Lu Thai Textile Co., Ltd. Semi-Annual Report 2017
LU THAI TEXTILE CO., LTD.
SEMI-ANNUAL REPORT 2017
August 2017
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Lu Thai Textile Co., Ltd. Semi-Annual Report 2017
Section I Important Statements, Contents and Definitions
The board of directors (the “Board”), the supervisory board (the “Supervisory Board”) 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
this Report, and shall be jointly and severally liable for any false representation, misleading
statements or material omissions in this Report.
Liu Zibin, head of the Company, Zhang Hongmei, accounting head for this Report, and
Zhang Keming, head of the accounting department (head of accounting), hereby guarantee
that the Financial Report carried in this Report is factual, accurate and complete.
Except for the following directors, all the other directors attended in person the board
meeting for the review of this Report.
Reason for not attending in
Name Office title Proxy
person
Bi Xiuli Independent Director For reason of work Xu Jianjun
The Company has described in detail in this Report the possible risks. Please refer to the
contents under “Risks Facing the Company and Countermeasures” under “Section IV
Performance Discussion and Analysis” of this Report. Securities Times, Shanghai Securities
News, China Securities Journal, Ta Kung Pao (HK) and www.cninfo.com.cn have been
designated by the Company for its information disclosure in 2017. And all information about
the Company shall be subject to what’s disclosed on the aforesaid media. Investors are kindly
reminded to pay attention to investment risks.
The Company plans not to distribute cash dividends or bonus shares or convert capital
reserve into share capital.
This 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 2017
Table of Contents
Semi-Annual Report 2017 ................................................................................................................. 1
Section I Important Statements, Contents and Definitions............................................................ 2
Section II Corporate Profile and Key Operating Results .............................................................. 5
Section III Business Profile ............................................................................................................... 9
Section IV Performance Discussion and Analysis ......................................................................... 12
Section V Significant Events ........................................................................................................... 22
Section VI Share Changes and Shareholders’ Profile .................................................................. 31
Section VII Preference Shares ........................................................................................................ 35
Section VIII Directors, Supervisors and Senior Management .................................................... 35
Section IX Corporate Bonds ........................................................................................................... 38
Section X Financial Report ............................................................................................................. 38
Section XI Documents Available for Reference .......................................................................... 151
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Lu Thai Textile Co., Ltd. Semi-Annual Report 2017
Definitions
Term Definition
Issuer, Company Lu Thai Textile Co., Ltd.
Board, Board of Directors The Board of Directors of Lu Thai Textile Co., Ltd.
Supervisory Board The Supervisory Board of Lu Thai Textile Co., Ltd.
CSRC The China Securities Regulatory Commission
RMB, RMB’0,000 RMB yuan, RMB ten thousand yuan
Company Law The Company Law of the People‘s Republic of China
Securities Law The Securities Law of the People‘s Republic of China
Reporting Period January 1, 2017-June 30, 2017
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Lu Thai Textile Co., Ltd. Semi-Annual Report 2017
Section II Corporate Profile and Key Operating Results
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 any) LU THAI TEXTILE CO., LTD
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
Indicate by tick mark whether any changes 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
No changes occurred to the said information during the Reporting Period, which can be found in the 2016 Annual Report.
2. Information Disclosure Media and Place where this Report is Kept
Indicate by tick mark whether any changes occurred to the information disclosure media and the place where this Report was kept
during the Reporting Period.
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Lu Thai Textile Co., Ltd. Semi-Annual Report 2017
□ Applicable √ Not applicable
The newspapers designated by the Company for information disclosure, the website designated by the CSRC for disclosing this
Report and the location where this Report was placed did not change during the Reporting Period. The said information can be found
in the 2016 Annual Report.
IV Key Consolidated Operating Results
Indicate by tick mark whether the Company needs to retroactively restate any of its accounting data.
□ Yes √ No
Same period of last
Reporting Period +/- (%)
year
Operating revenue (RMB) 2,990,459,696.43 2,831,326,773.03 5.62%
Net profit attributable to shareholders of the Company (RMB) 393,069,981.55 344,641,184.73 14.05%
Net profit attributable to shareholders of the Company before
385,081,158.45 333,236,862.51 15.56%
exceptional gains and losses (RMB)
Net cash from operating activities (RMB) 342,919,758.30 563,407,347.43 -39.13%
Basic earnings per share (RMB/share) 0.43 0.37 16.22%
Diluted earnings per share (RMB/share) 0.43 0.37 16.22%
Weighted average return on equity (%) 5.58% 5.10% 0.48%
End of Reporting
End of last year +/- (%)
Period
Total assets (RMB) 9,550,163,874.63 9,407,103,263.34 1.52%
Net assets attributable to shareholders of the Company
6,855,012,927.33 6,937,985,729.19 -1.20%
(RMB)
V Differences in Accounting Data under Chinese and Foreign Accounting Standards
1. Differences in Net Profit and Net Assets Disclosed in 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
Same period of last
Reporting Period Closing amount Opening amount
year
According to Chinese accounting
393,069,981.55 344,641,184.73 6,855,012,927.33 6,937,985,729.19
standards
Items and amounts adjusted according to international accounting standards
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Lu Thai Textile Co., Ltd. Semi-Annual Report 2017
Impact on domestic equipments
tax credit recognized as deferred
164,500.00 362,500.00 -164,500.00 -329,000.00
income under international
accounting standards
According to international
393,234,481.55 345,003,684.73 6,854,848,427.33 6,937,656,729.19
accounting standards
2. Differences in Net Profit and Net Assets Disclosed in Financial Reports Prepared under Chinese and Foreign
Accounting Standards
□ Applicable √ Not applicable
No such differences for the Reporting Period.
3. Reasons for Accounting Data Differences under Chinese 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.
VI Exceptional Gains/Losses
√ Applicable □ Not applicable
Unit: RMB
Item Reporting Period Note
Gains/losses on disposal of non-current assets (including offset asset impairment provisions) -1,972,237.14
Governmental subsidies charged to gains/losses for Reporting Period (except for government
grants closely related to the Company’s normal business operations and constantly given at 10,710,637.29
fixed quotas or amounts as per government’s uniform standards)
Gains/losses on fair value changes of financial assets and liabilities held for trading &
investment income from disposal of financial assets and liabilities held for trading as well as
2,496,235.34
financial assets available for sale, except for effective hedges related to normal business
operations of the Company
Non-operating income and expense other than above 367,172.52
Less: Income tax effects 1,643,262.69
Minority interests effects (after tax) 1,969,722.22
Total 7,988,823.10 --
Explanation of why the Company classified an item as an exceptional gain/loss according to the definition in the Explanatory
Announcement No. 1 on Information Disclosure for Companies Offering Their Securities to the Public—Exceptional Gains and
Losses, or reclassified any exceptional gain/loss item given as an example in the said explanatory announcement as a recurrent
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Lu Thai Textile Co., Ltd. Semi-Annual Report 2017
gain/loss:
□ Applicable √ Not applicable
No such cases in the Reporting Period.
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Lu Thai Textile Co., Ltd. Semi-Annual Report 2017
Section III Business Profile
I Main Business Scope for Reporting Period
Is the Company subject to any disclosure requirements for special industries?
No.
No changes occurred to the Company’s main business, primary products, business models and major growth drivers in the Reporting
Period.
Lu Thai, unremittingly taking “creating wealth, contributing to the society, clothing the country and boosting the development of the
world” as its mission, has been practicing the value of “people foremost policy, rigorous scientific attitude, client oriented principle
and integrity for win-win outcome” for a long time. It is devoted to improving and expanding its industrial chain, making it a
renowned textile and garment business group combing cotton breeding, spinning, bleaching and dyeing, neatening, testing, garment
making and marketing. Lu Thai produces and sells middle and high-grade yarn-dyed fabric and dyeing fabric for shirts and garment.
It claimed its fame for its comprehensive management, R&D ability, advanced technology, international development plan and stable
quality. Moreover, it also attaches great importance to improve the added value of its products, explore the emerging market and
renew its service philosophy. With natural fabric as its flagship, multi-component functional fiber fabric as its spearhead and
wash-and-wear non-ironing technology as its core competency, the Company kept a watchful eye on the latest consumption trend.
Great attention was paid to improve its healthy product series so as to satisfy the needs from the diversified and personalized market.
Lu Thai has already become the largest world renowned manufacturer for high-grade yarn dyed fabric and premium-brand shirts. It
had paved its development pattern featured in going green, low-carbon growth, science and technology and humanism. Its operation
performance was always among the top comparing to its peers. 80% of Lu Thai’s products were exported over 30 countries and
regions in the world, including America, EU and Japan. The export percentage for high-grade yarn dyed fabric--a self-owned brand
attained 70% of its export volume, accounting for 18% of the world’s export market share.
II Significant Changes in Main Assets
1. Significant Changes in Main Assets
Main assets Reason for significant change in Reporting Period
RMB480,808,661.11 as of end of June 2017, up 25.13% compared to opening amount,
Intangible assets mainly resulted by land use right obtained by Xinjiang Lu Thai Good Yield Cotton Co.,
Ltd. in Reporting Period
RMB265,987,434.60 as of end of June 2017, up 71.97% compared to opening amount,
Construction in progress mainly resulted by ongoing expansion project of Xinsheng Thermal Power and
100,000-ingot textile production line project of Xinjiang Lu Thai
2. Main Assets Overseas
√ Applicable □ Not applicable
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Lu Thai Textile Co., Ltd. Semi-Annual Report 2017
Control measures In the Major
Form Locati Operating
Asset Asset size to ensure asset Earnings Company’s net impairment
ation on model
safety assets (%) risk
Lu Thai
Incor Main management
(Hong Kong) Hong
porat 153,914,096.74 Marketing personnel sent by 2,502,238.10 2.10% No
Textile Co., Kong
ed the Company
Ltd.
Lu Thai
Incor Main management
(America) New
porat 8,395,776.90 Marketing personnel sent by -448,975.67 0.11% No
Textile Co., York
ed the Company
Ltd.
Lu Thai
Incor Main management
(Cambodia) Svay
porat 157,845,437.42 OEM personnel sent by 406,034.36 2.15% No
Textile Co., Rieng
ed the Company
Ltd.
Lu Thai
Incor Main management
(Burma) Rango
porat 83,812,290.82 OEM personnel sent by -1,434,234.30 1.14% No
Textile Co., on
ed the Company
Ltd.
Lu Thai
Incor Main management
(Vietnam) Tay
porat 891,304,423.58 OEM personnel sent by -23,827,131.34 12.15% No
Textile Co., Ninh
ed the Company
Ltd.
Anjian
Lu An Incor Main management
g,
Garments porat 132,327,346.21 OEM personnel sent by -7,932,509.72 1.80% No
Vietna
Co., Ltd. ed the Company
m
III Core Competitiveness Analysis
Is the Company subject to any disclosure requirements for special industries?
No.
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
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Lu Thai Textile Co., Ltd. Semi-Annual Report 2017
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-in draught 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 up gradation.
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
in the customer’s perspective was the Company’s service rule, which also helped to win the customers’ trust.
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Lu Thai Textile Co., Ltd. Semi-Annual Report 2017
Section IV Performance Discussion and Analysis
I Summary
For the Reporting Period, the Company achieved, on a consolidated basis, operating revenue of RMB2.99 billion,
an operating profit of RMB490 million, a net profit attributable to the shareholders of the Company (as the parent
company) of RMB393 million and a net profit of RMB385 million before exceptional gains and losses, up 5.62%,
17.03%, 14.05% and 15.56% respectively from the same period of last year. No changes have occurred to the
main business, the main profit sources and structure of the Company in this period.
During the Reporting Period, the Company continued in promoting international production capacity layout,
steadily promoted activities of "improve quality and enhance efficiency" and "market service deepening year",
and maintained the healthy, stable and sustainable development trend of the Company. During the Reporting
Period, the Company's overseas projects run smoothly and basically achieved plan expectations. During the
Reporting Period, the Company actively optimized product structure, focused on development of new products
and customized products, and promoted new products based on different market characteristics. In particular, we
conducted customized R & D services for more than 40 products to meet customer needs and market trend. In the
report period, the Company was appraised as "National Yarn-Dyed Fabric Trend Research Center" by China
Textile Information Center (CTIC) and China Textiles Development Center (CTDC), and appraised as "Top
Twenty Enterprises of China's Dyeing and Printing Industry" by China Dyeing and Printing Association.
During the Reporting Period, the Company and its subsidiaries strictly implemented the "Three Simultaneous"
management system for environmental protection project of construction projects. Supported with perfect waste
gas and water treatment facilities, the management system maintained good synchronous operation with main
production facilities. In April 2017, the Company was appraised as “Industry Leader in the Fourth Sessions of
Low Carbon Shandong” by nine units such as Shandong Economic and Information Technology Committee etc.
The Company's subsidiary Beijing Lu Thai Youxian E-Commerce Co., Ltd. provides high-quality tailor-made
services to consumers, and constantly broadens customer range to extend the Company's clothing brand
promotions.
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
Summary:
For the Reporting Period, operating revenues, operating costs and finance costs increased 5.62%, 5.81% and 54.94% respectively on
a year-on-year basis; and selling expenses, administrative expenses and the corporate income tax went down 22.93%, 8.57% and
12.14% respectively from a year earlier. Finance costs increased 54.94% mainly due to the increased interest cost. Selling expenses
decreased 22.93% mainly because of the decreased shopping mall cost. Net cash from operating activities went down 39.13% mainly
due to the increase in the cash paid for cotton. Net cash from investing activities climbed 54.46% mainly because of the decrease in
the cash paid by Lu Thai Vietnam to acquire fixed assets. Net cash from financing activities were up 40.35% mainly because B-share
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Lu Thai Textile Co., Ltd. Semi-Annual Report 2017
repurchase decreased 100%. And net increase in cash and cash equivalents went up 71.32% mainly owing to the 54.46% increase in
the net cash from investing activities.
Year-on-year changes of key consolidated financial data:
Unit: RMB
Reporting Period Same period of last year +/-% Main reason for change
Operating revenue 2,990,459,696.43 2,831,326,773.03 5.62%
Operating costs 2,049,939,214.63 1,937,399,591.08 5.81%
Selling expense 68,365,512.22 88,709,663.50 -22.93%
Administrative expense 312,470,311.94 341,771,955.16 -8.57%
Finance costs 30,695,300.54 19,810,742.68 54.94% Increased interest cost
Income taxes 78,649,409.64 89,518,494.52 -12.14%
R&D expense 158,802,502.01 161,055,249.75 -1.40%
Net cash from operating
342,919,758.30 563,407,347.43 -39.13% Increase in cash paid for cotton
activities
Decrease in cash paid by Lu
Net cash from investing
-216,949,013.37 -476,416,586.86 54.46% Thai Vietnam to acquire fixed
activities
assets
Net cash from financing B-share repurchase decreased
-165,683,765.09 -277,760,450.21 40.35%
activities 100%
Net increase in cash and
-53,780,039.58 -187,529,531.30 71.32%
cash equivalents
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.
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
2,763,490,806.33 1,854,462,799.59 32.89% 3.68% 2.15% 1.00%
Apparel
Cotton 33,168,770.44 30,395,114.73 8.36% 1,176.61% 998.40% 14.86%
Electricity and
60,879,574.69 67,726,961.79 -11.25% -9.07% 29.07% -32.87%
steam
Others 19,815,324.44 15,096,832.52 23.81% 19.50% 14.13% 3.59%
By product
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Lu Thai Textile Co., Ltd. Semi-Annual Report 2017
Fabric products 2,142,582,009.63 1,423,793,915.67 33.55% 2.54% 0.79% 1.16%
Shirts 620,908,796.70 430,668,883.92 30.64% 7.82% 6.93% 0.58%
Cotton 33,168,770.44 30,395,114.73 8.36% 1,176.61% 998.40% 14.86%
Electricity and
60,879,574.69 67,726,961.79 -11.25% -9.07% 29.07% -32.87%
steam
Others 19,815,324.44 15,096,832.52 23.81% 19.50% 14.13% 3.59%
By geographic segment
Hong Kong 201,561,597.38 134,341,862.49 33.35% 8.14% 6.43% 1.07%
Japan And South
226,731,715.80 153,925,489.60 32.11% 12.77% 11.46% 0.80%
Korea
Southeast Asia 606,652,356.60 403,472,128.01 33.49% -9.64% -11.13% 1.12%
Europe and
584,286,631.25 398,187,026.74 31.85% 32.51% 30.81% 0.88%
America
Others 339,548,028.33 227,028,606.59 33.14% -15.75% -16.89% 0.92%
Mainland China 918,574,146.54 650,726,595.20 29.16% 8.24% 10.69% -1.57%
III Non-Core Business Analysis
√ Applicable □ Not applicable
Unit: RMB
Amount In total profits (%) Source/reason Continuity
Gains on delivery of financial assets such
Investment gains 1,825,335.34 0.37% No
as forward exchange settlement
Gains/losses on fair Losses on fair value changes of financial
1,110,700.00 0.23% No
value changes assets
Inventory falling price provision,
Asset impairment 985,974.64 0.20% No
bad-debt provision
Non-business
4,444,757.98 0.91% Claim and governmental subsidies No
revenue
Non-business
5,919,822.60 1.21% Losses on disposal of non-current assets No
expense
IV Analysis of Assets and Liabilities
1. Significant Changes in Asset Composition
Unit: RMB
End of Reporting Period End of same period of last year Amount As a percentage
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Lu Thai Textile Co., Ltd. Semi-Annual Report 2017
As a percentage of As a percentage of of total assets
Amount Amount
total assets (%) total assets (%) (%)
Monetary funds 601,260,394.17 6.30% 578,366,000.68 6.41% -0.11%
Accounts
284,403,883.10 2.98% 231,418,989.53 2.57% 0.41%
receivable
Inventories 2,062,112,380.15 21.59% 1,791,392,840.17 19.86% 1.73%
Investing real
25,220,354.21 0.26% 0.00 0.00% 0.26%
estate
Long-term equity
0.00% 0.00%
investment
Fixed assets 5,131,175,806.66 53.73% 4,878,964,551.16 54.08% -0.35%
Construction in
265,987,434.60 2.79% 306,480,915.93 3.40% -0.61%
progress
Short-term
1,170,346,491.12 12.25% 1,068,119,117.17 11.84% 0.41%
borrowings
Long-term
111,928,541.12 1.24% -1.24%
borrowings
2. Assets and Liabilities Measured at Fair Value
√ Applicable □ Not applicable
Unit: RMB
Impairmen
Cumulative fair
Gain/loss on fair t Purchased
Opening value changes Sold amount in Closing
Item value changes in provisions amount in
amount recorded into current period amount
current period in current current period
equity
period
Financial assets
1. Financial assets
measured at fair value
of which changes are
recorded into current 1,110,700.00 1,110,700.00
gains/losses
(excluding derivative
financial assets)
Total of above 0.00 1,110,700.00 1,110,700.00
Financial liabilities 0.00 0.00
Significant changes in the measurement attributes of the main assets in the Reporting Period
□ Yes √ No
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Lu Thai Textile Co., Ltd. Semi-Annual Report 2017
3. Restricted Asset Rights as of End of Reporting Period
Not applicable
V Investments Made
1. Total Investments Made
□ Applicable √ Not applicable
2. Significant Equity Investments Made in the Reporting Period
□ Applicable √ Not applicable
3. Significant Non-Equity Investments Ongoing in the Reporting Period
□ Applicable √ Not applicable
4. Financial Investments
(1) Securities Investments
□ Applicable √ Not applicable
No such cases in the Reporting Period.
(2) Investments in Derivative Financial Instruments
√ Applicable □ Not applicable
Unit: RMB'0,000
Proportion
Ope
Relate of closing
Type of ning Amount Impairm Actual
d-part Initial Amount investment
derivativ inve purchased ent Closing gain/loss
Relati y investme Beginning Ending sold in amount in
Operator e stme in provisio investment in
on transac nt date date Reporting the
investme nt Reporting n (if amount Reportin
tion or amount Period Company’s
nt amo Period any) g Period
not closing net
unt
assets (%)
Forward
exchang
Commerci Non-re 01/19/201 09/29/201
No e 0 0 84,430.51 70,068.05 14,362.46 1.96% 130.3
al bank lated 7 7
settleme
nt
Commerci Non-re No Foreign 0 01/03/201 09/05/201 0 27,487.71 18,387.71 9,100 1.24% 11.2
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Lu Thai Textile Co., Ltd. Semi-Annual Report 2017
al bank lated exchang 7 7
e option
Forward
exchang
Commerci Non-re 05/22/201 06/05/201
No e 0 0 8,267.54 8,267.54 0 -7.71
al bank lated 7 7
transacti
ons
Foreign
Commerci Non-re 06/20/201 06/30/201
No exchang 0 0 12,871.36 12,871.36 0 4.76
al bank lated 7 7
e swap
Total 0 -- -- 0 133,057.12 109,594.66 0 23,462.46 3.20% 138.55
Capital source for derivative
Own funds
investment
Lawsuit (if applicable) Naught
Disclosure date of board of directors
announcement on approval of 05/19/2016
derivative investment (if any)
Disclosure date of general meeting
of shareholders announcement on
approval of 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
Analysis on risks and control well as regulatory policies from government securities regulatory authorities, if there were no standard
measures of derivative products operation procedures and strict approval procedures, it was easy to cause compliant and regulatory risks
held in the Reporting Period existing in the validity and feasibility of contract, commitments and other legal documents signed.
(including but not limited to market Risk control measures: The Company carefully studied and mastered laws, regulations and policies relevant
risk, liquidity risk, credit risk, to derivative products transaction, formulated internal control rules for the forward settlement hedging
operation risk, law risk, etc.) business, standardized the operation procedures. And strengthened the compliant examination on derivative
products investment business, and strictly abided by relevant laws, regulations and the Company’s internal
management rules.
2. Credit risk and liquidity risk:
When the contract matures, the Company couldn’t deliver as scheduled due to insufficient liquidity, and the
counterparty or the Company couldn’t fulfill the contract due to other aspects except the liquidity, which
would cause credit risk and further economic losses for the Company.
Risk control measures: the Company chose the powerful financial institutions with good reputation as the
17
Lu Thai Textile Co., Ltd. Semi-Annual Report 2017
counterparty, and signed standard derivative products transaction contract, as well as strictly controlled the
credit risk of counterparty. The Company conducted derivative investment transactions according to the
relevant approval procedure, which was in line with relevant laws, regulations, the Company’s Articles of
Association, the Management Rules for Derivative Investment of Lu Thai Textile Co., Ltd. and the Proposal
on the Plan of Lu Thai Textile Co., Ltd. for Derivative Transactions in 2016 approved at the 33h Session of
the 7th Board of Directors on May 17, 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 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 two years of "811 exchange rate reform", the central parity of RMB against US dollar
gradually formed the current price mechanism of "closing price + overnight basket of currency changes +
reverse cycle adjustment factor". The central parity has played a very good role in Price guideline, and the
effect of exchange rate reform is remarkable. In the short term, China's economy has gradually stabilized and
maintained high-speed growth. The internationalization of RMB is steadily advancing. Therefore, the RMB
exchange rate has neither the basis for devaluation nor the need for devaluation. In the long run, the dollar
index, customer trading behavior and market makers expectations are still key factors determining the future
of RMB exchange rate. In the future, the RMB exchange rate elasticity will increase, and the two-way
fluctuation will be obvious. Forward settlement and option business, which are greatly affected by exchange
rate fluctuations, are important derivatives transactions of 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.
