Lu Thai Textile Co., Ltd. Third Quarter Report 2019 LU THAI TEXTILE CO., LTD. THIRD QUARTER REPORT 2019 October 2019 1 Lu Thai Textile Co., Ltd. Third Quarter Report 2019 Part I Important Notes 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. (together with its consolidated subsidiaries, the “Company”, except where the context otherwise requires) 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. 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 English. Should there be any discrepancies or misunderstandings between the two versions, the Chinese versions shall prevail. 2 Lu Thai Textile Co., Ltd. Third Quarter Report 2019 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 (RMB) Q3 2019 YoY change (%) Q1-Q3 2019 YoY change (%) Operating revenue (RMB) 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 (RMB) Net profit attributable to the listed company’s 172,442,753.62 -23.06% 549,259,289.55 -6.99% shareholders before exceptional items (RMB) Net cash generated from/used in operating activities -- -- 481,803,616.13 -57.10% (RMB) Basic earnings per share (RMB/share) 0.20 -13.04% 0.68 6.25% Diluted earnings per share (RMB/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: RMB 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 3 Lu Thai Textile Co., Ltd. Third Quarter Report 2019 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 Number of Shareholders and Holdings of Top 10 Shareholders 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 Management 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 Monetary 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 4 Lu Thai Textile Co., Ltd. Third Quarter Report 2019 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 RMB-denominated ordinary stock 140,353,583 Hong Kong Securities Clearing Co. Ltd 25,984,811 RMB-denominated ordinary stock 25,984,811 Central Huijin Assets Management Co., Ltd. 20,315,300 RMB-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 RMB-denominated ordinary stock 18,313,391 Hong Kong Monetary Authority-Self-owned Fund 17,487,884 RMB-denominated ordinary stock 17,487,884 National Social Security Fund Portfolio 103 11,999,897 RMB-denominated ordinary stock 11,999,897 National Social Security Fund Portfolio 413 8,190,051 RMB-denominated ordinary stock 8,190,051 ASSICURAZIONI GENERALI-DIVIDEND 2 6,558,889 RMB-denominated ordinary stock 6,558,889 RBC EMERGING MARKETS SMALL 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 holding 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 5 Lu Thai Textile Co., Ltd. Third Quarter Report 2019 Part III Significant Events I Changes in Key Financial Statement 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 Prepayments 196,906,160.26 149,582,616.21 31.64% of 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 1,325,273,780.0 Increase in borrowings from banks in the Short-term borrowings 2,117,741,665.40 59.80% 5 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 borrowings 18,961,030.32 170,019,083.89 -88.85% borrowings into current portion of non-current liabilities Capital stock premium from repurchased Capital reserve 256,632,428.28 699,493,647.48 -63.31% B-shares 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 Other comprehensive 111,894,866.80 61,157,013.37 82.96% translation of foreign currency-denominated income financial statements in the Reporting Period Item Q1~Q3 2019 Q1~Q3 2018 Change Reason for change Increase in interest expense in the Reporting Finance cost 61,156,464.30 37,733,821.10 62.07% Period Investment income 16,777,341.81 -18,388,041.25 191.24% Increase in income from investments in 6 Lu Thai Textile Co., Ltd. Third Quarter Report 2019 derivative financial instruments and associated enterprises in the Reporting Period Losses on changes in fair value of Gain on changes in fair 5,638,067.04 -44,112,150.00 112.78% fails-to-delivery derivative financial instruments value of the same period of last year Recognition of disposal income from demolition Asset disposal income 162,416.20 23,233,253.44 -99.30% by Xinjiang Lu Thai in the same period of last year Payments for relief donations in the Reporting Non-operating expense 9,785,667.21 3,623,862.73 170.03% Period Increase in net cash outflow in relation to operating activities: 1. YoY increase of RMB331 million in cash paid for purchase of commodities Net cash generated and acceptance of labor services, which driven 1,123,152,616.7 from/used in operating 481,803,616.13 -57.10% by increase in payments for cotton; 2. YoY 