Lu Thai Textile Co., Ltd. Interim Report 2022
LU THAI TEXTILE CO., LTD.
INTERIM REPORT 2022
August 2022
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Lu Thai Textile Co., Ltd. Interim Report 2022
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, and Zhang Keming, head of accounting affairs
and head of the accounting department (equivalent to accounting manager) hereby guarantee
that the Financial Statements carried in this Report are factual, accurate and complete.
All the Company’s directors have attended the Board meeting for the review of this Report
and its summary.
The Company is subject to the disclosure requirements for listed companies engaging in
textile and apparel as stated in Guideline No. 3 of the Shenzhen Stock Exchange for Self-
regulation of Listed Companies—Industry-specific Information Disclosure.
Since 2022, affected by domestic pandemic rebound and more complicated international,
political and economic environments, China's textile industry has faced regional phased work
and production stoppages, blocked logistics operations and hikes in the prices of raw
materials. Since May, as the domestic pandemic control has become steady and the recovery
in production and logistics accelerated, leading operating indicators of the textile industry
have rallied despite pressure, reflecting robust resilience and anti-risk ability under the
support of national "stable growth" policies and measures. On the other hand, China's
exported textiles and apparel achieved steady growth. Data from the China's Customs shows
that in the first half of 2022, the country's exported textiles and apparel totaled USD156.49
billion, a year-on-year increase of 11.7%. Under the support of a rise in export prices, the
exported amount hit a record high year on year. In terms of export markets, the supply chain
of textile in Southeast Asia and other countries operates normally this year, which drives the
sound growth of supply chains of exported fabrics, yarns and other supporting products. In
the first half of 2022, China exported textiles and apparel of USD27.71 billion to the ASEAN,
up 23.3% year on year. In addition, the country's export to the member states of the Regional
Comprehensive Economic Partnership ("RCEP") amounted to USD45.57 billion, up 13.7%
year on year, demonstrating that the implementation of the RCEP benefits a steady and sound
export environment. In 2022, the textile industry is confronted with complicated development
status and challenges to stable operations. Moreover, the production and operating pressure
textile enterprises face is prominent.
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.
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Lu Thai Textile Co., Ltd. Interim Report 2022
Table of Contents
Part I Important Notes, Table of Contents and Definitions........................................................... 2
Part II Corporate Information and Key Financial Information................................................... 6
Part III Management Discussion and Analysis................................................................................9
Part IV Corporate Governance.......................................................................................................31
Part V Environmental and Social Responsibility.......................................................................... 35
Part VI Significant Events............................................................................................................... 39
Part VII Share Changes and Shareholder Information................................................................48
Part VIII Preferred Shares.............................................................................................................. 62
Part IX Bonds................................................................................................................................... 63
Part X Financial Statements............................................................................................................67
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Lu Thai Textile Co., Ltd. Interim Report 2022
Documents Available for Reference
1. The financial statements signed and stamped by the Company’s legal representative and head of accounting
affairs and head of the accounting department; and
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.
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Lu Thai Textile Co., Ltd. Interim Report 2022
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 ten thousand
RMB, RMB’0,000
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 2022 to 30 June 2022
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Lu Thai Textile Co., Ltd. Interim Report 2022
Part II Corporate Information and Key Financial Information
I Corporate Information
Stock name LTTC, LTTC-B Stock code 000726, 200726
Previous stock name (if any) N/A
Stock exchange for stock listing Shenzhen Stock Exchange
Company name in Chinese 鲁泰纺织股份有限公司
Abbr. (if any) 鲁泰纺织
Company name in English (if any) LU THAI TEXTILE CO.，LTD
Abbr. (if any) LTTC
Legal representative Liu Zibin
II Contact Information
Board Secretary Securities Representative
Name Zhang Keming Zheng Weiyin and Li Kun
No. 81, Songling East Road, Zichuan No. 81, Songling East Road, Zichuan District,
Address
District, Zibo, Shandong, P.R.China 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 2021 Annual Report.
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 2021 Annual Report.
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Lu Thai Textile Co., Ltd. Interim Report 2022
3. Other Information
Indicate by tick mark whether any change occurred to other information in the Reporting Period.
□ Applicable Not applicable
IV Key Financial Information
Indicate by tick mark whether there is any retrospectively restated datum in the table below.
□ Yes No
H1 2022 H1 2021 Change (%)
Operating revenue (RMB) 3,330,294,463.25 2,220,313,650.94 49.99%
Net profit attributable to the listed company’s shareholders
393,950,852.46 153,497,344.66 156.65%
(RMB)
Net profit attributable to the listed company’s shareholders
365,579,229.64 54,281,532.08 573.49%
before exceptional gains and losses (RMB)
Net cash generated from/used in operating activities (RMB) 117,482,408.74 182,761,025.14 -35.72%
Basic earnings per share (RMB/share) 0.45 0.17 164.71%
Diluted earnings per share (RMB/share) 0.39 0.19 105.26%
Weighted average return on equity (%) 4.77% 1.97% 2.80%
30 June 2022 31 December 2021 Change (%)
Total assets (RMB) 13,463,610,485.81 12,987,221,271.63 3.67%
Equity attributable to the listed company’s shareholders
8,451,359,392.81 7,983,307,400.03 5.86%
(RMB)
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.
VI Exceptional Gains and Losses
Applicable □ Not applicable
Unit: RMB
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Lu Thai Textile Co., Ltd. Interim Report 2022
Item Amount Note
Gain or loss on disposal of non-current assets (inclusive of impairment allowance write-offs) 2,696,076.03
Government subsidies charged to current profit or loss (exclusive of government subsidies consistently given
in the Company’s ordinary course of business at fixed quotas or amounts as per governmental policies or 27,720,772.37
standards)
Gain or loss on fair-value changes in held-for-trading financial assets and liabilities & income from disposal of
held-for-trading financial assets and liabilities and available-for-sale financial assets (exclusive of the effective 5,594,541.44
portion of hedges that arise in the Company’s ordinary course of business)
Reversed portions of impairment allowances for receivables which are tested individually for impairment 395,260.56
Non-operating income and expense other than the above 833,061.06
Less: Income tax effects 8,618,329.50
Non-controlling interests effects (net of tax) 249,759.14
Total 28,371,622.82
Particulars about other items that meet the definition of exceptional gain/loss:
□ Applicable Not applicable
No such cases for the Reporting Period.
Explanation of why the Company reclassifies as recurrent an exceptional gain/loss item 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 2022
Part III Management Discussion and Analysis
I Principal Activity of the Company in the Reporting Period
In the first half of 2022, the Company encountered a more complex and severe market environment featuring the recurrent COVID-
19 pandemic, geopolitical conflicts, increasing energy prices across the world, and high inflation. In face of challenges, the Company
adhered to the "customer-focused" philosophy and continues to promote the strategies of "Improve Quality and Efficiency" and
"Overall Internationalization". Under the premise of implementing pandemic prevention and control, the Company ensures an
orderly advance in staff production and life, management and operation through expanding the market, adjusting the structure and
building capabilities. Supported by its international supply chain and business portfolio, the Company continued to provide quality
products and services for customers at home and abroad. During the Reporting Period, the product order and business performance
have gradually recovered.
For the Reporting Period, the Company achieved operating revenue of RMB3,330 million, operating profit of RMB460 million, a net
profit attributable to the Company as the parent of RMB394 million, and a net profit attributable to the Company as the parent before
exceptional gains and losses of RMB366 million, respectively up 49.99%, 175.64%, 156.65% and 573.49% when compared to the
same period of last year. No changes occurred to the Company’s principal operations, products or business models, or the primary
factors driving the Company’s growth in the Reporting Period.
During the Reporting Period, the Company has been rated as the "Enterprise with Competitive Edges among China's Textile and
Apparels Brands" by China National Textile and Apparel Council, as the "Top 30 Enterprises in 2022 in the Dyeing and Printing
Industry" by China Dyeing and Printing Association, and as the "AAA Credit Enterprise in Business Credit Assessment" by China
Enterprise Confederation and China Enterprise Directors Association. The Company has prioritized the following aspects:
(I) Deepen and improve the management to enhance the operation efficiency
Confronted by the complicated global economic status, the recurrent pandemic and uncertainties of domestic economic environment,
the management of the Company centered around customers, explored ideas to improve its management, and continued the LTPS
construction. Also, the Company underlined its social responsibility and compliance management, established a performance
appraisal system oriented by results, and deepened information-based support and big data mining and application. By refined
procedures and information-based management, we braced the product lines and marketing, R&D, and other departments to raise the
operation efficiency.
(II) Respond to changes in markets and adjust marking strategies centered around customers
The Company consistently strengthened the market development with a direction of becoming a globalized apparel solution provider
with advanced fabrics as our pillar. Based on accurate grasp of market trend and customer demand, service upgrade was
comprehensively achieved and win-win cooperation with customers realized. Under the gradual influence of complex and changeable
COVID-19 pandemic and in line with the changes in domestic and foreign markets, the market structure was adjusted and optimized,
product type increased actively and business of career apparel promoted further. Additionally, customer relations and stickiness were
built and customized development projects promoted.
Focused on the core demands of customers and the trends in industrial development, the Company refined the internal model of
scientific research and innovative management, and rolled out key hierarchical technological breakthroughs. For one thing, it
improved the functions and quality of existing products and offered functional products with increasing experience competitiveness
to customers, for instance, dazzling dyeing serial products and premium knitted fabrics of shirts. For another, it introduced and
developed green production and processing technologies and technologies related to the recycling of water resources, chemicals and
energy, and bolstered sustainable operations. Meanwhile, the Company shored up the introduction and development of recyclable
and degradable materials to supply customers with more ecologically sustainable green textiles. A total of 33 patents were authorized,
including nine invention patents.
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Lu Thai Textile Co., Ltd. Interim Report 2022
(III) Continue the process of "Improve Quality and Efficiency" and "Overall Internationalization" to heighten management efficiency
In the first half of 2022, notwithstanding a turbulent international, political and economic environment and declining domestic
demand, the Company moved forward with its strategy of "Improve Quality and Efficiency" and "Overall Internationalization"
backed by its product line. On the basis of practices in sales regions, it also implemented its decisions and arrangements,
communicated more with customers, and expanded new markets for new customers to boost sales results. During the Reporting
Period, the Company by complementary domestic and foreign advantages, and the advantages in global supply chain systems and
overseas layouts, established a high-level dialog mechanism for all strategic customers, and pushed forward strategic coordination
with those customers. In addition to that, it set up a performance team to provide comprehensive services for those customers from
R&D to delivery.
(IV) Carry forward the corporate culture and seek the growth of employees and the Company together as guided by the spirit of the
craftsman
During the Reporting Period, the Company continued to instruct employees on carrying forward the spirit of the model worker and
the craftsman and the principle of hard-working and down-to-earth to uphold the corporate vision of a "World-class and century-old
textile enterprise". Workers were mobilized to learn the history of the Party and engage in Party-themed activities, and Party
members were encouraged to play the roles of leadership and demonstration. Various forms of activities were conducted like
awarding exemplary and predominant workers and skill competition. Reserved shares under the 2021 restricted share incentive
scheme were granted again for workers to share the fruits of development. The Company fostered a sound, innovative and enabling
working environment in which all employees were involved and pulled their wisdom together for business growth.
The Company, centered on producing mid- to high-end products, has been rated as the "Enterprise for Incubation of High-end
Products in Shandong Province" for four consecutive years, and was named National Key Talent Project. In the meantime, its holding
subsidiary Lufeng Co., Ltd. was also named "Enterprise for Incubation of High-end Products in Shandong Province".
The Company is subject to the disclosure requirements for listed companies engaging in textile and apparel as stated in Guideline
No. 3 of the Shenzhen Stock Exchange for Self-regulation of Listed Companies—Industry-specific Information Disclosure.
In the first half of 2022, under the impact of recurrent pandemic, and international and geopolitics, China's textile industry came
up against a more severe development environment. Furthermore, the industry's production management and operations of supply
chains were affected by enormous shocks, and the economy was under conspicuous pressure. Since the fourth quarter of 2021, the
cotton price has remained high over historical records. Because of the downturn in demand, cost is difficult to be apportioned to
terminal consumption and the profits in the intermediate supply chain are under influence. From the domestic market, the retail
sales of textiles and apparel in the first half of 2022 were lower than the same period of last year. Led by unstable international
status and domestic pandemic control, the willingness of consumers to spend was weak. From exported textiles, however, the first
half of 2022 witnessed positive growth year on year, representing optimistic progress. On one hand, China's exported textiles
accounted for a large percentage globally. Regardless of an upheaval, geopolitics was controllable with restricted impacts on
requirements. On the other hand, the production of textiles and apparel was resilient and resumption of work and production
proactive, both of which secured the supply of exports. Additionally, the depreciation in RMB boosted the export volume of
textiles and apparel. As a consequence, steady international demand offset the gloomy domestic one, though there was a gap
between current data and historical rational data.
II Core Competitiveness Analysis
1. The Company has a comprehensive vertical industrial chain and internationalized layout. It possesses the whole industrial chain
integrating spinning, bleaching and dyeing, neatening, testing, and garment making, as well as excellent quality control capabilities
through various links of the production of high-end yarn-dyed fabrics. In order to leverage international resources, give play to the
advantage of internationalized industrial distribution and reinforce the leading international status in manufacturing the yarn-dyed
fabrics for shirts, the Company has built various production bases in Cambodia, Burma and Vietnam etc., and established the design
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Lu Thai Textile Co., Ltd. Interim Report 2022
agency in Italy, and the market service offices in the U.S. and Japan.
2. The Company has better integrated management capability and high-level management system architecture. Since 1995, the
Company has successively passed the certification of ISO9001 quality management system, ISO14001 environmental management
system, ISO45001 Occupation Health Safety Management System, SA8000 Social Responsibility Management System, The
Worldwide Responsible Apparel Production Standard (WRAP), Sustainable Textile Production (STeP), Global Organic Textile
Standard (GOTS), Global Recycle Standard (GRS) and China National Accreditation Service for Conformity Assessment (CNAS),
and realized the internationalization, standardization and normalization of the corporate management. In order to make outstanding
achievement in its operating management, better improve the Company’s business performance and capabilities, the Company has
introduced the GB/T19580 Criteria for Performance Excellence step by step, set up the “big quality” system, promoted the
management innovation and guaranteed the management quality.
3. The Company establishes its high-level technical cooperation platform by virtue of strong R&D capability. In fact, the Company
always insists on the independent innovation, enhances its technical cooperation with various research institutes, colleges and
universities, strategic clients and important suppliers by relying on various technical platforms including the national enterprise
technical center, the national industrial design center, the national demonstration base for introducing talents, the national post-
doctoral scientific research station and Shandong Provincial Engineering Technology Research Center, dedicates itself to the cutting-
edge technical research, and gradually transforms from technology research to integrated product development. Besides, the
Company will also transform from the overcoming of key technical difficulties to the mastery of technical principles and the
formulation of industrial standards, and from the focus on technical innovation to the dynamic integration of new technique
exploration with model innovation, materialize the low-carbon, green and sustainable development.
III Core Business Analysis
Overview:
For the Reporting Period, the Company recorded operating revenue of RMB3,330 million (a 49.99% year-on-year increase); cost of
sales of RMB2,497 million (a 37.88% year-on-year increase), selling expense of RMB60 million (a 23.37% year-on-year increase),
administrative expense of RMB190 million (a 46.24% year-on-year increase), research and development expense of RMB115
million (a 12.51% year-on-year decline), and net cash generated from operating activities of RMB117 million (a 35.72% year-on-
year drop).
Year-on-year changes in key financial data:
Unit: RMB
Change
H1 2022 H1 2021 Main reason for change
(%)
Increased sales volumes of fabric and
Operating revenue 3,330,294,463.25 2,220,313,650.94 49.99%
shirts
Increased sales volumes of fabric and
Cost of sales 2,497,333,041.59 1,811,241,743.20 37.88%
shirts
Selling expense 59,894,351.04 48,546,795.06 23.37%
Increased equity incentive expenditures
Administrative expense 190,280,143.57 130,118,046.40 46.24%
and performance bonuses
Finance costs -71,933,482.03 24,222,929.28 -396.96% Increased net exchange gain
Income tax expense 67,767,576.50 22,209,233.14 205.13% Increased gross profit
R&D investments 114,951,241.87 131,384,483.80 -12.51%
Net cash generated from/used in Increased cash used in operating
117,482,408.74 182,761,025.14 -35.72%
operating activities activities
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Lu Thai Textile Co., Ltd. Interim Report 2022
Net cash generated from/used in Decreased cash generated from
-522,296,795.23 299,774,945.83 -274.23%
investing activities investing activities
Net cash generated from/used in
136,772,256.21 155,808,685.68 -12.22%
financing activities
Net increase in cash and cash Decreased net cash generated from
-240,373,645.82 635,115,592.71 -137.85%
equivalents investing activities
Significant changes to the profit structure or sources of the Company in the Reporting Period:
No such changes in the Reporting Period.
Breakdown of operating revenue:
Unit: RMB
H1 2022 H1 2021
As % of total As % of total Change (%)
Operating revenue operating revenue Operating revenue operating revenue
(%) (%)
Total 3,330,294,463.25 100% 2,220,313,650.94 100% 49.99%
By operating division
Textile and
3,071,908,914.09 92.24% 2,044,428,570.21 92.08% 50.26%
apparel
Electricity and
120,886,686.18 3.63% 112,014,559.74 5.04% 7.92%
steam
Others 137,498,862.98 4.13% 63,870,520.99 2.88% 115.28%
By product category
Fabric products 2,439,097,155.42 73.24% 1,644,786,813.50 74.08% 48.29%
Shirts 632,811,758.67 19.00% 399,641,756.71 18.00% 58.34%
Electricity and
120,886,686.18 3.63% 112,014,559.74 5.04% 7.92%
steam
Others 137,498,862.98 4.13% 63,870,520.99 2.88% 115.28%
By operating segment
Hong Kong 94,978,095.81 2.85% 84,111,107.56 3.79% 12.92%
Japan And
158,339,499.64 4.75% 125,781,396.82 5.67% 25.88%
South Korea
Southeast Asia 1,142,731,135.42 34.31% 494,884,594.42 22.29% 130.91%
Europe and
554,392,368.30 16.65% 227,821,017.11 10.26% 143.35%
America
Others 234,122,756.86 7.03% 206,958,205.91 9.32% 13.13%
Mainland China 1,145,730,607.22 34.41% 1,080,757,329.12 48.68% 6.01%
Any over 30% YoY movements in the data above and why:
Applicable □ Not applicable
Revenue from Southeast Asia and the European and American region increased 130.91% and 143.35% respectively compared to
the same period of last year, mainly driven by the recovery of overseas demand, leading to increased sales volumes of fabric and
shirts.
The Company is subject to the disclosure requirements for listed companies engaging in textile and apparel as stated in Guideline
No. 3 of the Shenzhen Stock Exchange for Self-regulation of Listed Companies—Industry-specific Information Disclosure.
Operating division, product category or operating segment contributing over 10% of operating revenue or operating profit:
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Lu Thai Textile Co., Ltd. Interim Report 2022
Unit: RMB
Gross YoY change in YoY change in YoY change in
Operating revenue Cost of sales profit operating cost of sales gross profit
margin revenue (%) (%) margin (%)
By operating division
Textile
and 3,071,908,914.09 2,229,111,273.58 27.44% 50.26% 34.73% 8.37%
apparel
By product category
Fabric
2,439,097,155.42 1,747,388,100.79 28.36% 48.29% 30.31% 9.89%
products
Shirts 632,811,758.67 481,723,172.79 23.88% 58.34% 53.60% 2.35%
By operating segment
Southeast
1,142,731,135.42 819,899,825.33 28.25% 130.91% 103.39% 9.71%
Asia
Europe
and 554,392,368.30 411,451,995.73 25.78% 143.35% 128.30% 4.89%
America
Mainland
1,145,730,607.22 909,525,949.31 20.62% 6.01% 3.03% 2.30%
China
Core business data of the prior year restated according to the changed statistical caliber for the Reporting Period:
□ Applicable Not applicable
Physical stores of the Company:
□ Yes No
New physical stores:
□ Yes No
Indicate by tick mark whether the Company discloses its top five franchised stores.
□ Yes No
IV Other Information Required by Information Disclosure Guide for Companies Engaged in
Textile and Garment Services
1. Capacity
The Company's own capacity
Industry
Item H1 2022 H1 2021
Classification
Total capacity (fabrics)
14,715.00 14,680.00
Fabrics (10,000 meters)
Rate of capacity utilization 87% 66%
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Lu Thai Textile Co., Ltd. Interim Report 2022
The Company's convertible bond
The Company's convertible bond
fundraising projects: The "Functional Fabric
fundraising projects: The "Functional
Intelligent Eco-park Project (Phase I)" with
Fabric Intelligent Eco-park Project
an annual capacity of 35 million meters of
(Phase I)" with an annual capacity of 35
Plants under construction high-grade functional fabrics and the
million meters of high-grade functional
"Production Line Project of High-grade
fabrics and the "Vientiane Production
Printed and Dyed Fabrics" with an annual
Line Project of High-grade Fabrics
capacity of 25 million meters of high-grade
(Phase I)" were in progress.
printed and dyed fabrics were in progress.
Total capacity (apparel)
1,015.00 1,015.00
(10,000 pieces)
Rate of capacity utilization 85% 60%
Textile and
apparel With respect to the Lu An Garment
Investment and Construction Project
(Phase III) of 3,000,000-piece
Plants under construction Production Line, equipment installation
has been completed in June 2022 and
trial production will soon begin.
Year-on-year change in the rate of capacity utilization above 10%
Yes □ No
Capacity utilization increased as a result of the recovery of overseas demand and the backflow of orders.
Overseas capacity
Yes □ No
Industry Classification Item Domestic Overseas
Percentage of
80% 20%
capacity
Fabrics Capacity layout Mainly in Shandong Province Mainly in Ty Ninh Province, Vietnam
Rate of capacity
89% 81%
utilization
Percentage of
44% 56%
capacity
Mainly in Tnh An Giang, Vietnam; Svay
Apparel Capacity layout Mainly in Shandong Province Rieng Province, Cambodia; and Thilawa
Special Economic Zone, Yangon, Myanmar
Rate of capacity
81% 85%
utilization
The Company’s expansion plan on developing overseas production capacity
The Company will invest in constructions of production bases in Ty Ninh Province, Vietnam, to produce woven and knitted fabrics.
For now, the projects are under preparation.
2. Sales model and channels
Product sales channels and operation methods
a. Sales model
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The Company adopted the order-based sales model. With the self-owned trademark "Luthai" for its fabric sales, it provided
customers with development and design plans based on customer needs, fabrics and patterns leading the market, fashion and
technology, functions and environmental protection. In addition, it engaged in brand operation of spot fabric on the new retail e-
commerce platform. Shirts were mainly made according to the orders of customers at home and abroad, and sold by brand owners.
The Company's self-owned brand was operated through self-owned exclusive shops such as Lu Thai Exhibition and Sales Pavilion,
counters of affiliated stores in malls and e-networking marketing. Meanwhile, the Company could provide customers with high-end
customized shirts and customized business wear to meet the market demand of the high-end service industry.
b. Sales channels
Direct sales: The headquarters of the Company carried out direct investments and operation, and operated and managed a brand at the
headquarters or by setting up a branch company in other regions to conclude transactions with customers offline.
Online sales: Through self-developed platforms and large third-party online shopping platforms, the Company concluded transactions
with customers on the Internet and delivered goods to customers by express delivery services.
Unit: RMB
YoY change in YoY change in
Sales Gross profit YoY change in
Operating revenue Cost of sales operating gross profit
channels margin cost of sales
revenue margin
Online
1,756,494.73 686,511.97 60.92% -40.96 -32.33 -4.98%
sales
Direct sales 2,441,686,268.96 1,748,045,164.09 28.41% 48.11 30.21 9.85%
OEM/OD
628,466,150.40 480,379,597.52 23.56% 59.96 54.46 2.72%
M
Total 3,071,908,914.09 2,229,111,273.58 27.44% 50.26 34.73 8.37%
Reason for change
3. Selling expense and breakdown thereof
Unit: RMB
percentage of
Item H1 2022 H1 2021 Amount of change Note
change
Increased performance bonuses for sales
Salaries 34,521,119.07 24,817,866.24 9,703,252.83 39.10%
personnel due to higher sales volumes
Marketing
15,812,366.09 13,898,356.44 1,914,009.65 13.77%
expense
Depreciation
3,352,693.87 2,919,396.85 433,297.02 14.84%
costs
Office costs 4,537,454.44 5,228,400.21 -690,945.77 -13.22%
Others 1,670,717.57 1,682,775.32 -12,057.75 -0.72%
Total 59,894,351.04 48,546,795.06 11,347,555.98 23.37%
4. Franchise and distribution
Franchisees and distributors recorded more than 30% of sales revenue
15
Lu Thai Textile Co., Ltd. Interim Report 2022
□ Yes No
5. Online sales
Online sales recorded more than 30% of sales revenue
□ Yes No
Self-developed sales platforms
Yes □ No
Start of operation 30 March 2009
Number of registered users 145,000
Average number of active monthly users (AMU) 5,000
Return rate of main brands 3.00%
Return rate of main types 3.00%
Cooperation with third-party sales platforms
Yes □ No
Online sales channels opened or closed by the Company
□ Applicable Not applicable
Impact on the Company in the current period and subsequent periods:
Not applicable.
6. Agency operation model
Agency operation model involved
□ Yes No
7. Inventory
Inventory
Days of Quantity
Inventory Year-on-year change in
Main products turnover of of Reason
age inventory balance
inventories inventory
Fabrics (10,000 Within 1
92 4,485.82 23.11%
meters) year
Fabrics (10,000
972.04 Over 1 year -32.37% Accelerated de-stocking
meters)
Shirts (10,000 Within 1
32 95.6 15.93%
pieces) year
Shirts (10,000 Delayed delivery of some shirts due to
21.55 Over 1 year 37.44%
COVID-19
pieces)
16
Lu Thai Textile Co., Ltd. Interim Report 2022
Reserves for falling prices of inventory
30 June 2022
Item Falling price reserves or provision for impairment
Gross amount Carrying amount
on contract performance cost
Raw materials 1,121,436,489.44 41,184,702.18 1,080,251,787.26
Goods in process 529,722,583.05 13,872,192.02 515,850,391.03
Products on hand 1,125,277,677.22 158,326,260.80 966,951,416.42
Commissioned
16,875,738.64 - 16,875,738.64
products
Materials in transit - - -
Total 2,793,312,488.35 213,383,155.00 2,579,929,333.35
Inventory information of retail channels such as franchised stores or distributors:
Not applicable.
8. Brand building
Production and sales of brand clothing, apparel and home textile products
Yes □ No
Self-owned brands
Target
Trademark Main product Charact Price zone of
Brand name consumer Main sales areas City levels
name types eristics main products
group
Provincial
East China,
Classic capital cities
Business South China
LTGRFF LTGRFF Shirts and suits busines RMB500-3000 and other
people and Southwest
s attire prefecture-
China
level cities
Trademark ownership disputes
□ Applicable Not applicable
9. Others
Engaged in business related to apparel design
□ Yes No
Whether the Company held meetings for the placement of orders
□ Yes No
17
Lu Thai Textile Co., Ltd. Interim Report 2022
V Analysis of Non-Core Businesses
Applicable □ Not applicable
Unit: RMB
As % of total
Amount Source/Reason Recurrent or not
profit
Return on Investment income from the disposal of
1,448,571.38 0.31% Not
investment held-for-trading financial assets
Gain/loss on
Gain/loss on changes in fair value of
changes in fair 3,069,030.56 0.67% Not
held-for-trading financial assets
value
Asset impairments -81,695,738.30 -17.71% Inventory valuation allowances Not
Non-operating Income of non-operating compensation,
3,026,253.46 0.66% Not
income etc
Non-operating Non-operating donations and
2,165,139.66 0.47% Not
expense compensations, etc.
VI Analysis of Assets and Liabilities
1. Significant Changes in Asset Composition
Unit: RMB
30 June 2022 31 December 2021 Reason for
Change in
any
As % of total As % of total percentage
Amount Amount significant
assets assets (%)
change
Monetary assets 1,925,789,127.57 14.30% 1,999,712,889.35 15.40% -1.10%
Accounts
667,240,987.64 4.96% 647,277,198.51 4.98% -0.02%
receivable
Inventories 2,579,929,333.35 19.16% 2,345,346,794.28 18.06% 1.10%
Investment
20,911,618.62 0.16% 21,362,302.03 0.16% 0.00%
property
Long-term
equity 155,042,645.67 1.15% 169,443,106.66 1.30% -0.15%
investments
Fixed assets 5,542,475,634.61 41.17% 5,561,601,374.44 42.82% -1.65%
Construction in
274,563,543.36 2.04% 237,579,082.99 1.83% 0.21%
progress
Right-of-use 477,203,293.08 3.54% 257,019,286.15 1.98% 1.56%
18
Lu Thai Textile Co., Ltd. Interim Report 2022
assets
Short-term
1,259,466,003.35 9.35% 1,011,034,138.32 7.78% 1.57%
borrowings
Contract
159,719,228.93 1.19% 204,967,348.96 1.58% -0.39%
liabilities
Long-term
685,339,710.99 5.09% 684,962,473.24 5.27% -0.18%
borrowings
Lease liabilities 110,455,594.21 0.82% 121,357,658.41 0.93% -0.11%
2. Major Assets Overseas
Applicable □ Not applicable
Control Risk of
Cause of As %
Operation measures to Earning material
Assets formatio Asset scale Location of net
model ensure asset position impairmen
n assets
safety t or not
Key
Lu Thai managemen
(Hong t personnel
Hong Sales-
Kong) Set-up 216,012,809.76 assigned by 3,340,621.91 2.45% Not
Kong oriented
Textile Co., the
Ltd. Company as
the parent
Key
managemen
Lu Thai
t personnel
(America) Sales-
Set-up 2,678,224.06 New York assigned by -124,596.08 0.03% Not
Textile Co., oriented
the
Ltd.
Company as
the parent
Key
managemen
Qiming t personnel
SvayRien Production-
Apparel Set-up 186,259,979.15 assigned by 12,508,433.09 2.11% Not
g oriented
Co., Ltd.
the
Company as
the parent
Vanguard Production- Key
Set-up 111,324,570.29 Yangon 10,476,744.95 1.26% Not
Apparel oriented managemen
19
Lu Thai Textile Co., Ltd. Interim Report 2022
Co., Ltd. t personnel
assigned by
the
Company as
the parent
Key
managemen
Continental t personnel
2,760,279,277.8 Production- 133,235,204.7 31.24
Textile Co., Set-up 4 Ty Ninh assigned by 7 % Not
oriented
Ltd. the
Company as
the parent
Key
managemen
Lu An t personnel
Tnh An Production-
Garments Set-up 267,986,587.07 assigned by 5,420,764.20 3.03% Not
Giang oriented
Co., Ltd. the
Company as
the parent
Key
managemen
Tianping
t personnel
Internationa Investment
Set-up 409,415,467.61 Singapore assigned by 2,513,856.07 4.63% Not
l Investment -oriented
the
Co., Ltd.
Company as
the parent
Key
managemen
Vientiane t personnel
Production-
Textile Co., Set-up 230,548,965.43 Vietnam assigned by 351,473.77 2.61% Not
oriented
Ltd.
the
Company as
the parent
3. Assets and Liabilities at Fair Value
Applicable □ Not applicable
Unit: RMB
20
Lu Thai Textile Co., Ltd. Interim Report 2022
Gain/loss
Cumulativ Impairme
on fair-
e fair- nt Sold in
value Purchased in
Beginning value allowance the Other Ending
Item changes in the Reporting
amount changes for the Reportin change amount
the Period
charged to Reporting g Period
Reporting
equity Period
Period
Financial
assets
1. Held-
for-
trading
financial
assets 190,052,000.0 6,005,570.7 280,000,000.0 476,057,570.7
0 9 0 9
(excludin
g
derivative
financial
assets)
2.
Derivativ
e 1,727,000.00 685,949.57 2,412,949.57
financial
assets
Subtotal
of 191,779,000.0 6,691,520.3 280,000,000.0 478,470,520.3
0 6 0 6
financial
assets
-
5,900,011.6
Others 34,663,071.88 237,547.1 40,325,536.36
3
5
-
Total of 226,442,071.8 6,691,520.3 280,000,000.0 5,900,011.6 518,796,056.7
237,547.1
8 6 0 3 2
the above 5
Financial 3,622,489.8
0.00 3,622,489.80
0
liabilities
Content of other change:
Changes in accounts receivable financing.
Significant changes to the measurement attributes of the major assets in the Reporting Period:
□Yes No
21
Lu Thai Textile Co., Ltd. Interim Report 2022
4. Restricted Asset Rights as at the Period-End
For details, see Part X. VII. 61. Assets with restricted ownership and using right in this Report.
VII Investments Made
1. Total Investment Amount
□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
Propor
tion of
closin Actua
Purch g l
Relatio Begin Sold Endin
Relate Initial ased Impair invest gain/l
nship Type ning in the g
d- invest Start in the ment ment oss in
Operat with of Endin invest Repor invest
party ment ing Repor provisi amoun the
or the derivat g date ment ting ment
transa amoun date ting on (if t in the Repor
Compa ive amoun Perio amoun
ction t Perio any) Comp ting
ny t d t
d any’s Perio
ending d
net
assets
15 24
Comm Non- Forwar 21,43 21,43 19,79 1,641. 252.5
No Mar Nove 0.00 0.19%
3.39 3.39 1.59 80 5
ercial related d ch mber
22
Lu Thai Textile Co., Ltd. Interim Report 2022
202 2022
bank exchan
2
ge
settlem
ent
Foreig
26
Comm n 30
Janu
Non- 57,16 Dece 38,00 19,16 11,60 45,56
ercial No exchan ary 5.16% 0.00
8.00 mber 8.00 0.00 0.00 8.00
related 202
bank ge 2022
1
option
Forwar
d 4
Comm 10
Apri
Non- exchan 12,70 Octob 12,70 12,70
ercial No l 0.00 0.00 1.44% 0.00
1.80 er 1.80 1.80
related ge 202
bank 2022
2
transac
tions
91,30 38,00 53,29 31,39 59,91 252.5
Total -- -- 6.79%
3.19 8.00 5.19 1.59 1.60 5
Capital source for derivative
The Company’s own money
investment
Lawsuit (if applicable) N/A
Disclosure date of board of directors
announcement on approval of 15 June 2021
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
Analysis on risks and control and credit risk, operation risk and risk of laws and regulation.
measures of derivative products held 1. Market risk: when the international and domestic economic situations change, the
in the Reporting Period (including but corresponding changes in exchange rates and interest rates may have an adverse impact on
not limited to market risk, liquidity the financial derivatives transactions of the Company. Precautionary measures to be taken
risk, credit risk, operation risk, law include: the Company chooses risk-controlled financial derivative tools with simple
risk, etc.) 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
23
Lu Thai Textile Co., Ltd. Interim Report 2022
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 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 helped them establish a risk-neutral
awareness of exchange rate and 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 Securities Investments and Derivative Transaction of Lu Thai
Textile Co., Ltd., the Proposal on Plan for Derivative Transaction of Lu Thai Textile Co.,
Ltd. approved at the 25th Meeting of the 9th Board of Directors, and performed relevant
information disclosure responsibilities.
Changes of market prices or fair 1. As at 30 June 2022, the Company held 13 undue financial derivatives contracts, totaling
values in the Reporting Period of the USD92.5 million, among which USD70 million was foreign exchange options, forward
invested derivatives. And the analysis exchange transactions USD20 million and forward exchange settlement USD2.5 million.
on the fair value of the derivatives 2. From January to June 2022, the total amount of all due financial derivatives of the
24
Lu Thai Textile Co., Ltd. Interim Report 2022
should include the specific use Company was equivalent to USD51 million which were all implemented based on
methods and the relevant assumptions contracts, generating gains of RMB2,525,500. Among them, gains of RMB2,525,500 were
and parameters. from the delivery of due forward forex settlement contracts of USD31 million, and USD20
million was forex option portfolio contracts not meeting the requirement for delivery.
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
Independent directors Zhou Zhiji, Pan Ailing, Wang Xinyu and Qu Dongmei have issued
the following professional advice on the Company's derivative transaction business: We
believe that the Company's foreign exchange derivative transaction business is performed
Specific opinion from independent on the condition of ensuring normal operations. Transactions using its own funds are
directors on the Company’s beneficial to avoiding the risk of exchange rate fluctuations, and are an effective tool to
derivatives investment and risk hedge RMB exchange rate risk. By strengthening internal control, implementing stop-loss
control and risk prevention measures, the Company can improve its ability to resist exchange rate
fluctuations and improve its management level. The derivative transaction plan proposed by
the Board of Directors is feasible, necessary, and the risks are manageable. There is no
damage to the interests of the Company and all the shareholders.
5. Use of Funds Raised
Applicable □ Not applicable
(1) Overall Use of Funds Raised
Applicable □ Not applicable
Unit: RMB’0,000
Total
of
raised Cumulativ Amoun
Total of Ratio of
Cumulativ capital e amount t of
Total raised cumulativ Total of Purpose and
e amount which of raised raised
Raisin Raising of capital e amount raised direction of
of raised purpos capital capital
g year manner raised used in which capital raised capital
capital e is which unused
capital this purpose is unused unused
used change purpose is for two
period changed
d in the changed years
report
period
By 30 June
2022,
RMB529.720
Convertibl 138,80 5,873.6 60,972.0
2020 82,027.9 25,000 25,000 18.01% 4 million in 0
e bonds 0 2 4
the unused
raised capital
was
25
Lu Thai Textile Co., Ltd. Interim Report 2022
deposited in
the raised
capital
account, and
RMB80
million was
used for cash
management.
138,80 5,873.6 60,972.0
Total -- 82,027.9 25,000 25,000 18.01% -- 0
0 2 4
General use situation of raised capital
(I) Amount of actual raised capital and arrival date
Upon approval by China Securities Regulatory Commission in the document “ZJXK [2020]299”, the Company publically issued
14,000,000 convertible bonds on 9 April 2020 at par value RMB 100, the issued amount was RMB 1.4 billion, and the Company
actually received the amount of raised capital RMB 1.388 billion after deducted the underwriting fee RMB 12 million. The above
amount was remitted in cash in RMB. After deducted legal fee, accountant fee, credit rating fee, information disclosure fee, issuing
commission and other costs RMB 2.54 million in total from the above actually raised capital, the net amount of raised capital was
RMB 1385.46 million, which entered the account on 15 April 2020, and Grant Thornton International Ltd (Special General
Partnership) issued the capital verification report with reference No. Grant Thornton Verification [2020] 371ZC0090 for it after
verification.
(II) Use situation and balance of raised capital
As at 30 June 2022, the Company directly invested RMB820,279.000 in total from the raised capital for its capital raising projects, of
which RMB761,542,800 was invested in the previous period and RMB58,736,200 in this Reporting Period. The unused amount was
RMB609,720,400 (including the net income of RMB42,296,400 from interest income deducted handling charge).
(2) Commitments on Projects with Funds Raised
Applicable □ Not applicable
Unit: RMB’0,000
Whether
Investme Date
the Cumulati
Total of Amoun nt when Benefi Wheth
Committed projects ve Whether
committ Total t the t er
investment are investme progress project
ed investment investe project realize reache
projects and changed nt by the feasibility
investme after d in end of reached d in d the
use direction (includi amount changed
nt of modificati this period the this expecte
of over ng by the significant
raised on (1) report intended report d
raised capital partially end of (3) ＝ ly
capital period availabl period benefit
changed period (2) (2)/(1)
e status
projects)
Committed investment projects
Functional
fabric smart
5,873.6 31 May
eco-park No 85,000 85,000 53,222.31 62.61% 0 N/A No
project 2 2023
(Phase 1)
Construction
of Vientiane
high-end 31
fabric Yes 25,000 25,000 0 0 0.00% Decemb 0 N/A No
production er 2024
line project
(Phase I)
Supplement
working No 28,800 28,800 0 28,805.59 100.02% 0 N/A No
capital
Subtotal of
5,873.6
committed -- 138,800 138,800 82,027.9 -- -- 0 -- --
investment 2
26
Lu Thai Textile Co., Ltd. Interim Report 2022
projects
Use direction of over raised capital
N/A
Repayment
of bank loans -- 0 0 0 0 0.00% -- -- -- --
(if any)
Supplement
working
-- 0 0 0 0 0.00% -- -- -- --
capital (if
any)
Subtotal of
use director
-- 0 0 0 0 -- -- 0 -- --
of over
raised capital
5,873.6
Total -- 138,800 138,800 82,027.9 -- -- 0 -- --
2
Situation and
reasons that
it did not
reach the
planned In the Reporting Period, due to the impact of the COVID-19 epidemic, the capital raising projects “Functional fabric
progress or smart eco-park project (Phase 1)” delayed in construction progress.
expected
return (based
on specific
projects)
Note for
significant
change of N/A
project
feasibility
Amount,
purpose and
use progress N/A
of over
raised capital
Change of
implementati
on site of
N/A
capital
raising
project
Adjustment
of
implementati
on mode of N/A
capital
raising
project
Advance Applicable
investment
and
By 30 April 2020, the total amount of displaced capital was RMB191.4288 million, including the amount RMB
displacement
189.8388 million invested in the project with the self-raised capital of the Company in advance, and payment of
of capital
issuing cost RMB1.59 million with its self-raised capital.
raising
project
Temporary
N/A
supplement
27
Lu Thai Textile Co., Ltd. Interim Report 2022
to working
capital with
unused
raised capital
Balance of
raised capital
after
implement of N/A
project and
relevant
reasons
Purpose and
use direction By 30 June 2022, RMB529.7204 million in the unused raised capital was deposited in the raised capital account, and
of unused RMB80 million was used for cash management.
raised capital
Problems
existing in
use and
information
None
disclosure of
raised capital
or other
situation
(3) Changes in Projects with Funds Raised
Applicable □ Not applicable
Unit: RMB’0,000
Amoun
Investmen Whether
t of Actual Date of
Accumulativ t schedule Realized occurred
Correspondin planne investmen reaching Whether
e investment as the income significan
Items after g original d funds t amount intended reached
amount as period- in the t changes
changes committed investe in the use of anticipate
the period- end Reportin in project
items d after Reporting the d income
end (2) (3)=(2)/(1 g Period feasibilit
change Period project
) y
s (1)
Constructio
n of
High-end
Vientiane
printing and 31
high-end
dyeing fabric 25,000 0 0 0.00% Decembe 0 N/A No
fabric
production r 2024
production
line project
line project
(Phase I)
Total -- 25,000 0 0 -- -- 0 -- --
In accordance with the Company's global strategic layout and market demand, the
Company planned to adjust its capacity structure. On 9 June 2022, the second
extraordinary general meeting and the first bondholders' meeting this year deliberated and
Notes of reasons for changes, decision-
adopted the Proposal on Changing the Purpose of Partial Raised Capital Unused. The
making procedures and information
disclosure (by specific items) aim was to terminate the "High-end printing and dyeing fabric production line project" and
leverage the raised capital of this project of RMB250 million for construction of Vientiane
high-end fabric production line project (Phase I), disclosed on 10 June 2022 on the cninfo
website ("www.cninfo.com.cn").
