Lu Thai Textile Co., Ltd. Annual Report 2022
LU THAI TEXTILE CO., LTD.
ANNUAL REPORT 2022
April 2023
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Lu Thai Textile Co., Ltd. Annual Report 2022
ANNUAL 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 has described in detail in this Report the possible risks. Please refer to the
contents about the major risks and countermeasures in “Prospects” in “Part III Management
Discussion and Analysis” of this Report. Securities Times, Shanghai Securities News, China
Securities Journal, Ta Kung Pao (HK) and www.cninfo.com.cn have been designated by the
Company for its information disclosure in 2023. And all information about the Company shall
be subject to what’s disclosed by the Company on the aforesaid media. Investors are kindly
reminded to exercise caution when making investment decisions.
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 2022, the Russo-Ukrainian conflict, the intensified inflation in Europe and the US, and
other severe and complex international situations led to a slowdown in global economic
growth, as the declines in demand resulted in increased downward pressure. Likewise, the
growth rate of the textile industry also showed a quarter-by-quarter decelerating trend. In the
face of the complex and changeable political and economic status of the world, the domestic
textile industry has overcome a variety of risks and shocks, as most of the operating indexes
have only dropped slightly year-on-year, and the total export volume hits a record high. From
the global perspective, the impact of inflation, geopolitical conflicts, trade frictions and other
factors that resulted in the global economic downturn has not diminished. There are still
many uncertainties in the international environment and domestic and foreign markets. As
the downward trend of the global economy may persist, the export trade regarding the
domestic textile industry is under great pressure. However, the domestic levels of processing,
manufacturing and equipment in fibres and raw materials, spinning and weaving, and
clothing and home textiles are mostly internationally advanced. In the context of the
upgrading of domestic demand, textile and clothing enterprises with core competitiveness are
equipped with relatively good development resilience and anti-risk capacity. In the future, the
integration between the textile industry and new fields will be accelerated, and more
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Lu Thai Textile Co., Ltd. Annual Report 2022
opportunities for low-carbon and green development will appear. For details, please refer to Part
III Management Discussion and Analysis.
The Board has approved a final dividend plan as follows: based on 887,633,151 shares, a cash
dividend of RMB1 (tax inclusive) per 10 shares is to be distributed to the shareholders, with
no bonus issue from either profit or capital reserves.
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. Annual Report 2022
Table of Contents
Part I Important Notes, Table of Contents and Definitions ........................................................... 2
Part II Corporate Information and Key Financial Information ................................................... 7
Part III Management Discussion and Analysis ............................................................................. 11
Part IV Corporate Governance ...................................................................................................... 37
Part V Environmental and Social Responsibility .......................................................................... 62
Part VI Significant Events ............................................................................................................... 66
Part VII Share Changes and Shareholder Information ............................................................... 76
Part VIII Preferred Shares .............................................................................................................. 88
Part IX Bonds ................................................................................................................................... 89
Part X Financial Statements ........................................................................................................... 93
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Lu Thai Textile Co., Ltd. Annual Report 2022
Documents Available for Reference
1. The financial statements signed and stamped by the Company’s legal representative, Chief Accountant and
Financial Manager;
2. The original Independent Auditor’s Report stamped by the CPA firm, as well as signed and stamped by the
relevant certified public accountants; and
3. 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. Annual 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 31 December 2022
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Lu Thai Textile Co., Ltd. Annual 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
Shenzhen Stock Exchange
listing
Company name in Chinese 鲁泰纺织股份有限公司
Abbr. 鲁泰纺织
Company name in English (if
LU THAI TEXTILE CO.，LTD
any)
Abbr. (if any) LTTC
Legal representative Liu Zibin
Registered address 61 Luthai Boulevard, High-tech Development Zone, Zibo City, Shandong Province, P.R.China
Zip code 255086
Past changes of registered
11 Mingbo Road, Zibo High-tech Development Zone, Shandong Province
address
Office address 81 Songling East Road, Zichuan District, Zibo City, Shandong Province, P.R.China
Zip code 255100
Company website www.lttc.com.cn
Email address lttc@lttc.com.cn
II Contact Information
Board Secretary Securities Representative
Name Zhang Keming Zheng Weiyin and Li Kun
81 Songling East Road, Zichuan District, 81 Songling East Road, Zichuan District,
Address
Zibo City, Shandong Province, P.R.China Zibo City, Shandong Province, 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 Media for Information Disclosure and Place where this Report Is Lodged
Securities Times, Shanghai Securities News, China Securities Journal and
Stock exchange website where this Report is disclosed
Ta Kung Pao (HK)
Media and website where this Report is disclosed www.cninfo.com.cn
Place where this Report is lodged The Securities Department of the Company
IV Change to Company Registered Information
Unified social credit code 91370300613281175K
Change to principal activity of the Company
No change
since going public (if any)
Every change of controlling shareholder since No change
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Lu Thai Textile Co., Ltd. Annual Report 2022
incorporation (if any)
V Other Information
The independent audit firm hired by the Company:
Name Grant Thornton China
Office address 5th Floor, Scitech Palace 22 Jianguomen Wai Avenue, Chaoyang District, Beijing
Accountants writing signatures He Feng and Cui Xiaoli
The independent sponsor hired by the Company to exercise constant supervision over the Company in the Reporting Period:
□ Applicable Not applicable
The independent financial advisor hired by the Company to exercise constant supervision over the Company in the Reporting
Period:
□ Applicable Not applicable
VI Key Financial Information
Indicate by tick mark whether there is any retrospectively restated datum in the table below.
□ Yes No
2022-over-2021
2022 2021 2020
change (%)
Operating revenue (RMB) 6,938,342,135.90 5,238,262,348.85 32.46% 4,751,222,464.14
Net profit attributable to the
listed company’s shareholders 963,864,819.43 347,609,693.30 177.28% 97,308,593.36
(RMB)
Net profit attributable to the
listed company’s shareholders
795,473,953.21 190,492,580.40 317.59% 20,039,094.03
before exceptional gains and
losses (RMB)
Net cash generated from/used in
1,422,310,774.26 348,137,005.48 308.55% 593,535,922.89
operating activities (RMB)
Basic earnings per share
1.10 0.39 182.05% 0.11
(RMB/share)
Diluted earnings per share
0.95 0.36 163.89% 0.11
(RMB/share)
Weighted average return on
11.31% 4.44% 6.87% 0.01%
equity (%)
Change of 31
December 2022 over
31 December 2022 31 December 2021 31 December 2020
31 December 2021
(%)
Total assets (RMB) 13,351,097,602.03 12,987,221,271.63 2.80% 12,129,903,960.65
Equity attributable to the listed
9,014,156,872.71 7,983,307,400.03 12.91% 7,687,577,590.72
company’s shareholders (RMB)
Indicate by tick mark whether the lower of the net profit attributable to the listed company’s shareholders before and after
exceptional gains and losses was negative for the last three accounting years, and the latest independent auditor’s report indicated
that there was uncertainty about the Company’s ability to continue as a going concern.
□ Yes No
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Lu Thai Textile Co., Ltd. Annual Report 2022
Indicate by tick mark whether the lower of the net profit attributable to the listed company’s shareholders before and after
exceptional gains and losses was negative.
□ Yes No
VII 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 difference for the Reporting Period.
2. Net Profit and Equity under CAS and Foreign Accounting Standards
□ Applicable Not applicable
No difference for the Reporting Period.
VIII Key Financial Information by Quarter
Unit: RMB
Q1 Q2 Q3 Q4
Operating revenue 1,580,088,801.60 1,750,205,661.65 1,876,128,426.25 1,731,919,246.40
Net profit attributable to the
159,375,310.19 234,575,542.27 302,015,616.54 267,898,350.43
listed company’s shareholders
Net profit attributable to the
listed company’s shareholders
137,429,342.24 228,149,887.40 322,056,642.38 107,838,081.19
before exceptional gains and
losses
Net cash generated from/used in
-15,953,827.96 133,436,236.70 611,606,413.58 693,221,951.94
operating activities
Indicate by tick mark whether any of the quarterly financial data in the table above or their summations differs materially from
what have been disclosed in the Company’s quarterly or interim reports.
□ Yes No
IX Exceptional Gains and Losses
Applicable □ Not applicable
Unit: RMB
Item 2022 2021 2020 Note
Gain or loss on disposal of non-current assets
-228,367.44 50,868,019.96 -3,265,763.83
(inclusive of impairment allowance write-offs)
Government subsidies charged to current profit or
loss (exclusive of government subsidies
50,298,092.20 58,686,874.90 61,358,132.11
consistently given in the Company’s ordinary
course of business at fixed quotas or amounts as
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Lu Thai Textile Co., Ltd. Annual Report 2022
per governmental policies or 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 154,877,757.70 77,620,424.02 46,684,051.43
assets (exclusive of the effective 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 6,198,745.44
impairment
Non-operating income and expense other than the
-1,810,393.39 -1,700,653.34 2,373,569.56
above
Less: Income tax effects 33,015,346.77 28,885,946.87 24,345,018.31
Non-controlling interests effects (net of tax) 1,730,876.08 5,670,351.21 5,535,471.63
Total 168,390,866.22 157,117,112.90 77,269,499.33 --
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. Annual Report 2022
Part III Management Discussion and Analysis
I Industry Overview for the Reporting Period
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 2022, the textile industry saw a supply-demand environment of “high cost and weak demand”, which resulted in the continuous
increase in the pressure on sales and profitability. According to the data released by the National Bureau of Statistics, the operating
revenue and the total profit of domestic textile enterprises above the designated size decreased by 0.9% and 24.8% in 2022,
respectively. In terms of export markets, the total export volume of the domestic textiles and apparel hit a record high, which
exceeded USD300 billion for the third consecutive year, and the increase in export prices played an important role. According to
the data released by the China National Textile and Apparel Council, the total export volume of the domestic textiles and apparel
reached USD340.95 billion in 2022, representing a year-on-year increase of 2.5%. But the lack of demand is still imposing
pressure on the textile and garment industry. Domestically, the impact of the slowdown in residents’ income growth, the slow
recovery of consumption scenarios, and other factors resulted in the continuous increase in the pressure on domestic sales of the
textile industry. In 2022, the retail sales of clothing, shoes and hats, and knitwear and textiles decreased by 6.5% year-on-year, and
the growth rates remained to be negative from March on. Meanwhile, although the online retail sales of apparel only increased by
3.5% year-on-year, representing a growth rate that was 4.8 percentage points less than that in 2021, the consumption of apparel
and accessories related to sports and outdoor supplies, as well as health and wellness, still has good resilience in growth.
Internationally, due to the impact of various factors, such as the Profound Changes Unseen in a Century, the volatile geopolitical
situation and the rising risk in the global economic downturn, pressures from the shrinking demand, the supply shock, and the
weakening expectations continued to evolve. Meanwhile, the complexity, severity and uncertainty of the development environment
for the textile industry significantly increased. However, China still has a remarkable advantage in the efficient and stable
operation of the integral industry chain and supply chain of the textile industry, which lays a solid foundation for the textile
industry to integrate into the national economic cycle and effectively handle external risks and challenges.
II Principal Activity of the Company in the Reporting Period
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, the evolving world pattern and the global economic downturn have brought multiple challenges to the international
trade environment. Meanwhile, enterprises also have faced various challenges, such as the downturn in the overall consumer
market, international trade barriers, Sino-US trade frictions, and large fluctuations in commodity prices. In the face of these
challenges, the Company adhered to the “customer-focused” philosophy and continued to promote the strategies of “Improve
Quality and Efficiency” and “Overall Internationalization”. Meanwhile, the Company ensures an orderly advance in management
and operation through expanding market, adjusting structure and building capabilities. Moreover, by taking advantage of its own
international supply chain system and international industry layout, the Company could provide quality products and services for
domestic and foreign customers. During the Reporting Period, the Company saw gradual recovery of product orders and rapid
recovery of business performance.
For the Reporting Period, the Company achieved operating revenue of RMB6,938 million, operating profit of RMB1,082 million, a
net profit attributable to the Company as the parent of RMB964 million, and a net profit attributable to the Company as the parent
before exceptional gains and losses of RMB795 million, respectively up 32.46%, 191.48%, 177.28% and 317.59% when compared
to last year. No changes occurred to the Company’s principal operations, primary products, business models, or the primary factors
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Lu Thai Textile Co., Ltd. Annual Report 2022
driving the Company’s growth in the Reporting Period.
During the Reporting Period, the Company was rated as a “AAA Enterprise in Corporate Credit Rating” by China Enterprise
Confederation and China Entrepreneur Association. Moreover, it was selected as “Competitive Chinese Textile and Apparel Brand”
and “Pioneer in the Chinese Textile and Apparel Industry of Innovative Climate Actions for 2022” by China National Textile and
Apparel Council. The Company has prioritized the following aspects:
(I) Scientifically implement strategic arrangements to effectively handle development challenges
The Company unremittingly adopts the development direction of becoming a global apparel solution provider with cutting-edge
fabrics at its core. By adhering to the “customer-focused” philosophy, the Company not only solved the “last kilometer” problem in
customer services, but also provided products and services for customers more precisely by enhancing the coordination between
internal processes. Moreover, the Company continued to uphold the spirit of diligence and enhance the cohesion and combat
effectiveness of employees, so that all members of the Company could unite to deal with difficulties and challenges. Meanwhile, the
Company has successfully completed various operation tasks, such as project implementation and the maintenance of the stable
operation of overseas production bases, new product development and new market expansion, as well as the reinforcement of
production capacity and the stabilization of the employee pool.
(II) Enhance customer relations in an all-around way and accelerate the integration into the circulating development
During the Reporting Period, the Company accelerated the formation of the development pattern of “dual circulation”. On the one
hand, the Company continued to expand the size of its overseas production bases and systematically implement its overseas
construction projects as scheduled with the focus on meeting customer needs and market demand in accordance with the “Belt and
Road” Initiative. On the other hand, the Company enhanced cooperation with high-quality domestic customers to expand its market
share. As a result, the Company has signed a strategic cooperation agreement with Heilan Group. Furthermore, it has reached
cooperation with JDmade regarding production with the focus on reaching more high-quality customers of female apparel. The
Company also made continued efforts to enrich product categories and accelerated the marketing of knitwear and functional fabrics.
Meanwhile, with business apparel for industries such as communication, construction, aviation and finance as the starting point, the
Company adapted to the new trends of consumption by leading consumption upgrading in the mass market through new fashion, new
media, new retail and other new methods. In doing so, the Company tried to elaborate its “core products” and stabilize its leading
position, so as to enhance the integrated development of domestic and international trade in a phased manner with certain highlights.
(III) Continue to enhance innovation capability to consolidate and expand competitive advantages
During the Reporting Period, in order to meet the personalized and diversified needs of customers in the new situation, the Company
enhanced its innovation capability with the focus on several aspects, such as technological research and product development. By
accelerating the R&D of green products, the Company made concerted efforts in energy conservation and carbon reduction in
production and operation. Relying on green production and processing, the Company launched a host of new sustainable products,
such as EcoF!t, the water-proof bio-based products and CELYS. In doing so, the Company aimed to guide the demand in consumer
markets and the trend of industry development based on the new trends of “double carbon”. In 2022, a total of 65 patents were
granted to the Company, including 21 invention patents. Moreover, the two technical achievements of the Company were
authenticated, including one at the world-leading level, and one at the internationally advanced level. The Company’s “key
technology and industrialization of the processing of high-conformity fabric for knitted shirts” project and “key technology and
industrialization of the fluorine-free, easy to decontaminate, ironing-free, super whitening, multi-functional finishing of cotton
knitwear” won the Second China National Textile and Apparel Council’s Science and Technology Progress Awards for 2022.
Meanwhile, the Company’s product “comfortable, long-lasting, cool and anti-wrinkle shirt” was rated as an Innovative Product of the
Ten Major Textile Categories in 2022.
The Company also made active efforts to explore digital transformation, with the goal of activating the development vitality of the
traditional industry and continuously promoting the digital research of the trends of textiles and fabrics and the intelligent
applications of colour management. Additionally, Lufeng Company, one of its holding subsidiaries, made active efforts in the
exploration of AI (intelligent) design. Through the company’s cooperation with China Textile Information Center in the development
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Lu Thai Textile Co., Ltd. Annual Report 2022
of an AI-based fashion pattern design platform, the product “AI pattern design-based print shirt” launched by the company was rated
as an Innovative Product of the Ten Major Textile Categories in 2022.
(IV) Actively play the leading role in the industry chain to improve the quality and efficiency of operation and development
The Company was not only recognized as a leading enterprise in the textile and apparel industrial chains at the provincial, municipal
and other levels, but also included in the list of leading enterprises in the Top 10 industrial clusters in Shandong Province. By actively
playing the leading role in the industry chain, the Company established the province-wide platform for coordination and exchange
activities regarding the integration and consolidation of industrial chains to seek win-win development. The Company also reached
material cooperation in multiple national and provincial key technological projects, as well as equipment, materials and markets, with
a series of universities and enterprises, such as Qingdao University, Sateri and HeiQ.
In 2022, in terms of operating revenue, Lu Thai ranked among the top in the domestic yarn-dyed fabric industry, top 100 in the
domestic cotton textile industry, top 30 in the domestic dyeing and printing industry, and top 100 in the domestic apparel industry.
While it was included in the list of Top 50 Business Apparel Enterprises in China, the Lu Thai Textile and Apparel Creative Design
Platform was also included in the Ministry of Industry and Information Technology’s list of the second group of demonstration textile
and apparel creative design platforms. With these achievements, the Company maintains its leading position regarding the R&D of
mid-to-high-end fabrics and continues to consolidate the foundations for its development.
III 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
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), Higg (FEM and FSLM) 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.
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Lu Thai Textile Co., Ltd. Annual Report 2022
IV Core Business Analysis
1. Overview
For the Reporting Period, the Company recorded operating revenue of RMB6,938 million (a 32.46% year-on-year increase); cost of
sales of RMB5,154 million (a 24.11% year-on-year increase), selling expense of RMB137 million (a 14.22% year-on-year increase)
and administrative expense of RMB396 million (a 18.17% year-on-year increase); research and development expense of RMB276
million (a 9.3% year-on-year increase); and net cash generated from operating activities of RMB1,422 million (a 308.55% year-on-
year increase).
2. Revenue and Cost Analysis
(1) Breakdown of Operating Revenue
Unit: RMB
2022 2021
As % of total As % of total Change (%)
Operating revenue operating revenue Operating revenue operating revenue
(%) (%)
Total 6,938,342,135.90 100% 5,238,262,348.85 100% 32.46%
By operating division
Textile and apparel 6,500,959,077.16 93.70% 4,921,443,076.68 93.95% 32.09%
Electricity and
219,789,458.76 3.16% 182,929,779.75 3.49% 20.15%
steam
Others 217,593,599.98 3.14% 133,889,492.42 2.56% 62.52%
By product category
Fabric products 5,141,344,925.82 74.10% 4,033,321,318.13 77.00% 27.47%
Shirts 1,359,614,151.34 19.60% 888,121,758.55 16.95% 53.09%
Electricity and
219,789,458.76 3.16% 182,929,779.75 3.49% 20.15%
steam
Others 217,593,599.98 3.14% 133,889,492.42 2.56% 62.52%
By operating segment
Hong Kong 245,673,888.89 3.54% 166,071,385.74 3.17% 47.93%
Japan And South
334,445,869.70 4.82% 254,482,374.29 4.86% 31.42%
Korea
Southeast Asia 2,356,718,298.83 33.96% 1,523,121,466.68 29.08% 54.73%
Europe and
1,199,472,122.97 17.29% 560,579,079.30 10.70% 113.97%
America
Others 484,134,513.74 6.98% 306,457,017.82 5.85% 57.98%
Mainland China 2,317,897,441.77 33.41% 2,427,551,025.02 46.34% -4.52%
By sales model
Direct sales 6,938,342,135.90 100.00% 5,238,262,348.85 100.00% 32.46%
(2) Operating Division, Product Category, Operating Segment or Sales Model Contributing over 10% of
Operating Revenue or Operating Profit
□ Applicable Not applicable
(3) Whether Revenue from Physical Sales Is Higher than Service Revenue
Yes □ No
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Lu Thai Textile Co., Ltd. Annual Report 2022
Operating division Item Unit 2022 2021 Change (%)
Unit sales 0,000 meters 22,580.48 20,123.11 12.21%
Fabric Output 0,000 meters 23,634.84 22,271.95 6.12%
Inventory 0,000 meters 3,763.43 4,844.58 -22.32%
Unit sales 0,000 pieces 1,889.22 1,443.99 30.83%
Apparel Output 0,000 pieces 1,872.64 1,444.92 29.60%
Inventory 0,000 pieces 138.76 171.99 -19.32%
Unit sales 000 KWH 153,637.52 123,065.87 24.84%
Electricity Output 000 KWH 414,202.18 424,085.59 -2.33%
Inventory 000 KWH
Unit sales Ton 310,410.00 327,979.23 -5.36%
Steam Output Ton 1,198,469.45 1,193,199.66 0.44%
Inventory Ton
Any over 30% YoY movements in the data above and why:
Applicable □ Not applicable
2022 saw an increased order intake due to new customers and more strategic customers in the textile and apparel business.
(4) Execution Progress of Major Signed Sales and Purchase Contracts in the Reporting Period
□ Applicable Not applicable
(5) Breakdown of Cost of Sales
By operating division and product category
Unit: RMB
2022 2021
Operating
Item As % of total As % of total Change (%)
division Cost of sales Cost of sales
cost of sales (%) cost of sales (%)
Textile
Cost of
and 4,689,861,379.28 90.99% 3,841,684,869.90 92.51% 22.08%
sales
apparel
Electricity Cost of
290,205,024.76 5.63% 210,275,788.87 5.06% 38.01%
and steam sales
Cost of
Other 174,301,192.86 3.38% 101,020,417.08 2.43% 72.54%
sales
Unit: RMB
2022 2021
Product
Item As % of total cost As % of total Change (%)
category Cost of sales Cost of sales
of sales (%) cost of sales (%)
Fabric Cost of
3,698,671,468.56 71.76% 3,153,777,018.80 75.94% 17.28%
products sales
Cost of
Shirts 991,189,910.72 19.23% 687,907,851.10 16.57% 44.09%
sales
Electricity Cost of
290,205,024.76 5.63% 210,275,788.87 5.06% 38.01%
and steam sales
Cost of
Other 174,301,192.86 3.38% 101,020,417.08 2.43% 72.54%
sales
Note:
Manufacture
Product Period Raw material Labor cost Depreciation Energy Total
expenses
Fabric 2022 49.52% 17.01% 6.50% 17.44% 9.53% 100.00%
15
Lu Thai Textile Co., Ltd. Annual Report 2022
2021 48.60% 17.47% 7.36% 17.45% 9.12% 100.00%
2022 62.67% 26.46% 1.90% 1.08% 7.89% 100.00%
Shirts
2021 53.47% 34.50% 2.85% 1.23% 7.95% 100.00%
(6) Changes in the Scope of Consolidated Financial Statements for the Reporting Period
Yes □ No
The Company incorporated a new subsidiary LTCL and subscribed for Yuanhui Fund during the year.
(7) Major Changes to the Business Scope or Product or Service Range in the Reporting Period
□ Applicable Not applicable
(8) Major Customers and Suppliers
Major customers:
Total sales to top five customers (RMB) 1,311,220,321.45
Total sales to top five customers as % of total sales of the
18.90%
Reporting Period (%)
Total sales to related parties among top five customers as % of
0.00%
total sales of the Reporting Period (%)
Information about top five customers:
Sales revenue contributed for As % of total sales revenue
No. Customer
the Reporting Period (RMB) (%)
Total -- 1,311,220,321.45 18.90%
Other information about major customers:
□ Applicable Not applicable
Major suppliers:
Total purchases from top five suppliers (RMB) 783,781,382.48
Total purchases from top five suppliers as % of total purchases
17.87%
of the Reporting Period (%)
Total purchases from related parties among top five suppliers
0.00%
as % of total purchases of the Reporting Period (%)
Information about top five suppliers:
Purchase in the Reporting
No. Supplier As % of total purchases (%)
Period (RMB)
Total -- 783,781,382.48 17.87%
Other information about major suppliers:
□ Applicable Not applicable
3. Expense
Unit: RMB
Reason for any
2022 2021 Change (%)
significant change
Selling expense 136,929,096.72 119,883,494.68 14.22%
Administrative expense 396,309,634.39 335,380,025.54 18.17%
Increased net exchange
Finance costs -148,951,129.67 44,988,908.41 -431.08%
gain
16
Lu Thai Textile Co., Ltd. Annual Report 2022
R&D expense 276,424,812.26 252,912,911.63 9.30%
4. Other Information Required by Information Disclosure Guide for Companies Engaged in Textile and
Garment Services
(1) Capacity
The Company's own capacity
Industry
Item 2022 2021
Classification
Total capacity (fabric) (10,000
29,430.00 29,360.00
meters)
Rate of capacity utilization 80% 76%
The Company's convertible bond The Company's convertible bond
fundraising projects: The fundraising projects: The "Functional
"Functional Fabric Intelligent Eco- Fabric Intelligent Eco-park Project
Fabric park Project (Phase I)" with an (Phase I)" with an annual capacity of
annual capacity of 35 million meters 35 million meters of high-grade
Plants under construction of high-grade functional fabrics and functional fabrics and the "Production
the "Production Line Project of Line Project of High-grade Printed and
High-grade Fabrics (Phase I)" with Dyed Fabrics" with an annual capacity
an annual capacity of 30 million of 25 million meters of high-grade
meters were in progress. printed and dyed fabrics were in
progress.
Total capacity (apparel) (10,000
2,030.00 2,030.00
pieces)
Apparel
Rate of capacity utilization 88% 70%
Plants under construction
Year-on-year change in the rate of capacity utilization above 10%
Yes □ No
2022 saw an increased order intake due to new customers and more strategic customers in the textile and apparel business,
resulting in a higher capacity utilization rate.
Overseas capacity
Yes □ No
Industry
Item Domestic Overseas
Classification
Percentage of capacity 80% 20%
Fabric
Capacity layout Mainly in Shandong Province Mainly in Vietnam
17
Lu Thai Textile Co., Ltd. Annual Report 2022
Rate of capacity utilization 80% 80%
Percentage of capacity 44% 56%
Mainly in Vietnam, Cambodia, and
Apparel Capacity layout Mainly in Shandong Province
Myanmar
Rate of capacity utilization 85% 90%
The Company’s expansion plan on developing overseas production capacity
The Company has invested in a production site in Southeast Asia, which is currently in the infrastructure construction phase.
(2) Sales model and channels
Product sales channels and operation methods
a. Sales model
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
Gross YoY change in YoY change in
Sales YoY change in
Operating revenue Cost of sales profit operating gross profit
channels cost of sales
margin revenue margin
Online
3,245,337.60 1,233,758.36 61.98% -34.41% -23.38% -5.47%
sales
Direct
5,148,363,141.19 3,700,431,958.41 28.12% 27.42% 17.27% 6.23%
sales
OEM/OD
1,349,350,598.37 988,195,662.51 26.77% 55.03% 45.17% 4.97%
M
Total 6,500,959,077.16 4,689,861,379.28 27.86% 32.25% 22.20% 5.93%
(3) Franchise and distribution
Franchisees and distributors recorded more than 30% of sales revenue
18
Lu Thai Textile Co., Ltd. Annual Report 2022
□ Yes No
(4) 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 147,000
Average number of active monthly users (AMU) 5,000
Return rate of main brands 3.50%
Return rate of main types 3.50%
Cooperation with third-party sales platforms
Yes □ No
Unit: RMB
Transaction amount during the Reporting
Name of platform Return rate
Period
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.
(5) Agency operation model
Agency operation model involved
□ Yes No
(6) Inventory
Inventory
Days of
Quantity of Inventory Year-on-year change in
Main products turnover of Reason
inventory age inventory balance
inventories
Fabric (10,000 Within 1
75 3,072.29 -19.65%
meters) year
Fabric (10,000 Over 1 Increased sales volume as a result of
691.14 -32.27%
the recovering market demand
meters) year
Shirts (10,000 26 97.21 Within 1 -12.92%
19
Lu Thai Textile Co., Ltd. Annual Report 2022
pieces) year
Shirts (10,000 Over 1
18.23 31.06%
pieces) year
Inventory valuation allowances:
2022.12.31
Item Valuation allowance or provision for
Gross amount Carrying amount
impairment on contract performance cost
Raw materials 964,638,749.13 47,996,904.87 916,641,844.26
Goods in process 502,282,021.10 12,926,711.64 489,355,309.46
Products on hand 869,338,282.54 181,010,948.47 688,327,334.07
Commissioned products 13,525,220.54 13,525,220.54
Total 2,349,784,273.31 241,934,564.98 2,107,849,708.33
(7) Brand building
Production and sales of brand clothing, apparel and home textile products
Yes □ No
Self-owned brands:
Chara Target
Trademark Main product Price zone of
Brand name cterist consumer Main sales areas City levels
name types main products
ics group
Classi Provincial
c East China, South capital cities
Business
LTGRFF LTGRFF Shirts and suits busine RMB500-3000 China and and other
people
ss Southwest China prefecture-
attire level cities
Trademark ownership disputes
□ Applicable Not applicable
(8) Other information
Engaged in business related to apparel design
□ Yes No
Whether the Company held meetings for the placement of orders
□ Yes No
20
Lu Thai Textile Co., Ltd. Annual Report 2022
5. R&D Investments
Applicable □ Not applicable
Estimated impact on
Names of main R&D
Goals of projects Progresses of projects Intended goals future development of
projects
the Company
Not only this project
has reached an
The Company aims to
This project is aimed to internationally
achieve mass This project is
reduce the usage of advanced level
production based on expected to improve
Waterless and low- water resources and according to expert
the technology and the Company’s
salt yarn dyeing chemical additives such authentication
industrial applications technological strength
technology as salt and alkali, so as to organized by the
of the technology in dyeing and
reduce environmental industry association,
based on different raw competitiveness.
pollution. but also the small batch
materials.
production has been
achieved.
Lyocell regenerated This project is
cellulose fibre exhibits a expected to expand the
Liquid ammonia
soft hand feeling and is The Company aims to promotion and
Development, finishing and other
comfortable to wear. develop a series of application of green
promotion and processing processes
While its production is products that meet raw materials, make
application of Lyocell have been validated,
environmentally customers’ the product structure
and other regenerated and the requirements
friendly, the material is requirements based on more reasonable and
cellulose fibre serial for industrial
naturally degradable, fabrics with good facilitate the green and
products application have been
thereby being in line shrinkage stability. sustainable
satisfied.
with the market development of the
development trend. Company.
The Company aims at
The screening and
the development of
testing of a part of This project is
This project is aimed to full-process green
natural softeners and expected to improve
reduce the consumption products and their
Ecological textile natural moisture the Company’s
of petroleum and other industrial application
dyeing and absorption and technological strength
mineral resources, the with the integration of
processing perspiration auxiliaries in green dyeing,
difficulty in wastewater the technology, natural
technology have been completed, finishing and
treatment, and carbon fibre, regenerated fibre
and the project samples processing, as well as
emissions. and the process of
have been tested for brand influence.
enzyme-based boiling
relevant indicators.
and bleaching.
This project is
The opening of yarn
This project is aimed to The Company aims to expected to facilitate
waste has been
expand the scope of achieve the recycling the development of the
Further development validated and small
waste recycling, of all fibre waste and circular economy and
and application of batch production has
facilitate resource scraps from factories the construction of the
recycled cotton been conducted. For
recycling, reduce waste, and transform them Company into an
fabrics the next step, the fabric
and protect the into high-value environmentally-
opening test will be
environment. materials. friendly and resource-
conducted.
saving enterprise.
This project is aimed for
the R&D of the next-
This project is aimed at
generation anti-virus and Relevant apparatus and
producing DP3.5 3A This project is
In-depth R&D of anti-bacterial products, equipment have been
antibacterial products expected to develop
long-lasting ironing- which is expected to introduced and the
enduring 50-time products that can meet
free anti-virus anti- reduce the damage of R&D of new anti-
washing and resisting market demand and
bacterial cotton viruses and bacteria to bacterial and anti-viral
H1N1 virus with an create value for the
products the human body, and the fabrics have been
activity value at no less Company.
development of healthy, initiated.
than 2.0.
safe and easy-to-manage
textile products.
Details about R&D personnel:
2022 2021 Change (%)
Number of R&D personnel 1,474 1,535 -3.97%
R&D personnel as % of total 13.17% 14.00% -0.83%
21
Lu Thai Textile Co., Ltd. Annual Report 2022
employees
Educational background of R&D personnel
Bachelor’s degree 200 206 -2.91%
Master’s degree 29 30 -3.33%
Age structure of R&D personnel
Below 30 184 231 -20.35%
30~40 964 1,083 -10.99%
Above 40 326 221 47.51%
Details about R&D investments:
2022 2021 Change (%)
R&D investments (RMB) 276,424,812.26 252,912,911.63 9.30%
R&D investments as % of operating
3.98% 4.83% -0.85%
revenue
Capitalized R&D investments (RMB) 0.00 0.00 0.00%
Capitalized R&D investments as % of
0.00% 0.00% 0.00%
total R&D investments
Reasons for any significant change to the composition of R&D personnel and the impact:
□ Applicable Not applicable
Reasons for any significant YoY change in the percentage of R&D expense in operating revenue:
□ Applicable Not applicable
Reason for any sharp variation in the percentage of capitalized R&D expense and rationale:
□ Applicable Not applicable
6. Cash Flows
Unit: RMB
Item 2022 2021 Change (%)
Subtotal of cash generated from
7,218,619,463.98 5,095,876,566.67 41.66%
operating activities
Subtotal of cash used in operating
5,796,308,689.72 4,747,739,561.19 22.09%
activities
Net cash generated from/used in
1,422,310,774.26 348,137,005.48 308.55%
operating activities
Subtotal of cash generated from
264,146,692.28 1,558,983,659.21 -83.06%
investing activities
Subtotal of cash used in investing
981,802,690.70 1,530,504,624.63 -35.85%
activities
Net cash generated from/used in
-717,655,998.42 28,479,034.58 -2,619.94%
investing activities
Subtotal of cash generated from
1,345,521,524.75 1,711,261,939.49 -21.37%
financing activities
Subtotal of cash used in financing
2,340,048,516.23 1,507,951,696.50 55.18%
activities
Net cash generated from/used in
-994,526,991.48 203,310,242.99 -589.17%
financing activities
Net increase in cash and cash
-147,109,614.73 573,476,477.42 -125.65%
equivalents
Explanation of why any of the data above varies significantly:
Applicable □ Not applicable
During the Reporting Period, subtotal of cash generated from operating activities increased 41.66% year on year, primarily driven
by the increased cash received from sale of goods; net cash generated from operating activities increased 308.55% year on year,
primarily driven by the increased cash received from sale of goods; subtotal of cash generated from investing activities decreased
83.06% year on year, primarily driven by the decreased disinvestments; subtotal of cash used in investing activities decreased
22
Lu Thai Textile Co., Ltd. Annual Report 2022
35.85% year on year, primarily driven by the decreased payments for investments; net cash generated from investing activities
decreased 2619.94% year on year, primarily driven by the decreased disinvestments; subtotal of cash used in financing activities
increased 55.18% year on year, primarily driven by the increased debt repayments; and net cash generated from financing
activities decreased 589.17% year on year, primarily driven by the increased debt repayments.
Reason for any big difference between the net operating cash flow and the net profit for this Reporting Period
□ Applicable Not applicable
V Analysis of Non-Core Businesses
Applicable □ Not applicable
Unit: RMB
As % of total
Amount Source/Reason Recurrent or not
profit
Return on long-term equity
Return on
13,734,073.31 1.27% investments and held-for-trading Not
investment
financial assets
Gain/loss on
Gain/loss on changes in fair value of
changes in fair 169,192,724.92 15.67% Not
value held-for-trading financial assets
Asset impairments -186,305,963.36 -17.26% Inventory valuation allowances Not
Non-operating Income of non-operating
8,056,548.73 0.75% Not
income
compensation, etc
Non-operating
11,007,935.46 1.02% Non-operating donations, etc. Not
expense
VI Analysis of Assets and Liabilities
1. Significant Changes in Asset Composition
Unit: RMB
31 December 2022 1 January 2022 Reason for
Change in
any
As % of total As % of total percentage
Amount Amount significant
assets assets (%)
change
Monetary assets 2,067,768,253.97 15.49% 1,999,712,889.35 15.40% 0.09%
Accounts
660,427,526.19 4.95% 647,277,198.51 4.98% -0.03%
receivable
Inventories 2,107,849,708.33 15.79% 2,345,346,794.28 18.06% -2.27%
Investment
20,460,935.21 0.15% 21,362,302.03 0.16% -0.01%
property
Long-term
equity 184,168,625.69 1.38% 169,443,106.66 1.30% 0.08%
investments
Fixed assets 5,807,847,850.67 43.50% 5,561,601,374.44 42.82% 0.68%
Construction in
199,943,501.73 1.50% 237,579,082.99 1.83% -0.33%
progress
Right-of-use
481,420,505.31 3.61% 257,019,286.15 1.98% 1.63%
assets
23
Lu Thai Textile Co., Ltd. Annual Report 2022
Short-term
518,946,415.96 3.89% 1,011,034,138.32 7.78% -3.89%
borrowings
Contract
206,879,672.53 1.55% 204,967,348.96 1.58% -0.03%
liabilities
Long-term
186,431,096.24 1.40% 684,962,473.24 5.27% -3.87%
borrowings
Lease liabilities 98,501,303.83 0.74% 121,357,658.41 0.93% -0.19%
Indicate whether overseas assets account for a large proportion of the total assets.
Applicable □ Not applicable
Mana Control
As % of the Material
Sourc Locati gemen measures to Return generated
Asset Asset value (RMB) Company’s impairment
e on t protect asset (RMB)
equity risk (yes/no)
model safety
Main
Incor management
Hong Kong Hong Marke
porate 211,201,941.02 personnel sent 5,944,461.35 2.24% No
project Kong ting
d by the Company
as the parent
Main
Incor management
America New Marke
porate 1,631,711.07 personnel sent -1,482,115.26 0.02% No
project York ting
d by the Company
as the parent
Main
Incor Manuf management
Cambodia Svay
porate 217,352,438.45 acturi personnel sent 25,073,063.35 2.31% No
project Rieng
d ng by the Company
as the parent
Main
Incor Manuf management
Myanmar Rango
porate 133,216,225.72 acturi personnel sent 21,854,519.76 1.42% No
project on
d ng by the Company
as the parent
Main
Incor Manuf management
Vietnam Vietna
porate 3,118,142,266.57 acturi personnel sent 227,085,825.52 33.14% No
project m
d ng by the Company
as the parent
Main
Incor management
Singapore Singap Invest
porate 868,264,142.82 personnel sent 2,577,545.12 9.23% No
project ore ment
d by the Company
as the parent
2. Assets and Liabilities at Fair Value
Applicable □ Not applicable
Unit: RMB
Gain/loss on
Cumulative Impairment
fair-value Purchased
fair-value allowance Sold in the
Beginning changes in in the Other Ending
Item changes for the Reporting
amount the Reporting change amount
recorded in Reporting Period
Reporting Period
equity Period
Period
Financial assets
24
Lu Thai Textile Co., Ltd. Annual Report 2022
1. Held-for-
trading financial
190,052,000 147,024,145 359,556,504 120,000,000 576,632,650
assets (excluding
derivative .00 .79 .86 .00 .65
financial assets)
2. Derivative 1,727,000.0 26,445,508. 28,172,508.
financial assets 0 83 83
Subtotal of 191,779,000 173,469,654 359,556,504 120,000,000 604,805,159
financial assets .00 .62 .86 .00 .48
-
34,663,071. 11,208,304.
Others -92,637.48 23,362,129.
88 78
62
-
226,442,071 173,469,654 359,556,504 120,000,000 616,013,464
Total of the above -92,637.48 23,362,129.
.88 .62 .86 .00 .26
62
-
Financial 4,276,929.7
0.00 4,276,929.7
liabilities 0
0
Content of other change:
Changes in receivables financing.
Significant changes to the measurement attributes of the major assets in the Reporting Period:
□ Yes No
3. Restricted Asset Rights as at the Period-End
For details, see Part X. VII. 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.
