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鲁 泰B:2019年半年度报告(英文版)2019-08-03  

						Lu Thai Textile Co., Ltd.                               Interim Report 2019




                            LU THAI TEXTILE CO., LTD.

                              INTERIM REPORT 2019




                                    August 2019




                                                                              1
Lu Thai Textile Co., Ltd.                                                                   Interim Report 2019




              Part I Important Notes, Table of Contents and Definitions

The Board of Directors (or the “Board”), the Supervisory Committee as well as the directors,
supervisors and senior management of Lu Thai Textile Co., Ltd. (hereinafter referred to as the
“Company”) hereby guarantee the factuality, accuracy and completeness of the contents of
this Report and its summary, and shall be jointly and severally liable for any
misrepresentations, misleading statements or material omissions therein.
Liu Zibin, the Company’s legal representative, Zhang Hongmei, the Company’s Chief
Accountant, and Zhang Keming, the Company’s Financial Manager hereby guarantee that
the financial statements carried in this Report are factual, accurate and complete.
All the directors of the Company except for the following attended in person the Board
meeting for the review of this Report and its summary.
                                                       Reason for not attending the    Proxy entrusted to attend the
             Name                      Office title
                                                            meeting in person                       meeting

Fujiwara Hidetoshi          Director                  For reason of other work        Qin Guiling

The Company has described in detail in this Report the possible risks facing it. Please refer to
the section headed “Risks Facing the Company and Countermeasures” of “Part IV Operating
Performance Discussion and Analysis” of this Report.
The Company has no interim dividend plan, either in the form of cash or stock.
This Report and its summary have been prepared in both Chinese and English. Should there
be any discrepancies or misunderstandings between the two versions, the Chinese versions
shall prevail.




                                                                                                                       2
Lu Thai Textile Co., Ltd.                                                                                          Interim Report 2019




                                                   Table of Contents




Interim Report 2019........................................................................................................................... 1

Part I Important Notes, Table of Contents and Definitions ........................................................... 2

Part II Corporate Information and Key Financial Information ................................................... 5

Part III Business Summary ............................................................................................................... 8

Part IV Operating Performance Discussion and Analysis ........................................................... 11

Part V Significant Events ................................................................................................................ 21

Part VI Share Changes and Shareholder Information ................................................................. 33

Part VII Preferred Shares ............................................................................................................... 38

Part VIII Directors, Supervisors and Senior Management.......................................................... 39

Part IX Corporate Bonds ................................................................................................................ 42

Part X Financial Statements ........................................................................................................... 43

Part XI Documents Available for Reference ................................................................................ 158




                                                                                                                                              3
Lu Thai Textile Co., Ltd.                                                                                Interim Report 2019




                                                     Definitions


                         Term                                                        Definition

                                                  Lu Thai Textile Co., Ltd. and its consolidated subsidiaries, except where the
The “Company”, “LTTC”, “Issuer” or “we”
                                                  context otherwise requires

The Board of Directors                            The Board of Directors of Lu Thai Textile Co., Ltd.

The Supervisory Committee                         The Supervisory Committee of Lu Thai Textile Co., Ltd.

CSRC                                              The China Securities Regulatory Commission

                                                  Expressed in the Chinese currency of Renminbi, expressed in tens of thousands
RMB, RMB’0,000
                                                  of Renminbi

The “Company Law”                               The “Company Law of the People‘s Republic of China”

The “Securities Law”                            The “Securities Law of the People‘s Republic of China”

The “Reporting Period” or “Current Period”    The period from 1 January 2019 to 30 June 2019




                                                                                                                               4
Lu Thai Textile Co., Ltd.                                                                                Interim Report 2019




          Part II Corporate Information and Key Financial Information

I Corporate Information

Stock name                          LTTC, LTTC-B                           Stock code                000726, 200726

Changed stock name (if any)         N/A

Stock     exchange   for    stock
                                    Shenzhen Stock Exchange
listing

Company name in Chinese             鲁泰纺织股份有限公司

Abbr. (if any)                      鲁泰纺织

Company name in English (if
                                    LU THAI TEXTILE CO.,LTD
any)

Abbr. (if any)                      LTTC

Legal representative                Liu Zibin


II Contact Information

                                                             Board Secretary                    Securities Representative

Name                                            Zhang Keming                            Zheng Weiyin and 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.                                            0533-5277008                            0533-5285166

Fax                                             0533-5418805                            0533-5418805

Email address                                   zhangkeming@lttc.com.cn                 wyzheng@lttc.com.cn,likun@lttc.com.cn


III Other Information

1. Contact Information of the Company


Indicate by tick mark whether any change occurred to the registered address, office address and their zip codes, website address and

email address of the Company in the Reporting Period.

□ Applicable √ Not applicable

No change occurred to the said information in the Reporting Period, which can be found in the 2018 Annual Report.




                                                                                                                                  5
Lu Thai Textile Co., Ltd.                                                                                      Interim Report 2019


2. Media for Information Disclosure and Place where this Report is Lodged


Indicate by tick mark whether any change occurred to the information disclosure media and the place for lodging the Company’s

periodic reports in the Reporting Period.

□ Applicable √ Not applicable

The newspapers designated by the Company for information disclosure, the website designated by the CSRC for disclosing the

Company’s periodic reports and the place for lodging such reports did not change in the Reporting Period. The said information can

be found in the 2018 Annual Report.


IV Key Financial Information

Indicate by tick mark whether there is any retrospectively restated datum in the table below.

√ Yes □ No
Accounting policy changes resulted in the retrospective restatements in the following table.

                                                                                     H1 2018                          Change (%)
                                                   H1 2019
                                                                          Before                  Restated              Restated

Operating revenue (RMB)                         3,185,448,344.01       3,281,014,155.43         3,280,407,775.82               -2.89%

Net profit attributable to the listed
                                                  411,446,216.59         377,355,959.02          377,355,959.02                    9.03%
company’s shareholders (RMB)

Net profit attributable to the listed
company’s         shareholders       before      376,816,535.93         366,948,339.88          366,432,917.21                    2.83%
exceptional gains and losses (RMB)

Net cash generated from/used in operating
                                                  119,717,062.57         697,784,710.77          697,784,710.77               -82.84%
activities (RMB)

Basic earnings per share (RMB/share)                          0.48                  0.41                      0.41             17.07%

Diluted earnings per share (RMB/share)                        0.48                  0.41                      0.41             17.07%

Weighted average return on equity (%)                       5.70%                  5.13%                     5.13%                 0.57%

                                                                               31 December 2018                       Change (%)
                                                30 June 2019
                                                                          Before                  Restated              Restated

Total assets (RMB)                             11,202,182,466.95      10,537,759,811.84        10,537,759,811.84                   6.31%

Equity attributable to the listed company’s
                                                7,135,598,465.75       7,146,548,467.86         7,146,548,467.86               -0.15%
shareholders (RMB)

Reason for change in accounting policy and correction of accounting error:




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Lu Thai Textile Co., Ltd.                                                                             Interim Report 2019


V Accounting Data Differences under China’s Accounting Standards for Business Enterprises
(CAS) and International Financial Reporting Standards (IFRS) and Foreign Accounting
Standards

1. Net Profit and Equity under CAS and IFRS

□ Applicable √ Not applicable

No such differences for the Reporting Period.


2. Net Profit and Equity Differences under CAS and Foreign Accounting Standards

□ Applicable √ Not applicable

No such differences for the Reporting Period.


XI Exceptional Gains and Losses

√ Applicable □ Not applicable

                                                                                                                     Unit: RMB

                                                   Item                                              H1 2019          Note

Gain or loss on disposal of non-current assets (inclusive of impairment allowance write-offs)          459,688.66

Government subsidies charged to current profit or loss (exclusive of government subsidies given
in the Company’s ordinary course of business at fixed quotas or amounts as per the government’s    32,226,225.91
uniform standards)

Gain or loss on fair-value changes in trading and derivative financial assets and liabilities &
income from disposal of trading and derivative financial assets and liabilities and investments in
                                                                                                     10,663,111.47
other debt obligations (exclusive of the effective portion of hedges that arise in the Company’s
ordinary course of business)

Non-operating income and expense other than the above                                                  890,331.64

Less: Income tax effects                                                                              6,167,989.87

         Non-controlling interests effects (net of tax)                                               3,441,687.15

Total                                                                                                34,629,680.66     --

Explanation of why the Company reclassifies as recurrent an exceptional gain/loss item defined or listed in the Explanatory

Announcement No. 1 on Information Disclosure for Companies Offering Their Securities to the Public—Exceptional Gain/Loss

Items:

□ Applicable √ Not applicable

No such cases for the Reporting Period.




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Lu Thai Textile Co., Ltd.                                                                                     Interim Report 2019




                                          Part III Business Summary

I Principal Activity of the Company in the Reporting Period

Is the Company subject to any industry-specific disclosure requirements?

No.

No changes occurred to the Company’s principal activities, primary products, business models and major growth drivers in the

Reporting Period.
Lu Thai has always adhered to its mission of “creating wealth, contributing to the society, clothing the world and weaving our way to
every corner of the globe”, as well as to its values 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 growing, 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 continues to renew its service philosophy, explore emerging markets and increase the added value of its products. 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 become the world’s largest
high-grade yarn dyed fabric producer and a world-class premium shirt provider. 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. 70% of Lu Thai’s products are exported to over 30 countries and regions including America, the EU and
Japan, of which more than 70% is under the Company’s own brand. So far, the Company has taken up around 18% of the world
market of yarn dyed fabric for medium- and high-end shirts.


II Significant Changes in Major Assets

1. Significant Changes in Major Assets


               Major assets                                            Main reason for significant changes


                                            The amount as at 30 June 2019 was RMB460,389,887.15, up 36.52% from the beginning
Construction in progress                    amount, primarily driven by increased construction and equipment investments for Lu
                                            Thai Vietnam’s second phase project.


2. Major Assets Overseas

√ Applicable □ Not applicable

                                                                               Control                       As % of the
                                                                                                Return                        Material
                              Asset value                   Management       measures to                     Company’s
      Asset     Source                          Location                                      generated                     impairment
                                  (RMB)                        model        protect asset                      net asset
                                                                                               (RMB)                        risk (yes/no)
                                                                                safety                          value


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Lu Thai Textile Co., Ltd.                                                                                   Interim Report 2019


                                                                               Main
Lu Thai
                                                                           management
(Hong
               Incorporat                      Hong                        personnel sent
Kong)                        175,089,652.92               Marketing                          4,111,793.66        2.27%      No
               ed                              Kong                            by the
Textile Co.,
                                                                           Company as
Ltd.
                                                                             the parent

                                                                               Main
Lu Thai                                                                    management
(America)      Incorporat                                                  personnel sent
                              13,077,851.06 New York      Marketing                           385,980.37         0.17%      No
Textile Co., ed                                                                by the
Ltd.                                                                       Company as
                                                                             the parent

                                                                               Main
Lu Thai                                                                    management
(Cambodia) Incorporat                          Svay                        personnel sent
                             173,891,030.13              Manufacturing                      12,707,516.44        2.25%      No
Textile Co., ed                                Rieng                           by the
Ltd.                                                                       Company as
                                                                             the parent

                                                                               Main
Lu Thai                                                                    management
(Burma)        Incorporat                                                  personnel sent
                              77,251,276.43 Rangoon Manufacturing                            6,435,142.22        1.00%      No
Textile Co., ed                                                                by the
Ltd.                                                                       Company as
                                                                             the parent

                                                                               Main
Lu Thai                                                                    management
(Vietnam)      Incorporat                                                  personnel sent
                            1,922,677,555.71 Tay Ninh Manufacturing                         36,981,264.37      24.89%       No
Textile Co., ed                                                                by the
Ltd.                                                                       Company as
                                                                             the parent

                                                                               Main
                                                                           management
Lu An
               Incorporat                     Anjiang,                     personnel sent
Garments                     168,749,794.48              Manufacturing                        765,750.18         2.18%      No
               ed                             Vietnam                          by the
Co., Ltd.
                                                                           Company as
                                                                             the parent


III Core Competitiveness Analysis

Is the Company subject to any industry-specific disclosure requirements?

No.
The comprehensive management ability, research and development ability, technological accumulation and global planning of the


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Lu Thai Textile Co., Ltd.                                                                                   Interim Report 2019


Company’s whole industry chain are the Company's core competitiveness, which did not change during the Reporting Period.

1. A complete industrial chain and a global network: The Company boasts a complete industrial chain from cotton planting, yarning,
dyeing, weaving and post-processing to cloth manufacturing, and thus enjoys the cost advantage brought by complete steps for
producing high-end dyed textile. The Company has set up production bases in Cambodia, Burma, Vietnam, etc., a design agency in
Italy and a market service agency in America, which helps give full play to its international resources, form a global business
network and solidify its internationally leading position as a yarn-dyed fabric maker.
2. The sound comprehensive management capacity and an efficient quality control system: The Company has passed ISO9000
quality management system, ISO14000 environmental management system, OHSAS18000 occupational health safety management
system, and SA8000 social accountability management system successively from 1995. Ever since 2007, the Company has also
passed WRAP: 1999 global garment production social accountability standard, C-TPAT: 2004 anti-terrorism standard, OE100 and
GOTS organic cotton system certification and CNAS national laboratory recognition, to realize the internationalization and
standardization of the Company’s management. In order to pursue the operational management of performance excellence and better
the Company’s performance and capability, the Company has gradually introduced GB/T19580-2004 -Standards for Performance
Excellence Evaluation, created “Great Quality” system and promoted management innovation, to ensure the Company’s business
quality.
3. It enjoyed strong R&D capability and high-end technological platform for cooperation. The Company highly valued
self-dependent innovation and made full use of various technology platforms, inclusive of the National Enterprise Technical Center,
National Talent-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.
5. It attaches importance to customer-specific individualized product design service, following the philosophy of customer
satisfaction at the forefront of market demand.




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Lu Thai Textile Co., Ltd.                                                                                    Interim Report 2019




              Part IV Operating Performance Discussion and Analysis

I Overview

For the Reporting Period, the Company recorded operating revenue of RMB3,185 million, an operating profit of RMB495 million, a
net profit attributable to the listed company’s shareholders of RMB411 million and a net profit before exceptional gains and losses of
RMB377 million, down 2.89% and up 9.33%, 9.03% and 2.83% respectively from the same period of last year. No changes have
occurred to the principal activities, the main profit sources and structure of the Company in this period.
During the Reporting Period, the Company continued to steadily promote “Improving Quality and Efficiency” and “Comprehensive
Internationalization”, maintaining the sound, stable and sustained development trend; made steady progress in its overseas expansion
programme and basically achieved the design expectation; and enhanced market survey for further communication with customers
and improved the “manufacturing + design” service ability, which accelerated market extension efficiency. The Company deepened
its relationship with customers through proactive measures such as adjustment of product structure, integration of supply chains,
design and development connection, brand cooperation and e-commerce platforms and facing new characteristics and new demands
of the market, kept improving product design concept and innovating service mode to meet market demand and keep up with the
development trends. During the Reporting Period, the Company was honored as “Top 100 Garment Makers 2018” by the China
National Garment Association, “Top 100 Private Enterprises with the Highest Brand Value of Shandong Province” and “High-End
Brand Builders in the Manufacturing Sector of Shandong Province” by the Shandong Council for Brand Development.
During the Reporting Period, the Company continued to persist in R&D investments, making new achievements in the application of
new materials, research of new fabrics, key technologies of new product development and research of equipment upgrading by means
of organizing science and technology lectures as well as cooperating with prominent domestic colleges. Two key R&D projects
included in China’s 13th Five-Year Plan, which are conducted by the Company, have passed the interim examination. As of the end
of the Reporting Period, the Company had 379 granted patents and 3 software copyrights; as well as had hosted or participated in the
formulation of 50 national and industrial standards.
During the Reporting Period, the design work of products targeting western and female consumers, etc. was completed for the
autumn and winter of 2020, which consist of 71 series under eight themes. The relevant promotion activities, samples and specific
design are underway together with the business department.
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 Core Business Analysis

Overview:
For the Reporting Period, the Company recorded operating revenue of RMB3,185 million (a 2.89% year-on-year decrease); cost of
sales of RMB2,211 million (a 6.35% year-on-year decrease), including selling expense of RMB78 million (a 16.28% year-on-year
rise) and administrative expense of RMB191 million (a 17.11% year-on-year increase); research and development expense of
RMB162 million (a 0.4% year-on-year drop); and net cash generated from operating activities of RMB120 million (an 82.84%
year-on-year drop).




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Lu Thai Textile Co., Ltd.                                                                                           Interim Report 2019


Year-on-year changes in key financial data:
                                                                                                                                    Unit: RMB

                                                                                  Change
                                           H1 2019              H1 2018                                    Main reason for change
                                                                                   (%)

Operating revenue                    3,185,448,344.01 3,280,407,775.82             -2.89%

Cost of sales                        2,210,886,955.53 2,360,836,431.41             -6.35%

Selling expense                            77,836,942.94       66,941,088.56       16.28%

Administrative expense                    191,205,597.74      163,274,510.70       17.11%

Finance costs                              52,554,570.05       30,525,225.31       72.17% Increase in interest expense

Income tax expense                         74,839,232.29       63,275,514.57       18.28%

R&D expense                               161,939,039.23      162,596,245.80       -0.40%

                                                                                            (1) Increase in cash payments for commodities
Net cash generated from/used in                                                             and services (mostly raw materials); and (2)
                                          119,717,062.57      697,784,710.77      -82.84%
operating activities                                                                        decrease in cash proceeds from sale of
                                                                                            commodities

Net cash generated from/used in
                                      -346,327,704.43         -423,627,352.67      18.25%
investing activities

Net cash generated from/used in                                                             Increase in the net amount of borrowings
                                          315,262,989.36      -285,883,409.46     210.28%
financing activities                                                                        obtained

                                                                                            A year-on-year increase of RMB678 million in
                                                                                            net cash generated from financing and
Net increase in cash and cash
                                           88,423,644.38        -5,067,323.02 1,844.98% investing activities and a year-on-year decrease
equivalents
                                                                                            of RMB578 million in net cash generated from
                                                                                            operating activities

Significant changes to the profit structure or sources of the Company in the Reporting Period:

□ Applicable √ Not applicable

No such changes in the Reporting Period.

Breakdown of core businesses:

                                                                                                                                    Unit: RMB

                                                                                     YoY change in                             YoY change in
                                                                   Gross profit                             YoY change in
                  Operating revenue           Cost of sales                         operating revenue                           gross profit
                                                                     margin                                cost of sales (%)
                                                                                            (%)                                 margin (%)

By operating division

Textile     and
                       2,934,448,827.78      2,007,858,829.06             31.58%                  0.46%              -2.46%            2.05%
apparel

Cotton                    6,856,226.38           6,153,947.34             10.24%              -93.22%               -93.45%            3.15%

Electricity and          99,820,071.53         100,489,871.91             -0.67%                  -1.91%              1.77%           -3.63%


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Lu Thai Textile Co., Ltd.                                                                                      Interim Report 2019


steam

Other                    26,265,030.04          23,804,349.14                 9.37%          -29.08%           -33.09%             5.43%

By product category

Fabric
                    2,334,195,650.45         1,586,586,777.72                 32.03%           0.61%            -2.05%             1.85%
products

Shirts                  600,253,177.33        421,272,051.34                  29.82%          -0.14%            -3.98%             2.81%

Cotton                    6,856,226.38           6,153,947.34                 10.24%         -93.22%           -93.45%             3.15%

Electricity and
                         99,820,071.53        100,489,871.91                  -0.67%          -1.91%             1.77%            -3.63%
steam

Other                    26,265,030.04          23,804,349.14                 9.37%          -29.08%           -33.09%             5.43%

By operating segment

Hong Kong               193,620,677.72         131,911,865.18                 31.87%           4.90%             1.98%             1.95%

Japan       And
                        227,171,179.04        157,054,077.28                  30.87%           7.17%             3.58%             2.39%
South Korea

Southeast Asia          853,969,711.97        580,900,368.79                  31.98%          12.31%             9.34%             1.85%

Europe      and
                        579,841,115.57        400,144,091.29                  30.99%           0.38%            -3.03%             2.43%
America

Other                   267,533,852.91        182,903,368.26                  31.63%         -16.55%           -18.83%             1.92%

Mainland
                        945,253,618.52        685,393,226.65                  27.49%         -14.53%           -18.07%             3.14%
China




III Analysis of Non-Core Businesses

√ Applicable □ Not applicable
                                                                                                                               Unit: RMB

                                            As % of profit                                                                    Exceptional
                             Amount                                                    Source/Reason
                                              before tax                                                                      or recurrent

                                                             Gains on equity investment, dividends from financial products,
Investment income         10,417,475.41             2.10%                                                                         No
                                                             forward exchange settlement and gains on delivery of options

                                                             Losses generated from the variation of fair value of forward
Gain/loss          on
                            5,282,600.00            1.07% exchange settlement delivered in the Reporting Period due to            No
changes in fair value
                                                             reversal, etc.

Asset impairments           -1,543,199.38          -0.31% Inventory falling price provision                                       No

Non-operating
                            3,097,024.44            0.62% Income of non-operating compensation, etc                               No
income

Non-operating
                            2,214,356.54            0.45% Non-operating compensation, etc.                                        No
expense



                                                                                                                                        13
Lu Thai Textile Co., Ltd.                                                                                          Interim Report 2019


IV Analysis of Assets and Liabilities

1. Material Changes in Asset Composition

                                                                                                                                  Unit: RMB

                                    30 June 2019                                30 June 2018                    Change in
                                                                                                                             Reason for any
                                                    As % of total                            As % of total      percentage
                              Amount                                      Amount                                             material change
                                                       assets                                   assets             (%)

Monetary capital              623,926,353.74                    5.57%    671,721,970.36                6.56%        -0.99%

Accounts
                              381,453,061.31                    3.41%    356,818,963.69                3.49%        -0.08%
receivable

Inventories                 2,338,090,631.11                20.87%      2,017,424,627.73            19.71%           1.16%

Investment
                               38,718,468.86                    0.35%     23,856,705.69                0.23%         0.12%
property

Long-term equity
                              100,637,911.44                    0.90%     95,806,134.43                0.94%        -0.04%
investments

Fixed assets                5,729,951,131.93                51.15%      5,359,308,862.06            52.37%          -1.22%

Construction       in
                              460,389,887.15                    4.11%    365,054,086.88                3.57%         0.54%
progress

Short-term
                            2,137,653,250.29                19.08%      1,458,058,962.33            14.25%           4.83%
borrowings

Long-term
                                                                0.00%     69,431,359.47                0.68%        -0.68%
borrowings


2. Assets and Liabilities at Fair Value

√ Applicable □ Not applicable
                                                                                                                                  Unit: RMB

                                     Gain/loss on        Cumulative
                                                                         Impairment
                                       fair-value         fair-value                       Purchased in        Sold in the
                        Beginning                                        allowance for
      Item                          changes in the         changes                         the Reporting       Reporting     Ending amount
                         amount                                          the Reporting
                                       Reporting          charged to                          Period             Period
                                                                            Period
                                        Period              equity

Financial assets

1. Trading
financial assets
(exclusive of
                    91,630,515.95       405,000.00                                                           29,871,000.00 62,164,515.95
derivative
financial
assets)


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Lu Thai Textile Co., Ltd.                                                                                               Interim Report 2019


Subtotal            of
                         91,630,515.95         405,000.00                                                        29,871,000.00 62,164,515.95
financial assets

Total    of     the
                         91,630,515.95         405,000.00                                                        29,871,000.00 62,164,515.95
above

Financial
                          4,877,600.00       4,877,600.00                                                                                     0.00
liabilities

Significant changes to the measurement attributes of the major assets in the Reporting Period:
□ Yes √ No


3. Restricted Asset Rights as at the Period-End

For details, see Part X. VII. 60. Assets with restricted ownership and using right in this Report.




V Investments Made

1. Total Investments Made

□ Applicable √ Not applicable


2. Major Equity Investments Made in the Reporting Period

□ Applicable √ Not applicable


3. Major 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

           Relati Relate Type                                                        Purchased                 Impairm Endi Proporti Actual
                                           Initial                      Beginning                Sold in the
Operat onship d-part             of                   Starting Ending                  in the                    ent      ng    on of   gain/los
                                         investment                     investment               Reporting
   or      with          y     derivat                 date     date                 Reporting                 provisio inves ending s in the
                                          amount                         amount                    Period
              the    transac    ive                                                   Period                    n (if    tmen investm Reporti


                                                                                                                                                15
Lu Thai Textile Co., Ltd.                                                                                              Interim Report 2019


          Comp          tion                                                                                    any)      t         ent     ng
           any                                                                                                          amo amount Period
                                                                                                                         unt       in the
                                                                                                                                  Compan
                                                                                                                                    y’s
                                                                                                                                  ending
                                                                                                                                    net
                                                                                                                                  assets

                               Forwa
                                    rd
Comm
          Non-re               exchan                 19 June 30 May
ercial                  No                66,365.49                        6,512.05 59,853.44 66,365.49                       0    0.00% 249.83
           lated                    ge                2018      2019
bank
                               settle
                                ment

                               Foreig
Comm                           n                      23        28
          Non-re
ercial                  No     exchan      3,922.86 March       March      1,909.89 2,012.97        3,922.86                  0    0.00% -140.28
           lated
bank                           ge                     2018      2019
                               option

                               Forwa
                               rd
Comm                                                  28
          Non-re               exchan                           31 May
ercial                  No                  3,049.7 Septemb                1,610.11 1,439.59         3,049.7                  0    0.00%    50.05
           lated               ge                               2019
bank                                                  er 2018
                               transac
                               tions

Total                                     73,338.05        --        --   10,032.05      63,306 73,338.05                     0    0.00%    159.6

Capital source for derivative
                                         The Company’s own money
investment

Lawsuit (if applicable)                  Naught

Disclosure date of board of
directors announcement on
                                         27 April 2018
approval         of        derivative
investment (if any)

Disclosure date of general
meeting       of        shareholders
announcement on approval of
derivative investment (if any)

Analysis on risks and control The Company conducted derivatives products transaction in order for hedging. And the forward
measures           of      derivative settlement hedging was operated by installments, with the relevant amount not more than the
products held in the Reporting planned derivatives products transactions. And all derivatives products transaction was zero-deposit.
Period     (including but not Meanwhile, the Company had a complete risk control system for sufficient analysis and prevention
limited     to        market        risk, of possible risks such as market risk, liquidity risk and credit risk, operation risk and risk of laws


                                                                                                                                                 16
Lu Thai Textile Co., Ltd.                                                                                         Interim Report 2019


liquidity   risk,   credit   risk, and regulation.
operation risk, law risk, etc.)   1. Market risk: when the international and domestic economic situations change, the corresponding
                                  changes in exchange rates and interest rates may have an adverse impact on the financial derivatives
                                  transactions of the Company. Precautionary measures to be taken include: the Company chooses
                                  risk-controlled financial derivative tools with simple structure and good liquidity to carry out the
                                  hedging business, strictly controls the scale of financial derivatives trading by staged operations,
                                  and adjusts the strategy according to market changes in a timely manner.
                                  2. Liquidity risk and credit risk: a credit risk arising from failure of the contractually due Company
                                  or counterparty in performing the contract due to liquidity or factors other than liquidity.
                                  Precautionary measures to be taken include: the Company determines the upper limit of derivatives
                                  transaction amounts according to production and operation scale as well as foreign exchange
                                  income, and conducts operations by stage according to the budget of future collections and
                                  disbursement. The derivative trades are free of guarantee deposit and can still be guaranteed in
                                  performance after the contract expires by means of extension and balance settlement etc. to prevent
                                  the Company from credit damages due to lack of liquidity. The Company selects financial
                                  institutions with strong capability and good reputation as a counterparty and signs standard
                                  derivative trading contracts to strictly control credit risk of the counterparty.
                                  3. Operation risk:
                                  The derivatives 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 operation procedures and approval procedures system to conduct
                                  derivative products transaction, implemented strict authorization and post checks and balances
                                  system, meanwhile, it improved the overall quality of relevant personnel through strengthening the
                                  professional ethics education and business training for them. Besides, it established the System of
                                  Reporting the Abnormal Situation Timely so as to ensure to lower the operation risks to the
                                  maximum.
                                  4. Risk of laws and regulation:
                                  The Company conducted derivatives products transaction in strict accordance with relevant laws
                                  and rules. If there were no standard operation procedures and strict approval procedures, it was easy
                                  to cause compliant and regulatory risks existing in the validity and feasibility of contract,
                                  commitments and other legal documents signed. Risk control measures: The Company carefully
                                  studied and mastered laws, regulations and policies relevant to derivative products transaction,
                                  formulated internal control rules for the forward settlement hedging business, standardized the
                                  operation procedures. And strengthened the compliant examination on derivative products
                                  transaction business. The Company conducted derivative            transaction business 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 Transaction of Lu Thai Textile Co.,
                                  Ltd., and the Proposal on the Plan of Lu Thai Textile Co., Ltd. for Derivative Transactions approved
                                  at the 17th Meeting of the 8th Board of Directors on 25 April 2018, and performed relevant
                                  information disclosure responsibilities.

Changes of market prices or 1. As of 30 June 2019, the Company has completed the delivery of all financial derivatives without
fair values in the Reporting any agreement on financial derivatives.


                                                                                                                                        17
Lu Thai Textile Co., Ltd.                                                                                         Interim Report 2019


Period     of     the     invested 2. January-June in 2019: the amount of all due financial derivatives of the Company converted into
derivatives. And the analysis USD is US$108,683,700 which were executed in accordance with agreements with revenues of
on the fair value of the RMB1,596,000, among which, gains of RMB2,498,300 was from the delivery of forward foreign
derivatives should include the exchange settlement of US$98.2 million; losses of RMB1,402,800 was from the delivery of foreign
specific use methods and the exchange options of US$6 million and gains of RMB500,500 was from the delivery of forward
relevant     assumptions        and exchange transactions of US$4,483,700.
parameters.

Whether significant changes
occurred to the Company’s
accounting policy and specific
accounting       principles      of No significant changes
derivatives in the Reporting
Period     compared       to    the
previous Reporting Period

                                      The Company’s independent directors Zhou Zhiji, Bi Xiuli, Pan Ailing, Wang Xinyu and Qu
                                      Dongmei, concerning conducting derivatives business, have issued the following professional
                                      advice: We are of the opinion that it will strengthen the Company’s competitiveness to use
Specific        opinion        from
                                      derivative transactions with focus on forward settlement and purchase as an effective tool to avoid
independent directors on the
                                      foreign exchange risks, to strengthen the relevant internal control and to carry out the loss and risk
Company’s              derivatives
                                      prevention measures so as to improve the operation and management. In conducting derivative
investment and risk control
                                      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 Major Subsidiaries

√ Applicable □ Not applicable
Major fully/majority-owned subsidiaries and those minority-owned subsidiaries with an over 10% effect on the Company’s net profit:
                                                                                                                                 Unit: RMB

           Relationsh Principal
                                           Registered                                              Operating        Operating
Name       ip with the activity                              Total assets        Net assets                                         Net profit
                                             capital                                                revenue           profit
           Company


                                                                                                                                          18
 Lu Thai Textile Co., Ltd.                                                                                    Interim Report 2019


Lufeng
Weaving
            Subsidiary Fabric       706,160,000.00    1,633,825,665.95 1,371,329,216.86 805,575,459.05 62,548,982.96 52,877,665.09
& Dyeing
Co., Ltd.

 Subsidiaries obtained or disposed in the Reporting Period:
 □ Applicable √ Not applicable
 Information about major majority- and minority-owned subsidiaries:
 Lufeng Weaving & Dyeing Co., Ltd. (hereinafter called “Lufeng Weaving & Dyeing”) is the majority-owned subsidiary of the
 Company. Registration place: Zibo, Shandong; registered capital: RMB706.160 million. It was authenticated to be high-tech
 enterprise in October 2014, and authenticated to be high-tech enterprise again for re-evaluation in 2017, 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, Lufeng Weaving & Dyeing continuously enhanced cost management, promoted R&D and
 innovation, increased the conversion rate of the scientific production and added value of products. As of 30 June 2019, the operating
 revenue of RMB805 million and net profit of RMB53 million were achieved by Lufeng Weaving & Dyeing.




 VIII Structured Bodies Controlled by the Company

 □ Applicable √ Not applicable


 IX Performance Forecast for January-September 2019

 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

 Risks that bring adverse impact to company development strategy and business objectives and countermeasures of the Company
 (1) Impacts generated by the economic environment. At present, the Company is facing the uncertainty of international trade dispute
 and continuous substantial impact of tariffs. Major economies began to change their monetary policies due to weakening global
 economic recovery and declining demand growth. What complicates the economic environment is higher domestic liquidity risk and
 debt defaults of small and medium-sized enterprises. Despite the difficulties, the Company will try to maintain the international market
 and explore the domestic market to achieve a balanced development of sales business at home and aboard.
 (2) Fluctuations in raw material prices: the raw cotton used by the Company is long-staple cotton, whose price is affected by many
 factors such as market supply and demand, climate, policies, exchange rates and quotas. Furthermore, with the development of
 environmental protection policies, the cost of dyeing auxiliaries also increased. Therefore, besides ensuring the stable supply of
 long-staple cotton by the subsidiary in Xinjiang, the Company must study the market dynamics to reduce the cost fluctuations due to
 changes in raw cotton price, and develop with the concept of green and environmental protection to meet environmental protection
 requirements.
 (3) Exchange rate changes: at present and in the future, the Company will continue to sell its products mainly in the international
 market for a long period of time, and US dollars will account for a relatively larger portion in sales revenue. In addition, the main
 machinery and equipment and some of its raw materials of the Company are also imported. The foreign currencies payment for
 imports includes US dollar and other currencies. Moreover, the commissioning of the Company's overseas production base and

                                                                                                                                      19
Lu Thai Textile Co., Ltd.                                                                                  Interim Report 2019


subsequent expansion of investment will increase the use of foreign currencies. Therefore, the Company will still be sensitive to the
impact of exchange rate changes.
In order to reduce adverse influence of exchange rate fluctuation, the Company adopted the following measures: firstly, the Company
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 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.