Condition and reason for not reaching
the schedule and anticipated income N/A
(by specific items)
Notes of condition of significant
N/A
changes occurred in project feasibility
28
Lu Thai Textile Co., Ltd. Interim Report 2022
after changes
VIII 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
IX 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 Princip
Registered Operating Operating
Name ip with the al Total assets Net assets Net profit
capital revenue profit
Company activity
Lufeng
Weavin
g& 706,160,0 1,933,899,903. 1,303,272,800. 824,088,561. 64,010,877. 53,903,771.
Subsidiary Fabric 00 67 07 65 84 42
Dyeing
Co.,
Ltd.
Shandon
g Lulian
- -
New 400,000,0 978,299,071.1 243,490,104.6 37,558,406.7
Subsidiary Fabric 45,430,711. 45,385,029.
00 8 2 3
Material 33 29
s 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 holding subsidiary of the Company.
Registration place: Zibo, Shandong; registered capital: RMB706.160 million. The mainly manufacturing and selling textile printing
and dyeing products and the products of clothing and garments, and it were authenticated to be high-tech enterprise in October 2014.
During the Reporting Period, due to the recovery of market demand and additional product sales, the Company achieved operating
29
Lu Thai Textile Co., Ltd. Interim Report 2022
revenue of RMB824 million, up 56.07% year on year and net profit of RMB53,903,800, up 316.32% year on year.
Shandong Lulian New Materials Co., Ltd. (hereinafter referred to as "Lulian New Materials") is the holding subsidiary of the
Company. Registration place: Zibo, Shandong; registered capital: RMB 400 million. It was established in April 2019 and mainly
manufacturing and selling functional fabrics. During the Reporting Period, projects were under construction and part of products
were released continually. The Company reported operating revenue of RMB37,558,400, up 167.12% year on year and net profit of
RMB-45,385,000, down 92.03% year on year.
X Structured Bodies Controlled by the Company
□Applicable Not applicable
XI Risks Facing the Company and Countermeasures
1. Impact of economic environment: under the great uncertainty of the international trade and geopolitical risks and the repeated
impact of the COVID-19 epidemic, the Company will face more challenges. In addition, the economic development of China
should be transformed and upgrade, therefore, the Company will continue to strictly execute coronavirus control measures,
guarantee production and safety and further utilize various resources at home and abroad to develop domestic and overseas
markets, so as to catch development opportunities after COVID-19 is controlled.
2. Price fluctuation of raw materials: cotton is the major production material of the Company, and the price of cotton is impacted
by market supply and demand, climate, policy, exchange rate, quota and other factors, therefore, based on the production orders
and import quota, the Company seriously considers the information of global cotton market, properly works out procurement
strategy and actively control cost and gross margin fluctuation arising from price change of cotton.
3. Change of exchange rate: the Company has a large ratio in import and export business. In recent years, the bi-directional
fluctuations in RMB exchange rate have become increasingly normal and flexible. The exchange rate fluctuation will place a
remarkable impact on its performance. To lower the impact of exchange rate fluctuations, the Company stuck to the risk-neutral
philosophy. Based on actual needs arising from production and operations, it incorporated exchange rate risks into routine
operations management, and took measures at proper timing to minimize the influence of exchange rate risks on the operations:
firstly, the Company appropriately 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 actively prevent risks. 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.
30
Lu Thai Textile Co., Ltd. Interim Report 2022
Part IV Corporate Governance
I Annual and Extraordinary General Meeting Convened during the Reporting Period
1. General Meetings Convened during the Reporting Period
Investor
Convened Disclosure
Meeting Type participation Index to disclosed information
date date
ratio
The 1st The Company deliberated and approved: 1.
Proposal on Repurchase and Cancel
Extraordinary Extraordinary Authorized but Unlocked Restricted Share of
7 March 8 March
General General 32.62% the Incentive Personnel not Conforming to the
2022 2022 Incentive Condition; and 2. Proposal on
Meeting of Meeting Amendment to the Partial Terms of Articles of
Association.
2022
It deliberated and approved: 1. Proposal on
2021 Annual Work Report of the Board of
Directors; 2. Proposal on 2021 Annual Work
Report of the Board of Supervisors; 3.
The 2021 Proposal on the Company's 2021 Annual
Annual General 20 May 21 May Report and Its Abstracts; 4. Proposal on the
Annual General 32.66%
2022 2022 Company's 2021 Annual Financial Accounting
Meeting Report; 5. Proposal on the Company's Profit
Meeting Distribution Plan for 2021; and 6. Proposal on
the Renewal of the Company's 2022 Annual
Financial Audit and Internal Control Audit
Institution.
It deliberated and approved: 1. Proposal on the
The 2nd Election of Non-Independent Directors of the
Tenth Session of the Board of Directors; 2.
Extraordinary Extraordinary Proposal on the Election of Supervisors of the
9 June 10 June
General General 30.91% Tenth Session of the Board of Directors; 3.
2022 2022 Proposal on the Election of Supervisors of the
Meeting of Meeting Tenth Session of the Board of Supervisors; and
4. Proposal on Changing the Purpose of
2022 Partial Raised Capital.
The 3rd It deliberated and approved: 1. Proposal on
Repurchase of the Company's Domestically
Extraordinary Extraordinary Listed Foreign Shares (B Share); and 2.
15 July 16 July
General General 31.42% Proposal on Repurchase and Cancel
2022 2022 Authorized but Unlocked Restricted Share of
Meeting of Meeting the Incentive Personnel not Conforming to the
Incentive Condition.
2022
2. Extraordinary General Meeting Convened at Request of Preference Shareholders with Resumed
Voting Rights
□Applicable Not applicable
II Change of Directors, Supervisors and Senior Management
Applicable □ Not applicable
31
Lu Thai Textile Co., Ltd. Interim Report 2022
Name Office title Type of change Date of change Reason for change
Left for expiration of
Fujiwara Hidetoshi Director 9 June 2022 Change of directors
term
Left for expiration of
Chen Ruimou Director 9 June 2022 Change of directors
term
Left for expiration of
Zeng Facheng Director 9 June 2022 Change of directors
term
Left for expiration of
Qin Guiling Director 9 June 2022 Change of directors
term
Left for expiration of
Zhang Hongmei Director 9 June 2022 Change of directors
term
Left for expiration of
Wang Xinyu Director 9 June 2022 Change of directors
term
Left for expiration of
Pan Ailing Director 9 June 2022 Change of directors
term
Xu Jianlyu Director Elected 9 June 2022 Change of directors
Zheng Huisheng Director Elected 9 June 2022 Change of directors
Zhang Zhanqi Director Elected 9 June 2022 Change of directors
Zhang Keming Director Elected 9 June 2022 Change of directors
Du Lixin Director Elected 9 June 2022 Change of directors
Peng Yanli Director Elected 9 June 2022 Change of directors
Quan Yuhua Director Elected 9 June 2022 Change of directors
Left for expiration of Change of senior
Zhang Jianxiang Senior management 9 June 2022
term management
Left for expiration of Change of senior
Zhang Wei Senior management 9 June 2022
term management
Left for expiration of Change of senior
Fu Guannan Senior management 9 June 2022
term management
Change of senior
Lyu Wenquan Senior management Engaged 9 June 2022
management
Change of senior
Xu Feng Senior management Engaged 9 June 2022
management
III Interim Dividend Plan
□Applicable Not applicable
The Company has no interim dividend plan, either in the form of cash or stock.
IV Equity Incentive Plans, Employee Stock Ownership Plans or Other Incentive Measures
for Employees
Applicable □ Not applicable
32
Lu Thai Textile Co., Ltd. Interim Report 2022
1. Equity Incentive
Deliberation Relevant
No. Overview of execution Disclosure index
time meeting
The 30th It deliberated and approved the Proposal on Granting the
Announcements of Resolution
Meeting of theReserved Restricted Shares under the 2021 Incentive Plan to the
(No. 2022-005, 2022-006,
9th Board of Incentive Personnel and Proposal on Repurchase and Cancel
2022-007, 2022-008)
18 February Directors, TheAuthorized but Unlocked Restricted Share of the Incentive
1 published on
2022 Personnel not Conforming to the Incentive Condition. The
18th Meeting of
http://www.cninfo.co on 19
the 9th independent directors consented independently to relevant
February 2022 and relevant
Supervisory matters. The Board of Supervisors expressed its agreeable
documents
Committee verification opinions on relevant matters.
Announcements of Resolution
The 1st
(No. 2022-011, 2022-012)
Extraordinary It deliberated and adopted the Proposal on Repurchase and
published on
2 8 March 2022 General Cancel Authorized but Unlocked Restricted Share of the
http://www.cninfo.co on 8
Meeting of Incentive Personnel not Conforming to the Incentive Condition.
March 2022 and relevant
2022
documents
As audited and confirmed by Shenzhen Stock Exchange and the Announcement of Resolution
Shenzhen Branch of China Securities Depository and Clearing (No. 2022-013) published on
3 18 March 2022 - Corporation Limited (hereinafter referred to as "China Clear"), http://www.cninfo.co on 18
the registration of granted reserved shares under the 2021 March 2022 and relevant
restricted share incentive scheme was completed. documents
As audited and confirmed by Shenzhen Stock Exchange and the Announcement of Resolution
Shenzhen Branch of China Clear, the procedures of (No. 2022-031) published on
4 14 May 2022 - repurchasing and canceling 240,000 shares of authorized and http://www.cninfo.co on 14
unlocked restricted share of the incentive personnel not May 2022 and relevant
conforming to the incentive condition were completed. documents
It deliberated and approved the Proposal on the Achievement of
The 33rd Lifting the Restriction Conditions in the First Restriction Period
Meeting of the for the First Grant of the 2021 Restricted Share Incentive Announcements of Resolution
9th Board of Scheme. The Company's independent directors consented (No. 2022-035, 2022-036)
Directors, The independently to the achievement of lifting the restriction published on
5 24 May 2022
20th Meeting of conditions in the first restriction period for the first grant of the http://www.cninfo.co on 25
the 9th 2021 restricted share incentive scheme, and to the matters of May 2022 and relevant
Supervisory lifting restrictions related to processing restricted shares. The documents
Committee Board of Supervisors expressed its agreeable review opinions
on relevant matters.
Announcement of Resolution
It issued the Proposal of Indicative Announcement on the
(No. 2022-041) published on
Trading on the Market of Lifting the Restriction in the First
6 31 May 2022 - http://www.cninfo.co on 31
Restriction Period for the First Grant of the 2021 Restricted
May 2022 and relevant
Share Incentive Scheme.
documents
9,578,000 restricted shares lifted from restricted sales were
7 8 June 2022 - -
traded on the market.
The 2nd
Meeting of the It deliberated and approved the Proposal on Repurchase and Announcements of Resolution
10th Board of Cancel Authorized but Unlocked Restricted Share of the (No. 2022-053, 2022-054,
Directors, The Incentive Personnel not Conforming to the Incentive Condition. 2022-056) published on
8 29 June 2022 nd
2 Meeting of In addition, the Company's independent directors voiced their http://www.cninfo.co on 30
the 10th independent opinions on the relevant matters. The Board of June 2022 and relevant
Supervisory Supervisors expressed its review opinions on relevant matters. documents
Committee
2. Implementation of Employee Stock Ownership Plan
□Applicable Not applicable
33
Lu Thai Textile Co., Ltd. Interim Report 2022
3. Other Incentive Measures for Employees
□Applicable Not applicable
34
Lu Thai Textile Co., Ltd. Interim Report 2022
Part V Environmental and Social Responsibility
I Major Environmental Issues
Indicate by tick mark whether the Company or any of its subsidiaries is a heavily polluting business identified by the
environmental protection authorities of China.
Yes □No
Number Distributi Discharge
Name of Discharge Approved
Name of Way of of on of standards Total Excessive
major concentra total
polluter discharge discharge discharge implemen discharge discharge
pollutants tion discharge
outlets outlets ted
Chief Emission
discharge standard
outlet of of water COD： COD:
Huangjia COD≤20 pollutants 225.482t 1495.08t
Lu Thai COD and Continuo pu 0mg/L;a in textile
； ；
Textile ammonia us 2 Industrial mmonia dyeing No
Park ; nitrogen≤ and ammonia ammonia
Co., Ltd nitrogen discharge chief 20mg/L finishing nitrogen nitrogen:
discharge industry ：3.744t 149.51t
outlet of GB 4287-
East Zone 2012
Emission
standard
of water COD：
Chief COD:
COD≤20 pollutants 117.054t
LuFeng COD and Continuo discharge 653.53t；
0mg/L;a in textile
outlet of ；
Company ammonia us 1 mmonia dyeing ammonia No
LuFeng ammonia
nitrogen≤ and nitrogen:
Company nitrogen
Limited nitrogen discharge 20mg/L finishing 65.3t
Limited
industry ：2.04t
GB 4287-
2012
Emission
standard
Zibo Organize SO2： of air
pollutants SO2: SO2:
≤35mg/m 19.96t, 236.13t/a,
Xinsheng SO2, d 3、 of
Productio Thermal NQx: NQx:
Thermal NQx, and continuou 4 NQx： No
n plant Power 61.5t, 674.63t/a,
≤50mg/m Plant in
Power PM s 3, PM： PM: PM:
Shandong 2.192t 67.47t/a.
≤5mg/m3 Province
Co., Ltd. discharge
DB37/66
4-2019
Discharge
into the
ecological COD≤50
Continent Beside QCVN40 Sewage
mg/L;am
pond in ： discharge
al Textile Sewage 1 sewage monia / No
2011/BT is
the park nitrogen≤
0.5mg/L NMT 906,100t
Co., Ltd. plant
district
after
treatment
35
Lu Thai Textile Co., Ltd. Interim Report 2022
Direct Gas
Continent Beside QCVN19
emission
Exhaust discharge ：
al Textile 2 boiler / is 258 / No
2009/BT
gas after NMT million
Co., Ltd. room m3
treatment
Construction of pollution prevention equipment and operation condition
Lu Thai Textile Co., Ltd. (hereinafter referred to as “the Company”) and its majority-owned subsidiary Lufeng Weaving & Dyeing
Co., Ltd. (hereinafter referred to as “Lufeng Weaving & Dyeing”) 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. 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 Company and Lufeng Weaving & Dyeing
centralizedly collected and coped with the dyeing and finishing waste gas, so as to greatly reduce the pollutant emission
concentration. Online supporting monitoring facilities were built, whose data was uploaded to the government environmental
monitoring system, to comprehensively monitor the Company's emission pollutants such as waste water and waste gas. 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. (hereinafter referred to as “Xinsheng Thermal Power”)
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 Continental Textile Co., Ltd. (hereinafter referred to as
“Continental Textile”), located in the KCN Phuoc Dong, Tay Ninh, Vietnam, 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. Continental Textile 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 2022: The COD (mean value) was
47.5 mg/L, the chrominance (mean value) was 20, the ammonia nitrogen (mean value) was 0.14 mg/L, and the total phosphorus
(mean value) was 0.10 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 H1 2022 was 906,100 tons, among which, the chemical oxygen demand
(COD) was 43.08 tons, ammonia nitrogen (NH3-N) was 0.107 tons and total phosphorus (TP) was 0.078 ton. Continental Textile is
equipped with multi-pipe and water film dust-separation devices to process the exhaust gas discharged from boilers. In H1 2022, 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 H1 2022, the total amount of sulfur dioxide emissions was 44.98 tons, and the
total amount of nitrogen oxides emissions was 41.38 tons.
Project Environmental Impact Assessment and Other Administrative Permission for Environmental Protection
In H1 2022, the “Lu Thai Textile Co., Ltd. Intelligent Technology Upgrading Project of 25 million-meter High-grade Fabric
Production Line”, the “Engineering Technology Research Institute Project”, the “Technology Upgrading Project of High-end Printing
and Dyeing Fabric Finishing Production Process” and the “Technology Upgrading Project of Regenerated Fibre Production Line and
Colored Spun Yarn Production Line” has put into production. The “Lufeng Weaving and Dyeing’s High-end Printing and Dyeing
Fabric Production Line Project” of the holding subsidiary Lufeng Weaving and Dyeing Co., Ltd. has been approved.
36
Lu Thai Textile Co., Ltd. Interim Report 2022
The wholly-owned subsidiary Zibo Xinsheng Thermal Power Co., Ltd. obtained the “Response of the Environmental Impact Report
of the Shandong Provincial Department of Environmental Protection on the Extension Project of Zibo Xinsheng Thermal Power”
(Luhuanjian [2015] No. 241), the phase II of the expansion project has been completed and been put into production.
The wholly-owned subsidiary Continental Textile’s Spinning Phase I and Dyeing Park Phase I environmental protection projects
have been completed and accepted for confirmation. The spinning phase II and yarn dyeing park Phase II environmental assessment
reports have been approved.
Emergency plan for environmental incidents
In order to prevent environmental pollution accidents, the Company and the holding subsidiary Lufeng Weaving & Dyeing
respectively prepared the Emergency Plan for Environmental Incidents, which were filed with Zibo Environmental Protection Bureau
Zichuan Branch. The Plan includes contents such as environmental risk sources identification and risk assessment, prevention and
early warning mechanism, emergency security, and supervision and management.
The wholly-owned subsidiary Zibo Xinsheng Thermal Power Co., Ltd. has formulated the “Emergency Plan for Environmental
Incidents” and filed it with the ecological and environmental 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 Continental Textile Co., Ltd. has prepared emergency plans for different environmental incidents to
reduce their impacts.
Environmental self-monitoring program
In accordance with the requirements of the competent environment authorities, the Company and the holding subsidiary Lufeng
Weaving & Dyeing observed the requirements of the superior environmental protection department to install automatic wastewater
monitoring facilities and achieve real-time monitoring of wastewater discharge. Besides, the automatic environment monitoring plan
was prepared. In addition, they invited a qualified testing institution quarterly to conduct tests on sewage and waste gas according to
the self-monitoring plan, duly disclosed the monitoring data to the Shandong Pollution Source Self-monitoring Sharing System, and
submitted the test reports to the competent environment authorities ensuring the monitoring data is true and valid.
The wholly-owned subsidiary Zibo Xinsheng Thermal Power Co., Ltd. has implemented online real-time monitoring of
environmental data in accordance with the requirements of the superior environmental protection department, and has achieved
emission standards.
The wholly-owned subsidiary Continental Textile Co., Ltd. installs automatic sewage sampling and water quality automatic online
monitoring devices, real-time automatic sampling and online monitoring of sewage effluent water quality; while the automatic online
waste gas monitoring system was installed to monitor waste gas emission quality in real-time. The company invites external qualified
testing institutions to conduct sewage, sludge and exhaust gas quarterly Test and submit the test report to the environmental
supervision department.
Administrative penalties imposed for environmental issues during the Reporting Period
Influence on
Rectification
Name Reason Case Result production and
measures
operation
N/A N/A N/A N/A N/A N/A
Other environment information that should be disclosed
No
Measures taken to decrease carbon emission in the Reporting Period and corresponding effects
Applicable □ Not applicable
The annual coal consumption for power generation of the wholly-owned subsidiary Xinsheng Thermal Power in H1 2022 was
reduced from 240.6g/kWh in 2021 to 191.4g/kWh through operation mode adjustment, energy conservation improvement and unit
37
Lu Thai Textile Co., Ltd. Interim Report 2022
efficiency enhancement.
Other related environment protection information
No
The Company shall abide by relevant disclosure requirements of the Self-Regulatory Guidelines of Shenzhen Stock Exchange for
Listed Companies No.3 - Industry Information Disclosure on textile and garment industry.
Environmental protection conformity situation of the Company in the report period
The Company and its majority-owned subsidiary Lufeng Weaving & Dyeing strictly implement the “Three Simultaneous”
management system for environmental protection in project construction. The companies are equipped with complete facilities for
waste gas and waste water treatment, wastewater is treated with hydrolysis and acidification technique + AO treatment process and
finally discharged according to GB4287-2012 the Discharge Standard of Water Pollutants for Dyeing and Finishing of Textile
Industry; the boiler exhaust is treated with low nitrogen combustion technology and meets DB37/2374-2018 the Emission Standards
of Air Pollutants for Boilers in Shandong Province. The spray + electrostatic technology is adopted in the waste gas treatment, which
meets the requirement in Regional Comprehensive Standards for the Discharge of Air Pollutants DB37/2376-2019 and Volatile
Organic Emission Standard of Shandong Province: Part 7 - Other Industries DB37/2801.7-2019. Temporary storage room of
common solid waste and hazardous waste is constructed in accordance with environmental protection requirements, and the
Company signs hazardous waste disposal contracts with third party qualified companies every year to dispose the hazardous waste of
the Company on basis of conformity. The Company strictly observes environmental protection laws and regulations, and its projects
have complete formalities and its environmental protection facilities are in normal operation; in H1 2022, the environmental
protection departments of governments at various levels checked the Company more than 20 times but nonconformity was found.
Zibo Xinsheng Thermal Power utilizes neutralization basin to teat acidic and alkali wastewater, and reduces pH value to 6-9 after
precipitation and neutralization. The treated wastewater and reverse osmosis water are used as desulfurizing water, coal feeding
system rinsing water, road sprinkling water and coal yard water. Desulfurizing wastewater is treated with flocculation sedimentation
purification process and the design output of wastewater treatment system is 10m3/h, and the water quality after treatment will meet
the requirements of Discharge Standard of Wastewater from Limestone-gypsum Flue Gas Desulfurization System In Fossil Fuel
Power Plant DL/T997-2006, and also meet the wastewater recycling requirement of the plant. The treated wastewater is used for
damping dry dust. The stove ash generating from coal burning and gypsum generating from ultralow emission in Zibo Xinsheng
Thermal Power. are general solid waste, the Company signs boiler ash and desulfurized gypsum supply and distribution agreements
with building material factory, cement factory for full comprehensive utilization.
Intercontinental Textile uses the comprehensive treatment process “pre-materialization +A2O biochemistry + post-materialization +
ozone treatment + activated sand filtration” to treat the industrial wastewater of the Company, and the relevant equipment has been
properly operated for 6.5 years after installation, and the discharged wastewater meets the level A discharge standard in the Technical
Specifications of Vietnam on Industrial Wastewater Discharge (QCVN40: 2011/BTNMT). the boiler exhaust of the Company is
treated with heat exchange and temperature reduction, dust separation, spraying, water film dust collection, absorption, chemical
reaction and etc. Now the equipment has been installed and properly operated for 6.5 years. Exhaust discharge meets the discharge
standard of Vietnam, “State Technical Specifications on Discharge of Industrial Inorganic Substances and Dust” (Circular
36/2015/TT-BTNMT). Hazardous waste and industrial waste warehouses are built up for separated storage of hazardous waste and
industrial waste in accordance with the Vietnamese regulations, Regulations on Administration of Hazardous Waste (Circular
36/2015/TT-BTNMT) and Decision on Administration of Waste (Decree 38/2015/N-CP), and waste transportation and disposal
contracts are signed with local qualified treatment organizations, and relevant treatment records of waste are reported the
environmental protection authority of Vietnam annually.
II Social Responsibility
Not applicable
38
Lu Thai Textile Co., Ltd. Interim Report 2022
Part VI Significant Events
I Commitments of the Company’s De Facto Controller, Shareholders, Related Parties and
Acquirers, as well as the Company Itself and Other Entities Fulfilled in the Reporting
Period or Ongoing at the Period-End
Applicable □ Not applicable
Date of
Type of Term of
Commitment Promisor Details of commitment commitment Fulfillment
commitment commitment
making
1. Not intervene the Company’s
operation and management beyond
the authority and not occupy the
Company’s interests. 2. From
the issuance date of this commitment
to the completion of the
implementation of the Company's
public offering of A-share convertible
corporate bonds, if the CSRC makes
other new regulatory provisions on
Dilution of
remedial measures for returns and the
at sight
commitment, and the above
returns on
Controlling commitment fails to meet the From 23
Commitments public
made in time shareholder, requirements of the CSRC, the 23 May May 2019
of IPO or offering A- On-going
actual company / I promise to issue 2019 to 8 April
refinancing share
controller supplementary commitment then in 2026
convertible
accordance with the latest regulations
corporate
of CSRC. 3. Commitment is made to
bonds
fulfill the Company's relevant
remedial measures for returns and
any commitment made herein by the
company / me. If the company / I
violate(s) such commitment and
cause(s) losses to the Company or
investors, the company / I will bear
the compensation responsibility to the
Company or investors in accordance
with the law.
39
Lu Thai Textile Co., Ltd. Interim Report 2022
1. Commitment is made not to
transfer benefits to other units or
individuals free of charge or under
unfair conditions, and no other ways
damaging the interests of the
Company will be taken. 2. I will
strictly abide by the budget
management of the Company, and
accept the strict supervision and
management of the Company to
avoid waste or excessive
consumption. Any position-related
consumption behaviors of me will
occur within the scope necessary for
the performance of my duties. 3.
Dilution of
Commitment is made not to use the
at sight
Company's assets to engage in
Directors returns on
investment and consumption From 23
and senior public
activities unrelated to the 23 May May 2019
management offering A- On-going
performance of duties. 4. 2019 to 8 April
of the share
Commitment is made that the 2026
Company convertible
remuneration system developed by
corporate
the Board of Directors or the
bonds
Remuneration Committee is linked to
the implementation of the Company's
remedial measures for returns. 5.
Commitment is made that the
conditions for exercising the Equity
Incentive Plan to be issued in the
future will be linked to the
implementation of the Company's
remedial measures for returns. 6.
From the issuance date of this
commitment to the completion of the
implementation of the Company's
public offering of A-share convertible
corporate bonds, if the CSRC makes
other new regulatory provisions on
40
Lu Thai Textile Co., Ltd. Interim Report 2022
remedial measures for returns and the
commitment, and the above
commitment fails to meet the
requirements of the CSRC, I promise
to issue supplementary commitment
then in accordance with the latest
regulations of CSRC. 7. Commitment
is made to fulfill the Company's
relevant remedial measures for
returns and any commitment made
herein by me. If I violate such
commitment and causes losses to the
Company or investors, I will bear the
compensation responsibility to the
Company or investors in accordance
with the law.
Executed on
Not
time or not
II Occupation of the Company’s Capital by the Controlling Shareholder or any of Its
Related Parties for Non-Operating Purposes
□Applicable Not applicable
No such cases in the Reporting Period.
III Irregularities in the Provision of Guarantees
□Applicable Not applicable
No such cases in the Reporting Period.
IV Engagement and Disengagement of Independent Auditor
Are the interim financial statements audited?
□Yes No
The interim financial statements have not been audited.
V Explanations Given by the Board of Directors and the Supervisory Committee Regarding
the Independent Auditor's “Modified Opinion” on the Financial Statements of the
Reporting Period
□Applicable Not applicable
41
Lu Thai Textile Co., Ltd. Interim Report 2022
VI Explanations Given by the Board of Directors Regarding the Independent Auditor's
“Modified Opinion” on the Financial Statements of Last Year
□Applicable Not applicable
VII Insolvency and Reorganization
□Applicable Not applicable
No such cases in the Reporting Period.
VIII Legal Matters
Significant lawsuits and arbitrations:
□Applicable Not applicable
No such cases in the Reporting Period.
Other legal matters:
□Applicable Not applicable
IX Punishments and Rectifications
□Applicable Not applicable
X Credit Quality of the Company as well as its Controlling Shareholder and De Facto
Controller
□Applicable Not applicable
XI Major 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-Party 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
42
Lu Thai Textile Co., Ltd. Interim Report 2022
No such cases in the Reporting Period.
5. Transactions with Related Finance Companies
□Applicable Not applicable
6. Transactions with Related Parties by Finance Companies Controlled by the Company
□Applicable Not applicable
7. Other Major Related-Party Transactions
□Applicable Not applicable
No such cases in the Reporting Period.
XII 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
No such cases in the Reporting Period.
2. Major Guarantees
Applicable □ Not applicable
Unit: RMB'0,000
Guarantees provided by the Company as the parent and its subsidiaries for external parties (exclusive of those for subsidiaries)
Disclosu
Guarante
re date Actual
Line of Actual Type of Counter- Term of Having e for a
of the guarante Collatera
Obligor guarante occurren guarante guarante guarante expired related
guarante e l (if any)
e ce date e e (if any) e or not party or
e line amount
not
announc
43
Lu Thai Textile Co., Ltd. Interim Report 2022
ement
Guarantees provided by the Company for its subsidiaries
Disclosu
re date Guarante
Actual
of the Line of Actual Type of Counter- Term of Having e for a
guarante Collatera
Obligor guarante guarante occurren guarante guarante guarante expired related
e l (if any)
e line e ce date e e (if any) e or not party or
amount
announc not
ement
Contine
ntal
Three
Textile
years
Co., since the
approval
Ltd./ Lu 17 May 12,617.4 17 May Joint-
5,936.34 N/A N/A of the No Yes
3 2021
Thai 2021 liability board of
the
(Tan
Compan
Chau) y
Textile
Co., Ltd.
Three
years
Contine since the
29 27 approval
ntal Joint-
March 4,026.84 March 0 N/A N/A of the No Yes
Textile 2019 2019 liability board of
the
Co., Ltd.
Compan
y
Three
years
Contine since the
28 27 approval
ntal Joint-
Septemb 3,020.13 Septemb 0 N/A N/A of the No Yes
Textile er 2019 er 2019 liability board of
the
Co., Ltd.
Compan
y
Two
years
Lu An since the
15 13 approval
Garment Joint-
January 3,355.7 January 0 N/A N/A of the No Yes
s Co., 2021 liability board of
2021 the
Ltd.
Compan
y
Shandon 14
13 One year
g Lulian Decemb 4,000 89.3 Joint- N/A N/A No Yes
New er 2021 Decemb since the
44
Lu Thai Textile Co., Ltd. Interim Report 2022
Material er 2021 approval
s Co., liability
of the
Ltd.
board of
the
Compan
y
Total approved line Total actual amount
for such guarantees of such guarantees in
0 5,936.34
in the Reporting the Reporting Period
Period (B1) (B2)
Total approved line Total actual balance
for such guarantees of such guarantees at
at the end of the 22,993.26 the end of the 6,025.64
Reporting Period Reporting Period
(B3) (B4)
Guarantees provided between subsidiaries
Disclosu
re date Guarante
Actual
of the Line of Actual Type of Counter- Term of Having e for a
guarante Collatera
Obligor guarante guarante occurren guarante guarante guarante expired related
e l (if any)
e line e ce date e e (if any) e or not party or
amount
announc not
ement
Total guarantee amount (total of the three kinds of guarantees above)
Total guarantee line Total actual
approved in the guarantee amount in
0 5,936.34
Reporting Period the Reporting Period
(A1+B1+C1) (A2+B2+C2)
Total actual
Total approved
guarantee balance at
guarantee line at the
22,993.26 the end of the 6,025.64
end of the Reporting
Reporting Period
Period (A3+B3+C3)
(A4+B4+C4)
Total actual guarantee amount (A4+B4+C4)
0.71%
as % of the Company’s net assets
Of which:
Balance of guarantees provided for
shareholders, actual controller and their 0
related parties (D)
Balance of debt guarantees provided directly
0
or indirectly for obligors with an over 70%
45
Lu Thai Textile Co., Ltd. Interim Report 2022
debt/asset ratio (E)
Amount by which the total guarantee amount
0
exceeds 50% of the Company’s net assets (F)
Total of the three amounts above (D+E+F) 0
Joint responsibilities possibly borne or
already borne in the Reporting Period for N/A
undue guarantees (if any)
Explanation about external guarantee
N/A
violating established procedure (if any)
Compound guarantees:
N/A
The Company shall abide by relevant disclosure requirements of the Self-Regulatory Guidelines of Shenzhen Stock Exchange for
Listed Companies No.3 - Industry Information Disclosure on textile and garment industry.
Whether the Company provides guarantees or financial assistance for dealers
□Yes No
3. Cash Entrusted for Wealth Management
Applicable □ Not applicable
RMB’0,000
Overdue amount
Specific type Capital resources Amount incurred Undue Balance Overdue amount with provision for
impairment
Brokerage
Raised funds 8,000 8,000 0 0
financial products
Other Self-owned funds 20,000 20,000 0 0
Total 28,000 28,000 0 0
Particulars of entrusted cash management with single significant amount or low security, bad liquidity, and no capital preservation
□Applicable Not applicable
Whether there is the case where the principal cannot be recovered at maturity or other case which may cause impairment for
entrusted asset management
□Applicable Not applicable
4. Other Major Contracts
□Applicable Not applicable
No such cases in the Reporting Period.
XIII Other Significant Events
Applicable □ Not applicable
1. The Company's 33rd session of the Ninth Board of Directors, the second extraordinary general meeting of 2022 and the first
46
Lu Thai Textile Co., Ltd. Interim Report 2022
bondholders' meeting on Lu Thai convertible bonds of 2022 deliberated and adopted the Proposal on Changing the Purpose of
Partial Raised Capital Unused. The aim was to terminate the "Production Line Project of High-grade Printed and Dyed Fabrics"
of its domestic holding subsidiary Lufeng Co., Ltd. and leverage the originally planned to be invested raised capital of RMB250
million for the newly invested Vientiane production line project of high-grade fabrics (Phase I) of the wholly-owned subsidiary in
Vietnam, Vientiane Textile Co., Ltd. For details, see relevant announcements (No.: 2022-035, 2022-036, 2022-038, 2022-043 and
2022-044) and documents disclosed on 25 May and 10 June 2022 on www.cninfo.com.cn.
2. The Company held the second session of Tenth Board of Directors and the third extraordinary general meeting of 2022, where it
deliberated and approved the Proposal on Repurchase of the Company's Domestically Listed Foreign Shares (B Share). The
capital scale for repurchase shall not exceed RMB100 million and repurchase price no more than HKD4.80 per share, and the
repurchase period shall not exceed 12 months from the date when the Company's Board of Directors deliberates and adopts the
share repurchase scheme. For details, see relevant announcements (No.: 2022-053, 2022-055, 2022-063, 2022-064 and 2022-065)
and documents disclosed on 30 June and 16 July 2022 on www.cninfo.com.cn.
XIV Significant Events of Subsidiaries
□Applicable Not applicable
47
Lu Thai Textile Co., Ltd. Interim Report 2022
Part VII Share Changes and Shareholder Information
I Share Changes
1. Share Changes
Unit: share
Before Increase/decrease in the Reporting Period (+/-) After
Shares as
Shares as
dividend
dividend
Percentag New converte Percentag
Shares converte Other Subtotal Shares
e (%) issues d from e (%)
d from
capital
profit
reserves
- -
I. Restricted 5,838,00
25,005,237 2.83% 9,194,92 3,356,92 21,648,311 2.44%
0
shares 6 6
1. Shares
held by
State
2. Shares
held by
state-owned
legal person
3. Shares
held by - -
5,838,00
other 25,005,237 2.83% 9,194,92 3,356,92 21,648,311 2.44%
0
6 6
domestic
investors
Among
which:
Shares held
by domestic
legal person
Shares held
- -
by domestic 5,838,00
25,005,237 2.83% 9,194,92 3,356,92 21,648,311 2.44%
0
natural 6 6
person
4. Shares
held by
48
Lu Thai Textile Co., Ltd. Interim Report 2022
other
foreign
investors
Among
which:
Shares held
by foreign
corporations
Shares held
by foreign
natural
person
II.
857,336,05 8,956,78 8,956,78 866,292,84
Unrestricted 97.17% 97.56%
8 2 2 0
shares
1. RMB
561,285,34 8,987,33 8,987,33 570,272,67
ordinary 63.61% 64.22%
2 2 2 4
shares
2.
Domesticall
296,050,71 296,020,16
y listed 33.55% -30,550 -30,550 33.34%
6 6
foreign
shares
3. Overseas
listed
foreign
shares
4. Other
III. Total 882,341,29 5,838,00 5,599,85 887,941,15
100.00% -238,144 100.00%
5 0 6 1
shares
Reasons for share changes:
Applicable □ Not applicable
a) On 21 March 2022, the Company completed the registration of granting 5,838,000 reserved shares under the 2021 restricted
share incentive scheme at the Shenzhen Branch of China Clear.
b) Due to the fact that the Company had issued convertible A-share bonds on 9 April 2020, convertible bonds were converted to
1,856 shares in the period from the beginning of 2022 to 30 June 2022.
c) On 8 June 2022, 9,578,000 shares of equity incentive restricted shares were lifted from restriction.
d) 240,000 shares of equity incentive restricted shares were repurchased and canceled.
49
Lu Thai Textile Co., Ltd. Interim Report 2022
e) Due to the general election of directors and executives, the shares held by former directors or executives will be locked and
adjusted in accordance with relevant regulations on the executive share management.
Approval of share changes:
Applicable □ Not applicable
a) In accordance with the authorization of the first extraordinary general meeting of 2021, the Company convened the 30th session
of Ninth Board of Directors on 18 February 2022. In the session, the Proposal on Granting the Reserved Restricted Shares under
the 2021 Incentive Plan to the Incentive Personnel was deliberated and approved. The Company's independent directors presented
their independent opinions on the preceding proposals, believing that the reserved granting conditions had been fulfilled, the
qualifications of incentive personnel were legitimate and valid, and the specified grant date conforming to relevant regulations.
The Board of Supervisors reviewed the list of partial incentive personnel reserved for granting and conveyed its verification
opinions.
b) On 18 February 2022, the Proposal on Repurchase and Cancel Authorized but Unlocked Restricted Share of Part of the
Incentive Personnel was deliberated and approved at the 30th session of the Ninth Board of Directors of the Company, as 11 of the
incentive personnel of the 2021 restricted share incentive scheme due to resignation or position changes, who no longer met the
condition of being incentive personnel. The restricted shares held by the 11 personnel with a total volume of 240,000 shares,
which were authorized but not lifted from restriction, shall be repurchased and canceled by the Company in accordance with the
2021 Restricted Share Incentive Scheme and relevant provisions of laws and regulations. The aforesaid matters were deliberated
and approved at the first extraordinary general meeting of the Company in 2022 that was held on 7 March 2022.
c) On 24 May 2022, the Company held the 33rd session of the Ninth Board of Directors and the 20th session of the Ninth Board of
Supervisors, and reviewed and approved the Proposal on the Achievement of Lifting the Restriction Conditions in the First Lifting
Restriction Period for the First Grant under the 2021 Restricted Share Incentive Scheme. Also, the Company agreed to process the
lifting restriction matters of 9,578,000 restricted shares held by 733 incentive personnel who fulfilled the restriction conditions in
the first lifting restriction period for the first grant under the 2021 restricted share incentive scheme.
Transfer of share ownership:
Applicable □ Not applicable
In accordance with the Administrative Measures for Equity Incentive of Listed Companies of the CSRC, Shenzhen Stock
Exchange and provisions of relevant rules of Shenzhen Branch of China Clear, the registration of granted reserved shares under
the 2021 restricted share incentive scheme was completed on 18 March 2022. The Company completed the procedures of
repurchasing and canceling 240,000 shares of restricted share at the Shenzhen Branch of China Clear on 14 May 2022.
Progress on any share repurchases:
Applicable □ Not applicable
On 29 June 2022, the Company convened its second session of Tenth Board of Directors where the Proposal on Repurchase of the
Company's Domestically Listed Foreign Shares (B Share) was deliberated and approved. Additionally, the Announcement on
Resolution of the Second Session of Tenth Board of Directors of Lu Thai Textile Co., Ltd. and the Announcement on Repurchase
of the Domestically Listed Foreign Shares (B Share) of Lu Thai Textile Co., Ltd. For details, see relevant announcements (No.:
2022-053 and 2022-055) on 30 June 2022 on www.cninfo.com.cn.
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
See relevant contents of "IV Key Financial Information" under "Part II Corporate Information and Key Financial Information".
