Lu Thai Textile Co. Ltd. Annual Report 2022

LU THAI TEXTILE CO. LTD.ANNUAL REPORT 2022

April 2023

1Lu Thai Textile Co. Ltd. Annual Report 2022

ANNUAL REPORT 2022

Part I Important Notes Table of Contents and Definitions

The Board of Directors (or the “Board”) the Supervisory Committee as well as the directors

supervisors and senior management of Lu Thai Textile Co. Ltd. (hereinafter referred to as the

“Company”) hereby guarantee the factuality accuracy and completeness of the contents of

this Report and its summary and shall be jointly and severally liable for any

misrepresentations misleading statements or material omissions therein.Liu Zibin the Company’s legal representative and Zhang Keming head of accounting affairs

and head of the accounting department (equivalent to accounting manager) hereby guarantee

that the Financial Statements carried in this Report are factual accurate and complete.All the Company’s directors have attended the Board meeting for the review of this Report

and its summary.The Company has described in detail in this Report the possible risks. Please refer to the

contents about the major risks and countermeasures in “Prospects” in “Part III ManagementDiscussion and Analysis” of this Report. Securities Times Shanghai Securities News China

Securities Journal Ta Kung Pao (HK) and www.cninfo.com.cn have been designated by the

Company for its information disclosure in 2023. And all information about the Company shall

be subject to what’s disclosed by the Company on the aforesaid media. Investors are kindly

reminded to exercise caution when making investment decisions.The Company is subject to the disclosure requirements for listed companies engaging in

textile and apparel as stated in Guideline No. 3 of the Shenzhen Stock Exchange for Self-

regulation of Listed Companies—Industry-specific Information Disclosure.In 2022 the Russo-Ukrainian conflict the intensified inflation in Europe and the US and

other severe and complex international situations led to a slowdown in global economic

growth as the declines in demand resulted in increased downward pressure. Likewise the

growth rate of the textile industry also showed a quarter-by-quarter decelerating trend. In the

face of the complex and changeable political and economic status of the world the domestic

textile industry has overcome a variety of risks and shocks as most of the operating indexes

have only dropped slightly year-on-year and the total export volume hits a record high. From

the global perspective the impact of inflation geopolitical conflicts trade frictions and other

factors that resulted in the global economic downturn has not diminished. There are still

many uncertainties in the international environment and domestic and foreign markets. As

the downward trend of the global economy may persist the export trade regarding the

domestic textile industry is under great pressure. However the domestic levels of processing

manufacturing and equipment in fibres and raw materials spinning and weaving and

clothing and home textiles are mostly internationally advanced. In the context of the

upgrading of domestic demand textile and clothing enterprises with core competitiveness are

equipped with relatively good development resilience and anti-risk capacity. In the future the

integration between the textile industry and new fields will be accelerated and more

2Lu Thai Textile Co. Ltd. Annual Report 2022

opportunities for low-carbon and green development will appear. For details please refer to Part

III Management Discussion and Analysis.The Board has approved a final dividend plan as follows: based on 887633151 shares a cash

dividend of RMB1 (tax inclusive) per 10 shares is to be distributed to the shareholders with

no bonus issue from either profit or capital reserves.This Report and its summary have been prepared in both Chinese and English. Should there

be any discrepancies or misunderstandings between the two versions the Chinese versions

shall prevail.

3Lu Thai Textile Co. Ltd. Annual Report 2022

Table of Contents

Part I Important Notes Table of Contents and Defin... 2

Part II Corporate Information and Key Financial In... 7

Part III Management Discussion and Analysis ........ 11

Part IV Corporate Governance ....................... 37

Part V Environmental and Social Responsibility ..... 62

Part VI Significant Events ......................... 66

Part VII Share Changes and Shareholder Information.. 76

Part VIII Preferred Shares ......................... 88

Part IX Bonds ...................................... 89

Part X Financial Statements ........................ 93

4Lu Thai Textile Co. Ltd. Annual Report 2022

Documents Available for Reference

1. The financial statements signed and stamped by the Company’s legal representative Chief Accountant and

Financial Manager;

2. The original Independent Auditor’s Report stamped by the CPA firm as well as signed and stamped by the

relevant certified public accountants; and

3. The originals of all the Company’s announcements and documents disclosed to the public during the Reporting

Period on Securities Times Shanghai Securities News China Securities Journal and Ta Kung Pao.

5Lu Thai Textile Co. Ltd. Annual Report 2022

Definitions

Term Definition

Lu Thai Textile Co. Ltd. and its consolidated subsidiaries except where the

The “Company” “LTTC” “Issuer” or “we”

context otherwise requires

The Board of Directors The Board of Directors of Lu Thai Textile Co. Ltd.The Supervisory Committee The Supervisory Committee of Lu Thai Textile Co. Ltd.CSRC The China Securities Regulatory Commission

Expressed in the Chinese currency of Renminbi expressed in ten thousand

RMB RMB’0000

Renminbi

The “Company Law” The “Company Law of the People‘s Republic of China”

The “Securities Law” The “Securities Law of the People‘s Republic of China”

The “Reporting Period” or “Current Period” The period from 1 January 2022 to 31 December 2022

6Lu Thai Textile Co. Ltd. Annual Report 2022

Part II Corporate Information and Key Financial Information

I Corporate Information

Stock name LTTC LTTC-B Stock code 000726 200726

Previous stock name (if any) N/A

Stock exchange for stock

Shenzhen Stock Exchange

listing

Company name in Chinese 鲁泰纺织股份有限公司

Abbr. 鲁泰纺织

Company name in English (if

LU THAI TEXTILE CO.，LTDany)

Abbr. (if any) LTTC

Legal representative Liu Zibin

Registered address 61 Luthai Boulevard High-tech Development Zone Zibo City Shandong Province P.R.China

Zip code 255086

Past changes of registered

11 Mingbo Road Zibo High-tech Development Zone Shandong Province

address

Office address 81 Songling East Road Zichuan District Zibo City Shandong Province P.R.China

Zip code 255100

Company website www.lttc.com.cn

Email address lttc@lttc.com.cn

II Contact Information

Board Secretary Securities Representative

Name Zhang Keming Zheng Weiyin and Li Kun

81 Songling East Road Zichuan District 81 Songling East Road Zichuan District

Address

Zibo City Shandong Province P.R.China Zibo City Shandong Province P.R.China

Tel. 0533-5277008 0533-5285166

Fax 0533-5418805 0533-5418805

Email address zhangkeming@lttc.com.cn wyzheng@lttc.com.cn，likun@lttc.com.cnIII Media for Information Disclosure and Place where this Report Is Lodged

Securities Times Shanghai Securities News China Securities Journal and

Stock exchange website where this Report is disclosed

Ta Kung Pao (HK)

Media and website where this Report is disclosed www.cninfo.com.cn

Place where this Report is lodged The Securities Department of the Company

IV Change to Company Registered Information

Unified social credit code 91370300613281175K

Change to principal activity of the Company

No change

since going public (if any)

Every change of controlling shareholder since No change

7Lu Thai Textile Co. Ltd. Annual Report 2022

incorporation (if any)

V Other Information

The independent audit firm hired by the Company:

Name Grant Thornton China

Office address 5th Floor Scitech Palace 22 Jianguomen Wai Avenue Chaoyang District Beijing

Accountants writing signatures He Feng and Cui Xiaoli

The independent sponsor hired by the Company to exercise constant supervision over the Company in the Reporting Period:

□ Applicable □ Not applicable

The independent financial advisor hired by the Company to exercise constant supervision over the Company in the Reporting

Period:

□ Applicable □ Not applicable

VI Key Financial Information

Indicate by tick mark whether there is any retrospectively restated datum in the table below.□ Yes □ No

2022-over-2021

202220212020

change (%)

Operating revenue (RMB) 6938342135.90 5238262348.85 32.46% 4751222464.14

Net profit attributable to the

listed company’s shareholders 963864819.43 347609693.30 177.28% 97308593.36

(RMB)

Net profit attributable to the

listed company’s shareholders

795473953.21190492580.40317.59%20039094.03

before exceptional gains and

losses (RMB)

Net cash generated from/used in

1422310774.26348137005.48308.55%593535922.89

operating activities (RMB)

Basic earnings per share

1.100.39182.05%0.11

(RMB/share)

Diluted earnings per share

0.950.36163.89%0.11

(RMB/share)

Weighted average return on

11.31%4.44%6.87%0.01%

equity (%)

Change of 31

December 2022 over

31 December 2022 31 December 2021 31 December 2020

31 December 2021

(%)

Total assets (RMB) 13351097602.03 12987221271.63 2.80% 12129903960.65

Equity attributable to the listed

9014156872.717983307400.0312.91%7687577590.72

company’s shareholders (RMB)

Indicate by tick mark whether the lower of the net profit attributable to the listed company’s shareholders before and after

exceptional gains and losses was negative for the last three accounting years and the latest independent auditor’s report indicated

that there was uncertainty about the Company’s ability to continue as a going concern.□ Yes □ No

8Lu Thai Textile Co. Ltd. Annual Report 2022

Indicate by tick mark whether the lower of the net profit attributable to the listed company’s shareholders before and after

exceptional gains and losses was negative.□ Yes □ No

VII Accounting Data Differences under China’s Accounting Standards for Business

Enterprises (CAS) and International Financial Reporting Standards (IFRS) and Foreign

Accounting Standards

1. Net Profit and Equity under CAS and IFRS

□ Applicable □ Not applicable

No difference for the Reporting Period.

2. Net Profit and Equity under CAS and Foreign Accounting Standards

□ Applicable □ Not applicable

No difference for the Reporting Period.VIII Key Financial Information by Quarter

Unit: RMB

Q1 Q2 Q3 Q4

Operating revenue 1580088801.60 1750205661.65 1876128426.25 1731919246.40

Net profit attributable to the

159375310.19234575542.27302015616.54267898350.43

listed company’s shareholders

Net profit attributable to the

listed company’s shareholders

137429342.24228149887.40322056642.38107838081.19

before exceptional gains and

losses

Net cash generated from/used in

-15953827.96133436236.70611606413.58693221951.94

operating activities

Indicate by tick mark whether any of the quarterly financial data in the table above or their summations differs materially from

what have been disclosed in the Company’s quarterly or interim reports.□ Yes □ No

IX Exceptional Gains and Losses

□ Applicable □ Not applicable

Unit: RMB

Item 2022 2021 2020 Note

Gain or loss on disposal of non-current assets

-228367.4450868019.96-3265763.83

(inclusive of impairment allowance write-offs)

Government subsidies charged to current profit or

loss (exclusive of government subsidies

50298092.2058686874.9061358132.11

consistently given in the Company’s ordinary

course of business at fixed quotas or amounts as

9Lu Thai Textile Co. Ltd. Annual Report 2022

per governmental policies or standards)

Gain or loss on fair-value changes in held-for-

trading financial assets and liabilities & income

from disposal of held-for-trading financial assets

and liabilities and available-for-sale financial 154877757.70 77620424.02 46684051.43

assets (exclusive of the effective portion of hedges

that arise in the Company’s ordinary course of

business)

Reversed portions of impairment allowances for

receivables which are tested individually for 6198745.44

impairment

Non-operating income and expense other than the

-1810393.39-1700653.342373569.56

above

Less: Income tax effects 33015346.77 28885946.87 24345018.31

Non-controlling interests effects (net of tax) 1730876.08 5670351.21 5535471.63

Total 168390866.22 157117112.90 77269499.33 --

Particulars about other items that meet the definition of exceptional gain/loss:

□ Applicable □ Not applicable

No such cases for the Reporting Period.Explanation of why the Company reclassifies as recurrent an exceptional gain/loss item listed in the Explanatory Announcement

No. 1 on Information Disclosure for Companies Offering Their Securities to the Public—Exceptional Gain/Loss Items:

□ Applicable □ Not applicable

No such cases for the Reporting Period.

