 55.70 393.87
Dyeing
Unit: RMB
Reporting Period Same period of last year
Total Total
Name Operation Operating cash Operation Operating cash
Net profit comprehensiv Net profit comprehensiv
revenue flow revenue flow
e income e income
Xinjiang
196,855,106.60 3,446,636.04 3,446,636.04 133,025,707.88 235,279,759.42 8,626,136.21 8,626,136.21 174,168,584.81
Lu Thai
Lufeng
Weaving & 716,210,253.15 35,147,675.14 35,147,675.14 12,610,567.38 677,791,081.36 8,154,036.52 8,154,036.52 -71,026,693.01
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. Market risk
(1) Foreign exchange risk
Foreign exchange risk is referred to the risk incurred due to loss of changes in exchange rate.
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, excepting the
140
Lu Thai Textile Co., Ltd. Semi-annual Report 2016
Company’s several subsidiaries purchase and sale, in USD, HKD and Dong, the other main
business settled by RMB. On 30 June 2016, 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 have impact to the
operation results of the Company.
Item Closing balance Opening balance
Cash and cash equivalents 171,161,976.12 359,365,961.61
Notes receivable 85,984,778.60 101,533,594.19
Account receivable 173,759,332.60 198,486,967.97
Other accounts receivable 932,085.37 21,499,240.95
Accounts payable 39,172,713.92 20,029,203.14
Other account payable 516,045.74 3,773,841.47
Short-term loans 868,119,117.17 572,766,318.90
Long-term borrowings 111,928,541.12
(2) Interest rate risk
The risk of cash flow changes of financial instruments due to change of interest rate mainly was
related bank loan (for details, see Section VII).
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 Reporting Period Last period
Influence to the Influence to equity of Influence to the Influence to equity of
profits shareholders profits shareholders
Increase 100 BP -4,750,027.46 -4,261,794.18 -2,482,939.38 -2,128,707.94
Decrease 100 BP 4,750,027.46 4,261,794.18 2,482,939.38 2,128,707.94
(3) Other price risk
The categories held by the Company are the investment of tradable financial assets measured by fair
value on assets liabilities date. Thus, the Company bares the risk of change in securities market.
2 Credit risk,
On 30 June 2016, 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.
3. Liquidity Risk
When managing liquidity risk, the Company maintained the management’s believe that supervising
141
Lu Thai Textile Co., Ltd. Semi-annual Report 2016
the sufficient cash and cash equivalents to meet the operating demand of the Company and reduce
the influence of the fluctuation of cash flow. The management of the Company supervises the usage
situation of the bank loan and ensures the loan agreement.
In the end of Reporting Period, the Company held cash and bank deposit of RMB578 million. In
recent two years, the average of net cash flow of operation activities was RMB1.070 billion. The
Company believed that the 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
Closing fair value
Item Fair value measurement Fair value measurement Fair value measurement
Total
items at level 1 items at level 2 items at level 3
I. Consistent fair value measurement -- -- -- --
(I) Financial assets calculated by fair
value and changes record into current 75,994,804.35 75,994,804.35
profits or losses
1. Trading financial assets 75,994,804.35 75,994,804.35
(2) Equity tool investment 75,994,804.35 75,994,804.35
Total assets of consistent fair value
75,994,804.35 75,994,804.35
measurement
(V)Transaction financial liabilities 9,735,700.00 9,735,700.00
Derivative financial liabilities 9,735,700.00 9,735,700.00
Total liabilities of consistent fair value
9,735,700.00 9,735,700.00
measurement
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 according to the closing price of stock on 30 June 2016 and 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
Name of parent Registration place Nature of business Registered capital Proportion of share Proportion of voting
142
Lu Thai Textile Co., Ltd. Semi-annual Report 2016
company held by parent rights owned by
company against the parent company
Company (%) against the Company
(%)
Textile, investment,
Lucheng Textile Zibo RMB63.26 million 14.69% 14.69%
etc.
The finial control of the Company was Mr. Liu Shizhen
2. Subsidiaries of the Company
See details to Notes IX. 1. Equity in subsidiary.
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
Zibo Chengshun Heating Co., Ltd. (hereinafter refer to as
Controlled subsidiary of the parent company
“Chengshun Heating” )
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)
4. List of related-party transactions
(1) Information on acquisition of goods and reception of labor service (unit: ten thousand Yuan)
Information on acquisition of goods and reception of labor service
Unit: RMB
The approval trade Whether exceed Same period of
Related party Content Reporting Period
credit trade credit or not last year
Towel, sock, oil product,
computer supplies, paper
Lucheng Textile 6,060,935.00 15,816,600.00 No 5,741,300.22
core, hose processing fees,
etc.