5 activities decrease of RMB222 million in cash received from sales of commodities and providing of labor services, which driven by decline in sales of products YoY decrease in payments for B-share Net cash generated repurchase and YoY increase in cash received from/used in financing 212,302,378.28 -288,801,161.03 173.51% from obtaining borrowings in the Reporting activities Period II Progress, Influence and Solutions with regard to Significant Events √ Applicable □ Not applicable The 28th Meeting of the 8th Board of Directors reviewed and approved ten proposals on 23 May 2019, including the Proposal of Meeting 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 May 2019. The 3rd Extraordinary General Meeting of 2019 reviewed and approved ten proposals on 16 September 2019, including the Proposal of Meeting 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 The progress of relevant matters for public 24 May 2019 Announcements on www.cninfo.com.cn issuance of A-share Convertible Corporate 17 September 2019 Announcements on www.cninfo.com.cn 7 Lu Thai Textile Co., Ltd. Third Quarter Report 2019 Bonds 15 October 2019 Announcements on www.cninfo.com.cn Progress of any share repurchase: □ Applicable √ Not applicable Progress of any reduction of the repurchased shares through centralized 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 Management Entrustment √ Applicable □ Not applicable Unit: RMB'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: RMB’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) Gopher Fund 22 26 Granti Annual Fixed-in Self-fu Tempora Asset corporati 3,000 Dece Dece ng of payment 8.50% 255 250.32 N/A Yes come nded rily no Managemen on mber mber trust of 8 Lu Thai Textile Co., Ltd. Third Quarter Report 2019 t Co., Ltd 2017 2019 loans interests to and HOM payment E of CRED principal IT upon maturity Payment of Invest Trust 7 9 principal Avic trust Fixed-in Self-fu ment Tempora compan 5,000 March March 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: RMB’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 March 1,909.89 14,108.87 16,018.76 0 40.15 al bank nected 2019 ge 2018 option Commerci Non-con Forwa 28 10 May No 3,049.7 1,610.11 1,439.59 3,049.7 0 50.04 al bank nected rd Septemb 2019 9 Lu Thai Textile Co., Ltd. Third Quarter Report 2019 exchan er 2018 ge transac tions 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. Meanwhile, 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. 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. Analysis of risks and control measures associated 2. Liquidity risk and credit risk: a credit risk arising from failure of the contractually due Company with derivative investments held in Reporting or counterparty in performing the contract due to liquidity or factors other than liquidity. Period (including but not limited to market risk, Precautionary measures to be taken include: the Company determines the upper limit of derivatives liquidity risk, credit risk, operational risk, legal transaction amounts according to production and operation scale as well as foreign exchange income, risk, etc.) 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 10 Lu Thai Textile Co., Ltd. Third Quarter Report 2019 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 the 26th Meeting 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 RMB8.6653 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 RMB7.7634 million; the delivery amount of foreign exchange options was USD23.5 million which generated an income of RMB0.4015 million. The delivery amount of foreign exchange transaction amounted to USD4.4837 million which generated an income of RMB0.5004 million. Major 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. 11 Lu Thai Textile Co., Ltd. Third Quarter Report 2019 VII Communications with the Investment Community such as Researches, Inquiries and Interviews during the Reporting Period √ Applicable □ Not applicable Type of communication Index to main information Date Way of communication party communicated 29 March 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. 