Lu Thai Textile Co., Ltd. Interim Report 2023
LU THAI TEXTILE CO., LTD.
INTERIM REPORT 2023
August 2023
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Lu Thai Textile Co., Ltd. Interim Report 2023
Part I Important Notes, Table of Contents and Definitions
The Board of Directors (or the “Board”), the Supervisory Committee as well as the directors,
supervisors and senior management of Lu Thai Textile Co., Ltd. (hereinafter referred to as the
“Company”) hereby guarantee the factuality, accuracy and completeness of the contents of
this Report and its summary, and shall be jointly and severally liable for any
misrepresentations, misleading statements or material omissions therein.
Liu Zibin, the Company’s legal representative, and Zhang Keming, head of accounting affairs
and head of the accounting department (equivalent to accounting manager) hereby guarantee
that the Financial Statements carried in this Report are factual, accurate and complete.
All the Company’s directors have attended the Board meeting for the review of this Report
and its summary.
The Company is subject to the disclosure requirements for listed companies engaging in
textile and apparel as stated in Guideline No. 3 of the Shenzhen Stock Exchange for Self-
regulation of Listed Companies—Industry-specific Information Disclosure.
The international political and economic landscapes have become complicated since 2023, and
global inflationary pressure persists. This has placed China’s economy in an increasingly
complex and severe external environment. With the full resumption of socioeconomic
development, the State Council and governments and departments at all levels launch a range
of policies to boost consumption. This has contributed to a gradual recovery in market
demand and consistently growing production and supply, presenting an upturn in the national
economic recovery. According to the data released by the National Bureau of Statistics, the
retail sales of consumer goods between January and June 2023 totaled RMB22.7588 trillion,
up 8.2% year on year. This indicates that, as the consumer market is recovering steadily, its
supporting role for the textile and apparel industry is significantly enhanced. Additionally,
data from China Customs shows that, in the first half of 2023, China’s export of textiles and
apparel totaled USD142.68 billion, a year-on-year decrease of 8.8%. This is caused by
insufficient demand in overseas markets as a result of the weak global economic recovery. For
details, please refer to Part III Management Discussion and Analysis.
The Company has no interim dividend plan, either in the form of cash or stock.
This Report and its summary have been prepared in both Chinese and English. Should there
be any discrepancies or misunderstandings between the two versions, the Chinese versions
shall prevail.
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Lu Thai Textile Co., Ltd. Interim Report 2023
Table of Contents
Part I Important Notes, Table of Contents and Definitions........................................................... 2
Part II Corporate Information and Key Financial Information................................................... 6
Part III Management Discussion and Analysis................................................................................9
Part IV Corporate Governance.......................................................................................................28
Part V Environmental and Social Responsibility.......................................................................... 30
Part VI Significant Events............................................................................................................... 34
Part VII Share Changes and Shareholder Information................................................................41
Part VIII Preferred Shares.............................................................................................................. 51
Part IX Bonds................................................................................................................................... 52
Part X Financial Statements............................................................................................................56
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Lu Thai Textile Co., Ltd. Interim Report 2023
Documents Available for Reference
1. The financial statements signed and stamped by the Company’s legal representative and head of accounting
affairs and head of the accounting department; and
2. The originals of all the Company’s announcements and documents disclosed to the public during the Reporting
Period on Securities Times, Shanghai Securities News, China Securities Journal and Ta Kung Pao.
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Lu Thai Textile Co., Ltd. Interim Report 2023
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 2023 to 30 June 2023
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Lu Thai Textile Co., Ltd. Interim Report 2023
Part II Corporate Information and Key Financial Information
I Corporate Information
Stock name LTTC, LTTC-B Stock code 000726, 200726
Previous stock name (if any) N/A
Stock exchange for stock listing Shenzhen Stock Exchange
Company name in Chinese 鲁泰纺织股份有限公司
Abbr. (if any) 鲁泰纺织
Company name in English (if any) LU THAI TEXTILE CO.，LTD
Abbr. (if any) LTTC
Legal representative Liu Zibin
II Contact Information
Board Secretary Securities Representative
Name Zhang Keming Zheng Weiyin and Li Kun
No. 81, Songling East Road, Zichuan No. 81, Songling East Road, Zichuan District,
Address
District, Zibo, Shandong, P.R.China Zibo, Shandong, P.R.China
Tel. 0533-5277008 0533-5285166
Fax 0533-5418805 0533-5418805
Email address zhangkeming@lttc.com.cn wyzheng@lttc.com.cn，likun@lttc.com.cn
III Other Information
1. Contact Information of the Company
Indicate by tick mark whether any change occurred to the registered address, office address and their zip codes, website address,
email address and other contact information of the Company in the Reporting Period.
□ Applicable Not applicable
No change occurred to the said information in the Reporting Period, which can be found in the 2022 Annual Report.
2. Media for Information Disclosure and Place where this Report is Lodged
Indicate by tick mark whether any change occurred to the information disclosure media and the place for lodging the Company’s
periodic reports in the Reporting Period.
□ Applicable Not applicable
The website of the Shenzhen Stock Exchange, media and website where the Company’s periodic reports are disclosed, as well as
the place for lodging such reports did not change in the Reporting Period. The said information can be found in the 2022 Annual
Report.
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Lu Thai Textile Co., Ltd. Interim Report 2023
3. Other Information
Indicate by tick mark whether any change occurred to other information in the Reporting Period.
□ Applicable Not applicable
IV Key Financial Information
Indicate by tick mark whether there is any retrospectively restated datum in the table below.
□ Yes No
H1 2023 H1 2022 Change (%)
Operating revenue (RMB) 2,840,491,262.47 3,330,294,463.25 -14.71%
Net profit attributable to the listed company’s shareholders
221,647,998.15 393,950,852.46 -43.74%
(RMB)
Net profit attributable to the listed company’s shareholders
191,809,861.94 365,579,229.64 -47.53%
before exceptional gains and losses (RMB)
Net cash generated from/used in operating activities (RMB) 148,610,216.98 117,482,408.74 26.50%
Basic earnings per share (RMB/share) 0.26 0.45 -42.22%
Diluted earnings per share (RMB/share) 0.23 0.39 -41.03%
Weighted average return on equity (%) 2.42% 4.77% -2.35%
30 June 2023 31 December 2022 Change (%)
Total assets (RMB) 13,573,972,109.67 13,351,097,602.03 1.67%
Equity attributable to the listed company’s shareholders (RMB) 9,256,925,049.09 9,014,156,872.71 2.69%
V Accounting Data Differences under China’s Accounting Standards for Business
Enterprises (CAS) and International Financial Reporting Standards (IFRS) and Foreign
Accounting Standards
1. Net Profit and Equity under CAS and IFRS
□ Applicable Not applicable
No such differences for the Reporting Period.
2. Net Profit and Equity Differences under CAS and Foreign Accounting Standards
□ Applicable Not applicable
No such differences for the Reporting Period.
VI Exceptional Gains and Losses
Applicable □ Not applicable
Unit: RMB
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Lu Thai Textile Co., Ltd. Interim Report 2023
Item Amount Note
Gain or loss on disposal of non-current assets (inclusive of impairment
-86,455.19
allowance write-offs)
Government subsidies charged to current profit or loss (exclusive of
government subsidies consistently given in the Company’s ordinary course
27,808,339.07
of business at fixed quotas or amounts as 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
5,660,105.05
liabilities and available-for-sale financial 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
2,281,937.13
individually for impairment
Non-operating income and expense other than the above 1,448,586.39
Less: Income tax effects 6,932,483.87
Non-controlling interests effects (net of tax) 341,892.37
Total 29,838,136.21
Particulars about other items that meet the definition of exceptional gain/loss:
□ Applicable Not applicable
No such cases for the Reporting Period.
Explanation of why the Company reclassifies as recurrent an exceptional gain/loss item listed in the Explanatory Announcement
No. 1 on Information Disclosure for Companies Offering Their Securities to the Public—Exceptional Gain/Loss Items:
□ Applicable Not applicable
No such cases for the Reporting Period.
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Lu Thai Textile Co., Ltd. Interim Report 2023
Part III Management Discussion and Analysis
I Principal Activity of the Company in the Reporting Period
With the full resumption of socioeconomic development since 2023, the domestic sales of the textile industry have shown an upturn,
further unblocking the industry circulation. However, the sluggish demand in the overseas markets, complicated trade environment,
and continuing high production costs have placed the textile industry under pressure in the first half of the year, especially in terms of
export. This can be manifested through its main business indicators, including production, efficiency, and investment. In the face of
these challenges, the Company adhered to the “customer-focused” philosophy and continued to promote the “Improve Quality and
Efficiency” and “Overall Internationalization” strategies. Meanwhile, the Company ensured orderly management and operation by
expanding market, adjusting structure and building capabilities.
For the Reporting Period, the Company achieved operating revenue of RMB2,840 million, a net profit attributable to the Company as
the parent of RMB222 million, and a net profit attributable to the Company as the parent before exceptional gains and losses of
RMB192 million, respectively down 14.71%, 43.74% and 47.53% when compared to the same period of last year. No changes
occurred to the Company’s principal operations, products or business models, or the primary factors driving the Company’s growth
in the Reporting Period.
During the Reporting Period, the Company was rated by the China National Textile and Apparel Council as the “Outstanding
Institution of 2022 for Talent Development in China’s Textile Industry” and “Chinese Textile and Apparel Brand of 2023 with
Competitive Edge”. It was also awarded by the Shandong Textile and Apparel Association “Social Responsibility Contribution
Award”. The Company mainly focused on the following aspects:
(I) Improve its global marketing system and continuously boost its capabilities of market expansion
The Company adhered to the “customer-focused” philosophy, focused on customer demand, and leveraged its own advantages in the
industrial chain and product R&D and design capabilities to boost its marketing capabilities and services. Meanwhile, the Company
continuously optimized its customer service procedure, improved exhibition planning and customer management procedures,
completed the setup of the overseas marketing team, and expanded the functions of its overseas offices. Doing so helped the
Company provide customers with more professional and efficient marketing services, further stabilize its partnership with customers,
and boost product competitiveness. Moreover, it attached great importance to the risk control of inventory and sales proceeds during
the marketing in order to minimize the business risk.
(II) Continuously advance R&D innovation to further consolidate its competitive edge
During the Reporting Period, the Company advanced the research on the technological research projects at the Company level and
reserve technology projects in an orderly manner and enhanced its capability of collaborative leadership in fields including the
market, marketing, R&D, and production. It also secured significant advances in projects such as the research on the wearability of
regenerated cellulose fabric and the processing technology for high-whiteness knitted fabric. Moreover, the Company intensified its
communication and cooperation with strategic suppliers. It rolled out new categories of products through independent R&D and the
introduction of cellulosic materials, with materials such as SupF!t, EcoF!t, and FlaxF!t having been promoted and applied to each
production line. Technological exchanges with higher education institutes and institutions, such as Donghua University and the
National Center for Nanoscience and Technology, were organized by the Company, which delivered four cooperation intentions
regarding the progress in cutting-edge technologies (e.g. green dyeing and finishing technology and the development of intelligent
textile products).
During the Reporting Period, the Company was granted 34 patents, including 26 ones for invention. It also won the China Patent
Award (Silver). Additionally, the Company had three technological achievements assessed by the China National Textile and
Apparel Council, including one assessed as an internationally advanced achievement. Moreover, the Company undertook one
national key R&D program in the “14th Five-Year Plan” period. These efforts have helped the Company form the “invention patent-
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Lu Thai Textile Co., Ltd. Interim Report 2023
focused” intellectual property development model.
(III) Push ahead with its “Overall Internationalization” strategic layout and improve the efficiency of resource consolidation
In terms of the overseas business segment, by removing the capacity constraints of bottlenecked processes, shortening the delivery
period, and improving the sample development capability, the Company filled in the steadily increasing orders of strategic customers.
While shortening the delivery period, it also built up its process and technique reserves, strengthened its product development
capabilities, refined the Group’s overseas supply chain system, developed more local suppliers of raw materials, re-planed and re-laid
out the product exhibition area, completed the categories of fabric samples, and vigorously contributed to the development of the
global supply chain systems of manufacturers and distributors.
Next, the Company will thoroughly explore the domestic markets at multiple levels and involving multiple fields, engage in the
domestic and international production-demand cycles, and promote technological and business pattern innovation and supply chain
updates. It will also coordinate reasonable quantity growth and effective quality improvement. Doing so will contribute to the
Company’s achievement of high-quality development.
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.
The sluggish demand in the overseas markets, complicated trade environment, and continuing high production costs have placed
the textile industry under pressure in the first half of 2023, especially in terms of export. This can be manifested through its main
business indicators, including production, efficiency, and investment. End customers are still struggling to reduce inventories,
decreasing the downstream demand. Accordingly, businesses generally present a low operating rate and thus face huge business
pressure. Nevertheless, China’s apparel export industry remains competitive. Affected by multiple unfavorable factors, such as the
increasingly weak demand in the principal markets worldwide and supply chain adjustments, businesses in the industry are
struggling to maintain the export scale of the textile and apparel industry and recover in anticipation by expanding into emerging
markets and creating new business models. In the future, they must enhance their capabilities and seize market opportunities to
actively respond to challenges.
II Core Competitiveness Analysis
1. The Company has a comprehensive vertical industrial chain and internationalized layout. It possesses the whole industrial chain
integrating spinning, bleaching and dyeing, neatening, testing, and garment making, as well as excellent quality control capabilities
through various links of the production of high-end yarn-dyed fabrics. In order to leverage international resources, give play to the
advantage of internationalized industrial distribution and reinforce the leading international status in manufacturing the fabrics for
shirts, the Company has put in place production bases, design agency, and market service offices overseas.
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-
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Lu Thai Textile Co., Ltd. Interim Report 2023
doctoral scientific research station and Shandong Provincial Engineering Technology Research Center, dedicates itself to the cutting-
edge technical research, and gradually transforms from technology research to integrated product development. Besides, the
Company will also transform from the overcoming of key technical difficulties to the mastery of technical principles and the
formulation of industrial standards, and from the focus on technical innovation to the dynamic integration of new technique
exploration with model innovation, materialize the low-carbon, green and sustainable development.
III Core Business Analysis
Overview:
For the Reporting Period, the Company recorded operating revenue of RMB2,840 million (a 14.71% year-on-year decrease); cost of
sales of RMB2,234 million (a 10.55% year-on-year decrease), selling expense of RMB66 million (a 10.88% year-on-year increase),
administrative expense of RMB175 million (a 7.87% year-on-year decrease), research and development expense of RMB131 million
(a 14.21% year-on-year increase), and net cash generated from operating activities of RMB149 million (a 26.50% year-on-year
increase).
Year-on-year changes in key financial data:
Unit: RMB
Change
H1 2023 H1 2022 Main reason for change
(%)
Operating revenue 2,840,491,262.47 3,330,294,463.25 -14.71%
Cost of sales 2,233,932,367.67 2,497,333,041.59 -10.55%
Selling expense 66,411,247.30 59,894,351.04 10.88%
Administrative expense 175,308,361.39 190,280,143.57 -7.87%
Finance costs -57,007,476.34 -71,933,482.03 20.75%
Decreased gross profit and R&D
expense being allowed for over-
Income tax expense 20,991,415.51 67,767,576.50 -69.02%
deduction in the calculation of the
taxable income amount
R&D investments 131,290,032.04 114,951,241.87 14.21%
Net cash generated from/used in
148,610,216.98 117,482,408.74 26.50%
operating activities
Net cash generated from/used in
-751,734,011.96 -522,296,795.23 -43.93% Increased payments for investments
investing activities
Net cash generated from/used in
51,586,090.91 136,772,256.21 -62.28% Decreased borrowings received
financing activities
Net increase in cash and cash
-533,029,486.11 -240,373,645.82 -121.75%
equivalents
Significant changes to the profit structure or sources of the Company in the Reporting Period:
□ Applicable Not applicable
No such changes in the Reporting Period.
Breakdown of operating revenue:
Unit: RMB
H1 2023 H1 2022
As % of total As % of total Change (%)
Operating revenue operating revenue Operating revenue operating revenue
(%) (%)
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Lu Thai Textile Co., Ltd. Interim Report 2023
Total 2,840,491,262.47 100% 3,330,294,463.25 100% -14.71%
By operating division
Textile and apparel 2,634,843,253.53 92.76% 3,071,908,914.09 92.24% -14.23%
Electricity and
120,527,005.15 4.24% 120,886,686.18 3.63% -0.30%
steam
Others 85,121,003.79 3.00% 137,498,862.98 4.13% -38.09%
By product category
Fabric products 1,932,688,936.22 68.04% 2,439,097,155.42 73.24% -20.76%
Shirts 702,154,317.31 24.72% 632,811,758.67 19.00% 10.96%
Electricity and
120,527,005.15 4.24% 120,886,686.18 3.63% -0.30%
steam
Others 85,121,003.79 3.00% 137,498,862.98 4.13% -38.09%
By operating segment
Hong Kong 117,626,748.26 4.14% 94,978,095.81 2.85% 23.85%
Japan And South
189,783,688.08 6.68% 158,339,499.64 4.75% 19.86%
Korea
Southeast Asia 825,289,532.25 29.05% 1,142,731,135.42 34.31% -27.78%
Europe and America 488,539,769.45 17.20% 554,392,368.30 16.65% -11.88%
Others 178,285,941.34 6.28% 234,122,756.86 7.03% -23.85%
Mainland China 1,040,965,583.09 36.65% 1,145,730,607.22 34.41% -9.14%
Operating division, product category or operating segment contributing over 10% of operating revenue or operating profit:
□ Applicable Not applicable
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.
Unit: RMB
Gross YoY change in YoY change in YoY change
Operating revenue Cost of sales profit operating cost of sales in gross profit
margin revenue (%) (%) margin (%)
By operating division
Textile and
2,634,843,253.53 2,032,231,736.66 22.87% -14.23% -8.83% -4.57%
apparel
By product category
Fabric
1,932,688,936.22 1,502,587,547.17 22.25% -20.76% -14.01% -6.11%
products
Shirts 702,154,317.31 529,644,189.49 24.57% 10.96% 9.95% 0.69%
By operating segment
Southeast
825,289,532.25 640,898,239.26 22.34% -27.78% -21.83% -5.91%
Asia
Europe and
488,539,769.45 371,547,663.95 23.95% -11.88% -9.70% -1.83%
America
Mainland
1,040,965,583.09 847,868,522.29 18.55% -9.14% -6.78% -2.07%
China
Core business data of the prior year restated according to the changed statistical caliber for the Reporting Period:
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Lu Thai Textile Co., Ltd. Interim Report 2023
□ Applicable Not applicable
Physical stores of the Company:
□ Yes No
New physical stores:
□ Yes No
Indicate by tick mark whether the Company discloses its top five franchised stores.
□ Yes No
IV Other Information Required by Information Disclosure Guide for Companies Engaged in
Textile and Garment Services
1. Capacity
The Company's own capacity
Industry
Item H1 2023 H1 2022
Classification
Total capacity (fabrics)
14,872.50 14,715.00
(10,000 meters)
Rate of capacity utilization 70% 87%
The Company's convertible bond The Company's convertible bond
Fabrics fundraising projects: The "Functional fundraising projects: The "Functional
Fabric Intelligent Eco-park Project Fabric Intelligent Eco-park Project
(Phase I)" with an annual capacity of (Phase I)" with an annual capacity of
Plants under construction
35 million meters of high-grade 35 million meters of high-grade
functional fabrics and the "Overseas functional fabrics and the "Overseas
Product Line Project of High-grade Product Line Project of High-grade
Fabrics (Phase I)" were in progress. Fabrics (Phase I)" were in progress.
Total capacity (apparel)
1,115.00 1,015.00
(10,000 pieces)
Textile and
Rate of capacity utilization 84% 85%
apparel
Plants under construction
Year-on-year change in the rate of capacity utilization above 10%
Yes □ No
Capacity utilization decreased as a result of the reduced overseas demand for fabric.
Overseas capacity
Yes □ No
Industry Classification Item Domestic Overseas
Percentage of capacity 80% 20%
Mainly in Vietnam
Fabrics Capacity layout Mainly in Shandong Province
Rate of capacity
68% 77%
utilization
Percentage of capacity 40% 60%
Apparel
Mainly in Vietnam, Cambodia, and
Capacity layout Mainly in Shandong Province
Myanmar
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Lu Thai Textile Co., Ltd. Interim Report 2023
Rate of capacity
86% 83%
utilization
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. 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
Sales YoY change in YoY change in YoY change in
Operating revenue Cost of sales profit
channels operating revenue cost of sales gross profit margin
margin
Online
1,962,704.70 803,334.38 59.07% 11.74% 17.02% -1.85%
sales
Direct
1,938,469,930.72 1,504,273,871.42 22.40% -20.61% -13.95% -6.01%
sales
OEM/OD
694,410,618.11 527,154,530.86 24.09% 10.49% 9.74% 0.53%
M
3. Selling expense and breakdown thereof
Unit: RMB
Amount of percentage
Item H1 2023 H1 2022 Note
change of change
Salaries 33,546,461.28 34,521,119.07 -974,657.79 -2.82%
Marketing
16,171,875.20 15,812,366.09 359,509.11 2.27%
expense
Depreciation
3,510,556.38 3,352,693.87 157,862.51 4.71%
costs
Business travel Increased business trips to enhance communication
3,906,192.17 411,115.04 3,495,077.13 850.15%
expenses with customers
Increased costs of seasonal maintenance of the heating
Office costs 7,315,422.95 4,126,339.40 3,189,083.55 77.29%
network
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Lu Thai Textile Co., Ltd. Interim Report 2023
Others 1,960,739.32 1,670,717.57 290,021.75 17.36%
Total 66,411,247.30 59,894,351.04 6,516,896.26 10.88%
4. Franchise and distribution
Franchisees and distributors recorded more than 30% of sales revenue
□ Yes No
5. Online sales
Online sales recorded more than 30% of sales revenue
□ Yes No
Self-developed sales platforms
Yes □ No
Start of operation 30 March 2009
Number of registered users 155,000
Average number of active monthly users (AMU) 5,000
Return rate of main brands 3.00%
Return rate of main types 3.00%
Cooperation with third-party sales platforms
Yes □ No
Online sales channels opened or closed by the Company
□ Applicable Not applicable
Impact on the Company in the current period and subsequent periods:
Not applicable.
6. Agency operation model
Agency operation model involved
□ Yes No
7. Inventory
Inventory
Days of Quantity
Inventory Year-on-year change in
Main products turnover of of Reason
age inventory balance
inventories inventory
Fabrics (10,000 Within 1
102 2,898.89 -35.38% Accelerated de-stocking
meters) year
Fabrics (10,000 Over 1
748.13 -23.04% Accelerated de-stocking
meters) year
Shirts (10,000 30 97.98 Within 1 2.49%
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Lu Thai Textile Co., Ltd. Interim Report 2023
pieces) year
Shirts (10,000 Over 1
14.08 -34.66% Accelerated de-stocking
pieces) year
Reserves for falling prices of inventory
30 June 2023
Item
Falling price reserves or provision for impairment
Gross amount Carrying amount
on contract performance cost
Raw materials 1,054,147,051.45 55,397,065.04 998,749,986.41
Goods in process 529,340,419.70 15,058,185.71 514,282,233.99
Products on hand 885,867,404.34 193,427,654.40 692,439,749.94
Commissioned
17,371,088.14 - 17,371,088.14
products
Materials in transit - - -
Total 2,486,725,963.63 263,882,905.15 2,222,843,058.48
Inventory information of retail channels such as franchised stores or distributors:
Not applicable.
8. Brand building
Production and sales of brand clothing, apparel and home textile products
Yes □ No
Self-owned brands
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
9. Others
Engaged in business related to apparel design
□ Yes No
Whether the Company held meetings for the placement of orders
□ Yes No
V Analysis of Non-Core Businesses
Applicable □ Not applicable
16
Lu Thai Textile Co., Ltd. Interim Report 2023
Unit: RMB
As % of total
Amount Source/Reason Recurrent or not
profit
Return on Investment income from the disposal of
46,798,662.00 20.28% Not
investment held-for-trading financial assets
Gain/loss on changes Loss on changes in fair value of held-
-42,471,705.81 -18.41% Not
in fair value for-trading financial assets
Asset impairments -75,665,553.95 -32.79% Inventory valuation allowances Not
Non-operating Income of non-operating compensation,
4,231,250.89 1.83% Not
income etc
Non-operating
2,464,360.53 1.07% Non-operating donations, etc. Not
expense
VI Analysis of Assets and Liabilities
1. Significant Changes in Asset Composition
Unit: RMB
Reason for
30 June 2023 31 December 2022 Change in
any
percentage
As % of total As % of total significant
Amount Amount (%)
assets assets change
Monetary
1,551,443,291.97 11.43% 2,067,768,253.97 15.49% -4.06%
assets
Accounts
534,155,829.19 3.94% 660,427,526.19 4.95% -1.01%
receivable
Inventories 2,222,843,058.48 16.38% 2,107,849,708.33 15.79% 0.59%
Investment
20,010,251.80 0.15% 20,460,935.21 0.15% 0.00%
property
Long-term
equity 182,835,476.83 1.35% 184,168,625.69 1.38% -0.03%
investments
Fixed assets 5,686,991,158.97 41.90% 5,807,847,850.67 43.50% -1.60%
Construction in
538,603,980.88 3.97% 199,943,501.73 1.50% 2.47%
progress
Right-of-use
487,341,555.12 3.59% 481,420,505.31 3.61% -0.02%
assets
Short-term
527,384,198.32 3.89% 518,946,415.96 3.89% 0.00%
borrowings
Contract
183,455,240.54 1.35% 206,879,672.53 1.55% -0.20%
liabilities
Long-term
164,369,828.94 1.21% 186,431,096.24 1.40% -0.19%
borrowings
Lease liabilities 97,740,959.65 0.72% 98,501,303.83 0.74% -0.02%
2. Major Assets Overseas
Applicable □ Not applicable
Material
Manage Control measures Return As % of the
Loca impairment
Asset Source Asset value (RMB) ment to protect asset generated Company’s
tion risk
model safety (RMB) equity
(yes/no)
Hon Main management
Hong Kong Incorp g Marketi personnel sent by
217,137,052.63 6,264,569.51 2.25% No
project orated Kon ng the Company as
g the parent
America Incorp New Marketi Main management
900,857.40 -740,116.24 0.01% No
project orated York ng personnel sent by
17
Lu Thai Textile Co., Ltd. Interim Report 2023
the Company as
the parent
Main management
Svay
Cambodia Incorp Manufa personnel sent by
213,812,798.67 Rien 5,406,050.15 2.22% No
project orated cturing the Company as
g
the parent
Main management
Myanmar Incorp Rang Manufa personnel sent by
118,957,902.84 14,178,564.56 1.23% No
project orated oon cturing the Company as
the parent
Main management
Vietnam Incorp Viet Manufa personnel sent by
3,655,024,262.33 54,418,516.33 37.92% No
project orated nam cturing the Company as
the parent
Main management
Sing
Singapore Incorp Investm personnel sent by
1,364,033,246.86 apor 44,201,578.04 14.15% No
project orated ent the Company as
e
the parent
3. Assets and Liabilities at Fair Value
Applicable □ Not applicable
Unit: RMB
Gain/loss
Impairme
on fair- Cumulative
nt
value fair-value Purchased in Sold in the
Beginning allowance Ending
Item changes in changes the Reporting Reporting Other change
amount for the amount
the charged to Period Period
Reporting
Reporting equity
Period
Period
Financial assets
1. Held-for-
trading financial -
239,522,65 515,020,415. 80,005,962.1 248,030,000. 901,270,568.8
assets (excluding 21,296,535.
0.65 34 4 00 1
derivative 04
financial assets)
-
2. Derivative 28,172,508.
10,603,652. 17,568,856.46
financial assets 83
37
5. Other non- -
337,110,00
current financial 248,030,000. 89,080,000.00
0.00
assets 00
-
Subtotal of 604,805,15 515,020,415. 80,005,962.1 1,007,919,425.
31,900,187.
financial assets 9.48 34 4 27
41
11,208,304. 13,085,402.2
Others -197,321.06 24,096,385.95
78 3
-
Total of the 616,013,46 515,020,415. 80,005,962.1 13,085,402.2 1,032,015,811.
31,900,187. -197,321.06
above 4.26 34 4 3 22
41
-
Financial 4,276,929.7
10,571,518. 14,848,448.10
liabilities 0
40
Content of other change:
Changes in accounts receivable financing.
Significant changes to the measurement attributes of the major assets in the Reporting Period:
□Yes No
18
Lu Thai Textile Co., Ltd. Interim Report 2023
4. Restricted Asset Rights as at the Period-End
For details, see Part X. VII. 63. Assets with restricted ownership and using right in this Report.
VII Investments Made
1. Total Investment Amount
□Applicable Not applicable
2. Major Equity Investments Made in the Reporting Period
□Applicable Not applicable
3. Major Non-Equity Investments Ongoing in the Reporting Period
□Applicable Not applicable
4. Financial Investments
(1) Securities Investments
□Applicable Not applicable
No such cases in the Reporting Period.
(2) Investments in Derivative Financial Instruments
Applicable □ Not applicable
1) Derivative Investments for Hedging Purposes during the Reporting Period
Applicable □ Not applicable
Unit: RMB'0,000
Proportion of
closing
Gain/loss on Cumulative
investment
Initial fair-value fair-value Purchased in Sold in the Ending
Type of amount in
investment changes in changes the Reporting Reporting investment
derivative the
amount the Reporting recorded in Period Period amount
Company’s
Period equity
ending net
assets
Foreign
exchange 256,788.86 -2,924.38 0.00 108,632.36 138,025.16 118,763.7 12.32%
option
Total 256,788.86 -2,924.38 0.00 108,632.36 138,025.16 118,763.7 12.32%
Whether
significant
changes
occurred to
No significant changes
the
Company’s
accounting
policy and
19
Lu Thai Textile Co., Ltd. Interim Report 2023
specific
accounting
principles of
derivatives in
the Reporting
Period
compared to
the previous
Reporting
Period
Actual 1. As of 30 June 2023, the Company held 23 undue financial derivatives contracts, totaling USD185 million, all
gain/loss in of which were forex option contracts.
the Reporting 2. From January to June 2023, the total amount of all due financial derivatives of the Company was equivalent to
Period USD207 million which were all implemented based on contracts, generating gains of RMB16.0054 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
of hedges fluctuations. 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
The Company conducted derivatives products transaction in order for hedging. And the forward settlement
hedging was operated by installments, with the relevant amount not more than the planned derivatives products
transactions. And all derivatives products transaction was zero-deposit. Meanwhile, the Company had a complete
risk control system for sufficient analysis and prevention of possible risks such as market risk, liquidity risk and
credit risk, operation risk and risk of laws and regulation.
1. Market risk: when the international and domestic economic situations change, the corresponding changes in
exchange rates and interest rates may have an adverse impact on the financial derivatives transactions of the
Company. Precautionary measures to be taken include: the Company chooses risk-controlled financial derivative
tools with simple structure and good liquidity to carry out the hedging business, strictly controls the scale of
financial derivatives trading by staged operations, and adjusts the strategy according to market changes in a
timely manner.