                                                                                                                                   20
Lu Thai Textile Co., Ltd.                                                                             Interim Report 2019




                                          Part V Significant Events

I Annual and Extraordinary General Meeting Convened during the Reporting Period

1. General Meeting Convened during the Reporting Period


                                         Investor
    Meeting             Type                              Convened date     Disclosure date    Index to disclosed information
                                    participation ratio

                                                                                              Announcement of Resolution
                                                                                              (No. 2019-012) published on
        st
The 1                                                                                         Securities Times, China
Extraordinary     Extraordinary                                                               Securities Journal, Shanghai
                                                0.00% 12 March 2019       13 March 2019
General Meeting General Meeting                                                               Securities News, and Hong Kong
of 2019                                                                                       Ta Kung Pao and
                                                                                              http://www.cninfo.co on 13
                                                                                              March 2019

                                                                                              Announcement of Resolution
                                                                                              (No. 2019-027) published on
                                                                                              Securities Times, China
The 2018
                   Annual General                                                             Securities Journal, Shanghai
Annual General                                  0.00% 23 April 2019       24 April 2019
                      Meeting                                                                 Securities News, and Hong Kong
Meeting
                                                                                              Ta Kung Pao and
                                                                                              http://www.cninfo.co on 24 April
                                                                                              2019

                                                                                              Announcement of Resolution
                                                                                              (No. 2019-047) published on
        nd
The 2                                                                                         Securities Times, China
Extraordinary     Extraordinary                                                               Securities Journal, Shanghai
                                                0.00% 10 June 2019        11 June 2019
General Meeting General Meeting                                                               Securities News, and Hong Kong
of 2019                                                                                       Ta Kung Pao and
                                                                                              http://www.cninfo.co on 10 June
                                                                                              2019


2. Extraordinary General Meeting Convened at Request of Preference Shareholders with Resumed Voting
Rights

□ Applicable √ Not applicable


II Interim Dividend Plan for the Reporting Period

□ Applicable √ Not applicable


                                                                                                                                21
Lu Thai Textile Co., Ltd.                                                Interim Report 2019


The Company has no interim dividend plan.


III Commitments of the Company’s Actual Controller, Shareholders, Connected 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.


IV Engagement and Disengagement of CPAs Firm

Has the Interim financial report been audited?

□Yes √ No

This Interim Report is unaudited.


V Explanations Given by Board of Directors and Supervisory Committee 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.



                                                                                               22
Lu Thai Textile Co., Ltd.                                                                                    Interim Report 2019


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
No such cases in the Reporting Period.


XII Significant Related-party Transactions

1. Continuing Related-Party Transactions

□ Applicable √ Not applicable
No such cases in the Reporting Period.


2. Related-Party 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
Indicate by tick mark whether there were any credits and liabilities with related parties for non-operating purposes.
√ Yes □ No
Note: please remember to make a choice regarding above question “whether there were any credits and liabilities with related parties
for non-operating purposes”.
Liabilities of related parties to account payable
                                               Beginning Amount newly     Amount
                                                                                                             Current     Ending
                    Relation with    Formation balance added in current returned in             Interest
  Related party                                                                                              interest   balance(R
                    the Company       reason (RMB’0,0      period     current period             rate
                                                                                                           (RMB’0,000) MB’0,000)
                                                  00)    (RMB’0,000) (RMB’0,000)

Zibo Lucheng
Textile           The Company as Currencies
                                                    12,152               900              900      4.35%          250.73      12,152
Investment Co., the parent           deposit
Ltd


                                                                                                                                   23
Lu Thai Textile Co., Ltd.                                               Interim Report 2019


Zibo Lujia
                  Wholly-owned
Property                               Currencies
                  subsidiary of                      60         4.35%          1.27           60
Management                             deposit
                  Lucheng Textile
Co., Ltd

Zibo Shidanlu     Joint-stock
                                       Currencies
Cosmetics Co.,    Company of                        145   145   4.35%          2.69
                                       deposit
Ltd               Lucheng Textile

                  Controlling
Zibo Taimei                            Currencies
                  subsidiary of                     130   130   4.35%          2.42
Ties Co., Ltd                          deposit
                  Lucheng Textile

Influences from liabilities of
parties related on operating results
                                       No
and financial situations of the
Company


5. Other Major Related-Party 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
No such cases in the Reporting Period.


XIV Major Contracts and Execution thereof

1. Entrustment, Contracting and Leases

(1) Entrustment

□ Applicable √ Not applicable
No such cases in the Reporting Period.


(2) Contracting

□ Applicable √ Not applicable
No such cases in the Reporting Period.


(3) Leases

□ Applicable √ Not applicable


                                                                                               24
Lu Thai Textile Co., Ltd.                                                                                             Interim Report 2019


No such cases in the Reporting Period.


2. Major guarantees

√ Applicable □ Not applicable


(1) Guarantees

                                                                                                                              Unit: RMB'0,000

                                  Guarantees provided by the Company as the parent for its subsidiaries

                                                         Actual
                    Disclosure date                                                                                                Guarantee
                                                    occurrence date    Actual                                             Having
                    of the guarantee     Line of                                     Type of                                             for a
     Obligor                                            (date of      guarantee                    Term of guarantee expired
                          line         guarantee                                    guarantee                                        related
                                                       agreement       amount                                             or not
                     announcement                                                                                                  party or not
                                                        signing)

                                                                                                   Five years since
Lu Thai
                                                                                    Joint-liabil the approval of the
(Vietnam)           25 January 2017      10,454.72 20 January 2017              0                                        No        Yes
                                                                                    ity            board of the
Textile Co., Ltd.
                                                                                                   Company

                                                                                                   Five years since
Lu Thai
                                                                                    Joint-liabil the approval of the
(Vietnam)           25 January 2017      17,969.05 20 January 2017 14,856.64                                             No        Yes
                                                                                    ity            board of the
Textile Co., Ltd.
                                                                                                   Company

                                                                                                   Five years since
Lu Thai
                                                                                    Joint-liabil the approval of the
(Vietnam)           27 October 2017      33,977.84 25 October 2017 14,562.88                                             No        Yes
                                                                                    ity            board of the
Textile Co., Ltd.
                                                                                                   Company

                                                                                                   Three years since
Lu Thai
                                                                                    Joint-liabil the approval of the
(Vietnam)           22 August 2018        7,549.52 20 August 2018      3,306.11                                          No        Yes
                                                                                    ity            board of the
Textile Co., Ltd.
                                                                                                   Company

                                                                                                   Two years since
Lu Thai
                                                                                    Joint-liabil the approval of the
(Vietnam)           22 August 2018        2,745.28 20 August 2018               0                                        No        Yes
                                                                                    ity            board of the
Textile Co., Ltd.
                                                                                                   Company

                                                                                                   Two years since
Lu Thai
                                                                                    Joint-liabil the approval of the
(Vietnam)           29 March 2019        10,312.05 27 March 2019                0                                        No        Yes
                                                                                    ity            board of the
Textile Co., Ltd.
                                                                                                   Company

Lu Thai                                                                                            Two years since
                                                                                    Joint-liabil
(Vietnam)           29 March 2019         4,124.82 27 March 2019                0                  the approval of the No          Yes
                                                                                    ity
Textile Co., Ltd.                                                                                  board of the


                                                                                                                                                 25
Lu Thai Textile Co., Ltd.                                                                                                Interim Report 2019


                                                                                                       Company

                                                                                                       Two years since
Lu Thai
                                                                                        Joint-liabil the approval of the
(Vietnam)           29 March 2019         20,624.1 27 March 2019                    0                                       No         Yes
                                                                                        ity            board of the
Textile Co., Ltd.
                                                                                                       Company

                                                                                                       Two years since
Lu Thai
                                                                                        Joint-liabil the approval of the
(Vietnam)           29 March 2019         20,624.1 27 March 2019                    0                                       No         Yes
                                                                                        ity            board of the
Textile Co., Ltd.
                                                                                                       Company

                                                                                                       Two years since
Lu Thai
                                                                                        Joint-liabil the approval of the
(Vietnam)           29 March 2019         5,499.76 27 March 2019                    0                                       No         Yes
                                                                                        ity            board of the
Textile Co., Ltd.
                                                                                                       Company

                                                                                                       Two years since
Lu Thai
                                                                                        Joint-liabil the approval of the
(Vietnam)           29 March 2019         4,124.82 27 March 2019                    0                                       No         Yes
                                                                                        ity            board of the
Textile Co., Ltd.
                                                                                                       Company

                                                                                                       Three years since
Xinjiang Lu
                                                                                        Joint-liabil the approval of the
Thai Good Yield 14 October 2017             15,000 12 October 2017                  0                                       No         Yes
                                                                                        ity            board of the
Cotton Co., Ltd.
                                                                                                       Company

Total approved line for such                                             Total actual amount of
guarantees    in    the     Reporting                        65,309.65 such guarantees in the                                           18,966.68
Period (B1)                                                              Reporting Period (B2)

                                                                         Total actual balance of
Total approved line for such
                                                                         such guarantees at the
guarantees at the end of the                                153,006.06                                                                  32,725.63
                                                                         end of the Reporting
Reporting Period (B3)
                                                                         Period (B4)

                                               Guarantees provided between subsidiaries

                          Disclosure                        Actual                                                                      Guarante
                          date of the                occurrence date       Actual                                             Having         e for a
                                         Line of                                         Type of
      Obligor         guarantee line                    (date of         guarantee                     Term of guarantee expired or      related
                                        guarantee                                       guarantee
                      announcemen                      agreement          amount                                                 not     party or
                               t                        signing)                                                                              not

Xinjiang Lu Thai                                     5 November                         Joint-liabil
                                            20,000                           19,900                    12 months            No          Yes
Textile Co., Ltd.                                    2018                               ity

Total approved line for such                                             Total actual amount of
guarantees    in    the     Reporting                                0 such guarantees in the                                                 19,900
Period (C1)                                                              Reporting Period (C2)

Total approved line for such                                             Total actual balance of
                                                                20,000                                                                        19,900
guarantees at the end of the                                             such guarantees at the


                                                                                                                                                       26
Lu Thai Textile Co., Ltd.                                                                                  Interim Report 2019


Reporting Period (C3)                                                 end of the Reporting
                                                                      Period (C4)

Total guarantee amount (total of the three kinds of guarantees above)

Total guarantee line approved in                                      Total    actual    guarantee
the       Reporting         Period                       65,309.65 amount in the Reporting                               38,866.68
(A1+B1+C1)                                                            Period (A2+B2+C2)

                                                                      Total    actual    guarantee
Total approved guarantee line at
                                                                      balance at the end of the
the end of the Reporting Period                        173,006.06                                                        52,625.63
                                                                      Reporting             Period
(A3+B3+C3)
                                                                      (A4+B4+C4)

Total actual guarantee amount (A4+B4+C4) as % of the
                                                                                                                            7.38%
Company’s net assets

Of which:

Balance of guarantees provided for shareholders, actual controller
                                                                                                                                 0
and their related parties (D)

Balance of debt guarantees provided directly or indirectly for
                                                                                                                                 0
obligors with an over 70% debt/asset ratio (E)

Amount by which the total guarantee amount exceeds 50% of the
                                                                                                                                 0
Company’s net assets (F)

Total of the three amounts above (D+E+F)                                                                                         0

                                                                      According to “Agreement on Counter Guarantee” signed on 12
                                                                      October 2017 between Lu Thai Company and Xinjiang Lu Thai
Explanation on possible bearing joint responsibility of liquidation
                                                                      Company, Xinjiang Lu Thai Company, the warrantee Xinjiang
due to immature guarantee (if any)
                                                                      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.

Compound guarantees:

None


(2) Irregularities in Provision of Guarantees

□ Applicable √ Not applicable
No such cases in the Reporting Period.


3. Other Significant Contracts

□ Applicable √ Not applicable
No such cases in the Reporting Period.




                                                                                                                                 27
Lu Thai Textile Co., Ltd.                                                                                                 Interim Report 2019


XV. Social Responsibilities

1. Significant Environment Protection

Indicate by tick mark whether the Company or any of its subsidiaries is identified as a major polluter by the environmental protection
authorities.
Yes

                                           Number                                                                                           Excessi
                 Name of                               Distribution                         Discharge                         Approved
  Name of                      Way of         of                           Discharge                             Total                        ve
                  major                                of discharge                         standards                              total
  polluter                    discharge discharg                          concentration                       discharge                     dischar
                pollutants                                outlets                          implemented                        discharge
                                           e outlets                                                                                          ge

                                                                                          Emission
                                                       Huangjiapu                         standard of                        COD is
                                                                                                             COD is
                                                       Industrial     COD≤150mg/L; water                                    1495.08t,
Lu Thai        COD and                                                                                       296.82t and
                             Continuous                Park;      East ammonia            pollutants in                      and
Textile Co., ammonia                          2                                                              ammonia                        No
                             discharge                 Zone           nitrogen≤10mg/ textile dyeing                         ammonia
Ltd            nitrogen                                                                                      nitrogen is
                                                       Industrial     L                   and finishing                      nitrogen is
                                                                                                             10.98t
                                                       Park                               industry: GB                       149.51t
                                                                                          4287-2012

                                                                                          Emission
                                                                                          standard of                        COD is
                                                                                                             COD is
Lufeng                                                                                    water                              575.985t,
               COD and                                 Lufeng chief COD≤140mg/L;                            147.02t and
Weaving &                    Continuous                                                   pollutants in                      and
               ammonia                        1        discharge      ammonia                                ammonia                        No
Dyeing Co.,                  discharge                                                    textile dyeing                     ammonia
               nitrogen                                outlet         nitrogen≤4mg/L                        nitrogen is
Ltd.                                                                                      and finishing                      nitrogen is
                                                                                                             3.36t
                                                                                          industry:     GB                   57.6t
                                                                                          4287-2012

                                                                                          Ultra-low
                                                                                          emission No.
                                                                                          2 modification January-Jun
                                                                      SO2:               list LZJBF         e in 2019:      SO2 is
Zibo                                                   Production
                                                                      ≤35mg/m3、         (2016) No 46 SO2 is                354.18t/a,
Xinsheng                                               plant of
               SO2, NQx,     Continuous                               NQx:≤100(50) of Emission             24.8594t,       NQx is
Thermal                                       4        Xinsheng                                                                             No
               and smoke     discharge                                mg/m3 and           standard of        NQx is          1011.95t/a
Power Co.,                                             Thermal
                                                                      smoke:≤10          air pollutants     79.31t and      and smoke
Ltd.                                                   Power
                                                                      (5)mg/m3            of Thermal         smoke is        is 101.2t/a.
                                                                                          Power Plant in 3.34736t.
                                                                                          Shandong
                                                                                          Province

Lu Thai                      Discharge                                COD≤50mg/L;
                                                                                                             Sewage
(Vietnam)                    into the                  Beside         ammonia             QCVN40:
               Sewage                         1                                                              discharge is /                 No
Textile Co.,                 ecological                sewage plant nitrogen≤            2011/BTNMT
                                                                                                             632,800t
Ltd.                         pond in the                              2.0mg/L


                                                                                                                                                   28
Lu Thai Textile Co., Ltd.                                                                                     Interim Report 2019


                             park
                             district
                             after
                             treatment

Lu Thai                      Direct                                                                 Gas
(Vietnam)                    discharge            Beside                         QCVN19:           emission is
               Exhaust gas                  2                   /                                                 /          No
Textile Co.,                 after                boiler room                    2009/BTNMT 111 million
Ltd.                         treatment                                                              m3

Construction of pollution prevention equipment and operation condition
Lu Thai Textile Co., Ltd. and its majority-owned subsidiary Lufeng Weaving & Dyeing Co., Ltd. strictly implement the "Three
Simultaneous" management system for environmental protection in project constructions. The companies are equipped with complete
facilities for waste gas and waste water treatment. In 2019, Lu Thai Textile Co., Ltd. and its majority-owned subsidiary Lufeng
Weaving & Dyeing Co., Ltd. carried out the waste water treatment system transformation project to improve the treated water quality
by systematic and comprehensive reform, further improving the river water quality and local ecological environment. The newly
added online monitoring devices for PH in 2019 monitor and detect the pollutants discharge index comprehensively. In 2019, the
Company makes great efforts to transform exhaust emission so as to reduce the discharge of atmospheric pollutants, including the
comprehensive treatment of VOCs discharged and low-nitrogen combustion of NOx discharged from boilers. Support teams were set
up to be responsible for daily operation maintenance and inspection to guarantee the normal operation of facilities. Both the exhaust
emission and waste water discharge meet the emission standards.
The wholly-owned subsidiary Zibo Xinsheng Thermal Power Co., Ltd. enforces the "Three Simultaneous" management system for
environmental protection in extension project construction in accordance with the government requirements, and adopts the
"limestone-gypsum method" to reduce emission concentration of sulfur dioxide, the “Low-nitrogen combustion + SNCR” and
"SNCR+SCR method" to reduce emission concentration of nitrogen oxides, and the "electric-bag electrostatic precipitator + wet
electrostatic precipitator" to reduce soot emission concentration. The overall system works well.
The waste water treatment project of the wholly-owned subsidiary Lu Thai (Vietnam) Textile Co., Ltd. is designed to treat 6,500 tons
of sewage water daily, among which, sewage plan I is designed to treat 3,000 tons of sewage water daily, and the sewage plant II is
designed to treat 3,500 tons of sewage water daily. The Company adopts a comprehensive treatment process of "pre-materialization +
A2O biochemistry + post-materialization + ozone oxidation+ active sand filtration " for waste water treatment, and the treated water
quality is better than the QCVN 40:2011/BTNMT A-level emission standards stipulated by the Vietnam government. The treated
waste water is all discharged to the ecological pond in the park. Treated water quality analysis for the first half year of 2019: The
COD (mean value) was 48.41 mg/L, the chrominance (mean value) was 33.37, the ammonia nitrogen (mean value) was 1.68 mg/L,
and the total phosphorus (mean value) was 0.118 mg/L. All the parameters met the A-level emission standards set in the "Regulations
on Parameters of Industrial Drainage in Vietnam" (QCVN40:2011/BTNMT). Waste water discharge in the whole year met the
standards without violation. The total amount of waste water discharged in the first half year of 2019 was 632,800 tons, among which,
the chemical oxygen demand (COD) was 30.63 tons, ammonia nitrogen (NH3-N) was 1.06 tons and total phosphorus (TP) was
74.80kg. The Company is equipped with multi-pipe and water film dust-separation devices to process the exhaust gas discharged
from boilers of the Company. In the first half year of 2019, all the equipment was in normal operation, and the exhaust gas inspection
parameters were lower than the QCVN19:2009/BTNMT emission standards set by Vietnam government. In the first half year of 2019,
the total amount of sulfur dioxide emissions was 32.52 tons, and the total amount of nitrogen oxides emissions was 35.81 tons.
Project Environmental Impact Assessment and Other Administrative Permission for Environmental Protection
In treatment and comprehensive improvement project of PVA waste water at high concentration of Lu Thai Textile in 2019 (I), the
main works have been completed and entered the commissioning phase; The treatment and comprehensive improvement project of
PVA waste water at high concentration of Lu Thai Textile (II) has completed the acceptance; The technical transformation of


                                                                                                                                    29
Lu Thai Textile Co., Ltd.                                                                                  Interim Report 2019


production line of high-grade greige cloth of Lu Thai Textile has been approved. The project is under construction. The technical
transformation project of automatic equipment of Lu Thai Garment has been completed the filing. In its majority-owned subsidiary
Lufeng Weaving & Dyeing Co., Ltd., EIA project of technical transformation of high-grade printed fabric production line has
completed the acceptance check. The production line of high-grade greige cloth has been accepted; The separation of dyeing
wastewater liquid membrane and comprehensive improvement project of sewage station in Lufeng Weaving & Dyeing has entered
the commissioning phase. Its wholly-owned subsidiary Zibo Xinsheng Thermal Power Co., Ltd. has obtained Reply of Environmental
Protection Department of Shandong Province on Environmental Impact Report of Expansion Project of Zibo Xinsheng Thermal
Power Co., Ltd. (LHS [2015] No. 241) as specified. The expansion project (phase II) is under construction. The completion
acceptance of environmental protection project for spinning phase I and yarn-dyed park phase I in its wholly-owned subsidiary Lu
Thai (Vietnam) Co., Ltd. has been confirmed. EIA report of spinning phase I and yarn-dyed park phase II has been approved and the
constructions are under construction.
Emergency plan for environmental incidents
The head office, factories in eastern district, and factories in western district of Lu Thai Textile Co., Ltd., and its majority-owned
subsidiary Lufeng Weaving & Dyeing Co., Ltd. prepared the Emergency Plan for Environmental Incidents, which was filed with
Zibo Environmental Protection Bureau Xichuan Branch. The wholly-owned subsidiary Zibo Xinsheng Thermal Power Co., Ltd. has
formulated the "Emergency Plan for Environmental Incidents" and filed it with the environmental protection management department.
The identification and risk assessment of environmental risk sources, prevention and early warning mechanisms, emergency
protection and supervision and management were included in the plan. The wholly-owned subsidiary Lu Thai (Vietnam) Co., Ltd.
has prepared emergency plans for different environmental incidents to reduce their impacts.
Environmental self-monitoring program
In accordance with the requirements of environmental protection authorities, Lu Thai Textile Co., Ltd and its majority-owned
subsidiary Lufeng Weaving & Dyeing Co., Ltd. formulates environmental self-testing plan for the following year in December of
each year according to the requirements of superior environmental protection administration, and implements the self-monitoring
plan to submit data to Zibo Automatic Environmental Monitoring System. The Company invited external qualified agency to detect
the sewage and exhaust gas every quarter, and report the examining report to environment inspection department. The wholly-owned
subsidiary Zibo Xinsheng Thermal Power Co., Ltd. complies with the requirements of superior environmental protection authorities
to meet discharge standards by online real-time monitoring of environmental protection data. The wholly-owned subsidiary Lu Thai
(Vietnam) Co., Ltd. installed an automatic sewage sampling device and automatic on-line monitoring device of water qualify for
real-time automatic sampling and monitoring of the quality of treated sewage. In addition, the Company invites external qualified
testing organizations to carry out inspections on waste water, sludge and exhaust gas every quarter, and provides reports to
environmental inspection departments.
Other environment information that should be disclosed
No
Other related environment protection information
No


2. Measures Taken for Targeted Poverty Alleviation

(1) Plans

The Company assumes social responsibilities by carrying out education support and poverty alleviation. The Company helps needy
students to continue their studies and impoverished peasants to maintain their basic livelihood.




                                                                                                                                   30
Lu Thai Textile Co., Ltd.                                                                                    Interim Report 2019


(2) Summary of the Related Work Done in the Reporting Period

The Company aids needy students and impoverished peasants financially in the areas where majority-owned subsidiaries locate to
enable them to continue their studies and maintain their basic livelihood and help them solve some practical difficulties.


(3) Results


                                                                              Measurement
                                   Indicator                                                             Quantity/Progress
                                                                                   unit

1. General results                                                                 ——                         ——

  Of which: 1.1 Funds                                                         Ten thousand                                         17

2. Itemized results                                                                ——                         ——

  2.1 Out of poverty by industrial development                                     ——                         ——

  2.2 Out of poverty by transferring employment                                    ——                         ——

  2.3 Out of poverty by relocation                                                 ——                         ——

  2.4 Out of poverty by education                                                  ——                         ——

Of which: 2.4.1 Amount for funding poor students                              Ten thousand                                         17

           2.4.2 Number of poor students funded                                   Person                                           56

  2.5 Out of poverty by improving health                                           ——                         ——

  2.6 Out of poverty by protecting ecological environment                          ——                         ——

  2.7 Subsidy for the poorest                                                      ——                         ——

  2.8 Social poverty alleviation                                                   ——                         ——

  2.9 Other items                                                                  ——                         ——

Of which: 2.9.1 Number of items                                                    a/an                                            1

        2.9.2 Amount of input                                                 Ten thousand                                         5

3. Accolades received (for what and at what level)                                 ——                         ——


(4) Subsequent Plans

None


XIX Other Significant Events

√ Applicable □ Not applicable
The Company held its 2nd Extraordinary General Meeting of 2018 on 23 March 2018 and passed Bill to Buy Back Some of the
B-shares of the Company. For details, please refer to the relevant announcements on www.cninfo.com.cn published on 24 March
2018 (No.: 2018-013); The Company disclosed Report on the Buyback of Some B-shares of the Company on 16 May 2018 and issued
Announcement of Lu Thai Textile Co., Ltd. about the Implementation of Buy-back of Shares on 29 May 2018 that the first buyback
shares were disclosed for the first time. As of 22 March 2019 when the repurchase period expired the Company repurchased


                                                                                                                                    31
Lu Thai Textile Co., Ltd.                                                                           Interim Report 2019


64,480,770 B shares which have been cancelled at Shenzhen Branch of China Securities Depository and Clearing Corporation
Limited completely on 4 April 2019. So far the total shares outstanding of the Company are reduced to 858,121,541 shares. For
details, please refer to the relevant announcements on www.cninfo.com.cn published on 23 March 2019 and 9 April 2019 (No.:
2019-013; 2019-023).




XVII. Significant Events of Subsidiaries

□ Applicable √ Not applicable




                                                                                                                          32
Lu Thai Textile Co., Ltd.                                                                                     Interim Report 2019




                  Part VI Share Changes and Shareholder Information

I. Share Changes

1. Share Changes

                                                                                                                               Unit: share

                                    Before                           Increase/decrease (+/-)                           After

                                                              Bon     Bonus
                                              Percenta New     us      issue                                                    Percenta
                                Number                                            Other        Subtotal          Number
                                              ge (%)   issues shar     from                                                      ge (%)
                                                               es     profit

1. Restricted shares            119,295,819 12.93%                                   44,079       44,079         119,339,898 13.91%

1.1 Shares held by the
                                                                                                          0
state

1.2      Shares   held    by
                                                                                                          0
state-own Legal-person

1.3 Shares held by other
                                  1,063,419    0.12%                                 44,079       44,079           1,107,498       0.13%
domestic investors

Among which: shares held
                                                                                                          0
by domestic legal person

Shares held by domestic
                                  1,063,419    0.12%                                 44,079       44,079           1,107,498       0.13%
natural person

1.4 Oversea shareholdings       118,232,400 12.82%                                                        0      118,232,400 13.78%

Among which: shares held
                                118,232,400 12.82%                                                        0      118,232,400 13.78%
by oversea legal person

Shares held by oversea
                                                                                                          0
natural person

2. Unrestricted shares          803,306,492 87.07%                             -64,524,849 -64,524,849           738,781,643 86.09%

2.1 RMB ordinary shares         561,105,431 60.82%                                  -28,279      -28,279         561,077,152 65.38%

2.2 Domestically listed
                                242,201,061 26.25%                             -64,496,570 -64,496,570           177,704,491 20.71%
foreign shares

2.3 Oversea listed foreign
                                                                                                          0
shares

2.4 Other                                                                                                 0

3. Total shares                 922,602,311 100.00%                            -64,480,770 -64,480,770           858,121,541 100.00%

Reasons for the share changes


                                                                                                                                       33
Lu Thai Textile Co., Ltd.                                                                                          Interim Report 2019


√ Applicable □ Not applicable
1. Some supervisors and senior executives’ shares are locked due to changing the term of office, the “restricted shares-shares held by
domestic natural person” increase 44,079 shares.
2. 64,480,770 B-shares repurchased by the Company have been cancelled at Shenzhen Branch of China Securities Depository and
Clearing Corporation Limited completely on 4 April 2019 and the total shares of the Company reduce 64,480,770 shares.
Approval of share changes:
□ Applicable √ Not applicable
Transfer of share ownership:
□ Applicable √ Not applicable
Progress on any share repurchases:
□ Applicable √ Not applicable
Progress on reducing the repurchased shares by means of centralized bidding:
□ Applicable √ Not applicable
Effects of share changes on the basic and diluted earnings per share, equity per share attributable to the Company’s ordinary
shareholders and other financial indicators of the prior year and the prior accounting period, respectively:
□ Applicable √ Not applicable
Other information that the Company considers necessary or is required by the securities regulator to be disclosed:
□ 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 preference shareholders
Total number of ordinary
                                                            55,045 with resumed voting rights at the period-end                               0
shareholders at the period-end
                                                                     (if any) (see Note 8)

                                  5% or greater ordinary shareholders or the top 10 ordinary shareholders

                                    Shareholdi                    Increase/decr                                           Pledged or frozen
                        Nature of                 Total shares                         Number of          Number of
       Name of                          ng                         ease during                                                 shares
                       shareholde                 held at the                        restricted shares   non-restricted
     shareholder                    percentage                    the Reporting                                                        Numbe
                            r                     period-end                               held           shares held      Status
                                        (%)                          Period                                                               r

Zibo          Lucheng Domestic
Textile     Investment non-state-      16.36%       140,353,583                  0                   0      140,353,583
Co., Ltd.              owned



                                                                                                                                              34
Lu Thai Textile Co., Ltd.                                                                                          Interim Report 2019


                         legal
                         person

                         Foreign
Tailun      (Thailand)
                         legal              13.78%      118,232,400               0      118,232,400                   0
Textile Co., Ltd.
                         person

Hong             Kong Foreign
Securities Clearing legal                    3.03%       25,985,611       -8029937                  0        25,985,611
Co. Ltd                  person

Central          Huijin State-own
Assets Management ed             legal       2.37%       20,315,300               0                 0        20,315,300
Co., Ltd.                person

                         Foreign
T.Rowe Price Intl
                         legal               2.32%       19,948,219               0                 0        19,948,219
Discovery Fund
                         person

                         Domestic
China Securities         non-state-
Finance Corporation owned                    2.13%       18,313,391               0                 0        18,313,391
Limited                  legal
                         person

Hong Kong
                         Foreign
Monetary
                         legal               2.04%       17,487,884        5852491                  0        17,487,884
Authority-self-owne
                         person
d funds

National Social
Security Fund            Other               1.34%       11,499,947 -500000                         0        11,499,947
Portfolio 103

National Social
Security Fund            Other               0.93%        7,980,051 7980051                         0          7,980,051
Portfolio 413

RBC Emerging             Foreign
Markets Small Cap legal                      0.72%        6,181,462 148400                          0          6,181,462
Equity Fund              person

Strategic investors or general
corporations becoming top-ten
                                         Naught
shareholders due to placing of
new shares (if any) (see Note 3)

                                         Zibo Lucheng Textile Investment Co., Ltd. is the largest shareholder and the actual controller of the
Related     or    acting-in-concert
                                         Company. Tailun (Thailand) Textile Co., Ltd. is the second largest shareholder and the foreign
parties among the shareholders
                                         sponsor of the Company. All the other shareholders are holding tradable A-shares or B-shares. And
above
                                         it is unknown whether there is any related party or acting-in-concert party among them.

                                         Shareholdings of the top ten non-restricted ordinary shareholders


                                                                                                                                           35
Lu Thai Textile Co., Ltd.                                                                                          Interim Report 2019



                                                     Number of non-restricted shares held at the                   Type of shares
               Name of shareholder
                                                                     period-end                             Type                Shares

                                                                                                    RMB       ordinary
Zibo Lucheng Textile Investment Co., Ltd.                                             140,353,583
                                                                                                    share

                                                                                                    RMB ordinary
Hong Kong Securities Clearing Co. Ltd                                                  25,985,611
                                                                                                    share

Central Huijin Assets Management Co.,                                                               RMB       ordinary
                                                                                       20,315,300
Ltd.                                                                                                share

                                                                                                    Domestically
T.ROWE PRICE INTL DISCOVERY
                                                                                       19,948,219 listed foreign
FUND
                                                                                                    share

China Securities Finance Corporation                                                                RMB       ordinary
                                                                                       18,313,391
Limited                                                                                             share

Hong Kong Monetary Authority-self-owned                                                             RMB       ordinary
                                                                                       17,487,884
funds                                                                                               share

                                                                                                    RMB       ordinary
National Social Security Fund Portfolio 103                                            11,499,947
                                                                                                    share

                                                                                                    RMB       ordinary
National Social Security Fund Portfolio 413                                             7,980,051
                                                                                                    share

                                                                                                    Domestically
RBC EMERGING MARKETS SMALL
                                                                                        6,181,462 listed       foreign
CAP EQUITY FUND
                                                                                                    share

                                                                                                    RMB       ordinary
Basic endowment insurance fund 000801                                                   6,000,356
                                                                                                    share

Explanation      on     connected     relationship
among the top ten shareholders of tradable Zibo Lucheng Textile Investment Co., Ltd. is the largest shareholder and the actual
share not subject to trading moratorium, as controller of the Company. Tailun (Thailand) Textile Co., Ltd. is the second largest
well as among the top ten shareholders of shareholder and the foreign sponsor of the Company. All the other shareholders are
tradable share not subject to trading holding tradable A-shares or B-shares. And it is unknown whether there is any related
moratorium and top ten shareholders, or party or acting-in-concert party among them.
explanation on acting-in-concert

Particular about shareholder participate in
the     securities    lending   and    borrowing Naught
business (if any) (note 4)

Indicate by tick mark whether any of the top 10 ordinary shareholders or the top 10 unrestricted ordinary shareholders of the
Company conducted any promissory repo during the Reporting Period.
□ Yea √ No
No such cases in the Reporting Period.




                                                                                                                                         36
Lu Thai Textile Co., Ltd.                                            Interim Report 2019


IV. Change of the Controlling Shareholder or the Actual Controller

Change of the controlling shareholder in the Reporting Period:

□ Applicable √ Not applicable

No such cases in the Reporting Period.

Change of the actual controller during the Reporting Period:

□ Applicable √ Not applicable

No such cases in the Reporting Period.