Changes of market prices or fair 1. As of June 30, 2017, the Company holds 12 outstanding financial derivatives contracts, with a total of
values in the Reporting Period of USD 36 million , of which 7 forward settlement contracts in a total of USD 21 million , and 5 foreign
the invested derivatives. And the exchange options contracts in a total of USD15 million. The latest contract period expires in September
analysis on the fair value of the 2017. Financial derivatives account for 3.20% of net assets at the end of the reporting period. 2. From
derivatives should include the January to June of 2017, the amount of maturity of the Company's financial derivatives is equivalent to USD
specific use methods and the 160,204,100, with proceeds of RMB1,385,500, of which the long-term settlements amount to USD 102
relevant assumptions and million, with proceeds of RMB1,303,000; while foreign currency options amount to USD 27 million, with
parameters. proceeds of RMB112,000 after execution of contracts; mature foreign exchange transactions are equivalent
18
Lu Thai Textile Co., Ltd. Semi-Annual Report 2017
to USD 12,204,100, with a loss of RMB77,100; foreign exchange swaps amount to USD 19 million, with
proceeds of RMB 47,600.
Whether significant changes
occurred to the Company’s
accounting policy and specific
No significant changes
accounting 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
Specific opinion from independent opinion that it will strengthen the Company’s competitiveness to use derivative transactions with focus on
directors on the Company’s forward settlement and purchase as an effective tool to avoid foreign exchange risks, to strengthen the
derivatives investment and risk relevant internal control and to carry out the loss and risk prevention measures so as to improve the operation
control and management. In conducting 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.
VI Sale of Major Assets and Equity Interests
1. Sale of Major Assets
□ Applicable √ Not applicable
No such cases in the Reporting Period.
2. Sale of Major Equity Interests
□ Applicable √ Not applicable
VII Main Controlled and Joint Stock Companies
√ Applicable □ Not applicable
Main subsidiaries and joint stock companies with an over 10% influence on the Company’s net profit
Unit: RMB
Relation
ship Main
Company business Industry Registered Operating Operating
with the Total assets Net assets Net profit
name scope capital revenues profit
Compan
y
Lufeng
Weaving & Subsidia Manufactu
Fabric 706,160,000.00 1,516,012,625.72 1,362,338,293.86 791,134,076.11 77,000,380.23 66,827,430.66
Dyeing Co., ry ring
Ltd.
19
Lu Thai Textile Co., Ltd. Semi-Annual Report 2017
Subsidiaries obtained or disposed in the Reporting Period
□ Applicable √ Not applicable
Particulars about the main controlled and joint stock companies:
Lufeng Weaving & Dyeing Co., Ltd. (hereinafter called “Lufeng Weaving & Dyeing”) is the holding subsidiary corporation of the
Company. Registration place: Zibo, Shandong; registered capital: RMB 706.160 million. It was authenticated to be high-tech
enterprise in October 2014, mainly manufacturing and selling textile printing and dyeing products and the products of clothing and
garments. Its export income accounted for more than 75%. During the Reporting Period, owning to the influence of various factors,
such as the continuous improvement of yield and quality and devaluation and RMB, operation revenue of Lufeng Weaving & Dyeing
was RMB 0.791 billion in January to June of 2017, increasing 10.46% compared with last year. Net profit of RMB 66.827,400
million was achieved, increasing 90.13% compared with last year.
VIII Structured Bodies Controlled by the Company
□ Applicable √ Not applicable
IX Performance Forecast for January-September 2017
Warning of possible loss or considerable YoY change in the accumulative net profit made during the period-beginning to the end of
the next reporting period, as well as the reasons:
□ Applicable √ Not applicable
X Risks Facing the Company and Countermeasures
(1) Economic environment impact: Compact of persistence of slow resurging of developed economic entity market and domestic
industrial structure deep adjustment on the whole consumption market may possibly cause uncertain for market environment of the
Company, and that may possibly influence on increase of oversees sales. The Company will try the best to stabilize the domestic and
international market and actively expand domestic market at the same time, to achieve a balanced development between domestic
and foreign sales.
(2) As the cost for production elements in China increases day by day, and the processing trade for textile garment especially garment
processing has been transferred to countries in southeastern Asia, it seems to be a must for top textile enterprise to go abroad. The
Company will, based on its comprehensive research on production elements, promote the comprehensive utilization of internationally
advantageous resources to create a reasonable layout for processing bases.
(3) The Company mainly uses long-staple cotton as its raw materials, whose price may be affected by market supply-demand,
climate, policy, exchange rate and quota. When the government’s cotton quota policy stayed unchanged, the cotton cost will be
mainly affected by domestic market. Therefore, except ensuring stable supply of long-staple cotton from Xinjiang subsidiary, the
Company must carefully study on market developments, and make every effort to reduce the influences of raw material price
fluctuation on its business performance, through actively effective manners and methods.
(4) Change of exchange rate: at present and in the future for a long time, products of the Company are mainly exported to the
international market, and sales income is mainly settled with USD; meanwhile, major equipment used in the Company was imported,
part of the foreign exchange paid for import was not USD. And the overseas production bases of the Company make it more sensitive
to exchange rate changes.
In the short term, on the one hand, the RMB exchange rate will remain basically stable due to overall stability of the Chinese
20
Lu Thai Textile Co., Ltd. Semi-Annual Report 2017
economy, weaken impact of Federal Reserve interest rate hike, the introduction of counter-cyclical factors to reduce the irrational
fluctuations in foreign exchange market, continuous rise of foreign exchange reserves and eased pressure of capital outflow etc. On
the other hand, taking into account the specific plan of "shrinking the balance sheet" announced by Federal Reserve, whose pace of
normalization of monetary policy may accelerate, US dollar may be thus promoted stronger. In addition, the euro area, Japan and
other major economies are likely to gradually return to normalized monetary policy under the good momentum of global economic
recovery, and international funds flowing into emerging capital markets will be reduced. Therefore, RMB is still facing a certain
devaluation pressure.
In order to reduce adverse influence of exchange rate fluctuation, the Company adopted the following measures: firstly, the Company
proactively conducted foreign exchange hedging, using forward FX sales and purchase, forward foreign exchange trading and option
portfolios to avoid some risks. Secondly, the Company made reasonable arrangement on settlement day and currency structure and
conclusion of agreements on fixed foreign exchange rate to avoid exchange rate-related risks. Thirdly, the Company actively adjusted
the Renminbi and foreign-currency liabilities structure to control financial costs. Fourthly, according to the fluctuation trend of
exchange rates, the Company properly adjusted imports of raw and auxiliary materials to partially offset the influence of exchange
rate fluctuations on the Company.
21
Lu Thai Textile Co., Ltd. Semi-Annual Report 2017
Section V Significant Events
I Annual and Special Meetings of Shareholders Convened during the Reporting Period
1. Meetings of Shareholders Convened during the Reporting Period
Investor
Meeting Type participation Convened date Disclosure date Index to disclosed information
ratio
Notice of Resolution (No.:
2016 Annual 2017-023) published on Securities
Annual Meeting
Meeting of 0.00% 05/12/2017 05/13/2017 Times , Hong Kong Ta Kung Pao
of Shareholders
Shareholders and http://www.cninfo.co on May
13, 2017
Notice of Resolution (No.:
The First Special 2017-010) published on Securities
Special Meeting
Meeting of 0.11% 03/21/2017 03/22/2017 Times , Hong Kong Ta Kung Pao
of Shareholders
Shareholders in 2017 and http://www.cninfo.co on March
22, 2017
2. Special Meetings of Shareholders Convened at Request of Preference Shareholders with Resumed Voting
Rights
□ Applicable √ Not applicable
II Proposal for Profit Distribution and Converting Capital Reserve into Share Capital for the
Reporting Period
□ Applicable √ Not applicable
For the Reporting Period, the Company plans not to distribute cash dividends or bonus shares or convert capital reserve into share
capital.
III Commitments of the Company’s Actual Controller, Shareholders, Related Parties and
Acquirer, as well as the Company and Other Commitment Makers, Fulfilled in the Reporting
Period or still Ongoing at Period-End
□ Applicable √ Not applicable
No such cases in the Reporting Period.
22
Lu Thai Textile Co., Ltd. Semi-Annual Report 2017
IV Engagement and Disengagement of CPAs Firm
Has the semi-annual financial report been audited?
□Yes √ No
This Semi-Annual Report is unaudited.
V Explanations Given by Board of Directors and Supervisory Board Regarding “Modified
Auditor’s Report” Issued by CPAs Firm for the Reporting Period
□ Applicable √ Not applicable
VI Explanations Given by Board of Directors Regarding “Modified Auditor’s Report” Issued
for Last Year
□ Applicable √ Not applicable
VII Bankruptcy and Restructuring
□ Applicable √ Not applicable
No such cases in the Reporting Period.
VIII Legal Matters
Significant lawsuits or arbitrations:
□ Applicable √ Not applicable
No such cases in the Reporting Period.
Other legal matters:
□ Applicable √ Not applicable
IX Punishments and Rectifications
□ Applicable √ Not applicable
No such cases in the Reporting Period.
X Credit Conditions of the Company as well as its Controlling Shareholder and Actual
Controller
□ Applicable √ Not applicable
XI Equity Incentive Plans, Employee Stock Ownership Plans or Other Incentive Measures for
Employees
□ Applicable √ Not applicable
23
Lu Thai Textile Co., Ltd. Semi-Annual Report 2017
No such cases in the Reporting Period.
XII Significant Related Transactions
1. Related Transactions Relevant to Routine Operations
□ Applicable √ Not applicable
No such cases in the Reporting Period.
2. Related Transactions Regarding Purchase or Sales of Assets or Equity Interests
□ Applicable √ Not applicable
No such cases in the Reporting Period.
3. Related Transactions Regarding Joint Investments in Third Parties
□ Applicable √ Not applicable
No such cases in the Reporting Period.
4. Credits and Liabilities with Related Parties
□ Applicable √ Not applicable
No such cases in the Reporting Period.
5. Other Significant Related Transactions
□ Applicable √ Not applicable
No such cases in the Reporting Period.
XIII. 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
during the Reporting Period.
XIV. Significant Contracts and Execution
1. Entrustment, Contracting and Leasing
(1) Entrustment
□ Applicable √ Not applicable
24
Lu Thai Textile Co., Ltd. Semi-Annual Report 2017
No such cases in the Reporting Period.
(2) Contracting
□ Applicable √ Not applicable
No such cases in the Reporting Period.
(3) Leasing
□ Applicable √ Not applicable
No such cases in the Reporting Period.
2. Significant Guarantees
√ Applicable □ Not applicable
(1) Guarantees
Unit: RMB'0,000
Guarantees provided by the Company for external parties (excluding those for subsidiaries)
Disclosure Guarante
Actual
date of Actual e for a
Amount for occurrence date Type of Period of Executed
Guaranteed party relevant guarantee related
guarantee (date of guarantee guarantee or not
announcem amount party or
agreement)
ent not
Guarantees provided by the Company for its subsidiaries
Guarante
Actual
Disclosure date of Amount Actual e for a
occurrence date Type of Period of Execute
Guaranteed party relevant for guarantee related
(date of guarantee guarantee d or not
announcement guarantee amount party or
agreement)
not
Guarantee
Three years since
Xinjiang Lu Thai of joint
the approval of the
Harvest Cotton Co., 12/10/2014 25,000 12/09/2014 0 and No Yes
board of the
Ltd. several
Company
liability
Guarantee Two years since
Lu Thai (Vietnam) 08/27/2015 36,681.6 08/26/2015 19,781.15 No Yes
of joint the approval of the
25
Lu Thai Textile Co., Ltd. Semi-Annual Report 2017
Textile Co., Ltd. and board of the
several Company
liability
Guarantee
Six years since the
of joint
Lu Thai (Vietnam) approval of the
02/25/2016 47,025 0 and No Yes
Textile Co., Ltd. board of the
several
Company
liability
Guarantee
Five years since
of joint
Lu Thai (Vietnam) the approval of the
01/25/2017 23,994.6 313.28 and No Yes
Textile Co., Ltd. board of the
several
Company
liability
Guarantee
Two years since
of joint
Lu Thai (Vietnam) the approval of the
01/25/2017 6,855.6 180.13 and No Yes
Textile Co., Ltd. board of the
several
Company
liability
Guarantee
Two years since
of joint
Lu Thai (Vietnam) the approval of the
01/25/2017 5,484.48 2,833.8 and No Yes
Textile Co., Ltd. board of the
several
Company
liability
Guarantee
Two years since
of joint
Lu An Garments the approval of the
01/25/2017 4,113.36 0 and No Yes
Co., Ltd. board of the
several
Company
liability
Guarantee
Five years since
of joint
Lu Thai (Vietnam) the approval of the
01/25/2017 28,107.96 0 and No Yes
Textile Co., Ltd. board of the
several
Company
liability
Guarantee
Two years since
of joint
Lu Thai (Vietnam) the approval of the
01/25/2017 20,566.8 0 and No Yes
Textile Co., Ltd. board of the
several
Company
liability
Lu Thai (Vietnam) Guarantee Two years since
Textile Co., Ltd. / of joint the approval of the
01/25/2017 6,855.6 0 No Yes
Lu An Garments and board of the
Co., Ltd. several Company
26
Lu Thai Textile Co., Ltd. Semi-Annual Report 2017
liability
Total amount of actual
Total amount of approved guarantee for
guarantee for
subsidiaries during the Reporting Period 95,978.4 6,358.52
subsidiaries during the
(B1)
Reporting Period (B2)
Total amount of actual
Total amount of approved guarantee for guarantee for
subsidiaries at the end of the Reporting 204,685 subsidiaries at the end 23,108.36
Period (B3) of the Reporting
Period (B4)
Guarantees provided by the subsidiaries of the Company for subsidiaries
Guarante
Disclosure date Actual occurrence Actual e for a
Amount for Type of Period of Executed
Guaranteed party of relevant date (date of guarantee related
guarantee guarantee guarantee or not
announcement agreement) amount party or
not
Guarantee
Xinjiang Lu Thai of joint and
10/28/2016 20,000 10/26/2016 15,000 12 months No Yes
Textile Co., Ltd. several
liability
Total actual occurred
Total guarantee line approved for
amount of guarantee for the
the subsidiaries during the 0 15,000
subsidiaries during the
Reporting 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 guarantee line approved Total actual occurred amount
during the Reporting Period 95,978.4 of guarantee during the 21,358.52
(A1+B1+C1) Reporting Period (A2+B2+C2)
Total guarantee line that has been Total actual guarantee balance
approved at the end of the Reporting 224,685 at the end of the Reporting 43,108.36
Period (A3+B3+C3) Period (A4+B4+C4)
Proportion of total guarantee amount (A4+B4+C4) to the net
6.29%
assets of the Company
Of which:
27
Lu Thai Textile Co., Ltd. Semi-Annual Report 2017
Amount of guarantee provide for shareholders, actual controller
0
and related parties (D)
Amount of guarantee provided directly or indirectly for guarantee
20,000
objects with asset-liability ratio reaching over 70% (E)
Balance between 50% of net assets and total amount of guarantee
0
which exceeds 50% of net assets (F)
Sum total of the above three guaranteed amounts (D+E+F) 20,000
According to “Agreement on Counter Guarantee” signed on
December 9, 2014 between Lu Thai Company and Xinjiang Lu
Explanation on possible bearing joint responsibility of liquidation
Thai Company, Xinjiang Lu Thai Company, the warrantee
due to immature guarantee (if any)
Xinjiang Lu Thai Company provided the corresponding amount of
counter guarantee for Lu Thai Company.
Explanation about external guarantee violating established The Company never provided guarantees for companies except
procedure (if any) controlling subsidiaries.
Explanations about guarantees provided with complex methods
(2) Illegal Provision of Guarantees for External Parties
□ Applicable √ Not applicable
No such cases in the Reporting Period.
3. Other Significant Contracts
□ Applicable √ Not applicable
No such cases in the Reporting Period.
XV. Social Responsibilities
1. Targeted Measures Taken to Help People Lift Themselves Out of Poverty
The Company didn’t carry out the work on targeted poverty alleviation, and subsequent targeted poverty alleviation plan in the
Reporting Period.
2. Significant Environmental Protection
Indicate by tick mark whether the Company or any of its subsidiaries is a heavily polluting business identified by the environmental
protection authorities of China
Yes
Name of Name of Quantit Distributio Emission Executed Total Approved Total Excessi
Discharge
Company or Main y of n Concentratio Emission Standard Weight of Weight of ve
Method
subsidiary Pollutant and Emissio Informatio n of Pollutant Emission Emission (t) Emissio
28
Lu Thai Textile Co., Ltd. Semi-Annual Report 2017
Distinctive n Outlet n of (t) n
Pollutant Emission Conditi
Outlet on
Huangjiap Emission standard COD was
COD≤180m
u of water pollutant 403.41tons COD was 3505
Lu Thai COD, g/L;
Continuous Industrial of textile dyeing ; ammonia tons; ammonia
Textile Co., ammonia 2 ammonia Naught
emissions Park; East and finishing nitrogen nitrogen was
Ltd. nitrogen nitrohen≤5m
Industrial industry GB was 16.41 316tons
g/L
Park 4287-2012 tons
No. 2
modification list
SO2： of ultra-low SO2:
Production
≤35mg/m3、 emissions of 30.2t,
Zibo Xinsheng Plant of SO2: 217.84t/a,
SO2, NQx, Continuous NQx: ≤100 Emission Standard NQx:
Thermoelectri 3 Xinsheng NQx: 622.41t/a, Naught
smoke emissions mg/m3, of Air Pollutant of 154.1t,
city Co., Ltd Thermoel smoke: 59.54t/a
smoke: ≤10 Thermal Power smoke:
ectricity
mg/m3 Plant in Shandong 2.8t
Province LZJBF
(2016) No. 46.
Construction of pollution prevention equipment and operation condition:
Lu Thai Textile Co., Ltd. strictly implements the "Three Simultaneous" management system for
environmental protection project of construction projects, which is supported with perfect waste gas
and water treatment facilities. These supporting waste gas and water treatment facilities are
equipped with teams being responsible for daily operation and maintenance under a patrol system.
These supporting environmental protection facilities run normally and maintain synchronous
operation with main production facilities. The wholly owned subsidiary Xinsheng Thermal Power
Co., Ltd., in accordance with the "Green Power Upgrade Project" of the government, makes
arrangements for the deployment of strict implementation of the "Three Simultaneous" management
system for construction project environmental protection. It adopts the co-governance technology
route of lowering initial emission concentration of nitrogen oxides by "technical reform of low
nitrogen combustion in boiler furnace" + “selective non catalytic reduction (SNCR) method for flue
gas denitrification" + high efficiency dust removal by "four-stage high voltage electrostatic
precipitator" and "electric-bag compound dust collector" + wet desulfurization by
"limestone-gypsum process" + deep dust removal by "wet high-voltage electrostatic precipitator",
which runs normally.
XVI. Other Significant Events
□ Applicable √ Not applicable
No such cases in the Reporting Period.
29
Lu Thai Textile Co., Ltd. Semi-Annual Report 2017
XVII. Significant Events of Subsidiaries
□ Applicable √ Not applicable
30
Lu Thai Textile Co., Ltd. Semi-Annual Report 2017
Section VI Share Changes and Shareholders’ Profile
I. Share Changes
1. Share Changes
Unit: share
Before the change Increase/decrease (+/-) After the change
Capitalizat
Newly Bonus ion of Proportio
Amount Proportion Other Subtotal Amount
issue share shares public n
reserves
I. Shares subject to trading 119,375,2
12.94% 128,824 128,824 119,504,064 12.95%
moratorium 40
3. Other domestic shares 1,142,840 0.12% 128,824 128,824 1,271,664 0.14%
Shares held by domestic
1,142,840 0.12% 128,824 128,824 1,271,664 0.14%
individuals
4. Shares held by overseas 118,232,4
12.82% 118,232,400 12.82%
shareholders 00
Including: Shares held by 118,232,4
12.82% 118,232,400 12.82%
overseas legal persons 00
II. Shares not subject to 803,227,0
87.06% -128,824 -128,824 803,098,247 87.05%
trading moratorium 71
1. Ordinary shares 560,822,4
60.79% -109,324 -109,324 560,713,136 60.78%
denominated in RMB 60
2. Domestically listed 242,404,6
26.27% -19,500 -19,500 242,385,111 26.27%
foreign shares 11
922,602,3
III. Total of shares 100.00% 0 0 922,602,311 100.00%
11
Reasons for the share changes
√ Applicable □ Not applicable
Because of the demission of Directors and the increase of domestically listed foreign shares held by some directors, and adjusting
senior managers’ shares of Shenzhen branch of China Securities Depository and Clearing Corporation Limited, 128,824 shares of
“limited sales condition shares-domestic natural person holding” of the Company increased.
Approval of share changes
□ Applicable √ Not applicable
Transfer of share ownership
31
Lu Thai Textile Co., Ltd. Semi-Annual Report 2017
□ Applicable √ Not applicable
Effects of share changes on the basic EPS, diluted EPS, net assets per share attributable to common shareholders of the Company and
other financial indexes over the prior year and the prior period
□ Applicable √ Not applicable
Other contents that the Company considers necessary or is required by the securities regulatory authorities to disclose
□ Applicable √ Not applicable
2. Changes in Restricted Shares
□ Applicable √ Not applicable
II. Issuance and Listing of Securities
□ Applicable √ Not applicable
III. Total Number of Shareholders and Their Shareholdings
Unit: share
Total number of ordinary
Total number of preference shareholders who had resumed their
shareholders at the end of the 61,000 0
voting right at the end of the Reporting Period (if any) (see note 8)
Reporting Period
Shareholdings of ordinary shareholders with a stake over 5% or top 10 ordinary shareholders
Number of Number of Number of Pledged or frozen
Increase/decre
Shareho ordinary shares ordinary ordinary shares
ase of shares
Nature of lding held at the end shares held shares held
Name of shareholder during the
shareholder percent of the subject to not subject Status of Amoun
Reporting
age (%) Reporting trading to trading shares t
Period
Period moratorium moratorium
Domestic
Zibo Lucheng Textile non-state-o
15.21% 140,353,583 0 140,353,583
Investment Co., Ltd. wned
corporation
Tailun (Thailand) Textile Foreign
12.82% 118,232,400 0 118,232,400
Co., Ltd. corporation
Hong Kong Securities Foreign
2.59% 23,931,227 17,759,510 23,931,227
Clearing Co. Ltd corporation
Central Huijin Assets State-owned
2.20% 20,315,300 0 20,315,300
Management Co., Ltd. corporation
32
Lu Thai Textile Co., Ltd. Semi-Annual Report 2017
T.Rowe Price Intl Discovery Foreign
2.16% 19,948,219 0 19,948,219
Fund corporation
China Securities Finance State-owned
1.70% 15,679,091 0 15,679,091
Corporation Limited corporation
Foreign
Lynas Asia Fund 1.19% 10,956,300 -1,473,700 10,956,300
corporation
Domestic
Hua’an New Silk Road
Non-stated-
Theme Equity Securities 1.11% 10,200,000 3,000,000 10,200,000
owned
Investment Fund
corporation
A share funds of first state Foreign
0.96% 8,852,681 3,502,900.00 8,852,681
of China corporation
Foreign
BNP Paribas－own funds 0.88% 8,131,797 0 8,131,797
corporation
Strategic investors or the general legal
person due to the placement of new shares
Naught
become the top 10 ordinary shareholders
(if any) (note 3)
Zibo Lucheng Textile Investment Co., Ltd. is the largest shareholder of the Company and
Explanation on associated relationship the actual controller. Tailun (Thailand) Textile Co., Ltd. is the second largest shareholder
among the above-mentioned shareholders as well as sponsor of foreign capital of the Company. All of other shareholders are people
or explanation on acting-in-concert holding circulating A share or circulating B share and the Company is not able to confirm
whether there is associated relationship or concerted action among other shareholders.