2. Liquidity risk and credit risk: a credit risk arising from failure of the contractually due Company or
Analysis on
counterparty in performing the contract due to liquidity or factors other than liquidity. Precautionary measures to
risks and
be taken include: the Company determines the upper limit of derivatives transaction amounts according to
control
production and operation scale as well as foreign exchange income, and conducts operations by stage according
measures of
to the budget of future collections and disbursement. The derivative trades are free of guarantee deposit and can
derivative
still be guaranteed in performance after the contract expires by means of extension and balance settlement etc. to
products held
prevent the Company from credit damages due to lack of liquidity. The Company selects financial institutions
in the
with strong capability and good reputation as a counterparty and signs standard derivative trading contracts to
Reporting
strictly control credit risk of the counterparty.
Period
3. Operation risk:
(including
The derivatives had high specialty and complexity, so internal operation procedures, staffs and external events
but not
would make the Company to undertake risks during the transaction. Risk control measures: The Company
limited to
promulgated strict authorization and approval system and perfect regulatory mechanism, fixed the operation
market risk,
procedures and approval procedures system to conduct derivative products transaction, implemented strict
liquidity risk,
authorization and post checks and balances system, meanwhile, it helped them establish a risk-neutral awareness
credit risk,
of exchange rate and improved the overall quality of relevant personnel through strengthening the professional
operation
ethics education and business training for them. Besides, it established the System of Reporting the Abnormal
risk, law risk,
Situation Timely so as to ensure to lower the operation risks to the maximum.
etc.)
4. Risk of laws and regulation:
The Company conducted derivatives products transaction in strict accordance with relevant laws and rules. If
there were no standard operation procedures and strict approval procedures, it was easy to cause compliant and
regulatory risks existing in the validity and feasibility of contract, commitments and other legal documents
signed. Risk control measures: The Company carefully studied and mastered laws, regulations and policies
relevant to derivative products transaction, formulated internal control rules for the forward settlement hedging
business, standardized the operation procedures. And strengthened the compliant examination on derivative
products transaction business. The Company conducted derivative transaction business according to the relevant
approval procedure, which was in line with relevant laws, regulations, the Company’s Articles of Association, the
Management Rules for Derivative Transactions of Lu Thai, the Proposal on Plan for Derivative Transaction of Lu
Thai Textile Co., Ltd. approved at the 33rd Meeting of the 9th Board of Directors, and performed relevant
information disclosure responsibilities.
Changes of In accordance with the relevant provisions and guidelines of the Accounting Standards for Business Enterprises
market prices No. 22 - Recognition and Measurement of Financial Instruments and the Accounting Standards for Business
or fair values Enterprises No. 37 - Presentation of Financial Instruments issued by the Ministry of Finance, the Company took
20
Lu Thai Textile Co., Ltd. Interim Report 2023
in the the relevant accounting measures for its business of FX derivative transactions to reflect the relevant items in the
Reporting balance sheet and the income statement. During the Reporting Period, the Company determined the fair value of
Period of the
FX options based on the bank’s corresponding quotations at the end of the period.
invested
derivatives.
And the
analysis on
the fair value
of the
derivatives
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 25 May 2022
approval of
derivative
investment
(if any)
Disclosure
date of
general
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
independent professional advice on the Company's derivative transaction business: We believe that the Company's foreign
directors on exchange derivative transaction business is performed on the condition of ensuring normal operations.
the Transactions using its own funds are beneficial to avoiding the risk of exchange rate fluctuations, and are an
Company’s effective tool to hedge exchange rate risk. By strengthening internal control, implementing stop-loss and risk
derivatives prevention measures, the Company can improve its ability to resist exchange rate fluctuations and improve its
investment management level. The derivative transaction plan proposed by the Board of Directors is feasible, necessary, and
and risk the risks are manageable. 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
21
Lu Thai Textile Co., Ltd. Interim Report 2023
Unit: RMB’0,000
Cumula
Total of
tive
raised Ratio of
amount
capital cumulati Amount
Total of of
Raisin Cumulative which ve Total of of raised
Total of raised raised Purpose and
Raisin g amount of purpose amount raised capital
raised capital capital direction of raised
g year mann raised is which capital unused
capital used in which capital unused
er capital used changed purpose unused for two
this period purpose
in the is years
is
report changed
change
period
d
By 30 June 2023,
RMB21.3881
million in the
unused raised
capital was
Conve
deposited in the
2020 rtible 138,800 20,592.53 112,546.59 0 25,000 18.01% 31,421.81 0
bonds raised capital
account, and
RMB292.83
million was used
for cash
management.
Total -- 138,800 20,592.53 112,546.59 0 25,000 18.01% 31,421.81 -- 0
General use situation of raised capital
(I) Amount of actual raised capital and arrival date
Upon approval by China Securities Regulatory Commission in the document “ZJXK [2020]299”, the Company publically issued 14,000,000
convertible bonds on 9 April 2020 at par value RMB 100, the issued amount was RMB 1.4 billion, and the Company actually received the
amount of raised capital RMB 1.388 billion after deducted the underwriting fee RMB 12 million. The above amount was remitted in cash in
RMB. After deducted legal fee, accountant fee, credit rating fee, information disclosure fee, issuing commission and other costs RMB 2.54
million in total from the above actually raised capital, the net amount of raised capital was RMB 1385.46 million, which entered the account on
15 April 2020, and Grant Thornton International Ltd (Special General Partnership) issued the capital verification report with reference No.
Grant Thornton Verification [2020] 371ZC0090 for it after verification.
(II) Use situation and balance of raised capital
As at 30 June 2023, the Company directly invested RMB1,125.4659 million in total from the raised capital for its capital raising projects. The
unused amount was RMB314.2181 million (including the net income of RMB50.8317 million from interest income deducted handling
charge).
(2) Commitments on Projects with Funds Raised
Applicable □ Not applicable
Unit: RMB’0,000
Whether
Cumulat Investme
the
Total of ive nt
Committed projects Date when Whether
committ Total Amount investme progress Benefit Whether
investment are the project project
ed investme invested nt realized reached
projects and changed by the reached the feasibility
investme nt after in this amount in this the
use direction (includin end of intended changed
nt of modifica report by the period report expected
of over raised g available significantl
raised tion (1) period end of period benefit
capital partially (3) ＝ status y
capital period
changed (2)/(1)
(2)
projects)
Committed investment projects
1. Functional
58,341.0 31 December
fabric smart No 85,000 85,000 901.08 68.64% 0 N/A No
eco-park 2 2024
22
Lu Thai Textile Co., Ltd. Interim Report 2023
project
(Phase 1)
2.
Construction
of overseas
high-end 19,691.4 25,399.9 31 December
Yes 25,000 25,000 101.60% 0 N/A No
fabric 5 8 2024
product line
project
(Phase I)
3.
Supplement 28,805.5
No 28,800 28,800 100.02% 0 N/A No
working 9
capital
Subtotal of
committed 20,592.5 112,546.
-- 138,800 138,800 -- -- 0 -- --
investment 3 59
projects
Use direction of over raised capital
N/A
Repayment
of bank loans -- 0 0 0 0 0.00% -- -- -- --
(if any)
Supplement
working
-- 0 0 0 0 0.00% -- -- -- --
capital (if
any)
Subtotal of
use director
-- 0 0 0 0 -- -- -- --
of over raised
capital
20,592.5 112,546.
Total -- 138,800 138,800 -- -- 0 -- --
3 59
Explain
project by
project
situation and
reasons that
it did not
reach the
planned
progress or Due to objective factors such as socio-economic and macro-environmental factors, the construction process of the functional
expected fabric smart eco-park project (Phase 1) has been affected to a certain extent in terms of the procurement of equipment and
return input of personnel, etc., and it is expected to be postponed until December 2024 to be ready for its intended use.
(including
reason for
inputting
“N/A” for
“Whether
reached the
expected
benefit”)
Note for
significant
change of N/A
project
feasibility
Amount,
purpose and N/A
use progress
23
Lu Thai Textile Co., Ltd. Interim Report 2023
of over raised
capital
Change of
implementati
on site of
N/A
capital
raising
project
Adjustment
of
implementati
on mode of N/A
capital
raising
project
Advance Applicable
investment
and
displacement By 30 April 2020, the total amount of displaced capital was RMB191.4288 million, including the amount RMB 189.8388
of capital million invested in the project with the self-raised capital of the Company in advance, and payment of issuing cost RMB1.59
raising million with its self-raised capital.
project
Temporary
supplement
to working
N/A
capital with
unused raised
capital
Balance of
raised capital
after
implement of N/A
project and
relevant
reasons
Purpose and
use direction By 30 June 2023, RMB21.3881 million in the unused raised capital was deposited in the raised capital account, and
of unused RMB292.83 million was used for cash management.
raised capital
Problems
existing in
use and
information
None
disclosure of
raised capital
or other
situation
(3) Changes in Projects with Funds Raised
Applicable □ Not applicable
Unit: RMB’0,000
Correspo Amount Actual Accumula Investme Realized Whether Whether
Date of
nding of investmen tive nt income in reached occurred
Items after reaching
original planned t amount investmen schedule the anticipat significant
changes intended use
committe funds in the t amount as the Reporting ed changes in
of the project
d items invested Reporting as the period- Period income project
24
Lu Thai Textile Co., Ltd. Interim Report 2023
after Period period- end feasibility
changes end (2) (3)=(2)/(1
(1) )
High-end
Construction printing
of overseas and
high-end fabric dyeing 31 December
25,000 19,691.45 25,399.98 101.60% 0 N/A No
production line fabric 2024
project (Phase productio
I) n line
project
Total -- 25,000 19,691.45 25,399.98 -- -- 0 -- --
In accordance with the Company's global strategic layout and market demand, the Company
planned to adjust its capacity structure. On 9 June 2022, the second extraordinary general meeting
Notes of reasons for changes, decision- and the first bondholders' meeting deliberated and adopted the Proposal on Changing the Purpose of
making procedures and information Partial Raised Capital Unused. The aim was to terminate the "High-end printing and dyeing fabric
disclosure (by specific items) production line project" 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 anticipated income (by N/A
specific items)
Notes of condition of significant changes
occurred in project feasibility after N/A
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
Relat
ionsh
Princ
ip
Nam ipal Registered Operating
with Total assets Net assets Operating profit Net profit
e activi capital revenue
the
ty
Com
pany
Lufe
ng
Wea Subsi Fabri
706160000 1,652,667,977.45 1,397,190,942.29 630,672,258.24 7,475,358.75 6,009,887.37
ving diary c
&
Dyei
25
Lu Thai Textile Co., Ltd. Interim Report 2023
ng
Co.,
Ltd.
Shan
dong
Lulia
n
Subsi Fabri
New 400000000 685,899,119.34 136,143,618.67 59,510,967.89 -57,545,974.11 -57,542,354.11
diary c
Mate
rials
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 weak consumer demand across the globe, LuFeng saw decreased export and high-added-value orders, leading to a
decline in both operating revenue and net profit.
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.
X Structured Bodies Controlled by the Company
□Applicable Not applicable
XI Risks Facing the Company and Countermeasures
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
26
Lu Thai Textile Co., Ltd. Interim Report 2023
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.
27
Lu Thai Textile Co., Ltd. Interim Report 2023
Part IV Corporate Governance
I Annual and Extraordinary General Meeting Convened during the Reporting Period
1. General Meetings Convened during the Reporting Period
Investor
Convened Disclosure
Meeting Type participati Index to disclosed information
date date
on ratio
It deliberated and approved 19 proposals,
including the Proposal on 2022 Annual Work
Annual Report of the Board of Directors, the Proposal
The 2022 Annual 12 May 13 May
General 32.95% on 2022 Annual Work Report of the
General Meeting 2023 2023
Meeting Supervisory Committee, and the Proposal on
the Company's 2022 Annual Report and Its
Summary.
2. Extraordinary General Meeting Convened at Request of Preference Shareholders with Resumed
Voting Rights
□Applicable Not applicable
II Change of Directors, Supervisors and Senior Management
□Applicable Not applicable
The Company’s directors, supervisors and senior management remained unchanged during the Reporting Period. For details, see
the 2022 Annual Report.
III Interim Dividend Plan
□Applicable Not applicable
The Company has no interim dividend plan, either in the form of cash or stock.
IV Equity Incentive Plans, Employee Stock Ownership Plans or Other Incentive Measures
for Employees
Applicable □ Not applicable
1. Equity Incentive
Deliberation Relevant
No. Overview of execution Disclosure index
time meeting
7th Meeting The Board of Directors reviewed and approved the Proposal on the
of the 10th Achievement of Lifting the Restriction Conditions in the First Restriction For details, see relevant
Board of Period for the Reserved Shares for Grant under the 2021 Restricted Share announcements (No.: 2023-
10 April Directors and Incentive Scheme and the Proposal on Repurchase and Cancel Authorized but 015, 2023-016, 2023-023, and
1
2023 6th Meeting Unlocked Restricted Share of the Incentive Personnel not Conforming to the 2023-024) and documents
of the 10th Incentive Condition. The independent directors consented independently to disclosed on April 12, 2023
Supervisory relevant matters. The Supervisory Committee reviewed and approved the on www.cninfo.com.cn.
Committee foregoing two proposals and issued the written review opinions. Beijing DHH
28
Lu Thai Textile Co., Ltd. Interim Report 2023
Law Firm Qingdao Office issued a legal opinion. The number of subjects of
incentive meeting the restriction lifting conditions for the reserved shares for
grant under the 2021 Restricted Share Incentive Scheme of the Company was
up to 343, and a total of 2,919,000 restricted shares were lifted out of
restrictions. The foregoing shares were listed and traded on 9 May 2023.
For details, see the relevant
It issued the Indicative Announcement on the Trading on the Market of Lifting
announcement (No.: 2023-
2 5 May 2023 - the Restriction in the First Restriction Period for the Reserved Shares for
027) disclosed on May 5,
Grant of the 2021 Restricted Share Incentive Scheme.
2023 on www.cninfo.com.cn.
It deliberated on and approved the Proposal on Repurchase and Cancel For details, see relevant
2022 Annual Authorized but Unlocked Restricted Share of the Incentive Personnel not announcements (No.: 2023-
3 12 May 2023 General Conforming to the Incentive Condition and disclosed the Announcement of 032 and 2023-033) disclosed
Meeting Capital Reduction on Repurchase and Cancel Partial Restricted Shares on 13 on May 13, 2023 on
May 2023. www.cninfo.com.cn.
The Board of Directors reviewed and approved the Proposal on the
9th Meeting Achievement of Lifting the Restriction Conditions in the Second Restriction
of the 10th Period for the First Grant of the 2021 Restricted Share Incentive Scheme. The
Board of independent directors consented independently to relevant matters. The For details, see relevant
Directors and Supervisory Committee reviewed and approved the foregoing proposal and announcements (No.: 2023-
4 26 May 2023 the 8th issued the written review opinions. The number of subjects of incentive 036 and 2023-037) disclosed
Meeting of meeting the restriction lifting conditions in the second restriction period for on May 27, 2023 on
the 10th the first grant under the 2021 Restricted Share Incentive Scheme of the www.cninfo.com.cn.
Supervisory Company was up to 717, and a total of 6,979,500 restricted shares were lifted
Committee out of restrictions. The foregoing shares were listed and traded on 8 June
2023.
For details, see the relevant
It issued the Indicative Announcement on the Trading on the Market of Lifting
announcement (No.: 2023-
5 1 June 2023 - the Restriction in the Second Restriction Period for the First Grant of the 2021
040) disclosed on June 1,
Restricted Share Incentive Scheme.
2023 on www.cninfo.com.cn.
2. Implementation of Employee Stock Ownership Plan
□Applicable Not applicable
3. Other Incentive Measures for Employees
□Applicable Not applicable
29
Lu Thai Textile Co., Ltd. Interim Report 2023
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
Lu Thai Textile Co., Ltd. and its holding subsidiaries, including LuFeng Company Limited, Shandong Lulian New Materials Co.,
Ltd., and Zibo Xinsheng Thermal Power Co., Ltd. carried out pollutant discharge permit management and were granted the
pollutant discharge permit by the Ecology and Environment Bureau of Zibo. The current pollutant discharge permit of Lu Thai
Textile Co., Ltd. is valid until 9 June 2026; that of LuFeng Company Limited is valid until 22 November 2026; that of Shandong
Lulian New Materials Co., Ltd. is valid until 25 October 2026; that of Zibo Xinsheng Thermal Power Co., Ltd. is valid until 22
June 2025.
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
Emissio
Chief
n
discharg
standard
e outlet
of water COD:
of COD:
COD≤20 pollutant 1495.08t
COD Huangjia 132.609t
Continu 0mg/L;a s in
Lu Thai and pu ; ；
ous mmonia textile
Textile Sewage ammoni 2 Industria ammoni ammoni No
discharg nitrogen dyeing
Co., Ltd a l Park ; a a
e ≤20mg/ and
nitrogen chief nitrogen: nitrogen:
L finishing
discharg 1.596t 149.51t
industry
e outlet
GB
of East
4287-
Zone
2012
COD Chief COD≤20 Emissio COD： COD is
LuFeng Continu 653.53t
and discharg 0mg/L;a n 71.659t
Compan ous
Sewage ammoni 1 e outlet mmonia standard ； ； No
y discharg
a of nitrogen of water ammoni ammoni
Limited e
nitrogen LuFeng ≤20mg/ pollutant a a
30
Lu Thai Textile Co., Ltd. Interim Report 2023
Compan L s in nitrogen: nitrogen
y textile 1.503t is 65.3t
Limited dyeing
and
finishing
industry
GB
4287-
2012
Emissio
n
standard
Chief of water COD： COD is
COD≤20
Shandon discharg pollutant 175.30t
COD 0mg/L; 15.935t
g Lulian Continu e outlet s in
and ammoni ； ；
New ous of textile
Sewage ammoni 1 a ammoni ammoni No
Material discharg Lulian dyeing
a nitrogen a a
s Co., e New and
nitrogen ≤20mg/ nitrogen: nitrogen
Ltd. Material finishing
L 0.246t is 17.5t
s industry
GB
4287-
2012
Emissio
n
SO2： standard
≤35mg/ of air
Zibo Organize m3、 pollutant SO2: SO2 is
Xinshen d s of 16.55t, 236.13t/
SO2, NQx：
g Waste continuo Producti Thermal NQx : a, NQx :
NQx, 4 ≤50mg/ No
Thermal gas us on plant Power 57.2t, 674.63t/
and PM m3,
Power discharg Plant in PM: a, PM:
Co., Ltd. e PM： Shandon 1.677t 67.47t/a.
≤5mg/m g
3 Province
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
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
31
Lu Thai Textile Co., Ltd. Interim Report 2023
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.
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 RMB23.2560 million in total,
among which, RMB22.7832 million for input in environment governance and protection and RMB472.8 thousand for payment of
environmental protection tax.
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.
Administrative penalties imposed for environmental issues during the Reporting Period
Influence on
Rectification
Name Reason Case Result production and
measures
operation
N/A N/A N/A N/A N/A N/A
Other environment information that should be disclosed
None
Measures taken to decrease carbon emission in the Reporting Period and corresponding effects
Applicable □ Not applicable
None
Other environmental information
None
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.
Related environmental accidents information
None
32
Lu Thai Textile Co., Ltd. Interim Report 2023
II Social Responsibility
Not applicable
33
Lu Thai Textile Co., Ltd. Interim Report 2023
Part VI Significant Events
I Commitments of the Company’s De Facto Controller, Shareholders, Related Parties and
Acquirers, as well as the Company Itself and Other Entities Fulfilled in the Reporting
Period or Ongoing at the Period-End
Applicable □ Not applicable
Date of
Type of Term of
Commitment Promisor Details of commitment commitment Fulfillment
commitment commitment
making
1. Not intervene the
Company’s operation and
management beyond the
authority and not occupy the
Company’s interests. 2. From
the issuance date of this
commitment to the
completion of the
implementation of the
Company's public offering of
A-share convertible corporate
bonds, if the CSRC makes
other new regulatory
provisions on remedial
Dilution of
measures for returns and the
at sight
commitment, and the above
Commitment Controllin returns on
commitment fails to meet the
s made in g public From 23 May
requirements of the CSRC,
time of IPO shareholde offering A- 23 May 2019 2019 to 8 On-going
the company / I promise to
or r, actual share April 2026
issue supplementary
refinancing controller convertible
commitment then in
corporate
accordance with the latest
bonds
regulations of CSRC. 3.
Commitment is made to
fulfill the Company's relevant
remedial measures for returns
and any commitment made
herein by the company / me.
If the company / I violate(s)
such commitment and
cause(s) losses to the
Company or investors, the
company / I will bear the
compensation responsibility
to the Company or investors
in accordance with the law.
1. Commitment is made not
to transfer benefits to other
units or individuals free of
Dilution of charge or under unfair
at sight conditions, and no other
Commitment Directors returns on ways damaging the interests
s made in and senior public of the Company will be From 23 May
time of IPO manageme offering A- taken. 2. I will strictly abide 23 May 2019 2019 to 8 On-going
or nt of the share by the budget management of April 2026
refinancing Company convertible the Company, and accept the
corporate strict supervision and
bonds management of the Company
to avoid waste or excessive
consumption. Any position-
related consumption
34
Lu Thai Textile Co., Ltd. Interim Report 2023
behaviors of me will occur
within the scope necessary
for the performance of my
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
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
in accordance with the law.
Executed on
Not
time or not
II Occupation of the Company’s Capital by the Controlling Shareholder or any of Its
Related Parties for Non-Operating Purposes
□Applicable Not applicable
No such cases in the Reporting Period.
35
Lu Thai Textile Co., Ltd. Interim Report 2023
III Irregularities in the Provision of Guarantees
□Applicable Not applicable
No such cases in the Reporting Period.
IV Engagement and Disengagement of Independent Auditor
Are the interim financial statements audited?
□Yes No
The interim financial statements have not been audited.
V Explanations Given by the Board of Directors and the Supervisory Committee Regarding
the Independent Auditor's “Modified Opinion” on the Financial Statements of the
Reporting Period
□Applicable Not applicable
VI Explanations Given by the Board of Directors Regarding the Independent Auditor's
“Modified Opinion” on the Financial Statements of Last Year
□Applicable Not applicable
VII Insolvency and Reorganization
□Applicable Not applicable
No such cases in the Reporting Period.
VIII Legal Matters
Significant lawsuits and arbitrations:
□Applicable Not applicable
No such cases in the Reporting Period.
Other legal matters:
□Applicable Not applicable
IX Punishments and Rectifications
□Applicable Not applicable
X Credit Quality of the Company as well as its Controlling Shareholder and De Facto
Controller
□Applicable Not applicable
36
Lu Thai Textile Co., Ltd. Interim Report 2023
XI Major Related-Party Transactions
1. Continuing Related-Party Transactions
□Applicable Not applicable
No such cases in the Reporting Period.
2. Related-Party Transactions Regarding Purchase or Sales of Assets or Equity Interests
□Applicable Not applicable
No such cases in the Reporting Period.
3. Related-Party Transactions Regarding Joint Investments in Third Parties
□Applicable Not applicable
No such cases in the Reporting Period.
4. Credits and Liabilities with Related Parties
□Applicable Not applicable
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.
XII Major Contracts and Execution thereof
1. Entrustment, Contracting and Leases
(1) Entrustment
□Applicable Not applicable
No such cases in the Reporting Period.
37
Lu Thai Textile Co., Ltd. Interim Report 2023
(2) Contracting
□Applicable Not applicable
No such cases in the Reporting Period.
(3) Leases
□Applicable Not applicable
No such cases in the Reporting Period.
2. Major Guarantees
Applicable □ Not applicable
Unit: RMB'0,000
Guarantees provided by the Company as the parent and its subsidiaries for external parties (exclusive of those for subsidiaries)
Disclosu
Guaran
re date Havin
Actual tee for
of the Line of Actual Type of Counter- g
guarante Collatera Term of a
Obligor guarante guarante occurren guarante guarante expire
e l (if any) guarantee related
e line e ce date e e (if any) d or
amount party
announc not
or not
ement
Guarantees provided by the Company for its subsidiaries
Disclosu
Guaran
re date Havin
Actual tee for
of the Line of Actual Type of Counter- g
guarante Collatera Term of a
Obligor guarante guarante occurren guarante guarante expire
e l (if any) guarantee related
e line e ce date e e (if any) d or
amount party
announc not
or not
ement
Three years
Wholly- since the
26 24
owned 23,845.1 Joint- approval of
August August 6,698.89 N/A N/A No Yes
subsidiar 4 liability the board of
2022 2022
y the
Company
Three years
Wholly- since the
owned 1 July 30 June Joint- approval of
7,225.8 0 N/A N/A No Yes
subsidiar 2023 2023 liability the board of
y the
Company
Total approved line Total actual amount
for such guarantees of such guarantees in
7,225.8 1,956.96
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 31,070.94 the end of the 6,698.89
Reporting Period Reporting Period
(B3) (B4)
Guarantees provided between subsidiaries
Disclosu Havin Guaran
Actual
re date Line of Actual Type of Counter- g tee for
guarante Collatera Term of
Obligor of the guarante occurren guarante guarante expire a
e l (if any) guarantee
guarante e ce date e e (if any) d or related
amount
e line not party
38
Lu Thai Textile Co., Ltd. Interim Report 2023
announc or not
ement
Total guarantee amount (total of the three kinds of guarantees above)
Total guarantee line Total actual
approved in the guarantee amount in
7,225.8 1,956.96
Reporting Period the Reporting Period
(A1+B1+C1) (A2+B2+C2)
Total actual
Total approved
guarantee balance at
guarantee line at the
31,070.94 the end of the 6,698.89
end of the Reporting
Reporting Period
Period (A3+B3+C3)
(A4+B4+C4)
Total actual guarantee amount (A4+B4+C4)
0.72%
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 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.
Whether the Company provides guarantees or financial assistance for dealers
□Yes No
3. Cash Entrusted for Wealth Management
Applicable □ Not applicable
RMB’0,000
Undue Overdue Overdue amount with
Specific type Capital resources Amount incurred
Balance amount provision for impairment
Bank’s financial
Raised funds 39,100 21,700 0 0
products
Bank’s financial
Self-owned funds 26,500 12,500 0 0
products
Brokerage
financial Raised funds 9,000 1,000 0 0
products
Brokerage
financial Self-owned funds 115,181.8 2,000.2 0 0
products
Total 189,781.8 37,200.2 0 0
Particulars of entrusted cash management with single significant amount or low security, bad liquidity, and no capital preservation
□Applicable Not applicable
39
Lu Thai Textile Co., Ltd. Interim Report 2023
Whether there is the case where the principal cannot be recovered at maturity or other case which may cause impairment for
entrusted asset management
□Applicable Not applicable
4. Other Major Contracts
□Applicable Not applicable
No such cases in the Reporting Period.
XIII Other Significant Events
Applicable □ Not applicable
The Proposal on Repurchase of Domestically Listed Foreign Shares (B-Stock) was approved at the 10th Meeting of the 10th Board
of Directors and the First Extraordinary General Meeting of 2023. As such, an amount of no more than RMB200 million would be
used to repurchase shares, with a price limit of HKD4.80 per share, within 12 months from the date when the share repurchase
plan was approved at the general meeting. For details, see the relevant announcements (No.: 2023-043, 2023-044, 2023-053, and
2023-055) and documents disclosed on 20 June 2023 and 7 July 2023 on www.cninfo.com.cn.
XIV Significant Events of Subsidiaries
□Applicable Not applicable
40
Lu Thai Textile Co., Ltd. Interim Report 2023
Part VII Share Changes and Shareholder Information
I Share Changes
1. Share Changes
Unit: share
Before Increase/decrease in the Reporting Period (+/-) After
Sha
res
Shares
as
as
divi
dividen
den
d
d
Percenta New convert Percenta
Shares con Other Subtotal Shares
ge (%) issues ed ge (%)
vert
from
ed
capital
fro
reserve
m
s
prof
it
I. Restricted
20,647,892 2.33% -9,168,500 -9,168,500 11,479,392 1.33%
shares
1. Shares held
by State
2. Shares held
by state-owned
legal person
3. Shares held
by other
20,647,892 2.33% -9,168,500 -9,168,500 11,479,392 1.33%
domestic
investors
Among which:
Shares held by
0
domestic legal
person
Shares held by
domestic natural 20,647,892 2.33% -9,168,500 -9,168,500 11,479,392 1.33%
person
4. Shares held
by other foreign
investors
Among which:
Shares held by
foreign
corporations
Shares
held by foreign
natural person
II. Unrestricted 866,985,259 97.67% -14,767,132 -14,767,132 852,218,127 98.67%
41
Lu Thai Textile Co., Ltd. Interim Report 2023
shares
1. RMB ordinary
570,804,568 64.31% 9,168,616 9,168,616 579,973,184 67.15%
shares
2. Domestically
listed foreign 296,180,691 33.37% -23,935,748 -23,935,748 272,244,943 31.52%
shares
3. Overseas
listed foreign
shares
4. Other
III. Total shares 887,633,151 100.00% -23,935,632 -23,935,632 863,697,519 100.00%
Reasons for share changes:
Applicable □ Not applicable
①Due to the fact that the Company had issued convertible A-share bonds on 9 April 2020, convertible bonds were converted to
116 shares in the period from the beginning of 2023 to 30 June, 2023.
②On 9 May and 8 June 2023, 2,919,000 and 6,979,500 shares of equity incentive restricted shares were lifted from restriction,
respectively.
③On 25 May 2023, 23,935,748 domestically listed foreign shares (B shares) were repurchased and canceled.
④Due to the lift of restrictions on the equity incentive restricted shares, the shares held by the directors and executives shall be
unlocked and adjusted in accordance with relevant regulations on executive share management.
Approval of share changes:
Applicable □ Not applicable
①On 10 April 2023, the Company held the 7th Meeting of the 10th Board of Directors and the 6th Meeting of the 10th
Supervisory Committee, and reviewed and approved the Proposal on the Achievement of Lifting the Restriction Conditions in the
First Restriction Period for the Reserved Shares for Grant under the 2021 Restricted Share Incentive Scheme. Also, the Company
agreed to process the restriction lifting matters for 2,919,000 restricted shares held by 343 incentive personnel who met the
restriction lifting conditions in the first restriction period for the reserved shares for grant under the 2021 Restricted Share
Incentive Scheme.
②The Company held the 2nd Meeting of the 10th Board of Directors on 29 June 2022 and the 3rd Extraordinary General Meeting
of 2022 on 15 July 2022, reviewing and approving the Proposal on Repurchase of the Company’s Domestically Listed Foreign
Shares (B Share). The Company repurchased 23,935,748 B shares in total through call auction via its securities account for
repurchase and completed the formalities for cancellation of the foregoing repurchased shares at the Shenzhen Branch of China
Securities Depository and Clearing Corporation Limited on 25 May 2023.
③On 26 May 2023, the Company held the 9th Meeting of the 10th Board of Directors and the 8th Meeting of the 10th Supervisory
Committee, and reviewed and approved the Proposal on the Achievement of the Lifting Restriction Conditions in the Second
Restriction Period for the First Grant of the 2021 Restricted Share Incentive Scheme. Also, the Company agreed to process the
restriction lifting matters for 6,979,500 restricted shares held by 717 incentive personnel who met the restriction lifting conditions
in the second restriction period for the first grant of the 2021 Restricted Share Incentive Scheme.
Transfer of share ownership:
Applicable □ Not applicable
The Company completed the formalities for cancellation of the 23,935,748 repurchased shares at the Shenzhen Branch of China
Securities Depository and Clearing Corporation Limited on 25 May 2023.
