Lu Thai Textile Co., Ltd. Third Quarter Report 2019 (Summary)
Stock Code: 000726, 200726 Stock Name: LTTC, LTTC-B Announcement No.: 2019-066
LU THAI TEXTILE CO., LTD.
THIRD QUARTER REPORT 2019 (SUMMARY)
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Lu Thai Textile Co., Ltd. Third Quarter Report 2019 (Summary)
Part I Important Notes
The Board of Directors (or the “Board”), the Supervisory Committee as well as the directors,
supervisors and senior manage ment of Lu Thai Textile Co., Ltd. (together with its
consolidated s ubsidiaries, the “Company”, except where the context otherwise requires)
hereby guarantee the factuality, accuracy and completeness of the conte nts of this Report and
its summary, and shall be jointly and severally liable for any misrepresentations, misleading
statements or mate rial omissions therein.
All the Company’s directors have attended the Board meeting for the review of this Report
and its summary.
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.
This Report and its summary have been prepared in both Chinese and Engl ish. Should there
be any discrepancies or misunderstandings between the two versions, the Chinese versions
shall prevail.
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Lu Thai Textile Co., Ltd. Third Quarter Report 2019 (Summary)
Part II Key Corporate Information
I Key Consolidated Financial Information
Indicate by tick mark whether there is any retrospectively restated datum in the table below.
□ Yes √ No
30 September 2019 31 December 2018 Change (%)
Total assets (RMB) 11,348,273,338.95 10,537,759,811.84 7.69%
Equity attributable to the listed company’s
7,351,503,162.46 7,146,548,467.86 2.87%
shareholders (RM B)
Q3 2019 YoY change (%) Q1-Q3 2019 YoY change (%)
Operating revenue (RM B) 1,626,165,317.03 -6.71% 4,811,613,661.04 -4.22%
Net profit attributable to the listed company’s
176,453,154.53 -15.79% 587,899,371.12 0.17%
shareholders (RM B)
Net profit attributable to the listed company’s
172,442,753.62 -23.06% 549,259,289.55 -6.99%
shareholders before exceptional items (RM B)
Net cash generated from/used in operating activities
-- -- 481,803,616.13 -57.10%
(RM B)
Basic earnings per share (RM B/share) 0.20 -13.04% 0.68 6.25%
Diluted earnings per share (RM B/share) 0.20 -13.04% 0.68 6.25%
Weighted average return on equity (%) 2.44% -0.51% 8.14% 0.06%
Exceptional gains and losses:
√ Applicable □ Not applicable
Unit: RM B
Item Q1-Q3 2019 Note
Gain or loss on disposal of non-current assets (inclusive of impairment allowance write-offs) -510,901.65
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 35,960,594.57
government’s uniform standards)
Gain/Loss on changes in fair value arising from holding of trading financial assets and
liabilities, derivative financial assets and liabilities and investment income from disposal of
trading financial assets and liabilities, derivative financial assets and liabilities and other 19,090,653.31
investments in debt obligation other than effective hedge business related to the Company’s
normal operating businesses
Non-operating income and expense other than above -5,090,217.43
Less: Income tax effects 7,880,401.60
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Lu Thai Textile Co., Ltd. Third Quarter Report 2019 (Summary)
Non-controlling interests effects (net of tax) 2,929,645.63
Total 38,640,081.57 --
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.
II Total Numbe r of Shareholde rs and Holdings of Top 10 Shareholde rs at 30 September 2019
1. Numbers of Ordinary Shareholders and Preferred Shareholders with Resumed Voting Rights as well as
Holdings of Top 10 Shareholders
Unit: share
Number of preferred shareholders with resumed
Number of ordinary shareholders 56,184 0
voting rights (if any)
Top 10 shareholders
Shares in pledge or
Shareholdin Restricted
Name of shareholder Nature of shareholder Number of shares frozen
g percentage shares
Status Shares
Domestic
Zibo Lucheng Textile Investment Co.,
non-state-owned legal 16.36% 140,353,583
Ltd.