                                                                                           37
Lu Thai Textile Co., Ltd.                                            Interim Report 2019




                                         Part VII Preferred Shares

□ Applicable √ Not applicable
No such cases in the Reporting Period.




                                                                                           38
Lu Thai Textile Co., Ltd.                                                                                       Interim Report 2019




        Part VIII Directors, Supervisors, Senior Management and Staff

I Change in Shareholdings of Directors, Supervisors and Senior Management

√ Applicable □ Not applicable

                                                                                            Number of                        Number of
                                                        Increase in Decrease                                 Number of
                                                                                              granted                          granted
                                   Incum Beginning         the       in the     Ending                        restricted
                                                                                             restricted                       restricted
   Name         Office title       bent/fo shareholdi    Current    Current    shareholdi                   shares granted
                                                                                            shares at the                    shares at the
                                    rmer ng (share)      Period     Period     ng (share)                   in the Current
                                                                                            period-begin                     period-end
                                                         (share)    (share)                                 Period (share)
                                                                                              (share)                          (share)

             Chairman and          Incum
Liu Zibin                                    148,290                             148,290
             GM                     bent

                                   Incum
Xu Zhinan Vice President
                                    bent

Fujiwara                           Incum
             Director
Hidetoshi                           bent

Chen                               Incum
             Director
Ruimou                              bent

Zeng                               Incum
             Director
Facheng                             bent

             Director,      Vice
Wang                               Incum
             GM, and Chief                   146,753                             146,753
Fangshui                            bent
             Engineer

Liu                                Incum
             Director
Deming                              bent

             Director and
Qin                                Incum
             Secretary of the                126,542                             126,542
Guiling                             bent
             Board

Zhang        Director          and Incum
                                              92,500                              92,500
Hongmei      Chief Accountant       bent

             Independent           Incum
Zhou Zhiji
             director               bent

             Independent           Incum
Bi Xiuli
             Director               bent

             Independent           Incum
Pan Ailing
             Director               bent

Wang         Independent           Incum


                                                                                                                                           39
Lu Thai Textile Co., Ltd.                                  Interim Report 2019


Xinyu       Director             bent

Qu          Independent         Incum
Dongmei     director             bent

            Supervisory
Zhang                           Incum
            Committee                    73,100   73,100
Shougang                         bent
            Chairman

                                Incum
Liu Zilong Supervisor                    10,000   10,000
                                 bent

Dong                            Incum
            Supervisor                    5,000    5,000
Shibing                          bent

Zhang                           Incum
            Vice GM                      52,150   52,150
Jianxiang                        bent

Wang        Vice GM, Product Incum
                                         83,700   83,700
Jiabin      Manager              bent

Zhang       Vice GM, GM of Incum
                                         80,300   80,300
Zhanqi      Lufeng Company       bent

Fujiwara    Manager of Japan Incum
Matsuzaka Office                 bent

            Secretary of the
Zhang       Board           and Incum
                                         77,700   77,700
Keming      Financial            bent
            Manager

                                Incum
Li Wenji    CIO                          10,000   10,000
                                 bent

Lyu         Vice       GM    of Incum
                                         33,750   33,750
Yongchen Lufeng Company          bent

Yu          Energy      Business Incum
                                         83,100   83,100
Shouzheng Manager                bent

            GM assistant,
Wang                            Incum
            Fabric Marketing             22,500   22,500
Changzhao                        bent
            Manager

            Manager of
Shang
            Garments            Incum
Chenggan                                 30,000   30,000
            Production           bent
g
            Department

            GM of Lu Thai       Incum
Du Lixin
            (Vietnam)            bent

            Manager of          Incum
Guo Heng
            Business             bent



                                                                                 40
Lu Thai Textile Co., Ltd.                                                                          Interim Report 2019


             Management

             GM assistant and
             Manager of            Incum
Zhang Wei
             Strategy Planning     bent
             Department

             Independent           Forme
Xu Jianjun
             director                r

             Independent           Forme
Zhao Yao
             director                r

             Manager of Brand
                                   Forme
Quan Peng Expanding                           27,750                 6,900     20,850
                                     r
             Department

Total                   --          --     1,103,135            0    6,900 1,096,235        0               0            0


II Change of Directors, Supervisors and Senior Management

√ Applicable □ Not applicable

   Name             Office title              Type of change        Date of change          Reason for change

Xu Jianjun     Independent director                Left             12 March 2019

                                           Left for expiration of
Zhao Yao       Independent director                                 10 June 2019        Regular change in directors
                                                 his term

Zhou Zhiji     Independent director               Elected           12 March 2019

Qu
               Independent director               Elected           10 June 2019        Regular change in directors
Dongmei

                 Manager of Brand          Left for expiration of
Quan Peng                                                           10 June 2019
              Expanding Department               his term




                                                                                                                         41
Lu Thai Textile Co., Ltd.                                                                               Interim Report 2019




                                         Part 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




                                                                                                                               42
Lu Thai Textile Co., Ltd.                                                                          Interim Report 2019




                                          Part X Financial Statements

I Independent Auditor’s Report

Are these interim financial statements audited by an independent auditor?

□Yes √ No

They are unaudited by such an auditor.


II Financial Statements

Currency unit for the financial statements and the notes thereto: RMB


1. Consolidated Balance Sheet

Prepared by Lu Thai Textile Co., Ltd.
                                                           30 June 2019
                                                                                                                 Unit: RMB

                                 Item                                       30 June 2019           31 December 2018

Current assets:

  Monetary capital                                                               623,926,353.74            545,502,709.36

  Trading financial assets                                                        31,146,000.00

  Financial assets at fair value through profit or loss

  Derivative financial assets

  Notes receivable                                                               173,998,375.29            174,657,918.26

  Accounts receivable                                                            381,453,061.31             374,607,116.55

  Prepayments                                                                    327,280,818.43            149,582,616.21

  Other receivables                                                               53,404,323.51              63,012,001.10

     Including: Interest receivable                                                  972,657.58

                  Dividends receivable

  Financial assets purchased under resale agreements

  Inventories                                                                   2,338,090,631.11          2,093,366,992.30

  Assets classified as held for sale

  Current portion of non-current assets                                           51,253,405.99

  Other current assets                                                            65,223,036.27              86,366,454.56

Total current assets                                                            4,045,776,005.65          3,487,095,808.34


                                                                                                                         43
Lu Thai Textile Co., Ltd.                                                                       Interim Report 2019


Non-current assets:

  Investments in debt obligations

  Available-for-sale financial assets                                                                     85,112,000.00

  Investments in other debt obligations

  Held-to-maturity investments

  Long-term receivables                                                          9,670,420.71             10,693,844.75

  Long-term equity investments                                                100,637,911.44              96,018,463.65

  Investments in other equity instruments                                      12,000,000.00

  Other non-current financial assets                                           31,018,515.95

  Investment property                                                          38,718,468.86              22,880,242.95

  Fixed assets                                                               5,729,951,131.93          5,748,562,385.35

  Construction in progress                                                    460,389,887.15            337,230,646.42

  Intangible assets                                                           478,905,610.17            478,689,064.45

  R&D expense

  Goodwill                                                                     20,563,803.29              20,613,803.29

  Long-term prepaid expense                                                   117,916,664.79             119,126,407.71

  Deferred income tax assets                                                   83,350,284.01              88,636,929.06

  Other non-current assets                                                     73,283,763.00              43,100,215.87

Total non-current assets                                                     7,156,406,461.30          7,050,664,003.50

Total assets                                                                11,202,182,466.95         10,537,759,811.84

Current liabilities:

  Short-term borrowings                                                      2,137,653,250.29          1,325,273,780.05

  Trading financial liabilities

  Financial liabilities at fair value through profit or loss                                               4,877,600.00

  Derivative financial liabilities

  Notes payable                                                                63,954,554.34                502,347.05

  Accounts payable                                                            258,962,828.52            353,186,163.90

  Advances from customers                                                      96,623,151.61            105,562,378.66

  Payroll payable                                                             258,386,596.80            325,998,210.17

  Taxes payable                                                                49,456,211.84              43,556,823.75

  Other payables                                                              213,970,947.86            215,946,987.68

     Including: Interest payable                                                 4,728,481.25              3,068,841.54

                 Dividends payable                                                441,113.64                 441,113.64

  Liabilities directly associated with assets classified as held for sale



                                                                                                                      44
Lu Thai Textile Co., Ltd.                                                                  Interim Report 2019


  Current portion of non-current liabilities                            144,282,763.91

  Other current liabilities

Total current liabilities                                              3,223,290,305.17           2,374,904,291.26

Non-current liabilities:

  Long-term borrowings                                                                             170,019,083.89

  Long-term payables

  Long-term payroll payable                                              86,420,799.53               96,958,178.53

  Provisions

  Deferred income                                                       139,234,253.96             140,183,446.39

  Deferred income tax liabilities                                        27,881,406.51               28,030,096.38

  Other non-current liabilities                                            1,840,000.00               1,840,000.00

Total non-current liabilities                                           255,376,460.00             437,030,805.19

Total liabilities                                                      3,478,666,765.17           2,811,935,096.45

Owners’ equity:

  Share capital                                                         858,121,541.00              922,602,311.00

  Capital reserves                                                      256,632,428.28             699,493,647.48

  Less: Treasury stock                                                                             486,922,944.94

  Other comprehensive income                                             72,443,324.62               61,157,013.37

  Specific reserve

  Surplus reserves                                                     1,022,717,451.40           1,022,717,451.40

  General reserve

  Retained earnings                                                    4,925,683,720.45           4,927,500,989.55

Total equity attributable to owners of the Company as the parent       7,135,598,465.75           7,146,548,467.86

Non-controlling interests                                               587,917,236.03             579,276,247.53

Total owners’ equity                                                  7,723,515,701.78           7,725,824,715.39

Total liabilities and owners’ equity                                 11,202,182,466.95          10,537,759,811.84

Legal representative: Liu Zibin                                               Chief Accountant: Zhang Hongmei


Financial Manager: Zhang Keming

2. Balance Sheet of the Company as the Parent
                                                                                                         Unit: RMB

                                   Item                            30 June 2019            31 December 2018

Current assets:

  Monetary capital                                                      253,467,095.41             191,305,104.80

  Trading financial assets                                               31,146,000.00


                                                                                                                 45
Lu Thai Textile Co., Ltd.                                                    Interim Report 2019


  Financial assets at fair value through profit or loss

  Derivative financial assets

  Notes receivable                                          62,119,619.38              91,555,248.34

  Accounts receivable                                      369,665,176.01            316,225,973.28

  Financings backed by accounts receivable

  Prepayments                                              217,392,254.90             115,020,260.51

  Other receivables                                        555,969,515.96            395,847,213.77

     Including: Interest receivable

                 Dividends receivable

  Inventories                                             1,311,906,461.89          1,040,433,078.53

  Assets classified as held for sale

  Current portion of non-current assets                     51,253,405.99

  Other current assets                                       7,410,828.74              12,671,631.64

Total current assets                                      2,860,330,358.28          2,163,058,510.87

Non-current assets:

  Investments in debt obligations

  Available-for-sale financial assets                                                  73,112,000.00

  Investments in other debt obligations

  Held-to-maturity investments

  Long-term receivables

  Long-term equity investments                            2,523,253,227.48          2,165,711,579.69

  Investments in other equity instruments

  Other non-current financial assets                        31,018,515.95

  Investment property                                       31,766,770.96              14,804,592.72

  Fixed assets                                            2,663,119,201.22          2,731,726,695.28

  Construction in progress                                  76,310,555.47              61,182,771.86

  Intangible assets                                        237,748,353.76            242,204,032.54

  R&D expense

  Goodwill

  Long-term prepaid expense

  Deferred income tax assets                                46,726,237.53              52,758,961.05

  Other non-current assets                                  30,594,810.94               6,047,443.10

Total non-current assets                                  5,640,537,673.31          5,347,548,076.24

Total assets                                              8,500,868,031.59          7,510,606,587.11



                                                                                                   46
Lu Thai Textile Co., Ltd.                                                                      Interim Report 2019


Current liabilities:

  Short-term borrowings                                                     1,206,050,936.38           622,604,447.52

  Trading financial liabilities

  Financial liabilities at fair value through profit or loss                                              4,877,600.00

  Derivative financial liabilities

  Notes payable                                                              394,797,353.60                120,000.00

  Accounts payable                                                           240,536,449.31            120,021,727.66

  Advances from customers                                                     56,085,488.30              49,798,551.14

  Payroll payable                                                            190,846,147.50            240,090,943.88

  Taxes payable                                                               21,194,320.12              30,914,089.32

  Other payables                                                             246,431,412.57            303,672,590.72

     Including: Interest payable                                               4,290,666.39               2,475,549.88

                    Dividends payable                                            441,113.64                 441,113.64

  Liabilities directly associated with assets classified as held for sale

  Current portion of non-current liabilities

  Other current liabilities

Total current liabilities                                                   2,355,942,107.78          1,372,099,950.24

Non-current liabilities:

  Long-term borrowings

  Long-term payables

  Long-term payroll payable                                                   86,420,799.53              96,958,178.53

  Provisions

  Deferred income                                                             94,086,040.14              94,390,844.09

  Deferred income tax liabilities                                             16,779,630.43              16,699,530.43

  Other non-current liabilities

Total non-current liabilities                                                197,286,470.10            208,048,553.05

Total liabilities                                                           2,553,228,577.88          1,580,148,503.29

Owners’ equity:

  Share capital                                                              858,121,541.00             922,602,311.00

  Other equity instruments

     Including: Preferred shares

                    Perpetual bonds

  Capital reserves                                                           317,206,232.47            759,836,756.57

  Less: Treasury stock                                                                                 486,922,944.94



                                                                                                                     47
Lu Thai Textile Co., Ltd.                                                               Interim Report 2019


  Other comprehensive income                                                                        520,200.00

  Specific reserve

  Surplus reserves                                                   1,019,608,711.76          1,019,608,711.76

  Retained earnings                                                  3,752,702,968.48          3,714,813,049.43

Total owners’ equity                                                5,947,639,453.71          5,930,458,083.82

Total liabilities and owners’ equity                                8,500,868,031.59          7,510,606,587.11


3. Consolidated Income Statement

                                                                                                       Unit: RMB

                                    Item                            H1 2019                  H1 2018

1. Revenue                                                           3,185,448,344.01          3,280,407,775.82

  Including: Operating revenue                                       3,185,448,344.01          3,280,407,775.82

               Interest income

2. Costs and expenses                                                2,737,159,910.26          2,838,643,909.66

  Including: Cost of sales                                           2,210,886,955.53          2,360,836,431.41

               Interest expense

               Taxes and surcharges                                     42,736,804.77             54,470,407.88

               Selling expense                                          77,836,942.94             66,941,088.56

               Administrative expense                                  191,205,597.74           163,274,510.70

               R&D expense                                             161,939,039.23           162,596,245.80

               Finance costs                                            52,554,570.05             30,525,225.31

                 Including: Interest expense                            47,316,465.76             22,535,312.05

                               Interest income                           4,338,765.10              7,403,493.02

Add: Other income                                                       32,226,225.91             37,142,521.95

      Return on investment (“-” for loss)                             10,417,475.41              4,646,023.78

         Including: Share of profit or loss of joint ventures and
                                                                         5,083,101.54             -1,730,597.59
associates
             Income from the derecognition of financial assets at
amortized cost (“-” for loss)

      Foreign exchange gain (“-” for loss)

      Net gain on exposure hedges (“-” for loss)

      Gain on changes in fair value (“-” for loss)                     5,282,600.00            -28,481,010.00

      Credit impairment loss (“-” for loss)                             -530,951.31

      Asset impairment loss (“-” for loss)                            -1,543,199.38             -2,121,494.84

      Asset disposal income (“-” for loss)                              513,490.00                -522,286.65


                                                                                                              48
Lu Thai Textile Co., Ltd.                                                                          Interim Report 2019


3. Operating profit (“-” for loss)                                              494,654,074.38           452,427,620.40

Add: Non-operating income                                                           3,097,024.44              3,007,154.83

Less: Non-operating expense                                                         2,214,356.54              1,994,923.71

4. Profit before tax (“-” for loss)                                             495,536,742.28           453,439,851.52

Less: Income tax expense                                                           74,839,232.29             63,275,514.57

5. Net profit (“-” for net loss)                                                420,697,509.99           390,164,336.95

  5.1 By operating continuity

     5.1.1 Net profit from continuing operations (“-” for net loss)             420,697,509.99           390,164,336.95

     5.1.2 Net profit from discontinued operations (“-” for net loss)

  5.2 By ownership

     5.2.1 Net profit attributable to owners of the Company as the
                                                                                  411,446,216.59           377,355,959.02
parent

     5.2.1 Net profit attributable to non-controlling interests                     9,251,293.40             12,808,377.93

6. Other comprehensive income, net of tax                                          11,806,511.25             27,559,653.92

  Attributable to owners of the Company as the parent                              11,806,511.25             27,559,653.92

     6.1 Items that will not be reclassified to profit or loss

         6.1.1 Changes caused by remeasurements on defined benefit
pension schemes
         6.1.2 Other comprehensive income that will not be
reclassified to profit or loss under the equity method
         6.1.3 Changes in the fair value of investments in other equity
instruments

         6.1.4 Changes in the fair value of the company’s credit risks

         6.1.5 Other

     6.2 Items that will be reclassified to profit or loss                         11,806,511.25             27,559,653.92

         6.2.1 Other comprehensive income that will be reclassified to
profit or loss under the equity method
         6.2.2 Changes in the fair value of investments in other debt
obligations
         6.2.3   Gain/Loss      on      changes   in    the   fair   value   of
                                                                                                              1,020,000.00
available-for-sale financial assets
         6.2.4 Other comprehensive income arising from the
reclassification of financial assets
         6.2.5   Gain/Loss      arising    from   the    reclassification    of
held-to-maturity investments to available-for-sale financial assets
         6.2.6 Allowance for credit impairments in investments in
other debt obligations

         6.2.7 Reserve for cash flow hedges




                                                                                                                         49
Lu Thai Textile Co., Ltd.                                                                             Interim Report 2019


        6.2.8 Differences arising from the translation of foreign
                                                                                   11,806,511.25                26,539,653.92
currency-denominated financial statements

        6.2.9 Other

  Attributable to non-controlling interests

7. Total comprehensive income                                                     432,504,021.24               417,723,990.87

  Attributable to owners of the Company as the parent                             423,252,727.84               404,915,612.94

  Attributable to non-controlling interests                                         9,251,293.40                12,808,377.93

8. Earnings per share

  8.1 Basic earnings per share                                                               0.48                           0.41

  8.2 Diluted earnings per share                                                             0.48                           0.41

Where business combinations under common control occurred in the current period, the net profit achieved by the acquirees before

the combinations was RMB0.00, with the amount for the same period of last year being RMB0.00.

Legal representative: Liu Zibin                                                         Chief Accountant: Zhang Hongmei


Financial Manager: Zhang Keming


4. Income Statement of the Company as the Parent

                                                                                                                      Unit: RMB

                                   Item                                       H1 2019                       H1 2018

1. Operating revenue                                                            2,488,329,566.37             2,503,788,850.64

Less: Cost of sales                                                             1,847,868,451.77             1,861,404,465.69

     Taxes and surcharges                                                          28,685,411.40                40,307,584.75

     Selling expense                                                               46,460,101.19                38,315,465.09

     Administrative expense                                                       115,345,994.08                99,865,575.84

     R&D expense                                                                  111,017,731.29               114,901,275.65

     Finance costs                                                                 12,593,818.90                 11,391,279.87

        Including: Interest expense                                                14,948,218.54                  5,723,459.78

                      Interest income                                               1,707,105.18                  3,196,632.70

Add: Other income                                                                  20,170,944.34                28,592,746.20

      Return on investment (“-” for loss)                                       156,928,724.90                  1,917,402.93

         Including: Share of profit or loss of joint ventures and
                                                                                    5,083,101.54                 -1,730,597.59
associates
             Income from the derecognition of financial assets at
amortized cost (“-” for loss)

      Net gain on exposure hedges (“-” for loss)

      Gain on changes in fair value (“-” for loss)                                5,282,600.00                -18,847,500.00


                                                                                                                              50
Lu Thai Textile Co., Ltd.                                                                        Interim Report 2019


       Credit impairment loss (“-” for loss)                                   -2,533,623.96

       Asset impairment loss (“-” for loss)                                                               1,182,154.91

       Asset disposal income (“-” for loss)                                      593,665.89              -9,032,750.08

2. Operating profit (“-” for loss)                                            506,800,368.91           341,415,257.71

Add: Non-operating income                                                         2,310,510.04              1,865,030.22

Less: Non-operating expense                                                       1,023,788.67              1,119,027.21

3. Profit before tax (“-” for loss)                                           508,087,090.28           342,161,260.72

Less: Income tax expense                                                         56,933,685.54             56,959,321.51

4. Net profit (“-” for net loss)                                              451,153,404.74           285,201,939.21

  4.1 Net profit from continuing operations (“-” for net loss)                451,153,404.74           285,201,939.21

  4.2 Net profit from discontinued operations (“-” for net loss)

5. Other comprehensive income, net of tax                                                                   1,020,000.00

  5.1 Items that will not be reclassified to profit or loss

     5.1.1 Changes caused by remeasurements on defined benefit
pension schemes
     5.1.2 Other comprehensive income that will not be reclassified
to profit or loss under the equity method
     5.1.3 Changes in the fair value of investments in other equity
instruments

     5.1.4 Changes in the fair value of the company’s credit risks

     5.1.5 Other

  5.2 Items that will be reclassified to profit or loss                                                     1,020,000.00

     5.2.1 Other comprehensive income that will be reclassified to
profit or loss under the equity method
     5.2.2 Changes in the fair value of investments in other debt
obligations
     5.2.3 Gain/Loss on changes in the fair value of available-for-sale
                                                                                                            1,020,000.00
financial assets
     5.2.4    Other     comprehensive     income       arising   from     the
reclassification of financial assets
     5.2.5     Gain/Loss      arising   from     the   reclassification    of
held-to-maturity investments to available-for-sale financial assets
     5.2.6 Allowance for credit impairments in investments in other
debt obligations

     5.2.7 Reserve for cash flow hedges

     5.2.8 Differences arising from the translation of foreign
currency-denominated financial statements

     5.2.9 Other




                                                                                                                       51
Lu Thai Textile Co., Ltd.                                                                   Interim Report 2019


6. Total comprehensive income                                              451,153,404.74           286,221,939.21

7. Earnings per share

    7.1 Basic earnings per share                                                     0.53                         0.31

    7.2 Diluted earnings per share                                                   0.53                         0.31


5. Consolidated Cash Flow Statement

                                                                                                           Unit: RMB

                                   Item                                 H1 2019                  H1 2018

1. Cash flows from operating activities:

  Proceeds from sale of commodities and rendering of services            3,110,163,161.87          3,222,986,999.01

  Tax rebates                                                               95,975,203.98            114,081,775.79

  Cash generated from other operating activities                            46,482,650.58             58,830,516.70

Subtotal of cash generated from operating activities                     3,252,621,016.43          3,395,899,291.50

  Payments for commodities and services                                  1,987,264,167.92          1,580,866,513.00

  Cash paid to and for employees                                           882,377,720.86           866,022,073.85

  Taxes paid                                                               171,428,644.27           138,363,376.99

  Cash used in other operating activities                                   91,833,420.81            112,862,616.89

Subtotal of cash used in operating activities                            3,132,903,953.86          2,698,114,580.73

Net cash generated from/used in operating activities                       119,717,062.57           697,784,710.77

2. Cash flows from investing activities:

  Proceeds from disinvestment                                               30,000,000.00

  Return on investment                                                       2,402,138.74

  Net proceeds from the disposal of fixed assets, intangible assets
                                                                             2,599,510.60               936,526.59
and other long-lived assets
  Net proceeds from the disposal of subsidiaries and other business
units

  Cash generated from other investing activities                             9,836,798.66             13,528,136.07

Subtotal of cash generated from investing activities                        44,838,448.00             14,464,662.66

  Payments for the acquisition of fixed assets, intangible assets and
                                                                           336,291,428.03           438,092,015.33
other long-lived assets

  Payments for investments                                                  50,000,000.00

  Net payments for the acquisition of subsidiaries and other business
units

  Cash used in other investing activities                                    4,874,724.40

Subtotal of cash used in investing activities                              391,166,152.43           438,092,015.33

Net cash generated from/used in investing activities                      -346,327,704.43           -423,627,352.67


                                                                                                                    52
Lu Thai Textile Co., Ltd.                                                                   Interim Report 2019


3. Cash flows from financing activities:

  Capital contributions received                                            50,000,000.00               500,000.00

     Including: Capital contributions by non-controlling interests to
                                                                            50,000,000.00               500,000.00
subsidiaries

  Borrowings obtained                                                    2,583,222,673.24          1,554,914,896.37

  Cash generated from other financing activities                            19,000,000.00             39,317,500.00

Subtotal of cash generated from financing activities                     2,652,222,673.24          1,594,732,396.37

  Repayments of borrowings                                               1,801,353,379.40          1,235,496,710.59

  Payments for interest and dividends                                      514,442,200.45           469,601,858.04

     Including: Dividends paid by subsidiaries to non-controlling
                                                                            50,000,000.00
interests

  Cash used in other financing activities                                   21,164,104.03           175,517,237.20

Subtotal of cash used in financing activities                            2,336,959,683.88          1,880,615,805.83

Net cash generated from/used in financing activities                       315,262,989.36           -285,883,409.46

4. Effect of foreign exchange rate changes on cash and cash
                                                                              -228,703.12              6,658,728.34
equivalents

5. Net increase in cash and cash equivalents                                88,423,644.38             -5,067,323.02

Add: Cash and cash equivalents, beginning of the period                    535,134,772.90           676,639,212.86

6. Cash and cash equivalents, end of the period                            623,558,417.28           671,571,889.84


6. Cash Flow Statement of the Company as the Parent

                                                                                                           Unit: RMB

                                   Item                                 H1 2019                  H1 2018

1. Cash flows from operating activities:

  Proceeds from sale of commodities and rendering of services            2,462,659,877.36          2,547,140,430.96

  Tax rebates                                                               61,662,415.98             70,272,032.57

  Cash generated from other operating activities                            21,521,514.73             36,415,607.59

Subtotal of cash generated from operating activities                     2,545,843,808.07          2,653,828,071.12

  Payments for commodities and services                                  1,310,008,487.94          1,356,047,613.94

  Cash paid to and for employees                                           584,827,906.35           605,320,730.04

  Taxes paid                                                               111,246,694.11             87,174,263.36

  Cash used in other operating activities                                   44,098,655.74             65,254,416.78

Subtotal of cash used in operating activities                            2,050,181,744.14          2,113,797,024.12

Net cash generated from/used in operating activities                       495,662,063.93           540,031,047.00

2. Cash flows from investing activities:



                                                                                                                  53
Lu Thai Textile Co., Ltd.                                                                  Interim Report 2019


  Proceeds from disinvestment                                             30,000,000.00

  Return on investment                                                   152,402,138.74

  Net proceeds from the disposal of fixed assets, intangible assets
                                                                           2,577,416.61              71,378,849.40
and other long-lived assets
  Net proceeds from the disposal of subsidiaries and other business
units

  Cash generated from other investing activities                          71,873,773.84            408,047,687.20

Subtotal of cash generated from investing activities                     256,853,329.19            479,426,536.60

  Payments for the acquisition of fixed assets, intangible assets and
                                                                         122,593,981.68              75,495,986.86
other long-lived assets

  Payments for investments                                               402,922,200.00            350,352,500.00

  Net payments for the acquisition of subsidiaries and other business
units

  Cash used in other investing activities                                240,578,744.40            329,863,300.00

Subtotal of cash used in investing activities                            766,094,926.08             755,711,786.86

Net cash generated from/used in investing activities                    -509,241,596.89            -276,285,250.26

3. Cash flows from financing activities:

  Capital contributions received

  Borrowings obtained                                                   1,694,064,390.96           905,214,428.57

  Net proceeds from the issuance of bonds

  Cash generated from other financing activities                         130,000,000.00            173,828,100.00

Subtotal of cash generated from financing activities                    1,824,064,390.96          1,079,042,528.57

  Repayments of borrowings                                              1,115,914,126.27           821,108,369.41

  Payments for interest and dividends                                    434,574,114.51            455,588,046.43

  Cash used in other financing activities                                196,713,504.03            175,517,237.20

Subtotal of cash used in financing activities                           1,747,201,744.81          1,452,213,653.04

Net cash generated from/used in financing activities                      76,862,646.15            -373,171,124.47

4. Effect of foreign exchange rate changes on cash and cash
                                                                           -1,121,122.58             -2,646,087.14
equivalents

5. Net increase in cash and cash equivalents                              62,161,990.61            -112,071,414.87

Add: Cash and cash equivalents, beginning of the period                  191,305,104.80            267,809,829.78

6. Cash and cash equivalents, end of the period                          253,467,095.41            155,738,414.91




                                                                                                                 54
       Lu Thai Textile Co., Ltd.                                                                                            Interim Report 2019
       7. Consolidated Statements of Changes in Owners’ Equity

       H1 2019
                                                                                                                                                                                                             Unit: RMB

                                                                                                                        H1 2019

                                                                         Equity attributable to owners of the Company as the parent

                                            Other equity

        Item                                instruments                                                         Spec                       Gen
                                                                                                   Other                                                              Ot                     Non-controllin      Total owners’
                                           Pref Perp                           Less: Treasury                   ific                       eral
                          Share capital                  Ot Capital reserves                    comprehensiv            Surplus reserves           Retained earnings he       Subtotal         g interests          equity
                                           erred etual                             stock                        reser                      reser
                                                         he                                       e income                                                            r
                                           shar bond                                                             ve                         ve
                                                         r
                                            es     s

1. Balances as at the                                                          486,922,944.9                            1,022,717,451.4                                    7,146,548,467.8 579,276,247.5 7,725,824,715.3
                          922,602,311.00                      699,493,647.48                    61,157,013.37                                      4,927,500,989.55
end of the prior year                                                                      4                                           0                                                 6                   3                    9

Add:    Adjustments
for           changed                                                                             -520,200.00                                         15,797,284.81         15,277,084.81                        15,277,084.81
accounting policies
  Adjustments       for
corrections         of
previous errors
  Adjustments       for
business
combinations under
common control

  Other adjustments

2. Balances as at the
                                                                               486,922,944.9                            1,022,717,451.4                                    7,161,825,552.6 579,276,247.5 7,741,101,800.2
beginning      of   the 922,602,311.00                        699,493,647.48                    60,636,813.37                                      4,943,298,274.36
                                                                                           4                                           0                                                 7                   3                    0
year

                                                                                                                                                                                                                       55
         Lu Thai Textile Co., Ltd.                                                             Interim Report 2019
3. Increase/ decrease
                                                               -486,922,944.
in the period (“-” for    -64,480,770.00   -442,861,219.20                   11,806,511.25                          -17,614,553.91    -26,227,086.92   8,640,988.50     -17,586,098.42
                                                                         94
decrease)
  3.1             Total
comprehensive                                                                  11,806,511.25                         411,446,216.59    423,252,727.84    9,251,293.40 432,504,021.24
income
  3.2          Capital
                                                               -486,922,944.
increased            and    -64,480,770.00   -442,861,219.20                                                                            -20,419,044.26 49,389,695.10      28,970,650.84
                                                                         94
reduced by owners
       3.2.1 Ordinary
                                                               -486,922,944.
shares increased by         -64,480,770.00   -442,630,569.04                                                                            -20,188,394.10 50,000,000.00      29,811,605.90
                                                                         94
shareholders
       3.2.2 Capital
increased by holders
of other equity
instruments
       3.2.3
Share-based
payments included
in owners’ equity

       3.2.4 Other                              -230,650.16                                                                               -230,650.16     -610,304.90       -840,955.06

 3.3              Profit                                                                                                                                 -50,000,000.0
                                                                                                                     -429,060,770.50   -429,060,770.50                   -479,060,770.50
distribution                                                                                                                                                        0

       3.3.1
Appropriation          to
surplus reserves
       3.3.2
Appropriation          to
general reserve

                                                                                                                                                                               56
         Lu Thai Textile Co., Ltd.   Interim Report 2019
     3.3.3
Appropriation          to                                                                      -50,000,000.0
                                                           -429,060,770.50   -429,060,770.50                   -479,060,770.50
owners                (or                                                                                 0
shareholders)

     3.3.4 Other

  3.4           Transfers
within           owners’
equity
     3.4.1      Increase
in capital (or share
capital) from capital
reserves
     3.4.2      Increase
in capital (or share
capital) from surplus
reserves
     3.4.3          Loss
offset     by    surplus
reserves
     3.4.4 Changes
in defined benefit
pension         schemes
transferred            to
retained earnings
     3.4.5         Other
comprehensive
income       transferred
to retained earnings

     3.4.6 Other


                                                                                                                     57
          Lu Thai Textile Co., Ltd.                                                                                          Interim Report 2019
  3.5           Specific
reserve
       3.5.1   Increase
in the period
       3.5.2 Used in
the period

  3.6 Other

4. Balances as at the                                                                                                    1,022,717,451.4                                    7,135,598,465.7 587,917,236.0 7,723,515,701.7
                           858,121,541.00                      256,632,428.28                    72,443,324.62                                      4,925,683,720.45
end of the period                                                                                                                       0                                                 5                   3                    8

          H1 2018
                                                                                                                                                                                                              Unit: RMB

                                                                                                                         H1 2018

                                                                          Equity attributable to owners of the Company as the parent

                                             Other equity

          Item                               instruments                                                         Spec                       Gen
                                                                                                    Other                                                              Ot                     Non-controllin      Total owners’
                                            Pref Perp                           Less: Treasury                   ific                       eral
                           Share capital                                                                                                                                                        g interests          equity
                                                          Ot Capital reserves                    comprehensiv            Surplus reserves           Retained earnings he       Subtotal
                                            erred etual                             stock                        reser                      reser
                                                          he                                       e income                                                            r
                                            shar bond                                                             ve                         ve
                                                          r
                                             es     s