12 Lu Thai Textile Co., Ltd. Third Quarter Report 2019 Part IV Financial Statements I Financial Statements 1. Consolidated Balance Sheet Prepared by Lu Thai Textile Co., Ltd. 30 September 2019 Unit: RMB Item 30 September 2019 31 December 2018 Current assets: Monetary capital 683,353,628.74 545,502,709.36 Trading financial assets 31,501,467.04 Financial assets at fair value through profit or loss Derivative financial assets Notes receivable 129,159,118.93 174,657,918.26 Accounts receivable 379,514,852.15 374,607,116.55 Accounts receivable financing Prepayments 196,906,160.26 149,582,616.21 Other receivables 73,542,617.81 63,012,001.10 Including: Interest receivable 2,365,415.76 Dividends receivable Financial assets purchased under resale agreements Inventories 2,449,924,067.98 2,093,366,992.30 Contractual assets Assets classified as held for sale Current portion of non-current assets 52,256,130.79 Other current assets 72,598,373.59 86,366,454.56 Total current assets 4,068,756,417.29 3,487,095,808.34 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 13 Lu Thai Textile Co., Ltd. Third Quarter Report 2019 Long-term receivables 8,818,242.91 10,693,844.75 Long-term equity investments 98,925,703.04 96,018,463.65 Investments in other equity instruments 12,000,000.00 Other non-current financial assets 31,018,515.95 Investment property 38,266,359.35 22,880,242.95 Fixed assets 5,771,423,930.07 5,748,562,385.35 Construction in progress 502,791,371.42 337,230,646.42 Intangible assets 528,724,915.77 478,689,064.45 Goodwill 20,563,803.29 20,613,803.29 Long-term prepaid expense 150,370,671.30 119,126,407.71 Deferred income tax assets 80,480,242.51 88,636,929.06 Other non-current assets 36,133,166.05 43,100,215.87 Total non-current assets 7,279,516,921.66 7,050,664,003.50 Total assets 11,348,273,338.95 10,537,759,811.84 Current liabilities: Short-term borrowings 2,117,741,665.40 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 22,125,109.37 502,347.05 Accounts payable 229,909,541.78 353,186,163.90 Advances from customers 104,448,976.14 105,562,378.66 Contractual liabilities Payroll payable 298,573,258.40 325,998,210.17 Taxes payable 38,820,588.53 43,556,823.75 Other payables 216,327,314.09 215,946,987.68 Including: Interest payable 7,318,446.67 3,068,841.54 Dividends payable 441,113.64 441,113.64 Liabilities directly associated with assets classified as held for sale Current portion of non-current liabilities 111,331,864.72 Other current liabilities Total current liabilities 3,139,278,318.43 2,374,904,291.26 Non-current liabilities: Long-term borrowings 18,961,030.32 170,019,083.89 14 Lu Thai Textile Co., Ltd. Third Quarter Report 2019 Long-term payables Long-term payroll payable 86,420,799.53 96,958,178.53 Provisions Deferred income 139,134,413.73 140,183,446.39 Deferred income tax liabilities 27,874,484.06 28,030,096.38 Other non-current liabilities 1,840,000.00 1,840,000.00 Total non-current liabilities 274,230,727.64 437,030,805.19 Total liabilities 3,413,509,046.07 2,811,935,096.45 Owners’ equity: Share capital 858,121,541.00 922,602,311.00 Capital reserve 256,632,428.28 699,493,647.48 Less: Treasury stock 486,922,944.94 Other comprehensive income 111,894,866.80 61,157,013.37 Surplus reserves 1,022,717,451.40 1,022,717,451.40 Retained earnings 5,102,136,874.98 4,927,500,989.55 Total equity attributable to owners of the Company as the parent 7,351,503,162.46 7,146,548,467.86 Non-controlling interests 583,261,130.42 579,276,247.53 Total owners’ equity 7,934,764,292.88 7,725,824,715.39 Total liabilities and owners’ equity 11,348,273,338.95 10,537,759,811.84 Legal representative: Liu Zibin The Company’s chief accountant: Zhang Hongmei The Company’s financial manager: Zhang Keming 2. Balance Sheet of the Company as the Parent Unit: RMB Item 30 September 2019 31 December 2018 Current assets: Monetary capital 146,337,238.24 191,305,104.80 Trading financial assets 31,350,000.00 Financial assets at fair value through profit or loss Derivative financial assets Notes receivable 47,978,730.62 91,555,248.34 Accounts receivable 350,747,701.24 316,225,973.28 Accounts receivable financing 15 Lu Thai Textile Co., Ltd. Third Quarter Report 2019 Prepayments 108,525,969.43 115,020,260.51 Other receivables 613,846,460.12 395,847,213.77 Including: Interest receivable Dividends receivable Inventories 1,432,477,318.67 1,040,433,078.53 Contractual assets Assets classified as held for sale Current portion of non-current assets 52,256,130.79 Other current assets 848,975.15 12,671,631.64 Total current assets 2,784,368,524.26 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 2,521,541,019.08 2,165,711,579.69 Investments in other equity instruments Other non-current financial assets 31,018,515.95 Investment property 31,428,015.67 14,804,592.72 Fixed assets 2,668,052,628.86 2,731,726,695.28 Construction in progress 59,479,055.48 61,182,771.86 Intangible assets 237,399,361.88 