Progress on any share repurchases:
Applicable □ Not applicable
The Company first repurchased B shares on 27 July 2022 and disclosed relevant progress during the repurchase period as required
by relevant laws and regulations. As at 8 May 2023, all the repurchased shares had been delivered, and the total amount of funds
used had hit the ceiling on the repurchase fund as stipulated in the repurchase program. The Company repurchased 23,935,748 B
shares in total through call auction via its securities account for repurchase, accounting for approximately 8.08% of the Company’s
B shares and 2.70% of the Company’s total share capital. The highest transaction price of the repurchase reached HKD4.80 per
share, and the lowest reached HKD4.17 per share. The total amount paid was HKD112,191,959.87 (including the transaction cost),
equivalent to RMB99,999,967.54, no more than RMB100 million. The foregoing repurchased shares were canceled at the
Shenzhen Branch of China Securities Depository and Clearing Corporation Limited on 25 May 2023.
42
Lu Thai Textile Co., Ltd. Interim Report 2023
Progress on reducing the repurchased shares by means of centralized bidding:
□Applicable Not applicable
Effects of share changes on the basic and diluted earnings per share, equity per share attributable to the Company’s ordinary
shareholders and other financial indicators of the prior year and the prior accounting period, respectively:
Applicable □ Not applicable
See relevant contents of "IV Key Financial Information" under "Part II Corporate Information and Key Financial Information".
Other information that the Company considers necessary or is required by the securities regulator to be disclosed:
□Applicable Not applicable
2. Changes in Restricted Shares
Applicable □ Not applicable
Unit: share
Restricted Restricted Restricted
Restricted
shares
Name of the shares shares shares Restricted Restricted shares relieved
amount at
shareholders amount at the relieved of increased of reasons date
the period-
period-begin the period the period end
Locked public
shares held by
senior 100000 shares on 9 May
Zhang Zhanqi 485,225 190,000 140,000 435,225 management and 2023 and 90000 shares on 8
Restricted shares June 2023
from equity
incentive
Locked public
shares held by
senior 50000 shares on 9 May 2023
Yu Shouzheng 312,325 110,000 85,000 287,325 management and and 60000 shares on 8 June
Restricted shares 2023
from equity
incentive
Locked public
shares held by
senior 50000 shares on 9 May 2023
Zhang Keming 308,275 110,000 85,000 283,275 management and and 60000 shares on 8 June
Restricted shares 2023
from equity
incentive
Locked public
shares held by
senior
Wang Jiabin 287,775 90,000 37,500 235,275 management and 90000 shares on 8 June 2023
Restricted shares
from equity
incentive
Locked public
shares held by
senior 50000 shares on 9 May 2023
Shang
272,500 110,000 85,000 247,500 management and and 60000 shares on 8 June
Chenggang
Restricted shares 2023
from equity
incentive
Li Wenji 257,500 110,000 47,500 195,000 Locked public 50000 shares on 9 May 2023
43
Lu Thai Textile Co., Ltd. Interim Report 2023
shares held by and 60000 shares on 8 June
senior 2023
management and
Restricted shares
from equity
incentive
Locked public
shares held by
senior 50000 shares on 9 May 2023
Du Lixin 250,000 110,000 47,500 187,500 management and and 60000 shares on 8 June
Restricted shares 2023
from equity
incentive
Locked public
shares held by
senior 50000 shares on 9 May 2023
Guo Heng 250,000 110,000 85,000 225,000 management and and 60000 shares on 8 June
Restricted shares 2023
from equity
incentive
Locked public
shares held by
senior 50000 shares on 9 May 2023
Xu Feng 190,000 95,000 47,500 142,500 management and and 45000 shares on 8 June
Restricted shares 2023
from equity
incentive
Locked public
shares held by
senior 25000 shares on 9 May 2023
Lyu Wenquan 150,000 70,000 70,000 150,000 management and and 45000 shares on 8 June
Restricted shares 2023
from equity
incentive
Locked public
shares held by
senior 2444000 shares on 9 May
Other restricted
17,884,292 8,793,500 9,090,792 management and 2023 and 6349500 shares on
shareholders
Restricted shares 8 June 2023
from equity
incentive
Total 20,647,892 9,898,500 730,000 11,479,392 -- --
II. Issuance and Listing of Securities
□Applicable Not applicable
III Total Number of Shareholders and Their Shareholdings
Unit: share
Total number of preference shareholders
Total number of ordinary
53,240 with resumed voting rights at the period- 0
shareholders at the period-end
end (if any) (see Note 8)
5% or greater ordinary shareholders or the top 10 ordinary shareholders
44
Lu Thai Textile Co., Ltd. Interim Report 2023
Increase/de Pledged, marked or
Shareho Total Number of
Nature of crease Number of frozen shares
Name of lding shares held non-
sharehold during the restricted
shareholder percent at the restricted
er Reporting shares held Status Number
age (%) period-end shares held
Period
Domestic
Zibo Lucheng
non-state-
Textile 140,353,58
owned 16.25% 0 0 140,353,583
Investment Co., 3
legal
Ltd.
person
Tailun Foreign
118,232,40
(Thailand) legal 13.69% 0 0 118,232,400
0
Textile Co., Ltd. person
Central Huijin State-
Assets owned
2.30% 19,884,100 0 0 19,884,100
Management legal
Co., Ltd. person
National Social
Security Fund Other 1.54% 13,260,051 0 0 13,260,051
Portfolio 413
ICBC Credit
Suisse
Innovation
Power Stock Other 1.38% 11,910,000 6810000 0 11,910,000
Type Securities
Investment
Fund
ICBC Credit
Suisse Selected
Balanced Mixed
Other 0.84% 7,230,000 7230000 0 7,230,000
Securities
Investment
Fund
FEDERATED
HERMES
GLOBAL
INVESTMENT
FD (CAYMAN)
Foreign
MASTER, SPC
legal 0.61% 5,259,028 635654 0 5,259,028
OBOAFTAO
person
FEDERATED
HERMES EMG
ASIA EQUITY
FD MASTER
S.P.
Dacheng China
Securities Asset
Other 0.61% 5,235,900 0 0 5,235,900
Management
Plan
GF China
Securities Asset
Other 0.56% 4,833,300 -402600 0 4,833,300
Management
Plan
Yinhua China
Securities Asset
Other 0.50% 4,320,212 -72100 0 4,320,212
Management
Plan
45
Lu Thai Textile Co., Ltd. Interim Report 2023
Strategic investors or general
corporations becoming top-
ten shareholders due to Naught
placing of new shares (if any)
(see Note 3)
Zibo Lucheng Textile Investment Co., Ltd. is the largest shareholder of the Company and the
Related or acting-in-concert actual controller. Tailun (Thailand) Textile Co., Ltd. is the second largest shareholder as well as
parties among the sponsor of foreign capital of the Company. All of other shareholders are people holding public A
shareholders above share or public B share and the Company is not able to confirm whether there is associated
relationship or concerted action among other shareholders.
Explain if any of the
shareholders above was
involved in entrusting/being Naught
entrusted with voting rights or
waiving voting rights
Special account for share
repurchases (if any) among
Naught
the top 10 shareholders (see
note 11)
Shareholdings of the top ten non-restricted ordinary shareholders
Type of shares
Name of shareholder Number of non-restricted shares held at the period-end
Type Shares
RMB
Zibo Lucheng Textile ordina
140,353,583 140,353,583
Investment Co., Ltd. ry
share
Domes
tically
Tailun (Thailand) Textile Co., listed
118,232,400 118,232,400
Ltd. foreig
n
shares
RMB
Central Huijin Assets ordina
19,884,100 19,884,100
Management Co., Ltd. ry
share
RMB
National Social Security Fund ordina
13,260,051 13,260,051
Portfolio 413 ry
share
RMB
ICBC Credit Suisse
ordina
Innovation Power Stock Type 11,910,000 11,910,000
ry
Securities Investment Fund
share
ICBC Credit Suisse Selected RMB
7,230,000 7,230,000
Balanced Mixed Securities ordina
46
Lu Thai Textile Co., Ltd. Interim Report 2023
Investment Fund ry
share
FEDERATED HERMES
Domes
GLOBAL INVESTMENT
tically
FD (CAYMAN) MASTER,
listed
SPC OBOAFTAO 5,259,028 5,259,028
foreig
FEDERATED HERMES
n
EMG ASIA EQUITY FD
shares
MASTER S.P.
RMB
Dacheng China Securities ordina
5,235,900 5,235,900
Asset Management Plan ry
share
RMB
GF China Securities Asset ordina
4,833,300 4,833,300
Management Plan ry
share
RMB
Yinhua China Securities ordina
4,320,212 4,320,212
Asset Management Plan ry
share
Explanation on connected
relationship among the top
ten shareholders of tradable
share not subject to trading Zibo Lucheng Textile Investment Co., Ltd. is the largest shareholder and the actual controller of
moratorium, as well as among the Company. Tailun (Thailand) Textile Co., Ltd. is the second largest shareholder and the
the top ten shareholders of foreign sponsor of the Company. All the other shareholders are holding tradable A-shares or B-
tradable share not subject to shares. And it is unknown whether there is any related party or acting-in-concert party among
trading moratorium and top them.
ten shareholders, or
explanation on acting-in-
concert
Particular about shareholder
participate in the securities
Naught
lending and borrowing
business (if any) (note 4)
Indicate by tick mark whether any of the top 10 ordinary shareholders or the top 10 unrestricted ordinary shareholders of the
Company conducted any promissory repo during the Reporting Period.
□Yes No
No such cases in the Reporting Period.
IV Change in Shareholdings of Directors, Supervisors and Senior Management
Applicable □ Not applicable
Incum Beginning Increase Decrea Ending Number Number Number
Name Office title bent/f shareholding in the se in shareholdi of granted of of granted
ormer (share) Current the ng (share) restricted restricted restricted
47
Lu Thai Textile Co., Ltd. Interim Report 2023
Period Current shares at shares shares at
(share) Period the granted in the
(share) period- the period-
begin Current end
(share) Period (share)
(share)
Chairman and Incum
Liu Zibin 148,290 148,290
President
bent
Xu Incum
Vice Chairman
Zhinan
bent
Xu Incum
Jianlyu Director bent
Zheng Incum
Huisheng Director bent
Director, Vice
Controller of
Liu Incum
Global
Deming
Marketing bent
Department
Director, Vice
president,
Zhang Controller of Incum
580,300 580,300 380,000 190,000
Zhanqi Global bent
Marketing
Department
Director, Board
Secretary, Chief
Accountant,
Zhang Incum
Controller of 377,700 377,700 220,000 110,000
Keming bent
Financial
Management
Department
Director, Chief
Engineer,
Executive Dean
of Lu Thai Incum
Du Lixin 250,000 250,000 220,000 110,000
Engineering bent
Technology
Research
Institute
Zhou Independent Incum
Zhiji Director
bent
Qu Independent Incum
Dongmei Director
bent
Peng Independent Incum
Yanli bent
Director
Quan Independent Incum
Yuhua bent
Director
Zhang Chairman of the
Incum
Shougan Supervisory 73,100 73,100
g Committee bent
48
Lu Thai Textile Co., Ltd. Interim Report 2023
Liu Incum
Supervisor 10,000 10,000
Zilong
bent
Supervisor,
Manager of
Dong Incum
Logistics 5,000 5,000
Shibing
Management bent
Department
Wang Incum
Counselor 313,700 313,700 180,000 90,000
Jiabin bent
President
Shang Assistant,
Incum
Chengga Controller of 330,000 330,000 220,000 110,000
bent
ng Garment Product
Line
President
Assistant,
Yu Controller of
Incum
Shouzhe Energy and 383,100 383,100 220,000 110,000
bent
ng Environment
Protection
Department
Fujiwara
GM of Japan Incum
Matsuza
Office
ka bent
Dean of Lu Thai
Engineering
Incum
Li Wenji Technology 260,000 260,000 220,000 110,000
bent
Research
Institute
Controller of
Guo Functional Incum
300,000 300,000 220,000 110,000
Heng Fabric Product bent
Line
Vice Controller
of Yarn Dyed
Fabric Product
Lyu Line, Manager Incum
200,000 200,000 140,000 70,000
Wenquan of Yarn Dyed bent
Production
Management
Department
Vice Controller
of Yarn Dyed Incum
Xu Feng 190,000 190,000 190,000 95,000
Fabric Product bent
Line
Total -- -- 3,421,190 0 0 3,421,190 2,210,000 0 1,105,000
V Change of the Controlling Shareholder or the De Facto Controller
Change of the controlling shareholder in the Reporting Period
□Applicable Not applicable
No such cases in the Reporting Period.
Change of the de facto controller in the Reporting Period
□Applicable Not applicable
49
Lu Thai Textile Co., Ltd. Interim Report 2023
No such cases in the Reporting Period.
50
Lu Thai Textile Co., Ltd. Interim Report 2023
Part VIII Preference Shares
□Applicable Not applicable
No preference shares in the Reporting Period.
51
Lu Thai Textile Co., Ltd. Interim Report 2023
Part IX Bonds
Applicable □ Not applicable
I Enterprise Bonds
□Applicable Not applicable
No enterprise bonds in the Reporting Period.
II Corporate Bonds
□Applicable Not applicable
No corporate bonds in the Reporting Period.
III Debt Financing Instruments of Non-financial Enterprises
□Applicable Not applicable
No such cases in the Reporting Period.
IV Convertible Corporate Bonds
Applicable □ Not applicable
1. Previous Adjustments and Correction of Conversion Price
On 9 April 2020, the Company publicly issued 14 million A-share convertible corporate bonds (short name: Lu
Thai Convertible Bonds, bond code: 127016) on Shenzhen Stock Exchange with an issue price of RMB100 per
share and a share conversion price of RMB9.01 per share. The bonds were listed on Shenzhen Stock Exchange on
13 May 2020. In accordance with related terms of the “Prospectus for the Public Offering of A-Share Convertible
Corporate Bonds of Lu Thai Textile Co., Ltd.”, as well as the regulations of China Securities Regulatory
Commission on the public offering of convertible corporate bonds, if the Company has any distribution of share
dividends, conversion into share capital, additional issue of new shares (excluding share capital increase due to
conversion into shares from the convertible corporate bonds issued this time), share allotment and distribution of
cash dividends after the issue of “Lu Thai Convertible Bonds”, adjustment shall be made to the share conversion
price.
On 21 May 2020, the Company held the Annual General Meeting of 2019, where the “Proposal on the Company’s
Profit Distribution Plan for 2019” was considered and approved. According to the Proposal, a cash amount of
RMB 1.00 (inclusive of tax) would be distributed to every 10 shares, with the 858,121,541 shares of share capital
on 31 December 2019 as the base. The share registration date for the Company’s equity distribution of 2019 was 8
July 2020 and the ex-rights and ex-dividend date was 9 July 2020. Therefore, the share conversion price of “Lu
Thai Convertible Bonds” was adjusted from RMB9.01 per share to RMB8.91 per share, and the new price after
the adjustment took effect on and as of 9 July 2020 (the ex-rights and ex-dividend date).
52
Lu Thai Textile Co., Ltd. Interim Report 2023
On 3 June 2021, the Company completed the registration of first-granted restricted stocks of restricted share
incentive scheme at the Shenzhen Branch of China Securities Depository and Clearing Corporation Limited
(China Clear). 7 June 2021 is designated as the listing date of first-granted restricted stocks of the Company in
2021. The Company grants 750 subjects of incentive 24,285,000 restricted shares at a price of RMB3.31 per share,
accounting for 2.83% of total share capital of the Company. The source of the stock is RMB A-share ordinary
shares issued by the Company to subjects of incentive. Therefore, the conversion price of Lu Thai Convertible
Bond will be adjusted from RMB8.91 per share to RMB8.76 per share, with the adjusted conversion price coming
into force from 7 June 2021.
The 2020 annual general meeting convened on 20 April 2021 deliberated on and adopted the Company's
Proposal on Profit Appropriation Plan in 2020, which distributes cash of RMB0.50 per 10 shares (including tax)
with total share capital at the record date of this distribution scheme as base. The record date of the Company's
interest distribution in 2020 is set on 17 June 2021. The ex-date is set on 18 June 2021. Therefore, the
conversion price of Lu Thai Convertible Bond will be adjusted from RMB8.76 per share to RMB8.71 per share,
with the adjusted conversion price coming into force from 18 June 2021 (the ex-date).
On 22 March 2022, the Company completed the registration of granting reserved shares under the 2021 restricted
share incentive scheme at the Shenzhen Branch of China Clear. 22 March 2022 was designated as the listing date
for granting reserved restricted shares of the Company. The Company granted 343 incentive personnel 5,838,000
restricted shares at a price of RMB3.56 per share, accounting for 0.66% of total share capital of the Company. The
source of the stock is RMB A-share ordinary shares issued by the Company to incentive personnel. Therefore, the
conversion price of Lu Thai convertible bond will be adjusted from RMB8.71 per share to RMB8.68 per share,
with the adjusted conversion price coming into force from 22 March 2022.
The 2021 annual general meeting convened on 20 May 2022 deliberated and adopted the Company's Proposal on
Profit Appropriation Plan in 2021, which distributes cash of RMB0.70 per ten shares (including tax) with total
share capital at the record date of this distribution scheme as base. The record date of the Company's interest
distribution in 2021 was set on 22 June 2022. The ex-date was set on 23 June 2022. Therefore, the conversion
price of Lu Thai convertible bond will be adjusted from RMB8.68 per share to RMB8.61 per share, with the
adjusted conversion price coming into force from 23 June 2022.
The Company completed the formalities for cancellation of the 23,935,748 repurchased B shares at the Shenzhen
Branch of China Securities Depository and Clearing Corporation Limited on 25 May 2023. In accordance with the
issuance clauses in the Company’s Prospectus and relevant regulations of the China Securities Regulatory
Commission (CSRC) on the issuance of convertible bonds, the conversion price of Lu Thai convertible bond shall
be adjusted from RMB8.61 per share to RMB8.73 per share. The adjusted conversion price came into force on 26
May 2023.
The Company implemented the 2022 Equity Distribution Plan on 16 June 2023. In accordance with the issuance
clauses in the Company’s Prospectus and relevant regulations of the CSRC on the issuance of convertible bonds,
the conversion price of Lu Thai convertible bond shall be adjusted from RMB8.73 per share to RMB8.63 per
share. The adjusted conversion price came into force on 16 June 2023.
53
Lu Thai Textile Co., Ltd. Interim Report 2023
2. Accumulative Conversion
Applicable □ Not applicable
Converted shares
Accum
as % of total Unconverte
Accumulati ulative
Abbre Total shares issued by Unconverted d amount
ve amount shares
viatio Start date circulation Total amount the Company amount (RMB) as % of
converted convert
n (piece) before the start total
(RMB) ed
date of amount
(share)
conversion
Lu
Thai
Conv
15 October
ertibl 14,000,000 1,400,000,000.00 148,600.00 16,726 0.00% 1,399,851,400.00 99.99%
2020
e
Bond
s
3. Top 10 Convertible Bond Holders
Number of Amount of As % of
Nature of convertible bonds convertible bonds convertible
No. Name of holders
holders held at the period- held at the period- bonds held at
end (share) end (RMB) the period-end
China Construction Bank - E Fund
1 Enhanced Income Bond Securities Other 694,212 69,421,200.00 4.96%
Investment Fund
Northwest Investment Management
Foreign legal
2 (Hong Kong) Limited - Northwest 679,990 67,999,000.00 4.86%
Feilong Fund Co., Ltd. person
Fuguo Fumin Fixed Income Pension
3 Product - China Construction Bank Other 673,269 67,326,900.00 4.81%
Corporation
Shanghai Pudong Development Bank
4 Co., Ltd. - E Fund Yuxiang Return Bond Other 485,552 48,555,200.00 3.47%
Securities Investment Bond
Industrial and Commercial Bank of China
5 - China Universal Convertible Bond Other 391,048 39,104,800.00 2.79%
Securities Investment Fund
China Merchants Bank Co., Ltd. -
6 Dongfanghong Juli Bond Securities Other 305,911 30,591,100.00 2.19%
Investment Fund
Basic Endowment Insurance Fund
7 Other 273,171 27,317,100.00 1.95%
(Portfolio 102)
China Merchants Bank Co., Ltd. - Bosera
8 Solid-return Bond Listed Open-ended Other 251,220 25,122,000.00 1.79%
Fund (LOF)
Agricultural Bank of China - Essence
9 Target Income Bond Securities Other 219,059 21,905,900.00 1.56%
Investment Fund
54
Lu Thai Textile Co., Ltd. Interim Report 2023
China Asset Management Living Longer
10 No. 9 Fixed Income Pension Product- Other 211,147 21,114,700.00 1.51%
China Merchants Bank Co., Ltd.
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- VI The Major Accounting Data and the Financial Indicators of the
Recent 2 Years of the Company up the Period-end.
The credit rating of the Company's convertible bonds for the reporting period is AA+, which has not changed compared with that
of the same period of last year.
V Losses of Scope of Consolidated Financial Statements during the Reporting Period
Exceeding 10% of Net Assets up the Period-end of Last Year
□Applicable Not applicable
VI The Major Accounting Data and the Financial Indicators of the Recent 2 Years of the
Company up the Period-end
Unit: RMB’0,000
Item 30 June 2023 31 December 2022 Increase/decrease
Current ratio 3.08 2.99 3.01%
Debt/asset ratio 28.99% 29.53% -0.54%
Quick ratio 1.89 1.86 1.61%
H1 2023 H1 2022 YoY increase/decrease
Net profit before exceptional
19,180.99 36,557.92 -47.53%
gains and losses
EBITDA/debt ratio 20.29% 21.76% -1.47%
Interest cover (times) 5.49 9.19 -40.26%
Cash-to-interest cover (times) 2.95 2.68 10.07%
EBITDA-to-interest cover
10.90 13.54 -19.50%
(times)
Loan repayment ratio 100.00% 100.00%
Interest payment ratio 100.00% 100.00%
55
Lu Thai Textile Co., Ltd. Interim Report 2023
Part X Financial Statements
I Independent Auditor’s Report
Are these interim financial statements audited by an independent auditor?
□Yes No
They are unaudited by such an auditor.
II Financial Statements
Currency unit for the financial statements and the notes thereto: RMB
1. Consolidated Balance Sheet
Prepared by Lu Thai Textile Co., Ltd.
30 June 2023
Unit: RMB
Item 30 June 2023 1 January 2023
Current assets:
Monetary assets 1,551,443,291.97 2,067,768,253.97
Held-for-trading financial assets 918,839,425.27 267,695,159.48
Notes receivable 197,304,993.41 168,755,715.84
Accounts receivable 534,155,829.19 660,427,526.19
Accounts receivable financing 24,096,385.95 11,208,304.78
Prepayments 127,627,785.82 95,021,598.32
Other receivables 48,082,107.24 89,855,659.99
Including: Interest receivable
Dividends receivable 18,563,298.39 18,563,298.39
Inventories 2,222,843,058.48 2,107,849,708.33
Other current assets 117,577,811.23 76,847,903.07
Total current assets 5,741,970,688.56 5,545,429,829.97
Non-current assets:
Long-term receivables
Long-term equity investment 182,835,476.83 184,168,625.69
Other equity instrument investment
Other non-current financial assets 89,080,000.00 337,110,000.00
Investment property 20,010,251.80 20,460,935.21
56
Lu Thai Textile Co., Ltd. Interim Report 2023
Fixed assets 5,686,991,158.97 5,807,847,850.67
Construction in progress 538,603,980.88 199,943,501.73
Right-of-use assets 487,341,555.12 481,420,505.31
Intangible assets 347,981,438.31 352,889,578.06
Development costs
Goodwill 20,563,803.29 20,563,803.29
Long-term deferred expenses 2,343,814.17 2,948,981.97
Deferred income tax assets 145,560,608.14 155,774,523.25
Other non-current assets 310,689,333.60 242,539,466.88
Total non-current assets 7,832,001,421.11 7,805,667,772.06
Total assets 13,573,972,109.67 13,351,097,602.03
Current liabilities:
Short-term borrowings 527,384,198.32 518,946,415.96
Held-for-trading financial liabilities 14,848,448.10 4,276,929.70
Derivative financial liabilities
Notes payable 55,450,000.00
Accounts payable 260,310,397.35 246,588,463.74
Advances from customers
Contract liabilities 183,455,240.54 206,879,672.53
Payroll payable 248,100,769.78 330,027,159.72
Taxes payable 34,029,875.93 31,483,442.06
Other payables 53,589,227.72 83,357,296.71
Including: Interest payable
Dividends payable 441,113.64 441,113.64
Held-for-sale liabilities
Current portion of non-current
487,410,386.14 307,921,837.35
liabilities
Other current liabilities 53,266,227.69 66,889,025.17
Total current liabilities 1,862,394,771.57 1,851,820,242.94
Non-current liabilities:
Long-term borrowings 164,369,828.94 186,431,096.24
Bonds payable 1,449,985,859.18 1,438,162,231.27
Lease liabilities 97,740,959.65 98,501,303.83
Long-term payables
57
Lu Thai Textile Co., Ltd. Interim Report 2023
Long-term payroll payable 57,417,997.65 57,417,997.65
Provisions
Deferred income 153,040,887.32 159,615,037.36
Deferred income tax liabilities 150,232,232.76 151,243,432.80
Other non-current liabilities
Total non-current liabilities 2,072,787,765.50 2,091,371,099.15
Total liabilities 3,935,182,537.07 3,943,191,342.09
Owners’ equity:
Share capital 863,697,519.00 887,633,151.00
Other equity instruments 71,383,779.76 71,383,830.75
Including: Preferred shares
Perpetual bonds
Capital reserves 331,086,224.51 395,872,135.71
Less: Treasury stock 31,843,365.00 154,396,198.73
Other comprehensive income 178,501,177.97 107,628,898.09
Specific reserve 2,777,410.71
Surplus reserves 1,215,124,336.54 1,215,124,336.54
General reserve
Retained earnings 6,626,197,965.60 6,490,910,719.35
Total equity attributable to owners of the
9,256,925,049.09 9,014,156,872.71
Company as the parent
Non-controlling interests 381,864,523.51 393,749,387.23
Total owners’ equity 9,638,789,572.60 9,407,906,259.94
Total liabilities and owners’ equity 13,573,972,109.67 13,351,097,602.03
Legal representative: Liu Zibin Chief Accountant: Zhang Keming Financial Manager: Zhang Keming
2. Balance Sheet of the Company as the Parent
Unit: RMB
Item 30 June 2023 1 January 2023
Current assets:
Monetary assets 904,068,783.73 1,493,189,218.38
Held-for-trading financial assets 512,161,523.73 14,782,050.00
Derivative financial assets
Notes receivable 78,506,812.32 99,348,764.36
Accounts receivable 273,137,962.00 357,917,050.71
58
Lu Thai Textile Co., Ltd. Interim Report 2023
Accounts receivable financing 15,197,301.50 4,977,876.31
Prepayments 85,041,332.24 52,932,385.24
Other receivables 2,269,454,600.86 1,982,595,534.99
Including: Interest receivable
Dividends receivable 185,745,705.03 18,563,298.39
Inventories 1,129,000,002.56 1,032,571,546.29
Contract assets
Available-for-sale assets
Current portion of non-current assets
Other current assets 1,706,749.61 12,117,078.06
Total current assets 5,268,275,068.55 5,050,431,504.34
Non-current assets:
Long-term receivables
Long-term equity investments 3,289,971,143.33 3,069,423,182.09
Investments in other equity
instruments
Other non-current financial assets 77,080,000.00 325,110,000.00
Investment property 66,480,366.32 68,234,288.24
Fixed assets 2,167,477,108.69 2,239,204,199.53
Construction in progress 27,581,111.26 14,457,725.94
Right-of-use assets 97,587,641.75 102,526,417.74
Intangible assets 200,822,940.42 203,872,938.32
Development costs
Goodwill
Long-term deferred expenses 907,110.12 1,124,816.52
Deferred income tax assets 65,188,470.57 70,230,669.83
Other non-current assets 137,366,526.25 180,305,870.74
Total non-current assets 6,130,462,418.71 6,274,490,108.95
Total assets 11,398,737,487.26 11,324,921,613.29
Current liabilities:
Short-term borrowings 87,830,718.55 73,701,088.21
Held-for-trading financial liabilities 2,834,100.00
Notes payable 55,000,000.00 213,094,435.63
Accounts payable 86,113,714.25 100,586,843.48
59
Lu Thai Textile Co., Ltd. Interim Report 2023
Advances from customers
Contract liabilities 72,897,402.82 91,983,662.84
Payroll payable 170,302,387.74 231,917,717.02
Taxes payable 23,491,218.07 9,698,693.68
Other payables 49,283,273.91 164,914,178.73
Including: Interest payable
Dividends payable 441,113.64 441,113.64
Liabilities held for sale
Current portion of non-current
487,410,386.14 307,273,908.99
liabilities
Other current liabilities 37,016,915.36 42,075,638.45
Total current liabilities 1,072,180,116.84 1,235,246,167.03
Non-current liabilities:
Long-term borrowings 164,369,828.94 186,431,096.24
Bonds payable 1,449,985,859.18 1,438,162,231.27
Lease liabilities 99,528,524.92 100,877,929.66
Long-term payables
Long-term payroll payable 57,417,997.65 57,417,997.65
Provisions
Deferred income 114,186,124.70 119,562,568.94
Deferred income tax liabilities 109,964,122.90 112,945,049.91
Other non-current liabilities
Total non-current liabilities 1,995,452,458.29 2,015,396,873.67
Total liabilities 3,067,632,575.13 3,250,643,040.70
Owners’ equity:
Share capital 863,697,519.00 887,633,151.00
Other equity instruments 71,383,779.76 71,383,830.75
Including: Preferred shares
Perpetual bonds
Capital reserves 392,466,258.75 457,252,169.95
Less: Treasury stock 31,843,365.00 154,396,198.73
Other comprehensive income -107,571.25 -30,162.34
Specific reserve
Surplus reserves 1,212,015,596.90 1,212,015,596.90
60
Lu Thai Textile Co., Ltd. Interim Report 2023
Retained earnings 5,823,492,693.97 5,600,420,185.06
Total owners’ equity 8,331,104,912.13 8,074,278,572.59
Total liabilities and owners’ equity 11,398,737,487.26 11,324,921,613.29
3. Consolidated Income Statement
Unit: RMB
Item H1 2023 H1 2022
1. Revenue 2,840,491,262.47 3,330,294,463.25
Including: Operating revenue 2,840,491,262.47 3,330,294,463.25
2. Costs and expenses 2,584,294,892.42 2,825,026,554.05
Including: Cost of sales 2,233,932,367.67 2,497,333,041.59
Taxes and surcharges 34,360,360.36 34,501,258.01
Selling expense 66,411,247.30 59,894,351.04
Administrative expense 175,308,361.39 190,280,143.57
Development cost 131,290,032.04 114,951,241.87
Finance costs -57,007,476.34 -71,933,482.03
Including: Interest expense 39,502,439.47 44,216,587.17
Interest income 30,385,764.21 22,350,147.90
Add: Other income 27,724,922.40 27,720,772.37
Return on investment (“-” for loss) 46,798,662.00 1,448,571.38
Including: Share of profit or loss of joint ventures and associates -1,333,148.86 -1,076,939.49
Income from the derecognition of financial assets at amortized
cost (“-” for loss)
Exchange gain (“-” for loss)
Net gain on exposure hedges (“-” for loss)
Gain on changes in fair value (“-” for loss) -42,471,705.81 3,069,030.56
Credit impairment loss (“-” for loss) 16,809,724.05 1,994,592.93
Asset impairment loss (“-” for loss) -75,665,553.95 -81,695,738.30
Asset disposal income (“-” for loss) -404,759.16 2,668,023.30
3. Operating profit (“-” for loss) 228,987,659.58 460,473,161.44
Add: Non-operating income 4,231,250.89 3,026,253.46
Less: Non-operating expense 2,464,360.53 2,165,139.66
4. Profit before tax (“-” for loss) 230,754,549.94 461,334,275.24
Less: Income tax expense 20,991,415.51 67,767,576.50
5. Net profit (“-” for net loss) 209,763,134.43 393,566,698.74
61
Lu Thai Textile Co., Ltd. Interim Report 2023
5.1 By operating continuity
5.1.1 Net profit from continuing operations (“-” for net loss) 209,763,134.43 393,566,698.74
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
221,647,998.15 393,950,852.46
parent (“-” for net loss)
5.2.1 Net profit attributable to non-controlling interests (“-” for net
-11,884,863.72 -384,153.72
loss)
6. Other comprehensive income, net of tax 70,872,279.88 80,891,071.35
Attributable to owners of the Company as the parent 70,872,279.88 80,891,071.35
6.1 Items that will not be reclassified to profit or loss
6.1.1 Changes caused by re-measurements on defined benefit
schemes
6.1.2 Other comprehensive income that will not be reclassified to
profit or loss under the equity method
6.1.3 Changes in the fair value of investments in other equity
instruments
6.1.4 Changes in the fair value arising from changes in own credit
risk
6.1.5 Other
6.2 Items that will be reclassified to profit or loss 70,872,279.88 80,891,071.35
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-
70,961,260.92 80,772,687.91
denominated financial statements
6.2.7 Other -88,981.04 118,383.44
Attributable to non-controlling interests
7. Total comprehensive income 280,635,414.31 474,457,770.09
Attributable to owners of the Company as the parent 292,520,278.03 474,841,923.81
62
Lu Thai Textile Co., Ltd. Interim Report 2023
Attributable to non-controlling interests -11,884,863.72 -384,153.72
8. Earnings per share
8.1 Basic earnings per share 0.26 0.45
8.2 Diluted earnings per share 0.23 0.39
Where business combinations under common control occurred in the current period, the net profit achieved by the acquirees before
the combinations was RMB0.00, with the amount for the same period of last year being RMB0.00.