Other information that the Company considers necessary or is required by the securities regulator to be disclosed:
□Applicable Not applicable
50
Lu Thai Textile Co., Ltd. Interim Report 2022
2. Changes in Restricted Shares
Applicable □ Not applicable
Unit: share
Restricted Restricted Restricted Restricted
shares shares shares shares
Name of the Restricted
amount at relieved increased amount at Restricted shares relieved date
shareholders reasons
the period- of the of the the period-
begin period period end
The Company shall implement the
Locked
provisions on restricted sale by
public shares
directors, supervisors and senior
Liu Zibin 111,217 111,217 held by
management within tenure, and lift
senior
the lock-up in batches according to
management
the share incentive scheme
Locked
The Company shall implement the
public shares
provisions on restricted sale by
Wang Fangshui 110,065 110,065 held by
directors, supervisors and senior
senior
management
management
Locked
The Company shall implement the
public shares
provisions on restricted sale by
Qin Guiling 94,906 31,636 126,542 held by
directors, supervisors and senior
senior
management
management
Locked
public shares
held by The Company shall implement the
senior provisions on restricted sale by
management directors, supervisors and senior
Zhang Hongmei 369,375 120,000 143,125 392,500
and management, and lift the lock-up in
Restricted batches according to the share
shares from incentive scheme
equity
incentive
Locked
public shares
held by The Company shall implement the
senior provisions on restricted sale by
management directors, supervisors and senior
Wang Jiabin 362,775 120,000 45,000 287,775
and management within tenure, and lift
Restricted the lock-up in batches according to
shares from the share incentive scheme
equity
incentive
Locked
public shares
held by The Company shall implement the
senior provisions on restricted sale by
management directors, supervisors and senior
Yu Shouzheng 262,325 80,000 130,000 312,325
and management within tenure, and lift
Restricted the lock-up in batches according to
shares from the share incentive scheme
equity
incentive
51
Lu Thai Textile Co., Ltd. Interim Report 2022
Locked
public shares
held by The Company shall implement the
senior provisions on restricted sale by
management directors, supervisors and senior
Zhang Zhanqi 360,225 120,000 245,000 485,225
and management within tenure, and lift
Restricted the lock-up in batches according to
shares from the share incentive scheme
equity
incentive
Locked
public shares
held by The Company shall implement the
senior provisions on restricted sale by
management directors, supervisors and senior
Zhang Keming 258,275 80,000 130,000 308,275
and management within tenure, and lift
Restricted the lock-up in batches according to
shares from the share incentive scheme
equity
incentive
The Company shall implement the
Locked
provisions on restricted sale by
public shares
directors, supervisors and senior
Zhang Shougang 54,825 54,825 held by
management within tenure, and lift
senior
the lock-up in batches according to
management
the share incentive scheme
Locked
The Company shall implement the
public shares
provisions on restricted sale by
Zhang Jianxiang 39,112 13,038 52,150 held by
directors, supervisors and senior
senior
management
management
Locked
The Company shall implement the
public shares
provisions on restricted sale by
Lyu Yongchen 19,012 4,725 14,287 held by
directors, supervisors and senior
senior
management
management
Locked
public shares
held by The Company shall implement the
senior provisions on restricted sale by
management directors, supervisors and senior
Shang Chenggang 222,500 80,000 130,000 272,500
and management within tenure, and lift
Restricted the lock-up in batches according to
shares from the share incentive scheme
equity
incentive
Locked
The Company shall implement the
public shares
provisions on restricted sale by
Wang Changzhao 16,875 16,875 held by
directors, supervisors and senior
senior
management
management
Locked The Company shall implement the
public shares provisions on restricted sale by
held by directors, supervisors and senior
Li Wenji 207,500 80,000 130,000 257,500
senior management within tenure, and lift
management the lock-up in batches according to
and the share incentive scheme
52
Lu Thai Textile Co., Ltd. Interim Report 2022
Restricted
shares from
equity
incentive
The Company shall implement the
Locked
provisions on restricted sale by
public shares
directors, supervisors and senior
Liu Zilong 7,500 7,500 held by
management within tenure, and lift
senior
the lock-up in batches according to
management
the share incentive scheme
The Company shall implement the
Locked
provisions on restricted sale by
public shares
directors, supervisors and senior
Dong Shibing 3,750 3,750 held by
management within tenure, and lift
senior
the lock-up in batches according to
management
the share incentive scheme
Locked
public shares
held by The Company shall implement the
senior provisions on restricted sale by
management directors, supervisors and senior
Du Lixin 200,000 80,000 130,000 250,000
and management within tenure, and lift
Restricted the lock-up in batches according to
shares from the share incentive scheme
equity
incentive
Locked
public shares
held by The Company shall implement the
senior provisions on restricted sale by
management directors, supervisors and senior
Zhang Wei 200,000 80,000 80,000 200,000
and management, and lift the lock-up in
Restricted batches according to the share
shares from incentive scheme
equity
incentive
Locked
public shares
held by The Company shall implement the
senior provisions on restricted sale by
management directors, supervisors and senior
Fu Guannan 200,000 80,000 80,000 200,000
and management, and lift the lock-up in
Restricted batches according to the share
shares from incentive scheme
equity
incentive
Locked
public shares
held by The Company shall implement the
senior provisions on restricted sale by
management directors, supervisors and senior
Guo Heng 200,000 80,000 130,000 250,000
and management within tenure, and lift
Restricted the lock-up in batches according to
shares from the share incentive scheme
equity
incentive
53
Lu Thai Textile Co., Ltd. Interim Report 2022
Locked
public shares
held by The Company shall implement the
senior provisions on restricted sale by
management directors, supervisors and senior
Lyu Wenquan 150,000 60,000 60,000 150,000
and management within tenure, and lift
Restricted the lock-up in batches according to
shares from the share incentive scheme
equity
incentive
The Company shall implement the
Restricted
provisions on restricted sale by
shares from directors, supervisors and senior
Xu Feng 150,000 60,000 100,000 190,000
management within tenure, and lift
equity
the lock-up in batches according to
incentive the share incentive scheme
Restricted
Other subjects of
Lift the lock-up in batches
restricted share shares from
21,405,000 8,458,000 4,648,000 17,595,000 according to the share incentive
incentive scheme in
equity scheme
2021
incentive
Total 25,005,237 9,582,725 6,225,799 21,648,311 -- --
II. Issuance and Listing of Securities
Applicable □ Not applicable
Name of
Stock and issue Approved Termination
Issue Issue Listing Disclosure
derivative price amount for date for Disclosure index
date amount date date
securities (interest) listing trading
thereof
Stock
Refer to the announcement
22 22 (No.: 2022-013) disclosed
18 March
LTTC March 3.56 5,838,000 March 5,838,000 on
2022
2022 2022 http://www.cninfo.com.cn/
on 18 March 2022.
Convertible corporate bonds, convertible corporate bonds separately traded and corporate bonds
Other derivative securities
Notes:
In accordance with the authorization of the first extraordinary general meeting of 2021, the Company convened the 30th session of
Ninth Board of Directors on 18 February 2022. In the session, the Proposal on Granting the Reserved Restricted Shares under the
2021 Incentive Plan to the Incentive Personnel was deliberated and approved. Furthermore, in line with the Administrative
Measures for Equity Incentive of Listed Companies of the CSRC, Shenzhen Stock Exchange and provisions of relevant rules of
Shenzhen Branch of China Clear, the registration of granting 5,838,000 shares of restricted share to 343 incentive personnel was
completed. For details, see relevant announcements disclosed on Securities Times, Shanghai Securities News, China Securities
Journal, Ta Kung Pao (HK) and www.cninfo.com.cn.
54
Lu Thai Textile Co., Ltd. Interim Report 2022
III Total Number of Shareholders and Their Shareholdings
Unit: share
Total number of ordinary Total number of preference shareholders
shareholders at the period- 55,443 with resumed voting rights at the period- 0
end end (if any) (see Note 8)
5% or greater ordinary shareholders or the top 10 ordinary shareholders
Number Pledged, marked or frozen
Shareholdin Total Increase/decrea Number of
Nature of of shares
Name of g shares held se during the non-
sharehold restricte
shareholder percentage at the Reporting restricted
er d shares Status Number
(%) period-end Period shares held
held
Domestic
Zibo Lucheng
non-state-
Textile 140,353,58 140,353,58
owned 15.81%
Investment 3 3
legal
Co., Ltd.
person
Tailun
Foreign
(Thailand) 118,232,40 118,232,40
legal 13.32%
Textile Co., 0 0
person
Ltd.
Central Huijin State-
Assets owned
2.24% 19,884,100 19,884,100
Management legal
Co., Ltd. person
Domestic
National
non-state-
Social
owned 1.27% 11,250,051 1,440,000 11,250,051
Security Fund
legal
Portfolio 413
person
Basic Domestic
Endowment non-state-
Insurance owned 0.70% 6,175,600 6,175,600 6,175,600
Fund Portfolio legal
1002 person
Dacheng
China
Securities
Other 0.59% 5,235,900 5,235,900
Asset
Management
Plan
GF China
Securities
Asset Other 0.59% 5,235,900 5,235,900
Management
Plan
ICBC Credit
Suisse
Innovation
Power Stock Other 0.56% 4,950,000 1,350,000 4,950,000
Type
Securities
Investment
55
Lu Thai Textile Co., Ltd. Interim Report 2022
Fund
FEDERATED
HERMES
GLOBAL
INVESTMEN
T FD
(CAYMAN)
MASTER, Foreign
SPC legal 0.52% 4,623,374 395,587 4,623,374
OBOAFTAO
FEDERATED person
HERMES
EMG ASIA
EQUITY FD
MASTER
S.P.
Harvest China
Securities
Asset Other 0.50% 4,460,200 -775,700 4,460,200
Management
Plan
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 of the Company and the actual
Related or acting-in-concert controller. Tailun (Thailand) Textile Co., Ltd. is the second largest shareholder as well as sponsor of
parties among the foreign capital of the Company. All of other shareholders are people holding public A share or public
shareholders above B share and the Company is not able to confirm whether there is associated relationship or concerted
action among other shareholders.
Explain if any of the
shareholders above was
involved in entrusting/being Naught
entrusted with voting rights
or waiving voting rights
Special account for share
repurchases (if any) among
Naught
the top 10 shareholders (see
note 11)
Shareholdings of the top ten non-restricted ordinary shareholders
Type of shares
Name of shareholder Number of non-restricted shares held at the period-end
Type Shares
Zibo Lucheng Textile RMB 140,353,58
140,353,583
Investment Co., Ltd. ordinary 3
56
Lu Thai Textile Co., Ltd. Interim Report 2022
share
Domesticall
Tailun (Thailand) Textile y listed 118,232,40
118,232,400
Co., Ltd. foreign 0
shares
RMB
Central Huijin Assets
19,884,100 ordinary 19,884,100
Management Co., Ltd.
share
RMB
National Social Security
11,250,051 ordinary 11,250,051
Fund Portfolio 413
share
Basic Endowment RMB
Insurance Fund Portfolio 6,175,600 ordinary 6,175,600
1002 share
RMB
Dacheng China Securities
5,235,900 ordinary 5,235,900
Asset Management Plan
share
RMB
GF China Securities Asset
5,235,900 ordinary 5,235,900
Management Plan
share
ICBC Credit Suisse
RMB
Innovation Power Stock
4,950,000 ordinary 4,950,000
Type Securities Investment
share
Fund
FEDERATED HERMES
GLOBAL INVESTMENT
Domesticall
FD (CAYMAN) MASTER,
y listed
SPC OBOAFTAO 4,623,374 4,623,374
foreign
FEDERATED HERMES
shares
EMG ASIA EQUITY FD
MASTER S.P.
RMB
Harvest China Securities
4,460,200 ordinary 4,460,200
Asset Management Plan
share
Explanation on connected
relationship among the top
ten shareholders of tradable
share not subject to trading
Zibo Lucheng Textile Investment Co., Ltd. is the largest shareholder and the actual controller of the
moratorium, as well as
Company. Tailun (Thailand) Textile Co., Ltd. is the second largest shareholder and the foreign
among the top ten
sponsor of the Company. All the other shareholders are holding tradable A-shares or B-shares. And it
shareholders of tradable
is unknown whether there is any related party or acting-in-concert party among them.
share not subject to trading
moratorium and top ten
shareholders, or explanation
on acting-in-concert
Particular about shareholder
participate in the securities
Naught
lending and borrowing
business (if any) (note 4)
57
Lu Thai Textile Co., Ltd. Interim Report 2022
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.
IV Change in Shareholdings of Directors, Supervisors and Senior Management
Applicable □ Not applicable
Number of Number of
Increase Decreas granted restricted Number of
Incu
Beginning in the e in the Ending restricted shares granted
mben
Name Office title shareholdin Current Current shareholdin shares at granted in restricted shares
t/for
g (share) Period Period g (share) the period- the Current at the period-
mer
(share) (share) begin Period end (share)
(share) (share)
Incu
Chairman and
Liu Zibin mben 148,290 148,290
President
t
Incu
Xu Vice
mben
Zhinan Chairman
t
Incu
Xu
Director mben
Jianlyu
t
Incu
Zheng
Director mben
Huisheng
t
Director, Vice
Controller of Incu
Liu
Global mben
Deming
Marketing t
Department
Director, Vice
president,
Incu
Zhang Controller of
mben 380,300 580,300 300,000 200,000 500,000
Zhanqi Global
t
Marketing
Department
Director,
Board
Secretary,
Incu
Zhang Chief
mben 277,700 377,700 200,000 100,000 300,000
Keming Accountant,
t
Controller of
Financial
Management
58
Lu Thai Textile Co., Ltd. Interim Report 2022
Department
Director,
Chief
Engineer,
Executive
Incu
Dean of Lu
Du Lixin mben 200,000 300,000 200,000 100,000 300,000
Thai
t
Engineering
Technology
Research
Institute
Incu
Zhou Independent
mben
Zhiji Director
t
Incu
Qu Independent
mben
Dongmei Director
t
Incu
Peng Independent
mben
Yanli
Director t
Incu
Quan Independent
mben
Yuhua
Director t
Chairman of
Incu
Zhang the
mben 73,100 73,100
Shougang Supervisory
t
Committee
Incu
Liu
Supervisor mben 10,000 10,000
Zilong
t
Supervisor,
Manager of Incu
Dong
Logistics mben 5,000 5,000
Shibing
Management t
Department
Security
Incu
Wang Controller,
mben 383,700 20,000 363,700 300,000 300,000
Jiabin Chairman of
t
Labor Union
President
Shang Assistant, Incu
Chenggan Controller of mben 230,000 330,000 200,000 100,000 300,000
g Garment t
Product Line
59
Lu Thai Textile Co., Ltd. Interim Report 2022
President
Assistant,
Yu Controller of Incu
Shouzhen Energy and mben 283,100 383,100 200,000 100,000 300,000
g Environment t
Protection
Department
Fujiwara Incu
GM of Japan
Matsuzak mben
Office
a t
Controller of
Incu
Business
Li Wenji mben 210,000 310,000 200,000 100,000 300,000
Management t
Department
Controller of
Incu
Functional
Guo Heng mben 200,000 300,000 200,000 100,000 300,000
Fabric Product
t
Line
Vice
Controller of
Yarn Dyed
Fabric Product Incu
Lyu
Line, Manager mben 150,000 200,000 150,000 50,000 200,000
Wenquan
of Yarn Dyed t
Production
Management
Department
Vice
Controller of Incu
Xu Feng Yarn Dyed mben 150,000 250,000 150,000 100,000 250,000
Fabric Product t
Line
Fujiwara Appo
Director inted
Hidetoshi
Chen Appo
Director inted
Ruimou
Zeng Appo
Director inted
Facheng
Qin Appo
Director 126,542 126,542
inted
Guiling
Director and
Zhang Appo
Chief 392,500 392,500 300,000 300,000
inted
Hongmei
Accountant
Pan Independent Appo
inted
Ailing Director
Appo
Wang Independent inted
60
Lu Thai Textile Co., Ltd. Interim Report 2022
Xinyu Director
Zhang Other senior Appo
52,150 52,150
Jianxiang management inted
Zhang Other senior Appo
200,000 200,000 200,000 200,000
Wei management inted
Fu Other senior Appo
200,000 200,000 200,000 200,000
Guannan management inted
Total -- -- 3,672,382 0 20,000 4,602,382 2,800,000 950,000 3,750,000
V Change of the Controlling Shareholder or the De Facto Controller
Change of the controlling shareholder in the Reporting Period
□Applicable Not applicable
No such cases in the Reporting Period.
Change of the de facto controller in the Reporting Period
□Applicable Not applicable
No such cases in the Reporting Period.
61
Lu Thai Textile Co., Ltd. Interim Report 2022
Part VIII Preference Shares
□Applicable Not applicable
No preference shares in the Reporting Period.
62
Lu Thai Textile Co., Ltd. Interim Report 2022
Part IX Bonds
Applicable □ Not applicable
I Enterprise Bonds
□Applicable Not applicable
No enterprise bonds in the Reporting Period.
II Corporate Bonds
□Applicable Not applicable
No corporate bonds in the Reporting Period.
III Debt Financing Instruments of Non-financial Enterprises
□Applicable Not applicable
No such cases in the Reporting Period.
IV Convertible Corporate Bonds
Applicable □ Not applicable
1. Previous Adjustments and Correction of Conversion Price
On 9 April 2020, the Company publicly issued 14 million A-share convertible corporate bonds (short name: Lu
Thai Convertible Bonds, bond code: 127016) on Shenzhen Stock Exchange with an issue price of RMB100 per
share and a share conversion price of RMB9.01 per share. The bonds were listed on Shenzhen Stock Exchange on
13 May 2020. In accordance with related terms of the “Prospectus for the Public Offering of A-Share Convertible
Corporate Bonds of Lu Thai Textile Co., Ltd.”, as well as the regulations of China Securities Regulatory
Commission on the public offering of convertible corporate bonds, if the Company has any distribution of share
dividends, conversion into share capital, additional issue of new shares (excluding share capital increase due to
conversion into shares from the convertible corporate bonds issued this time), share allotment and distribution of
cash dividends after the issue of “Lu Thai Convertible Bonds”, adjustment shall be made to the share conversion
price.
On 21 May 2020, the Company held the Annual General Meeting of 2019, where the “Proposal on the Company’s
Profit Distribution Plan for 2019” was considered and approved. According to the Proposal, a cash amount of
RMB 1.00 (inclusive of tax) would be distributed to every 10 shares, with the 858,121,541 shares of share capital
on 31 December 2019 as the base. The share registration date for the Company’s equity distribution of 2019 was 8
July 2020 and the ex-rights and ex-dividend date was 9 July 2020. Therefore, the share conversion price of “Lu
Thai Convertible Bonds” was adjusted from RMB9.01 per share to RMB8.91 per share, and the new price after
the adjustment took effect on and as of 9 July 2020 (the ex-rights and ex-dividend date).
63
Lu Thai Textile Co., Ltd. Interim Report 2022
On 3 June 2021, the Company completed the registration of first-granted restricted stocks of restricted share
incentive scheme at the Shenzhen Branch of China Securities Depository and Clearing Corporation Limited
(China Clear). 7 June 2021 is designated as the listing date of first-granted restricted stocks of the Company in
2021. The Company grants 750 subjects of incentive 24,285,000 restricted shares at a price of RMB3.31 per share,
accounting for 2.83% of total share capital of the Company. The source of the stock is RMB A-share ordinary
shares issued by the Company to subjects of incentive. Therefore, the conversion price of Lu Thai Convertible
Bond will be adjusted from RMB8.91 per share to RMB8.76 per share, with the adjusted conversion price coming
into force from 7 June 2021.
The 2020 annual general meeting convened on 20 April 2021 deliberated on and adopted the Company's
Proposal on Profit Appropriation Plan in 2020, which distributes cash of RMB0.50 per 10 shares (including tax)
with total share capital at the record date of this distribution scheme as base. The record date of the Company's
interest distribution in 2020 is set on 17 June 2021. The ex-date is set on 18 June 2021. Therefore, the
conversion price of Lu Thai Convertible Bond will be adjusted from RMB8.76 per share to RMB8.71 per share,
with the adjusted conversion price coming into force from 18 June 2021 (the ex-date).
On 22 March 2022, the Company completed the registration of granting reserved shares under the 2021 restricted
share incentive scheme at the Shenzhen Branch of China Clear. 22 March 2022 was designated as the listing date
for granting reserved restricted shares of the Company. The Company granted 343 incentive personnel 5,838,000
restricted shares at a price of RMB3.56 per share, accounting for 0.66% of total share capital of the Company. The
source of the stock is RMB A-share ordinary shares issued by the Company to incentive personnel. Therefore, the
conversion price of Lu Thai convertible bond will be adjusted from RMB8.71 per share to RMB8.68 per share,
with the adjusted conversion price coming into force from 22 March 2022.
The 2021 annual general meeting convened on 20 May 2022 deliberated and adopted the Company's Proposal on
Profit Appropriation Plan in 2021, which distributes cash of RMB0.70 per ten shares (including tax) with total
share capital at the record date of this distribution scheme as base. The record date of the Company's interest
distribution in 2021 was set on 22 June 2022. The ex-date was set on 23 June 2022. Therefore, the conversion
price of Lu Thai convertible bond will be adjusted from RMB8.68 per share to RMB8.61 per share, with the
adjusted conversion price coming into force from 23 June 2022.
2. Accumulative Conversion
Applicable □ Not applicable
Converte
d shares
as % of Unconverte
Accumulati Accumulati
Total total Unconverted d amount
Abbreviatio Start ve amount ve shares
circulatio Total amount shares amount (RMB) as % of
n date converted converted
n (piece) issued by total
(RMB) (share)
the amount
Company
before the
64
Lu Thai Textile Co., Ltd. Interim Report 2022
start date
of
conversio
n
Lu Thai 15
14,000,00 1,400,000,000. 1,399,852,400.
Convertible Octobe 147,600.00 16,610 0.00% 99.99%
0 00 00
Bonds r 2020
3. Top 10 Convertible Bond Holders
Unit: share
As % of
Number of convertible Amount of convertible
Nature of convertible
No. Name of holders bonds held at the period- bonds held at the
holders bonds held at the
end (share) period-end (RMB)
period-end
Fuguo Fumin Fixed Benefit
1 Pension Product - China Other 674,439 67,443,900.00 4.82%
Construction Bank
Industrial and Commercial Bank
of China - China Universal
2 Other 592,475 59,247,500.00 4.23%
Convertible Bond Securities
Investment Fund
China Construction Bank - E
3 Fund Enhanced Return Bond Other 455,992 45,599,200.00 3.26%
Securities Investment Fund
Agricultural Bank of China -
4 Essence Target Income Bond Other 345,399 34,539,900.00 2.47%
Securities Investment Fund
ICBC Credit Suisse Ruixi Fixed
5 Benefit Pension Product - Bank of Other 344,824 34,482,400.00 2.46%
China
National Social Security Fund
6 Other 340,000 34,000,000.00 2.43%
Portfolio 1005
State-
owned
7 Guosen Securities Co., Ltd. 284,035 28,403,500.00 2.03%
legal
person
State-
Genertec Investment Management owned
8 273,581 27,358,100.00 1.95%
Co., Ltd. legal
person
China Construction Bank -
9 Xinhua Zengyi Bond Securities Other 251,728 25,172,800.00 1.80%
Investment Fund
Corporate Annuity Scheme of
PetroChina Group Co., Ltd. -
10 Other 235,673 23,567,300.00 1.68%
Industrial and Commercial Bank
of China
4. Significant Changes in Profitability, Assets Condition and Credit Status of Guarantors
□Applicable Not applicable
65
Lu Thai Textile Co., Ltd. Interim Report 2022
5. The Company’s Liabilities, Credit Changes at the Period-end and Cash Arrangements to Repay Debts
in Future Years
For the relevant indicators, please refer to the Part IX Bonds- VIII The Major Accounting Data and the Financial Indicators of the
Recent 2 Years of the Company up the Period-end.
The credit rating of the Company's convertible bonds for the reporting period is AA+, which has not changed compared with that
of the same period of last year.
V Losses of Scope of Consolidated Financial Statements during the Reporting Period
Exceeding 10% of Net Assets up the Period-end of Last Year
□Applicable Not applicable
VI The Major Accounting Data and the Financial Indicators of the Recent 2 Years of the
Company up the Period-end
Unit: RMB’0,000
Item 30 June 2022 31 December 2021 Increase/decrease
Current ratio 2.78 2.62 6.11%
Debt/asset ratio 34.38% 35.57% -1.19%
Quick ratio 1.56 1.49 4.70%
H1 2022 H1 2021 YoY increase/decrease
Net profit before exceptional
36,557.92 5,428.15 573.49%
gains and losses
EBITDA/debt ratio 21.76% 14.06% 7.70%
Interest cover (times) 9.19 4.96 85.28%
Cash-to-interest cover (times) 2.68 5.15 -47.96%
EBITDA-to-interest cover
13.54 10.95 23.65%
(times)
Loan repayment ratio 100.00% 100.00% 0.00%
Interest payment ratio 100.00% 100.00% 0.00%
66
Lu Thai Textile Co., Ltd. Interim Report 2022
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 2022
Unit: RMB
Item 30 June 2022 1 January 2022
Current assets:
Monetary assets 1,925,789,127.57 1,999,712,889.35
Held-for-trading financial assets 288,418,520.36 1,727,000.00
Derivative financial assets
Notes receivable 227,397,243.31 227,740,247.89
Accounts receivable 667,240,987.64 647,277,198.51
Accounts receivable financing 40,325,536.36 34,663,071.88
Prepayments 82,325,516.31 54,545,954.20
Other receivables 49,115,558.70 74,191,613.22
Including: Interest receivable
Dividends receivable 18,563,298.40 47,025,975.44
Financial assets purchased under
resale agreements
Inventories 2,579,929,333.35 2,345,346,794.28
Other current assets 28,649,163.94 55,992,522.81
Total current assets 5,889,190,987.54 5,441,197,292.14
Non-current assets:
67
Lu Thai Textile Co., Ltd. Interim Report 2022
Long-term receivables
Long-term equity investment 155,042,645.67 169,443,106.66
Other equity instrument investment
Other non-current financial assets 190,052,000.00 190,052,000.00
Investment property 20,911,618.62 21,362,302.03
Fixed assets 5,542,475,634.61 5,561,601,374.44
Construction in progress 274,563,543.36 237,579,082.99
Right-of-use assets 477,203,293.08 257,019,286.15
Intangible assets 357,795,521.79 363,130,978.14
Development costs
Goodwill 20,563,803.29 20,563,803.29
Long-term deferred expenses 2,045,675.62 672,601.04
Deferred income tax assets 145,319,610.74 138,516,136.50
Other non-current assets 388,446,151.49 586,083,308.25
Total non-current assets 7,574,419,498.27 7,546,023,979.49
Total assets 13,463,610,485.81 12,987,221,271.63
Current liabilities:
Short-term borrowings 1,259,466,003.35 1,011,034,138.32
Held-for-trading financial liabilities 3,622,489.80
Derivative financial liabilities
Notes payable 55,450,000.00
Accounts payable 177,051,974.86 335,401,371.30
Advances from customers
Contract liabilities 159,719,228.93 204,967,348.96
Payroll payable 226,484,047.60 272,014,296.09
Taxes payable 75,675,106.85 29,457,702.72
Other payables 89,649,867.37 97,200,565.31
Including: Interest payable
Dividends payable 441,113.64 441,113.64
Held-for-sale liabilities
68
Lu Thai Textile Co., Ltd. Interim Report 2022
Current portion of non-current liabilities 9,189,916.44 8,877,404.52
Other current liabilities 58,428,665.14 120,434,721.81
Total current liabilities 2,114,737,300.34 2,079,387,549.03
Non-current liabilities:
Long-term borrowings 685,339,710.99 684,962,473.24
Bonds payable 1,412,196,548.55 1,395,480,652.71
Including: Preferred shares
Perpetual bonds
Lease liabilities 110,455,594.21 121,357,658.41
Long-term payables
Long-term payroll payable 45,933,262.13 57,384,062.39
Provisions
Deferred income 163,339,109.58 188,958,133.78
Deferred income tax liabilities 96,821,689.02 92,571,310.14
Other non-current liabilities
Total non-current liabilities 2,514,085,914.48 2,540,714,290.67
Total liabilities 4,628,823,214.82 4,620,101,839.70
Owners’ equity:
Share capital 887,941,151.00 882,341,295.00
Other equity instruments 71,383,830.75 71,384,656.84
Including: Preferred shares
Perpetual bonds
Capital reserves 379,130,899.16 340,587,387.65
Less: Treasury stock 67,684,900.00 78,908,300.00
Other comprehensive income 44,467,322.98 -36,423,748.37
Specific reserve
Surplus reserves 1,215,124,336.54 1,215,124,336.54
General reserve
Retained earnings 5,920,996,752.38 5,589,201,772.37
Total equity attributable to owners of the 8,451,359,392.81 7,983,307,400.03
69
Lu Thai Textile Co., Ltd. Interim Report 2022
Company as the parent
Non-controlling interests 383,427,878.18 383,812,031.90
Total owners’ equity 8,834,787,270.99 8,367,119,431.93
Total liabilities and owners’ equity 13,463,610,485.81 12,987,221,271.63
Legal representative: Liu Zibin Chief Accountant: Zhang Keming Financial Manager: Zhang Keming
2. Balance Sheet of the Company as the Parent
Unit: RMB
Item 30 June 2022 1 January 2022
Current assets:
Monetary assets 1,003,368,109.67 977,713,296.25
Held-for-trading financial assets 205,958,323.45 1,286,000.00
Derivative financial assets
Notes receivable 125,339,733.99 132,028,322.80
Accounts receivable 411,270,113.30 425,711,738.27
Accounts receivable financing 16,499,916.59 29,361,263.86
Prepayments 232,629,202.77 31,580,697.18
Other receivables 2,451,463,878.52 2,060,180,025.87
Including: Interest receivable
Dividends receivable 126,413,895.72 94,525,975.44
Inventories 1,390,136,832.87 1,230,487,585.69
Contract assets
Available-for-sale assets
Current portion of non-current assets
Other current assets 9,687,385.16 205,568.38
Total current assets 5,846,353,496.32 4,888,554,498.30
Non-current assets:
Investments in debt obligations
Investments in other debt obligations
Long-term receivables
70
Lu Thai Textile Co., Ltd. Interim Report 2022
Long-term equity investments 2,806,147,532.17 2,818,047,993.16
Investments in other equity instruments
Other non-current financial assets 178,052,000.00 178,052,000.00
Investment property 69,178,500.29 65,888,260.77
Fixed assets 2,216,186,063.22 2,305,059,429.29
Construction in progress 11,534,209.88 12,268,416.12
Right-of-use assets 109,479,060.12 116,279,075.24
Intangible assets 206,705,953.99 209,970,392.83
Development costs
Goodwill
Long-term deferred expenses 305,727.68 672,601.04
Deferred income tax assets 58,194,531.91 56,003,944.38
Other non-current assets 385,336,148.70 366,112,002.79
Total non-current assets 6,041,119,727.96 6,128,354,115.62
Total assets 11,887,473,224.28 11,016,908,613.92
Current liabilities:
Short-term borrowings 721,629,860.40 615,181,318.98
Held-for-trading financial liabilities 3,257,000.00
Derivative financial liabilities
Notes payable 213,094,435.63
Accounts payable 76,659,878.30 146,714,973.77
Advances from customers
Contract liabilities 70,477,319.44 58,280,121.24
Payroll payable 155,286,696.13 190,277,420.32
Taxes payable 51,562,547.32 15,288,956.94
Other payables 244,346,094.12 92,914,225.42
Including: Interest payable
Dividends payable 441,113.64 441,113.64
Liabilities held for sale
Current portion of non-current liabilities 8,905,336.67 8,605,336.67
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Lu Thai Textile Co., Ltd. Interim Report 2022
Other current liabilities 35,035,678.38 64,202,247.99
Total current liabilities 1,580,254,846.39 1,191,464,601.33
Non-current liabilities:
Long-term borrowings 685,339,710.99 684,962,473.24
Bonds payable 1,412,196,548.55 1,395,480,652.71
Including: Preferred shares
Perpetual bonds
Lease liabilities 112,980,621.66 118,780,465.67
Long-term payables
Long-term payroll payable 45,933,262.13 57,384,062.39
Provisions
Deferred income 122,922,118.47 125,360,026.35
Deferred income tax liabilities 71,659,654.39 67,488,141.18
Other non-current liabilities
Total non-current liabilities 2,451,031,916.19 2,449,455,821.54
Total liabilities 4,031,286,762.58 3,640,920,422.87
Owners’ equity:
Share capital 887,941,151.00 882,341,295.00
Other equity instruments 71,383,830.75 71,384,656.84
Including: Preferred shares
Perpetual bonds
Capital reserves 440,510,933.40 401,967,421.89
Less: Treasury stock 67,684,900.00 78,908,300.00
Other comprehensive income -72,587.02 -293,580.24
Specific reserve
Surplus reserves 1,212,015,596.90 1,212,015,596.90
Retained earnings 5,312,092,436.67 4,887,481,100.66
Total owners’ equity 7,856,186,461.70 7,375,988,191.05
Total liabilities and owners’ equity 11,887,473,224.28 11,016,908,613.92
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Lu Thai Textile Co., Ltd. Interim Report 2022
3. Consolidated Income Statement
Unit: RMB
Item H1 2022 H1 2021
1. Revenue 3,330,294,463.25 2,220,313,650.94
Including: Operating revenue 3,330,294,463.25 2,220,313,650.94
2. Costs and expenses 2,825,026,554.05 2,173,672,124.61
Including: Cost of sales 2,497,333,041.59 1,811,241,743.20
Taxes and surcharges 34,501,258.01 28,158,126.87
Selling expense 59,894,351.04 48,546,795.06
Administrative expense 190,280,143.57 130,118,046.40
Development cost 114,951,241.87 131,384,483.80
Finance costs -71,933,482.03 24,222,929.28
Including: Interest expense 44,216,587.17 28,972,821.31
Interest income 22,350,147.90 14,562,127.13
Add: Other income 27,720,772.37 19,089,311.11
Return on investment (“-” for loss) 1,448,571.38 29,181,508.22
Including: Share of profit or loss of joint ventures and associates -1,076,939.49 -1,789,070.68
Income from the derecognition of financial assets at amortized cost
(“-” for loss)
Exchange gain (“-” for loss)
Net gain on exposure hedges (“-” for loss)
Gain on changes in fair value (“-” for loss) 3,069,030.56 8,034,224.66
Credit impairment loss (“-” for loss) 1,994,592.93 12,613,175.75
Asset impairment loss (“-” for loss) -81,695,738.30 -7,035,233.41
Asset disposal income (“-” for loss) 2,668,023.30 58,531,388.42
3. Operating profit (“-” for loss) 460,473,161.44 167,055,901.08
Add: Non-operating income 3,026,253.46 1,184,008.01
Less: Non-operating expense 2,165,139.66 2,589,928.93
4. Profit before tax (“-” for loss) 461,334,275.24 165,649,980.16
Less: Income tax expense 67,767,576.50 22,209,233.14
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Lu Thai Textile Co., Ltd. Interim Report 2022
5. Net profit (“-” for net loss) 393,566,698.74 143,440,747.02
5.1 By operating continuity
5.1.1 Net profit from continuing operations (“-” for net loss) 393,566,698.74 143,440,747.02
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 parent 393,950,852.46 153,497,344.66
5.2.1 Net profit attributable to non-controlling interests -384,153.72 -10,056,597.64
6. Other comprehensive income, net of tax 80,891,071.35 -14,700,397.96
Attributable to owners of the Company as the parent 80,891,071.35 -14,722,687.09
6.1 Items that will not be reclassified to profit or loss
6.1.1 Changes caused by re-measurements on defined benefit
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 arising from changes in own credit
risk
6.1.5 Other
6.2 Items that will be reclassified to profit or loss 80,891,071.35 -14,722,687.09
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 Other comprehensive income arising from the reclassification of
financial assets
6.2.4 Credit impairment allowance for investments in other debt
obligations
6.2.5 Reserve for cash flow hedges
6.2.6 Differences arising from the translation of foreign currency-
80,772,687.91 -14,722,321.59
denominated financial statements
6.2.7 Other 118,383.44 -365.50
Attributable to non-controlling interests 22,289.13
7. Total comprehensive income 474,457,770.09 128,740,349.06
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Lu Thai Textile Co., Ltd. Interim Report 2022
Attributable to owners of the Company as the parent 474,841,923.81 138,774,657.57
Attributable to non-controlling interests -384,153.72 -10,034,308.51
8. Earnings per share
8.1 Basic earnings per share 0.45 0.17
8.2 Diluted earnings per share 0.39 0.19
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 Keming Financial Manager: Zhang Keming
4. Income Statement of the Company as the Parent
Unit: RMB
Item H1 2022 H1 2021
1. Operating revenue 2,096,728,996.78 1,546,770,256.74
Less: Cost of sales 1,554,834,847.73 1,233,607,256.57
Taxes and surcharges 24,600,731.76 18,073,275.27
Selling expense 43,382,853.03 35,265,127.32
Administrative expense 133,045,963.42 75,940,716.94
R&D expense 76,010,921.94 92,384,664.97
Finance costs -82,597,376.96 7,127,260.14
Including: Interest expense 15,888,011.59 13,954,488.83
Interest income 14,238,816.94 11,629,881.84
Add: Other income 3,914,908.50 13,305,144.20
Return on investment (“-” for loss) 220,205,603.25 111,926,435.70
Including: Share of profit or loss of joint ventures and associates -1,076,939.49 -1,789,070.68
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) 1,415,323.45 5,605,924.66
Credit impairment loss (“-” for loss) 216,712.40 11,175,804.15
Asset impairment loss (“-” for loss) -35,555,171.46 -3,411,935.03
Asset disposal income (“-” for loss) 1,800,173.51 58,532,217.69
2. Operating profit (“-” for loss) 539,448,605.51 281,505,546.90
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Lu Thai Textile Co., Ltd. Interim Report 2022
Add: Non-operating income 2,262,303.15 972,603.08
Less: Non-operating expense 1,108,474.11 2,054,627.77
3. Profit before tax (“-” for loss) 540,602,434.55 280,423,522.21
Less: Income tax expense 53,835,226.09 33,278,229.82
4. Net profit (“-” for net loss) 486,767,208.46 247,145,292.39
4.1 Net profit from continuing operations (“-” for net loss) 486,767,208.46 247,145,292.39
4.2 Net profit from discontinued operations (“-” for net loss)
5. Other comprehensive income, net of tax 220,993.22 260,564.41
5.1 Items that will not be reclassified to profit or loss
5.1.1 Changes caused by re-measurements on defined benefit 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 arising from changes in own credit risk
5.1.5 Other
5.2 Items that will be reclassified to profit or loss 220,993.22 260,564.41
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 Other comprehensive income arising from the reclassification of
financial assets
5.2.4 Credit impairment allowance for investments in other debt
obligations
5.2.5 Reserve for cash flow hedges
5.2.6 Differences arising from the translation of foreign currency-
denominated financial statements
5.2.7 Other 220,993.22 260,564.41
6. Total comprehensive income 486,988,201.68 247,405,856.80
7. Earnings per share
7.1 Basic earnings per share 0.56 0.28
7.2 Diluted earnings per share 0.49 0.29
76
Lu Thai Textile Co., Ltd. Interim Report 2022
5. Consolidated Cash Flow Statement
Unit: RMB
Item H1 2022 H1 2021
1. Cash flows from operating activities:
Proceeds from sale of commodities and rendering of services 3,081,011,881.19 2,188,519,072.50
Tax rebates 118,817,131.92 49,776,817.94
Cash generated from other operating activities 17,250,057.84 40,450,105.81
Subtotal of cash generated from operating activities 3,217,079,070.95 2,278,745,996.25
Payments for commodities and services 2,128,158,530.89 1,226,604,647.77
Cash paid to and for employees 821,334,821.91 720,934,623.02
Taxes paid 80,208,573.82 80,233,114.94
Cash used in other operating activities 69,894,735.59 68,212,585.38
Subtotal of cash used in operating activities 3,099,596,662.21 2,095,984,971.11
Net cash generated from/used in operating activities 117,482,408.74 182,761,025.14
2. Cash flows from investing activities:
Proceeds from disinvestment 13,323,521.50 1,123,970,000.00
Return on investment 29,960,712.68 47,849,203.51
Net proceeds from the disposal of fixed assets, intangible assets and
6,647,359.73 710,556.50
other long-lived assets
Net proceeds from the disposal of subsidiaries and other business
units
Cash generated from other investing activities 32,608,417.38 37,938,763.04
Subtotal of cash generated from investing activities 82,540,011.29 1,210,468,523.05
Payments for the acquisition of fixed assets, intangible assets and
150,968,099.58 287,358,483.38
other long-lived assets
Payments for investments 280,000,000.00 620,970,000.00
Net increase in pledged loans granted
Net payments for the acquisition of subsidiaries and other business
units
Cash used in other investing activities 173,868,706.94 2,365,093.84
Subtotal of cash used in investing activities 604,836,806.52 910,693,577.22
77
Lu Thai Textile Co., Ltd. Interim Report 2022
Net cash generated from/used in investing activities -522,296,795.23 299,774,945.83
3. Cash flows from financing activities:
Capital contributions received 20,000,880.00 80,383,350.00
Including: Capital contributions by non-controlling interests to
subsidiaries
Borrowings raised 1,017,900,674.25 843,468,990.63
Cash generated from other financing activities
Subtotal of cash generated from financing activities 1,037,901,554.25 923,852,340.63
Repayment of borrowings 793,712,239.85 692,224,712.96
Interest and dividends paid 89,198,073.90 66,479,635.99
Including: Dividends paid by subsidiaries to non-controlling interests
Cash used in other financing activities 18,218,984.29 9,339,306.00
Subtotal of cash used in financing activities 901,129,298.04 768,043,654.95
Net cash generated from/used in financing activities 136,772,256.21 155,808,685.68
4. Effect of foreign exchange rates changes on cash and cash
27,668,484.46 -3,229,063.94
equivalents
5. Net increase in cash and cash equivalents -240,373,645.82 635,115,592.71
Add: Cash and cash equivalents, beginning of the period 1,970,006,884.89 1,396,530,407.47
6. Cash and cash equivalents, end of the period 1,729,633,239.07 2,031,646,000.18
6. Cash Flow Statement of the Company as the Parent
Unit: RMB
Item H1 2022 H1 2021
1. Cash flows from operating activities:
Proceeds from sale of commodities and rendering of services 2,011,005,609.32 1,577,179,188.45
Tax rebates 23,074,436.96 3,977,675.63
Cash generated from other operating activities 10,572,238.74 30,694,841.32
Subtotal of cash generated from operating activities 2,044,652,285.02 1,611,851,705.40
Payments for commodities and services 1,331,190,780.98 803,497,278.61
Cash paid to and for employees 484,573,239.10 440,588,791.54
Taxes paid 50,678,412.46 45,320,520.61
78
Lu Thai Textile Co., Ltd. Interim Report 2022
Cash used in other operating activities 42,450,664.45 52,552,741.22
Subtotal of cash used in operating activities 1,908,893,096.99 1,341,959,331.98
Net cash generated from/used in operating activities 135,759,188.03 269,892,373.42
2. Cash flows from investing activities:
Proceeds from disinvestment 13,323,521.50 549,430,000.00
Return on investment 186,817,055.74 132,956,299.26
Net proceeds from the disposal of fixed assets, intangible assets and
7,706,280.16 804,625.93
other long-lived assets
Net proceeds from the disposal of subsidiaries and other business
units
Cash generated from other investing activities 1,095,700,570.04 495,197,496.03
Subtotal of cash generated from investing activities 1,303,547,427.44 1,178,388,421.22
Payments for the acquisition of fixed assets, intangible assets and other
39,865,621.95 41,200,695.39
long-lived assets
Payments for investments 202,500,000.00 392,970,000.00
Net payments for the acquisition of subsidiaries and other business
units
Cash used in other investing activities 1,343,713,654.95 928,911,558.44
Subtotal of cash used in investing activities 1,586,079,276.90 1,363,082,253.83
Net cash generated from/used in investing activities -282,531,849.46 -184,693,832.61
3. Cash flows from financing activities:
Capital contributions received 20,000,880.00 80,383,350.00
Borrowings raised 507,937,437.39 442,042,271.59
Cash generated from other financing activities 154,870,600.00 58,215,720.00
Subtotal of cash generated from financing activities 682,808,917.39 580,641,341.59
Repayment of borrowings 416,282,653.26 86,522,398.76
Interest and dividends paid 85,575,684.96 60,176,992.11
Cash used in other financing activities 18,030,031.87 133,919,601.16
Subtotal of cash used in financing activities 519,888,370.09 280,618,992.03
Net cash generated from/used in financing activities 162,920,547.30 300,022,349.56
4. Effect of foreign exchange rates changes on cash and cash
9,506,927.55 -1,488,714.12
equivalents
79
Lu Thai Textile Co., Ltd. Interim Report 2022
5. Net increase in cash and cash equivalents 25,654,813.42 383,732,176.25
Add: Cash and cash equivalents, beginning of the period 977,713,296.25 728,346,695.28
6. Cash and cash equivalents, end of the period 1,003,368,109.67 1,112,078,871.53
7. Consolidated Statements of Changes in Owners’ Equity
80
Lu Thai Textile Co., Ltd. Interim Report 2022
H1 2022
Unit: RMB
H1 2022
Equity attributable to owners of the Company as the parent
Other equity instruments Other Speci Gene Non- Total
Item Less:
Share Prefer Perpet Capital comprehe fic Surplus ral Retained Oth controllin owners’
Treasury Subtotal
capital red ual Other reserves nsive reser reserves reser earnings er g interests equity
stock
shares bonds income ve ve
1.