143
Lu Thai Textile Co., Ltd. Semi-annual Report 2016
Purchase of gift box for
Stanluian Company cosmetic, lotion, washing-up No 84,371.37
liquid, Liquid soap, etc.
Goods processing fee and
Taimei Ties 563,319.65 1,300,000.00 No 479,818.63
quilt cover processing fee
Limin Purified Sewage Treatment and reuse
8,920,188.77 26,806,000.00 No 4,856,374.44
Water water
Lurui Fine
Auxiliaries 39,845,988.16 100,000,000.00 No 33,961,091.09
Chemical
Information of sales of goods and provision of labor service
Unit: RMB
Same period of
Related party Content Reporting Period
last year
Sales of materials, electricity, running water, steam and
Lucheng Textile 148,646.03 103,229.76
LED lamp
Lucheng Textile Sales of greige yarn, dyed yarn, fabric and garments 511,769.75 376,771.28
Taimei Ties Sales of electricity, heating charges and garment 11,929.11 11,878.01
Sales of materials, electricity, garment , running water and
Stanluian Company 24,655.83 20,891.49
heating charges
Limin Purified Water Sales of materials, garment, and equipment 1,625.19 2,496.96
Sales of garments, equipment, LED lamp, and lunch
Lurui Fine Chemical 124,544.74 232,519.66
components
Sale of materials. heating water, heating power,
Chengshun Heating 3,376,447.92 2,401,125.83
electricity, tap water and garment
Lujia Property Selling materials and recycled water 22,832.10 48,070.08
(2) Information of related lease
The Company was lessor:
Unit: RMB
The lease income confirmed in The lease income confirmed in
Name of lessee Category of leased assets
this year last year
Lucheng Textile Houses and buildings 192,101.59 195,200.00
Lurui Fine Chemical Houses and buildings 681.97
The Company was lessee:
Unit: RMB
The lease income confirmed in
lessor Category of leased assets Category of leased assets
this year
144
Lu Thai Textile Co., Ltd. Semi-annual Report 2016
Lucheng Textile Rent of land 2,276,285.72 2,313,000.00
Lucheng Textile Rent of gas station 259,219.04 263,400.00
Lucheng Textile Rent of land and buildings 5,455,409.54 5,543,400.00
Luqun Property Rent of land and buildings 720,380.94 901,200.00
Lucheng Textile Rent of houses 343,066.66 348,600.00
5. Receivables and payables of related parties
(1) Payables
Unit: RMB
Name o f item Related party Closing book balance Opening book balance
Accounts payable Lucheng Textile 4,743.00 131,696.00
XIII. Commitments and contingency
1. Significant commitments
Significant commitments at balance sheet date
Item Closing balance (RMB’0,000) Opening balance (RMB’0,000)
Commitments signed but hasn’t been recognized in
financial statements
-- Commitment for constructing and purchasing long-term 25,087.31 5,524.91
assets
Total 25,087.31 5,524.91
2. Contingency
(1) Significant contingency at balance sheet date
As of 30 June 2016, there was no significant contingency to be disclosed.
(2) The Company have no significant contingency to disclose, also should be stated
There was no significant contingency in the Company.
145
Lu Thai Textile Co., Ltd. Semi-annual Report 2016
XIV. Notes of main items in the financial statements of the Company
1. Accounts receivable
(1)Accounts receivable disclosed by category
Unit: RMB
Closing balance Opening balance
Book balance Bad debt provision Book balance Bad debt provision
With
Category Withdr
draw
Proporti Book value Propor awal Book value
Amount Amount al Amount Amount
on tion propor
propo
tion
rtion
Accounts
receivable with
insignificant
single amount 80.65 37.90 60.31
116,536,107.70 29.80% 93,985,847.77 22,550,259.93 120,361,083.64 72,592,947.77 47,768,135.87
for which bad % % %
debt provision
separately
accrued
Accounts
receivable
withdrawal of
5.01 62.10
bad debt 274,470,635.58 70.20% 13,746,593.19 260,724,042.39 197,230,287.58 9,869,969.51 5.00% 187,360,318.07
% %
provision of by
credit risks
characteristics:
100.00 27.55 100.00 25.97
Total 391,006,743.28 107,732,440.96 283,274,302.32 317,591,371.22 82,462,917.28 235,128,453.94
% % % %
Accounts receivable with single significant amount and withdrawal bad debt provision separately at end of period
√ Applicable □ Not applicable
Unit: RMB
Closing balance
Accounts receivable
Withdrawal
(classified by units) Account receivable Bad debt provision Withdrawal reason
proportion
The subsidiary Beijing Innovative
Beijing Innovative 116,536,107.70 93,985,847.77 80.65%
was under canceling
Total 116,536,107.70 93,985,847.77 -- --
In the groups, accounts receivable adopting aging analysis method to withdraw bad debt provision:
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√ Applicable □ Not applicable
Unit: RMB
Closing balance
Aging
Account receivable Bad debt provision Withdrawal proportion
Subentry within 1 year
Within 1 year 274,218,193.58 13,710,909.68 5.00%
Subtotal within 1 year 274,218,193.58 13,710,909.68 5.00%
1 to 2 years 148,048.84 14,804.88 10.00%
2 to 3 years 104,393.16 20,878.63 20.00%
Total 274,470,635.58 13,746,593.19 5.01%
Notes:
In the groups, accounts receivable adopting balance percentage method to withdraw bad debt provision:
□ Applicable √ Not applicable
(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 RMB25, 269,523.68; the amount of the
reversed or collected part during the Reporting Period was of RMB0.00.