Particulars about shares held by top 10 common shareholders not subject to trading moratorium
Number of shares held not Type of share
subject to trading
Name of shareholder
moratorium at the end of the Type of share Number
period
RMB common
Zibo Lucheng Textile Investment Co., Ltd. 140,353,583
shares
RMB common
Hong Kong Securities Clearing Co. Ltd 23,931,227
shares
RMB common
Central Huijin Assets Management Co., Ltd. 20,315,300
shares
Domestically
T.Rowe Price Intl Discovery Fund 19,948,219 listed foreign
shares
China Securities Finance Corporation Limited 15,679,091 RMB common
33
Lu Thai Textile Co., Ltd. Semi-Annual Report 2017
shares
Domestically
Lynas Asia Fund 10,956,300 listed foreign
shares
RMB common
Hua’an New Silk Road Theme Equity Securities Investment Fund 10,200,000
shares
RMB common
A share funds of first state of China 8,852,681
shares
RMB common
BNP Paribas－own funds 8,131,797
shares
RMB common
Hong Kong Monetary Authority－own funds 7,795,650
shares
Zibo Lucheng Textile Investment Co., Ltd. is the largest
shareholder of the Company and the actual controller.
Explanation on associated relationship among the top ten shareholders of Tailun (Thailand) Textile Co., Ltd. is the second largest
tradable share not subject to trading moratorium, as well as among the shareholder as well as sponsor of foreign capital of the
top ten shareholders of tradable share not subject to trading moratorium Company. All of other shareholders are people holding
and top ten shareholders, or explanation on acting-in-concert 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.
Particular about shareholder participate in the securities lending and
Naught
borrowing business (if any) (note 4)
Indicate by tick mark whether any of the top ten common shareholders or the top ten non-restricted common shareholders of the
Company conducted any promissory repo during the Reporting Period.
□ Yea √ No
No such cases in the Reporting Period.
IV. Change of the Controlling Shareholder or the Actual Controller
Change of the controlling shareholder in the Reporting Period
□ Applicable √ Not applicable
There was no any change of the controlling shareholder of the Company in the Reporting Period.
Change of the actual controller in the Reporting Period
□ Applicable √ Not applicable
There was no any change of the actual controller of the Company in the Reporting Period.
34
Lu Thai Textile Co., Ltd. Semi-Annual Report 2017
Section VII Preference Shares
□ Applicable √ Not applicable
No preference shares in the Reporting Period.
Section VIII Directors, Supervisors and Senior Management
I Changes in Shareholdings of Directors, Supervisors and Senior Management
√ Applicable □ Not applicable
Number of
Number of Number of
Decrease restricted
Increase in granted granted
Incum Opening in the Closing shares
the Current restricted restricted
Name Office title bent/fo shareholding Current shareholdi granted in
Period shares at the shares at the
rmer (share) Period ng (share) the Current
(share) period-begin period-end
(share) Period
ning (share) (share)
(share)
Curren
Liu Zibin Chairman/GM 148,290 148,290
t
Curren
Xu Zhinan Vice President
t
Fujiwara Curren
Director /Senior Consultant
Hidetoshi t
Chen Curren
Director
Ruimou t
Zeng Curren
Director
Facheng t
Wang Director /Vice GM/Chief Curren
146,753 146,753
Fangshui Engineer t
Liu Curren
Director
Deming t
Qin Director / Vice GM Curren
107,042 19,500 126,542
Guiling /Chairman Secretary t
Zhang Curren
Director /Chief Accountant 92,500 92,500
Hongmei t
Curren
Xu Jianjun Independent Director
t
35
Lu Thai Textile Co., Ltd. Semi-Annual Report 2017
Curren
Zhao Yao Independent Director
t
Curren
Bi Xiuli Independent Director
t
Curren
Pan Ailing Independent Director
t
Wang Curren
Independent Director
Xinyu t
Li Supervisory Board Curren
176,164 176,164
Tongmin Chairman t
Curren
Liu Zilong Supervisor
t
Dong Curren
Supervisor 5,000 5,000
Shibing t
Zhang Curren
Vice GM 52,150 52,150
Jianxiang t
Wang Curren
Vice GM, Product Manager 83,700 83,700
Jiabin t
Zhang Vice GM, Management Curren
73,100 73,100
Shougang Manager t
Zhang Vice GM, GM of Lufeng Curren
80,300 80,300
Zhanqi Company t
Manager of the Second
Fujiwara Curren
Department of International
Matsuzaka t
Business
Zhang Curren
Financial Manager 77,700 77,700
Keming t
Curren
Li Wenji CIO 10,000 10,000
t
Manager of the Third
Curren
Pan Pingli Department of International 130,496 130,496
t
Business
Lv Vice GM of Lufeng Curren
33,750 33,750
Yongchen Company t
Yu
Curren
Shouzhen Energy Business Manager 83,100 83,100
t
g
Wang Manager of the First Curren
22,500 22,500
Changzha Department of International t
36
Lu Thai Textile Co., Ltd. Semi-Annual Report 2017
o Business
Curren
Quan Peng Marketing Manager 27,750 27,750
t
Shang
Curren
Chenggan Clothing Business Manager 30,000 30,000
t
g
Total -- -- 1,380,295 19,500 0 1,399,795 0 0 0
II Changes in Directors, Supervisors and Senior Management
√ Applicable □ Not applicable
Name Office title Type of change Date Reason
Be elected as the Director of the 8th Board of
Liu Deming Director Elected 05/12/2017
Directors.
37
Lu Thai Textile Co., Ltd. Semi-Annual Report 2017
Section IX Corporate Bonds
Are there any corporate bonds publicly offered and listed on the stock exchange, which were undue before the approval date of this
Report or were due but could not be redeemed in full?
No
Section X Financial Report
I. Auditor’s Report
Whether the semi-annual report has been audited?
□Yes √ No
The semi-annual report of the Company has not been audited.
II. Financial Statements
The unit of the financial statements attached: RMB
1. Consolidated Balance Sheet
Prepared by Lu Thai Textile Co., Ltd.
June 30, 2017
Unit: RMB
Item Closing balance Opening balance
Current assets:
Monetary funds 601,260,394.17 662,967,785.49
Financial assets at fair value through profit/loss 1,110,700.00
Derivative financial assets
Notes receivable 96,812,985.77 84,161,909.91
Accounts receivable 284,403,883.10 293,129,727.93
Accounts paid in advance 139,250,217.85 212,487,501.51
Interest receivable
Dividends receivable
Other accounts receivable 31,021,116.32 46,262,835.47
Financial assets purchased under agreements to resell
38
Lu Thai Textile Co., Ltd. Semi-Annual Report 2017
Inventories 2,062,112,380.15 1,816,700,441.85
Assets held for sale
Non-current assets due within one year
Other current assets 49,899,317.36 107,535,889.38
Total current assets 3,265,870,994.72 3,223,246,091.54
Non-current assets:
Available-for-sale financial assets 24,660,000.00 24,660,000.00
Held-to-maturity investments
Long-term accounts receivable 2,310,000.00 2,310,000.00
Long-term equity investments
Investment property 25,220,354.21 25,844,090.56
Fixed assets 5,131,175,806.66 5,244,335,459.80
Construction in progress 265,987,434.60 154,668,358.96
Engineering materials 108,821,916.14 117,120,463.50
Disposal of fixed assets
Productive living assets 1,395,333.76 1,381,292.75
Intangible assets 480,808,661.11 384,253,077.39
R&D expenses
Goodwill 20,613,803.29 20,613,803.29
Long-term deferred expenses 112,044,409.51 114,227,364.54
Deferred tax assets 65,994,786.41 63,183,792.63
Other non-current assets 45,260,374.22 31,259,468.38
Total non-current assets 6,284,292,879.91 6,183,857,171.80
Total assets 9,550,163,874.63 9,407,103,263.34
Current liabilities:
Short-term borrowings 1,170,346,491.12 873,261,856.02
Financial liabilities at fair value through profit/loss
Derivative financial liabilities
Notes payable 3,088,525.00
Accounts payable 239,758,421.16 252,538,563.06
Accounts received in advance 91,701,520.84 89,451,314.62
Financial assets sold for repurchase
Fees and commissions payable
Payroll payable 228,687,259.66 315,618,449.91
39
Lu Thai Textile Co., Ltd. Semi-Annual Report 2017
Taxes payable 60,019,276.75 77,214,706.67
Interest payable 1,399,311.51 1,165,730.47
Dividends payable 441,113.64 441,113.64
Other accounts payable 62,386,889.87 69,365,641.15
Reinsurance premiums payable
Liabilities held for sale
Non-current liabilities due within one year 137,564,884.44
Other current liabilities
Total current liabilities 1,995,393,693.99 1,679,057,375.54
Non-current liabilities:
Long-term borrowings 135,678,044.89
Long-term accounts payable
Long-term payroll payable 97,673,785.15 79,122,422.89
Special payables
Provisions
Deferred income 117,579,951.26 95,990,489.79
Deferred tax liabilities 2,271,524.56 2,341,089.87
Other non-current liabilities 1,840,000.00 1,840,000.00
Total non-current liabilities 219,365,260.97 314,972,047.44
Total liabilities 2,214,758,954.96 1,994,029,422.98
Owners’ equity:
Share capital 922,602,311.00 922,602,311.00
Capital reserve 753,484,021.82 753,440,557.83
Less: Treasury shares
Other comprehensive income 38,508,452.99 53,293,544.89
Special reserve
Surplus reserve 888,761,783.04 888,761,783.04
Provisions for general risks
Retained earnings 4,251,656,358.48 4,319,887,532.43
Equity attributable to owners of the Company 6,855,012,927.33 6,937,985,729.19
Minority interests 480,391,992.34 475,088,111.17
Total owners’ equity 7,335,404,919.67 7,413,073,840.36
Total liabilities and owners’ equity 9,550,163,874.63 9,407,103,263.34
Legal representative: Liu Zibin Accounting head for this Report: Zhang Hongmei
40
Lu Thai Textile Co., Ltd. Semi-Annual Report 2017
Head of the accounting department: Zhang Keming
2. Balance Sheet of the Company
Unit: RMB
Item Closing balance Opening balance
Current assets:
Monetary funds 226,365,988.84 177,016,859.63
Financial assets at fair value through profit/loss 1,110,700.00
Derivative financial assets
Notes receivable 60,513,574.73 64,421,665.52
Accounts receivable 309,285,846.20 297,026,110.33
Accounts paid in advance 35,982,641.64 139,013,057.80
Interest receivable
Dividends receivable
Other accounts receivable 344,736,279.78 340,458,208.20
Inventories 1,400,552,673.13 1,086,364,931.72
Assets held for sale
Non-current assets due within one year
Other current assets 10,160,554.93 1,126,006.88
Total current assets 2,388,708,259.25 2,105,426,840.08
Non-current assets:
Available-for-sale financial assets 12,500,000.00 12,500,000.00
Held-to-maturity investments
Long-term accounts receivable
Long-term equity investments 1,718,956,616.04 1,711,021,866.04
Investment property 14,477,218.86 14,829,443.58
Fixed assets 2,891,842,729.34 3,019,132,803.64
Construction in progress 66,747,892.97 25,796,329.33
Engineering materials 4,460,897.70 663,894.82
Disposal of fixed assets
Intangible assets 228,353,171.60 229,433,475.02
R&D expenses
Goodwill
Long-term deferred expenses
41
Lu Thai Textile Co., Ltd. Semi-Annual Report 2017
Deferred tax assets 59,139,599.26 62,042,513.61
Other non-current assets 18,984,420.27 8,831,098.34
Total non-current assets 5,015,462,546.04 5,084,251,424.38
Total assets 7,404,170,805.29 7,189,678,264.46
Current liabilities:
Short-term borrowings 825,244,964.72 503,005,010.24
Financial liabilities at fair value through profit/loss
Derivative financial liabilities
Notes payable 400,000.00
Accounts payable 167,691,573.57 158,737,347.81
Accounts received in advance 69,190,582.16 54,552,285.78
Payroll payable 169,190,142.84 240,389,712.34
Taxes payable 46,699,473.31 47,790,003.82
Interest payable 1,399,311.51 646,147.15
Dividends payable 441,113.64 441,113.64
Other accounts payable 20,356,915.19 19,309,386.42
Liabilities held for sale
Non-current liabilities due within one year
Other current liabilities
Total current liabilities 1,300,614,076.94 1,024,871,007.20
Non-current liabilities:
Long-term borrowings
Long-term payables
Long-term payroll payable 97,673,785.15 79,122,422.89
Special payables
Provisions
Deferred income 70,450,071.64 62,691,326.97
Deferred tax liabilities
Other non-current liabilities
Total non-current liabilities 168,123,856.79 141,813,749.86
Total liabilities 1,468,737,933.73 1,166,684,757.06
Owners’ equity:
Share capital 922,602,311.00 922,602,311.00
Capital reserve 759,836,702.91 759,793,238.92
42
Lu Thai Textile Co., Ltd. Semi-Annual Report 2017
Less: Treasury shares
Other comprehensive income
Special reserve
Surplus reserve 888,761,783.04 888,761,783.04
Retained earnings 3,364,232,074.61 3,451,836,174.44
Total owners’ equity 5,935,432,871.56 6,022,993,507.40
Total liabilities and owners’ equity 7,404,170,805.29 7,189,678,264.46
3. Consolidated Income Statement
Unit: RMB
Item January-June 2017 January-June 2016
1. Operating revenues 2,990,459,696.43 2,831,326,773.03
Including: Sales income 2,990,459,696.43 2,831,326,773.03
2. Operating costs 2,513,954,465.70 2,409,931,338.67
Including: Cost of sales 2,049,939,214.63 1,937,399,591.08
Taxes and surtaxes 51,498,151.73 24,800,728.52
Selling expenses 68,365,512.22 88,709,663.50
Administrative expenses 312,470,311.94 341,771,955.16
Finance costs 30,695,300.54 19,810,742.68
Asset impairment loss 985,974.64 -2,561,342.27
Add: Profit on fair value changes (“-” means loss) 1,110,700.00 30,946,569.40
Investment income (“-” means loss) 1,825,335.34 -33,641,221.22
Including: Share of profit/loss of associates and joint
ventures
Exchange gains (“-” means loss)
Other gains 10,580,637.29
3. Operating profit (“-” means loss) 490,021,903.36 418,700,782.54
Add: Non-operating income 4,444,757.98 21,193,437.32
Including: Profit on disposal of non-current assets 79,814.73 228,313.30
Less: Non-operating expense 5,919,822.60 7,718,639.90
Including: Loss on disposal of non-current assets 2,052,051.87 5,412,125.25
4. Total profit (“-” means loss) 488,546,838.74 432,175,579.96
Less: Corporate income tax 78,649,409.64 89,518,494.52
5. Net profit (“-” means loss) 409,897,429.10 342,657,085.44
43
Lu Thai Textile Co., Ltd. Semi-Annual Report 2017
Net profit attributable to owners of the Company 393,069,981.55 344,641,184.73
Minority interests’ income 16,827,447.55 -1,984,099.29
6. Other comprehensive income net of tax -14,785,091.90 12,389,756.62
Other comprehensive income net of tax attributable to
-14,785,091.90 12,389,756.62
owners of the Company
6.1 Other comprehensive income that will not be
reclassified into profit/loss
6.1.1 Changes in net liabilities or assets with a
defined benefit plan upon re-measurement
6.1.2 Share of other comprehensive income of
investees that cannot be reclassified into profit/loss under the
equity method
6.2 Other comprehensive income to be subsequently
-14,785,091.90 12,389,756.62
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
available-for-sale financial assets
6.2.3 Profit/loss on reclassifying held-to-maturity
investments into available-for-sale financial assets
6.2.4 Effective profit/loss on cash flow hedges
6.2.5 Currency translation differences -14,785,091.90 12,389,756.62
6.2.6 Other
Other comprehensive income net of tax attributable to
minority interests
7. Total comprehensive income 395,112,337.20 355,046,842.06
Attributable to owners of the Company 378,284,889.65 357,030,941.35
Attributable to minority interests 16,827,447.55 -1,984,099.29
8. Earnings per share
8.1 Basic earnings per share 0.43 0.37
8.2 Diluted earnings per share 0.43 0.37
Where business mergers under the same control occurred in this Reporting Period, the net profit achieved by the merged parties
before the business mergers was RMB0.00, with the corresponding amount for the last period being RMB0.00.
Legal representative: Liu Zibin Accounting head for this Report: Zhang Hongmei
Head of the accounting department: Zhang Keming
44
Lu Thai Textile Co., Ltd. Semi-Annual Report 2017
4. Income Statement of the Company
Unit: RMB
Item January-June 2017 January-June 2016
1. Operating revenues 2,482,323,588.80 2,368,661,868.37
Less: Operating costs 1,766,681,024.07 1,694,641,982.80
Taxes and surtaxes 37,477,779.18 16,485,789.46
Selling expenses 43,320,775.03 41,443,498.62
Administrative expenses 210,435,426.62 240,628,498.30
Finance costs 8,369,769.83 16,938,533.41
Asset impairment loss 262,131.70 28,282,906.69
Add: profit on fair value changes (“-” means loss) 1,110,700.00 29,792,100.00
Investment income (“-” means loss) 19,258,397.61 10,374,629.30
Including: Share of profit/loss of associates and joint ventures
Other gains 5,169,055.33
2. Operating profit (“-” means loss) 441,314,835.31 370,407,388.39
Add: Non-operating income 2,286,879.48 8,189,519.23
Including: Profit on disposal of non-current assets 79,814.73 182,382.68
Less: Non-operating expense 4,258,965.03 1,508,061.31
Including: Loss on disposal of non-current assets 518,095.91 69,815.52
3. Total profit (“-” means loss) 439,342,749.76 377,088,846.31
Less: Corporate income tax 65,645,694.09 59,769,948.62
4. Net profit (“-” means loss) 373,697,055.67 317,318,897.69
5. Other comprehensive income net of tax
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
45
Lu Thai Textile Co., Ltd. Semi-Annual Report 2017
5.2.4 Effective profit/loss on cash flow hedges
5.2.5 Currency translation differences
5.2.6 Other
6. Total comprehensive income 373,697,055.67 317,318,897.69
7. Earnings per share
7.1 Basic earnings per share 0.41 0.33
7.2 Diluted earnings per share 0.41 0.33
5. Consolidated Cash Flow Statement
Unit: RMB
Item January-June 2017 January-June 2016
1. Cash flows from operating activities:
Cash received from sale of commodities and rendering of service 2,963,874,950.58 2,812,336,711.92
Net increase in disposal of financial assets at fair value through profit/loss
Tax refunds received 103,287,108.06 101,275,470.39
Cash received from other operating activities 50,782,423.51 35,139,448.72
Subtotal of cash inflows from operating activities 3,117,944,482.15 2,948,751,631.03
Cash paid for goods and services 1,632,941,916.28 1,274,986,141.87
Cash paid to and for employees 819,725,451.87 799,339,164.59
Taxes paid 178,723,600.79 192,415,372.94
Cash paid for other operating activities 143,633,754.91 118,603,604.20
Subtotal of cash outflows due to operating activities 2,775,024,723.85 2,385,344,283.60
Net cash flows from operating activities 342,919,758.30 563,407,347.43
2. Cash flows from investing activities:
Cash received from retraction of investments
Cash received as investment income 439,800.00
Net cash received from disposal of fixed assets, intangible assets and other
1,257,813.92 746,129.22
long-term assets
Net cash received from disposal of subsidiaries or other business units
Cash received from other investing activities 70,035,606.25 5,852,642.02
Subtotal of cash inflows from investing activities 71,733,220.17 6,598,771.24
Cash paid to acquire fixed assets, intangible assets and other long-term
288,682,233.54 445,389,460.81
assets
Cash paid for investment
Net increase in pledged loans
46
Lu Thai Textile Co., Ltd. Semi-Annual Report 2017
Net cash paid to acquire subsidiaries and other business units
Cash paid for other investing activities 37,625,897.29
Subtotal of cash outflows due to investing activities 288,682,233.54 483,015,358.10
Net cash flows from investing activities -216,949,013.37 -476,416,586.86
3. Cash flows from financing activities:
Cash received from capital contributions 500,000.00
Including: Cash received from minority shareholder investments by
500,000.00
subsidiaries
Cash received as borrowings 1,143,078,297.25 1,150,565,513.31
Cash received from issuance of bonds
Cash received from other financing activities 8,000,000.00 29,805,722.42
Subtotal of cash inflows from financing activities 1,151,578,297.25 1,180,371,235.73
Repayment of borrowings 833,454,881.16 793,831,444.36
Cash paid for interest expenses and distribution of dividends or profit 483,807,181.18 460,834,827.15
Including: dividends or profit paid by subsidiaries to minority interests
Cash paid for other financing activities 203,465,414.43
Sub-total of cash outflows due to financing activities 1,317,262,062.34 1,458,131,685.94
Net cash flows from financing activities -165,683,765.09 -277,760,450.21
4. Effect of foreign exchange rate changes on cash and cash equivalents -14,067,019.42 3,240,158.34
5. Net increase in cash and cash equivalents -53,780,039.58 -187,529,531.30
Add: Opening balance of cash and cash equivalents 654,779,220.82 765,695,473.65
6. Closing balance of cash and cash equivalents 600,999,181.24 578,165,942.35
6. Cash Flow Statement of the Company
Unit: RMB
Item January-June 2017 January-June 2016
1. Cash flows from operating activities:
Cash received from sale of commodities and rendering of service 2,436,886,166.08 2,319,086,273.65
Tax refunds received 75,165,906.24 79,077,492.94
Cash received from other operating activities 15,897,897.32 8,476,623.71
Subtotal of cash inflows from operating activities 2,527,949,969.64 2,406,640,390.30
Cash paid for goods and services 1,526,580,047.50 1,170,201,165.76
Cash paid to and for employees 587,514,691.21 591,944,379.31
Taxes paid 97,827,376.39 87,975,686.65
47
Lu Thai Textile Co., Ltd. Semi-Annual Report 2017
Cash paid for other operating activities 75,176,222.57 65,775,345.61
Subtotal of cash outflows due to operating activities 2,287,098,337.67 1,915,896,577.33
Net cash flows from operating activities 240,851,631.97 490,743,812.97
2. Cash flows from investing activities:
Cash received from retraction of investments
Cash received as investment income 17,976,433.62 37,201,249.06
Net cash received from disposal of fixed assets, intangible assets and other
1,272,813.92 617,126.22
long-term assets
Net cash received from disposal of subsidiaries or other business units
Cash received from other investing activities 143,584,458.87 1,982,456.23
Subtotal of cash inflows from investing activities 162,833,706.41 39,800,831.51
Cash paid to acquire fixed assets, intangible assets and other long-term
35,162,185.30 108,131,817.43
assets
Cash paid for investment 7,934,750.00 125,429,260.00
Net cash paid to acquire subsidiaries and other business units
Cash paid for other investing activities 162,588,600.00 27,632,600.00
Subtotal of cash outflows due to investing activities 205,685,535.30 261,193,677.43
Net cash flows from investing activities -42,851,828.89 -221,392,845.92
3. Cash flows from financing activities:
Cash received from capital contributions
Cash received as borrowings 921,800,512.27 830,324,835.12
Cash received from issuance of bonds
Cash received from other financing activities
Subtotal of cash inflows from financing activities 921,800,512.27 830,324,835.12
Repayment of borrowings 597,328,780.40 508,528,371.67
Cash paid for interest expenses and distribution of dividends or profit 464,854,599.26 455,604,710.53
Cash paid for other financing activities 281,215,324.43
Sub-total of cash outflows due to financing activities 1,062,183,379.66 1,245,348,406.63
Net cash flows from financing activities -140,382,867.39 -415,023,571.51
4. Effect of foreign exchange rate changes on cash and cash equivalents -8,267,806.48 -2,662,104.87
5. Net increase in cash and cash equivalents 49,349,129.21 -148,334,709.33
Add: Opening balance of cash and cash equivalents 177,016,859.63 361,326,403.14
6. Closing balance of cash and cash equivalents 226,365,988.84 212,991,693.81
7. Consolidated Statement of Changes in Owners’ Equity
48
Lu Thai Textile Co., Ltd. Semi-Annual Report 2017
January-June 2017
Unit: RMB
January-June 2017
Equity attributable to owners of the Company
Item Other equity instruments Less: Specia Gener
Other Minority Total owners’
Treas l al risk
Share capital Capital reserve comprehensive Surplus reserve Retained earnings interests equity
Preferen Perpetual
Other ury reserv reserv
ce shares bonds income
shares e e
1. Balance at the end of the prior
922,602,311.00 753,440,557.83 53,293,544.89 888,761,783.04 4,319,887,532.43 475,088,111.17 7,413,073,840.36
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
922,602,311.00 753,440,557.83 53,293,544.89 888,761,783.04 4,319,887,532.43 475,088,111.17 7,413,073,840.36
year
3. Increase/ decrease in the period
43,463.99 -14,785,091.90 -68,231,173.95 5,303,881.17 -77,668,920.69
(“-” means decrease)
3.1 Total comprehensive
-14,785,091.90 393,069,981.55 16,827,447.55 395,112,337.20
income
3.2 Capital increased and
43,463.99 43,463.99
reduced by owners
3.2.1 Ordinary shares
increased by shareholders
3.2.2 Capital increased by
holders of other equity
49
Lu Thai Textile Co., Ltd. Semi-Annual Report 2017
instruments
3.2.3 Amounts of
share-based payments charged to
owners’ equity
3.2.4 Other 43,463.99 43,463.99
3.3 Profit distribution -461,301,155.50 -11,523,566.38 -472,824,721.88
3.3.1 Appropriation to
surplus reserve
3.3.2 Appropriation to
general risk provisions
3.3.3 Appropriation to
-461,301,155.50 -11,523,566.38 -472,824,721.88
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
50
Lu Thai Textile Co., Ltd. Semi-Annual Report 2017
3.5 Special reserve
3.5.1 Withdrawn for the
period
3.5.2 Used in the period
3.6 Other
4. Closing balance 922,602,311.00 753,484,021.82 38,508,452.99 888,761,783.04 4,251,656,358.48 480,391,992.34 7,335,404,919.67
January-June 2016
Unit: RMB
January-June 2016
Equity attributable to owners of the Company
Item Other equity instruments Spec Gener
Other Minority Total owners’
Less: Treasury ial al risk
Share capital Capital reserve comprehensiv Surplus reserve Retained earnings interests equity
Preferen Perpetua Othe
shares reser reserv
ce shares l bonds r e income
ve e
1. Balance at the end 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
prior 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
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
the year
51
Lu Thai Textile Co., Ltd. Semi-Annual Report 2017
3. Increase/ decrease in the
-33,156,185.00 -253,705,609.14 -11,610,721.68 36,202,772.58 73,113,278.76 266,807,674.73 35,603,556.75 136,476,210.36
period (“-” means decrease)
3.1 Total comprehensive
36,202,772.58 805,446,326.99 47,627,123.13 889,276,222.70
income
3.2 Capital increased and
-33,156,185.00 -253,705,609.14 -11,610,721.68 -275,251,072.46
reduced by owners
3.2.1 Ordinary shares
-33,156,185.00 -253,706,278.05 -11,610,721.68 -275,251,741.37
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 668.91 668.91
3.3 Profit distribution 73,113,278.76 -538,638,652.26 -12,023,566.38 -477,548,939.88
3.3.1 Appropriation to
73,113,278.76 -73,113,278.76
surplus reserve
3.3.2 Appropriation to
general risk provisions
3.3.3 Appropriation to
-465,525,373.50 -12,023,566.38 -477,548,939.88
owners (or shareholders)
3.3.4 Other
3.4 Internal carry-forward of
owners’ equity
52
Lu Thai Textile Co., Ltd. Semi-Annual Report 2017
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 922,602,311.00 753,440,557.83 53,293,544.89 888,761,783.04 4,319,887,532.43 475,088,111.17 7,413,073,840.36
8. Statement of Changes in Owners’ Equity of the Company
January-June 2017
Unit: RMB
January-June 2017
Other equity instruments Other
Item Less: Treasury Special Total owners’
Share capital Preference Perpetual Capital reserve comprehensive Surplus reserve Retained earnings
Other shares reserve equity
shares bonds income
1. Balance at the end of the prior 922,602,311.00 759,793,238.92 888,761,783.04 3,451,836,174.44 6,022,993,507.40
53
Lu Thai Textile Co., Ltd. Semi-Annual Report 2017
year
Add: Changes in accounting
policies
Correction of errors in prior
periods
Other
2. Balance at the beginning of the