25
Lu Thai Textile Co., Ltd. Annual Report 2022
(2) Investments in Derivative Financial Instruments
Applicable □ Not applicable
1) Derivative Investments for Hedging Purposes during the Reporting Period
Applicable □ Not applicable
Unit: RMB'0,000
Proportion of
Gain/loss on Cumulative closing
Initial fair-value fair-value Purchased in Sold in the Ending investment
Type of
investment changes in changes the Reporting Reporting investment amount in the
derivative
amount the Reporting recorded in Period Period amount Company’s
Period equity ending net
assets
Forward
exchange 22,090.11 0 0 22,090.11 22,090.11 0 0.00%
settlement
Foreign
exchange 279,724.8 2,225.85 0 241,716.8 131,568.3 148,156.5 15.75%
option
Forward
exchange 12,701.8 0 0 12,701.8 12,701.8 0 0.00%
transactions
Total 314,516.71 2,225.85 0 276,508.71 166,360.21 148,156.5 15.75%
Whether
significant
changes
occurred to
the
Company’s
accounting
policy and
specific
No significant changes
accounting
principles of
derivatives in
the Reporting
Period
compared to
the previous
Reporting
Period
1. As of 31 December 2022, the Company held 21 undue financial derivatives contracts, totaling USD216 million,
all of which were forex option contracts. 2. During 2022, the total amount of all due financial derivatives of the
Actual
Company was equivalent to USD251 million, which were all executed according to the contracts, resulting in a loss
gain/loss in
of RMB18.1538 million, among which, gains of RMB1.6913 million were from due forward forex settlement
the Reporting
contracts of USD34 million; due forex option contracts were USD197 million, with USD55 million not yet meeting
Period
the settlement conditions and USD142 million settled, resulting in a loss of RMB24.3997 million; gains of
RMB4.5546 million were from due forward forex transactions of USD20 million.
The Company conducts foreign exchange (FX) derivative transactions with the intention of hedging. Specifically,
Effectiveness the business is carried out to fix costs, avoid exchange rate risks and improve resistance against FX rate fluctuations.
of hedges As a result, the Company has gained better capabilities of avoiding and preventing the risks of FX rate fluctuations,
and the financial robustness of the Company has been enhanced.
Capital
source for
The Company’s own money
derivative
investment
Analysis on The Company conducted derivatives products transaction in order for hedging. And the forward settlement hedging
risks and was operated by installments, with the relevant amount not more than the planned derivatives products transactions.
control And all derivatives products transaction was zero-deposit. Meanwhile, the Company had a complete risk control
26
Lu Thai Textile Co., Ltd. Annual Report 2022
measures of system for sufficient analysis and prevention of possible risks such as market risk, liquidity risk and credit risk,
derivative operation risk and risk of laws and regulation.
products held 1. Market risk: When the international and domestic economic situations change, the corresponding changes in
in the exchange rates and interest rates may have an adverse impact on the financial derivative transactions of the
Reporting Company. Precautions: The Company chooses financial instruments with simple structures, high liquidity and
Period controllable risk and strictly controls the scale of derivative transactions, performing them by stages and in batches.
(including Means such as extension and balance settlement can be adopted to ensure contract performance after the contract
but not expires.
limited to 2. Liquidity risk and credit risk: Credit risk arises when the Company or counterparties in transactions couldn’t
market risk, perform contracts due now, to liquidity or other factors that result in further economic loss. Precautions: The
liquidity risk, derivative transactions can only be done with financial institutions qualified for derivative transactions, as authorized
credit risk, by relevant national authorities or financial or foreign exchange authorities in the country or region where the
operation Company operates. Derivative transactions with other institutions or individuals are not allowed so as to control
risk, law risk, related risk concerning counterparties.
etc.) 3. Internal risk control: Derivative transactions are highly specialized and complex. Therefore, there is a risk of loss
in derivative transactions due to the imperfect internal control system when business is performed. Precautions: The
Company should strictly implement Management Policy for Investments in Securities and Derivative Transactions
of Lu Thai Textile Co., Ltd., continuously optimize the business operation process and authorization management
system, strengthen professional ethics education and business training for relevant personnel, clarify job
responsibilities, engage in derivative transaction business strictly within the scope of authorization, and establish a
timely reporting system for abnormal conditions to avoid operational risks.
4. Risk of laws and regulation: Derivative transactions of the Company must be strictly in compliance with relevant
national laws and regulations. Otherwise, signed contracts, commitments and other legal documents may entail
compliance risk and regulatory risk in terms of effectiveness and enforceability. Precautions: The Company should
strengthen the supervision and inspection of the standardization of derivative transactions, the effectiveness of
internal control mechanism, and the authenticity of information disclosure to avoid possible legal risks. The
Company has fulfilled relevant approval procedures for its derivative transactions business, which is in line with the
relevant national laws, regulations, the Articles of Association, the Management Policy for the Transaction of
Derivatives of Lu Thai, the Proposal on the Company's Derivative Transaction Plan deliberated and adopted at the
25th meeting of the 9th session of the Board of Directors held on 11 June 2021, and the Proposal on the Company's
Derivative Transaction Plan deliberated and adopted at the 25th meeting of the 33rd session of the Board of
Directors held on 24 May 2022, and fulfilled the relevant information disclosure obligations.
Changes of
market prices
or fair values
in the
Reporting
Period of the
invested
derivatives.
In accordance with the relevant provisions and guidelines of the Accounting Standards for Business Enterprises No.
And the
22 - Recognition and Measurement of Financial Instruments and the Accounting Standards for Business Enterprises
analysis on
No. 37 - Presentation of Financial Instruments issued by the Ministry of Finance, the Company took the relevant
the fair value
accounting measures for its business of FX derivative transactions to reflect the relevant items in the balance sheet
of the
and the income statement. During the Reporting Period, the Company determined the fair value of forward FX
derivatives
settlement and FX options based on the bank’s corresponding quotations at the end of the period.
should
include the
specific use
methods and
the relevant
assumptions
and
parameters.
Lawsuit (if
N/A
applicable)
Disclosure
date of board
of directors
announceme
nt on 15 June 2021
approval of
derivative
investment
(if any)
Disclosure
date of 25 May 2022
general
27
Lu Thai Textile Co., Ltd. Annual Report 2022
meeting
announceme
nt on
approval of
derivative
investment
(if any)
Specific
opinion from Independent directors Zhou Zhiji, Qu Dongmei, Peng Yanli, and Quan Yuhua have issued the following professional
independent advice on the Company's derivative transaction business: We believe that the Company's foreign exchange
directors on derivative transaction business is performed on the condition of ensuring normal operations. Transactions using its
the own funds are beneficial to avoiding the risk of exchange rate fluctuations, and are an effective tool to hedge
Company’s exchange rate risk. By strengthening internal control, implementing stop-loss and risk prevention measures, the
derivatives Company can improve its ability to resist exchange rate fluctuations and improve its management level. The
investment derivative transaction plan proposed by the Board of Directors is feasible, necessary, and the risks are manageable.
and risk There is no damage to the interests of the Company and all the shareholders.
control
2) Derivative Investments for Speculative Purposes during the Reporting Period
□ Applicable Not applicable
No such cases in the Reporting Period.
5. Use of Funds Raised
Applicable □ Not applicable
(1) Overall Use of Funds Raised
Applicable □ Not applicable
Unit: RMB’0,000
Total of
Cumulat
raised Ratio of
ive
Cumulat capital cumulati Amount
Total of amount Purpose and
ive which ve Total of of raised
Total of raised of raised direction of
Raisin Raising amount purpose amount raised capital
raised capital used capital raised
g year manner of raised is which capital unused
capital in this which capital
capital changed purpose unused for two
period purpose unused
used in the is years
is
report changed
changed
period
By 31
December
2022,
RMB256.37
18 million in
the unused
raised
Convert
91,954.0 51,637.1 capital was
2020 ible 138,800 15,799.79 25,000 25,000 18.01% 0
bonds 6 8 deposited in
the raised
capital
account, and
RMB260
million was
used for
cash
28
Lu Thai Textile Co., Ltd. Annual Report 2022
management
.
91,954.0 51,637.1
Total -- 138,800 15,799.79 25,000 25,000 18.01% -- 0
6 8
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 31 December 2022, the Company directly invested RMB919.5406 million in total from the raised capital for its capital raising
projects. The unused amount was RMB516.3718 million (including the net income of RMB46.7481 million from interest income
deducted handling charge).
(2) Commitments on Projects with Funds Raised
Applicable □ Not applicable
Unit: RMB’0,000
Whether
Total Wheth
the Date
Committed of Cumulativ Investmen er
projects when the
investment commi Total Amount e Benefit Whether project
are t progress project
projects tted investme invested investmen realized reached feasibil
changed by the end reached
and use invest nt after in this t amount of period in this the ity
(includin the
direction of ment modifica report by the end report expected change
g (3) ＝ intended
over raised of tion (1) period of period period benefit d
partially (2)/(1) available
capital raised (2) signific
changed status
capital antly
projects)
Committed investment projects
Functional
fabric
smart eco- 10,091.2 31 May
No 85,000 85,000 57,439.94 67.58% 0 N/A No
park 6 2023
project
(Phase 1)
Constructio
n of
overseas
31
high-end
Yes 25,000 25,000 5,708.53 5,708.53 22.83% Decemb 0 N/A No
fabric
er 2024
production
line project
(Phase I)
Supplemen
t working No 28,800 28,800 0 28,805.59 100.02% 0 N/A No
capital
Subtotal of
committed 138,80 15,799.7
-- 138,800 91,954.06 -- -- 0 -- --
investment 0 9
projects
Use direction of over raised capital
N/A
29
Lu Thai Textile Co., Ltd. Annual Report 2022
Repayment
of bank
-- 0 0 0 0 0.00% -- -- -- --
loans (if
any)
Supplemen
t working
-- 0 0 0 0 0.00% -- -- -- --
capital (if
any)
Subtotal of
use director
of over -- 0 0 0 0 -- -- 0 -- --
raised
capital
138,80 15,799.7
Total -- 138,800 91,954.06 -- -- 0 -- --
0 9
Explain
project by
project
situation
and reasons
that it did
not reach
the planned
progress or
Due to the global economic downturn, the raised funds investment project “Functional fabric smart eco-park project
expected
return (Phase 1)” delayed in construction progress.
(including
reason for
inputting
“N/A” for
“Whether
reached the
expected
benefit”)
Note for
significant
change of N/A
project
feasibility
Amount,
purpose
and use
N/A
progress of
over raised
capital
Change of
implement
ation site
N/A
of capital
raising
project
Adjustment
of
implement
ation mode N/A
of capital
raising
project
30
Lu Thai Textile Co., Ltd. Annual Report 2022
Advance Applicable
investment
and
displaceme By 30 April 2020, the total amount of displaced capital was RMB191.4288 million, including the amount RMB
nt of 189.8388 million invested in the project with the self-raised capital of the Company in advance, and payment of
capital issuing cost RMB1.59 million with its self-raised capital.
raising
project
Temporary
supplement
to working
capital with N/A
unused
raised
capital
Balance of
raised
capital
after
implement N/A
of project
and
relevant
reasons
Purpose
and use
direction of By 31 December 2022, RMB256.3718 million in the unused raised capital was deposited in the raised capital account,
unused and RMB260 million was used for cash management.
raised
capital
Problems
existing in
use and
informatio
n
None
disclosure
of raised
capital or
other
situation
(3) Changes in Projects with Funds Raised
Applicable □ Not applicable
Unit: RMB’0,000
Amount Investme
Accumula
of Actual nt Whether
Correspo tive Date of Realized
planned investmen schedule Whether occurred
Items nding investmen reaching income in
funds t amount as the reached significan
after original t amount intended the
invested in the period- anticipate t changes
changes committe as the use of the Reporting
after Reporting end d income in project
d items period- project Period
changes Period (3)=(2)/(1 feasibility
end (2)
(1) )
Construct High-end
ion of printing 31
overseas and 25,000 5,708.53 5,708.53 22.83% December 0 N/A No
high-end dyeing 2024
fabric fabric
31
Lu Thai Textile Co., Ltd. Annual Report 2022
productio productio
n line n line
project project
(Phase I)
Total -- 25,000 5,708.53 5,708.53 -- -- 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
Notes of reasons for changes, extraordinary general meeting and the first bondholders' meeting this year deliberated and
decision-making procedures and adopted the Proposal on Changing the Purpose of Partial Raised Capital Unused. The
information disclosure (by specific aim was to terminate the "High-end printing and dyeing fabric production line project"
items) and leverage the raised capital of this project of RMB250 million for construction of
overseas 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
N/A
anticipated income (by specific
items)
Notes of condition of significant
changes occurred in project N/A
feasibility 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
Relationship
Principal Registered Operating Operating
Name with the Total assets Net assets Net profit
activity capital revenue profit
Company
LuFeng
Company Subsidiary Fabric 706160000 1,713,860,629.99 1,391,192,627.05 1,813,342,589.95 151,554,691.72 141,742,849.86
Limited
Shandong
Lulian
Subsidiary Fabric 400000000 785,333,052.16 193,685,972.78 90,195,368.38 -90,553,128.78 -95,189,161.13
New
Materials
32
Lu Thai Textile Co., Ltd. Annual Report 2022
Co., Ltd.
Subsidiaries obtained or disposed in the Reporting Period:
□Applicable Not applicable
Information about major majority- and minority-owned subsidiaries:
LuFeng Company Limited (hereinafter referred to as “LuFeng”) 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, with the recovering American and European markets, LuFeng saw more export and high-added-value orders. This, coupled
with currency impacts, resulted in growth in both operating revenue and net profit. It recorded operating revenue of RMB1.8 billion,
up 29.51% year on year; and a net profit of RMB142 million, up 1981.21% 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, it was ramping up production and part of products were
released continually. It reported operating revenue of RMB90.1954 million, up 102.58% year on year; and a net profit of RMB-
95.1892 million, down 19.72% year on year.
X Structured Bodies Controlled by the Company
□Applicable Not applicable
XI Prospects
1. Industry competition and development trend
The textile industry of China has certain strength in the global textile industry, mainly showing in industry chain, technology, labor
efficiency and other aspects. The global economic downturn has impacted the economy and trade of various countries since 2020, but
the competitive edge of the textile industry of China in the international market still remains. In recent years, when the domestic
environmental protection requirements are becoming more stringent, production costs are going up and the transformation and
upgrade policy is implemented in China, the textile industry may face structural adjustment, and the demand to yarn-dyed fabric used
for shirts will change as diversified products in small batch, functionality and leisure orientation.
2. Development strategy of the Company
The Company is a large-scale textile enterprise with a complete industrial chain integrating spinning, dyeing, weaving, post-
treatment and garment manufacturing. It is the world's largest production base for yarn-dyed fabrics for shirts, providing blending of
three major series of shirt fabrics of pure cotton and natural fiber, cotton and natural fiber as well as cotton and functional fiber. And
the newly developed shirt knitted fabric and functional fabric are also popular in markets. In order to maintain the outstanding
advantages of the Company in global shirt-dyed fabrics, the Company is pushing intelligent manufacturing upgrades and integrating
domestic and foreign advantageous resources to deepen internationalization of the Company with regional advantages. The Company
combines quality innovation and customer needs, and innovates the marketing model with advantages of resources in each channel.
High-end shirt customization services are provided to meet various needs of customers. Furthermore, the Company increases
investment in innovation to improve R&D and design and develop new fabrics. The Company holds the concept of low-carbon
environmental protection for sustainable development.
3. Business plan (the following description does not constitute any commitment of the Company)
33
Lu Thai Textile Co., Ltd. Annual Report 2022
(1) In terms of corporate governance, in order to ensure the healthy, stable and sustainable development of the Company at the
institutional level, the Company will establish an internal control system to improve organizational structure, corporate governance
structure and risk prevention mechanism.
(2) In the aspect of market development, the Company actively develops emerging markets on the basis of maintaining the existing
market, accurately understands market trend and customers’ demand, and fully improves service capacity, so that the Company could
be a global dress solution supplier based on leading fabric.
(3) In the aspect of business administration, the Company continually Implements the strategy of “quality and efficiency
improvement” and “comprehensive internationalization”, makes more efforts in developing market, adjusting structure and
improving capacity, strengthens integrated product development (IPD), promotes innovation while meeting market demand and
builds up a flexible, rapid response, efficient and traceable supply system chain with internal and external resources.
(4) In terms of industrial overall arrangement, in order to maintain the leading position of the Company in the global yarn-dyed
industry, the Company rationally allocates domestic and foreign resources and improves production efficiency while keeping product
quality relying on the advantages of U.S. companies, Milan and Japan Office in market development, design and R&D, customer
service and talent development, and the cost advantages of Southeast Asian production bases.
4. Capital needs, sources and planning
Within the Reporting Period, the functional fabric intelligent ecological park project (phase I) of the Company’s majority-owned
subsidiary Lulian New Materials and the overseas high-end fabric production line project (phase I) were under construction.
Corresponding equipment installation and trial production will be arranged successively, and the project fund is from the raised fund
of the A Share convertible bonds issued by the Company.
5. Risks that bring adverse impact to company development strategy and business objectives and countermeasures of the Company
(1) Impact of economic environment: under the enormous uncertainty risk of the international trade, the geopolitical risk and the
impact of the global economic downturn, the Company will face challenges in terms of international trade policies and market
changes. In addition, the economic development of China should be transformed and upgrade, therefore, the Company will continue
to strictly guarantee production and safety and further utilize various resources at home and abroad to develop domestic and overseas
markets, so as to catch new development opportunities.
(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.
XII Communications with the Investment Community such as Researches, Inquiries and
Interviews during the Reporting Period
Applicable □ Not applicable
34
Lu Thai Textile Co., Ltd. Annual Report 2022
Place of Way of Type of Contents and Index to main inquiry
Date of visit Visitor
visit visit visitor materials provided information
The Investor Relations
Compan About basic Management Archive
Instituti Institutional
7 January 2022 y’s By phone information of the 20220110 disclosed on Cninfo
on investor
conferen Company by the Company on 10 January
ce room 2022
The Investor Relations
Compan About basic Management Archive
11 January Instituti Institutional
y’s By phone information of the 20220111（2） disclosed on
2022 on investor
conferen Company Cninfo by the Company on 12
ce room January 2022
The Investor Relations
Compan About basic Management Archive
11 January Instituti Institutional
y’s By phone information of the 20220111（1） disclosed on
2022 on investor
conferen Company Cninfo by the Company on 12
ce room January 2022
The Investor Relations
Compan One-on- About basic Management Archive
11 January Instituti Institutional
y’s one information of the 20220111 disclosed on Cninfo
2022 on investor
conferen meeting Company by the Company on 13 January
ce room 2022
The Investor Relations
Compan About basic Management Archive
14 January Instituti Institutional
y’s By phone information of the 20220114 disclosed on Cninfo
2022 on investor
conferen Company by the Company on 17 January
ce room 2022
The Investor Relations
Compan About basic Management Archive
Instituti Institutional
29 April 2022 y’s By phone information of the 20220429（1） disclosed on
on investor
conferen Company Cninfo by the Company on 5
ce room May 2022
The Investor Relations
Compan About basic Management Archive
Instituti Institutional
29 April 2022 y’s By phone information of the 20220429（2） disclosed on
on investor
conferen Company Cninfo by the Company on 5
ce room May 2022
The Investor Relations
Compan About basic Management Archive
Instituti Institutional
27 May 2022 y’s By phone information of the 20220527（1） disclosed on
on investor
conferen Company Cninfo by the Company on 30
ce room May 2022
The Investor Relations
Compan About basic Management Archive
Instituti Institutional
27 May 2022 y’s By phone information of the 20220527（2） disclosed on
on investor
conferen Company Cninfo by the Company on 30
ce room May 2022
The Results Presentation and
Compan About basic Roadshow Information
Instituti Institutional
31 May 2022 y’s By phone information of the 20220531 disclosed on Cninfo
on investor
conferen Company by the Company on 31 May
ce room 2022
The Investor Relations
Compan About basic Management Archive
Instituti Institutional
1 June 2022 y’s By phone information of the 20220601 disclosed on Cninfo
on investor
conferen Company by the Company on 2 June
ce room 2022
13 July 2022 The By phone Instituti Institutional About basic Investor Relations
35
Lu Thai Textile Co., Ltd. Annual Report 2022
Compan on investor information of the Management Archive
y’s Company 20220715 disclosed on Cninfo
conferen by the Company on 15 July
ce room 2022
The Investor Relations
Compan About basic Management Archive
Instituti Institutional
20 July 2022 y’s By phone information of the 20220721 disclosed on Cninfo
on investor
conferen Company by the Company on 21 July
ce room 2022
The Investor Relations
Compan About basic Management Archive
Instituti Institutional
26 August 2022 y’s By phone information of the 20220829（1） disclosed on
on investor
conferen Company Cninfo by the Company on 29
ce room August 2022
The Investor Relations
Compan About basic Management Archive
Instituti Institutional
26 August 2022 y’s By phone information of the 20220829（2） disclosed on
on investor
conferen Company Cninfo by the Company on 29
ce room August 2022
The Investor Relations
Compan About basic Management Archive
1 September Instituti Institutional
y’s By phone information of the 20220902 disclosed on Cninfo
2022 on investor
conferen Company by the Company on 2
ce room September 2022
The Investor Relations
Compan About basic Management Archive
31 October Instituti Institutional
y’s By phone information of the 20221103（1） disclosed on
2022 on investor
conferen Company Cninfo by the Company on 3
ce room November 2022
The Investor Relations
Compan About basic Management Archive
31 October Instituti Institutional
y’s By phone information of the 20221103（2） disclosed on
2022 on investor
conferen Company Cninfo by the Company on 3
ce room November 2022
The Investor Relations
Compan About basic Management Archive
1 November Instituti Institutional
y’s By phone information of the 20221103 disclosed on Cninfo
2022 on investor
conferen Company by the Company on 3
ce room November 2022
The Investor Relations
Compan About basic Management Archive
14 November Instituti Institutional
y’s By phone information of the 20221116 disclosed on Cninfo
2022 on investor
conferen Company by the Company on 16
ce room November 2022
The Investor Relations
Compan About basic Management Archive
7 December Instituti Institutional
y’s By phone information of the 20221209 disclosed on Cninfo
2022 on investor
conferen Company by the Company on 9
ce room December 2022
36
Lu Thai Textile Co., Ltd. Annual Report 2022
Part IV Corporate Governance
I General Information of Corporate Governance
During the Reporting Period, the Company strictly conforms to Company Law, Securities Law (Revised in 2019) and Governing
Rules for Listed Company, Guideline No. 1 of the Shenzhen Stock Exchange for the Self-regulation of Listed Companies—
Operation Compliance of Main Board Listed Companies as well as relevant stipulations and requirements from normative documents,
continuously improves the corporate governance structure, safeguards the standardized and efficient operation of three Committees
and one Management, forms a sound and effective internal control system so as to safeguard legitimate interests of the Company and
investors. Within the Reporting Period, the Company amended Articles of Association of Lu Thai Textile Co., Ltd.
1. Shareholders and Shareholders’ General Meeting
The Company shall convene and hold the shareholders meeting in strict accordance with the Shareholders Meeting Procedural Rules,
and guarantee that all shareholders, especially the minority shareholders, could have equal status and fully execute their rights.
2. The relationship between the majority shareholders and the Company
The Company’s majority shareholders acted according to relevant standards without directly or indirectly intervening the Company’s
decision-making and operating activities; the Company was independent with its majority shareholders in business, personnel, assets,
organization, finance, and the Company’s Board of Directors, Supervisory Committee and Internal Organs could completely
independent to operate. There was no situation about annexing the assets or occupation of funds of the Company by principal
shareholders or other events on infringing the interest of the Company and other shareholders.
3. The directors and Board of Directors
The Company’s Board of Directors shall perform their duties in strict accordance with Articles of Association and the Board of
Directors Procedural Rules. Under the Board of Directors, the Company established the Strategy Committee, the Audit Committee,
the Nomination Committee and the Remuneration Committee. Various specialized committees would fully perform their functions
and further guarantee the high-efficient operation and the scientific decision-making of the Board of Directors.
4. Supervisors and Supervisory Committee
The Company’s Supervisory Committee will perform their duties in strict accordance with Articles of Association and the
Supervisory Committee Procedural Rules. The number of members and the composition of the Company’s Supervisory Committee
shall comply with applicable laws and regulations; the Company’s supervisors shall strictly abide by relevant provisions, seriously
execute their duties and supervise the Company’s financial status and the legal execution of duties of the directors, president and
other senior managers by adhering to the principle of being responsible for the shareholders and the listed company.
5. Information disclosure
The Company strictly, in accordance with the laws, regulations and the Articles of Association, disclosed relevant information in a
true, accurate, complete and timely manner. The Company has formulated the Information Disclosure Management System,
Information Insider Registration Management System and Investor Relations Management System, etc., to ensure the fairness,
openness and fairness of information disclosure.
6. Investor relations management
During the Reporting Period, as required by Investor Relations Management System, to maintain good communication with investors,
the Company accepted on-site investigations and consultations of investors through on-site investigations and telephone
consultations, and promptly answered questions asked by investors on the SZSE Easy-IR.
Indicate by tick market whether there is any material incompliance with the applicable laws, administrative regulations and the
CSRC rules for the governance of listed companies.
□ Yes √ No
No such cases in the Reporting Period.
37
Lu Thai Textile Co., Ltd. Annual Report 2022
II The Company’s Independence from Its Controlling Shareholder and Actual Controller in
Assets, Personnel, Financial Affairs, Organization and Business
1. As for the business: the Company shall establish its independent and complete business system with the market-oriented
independent management ability. In the respect of business operation, the Company is completely separated from the controlling
shareholders.
2. As for the personnel: the Company’s labor, personnel and remuneration management departments shall be independent with their
own sound systems, and separated from that of the substantial shareholder. The Company’s senior managers are not allowed to
simultaneously hold any office in any shareholder’s unit.
3. As for the assets: the Company possesses the entire and independent legal person property right with independent and perfect the
production system, auxiliary production systems and supporting facilities; and possesses the independent ownership of the intangible
assets such as the industrial property, trademarks, non-patented technology.
4. As for the institution: the Company’s Board of Directors, Supervisory Committee and other internal organization shall be sound
and involved in independent operation. The substantial shareholder shall legally execute its rights, fulfill corresponding obligations
and not surpass the shareholders meeting to directly or indirectly interfere the Company’s business activities.
5. As for the finance: the Company possesses independent financial departments with normative financial accounting system and
financial management system as well as internal control system with independent bank account.
III Horizontal Competition
□ Applicable √ Not applicable
IV Annual and Special General Meetings Convened during the Reporting Period
1. General Meeting Convened during the Reporting Period
Investor
Date of the
Meeting Type participation Disclosure date Resolutions
meeting
ratio
Two proposals, including the
The 1st Proposal on Repurchase and
Extraordinary Extraordinary Cancel Authorized but Unlocked
General General 32.62% 7 March 2022 8 March 2022 Restricted Share of the Incentive
Meeting of Meeting Personnel not Conforming to the
2022 Incentive Condition, were
deliberated and approved.
The 2021 Six proposals, including the
Annual
Annual Proposal on 2021 Annual Work
General 32.66% 20 May 2022 21 May 2022
General Report of the Board of Directors,
Meeting
Meeting were deliberated and approved.
Four proposals, including the
The 2nd
Proposal on the Election of Non-
Extraordinary Extraordinary
Independent Directors of the
General General 30.91% 9 June 2022 10 June 2022
Tenth Session of the Board of
Meeting of Meeting
Directors, were deliberated and
2022
approved.
The 3rd Two proposals, including the
Extraordinary Extraordinary Proposal on Repurchase of the
General General 31.42% 15 July 2022 16 July 2022 Company’s Domestically Listed
Meeting of Meeting Foreign Shares (B Share), were
2022 deliberated and approved.
38
Lu Thai Textile Co., Ltd. Annual Report 2022
2. Special General Meetings Convened at the Request of Preferred Shareholders with Resumed Voting
Rights
□ Applicable Not applicable
V Directors, Supervisors and Senior Management
1. Basic Information
Increas Decrea
Beginn e in se in Other
Ending
Incum Start ing the the increas Reaso
Office Gen End of shareh
Name bent/F Age of shareh Report Report e/decre n for
title der tenure olding
ormer tenure olding ing ing ase change
(share)
(share) Period Period (share)
(share) (share)
Chairman
Liu Incum Mal 6 June 8 June 148,29 148,29
and 58
Zibin bent e 2007 2025 0 0
President
Xu Vice Incum Mal 6 May 8 June
93
Zhinan Chairman bent e 2004 2025
Xu Incum Fem 9 June 8 June
Director 48
Jianlyu bent ale 2022 2025
Zheng
Incum Mal 9 June 8 June
Huishe Director 35
bent e 2022 2025
ng
Director,
Vice
Controlle
Liu r of 12
Incum Mal 8 June
Demin Global 33 May
bent e 2025
g Marketin 2017
g
Departme
nt
Director,
Vice Grante
president, d
Head of 200,00
Zhang Incum Mal 9 June 8 June 380,30 200,00 580,30
Global 51 0
Zhanqi bent e 2022 2025 0 0 0
Marketin restrict
g ed
Departme shares
nt
Director,
Board
Secretary
Grante
, Chief
d
Accounta
Zhang 100,00
nt, Head Incum Mal 9 June 8 June 277,70 100,00 377,70
Kemin 55 0
of bent e 2022 2025 0 0 0
g restrict
Financial
ed
Managem
shares
ent
Departme
nt
Director, Grante
Chief d
Engineer, 100,00
Du Incum Mal 9 June 8 June 200,00 100,00 250,00
Executive 48 50,000 0
Lixin bent e 2022 2025 0 0 0
Dean of restrict
Lu Thai ed
Engineeri shares,
39
Lu Thai Textile Co., Ltd. Annual Report 2022
ng and
Technolo having
gy reduce
Research d
Institute 50,000
shares
on the
open
market
Independ 10
Zhou Incum Mal 8 June
ent 60 March
Zhiji bent e 2025
Director 2019
Qu Independ 10
Incum Fem 8 June
Dong ent 54 June
bent ale 2025
mei Director 2019
Independ
Peng Incum Fem 9 June 8 June
ent 62
Yanli bent ale 2022 2025
Director
Independ
Quan Incum Fem 9 June 8 June
ent 67
Yuhua bent ale 2022 2025
Director
Chairman
of the 8
Zhang
Superviso Incum Mal Februa 8 June
Shoug 53 73,100 73,100
ry bent e ry 2025
ang
Committe 2018
e
Liu Superviso Incum Mal 6 June 8 June
55 10,000 10,000
Zilong r bent e 2007 2025
Superviso
r,
Manager
Dong of
Incum Mal 6 June 8 June
Shibin Logistics 54 5,000 5,000
bent e 2007 2025
g Managem
ent
Departme
nt
Havin
g
Head of
reduce
Safety,
d
Wang Chairman Incum Mal 6 June 8 June 383,70 313,70
60 70,000 70,000
Jiabin of the bent e 2007 2025 0 0
shares
Labor
on the
Union
open
market
Grante
President
d
Assistant,
Shang 100,00
Head of Incum Mal 6 June 8 June 230,00 100,00 330,00
Cheng 50 0
Garment bent e 2013 2025 0 0 0
gang restrict
Product
ed
Line
shares
President
Assistant,
Head of Grante
Energy d
Yu and 100,00
Incum Mal 6 June 8 June 283,10 100,00 383,10
Shouz Environm 55 0
bent e 2007 2025 0 0 0
heng ent restrict
Protectio ed
n shares
Departme
nt
Fujiwa GM of Incum Mal 9 8 June
50
ra Japan bent e Decem 2025
40
Lu Thai Textile Co., Ltd. Annual Report 2022
Matsu Office ber
zaka 2014
Grante
d
100,00
0
restrict
Head of ed
Business shares,
Li Managem Incum Mal 8 June 8 June 210,00 100,00 260,00 and
56 50,000
Wenji ent bent e 2016 2025 0 0 0 having
Departme reduce
nt d
50,000
shares
on the
open
market
Grante
Head of d
Functiona 18 100,00
Guo Incum Mal 8 June 200,00 100,00 300,00
l Fabric 51 Januar 0
Heng bent e 2025 0 0 0
Product y 2018 restrict
Line ed
shares
Deputy
Head of
Yarn
Dyed
Fabric
Product
Grante
Line,
d
Lyu Manager
Incum Mal 9 June 8 June 150,00 200,00 50,000
Wenqu of Yarn 50 50,000
bent e 2022 2025 0 0 restrict
an Dyed
ed
Fabric
shares
Productio
n and
Managem
ent
Departme
nt
Grante
d
100,00
0
restrict
Deputy
ed
Head of
shares,
Yarn
Xu Incum Mal 9 June 8 June 150,00 100,00 190,00 and
Dyed 46 60,000
Feng bent e 2022 2025 0 0 0 having
Fabric
reduce
Product
d
Line
60,000
shares
on the
open
market
Fujiwa
ra Forme Mal 7 May 9 June
Director 83
Hideto r e 1998 2022
shi
Chen 16
Forme Mal 9 June
Ruimo Director 79 April
r e 2022
u 2000
Zeng Forme Mal 6 June 9 June
Director 72
Fachen r e 2007 2022
41
Lu Thai Textile Co., Ltd. Annual Report 2022
g
Qin
Forme Fem 7 May 9 June 126,54 126,54
Guilin Director 57
r ale 1998 2022 2 2
g
Grante
d
Director
Zhang 180,00
and Chief Forme Fem 6 June 9 June 392,50 180,00 212,50
Hong 53 0
Accounta r ale 2016 2022 0 0 0
mei restrict
nt
ed
shares
Independ
Pan Forme Fem 6 June 9 June
ent 58
Ailing r ale 2016 2022
Director
Independ
Wang Forme Mal 6 June 9 June
ent 56
Xinyu r e 2016 2022
Director
Zhang
Counselo Forme Mal 6 June 9 June
Jianxia 55 52,150 52,150
r r e 2007 2022
ng
Assistant
to
Chairman
of the
Board, 18
Zhang Forme Mal 9 June 200,00 200,00
Head of 38 Januar
Wei r e 2022 0 0
Strategy y 2018
and
Market
Departme
nt
President
14
Fu Assistant,
Forme Fem Decem 9 June 200,00 200,00
Guann Head of 40
r ale ber 2022 0 0
an Investme
2020
nt
3,672, 950,00 230,00 180,00 4,212,
Total -- -- -- -- -- -- --
382 0 0 0 382
Indicate by tick mark whether any director, supervisor or senior management departed the Company before the expiry of their
tenures during the Reporting Period.
□ Yes No
Change of Directors, Supervisors and Senior Management
Applicable □ Not applicable
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
42
Lu Thai Textile Co., Ltd. Annual Report 2022
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
2. Biographical Information
Professional backgrounds, major work experience and current duties in the Company of the incumbent directors, supervisors and
senior management:
1. Mr. Liu Zibin: Chairman and President of the Company, born in 1965, with a master degree. He served as the GM and chairman of
Zibo Lucheng Textile Co., Ltd. And he currently serves as the chairman and president of Luthai Textile Co., Ltd., the chairman of
Lufeng Textile Dyeing Co., Ltd., the chairman of Zibo Xinsheng Thermoelectric Co., Ltd., the chairman of Zibo Lu Qun Textile Co.,
Ltd., the chairman of Shanghai Luthai Textile and Garment Co., Ltd., the chairman of Luthai (Hong Kong) Co., Ltd., the chairman of
Shanghai Zhinuo Textile New Materials Co., Ltd., the chairman of Shandong Lulian New Materials Co., Ltd., the chairman of
Shandong Lujia Import and Export Co., Ltd. and the chairman of Hainan Huilin International Holdings Co., Ltd.
2. Mr. Xu Zhinan: Vice chairman of the Company, born in 1930, Thai nationality. He used to be director and deputy GM of Lu Thai
Textile Co., Ltd. And he currently serves as the director and deputy chairman of the Company and GM of Thailand Fiber Co., Ltd.
3. Ms. Xu Jianlyu: Director of the Company, born in 1975, Thai nationality. She currently serves as president of Cassardi
International Co., Ltd.
4. Mr. Zheng Huisheng: Director of the Company, born in 1988, Thai nationality. He currently serves as director of Cassardi
International Co., Ltd.
5. Mr. Liu Deming: Director of the Company, deputy head of global marketing department, born in 1990, with a master degree.
Currently, he serves as chairman and GM of Zibo Lucheng Textile Investment Co., Ltd., director of Lu Thai Textile Co., Ltd. and
deputy head of global marketing department of Lu Thai Textile Co., Ltd.
6. Mr. Zhang Zhanqi: Director, vice president, and head of global marketing department of the Company and GM of LuFeng
Company Limited, born in 1972, with a master degree of business administration. Also, he serves as a senior engineer, once was the
factory director of fabric finishing factory and manager of quality management department of the Company.
7. Mr. Zhang Keming: Director, Board Secretary, Chief Accountant, and head of Financial Management Department of the Company.
Born in 1968, with a master degree of business administration, he is a senior accountant. Once he was deputy manager and manager
of the financial department of the Company.
8. Mr. Du Lixin: Director, chief engineer, and executive dean of Luthai Institute of Engineering and Technology of the Company.
Born in 1975, he served as spinning operator, a weaver's planner, a deputy director of the production department's dispatching room,
a weaver's factory director, a manager of the weaving department, and a deputy manager of the production department of Lu Thai.
9. Mr. Zhou Zhiji: Independent director of the Company, born in 1963, with a bachelor degree. He is in possession of the certificates
of CPA and senior accountant. He served as a cadre of Shandong Provincial Department of Finance, director of department of
Shandong accounting firm, chief accountant of Shandong Zhengyuan Accounting Firm, director and manager of Shandong Yingshida
Enterprise Management Consulting Co., Ltd., chairman of Shandong Jinheng Consulting Co., Ltd. Now, he serves as a supervisor of
43
Lu Thai Textile Co., Ltd. Annual Report 2022
Shandong Jinheng Consulting Co., Ltd.
10. Ms. Qu Dongmei: Independent director of the Company, born in 1969, with a doctor degree of economic law. She currently
serves as a professor at the School of Law of Shandong Normal University, a master's supervisor in Civil and Commercial Law, a
lawyer of Grandall Law Firm (Jinan) and an arbitrator of Jinan Arbitration Commission.
11. Ms. Peng Yanli: Independent director of the Company, born in 1961, with a master degree of business administration. She is a
senior engineer at the level of professor. As a former official in the former Ministry of the Textile Industry and the former China
Textile Federation, she served as president of China Wool Textile Association, deputy secretary general of China National Textile and
Apparel Council, vice chairman of China Textile Engineering Society, and deputy director of China Textile Information Center.
12. Ms. Quan Yuhua: Independent director of the Company, born in 1956, with a bachelor degree. She is a senior accountant.
Moreover, she served as manager of the financing department of the CCB Shandong Branch Trust and Investment Company, the
director assistant in the information and research office, the entrusted loan office, and the fee-based business department of the CCB
Shandong Branch, and the level-5 customer manager in the Zhenzhuquan Branch of CCB in Jinan City.
13. Mr. Zhang Shougang: Chairman of the Board of Supervisors, born in 1970, with a master degree of business administration. He is
in possession of a certificate of senior engineer. And he served as director of the weaving factory, manager of the weaving department,
manager of the quality management department, manager of the garment production department, manager of the enterprise
management department and Director of Human Resources Department of the Company.
14. Mr. Liu Zilong: Supervisor of the Company, born in 1968, with a master degree of business administration. In addition, he has
served as the GM of Luthai (Hong Kong) since 2002.
15. Mr. Dong Shibing: Supervisor of the Company, born in 1969, with a diploma of technical secondary school. He once served as
deputy director of the GM's office of the Company. Currently, he served as the manager of the Company's logistics management
department and GM of Zibo Banyang Villa Hotel Co., Ltd.
16. Mr. Wang Jiabin: Chairman of the Labor Union and head of safety of the Company. Born in 1963, with a master degree of
business administration, he served as workshop director of Zibo No. 1 Cotton Textile Mill, director of labor safety, weaving
workshop director of Luthai Textile Co., Ltd., director of power, director of bleaching and dyeing factory, manager of bleaching and
dyeing department, assistant to the GM, head of yarn-dyed fabric product line, and vice president.
17. Mr. Shang Chenggang: President Assistant and head of apparel product line of the Company. Born in 1973, he served as deputy
director, director, manager of GM department, management representative and manager of garment production department, head of
garment manufacturing center & manager of garment production management department of the Company.
18. Mr. Yu Shouzheng: President Assistant, Head of the energy and environmental protection department of the Company, GM of
Zibo Xinsheng Thermal Power Co., Ltd., born in 1968, with a master degree of business administration. As an engineer, he once
worked as the director of the power department and manager of the energy division of the Company.