1. Balances as at the                                                                                                                                                       7,230,942,770.1 544,132,719.6 7,775,075,489.8
                           922,602,311.00                      699,493,593.82                    16,810,574.22            962,933,579.06            4,629,102,712.06
end of the prior year                                                                                                                                                                     6                   4                    0

Add:      Adjustments
for            changed
accounting policies
  Adjustments        for
corrections          of
previous errors
  Adjustments        for
                                                                                                                                                                                                                        58
         Lu Thai Textile Co., Ltd.                                                             Interim Report 2019
business
combinations under
common control

  Other adjustments

2. Balances as at the
                                                                                                                                        7,230,942,770.1 544,132,719.6 7,775,075,489.8
beginning      of      the 922,602,311.00   699,493,593.82                   16,810,574.22   962,933,579.06          4,629,102,712.06
                                                                                                                                                     6             4                 0
year
3. Increase/ decrease
                                                             121,952,709.4
in the period (“-” for                            53.66                    27,559,653.92                             -75,988,368.98   -170,381,370.89 13,308,377.93 -157,072,992.96
                                                                        9
decrease)
  3.1               Total
comprehensive                                                                27,559,653.92                            377,355,959.02    404,915,612.94 12,808,377.93 417,723,990.87
income
  3.2          Capital
                                                             121,952,709.4
increased             and                           53.66                                                                               -121,952,655.83   500,000.00 -121,452,655.83
                                                                        9
reduced by owners
       3.2.1 Ordinary
                                                             121,952,709.4
shares increased by                                                                                                                     -121,952,709.49   500,000.00 -121,452,709.49
                                                                        9
shareholders
       3.2.2 Capital
increased by holders
of other equity
instruments
       3.2.3
Share-based
payments included
in owners’ equity

       3.2.4 Other                                  53.66                                                                                        53.66                            53.66

 3.3                Profit                                                                                           -453,344,328.00    -453,344,328.00                -453,344,328.00

                                                                                                                                                                             59
         Lu Thai Textile Co., Ltd.   Interim Report 2019
distribution
     3.3.1
Appropriation          to
surplus reserves
     3.3.2
Appropriation          to
general reserve
     3.3.3
Appropriation          to
                                                           -453,344,328.00   -453,344,328.00   -453,344,328.00
owners                (or
shareholders)

     3.3.4 Other

  3.4           Transfers
within           owners’
equity
     3.4.1      Increase
in capital (or share
capital) from capital
reserves
     3.4.2      Increase
in capital (or share
capital) from surplus
reserves
     3.4.3          Loss
offset     by    surplus
reserves
     3.4.4 Changes
in defined benefit
pension         schemes
transferred            to
                                                                                                     60
          Lu Thai Textile Co., Ltd.                                                                                         Interim Report 2019
retained earnings
       3.4.5        Other
comprehensive
income         transferred
to retained earnings

       3.4.6 Other

  3.5            Specific
reserve
       3.5.1     Increase
in the period
       3.5.2 Used in
the period

  3.6 Other

4. Balances as at the                                                             121,952,709.4                                                                         7,060,561,399.2 557,441,097.5 7,618,002,496.8
                             922,602,311.00                    699,493,647.48                     44,370,228.14           962,933,579.06          4,553,114,343.08
end of the period                                                                             9                                                                                      7                  7                     4


          8. Statements of Changes in Owners’ Equity of the Company as the Parent

          H1 2019
                                                                                                                                                                                                        Unit: RMB

                                                                                                                                H1 2019

                                                               Other equity instruments                                                           Specifi
                                                                                                                                    Other
                     Item                                                                                     Less: Treasury                         c                                           Othe        Total owners’
                                              Share capital    Preferre Perpetua           Capital reserves                     comprehensive               Surplus reserves Retained earnings
                                                                                   Other                          stock                           reserv                                          r             equity
                                                               d shares l bonds                                                     income
                                                                                                                                                     e
1. Balances as at the end of the prior
                                              922,602,311.00                               759,836,756.57 486,922,944.94            520,200.00              1,019,608,711.76 3,714,813,049.43               5,930,458,083.82
year
Add:      Adjustments        for   changed
                                                                                                                                    -520,200.00                                  15,797,284.81                15,277,084.81
accounting policies
                                                                                                                                                                                                                    61
         Lu Thai Textile Co., Ltd.                                                    Interim Report 2019
  Adjustments for corrections of
previous errors

  Other adjustments

2. Balances as at the beginning of
                                         922,602,311.00   759,836,756.57 486,922,944.94                     1,019,608,711.76 3,730,610,334.24   5,945,735,168.63
the year
3. Increase/ decrease in the period
                                         -64,480,770.00   -442,630,524.10 -486,922,944.94                                       22,092,634.24      1,904,285.08
(“-” for decrease)

  3.1 Total comprehensive income                                                                                               451,153,404.74    451,153,404.74

  3.2 Capital increased and reduced
                                         -64,480,770.00   -442,630,524.10 -486,922,944.94                                                         -20,188,349.16
by owners
     3.2.1 Ordinary shares increased
                                         -64,480,770.00   -442,630,569.04 -486,922,944.94                                                         -20,188,394.10
by shareholders
     3.2.2 Capital increased by
holders of other equity instruments
     3.2.3 Share-based payments
included in owners’ equity

     3.2.4 Other                                                   44.94                                                                                    44.94

  3.3 Profit distribution                                                                                                     -429,060,770.50   -429,060,770.50

     3.3.1 Appropriation to surplus
reserves
     3.3.2 Appropriation to owners
                                                                                                                              -429,060,770.50   -429,060,770.50
(or shareholders)

     3.3.3 Other

  3.4 Transfers        within owners’
equity
     3.4.1 Increase in capital (or
share      capital)    from    capital
reserves

                                                                                                                                                       62
         Lu Thai Textile Co., Ltd.                                                                                         Interim Report 2019
       3.4.2 Increase in capital (or
share capital) from surplus reserves
       3.4.3 Loss offset by surplus
reserves
       3.4.4     Changes       in   defined
benefit pension schemes transferred
to retained earnings
       3.4.5     Other       comprehensive
income         transferred     to   retained
earnings

       3.4.6 Other

  3.5 Specific reserve

       3.5.1 Increase in the period

       3.5.2 Used in the period

  3.6 Other

4. Balances as at the end of the
                                               858,121,541.00                               317,206,232.47                                                 1,019,608,711.76 3,752,702,968.48            5,947,639,453.71
period

         H1 2018
                                                                                                                                                                                                       Unit: RMB

                                                                                                                                H1 2018

                                                                Other equity instruments                                                         Specifi
                                                                                                                                    Other
                    Item                                                                                       Less: Treasury                      c                                            Othe     Total owners’
                                               Share capital    Preferre Perpetua           Capital reserves                    comprehensive              Surplus reserves Retained earnings
                                                                                    Other                          stock                         reserv                                          r          equity
                                                                d shares l bonds                                                   income
                                                                                                                                                   e
1. Balances as at the end of the prior
                                               922,602,311.00                               759,836,702.91                           28,050.00              959,824,839.42 3,630,102,526.37             6,272,394,429.70
year
Add:     Adjustments          for   changed
accounting policies
                                                                                                                                                                                                                63
         Lu Thai Textile Co., Ltd.                                                    Interim Report 2019
  Adjustments for corrections of
previous errors

  Other adjustments

2. Balances as at the beginning of
                                         922,602,311.00   759,836,702.91                       28,050.00    959,824,839.42 3,630,102,526.37   6,272,394,429.70
the year
3. Increase/ decrease in the period
                                                                  53.66 121,952,709.49      1,020,000.00                    -168,142,388.79   -289,075,044.62
(“-” for decrease)

  3.1 Total comprehensive income                                                            1,020,000.00                     285,201,939.21    286,221,939.21

  3.2 Capital increased and reduced
                                                                  53.66 121,952,709.49                                                        -121,952,655.83
by owners
     3.2.1 Ordinary shares increased
                                                                           121,952,709.49                                                     -121,952,709.49
by shareholders
     3.2.2 Capital increased by
holders of other equity instruments
     3.2.3 Share-based payments
included in owners’ equity

     3.2.4 Other                                                  53.66                                                                                   53.66

  3.3 Profit distribution                                                                                                   -453,344,328.00   -453,344,328.00

     3.3.1 Appropriation to surplus
reserves
     3.3.2 Appropriation to owners
                                                                                                                            -453,344,328.00   -453,344,328.00
(or shareholders)

     3.3.3 Other

  3.4 Transfers        within owners’
equity
     3.4.1 Increase in capital (or
share      capital)    from    capital
reserves

                                                                                                                                                     64
         Lu Thai Textile Co., Ltd.                                                      Interim Report 2019
     3.4.2 Increase in capital (or
share capital) from surplus reserves
     3.4.3 Loss offset by surplus
reserves
     3.4.4     Changes       in   defined
benefit pension schemes transferred
to retained earnings
     3.4.5     Other       comprehensive
income       transferred    to    retained
earnings

     3.4.6 Other

  3.5 Specific reserve

     3.5.1 Increase in the period

     3.5.2 Used in the period

  3.6 Other

4. Balances as at the end of the
                                             922,602,311.00   759,836,756.57 121,952,709.49   1,048,050.00    959,824,839.42 3,461,960,137.58   5,983,319,385.08
period




                                                                                                                                                       65
Lu Thai Textile Co., Ltd.                                                                                  Interim Report 2019


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 3 February 1993, the Company is approved by the former Ministry of Foreign Trade and Economy of the State (1993)
in WJMZEHZ No. 59 to convert into a joint-stock enterprise. Zibo Administration for Industry and Commerce issued the Company
corporate business license with the registration No. of QGLZZZ No. 000066. In July 1997, the Company is approved by the
Securities Committee of the Department of the State in the ZWF (1997) No. 47 to issue 80 million shares of domestically listed
foreign share( B-shares) at the price of RMB1.00 per share. Upon approved by Shenzhen Stock Exchange with No. (1997) 296
Listing Notice, the Company is listed on the Shenzhen Stock Exchange on 19 August 1997 with B-shares stock code of 200726. On
24 November 2000, approved by ZJGSZ [2000] No.199 by CSRC, the Company increased publication of 50 million shares of
general share (A-shares) at the book value of RMB1.00, which are listed on the Shenzhen Stock Exchange on 25 December 2000
with A-shares stock code of 000726 through approval by Shenzhen Stock Exchange with No. (2000) 162 Listing Notice. As
approved by 2000 Annual 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 Annual 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 Annual 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 25 December 2003, the inner employees’ shares reach 3 years since listing on the
A-share stock market, and they set out circulation on 26 December 2003. As approved by the Annual General Meeting 2006 held in
June 2007, the Company implemented the plan on converting 10 shares to all its shareholders with capital reserves for every 10
shares. After capitalization, the registered capital of the Company was RMB844.8648 million. The Company, in accordance with the
official reply on approving Lu Thai Textile Co., Ltd. to issue additional shares (ZJXK [2008] No. 890 document) from CSRC, issued
the Renminbi common shares (A shares) amounting to 150 million shares on 8 December 2008. According to the relevant resolution
of the 2nd Special Extraordinary General Meeting of 2011, the relevant resolution of the 15th Meeting of the 6th Board of Directors,
the Opinion of China Securities Regulatory Commission on the Restricted Share Incentive Plan of Lu Thai Textile Co., Ltd.
(Shang-Shi-Bu-Han [2011] No. 206), the Company applied for a registered capital increment of RMB14.09 million, which was
contributed by restricted share incentive receivers with monetary funds. In accordance with the resolution of Proposal on
Repurchasing and Canceling Partial Restricted Shares already Granted for the Original Incentive Targets not Reaching the Incentive
Conditions made at the 23rd Session of the 6th Board of Directors on 13 August 2012, the Company canceling a total of 60,000.00
shares already granted for the original incentive targets not reaching the incentive conditions. According to the second temporary
resolution of Proposal on counter purchase of part of the domestic listed foreign share (B share) on 25 June 2012, the Company
counter purchase domestic listed foreign 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 the 6th Board of Directors on 27 March 2013, the Company repurchase and cancel 4,257,000 shares owned by
original people whom to motivate. According to the Proposal on Repurchase and Write-off of Partly of the Original Incentive Targets
Not Met with the Incentive Conditions but Granted Restricted Shares approved on the 11 th Meeting of the 7th Board of Directors on
11 June 2014, to execute repurchase and write-off of the whole granted shares of 42,000 shares of the original incentive targets not
met with the incentive targets of the Company. 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 5 August 2015, the Company repurchased 33,156,200 domestically listed
foreign shares (B-shares). According to the Agreement about Repurchase of Part of the Company’s B Shares by the Resolutions on
the 2nd Extraordinary General Meeting of 2018 on 23 March 2018, the Company repurchased 17.6748 million domestically listed



                                                                                                                                   66
Lu Thai Textile Co., Ltd.                                                                                      Interim Report 2019


foreign shares (B shares). As of 30 June 2019, the registered capital of the Company was RMB858.1215 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 1 August 2019.
There were 16 subsidiaries included into the consolidation scope of the Company from January to June 2019, and for the details,
please refer to Notes IX. “Equities among Other Entities”.


IV Basis for Preparation of Financial Statements

1. Preparation Basis

With the going-concern assumption as the basis and based on transactions and other events that actually occurred, the Group
prepared financial statements in accordance with The Accounting Standards for Business Enterprises—Basic Standard issued by the
Ministry of Finance with Decree No. 33 and revised with Decree No. 76, the 42 specific accounting standards, the Application
Guidance of Accounting Standards for Business Enterprises, the Interpretation of Accounting Standards for Business Enterprises and
other regulations issued and revised from 15 February 2006 onwards (hereinafter jointly referred to as “the Accounting Standards for
Business Enterprises”, “China Accounting Standards” or “CAS”), as well as the Rules for Preparation Convention of Disclosure of
Public Offering Companies No.15 – General Regulations for Financial Reporting (revised in 2014) by China Securities Regulatory
Commission.
In accordance with relevant provisions of the Accounting Standards for Business Enterprises, the Group adopted the accrual basis in
accounting. Except for some financial instruments, the financial statements were based on historical costs for measurement.
Non-current asset held for sale was priced according to the lower one between the amount of fair value minus estimated costs and the
original book value which complies with the conditions of holding for sale. If 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 IV. As for the notes to the important accounting judgment and estimations made by
the management level, please refer to Notes V. 29 “Other significant 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 30 June 2019,

                                                                                                                                     67
Lu Thai Textile Co., Ltd.                                                                                    Interim Report 2019


business results and cash flows for the January to June of 2019, 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 1st and ends on December 31st 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 and US Dollar as the recording currency according their major economic environment of the
operating. When preparing the financial statements for the Reporting Period, the Company adopted RMB as the recording currency.


5. Accounting Treatment 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.

                                                                                                                                      68
Lu Thai Textile Co., Ltd.                                                                                      Interim Report 2019


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
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 5 th 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. 14 “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.                                                                                       Interim Report 2019


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 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. 14 “Long
Term Equity Investment” or Notes V. 9 “Financial Instruments”.



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Lu Thai Textile Co., Ltd.                                                                                        Interim Report 2019


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. 14. (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.


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.
For the preparation for consolidated financial statement involved in foreign operations, if there are items of foreign currency
monetary of net investment in foreign operations in essence, then the balance of exchange generated by changes in exchange rate
shall included into other comprehensive income; when disposing foreign operations, it shall be converted into the disposal of the
current profits and losses.
A foreign currency non-monetary item measured at the historical costs shall still be translated at the spot exchange rate on the

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Lu Thai Textile Co., Ltd.                                                                                        Interim Report 2019


transaction date. Where the foreign non-monetary items measured at the fair value shall be converted into amount in its bookkeeping
base currency at spot exchange rate, the exchange gains and losses arising thereof shall be treated as change in fair value, and
recorded into the current period gains and losses or as other comprehensive incomes.
(3) Translation of foreign currency financial statements
When it involves overseas business in preparing the consolidated financial statement, for the translation difference of foreign
currency monetary items of net investment in overseas business arising from the change in exchange rate, it shall be recorded into the
item of “difference of foreign currency financial statement translation” under the owners’ equity; and be recorded into disposal gains
and losses at current period when disposing overseas business.
The foreign currency financial statement of overseas business should be translated in to RMB financial statement by the following
methods: The asset and liability items in the balance sheets shall be translated at a spot exchange rate on the balance sheet date.
Among the owner’s equity items, except for the items as “undistributed profits”, other items shall be translated at the spot exchange
rate at the time when they are incurred. The income and expense items in the profit statements shall be translated at the spot exchange
rate of the transaction date. The undistributed profits at year-begin is the undistributed profits at the end of last year after the
translation; undistributed profits at year-end shall be listed as various distribution items after the translation; after the translation, the
balance between assets and the sum of liabilities and owners’ equities shall be recorded into other comprehensive gains and losses as
difference of foreign currency translation. Where an enterprise disposes of an overseas business without the control right, it shall shift
the differences, which is presented under the items of the owner’s equities in the balance sheet and which arises from the translation
of foreign currency financial statements relating to this overseas business, into the disposal profits and losses of the current period by
all or proportion of the disposed overseas business.
Foreign cash flow shall be translated at the spot exchange rate of the date of cash flow incurred. The influence of exchange rate on
the cash flow shall be adjustment item and individually listed in the cash flow statement.
And the opening balance and the actual balance of last year shall be listed at the amounts after translation of foreign currency
financial statement in last year.
Where the control of the Company over an overseas operation ceases due to disposal of all or some of the Company’s owner’s equity
in the overseas operation or other reasons, the foreign-currency statement translation difference belonging to the parent company’s
owner’s equity in relation to the 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.
(1) Classification, recognition and measurement of financial assets
The Company classifies the financial assets into financial assets measured at amortized cost, financial assets measured by the fair
value and the changes recorded in other comprehensive income and financial assets at fair value through profit or loss based on the
business model for financial assets management and characteristics of contractual cash flow of financial assets. Financial assets
initially recognized shall be measured at their fair values. For financial assets measured at their fair values and of which the variation
is recorded into the profit or loss of the current period, the transaction expenses thereof shall be directly included into the current
profit or loss; for other financial assets, the transaction expenses thereof shall be included into the initially recognized amount.
①Financial assets measured by the amortized cost



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Lu Thai Textile Co., Ltd.                                                                                        Interim Report 2019


The business mode of the Company to manage the financial assets targets at collecting the contractual cash flow, that is, the cash
flow generated in the specific date is the payment of the interest based on the principal and outstanding principal amount. This kind
of financial assets of the Company shall be subsequently measured based on the amortized cost and effective interest method, and the
gains or losses arising from the amortization, impairment shall be included into current profit and loss.
②Financial assets measured at the fair value with its changes included into other comprehensive income
Business mode for managing financial assets of the Company takes contract cash flow collected as target and selling as target. The
Company calculates such financial assets as per fair value whose change is included into corresponding comprehensive income, but
impairment loss or gain, exchange gain or loss and interest income calculated as per actual interest rate method are included into the
current profit and loss. Furthermore, the Company designates partial non-tradable equity vehicle investment as the financial asset
measured with fair value whose change is included into other comprehensive income. The Company includes the related dividend
income of such financial assets into the current profit and loss with the change in fair value included into other comprehensive
income. At the time of derecognition of such financial assets, accumulated gain or loss included into other comprehensive income
before will be shifted to retained earnings from other comprehensive incomes but not included into the current profit and loss.
③Financial assets at fair value through profit or loss
The Company classifies financial assets except for above-mentioned financial assets measured with amortized cost and financial
assets measured with fair value whose change is included into other comprehensive income into financial assets at fair value through
profit or loss
(2) Classification, recognition and measurement of financial liabilities
The Group’s financial liabilities are, on initial recognition, classified into financial liabilities at fair value through profit or loss and
financial liabilities measured with amortized cost.
①Financial liabilities at fair value through profit or loss
Financial liabilities at fair value through profit or loss include trading financial liabilities which are subsequently measured at fair
value and the changes of fair value are recorded into the current profit or loss. When the liabilities are derecognized, the difference
between their fair values and their initial recorded amount was recognized as investment income and at the same time the gains and
losses of fair value shall be adjusted.
②Financial liabilities with amortized cost
Financial liabilities with amortized cost shall be subsequently measured at the amortized cost. And gains or losses generated from
derecognition or amortization shall be recorded into the current profit or loss.
(3) Recognition basis and measurement of financial assets transfer
A financial asset when one of the following conditions is met will be derecognized:
①the rights to receive cash flows from the asset have expired;
②the enterprise has transferred its rights to receive cash flows from the asset to a third party under a pass-through arrangement; or
③the enterprise has transferred its rights to receive cash flows from the asset and either (a) has transferred substantially all the risks
and rewards of the asset, or (b) has neither transferred nor retained substantially all the risks and rewards of the asset, but has
transferred control of the asset.
For a transfer of a financial asset in its entirety that satisfies the derecognition criteria, (a). the carrying amount of the financial asset
transferred; and (b) the sum of the consideration received from the transfer and any cumulative gain or loss that had been recognized
in other comprehensive income, is recognized in profit or loss. If a part of the transferred financial asset qualifies for derecognition,
the carrying amount of the transferred financial asset is allocated between the part that continues to be recognized and the part that is
derecognized, based on the relative fair value of those parts. The difference between (a) the carrying amount allocated to the part
derecognized; and (b) the sum of the consideration received for the part derecognized and any cumulative gain or loss allocated to the
part derecognized which has been previously recognized in other comprehensive income, is recognized in profit or loss.
If the Company endorses the financial assets sold by right of recourse and holding financial assets, it needs to confirm that whether
almost all risks and remuneration in the ownership of financial assets have been transferred or not. Where an enterprise has



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Lu Thai Textile Co., Ltd.                                                                                       Interim Report 2019


transferred nearly all of the risks and rewards related to the ownership of the financial asset to the transferee, it shall stop recognizing
the financial asset; If it retained nearly all of the risks and rewards related to the ownership of the financial asset, it shall not stop
recognizing the financial asset. If the Company does not transfer or retain nearly all of the risks and rewards related to the ownership
of the financial asset, then it continuously judges that whether the Company retain the control of the assets, and conducts accounting
treatment according to the principles described in former paragraphs.
(4) 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)
(5) Determination of financial assets and liabilities’ fair value
For a financial instrument which has an active market, the Company uses quoted price in the active market to establish its fair value.
For a financial instrument which does not have an active market, the Company establishes fair value by using a valuation technique.
In valuation, the Company adopts applicable valuation techniques supported by sufficient utilizable data and other information in
current circumstances, selects input values consistent with asset or liability characteristics considered in relevant asset or liability
transactions of market participators and prioritizes the applying relevant observable input values. Unobservable input values shall not
be applied unless relevant observable input values are not accessible or feasible.
(6) Impairment of financial assets
The Company estimates the expected credit loss of financial assets measured at the amortized cost and those measured at fair value
and whose changes are included in other comprehensive income (debt instruments) based on expected credit loss. The measurement
of expected credit loss depends on whether the credit risk of financial assets has increased significantly since the initial confirmation.
In case of d significant increase, the Company measures its loss provisions according to the amount equivalent to the expected credit
loss of the financial instrument during its entire life; otherwise, the Company measures its loss provisions according to the amount
equivalent to the expected credit loss of the financial instrument in the next 12 months, and the increased or reversed amount of loss
provisions resulting therefrom shall be included in profits and losses of the current period as impairment losses or gains.


10. Notes Receivable

All notes receivable settled of the Company are bank’s acceptance bill and L/C. Based on the credit risk characteristics of notes
receivable and comprehensive evaluation of their credit risk characteristics, the Company does not withdraw credit impairment losses
for notes receivable.


11. Accounts Receivable

The accounts receivable of the Company include accounts receivable, long-term receivables and other receivables. The Company
measures its credit loss according to the amount of estimated credit loss in the duration of the Company, and the increased or
reversed amount of credit loss resulting therefrom shall be recorded as loss of credit impairment in the current profit and loss. The
withdrawal method is as follows:
(1) Accounts Receivable with Significant Single Amount for Which the Bad Debt Provision is Made Individually
Where there is objective evidence indicating credit impairment in an account receivable, the Company shall make provisions for bad
debts and confirm the expected credit loss.

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Lu Thai Textile Co., Ltd.                                                                                    Interim Report 2019


(2) Accounts Receivable Which the Bad Debt Provision is Withdrawn by Credit Risk Characteristics
Name of portfolios          Withdrawal method
Risk portfolio              Expected credit losses
The Company grouped accounts receivable into risk portfolios according to similar credit risk characteristics (account age), and
compiled a comparative table of the age of accounts receivable and the expected credit loss rate in the duration of the Company
combining the current conditions and the forecast of future economic situation to calculate the expected credit loss rate. Refer to the
table details as follows:
Aging                       Expected credit loss rate (%)

Within       1        year 5
(including 1 year)

1-2 years                   10

2-3 years                   20

Over 3 years                30




12. 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 actual cost when acquired, and the cost of the inventories including the procurement cost, processing
cost and other costs. Grey yarn, dyed yarn, and plus material shall be measured at first-in first-out method when acquired and
delivered; other inventories 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 by the difference of the cost of individual item less its realizable value.
After the provision for decline in value of inventories is made, if the circumstances that previously caused inventories to be written
down below cost no longer exist so that the net realizable value of inventories is higher than their cost, the original provision for
decline in value is reversed and the reversal is included in profit or loss for the period.
(4) The perpetual inventory system is maintained for stock system.
(5) Amortization method of the low-value consumption goods and packing articles
For the low-value consumption goods, should be amortized by one-off amortization method when consuming; and for the packing
articles, should be amortized by one-off amortization method when consuming.




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Lu Thai Textile Co., Ltd.                                                                                     Interim Report 2019


13. Assets Held for Sale

The Company classifies an asset into held-for-sale when its book value is mainly recovered by selling (including the exchanges of
non-monetary assets with commercial substance) instead of a non-current asset or disposal group. Specific standards are
simultaneously satisfying the following conditions: A asset or disposal group can be sold immediately under current conditions based
on the practice of selling such assets or disposal groups in similar transactions; the Company has already made a resolution on sale
plan and obtained a confirmed purchase commitment; and the sale is expected to will be completed within one year. A disposal group
refers to a group of assets that are disposed of together as a whole by sale or other means in a transaction and the liabilities directly
related to these assets transferred in the transaction. Where the asset group or combination of asset groups to which a disposal group
belongs apportions the goodwill acquired in the business combination in accordance with the "Accounting Standards for Enterprises
No. 8 - Asset Impairment", the disposal group shall include the goodwill allocated to it.
When the Company initially measures or re-measures on the balance sheet date the non-current assets and disposal groups classified
as held-for-sale, If the book value is higher than the fair value minus the net amount of the sale costs, the book value will be written
down to the net amount of fair value minus the sale costs, and the amount written down will be recognized as impairment loss of
assets and included in the current profit and loss, and provision for impairment of held-for-sale assets will be made at the same time.
For the confirmed amount of impairment loss of assets of the disposal groups held for sale, the book value of goodwill of the disposal
groups will be offset first, and then the book value of various non-current assets applicable to the measurement of Accounting
Standards for Business Enterprises No. 42 - Non-current Assets and Disposal Groups Held for Sale and Termination of Operations
(hereinafter referred to as “Held for sale standards”) in the disposal groups will be offset according to the proportions. If the net
amount that the fair value of the disposal groups held for sale on the follow-up balance sheet date minus the sale costs increases, the
previous written-down amount will be restored, and reversed to the asset impairment loss confirmed after the assets being classified
as held-for-sale. The reversed amount will be included in the current profit or loss. And its book value shall be increased
proportionately to the proportion of the book value of various non-current assets measured by the disposal group in addition to
goodwill applicable to the measurement of held-for-sale norms; The book value of deducted goodwill and the non-current assets
applicable to the measurement of held-for-sale norms will not be reversed if the asset impairment loss is recognized before it is
classified as held for sale.
Non-current assets held for sale or non-current assets in the disposal group are not subject to depreciation or amortization. Interest
and other expenses of liabilities in the disposal group held for sale will be confirmed as before.
When a non-current asset or disposal group ceases be classified as held-for-sale or a non-current asset is removed out from the
held-for-sale disposal group due to failure in meeting the classification conditions for the category of held-for-sale, it will be
measured by one of the followings whichever is lower: (1) The book value before being classified as held for sale will be adjusted
according to the depreciation, amortization or impairment that would have been recognized under the assumption that it was not
classified as held for sale; (2) The recoverable amount.


14. 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.
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

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Lu Thai Textile Co., Ltd.                                                                                        Interim Report 2019


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 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 are not accord with that of the



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Lu Thai Textile Co., Ltd.                                                                                        Interim Report 2019


Company, should be adjusted according to the accounting policies of the Company and the financial statement of the investees during
the accounting period and according which to recognize the investment income as well as other comprehensive income. For the
transaction happened between the Company and associated enterprises as well as joint ventures, if the assets launched or sold not
form into business, the portion of the unrealized gains and losses of the internal transaction, which belongs to the Company according
to the calculation of the enjoyed proportion, should recognize the investment gains and losses on the basis. But the losses of the
unrealized internal transaction happened between the Company and the investees which belongs to the impairment losses of the
transferred assets, should not be neutralized.
The 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 IV. 5.
(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
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.




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Lu Thai Textile Co., Ltd.                                                                                      Interim Report 2019


15. 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. 21 “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.


16. Fixed Assets

(1) Conditions for Recognition

The term “fixed assets” refers to the tangible assets that simultaneously possess the features as follows: (a) they are held for the sake
of producing commodities, rendering labor service, renting or business management; and (b) their useful life is in excess of one fiscal
year. The fixed assets are only recognized when the relevant economic benefits probably flow in the Company and its cost could be
reliable measured. The fixed assets should take the initial measurement according to the cost and at the same time consider the
influences of the factors of the estimated discard expenses.


(2) Depreciation Methods


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




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Lu Thai Textile Co., Ltd.                                                                                        Interim Report 2019


(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.


17. 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. 21 “Long-term assets impairment”.


18. Borrowing Costs

Borrowing costs include interest on borrowings, amortization of discounts or premiums, ancillary expenses and exchange differences
arising from foreign currency borrowings. The capitalization of borrowing costs, which can be directly attributable to asset
acquisition or construction, starts when asset expenditure or borrowing cost are generated, or the asset acquisition or construction is
launched to enable the asset to meet the predefined conditions for use or sale, and ends when the acquired or constructed asset
conforming to capitalization conditions meet the predefined conditions for use or sale. The other borrowing costs are recognized as
expenses in the current period.
The actual interest expenses incurred in the current period of specific borrowings shall be capitalized by subtracting the interest
income earned by the bank from unused borrowing funds or investment income gained from temporary investment. For general
borrowings, the amount to be capitalized shall be determined based on the weighted average of total asset expenditure exceeding the
specific borrowing multiplied by the capitalization rate of general borrowings. The capitalization rate is determined based on the
weighted average interest rate of general borrowings.
During the capitalization period, the foreign exchange differences on foreign currency specific borrowings shall be capitalized. The
exchange differences on foreign currency general borrowings shall be included in the current profits and losses.
Assets eligible for capitalization refer to assets such as fixed assets, investment real estate and inventory that require a considerable
amount of time for acquisition or construction to be ready for use or sale.
If the acquisition or construction process of the assets eligible for capitalization is stopped unexpectedly for more than 3 months, the
capitalization of borrowing costs shall be suspended until the asset acquisition or construction resumes.


19. 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.

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Lu Thai Textile Co., Ltd.                                                                                     Interim Report 2019


Upon harvest or sale, the cost of consumptive biological assets shall be based on its book value through weighted average.
On the date of Balance Sheet, the consumptive biological assets shall be measured with lower of cost and net realizable value, and
the method for confirming the reserve for inventory price drop shall be adopted to confirm the reserve for price drop of consumptive
biological assets. If the impacts of depreciation disappear, the depreciation amount shall be recovered, and the reserve for price drop
originally accrued shall be reversed. Such amount reversed shall be recognized as loss and gain for the current period.
If consumptive biological assets change its usage to be as productive biological assets, the cost after such change shall be confirmed
based on the book value when the usage is changed. If consumptive biological assets are changed as public biological assets,
depreciation shall be taken into consideration pursuant to Corporate Accounting Rules No. 8 – Assets Depreciation. When
depreciation occur, accrued the depreciation reserve first and then confirm based on the book value after such accrual.
(2) Productive living assets
Productive living 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 living assets shall be measured based on cost.
All costs for creating or fostering Productive living 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 living assets
are as below:
      Category                 Useful life (Year)    Expected net salvage value      Annual deprecation (%)
                                                                 (%)
      Livestock                     5                            5%                             19


The Company shall review the service life, expected net residuals and depreciation method of the productive living 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 living 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 living 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 living 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 living assets changed the usage as non-profit living assets, should be
recognized according to the book value after the withdrawal of the impairment provision in accord with the regulation of No. 8 of
ASBE - Assets Impairment for considering whether there was impairment and should withdraw the impairment provision in ahead of
it.


20. 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


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Lu Thai Textile Co., Ltd.                                                                                         Interim Report 2019


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.
For details of impairment testing method and provision-making method for intangible assets, see Notes V. 21 “Long-term assets
impairment”.
(2) Accounting Policy for Internal Research and Development Expenditures
The expenditures for internal research and development projects of an enterprise shall be classified into research expenditures and
development expenditures.
The research expenditures shall be recorded into the profit or loss for the current period.
The development expenditures shall be confirmed as intangible assets when they satisfy the following conditions simultaneously, and
shall be recorded into profit or loss for the current period when they don’t satisfy the following conditions.
① It is feasible technically to finish intangible assets for use or sale;
② It is intended to finish and use or sell the intangible assets;
③ The usefulness of methods for intangible assets to generate economic benefits shall be proved, including being able to prove that
there is a potential market for the products manufactured by applying the intangible assets or there is a potential market for the
intangible assets itself or the intangible assets will be used internally;
④ It is able to finish the development of the intangible assets, and able to use or sell the intangible assets, with the support of
sufficient technologies, financial resources and other resources;
⑤ The development expenditures of the intangible assets can be reliably measured.
As for expenses that can’t be identified as research expenditures or development expenditures, the occurred R & D expenses shall be
all included in current profits and losses.