(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 RMB241, 944,740.19,
61.88% of total closing balance of account receivable, the relevant closing balance of bad debt provision withdrawn was
RMB100, 256,279.40.
2. Other accounts receivable
(1) Other accounts receivable disclosed by category
Unit: RMB
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
receivable withdrawn 98,747,6 6,038,22 92,709,43 36,565, 3,024,839 33,540,540.
100.00% 6.11% 100.00% 8.27%
bad debt provision 61.15 2.15 9.00 379.68 .14 54
according to credit
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risks characteristics
98,747,6 6,038,22 92,709,43 36,565, 3,024,839 33,540,540.
Total 100.00% 6.11% 100.00% 8.27%
61.15 2.15 9.00 379.68 .14 54
Other receivable with single significant amount and withdrawal bad debt provision separately at end of period：
□ Applicable √ Not applicable
In the groups, other accounts receivable adopting aging analysis method to withdraw bad debt provision:
√ Applicable □ Not applicable
Unit: RMB
Closing balance
Aging
Other accounts receivable Bad debt provision Withdrawal proportion
Subentry within 1 year
Within 1 year 93,411,348.20 4,670,567.41 5.00%
Subtotal within 1 year 93,411,348.20 4,670,567.41 5.00%
1 to 2 years 1,115,111.43 111,511.14 10.00%
2 to 3 years 102,168.58 20,433.72 20.00%
Over 3 years 4,119,032.94 1,235,709.88 30.00%
Total 98,747,661.15 6,038,222.15 6.11%
Notes:
In the groups, other accounts receivable adopting balance percentage method to withdraw bad debt provision:
□ Applicable √ Not applicable
In the groups, other accounts receivable adopting other methods to withdraw bad debt provision:
□ Applicable √ Not applicable
(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 RMB25,269,523.68; the amount of the
reversed or collected part during the Reporting Period was of RMB0.00.
(3) Other accounts receivable classified by the nature of accounts
Unit: RMB
Nature Closing book balance Opening book balance
Intercourse funds 80,016,233.59 4,175,136.88
Export rebates 16,073,852.13
Payment on behalf 12,418,016.20 11,217,554.27
The cash pledge and guarantee 2,772,955.34 2,427,649.51
Borrowings and deposit 1,249,240.21 757,574.35
Others 2,291,215.81 1,913,612.54
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Total 98,747,661.15 36,565,379.68
(4) Top 5 of the closing balance of the other accounts receivable collected according to the arrears party
Unit: RMB
Closing
Name of the entity Nature Closing balance Aging Proportion% balance of bad
debt provision
Lu Thai (Vietnam) Intercourse funds 52,895,780.56 Within 1 year 53.57% 2,644,789.03
Lu An Garment Intercourse funds 25,871,405.78 Within 1 year 26.20% 1,293,570.29
Accounts receivable
of advance money for Advance money for the
the social security social security undertake by
9,515,510.84 Within 1 year 9.63% 475,775.54
undertake by the the individual of the
individual of the employee
employee
Lu Thai (Cambodia) Intercourse funds 4,637,019.32 Within 1 year 4.70% 231,850.97
Deposits for wages
Deposits for wages paid to
paid to migrant
migrant workers of 1,458,593.50 Over 3 years 1.48% 437,578.05
workers of Zichuan
infrastructure works
District, Zibo city
Total -- 94,378,310.00 -- 95.58% 5,083,563.88
3. Long-term equity investment
Unit: RMB
Closing balance Opening balance
Item Depreciation Depreciation
Book balance Book value Book balance Book value
reserves reserves
Investment to the
1,723,809,000.04 25,200,000.00 1,698,609,000.04 1,613,379,740.04 35,675,000.00 1,577,704,740.04
subsidiary
Total 1,723,809,000.04 25,200,000.00 1,698,609,000.04 1,613,379,740.04 35,675,000.00 1,577,704,740.04
(1) Investment to the subsidiary
Unit: RMB
Withdrawn
Closing balance
impairment
Investee Opening balance Increase Decrease Closing balance of impairment
provision in the
provision
Reporting Period
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Beijing Innovative 25,200,000.00 25,200,000.00 25,200,000.00
Xinjiang Lu Thai 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
Lu Thai (Hong