19. Mr. Fujiwara Matsuzaka: GM of branch office in Japan, Japanese with a bachelor degree. He is a special foreign expert of the
Company, and he once won the Qilu Friendship Award. In addition, he served as deputy manager of international business
department, manager of No.1 international business department, manager of No.2 international business department and manager of
clothing marketing department of Luthai Textile Co., Ltd.
20. Mr. Li Wenji: Controller of the enterprise management department, born in 1967. Once he was a teacher of Shandong University
of Finance. He once served as the manager of the Company's information department and CIO.
21. Mr. Guo Heng: Head of Functional Fabric Product Line. Born in 1972, he served as the deputy director of the spinning factory of
Lu Thai, the deputy manager of the yarn business department, and the manager of the yarn business department and head of
enterprise management department of Lu Thai.
22. Mr. Lyu Wenquan: Deputy head of the yarn-dyed fabric product line, manager of the yarn-dyed production management
department, born in 1973. He serves as a senior engineer. Moreover, he is one of the middle-aged and young experts in Zibo City and
one of the “Torch Talents” for Zibo High-tech Zone. In addition, he served as a factory director and the manager of the fabric
finishing business department of Lu Thai.
44
Lu Thai Textile Co., Ltd. Annual Report 2022
23. Mr. Xu Feng: Deputy head of the yarn-dyed fabric product line, born in 1977. He is an engineer and served as assistant manager
of the bleaching and dyeing business department.
Offices held concurrently in shareholding entities:
Applicable □ Not applicable
Remuneration or
Office held in the End of allowance from
Name Shareholding entity Start of tenure
shareholding entity tenure the shareholding
entity
Zibo Lucheng Textile
Liu Zibin Director 26 February 1999 No
Investment Co., Ltd.
Tailun (Thailand) Textile Co.,
Xu Zhinan GM 29 January 1985 No
Ltd.
Zibo Lucheng Textile
Liu Deming Chairman and GM 1 February 2017 No
Investment Co., Ltd.
Mr. Liu Zibin is the Director of Zibo Lucheng Textile Investment Co., Ltd., holding 4% equities of Zibo
Explanations Lucheng Textile Investment Co., Ltd. Basic information of Mr. Liu Zibin: Chinese, no right of residence in other
about holding countries or regions. Mr. Liu Deming holds the post of Chairman and GM of Zibo Lucheng Textile Investment
posts in Co., Ltd., holding 21% equities of Zibo Lucheng Textile Investment Co., Ltd. Basic information of Mr. Liu
shareholders’ Deming: Chinese, no right of residence in other countries or regions. Mr. Xu Zhinan is the sponsor of foreign
companies capital of the Company, shareholder of Tailun (Thailand) Textile Co., Ltd. and Tailun (Thailand) Textile Co.,
Ltd. is the second largest shareholder of the Company. Basic information about Mr. Xu Zhinan: Thai.
Offices held concurrently in other entities:
Applicable □ Not applicable
Remuneration or
Office held in End of
Name Other entity Start of tenure allowance from
the entity tenure
the entity
LuFeng Company Limited, Zibo
Luqun Textile Co., Ltd., Zibo
Xinsheng Thermal Power Co.,
Ltd., Shanghai Lu Thai Textile
Garment Co., Ltd., Lu Thai (HK)
Chairman of the
Textile Co., Ltd, Shanghai Zhinuo
Liu Zibin Board, Director, 7 December 2015 No
Textile New Material Co., Ltd,
GM
Shandong Lulian New Materials
Co., Ltd., Shandong Lujia Import
and Export Co., Ltd., Hainan
Huilin International Holdings Co.,
Ltd.
LuFeng Company Limited, Zibo
Xinsheng Thermal Power Co.,
Ltd., Zibo Luqun Textile Co., Ltd.,
Liu Shandong Lulian New Materials
Director 21 August 2017 No
Deming Co., Ltd., Shanghai Zhinuo Textile
New Materials Co., Ltd., Beijing
Zhishu Management Consulting
Co., Ltd.
Zhang
LuFeng Company Limited Director and GM 5 July 2014 No
Zhanqi
Zibo Luqun Textile Co., Ltd.,
Shandong Lulian New Materials
Co., Ltd., LuFeng Company
Zhang Director,
Limited, Shanghai Luthai Textile 3 March 2022 No
Keming Supervisor
and Apparel Co., Ltd., Shanghai
Zhinuo Textile New Materials Co.,
Ltd.
Shandong Jinheng Consulting Co.,
Zhou Zhiji Supervisor 1 October 2015 Yes
Ltd
Qu Law School of Shandong Normal Professor 1 July 2003 Yes
45
Lu Thai Textile Co., Ltd. Annual Report 2022
Dongmei University
Shandong High End Blueberry
Director, and
Quan Biotechnology Co., Ltd.,
Independent 1 April 2008 Yes
Yuhua Shandong Spark International
Director
Education Group Co., Ltd.
Lu Thai (Hong Kong) Textile Co.,
Liu Zilong GM 9 May 2005 No
Ltd.
Dong Zibo Banyang Villa Hotel Co.,
Director and GM 2 April 2021 No
Shibing Ltd.
Yu Zibo Xinsheng Thermal Power
Director and GM 13 April 2021 No
Shouzheng Co., Ltd.
Shandong Lulian New Materials
Guo Heng Director and GM 28 August 2021 No
Co., Ltd.
Explanatio
ns about
holding Except for independent directors, all other entities the Company’s directors, supervisors and senior management
posts in hold posts are majority-owned subsidiaries of the Company.
other
entities
Punishments imposed in the recent three years by the securities regulator on the incumbent directors, supervisors and senior
management as well as those who left in the Reporting Period:
□ Applicable Not applicable
3. Remuneration of Directors, Supervisors and Senior Management
Decision-making procedure, determination basis and actual payments of remuneration for directors, supervisors and senior
management:
The Remuneration and Appraisal Committee under the Board of Directors of the Company is liable to not only preparing appraisal
criteria for directors and senior management of the Company and appraising them, but also preparing and reviewing remuneration
policies and plans for directors and senior management of the Company, who is liable to the Board of Directors. The Remuneration
and Appraisal Committee shall propose the remuneration amount of directors and senior management according to the Company's
management condition and post performance results, and shall report to the Board of Directors for ratification after the approval by
voting.
The Controller of Financial Management Department, the Corporate Management Department and the HR Department of the
Company shall be liable to the preliminary preparation for the decision of the Remuneration and Appraisal Committee, including but
not limited to providing information such as the Company's main financial indicators and the completion of management objectives.
The Remuneration and Appraisal Committee shall confirm the annual appraisal results of directors and officers in accordance with
the completion of the Company's performance and the remuneration criteria for officers, and shall report to the Board of Directors for
ratification after the approval by voting.
The number of incumbent directors, supervisors and senior executives is 23, among which there are 19 persons actually receiving
remuneration from the Company. By 31 December 2022, the total amount of annual payment drawn from the Company by directors,
supervisors and senior executives is RMB12.4533 million (before tax).
Remuneration of directors, supervisors and senior management for the Reporting Period
Unit: RMB'0,000
Total
Any
before-tax
Incumbent remuneration
Name Office title Gender Age remunerati
/Former from related
on from the
party
Company
Liu Zibin Chairman and President Male 58 Incumbent 101.07 No
Xu Zhinan Vice Chairman Male 93 Incumbent 0.00 No
46
Lu Thai Textile Co., Ltd. Annual Report 2022
Xu Jianlyu Director Female 48 Incumbent 0.00 No
Zheng
Director Male 35 Incumbent 0.00 No
Huisheng
Liu Director, Deputy Head of Global Marketing
Male 33 Incumbent 77.76 No
Deming Department
Zhang Director, Vice president, Head of Global
Male 51 Incumbent 92.81 No
Zhanqi Marketing Department
Zhang Director, Board Secretary, Chief Accountant, Head
Male 55 Incumbent 79.62 No
Keming of Financial Management Department
Director, Chief Engineer, Executive Dean of Lu
Du Lixin Male 48 Incumbent 79.76 No
Thai Engineering Technology Research Institute
Zhou Zhiji Independent Director Male 60 Incumbent 5.70 No
Qu
Independent Director Female 54 Incumbent 5.70 No
Dongmei
Peng Yanli Independent Director Female 62 Incumbent 0.00 No
Quan
Independent Director Female 67 Incumbent 3.50 No
Yuhua
Zhang
Chairman of the Supervisory Committee Male 53 Incumbent 62.20 No
Shougang
Liu Zilong Supervisor Male 55 Incumbent 79.88 No
Dong Supervisor, Manager of Logistics Management
Male 54 Incumbent 77.62 No
Shibing Department
Wang
Head of Safety, Chairman of the Labor Union Male 60 Incumbent 90.60 No
Jiabin
Shang
President Assistant, Head of Apparel Product Line Male 50 Incumbent 78.81 No
Chenggang
Yu President Assistant, Head of Energy and
Male 55 Incumbent 79.76 No
Shouzheng Environment Protection Department
Fujiwara
GM of Japan Office Male 50 Incumbent 104.79 No
Matsuzaka
Li Wenji Head of Business Management Department Male 56 Incumbent 80.35 No
Guo Heng Head of Functional Fabric Product Line Male 51 Incumbent 79.18 No
Deputy Head of Yarn Dyed Fabric Product Line,
Lyu
and Manager of Yarn Dyed Fabric Production Male 50 Incumbent 25.76 No
Wenquan
Management Department
Xu Feng Deputy Head of Yarn Dyed Fabric Product Line Male 46 Incumbent 40.46 No
Total -- -- -- -- 1,245.33 --
VI Performance of Duty by Directors in the Reporting Period
1. Board Meeting Convened during the Reporting Period
Date of the
Meeting Disclosure date Meeting resolutions
meeting
th th
29 Meeting of the 9 Board of Two proposals, including the Proposal on Routine
24 January 2022 26 January 2022
Directors Related Transactions, were deliberated and approved.
Three proposals, including the Proposal on Granting
30th Meeting of the 9th Board of the Reserved Restricted Shares under the 2021
18 February 2022 19 February 2022
Directors Incentive Plan to the Incentive Personnel, were
deliberated and approved.
Five proposals, including the Proposal on the
Application for Comprehensive Credit Line of
31st Meeting of the 9th Board of
30 March 2022 31 March 2022 RMB800 million from the Zibo Branch of China
Directors
Minsheng Bank Co., Ltd., were deliberated and
approved.
A total of 17 proposals, including the Proposal on
32nd Meeting of the 9th Board of
27 April 2022 29 April 2022 2021 Annual Work Report of the Board of Directors,
Directors
the Proposal on 2021 Annual Work Report of the
47
Lu Thai Textile Co., Ltd. Annual Report 2022
President, and the Proposal on the Company’s 2021
Annual Report and Its Abstracts, were deliberated and
approved.
Eight proposals, including the Proposal on the
Election of the Board of Directors and the Nomination
of the Candidates for Directors of the Tenth Board of
33rd Meeting of the 9th Board of Directors, the Proposal on the Nomination of the
24 May 2022 25 May 2022
Directors Candidates for Independent Directors of the Tenth
Board of Directors, and the Proposal on the
Company’s Plan for Derivative Transaction, were
deliberated and approved.
Seven proposals, including the Proposal on the
Election of the Nominating Committee for the Tenth
1st Meeting of the 10th Board of
9 June 2022 10 June 2022 Board of Directors and the Proposal on the Election of
Directors
the Chairman and Vice Chairmans of the Tenth Board
of Directors, were deliberated and approved.
Three proposals, including the Proposal on
2nd Meeting of the 10th Board of Repurchase of the Company’s Domestically Listed
29 June 2022 30 June 2022
Directors Foreign Shares (B Share), were deliberated and
approved.
Five proposals, including the Proposal on the
Company’s 2022 Interim Report and Its Abstracts and
3rd Meeting of the 10th Board of
24 August 2022 26 August 2022 the Proposal on the 2022 Special Interim Report of
Directors
the Deposit and Use of the Raised Funds, were
deliberated and approved.
4th Meeting of the 10th Board of Two proposals, including the Proposal on the 2022
27 October 2022 29 October 2022
Directors Third Quarter Report, were deliberated and approved.
2. Attendance of Directors at Board Meetings and General Meetings
Attendance of directors at board meetings and general meetings
Total number of Board meetings Board Board The director
Board
board meetings attended by way meetings meetings failed to attend General
meetings
Director the director was of attended the director two consecutive meetings
attended on
eligible to telecommunicat through a failed to board meetings attended
site
attend ion proxy attend (yes/no)
Liu Zibin 9 9 0 0 0 No 4
Xu Zhinan 9 0 9 0 0 No 0
Liu
9 9 0 0 0 No 4
Deming
Xu Jianlyu 4 0 4 0 0 No 0
Zheng
4 0 4 0 0 No 0
Huisheng
Zhang
4 4 0 0 0 No 4
Zhanqi
Zhang
4 4 0 0 0 No 4
Keming
Du Lixin 4 4 0 0 0 No 4
Zhou Zhiji 9 3 6 0 0 No 2
Qu
9 2 7 0 0 No 1
Dongmei
Peng
4 0 4 0 0 No 0
Yanli
Quan
4 1 3 0 0 No 1
Yuhua
Why any director failed to attend two consecutive board meetings:
48
Lu Thai Textile Co., Ltd. Annual Report 2022
Not applicable.
3. Objections Raised by Directors on Matters of the Company
Indicate by tick mark whether any directors raised any objections on any matter of the Company.
□ Yes No
No such cases in the Reporting Period.
4. Other Information about the Performance of Duty by Directors
Indicate by tick mark whether any suggestions from directors were adopted by the Company.
Yes □ No
Suggestions from directors adopted or not adopted by the Company
Naught
VII Performance of Duty by Specialized Committees under the Board in the Reporting
Period
Other
Details
Numbe informat
about
r of ion
issues
Committe meetin Convene Important opinions and about
Members Content with
e gs d date suggestions raised the
objectio
conven perform
ns
ed ance of
(if any)
duty
The opinions were as
follows: (1) Preparing the
Company's financial
accounting statements in
accordance with the
Company's accounting
policies and applying
accounting policies
properly, it carried out
Mainly, the Company's accounting estimate fully
financial statements and reasonably, which
submitted to Grant conformed to the New
Thornton Certified Accounting Standard for
Zhou Public Accountants Business Enterprises,
Audit Zhiji, Qu 20 LLP for preliminary accounting system for
Committe Dongmei, 5 January audit were reviewed, enterprises and the
e and Zhang 2022 written opinions were requirements of relevant
Keming expressed, and provisions issued by the
communication with Ministry of Finance; (2)
Leader of annual audit Unit statements of the
accountant project was Company's financial
conducted. statements that were
included in the scope of
consolidation were
complete, while the
statement consolidation
basis was accurate; (3) The
financial statements of the
Company were objective,
true and accurate, without
any major misstatement or
49
Lu Thai Textile Co., Ltd. Annual Report 2022
omission; (4) And due to the
fact that there still is a
period of time from the day
for review of the financial
statements to the day for
audit report and financial
statement release, the
Financial Management
Department of the Company
was submitted to focus on
and cope with post balance
sheet events, so as to ensure
the fairness, authenticity and
integrity of the financial
statements. The Audit
Committee thought that the
financial accounting
statements could be
submitted to Annual
Certified Public Accountant
for audit according to annual
audit plan.
The following matters
were mainly audited:
(1) The Company's
2021 Annual Financial
Report audited by the
accounting firm. (2)
The opinions were as
Conclusion Report on
follows: The procedure of
the Company's Audit
financial statement
Work for the 2021
preparation was reasonable
Annual Financial
and normative as the
Report conducted by
Company conformed to the
Grant Thornton
New Accounting Standard
Certified Public
for Business Enterprises and
Accountants LLP. (3)
relevant provisions of the
Proposal on the renewal
Company's financial system,
of Grant Thornton
which fairly reflected the
Certified Public
Company's assets, liabilities,
Accountants LLP As
shareholders' equity and
27 April the Company's 2022
operating results by 31
2022 Annual Financial Audit
December 2021, which were
and Internal Control
true, accurate and complete.
Audit Institution. (4)
The Audit Committee
Report of the 2021
thought that the Company's
Annual Deposit and
2021 Annual Financial
Use of the Raised
Accounting Report that was
Funds. (5) Report on
preliminarily approved by
the Implementation of
Grant Thornton Certified
the 2021 Annual
Public Accountants LLP
Internal Audit Plan; (6)
could be submitted to the
2022 Annual Internal
32rd Meeting of the 9th
Audit Plan; (7) Special
Board of Directors for
Report of the Deposit
review.
and Use of the Raised
Funds in Q1 2022; and
(8) Report on the
Implementation of the
Internal Audit Plan for
Q1 2022
Mainly, the following The following proposals
matters were were adopted by voting at
13 deliberated: (1) Special the meeting: Special Interim
August Interim Report 2022 of Report 2022 of the Deposit
2022 the Deposit and Use of and Use of the Raised Funds
the Raised Funds. (2) and Interim Report 2022 on
Interim Report 2022 on the Implementation of
50
Lu Thai Textile Co., Ltd. Annual Report 2022
the Implementation of Internal Audit Plan.
Internal Audit Plan.
Mainly, the following
matters were The following proposals
deliberated at the were adopted by voting at
meeting: (1) Special the meeting: Special Report
17 Report on the Deposit on the Deposit and Use of
October and Use of the Raised the Raised Funds of 2022
2022 Funds of 2022 Third Third Quarter and Report on
Quarter. (2) Report on the Implementation of
the Implementation of Internal Audit Plan of 2022
Internal Audit Plan of Third Quarter.
2022 Third Quarter.
The time arrangement plan
for 2022 annual financial
audit work was unanimously
11 The time arrangement
determined at the meeting
for the Company's 2022
Novemb through the negotiation with
annual financial audit
er 2022 the 2022 annual audit
work was negotiated.
institution, Grant Thornton
Certified Public
Accountants LLP.
The following proposals
were deliberated and
The main topics of the approved by voting at the
meeting were: meeting:
(1) The Remuneration The Remuneration
Standards and Standards and Appraisal
Appraisal Plan of Lu Plan of Lu Thai Textile Co.,
Thai Textile Co., Ltd. Ltd. for Senior Management
for Senior Management Personnel and the Proposal
27 April
Personnel. of Lu Thai Textile Co., Ltd.
2022 (2) The Proposal of Lu on the Appraisal Results of
Thai Textile Co., Ltd. Directors and Senior
on the Appraisal Management Personnel in
Results of Directors 2021. Meanwhile, the
and Senior submission of the second
Management Personnel proposal to the 32nd
Peng in 2021. Meeting of the 9th Board of
Yanli, Liu Directors for deliberation
Remunera was approved.
Zibin,
tion The following proposals
Zhou 2
Committe were deliberated and
Zhiji, and The main topics of the approved by voting at the
e
Qu meeting were: meeting:
Dongmei (1) The Appraisal The Appraisal Report on the
Report on the Personal Personal Performance of the
Performance of the Incentive Personnel of the
Incentive Personnel of 2021 Restricted Share
the 2021 Restricted Incentive Scheme and the
Share Incentive Proposal on the
20 May
Scheme. Achievement of Lifting the
2022 (2) The Proposal on the Restriction Conditions in the
Achievement of Lifting First Restriction Period for
the Restriction the First Grant of the 2021
Conditions in the First Restricted Share Incentive
Restriction Period for Scheme. Meanwhile, the
the First Grant of the submission of the second
2021 Restricted Share proposal to the 33rd
Incentive Scheme. Meeting of the 9th Board of
Directors for deliberation
was approved.
Liu Zibin, The Strategic Planning The Strategic Planning of
Strategy
Xu 27 April of Lu Thai Textile for Lu Thai Textile for 2022-
Committe 1
Zhinan, 2022 2022-2026 was 2026 was approved at the
e
Liu reviewed. meeting by poll.
51
Lu Thai Textile Co., Ltd. Annual Report 2022
Deming,
Xu
Jianlyu,
Zheng
Huisheng,
Zhang
Zhanqi,
Zhang
Keming,
Du Lixin,
Zhou
Zhiji, Qu
Dongmei,
Peng
Yanli,
Quan
Yuhua
The following proposals
were approved by voting at
The main topics of the the meeting:
meeting were: The Proposal on the
(1) The Proposal on the Election of the Board of
Election of the Board of Directors and the
Directors and the Nomination of the
Nomination of the Candidates for Directors of
Candidates for the Tenth Board of Directors
20 May
Directors of the Tenth and the Proposal on the
2022 Board of Directors. Nomination of the
(2) The Proposal on the Candidates for Independent
Nomination of the Directors of the Tenth Board
Candidates for of Directors. Meanwhile, the
Qu Independent Directors submission of the two
Dongmei, of the Tenth Board of proposals to the 33rd
Liu Zibin, Directors. Meeting of the 9th Board of
Nominati Directors for deliberation
Xu
on was approved.
Zhinan, 2
Committe The Proposal on the
Zhou Nomination of the
e The main topic of the
Zhiji, Candidates for the Chairman
meeting was:
Peng and Vice Chairmans of the
(1) The Proposal on the
Yanli Board of Directors,
Nomination of the
Members of Special
Candidates for the
Committees, President, Vice
Chairman and Vice
Presidents, Chief
Chairmans of the Board
Accountant, Board
9 June of Directors, Members
Secretary, Securities Affairs
2022 of Special Committees,
Representative and other
President, Vice
Senior Management
Presidents, Chief
Personnel was deliberated
Accountant, Board
and approved at the
Secretary, Securities
meeting. In addition, it was
Affairs Representative
submitted to the First
and other Senior
Meeting of the Tenth Board
Management Personnel.
of Directors for deliberation
and approval.
VIII Performance of Duty by the Supervisory Committee
Indicate by tick mark whether the Supervisory Committee found any risk to the Company during its supervision in the Reporting
Period.
□ Yes No
52
Lu Thai Textile Co., Ltd. Annual Report 2022
The Supervisory Committee raised no objections in the Reporting Period.
IX Employees
1. Number, Functions and Educational Backgrounds of Employees
Number of in-service employees of the Company as the parent
8,608
at the period-end
Number of in-service employees of major subsidiaries at the
14,420
period-end
Total number of in-service employees 23,028
Total number of paid employees in the Reporting Period 23,028
Number of retirees to whom the Company as the parent or its
0
major subsidiaries need to pay retirement pensions
Functions
Function Employees
Production 17,149
Sales 518
Technical 4,670
Financial 104
Administrative 587
Total 23,028
Educational backgrounds
Educational background Employees
Doctor 3
Master 80
Bachelor 1,317
College 4,523
High school and below 17,105
Total 23,028
2. Employee Remuneration Policy
The Company has formulated a remuneration management system with its principle being “payment according to one’s work and
more pay for more work”. Through post evaluation and through researches of Social salary levels carried out as multi-faceted, as well
as the formulation of the reasonable salary management system, fully demonstrates the internal fairness, self-fairness and external
fairness. It has greatly motivated the employees and enhanced the corporate management.
3. Employee Training Plans
Trainings will be carried out according to requirements of the Company’s strategic development planning, improvement of
employees’ capability, performance management, employees’ career planning, etc. The annual training plan is determined by
carrying out researches on training needs. And the training courses fall into three major categories, i.e. management, technical skills
and general knowledge. Through these trainings, the Company will improve the knowledge structure of its employees, improve their
job skills and increase their comprehensive quality to provide excellent human resources for the long-term, sustained and stable
53
Lu Thai Textile Co., Ltd. Annual Report 2022
development of the Company.
4. Labor Outsourcing
Applicable □ Not applicable
Total man-hours (hour) 495,904
Total rewards paid (RMB) 10,062,747.57
X Profit Distributions (in the Form of Cash and/or Stock)
How the profit distribution policy, especially the cash dividend policy, was formulated, executed or revised in the Reporting Period:
□Applicable Not applicable
Indicate by tick mark whether the Company fails to put forward a cash dividend proposal for shareholders despite the facts that the
Company has made profits in the Reporting Period and the profits of the Company as the parent distributable to shareholders are
positive.
□Applicable Not applicable
Final dividend plan for the Reporting Period
Applicable □ Not applicable
Bonus shares for every 10 shares (share) 0
Dividend for every 10 shares (RMB) (tax inclusive) 1
Bonus issue from capital reserves (share/10 shares) 0
Total shares as the basis for the profit distribution proposal 887,633,151
(share)
Cash dividends (RMB) (tax inclusive) 86,631,432.30
Cash dividends in other forms (such as share repurchase)
85,897,953.56
(RMB)
Total cash dividends (including those in other forms) (RMB) 172529385.86
Distributable profit (RMB) 5,600,420,185.06
Total cash dividends (including those in other forms) as % of
100%
total profit distribution
Cash dividend policy
If the Company is in a mature development stage and has plans for any significant expenditure, in profit allocation, the ratio of
cash dividends in the profit allocation shall be 40% or above.
Details about the proposal for profit distribution and converting capital reserve into share capital
Based on 887,633,151 shares (including shares transferred from convertible bonds for the Reporting Period) on 31 December
2022, the cash allocated per 10 shares is RMB1.00 (including tax). The Company implemented B-share repurchase from 27 July
2022. As at the end of 31 December 2022, a total of 21,318,828 B shares were repurchased but not cancelled yet, which were
treasury shares enjoying no shareholders’ rights such as profit distribution in accordance with relevant regulations. The individual
income tax for A Share shall be subject to related regulations under CS [2015] No. 101 Notice on Certain Question about the
Differentiated Individual Income Tax Policy for Cash Dividend of Listed Companies jointly issued by Ministry of Finance, SAT,
and CSRC; and that for B Share shall be conversed to HKD based on the central parity rate on interbank exchange market released
by the People’s Bank of China on the following day after shareholder’s meeting (for domestic individual shareholders, tax is paid
pursuant to CS [2015] No. 101; for foreign shareholders, tax is free pursuant to CSZ (1994) No. 020 regulations; and non-
residential corporate shareholders is entitled to a 10% reduction of enterprise income tax according to related regulations under
Enterprise Income Tax Law of the People’s Republic of China). Since the Company is in the period of transferring convertible
bonds into shares and repurchase of B Share, the profit distribution will be conducted based on the total share capital on the equity
registration date (deducting the number of shares repurchased that have not yet been cancelled) for implementing this profit
distribution plan with no change in the amount per share.
54
Lu Thai Textile Co., Ltd. Annual Report 2022
XI Equity Incentive Plans, Employee Stock Ownership Plans or Other Incentive Measures
for Employees
Applicable □ Not applicable
1. Equity Incentive
Deliberation
No. Relevant meeting Overview of execution Disclosure index
time
It deliberated and approved the Proposal on
Granting the Reserved Restricted Shares under the
2021 Incentive Plan to the Incentive Personnel and
Proposal on Repurchase and Cancel Authorized
th but Unlocked Restricted Share of the Incentive
The 30 Meeting of
th Personnel not Conforming to the Incentive
the 9 Board of Relevant documents
th Condition. The independent directors consented
18 February Directors, The 18 published on
1 independently to relevant matters. The
2022 Meeting of the 9th http://www.cninfo.co on 19
Supervisory Committee verified the list of
Supervisory February 2022
incentive personnel reserved for granting and
Committee
issued its agreeable verification opinions. In the
meantime, the Board of Supervisors reviewed and
approved the above two proposals and issued its
written verification opinions. Beijing DHH
(Qingdao) Law Firm issued a legal opinion.
Announcement (No. 2022-
The 1st Extraordinary It deliberated and adopted the Proposal on
7 March 012) published on
2 General Meeting of Repurchase and Cancel Authorized but Unlocked
2022 http://www.cninfo.co on 8
2022 Restricted Share of Some Incentive Personnel.
March 2022
As audited and confirmed by Shenzhen Stock
Exchange and the Shenzhen Branch of China
Relevant announcement
Securities Depository and Clearing Corporation
18 March published on
3 - Limited (hereinafter referred to as "China Clear"),
2022 http://www.cninfo.co on 18
the registration of granted reserved shares of
March 2022
5,838,000 under the 2021 restricted share incentive
scheme was completed.
As audited and confirmed by Shenzhen Stock
Exchange and the Shenzhen Branch of China
Announcement (No. 2022-
Clear, the procedures of repurchasing and
031) published on
4 14 May 2022 - canceling 240,000 shares of authorized and
http://www.cninfo.co on 14
unlocked restricted share of the incentive
May 2022
personnel not conforming to the incentive
condition were completed.
The Company reviewed and approved the
Proposal on the Achievement of Lifting the
Restriction Conditions in the First Lifting
Restriction Period for the First Grant Portion of
The 33rd Meeting of the 2021 Restricted Share Incentive Scheme. The
the 9th Board of Company’s independent directors expressed their Relevant announcements
Directors, The 20th independent opinions on relevant matters. The published on
5 24 May 2022
Meeting of the 9th Board of Supervisors reviewed and approved the http://www.cninfo.co on 25
Supervisory Proposal on the Achievement of Lifting the May 2022
Committee Restriction Conditions in the First Restriction
Period for the First Grant of the 2021 Restricted
Share Incentive Scheme and expressed its written
review opinion. The number of the subjects of
incentive participating in the assessment in the first
55
Lu Thai Textile Co., Ltd. Annual Report 2022
restriction period for the first grant of the 2021
restricted share incentive scheme of the Company
were up to 735, among which 733 meet the
conditions to be released, and the total amount of
restricted shares that can be released was
9,578,000. The restricted shares released this time
were listed and traded on 8 June 2022.
It issued the Proposal of Indicative Announcement
Announcement (No. 2022-
on the Trading on the Market of Lifting the
041) published on
6 31 May 2022 - Restriction in the First Restriction Period for the
http://www.cninfo.co on 31
First Grant of the 2021 Restricted Share Incentive
May 2022
Scheme.
It deliberated and approved the Proposal on
Repurchase and Cancel Authorized but Unlocked
Restricted Share of the Incentive Personnel not
nd Conforming to the Incentive Condition. In
The 2 Meeting of
th addition, the Company's independent directors
the 10 Board of Relevant announcements
voiced their independent opinions on the relevant
Directors, The 2nd published on
7 29 June 2022 matters. The Supervisory Committee deliberated
Meeting of the 10th http://www.cninfo.co on 30
and approved the Proposal on Repurchase and
Supervisory June 2022
Cancel Authorized but Unlocked Restricted Share
Committee
of the Incentive Personnel not Conforming to the
Incentive Condition and issued a written review
opinion. Beijing DHH (Qingdao) Law Firm issued
the legal opinion.
The Company reviewed and approved the
Proposal on Repurchase and Cancel Authorized
Relevant announcements
The 3rd Extraordinary but Unlocked Restricted Share of the Incentive
published on
8 15 July 2022 General Meeting of Personnel not Conforming to the Incentive
http://www.cninfo.co on 16
2022 Condition, and released the Announcement of
July 2022
Capital Reduction on Repurchase and Cancel
Partial Shares on 16 July 2022.
As audited and confirmed by Shenzhen Stock
Exchange and the Shenzhen Branch of China
Announcement (No. 2022-
Clear, the procedures of repurchasing and
30 September 081) published on
9 - canceling 308,000 shares of authorized and
2022 http://www.cninfo.co on 30
unlocked restricted share of the incentive
September 2022
personnel not conforming to the incentive
condition were completed.
Equity incentives for directors, supervisors and senior management in the Reporting Period:
Applicable □ Not applicable
Unit: share
Exerci
se Numb
Share price er of
Numb The
Share s Share of Numb restric Numb
Marke er of grant
option feasib s exerci er of ted er of
Share Share t price releas price
s le to exerci sed restric shares restric
option option at the ed of
grante exerci sed shares ted newly ted
Office s held s held period shares restric
Name d in se during during shares grante shares
title at the at the -end for ted
the during the the held d held
period period (RMB the shares
Repor the Repor Repor at the during at the
-begin -end /share Repor (RMB
ting Repor ting ting period the period
) ting /share
Period ting Period Period -begin Repor -end
Period )
Period (RMB ting
/share Period
)
Zhang Direct 300,0 120,0 200,0 380,0
3.56
Zhanq or, 00 00 00 00
56
Lu Thai Textile Co., Ltd. Annual Report 2022
i Vice
Presid
ent,
Contr
oller
of
Globa
l
Marke
ting
Depar
tment
Direct
or,
Board
Secret
ary,
Chief
Accou
ntant,
Zhang
Contr 200,0 80,00 100,0 220,0
Kemi 3.56
oller 00 0 00 00
ng
of
Finan
cial
Mana
geme
nt
Depar
tment
Direct
or,
Chief
Engin
eer,
Execu
tive
Dean
Du of Lu 200,0 80,00 100,0 220,0
3.56
Lixin Thai 00 0 00 00
Engin
eering
Techn
ology
Resea
rch
Institu
te
Senior
Wang mana 300,0 120,0 180,0
Jiabin geme 00 00 00
nt
Shang Senior
mana 200,0 80,00 100,0 220,0
Cheng 3.56
geme 00 0 00 00
gang nt
Yu Senior
200,0 80,00 100,0 220,0
Shouz mana 3.56
geme 00 0 00 00
heng
57
Lu Thai Textile Co., Ltd. Annual Report 2022
nt
Senior
Li mana 200,0 80,00 100,0 220,0
3.56
Wenji geme 00 0 00 00
nt
Senior
Guo mana 200,0 80,00 100,0 220,0
3.56
Heng geme 00 0 00 00
nt
Lyu Senior
mana 150,0 60,00 50,00 140,0
Wenq 3.56
geme 00 0 0 00
uan nt
Senior
Xu mana 150,0 60,00 100,0 190,0
3.56
Feng geme 00 0 00 00
nt
2,100, 840,0 950,0 2,210,
Total -- 0 0 0 0 -- 0 -- --
000 00 00 000
Appraisal of and incentive for senior management
During the Reporting Period, the Company constantly improved the performance evaluation mechanism and made the evaluation
and incentive of the Senior Executives concerned with the Company’s performances and the individual working results. According
to the overall development strategy and the annual operating target of the Company at the period-begin, the Company confirms the
annual performance comprehensive indication and the management duty of each Senior Executives, and executes the performance
examination and the redemption of the rewards and punishment for the Senior Executives by the Remuneration and Examination
Committee affiliated to the Board of Directors at the year-end. The Company will constantly improve the evaluation and incentive
mechanism that to tightly concern the salary of the Senior Executives with the management level and the operating performance so
that to fully mobilize and inspire the initiative and creativity of them.
2. Implementation of Employee Stock Ownership Plans
□Applicable Not applicable
3. Other Incentive Measures for Employees
Applicable □ Not applicable
On 18 March 2022, the Company completed the granted registration of the reserved shares of 2021 restricted share incentive
scheme, and also granted 4,888,000 reserved shares of the restricted shares to 334 middle management and core members in
addition to the above directors and senior management.
XII Establishment and Execution of the Internal Control System for the Reporting Period
1. Establishment and Execution of the Internal Control System
According to Fundamental Norms for Internal Control of Enterprises, Supporting Guidelines for Internal Control of Enterprises and
relevant provisions prescribed by securities regulators for the internal control establishment of listed companies, combining the actual
status of the Company's business, the Company established the internal control system that covers all stages including production and
management, as well as adapts to the Company's management requirements and development needs. It is relatively normative and
complete, for which its organization is complete and reasonably designed, its implementation is basically effective, and there is no
substantial omission, so as to ensure that the Company's operation and management is legal and compliant, the assets are safe, and
the financial reports and related information are true and complete, and maintain the fundamental interests of all shareholders of the
Company.
58
Lu Thai Textile Co., Ltd. Annual Report 2022
Within Reporting Period, relevant systems and procedures were timely streamlined and optimized and the sound operation of risk
management and internal control system was ensured by the Company in line with the change of all business procedures and audit
results, without any violation of laws, regulations or Articles of Incorporation.
2. Material Internal Control Weaknesses Identified for the Reporting Period
□Yes No
XIII Management and Control over Subsidiaries by the Company for the Reporting Period
Integration Countermeasur Settlement Follow-up
Subsidiary Integration plan Problem
progress es taken progress settlement plan
- - - - - - -
XIV Internal Control Self-Evaluation Report or Independent Auditor’s Report on Internal
Control
1. Internal Control Self-Evaluation Report
Disclosure date of the internal control
12 April 2023
self-evaluation report
For details, please refer to the Self-appraisal Report on Internal Control of Lu Thai
Index to the disclosed internal control
Textile Co., Ltd. simultaneously disclosed on www.cninfo.com.cn with the 2022
self-evaluation report
Annual Report of the Company.
Evaluated entities’ combined assets as %
89.03%
of consolidated total assets
Evaluated entities’ combined operating
revenue as % of consolidated operating 87.72%
revenue
Identification standards for internal control weaknesses
Weaknesses in internal control over Weaknesses in internal control not
Type
financial reporting related to financial reporting
Great defect: (1) malpractices of the Great defect: (1) seriously violated the
Directors, Supervisors and Senior national laws and regulations; (2) the
Executives; (2) the CPA founded the decision-making of the enterprise was
current financial report occurred not scientific that led to the serious
significant misstatement while during the mistakes of itself; (3) outflow of the
implementation process of the internal management personnel or the technician
control could not founded the personnel was serious; (4) frequently
misstatement; (3) the supervision of the appeared the negative news from the
Audit Committee and the internal audit Media; (5) the significant business
institution of the Company on the lacked of systematic control or the
internal control was invalid. (4) other systematic control was invalid; (6) the
defects that may cause the Company to result of the internal control assessment
deviate significantly from its control which was the great defect event had not
Nature standard
objectives. Significant defeat: (1) had not been revised. Significant defeat: (1)
abide by the generally accepted violated the enterprise internal
accounting principles to choose and regulations that caused rather serious
apply the accounting policies; had not losses; (2) significant business lacked of
built up the anti-fraud and significant systematic control; (3) outflow of the
counterbalance mechanism and control rather important personnel was serious;
measures; (2) during the financial report (4) the Media reported the negative news
process, there occurred single or multiple that caused rather serious negative
defects which not reached the influence; (5) rather important business
recognition standard of the significant lacked of systematic control or the
defeat but influenced the true and systematic control was invalid; (6) the
accurate target of the financial report. results of the internal control assessment
General defect: other internal control which as the significant defect had not
59
Lu Thai Textile Co., Ltd. Annual Report 2022
defect which had not constructed as the been revised. General defect: other
great defeat, significant defect. internal control defect which had not
constructed as the great defeat,
significant defect.
Great defect: misstatement≥0.4% of the
total operating income;
Great defect: losses≥0.4% of the total
misstatement≥0.4% of the total owners’
operating income; losses≥0.4% of the
equities amount; misstatement≥0.3% of
total owners’ equities amount;
the total assets amount. Not insignificant:
losses≥0.3% of the total assets amount.
0.2% of the total operating
Great defect: 0.2% of the total operating
income;≤misstatement ＜ 0.4% of the
income≤losses ＜ 0.4% of the total
total operating income; 0.2% of the total
operating income; 0.2% of the total
owners’ equities amount≤misstatement
Quantitative standard owners’ equities amount ≤losses＜0.4%
＜ 0.4% of the total owners’ equities
of the total owners’ equities amount;
amount; 0.15% of the total assets
0.15% of the total assets amount≤losses
amount≤misstatement＜0.3% of the total
＜ 0.3% of the total assets amount.
assets amount. Insignificant:
General defect: losses <0.2% of the total
misstatement < 0.2% of the total
operating income; losses < 0.2% of the
operating income; misstatement < 0.2%
total owners’ equities amount; losses <
of the total owners’ equities amount;
0.15% of the total assets amount.
misstatement < 0.15% of the total assets
amount.
Number of material weaknesses in
0
internal control over financial reporting
Number of material weaknesses in
internal control not related to financial 0
reporting
Number of serious weaknesses in
0
internal control over financial reporting
Number of serious weaknesses in
internal control not related to financial 0
reporting
2. Independent Auditor’s Report on Internal Control
Applicable □ Not applicable
Opinion paragraph in the independent auditor’s report on internal control
All shareholders of Lu Thai Textile Co., Ltd.:
According to Audit Guidelines for Enterprise Internal Control and the relevant requirements of Auditing Standards for Chinese
Certified Public Accountants, we have audited the effectiveness of internal control in the financial report of Lu Thai Textile Co.,
Ltd. (Hereinafter referred to as "Lu Thai Textile”) by 31 December 2022.
I. Responsibilities of Lu Thai Textile for internal control
The Board of Directors of Lu Thai Textile is responsible for establishing, improving and implementation the internal controls and
evaluating its effectiveness in accordance with Standard for Enterprise Internal Control, Application Guidelines for Enterprise
Internal Control, Enterprise Internal Control Audit Guidelines.