Balances -
882,341,2 71,384,6 340,587,3 78,908,3 1,215,124,3 5,589,201,7 7,983,307,4 383,812,0 8,367,119,4
as at the 36,423,74
95.00 56.84 87.65 00.00 36.54 72.37 00.03 31.90 31.93
8.37
end of the
prior year
Add:
Adjustme
nts for
changed
accountin
g policies
Adjustme
nts for
correction
s of
previous
errors
81
Lu Thai Textile Co., Ltd. Interim Report 2022
Adjustme
nts for
business
combinati
ons under
common
control
Other
adjustmen
ts
2.
Balances
-
as at the 882,341,2 71,384,6 340,587,3 78,908,3 1,215,124,3 5,589,201,7 7,983,307,4 383,812,0 8,367,119,4
36,423,74
95.00 56.84 87.65 00.00 36.54 72.37 00.03 31.90 31.93
beginning 8.37
of the
year
3.
Increase/
decrease - -
5,599,856. 38,543,51 80,891,07 331,794,98 468,051,99 467,667,83
in the -826.09 11,223,4 384,153.7
00 1.51 1.35 0.01 2.78 9.06
00.00 2
period (“-
” for
decrease)
-
3.1 Total 80,891,07 393,950,85 474,841,92 474,457,77
384,153.7
1.35 2.46 3.81 0.09
comprehe 2
82
Lu Thai Textile Co., Ltd. Interim Report 2022
nsive
income
3.2
Capital
-
increased 5,599,856. 38,543,51 55,365,941. 55,365,941.
-826.09 11,223,4
00 1.51 42 42
and 00.00
reduced
by owners
3.2.1
Ordinary
shares
5,599,856. 14,417,71 20,017,569. 20,017,569.
increased 00 3.13 13 13
by
sharehold
ers
3.2.2
Capital
increased
by
holders of -826.09 -826.09 -826.09
other
equity
instrumen
ts
3.2.3 24,125,79 24,125,798. 24,125,798.
8.38 38 38
Share-
83
Lu Thai Textile Co., Ltd. Interim Report 2022
based
payments
included
in
owners’
equity
-
3.2.4 11,223,400. 11,223,400.
11,223,4
00 00
Other 00.00
3.3 Profit - - -
distributio 62,155,872. 62,155,872. 62,155,872.
45 45 45
n
3.3.1
Appropria
tion to
surplus
reserves
3.3.2
Appropria
tion to
general
reserve
3.3.3
Appropria - - -
tion to 62,155,872. 62,155,872. 62,155,872.
45 45 45
owners
(or
84
Lu Thai Textile Co., Ltd. Interim Report 2022
sharehold
ers)
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
85
Lu Thai Textile Co., Ltd. Interim Report 2022
Loss
offset by
surplus
reserves
3.4.4
Changes
in defined
benefit
pension
schemes
transferre
d to
retained
earnings
3.4.5
Other
comprehe
nsive
income
transferre
d to
retained
earnings
3.4.6
Other
3.5
86
Lu Thai Textile Co., Ltd. Interim Report 2022
Specific
reserve
3.5.1
Increase
in the
period
3.5.2
Used in
the period
3.6 Other
4.
Balances
887,941,1 71,383,8 379,130,8 67,684,9 44,467,32 1,215,124,3 5,920,996,7 8,451,359,3 383,427,8 8,834,787,2
as at the 51.00 30.75 99.16 00.00 2.98 36.54 52.38 92.81 78.18 70.99
end of the
period
H1 2021
Unit: RMB
H1 2021
Equity attributable to owners of the Company as the parent
Other equity instruments
Less: Other Speci Gene Non- Total
Item
Share Prefer Perpet Capital Treas comprehe fic Surplus ral Retained Oth controlling owners’
Subtotal
capital red ual Other reserves ury nsive reser reserves reser earnings er interests equity
shares bonds stock income ve ve
87
Lu Thai Textile Co., Ltd. Interim Report 2022
1.
Balances
858,132,3 71,386,45 255,912,4 1,308,922. 1,154,017,4 5,346,819,9 7,687,577,5 404,098,7 8,091,676,3
as at the 22.00 1.81 88.01 89 57.79 48.22 90.72 89.18 79.90
end of the
prior year
Add:
Adjustme
nts for
changed
accountin
g policies
Adjustme
nts for
correction
s of
previous
errors
Adjustme
nts for
business
combinati
ons under
common
control
88
Lu Thai Textile Co., Ltd. Interim Report 2022
Other
adjustmen
ts
2.
Balances
as at the 858,132,3 71,386,45 255,912,4 1,308,922. 1,154,017,4 5,346,819,9 7,687,577,5 404,098,7 8,091,676,3
22.00 1.81 88.01 89 57.79 48.22 90.72 89.18 79.90
beginning
of the
year
3.
Increase/
decrease - -
24,287,60 61,703,90 109,376,35 180,643,99 170,609,68
in the -1,183.05 14,722,68 10,034,30
0.00 8.29 4.26 2.41 3.90
7.09 8.51
period (“-
” for
decrease)
3.1 Total
- -
comprehe 153,497,34 138,774,65 128,740,34
14,722,68 10,034,30
4.66 7.57 9.06
nsive 7.09 8.51
income
3.2
Capital
increased 24,287,60 61,703,90 85,990,325. 85,990,325.
-1,183.05
0.00 8.29 24 24
and
reduced
by owners
89
Lu Thai Textile Co., Ltd. Interim Report 2022
3.2.1
Ordinary
shares
24,287,60 61,703,90 85,991,508. 85,991,508.
increased 0.00 8.29 29 29
by
sharehold
ers
3.2.2
Capital
increased
by holders
-1,183.05 -1,183.05 -1,183.05
of other
equity
instrumen
ts
3.2.3
Share-
based
payments
included
in owners’
equity
3.2.4
Other
90
Lu Thai Textile Co., Ltd. Interim Report 2022
3.3 Profit - - -
distributio 44,120,990. 44,120,990. 44,120,990.
40 40 40
n
3.3.1
Appropria
tion to
surplus
reserves
3.3.2
Appropria
tion to
general
reserve
3.3.3
Appropria
tion to - - -
owners 44,120,990. 44,120,990. 44,120,990.
40 40 40
(or
sharehold
ers)
3.3.4
Other
3.4
Transfers
within
91
Lu Thai Textile Co., Ltd. Interim Report 2022
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
92
Lu Thai Textile Co., Ltd. Interim Report 2022
benefit
pension
schemes
transferre
d to
retained
earnings
3.4.5
Other
comprehe
nsive
income
transferre
d to
retained
earnings
3.4.6
Other
3.5
Specific
reserve
3.5.1
Increase
in the
period
93
Lu Thai Textile Co., Ltd. Interim Report 2022
3.5.2
Used in
the period
3.6 Other
4.
Balances -
882,419,9 71,385,26 317,616,3 1,154,017,4 5,456,196,3 7,868,221,5 394,064,4 8,262,286,0
as at the 13,413,76
22.00 8.76 96.30 57.79 02.48 83.13 80.67 63.80
4.20
end of the
period
8. Statements of Changes in Owners’ Equity of the Company as the Parent
H1 2022
Unit: RMB
H1 2022
Other equity instruments Less: Other Specifi
Item Capital Surplus Retained Othe Total owners’
Share capital Preferre Perpetu Treasury comprehensi c
Other reserves reserves earnings r equity
d shares al bonds stock ve income reserve
1. Balances
as at the end 882,341,295. 71,384,656. 401,967,421. 78,908,300. 1,212,015,596. 4,887,481,100. 7,375,988,191.
-293,580.24
00 84 89 00 90 66 05
of the prior
year
Add:
Adjustments
for changed
accounting
94
Lu Thai Textile Co., Ltd. Interim Report 2022
policies
Adjustments
for
corrections
of previous
errors
Other
adjustments
2. Balances
as at the 882,341,295. 71,384,656. 401,967,421. 78,908,300. 1,212,015,596. 4,887,481,100. 7,375,988,191.
-293,580.24
00 84 89 00 90 66 05
beginning of
the year
3. Increase/
decrease in -
38,543,511.5
the period (“- 5,599,856.00 -826.09 11,223,400. 220,993.22 424,611,336.01 480,198,270.65
1
00
” for
decrease)
3.1 Total
comprehensi 220,993.22 486,767,208.46 486,988,201.68
ve income
3.2 Capital
-
increased 38,543,511.5
5,599,856.00 -826.09 11,223,400. 55,365,941.42
1
and reduced 00
by owners
95
Lu Thai Textile Co., Ltd. Interim Report 2022
3.2.1
Ordinary
14,417,713.1
shares 5,599,856.00 20,017,569.13
3
increased by
shareholders
3.2.2 Capital
increased by
holders of -826.09 -826.09
other equity
instruments
3.2.3 Share-
based
payments 24,125,798.3
24,125,798.38
8
included in
owners’
equity
-
3.2.4 Other 11,223,400. 11,223,400.00
00
3.3 Profit
-62,155,872.45 -62,155,872.45
distribution
3.3.1
Appropriatio
n to surplus
reserves
96
Lu Thai Textile Co., Ltd. Interim Report 2022
3.3.2
Appropriatio
n to owners -62,155,872.45 -62,155,872.45
(or
shareholders)
3.3.3
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
97
Lu Thai Textile Co., Ltd. Interim Report 2022
surplus
reserves
3.4.4
Changes in
defined
benefit
pension
schemes
transferred to
retained
earnings
3.4.5
Other
comprehensi
ve income
transferred to
retained
earnings
3.4.6
Other
3.5 Specific
reserve
3.5.1
Increase in
the period
98
Lu Thai Textile Co., Ltd. Interim Report 2022
3.5.2 Used
in the period
3.6 Other
4. Balances
887,941,151. 71,383,830. 440,510,933. 67,684,900. 1,212,015,596. 5,312,092,436. 7,856,186,461.
as at the end -72,587.02
00 75 40 00 90 67 70
of the period
H1 2021
Unit: RMB
H1 2021
Other equity instruments Less: Other Specifi
Item Capital Surplus Retained Othe Total owners’
Share capital Preferre Perpetua Treasur comprehensiv c
Other reserves reserves earnings r equity
d shares l bonds y stock e income reserve
1. Balances
as at the end 858,132,322.0 71,386,451.8 317,292,522.2 1,150,908,718.1 4,381,640,182.3 6,778,935,883.2
-424,313.33
0 1 5 5 2 0
of the prior
year
Add:
Adjustments
for changed
accounting
policies
Adjustments
for
corrections of
previous
errors
99
Lu Thai Textile Co., Ltd. Interim Report 2022
Other
adjustments
2. Balances
as at the 858,132,322.0 71,386,451.8 317,292,522.2 1,150,908,718.1 4,381,640,182.3 6,778,935,883.2
-424,313.33
0 1 5 5 2 0
beginning of
the year
3. Increase/
decrease in
the period (“- 24,287,600.00 -1,183.05 61,703,908.29 260,564.41 203,024,301.99 289,275,191.64
” for
decrease)
3.1 Total
comprehensiv 260,564.41 247,145,292.39 247,405,856.80
e income
3.2 Capital
increased and
24,287,600.00 -1,183.05 61,703,908.29 85,990,325.24
reduced by
owners
3.2.1
Ordinary
shares 24,287,600.00 61,703,908.29 85,991,508.29
increased by
shareholders
3.2.2 Capital
increased by -1,183.05 -1,183.05
holders of
100
Lu Thai Textile Co., Ltd. Interim Report 2022
other equity
instruments
3.2.3 Share-
based
payments
included in
owners’
equity
3.2.4 Other
3.3 Profit
-44,120,990.40 -44,120,990.40
distribution
3.3.1
Appropriatio
n to surplus
reserves
3.3.2
Appropriatio
n to owners -44,120,990.40 -44,120,990.40
(or
shareholders)
3.3.3 Other
3.4
Transfers
within
owners’
101
Lu Thai Textile Co., Ltd. Interim Report 2022
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
102
Lu Thai Textile Co., Ltd. Interim Report 2022
earnings
3.4.5 Other
comprehensiv
e 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
882,419,922.0 71,385,268.7 378,996,430.5 1,150,908,718.1 4,584,664,484.3 7,068,211,074.8
as at the end -163,748.92
0 6 4 5 1 4
of the period
103
Lu Thai Textile Co., Ltd. Interim Report 2022
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 RMB 1.00 per share. Upon approved by
Shenzhen Stock Exchange with No. (1997) 296 Listing Notice, the Company is listed on the Shenzhen Stock Exchange on 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 RMB 1.00, 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 RMB
844.8648 million.
The Company, in accordance with the official reply on approving Lu Thai Textile Co., Ltd. to issue additional shares (ZJXK [2008]
No. 890 document) from CSRC, issued the Renminbi common shares (A shares) amounting to 150 million shares on 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
RMB 14.09 million, which was contributed by restricted share incentive receivers with monetary funds.
In accordance with the resolution of Proposal on Repurchasing and Canceling Partial Restricted Shares already Granted for the
104
Lu Thai Textile Co., Ltd. Interim Report 2022
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 11th 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).
As per the Proposal on Buy-back of Some B-shares considered and approved as a resolution at the 2nd Extraordinary General Meeting
on 23 March 2018, the Company repurchased 64,480,800 domestically listed foreign shares (B-shares).
There were 10,800 shares of the Company which were converted from the convertible bonds in 2020.
In line with the resolution of the 1st Extraordinary General Meeting of the Company on 13 May 2021 and the resolution of the 24th
Meeting of the 9th Board of Directors on 17 May 2021, the Company implemented the restricted share incentive scheme and applied
for a registered capital increment of RMB24,285,000 which was contributed by restricted share incentive receivers with monetary
funds.
In conformity with the resolution of the 26th Meeting of the 9th Board of Directors of the Company on 26 August 2021, the Proposal
on Repurchase and Cancel Authorized but Unlocked Restricted Share of the Incentive Personnel not Conforming to the Incentive
Condition, the Company applied for a registered capital decrease of RMB80,000.
There were 4,000 shares of the Company which were converted from the convertible bonds in 2021.
In line with the authorization of the first extraordinary general meeting of the Company in 2021 and the resolution of the 30th session
of the Ninth Board of Directors on 18 February 2022, the Company granted incentive personnel 5,838,000 shares of reserved
restricted share under the 2021 incentive plan and added registered capital of RMB5,838,000 which was contributed by restricted
share incentive personnel with monetary funds.
In conformity with the resolution of the 30th session of the Ninth Board of Directors of the Company on 18 February 2022, the
Proposal on Repurchase and Cancel Authorized but Unlocked Restricted Share of Part of the Incentive Personnel, the Company
applied for a registered capital decrease of RMB240,000.
A total of 1,900 shares of convertible bonds of the Company could be converted from January to June 2022.
As at 30 June 2022, the Company's registered capital stood at RMB887,941,200.
The Company’s registered address: No. 61, Luthai Avenue, Hi-tech Development Zone, Zibo, Shandong
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The Company’s unified social credit code: 91370300613281175K
The Company’s legal representative: Liu Zibin
The Company establishes the corporate governance structure consisting of the shareholders meeting, the Board of Directors and the
Supervisory Committee. At present, the Company has set up various departments including the Yarn-dyed Fabric Product Line,
Garment Product Line, the Clothing Marketing Department, the Global Marketing Department, the Supply Chain Department, Lu
Thai Engineering Technology Institute, the Enterprise Management Department, the Financial Management Department and the
Strategy and Market Department etc.
The scope of business of the Company and its subsidiaries shall include general projects: Fabric textile processing; fabric printing
and dyeing processing; garment manufacturing; the sales of textiles and raw materials; clothing wholesale; clothing retail; Internet
sales (except for the sale of goods requiring a license); the production of Class I medical devices; the production of routine masks
(non-medical); the production of labour protection appliances; software development; technical services, development of technology,
technology consulting, technical exchange, technology transfer and technology promotion; the sales of textile special equipment; the
sales of mechanical and electrical equipment; the procurement of primary agricultural products; business training (trainings that
require approval such as educational training and vocational skill training exclusive); housing lease; the lease of non-residential real
estate; the lease of land usage right; the sales of special chemical products (dangerous chemicals exclusive); and the sales of building
materials. It shall also include licensed projects (business activities can be carried out legally and independently with business license
in addition to projects that must be approved by law): Inspection and testing service; catering service; power generation business,
power transmission business, and power supply (distribution) business. (For projects that must be approved by law, the business
activities can only be carried out upon approval by the relevant departments, and the specific business projects shall be subject to the
approval document or license of relevant departments)
The Company’s financial statements and Notes thereof have been approved by the 3rd Meeting of the 10th Board of Directors held on
24 August 2022.
There were 20 subsidiaries included into the consolidation scope of the Company in H1 2022, and for the details, please refer to
Note VIII. “Changes of Consolidation Scope” and Notes IX. “Equities among Other Entities”.
IV Basis for Preparation of Financial Statements
1. Preparation Basis
This financial statement is prepared in accordance with the accounting standards for business enterprises, and the application guide,
interpretation and other relevant regulations (hereinafter collectively referred to as “Accounting Standards for Business Enterprises”)
issued by the Ministry of Finance. In addition, the Company also disclosed relevant financial information in accordance with the
Regulations on Information Disclosure and Compilation for Companies Public Offering Securities No. 15-General Provisions on
Financial Report (revised in 2014) issued by China Securities Regulatory Commission.
The Company's accounting is based on the accrual basis. Except for certain financial instruments, this financial statement is
measured on the basis of historical cost. If the asset is impaired, the corresponding impairment provision shall be made in accordance
with relevant regulations.
2. Going-concern
The financial statements are presented on the basis of continuing operations.
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V Significant Accounting Policies and Estimates
Specific accounting policies and accounting estimates indicators:
The Company determines income recognition policy according to its production and operation characteristics, and the specific
accounting policies are shown in Note V (27).
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 consolidated, and the Company’s financial positions as at 31 December 2021,
business results and cash flows for 2021, and other relevant information.
2. Fiscal Year
The Company’s fiscal year starts on 1 January and ends on 31 December of every year according to the Gregorian calendar.
3. Operating Cycle
The Company regards 12 months as an operating cycle.
4. Recording Currency
The Company and its domestic subsidiaries adopt RMB as the recording currency. The Company’s 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
(1) Business combinations under the same control
For business combinations under the same control, the assets and liabilities of the merged party acquired by the merger party in the
merger, except for adjustments due to different accounting policies, shall be measured at the carrying value of the merged party in the
consolidated financial statement of the final controller on the combination date. As for the difference between the carrying value of
the merger consideration and carrying value of the net assets obtained in the merger, the capital reserve (capital stock premium) shall
be adjusted, and if the capital reserve (capital stock premium) is insufficient to offset, the retained earnings shall be adjusted.
Realize business combination under the same control in steps by transaction several times
In specific financial statements, the share of book value of the net assets of the combined party that shall be enjoyed in the combined
financial statements of the final control party on the combination date as calculated according to the shareholding ratio of the
combination date is regarded as the initial investment cost of the investment; the difference between the initial investment cost and
the sum of book value of investment held before combination plus the book value of the consideration newly paid on the combination
date is used for adjusting the capital reserve (capital stock premium), and if the capital reserve is insufficient to offset, the retained
earnings shall be adjusted.
In the combined financial statements, the assets and liabilities of the combined party acquired by the combining party in the
combination, except for adjustments due to different accounting policies, shall be measured at the book value of the combined party
in the consolidated financial statement of the final controller on the combination date; the difference between the sum of the book
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value of investment held before combination plus the book value newly paid on the combination date, and the book value of the net
assets acquired in combination, is used for adjusting the capital reserve (capital stock premium), and if the capital reserve (capital
stock premium) is insufficient to offset, the retained earnings shall be adjusted. The long-term equity investment held by the
combining party before acquiring the control right of the combined party, if relevant gains and losses, other comprehensive revenues
and changes in other owner’s equity have been confirmed from the date of acquiring equity and the date when the combining party
and the combined party under the final control of the same party, whichever is later, to the combination date, shall offset the retained
earnings at the beginning or current profits and losses in the period of comparing statements.
(2) Business combinations not under the same control
For a business combination not under the same control, the cost of the combination is the assets paid, liabilities incurred or assumed,
and the fair value of the equity securities issued on the acquisition date to obtain control over the purchased party. On the purchase
date, the acquired assets, liabilities and contingent liabilities of the purchased party are recognized at fair value.
The difference between the merger cost and the fair value of the identifiable net assets of the acquired party acquired in the merger
(the former is greater than the latter) is recognized as goodwill, and subsequent measurement is made based on the cost deducting the
accumulated impairment provision; the difference between the merger cost and the fair value of the identifiable net assets of the
acquired party acquired in the merger (the former is less than the latter) shall be recorded into the current profit or loss after the
recheck.
Achieve business combination not under the same control step by step through multiple transactions
In specific financial statements, the sum of book value of the acquired party's equity investment held before the purchase date and the
investment cost newly paid on the purchase date is regarded as the initial investment cost of the investment. The other comprehensive
income recognized by using the equity method of accounting of the equity investment held before the purchase date, is not disposed
on the purchase date, and the same basis as the direct disposal of relevant assets or liabilities of the investee is used to conduct
accounting treatment when disposing the investment; the owner's equity recognized as a result of the changes of the other owner's
equity except for the net profit and loss of the investee, other comprehensive income and profit distribution shall be transferred to the
current profit and loss during the disposal period when disposing the investment. If the equity investment held before the purchase
date is measured at fair value, the accumulative changes in fair value originally included in other comprehensive income shall be
transferred to retained earnings when accounting by cost method.
In consolidated financial statements, the cost of consolidation is the sum of the consideration paid at the purchase date and the fair
value at the purchase date of the equity already held by the acquired party before the purchase date. For equity of the acquired party
that is already held before the purchase date, it shall be re-measured according to the fair value of the equity on the purchase date,
and the difference between the fair value and its book value shall be included in the current income. If the equity of the acquired
party held before the purchase date involves other comprehensive income and the changes of other owner's equity, it shall be
transferred to current income on the purchase date, except for other comprehensive income caused by changes in net liabilities or net
assets of the income plan remeasured and reset by the investee.
(3) Treatment of transaction costs in business combinations
Intermediary expenses such as auditing, legal services, evaluation and consulting and other related management expenses incurred
for the business combination shall be included in the current profit and loss when incurred. The transaction costs of equity securities
or debt securities issued as the merger consideration shall be included in the initial recognition amount of equity securities or debt
securities.
6. Preparation of the Consolidated Financial Statements
(1) Consolidation scope
The consolidation scope of the consolidated financial statements is determined on the basis of control. Control means that the
Company has the power over the invested unit, enjoys variable returns by participating in the related activities of the invested unit,
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and has the ability to use the power over the invested unit to influence the amount of its return. Subsidiaries refer to the entities
controlled by the Company (including enterprises, divisible parts of invested entities, structured entities, etc.).
(2) Preparation method of consolidated financial statements
The consolidated financial statements are prepared by the Company based on the financial statements of the Company and its
subsidiaries and other relevant materials. When preparing the consolidated financial statements, the accounting policies and
accounting fiscal of the Company and those of subsidiaries shall be consistent and the large transactions and intercourse balance
among companies shall be offset. Subsidiaries and businesses increased due to business combinations under the same control during
the Reporting Period shall be included into the Company’s combination scope since the date when they are jointly controlled by the
final controller, and the operating result and cash flow since then shall be respectively included into the consolidated income
statement and consolidated cash flow statement. As for subsidiaries and businesses increase due to business combinations not under
the same control during the Reporting Period, the revenue, expenses and profit or those subsidiaries and businesses from the purchase
date to the end of the Reporting Period shall be included into the consolidated income statement and the cash flow thereof shall be
included into the consolidated cash flow statement. The share of shareholders’ equity in subsidiaries not belonging to the Company
shall be regarded as the minority interests and separately listed under the item of shareholders’ equity in the consolidated balance
sheet. The share of current portion of net profit or loss in subsidiaries belonging to minority interests shall presented as the item of
minority interests under the item of net profit in the consolidated income statement. The difference between the losses of subsidiaries
born by not-controlling shareholders and the share of the company’s owners’ equity at the period-beginning the not-controlling
shareholders enjoy (the former is larger than the latter) shall be offset the minority interests.
(3) Purchase of minority shareholders' equity of subsidiaries
As for the difference between the cost of a long-term equity investment newly acquired due to the purchase of the minority shares
and the share of net assets of the subsidiary continuously accounted from the purchase date or combination date the Company shall
enjoy based on the new shareholding ratio and the difference between the disposal price of partial equity investments in the
subsidiary under the premise of remaining the control power and the share of net assets of the subsidiary continuously accounted
from the purchase date or combination date the Company shall enjoy and corresponding to the disposal of long-term equity
investments, the capital reserve (capital stock premium) in the consolidated balance sheet shall be adjusted and when the capital
reserve is insufficient to offset, the retained earnings shall be adjusted.
(4) Treatment of loss of control over subsidiaries
If the control over the original subsidiary is lost due to the disposal of partial equity investments or other reasons, the residual equity
shall be remeasured at the fair value on the date of losing the control power; the balance of the sum of the consideration obtained
from equity disposal and the fair value of residual equity after deducting the sum of the share of the carrying value of net assets in the
original subsidiary continuously accounted from the purchase date the Company shall enjoy based on the original shareholding ratio
and the goodwill shall be recorded into the investment income of the period when the control power is lost. The other comprehensive
income related to the equity investments in the original subsidiary shall be transferred to the current profit or loss when the control
power is lost except for the other comprehensive income arising from changes in net liabilities or net assets due to the remeasurement
of defined benefit plan by the investee.
7. Classification of Joint Arrangements and Accounting Treatment of Joint Operations
Joint arrangement refers to an arrangement under the joint control of two or more participants. The Company's joint arrangements are
divided into joint operations and joint ventures.
(1) Joint operations
A joint operation refers to a joint arrangement whereby the Company enjoys relevant assets of the arrangement, and assumes
obligations relevant liabilities of the arrangement.
The Company recognizes the following items related to the interest share in joint operation, and conducts accounting treatment in
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accordance with relevant provisions of the Accounting Standard for Business Enterprises:
A. It recognizes separately held assets and jointly held assets according to the proportion;
B. It recognizes separately assumed liabilities and jointly assumed liabilities according to the proportion;
C. Income from the sale of the proportion of joint operation output is recognized;
D. Income from the sale of the joint operation output is recognized according to the proportion.
E. While the separately incurred fee is recognized, the incurred fee for joint operation is recognized according to the proportion.
(2) Joint ventures
A joint venture refers to a joint arrangement whereby the Company enjoys the right of the net assets of the arrangement only.
Accounting treatment of the investment of a joint venture is conducted by the Company in line with the provisions of relevant equity
method of accounting for long-term equity investment.
8. 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. Cash equivalents refer to investments
held by the Company that are short-term, highly liquid, easily convertible into known amounts of cash, and have little risk of change
in value.
9. Foreign Currency Businesses and Translation of Foreign Currency Financial Statements
(1) Foreign currency business
The Company's foreign currency business is translated into the amount of the recording currency at the approximate exchange rate of
the spot exchange rate on the transaction date.
On the balance sheet date, foreign currency monetary items are 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 the previous balance sheet date is included in the current profit and loss; for foreign currency non-
monetary items measured at historical cost, the translation adopts the spot exchange rate on the day the transaction occurs; for foreign
currency non-monetary items measured at fair value, the translation adopts the spot exchange rate on the day when the fair value is
confirmed, and the difference between the amount of recording currency and the amount of original recording currency shall be
included into the current profit or loss or other comprehensive income based on the nature of non-monetary items.
(2) Conversion of foreign currency financial statements
When converting the foreign currency financial statements of overseas subsidiaries on the balance sheet date, the assets and liabilities
items in the balance sheet shall be converted at the spot exchange rate on the balance sheet date. Other items of shareholders' equity
except for "undistributed profits" shall be converted at the spot exchange rate on the occurrence date.
Income and expense items in the income statement shall be converted using the spot exchange rate on the transaction date.
All items in the cash flow statement are converted according to the spot exchange rate on the occurrence date of cash flow. The
impact of exchange rate changes on cash is taken as a reconciling item, and the item "impact of exchange rate changes on cash and
cash equivalents" is separately listed in the cash flow statement to reflect.
The difference arising from the conversion of financial statements is reflected in the "other comprehensive income" under the
shareholders' equity in the balance sheet.
When disposing of the overseas operation and losing control rights, the foreign currency statement conversion difference related to
the overseas operation shown under the shareholders' equity in the balance sheet shall be transferred to current profit and loss of
disposal in whole or in proportion to the disposal of overseas operation.
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10. Financial Instruments
Financial instruments refer to contracts that form one party’s financial assets and form other parties’ financial liabilities or equity
instruments.
(1) Recognition and derecognition of financial instruments
The Company recognizes a financial asset or liability when it becomes a party of the relevant financial instrument contract.
Where a financial asset satisfies any of the following requirements, the recognition of it is terminated:
① The contractual rights for collecting the cash flow of the said financial asset are terminated;
② The said financial asset has been transferred and meet the following derecognition conditions for transfer of financial assets.
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.
The purchase and sale of financial assets under the normal ways shall be recognized and stopped to be recognized respectively at the
price of transaction date.
(2) Classification and measurement of financial assets
The Company classifies financial assets into the following three categories according to the business mode of managing financial
assets and the contractual cash flow characteristics of financial assets upon initial recognition: financial assets measured at amortized
cost, financial assets measured at fair value and whose changes are included in other comprehensive income, and financial assets
measured at fair value and whose changes are included in current profit and loss.
Financial assets measured at amortized cost
The Company classifies financial assets that meet the following conditions and are not designated to be measured at fair value and
whose changes are included in current profit and loss as financial assets measured at amortized cost:
The Company's business model for managing this financial asset is aimed at collecting contractual cash flow;
The contractual terms of this financial asset stipulate that the cash flow generated on the specific date is only the payment of principal
and interest based on the principal amount outstanding.
Such financial assets are measured in amortized cost by the effective interest method after initial recognition. Gains or losses arising
from financial assets measured in amortized cost that are not part of any hedging relationship are included in current profit and loss
when derecognition, amortization according to the effective interest method, or impairment is recognized.
Financial assets measured at fair value and whose changes are included in other comprehensive income
The Company classifies financial assets that meet the following conditions and are not designated to be measured at fair value and
whose changes are included in current profit and loss as financial assets measured at fair value and whose changes are included in
other comprehensive income:
The Company's business model for managing this financial asset is aimed at both collecting the contractual cash flow and selling this
financial asset;
The contractual terms of this financial asset stipulate that the cash flow generated on the specific date is only the payment of principal
and interest based on the principal amount outstanding.
Such financial assets are subsequently measured at fair value after initial recognition. Interest, impairment losses or gains and
exchange gains and losses calculated by the effective interest method are included in current profit and loss, while other gains or
losses are included in other comprehensive income. When the financial asset is derecognized, the accumulated gains or losses
previously included in other comprehensive income are transferred out and included in current profit and loss.
Financial assets measured at fair value and whose changes are included in current profit and loss
Except for the above financial assets measured at amortized cost and at fair value with changes included in other comprehensive
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income, the Company classifies all other financial assets as financial assets measured at fair value with changes included in current
profit and loss. Upon initial recognition, in order to eliminate or significantly reduce accounting mismatches, the Company
irrevocably designates some financial assets that should have been measured at amortized cost or at fair value and whose changes are
included in other comprehensive income as financial assets measured at fair value and whose changes are included in current profit
and loss.
Such financial assets are subsequently measured at fair value after initial recognition, and the resulting gains or losses (including
interest and dividend income) are included in current profit and loss unless the financial assets are part of the hedging relationship.
The business model of managing financial assets refers to how the Company manages financial assets to generate cash flow. The
business model determines whether the cash flow of the financial assets managed by the Company comes from the collection of
contractual cash flow, the sale of financial assets or both. The Company determines the business model for managing financial assets
on the basis of objective facts and specific business objectives decided by key management personnel to manage financial assets.
The Company evaluates the contractual cash flow characteristics of financial assets to determine whether the contractual cash flow
generated by the relevant financial assets on the specific date is only the payment of principal and interest based on the principal
amount outstanding. Among them, the principal refers to the fair value of financial assets upon initial recognition; interest includes
consideration for the time value of money, credit risks related to the principal amount outstanding in the specific period, and other
basic lending risks, costs and profits. In addition, the Company evaluates the contract terms that may lead to changes in the time
distribution or amount of contractual cash flow of financial assets to determine whether they meet the requirements of the above-
mentioned contractual cash flow characteristics.
Only when the Company changes the business mode of managing financial assets will all affected related financial assets be
reclassified on the first day of the first reporting period after business model changes, otherwise financial assets cannot be reclassified
after initial recognition.
Financial assets are measured at fair value upon initial recognition. For financial assets measured at fair value and whose changes are
included in current profit and loss, relevant transaction expenses are directly included in current profit and loss; for other types of
financial assets, relevant transaction expenses are included in the initial recognition amount. For accounts receivable arising from the
sale of products or the provision of labor services, which do not include or do not consider significant financing components, the
amount of consideration the Company is expected to be entitled to receive is taken as the initial recognition amount.
(3) Classification and measurement of financial liabilities
The Company's financial liabilities are classified upon initial recognition as: financial liabilities measured at fair value and whose
changes are included in current profit and loss, and financial liabilities measured at amortized cost. For financial liabilities that are
not classified as measured at fair value and whose changes are included in current profit and loss, relevant transaction costs are
included in the initial recognition amount.
Financial liabilities measured at fair value and whose changes are included in current profit and loss
Financial liabilities measured at fair value and whose changes are included in current profit and loss include transactional financial
liabilities and financial liabilities designated as measured at fair value upon initial recognition and whose changes are included in
current profit and loss. Subsequent measurement shall be carried out according to fair value for such financial liabilities. Gains or
losses resulting from changes in fair value and dividends and interest expenses related to such financial liabilities shall be included in
current profit and loss.
Financial liabilities measured at amortized cost
Other financial liabilities are subsequently measured at amortized cost by using the effective interest method. Gains or losses
resulting from derecognition or amortization are included in current profit and loss.
Distinction between financial liabilities and equity instruments
Financial liabilities refer to liabilities that meet one of the following conditions:
① The contractual obligation to deliver cash or other financial assets to other parties.
② The contractual obligation to exchange financial assets or financial liabilities with other parties under potentially unfavorable
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conditions.
③ Non-derivative contracts that must be or can be settled with the enterprise's own equity instruments in the future, and the
enterprise will deliver a variable number of its own equity instruments according to the contract.
④ Derivative contracts that must be or can be settled with the enterprise's own equity instruments in the future, except derivatives
contracts that exchange a fixed amount of cash or other financial assets with a fixed amount of its own equity instruments.
Equity instruments refer to contracts that can prove that an enterprise has the residual equity in its assets after deducting all liabilities.
If the Company cannot unconditionally avoid performing a contractual obligation by delivering cash or other financial assets, the
contractual obligation meets the definition of financial liability.
If a financial instrument must be or can be settled with the Company's own equity instruments, it is necessary to consider whether the
Company's own equity instruments used to settle the instrument are used as substitutes for cash or other financial assets or to enable
the holder of this instrument to enjoy the residual equity in the assets after deducting all liabilities from the issuer. If it is the former,
this instrument is the Company's financial liability; if the latter is the case, this instrument is the Company's equity instrument.
(4) Derivative financial instruments and embedded derivatives
The Company's derivative financial instruments include forward foreign exchange contracts. Initially, the fair value on the date when
the derivative transaction contract is signed shall be used for measurement, and the fair value shall be used for subsequent
measurement. Derivative financial instruments with positive fair value are recognized as an asset, while those with negative fair
value are indeed recognized as a liability. Any gains or losses arising from changes in fair value that do not conform to the provisions
of hedge accounting are directly included in current profit and loss.
For hybrid instruments containing embedded derivatives, such as the main contract is a financial asset, the relevant provisions on
classification of financial assets shall apply to the hybrid instruments as a whole. If the main contract is not a financial asset, and the
hybrid instrument is not measured at fair value and its changes are included in current profit and loss for accounting treatment, the
embedded derivative instrument has no close relationship with the main contract in terms of economic characteristics and risks, and
has the same conditions as the embedded derivative instrument, and the separate existing instrument meets the definition of
derivative instrument, the embedded derivative instrument shall be separated from the hybrid instrument and treated as a separate
derivative financial instrument. If it is not possible to separately measure embedded derivative instruments at the time of acquisition
or the subsequent balance sheet date, the hybrid instruments as a whole are designated as financial assets or financial liabilities
measured at fair value and their changes are included in current profit and loss.
(5) Fair value of financial instruments
See Note V(11) for the method of determining the fair value of financial assets and liabilities.
(6) Impairment of financial assets
The Company conducts impairment accounting treatment for the following items and confirms the loss provision based on the
expected credit losses:
Financial assets measured at amortized cost;
Receivables and creditors' investments measured at fair value and whose changes are included in other comprehensive income;
Contract assets defined in the Accounting Standards for Business Enterprises No. 14-Revenue;
Lease receivables;
Financial guarantee contracts (except those that are measured at fair value and whose changes are included in current profit and loss,
the transfer of financial assets does not meet the conditions for derecognition or continue to involve in the transferred financial
assets).
Measurement of expected credit loss
Expected credit loss refers to the weighted average of the credit losses of financial instruments weighted by the risk of default. Credit
loss refers to the difference between all contractual cash flows discounted at the original effective interest rate and receivable
according to the contract and all cash flows expected to be collected of the Company, i.e. the present value of all cash shortfalls.
Considering the reasonable and reliable information about past events, current situation and the forecast of future economic situation,
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the company takes the risk of default as the weight, calculates the probability weighted amount of the present value of the difference
between the cash flow receivable from the contract and the cash flow expected to be received, and confirms the expected credit loss.
The Company separately measures the expected credit losses of financial instruments at different stages. If the credit risk of financial
instruments has not increased significantly since the initial recognition, it is in the first stage. The Company measures the loss reserve
according to the expected credit loss in the next 12 months; if the credit risk of financial instruments has increased significantly since
its initial recognition but no credit impairment has occurred, it is in the second stage. The Company measures the loss reserve
according to the expected credit loss during the whole duration of this instrument; if the financial instrument has suffered credit
impairment since its initial recognition, it is in the third stage. The Company measures the loss reserve according to the expected
credit loss during the whole duration of this instrument.
For financial instruments with low credit risk on the balance sheet date, the Company assumes that their credit risk has not increased
significantly since the initial recognition, and measures the loss reserve according to the expected credit loss in the next 12 months.
The expected credit loss during the whole duration refers to the expected credit loss caused by all possible default events during the
whole expected duration of financial instruments. The expected credit loss in the next 12 months refers to the expected credit loss
caused by the possible default events of financial instruments within 12 months (or the expected duration if the expected duration of
financial instruments is less than 12 months) after the balance sheet date, which is part of the expected credit loss in the whole
duration.
When measuring the expected credit loss, the longest term that the Company needs to consider is the longest contract term that the
enterprise faces credit risk (including the option to renew the contract).
The Company calculates interest income based on the book balance before deducting impairment provisions and the effective interest
rate for financial instruments in the first and second stages and with low credit risk. The interest income shall be calculated according
to their book balance minus the amortized cost after impairment provision and the effective interest rate for financial instruments in
the third stage.
Notes receivable, accounts receivable and contract assets
The Company always measures its loss reserves at an amount equivalent to the expected credit loss during the entire duration for
notes receivable, contract assets and accounts receivable, regardless of whether there is any significant financing component.
If a single financial asset cannot be used to evaluate the expected credit loss information at a reasonable cost, the Company will
divide the notes receivable and accounts receivable into portfolio on the basis of the credit risk features, and calculate the expected
credit loss based on the portfolio. The basis for determining the portfolio is as follows:
A. Notes receivable
Notes receivable portfolio 1: bank acceptance bills and L/C
Notes receivable portfolio 2: commercial acceptance bills
B. Accounts receivable
Accounts receivable portfolio 1: payment not overdue (with credit insurance)
Accounts receivable portfolio 2: payment not overdue (without credit insurance)
Accounts receivable portfolio 3: payment overdue (with credit insurance)
Accounts receivable portfolio 4: payment overdue (without credit insurance)
C. Contract assets
Contract assets portfolio 1: product sales
Contract assets portfolio 2: engineering construction
For notes receivable and contract assets divided into portfolios, with reference to historical credit loss experience, combined with
current conditions and predictions of future economic conditions, the Company has calculated expected credit losses through default
risk exposure and expected credit loss rate for the entire duration.
For accounts receivable divided into portfolios, with reference to historical credit loss experience, combined with current conditions
and predictions of future economic conditions, the Company has prepared a comparison table between the number of aging/overdue
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days of accounts receivable and the expected credit loss rate over the entire duration, and has calculated the expected credit loss.