person
Tailun (Thailand) Textile Co., Ltd. Foreign legal person 13.78% 118,232,400 118,232,400
Hong Kong Securities Clearing Co. Ltd Foreign legal person 3.03% 25,984,811
Central Huijin Assets M anagement Co., State-owned legal
2.37% 20,315,300
Ltd. person
T.ROWE PRICE INTL DISCOVERY
Foreign legal person 2.32% 19,948,219
FUND
Domestic
China Securities Finance Corporation
non-state-owned legal 2.13% 18,313,391
Limited
person
Hong Kong M onetary
Foreign legal person 2.04% 17,487,884
Authority-Self-owned Fund
National Social Security Fund Portfolio
Other 1.40% 11,999,897
103
National Social Security Fund
Other 0.95% 8,190,051
Portfolio 413
ASSICURAZIONI Other 0.76% 6,558,889
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Lu Thai Textile Co., Ltd. Third Quarter Report 2019 (Summary)
GENERALI-DIVIDEND 2
Top 10 unrestricted shareholders
Unrestricted Shares by type
Name of shareholder
shares Type Shares
Zibo Lucheng Textile Investment Co., Ltd. 140,353,583 RM B-denominated ordinary stock 140,353,583
Hong Kong Securities Clearing Co. Ltd 25,984,811 RM B-denominated ordinary stock 25,984,811
Central Huijin Assets M anagement Co., Ltd. 20,315,300 RM B-denominated ordinary stock 20,315,300
T.ROWE PRICE INTL DISCOVERY FUND 19,948,219 Domestically listed foreign stock 19,948,219
China Securities Finance Corporation Limited 18,313,391 RM B-denominated ordinary stock 18,313,391
Hong Kong M onetary Authority -Self-owned Fund 17,487,884 RM B-denominated ordinary stock 17,487,884
National Social Security Fund Portfolio 103 11,999,897 RM B-denominated ordinary stock 11,999,897
National Social Security Fund Portfolio 413 8,190,051 RM B-denominated ordinary stock 8,190,051
ASSICURAZIONI GENERALI-DIVIDEND 2 6,558,889 RM B-denominated ordinary stock 6,558,889
RBC EM ERGING M ARKETS SM ALL CAP EQUITY FUND 6,181,462 Domestically listed foreign stock 6,181,462
Zibo Lucheng Textile Investment Co., Ltd. is the largest shareholder
and the actual controller of the Company. Tailun (Thailand) Textile
Co., Ltd. is the second largest shareholder and the foreign sponsor of
Related or acting-in-concert parties among shareholders above
the Company. All the other shareholders are hold ing tradable
A-shares or B-shares. And it is unknown whether there is any related
party or acting-in-concert party among them.
Top 10 ordinary shareholders involved in securities margin
Naught
trading (if any)
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.
□ Yes √ No
No such cases in the Reporting Period.