II. Responsibilities of certified public accountants
It is our responsibility to issue an audit opinion on the effectiveness of internal controls in financial report on the basis of the
implementation of the audit, and to disclose significant deficiencies in the internal controls of non-financial reports that have been
noted.
III. Inherent limitations of internal control
Internal control has inherent limitations, and there is a possibility that misreporting cannot be prevented. In addition, because the
change of circumstances may cause the internal control to become inappropriate or the degree of compliance with the control
policies and procedures is reduced, it is risky to infer the effectiveness of the future internal control based on the audit results of
the internal control.
IV. Audit Opinion on Internal Control in Financial Report
We believe that Lu Thai Textile Co., Ltd. kept effectively internal control on financial reporting in all respects according to
Enterprise Internal Control Basic Specification and the relevant provisions on 31 December 2022.
Independent auditor’s report on Disclosed
60
Lu Thai Textile Co., Ltd. Annual Report 2022
internal control disclosed or not
Disclosure date 12 April 2023
For details, please refer to the Auditor’s Report on Internal Control on
Index to such report disclosed
www.cninfo.com.cn at the same time of disclosing the Company’s 2022 Annual Report.
Type of the auditor’s opinion Unmodified unqualified opinion
Material weaknesses in internal
control not related to financial None
reporting
Indicate by tick mark whether any modified opinion is expressed in the independent auditor’s report on the Company’s internal
control.
□Yes No
Indicate by tick mark whether the independent auditor’s report on the Company’s internal control is consistent with the internal
control self-evaluation report issued by the Company’s Board.
Yes □No
XV Rectifications of Problems Identified by Self-inspection in the Special Action for Listed
Company Governance
Not applicable.
61
Lu Thai Textile Co., Ltd. Annual 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
Policies and industry standards pertaining to environmental protection
During production and operation, Lu Thai Textile Co., Ltd. and its holding subsidiaries, LuFeng Company Limited and Shandong
Lulian New Materials Co., Ltd., its wholly owned subsidiary, Zibo Xinsheng Thermal Power Co., Ltd., are subject to the following
laws and regulations and industry standards related to environmental protection: The Environmental Protection Law of the
People’s Republic of China, the Law of the People’s Republic of China on Prevention and Control of Water Pollution, the Law of
the People’s Republic of China on the Prevention and Control of Atmospheric Pollution, the Law of the People’s Republic of
China on the Prevention and Control of Solid Waste Pollution, the Contingency Management Measures for Environmental
Emergencies, the Emission Standards of Water Pollutants in Textile Dyeing and Finishing Industry (GB4287-2012), the Standard
for Pollution Control on the Municipal Solid Waste Incineration (GB18485-2014), and the Emission Standard of Air Pollutants of
Thermal Power Plants (DB37/664-2019).
Status of environmental protection administrative license
In 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 have been put into production.
The holding subsidiary Shandong Lulian New Materials Co., Ltd. obtained the Review Opinion on the Environmental Impact
Report on the Functional Fabric Smart Eco-park Project (Phase I) of Shandong Lulian New Materials Co., Ltd. (Zihuanshen
[2019] No. 56) and the phase I of the project has been put into use.
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) and the phase II of the expansion project has been completed and been put into production.
The regulations for industrial emissions and the particular requirements for controlling pollutant emissions those are associated
with production and operational activities.
Discharg
Discharg
Type of Name of Number Distribut e Approve Excessiv
Way of e Total
Name of major major of ion of standard d total e
discharg concentr discharg
polluter pollutant pollutant discharg discharg s discharg discharg
e ation/int e
s s e outlets e outlets impleme e e
ensity
nted
Chief Emissio
COD discharg n COD: COD:
Continu COD≤20 394.839t
e outlet standard 1495.08t
Lu Thai and 0mg/L;a
of of water ; ；
ous mmonia
Textile Sewage ammoni 2 Huangjia pollutant ammoni ammoni No
nitrogen
discharg pu s in a a
≤20mg/
Co., Ltd a Industria textile nitrogen: nitrogen:
L
e l Park ; dyeing 149.51t
nitrogen 7.195t
chief and
62
Lu Thai Textile Co., Ltd. Annual Report 2022
discharg finishing
e outlet industry
of East GB
Zone 4287-
2012
Emissio
n
standard
COD Chief of water COD： COD is
LuFeng Continu discharg COD≤20 pollutant 195.233t 653.53t
and e outlet 0mg/L;a s in ； ；
Compan ous of mmonia textile
Sewage ammoni 1 ammoni ammoni No
LuFeng nitrogen dyeing
y discharg Compan ≤20mg/ and a a
a nitrogen: nitrogen
y L finishing
Limited e is 65.3t
nitrogen Limited industry 3.485t
GB
4287-
2012
Emissio
n
standard
Chief of water
COD COD≤20 COD： COD is
Shandon discharg pollutant
Continu 0mg/L; 20.773t 175.30t
g Lulian and e outlet s in
ammoni ； ；
New ous of textile
Sewage ammoni 1 a ammoni ammoni No
Material Lulian dyeing
discharg nitrogen a a
s Co., a New and
≤20mg/ nitrogen: nitrogen
Ltd. e Material finishing
nitrogen L 0.213t is 17.5t
s industry
GB
4287-
2012
Emissio
n
SO2： standard
Organize
≤35mg/ of air
Zibo pollutant SO2: SO2 is
d m3、
Xinshen SO2, s of 32.58t, 236.13t/
g Waste continuo Producti NQx： Thermal NQx :10 a, NQx :
NQx, 4
on plant ≤50mg/ Power 674.63t/ No
Thermal gas 0.1t,
us m3, Plant in a, PM:
Power and PM PM： PM:
Shandon 67.47t/a.
Co., Ltd. discharg ≤5mg/m 3.612t
g
3 Province
e
DB37/6
64-2019
Treatment of pollutants
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”) and Shandong Lulian New Materials Co., Ltd. (hereinafter
referred to as “Lulian New Materials”) 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. and Shandong Lulian New
Materials Co., Ltd. continuously optimize the dyeing waste water treatment progress, improve the treated water quality, ensure that
the pollutant emission concentration is better than the national standard, further improve 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
63
Lu Thai Textile Co., Ltd. Annual Report 2022
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.
Emergency plan for environmental incidents
In order to prevent environmental pollution accidents, the Company and the holding subsidiary Lufeng Weaving & Dyeing and
Lulian New Materials 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.
Environmental self-monitoring program
In accordance with the requirements of the competent environment authorities, the Company and the holding subsidiary Lufeng
Weaving & Dyeing and Lulian New Materials 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 as required by emission permit. In addition, they invited a qualified testing
institution to conduct tests on sewage and waste gas based on the frequency of monitoring, disclosed the monitoring data in time,
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.
Input in environment governance and protection and payment of environmental protection tax
During the Reporting Period, the input in environment governance and protection and payment of environmental protection tax for
the Company and the holding subsidiary Lufeng Weaving & Dyeing and Lulian New Materials are RMB65,933,700 in total,
among which, RMB64,802,600 for input in environment governance and protection and RMB1,131,100 for payment of
environmental protection tax.
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 2022 was decline
16.22% compared with 2021 through operation mode adjustment, energy conservation improvement and unit efficiency
enhancement.
Administrative penalties imposed for environmental issues during the Reporting Period
Influence on
Rectification
Name Reason Case Result production and
measures
operation
64
Lu Thai Textile Co., Ltd. Annual Report 2022
N/A N/A N/A N/A N/A N/A
Other environment information that should be disclosed
No
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.
Related environmental accidents information
No
II Social Responsibility
The Company has prepared the Sustainability Report 2022, and for more details, please refer to the Sustainability Report 2022
simultaneously disclosed with the Annual Report 2022.
III Consolidation and Expansion of Poverty Alleviation Outcomes, and Rural Revitalization
Not applicable
65
Lu Thai Textile Co., Ltd. Annual Report 2022
Part VI Significant Events
I Fulfillment of Commitments
1. 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
Dilution of
Company's public offering of
at sight
A-share convertible corporate
Controllin returns on
Commitment bonds, if the CSRC makes
s made in g public From 23 May
other new regulatory
time of IPO shareholde offering A- 23 May 2019 2019 to 8 On-going
or provisions on remedial
refinancing r, actual share April 2026
measures for returns and the
controller convertible
commitment, and the above
corporate
commitment fails to meet the
bonds
requirements of the CSRC,
the company / I promise to
issue supplementary
commitment then in
accordance with the latest
regulations of CSRC. 3.
Commitment is made to
fulfill the Company's relevant
remedial measures for returns
66
Lu Thai Textile Co., Ltd. Annual Report 2022
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.
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
Dilution of
strict supervision and
at sight
management of the Company
Directors returns on
Commitment to avoid waste or excessive
s made in and senior public From 23 May
consumption. Any position-
time of IPO manageme offering A- 23 May 2019 2019 to 8 On-going
or related consumption
refinancing nt of the share April 2026
behaviors of me will occur
Company convertible
within the scope necessary
corporate
for the performance of my
bonds
duties. 3. Commitment is
made not to use the
Company's assets to engage
in investment and
consumption activities
unrelated to the performance
of duties. 4. Commitment is
made that the remuneration
system developed by the
Board of Directors or the
67
Lu Thai Textile Co., Ltd. Annual Report 2022
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 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
68
Lu Thai Textile Co., Ltd. Annual Report 2022
in accordance with the law.
Executed on
Not
time or not
2. Where there had been an earnings forecast for an asset or project and the Reporting Period was still
within the forecast period, explain why the forecast has been reached for the Reporting Period.
□Applicable Not applicable
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 Explanations Given by the Board of Directors Regarding the Latest “Modified Opinion”
on the Financial Statements
□Applicable Not applicable
V Explanations Given by the Board of Directors, the Supervisory Board and the
Independent Directors (if any) Regarding the Independent Auditor's “Modified Opinion”
on the Financial Statements of the Reporting Period
□Applicable Not applicable
VI YoY Changes to Accounting Policies, Estimates or Correction of Material Accounting
Errors
□Applicable Not applicable
No such cases in the Reporting Period.
VII YoY Changes to the Scope of the Consolidated Financial Statements
Applicable □ Not applicable
The Company incorporated a new subsidiary LTCL and subscribed for Yuanhui Fund during the year.
VIII Engagement and Disengagement of Independent Auditor
Current independent auditor:
69
Lu Thai Textile Co., Ltd. Annual Report 2022
Name of the domestic independent auditor Grant Thornton China (Special General Partnership)
The Company’s payment to the domestic independent auditor
173.5
(RMB’0,000)
How many consecutive years the domestic independent auditor
4
has provided audit service for the Company
Names of the certified public accountants from the domestic
Cui Xiaoli, He Feng
independent auditor writing signatures on the auditor’s report
How many consecutive years the certified public accountants
3
have provided audit service for the Company
Indicate by tick mark whether the independent auditor was changed for the Reporting Period.
□Yes No
Independent auditor, financial advisor or sponsor engaged for the audit of internal controls:
Applicable □ Not applicable
The Company held the 2021 Annual General Meeting on 20 May 2022 and approved the Proposal on Renewal Engagement of the
2022 Financial Audit and Internal Control Auditor and decided to renew the contract with Grant Thornton China (Special General
Partnership) for 2022 financial audit and internal control affairs and paid RMB1.735 million in total for 2021 financial report audit
and the internal control audit.
IX Possibility of Delisting after Disclosure of this Report
□Applicable Not applicable
X Insolvency and Reorganization
□Applicable Not applicable
No such cases in the Reporting Period.
XI Major Legal Matters
□Applicable Not applicable
No such cases in the Reporting Period.
XII Punishments and Rectifications
□Applicable Not applicable
No such cases in the Reporting Period.
XIII Credit Quality of the Company as well as Its Controlling Shareholder and Actual
Controller
□Applicable Not applicable
XIV Major Related-Party Transactions
1. Continuing Related-Party Transactions
□Applicable Not applicable
No such cases in the Reporting Period.
70
Lu Thai Textile Co., Ltd. Annual Report 2022
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
No such cases in the Reporting Period.
5. Transactions with Related Finance Companies
□Applicable Not applicable
The Company did not make deposits in, receive loans or credit from and was not involved in any other finance business with any
related finance company or any other related parties.
6. Transactions with Related Parties by Finance Companies Controlled by the Company
□Applicable Not applicable
The finance company controlled by the Company did not make deposits, receive loans or credit from and was not involved in any
other finance business with any related parties.
7. Other Major Related-Party Transactions
□Applicable Not applicable
No such cases in the Reporting Period.
XV 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.
71
Lu Thai Textile Co., Ltd. Annual Report 2022
(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
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
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
Three
years
since the
Wholly-
26 24 approval
owned 26,465.4 12,605.9
August August of the No Yes
subsidiar 8 3
2022 2022 board of
y
the
Compan
y
Total approved line Total actual amount
for such guarantees of such guarantees in
22,983.18 12,605.93
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 26,465.48 the end of the 12,605.93
Reporting Period Reporting Period
(B3) (B4)
72
Lu Thai Textile Co., Ltd. Annual Report 2022
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
22,983.18 12,605.93
Reporting Period the Reporting Period
(A1+B1+C1) (A2+B2+C2)
Total actual
Total approved
guarantee balance at
guarantee line at the
26,465.48 the end of the 12,605.93
end of the Reporting
Reporting Period
Period (A3+B3+C3)
(A4+B4+C4)
Total actual guarantee amount (A4+B4+C4)
1.40%
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
or indirectly for obligors with an over 70% 0
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
73
Lu Thai Textile Co., Ltd. Annual Report 2022
3. Cash Entrusted for Wealth Management
(1) Cash Entrusted for Wealth Management
Applicable □ Not applicable
Overviews of cash entrusted for wealth management during the Reporting Period
RMB’0,000
Overdue amount with
Undue
Specific type Capital resources Amount incurred Overdue amount provision for
Balance
impairment
Brokerage
financial Raised funds 21,000 9,000 0 0
products
Others Self-owned funds 20,000 20,000 0 0
Total 41,000 29,000 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
(2) Entrusted Loans
□Applicable Not applicable
No such cases in the Reporting Period.
4. Other Major Contracts
□Applicable Not applicable
No such cases in the Reporting Period.
XVI 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
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 overseas production line project of high-grade fabrics (Phase I). 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
74
Lu Thai Textile Co., Ltd. Annual Report 2022
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.
XVII Significant Events of Subsidiaries
□Applicable Not applicable
75
Lu Thai Textile Co., Ltd. Annual 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% 10,195,34 4,357,34 20,647,892 2.33%
0
shares 5 5
1. Shares
held by State
2. Shares
held by
state-owned
legal person
3. Shares
- -
held by other 5,838,00
25,005,237 2.83% 10,195,34 4,357,34 20,647,892 2.33%
0
domestic 5 5
investors
Among
which:
Shares held
by domestic
legal person
Shares held
- -
by domestic 5,838,00
25,005,237 2.83% 10,195,34 4,357,34 20,647,892 2.33%
0
natural 5 5
person
4. Shares
held by other
0
foreign
investors
76
Lu Thai Textile Co., Ltd. Annual Report 2022
Among
which:
Shares held 0
by foreign
corporations
Shares held
by foreign 0
natural
person
II.
857,336,05 9,649,20 866,985,25
Unrestricted 97.17% 9,649,201 97.67%
8 1 9
shares
1. RMB
561,285,34 9,519,22 570,804,56
ordinary 63.61% 9,519,226 64.31%
2 6 8
shares
2.
Domesticall
296,050,71 296,180,69
y listed 33.55% 129,975 129,975 33.37%
6 1
foreign
shares
3. Overseas
listed
0
foreign
shares
4. Other 0
III. Total 882,341,29 5,838,00 5,291,85 887,633,15
100.00% -546,144 100.00%
5 0 6 1
shares
Reasons for share changes:
Applicable □ Not applicable
a) On 18 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 Securities Depository and Clearing Corporation Limited.
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 31 December 2022.
c) On 8 June 2022, 9,578,000 shares of equity incentive restricted shares were lifted from restriction.
d) 548,000 shares of equity incentive restricted shares were repurchased and canceled.
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:
77
Lu Thai Textile Co., Ltd. Annual Report 2022
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.
d) On 29 June 2022, the Proposal on Repurchase and Cancel Authorized but Unlocked Restricted Share of the Incentive Personnel
not Conforming to the Incentive Condition was deliberated and approved at the second Meeting of the Tenth Board of Directors of
the Company, as eight of the incentive personnel of the 2021 restricted share incentive scheme no longer met the condition of
being incentive personnel due to resignation, retirement, or position changes. The restricted shares held by the eight personnel with
a volume of 308,000 shares, which were authorized but not lifted from restricted sales, shall be repurchased and cancelled by the
Company in accordance with the 2021 Restricted Share Incentive Scheme (hereinafter referred to as the “Incentive Scheme”) of the
Company and relevant provisions of laws and regulation. The aforesaid matters were deliberated and approved at the third
Extraordinary General Meeting of the Company in 2022 that was held on 15 July 2022.
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 Securities Depository and Clearing Corporation Limited,
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 Securities Depository and Clearing Corporation Limited on 14 May 2022. The Company completed the procedures of
repurchasing and canceling 308,000 shares of restricted share at the Shenzhen Branch of China Securities Depository and Clearing
Corporation Limited on 30 September 2022.
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 "VI 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
78
Lu Thai Textile Co., Ltd. Annual Report 2022
2. Changes in Restricted Shares
Applicable □ Not applicable
Unit: share
Restricted Restricted Restricted Restricted
Name of the shares shares shares shares Restricted shares relieved
Restricted reasons
shareholders amount at the increased of relieved of amount at the date
period-begin the period the period period-end
The Company shall
Locked public implement the provisions
shares held by on restricted shares by
Liu Zibin 111,217 111,217
senior directors, supervisors and
management senior management within
tenure
The Company shall
Locked public
implement the provisions
shares held by
on restricted shares by
senior
directors, supervisors and
Zhang Zhanqi 360,225 245,000 120,000 485,225 management and
senior management within
Restricted shares
tenure, and lift the lock-up
from equity
in batches according to the
incentive
share incentive scheme
The Company shall
Locked public
implement the provisions
shares held by
on restricted shares by
senior
directors, supervisors and
Zhang Keming 258,275 130,000 80,000 308,275 management and
senior management within
Restricted shares
tenure, and lift the lock-up
from equity
in batches according to the
incentive
share incentive scheme
The Company shall
Locked public
implement the provisions
shares held by
on restricted shares by
senior
directors, supervisors and
Du Lixin 200,000 130,000 80,000 250,000 management and
senior management within
Restricted shares
tenure, and lift the lock-up
from equity
in batches according to the
incentive
share incentive scheme
The Company shall
Locked public implement the provisions
Zhang shares held by on restricted shares by
54,825 54,825
Shougang senior directors, supervisors and
management senior management within
tenure
The Company shall
Locked public implement the provisions
shares held by on restricted shares by
Liu Zilong 7,500 7,500
senior directors, supervisors and
management senior management within
tenure
The Company shall
Locked public implement the provisions
shares held by on restricted shares by
Dong Shibing 3,750 3,750
senior directors, supervisors and
management senior management within
tenure
79
Lu Thai Textile Co., Ltd. Annual Report 2022
The Company shall
Locked public
implement the provisions
shares held by
on restricted shares by
senior
directors, supervisors and
Wang Jiabin 362,775 45,000 120,000 287,775 management and
senior management within
Restricted shares
tenure, and lift the lock-up
from equity
in batches according to the
incentive
share incentive scheme
The Company shall
Locked public
implement the provisions
shares held by
on restricted shares by
senior
Shang directors, supervisors and
222,500 130,000 80,000 272,500 management and
Chenggang senior management within
Restricted shares
tenure, and lift the lock-up
from equity
in batches according to the
incentive
share incentive scheme
The Company shall
Locked public
implement the provisions
shares held by
on restricted shares by
senior
directors, supervisors and
Yu Shouzheng 262,325 130,000 80,000 312,325 management and
senior management within
Restricted shares
tenure, and lift the lock-up
from equity
in batches according to the
incentive
share incentive scheme
The Company shall
Locked public
implement the provisions
shares held by
on restricted shares by
senior
directors, supervisors and
Li Wenji 207,500 130,000 80,000 257,500 management and
senior management within
Restricted shares
tenure, and lift the lock-up
from equity
in batches according to the
incentive
share incentive scheme
The Company shall
Locked public
implement the provisions
shares held by
on restricted shares by
senior
directors, supervisors and
Guo Heng 200,000 130,000 80,000 250,000 management and
senior management within
Restricted shares
tenure, and lift the lock-up
from equity
in batches according to the
incentive
share incentive scheme
The Company shall
Locked public
implement the provisions
shares held by
on restricted shares by
senior
directors, supervisors and
Lyu Wenquan 150,000 60,000 60,000 150,000 management and
senior management within
Restricted shares
tenure, and lift the lock-up
from equity
in batches according to the
incentive
share incentive scheme
The Company shall
implement the provisions
on restricted shares by
Restricted shares
directors, supervisors and
Xu Feng 150,000 100,000 60,000 190,000 from equity
senior management within
incentive
tenure, and lift the lock-up
in batches according to the
share incentive scheme
Wang Fangshui 110,065 110,065 Release of locked The Company shall
80
Lu Thai Textile Co., Ltd. Annual Report 2022
public shares held implement the provisions
by senior on restricted shares by
management directors, supervisors and
senior management
The Company shall
Release of locked
implement the provisions
public shares held
Qin Guiling 94,906 31,636 126,542 on restricted shares by
by senior
directors, supervisors and
management
senior management
The Company shall
implement the provisions
Release of locked on restricted shares by
Zhang public shares held directors, supervisors and
369,375 -156,875 212,500
Hongmei by senior senior management,
management repurchase and cancellation
according to the share
incentive scheme
The Company shall
Release of locked
implement the provisions
Zhang public shares held
39,112 13,038 52,150 on restricted shares by
Jianxiang by senior
directors, supervisors and
management
senior management
The Company shall
Release of locked
implement the provisions
public shares held
Lyu Yongchen 19,012 19,012 on restricted shares by
by senior
directors, supervisors and
management
senior management
The Company shall
Release of locked
implement the provisions
Wang public shares held
16,875 16,875 on restricted shares by
Changzhao by senior
directors, supervisors and
management
senior management
Other subjects
Restricted shares Lift the lock-up in batches
of restricted
21,805,000 4,520,000 8,618,000 17,707,000 from equity according to the share
share incentive
incentive incentive scheme
scheme in 2021
Total 25,005,237 5,637,799 9,995,144 20,647,892 -- --
II. Issuance and Listing of Securities
1. Securities (Exclusive of Preferred Shares) Issued in the Reporting Period
Applicable □ Not applicable
Name of
Stock and issue Approved Termination
Issue Issue Listing Disclosure
derivative price amount date for Disclosure index
date amount date date
securities (interest) for listing trading
thereof
Stock
Refer to the announcement
22 22
(No.: 2022-013) disclosed on 18 March
LTTC March 3.56 5,838,000 March 5,838,000
http://www.cninfo.com.cn/ 2022
2022 2022
on 18 March 2022.
Convertible corporate bonds, convertible corporate bonds separately traded and corporate bonds
Other derivative securities
81
Lu Thai Textile Co., Ltd. Annual Report 2022
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 Securities Depository and Clearing Corporation Limited, 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.
2. Changes to Total Shares, Shareholder Structure and Asset and Liability Structures
Applicable □ Not applicable
At the beginning of 2022, the Company possessed 882,341,295 shares in total (586,103,154 A shares and 296,238,141 B shares
inclusive). The Company’s reserved restricted shares under the 2021 incentive plan completed the direct issuance of 5,838,000
restricted ordinary A shares to the incentive personnel on 18 March 2022. As convertible bonds of Lu Thai were converted to 1,856 A
shares cumulatively from 1 January 2022 to 31 December 2022, the repurchasing and canceling 548,000 shares of equity incentive
restricted stock was completed. By 31 December 2022, the Company possessed 887,633,151 shares in total (591,395,010 A shares
and 296,238,141 B shares inclusive), which had no significant impact on the Company's assets and liability structure.
3. Existing Staff-Held Shares
□Applicable Not applicable
III Shareholders and Actual Controller
1. Total Number of Shareholders and Their Shareholdings
Unit: share
Number of Number of
ordinary preferred
Number of preferred
shareholder shareholder
Number of shareholders with
s at the s with
ordinary resumed voting rights at
51,905 month-end 49,096 resumed 0 0
shareholder the month-end prior to the
prior to the voting
s disclosure of this Report
disclosure rights (if
(if any) (see note 8)
of this any) (see
Report note 8)
5% or greater shareholders or top 10 shareholders
Increase/de Shares in pledge, marked
Total
Shareholdi crease in Unrestricte or frozen
Name of Nature of shares held Restricted
ng the d shares
shareholder shareholder at the shares held
percentage Reporting held Status Shares
period-end
Period
Zibo Domestic
Lucheng non-state-
140,353,58 140,353,58
Textile owned 15.81% 0 0
Investment legal 3 3
Co., Ltd. person
Tailun Foreign 13.32% 118,232,40 0 0 118,232,40
82
Lu Thai Textile Co., Ltd. Annual Report 2022
(Thailand) legal 0 0
Textile Co., person
Ltd.
Central
State-
Huijin
owned
Assets 2.24% 19,884,100 0 0 19,884,100
legal
Manageme
person
nt Co., Ltd.
National
Domestic
Social
non-state-
Security
owned 1.49% 13,260,051 3,450,000 0 13,260,051
Fund
legal
Portfolio
person
413
Dacheng
China
Securities
Other 0.59% 5,235,900 0 0 5,235,900
Asset
Manageme
nt Plan
GF China
Securities
Asset Other 0.59% 5,235,900 0 0 5,235,900
Manageme
nt Plan
ICBC
Credit
Suisse
Innovation
Power Other 0.57% 5,100,000 1,500,000 0 5,100,000
Stock Type
Securities
Investment
Fund
FEDERAT
ED
HERMES
GLOBAL
INVESTM
ENT FD
(CAYMA
N)
MASTER,
SPC Foreign
OBOAFTA legal 0.52% 4,623,374 395,587 0 4,623,374
O person
FEDERAT
ED
HERMES
EMG
ASIA
EQUITY
FD
MASTER
S.P.
Harvest
China
Securities
Other 0.50% 4,460,200 -775,700 0 4,460,200
Asset
Manageme
nt Plan
Yinhua Other 0.49% 4,392,312 -843,588 0 4,392,312
83
Lu Thai Textile Co., Ltd. Annual Report 2022
China
Securities
Asset
Manageme
nt 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- controller. Tailun (Thailand) Textile Co., Ltd. is the second largest shareholder as well as sponsor of
concert parties among the foreign capital of the Company. All of other shareholders are people holding public A share or
public B share and the Company is not able to confirm whether there is associated relationship or
shareholders above concerted action among other shareholders.
Explain if any of the
shareholders above was
involved in
Naught
entrusting/being entrusted
with voting rights or
waiving voting rights
Special account for share
repurchases (if any) As of 31 December 2022, there are 21,318,828 shares in the special repurchase account of the
Company
among the top 10
shareholders (see note 10)
Top 10 unrestricted shareholders
Shares by type
Name of shareholder Unrestricted shares held at the period-end
Type Shares
RMB
Zibo Lucheng Textile 140,353,58
140,353,583 ordinary
Investment Co., Ltd. 3
share
Domestical
Tailun (Thailand) Textile ly 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
13,260,051 ordinary 13,260,051
Fund Portfolio 413
share
RMB
Dacheng China Securities
5,235,900 ordinary 5,235,900
Asset Management Plan
share
GF China Securities Asset 5,235,900 RMB 5,235,900
84
Lu Thai Textile Co., Ltd. Annual Report 2022
Management Plan
ordinary
share
ICBC Credit Suisse
RMB
Innovation Power Stock
5,100,000 ordinary 5,100,000
Type Securities share
Investment Fund
FEDERATED HERMES
GLOBAL INVESTMENT
FD (CAYMAN) Domestical
MASTER, SPC ly listed
4,623,374 4,623,374
OBOAFTAO 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
RMB
Yinhua China Securities
4,392,312 ordinary 4,392,312
Asset Management Plan
share
Related or acting-in-
concert parties among top
10 unrestricted public Zibo Lucheng Textile Investment Co., Ltd. is the largest shareholder and the actual controller of the
shareholders, as well as Company. Tailun (Thailand) Textile Co., Ltd. is the second largest shareholder and the foreign
between top 10 sponsor of the Company. All the other shareholders are holding tradable A-shares or B-shares. And
unrestricted public it is unknown whether there is any related party or acting-in-concert party among them.
shareholders and top 10
shareholders
Top 10 ordinary
shareholders involved in
Naught
securities margin trading
(if any) (see note 4)
Indicate by tick mark whether any of the top 10 ordinary shareholders or the top 10 unrestricted ordinary shareholders of the
Company conducted any promissory repo during the Reporting Period.
□Yes No
No such cases in the Reporting Period.
2. Controlling Shareholder
Nature of the controlling shareholder: Controlled by a natural person
Type of the controlling shareholder: legal person
Legal
Date of Unified social credit
Name of controlling shareholder representative/person in Principal activity
establishment code
charge
Investment on textile,
electricity and chemical;
Zibo Lucheng Textile Investment 25 September
Liu Deming 91370303164200391J purchase, process and
Co., Ltd. 1998
sale of cotton; retail
service etc.
Particulars about shareholding of
controlling shareholders
N/A
controlling and holding shares of
other listed companies during the
85
Lu Thai Textile Co., Ltd. Annual Report 2022
Reporting Period
Change of the controlling shareholder in the Reporting Period:
□Applicable Not applicable
No such cases in the Reporting Period.
3. Actual Controller and Its Acting-in-Concert Parties
Nature of the actual controller: Domestic natural person
Type of the actual controller: natural person
Whether gain the right of
Relations with the actual
Name of the actual controller Nationality residence in other countries or
controller
regions or not
Liu Zibin In person China No
Concerted action (including
Liu Deming agreement, relatives, and same China No
control)
Liu Zibin is the Chairman of the Board and President of Lu Thai Textile Co., Ltd. , Liu
Professions and titles Deming is the Chairman of the Board and GM of Zibo Lucheng Textile Investment
Co., Ltd.
Particulars about listed companies with
shares ever held by the actual controller N/A
over the past 10 years
Change of the actual controller during the Reporting Period:
□Applicable Not applicable
No such cases in the Reporting Period.
Ownership and control relations between the actual controller and the Company:
Indicate by tick mark whether the actual controller controls the Company via trust or other ways of asset management.
□Applicable Not applicable
4. Number of Accumulative Pledged Shares held by the Company’s Controlling Shareholder or the
Largest Shareholder as well as Its Acting-in-Concert Parties Accounts for 80% of all shares of the
Company held by Them
□Applicable Not applicable
86
Lu Thai Textile Co., Ltd. Annual Report 2022
5. Other 10% or Greater Corporate Shareholders
□Applicable Not applicable
6. Limitations on Shareholding Decrease by the Company’s Controlling Shareholder, Actual Controller,
Reorganizer and Other Commitment Makers
□Applicable Not applicable
IV Specific Implementation of Share Repurchase during the Reporting Period
Progress on any share repurchase
Applicable □ Not applicable
Number of
Shares As % of repurchased shares as
Disclosure Shares
intended to be total a percentage of the
time of the Amount Period Usage repurchased
repurchased share underlying shares
plan (share)
(share) capital covered by the equity
incentive plan (if any)
15 July
16 July 15000000- 1.69%- Not exceeding 2022 to
Cancelled 21,318,828 0.00%
2022 30000000 3.38% RMB100,000,000 14 July
2023
Progress on reducing the repurchased shares by means of centralized bidding
□Applicable Not applicable
87
Lu Thai Textile Co., Ltd. Annual Report 2022
Part VIII Preference Shares
□Applicable Not applicable
No preference shares in the Reporting Period.
88
Lu Thai Textile Co., Ltd. Annual 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 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).
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
89
Lu Thai Textile Co., Ltd. Annual Report 2022
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
total
shares Unconverte
Accumulati Accumulati
Total issued by Unconverted d amount
Abbreviatio Start ve amount ve shares
circulatio Total amount the amount (RMB) as % of
n date converted converted
n (piece) Company total
(RMB) (share)
before the amount
start date
of
conversio
n
14,000,00 1,400,000,000. 1,399,852,400.
Lu Thai 15 147,600.00 16,610 0.00% 99.99%
0 00 00
90
Lu Thai Textile Co., Ltd. Annual Report 2022
Convertible Octobe
Bonds r 2020
3. Top 10 Convertible Bond Holders
Unit: share
Number of As % of
Amount of convertible
Nature of convertible bonds convertible bonds
No. Name of holders bonds held at the period-
holders held at the period-end held at the period-
end (RMB)
(share) end
Northwest Investment Management Foreign
1 (Hong Kong) Limited - Northwest legal 1,349,990 134,999,000.00 9.64%
Feilong Fund Co., Ltd. person
China Construction Bank - E Fund
2 Enhanced Income Bond Securities Other 694,212 69,421,200.00 4.96%
Investment Fund
Fuguo Fumin Fixed Income Pension
3 Product - China Construction Bank Other 674,439 67,443,900.00 4.82%
Corporation
Industrial and Commercial Bank of
China - China Universal
4 Other 481,705 48,170,500.00 3.44%
Convertible Bond Securities
Investment Fund
Agricultural Bank of China -
5 Essence Target Income Bond Other 306,016 30,601,600.00 2.19%
Securities Investment Fund
China Merchants Bank Co., Ltd. -
6 Bosera Solid-return Bond Listed Other 290,968 29,096,800.00 2.08%
Open-ended Fund
China Merchants Bank Co., Ltd. -
7 Dongfanghong Juli Bond Securities Other 286,911 28,691,100.00 2.05%
Investment Fund
Shanghai Pudong Development
Bank Co., Ltd. - E Fund Yuxiang
8 Other 275,112 27,511,200.00 1.97%
Return Bond Securities Investment
Bond
Basic Endowment Insurance Fund
9 Other 273,171 27,317,100.00 1.95%
(Portfolio 102)
Dajia Assets - Pudong Development
Bank - Dajia Assets Houkun No. 5
10 Other 271,790 27,179,000.00 1.94%
Collective Asset Management
Product
4. Significant Changes in Profitability, Assets Condition and Credit Status of Guarantors
□Applicable Not applicable
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.
91
Lu Thai Textile Co., Ltd. Annual Report 2022
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 Matured Interest-bearing Debt excluding Bonds up the Period-end
□Applicable Not applicable
VII Whether there was any Violation of Rules and Regulations during the Reporting Period
□Yes No
VIII 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 Period-end The end of last year Increase/decrease
Current ratio 2.99 2.62 14.12%
Asset-liability ratio 29.53% 35.57% -6.04%
Quick ratio 1.86 1.49 24.83%
Reporting Period Same period of last year YoY increase/decrease
Net profit after deducting
non-recurring profit or loss 79,547.40 19,049.26 317.59%
Debt/EBITDA ratio 66.20% 28.94% 37.26%
Interest cover (times) 11.25 4.49 150.56%
Cash-to-interest cover (times) 14.43 4.03 258.06%
EBITDA interest coverage
ratio 15.94 9.39 69.76%
Rate of redemption 100.00% 100.00% 0.00%
Interest coverage 100.00% 100.00% 0.00%
92
Lu Thai Textile Co., Ltd. Annual Report 2022
Part X Financial Statements
I Independent Auditor’s Report
Type of the independent auditor’s opinion Unmodified unqualified opinion
Date of signing this report 10 April 2023
Name of the independent auditor Grant Thornton China (Special General Partnership)
No. of independent auditor’s report Grant Thornton SZ (2023) No. 371A009261
Name of the certified public accountants He Feng, Cui Xiaoli
Text of the Independent Auditor’s Report
To the shareholders of Lu Thai Textile Co., Ltd:
I Opinion
We have audited the financial statements of Lu Thai Textile Co., Ltd. (hereinafter referred to as the “Company”), which comprise the
consolidated and parent company balance sheets as of 31 December 2022, the consolidated and parent company statements of
income, cash flows and changes in owners’ equity for the year then ended, as well as the notes to the financial statements.
In our opinion, the financial statements referred to above present fairly, in all material respects, the consolidated and parent company
financial position of the Company at 31 December 2022, and the consolidated and parent company operating results and cash flows
for the year then ended, in conformity with the Chinese Accounting Standards (CAS).
II Basis for Opinion
We conducted our audits in accordance with the Audit Standards for Chinese Registered Accountants. Our responsibilities under
those standards are further described in the Auditor’s Responsibilities for Audit of Financial Statements section of our report. We are
independent of the Company in accordance with the China Code of Ethics for Certified Public Accountants, and we have fulfilled our
other ethical responsibilities in accordance with the said Code of Ethics. We believe that the audit evidence we have obtained is
sufficient and appropriate to provide a basis for our opinion.
III Key Audit Matters
Key audit matters are those matters that, in our professional judgment, were of most significance in our audit of the financial
statements of the current period. These matters were addressed in the context of our audit of the financial statements as a whole, and
in forming our opinion thereon, and we do not provide a separate opinion on these matters.
(I) Recognition of revenue
For details, please refer to the Note III-26 and the Note V-45 of the financial report.
1. Item description
The businesses of Lu Thai Textile Co., Ltd. mainly are production and sales of yarn-dyed fabrics and shirts. The operation revenue of
the Company in 2022 was RMB6,938,342,100, of which export income accounted for over 50%. For the income from domestic sales,
the amount of product sales income is recognized when the products are delivered to and confirmed by the purchaser according to the
contract. The income is recognized when the purchaser obtains control of the product. For the income from export sales, the amount
of sales income is recognized when products are declared and depart from port according to the contract, and the bill of lading is
received. The income is recognized when the purchaser obtains control of the product.
93
Lu Thai Textile Co., Ltd. Annual Report 2022
Since income is one of the key performance indicators of Lu Thai Textile Co., Ltd., there is an inherent risk that the management
manipulates income to achieve specific goals or expectations, therefore, we identify income recognition as a key audit item.
2. Audit response
The audit procedures for revenue recognition mainly include:
(1) Understand and evaluate the design effectiveness of internal control related to revenue recognition, and test the effectiveness of
operation;
(2) Through interviewing the management and reviewing the relevant contract terms, understand and evaluate whether the income
confirmation accounting policy meets the requirements of the enterprise accounting standards;
(3) Perform analytical procedures on revenue and costs to analyze the rationality of fluctuations in sales volume, unit price, and gross
profit in each month, current year, and previous year of the current period;
(4) Check the supporting evidence such as sales contract, product delivery order, invoice, customs declaration, shipping order, and
signing receipt;
(5) Select samples to verify the balance and transaction amount;
(6) Select samples and conduct spot checks on relevant information such as export sales revenue, export tax rebate declaration forms,
and China electronic port export data;
(7) Perform a cut-off test on the revenue recognized before and after the balance sheet date, and check the product delivery slip,
invoice, customs declaration, shipping bill, signing receipt, etc., to assess whether the revenue is recognized within the appropriate
period.
(II) Inventory falling price reserves
For details, please refer to the Note III-12 and the Note V-8 of the financial report.
1. Item description
As of 31 December 2022, the inventory balance of Lu Thai Textile Co., Ltd. was RMB2,349,784,300 and the inventory depreciation
reserve was RMB241,934,600. The management withdrew the inventory falling price reserves with significant judgments and
estimates, and therefore, we identify inventory falling price reserves as a key audit item.
2. Audit response
The audit procedures for inventory falling price reserves mainly include:
(1) Understand and evaluate the design effectiveness of the internal control related to the provision of inventory decline price, and
test the effectiveness of operation;
(2) Understand and evaluate the appropriateness of the company's inventory depreciation reserve provision policy;
(3) Monitor the inventory and pay attention to the status of the inventory, check whether the defective and inventory with long aging
have been identified;
(4) Obtain the inventory age table, and conduct an analytical review of the long-age inventory status and turnover;
(5) Check the changes in the inventory depreciation reserves accrued in previous years and evaluate the rationality of the changes in
inventory depreciation reserves;
(6) Obtain the inventory falling price reserves calculation sheet; recheck and evaluate the rationality of major estimations made by
the management during the determination of net realizable value; conduct the recalculation, check the selling price after the period
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Lu Thai Textile Co., Ltd. Annual Report 2022
and analyze the rationality of the predicted selling price.
(III) Assessment of fair value of financial assets measured at fair value and changes included in current profit or loss
Please refer to Notes to Financial Statements (Note III 10 and Note V 2, 11 and 53) for details about relevant information disclosure.