922,602,311.00 759,793,238.92 888,761,783.04 3,451,836,174.44 6,022,993,507.40
year
3. Increase/ decrease in the period
43,463.99 -87,604,099.83 -87,560,635.84
(“-” means decrease)
3.1 Total comprehensive income 373,697,055.67 373,697,055.67
3.2 Capital increased and reduced
43,463.99 43,463.99
by owners
3.2.1 Ordinary shares 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 43,463.99 43,463.99
3.3 Profit distribution -461,301,155.50 -461,301,155.50
3.3.1 Appropriation to surplus
reserve
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Lu Thai Textile Co., Ltd. Semi-Annual Report 2017
3.3.2 Appropriation to owners
-461,301,155.50 -461,301,155.50
(or 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 922,602,311.00 759,836,702.91 888,761,783.04 3,364,232,074.61 5,935,432,871.56
January-June 2016
Unit: RMB
January-June 2016
Item
Share capital Other equity instruments Capital reserve Less: Treasury Other Specia Surplus reserve Retained earnings Total owners’
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Lu Thai Textile Co., Ltd. Semi-Annual Report 2017
shares comprehensive l equity
Preference Perpetual
Other income reserv
shares bonds
e
1. Balance at the end of the prior
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
year
Add: Changes in accounting
policies
Correction of errors in prior
periods
Other
2. Balance at the beginning of the
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
year
3. Increase/ decrease in the period
-33,156,185.00 -253,705,609.14 -11,610,721.68 73,113,278.76 192,494,135.29 -9,643,658.41
(“-” means decrease)
3.1 Total comprehensive income 731,132,787.55 731,132,787.55
3.2 Capital increased and reduced
-33,156,185.00 -253,705,609.14 -11,610,721.68 -275,251,072.46
by owners
3.2.1 Ordinary shares
-33,156,185.00 -253,706,278.05 -11,610,721.68 -275,251,741.37
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 668.91 668.91
3.3 Profit distribution 73,113,278.76 -538,638,652.26 -465,525,373.50
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Lu Thai Textile Co., Ltd. Semi-Annual Report 2017
3.3.1 Appropriation to surplus
73,113,278.76 -73,113,278.76
reserve
3.3.2 Appropriation to owners
-465,525,373.50 -465,525,373.50
(or 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 922,602,311.00 759,793,238.92 888,761,783.04 3,451,836,174.44 6,022,993,507.40
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Lu Thai Textile Co., Ltd. Semi-Annual Report 2017
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 RMB 1.00 per share. Upon approved by Shenzhen Stock
Exchange with No. (1997) 296 Listing Notice, the Company is listed on the Shenzhen Stock
Exchange on August 19, 1997 with B-shares stock code of 200726. On November 24, 2000,
approved by ZJGSZ [2000] No.199 by CSRC, the Company increased publication of 50 million
shares of general share (A-shares) at the book value of RMB 1.00, which are listed on the Shenzhen
Stock Exchange on December 25, 2000 with A-shares stock code of 000726 through approval by
Shenzhen Stock Exchange with No. (2000) 162 Listing Notice. As approved by 2000 Shareholders’
General Meeting in May, 2001, the Company carried out the distribution plan that 10 shares of
capital public reserve are converted to 3 more shares for each 10 shares. As approved by
Resolutions of 2001 Shareholders’ General Meeting in June 2002, the Company implemented the
distribution plan that 10 shares of capital public reserve are converted 3 more shares for each 10
shares again. As approved by 2002 Shareholders’ General Meeting in May 2003, the Company
implemented the distribution plan that 10 shares of capital public reserve are 2 more shares for each
10 shares, and inner employees’ shared increased to 40.56 million shares. 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 RMB 844.8648 million.
The Company, in accordance with the official reply on approving Lu Thai Textile Co., Ltd. to issue
additional shares (ZJXK [2008] No. 890 document) from CSRC, issued the Renminbi common
shares (A shares) amounting to 150 million shares on December 8, 2008. According to the relevant
resolution of the 2nd Special Shareholders’ General Meeting for 2011, the relevant resolution of the
15th Session of the 6th Board of Directors, the Opinion of China Securities Regulatory Commission
on the Restricted Share Incentive Plan of Lu Thai Textile Co., Ltd. (Shang-Shi-Bu-Han [2011] No.
206), the Company applied for a registered capital increment of RMB 14.09 million, which was
contributed by restricted share incentive receivers with monetary funds. In accordance with the
resolution of Proposal on Repurchasing and Canceling Partial Restricted Shares already Granted for
the Original Incentive Targets not Reaching the Incentive Conditions made at the 23rd Session of
the 6th Board of Directors on August 13, 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 June 25, 2012, the Company counter purchase domestic listed foreign
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Lu Thai Textile Co., Ltd. Semi-Annual Report 2017
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 March 27, 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 June 11,
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. As per the Proposal on
Buy-back of Some A- and B-shares considered and approved as a resolution at the 1st special
meeting of shareholders on August 5, 2015, the Company repurchased 33,156,200 domestically
listed foreign shares (B-shares). As of June 30, 2017, the registered capital of the Company was
RMB922.6023 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 production and sales of the purified water projects.
The Company’s financial statements have been approved for issue by the Board of Directors of the
Company on August 28, 2017.
There were 15 subsidiaries included into the consolidation scope of the Company from January to
June 2017, and for the details, please refer to Notes VIII. “Equities among Other Entities”.
IV. Basis for the Preparation of the Financial Statement
1. Basis for the Preparation
With the going-concern assumption as the basis and based on transactions and other events that
actually occurred, the Group prepared financial statements in accordance with issued by the Ministry of Finance with
Decree No. 33 and revised with Decree No. 76, the 41 specific accounting standards, the
Application Guidance of Accounting Standards for Business Enterprises, the Interpretation of
Accounting Standards for Business Enterprises and other regulations issued and revised from 15
Feb. 2006 onwards (hereinafter jointly referred to as “the Accounting Standards for Business
Enterprises”, “China Accounting Standards” or “CAS”), as well as the Rules for Preparation
Convention of Disclosure of Public Offering Companies No.15 – General Regulations for Financial
Reporting (revised in 2014) by China Securities Regulatory Commission.
In accordance with relevant provisions of the Accounting Standards for Business Enterprises, the
Group adopted the accrual basis in accounting. Except for some financial instruments, where
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Lu Thai Textile Co., Ltd. Semi-Annual Report 2017
impairment occurred on an asset, an impairment reserve was withdrawn accordingly pursuant to
relevant requirements.
V. Significant Accounting Policies and Estimates
Specific accounting policies and accounting estimates indicators:
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
policies and accounting estimates of the transactions and events such as recognizing the revenues,
and for details, please refer to each description of Notes V. As for the notes to the important
accounting judgment and estimations made by the management level, please refer to Notes 25.
“Other important accounting policies and estimations”.
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 June 30, 2017, business results and cash
flows for the January to June of 2017, 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 January 1 and ends on December 31 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
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.
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Lu Thai Textile Co., Ltd. Semi-Annual Report 2017
5. Accounting Treatment for Business Combinations under the Common Control and Not under the Common
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
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 than the fair value of the
61
Lu Thai Textile Co., Ltd. Semi-Annual Report 2017
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 V. 6
(2)), Whether the deals are “package deal” or not, belong to the “package deal”, see the previous
paragraphs described in this section and Notes V. 12. “Long term equity investment transaction”
and conduct accounting treatment, those not belong to the "package deal" distinguish between the
individual financial statements and the consolidated financial statements and conduct relevant
accounting treatment.
In the individual financial statements, the sum of the book value and new investment cost of the
Company holds in the acquiree before the acquiring date shall be considered as initial cost of the
investment. Other related comprehensive gains in relation to the equity interests that the Company
holds in the acquiree before the acquiring date shall be treated on the same basis as the acquiree
directly disposes the related assets or liabilities when disposing the investment (that is, except for
the corresponding share in the changes in the net liabilities or assets with a defined benefit plan
measured at the equity method arising from the acquiree’s re-measurement, the others shall be
transferred into current investment gains).
In the Company’s consolidated financial statements, as for the equity interests that the Company
holds in the acquiree before the acquiring date, they shall be re-measured according to their fair
values at the acquiring date; the positive difference between their fair values and carrying amounts
shall be recorded into the investment gains for the period including the acquiring date. Other related
comprehensive gains in relation to the equity interests that the Company holds in the acquiree
before the acquiring date shall be treated on the same basis as the acquiree directly disposes the
related assets or liabilities when disposing the investment (that is, except for the corresponding
share in the changes in the net liabilities or assets with a defined benefit plan measured at the equity
method arising from the acquiree’s re-measurement, the others shall be transferred into current
investment gains on the acquiring date).
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Lu Thai Textile Co., Ltd. Semi-Annual Report 2017
6. Preparation of the 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.
If any changes in the relevant facts or situations result in any changes in the elements involved in
the aforesaid definition of “control”, the Company shall carry out a reassessment.
(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.
Where the Company losses control on its original subsidiaries due to disposal of some equity
63
Lu Thai Textile Co., Ltd. Semi-Annual Report 2017
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 Notes V. 12.
“Long Term Equity Investment” or Notes V. 9. “Financial Instruments”.
Where the Company losses control on its original subsidiaries due to step by step disposal of equity
investments through multiple transactions, it need to distinguish the Group losses control on its
subsidiaries due to disposal of equity investments whether belongs to a package deal. All the
transaction terms, conditions and economic impact of the disposal of subsidiaries’ equity
investment are in accordance with one or more of the following conditions, which usually indicate
the multiple transactions, should be considered as a package deal for accounting treatment. ①
These deals are at the same time or under the condition of considering the influence of each other to
concluded; ② These transactions only be as a whole can achieve a complete business result; ③
The occurrence of a deal depends on at least one other transactions；④ A deal alone is not
economical, it is economical with other trading together. Those not belong to a package deal, each
of them a deal depends on circumstances respectively conduct accounting treatment in accordance
with the applicable principles of “part disposal of subsidiaries of a long-term equity investment
under the condition of not losing control on its subsidiaries” (see Notes V. 12. (2) ④ in this
section) 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 loss of control, when the Company losing
control on its subsidiary.
7. Confirmation Standard for Cash and Cash Equivalent
The term “cash” refers to cash on hand and deposits that are available for payment at any time. 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
financial asset group with similar credit risk for an impairment test.
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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
continuous involvement in the transferred financial asset. The term "continuous involvement in the
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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
As for a derivative financial liability connected to an equity instrument for which there is not quoted
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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.
All types of distribution (excluding stock dividends) made by the Company to holders of equity
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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
Receivables with the amount of RMB 5 million or more than
Judgement basis or monetary standards of provision for bad
RMB 5 million should recognize as the receivables with
debts of the individually significant accounts receivable
significant single amount.
The Company made an independent impairment test on
receivables with significant single amounts; the financial assets
without impairment by independent impairment test should be
Method of individual provision for bad debts of the individually
included in financial assets portfolio with similar credit risk to
significant accounts receivable
take the impairment test. Receivables was recognized with
impairment should no longer be included in receivables portfolio
with similar credit 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
been impaired, impairment loss shall be recognized on the basis
Withdrawal method for bad debt provision 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: receivables involved in disputes, lawsuits or arbitrations;
receivables with clear signs that the debtor is not likely to repay;
and the like.
11. Inventory
Is the Company subject to any disclosure requirements for special industries?
No.
(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
Inventories shall be measured at planned cost when acquired, and the cost of the inventories
including the procurement cost, processing cost and other costs. Raw yarn, yarn, and fabric shall be
measured by FIFO method when delivered, and the raw material and shirts shall be measured as per
the weighted average method.
(3) Basis for determining net realizable value of inventories and provision methods for decline in
value of inventories
Net realizable value is the estimated selling price in the ordinary course of business less the
estimated costs of completion, the estimated costs necessary to make the sale and relevant taxes.
Net realizable value is determined on the basis of clear evidence obtained, and takes into
consideration the purpose of holding inventories and effect of post balance sheet events.
At the balance sheet date, inventories are measured at the lower of the cost and net realizable value.
If the net realizable value is below the cost of inventories, a provision for decline in value of
inventories is made. The provision for inventories decline in value is determined normally by the
difference of the cost of individual item less its realizable value. For large quantity and low value
items of inventories, provision for decline in value is made based on categories of inventories. For
items of inventories relating to a product line that are produced and marketed in the same
geographical area, have the same or similar end users or purposes, and cannot be practicably
evaluated separately from other items in that product line provision for decline in value is
determined on an aggregate basis.
After the provision for decline in value of inventories is made, if the circumstances that previously
caused inventories to be written down below cost no longer exist so that the net realizable value of
inventories is higher than their cost, the original provision for decline in value is reversed and the
reversal is included in profit or loss for the period.
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(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 policies to Notes V. 9. “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.
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 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.
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
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of gaining, such as actual cash payment paid by the Company, the fair value of equity securities
issued by the Company, the agreed value of the investment contract or agreement, the fair value or
original carrying amount of exchanged assets from non-monetary assets exchange transaction, the
fair value of the long-term equity investments, etc. The expenses, taxes and other necessary
expenditures directly related with gaining the long-term equity investments shall also be recorded
into investment cost.
(2) Subsequent measurement and recognition of gains or losses
A long-term equity investment where the investing enterprise has joint control (except for which
forms into common operators) or significant influence over the investors should be measured by
equity method. Moreover, long-term equity investment adopting the cost method in the financial
statements, and which the Company has control on invested entity.
① Long-term equity investment measured by adopting cost method
The price of a long-term equity investment measured by adopting the cost method shall be included
at its initial investment cost and append as well as withdraw the cost of investing and adjusting the
long-term equity investment. The return on investment at current period shall be recognized in
accordance with the cash dividend or profit announced to distribute by the invested entity, except
the announced but not distributed cash dividend or profit included in the actual payment or
consideration upon gaining the investment.
② Long-term equity investment measured by adopting equity method
If the initial cost of a long-term equity investment is more than the Company's attributable share of
the fair value of the invested entity's identifiable net assets for investment, the initial cost of the
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 policies 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
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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 Company shall recognize the net losses of the invested enterprise until the book value of the
long-term equity investment and other long-term rights and interests which substantially form the
net investment made to the invested entity are reduced to zero. However, if the Company has the
obligation to undertake extra losses, it shall be recognized as the estimated liabilities in accordance
with the estimated duties and then recorded into investment losses at current period. If the invested
entity realizes any net profits later, the Company shall, after the amount of its attributable share of
profits offsets against its attributable share of the un-recognized losses, resume recognizing its
attributable share of profits.
For the long-term equity investment held by the Company before the first execution of the new
accounting criterion on January 1, 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 Notes V. 6. (2) “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
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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.
13. Investment Real Estate
Measurement model of investment real estate
Costing method measurement
Depreciation or amortization method
The investment real estate refers to the real estate gaining the rent or capital appreciation or both. It
includes rented land use right, holding land use right to be transferred after the appreciation and
rented building, etc.
The investment real estate is measured initially according to the cost. The subsequent expenses
related with the investment real estate shall be calculated into the cost of investment real estate if
the economic benefit related with the asset may flow in and the cost may be measured reliably.
Other subsequent expenses shall be calculated in the current profits and losses at the occurrence.
The Company adopts the cost mode to conduct the subsequent measurement on the investment real
estate, depreciates or amortizes according to the policy consistent with the house building or land
use right.
The devaluation test method and devaluation provision method for the investment real estate can be
seen in Notes V. 18 “Long-term Asset Devaluation”.
When the self-use real estate or stock is converted to the investment real estate or the investment
real estate is converted to the self-use real estate, the book value before the conversion shall be the
entry value after the conversion.
When the investment real estate is disposed, or out of usage permanently, and it is expected not to
get the economic benefit from the disposal, the confirmation on the investment real estate shall be
terminated. The disposal income for the sales, transferring, scrap or damage of the investment real
estate deducing the book value and related tax shall be calculated in the current profits and losses.
14. Fixed Assets
(1) Conditions for Recognition
The term “fixed assets” refers to the tangible assets that simultaneously possess the features as follows: (a) they are held for the sake
of producing commodities, rendering labor service, renting or business management; and (b) their useful life is in excess of one fiscal
year. The fixed assets are only recognized when the relevant economic benefits probably flow in the Company and its cost could be
reliable measured. The fixed assets should take the initial measurement according to the cost and at the same time consider the
influences of the factors of the estimated discard expenses.
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(2) Depreciation Methods
Category of fixed assets Method Useful life Salvage value Annual deprecation
Average method of
Housing and building 5-30 0-10 3.00-20.00
useful life
Average method of
Machinery equipments 10-18 0-10 5.00-10.00
useful life
Average method of
Transportation vehicle 5 0-10 18.00-20.00
useful life
Electronic equipments Average method of
5 0-10 18.00-20.00
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.
15. 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 Notes V. 18 “Long-term assets impairment”.
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
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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
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 Annual deprecation (%)
value (%)
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
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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
intangible assets, if the economic benefits related to intangible assets are likely to flow into the
enterprise and the cost of intangible assets can be measured reliably, shall be recorded into the costs
of intangible assets; otherwise, it shall be recorded into current profits and losses upon the
occurrence.
The use right of land gained is usually measured as intangible assets. For the self-developed and
constructed factories and other constructions, the related expenditures on use right of land and
construction costs shall be respectively measured as intangible assets and fixed assets. For the
purchased houses and buildings, the related payment shall be distributed into the payment for use
right of land and the payment for buildings, if it is difficult to be distributed, the whole payment
shall be treated as fixed assets.
For intangible assets with a finite service life, from the time when it is available for use, the cost
after deducting the sum of the expected salvage value and the accumulated impairment provision
shall be amortized by straight line method during the service life. While the intangible assets
without certain service life shall not be amortized.
At the end of period, the Company shall check the service life and amortization method of
intangible assets with finite service life, if there is any change, it shall be regarded as a change of
the accounting estimates. Besides, the Company shall check the service life of intangible assets
without certain service life, if there is any evidence showing that the period of intangible assets to
bring the economic benefits to the enterprise can be prospected, it shall be estimated the service life
and amortized in accordance with the amortization policies for intangible assets with finite service
life.
(2) Accounting Policies of Internal R & D Expenses
The expenditures for internal research and development projects of an enterprise shall be classified
into research expenditures and development expenditures.
The research expenditures shall be recorded into the profit or loss for the current period.
The development expenditures shall be confirmed as intangible assets when they satisfy the
following conditions simultaneously, and shall be recorded into profit or loss for the current period
when they don’t satisfy the following conditions.
① It is feasible technically to finish intangible assets for use or sale;
② It is intended to finish and use or sell the intangible assets;
③ The usefulness of methods for intangible assets to generate economic benefits shall be proved,
including being able to prove that there is a potential market for the products manufactured by
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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.
(3) Impairment testing method and provision-making method for intangible assets
For details of impairment testing method and provision-making method for intangible assets, see
Notes V. 18 “Long-term assets impairment”.
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. 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 land contract fees, land rental fees and house rental
fees. And the long-term deferred expense shall be amortized by the straight-line method averagely
within the benefit period.