Legal representative: Liu Zibin Chief Accountant: Zhang Keming Financial Manager: Zhang Keming
4. Income Statement of the Company as the Parent
Unit: RMB
Item H1 2023 H1 2022
1. Operating revenue 1,609,909,822.43 2,096,728,996.78
Less: Cost of sales 1,277,031,824.62 1,554,834,847.73
Taxes and surcharges 21,096,525.14 24,600,731.76
Selling expense 43,132,295.18 43,382,853.03
Administrative expense 109,290,133.53 133,045,963.42
R&D expense 89,977,015.81 76,010,921.94
Finance costs -76,975,133.92 -82,597,376.96
Including: Interest expense 17,569,729.67 15,888,011.59
Interest income 22,004,783.28 14,238,816.94
Add: Other income 8,593,238.09 3,914,908.50
Return on investment (“-” for loss) 219,763,969.54 220,205,603.25
Including: Share of profit or loss of joint ventures and
-1,333,148.86 -1,076,939.49
associates
Income from the derecognition of financial assets at
amortized cost (“-” for loss)
Net gain on exposure hedges (“-” for loss)
Gain on changes in fair value (“-” for loss) -45,480,664.13 1,415,323.45
Credit impairment loss (“-” for loss) 6,259,781.13 216,712.40
Asset impairment loss (“-” for loss) -19,582,479.49 -35,555,171.46
Asset disposal income (“-” for loss) -295,512.79 1,800,173.51
2. Operating profit (“-” for loss) 315,615,494.42 539,448,605.51
Add: Non-operating income 2,814,084.00 2,262,303.15
Less: Non-operating expense 792,483.54 1,108,474.11
3. Profit before tax (“-” for loss) 317,637,094.88 540,602,434.55
63
Lu Thai Textile Co., Ltd. Interim Report 2023
Less: Income tax expense 8,203,834.07 53,835,226.09
4. Net profit (“-” for net loss) 309,433,260.81 486,767,208.46
4.1 Net profit from continuing operations (“-” for net loss) 309,433,260.81 486,767,208.46
4.2 Net profit from discontinued operations (“-” for net
loss)
5. Other comprehensive income, net of tax -77,408.91 220,993.22
5.1 Items that will not be reclassified to profit or loss
5.1.1 Changes caused by re-measurements on defined
benefit schemes
5.1.2 Other comprehensive income that will not be
reclassified to profit or loss under the equity method
5.1.3 Changes in the fair value of investments in other
equity instruments
5.1.4 Changes in the fair value arising from changes in own
credit risk
5.1.5 Other
5.2 Items that will be reclassified to profit or loss -77,408.91 220,993.22
5.2.1 Other comprehensive income that will be reclassified
to profit or loss under the equity method
5.2.2 Changes in the fair value of investments in other debt
obligations
5.2.3 Other comprehensive income arising from the
reclassification of financial assets
5.2.4 Credit impairment allowance for investments in other
debt obligations
5.2.5 Reserve for cash flow hedges
5.2.6 Differences arising from the translation of foreign
currency-denominated financial statements
5.2.7 Other -77,408.91 220,993.22
6. Total comprehensive income 309,355,851.90 486,988,201.68
7. Earnings per share
7.1 Basic earnings per share 0.36 0.56
7.2 Diluted earnings per share 0.32 0.49
5. Consolidated Cash Flow Statement
Unit: RMB
64
Lu Thai Textile Co., Ltd. Interim Report 2023
Item H1 2023 H1 2022
1. Cash flows from operating activities:
Proceeds from sale of commodities and rendering of services 2,809,154,113.13 3,081,011,881.19
Tax rebates 75,305,681.28 118,817,131.92
Cash generated from other operating activities 68,114,428.99 17,250,057.84
Subtotal of cash generated from operating activities 2,952,574,223.40 3,217,079,070.95
Payments for commodities and services 1,823,197,285.44 2,128,158,530.89
Cash paid to and for employees 849,321,563.91 821,334,821.91
Taxes paid 64,065,437.19 80,208,573.82
Cash used in other operating activities 67,379,719.88 69,894,735.59
Subtotal of cash used in operating activities 2,803,964,006.42 3,099,596,662.21
Net cash generated from/used in operating activities 148,610,216.98 117,482,408.74
2. Cash flows from investing activities:
Proceeds from disinvestment 1,525,821,962.14 13,323,521.50
Return on investment 22,361,582.82 29,960,712.68
Net proceeds from the disposal of fixed assets, intangible assets
1,794,347.29 6,647,359.73
and other long-lived assets
Net proceeds from the disposal of subsidiaries and other business
units
Cash generated from other investing activities 61,197,806.89 32,608,417.38
Subtotal of cash generated from investing activities 1,611,175,699.14 82,540,011.29
Payments for the acquisition of fixed assets, intangible assets and
352,801,937.92 150,968,099.58
other long-lived assets
Payments for investments 2,006,213,736.27 280,000,000.00
Cash used in other investing activities 3,894,036.91 173,868,706.94
Subtotal of cash used in investing activities 2,362,909,711.10 604,836,806.52
Net cash generated from/used in investing activities -751,734,011.96 -522,296,795.23
3. Cash flows from financing activities:
Capital contributions received 20,000,880.00
Including: Capital contributions by non-controlling interests to
subsidiaries
Borrowings raised 590,526,602.96 1,017,900,674.25
Cash generated from other financing activities
Subtotal of cash generated from financing activities 590,526,602.96 1,037,901,554.25
Repayment of borrowings 416,309,860.45 793,712,239.85
65
Lu Thai Textile Co., Ltd. Interim Report 2023
Interest and dividends paid 113,125,135.43 89,198,073.90
Including: Dividends paid by subsidiaries to non-controlling
interests
Cash used in other financing activities 9,505,516.17 18,218,984.29
Subtotal of cash used in financing activities 538,940,512.05 901,129,298.04
Net cash generated from/used in financing activities 51,586,090.91 136,772,256.21
4. Effect of foreign exchange rates changes on cash and cash
18,508,217.96 27,668,484.46
equivalents
5. Net increase in cash and cash equivalents -533,029,486.11 -240,373,645.82
Add: Cash and cash equivalents, beginning of the period 1,822,897,270.16 1,970,006,884.89
6. Cash and cash equivalents, end of the period 1,289,867,784.05 1,729,633,239.07
6. Cash Flow Statement of the Company as the Parent
Unit: RMB
Item H1 2023 H1 2022
1. Cash flows from operating activities:
Proceeds from sale of commodities and rendering of services 1,621,793,418.78 2,011,005,609.32
Tax rebates 35,559,906.66 23,074,436.96
Cash generated from other operating activities 56,719,401.33 10,572,238.74
Subtotal of cash generated from operating activities 1,714,072,726.77 2,044,652,285.02
Payments for commodities and services 1,259,042,871.11 1,331,190,780.98
Cash paid to and for employees 459,317,676.05 484,573,239.10
Taxes paid 24,388,725.60 50,678,412.46
Cash used in other operating activities 33,086,342.08 42,450,664.45
Subtotal of cash used in operating activities 1,775,835,614.84 1,908,893,096.99
Net cash generated from/used in operating activities -61,762,888.07 135,759,188.03
2. Cash flows from investing activities:
Proceeds from disinvestment 1,395,821,962.14 13,323,521.50
Return on investment 21,094,108.64 186,817,055.74
Net proceeds from the disposal of fixed assets, intangible assets
2,637,307.50 7,706,280.16
and other long-lived assets
Net proceeds from the disposal of subsidiaries and other
431,493,365.00
business units
Cash generated from other investing activities 1,200,787,279.07 1,095,700,570.04
Subtotal of cash generated from investing activities 3,051,834,022.35 1,303,547,427.44
66
Lu Thai Textile Co., Ltd. Interim Report 2023
Payments for the acquisition of fixed assets, intangible assets and
32,526,882.27 39,865,621.95
other long-lived assets
Payments for investments 2,318,818,000.00 202,500,000.00
Net payments for the acquisition of subsidiaries and other
business units
Cash used in other investing activities 1,238,001,959.48 1,343,713,654.95
Subtotal of cash used in investing activities 3,589,346,841.75 1,586,079,276.90
Net cash generated from/used in investing activities -537,512,819.40 -282,531,849.46
3. Cash flows from financing activities:
Capital contributions received 20,000,880.00
Borrowings raised 188,065,597.90 507,937,437.39
Cash generated from other financing activities 154,870,600.00
Subtotal of cash generated from financing activities 188,065,597.90 682,808,917.39
Repayment of borrowings 13,868,839.85 416,282,653.26
Interest and dividends paid 110,643,219.41 85,575,684.96
Cash used in other financing activities 92,590,001.16 18,030,031.87
Subtotal of cash used in financing activities 217,102,060.42 519,888,370.09
Net cash generated from/used in financing activities -29,036,462.52 162,920,547.30
4. Effect of foreign exchange rates changes on cash and cash
8,061,427.42 9,506,927.55
equivalents
5. Net increase in cash and cash equivalents -620,250,742.57 25,654,813.42
Add: Cash and cash equivalents, beginning of the period 1,283,846,116.80 977,713,296.25
6. Cash and cash equivalents, end of the period 663,595,374.23 1,003,368,109.67
7. Consolidated Statements of Changes in Owners’ Equity
67
Lu Thai Textile Co., Ltd. Interim Report 2023
H1 2023
Unit: RMB
H1 2023
Equity attributable to owners of the Company as the parent
Other equity instruments
Other Gene Non- Total
Item Prefer Less:
Share Perpe Capital comprehe Specific Surplus ral Retained Oth controllin owners’
red Treasury Subtotal
capital tual Other reserves nsive reserve reserves reser earnings er g interests equity
share stock
bonds income ve
s
1.
Balances
887,633,1 71,383,8 395,872,1 154,396,1 107,628,8 1,215,124, 6,490,910, 9,014,156, 393,749,3 9,407,906,
as at the 51.00 30.75 35.71 98.73 98.09 336.54 719.35 872.71 87.23 259.94
end of the
prior year
Add:
Adjustme
nts for
changed
accountin
g policies
Adjustme
nts for
correctio
ns of
previous
68
Lu Thai Textile Co., Ltd. Interim Report 2023
errors
Adjustme
nts for
business
combinati
ons under
common
control
Other
adjustme
nts
2.
Balances
as at the 887,633,1 71,383,8 395,872,1 154,396,1 107,628,8 1,215,124, 6,490,910, 9,014,156, 393,749,3 9,407,906,
51.00 30.75 35.71 98.73 98.09 336.54 719.35 872.71 87.23 259.94
beginning
of the
year
3.
Increase/
decrease - - - -
70,872,27 2,777,41 135,287,24 242,768,17 230,883,31
in the 23,935,63 -50.99 64,785,91 122,552,8 11,884,86
9.88 0.71 6.25 6.38 2.66
2.00 1.20 33.73 3.72
period (“-
” for
decrease)
70,872,27 221,647,99 292,520,27 - 280,635,41
3.1 9.88 8.15 8.03 11,884,86 4.31
69
Lu Thai Textile Co., Ltd. Interim Report 2023
3.72
Total
comprehe
nsive
income
3.2
Capital
increased - - -
33,831,239 33,831,239
and 23,935,63 -50.99 64,785,91 122,552,8
.54 .54
2.00 1.20 33.73
reduced
by
owners
3.2.1
Ordinary
shares
increased 116.00 923.91 1,039.91 1,039.91
by
sharehold
ers
3.2.2
Capital
increased
by
holders of
other
equity
instrumen
70
Lu Thai Textile Co., Ltd. Interim Report 2023
ts
3.2.3
Share-
based
payments 11,076,41 11,076,415 11,076,415
5.02 .02 .02
included
in
owners’
equity
- - -
3.2.4 22,753,784 22,753,784
23,935,74 -50.99 75,863,25 122,552,8
.61 .61
Other 8.00 0.13 33.73
3.3 Profit - - -
distributi 86,360,751 86,360,751 86,360,751
.90 .90 .90
on
3.3.1
Appropri
ation to
surplus
reserves
3.3.2
Appropri
ation to
general
reserve
- - -
3.3.3
86,360,751 86,360,751 86,360,751
Appropri .90 .90 .90
71
Lu Thai Textile Co., Ltd. Interim Report 2023
ation to
owners
(or
sharehold
ers)
3.3.4
Other
3.4
Transfers
within
owners’
equity
3.4.1
Increase
in capital
(or share
capital)
from
capital
reserves
3.4.2
Increase
in capital
(or share
capital)
from
72
Lu Thai Textile Co., Ltd. Interim Report 2023
surplus
reserves
3.4.3
Loss
offset by
surplus
reserves
3.4.4
Changes
in defined
benefit
pension
schemes
transferre
d to
retained
earnings
3.4.5
Other
comprehe
nsive
income
transferre
d to
retained
earnings
73
Lu Thai Textile Co., Ltd. Interim Report 2023
3.4.6
Other
3.5
2,777,41 2,777,410. 2,777,410.
Specific 0.71 71 71
reserve
3.5.1
Increase 5,275,20 5,275,200. 5,275,200.
0.00 00 00
in the
period
3.5.2
2,497,78 2,497,789. 2,497,789.
Used in 9.29 29 29
the period
3.6 Other
4.
Balances
863,697,5 71,383,7 331,086,2 31,843,36 178,501,1 2,777,41 1,215,124, 6,626,197, 9,256,925, 381,864,5 9,638,789,
as at the 19.00 79.76 24.51 5.00 77.97 0.71 336.54 965.60 049.09 23.51 572.60
end of the
period
H1 2022
Unit: RMB
H1 2022
Equity attributable to owners of the Company as the parent
Non- Total
Item Other equity instruments Less: Other Speci Gene
Share Capital Surplus Retained Oth controllin owners’
Prefer Perpet Treasury comprehe fic ral Subtotal
capital Other reserves reserves earnings er g interests equity
red ual stock nsive reser reser
74
Lu Thai Textile Co., Ltd. Interim Report 2023
shares bonds income ve ve
1.
Balances -
882,341,2 71,384,6 340,587,3 78,908,3 1,215,124,3 5,589,201,7 7,983,307,4 383,812,0 8,367,119,4
as at the 36,423,74
95.00 56.84 87.65 00.00 36.54 72.37 00.03 31.90 31.93
8.37
end of the
prior year
Add:
Adjustme
nts for
changed
accountin
g policies
Adjustme
nts for
correction
s of
previous
errors
Adjustme
nts for
business
combinati
ons under
common
75
Lu Thai Textile Co., Ltd. Interim Report 2023
control
Other
adjustmen
ts
2.
Balances
-
as at the 882,341,2 71,384,6 340,587,3 78,908,3 1,215,124,3 5,589,201,7 7,983,307,4 383,812,0 8,367,119,4
36,423,74
95.00 56.84 87.65 00.00 36.54 72.37 00.03 31.90 31.93
beginning 8.37
of the
year
3.
Increase/
decrease - -
5,599,856. 38,543,51 80,891,07 331,794,98 468,051,99 467,667,83
in the -826.09 11,223,4 384,153.7
00 1.51 1.35 0.01 2.78 9.06
00.00 2
period (“-
” for
decrease)
3.1 Total
-
comprehe 80,891,07 393,950,85 474,841,92 474,457,77
384,153.7
1.35 2.46 3.81 0.09
nsive 2
income
3.2
Capital -
5,599,856. 38,543,51 55,365,941. 55,365,941.
increased -826.09 11,223,4
00 1.51 42 42
00.00
and
reduced
76
Lu Thai Textile Co., Ltd. Interim Report 2023
by owners
3.2.1
Ordinary
shares
5,599,856. 14,417,71 20,017,569. 20,017,569.
increased 00 3.13 13 13
by
sharehold
ers
3.2.2
Capital
increased
by
holders of
other
equity
instrumen
ts
3.2.3
Share-
based
payments 24,125,79 24,125,798. 24,125,798.
8.38 38 38
included
in
owners’
equity
- 11,222,573. 11,222,573.
3.2.4 -826.09
11,223,4 91 91
77
Lu Thai Textile Co., Ltd. Interim Report 2023
00.00
Other
3.3 Profit - - -
distributio 62,155,872. 62,155,872. 62,155,872.
45 45 45
n
3.3.1
Appropria
tion to
surplus
reserves
3.3.2
Appropria
tion to
general
reserve
3.3.3
Appropria
tion to - - -
owners 62,155,872. 62,155,872. 62,155,872.
45 45 45
(or
sharehold
ers)
3.3.4
Other
3.4
Transfers
within
78
Lu Thai Textile Co., Ltd. Interim Report 2023
owners’
equity
3.4.1
Increase
in capital
(or share
capital)
from
capital
reserves
3.4.2
Increase
in capital
(or share
capital)
from
surplus
reserves
3.4.3
Loss
offset by
surplus
reserves
3.4.4
Changes
in defined
79
Lu Thai Textile Co., Ltd. Interim Report 2023
benefit
pension
schemes
transferre
d to
retained
earnings
3.4.5
Other
comprehe
nsive
income
transferre
d to
retained
earnings
3.4.6
Other
3.5
Specific
reserve
3.5.1
Increase
in the
period
3.5.2
80
Lu Thai Textile Co., Ltd. Interim Report 2023
Used in
the period
3.6 Other
4.
Balances
887,941,1 71,383,8 379,130,8 67,684,9 44,467,32 1,215,124,3 5,920,996,7 8,451,359,3 383,427,8 8,834,787,2
as at the 51.00 30.75 99.16 00.00 2.98 36.54 52.38 92.81 78.18 70.99
end of the
period
8. Statements of Changes in Owners’ Equity of the Company as the Parent
H1 2023
Unit: RMB
H1 2023
Other equity instruments Less: Other Specifi
Item Capital Surplus Retained Othe Total owners’
Share capital Preferre Perpetu Treasury comprehensi c
Other reserves reserves earnings r equity
d shares al bonds stock ve income reserve
1. Balances
as at the end 887,633,151. 71,383,830. 457,252,169. 154,396,198. 1,212,015,596. 5,600,420,185. 8,074,278,572.
-30,162.34
00 75 95 73 90 06 59
of the prior
year
Add:
Adjustments
for changed
accounting
policies
81
Lu Thai Textile Co., Ltd. Interim Report 2023
Adjustments
for
corrections
of previous
errors
Other
adjustments
2. Balances
as at the 887,633,151. 71,383,830. 457,252,169. 154,396,198. 1,212,015,596. 5,600,420,185. 8,074,278,572.
-30,162.34
00 75 95 73 90 06 59
beginning of
the year
3. Increase/
decrease in - - -
the period (“- 23,935,632.0 -50.99 64,785,911.2 122,552,833. -77,408.91 223,072,508.91 256,826,339.54
0 0 73
” for
decrease)
3.1 Total
comprehensi -77,408.91 309,433,260.81 309,355,851.90
ve income
3.2 Capital
- - -
increased
23,935,632.0 -50.99 64,785,911.2 122,552,833. 33,831,239.54
and reduced 0 0 73
by owners
3.2.1
116.00 923.91 1,039.91
Ordinary
82
Lu Thai Textile Co., Ltd. Interim Report 2023
shares
increased by
shareholders
3.2.2 Capital
increased by
holders of
other equity
instruments
3.2.3 Share-
based
payments 11,076,415.0
11,076,415.02
2
included in
owners’
equity
- - -
3.2.4 Other 23,935,748.0 -50.99 75,863,250.1 122,552,833. 22,753,784.61
0 3 73
3.3 Profit
-86,360,751.90 -86,360,751.90
distribution
3.3.1
Appropriatio
n to surplus
reserves
3.3.2
Appropriatio
-86,360,751.90 -86,360,751.90
n to owners
(or
83
Lu Thai Textile Co., Ltd. Interim Report 2023
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
surplus
reserves
3.4.4
Changes in
84
Lu Thai Textile Co., Ltd. Interim Report 2023
defined
benefit
pension
schemes
transferred to
retained
earnings
3.4.5
Other
comprehensi
ve income
transferred to
retained
earnings
3.4.6
Other
3.5 Specific
reserve
3.5.1
Increase in
the period
3.5.2 Used
in the period
3.6 Other
4. Balances 863,697,519. 71,383,779. 392,466,258. 31,843,365.0 1,212,015,596. 5,823,492,693. 8,331,104,912.
-107,571.25
00 76 75 0 90 97 13
as at the end
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Lu Thai Textile Co., Ltd. Interim Report 2023
of the period
H1 2022
Unit: RMB
H1 2022
Other equity instruments Less: Other Specifi
Item Capital Surplus Retained Othe Total owners’
Share capital Preferre Perpetu Treasury comprehensi c
Other reserves reserves earnings r equity
d shares al bonds stock ve income reserve
1. Balances
as at the end 882,341,295. 71,384,656. 401,967,421. 78,908,300. 1,212,015,596. 4,887,481,100. 7,375,988,191.
-293,580.24
00 84 89 00 90 66 05
of the prior
year
Add:
Adjustments
for changed
accounting
policies
Adjustments
for
corrections
of previous
errors
Other
adjustments
86
Lu Thai Textile Co., Ltd. Interim Report 2023
2. Balances
as at the 882,341,295. 71,384,656. 401,967,421. 78,908,300. 1,212,015,596. 4,887,481,100. 7,375,988,191.
-293,580.24
00 84 89 00 90 66 05
beginning of
the year
3. Increase/
decrease in -
38,543,511.5
the period (“- 5,599,856.00 -826.09 11,223,400. 220,993.22 424,611,336.01 480,198,270.65
1
00
” for
decrease)
3.1 Total
comprehensi 220,993.22 486,767,208.46 486,988,201.68
ve income
3.2 Capital
-
increased 38,543,511.5
5,599,856.00 -826.09 11,223,400. 55,365,941.42
1
and reduced 00
by owners
3.2.1
Ordinary
14,417,713.1
shares 5,599,856.00 20,017,569.13
3
increased by
shareholders
3.2.2 Capital
increased by
holders of
other equity
instruments
87
Lu Thai Textile Co., Ltd. Interim Report 2023
3.2.3 Share-
based
payments 24,125,798.3
24,125,798.38
8
included in
owners’
equity
-
3.2.4 Other -826.09 11,223,400. 11,222,573.91
00
3.3 Profit
-62,155,872.45 -62,155,872.45
distribution
3.3.1
Appropriatio
n to surplus
reserves
3.3.2
Appropriatio
n to owners -62,155,872.45 -62,155,872.45
(or
shareholders)
3.3.3
Other
3.4
Transfers
within
owners’
88
Lu Thai Textile Co., Ltd. Interim Report 2023
equity
3.4.1
Increase in
capital (or
share capital)
from capital
reserves
3.4.2
Increase in
capital (or
share capital)
from surplus
reserves
3.4.3 Loss
offset by
surplus
reserves
3.4.4
Changes in
defined
benefit
pension
schemes
transferred to
retained
earnings
89
Lu Thai Textile Co., Ltd. Interim Report 2023
3.4.5
Other
comprehensi
ve income
transferred to
retained
earnings
3.4.6
Other
3.5 Specific
reserve
3.5.1
Increase in
the period
3.5.2 Used
in the period
3.6 Other
4. Balances
887,941,151. 71,383,830. 440,510,933. 67,684,900. 1,212,015,596. 5,312,092,436. 7,856,186,461.
as at the end -72,587.02
00 75 40 00 90 67 70
of the period
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Lu Thai Textile Co., Ltd. Interim Report 2023
III Company Profile
Lu Thai Textile Co., Ltd. (hereinafter referred to as the “Company”) is a joint venture invested by Zibo Lucheng Textile
Investment Co., Ltd (originally named Zibo Lucheng Textile Co., Ltd, hereinafter referred to as Lucheng Textile) and Thailand
Tailun Textile Co., Ltd. On 3 February 1993, the Company is approved by the former Ministry of Foreign Trade and Economy of
the State (1993) in WJMZEHZ No. 59 to convert into a joint-stock enterprise. Zibo Administration for Industry and Commerce
issued the Company corporate business license with the registration No. of QGLZZZ No. 000066.
In July 1997, the Company is approved by the Securities Committee of the Department of the State in the ZWF (1997) No. 47 to
issue 80 million shares of domestically listed foreign share( B-shares) at the price of RMB 1.00 per share. Upon approved by
Shenzhen Stock Exchange with No. (1997) 296 Listing Notice, the Company is listed on the Shenzhen Stock Exchange on 19
August 1997 with B-shares stock code of 200726. On 24 November 2000, approved by ZJGSZ [2000] No.199 by CSRC, the
Company increased publication of 50 million shares of general share (A-shares) at the book value of RMB 1.00, which are listed
on the Shenzhen Stock Exchange on 25 December 2000 with A-shares stock code of 000726 through approval by Shenzhen Stock
Exchange with No. (2000) 162 Listing Notice.
As approved by 2000 Annual General Meeting in May 2001, the Company carried out the distribution plan that 10 shares of
capital public reserve are converted to 3 more shares for each 10 shares.
As approved by Resolutions of 2001 Annual General Meeting in June 2002, the Company implemented the distribution plan that
10 shares of capital public reserve are converted 3 more shares for each 10 shares again.
As approved by 2002 Annual General Meeting in May 2003, the Company implemented the distribution plan that 10 shares of
capital public reserve are 2 more shares for each 10 shares, and inner employees’ shared increased to 40.56 million shares. As
examined and approved by ZJGSZ No. [2000] 199 of CSRC, the inner employees’ shares will start circulation 3 years later since
listing on the A-share market. On 25 December 2003, the inner employees’ shares reach 3 years since listing on the A-share stock
market, and they set out circulation on 26 December 2003.
As approved by the Annual General Meeting 2006 held in June 2007, the Company implemented the plan on converting 10 shares
to all its shareholders with capital reserves for every 10 shares. After capitalization, the registered capital of the Company was
RMB 844.8648 million.
The Company, in accordance with the official reply on approving Lu Thai Textile Co., Ltd. to issue additional shares (ZJXK [2008]
No. 890 document) from CSRC, issued the Renminbi common shares (A shares) amounting to 150 million shares on 8 December
2008.
According to the relevant resolution of the 2nd Special Extraordinary General Meeting of 2011, the relevant resolution of the 15th
Meeting of the 6th Board of Directors, the Opinion of China Securities Regulatory Commission on the Restricted Share Incentive
Plan of Lu Thai Textile Co., Ltd. (Shang-Shi-Bu-Han [2011] No. 206), the Company applied for a registered capital increment of
RMB 14.09 million, which was contributed by restricted share incentive receivers with monetary funds.
In accordance with the resolution of Proposal on Repurchasing and Canceling Partial Restricted Shares already Granted for the
Original Incentive Targets not Reaching the Incentive Conditions made at the 23rd Session of the 6th Board of Directors on 13
August 2012, the Company canceling a total of 60,000.00 shares already granted for the original incentive targets not reaching the
incentive conditions.
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Lu Thai Textile Co., Ltd. Interim Report 2023
According to the second temporary resolution of Proposal on counter purchase of part of the domestic listed foreign share (B share)
on 25 June 2012, the Company counter purchase domestic listed foreign share (B share) 48,837,300 shares.
According to the Proposal on Repurchase and Cancel Part of Unlocked Restricted Share of the Original Incentive Personnel not
Conforming to the Incentive Condition, Proposal on Repurchase and Cancel unlocked Restricted Share in Second Unlocked Period
of all the Incentive Personnel reviewed and approved by the 26th Meeting of the 6th Board of Directors on 27 March 2013, the
Company repurchase and cancel 4,257,000 shares owned by original people whom to motivate.
According to the Proposal on Repurchase and Write-off of Partly of the Original Incentive Targets Not Met with the Incentive
Conditions but Granted Restricted Shares approved on the 11th Meeting of the 7th Board of Directors on 11 June 2014, to execute
repurchase and write-off of the whole granted shares of 42,000 shares of the original incentive targets not met with the incentive
targets of the Company.
As per the Proposal on Buy-back of Some A- and B-shares considered and approved as a resolution at the 1st special meeting of
shareholders on 5 August 2015, the Company repurchased 33,156,200 domestically listed foreign shares (B-shares).
As per the Proposal on Buy-back of Some B-shares considered and approved as a resolution at the 2nd Extraordinary General
Meeting on 23 March 2018, the Company repurchased 64,480,800 domestically listed foreign shares (B-shares).
There were 10,800 shares of the Company which were converted from the convertible bonds in 2020.
In line with the resolution of the 1st Extraordinary General Meeting of the Company on 13 May 2021 and the resolution of the
24th Meeting of the 9th Board of Directors on 17 May 2021, the Company implemented the restricted share incentive scheme and
applied for a registered capital increment of RMB24,285,000 which was contributed by restricted share incentive receivers with
monetary funds.
In 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
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.
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Lu Thai Textile Co., Ltd. Interim Report 2023
In line with the resolution of the 3rd Extraordinary General Meeting of the Company on 15 July 2022, the Proposal on
Repurchasing the Domestically Listed Foreign Shares (B Shares) of the Company, the Company repurchased 23,935,700 B shares.
A total of 100 shares of convertible bonds of the Company could be converted from January to June 2023.
As at 30 June 2023, the Company's registered capital stood at RMB863,697,500.
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 13th Meeting of the 10th Board of Directors held
on 17 August 2023.
There were 16 subsidiaries included into the consolidation scope of the Company in H1 2023 with no change in the scope of
consolidated financial statements, and for the details, please refer to Note VIII. “Changes of Consolidation Scope” and Notes IX.