1. Event Description
Up to 31 December 2022, the balance of financial asset measured based on the fair value whose variations were included the current
profit and loss of Lu Thai Textiles was RMB604,805,200, of which, the fair value of financial asset classified into the tier-2 input
value by adopting the observable input value was RMB515,725,200, and the fair value of financial asset classified into the tier-3
input value by adopting the non-observable input value was RMB89,080,000. Considering that the financial asset’s fair value
variations had significant impact on the profit and loss of Lu Thai Textiles in 2022, and Lu Thai Textiles adopted the valuation
technique to determine its fair value (usually, the valuation technique involves various assumptions and estimations based on
subjective judgment, and huge difference in the estimated fair value of financial instrument may be caused by adopting different
valuation techniques or assumptions), we recognized the event as the key audit event.
2. Audit response
Our audit procedures geared to the evaluation of the withdrawal of financial instrument’s fair value mainly include:
(1) Study and evaluate the effectiveness of the designed internal control for the valuation of financial instruments and test the
operational effectiveness;
(2) Assess the professional quality, competence and objectiveness of the independent appraiser employed by the Company’s
management; evaluate the rationality of various assumptions applied by the independent appraiser in the evaluation report and the
appropriateness of the financial instrument valuation models;
(3) Assess the rationality and appropriateness of the observable key input value applied during the valuation of the tier-2 fair value;
(4) Recheck the rationality, appropriateness and calculation accuracy of the key input value during the fair value assessment for the
tier-3 financial instrument measured based the fair value and involving the management’s major judgment.
IV Other Information
The Company’s management is responsible for the other information. The other information comprises all of the information
included in the Company’s 2022 Annual Report other than the financial statements and our auditor’s report thereon.
Our opinion on the financial statements does not cover the other information and we do not express any form of assurance conclusion
thereon.
In connection with our audit of the financial statements, our responsibility is to read the other information and, in doing so, consider
whether the other information is materially inconsistent with the financial statements or our knowledge obtained in the audit or
otherwise appears to be materially misstated.
If, based on the work we have performed, we conclude that there is a material misstatement of this other information, we are required
to report that fact. We have nothing to report in this regard.
V Responsibilities of Management and Those Charged with Governance for Financial Statements
The Company’s management (hereinafter referred to as the “Management”) is responsible for the preparation of the financial
statements that give a fair view in accordance with CAS, and for designing, implementing and maintaining such internal control as
the management determines is necessary to enable the preparation of financial statements that are free from material misstatement,
whether due to fraud or error.
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Lu Thai Textile Co., Ltd. Annual Report 2022
In preparing the financial statements, the management is responsible for assessing the Company’s ability to continue as a going
concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless the
management either intends to liquidate the Company or to cease operations, or have no realistic alternative but to do so.
Those charged with governance are responsible for overseeing the Company’s financial reporting process.
VI Auditor’s Responsibilities for Audit of Financial Statements
Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material
misstatement, whether due to fraud or error, and to issue an auditor’s report that includes our opinion. Reasonable assurance is a high
level of assurance, but is not a guarantee that an audit conducted in accordance with CAS will always detect a material misstatement
when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could
reasonably be expected to influence the economic decisions of users taken on the basis of these financial statements.
As part of an audit in accordance with CAS, we exercise professional judgment and maintain professional skepticism throughout the
audit. We also:
(1) Identify and assess the risks of material misstatement of the financial statements, whether due to fraud or error, design and
perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for
our opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as
fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control.
(2) Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the
circumstances.
(3) Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures
made by the management.
(4) Conclude on the appropriateness of the management’s use of the going concern basis of accounting and, based on the audit
evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on the
Company’s ability to continue as a going concern. If we conclude that a material uncertainty exists, we are required by CAS to draw
users’ attention in our auditor’s report to the related disclosures in the financial statements or, if such disclosures are inadequate, we
should modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of our auditor’s report. However,
future events or conditions may cause the Company to cease to continue as a going concern.
(5) Evaluate the overall presentation, structure and content of the financial statements, and whether the financial statements represent
the underlying transactions and events in a manner that achieves fair presentation.
(6) Obtain sufficient appropriate audit evidence regarding the financial information of the entities or business activities within the
Company to express an opinion on the financial statements. We are responsible for the direction, supervision and performance of the
Company audit. We remain solely responsible for our audit opinion.
We communicate with those charged with governance of the Company regarding the planned scope and timing of the audit and
significant audit findings, including any noteworthy deficiencies in internal control that we identify during our audit.
We also provide those charged with governance with a statement that we have complied with relevant ethical requirements regarding
independence, and communicate with them all relationships and other matters that may reasonably be thought to bear on our
independence, and where applicable, related safeguards (if applicable).
From the matters communicated with those charged with governance, we determine those matters that were of most significance in
the audit of the financial statements of the current period and are therefore the key audit matters. We describe these matters in our
auditor’s report unless law or regulation precludes public disclosure about the matter or when, in extremely rare circumstances, we
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Lu Thai Textile Co., Ltd. Annual Report 2022
determine that a matter should not be communicated in our report because the adverse consequences of doing so would reasonably be
expected to outweigh the public interest benefits of such communication.
Grant Thornton China Chinese CPA
(Special General Partnership) (Engagement Partner):
Chinese CPA:
Beijing China 10 April 2023
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.
31 December 2022
Unit: RMB
Item 31 December 2022 1 January 2022
Current assets:
Monetary assets 2,067,768,253.97 1,999,712,889.35
Held-for-trading financial assets 267,695,159.48 1,727,000.00
Notes receivable 168,755,715.84 227,740,247.89
Accounts receivable 660,427,526.19 647,277,198.51
Accounts receivable financing 11,208,304.78 34,663,071.88
Prepayments 95,021,598.32 54,545,954.20
Other receivables 89,855,659.99 74,191,613.22
Including: Interest receivable
Dividends receivable 18,563,298.39 47,025,975.44
Financial assets purchased under resale
agreements
Inventories 2,107,849,708.33 2,345,346,794.28
Contract assets
Assets held for sale
Current portion of non-current assets
Other current assets 76,847,903.07 55,992,522.81
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Lu Thai Textile Co., Ltd. Annual Report 2022
Total current assets 5,545,429,829.97 5,441,197,292.14
Non-current assets:
Long-term receivables
Long-term equity investments 184,168,625.69 169,443,106.66
Investments in other equity
instruments
Other non-current financial assets 337,110,000.00 190,052,000.00
Investment property 20,460,935.21 21,362,302.03
Fixed assets 5,807,847,850.67 5,561,601,374.44
Construction in progress 199,943,501.73 237,579,082.99
Right-of-use assets 481,420,505.31 257,019,286.15
Intangible assets 352,889,578.06 363,130,978.14
Development costs
Goodwill 20,563,803.29 20,563,803.29
Long-term prepaid expense 2,948,981.97 672,601.04
Deferred income tax assets 155,774,523.25 138,516,136.50
Other non-current assets 242,539,466.88 586,083,308.25
Total non-current assets 7,805,667,772.06 7,546,023,979.49
Total assets 13,351,097,602.03 12,987,221,271.63
Current liabilities:
Short-term borrowings 518,946,415.96 1,011,034,138.32
Held-for-trading financial liabilities 4,276,929.70
Notes payable 55,450,000.00
Accounts payable 246,588,463.74 335,401,371.30
Advances from customers
Contract liabilities 206,879,672.53 204,967,348.96
Employee benefits payable 330,027,159.72 272,014,296.09
Taxes payable 31,483,442.06 29,457,702.72
Other payables 83,357,296.71 97,200,565.31
Including: Interest payable
Dividends payable 441,113.64 441,113.64
Current portion of non-current
307,921,837.35 8,877,404.52
liabilities
Other current liabilities 66,889,025.17 120,434,721.81
Total current liabilities 1,851,820,242.94 2,079,387,549.03
Non-current liabilities:
Long-term borrowings 186,431,096.24 684,962,473.24
Bonds payable 1,438,162,231.27 1,395,480,652.71
Lease liabilities 98,501,303.83 121,357,658.41
Long-term payables
Long-term employee benefits payable 57,417,997.65 57,384,062.39
Provisions
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Lu Thai Textile Co., Ltd. Annual Report 2022
Deferred income 159,615,037.36 188,958,133.78
Deferred income tax liabilities 151,243,432.80 92,571,310.14
Other non-current liabilities
Total non-current liabilities 2,091,371,099.15 2,540,714,290.67
Total liabilities 3,943,191,342.09 4,620,101,839.70
Owners’ equity:
Share capital 887,633,151.00 882,341,295.00
Other equity instruments 71,383,830.75 71,384,656.84
Including: Preferred shares
Perpetual bonds
Capital reserves 395,872,135.71 340,587,387.65
Less: Treasury stock 154,396,198.73 78,908,300.00
Other comprehensive income 107,628,898.09 -36,423,748.37
Specific reserve
Surplus reserves 1,215,124,336.54 1,215,124,336.54
General reserve
Retained earnings 6,490,910,719.35 5,589,201,772.37
Total equity attributable to owners of the
9,014,156,872.71 7,983,307,400.03
Company as the parent
Non-controlling interests 393,749,387.23 383,812,031.90
Total owners’ equity 9,407,906,259.94 8,367,119,431.93
Total liabilities and owners’ equity 13,351,097,602.03 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 31 December 2022 1 January 2022
Current assets:
Monetary assets 1,493,189,218.38 977,713,296.25
Held-for-trading financial assets 14,782,050.00 1,286,000.00
Derivative financial assets
Notes receivable 99,348,764.36 132,028,322.80
Accounts receivable 357,917,050.71 425,711,738.27
Accounts receivable financing 4,977,876.31 29,361,263.86
Prepayments 52,932,385.24 31,580,697.18
Other receivables 1,982,595,534.99 2,060,180,025.87
Including: Interest receivable
Dividends receivable 18,563,298.39 94,525,975.44
Inventories 1,032,571,546.29 1,230,487,585.69
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Lu Thai Textile Co., Ltd. Annual Report 2022
Contract assets
Available-for-sale assets
Current portion of non-current assets
Other current assets 12,117,078.06 205,568.38
Total current assets 5,050,431,504.34 4,888,554,498.30
Non-current assets:
Long-term receivables
Long-term equity investments 3,069,423,182.09 2,818,047,993.16
Investments in other equity instruments
Other non-current financial assets 325,110,000.00 178,052,000.00
Investment property 68,234,288.24 65,888,260.77
Fixed assets 2,239,204,199.53 2,305,059,429.29
Construction in progress 14,457,725.94 12,268,416.12
Right-of-use assets 102,526,417.74 116,279,075.24
Intangible assets 203,872,938.32 209,970,392.83
Development costs
Goodwill
Long-term deferred expenses 1,124,816.52 672,601.04
Deferred income tax assets 70,230,669.83 56,003,944.38
Other non-current assets 180,305,870.74 366,112,002.79
Total non-current assets 6,274,490,108.95 6,128,354,115.62
Total assets 11,324,921,613.29 11,016,908,613.92
Current liabilities:
Short-term borrowings 73,701,088.21 615,181,318.98
Notes payable 213,094,435.63
Accounts payable 100,586,843.48 146,714,973.77
Advances from customers
Contract liabilities 91,983,662.84 58,280,121.24
Payroll payable 231,917,717.02 190,277,420.32
Taxes payable 9,698,693.68 15,288,956.94
Other payables 164,914,178.73 92,914,225.42
Including: Interest payable
Dividends payable 441,113.64 441,113.64
Held-for-sale liabilities
Current portion of non-current
307,273,908.99 8,605,336.67
liabilities
Other current liabilities 42,075,638.45 64,202,247.99
Total current liabilities 1,235,246,167.03 1,191,464,601.33
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Lu Thai Textile Co., Ltd. Annual Report 2022
Non-current liabilities:
Long-term borrowings 186,431,096.24 684,962,473.24
Bonds payable 1,438,162,231.27 1,395,480,652.71
Lease liabilities 100,877,929.66 118,780,465.67
Long-term payables
Long-term payroll payable 57,417,997.65 57,384,062.39
Provisions
Deferred income 119,562,568.94 125,360,026.35
Deferred income tax liabilities 112,945,049.91 67,488,141.18
Other non-current liabilities
Total non-current liabilities 2,015,396,873.67 2,449,455,821.54
Total liabilities 3,250,643,040.70 3,640,920,422.87
Owners’ equity:
Share capital 887,633,151.00 882,341,295.00
Other equity instruments 71,383,830.75 71,384,656.84
Capital reserves 457,252,169.95 401,967,421.89
Less: Treasury stock 154,396,198.73 78,908,300.00
Other comprehensive income -30,162.34 -293,580.24
Specific reserve
Surplus reserves 1,212,015,596.90 1,212,015,596.90
Retained earnings 5,600,420,185.06 4,887,481,100.66
Total owners’ equity 8,074,278,572.59 7,375,988,191.05
Total liabilities and owners’ equity 11,324,921,613.29 11,016,908,613.92
3. Consolidated Income Statement
Unit: RMB
Item 2022 2021
1. Revenue 6,938,342,135.90 5,238,262,348.85
Including: Operating revenue 6,938,342,135.90 5,238,262,348.85
2. Costs and expenses 5,884,547,175.68 4,965,632,056.69
Including: Cost of sales 5,154,367,596.90 4,152,981,075.85
Taxes and surcharges 69,467,165.08 59,485,640.58
Selling expense 136,929,096.72 119,883,494.68
Administrative expense 396,309,634.39 335,380,025.54
Development cost 276,424,812.26 252,912,911.63
Finance costs -148,951,129.67 44,988,908.41
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Lu Thai Textile Co., Ltd. Annual Report 2022
Including: Interest expense 88,644,208.75 65,526,817.38
Interest income 49,863,731.95 40,686,077.22
Add: Other income 49,142,717.20 58,686,029.71
Return on investment (“-” for loss) 13,734,073.31 50,449,943.70
Including: Share of profit or loss of joint
28,049,040.53 -10,755,175.91
ventures and associates
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
169,192,724.92 16,415,304.41
loss)
Credit impairment loss (“-” for loss) -18,134,328.11 1,590,092.00
Asset impairment loss (“-” for loss) -186,305,963.36 -85,623,858.26
Asset disposal income (“-” for loss) 912,625.90 57,175,147.62
3. Operating profit (“-” for loss) 1,082,336,810.08 371,322,951.34
Add: Non-operating income 8,056,548.73 5,417,119.07
Less: Non-operating expense 11,007,935.46 13,424,054.88
4. Profit before tax (“-” for loss) 1,079,385,423.35 363,316,015.53
Less: Income tax expense 105,623,060.81 35,993,079.51
5. Net profit (“-” for net loss) 973,762,362.54 327,322,936.02
5.1 By operating continuity
5.1.1 Net profit from continuing
973,762,362.54 327,322,936.02
operations (“-” for net loss)
5.1.2 Net profit from discontinued
operations (“-” for net loss)
5.2 By ownership
5.2.1 Net profit attributable to
shareholders of the Company as the 963,864,819.43 347,609,693.30
parent
5.2.2 Net profit attributable to non-
9,897,543.11 -20,286,757.28
controlling interests
6. Other comprehensive income, net of
144,092,458.68 -37,732,671.26
tax
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Lu Thai Textile Co., Ltd. Annual Report 2022
Attributable to owners of the Company
144,052,646.46 -37,732,671.26
as the parent
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
144,052,646.46 -37,732,671.26
profit or loss
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- 143,850,902.02 -37,716,717.19
denominated financial statements
6.2.7 Other 201,744.44 -15,954.07
Attributable to non-controlling interests 39,812.22
7. Total comprehensive income 1,117,854,821.22 289,590,264.76
Attributable to owners of the Company
1,107,917,465.89 309,877,022.04
as the parent
Attributable to non-controlling interests 9,937,355.33 -20,286,757.28
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Lu Thai Textile Co., Ltd. Annual Report 2022
8. Earnings per share
8.1 Basic earnings per share 1.10 0.39
8.2 Diluted earnings per share 0.95 0.36
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 2022 2021
1. Operating revenue 4,207,250,282.21 3,647,402,509.21
Less: Cost of sales 3,167,800,915.91 2,824,451,867.80
Taxes and surcharges 48,152,045.75 39,686,908.16
Selling expense 98,346,509.45 85,257,586.04
Administrative expense 273,742,666.38 212,434,986.88
R&D expense 186,084,341.76 178,176,401.25
Finance costs -171,451,099.25 14,374,893.63
Including: Interest expense 21,891,357.83 33,309,727.39
Interest income 34,599,913.21 33,021,266.87
Add: Other income 22,189,971.41 33,778,765.18
Return on investment (“-” for loss) 149,933,954.32 298,576,196.15
Including: Share of profit or loss of joint
28,049,040.53 -10,755,175.91
ventures and associates
Income from the derecognition of
financial assets at amortized cost (“-” for
loss)
Net gain on exposure hedges (“-” for
loss)
Gain on changes in fair value (“-” for
160,554,050.00 20,786,304.41
loss)
Credit impairment loss (“-” for loss) -2,217,796.79 3,935,670.51
Asset impairment loss (“-” for loss) -81,729,018.43 -34,971,247.79
Asset disposal income (“-” for loss) 182,029.49 57,897,322.56
2. Operating profit (“-” for loss) 853,488,092.21 673,022,876.47
Add: Non-operating income 6,621,289.52 4,866,312.90
Less: Non-operating expense 6,748,987.44 11,591,362.60
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Lu Thai Textile Co., Ltd. Annual Report 2022
3. Profit before tax (“-” for loss) 853,360,394.29 666,297,826.77
Less: Income tax expense 78,265,437.44 55,229,039.28
4. Net profit (“-” for net loss) 775,094,956.85 611,068,787.49
4.1 Net profit from continuing
775,094,956.85 611,068,787.49
operations (“-” for net loss)
4.2 Net profit from discontinued
operations (“-” for net loss)
5. Other comprehensive income, net of
263,417.90 130,733.09
tax
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
263,417.90 130,733.09
profit or loss
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-
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Lu Thai Textile Co., Ltd. Annual Report 2022
denominated financial statements
5.2.7 Other 263,417.90 130,733.09
6. Total comprehensive income 775,358,374.75 611,199,520.58
7. Earnings per share
7.1 Basic earnings per share 0.88 0.71
7.2 Diluted earnings per share 0.79 0.64
5. Consolidated Cash Flow Statement
Unit: RMB
Item 2022 2021
1. Cash flows from operating activities:
Proceeds from sale of commodities and
7,001,597,756.89 4,877,137,793.95
rendering of services
Tax rebates 166,814,030.33 118,978,037.24
Cash generated from other operating
50,207,676.76 99,760,735.48
activities
Subtotal of cash generated from
7,218,619,463.98 5,095,876,566.67
operating activities
Payments for commodities and services 3,927,652,179.15 3,075,758,673.05
Cash paid to and for employees 1,548,156,910.96 1,394,301,069.51
Taxes paid 182,308,141.79 139,250,588.74
Cash used in other operating activities 138,191,457.82 138,429,229.89
Subtotal of cash used in operating
5,796,308,689.72 4,747,739,561.19
activities
Net cash generated from/used in
1,422,310,774.26 348,137,005.48
operating activities
2. Cash flows from investing activities:
Proceeds from disinvestment 133,323,521.50 1,318,751,294.68
Return on investment 34,285,319.99 41,433,282.80
Net proceeds from the disposal of fixed
assets, intangible assets and other long- 7,324,525.46 4,645,043.40
lived assets
Net proceeds from the disposal of
95,860,000.00
subsidiaries and other business units
Cash generated from other investing
89,213,325.33 98,294,038.33
activities
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Lu Thai Textile Co., Ltd. Annual Report 2022
Subtotal of cash generated from
264,146,692.28 1,558,983,659.21
investing activities
Payments for the acquisition of fixed
assets, intangible assets and other long- 503,584,860.31 430,591,025.71
lived assets
Payments for investments 359,556,504.86 760,870,000.00
Net increase in pledged loans granted
Net payments for the acquisition of
subsidiaries and other business units
Cash used in other investing activities 118,661,325.53 339,043,598.92
Subtotal of cash used in investing
981,802,690.70 1,530,504,624.63
activities
Net cash generated from/used in
-717,655,998.42 28,479,034.58
investing activities
3. Cash flows from financing activities:
Capital contributions received 19,086,927.80 80,122,550.00
Including: Capital contributions by non-
controlling interests to subsidiaries
Borrowings raised 1,326,434,596.95 1,631,139,389.49
Cash generated from other financing
activities
Subtotal of cash generated from
1,345,521,524.75 1,711,261,939.49
financing activities
Repayment of borrowings 2,118,703,417.56 1,359,634,451.98
Interest and dividends paid 114,018,478.84 84,499,928.33
Including: Dividends paid by
subsidiaries to non-controlling interests
Cash used in other financing activities 107,326,619.83 63,817,316.19
Subtotal of cash used in financing
2,340,048,516.23 1,507,951,696.50
activities
Net cash generated from/used in
-994,526,991.48 203,310,242.99
financing activities
4. Effect of foreign exchange rates
142,762,600.91 -6,449,805.63
changes on cash and cash equivalents
5. Net increase in cash and cash
-147,109,614.73 573,476,477.42
equivalents
Add: Cash and cash equivalents,
1,970,006,884.89 1,396,530,407.47
beginning of the period
107
Lu Thai Textile Co., Ltd. Annual Report 2022
6. Cash and cash equivalents, end of the
1,822,897,270.16 1,970,006,884.89
period
6. Cash Flow Statement of the Company as the Parent
Unit: RMB
Item 2022 2021
1. Cash flows from operating activities:
Proceeds from sale of commodities and
4,230,164,898.24 3,312,220,027.60
rendering of services
Tax rebates 35,115,485.51 24,444,047.02
Cash generated from other operating
46,602,876.06 51,752,143.18
activities
Subtotal of cash generated from
4,311,883,259.81 3,388,416,217.80
operating activities
Payments for commodities and services 2,204,442,463.82 2,128,657,555.64
Cash paid to and for employees 867,417,441.71 837,615,352.93
Taxes paid 124,452,272.83 83,471,328.14
Cash used in other operating activities 87,964,680.84 97,694,765.19
Subtotal of cash used in operating
3,284,276,859.20 3,147,439,001.90
activities
Net cash generated from/used in
1,027,606,400.61 240,977,215.90
operating activities
2. Cash flows from investing activities:
Proceeds from disinvestment 473,611,167.77 587,311,294.68
Return on investment 186,817,055.74 255,233,323.75
Net proceeds from the disposal of fixed
assets, intangible assets and other long- 32,427,869.91 6,091,843.79
lived assets
Net proceeds from the disposal of
263,014,351.00
subsidiaries and other business units
Cash generated from other investing
2,254,482,395.37 970,377,365.78
activities
Subtotal of cash generated from
2,947,338,488.79 2,082,028,179.00
investing activities
Payments for the acquisition of fixed
assets, intangible assets and other long- 143,565,978.32 68,414,055.96
lived assets
108
Lu Thai Textile Co., Ltd. Annual Report 2022
Payments for investments 662,467,290.00 640,977,947.65
Net payments for the acquisition of
subsidiaries and other business units
Cash used in other investing activities 2,002,472,544.95 1,729,113,808.44
Subtotal of cash used in investing
2,808,505,813.27 2,438,505,812.05
activities
Net cash generated from/used in
138,832,675.52 -356,477,633.05
investing activities
3. Cash flows from financing activities:
Capital contributions received 19,086,927.80 80,122,550.00
Borrowings raised 592,777,524.65 800,983,356.71
Cash generated from other financing
154,870,600.00 58,215,720.00
activities
Subtotal of cash generated from
766,735,052.45 939,321,626.71
financing activities
Repayment of borrowings 1,357,097,218.44 312,407,315.63
Interest and dividends paid 100,075,384.31 75,954,642.88
Cash used in other financing activities 191,679,488.04 182,836,702.32
Subtotal of cash used in financing
1,648,852,090.79 571,198,660.83
activities
Net cash generated from/used in
-882,117,038.34 368,122,965.88
financing activities
4. Effect of foreign exchange rates
21,810,782.76 -3,255,947.76
changes on cash and cash equivalents
5. Net increase in cash and cash
306,132,820.55 249,366,600.97
equivalents
Add: Cash and cash equivalents,
977,713,296.25 728,346,695.28
beginning of the period
6. Cash and cash equivalents, end of the
1,283,846,116.80 977,713,296.25
period
7. Consolidated Statements of Changes in Owners’ Equity
109
Lu Thai Textile Co., Ltd. Annual Report 2022
2022
Unit: RMB
2022
Equity attributable to owners of the Company as the parent
Other equity instruments Other Gene Non- Total
Item Less:
Share Prefer Perpet Capital comprehen Specific Surplus ral Retained Oth controlling owners’
Treasury Subtotal
capital red ual Other reserves sive reserve reserves reser earnings er interests equity
stock
shares bonds income ve
1.
Balances -
882,341,29 71,384,65 340,587,38 78,908,300 1,215,124,3 5,589,201,7 7,983,307,4 383,812,03 8,367,119,4
as at the 36,423,748
5.00 6.84 7.65 .00 36.54 72.37 00.03 1.90 31.93
.37
end of the
prior year
Add:
Adjustmen
ts for
changed
accounting
policies
Adjustmen
ts for
correction
s of
previous
errors
110
Lu Thai Textile Co., Ltd. Annual Report 2022
Adjustmen
ts for
business
combinati
ons under
common
control
Other
adjustment
s
2.
Balances -
882,341,29 71,384,65 340,587,38 78,908,300 1,215,124,3 5,589,201,7 7,983,307,4 383,812,03 8,367,119,4
as at the 36,423,748
5.00 6.84 7.65 .00 36.54 72.37 00.03 1.90 31.93
.37
beginning
of the year
3.
Increase/
decrease
5,291,856. 55,284,748 75,487,898 144,052,64 901,708,946 1,030,849,4 9,937,355. 1,040,786,8
in the -826.09
00 .06 .73 6.46 .98 72.68 33 28.01
period (“-”
for
decrease)
3.1 Total
144,052,64 963,864,819 1,107,917,4 9,937,355. 1,117,854,8
comprehe 6.46 .43 65.89 33 21.22
nsive
111
Lu Thai Textile Co., Ltd. Annual Report 2022
income
3.2
Capital
- -
increased 5,291,856. 55,284,748 75,487,898
-826.09 14,912,120. 14,912,120.
00 .06 .73
and 76 76
reduced
by owners
3.2.1
Ordinary
shares
5,291,856. 13,743,193 19,035,049. 19,035,049.
increased 00 .13 13 13
by
shareholde
rs
3.2.2
Capital
increased
by holders
of other
equity
instrument
s
112
Lu Thai Textile Co., Ltd. Annual Report 2022
3.2.3
Share-
based
39,975,678 39,975,678. 39,975,678.
payments .06 06 06
included
in owners’
equity
- -
3.2.4 1,565,876. 75,487,898
-826.09 73,922,847. 73,922,847.
87 .73
Other 95 95
3.3 Profit - - -
distributio 62,155,872. 62,155,872. 62,155,872.
45 45 45
n
3.3.1
Appropriat
ion to
surplus
reserves
3.3.2
Appropriat
ion to
general
reserve
3.3.3
- - -
Appropriat
62,155,872. 62,155,872. 62,155,872.
ion to 45 45 45
owners (or
113
Lu Thai Textile Co., Ltd. Annual Report 2022
shareholde
rs)
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
114
Lu Thai Textile Co., Ltd. Annual Report 2022
reserves
3.4.3
Loss
offset by
surplus
reserves
3.4.4
Changes
in defined
benefit
pension
schemes
transferred
to retained
earnings
3.4.5
Other
comprehe
nsive
income
transferred
to retained
earnings
115
Lu Thai Textile Co., Ltd. Annual Report 2022
3.4.6
Other
3.5
Specific
reserve
3.5.1
5,414,40 5,414,407.9 5,414,407.9
Increase in 7.96 6 6
the period
3.5.2 - - -
Used in 5,414,40 5,414,407.9 5,414,407.9
7.96 6 6
the period
3.6 Other
4.
Balances
887,633,15 71,383,83 395,872,13 154,396,19 107,628,89 1,215,124,3 6,490,910,7 9,014,156,8 393,749,38 9,407,906,2
as at the 1.00 0.75 5.71 8.73 8.09 36.54 19.35 72.71 7.23 59.94
end of the
period
2021
Unit: RMB
2021
Equity attributable to owners of the Company as the parent
Other equity instruments Other Speci Gene Non- Total
Item Less:
Share Preferr Perpet Capital comprehen fic Surplus ral Retained Oth controlling owners’
Treasury Subtotal
capital ed ual Other reserves sive reserv reserves reser earnings er interests equity
stock
shares bonds income e ve
1. 858,132,32 71,386,45 255,912,48 1,308,922. 1,154,017,45 5,346,819,94 7,687,577,59 404,098,78 8,091,676,37
116
Lu Thai Textile Co., Ltd. Annual Report 2022
2.00 1.81 8.01 89 7.79 8.22 0.72 9.18 9.90
Balances
as at the
end of the
prior year
Add:
Adjustmen
ts for
changed
accounting
policies
Adjustmen
ts for
corrections
of previous
errors
Adjustmen
ts for
business
combinatio
ns under
common
control
Other
adjustment
117
Lu Thai Textile Co., Ltd. Annual Report 2022
s
2.
Balances
858,132,32 71,386,45 255,912,48 1,308,922. 1,154,017,45 5,346,819,94 7,687,577,59 404,098,78 8,091,676,37
as at the 2.00 1.81 8.01 89 7.79 8.22 0.72 9.18 9.90
beginning
of the year
3.
Increase/
- -
decrease in 24,208,973 84,674,899 78,908,30 61,106,878.7 242,381,824. 295,729,809. 275,443,052.
-1,794.97 37,732,671 20,286,757
.00 .64 0.00 5 15 31 03
the period .26 .28
(“-” for
decrease)
3.1 Total
- -
comprehen 347,609,693. 309,877,022. 289,590,264.
37,732,671 20,286,757
30 04 76
sive .26 .28
income
3.2
Capital
increased 24,208,973 84,674,899 78,908,30 29,973,777.6 29,973,777.6
-1,794.97
.00 .64 0.00 7 7
and
reduced by
owners
3.2.1
Ordinary 24,208,973 55,949,334 80,158,307.2 80,158,307.2
.00 .21 1 1
shares
increased
118
Lu Thai Textile Co., Ltd. Annual Report 2022
by
shareholde
rs
3.2.2
Capital
increased
by holders
of other
equity
instrument
s
3.2.3
Share-
based
28,325,788 28,325,788.6 28,325,788.6
payments .60 0 0
included in
owners’
equity
- -
78,908,30
3.2.4 Other -1,794.97 399,776.83 78,510,318.1 78,510,318.1
0.00
4 4
3.3 Profit - - -
61,106,878.7
distributio 105,227,869. 44,120,990.4 44,120,990.4
5
15 0 0
n
3.3.1 -
61,106,878.7
Appropriat 61,106,878.7
5
5
ion to
119
Lu Thai Textile Co., Ltd. Annual Report 2022
surplus
reserves
3.3.2
Appropriat
ion to
general
reserve
3.3.3
Appropriat
- - -
ion to
44,120,990.4 44,120,990.4 44,120,990.4
owners (or 0 0 0
shareholde
rs)
3.3.4
Other
3.4
Transfers
within
owners’
equity
3.4.1
Increase in
capital (or
share
capital)
from
120
Lu Thai Textile Co., Ltd. Annual Report 2022
capital
reserves
3.4.2
Increase in
capital (or
share
capital)
from
surplus
reserves
3.4.3
Loss offset
by surplus
reserves
3.4.4
Changes in
defined
benefit
pension
schemes
transferred
to retained
earnings
3.4.5
Other
comprehen
121
Lu Thai Textile Co., Ltd. Annual Report 2022
sive
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 -
882,341,29 71,384,65 340,587,38 78,908,30 1,215,124,33 5,589,201,77 7,983,307,40 383,812,03 8,367,119,43
as at the 36,423,748
5.00 6.84 7.65 0.00 6.54 2.37 0.03 1.90 1.93
.37
end of the
period
8. Statements of Changes in Owners’ Equity of the Company as the Parent
2022
Unit: RMB
122
Lu Thai Textile Co., Ltd. Annual Report 2022
2022
Other equity instruments Other Specifi
Item Capital Less: Treasury Retained Othe Total owners’
Share capital Preferre Perpetua comprehensiv c Surplus reserves
Other reserves stock earnings r equity
d shares l bonds e income reserve
1. Balances as
882,341,295.0 71,384,656.8 401,967,421.8 1,212,015,596.9 4,887,481,100.6 7,375,988,191.0
at the end of 78,908,300.00 -293,580.24
0 4 9 0 6 5
the prior year
Add:
Adjustments
for changed
accounting
policies
Adjustments
for corrections
of previous
errors
Other
adjustments
2. Balances as
at the 882,341,295.0 71,384,656.8 401,967,421.8 1,212,015,596.9 4,887,481,100.6 7,375,988,191.0
78,908,300.00 -293,580.24
0 4 9 0 6 5
beginning of
the year
3. Increase/
decrease in
5,291,856.00 -826.09 55,284,748.06 75,487,898.73 263,417.90 712,939,084.40 698,290,381.54
the period (“-”
for decrease)
123
Lu Thai Textile Co., Ltd. Annual Report 2022
3.1 Total
comprehensiv 263,417.90 775,094,956.85 775,358,374.75
e income
3.2 Capital
increased and
5,291,856.00 -826.09 55,284,748.06 75,487,898.73 -14,912,120.76
reduced by
owners
3.2.1 Ordinary
shares
5,291,856.00 13,743,193.13 19,035,049.13
increased by
shareholders
3.2.2 Capital
increased by
holders of
other equity
instruments
3.2.3 Share-
based
payments
39,975,678.06 39,975,678.06
included in
owners’
equity
3.2.4 Other -826.09 1,565,876.87 75,487,898.73 -73,922,847.95
3.3 Profit
-62,155,872.45 -62,155,872.45
distribution
3.3.1
124
Lu Thai Textile Co., Ltd. Annual Report 2022
Appropriation
to surplus
reserves
3.3.2
Appropriation
-62,155,872.45 -62,155,872.45
to owners (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
125
Lu Thai Textile Co., Ltd. Annual Report 2022
surplus
reserves
3.4.4
Changes in
defined
benefit
pension
schemes
transferred to
retained
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
126
Lu Thai Textile Co., Ltd. Annual Report 2022
4. Balances as
887,633,151.0 71,383,830.7 457,252,169.9 154,396,198.7 1,212,015,596.9 5,600,420,185.0 8,074,278,572.5
at the end of -30,162.34
0 5 5 3 0 6 9
the period
2021
Unit: RMB
2021
Other equity instruments Less: Other Specifi
Item Capital Retained Othe Total owners’
Share capital Preferre Perpetua Treasury comprehensiv c Surplus reserves
Other reserves earnings r equity
d shares l bonds stock e income reserve
1. Balances as
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
at the end of -424,313.33
0 1 5 5 2 0
the prior year
Add:
Adjustments
for changed
accounting
policies
Adjustments
for corrections
of previous
errors
Other
adjustments
2. Balances as 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
at the
127
Lu Thai Textile Co., Ltd. Annual Report 2022
beginning of
the year
3. Increase/
decrease in 78,908,300.0
24,208,973.00 -1,794.97 84,674,899.64 130,733.09 61,106,878.75 505,840,918.34 597,052,307.85
0
the period (“-”
for decrease)
3.1 Total
comprehensiv 130,733.09 611,068,787.49 611,199,520.58
e income
3.2 Capital
increased and 78,908,300.0
24,208,973.00 -1,794.97 84,674,899.64 29,973,777.67
0
reduced by
owners
3.2.1 Ordinary
shares
24,208,973.00 55,949,334.21 80,158,307.21
increased by
shareholders
3.2.2 Capital
increased by
holders of
other equity
instruments
3.2.3 Share-
based
28,325,788.60 28,325,788.60
payments
included in
128
Lu Thai Textile Co., Ltd. Annual Report 2022
owners’
equity
78,908,300.0
3.2.4 Other -1,794.97 399,776.83 -78,510,318.14
0
3.3 Profit
61,106,878.75 -105,227,869.15 -44,120,990.40
distribution
3.3.1
Appropriation
61,106,878.75 -61,106,878.75
to surplus
reserves
3.3.2
Appropriation
-44,120,990.40 -44,120,990.40
to owners (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
129
Lu Thai Textile Co., Ltd. Annual Report 2022
capital (or
share capital)
from surplus
reserves
3.4.3 Loss
offset by
surplus
reserves
3.4.4
Changes in
defined
benefit
pension
schemes
transferred to
retained
earnings
3.4.5 Other
comprehensiv
e income
transferred to
retained
earnings
3.4.6 Other
3.5 Specific
reserve
130
Lu Thai Textile Co., Ltd. Annual Report 2022
3.5.1
Increase in the
period
3.5.2 Used
in the period
3.6 Other
4. Balances as
882,341,295.0 71,384,656.8 401,967,421.8 78,908,300.0 1,212,015,596.9 4,887,481,100.6 7,375,988,191.0
at the end of -293,580.24
0 4 9 0 0 6 5
the period
131
Lu Thai Textile Co., Ltd. Annual Report 2022
III Company Profile
1. 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.
132
Lu Thai Textile Co., Ltd. Annual Report 2022
In accordance with the resolution of Proposal on Repurchasing and Canceling Partial Restricted Shares already Granted for the
Original Incentive Targets not Reaching the Incentive Conditions made at the 23 rd 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 1 st 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 2 nd 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 line with the resolution of the 26th Meeting of the 9th Board of Directors of the Company on 26 August 2021 that the Proposal on
Repurchase and Cancel Authorized but Unlocked Restricted Share of the Incentive Personnel not Conforming to the Incentive
Condition, the Company applied to reduce the registered capital of RMB80,000.
There were 4,000 shares of the Company which were converted from the convertible bonds in 2021.
In line with the resolution of the first Extraordinary General Meeting of the Company on 13 May 2021 and the resolution of the 30th
session of the Ninth Board of Directors on 18 February 2022, the Company applied for an increase of the share capital by RMB
5,838,000, which was contributed by 343 restricted share incentive receivers 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 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
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condition of the Company were repurchased and cancelled.
In conformity with the resolution of the second session of the Tenth Board of Directors on 29 June 2022 and the resolution of the
third Extraordinary General Meeting of the Company on 15 July 2022, the Proposal on Repurchase and Cancel Authorized but
Unlocked Restricted Share of the Incentive Personnel not Conforming to the Incentive Condition, all the 308,000 shares authorized to
the original incentive personnel who did not conform to the incentive condition of the Company were repurchased and cancelled.
There were 1,900 shares of the Company which were converted from the convertible bonds in 2022.
As of 31 December 2022, the registered capital of the Company is RMB887,633,200.
The Company’s registered address: No. 61, Luthai Avenue, Hi-tech Development Zone, Zibo, Shandong
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 7th Meeting of the 10th Board of Directors held on
10 April 2022.
2. Scope of consolidated financial statements
The Company’s scope of consolidated financial statements was determined based on control.
(1) Subsidiaries included in the consolidated financial statements during the Reporting Period
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Registration Shareholding
Company Way
place ratio (%)
Lu Thai (Hong Kong) Textile Co., Ltd. (“Lu Thai (Hong
Hong Kong 100 Establishment
Kong)”)
Shanghai Lu Thai Textile Garment Co., Ltd. (“Shanghai Lu
Shanghai 100 Establishment
Thai”)
Lufeng Textile Dyeing Co., Ltd. (“Lufeng Textile Dyeing”) Zibo 75 Establishment
Zibo Lu Qun Textile Co., Ltd. (“Lu Qun Textile”) Zibo 100 Establishment
Zibo Xinsheng Thermal Power Co., Ltd. (“Xinsheng Thermal Business combination not
Zibo 100
Power”) under the same control
Shanghai Zhinuo Textile New Materials Co., Ltd. (“Shanghai
Shanghai 100 Establishment
Zhinuo”)
Shandong Lulian New Materials Co., Ltd. (“Lulian New
Zibo 75 Establishment
Materials”)
Shandong Lujia Import and Export Co., Ltd. (“Lujia Import
Zibo 100 Establishment
and Export”)
Beijing Zhishu Management Consulting Co., Ltd. (“Zhishu
Beijing 100 Establishment
Consulting”)
Lu Thai Vocational Training School Zibo 100 Establishment
Zibo Banyang Villa Hotel Co., Ltd. (“Banyang Villa”) Zibo 100 Establishment
Hainan Huilin International Holdings Co., Ltd. (“Huilin
Wenchang 100 Establishment
International”)
LIIPL Singapore 100 Establishment
VACL Burma 100 Establishment
Lu Thai (America) Textile Co., Ltd. (“Lu Thai (America)”) America 100 Establishment
Yuanhui Dividend No.2 Private Equity Investment Fund
100 Subscription
(“Yuanhui Fund”)
(2) Changes of consolidated financial statements for the Reporting Period
Company with change Increase or decrease to consolidated statements Reason for change
LTCL Increase Establishment
Yuanhui Fund Increase Subscription
For details, please refer to Note VIII. “Changes of Consolidation Scope” and Notes IX. 1.Equities in Subsidiaries”.