242,204,032.54 Goodwill Long-term prepaid expense Deferred income tax assets 46,274,665.49 52,758,961.05 Other non-current assets 2,819,450.02 6,047,443.10 Total non-current assets 5,598,012,712.43 5,347,548,076.24 Total assets 8,382,381,236.69 7,510,606,587.11 Current liabilities: Short-term borrowings 928,629,284.35 622,604,447.52 Trading financial liabilities Financial liabilities at fair value through profit or loss 4,877,600.00 Derivative financial liabilities 16 Lu Thai Textile Co., Ltd. Third Quarter Report 2019 Notes payable 420,035,914.66 120,000.00 Accounts payable 158,548,287.20 120,021,727.66 Advances from customers 60,609,258.23 49,798,551.14 Contractual liabilities Payroll payable 222,245,639.71 240,090,943.88 Taxes payable 28,318,102.82 30,914,089.32 Other payables 280,561,093.63 303,672,590.72 Including: Interest payable 6,170,923.39 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 2,098,947,580.60 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 93,190,373.91 94,390,844.09 Deferred income tax liabilities 16,810,230.43 16,699,530.43 Other non-current liabilities Total non-current liabilities 196,421,403.87 208,048,553.05 Total liabilities 2,295,368,984.47 1,580,148,503.29 Owners’ equity: Share capital 858,121,541.00 922,602,311.00 Capital reserves 317,206,232.47 759,836,756.57 Less: Treasury stock 486,922,944.94 Other comprehensive income 520,200.00 Surplus reserves 1,019,608,711.76 1,019,608,711.76 Retained earnings 3,892,075,766.99 3,714,813,049.43 Total owners’ equity 6,087,012,252.22 5,930,458,083.82 Total liabilities and owners’ equity 8,382,381,236.69 7,510,606,587.11 17 Lu Thai Textile Co., Ltd. Third Quarter Report 2019 3. Consolidated Income Statement for Q3 Unit: RMB Item Q3 2019 Q3 2018 1. Revenue 1,626,165,317.03 1,743,184,011.30 Including: Operating revenue 1,626,165,317.03 1,743,184,011.30 Interest income 2. Costs and expenses 1,409,327,905.19 1,441,771,123.15 Including: Cost of sales 1,134,881,337.85 1,202,063,269.94 Interest expense Taxes and surcharges 19,277,202.31 25,517,190.09 Selling expense 39,940,915.79 36,889,477.84 Administrative expense 132,610,760.47 117,159,789.88 R&D expense 74,015,794.52 52,932,799.61 Finance costs 8,601,894.25 7,208,595.79 Including: Interest expense 19,779,508.78 16,558,359.20 Interest income 2,710,018.22 5,662,375.52 Add: Other income 3,734,368.66 9,124,879.25 Return on investment (“-” for loss) 6,359,866.40 -23,034,065.03 Including: Share of profit or loss of joint ventures and -1,712,208.40 -1,055,310.06 associates Derecognition income of financial assets measured at amortized cost Foreign exchange gain (“-” for loss) Net gain on exposure hedges (“-” for loss) Gain on changes in fair value (“-” for loss) 355,467.04 -15,631,140.00 Credit impairment loss (“-” for loss) -486,217.28 Asset impairment loss (“-” for loss) -6,458,082.21 -2,893,902.64 Asset disposal income (“-” for loss) -351,073.80 23,755,540.09 3. Operating profit (“-” for loss) 219,991,740.65 292,734,199.82 Add: Non-operating income 971,245.09 2,673,434.80 Less: Non-operating expense 7,571,310.67 1,628,939.02 4. Profit before tax (“-” for loss) 213,391,675.07 293,778,695.60 Less: Income tax expense 29,571,059.77 44,321,359.81 5. Net profit (“-” for net loss) 183,820,615.30 249,457,335.79 18 Lu Thai Textile Co., Ltd. Third Quarter Report 2019 5.1 By operating continuity 5.1.1 Net profit from continuing operations (“-” for net loss) 183,820,615.30 249,457,335.79 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 176,453,154.53 209,540,056.51 parent 5.2.2 Net profit attributable to non-controlling interests 7,367,460.77 39,917,279.28 6. Other comprehensive income, net of tax 39,451,542.18 24,566,771.97 Attributable to owners of the Company as the parent 39,451,542.18 24,566,771.97 6.2 Items that will be reclassified to profit or loss 39,451,542.18 24,566,771.97 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 -344,250.00 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 6.2.8 Differences arising from the translation of foreign 39,451,542.18 24,911,021.97 currency-denominated financial statements 6.2.9 Other Attributable to non-controlling interests 7. Total comprehensive income 223,272,157.48 274,024,107.76 Attributable to owners of the Company as the parent 215,904,696.71 234,106,828.48 Attributable to non-controlling interests 7,367,460.77 39,917,279.28 8. Earnings per share 8.1 Basic earnings per share 0.20 0.23 8.2 Diluted earnings per share 0.20 0.23 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 