Other receivables
The Company divides other receivables into several portfolios based on the features of credit risk, and calculates the expected credit
losses on the basis of the combination. The basis for determining the portfolio is as follows:
Other receivables portfolio 1: Receivables from related parties within the scope of consolidation
Other receivables portfolio 2: Tax refund receivable
Other receivables portfolio 3: Deposit receivable and security deposit
Other receivables portfolio 4: other receivables
For other receivables that are divided into portfolios, the Company calculates the expected credit loss with the default risk exposure
and the expected credit loss rate within the next 12 months or the entire duration.
Creditors' investment and other creditors' investment
For creditors' investment and other creditors' investment, the Company calculates the expected credit based on the nature of the
investment, as well as kinds of types of counterparties and risk exposures, the default risk exposure and the expected credit loss rate
within the next 12 months or the entire duration loss.
Assessment on significant increase of credit risk
In order to determine the relative changes in the default risk of financial instruments during their expected life and to assess whether
the credit risk of financial instruments has increased significantly since initial recognition, the Company compares the default risk of
financial instruments on the balance sheet date with the default risk on the initial recognition date.
When determining whether the credit risk has risen greatly since the initial recognition, the Company considers reasonable and
reliable information (forward-looking information inclusive) that can be obtained without unnecessary extra costs or efforts. The
information the Company considers shall include:
The debtor fails to pay the principal and interest according to the contract expiration date;
The external or internal credit ratings (if any) of financial instruments, which have occurred or are expected, deteriorate significantly;
The debtor’s operating results, which have occurred or are expected, deteriorate significantly;
Existing or expected changes in technology, market, economy or legal environment will lead to a great adverse effect on the debtor's
ability to repay the Company.
Based on the nature of financial instruments, the Company assesses whether there is great risk in credit risk on the basis of individual
financial instruments or financial instrument portfolios. During assessment based on financial instrument portfolios, the Company
can divide financial instruments on the basis of common credit risk characteristics, such as overdue information and credit risk
ratings.
In case that the period overdue exceeds 30 days, the Company determines that there is a significant increase in the credit risk of
financial instruments.
Financial assets with depreciation of credit
The Company assesses, on the balance sheet date, whether there is any credit impairment to financial assets measured at amortized
cost and creditors' investment measured at fair value and whose changes are included in other comprehensive income. In case of one
or more events that adversely affect the expected future cash flow of a financial asset occur, the financial asset will become financial
assets with depreciation of credit. The observable information below can be treated as evidence for credit impairment to financial
assets:
The issuer or debtor is caught in a serious financial difficulty;
The debtor breaches the agreement of contract, such as default or overdue payment of interest or principal, or other default;
Due to economic or contractual considerations related to the debtor's financial difficulties, the Company gives concessions to the
debtor; and the concessions will not be made under any other circumstances;
There lies a great probability of bankruptcy or other financial restructuring for the debtor;
The issuer or debtor is caught in financial difficulties, which leads to the disappearance of the active market of the financial asset;
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Presentation of expected credit loss provision
The Company remeasures expected credit losses on each balance sheet date to reflect the changes in the credit risk of financial
instruments since initial recognition; the increase or reversal amount of the loss reserve formed there from shall be included in the
current profit and loss as impairment losses or gains. For financial assets measured at amortized cost, the loss allowance offsets the
carrying amount of the financial asset listed in the balance sheet; for creditors’ investment that are measured at fair value and its
changes are included in other comprehensive income, the Company recognizes its loss reserve in other comprehensive income and
will not offset the carrying amount of the financial asset.
Write-offs
In case that the Company fails to reasonably expect the contract cash flow of the financial asset to be recovered in a full or partial
scale, the book balance of the financial asset will be written off directly. Such write-downs may constitute the derecognition for
related financial assets. This situation occurs frequently when the Company determines that the debtor does not have any assets or
any source of income to generate sufficient cash flow to repay the amount that will be written off. However, in accordance with the
procedures for recovering due payments of the Company, the written-off financial assets may still be affected by the execution
activities.
In case that the financial asset written off is recovered later, it shall be included in the current profit and loss as the reversal of the
impairment loss.
(7) Transfer of financial assets
The transfer of financial assets refers to the transfer or delivery of financial assets to another party (transferee) other than the issuer of
the financial asset.
If the Company has transferred almost all the risks and rewards of the ownership of financial assets to the transferee, derecognize the
financial asset; if it retains almost all the risks and rewards of the ownership of financial assets, the financial asset will not be
derecognized.
If the Company has neither transferred nor retained almost all the risks and rewards of the ownership of financial assets, it shall be
dealt with in the following situations: if the control of the financial asset is abandoned, the confirmation of the financial asset shall be
terminated and the generated assets and liabilities shall be confirmed; If the financial assets are controlled, the relevant financial
assets shall be recognized according to the extent of their continued involvement in the transferred financial assets, and the relevant
liabilities shall be recognized accordingly.
(8) Offsetting financial assets and financial liabilities
When the Company has a legal right that is currently enforceable to set off the recognized financial assets and financial liabilities,
and intends either to settle on a net basis, or to realize the financial asset and settle the financial liability simultaneously, a financial
asset and a financial liability shall be offset and the net amount is presented in the balance sheet. Except for the above circumstances,
financial assets and financial liabilities shall be presented separately in the balance sheet and shall not be offset.
11. Measurement of Fair Value
Fair value refers to the price that market participants can receive from sales of a asset or shall pay for transfer of a liability in the
orderly transaction that occurs on the measurement date.
The Company measures related assets or liabilities at fair value, assuming that the orderly transaction of selling assets or transferring
liabilities is conducted in the main market of related assets or liabilities; if there is no main market, the Company assumes that the
transaction is conducted in the most beneficial market. The main market (or the most favorable market) is the trading market that the
Company can enter on the measurement date. The Company uses the assumptions used by market participants to maximize their
economic benefits when pricing the asset or liability.
For financial assets or financial liabilities with active markets, the Company uses the quotation in active markets to determine its fair
value. If there is no active market for financial instruments, the Company uses valuation techniques to determine its fair value.
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When measuring non-financial assets at fair value, the ability of market participants to best use the asset for generating economic
benefits, or the ability to sell the asset to other market participants that can best use the asset to generate economic benefits shall be
considered.
The Company adopts valuation techniques that are applicable in the current situation and have sufficient available data and other
information to support it. Priority is given to using relevant observable input values. Only when observable input values are
unavailable or are not feasible to obtain, the unobservable input values can be used. For assets and liabilities measured or disclosed at
fair value in the financial statements, the fair value hierarchy to which they belong is determined based on the lowest level input
value that is important to the fair value measurement as a whole: the first level input value is the unadjusted quotation of the same
assets or liabilities able to be obtained in an active market on the measurement date; the second level input value is the directly or
indirectly observable input value of the relevant asset or liability except the first level input value; the third level input value is
unobservable input value of related assets or liabilities.
On each balance sheet date, the Company reassessed the assets and liabilities continuously measured at fair value confirmed in the
financial statements to determine whether there is a transition among levels of fair value measurement.
12. Inventory
(1) Classification
Inventories mainly include raw materials, work-in-progress, stock products, products processed on entrustment and 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 and the packing articles should be amortized by one-off amortization method when
consuming.
13. Contract Costs
Contract cost includes the incremental cost incurred for acquiring contract and contract performance cost.
The incremental cost incurred for acquiring contract refers to the cost that will not occur if the Company has not acquired contract
(for example, sales commission). If the cost is expected to be recovered, the Company regards it as contract acquiring cost and
confirms it as an asset. The expenses incurred by the Company for acquiring contract, other than the incremental cost expected to be
recovered, are included in the current profits and losses at the time of occurrence.
If the cost incurred for performance of contract does not belong to inventory and other scope of other corporate accounting standards
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and meets the following conditions, the Company will regard it as contract performance cost and confirm it as an asset:
①The cost is directly related to a copy of contract currently acquired or expected to be acquired, including direct labor, direct
materials, manufacture expenses (or similar expenses), cost determined to be undertaken by the customer and other cost incurred due
to the contract;
②The cost increases the resources of the Company that will be used for performance of contract obligations in the future;
③The cost is expected to be recovered.
The assets confirmed by the contract acquiring cost and the assets confirmed by the contract performance cost (“assets related to
contract cost”) are amortized according to the same basis as confirmation of goods or service income related to the asset and are
included in the current profits and losses. If the amortization term does not exceed one year, it will be included in the current profits
and losses at the time of occurrence.
When the book value of an asset related to contract cost is higher than the difference between the following two items, the Company
accrues provision for impairment to the excessive part and confirms it as impairment loss:
①The remaining consideration that the Company expects to acquire from transfer of goods or services related to the asset;
②The cost that will occur for transfer of such related goods or services as estimated.
The contract performance cost confirmed as asset, if amortization term does not exceed one year or a normal business cycle at the
time of initial confirmation, is listed in the item of “inventory”; if amortization term exceeds one year or a normal business cycle at
the time of initial confirmation, is listed in the item of “other non-current assets”.
The contract acquiring cost that is confirmed as asset, if amortization term does not exceed one year or a normal business cycle at the
time of initial confirmation, is listed in the item of “other current assets”; if amortization term exceeds one year or a normal business
cycle at the time of initial confirmation, is listed in the item of “other non-current assets”.
14. Long-term Equity Investments
Long-term equity investments include equity investments in subsidiaries, joint ventures and associated enterprises. The investee that
the Company is able to exert significant influence is an associated enterprise of the Company.
(1) Determination of initial investment cost
Long-term equity investment that forms a business combination: Long-term equity investment obtained by business combination
under the same control, on the merger date, based on the book value share of the merged party’s owners’ equity in the final
controller’s consolidated financial statements as investment cost; The long-term equity investment acquired by a business
combination shall be the investment cost of the long-term equity investment according to the cost of the combination.
For long-term equity investments obtained by other means: the long-term equity investment obtained by paying cash shall be the
initial investment cost according to the actual purchase price; the long-term equity investment obtained by issuing equity securities
shall be the initial investment cost of the fair value of the equity securities issued.
(2) Subsequent measurement and profit and loss confirmation method
Investment in subsidiaries is accounted for using the cost method unless the investment meets the conditions for holding for sale;
investment in associates and joint ventures is accounted for using the equity method.
For long-term equity investments that are accounted for using the cost method, in addition to the cash dividends or profits that have
been declared but not yet included in the actual payment or consideration included in the investment, the cash dividends or profits
declared by the invested entity are recognized as investment income and recorded into the current profit and loss.
For long-term equity investments accounted for using the equity method, where the initial investment cost is greater than the fair
value share of the investee’s identifiable net assets at the time of investment, the investment cost of the long-term equity investment
is not adjusted; when the initial investment cost is less than the investment, the investee ’s If the fair value share of net assets is
identified, the book value of the long-term equity investment is adjusted, and the difference is included in the current profit and loss
of the investment.
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When using the equity method of accounting, the investment income and other comprehensive income are recognized separately
according to the share of net profit and loss and other comprehensive income realized by the invested unit that should be enjoyed or
shared, and the book value of the long-term equity investment is adjusted at the same time; The distribution of profits or cash
dividends should be calculated to reduce the book value of long-term equity investment; the investee's other changes in owner's
equity other than net profit and loss, other comprehensive income and profit distribution, adjust the book value of long-term equity
investment and Included in capital reserves (other capital reserves). When confirming the share of the investee’s net profit or loss,
based on the fair value of the investee’s identifiable assets at the time of investment, and in accordance with the Company’s
accounting policies and accounting period, the net profit of the investee Confirm after making adjustments.
If the additional investment and other reasons can exert significant influence on the investee or exercise joint control but do not
constitute control, on the conversion date, the sum of the fair value of the original equity plus the additional investment cost will be
used as the initial accounting for the equity method cost of investment. If the original equity is classified as non-trading equity
instrument investment measured at fair value whose changes are included in other comprehensive income, the relevant original and
accumulative changes in fair value included in other comprehensive income shall be transferred to retained earnings when accounting
by equity method.
If the joint control or significant influence on the invested unit is lost due to the disposal of part of the equity investment, etc., the
remaining equity after the disposal shall be changed to the Accounting Standards for Business Enterprises No. 22-Recognition and
Measurement of Financial Instruments is performed, and the difference between fair value and book value is included in the current
profit and loss. Other comprehensive income recognized by the original equity investment due to the equity method of accounting
shall be accounted for on the same basis as the investee’s direct disposal of related assets or liabilities when the equity method of
accounting is terminated; changes in other owners ’equity related to the original equity investment Transfer to current profit and loss.
If the control of the invested unit is lost due to the disposal of part of the equity investment, if the remaining equity after the disposal
can exercise joint control or exert significant influence on the invested unit, the equity method is used for accounting and the
remaining equity is treated as When acquiring, the equity method is adopted for adjustment; if the remaining equity after disposal
cannot exercise joint control or exert significant influence on the investee, the accounting shall be changed according to the relevant
provisions of "Accounting Standards for Business Enterprises No. 22-Recognition and Measurement of Financial Instruments The
difference between the fair value and the book value on the date of loss of control is included in the current profit and loss.
If the shareholding ratio of the company decreases due to the capital increase of other investors, thereby losing control but being able
to exercise joint control or exert significant influence on the investee, the new shareholding ratio shall be used to confirm that the
company should enjoy the capital increase of the investee. The difference between the increase in share and the increase in the share
of net assets and the original book value of the long-term equity investment corresponding to the decrease in the proportion of the
shareholding that should be carried forward are included in the current profit and loss; That is, adjustments are made using the equity
method of accounting.
The unrealized internal transaction gains and losses that occur between the Company and associates and joint ventures are calculated
according to the shareholding ratio and are attributed to the Company, and the investment gains and losses are recognized on the
basis of offset. However, the unrealized internal transaction losses incurred by the Company and the investee are the impairment
losses of the transferred assets and shall not be offset.
(3) Determine the basis for joint control and significant influence on the invested unit
Joint control refers to the common control of an arrangement in accordance with the relevant agreement, and related activities of the
arrangement must be agreed upon by the parties sharing control rights before they can make decisions. When judging whether there
is joint control, first determine whether all participants or a combination of participants collectively control the arrangement, and
secondly determine whether the decision-making related activities of the arrangement must be unanimously agreed by the
participants who collectively control the arrangement. If all participants or a Company of participants must act in concert to
determine the relevant activities of an arrangement, it is considered that all participants or a Company of participants collectively
control the arrangement; if there is a combination of two or more participants can collectively Controlling an arrangement does not
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constitute joint control. When judging whether there is joint control, the protective rights enjoyed are not considered.
Significant influence means that the investor has the right to participate in the decision-making of the financial and operating policies
of the invested unit, but cannot control or jointly control the formulation of these policies with other parties. When determining
whether it can exert significant influence on the invested unit, consider that the investor directly or indirectly holds the voting shares
of the invested unit and the current executable potential voting rights held by the investor and other parties are assumed to be
converted into the invested unit After the equity of the company, the impact includes the current convertible warrants, stock options
and convertible corporate bonds issued by the investee.
When the Company directly or indirectly owns more than 20% (including 20%) but less than 50% of the voting shares of the
invested unit, it is generally considered to have a significant impact on the invested unit, unless there is clear evidence that such
circumstances cannot participate in the production and operation decisions of the invested unit, and does not have a significant
impact; when the Company owns less than 20% (excluding) voting rights of the invested unit, it generally does not consider it to
have a significant impact on the invested unit unless there is clear evidence that Under these circumstances, it can participate in the
production and operation decisions of the invested unit and have a significant impact.
(4) Impairment test method and impairment provision method
For the investments in subsidiaries, associates and joint ventures, the method of accruing asset impairment is shown in the Note V-22.
15. Investment Property
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 and withdrawn depreciation or amortization as regulations of
fixed assets or intangible assets.
The Company adopts the cost mode to conduct the subsequent measurement on the investment real estate, see the Note V-22 for
the method of withdrawing asset impairment provision.
The difference between the disposal income of investment real estate sales, transfer, scrap or damage after deducting its book value
and related taxes is included in the current profit and loss.
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 of the Company are initially measured at the actual cost at the time of acquisition.
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The subsequent expenditures related to the fixed assets shall be included in the cost of the fixed assets when the economic benefits
related to the fixed assets are likely to flow into the Company and the costs can be measured reliably. The daily repair expenses of
fixed assets that do not meet the conditions of capitalized subsequent expenditures of fixed assets shall be included in the current
profit and loss or the cost of relevant assets according to the beneficiaries when incurred. The book value of the replaced part shall
be terminated.
(2) Depreciation Methods
Category of fixed Annual deprecation
Method Useful life Salvage value (%)
assets (%)
Average method of
Housing and building 5-30 0-10 20.00-3.00
useful life
Average method of
Machinery equipments 10-18 0-10 10.00-5.00
useful life
Average method of
Transportation vehicle 5 0-10 20.00-18.00
useful life
Electronic equipments Average method of
5 0-10 20.00-18.00
and others useful life
(3) Recognition Basis, Pricing and Depreciation Method of Fixed Asset under Finance Lease
When the fixed assets leased by the Group meet one or more of the following criteria, it is recognized as fixed asset under finance
lease: a) When the lease term expires, the ownership of the leased assets is transferred to the Group. b) The Group has the option
to purchase leased assets, and the purchase price concluded is expected to be much lower than the fair value of the leased assets
when the option is exercised, so it can be reasonably determined that the Group will exercise this option on the lease start date. c)
Even if the ownership of the asset is not transferred, the lease period accounts for most of the service life of the leased asset. d)
The present value of the Group's minimum lease payment on the lease start date is almost equivalent to the fair value of the leased
asset on the lease start date. e) The leased assets are of a special nature and only the Group can leverage them without major
renovation.
The fixed assets under finance lease shall be the booked value at the lower of the fair value of the leased assets on the lease start
date and the present value of the minimum lease payment. The minimum lease payment is taken as the book value of long-term
payables, and the difference is taken as unrecognized financing expenses. The initial direct costs such as handling charges,
attorney's fees, travel expenses, and stamp taxes that incurred during the lease negotiation and signing of the lease contract are
included in the value of the leased asset. Unrecognized financing expenses are allocated leveraging the effective interest rate
method in each period of the lease period.
Fixed asset under finance lease adopts the same policy as its own fixed assets to withdraw depreciation of leased assets. If it can be
reasonably determined that the ownership of the leased asset will be acquired at the end of the lease period, depreciation will be
accrued within the useful life of the leased asset; if it cannot be reasonably determined that the ownership of the leased asset can
be acquired at the end of the lease period, the depreciation shall be accrued in the shorter period between the lease period and the
residual life of the leased asset.
(4) Other Notes
At the end of each year, review is carried out by the Group for the service life, estimated net residual value and depreciation
method of fixed assets. If there is any difference between the expected service life and the original estimated service life, the
service life of fixed assets will be adjusted; if there is any difference between the expected net residual value and the original
estimated net residual value, the expected net residual value will be adjusted.
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Major repair expenses incurred by the Group in the regular inspection of fixed assets are included in the cost of fixed assets if
evidence shows that they meet the recognition conditions of fixed assets, and those fail to meet the recognition conditions of fixed
assets are included in the current profit and loss. Fixed assets at intervals of regular major repairs shall be depreciated as accrued.
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 provision withdrawal method of the construction in progress to Notes V-22.
18. Engineering Materials
Engineering materials of the Company refer to various materials prepared for projects under construction, including engineering
materials, equipment not yet installed, tools and instruments prepared for production, etc.
The purchased engineering materials will be measured according to the cost. The received engineering materials will be transferred
to the project under construction, and the remaining engineering materials after the completion of the project will be stored as
inventory.
Please refer to Note V (22) for the method of provision for impairment of assets for engineering materials.
In the balance sheet, the ending balance of engineering materials is listed in the "project under construction" item.
19. Borrowing Costs
(1) Confirmation principle of Capitalized Borrowing Expense
The borrowing expenses incurred by the Company, if can directly belong to acquisition, construction or production of assets meeting
capitalization conditions, are capitalized and included in relevant asset cost; other borrowing expenses are confirmed as expense
according to its amount at the time of occurrence and included in the current profits and losses. If the borrowing expenses meet the
following conditions, capitalization starts:
①Assets expenditure has occurred, and asset expenditure includes the expenditure occurring in the form of payment in cash,
transferring noncash asset or assuming interest bearing debt for acquiring, constructing or producing the assets meeting capitalization
conditions;
② Borrowing expenses have occurred;
③The acquisition, construction or production activities required for making assets usable or saleable as intended have started.
(2) Capitalization period of borrowing expenses
When the Company acquires, constructs or produces assets, which meet capitalization conditions and reach the intended usable or
saleable status, the borrowing expenses stop capitalization. The borrowing expenses that occur after the assets meeting capitalization
conditions reach the intended usable or saleable status are confirmed as expenses according to its amount at the time of occurrence
and are included in the current profits and losses.
If the assets meeting capital conditions generate improper interruption in the course of acquisition, construction or production, and
the interruption time continuously exceeds three months, capitalization of borrowing expenses suspends; the borrowing expenses in
the normal interruption period are continually capitalized.
(3) Capitalization rate of borrowing expenses and calculation method of capitalized amount
The interest expenses of special borrowing actually occurring in the current period, minus the interest income of the unused borrowed
capital obtained from depositing in bank or the gain on temporary investment, are capitalized; for common borrowing, the weighted
average of asset expenditure of the part that the cumulative asset expenditure exceeds special borrowing is multiplied by the
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capitalization rate of the occupied common borrowing to determine capitalization amount. Capitalization rate is calculated and
determined according to the weighted average rate of common borrowing.
In the period of capitalization, the exchange difference of special borrowing in foreign currency is fully capitalized; the exchange
difference of special borrowing in foreign currency is included in the current profits and losses.
20. Right-of-use Assets
(1) Recognition conditions for right-of-use assets
The term "right-of-use assets" refers to the right of the lessee to use the leased assets during the lease term. At the start date of the
lease term. The Company initially measures the right-of-use assets at cost. The cost includes: a) the initial measurement amount of
lease obligations; b) the lease payment amount paid on or prior to the inception of the lease (less the related amount of lease
incentives already enjoyed if any); c) the initial direct cost incurred by the lessee; and d) the anticipated cost of dismantling and
removing the leasehold property, restoring the site where the leasehold property is located, or bringing the leasehold property back
to the state agreed upon in the lease terms.
The Company makes provision for depreciation of right-of-use assets with the composite life method. Where it can be reasonably
certain that the Company will obtain ownership of the leased assets at the expiry of the lease term, the leased assets are depreciated
over the expected residual service life; where it cannot be reasonably certain that the Company can obtain ownership of the leased
assets at the end of the lease term, the leased assets are depreciated at the shorter of the lease term and the residual service life of
the leased assets.
The Company will determine the impairment of right-of-use assets and conduct accounting treatment in accordance with relevant
provisions of the Accounting Standards for Business Enterprises No.8 - Asset Impairment.
21. Intangible Assets
(1) Pricing Method, Useful Life and Impairment Test
The intangible assets of the Company include land use right, patent right, etc.
Intangible assets are initially measured at cost, and their service life is analyzed and determined when intangible assets are acquired.
If the service life of intangible assets is limited, the intangible assets shall be amortized by the method that can reflect the expected
realization method of the economic benefits related to the assets within the expected service life since they are available for use. The
straight-line method shall be used for amortization if no expected realization method can be determined reliably. Intangible assets
with uncertain service life shall not be amortized.
The amortization method of intangible assets with limited service life is as follows:
Amortization
Category Service life Note
method
Land use right Stipulated in the land certificate Method of line
Patent use right 10 years Method of line
Software use right 1-3 years Method of line
Brand use right 10 years Method of line
At the end of each year, the Company reviews the service life and amortization method of intangible assets with limited service life.
If the estimate is different from the previous one, the original estimate shall be adjusted and treated as per accounting estimate change.
If it is estimated that an intangible asset can no longer bring future economic benefits to the enterprise on the date of balance sheet,
this carrying amount of the intangible asset shall be transferred into the current profit and loss.
The method of withdrawing impairment on intangible assets was stated in the Note V-22.
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(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 can be capitalized only when they satisfy the following conditions simultaneously: 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. The development expenditures shall be recorded into profit or loss for
the current period when they don’t satisfy the following conditions.
The research and development project of the Company will enter the development stage after meeting the above conditions and the
project is approved and initiated through technical feasibility and economic feasibility study.
The capitalized expenditure in the development stage is listed as expenditure for development on the balance sheet, and it will be
transferred to intangible assets from the date when the project reaches the intended purpose.
22. Impairment of Long-term Assets
For long term equity investment in subsidiaries, associated enterprises and joint ventures, investment real estate which follow-up
measurement is carried out by cost pattern, fixed assets, construction in progress, intangible assets, business reputation, etc.
(excluding inventory, deferred income tax assets, financial assets), the impairment of assets shall be determined according to the
following methods:
On the date of the balance sheet, determination shall be made to see whether there is any sign of possible impairment of assets. If
there is, the Company will estimate its recoverable amount and conduct impairment test. For goodwill, intangible assets with
uncertain service life and intangible assets that have not reached the serviceable state due to business merger, impairment test shall be
carried out every year regardless of whether there is any sign of impairment.
The recoverable amount is determined according to the net amount of the fair value of the asset minus the disposal expenses and the
present value of the expected future cash flow of the asset, the higher amount shall be prevail. The Company estimates the
recoverable amount on the basis of a single asset. If it is difficult to estimate the recoverable amount of a single asset, the recoverable
amount of the asset group shall be determined based on the asset group to which the asset belongs. The asset group is determined on
the basis of whether the main cash inflow generated by the asset group is independent of the cash inflow of other assets or asset
groups.
When the recoverable amount of an asset or asset group is lower than its carrying amount, the group will write down its carrying
amount to the recoverable amount, and the written down amount will be included in the current profit and loss, and the corresponding
asset impairment reserve will be accrued.
Regarding the impairment test of business reputation, the carrying amount of business reputation formed by business merger shall be
apportioned to the relevant asset group in a reasonable way from the date of purchase. If it is difficult to apportion to the relevant
asset group, it shall be apportioned to the relevant combination of asset group. The relevant asset group or combination of asset
groups is the one that can benefit from the synergy effect of business merger, and is the one smaller than the reportable segment
determined by the Company.
In the impairment test, if there is any sign of impairment in the asset group or combination of asset groups related to business
reputation, first, impairment test shall be carried out on the asset group or combination of asset groups not containing business
reputation, to calculate the recoverable amount and recognize the corresponding impairment loss. Then impairment test shall be
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carried out on the asset group or combination of asset group containing business reputation to compare the carrying amount with the
recoverable amount. If the recoverable amount is lower than the carrying amount, the impairment loss of business reputation shall be
recognized.
Once the impairment loss of assets is recognized, it will not be reversed in the future accounting period.
23. Long-term Deferred Expenses
The long-term expenses to be amortized incurred by the Company are valued at the actual cost and amortized averagely according to
the expected benefit period. For long-term expenses to be amortized, the amortized value that cannot benefit the future accounting
period shall be included in the current profit and loss.
24. Payroll
(1) Accounting Treatment of Short-term Compensation
During the accounting period in which employees provide services, the Company recognizes the actual employee wages, bonuses,
social insurance premiums such as medical insurance premiums, industrial injury insurance premiums, and maternity insurance
premiums and housing provident funds paid to employees according to the prescribed standards and proportions as liabilities and
included them in the current profit and loss or related asset costs. If the liability is not expected to be fully paid within twelve months
after the end of the annual reporting period for employees to provide related services, and the financial impact is significant, the
liability will be measured at the discounted amount.
(2) Accounting Treatment of the Welfare after Departure
The post-employment benefit plan includes a defined contribution plan and a defined benefit plan. Among them, the defined
contribution plan refers to the post-employment benefit plan that the enterprise no longer assumes further payment obligations after
the fixed fund has paid a fixed fee; the defined benefit plan refers to the post-employment benefit plan other than the established
contribution plan.
Set withdrawal plan
The set contribution plan includes basic pension insurance and unemployment insurance.
During the accounting period in which employees provide services, the amount of deposit payable calculated according to the set
withdrawal plan is recognized as a liability and included in the current profit and loss or related asset costs.
Define a benefit plan
For the defined benefit plan, an independent actuary performs an actuarial valuation on the annual balance sheet date, and the cost of
providing benefits is determined by the expected cumulative benefit unit method. The employee compensation cost caused by the
Company's defined benefit plan includes the following components:
①Service cost, including current service cost, past service cost and settlement gains or losses. Among them, the current service cost
refers to the increase in the present value of the defined benefit plan obligations caused by the employees providing services in the
current period; the past service cost refers to the defined benefit related to the employee services in the previous period caused by the
modification of the defined benefit plan An increase or decrease in the present value of plan obligations.
② The net interest of the net liabilities or net assets of the defined benefit plan, including the interest income of the plan assets, the
interest expense of the defined benefit plan obligations and the interest affected by the asset ceiling.
③ Re-measure the changes caused by the net liabilities or net assets of the defined benefit plan.
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Unless other accounting standards require or allow employee benefit costs to be included in the cost of assets, the Company will
include the above items ① and ② into the current profit and loss; item ③ is included in other comprehensive income and will not be
transferred back to profit or loss in the subsequent accounting period When the defined benefit plan is terminated, all the parts
originally included in other comprehensive income are carried forward to undistributed profits within the scope of equity.
(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.
Regarding the implementation of internal retirement plan of the employees, the economic compensation before the official retirement
date belongs to the dismissal welfare. From the date when the employees stop providing services to the normal retirement date, the
wages and social insurance premiums to be paid to the early retired employees shall be included in the current profit and loss at one
time. Financial compensation (such as normal pension) after the official retirement date shall be handled as welfare after separation.
(4) Accounting Treatment of the Welfare of Other Long-term Staffs
Other long-term employee benefits provided by the Company to employees that meet the conditions of defined contribution plans
shall be handled in accordance with the above-mentioned relevant provisions on defined contribution plans. Those in line with the
defined benefit plan shall be handled in accordance with the above-mentioned relevant provisions on the defined benefit plan.
However, the part of "changes caused by remeasuring the net liabilities or net assets of the defined benefit plan" in the salary cost
of relevant employees shall be included in the current profit and loss or the relevant asset cost.
25. Lease Liabilities
The Company initially measures the lease obligation at the present value of the lease payments outstanding at the commencement
date of the lease term. Lease payments include: a) fixed payment (including substantial fixed payment), and the relevant amount after
deducting the lease incentive if any; b) variable lease payments depending on index or ratio; c) estimated payments due to the
guaranteed residual value provided by the lessee; d) exercise price of the purchased option, provided that the lessee reasonably
determines that the option will be exercised; and e) the amount to be paid for the exercise of the lease termination options, provided
that the lease term reflects that the lessee will exercise the options to terminate the lease.
The Company uses the interest rate implicit in lease as the rate of discount. If the interest rate implicit in lease cannot be reasonably
determined, the Company's incremental borrowing rate is used as the rate of discount. The Company calculates the interest expenses
of the lease obligations during each period of the lease term at a fixed periodic interest rate, and includes them in financial expenses.
The periodic interest rate refers to the rate of discount employed by the Company or the rate of discount after revision.
Variable lease payments that are not covered in the measurement of the lease obligations are included in current profit or loss when
actually incurred.
When there is a change in the Company's evaluation results of lease renewal options, lease termination options or purchase options,
the Company will re-measure the lease obligation utilizing the present value of the changed lease payment and the revised rate of
discount, and adjust the book value of right-of-use assets accordingly. Where there is a change in substantial lease payment,
estimated payments due to the guaranteed residual value, or variable lease payments depending on index or ratio, the Company will
re-measure the lease obligation leveraging the present value of the changed lease payment and the original rate of discount, and
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adjust the book value of right-of-use assets accordingly.
26. Provisions
If the obligation related to contingency meets the following conditions at the same time, the Company will recognize it as a provision.
(1) The obligation is the current obligation assumed by the Company;
(2) The performance of the obligation is likely to cause an outflow of economic benefits of the Company;
(3) The amount of the obligation can be measured reliably.
The provisions are initially measured in accordance with the optimal estimate of the necessary expenditures for the fulfillment of the
current obligation, with factors such as risks, uncertainty and the time value of money related to contingencies taken into
consideration comprehensively. Where the time value of money has a significant impact, the best estimate is determined by
discounting the relevant future cash outflow. The Company re-checks the book value of the provisions on the balance sheet date and
adjusts the book value to reflect the current best estimate.
If all or part of the expenditure required to settle recognized provisions is expected to be compensated by a third party or other parties,
the amount of compensation shall be recognized separately as an asset only when it is substantially certain that it will be received.
The recognized amount of compensation shall not exceed the book value of the recognized liabilities.
27. Share-based Payments and Equity Instruments
(1) Category of share-based payment
The share-based payments of the Company are divided into equity-settled share payments and cash-settled share payments.
(2) Method of determining the fair value of equity instruments
The Company shall determine the fair value of equity instruments such as options granted in active markets according to the
quotations in active markets. For granted equity instruments such as options without active markets, the fair value is determined by
option pricing model. The following factors shall be considered for the selected option pricing model: A. Exercise price of the option;
B. Expiration date of the option; C. Current price of the object shares; D. Expected fluctuation rate of stock price; E. Estimated
dividends of shares; F. Risk-free interest rate within the option term.
(3) Ground for recognizing the optimal estimation of feasible right equity instruments
On each balance sheet date during the waiting period, the Company shall make the optimal estimate based on subsequent information
such as the latest change in the number of employees with feasible rights, and revise the number of equity instruments for the
estimated feasible rights. On the feasible right date, the final estimated number of feasible right equity instruments shall be the same
as the actual number of feasible rights.
(4) Relevant accounting treatment for implementing, modifying and terminating share-based payment plan
Equity-settled share-based payments shall be measured at the fair value of the equity instruments granted to employees. Where the
right is exercised immediately after the grant, relevant costs or fees shall be included in accordance with the fair value of the equity
instruments on the grant date to accordingly increase the capital reserve. Where the right is exercised upon the completion of the
services during the waiting period or the achievement of the specified result conditions, the services obtained in the current period
shall be included in the relevant costs or fees and the capital reserve according to the fair value of the equity instruments on the grant
date based on the optimal estimate of the number of feasible right equity instruments on each balance sheet date during the waiting
period. The recognized related costs or fees and total owner's equity after the feasible right date shall not be adjusted any more.
The cash-settled share-based payments shall be measured according to the fair value of liabilities calculated and determined on the
basis of shares or other equity instruments, which are assumed by the Company. Where the right is exercised immediately after the
grant, the fair value of the liabilities assumed by the Company shall be included in the relevant costs or fees on the grant date, so as
to accordingly increase the liabilities. For the cash-settled share-based payments, for which the right is exercised upon the completion
of the services during the waiting period or the achievement of the specified result conditions, the services obtained in the current
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period shall be included in costs or fees and corresponding liabilities according to the fair value amount of liabilities assumed by the
Company based on the optimal estimate of feasible status on each balance sheet date during the waiting period. On each balance
sheet date and settlement date before the relevant liabilities are settled, the fair value of the liabilities shall be re-measured, and the
changes shall be included in the current profit and loss.
When the Company modifies a share-based payment plan, if the modification increases the fair value of the equity instruments
granted, the increase in the services acquired shall be recognized accordingly according to the increase in the fair value of the equity
instruments; if the modification increases the number of equity instruments granted, the fair value of the increased equity instruments
shall be recognized accordingly as the increase in the services acquired. The increase in the fair value of the equity instruments refers
to the difference between the fair values of the equity instruments before and after the modification on the modification date. If the
modification reduces the total fair value of the share-based payment or any other method not conducive to the employees is adopted
to modify the terms and conditions of the share-based payment plan, the accounting treatment of the services acquired would
continue, as if such change had never occurred, unless the Company cancels some or all of the granted equity instruments.
During the waiting period, if the granted equity instrument is canceled (except for the cancellation due to non-market conditions that
do not meet the feasible conditions), the Company shall treat the canceled equity instrument as an accelerated exercise, immediately
include the left amount to be recognized during the waiting period in the current profit and loss, and recognize the capital reserve at
the same time. Where the employee or other party can choose to meet the non-feasible right condition but fails during the waiting
period, it shall be treated as the cancellation of the granted equity instrument.
28. Revenue
Accounting policies adopted for the recognition and measurement of revenue
(1) General principle
The Company recognizes revenue when it has fulfilled its contract performance obligation in a contract, namely, when the customer
obtains the control over the related commodity or service.
If a contract contains two or more performance obligations, the Company allocates transaction price to single performance
obligations on the contract commencement date according to the relative ratio of separate price of goods or services committed by
single performance obligation, and income is measured according to the transaction price allocated to single performance obligation.
When meeting one of the following conditions, the Company belongs to performance of contract performing obligations in a period,
or otherwise, the Company belongs to performance of contract performing obligations at a point of time:
①While the Company is performing the contract, the customer acquires and consumes the economic benefit arising from
performance by the Company.
②The customer can control the goods in construction in the course of performance by the Company.
③The goods outputted in the course of performance by the Company have irreplaceable purpose, and the Company has the right to
collection of money for the completed performance part cumulative up to now in the whole term of contract.
For the performance obligation performed in a period, the Company confirms income according to the performance progress in such
period. When the performance progress cannot be reasonably determined, if the cost that the Company has incurred is expected to be
compensated, income is confirmed according to the cost amount that has occurred, until the performance progress can be reasonably
determined.
For the performance obligation performed at a point of time, income is confirmed at the point of time when the customer acquires the
control right to relevant goods or services. When it judges whether the customer has acquired the control right to the goods or
services, the Company will consider the following indications:
①The Company enjoys the current collection right to the goods or services, i.e. the customer undertakes current payment obligation
to the goods.
②The Company has transferred the legal ownership of the goods to the customer, that is, the customer has owned the legal
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ownership of the goods.
③The Company has transferred the kind of the goods to the customer, namely, the customer has possessed the good in kind.
④The Company has transferred the major risks and remuneration on the ownership of the goods, i.e. the customer has acquired the
major risks and remuneration on the ownership of the goods.
④The customer has accepted the goods or services.
⑤Other indications showing that the customer has acquired the control right to the goods.
The Company has transferred goods or services and has the right to collect consideration (and the right depends on factors other than
time elapse) as contract assets, and contract asset is accrued impairment on the basis of expected credit loss (refer to Note V 10(6)).
The right of the Company, unconditionally (only depending on time elapse) charging consideration from the customer, is listed as
receivable. The obligation of the Company that shall transfer goods or services to the customer for the consideration that has been or
shall be collected is liability to the contract.
The contract assets and contract liabilities under the same contract are listed in net amount. If net amount is debit balance, it is listed
in the items “contract asset” or “other non-current asset” according to its fluidity; if net amount is credit balance, it is listed in the
items “contract liability” or “other non-current liability” according to its fluidity.
(2) Specific methods
The specific income confirming methods of the Company are following:
For income of domestic products, after the Company delivers products to the purchaser according to the provisions of the contract
and the purchaser confirms receipt, the purchaser acquires the control right of products, and the Company confirms income.
For income of exportable products, after the Company completes customs declaration of products, departure and obtains bill of
lading according to the provisions of the contract, the purchaser acquires the control right of products, and the Company confirms
income.
Differences in accounting policies for revenue recognition due to different business models of the same type of business
29. Government Grants
Government grants are recognized when they meet the conditions attached to government grants and when they can be received.
Government grants for monetary assets shall be measured according to the amount received or receivable. Government grants for
non-monetary assets shall be measured by fair value, and they shall be measured by the nominal amount of RMB1 if the fair value
cannot be obtained reliably. Asset related government grants refer to the government grants obtained by the Company for acquisition
and construction or other forms of long-term assets. In addition, they are government grants related to income.
Regarding the government grants that the government document does not specify the object of subsidy and can form long-term assets,
the part of government subsidy corresponding to the asset value shall be regarded as the asset-related government subsidy and the
rest shall be regarded as income-related government subsidy. If it is difficult to distinguish, the government subsidy shall be regarded
as the income-related government subsidy.
The government grants related to assets shall be recognized as the deferred income, which shall be included in the profit and loss in
installment in a reasonable and systematic way within the service life of the relevant assets. Income-related government grants which
are used to compensate the relevant costs or losses incurred shall be included in the current profit and loss. Those used to compensate
the relevant costs or losses in the later period shall be included in the deferred income, and shall be included in the current profit and
loss during the recognition period of the relevant costs or losses. The government grants measured according to the nominal amount
shall be directly included in the current profit and loss. The same method is adopted for the same or similar government subsidy
businesses of the Company.
Government grants related to daily activities shall be included in other incomes according to the essence of business transactions.
Government grants irrelevant to daily activities are included in non-business income.
When the recognized government grants need to be returned, and are used to offset the carrying value of related assets when initially
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recognized, the carrying value of the assets shall be adjusted; the book balance of relevant deferred income shall be offset if there is a
balance of relevant deferred income, and the excess part shall be included in the current profit and loss. Otherwise, it shall be directly
included in the current profit and loss.
Regarding the interest subsidy of the policy preferential loan obtained, if the Ministry of Finance allocates the interest subsidy to the
loan bank, the actual received loan amount shall be taken as the entry value of the loan, and the loan cost shall be calculated
according to the loan principal and the policy preferential interest rate. If the Ministry of Finance allocates the interest subsidy
directly to the Company, the interest subsidy will offset the borrowing costs.
30. Deferred Income Tax Assets/Deferred Income Tax Liabilities
Income tax includes current income tax and deferred income tax. All shall be included in the current profit and loss as income tax
expense except the adjustment business reputation arising from business merger, or the deferred income tax related to the
transactions or events directly included in the owner's equity is included in the owner's equity.
Pursuant to the temporary difference between the carrying amount of assets and liabilities on the date of balance sheet and the tax
basis, the Company recognizes the deferred income tax by balance sheet liability method.
For all taxable temporary differences, related deferred income tax liabilities are recognized, unless the taxable temporary differences
are generated in the following transactions:
(1) The initial recognition of business reputation or the initial recognition of assets or liabilities arising from transactions with the
following characteristics: The transaction is not a business merger, and does not affect the accounting profit or taxable income when
it occurs;
(2) Regarding the taxable temporary difference related to the investment of subsidiaries, joint ventures and associated enterprises, the
time of reversal of the temporary difference can be controlled and the temporary difference is unlikely to be reversed in the
foreseeable future.