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
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with relevant regulations.
2. Going-concern
The financial statements are presented on the basis of continuing operations.
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 (25).
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 2022,
business results and cash flows for 2022, 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, 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
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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, 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 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 investment 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.
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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,
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.
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(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
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 approximate spot exchange rate on the transaction
date.
All items in the cash flow statement are converted according to the approximate 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
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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.
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.
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Lu Thai Textile Co., Ltd. Annual Report 2022
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
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:
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Lu Thai Textile Co., Ltd. Annual Report 2022
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
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, structural deposits and exchange option
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
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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,
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 with low credit rating 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.
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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
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;
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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;
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
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value. If there is no active market for financial instruments, the Company uses valuation techniques to determine its fair value.
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. 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
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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.
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
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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
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-20.
14. 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-20 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
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and related taxes is included in the current profit and loss.
15. 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.
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
See the Note V-20 for details.
(4) At the end of each year, review is carried out by the Company 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
(5) Disposal of Fixed Assets
A fixed asset shall be derecognized when it is disposed of or it is expected that no economic benefit can be generated by using or
disposing of it. The amount of the disposal income of sales, transfer, scrap or damage of the fixed asset after deducting its book
value and related taxes is included in the current profit and loss.
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16. 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-20.
17. 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 (20) 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.
18. 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
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.
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19. 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-20.
(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.
20. 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, right-of-use assets, intangible assets, business
reputation, etc. (excluding inventory, investment property measured at fair value pattern, deferred income tax assets, financial assets),
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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
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.
21. 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.
22. 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.
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(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.
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.
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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.
23. 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.
24. 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
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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 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.
25. 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.
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②The Company has transferred the legal ownership of the goods to the customer, that is, the customer has owned the legal
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
26. 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
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:
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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”.
27. 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
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.
28. 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.
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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.
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.
29. Lease
(1) Identification of lease
On the start date of the contract, the Company assessed as the lessee or the lessor whether the customers in the contract are entitled
to obtain almost all the economic benefits arising from the use of the identified assets during the use period, and have the right to
dominate the use of the identified assets during the use period. If a party to the contract transferred the right allowing the control
over the use of one or more assets that have been identified within a certain period, in exchange for a consideration, such contract
is determined by the Company to be a lease or includes a lease.
(2) 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-30.
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
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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.
(3) 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
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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.
30. 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: the initial
measurement amount of lease obligations; 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); the initial direct cost incurred by the lessee; and 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. As the lessee, the Company shall recognize and measure the
cost of demolition and restoration in accordance with the Accounting Standards for Business Enterprises No.13 - Contingencies.
Subsequent adjustments are made for any re-measurement of the lease liabilities.
(2) Depreciation method of right-of-use assets
The Company uses the straight-line method for depreciation. Where it can be reasonably certain that the Company, the lessee, can
obtain ownership of the leased assets at the expiry of the lease term, the leased assets are depreciated over the 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.
(3) Impairment test method and impairment provision method of right-of-use assets See Note V-20.
31. Cost of Safety Production and Maintenance
In accordance with the regulations of the Notice on Issuing the Management Measures for the Provision and Use of Enterprise
Production Safety Costs (C.Z. [2022] No. 136) issued by the Ministry of Finance and the Ministry of Emergency, and based on the
above actual annual operating revenue of power generation and supply enterprises, the Company adopts the method where the
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deduction rate declines when the operating revenue increases to deduct safety production costs according to the following
standards:
Annual actual sales revenue standard Proportion of safety production cost (%)
Not exceeding RMB10 million 3
RMB10 million to RMB100 million 1.5
RMB100 million to RMB1 billion 1
RMB1 billion to RMB5 billion 0.8
Safety production costs and costs for sustaining simple reproduction are included in the cost of relevant production or current loss
and profit when deducted, and are simultaneously included in the “specific reserve”.
When using the deducted safety production costs and the costs for sustaining simple reproduction in conformity with regulations, the
outgoing expenditures shall directly be used to offset the specific reserve; the costs becoming fixed assets shall be aggregated under
“construction in progress” and then be recognized as fixed assets when the safety project is completed and reaches the intended
available status; The aforesaid fixed assets will not be depreciated as accrued in the future period.
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
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. 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
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Lu Thai Textile Co., Ltd. Annual Report 2022
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
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.
35. Changes in Main Accounting Policies and Estimates
(1) Significant Changes in Accounting Policies
Applicable □ Not applicable
On 31 December 2021, the Ministry of Finance issued the Interpretation No. 15 of the Accounting Standards for Business Enterprises
(CK [2021] No. 35), which provides for the “accounting treatment for the sale of products or by-products produced by an enterprise
before the fixed assets reach their intended useable state or during the research and development process” and “judgment on loss-
making contracts”, effective from 1 January 2022.
On 30 November 2022, the Ministry of Finance issued the Interpretation No. 16 of the Accounting Standards for Business
Enterprises (C.K. [2022] No. 31), which provides for the “accounting treatment of the income tax effects of dividends on financial
instruments classified as equity instruments by the issuer” and “accounting treatment of the revision of share-based payment settled
in cash to share-based payment settled in equity by an enterprise”, effective on the date of publication.
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Lu Thai Textile Co., Ltd. Annual Report 2022
a) The Interpretation No. 15 of Accounting Standards for Business Enterprises
In December 2021, the Ministry of Finance issued the Interpretation No. 15 of the Accounting Standards for Business Enterprises
(C.K. [2021] No. 35) (hereinafter referred to as the “Interpretation No. 15”).
Interpretation No. 15 provides that if an enterprise sells products or by-products produced before the fixed assets reach their intended
useable state or during the research and development process (hereinafter referred to as “trial sales”), it shall be accounted for
separately in accordance with the provisions of Accounting Standards for Business Enterprises No. 14-Revenue and Accounting
Standards for Business Enterprises No. 1– Inventory.
This provision shall be effective from 1 January 2022. The enterprises shall make some retroactive adjustments for their trial sales
that occurred between the beginning of the earliest period presented in the financial statements and 1 January 2022.
Interpretation No. 15 provides that in determining a loss-making contract, the cost to the enterprise of performing the contract
includes the incremental cost of performing the contract and the apportionment of other costs directly related to the performance of
the contract. The incremental cost of performing the contract includes direct labour, direct materials, etc.; the apportioned amount of
other costs directly related to the performance of the contract includes the apportioned amount of depreciation of fixed assets used to
perform the contract, etc. This provision shall be effective from 1 January 2022. The enterprises shall implement this provision for
contracts not fully performed as at 1 January 2022. Besides, the cumulative effect shall adjust retained earnings and other related
financial statement items at the beginning of the year of implementation, and shall not adjust comparative financial data of the prior
period.
The implementation of the Interpretation No. 15 has not had a significant impact on the financial position and operating results of the
Company.
b) The Interpretation No. 16 of Accounting Standards for Business Enterprises
In November 2022, the Ministry of Finance issued the Interpretation No. 16 of the Accounting Standards for Business Enterprises
(C.K. [2022] No. 31) (hereinafter referred to as the “Interpretation No. 16”).
Interpretation No. 16 provides that for financial instruments such as perpetual bonds classified as equity instruments, the enterprises
shall recognise the income tax effect related to dividends when recognising dividends payable. For profits allocated from transactions
or events previously giving rise to gains or losses, the income tax effect of such dividend shall be included in current profit or loss;
for profits allocated from transactions or events previously recognised in owners’ equity, the income tax effect of such dividends
should be included in the owners’ equity item.
Interpretation No. 16 provides that if the enterprises modify the terms and conditions in a cash-settled share-based payment
agreement to make it an equity-settled share-based payment, at the date of modification, the enterprises shall measure the equity-
settled share-based payment at the fair value of the equity instrument granted at that date, include the acquired services in capital
reserve and derecognise the liability recognised for the cash-settled share-based payment at the date of modification. And the
difference between the two beings shall be included in the current profit or loss. If the waiting period is extended or shortened as a
consequence of the modification, the enterprises shall make some accounting treatment as described above in accordance with the
modified waiting period (without regard to the relevant provisions of the accounting treatment for adverse modifications).
The implementation of the Interpretation No. 16 has not had a significant impact on the financial position and operating results of the
Company.
(2) Significant Changes in Accounting Estimates
□Applicable Not applicable
163
Lu Thai Textile Co., Ltd. Annual Report 2022
VI Taxation
1. Main Taxes and Tax Rate
Category of taxes Tax basis Tax rate
Taxable value-added amount (the taxable amount is calculated by
multiplying the taxable sales by the applicable tax rate and
VAT 13%, 9%, 6%, 5%, 3%, 0
deducting the input tax allowed to be deducted in the current
period)
Urban maintenance
Turnover tax actually paid 7%, 5%
and construction tax
Enterprise income
Income tax payable 0, 15%, 16.5%, 17%, 20%, 25%
tax
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%
Lulian New Materials 15%
Lu Thai Hong Kong 16.50%
Luqun Textile 25%
Xinsheng Power 25%
Shanghai Lu Thai 20%
Shanghai Zhinuo 20%
Lujia Import & Export 20%
Zhishu Consulting 20%
Lu Thai Vocational Training School 0%
Banyang Villa 20%
Huilin International 15%
LIIPL 17%
VACL 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 17 August 2020. In accordance with the Notice for Announcing the First Batch
of Hi-tech Enterprise List of Shandong Province in 2022, the majority-owned subsidiary Lulian New Materials was identified as a
hi-tech enterprise, and the certificate issuing date was 12 December 2022. 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
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Lu Thai Textile Co., Ltd. Annual Report 2022
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 subsidiaries Lufeng
Weaving & Dyeing and Lulian New Materials enjoy a corporate income tax rate of 15%.
According to Announcement of the State Taxation Administration on Issues Concerning the Implementation of the Inclusive
Income Tax Reduction and Exemption Policy for Small and Low-profit Enterprises (Announcement No. 2 [2019] of the State
Taxation Administration) and 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), the portion of annual taxable income of within RMB1 million
of the wholly-owned subsidiaries of the Company, including Shanghai Luthai, Shanghai Zhinuo Textile New Materials Co., Ltd.,
Lu Jia Import & Export Co., Ltd., Zhishu Consulting and Zibo Banyang Villa Hotel Co., Ltd. shall be included in taxable income
by reduction of 12.5% based on the enterprise income tax rate of 20%; for the portion exceeding RMB1 million but within RMB3
million, it shall be included in taxable income by reduction of 50% based on the enterprise income tax rate of 20%.
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.
Lu Thai (Hong Kong) Textile Co., Ltd. (hereinafter refers as Lu Thai (Hong Kong) Textile), the wholly-owned subsidiary
company of the Company, was incorporated in Hong Kong SAR, whose profit tax shall be paid at tax rate of 16.5%.
The wholly own subsidiary VACL, according to the Burma’s Special Economic Zone Law issued by Pyidaungsu Hluttaw, VACL
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 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 LIIPL of Huilin International is registered in Singapore and pays the corporate income tax at a rate
of 17%.
VII. Notes to Major Items in the Consolidated Financial Statements of the Company
1. Monetary capital
Unit: RMB
Item Ending balance Beginning balance
Cash on hand 2,360,089.79 3,475,164.56
Bank deposits 2,054,133,036.04 1,994,544,688.81
Other monetary capital 11,275,128.14 1,693,035.98
Total 2,067,768,253.97 1,999,712,889.35
Of which: The total amount deposited
246,365,368.50 124,950,227.06
overseas
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Lu Thai Textile Co., Ltd. Annual Report 2022
Other notes:
(1) On 31 December 2022, the monetary capital with restricted ownership was RMB1,328,577.85, which included RMB515,460.80
of cash deposit for domestic L/G and USD116,750.00 (RMB813,117.05) of cash deposit for L/C.
(2) The interest receivable in bank deposits was RMB9,206,657.38.
2. Trading financial assets
Unit: RMB
Item Ending balance Beginning balance
Financial assets at fair value through profit or loss 267,695,159.48 1,727,000.00
Of which:
Debt instrument investment 239,522,650.65
Derivative financial assets 28,172,508.83 1,727,000.00
Of which:
Total 267,695,159.48 1,727,000.00
3. Notes Receivable
(1) Notes Receivable Listed by Category
Unit: RMB
Item Ending balance Beginning balance
Bank acceptance bill 95,123,874.32 129,359,621.79
Commercial acceptance bill 121,492.55
L/C 73,631,841.52 98,259,133.55
Total 168,755,715.84 227,740,247.89
Unit: RMB
Ending balance Beginning balance
Carrying amount Bad debt provision Carrying amount Bad debt provision
Categor Withdra Withdra
y Carrying Carrying
Proporti wal value Proporti wal value
Amount Amount Amount Amount
on proporti on proporti
on on
Of
which:
Notes
receivab
le of bad
debt
168,755, 168,755, 227,746, 227,740,
provisio 100.00% 100.00% 6,394.34
n 715.84 715.84 642.23 247.89
withdra
wn by
groups
Of
which:
Commer
cial 127,886. 121,492.
0.06% 6,394.34 5.00%
acceptan 89 55
ce bill
Bank
acceptan 168,755, 168,755, 227,618, 227,618,
100.00% 99.94%
ce bill 715.84 715.84 755.34 755.34
with low
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Lu Thai Textile Co., Ltd. Annual Report 2022
credit
rating
and L/C
168,755, 168,755, 227,746, 227,740,
Total 100.00% 100.00% 6,394.34
715.84 715.84 642.23 247.89
If the bad debt provision for notes receivable was withdrawn in accordance with the general model of expected credit losses,
information related to bad debt provision shall be disclosed by reference to the disclosure method of other receivables:
□Applicable Not applicable
(2) Bad debt provision withdrawn, reversed or collected during the Reporting Period
Bad debt provision withdrawn in the Reporting Period:
Unit: RMB
Changes in the reporting period
Beginning
Category Reversal or Ending balance
balance Withdrawal Write-off Other
recovery
Commercial
6,394.34 -6,394.34 0.00
acceptance bill
Total 6,394.34 -6,394.34 0.00 0.00 0.00 0.00
Of which significant amount of reversal or recovery bad debt provision in the Reporting Period:
□Applicable Not applicable
4. Accounts receivable
(1) Accounts receivable classified by category
Unit: RMB
Ending balance Beginning balance
Carrying amount Bad debt provision Carrying amount Bad debt provision
Categor Withdra Withdra
y Carrying Carrying
Proporti wal value Proporti wal value
Amount Amount Amount Amount
on proporti on proporti
on on
Account
s
receivab
le of bad
debt 5,137,50 5,137,50 2,179,97 2,179,97
0.71% 100.00% 0.31% 100.00%
provisio 0.44 0.44 0.77 0.77
n
separatel
y
accrued
Of
which:
Account
s
receivab
le of bad
debt 716,765, 56,338,1 660,427, 692,042, 44,764,9 647,277,
99.29% 7.86% 99.69% 6.47%
provisio 668.96 42.77 526.19 157.38 58.87 198.51
n
withdra
wn by
groups
Of
which:
Group 1: 166,814, 23.11% 1,751,55 1.05% 165,062, 99,484,4 14.33% 1,044,58 1.05% 98,439,9
167
Lu Thai Textile Co., Ltd. Annual Report 2022
Undue 345.91 0.62 795.29 89.32 7.17 02.15
accounts
(credit
insuranc
e
insured)
Group 2:
Undue
accounts
395,429, 19,771,4 375,658, 508,102, 25,405,1 482,696,
(no 54.78% 5.00% 73.19% 5.00%
credit 681.72 84.04 197.68 078.32 03.98 974.34
insuranc
e)
Group 3:
Overdue
accounts
73,996,7 11,617,4 62,379,2 20,932,2 2,239,75 18,692,5
(credit 10.25% 15.70% 3.02% 10.70%
insuranc 51.59 89.99 61.60 98.93 5.99 42.94
e
insured)
Group 4:
Overdue
accounts
80,524,8 23,197,6 57,327,2 63,523,2 16,075,5 47,447,7
(no 11.15% 28.81% 9.15% 25.31%
credit 89.74 18.12 71.62 90.81 11.73 79.08
insuranc
e)
721,903, 61,475,6 660,427, 694,222, 46,944,9 647,277,
Total 100.00% 8.52% 100.00% 6.76%
169.40 43.21 526.19 128.15 29.64 198.51
Bad debt provision separately accrued: Y2022
Unit: RMB
Ending balance
Name
Carrying amount Bad debt provision Withdrawal proportion Provision reason
Customer filed for
Customer 1 2,705,609.83 2,705,609.83 100.00%
bankruptcy protection
Customer financial
Customer 2 1,986,544.97 1,986,544.97 100.00%
difficulties
Customer filed for
Customer 3 281,353.47 281,353.47 100.00%
bankruptcy protection
Customer financial
Customer 4 90,959.35 90,959.35 100.00%
difficulties
Customer financial
Customer 5 73,032.82 73,032.82 100.00%
difficulties
Total 5,137,500.44 5,137,500.44
Bad debt provision separately accrued: Y2021
Ending balance
Name Withdrawal
Carrying amount Bad debt provision Provision reason
proportion
Customer filed for bankruptcy
Customer 1 1,347,066.83 1,347,066.83 100.00%
protection
Customer filed for bankruptcy
Customer 2 273,384.76 273,384.76 100.00%
protection
Customer financial difficulties or
Other customer 559,519.18 559,519.18 100.00%
filed for bankruptcy protection
Total 2,179,970.77 2,179,970.77
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Lu Thai Textile Co., Ltd. Annual Report 2022
Bad debt provision withdrawn by groups: Y2022
Unit: RMB
Ending balance
Name Withdrawal
Carrying amount Bad debt provision
proportion
Group 1: Undue accounts (credit insurance
166,814,345.91 1,751,550.62 1.05%
insured)
Group 2: Undue accounts (no credit insurance) 395,429,681.72 19,771,484.04 5.00%
Group 3: Overdue accounts (credit insurance
73,996,751.59 11,617,489.99 15.70%
insured)
Group 4: Overdue accounts (no credit
80,524,889.74 23,197,618.12 28.81%
insurance)
Total 716,765,668.96 56,338,142.77
Notes:
Bad debt provision withdrawn by groups: Y2021
Unit: RMB
Ending balance
Name Withdrawal
Carrying amount Bad debt provision
proportion
Group 1: Undue accounts (credit insurance
99,484,489.32 1,044,587.17 1.05%
insured)
Group 2: Undue accounts (no credit insurance) 508,102,078.32 25,405,103.98 5.00%
Group 3: Overdue accounts (credit insurance
20,932,298.93 2,239,755.99 10.70%
insured)
Group 4: Overdue accounts (no credit
63,523,290.81 16,075,511.73 25.31%
insurance)
Total 692,042,157.38 44,764,958.87
Notes:
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 Carrying amount
Within 1 year (including 1 year) 710,248,142.12
1 to 2 years 1,413,758.76
2 to 3 years 3,516,929.18
Over 3 years 6,724,339.34
3 to 4 years 6,330,795.56
4 to 5 years 391,883.77
Over 5 years 1,660.01
Total 721,903,169.40
(2) Bad debt provision withdrawn, reversed or collected during the Reporting Period
Bad debt provision withdrawn in the Reporting Period:
Unit: RMB
Category Beginning balance Changes in the reporting period Ending balance
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Lu Thai Textile Co., Ltd. Annual Report 2022
Reversal or
Withdrawal Write-off Other
recovery
Bad debt
46,944,929.64 17,054,611.68 2,523,898.11 61,475,643.21
provision
Total 46,944,929.64 17,054,611.68 2,523,898.11 61,475,643.21
(3) Particulars of the actual verification of accounts receivable during the Reporting Period
Item Amount
Accounts receivable actually verified 2,523,898.11
(4) Top 5 of accounts receivable of ending balance collected by arrears party
Unit: RMB
Proportion to total ending balance of Ending balance of bad
Name of Entity Ending balance
accounts receivable debt provision
Aggregate amount of top 5 of
accounts receivable of ending 156,993,472.47 21.75% 9,470,319.30
balance collected by arrears party
Total 156,993,472.47 21.75%
5. Accounts receivable financing
Unit: RMB
Item Ending balance Beginning balance
Notes receivable 11,300,942.26 35,042,339.23
Less: Other comprehensive income -
-92,637.48 -379,267.35
changes in fair value
Total 11,208,304.78 34,663,071.88
Changes in accounts receivable financing and fair value in the Reporting Period
□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.
□Applicable Not applicable
Other notes:
There was no bank acceptance bill for which bad debt provision accrued separately in the Company. On 31 December 2022, the
Company believed that there was no significant credit risk in the bank acceptance bill held by the Company, and no significant
loss caused by bank defaults.
(1) Notes receivable endorsed by the Company or discounted and not due on the balance sheet date at the period-end
Category Derecognized amount at the Non-derecognized amount at the
period-end period-end
Bank acceptance bill 470,254,140.70
Trade acceptance bill
Total 470,254,140.70
The bank acceptance bill used for discount is accepted by a bank with high credit grade, the credit risk and deferred payment risk
are low, and the interest rate risk related to the bill has been transferred to the bank. It can be judged that the main risk and reward
on the ownership of the bill have been transferred, so the bank acceptance bill was derecognized at the period-end.
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Lu Thai Textile Co., Ltd. Annual Report 2022
6. Prepayment
(1) List by aging analysis
Unit: RMB
Ending balance Beginning balance
Aging
Amount Proportion Amount Proportion
Within 1 year 94,608,438.10 99.57% 54,395,566.77 99.73%
1 to 2 years 411,030.94 0.43% 80,046.79 0.15%
2 to 3 years 2,129.28 0.00% 57,065.73 0.10%
Over 3 years 13,274.91 0.02%
Total 95,021,598.32 54,545,954.20
(2) Top 5 of the ending balance of the prepayment collected according to the prepayment target
The advances to suppliers from the top five of prepaid parties classified based on the ending balance totals RMB53,221,240.22 in
the current period, accounting for 56.01% of the total ending balance of the advances to suppliers.
7. Other receivables
Unit: RMB
Item Ending balance Beginning balance
Dividends receivable 18,563,298.39 47,025,975.44
Other receivables 71,292,361.60 27,165,637.78
Total 89,855,659.99 74,191,613.22
(1) Dividends receivable
1) Category of dividends receivable
Unit: RMB
Item (or Investee) Ending balance Beginning balance
Sanchang Fengshou Cotton Industry Co., Ltd. (hereinafter referred to as
19,540,314.10 49,501,026.78
"Fengshou Cotton")
Less: Bad debt provision -977,015.71 -2,475,051.34
Total 18,563,298.39 47,025,975.44
2) Significant dividends receivable aging over 1 year
Unit: RMB
Whether occurred impairment and
Item (or investee) Ending balance Aging Reason
its judgment basis
Collect in accordance with agreed
Fengshou Cotton 19,540,314.10 2-3 年 Not past due
dividend payment plan
Total 19,540,314.10
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Lu Thai Textile Co., Ltd. Annual Report 2022
3) Withdrawal of bad debt provision
Applicable □ Not applicable
Unit: RMB
First stage Second stage Third stage
Bad debt provision Expected loss in the duration Expected loss in the Total
Expected credit loss of
(credit impairment not duration (credit impairment
the next 12 months
occurred) occurred)
Balance of 1 January
2,475,051.34 2,475,051.34
2022
Balance of 1 January
2022 in the Reporting
Period
Withdrawal of the current -
-1,498,035.63
period 1,498,035.63
Balance of 31 December
977,015.71 977,015.71
2022
Changes of carrying amount with significant amount changed of loss provision in the current period
□Applicable Not applicable
Other notes:
The Company did not have dividends receivable in the second and third stages at the Period-end.
(2) Other receivables
1) Other receivables classified by category
Unit: RMB
Nature Ending carrying amount Beginning carrying amount
Export rebates 14,027,493.50 1,384,112.79
VAT to be returned 8,307,493.84 8,486,685.52
Payment on behalf 11,897,474.75 11,917,827.00
Guarantee deposit and cash deposit 4,220,014.58 6,586,697.20
Borrowings and petty cash 1,543,080.24 1,051,186.48
Other 36,256,599.70 402,457.40
Total 76,252,156.61 29,828,966.39
2) Withdrawal of bad debt provision
Unit: RMB
First stage Second stage Third stage
Bad debt provision Expected credit Expected loss in the duration Expected loss in the Total
loss of the next (credit impairment not duration (credit
12 months occurred) impairment occurred)
Balance of 1 January 2022 1,357,763.63 1,305,564.98 2,663,328.61
Balance of 1 January 2022 in
the Reporting Period
——Transfer to the second
-17,221.80 17,221.80
stage
Withdrawal of the current
2,628,878.20 -44,731.80 2,584,146.40
period
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Lu Thai Textile Co., Ltd. Annual Report 2022
Verification of the current
287,680.00 287,680.00
period
Balance of 31 December 2022 3,681,740.03 1,278,054.98 4,959,795.01
Changes of carrying amount with significant amount changed of loss provision in the current period
□Applicable Not applicable
Disclosure by aging
Unit: RMB
Aging Carrying amount
Within 1 year (including 1 year) 70,961,586.97
1 to 2 years 1,080,590.18
2 to 3 years 678,244.85
Over 3 years 3,531,734.61
3 to 4 years 131,544.46
4 to 5 years 101,101.14
Over 5 years 3,299,089.01
Total 76,252,156.61
3) Bad debt provision withdrawn, reversed or collected during the Reporting Period
Bad debt provision withdrawn in the Reporting Period:
Unit: RMB
Changes in the Reporting Period
Beginning Revers Ending
Category al or
balance Withdrawal Write-off Other balance
recover
y
Expected credit loss in the
next 12 months in the first 1,357,763.63 2,628,878.20 287,680.00 -17,221.80 3,681,740.03
stage
Expected loss in the duration
(credit impairment not 1,305,564.98 -44,731.80 17,221.80 1,278,054.98
occurred) in the second stage
Expected loss in the duration
(credit impairment occurred)
in the third stage
Total 2,663,328.61 2,584,146.40 287,680.00 0.00 4,959,795.01
4) Top 5 of the ending balance of the other receivables collected according to the arrears party
Unit: RMB
Proportion to
ending balance of Ending balance of
Name of entity Nature Ending balance Aging
total other bad debt provision
receivables
Customer 1 Other receivables 35,104,900.00 Within 1 year 46.04% 1,755,245.00
Customer 2 Export rebates 14,027,493.50 Within 1 year 18.40% 701,374.67
Customer 3 Input VAT 8,307,493.84 Within 1 year 10.90% 415,374.69
Customer 4 Advance payments 6,163,773.43 Within 1 year 8.08% 308,188.67
173
Lu Thai Textile Co., Ltd. Annual Report 2022
Customer 5 Advance payments 1,528,172.14 Within 1 year 2.00% 76,408.61
Total 65,131,832.91 85.42% 3,256,591.64
8. Inventory
Whether the Company needs to comply with the disclosure requirements for real estate industry
Not
(1) Category of inventory
Unit: RMB
Ending balance Beginning balance
Falling price Falling price
reserves of reserves of
inventory or inventory or
Item Carrying depreciation Carrying Carrying depreciation Carrying
amount reserves of amount amount reserves of amount
contract contract
performance performance
cost cost
Raw materials 964,638,749.13 47,996,904.87 916,641,844.26 928,078,106.34 17,925,640.41 910,152,465.93
Goods in
502,282,021.10 12,926,711.64 489,355,309.46 611,695,332.97 2,538,846.30 609,156,486.67
process
Inventory
869,338,282.54 181,010,948.47 688,327,334.07 939,550,089.36 143,767,058.72 795,783,030.64
goods
Assigned
processing 13,525,220.54 13,525,220.54 30,254,811.04 30,254,811.04
products
2,349,784,273. 2,107,849,708. 2,509,578,339. 2,345,346,794.
Total 241,934,564.98 164,231,545.43
31 33 71 28
(2) Falling price reserves of inventory and depreciation reserves of contract performance cost
Unit: RMB
Decreased amount of the
Increased amount of the period
period
Item Beginning balance Ending balance
Reverse or write-
Withdrawal Other Other
off
Raw materials 17,925,640.41 32,518,053.20 2,446,788.74 47,996,904.87
Goods in
2,538,846.30 12,926,711.64 2,538,846.30 12,926,711.64
process
Inventory
143,767,058.72 130,589,313.34 93,345,423.59 181,010,948.47
goods
Total 164,231,545.43 176,034,078.18 98,331,058.63 241,934,564.98
9. Other current assets
Unit: RMB
Item Ending balance Beginning balance
Input tax 9,813,869.63 53,076,859.19
Prepaid income tax 14,983,737.42 2,589,285.09
Other prepaid taxes 432,344.55 126,618.09
Convertible bond fractional share funds 199,689.59 199,760.44
174
Lu Thai Textile Co., Ltd. Annual Report 2022
Refundable deposits 51,418,261.88
Total 76,847,903.07 55,992,522.81
10. Long-term equity investment
Unit: RMB
Increase/decrease
Gains Ending
Cash
Beginning and Adjustme Chan Withdr Ending balance
bonus
balance Additi losses nt of ges awal of balance of
Investee Reduced or
(carrying onal recognize other of impair Oth (carrying depreci
investme profits
value) invest d under comprehe other ment er value) ation
nt announ
ment the nsive equit provisi reserve
ced to
equity income y on
issue
method
I. Joint ventures
II. Associated enterprises
Ningbo
Meishan
Bonded
Port
Area
Haohon
g Equity
Investm
ent -
Partners 67,657,62 60,547,74
7,109,87
hip 6.65 9.28
(L.P.) 7.37
(hereina
fter
referred
to as
"Haoho
ng
Investm
ent")
Haohon
g Equity
Investm
ent
Partners
hip
(L.P.)
101,785,4 13,323,5 35,158,9 123,620,8
(hereina
fter 80.01 21.50 17.90 76.41
referred
to as
"Haoho
ng
Investm
ent")
169,443,1 13,323,5 28,049,0 184,168,6
Subtotal
06.66 21.50 40.53 25.69
169,443,1 13,323,5 28,049,0 184,168,6
Total
06.66 21.50 40.53 25.69
11. Other non-current financial assets
Unit: RMB
175
Lu Thai Textile Co., Ltd. Annual Report 2022
Item Ending balance Beginning balance
Equity instrument investment 325,110,000.00 178,052,000.00
Financial assets designated to be measured at fair value with
12,000,000.00 12,000,000.00
the changes in fair value included in current profits and losses
Total 337,110,000.00 190,052,000.00
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
1. Beginning balance 33,577,852.12 33,577,852.12
2. Increased amount of the period
(1) Outsourcing
(2) Transfer from inventories/fixed
assets/construction in progress
(3) Enterprise combination increase
3. Decreased amount of the 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 of the period 901,366.82 901,366.82
(1) Withdrawal or amortization 901,366.82 901,366.82
3. Decreased amount of the period
(1) Disposal
(2) Other transfer
4. Ending balance 13,116,916.91 13,116,916.91
III. Depreciation reserves
1. Beginning balance
2. Increased amount of the period
(1) Withdrawal
3. Decreased amount of the period
(1) Disposal
(2) Other transfer
4. Ending balance
IV. Carrying value
176
Lu Thai Textile Co., Ltd. Annual Report 2022
1. Ending carrying value 20,460,935.21 20,460,935.21
2. Beginning carrying value 21,362,302.03 21,362,302.03
13. Fixed assets
Unit: RMB
Item Ending balance Beginning balance
Fixed assets 5,807,847,850.67 5,559,649,164.65
Proceeds from disposal of fixed assets 1,952,209.79
Total 5,807,847,850.67 5,561,601,374.44
(1) List of fixed assets
Unit: RMB
Electronic
Houses and Machinery Transportation
Item equipment and Total
buildings equipment equipment
others
I. Original carrying
value
1. Beginning
3,400,996,650.73 7,004,146,023.55 48,665,620.78 130,151,497.42 10,583,959,792.48
balance
2. Increased amount
256,094,212.15 488,642,816.67 5,400,253.52 9,244,294.31 759,381,576.65
of the period
(1) Purchase 349,619,953.56 4,514,061.92 6,678,265.02 360,812,280.50
(2) Transfer from
construction in 179,980,745.18 30,548,432.39 2,016,684.27 212,545,861.84
progress
(3) Enterprise
combination increase
(4) Other increase 76,113,466.97 108,474,430.72 886,191.60 549,345.02 186,023,434.31
3. Decreased amount
4,988,969.67 65,565,057.73 724,717.48 5,656,898.85 76,935,643.73
of the period
(1) Disposal or
4,988,969.67 65,565,057.73 724,717.48 5,656,898.85 76,935,643.73
scrap
4. Ending balance 3,652,101,893.21 7,427,223,782.49 53,341,156.82 133,738,892.88 11,266,405,725.40
II. Accumulative
depreciation
1. Beginning
1,090,800,777.05 3,758,383,265.78 35,811,352.62 106,782,812.91 4,991,778,208.36
balance
2. Increased amount
131,502,052.40 343,566,952.94 4,856,466.21 12,507,936.51 492,433,408.06
of the period
(1) Withdrawal 120,881,174.92 314,355,872.70 4,271,054.26 12,080,568.31 451,588,670.19
(2) Other increase 10,620,877.48 29,211,080.24 585,411.95 427,368.20 40,844,737.87
3. Decreased amount
4,490,072.71 53,401,293.06 673,438.62 5,217,361.50 63,782,165.89
of the period
(1) Disposal or
4,490,072.71 53,401,293.06 673,438.62 5,217,361.50 63,782,165.89
scrap
4. Ending balance 1,217,812,756.74 4,048,548,925.66 39,994,380.21 114,073,387.92 5,420,429,450.53
III. Depreciation
reserves
1. Beginning
429,416.16 32,029,934.70 5,671.30 67,397.31 32,532,419.47
balance
2. Increased amount
10,271,485.18 400.00 10,271,885.18
of the period
(1) Withdrawal 10,271,485.18 400.00 10,271,885.18
177
Lu Thai Textile Co., Ltd. Annual Report 2022
3. Decreased amount
4,670,214.95 5,665.50 4,675,880.45
of the period
(1) Disposal or
4,670,214.95 5,665.50 4,675,880.45
scrap
4. Ending balance 429,416.16 37,631,204.93 5,671.30 62,131.81 38,128,424.20
IV. Carrying value
1. Ending carrying
2,433,859,720.31 3,341,043,651.90 13,341,105.31 19,603,373.15 5,807,847,850.67
value
2. Beginning
2,309,766,457.52 3,213,732,823.07 12,848,596.86 23,301,287.20 5,559,649,164.65
carrying value
(2) Fixed assets leased out by operation lease
Unit: RMB
Item Ending carrying value
Houses and buildings 3,936,060.52
(3) Fixed assets failed to accomplish certification of property
Unit: RMB
Item Carrying amount Reason of certificate of titles have not yet been obtained
Lufeng weaving dye gray Under the relevant certificate procedures of acceptance, measurement,
10,410,130.08
yarn warehouse examination by the real estate trading center and other departments
Lulian New Materials yarn
8,466,234.48 Ditto
warehouse
Lulian New Materials
84,807,194.89 Ditto
fabric inspection workshop
(4) 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 162,197,188.04 157,651,325.17
Engineering materials 37,746,313.69 79,927,757.82
Total 199,943,501.73 237,579,082.99
(1) List of Construction in Progress
Unit: RMB
Ending balance Beginning balance
Item
Carrying Depreciation Carrying value Carrying Depreciation Carrying value
178
Lu Thai Textile Co., Ltd. Annual Report 2022
amount reserves amount reserves
Reform project of
Xinsheng Thermal 18,548,362.41 18,548,362.41 33,040,260.81 33,040,260.81
Power
Functional Fabric
Intelligent Ecological 84,984,974.35 84,984,974.35
Park Project (Phase I)
High-grade fabric
110,653,801.46 110,653,801.46
product line project (I)
Garment extension
376,701.86 376,701.86
project
Other sporadic
32,995,024.17 32,995,024.17 39,249,388.15 39,249,388.15
projects
Total 162,197,188.04 162,197,188.04 157,651,325.17 157,651,325.17
(2) Changes in significant construction in progress during the Reporting Period
Unit: RMB
Includi
Propor
ng:
tion of Capital
Accum Amou
accum ization
ulated nt of
Increas Transf Other ulated rate of
Beginn amoun capital
ed erred decrea Ending invest Job interes Capital
ing t of ized
Item Budget amoun in sed balanc ment schedu ts for resour
balanc interes interes
t of the fixed amoun e in le the ces
e t ts for
period assets t constr reporti
capital the
uctions ng
ization reporti
to period
ng
budget
period
Refor
m
project
of 30,000 33,040 15,262 29,754 18,548
62.00
Xinshe ,000.0 ,260.8 ,396.4 ,294.8 ,362.4 70.00 Other
%
ng 0 1 8 8 1
Therm
al
Power
Functi
onal
Fabric
Intellig
ent 217,21 84,984 38,622 123,60 14,445 Public
140.00 7,702,
Ecolog 1,000. ,974.3 ,983.8 7,958. 97.00 ,118.7 3.68% offerin
% 801.85
ical 00 5 3 18 6 g fund
Park
Project
(Phase
I)
High-
grade
fabric 251,80 110,65 110,65 Public
43.94
produc 0,800. 3,801. 3,801. 43.94 offerin
%
t line 00 46 46 g fund
project
(I)
Garme 32,580 376,70 31,091 31,467 95.00 100.00 Other
179
Lu Thai Textile Co., Ltd. Annual Report 2022
nt ,000.0 1.86 ,025.2 ,727.1 %
extensi 0 9 5
on
project
Other
sporad 39,249 21,461 27,715 32,995
ic ,388.1 ,517.6 ,881.6 ,024.1 Other
project 5 5 3 7
s
531,59 157,65 217,09 212,54 162,19 14,445
7,702,
Total 1,800. 1,325. 1,724. 5,861. 7,188. ,118.7
801.85
00 17 71 84 04 6
(3) Engineering materials
Unit: RMB
Ending balance Beginning balance
Item Depreciation Depreciati
Carrying amount Carrying value Carrying amount Carrying value
reserve on reserve
Special
37,746,313.69 37,746,313.69 79,927,757.82 79,927,757.82
equipment
Total 37,746,313.69 37,746,313.69 79,927,757.82 79,927,757.82
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 of the
1,759,797.64 243,114,051.24 244,873,848.88
period
(1) Rent 1,228,493.27 229,640,412.38 230,868,905.65
(2) Lease liabilities
402,241.59 402,241.59
adjustment
(3) Other increase 129,062.78 13,473,638.86 13,602,701.64
3. Decreased amount of the
424,514.97 424,514.97
period
(1) Sublease is a financial
lease
(2) Transfer or hold for sale
(3) Expiration 424,514.97 424,514.97
(4) Other decreases
4. Ending balance 74,496,696.93 445,512,889.01 520,009,585.94
II. Accumulative depreciation
1. Beginning balance 11,227,086.37 7,313,879.51 18,540,965.88
2. Increased amount of the
11,066,530.87 9,406,098.85 20,472,629.72
period
(1) Withdrawal 10,987,813.58 9,031,453.21 20,019,266.79
(2) Other increases 78,717.29 374,645.64 453,362.93
3. Decreased amount of the
424,514.97 424,514.97
period
180
Lu Thai Textile Co., Ltd. Annual Report 2022
(1) Disposal
(2) Expiration 424,514.97 424,514.97
4. Ending balance 22,293,617.24 16,295,463.39 38,589,080.63
III. Depreciation reserves
1. Beginning balance
2. Increased amount of the
period
(1) Withdrawal
3. Decreased amount of the
period
(1) Disposal
4. Ending balance
IV. Carrying value
1. Ending carrying value 52,203,079.69 429,217,425.62 481,420,505.31
2. Beginning carrying value 61,509,812.92 195,509,473.23 257,019,286.15
16. Intangible assets
(1) List of intangible assets
Unit: RMB
Non-patent
Item Land use right Patent right Software use right Total
technology
I. Original
carrying value
1. Beginning
470,338,494.00 409,550.00 2,131,387.36 472,879,431.36
balance
2. Increased
amount of the 505,899.97 505,899.97
period
(1)
492,893.82 492,893.82
Purchase
(2) Internal
R&D
(3)
Enterprise
combination
increase
(4) Other
13,006.15 13,006.15
increase
3. Decreased
amount of the 1,264,470.58 1,264,470.58
period
(1)
1,264,470.58 1,264,470.58
Disposal
4. Ending
470,338,494.00 409,550.00 1,372,816.75 472,120,860.75
balance
II. Accumulated
amortization
1. Beginning
108,346,465.36 30,716.28 1,371,271.58 109,748,453.22
balance
2. Increased
amount of the 9,975,455.27 40,955.70 730,889.08 10,747,300.05
period
(1)
9,975,455.27 40,955.70 727,006.31 10,743,417.28
Withdrawal
181
Lu Thai Textile Co., Ltd. Annual Report 2022
(2) Other
3,882.77 3,882.77
increase
3. Decreased
amount of the 1,264,470.58 1,264,470.58
period
(1)
1,264,470.58 1,264,470.58
Disposal
4. Ending
118,321,920.63 71,671.98 837,690.08 119,231,282.69
balance
III. Depreciation
reserves
1. Beginning
balance
2. Increased
amount of the
period
(1)
Withdrawal
3. Decreased
amount of the
period
(1) Disposal
4. Ending
balance
IV. Carrying value
1. Ending
352,016,573.37 337,878.02 535,126.67 352,889,578.06
carrying value
2. Beginning
361,992,028.64 378,833.72 760,115.78 363,130,978.14
carrying value
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
Increased amount of the period Decreased amount of the period
Beginning Recognized as Ending
Item Internal Transfer to current
balance Other intangible balance
development gains and losses
assets
Product
276,424,812.26 276,424,812.26
R&D
Total 276,424,812.26 276,424,812.26
18. Goodwill
(1) Original carrying value of goodwill
Unit: RMB
Name of the invested Increase Decrease
units or events Beginning balance Formed by business Ending balance
generating goodwill Disposal
combination
Xinsheng Power 20,563,803.29 20,563,803.29
Total 20,563,803.29 20,563,803.29
182
Lu Thai Textile Co., Ltd. Annual Report 2022
19. Long-term prepaid expense
Unit: RMB
Amortization
Increased amount Other decreased
Item Beginning balance amount of the Ending balance
of the period amount
period
Decoration and
672,601.04 5,638,681.33 3,441,897.80 2,869,384.57
repair expenses
Technical service
114,974.00 35,376.60 79,597.40
fee
Total 672,601.04 5,753,655.33 3,477,274.40 2,948,981.97
20. Deferred income tax assets/deferred income tax liabilities
(1) Deferred income tax assets that had not been off-set
Unit: RMB
Ending balance Beginning balance
Item Deductible temporary Deferred income tax Deductible temporary Deferred income tax
difference assets difference assets
Depreciation reserves
255,841,124.12 38,889,866.26 211,902,261.84 32,571,574.68
of assets
Unrealized profit of
131,224,111.61 17,495,580.49 154,652,429.83 23,546,803.59
internal transactions
Deductible losses 152,699,543.87 28,176,066.84 125,211,374.31 23,469,558.56
Payroll payable 73,899,001.83 11,096,607.07 62,871,779.73 9,443,195.07
Deferred income 159,284,848.68 24,863,045.77 188,769,454.53 31,627,668.49
Contract liability 81,088,515.08 20,272,128.77 50,555,810.44 12,638,952.61
Changes in the fair
value of other non- 330,000.00 49,500.00 160,000.00 24,000.00
current financial assets
Changes in fair value
92,637.48 13,895.62 379,267.35 58,968.83
of receivable financing
Operating leases 6,274,343.07 1,002,949.03 3,105,101.78 486,827.11
Restricted stock
53,367,269.88 8,005,090.48 30,990,583.74 4,648,587.56
incentive fees
Convertible corporate
17,827,648.45 2,674,147.27
bonds
Associated enterprises 21,570,971.02 3,235,645.65
Total 953,500,015.09 155,774,523.25 828,598,063.55 138,516,136.50
(2) Deferred income tax liabilities had not been off-set
Unit: RMB
Ending balance Beginning balance
Item Deductible temporary Deferred income tax Deductible temporary Deferred income tax
difference liabilities difference liabilities
Depreciation of fixed
643,426,505.04 101,589,274.02 462,125,128.72 74,185,425.08
assets
Changes in fair value
of trading financial 23,985,450.00 3,597,817.50 1,727,000.00 259,050.00
assets
Changes in the fair 268,073,567.06 40,211,035.06 120,845,567.06 18,126,835.06
183
Lu Thai Textile Co., Ltd. Annual Report 2022
value of other non-
current financial assets
Associated enterprises 36,944,397.91 5,541,659.69
Fund income 2,024,310.22 303,646.53
Total 974,454,230.23 151,243,432.80 584,697,695.78 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
155,774,523.25 138,516,136.50
assets
Deferred income tax
151,243,432.80 92,571,310.14
liabilities
(4) List of unrecognized deferred income tax assets
Unit: RMB
Item Ending balance Beginning balance
Deductible temporary difference 49,938,675.28 33,132,273.10
Deductible losses 170,560,094.42 73,702,292.27
Total 220,498,769.70 106,834,565.37
(5) Deductible losses of unrecognized deferred income tax assets will due in the following years
Unit: RMB
Years Ending amount Beginning amount Note
Y2023
Y2024 646.08 1,344.62
Y2025 52,127.16 584,842.87
Y2026 71,952,021.26 73,116,104.78
Y2027 98,555,299.92
Total 170,560,094.42 73,702,292.27
21. Other Non-current Assets
Unit: RMB
Ending balance Beginning balance
Item Carrying Depreciation Carrying Depreciation
Carrying value Carrying value
amount reserves amount reserves
Prepayment for land
214,131,583.94 214,131,583.94
transfer fee
Prepayment for
80,902,453.33 80,902,453.33 11,691,427.91 11,691,427.91
equipment
184
Lu Thai Textile Co., Ltd. Annual Report 2022
Term deposits over 1
151,000,000.00 151,000,000.00 351,000,000.00 351,000,000.00
year
Interest receivable
from term deposits 10,637,013.55 10,637,013.55 9,260,296.40 9,260,296.40
over 1 year
Total 242,539,466.88 242,539,466.88 586,083,308.25 586,083,308.25
22. Short-term Borrowings
(1) Category of Short-term Borrowings
Unit: RMB
Item Ending balance Beginning balance
Guarantee loan 238,770,866.65
Credit loan 518,946,415.96 772,263,271.67
Total 518,946,415.96 1,011,034,138.32
Notes of the category for short-term loans:
The short-term borrowing includes interest payable of RMB52,925.01.