The Company’s chief accountant: Zhang Hongmei The Company’s financial manager: Zhang Keming 19 Lu Thai Textile Co., Ltd. Third Quarter Report 2019 4. Income Statement of the Company as the Parent for Q3 Unit: RMB Item Q3 2019 Q3 2018 1. Operating revenue 1,228,054,030.71 1,311,467,279.35 Less: Cost of sales 915,369,284.69 969,922,821.85 Taxes and surcharges 12,937,532.49 17,215,045.88 Selling expense 22,518,421.20 20,317,829.54 Administrative expense 78,566,335.27 75,809,175.22 R&D expense 52,844,715.85 37,589,240.19 Finance costs 6,719,151.21 4,383,922.13 Including: Interest expense 7,263,684.00 5,775,599.84 Interest income 741,357.06 418,784.42 Add: Other income 4,331,634.30 4,231,549.46 Return on investment (“-” for loss) 23,766,350.02 -1,036,006.41 Including: Share of profit or loss of joint ventures and -1,712,208.40 -1,055,310.06 associates Derecognition income of financial assets measured at amortized cost Net gain on exposure hedges (“-” for loss) Gain on changes in fair value (“-” for loss) 204,000.00 -11,551,800.00 Credit impairment loss (“-” for loss) -59,892.99 Asset impairment loss (“-” for loss) -2,207,675.19 Asset disposal income (“-” for loss) -287,498.05 -60,714.02 2. Operating profit (“-” for loss) 167,053,183.28 175,604,598.38 Add: Non-operating income 767,005.32 2,629,812.70 Less: Non-operating expense 5,622,462.22 1,220,654.32 3. Profit before tax (“-” for loss) 162,197,726.38 177,013,756.76 Less: Income tax expense 22,824,927.87 24,375,571.27 4. Net profit (“-” for net loss) 139,372,798.51 152,638,185.49 4.1 Net profit from continuing operations (“-” for net loss) 139,372,798.51 152,638,185.49 4.2 Net profit from discontinued operations (“-” for net loss) 5. Other comprehensive income, net of tax -344,250.00 5.2 Items that will be reclassified to profit or loss -344,250.00 5.2.1 Other comprehensive income that will be reclassified to profit or loss under the equity method 20 Lu Thai Textile Co., Ltd. Third Quarter Report 2019 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 -344,250.00 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 6. Total comprehensive income 139,372,798.51 152,293,935.49 7. Earnings per share 7.1 Basic earnings per share 0.16 0.16 7.2 Diluted earnings per share 0.16 0.16 5. Consolidated Income Statement for Q1~Q3 Unit: RMB Item Q1~Q3 2019 Q1~Q3 2018 1. Revenue 4,811,613,661.04 5,023,591,787.12 Including: Operating revenue 4,811,613,661.04 5,023,591,787.12 Interest income 2. Operating costs and expenses 4,146,487,815.45 4,280,415,032.81 Including: Cost of sales 3,345,768,293.38 3,562,899,701.35 Interest income Taxes and surcharges 62,014,007.08 79,987,597.97 Selling expense 117,777,858.73 103,830,566.40 Administrative expense 323,816,358.21 280,434,300.58 R&D expense 235,954,833.75 215,529,045.41 Finance costs 61,156,464.30 37,733,821.10 Including: Interest expense 67,095,974.54 39,093,671.25 Interest income 7,048,783.32 13,065,868.54 Add: Other income 35,960,594.57 46,267,401.20 Investment income (“-” for loss) 16,777,341.81 -18,388,041.25 21 Lu Thai Textile Co., Ltd. Third Quarter Report 2019 Including: Share of profit or loss of joint ventures and 3,370,893.14 -2,785,907.65 associates Derecognition income of financial assets measured at amortized cost Foreign exchange gain (“-” for loss) Net gain on exposure hedges (“-” for loss) Gain on changes in fair value (“-” for loss) 5,638,067.04 -44,112,150.00 Credit impairment loss (“-” for loss) -1,017,168.59 Asset impairment loss (“-” for loss) -8,001,281.59 -5,015,397.48 Asset disposal income (“-” for loss) 162,416.20 23,233,253.44 3. Operating profit (“-” for loss) 714,645,815.03 745,161,820.22 Add: Non-operating income 4,068,269.53 5,680,589.63 Less: Non-operating expense 9,785,667.21 3,623,862.73 4. Profit before tax (“-” for loss) 708,928,417.35 747,218,547.12 Less: Income tax expense 104,410,292.06 107,596,874.38 5. Net profit (“-” for net loss) 604,518,125.29 639,621,672.74 5.1 By operating continuity 5.1.1 Net profit from continuing operations (“-” for net loss) 604,518,125.29 639,621,672.74 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 587,899,371.12 586,896,015.53 parent 5.2.2 Net profit attributable to non-controlling interests 16,618,754.17 52,725,657.21 6. Other comprehensive income, net of tax 51,258,053.43 52,126,425.89 Attributable to owners of the Company as the parent 51,258,053.43 52,126,425.89 6.2 Items that will be reclassified to profit or loss 51,258,053.43 52,126,425.89 