2. Number of Preferred Shareholders and Shareholdings of Top 10 of Them
□ Applicable √ Not applicable
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Lu Thai Textile Co., Ltd. Third Quarter Report 2019 (Summary)
Part III Significant Events
I Changes in Key Financial State ment Line Items and Explanation of why
√ Applicable □ Not applicable
30 September 31 December
Item Change Reason for change
2019 2018
Increase in prepayments for agricultural means of
Prepayments 196,906,160.26 149,582,616.21 31.64%
production in the Reporting Period
Current portion of Purchase of trust financial products in the
52,256,130.79 - 100.00%
non-current assets Reporting Period
Transfer of operating leased houses into
Investment property 38,266,359.35 22,880,242.95 67.25%
investment property in the Reporting Period
Construction in Increase in inputs in Yarn Dye II Project of Lu
502,791,371.42 337,230,646.42 49.09%
progress Thai (Vietnam) and equipment
Short-term Increase in borrowings from banks in the
2,117,741,665.40 1,325,273,780.05 59.80%
borrowings Reporting Period
Increase in bank’s acceptance bills opened for
Notes payable 22,125,109.37 502,347.05 4304.35%
payments of materials in the Reporting Period
Payments for raw materials and equipment in the
Accounts payable 229,909,541.78 353,186,163.90 -34.90%
Reporting Period
Current portion of Increase in current portion of long-term
111,331,864.72 - 100.00%
non-current liabilities borrowings
Reclassification of current portion of long-term
Long-term
18,961,030.32 170,019,083.89 -88.85% borrowings into current portion of non-current
borrowings
liabilities
Capital stock premium from repurchased B-shares
Capital reserve 256,632,428.28 699,493,647.48 -63.31%
cancelled in the Reporting Period
Cancellation of repurchased B-shares in the
Treasury stock - 486,922,944.94 -100.00%
Reporting Period
Increase in differences arising from the translation
Other comprehensive
111,894,866.80 61,157,013.37 82.96% of foreign currency-denominated financial
income
statements in the Reporting Period
Item Q1~Q3 2019 Q1~Q3 2018 Change Reason for change
Finance cost 61,156,464.30 37,733,821.10 62.07% Increase in interest expense in the Reporting Period
Increase in income from investments in derivative
Investment income 16,777,341.81 -18,388,041.25 191.24%
financial instruments and associated enterprises in
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Lu Thai Textile Co., Ltd. Third Quarter Report 2019 (Summary)
the Reporting Period
Losses on changes in fair value of fails-to-delivery
Gain on changes in
5,638,067.04 -44,112,150.00 112.78% derivative financial instruments of the same period
fair value
of last year
Asset disposal Recognition of disposal income from demolition
162,416.20 23,233,253.44 -99.30%
income by Xinjiang Lu Thai in the same period of last year
Non-operating Payments for relief donations in the Reporting
9,785,667.21 3,623,862.73 170.03%
expense Period
Increase in net cash outflow in relation to operating
activities: 1. YoY increase of RM B331 million in
cash paid for purchase of commodities and
Net cash generated
acceptance of labor services, which driven by
from/used in 481,803,616.13 1,123,152,616.75 -57.10%
increase in payments for cotton; 2. YoY decrease
operating activities
of RM B222 million in cash received from sales of
commodities and providing of labor services,
which driven by decline in sales of products
Net cash generated YoY decrease in payments for B-share repurchase
from/used in 212,302,378.28 -288,801,161.03 173.51% and YoY increase in cash received from obtaining
financing activities borrowings in the Reporting Period
II Progress, Influence and Solutions with regard to Significant Events
√ Applicable □ Not applicable
The 28th M eeting of the 8th Board of Directors reviewed and approved ten proposals on 23 M ay 2019, including the Proposal of
M eeting the Conditions for Public Issuance of A-share Convertible Corporate Bonds, the Proposal of Plan on Public Issuance of
A-share Convertible Corporate Bonds and the Proposal of Preplan on Public Issuance of A -share Convertible Corporate Bonds. For
details, please refer to the announcement (announcement No.: 2019-039) disclosed on www.cninfo.com.cn on 24 M ay 2019. The 3rd
Extraordinary General M eeting of 2019 reviewed and approved ten proposals on 16 September 2019, including the Proposal of
M eeting the Conditions for Public Issuance of A-share Convertible Corporate Bonds, the Proposal of Plan on Public Issuance of
A-share Convertible Corporate Bonds, the Proposal of Preplan on Public Issuance of A-share Convertible Corporate Bonds and the
Proposal of Change in Audit Institution. For details, please refer to the announcement (announcement No.: 2019-059) disclosed on
www.cninfo.com.cn on 17 September 2019. The Company received the Acceptance Form on Application for CSRC Administrative
License issued by CSRC (No. 192620) on 15 October 2019. For details, please refer to the relevant announcement (announcement
No.: 2019-064) disclosed on www.cninfo.com.cn on 16 October 2019.