“Equities among Other Entities”.
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Lu Thai Textile Co., Ltd. Interim Report 2023
IV Basis for Preparation of Financial Statements
1. Preparation Basis
This financial statement is prepared in accordance with the accounting standards for business enterprises, and the application guide,
interpretation and other relevant regulations (hereinafter collectively referred to as “Accounting Standards for Business Enterprises”)
issued by the Ministry of Finance. In addition, the Company also disclosed relevant financial information in accordance with the
Regulations on Information Disclosure and Compilation for Companies Public Offering Securities No. 15-General Provisions on
Financial Report (revised in 2014) issued by China Securities Regulatory Commission.
The Company's accounting is based on the accrual basis. Except for certain financial instruments, this financial statement is
measured on the basis of historical cost. If the asset is impaired, the corresponding impairment provision shall be made in accordance
with relevant regulations.
2. Going-concern
The financial statements are presented on the basis of continuing operations.
V Significant Accounting Policies and Estimates
Specific accounting policies and accounting estimates indicators:
The Company determines income recognition policy according to its production and operation characteristics, and the specific
accounting policies are shown in Note V (27).
1. Statement of Compliance with the Accounting Standards for Business Enterprises
The financial statements prepared by the Company are in compliance with in compliance with the Accounting Standards for Business
Enterprises, which factually and completely present the consolidated, and the Company’s financial positions as at 30 June 2023,
business results and cash flows for H1 2023, 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.
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Lu Thai Textile Co., Ltd. Interim Report 2023
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
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
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Lu Thai Textile Co., Ltd. Interim Report 2023
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.
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
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Lu Thai Textile Co., Ltd. Interim Report 2023
reserve is insufficient to offset, the retained earnings shall be adjusted.
(4) Treatment of loss of control over subsidiaries
If the control over the original subsidiary is lost due to the disposal of partial equity investments or other reasons, the residual equity
shall be remeasured at the fair value on the date of losing the control power; the balance of the sum of the consideration obtained
from equity disposal and the fair value of residual equity after deducting the sum of the share of the carrying value of net assets in the
original subsidiary continuously accounted from the purchase date the Company shall enjoy based on the original shareholding ratio
and the goodwill shall be recorded into the investment income of the period when the control power is lost. The other comprehensive
income related to the equity investments in the original subsidiary shall be transferred to the current profit or loss when the control
power is lost except for the other comprehensive income arising from changes in net liabilities or net assets due to the remeasurement
of defined benefit plan by the investee.
7. Classification of Joint Arrangements and Accounting Treatment of Joint Operations
Joint arrangement refers to an arrangement under the joint control of two or more participants. The Company's joint arrangements are
divided into joint operations and joint ventures.
(1) Joint operations
A joint operation refers to a joint arrangement whereby the Company enjoys relevant assets of the arrangement, and assumes
obligations relevant liabilities of the arrangement.
The Company recognizes the following items related to the interest share in joint operation, and conducts accounting treatment in
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
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Lu Thai Textile Co., Ltd. Interim Report 2023
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
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.
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Such financial assets are measured in amortized cost by the effective interest method after initial recognition. Gains or losses arising
from financial assets measured in amortized cost that are not part of any hedging relationship are included in current profit and loss
when derecognition, amortization according to the effective interest method, or impairment is recognized.
Financial assets measured at fair value and whose changes are included in other comprehensive income
The Company classifies financial assets that meet the following conditions and are not designated to be measured at fair value and
whose changes are included in current profit and loss as financial assets measured at fair value and whose changes are included in
other comprehensive income:
The Company's business model for managing this financial asset is aimed at both collecting the contractual cash flow and selling this
financial asset;
The contractual terms of this financial asset stipulate that the cash flow generated on the specific date is only the payment of principal
and interest based on the principal amount outstanding.
Such financial assets are subsequently measured at fair value after initial recognition. Interest, impairment losses or gains and
exchange gains and losses calculated by the effective interest method are included in current profit and loss, while other gains or
losses are included in other comprehensive income. When the financial asset is derecognized, the accumulated gains or losses
previously included in other comprehensive income are transferred out and included in current profit and loss.
Financial assets measured at fair value and whose changes are included in current profit and loss
Except for the above financial assets measured at amortized cost and at fair value with changes included in other comprehensive
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
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The Company's financial liabilities are classified upon initial recognition as: financial liabilities measured at fair value and whose
changes are included in current profit and loss, and financial liabilities measured at amortized cost. For financial liabilities that are
not classified as measured at fair value and whose changes are included in current profit and loss, relevant transaction costs are
included in the initial recognition amount.
Financial liabilities measured at fair value and whose changes are included in current profit and loss
Financial liabilities measured at fair value and whose changes are included in current profit and loss include transactional financial
liabilities and financial liabilities designated as measured at fair value upon initial recognition and whose changes are included in
current profit and loss. Subsequent measurement shall be carried out according to fair value for such financial liabilities. Gains or
losses resulting from changes in fair value and dividends and interest expenses related to such financial liabilities shall be included in
current profit and loss.
Financial liabilities measured at amortized cost
Other financial liabilities are subsequently measured at amortized cost by using the effective interest method. Gains or losses
resulting from derecognition or amortization are included in current profit and loss.
Distinction between financial liabilities and equity instruments
Financial liabilities refer to liabilities that meet one of the following conditions:
① The contractual obligation to deliver cash or other financial assets to other parties.
② The contractual obligation to exchange financial assets or financial liabilities with other parties under potentially unfavorable
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.
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(5) Fair value of financial instruments
See Note V(11) for the method of determining the fair value of financial assets and liabilities.
(6) Impairment of financial assets
The Company conducts impairment accounting treatment for the following items and confirms the loss provision based on the
expected credit losses:
Financial assets measured at amortized cost;
Receivables and creditors' investments measured at fair value and whose changes are included in other comprehensive income;
Contract assets defined in the Accounting Standards for Business Enterprises No. 14-Revenue;
Lease receivables;
Financial guarantee contracts (except those that are measured at fair value and whose changes are included in current profit and loss,
the transfer of financial assets does not meet the conditions for derecognition or continue to involve in the transferred financial
assets).
Measurement of expected credit loss
Expected credit loss refers to the weighted average of the credit losses of financial instruments weighted by the risk of default. Credit
loss refers to the difference between all contractual cash flows discounted at the original effective interest rate and receivable
according to the contract and all cash flows expected to be collected of the Company, i.e. the present value of all cash shortfalls.
Considering the reasonable and reliable information about past events, current situation and the forecast of future economic situation,
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
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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.
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
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financial instruments or financial instrument portfolios. During assessment based on financial instrument portfolios, the Company
can divide financial instruments on the basis of common credit risk characteristics, such as overdue information and credit risk
ratings.
In case that the period overdue exceeds 30 days, the Company determines that there is a significant increase in the credit risk of
financial instruments.
Financial assets with depreciation of credit
The Company assesses, on the balance sheet date, whether there is any credit impairment to financial assets measured at amortized
cost and creditors' investment measured at fair value and whose changes are included in other comprehensive income. In case of one
or more events that adversely affect the expected future cash flow of a financial asset occur, the financial asset will become financial
assets with depreciation of credit. The observable information below can be treated as evidence for credit impairment to financial
assets:
The issuer or debtor is caught in a serious financial difficulty;
The debtor breaches the agreement of contract, such as default or overdue payment of interest or principal, or other default;
Due to economic or contractual considerations related to the debtor's financial difficulties, the Company gives concessions to the
debtor; and the concessions will not be made under any other circumstances;
There lies a great probability of bankruptcy or other financial restructuring for the debtor;
The issuer or debtor is caught in financial difficulties, which leads to the disappearance of the active market of the financial asset;
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.
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(8) Offsetting financial assets and financial liabilities
When the Company has a legal right that is currently enforceable to set off the recognized financial assets and financial liabilities,
and intends either to settle on a net basis, or to realize the financial asset and settle the financial liability simultaneously, a financial
asset and a financial liability shall be offset and the net amount is presented in the balance sheet. Except for the above circumstances,
financial assets and financial liabilities shall be presented separately in the balance sheet and shall not be offset.
11. Measurement of Fair Value
Fair value refers to the price that market participants can receive from sales of a asset or shall pay for transfer of a liability in the
orderly transaction that occurs on the measurement date.
The Company measures related assets or liabilities at fair value, assuming that the orderly transaction of selling assets or transferring
liabilities is conducted in the main market of related assets or liabilities; if there is no main market, the Company assumes that the
transaction is conducted in the most beneficial market. The main market (or the most favorable market) is the trading market that the
Company can enter on the measurement date. The Company uses the assumptions used by market participants to maximize their
economic benefits when pricing the asset or liability.
For financial assets or financial liabilities with active markets, the Company uses the quotation in active markets to determine its fair
value. If there is no active market for financial instruments, the Company uses valuation techniques to determine its fair value.
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
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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
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
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by equity method.
If the joint control or significant influence on the invested unit is lost due to the disposal of part of the equity investment, etc., the
remaining equity after the disposal shall be changed to the Accounting Standards for Business Enterprises No. 22-Recognition and
Measurement of Financial Instruments is performed, and the difference between fair value and book value is included in the current
profit and loss. Other comprehensive income recognized by the original equity investment due to the equity method of accounting
shall be accounted for on the same basis as the investee’s direct disposal of related assets or liabilities when the equity method of
accounting is terminated; changes in other owners ’equity related to the original equity investment Transfer to current profit and loss.
If the control of the invested unit is lost due to the disposal of part of the equity investment, if the remaining equity after the disposal
can exercise joint control or exert significant influence on the invested unit, the equity method is used for accounting and the
remaining equity is treated as When acquiring, the equity method is adopted for adjustment; if the remaining equity after disposal
cannot exercise joint control or exert significant influence on the investee, the accounting shall be changed according to the relevant
provisions of "Accounting Standards for Business Enterprises No. 22-Recognition and Measurement of Financial Instruments The
difference between the fair value and the book value on the date of loss of control is included in the current profit and loss.
If the shareholding ratio of the company decreases due to the capital increase of other investors, thereby losing control but being able
to exercise joint control or exert significant influence on the investee, the new shareholding ratio shall be used to confirm that the
company should enjoy the capital increase of the investee. The difference between the increase in share and the increase in the share
of net assets and the original book value of the long-term equity investment corresponding to the decrease in the proportion of the
shareholding that should be carried forward are included in the current profit and loss; That is, adjustments are made using the equity
method of accounting.
The unrealized internal transaction gains and losses that occur between the Company and associates and joint ventures are calculated
according to the shareholding ratio and are attributed to the Company, and the investment gains and losses are recognized on the
basis of offset. However, the unrealized internal transaction losses incurred by the Company and the investee are the impairment
losses of the transferred assets and shall not be offset.
(3) Determine the basis for joint control and significant influence on the invested unit
Joint control refers to the common control of an arrangement in accordance with the relevant agreement, and related activities of the
arrangement must be agreed upon by the parties sharing control rights before they can make decisions. When judging whether there
is joint control, first determine whether all participants or a combination of participants collectively control the arrangement, and
secondly determine whether the decision-making related activities of the arrangement must be unanimously agreed by the
participants who collectively control the arrangement. If all participants or a Company of participants must act in concert to
determine the relevant activities of an arrangement, it is considered that all participants or a Company of participants collectively
control the arrangement; if there is a combination of two or more participants can collectively Controlling an arrangement does not
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.
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(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-21.
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-21 for
the method of withdrawing asset impairment provision.
The difference between the disposal income of investment real estate sales, transfer, scrap or damage after deducting its book value
and related taxes is included in the current profit and loss.
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
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(3) Recognition Basis, Pricing and Depreciation Method of Fixed Asset under Finance Lease
When the fixed assets leased by the Group meet one or more of the following criteria, it is recognized as fixed asset under finance
lease: a) When the lease term expires, the ownership of the leased assets is transferred to the Group. b) The Group has the option
to purchase leased assets, and the purchase price concluded is expected to be much lower than the fair value of the leased assets
when the option is exercised, so it can be reasonably determined that the Group will exercise this option on the lease start date. c)
Even if the ownership of the asset is not transferred, the lease period accounts for most of the service life of the leased asset. d)
The present value of the Group's minimum lease payment on the lease start date is almost equivalent to the fair value of the leased
asset on the lease start date. e) The leased assets are of a special nature and only the Group can leverage them without major
renovation.
The fixed assets under finance lease shall be the booked value at the lower of the fair value of the leased assets on the lease start
date and the present value of the minimum lease payment. The minimum lease payment is taken as the book value of long-term
payables, and the difference is taken as unrecognized financing expenses. The initial direct costs such as handling charges,
attorney's fees, travel expenses, and stamp taxes that incurred during the lease negotiation and signing of the lease contract are
included in the value of the leased asset. Unrecognized financing expenses are allocated leveraging the effective interest rate
method in each period of the lease period.
Fixed asset under finance lease adopts the same policy as its own fixed assets to withdraw depreciation of leased assets. If it can be
reasonably determined that the ownership of the leased asset will be acquired at the end of the lease period, depreciation will be
accrued within the useful life of the leased asset; if it cannot be reasonably determined that the ownership of the leased asset can
be acquired at the end of the lease period, the depreciation shall be accrued in the shorter period between the lease period and the
residual life of the leased asset.
(4) Other Notes
At the end of each year, review is carried out by the Group for the service life, estimated net residual value and depreciation
method of fixed assets. If there is any difference between the expected service life and the original estimated service life, the
service life of fixed assets will be adjusted; if there is any difference between the expected net residual value and the original
estimated net residual value, the expected net residual value will be adjusted.
Major repair expenses incurred by the Group in the regular inspection of fixed assets are included in the cost of fixed assets if
evidence shows that they meet the recognition conditions of fixed assets, and those fail to meet the recognition conditions of fixed
assets are included in the current profit and loss. Fixed assets at intervals of regular major repairs shall be depreciated as
accrued.
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-21.
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
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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 (21) 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.
19. Right-of-use Assets
(1) Recognition conditions for right-of-use assets
The term "right-of-use assets" refers to the right of the lessee to use the leased assets during the lease term. At the start date of the
lease term. The Company initially measures the right-of-use assets at cost. The cost includes: a) the initial measurement amount of
lease obligations; b) the lease payment amount paid on or prior to the inception of the lease (less the related amount of lease
incentives already enjoyed if any); c) the initial direct cost incurred by the lessee; and d) the anticipated cost of dismantling and
removing the leasehold property, restoring the site where the leasehold property is located, or bringing the leasehold property back
to the state agreed upon in the lease terms.
The Company makes provision for depreciation of right-of-use assets with the composite life method. Where it can be reasonably
certain that the Company will obtain ownership of the leased assets at the expiry of the lease term, the leased assets are depreciated
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over the expected residual service life; where it cannot be reasonably certain that the Company can obtain ownership of the leased
assets at the end of the lease term, the leased assets are depreciated at the shorter of the lease term and the residual service life of
the leased assets.
The Company will determine the impairment of right-of-use assets and conduct accounting treatment in accordance with relevant
provisions of the Accounting Standards for Business Enterprises No.8 - Asset Impairment.
20. 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-21.
(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.
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21. 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),
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.
22. 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.
23. 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
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included them in the current profit and loss or related asset costs.
(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.
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(4) Accounting Treatment of the Welfare of Other Long-term Staffs
Other long-term employee benefits provided by the Company to employees that meet the conditions of defined contribution plans
shall be handled in accordance with the above-mentioned relevant provisions on defined contribution plans. Those in line with the
defined benefit plan shall be handled in accordance with the above-mentioned relevant provisions on the defined benefit plan.
However, the part of "changes caused by remeasuring the net liabilities or net assets of the defined benefit plan" in the salary cost
of relevant employees shall be included in the current profit and loss or the relevant asset cost.
24. Lease Liabilities
The Company initially measures the lease obligation at the present value of the lease payments outstanding at the commencement
date of the lease term. Lease payments include: a) fixed payment (including substantial fixed payment), and the relevant amount after
deducting the lease incentive if any; b) variable lease payments depending on index or ratio; c) estimated payments due to the
guaranteed residual value provided by the lessee; d) exercise price of the purchased option, provided that the lessee reasonably
determines that the option will be exercised; and e) the amount to be paid for the exercise of the lease termination options, provided
that the lease term reflects that the lessee will exercise the options to terminate the lease.
The Company uses the interest rate implicit in lease as the rate of discount. If the interest rate implicit in lease cannot be reasonably
determined, the Company's incremental borrowing rate is used as the rate of discount. The Company calculates the interest expenses
of the lease obligations during each period of the lease term at a fixed periodic interest rate, and includes them in financial expenses.
The periodic interest rate refers to the rate of discount employed by the Company or the rate of discount after revision.
Variable lease payments that are not covered in the measurement of the lease obligations are included in current profit or loss when
actually incurred.
When there is a change in the Company's evaluation results of lease renewal options, lease termination options or purchase options,
the Company will re-measure the lease obligation utilizing the present value of the changed lease payment and the revised rate of
discount, and adjust the book value of right-of-use assets accordingly. Where there is a change in substantial lease payment,
estimated payments due to the guaranteed residual value, or variable lease payments depending on index or ratio, the Company will
re-measure the lease obligation leveraging the present value of the changed lease payment and the original rate of discount, and
adjust the book value of right-of-use assets accordingly.
25. 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.
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26. Share-based Payments and Equity Instruments
(1) Category of share-based payment
The share-based payments of the Company are divided into equity-settled share payments and cash-settled share payments.
(2) Method of determining the fair value of equity instruments
The Company shall determine the fair value of equity instruments such as options granted in active markets according to the
quotations in active markets. For granted equity instruments such as options without active markets, the fair value is determined by
option pricing model. The following factors shall be considered for the selected option pricing model: A. Exercise price of the option;
B. Expiration date of the option; C. Current price of the object shares; D. Expected fluctuation rate of stock price; E. Estimated
dividends of shares; F. Risk-free interest rate within the option term.
(3) Ground for recognizing the optimal estimation of feasible right equity instruments
On each balance sheet date during the waiting period, the Company shall make the optimal estimate based on subsequent information
such as the latest change in the number of employees with feasible rights, and revise the number of equity instruments for the
estimated feasible rights. On the feasible right date, the final estimated number of feasible right equity instruments shall be the same
as the actual number of feasible rights.
(4) Relevant accounting treatment for implementing, modifying and terminating share-based payment plan
Equity-settled share-based payments shall be measured at the fair value of the equity instruments granted to employees. Where the
right is exercised immediately after the grant, relevant costs or fees shall be included in accordance with the fair value of the equity
instruments on the grant date to accordingly increase the capital reserve. Where the right is exercised upon the completion of the
services during the waiting period or the achievement of the specified result conditions, the services obtained in the current period
shall be included in the relevant costs or fees and the capital reserve according to the fair value of the equity instruments on the grant
date based on the optimal estimate of the number of feasible right equity instruments on each balance sheet date during the waiting
period. The recognized related costs or fees and total owner's equity after the feasible right date shall not be adjusted any more.
The cash-settled share-based payments shall be measured according to the fair value of liabilities calculated and determined on the
basis of shares or other equity instruments, which are assumed by the Company. Where the right is exercised immediately after the
grant, the fair value of the liabilities assumed by the Company shall be included in the relevant costs or fees on the grant date, so as
to accordingly increase the liabilities. For the cash-settled share-based payments, for which the right is exercised upon the completion
of the services during the waiting period or the achievement of the specified result conditions, the services obtained in the current
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
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period, it shall be treated as the cancellation of the granted equity instrument.
27. Revenue
Accounting policies adopted for the recognition and measurement of revenue
(1) General principle
The Company recognizes revenue when it has fulfilled its contract performance obligation in a contract, namely, when the customer
obtains the control over the related commodity or service.
If a contract contains two or more performance obligations, the Company allocates transaction price to single performance
obligations on the contract commencement date according to the relative ratio of separate price of goods or services committed by
single performance obligation, and income is measured according to the transaction price allocated to single performance obligation.
When meeting one of the following conditions, the Company belongs to performance of contract performing obligations in a period,
or otherwise, the Company belongs to performance of contract performing obligations at a point of time:
①While the Company is performing the contract, the customer acquires and consumes the economic benefit arising from
performance by the Company.
②The customer can control the goods in construction in the course of performance by the Company.
③The goods outputted in the course of performance by the Company have irreplaceable purpose, and the Company has the right to
collection of money for the completed performance part cumulative up to now in the whole term of contract.
For the performance obligation performed in a period, the Company confirms income according to the performance progress in such
period. When the performance progress cannot be reasonably determined, if the cost that the Company has incurred is expected to be
compensated, income is confirmed according to the cost amount that has occurred, until the performance progress can be reasonably
determined.
For the performance obligation performed at a point of time, income is confirmed at the point of time when the customer acquires the
control right to relevant goods or services. When it judges whether the customer has acquired the control right to the goods or
services, the Company will consider the following indications:
①The Company enjoys the current collection right to the goods or services, i.e. the customer undertakes current payment obligation
to the goods.
②The Company has transferred the legal ownership of the goods to the customer, that is, the customer has owned the legal
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:
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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.
Revenue for DAP business is recognized when the products are shipped to the designated receiving location and delivered to the
customer.
Differences in accounting policies for revenue recognition due to different business models of the same type of business
28. 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.
29. 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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Lu Thai Textile Co., Ltd. Interim Report 2023
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.
30. 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-19.
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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Lu Thai Textile Co., Ltd. Interim Report 2023
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.
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
deduction rate declines when the operating revenue increases to deduct safety production costs according to the following
standards:
Annual actual sales revenue Proportion of safety
standard production cost (%)
Not exceeding RMB10 million 3
RMB10 million to RMB100
1.5
million
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
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Lu Thai Textile Co., Ltd. Interim Report 2023
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. Changes in Main Accounting Policies and Estimates
(1) Significant Changes in Accounting Policies
□Applicable Not applicable
(2) Significant Changes in Accounting Estimates
□Applicable Not applicable
(3) Adjustments to Financial Statement Items at the Beginning of the Year of the First Implementation of the New
Accounting Standards Implemented since 2023
□Applicable Not applicable
35. Material Accounting Judgments and Estimates
The Company evaluates the important accounting estimates and key assumptions adopted on an ongoing basis, based on historical
experience and other factors, including reasonable expectations of future events. Important accounting estimates and critical
assumptions that have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the
next fiscal year are listed as follows:
Classification of financial assets
The significant judgments involved when the Company determines the classification of financial assets include analysis of business
models and contractual cash flow characteristics. The Company determines the business model for managing financial assets at the
level of the financial asset portfolio, taking into account factors such as the approach of evaluating and reporting the performance of
financial assets to key management personnel, the risks affecting the performance of financial assets and the manner in which they
are managed, and way in which the relevant business management personnel are compensated.
The following main judgments exist in assessing whether the contractual cash flows of financial assets are consistent with the basic
lending arrangements:
Whether the time distribution or amount of the principal amount during the duration may change due to early repayment or for other
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Lu Thai Textile Co., Ltd. Interim Report 2023
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.
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
VAT 13%, 9%, 6%, 5%, 3%, 0
tax rate and 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, 11%, 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%
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Lu Thai Textile Co., Ltd. Interim Report 2023
Lufeng Weaving & Dyeing 15%
Lulian New Materials 15%
Lu Thai Hong Kong 16.50%
Shanghai Lu Thai 20%
Shanghai Zhinuo 20%
Zhishu Consulting 20%
Banyang Villa 20%
Lu Thai Vocational Training School 0%
Huilin International 15%
LIIPL 17%
VACL 11%
Others in the consolidation scope 25%
2. Tax Preference
The Company, together with its holding subsidiaries, including Lufeng Weaving & Dyeing and Lulian New Materials, has been
recognized as a high-tech enterprise. Therefore, in accordance with Article 28 of the Enterprise Income Tax Law of the People’s
Republic of China and the Announcement of the State Administration of Taxation on Issues Concerning the Implementation of
Preferential Income Tax Policies for High-tech Enterprises (Announcement No. 24 [2017] of the State Administration of Taxation),
the applicable enterprise income tax rate shall be 15%.
Lu Thai (Hong Kong) Textile Co., Ltd. (hereinafter refers as Lu Thai (Hong Kong) Textile), the wholly-owned subsidiary of the
Company, was incorporated in Hong Kong SAR, whose profit tax shall be paid at tax rate of 16.5%.
The wholly-owned subsidiaries, including Shanghai Luthai, Shanghai Zhinuo, Zhishu Consulting, and Banyang Villa, have been
recognized as small, low-profit enterprises. According to the Announcement of the Ministry of Finance and the State Taxation
Administration on Preferential Income Tax Policies for Small, Low-profit Enterprises and Privately or Individually-owned
Businesses (Announcement No. 6 [2023] of the Ministry of Finance and the State Taxation Administration) and Announcement of the
Ministry of Finance and the State Taxation Administration on Further Implementing the Preferential Income Tax Policies for Micro
and Small Enterprises (Announcement No. 13 [2022] of the Ministry of Finance and the State Taxation Administration), the portion
of the annual taxable income of small, low-profit enterprises not exceeding RMB3 million shall be included in the taxable income at
a reduced rate of 25%, and the enterprise income tax shall be paid at the tax rate of 20%.
The wholly-owned subsidiary, Lu Thai Vocational Training School, has been recognized as a non-profit making organization exempt
from tax between 2021 and 2025. According to Article 26, Item 4 of the Enterprise Income Tax Law of the People’s Republic of
China, the policy whereby eligible non-profit making organizations are exempt from enterprise income tax shall apply to the
foregoing subsidiary.
The wholly-owned subsidiary, Huilin International, which was registered in the Hainan Free Trade Port and operates in the
encouraged industry, shall pay enterprise income tax at a reduced tax rate of 15% between 1 January 2020 and 31 December 2024,
according to the Announcement of the Ministry of Finance and the State Taxation Administration on the Preferential Income Tax
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Lu Thai Textile Co., Ltd. Interim Report 2023
Policies for Enterprises Registered in the Hainan Free Trade Port (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%.
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 22%. Year 2023 is the first year of tax halving period with the enterprise income tax rate at 11%.
Lu Thai America, the wholly-owned subsidiary of the Company registered in New York, America, was imposed the federal
enterprise income tax at fixed tax rate of 21%, and imposed the New York Enterprise income tax at the fixed tax rate of 6.5%.
VII. Notes to Main Items of Consolidated Financial Statements
1. Monetary Assets
Unit: RMB
Item Ending balance Beginning balance
Cash on hand 4,718,966.73 2,360,089.79
Bank deposits 1,544,812,531.20 2,054,133,036.04
Other monetary funds 1,911,794.04 11,275,128.14
Total 1,551,443,291.97 2,067,768,253.97
Of which: total amount deposited
254,835,924.09 246,365,368.50
overseas
Other notes:
(1) On 30 June 2023, the monetary assets with restricted ownership were of RMB1,910,353.64, which were the deposit for
domestic guarantee business of RMB515,460.80 and the deposit for L/C of USD193,043.38 (equivalent to RMB1,394,892.84).
(2) The interest receivable in bank deposits was RMB26,959,329.60.
2. Trading Financial Assets
Unit: RMB
Item Ending balance Beginning balance
Financial assets at fair value through profit or loss 918,839,425.27 267,695,159.48
Of which:
Debt instrument investment 901,270,568.81 239,522,650.65
Derivative financial assets 17,568,856.46 28,172,508.83
Of which:
Total 918,839,425.27 267,695,159.48
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Lu Thai Textile Co., Ltd. Interim Report 2023
3. Notes Receivable
(1) Notes Receivable Listed by Category
Unit: RMB
Item Ending balance Beginning balance
Bank acceptance bill 85,221,612.48 95,123,874.32
L/C 112,083,380.93 73,631,841.52
Total 197,304,993.41 168,755,715.84
Unit: RMB
Ending balance Beginning balance
Carrying amount Bad debt provision Carrying amount Bad debt provision
Category Withdra Carrying Withdra Carrying
Proporti Amou wal value Proporti wal value
Amount Amount Amount
on nt proporti on proporti
on on
Notes
receivable
for which
bad debt 0.00 0.00% 0.00 0.00% 0.00 0.00 0.00% 0.00 0.00% 0.00
provision
separately
accrued
Of
which:
Notes
receivable
of bad
197,304, 197,304, 168,755, 168,755,
debt 100.00% 100.00%
993.41 993.41 715.84 715.84
provision
withdrawn
by groups
Of
which:
Trade
acceptanc 0.00 0.00%
e
Bank
acceptanc 197,304, 197,304, 168,755, 168,755,
100.00% 100.00%
e bill and 993.41 993.41 715.84 715.84
L/C
197,304, 197,304, 168,755, 168,755,
Total 100.00% 0.00 0.00% 100.00%
993.41 993.41 715.84 715.84
Please refer to the relevant information of disclosure of bad debt provision of other accounts receivable if adopting the general
mode of expected credit loss to withdraw bad debt provision of notes receivable.
□Applicable Not applicable
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Lu Thai Textile Co., Ltd. Interim Report 2023
(2) Bad Debt Provision Withdrawal, Reversed or Recovered in the Reporting Period
Withdrawal of bad debt provision:
Unit: RMB
Changes in the Reporting Period
Beginning
Category Reversed or Ending balance
balance Withdrawal Verification Others
recovered
Commercial
0.00 0.00 0.00
acceptance bill
Total 0.00 0.00 0.00
Of which significant amount of reversal or recovery bad debt provision in the Reporting Period:
□Applicable Not applicable
(3) Notes Receivable which Had Endorsed by the Company or Had Discounted and Had not Due on the
Balance Sheet Date at the Period-end
Unit: RMB
Amount of recognition termination at the Amount of not terminated recognition at
Item
period-end the period-end
Bank acceptance bill 57,867,417.94
Total 57,867,417.94
4. Accounts Receivable
(1) Listed by Category
Unit: RMB
Ending balance Beginning balance
Carrying amount Bad debt provision Carrying amount Bad debt provision
Categor
y Withdra Carrying Withdra Carrying
Proporti wal value Proporti wal value
Amount Amount Amount Amount
on proporti on proporti
on on
Account
s
receivab
le
withdra
wal of 2,855,56 2,855,56 5,137,50 5,137,50
0.49% 100.00% 0.71% 100.00% 0.00
Bad debt 3.31 3.31 0.44 0.44
provisio
n
separatel
y
accrued
Of
which:
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Lu Thai Textile Co., Ltd. Interim Report 2023
Account
s
receivab
le
withdra 577,630, 43,474,3 534,155, 716,765, 56,338,1 660,427,
99.51% 7.53% 99.29% 7.86%
wal of 215.71 86.52 829.19 668.96 42.77 526.19
bad debt
provisio
n of by
group
Of
which:
Undue
accounts
(credit 182,353, 1,914,70 180,438, 166,814, 1,751,55 165,062,
31.41% 1.05% 23.11% 1.05%
insuranc 008.63 6.61 302.02 345.91 0.62 795.29
e
insured)
Undue
accounts
(no 284,593, 14,229,6 270,363, 395,429, 19,771,4 375,658,
49.03% 5.00% 54.78% 5.00%
credit 682.19 84.15 998.04 681.72 84.04 197.68
insuranc
e)
Overdue
accounts
(credit 42,993,0 6,749,91 36,243,1 73,996,7 11,617,4 62,379,2
7.41% 15.70% 10.25% 15.70%
insuranc 75.36 2.83 62.53 51.59 89.99 61.60
e
insured)
Overdue
accounts
(no 67,690,4 20,580,0 47,110,3 80,524,8 23,197,6 57,327,2
11.66% 30.40% 11.15% 28.81%
credit 49.53 82.93 66.60 89.74 18.12 71.62
insuranc
e)
580,485, 46,329,9 534,155, 721,903, 61,475,6 660,427,
Total 100.00% 7.98% 100.00% 8.52%
779.02 49.83 829.19 169.40 43.21 526.19
Bad debt provision separately accrued: June 2023
Unit: RMB
Ending balance
Name
Carrying amount Bad debt provision Withdrawal proportion Reason for withdraw
Customer's application
Customer 1 2,807,080.87 2,807,080.87 100.00% for bankruptcy
protection
Customer in financial
Customer 2 48,482.44 48,482.44 100.00%
difficulty
Total 2,855,563.31 2,855,563.31
Bad debt provision separately accrued: Y2022
Unit: RMB
Name Ending balance
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Lu Thai Textile Co., Ltd. Interim Report 2023
Carrying amount Bad debt provision Withdrawal proportion Reason for withdraw
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
Withdrawal of bad debt provision by group: June 2023
Unit: RMB
Ending balance
Name
Carrying amount Bad debt provision Withdrawal proportion
Group 1: Undue accounts (credit insurance
182,353,008.63 1,914,706.61 1.05%
insured)
Group 2: Undue accounts (no credit
284,593,682.19 14,229,684.15 5.00%
insurance)
Group 3: Overdue accounts (credit insurance
42,993,075.36 6,749,912.83 15.70%
insured)
Group 4: Overdue accounts (no credit
67,690,449.53 20,580,082.93 30.40%
insurance)
Total 577,630,215.71 43,474,386.52
Notes:
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
166,814,345.91 1,751,550.62 1.05%
insured)
Group 2: Undue accounts (no credit
395,429,681.72 19,771,484.04 5.00%
insurance)
Group 3: Overdue accounts (credit
73,996,751.59 11,617,489.99 15.70%
insurance 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:
Please refer to the relevant information of disclosure of bad debt provision of other accounts receivable if adopting the general
mode of expected credit loss to withdraw bad debt provision of accounts receivable.