10Lu Thai Textile Co. Ltd. Annual Report 2022

Part III Management Discussion and Analysis

I Industry Overview for the Reporting Period

The Company is subject to the disclosure requirements for listed companies engaging in textile and apparel as stated in Guideline

No. 3 of the Shenzhen Stock Exchange for Self-regulation of Listed Companies—Industry-specific Information Disclosure.In 2022 the textile industry saw a supply-demand environment of “high cost and weak demand” which resulted in the continuous

increase in the pressure on sales and profitability. According to the data released by the National Bureau of Statistics the operating

revenue and the total profit of domestic textile enterprises above the designated size decreased by 0.9% and 24.8% in 2022

respectively. In terms of export markets the total export volume of the domestic textiles and apparel hit a record high which

exceeded USD300 billion for the third consecutive year and the increase in export prices played an important role. According to

the data released by the China National Textile and Apparel Council the total export volume of the domestic textiles and apparel

reached USD340.95 billion in 2022 representing a year-on-year increase of 2.5%. But the lack of demand is still imposing

pressure on the textile and garment industry. Domestically the impact of the slowdown in residents’ income growth the slow

recovery of consumption scenarios and other factors resulted in the continuous increase in the pressure on domestic sales of the

textile industry. In 2022 the retail sales of clothing shoes and hats and knitwear and textiles decreased by 6.5% year-on-year and

the growth rates remained to be negative from March on. Meanwhile although the online retail sales of apparel only increased by

3.5% year-on-year representing a growth rate that was 4.8 percentage points less than that in 2021 the consumption of apparel

and accessories related to sports and outdoor supplies as well as health and wellness still has good resilience in growth.Internationally due to the impact of various factors such as the Profound Changes Unseen in a Century the volatile geopolitical

situation and the rising risk in the global economic downturn pressures from the shrinking demand the supply shock and the

weakening expectations continued to evolve. Meanwhile the complexity severity and uncertainty of the development environment

for the textile industry significantly increased. However China still has a remarkable advantage in the efficient and stable

operation of the integral industry chain and supply chain of the textile industry which lays a solid foundation for the textile

industry to integrate into the national economic cycle and effectively handle external risks and challenges.II Principal Activity of the Company in the Reporting Period

The Company is subject to the disclosure requirements for listed companies engaging in textile and apparel as stated in Guideline

No. 3 of the Shenzhen Stock Exchange for Self-regulation of Listed Companies—Industry-specific Information Disclosure.Since 2022 the evolving world pattern and the global economic downturn have brought multiple challenges to the international

trade environment. Meanwhile enterprises also have faced various challenges such as the downturn in the overall consumer

market international trade barriers Sino-US trade frictions and large fluctuations in commodity prices. In the face of these

challenges the Company adhered to the “customer-focused” philosophy and continued to promote the strategies of “ImproveQuality and Efficiency” and “Overall Internationalization”. Meanwhile the Company ensures an orderly advance in management

and operation through expanding market adjusting structure and building capabilities. Moreover by taking advantage of its own

international supply chain system and international industry layout the Company could provide quality products and services for

domestic and foreign customers. During the Reporting Period the Company saw gradual recovery of product orders and rapid

recovery of business performance.For the Reporting Period the Company achieved operating revenue of RMB6938 million operating profit of RMB1082 million a

net profit attributable to the Company as the parent of RMB964 million and a net profit attributable to the Company as the parent

before exceptional gains and losses of RMB795 million respectively up 32.46% 191.48% 177.28% and 317.59% when compared

to last year. No changes occurred to the Company’s principal operations primary products business models or the primary factors

11Lu Thai Textile Co. Ltd. Annual Report 2022

driving the Company’s growth in the Reporting Period.During the Reporting Period the Company was rated as a “AAA Enterprise in Corporate Credit Rating” by China Enterprise

Confederation and China Entrepreneur Association. Moreover it was selected as “Competitive Chinese Textile and Apparel Brand”

and “Pioneer in the Chinese Textile and Apparel Industry of Innovative Climate Actions for 2022” by China National Textile and

Apparel Council. The Company has prioritized the following aspects:

(I) Scientifically implement strategic arrangements to effectively handle development challenges

The Company unremittingly adopts the development direction of becoming a global apparel solution provider with cutting-edge

fabrics at its core. By adhering to the “customer-focused” philosophy the Company not only solved the “last kilometer” problem in

customer services but also provided products and services for customers more precisely by enhancing the coordination between

internal processes. Moreover the Company continued to uphold the spirit of diligence and enhance the cohesion and combat

effectiveness of employees so that all members of the Company could unite to deal with difficulties and challenges. Meanwhile the

Company has successfully completed various operation tasks such as project implementation and the maintenance of the stable

operation of overseas production bases new product development and new market expansion as well as the reinforcement of

production capacity and the stabilization of the employee pool.(II) Enhance customer relations in an all-around way and accelerate the integration into the circulating development

During the Reporting Period the Company accelerated the formation of the development pattern of “dual circulation”. On the one

hand the Company continued to expand the size of its overseas production bases and systematically implement its overseasconstruction projects as scheduled with the focus on meeting customer needs and market demand in accordance with the “Belt andRoad” Initiative. On the other hand the Company enhanced cooperation with high-quality domestic customers to expand its market

share. As a result the Company has signed a strategic cooperation agreement with Heilan Group. Furthermore it has reached

cooperation with JDmade regarding production with the focus on reaching more high-quality customers of female apparel. The

Company also made continued efforts to enrich product categories and accelerated the marketing of knitwear and functional fabrics.Meanwhile with business apparel for industries such as communication construction aviation and finance as the starting point the

Company adapted to the new trends of consumption by leading consumption upgrading in the mass market through new fashion new

media new retail and other new methods. In doing so the Company tried to elaborate its “core products” and stabilize its leading

position so as to enhance the integrated development of domestic and international trade in a phased manner with certain highlights.(III) Continue to enhance innovation capability to consolidate and expand competitive advantages

During the Reporting Period in order to meet the personalized and diversified needs of customers in the new situation the Company

enhanced its innovation capability with the focus on several aspects such as technological research and product development. By

accelerating the R&D of green products the Company made concerted efforts in energy conservation and carbon reduction in

production and operation. Relying on green production and processing the Company launched a host of new sustainable products

such as EcoF!t the water-proof bio-based products and CELYS. In doing so the Company aimed to guide the demand in consumer

markets and the trend of industry development based on the new trends of “double carbon”. In 2022 a total of 65 patents were

granted to the Company including 21 invention patents. Moreover the two technical achievements of the Company wereauthenticated including one at the world-leading level and one at the internationally advanced level. The Company’s “keytechnology and industrialization of the processing of high-conformity fabric for knitted shirts” project and “key technology andindustrialization of the fluorine-free easy to decontaminate ironing-free super whitening multi-functional finishing of cottonknitwear” won the Second China National Textile and Apparel Council’s Science and Technology Progress Awards for 2022.Meanwhile the Company’s product “comfortable long-lasting cool and anti-wrinkle shirt” was rated as an Innovative Product of the

Ten Major Textile Categories in 2022.The Company also made active efforts to explore digital transformation with the goal of activating the development vitality of the

traditional industry and continuously promoting the digital research of the trends of textiles and fabrics and the intelligent

applications of colour management. Additionally Lufeng Company one of its holding subsidiaries made active efforts in the

exploration of AI (intelligent) design. Through the company’s cooperation with China Textile Information Center in the development

12Lu Thai Textile Co. Ltd. Annual Report 2022

of an AI-based fashion pattern design platform the product “AI pattern design-based print shirt” launched by the company was rated

as an Innovative Product of the Ten Major Textile Categories in 2022.(IV) Actively play the leading role in the industry chain to improve the quality and efficiency of operation and development

The Company was not only recognized as a leading enterprise in the textile and apparel industrial chains at the provincial municipal

and other levels but also included in the list of leading enterprises in the Top 10 industrial clusters in Shandong Province. By actively

playing the leading role in the industry chain the Company established the province-wide platform for coordination and exchange

activities regarding the integration and consolidation of industrial chains to seek win-win development. The Company also reached

material cooperation in multiple national and provincial key technological projects as well as equipment materials and markets with

a series of universities and enterprises such as Qingdao University Sateri and HeiQ.In 2022 in terms of operating revenue Lu Thai ranked among the top in the domestic yarn-dyed fabric industry top 100 in the

domestic cotton textile industry top 30 in the domestic dyeing and printing industry and top 100 in the domestic apparel industry.While it was included in the list of Top 50 Business Apparel Enterprises in China the Lu Thai Textile and Apparel Creative Design

Platform was also included in the Ministry of Industry and Information Technology’s list of the second group of demonstration textile

and apparel creative design platforms. With these achievements the Company maintains its leading position regarding the R&D of

mid-to-high-end fabrics and continues to consolidate the foundations for its development.III Core Competitiveness Analysis

1. The Company has a comprehensive vertical industrial chain and internationalized layout. It possesses the whole industrial chain

integrating spinning bleaching and dyeing neatening testing and garment making as well as excellent quality control capabilities

through various links of the production of high-end yarn-dyed fabrics. In order to leverage international resources give play to the

advantage of internationalized industrial distribution and reinforce the leading international status in manufacturing the yarn-dyed

fabrics for shirts the Company has built various production bases in Cambodia Burma and Vietnam etc. and established the design

agency in Italy and the market service offices in the U.S. and Japan.

2. The Company has better integrated management capability and high-level management system architecture. Since 1995 the

Company has successively passed the certification of ISO9001 quality management system ISO14001 environmental management

system ISO45001 Occupation Health Safety Management System SA8000 Social Responsibility Management System The

Worldwide Responsible Apparel Production Standard (WRAP) Sustainable Textile Production (STeP) Global Organic Textile

Standard (GOTS) Global Recycle Standard (GRS) Higg (FEM and FSLM) and China National Accreditation Service for

Conformity Assessment (CNAS) and realized the internationalization standardization and normalization of the corporate

management. In order to make outstanding achievement in its operating management better improve the Company’s business

performance and capabilities the Company has introduced the GB/T19580 Criteria for Performance Excellence step by step set up

the “big quality” system promoted the management innovation and guaranteed the management quality.

3. The Company establishes its high-level technical cooperation platform by virtue of strong R&D capability. In fact the Company

always insists on the independent innovation enhances its technical cooperation with various research institutes colleges and

universities strategic clients and important suppliers by relying on various technical platforms including the national enterprise

technical center the national industrial design center the national demonstration base for introducing talents the national post-

doctoral scientific research station and Shandong Provincial Engineering Technology Research Center dedicates itself to the cutting-

edge technical research and gradually transforms from technology research to integrated product development. Besides the

Company will also transform from the overcoming of key technical difficulties to the mastery of technical principles and the

formulation of industrial standards and from the focus on technical innovation to the dynamic integration of new technique

exploration with model innovation materialize the low-carbon green and sustainable development.

13Lu Thai Textile Co. Ltd. Annual Report 2022

IV Core Business Analysis

1. Overview

For the Reporting Period the Company recorded operating revenue of RMB6938 million (a 32.46% year-on-year increase); cost of

sales of RMB5154 million (a 24.11% year-on-year increase) selling expense of RMB137 million (a 14.22% year-on-year increase)

and administrative expense of RMB396 million (a 18.17% year-on-year increase); research and development expense of RMB276

million (a 9.3% year-on-year increase); and net cash generated from operating activities of RMB1422 million (a 308.55% year-on-

year increase).

2. Revenue and Cost Analysis

(1) Breakdown of Operating Revenue

Unit: RMB

20222021

As % of total As % of total Change (%)

Operating revenue operating revenue Operating revenue operating revenue

(%)(%)

Total 6938342135.90 100% 5238262348.85 100% 32.46%

By operating division

Textile and apparel 6500959077.16 93.70% 4921443076.68 93.95% 32.09%

Electricity and

219789458.763.16%182929779.753.49%20.15%

steam

Others 217593599.98 3.14% 133889492.42 2.56% 62.52%

By product category

Fabric products 5141344925.82 74.10% 4033321318.13 77.00% 27.47%

Shirts 1359614151.34 19.60% 888121758.55 16.95% 53.09%

Electricity and

219789458.763.16%182929779.753.49%20.15%

steam

Others 217593599.98 3.14% 133889492.42 2.56% 62.52%

By operating segment

Hong Kong 245673888.89 3.54% 166071385.74 3.17% 47.93%

Japan And South

334445869.704.82%254482374.294.86%31.42%

Korea

Southeast Asia 2356718298.83 33.96% 1523121466.68 29.08% 54.73%

Europe and

1199472122.9717.29%560579079.3010.70%113.97%

America

Others 484134513.74 6.98% 306457017.82 5.85% 57.98%

Mainland China 2317897441.77 33.41% 2427551025.02 46.34% -4.52%

By sales model

Direct sales 6938342135.90 100.00% 5238262348.85 100.00% 32.46%

(2) Operating Division Product Category Operating Segment or Sales Model Contributing over 10% of

Operating Revenue or Operating Profit

□ Applicable □ Not applicable

(3) Whether Revenue from Physical Sales Is Higher than Service Revenue

□ Yes □ No

14Lu Thai Textile Co. Ltd. Annual Report 2022

Operating division Item Unit 2022 2021 Change (%)

Unit sales 0000 meters 22580.48 20123.11 12.21%

Fabric Output 0000 meters 23634.84 22271.95 6.12%

Inventory 0000 meters 3763.43 4844.58 -22.32%

Unit sales 0000 pieces 1889.22 1443.99 30.83%

Apparel Output 0000 pieces 1872.64 1444.92 29.60%

Inventory 0000 pieces 138.76 171.99 -19.32%

Unit sales 000 KWH 153637.52 123065.87 24.84%

Electricity Output 000 KWH 414202.18 424085.59 -2.33%

Inventory 000 KWH

Unit sales Ton 310410.00 327979.23 -5.36%

Steam Output Ton 1198469.45 1193199.66 0.44%

Inventory Ton

Any over 30% YoY movements in the data above and why:

□ Applicable □ Not applicable

2022 saw an increased order intake due to new customers and more strategic customers in the textile and apparel business.