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 675,750.00 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 22 Lu Thai Textile Co., Ltd. Third Quarter Report 2019 6.2.7 Reserve for cash flow hedges 6.2.8 Differences arising from the translation of foreign 51,258,053.43 51,450,675.89 currency-denominated financial statements 6.2.9 Other Attributable to non-controlling interests 7. Total comprehensive income 655,776,178.72 691,748,098.63 Attributable to owners of the Company as the parent 639,157,424.55 639,022,441.42 Attributable to non-controlling interests 16,618,754.17 52,725,657.21 8. Earnings per share 8.1 Basic earnings per share 0.68 0.64 8.2 Diluted earnings per share 0.68 0.64 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 The Company’s chief accountant: Zhang Hongmei The Company’s financial manager: Zhang Keming 6. Income Statement of the Company as the Parent for Q1~Q3 Unit: RMB Item Q1~Q3 2019 Q1~Q3 2018 1. Operating revenue 3,716,383,597.08 3,815,256,129.99 Less: Cost of sales 2,763,237,736.46 2,831,327,287.54 Taxes and surcharges 41,622,943.89 57,522,630.63 Selling expense 68,978,522.39 58,633,294.63 Administrative expense 193,912,329.35 175,674,751.06 R&D expense 163,862,447.14 152,490,515.84 Finance costs 19,312,970.11 15,775,202.00 Including: Interest expense 22,211,902.54 11,499,059.62 Interest income 2,448,462.24 3,615,417.12 Add: Other income 24,502,578.64 32,824,295.66 Investment income (“-” for loss) 180,695,074.92 881,396.52 Including: Share of profit or loss of joint ventures and 3,370,893.14 -2,785,907.65 associates Derecognition income of financial assets measured at amortized cost Net gain on exposure hedges (“-” for loss) 23 Lu Thai Textile Co., Ltd. Third Quarter Report 2019 Gain on changes in fair value (“-” for loss) 5,486,600.00 -30,399,300.00 Credit impairment loss (“-” for loss) -2,593,516.95 Asset impairment loss (“-” for loss) -1,025,520.28 Asset disposal income (“-” for loss) 306,167.84 -9,093,464.10 2. Operating profit (“-” for loss) 673,853,552.19 517,019,856.09 Add: Non-operating income 3,077,515.36 4,494,842.92 Less: Non-operating expense 6,646,250.89 2,339,681.53 3. Profit before tax (“-” for loss) 670,284,816.66 519,175,017.48 Less: Income tax expense 79,758,613.41 81,334,892.78 4. Net profit (“-” for net loss) 590,526,203.25 437,840,124.70 4.1 Net profit from continuing operations (“-” for net loss) 590,526,203.25 437,840,124.70 4.2 Net profit from discontinued operations (“-” for net loss) 5. Other comprehensive income, net of tax 675,750.00 5.2 Items that will be reclassified to profit or loss 675,750.00 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 675,750.00 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 6. Total comprehensive income 590,526,203.25 438,515,874.70 7. Earnings per share 7.1 Basic earnings per share 0.69 0.47 7.2 Diluted earnings per share 0.69 0.47 7. Consolidated Cash Flow Statement for Q1~Q3 Unit: RMB 24 Lu Thai Textile Co., Ltd. Third Quarter Report 2019 Item Q1~Q3 2019 Q1~Q3 2018 1. Cash flows from operating activities: Proceeds from sale of commodities and rendering of services 4,697,089,850.71 4,919,565,086.62 Tax rebates 161,177,878.89 163,977,565.90 Cash generated from other operating activities 91,028,581.53 72,652,513.56 Subtotal of cash generated from operating activities 4,949,296,311.13 5,156,195,166.08 Payments for commodities and services 2,761,552,075.30 2,430,285,387.35 Cash paid to and for employees 1,266,692,936.92 1,234,503,411.97 Taxes paid 232,669,382.58 195,779,524.72 Cash used in other operating activities 206,578,300.20 172,474,225.29 Subtotal of cash used in operating activities 4,467,492,695.00 4,033,042,549.33 Net cash generated from/used in operating activities 481,803,616.13 1,123,152,616.75 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 2,662,361.66 32,556,953.49 and other long-lived assets Cash generated from other investing activities 18,383,297.66 76,342,399.31 Subtotal of cash generated from investing activities 53,447,798.06 108,899,352.80 Payments for the acquisition of fixed assets, intangible assets and 611,715,722.57 806,532,720.12 other long-lived assets Payments for investments 50,000,000.00 Cash used in other investing activities 4,874,724.40 27,629,580.00 Subtotal of cash used in investing activities 666,590,446.97 834,162,300.12 Net cash generated from/used in investing activities -613,142,648.91 -725,262,947.32 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 3,108,669,601.05 2,376,163,674.80 Cash generated from other