For deductible temporary differences, deductible losses and tax credits that can be carried forward in subsequent years, the Company
is likely to obtain the future taxable income as the limit to offset the deductible temporary differences, deductible losses and tax
credits, in which way to recognize the deferred income tax assets arising from the deductible temporary differences, deductible losses
and tax credits, unless the deductible temporary differences are generated in the following transactions:
(1) The transaction is not a business merger, and does not affect the accounting profit nor taxable income when it occurs;
(2) The corresponding deferred income tax assets shall be recognized if the deductible temporary differences related to the
investment of subsidiaries, joint ventures and associated enterprises meet the following conditions simultaneously: The temporary
differences are likely to be reversed in the foreseeable future, and the taxable income used to deduct the deductible temporary
differences is likely to be obtained in the future.
On the date of the balance sheet, the income tax assets and deferred income tax liabilities shall be measured by the Company on the
basis of the applicable tax rate during the period when the assets are expected to be recovered or the liabilities are expected to be paid
off, and the income tax impact on the expected recovery of assets on the date of the balance sheet or on the method to pay off the
liabilities shall be reflected.
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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.
31. Lease
(1) As the lessee
On the commencement date of the lease term, the Company recognizes the right-of-use assets and lease liabilities for all leases,
except for short-term leases and low-value asset leases with simplified treatment.
For accounting policies for the right-of-use assets, see Note V-20.
Lease liabilities are initially measured in line with the lease payments not yet paid on the commencement date of the lease term using
the present value calculated by the interest rate implicit in lease. If the interest rate implicit in lease cannot be determined, the
incremental borrowing rate shall be used as the discount rate. Lease payments include: Fixed payment and substantial fixed payment,
and the relevant amount after deducting the lease incentive if any; variable lease payments depending on index or ratio; exercise price
of the purchased option, provided that the lessee reasonably determines that the option will be exercised; the amount to be paid for
the exercise of the lease termination options, provided that the lease term reflects that the lessee will exercise the options to terminate
the lease; and estimated payments due to the guaranteed residual value provided by the lessee. Subsequently, it calculates the interest
expenses of the lease liabilities during each period of the lease term at a fixed periodic interest rate, and includes them in current
profit and loss. Variable lease payments that are not covered in the measurement of the lease liabilities are included in current profit
or loss when actually incurred.
Short-term lease
A short-term lease refers to a lease for a period not exceeding 12 months on the commencement date of the lease, except for leases
with a purchase option.
The Company includes the short-term lease payment in the cost of relevant assets or the current profit and loss in each period of the
lease term by the straight-line method.
Low-value asset lease
A low-value asset lease refers to a lease where the value is lower than RMB40,000 and a single leased asset is a new asset.
The Company includes the lease payment of the low-value asset lease in the cost of relevant assets or the current profit and loss in
each period of the lease term by the straight-line method.
For low-value asset lease, it chooses to adopt the aforesaid simplified treatment method in line with the specific status of each lease.
Lease change
If a lease changes and meets the following conditions simultaneously, the lease change shall be regarded as a separate lease for
accounting treatment: a) The lease change expands its lease cope by increasing one or multiple use rights of lease assets; and b) The
increased consideration is equivalent to the amount of the separate price for the expanded part of the lease, which is adjusted
according to the contract.
Where the lease change is not regarded as a separate lease for accounting treatment, on the effective date of the lease change, by the
Company, the consideration of the contract is amortized again upon change, the lease term is redetermined, and the lease liabilities
are remeasured according to the present value that is calculated by the lease payments and the revised discount rate upon change.
The Company shall correspondingly reduce the book value of the right-of-use assets and include the profit or loss of the lease
terminated in part or whole in the current profit or loss, if the lease change narrows the scope of lease or shortens the lease term.
The Company shall correspondingly adjust the book value of the right-of-use assets, if other lease changes result in the re-calculation
of the lease liability.
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(2) As the lessor
When the Company is a lessor, it shall recognize leases that substantially transfer all risks and remuneration related to the ownership
of assets as finance leases, and leases other than finance leases as operating leases.
Financial lease
In a finance lease, the Company recognizes the net lease investment as the book value of finance lease receivables on the
commencement date of the lease term. The net lease investment is the sum of the unguaranteed residual value and the present value
of lease receivables not yet received on the commencement date of the lease term at the interest rate implicit in lease. The Company
calculates and confirms the interest income at a fixed periodic interest rate in each period in the lease term. Variable lease payments
obtained that are not included in the net lease investment for measurement, where the Company is the lessor, are included in the
profit or loss of the current period when actually incurred.
Accounting treatment shall be conducted for the derecognition and impairment of finance lease receivables in accordance with the
provisions of the Accounting Standard for Business Enterprises No.22 - Recognition and Measurement of Financial Instruments and
the Accounting Standard for Business Enterprises No.23 - Transfer of Financial Assets.
Operating leases
The Company shall recognize the current profit and loss of the rent of the operating lease in each period of the lease term by the
straight-line method. The initial direct costs related to the operating lease shall be capitalized, amortized within the lease term on the
same basis as the recognition of rental earning, and included in profit or loss for the current period. The received variable lease
payments related to the operating lease that are not included in the lease payments receivable are included in profit or loss for the
current period when they are actually incurred.
Lease change
Where an operating lease changes, the accounting treatment is conducted for it which is regarded as a new lease from the effective
date of the change, and receivables in advance or lease receivables related to lease before change are deemed as the receivables in the
new lease.
Where a finance lease changes and meets the following conditions simultaneously, the change is regarded as a separate lease by the
Company for accounting treatment: a) The change expands its lease cope by increasing one or multiple use rights of lease assets; and
b) The increased consideration is equivalent to the amount of the separate price for the expanded part of the lease, which is adjusted
according to the contract.
Where a finance lease changes and is not regarded as a separate lease for accounting treatment, the Company treats the changed lease
under the following circumstances: a) If the change comes into force on the commencement date of the lease term, the lease will be
clarified as an operating lease, while it will be regarded as a new lease for accounting treatment by the Company on the effective date
of the lease change, and the net lease investment before the effective date of lease change will be regarded as the book value of lease
assets; and b) If the change comes into force on the commencement date of the lease term, the lease will be clarified as a finance
lease, the Company will carry out accounting treatment in accordance with the provisions on modification or renegotiation of a
contract of the Accounting Standard for Business Enterprises No. 22 - Recognition and Measurement of Financial Instruments.
32. Repurchase of Shares
Before the shares repurchased by the Company are cancelled or transferred, they are managed as treasury shares, and all expenditures
for the repurchase of shares are transferred to the cost of treasury shares. Consideration and transaction costs paid in share repurchase
reduce shareholders' equity. When buying back, transferring or cancelling shares in the Company, no profits or losses are recognized.
The transfer of inventory shares shall be credited to the capital reserve on the basis of the difference between the amount actually
received and the carrying amount of the treasury stock. Write off surplus reserves and undistributed profits if capital reserves are
insufficient to offset. Write-off of treasury stocks can reduce shares in par with par value and number of write-out stocks. The capital
reserve is offset based on the difference between book balance and face value of cancelled treasury stocks. Write off surplus reserves
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and undistributed profits if capital reserves are insufficient to offset.
33. Restricted Shares
In the equity incentive plan, the Company grants restricted stocks to the incentive personnel, who firstly subscribe the stocks. If
the unlocking conditions specified in the equity incentive plan are not met, the Company will repurchase the stocks at the
previously agreed price. Where the restricted stocks issued to the employees has gone through capital increase procedures such as
registration in accordance with relevant provisions, the Company shall, on the grant date, recognize the share capital and the
capital reserve (share capital premium) in conformity with the subscription payment received from the employees. Meanwhile, it
shall recognize the treasury stocks and other payables with respect to repurchase obligations.
34. Changes in Main Accounting Policies and Estimates
(1) Significant Changes in Accounting Policies
□Applicable Not applicable
(2) Significant Changes in Accounting Estimates
□Applicable Not applicable
35. Material Accounting Judgments and Estimates
The Company evaluates the important accounting estimates and key assumptions adopted on an ongoing basis, based on historical
experience and other factors, including reasonable expectations of future events. Important accounting estimates and critical
assumptions that have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the
next fiscal year are listed as follows:
Classification of financial assets
The significant judgments involved when the Company determines the classification of financial assets include analysis of business
models and contractual cash flow characteristics. The Company determines the business model for managing financial assets at the
level of the financial asset portfolio, taking into account factors such as the approach of evaluating and reporting the performance of
financial assets to key management personnel, the risks affecting the performance of financial assets and the manner in which they
are managed, and way in which the relevant business management personnel are compensated.
The following main judgments exist in assessing whether the contractual cash flows of financial assets are consistent with the basic
lending arrangements:
Whether the time distribution or amount of the principal amount during the duration may change due to early repayment or for other
reasons; whether the interest includes only the time value of money, credit risk, other basic lending risks and consideration against
costs and profits. For example, whether the amount of early repayment reflects only the outstanding principal and interest based on
the outstanding principal, as well as reasonable compensation paid for early termination of the contract.
Measurement of expected credit losses of accounts receivable
The Company calculates the expected credit loss of accounts receivable using the exposure to default risk of accounts receivable and
the expected credit loss ratio, and determines the expected credit loss ratio based on the probability of default and the default loss
ratio. When determining the expected credit loss ratio, the Company uses data such as internal historical credit loss experience and
adjusts historical data to take into account current conditions and forward-looking information. When considering forward-looking
information, the Company uses indicators such as the risk of economic downturn and changes in the external market environment,
technological environment and customer profile. The Company regularly monitors and reviews the assumptions related to the
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Lu Thai Textile Co., Ltd. Interim Report 2022
calculation of expected credit losses.
Goodwill impairment
We shall assess whether there is impairment of goodwill at least annually. This requires estimating the use value of the asset group to
which goodwill has been assigned. When estimating the use value, the Company shall estimate the future cash flows from the asset
group and select the appropriate discount rate to calculate the present value of future cash flows at the same time.
Deferred income tax assets
To the extent that it is probable that sufficient taxable profit will be available to offset the losses, the Company recognizes deferred
income tax assets for all unused tax losses. This requires the Company's management to use many judgments to estimate the timing
and amount of future taxable profits, taking into account tax planning strategies, so as to determine the amount of deferred income
tax assets to be recognized.
Determination of fair value of unlisted equity investment
The fair value of unlisted equity investment is the expected future cash flows discounted at the current discount rate for items with
similar terms and risk characteristics. Such valuation requires the Company to estimate expected future cash flows and discount
rates and is therefore subject to uncertainty. Under limited circumstances, if the information used to determine fair value is
insufficient, or if the range of possible estimates of fair value is wide and the cost represents the best estimate of fair value within
that range, the cost may represent its appropriate estimate of fair value within that range of distribution.
VI Taxation
1. Main Taxes and Tax Rate
Category of taxes Tax basis Tax rate
VAT Taxable income 13%、9%、6%、5%、3%、0
Urban maintenance and construction tax Turnover tax payable 7%、5%
0、5%、8.5%、15%、16.5%、17%、
Enterprise income tax Income tax payable 20%、25%
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 15%
Lu Thai Hong Kong 16.50%
Luqun Textile 25%
Xinsheng Power 25%
Shanghai Lu Thai 20%
Shanghai Zhinuo 20%
Lulian New Materials 25%
Lujia Import & Export 20%
Beijing Zhishu 20%
Lu Thai Cambodia 20%
Vanguard Apparel 0%
Continental Textile 5%
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Lu Thai Textile Co., Ltd. Interim Report 2022
Lu Thai Tan Chau 0%
Lu An Garments 8.5%
Lu Thai Vocational Training School 0%
Huilin International 15%
Tianping International 17%
Banyang Hills 20%
Vientiane Textile 0%
2. Tax Preference
In accordance with the Reply on Filing of the Second Batch of Hi-tech Enterprises of Shandong Province in 2020 with Reference No.
Guo Ke Huo Zi [2021]25, the Company was identified as a hi-tech enterprise and the certificate issuing date was December 8, 2020;
in accordance with the Notice for Announcing the First Batch of Hi-tech Enterprise Identification List of Shandong Province in 2020
with reference No. Lu Ke Zi [2020]136, the majority-owned subsidiary Lufeng Weaving & Dyeing was identified as a hi-tech
enterprise, and the certificate issuing date was August 17, 2020. 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, the Measures for the Administration of the Recognition of High and New
Technological 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 & Dyeing enjoy a 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-owned subsidiaries include Shanghai Luthai, Shanghai Zhinuo, Lujia Import & Export, Beijing Zhishu and Banyang
Mountain Villa. According to the Announcement of the State Taxation Administration on Issues Concerning the Implementation of
Preferential Income Tax Policies to Support the Development of Small and Low-profit Enterprises and Individual Businesses
(Announcement No.8 [2021] of the State Taxation Administration) and Announcement of the Ministry of Finance and the State
Taxation Administration on Further Implementing the Preferential Income Tax Policies for Micro and Small Enterprise (Ministry
of Finance and the State Taxation Administration [2022] No. 13), the annual taxable income of small low-profit enterprises with a
value of less than RMB1 million (including RMB1 million) shall be included in the taxable income at a reduced rate of 12.5%, and
the enterprise income tax shall be paid at the tax rate of 20%. The part that the annual taxable income exceeds RMB1 million but
no more than RMB3 million shall be included in the taxable income at a reduced rate of 25%, and the enterprise income tax shall
be paid at the tax rate of 20%.
The wholly own subsidiary Vanguard Apparel, according to the Burma’s Special Economic Zone Law issued by Pyidaungsu Hluttaw,
Vanguard Apparel 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%. Year 2022 is the seventh year of tax holiday.
The wholly-owned subsidiary Continental Textile 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 Industrial Zone
Management Committee, and it will enter into 2 years’ duty-free term if it is profitable within 3 years’ starting term. Continental
Textile 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. Year 2022 is the first year of the halving collection
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Lu Thai Textile Co., Ltd. Interim Report 2022
period..
The wholly-owned subsidiary of Continental Textile, Lu Thai Tan Chau, 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 Office, and it will enter into 2 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. Year 2022 is the second year of tax holiday.
Lu Thai America, the wholly-owned subsidiary of the Company registered in New York, America, was imposed the federal
enterprise income tax at fixed tax rate of 21%, and imposed the New York Enterprise income tax at the fixed tax rate of 6.5%.
The wholly-owned subsidiary Lu Thai Vocational Training School Co., Ltd. enjoys the preferential policy for non-profit organization
income exemption from corporate income tax according to Article 26, Item 4 of the Enterprise Income Tax Law of the People's
Republic of China and Article 84 and Article 85 of Regulations for the Implementation of the Enterprise Income Tax Law of the
People's Republic of China and CS (2018) No. 13.
The Wholly-owned subsidiary Huilin International, which is registered in Hainan Pilot Free Zone and operates the encouraged
industry, pays corporate income tax at a reduced tax rate of 15% according to Announcement of the Ministry of Finance and the
State Taxation Administration on the Corporate Income Tax Preferential Policies of Hainan Pilot Free Zone (Announcement No.31
[2020] of the Ministry of Finance and the State Taxation Administration)
The Wholly-owned subsidiary Tianping International of Huilin International is registered in Singapore and pays the corporate
income tax at a rate of 17% in accordance with the Income Tax of Singapore (Chapter 134).
The enterprise income tax rate of Qiming Apparel, the wholly-owned subsidiary of Libra International, is 20% based on the
provisions of the Tax Law of Kingdom of Cambodia on income tax.
The wholly-owned subsidiary of Libra International-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.
Year 2022 is the second year of the halving collection period.
The wholly-owned subsidiary of Tianping International- Vientiane Textile shall enjoy the preference of enterprise income tax at
three years' starting term + two years' duty-free term + four years' half-tax term according to the investment license issued by the
Vietnamese Tay Ninh Industrial Zone Management Committee, and it will enter into two years' duty-free term if it is profitable
within three years' starting term. The Company shall enjoy 17% of the preference tax rate within ten 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 year
2022 is the first year of preparation term.
VII. Notes to Main Items of Consolidated Financial Statements
1. Monetary Assets
Unit: RMB
Item Ending balance Beginning balance
Cash on hand 9,920,694.07 3,475,164.56
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Lu Thai Textile Co., Ltd. Interim Report 2022
Bank deposits 1,913,994,743.52 1,994,544,688.81
Other monetary funds 1,873,689.98 1,693,035.98
Total 1,925,789,127.57 1,999,712,889.35
Of which: total amount deposited
432,837,387.28 124,950,227.06
overseas
Other notes:
(1) On June 30, 2022, the monetary assets with restricted ownership were of RMB1,873,689.98, which was the electricity fee
guarantee of USD197,230.08 (equivalent to RMB1,323,689.98) for the Company's subsidiary Continental Textile, and the cash
deposit for L/C of RMB550,000.00 for the subsidiary Lulian New Materials.
(2) The interest receivable in bank deposits was RMB2,526,362.77.
2. Trading Financial Assets
Unit: RMB
Item Ending balance Beginning balance
Financial assets at fair value through profit or loss 288,418,520.36 1,727,000.00
Of which:
Debt instrument investment 286,005,570.79
Derivative financial assets 2,412,949.57 1,727,000.00
Of which:
Total 288,418,520.36 1,727,000.00
Other notes:
Among trading financial assets, debt instrument investment was the purchased WM products, and derivative financial assets were
the forward foreign exchange.
3. Notes Receivable
(1) Notes Receivable Listed by Category
Unit: RMB
Item Ending balance Beginning balance
Bank acceptance bill 79,099,275.06 129,359,621.79
Commercial acceptance bill 121,492.55
L/C 148,297,968.25 98,259,133.55
Total 227,397,243.31 227,740,247.89
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Lu Thai Textile Co., Ltd. Interim Report 2022
Unit: RMB
Ending balance Beginning balance
Category Carrying amount Bad debt provision Carrying amount Bad debt provision
Carrying value Carrying value
Withdrawal Withdrawal
Amount Proportion Amount Amount Proportion Amount
proportion proportion
Of which:
Notes receivable
of bad debt
provision 227,397,243.31 100.00% 227,397,243.31 227,746,642.23 100.00% 6,394.34 227,740,247.89
withdrawn by
groups
Of which:
Trade
0.00 0.00% 127,886.89 0.06% 6,394.34 5.00% 121,492.55
acceptance
Bank
acceptance
227,397,243.31 100.00% 227,397,243.31 227,618,755.34 99.94% 227,618,755.34
bill and
L/C
Total 227,397,243.31 100.00% 0.00 0.00% 227,397,243.31 227,746,642.23 100.00% 6,394.34 0.00% 227,740,247.89
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) Bad Debt Provision Withdrawal, Reversed or Recovered in the Reporting Period
Withdrawal of bad debt provision:
Unit: RMB
Changes in the Reporting Period
Beginning
Category Ending balance
balance Reversed or
Withdrawal Verification Others
recovered
Trade
6,394.34 -6,394.34 0.00
acceptance
Total 6,394.34 -6,394.34 0.00 0.00 0.00 0.00
Of which significant amount of recovered or transferred-back bad debt provision for the current period:
□Applicable Not applicable
(3) Notes Receivable which Had Endorsed by the Company or Had Discounted and Had not Due on the
Balance Sheet Date at the Period-end
Unit: RMB
Amount of recognition termination at the Amount of not terminated recognition at
Item
period-end the period-end
Bank acceptance bill 61,415,840.30
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Lu Thai Textile Co., Ltd. Interim Report 2022
Total 61,415,840.30
4. Accounts Receivable
(1) Listed by Category
Unit: RMB
Ending balance Beginning balance
Carrying amount Bad debt provision Carrying amount Bad debt provision
Category
Withdrawa Carrying value Withdrawa Carrying value
Proportio Proportio
Amount Amount l Amount Amount l
n n
proportion proportion
Accounts
receivable
withdrawa
l of Bad
4,963,849.32 0.70% 4,963,849.32 100.00% 2,179,970.77 0.31% 2,179,970.77 100.00% 0.00
debt
provision
separately
accrued
Of
which:
Accounts
receivable
withdrawa
l of bad 707,314,799.5 40,073,811.8 667,240,987.6 692,042,157.3 44,764,958.8 647,277,198.5
99.30% 5.67% 99.69% 6.47%
debt 1 7 4 8 7 1
provision
of by
group
Of
which:
Undue
accounts
269,217,570.6 266,390,786.1
(credit 37.80% 2,826,784.49 1.05% 99,484,489.32 14.33% 1,044,587.17 1.05% 98,439,902.15
3 4
insurance
insured)
Undue
accounts 331,478,752.1 16,573,937.6 314,904,814.5 508,102,078.3 25,405,103.9 482,696,974.3
46.54% 5.00% 73.19% 5.00%
(no credit 7 2 5 2 8 4
insurance)
Overdue
accounts
(credit 47,421,050.20 6.66% 5,074,052.37 10.70% 42,346,997.83 20,932,298.93 3.02% 2,239,755.99 10.70% 18,692,542.94
insurance
insured)
Overdue
accounts 15,599,037.3 16,075,511.7
59,197,426.51 8.31% 26.35% 43,598,389.13 63,523,290.81 9.15% 25.31% 47,447,779.08
(no credit 8 3
insurance)
712,278,648.8 45,037,661.1 667,240,987.6 694,222,128.1 46,944,929.6 647,277,198.5
Total 100.00% 6.32% 100.00% 6.76%
3 9 4 5 4 1
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Lu Thai Textile Co., Ltd. Interim Report 2022
Bad debt provision separately accrued: June 30, 2022
Unit: RMB
Ending balance
Name
Bad debt
Carrying amount Withdrawal proportion Reason for withdraw
provision
Customer's application for
Customer 1 1,289,803.43 1,289,803.43 100.00%
bankruptcy protection
Customer 2
Customer's application for
Customer 3 2,627,179.62 2,627,179.62 100.00%
bankruptcy protection
Customer in financial difficulty or
Other customers 1,046,866.27 1,046,866.27 100.00%
application for bankruptcy
Total 4,963,849.32 4,963,849.32
Withdrawal of bad debt provision by group: June 30, 2022
Unit: RMB
Ending balance
Name
Withdrawal
Carrying amount Bad debt provision
proportion
Group 1: Undue accounts (credit insurance insured) 269,217,570.63 2,826,784.49 1.05%
Group 2: Undue accounts (no credit insurance) 331,478,752.17 16,573,937.62 5.00%
Group 3: Overdue accounts (credit insurance insured) 47,421,050.20 5,074,052.37 10.70%
Group 4: Overdue accounts (no credit insurance) 59,197,426.51 15,599,037.38 26.35%
Total 707,314,799.51 40,073,811.87
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 accounts receivable.
□Applicable Not applicable
Disclosure by aging
Unit: RMB
Aging Ending balance
Within 1 year (including 1 year) 694,105,190.79
1 to 2 years 5,034,730.69
2 to 3 years 10,986,508.26
Over 3 years 2,152,219.09
3 to 4 years 1,802,381.63
4 to 5 years 349,837.46
Total 712,278,648.83
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Lu Thai Textile Co., Ltd. Interim Report 2022
(2) Bad Debt Provision Withdrawal, Reversed or Recovered in the Reporting Period
Withdrawal of bad debt provision:
Unit: RMB
Changes in the Reporting Period
Beginning
Category Ending balance
balance Reversed or
Withdrawal Verification Others
recovered
Bad debt provision
2,179,970.77 2,783,878.55 4,963,849.32
separately accrued
Withdrawal of bad
debt provision by 44,764,958.87 -4,181,679.73 509,467.27 40,073,811.87
group
Total 46,944,929.64 -1,397,801.18 0.00 509,467.27 0.00 45,037,661.19
(3) Accounts Receivable Written-off in Current Period
Unit: RMB
Item Written-off amount
Written-off accounts receivable 509,467.27
(4) Top 5 of the Ending Balance of the Accounts Receivable Collected according to Arrears Party
Unit: RMB
Proportion to total ending balance of Ending balance of bad debt
Name of the entity Ending balance
accounts receivable provision
Aggregate amount of top 5 of
accounts receivable of ending
201,805,029.14 28.33% 8,014,244.04
balance collected by arrears
party
Total 201,805,029.14 28.33%
5. Accounts Receivable Financing
Unit: RMB
Item Ending balance Beginning balance
Notes Receivable 40,563,083.51 35,042,339.23
Less: Other comprehensive income-fair
-237,547.15 -379,267.35
value change
Total 40,325,536.36 34,663,071.88
The changes of accounts receivable financing in the Reporting Period and the changes in fair value
□Applicable Not applicable
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 accounts receivable financing.
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Lu Thai Textile Co., Ltd. Interim Report 2022
□Applicable Not applicable
6. Prepayment
(1) Prepayment Listed by Aging Analysis
Unit: RMB
Ending balance Beginning balance
Aging
Amount Proportion Amount Proportion
Within 1 year 80,853,968.25 98.21% 54,395,566.77 99.72%
1 to 2 years 1,426,555.72 1.73% 80,046.79 0.15%
2 to 3 years 7,991.81 0.01% 57,065.73 0.10%
Over 3 years 37,000.53 0.04% 13,274.91 0.02%
Total 82,325,516.31 54,545,954.20
(2) Top 5 Prepayment in Ending Balance Collected according to the Prepayment Target
The total top 5 prepayment in ending balance collected according to the prepayment target for the Company was
RMB54,586,308.67, accounting for 66.31% of total ending balance of prepayment.
7. Other Accounts Receivable
Unit: RMB
Item Ending balance Beginning balance
Dividend receivable 18,563,298.40 47,025,975.44
Other receivables 30,552,260.30 27,165,637.78
Total 49,115,558.70 74,191,613.22
(1) Dividend Receivable
1) Dividend Receivable Classification
Unit: RMB
Project (or investee) Ending balance Beginning balance
Sanchang project 19,540,314.10 49,501,026.78
Less: bad debt provision -977,015.70 -2,475,051.34
Total 18,563,298.40 47,025,975.44
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Lu Thai Textile Co., Ltd. Interim Report 2022
2) Significant Dividends Receivable Aging over 1 Year
Unit: RMB
Whether occurred impairment
Project (or investee) Ending balance Aging Reason
and its judgment basis
Collect in accordance with
Sanchang project 19,540,314.10 1 to 2 years Not past due
agreed dividend payment plan
Total 19,540,314.10
3) Withdrawal of Bad Debt Provision
Applicable □Not applicable
Unit: RMB
First stage Second stage Third stage
Bad debt provision Expected loss in the Expected loss in the Total
Expected credit loss
duration (credit impairment duration (credit
in the next 12 months
not occurred) impairment occurred)
Balance of January 1,
2,475,051.34 2,475,051.34
2022,
Balance of 1 January
2022 in the Current
Period
Withdrawal of the
-1,498,035.64 -1,498,035.64
Current Period
Balance of June 30, 2022 977,015.70 977,015.70
Changes of carrying amount with significant amount changed of loss provision in the Current Period
□Applicable Not applicable
(2)Other Accounts Receivable
1) Other Receivables Classified by Category
Unit: RMB
Nature Ending carrying amount Beginning carrying amount
Export rebates 4,603,780.67 1,384,112.79
VAT to be returned 8,375,554.18 8,486,685.52
Payment on behalf 12,215,286.56 11,917,827.00
Guarantee deposit and cash deposit 5,678,315.63 6,586,697.20
Borrowings and petty cash 1,711,381.56 1,051,186.48
Others 1,538,908.54 402,457.40
Total 34,123,227.14 29,828,966.39
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Lu Thai Textile Co., Ltd. Interim Report 2022
2) Withdrawal of Bad Debt Provision
Unit: RMB
First stage Second stage Third stage
Bad debt provision Expected credit Expected loss in the Expected loss in the Total
loss in the next 12 duration (credit duration (credit
months impairment not occurred) impairment occurred)
Balance of January 1, 2022, 1,357,763.63 1,305,564.98 2,663,328.61
Balance of 1 January 2022 in
the Current Period
Withdrawal of the Current
135,666.13 771,972.10 907,638.23
Period
Balance of June 30, 2022 1,493,429.76 2,077,537.08 0.00 3,570,966.84
Changes of carrying amount with significant amount changed of loss provision in the Current Period
□Applicable Not applicable
Disclosure by aging
Unit: RMB
Aging Ending balance
Within 1 year (including 1 year) 28,186,049.04
1 to 2 years 1,277,127.27
2 to 3 years 816,397.44
Over 3 years 3,843,653.39
3 to 4 years 300.00
4 to 5 years 115,926.86
Over 5 years 3,727,426.53
Total 34,123,227.14
3) Bad Debt Provision Withdrawn, Reversed or Recovered in the Reporting Period
Withdrawal of bad debt provision:
Unit: RMB
Changes in the Reporting Period
Beginning
Category Ending balance
balance Reversed or Verifi Other
Withdrawal
recovered cation s
Expected credit loss of the next 12
1,357,763.63 135,666.13 1,493,429.76
months at the first stage
Expected loss in the duration (credit
impairment not occurred) at the second 1,305,564.98 771,972.10 2,077,537.08
stage
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Lu Thai Textile Co., Ltd. Interim Report 2022
Expected loss in the duration (credit
0.00
impairment occurred) at the third stage
Total 2,663,328.61 907,638.23 0.00 0.00 0.00 3,570,966.84
4) Top 5 Other Accounts Receivable in Ending Balance Collected according to the Arrears Party
Unit: RMB
Proportion to total Ending balance
Name of the entity Nature Ending balance Aging ending balance of of bad debt
other receivables % provision
VAT receivable to be returned Within 1
Input VAT 6,690,060.63 19.61% 334,503.03
from Polaris Apparel year
Withholding and remitting of Within 1
Advance money 4,726,991.26 13.85% 236,349.56
personal endowment insurance year
Within 1
Receivable export rebates Export rebates 4,603,780.66 13.49% 230,189.03
year
VAT receivable to be returned Within 1
Input VAT 1,685,493.55 4.94% 823,026.50
from Continental Textile year
Withholding and remitting of Within 1
Advance money 1,187,642.10 3.48% 59,382.11
personal housing provident fund year
Total 18,893,968.20 55.37% 1,683,450.23
8. Inventory
Whether the Company needs to comply with the disclosure requirements for the real estate industry
No
(1) Category of Inventory
Unit: RMB
Ending balance Beginning balance
Depreciation Depreciation
reserves of reserves of
inventories or inventories or
Item impairment impairment
Carrying amount Carrying value Carrying amount Carrying value
provision for provision for
contract contract
performance performance
costs costs
Raw
1,121,436,489.44 41,184,702.18 1,080,251,787.26 928,078,106.34 17,925,640.41 910,152,465.93
materials
Goods in
529,722,583.05 13,872,192.02 515,850,391.03 611,695,332.97 2,538,846.30 609,156,486.67
process
Inventory
1,125,277,677.22 158,326,260.80 966,951,416.42 939,550,089.36 143,767,058.72 795,783,030.64
goods
Assigned
processing 16,875,738.64 16,875,738.64 30,254,811.04 30,254,811.04
products
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Lu Thai Textile Co., Ltd. Interim Report 2022
Goods in
transit
Total 2,793,312,488.35 213,383,155.00 2,579,929,333.35 2,509,578,339.71 164,231,545.43 2,345,346,794.28
(2) Falling Price Reserves of Inventory and Impairment Reserves for Contract Performance Costs
Unit: RMB
Increased amount of the current Decreased amount for the current
period period
Item Beginning balance Transferred- Ending balance
Withdrawal Others back or charged- Others
off
Raw
17,925,640.41 23,194,917.86 64,143.91 41,184,702.18
materials
Goods in
2,538,846.30 11,333,345.72 13,872,192.02
process
Inventory
143,767,058.72 44,941,609.33 1,374,147.79 31,756,555.04 158,326,260.80
goods
Total 164,231,545.43 79,469,872.91 1,438,291.70 31,756,555.04 213,383,155.00
9. Other Current Assets
Unit: RMB
Item Ending balance Beginning balance
Other tax 18,754,999.39 53,076,859.19
Prepaid income tax 653,486.60 2,589,285.09
Prepaid other taxes 1,577.18 126,618.09
Convertible broken lot fund 199,689.59 199,760.44
Payout cash deposit 9,039,411.18
Total 28,649,163.94 55,992,522.81
10. Long-term Equity Investment
Unit: RMB
Increase/decrease for the current period Endi
A Adju Cash ng
Cha With
d stme bonu bala
Beginning nge draw
di Gains and losses nt of s or nce
s of al of Ending Balance
Investee balance (carrying ti Reduced recognized under other profit Oth of
oth impa (Carrying Value)
value) o investment the equity comp s ers depr
er irme
n method rehen anno eciat
equ nt
al sive unce ion
ity prov
in inco d to reser
146
Lu Thai Textile Co., Ltd. Interim Report 2022
v me issue ision ve
e
st
m
e
nt
I. Joint ventures
II. Associated enterprises
Ningbo Mei
shan Bonded
Port Area
Haohong Equity
Investment
Partnership 67,657,626.65 594,388.64 68,252,015.29
(L.P)
(hereinafter
referred to as
“Haohong
Investment”)
Ningbo Haoying
Equity
Investment
Partnership
(L.P) 101,785,480.01 13,323,521.50 -1,671,328.13 86,790,630.38
(hereinafter
referred to as
“Haoying
Investment”)
Subtotal 169,443,106.66 13,323,521.50 -1,076,939.49 155,042,645.67
Total 169,443,106.66 13,323,521.50 -1,076,939.49 155,042,645.67
11. Other Non-current Financial Assets
Unit: RMB
Item Ending balance Beginning balance
Equity instrument investment 178,052,000.00 178,052,000.00
Financial assets assigned measured by fair value and the changes
12,000,000.00 12,000,000.00
be included in the current gains and losses
Total 190,052,000.00 190,052,000.00
12. Investment Property
(1) Investment Property Adopting the Cost Measurement Mode
Applicable □Not applicable
Unit: RMB
Houses and Construction in
Item Land use right Total
buildings progress
I. Original carrying value
147
Lu Thai Textile Co., Ltd. Interim Report 2022
1. Beginning balance 33,577,852.12 33,577,852.12
2. Increased amount for the current period
(1) Outsourcing
(2)Transfer from inventory/fixed
assets/construction in progress
(3) Business combination increase
3. Decreased amount for the current period
(1) Disposal
(2) Other transfer
4. Ending balance 33,577,852.12 33,577,852.12
II. Accumulative depreciation and accumulative
amortization
1. Beginning balance 12,215,550.09 12,215,550.09
2. Increased amount for the current period 450,683.41 450,683.41
(1) Withdrawal or amortization 450,683.41 450,683.41
(2) Fixed asset carried down 0.00
3. Decreased amount for the current period
(1) Disposal
(2) Other transfer
4. Ending balance 12,666,233.50 12,666,233.50
III. Depreciation reserves
1. Beginning balance
2. Increased amount for the current period
(1) Withdrawal
3. Decreased amount for the current period
(1) Disposal
(2) Other transfer
4. Ending balance
IV. Carrying value
1. Ending carrying value 20,911,618.62 20,911,618.62
2. Beginning carrying value 21,362,302.03 21,362,302.03
148
Lu Thai Textile Co., Ltd. Interim Report 2022
(2) Investment Property Adopting the Fair Value Measurement Mode
□Applicable Not applicable
13. Fixed Assets
Unit: RMB
Item Ending balance Beginning balance
Fixed assets 5,542,475,634.61 5,559,649,164.65
Liquidation of PP&E 1,952,209.79
Total 5,542,475,634.61 5,561,601,374.44
(1) List of Fixed Assets
Unit: RMB
Electronic
Houses and Transportation
Item Machinery equipment equipment and Total
buildings equipment
others
I. Original carrying value:
1. Beginning balance 3,400,996,650.73 7,004,146,023.55 48,665,620.78 130,151,497.42 10,583,959,792.48
2. Increased amount for the
94,284,710.41 157,269,303.00 2,029,878.78 4,401,678.21 257,985,570.40
current period
(1) Purchase 0.00 90,430,998.86 1,537,041.06 2,074,513.37 94,042,553.29
(2) Transfer from
50,703,854.73 5,328,594.56 2,016,684.27 58,049,133.56
construction in progress
(3) Business
0.00
combination increase
(4) Other increase 43,580,855.68 61,509,709.58 492,837.72 310,480.57 105,893,883.55
3. Decreased amount for
0.00 55,463,368.77 202,581.48 3,462,751.26 59,128,701.51
the current period
(1) Disposal or scrap 0.00 55,463,368.77 202,581.48 3,462,751.26 59,128,701.51
(2) Transfer from construction
0.00
in progress
(3) Transfer from investment
0.00
properties
(4) Other decrease 0.00
4. Ending balance 3,495,281,361.14 7,105,951,957.78 50,492,918.08 131,090,424.37 10,782,816,661.37
II. Accumulative depreciation
1. Beginning balance 1,090,800,777.05 3,758,383,265.78 35,811,352.62 106,782,812.91 4,991,778,208.36
2. Increased amount for the
65,242,834.76 172,424,273.02 2,698,181.37 6,395,148.00 246,760,437.16
current period
149
Lu Thai Textile Co., Ltd. Interim Report 2022
(1) Withdrawal 58,737,019.84 156,997,526.76 2,387,829.86 5,811,749.51 223,934,125.97
(2) Other Increases 6,505,814.92 15,426,746.26 310,351.51 583,398.49 22,826,311.18
3. Decreased amount for
0.00 27,398,569.19 194,028.51 3,179,639.17 30,772,236.87
the current period
(1) Disposal or scrap 0.00 27,398,569.19 194,028.51 3,179,639.17 30,772,236.87
(2) Transfer from construction
0.00
in progress
(3) Transfer from investment
0.00
properties
(4) Other decrease 0.00
4. Ending balance 1,156,043,611.81 3,903,408,969.61 38,315,505.48 109,998,321.74 5,207,766,408.64
III. Depreciation reserves
1. Beginning balance 429,416.16 32,029,934.70 5,671.30 67,397.31 32,532,419.47
2. Increased amount for the
2,225,865.39 2,225,865.39
current period
(1) Withdrawal 2,225,865.39 2,225,865.39
3. Decreased amount for
2,183,666.74 0.00 2,183,666.74
the current period
(1) Disposal or scrap 2,183,666.74 2,183,666.74
4. Ending balance 429,416.16 32,072,133.35 5,671.30 67,397.31 32,574,618.12
IV. Carrying value
1. Ending carrying value 2,338,808,333.17 3,170,470,854.82 12,171,741.30 21,024,705.32 5,542,475,634.61
2. Beginning carrying
2,309,766,457.52 3,213,732,823.07 12,848,596.86 23,301,287.20 5,559,649,164.65
value
(2) Fixed Assets Leased out by Operation Lease
Unit: RMB
Item Ending carrying amount
Houses and buildings 3,567,753.54
(3) Fixed Assets Failed to Accomplish Certification of Property
Unit: RMB
Item Carrying value Reason
Lufeng weaving dye gray Under the relevant certificate procedures of acceptance, measurement,
10,634,025.48
yarn warehouse examination by the real estate trading center and other departments
150
Lu Thai Textile Co., Ltd. Interim Report 2022
(4) Proceeds from Disposal of Fixed Assets
Unit: RMB
Item Ending balance Beginning balance
Boiler and ancillary equipment 0.00 1,952,209.79
Total 1,952,209.79
14. Construction in Progress
Unit: RMB
Item Ending balance Beginning balance
Construction in progress 149,057,760.69 157,651,325.17
Engineering materials 125,505,782.67 79,927,757.82
Total 274,563,543.36 237,579,082.99
(1) List of Construction in Progress
Unit: RMB
Ending balance Beginning balance
Depr Depr
Item eciati eciati
Carrying amount on Carrying value Carrying amount on Carrying value
reser reser
ves ves
Reform project of Xinsheng
29,566,437.06 29,566,437.06 33,240,957.43 33,240,957.43
Thermal Power
Wanxiang Textile production
945,151.23 945,151.23
line project of dyeing
Garment project (Phase III) of
22,880,584.81 22,880,584.81
Polaris Apparel
Functional Fabric Intelligent
Ecological Park Project Phase 71,895,051.83 71,895,051.83 84,984,974.35 84,984,974.35
I
Other small projects 23,770,535.76 23,770,535.76 39,425,393.39 39,425,393.39
Total 149,057,760.69 0.00 149,057,760.69 157,651,325.17 0.00 157,651,325.17
(2) Changes in Significant Construction in Progress during the Reporting Period
Unit: RMB
151
Lu Thai Textile Co., Ltd. Interim Report 2022
Of
Proport which:
Capital
ion of amount
Other Accum ization
Increas accum of
decreas ulated rate of
ed Transfe ulated capitali
Beginn ed Ending Job amount interest Capital
Project amount rred in invest zed
Budget ing amount balanc schedu of s for resourc
Name of the fixed ment in interest
balance for the e le interest the es
current assets constru s for
current capitali Reporti
period ctions the
period zation ng
to Reporti
Period
budget ng
Period
Reform
project of
54,380, 33,240, 5,434,0 9,108,6 29,566, 53.00 53.00
Xinsheng Others
000.00 957.43 85.26 05.63 437.06 % %
Thermal
Power
Wanxiang
Textile 251,80
945,15 945,15
production 0,800.0 0.38% 0.38% Others
1.23 1.23
line project 0
of dyeing
Garment
project
22,915, 22,880, 22,880, 99.85 98.00
(Phase III) Others
236.38 584.81 584.81 % %
of Polaris
Apparel
Functional
Raised
Fabric
throug
Intelligent 217,21
84,984, 12,569, 25,659, 71,895, 125.37 96.00 11,637, 4,895,6 h
Ecological 1,000.0 3.68%
974.35 920.70 843.22 051.83 % % 936.90 19.99 equity
Park 0
offerin
Project
g
Phase I
Other -
39,425, 6,070,0 23,280, 23,770,
small 1,555,8 Others
393.39 22.91 684.71 535.76
projects 04.17
546,30 157,65 - 149,05
47,899, 58,049, 11,637, 4,895,6
Total 7,036.3 1,325.1 1,555,8 7,760.6
764.91 133.56 936.90 19.99
8 7 04.17 9
(3) Engineering Materials
Unit: RMB
Ending balance Beginning balance
Item
Depreciatio Depreciatio
Carrying amount Carrying value Carrying amount Carrying value
n reserves n reserves
Special
materials
Special
125,505,782.67 125,505,782.67 79,927,757.82 0.00 79,927,757.82
equipment
Total 125,505,782.67 125,505,782.67 79,927,757.82 79,927,757.82
152
Lu Thai Textile Co., Ltd. Interim Report 2022
15. Right-of-use Assets
Unit: RMB
Item Houses and buildings Land use right Total
I. Original carrying value
1. Beginning balance 72,736,899.29 202,823,352.74 275,560,252.03
2. Increased amount for
578,462.96 228,789,463.05 229,367,926.01
the current period
(1) Rent 535,874.95 221,291,770.33 221,827,645.28
(2) Lease Liabilities
Adjustment
(3) Other Increase 42,588.01 7,497,692.72 7,540,280.73
3. Decreased amount for
424,514.97 0.00 424,514.97
the current period
(1) Sublease is a Financial
Lease
(2) Transfer or Hold for Sale
(3) Other Decreasess 424,514.97 424,514.97
4. Ending balance 72,890,847.28 431,612,815.79 504,503,663.07
II. Accumulative depreciation
1. Beginning balance 11,227,086.37 7,313,879.51 18,540,965.88
2. Increased amount for
6,340,517.34 2,843,401.74 9,183,919.08
the current period
(1) Withdrawal 6,310,238.62 2,677,865.33 8,988,103.95
(2) Other Increases 30,278.72 165,536.41 195,815.13
3. Decreased amount for
424,514.97 0.00 424,514.97
the current period
(1) Disposal 424,514.97 424,514.97
(2) Other Decreases
4. Ending balance 17,143,088.74 10,157,281.25 27,300,369.99
III. Depreciation reserves
1. Beginning balance
2. Increased amount for
the current period
(1) Withdrawal
3. Decreased amount for
the current period
153
Lu Thai Textile Co., Ltd. Interim Report 2022
(1) Disposal
4. Ending balance
IV. Carrying value
1. Ending carrying value 55,747,758.54 421,455,534.54 477,203,293.08
2. Beginning carrying
61,509,812.92 195,509,473.23 257,019,286.15
value
16. Intangible assets
(1) List of intangible assets
Unit: RMB
Non-patent Software use Brand use
Item Land use right Patent right Total
technologies rights rights
I. Original carrying value
1. Beginning balance 470,338,494.00 409,550.00 2,131,387.36 472,879,431.36
2. Increased amount for the
106,529.15 106,529.15
current period
(1) Purchase 99,115.05 99,115.05
(2) Internal R&D
(3) Business
combination increase
(4) Other increase 7,414.10 7,414.10
3. Decreased amount for the
425,337.91 425,337.91
current period
(1) Disposal
(2) Invalid and recognition
425,337.91 425,337.91
terminated portion
4. Ending balance 470,338,494.00 409,550.00 1,812,578.60 472,560,622.60
II. Accumulated amortization
1. Beginning balance 108,346,465.36 30,716.28 1,371,271.58 109,748,453.22
2. Increased amount for the
5,048,199.62 20,477.63 433,780.23 5,502,457.48
current period
(1) Withdrawal 5,048,199.62 20,477.63 431,864.88 5,500,542.13
(2) Other Increases 1,915.35 1,915.35
3. Decreased amount for the
485,809.89 485,809.89
current period
(1) Disposal
154
Lu Thai Textile Co., Ltd. Interim Report 2022
(2) Invalid and recognition
485,809.89 485,809.89
terminated portion
4. Ending balance 113,394,664.98 51,193.91 1,319,241.92 114,765,100.81
III. Depreciation reserves
1. Beginning balance
2. Increased amount for the
current period
(1) Withdrawal
3. Decreased amount for the
current period
(1) Disposal
4. Ending balance
IV. Carrying value
1. Ending carrying value 356,943,829.02 358,356.09 493,336.68 357,795,521.79
2. Beginning carrying value 361,992,028.64 378,833.72 760,115.78 363,130,978.14
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%.