□Applicable Not applicable
Disclosure by aging
Unit: RMB
Aging Ending balance
127
Lu Thai Textile Co., Ltd. Interim Report 2023
Within 1 year (including 1 year) 569,409,935.73
1 to 2 years 3,654,284.87
2 to 3 years 38,830.18
Over 3 years 7,382,728.24
3 to 4 years 6,307,156.76
4 to 5 years 765,372.56
Over 5 years 310,198.92
Total 580,485,779.02
(2) Bad Debt Provision Withdrawal, Reversed or Recovered in the Reporting Period
Withdrawal of bad debt provision:
Unit: RMB
Changes in the Reporting Period
Beginning
Category Reversed or Ending balance
balance Withdrawal Verification Others
recovered
Bad debt provision
5,137,500.44 -2,281,937.13 2,855,563.31
separately accrued
Withdrawal of bad
debt provision by 56,338,142.77 -12,677,803.47 185,952.78 43,474,386.52
group
Total 61,475,643.21 -14,959,740.60 185,952.78 46,329,949.83
(3) Accounts Receivable Written-off in Current Period
Unit: RMB
Item Written-off amount
Written-off accounts receivable 185,952.78
(4) Top 5 of the Ending Balance of the Accounts Receivable Collected according to Arrears Party
Unit: RMB
Proportion to total ending balance of Ending balance of bad
Name of the entity Ending balance
accounts receivable debt provision
Aggregate amount of top 5 of
accounts receivable of ending
109,253,305.36 18.82% 8,336,603.06
balance collected by arrears
party
Total 109,253,305.36 18.82%
5. Accounts Receivable Financing
Unit: RMB
Item Ending balance Beginning balance
128
Lu Thai Textile Co., Ltd. Interim Report 2023
Notes Receivable 24,293,707.01 11,300,942.26
Less: Other comprehensive income-fair
-197,321.06 -92,637.48
value change
Total 24,096,385.95 11,208,304.78
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
6. Prepayment
(1) Prepayment Listed by Aging Analysis
Unit: RMB
Ending balance Beginning balance
Aging
Amount Proportion Amount Proportion
Within 1 year 126,679,716.40 99.26% 94,608,438.10 99.57%
1 to 2 years 826,642.15 0.65% 411,030.94 0.43%
2 to 3 years 121,427.27 0.10% 2,129.28 0.00%
Over 3 years 0.00 0.00%
Total 127,627,785.82 95,021,598.32
(2) Top 5 Prepayment in Ending Balance Collected according to the Prepayment Target
The total top 5 prepayment in ending balance collected according to the prepayment target for the Company was
RMB66,505,029.66, accounting for 52.11% of total ending balance of prepayment.
7. Other Receivables
Unit: RMB
Item Ending balance Beginning balance
Dividend receivable 18,563,298.39 18,563,298.39
Other receivables 29,518,808.85 71,292,361.60
Total 48,082,107.24 89,855,659.99
(1) Dividend Receivable
1) Dividend Receivable Classification
Unit: RMB
Project (or investee) Ending balance Beginning balance
129
Lu Thai Textile Co., Ltd. Interim Report 2023
Fengshou Cotton 19,540,314.10 19,540,314.10
Less: Bad debt provision -977,015.71 -977,015.71
Total 18,563,298.39 18,563,298.39
2) Significant Dividends Receivable Aging over 1 Year
Unit: RMB
Whether occurred impairment
Project (or investee) Ending balance Aging Reason
and its judgment basis
2-3 Collect in accordance with
Fengshou Cotton 19,540,314.10 Not past due
years agreed dividend payment plan
Total 19,540,314.10
3) Withdrawal of Bad Debt Provision
Applicable □Not applicable
Unit: RMB
First stage Second stage Third stage
Bad debt provision Expected credit Expected loss in the Total
Expected loss in the duration
loss in the next 12 duration (credit
(credit impairment occurred)
months impairment not occurred)
Balance of 1 January 2023 977,015.71 977,015.71
Balance of 1 January 2023 in
the Current Period
Balance of 30 June 2023 977,015.71 977,015.71
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 Nature
Unit: RMB
Nature Ending carrying amount Beginning carrying amount
Export rebates 3,221,539.24 14,027,493.50
VAT to be returned 8,278,028.44 8,307,493.84
Payment on behalf 12,651,588.94 11,897,474.75
Guarantee deposit and cash deposit 3,015,014.86 4,220,014.58
Borrowings and petty cash 2,064,938.80 1,543,080.24
Others 3,397,510.13 36,256,599.70
Total 32,628,620.41 76,252,156.61
130
Lu Thai Textile Co., Ltd. Interim Report 2023
2) Withdrawal of Bad Debt Provision
Unit: RMB
First stage Second stage Third stage
Expected loss in the
Bad debt provision Expected loss in the Total
Expected credit loss in duration (credit
duration (credit impairment
the next 12 months impairment not
occurred)
occurred)
Balance of 1 January
3,681,740.03 1,278,054.98 4,959,795.01
2023
Balance of 1 January
2023 in the Current
Period
Withdrawal of the
-2,218,958.32 368,974.87 -1,849,983.45
Current Period
Balance of 30 June
1,462,781.71 1,647,029.85 0.00 3,109,811.56
2023
Changes of carrying amount with significant amount changed of loss provision in the current period
□Applicable Not applicable
Disclosure by aging
Unit: RMB
Aging Ending balance
Within 1 year (including 1 year) 27,810,178.47
1 to 2 years 625,737.48
2 to 3 years 872,530.00
Over 3 years 3,320,174.46
3 to 4 years 765,952.27
4 to 5 years 76,463.18
Over 5 years 2,477,759.01
Total 32,628,620.41
3) Bad Debt Provision Withdrawn, Reversed or Recovered in the Reporting Period
Withdrawal of bad debt provision:
Unit: RMB
Changes in the Reporting Period
Beginning
Category Reversed or Verific Ending balance
balance Withdrawal Others
recovered ation
Expected credit loss of the next 12
3,681,740.03 -2,218,958.32 1,462,781.71
months at the first stage
Expected loss in the duration
(credit impairment not occurred) 1,278,054.98 368,974.87 1,647,029.85
at the second stage
131
Lu Thai Textile Co., Ltd. Interim Report 2023
Expected loss in the duration
(credit impairment occurred) at 0.00
the third stage
Total 4,959,795.01 -1,849,983.45 0.00 0.00 0.00 3,109,811.56
4) Top 5 Other Accounts Receivable in Ending Balance Collected according to the Arrears Party
Unit: RMB
Proportion to total ending
Name of the Ending balance of bad
Nature Ending balance Aging balance of other
entity debt provision
receivables %
Within 1
Customer 1 Input VAT 8,134,048.45 24.93% 406,702.42
year
Advance Within 1
Customer 2 5,138,238.51 15.75% 256,911.93
payments year
Within 1
Customer 3 Export rebates 3,221,539.23 9.87% 161,076.96
year
Advance Within 1
Customer 4 1,144,279.95 3.51% 57,214.00
payments year
Advance Within 1
Customer 5 1,229,536.19 3.77% 61,476.81
payments year
Total 18,867,642.33 57.83% 943,382.12
8. Inventory
Whether the Company needs to comply with the disclosure requirements for the real estate industry
No
(1) Category of Inventory
Unit: RMB
Ending balance Beginning balance
Depreciation Depreciation
reserves of reserves of
inventories or inventories or
Item Carrying impairment Carrying impairment
Carrying value Carrying value
amount provision for amount provision for
contract contract
performance performance
costs costs
1,054,147,051.
Raw materials 55,397,065.04 998,749,986.41 964,638,749.13 47,996,904.87 916,641,844.26
45
Goods in
529,340,419.70 15,058,185.71 514,282,233.99 502,282,021.10 12,926,711.64 489,355,309.46
process
Inventory
885,867,404.34 193,427,654.40 692,439,749.94 869,338,282.54 181,010,948.47 688,327,334.07
goods
Assigned
processing 17,371,088.14 17,371,088.14 13,525,220.54 13,525,220.54
products
2,486,725,963. 2,222,843,058. 2,349,784,273. 2,107,849,708.
Total 263,882,905.15 241,934,564.98
63 48 31 33
132
Lu Thai Textile Co., Ltd. Interim Report 2023
(2) Falling Price Reserves of Inventory and Impairment Reserves for Contract Performance Costs
Unit: RMB
Increased amount of the current Decreased amount for the
Beginning period current period
Item Ending balance
balance Transferred-back
Withdrawal Others Others
or charged-off
Raw
47,996,904.87 8,300,734.32 628,508.02 1,529,082.17 55,397,065.04
materials
Goods in
12,926,711.64 9,932,665.69 0.00 7,801,191.62 15,058,185.71
process
Inventory
181,010,948.47 57,432,153.94 871,636.46 45,887,084.47 193,427,654.40
goods
Total 241,934,564.98 75,665,553.95 1,500,144.48 55,217,358.26 263,882,905.15
9. Other Current Assets
Unit: RMB
Item Ending balance Beginning balance
Other tax 11,981,883.51 9,813,869.63
Prepaid income tax 3,660,072.09 14,983,737.42
Prepaid other taxes 1,517.42 432,344.55
Convertible broken lot fund 199,688.35 199,689.59
Refundable deposits 101,734,649.86 51,418,261.88
Total 117,577,811.23 76,847,903.07
10. Long-term Equity Investment
Unit: RMB
Increase/decrease for the current period
Gains
and Cash Ending
Beginni Adjust Withdr Ending
losses bonus balance
ng Additio Reduce ment of Change awal of Balance
Investe recogni or of
balance nal d other s of impair (Carryi
e zed profits Others depreci
(carryin investm investm compre other ment ng
under announ ation
g value) ent ent hensive equity provisi Value)
the ced to reserve
income on
equity issue
method
I. Joint ventures
II. Associated enterprises
Ningbo
Mei -
60,547, 60,196,
shan 351,268
749.28 480.79
Bonded .49
Port
133
Lu Thai Textile Co., Ltd. Interim Report 2023
Area
Haohon
g
Equity
Investm
ent
Partner
ship
(L.P)
(herein
after
referred
to as
“Haoho
ng
Investm
ent”)
Ningbo
Haoyin
g
Equity
Investm
ent
Partner
ship -
123,620 122,638
(L.P) 981,880
,876.41 ,996.04
(herein .37
after
referred
to as
“Haoyi
ng
Investm
ent”)
-
Subtota 184,168 182,835
0.00 1,333,1
l ,625.69 ,476.83
48.86
-
184,168 182,835
Total 0.00 1,333,1
,625.69 ,476.83
48.86
11. Other Non-current Financial Assets
Unit: RMB
Item Ending balance Beginning balance
Equity instrument investment 77,080,000.00 325,110,000.00
Financial assets assigned measured by fair value and the changes be
12,000,000.00 12,000,000.00
included in the current gains and losses
Total 89,080,000.00 337,110,000.00
134
Lu Thai Textile Co., Ltd. Interim Report 2023
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 for the current period
(1) Outsourcing
(2)Transfer from inventory/fixed
assets/construction in progress
(3) Business combination increase
3. Decreased amount for the current period
(1) Disposal
(2) Other transfer
4. Ending balance 33,577,852.12 33,577,852.12
II. Accumulative depreciation and accumulative
amortization
1. Beginning balance 13,116,916.91 13,116,916.91
2. Increased amount for the current period 450,683.41 450,683.41
(1) Withdrawal or amortization 450,683.41 450,683.41
3. Decreased amount for the current period
(1) Disposal
(2) Other transfer
4. Ending balance 13,567,600.32 13,567,600.32
III. Depreciation reserves
1. Beginning balance
2. Increased amount for the current period
(1) Withdrawal
3. Decreased amount for the current period
(1) Disposal
(2) Other transfer
4. Ending balance
IV. Carrying value
135
Lu Thai Textile Co., Ltd. Interim Report 2023
1. Ending carrying value 20,010,251.80 20,010,251.80
2. Beginning carrying value 20,460,935.21 20,460,935.21
(2) Investment Property Adopting the Fair Value Measurement Mode
□Applicable Not applicable
13. Fixed Assets
Unit: RMB
Item Ending balance Beginning balance
Fixed assets 5,686,991,158.97 5,807,847,850.67
Total 5,686,991,158.97 5,807,847,850.67
(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
3,652,101,893.21 7,427,223,782.49 53,341,156.82 133,738,892.88 11,266,405,725.40
balance
2. Increased
amount for the 52,599,868.40 50,249,815.12 3,853,107.92 26,151,727.42 132,854,518.86
current period
(1)
0.00 39,274,124.69 1,389,395.20 571,014.34 41,234,534.23
Purchase
(2)
Transfer from
8,072,170.65 6,897,469.12 0.00 14,969,639.77
construction in
progress
(3)
Business
0.00
combination
increase
(4) Other
44,527,697.75 4,078,221.31 2,463,712.72 25,580,713.08 76,650,344.86
increase
3. Decreased
amount for the 0.00 23,965,219.50 64,957.26 1,423,445.95 25,453,622.71
current period
(1)
0.00 15,624,873.76 64,957.26 1,423,445.95 17,113,276.97
Disposal or scrap
(2)
Transfer from
8,340,345.74 8,340,345.74
construction in
progress
136
Lu Thai Textile Co., Ltd. Interim Report 2023
(3) Other
decrease
4. Ending
3,704,701,761.61 7,453,508,378.11 57,129,307.48 158,467,174.35 11,373,806,621.55
balance
II. Accumulative
depreciation
1. Beginning
1,217,812,756.74 4,048,548,925.66 39,994,380.21 114,073,387.92 5,420,429,450.53
balance
2. Increased
amount for the 72,186,131.10 167,031,980.40 4,229,794.65 3,787,671.09 247,235,577.24
current period
(1)
66,557,814.24 151,896,224.05 3,940,544.52 3,584,593.29 225,979,176.10
Withdrawal
(2) Other
5,628,316.86 15,135,756.35 289,250.13 203,077.80 21,256,401.14
Increases
3. Decreased
amount for the 0.00 14,677,834.08 58,461.53 1,342,123.48 16,078,419.09
current period
(1)
0.00 11,572,660.17 58,461.53 1,342,123.48 12,973,245.18
Disposal or scrap
(2)
Transfer from
3,105,173.91 3,105,173.91
construction in
progress
(4) Other decrease
4. Ending
1,289,998,887.84 4,200,903,071.98 44,165,713.33 116,518,935.53 5,651,586,608.68
balance
III. Depreciation
reserves
1. Beginning
429,416.16 37,631,204.93 5,671.30 62,131.81 38,128,424.20
balance
2. Increased
amount for the
current period
(1)
Withdrawal
3. Decreased
amount for the 2,899,570.30 0.00 2,899,570.30
current period
(1)
2,899,570.30 2,899,570.30
Disposal or scrap
4. Ending
429,416.16 34,731,634.63 5,671.30 62,131.81 35,228,853.90
balance
IV. Carrying value
1. Ending
2,414,273,457.61 3,217,873,671.50 12,957,922.85 41,886,107.01 5,686,991,158.97
carrying value
137
Lu Thai Textile Co., Ltd. Interim Report 2023
2. Beginning
2,433,859,720.31 3,341,043,651.90 13,341,105.31 19,603,373.15 5,807,847,850.67
carrying value
(2) Fixed Assets Leased out by Operation Lease
Unit: RMB
Item Ending carrying amount
Houses and buildings 4,882,924.27
(3) Fixed Assets Failed to Accomplish Certification of Property
Unit: RMB
Item Carrying value Reason
Lufeng weaving dye gray Under the relevant certificate procedures of acceptance, measurement,
10,186,234.68
yarn warehouse examination by the real estate trading center and other departments
Lulian New Materials fabric
83,527,790.14 The same as above
inspection workshop
Lulian New Materials yarn
8,344,878.57 The same as above
warehouse
14. Construction in Progress
Unit: RMB
Item Ending balance Beginning balance
Construction in progress 377,550,919.39 162,197,188.04
Engineering materials 161,053,061.49 37,746,313.69
Total 538,603,980.88 199,943,501.73
(1) List of Construction in Progress
Unit: RMB
Ending balance Beginning balance
Depre
Item Depreciat
ciation
Carrying amount Carrying value Carrying amount ion Carrying value
reserv
reserves
es
Reform project of
Xinsheng Thermal 16,078,622.35 16,078,622.35 18,548,362.41 18,548,362.41
Power
High-grade fabric
product line project 331,642,537.17 331,642,537.17 110,653,801.46 110,653,801.46
(I)
Other sporadic
29,829,759.87 29,829,759.87 32,995,024.17 32,995,024.17
projects
Total 377,550,919.39 377,550,919.39 162,197,188.04 162,197,188.04
138
Lu Thai Textile Co., Ltd. Interim Report 2023
(2) Changes in Significant Construction in Progress during the Reporting Period
Unit: RMB
Of
Propor
which:
tion of Capital
Other Accum amoun
accum ization
Increas decrea ulated t of
Transf ulated rate of
Beginn ed sed amoun capital
erred Ending invest Job interes
Project ing amoun amoun t of ized Capital
Budget in balanc ment schedu ts for
Name balanc t of the t for interes interes resources
fixed e in le the
e current the t ts for
assets constr Report
period current capital the
uctions ing
period ization Report
to Period
ing
budget
Period
Refor
m
project
of 30,000 18,548 16,078
4,079, 6,549, 80.00 90.00
Xinshe ,000.0 ,362.4 ,622.3 Other
396.96 137.02 % %
ng 0 1 5
Therm
al
Power
High-
Public
grade
offering
fabric 464,80 110,65 220,98 331,64
71.35 71.35 9,703, 9,703, fund and
produc 0,000. 3,801. 8,735. 2,537. 3.68%
% % 751.96 751.96 self-
t line 00 46 71 17
raised
project
fund
(I)
Other
sporad 32,995 29,829
5,255, 8,420,
ic ,024.1 ,759.8 Other
project 238.45 502.75
7 7
s
494,80 162,19 230,32 14,969 377,55
9,703, 9,703,
Total 0,000. 7,188. 3,371. ,639.7 0.00 0,919.
751.96 751.96
00 04 12 7 39
(3) Engineering Materials
Unit: RMB
Ending balance Beginning balance
Item Depreciati
Depreciatio
Carrying amount Carrying value Carrying amount on Carrying value
n reserves
reserves
Special
161,053,061.49 161,053,061.49 37,746,313.69 37,746,313.69
equipment
Total 161,053,061.49 161,053,061.49 37,746,313.69 37,746,313.69
15. Right-of-use Assets
Unit: RMB
139
Lu Thai Textile Co., Ltd. Interim Report 2023
Item Houses and buildings Land use right Total
I. Original carrying value
1. Beginning balance 74,496,696.93 445,512,889.01 520,009,585.94
2. Increased amount for
3,714,244.15 14,457,623.14 18,171,867.29
the current period
(1) Other Increase 3,714,244.15 14,457,623.14 18,171,867.29
3. Decreased amount for
the current period
4. Ending balance 78,210,941.08 459,970,512.15 538,181,453.23
II. Accumulative depreciation
1. Beginning balance 22,293,617.24 16,295,463.39 38,589,080.63
2. Increased amount for
6,383,739.71 5,867,077.77 12,250,817.48
the current period
(1) Withdrawal 5,147,501.62 5,553,109.05 10,700,610.67
(2) Other Increases 1,236,238.09 313,968.72 1,550,206.81
3. Decreased amount for
the current period
(1) Disposal
4. Ending balance 28,677,356.95 22,162,541.16 50,839,898.11
III. Depreciation reserves
1. Beginning balance
2. Increased amount for
the current period
(1) Withdrawal
3. Decreased amount for
the current period
(1) Disposal
4. Ending balance
IV. Carrying value
1. Ending carrying value 49,533,584.13 437,807,970.99 487,341,555.12
2. Beginning carrying
52,203,079.69 429,217,425.62 481,420,505.31
value
16. Intangible assets
(1) List of intangible assets
Unit: RMB
Non-patent Software use
Item Land use right Patent right Total
technologies rights
140
Lu Thai Textile Co., Ltd. Interim Report 2023
I. Original carrying value
1. Beginning balance 470,314,218.02 409,550.00 1,408,745.96 472,132,513.98
2. Increased amount for
377,450.16 377,450.16
the current period
(1) Purchase 371,681.42 371,681.42
(2) Internal R&D
(3) Business
combination increase
(4) Other increase 5,768.74 5,768.74
3. Decreased amount for
207,079.65 207,079.65
the current period
(1) Disposal 207,079.65 207,079.65
4. Ending balance 470,314,218.02 409,550.00 1,579,116.47 472,302,884.49
II. Accumulated amortization
1. Beginning balance 118,257,329.99 71,671.98 913,933.95 119,242,935.92
2. Increased amount for
5,273,783.82 20,476.86 257,228.08 5,551,488.76
the current period
(1) Withdrawal 5,273,783.82 20,476.86 256,508.20 5,550,768.88
(4) Other Increases 719.88 719.88
3. Decreased amount for
265,898.85 207,079.65 472,978.50
the current period
(1) Disposal 265,898.85 207,079.65 472,978.50
4. Ending balance 123,265,214.96 92,148.84 964,082.38 124,321,446.18
III. Depreciation reserves
1. Beginning balance
2. Increased amount for
the current period
(1) Withdrawal
3. Decreased amount for
the current period
(1) Disposal
4. Ending balance
IV. Carrying value
1. Ending carrying value 347,049,003.06 317,401.16 615,034.09 347,981,438.31
2. Beginning carrying
352,056,888.03 337,878.02 494,812.01 352,889,578.06
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%.
141
Lu Thai Textile Co., Ltd. Interim Report 2023
17. Development costs
Unit: RMB
Increased amount of the current period Decreased amount for the current period Endin
Beginning Transferred into g
Item Internal Recognized as
balance Others the current profit balan
development costs intangible assets ce
or loss
R&D of
131,290,032.04 131,290,032.04
products
Total 131,290,032.04 131,290,032.04
18. Goodwill
(1) Original Carrying Value of Goodwill
Unit: RMB
Decrease for
Increase for the current
the current
period
Name of the invested units or events Beginning period
Ending balance
generating goodwill balance Formed by
Disposa
business
l
combination
Xinsheng Power 20,563,803.29 20,563,803.29
Total 20,563,803.29 20,563,803.29
19. Long-term Prepaid Expense
Unit: RMB
Increased amount Amortization
Other decreased
Item Beginning balance of the current amount of the Ending balance
amount
period current period
Decoration fee 2,869,384.57 587,479.50 2,281,905.07
Technical service
79,597.40 17,688.30 61,909.10
charges
Total 2,948,981.97 605,167.80 2,343,814.17
20. Deferred Income Tax Assets/Deferred Income Tax Liabilities
(1) Deferred Income Tax Assets Had Not Been Off-set
Unit: RMB
Ending balance Beginning balance
Item Deductible temporary Deferred income tax Deductible temporary Deferred income tax
differences assets differences assets
Provision for
277,685,760.46 38,500,375.54 255,841,124.12 38,889,866.26
impairment of assets
142
Lu Thai Textile Co., Ltd. Interim Report 2023
Internal unrealized
86,662,593.50 12,083,037.05 131,224,111.61 17,495,580.49
profit
Deductible losses 137,197,410.39 26,000,771.84 152,699,543.87 28,176,066.84
Payroll payable 56,249,001.82 8,449,107.07 73,899,001.83 11,096,607.07
Deferred income 152,710,698.64 23,806,448.32 159,284,848.68 24,863,045.77
Contract liabilities 83,530,009.89 20,882,502.45 81,088,515.08 20,272,128.77
Changes in fair value
of other non-current 330,000.00 49,500.00 330,000.00 49,500.00
financial assets
Changes in fair value
of trading financial 5,258,300.00 788,745.00
liabilities
The changes of
accounts receivable 197,321.06 29,598.16 92,637.48 13,895.62
financing in fair value
Operating leases 6,274,343.04 1,002,949.03 6,274,343.07 1,002,949.03
Restricted stock
53,367,269.88 8,005,090.48 53,367,269.88 8,005,090.48
incentive fees
Convertible corporate
17,827,648.45 2,674,147.27 17,827,648.45 2,674,147.27
bonds
Associated enterprises 21,922,239.51 3,288,335.93 21,570,971.02 3,235,645.65
Total 899,212,596.64 145,560,608.14 953,500,015.09 155,774,523.25
(2) Deferred Income Tax Liabilities Had Not Been Off-set
Unit: RMB
Ending balance Beginning balance
Item Taxable temporary Deferred income Taxable temporary Deferred income
difference tax liabilities difference tax liabilities
Depreciation of fixed assets 658,195,369.06 105,285,717.34 643,426,505.04 101,589,274.02
Changes in fair value of trading
220,307,574.56 33,046,136.19 23,985,450.00 3,597,817.50
financial assets
Changes in the fair value of other
20,127,400.00 3,019,110.00 268,073,567.06 40,211,035.06
non-current financial assets
Associated enterprises 35,962,517.54 5,394,377.63 36,944,397.91 5,541,659.69
Fund income 23,245,944.02 3,486,891.60 2,024,310.22 303,646.53
Total 957,838,805.18 150,232,232.76 974,454,230.23 151,243,432.80
(3) Deferred income tax assets or liabilities had been off-set listed in net amount
Unit: RMB
Beginning off-set
Ending off-set amount Ending balance of Beginning balance of
amount of deferred
Item of deferred income tax deferred income tax deferred income tax
income tax assets and
assets and liabilities assets and liabilities assets and liabilities
liabilities
Deferred income tax
145,560,608.14 155,774,523.25
assets
143
Lu Thai Textile Co., Ltd. Interim Report 2023
Deferred income tax
150,232,232.76 151,243,432.80
liabilities
(4) List of unrecognized deferred income tax assets
Unit: RMB
Item Ending balance Beginning balance
Deductible temporary difference 81,763,112.47 49,938,675.28
Deductible losses 231,228,211.52 170,560,094.42
Total 312,991,323.99 220,498,769.70
(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 646.08 646.08
Y2025 52,127.16 52,127.16
Y2026 71,952,021.26 71,952,021.26
Y2027 98,555,299.92 98,555,299.92
Y2028 60,668,117.10
Total 231,228,211.52 170,560,094.42
21. Other Non-current Assets
Unit: RMB
Ending balance Beginning balance
Item Depreciatio Depreciati
Carrying amount Carrying value Carrying amount Carrying value
n reserves on reserves
Prepayment for
175,390,097.49 175,390,097.49 80,902,453.33 80,902,453.33
equipment
Term deposits
135,000,000.00 135,000,000.00 151,000,000.00 151,000,000.00
over 1 year
Interest
receivable from
299,236.11 299,236.11 10,637,013.55 10,637,013.55
term deposits
over 1 year
Total 310,689,333.60 310,689,333.60 242,539,466.88 242,539,466.88
22. Short-term Borrowings
(1) Category of Short-term Borrowings
Unit: RMB
144
Lu Thai Textile Co., Ltd. Interim Report 2023
Item Ending balance Beginning balance
Credit loan 527,384,198.32 518,946,415.96
Total 527,384,198.32 518,946,415.96
Notes of the category for short-term loans:
The short-term borrowing includes interest payable of RMB421,939.05.