(4) Execution Progress of Major Signed Sales and Purchase Contracts in the Reporting Period

□ Applicable □ Not applicable

(5) Breakdown of Cost of Sales

By operating division and product category

Unit: RMB

20222021

Operating

Item As % of total As % of total Change (%) division Cost of sales Cost of sales

cost of sales (%) cost of sales (%)

Textile

Cost of

and 4689861379.28 90.99% 3841684869.90 92.51% 22.08%

sales

apparel

Electricity Cost of

290205024.765.63%210275788.875.06%38.01%

and steam sales

Cost of

Other 174301192.86 3.38% 101020417.08 2.43% 72.54%

sales

Unit: RMB

20222021

Product

Item As % of total cost As % of total Change (%) category Cost of sales Cost of sales

of sales (%) cost of sales (%)

Fabric Cost of

3698671468.5671.76%3153777018.8075.94%17.28%

products sales

Cost of

Shirts 991189910.72 19.23% 687907851.10 16.57% 44.09%

sales

Electricity Cost of

290205024.765.63%210275788.875.06%38.01%

and steam sales

Cost of

Other 174301192.86 3.38% 101020417.08 2.43% 72.54%

sales

Note:

Manufacture

Product Period Raw material Labor cost Depreciation Energy Total

expenses

Fabric 2022 49.52% 17.01% 6.50% 17.44% 9.53% 100.00%

15Lu Thai Textile Co. Ltd. Annual Report 2022

202148.60%17.47%7.36%17.45%9.12%100.00%

202262.67%26.46%1.90%1.08%7.89%100.00%

Shirts

202153.47%34.50%2.85%1.23%7.95%100.00%

(6) Changes in the Scope of Consolidated Financial Statements for the Reporting Period

□ Yes □ No

The Company incorporated a new subsidiary LTCL and subscribed for Yuanhui Fund during the year.

(7) Major Changes to the Business Scope or Product or Service Range in the Reporting Period

□ Applicable □ Not applicable

(8) Major Customers and Suppliers

Major customers:

Total sales to top five customers (RMB) 1311220321.45

Total sales to top five customers as % of total sales of the

18.90%

Reporting Period (%)

Total sales to related parties among top five customers as % of

0.00%

total sales of the Reporting Period (%)

Information about top five customers:

Sales revenue contributed for As % of total sales revenue

No. Customer

the Reporting Period (RMB) (%)

Total -- 1311220321.45 18.90%

Other information about major customers:

□ Applicable □ Not applicable

Major suppliers:

Total purchases from top five suppliers (RMB) 783781382.48

Total purchases from top five suppliers as % of total purchases

17.87%

of the Reporting Period (%)

Total purchases from related parties among top five suppliers

0.00%

as % of total purchases of the Reporting Period (%)

Information about top five suppliers:

Purchase in the Reporting

No. Supplier As % of total purchases (%)

Period (RMB)

Total -- 783781382.48 17.87%

Other information about major suppliers:

□ Applicable □ Not applicable

3. Expense

Unit: RMB

Reason for any

2022 2021 Change (%)

significant change

Selling expense 136929096.72 119883494.68 14.22%

Administrative expense 396309634.39 335380025.54 18.17%

Increased net exchange

Finance costs -148951129.67 44988908.41 -431.08%

gain

16Lu Thai Textile Co. Ltd. Annual Report 2022

R&D expense 276424812.26 252912911.63 9.30%

4. Other Information Required by Information Disclosure Guide for Companies Engaged in Textile and

Garment Services

(1) Capacity

The Company's own capacity

Industry

Item 2022 2021

Classification

Total capacity (fabric) (10000

29430.0029360.00

meters)

Rate of capacity utilization 80% 76%

The Company's convertible bond The Company's convertible bond

fundraising projects: The fundraising projects: The "Functional

"Functional Fabric Intelligent Eco- Fabric Intelligent Eco-park Project

Fabric park Project (Phase I)" with an (Phase I)" with an annual capacity of

annual capacity of 35 million meters 35 million meters of high-grade

Plants under construction of high-grade functional fabrics and functional fabrics and the "Production

the "Production Line Project of Line Project of High-grade Printed and

High-grade Fabrics (Phase I)" with Dyed Fabrics" with an annual capacity

an annual capacity of 30 million of 25 million meters of high-grade

meters were in progress. printed and dyed fabrics were in

progress.Total capacity (apparel) (10000

2030.002030.00

pieces)

Apparel

Rate of capacity utilization 88% 70%

Plants under construction

Year-on-year change in the rate of capacity utilization above 10%

□ Yes □ No

2022 saw an increased order intake due to new customers and more strategic customers in the textile and apparel business

resulting in a higher capacity utilization rate.Overseas capacity

□ Yes □ No

Industry

Item Domestic Overseas

Classification

Percentage of capacity 80% 20%

Fabric

Capacity layout Mainly in Shandong Province Mainly in Vietnam

17Lu Thai Textile Co. Ltd. Annual Report 2022

Rate of capacity utilization 80% 80%

Percentage of capacity 44% 56%

Mainly in Vietnam Cambodia and

Apparel Capacity layout Mainly in Shandong Province

Myanmar

Rate of capacity utilization 85% 90%

The Company’s expansion plan on developing overseas production capacity

The Company has invested in a production site in Southeast Asia which is currently in the infrastructure construction phase.

(2) Sales model and channels

Product sales channels and operation methods

a. Sales model

The Company adopted the order-based sales model. With the self-owned trademark "Luthai" for its fabric sales it provided

customers with development and design plans based on customer needs fabrics and patterns leading the market fashion and

technology functions and environmental protection. In addition it engaged in brand operation of spot fabric on the new retail e-

commerce platform. Shirts were mainly made according to the orders of customers at home and abroad and sold by brand owners.The Company's self-owned brand was operated through self-owned exclusive shops such as Lu Thai Exhibition and Sales Pavilion

counters of affiliated stores in malls and e-networking marketing. Meanwhile the Company could provide customers with high-end

customized shirts and customized business wear to meet the market demand of the high-end service industry.b. Sales channels

Direct sales: The headquarters of the Company carried out direct investments and operation and operated and managed a brand at the

headquarters or by setting up a branch company in other regions to conclude transactions with customers offline.Online sales: Through self-developed platforms and large third-party online shopping platforms the Company concluded transactions

with customers on the Internet and delivered goods to customers by express delivery services.Unit: RMB

Gross YoY change in YoY change in

Sales YoY change in

Operating revenue Cost of sales profit operating gross profit

channels cost of sales

margin revenue margin

Online

3245337.601233758.3661.98%-34.41%-23.38%-5.47%

sales

Direct

5148363141.193700431958.4128.12%27.42%17.27%6.23%

sales

OEM/OD

1349350598.37988195662.5126.77%55.03%45.17%4.97%

M

Total 6500959077.16 4689861379.28 27.86% 32.25% 22.20% 5.93%

(3) Franchise and distribution

Franchisees and distributors recorded more than 30% of sales revenue

18Lu Thai Textile Co. Ltd. Annual Report 2022

□ Yes □ No

(4) Online sales

Online sales recorded more than 30% of sales revenue

□ Yes □ No

Self-developed sales platforms

□ Yes □ No

Start of operation 30 March 2009

Number of registered users 147000

Average number of active monthly users (AMU) 5000

Return rate of main brands 3.50%

Return rate of main types 3.50%

Cooperation with third-party sales platforms

□ Yes □ No

Unit: RMB

Transaction amount during the Reporting

Name of platform Return rate

Period

Online sales channels opened or closed by the Company

□ Applicable □ Not applicable

Impact on the Company in the current period and subsequent periods:

Not applicable.

(5) Agency operation model

Agency operation model involved

□ Yes □ No

(6) Inventory

Inventory

Days of

Quantity of Inventory Year-on-year change in

Main products turnover of Reason

inventory age inventory balance

inventories

Fabric (10000 Within 1

753072.29-19.65%

meters) year

Fabric (10000 Over 1 Increased sales volume as a result of

691.14-32.27%

the recovering market demand

meters) year

Shirts (10000 26 97.21 Within 1 -12.92%

19Lu Thai Textile Co. Ltd. Annual Report 2022

pieces) year

Shirts (10000 Over 1

18.2331.06%

pieces) year

Inventory valuation allowances:

2022.12.31

Item Valuation allowance or provision for

Gross amount Carrying amount

impairment on contract performance cost

Raw materials 964638749.13 47996904.87 916641844.26

Goods in process 502282021.10 12926711.64 489355309.46

Products on hand 869338282.54 181010948.47 688327334.07

Commissioned products 13525220.54 13525220.54

Total 2349784273.31 241934564.98 2107849708.33

(7) Brand building

Production and sales of brand clothing apparel and home textile products

□ Yes □ No

Self-owned brands:

Chara Target

Trademark Main product Price zone of

Brand name cterist consumer Main sales areas City levels

name types main products

ics group

Classi Provincial

c East China South capital cities

Business

LTGRFF LTGRFF Shirts and suits busine RMB500-3000 China and and other

people

ss Southwest China prefecture-

attire level cities

Trademark ownership disputes

□ Applicable □ Not applicable

(8) Other information

Engaged in business related to apparel design

□ Yes □ No

Whether the Company held meetings for the placement of orders

□ Yes □ No

20Lu Thai Textile Co. Ltd. Annual Report 2022

5. R&D Investments

□ Applicable □ Not applicable

Estimated impact on

Names of main R&D

Goals of projects Progresses of projects Intended goals future development of

projects

the Company

Not only this project

has reached an

The Company aims to

This project is aimed to internationally

achieve mass This project is

reduce the usage of advanced level

production based on expected to improve

Waterless and low- water resources and according to expert

the technology and the Company’s

salt yarn dyeing chemical additives such authentication

industrial applications technological strength

technology as salt and alkali so as to organized by the

of the technology in dyeing and

reduce environmental industry association

based on different raw competitiveness.pollution. but also the small batch

materials.production has been

achieved.Lyocell regenerated This project is

cellulose fibre exhibits a expected to expand the

Liquid ammonia

soft hand feeling and is The Company aims to promotion and

Development finishing and other

comfortable to wear. develop a series of application of green

promotion and processing processes

While its production is products that meet raw materials make

application of Lyocell have been validated

environmentally customers’ the product structure

and other regenerated and the requirements

friendly the material is requirements based on more reasonable and

cellulose fibre serial for industrial

naturally degradable fabrics with good facilitate the green and

products application have been

thereby being in line shrinkage stability. sustainable

satisfied.with the market development of the

development trend. Company.The Company aims at

The screening and

the development of

testing of a part of This project is

This project is aimed to full-process green

natural softeners and expected to improve

reduce the consumption products and their

Ecological textile natural moisture the Company’s

of petroleum and other industrial application

dyeing and absorption and technological strength

mineral resources the with the integration of

processing perspiration auxiliaries in green dyeing

difficulty in wastewater the technology natural

technology have been completed finishing and

treatment and carbon fibre regenerated fibre

and the project samples processing as well as

emissions. and the process of

have been tested for brand influence.enzyme-based boiling

relevant indicators.and bleaching.This project is

The opening of yarn

This project is aimed to The Company aims to expected to facilitate

waste has been

expand the scope of achieve the recycling the development of the

Further development validated and small

waste recycling of all fibre waste and circular economy and

and application of batch production has

facilitate resource scraps from factories the construction of the

recycled cotton been conducted. For

recycling reduce waste and transform them Company into an

fabrics the next step the fabric

and protect the into high-value environmentally-

opening test will be

environment. materials. friendly and resource-

conducted.saving enterprise.This project is aimed for

the R&D of the next-

This project is aimed at

generation anti-virus and Relevant apparatus and

producing DP3.5 3A This project is

In-depth R&D of anti-bacterial products equipment have been

antibacterial products expected to develop

long-lasting ironing- which is expected to introduced and the

enduring 50-time products that can meet

free anti-virus anti- reduce the damage of R&D of new anti-

washing and resisting market demand and

bacterial cotton viruses and bacteria to bacterial and anti-viral

H1N1 virus with an create value for the

products the human body and the fabrics have been

activity value at no less Company.development of healthy initiated.than 2.0.safe and easy-to-manage

textile products.Details about R&D personnel:

2022 2021 Change (%)

Number of R&D personnel 1474 1535 -3.97%

R&D personnel as % of total 13.17% 14.00% -0.83%

21Lu Thai Textile Co. Ltd. Annual Report 2022

employees

Educational background of R&D personnel

Bachelor’s degree 200 206 -2.91%

Master’s degree 29 30 -3.33%

Age structure of R&D personnel

Below 30 184 231 -20.35%

30~409641083-10.99%

Above 40 326 221 47.51%

Details about R&D investments:

2022 2021 Change (%)

R&D investments (RMB) 276424812.26 252912911.63 9.30%

R&D investments as % of operating

3.98%4.83%-0.85%

revenue

Capitalized R&D investments (RMB) 0.00 0.00 0.00%

Capitalized R&D investments as % of

0.00%0.00%0.00%

total R&D investments

Reasons for any significant change to the composition of R&D personnel and the impact:

□ Applicable □ Not applicable

Reasons for any significant YoY change in the percentage of R&D expense in operating revenue:

□ Applicable □ Not applicable

Reason for any sharp variation in the percentage of capitalized R&D expense and rationale:

□ Applicable □ Not applicable

6. Cash Flows

Unit: RMB

Item 2022 2021 Change (%)

Subtotal of cash generated from

7218619463.985095876566.6741.66%

operating activities

Subtotal of cash used in operating

5796308689.724747739561.1922.09%

activities

Net cash generated from/used in

1422310774.26348137005.48308.55%

operating activities

Subtotal of cash generated from

264146692.281558983659.21-83.06%

investing activities

Subtotal of cash used in investing

981802690.701530504624.63-35.85%

activities

Net cash generated from/used in

-717655998.4228479034.58-2619.94%

investing activities

Subtotal of cash generated from

1345521524.751711261939.49-21.37%

financing activities

Subtotal of cash used in financing

2340048516.231507951696.5055.18%

activities

Net cash generated from/used in

-994526991.48203310242.99-589.17%

financing activities

Net increase in cash and cash

-147109614.73573476477.42-125.65%

equivalents

Explanation of why any of the data above varies significantly:

□ Applicable □ Not applicable

During the Reporting Period subtotal of cash generated from operating activities increased 41.66% year on year primarily driven

by the increased cash received from sale of goods; net cash generated from operating activities increased 308.55% year on year

primarily driven by the increased cash received from sale of goods; subtotal of cash generated from investing activities decreased

83.06% year on year primarily driven by the decreased disinvestments; subtotal of cash used in investing activities decreased

22Lu Thai Textile Co. Ltd. Annual Report 2022

35.85% year on year primarily driven by the decreased payments for investments; net cash generated from investing activities

decreased 2619.94% year on year primarily driven by the decreased disinvestments; subtotal of cash used in financing activities

increased 55.18% year on year primarily driven by the increased debt repayments; and net cash generated from financing

activities decreased 589.17% year on year primarily driven by the increased debt repayments.Reason for any big difference between the net operating cash flow and the net profit for this Reporting Period

□ Applicable □ Not applicable

V Analysis of Non-Core Businesses

□ Applicable □ Not applicable

Unit: RMB

As % of total

Amount Source/Reason Recurrent or not

profit

Return on long-term equity

Return on

13734073.31 1.27% investments and held-for-trading Not

investment

financial assets

Gain/loss on

Gain/loss on changes in fair value of

changes in fair 169192724.92 15.67% Not

value held-for-trading financial assets

Asset impairments -186305963.36 -17.26% Inventory valuation allowances Not

Non-operating Income of non-operating

8056548.73 0.75% Not

income

compensation etc

Non-operating

11007935.461.02%

expense Non-operating donations etc.Not

VI Analysis of Assets and Liabilities

1. Significant Changes in Asset Composition

Unit: RMB

31 December 2022 1 January 2022 Reason for Change in

any

As % of total As % of total percentage

Amount Amount significant

assets assets (%) change

Monetary assets 2067768253.97 15.49% 1999712889.35 15.40% 0.09%

Accounts

660427526.194.95%647277198.514.98%-0.03%

receivable

Inventories 2107849708.33 15.79% 2345346794.28 18.06% -2.27%

Investment

20460935.210.15%21362302.030.16%-0.01%

property

Long-term

equity 184168625.69 1.38% 169443106.66 1.30% 0.08%

investments

Fixed assets 5807847850.67 43.50% 5561601374.44 42.82% 0.68%

Construction in

199943501.731.50%237579082.991.83%-0.33%

progress

Right-of-use

481420505.313.61%257019286.151.98%1.63%

assets

23Lu Thai Textile Co. Ltd. Annual Report 2022

Short-term

518946415.963.89%1011034138.327.78%-3.89%

borrowings

Contract

206879672.531.55%204967348.961.58%-0.03%

liabilities

Long-term

186431096.241.40%684962473.245.27%-3.87%

borrowings

Lease liabilities 98501303.83 0.74% 121357658.41 0.93% -0.19%

Indicate whether overseas assets account for a large proportion of the total assets.□ Applicable □ Not applicable

Mana Control

As % of the Material

Sourc Locati gemen measures to Return generated

Asset Asset value (RMB) Company’s impairment

e on t protect asset (RMB)

equity risk (yes/no)

model safety

Main

Incor management

Hong Kong Hong Marke

porate 211201941.02 personnel sent 5944461.35 2.24% No

project Kong ting d by the Company

as the parent

Main

Incor management

America New Marke

porate 1631711.07 personnel sent -1482115.26 0.02% No

project York ting d by the Company

as the parent

Main

Incor Manuf management

Cambodia Svay

porate 217352438.45 acturi personnel sent 25073063.35 2.31% No

project Rieng d ng by the Company

as the parent

Main

Incor Manuf management

Myanmar Rango

porate 133216225.72 acturi personnel sent 21854519.76 1.42% No

project on d ng by the Company

as the parent

Main

Incor Manuf management

Vietnam Vietna

porate 3118142266.57 acturi personnel sent 227085825.52 33.14% No

project m d ng by the Company

as the parent

Main

Incor management

Singapore Singap Invest

porate 868264142.82 personnel sent 2577545.12 9.23% No

project ore ment d by the Company

as the parent

2. Assets and Liabilities at Fair Value

□ Applicable □ Not applicable

Unit: RMB

Gain/loss on

Cumulative Impairment

fair-value Purchased

fair-value allowance Sold in the

Beginning changes in in the Other Ending

Item changes for the Reporting

amount the Reporting change amount

recorded in Reporting Period

Reporting Period

equity Period

Period

Financial assets

24Lu Thai Textile Co. Ltd. Annual Report 2022

1. Held-for-

trading financial

190052000147024145359556504120000000576632650

assets (excluding

derivative .00 .79 .86 .00 .65

financial assets)

2. Derivative 1727000.0 26445508. 28172508.

financial assets 0 83 83

Subtotal of 191779000 173469654 359556504 120000000 604805159

financial assets .00 .62 .86 .00 .48

-

34663071.11208304.

Others -92637.48 23362129.

8878

62

-

226442071173469654359556504120000000616013464

Total of the above -92637.48 23362129..88.62.86.00.26

62

-

Financial 4276929.7

0.004276929.7

liabilities 0

0

Content of other change:

Changes in receivables financing.Significant changes to the measurement attributes of the major assets in the Reporting Period:

□ Yes □ No

3. Restricted Asset Rights as at the Period-End

For details see Part X. VII. 61. Assets with restricted ownership and using right in this Report.VII Investments Made

1. Total Investment Amount

□ Applicable □ Not applicable

2. Major Equity Investments Made in the Reporting Period

□ Applicable □ Not applicable

3. Major Non-Equity Investments Ongoing in the Reporting Period

□ Applicable □ Not applicable

4. Financial Investments

(1) Securities Investments

□ Applicable □ Not applicable

No such cases in the Reporting Period.

25Lu Thai Textile Co. Ltd. Annual Report 2022

(2) Investments in Derivative Financial Instruments

□ Applicable □ Not applicable

1) Derivative Investments for Hedging Purposes during the Reporting Period

□ Applicable □ Not applicable

Unit: RMB'0000

Proportion of

Gain/loss on Cumulative closing

Initial fair-value fair-value Purchased in Sold in the Ending investment

Type of

investment changes in changes the Reporting Reporting investment amount in the

derivative

amount the Reporting recorded in Period Period amount Company’s

Period equity ending net

assets

Forward

exchange 22090.11 0 0 22090.11 22090.11 0 0.00%

settlement

Foreign

exchange 279724.8 2225.85 0 241716.8 131568.3 148156.5 15.75%

option

Forward

exchange 12701.8 0 0 12701.8 12701.8 0 0.00%

transactions

Total 314516.71 2225.85 0 276508.71 166360.21 148156.5 15.75%

Whether

significant

changes

occurred to

the

Company’s

accounting

policy and

specific

No significant changes

accounting

principles of

derivatives in

the Reporting

Period

compared to

the previous

Reporting

Period

1. As of 31 December 2022 the Company held 21 undue financial derivatives contracts totaling USD216 million

all of which were forex option contracts. 2. During 2022 the total amount of all due financial derivatives of the

Actual

Company was equivalent to USD251 million which were all executed according to the contracts resulting in a loss

gain/loss in

of RMB18.1538 million among which gains of RMB1.6913 million were from due forward forex settlement

the Reporting

contracts of USD34 million; due forex option contracts were USD197 million with USD55 million not yet meeting

Period

the settlement conditions and USD142 million settled resulting in a loss of RMB24.3997 million; gains of

RMB4.5546 million were from due forward forex transactions of USD20 million.The Company conducts foreign exchange (FX) derivative transactions with the intention of hedging. Specifically

Effectiveness the business is carried out to fix costs avoid exchange rate risks and improve resistance against FX rate fluctuations.of hedges As a result the Company has gained better capabilities of avoiding and preventing the risks of FX rate fluctuations

and the financial robustness of the Company has been enhanced.Capital

source for

The Company’s own money

derivative

investment

Analysis on The Company conducted derivatives products transaction in order for hedging. And the forward settlement hedging

risks and was operated by installments with the relevant amount not more than the planned derivatives products transactions.control And all derivatives products transaction was zero-deposit. Meanwhile the Company had a complete risk control

26Lu Thai Textile Co. Ltd. Annual Report 2022

measures of system for sufficient analysis and prevention of possible risks such as market risk liquidity risk and credit risk

derivative operation risk and risk of laws and regulation.products held 1. Market risk: When the international and domestic economic situations change the corresponding changes in

in the exchange rates and interest rates may have an adverse impact on the financial derivative transactions of the

Reporting Company. Precautions: The Company chooses financial instruments with simple structures high liquidity and

Period controllable risk and strictly controls the scale of derivative transactions performing them by stages and in batches.(including Means such as extension and balance settlement can be adopted to ensure contract performance after the contract

but not expires.limited to 2. Liquidity risk and credit risk: Credit risk arises when the Company or counterparties in transactions couldn’t

market risk perform contracts due now to liquidity or other factors that result in further economic loss. Precautions: The

liquidity risk derivative transactions can only be done with financial institutions qualified for derivative transactions as authorized

credit risk by relevant national authorities or financial or foreign exchange authorities in the country or region where the

operation Company operates. Derivative transactions with other institutions or individuals are not allowed so as to control

risk law risk related risk concerning counterparties.etc.) 3. Internal risk control: Derivative transactions are highly specialized and complex. Therefore there is a risk of loss

in derivative transactions due to the imperfect internal control system when business is performed. Precautions: The

Company should strictly implement Management Policy for Investments in Securities and Derivative Transactions

of Lu Thai Textile Co. Ltd. continuously optimize the business operation process and authorization management

system strengthen professional ethics education and business training for relevant personnel clarify job

responsibilities engage in derivative transaction business strictly within the scope of authorization and establish a

timely reporting system for abnormal conditions to avoid operational risks.

4. Risk of laws and regulation: Derivative transactions of the Company must be strictly in compliance with relevant

national laws and regulations. Otherwise signed contracts commitments and other legal documents may entail

compliance risk and regulatory risk in terms of effectiveness and enforceability. Precautions: The Company should

strengthen the supervision and inspection of the standardization of derivative transactions the effectiveness of

internal control mechanism and the authenticity of information disclosure to avoid possible legal risks. The

Company has fulfilled relevant approval procedures for its derivative transactions business which is in line with the

relevant national laws regulations the Articles of Association the Management Policy for the Transaction of

Derivatives of Lu Thai the Proposal on the Company's Derivative Transaction Plan deliberated and adopted at the

25th meeting of the 9th session of the Board of Directors held on 11 June 2021 and the Proposal on the Company's

Derivative Transaction Plan deliberated and adopted at the 25th meeting of the 33rd session of the Board of

Directors held on 24 May 2022 and fulfilled the relevant information disclosure obligations.Changes of

market prices

or fair values

in the

Reporting

Period of the

invested

derivatives.In accordance with the relevant provisions and guidelines of the Accounting Standards for Business Enterprises No.And the

22 - Recognition and Measurement of Financial Instruments and the Accounting Standards for Business Enterprises

analysis on

No. 37 - Presentation of Financial Instruments issued by the Ministry of Finance the Company took the relevant

the fair value

accounting measures for its business of FX derivative transactions to reflect the relevant items in the balance sheet

of the

and the income statement. During the Reporting Period the Company determined the fair value of forward FX

derivatives

settlement and FX options based on the bank’s corresponding quotations at the end of the period.should

include the

specific use

methods and

the relevant

assumptions

and

parameters.Lawsuit (if

N/A

applicable)

Disclosure

date of board

of directors

announceme

nt on 15 June 2021

approval of

derivative

investment

(if any)

Disclosure

date of 25 May 2022

general

27Lu Thai Textile Co. Ltd. Annual Report 2022

meeting

announceme

nt on

approval of

derivative

investment

(if any)

Specific

opinion from Independent directors Zhou Zhiji Qu Dongmei Peng Yanli and Quan Yuhua have issued the following professional

independent advice on the Company's derivative transaction business: We believe that the Company's foreign exchange

directors on derivative transaction business is performed on the condition of ensuring normal operations. Transactions using its

the own funds are beneficial to avoiding the risk of exchange rate fluctuations and are an effective tool to hedge

Company’s exchange rate risk. By strengthening internal control implementing stop-loss and risk prevention measures the

derivatives Company can improve its ability to resist exchange rate fluctuations and improve its management level. The

investment derivative transaction plan proposed by the Board of Directors is feasible necessary and the risks are manageable.and risk There is no damage to the interests of the Company and all the shareholders.control

2) Derivative Investments for Speculative Purposes during the Reporting Period

□ Applicable □ Not applicable

No such cases in the Reporting Period.

5. Use of Funds Raised

□ Applicable □ Not applicable

(1) Overall Use of Funds Raised

□ Applicable □ Not applicable

Unit: RMB’0000

Total of

Cumulat

raised Ratio of

ive

Cumulat capital cumulati Amount

Total of amount Purpose and

ive which ve Total of of raised

Total of raised of raised direction of

Raisin Raising amount purpose amount raised capital

raised capital used capital raised

g year manner of raised is which capital unused

capital in this which capital

capital changed purpose unused for two

period purpose unused

used in the is years

is

report changed

changed

period

By 31

December

2022

RMB256.37

18 million in

the unused

raised

Convert

91954.0 51637.1 capital was

2020 ible 138800 15799.79 25000 25000 18.01% 0

bonds 6 8 deposited in

the raised

capital

account and

RMB260

million was

used for

cash

28Lu Thai Textile Co. Ltd. Annual Report 2022

management.