Overview of significant events Disclosure date Announcement index
24 M ay 2019 Announcements on www.cninfo.com.cn
The progress of relevant matters for public
issuance of A-share Convertible Corporate 17 September 2019 Announcements on www.cninfo.com.cn
Bonds
15 October 2019 Announcements on www.cninfo.com.cn
Progress of any share repurchase:
□ Applicable √ Not applicable
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Lu Thai Textile Co., Ltd. Third Quarter Report 2019 (Summary)
Progress of any reduction of the repurchased shares through centraliz ed bidding:
□ Applicable √ Not applicable
III Commitments that the Company’s Actual Controller, Shareholders, Related Parties,
Acquirers, the Company Itself or Other Parties, Failed to Fulfill on Time during the
Reporting Period
□ Applicable √ Not applicable
No such cases in the Reporting Period.
IV Securities Investments
□ Applicable √ Not applicable
No such cases in the Reporting Period.
V Wealth Manage ment Entrustment
√ Applicable □ Not applicable
Unit: RM B'0,000
Type of wealth Outstanding amount
Funding source Principal Overdue amount
management before maturity
Other Self-funded 0 3,000 0
Trust finance products Self-funded 5,000 5,000 0
Total 5,000 8,000 0
High-risk wealth management entrustments with amounts that are individually significant, or with low security, low liquidity, or no
protection of the principal:
√ Applicable □ Not applicable
Unit: RM B’0,000
Collecti Throu Overvie
Refere Actual
Type of Invest Expect on/paym Impair gh Any w and
nce gain/lo
wealth Fundin ment ed ent of ment prescri plan for index to
Type of Princi Start End Way of annual ss in
Trustee manage g with return gain/loss allowa bed further more
trustee pal date date payback ized Report
ment source princi (if in nce (if proced entrustm informat
return ing
product pal any) Reportin any) ure or ent ion (if
(%) Period
g Period not any)
Granti Annual
ng of payment
Gopher 22 26
Fund trust of
Asset Fixed-in Self-fu Dece Dece Tempora
corporati 3,000 loans interests 8.50% 255 250.32 N/A Yes
M anagemen come nded mber mber rily no
on to and
t Co., Ltd 2017 2019
HOM payment
E of
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Lu Thai Textile Co., Ltd. Third Quarter Report 2019 (Summary)
CRED principal
IT upon
maturity
Payment
of
Invest
Trust 7 9 principal
Avic trust Fixed-in Self-fu ment Tempora
compan 5,000 M arch M arch and 8.00% 400 0 N/A Yes
co. LTD come nded trust rily no
y 2019 2020 interest
assets
upon
maturity
Total 8,000 -- -- -- -- -- -- 655 250.32 -- -- -- --
Wealth management entrustments with possible impairments including an expectedly unrecoverable principal:
□ Applicable √ Not applicable
VI Investments in Derivative Financial Instruments
√ Applicable □ Not applicable
Unit: RM B’0,000
Ending
Relate
Relation Impair investment Actual
d-part Type
ship Initial Purchased in Sold in ment Ending as % of gain/loss
Counterpa y of Start Beginning
with the investment End date Reporting Reporting allowa investme the in
rty transac derivat date investment
Compan amount Period Period nce (if nt Company’ Reporting
tion or ive
y any) s ending Period
not
net assets
Forwa
rd
11
Commerci Non-con exchan 19 June
No 98,187.76 November 6,512.05 91,675.71 93,944.02 4,243.74 0.53% 776.34
al bank nected ge 2018
2019
settle
ment
Foreig
n 23
Commerci Non-con 30 August
No exchan 16,018.76 M arch 1,909.89 14,108.87 16,018.76 0 40.15
al bank nected 2019
ge 2018
option
Forwa
rd
28
Commerci Non-con exchan 10 M ay
No 3,049.7 Septemb 1,610.11 1,439.59 3,049.7 0 50.04
al bank nected ge 2019
er 2018
transac
tions
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Lu Thai Textile Co., Ltd. Third Quarter Report 2019 (Summary)
Total 117,256.22 -- -- 10,032.05 107,224.17 113,012.48 4,243.74 0.53% 866.53
Funding source Self-funded
Legal matters involved (if applicable) N/A
Disclosure date of board of directors 27 April 2018
announcement on approval of derivative
30 April 2019
investment (if any)
Disclosure date of general meeting of
shareholders announcement on approval of
derivative investment (if any)
The Company conducted derivatives products transaction in order for hedging. And the forward
settlement hedging was operated by installments, with the relevant amount not more than the planned
derivatives products transactions. And all derivatives products transaction was zero-deposit.