23. Trading financial liabilities
Item Ending balance Beginning balance
Trading financial liabilities 4,276,929.70
Of which: Derivative financial
4,276,929.70
liabilities
Total 4,276,929.70
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 RMB0.00.
25. Accounts Payable
(1) List of accounts payable
Unit: RMB
Item Ending balance Beginning balance
Payment for goods 112,354,158.59 217,076,555.49
Engineering equipment 91,747,417.03 73,998,453.07
Others 42,486,888.12 44,326,362.74
Total 246,588,463.74 335,401,371.30
185
Lu Thai Textile Co., Ltd. Annual Report 2022
26. Contract Liabilities
Unit: RMB
Item Ending balance Beginning balance
Advance from sales 221,918,730.24 218,008,930.11
Less: contract liability recorded in other
-15,039,057.71 -13,041,581.15
non-current liabilities
Total 206,879,672.53 204,967,348.96
27. Payroll Payable
(1) List of payroll payable
Unit: RMB
Increase for the current Decrease for the
Item Beginning balance Ending balance
period current period
I. Short-term salary 271,168,796.78 1,483,953,061.68 1,425,801,852.70 329,320,005.76
II. Post-employment
benefit-defined 845,499.31 164,831,777.38 164,970,122.73 707,153.96
contribution plans
III. Termination
212,789.00 212,789.00
benefits
Total 272,014,296.09 1,648,997,628.06 1,590,984,764.43 330,027,159.72
(2) List of Short-term Salary
Unit: RMB
Increase for the current Decrease for the
Item Beginning balance Ending balance
period current period
1. Salary, bonus,
213,722,481.75 1,314,475,956.46 1,263,432,536.39 264,765,901.82
allowance, subsidy
2. Employee welfare 54,589,165.69 54,589,165.69
3. Social insurance 440,389.54 78,172,107.90 78,577,432.61 35,064.83
Of which:
Medical insurance 398,996.08 70,834,803.61 71,216,684.18 17,115.51
premiums
Work-
related injury insurance 41,081.00 7,313,430.89 7,348,326.31 6,185.58
premiums
Maternity
312.46 23,873.40 12,422.12 11,763.74
insurance
4. Housing fund 14,236,439.70 14,236,439.70
5. Labor union budget
and employee 57,005,925.49 22,479,391.93 14,966,278.31 64,519,039.11
education budget
Total 271,168,796.78 1,483,953,061.68 1,425,801,852.70 329,320,005.76
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Lu Thai Textile Co., Ltd. Annual Report 2022
(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
810,454.21 149,403,902.00 149,770,118.11 444,238.10
insurance
2. Unemployment
35,045.10 15,427,875.38 15,200,004.62 262,915.86
insurance premiums
Total 845,499.31 164,831,777.38 164,970,122.73 707,153.96
Other notes:
The Company, in line with the requirement, participates in endowment insurance, unemployment insurance plans, and so on.
Under these plans, the Company makes monthly contributions to these plans at 16% and 0.7% of the social security contribution
base, respectively. No further payment obligations will be incurred by the Company beyond the above monthly contribution fees.
The relevant expense occurred was recorded into current profits and losses or related asset costs.
28. Taxes Payable
Unit: RMB
Item Ending balance Beginning balance
VAT 8,191,703.94 5,534,817.32
Enterprise income tax 7,853,201.82 8,173,413.58
Personal income tax 1,070,729.43 607,463.91
Urban maintenance and construction tax 3,625,674.57 3,645,871.40
Stamp duty 760,689.83 320,584.10
Real estate tax 5,023,343.97 5,200,898.00
Land use tax 1,980,295.59 2,651,253.23
Educational fee 1,602,333.55 1,585,262.09
Local education surcharge 1,068,222.36 1,056,841.39
Tax on natural resources 99,406.00 179,258.00
Environmental protection tax 207,841.00 502,039.70
Total 31,483,442.06 29,457,702.72
29. Other Payables
Unit: RMB
Item Ending balance Beginning balance
Dividends payable 441,113.64 441,113.64
Other payables 82,916,183.07 96,759,451.67
Total 83,357,296.71 97,200,565.31
(1) Dividends payable
Unit: RMB
187
Lu Thai Textile Co., Ltd. Annual Report 2022
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. 4,246,108.66 4,544,176.56
Collecting payment on behalf of others 3,148,636.19
Restricted stock repurchase obligations 65,286,630.00 78,908,300.00
Others 13,383,444.41 10,158,338.92
Total 82,916,183.07 96,759,451.67
30. Current Portion of Non-current Liabilities
Unit: RMB
Item Ending balance Beginning balance
Long-term borrowings matured within 1
300,800,000.00 8,500,000.00
year
Lease liabilities matured within 1 year 7,121,837.35 377,404.52
Total 307,921,837.35 8,877,404.52
31. Other current liabilities
Unit: RMB
Item Ending balance Beginning balance
Tax to be charged off 15,039,057.71 13,041,581.15
Endorsed undue bill under non-
51,849,967.46 107,393,140.66
derecognition
Total 66,889,025.17 120,434,721.81
32. Long-term Borrowings
(1) Category of long-term borrowings
Unit: RMB
Item Ending balance Beginning balance
Credit loan 487,231,096.24 693,462,473.24
Less: current portion of long-term
-300,800,000.00 -8,500,000.00
borrowings
Total 186,431,096.24 684,962,473.24
Note to the category of long-term borrowings:
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Lu Thai Textile Co., Ltd. Annual Report 2022
The long-term borrowing includes interest payable of RMB501,096.24.
Other notes, including interest rate range:
Interest rate range Interest rate range
Item Ending balance Beginning balance
(%) (%)
Credit loan 487,231,096.24 3.06-3.65 693,462,473.24 3.06-3.65
33. Bonds Payable
(1) Bonds payable
Unit: RMB
Item Ending balance Beginning balance
Convertible corporate bonds 1,438,162,231.27 1,395,480,652.71
Total 1,438,162,231.27 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
Transf
Amortiz
The Withdra Repaym erred
ation of
Issu curr wal of ent in shares
Bonds Dura Issuing Beginning premium Ending
Par value ing ent interest the in
name tion amount balance and balance
date issu by par reportin reporti
deprecia
e value g period ng
tion
period
Lu
Thai 9
Conver Apri
1,400,000, 6 1,400,000, 1,395,480, 12,495,6 38,601,3 8,399,1 16,200 1,438,162,
tible l
000.00 years 000.00 652.71 43.16 22.71 87.31 .00 231.27
Bonds 202
(12701 0
6)
1,400,000, 1,395,480, 12,495,6 38,601,3 8,399,1 16,200 1,438,162,
Total ——
000.00 652.71 43.16 22.71 87.31 .00 231.27
(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 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
189
Lu Thai Textile Co., Ltd. Annual Report 2022
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. 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 139,634,635.96 160,713,545.55
Unrecognized financing costs -34,011,494.78 -38,978,482.62
Less: Current portion of lease liabilities -7,121,837.35 -377,404.52
Total 98,501,303.83 121,357,658.41
Other notes
The amount of interest expense on lease liabilities accrued in 2022 was RMB50,166,483,500, which was included in financial
costs - interest expense.
35. Long-term Payroll Payable
(1) List of long-term payroll payable
Unit: RMB
Item Ending balance Beginning balance
III. Other long-term welfare 57,417,997.65 57,384,062.39
Total 57,417,997.65 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 2,708,509.43 32,051,605.85 159,615,037.36 Government grants
Total 188,958,133.78 2,708,509.43 32,051,605.85 159,615,037.36
Other notes:
For details about government grants included in deferred income, please refer to NoteVII-64. Government Grants.
37. Share Capital
Unit: RMB
Increase/decrease (+/-)
Beginning Shares
New shares Bonus converted Ending balance
balance Others Subtotal
issued shares from capital
reserve
Total 882,341,295.00 5,838,000.00 -546,144.00 5,291,856.00 887,633,151.00
190
Lu Thai Textile Co., Ltd. Annual Report 2022
shares
Other notes:
(1) In line with the resolution of the first Extraordinary General Meeting of the Company on 13 May 2021 and the resolution of the
30th session of the Ninth Board of Directors on 18 February 2022, the Company implemented the restricted share incentive scheme
to increase its share capital by RMB5,838,000. This change in share capital has been audited by Zhitong Accounting Firm (Special
General Partnership) and the capital verification report ZTYZ (2022) No. 371C000125 was issued on 14 March 2022.
(2) 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 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. In conformity with the resolution of the 2nd Meeting of the 10th Board of
Directors of the Company on 29 June 2022, the Proposal on Repurchase and Cancel Authorized but Unlocked Restricted Share of
the Incentive Personnel not Conforming to the Incentive Condition approved on the 3rd Extraordinary General Meeting of the
Company on 15 July 2022, all the 308,000 shares authorized to the original incentive personnel who did not conform to the incentive
condition of the Company were repurchased and cancelled
This change in share capital has been audited by Zhitong Accounting Firm (Special General Partnership) and the capital verification
report ZTYZ (2022) No. 371C000541 was issued on 21 September 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) Changes of outstanding financial instruments such as preferred shares and perpetual bonds at the period-end
Unit: RMB
Period-beginning Increase Decrease Period-end
Outstanding financial
instruments Carrying Carrying
Number Carrying value Number Number Number Carrying value
value value
Convertible debt to
71,384,656.84 826.09 71,383,830.75
equity
Total 71,384,656.84 826.09 71,383,830.75
39. Capital reserves
Unit: RMB
Item Beginning balance Increase Decrease Ending balance
Capital premium (premium on
253,645,214.89 42,448,973.13 1,216,920.00 294,877,268.02
stock)
Other capital reserves 86,942,172.76 41,541,554.93 27,488,860.00 100,994,867.69
Total 340,587,387.65 83,990,528.06 28,705,780.00 395,872,135.71
Other notes: including increase and decrease in the Reporting Period and the reasons for changes:
(1) In line with the resolution of the 1st Extraordinary General Meeting of the Company on 13 May 2021 and the resolution of the
30th Meeting of the 9th Board of Directors on 18 February 2022, the Company implemented the restricted share incentive scheme
and applied for a registered capital increment of RMB5,838,000.00, to increase the capital reserve - capital premium by
RMB14,945,280.00.
According to the Proposal on Repurchase and Cancel Authorized but Unlocked Restricted Share of the Incentive Personnel not
Conforming to the Incentive Condition approved on the 30th Meeting of the 9th Board of Directors on 18 February 2022, all the
240,000 shares authorized to the original incentive personnel who did not conform to the incentive condition of the Company were
191
Lu Thai Textile Co., Ltd. Annual Report 2022
repurchased and cancelled, reducing the capital reserve - capital premium by RMB542,400.00.
In conformity with the resolution of the 2nd Meeting of the 10th Board of Directors of the Company on 29 June 2022, the
Proposal on Repurchase and Cancel Authorized but Unlocked Restricted Share of the Incentive Personnel not Conforming to the
Incentive Condition approved on the 3rd Extraordinary General Meeting of the Company on 15 July 2022, all the 308,000 shares
authorized to the original incentive personnel who did not conform to the incentive condition of the Company were repurchased
and cancelled, reducing the capital reserve - capital premium by RMB674,520.00.
(2) In terms of the restricted stock incentive fees in the Reporting Period, the capital reserve - other capital reserve increased by
RMB39,975,678.06. As for deferred income tax assets arising from the restricted stock incentive fees, the capital reserve - other
capital reserves increased by RMB1,483,480.21. The portion of restricted shares of RMB27,488,860.00 due to be unlocked was
transferred from the capital reserve - other capital reserve to the capital reserve - capital premium.
(3) The capital reserve - 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
Item Beginning balance Ending balance
period current period
Restricted stock
78,908,300.00 20,783,280.00 34,404,950.00 65,286,630.00
repurchase
B shares repurchase 89,109,568.73 89,109,568.73
Total 78,908,300.00 109,892,848.73 34,404,950.00 154,396,198.73
41. Other comprehensive income
Unit: RMB
Reporting period
Less: Less:
Recorded in Recorded in
other other
comprehensi comprehensi
Income Less: Attributable Attributab
Beginning ve income in ve income in Ending
Item before Incom to owners of le to non-
balance prior period prior period balance
taxation in e tax the Company controllin
and and
the Current expens as the parent g interests
transferred transferred
Period e after tax after tax
in profit or in retained
loss in the earnings in
Current the Current
Period Period
II. Other
comprehensi
ve income
that may -
144,097,719. 144,052,646. 107,628,898.
subsequently 36,423,748. 45,073.21 39,812.22
be 67 46 09
37
reclassified
to profit or
loss
Differences
arising from
translation -
143,850,902. 143,850,902. 107,695,495.
of foreign 36,155,406.
currency- 02 02 07
95
denominated
financial
statements
Changes in
-268,341.42 246,817.65 45,073.21 201,744.44 39,812.22 -66,596.98
fair value of
192
Lu Thai Textile Co., Ltd. Annual Report 2022
receivable
financing
Total of -
other 144,097,719. 144,052,646. 107,628,898.
36,423,748. 45,073.21 39,812.22
comprehensi 67 46 09
ve income 37
42. Special Reserve
Unit: RMB
Increase for the current Decrease for the
Item Beginning balance Ending balance
period current period
Safety production costs 5,414,407.96 5,414,407.96
Total 5,414,407.96 5,414,407.96
43. 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 1,215,124,336.54
44. Retained Earnings
Unit: RMB
Item Reporting 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
963,864,819.43 347,609,693.30
Company as the parent
Less: Withdrawal of statutory surplus reserves 61,106,878.75
Dividend of ordinary shares payable 62,155,872.45 44,120,990.40
Ending retained profits 6,490,910,719.35 5,589,201,772.37
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.
193
Lu Thai Textile Co., Ltd. Annual Report 2022
45. Operating revenue and cost of sales
Unit: RMB
Reporting period Same period of last year
Item
Operating revenue Cost of sales Operating revenue Cost of sales
Main operations 6,720,748,535.92 4,980,066,404.04 5,104,372,856.43 4,051,960,658.77
Other operations 217,593,599.98 174,301,192.86 133,889,492.42 101,020,417.08
Total 6,938,342,135.90 5,154,367,596.90 5,238,262,348.85 4,152,981,075.85
Whether the lower of the audited net profit before and after deduction of non-recurring gains and losses was negative
□Yes No
Information about performance obligations: None
46. Taxes and surtaxes
Unit: RMB
Item Reporting period Same period of last year
Urban maintenance and construction tax 21,551,569.33 14,381,696.21
Educational fee 9,360,764.03 6,290,701.80
Tax on natural resources 617,924.00 549,706.00
Real estate tax 19,206,856.99 20,100,901.40
Land use tax 8,259,276.46 9,909,346.19
Vehicle and vessel usage tax 75,267.28 76,140.82
Stamp duty 3,318,063.77 2,859,516.00
Local education surcharge 6,240,509.35 4,193,801.19
Environmental protection tax 836,933.87 1,123,830.97
Total 69,467,165.08 59,485,640.58
Other notes:
Please refer to Note VI. Taxes for details of various taxes and additional standards for calculation and payment.
47. Selling expense
Unit: RMB
Item Reporting period Same period of last year
Salary 73,759,174.53 57,662,873.54
Sales service fee 18,327,334.31 21,639,487.21
Advertising expense 15,425,043.50 14,810,042.91
Depreciation charge 6,866,294.03 5,622,896.50
Repair material consumption 4,276,970.89 4,215,335.36
Business entertainment expenses 3,128,859.41 2,902,178.36
Travel expense 2,886,260.00 1,450,850.24
Insurance 2,658,882.85 1,725,564.05
194
Lu Thai Textile Co., Ltd. Annual Report 2022
Office expense 1,628,158.22 1,317,861.12
Carriage charges 1,557,023.97 1,421,767.96
Testing fee 1,109,761.81 936,420.61
Others 5,305,333.20 6,178,216.82
Total 136,929,096.72 119,883,494.68
48. Administrative expense
Unit: RMB
Item Reporting period Same period of last year
Salary 152,944,880.74 103,358,648.44
Restricted stock incentive expenses 39,975,678.06 28,325,788.60
Warehouse funding 39,954,757.25 37,711,640.44
Depreciation charge 39,274,834.40 39,245,353.92
Travel expense 24,305,825.05 25,162,377.20
Office operating fee 23,920,159.03 24,444,907.21
Labor-union expenditure 12,128,110.20 12,176,204.31
Amortization of intangible assets 10,319,191.27 10,997,114.25
Repair expenses 9,477,943.54 8,803,754.24
Security service charge 8,697,194.36 9,350,535.69
Employee education budget 8,416,818.94 8,570,709.45
Energy cost 5,940,431.82 6,042,018.37
Audit and assessment fees 3,330,698.66 3,110,755.89
Insurance 3,211,971.72 2,729,563.84
Others 14,411,139.35 15,350,653.69
Total 396,309,634.39 335,380,025.54
49. R&D expense
Unit: RMB
Item Reporting period Same period of last year
Labor cost 148,381,734.76 150,169,732.63
Material expense 94,170,080.52 71,155,134.23
Depreciation charge 18,475,905.83 12,291,606.38
Other 15,397,091.15 19,296,438.39
Total 276,424,812.26 252,912,911.63
50. Financial costs
Unit: RMB
Item Reporting period Same period of last year
195
Lu Thai Textile Co., Ltd. Annual Report 2022
Interest expense 103,785,745.79 95,549,947.27
Less: Capitalized interest expense 15,141,537.04 30,023,129.89
Interest income 56,856,571.04 53,773,124.16
Add: Capitalized interest income 6,992,839.09 13,087,046.94
Foreign exchange gains or losses -197,850,382.46 12,488,479.34
Less: Capitalized foreign exchange gains
or losses
Commission charge and other 10,118,775.99 7,659,688.91
Total -148,951,129.67 44,988,908.41
Other notes:
The amount of interest capitalization has been included in the construction in progress. The capitalization rate used to calculate
and determine the capitalization amount of borrowing expenses during the period was 3.68% (same period of last year: 3.68%).
51. Other income
Unit: RMB
Sources Reporting period Same period of last year
Subsidies for the price of heating coal 22,000,000.00 11,000,000.00
Reward for supporting high-quality
12,000,000.00
development
Subsidies for equipment 5,865,271.93 5,707,371.33
R&D subsidy 2,783,850.60 3,862,050.00
Human resources subsidy 1,856,682.75 12,087,306.28
Financing subsidy 1,554,100.00 140,000.00
Land subsidy 1,354,251.84 1,354,251.84
Reward for science and technology 500,000.00 850,000.00
Tax relief 385,950.34 431,893.85
Rebate of surcharges for withholding
228,778.26 494,750.80
taxes
Special fund for foreign trade and
162,000.00
commerce and circulation
Strengthen the enterprise government
136,600.00 14,435,200.00
subsidy
Design reward 127,000.00
Credit insurance subsidy 53,200.00
Subsidy for intellectual property rights 50,000.00
Subsidy for public rental housing 48,231.48 48,231.48
Subsidy for environmental protection 36,800.00 30,600.00
Subsidy for exhibition halls 3,602,400.00
Subsidy for the transformation of garden
3,329,374.13
green
Investment subsidy 272,600.00
Energy subsidy 300,000.00
Special subsidy for green factory 500,000.00
Special funds for the conversion of new
240,000.00
and old industrial kinetic energy
196
Lu Thai Textile Co., Ltd. Annual Report 2022
Total 49,142,717.20 58,686,029.71
52. Investment income
Unit: RMB
Item Reporting period Same period of last year
Long-term equity investment income
28,049,040.53 -10,755,175.91
accounted by equity method
Investment income from holding of
3,020,431.96 5,196,411.23
trading financial assets
Investment income from disposal of
-17,335,399.18 52,737,594.16
trading financial assets
Interest income from debt investment
3,271,114.22
during the holding period
Total 13,734,073.31 50,449,943.70
53. Gain on changes in fair value
Unit: RMB
Sources Reporting period Same period of last year
Trading financial assets 173,469,654.62 16,415,304.41
Of which: Income from changes in
fair value generated by derivative 26,445,508.83 -14,914,500.00
financial instruments
Trading financial liabilities -4,276,929.70
Total 169,192,724.92 16,415,304.41
54. Credit impairment loss
Unit: RMB
Item Reporting period Same period of last year
Bad debt loss of other receivables -2,584,146.40 191,358.68
Bad debt loss of long-term receivables 4,568,589.55
Bad debt loss of notes receivable 6,394.34 -6,394.34
Bad debt loss of accounts receivable -17,054,611.68 -4,661,497.52
Bad debt loss of accounts receivable
financing
Bad debt loss of dividends receivable 1,498,035.63 1,498,035.63
Total -18,134,328.11 1,590,092.00
55. Asset impairment loss
Item Reporting period Same period of last year
II. Inventory falling price loss and impairment
-176,034,078.18 -84,192,619.67
provision for contract performance costs
V. Impairment loss on fixed assets -10,271,885.18 -1,431,238.59
197
Lu Thai Textile Co., Ltd. Annual Report 2022
Total -186,305,963.36 -85,623,858.26
56. Asset disposal income
Unit: RMB
Sources Reporting period Same period of last year
Fixed asset disposal income ("-" for loss) 912,625.90 37,736,401.52
Intangible asset disposal income ("-" for loss) 19,438,746.10
Total 912,625.90 57,175,147.62
57. Non-operating income
Unit: RMB
Amount recorded in the
Item Reporting period Same period of last year current non-recurring profit or
loss
Government subsidy 845.19
Claim income 5,768,083.06 3,882,284.18 5,768,083.06
Other 2,288,465.67 1,533,989.70 2,288,465.67
Total 8,056,548.73 5,417,119.07 8,056,548.73
58. Non-operating expense
Unit: RMB
Amount recorded in the
Item Reporting period Same period of last year current non-recurring profit or
loss
Donations 3,002,742.26 5,427,805.35 3,002,742.26
Losses from damage and
1,140,993.34 6,307,127.66 1,140,993.34
scrap of non-current assets
Other 6,864,199.86 1,689,121.86 6,864,199.86
Total 11,007,935.46 13,424,054.88 11,007,935.46
59. Income tax expense
(1) List of income tax expense
Unit: RMB
Item Reporting period Same period of last year
Current income tax expense 62,770,917.90 44,300,245.37
Deferred income tax expense 42,852,142.91 -8,307,165.86
Total 105,623,060.81 35,993,079.51
(2) Adjustment process of accounting profit and income tax expense
Unit: RMB
Item Reporting period
198
Lu Thai Textile Co., Ltd. Annual Report 2022
Profit before taxation 1,079,385,423.35
Current income tax expense accounted at statutory/applicable tax rate 161,907,813.50
Influence of applying different tax rates by subsidiaries -6,725,606.87
Influence of income tax before adjustment 3,186,064.16
Influence of non-taxable income -29,225,532.43
Influence of not deductable costs, expenses and losses 7,751,346.83
Influence of deductible temporary difference or deductable losses of
unrecognized deferred income tax assets at the beginning of the Reporting 16,729,891.87
Period
Tax effect of utilizing unrecognized deductible losses and deductible temporary
-2,035,875.14
differences from prior years
Influence of tax rate changes on the deferred income tax balance at the
4,687,852.41
beginning of the Reporting Period
Influence of additional deduction of R&D expenses (filled in with "-") -29,030,682.76
Influence of other expense deduction (filled in with "-") -21,622,210.77
Income tax expense 105,623,060.81
60. Cash flow statement
(1) Cash generated from other operating activities
Unit: RMB
Item Reporting period Same period of last year
Government subsidy 20,954,995.78 73,782,025.37
Claim income 4,139,336.63 1,868,220.21
Recovery of employee borrowings, petty cash and
17,611,761.21 17,533,544.43
deposit
Collection for employees 6,075,612.73 3,269,342.35
Other 1,425,970.41 3,307,603.12
Total 50,207,676.76 99,760,735.48
(2) Cash used in other operating activities
Unit: RMB
Item Reporting period Same period of last year
Business travel charges 35,421,625.76 27,609,515.01
Insurance 5,836,194.04 5,399,989.92
Audit advisory announcement fee 5,987,087.33 6,968,624.27
Decoration & repair expenses 4,600,193.71 2,551,270.42
Donation 2,669,896.97 5,427,805.35
Payment of employee borrowings, petty
6,835,985.20 20,293,286.72
cash and deposit
Agency service fee 17,283,324.08 6,934,810.71
Other 59,557,150.73 63,243,927.49
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Lu Thai Textile Co., Ltd. Annual Report 2022
Total 138,191,457.82 138,429,229.89
(3) Cash generated from other investing activities
Unit: RMB
Item Reporting period Same period of last year
Interest income 46,470,970.15 40,794,225.34
Income from forward foreign exchange 13,555,720.28 52,737,594.16
Recovery of cash deposit of L/C for
593,035.98 1,515,615.23
purchasing equipment
Recovery of cash deposit of forward
1,100,000.00
foreign exchange
Recovery of intercourse funds 3,246,603.60
Expiration of term deposits 27,493,598.92
Total 89,213,325.33 98,294,038.33
(4) Cash used in other investing activities
Unit: RMB
Item Reporting period Same period of last year
Forward settlement exchange loss 31,709,481.57
Term deposit 34,335,748.58 338,493,598.92
Payment of deposit for the L/C of
813,117.05 550,000.00
equipment purchase
Refundable deposits 51,418,261.88
Fund management and custody fees 384,716.45
Total 118,661,325.53 339,043,598.92
(5) Cash used in other financing activities
Unit: RMB
Item Reporting period Same period of last year
Repayment of lease liabilities and rent
18,808,301.14 23,817,316.19
advance
Pledged certificate of time deposit 40,000,000.00
Repurchase of B shares 88,518,318.69
Total 107,326,619.83 63,817,316.19
61. Supplemental information for cash flow statement
(1) Supplemental information for cash flow statement
Unit: RMB
Same period of last
Supplementary materials Reporting period
year
1. Reconciliation of net profit to net cash flows generated from operating activities
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Lu Thai Textile Co., Ltd. Annual Report 2022
Net profit 973,762,362.54 327,322,936.02
Add: Provision for impairment of assets 204,440,291.47 84,033,766.26
Depreciation of fixed assets, oil-gas assets, and productive living assets 452,490,037.00 438,000,648.11
Depreciation of right-of-use assets 20,019,266.79 18,589,585.97
Amortization of intangible assets 10,743,417.28 11,119,539.17
Amortization of long-term prepaid expenses 3,477,274.40 733,746.72
Losses from disposal of fixed assets, intangible assets and other long-lived
-912,625.90 -57,175,147.62
assets (gains: negative)
Losses from scrap of fixed assets (gains: negative) 1,140,993.34 6,307,127.66
Losses from changes in fair value (gains: negative) -169,192,724.92 -16,415,304.41
Finance costs (gains: negative) -164,912,714.11 35,591,822.80
Investment loss (gains: negative) -13,734,073.31 -50,449,943.70
Decrease in deferred income tax assets (gains: negative) -15,819,979.75 -15,245,314.55
Increase in deferred income tax liabilities (“-” means decrease) 58,672,122.66 6,938,148.70
Decrease in inventory (gains: negative) 159,794,066.40 -376,221,851.40
Decrease in accounts receivable generated from operating activities (gains:
-31,919,160.89 -183,550,625.67
negative)
Increase in accounts payable used in operating activities (decrease: negative) -65,737,778.74 118,557,871.42
Other
Net cash generated from/used in operating activities 1,422,310,774.26 348,137,005.48
2. Significant investing and financing activities without involvement of cash receipts
and payments
Conversion of debt into capital
Convertible corporate bonds due within one year
Fixed assets under financing lease
3. Net increase/decrease of cash and cash equivalent:
Ending balance of cash 1,822,897,270.16 1,970,006,884.89
Less: Beginning balance of cash 1,970,006,884.89 1,396,530,407.47
Add: ending balance of cash
Less: Beginning balance of cash equivalents
Net increase in cash and cash equivalents -147,109,614.73 573,476,477.42
(2) Cash and cash equivalents
Unit: RMB
Item Ending balance Beginning balance
I. Cash 1,822,897,270.16 1,970,006,884.89
Including: Cash on hand 2,360,089.79 3,475,164.56
Bank deposits on demand 1,810,590,630.08 1,966,531,720.33
Other monetary assets on demand 9,946,550.29
III. Ending balance of cash and cash equivalents 1,822,897,270.16 1,970,006,884.89
62. Assets with restricted ownership or right to use
Unit: RMB
Item Ending carrying amount Reason for Restriction
Monetary capital 1,328,577.85 Cash deposit
Other current assets 51,418,261.88 Refundable deposits
Total 52,746,839.73
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Lu Thai Textile Co., Ltd. Annual Report 2022
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 87,514,220.21 6.9646 609,501,538.07
EUR 2,763,940.88 7.4229 20,516,456.76
HKD 2,471,409.81 0.8933 2,207,710.38
JPY 4,293,972.00 0.0524 225,004.13
GBP 57.18 8.3941 479.97
CHF 137.87 7.5432 1,039.98
Dong 171,265,069,207.59 0.0003 50,514,770.89
MMK 216,828,470.11 0.0033 719,106.38
Riel 128,519,189.00 0.0017 217,411.90
Notes receivable
Of which: USD 10,558,606.79 6.9646 73,536,472.85
Accounts receivable
Of which: USD 53,772,210.14 6.9646 374,501,934.76
EUR 4,958.45 7.4229 36,806.08
HKD
Dong 26,285,524,532.00 0.0003 7,752,936.75
Other receivables
Of which: USD 217,642.50 6.9646 1,515,792.96
EUR 8,000.00 7.4229 59,383.20
JPY 1,395,040.00 0.0524 73,100.10
HKD 148,407.30 0.8933 132,572.24
Dong 1,925,516,207.00 0.0003 567,932.56
MMK 1,000,000.00 0.0033 3,316.48
Accounts payable
Of which: USD 8,945,409.60 6.9646 62,301,199.71
JPY 5,807,111.04 0.0524 304,292.62
EUR 146,054.80 7.4229 1,084,150.17
Dong 36,727,764,877.00 0.0003 10,832,884.00
MMK 60,936,693.00 0.0033 202,095.07
Other payables
Of which: USD 2,828.42 6.9646 19,698.81
Dong 1,656,031,489.00 0.0003 488,447.83
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Lu Thai Textile Co., Ltd. Annual Report 2022
MMK 1,030,000.00 0.0033 3,415.97
Short-term borrowings
Of which: USD 14,849,049.68 6.9646 103,417,691.40
Dong 99,568,079,528.00 0.0003 29,367,685.71
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 were Hong Kong, Burma, America, Vietnam, Singapore and Cambodia, and
the recording currency was HKD for Hong Kong and USD for other overseas companies.
64. Government Grants
(1) The government grants included in deferred income shall be measured by the total amount method
Listed
items
Carried
Beginning Other Ending carried Related to
Item Type Increased forward to
balance change balance forward assets/income
profit or loss
to profit
or loss
Land Fiscal Other in Related to ass
52,059,086.09 1,354,251.84 50,704,834.25
subsidy appropriation come ets
Equipment Fiscal Other in Related to ass
103,589,720.75 1,267,000.00 5,865,271.93 98,991,448.82
subsidy appropriation come ets
Project
Fiscal Other in Related to ass
investment 1,927,400.00 1,927,400.00
appropriation come ets
subsidy
Research
and Fiscal Other in Related to ass
8,288,679.25 1,441,509.43 2,783,850.60 6,946,338.08
development appropriation come ets
subsidy
Public
Fiscal Other in Related to ass
housing 1,093,247.69 48,231.48 1,045,016.21
appropriation come ets
subsidy
Subsidies for
Fiscal Other in Related to ass
the price of 22,000,000.00 22,000,000.00
appropriation come ets
heating coal
Total 188,958,133.78 2,708,509.43 32,051,605.85 159,615,037.36
203
Lu Thai Textile Co., Ltd. Annual Report 2022
(2) Government grants measured by the total amount method and included in the current profit or loss
Amount recorded in Amount recorded in Listed items recorded Related to
Item Type the profit or loss of the current profit in the current profit assets/inco
last year or loss or loss me
Fiscal
Reward for supporting high- Related to
quality development
appropri 12,000,000.00 Other income
income
ation
Fiscal
Related to
Human resources subsidy appropri 12,087,306.28 1,856,682.75 Other income
income
ation
Fiscal
Related to
Financing subsidy appropri 140,000.00 1,554,100.00 Other income
income
ation
Fiscal
Reward for science and Related to
technology
appropri 850,000.00 500,000.00 Other income
income
ation
Fiscal
Related to
Tax relief appropri 431,893.85 385,950.34 Other income
income
ation
Fiscal
Rebate of surcharges for Related to
withholding taxes
appropri 494,750.80 228,778.26 Other income
income
ation
Fiscal
Special fund for foreign trade Related to
and commerce and circulation
appropri 162,000.00 Other income
income
ation
Fiscal
Strengthen the enterprise Related to
government subsidy
appropri 14,435,200.00 136,600.00 Other income
income
ation
Fiscal
Related to
Design reward appropri 127,000.00 Other income
income
ation
Fiscal
Related to
Credit insurance subsidy appropri 53,200.00 Other income
income
ation
Fiscal
Subsidy for intellectual property Related to
rights
appropri 50,000.00 Other income
income
ation
Fiscal
Subsidy for environmental Related to
protection
appropri 30,600.00 36,800.00 Other income
income
ation
Special funds for the conversion Fiscal
Related to
of new and old industrial kinetic appropri 240,000.00 Other income
energy income
ation
Fiscal
Special subsidy for green Related to
factory
appropri 500,000.00 Other income
income
ation
Fiscal
Related to
Energy subsidy appropri 300,000.00 Other income
income
ation
Fiscal
Related to
R&D subsidy appropri 87,050.00 Other income
income
ation
Fiscal
Related to
Subsidy for exhibition halls appropri 3,602,400.00 Other income
income
ation
Labour safety and health Fiscal Related to
incentives
845.19 Non-operating income
appropri income
204
Lu Thai Textile Co., Ltd. Annual Report 2022
ation
Total 33,200,046.12 17,091,111.35
(3) Government grants offsetting relevant cost with net method
Offset relevant cost for Listed items
Offset relevant cost Related to
Item Type the same period of last offsetting relevant
for current period assets/income
year cost
2021 Central foreign trade
Financial
and economic development 1,110,000.00 Finance costs Related to income
discount
fund
Enterprises relief loan and Financial
45,375.00 Finance costs Related to income
financial discount funds discount
Total 1,155,375.00
(4) Return of government grants
□Applicable Not applicable
VIII. Change of Consolidation Scope
1. Other reasons for changes of consolidation scope
Note to changes in combination scope for other reasons (such as newly establishment or liquidation of subsidiaries, etc.) and
relevant information:
The Company newly established a sub-subsidiary LTCL and subscribed Yuanhui Fund during the Reporting Period.