91954.051637.1

Total -- 138800 15799.79 25000 25000 18.01% -- 0

68

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

14000000 convertible bonds on 9 April 2020 at par value RMB 100 the issued amount was RMB 1.4 billion and the Company

actually received the amount of raised capital RMB 1.388 billion after deducted the underwriting fee RMB 12 million. The above

amount was remitted in cash in RMB. After deducted legal fee accountant fee credit rating fee information disclosure fee issuing

commission and other costs RMB 2.54 million in total from the above actually raised capital the net amount of raised capital was

RMB 1385.46 million which entered the account on 15 April 2020 and Grant Thornton International Ltd (Special General

Partnership) issued the capital verification report with reference No. Grant Thornton Verification [2020] 371ZC0090 for it after

verification.(II) Use situation and balance of raised capital

As at 31 December 2022 the Company directly invested RMB919.5406 million in total from the raised capital for its capital raising

projects. The unused amount was RMB516.3718 million (including the net income of RMB46.7481 million from interest income

deducted handling charge).

(2) Commitments on Projects with Funds Raised

□ Applicable □ Not applicable

Unit: RMB’0000

Whether

Total Wheth

the Date

Committed of Cumulativ er

projects Investmen when the

investment commi Total Amount e Benefit Whether project

are t progress project

projects tted investme invested investmen realized reached feasibil

changed by the end reached

and use invest nt after in this t amount in this the ity

(includin of period the

direction of ment modifica report by the end report expected change

g (3) ＝ intended

over raised of tion (1) period of period period benefit d

partially (2)/(1) available

capital raised (2) signific

changed status

capital antly

projects)

Committed investment projects

Functional

fabric

smart eco- 10091.2 31 May

No 85000 85000 57439.94 67.58% 0 N/A No

park 6 2023

project

(Phase 1)

Constructio

n of

overseas

31

high-end

Yes 25000 25000 5708.53 5708.53 22.83% Decemb 0 N/A No

fabric

er 2024

production

line project

(Phase I)

Supplemen

t working No 28800 28800 0 28805.59 100.02% 0 N/A No

capital

Subtotal of

committed 13880 15799.7

--13880091954.06----0----

investment 0 9

projects

Use direction of over raised capital

N/A

29Lu Thai Textile Co. Ltd. Annual Report 2022

Repayment

of bank

--00000.00%--------

loans (if

any)

Supplemen

t working

--00000.00%--------

capital (if

any)

Subtotal of

use director

of over -- 0 0 0 0 -- -- 0 -- --

raised

capital

1388015799.7

Total -- 138800 91954.06 -- -- 0 -- --

09

Explain

project by

project

situation

and reasons

that it did

not reach

the planned

progress orDue to the global economic downturn the raised funds investment project “Functional fabric smart eco-park projectexpectedreturn (Phase 1)” delayed in construction progress.(including

reason for

inputting

“N/A” for“Whetherreached the

expectedbenefit”)

Note for

significant

change of N/A

project

feasibility

Amount

purpose

and use

N/A

progress of

over raised

capital

Change of

implement

ation site

N/A

of capital

raising

project

Adjustment

of

implement

ation mode N/A

of capital

raising

project

30Lu Thai Textile Co. Ltd. Annual Report 2022

Advance Applicable

investment

and

displaceme By 30 April 2020 the total amount of displaced capital was RMB191.4288 million including the amount RMB

nt of 189.8388 million invested in the project with the self-raised capital of the Company in advance and payment of

capital issuing cost RMB1.59 million with its self-raised capital.raising

project

Temporary

supplement

to working

capital with N/A

unused

raised

capital

Balance of

raised

capital

after

implement N/A

of project

and

relevant

reasons

Purpose

and use

direction of By 31 December 2022 RMB256.3718 million in the unused raised capital was deposited in the raised capital account

unused and RMB260 million was used for cash management.raised

capital

Problems

existing in

use and

informatio

n

None

disclosure

of raised

capital or

other

situation

(3) Changes in Projects with Funds Raised

□ Applicable □ Not applicable

Unit: RMB’0000

Amount Investme

Accumula

of Actual nt Whether

Correspo tive Date of Realized

planned investmen schedule Whether occurred

Items nding investmen reaching income in

funds t amount as the reached significan

after original t amount intended the

invested in the period- anticipate t changes

changes committe as the use of the Reporting

after Reporting end d income in project

d items period- project Period

changes Period (3)=(2)/(1 feasibility

end (2)

(1))

Construct High-end

ion of printing 31

overseas and 25000 5708.53 5708.53 22.83% December 0 N/A No

high-end dyeing 2024

fabric fabric

31Lu Thai Textile Co. Ltd. Annual Report 2022

productio productio

n line n line

project project

(Phase I)

Total -- 25000 5708.53 5708.53 -- -- 0 -- --

In accordance with the Company's global strategic layout and market demand the

Company planned to adjust its capacity structure. On 9 June 2022 the second

Notes of reasons for changes extraordinary general meeting and the first bondholders' meeting this year deliberated and

decision-making procedures and adopted the Proposal on Changing the Purpose of Partial Raised Capital Unused. The

information disclosure (by specific aim was to terminate the "High-end printing and dyeing fabric production line project"

items) and leverage the raised capital of this project of RMB250 million for construction of

overseas high-end fabric production line project (Phase I) disclosed on 10 June 2022 on

the cninfo website ("www.cninfo.com.cn").Condition and reason for not

reaching the schedule and

N/A

anticipated income (by specific

items)

Notes of condition of significant

changes occurred in project N/A

feasibility after changes

VIII Sale of Major Assets and Equity Interests

1. Sale of Major Assets

□Applicable □ Not applicable

No such cases in the Reporting Period.

2. Sale of Major Equity Interests

□Applicable □ Not applicable

IX Major Subsidiaries

□ Applicable □ Not applicable

Major fully/majority-owned subsidiaries and those minority-owned subsidiaries with an over 10% effect on the Company’s net

profit:

Unit: RMB

Relationship

Principal Registered Operating Operating

Name with the Total assets Net assets Net profit

activity capital revenue profit

Company

LuFeng

Company Subsidiary Fabric 706160000 1713860629.99 1391192627.05 1813342589.95 151554691.72 141742849.86

Limited

Shandong

Lulian

Subsidiary Fabric 400000000 785333052.16 193685972.78 90195368.38 -90553128.78 -95189161.13

New

Materials

32Lu Thai Textile Co. Ltd. Annual Report 2022

Co. Ltd.Subsidiaries obtained or disposed in the Reporting Period:

□Applicable □ Not applicable

Information about major majority- and minority-owned subsidiaries:

LuFeng Company Limited (hereinafter referred to as “LuFeng”) is the holding subsidiary of the Company. Registration place: Zibo

Shandong; registered capital: RMB706.160 million. The mainly manufacturing and selling textile printing and dyeing products and

the products of clothing and garments and it were authenticated to be high-tech enterprise in October 2014. During the Reporting

Period with the recovering American and European markets LuFeng saw more export and high-added-value orders. This coupled

with currency impacts resulted in growth in both operating revenue and net profit. It recorded operating revenue of RMB1.8 billion

up 29.51% year on year; and a net profit of RMB142 million up 1981.21% year on year.Shandong Lulian New Materials Co. Ltd. (hereinafter referred to as "Lulian New Materials") is the holding subsidiary of the

Company. Registration place: Zibo Shandong; registered capital: RMB 400 million. It was established in April 2019 and mainly

manufacturing and selling functional fabrics. During the Reporting Period it was ramping up production and part of products were

released continually. It reported operating revenue of RMB90.1954 million up 102.58% year on year; and a net profit of RMB-

95.1892 million down 19.72% year on year.

X Structured Bodies Controlled by the Company

□Applicable □ Not applicable

XI Prospects

1. Industry competition and development trend

The textile industry of China has certain strength in the global textile industry mainly showing in industry chain technology labor

efficiency and other aspects. The global economic downturn has impacted the economy and trade of various countries since 2020 but

the competitive edge of the textile industry of China in the international market still remains. In recent years when the domestic

environmental protection requirements are becoming more stringent production costs are going up and the transformation and

upgrade policy is implemented in China the textile industry may face structural adjustment and the demand to yarn-dyed fabric used

for shirts will change as diversified products in small batch functionality and leisure orientation.

2. Development strategy of the Company

The Company is a large-scale textile enterprise with a complete industrial chain integrating spinning dyeing weaving post-

treatment and garment manufacturing. It is the world's largest production base for yarn-dyed fabrics for shirts providing blending of

three major series of shirt fabrics of pure cotton and natural fiber cotton and natural fiber as well as cotton and functional fiber. And

the newly developed shirt knitted fabric and functional fabric are also popular in markets. In order to maintain the outstanding

advantages of the Company in global shirt-dyed fabrics the Company is pushing intelligent manufacturing upgrades and integrating

domestic and foreign advantageous resources to deepen internationalization of the Company with regional advantages. The Company

combines quality innovation and customer needs and innovates the marketing model with advantages of resources in each channel.High-end shirt customization services are provided to meet various needs of customers. Furthermore the Company increases

investment in innovation to improve R&D and design and develop new fabrics. The Company holds the concept of low-carbon

environmental protection for sustainable development.

3. Business plan (the following description does not constitute any commitment of the Company)

33Lu Thai Textile Co. Ltd. Annual Report 2022

(1) In terms of corporate governance in order to ensure the healthy stable and sustainable development of the Company at the

institutional level the Company will establish an internal control system to improve organizational structure corporate governance

structure and risk prevention mechanism.

(2) In the aspect of market development the Company actively develops emerging markets on the basis of maintaining the existing

market accurately understands market trend and customers’ demand and fully improves service capacity so that the Company could

be a global dress solution supplier based on leading fabric.

(3) In the aspect of business administration the Company continually Implements the strategy of “quality and efficiencyimprovement” and “comprehensive internationalization” makes more efforts in developing market adjusting structure and

improving capacity strengthens integrated product development (IPD) promotes innovation while meeting market demand and

builds up a flexible rapid response efficient and traceable supply system chain with internal and external resources.

(4) In terms of industrial overall arrangement in order to maintain the leading position of the Company in the global yarn-dyed

industry the Company rationally allocates domestic and foreign resources and improves production efficiency while keeping product

quality relying on the advantages of U.S. companies Milan and Japan Office in market development design and R&D customer

service and talent development and the cost advantages of Southeast Asian production bases.

4. Capital needs sources and planning

Within the Reporting Period the functional fabric intelligent ecological park project (phase I) of the Company’s majority-owned

subsidiary Lulian New Materials and the overseas high-end fabric production line project (phase I) were under construction.Corresponding equipment installation and trial production will be arranged successively and the project fund is from the raised fund

of the A Share convertible bonds issued by the Company.

5. Risks that bring adverse impact to company development strategy and business objectives and countermeasures of the Company

(1) Impact of economic environment: under the enormous uncertainty risk of the international trade the geopolitical risk and the

impact of the global economic downturn the Company will face challenges in terms of international trade policies and market

changes. In addition the economic development of China should be transformed and upgrade therefore the Company will continue

to strictly guarantee production and safety and further utilize various resources at home and abroad to develop domestic and overseas

markets so as to catch new development opportunities.

(2) Price fluctuation of raw materials: cotton is the major production material of the Company and the price of cotton is impacted

by market supply and demand climate policy exchange rate quota and other factors therefore based on the production orders

and import quota the Company seriously considers the information of global cotton market properly works out procurement

strategy and actively control cost and gross margin fluctuation arising from price change of cotton.