23. Trading financial liabilities
Unit: RMB
Item Ending balance Beginning balance
Trading financial liabilities 14,848,448.10 4,276,929.70
Of which:
Derivative financial liabilities 14,848,448.10 4,276,929.70
Of which:
Total 14,848,448.10 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 131,163,917.73 112,354,158.59
Engineering equipment 87,382,830.12 91,747,417.03
Others 41,763,649.50 42,486,888.12
Total 260,310,397.35 246,588,463.74
26. Contract Liabilities
Unit: RMB
Item Ending balance Beginning balance
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Lu Thai Textile Co., Ltd. Interim Report 2023
Advance from sales 191,626,217.13 221,918,730.24
Less: contract liability recorded in other
-8,170,976.59 -15,039,057.71
current liabilities
Total 183,455,240.54 206,879,672.53
27. Payroll Payable
(1) List of payroll payable
Unit: RMB
Increase for the Decrease for the
Item Beginning balance Ending balance
current period current period
I. Short-term salary 329,320,005.76 598,092,985.75 679,451,558.37 247,961,433.14
II. Post-employment benefit-
707,153.96 73,520,413.75 74,088,231.07 139,336.64
defined contribution plans
III. Termination benefits 832,782.28 832,782.28 0.00
Total 330,027,159.72 672,446,181.78 754,372,571.72 248,100,769.78
(2) List of Short-term Salary
Unit: RMB
Increase for the Decrease for the
Item Beginning balance Ending balance
current period current period
1. Salary, bonus, allowance,
264,765,901.82 526,347,917.28 610,947,255.76 180,166,563.34
subsidy
2. Employee welfare 17,866,827.97 17,866,827.97 0.00
3. Social insurance 35,064.83 37,474,492.21 37,460,418.57 49,138.47
Of which: Medical insurance
17,115.51 33,671,087.41 33,646,335.61 41,867.31
premiums
Work-related injury
6,185.58 3,790,287.71 3,789,728.58 6,744.71
insurance premiums
Maternity insurance 11,763.74 13,117.09 24,354.38 526.45
4. Housing fund 6,986,392.10 6,986,392.10
5. Labor union budget and
64,519,039.11 9,417,356.19 6,190,663.97 67,745,731.33
employee education budget
Total 329,320,005.76 598,092,985.75 679,451,558.37 247,961,433.14
(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
444,238.10 70,614,664.50 70,927,274.36 131,628.24
insurance
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Lu Thai Textile Co., Ltd. Interim Report 2023
2. Unemployment
262,915.86 2,905,749.25 3,160,956.71 7,708.40
insurance premiums
Total 707,153.96 73,520,413.75 74,088,231.07 139,336.64
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 7,385,708.58 8,191,703.94
Enterprise income tax 10,491,445.36 7,853,201.82
Personal income tax 2,580,485.54 1,070,729.43
Urban maintenance and construction tax 1,797,820.16 3,625,674.57
Stamp duty 879,149.92 760,689.83
Real estate tax 5,169,486.75 5,023,343.97
Land use tax 3,818,481.25 1,980,295.59
Educational fee 600,226.10 1,602,333.55
Local education surcharge 536,174.30 1,068,222.36
Tax on natural resources 531,085.39 99,406.00
Environmental protection tax 239,812.58 207,841.00
Total 34,029,875.93 31,483,442.06
29. Other Payables
Unit: RMB
Item Ending balance Beginning balance
Dividends payable 441,113.64 441,113.64
Other payables 53,148,114.08 82,916,183.07
Total 53,589,227.72 83,357,296.71
(1) Dividends payable
Unit: RMB
Item Ending balance Beginning balance
Dividends payable to individual
441,113.64 441,113.64
shareholders
147
Lu Thai Textile Co., Ltd. Interim Report 2023
Total 441,113.64 441,113.64
(2) Other Payables
1) Other payables listed by nature
Unit: RMB
Item Ending balance Beginning balance
Deposits and cash deposits etc. 5,050,613.85 4,246,108.66
Collecting payment on behalf of others 4,707,395.36
Restricted stock repurchase obligations 31,556,265.00 65,286,630.00
Others 11,833,839.87 13,383,444.41
Total 53,148,114.08 82,916,183.07
30. Current Portion of Non-current Liabilities
Unit: RMB
Item Ending balance Beginning balance
Long-term borrowings matured within 1
483,930,000.00 300,800,000.00
year
Lease obligation matured within 1 year 3,480,386.14 7,121,837.35
Total 487,410,386.14 307,921,837.35
31. Other current liabilities
Unit: RMB
Item Ending balance Beginning balance
Tax to be charged off 8,170,976.59 15,039,057.71
Endorsed undue bill under non-
45,095,251.10 51,849,967.46
derecognition
Total 53,266,227.69 66,889,025.17
32. Long-term Borrowings
(1) Category of long-term borrowings
Unit: RMB
Item Ending balance Beginning balance
Credit loan 648,299,828.94 487,231,096.24
Less: current portion of long-term
-483,930,000.00 -300,800,000.00
borrowings
148
Lu Thai Textile Co., Ltd. Interim Report 2023
Total 164,369,828.94 186,431,096.24
Note to the category of long-term borrowings:
The long-term borrowing includes interest payable of RMB504,231.04.
Other notes, including interest rate range:
Interest rate range Interest rate range
Item Ending balance Beginning balance
(%) (%)
Credit loan 648,299,828.94 2.6-3.5 487,231,096.24 3.06-3.65
33. Bonds Payable
(1) Bonds payable
Unit: RMB
Item Ending balance Beginning balance
Convertible corporate bonds 1,449,985,859.18 1,438,162,231.27
Total 1,449,985,859.18 1,438,162,231.27
(2) Changes of bonds payable (excluding other financial instruments divided as financial liabilities such
as preferred shares and perpetual bonds)
Unit: RMB
Amorti
Issued zation Repaid
Interest Current
Bond Beginni in the of in the
Par Issue Issue accrued shares Ending
Name duratio ng Reporti premiu Reporti
value date amount at par convert balance
n balance ng m and ng
value ed
Period depreci Period
ation
LuThai
Convert 1,400,0 1,400,0 1,438,1 1,449,9
9 April 8,519,7 17,303, 13,998, 1,000.0
ible 00,000. 6 00,000. 62,231. 0.00 85,859.
2020 20.60 424.24 516.93 0
Bond 00 00 27 18
127016
1,400,0 1,438,1 1,449,9
8,519,7 17,303, 13,998, 1,000.0
Total 00,000. 62,231. 0.00 85,859.
20.60 424.24 516.93 0
00 27 18
(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)
149
Lu Thai Textile Co., Ltd. Interim Report 2023
the first trading day on 15 October 2020, six months after the date of issue, and shall end on (and include) the trading day prior to
the maturity date of the convertible bonds (8 April 2026). Holders may apply for conversion during the conversion period.
The initial conversion price of convertible corporate bonds was RMB9.01 per share when it was issued but was adjusted to
RMB8.91 per share since July 9, 2020, after the Company implemented the 2019 profit sharing agreement on July 8, 2020. After
the Company implemented the restricted stock incentive plan in 2021, the price was adjusted to RMB8.76 per share accordingly
since June 7, 2021. Upon the implementation of the 2020 profit sharing agreement by the Company on June 18, 2021, it was
adjusted to RMB8.71 per share accordingly again since June 18, 2021. 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. The
Company completed the formalities for cancellation of the 23,935,748 repurchased B shares on 25 May 2023, and the conversion
price of the convertible bond was adjusted to RMB8.73 per share on 26 May 2023. Upon the implementation of the 2022 Profit
Distribution Plan by the Company on 16 June 2023, the conversion price of the convertible bond was adjusted to RMB8.63 per
share accordingly on 16 June 2023.
34. Lease obligation
Unit: RMB
Item Ending balance Beginning balance
Lease payments 133,197,067.77 139,634,635.96
Unrecognized financing costs -31,975,721.98 -34,011,494.78
Less: Current portion of lease liabilities -3,480,386.14 -7,121,837.35
Total 97,740,959.65 98,501,303.83
Other notes
The amount of interest expense on lease liabilities accrued in H1 2023 was RMB2,315,000.27, 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 57,417,997.65
Total 57,417,997.65 57,417,997.65
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 159,615,037.36 14,190,000.00 20,764,150.04 153,040,887.32 Government grants
Total 159,615,037.36 14,190,000.00 20,764,150.04 153,040,887.32
150
Lu Thai Textile Co., Ltd. Interim Report 2023
37. Share Capital
Unit: RMB
Increase/decrease (+/-)
Bonu Shares
Beginning balance New shares s converted Ending balance
Others Subtotal
issued share from capital
s reserve
Total
887,633,151.00 -23,935,632.00 -23,935,632.00 863,697,519.00
shares
Other notes:
(1) The Company held the 2nd Meeting of the 10th Board of Directors on 29 June 2022 and the 3rd Extraordinary General
Meeting of 2022 on 15 July 2022, reviewing and approving the Proposal on Repurchase of the Company’s Domestically Listed
Foreign Shares (B Share). The Company repurchased 23,935,748 B shares in total through call auction via its securities account
for repurchase and completed the formalities for cancellation of the foregoing repurchased shares at the Shenzhen Branch of China
Securities Depository and Clearing Corporation Limited on 25 May 2023.
(2) A total of 116 shares of convertible bonds of the Company can be converted in the Reporting Period.
This change in share capital has been audited by Zhitong Accounting Firm (Special General Partnership) and the capital
verification report ZTYZ (2023) No. 371C000235 was issued on 18 May 2023.
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 Num Numb Carrying Carrying Numb
Carrying value Number Carrying value
ber er value value er
Convertible debt to
71,383,830.75 50.99 71,383,779.76
equity
Total 71,383,830.75 50.99 71,383,779.76
A description of the increase or decrease in other equity instruments for the current period and reasons thereof, and basis for
corresponding accounting treatment:
The decrease in other equity instruments for the period is due to the convertible debt-for-equity swap.
39. Capital Reserves
Unit: RMB
Increase for the Decrease for the
Item Beginning balance Ending balance
current period current period
Capital premium
294,877,268.02 30,336,158.91 75,863,250.13 249,350,176.80
(premium on stock)
Other capital reserves 100,994,867.69 11,076,415.02 30,335,235.00 81,736,047.71
Total 395,872,135.71 41,412,573.93 106,198,485.13 331,086,224.51
Other notes, including a description of the increase or decrease for the current period and the reasons for the change:
151
Lu Thai Textile Co., Ltd. Interim Report 2023
(1) The capital reserves—capital premium arising from the repurchase of B shares decreased by RMB75,863,250.13.
(2) The capital reserve - other capital reserve increased by RMB11,010,319.17 during the Reporting Period, arising from the
restricted share incentive fees. The portion of restricted shares of RMB30,335,235.00 due to be unlocked was transferred from the
capital reserve - other capital reserve to the capital reserve - capital premium.
(3) The capital reserves—capital premium arising from the conversion of convertible bonds increased by RMB923.91 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
65,286,630.00 33,443,265.00 31,843,365.00
repurchase
B shares repurchase 89,109,568.73 10,689,429.40 99,798,998.13 0.00
Total 154,396,198.73 10,689,429.40 133,242,263.13 31,843,365.00
41. Other comprehensive income
Unit: RMB
Amount of the current period
Less: Less:
recorded in recorded in
other other
Amount comprehen comprehen
Attributabl
before sive sive
Beginning e to the Attributabl Ending
Item deducting income in income in Less:
balance Company e minority balance
income tax prior period prior period Income tax
as the shareholder
for the and and expense
parent after s after tax
current transferred transferred
tax
period in profit or in retained
loss in the earnings in
Current the Current
Period Period
II. Other
comprehen
sive
income that
may 107,628,89 70,856,577. 70,872,279. 178,501,17
-15,702.54
subsequentl 8.09 34 88 7.97
y be
reclassified
to profit or
loss
Differ
ences 107,695,49 70,961,260. 70,961,260. 178,656,75
arising 5.07 92 92 5.99
from
152
Lu Thai Textile Co., Ltd. Interim Report 2023
translation
of foreign
currency-
denominate
d financial
statements
The
changes of
accounts
- -
receivable -66,596.98 -15,702.54 -88,981.04
104,683.58 155,578.02
financing
in fair
value
Total of
other
107,628,89 70,856,577. 70,872,279. 178,501,17
comprehen -15,702.54
8.09 34 88 7.97
sive
income
42. Special Reserve
Unit: RMB
Increase for the current Decrease for the
Item Beginning balance Ending balance
period current period
Safety production costs 5,275,200.00 2,497,789.29 2,777,410.71
Total 5,275,200.00 2,497,789.29 2,777,410.71
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
6,490,910,719.35 5,589,201,772.37
adjustments
Beginning balance of retained profits after
6,490,910,719.35 5,589,201,772.37
adjustments
Add: Net profit attributable to owners of the
221,647,998.15 393,950,852.46
Company as the parent
153
Lu Thai Textile Co., Ltd. Interim Report 2023
Dividends of common shares payable 86,360,751.90 62,155,872.45
Ending retained profits 6,626,197,965.60 5,920,996,752.38
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.
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 2,755,370,258.68 2,166,155,297.68 3,192,795,600.27 2,393,341,282.26
Other operations 85,121,003.79 67,777,069.99 137,498,862.98 103,991,759.33
Total 2,840,491,262.47 2,233,932,367.67 3,330,294,463.25 2,497,333,041.59
Information about performance obligations: None
Information in relation to the transaction price apportioned to the residual contract performance obligation:
As at the end of the Reporting Period, the revenue amount corresponding to the contract performance obligation yet to be fulfilled
or yet to be completed under a signed contract is RMB 0.00, including RMB 0.00 expected to be recognized as revenue in 0, RMB
0.00 expected to be recognized as revenue in 0, and RMB 0.00 expected to be recognized as revenue in 0.
46. Taxes and surtaxes
Unit: RMB
Item Reporting period Same period of last year
Urban maintenance and construction tax 7,809,806.48 9,776,946.60
Educational fee 3,269,199.52 4,171,872.08
Tax on natural resources 461,899.63 269,306.00
Real estate tax 10,749,586.45 10,096,302.07
Land use tax 7,639,050.17 5,119,280.86
Vehicle and vessel usage tax 47,802.52 48,152.44
Stamp duty 1,545,453.42 1,777,082.23
Local education surcharge 2,364,499.69 2,781,248.07
Environmental protection tax 473,062.48 461,067.66
Total 34,360,360.36 34,501,258.01
Other notes:
154
Lu Thai Textile Co., Ltd. Interim Report 2023
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 33,546,461.28 34,521,119.07
Marketing expense 16,171,875.20 15,812,366.09
Travel expense 3,906,192.17 411,115.04
Depreciation charge 3,510,556.38 3,352,693.87
Office operating fee 7,315,422.95 4,126,339.40
Others 1,960,739.32 1,670,717.57
Total 66,411,247.30 59,894,351.04
48. Administrative expense
Unit: RMB
Item Reporting period Same period of last year
Salary 80,911,708.29 93,534,860.68
Depreciation charge 19,438,392.08 18,872,138.30
Warehouse funding 18,862,735.72 19,455,536.27
Labor-union expenditure 5,566,260.80 6,143,835.05
Employee education budget 3,894,091.42 4,312,539.39
Amortization of intangible assets 5,795,577.62 5,805,244.20
Carriage charges 3,694,751.74 3,275,956.40
Others 37,144,843.72 38,880,033.28
Total 175,308,361.39 190,280,143.57
49. R&D expense
Unit: RMB
Item Reporting period Same period of last year
Labor cost 74,856,472.66 66,198,913.29
Material expense 36,990,187.47 31,344,635.57
Depreciation charge 8,755,526.54 9,209,535.98
Other 10,687,845.37 8,198,157.03
Total 131,290,032.04 114,951,241.87
155
Lu Thai Textile Co., Ltd. Interim Report 2023
50. Financial costs
Unit: RMB
Item Reporting period Same period of last year
Interest expense 49,206,191.44 55,026,837.64
Less: Capitalized interest expense 9,703,751.96 10,810,250.47
Interest income 30,385,764.22 28,264,778.38
Add: Capitalized interest income 5,914,630.48
Foreign exchange gains or losses -70,727,318.86 -98,749,158.07
Less: Capitalized foreign exchange gains
or losses
Others 4,603,167.24 4,949,236.76
Total -57,007,476.34 -71,933,482.03
51. Other income
Unit: RMB
Sources Reporting period Same period of last year
Government grants 6,960,772.36 2,101,748.17
Transfer of deferred income 20,764,150.04 25,619,024.20
Total 27,724,922.40 27,720,772.37
52. Investment income
Unit: RMB
Item Reporting period Same period of last year
Long-term equity investment income
-1,333,148.86 -1,076,939.49
accounted by equity method
Investment income from disposal of
48,131,810.86 2,525,510.87
trading financial assets
Total 46,798,662.00 1,448,571.38
53. Gain on changes in fair value
Unit: RMB
Sources Reporting period Same period of last year
Trading financial assets -31,900,187.41 6,691,520.36
Of which: Income from changes in fair value
-10,603,652.37 685,949.57
generated by derivative financial instruments
Trading financial liabilities -10,571,518.40 -3,622,489.80
Total -42,471,705.81 3,069,030.56
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Lu Thai Textile Co., Ltd. Interim Report 2023
54. Credit impairment loss
Unit: RMB
Item Reporting period Same period of last year
Bad debt loss of other receivables 1,849,983.45 -907,638.23
Bad debt loss of notes receivable 0.00 6,394.34
Bad debt loss of accounts receivable 14,959,740.60 1,397,801.18
Bad debt loss of dividends receivable 0.00 1,498,035.64
Total 16,809,724.05 1,994,592.93
55. Asset impairment loss
Unit: RMB
Item Reporting period Same period of last year
II. Inventory falling price loss and impairment
-75,665,553.95 -79,469,872.91
provision for contract performance costs
V. Impairment loss on fixed assets -2,225,865.39
Total -75,665,553.95 -81,695,738.30
56. Asset disposal income
Unit: RMB
Sources Reporting period Same period of last year
Fixed asset disposal income ("-" for loss) -404,759.16 2,668,023.30
Intangible asset disposal income ("-" for
loss)
Total -404,759.16 2,668,023.30
57. Non-operating income
Unit: RMB
Amount recorded in the current
Item Reporting period Same period of last year
non-recurring profit or loss
Claim income 2,140,794.59 2,413,323.36
Other 2,090,456.30 612,930.10
Total 4,231,250.89 3,026,253.46
58. Non-operating expense
Unit: RMB
Amount recorded in the current
Item Reporting period Same period of last year
non-recurring profit or loss
Donations 438,626.02 1,067,708.86
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Other 2,025,734.51 1,097,430.80
Total 2,464,360.53 2,165,139.66
59. Income tax expense
(1) List of income tax expense
Unit: RMB
Item Reporting period Same period of last year
Current income tax expense 10,575,366.34 70,344,008.61
Deferred income tax expense 10,416,049.17 -2,576,432.11
Total 20,991,415.51 67,767,576.50
(2) Adjustment process of accounting profit and income tax expense
Unit: RMB
Item Reporting period
Profit before taxation 230,754,549.94
Current income tax expense accounted at statutory/applicable
34,613,182.49
tax rate
Influence of applying different tax rates by subsidiaries -11,549,295.44
Influence of income tax before adjustment -1,312,665.55
Influence of non-taxable income 0.00
Influence of not deductable costs, expenses and losses 77,929.18
Influence of utilizing deductable losses of unrecognized
0.00
deferred income tax assets from prior years
Effect of deductible temporary differences or deductible losses
15,167,029.28
on deferred income tax assets not recognized in the period
Influence of additional deduction of R&D expenses (filled in
-12,441,424.78
with "-")
Influence of other expense deduction (filled in with "-") -3,563,339.67
Income tax expense 20,991,415.51
60. Other comprehensive income
Refer to Note VII-41 for details.
61. Cash flow statement
(1) Cash generated from other operating activities
Unit: RMB
Item Reporting period Same period of last year
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Government subsidy 21,278,038.60 1,980,644.87
Claim income 1,680,611.12 1,683,147.72
Recovery of employee borrowings, petty cash
5,065,850.80 7,337,923.73
and deposit
Collection for employees 1,913,782.89 5,216,485.83
Other 38,176,145.58 1,031,855.69
Total 68,114,428.99 17,250,057.84
(2) Cash used in other operating activities
Unit: RMB
Item Reporting period Same period of last year
Business travel charges 24,090,673.70 24,176,311.80
Insurance 2,214,458.96 2,535,111.86
Service fees 3,463,173.10 7,492,345.81
Decoration & repair expenses 1,205,617.14 1,853,995.94
Donation 954,843.00 1,005,693.17
Pre-payment 30,558.79 4,599,753.95
Payment of employee borrowings, petty
5,533,763.00 4,351,232.81
cash and deposit
Others 29,886,632.19 23,880,290.25
Total 67,379,719.88 69,894,735.59
(3) Cash generated from other investing activities
Unit: RMB
Item Reporting period Same period of last year
Interest income 21,207,422.84 20,657,090.40
Income from forward foreign exchange
16,005,350.00 2,525,510.87
and options
Income from holding of trading financial
assets
Return of guarantees 805,891.25 1,100,000.00
Return of term deposits 23,179,142.80 8,325,816.11
Total 61,197,806.89 32,608,417.38
(4) Cash used in other investing activities
Unit: RMB
Item Reporting period Same period of last year
Term deposit 2,506,369.87 172,545,016.96
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Lu Thai Textile Co., Ltd. Interim Report 2023
Pay margin 1,387,667.04 1,323,689.98
Total 3,894,036.91 173,868,706.94
(5) Cash used in other financing activities
Unit: RMB
Item Reporting period Same period of last year
Payment of right-of-use assets 9,505,516.17 9,179,573.11
Payment of cash deposits for profit
9,039,411.18
distribution
Total 9,505,516.17 18,218,984.29
62. Supplemental information for cash flow statement
(1) Supplemental information for cash flow statement
Unit: RMB
Amount during the Same period of last
Supplemental information
current period year
1. Reconciliation of net profit to net cash flows generated from operating
activities
Net Profit 209,763,134.43 393,566,698.74
Add: Provision for impairment of assets 58,855,829.90 79,701,145.37
Depreciation of fixed assets, oil-gas assets, and productive biological
247,686,260.65 224,384,809.38
assets
Depreciation of right-of-use assets 12,250,817.48 8,988,103.95
Amortization of intangible assets 5,551,488.76 5,502,457.48
Amortization of long-term prepaid expenses 605,167.80 490,056.67
Losses from disposal of fixed assets, intangible assets and other long-
-404,759.16 -3,069,030.56
lived assets (gains: negative)
Losses from scrap of fixed assets (gains: negative) -28,052.73
Losses from changes in fair value (gains represented by "-") 42,471,705.81 -6,691,520.36
Finance costs (gains: negative) -61,610,643.58 -76,882,718.79
Investment loss (gains represented by "-") -46,798,662.00 -1,448,571.38
Decrease in deferred income tax assets (gains: negative) 10,213,915.11 -6,803,474.24
Increase in deferred income tax liabilities (“-” means decrease) -1,011,200.04 4,250,378.88
Decrease in inventory (gains: negative) -136,941,690.32 -283,734,148.64
Decrease in accounts receivable generated from operating activities
70,267,472.18 1,860,662.45
(gains represented by "-")
Increase in accounts payable used in operating activities (decrease
-262,288,620.04 -222,604,387.48
represented by "-")
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Others
Net cash flow from operating activities 148,610,216.98 117,482,408.74
2. Significant investing and financing activities without involvement of cash
receipts and payments
Conversion of debt to capital
Convertible corporate bonds matured within one year
Fixed asset under finance lease
3. Net increase/decrease of cash and cash equivalent:
Closing balance of cash 1,289,867,784.05 1,729,633,239.07
Less: Opening balance of cash 1,822,897,270.16 1,970,006,884.89
Plus: Closing balance of cash equivalents
Less: Opening balance of cash equivalents
Net increase in cash and cash equivalents -533,029,486.11 -240,373,645.82
(2) Cash and cash equivalents
Unit: RMB
Item Ending balance Beginning balance
I. Cash 1,289,867,784.05 1,822,897,270.16
Including: Cash on hand 4,718,966.73 2,360,089.79
Bank deposits on demand 1,285,147,376.92 1,810,590,630.08
Other monetary assets on demand 1,440.40 9,946,550.29
III. Ending balance of cash and cash
1,289,867,784.05 1,822,897,270.16
equivalents
63. Assets with restricted ownership or right to use
Unit: RMB
Item Ending carrying amount Reason for Restriction
Monetary capital 1,910,353.64 Cash deposit
Other current assets 101,734,649.86 Refundable deposits
Total 103,645,003.50
64. Foreign currency monetary items
(1) Foreign currency monetary items
Unit: RMB
Closing foreign currency Ending balance converted to
Item Exchange rate
balance RMB
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Lu Thai Textile Co., Ltd. Interim Report 2023
Monetary capital
Of which: USD 47,723,907.12 7.2258 344,843,408.07
EUR 1,275,226.42 7.8771 10,045,086.03
HKD 4,136,573.14 0.9220 3,813,920.44
JPY 12,478,328.00 0.0501 625,164.23
CHF 616.44 8.0614 4,969.37
GBP 57.18 9.1432 522.81
Dong 52,333,090,739.00 0.0003 16,044,838.61
MMK 661,474,026.72 0.0034 2,276,037.74
Riel 101,084,492.00 0.0017 176,856.29
Notes receivable
Of which: USD 15,447,197.45 7.2258 111,618,359.33
Accounts receivable
Of which: USD 51,855,545.54 7.2258 374,697,800.96
EUR 97,826.27 7.8771 770,587.31
HKD
Dong 20,354,280,945.00 0.0003 6,240,433.12
Long-term borrowings
Of which: USD
EUR
HKD
Other receivables
Of which: USD 1,304,108.06 7.2258 9,423,224.02
EUR 40,900.00 7.8771 322,173.39
HKD 148,549.00 0.922 136,962.18
JPY 4,595,040.00 0.0501 230,211.50
Dong 697,724,334.00 0.0003 213,915.79
MMK 2,000,000.00 0.0034 6,881.71
Accounts payable
Of which: USD 3,512,862.89 7.2258 25,383,244.67
EUR 18,289.20 7.8771 144,065.86
JPY 803,987.00 0.0501 40,279.75
Dong 30,280,322,995.00 0.0003 9,283,665.24
MMK 33,728,957.00 0.0034 116,056.53
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Other payables
Of which: USD 4,443.21 7.2258 32,105.75
Dong 1,035,006,422.00 0.0003 317,323.34
MMK 1,030,000.00 0.0034 3,544.08
Short-term borrowings
Of which: USD 32,722,650.43 7.2258 236,447,327.48
Dong 269,388,429,265.00 0.0003 82,591,985.48
(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.
65. Government Grants
(1) Basic information on government grants
Unit: RMB
Amount recorded in the
Category Amount Listed items
current profit or loss
Withholding and remitting of
252,541.79 Other income 252,541.79
return of handling charges
Technical transformation
3,969,900.00 Other income 3,969,900.00
project subsidies
Tax reduction and exemption 2,106,830.57 Other income 2,106,830.57
Human resources subsidies 471,500.00 Other income 471,500.00
Quality improvement
160,000.00 Other income 160,000.00
subsidies
Total 6,960,772.36 6,960,772.36
(2) Return of Government Grants
□Applicable Not applicable
VIII. Change of Consolidation Scope
1. Other reasons for changes of consolidation scope
Notes of other changes in the combination scope (e.g., new subsidiaries, liquidation of subsidiaries, etc.) and relevant situations:
No change.
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IX. Equity in Other Entities
1. Equity in Subsidiary
(1) Compositions of the Group
Holding percentage
Main Registra
(%)
Name operatin tion Nature of business Way of gaining
Indirectl
g place place Directly
y
Luthai (Hong Hong Hong
Wholesale and retail industry 100.00% Set-up
Kong) Kong Kong
Shanghai Shangh Shangha
Wholesale and retail industry 100.00% Set-up
Luthai ai i
Lufeng
Company Zibo Zibo Manufacturing industry 75.00% Set-up
Limited
Luqun Textile Zibo Zibo Manufacturing industry 100.00% Set-up
Xinsheng Business combination not
Zibo Zibo Manufacturing industry 100.00%
Power under the same control
Technology development, technical
Shanghai Shangh Shangha
consultancy and transfer of 100.00% Set-up
Zhinuo ai i
technologies
Lulian New
Zibo Zibo Manufacturing industry 75.00% Set-up
Materials
Lujia Import &
Zibo Zibo Import and export trade 100.00% Set-up
Export
Zhishu
Beijing Beijing Management consulting 100.00% Set-up
Consulting
Lu Thai
Occupational
Zibo Zibo Skill training 100.00% Set-up
Training
School
Banyang
Zibo Zibo Catering services 100.00% Set-up
Mountain Villa
Huilin Wencha Wencha
Modern service industry 100.00% Set-up
International ng ng
LIIPL (sub- Singapo Singapo Wholesale textiles and leather,
100.00% Set-up
subsidiary) re re holding company
VACL Burma Burma Manufacturing industry 100.00% Set-up
Lu Thai Americ
America Wholesale and retail industry 100.00% Set-up
(America) a
Yuanhui Fund 100.00% Subscribe
(2) Significant non-wholly-owned subsidiary
Unit: RMB
Shareholding Declaring dividends
The profit or loss attributable Balance of non-controlling
Name proportion of non- distributed to non-
to the non-controlling interests interests at the period-end
controlling interests controlling interests
Lufeng
Company 25.00% 2,463,643.73 347,714,974.91
Limited
Lulian New
25.00% -14,348,507.45 34,149,548.60
Materials
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Lu Thai Textile Co., Ltd. Interim Report 2023
(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 958,13 694,53 1,652, 199,99 55,486 255,47 977,75 736,10 1,713, 264,89 57,773 322,66
ny 7,401. 0,575. 667,97 0,653. ,381.8 7,035. 1,666. 8,963. 860,62 4,436. ,566.5 8,002.
Limite 46 99 7.45 27 9 16 75 24 9.99 41 3 94
d
Lulian 100,50 585,39 685,89 546,42 549,75 194,59 590,73 785,33 588,31 591,64
New 3,331, 3,331,
6,241. 2,877. 9,119. 3,954. 5,500. 4,378. 8,673. 3,052. 5,533. 7,079.
Materi 546.24 546.24
als 61 73 34 43 67 81 35 16 14 38
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
Lufeng
630,672,25 6,009,887.3 5,998,315.2 111,673,71 824,088,56 53,903,771. 53,785,571. 286,465,94
Company
Limited 8.24 7 4 9.55 1.65 42 14 4.48
- - - - - -
Lulian New 59,510,967. 37,558,406.
57,542,354. 57,542,354. 50,620,961. 45,385,029. 45,385,029. 20,097,376.
Materials 89 73
11 11 20 29 29 54
2. Equity in joint ventures or associated enterprises
(1) Significant joint ventures or associated enterprises
Accounting treatment of
Holding percentage (%)
Main operating Registration Nature of the investment to joint
Name
place place business venture or associated
Directly Indirectly
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 of last
Ending balance/reporting period
year
Haohong Haoying
Haohong Investment Haoying Investment
Investment Investment
Current assets 183,836,731.09 276,420,297.42 184,892,005.99 278,997,681.82
Non-current assets
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Lu Thai Textile Co., Ltd. Interim Report 2023
Total assets 183,836,731.09 276,420,297.42 184,892,005.99 278,997,681.82
Current liabilities 3,253,866.05 3,255,230.09
Non-current liability
Total liabilities 3,253,866.05 3,255,230.09
Net assets 180,582,865.04 276,420,297.42 181,636,775.90 278,997,681.82
Equity of non-controlling interests
Equity attributable to shareholders
180,582,865.04 276,420,297.42 181,636,775.90 278,997,681.82
of the Company as the parent
Net assets shares calculated at the
60,196,480.79 131,628,581.43 60,547,749.28 132,856,975.88
shareholding proportion
Adjusted items
- Goodwill
- Unrealized profit of internal
transactions
- Others -8,989,585.38 -9,236,099.47
Carrying value of investment to
60,196,480.79 122,638,996.04 60,547,749.28 123,620,876.41
associated enterprises
Fair value of equity investments in
associated enterprises with publicly
quoted prices
Operating revenue
Net profit -1,053,910.87 -2,577,384.40 1,783,344.27 -4,386,967.62
Net profit from discontinued
operations
Other comprehensive income
Total comprehensive income -1,053,910.87 -2,577,384.40 1,783,344.27 -4,386,967.62
Dividends received from the
associates in the current 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, other current assets, trading financial assets, investment in debt obligations, other non-current
financial assets, long-term receivables, notes payable, accounts payable, other payables, short-term borrowings, current portion of
non-current liabilities, long-term borrowings, bonds payable, and lease liabilities. Details of various financial instruments are
disclosed in relevant Notes. Risks related to these financial instruments, and risk management policies the Company has adopted
to reduce these risks are described as follows. The Company management manages and monitors the risk exposure to ensure the
above risks are controlled in a limited scope.
1. Risk management objectives and policies
The Company has conducted the risk management to achieve an appropriate balance between the risk and the income and to
minimize the adverse influence of financial risks on the Company’s financial performance. According to such risk management
objective, the Company has formulated corresponding risk management policy to recognize and analyze possible risks
encountered by the Company, set the appropriate acceptable risk level and designed corresponding internal control procedures to
monitor the Company’s risk level. Meanwhile, the Company will regularly review these risk management policies and relevant
166
Lu Thai Textile Co., Ltd. Interim Report 2023
internal control system so as to cater for the market or respond to any change in the Company’s business operations. Accordingly,
the Company’s internal audit department will also regularly or randomly check whether the internal control system is implemented
in conformity with relevant risk management policies.