financing activities 110,000,000.00 85,500,000.00 Subtotal of cash generated from financing activities 3,268,669,601.05 2,462,163,674.80 Repayments of borrowings 2,398,405,094.49 1,842,546,176.23 Payments for interest and dividends 545,798,024.25 496,450,783.83 Including: Dividends paid by subsidiaries to non-controlling 62,023,566.38 12,023,566.38 interests 25 Lu Thai Textile Co., Ltd. Third Quarter Report 2019 Cash used in other financing activities 112,164,104.03 411,967,875.77 Subtotal of cash used in financing activities 3,056,367,222.77 2,750,964,835.83 Net cash generated from/used in financing activities 212,302,378.28 -288,801,161.03 4. Effect of foreign exchange rate changes on cash and cash 14,142,881.59 17,794,234.31 equivalents 5. Net increase in cash and cash equivalents 95,106,227.09 126,882,742.71 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 630,240,999.99 803,521,955.57 8. Cash Flow Statement of the Company as the Parent Q1~Q3 Unit: RMB Item Q1~Q3 2019 Q1~Q3 2018 1. Cash flows from operating activities: Proceeds from sale of commodities and rendering of services 3,614,205,464.15 3,785,633,830.30 Tax rebates 117,003,748.15 106,532,179.75 Cash generated from other operating activities 28,034,497.06 43,398,321.95 Subtotal of cash generated from operating activities 3,759,243,709.36 3,935,564,332.00 Payments for commodities and services 2,030,728,889.86 2,128,325,245.47 Cash paid to and for employees 833,777,571.31 892,249,851.42 Taxes paid 132,287,115.34 126,464,943.27 Cash used in other operating activities 103,194,693.82 101,507,637.23 Subtotal of cash used in operating activities 3,099,988,270.33 3,248,547,677.39 Net cash generated from/used in operating activities 659,255,439.03 687,016,654.61 2. Cash flows from investing activities: Proceeds from disinvestment 30,000,000.00 Return on investment 170,378,572.36 17,976,433.62 Net proceeds from the disposal of fixed assets, intangible assets 2,670,316.61 91,081,938.50 and other long-lived assets Net proceeds from the disposal of subsidiaries and other business units Cash generated from other investing activities 102,390,079.19 489,871,987.82 Subtotal of cash generated from investing activities 305,438,968.16 598,930,359.94 Payments for the acquisition of fixed assets, intangible assets and 154,894,842.57 164,450,789.04 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 26 Lu Thai Textile Co., Ltd. Third Quarter Report 2019 units Cash used in other investing activities 247,450,344.40 382,356,069.93 Subtotal of cash used in investing activities 805,267,386.97 897,159,358.97 Net cash generated from/used in investing activities -499,828,418.81 -298,228,999.03 3. Cash flows from financing activities: Capital contributions received Borrowings obtained 1,743,028,577.13 1,414,730,254.38 Cash generated from other financing activities 317,313,300.00 241,357,600.00 Subtotal of cash generated from financing activities 2,060,341,877.13 1,656,087,854.38 Repayments of borrowings 1,463,702,550.96 1,189,079,694.80 Payments for interest and dividends 444,520,651.34 458,408,100.12 Cash used in other financing activities 359,508,204.03 411,967,875.77 Subtotal of cash used in financing activities 2,267,731,406.33 2,059,455,670.69 Net cash generated from/used in financing activities -207,389,529.20 -403,367,816.31 4. Effect of foreign exchange rate changes on cash and cash 2,994,642.42 -3,518,381.48 equivalents 5. Net increase in cash and cash equivalents -44,967,866.56 -18,098,542.21 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 146,337,238.24 249,711,287.57 II Adjustments to the Financial Statements 1. Adjustments to the Financial Statements at the Beginning of the Execution of any New Standards Governing Financial Instruments, Revenue or Leases from 2019 √ 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 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 Prepayments 149,582,616.21 149,582,616.21 27 Lu Thai Textile Co., Ltd. Third Quarter Report 2019 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 Contractual assets Assets classified as held for sale Current portion of non-current assets Other current assets 86,366,454.56 86,366,454.56 Total current assets 3,487,095,808.34 3,547,707,808.34 60,612,000.00 Non-current assets: Investments in debt obligations Available-for-sale financial assets 85,112,000.00 -85,112,000.00 Investments in other debt obligations Held-to-maturity investments Long-term receivables 10,693,844.75 10,693,844.75 Long-term equity investments 