(3) Change of exchange rate: the Company has a large ratio in import and export business. In recent years the bi-directional

fluctuations in RMB exchange rate have become increasingly normal and flexible. The exchange rate fluctuation will place a

remarkable impact on its performance. To lower the impact of exchange rate fluctuations the Company stuck to the risk-neutral

philosophy. Based on actual needs arising from production and operations it incorporated exchange rate risks into routine

operations management and took measures at proper timing to minimize the influence of exchange rate risks on the operations:

firstly the Company appropriately conducted foreign exchange hedging using forward FX sales and purchase forward foreign

exchange trading and option portfolios to avoid some risks Secondly the Company made reasonable arrangement on settlement

day and currency structure and conclusion of agreements on fixed foreign exchange rate to avoid exchange rate-related risks.Thirdly the Company adjusted the Renminbi and foreign-currency liabilities structure to actively prevent risks. Fourthly

according to the fluctuation trend of exchange rates the Company properly adjusted imports of raw and auxiliary materials to

partially offset the influence of exchange rate fluctuations on the Company.XII Communications with the Investment Community such as Researches Inquiries and

Interviews during the Reporting Period

□ Applicable □ Not applicable

34Lu Thai Textile Co. Ltd. Annual Report 2022

Place of Way of Type of Contents and Index to main inquiry

Date of visit Visitor

visit visit visitor materials provided information

The Investor Relations

Compan About basic Management Archive

Instituti Institutional

7 January 2022 y’s By phone information of the 20220110 disclosed on Cninfo

on investor

conferen Company by the Company on 10 January

ce room 2022

The Investor Relations

Compan About basic Management Archive

11 January Instituti Institutional

y’s By phone information of the 20220111（2） disclosed on

2022 on investor

conferen Company Cninfo by the Company on 12

ce room January 2022

The Investor Relations

Compan About basic Management Archive

11 January Instituti Institutional

y’s By phone information of the 20220111（1） disclosed on

2022 on investor

conferen Company Cninfo by the Company on 12

ce room January 2022

The Investor Relations

Compan One-on- About basic Management Archive

11 January Instituti Institutional

y’s one information of the 20220111 disclosed on Cninfo

2022 on investor

conferen meeting Company by the Company on 13 January

ce room 2022

The Investor Relations

Compan About basic Management Archive

14 January Instituti Institutional

y’s By phone information of the 20220114 disclosed on Cninfo

2022 on investor

conferen Company by the Company on 17 January

ce room 2022

The Investor Relations

Compan About basic Management Archive

Instituti Institutional

29 April 2022 y’s By phone information of the 20220429（1） disclosed on

on investor

conferen Company Cninfo by the Company on 5

ce room May 2022

The Investor Relations

Compan About basic Management Archive

Instituti Institutional

29 April 2022 y’s By phone information of the 20220429（2） disclosed on

on investor

conferen Company Cninfo by the Company on 5

ce room May 2022

The Investor Relations

Compan About basic Management Archive

Instituti Institutional

27 May 2022 y’s By phone information of the 20220527（1） disclosed on

on investor

conferen Company Cninfo by the Company on 30

ce room May 2022

The Investor Relations

Compan About basic Management Archive

Instituti Institutional

27 May 2022 y’s By phone information of the 20220527（2） disclosed on

on investor

conferen Company Cninfo by the Company on 30

ce room May 2022

The Results Presentation and

Compan About basic Roadshow Information

Instituti Institutional

31 May 2022 y’s By phone information of the 20220531 disclosed on Cninfo

on investor

conferen Company by the Company on 31 May

ce room 2022

The Investor Relations

Compan About basic Management Archive

Instituti Institutional

1 June 2022 y’s By phone information of the 20220601 disclosed on Cninfo

on investor

conferen Company by the Company on 2 June

ce room 2022

13 July 2022 The By phone Instituti Institutional About basic Investor Relations

35Lu Thai Textile Co. Ltd. Annual Report 2022

Compan on investor information of the Management Archive

y’s Company 20220715 disclosed on Cninfo

conferen by the Company on 15 July

ce room 2022

The Investor Relations

Compan About basic Management Archive

Instituti Institutional

20 July 2022 y’s By phone information of the 20220721 disclosed on Cninfo

on investor

conferen Company by the Company on 21 July

ce room 2022

The Investor Relations

Compan About basic Management Archive

Instituti Institutional

26 August 2022 y’s By phone information of the 20220829（1） disclosed on

on investor

conferen Company Cninfo by the Company on 29

ce room August 2022

The Investor Relations

Compan About basic Management Archive

Instituti Institutional

26 August 2022 y’s By phone information of the 20220829（2） disclosed on

on investor

conferen Company Cninfo by the Company on 29

ce room August 2022

The Investor Relations

Compan About basic Management Archive

1 September Instituti Institutional

y’s By phone information of the 20220902 disclosed on Cninfo

2022 on investor

conferen Company by the Company on 2

ce room September 2022

The Investor Relations

Compan About basic Management Archive

31 October Instituti Institutional

y’s By phone information of the 20221103（1） disclosed on

2022 on investor

conferen Company Cninfo by the Company on 3

ce room November 2022

The Investor Relations

Compan About basic Management Archive

31 October Instituti Institutional

y’s By phone information of the 20221103（2） disclosed on

2022 on investor

conferen Company Cninfo by the Company on 3

ce room November 2022

The Investor Relations

Compan About basic Management Archive

1 November Instituti Institutional

y’s By phone information of the 20221103 disclosed on Cninfo

2022 on investor

conferen Company by the Company on 3

ce room November 2022

The Investor Relations

Compan About basic Management Archive

14 November Instituti Institutional

y’s By phone information of the 20221116 disclosed on Cninfo

2022 on investor

conferen Company by the Company on 16

ce room November 2022

The Investor Relations

Compan About basic Management Archive

7 December Instituti Institutional

y’s By phone information of the 20221209 disclosed on Cninfo

2022 on investor

conferen Company by the Company on 9

ce room December 2022

36Lu Thai Textile Co. Ltd. Annual Report 2022

Part IV Corporate Governance

I General Information of Corporate Governance

During the Reporting Period the Company strictly conforms to Company Law Securities Law (Revised in 2019) and Governing

Rules for Listed Company Guideline No. 1 of the Shenzhen Stock Exchange for the Self-regulation of Listed Companies—

Operation Compliance of Main Board Listed Companies as well as relevant stipulations and requirements from normative documents

continuously improves the corporate governance structure safeguards the standardized and efficient operation of three Committees

and one Management forms a sound and effective internal control system so as to safeguard legitimate interests of the Company and

investors. Within the Reporting Period the Company amended Articles of Association of Lu Thai Textile Co. Ltd.

1. Shareholders and Shareholders’ General Meeting

The Company shall convene and hold the shareholders meeting in strict accordance with the Shareholders Meeting Procedural Rules

and guarantee that all shareholders especially the minority shareholders could have equal status and fully execute their rights.

2. The relationship between the majority shareholders and the Company

The Company’s majority shareholders acted according to relevant standards without directly or indirectly intervening the Company’s

decision-making and operating activities; the Company was independent with its majority shareholders in business personnel assets

organization finance and the Company’s Board of Directors Supervisory Committee and Internal Organs could completely

independent to operate. There was no situation about annexing the assets or occupation of funds of the Company by principal

shareholders or other events on infringing the interest of the Company and other shareholders.

3. The directors and Board of Directors

The Company’s Board of Directors shall perform their duties in strict accordance with Articles of Association and the Board of

Directors Procedural Rules. Under the Board of Directors the Company established the Strategy Committee the Audit Committee

the Nomination Committee and the Remuneration Committee. Various specialized committees would fully perform their functions

and further guarantee the high-efficient operation and the scientific decision-making of the Board of Directors.

4. Supervisors and Supervisory Committee

The Company’s Supervisory Committee will perform their duties in strict accordance with Articles of Association and the

Supervisory Committee Procedural Rules. The number of members and the composition of the Company’s Supervisory Committee

shall comply with applicable laws and regulations; the Company’s supervisors shall strictly abide by relevant provisions seriously

execute their duties and supervise the Company’s financial status and the legal execution of duties of the directors president and

other senior managers by adhering to the principle of being responsible for the shareholders and the listed company.

5. Information disclosure

The Company strictly in accordance with the laws regulations and the Articles of Association disclosed relevant information in a

true accurate complete and timely manner. The Company has formulated the Information Disclosure Management System

Information Insider Registration Management System and Investor Relations Management System etc. to ensure the fairness

openness and fairness of information disclosure.

6. Investor relations management

During the Reporting Period as required by Investor Relations Management System to maintain good communication with investors

the Company accepted on-site investigations and consultations of investors through on-site investigations and telephone

consultations and promptly answered questions asked by investors on the SZSE Easy-IR.Indicate by tick market whether there is any material incompliance with the applicable laws administrative regulations and the

CSRC rules for the governance of listed companies.□ Yes √ No

No such cases in the Reporting Period.

37Lu Thai Textile Co. Ltd. Annual Report 2022

II The Company’s Independence from Its Controlling Shareholder and Actual Controller in

Assets Personnel Financial Affairs Organization and Business

1. As for the business: the Company shall establish its independent and complete business system with the market-oriented

independent management ability. In the respect of business operation the Company is completely separated from the controlling

shareholders.

2. As for the personnel: the Company’s labor personnel and remuneration management departments shall be independent with their

own sound systems and separated from that of the substantial shareholder. The Company’s senior managers are not allowed to

simultaneously hold any office in any shareholder’s unit.

3. As for the assets: the Company possesses the entire and independent legal person property right with independent and perfect the

production system auxiliary production systems and supporting facilities; and possesses the independent ownership of the intangible

assets such as the industrial property trademarks non-patented technology.

4. As for the institution: the Company’s Board of Directors Supervisory Committee and other internal organization shall be sound

and involved in independent operation. The substantial shareholder shall legally execute its rights fulfill corresponding obligations

and not surpass the shareholders meeting to directly or indirectly interfere the Company’s business activities.

5. As for the finance: the Company possesses independent financial departments with normative financial accounting system and

financial management system as well as internal control system with independent bank account.III Horizontal Competition

□ Applicable √ Not applicable

IV Annual and Special General Meetings Convened during the Reporting Period

1. General Meeting Convened during the Reporting Period

Investor

Date of the

Meeting Type participation Disclosure date Resolutions

meeting

ratio

Two proposals including the

The 1st Proposal on Repurchase and

Extraordinary Extraordinary Cancel Authorized but Unlocked

General General 32.62% 7 March 2022 8 March 2022 Restricted Share of the Incentive

Meeting of Meeting Personnel not Conforming to the

2022 Incentive Condition were

deliberated and approved.The 2021 Six proposals including the

Annual

Annual Proposal on 2021 Annual Work

General 32.66% 20 May 2022 21 May 2022

General Report of the Board of Directors

Meeting

Meeting were deliberated and approved.nd Four proposals including the The 2

Proposal on the Election of Non-

Extraordinary Extraordinary

Independent Directors of the

General General 30.91% 9 June 2022 10 June 2022

Tenth Session of the Board of

Meeting of Meeting

Directors were deliberated and

2022

approved.The 3rd Two proposals including the

Extraordinary Extraordinary Proposal on Repurchase of the

General General 31.42% 15 July 2022 16 July 2022 Company’s Domestically Listed

Meeting of Meeting Foreign Shares (B Share) were

2022 deliberated and approved.

38Lu Thai Textile Co. Ltd. Annual Report 2022

2. Special General Meetings Convened at the Request of Preferred Shareholders with Resumed Voting

Rights

□ Applicable □ Not applicable

V Directors Supervisors and Senior Management

1. Basic Information

Increas Decrea

Beginn e in se in Other

Ending

Incum Start ing the the increas Reaso

Office Gen End of shareh

Name bent/F Age of shareh Report Report e/decre n for

title der tenure olding

ormer tenure olding ing ing ase change

(share)

(share) Period Period (share)

(share) (share)