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 basic endowment insurance and unemployment insurance
and welfare plans after demission include setting drawing plan. Where the setting drawing plan is
adopted, 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 Demission
The Company relieves the labor relation with the employees before the due date of the labor
contacts or puts forward the advice of providing the compensation for urging the employees
volunteered to receive the downsizing and when the Company could not unilaterally withdraw the
demission welfare owning to the relieving plan of the labor relation or the downsizing advice,
should confirm the liabilities of the employees’ salary from the demission welfare on the earlier day
between the cost confirmed by the Company and the cost related to the reorganization of the
payment of the demission welfare and includes which in the current gains and losses. But as for the
demission welfare be estimated that could not be completed paid within 12 months after the end of
the annual Reporting 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 demission 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 (demission 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. Revenue
Is the Company subject to any disclosure requirements for special industries?
No.
(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
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 cannot 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
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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 cannot 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
cannot be measured respectively, both parts shall be conducted as selling goods.
(3) Royalty revenue
In accordance with relevant contract or agreement, the amount of royalty revenue should be
recognized as revenue on accrual basis.
(4) Interest revenue
The amount of interest revenue should be measured and confirmed in accordance with the length of
time for which the Company’s monetary fund is used by others and the agreed interest rate.
22. Government Subsidies
(1) Judgment Basis and Accounting Treatment of Government Subsidies Related to Assets
The government subsidy refers to the Company gets the monetary and non-monetary assets for free
from the government, excluding the capital that the government invests as the owner. It can be
divided into the asset-related government subsidy and income-related government subsidy. The
Company defines the obtained government subsidy for the acquisition and construction or forming
the long-term asset in other ways as the asset-related government subsidy; other government
subsidies are defined as the income-related government subsidy. If the government document does
not clearly prescribe the subsidy object, the following ways shall be adopted to divide the subsidy
into the income-related government subsidy and asset-related government subsidy: (1) The
government document clears the specific project for the subsidy, it shall divide according to the
relative ratio of asset expenditure amount and entry cost expenditure amount to be formed in the
budget of specific project, review according to the division ratio at each balance sheet date, and
change when necessary; (2) The government document only makes the general expression on the
usage without indicated specific project, it shall be the income-related government subsidy.
If the government subsidy is monetary asset, it shall be measured according to the received or
receivable amount. If the government subsidy is non-monetary asset, it shall be measured according
to the fair value; it the fair value cannot be got reliably, it shall be measured according to the
nominal amount. The government subsidy measured according to the nominal amount shall be
calculated in the current profits and losses directly.
The Company usually confirms and measures the government subsidy according to the received
amount when receiving actually. However, the financial support fund which can be received
complying with the related conditions prescribed in the financial support policy indicated by the
conclusive evidence shall be measured according to the receivable amount. The following
conditions shall be met for the government subsidy measured by the receivable amount: (1) The
receivable subsidy amount has been confirmed by the authorized government department, or it can
be measured reasonably according to the officially released provisions related with the financial
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fund management method, and it is expected there is no major uncertainty for the amount; (2) It is
based on the financial support project and financial fund management method actively opened
released officially by the local financial department and according to the provision in Government
Information Disclosure Provisions, the management method shall be universal (any enterprise
complying with the prescribed condition can apply) rather than for the specific enterprise; (3) The
related subsidy approval document has clearly promised the appropriate term, and the appropriation
of the amount shall have the corresponding financial budget for the guarantee, therefore, it can
ensure to receive within the prescribed term reasonably; (4) Other related conditions (if any) shall
be satisfied according to the specific case of the Company and the subsidy matter.
The asset-related government subsidy shall be confirmed as the deferred income, and it shall be
allocated in average and calculated in the current profits and losses within the service life of related
asset.
(2) Judgment Basis and Accounting Treatment of Government Subsidies Related to Income
The income-related government subsidy to compensate the related expense and loss later shall be
confirmed as the deferred income, and it shall be calculated in the other profits and losses during the
period to confirm the related expenses; the occurred related cost expenses and losses for
compensation shall be calculated in other gains or non-operating income.
Government subsidy related to routine activities of corporation shall be calculated in other gains
according to the essence of economic business. Government subsidy not related to routine activities
of corporation shall be calculated in non-operating income.
When the confirmed government subsidy needs to be returned and there is the related deferred
income balance, the related deferred income book balance shall be offset, and the surpassing part
shall be calculated in the current profits and losses; If there is no related deferred income, it shall be
calculated in the current profits and losses directly.
The government capital investment is excluded in the government subsidy.
23. Deferred Income Tax Assets/Deferred Income Tax Liabilities
(1) Income tax of the current period
On the balance sheet date, for the current income tax liabilities (or assets) of the current period as
well as the part formed during the previous period, should be measured by the income tax of the
estimated payable (returnable) amount which be calculated according to the regulations of the tax
law. The amount of the income tax payable which is based by the calculation of the current income
tax expenses, are according to the result measured from the corresponding adjustment of the pre-tax
accounting profit of this Reporting Period which in accord to the relevant regulations of the tax law.
(2) Deferred income tax assets and deferred income tax liabilities
The difference between the book value of certain assets and liabilities and their tax assessment basis,
as well as the temporary difference occurs from the difference between the book value of the items
which not be recognized as assets and liabilities but could confirm their tax assessment basis
according to the regulations of the tax law, the deferred income tax assets and the deferred income
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
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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 from 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
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
86
Lu Thai Textile Co., Ltd. Semi-Annual Report 2017
from the same taxpaying bodies by the same tax collection and administration department or is
relevant to the different taxpaying bodies but during each period which there is significant reverse
of the deferred income assets and liabilities in the future and among which the involved taxpaying
bodies intend to settle the current income tax and liabilities by net amount or are at the same time
acquire the asset as well as liquidate the liabilities.
24. Lease
(1) Accounting Treatment of Operating Lease
(1) Business of operating leases recorded by the Group as the lessee
The rent expenses from operating leases shall be recorded by the lessee in the relevant asset costs or
the profits and losses of the current period by using the straight-line method over each period of the
lease term. The initial direct costs shall be recognized as the profits and losses of the current period.
The contingent rents shall be recorded into the profits and losses of the current period in which they
actually arise.
(2) Business of operating leases recorded by the Group as the lessor
The rent incomes from operating leases shall be recognized as the profits and losses of the current
period by using the straight-line method over each period of the lease term. The initial direct costs
of great amount shall be capitalized when incurred, and be recorded into current profits and losses
in accordance with the same basis for recognition of rent incomes over the whole lease term. The
initial direct costs of small amount shall be recorded into current profits and losses when incurred.
The contingent rents shall be recorded into the profits and losses of the current period in which they
actually arise.
(2) Accounting Treatments of Finance 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
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
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Lu Thai Textile Co., Ltd. Semi-Annual Report 2017
account of the financing lease values receivable, and record the unguaranteed residual value at the
same time. The balance between the sum of the minimum lease receipts, the initial direct costs and
the unguaranteed residual value and the sum of their present values shall be recognized as
unrealized financing income. The balance through deducting unrealized financing incomes from the
finance lease accounts receivable shall be respectively stated in long-term claims and long-term
claims due within 1 year.
Unrecognized financing incomes shall be adopted by the effective interest rate method in the lease
term, so as to calculate and recognize current financing revenues. The contingent rents shall be
recorded into the profits and losses of the current period in which they actually arise.
25. Other Significant Accounting Policies 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.
(3) Inventory depreciation reserves
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Lu Thai Textile Co., Ltd. Semi-Annual Report 2017
The Company shall calculate whichever is lower between the cost and realizable net value in light
of inventory accounting policies. As for inventories of which the cost is higher than the realizable
net value and inventories which are obsolete and unsalable inventory depreciation reserves shall be
withdrawn. Impairment of inventories to realizable net value is based on the assessment of the
marketing of inventories and realizable net value thereof. Identification of inventory impairment
requires well-established evidences by management staffs, as well as judgments and estimates
based on consideration of the purpose of holding inventories and other factors such as events
occurring after the date of balance sheet. The difference between actual outcomes and originally
estimated outcomes, which will influence the carrying amount of inventories and inventory
depreciation reserves in the estimated period of the change, shall be withdrawn or reversed.
(4) Fair values of financial instruments
As for financial instruments not existing in active trading market, the Company shall determine
their fair values by all kinds of assessment methods, which include model analysis of discounted
cash flow and etc. During the assessment, the Company needs to assess for respects such as future
cash flows, credit risks, market volatility, correlation, and choose appropriate discount rate. Such
related assumptions have uncertainty, of which the change will effect on fair values of financial
instruments.
(5) Impairment of financial assets available for sale
To a large extent, whether the impairment of financial assets available for sale is recognized or not
relies on the judgments and assumptions of the management staffs. In that way, the Company shall
be certain about whether to recognize impairment losses of financial assets available for sale in the
profit statement. During the process of making judgments and assumptions, the Company needs to
evaluate how much the fair value of such investment is less than its cost, how long such investment
will last, and the financial condition and short-term business outlook of the invested parties, which
include industry status, technology transform, credit rating, default rate and risks from the opposite
parties.
(6) Impairment provisions of non-financial non-current assets
The Company shall judge whether there is sign of impairment of non-current assets other than
financial assets on balance sheet date. Intangible assets with uncertain service lives, besides being
conducted with annual impairment test every year, have to accept impairment tests when there is
sign of impairment. Other non-current assets except for financial assets have to accept impairment
tests when there is sign indicating the carrying amount thereof is unrecoverable.
When the carrying amounts of the asset or group assets are higher than the recoverable amounts,
namely whichever is higher between the net amount through deducting disposal charges from the
fair value and the present value of the estimated future cash flow, impairment occurs.
The net amount of the fair value of an asset minus the disposal expenses shall be determined in light
of the amount of the basis of the price as stipulated in the sales agreement or the observable market
price in the fair transaction minus the incremental cost directly subject to the disposal of the asset.
When estimating present value of future cash flows, it is necessary to make significant judgments
on characters of the asset or asset group, such as output, sales price, related operating costs, and
discount used to calculate the present value. When estimating recoverable amount, the Company
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 2017
The Company tests whether there is impairment of good will at least for every year, which requires
itself to estimate the present value of the future cash flow of group assets or combination of group
assets. When estimating the present value of the future cash flow, the Company needs to estimate
the cash flow arising from future group assets or combination of group assets, and at the same time
choose appropriate discount rate to determine the present value of the future cash flow.
(7) Depreciation and amortization
Upon consideration on the salvage value of investment real estates, fixed assets and intangible
assets, the Company shall withdraw depreciation and amortization by straight-line method over
their service lives. The Company checks on service lives at fixed intervals, so as to determine the
amounts of depreciation expenses and amortization expenses at each period. Service lives are
confirmed in accordance with the past experience on similar assets of the Company, along with
renewed technology of expectation. If any significant change occurred to previous estimated,
depreciation expenses and amortization expenses will be adjusted in future period.
(8) Development expenditure
When recognizing the capitalized amount, the management layer of the Company needs to make
suppose about the estimated future cash flow, the appropriate discounts rate and the estimated
benefit period related to the assets.
(9) Deferred income tax assets
In a limit providing large possibility of offset losses from sufficient taxable profits, the Group shall
recognize deferred income tax assets in line with all unused tax losses, which requires management
staffs of the Group to estimate the time when future taxable profits occurs and the amount thereof
by applying plenty of judgments and combining tax planning strategies, so as to determine the
amount of the recognizable deferred income tax assets.
(10) Income taxes
There’s certain uncertainty of disposal and calculation of taxes of partial transactions in normal
operating activities. It is uncertain whether some pre-taxed items can set aside the approvals by tax
authorities or not. If there are differences between the ultimate recognition outcomes and the
originally estimated amounts of such tax issues, then such differences shall effect on the current
income tax and deferred income tax during the ultimate recognition period.
26. Changes in Main Accounting Policies and Estimates
(1) Change of Accounting Policies
□ Applicable √ Not applicable
(2) Significant Changes in Accounting Estimates
□ Applicable √ Not applicable
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Lu Thai Textile Co., Ltd. Semi-Annual Report 2017
VI. Taxation
1. Main Taxes and Tax Rate
Category of taxes Tax basis Tax rate
Calculated the output tax at 17%, 13%, 11%, 6%, 5%,
3% and 0% of taxable income and paid the VAT by
VAT 17%, 13%, 11%, 6%, 5%, 3%, 0%
the amount after deducting the deductible withholding
VAT at current period
Urban maintenance and Paid at 7%, 5%, 1% of the circulating tax actually
7%, 5%, 1%
construction tax paid
Paid at 0%, 15%, 16.5%, and 25% of taxable income
Enterprise income tax 0%, 15%, 16.5%, 25%
respectively
Notes to the disclosure of taxpaying bodies in different corporate tax rate
Name of taxpaying bodies Rate of income tax
The Company 15%
Lufeng Weaving & Dyeing Co., Ltd. (hereinafter refer to as
15%
“Lufeng Weaving & Dyeing”)
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”)
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”)
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) Textile Co., Ltd. (hereinafter referred to as
0%
“Lu Thai Vietnam”)
Lu An Garments Co., Ltd. (hereinafter referred to as “Lu An
0%
Garments”
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Lu Thai Textile Co., Ltd. Semi-Annual Report 2017
2. Tax Preference
The Company, in accordance with the Public Notice on New High-tech Enterprise List in 2014 of
Shandong Province (LKHZ [2014] No. 136) 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 October 31, 2014. The Company shall,
in line with Article 28 of Enterprise Income Tax Law of the People’s Republic of China, No. 76
announcement in 2015 of “Handling Measures for Matters on Enterprise Income Tax Preferential
Policy” issued by the State Administration of Taxation and the “Guidelines for Administration of
Accreditation of New and High Technology Enterprises” GKF (2016) No.195, which is revised and
issued by Ministry of Science and Technology, Ministry of Finance and State Administration of
Taxation, enjoy a 15% rate for enterprise income tax.
The Company’s controlled subsidiary— Lufeng Weaving & Dyeing Co., Ltd., in accordance with
the Public Notice on Confirmation of New High-tech Enterprise List in 2014 of Shandong Province
(LKHZ [2014] No. 130) 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 October 30, 2014. The Company shall, in line with
Article 28 of Enterprise Income Tax Law of the People’s Republic of China, No. 76 announcement
in 2015 of “Handling Measures for Matters on Enterprise Income Tax Preferential Policy” issued by
the State Administration of Taxation and the “Guidelines for Administration of Accreditation of
New and High Technology Enterprises” GKF (2016) No.195, which is revised and issued by
Ministry of Science and Technology, Ministry of Finance and State Administration of Taxation,
enjoy a 15% 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%.
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-owned subsidiary Lu Thai (Vietnam) Textile Co., Ltd. shall enjoy the preference of
enterprise income tax at 3 years’ starting term + 2 years’ duty-free term + 4 years’ half-tax term
according to the investment license issued by Vietnamese Fudong Industrial Zone Management
Committee, and it will enter into duty-free term if it is profitable in any year within 3 years’ starting
term. The Company shall enjoy 17% of the preference tax rate within 10 years since the tax year to
get the first production and operation income, and the enterprise income tax rate shall be 20% after
92
Lu Thai Textile Co., Ltd. Semi-Annual Report 2017
the preference term ends.
The wholly-owned subsidiary Lu An Garments Co., Ltd. shall enjoy the preference of enterprise
income tax at 3 years’ starting term + 2 years’ duty-free term + 4 years’ half-tax term according to
the investment license issued by Vietnamese Anjiang Province Economic Zone Management
Committee, and it will enter into duty-free term if the profitability is realized at any year within 3
years’ starting term. The Company shall enjoy 17% of the preference tax rate within 10 years since
the tax year to get the first production and operation income, and the enterprise income tax rate shall
be 20% after the preference term ends.
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 4,155,209.28 3,216,250.69
Bank deposits 596,843,971.96 651,562,970.13
Other monetary funds 261,212.93 8,188,564.67
Total 601,260,394.17 662,967,785.49
Of which total amount of deposited abroad 91,339,325.43 98,109,438.71
Other notes:
On June 30, 2017, the monetary fund with restricted ownership of the Company was of RMB
261,212.93 (December 31, 2016: RMB 8,188,564.67), which was guarantee deposit of
RMB261,212.93 by the Company’s subsidiary Lufeng Weaving & Dyeing (See Notes VII. 57).
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 1,110,700.00
Equity instrument investment 1,110,700.00
Total 1,110,700.00
3. Derivative Financial Assets
□ Applicable √ Not applicable
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Lu Thai Textile Co., Ltd. Semi-Annual Report 2017
4. Notes Receivable
(1) Notes Receivable Listed by Category
Unit: RMB
Item Closing balance Opening balance
Bank acceptance bill 14,130,123.08 12,263,703.90
Letter of credit 82,682,862.69 71,898,206.01
Total 96,812,985.77 84,161,909.91
(2) 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 156,334,943.46
Total 156,334,943.46
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 With
Category draw draw
Propor al Book value Propor al Book value
Amount Amount Amount Amount
tion prop tion prop
ortio ortio
n n
Accounts
receivable
withdrawn bad
100.00 5.03 100.00 5.02
debt provision 299,479,242.38 15,075,359.28 284,403,883.10 308,637,549.96 15,507,822.03 293,129,727.93
% % % %
according to
credit risks
characteristics
100.00 5.03 100.00 5.02
Total 299,479,242.38 15,075,359.28 284,403,883.10 308,637,549.96 15,507,822.03 293,129,727.93
% % % %
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Lu Thai Textile Co., Ltd. Semi-Annual Report 2017
Accounts receivable with significant single amount for which bad debt provision separately accrued at the period-end
□ Applicable √ Not applicable
In the groups, accounts receivable adopting aging analysis method to accrue bad debt provision:
√Applicable □ Not applicable
Unit: RMB
Closing balance
Aging
Accounts receivable Bad debt provision Withdrawal proportion
Sub-item within 1 year
Within 1 year 298,627,298.59 14,931,364.91 5.00%
Subtotal within 1 year 298,627,298.59 14,931,364.91 5.00%
1 to 2 years 557,943.79 55,794.37 10.00%
Over 3 years 294,000.00 88,200.00 30.00%
Total 299,479,242.38 15,075,359.28 5.03%
Notes of the basis of recognizing the group:
In the groups, accounts receivable adopting balance percentage method to withdraw bad debt provision
□ Applicable √ Not applicable
In the groups, accounts receivable adopting other methods to accrue bad debt provision:
(2) Accounts Receivable Withdraw, Reversed or Collected during the Reporting Period
The withdrawal amount of the bad debt provision during the Reporting Period was of RMB -432,462.75; the amount of the reversed
or collected part during the Reporting Period was of RMB0.00.
(3) Top 5 of the Closing Balance of the Accounts Receivable Collected According to the Arrears Party
The total amount of the top 5 of the closing balance of the accounts receivable collected
according to the arrears party of the Company was of RMB 76,077,679.68 in the Reporting
Period, 25.40% of total amount of closing balance of account receivable. The total amount of
closing balance of bad debt provision was of RMB 3,803,883.98.
6. Prepayment
(1) Listed by Aging Analysis
Unit: RMB
Closing balance Opening balance
Aging
Amount Proportion Amount Proportion
Within 1 year 137,054,292.20 98.42% 211,402,803.04 99.49%
1 to 2 years 2,140,217.65 1.54% 805,437.09 0.38%
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Lu Thai Textile Co., Ltd. Semi-Annual Report 2017
2 to 3 years 19,505.29 0.01% 242,576.42 0.11%
Over 3 years 36,202.71 0.03% 36,684.96 0.02%
Total 139,250,217.85 -- 212,487,501.51 --
(2) Top 5 of the Closing Balance of the Prepayment Collected According to the Prepayment Target
The total amount of the top 5 of the closing balance of the prepayment collected according to
the prepayment target was of RMB 45,859,784.84, 32.93% of total amount of closing balance of
prepayment.
7. 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 Withdr Withdr
Propor awal Book value Propor awal Book value
Amount Amount Amount Amount
tion propor tion propor
tion tion
Other accounts
receivable
withdrawn bad
100.00 13.66 100.00 11.05
debt provision 35,928,529.49 4,907,413.17 31,021,116.32 52,008,961.83 5,746,126.36 46,262,835.47
% % % %
according to
credit risks
characteristics
100.00 13.66 100.00 11.05
Total 35,928,529.49 4,907,413.17 31,021,116.32 52,008,961.83 5,746,126.36 46,262,835.47
% % % %
Other accounts receivable with significant single amount for which bad debt provision separately accrued at the period-end
□ Applicable √ Not applicable
In the groups, other accounts receivable adopting aging analysis method to accrue bad debt provision:
√Applicable □ Not applicable
Unit: RMB
Closing balance
Aging
Other accounts receivable Bad debt provision Withdrawal proportion
Sub-item within 1 year
Within 1 year 22,854,883.98 1,142,742.68 5.00%
Subtotal within 1 year 22,854,883.98 1,142,742.68 5.00%
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Lu Thai Textile Co., Ltd. Semi-Annual Report 2017
1 to 2 years 566,407.13 56,640.71 10.00%
2 to 3 years 441,417.35 88,283.47 20.00%
Over 3 years 12,065,821.03 3,619,746.31 30.00%
Total 35,928,529.49 4,907,413.17 13.66%
Notes of the basis of recognizing the group:
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 accrue bad debt provision:
□ Applicable √ Not applicable
(2) Bad Debt Provision Withdrawal, Reversed or Collected during the Reporting Period
The withdrawal amount of the bad debt provision during the Reporting Period was of RMB -827,931.19; the amount of the reversed
or collected part during the Reporting Period was of RMB 0.00.
(3) The Actual Write-off Other Accounts Receivable
Unit: RMB
Item Amount
Actual write-off other accounts receivable 10,782.00
(4) Other Account Receivable Classified by Account Nature
Unit: RMB
Nature Closing book balance Opening book balance
Export taxes refund 2,665,685.60 18,563,850.28
Advance payment 11,904,513.12 17,597,169.14
Pledge and guarantee 7,037,663.30 3,757,964.01
Lending and deposit 2,847,982.40 1,404,072.87
Other 11,472,685.07 10,685,905.53
Total 35,928,529.49 52,008,961.83
(5) Top 5 of the Closing Balance of the Other Accounts Receivable Collected According to the Arrears Party
Unit: RMB
Proportion of the total Closing
Name of units Nature Closing balance Aging
end balance of the balance of
accounts receivable (%) bad debt
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Lu Thai Textile Co., Ltd. Semi-Annual Report 2017
provision
Accounts receivable of advance Advance money for the
money for the social security social security undertake by
6,814,952.38 Within 1 year 18.97% 340,747.62
undertake by the individual of the individual of the
the employee employee
Deposits for wages paid to Deposits for wages paid to
migrant workers of Zichuan migrant workers of 2,955,620.10 Over 3 years 8.23% 886,686.03
District, Zibo city infrastructure works
Finance Bureau of Zichuan Export tax refunds of the
2,665,685.60 Over 3 years 7.42% 799,705.68
District, Zibo local government
Advance payment of Xisha
Advance payment 1,691,340.28 Within 1 year 4.71% 84,567.01
Village, Xinjiang
Electric charge of
Advance payment 1,679,179.54 Within 1 year 4.67% 83,958.98
sub-storehouse of Xinjiang
Total -- 15,806,777.90 -- 44.00% 2,195,665.32
8. Inventory
Whether the Company needs to comply with the disclosure requirements of the real estate industry
No
(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 932,433,210.94 55,147.54 932,378,063.40 719,354,838.11 620,979.00 718,733,859.11
Products in
468,298,319.07 468,298,319.07 412,808,521.45 412,808,521.45
process
Inventory goods 678,166,953.59 42,851,908.27 635,315,045.32 731,266,751.73 64,673,863.30 666,592,888.43
Consumptive
1,313,513.67 595,177.89 718,335.78 1,141,156.72 671,556.72 469,600.00
biological assets
Assigned
processing 25,402,616.58 25,402,616.58 18,095,572.86 18,095,572.86
products
Total 2,105,614,613.85 43,502,233.70 2,062,112,380.15 1,882,666,840.87 65,966,399.02 1,816,700,441.85
Whether the Company is required to comply with the "Shenzhen Stock Exchange Industry Information Disclosure Guidelines No. 4 -
listed companies engaged in seed industry, planting business" disclosure requirements
No
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Lu Thai Textile Co., Ltd. Semi-Annual Report 2017
(2) Inventory Falling Price Reserves
Unit: RMB
Increased amount Decreased amount
Item Opening balance Write-back or Closing balance
Withdrawal Other Other
write-off
Raw materials 620,979.00 565,831.46 55,147.54
Stock commodity 64,673,863.30 2,246,368.58 24,068,323.61 42,851,908.27
Consumptive
671,556.72 76,378.83 595,177.89
biological assets
Total 65,966,399.02 2,246,368.58 24,710,533.90 43,502,233.70
Item Specific basis of withdrawal Reasons for write-back Reasons for write-off
of inventory falling price
reserves
The lower one between cost of Dispose in the Reporting
Raw materials each item of inventory and its Period
realizable net value
The lower one between cost of Sale in the Reporting
Stock commodity each item of inventory and its Period
realizable net value
The lower one between cost of Sale in the Reporting
Consumptive biological
each item of inventory and its Period
assets
realizable net value
Notes: ①The inventory falling price reserves shall be made based on the balance of inventory cost
and the realizable net value regarding the former is higher than the latter, which is caused by the
quality problem of some raw materials, the gray yarn and dyed yarn in finished products, by the
long stock age of some shirts and fabric and by the decrease of market price of the consumptive
biological asset Hu sheep at the end of the Reporting Period.