96,018,463.65 95,554,809.90 -463,653.75 Investments in other equity instruments 12,000,000.00 12,000,000.00 Other non-current financial assets 31,018,515.95 31,018,515.95 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 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 expense 119,126,407.71 119,126,407.71 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 Trading financial liabilities Financial liabilities at fair value through profit or loss 4,877,600.00 -4,877,600.00 28 Lu Thai Textile Co., Ltd. Third Quarter Report 2019 Derivative financial liabilities 4,877,600.00 4,877,600.00 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 Contractual liabilities 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 payable 3,068,841.54 3,068,841.54 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 2,374,904,291.26 2,374,904,291.26 Non-current liabilities: Insurance contract reserve Long-term borrowings 170,019,083.89 170,019,083.89 Bonds payable Including: Preferred shares Perpetual bonds 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 liabilities 28,030,096.38 28,030,096.38 Other non-current liabilities 1,840,000.00 1,840,000.00 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 Capital reserves 699,493,647.48 699,493,647.48 Less: Treasury stock 486,922,944.94 486,922,944.94 Other comprehensive income 61,157,013.37 60,636,813.37 -520,200.00 Specific reserve 29 Lu Thai Textile Co., Ltd. Third Quarter Report 2019 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 the 7,146,548,467.86 7,161,825,552.67 15,277,084.81 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’ equity 10,537,759,811.84 10,553,036,896.65 15,277,084.81 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 Accounts receivable financing Prepayments 115,020,260.51 115,020,260.51 Other receivables 395,847,213.77 395,847,213.77 30 Lu Thai Textile Co., Ltd. Third Quarter Report 2019 Including: Interest receivable Dividends receivable Inventories 1,040,433,078.53 1,040,433,078.53 Contractual assets Assets classified as held 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 assets 73,112,000.00 -73,112,000.00 Investments in other debt obligations Held-to-maturity investments Long-term receivables Long-term equity investments 2,165,711,579.69 2,165,247,925.94 -463,653.75 Investments in other equity instruments Other non-current financial assets 31,018,515.95 31,018,515.95 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 Intangible assets 242,204,032.54 242,204,032.54 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: Short-term borrowings 622,604,447.52 622,604,447.52 Trading financial liabilities Financial liabilities at fair value through profit or loss 4,877,600.00 -4,877,600.00 Derivative financial liabilities 4,877,600.00 4,877,600.00 Notes payable 120,000.00 120,000.00 Accounts payable 120,021,727.66 120,021,727.66 31 Lu Thai Textile Co., Ltd. Third Quarter Report 2019 Advances from customers 49,798,551.14 49,798,551.14 Contractual 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 payable 2,475,549.88 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 1,372,099,950.24 1,372,099,950.24 Non-current liabilities: Long-term borrowings Long-term payables Long-term payroll payable 96,958,178.53 96,958,178.53 Provisions Deferred income 94,390,844.09 94,390,844.09 Deferred income tax liabilities 16,699,530.43 16,699,530.43 Non-current liabilities Total non-current liabilities 208,048,553.05 208,048,553.05 Total liabilities 1,580,148,503.29 1,580,148,503.29 Owners’ equity: Share capital 922,602,311.00 922,602,311.00 Capital reserves 759,836,756.57 759,836,756.57 Less: Treasury stock 486,922,944.94 486,922,944.94 Other comprehensive income 520,200.00 -520,200.00 Specific reserves Surplus reserves 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’ equity 7,510,606,587.11 7,525,883,671.92 15,277,084.81 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, 32 Lu Thai Textile Co., Ltd. Third Quarter Report 2019 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. 2. Retrospective Restatement of Previous Comparative Data due to the Execution of any New Standards Governing Financial Instruments or Leases from 2019 □ Applicable √ Not applicable III Independent Auditor’s Report Indicate by tick mark whether the financial statements above have been audited by an independent auditor. □Yes √ No These financial statements have not been audited by such an auditor. Signature of the Chairman of the Board: Liu Zibin Lu Thai Textile Co., Ltd. 30 October 2019 33