17. Development costs
Unit: RMB
Beginning Increased amount of the current
Item Decreased amount for the current period Ending balance
balance period
Transferred into
Beginning Internal Recognized as
Item Others the current profit Ending balance
balance development costs intangible assets
or loss
R&D of
114,951,241.87 114,951,241.87
products
Total 114,951,241.87 114,951,241.87
18. Goodwill
(1) Original Carrying Value of Goodwill
Unit: RMB
Name of the invested units or events Increase for the current Decrease for the
Beginning balance Ending balance
generating goodwill period current period
Name of the invested units or events Formed by business
Beginning balance Disposal Ending balance
generating goodwill combination
Xinsheng Power 20,563,803.29 20,563,803.29
Total 20,563,803.29 20,563,803.29
155
Lu Thai Textile Co., Ltd. Interim Report 2022
19. Long-term Prepaid Expense
Unit: RMB
Increased amount Amortization
Other decreased
Item Beginning balance of the current amount of the Ending balance
amount
period current period
Decoration fee 672,601.04 1,748,157.25 472,368.37 1,948,389.92
Technical service
114,974.00 17,688.30 97,285.70
charges
Total 672,601.04 1,863,131.25 490,056.67 2,045,675.62
20. Deferred Income Tax Assets/Deferred Income Tax Liabilitie
(1) Deferred Income Tax Assets Had Not Been Off-set
Unit: RMB
Ending balance Beginning balance
Item Deductible
Deductible temporary Deferred income Deferred income
temporary
differences tax assets tax assets
differences
Provision for impairment of assets 208,828,922.12 32,282,072.55 211,902,261.84 32,571,574.68
Internal unrealized profit 184,295,358.69 28,108,326.24 154,652,429.83 23,546,803.59
Deductible losses 157,150,423.74 31,454,320.95 125,211,374.31 23,469,558.56
Payroll payable 62,871,779.73 9,443,195.07 62,871,779.73 9,443,195.07
Deferred income 163,150,430.33 25,513,848.94 188,769,454.53 31,627,668.49
Contract liabilities 51,142,001.01 12,785,500.25 50,555,810.44 12,638,952.61
Changes in fair value of other non-
160,000.00 24,000.00 160,000.00 24,000.00
current financial assets
Changes in fair value of trading
3,582,000.00 537,300.00 0.00 0.00
financial liabilities
The changes of accounts receivable
237,547.15 35,632.07 379,267.35 58,968.83
financing in fair value
Operating leases 3,105,101.77 486,827.11 3,105,101.78 486,827.11
Restricted stock incentive fees 30,990,583.74 4,648,587.56 30,990,583.74 4,648,587.56
Total 865,514,148.28 145,319,610.74 828,598,063.55 138,516,136.50
(2) Deferred Income Tax Liabilities Had Not Been Off-set
Unit: RMB
Item Ending balance Beginning balance
156
Lu Thai Textile Co., Ltd. Interim Report 2022
Taxable temporary Deferred income Taxable temporary Deferred income tax
difference tax liabilities difference liabilities
Depreciation of fixed assets 488,302,796.89 77,789,293.61 462,125,128.72 74,185,425.08
Internal unrealized profit 0.00 0.00 0.00 0.00
Changes in fair value of trading
6,005,570.79 905,560.35 1,727,000.00 259,050.00
financial assets
Changes in fair value of other non-
120,845,567.06 18,126,835.06 120,845,567.06 18,126,835.06
current financial assets
Interest payable of investment in debt
0.00 0.00 0.00 0.00
obligations
Total 615,153,934.74 96,821,689.02 584,697,695.78 92,571,310.14
(3) Deferred Income Tax Assets or Liabilities Had Been Off-set Listed in Net Amount
Unit: RMB
Beginning off-set
Ending off-set amount Ending balance of Beginning balance of
amount of deferred
Item of deferred income tax deferred income tax deferred income tax
income tax assets and
assets and liabilities assets and liabilities assets and liabilities
liabilities
Deferred income tax
145,319,610.74 138,516,136.50
assets
Deferred income tax
96,821,689.02 92,571,310.14
liabilities
(4) List of Unrecognized Deferred Income Tax Assets
Unit: RMB
Item Ending balance Beginning balance
Deductible temporary differences 91,778,320.43 9,031,432.71
Deductible losses 120,863,363.31 73,702,292.27
Total 212,641,683.74 82,733,724.98
(5) Deductible Losses of Unrecognized Deferred Income Tax Assets will Due in the Following Years
Unit: RMB
Year Ending amount Beginning amount Notes
2023
2024 1,344.62 1,344.62
2025 584,842.87 584,842.87
2026 73,116,104.78 73,116,104.78
2027 47,161,071.04
157
Lu Thai Textile Co., Ltd. Interim Report 2022
Total 120,863,363.31 73,702,292.27
21. Other Non-current Assets
Unit: RMB
Ending balance Beginning balance
Deprec Deprec
Item
iation iation
Carrying amount Carrying value Carrying amount Carrying value
reserve reserve
s s
Prepayment for land
0.00 0.00 214,131,583.94 214,131,583.94
transfer fee
Prepayment for
23,267,167.25 23,267,167.25 11,691,427.91 11,691,427.91
equipment
Term deposits over
351,000,000.00 351,000,000.00 351,000,000.00 351,000,000.00
1 year
Interest receivable
from term deposits 14,178,984.24 14,178,984.24 9,260,296.40 9,260,296.40
over 1 year
Total 388,446,151.49 388,446,151.49 586,083,308.25 586,083,308.25
22. Short-term Borrowings
(1) Category of Short-term Borrowings
Unit: RMB
Item Ending balance Beginning balance
Guarantee loan 59,363,353.27 238,770,866.65
Credit loan 1,200,102,650.08 772,263,271.67
Total 1,259,466,003.35 1,011,034,138.32
Notes of the category for short-term loans:
(1) The ending guarantee loan was the guarantee provided for the bank loan of the subsidiary Continental Textile by the Company.
Refer to Note XIV-2 for details.
(2) The short-term borrowing includes interest payable of RMB897,155.03.
23. Trading financial liabilities
Unit: RMB
Item Ending balance Beginning balance
Trading financial liabilities 3,622,489.80
Of which:
Derivative financial liabilities 3,622,489.80
158
Lu Thai Textile Co., Ltd. Interim Report 2022
Of which:
Total 3,622,489.80
24. Notes payable
Unit: RMB
Category Ending balance Beginning balance
Bank acceptance bill 55,450,000.00
Total 55,450,000.00
The total amount of notes payable due but unpaid was RMBXXX.
25. Accounts Payable
(1) List of accounts payable
Unit: RMB
Item Ending balance Beginning balance
Payment for goods 80,155,029.96 217,076,555.49
Engineering equipment 64,786,561.37 73,998,453.07
Others 32,110,383.53 44,326,362.74
Total 177,051,974.86 335,401,371.30
26. Contract Liabilities
Unit: RMB
Item Ending balance Beginning balance
Advance from sales 167,618,149.81 218,008,930.11
Less: contract liability recorded in other
-7,898,920.88 -13,041,581.15
current liabilities
Total 159,719,228.93 204,967,348.96
27. Payroll Payable
(1) List of payroll payable
Unit: RMB
Increase for the Decrease for the
Item Beginning balance Ending balance
current period current period
159
Lu Thai Textile Co., Ltd. Interim Report 2022
I. Short-term salary 271,168,796.78 634,688,453.68 679,841,504.23 226,015,746.23
II. Post-employment benefit-
845,499.31 62,357,605.62 62,734,803.56 468,301.37
defined contribution plans
III. Termination benefits 686,990.96 686,990.96 0.00
Total 272,014,296.09 697,733,050.26 743,263,298.75 226,484,047.60
(2) List of Short-term Salary
Unit: RMB
Increase for the Decrease for the
Item Beginning balance Ending balance
current period current period
1. Salary, bonus, allowance,
213,722,481.75 557,837,133.00 606,353,246.09 165,206,368.66
subsidy
2. Employee welfare 0.00 27,265,863.93 27,265,863.93 0.00
3. Social insurance 440,389.54 32,077,671.88 32,316,614.50 201,446.92
Of which: Medical
398,996.08 28,730,835.58 28,956,312.08 173,519.58
insurance premiums
Work-related injury
41,081.00 3,344,873.54 3,358,427.66 27,526.88
insurance premiums
Maternity insurance 312.46 1,962.76 1,874.76 400.46
4. Housing fund 0.00 7,112,711.60 7,112,711.60 0.00
5. Labor union budget and
57,005,925.49 10,395,073.27 6,793,068.11 60,607,930.65
employee education budget
Total 271,168,796.78 634,688,453.68 679,841,504.23 226,015,746.23
(3) List of defined contribution plans
Unit: RMB
Increase for the current Decrease for the
Item Beginning balance Ending balance
period current period
1. Basic pension
810,454.21 59,673,670.38 60,032,894.03 451,230.56
insurance
2. Unemployment
35,045.10 2,683,935.24 2,701,909.53 17,070.81
insurance premiums
Total 845,499.31 62,357,605.62 62,734,803.56 468,301.37
28. Taxes Payable
Unit: RMB
Item Ending balance Beginning balance
VAT 12,876,033.98 5,534,817.32
160
Lu Thai Textile Co., Ltd. Interim Report 2022
Enterprise income tax 45,655,345.73 8,173,413.58
Personal income tax 3,118,665.03 607,463.91
Urban maintenance and construction tax 3,330,294.72 3,645,871.40
Stamp duty 279,144.11 320,584.10
Real estate tax 5,048,467.15 5,200,898.00
Land use tax 2,558,596.46 2,651,253.23
Educational fee 1,476,886.59 1,585,262.09
Local education surcharge 984,591.06 1,056,841.39
Local water conservancy facility
construction fund
Tax on natural resources 163,008.00 179,258.00
Environmental protection tax 184,074.02 502,039.70
Total 75,675,106.85 29,457,702.72
29. Other Payables
Unit: RMB
Item Ending balance Beginning balance
Dividends payable 441,113.64 441,113.64
Other payables 89,208,753.73 96,759,451.67
Total 89,649,867.37 97,200,565.31
(1) Dividends payable
Unit: RMB
Item Ending balance Beginning balance
Dividends payable to individual
441,113.64 441,113.64
shareholders
Total 441,113.64 441,113.64
(2) Other Payables
1) Other payables listed by nature
Unit: RMB
Item Ending balance Beginning balance
Deposits and cash deposits etc. 5,914,424.40 4,544,176.56
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Lu Thai Textile Co., Ltd. Interim Report 2022
Collecting payment on behalf of others 2,169,707.82 3,148,636.19
Intercourse funds 2,102,138.44
Restricted stock repurchase obligations 67,684,900.00 78,908,300.00
Others 11,337,583.07 10,158,338.92
Total 89,208,753.73 96,759,451.67
30. Current Portion of Non-current Liabilities
Unit: RMB
Item Ending balance Beginning balance
Long-term borrowings matured within 1
8,800,000.00 8,500,000.00
year
Lease obligation matured within 1 year 389,916.44 377,404.52
Bond interest payable matured within 1
year
Total 9,189,916.44 8,877,404.52
31. Other current liabilities
Unit: RMB
Item Ending balance Beginning balance
Tax to be charged off 7,898,920.88 13,041,581.15
Demolition compensation received
Endorsed undue bill under non-
50,529,744.26 107,393,140.66
derecognition
Total 58,428,665.14 120,434,721.81
32. Long-term Borrowings
(1) Category of long-term borrowings
Unit: RMB
Item Ending balance Beginning balance
Credit loan 694,139,710.99 693,462,473.24
Less: current portion of long-term
-8,800,000.00 -8,500,000.00
borrowings
Total 685,339,710.99 684,962,473.24
Note to the category of long-term borrowings:
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Lu Thai Textile Co., Ltd. Interim Report 2022
The long-term borrowing includes interest payable of RMB659,710.99.
Other notes, including interest rate range:
Interest rate range Interest rate range
Item Ending balance Beginning balance
(%) (%)
Guarantee loan 0.00 0.00
Credit loan 694,139,710.99 2.90-3.65 693,462,473.24 3.06-3.65
33. Bonds Payable
(1) Bonds payable
Unit: RMB
Item Ending balance Beginning balance
Convertible corporate bonds 1,412,196,548.55 1,395,480,652.71
Total 1,412,196,548.55 1,395,480,652.71
(2) Changes of bonds payable (excluding other financial instruments divided as financial liabilities such
as preferred shares and perpetual bonds)
Unit: RMB
Amorti
Issued zation Repaid
Bon Interest Current
Beginni in the of in the
d Issue accrued shares
Name Par value Issue date ng Report premiu Reporti Ending balance
durat amount at par convert
balance ing m and ng
ion value ed
Period depreci Period
ation
LuThai
1,400,0
Convertibl 1,400,000,000 9 April 1,395,48 5,438,1 19,693, 8,399,1 16,200.
6 00,000. 1,412,196,548.55
e Bond .00 2020 0,652.71 08.90 174.25 87.31 00
00
127016
1,400,0
1,395,48 5,438,1 19,693, 8,399,1 16,200.
Total —— 00,000. 1,412,196,548.55
0,652.71 08.90 174.25 87.31 00
00
(3) Notes to the conditions and time of the shares transfer of the convertible corporate bonds
According to the Approval of the Public Issue of Convertible Corporate Bonds of Lu Thai Textile Co., Ltd. (ZH.J.X.K [2020]
No. 299) of the China Securities Regulatory Commission, the Company issued 14 million convertible bonds with a face value of
RMB100 each for a total issue amount of RMB1.4 billion with a maturity of 6 years, i.e. from 9 April 2020 to 8 April 2026.
The coupon rates of the convertible bonds issued by the Company are 0.3%, 0.6%, 1%, 1.5%, 1.8% and 2% in the following
order from the first stage to the sixth stage, with interest payable annually. The conversion period shall commence from (and
163
Lu Thai Textile Co., Ltd. Interim Report 2022
include) the first trading day on 15 October 2020, six months after the date of issue, and shall end on (and include) the trading day
prior to the maturity date of the convertible bonds (8 April 2026). Holders may apply for conversion during the conversion period.
The initial conversion price of convertible corporate bonds was RMB9.01 per share when it was issued but was adjusted to
RMB8.91 per share since July 9, 2020, after the Company implemented the 2019 profit sharing agreement on July 8, 2020. After
the Company implemented the restricted stock incentive plan in 2021, the price was adjusted to RMB8.76 per share accordingly
since June 7, 2021. Upon the implementation of the 2020 profit sharing agreement by the Company on June 18, 2021, it was
adjusted to RMB8.71 per share accordingly again since June 18, 2021. March 22, 2022 was designated as the listing date of
reserved restricted stocks of the Company, since which it was adjusted to RMB8.68 per share accordingly. Upon the
implementation of the 2021 profit sharing agreement by the Company on June 23, 2022, it was adjusted to RMB8.61 per share
accordingly again since June 23, 2022.
34. Lease obligation
Unit: RMB
Item Ending balance Beginning balance
Lease payments 147,312,721.04 160,713,545.55
Unrecognized financing costs -36,467,210.39 -38,978,482.62
Less: Current portion of lease liabilities -389,916.44 -377,404.52
Total 110,455,594.21 121,357,658.41
35. Long-term Payroll Payable
(1) List of long-term payroll payable
Unit: RMB
Item Ending balance Beginning balance
III. Other long-term welfare 45,933,262.13 57,384,062.39
Total 45,933,262.13 57,384,062.39
36. Deferred Income
Unit: RMB
Increase for the Decrease for the Reason for
Item Beginning balance Ending balance
current period current period formation
Government grants 188,958,133.78 25,619,024.20 163,339,109.58 Government grants
Total 188,958,133.78 25,619,024.20 163,339,109.58
37. Share Capital
Unit: RMB
164
Lu Thai Textile Co., Ltd. Interim Report 2022
Increase/decrease (+/-)
Bonu Shares
Beginning balance Ending balance
New shares s converted
Others Subtotal
issued share from capital
s reserve
Total
882,341,295.00 5,838,000.00 -238,144.00 5,599,856.00 887,941,151.00
shares
Other notes:
(1) In line with the resolution of the 30th session of the Ninth Board of Directors of the Company on February 18, 2022 and the
18th session of the Ninth Board of Supervisors, the Company granted incentive personnel reserved restricted stocks under the
2021 incentive plan and added capital of RMB5,838,000. This change in share capital has been audited by Zhitong Accounting
Firm (Special General Partnership) and the capital verification report Z.T.Y.Z. (2022) No. 371C000125 was issued on March 14,
2022.
(2) In conformity with the resolution of the 30th session of the Ninth Board of Directors of the Company on February 18, 2022,
the Proposal on Repurchase and Cancel Authorized but Unlocked Restricted Share of the Incentive Personnel not Conforming to
the Incentive Condition, all the 240,000 shares authorized to the original incentive personnel who did not conform to the incentive
condition of the Company were repurchased and canceled. This change in share capital has been audited by Zhitong Accounting
Firm (Special General Partnership) and the capital verification report Z.T.Y.Z. (2022) No. 371C000232 was issued on May 6,
2022.
(3) A total of 1,856.00 shares of convertible bonds of the Company can be converted in the Reporting Period.
38. Other Equity Instruments
(1) Basic Information about Other Outstanding Financial Instruments such as Preferred Shares and Perpetual Bonds at
the Period-end
On 9 April 2020, the Company publicly issued 14 million A-share convertible corporate bonds (short name: Luthai Convertible
Bonds, bond code: 127016) on Shenzhen Stock Exchange with an issue price of RMB100 per share. The bonds were listed on
Shenzhen Stock Exchange on 13 May 2020.
(2) Changes of Outstanding Financial Instruments such as Preferred Shares and Perpetual Bonds at the Period-end
Unit: RMB
Increase for the current Decrease for the
Outstanding Opening Closing
period current period
financial
instruments Numbe Num Numbe Carrying Num
Carrying value Carrying value Carrying value
r ber r value ber
Convertible
71,384,656.84 826.09 71,383,830.75
bonds to equity
Total 71,384,656.84 826.09 71,383,830.75
Other notes:
The decrease in other equity instruments for the period is due to the convertible debt-for-equity swap.
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39. Capital Reserves
Unit: RMB
Increase for the current Decrease for the
Item Beginning balance Ending balance
period current period
Capital premium
253,645,214.89 42,448,973.13 542,400.00 295,551,788.02
(premium on stock)
Other capital reserves 86,942,172.76 24,125,798.38 27,488,860.00 83,579,111.14
Total 340,587,387.65 66,574,771.51 28,031,260.00 379,130,899.16
Other notes, including a description of the increase or decrease for the current period and the reasons for the change:
(1) In conformity with the resolution of the 30th session of the Ninth Board of Directors of the Company on February 18, 2022 and
the 18th session of the Ninth Board of Supervisors, the Company granted incentive personnel reserved restricted stocks under the
2021 incentive plan, added the capital of RMB5,838,000 and increased the capital reserve-capital premium by RMB14,945,280.00.
In conformity with the resolution of the 30th session of the Ninth Board of Directors of the Company on February 18, 2022, the
Proposal on Repurchase and Cancel Authorized but Unlocked Restricted Share of the Incentive Personnel not Conforming to the
Incentive Condition, all the 240,000 shares authorized to the original incentive personnel who did not conform to the incentive
condition of the Company were repurchased and canceled, reducing the capital reserve-capital premium by RMB542,400.00.
(2) In conformity with the resolution of the 33rd session of the Ninth Board of Directors of the Company on May 24, 2022 and the
20th session of the Ninth Board of Supervisors, the Company processed the matters of lifting restrictions on 9,578,000 restricted
stocks, reduced the capital reserve-other capital reserve by RMB27,488,860.00 and increased the capital reserve-capital premium
by RMB27,488,860.00.
(3) It was recognized that the capital reserve-other capital reserve arising from the restricted stock incentive fees increased by
RMB24,125,738.72 in the Reporting Period.
(3) The capital reserves—capital premium arising from the conversion of convertible bonds increased by RMB14,833.13 in the
Reporting Period.
40. Treasury stocks
Unit: RMB
Increase for the current Decrease for the current
Item Beginning balance Ending balance
period period
Restricted stock
78,908,300.00 20,783,280.00 32,006,680.00 67,684,900.00
repurchase
Total 78,908,300.00 20,783,280.00 32,006,680.00 67,684,900.00
Other notes, including a description of the increase or decrease for the current period and the reasons for the change:
The Company recognized the restricted stock repurchase obligations and increased the treasury stocks by RMB20,783,280.00.
(2) The Company satisfied the unlocking conditions of restricted stocks, charged off the repurchase obligations and reduced the
treasury stocks by RMB32,006,680.
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41. Other comprehensive income
Unit: RMB
Amount of the current period
Less: Less:
recorded in recorded in
other other
Amount
comprehensi comprehensi Attributable
before Attributab
Beginning ve income in ve income in Less: to the Ending
Item deducting le
balance prior period prior period Income Company balance
income tax minority
and and tax as the
for the shareholde
transferred transferred expense parent after
current rs after tax
in profit or in retained tax
period
loss in the earnings in
Current the Current
Period Period
II. Other
comprehensiv
e income that
-
may 80,914,408. 23,336. 80,891,071. 44,467,322.
36,423,748.
subsequently 11 76 35 98
37
be reclassified
to profit or
loss
Differenc
es arising from
translation of
-
foreign 80,772,687. 80,772,687. 44,617,280.
36,155,406.
currency- 91 91 96
95
denominated
financial
statements
The changes
of accounts
23,336.
receivable -268,341.42 141,720.20 118,383.44 -149,957.98
76
financing in
fair value
Total of other -
80,914,408. 23,336. 80,891,071. 44,467,322.
comprehensiv 36,423,748.
11 76 35 98
e income 37
42. Surplus reserves
Unit: RMB
Increase for the current Decrease for the
Item Beginning balance Ending balance
period current period
Statutory surplus
1,211,782,763.96 1,211,782,763.96
reserves
Discretional surplus
3,341,572.58 3,341,572.58
reserves
Total 1,215,124,336.54 0.00 0.00 1,215,124,336.54
167
Lu Thai Textile Co., Ltd. Interim Report 2022
43. Retained profits
Unit: RMB
Item Current period Same period of last year
Beginning balance of retained profits before
5,589,201,772.37 5,346,819,948.22
adjustments
Beginning balance of retained profits after
5,589,201,772.37 5,346,819,948.22
adjustments
Add: Net profit attributable to owners of the
393,950,852.46 153,497,344.66
Company as the parent
Dividends of common shares payable 62,155,872.45 44,120,990.40
Ending retained profits 5,920,996,752.38 5,456,196,302.48
List of adjustment of beginning retained profits:
1) RMB0.00 beginning retained profits was affected by retrospective adjustment conducted according to the Accounting Standards
for Business Enterprises and relevant new regulations.
2) RMB0.00 beginning retained profits was affected by changes in accounting policies.
3) RMB0.00 beginning retained profits was affected by correction of significant accounting errors.
4) RMB0.00 beginning retained profits was affected by changes in combination scope arising from same control.
5) RMB0.00 beginning retained profits was affected totally by other adjustments.
44. Operating revenue and cost of sales
Unit: RMB
Amount of the current period Amount of the previous period
Item
Revenue Cost Revenue Cost
Principal business 3,192,795,600.27 2,393,341,282.26 2,156,443,129.95 1,763,955,459.16
Others 137,498,862.98 103,991,759.33 63,870,520.99 47,286,284.04
Total 3,330,294,463.25 2,497,333,041.59 2,220,313,650.94 1,811,241,743.20
Information about performance obligations: None
Information in relation to the transaction price apportioned to the residual contract performance obligation:
As at the end of the Reporting Period, the revenue amount corresponding to the contract performance obligation yet to be fulfilled
or yet to be completed under a signed contract is RMB 0.00, including RMB 0.00 expected to be recognized as revenue in 0, RMB
0.00 expected to be recognized as revenue in 0, and RMB 0.00 expected to be recognized as revenue in 0.
45. Taxes and surtaxes
Unit: RMB
Item Amount of the current period Amount of the previous period
Urban maintenance and construction tax 9,776,946.60 6,283,128.18
Educational fee 4,171,872.08 2,695,603.21
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Tax on natural resources 269,306.00 236,902.00
Real estate tax 10,096,302.07 10,055,281.39
Land use tax 5,119,280.86 5,120,956.62
Vehicle and vessel usage tax 48,152.44 49,025.98
Stamp duty 1,777,082.23 1,427,573.40
Local education surcharge 2,781,248.07 1,797,068.80
Local water conservancy facility
0.00 -102,200.92
construction fund
Environmental protection tax 461,067.66 594,788.21
Total 34,501,258.01 28,158,126.87
Other notes:
Please refer to Note VI. Taxes for details of various taxes and additional standards for calculation and payment.
46. Selling expense
Unit: RMB
Item Amount of the current period Amount of the previous period
Salary 34,521,119.07 24,817,866.24
Marketing expense 15,812,366.09 13,898,356.44
Depreciation charge 3,352,693.87 2,919,396.85
Office operating fee 4,537,454.44 5,228,400.21
Others 1,670,717.57 1,682,775.32
Total 59,894,351.04 48,546,795.06
47. Administrative expense
Unit: RMB
Item Amount of the current period Amount of the previous period
Salary 93,534,860.68 34,322,960.21
Depreciation charge 18,872,138.30 20,441,508.41
Warehouse funding 19,455,536.27 17,942,419.24
Travel expense 12,135,020.70 12,190,687.06
Labor-union expenditure 6,143,835.05 5,802,625.03
Employee education budget 4,312,539.39 4,210,543.12
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Amortization of intangible assets 5,805,244.20 6,143,216.69
Carriage charges 3,275,956.40 3,094,038.89
Others 26,745,012.58 25,970,047.75
Total 190,280,143.57 130,118,046.40
48. R&D expense
Unit: RMB
Item Amount of the current period Amount of the previous period
Labor cost 66,198,913.29 77,616,982.58
Material expense 31,344,635.57 36,220,227.08
Depreciation charge 9,209,535.98 6,279,523.70
Others 8,198,157.03 11,267,750.44
Total 114,951,241.87 131,384,483.80
49. Financial costs
Unit: RMB
Item Amount of the current period Amount of the previous period
Finance costs 55,026,837.64 39,272,113.66
Less: Capitalized interest expense 10,810,250.47 10,299,292.35
Interest income 28,264,778.38 14,562,127.13
Add: Capitalized interest income 5,914,630.48
Exchange gain or loss -98,749,158.07 5,910,962.13
Less: Capitalized foreign exchange gains
or losses
Others 4,949,236.76 3,901,272.97
Total -71,933,482.03 24,222,929.28
50. Other income
Unit: RMB
Sources Amount of the current period Amount of the previous period
Government grants 2,101,748.17 14,851,875.95
Transfer of deferred income 25,619,024.20 4,237,435.16
170
Lu Thai Textile Co., Ltd. Interim Report 2022
Total 27,720,772.37 19,089,311.11
51. Investment income
Unit: RMB
Item Amount of the current period Amount of the previous period
Long-term equity investment income
-1,076,939.49 -1,789,070.68
accounted by equity method
Investment income from disposal of
2,525,510.87 24,904,879.52
trading financial assets
Interest income earned on investment in
debt obligations during the holding 6,065,699.38
period
Total 1,448,571.38 29,181,508.22
52. Gain on changes in fair value
Unit: RMB
Sources Amount of the current period Amount of the previous period
Trading Financial Assets 6,691,520.36 8,034,224.66
Of which: Income from changes in fair value generated
685,949.57 9,840,800.00
by derivative financial instruments
Trading financial liabilities -3,622,489.80
Total 3,069,030.56 8,034,224.66
53. Credit impairment loss
Unit: RMB
Item Amount of the current period Amount of the previous period
Bad debt loss of other receivables -907,638.23 -211,404.00
Bad debt loss of notes receivable ("-" indicates
6,394.34 -87,833.04
loss)
Bad debt loss of accounts receivable ("-" indicates
1,397,801.18 11,414,377.16
loss)
Bad debt loss of dividends receivable ("-"
1,498,035.64 1,498,035.63
indicates loss)
Total 1,994,592.93 12,613,175.75
54. Asset impairment loss
Unit: RMB
Item Amount of the current period Amount of the previous period
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Lu Thai Textile Co., Ltd. Interim Report 2022
II. Inventory falling price loss and impairment
-79,469,872.91 -7,035,233.41
provision for contract performance costs
V. Impairment loss on fixed assets -2,225,865.39
Total -81,695,738.30 -7,035,233.41
55. Asset disposal income
Unit: RMB
Sources Amount of the current period Amount of the previous period
Fixed asset disposal income (“-” for loss) 3,069,030.56 39,092,642.32
Intangible asset disposal income (“-” for loss) 19,438,746.10
Total 3,069,030.56 58,531,388.42
56. Non-operating income
Unit: RMB
Amount of the current Amount of the previous Amount recorded in the current
Item
period period non-recurring profit or loss
Gains on damage and scrap of
28,052.73
non-current assets
Others 2,998,200.73 1,184,008.01
Total 3,026,253.46 1,184,008.01
57. Non-operating expense
Unit: RMB
Amount of the current Amount of the previous Amount recorded in the current
Item
period period non-recurring profit or loss
Donation 1,067,708.86 2,012,051.62
Others 1,097,430.80 577,877.31
Total 2,165,139.66 2,589,928.93
58. Income tax expense
(1) List of Income Tax Expense
Unit: RMB
Item Amount of the current period Amount of the previous period
Current income tax expense 70,344,008.61 29,081,920.36
172
Lu Thai Textile Co., Ltd. Interim Report 2022
Deferred income tax expense -2,576,432.11 -6,872,687.22
Total 67,767,576.50 22,209,233.14
(2) Adjustment process of accounting profit and income tax expense
Unit: RMB
Item Amount of the current period
Total profit 461,334,275.24
Current income tax expense accounted at statutory/applicable tax rate 69,200,141.29
Influence of applying different tax rates by subsidiaries -4,506,291.70
Influence of income tax before adjustment 3,092,064.35
Influence of non-deductible costs, expenses and losses 3,976.10
Effect of deductible temporary differences or deductible losses on deferred income tax
139,227.39
assets not recognized in the period
Profit/loss of associated enterprises and joint ventures accounted by equity method -161,540.92
Income tax expense 67,767,576.50
59. Other comprehensive income
Refer to Note VII-41 for details.
60. Cash flow statement
(1) Cash generated from other operating activities
Unit: RMB
Item Amount of the current period Amount of the previous period
Government grants 1,980,644.87 21,588,175.95
Claim income 1,683,147.72 356,171.92
Recovery of employee borrowings, petty cash
7,337,923.73 12,429,591.08
and deposit
Collection for employees 5,216,485.83 2,413,849.33
Others 1,031,855.69 3,662,317.53
Total 17,250,057.84 40,450,105.81
(2) Cash used in other operating activities
Unit: RMB
173
Lu Thai Textile Co., Ltd. Interim Report 2022
Item Amount of the current period Amount of the previous period
Lease rental 367,757.50 2,387,330.09
Advertising expense 203,882.54 605,033.82
Business travel charges 24,176,311.80 15,478,544.40
Insurance 2,535,111.86 2,585,281.80
Service fees 7,492,345.81 6,023,522.11
Decoration & repair expenses 1,853,995.94 394,368.44
Donation 1,005,693.17 2,433,466.47
Pre-payment 4,599,753.95 858,305.97
Payment of employee borrowings, petty
4,351,232.81 15,018,936.57
cash and deposit
Others 23,308,650.21 22,427,795.71
Total 69,894,735.59 68,212,585.38
(3) Cash generated from other investing activities
Unit: RMB
Item Amount of the current period Amount of the previous period
Interest income 20,657,090.40 14,858,805.99
Income from forward foreign exchange 2,525,510.87 23,079,957.05
Return of guarantees 1,100,000.00
Return of term deposits 8,325,816.11
Total 32,608,417.38 37,938,763.04
(4) Cash used in other investing activities
Unit: RMB
Item Amount of the current period Amount of the previous period
Term deposit 172,545,016.96
Pay margin 1,323,689.98 2,365,093.84
Total 173,868,706.94 2,365,093.84
(5) Cash generated from other financing activities
Unit: RMB
174
Lu Thai Textile Co., Ltd. Interim Report 2022
Item Amount of the current period Amount of the previous period
Return of loan guarantees 0.00 0.00
Recovery of intercourse accounts 0.00 0.00
(6) Cash used in other financing activities
Unit: RMB
Item Amount of the current period Amount of the previous period
Pay right-of-use assets accounts 9,179,573.11 9,339,306.00
Pay payout cash deposit 9,039,411.18
Total 18,218,984.29 9,339,306.00
61. Supplemental information for cash flow statement
(1) Supplemental information for cash flow statement
Unit: RMB
Amount during the current
Supplemental information Same period of last year
period
1. Reconciliation of net profit to net cash flows generated from
operating activities
Net Profit 393,566,698.74 143,440,747.02
Add: Provision for impairment of assets 79,701,145.37 -5,577,942.34
Depreciation of fixed assets, oil-gas assets, and productive
224,384,809.38 218,273,154.39
biological assets
Depreciation of right-of-use assets 8,988,103.95 11,100,529.06
Amortization of intangible assets 5,502,457.48 5,624,309.84
Amortization of long-term prepaid expenses 490,056.67 366,873.36
Losses from disposal of fixed assets, intangible assets and other
-3,069,030.56 -58,531,388.42
long-lived assets (gains: negative)
Losses from scrap of fixed assets (gains: negative) -28,052.73 0.00
Losses from changes in fair value (gains represented by "-") -6,691,520.36 -8,034,224.66
Finance costs (gains: negative) -76,882,718.79 20,321,656.31
Investment loss (gains represented by "-") -1,448,571.38 -29,181,508.22
Decrease in deferred income tax assets (gains: negative) -6,803,474.24 -7,774,846.27
Increase in deferred income tax liabilities (“-” means decrease) 4,250,378.88 71,198.63
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Lu Thai Textile Co., Ltd. Interim Report 2022
Decrease in inventory (gains: negative) -283,734,148.64 -59,506,379.69
Decrease in accounts receivable generated from operating
1,860,662.45 13,448,642.14
activities (gains represented by "-")
Increase in accounts payable used in operating activities
-222,604,387.48 -61,279,796.01
(decrease represented by "-")
Others
Net cash flow from operating activities 117,482,408.74 182,761,025.14
2. Significant investing and financing activities without involvement of
cash receipts and payments
Conversion of debt to capital
Convertible corporate bonds matured within one year
Fixed asset under finance lease
3. Net increase/decrease of cash and cash equivalent:
Closing balance of cash 1,729,633,239.07 2,031,646,000.18
Less: Opening balance of cash 1,970,006,884.89 1,396,530,407.47
Plus: Closing balance of cash equivalents
Less: Opening balance of cash equivalents
Net increase in cash and cash equivalents -240,373,645.82 635,115,592.71
(2) Cash and cash equivalents
Unit: RMB
Item Ending balance Beginning balance
I. Cash 1,729,633,239.07 1,970,006,884.89
Including: Cash on hand 9,920,694.07 3,475,164.56
Bank deposits on demand 1,719,712,545.00 1,966,531,720.33
III. Ending balance of cash and cash
1,729,633,239.07 1,970,006,884.89
equivalents
62. Assets with restricted ownership or right to use
Unit: RMB
Item Ending carrying amount Reason for Restriction
Monetary capital 1,873,689.98 Cash deposit for L/G and L/C
Other non-current assets 40,000,000.00 Time deposit certificates pledge
Total 41,873,689.98
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63. Foreign currency monetary items
(1) Foreign currency monetary items
Unit: RMB
Closing foreign currency Ending balance converted to
Item Exchange rate
balance RMB
Monetary capital
Of which: USD 86,698,419.23 6.7114 581,867,770.79
EUR 2,148,057.70 7.0084 15,054,447.58
HKD 3,789,518.33 0.8552 3,240,796.08
JPY 34,021,637.00 0.0491 1,670,462.38
GBP 1,957.18 8.1365 15,924.60
CHF 137.87 7.0299 969.21
SEK
Dong 870,447,956,273.00 0.00029 251,027,528.62
MMK 648,486,252.35 0.0036 2,355,950.55
Riel 97,270,639.00 0.0016 158,183.83
Notes receivable
Of which: USD 22,096,428.20 6.7114 148,297,968.25
Accounts receivable
Of which: USD 80,759,301.31 6.7114 542,007,974.80
EUR 411,444.52 7.0084 2,883,567.78
HKD
Dong 25,813,712,911.00 0.00029 7,444,388.27
MMK 14,108,400.00 0.0036 51,255.82
Other receivables
Of which: USD 202,535.10 6.7114 1,359,294.07
JPY 1,688,430.00 0.0491 82,901.91
HKD 1,598,011.12 0.8552 1,366,619.11
Dong 2,236,491,468.50 0.00029 644,979.31
MMK 1,800,000.00 0.0036 6,539.40
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Accounts payable
Of which: USD 4,926,616.83 6.7114 33,064,496.19
EUR 325,540.17 7.0084 2,281,515.73
JPY 1,867,204.00 0.0491 91,679.72
Dong 34,331,649,624.00 0.00029 9,900,866.67
MMK 8,205,788.00 0.0036 29,811.63
Other payables
Of which: USD 543,698.79 6.7114 3,648,980.06
Dong 1,481,185,044.00 0.00029 427,157.33
MMK 1,390,000.00 0.0036 5,049.87
Short-term borrowings
Of which: USD 75,468,480.99 6.7114 506,499,163.32
Dong 196,512,588,845.00 0.00029 56,672,049.33
Current portion of long-term
borrowings
Of which: USD 0.00
Long-term borrowings
Of which: USD
EUR
HKD
(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 the Company's subsidiaries Lu Thai (Hong Kong), Vanguard Apparel, Lu Thai (America), Continental
Textile as well as sub-subsidiaries Lu Thai Tan Chau, Libra International, Polaris Apparel, Lu An Garments and Wanxiang Textile
were Hong Kong, Burma, America, Vietnam, Vietnam, Singapore, Cambodia, Vietnam and Vietnam, and the recording currency
was HKD for Lu Thai (Hong Kong) and USD for other overseas companies.
64. Government subsidy
(1) Basic information on government grants
Unit: RMB
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Lu Thai Textile Co., Ltd. Interim Report 2022
Amount recorded in the current
Category Amount Listed items
profit or loss
Rewards for follow-on offering 900,000.00 Other income 900,000.00
Withholding and remitting of return of
303,337.26 Other income 303,337.26
handling charges
Provincial special funds for foreign trade
215,200.00 Other income 215,200.00
and economic development
Employment subsidy funds for Zibo 401,355.53 Other income 401,355.53
Tax reduction and exemption 161,255.38 Other income 161,255.38
Subsidy accounts for van phase-out 25,600.00 Other income 25,600.00
Talent subsidies 95,000.00 Other income 95,000.00
Total 2,101,748.17 2,101,748.17
(2) Return of Government Grants
□Applicable Not applicable
VIII. Change of Consolidation Scope
1. Other reasons for changes of consolidation scope
Notes of other changes in the combination scope (e.g., new subsidiaries, liquidation of subsidiaries, etc.) and relevant situations:
During the year, the Company established new a subsidiary, Wanxiang Textile Co., Ltd.