②The subsidiary of the Company Xinjiang Lu Thai Textile obtained the bank short-term loan of
RMB200,000,000.00 leaving the inventories as a pledge and secured by Xinjiang Lu Thai. The
closing book value of the inventories was RMB62,445,521.72.
9. Other Current Assets
Unit: RMB
Item Closing balance Opening balance
Prepaid income tax to be deducted 1,847,977.57 1,325,487.99
VAT input tax to be deducted 48,051,339.79 40,242,307.31
Income received from sale of shares 65,968,094.08
Total 49,899,317.36 107,535,889.38
99
Lu Thai Textile Co., Ltd. Semi-Annual Report 2017
10. 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 42,782,600.00 24,660,000.00 67,442,600.00 42,782,600.00 24,660,000.00
instruments
Measured by cost 67,442,600.00 42,782,600.00 24,660,000.00 67,442,600.00 42,782,600.00 24,660,000.00
Total 67,442,600.00 42,782,600.00 24,660,000.00 67,442,600.00 42,782,600.00 24,660,000.00
(2) Available-for-sale Financial Assets Measured by Cost at the Period-end
Unit: RMB
Book balance Impairment provision Cash
Shareholdin bonus
g proportion of the
Investee Period-beginni Incre Decre Period-beginni Increa Decrea
Period-end Period-end among the Reporti
ng ase ase ng se se
investees ng
Period
Zibo Chengshun
Heating Co., Ltd.
(hereinafter refer 160,000.00 160,000.00 2.00%
to as “Chengshun
Heating”)
Yantai Rongchang
Pharmacy Co.,
Ltd. (hereinafter
55,282,600.00 55,282,600.00 42,782,600.00 42,782,600.00 3.88%
refer to as
“Rongchang
Pharmacy”)
Shandong
Hongqiao Power
12,000,000.00 12,000,000.00 19.38%
Co., Ltd.
(Hongqiao Power)
Total 67,442,600.00 67,442,600.00 42,782,600.00 42,782,600.00 --
100
Lu Thai Textile Co., Ltd. Semi-Annual Report 2017
11. Long-term Accounts Receivable
(1) List of Long-term Accounts Receivable
Unit: RMB
Closing balance Opening balance Interval
of
Item Bad-debt Bad-debt
Book balance Book value Book balance Book value discount
provision provision
rate
Finance lease 2,310,000.00 2,310,000.00 2,310,000.00 2,310,000.00 10.54%
Of which: unrealized
55,436.96 55,436.96
financing income
Total 2,310,000.00 2,310,000.00 2,310,000.00 2,310,000.00 --
12. Investment Property
(1) Investment Property Adopting the Cost Measurement Mode
√ Applicable □ Not applicable
Unit: RMB
Item Houses and buildings Land use right Construction in progress Total
I. Original book value
1. Opening balance 35,848,151.08 35,848,151.08
2. Increased amount of
91,262.13 91,262.13
the period
(1) Outsourcing
(2) Transfer of
inventory\fixed
91,262.13 91,262.13
assets\project under
construction
(3) Increased from
enterprise merger
3. Decreased amount of
the period
(1) Disposal
(2) Other transfer
4. Closing balance 35,939,413.21 35,939,413.21
II. Accumulative
depreciation and
101
Lu Thai Textile Co., Ltd. Semi-Annual Report 2017
accumulative
amortization
1. Opening balance 10,004,060.52 10,004,060.52
2. Increased amount of
714,998.48 714,998.48
the period
(1) Withdrawal or
714,998.48 714,998.48
amortization
3. Decreased amount of
the period
(1) Disposal
(2) Other transfer
4. Closing balance 10,719,059.00 10,719,059.00
III. Depreciation reserves
1. Opening balance
2. Increased amount of
the period
(1) Withdrawal
3. Decreased amount of
the period
(1) Disposal
(2) Other transfer
4. Closing balance
IV. Book value
1. Closing book value 25,220,354.21 25,220,354.21
2. Opening book value 25,844,090.56 25,844,090.56
13. Fixed Assets
(1) List of Fixed Assets
Unit: RMB
Houses and Machinery Transportation Electronic
Item Total
buildings equipment equipment equipment and other
I. Original book value
1. Opening balance 3,003,765,886.38 5,901,931,150.93 69,362,411.17 108,153,150.25 9,083,212,598.73
2. Increased amount of
2,373,588.52 115,762,739.77 2,408,181.24 6,718,012.55 127,262,522.08
the Period
102
Lu Thai Textile Co., Ltd. Semi-Annual Report 2017
(1) Purchase 913,672.01 85,667,565.24 2,408,181.24 4,753,512.55 93,742,931.04
(2) Transfer of project
1,459,916.51 30,095,174.53 1,964,500.00 33,519,591.04
under construction
(3) Enterprise
combination increase
3. Decreased amount of
46,380,318.04 31,808,133.13 577,321.80 1,976,866.80 80,742,639.77
the Period
(1) Disposal or Scrap 46,289,055.91 31,808,133.13 577,321.80 1,976,866.80 80,651,377.64
(2) Transfer of investment
91,262.13 91,262.13
property
4. Closing balance 2,959,759,156.86 5,985,885,757.57 71,193,270.61 112,894,296.00 9,129,732,481.04
II. Accumulative
depreciation
1. Opening balance 816,572,289.59 2,870,139,352.08 50,409,954.25 74,216,267.84 3,811,337,863.76
2. Increased amount of
54,353,717.52 141,758,652.24 2,273,874.27 4,370,957.01 202,757,201.04
the Period
(1) Withdrawal 54,353,717.52 141,758,652.24 2,273,874.27 4,370,957.01 202,757,201.04
3. Decreased amount of
16,460,453.18 23,350,146.28 518,127.11 1,834,677.28 42,163,403.85
the Period
(1) Disposal or Scrap 16,460,453.18 23,350,146.28 518,127.11 1,834,677.28 42,163,403.85
4. Closing balance 854,465,553.93 2,988,547,858.04 52,165,701.41 76,752,547.57 3,971,931,660.95
III. Depreciation reserves
1. Opening balance 4,830,670.26 22,596,691.34 27,269.67 84,643.90 27,539,275.17
2. Increased amount of
the Period
(1) Withdrawal
3. Decreased amount of
912,982.09 1,279.65 914,261.74
the Period
(1) Disposal or Scrap 912,982.09 1,279.65 914,261.74
4. Closing balance 4,830,670.26 21,683,709.25 27,269.67 83,364.25 26,625,013.43
IV. Book value
1. Closing book value 2,100,462,932.67 2,975,654,190.28 19,000,299.53 36,058,384.18 5,131,175,806.66
2. Opening book value 2,182,362,926.53 3,009,195,107.51 18,925,187.25 33,852,238.51 5,244,335,459.80
(2) Fixed Assets Leased out from Operation Lease
Unit: RMB
103
Lu Thai Textile Co., Ltd. Semi-Annual Report 2017
Item Closing book value
Houses and buildings 18,882,879.27
(3) Fixed Assets without Certificate of Property Right
Unit: RMB
Item Book value Reason
Ongoing inspection, surveying, verification to application
Weaving and yarn dying workshop 107,224,860.17
procedures by Housing authorities
Employee’s dormitory building of eastern Ongoing inspection, surveying, verification to application
44,696,228.30
area of industrial park procedures by Housing authorities
Ongoing inspection, surveying, verification to application
Spinning Fourth factory workshop 95,437,292.22
procedures by Housing authorities
Dormitory building of north yard in Ongoing inspection, surveying, verification to application
127,965,044.55
western area procedures by Housing authorities
Ongoing inspection, surveying, verification to application
Sample testing factory in western area 32,036,456.74
procedures by Housing authorities
Ongoing inspection, surveying, verification to application
Lufeng weaving dye workshop 132,979,806.76
procedures by Housing authorities
Other notes
14. Construction in Progress
(1) List of Construction in Progress
Unit: RMB
Closing balance Opening balance
Item Impairment Impairment
Book balance Book value Book balance Book value
provision provision
Reform project of
Xinsheng Thermal 13,387,636.75 13,387,636.75
Power
Expending project of
Xinsheng Thermal 115,328,166.90 115,328,166.90 72,155,299.06 72,155,299.06
Power
Energy conservation
9,607,705.02 9,607,705.02
project of Helijie
Lu Thai (Vietnam)
44,971,099.85 44,971,099.85 26,114,552.04 26,114,552.04
project
104
Lu Thai Textile Co., Ltd. Semi-Annual Report 2017
Lu Thai Garment
4,441,805.24 4,441,805.24 3,966,433.79 3,966,433.79
project
Project of 100 thousand
spindle spinning
25,675,058.78 25,675,058.78 0.00 0.00
production line
construction in Xinjiang
Reform of weaving
complex workshop in 31,302,498.94 31,302,498.94 0.00 0.00
eastern area of Lu Thai
Other small projects 44,268,804.89 44,268,804.89 29,436,732.30 29,436,732.30
Total 265,987,434.60 265,987,434.60 154,668,358.96 154,668,358.96
(2) Changes of Significant Construction in Progress
Unit: RMB
Of
Proporti which: Capita
Accumu
Other on the lizatio
lative
Amount that decrea estimate amount n rate Capita
Project amount
Name o f Opening transferred to sed d of the of the of the l
Estimated number Increase Closing balance progre of
item balance fixed assets of amoun project capitaliz interes resour
ss capitaliz
the period t of the accumul ed ts of ces
ed
period ative interests the
interests
input of the period
period
Reform
project of
100.00
Xinsheng 19,320,000.00 13,387,636.75 5,933,321.09 19,320,957.84 0.00 100.00% Others
%
Thermal
Power
Expending
project of
48.65
Xinsheng 240,000,000.00 72,155,299.06 43,172,867.84 0.00 115,328,166.90 48.65% Others
%
Thermal
Power
Energy
conservati 100.00
9,000,000.00 9,607,705.02 9,607,705.02 0.00 100.00% Others
on project %
of Helijie
Lu Thai 98.00
242,280,000.00 26,114,552.04 18,856,547.81 0.00 44,971,099.85 98.00% Others
(Vietnam) %
105
Lu Thai Textile Co., Ltd. Semi-Annual Report 2017
project
Lu Thai
86.00
Garment 93,040,000.00 3,966,433.79 475,371.45 0.00 4,441,805.24 86.00% Others
%
project
Project of
100
thousand
spindle
spinning 37.00
69,000,000.00 0.00 25,675,058.78 0.00 25,675,058.78 37.00% Others
production %
line
constructi
on in
Xinjiang
Reform of
weaving
complex
workshop 36,000,000.00 0.00 31,302,498.94 0.00 31,302,498.94 3.00% 3.00% Others
in eastern
area of Lu
Thai
Other
small 0.00 29,436,732.30 19,423,000.77 4,590,928.18 0.00 44,268,804.89 0.00% 0.00% Others
projects
0.00% 0.00% Others
154,668,358.9 144,838,666.6
Total 708,640,000.00 33,519,591.04 0.00 265,987,434.60 -- --
6 8
15. Engineering Material
Unit: RMB
Item Closing balance Opening balance
Specific materials 6,491.45
Specific equipment 108,821,916.14 117,113,972.05
Total 108,821,916.14 117,120,463.50
16. Productive Biological Assets
(1) Productive Biological Assets Adopting Cost Measurement Mode
√ Applicable □ Not applicable
106
Lu Thai Textile Co., Ltd. Semi-Annual Report 2017
Unit: RMB
Item Planting industry Livestock Forestry Aquaculture Total
Hu sheep
I. Original book
value
1. Opening
1,805,109.43 1,805,109.43
balance
2. Increased
387,919.74 387,919.74
amount of the Period
(1) Outsourcing 260,950.00 260,950.00
(2) Self
126,969.74 126,969.74
cultivate
3. Decreased
369,400.00 369,400.00
amount of the Period
(1) Disposal 342,300.00 342,300.00
(2) Other 27,100.00 27,100.00
4. Closing balance 1,823,629.17 1,823,629.17
II. Accumulative
depreciation
1. Opening
423,816.68 423,816.68
balance
2. Increased
168,002.23 168,002.23
amount of the Period
(1) Withdrawal 168,002.23 168,002.23
3. Decreased
163,523.50 163,523.50
amount of the period
(1) Disposal 151,287.50 151,287.50
(2) Other 12,236.00 12,236.00
4. Closing balance 428,295.41 428,295.41
III. Depreciation
reserves
1. Opening
balance
2. Increased
amount of the Period
(1) Withdrawal
3. Decreased
107
Lu Thai Textile Co., Ltd. Semi-Annual Report 2017
amount of the Period
(1) Disposal
(2) Other
4. Closing balance
IV. Book value
1. Closing book
1,395,333.76 1,395,333.76
value
2. Opening book
1,381,292.75 1,381,292.75
value
(2) Productive Biological Assets Adopting Fair Value Measurement Mode
□ Applicable √ Not applicable
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 479,972,935.82 1,985,176.47 480,000.00 482,438,112.29
2. Increased amount of the
101,137,893.00 3,319,129.85 104,457,022.85
Period
(1) Purchase 101,137,893.00 3,319,129.85 104,457,022.85
(2) Internal R&D
(3) Enterprise combination
increase
3. Decreased amount of the
Period
(1) Disposal
4. Closing balance 581,110,828.82 1,985,176.47 3,799,129.85 586,895,135.14
II. Accumulated amortization
1. Opening balance 96,720,842.54 1,224,192.36 240,000.00 98,185,034.90
2. Increased amount of the
7,312,282.76 99,258.84 489,897.53 7,901,439.13
Period
(1) Withdrawal 7,312,282.76 99,258.84 489,897.53 7,901,439.13
3. Decreased amount of the
108
Lu Thai Textile Co., Ltd. Semi-Annual Report 2017
Period
(1) Disposal
4. Closing balance 104,033,125.30 1,323,451.20 729,897.53 106,086,474.03
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
IV. Book value
1. Closing book value 477,077,703.52 661,725.27 3,069,232.32 480,808,661.11
2. Opening book value 383,252,093.28 760,984.11 240,000.00 384,253,077.39
The proportion of the intangible assets formed from the internal R&D through the Company among the balance of the intangible
assets at the period-end is 000%.
(2) Details of Land Use Right without Certificate of Property Right
Notes: The subsidiary of the Company Xinjiang Lu Thai Fengshou Cotton Industry Co., Ltd.
obtained short-term bank loans of RMB60,000,000.00 leaving the land use right as a pledge. The
closing book value of the land use right was RMB19,383,978.30. Please refer to No. 23 and 57 in
Note VII.
18. R&D Expenses
Current increased amount Current decreased amount
Opening Recognized Transferred in Closing
Item Internal R&D
balance Others as intangible current gains and balance
expenses
assets losses
Product
158,802,502.01 158,802,502.01
research
Total 158,802,502.01 158,802,502.01
109
Lu Thai Textile Co., Ltd. Semi-Annual Report 2017
19. Goodwill
(1) Original Book Value of Goodwill
Unit: RMB
Name of the
invested unit or
Opening balance Increase Decrease Closing balance
event generating
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
(2) Impairment Provision of Goodwill
Unit: RMB
Name of the
invested unit or
Opening balance Increase Decrease Closing balance
event generating
goodwill
Notes to the recognition methods of the goodwill impairment test process, parameters and goodwill impairment losses:
For details about the test method of impairment provision of goodwill, please refer to No. 18
Long-term Assets Impairment in Note V.
20. Long-term Unamortized Expenses
Unit: RMB
Decreased
Item Opening balance Increased amount Amortization amount Closing balance
amount
Land contracting fee of
26,793,269.36 523,890.18 26,269,379.18
Xinjiang Lu Thai
Land rent of overseas
86,894,972.90 1,295,062.18 85,599,910.72
subsidiaries
House rent of overseas
539,122.28 364,002.67 175,119.61
subsidiaries
Total 114,227,364.54 2,182,955.03 112,044,409.51
110
Lu Thai Textile Co., Ltd. Semi-Annual Report 2017
21. Deferred Income Tax Assets/Deferred Income Tax Liabilities
(1) Deferred Income Tax Assets Not Off-set
Unit: RMB
Closing balance Opening balance
Item Deductible temporary Deferred income tax Deductible temporary Deferred income tax
difference assets difference assets
Assets impairment
120,631,354.79 19,131,583.71 140,348,122.97 22,081,838.10
provision
Unrealized internal sales
77,535,442.48 11,630,316.38 81,198,211.62 9,319,462.09
gain and loss
One-time expenses 2,901,238.68 725,309.67 2,901,238.68 725,309.67
Payroll payable 110,698,173.59 17,032,239.77 110,698,173.59 17,032,239.77
Deferred income 107,270,615.59 17,475,336.88 94,231,052.79 14,024,943.00
Total 419,036,825.13 65,994,786.41 429,376,799.65 63,183,792.63
(2) Deferred Income Tax Liabilities Not Off-set
Unit: RMB
Closing balance Opening balance
Item Taxable temporary Deferred income tax Taxable temporary Deferred income tax
differences liabilities differences liabilities
Depreciation of fixed
13,766,815.52 2,271,524.56 14,188,423.45 2,341,089.87
assets
Total 13,766,815.52 2,271,524.56 14,188,423.45 2,341,089.87
(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-beginning the period-beginning
Deferred income tax
65,994,786.41 63,183,792.63
assets
Deferred income tax
2,271,524.56 2,341,089.87
liabilities
111
Lu Thai Textile Co., Ltd. Semi-Annual Report 2017
(4) List of Unrecognized Deferred Income Tax Assets
Unit: RMB
Item Closing balance Opening balance
Deductible temporary difference 22,570,600.46 17,124,084.90
Deductible losses 33,409,997.13 28,727,921.83
Total 55,980,597.59 45,852,006.73
(5) Deductible Losses of Unrecognized Deferred Income Tax Assets Due in the Following Years
Unit: RMB
Years Closing balance Opening balance Notes
Y2017 649,483.64 649,483.64
Y2018 125,946.78 125,946.78
Y2019 1,456,659.23 1,456,659.23
Y2020 24,488,754.73 22,245,128.73
Y2021 4,250,703.45 4,250,703.45
Y2022 2,438,449.30
Total 33,409,997.13 28,727,921.83 --
22. Other Non-current Assets
Unit: RMB
Item Closing balance Opening balance
Prepayment for equipment 33,293,973.22 5,853,067.38
Prepayment for land 11,966,401.00 25,406,401.00
Total 45,260,374.22 31,259,468.38
23. Short-term Loans
(1) Category of Short-term Loans
Unit: RMB
Item Closing balance Opening balance
Mortgage loan 260,000,000.00 310,000,000.00
Guaranteed loan 85,114,426.40 33,987,976.00
Credit loan 825,232,064.72 529,273,880.02
Total 1,170,346,491.12 873,261,856.02
112
Lu Thai Textile Co., Ltd. Semi-Annual Report 2017
Notes of short-term loans category:
For details about the category and amount of mortgaged assets of mortgage loan, please refer to
No.8, 17, 57 in Note VII.
24. Notes Payable
Unit: RMB
Category Closing balance Opening balance
Trade acceptance 3,088,525.00
Total 3,088,525.00
The total amount of the overdue notes payable at the period-end was of RMB000.
25. Accounts Payable
(1) List of Accounts Payable
Unit: RMB
Item Closing balance Opening balance
Purchase of goods 147,551,490.02 149,708,800.67
Engineering equipments 76,434,512.38 82,922,798.32
Others 15,772,418.76 19,906,964.07
Total 239,758,421.16 252,538,563.06
26. Advance from Customers
(1) List of Advance from Customers
Unit: RMB
Item Closing balance Opening balance
Advance from goods 91,701,520.84 89,451,314.62
Total 91,701,520.84 89,451,314.62
27. Payroll Payable
(1) List of Payroll Payable
Unit: RMB
Item Opening balance Increase Decrease Closing balance
I. Short-term salary 315,538,148.10 785,802,892.14 872,802,817.74 228,538,222.50
113
Lu Thai Textile Co., Ltd. Semi-Annual Report 2017
II. Post-employment
benefit-defined contribution 80,301.81 50,283,664.02 50,214,928.67 149,037.16
plans
III. Termination benefits 198,658.00 198,658.00
Total 315,618,449.91 836,285,214.16 923,216,404.41 228,687,259.66
(2) List of Short-term Salary
Unit: RMB
Item Opening balance Increase Decrease Closing balance
1. Salary, bonus, allowance,
273,033,283.13 720,041,301.08 811,386,671.40 181,687,912.81
subsidy
2. Employee welfare 23,274,265.39 23,274,265.39
3. Social insurance 42,846.03 24,393,051.63 24,383,717.34 52,180.32
Of which: Medical insurance
35,918.60 18,811,992.04 18,803,096.45 44,814.19
premiums
Work-related injury
6,110.95 3,000,829.51 3,000,630.63 6,309.83
insurance
Maternity insurance 816.48 2,580,230.08 2,579,990.26 1,056.30
4. Housing fund 667.07 5,311,987.18 5,311,313.25 1,341.00
5. Labor union budget and
42,461,351.87 12,782,286.86 8,446,850.36 46,796,788.37
employee education budget
Total 315,538,148.10 785,802,892.14 872,802,817.74 228,538,222.50
(3) List of Drawing Scheme
Unit: RMB
Item Opening balance Increase Decrease Closing balance
1. Basic pension benefits 73,723.82 48,524,843.08 48,453,237.38 145,329.52
2. Unemployment
6,577.99 1,758,820.94 1,761,691.29 3,707.64
insurance
Total 80,301.81 50,283,664.02 50,214,928.67 149,037.16
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 1.0% 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.