128,771,800.00 128,771,800.00
Kong)
Lufeng Sunshine 15,000,000.00 15,000,000.00 -10,475,000.00
Shanghai Lu Thai 20,000,000.00 20,000,000.00
Lu
108,223,964.38 108,223,964.38
Thai(Cambodia)
Lu Thai(America) 6,774,300.00 6,774,300.00
Lu Thai(Burma) 62,327,753.57 62,327,753.57
Beijing Youxian 9,000,000.00 9,000,000.00
Lu Thai(Vietnam) 213,033,600.00 105,001,210.00 318,034,810.00
Lu An Garment 20,428,050.00 20,428,050.00
Total 1,613,379,740.04 125,429,260.00 15,000,000.00 1,723,809,000.04 -10,475,000.00 25,200,000.00
4. Revenue and Cost of Sales
Unit: RMB
Reporting Period Same period of last year
Item
Sales revenue Cost of sales Sales revenue Cost of sales
Main operations 2,225,300,186.31 1,571,303,646.81 2,271,611,588.70 1,695,745,675.96
Other operations 143,361,682.06 123,338,335.99 78,000,829.19 62,998,536.38
Total 2,368,661,868.37 1,694,641,982.80 2,349,612,417.89 1,758,744,212.34
5. Investment income
Unit: RMB
Item Reporting Period Same period of last year
Long-term equity investment income
37,003,529.30 17,976,429.21
accounted by cost method
Investment income received from disposal of
financial assets measured by fair value and -26,628,900.00 26,539,715.88
the changes be included in the current profits
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Lu Thai Textile Co., Ltd. Semi-annual Report 2016
and losses during holding period
Total 10,374,629.30 44,516,145.09
XV. Supplementary materials
1. Items and amounts of extraordinary gains and losses
√ Applicable □ Not applicable
Unit: RMB
Item Amount Explanation
Gains/losses on the disposal of non-current assets -5,183,811.95
Tax rebates, reductions or exemptions due to approval beyond authority or the lack of
14,112,224.13
official approval documents
Gain/loss from change of fair value of transactional assets and liabilities, and investment
gains from disposal of transactional financial assets and liabilities and available-for-sale -2,694,651.82
financial assets, other than valid hedging related to the Company’s common businesses
Other non-operating income and expenses other than the above 4,546,385.24
Less: Income tax effects -2,743,698.15
Minority interests effects 2,119,521.53
Total 11,404,322.22 --
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 √ Not applicable
2. Return on equity and earnings per share
Weighted average ROE EPS (Yuan/share)
Profit as of Reporting Period
(%) EPS-basic EPS-diluted
Net profit attributable to common shareholders of the
5.10% 0.37 0.37
Company
Net profit attributable to common shareholders of the
4.93% 0.35 0.35
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 □ Not applicable
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Unit: RMB
Net profit Net assets
Reporting Same period of
Closing balance Opening balance
Period last year
Chinese accounting standards 344,641,184.73 344,521,516.72 6,508,090,698.05 6,837,113,075.58
Items and amounts adjusted in accordance with international accounting standards
Impact on domestic equipments tax credit recognized as
362,500.00 612,500.00 -691,500.00 -1,054,000.00
deferred income under international accounting standards
International accounting standards 345,003,684.73 345,134,016.72 6,507,399,198.05 6,836,059,075.58
(2) Differences of net profit and net assets disclosed in financial reports prepared under overseas and
Chinese accounting standards
□ Applicable √ Not applicable
(3) 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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Lu Thai Textile Co., Ltd. Semi-annual Report 2016
Section X Documents Available for Reference
I. Accounting statements signed by legal representative, responsible person in charge of accounting work and
responsible person of accounting department;
II. The original of Auditors’ Report carried with the seal of the accounting firm, as well as the personal signatures
of certified public accountants.
III. 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 Zibin
Lu Thai Textile Co., Ltd.
31 August 2016
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