IX. Equity in Other Entities
1. Equity in Subsidiary
(1) Compositions of the Group
Main operating Registration Nature of Holding percentage (%)
Name Way of gaining
place place business Directly Indirectly
Luthai (Hong Wholesale and
Hong Kong Hong Kong 100.00% Set-up
Kong) retail industry
Shanghai Wholesale and
Shanghai Shanghai 100.00% Set-up
Luthai retail industry
Lufeng
Manufacturing
Company Zibo Zibo 75.00% Set-up
industry
Limited
Manufacturing
Luqun Textile Zibo Zibo 100.00% Set-up
industry
Business
Xinsheng Manufacturing combination
Zibo Zibo 100.00%
Power industry not under the
same control
Technology
development,
Shanghai
Shanghai Shanghai technical 100.00% Set-up
Zhinuo
consultancy
and transfer of
205
Lu Thai Textile Co., Ltd. Annual Report 2022
technologies
Lulian New Manufacturing
Zibo Zibo 75.00% Set-up
Materials industry
Lujia Import & Import and
Zibo Zibo 100.00% Set-up
Export export trade
Zhishu Management
Beijing Beijing 100.00% Set-up
Consulting consulting
Lu Thai
Occupational
Zibo Zibo Skill training 100.00% Set-up
Training
School
Banyang Catering
Zibo Zibo 100.00% Set-up
Mountain Villa services
Huilin Modern service
Wenchang Wenchang 100.00% Set-up
International industry
Wholesale
LIIPL (sub- textiles and
Singapore Singapore 100.00% Set-up
subsidiary) leather, holding
company
Manufacturing
VACL Burma Burma 100.00% Set-up
industry
Lu Thai Wholesale and
America America 100.00% Set-up
(America) retail industry
Yuanhui Fund 100.00% Subscribe
(2) Significant non-wholly-owned subsidiary
Unit: RMB
Shareholding
The profit or loss Declaring dividends
proportion of non- Balance of non-controlling
Name attributable to the non- distributed to non-
controlling interests at the period-end
controlling interests controlling interests
interests
Lufeng
Company 25.00% 33,842,473.81 345,251,331.18
Limited
Lulian New
25.00% -23,905,118.48 48,498,056.05
Materials
(3) The main financial information of significant not wholly-owned subsidiary
Unit: RMB
Ending balance Beginning balance
Curren Non- Curren Non-
Name Non- Total Non- Total
Curren Total t current Curren Total t current
current liabiliti current liabiliti
t assets assets liabiliti liabilit t assets assets liabiliti liabilit
assets es assets es
es y es y
Lufeng
Compa 977,75 736,10 1,713, 264,89 57,773 322,66 1,126, 759,36 1,885, 586,52 49,665 636,19
ny 1,666. 8,963. 860,62 4,436. ,566.5 8,002. 316,83 2,074. 678,91 6,434. ,247.8 1,682.
Limite 75 24 9.99 41 3 94 7.35 19 1.54 78 3 61
d
Lulian 194,59 590,73 785,33 588,31 591,64 474,52 523,83 998,36 706,30 709,48
New 3,331, 3,185,
4,378. 8,673. 3,052. 5,533. 7,079. 6,303. 5,116. 1,420. 0,975. 6,286.
Materi 546.24 310.88
als 81 35 16 14 38 81 34 15 36 24
Unit: RMB
Reporting period Same period of last year
Total Cash flows Total Cash flows
Name Operating comprehen from Operating comprehen from
Net profit Net profit
revenue sive operating revenue sive operating
income activities income activities
206
Lu Thai Textile Co., Ltd. Annual Report 2022
Lufeng - - -
1,813,342,5 141,742,84 141,705,39 377,784,77 1,400,185,9
Company 7,534,683.4 7,337,982.8 186,015,89
Limited 89.95 9.86 8.12 2.57 35.63
2 2 9.52
- - - - - -
Lulian New 90,195,368. 44,524,344.
95,189,161. 95,189,161. 36,509,858. 79,511,556. 79,511,556. 54,085,659.
Materials 38 91
13 13 74 10 10 40
2. Equity in joint ventures or associated enterprises
(1) Significant joint ventures or associated enterprises
Holding percentage (%) Accounting treatment of
Main operating Registration Nature of the investment to joint
Name
place place business Directly Indirectly venture or associated
enterprise
I. Joint ventures
II. Associated
enterprises
Haohong Equity
Ningbo Ningbo 33.33% Equity method
Investment investment
Haoing Equity
Ningbo Ningbo 47.62% Equity method
Investment investment
(2) Main financial information of significant associated enterprises
Unit: RMB
Beginning balance/the same period
Ending balance/reporting period
of last year
Haohong Haoying Haohong Haoying
Investment Investment Investment Investment
Current assets 184,892,005.99 278,997,681.82 206,401,708.32 214,686,791.30
Non-current assets
Total assets 184,892,005.99 278,997,681.82 206,401,708.32 214,686,791.30
Current liabilities 3,255,230.09 3,433,167.13
Non-current liability
Total liabilities 3,255,230.09 3,433,167.13
Net assets 181,636,775.90 278,997,681.82 202,968,541.19 214,686,791.30
Equity of non-controlling interests
Equity attributable to shareholders of the Company
181,636,775.90 278,997,681.82 202,968,541.19 214,686,791.30
as the parent
Net assets shares calculated at the shareholding
60,547,749.28 132,856,975.88 67,657,626.65 102,231,850.02
proportion
Adjusted items
- Goodwill
- Unrealized profit of internal transactions
- Others -9,236,099.47 -446,370.01
Carrying value of investment to associated
60,547,749.28 123,620,876.41 67,657,626.65 101,785,480.01
enterprises
Fair value of equity investments in associated
enterprises with publicly quoted prices
Operating revenue
Net profit -21,331,765.29 92,290,313.66 -38,376,840.16 5,214,730.23
Net profit from discontinued operations
Other comprehensive income
Total comprehensive income -21,331,765.29 92,290,313.66 -38,376,840.16 5,214,730.23
Dividends received from the associates in the current
207
Lu Thai Textile Co., Ltd. Annual Report 2022
period
X. Risks Associated with Financial Instruments
The Company's major financial instruments include monetary capital, notes receivable, accounts receivable, accounts receivable
financing, other receivables, trading financial assets, other non-current financial assets, other non-current assets-time deposits over
one year, notes payable, accounts payable, other payables, short-term borrowings, current portion of non-current liabilities, other
current liabilities-endorsed but undue bills, long-term borrowings, bonds payable, lease liabilities and other equity instruments.
Details of various financial instruments are disclosed in relevant Notes. Possible risks related to these financial instruments and
various risk management policies implemented to reduce these risks are described as follows. The Company’s management has
controlled and monitored these risk exposures in order to control the above-mentioned risks within the 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, and other receivables.
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. In addition, the Company will regularly monitor the client’s credit record. For clients with poor credit records, the
Company will issue the written Reminder Notice, shorten the credit period or cancel the credit period to guarantee the Company’s
overall credit risk under control.
The hugest credit risk exposure borne by the Company is the book value of each financial asset reflected in the balance sheet.
In terms of accounts receivable, the top 5 customers in accounts receivable were accounted for 21.75% of the total amount of
208
Lu Thai Textile Co., Ltd. Annual Report 2022
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 85.42% of the total amount of other receivables of the Company (52.62% in 2021).
Investment in debt obligations
The Company generally limits its exposure to credit risk by investing only in securities for which there is an active market (other
than long-term strategic investments) and for which the counterpart has a high credit rating.
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
31 December 2022 31 December 2021
Trading financial
239,522,650.65
assets
Total 239,522,650.65
(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 fluctuation risk of fair value of financial instrument or future cash flow caused by the changes of
market interest rate. 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 instruments held by the Company are as follows (Unit: RMB’0,000):
Item Amount of current year Amount of last year
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Lu Thai Textile Co., Ltd. Annual Report 2022
Financial instruments with fixed interest
rate
Of which: Short-term borrowings 49,811.77 101,026.99
Current portion of long-term
19,880.00 850.00
borrowings
Long-term borrowings 10,330.00 58,523.00
Bonds payable 143,816.22 139,548.07
Total 223,837.99 299,948.05
Financial instruments with floating
interest rate
Financial assets 23,952.27
Of which: trading financial assets 23,952.27
Financial liabilities 20,540.58 9,900.00
Of which: Short-term borrowings 2,077.58
Current portion of long-term
10,200.00
borrowings
Long-term borrowings 8,263.00 9,900.00
On 31 December 2022, if the lending rate calculated at floating interest rate up or down 100 basis points with other variables
unchanged, the pretax profit and shareholders’ equity will be decreased or increased about RMB2,054,100.
On 31 December 2022, if the floating earning rate on transactional financial assets had been 100 basis points higher or lower, all
other factors being constant, the Company’s accounting profit before taxes and shareholders’ equity would represent an increase or
decrease by approximately RMB2,395,200.
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.
The Company’s recognised foreign currency assets and liabilities as well as future foreign currency transactions (the denomination
currencies of foreign currency assets and liabilities and foreign currency transactions are mainly USD, VND, EUR, and HKD) are
exposed to foreign exchange risk.
On 31 December 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
Ending balance Beginning balance Ending balance Beginning balance
USD 16,573.86 112,245.83 105,905.57 89,577.60
EUR 108.42 361.14 2,061.26 587.83
JPY 30.43 78.72 29.81 13.63
HKD 234.03 408.53
GBP 0.05 7.92
CHF 14.02 0.10 10.32
Dong 4,068.90 3,342.45 5,883.56 3,399.25
MMK 20.55 3.40 72.24 241.25
Riel 21.74 4.77
Total 20,802.16 116,045.56 114,208.38 94,251.09
The Group pays close attention on the influence of foreign exchange risk due to the changes in exchange rate. The Company has
210
Lu Thai Textile Co., Ltd. Annual Report 2022
signed contracts of futures exchange for the purpose of the aversion of foreign exchange risk. At the end of each reporting periods,
for the monetary capital, notes receivable, accounts receivable, other receivables, accounts payable, short-term borrowings and
other payables denominated in foreign currency, if renminbi to foreign currency up or down 10% with other variables unchanged,
the influence on the shareholders’ equity and net profit of the Company is as follows (Unit: RMB’0,000):
Reporting period Same period of last year
Exchange rate changes Influence on the Influence on Influence on the Influence on
profits shareholders’ equity profits shareholders’ equity
Up 10% against RMB -9,340.62 -9,340.62 2,179.45 2,179.45
Down 10% against RMB 9,340.62 9,340.62 -2,179.45 -2,179.45
Other price risks
Other price risks are the risks of fluctuations due to changes in market prices other than exchange rate risk and interest rate risk,
whether these changes result from factors relating to a single financial instrument or its issuer, or from those relating to all similar
financial instruments traded within the market. Other price risks can arise from changes in commodity prices, stock market index,
equity instrument prices, and other risk variables.
Investments in listed equity instruments held by the Company, which are classified as other non-current financial assets are
measured at fair value at the balance sheet date. As a consequence, the Company is undertaking the risk of changes in equity
markets.
The Company closely monitors the impact of price changes on the price risk of the Company’s investments in equity and securities.
The Company does not currently take any steps for other price risk aversion. Nevertheless, the management is liable for
supervisory control on other price risks and shall consider reducing the price risk of investments in equity and securities by
holding a diversified portfolio investment in equity and securities when required.
With all other variables being constant, the pre-tax impact on the Company’s profit or loss for the current period and other
comprehensive income of a 10% change in the price of investments in equity and securities for the year is as follows (in
RMB’0,000):
Other comprehensive income rise
Pre-tax profit rise (decline)
(decline)
Item
Reporting period Reporting period
Up due to equity securities
2,480.30
investment
Down due to equity securities
-2,480.30
investment
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 31
December 2022, the asset-liability ratio was 29.53% of the Company (35.57% on 31 December 2021).
XI. The Disclosure of Fair Value
1. Ending fair value of assets and liabilities at fair value
Unit: RMB
211
Lu Thai Textile Co., Ltd. Annual Report 2022
Ending fair value
Item Fair value Fair value Fair value
measurement measurement measurement Total
items at level 1 items at level 2 items at level 3
I. Consistent fair value measurement -- -- -- --
(I) Trading financial assets 267,695,159.48 267,695,159.48
1. Financial assets at fair value through profit or
267,695,159.48 267,695,159.48
loss
(1) Investment in debt instruments 239,522,650.65 239,522,650.65
(3)Derivative financial assets 28,172,508.83 28,172,508.83
(VI) Accounts receivable financing 11,208,304.78 11,208,304.78
(VII) Other non-current financial assets 248,030,000.00 89,080,000.00 337,110,000.00
The total amount of assets consistently measured at
515,725,159.48 100,288,304.78 616,013,464.26
fair value
(VI) Trading financial liabilities 4,276,929.70 4,276,929.70
Of which: Derivative financial liabilities 4,276,929.70 4,276,929.70
The total amount of liabilities consistently
4,276,929.70 4,276,929.70
measured at fair value
II. Inconsistent Fair Value Measurement -- -- -- --
2. Valuation technique adopted and nature and amount determination of important parameters for
consistent and inconsistent fair value measurement items at level 2
For wealth management products, the Company determines their fair value based on the prospective earning rate as agreed in the
contract.
For fund products, the Company determines their fair value based on the net unit value provided by the fund manager.
For forward settlements of exchanges, the Company determines their fair value based on bank forward foreign exchange
quotations at the end of the period.
For restricted shares in listed companies, the Company recognises their fair value based on the share price of the listed company
and with taking into account the liquidity discount.
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.
212
Lu Thai Textile Co., Ltd. Annual Report 2022
4. Explain the Reason for Conversion and the Governing Policy when the Conversion Happens if
Conversion Happens among Consistent Fair Value Measurement Items at Different Levels
The Company takes the date of the event giving rise to the conversion between levels as the point at which the conversion between
levels is recognised. During this year, Remegen Co., Ltd. where the Company has share investment was listed and is still under a
restricted period, therefore the fair value measurement of this other non-current financial asset has been converted from level 3 to
level 2. In addition to this other non-current financial asset, there was no conversion between level 1 and level 2 in the fair value
measurement of the Company’s other current assets and other financial liabilities, and there was no transfer to or from level 3.
5. Fair Value of Financial Assets and Liabilities Not Measured at Fair Value
The financial assets and financial liabilities measured at amortized cost mainly include: monetary assets, notes receivable,
accounts receivable, other receivables, short-term borrowings, notes payable, accounts payables, other payables, current portion of
long-term borrowings, long-term borrowings and bonds payable, etc.
XII. Related Party and Related-party Transactions
1. Information related to the company as the parent of the Company
Proportion of share held by Proportion of voting rights
Registration Nature of Registered
Name the company as the parent owned by the company as the
place business capital
against the company (%) parent against the company (%)
Textile,
Lucheng
Zibo chemistry and 63,260,000 15.81% 15.81%
Textile
investment
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 Relationship with the company
Zibo Limin Purified Water Co., Ltd. (hereinafter referred to as "Limin Wholly-owned subsidiary of the Company as the
Purified Water") parent
Wholly-owned subsidiary of the Company as the
Zibo Luqun Land Co., Ltd (hereinafter referred to as "Luqun Land")
parent
Zibo Lurui Fine Chemical Co., Ltd. (hereinafter referred to as "Lurui Wholly-owned subsidiary of the Company as the
Chemical") parent
Zibo Lujia Property Management Co., Ltd. (hereinafter referred to as "Lujia Wholly-owned subsidiary of the Company as the
Property") parent
Hong Kong Tung Hoi International Company Limited (hereinafter referred Wholly-owned subsidiary of the Company as the
to as "Tung Hoi International") parent
Zibo Chengshun Hosiery Co., Ltd. (hereinafter referred to as "Chengshun Wholly-owned subsidiary of the Company as the
Hosiery") parent
213
Lu Thai Textile Co., Ltd. Annual Report 2022
Zibo Chengshun Economic and Trade Co., Ltd. (hereinafter referred to as Wholly-owned subsidiary of the Company as the
"Chengshun Economic and Trade") parent
Chengshun Petrochemical (Zhejiang Zhoushan) Co., Ltd. (hereinafter Wholly-owned subsidiary of the Company as the
referred to as "Chengshun Petrochemical") parent
Zibo Lucheng Petrochemical Sales Co., Ltd. (hereinafter referred to as Wholly-owned subsidiary of the Company as the
"Lucheng Petrochemical") parent
Shanghai Hengjiu Textile New Materials Co., Ltd. (hereinafter referred to Wholly-owned subsidiary of the Company as the
as "Hengjiu Textile") parent
Shandong Xirui New Material Co., Ltd. (hereinafter referred to as "Xirui Wholly-owned subsidiary of the parent company's
New Material") wholly-owned subsidiary
Zibo Lumei Economic and Trade Co., Ltd. (hereinafter referred to as Wholly-owned subsidiary of the Company as the
"Lumei Economic and Trade") parent
Wholly-owned subsidiary of the Company as the
Ningbo Xiran Investment Co., Ltd. (“Ningbo Xiran”)
parent
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
Whether
Reporting The approval Same period of
Related party Content exceed trade
period trade credit last year
credit or not
Limin Purified Recycled water, sewage
27,043,524.89 36,250,000.00 Not 26,328,581.68
Water treatment, and equipment
Lurui Fine
Auxiliaries 85,208,487.04 118,000,000.00 Not 91,043,342.61
Chemical
Tung Hoi
Auxiliaries 13,759,814.29 25,000,000.00 Not 0.00
International
Paper core, hosiery, hosiery
Chengshun Hosiery,
processing fees, purchase of
Xirui New 8,391,376.29 15,050,000.00 Not 9,808,733.74
hosiery, accessories and fabrics
Materials
and face masks
Chengshun Trading Supermarket retail 5,306,076.78 3,840,000.00 Not 2,013,167.16
Lucheng
Oils 3,888,228.61 5,151,700.00 Not 3,338,571.42
Petrochemical
Chengshun
Natural gas and oil products 54,995,492.72 61,540,000.00 Not 40,436,209.23
Petrochemical
Information of sales of goods and provision of labor service
Unit: RMB
Reporting Same period of
Related party Content
period last year
Lucheng Textile Tap water 1,093.19
Chengshun
Materials, electricity, running water, heating, steam 308,201.04 280,543.32
Hosiery
Chengshun
Yarn, garments, fabrics 638,004.63 682,514.98
Hosiery
Chengshun
Materials, electricity, tap water, yarn, garments, fabrics, food, heating, steam 219,216.70 133,676.54
Trading
Lucheng
Materials, electricity, garments, fabrics 17,310.31 16,228.55
Petrochemical
Limin Purified
Materials, electricity, garments, fabrics lunch components services, food 5,363,626.64 3,483,636.46
Water
Lurui Fine
Materials, yarn, garments, fabrics, food 165,895.59 158,981.84
Chemical
214
Lu Thai Textile Co., Ltd. Annual Report 2022
Lujia Property Materials, garments, fabrics, heating, steam 81,109.42 141,800.60
Xirui New
Materials, garments, fabrics, waste cotton 114,574.26 1,169,150.35
Materials
Xirui New
Catering service, alcoholic beverages 271.70 13,854.72
Materials
Lumei
Economic and Garments, fabrics, computer supplies 106.19 123.36
Trade
Luqun Property Garments, fabrics, catering service 3,387.06 38.62
Notes
(2) Information on related-party lease
The Company was lessor:
Unit: RMB
The lease income confirmed The lease income confirmed
Name of lessee Category of leased assets
in the current period in the same period of last year
Chengshun Economic and
Rent of 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 Amoun Amoun Amoun Amoun Amoun Amoun Amoun Amoun Amoun Amoun
t of the t of the t of the t of the t of the t of the t of the t of the t of the t 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 3,614,8 3,614,8 1,208,2 1,317,3 29,675,
g
land 57.20 57.20 11.39 51.96 587.49
Textile
Luchen Rent of
233,142 233,142 111,526 117,041 2,589,2
g gas
.84 .84 .32 .60 19.21
Textile station
Luchen Rent of
11,022, 11,022, 2,198,7 2,551,3 62,292,
g buildin
228.60 228.60 93.82 33.93 894.06
Textile gs
Rent of
Luqun land
1,971,4 1,971,4 1,166,2 1,202,7 26,379,
Propert and
28.52 28.52 62.45 76.50 793.30
y buildin
gs
(3) Information on remuneration for key management personnel
Unit: RMB
Item Reporting period Same period of last year
Remuneration for key management
12,453,347.54 14,155,635.36
personnel
215
Lu Thai Textile Co., Ltd. Annual Report 2022
6. Accounts receivable and payable of related party
(1) Accounts receivable
Unit: RMB
Ending balance Beginning balance
Item Related party
Carrying amount Bad debt provision Carrying amount Bad debt provision
Lurui Fine
Prepayments 197,267.31
Chemical
(2) Accounts payable
Unit: RMB
Item Related party Ending carrying amount Beginning carrying amount
Accounts payable Lurui Fine Chemical 6,022,580.15
Accounts payable Tung Hoi International 976,966.23
Contract liability 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
5,838,000.00
Company for the current period
The total amount of the Company's equity instruments
9,578,000.00
exercised for the current period
The total amount of equity instruments of the Company losing
548,000.00
efficacy for the current period
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
No
period estimates and the previous estimates
Accumulated amount of equity-settled share-based payment
68,301,466.66
included in capital reserves
The total amount of the expense recognized for the current
39,975,678.06
period paid on equity-settled shares
216
Lu Thai Textile Co., Ltd. Annual Report 2022
XIV. Commitments and Contingency
1. Significant commitments
Significant commitments on balance sheet date
(1) Capital commitments
Commitments signed but have not been
31 December 2022 31 December 2021
recognized in financial statements
Commitment on constructing and purchasing long-
50,131.58 10,006.86
lived assets (RMB’0,000)
2. Contingency
(1) Significant contingency on balance sheet date
As at 31 December 2022, there was no contingency such as pending lawsuits and external guarantees in the Company to disclose.
XV. Events after Balance Sheet Date
1. Profit distribution
Unit: RMB
Profits or dividends to be distributed 86,631,432.30
Profits or dividends announced to be distributed after the
86,631,432.30
approval
th
On 10 April 2023, the 7 Meeting of the 10th Board of
Directors of the Company approved the 2022 Annual Profit
Distribution Plan: Based on the share capital of 866,314,323
shares (the share capital of 887,633,151 shares on 31
December 2022 deducting the repurchased B shares), it is
Profit distribution plan
proposed to distribute cash at RMB1.00 (including tax) per
10 shares and cash dividends of RMB86,631,432.30. The
above distribution plan will be implemented after it is
submitted to the 2022 Annual General Meeting for
consideration and approval.
2. Notes to other events after balance sheet date
As at 10 April 2023, the Company has no other events after balance sheet date that should be disclosed.
XVI. Notes of Main Items in the Financial Statements of the Company as the Parent
1. Accounts receivable
(1) Accounts receivable classified by category
Unit: RMB
Categor Ending balance Beginning balance
y Carrying amount Bad debt provision Carrying Carrying amount Bad debt provision Carrying
217
Lu Thai Textile Co., Ltd. Annual Report 2022
Withdra value Withdra value
Proporti wal Proporti wal
Amount Amount Amount Amount
on proporti on proporti
on on
Account
s
receivab
le of bad
debt 4,856,14 4,856,14 1,788,43 1,788,43
1.24% 100.00% 0.39% 100.00%
provisio 6.97 6.97 2.20 2.20
n
separatel
y
accrued
Of
which:
Account
s
receivab
le of bad
debt 386,947, 29,030,1 357,917, 453,937, 28,225,8 425,711,
98.76% 7.50% 99.61% 6.22%
provisio 247.21 96.50 050.71 579.34 41.07 738.27
n
withdra
wn by
groups
Of
which:
Group 1:
Undue
accounts
45,947,6 482,450. 45,465,2 45,299,1 475,640. 44,823,4
(credit 11.72% 1.05% 9.94% 1.05%
insuranc 51.98 35 01.63 17.13 73 76.40
e
insured)
Group 2:
Undue
accounts
272,913, 13,645,6 259,267, 366,082, 18,304,1 347,778,
(no 69.64% 5.00% 80.33% 5.00%
credit 162.58 58.14 504.44 322.24 16.12 206.12
insuranc
e)
Group 3:
Overdue
accounts
31,716,5 4,979,49 26,737,0 11,631,2 1,244,54 10,386,7
(credit 8.09% 15.70% 2.55% 10.70%
insuranc 29.93 5.20 34.73 78.80 6.83 31.97
e
insured)
Group 4:
Overdue
accounts
36,369,9 9,922,59 26,447,3 30,924,8 8,201,53 22,723,3
(no 9.28% 27.28% 6.79% 26.52%
credit 02.72 2.81 09.91 61.17 7.39 23.78
insuranc
e)
391,803, 33,886,3 357,917, 455,726, 30,014,2 425,711,
Total 100.00% 8.65% 100.00% 6.59%
394.18 43.47 050.71 011.54 73.27 738.27
Bad debt provision separately accrued: Y2022
Unit: RMB
Ending balance
Name
Carrying amount Bad debt provision Withdrawal proportion Provision reason
218
Lu Thai Textile Co., Ltd. Annual Report 2022
Customer filed for
Customer 1 2,705,609.83 2,705,609.83 100.00%
bankruptcy protection
Customer financial
Customer 2 1,986,544.97 1,986,544.97 100.00%
difficulties
Customer financial
Customer 3 90,959.35 90,959.35 100.00%
difficulties
Customer financial
Customer 4 73,032.82 73,032.82 100.00%
difficulties
Total 4,856,146.97 4,856,146.97
Bad debt provision separately accrued: Y2021
Unit: RMB
Ending balance
Name
Carrying amount Bad debt provision Withdrawal proportion Provision reason
Customer filed for
Customer 1 967,724.98 967,724.98 100.00%
bankruptcy protection
Customer filed for
Customer 2 273,384.76 273,384.76 100.00%
bankruptcy protection
Customer financial
Other customer 547,322.46 547,322.46 100.00% difficulties or filed for
bankruptcy protection
Total 1,788,432.20 1,788,432.20
Bad debt provision withdrawn by groups: Y2022
Unit: RMB
Ending balance
Name
Carrying amount Bad debt provision Withdrawal proportion
Group 1: Undue accounts (credit insurance insured) 45,947,651.98 482,450.35 1.05%
Group 2: Undue accounts (no credit insurance) 272,913,162.58 13,645,658.14 5.00%
Group 3: Overdue accounts (credit insurance insured) 31,716,529.93 4,979,495.20 15.70%
Group 4: Overdue accounts (no credit insurance) 36,369,902.72 9,922,592.81 27.28%
Total 386,947,247.21 29,030,196.50
Notes:
Bad debt provision withdrawn by groups: Y2021
Unit: RMB
Ending balance
Name
Carrying amount Bad debt provision Withdrawal proportion
Group 1: Undue accounts (credit insurance insured) 45,299,117.13 475,640.73 1.05%
Group 2: Undue accounts (no credit insurance) 366,082,322.24 18,304,116.12 5.00%
Group 3: Overdue accounts (credit insurance insured) 11,631,278.80 1,244,546.83 10.70%
Group 4: Overdue accounts (no credit insurance) 30,924,861.17 8,201,537.39 26.52%
Total 453,937,579.34 28,225,841.07
Notes:
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
219
Lu Thai Textile Co., Ltd. Annual Report 2022
Unit: RMB
Aging Carrying amount
Within 1 year (including 1 year) 386,580,998.61
1 to 2 years 536,914.02
2 to 3 years 224,827.57
Over 3 years 4,460,653.98
3 to 4 years 4,150,455.06
4 to 5 years 310,198.92
Total 391,803,394.18
(2) Bad debt provision withdrawn, reversed or collected during the Reporting Period
Bad debt provision withdrawn in the Reporting Period:
Unit: RMB
Changes in the reporting period
Category Beginning balance Reversal or Ending balance
Withdrawal Write-off Other
recovery
Bad debt
30,014,273.27 4,211,727.00 339,656.80 33,886,343.47
provision
Total 30,014,273.27 4,211,727.00 339,656.80 33,886,343.47
(3) Particulars of the actual verification of accounts receivable during the Reporting Period
Unit: RMB
Item Amount
Accounts receivable actually verified 339,656.80
(4) Top 5 of accounts receivable of ending balance collected by arrears party
Unit: RMB
Proportion to total ending
Ending balance of bad debt
Name of entity Ending balance balance of accounts
provision
receivable
Aggregate amount of top 5 of
accounts receivable of ending
115,107,612.95 29.38% 6,147,612.17
balance collected by arrears
party
Total 115,107,612.95 29.38%
2. Notes receivable
31 December 2022 31 December 2021
Notes
Category Carrying Bad debt Bad debt
Carrying value Carrying amount Carrying value
amount provision provision
Bank
49,401,876.98 49,401,876.98 70,946,803.29 70,946,803.29
acceptance bill
Commercial
127,886.89 6,394.34 121,492.55
acceptance bill
220
Lu Thai Textile Co., Ltd. Annual Report 2022
L/C
49,946,887.38 49,946,887.38 60,960,026.96 60,960,026.96
Total
99,348,764.36 99,348,764.36 132,034,717.14 6,394.34 132,028,322.80
(1) Notes receivable endorsed by the Company or discounted and not due at the period-end
Category Derecognized amount at the period-end Non-derecognized amount at the period-end
Bank acceptance bill 43,987,668.82
Trade acceptance bill
Total 43,987,668.82
If the bank acceptance bill used for endorsement and discount is accepted by a bank with low credit grade, the endorsement and
discount do not affect the right of recourse, and the credit risk and deferred payment risk related to the bill have not been transferred,
so the bank acceptance bill was not derecognized at the period-end.
(2) Classified at bad debt provision method
31 December 2022 31 December 2021
Bad debt Bad debt
Carrying amount Carrying amount
Category provision provision
Expecte Carrying Expected Carrying
Proportio Amoun d credit value Proportio Amoun credit value
Amount Amount
n (%) t loss rate n (%) t loss rate
(%) (%)
Bad debt
provision
separately
accrued
Bad debt
provision 99,348,764.3 99,348,764.3 132,034,717.1 6,394.3 132,028,322.8
100 100
withdrawn 6 6 4 4 0
by groups
Of which:
Commercia
6,394.3
l 127,886.89 0.1 5 121,492.55
4
acceptance
bill
Bank
acceptance
bill with 99,348,764.3 99,348,764.3 131,906,830.2 131,906,830.2
100 99.9
low credit 6 6 5 5
rating and
L/C
99,348,764.3 99,348,764.3 132,034,717.1 6,394.3 132,028,322.8
Total 100 100
6 6 4 4 0
(3) Bad debt provision withdrawn, reversed or collected during the Reporting Period
Amount of bad debt provision
1 January 2022 6,394.34
221
Lu Thai Textile Co., Ltd. Annual Report 2022
Withdrawal of the current period -6,394.34
Reversal or recovery in the Reporting Period
Amount written-off for the Reporting Period
Write-off in the current period
Other
31 December 2022
3. Other receivable
Unit: RMB
Item Ending balance Beginning balance
Dividends receivable 18,563,298.39 94,525,975.44
Other receivables 1,964,032,236.60 1,965,654,050.43
Total 1,982,595,534.99 2,060,180,025.87
(1) Dividends receivable
1) Category of dividends receivable
Unit: RMB
Item (or investee) Ending balance Beginning balance
Fengshou Cotton 19,540,314.10 49,501,026.78
Luqun Textile 50,000,000.00
Less: Bad debt provision -977,015.71 -4,975,051.34
Total 18,563,298.39 94,525,975.44
2) Significant dividends receivable aging over 1 year
Unit: RMB
Item (or Ending Whether occurred impairment and its
Aging Reason
investee) balance judgment basis
Fengshou 2 to 3 Collect in accordance with agreed
19,540,314.10 Not past due
Cotton years 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 duration Expected loss in the Total
Expected credit loss in
(credit impairment not duration (credit impairment
the next 12 months
occurred) occurred)
Balance of 1 January
4,975,051.34 4,975,051.34
2022
Balance of 1 January
222
Lu Thai Textile Co., Ltd. Annual Report 2022
2022 in the Reporting
Period
Withdrawal of the current -
-3,998,035.63
period 3,998,035.63
Balance of 31 December
977,015.71 977,015.71
2022
Changes of carrying amount with significant amount changed of loss provision in the current period
□Applicable Not applicable
(2) Other receivables
1) Other receivables classified by category
Unit: RMB
Nature Ending carrying amount Beginning carrying amount
Intercourse funds 1,914,694,616.18 1,958,920,668.29
Export rebates 9,934,992.64
Payment on behalf 9,769,724.73 9,591,346.65
Guarantee deposit and cash deposit 3,278,418.46 3,764,642.06
Borrowings and petty cash 968,504.94 737,517.66
Other 35,155,692.70 399,089.06
Total 1,973,801,949.65 1,973,413,263.72
2) Withdrawal of bad debt provision
Unit: RMB
First stage Second stage Third stage
Bad debt provision Expected loss in the duration Expected loss in the Total
Expected credit loss of
(credit impairment not duration (credit impairment
the next 12 months
occurred) occurred)
Balance of 1 January
6,469,310.84 1,289,902.45 7,759,213.29
2022
Balance of 1 January
2022 in the Reporting
Period
--Transferred to the
-9,696.46 9,696.46
second stage
Withdrawal of the
2,117,743.68 -107,243.92 2,010,499.76
current period
Balance of 31 December
8,577,358.06 1,192,354.99 9,769,713.05
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 Carrying amount
Within 1 year (including 1 year) 1,617,443,472.58
1 to 2 years 176,434,854.82
2 to 3 years 177,216,762.10
223
Lu Thai Textile Co., Ltd. Annual Report 2022
Over 3 years 2,706,860.15
3 to 4 years 128,000.00
4 to 5 years 101,101.14
Over 5 years 2,477,759.01
Total 1,973,801,949.65
3) Top 5 of the Ending Balance of the Other Receivables Collected according to the Arrears Party
Ending balance
Name of Proportion to ending balance of
Nature Ending balance Aging of bad debt
entity total other receivables
provision
Customer Intercourse
790,330,438.87 Within 1 year 40.04% 2,370,991.32
1 funds
Customer Intercourse Within 1 year, 1 to 2 years
569,006,001.54 28.83% 1,707,018.00
2 funds and 2 to 3 years
Customer Intercourse
218,253,255.72 Within 1 year 11.06% 654,759.77
3 funds
Customer Intercourse
189,663,654.27 Within 1 year 9.61% 568,990.96
4 funds
Customer Intercourse
124,141,265.78 Within 1 year 6.29% 372,423.80
5 funds
Total 1,891,394,616.18 95.83% 5,674,183.85
4. Long-term equity investment
Unit: RMB
Ending balance Beginning balance
Item Depreciation Depreciation
Carrying amount Carrying value Carrying amount Carrying value
reserve reserve
Investment to
2,885,254,556.40 2,885,254,556.40 2,648,604,886.50 2,648,604,886.50
Subsidiaries
Investment to
Joint Ventures
184,168,625.69 184,168,625.69 169,443,106.66 169,443,106.66
and Associated
Enterprises
Total 3,069,423,182.09 3,069,423,182.09 2,818,047,993.16 2,818,047,993.16
(1) Investment to subsidiaries
Unit: RMB
Increase/decrease
Ending
Beginning Withdrawal Ending balance balance of
Investee balance (carrying Additional Reduced of
Other (carrying value) depreciation
value) investment investment impairment reserve
provision
Xinsheng
176,340,737.93 176,340,737.93
Power
Lufeng
Company 529,620,000.00 529,620,000.00
Limited
Luqun
171,784,550.00 171,784,550.00
Textile
Luthai (Hong
128,771,800.00 128,771,800.00
Kong)
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Lu Thai Textile Co., Ltd. Annual Report 2022
Shanghai
20,000,000.00 20,000,000.00
Luthai
Lu Thai
10,209,050.00 10,209,050.00
(America)
VACL 62,337,238.57 62,337,238.57
ZJ Textile 834,936,510.00 425,817,620.10 409,118,889.90
Lulian New
300,000,000.00 300,000,000.00
Materials
Lujia Import
10,000,000.00 10,000,000.00
& Export
Lu Thai
Occupational
100,000.00 100,000.00
Training
School
Shanghai
5,000.00 5,000.00
Zhinuo
Zhishu
1,000,000.00 1,000,000.00 2,000,000.00
Consulting
Huilin
400,000,000.00 459,967,290.00 859,967,290.00
International
Banyang
Mountain 3,500,000.00 1,500,000.00 5,000,000.00
Villa
Yuanhui
200,000,000.00 200,000,000.00
Fund
Total 2,648,604,886.50 662,467,290.00 425,817,620.10 2,885,254,556.40
(2) Investment to joint ventures and associated enterprises
Unit: RMB
Increase/decrease
Gains
and Cash Ending
Beginni Adjust Withdr
losses bonus Ending balance
ng Additio Reduce ment of Change awal of
Investe recogni or balance of
balance nal d other s of impair
e zed profits Other (carryin depreci
(carryin investm investm compre other ment
under announ g value) ation
g value) ent ent hensive equity provisi
the ced to reserve
income on
equity issue
method
I. Joint ventures
II. Associated enterprises
Haohon -
g 67,657, 60,547,
7,109,8
Investm 626.65 749.28
ent 77.37
Haoyin
g 101,785 13,323, 35,158, 123,620
Investm ,480.01 521.50 917.90 ,876.41
ent
Subtota 169,443 13,323, 28,049, 184,168
l ,106.66 521.50 040.53 ,625.69
169,443 3,323,5 28,049, 184,168
Total
,106.66 21.50 040.53 ,625.69
5. Operating revenue and cost of sales
Unit: RMB
Item Reporting period Same period of last year
225
Lu Thai Textile Co., Ltd. Annual Report 2022
Operating revenue Cost of sales Operating revenue Cost of sales
Main operations 3,907,554,376.70 2,899,728,853.91 3,452,380,376.61 2,643,956,373.18
Other operations 299,695,905.51 268,072,062.00 195,022,132.60 180,495,494.62
Total 4,207,250,282.21 3,167,800,915.91 3,647,402,509.21 2,824,451,867.80
6. Investment income
Unit: RMB
Item Reporting period Same period of last year
Long-term equity investment income
106,856,787.62 274,015,922.61
accounted by cost method
Long-term equity investment income
28,049,040.53 -10,755,175.91
accounted by equity method
Investment income from disposal of
34,470,026.17 -5,319,992.03
long-term equity investment
Investment income from disposal of
1,974,280.18
trading financial assets
Interest income from debt investment
2,401,261.30
during the holding period
Investment income from disposal of
-19,441,900.00 36,259,900.00
trading financial assets
Total 149,933,954.32 298,576,196.15
XVII. Supplemental Information
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 -228,367.44
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
50,298,092.20
policies and regulations, or 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
154,877,757.70
as well as financial assets available for sale, other than valid hedging related
to the Company’s common businesses
Other non-operating income and expense other than the above -1,810,393.39
Less: Income tax effects 33,015,346.77
Non-controlling interests effects 1,730,876.08
Total 168,390,866.22 --
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.
226
Lu Thai Textile Co., Ltd. Annual Report 2022
Note to define the non-recurring profit and loss items listed in the Explanatory Announcement No. 1 on Information Disclosure for
Companies Offering Their Securities to the Public—Non-recurring Gains and Losses as recurring profit and loss items.
□Applicable Not applicable
2. Return on equity and earnings per share
Weighted average EPS (Yuan/share)
Profit as of reporting period
roe (%) EPS-basic EPS-diluted
Net profit attributable to ordinary shareholders of the Company 11.31% 1.10 0.95
Net profit attributable to ordinary shareholders of the Company
9.34% 0.90 0.79
after deduction of non-recurring profit or loss
Chairman of the Board: Liu Zibin
Lu Thai Textile Co., Ltd.
12 April 2023
227