M eanwhile, the Company had a complete risk control system for sufficient analysis and prevention
of possible risks such as market risk, liquidity risk and credit risk, operation risk and risk of laws and
regulation.
1. M arket 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.
Analysis of risks and control measures associated Precautionary measures to be taken include: the Company determines the upper limit of derivatives
with derivative investments held in Reporting transaction amounts according to production and operation scale as well as foreign exchange income,
Period (including but not limited to market risk, and conducts operations by stage according to the budget of future collections and disbursement. The
liquidity risk, credit risk, operational risk, legal derivative trades are free of guarantee deposit and can still be guaranteed in performance after the
risk, etc.) 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 Syst em of
Reporting the Abnormal Situation Timely so as to ensure to lower the operation risks to the
maximum.
4. Risk of laws and regulation:
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Lu Thai Textile Co., Ltd. Third Quarter Report 2019 (Summary)
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 M anagement 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 17 th M eeting of the
8th Board of Directors on 25 April 2018 and the 26 th M eeting of the 8th Board of Directors on 29
April 2019, and performed relevant information disclosure responsibilities.
1. As of 30 September 2019, the Company held financial derivative worth USD6 million in totals,
which was forward settlement of exchange executed in accordance with the contracts. The latest
contract expiration date was 11 November 2019. Financial derivatives occupied 0.53 % of the net
assets as at the period end.
Changes in market prices or fair value of
2. In Q1~Q3 2019, the amount of maturing financial derivatives of the Company amounted to
derivative investments in Reporting Period (fair
USD165.0969 million which was executed as per the contract in full, which generated an income of
value analysis should include measurement
RM B8.6653 million. The delivery amount of forward settlement of exchange amounted to
method and related assumptions and parameters)
USD137.1132 million which generated an income of RM B7.7634 million; the delivery amount of
foreign exchange options was USD23.5 million which generated an income of RM B0.4015 million.
The delivery amount of foreign exchange transaction amounted to USD4.4837 million which
generated an income of RM B0.5004 million.
M ajor changes in accounting policies and specific
accounting principles adopted for derivative
No significant changes
investments in Reporting Period compared to last
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 derivative
transactions with focus on forward settlement and purchase as an effective tool to avoid foreign
Opinion of independent directors on derivative
exchange risks, to strengthen the relevant internal control and to carry out the loss and risk
investments and risk control
prevention measures so as to improve the operation and management. In conducting derivative
transactions with focus on forward settlement and purchase, the Company follows a legal approval
procedure, has sound relevant institutions and keeps the risks relatively controllable. No harm has
been done to the interests of the Company’s shareholders.
VII Communications with the Investment Community such as Researches, Inquiries and
Inte rvie ws during the Reporting Period
√ Applicable □ Not applicable
Date Way of communication Type of communication Index to main information
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Lu Thai Textile Co., Ltd. Third Quarter Report 2019 (Summary)
party communicated
29 M arch 2019 By phone Individual Basic information of the Company
VIII Irregularities in the Provision of Guarantees
□ Applicable √ Not applicable
No such cases in the Reporting Period.
IX Occupation of the Company’s Capital by the Controlling Shareholder or Its Related
Parties for Non-Operating Purposes
□ Applicable √ Not applicable
No such cases in the Reporting Period.
Signature of the Chairman of the Board: Liu Zibin
Lu Thai Textile Co., Ltd.
30 October 2019
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