21. 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



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Lu Thai Textile Co., Ltd.                                                                                   Interim Report 2019


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.


22. 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 etc. And the long-term deferred expense shall be amortized by the straight-line method
averagely within the benefit period.


23. Payroll

(1) Accounting Treatment of Short-term Compensation

The payroll of the Company mainly includes: short-term employees compensation, welfare after departure, demission welfare, and
the welfare of other long-term staffs, of which:
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 Demission Welfare
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.
(4) Accounting Treatment of the Welfare of Other Long-term Staffs

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Lu Thai Textile Co., Ltd.                                                                                    Interim Report 2019


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 recognition conditions of the estimated liabilities.
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.


24. Revenue


Is the Company subject to any disclosure requirements for special industries?
No.
Has implemented the new revenue standard or not
□ Applicable √ Not applicable
(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 can’t be measured in a reliable way, the revenue from the
providing of labor services shall be recognized in accordance with the amount of the cost of labor services incurred and expected to
be compensated, and make the cost of labor services incurred as the current expenses. If it is predicted that the cost of labor services
incurred couldn’t be compensated, thus no revenue shall be recognized.
Where a contract or agreement signed between Company and other enterprises concerns selling goods and providing of labor services,
if the part of sale of goods and the part of providing labor services can be distinguished from each other and can be measured

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Lu Thai Textile Co., Ltd.                                                                                       Interim Report 2019


respectively, the part of sale of goods and the part of providing labor services shall be treated respectively. If the part of selling goods
and the part of providing labor services can’t be distinguished from each other, or if the part of sale of goods and the part of providing
labor services can be distinguished from each other but can’t 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.


25. Government Subsidies

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 investor who enjoys the corresponding owner’s equity. 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 can’t 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 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.
The asset-related government subsidy shall be confirmed as the deferred income, and it shall be calculated into the current profits and
losses by stages in reasonable and systematic way within the service life of related asset. 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 current
profits and losses during the period to confirm the related costs or losses; the occurred related costs or losses for compensation shall
be calculated in the current profits and losses directly.
For government subsidy including the asset-related government subsidy and the income-related government subsidy at one time,
accounting treatment shall be conducted respectively to distinguish the different parts; if it is difficult to distinguish, then it shall be


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Lu Thai Textile Co., Ltd.                                                                                      Interim Report 2019


classified into the income-related government subsidy
Government subsidies related to routine activities of the Company shall be calculated into other income or offset related costs
according to the essence of economic business; government subsidies that have nothing to do with routine activities shall calculated
into 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 deducted, and the surpassing part shall be calculated into the current profits and losses; If in other
situations, it shall be calculated in the current profits and losses directly.


26. 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 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.



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Lu Thai Textile Co., Ltd.                                                                                     Interim Report 2019


(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 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.


27. Lease

(1) Accounting Treatment of Operating Lease

(1) Business of operating leases recorded by the Group as the lessee
The rent expenses from operating leases shall be recorded by the lessee in the relevant asset costs or the profits and losses of the
current period by using the straight-line method over each period of the lease term. The initial direct costs shall be recognized as the
profits and losses of the current period. The contingent rents shall be recorded into the profits and losses of the current period in
which they actually arise.
(2) Business of operating leases recorded by the Group as the lessor
The rent incomes from operating leases shall be recognized as the profits and losses of the current period by using the straight-line
method over each period of the lease term. The initial direct costs of great amount shall be capitalized when incurred, and be
recorded into current profits and losses in accordance with the same basis for recognition of rent incomes over the whole lease term.
The initial direct costs of small amount shall be recorded into current profits and losses when incurred. The contingent rents shall be
recorded into the profits and losses of the current period in which they actually arise.


(2) Accounting Treatments of Financial Lease

(1) Business of finance leases recorded by the Company as the lessee
On the lease beginning date, the Company shall record the lower one of the fair value of the leased asset and the present value of the
minimum lease payments on the lease beginning date as the entering value in an account, recognize the amount of the minimum lease
payments as the entering value in an account of long-term account payable, and treat the balance between the recorded amount of the
leased asset and the long-term account payable as unrecognized financing charges. Besides, the initial direct costs directly
attributable to the leased item incurred during the process of lease negotiating and signing the leasing agreement shall be recorded in
the asset value of the current period. The balance through deducting unrecognized financing charges from the minimum lease
payments shall be respectively stated in long-term liabilities and long-term liabilities due within 1 year.
Unrecognized financing charges shall be adopted by the effective interest rate method in the lease term, so as to calculate and
recognize current financing charges. The contingent rents shall be recorded into the profits and losses of the current period in which

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Lu Thai Textile Co., Ltd.                                                                                      Interim Report 2019


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 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.




28. Repurchase of Shares

No gains or losses shall be recognized when the consideration and transaction fees paid in share repurchases reduce the shareholders’
equity and the Company’s shares are repurchased, transferred or cancelled.
Transfer of treasury stocks shall be included into the capital reserves according to the difference between the actually received
amount and the book value of the treasury stocks. If the capital reserves are insufficient for adjustment, the surplus reserves and
retained profits shall be adjusted accordingly. For cancellation of treasury stocks, the share capital shall be reduced according to the
par value and number of shares cancelled and the capital reserves shall be adjusted according to the difference between the book
value of the treasury stocks and the par value. If the capital reserves are insufficient for adjustment, the surplus reserves and retained
profits shall be adjusted accordingly.


29. 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) Inventory depreciation reserves
The Company shall calculate whichever is lower between the cost and realizable net value in light of inventory accounting policies.

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Lu Thai Textile Co., Ltd.                                                                                    Interim Report 2019


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.
(3) 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.
(4) 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.
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.
(5) 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.
(6) 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.
(7) Income taxes
There’s certain uncertainty of disposal and calculation of taxes of partial transactions in normal operating activities. It is uncertain



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Lu Thai Textile Co., Ltd.                                                                                   Interim Report 2019


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.
(8) Measurement of fair value
Some of assets and liabilities in financial statement of the Company are measured by fair value. When estimating the fair value of an
asset or liability, the Company adopts the available and observable market data. During the process of confirming the fair value of
various assets and liabilities, relevant information of the adopted valuation technique and input value was disclosure in Note XI.


30. Changes in Main Accounting Policies and Estimates

(1) Significant Changes in Accounting Policies

√ Applicable □ Not applicable

             Contents of changes in accounting policies and reasons thereof                      Approval procedures           Note

(1) In 2017, the Ministry of Finance revised and issued the Accounting Standards for
Business Enterprises No. 22-Recognition and Measurement of Financial Instruments,
Accounting Standards for Business Enterprises No. 23-Transfer of Financial Assets,
Accounting Standards for Business Enterprises No. 24-Hedge Accounting and
Accounting Standards for Business Enterprises No. 37-Presentation of Financial
Instruments, and required all enterprises listed domestically to implement the
accounting standards related to new financial instruments. The Company starts to carry
out above accounting standards since 1 January 2019.
(2) On 15 June 2018, the Ministry of Finance issued the Notice on Revising and
Issuing the Format of 2018 Financial Statements of General Enterprises (CK[2018]No. The Proposal on Changes in Parts
15) in which the format of financial statements of general enterprises was revised, and of Accounting Policies of the
required governed enterprises to perform since the start date stipulated in this Company has been reviewed and
document.                                                                                 approved on the 24th Meeting of
                                                                                       th
(3) In 2015, the Company set up the two wholly-owned subsidiaries Lu Thai Vietnam the 8 Board of Directors.
and Lu An Garments in Vietnam. The recording currency of both two subsidiaries is
DONG during the period from respective establishment date to 31 December 2018. The
sales export of the two subsidiaries was mainly settled in USD. 86.48% of sales
revenue of Lu Thai Vietnam in 2018 was settled in USD and all sales revenue of Lu An
Garments were settled in USD. In accordance with provisions of No. 200/2014TT-BTC
Accounting Systems for Business Enterprises issued by the Ministry of Finance of
Vietnam, the two subsidiaries satisfied the condition taking USD as the recording
currency, thus, their recording currencies have been changed into USD since 1 January
2019. The Company needs to make corresponding adjustments to related parts of
accounting policies in line with above provisions of accounting systems.


(2) Significant Changes in Accounting Estimates

□ Applicable √ Not applicable




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Lu Thai Textile Co., Ltd.                                                              Interim Report 2019


(3) Adjustments to the Financial Statements at the Beginning of the First Execution Year of any New
Standards Governing Financial Instruments, Revenue or Leases

√ Applicable □ Not applicable
Consolidated Balance Sheet
                                                                                                     Unit: RMB

             Item                   31 December 2018          1 January 2019              Adjusted

Current assets:

   Monetary capital                         545,502,709.36           545,502,709.36

   Settlement reserve

   Interbank loans granted

   Trading financial assets                                            60,612,000.00             60,612,000.00

   Financial assets at fair
value through profit or loss

   Derivative financial assets

   Notes receivable                         174,657,918.26           174,657,918.26

   Accounts receivable                      374,607,116.55            374,607,116.55

  Financing backed by
accounts receivable

  Prepayments                               149,582,616.21           149,582,616.21

  Premiums receivable

   Reinsurance receivables

   Receivable        reinsurance
contract reserve

   Other receivables                         63,012,001.10             63,012,001.10

     Including: Interest
receivable

                   Dividends
receivable

   Financial assets purchased
under resale agreements

   Inventories                             2,093,366,992.30         2,093,366,992.30

  Contract assets

   Assets classified as held
for sale
   Current        portion      of
non-current assets

   Other current assets                      86,366,454.56             86,366,454.56



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Lu Thai Textile Co., Ltd.                                                 Interim Report 2019


Total current assets               3,487,095,808.34    3,547,707,808.34             60,612,000.00

Non-current assets:

  Loans and advances to
customers

  Investments in debt
obligations

  Available-for-sale financial
                                     85,112,000.00                                 -85,112,000.00
assets

  Investments in other debt
obligations

  Held-to-maturity
investments

  Long-term receivables              10,693,844.75       10,693,844.75

  Long-term              equity
                                     96,018,463.65       95,554,809.90                -463,653.75
investments

  Investments in other equity
                                                         12,000,000.00              12,000,000.00
instruments

  Other non-current financial
                                                         31,018,515.95              31,018,515.95
assets

  Investment property                22,880,242.95       22,880,242.95

  Fixed assets                     5,748,562,385.35    5,748,562,385.35

  Construction in progress          337,230,646.42      337,230,646.42

  Productive living assets

  Oil and gas assets

  Right-of-use assets

  Intangible assets                 478,689,064.45      478,689,064.45

  R&D expense

  Goodwill                           20,613,803.29       20,613,803.29

  Long-term             prepaid
                                    119,126,407.71      119,126,407.71
expense

  Deferred income tax assets         88,636,929.06       85,859,151.67              -2,777,777.39

  Other non-current assets           43,100,215.87       43,100,215.87

Total non-current assets           7,050,664,003.50    7,005,329,088.31            -45,334,915.19

Total assets                      10,537,759,811.84   10,553,036,896.65             15,277,084.81

Current liabilities:

  Short-term borrowings            1,325,273,780.05    1,325,273,780.05

  Borrowings from central



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Lu Thai Textile Co., Ltd.                                                   Interim Report 2019


bank

  Interbank loans obtained

  Trading financial liabilities

  Financial liabilities at fair
                                         4,877,600.00                                 -4,877,600.00
value through profit or loss
  Derivative             financial
                                                            4,877,600.00               4,877,600.00
liabilities

  Notes payable                            502,347.05         502,347.05

  Accounts payable                     353,186,163.90     353,186,163.90

  Advances from customers              105,562,378.66     105,562,378.66

Financial assets sold under
repurchase agreements

  Customer deposits and
interbank deposits

  Payables for acting trading
of securities
  Payables for underwriting
of securities

  Payroll payable                      325,998,210.17     325,998,210.17

  Taxes payable                         43,556,823.75      43,556,823.75

  Other payables                       215,946,987.68     215,946,987.68

       Including: Interest
                                         3,068,841.54       3,068,841.54
payable

                  Dividends
                                           441,113.64         441,113.64
payable

  Handling charges and
commissions payable

  Reinsurance payables

  Contract liabilities

  Liabilities             directly
associated       with        assets
classified as held for sale
  Current        portion        of
non-current liabilities

  Other current liabilities

Total current liabilities             2,374,904,291.26   2,374,904,291.26

Non-current liabilities:

  Insurance contract reserve



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Lu Thai Textile Co., Ltd.                                                     Interim Report 2019


  Long-term borrowings                  170,019,083.89      170,019,083.89

  Bonds payable

     Including:         Preferred
shares
                    Perpetual
bonds

  Lease liabilities

  Long-term payables

  Long-term payroll payable              96,958,178.53       96,958,178.53

  Provisions

  Deferred income                       140,183,446.39      140,183,446.39

  Deferred          income      tax
                                         28,030,096.38       28,030,096.38
liabilities
  Other               non-current
                                           1,840,000.00        1,840,000.00
liabilities

Total non-current liabilities           437,030,805.19      437,030,805.19

Total liabilities                      2,811,935,096.45    2,811,935,096.45

Owners’ equity:

  Share capital                         922,602,311.00      922,602,311.00

  Other equity instruments

     Including:         Preferred
shares
                    Perpetual
bonds

  Capital reserves                      699,493,647.48      699,493,647.48

  Less: Treasury stock                  486,922,944.94      486,922,944.94

  Other         comprehensive
                                         61,157,013.37       60,636,813.37                -520,200.00
income

  Specific reserve

  Surplus reserves                     1,022,717,451.40    1,022,717,451.40

  General reserve

  Retained earnings                    4,927,500,989.55    4,943,298,274.36             15,797,284.81

Total equity attributable to
owners of the Company as               7,146,548,467.86    7,161,825,552.67             15,277,084.81
the parent

Non-controlling interests               579,276,247.53      579,276,247.53

Total owners’ equity                  7,725,824,715.39    7,741,101,800.20             15,277,084.81

Total liabilities and owners’        10,537,759,811.84   10,553,036,896.65             15,277,084.81


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Lu Thai Textile Co., Ltd.                                                                                     Interim Report 2019


equity

Note for adjustment:
In 2017, Ministry of Finance respectively revised and issued the Accounting Standards for Business Enterprises No. 22 - Recognition
and Measurement of Financial Instruments, the Accounting Standards for Business Enterprises No. 23 – Transfer of Financial Assets,
the Accounting Standards for Business Enterprises No. 24 – Hedging Accounting, and the Accounting Standards for Business
Enterprises No. 37 – Presentation of Financial Instruments (hereinafter jointly referred to as “new standards governing financial
instruments”), which required that enterprises listed domestically shall implement it from 1 January 2019. According to the standards,
enterprises shall, on implementation date of the standards, classify and measure financial instruments according to regulations, and
adjustment is not needed if the involved previous comparative data of financial statements is different from the data under the “new
standards governing financial instruments. For the balance between the original carrying value of financial instruments and the new
carrying value on implementation date of the standards, the amount of the items on 1 January 2019 in financial statements shall be
adjusted, such as earned earnings, other comprehensive income.
The Company began to implement the new standards governing financial instruments from 1 January 2019. According to Notes of
Revising and Printing the Format of 2018 General Enterprises Financial Statement issued by the Ministry of Finance, the Company
shall reclassify the original financial assets (liabilities) into trading financial assets, investments in other equity instruments, other
non-current financial assets, and derivative financial liabilities. For details about the influenced items and amounts, see the above
adjusted financial statements.


Balance Sheet of the Company as the Parent
                                                                                                                              Unit: RMB

             Item                      31 December 2018                     1 January 2019                        Adjusted

Current assets:

   Monetary capital                               191,305,104.80                     191,305,104.80

   Trading financial assets                                                           60,612,000.00                      60,612,000.00

   Financial assets at fair
value through profit or loss

   Derivative financial assets

   Notes receivable                                91,555,248.34                      91,555,248.34

   Accounts receivable                            316,225,973.28                     316,225,973.28

   Financings     backed       by
accounts receivable

  Prepayments                                     115,020,260.51                     115,020,260.51

   Other receivables                              395,847,213.77                     395,847,213.77

     Including: Interest
receivable

                  Dividends
receivable

   Inventories                                  1,040,433,078.53                   1,040,433,078.53

  Contract assets

   Assets classified as held


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Lu Thai Textile Co., Ltd.                                                 Interim Report 2019


for sale
  Current        portion       of
non-current assets

  Other current assets                12,671,631.64      12,671,631.64

Total current assets                2,163,058,510.87   2,223,670,510.87             60,612,000.00

Non-current assets:

  Investments in debt
obligations

  Available-for-sale financial
                                      73,112,000.00                                -73,112,000.00
assets

  Investments in other debt
obligations

  Held-to-maturity
investments

  Long-term receivables

  Long-term                equity
                                    2,165,711,579.69   2,165,247,925.94               -463,653.75
investments

  Investments in other equity
instruments

  Other non-current financial
                                                         31,018,515.95              31,018,515.95
assets

  Investment property                 14,804,592.72      14,804,592.72

  Fixed assets                      2,731,726,695.28   2,731,726,695.28

  Construction in progress            61,182,771.86      61,182,771.86

  Productive living assets

  Oil and gas assets

  Right-of-use assets

  Intangible assets                  242,204,032.54     242,204,032.54

  R&D expense

  Goodwill

  Long-term             prepaid
expense

  Deferred income tax assets          52,758,961.05      49,981,183.66              -2,777,777.39

  Other non-current assets             6,047,443.10       6,047,443.10

Total non-current assets            5,347,548,076.24   5,302,213,161.05            -45,334,915.19

Total assets                        7,510,606,587.11   7,525,883,671.92             15,277,084.81

Current liabilities:




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Lu Thai Textile Co., Ltd.                                                  Interim Report 2019


  Short-term borrowings               622,604,447.52     622,604,447.52

  Trading financial liabilities

  Financial liabilities at fair
                                        4,877,600.00                                 -4,877,600.00
value through profit or loss
  Derivative             financial
                                                           4,877,600.00               4,877,600.00
liabilities

  Notes payable                           120,000.00         120,000.00

  Accounts payable                    120,021,727.66     120,021,727.66

  Advances from customers              49,798,551.14      49,798,551.14

  Contract liabilities

  Payroll payable                     240,090,943.88     240,090,943.88

  Taxes payable                        30,914,089.32      30,914,089.32

  Other payables                      303,672,590.72     303,672,590.72

     Including: Interest
                                        2,475,549.88       2,475,549.88
payable

                  Dividends
                                          441,113.64         441,113.64
payable

  Liabilities             directly
associated      with        assets
classified as held for sale
  Current         portion      of
non-current liabilities

  Other current liabilities

Total current liabilities            1,372,099,950.24   1,372,099,950.24

Non-current liabilities:

  Long-term borrowings

  Bonds payable

     Including:        Preferred
shares
                  Perpetual
bonds

  Long-term payables

  Long-term payroll payable

  Provisions                           96,958,178.53      96,958,178.53

  Deferred income

  Deferred        income      tax
                                       94,390,844.09      94,390,844.09
liabilities

  Other             non-current        16,699,530.43      16,699,530.43


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Lu Thai Textile Co., Ltd.                                                                                        Interim Report 2019


liabilities

Total non-current liabilities

Total liabilities                                  208,048,553.05                      208,048,553.05

Owners’ equity:                                 1,580,148,503.29                    1,580,148,503.29

   Share capital

   Other equity instruments                        922,602,311.00                      922,602,311.00

     Including:         Preferred
shares
                    Perpetual
bonds

   Capital reserves

   Less: Treasury stock                            759,836,756.57                      759,836,756.57

   Other        comprehensive
                                                   486,922,944.94                      486,922,944.94
income

   Specific reserve                                     520,200.00                                                             -520,200.00

   Surplus reserves

   General reserve                               1,019,608,711.76                    1,019,608,711.76

   Retained earnings                             3,714,813,049.43                    3,730,610,334.24                        15,797,284.81

Total owners’ equity                            5,930,458,083.82                    5,945,735,168.63                        15,277,084.81

Total liabilities and owners’
                                                 7,510,606,587.11                    7,525,883,671.92                        15,277,084.81
equity

Note for adjustment:
In 2017, Ministry of Finance respectively revised and issued the Accounting Standards for Business Enterprises No. 22 - Recognition
and Measurement of Financial Instruments, the Accounting Standards for Business Enterprises No. 23 – Transfer of Financial Assets,
the Accounting Standards for Business Enterprises No. 24 – Hedging Accounting, and the Accounting Standards for Business
Enterprises No. 37 – Presentation of Financial Instruments (hereinafter jointly referred to as “new standards governing financial
instruments”), which required that enterprises listed domestically shall implement it from 1 January 2019. According to the standards,
enterprises shall, on implementation date of the standards, classify and measure financial instruments according to regulations, and
adjustment is not needed if the involved previous comparative data of financial statements is different from the data under the “new
standards governing financial instruments. For the balance between the original carrying value of financial instruments and the new
carrying value on implementation date of the standards, the amount of the items on 1 January 2019 in financial statements shall be
adjusted, such as earned earnings, other comprehensive income.
The Company began to implement the new standards governing financial instruments from 1 January 2019. According to Notes of
Revising and Printing the Format of 2018 General Enterprises Financial Statement issued by the Ministry of Finance, the Company
shall reclassify the original financial assets (liabilities) into trading financial assets, other non-current financial assets, and derivative
financial liabilities. For details about the influenced items and amounts, see the above adjusted financial statements.




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Lu Thai Textile Co., Ltd.                                                                                   Interim Report 2019


(4) Retroactive Adjustments to Comparative Data of Prior Years when First Execution of any New
Standards Governing Financial Instruments or Leases

□ Applicable √ Not applicable


VI. Taxation

1. Main Taxes and Tax Rate


 Category of taxes                                   Tax basis                                                 Tax rate

                     Calculated the output tax at 16%, 13%, 10%, 9%, 6%, 5%, 3%, and 0%
                                                                                                16%, 13%, 10%, 9%, 6%, 5%, 3%,
VAT                  of taxable income and paid the VAT by the amount after deducting the
                                                                                                0%
                     deductible withholding VAT at current period.

Urban
maintenance     and Paid at 7%, 5%, 1% of the circulating tax actually paid                     7%, 5%, 1%
construction tax

Enterprise income Paid at 25%, 16.5% and 15%, and 0% of taxable income respectively, for
                                                                                                25%, 16.5%, 15%, 0%
tax                  details, see the table below.

Notes of the disclosure situation of the taxpaying bodies with different enterprises income tax rate

                                  Taxpayer                                                       Income tax rate

The Company                                                                15%

Lufeng Weaving & Dyeing Co., Ltd. (hereinafter refer to as “Lufeng
                                                                           15%
Weaving & Dyeing”)

Lu Thai (Hong Kong) Textile Co., Ltd. (hereinafter refer to as “Lu Thai
                                                                           16.50%
Hong Kong”)

Xinjiang Lu Thai Harvest Cotton Co., Ltd. (“Xinjiang Lu Thai”)           25%

Zibo Luqun Textile Co., Ltd. (hereinafter refer to as “Luqun Textile”)   25%

Zibo Xinsheng Power Co., Ltd. hereinafter refer to as “Xinsheng
                                                                           25%
Power”)

Shanghai Lu Thai Textile & Garments Co., Ltd. (hereinafter referred to
                                                                           25%
as “Shanghai Lu Thai”)

Beijing Lu Thai Youxian Electronic Commerce Co., Ltd. (hereinafter
                                                                           25%
referred to as “Beijing Youxian”)

Shanghai Zhinuo Textile New Materials Co., Ltd. (hereinafter referred
                                                                           25%
to as “Shanghai Zhinuo”)

Shandong Lulian New Materials Co., Ltd. (hereinafter refer to as
                                                                           25%
“Lulian New Materials”)

Shandong Lulian New Materials Co., Ltd. (hereinafter referred to as
                                                                           25%
“ Lulian New Materials”)



                                                                                                                                  99
Lu Thai Textile Co., Ltd.                                                                                     Interim Report 2019


Xinjiang Lu Thai Textile Co., Ltd. (hereinafter referred to as “Xinjiang
                                                                            15%
Textile”)

Lu Thai (Cambodia) Textile Co., Ltd. (hereinafter referred to as “Lu
                                                                            0%
Thai Cambodia”)

Lu Thai (Burma) Textile Co., Ltd. (hereinafter referred to as “Lu Thai
                                                                            0%
Burma”)

Lu Thai (Vietnam) Textile Co., Ltd. (hereinafter referred to as “Lu Thai
                                                                            0%
Vietnam”)

Lu Thai (Tan Chau) Textile Co., Ltd. (hereinafter referred to as “Lu
                                                                            0%
Thai Tan Chau”)

Lu An Garments Co., Ltd. (hereinafter referred to as “Lu An Garments” 0%

Lu Thai (America) Textile Co., Ltd. (hereinafter referred to as “Lu Thai
                                                                            Refer to 2. Tax Preference presented as follows for details
America”


2. Tax Preference

According to the "On the Recognition of 2078 Enterprises as High-tech Enterprises for 2017 such as WeihaiTuozhan Fiber Co., Ltd."
(LK Zi[2018 ] No. 37) issued Department of Science and Technology of Shandong Province, Shandong Provincial Finance
Department, State Administration of Taxation of Shandong Province and Local Taxation Bureau of Shandong Province, the
Company and the holding subsidiary Lufeng Weaving and Dyeing Co., Ltd. were identified as high-tech enterprises. Pursuant to
Article 28 of the "Law of the PRC on Enterprise Income Tax” and the No. 23 Announcement revised and published by the State
Administration of Taxation in 2018, namely “Management of Preferential Policy on Corporate Income Tax” and the “Measures for
the Administration of the Recognition of Hi-tech Enterprises” GKFH [2016] No. 195 revised and published by the Ministry of
Science and Technology, Ministry of Finance and State Administration of Taxation, the Company and the holding subsidiary Lufeng
Weaving and Dyeing      Co., Ltd. enjoy a corporate income tax rate of 15%.
According to the "Notice of the Ministry of Finance, the General Administration of Customs and the State Administration of
Taxation on Tax Policy Issues concerning Further Implementing the Western China Development Strategy " (CS[2011] No. 58),
Xinjiang Textile Co., Ltd., the subsidiary of Lu Thai in Xinjiang, enjoys a preferential corporate income tax rate of 15%.
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 + 4 years’ duty-free term + 9 years’ half-tax term according to the investment license issued by Vietnamese Fudong
Industrial Zone Management Committee, and it will enter into 4 years’ duty-free term if it is profitable within 3 years’ starting term.
The Company shall enjoy 10% of the preference tax rate within 15 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.

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Lu Thai Textile Co., Ltd.                                                                                   Interim Report 2019


The wholly-owned subsidiary Lu Thai Tan Chau of Lu Thai Vietnam shall enjoy the preference of enterprise income tax at 3 years’
starting term + 4 years’ duty-free term + 9 years’ half-tax term according to the investment license issued by Vietnamese Tay Ninh
Investment Planning Department, and it will enter into 4 years’ duty-free term if it is profitable within 3 years’ starting term. The
Company shall enjoy 10% of the preference tax rate within 15 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.
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.
Lu Thai America, the wholly-owned subsidiary of the Company registered in New York, America, was imposed the federal
enterprise income tax at progressive tax rate in excess of specific amount of 15%-39%, and imposed the New York Enterprise
income tax at the rate of 6.5%. The income tax rate shall be 6.5% when the sales income in New York was below US$1 million,
while 8.85% when above US$1 million.
According to Announcement No. 2 of 2019 published the State Administration of Taxation(SAT), wholly-owned subsidiaries of the
Company Shanghai Lu Thai, Shanghai Zhinuo and Beijing Lu Thai Youxian enjoy income tax reduction and exemption for
small-scale and low-profit enterprises. From 1 January 2019 to 31 December 2021, the portion of annual taxable income within
RMB1 million of the subsidiaries shall be included in taxable income by reduction of 25%; for the portion exceeding RMB1 million
but within RMB3 million, it shall be included in taxable income by reduction of 25% based on the enterprise income tax rate of 20%.


VII. Notes to Major Items in the Consolidated Financial Statements of the Company

1. Monetary Capital

                                                                                                                           Unit: RMB

                            Item                                     Ending balance                       Beginning balance

Cash on hand                                                                      10,330,609.69                         9,087,924.86

Bank deposits                                                                    613,227,807.59                      526,046,848.04

Other monetary capital                                                                367,936.46                       10,367,936.46

Total                                                                            623,926,353.74                      545,502,709.36

  Of which: total amount deposited oversees                                      153,331,870.26                        92,173,384.32

Other notes
As of 30 June 2019, the monetary capital with restricted ownership of the Company was RMB367,936.46 (31 December 2018:
RMB10,367,936.46), among which, RMB295,288.20 was used as guarantee deposit for L/C by the Company’s sub-subsidiary
Xinjiang Textile and RMB72,648.26 was used as guarantee deposit for L/G by the Company’s subsidiary Lufeng Weaving & Dyeing.


2. Trading Financial Assets

                                                                                                                           Unit: RMB

                            Item                                     Ending balance                       Beginning balance

Financial assets at fair value through profit or loss                             31,146,000.00                        60,612,000.00



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Lu Thai Textile Co., Ltd.                                                                                    Interim Report 2019


Including:

Trading financial assets                                                          31,146,000.00                        60,612,000.00

Total                                                                             31,146,000.00                        60,612,000.00

Other notes


3. Notes Receivable

(1) Notes Receivable Listed by Category

                                                                                                                            Unit: RMB

                            Item                                     Ending balance                        Beginning balance

Bank acceptance bill                                                              40,719,317.59                        72,215,993.39

L/C                                                                              133,279,057.70                       102,441,924.87

Total                                                                            173,998,375.29                       174,657,918.26

Notes of the basis of recognizing the group:
Please refer to the relevant information of disclosure of bad debt provision of other accounts receivable if adopting the general mode
of expected credit loss to withdraw bad debt provision of notes receivable.
□ Applicable √ Not applicable


(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         Amount of not terminated
                            Item
                                                                      the period-end                 recognition at the period-end

Bank acceptance bill                                                             160,849,728.60

Total                                                                            160,849,728.60


4. Accounts Receivable

(1) Accounts Receivable Disclosed by Category

                                                                                                                            Unit: RMB

                                          Ending balance                                                Beginning balance

                    Carrying amount           Bad debt provision                    Carrying amount        Bad debt provision

Category                                                 Withdra                                                       Withdr
                                                                     Carrying
                                   Proporti                wal                                  Proporti                 awal Carrying value
                    Amount                     Amount                 value         Amount                   Amount
                                     on                 proportio                                  on                   propor
                                                            n                                                            tion




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        Lu Thai Textile Co., Ltd.                                                                                         Interim Report 2019


Of which:

Accounts receivable
withdrawal of bad          401,632,651.5                 20,179,590.           381,453,061.3 394,430,830                 19,823,714.           374,607,116.5
                                               100.00%                 5.02%                                 100.00%                   5.03%
debt provision by the                      2                     21                         1          .86                       31                       5
group

Of which:

Accounts receivable
withdrawal of bad
                           401,632,651.5                 20,179,590.           381,453,061.3 394,430,830                 19,823,714.           374,607,116.5
debt provision by                              100.00%                 5.02%                                 100.00%                   5.03%
                                           2                     21                         1          .86                       31                       5
credit risks
characteristics

                           401,632,651.5                 20,179,590.           381,453,061.3 394,430,830                 19,823,714.           374,607,116.5
Total                                          100.00%                 5.02%                                 100.00%                   5.03%
                                           2                     21                         1          .86                       31                       5

        Withdrawal of bad debt provision: Accounts receivable withdrawal of bad debt provision by credit risks characteristics
                                                                                                                                          Unit: RMB

                                                                                                   Ending balance
                                    Item
                                                                        Carrying amount           Bad debt provision        Withdrawal provision

        Accounts receivable withdrawal of bad debt provision
                                                                                 401,632,651.52             20,179,590.21                      5.02%
        by credit risks characteristics

        Disclosure by age
                                                                                                                                          Unit: RMB

                                    Age                                                            Ending balance

        Within 1 year (including 1 year)                                                                                           401,092,349.62

        1 to 2 years                                                                                                                     141,075.43

        2 to 3 years                                                                                                                      89,027.55

        Over 3 years                                                                                                                     310,198.92

        Total                                                                                                                      401,632,651.52


        (2) Bad Debt Provision Withdrawn, Reversed or Recovered in the Reporting Period

        Bad Debt Provision Withdrawn, Reversed or Recovered in the Reporting Period:
                                                                                                                                          Unit: RMB

                                                                            Changes in the current period
                Category         Beginning balance                                                                              Ending balance
                                                               Withdrawal            Withdrawal             Withdrawal

        Bad debt provision
        for accounts                      19,823,714.31           1,065,950.68                                   710,074.78            20,179,590.21
        receivable

        Total                             19,823,714.31           1,065,950.68                                   710,074.78            20,179,590.21


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Lu Thai Textile Co., Ltd.                                                                                         Interim Report 2019




 (3) Particulars of the Actual Verification of Accounts Receivable during the Reporting Period

                                                                                                                                 Unit: RMB

                               Item                                                                Amount

Accounts receivable actually verified                                                                                            710,074.78


(4) Top 5 Accounts Receivable in Ending Balance Collected according to the Arrears Party

The total top 5 accounts receivable in ending balance collected according to the arrears party for the
Company was RMB115,365,596.34, accounting for 28.72% of the total ending balance of accounts
receivable, and the total ending balance of bad debt provision correspondingly withdrawn was
RMB5,768,279.82.