The major risks caused by financial instruments of the Company are credit risk, liquidity risk and market risk (including foreign
exchange risk and interest rate risk).
The Board of Directors shall be responsible for planning and establishing the risk management framework for the Company,
determining the Company’s risk management policies and relevant guidelines and monitoring the implementation of various risk
management measures. However, the Company has established corresponding risk management policies to recognize and analyze
possible risks encountered by the Company. Besides, various risks are specified in these risk management policies, including the
credit risk, the liquidity risk and the market risk management etc. On a regular basis, the Company will evaluate the specific
marketing environment and various changes in the Company’s business operations so as to determine whether any risk
management policy and system need be updated.
(1) Credit risk
Credit Risk means that the Company will suffer any financial losses due to the counter party’s failure in fulfilling the contract
obligations.
The Company shall manage the credit risk based on the specific Group Classification, and the credit risk mainly arises from bank
deposit, notes receivable, accounts receivable, other receivables and long-term accounts receivable etc.
The Group’s bank deposits are mainly saved in state-owned banks and other large and medium-sized listed banks. The Group’s
bank deposits are expected not to suffer any major credit risks.
For notes receivable, accounts receivable, other accounts receivable and long-term accounts receivable, the Company has
established relevant policies to control the credit risk exposure. According to the client’s financial status, credit record and other
factors (including the current market condition), the Company will evaluate the client’s credit qualification and set corresponding
credit period. The Company regularly monitors the credit records of customers. For customers with bad credit records, the
Company adopted corresponding methods, such as written pressing for payment, shortening credit period, and canceling credit
period, so as to ensure the Company's overall credit risk is controllable.
The hugest credit risk exposure borne by the Company is the book value of each financial asset reflected in the balance sheet, and
the Company also faces credit risk due to the provision of financial guarantee, as detailed in Note XII 2.
In terms of accounts receivable, the top 5 customers in accounts receivable were accounted for 18.82% of the total amount of
accounts receivable of the Company (21.75% in 2022). As for other receivables, the top 5 of the ending balance according to the
arrears party was accounted for 57.83% of the total amount of other receivables of the Company (85.42% in 2022).
Investment in debt obligations
The Group supervised the changes of credit risk through tracking the published external credit ratings. In order to make sure
whether the credit rating was the latest, and whether the credit risk has increased obviously of evaluation report date but not been
reflected in the published external ratings, the Company has supplemented through examining the changes of bond yield and the
available news and supervision information.
On the balance sheet date, the carrying value of investment in debt obligations of the Company are listed as follows according to
report items (Unit: RMB’0,000).
30 June 2023 31 December 2022
Trading Financial Assets 90,127.06 23,952.27
Other Current Assets -
Total 90,127.06 23,952.27
(2) Liquidity risk
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Lu Thai Textile Co., Ltd. Interim Report 2023
Liquidity Risk refers to the risk of capital shortage encountered by the Company during the cash payment or the settlement of
other financial assets.
During the management of liquidity risk, the Company shall reserve and monitor corresponding cash and cash equivalent deemed
sufficient by the management so as to meet the Company’s operational requirements and mitigate the impact caused by the cash
flow fluctuation. The Group’s management will monitor the use of bank loans and guarantee the fulfillment of loan agreement.
Meanwhile, major financial institutions shall promise to provide the Group with sufficient reserve funds in order to satisfy the
short-term and long-term fund demand. The Group shall raise its working capital based on the capital generated from business
operations and bank loans.
(3) Market risk
The financial instrument’s market risk refers to the fluctuation risk of fair value of financial instrument or future cash flow caused
by the changes of market price, including the interest rate risk and the exchange rate risk.
Interest rate risk
Interest rate risk refers to the risk of fluctuations in the fair value or future cash flows of financial instruments arising from changes
in market interest rates. The interest rate can derive from the recognized interest-bearing financial instruments and unrecognized
financial instruments (including certain loan commitment).
The Group’s interest rate risk mainly arises from the bank loan. Financial liabilities based on the floating interest rate will cause
the cash flow interest rate risk to the Company, and financial liabilities based on the fixed interest rate the fair value interest rate
risk.
However, the Company has paid close attention the impact of interest rate fluctuations on the Company’s interest rate risk. At
present, the Company has not taken any interest rate hedging measures. The rise of interest rate will increase the cost of newly-
added interest-bearing debts and the interest cost of the Company’s unsettled interest-bearing debts based on the floating interest
rate, and cause major adverse influence on the Company’s financial performance. The management will timely make
corresponding adjustment according to the latest market situation, and corresponding interest rate swap will be arranged to reduce
the interest rate risk.
The interest-bearing financial instruments held by the Company are as follows (Unit: RMB’0,000):
Item 30 June 2023 31 December 2022
Fixed-interest financial instruments
Including: short-term borrowings 52,334.96 49,811.77
Current portion of long-term borrowings 29,880.00 19,880.00
Long-term borrowings 6,284.07 10,330.00
Bonds Payable 144,998.59 143,816.22
Total 233,497.61 223,837.99
Floating-interest financial instruments
Financial assets 90,127.06 23,952.27
Including: trading financial assets 90,127.06 23,952.27
Financial liabilities 28,976.78 20,540.58
Including: short-term borrowings 361.29 2,077.58
Current portion of long-term borrowings 18,513.00 10,200.00
Long-term borrowings 10,102.49 8,263.00
On 30 June 2023, if the lending rate calculated at floating interest rate up or down 100 basis points with other variables unchanged,
the net profit and shareholders’ equity will be decreased or increased about RMB2,897,700.
On 30 June 2023, if the floating interest rate of trading financial assets up or down 100 basis points with other variables unchanged,
the net profit and shareholders’ equity will be decreased or increased about RMB9,012,700.
Foreign exchange risk
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Lu Thai Textile Co., Ltd. Interim Report 2023
Foreign exchange risk is referred to the fluctuation risk of fair value of financial instruments or future cash flows resulted from the
change of foreign exchange rate. The foreign exchange rate was originated from the financial instruments denominated in foreign
currencies other than the recording currency.
On 30 June 2023, the amount of foreign currency financial assets and foreign currency financial liabilities converted to renminbi is
as follows (Unit: RMB’0,000):
Foreign currency liabilities Foreign currency assets
Item Amount at the End of This Amount at the Beginning of Amount at the End of This Amount at the Beginning of
Reporting Period This Reporting Period Reporting Period This Reporting Period
USD 26,186.27 16,573.86 84,058.28 105,905.57
EUR 14.41 108.42 1,113.78 2,061.26
JPY 4.03 30.43 85.54 29.81
HKD 0.00 0.00 395.09 234.03
GBP 0.00 0.00 0.05 0.05
CHF 0.00 0.00 0.50 0.10
SEK
Dong 9,219.30 4,068.90 2,249.92 5,883.56
MMK 11.96 20.55 228.29 72.24
Riel 0.00 0.00 17.69 21.74
Total 35,435.96 20,802.16 88,149.14 114,208.36
The Group has paid close attention the impact of exchange rate fluctuations on the Group’s exchange rate risk. As at the end of
each reporting period, for the Group's monetary capital, bills receivable, accounts receivable, accounts payable, short-term
borrowings and long-term borrowings denominated in foreign currencies, the impact on the Group's shareholders' equity and profit
assuming a 10% appreciation or depreciation of RMB against foreign currencies, while other factors remain unchanged, would be
as follows (Unit: RMB’0,000):
Current period Same period last year
Exchange rate fluctuations Impact on Impact on shareholders' Impact on Impact on shareholders'
profit equity profit equity
10% appreciation against
RMB -5,271.32 -5,271.32 -9,469.17 -9,469.17
10% depreciation against
RMB 5,271.32 5,271.32 9,469.17 9,469.17
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 30 June
2023, the asset-liability ratio was 28.99% of the Company (29.53% on 31 December 2022).
XI. Disclosure of Fair Value
1. Ending Fair Value of Assets and Liabilities at Fair Value
Unit: RMB
Item Closing fair value
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Lu Thai Textile Co., Ltd. Interim Report 2023
Fair value measurement Fair value measurement Fair value measurement
Total
items at level 1 items at level 2 items at level 3
I. Consistent fair value
-- -- -- --
measurement
(I) Trading financial assets 218,443,273.75 700,396,151.52 918,839,425.27
1. Financial assets at fair value
218,443,273.75 700,396,151.52 918,839,425.27
through profit or loss
(1) Investment in debt
218,443,273.75 682,827,295.06 901,270,568.81
instruments
(3)Derivative financial assets 17,568,856.46 17,568,856.46
(VI) Accounts receivable
24,096,385.95 24,096,385.95
financing
(VII) Other non-current
89,080,000.00 89,080,000.00
financial assets
The total amount of assets
consistently measured at fair 218,443,273.75 700,396,151.52 113,176,385.95 1,032,015,811.22
value
(VI) Trading financial
14,848,448.10 14,848,448.10
liabilities
Of which: Derivative financial
14,848,448.10 14,848,448.10
liabilities
The total amount of liabilities
consistently measured at fair 14,848,448.10 14,848,448.10
value
II. Inconsistent Fair Value
-- -- -- --
Measurement
2. Market Price Recognition Basis for Consistent and Inconsistent Fair Value Measurement Items at
Level 1
For equity of listed companies, the Company recognizes the fair value based on its market price on the publicly traded market.
3. 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 options, the Company determines their fair value based on bank forward foreign exchange quotations at the end of the
period.
4. 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
170
Lu Thai Textile Co., Ltd. Interim Report 2023
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.
5. 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. Remegen Co., Ltd. where the Company has share investment was listed and is tradable, therefore the fair
value measurement of this other non-current financial asset has been converted from level 2 to level 1.
6. 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
Registra Proportion of share held by the Proportion of voting rights
Registered
Name tion Nature of business company as the parent against owned by the company as the
capital
place the company (%) parent against the company (%)
Lucheng Textile, chemistry and RMB63,2
Zibo 16.25% 16.25%
Textile investment 60,000
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 parent
Purified Water")
Zibo Luqun Land Co., Ltd (hereinafter referred to as "Luqun Land") Wholly-owned subsidiary of the Company as the parent
Zibo Lurui Fine Chemical Co., Ltd. (hereinafter referred to as "Lurui
Wholly-owned subsidiary of the Company as the parent
Chemical")
171
Lu Thai Textile Co., Ltd. Interim Report 2023
Zibo Lujia Property Management Co., Ltd. (hereinafter referred to as
Wholly-owned subsidiary of the Company as the parent
"Lujia Property")
Hong Kong Tung Hoi International Company Limited (hereinafter
Wholly-owned subsidiary of the Company as the parent
referred to as "Tung Hoi International")
Zibo Chengshun Hosiery Co., Ltd. (hereinafter referred to as
Wholly-owned subsidiary of the Company as the parent
"Chengshun Hosiery")
Zibo Chengshun Economic and Trade Co., Ltd. (hereinafter referred
Wholly-owned subsidiary of the Company as the parent
to as "Chengshun Economic and Trade")
Chengshun Petrochemical (Zhejiang Zhoushan) Co., Ltd. (hereinafter
Wholly-owned subsidiary of the Company as the parent
referred to as "Chengshun Petrochemical")
Zibo Lucheng Petrochemical Sales Co., Ltd. (hereinafter referred to as
Wholly-owned subsidiary of the Company as the parent
"Lucheng Petrochemical")
Shanghai Hengjiu Textile New Materials Co., Ltd. (hereinafter
Wholly-owned subsidiary of the Company as the parent
referred to as "Hengjiu Textile")
Shandong Xirui New Material Co., Ltd. (hereinafter referred to as Wholly-owned subsidiary of the parent company's
"Xirui New Material") wholly-owned subsidiary
Zibo Lumei Economic and Trade Co., Ltd. (hereinafter referred to as
Wholly-owned subsidiary of the Company as the parent
"Lumei Economic and Trade")
Ningbo Xiran Investment Co., Ltd. (“Ningbo Xiran”) Wholly-owned subsidiary of the Company as the 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
The approval Same period of
Related party Content Reporting period exceed trade
trade credit last year
credit or not
Limin Purified Recycled water, sewage
13,016,170.41 19,400,000.00 Not 13,452,523.98
Water treatment
Lurui Fine
Auxiliaries 30,532,002.97 46,800,000.00 Not 51,716,798.45
Chemical
Tung Hoi
Auxiliaries 18,138,767.89 20,000,000.00 Not
International
Chengshun
Paper core, hosiery, hosiery,
Hosiery, Luqun 3,511,793.11 5,458,333.33 Not 4,473,602.71
electricity, etc.
Land
Chengshun
Supermarket retail 781,733.59 1,880,000.00 Not 3,939,234.06
Trading
Lucheng
Oils 1,997,076.22 2,000,000.00 Not 1,993,157.77
Petrochemical
Chengshun
Natural gas and oil products 25,248,021.93 39,375,000.00 Not 27,957,095.10
Petrochemical
Xirui New
Face masks Not 150,069.91
Materials
Information of sales of goods and provision of labor service
Unit: RMB
Same period of last
Related party Content Reporting period
year
Chengshun
Yarn, yarn-dyed fabric, etc. 211,763.04 519,500.49
Hosiery
Chengshun
Materials, electricity, running water, heating, steam 128,111.06 154,962.88
Hosiery
Chengshun Materials, electricity, tap water, yarn, garments, food,
61,083.89 50,822.62
Trading heating, steam
Lucheng
Electricity, materials 6,733.58 7,266.40
Petrochemical
172
Lu Thai Textile Co., Ltd. Interim Report 2023
Limin Purified Materials, electricity, garments, lunch components
2,764,696.42 2,647,392.88
Water services, food
Lurui Fine
Garments, fabrics, food 153,643.21 41,838.73
Chemical
Lujia Property Materials, garments 17,773.07 34,377.34
Xirui New
Catering and accommodation service 9,917.94
Materials
Xirui New
Materials, garments, etc. 54,623.19 44,576.98
Materials
Luqun Property Materials, garments 365,076.11
Lumei Economic
Garments 63.72
and Trade
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
Chengshun Hosiery Rent of houses and buildings 8,400.00
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 1,807,4 1,807,4 561,567 618,066
g
land 28.60 28.60 .29 .67
Textile
Luchen Rent of
116,571 116,571 53,613. 56,468.
g gas
.42 .42 54 65
Textile station
Luchen Rent of
5,511,1 5,511,1 962,595 1,144,3
g buildin
14.30 14.30 .71 74.63
Textile gs
Rent of
Luqun land
985,714 985,714 568,899 587,802
Propert and
.26 .26 .59 .00
y buildin
gs
173
Lu Thai Textile Co., Ltd. Interim Report 2023
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 412,650.99
Accounts payable Tung Hoi International 2,950,527.17 976,966.23
Contract liability Luqun Property 271,236.18 649,676.55
XIII. Stock Payment
1. The overall situation of share-based payments
Applicable □Not applicable
Unit: RMB
The total amount of equity instruments granted by the Company for the current period 0.00
The total amount of the Company's equity instruments exercised for the current period 9,898,500.00
The total amount of equity instruments of the Company losing efficacy for the current
0.00
period
The range of exercise prices of stock options issued and outstanding at the end of the
-
period of the Company and the remaining term of the contract
The range of exercise prices of other equity instruments issued at the end of the period of
-
the Company and the remaining term of the contract
2. Equity-settled share-based payments
Applicable □Not applicable
Unit: RMB
Methods for determining the fair value of equity instruments on the Difference between the market price of the stock and the
grant date grant price on the grant date
Optimal estimation of expected feasible right in the
Basis for determining the number of feasible right equity instruments
future
Reasons for the significant discrepancy between the current period
N/A
estimates and the previous estimates
Accumulated amount of equity-settled share-based payment included 79,311,785.83
174
Lu Thai Textile Co., Ltd. Interim Report 2023
in capital reserves
The total amount of the expense recognized for the current period
11,010,319.17
paid on equity-settled shares
3. Cash-settled share-based payments
□Applicable Not applicable
XIV. Commitments and Contingency
1. Significant Commitments
Significant commitments on balance sheet date
(1) Capital commitments
Commitments signed but hasn’t been recognized in
30 June 2023 31 December 2022
financial statements
Commitment on constructing and purchasing long-
30,305.38 50,131.58
lived assets (RMB’0,000)
2. Contingency
(1) Significant Contingency on Balance Sheet Date
As at 30 June 2023, there was no contingency such as pending lawsuits and external guarantees in the Company to disclose.
(2) Explanation shall be given even if there is no significant contingency for the Company to disclose
There was no significant contingency in the Company to disclose.
XV. Notes of Main Items in the Financial Statements of the Company as the Parent
1. Accounts Receivable
(1) Listed by Category
Unit: RMB
Ending balance Beginning balance
Carrying amount Bad debt provision Carrying amount Bad debt provision
Categor
y Withdra Carrying Withdra Carrying
Proporti wal value Proporti wal value
Amount Amount Amount Amount
on proporti on proporti
on on
Account
s 2,855,56 2,855,56 4,856,14 4,856,14
0.97% 100.00% 1.24% 100.00%
receivab 3.31 3.31 6.97 6.97
le
175
Lu Thai Textile Co., Ltd. Interim Report 2023
withdra
wal of
Bad debt
provisio
n
separatel
y
accrued
Of
which:
Account
s
receivab
le
withdra 290,930, 17,792,5 273,137, 386,947, 29,030,1 357,917,
99.03% 6.12% 98.76% 7.50%
wal of 481.12 19.12 962.00 247.21 96.50 050.71
bad debt
provisio
n of by
group
Of
which:
Undue
accounts
(credit 41,732,7 438,194. 41,294,5 45,947,6 482,450. 45,465,2
14.21% 1.05% 11.73% 1.05%
insuranc 83.74 24 89.50 51.98 35 01.63
e
insured)
Undue
accounts
(no 219,947, 10,997,3 208,950, 272,913, 13,645,6 259,267,
74.87% 5.00% 69.66% 5.00%
credit 547.38 77.38 170.00 162.58 58.14 504.44
insuranc
e)
Overdue
accounts
(credit 15,230,2 2,391,14 12,839,1 31,716,5 4,979,49 26,737,0
5.18% 15.70% 8.10% 15.70%
insuranc 53.18 9.75 03.43 29.93 5.20 34.73
e
insured)
Overdue
accounts
(no 14,019,8 3,965,79 10,054,0 36,369,9 9,922,59 26,447,3
4.77% 28.29% 9.28% 27.28%
credit 96.82 7.75 99.07 02.72 2.81 09.91
insuranc
e)
293,786, 20,648,0 273,137, 391,803, 33,886,3 357,917,
Total 100.00% 7.03% 100.00% 8.65%
044.43 82.43 962.00 394.18 43.47 050.71
Bad debt provision separately accrued: June 2023
Unit: RMB
Ending balance
Name
Carrying amount Bad debt provision Withdrawal proportion Reason for withdraw
Customer 1 2,807,080.87 2,807,080.87 100.00% Customer's application
176
Lu Thai Textile Co., Ltd. Interim Report 2023
for bankruptcy
protection
Customer in financial
Customer 2 48,482.44 48,482.44 100.00%
difficulty
Total 2,855,563.31 2,855,563.31
Bad debt provision separately accrued: Y2022
Unit: RMB
Ending balance
Name
Carrying amount Bad debt provision Withdrawal proportion Reason for withdraw
Customer's application
Customer 1 2,705,609.83 2,705,609.83 100.00% for bankruptcy
protection
Customer in financial
Customer 2 1,986,544.97 1,986,544.97 100.00%
difficulty
Customer in financial
Customer 3 90,959.35 90,959.35 100.00%
difficulty
Customer in financial
Customer 4 73,032.82 73,032.82 100.00%
difficulty
Total 4,856,146.97 4,856,146.97
Withdrawal of bad debt provision by group: June 2023
Unit: RMB
Ending balance
Name Withdrawal
Carrying amount Bad debt provision
proportion
Group 1: Undue accounts (credit insurance
41,732,783.74 438,194.24 1.05%
insured)
Group 2: Undue accounts (no credit insurance) 219,947,547.38 10,997,377.38 5.00%
Group 3: Overdue accounts (credit insurance
15,230,253.18 2,391,149.75 15.70%
insured)
Group 4: Overdue accounts (no credit insurance) 14,019,896.82 3,965,797.75 28.29%
Total 290,930,481.12 17,792,519.12
Notes:
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
45,947,651.98 482,450.35 1.05%
insured)
Group 2: Undue accounts (no credit insurance) 272,913,162.58 13,645,658.14 5.00%
Group 3: Overdue accounts (credit insurance
31,716,529.93 4,979,495.20 15.70%
insured)
Group 4: Overdue accounts (no credit
36,369,902.72 9,922,592.81 27.28%
insurance)
Total 386,947,247.21 29,030,196.50
177
Lu Thai Textile Co., Ltd. Interim Report 2023
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 Ending balance
Within 1 year (including 1 year) 287,831,138.50
1 to 2 years 2,247,298.88
2 to 3 years 31,034.12
Over 3 years 3,676,572.93
3 to 4 years 2,800,273.41
4 to 5 years 566,100.60
Over 5 years 310,198.92
Total 293,786,044.43
(2) Bad Debt Provision Withdrawal, Reversed or Recovered in the Reporting Period
Withdrawal of bad debt provision:
Unit: RMB
Changes in the Reporting Period
Category Beginning balance Reversed or Ending balance
Withdrawal Verification Others
recovered
Bad debt
33,886,343.47 -13,238,163.27 97.77 20,648,082.43
provision
Total 33,886,343.47 -13,238,163.27 97.77 20,648,082.43
(3) Accounts Receivable Written-off in Current Period
Unit: RMB
Item Written-off amount
Written-off accounts receivable 97.77
(4) Top 5 of the Ending Balance of the Accounts Receivable Collected according to Arrears Party
Unit: RMB
Proportion to total ending
Ending balance of bad debt
Name of the entity Ending balance balance of accounts
provision
receivable
Aggregate amount of top 5 of
accounts receivable of ending 103,294,017.09 35.16% 4,897,094.60
balance collected by arrears
178
Lu Thai Textile Co., Ltd. Interim Report 2023
party
Total 103,294,017.09 35.16%
2. Other Receivables
Unit: RMB
Item Ending balance Beginning balance
Dividend receivable 185,745,705.03 18,563,298.39
Other receivables 2,083,708,895.83 1,964,032,236.60
Total 2,269,454,600.86 1,982,595,534.99
(1) Dividend Receivable
1) Dividend Receivable Classification
Unit: RMB
Project (or investee) Ending balance Beginning balance
Fengshou Cotton 19,540,314.10 19,540,314.10
ZJ Texitle 175,981,480.67
Less: bad debt provision -9,776,089.74 -977,015.71
Total 185,745,705.03 18,563,298.39
2) Withdrawal of Bad Debt Provision
Applicable □Not applicable
Unit: RMB
First stage Second stage Third stage
Bad debt provision Expected loss in the Expected loss in the Total
Expected credit loss in
duration (credit duration (credit impairment
the next 12 months
impairment not occurred) occurred)
Balance of 1 January
977,015.71 977,015.71
2023
Balance of 1 January
2023 in the Current
Period
Withdrawal of the
8,799,074.03 8,799,074.03
Current Period
Balance of 30 June
9,776,089.74 9,776,089.74
2023
Changes of carrying amount with significant amount changed of loss provision in the Current Period
□Applicable Not applicable
179
Lu Thai Textile Co., Ltd. Interim Report 2023
(2)Other Receivables
1) Other receivables classified by category
Unit: RMB
Nature Ending carrying amount Beginning carrying amount
Intercourse funds 2,078,500,343.98 1,914,694,616.18
Export rebates 9,934,992.64
Payment on behalf 6,805,978.11 9,769,724.73
Guarantee deposit and cash deposit 2,829,693.46 3,278,418.46
Borrowings and petty cash 1,368,737.16 968,504.94
Other 2,153,164.28 35,155,692.70
Total 2,091,657,916.99 1,973,801,949.65
2) Withdrawal of bad debt provision
Unit: RMB
First stage Second stage Third stage
Bad debt provision Expected credit loss Expected loss in the Expected loss in the Total
of the next 12 duration (credit duration (credit
months impairment not occurred) impairment occurred)
Balance of 1 January
8,577,358.06 1,192,354.99 9,769,713.05
2023
Balance of 1 January
2023 in the Current
Period
Withdrawal of the
-1,804,402.91 -16,288.98 -1,820,691.89
Current Period
Balance of 30 June 2023 6,772,955.15 1,176,066.01 7,949,021.16
Changes of carrying amount with significant amount changed of loss provision in the current period
□Applicable Not applicable
Disclosure by aging
Unit: RMB
Aging Ending balance
Within 1 year (including 1 year) 1,856,188,216.78
1 to 2 years 151,060,529.29
2 to 3 years 81,093,588.73
Over 3 years 3,315,582.19
3 to 4 years 761,360.00
4 to 5 years 76,463.18
180
Lu Thai Textile Co., Ltd. Interim Report 2023
Over 5 years 2,477,759.01
Total 2,091,657,916.99
3) Top 5 of the Ending Balance of the Other Receivables Collected according to the Arrears Party
Unit: RMB
Proportion to ending Ending balance
Name of
Nature Ending balance Aging balance of total other of bad debt
entity
receivables provision
Intercourse
Customer 1 630,682,888.49 Within 1 year 30.15% 1,892,048.67
funds
Intercourse Within 1 year, 1 to 2 years
Customer 2 606,370,330.06 28.99% 1,819,110.99
funds and 2 to 3 years
Intercourse
Customer 3 524,383,925.26 Within 1 year 25.07% 1,573,151.78
funds
Intercourse
Customer 4 208,420,388.97 Within 1 year 9.96% 625,261.17
funds
Intercourse
Customer 5 91,535,922.02 Within 1 year 4.38% 274,607.77
funds
Total 2,061,393,454.80 98.55% 6,184,180.38
3. Long-term Equity Investment
Unit: RMB
Ending balance Beginning balance
Depre Depre
Item ciation ciation
Carrying amount Carrying value Carrying amount Carrying value
reserv reserv
es es
Investment to
3,107,135,666.50 3,107,135,666.50 2,885,254,556.40 2,885,254,556.40
subsidiaries
Investment to
joint ventures
182,835,476.83 182,835,476.83 184,168,625.69 184,168,625.69
and associated
enterprises
Total 3,289,971,143.33 3,289,971,143.33 3,069,423,182.09 3,069,423,182.09
(1) Investment to subsidiaries
Unit: RMB
Increase/decrease
Ending
Withdr balance
Beginning balance awal of Ending balance of
Investee
(carrying value) Additional Reduced impair Oth (carrying value) deprecia
investment investment ment er tion
provisi reserve
on
Xinsheng Power 176,340,737.93 176,340,737.93
Lufeng Company
529,620,000.00 529,620,000.00
Limited
Luqun Textile 171,784,550.00 171,784,550.00
181
Lu Thai Textile Co., Ltd. Interim Report 2023
Luthai (Hong Kong) 128,771,800.00 128,771,800.00
Shanghai Luthai 20,000,000.00 20,000,000.00
Lu Thai (America) 10,209,050.00 10,209,050.00
VACL 62,337,238.57 62,337,238.57
ZJ Textile 409,118,889.90 409,118,889.90 0.00
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 Zhinuo 5,000.00 5,000.00
Zhishu Consulting 2,000,000.00 2,000,000.00
Huilin International 859,967,290.00 431,000,000.00 1,290,967,290.00
Banyang Mountain
5,000,000.00 5,000,000.00
Villa
Yuanhui Fund 200,000,000.00 200,000,000.00 400,000,000.00
Total 2,885,254,556.40 631,000,000.00 409,118,889.90 3,107,135,666.50
(2) Investment to joint ventures and associated enterprises
Unit: RMB
Increase/decrease
Gains
Ending
Beginni and Cash
Adjust Withdr Ending balance
ng losses bonus
Additio Reduce ment of Change awal of balance of
Investee balance recogni or
nal d other s of impair (carrying depreci
(carryin zed profits Other
investm investm compre other ment value) ation
g value) under announ
ent ent hensive equity provisi reserve
the ced to
income on
equity issue
method
I. Joint ventures
II. Associated enterprises
-
Haohong 60,547, 60,196,480
0.00 0.00 351,268 0.00
Investment 749.28 .79
.49
-
Haoying 123,620 122,638,99
0.00 0.00 981,880 0.00
Investment ,876.41 6.04
.37
-
184,168 182,835,47
Subtotal 0.00 1,333,1 0.00
,625.69 6.83
48.86
-
184,168 182,835,47
Total 0.00 1,333,1 0.00
,625.69 6.83
48.86
182
Lu Thai Textile Co., Ltd. Interim Report 2023
4. Operating Revenue and Cost of Sales
Unit: RMB
Amount of the current period Amount of the previous period
Item
Revenue Cost Revenue Cost
Principal business 1,487,391,745.52 1,187,994,259.75 1,923,502,455.26 1,403,671,534.86
Others 122,518,076.91 89,037,564.87 173,226,541.52 151,163,312.87
Total 1,609,909,822.43 1,277,031,824.62 2,096,728,996.78 1,554,834,847.73
Information about performance obligations: None
Information in relation to the transaction price apportioned to the residual contract performance obligation:
As at the end of the Reporting Period, the revenue amount corresponding to the contract performance obligation yet to be fulfilled
or yet to be completed under a signed contract is RMB 0.00, including RMB 0.00 expected to be recognized as revenue in the year,
RMB 0.00 expected to be recognized as revenue in the year, and RMB 0.00 expected to be recognized as revenue in the year.
5. Investment Income
Unit: RMB
Item Amount of the current period Amount of the previous period
Long-term equity investment income
167,571,836.72 219,600,542.74
accounted by cost method
Long-term equity investment income
-1,333,148.86 -1,076,939.49
accounted by equity method
Investment income from disposal of
22,374,515.10
long-term equity investment
Investment income from disposal of
31,150,766.58 1,682,000.00
trading financial assets
Total 219,763,969.54 220,205,603.25
XVI. Supplementary Materials
1. Items and Amounts of Non-recurring Profit or Loss
Applicable □Not applicable
Unit: RMB
Item Amount Note
Gains/losses from the disposal of non-current assets (inclusive of
-86,455.19
impairment allowance write-offs)
Government grants recorded in the current profit or loss (except for those
acquired in the ordinary course of company's business, in line with
27,808,339.07
national 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
5,660,105.05
and liabilities as well as financial assets available for sale, other than
valid hedging related to the Company’s common businesses
183
Lu Thai Textile Co., Ltd. Interim Report 2023
Reversal of provision for impairment of receivables separately tested for
2,281,937.13
impairment
Other non-operating income and expense other than the above 1,448,586.39
Less: Income tax effects 6,932,483.87
Non-controlling interests effects 341,892.37
Total 29,838,136.21 --
Details of other profit and loss items in line with the definition of non-recurring gains and losses:
□Applicable Not applicable
There are no other profit and loss items in line with the definition of non-recurring gains and losses in the Company.
Note to 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 EPS
Profit as of Reporting Period average
ROE (%) EPS-basic EPS-diluted
Net profit attributable to ordinary shareholders of the
2.42% 0.26 0.23
Company
Net profit attributable to ordinary shareholders of the
2.10% 0.22 0.21
Company after deduction of non-recurring profit or loss
Chairman of the Board: Liu Zibin
Lu Thai Textile Co., Ltd.
19 August 2023
184