Chairman

Liu Incum Mal 6 June 8 June 14829 14829

and 58

Zibin bent e 2007 2025 0 0

President

Xu Vice Incum Mal 6 May 8 June

93

Zhinan Chairman bent e 2004 2025

Xu Incum Fem 9 June 8 June

Director 48

Jianlyu bent ale 2022 2025

Zheng

Incum Mal 9 June 8 June

Huishe Director 35

bent e 2022 2025

ng

Director

Vice

Controlle

Liu r of 12

Incum Mal 8 June

Demin Global 33 May

bent e 2025

g Marketin 2017

g

Departme

nt

Director

Vice Grante

president d

Head of 20000

Zhang Incum Mal 9 June 8 June 38030 20000 58030

Global 51 0

Zhanqi bent e 2022 2025 0 0 0

Marketin restrict

g ed

Departme shares

nt

Director

Board

Secretary

Grante

Chief

d

Accounta

Zhang 10000

nt Head Incum Mal 9 June 8 June 27770 10000 37770

Kemin 55 0

of bent e 2022 2025 0 0 0

g restrict

Financial

ed

Managem

shares

ent

Departme

nt

Director Grante

Chief d

Engineer 10000

Du Incum Mal 9 June 8 June 20000 10000 25000

Executive 48 50000 0

Lixin bent e 2022 2025 0 0 0

Dean of restrict

Lu Thai ed

Engineeri shares

39Lu Thai Textile Co. Ltd. Annual Report 2022

ng and

Technolo having

gy reduce

Research d

Institute 50000

shares

on the

open

market

Independ 10

Zhou Incum Mal 8 June

ent 60 March

Zhiji bent e 2025

Director 2019

Qu Independ 10

Incum Fem 8 June

Dong ent 54 June

bent ale 2025

mei Director 2019

Independ

Peng Incum Fem 9 June 8 June

ent 62

Yanli bent ale 2022 2025

Director

Independ

Quan Incum Fem 9 June 8 June

ent 67

Yuhua bent ale 2022 2025

Director

Chairman

of the 8

Zhang

Superviso Incum Mal Februa 8 June

Shoug 53 73100 73100

ry bent e ry 2025

ang

Committe 2018

e

Liu Superviso Incum Mal 6 June 8 June

551000010000

Zilong r bent e 2007 2025

Superviso

r

Manager

Dong of

Incum Mal 6 June 8 June

Shibin Logistics 54 5000 5000

bent e 2007 2025

g Managem

ent

Departme

nt

Havin

g

Head of

reduce

Safety

d

Wang Chairman Incum Mal 6 June 8 June 38370 31370

607000070000

Jiabin of the bent e 2007 2025 0 0

shares

Labor

on the

Union

open

market

Grante

President

d

Assistant

Shang 10000

Head of Incum Mal 6 June 8 June 23000 10000 33000

Cheng 50 0

Garment bent e 2013 2025 0 0 0

gang restrict

Product

ed

Line

shares

President

Assistant

Head of Grante

Energy d

Yu and 10000

Incum Mal 6 June 8 June 28310 10000 38310

Shouz Environm 55 0

bent e 2007 2025 0 0 0

heng ent restrict

Protectio ed

n shares

Departme

nt

Fujiwa GM of Incum Mal 9 8 June

50

ra Japan bent e Decem 2025

40Lu Thai Textile Co. Ltd. Annual Report 2022

Matsu Office ber

zaka 2014

Grante

d

10000

0

restrict

Head of ed

Business shares

Li Managem Incum Mal 8 June 8 June 21000 10000 26000 and

5650000

Wenji ent bent e 2016 2025 0 0 0 having

Departme reduce

nt d

50000

shares

on the

open

market

Grante

Head of d

Functiona 18 10000

Guo Incum Mal 8 June 20000 10000 30000

l Fabric 51 Januar 0

Heng bent e 2025 0 0 0

Product y 2018 restrict

Line ed

shares

Deputy

Head of

Yarn

Dyed

Fabric

Product

Grante

Line

d

Lyu Manager

Incum Mal 9 June 8 June 15000 20000 50000

Wenqu of Yarn 50 50000

bent e 2022 2025 0 0 restrict

an Dyed

ed

Fabric

shares

Productio

n and

Managem

ent

Departme

nt

Grante

d

10000

0

restrict

Deputy

ed

Head of

shares

Yarn

Xu Incum Mal 9 June 8 June 15000 10000 19000 and

Dyed 46 60000

Feng bent e 2022 2025 0 0 0 having

Fabric

reduce

Product

d

Line

60000

shares

on the

open

market

Fujiwa

ra Forme Mal 7 May 9 June

Director 83

Hideto r e 1998 2022

shi

Chen 16

Forme Mal 9 June

Ruimo Director 79 April

r e 2022

u 2000

Zeng Forme Mal 6 June 9 June

Director 72

Fachen r e 2007 2022

41Lu Thai Textile Co. Ltd. Annual Report 2022

g

Qin

Forme Fem 7 May 9 June 12654 12654

Guilin Director 57

r ale 1998 2022 2 2

g

Grante

d

Director

Zhang 18000

and Chief Forme Fem 6 June 9 June 39250 18000 21250

Hong 53 0

Accounta r ale 2016 2022 0 0 0

mei restrict

nt

ed

shares

Independ

Pan Forme Fem 6 June 9 June

ent 58

Ailing r ale 2016 2022

Director

Independ

Wang Forme Mal 6 June 9 June

ent 56

Xinyu r e 2016 2022

Director

Zhang

Counselo Forme Mal 6 June 9 June

Jianxia 55 52150 52150

r r e 2007 2022

ng

Assistant

to

Chairman

of the

Board 18

Zhang Forme Mal 9 June 20000 20000

Head of 38 Januar

Wei r e 2022 0 0

Strategy y 2018

and

Market

Departme

nt

President

14

Fu Assistant

Forme Fem Decem 9 June 20000 20000

Guann Head of 40

r ale ber 2022 0 0

an Investme

2020

nt

36729500023000180004212

Total -- -- -- -- -- -- --

382000382

Indicate by tick mark whether any director supervisor or senior management departed the Company before the expiry of their

tenures during the Reporting Period.□ Yes □ No

Change of Directors Supervisors and Senior Management

□ Applicable □ Not applicable

Name Office title Type of change Date of change Reason for change

Left for expiration of

Fujiwara Hidetoshi Director 9 June 2022 Change of directors

term

Left for expiration of

Chen Ruimou Director 9 June 2022 Change of directors

term

Left for expiration of

Zeng Facheng Director 9 June 2022 Change of directors

term

Left for expiration of

Qin Guiling Director 9 June 2022 Change of directors

term

Left for expiration of

Zhang Hongmei Director 9 June 2022 Change of directors

term

Left for expiration of

Wang Xinyu Director 9 June 2022 Change of directors

term

Left for expiration of

Pan Ailing Director 9 June 2022 Change of directors

term

Xu Jianlyu Director Elected 9 June 2022 Change of directors

Zheng Huisheng Director Elected 9 June 2022 Change of directors

42Lu Thai Textile Co. Ltd. Annual Report 2022

Zhang Zhanqi Director Elected 9 June 2022 Change of directors

Zhang Keming Director Elected 9 June 2022 Change of directors

Du Lixin Director Elected 9 June 2022 Change of directors

Peng Yanli Director Elected 9 June 2022 Change of directors

Quan Yuhua Director Elected 9 June 2022 Change of directors

Left for expiration of Change of senior

Zhang Jianxiang Senior management 9 June 2022

term management

Left for expiration of Change of senior

Zhang Wei Senior management 9 June 2022

term management

Left for expiration of Change of senior

Fu Guannan Senior management 9 June 2022

term management

Change of senior

Lyu Wenquan Senior management Engaged 9 June 2022

management

Change of senior

Xu Feng Senior management Engaged 9 June 2022

management

2. Biographical Information

Professional backgrounds major work experience and current duties in the Company of the incumbent directors supervisors and

senior management:

1. Mr. Liu Zibin: Chairman and President of the Company born in 1965 with a master degree. He served as the GM and chairman of

Zibo Lucheng Textile Co. Ltd. And he currently serves as the chairman and president of Luthai Textile Co. Ltd. the chairman of

Lufeng Textile Dyeing Co. Ltd. the chairman of Zibo Xinsheng Thermoelectric Co. Ltd. the chairman of Zibo Lu Qun Textile Co.Ltd. the chairman of Shanghai Luthai Textile and Garment Co. Ltd. the chairman of Luthai (Hong Kong) Co. Ltd. the chairman of

Shanghai Zhinuo Textile New Materials Co. Ltd. the chairman of Shandong Lulian New Materials Co. Ltd. the chairman of

Shandong Lujia Import and Export Co. Ltd. and the chairman of Hainan Huilin International Holdings Co. Ltd.

2. Mr. Xu Zhinan: Vice chairman of the Company born in 1930 Thai nationality. He used to be director and deputy GM of Lu Thai

Textile Co. Ltd. And he currently serves as the director and deputy chairman of the Company and GM of Thailand Fiber Co. Ltd.

3. Ms. Xu Jianlyu: Director of the Company born in 1975 Thai nationality. She currently serves as president of Cassardi

International Co. Ltd.

4. Mr. Zheng Huisheng: Director of the Company born in 1988 Thai nationality. He currently serves as director of Cassardi

International Co. Ltd.

5. Mr. Liu Deming: Director of the Company deputy head of global marketing department born in 1990 with a master degree.

Currently he serves as chairman and GM of Zibo Lucheng Textile Investment Co. Ltd. director of Lu Thai Textile Co. Ltd. and

deputy head of global marketing department of Lu Thai Textile Co. Ltd.

6. Mr. Zhang Zhanqi: Director vice president and head of global marketing department of the Company and GM of LuFeng

Company Limited born in 1972 with a master degree of business administration. Also he serves as a senior engineer once was the

factory director of fabric finishing factory and manager of quality management department of the Company.

7. Mr. Zhang Keming: Director Board Secretary Chief Accountant and head of Financial Management Department of the Company.

Born in 1968 with a master degree of business administration he is a senior accountant. Once he was deputy manager and manager

of the financial department of the Company.

8. Mr. Du Lixin: Director chief engineer and executive dean of Luthai Institute of Engineering and Technology of the Company.

Born in 1975 he served as spinning operator a weaver's planner a deputy director of the production department's dispatching room

a weaver's factory director a manager of the weaving department and a deputy manager of the production department of Lu Thai.

9. Mr. Zhou Zhiji: Independent director of the Company born in 1963 with a bachelor degree. He is in possession of the certificates

of CPA and senior accountant. He served as a cadre of Shandong Provincial Department of Finance director of department of

Shandong accounting firm chief accountant of Shandong Zhengyuan Accounting Firm director and manager of Shandong Yingshida

Enterprise Management Consulting Co. Ltd. chairman of Shandong Jinheng Consulting Co. Ltd. Now he serves as a supervisor of

43Lu Thai Textile Co. Ltd. Annual Report 2022

Shandong Jinheng Consulting Co. Ltd.

10. Ms. Qu Dongmei: Independent director of the Company born in 1969 with a doctor degree of economic law. She currently

serves as a professor at the School of Law of Shandong Normal University a master's supervisor in Civil and Commercial Law a

lawyer of Grandall Law Firm (Jinan) and an arbitrator of Jinan Arbitration Commission.

11. Ms. Peng Yanli: Independent director of the Company born in 1961 with a master degree of business administration. She is a

senior engineer at the level of professor. As a former official in the former Ministry of the Textile Industry and the former China

Textile Federation she served as president of China Wool Textile Association deputy secretary general of China National Textile and

Apparel Council vice chairman of China Textile Engineering Society and deputy director of China Textile Information Center.

12. Ms. Quan Yuhua: Independent director of the Company born in 1956 with a bachelor degree. She is a senior accountant.

Moreover she served as manager of the financing department of the CCB Shandong Branch Trust and Investment Company the

director assistant in the information and research office the entrusted loan office and the fee-based business department of the CCB

Shandong Branch and the level-5 customer manager in the Zhenzhuquan Branch of CCB in Jinan City.

13. Mr. Zhang Shougang: Chairman of the Board of Supervisors born in 1970 with a master degree of business administration. He is

in possession of a certificate of senior engineer. And he served as director of the weaving factory manager of the weaving department

manager of the quality management department manager of the garment production department manager of the enterprise

management department and Director of Human Resources Department of the Company.

14. Mr. Liu Zilong: Supervisor of the Company born in 1968 with a master degree of business administration. In addition he has

served as the GM of Luthai (Hong Kong) since 2002.

15. Mr. Dong Shibing: Supervisor of the Company born in 1969 with a diploma of technical secondary school. He once served as

deputy director of the GM's office of the Company. Currently he served as the manager of the Company's logistics management

department and GM of Zibo Banyang Villa Hotel Co. Ltd.

16. Mr. Wang Jiabin: Chairman of the Labor Union and head of safety of the Company. Born in 1963 with a master degree of

business administration he served as workshop director of Zibo No. 1 Cotton Textile Mill director of labor safety weaving

workshop director of Luthai Textile Co. Ltd. director of power director of bleaching and dyeing factory manager of bleaching and

dyeing department assistant to the GM head of yarn-dyed fabric product line and vice president.

17. Mr. Shang Chenggang: President Assistant and head of apparel product line of the Company. Born in 1973 he served as deputy

director director manager of GM department management representative and manager of garment production department head of

garment manufacturing center & manager of garment production management department of the Company.

18. Mr. Yu Shouzheng: President Assistant Head of the energy and environmental protection department of the Company GM of

Zibo Xinsheng Thermal Power Co. Ltd. born in 1968 with a master degree of business administration. As an engineer he once

worked as the director of the power department and manager of the energy division of the Company.

19. Mr. Fujiwara Matsuzaka: GM of branch office in Japan Japanese with a bachelor degree. He is a special foreign expert of the

Company and he once won the Qilu Friendship Award. In addition he served as deputy manager of international business

department manager of No.1 international business department manager of No.2 international business department and manager of

clothing marketing department of Luthai Textile Co. Ltd.

20. Mr. Li Wenji: Controller of the enterprise management department born in 1967. Once he was a teacher of Shandong University

of Finance. He once served as the manager of the Company's information department and CIO.

21. Mr. Guo Heng: Head of Functional Fabric Product Line. Born in 1972 he served as the deputy director of the spinning factory of

Lu Thai the deputy manager of the yarn business department and the manager of the yarn business department and head of

enterprise management department of Lu Thai.

22. Mr. Lyu Wenquan: Deputy head of the yarn-dyed fabric product line manager of the yarn-dyed production management

department born in 1973. He serves as a senior engineer. Moreover he is one of the middle-aged and young experts in Zibo City and

one of the “Torch Talents” for Zibo High-tech Zone. In addition he served as a factory director and the manager of the fabric

finishing business department of Lu Thai.