5. Prepayment

(1) Prepayment Listed by Aging Analysis

                                                                                                                                  Unit: RMB

                                                Ending balance                                       Beginning balance
          Aging
                                      Amount                     Proportion                   Amount                    Proportion

Within 1 year                          327,272,499.39                     100.00%              149,436,553.91                       99.90%

1 to 2 years                                                                                        10,838.26                        0.01%

2 to 3 years                                   8,319.04                       0.00%                    8,319.04                      0.01%

Over 3 years                                                                                      126,905.00                         0.08%

Total                                  327,280,818.43                --                        149,582,616.21               --

Notes of the reasons of the prepayment ages over 1 year with significant amount but failed settled in time:
None


(2) Top 5 of the Ending Balance of the Prepayments Collected according to the Prepayment Target

The total top 5 of the ending balance of the prepayments collected according to the prepayment target for the Company was
RMB277,207,635.73, accounting for 84.70% of total ending balance of prepayments.


6. Other Receivables

                                                                                                                                 Unit: RMB

                      Item                                  Ending balance                                Beginning balance

Interest receivable                                                              972,657.58




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Lu Thai Textile Co., Ltd.                                                                                       Interim Report 2019


Other receivables                                                           52,431,665.93                                 63,012,001.10

Total                                                                       53,404,323.51                                 63,012,001.10


(1) Interest Receivable

1) Category of Interest Receivable
                                                                                                                             Unit: RMB

                     Item                                     Ending balance                           Beginning balance

Fixed time deposits                                                             972,657.58

Total                                                                           972,657.58


(2) Other Receivables

1) Other Receivables Classified by Account Nature
                                                                                                                             Unit: RMB

                     Nature                               Ending carrying amount                   Beginning carrying amount

Export taxes refund                                                         19,462,152.98                                 25,988,374.88

Advance payment                                                             27,542,443.46                                 30,975,850.53

Cash pledge & Margin                                                           7,006,988.12                                6,227,752.93

Borrowings and petty cash                                                      2,591,549.18                                3,232,785.56

Other                                                                           915,905.78                                 2,272,245.31

Total                                                                       57,519,039.52                                 68,697,009.21

2) Withdrawal of Bad Debt Provision
                                                                                                                              Unit: RMB

                                         First stage                Second stage                  Third stage

                                                                Expected loss in the          Expected loss in the
        Bad debt provision        Expected credit loss of                                                                    Total
                                                             duration (credit impairment duration (credit impairment
                                     the next 12 months
                                                                   not occurred)                   occurred)

Balance of 1 January 2019                    5,092,570.88                      592,437.23                                  5,685,008.11

Balance of 1 January 2019 in
                                           ——                        ——                          ——                    ——
the current period

Withdrawal of the current
                                              -597,634.52                                                                   -597,634.52
period

Balance of 30 June 2019                      4,494,936.36                      592,437.23                                  5,087,373.59

Changes of carrying amount with significant amount changes in loss provision in the current period
□ Applicable √ Not applicable
List by Aging Analysis
                                                                                                                              Unit: RMB


                                                                                                                                      105
Lu Thai Textile Co., Ltd.                                                                                      Interim Report 2019


                            Aging                                                            Ending balance

Within 1 year (including 1 year)                                                                                         48,719,076.28

1to 2 years                                                                                                               1,436,382.82

2 to 3 years                                                                                                              2,344,861.53

Over 3 years                                                                                                              5,018,718.89

Total                                                                                                                    57,519,039.52

3) Bad Debt Provision Withdrawn, Reversed or Recovered in the Reporting Period
Bad Debt Provision Withdrawn, Reversed or Recovered in the Reporting Period:
                                                                                                                             Unit: RMB

                                                                 Changes in the current period
           Category             Beginning balance                                                                   Ending balance
                                                             Withdrawal               Reversal or recovery

Bad debt provision for
                                          5,685,008.11             -597,634.52                                            5,087,373.59
other receivables

Total                                     5,685,008.11             -597,634.52                                            5,087,373.59

4 ) Particulars of the Actual Verification of Accounts Receivable during the Reporting Period
                                                                                                                             Unit: RMB

                                Item                                                                Amount

Accounts receivable actually verified                                                                                                0.00

5) Top 5 of the Ending Balance of the Other Receivables Collected according to the Arrears Party
                                                                                                                             Unit: RMB

                                                                                                   Proportion to ending Ending balance
       Name of the entity               Nature           Ending balance              Aging            balance of other    of bad debt
                                                                                                       receivables%        provision

Export taxes refund
                              Export taxes refund          19,462,152.98      Within 1 year                     33.83%      973,107.65
receivable

Advance money
receivable of the             Advance                       8,143,803.43      Within 1 year                     14.16%      407,190.17
fundraising houses

Advances for agricultural
                              Advance                       4,140,053.29      Within 1 year                      7.20%      207,002.66
machinery

Cash deposit for salary of
                              Cash deposit for salary
migrant workers in                                                         Within 1 year; over
                              of migrant workers for        3,472,120.10                                         6.04%      886,686.03
Zichuan district of Zibo                                                   3 years
                              construction work
city

Bureau of Housing and
Urban-Rural Development Refund of wall                                     Within 1 year; over
                                                            1,495,857.16                                         2.60%      280,125.36
in Zichuan district of Zibo modification                                   3 years
city


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Lu Thai Textile Co., Ltd.                                                                                             Interim Report 2019


Total                                    --                    36,713,986.96              --                            63.83%      2,754,111.87


7. Inventory

Whether the Company has executed the new income standards
□ Yes √ No


(1) Category of Inventories

                                                                                                                                       Unit: RMB

                                         Ending balance                                                    Beginning balance
        Item                              Falling price                                                      Falling price
                    Carrying amount                             Carrying value       Carrying amount                             Carrying value
                                               reserves                                                        reserves

Raw materials       1,046,230,286.41                      0.00 1,046,230,286.41       768,264,219.42           2,069,324.65      766,194,894.77

Goods in process      498,963,577.52                            498,963,577.52        568,371,033.96                             568,371,033.96

Inventory goods       815,759,425.79          43,863,760.34     771,895,665.45        798,090,300.29          64,960,183.31      733,130,116.98

Consumptive
                        1,446,825.64             237,414.18           1,209,411.46      1,352,241.24             266,680.61         1,085,560.63
living assets

Assigned
processing             19,791,690.27                                 19,791,690.27     24,585,385.96                               24,585,385.96
products

Total               2,382,191,805.63          44,101,174.52 2,338,090,631.11 2,160,663,180.87                 67,296,188.57 2,093,366,992.30

Whether the Company need satisfy relevant disclosure requirements stated in SZSE Industrial Information Disclosure Guidance
No.4---Listed Company Specialized in Seed Industry and Planting Businesses or not?
No


(2) Falling Price Reserves of Inventories

                                                                                                                                       Unit: RMB

                                                          Increase                                  Decrease
                       Beginning
        Item                                                                           Reverse or                              Ending balance
                        balance               Withdrawal               Other                                    Other
                                                                                        write-off

Raw materials           2,069,324.65                                                    2,069,324.65                                        0.00

Inventory goods        64,960,183.31           1,543,199.38                            22,639,622.35                               43,863,760.34

Consumptive
                            266,680.61                                                         29,266.43                             237,414.18
living assets

Total                  67,296,188.57           1,543,199.38                            24,738,213.43                               44,101,174.52




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Lu Thai Textile Co., Ltd.                                                                                  Interim Report 2019


(3) The Withdrawal Basis for Inventory Falling Price Reserves and Reasons for Write-back or Write-off
during the Reporting Period


         Item         Specific basis of withdrawal of         Reasons for write-back             Reasons for write-off
                      inventory falling price reserves

                    The lower one between cost of each                                     Disposed in the Reporting Period
Raw materials       item of inventory and its realizable
                                 net value

                    The lower one between cost of each                                        Sold in the Reporting Period
Inventory goods     item of inventory and its realizable
                                 net value

                    The lower one between cost of each                                        Sold in the Reporting Period
Consumptive
                    item of inventory and its realizable
living assets
                                 net value

Notes:
① The 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 living asset
Hu sheep at the end of the Reporting Period.
② The subsidiary of the Company-Xinjiang Lu Thai Textile-obtained the short-term borrowing of RMB299,000,000.00
from the bank taking the inventories with the carrying value of RMB255,913,268.92 as a pledge.


8. Non-current Assets Due within 1 Year

                                                                                                                           Unit: RMB

                   Item                                    Ending balance                            Beginning balance

Equity investment due within 1 year                                      51,253,405.99

Total                                                                    51,253,405.99


9. Other Current Assets

Whether the Company has executed the new income standards
□ Yes √ No
                                                                                                                           Unit: RMB

                   Item                                    Ending balance                            Beginning balance

VAT input tax to be deducted                                             58,479,595.74                                69,931,124.83

Prepaid income tax to be deducted                                           6,743,440.53                                 4,820,039.66

B-share repurchase account                                                                                            11,615,290.07

Total                                                                    65,223,036.27                                86,366,454.56

Other notes:


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10. Long-term Receivables

(1) List of Long-term Receivables

                                                                                                                                    Unit: RMB

                                              Ending balance                                 Beginning balance
                                                                                                                                  Interval of
            Item                Carrying        Bad debt                          Carrying       Carrying        Carrying
                                                               Carrying value                                                    discount rate
                                amount          provision                         amount           value            amount

Financing lease
                                650,000.00                        650,000.00      650,000.00                        650,000.00 15.37%
accounts

Of which: unrealized
                                 66,001.90                         66,001.90      105,603.04                        105,603.04
financing income

Long-term advances
                               9,611,679.27      591,258.56     9,020,420.71 10,572,468.16       528,623.41 10,043,844.75
receivable

Total                         10,261,679.27      591,258.56     9,670,420.71 11,222,468.16       528,623.41 10,693,844.75             --

Bad Debt Provision

                                           First stage                 Second stage                    Third stage

                                                               Expected loss in the duration       Expected loss in the
        Bad Debt Provision         Expected credit loss of                                                                          Total
                                                                  (credit impairment not        duration (credit impairment
                                     the next 12 months
                                                                        occurred)                          occurred)

Balance of 1 January 2019                        528,623.41                                                                        528,623.41

Balance of 1 January 2019 in
                                              ——                         ——                              ——                   ——
the current period

--Transfer to Second stage

-- Transfer to Third stage

-- Reverse to Second stage

-- Reverse to Third stage

Withdrawal of the current
                                                   62,635.15                                                                        62,635.15
period

Reversal of the current period

Write-offs of the current
period

Verification of the current

period

Other changes

Balance of 30 June 2019                          591,258.56                                                                        591,258.56




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Lu Thai Textile Co., Ltd.                                                                                             Interim Report 2019




Changes of carrying amount with significant amount changes in loss provision in the current period
□ Applicable √ Not applicable


11. Long-term Equity Investment

                                                                                                                                    Unit: RMB

                                                                  Increase/decrease

                                                                                                     Withd                             Ending
                                   Addi                                                              rawal                             balance
                                           Red     Gains and      Adjustmen                Cash
                                   tiona                                        Chang                 of                                 of
                    Beginning              uced      losses        t of other            bonus or
    Investee                         l                                           es of               depre            Ending balance depreci
                      balance              inve    recognized     comprehe                profits             Other
                                   inve                                          other               ciatio                             ation
                                           stme     under the        nsive               announced
                                   stme                                         equity                 n                               reserve
                                            nt    equity method     income                to issue
                                    nt                                                               reserv                                 s
                                                                                                      es

II. Associated enterprises

Ningbo Mei
shan Bonded
Poer Area
Haohong Equity
Investment
Partnership        95,554,809.90                   5,083,101.54                                                       100,637,911.44
(L.P)
(hereinafter
referred to as
“Haohong
Investment”)

Subtotal           95,554,809.90                   5,083,101.54                                                       100,637,911.44

Total              95,554,809.90                   5,083,101.54                                                       100,637,911.44

Other notes


12. Other Equity Instrument Investment

                                                                                                                                    Unit: RMB

                    Item                                        Ending balance                                 Beginning balance

Shandong Hongqiao Power Co., Ltd.                                               12,000,000.00                                   12,000,000.00

Total                                                                           12,000,000.00                                   12,000,000.00




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Lu Thai Textile Co., Ltd.                                                                                   Interim Report 2019


13. Other Non-current Financial Assets

                                                                                                                          Unit: RMB

                     Item                                   Ending balance                          Beginning balance

Yantai Rongchang Pharmacy Co., Ltd.                                       31,018,515.95                               31,018,515.95

Total                                                                     31,018,515.95                               31,018,515.95


14. Investment Property

(1) Investment Property Adopting the Cost Measurement Mode

√ Applicable □ Not applicable
                                                                                                                          Unit: RMB

                                                                                          Construction in
                  Item                     Houses and buildings     Land use right                                    Total
                                                                                             progress

I. Original carrying value

1. Beginning balance                              32,399,982.40                                                       32,399,982.40

2. Increased amount of the period                 21,149,343.04                                                       21,149,343.04

(1) Outsourcing

(2)Transfer    from      inventory\fixed
                                                  21,149,343.04                                                       21,149,343.04
assets\construction in progress

(3) Enterprise combination increase

3. Decreased amount of the period                  1,003,063.00                                                        1,003,063.00

(1) Disposal

(2) Other transfer                                 1,003,063.00                                                        1,003,063.00

4. Ending balance                                 52,546,262.44                                                       52,546,262.44

II. Accumulative depreciation and
accumulative amortization

1. Beginning balance                               9,519,739.45                                                        9,519,739.45

2. Increased amount of the period                  4,420,898.71                                                        4,420,898.71

(1) Withdrawal or amortization                       599,921.59                                                          599,921.59

(2) Transfer from accumulative
                                                   3,820,977.12                                                        3,820,977.12
depreciation of fixed assets

3. Decreased amount of the period                    112,844.58                                                          112,844.58

(1) Disposal

(2) Other transfer                                   112,844.58                                                          112,844.58

4. Ending balance                                 13,827,793.58                                                       13,827,793.58



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Lu Thai Textile Co., Ltd.                                                                                 Interim Report 2019


III. Depreciation reserves

1. Beginning balance

2. Increased amount of the period

(1) Withdrawal

3. Decreased amount of the period

(1) Disposal

(2) Other transfer

4. Ending balance

IV. Carrying value

1. Ending carrying value                         38,718,468.86                                                      38,718,468.86

2. Beginning carrying value                      22,880,242.95                                                      22,880,242.95


15. Fixed Assets

                                                                                                                        Unit: RMB

                      Item                                Ending balance                          Beginning balance

Fixed assets                                                            5,729,951,131.93                         5,748,562,385.35

Total                                                                   5,729,951,131.93                         5,748,562,385.35


(1) List of Fixed Assets

                                                                                                                        Unit: RMB

                                                                                             Electronic
                                    Houses and         Machinery          Transportation
               Item                                                                         equipment and            Total
                                     buildings         equipment            equipment
                                                                                               others

I. Original carrying value

  1. Beginning balance          3,251,285,811.62 6,567,263,906.52           63,692,200.59    125,565,020.71 10,007,806,939.44

  2. Increased amount of the
                                    35,098,684.89      193,352,685.57        2,129,219.80       2,674,113.23      233,254,703.49
period

     (1) Purchase                     2,952,811.67      98,261,725.84        2,025,255.17       2,665,184.54      105,904,977.22

     (2) Transfer from
                                    30,548,510.07       91,728,021.21                                             122,276,531.28
construction in progress

     (3) Enterprise
combination increase

     (4) Other                       1,597,363.15        3,362,938.52          103,964.63          8,928.69          5,073,194.99

  3. Decreased amount of the
                                    33,418,502.68         889,202.53           197,832.66       1,266,933.26        35,772,471.13
period



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Lu Thai Textile Co., Ltd.                                                                           Interim Report 2019


     (1) Disposal or Scrap              1,002,066.89      889,202.53      197,832.66        1,266,933.26       3,356,035.34

     (2) Transferred into
                                       21,182,119.54                                                          21,182,119.54
investment property

     (3) Transferred into
                                       11,234,316.25                                                          11,234,316.25
construction in progress

     (4) Other

  4. Ending balance               3,252,965,993.83 6,759,727,389.56     65,623,587.73     126,972,200.68 10,205,289,171.80

II. Accumulative depreciation

  1. Beginning balance             959,511,665.02 3,129,855,046.37      41,145,799.39      86,048,051.87   4,216,560,562.65

  2. Increased amount of the
                                       55,942,394.39   159,683,083.77    2,652,806.16       7,847,292.25    226,125,576.57
period

     (1) Withdrawal                    55,942,394.39   159,683,083.77    2,652,806.16       7,847,292.25    226,125,576.57

  3. Decreased amount of the
                                        7,851,140.84      791,015.03      187,941.03        1,199,359.61      10,029,456.51
period

     (1) Disposal or Scrap               334,727.30       791,015.03      187,941.03        1,199,359.61       2,513,042.97

     (2) Transferred into
                                        3,820,977.12                                                           3,820,977.12
investment property

     (3) Transferred into
                                        3,695,436.42                                                           3,695,436.42
construction in progress

  4. Ending balance               1,007,602,918.57 3,288,747,115.11     43,610,664.52      92,695,984.51   4,432,656,682.71

III. Depreciation reserves

  1. Beginning balance                  2,893,416.89    39,649,126.64      24,803.69          116,644.22      42,683,991.44

  2. Increased amount of the
period

     (1) Withdrawal

  3. Decreased amount of the
                                                             2,634.28                                              2,634.28
period

     (1) Disposal or Scrap                                   2,634.28                                              2,634.28

  4. Ending balance                     2,893,416.89    39,646,492.36      24,803.69          116,644.22      42,681,357.16

IV. Carrying value

  1. Ending carrying value        2,242,469,658.37 3,431,333,782.09     21,988,119.52      34,159,571.95   5,729,951,131.93

  2. Beginning carrying value     2,288,880,729.71 3,397,759,733.51     22,521,597.51      39,400,324.62   5,748,562,385.35


(2) Fixed Assets Leased out by Operation Lease

                                                                                                                  Unit: RMB

                                Item                                               Ending carrying value


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Lu Thai Textile Co., Ltd.                                                                                      Interim Report 2019


Houses and buildings                                                                                                         1,056,074.64


(3) Fixed Assets Failed to Accomplish Certification of Property

                                                                                                                               Unit: RMB

                 Item                       Carrying value                                         Reason

                                                                     Ongoing inspection, surveying, verification to application
Weaving and yarn dying workshop                   99,676,229.15
                                                                     procedures by Housing authorities

Employee’s dormitory building of                                    Ongoing inspection, surveying, verification to application
                                                  40,781,736.31
eastern area of industrial park                                      procedures by Housing authorities

                                                                     Ongoing inspection, surveying, verification to application
Spinning Fourth factory workshop                  88,063,762.49
                                                                     procedures by Housing authorities

                                                                     Ongoing inspection, surveying, verification to application
Employee’s dormitory building of                                    procedures by Housing authorities for some assets and
                                                 119,623,003.67
western area of industrial park                                      uncompleted inspection by relevant authorities for some other
                                                                     assets

Eastern sample plant                              29,327,157.36 Uncompleted inspection by relevant authorities

Lufeng weaving dye workshop                     129,348,595.84 Ongoing registration of premises permit by real estate exchange

Xinjiang construction project of
                                                                     Ongoing verification to application procedures by Bureau of
100,000-spindle spinning production               67,813,878.46
                                                                     Land Resources
line


16. Construction in Progress

                                                                                                                               Unit: RMB

                    Item                                 Ending balance                                  Beginning balance

Construction in progress                                                  257,965,534.19                                  244,493,960.75

Engineering materials                                                     202,424,352.96                                   92,736,685.67

Total                                                                     460,389,887.15                                  337,230,646.42


(1) List of Construction in Progress

                                                                                                                               Unit: RMB

                                                    Ending balance                                       Beginning balance

                                                         Depreciati                                          Depreciati
                Item                                                                          Carrying
                                      Carrying amount        on         Carrying value                          on        Carrying value
                                                                                              amount
                                                          reserves                                            reserves

Renovation project for exhibition
                                          2,683,566.26                        2,683,566.26   24,788,720.86                 24,788,720.86
hall and office building



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     Lu Thai Textile Co., Ltd.                                                                                                Interim Report 2019


     Renovation project for international
     business center and creative                     9,491,723.70                        9,491,723.70
     experience center

      Phase II of Eastern Dyed-yarn
                                                        270,225.14                         270,225.14
      Automatic Library

      Reform project of Xinsheng
                                                     13,975,666.21                       13,975,666.21      12,145,265.65                  12,145,265.65
      Thermal Power

      Expansion project of Xinsheng
                                                     18,860,515.84                       18,860,515.84      73,512,524.40                  73,512,524.40
      Thermal Power (Phase II)

      Heat supply engineering of
                                                     10,470,515.13                       10,470,515.13       9,025,279.89                   9,025,279.89
      Xinsheng Thermal Power

      Lu Thai (Vietnam) project                      23,786,203.77                       23,786,203.77      12,414,796.74                  12,414,796.74

      Spinning Phase II of Lu Thai
                                                     10,334,473.83                       10,334,473.83       3,908,174.87                   3,908,174.87
      (Vietnam) project

      Yarn Dye Phase II of Lu Thai
                                                    105,226,627.88                      105,226,627.88      83,880,726.83                  83,880,726.83
      (Vietnam) project

      Project of Lu An Garments                       2,600,417.15                        2,600,417.15       4,140,135.90                   4,140,135.90

      Yarn Dye of Lu Thai Tan Chau
                                                     37,030,681.68                       37,030,681.68
      project

      Phase I of Functional Fabric
                                                      2,503,277.46                        2,503,277.46
      Intelligent Ecological Park project

      Other retails projects                         20,731,640.14                       20,731,640.14      20,678,335.61                  20,678,335.61

      Total                                         257,965,534.19           0.00 257,965,534.19 244,493,960.75                     0.00 244,493,960.75


     (2) Changes in Significant Construction in Progress during the Reporting Period

                                                                                                                                                Unit: RMB

                                                                                                                                           Of       Capita
                                                                                                          Proportion
                                                                                                                                        which: lizatio
                                                                                                              of            Accumu
                                                                                                                                        amount n rate
                                                                                 Other                    accumulat           lated                          Capi
                                                                                                                                           of         of
                                                                Transferred decrea                           ed        Job amount                                tal
                                    Beginning       Increased                               Ending                                      capitaliz interes
      Item           Budget                                      in fixed         sed                     investment sche      of                            reso
                                     balance        amount                                  balance                                        ed       ts for
                                                                  assets         amoun                        in       dule interest                         urce
                                                                                                                                        interests    the
                                                                                   t                      constructi        capitaliz                            s
                                                                                                                                        for the Report
                                                                                                            ons to            ation
                                                                                                                                        Reportin     ing
                                                                                                           budget
                                                                                                                                        g Period Period

Renovation
                   27,100,000. 24,788,720. 5,011,070. 27,116,225.                          2,683,566.2                                                       Othe
project for                                                                                                 95.00% 95%
                               00              86          65               25                        6                                                      r
exhibition hall


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      Lu Thai Textile Co., Ltd.                                                               Interim Report 2019


and office
building

Renovation
project for
international
                   8,500,000.0               9,491,723.            9,491,723.7                                       Othe
business center                                                                  23.00% 23%
                              0                     70                      0                                        r
and creative
experience
center

Phase II of                                                                                                          Othe
Eastern                                                                                                              r
                   1,600,000.0               270,225.1
Dyed-yarn                                                           270,225.14   17.00% 17%
                              0                      4
Automatic
Library

Reform project                                                                                                       Othe
                   20,000,000. 12,145,265. 1,830,400.              13,975,666.
of Xinsheng                                                 0.00                 94.00% 94%                          r
                            00          65          56                     21
Thermal Power

Expansion                                                                                                            Othe
project of                                                                                                           r
                   97,950,000. 73,512,524. 33,611,29 88,263,299.   18,860,515.
Xinsheng                                                                         92.00% 92%
                            00          40        1.18       74            84
Thermal Power
(Phase II)

Heat supply                                                                                                          Othe
engineering of     32,670,000. 9,025,279.8 1,445,235.              10,470,515.                                       r
                                                            0.00                 50.00% 50%
Xinsheng                    00           9          24                     13
Thermal Power

Lu Thai                                                                                                              Othe
                  242,282,300 12,414,796. 11,371,40                23,786,203.
(Vietnam)                                                   0.00                 99.00% 99%                          r
                            .00         74        7.03                     77
project

Spinning Phase                                                                                                       Othe
II of Lu Thai      52,750,000. 3,908,174.8 6,426,298.              10,334,473.                                       r
                                                            0.00                 96.00% 96%
(Vietnam)                   00           7          96                     83
project

Yarn Dye Phase                                                                                                       Othe
II of Lu Thai     110,300,000 83,880,726. 21,345,90                105,226,627                                       r
                                                            0.00                 95.00% 95%
(Vietnam)                   .00         83        1.05                     .88
project

Project of Lu An 93,035,700. 4,140,135.9 1,918,639. 3,458,357.8    2,600,417.1                                       Othe
                                                                                 99.00% 99%
Garments                    00           0          08        3             5                                        r

Yarn Dye of Lu    109,995,200                37,030,68             37,030,681.                                       Othe
                                      0.00                  0.00                 34.00% 34%
Thai Tan Chau               .00                   1.68                     68                                        r



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        Lu Thai Textile Co., Ltd.                                                                                             Interim Report 2019


project

Phase I of                                                                                                                                              Othe
Functional                                                                                                                                              r
Fabric                 158,065,400                 2,503,277.                             2,503,277.4
                                            0.00                           0.00                               2.00% 2%
Intelligent                     .00                        46                                         6
Ecological Park
project

Other retails                         20,678,335. 3,491,952. 3,438,648.4                  20,731,640.                                                   Othe
projects                                      61           99                6                       14                                                 r

                       954,248,600 244,493,960 135,748,1 122,276,531                     257,965,534
Total                                                                                                         --     --                                     --
                                .00          .75       04.72                .28                     .19


        (3) Engineering Materials

                                                                                                                                             Unit: RMB

                                                          Ending balance                                            Beginning balance

                                                                                                                          Depreciati
                   Item                                         Carrying
                                       Carrying amount                            Carrying value     Carrying amount         on        Carrying value
                                                                amount
                                                                                                                           reserves

        Specific materials

        Specific equipment                202,424,352.96                           202,424,352.96         92,736,685.67                 92,736,685.67

        Total                             202,424,352.96                           202,424,352.96         92,736,685.67                 92,736,685.67

        Other notes:


        17. Intangible Assets

        (1) List of Intangible Assets

                                                                                                                                             Unit: RMB

                                                                                                   Software use
                         Item                      Land use right            Patent right                          Brand use right         Total
                                                                                                      right

        I. Original carrying value

           1. Beginning balance                      580,757,501.63               1,985,176.47      9,710,689.79          300,000.00 592,753,367.89

           2. Increased amount of the
                                                        8,997,749.14                                1,184,552.59                        10,182,301.73
        period

              (1) Purchase                              8,997,749.14                                1,184,552.59                        10,182,301.73

              (2) Internal R&D

              (3) Business combination
        increase



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Lu Thai Textile Co., Ltd.                                                                                     Interim Report 2019


  3. Decreased amount of the
period

         (1) Disposal

4. Ending balance                         589,755,250.77      1,985,176.47        10,895,242.38         300,000.00 602,935,669.62

II. Accumulated amortization

1. Beginning balance                      106,250,709.40      1,621,227.72          6,072,366.32        120,000.00 114,064,303.44

2. Increased amount of the period           7,847,326.45           114,258.84       2,004,170.72                            9,965,756.01

(1) Withdrawal                              7,847,326.45           114,258.84       2,004,170.72                            9,965,756.01

3. Decreased amount of the period

(1) Disposal

4. Ending balance                         114,098,035.85      1,735,486.56          8,076,537.04        120,000.00 124,030,059.45

III. Depreciation reserves

1. Beginning balance

2. Increased amount of the period

(1) Withdrawal

3. Decreased amount of the period

(1) Disposal

4. Ending balance

IV. Carrying value

1. Ending carrying value                  475,657,214.92           249,689.91       2,818,705.34        180,000.00 478,905,610.17

2. Beginning carrying value               474,506,792.23           363,948.75       3,638,323.47        180,000.00 478,689,064.45

The proportion of intangible assets formed from the internal R&D of the Company at the Period-end to the ending balance of
intangible assets was 0.00.




18. R&D Expense


                                              Increase                                      Decrease
                 Beginning                                                                                                     Ending
     Item                                                                       Recognized as      Transferred into the
                   balance     Internal R&D expense        Other                                                              balance
                                                                            intangible assets      current profit or loss

R&D of
                                     161,939,039.23                                                     161,939,039.23
products

Total                                161,939,039.23                                                     161,939,039.23




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Lu Thai Textile Co., Ltd.                                                                                       Interim Report 2019


19. Goodwill

(1) Original Carrying Value of Goodwill

                                                                                                                                Unit: RMB

  Name of the invested units or events                                          Increase                Decrease
                                             Beginning balance                                                           Ending balance
          generating goodwill                                          Business combination             Disposal

Xinsheng Power                                         20,563,803.29                                                         20,563,803.29

Helijie                                                   50,000.00                                        50,000.00

                      Total                            20,613,803.29                                       50,000.00         20,563,803.29


(2) Impairment Provision for Goodwill

Refer to Note V-21 for details of the test method of goodwill impairment.


20. Long-term Prepaid Expense

                                                                                                                                Unit: RMB

                                                                                 Amortization
                                                                                                       Other decreased
               Item             Beginning balance      Increased amount          amount of the                           Ending balance
                                                                                                           amount
                                                                                    period

Land contracting fee of
                                      25,607,423.92                                    543,109.50                          25,064,314.42
Xinjiang Luthai

Decoration fee of Xinjiang
                                         672,679.41                                        81,067.98                           591,611.43
Lu Thai

Land rent of overseas
                                      92,846,304.38            393,170.13              978,735.57                          92,260,738.94
subsidiaries

Housing rent of overseas
                                               0.00
subsidiaries

Total                                119,126,407.71            393,170.13            1,602,913.05                         117,916,664.79


21. Deferred Income Tax Assets/Deferred Income Tax Liabilities

(1) Deferred Income Tax Assets that Had not Been Set-off

                                                                                                                                Unit: RMB

                                                    Ending balance                                       Beginning balance
                 Item                Deductible temporary     Deferred income tax          Deductible temporary     Deferred income tax
                                          difference                   assets                   difference                   assets

Provision for impairment of assets           99,166,519.42             17,549,279.45              126,694,466.74             20,904,717.95


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Lu Thai Textile Co., Ltd.                                                                                  Interim Report 2019


Unrealized profit of internal
                                             145,987,556.90            17,900,842.79          130,892,601.80            16,151,715.20
transactions

One-time listed decoration
                                               4,140,492.30             1,035,123.08             4,140,492.30            1,035,123.08
expenses

Payroll payable                              122,397,245.35            18,458,763.12          122,397,245.35            18,458,763.12

Deferred income                              139,234,253.96            22,286,791.36          140,183,446.39            22,457,708.11

Changes in fair value of trading
                                                                                                 4,877,600.00             731,640.00
financial liabilities

Changes in fair value of financial
                                              24,264,084.05             3,639,612.61            24,264,084.05            3,639,612.61
assets

Deductible loss                               16,532,477.30             2,479,871.60            16,532,477.30            2,479,871.60

合计                                         551,722,629.28            83,350,284.01          569,982,413.93            85,859,151.67


(2) Deferred Income Tax Liabilities Had not Been Off-set

                                                                                                                           Unit: RMB

                                                    Ending balance                                  Beginning balance
                Item                  Deductible temporary     Deferred income tax     Deductible temporary     Deferred income tax
                                           difference                liabilities             difference              liabilities

Depreciation of fixed assets                 162,078,958.68            25,849,404.39          162,016,488.25            25,838,853.38

Unrealized profit of internal
                                              12,400,680.83             1,860,102.12            13,996,286.66            2,099,443.00
transactions

Changes in fair value of
                                               1,146,000.00               171,900.00               612,000.00              91,800.00
available-for-sale financial assets

Total                                        175,625,639.51            27,881,406.51          176,624,774.91            28,030,096.38


(3) List of Unrecognized Deferred Income Tax Assets

                                                                                                                           Unit: RMB

                Item                                Ending balance                                  Beginning balance

Deductible temporary difference                                        13,474,234.62                                     9,323,059.10

Deducible losses                                                       26,305,825.71                                    26,603,299.43

Total                                                                  39,780,060.33                                    35,926,358.53


(4) Deductible Losses of Unrecognized Deferred Income Tax Assets will Due in the Following Years

                                                                                                                           Unit: RMB

                Years                         Ending balance                       Beginning balance                 Notes



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Lu Thai Textile Co., Ltd.                                                                                Interim Report 2019


Y2019                                                       451,833.98                        451,833.98

Y2020                                                    15,662,840.17                     18,170,464.10

Y2021                                                     4,250,703.45                       4,250,703.45

Y2022                                                     3,730,297.90                       3,730,297.90

Y2024                                                     2,210,150.21

Total                                                    26,305,825.71                     26,603,299.43             --


22. Other Non-current Assets

Whether the Company has executed the new income standards
□ Yes √ No
                                                                                                                           Unit: RMB

                    Item                                 Ending balance                            Beginning balance

Prepayment for equipment                                                  15,287,122.02                             17,275,143.10

Prepayment for land                                                       25,400,000.00                              1,996,937.00

Prepayment for rental fees of land                                        32,596,640.98                             23,828,135.77

Total                                                                     73,283,763.00                             43,100,215.87


23. Short-term Borrowings

(1) Category of Short-term Borrowings

                                                                                                                           Unit: RMB

                    Item                                 Ending balance                            Beginning balance

Mortgage borrowings                                                      299,000,000.00                           450,000,000.00

Guaranteed borrowings                                                    177,211,407.19                           250,108,063.34

Credit borrowings                                                    1,661,441,843.10                             625,165,716.71

Total                                                                2,137,653,250.29                           1,325,273,780.05

Notes of short-term borrowings category:
For details of category and amount for each assets mortgaged for mortgage borrowings, please refer to Note VII-7 and 60.