114
Lu Thai Textile Co., Ltd. Semi-Annual Report 2017
28. Taxes Payable
Unit: RMB
Item Closing balance Opening balance
VAT 1,779,432.09 8,584,752.76
Corporate income tax 39,889,293.24 45,985,549.11
Personal income tax 3,369,785.88 1,376,971.80
Urban maintenance and construction tax 3,094,106.55 6,314,742.98
Stamp duty 372,118.60 468,060.60
Property tax 4,569,322.79 4,484,688.82
Land use tax 4,487,172.05 4,428,494.17
Education surcharge 1,340,790.20 2,798,858.01
Local education surcharge 893,860.12 1,865,905.35
Local water conservancy facility
223,395.23 906,683.07
construction fund
Total 60,019,276.75 77,214,706.67
29. Interest Payable
Unit: RMB
Item Closing balance Opening balance
Interest payable on short-term borrowings 1,399,311.51 1,165,730.47
Total 1,399,311.51 1,165,730.47
30. 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
31. Other Accounts Payable
(1) Other Accounts Payable Listed by Nature of the Account
Unit: RMB
Item Closing balance Opening balance
The deposit and guarantee 18,946,782.97 18,768,467.36
115
Lu Thai Textile Co., Ltd. Semi-Annual Report 2017
Collecting payment on behalf of others 14,859,732.29 22,870,555.86
Intercourse funds 3,063,108.92 2,641,922.16
Others 25,517,265.69 25,084,695.77
Total 62,386,889.87 69,365,641.15
(2) Other Significant Accounts Payable 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 sales contract
Total 11,925,000.00 --
32. Non-current Liabilities Due within 1 Year
Unit: RMB
Item Closing balance Opening balance
Long-term borrowings due within one year 137,564,884.44
Total 137,564,884.44
33. Long-term Loan
(1) Category of Long-term Loan
Unit: RMB
Item Closing balance Opening balance
Guaranteed loan 135,678,044.89
Total 135,678,044.89
34. Long-term Payroll Payable
(1) Long-term Payroll Payable Chart
Unit: RMB
Item Closing balance Opening balance
III. Other long term welfare 97,673,785.15 79,122,422.89
Total 97,673,785.15 79,122,422.89
35. Deferred Revenue
Unit: RMB
116
Lu Thai Textile Co., Ltd. Semi-Annual Report 2017
Item Opening balance Increase Decrease Closing balance Reason
Government Government
95,935,052.83 22,963,045.28 1,318,146.85 117,579,951.26
subsidies subsidies
Unrealized financing
55,436.96 55,436.96 Finance lease
incomes
Total 95,990,489.79 22,963,045.28 1,373,583.81 117,579,951.26 --
Item involving government subsidies:
Unit: RMB
Amount recorded
Related to
Amount of into non-operating
Item Opening balance Other changes Closing balance assets/related
newly subsidy income in report
income
period
Related to the
Land 60,658,927.21 739,078.92 59,919,848.29
assets
Related to the
Equipment 34,452,125.58 22,963,045.28 555,067.93 56,860,102.93
assets
Production biological Related to the
824,000.04 24,000.00 800,000.04
assets assets
Total 95,935,052.83 22,963,045.28 1,318,146.85 117,579,951.26 --
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
37. Share Capital
Unit: RMB
Increase/decrease (+/-)
Opening Capitalized Closing
New shares
balance Bonus shares Capital Others Subtotal balance
issued
reserves
The sum of
922,602,311.00 922,602,311.00
shares
38. Capital Surplus
Unit: RMB
117
Lu Thai Textile Co., Ltd. Semi-Annual Report 2017
Item Opening balance Increase Decrease Closing balance
Capital premium 694,461,338.34 694,461,338.34
Other capital reserves 58,979,219.49 43,463.99 59,022,683.48
Total 753,440,557.83 43,463.99 753,484,021.82
39. Other Comprehensive Income
Unit: RMB
Reporting Period
Less: recorded
in other
comprehensive
Less: Attributable to
Opening Amount before income in Attributable Closing
Item Income owners of the
balance income tax in prior period to minority balance
tax Company after
current period and transferred shareholders
expense tax
to profit or after tax
loss in current
period
II. Other comprehensive
53,293,544.89 -14,785,091.90 -14,785,091.90 38,508,452.99
reclassified into profits or losses
Converted difference of the
foreign currency financial 53,293,544.89 -14,785,091.90 -14,785,091.90 38,508,452.99
statement
Total 53,293,544.89 -14,785,091.90 -14,785,091.90 38,508,452.99
40. Surplus Reserves
Unit: RMB
Item Opening balance Increase Decrease Closing balance
Statutory surplus
885,420,210.46 885,420,210.46
reserves
Discretionary surplus
3,341,572.58 3,341,572.58
reserves
Total 888,761,783.04 888,761,783.04
Other note, including changes and reason of change:
The Company drew the statutory surplus reserves by 10% of net profits in accordance with the
regulations of law and articles of company.
118
Lu Thai Textile Co., Ltd. Semi-Annual Report 2017
41. Retained Earnings
Unit: RMB
Item Reporting Period Same period of last year
Opening balance of retained profits before
4,319,887,532.43 4,053,079,857.70
adjustments
Opening balance of retained profits after
4,319,887,532.43 4,053,079,857.70
adjustments
Add: Net profit attributable to owners of the
393,069,981.55 805,446,326.99
Company
Less: Withdrawal of statutory surplus reserves 73,113,278.76
Dividend of common stock payable 461,301,155.50 465,525,373.50
Closing retained profits 4,251,656,358.48 4,319,887,532.43
List of adjustment of opening retained profits:
1) RMB000 opening retained profits was affected by retrospective adjustment conducted according to the Accounting Standards for
Business Enterprises and relevant new regulations.
2) RMB000 opening retained profits was affected by changes on accounting policies.
3) RMB000 opening retained profits was affected by correction of significant accounting errors.
4) RMB000 opening retained profits was affected by changes in combination scope arising from same control.
5) RMB000 opening retained profits was affected totally by other adjustments.
42. Revenues and Operating Costs
Unit: RMB
Reporting Period Same period of last year
Item
Sales revenue Cost of sales Sales revenue Cost of sales
Main operations 2,877,354,475.90 1,967,681,708.63 2,751,457,469.09 1,883,823,007.20
Other operations 113,105,220.53 82,257,506.00 79,869,303.94 53,576,583.88
Total 2,990,459,696.43 2,049,939,214.63 2,831,326,773.03 1,937,399,591.08
43. Tax and Surcharges
Unit: RMB
Item Reporting Period Same period of last year
Urban maintenance and construction tax 16,393,442.71 12,773,141.80
Education Surcharge 7,180,677.97 5,766,081.36
Property tax 9,865,797.76
Land use tax 9,262,257.89
119
Lu Thai Textile Co., Ltd. Semi-Annual Report 2017
Vehicles and vessels use tax 71,177.18
Stamp duty 1,968,220.89
Local education surcharge 4,787,118.66 3,844,052.89
Local water conservancy facility
1,969,458.67 1,823,463.31
construction fund
Business tax 593,989.16
Total 51,498,151.73 24,800,728.52
Other notes:
Note: The calculation and payment standard of each tax and surcharge can be looked up in Note VI.
Tax.
44. Sale Expenses
Unit: RMB
Item Reporting Period Same period of last year
Salary 18,231,453.63 29,504,903.71
Transport fees 19,456,296.25 15,982,535.64
Advertising expense 8,178,116.43 6,756,908.41
Mall costs 9,533,886.96
Terminal Handing charges 5,798,672.52 3,220,637.85
Depreciation charge 2,631,285.73 3,183,927.54
Business travel charges 2,401,690.68 2,370,210.27
Rental charges 687,727.39 1,275,879.18
Others 10,980,269.59 16,880,773.94
Total 68,365,512.22 88,709,663.50
45. Administration Expenses
Unit: RMB
Item Reporting Period Same period of last year
R&D expenses 158,802,502.01 161,055,249.75
Salary 50,178,864.06 52,531,501.43
Taxes 22,890,567.34
Depreciation charge 11,378,471.54 12,457,685.52
Warehouse funding 14,931,054.00 11,335,036.99
Business travel charges 12,066,196.48 8,272,682.65
120
Lu Thai Textile Co., Ltd. Semi-Annual Report 2017
Rental charges 6,524,734.12 7,465,489.25
Labor-union expenditure 7,312,516.87 7,485,349.25
Employee education budget 5,469,769.99 5,414,286.48
Amortization of intangible assets 5,452,967.89 5,132,925.98
Transport fees 3,489,273.36 3,391,774.21
Others 36,863,961.62 44,339,406.31
Total 312,470,311.94 341,771,955.16
46. Financial Expenses
Unit: RMB
Item Reporting Period Same period of last year
Interest expenses 14,418,152.20 8,741,653.03
Less: Interest income 2,642,590.05 3,040,662.29
Less: Amount of capitalized interest
Exchange gains and losses 15,375,073.21 10,815,487.46
Less: capitalization of foreign currency
exchange gains and losses
Others 3,544,665.18 3,294,264.48
Total 30,695,300.54 19,810,742.68
48. Asset Impairment Loss
Unit: RMB
Item Reporting Period Same period of last year
I. Bad debt loss -1,260,393.94 -3,203,674.28
II. Inventory falling price loss 2,246,368.58 642,332.01
Total 985,974.64 -2,561,342.27
48. Gains and Losses from Changes in Fair Value
Unit: RMB
Sources of changes in fair value gains Reporting period Same period of last year
Financial assets measured by fair value and the changes be
1,110,700.00 -6,013,605.60
included in the current profits and losses
Financial liabilities measured by fair value and the changes
36,960,175.00
included in the current gains and losses
121
Lu Thai Textile Co., Ltd. Semi-Annual Report 2017
Total 1,110,700.00 30,946,569.40
49. 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 1,385,535.34 -33,641,221.22
in the current profits and losses during holding period
Investment income received from holding of
439,800.00
available-for-sale financial assets
Total 1,825,335.34 -33,641,221.22
Other notes:
50. Other Income
Unit: RMB
Sources of other income Same period of last
Reporting period
year
2016 power industrial city 30 policies support fund (special fund for business management
3,036,000.00
Zicaiqizhi[2016] No. 205)
Special fund for development of service sector (Chuancaiqizhi[2017] No. 16, No. 17) 70,500.00
Subsidy for Elite Program of Zibo (Zizhengbanzi[2016] No. 159) 500,000.00
Receiving subsidy from the academician workstation (Cheque No: 14916508) 200,000.00
Progress of Science and Technology Award 50,000.00
Reward fund for enterprises with an advantage in patent creation in 2016 (Zizhizi[2017]
30,000.00
No. 22)
Fund for energy-saving 30,000.00
Fund for supporting talents 300,000.00
Funding for Municipal Key Talents Introduce Project 50,000.00
Export credit insurance premiums 135,200.00
Subsidy for Las Vegas Show 56,000.00
Government subsidy for brand construction 740,200.00
Government subsidy for service trade 20,000.00
Progress of Science and Technology Award in of Zibo in 2016 50,000.00
Counterpart funding for post doctorates 50,000.00
Special subsidy liquidation fund for textile and garment in 2016 3,871,234.20
122
Lu Thai Textile Co., Ltd. Semi-Annual Report 2017
Deferred income amortization 1,391,503.09
Total 10,580,637.29
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
79,814.73 228,313.30 79,814.73
non-current assets
Including: Gains from disposal
79,814.73 228,313.30 79,814.73
of fixed assets
Government subsidies 130,000.00 14,112,224.13 130,000.00
Others 4,234,943.25 6,852,899.89 4,234,943.25
Total 4,444,757.98 21,193,437.32 4,444,757.98
Government subsidies recorded into current profits and losses
Unit: RMB
Whether
subsidies
Distribut Special Related to
Distribution influence the Reporting Same period
Item ion Nature subsidy or assets/related
entity current Period of last year
reason not income
profits and
losses or not
Due to engaged in
Acquisition special industry that the
of Leader state encouraged and
Finance
Quality supported, gained Related to the
Bureau of Award Yes No 30,000.00
Award (Zi subsidy (obtaining in income
Zibo
Enterprise line with the law and the
[2016]45) regulations of national
policy)
Due to engaged in
Government special industry that the
subsidies to state encouraged and
Finance
projects supported, gained Related to the
Bureau of Subsidy Yes No 100,000.00
invested by subsidy (obtaining in income
Zibo
the line with the law and the
Company regulations of national
policy)
Funds for Finance Subsidy Due to engaged in Yes No 600,000.00 Related to the
123
Lu Thai Textile Co., Ltd. Semi-Annual Report 2017
development Bureau of special industry that the income
of center Zibo state encouraged and
foreign trade supported, gained
and economic subsidy (obtaining in
cooperation line with the law and the
regulations of national
policy)
Due to engaged in
special industry that the
state encouraged and
Export credit Finance
supported, gained Related to the
insurance Bureau of Subsidy Yes No 200,000.00
subsidy (obtaining in income
premiums Zibo
line with the law and the
regulations of national
policy)
Foreign Due to engaged in
economy special industry that the
trade state encouraged and
Finance
cooperation supported, gained Related to the
Bureau of Subsidy Yes No 208,000.00
(foreign subsidy (obtaining in income
Zibo
investment)- line with the law and the
Vietnam regulations of national
subsidy policy)
Foreign Due to engaged in
economy special industry that the
trade state encouraged and
Finance
cooperation supported, gained Related to the
Bureau of Subsidy Yes No 208,000.00
(foreign subsidy (obtaining in income
Zibo
investment)- line with the law and the
Cambodia regulations of national
subsidy policy)
Foreign Due to engaged in
economy special industry that the
trade state encouraged and
Finance
cooperation supported, gained Related to the
Bureau of Subsidy Yes No 180,400.00
(foreign subsidy (obtaining in income
Zibo
investment)- line with the law and the
Buma regulations of national
subsidy policy)
Equipment Due to engaged in
Finance
import special industry that the Related to the
Bureau of Subsidy Yes No 52,000.00
discount state encouraged and income
Zibo
interest funds supported, gained
124
Lu Thai Textile Co., Ltd. Semi-Annual Report 2017
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 Related to the
Subsidy government attracting Yes No 1,200.00
nt dynamic Zichuan 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 Related to the
Subsidy government attracting Yes No 500,000.00
subsidy-perfo of Zibo, 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 Related to the
Subsidy government attracting Yes No 150,000.00
Toyota of Zibo, 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 Related to the
for Subsidy government attracting Yes No 100,000.00
of Zibo, income
E-commerce investment and local
Finance
supportive policy etc.
Bureau of
Zibo
Due to engaged in
special industry that the
state encouraged and
Export credit Finance
supported, gained Related to the
insurance Bureau of Subsidy Yes No 73,500.00
subsidy (obtaining in income
premiums Zibo
line with the law and the
regulations of national
policy)
125
Lu Thai Textile Co., Ltd. Semi-Annual Report 2017
People's
Energy Government Subsidy from R&D
Related to the
saving award Office of Award Technical updating and Yes No 1,000,000.00
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 Related to the
for energy Subsidy Technical updating and Yes No 1,000,000.00
Zichuan income
saving reform transformation, etc.
District
Subsidy gained due to
Pollution Environment
confirming with local
source video al monitor Related to the
Subsidy government attracting Yes No 21,800.00
monitoring station of income
investment and local
subsidy Zibo
supportive policy etc.
Science and
Department Subsidy from R&D
technology Related to the
of Finance of Subsidy Technical updating and Yes No 12,000.00
innovation income
Shandong transformation, etc.
fund
Due to engaged in
special industry that the
Finance state encouraged and
Export award
Bureau of supported, gained Related to the
liquidation Award Yes No 42,400.00
Zichuan subsidy (obtaining in income
fund
District line with the law and the
regulations of national
policy)
126
Lu Thai Textile Co., Ltd. Semi-Annual Report 2017
Due to engaged in
special industry that the
Special funds
Finance state encouraged and
for
Bureau of supported, gained Related to the
encouraging Subsidy Yes No 67,700.00
Zichuan subsidy (obtaining in income
foreign trade
District line with the law and the
development
regulations of national
policy)
Due to engaged in
special industry that the
Finance state encouraged and
Export credit
Bureau of supported, gained Related to the
insurance Subsidy Yes No 22,700.00
Zichuan subsidy (obtaining in income
subsidy
District line with the 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 Related to the
Subsidy government attracting Yes No 10,900.00
monitoring station of income
investment and local
subsidy Zibo
supportive policy etc.
Subsidy gained due to
Akesu
Electricity confirming with local
Prefecture Related to the
Finance Subsidy government attracting Yes No 318,191.00
Bureau of income
subsidies investment and local
Finance
supportive policy etc.
Akesu Subsidy gained due to
Enterprise
Prefecture confirming with local Related to the
paying VAT Subsidy Yes No 7,000,000.00
Bureau of government attracting income
subsidy
Finance investment and local
127
Lu Thai Textile Co., Ltd. Semi-Annual Report 2017
supportive policy etc.
Spinning Finance Subsidy from R&D
Related to the
reform Bureau of Subsidy Technical updating and Yes No 100,000.00
income
project fund Awati transformation, etc.
Home of staff
Subsidy gained due to
of textile and
Finance confirming with local
garment Related to the
Bureau of Subsidy government attracting Yes No 70,000.00
enterprise income
Awati investment and local
creating
supportive policy etc.
subsidy funds
Due to engaged in
special industry that the
state encouraged and
Returning Forestry
supported, gained Related to the
farmland to Bureau of Subsidy Yes No 39,600.00
subsidy (obtaining in income
forest subsidy Awati
line with the law and the
regulations of national
policy)
Subsidy gained due to
Pollution Environment
confirming with local
source video al monitor Related to the
Subsidy government attracting Yes No 21,800.00
monitoring station of income
investment and local
subsidy Zibo
supportive policy etc.
Due to engaged in
special industry that the
Special funds
Finance state encouraged and
for
Bureau of supported, gained Related to the
encouraging Subsidy Yes No 15,200.00
Zichuan subsidy (obtaining in income
foreign trade
District line with the law and the
development
regulations of national
policy)
Subsidy gained due to
Purchase of Finance confirming with local
Related to the
equipment Bureau of Subsidy government attracting Yes No 178,000.00
income
subsidy Gaoqing investment and local
supportive policy etc.
Deferred
Related to the
revenue 448,874.23
assets
amortization
Deferred
Related to the
revenue 339,555.90
assets
amortization
128
Lu Thai Textile Co., Ltd. Semi-Annual Report 2017
Deferred
Related to the
revenue 19,453.02
assets
amortization
Deferred
Related to the
revenue 426,499.98
assets
amortization
Total -- -- -- -- -- 130,000.00 14,112,224.13 --
52. Non-operating Expenses
Unit: RMB
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
2,052,051.87 5,412,125.25 2,052,051.87
assets
Including: Loss on disposal of
2,052,051.87 5,412,125.25 2,052,051.87
fixed assets
Donation 3,010,000.00 806,408.43 3,010,000.00
Others 857,770.73 1,500,106.22 857,770.73
Total 5,919,822.60 7,718,639.90 5,919,822.60
53. Income Tax Expense
(1) Lists of Income Tax Expense
Unit: RMB
Item Reporting Period Same period of last year
Current income tax expense 81,529,968.73 78,609,388.16
Deferred income tax expense -2,880,559.09 10,909,106.36
Total 78,649,409.64 89,518,494.52
(2) Adjustment Process of Accounting Profit and Income Tax Expense
Unit: RMB
Item Reporting Period
Total profits 488,546,838.74
Current income tax expense accounted by tax and relevant
73,282,025.81
regulations
Influence of different tax rate suitable to subsidiary 8,532,510.60
129
Lu Thai Textile Co., Ltd. Semi-Annual Report 2017
Influence of income tax before adjustment 622,569.86
Influence of non taxable income -5,144,651.52
Influence of not deductable costs, expenses and losses 306,588.79
Influence of deductible losses of unrecognized deferred income
-27,520.76
tax assets used in previous years
Influence of deductible temporary difference or deductible losses
1,077,886.86
of deferred income tax assets derecognized in Reporting Period.
Income tax expense 78,649,409.64
54. Other Comprehensive Income
Refer to Note VII. 39.
55. Information of Cash Flow Statement
(1) Other Cash Received Relevant to Operating Activities
Unit: RMB
Item Reporting Period Same period of last year
Government subsidies 32,282,179.48 13,779,541.00
Claim income 1,325,325.55 1,598,909.74
Penalty income 73,452.28 85,482.93
Recovery of employee borrowings, petty
293,762.05 4,649,690.95
cash and deposit
Money collected for others 278,441.53 943,338.62
Others 16,529,262.62 14,082,485.48
Total 50,782,423.51 35,139,448.72
(2) Other Cash Paid Relevant to Operating Activities
Unit: RMB
Item Reporting Period Same period of last year
Freight and miscellaneous charges 29,710,088.63 26,496,789.77
Rental charges and management expenses
8,711,587.87
of the shops
Rental charges 12,119,156.17 13,176,835.37
Advertising expense 2,594,594.92 3,244,875.81
Business travel charges 16,599,609.73 11,682,937.78
130
Lu Thai Textile Co., Ltd. Semi-Annual Report 2017
Premium 3,339,363.25 3,564,970.67
Copyright royalty 891,154.41
Audit advisory announcement fee 2,896,671.62 3,479,711.34
Decoration & repair expenses 4,151,211.04 3,919,826.15
Donation 4,226,982.21 806,408.43
Money paid for others 24,679,803.50
Others 43,316,273.84 42,628,506.60
Total 143,633,754.91 118,603,604.20
(3) Other Cash Received Relevant to Investment Activities
Unit: RMB
Item Reporting Period Same period of last year
Interest income 2,642,590.05 3,693,737.37
Income from forward foreign exchange 1,385,535.34
Sales of securities 66,007,480.86 2,158,904.65
Investment income from holding of trading
financial assets
Collection of option premium
Total 70,035,606.25 5,852,642.02
(4) Other Cash Paid Relevant to Investment Activity
Unit: RMB
Item Reporting Period Same period of last year
Purchase of securities 3,038,322.29
Losses from forward foreign exchange 34,587,575.00
Total 37,625,897.29
(5) Other Cash Received Relevant to Financing Activities
Unit: RMB
Item Reporting Period Same period of last year
Received pledged margin 8,000,000.00 29,805,722.42
Total 8,000,000.00 29,805,722.42
131
Lu Thai Textile Co., Ltd. Semi-Annual Report 2017
(6) Other Cash Paid Relevant to Financing Activities
Unit: RMB
Item Reporting Period Same period of last year
Payment for the B-share buy-back amount 203,465,414.43
Total 203,465,414.43
56. Supplemental Information for Cash Flow Statement
(1) Supplemental Information for Cash Flow Statement
Unit: RMB
Supplemental information Reporting Period Same period of last year
1. Reconciliation of net profit to net cash flows generated from
-- --
operating activities
Net profit 409,897,429.10 342,657,085.44
Add: Provision for impairment of assets 985,974.64 -2,561,342.27
Depreciation of fixed assets, of oil-gas assets, of productive
203,640,201.75 176,763,336.08
biological assets
Amortization of intangible assets 7,901,439.13 6,062,971.96
Long-term unamortized expenses 2,182,955.03 1,183,338.36
Losses on disposal of fixed assets, intangible assets and other
1,972,237.14 5,183,811.95
long-term assets (gains: negative)
Losses on retirement of fixed assets (gains: negative) 0.00
Losses from variation of fair value (gains: negative) -1,110,700.00 -30,946,569.40
Financial cost (gains: negative) 27,150,635.36 16,516,478.20
Investment loss (gains: negative) -1,825,335.34 33,641,221.22
Decrease in deferred income tax assets (gains: negative) -2,810,993.78 10,953,337.12
Increase in deferred income tax liabilities
-69,565.31 44,230.76
(“-” means decrease)
Decrease in inventory (gains: negative) -222,947,772.98 -31,187,606.68
Decrease in accounts receivable from operating activities (gains:
35,013,507.82 167,746,613.50
negative)
Increase in payables from operating activities (decrease: negative) -117,060,254.26 -132,649,558.81
Net cash flows generated from operating activities 342,919,758.30 563,407,347.43
2. Significant investing and financing activities without involvement
-- --
of cash receipts and payments
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Lu Thai Textile Co., Ltd. Semi-Annual Report 2017
3. Net increase in cash and cash equivalents: -- --
Closing balance of cash 600,999,181.24 578,165,942.35
Less: Opening balance of cash 654,779,220.82 765,695,473.65
Net increase in cash and cash equivalents -53,780,039.58 -187,529,531.30
(2) Cash and Cash Equivalents
Unit: RMB
Item Closing balance Opening balance
I. Cash 600,999,181.24 654,779,220.82
Including: Cash on hand 4,155,209.28 3,216,250.69
Bank deposit on demand 596,843,971.96 651,562,970.13
III. Closing balance of cash and cash
600,999,181.24 654,779,220.82
equivalents
57. Assets with Restricted Ownership and Right to Use
Unit: RMB
Item Closing book value Restricted reason
Monetary capital 261,212.93 Security deposit of L/G
Inventory 62,445,521.72 Pledge for short-term loan
Intangible assets 19,383,978.30 Pledge for short-term loan
Total 82,090,712.95 --
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 63,288,149.59 6.7744 428,732,067.57
EUR 88,291.40 7.7496 684,223.03
HKD 19,975,142.11 0.8679 17,336,686.96
JPY 4,619,865.00 0.0605 279,501.84
THB 68,990.19 0.1996 13,770.44
SGD 91.90 4.9135 451.55
GBP 4,020.86 8.8144 35,441.47
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Lu Thai Textile Co., Ltd. Semi-Annual Report 2017
AUD 2,821.03 5.2099 14,697.28
CHF 87.90 7.0888 623.10
SEK 920.00 0.801 736.92
KHR 48,435,150.00 0.001667 80,638.73
DONG 12,870,971,632.00 0.000298 3,835,549.54
TWD 30,100.00 0.2228 6,706.28
Notes receivable:
Including: USD 12,176,890.53 6.7744 82,491,127.24
Including: USD 21,530,381.45 6.7744 145,855,416.09
HKD 2,456,217.94 0.8679 2,131,751.55
DONG 133,655,025.00 0.000298 39,834.25
Other accounts receivable:
Including: USD 68,993.14 6.7744 467,387.13
EUR 20,000.00 7.7496 154,992.00
DONG 840,180,457.00 0.000298 250,405.56
HKD 5,000.00 0.867900 4,339.50
JPY 200,000.00 0.060500 12,100.00
CHF 25.00 7.088800 220.36
Accounts payable:
Including: USD 575,848.77 6.7744 3,901,029.93
JPY 123,482,650.00 0.0605 7,473,784.26
EUR 243,289.47 7.7496 1,884,326.05
CHF 79,852.00 7.0888 565,628.87
DONG 19,865,729,714.99 0.000298 5,920,739.08
Other accounts payable:
Including: USD 71,527.77 6.7744 484,557.73
HKD 391,076.97 0.8679 339,415.70
DONG 234,100,879.00 0.000298 69,770.92
Short-term loans:
Including: USD 130,711,018.86 6.7744 885,488,726.14
EUR 2,959,230.19 7.7496 22,929,314.47
JPY 22,577,085.00 0.0605 1,366,489.89
Non-current liabilities due within one
year
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Lu Thai Textile Co., Ltd. Semi-Annual Report 2017
Including: USD 9,473,424.94 6.7744 64,171,769.91
EUR 5,650,732.80 7.7496 43,748,753.84
JPY 489,906,155.00 0.0605 29,644,360.69
(2) Note to Oversea Entities Including: for Significant Oversea Entities, Main Operating Place, Recording
Currency and Selection Basis, Shall be disclosed; if there Are Changes into Recording Currency, the Reason
Shall Also Be Disclosed.