IX. Equity in Other Entities
1. Equity in Subsidiary
(1) Compositions of the Group
Shareholding percentage
Main Registra
(%)
Name operating tion Nature of business Way of gaining
place place Directly Indirectly
Hong Hong
Luthai (Hong Kong) Wholesale and retail industry 100.00% Set-up
Kong Kong
Shanghai Shangh
Shanghai Luthai Wholesale and retail industry 100.00% Set-up
City ai City
Lufeng Weaving &
Zibo Zibo Manufacturing industry 75.00% Set-up
Dyeing
Luqun Textile Zibo Zibo Manufacturing industry 100.00% Set-up
Business
combination not
Xinsheng Power Zibo Zibo Manufacturing industry 100.00%
under the same
control
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Technology development, technical
Shanghai Shangh
Shanghai Zhinuo consultancy and transfer of 100.00% Set-up
City ai City
technologies
Lulian New Materials Zibo Zibo Manufacturing industry 75.00% Set-up
Lujia Import & Export Zibo Zibo Import and export trade 100.00% Set-up
Beijing Beijing
Beijing Zhishu Commercial services 100.00% Set-up
City City
Lu Thai Occupational
Zibo Zibo Skill training 100.00% Set-up
Training School
Banyang Villa Zibo Zibo Catering 100.00% Set-up
Wenchan Wencha
Huilin International Modern service industry 100.00% Set-up
g ng
Libra International (sub- Singapor Singapo Wholesale textiles and leather,
100.00% Set-up
subsidiary) e re holding company
Polaris Apparel (sub- Cambodi Cambod
Manufacturing industry 100.00% Set-up
subsidiary) a ia
Vanguard Apparel Co.,
Burma Burma Manufacturing industry 100.00% Set-up
Ltd.
Americ
Lu Thai (America) America Wholesale and retail industry 100.00% Set-up
a
Continental Textile Co., Vietna
Vietnam Manufacturing industry 100.00% Set-up
Ltd. m
Lu Thai Tan Chau (sub- Vietna
Vietnam Manufacturing industry 100.00% Set-up
subsidiary) m
Lu An Garments (sub- Vietna
Vietnam Manufacturing industry 100.00% Set-up
subsidiary) m
Wanxiang Textile (sub- Vietna
Vietnam Manufacturing industry 100.00% Set-up
subsidiary) m
Notes to holding proportion in subsidiary different from voting proportion:
Not applicable.
Basis of holding half or less voting rights but still controlling the investee and holding more than half of the voting rights but not
controlling the investee:
Not applicable.
Significant structural entities and controlling basis in the scope of combination:
Not applicable.
Basis of determining whether the Company is the agent or the principal:
Not applicable.
(2) Significant Non-wholly-owned Subsidiary
Unit: RMB
Shareholding The profit or loss attributable Declaring dividends distributed to Balance of non-
Name proportion of non- to the non-controlling interests non-controlling interests for the controlling interests at the
controlling interests for the current period current period period-end
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Lufeng
Weaving & 25.00% 10,938,568.10 322,347,425.47
Dyeing
Lulian New
25.00% -11,322,721.82 61,080,452.71
Materials
Holding proportion of non-controlling interests in subsidiary different from voting proportion:
Not applicable.
(3) The Main Financial Information of Significant Not Wholly-owned Subsidiary
Unit: RMB
Ending balance Beginning balance
Non- Non-
Name Non- Current Total Non- Current Total
Current Total current Current Total current
current liabiliti liabiliti current liabiliti liabiliti
assets assets liabiliti assets assets liabiliti
assets es es assets es es
es es
Lufeng
732,30 1,933,8 581,93 630,62 1,126,3 759,36 1,885,6 586,52 636,19
Weavin 1,201,59 48,693, 49,665,
8,076.1 99,903. 3,505.0 7,103.6 16,837. 2,074.1 78,911. 6,434.7 1,682.6
g& 1,827.54 598.59 247.83
3 67 1 0 35 9 54 8 1
Dyeing
Lulian
567,93 978,29 731,61 734,80 474,52 523,83 998,36 706,30 709,48
New 410,363, 3,197,1 3,185,3
5,862.2 9,071.1 1,843.8 8,966.5 6,303.8 5,116.3 1,420.1 0,975.3 6,286.2
Material 208.91 22.72 10.88
7 8 4 6 1 4 5 6 4
s
Unit: RMB
Amount of the current period Amount of the previous period
Cash flows Cash flows
Name Total Total
from from
Revenue Net Profit comprehensi Revenue Net Profit comprehensi
operating operating
ve income ve income
activities activities
Lufeng
- - -
Weavin 824,088,561. 53,903,771. 53,785,571. 286,465,944. 528,023,041.
24,919,021. 24,829,865. 25,430,786.
g& 65 42 14 48 71
98 50 43
Dyeing
Lulian
- - - - - -
New 37,558,406.7 14,060,457.1
45,385,029. 45,385,029. 20,097,376.5 23,633,974. 23,633,974. 20,179,784.
Materia 3 8
29 29 4 03 03 39
ls
2. Equity in Joint Ventures or Associated Enterprises
(1) Significant Joint Ventures or Associated Enterprises
Shareholding percentage (%) Accounting
treatment of the
Main operating Registration Nature of investment to joint
Name
place place business venture or
Directly Indirectly
associated
enterprise
Haohong Equity
Ningbo Ningbo 33.33% Equity method
Investment investment
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Lu Thai Textile Co., Ltd. Interim Report 2022
Haoying Equity
Ningbo Ningbo 47.62% Equity method
Investment investment
(2) Main Financial Information of Significant Associated Enterprises
Unit: RMB
Opening balance/amount of the previous
Closing balance/amount of the current period
period
Haohong Investment Haoying Investment Haohong Investment Haoying Investment
Current assets 208,185,052.59 210,299,642.68 206,401,708.32 214,686,791.30
Non-current assets
Total assets 208,185,052.59 210,299,642.68 206,401,708.32 214,686,791.30
Current liabilities 3,433,167.13 27,979,423.14 3,433,167.13
Non-current liabilities
Total liabilities 3,433,167.13 27,979,423.14 3,433,167.13
Net Assets 204,751,885.46 182,320,219.54 202,968,541.19 214,686,791.30
Equity of non-controlling interests
Equity attributable to shareholders of
204,751,885.46 182,320,219.54 202,968,541.19 214,686,791.30
the Company as the parent
Net assets shares calculated at the
68,252,015.29 86,819,065.34 67,657,626.65 102,231,850.02
shareholding proportion
Adjusted items
- Goodwill
--Unrealized profit of intra-company
transaction
--Other -28,537.96 -446,370.01
Carrying value of investment to
68,252,015.29 86,790,630.38 67,657,626.65 101,785,480.01
associated enterprises
Fair value of equity investments in
associated enterprises with publicly
quoted prices
Revenue
Net Profit 1,783,344.27 -4,386,967.62 -10,484,845.56 3,582,108.00
Net profit from discontinued operations
Other comprehensive income
Total comprehensive income 1,783,344.27 -4,386,967.62 -10,484,845.56 3,582,108.00
Dividends received from the associates
in the current period
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X. Risks Associated with Financial Instruments
The Company's major financial instruments include monetary capital, notes receivable, accounts receivable, accounts
receivable financing, other receivables, other current assets, trading financial assets, investment in debt obligations, other non-
current financial assets, long-term receivables, notes payable, accounts payable, other payables, short-term borrowings, current
portion of non-current liabilities, long-term borrowings, bonds payable, and lease liabilities. Details of various financial
instruments are disclosed in relevant Notes. Risks related to these financial instruments, and risk management policies the
Company has adopted to reduce these risks are described as follows. The Company management manages and monitors the risk
exposure to ensure the above risks are controlled in a limited scope.
1. Risk management objectives and policies
The Company has conducted the risk management to achieve an appropriate balance between the risk and the income and to
minimize the adverse influence of financial risks on the Company’s financial performance. According to such risk management
objective, the Company has formulated corresponding risk management policy to recognize and analyze possible risks
encountered by the Company, set the appropriate acceptable risk level and designed corresponding internal control procedures to
monitor the Company’s risk level. Meanwhile, the Company will regularly review these risk management policies and relevant
internal control system so as to cater for the market or respond to any change in the Company’s business operations. Accordingly,
the Company’s internal audit department will also regularly or randomly check whether the internal control system is implemented
in conformity with relevant risk management policies.
The major risks caused by financial instruments of the Company are credit risk, liquidity risk and market risk (including
foreign exchange risk and interest rate risk).
The Board of Directors shall be responsible for planning and establishing the risk management framework for the Company,
determining the Company’s risk management policies and relevant guidelines and monitoring the implementation of various risk
management measures. However, the Company has established corresponding risk management policies to recognize and analyze
possible risks encountered by the Company. Besides, various risks are specified in these risk management policies, including the
credit risk, the liquidity risk and the market risk management etc. On a regular basis, the Company will evaluate the specific
marketing environment and various changes in the Company’s business operations so as to determine whether any risk
management policy and system need be updated.
(1) Credit risk
Credit Risk means that the Company will suffer any financial losses due to the counter party’s failure in fulfilling the contract
obligations.
The Company shall manage the credit risk based on the specific Group Classification, and the credit risk mainly arises from
bank deposit, notes receivable, accounts receivable, other receivables and long-term accounts receivable etc.
The Group’s bank deposits are mainly saved in state-owned banks and other large and medium-sized listed banks. The
Group’s bank deposits are expected not to suffer any major credit risks.
For notes receivable, accounts receivable, other accounts receivable and long-term accounts receivable, the Company has
established relevant policies to control the credit risk exposure. According to the client’s financial status, credit record and other
factors (including the current market condition), the Company will evaluate the client’s credit qualification and set corresponding
credit period. The Company regularly monitors the credit records of customers. For customers with bad credit records, the
Company adopted corresponding methods, such as written pressing for payment, shortening credit period, and canceling credit
period, so as to ensure the Company's overall credit risk is controllable.
The hugest credit risk exposure borne by the Company is the book value of each financial asset reflected in the balance sheet,
and the Company also faces credit risk due to the provision of financial guarantee, as detailed in Note XII 2.
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In terms of accounts receivable, the top 5 customers in accounts receivable were accounted for 28.33% of the total amount of
accounts receivable of the Company (29.83% in 2021). As for other receivables, the top 5 of the ending balance according to the
arrears party was accounted for 55.37% of the total amount of other receivables of the Company (52.62% in 2021).
Investment in debt obligations
The Group supervised the changes of credit risk through tracking the published external credit ratings. In order to make sure
whether the credit rating was the latest, and whether the credit risk has increased obviously of evaluation report date but not been
reflected in the published external ratings, the Company has supplemented through examining the changes of bond yield and the
available news and supervision information.
On the balance sheet date, the carrying value of investment in debt obligations of the Company are listed as follows according
to report items (Unit: RMB’0,000).
June 30, 2022 December 31, 2021
Trading Financial Assets 28,600.56 -
Other Current Assets - -
Total 28,600.56 -
(2) Liquidity risk
Liquidity Risk refers to the risk of capital shortage encountered by the Company during the cash payment or the settlement of
other financial assets.
During the management of liquidity risk, the Company shall reserve and monitor corresponding cash and cash equivalent
deemed sufficient by the management so as to meet the Company’s operational requirements and mitigate the impact caused by
the cash flow fluctuation. The Group’s management will monitor the use of bank loans and guarantee the fulfillment of loan
agreement. Meanwhile, major financial institutions shall promise to provide the Group with sufficient reserve funds in order to
satisfy the short-term and long-term fund demand. The Group shall raise its working capital based on the capital generated from
business operations and bank loans.
(3) Market risk
The financial instrument’s market risk refers to the fluctuation risk of fair value of financial instrument or future cash flow
caused by the changes of market price, including the interest rate risk and the exchange rate risk.
Interest rate risk
Interest rate risk refers to the risk of fluctuations in the fair value or future cash flows of financial instruments arising from
changes in market interest rates. The interest rate can derive from the recognized interest-bearing financial instruments and
unrecognized financial instruments (including certain loan commitment).
The Group’s interest rate risk mainly arises from the bank loan. Financial liabilities based on the floating interest rate will
cause the cash flow interest rate risk to the Company, and financial liabilities based on the fixed interest rate the fair value interest
rate risk.
However, the Company has paid close attention the impact of interest rate fluctuations on the Company’s interest rate risk. At
present, the Company has not taken any interest rate hedging measures. The rise of interest rate will increase the cost of newly-
added interest-bearing debts and the interest cost of the Company’s unsettled interest-bearing debts based on the floating interest
rate, and cause major adverse influence on the Company’s financial performance. The management will timely make
corresponding adjustment according to the latest market situation, and corresponding interest rate swap will be arranged to reduce
the interest rate risk.
The interest-bearing financial liabilities held by the Company are as follows (Unit: RMB’0,000):
Item June 30, 2022 December 31, 2021
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Lu Thai Textile Co., Ltd. Interim Report 2022
Fixed-interest financial liability
Including: short-term borrowings 121,363.14 101,026.99
Current portion of long-term borrowings 180.00 850.00
Long-term borrowings 30,120.00 58,523.00
Bonds Payable 141,219.65 139,548.07
Total 292,882.79 299,948.05
Floating rate financial liability
Including: short-term borrowings 4,493.75
Current portion of long-term borrowings 700.00
Long-term borrowings 38,348.00 9,900.00
Total 43,541.75 9,900.00
On June 30, 2022, if the lending rate calculated at floating interest rate up or down 100 basis points with other variables
unchanged, the net profit and shareholders’ equity will be decreased or increased about RMB4,354,200.
Foreign exchange risk
Foreign exchange risk is referred to the fluctuation risk of fair value of financial instruments or future cash flows resulted
from the change of foreign exchange rate. The foreign exchange rate was originated from the financial instruments denominated in
foreign currencies other than the recording currency.
On June 30, 2022, the amount of foreign currency financial assets and foreign currency financial liabilities converted to
renminbi is as follows (Unit: RMB’0,000):
Foreign currency liabilities Foreign currency assets
Item Amount at the End Amount at the Amount at the
of This Reporting Beginning of This Amount at the End of Beginning of This
Period Reporting Period This Reporting Period Reporting Period
USD 54,321.26 112,245.83 127,353.30 89,577.60
EUR 228.15 361.14 1,793.80 587.83
JPY 9.17 78.72 175.34 13.63
HKD 460.74 408.53
GBP 1.59 7.92
CHF 14.02 0.10 10.32
SEK
Dong 6,700.01 3,342.45 25,911.69 3,399.25
MMK 3.49 3.40 241.37 241.25
Riel 15.82 4.77
Total 61,262.08 116,045.56 155,953.75 94,251.09
The Group has paid close attention the impact of exchange rate fluctuations on the Group’s exchange rate risk. As at the end
of each reporting period, for the Group's monetary capital, bills receivable, accounts receivable, accounts payable, short-term
borrowings and long-term borrowings denominated in foreign currencies, the impact on the Group's shareholders' equity and net
185
Lu Thai Textile Co., Ltd. Interim Report 2022
profit assuming a 10% appreciation or depreciation of RMB against foreign currencies, while other factors remain unchanged,
would be as follows (Unit: RMB’0,000):
Current period Same period last year
Exchange rate
fluctuations Impact on shareholders' Impact on shareholders'
Impact on profit equity Impact on profit equity
10% appreciation
against RMB -9,469.17 -9,469.17 3,742.78 3,742.78
10% depreciation
against RMB 9,469.17 9,469.17 -3,742.78 -3,742.78
2. Capital management
The objectives of capital management policies of the Company are to ensure the continuous operation of the Company so as
to provide return to shareholders and benefit other stakeholders, as well as to reduce capital cost by maintaining the optimal capital
structure.
In order to maintain or adjust capital structure, the Company might adjust financing method and the dividends paid to
shareholders, return capital to shareholders, issue new shares and other equity instrument or sell assets to reduce debts.
The Group supervised the capital structure based on the asset-liability ratio (namely total liabilities divide total assets). On
June 30, 2022, the asset-liability ratio was 34.38% of the Company (35.57% on December 31, 2021).
XI. Disclosure of Fair Value
1. Ending Fair Value of Assets and Liabilities at Fair Value
Unit: RMB
Closing fair value
Item Fair value Fair value Fair value
measurement items measurement items measurement items Total
at level 1 at level 2 at level 3
I. Consistent Fair Value
-- -- -- --
Measurement
(1) Debt instrument
286,005,570.79 286,005,570.79
investments
(3)Derivative financial assets 2,412,949.57 2,412,949.57
vi. Accounts receivable
40,325,536.36 40,325,536.36
financing
vii. Other non-current financial
190,052,000.00 190,052,000.00
assets
vi. Trading financial liabilities 3,622,489.80 3,622,489.80
Derivative financial
3,622,489.80 3,622,489.80
liabilities
II. Inconsistent Fair Value
-- -- -- --
Measurement
2. Continuous and non-continuous Level 2 fair value measurement items, valuation techniques used, and
the qualitative and quantitative information of important parameters
For forward settlements of exchanges, the Company determines their fair value based on bank forward foreign exchange
quotations at the end of the period.
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Lu Thai Textile Co., Ltd. Interim Report 2022
For fund products, the Company recognizes their fair value based on the net value on the date of statement.
For WM products of brokers, the Company recognizes the products' fair value based on the return of products within the expected
interval.
3. Valuation Technique Adopted and Nature and Amount Determination of Important Parameters for
Consistent and Inconsistent Fair Value Measurement Items at Level 3
For the unlisted equity investment, the Company adopts the comparable listed company comparison method, and the non-
observable input value of the comparable listed company comparison method includes the liquidity discount.
The investment into Shandong Hongqiao Thermoelectric Co., Ltd. made by Luqun Textile (the Company’s subsidiary) is
expected to be held in the long run for obtaining the discount on power purchase. As no revenue distribution right is vested in the
investment, the invested unit’s operating profit and loss are not shared or borne, and the equity transfer is not proposed, the
Company regards it as the financial asset which shall be measured based on the fair value and whose variations are included in the
current profit and loss, and the investment cost is deemed as the fair value of the financial asset.
For accounts receivables financing at fair value and the changes included in other comprehensive income, its fair value shall
be determined by the discount cash flow method.
XII. Related Party and Related-party Transactions
1. Information Related to the Company as the Parent of the Company
Proportion of
Proportion of share
voting rights
Name of the held by the
Registration Registered owned by the
Company as the Nature of business Company as the
place Capital Company as the
parent parent against the
parent against the
Company (%)
Company (%)
Textile, chemistry and RMB63.26
Lucheng Textile Zibo 15.81% 15.81%
investment million
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.
3. Information on the Joint Ventures and Associated Enterprises of the Company
Refer to Note IX-2.
4. Information on Other Related Parties
Name of other related party Relationship with the Company
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
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Lu Thai Textile Co., Ltd. Interim Report 2022
Zibo Lurui Fine Chemical Co., Ltd. (hereinafter referred to as
Majority-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 Chengshun Hosiery Co., Ltd. (hereinafter referred to as
Wholly-owned subsidiary of the Company as the parent
Chengshun Hosiery)
Zibo Chengshun Economic and Trade Co., Ltd. (hereinafter
Wholly-owned subsidiary of the Company as the parent
referred to as Chengshun Economic and Trade)
Chengshun Petrochemical (Zhejiang Zhoushan) Co., Ltd.
Wholly-owned subsidiary of the Company as the parent
(hereinafter referred to as Chengshun Petrochemical)
Zibo Lucheng Petrochemical Sales Co., Ltd. (hereinafter
Wholly-owned subsidiary of the Company as the parent
referred to as Lucheng Petrochemical)
Shanghai Hengjiu Textile New Materials Co., Ltd. (hereinafter
Wholly-owned subsidiary of the Company as the parent
referred to as Hengjiu Textile)
Unikorn Nonwovens Co., Ltd. (hereinafter referred to as the Wholly-owned subsidiary of wholly-owned subsidiary of the
"Unikorn Nonwovens") Company as the parent
Zibo Lumei Economic and Trade Co., Ltd. (hereinafter referred
Wholly-owned subsidiary of the Company as the parent
to as Lumei Economic and Trade)
5. List of Related-party Transactions
(1) Information on Acquisition of Goods and Reception of Labor Service
Information on acquisition of goods and reception of labor service
Unit: RMB
Content of the
Amount of the The approval trade Whether exceed Amount of the
Related Parties Related-Party
current period credit trade credit or not previous period
Transaction
Limin Purified Recycled water and
13,452,523.98 16,140,000.00 No 12,211,050.25
Water sewage treatment
Lurui Fine
Auxiliaries 51,716,798.45 59,000,000.00 No 40,620,712.88
Chemical
Welfares such as
Chengshun
socks, paper cores and 4,473,602.71 5,370,000.00 No 4,379,850.31
Hosiery
hose processing fee
Chengshun
Economic and Supermarket retail 3,939,234.06 4,420,000.00 No 577,791.56
Trade
Lucheng
Oils 1,993,157.77 2,390,000.00 No 1,524,662.66
Petrochemical
Chengshun
Gas 27,957,095.10 30,770,000.00 No 18,133,501.78
Petrochemical
Unikorn
Mask 150,069.91 150,000.00 Yes 700,367.23
Nonwovens
Information of sales of goods and provision of labor service
Unit: RMB
Amount of the current
Related Parties Content of the Related-Party Transaction Amount of the previous period
period
Lucheng Sales of materials, electricity, running water,
5,797.88
Textile draught water, gas etc.
188
Lu Thai Textile Co., Ltd. Interim Report 2022
Chengshun Materials, electricity, running water, heating,
154,962.88 133,071.57
Hosiery steam
Chengshun
Sales of grey yarn etc 519,500.49 353,219.89
Hosiery
Chengshun
Economic and Materials, electricity, running water 50,822.62 47,784.20
Trade
Lucheng
Electricity, materials 7,266.40 7,857.02
Petrochemical
Limin Purified
Sales of materials, garment, electricity etc. 2,647,392.88 1,572,783.76
Water
Lurui Fine Sales of garment, fabrics, yarns, water &
41,838.73 6,731.29
Chemical electricity, lunch components and materials
Lujia Property Sales of materials and recycled water 34,377.34 71,945.34
Unikorn
Fabrics, materials, isolation gowns, etc. 44,576.98 1,012,527.84
Nonwovens
(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 current period the same period of last year
Chengshun Economic and
Houses and buildings 36,108.00 36,108.00
Trade
The Company was lessee:
Unit: RMB
Rental expense of Variable lease
simplified short- payments that are
Interest expense on
term leases and not covered in the Added right-of-use
Rent payable lease liabilities
Categor low-value asset measurement of assets
Name borne
y of leases (if the lease liabilities
of applicable) (if applicable)
leased
lessor
assets Amount Amount Amount Amount Amount Amount Amount Amount Amount Amount
of the of the of the of the of the of the of the of the of the of the
current previou current previou current previou current previou current previou
period s period period s period period s period period s period period s period
Luchen
Rent of 1,807,4 1,807,4 618,066 672,003 29,675,
g
land 28.60 28.60 .67 .82 587.49
Textile
Luchen Rent of
116,571 116,571 56,468. 59,194. 2,589,2
g gas
.42 .42 65 31 19.21
Textile station
Luchen Rent of
5,511,1 5,511,1 1,144,3 1,318,8 62,292,
g buildin
14.30 14.30 74.63 33.64 894.06
Textile gs
Rent of
Luqun land
985,714 985,714 587,802 605,847 26,379,
Propert and
.26 .26 .00 .21 793.30
y buildin
gs
189
Lu Thai Textile Co., Ltd. Interim Report 2022
6. Accounts Receivable and Payable of Related Party
(1) Accounts payable
Unit: RMB
Project Name Related Parties Ending carrying amount Beginning carrying amount
Accounts payable Lurui Fine Chemical 2,881,480.53 6,022,580.15
Contract liabilities Luqun Property 649,676.55 649,676.55
XIII. Stock Payment
1. The overall situation of share-based payments
Applicable □Not applicable
Unit: RMB
The total amount of equity instruments granted by the Company for the
5,838,000.00
current period
The total amount of the Company's equity instruments exercised for the
0.00
current period
The total amount of equity instruments of the Company losing efficacy for
0.00
the current period
The range of exercise prices of stock options issued and outstanding at the
-
end of the period of the Company and the remaining term of the contract
The range of exercise prices of other equity instruments issued at the end of
-
the period of the Company and the remaining term of the contract
2. Equity-settled share-based payments
Applicable □Not applicable
Unit: RMB
Methods for determining the fair value of equity instruments on Difference between the market price of the stock and the grant
the grant date price on the grant date
Basis for determining the number of feasible right equity
Optimal estimation of expected feasible right in the future
instruments
Reasons for the significant discrepancy between the current
N/A
period estimates and the previous estimates
Accumulated amount of equity-settled share-based payment
52,451,527.32
included in capital reserves
The total amount of the expense recognized for the current
24,125,738.72
period paid on equity-settled shares
3. Cash-settled share-based payments
□Applicable Not applicable
190
Lu Thai Textile Co., Ltd. Interim Report 2022
XIV. Commitments and Contingency
1. Significant Commitments
Significant commitments on balance sheet date
(1) Capital commitments
Commitments signed but hasn’t been recognized December 31,
2022.6.30
in financial statements 2021
Commitment on constructing and purchasing long-
6,540.63 10,006.86
lived assets (RMB’0,000)
2. Contingency
(1) Significant Contingency on Balance Sheet Date
Contingent liabilities formed by the debt guarantee provided to other entities and the financial impact
As at June 30, 2022, the Company provided guarantee to loans of the following entities:
Curren Foreign currency Amount converted to Start Maturity Not
Name Item
cy amount RMB date date es
I. Subsidiary
Continental Textile Short-term 2022/2/
USD 1,758,716.41 11,803,449.31 2022/8/9
Co., Ltd. borrowings 10
Continental Textile Short-term 2022/2/
USD 628,062.00 4,215,175.31 2022/8/9
Co., Ltd. borrowings 10
Continental Textile Short-term 2022/2/
USD 1,826,256.41 12,256,737.27 2022/8/9
Co., Ltd. borrowings 10
Continental Textile Short-term 2022/2/
USD 784,115.00 5,262,509.41 2022/8/10
Co., Ltd. borrowings 11
Continental Textile Short-term 2022/2/
USD 1,676,876.60 11,254,189.61 2022/8/16
Co., Ltd. borrowings 17
Continental Textile Short-term 2022/2/
USD 723,971.00 4,858,858.97 2022/8/16
Co., Ltd. borrowings 17
Continental Textile Short-term 2022/2/
USD 217,393.00 1,459,011.38 2022/8/22
Co., Ltd. borrowings 22
Continental Textile Short-term 2022/2/
USD 555,906.00 3,730,907.53 2022/8/25
Co., Ltd. borrowings 25
Continental Textile Short-term 2022/2/
USD 673,855.60 4,522,514.47 2022/8/25
Co., Ltd. borrowings 25
Total 8,845,152.02 59,363,353.27
(2) Explanation shall be given even if there is no significant contingency for the Company to disclose
There was no significant contingency in the Company to disclose.
191
Lu Thai Textile Co., Ltd. Interim Report 2022
XV. Notes of Main Items in the Financial Statements of the Company as the Parent
1. Accounts Receivable
(1) Listed by Category
Unit: RMB
Ending balance Beginning balance
Carrying amount Bad debt provision Carrying amount Bad debt provision
Category Withdra Carrying Withdra Carrying
Proportio wal value Proportio wal value
Amount Amount Amount Amount
n proportio n proportio
n n
Accounts
receivable
withdrawal of
4,140,76 4,140,76 1,788,43 1,788,43
Bad debt 0.95% 100.00% 1.60% 100.00%
5.04 5.04 2.20 2.20
provision
separately
accrued
Of which:
Accounts
receivable
withdrawal of 433,781, 22,511,0 411,270, 453,937, 28,225,8 425,711,
99.05% 5.19% 99.61% 6.22%
bad debt 205.86 92.56 113.30 579.34 41.07 738.27
provision of by
group
Of which:
Undue
accounts
104,977, 1,102,26 103,875, 45,299,1 475,640. 44,823,4
(credit 23.97% 1.05% 9.94% 1.05%
352.44 2.20 090.24 17.13 73 76.40
insurance
insured)
Undue
accounts (no 285,305, 14,265,2 271,040, 366,082, 18,304,1 347,778,
65.15% 5.00% 80.33% 5.00%
credit 559.56 77.98 281.58 322.24 16.12 206.12
insurance)
Overdue
accounts
26,980,6 2,886,93 24,093,7 11,631,2 1,244,54 10,386,7
(credit 6.16% 10.70% 2.55% 10.70%
98.30 4.72 63.58 78.80 6.83 31.97
insurance
insured)
Overdue
accounts (no 16,517,5 4,256,61 12,260,9 30,924,8 8,201,53 22,723,3
3.77% 25.77% 6.79% 26.52%
credit 95.56 7.67 77.89 61.17 7.39 23.78
insurance)
437,921, 26,651,8 411,270, 455,726, 30,014,2 425,711,
Total 100.00% 6.09% 100.00% 6.59%
970.90 57.60 113.30 011.54 73.27 738.27
Bad debt provision separately accrued: June 30, 2022
Unit: RMB
192
Lu Thai Textile Co., Ltd. Interim Report 2022
Ending balance
Name
Carrying amount Bad debt provision Withdrawal proportion Reason for withdraw
Customer's application for
Customer 1 1,018,678.64 1,018,678.64 100.00%
bankruptcy protection
Customer 2
Customer's application for
Customer 3 2,627,179.62 2,627,179.62 100.00%
bankruptcy protection
Customer in financial difficulty or
Other customers 494,906.78 494,906.78 100.00%
application for bankruptcy
Total 4,140,765.04 4,140,765.04
Withdrawal of bad debt provision by group: June 30, 2022
Unit: RMB
Ending balance
Name
Withdrawal
Carrying amount Bad debt provision
proportion
Group 1: Undue accounts (credit insurance
104,977,352.44 1,102,262.20 1.05%
insured)
Group 2: Undue accounts (no credit insurance) 285,305,559.56 14,265,277.98 5.00%
Group 3: Overdue accounts (credit insurance
26,980,698.30 2,886,934.72 10.70%
insured)
Group 4: Overdue accounts (no credit insurance) 16,517,595.56 4,256,617.67 25.77%
Total 433,781,205.86 22,511,092.56
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 accounts receivable.
Applicable □Not applicable
Disclosure by aging
Unit: RMB
Aging Ending balance
Within 1 year (including 1 year) 430,159,931.96
1 to 2 years 1,337,426.91
2 to 3 years 5,171,569.39
Over 3 years 1,253,042.64
3 to 4 years 650,597.65
4 to 5 years 531,719.44
Over 5 years 70,725.55
Total 437,921,970.90
193
Lu Thai Textile Co., Ltd. Interim Report 2022
(2) Bad Debt Provision Withdrawal, Reversed or Recovered in the Reporting Period
Withdrawal of bad debt provision:
Unit: RMB
Changes in the Reporting Period
Beginning
Category Ending balance
balance Reversed or
Withdrawal Verification Others
recovered
Bad debt
30,014,273.27 -3,064,092.20 298,323.47 26,651,857.60
provision
Total 30,014,273.27 -3,064,092.20 298,323.47 26,651,857.60
(3) Accounts Receivable Written-off in Current Period
Unit: RMB
Item Written-off amount
Written-off accounts receivable 298,323.47
(4) Top 5 of the Ending Balance of the Accounts Receivable Collected according to Arrears Party
Unit: RMB
Proportion to total ending balance of Ending balance of bad
Name of the entity Ending balance
accounts receivable debt provision
Aggregate amount of top 5 of
accounts receivable of ending
159,106,376.10 36.33% 6,920,633.60
balance collected by arrears
party
Total 159,106,376.10 36.33%
2. Other Receivables
Unit: RMB
Item Ending balance Beginning balance
Dividend receivable 126,413,895.72 94,525,975.44
Other receivables 2,325,049,982.80 1,965,654,050.43
Total 2,451,463,878.52 2,060,180,025.87
(1) Dividend Receivable
1) Dividend Receivable Classification
Unit: RMB
Project (or investee) Ending balance Beginning balance
194
Lu Thai Textile Co., Ltd. Interim Report 2022
Sanchang project 19,540,314.10 49,501,026.78
Luqun Textile 50,000,000.00
Continental Textile Co., Ltd. 113,526,944.55
Less: bad debt provision -6,653,362.93 -4,975,051.34
Total 126,413,895.72 94,525,975.44
2) Withdrawal of Bad Debt Provision
Applicable □Not applicable
Unit: RMB
First stage Second stage Third stage
Bad debt provision Expected loss in the Expected loss in the Total
Expected credit loss in
duration (credit duration (credit
the next 12 months
impairment not occurred) impairment occurred)
Balance of January 1,
4,975,051.34 4,975,051.34
2022,
Balance of 1 January
2022 in the Current
Period
Withdrawal of the
1,678,311.59 1,678,311.59
Current Period
Balance of June 30,
6,653,362.93 6,653,362.93
2022
Changes of carrying amount with significant amount changed of loss provision in the Current Period
□Applicable Not applicable
(2)Other Accounts Receivable
1) Other Receivables Classified by Category
Unit: RMB
Nature Ending carrying amount Beginning carrying amount
Intercourse funds 2,318,333,401.20 1,958,920,668.29
Payment on behalf 9,200,958.95 9,591,346.65
Guarantee deposit and cash deposit 4,172,057.96 3,764,642.06
Borrowings and petty cash 1,245,760.43 737,517.66
Others 1,032,480.10 399,089.06
Total 2,333,984,658.64 1,973,413,263.72
195
Lu Thai Textile Co., Ltd. Interim Report 2022
2) Withdrawal of Bad Debt Provision
Unit: RMB
First stage Second stage Third stage
Bad debt provision Expected loss in the Expected loss in the Total
Expected credit loss in
duration (credit duration (credit
the next 12 months
impairment not occurred) impairment occurred)
Balance of January 1,
6,469,310.84 1,289,902.45 7,759,213.29
2022,
Balance of 1 January
2022 in the Current
Period
Withdrawal of the
485,689.37 -643,902.75 1,333,675.93 1,175,462.55
Current Period
Balance of June 30,
6,955,000.20 645,999.70 1,333,675.93 8,934,675.84
2022
Changes of carrying amount with significant amount changed of loss provision in the Current Period
□Applicable Not applicable
Disclosure by aging
Unit: RMB
Aging Ending balance
Within 1 year (including 1 year) 1,758,002,528.66
1 to 2 years 572,599,084.11
2 to 3 years 787,360.00
Over 3 years 2,595,685.87
4 to 5 years 115,926.86
Over 5 years 2,479,759.01
Total 2,333,984,658.64
3) Top 5 of the Ending Balance of the 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 bad debt provision
receivables %
Continental Textile Intercourse Within 1 year and
1,033,555,600.00 44.28% 3,100,666.80
Co., Ltd. funds 1 to 2 years
Lulian New Intercourse Within 1 year and
709,606,001.54 30.40% 2,128,818.00
Materials funds 1 to 2 years
Intercourse Within 1 year and
Lu Thai Tan Chau 298,657,300.00 12.80% 895,971.90
funds 1 to 2 years
196
Lu Thai Textile Co., Ltd. Interim Report 2022
Lufeng Weaving & Intercourse
159,654,249.66 Within 1 year 6.84% 478,962.75
Dyeing funds
Intercourse
Lu An Garments 109,060,250.00 Within 1 year 4.67% 327,180.75
funds
Total 2,310,533,401.20 98.99% 6,931,600.20
3. Long-term Equity Investment
Unit: RMB
Ending balance Beginning balance
Item
Depreciation Depreciation
Carrying amount Carrying value Carrying amount Carrying value
reserves reserves
Investment to
2,651,104,886.50 0.00 2,651,104,886.50 2,648,604,886.50 2,648,604,886.50
subsidiaries
Investment to joint
ventures and
155,042,645.67 155,042,645.67 169,443,106.66 169,443,106.66
associated
enterprises
Total 2,806,147,532.17 0.00 2,806,147,532.17 2,818,047,993.16 0.00 2,818,047,993.16
(1) Investment to subsidiaries
Unit: RMB
Increase/decrease for the current period
Ending
Beginning
Withdrawal Ending Balance balance of
Investee balance (carrying
Additional Reduced of (Carrying Value) depreciation
value) Others
investment investment impairment reserve
provision
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
10,209,050.00 10,209,050.00
(America)
Vanguard
Apparel Co., 62,337,238.57 62,337,238.57
Ltd.
Continental
834,936,510.00 834,936,510.00
Textile Co., Ltd.
Lulian New
300,000,000.00 300,000,000.00
Materials
Lujia Import &
10,000,000.00 10,000,000.00
Export
197
Lu Thai Textile Co., Ltd. Interim Report 2022
Lu Thai
Occupational 100,000.00 100,000.00
Training School
Shanghai Zhinuo 5,000.00 5,000.00
Zhishu
1,000,000.00 1,000,000.00 2,000,000.00
Management
Huilin
400,000,000.00 400,000,000.00
International
Banyang Villa 3,500,000.00 1,500,000.00 5,000,000.00
Total 2,648,604,886.50 2,500,000.00 2,651,104,886.50 0.00
(2) Investment to joint ventures and associated enterprises
Unit: RMB
Increase/decrease for the current period
Gains Ending
Cash
Beginning and Chan Withdr Ending balance
Adjustme bonus
Investe balance Additi losses ges awal of Balance of
Reduced nt of other or
e (carrying onal recogniz of impair Oth (Carrying deprecia
investme comprehe profits
value) invest ed under other ment ers Value) tion
nt nsive announ
ment the equit provisi reserve
income ced to
equity y on
issue
method
I. Joint ventures
II. Associated enterprises
Haoho
ng 67,657,62 594,388. 68,252,01
0.00 0.00 0.00
Invest 6.65 64 5.29
ment
Haoyin
-
g 101,785,4 13,323,5 86,790,63
0.00 1,671,32 0.00
Invest 80.01 21.50 0.38
8.13
ment
-
Subtota 169,443,1 155,042,6
0.00 1,076,93 0.00
l 06.66 45.67
9.49
-
169,443,1 155,042,6
Total 0.00 1,076,93 0.00
06.66 45.67
9.49
4. Operating Revenue and Cost of Sales
Unit: RMB
Amount of the current period Amount of the previous period
Item
Revenue Cost Revenue Cost
Principal business 1,923,502,455.26 1,403,671,534.86 1,454,435,324.82 1,148,081,216.40
198
Lu Thai Textile Co., Ltd. Interim Report 2022
Others 173,226,541.52 151,163,312.87 92,334,931.92 85,526,040.17
Total 2,096,728,996.78 1,554,834,847.73 1,546,770,256.74 1,233,607,256.57
Information about performance obligations: None
Information in relation to the transaction price apportioned to the residual contract performance obligation:
As at the end of the Reporting Period, the revenue amount corresponding to the contract performance obligation yet to be fulfilled
or yet to be completed under a signed contract is RMB 0.00, including RMB 0.00 expected to be recognized as revenue in the year,
RMB 0.00 expected to be recognized as revenue in the year, and RMB 0.00 expected to be recognized as revenue in the year.
5. Investment Income
Unit: RMB
Item Amount of the current period Amount of the previous period
Long-term equity investment income
219,600,542.74 94,015,922.61
accounted by cost method
Long-term equity investment income
-1,076,939.49 -1,789,070.68
accounted by equity method
Investment income from disposal of
1,682,000.00 17,298,322.47
trading financial assets
Interest income earned on investment in
2,401,261.30
debt obligations during the holding period
Total 220,205,603.25 111,926,435.70
XVI. Supplementary Materials
1. Items and Amounts of Non-recurring Profit or Loss
Applicable □Not applicable
Unit: RMB
Item Amount Note
Gains/losses from the disposal of non-current assets 2,696,076.03
Government grants recorded in the current profit or loss (except for those acquired in the
ordinary course of company's business, in line with national policies and regulations, or 27,720,772.37
granted continuously according to certain standard quotas or amounts)
Gain/loss from change of fair value of trading financial assets and liabilities, and
investment gains from disposal of trading financial assets and liabilities as well as
5,594,541.44
financial assets available for sale, other than valid hedging related to the Company’s
common businesses
Reversal of provision for impairment of receivables separately tested for impairment 395,260.56
Other non-operating income and expense other than the above 833,061.06
Less: Income tax effects 8,618,329.50
Non-controlling interests effects 249,759.14
199
Lu Thai Textile Co., Ltd. Interim Report 2022
Total 28,371,622.82 --
Details of other profit and loss items in line with the definition of non-recurring gains and losses:
□Applicable Not applicable
There are no other profit and loss items in line with the definition of non-recurring gains and losses in the Company.
Note to defining the non-recurring profit and loss items listed in the Explanatory Notice of Information Disclosure by Companies
Offering Securities to the Public No. 1 - Non-recurring Profit and Loss Items as recurring profit and loss items
□Applicable Not applicable
2. Return on Equity and Earnings Per Share
EPS
Weighted average ROE
Profit as of Reporting Period
(%)
EPS-basic EPS-diluted
Net profit attributable to ordinary shareholders of the
4.77% 0.45 0.39
Company
Net profit attributable to ordinary shareholders of the
4.43% 0.42 0.36
Company after deduction of non-recurring profit or loss
3. Accounting data differences under PRC GAAP and those under IFRSs
(1) Differences between disclosed net profits and net assets in financial report in accordance with
International Accounting Standards and Chinese Accounting Standards.
□Applicable Not applicable
(2) Differences between disclosed net profits and net assets in financial report in accordance with
Domestic Accounting Standards and Chinese Accounting Standards.
□Applicable Not applicable
(3) Explain Reasons for the Differences between Accounting Data under Domestic and Overseas
Accounting Standards; for any Adjustment Made to the Difference Existing in the Data Audited by the
Foreign Auditing Agent, Such Foreign Auditing Agent’s Name Shall Be Clearly Stated
Chairman of the Board: Liu Zibin
Lu Thai Textile Co., Ltd.
26 August 2022
200