24. Derivative Financial Liabilities

                                                                                                                           Unit: RMB

                    Item                                 Ending balance                            Beginning balance

Derivative financial liabilities                                                   0.00                              4,877,600.00

Total                                                                                                                4,877,600.00




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Lu Thai Textile Co., Ltd.                                                                            Interim Report 2019


25. Notes Payable

                                                                                                                     Unit: RMB

                    Item                                 Ending balance                         Beginning balance

Trade acceptance                                                            475,192.04                              502,347.05

Bank acceptance bill                                                  63,479,362.30                                        0.00

Total                                                                 63,954,554.34                                 502,347.05

The total overdue but unpaid notes payable at the period-end were RMB63,954,554.34.


26. Accounts Payable

(1) List of Accounts Payable

                                                                                                                     Unit: RMB

                    Item                                 Ending balance                         Beginning balance

Purchase of goods                                                    151,900,644.66                           237,111,166.13

Engineering equipment                                                 98,761,927.10                           106,527,421.37

Other                                                                     8,300,256.76                          9,547,576.40

Total                                                                258,962,828.52                           353,186,163.90


27. Advances from Customers

Whether the Company has executed the new income standards
□ Yes √ No


(1) List of Advances from Customers

                                                                                                                     Unit: RMB

                    Item                                 Ending balance                         Beginning balance

Advances of goods                                                     96,623,151.61                           105,562,378.66

Total                                                                 96,623,151.61                           105,562,378.66


28. Payroll Payable

(1) List of Payroll Payable

                                                                                                                     Unit: RMB

               Item                Beginning balance             Increase                Decrease          Ending balance

I. Short-term salary                    325,972,145.10            849,638,696.25          917,224,915.18      258,385,926.17




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Lu Thai Textile Co., Ltd.                                                                          Interim Report 2019


II. Post-employment
                                                   26,065.07          86,343,306.24     86,368,700.68               670.63
benefit-defined contribution plans

III. Termination benefits                                0.00          1,912,961.26      1,912,961.26

Total                                        325,998,210.17         937,894,963.75    1,005,506,577.12      258,386,596.80


(2) List of Short-term Salary

                                                                                                                 Unit: RMB

                Item                     Beginning balance          Increase          Decrease           Ending balance

1.Salary,      bonus,     allowance,
                                             268,788,698.76         765,144,129.27     836,694,701.85       197,238,126.18
subsidy

2. Employee welfare                                      0.00         24,422,914.84     24,422,914.84

3. Social insurance                                37,292.13          40,552,737.70     40,571,570.28            18,459.55

Of which:       Medical     insurance
                                                   29,466.69          32,303,724.29     32,320,755.92            12,435.06
premiums

                    Work-related
                                                    6,291.48           4,064,483.57      4,064,791.20             5,983.85
injury insurance

                    Maternity
                                                    1,533.96           4,184,529.84      4,186,023.16                40.64
insurance

4. Housing fund                                          0.00          7,939,107.30      7,939,107.30

5.Labor     union       budget     and
                                              57,146,154.21           11,579,807.14      7,596,620.91        61,129,340.44
employee education budget

Total                                        325,972,145.10         849,638,696.25     917,224,915.18       258,385,926.17


(3) List of Defined Contribution Plans

                                                                                                                 Unit: RMB

                Item                     Beginning balance          Increase          Decrease           Ending balance

1. Basic pension benefits                          25,019.49          82,804,948.82     82,829,324.78               643.53

2. Unemployment insurance                           1,045.58           3,538,357.42      3,539,375.90                27.10

Total                                              26,065.07          86,343,306.24     86,368,700.68               670.63

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 16% and 0.7% 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.




                                                                                                                          123
Lu Thai Textile Co., Ltd.                                                        Interim Report 2019


29. Taxes Payable

                                                                                                 Unit: RMB

                    Item                    Ending balance                  Beginning balance

VAT                                                      22,920,170.57                      4,057,605.21

Corporate income tax                                     12,400,123.09                     18,491,849.09

Personal income tax                                          1,449,390.70                   1,279,197.68

Urban maintenance and construction tax                       2,463,740.52                   5,509,392.03

Stamp tax                                                     333,741.30                        187,822.50

Property tax                                                 4,403,240.67                   4,684,717.85

Land use tax                                                 2,324,707.70                   4,215,720.49

Education surcharge                                          1,616,023.08                   2,381,414.25

Local education surcharge                                    1,077,348.69                   1,587,021.34

Local water conservancy facility
                                                              163,140.72                        394,952.66
construction fund

Resource tax                                                  114,460.00                        154,200.00

Environmental protection tax                                  190,124.80                        612,930.65

Total                                                    49,456,211.84                     43,556,823.75


30. Other Payables

                                                                                                 Unit: RMB

                    Item                    Ending balance                  Beginning balance

Interest payable                                             4,728,481.25                   3,068,841.54

Dividends payable                                             441,113.64                        441,113.64

Other payables                                          208,801,352.97                    212,437,032.50

Total                                                   213,970,947.86                    215,946,987.68


(1) Interest Payable

                                                                                                 Unit: RMB

                    Item                    Ending balance                  Beginning balance

Interest payable of short-term borrowings                    4,728,481.25                   3,068,841.54

Total                                                        4,728,481.25                   3,068,841.54


(2) Dividends Payable

                                                                                                 Unit: RMB


                                                                                                       124
Lu Thai Textile Co., Ltd.                                                                                   Interim Report 2019


                    Item                                   Ending balance                             Beginning balance

Dividends payable to individual
                                                                             441,113.64                                    441,113.64
shareholders by the Company

Total                                                                        441,113.64                                    441,113.64

Other notes, including significant dividends payable unpaid for over one year, the unpaid reason shall be disclosed:
The dividends payable unpaid for over one year were cash dividends of previous year not received by individual shareholders yet.


(3) Other Payables

1) Other Payables Listed by Nature
                                                                                                                            Unit: RMB

                    Item                                   Ending balance                             Beginning balance

Deposits and cash deposits etc.                                           22,166,727.74                                 19,035,286.49

Collecting payment on behalf of others                                    16,032,165.86                                 18,288,047.56

Intercourse funds                                                        160,010,348.59                                165,655,961.20

Other                                                                     10,592,110.78                                  9,457,737.25

Total                                                                    208,801,352.97                                212,437,032.50

2) Significant Other Payables Aging over One Year
                                                                                                                            Unit: RMB

                    Item                                   Ending balance                       Unpaid/Un-carry-over reason

Cotton and Linen Company                                                  11,925,000.00 Received deposit of sale contract

Total                                                                     11,925,000.00                       --


31. Current Portion of Non-current Liabilities

                                                                                                                            Unit: RMB

                    Item                                   Ending balance                             Beginning balance

Current portion of long-term borrowings                                  144,282,763.91

Total                                                                    144,282,763.91


32. Long-term Borrowings

(1) Category of Long-term Borrowings

                                                                                                                            Unit: RMB

                    Item                                   Ending balance                             Beginning balance

Guarantee loan                                                           144,282,763.91                                170,019,083.89

Less: current portion of long-term                                      -144,282,763.91


                                                                                                                                   125
Lu Thai Textile Co., Ltd.                                                                                        Interim Report 2019


borrowings (Notes VII-31)

Total                                                                                                                     170,019,083.89


33. Long-term Payroll Payable

(1) List of Long-term Payroll Payable

                                                                                                                                   Unit: RMB

                   Item                                      Ending balance                                Beginning balance

III. Other long-term welfare                                              86,420,799.53                                      96,958,178.53

Total                                                                     86,420,799.53                                      96,958,178.53


34. Deferred Income

                                                                                                                                   Unit: RMB

                                                                                                                          Reason for
          Item          Beginning balance             Increase            Decrease               Ending balance
                                                                                                                          formation

Government                                                                                                           Government
                            140,077,843.35             4,177,400.00           5,086,991.29          139,168,252.06
subsidies                                                                                                            subsidies

Unrealized financing
                                 105,603.04                                       39,601.14                66,001.90 Finance lease
incomes

Total                       140,183,446.39             4,177,400.00           5,126,592.43          139,234,253.96               --

Item involving government subsidies:
                                                                                                                                   Unit: RMB

                                                         Amount         Amount
                                                                                       Amount
                                                       recorded into recorded into                  Othe
                                                                                      offset cost                                Related to
                     Beginning         Amount of      non-operating other income                      r
        Item                                                                            in the              Ending balance assets/related
                       balance        newly subsidy income in the        in the                     chan
                                                                                      Reporting                                   income
                                                        Reporting      Reporting                    ges
                                                                                        Period
                                                          Period        Period

                                                                                                                             Related to
Land                57,872,611.45                                       677,125.92                           57,195,485.53
                                                                                                                             assets

                                                                                                                             Related to
Equipment           61,790,767.51        877,400.00                   2,407,142.82                           60,261,024.69
                                                                                                                             assets

Production                                                                                                                   Related to
                        558,000.08                                       66,499.98                              491,500.10
living assets                                                                                                                assets

Overseas                                                                                                                     Related to
                        500,000.00                                                                              500,000.00
investment                                                                                                                   assets

R&D                    5,262,000.00    3,300,000.00                                                            8,562,000.00 Related to



                                                                                                                                           126
Lu Thai Textile Co., Ltd.                                                                                 Interim Report 2019


                                                                                                                    income

Public housing                                                                                                      Related to
                     1,237,942.13                                      24,115.74                     1,213,826.39
subsidy                                                                                                             assets

Subsidy for
improvement
                                                                                                                    Related to
and                 12,856,522.18                                    1,912,106.83                   10,944,415.35
                                                                                                                    income
transformation
of green land

Total              140,077,843.35    4,177,400.00                    5,086,991.29                  139,168,252.06

Other notes:


35. Other Non-current Liabilities

Whether the Company has executed the new income standards
□ Yes √ No
                                                                                                                        Unit: RMB

                   Item                                   Ending balance                           Beginning balance

Other                                                                      1,840,000.00                              1,840,000.00

Total                                                                      1,840,000.00                              1,840,000.00


36. Share Capital

                                                                                                                        Unit: RMB

                                                             Increase/decrease(+/-)
                    Beginning
                                    New shares                  Bonus issue                                      Ending balance
                         balance                 Bonus share                          Other       Subtotal
                                      issued                    from profit

The sum of
                   922,602,311.00                                                -64,480,770.00 -64,480,770.00    858,121,541.00
shares


37. Capital Reserves

                                                                                                                        Unit: RMB

                  Item                     Beginning balance               Increase            Decrease          Ending balance

Capital premium (premium on stock)                  640,470,910.34                            442,861,264.14      197,609,646.20

Other capital reserves                               59,022,737.14                    44.94                         59,022,782.08

Total                                               699,493,647.48                    44.94   442,861,264.14      256,632,428.28




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Lu Thai Textile Co., Ltd.                                                                                            Interim Report 2019


38. Treasury Shares

                                                                                                                                      Unit: RMB

                   Item                      Beginning balance                  Increase                Decrease                Ending balance

Shares of the Company acquired for
                                                   486,922,944.94                20,188,394.10           507,111,339.04
decrease in registered capital

Total                                              486,922,944.94                20,188,394.10           507,111,339.04


39. Other Comprehensive Income

                                                                                                                                      Unit: RMB

                                                                                Reporting Period

                                                                      Less:
                                                                    recorded        Less:
                                                                    in other      recorded                              Attri
                                                                    compreh        in other                             buta
                                                                     ensive       comprehe                               ble
                                                                     income         nsive                                to
                                                                                               Less: Attributable to
                                                                     in prior     income in                             non-
                                     Beginning    Income before                                Incom owners of the
               Item                                                  period         prior                               contr Ending balance
                                      balance     taxation in the                              e tax   Company as
                                                                       and       period and                             ollin
                                                  Current Period                               expen    the parent
                                                                    transferre transferred                               g
                                                                                                se       after tax
                                                                      d in       in retained                            inter
                                                                    profit or profits in                                ests
                                                                     loss in         the                                after
                                                                       the         Current                               tax
                                                                    Current        Period
                                                                     Period

II. Other comprehensive income
that may subsequently be            60,636,813.37 11,806,511.25                                        11,806,511.25              72,443,324.62
reclassified to profit or loss

         Differences arising from
translation of foreign
                                    60,636,813.37 11,806,511.25                                        11,806,511.25              72,443,324.62
currency-denominated financial
statements

Total of other comprehensive
                                    60,636,813.37 11,806,511.25                                        11,806,511.25              72,443,324.62
income

Other notes, including the adjustment of the effective gain/loss on cash flow hedges to the initial recognized amount:


40. Surplus Reserves

                                                                                                                                      Unit: RMB


                                                                                                                                            128
Lu Thai Textile Co., Ltd.                                                                                     Interim Report 2019


               Item                  Beginning balance               Increase               Decrease              Ending balance

Statutory surplus reserves                 1,019,375,878.82                                                           1,019,375,878.82

Discretional surplus reserves                   3,341,572.58                                                                 3,341,572.58

Total                                      1,022,717,451.40                                                           1,022,717,451.40

Notes, including changes and reason of change:
In accordance with provisions of Articles of Association and Corporate Law, the Company withdrew 10% of net profits as the
statutory surplus reserves.


41. Retained Earnings

                                                                                                                               Unit: RMB

                        Item                                      Reporting Period                      Same period of last year

Beginning balance of retained earnings before
                                                                               4,927,500,989.55                       4,629,102,712.06
adjustments

Total beginning retained earnings before
                                                                                 15,797,284.81
adjustment (+ for increase, - for decrease))

Total beginning retained earnings after adjustment                             4,943,298,274.36                       4,629,102,712.06

Add: Net profit attributable to owners of the
                                                                                411,446,216.59                          811,526,477.83
Company as the parent

Less: Withdrawal of statutory surplus reserves                                                                           59,783,872.34

        Dividend of ordinary shares payable                                     429,060,770.50                          453,344,328.00

Ending retained earnings                                                       4,925,683,720.45                       4,927,500,989.55

List of adjustment of beginning retained earnings:

(1) RMB15,797,284.81 beginning retained earnings was affected by retrospective adjustment conducted according to the Accounting
Standards for Business Enterprises and relevant new regulations.

(2) RMB0.00 beginning retained earnings was affected by changes in accounting policies.

(3) RMB0.00 beginning retained earnings was affected by correction of significant accounting errors.

(4) RMB0.00 beginning retained earnings was affected by changes in combination scope arising from same control.

(5) RMB0.00 beginning retained earnings was affected totally by other adjustments.


42. Operating Revenue and Cost of Sales

                                                                                                                               Unit: RMB

                                              Reporting Period                                    Same period of last year
            Item
                                Operating revenue              Cost of sales           Operating revenue            Cost of sales

Main operations                     3,067,390,155.73             2,138,306,997.45          3,161,001,569.72           2,286,826,556.57

Other operations                      118,058,188.28                72,579,958.08            119,406,206.10              74,009,874.84


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Lu Thai Textile Co., Ltd.                                                                                      Interim Report 2019


Total                              3,185,448,344.01           2,210,886,955.53              3,280,407,775.82          2,360,836,431.41

Whether the Company has executed the new income standards
□ Yes √ No
Other notes


43. Taxes and Surtaxes

                                                                                                                             Unit: RMB

                    Item                                  Reporting Period                           Same period of last year

Urban maintenance and construction tax                                    12,942,977.77                                  17,451,386.91

Education Surcharge                                                          6,280,555.02                                 7,605,633.12

Property tax                                                                  273,812.00                                   220,654.00

Land use tax                                                              10,445,304.80                                  10,374,539.75

Vehicle and vessel usage tax                                                 4,971,821.88                                 9,379,056.90

Stamp duty                                                                     67,558.06                                     75,652.02

Local education surcharge                                                    1,974,918.20                                 1,989,710.41

Local water conservancy facility
                                                                             4,186,251.77                                 5,070,422.01
construction fund

Urban maintenance and construction tax                                        906,978.57                                  1,262,384.77

Environmental protection tax                                                  686,626.70                                  1,040,967.99

Total                                                                     42,736,804.77                                  54,470,407.88

Other notes:
For details of specific payment standard for each taxes and surtaxes, please refer to Note VI Taxation


44. Selling Expense

                                                                                                                             Unit: RMB

                    Item                                  Reporting Period                           Same period of last year

Salary                                                                    20,574,080.44                                  19,297,126.63

Transport fees                                                            23,619,036.59                                  20,928,650.85

Advertising expense                                                           842,219.72                                  5,420,732.63

Port surcharge                                                               6,962,843.36                                 6,170,035.18

Depreciation charge                                                          2,590,789.92                                 2,532,810.28

Business travel charges                                                      2,276,163.13                                 1,629,252.55

Rental charges                                                                352,005.53                                    556,033.51

Sales service charge                                                         9,324,787.65                                   820,971.59

Other                                                                     11,295,016.60                                   9,585,475.34


                                                                                                                                     130
Lu Thai Textile Co., Ltd.                                                        Interim Report 2019


Total                                                77,836,942.94                          66,941,088.56


45. Administrative Expense

                                                                                                Unit: RMB

                    Item               Reporting Period                  Same period of last year

Salary                                               70,734,616.39                          49,380,053.99

Depreciation charge                                  16,165,351.08                          13,579,871.22

Warehouse funding                                    18,689,030.12                          14,923,489.16

Travel expense                                            9,626,697.87                       8,855,345.37

Rental charges                                            7,783,345.21                       8,383,823.95

Labor-union expenditure                                   7,253,250.66                       8,029,634.53

Employee education budget                                 4,917,654.51                       5,642,213.54

Amortization of intangible assets                         6,659,983.58                       5,669,585.44

Transport fees                                            3,978,013.51                       3,049,340.29

Other                                                45,397,654.81                          45,761,153.21

Total                                               191,205,597.74                         163,274,510.70


46. R&D Expense

                                                                                                Unit: RMB

                    Item               Reporting Period                  Same period of last year

Salary                                               81,442,048.22                          86,027,684.32

Materials                                            61,389,843.36                          59,527,384.78

Depreciation                                              5,495,504.06                       4,787,846.11

Other                                                13,611,643.59                          12,253,330.59

Total                                               161,939,039.23                         162,596,245.80


47. Finance Costs

                                                                                                Unit: RMB

                    Item               Reporting Period                  Same period of last year

Interest expense                                     47,316,465.76                          22,535,312.05

Less: Interest income                                     4,338,765.10                       7,403,493.02

Less: Amount of capitalized interest

Foreign exchange gains or losses                          4,695,399.57                      11,511,469.36

Other                                                     4,881,469.82                       3,881,936.92


                                                                                                       131
Lu Thai Textile Co., Ltd.                                                                    Interim Report 2019


Total                                                         52,554,570.05                             30,525,225.31


48. Other Income

                                                                                                            Unit: RMB

                   Sources                      Reporting Period                     Same period of last year

Government subsidies                                          32,226,225.91                             37,142,521.95

Total                                                         32,226,225.91                             37,142,521.95


49. Investment Income

                                                                                                            Unit: RMB

                      Item                         Reporting Period                   Same period of last year

Long-term equity investment income
                                                                      5,083,101.54                      -1,730,597.59
accounted by equity method

Investment income from disposal of financial
                                                                        -46,137.60
assets at fair value through profit or loss

Investment income of trading financial assets
                                                                      1,382,405.99
during holding period

Investment income from disposal of trading
                                                                      3,998,105.48                       6,376,621.37
financial assets

Total                                                                10,417,475.41                       4,646,023.78


50. Gain on Changes in Fair Value

                                                                                                            Unit: RMB

                   Sources                      Reporting Period                     Same period of last year

Trading financial assets                                            405,000.00

Transactional financial liabilities                                4,877,600.00                        -28,481,010.00

Total                                                              5,282,600.00                        -28,481,010.00


51. Credit Impairment Loss

                                                                                                            Unit: RMB

                    Item                        Reporting Period                     Same period of last year

Bad debt loss of other receivables                                  597,634.52

Bad debt loss of long-term receivables                               -62,635.15

Bad debt loss of accounts receivable                           -1,065,950.68




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Lu Thai Textile Co., Ltd.                                                                              Interim Report 2019


Total                                                                  -530,951.31


52. Asset Impairment Loss

Whether the Company has executed the new income standards
□ Yes √ No
                                                                                                                       Unit: RMB

                      Item                          Reporting Period                         Same period of last year

I. Bad debt loss                                                                                                   -2,221,300.66

II. Inventory falling price loss                                   -1,543,199.38                                       99,805.82

Total                                                              -1,543,199.38                                   -2,121,494.84


53. Asset Disposal Income

                                                                                                                       Unit: RMB

                   Sources                          Reporting Period                         Same period of last year

Fixed asset disposal income                                            513,490.00                                    -522,286.65


54. Non-operating Income

                                                                                                                       Unit: RMB

                                                                                                 Amount recorded in the current
               Item                  Reporting Period           Same period of last year
                                                                                                   non-recurring profit or loss

Gains from damage and scrap
                                                   16,961.25                         12,598.97                         16,961.25
of non-current assets

Other                                           3,080,063.19                    2,994,555.86                        3,080,063.19

Total                                           3,097,024.44                    3,007,154.83                        3,097,024.44


55. Non-operating Expense

                                                                                                                       Unit: RMB

                                                                                                 Amount recorded in the current
               Item                  Reporting Period           Same period of last year
                                                                                                   non-recurring profit or loss

Donations                                        102,676.14                           7,246.70                        102,676.14

Losses from damage and scrap
                                                   24,624.99                    1,094,026.64                           24,624.99
of non-current assets

Other                                           2,087,055.41                     893,650.37                         2,087,055.41

Total                                           2,214,356.54                    1,994,923.71                        2,214,356.54




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Lu Thai Textile Co., Ltd.                                                                                    Interim Report 2019


56. Income Tax Expense

(1) List of Income Tax Expense

                                                                                                                            Unit: RMB

                    Item                                    Reporting Period                         Same period of last year

Current income tax expense                                                72,479,054.50                                 63,894,098.11

Deferred income tax expense                                                    2,360,177.79                               -618,583.54

Total                                                                     74,839,232.29                                 63,275,514.57


(2) Adjustment Process of Accounting Profit and Income Tax Expense

                                                                                                                            Unit: RMB

                               Item                                                           Reporting Period

Profit before taxation                                                                                                 495,536,742.28

Current income tax expense accounted at statutory/applicable tax
                                                                                                                        76,149,895.40
rate

Influence of applying different tax rates by subsidiaries                                                               -1,773,914.98

Influence of non-taxable income                                                                                            463,251.87

Income tax expense                                                                                                      74,839,232.29


57. Cash Flow Statement

(1) Cash Generated from Other Operating Activities

                                                                                                                            Unit: RMB

                    Item                                    Reporting Period                         Same period of last year

Government subsidies                                                      31,316,634.62                                 38,328,491.16

Claim income                                                                   2,085,818.06                              1,639,520.19

Recovery of employee borrowings, petty
                                                                          10,419,971.60                                  7,332,632.94
cash and deposit

Collection for employees                                                       1,888,073.17                              2,811,301.35

Other                                                                           772,153.13                               8,718,571.06

Total                                                                     46,482,650.58                                 58,830,516.70


Cash Used in Other Operating Activities

                                                                                                                            Unit: RMB

                    Item                                    Reporting Period                         Same period of last year


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Lu Thai Textile Co., Ltd.                                                               Interim Report 2019


Freight and miscellaneous charges                           27,584,811.06                          30,263,702.56

Rental charges                                              10,519,175.31                           5,121,075.62

Advertising expense                                              1,918,696.01                         361,478.56

Business travel charges                                      11,411,011.08                         17,701,778.95

Insurance                                                        6,869,594.27                       9,043,863.69

Audit advisory announcement fee                                  2,301,944.65                       4,654,078.64

Decoration & repair expenses                                       82,537.34                        1,092,271.20

Donation                                                           22,546.59                          207,152.51

Pre-payment                                                      5,086,731.48                         967,632.15

Payment of employee borrowings, petty
                                                            11,643,401.71                           9,938,512.86
cash and deposit

Other                                                       14,392,971.31                          33,511,070.15

Total                                                       91,833,420.81                         112,862,616.89




(3) Cash Generated from Other Investing Activities

                                                                                                       Unit: RMB

                     Item                     Reporting Period                  Same period of last year

Interest income                                                  3,366,107.52                       7,141,264.70

Income from forward foreign exchange                             6,470,691.14                       6,274,421.37

Sale of securities

Option cost                                                                                           112,450.00

Total                                                            9,836,798.66                      13,528,136.07


(4) Cash Used in Other Investing Activities

                                                                                                       Unit: RMB

                     Item                     Reporting Period                  Same period of last year

forward settlement exchange loss                                 4,874,724.40                                 0.00

Payment of deposit for the L/C of
                                                                                                              0.00
equipment purchase

Total                                                            4,874,724.40


(5) Cash Generated from Other Financing Activities

                                                                                                       Unit: RMB



                                                                                                               135
Lu Thai Textile Co., Ltd.                                                                                         Interim Report 2019


                    Item                                   Reporting Period                             Same period of last year

Return of loan guarantees                                                    10,000,000.00                                  17,200,000.00

Recovery of intercourse accounts                                               9,000,000.00                                 21,300,000.00

Government subsidies related to assets                                                                                            817,500.00

Total                                                                        19,000,000.00                                  39,317,500.00


(6) Cash Used in Other Financing Activities

                                                                                                                                   Unit: RMB

                    Item                                   Reporting Period                             Same period of last year

Payment of the B-share buy-back amount                                         8,573,104.03                                175,517,237.20

Payment of intercourse accounts                                              11,750,000.00

Acquisition of minority shareholders’
                                                                                841,000.00
equity of subsidiaries

Total                                                                        21,164,104.03                                 175,517,237.20


58. 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                                                                                    420,697,509.99               390,164,336.95

Add: Provision for impairment of assets                                                            2,074,150.69              2,121,494.84

Depreciation of fixed assets, oil-gas assets, and productive living assets                    226,725,498.16               204,806,245.97

Amortization of intangible assets                                                                  9,965,756.01              8,762,435.07

Amortization of long-term prepaid expense                                                          1,602,913.05              1,573,450.85

Losses from disposal of fixed assets, intangible assets and other long-lived
                                                                                                   -513,490.00                    522,286.65
assets (gains: negative)

Losses from scrap of fixed assets (gains: negative)                                                   7,663.74               1,081,427.67

Losses from changes in fair value (gains: negative)                                            -5,282,600.00                28,481,010.00

Finance costs (gains: negative)                                                                47,673,100.23                29,182,177.28

Investment loss (gains: negative)                                                             -10,417,475.41                -4,646,023.78

Decrease in deferred income tax assets (gains: negative)                                           2,508,867.66               -618,583.54

Increase in deferred income tax liabilities                                                        -148,689.87                    207,835.87



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(“-” means decrease)

Decrease in inventory (gains: negative)                                                     -221,528,624.76           103,831,822.46

Decrease in accounts receivable generated from operating activities (gains:
                                                                                            -174,035,167.80            -10,014,110.37
negative)

Increase in accounts payable used in operating activities (decrease:
                                                                                            -179,612,349.12            -56,853,595.15
negative)

Other                                                                                                                     -817,500.00

Net cash generated from/used in operating activities                                        119,717,062.57            697,784,710.77

2. Significant investing and financing activities without involvement of
                                                                                             --                         --
cash receipts and payments

3. Net increase/decrease of cash and cash equivalent:                                        --                         --

Ending balance of cash                                                                      623,558,417.28            671,571,889.84

Less: beginning balance of cash                                                             535,134,772.90            676,639,212.86

Net increase in cash and cash equivalents                                                     88,423,644.38             -5,067,323.02


(2) Cash and Cash Equivalents

                                                                                                                              Unit: RMB

                     Item                                  Ending balance                             Beginning balance

I. Cash                                                                    623,558,417.28                             535,134,772.90

Including: Cash on hand                                                     10,330,609.69                                9,087,924.86

            Bank deposit on demand                                         613,227,807.59                             526,046,848.04

III. Ending balance of cash and cash
                                                                           623,558,417.28                             535,134,772.90
equivalents

Other notes:


59. Assets with Restricted Ownership or Right to Use

                                                                                                                              Unit: RMB

                     Item                               Ending carrying value                        Reason for restriction

Monetary capital                                                               367,936.46 Cash deposit for L/G

Inventory                                                                  255,913,268.92 Mortgaged for short-term borrowings

Total                                                                      256,281,205.38                       --


60. Foreign Currency Monetary Items

(1) Foreign Currency Monetary Items

                                                                                                                              Unit: RMB

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                            Ending foreign currency                                 Ending balance converted to
                Item                                       Exchange rate
                                   balance                                                    RMB

Monetary capital                      --                        --

Of which: USD                              56,059,601.32                   6.8747                 385,413,571.13

           EUR                               340,366.86                    7.8170                   2,660,647.74

           HKD                             12,602,313.98                   0.8797                  11,086,255.60

           JPY                             19,037,425.00                   0.0638                   1,214,587.71

           KHR                         166,654,000.00                      0.0017                     281,145.30

           GBP                                  4,890.26                   8.7113                      42,600.52

           CHF                                83,706.92                    7.0388                     589,196.27

           MMK                         372,712,597.87                      0.0045                   1,691,369.77

           Dong                    187,133,620,846.00                  0.000295                    55,151,719.16

Accounts receivable                   --                                       --

Of which: USD                              49,641,282.94                   6.8747                 341,268,927.83

           EUR

           HKD                              2,359,417.94                   0.8797                   2,075,579.96

           Dong                     28,012,243,808.00                  0.000295                     8,263,611.92

Long-term borrowings                  --                                       --

Of which: USD

           EUR

           HKD

Notes receivable:

Of which: USD                              19,386,890.73                   6.8747                 133,279,057.70

Other receivables:

Of which: USD                                119,012.24                    6.8747                     818,173.45

          HKD                                176,099.00                    0.8797                     154,914.29

          JPY                               1,395,040.00                   0.0638                      89,003.55

          EUR                                 14,900.00                    7.8170                     116,473.30

          GBP                                   5,500.00                   8.7113                      47,912.15

          MMK                               1,100,000.00                   0.0045                       4,991.80

          Dong                       3,960,169,897.16                  0.000295                     1,168,250.12

          THB                                 90,000.00                    0.2234                      20,106.00

          SEK                                   4,000.00                   0.7413                       2,965.20

Accounts payable:




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Of which: USD                                    7,344,664.60                        6.8747                50,492,365.73

          JPY                                   63,617,639.84                        0.0638                 4,058,805.42

          EUR                                        232,471.26                      7.8170                 1,817,227.84

          MMK                                   32,518,917.00                        0.0045                   147,570.85

          Dong                             17,687,649,147.08                      0.000295                  5,217,856.50

Other payables:

Of which: USD                                         96,280.00                      6.8747                   661,896.12

          HKD                                   15,453,832.54                        0.8797                13,594,736.49

          Dong                                 314,954,542.00                     0.000295                      92,911.59

Short-term borrowings:

Of which: USD                                  154,005,393.52                        6.8747             1,058,740,878.83

          Dong                             33,348,817,526.00                      0.000295                  9,837,901.17

Current portion of long-term
borrowings :

Of which: USD                                   20,987,499.66                        6.8747               144,282,763.91

Other notes:


(2) Notes to Overseas Entities Including: for Significant Oversea Entities, Main Operating Place, Recording
Currency and Selection Basis Shall Be Disclosed; if there Are Changes in Recording Currency, Relevant
Reasons Shall Be Disclosed.

√ Applicable □ Not applicable
The operating places of Company’s subsidiaries Lu Thai( Hong Kong), Lu Thai(Cambodia), Lu Thai(Burma), Lu Thai(America),
and Lu Thai(Vietnam), and Lu An Garment Co., Ltd. were Hong Kong, Cambodia, Burma, America, Vietnam and Vietnam, and the
recording currency respectively was HKD, USD, USD, USD, USD and USD.