√ 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. Equity in Other Entities
1. Equity in Subsidiary
(1) The Structure of the Enterprise Group
Main Holding percentage
Registration Nature of
Name operating (%) Way of gaining
place business
place Directly Indirectly
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
Manufacturing
Luqun Textile Zibo Zibo 100.00% Set-up
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
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Lu Thai Textile Co., Ltd. Semi-Annual Report 2017
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% 3,501,815.94 12,023,566.38 183,048,336.98
Thai
Lufeng
Weaving & 25.00% 13,655,231.25 337,532,947.04
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 liabilities assets liabilities
Xinjiang 345,388, 451,738, 797,126, 336,339, 5,072,43 341,412, 528,219, 350,642, 878,862, 402,356, 5,428,01 407,784,
Lu Thai 449.94 335.13 785.07 700.90 0.50 131.40 890.20 671.38 561.58 617.55 8.92 636.47
Lufeng
688,907, 827,105, 1,516,01 124,302, 29,371,5 153,674, 592,276, 843,971, 1,436,24 111,025, 29,711,1 140,737,
Weaving
142.51 483.21 2,625.72 743.86 88.00 331.86 639.42 262.60 7,902.02 894.92 43.90 038.82
&
136
Lu Thai Textile Co., Ltd. Semi-Annual Report 2017
Dyeing
Unit: RMB
Reporting period The same period of last year
Total Cash flow Total
Name Operation Operation Cash flow from
Net profit consolidated from operating Net profit consolidated
revenue revenue operating activities
income activities income
Xinjiang Lu
259,171,106.59 14,636,728.56 14,636,728.56 79,439,238.74 196,855,106.60 3,446,636.04 3,446,636.04 133,025,707.88
Thai
Lufeng
Weaving & 791,134,076.11 66,827,430.66 66,827,430.66 69,665,169.07 716,210,253.15 35,147,675.14 35,147,675.14 12,610,567.38
Dyeing
Other notes:
(4) Significant Restrictions of Using Enterprise Group Assets and Paying Off Enterprise Group Debt
(5) Provide Financial Support or Other Support for Structure Entities Incorporate into the Scope of
Consolidated Financial Statements
Other notes:
IX. 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 “Note VI”. 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.
(I) 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.
137
Lu Thai Textile Co., Ltd. Semi-Annual Report 2017
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
Company’s several subsidiaries purchase and sale, in USD, HKD and Dong, the other main
business settled by RMB. On June 30, 2017, in addition to the following assets or liabilities in
statement was USD, HKD, EUR and GONG, 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 451,021,094.71 295,220,057.63
Notes receivable 82,491,127.24 71,898,206.01
Account receivable 148,027,001.89 201,635,005.83
Other accounts receivable 889,444.55 5,624,249.98
Other current assets - 65,968,094.08
Accounts payable 19,745,508.19 47,263,170.03
Other accounts payable 893,744.35 4,286,466.39
Short-term loans 909,784,530.50 563,261,856.02
Long-term borrowings 135,678,044.89
Non-current liabilities due within one year 137,564,884.44
(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 Note VII 23 and 33).
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 Same period of last year
Influence to the Influence to equity Influence to the Influence to equity
profits of shareholders profits of shareholders
Increase 100 BP -8,376,485.24 -7,702,361.91 -4,750,027.46 -4,261,794.18
Decrease 100 BP 8,376,485.24 7,702,361.91 4,750,027.46 4,261,794.18
2 Credit Risk,
On June 30, 2017, 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
138
Lu Thai Textile Co., Ltd. Semi-Annual Report 2017
When managing liquidity risk, the Company maintained the management’s believe that supervising
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 RMB601 million. In
recent two years, the average of net cash flow of operation activities was RMB1.169 billion. The
Company believed that the liquidity risk was insignificant.
X. The Disclosure of the Fair Value
1. Closing Fair Value of Assets and Liabilities Calculated by Fair Value
Unit: RMB
Fair value at the end of the Reporting Period
Item First level Second level Third level
Total
Fair value measurement Fair value measurement Fair value measurement
I. Continuous fair value
-- -- -- --
measurement
(I) Financial assets calculated
by fair value and changes record 1,110,700.00
into current profits or losses
1. Trading financial assets 1,110,700.00
(3) Derivative financial assets 1,110,700.00
II. Discontinuous fair value
-- -- -- --
measurement
2. Market Price Recognition Basis for Consistent and Inconsistent Fair Value Measurement Items at Level 1
The fair value at level 1 of financial assets shall be determined in accordance with the bank quotation of forward foreign exchange on
June 30, 2017.
XI. Related Party and Related Transaction
1. Information Related to Parent Company of the Company
Proportion of voting
Proportion of share
rights owned by
Name of parent held by parent
Registration place Nature of business Registered capital parent company
company company against the
against the Company
Company (%)
(%)
Lucheng Textile Zibo Textile, chemistry, RMB63,260,000 15.21% 15.21%
139
Lu Thai Textile Co., Ltd. Semi-Annual Report 2017
investment, etc.
Notes: Information on the parent company
The final controllers of the Company are Liu Zibin and Liu Deming.
2. Subsidiaries of the Company
For details, please refer to Note VIII. 1. Equity in Subsidiaries.
3. Information on Other Related Parties of the Company
Name Relationship
Affiliated person (the same chairman of the Board
Zibo Stanluian Cosmetics Co., Ltd. (hereinafter called “Stanluian”)
with the 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 Purified
Wholly-owned subsidiary of the parent company
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 “Chengshun
Controlled subsidiary of the parent company
Heating” )
Zibo Lurui Fine Chemical Co., Ltd. (hereinafter referred to as Lurui
Controlled subsidiary of the parent company
Chemical)
Zibo Lujia Property Management Co. , Ltd. (hereinafter referred to as Lujia
Wholly-owned subsidiary of the parent company
Property)
Shangdong Chengshun Petroleum and Chemical Co., Ltd. (hereinafter
Wholly-owned subsidiary of the parent company
referred to as “Chengshun Petroleum”)
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
Reporting The approval trade Whether exceed Same period of last
Related-party Content
Period credit trade credit or not year
Towel, sock, oil product,
supermarket retailing,
Lucheng Textile electronics, computer 6,635,174.84 7,900,000.00 No 6,060,935.00
supplies, odd processing,
etc.
Taimei Ties Processing charges 641,693.32 No 563,319.65
140
Lu Thai Textile Co., Ltd. Semi-Annual Report 2017
Limin Purified Treatment of recycled
11,460,424.24 13,640,000.00 No 8,920,188.77
Water water and sewage
Chengshun
Natural gas 8,940,846.94 10,640,000.00 No
Petrolum
Lurui Fine
Additive 44,827,622.22 53,300,000.00 No 39,845,988.16
Chemical
Information of sales of goods and provision of labor service
Unit: RMB
Same period of last
Related-party Content Reporting Period
year
Sales of materials, electricity, running water, steam and
Lucheng Textile 161,866.40 148,646.03
LED lamp
Lucheng Textile Sales of greige yarn, dyed yarn, fabric 372,527.18 511,769.75
Taimei Ties Sales of electricity, heating charges 12,289.62 11,929.11
Sales of materials, electricity, LED lamp, running water and
Stanluian Company 29,595.68 24,655.83
heating charges
Limin Purified
Sales of materials, garment, and LED lamp 1,365.29 1,625.19
Water
Sales of garments, equipment, LED lamp, fabric, additive
Lurui Fine Chemical 105,936.42 124,544.74
and lunch components
Sale of materials, low temperature hot water, heating
Chengshun Heating power, electricity, tap water, washing charges for pipelines 4,136,861.67 3,376,447.92
and garment
Lujia Property Sales of materials and recycled water 44,777.40 22,832.10
(2) Information of Related Lease
The Company serves as the lessor:
Unit: RMB
Rental income confirmed in the Rental income confirmed in the
Name of leasee Type of leased assets
Report period same period of last year
Lucheng Textile Houses and buildings 15,428.58 192,101.59
Lurui Fine Chemical Houses and buildings 4,091.82 681.97
The Company serves as the leasee:
Unit: RMB
Rental expense confirmed in the Rental expense confirmed in the
Name of lessor Type of leased assets
report period same period of last year
Lucheng Textile Rent of land 1,807,428.60 2,276,285.72
141
Lu Thai Textile Co., Ltd. Semi-Annual Report 2017
Lucheng Textile Rent of gas station 250,857.12 259,219.04
Lucheng Textile Rent of land and buildings 5,302,857.18 5,455,409.54
Luqun Property Rent of land and buildings 697,142.82 720,380.94
Lucheng Textile Rent of houses 331,999.98 343,066.66
(3) Borrowing and Lending of Related Parties
Unit: RMB
Related party Amount Start date Maturity date notes
Borrowing
Limin Purified Water 7,000,000.00 01/24/2017 03/10/2017
Stanluian Company 1,300,000.00 01/24/2017 03/10/2017
Luqun Property 9,000,000.00 01/24/2017 03/14/2017
Taimei Ties 2,700,000.00 01/24/2017 03/10/2017
Lending
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:
Lurui Fine Chemical 637,294.91 790,533.58
XII. Commitments and Contingencies
1. Significant Commitments
Significant commitments at balance sheet date
Capital Commitment Unit: RMB’0,000
Item Closing balance Opening balance
Commitments signed but hasn’t been recognized in
financial statements
-- Commitment for constructing and purchasing long-term 16,928.02 20,581.71
assets
Total 16,928.02 20,581.71
142
Lu Thai Textile Co., Ltd. Semi-Annual Report 2017
2. Contingencies
(1) Significant Contingencies at Balance Sheet Date
As of June 30, 2017, there were no contingencies to be disclosed.
(2) If the Company Has No Significant Contingency to Disclose, Relevant Explanations Should Also Be Given
The company has no significant contingency to disclose.
XIII. Notes of Main Items in the Financial Statements of the Company
1. Accounts Receivable
(1) Accounts Receivable Classified by Category
Unit: RMB
Closing balance Opening balance
Book balance Bad debt provision Book balance Bad debt provision
Category Withdr Withdr
Propor awal Book value Propor awal Book value
Amount Amount Amount Amount
tion propor tion propor
tion tion
Accounts
receivable with
significant single 23.94 100.00 24.68 100.00
102,458,768.26 102,458,768.26 102,459,665.95 102,459,665.95 0.00
amount for which % % % %
bad debt provision
separately accrued
Accounts
receivable
withdrawal of bad 76.06 75.32
325,586,807.64 16,300,961.44 5.01% 309,285,846.20 312,659,373.66 15,633,263.33 5.00% 297,026,110.33
debt provision of % %
by credit risk
characteristics
100.00 27.74 100.00 28.45
Total 428,045,575.90 118,759,729.70 309,285,846.20 415,119,039.61 118,092,929.28 297,026,110.33
% % % %
Accounts receivable with single significant amount and withdrawal bad debt provision separately at end of period
√ Applicable □ Not applicable
Unit: RMB
Accounts receivable Closing balance
143
Lu Thai Textile Co., Ltd. Semi-Annual Report 2017
(classified by units) Accounts Withdrawal
Bad debt provision Withdrawal reason
receivable proportion
The net asset of the subsidiary Beijing
Beijing Innovative 102,458,768.26 102,458,768.26 100.00%
Innovative was minus for loss.
Total 102,458,768.26 102,458,768.26 -- --
In the groups, accounts receivable adopting aging analysis method to withdraw bad debt provision:
√ Applicable □ Not applicable
Unit: RMB
Closing balance
Aging
Accounts receivable Bad debt provision Withdrawal proportion
Subentry within 1 year
Within 1 year 325,154,386.49 16,257,719.32 5.00%
Subtotal within 1 year 325,154,386.49 16,257,719.32 5.00%
1 to 2 years 432,421.15 43,242.12 10.00%
Total 325,586,807.64 16,300,961.44 5.01%
In the groups, accounts receivable adopting balance percentage method to withdraw bad debt provision:
□ Applicable √ Not applicable
(2) Accounts Receivable Withdrawn, Reversed or Collected during the Reporting Period
The withdrawal amount of the bad debt provision during the Reporting Period was of RMB666,800.42; the amount of the reversed or
collected part during the Reporting Period was of RMB000.
(3) Accounts Receivable of the Top 5 of the Closing Balance Classified by Debtors
The total amount of top five of account receivable of closing balance collected by arrears party was
RMB160,374,601.77, 37.47% of total closing balance of account receivable, the relevant closing
balance of bad debt provision withdrawn was RMB105,354,559.93.
2. Other Accounts Receivable
(1) Other Accounts Receivable Classified by Category
Unit: RMB
Closing balance Opening balance
Book balance Bad debt provision Book balance Bad debt provision
Category Withdr Withdr
Propor awal Book value Proporti awal Book value
Amount Amount Amount Amount
tion propor on propor
tion tion
144
Lu Thai Textile Co., Ltd. Semi-Annual Report 2017
Other accounts
receivable with
significant single 94.82
328,814,853.45 328,814,853.45 317,675,160.04 92.64% 317,675,160.04
amount for which %
bad debt provision
separately accrued
Other accounts
receivable
withdrawn bad debt 11.36
17,962,681.62 5.18% 2,041,255.29 15,921,426.33 25,228,972.17 7.36% 2,445,924.01 9.69% 22,783,048.16
provision according %
to credit risk
characteristics
Other accounts
receivable with
significant single 100.00
346,777,535.07 2,041,255.29 0.59% 344,736,279.78 342,904,132.21 100.00% 2,445,924.01 0.71% 340,458,208.20
amount for which %
bad debt provision
separately accrued
Other receivable with single significant amount and withdrawal bad debt provision separately at end of period：
√ Applicable □ Not applicable
Unit: RMB
Closing balance
Other accounts receivable
Other accounts
(classified by units) Bad debt provision Withdrawal proportion Withdrawal reason
receivable
Separate test without
Lu Thai (Vietnam) 226,956,104.14
impairment
Separate test without
Lu An Garments 101,858,749.31
impairment
Total 328,814,853.45 -- --
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
12,973,584.18 648,679.20 5.00%
Subtotal within 1 year 12,973,584.18 648,679.20 5.00%
1 to 2 years 329,057.03 32,905.70 10.00%
2 to 3 years 383,417.35 76,683.47 20.00%
145
Lu Thai Textile Co., Ltd. Semi-Annual Report 2017
Over 3 years 4,276,623.06 1,282,986.92 30.00%
Total 17,962,681.62 2,041,255.29 11.36%
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) The Bad-debt Provision Withdrawn, Reversed or Collected during the Reporting Period
The withdrawal amount of the bad debt provision during the Reporting Period was of RMB-404,668.72; the amount of the reversed
or collected part during the Reporting Period was of RMB0.00.
(3) Other Accounts Receivable Classified by Account Nature
Unit: RMB
Nature of accounts Closing book balance Opening book balance
Intercourse funds 329,061,130.18 317,675,160.04
Export rebates 7,802,287.09
Payment on behalf 11,454,984.16 13,285,751.37
The cash pledge and guarantee 3,653,395.01 442,488.00
Borrowings and deposit 1,338,748.79 1,013,029.29
Others 1,269,276.93 2,685,416.42
Total 346,777,535.07 342,904,132.21
(4) The Other Accounts Receivable of the Top 5 of the Closing Balance Classified by Debtors
Unit: RMB
Proportion to the Closing
Account-age
total of closing balance of
Name of unit Nature of accounts Closing balance at the end of
balance of other bad-debt
the period
accounts receivable provision
Within 1
Lu Thai (Vietnam) Intercourse funds 226,956,104.14 65.45%
year
Within 1
Lu An Garment Intercourse funds 101,858,749.31 29.37%
year
Accounts receivable of advance Advance money for the
Within 1
money for the social security social security undertake by 6,814,952.38 1.97% 340,747.62
year
undertake by the individual of the individual of the
146
Lu Thai Textile Co., Ltd. Semi-Annual Report 2017
the employee employee
House payment of Yanyang Within 3
House payment 1,891,517.79 0.55% 567,455.34
Community in Huangjiapu years
Deposits for wages paid to Deposits for wages paid to
Within 3
migrant workers of Zichuan migrant workers of 1,458,593.50 0.42% 437,578.05
years
District, Zibo city infrastructure works
Total -- 338,979,917.12 -- 97.75% 1,345,781.01
3. Long-term Equity Investment
Unit: RMB
Closing balance Opening balance
Item Impairment Impairment
Book balance Book value Book balance Book value
provision provision
Investment to the
1,744,156,616.04 25,200,000.00 1,718,956,616.04 1,736,221,866.04 25,200,000.00 1,711,021,866.04
subsidiary
Total 1,744,156,616.04 25,200,000.00 1,718,956,616.04 1,736,221,866.04 25,200,000.00 1,711,021,866.04
(1) Investment to the Subsidiary
Unit: RMB
Withdrawn
impairment Closing balance
Investee Opening balance Increase Decrease Closing balance provision in of impairment
the Reporting provision
Period
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 0.00 0.00
Shanghai Lu Thai 20,000,000.00 20,000,000.00
Lu
108,242,335.38 108,242,335.38
Thai(Cambodia)
Lu Thai(America) 6,774,300.00 3,434,750.00 10,209,050.00
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Lu Thai Textile Co., Ltd. Semi-Annual Report 2017
Lu Thai(Burma) 62,337,238.57 62,337,238.57
Beijing Youxian 9,000,000.00 4,500,000.00 13,500,000.00
Lu Thai(Vietnam) 318,034,810.00 318,034,810.00
Lu An Garment 32,813,060.00 32,813,060.00
Total 1,736,221,866.04 7,934,750.00 1,744,156,616.04 25,200,000.00
4. Revenues and Operating Costs
Unit: RMB
Reporting Period Same period of last year
Item
Sales revenue Cost of sales Sales revenue Cost of sales
Main operations 2,368,342,984.34 1,674,625,537.10 2,225,300,186.31 1,571,303,646.81
Other operations 113,980,604.46 92,055,486.97 143,361,682.06 123,338,335.99
Total 2,482,323,588.80 1,766,681,024.07 2,368,661,868.37 1,694,641,982.80
5. Investment Income
Unit: RMB
Item Reporting Period Same period of last year
Long-term equity investment income accounted by cost method 17,976,433.62 37,003,529.30
Investment income received from disposal of financial assets
measured by fair value and the changes be included in the current 1,281,963.99 -26,628,900.00
profits and losses during holding period
Total 19,258,397.61 10,374,629.30
XIV. 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 -1,972,237.14
Tax rebates, reductions or exemptions due to approval beyond authority or the lack
10,710,637.29
of 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
2,496,235.34
available-for-sale financial assets, other than valid hedging related to the
Company’s common businesses
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Lu Thai Textile Co., Ltd. Semi-Annual Report 2017
Other non-operating income and expenses other than the above 367,172.52
Less: Income tax effects 1,643,262.69
Minority interests effects 1,969,722.22
Total 7,988,823.10 --
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 Net Equity and Earnings Per Share
Weighted average EPS（Yuan/share）
Profit as of Reporting Period
ROE (%) EPS-basic EPS-diluted
Net profit attributable to common shareholders of the
5.58% 0.43 0.43
Company
Net profit attributable to common shareholders of the
5.46% 0.42 0.42
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
Unit: RMB
Net profit Net assets
Reporting Period Same period of last year Closing balance Opening balance
Chinese accounting
393,069,981.55 344,641,184.73 6,855,012,927.33 6,937,985,729.19
standards
Items and amounts adjusted in accordance with international accounting standards:
Impact on domestic
equipments tax credit
recognized as deferred
164,500.00 362,500.00 -164,500.00 -329,000.00
income under
international accounting
standards
International accounting
393,234,481.55 345,003,684.73 6,854,848,427.33 6,937,656,729.19
standards
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Lu Thai Textile Co., Ltd. Semi-Annual Report 2017
(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.
150
Lu Thai Textile Co., Ltd. Semi-Annual Report 2017
Section XI 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.
Board Chairman’s signature: Liu Zibin
Lu Thai Textile Co., Ltd.
August 30, 2017
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