61.   Government Subsidy

(1) Basic Information on Government Subsidy

                                                                                                                Unit: RMB

                                                                                                 Amount recorded in the
                         Category                             Amount             Listed items
                                                                                                  current profit or loss

Subsidies for transferring Xinjiang cotton yarn to
                                                                  1,034,400.00   Other income               1,034,400.00
warehouses out of Xinjiang

Subsidy for export credit insurance premium                        127,700.00    Other income                 127,700.00

Return of service charge for withholding and
                                                                   131,712.26    Other income                 131,712.26
remitting tax



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Government subsidy for award in single champion
                                                      2,000,000.00   Other income              2,000,000.00
demonstration enterprise

Local financial support for contributions              500,000.00    Other income                500,000.00

Electricity fee subsidy                                646,950.00    Other income                646,950.00

Industry fund for quality and efficiency
                                                       100,000.00    Other income                100,000.00
improvement and energy conservation

Social insurance subsidy of preferential policy for
                                                       112,900.00    Other income                112,900.00
strengthening local enterprise development

R&D subsidy for preferential policy for
                                                      4,780,600.00   Other income              4,780,600.00
strengthening local enterprise development

Special fund for energy conservation and
                                                       300,000.00    Other income                300,000.00
consumption reduction

Special fund for development and innovation in
                                                       400,000.00    Other income                400,000.00
science and technology

Government subsidy for innovation award in
                                                       300,000.00    Other income                300,000.00
science and technology conference

Special fund for integration of “information
                                                       100,000.00    Other income                100,000.00
technology and industrialization”

Subsidies for transferring cotton yarn to
                                                      2,262,912.65   Other income              2,262,912.65
warehouses

Subsidy for enterprise management and
                                                        84,000.00    Other income                 84,000.00
consultation

Special fund for enterprise management and
                                                       200,000.00    Other income                200,000.00
consultation

Support fund for leading talent                        300,000.00    Other income                300,000.00

Science and technology award in Shandong
                                                       300,000.00    Other income                300,000.00
Province

Subsidy for purchase of equipments                    1,229,500.00   Other income              1,229,500.00

Social insurance subsidy                              1,057,011.68   Other income              1,057,011.68

Deductible of input VAT on production and
                                                        13,377.37    Other income                 13,377.37
consumer services

Provincial industry fund for quality and efficiency
                                                      1,000,000.00   Other income              1,000,000.00
improvement and energy conservation

Subsidy for municipal-level industrial design
                                                       100,000.00    Other income                100,000.00
center

Fund of municipal-level talents introduce major
                                                       300,000.00    Other income                300,000.00
project

Subsidy fund for leading persons (innovation in       2,000,000.00   Other income              2,000,000.00


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traditional industries) of Mount Tai industry

Subsidy for leading talent of Mount Tai industry                      50,000.00      Other income                      50,000.00

Support fund of effective application in leading
                                                                     100,000.00      Other income                     100,000.00
persons program of Mount Tai industry

Fund for leading persons of Mount Tai                                 20,000.00      Other income                      20,000.00

Special government subsidy for development of
                                                                      25,400.00      Other income                      25,400.00
foreign trade and commerce

Subsidy for stabilizing posts                                      5,905,352.00      Other income                   5,905,352.00

Social insurance for employing people with job
                                                                      31,718.66      Other income                      31,718.66
hunting difficulties

Matching subsidy fund for support of gifted and
                                                                     200,000.00      Other income                     200,000.00
talented persons

Central special fund for development of foreign
                                                                     780,000.00      Other income                     780,000.00
trade and commerce

Central special credit insurance subsidy for
                                                                     285,700.00      Other income                     285,700.00
development of foreign trade and commerce

Central special exhibition subsidy for
                                                                     228,000.00      Other income                     228,000.00
development of foreign trade and commerce

Subsidy for patent                                                   122,000.00      Other income                     122,000.00

Subsidy for leading talent of chief technician in
                                                                      10,000.00      Other income                      10,000.00
Zibo

Subsidy for equipments in top 30 industry project                    382,400.00     Deferred income

Subsidy fund for leading persons project of Mount
                                                                   2,900,000.00     Deferred income
Tai industry

Subsidy fund for support of gifted and talented
                                                                     400,000.00     Deferred income
persons of Zibo City

Subsidy for equipments of 30 strong industrial
                                                                     495,000.00     Deferred income
counties project
Total                                                             31,316,634.62                                    27,139,234.62


(2) Return of Government Subsidy

□ Applicable √ Not applicable


VIII. Changes of Consolidation Scope

1. Other

Shandong Lulian New Materials Co., Ltd. (hereinafter refer to as “Lulian New Materials”) and Lu Thai (Tan Chau) Textile Co., Ltd.



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Lu Thai Textile Co., Ltd.                                                                                 Interim Report 2019


(hereinafter refer to as “Lu Thai Tan Chau”) were incorporated as a subsidiary and a sub-subsidiary of the Company respectively
during the Reporting Period.


IX. Equity in Other Entities

1. Equity in Subsidiary

(1) Subsidiaries


                            Main operating     Registration      Nature of       Holding percentage (%)
         Name                                                                                                  Way of gaining
                                   place            place         business       Directly    Indirectly

                                                              Wholesale and
Luthai (Hong Kong)          Hong Kong        Hong Kong                             100.00%                Set-up
                                                              retail industry

                                                              Wholesale and
Shanghai Luthai             Shanghai         Shanghai                              100.00%                Set-up
                                                              retail industry

                                                               Manufacturing                              Set-up
Lulian New Materials        Zibo             Zibo                                   75.00%
                                                                  industry

                                                               Wholesale and                              Set-up
Shanghai Zhinuo             Shanghai         Shanghai                              100.00%
                                                               retail industry

                                                               Manufacturing                              Business combination not
Xinjiang Luthai             Xinjiang         Xinjiang                               59.92%
                                                                  industry                                 under the same control

Lufeng Weaving &                                               Manufacturing
                            Zibo             Zibo                                   75.00%                Set-up
Dyeing                                                            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 Textile                                               Manufacturing
                            Xinjiang         Xinjiang                                            59.92% Set-up
(sub-subsidiary)                                                  industry

                                                               Wholesale and
Beijing Youxian             Beijing          Beijing                               100.00%                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




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Lu Thai Tan Chau                                                    Manufacturing
                            Vietnam               Vietnam                                                  100.00% Set-up
(sub-subsidiary)                                                          industry

                                                                    Manufacturing
Lu An Garments              Vietnam               Vietnam                                    100.00%                     Set-up
                                                                          industry


(2) Significant Non-wholly-owned Subsidiary

                                                                                                                                             Unit: RMB

                            Shareholding proportion            The profit or loss            Declaring dividends                    Balance of
           Name                of non-controlling              attributable to the              distributed to               non-controlling interests
                                      interests             non-controlling interests non-controlling interests                 at the period-end

Xinjiang Luthai                                    40.08%                -4,676,260.97                                                195,960,043.78

Lufeng Weaving &
                                                   25.00%                13,939,054.37                 50,000,000.00                  341,968,692.25
Dyeing


(3) The Main Financial Information of Significant Not Wholly-owned Subsidiary

                                                                                                                                             Unit: RMB

                                                                          Ending balance
    Name                               Non-current                                                          Non-current
                   Current assets                             Total assets           Current liabilities                            Total liabilities
                                          assets                                                                 liability

Xinjiang
                   393,133,252.63 553,241,390.51               946,374,643.14            433,309,416.90      4,653,818.92            437,963,235.82
Luthai

Lufeng
Weaving &          798,971,361.50 834,854,304.45             1,633,825,665.95            229,786,770.43     32,709,678.66            262,496,449.09
Dyeing

                                                                         Beginning balance
    Name                                                                                                    Non-current
                   Current assets Non-current assets           Total assets          Current liabilities                            Total liabilities
                                                                                                                 liability

Xinjiang
                   577,801,870.44       569,395,421.71 1,147,197,292.15                  628,672,392.36      4,814,373.04            633,486,765.40
Luthai

Lufeng
Weaving &          908,054,381.50       820,360,513.63 1,728,414,895.13                  176,914,108.80     33,049,234.56            209,963,343.36
Dyeing

                                                                                                                                             Unit: RMB

                                                                          Reporting Period
    Name                                                                                                               Cash flows from operating
                      Operating revenue                     Net profit               Total comprehensive income
                                                                                                                                   activities

Xinjiang                      314,368,667.80                    -5,299,119.43                        -5,299,119.43                    30,794,222.48


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Luthai

Lufeng
Weaving &                       805,575,459.05                 52,877,665.09                    52,877,665.09               106,151,171.66
Dyeing

                                                                  Same period of last year
     Name                                                                                                       Cash flows from operating
                        Operating revenue                  Net profit           Total comprehensive income
                                                                                                                          activities

Xinjiang
                                342,127,462.81                  3,505,617.21                     3,505,617.21                96,172,947.55
Luthai

Lufeng
Weaving &                       793,449,942.60                 28,734,401.92                    28,734,401.92                16,773,852.80
Dyeing


2. Equity in Joint Ventures or Associated Enterprises

(1) Significant Joint Ventures or Associated Enterprises


                                                                                Holding percentage (%)       Accounting treatment of the
                       Main operating       Registration       Nature of
      Name                                                                                                   investment to joint venture or
                            place              place           business         Directly        Indirectly
                                                                                                                  associated enterprise

Haohong                                                     Equity
                      Ningbo            Ningbo                                   33.33%                              Equity method
Investment                                                  investment


(2) Main Financial Information of Significant Joint Ventures

                                                                                                                                   Unit: RMB

                                                                                                Beginning balance/The Same period of last
                                                       Ending balance/Reporting Period
                                                                                                                   year

Current assets                                                                  14,291,970.20                                100,703,096.38

Non-current assets                                                             287,801,958.52                                186,140,002.64

Total assets                                                                   302,093,928.72                                286,843,099.02

Current liabilities                                                               150,000.00                                      150,000.00

Total liabilities                                                                 150,000.00                                      150,000.00

Equity attributable to shareholders of the
                                                                               301,943,928.72                                286,693,099.02
Company as the parent

Net assets shares calculated at the
                                                                               100,637,911.44                                  95,554,809.90
shareholding proportion

Carrying value of investment to associated
                                                                               100,637,911.44                                  95,554,809.90
enterprises



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Net profit                                                                  15,250,829.70                                -5,192,312.01

Total comprehensive income                                                  15,250,829.70                                -5,192,312.01


X. The Risk Related to Financial Instruments

Main financial instruments of the Company included: Loans, accounts receivable, accounts payable, etc., all the details of the
financial instruments, see related projects of “Section VII”. The risk associated with these financial instruments, as well as the
Company’s risk management policy to reduce these risks which were described below. The Company's management managed and
supervised these risks to ensure that the above risk was controlled in a limited scope.
The Company use sensitivity analysis technology to analyze the reasonable of risk variables, influence of probable changes to the
current profits and Stockholders' equity. Because rarely any risk variables change in isolation, and the correlation between variables
for the eventual impact of the change of a risk variables will have a significant effect, thus, the aforesaid content was processing
under the assumption of the change of each variable was conducted independently.
(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.     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 30 December 2018, in addition to the following assets or liabilities in statement was USD, HKD and EUR, the
Company’s assets or liabilities was RMB balance. The foreign exchange risk incurred by assets and liabilities of foreign balance may
have impact to the operation results of the Company.
                 Item                             Period-end                              Period-beginning
Cash and cash equivalents                                  458,131,093.20                          216,061,990.69

Notes receivable                                           133,279,057.70                          102,441,924.87

Account receivable                                         351,608,119.71                          306,659,681.14

Other receivables                                            2,422,789.86                            1,687,612.64
Accounts payable                                            61,733,826.33                           39,150,734.53
Other payables                                              14,349,544.19                            1,622,838.36
Short-term borrowings                                   1,068,578,780.00                           690,273,780.05
Current portion of long-term                               144,282,763.91
borrowings
Long-term borrowings                                                                               170,019,083.89

(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, refer to
Note VII-23 and 32).
Sensitive analysis of interest rate risk:

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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 profits Influence to equity of Influence to the profits Influence to equity of
                                                            shareholders                                        shareholders

Increase 100 BP                    -8,018,035.88              -6,795,539.51           -3,208,984.32              -1,891,755.11

Decrease 100 BP                     8,018,035.88               6,795,539.51               3,208,984.32            1,891,755.11

2. Credit Risk
On 30 June 2019, maximum credit risk what may lead to the financial losses was the other party of the contract failed to fulfill the
obligations and causes loss of the Company’s financial assets, which including: book value of financial assets recognized in
consolidated balance sheet.
In order to reduce the credit risk, the Company established a special team be responsible for the determination of credit limit to
conduct credit approval, and perform other supervising procedures to ensure that taking necessary measures to recycle expired claims.
In addition, the Company at each balance sheet date, review every single receivables recycling situation, to ensure that the money
unable to recycle withdrawn provision for bad debt fully. Thus, the Company management believed that have assume the credit risk
the Company shouldered had been greatly reduced.
The Company's working capital was in bank with higher credit rating, so credit risk of working capital was low.
3. Liquidity Risk
When manage liquidity risk, the Company keep administrators deemed sufficient cash and cash equivalents and supervised it to meet
the need of the operation of the Company and reduce the influence of cash flow volatility. The Company management supervised the
usage of bank loan and ensured to comply with the loan agreement.
In the end of Reporting Period, the Company held cash and bank deposit of RMB624 million. In recent two years, the average of net
cash flow of operation activities was RMB1.25 billion. The Company believed that the liquidity risk was insignificant.


XI. The Disclosure of Fair Value

1. Ending Fair Value of Assets and Liabilities at Fair Value

                                                                                                                                  Unit: RMB

                                                                              Ending fair value
                 Item                Fair value measurement        Fair value measurement       Fair value measurement
                                                                                                                                  Total
                                         items at level 1              items at level 2             items at level 3

I. Consistent fair value
                                                --                            --                           --                       --
measurement

1.Financial assets at fair value
                                                                             62,164,515.95                                     62,164,515.95
through profit or loss

(1) Debt instrument investment                                               31,146,000.00                                     31,146,000.00

(2) Equity instrument
                                                                             31,018,515.95                                     31,018,515.95
investment

The total amount of assets
consistently measured at fair                               0.00             62,164,515.95                                     62,164,515.95
value


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The total amount of assets
inconsistently measured at fair                 --                        --                          --                    --
value


2. Market Price Recognition Basis for Consistent and Inconsistent Fair Value Measurement Items at Level
1

The fair value of financial liabilities at level 1 was determined in accordance with the quotation of future foreign exchange of the
bank on 30 June 2019.




3. Valuation Technique Adopted and Nature and Amount Determination of Important Parameters for
Consistent and Inconsistent Fair Value Measurement Items at Level 2

For the fund and equity investment without active markets in trading financial assets, the fair value was determined in accordance
with the evaluation on the balance sheet date provided by the asset manager and appraisal value of assessment agency to the
investment company.


XII. Related Party and Related-party Transactions

1. Information Related to the Company as the Parent of the Company

                                                                  Proportion of share held by the      Proportion of voting rights
              Registratio                            Registered
   Name                       Nature of business                  Company as the parent against      owned by the Company as the
                n place                               capital
                                                                         the Company (%)            parent against the Company (%)

Zibo
Lucheng
                            Textile, chemistry and   RMB63.26
Textile       Zibo                                                                         16.36%                            16.36%
                            investment                million
Investment
Co., Ltd.

Notes: information on the Company as the parent
The final controllers of the Company are Mr. Liu Zibin and Mr. Liu Deming.


2. Subsidiaries of the Company

Refer to Note IX-1. Equity in Subsidiaries.


3. Information on the Joint Ventures and Associated Enterprises of the Company

Refer to Note IX-2. Equity in Joint Ventures or Associated Enterprises for Details of Significant Joint Ventures or Associated
Enterprises of the Company.




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4. Information on Other Related Parties


                                Name                                                   Relationship with the Company

Zibo Stanluian Cosmetics Co., Ltd. (hereinafter called
                                                                     Joint-stock company of the Company as the parent
“Stanluian”)

Zibo Taimei Ties Co., Ltd. (hereinafter called Taimei Ties)          Majority-owned subsidiary of the Company as the parent

Zibo Limin Purified Water Co., Ltd. (hereinafter called Limin
                                                                     Wholly-owned subsidiary of the Company as the parent
Purified Water)

Zibo Luqun Land Co., Ltd (hereinafter called Luqun Land)             Wholly-owned subsidiary of the Company as the parent

Zibo Lurui Fine Chemical Co., Ltd. (hereinafter referred to as
                                                                     Wholly-owned subsidiary of the Company as the parent
Lurui Chemical)

Zibo Lujia Property Management Co. , Ltd. (hereinafter referred
                                                                     Wholly-owned subsidiary of the Company as the parent
to as Lujia Property)

Hong Kong Tung Hoi International Company Limited
                                                                     Wholly-owned subsidiary of the Company as the parent
(hereinafter called Tung Hoi International)

Zibo Stanluian Cosmetics Co., Ltd. (hereinafter called
                                                                     Wholly-owned subsidiary of the Company as the parent
“Stanluian”)

Other notes


5. List of Connected Transactions

(1) Information on Acquisition of Goods and Reception of Labor Service

Information on acquisition of goods and reception of labor service
                                                                                                                               Unit: RMB

                                                               Reporting       The approval trade   Whether exceed        Same period of
 Related party                       Content
                                                                 Period              credit         trade credit or not      last year

Zibo Lucheng Towels, socks, oils, supermarket retail,
Textile           welfare, electronics, computer
                                                                6,177,619.85        7,210,000.00           No               6,462,966.30
Investment        equipment, computer supplies, paper
Co., Ltd.         cores, boot etc.

Limin Purified                                                                                             No
                  Sewage treatment, materials                  11,140,353.11       13,300,000.00                           12,624,335.83
Water

Chengshun                                                                                                  No
                  Gas                                          22,728,978.86       27,000,000.00                           15,016,102.73
Petrochemical

Lurui Fine                                                                                                 No
                  Auxiliaries                                  57,285,041.23       69,000,000.00                           53,067,182.08
Chemical



Information of sales of goods and provision of labor service
                                                                                                                               Unit: RMB

                                                                                                                                         148
Lu Thai Textile Co., Ltd.                                                                                        Interim Report 2019


 Related party                     Content                               Reporting Period                  Same period of last year

Lucheng          Sales of materials, electricity, running
                                                                                         56,265.15                               62,734.54
Textile          water, draught water, gas, LED light etc.

Lucheng          Sales of grey yarn, dyed yarn, garment
                                                                                       252,090.27                               205,267.94
Textile          etc.

Stanluian        Sales of materials, electricity, and running
                                                                                                                                  6,926.79
Company          water

Limin Purified Sales of materials, garment, LED light
                                                                                       865,399.14                                72,279.13
Water            etc.

Lurui Fine       Sales of garment, LED light, shell fabric,
                                                                                       155,742.15                                88,729.05
Chemical         yarn, water&electricity, lunch components

Lujia Property Sales of recycled water and materials etc.                                45,794.67                               35,871.66


(2) Information on Related-party Lease

The Company was lessor:
                                                                                                                                 Unit: RMB

                                                                         The lease income confirmed in The lease income confirmed in
          Name of lessee               Category of leased assets
                                                                             the Reporting Period           the Same period of last year

Zibo Lucheng Textile
                                   Houses and buildings                                       36,108.00                          48,965.14
Investment Co., Ltd.

Lurui Fine Chemical                Houses and buildings                                         4,091.82                           4,091.82

The Company was lessee:
                                                                                                                                 Unit: RMB

                                                                         The lease fee confirmed in the    The lease fee confirmed in the
          Name of lessor               Category of leased assets
                                                                               Reporting Period               Same period of last year

Zibo Lucheng Textile
                                   Rent of land                                             1,807,428.60                       1,807,428.60
Investment Co., Ltd.

Zibo Lucheng Textile
                                   Rent of gas station                                       250,857.12                         250,857.12
Investment Co., Ltd.

Zibo Lucheng Textile
                                   Rent of land and buildings                               5,511,114.30                       5,748,600.80
Investment Co., Ltd.

Luqun Property                     Rent of land and buildings                                697,142.82                         697,142.82

Notes


(3) Information on Inter-bank Lending of Capital of Related Parties

                                                                                                                                 Unit: RMB

    Related party              Amount                       Start date                 End date                         Note


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Borrowing

Zibo Lucheng                                                                                    Borrowed by the Company’s
                                9,000,000.00        8 April 2019        31 December 2019
Textile Investment                                                                              subsidiaries Xinsheng Power


6. Accounts Receivable and Payable of Related Party

(1) Accounts Payable

                                                                                                                    Unit: RMB

              Item                       Related party             Ending carrying amount        Beginning carrying amount

Accounts payable                Lurui Fine Chemical                             1,839,807.21                                0.00

                                Zibo Lucheng Textile
Other payables                                                                121,520,000.00                  127,139,981.30
                                Investment Co., Ltd.

Other payables                  Lujia Property                                    600,000.00                       646,472.50

Other payables                  Stanluian Company                                                                1,537,779.37

Other payables                  Taimei Ties                                                                      1,420,277.49


XIII. Commitments and Contingency

1. Significant Commitments

Significant commitments on Balance Sheet Date
Capital commitments

                      Item                             Ending balance (RMB’0,000)          Beginning balance (RMB’0,000)

Commitments signed but hasn’t been
recognized in financial statements

 -- Commitment on constructing and                                             20,965.65                               4528.59
purchasing long-lived assets

Total                                                                          20,965.65                               4528.59




2. Contingency

(1) In Despite of no Significant Contingency to Disclose, the Company Shall Also Make Relevant
Statements

There was no significant contingency in the Company to disclose.




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   XIV. Notes of Main Items in the Financial Statements of the Company as the Parent

   1. Accounts Receivable

   (1) Accounts Receivable Disclosed by Category

                                                                                                                                         Unit: RMB

                                              Ending balance                                                  Beginning balance

                         Carrying amount          Bad debt provision                     Carrying amount          Bad debt provision

        Category                                                Withdr                                                          Withdr
                                                                          Carrying                                                            Carrying
                                       Proporti                 awal                                   Proporti                   awal
                         Amount                    Amount                  value         Amount                    Amount                      value
                                         on                     propor                                   on                     propor
                                                                 tion                                                             tion

Of which:

Accounts receivable
withdrawal of bad      389,210,047                19,544,871.            369,665,176 332,953,633                  16,727,660.            316,225,973
                                       100.00%                  5.02%                                 100.00%                   5.02%
debt provision by                .23                       22                      .01          .50                        22                          .28
the group

Of which:

Accounts receivable
withdrawal of bad
                       389,210,047                19,544,871.            369,665,176 332,953,633                  16,727,660.            316,225,973
debt provision of by                   100.00%                  5.02%                                 100.00%                   5.02%
                                 .23                       22                      .01          .50                        22                          .28
credit risks
characteristics

                       389,210,047                19,544,871.            369,665,176 332,953,633                  16,727,660.            316,225,973
Total                                  100.00%                  5.02%                                 100.00%                   5.02%
                                 .23                       22                      .01          .50                        22                          .28

   Bad debt provisions established on the group basis: Accounts receivable of which bad debt provisions are established by credit risk
   characteristics
                                                                                                                                         Unit: RMB

                                                                                                      Ending balance
                                  Item                                                                                              Bad debt
                                                                            Carrying amount             Bad debt provision
                                                                                                                                  provision ratio

    Accounts receivable of which bad debt provisions are
                                                                                     389,210,047.23             19,544,871.22                  5.02%
    established by credit risk

    Total                                                                            389,210,047.23             19,544,871.22            --



   Please refer to the relevant information of disclosure of bad debt provision of other accounts receivable if adopting the general mode
   of expected credit loss to withdraw bad debt provision of notes receivable.
   □ Applicable √ Not applicable
   List by Aging Analysis


                                                                                                                                                   151
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                                                                                                                          Unit: RMB

                             Aging                                                        Ending balance

Within 1 year (including 1 year)                                                                                    388,811,793.55

1 to 2 years                                                                                                              63,890.76

2 to 3 years                                                                                                              24,164.00

Over 3 years                                                                                                             310,198.92

Total                                                                                                              389,210,047.23


(2) Bad Debt Provision Withdrawn, Reversed or Recovered in the Reporting Period

Bad debt provision withdrawn, reversed or recovered in the Reporting Period:
                                                                                                                          Unit: RMB

                                                             Changes in the current period
        Category        Beginning balance                                                                        Ending balance
                                                Withdrawal         Reversal or recovery        Write-off

Bad debt provision           16,727,660.22          2,837,798.47                                    20,587.47        19,544,871.22

Total                        16,727,660.22          2,837,798.47                                    20,587.47        19,544,871.22


(3) Particulars of the Actual Verification of Accounts Receivable during the Reporting Period

                                                                                                                          Unit: RMB

                               Item                                                          Amount verified

Accounts receivable actually verified                                                                                     20,587.47


(4) Top 5 Accounts Receivable in Ending Balance Collected according to the Arrears Party

The total top 5 accounts receivable in ending balance collected according to the arrears party for the Company was
RMB93,127,293.09, accounting for 23.93% of total ending balance of accounts receivable, and the total accounts receivable
correspondingly withdrawn was RMB4,656,364.65.


2. Other Receivables

                                                                                                                          Unit: RMB

                     Item                                Ending balance                              Beginning balance

Other receivables                                                       555,969,515.96                             395,847,213.77

Total                                                                   555,969,515.96                             395,847,213.77


(1) Other Receivables

1) Other Receivables Classified by Account Nature
                                                                                                                          Unit: RMB

                                                                                                                                  152
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                     Nature                              Ending carrying amount                        Beginning carrying amount

Intercourse funds                                                             528,177,166.18                                358,031,837.54

Export rebates                                                                 14,358,034.64                                 22,505,284.46

Payment on behalf                                                               9,931,697.40                                 13,005,358.64

Guarantee deposit and cash deposit                                              3,542,120.21                                  3,221,373.64

Borrowings and petty cash                                                       1,971,342.94                                  1,774,825.33

Other                                                                             445,867.85                                     69,421.93

Total                                                                         558,426,229.22                                398,608,101.54

2) Withdrawal of Bad Debt Provision
                                                                                                                                 Unit: RMB

                                           First stage                Second stage                     Third stage

                                                               Expected loss in the duration    Expected loss in the
         Bad debt provision          Expected credit loss of                                                                     Total
                                                                  (credit impairment not             duration (credit
                                      the next 12 months
                                                                        occurred)              impairment occurred)

Balance of 1 January 2019                     2,760,887.77                                                                    2,760,887.77

Balance of 1 January 2019 in
                                             ——                          ——                           ——                   ——
the current period

Withdrawal of the current
                                               -304,174.51                                                                     -304,174.51
period

Balance of 30 June 2019                       2,456,713.26                                                                    2,456,713.26

Changes of carrying amount with significant amount changes in loss provision in the current period
□ Applicable √ Not applicable
List by Aging Analysis
                                                                                                                                 Unit: RMB

                               Aging                                                           Ending balance

Within 1 year (including 1 year)                                                                                             24,976,875.42

1 to 2 years                                                                                                                    736,675.11

2 to 3 years                                                                                                                  2,264,517.79

Over 3 years                                                                                                                  2,270,994.72

Total                                                                                                                        30,249,063.04

3) Bad Debt Provision Withdrawn, Reversed or Recovered in the Reporting Period
Bad Debt Provision Withdrawn, Reversed or Recovered in the Reporting Period:
                                                                                                                                 Unit: RMB

                                                                     Changes in the current period
          Category                Beginning balance                                                                     Ending balance
                                                                 Withdrawal            Reversal or recovery

Bad debt provision                        2,760,887.77                 -304,174.51                                            2,456,713.26


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Total                                      2,760,887.77                  -304,174.51                                             2,456,713.26

4) Particulars of Other Receivables with Actual Verification
                                                                                                                                    Unit: RMB

                                  Item                                                                  Amount

Accounts receivable actually verified                                                                                                      0.00

5) Top 5 of the Ending Balance of Other Receivables Collected according to the Arrears Party
                                                                                                                                    Unit: RMB

                                                                                                  Proportion to total
                                                                                                   ending balance of       Ending balance of
       Name of the entity                 Nature                 Ending balance       Aging
                                                                                                    other accounts         bad debt provision
                                                                                                      receivable

                                                                                  Within 1
Lu Thai (Vietnam)              Intercourse funds                 441,878,476.51                                 79.13%
                                                                                  year

                                                                                  Within 1
Lu An Garments                 Intercourse funds                  86,298,689.67                                 15.45%
                                                                                  year

Refund of tax for export                                                          Within 1
                               Export rebates                     14,358,034.64                                  2.57%             717,901.73
receivable                                                                        year

Accounts receivable of
                               Advance money for the
advance money for the
                               social security undertake by                       Within 1
social security undertake                                          7,635,619.56                                  1.37%             381,780.98
                               the individual of the                              year
by the     individual of the
                               employee
employee

Cash deposit for salary of
                               Cash deposit for salary of
migrant workers in                                                                Over 3
                               migrant workers for                 1,458,593.50                                  0.26%             437,578.05
Zichuan district of Zibo                                                          years
                               construction work
city

Total                                        --                  551,629,413.88           --                    98.78%           1,537,260.76


3. Long-term Equity Investment

                                                                                                                                    Unit: RMB

                                                  Ending balance                                         Beginning balance
            Item                                    Depreciation                                               Depreciation
                               Carrying amount                       Carrying value        Carrying amount                    Carrying value
                                                       reserve                                                   reserve

Investment to
                                2,422,615,316.04                     2,422,615,316.04 2,069,693,116.04                        2,069,693,116.04
subsidiaries

Investment to joint
ventures and associated           100,637,911.44                      100,637,911.44           95,554,809.90                    95,554,809.90
enterprises



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Total                        2,523,253,227.48                   2,523,253,227.48 2,165,247,925.94                        2,165,247,925.94


(1) Investment to Subsidiaries

                                                                                                                                  Unit: RMB

                                                                                              Depreciation reserve     Ending balance of
    Investee       Beginning balance     Increase           Decrease     Ending balance
                                                                                                     withdrawn        depreciation reserve

Xinjiang Luthai       147,303,034.16                                      147,303,034.16

Xinsheng Power        176,340,737.93                                      176,340,737.93

Lufeng Weaving
                      529,620,000.00                                      529,620,000.00
& Dyeing

Luqun Textile         171,784,550.00                                      171,784,550.00

Luthai (Hong
                      128,771,800.00                                      128,771,800.00
Kong)

Shanghai Luthai        20,000,000.00                                       20,000,000.00

Lu Thai
                      108,242,335.38                                      108,242,335.38
(Cambodia)

Lu Thai
                       10,209,050.00                                       10,209,050.00
(America)

Lu Thai
                       62,337,238.57                                       62,337,238.57
(Burma)

Beijing Youxian        18,000,000.00         841,000.00                    18,841,000.00

Lu Thai
                      632,855,310.00 202,081,200.00                       834,936,510.00
(Vietnam)

Lu An Garments         64,229,060.00                                       64,229,060.00

Lulian New
                                       150,000,000.00                     150,000,000.00
Materials

Total               2,069,693,116.04 352,922,200.00                      2,422,615,316.04


(2) Investment to Joint Ventures and Associated Enterprises

                                                                                                                                  Unit: RMB

                                                            Increase/decrease
                                                                                                                                   Ending
                                               Gains and     Adjustm                          Withdr
                                                                                   Cash                                            balance
                             Additi Redu         losses        ent of   Change                 awal
                Beginning                                                        bonus or                                            of
 Investee                     onal     ced     recognized      other     s of                   of               Ending balance
                  balance                                                         profits               Other                     depreciati
                              invest invest     under the    compreh other                    impair
                                                                                 announce                                            on
                              ment ment          equity       ensive    equity                ment
                                                                                 d to issue                                        reserve
                                                method        income                          provisi


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                                                                                                 on

II. Associated enterprises

Haohong
Investme         95,554,809.90                  5,083,101.54                                                      100,637,911.44
nt

Subtotal         95,554,809.90                  5,083,101.54                                                      100,637,911.44

Total            95,554,809.90                  5,083,101.54                                                      100,637,911.44


4. Operating Revenue and Cost of Sales

                                                                                                                                    Unit: RMB

                                              Reporting Period                                        Same period of last year
               Item
                                  Operating revenue             Cost of sales           Operating revenue               Cost of sales

Main operations                      2,354,610,227.06            1,732,468,733.73              2,360,871,867.81           1,740,109,055.52

Other operations                       133,719,339.31              115,399,718.04               142,916,982.83              121,295,410.17

Total                                2,488,329,566.37            1,847,868,451.77              2,503,788,850.64           1,861,404,465.69

Whether the Company has executed the new income standards
□ Yes √ No
Other notes:


5. Investment Income

                                                                                                                                    Unit: RMB

                      Item                                     Reporting Period                           Same period of last year

Long-term equity investment income
                                                                            150,000,000.00
accounted by cost method

Long-term equity investment income
                                                                                5,083,101.54                                     -1,730,597.59
accounted by equity method

Investment income of trading financial assets
                                                                                1,382,405.99
during holding period

Investment income from disposal of trading
                                                                                  463,217.37                                     3,648,000.52
financial assets

Total                                                                       156,928,724.90                                       1,917,402.93


XV. Supplementary Materials

1. Items and Amounts of Non-recurring Profit or Loss

√ Applicable □ Not applicable



                                                                                                                                           156
Lu Thai Textile Co., Ltd.                                                                                         Interim Report 2019


                                                                                                                                Unit: RMB

                                             Item                                                         Amount               Note

Gains/losses from the disposal of non-current assets                                                         459,688.66

Government grants recognized in the current period, except for those acquired in the
ordinary course of business or granted at certain quotas or amounts according to the                       32,226,225.91
government’s unified standards

Gain/loss from change of fair value of trading financial assets and liabilities, and
derivative financial assets and liabilities, and investment gains from disposal of trading
                                                                                                           10,663,111.47
financial assets and liabilities, derivative financial assets and liabilities, and other equity
investment, other than valid hedging related to the Company’s common businesses

Other non-operating income and expense other than the above                                                  890,331.64

Less: Income tax effects                                                                                    6,167,989.87

       Non-controlling interests effects                                                                    3,441,687.15

Total                                                                                                      34,629,680.66         --

Explain the reasons if the Company classifies an item as an non-recurring gain/loss according to the definition in the Explanatory
Announcement No. 1 on Information Disclosure for Companies Offering Their Securities to the Public—Non-recurring Gains and
Losses, or classifies any extraordinary gain/loss item mentioned in the said explanatory announcement as a recurrent gain/loss item.
□ Applicable √Not applicable


2. Return on Equity and Earnings Per Share


                                                                                                      EPS (Yuan/share)
    Profit as of Reporting Period              Weighted average ROE (%)
                                                                                              EPS-basic                 EPS-basic

Net profit attributable to ordinary
                                                                              5.70%                        0.48                         0.48
shareholders of the Company

Net profit attributable to ordinary
shareholders of the Company after
                                                                              5.22%                        0.44                         0.44
deduction of non-recurring profit or
loss




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                            Part XI Documents Available for Reference

1. The financial statements signed and stamped by the Company’s legal representative, Chief Accountant and
Financial Manager;
2. The originals of all the Company’s announcements and documents disclosed to the public during the Reporting
Period on Securities Times, Shanghai Securities News, China Securities Journal and Ta Kung Pao.


                                                                              Chairman of the Board: Liu Zibin

                                                                                  Lu Thai Textile Co., Ltd.

                                                                                         3 August 2019




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