44Lu Thai Textile Co. Ltd. Annual Report 2022

23. Mr. Xu Feng: Deputy head of the yarn-dyed fabric product line born in 1977. He is an engineer and served as assistant manager

of the bleaching and dyeing business department.Offices held concurrently in shareholding entities:

□ Applicable □ Not applicable

Remuneration or

Office held in the End of allowance from

Name Shareholding entity Start of tenure

shareholding entity tenure the shareholding

entity

Zibo Lucheng Textile

Liu Zibin Director 26 February 1999 No

Investment Co. Ltd.Tailun (Thailand) Textile Co.Xu Zhinan GM 29 January 1985 No

Ltd.Zibo Lucheng Textile

Liu Deming Chairman and GM 1 February 2017 No

Investment Co. Ltd.Mr. Liu Zibin is the Director of Zibo Lucheng Textile Investment Co. Ltd. holding 4% equities of Zibo

Explanations Lucheng Textile Investment Co. Ltd. Basic information of Mr. Liu Zibin: Chinese no right of residence in other

about holding countries or regions. Mr. Liu Deming holds the post of Chairman and GM of Zibo Lucheng Textile Investment

posts in Co. Ltd. holding 21% equities of Zibo Lucheng Textile Investment Co. Ltd. Basic information of Mr. Liu

shareholders’ Deming: Chinese no right of residence in other countries or regions. Mr. Xu Zhinan is the sponsor of foreign

companies capital of the Company shareholder of Tailun (Thailand) Textile Co. Ltd. and Tailun (Thailand) Textile Co.Ltd. is the second largest shareholder of the Company. Basic information about Mr. Xu Zhinan: Thai.Offices held concurrently in other entities:

□ Applicable □ Not applicable

Remuneration or

Office held in End of

Name Other entity Start of tenure allowance from

the entity tenure

the entity

LuFeng Company Limited Zibo

Luqun Textile Co. Ltd. Zibo

Xinsheng Thermal Power Co.Ltd. Shanghai Lu Thai Textile

Garment Co. Ltd. Lu Thai (HK)

Chairman of the

Textile Co. Ltd Shanghai Zhinuo

Liu Zibin Board Director 7 December 2015 No

Textile New Material Co. Ltd

GM

Shandong Lulian New Materials

Co. Ltd. Shandong Lujia Import

and Export Co. Ltd. Hainan

Huilin International Holdings Co.Ltd.LuFeng Company Limited Zibo

Xinsheng Thermal Power Co.Ltd. Zibo Luqun Textile Co. Ltd.Liu Shandong Lulian New Materials

Director 21 August 2017 No

Deming Co. Ltd. Shanghai Zhinuo Textile

New Materials Co. Ltd. Beijing

Zhishu Management Consulting

Co. Ltd.Zhang

LuFeng Company Limited Director and GM 5 July 2014 No

Zhanqi

Zibo Luqun Textile Co. Ltd.Shandong Lulian New Materials

Co. Ltd. LuFeng Company

Zhang Director

Limited Shanghai Luthai Textile 3 March 2022 No

Keming Supervisor

and Apparel Co. Ltd. Shanghai

Zhinuo Textile New Materials Co.Ltd.Shandong Jinheng Consulting Co.Zhou Zhiji Supervisor 1 October 2015 Yes

Ltd

Qu Law School of Shandong Normal Professor 1 July 2003 Yes

45Lu Thai Textile Co. Ltd. Annual Report 2022

Dongmei University

Shandong High End Blueberry

Director and

Quan Biotechnology Co. Ltd.Independent 1 April 2008 Yes

Yuhua Shandong Spark International

Director

Education Group Co. Ltd.Lu Thai (Hong Kong) Textile Co.Liu Zilong GM 9 May 2005 No

Ltd.Dong Zibo Banyang Villa Hotel Co.Director and GM 2 April 2021 No

Shibing Ltd.Yu Zibo Xinsheng Thermal Power

Director and GM 13 April 2021 No

Shouzheng Co. Ltd.Shandong Lulian New Materials

Guo Heng Director and GM 28 August 2021 No

Co. Ltd.Explanatio

ns about

holding Except for independent directors all other entities the Company’s directors supervisors and senior management

posts in hold posts are majority-owned subsidiaries of the Company.other

entities

Punishments imposed in the recent three years by the securities regulator on the incumbent directors supervisors and senior

management as well as those who left in the Reporting Period:

□ Applicable □ Not applicable

3. Remuneration of Directors Supervisors and Senior Management

Decision-making procedure determination basis and actual payments of remuneration for directors supervisors and senior

management:

The Remuneration and Appraisal Committee under the Board of Directors of the Company is liable to not only preparing appraisal

criteria for directors and senior management of the Company and appraising them but also preparing and reviewing remuneration

policies and plans for directors and senior management of the Company who is liable to the Board of Directors. The Remuneration

and Appraisal Committee shall propose the remuneration amount of directors and senior management according to the Company's

management condition and post performance results and shall report to the Board of Directors for ratification after the approval by

voting.The Controller of Financial Management Department the Corporate Management Department and the HR Department of the

Company shall be liable to the preliminary preparation for the decision of the Remuneration and Appraisal Committee including but

not limited to providing information such as the Company's main financial indicators and the completion of management objectives.The Remuneration and Appraisal Committee shall confirm the annual appraisal results of directors and officers in accordance with

the completion of the Company's performance and the remuneration criteria for officers and shall report to the Board of Directors for

ratification after the approval by voting.The number of incumbent directors supervisors and senior executives is 23 among which there are 19 persons actually receiving

remuneration from the Company. By 31 December 2022 the total amount of annual payment drawn from the Company by directors

supervisors and senior executives is RMB12.4533 million (before tax).Remuneration of directors supervisors and senior management for the Reporting Period

Unit: RMB'0000

Total

Any

before-tax

Incumbent remuneration

Name Office title Gender Age remunerati

/Former from related

on from the

party

Company

Liu Zibin Chairman and President Male 58 Incumbent 101.07 No

Xu Zhinan Vice Chairman Male 93 Incumbent 0.00 No

46Lu Thai Textile Co. Ltd. Annual Report 2022

Xu Jianlyu Director Female 48 Incumbent 0.00 No

Zheng

Director Male 35 Incumbent 0.00 No

Huisheng

Liu Director Deputy Head of Global Marketing

Male 33 Incumbent 77.76 No

Deming Department

Zhang Director Vice president Head of Global

Male 51 Incumbent 92.81 No

Zhanqi Marketing Department

Zhang Director Board Secretary Chief Accountant Head

Male 55 Incumbent 79.62 No

Keming of Financial Management Department

Director Chief Engineer Executive Dean of Lu

Du Lixin Male 48 Incumbent 79.76 No

Thai Engineering Technology Research Institute

Zhou Zhiji Independent Director Male 60 Incumbent 5.70 No

Qu

Independent Director Female 54 Incumbent 5.70 No

Dongmei

Peng Yanli Independent Director Female 62 Incumbent 0.00 No

Quan

Independent Director Female 67 Incumbent 3.50 No

Yuhua

Zhang

Chairman of the Supervisory Committee Male 53 Incumbent 62.20 No

Shougang

Liu Zilong Supervisor Male 55 Incumbent 79.88 No

Dong Supervisor Manager of Logistics Management

Male 54 Incumbent 77.62 No

Shibing Department

Wang

Head of Safety Chairman of the Labor Union Male 60 Incumbent 90.60 No

Jiabin

Shang

President Assistant Head of Apparel Product Line Male 50 Incumbent 78.81 No

Chenggang

Yu President Assistant Head of Energy and

Male 55 Incumbent 79.76 No

Shouzheng Environment Protection Department

Fujiwara

GM of Japan Office Male 50 Incumbent 104.79 No

Matsuzaka

Li Wenji Head of Business Management Department Male 56 Incumbent 80.35 No

Guo Heng Head of Functional Fabric Product Line Male 51 Incumbent 79.18 No

Deputy Head of Yarn Dyed Fabric Product Line

Lyu

and Manager of Yarn Dyed Fabric Production Male 50 Incumbent 25.76 No

Wenquan

Management Department

Xu Feng Deputy Head of Yarn Dyed Fabric Product Line Male 46 Incumbent 40.46 No

Total -- -- -- -- 1245.33 --

VI Performance of Duty by Directors in the Reporting Period

1. Board Meeting Convened during the Reporting Period

Date of the

Meeting Disclosure date Meeting resolutions

meeting

29th Meeting of the 9th Board of Two proposals including the Proposal on Routine

24 January 2022 26 January 2022

Directors Related Transactions were deliberated and approved.Three proposals including the Proposal on Granting

30th Meeting of the 9th Board of the Reserved Restricted Shares under the 2021

18 February 2022 19 February 2022

Directors Incentive Plan to the Incentive Personnel were

deliberated and approved.Five proposals including the Proposal on the

st th Application for Comprehensive Credit Line of 31 Meeting of the 9 Board of

30 March 2022 31 March 2022 RMB800 million from the Zibo Branch of China

Directors

Minsheng Bank Co. Ltd. were deliberated and

approved.nd th A total of 17 proposals including the Proposal on 32 Meeting of the 9 Board of

27 April 2022 29 April 2022 2021 Annual Work Report of the Board of Directors

Directors

the Proposal on 2021 Annual Work Report of the

47Lu Thai Textile Co. Ltd. Annual Report 2022

President and the Proposal on the Company’s 2021

Annual Report and Its Abstracts were deliberated and

approved.Eight proposals including the Proposal on the

Election of the Board of Directors and the Nomination

of the Candidates for Directors of the Tenth Board of

33rd Meeting of the 9th Board of Directors the Proposal on the Nomination of the

24 May 2022 25 May 2022

Directors Candidates for Independent Directors of the Tenth

Board of Directors and the Proposal on the

Company’s Plan for Derivative Transaction were

deliberated and approved.Seven proposals including the Proposal on the

st th Election of the Nominating Committee for the Tenth 1 Meeting of the 10 Board of

9 June 2022 10 June 2022 Board of Directors and the Proposal on the Election of

Directors

the Chairman and Vice Chairmans of the Tenth Board

of Directors were deliberated and approved.Three proposals including the Proposal on

2nd Meeting of the 10th Board of Repurchase of the Company’s Domestically Listed

29 June 2022 30 June 2022

Directors Foreign Shares (B Share) were deliberated and

approved.Five proposals including the Proposal on the

rd th Company’s 2022 Interim Report and Its Abstracts and 3 Meeting of the 10 Board of

24 August 2022 26 August 2022 the Proposal on the 2022 Special Interim Report of

Directors

the Deposit and Use of the Raised Funds were

deliberated and approved.

4th Meeting of the 10th Board of Two proposals including the Proposal on the 2022

27 October 2022 29 October 2022

Directors Third Quarter Report were deliberated and approved.

2. Attendance of Directors at Board Meetings and General Meetings

Attendance of directors at board meetings and general meetings

Total number of Board meetings Board Board The director

Board

board meetings attended by way meetings meetings failed to attend General

meetings

Director the director was of attended the director two consecutive meetings

attended on

eligible to telecommunicat through a failed to board meetings attended

site

attend ion proxy attend (yes/no)

Liu Zibin 9 9 0 0 0 No 4

Xu Zhinan 9 0 9 0 0 No 0

Liu

9 9 0 0 0 No 4

Deming

Xu Jianlyu 4 0 4 0 0 No 0

Zheng

4 0 4 0 0 No 0

Huisheng

Zhang

4 4 0 0 0 No 4

Zhanqi

Zhang

4 4 0 0 0 No 4

Keming

Du Lixin 4 4 0 0 0 No 4

Zhou Zhiji 9 3 6 0 0 No 2

Qu

9 2 7 0 0 No 1

Dongmei

Peng

4 0 4 0 0 No 0

Yanli

Quan

4 1 3 0 0 No 1

Yuhua

Why any director failed to attend two consecutive board meetings:

48Lu Thai Textile Co. Ltd. Annual Report 2022

Not applicable.

3. Objections Raised by Directors on Matters of the Company

Indicate by tick mark whether any directors raised any objections on any matter of the Company.□ Yes □ No

No such cases in the Reporting Period.

4. Other Information about the Performance of Duty by Directors

Indicate by tick mark whether any suggestions from directors were adopted by the Company.□ Yes □ No

Suggestions from directors adopted or not adopted by the Company

Naught

VII Performance of Duty by Specialized Committees under the Board in the Reporting

Period

Other

Details

Numbe informat

about

r of ion

issues

Committe meetin Convene Important opinions and about

Members Content with

e gs d date suggestions raised the

objectio

conven perform

ns

ed ance of

(if any)

duty

The opinions were as

follows: (1) Preparing the

Company's financial

accounting statements in

accordance with the

Company's accounting

policies and applying

accounting policies

properly it carried out

Mainly the Company's accounting estimate fully

financial statements and reasonably which

submitted to Grant conformed to the New

Thornton Certified Accounting Standard for

Zhou Public Accountants Business Enterprises

Audit Zhiji Qu 20 LLP for preliminary accounting system for

Committe Dongmei 5 January audit were reviewed enterprises and the

e and Zhang 2022 written opinions were requirements of relevant

Keming expressed and provisions issued by the

communication with Ministry of Finance; (2)

Leader of annual audit Unit statements of the

accountant project was Company's financial

conducted. statements that were

included in the scope of

consolidation were

complete while the

statement consolidation

basis was accurate; (3) The

financial statements of the

Company were objective

true and accurate without

any major misstatement or

49Lu Thai Textile Co. Ltd. Annual Report 2022

omission; (4) And due to the

fact that there still is a

period of time from the day

for review of the financial

statements to the day for

audit report and financial

statement release the

Financial Management

Department of the Company

was submitted to focus on

and cope with post balance

sheet events so as to ensure

the fairness authenticity and

integrity of the financial

statements. The Audit

Committee thought that the

financial accounting

statements could be

submitted to Annual

Certified Public Accountant

for audit according to annual

audit plan.The following matters

were mainly audited:

(1) The Company's

2021 Annual Financial

Report audited by the

accounting firm. (2)

The opinions were as

Conclusion Report on

follows: The procedure of

the Company's Audit

financial statement

Work for the 2021

preparation was reasonable

Annual Financial

and normative as the

Report conducted by

Company conformed to the

Grant Thornton

New Accounting Standard

Certified Public

for Business Enterprises and

Accountants LLP. (3)

relevant provisions of the

Proposal on the renewal

Company's financial system

of Grant Thornton

which fairly reflected the

Certified Public

Company's assets liabilities

Accountants LLP As

shareholders' equity and

27 April the Company's 2022

operating results by 31

2022 Annual Financial Audit December 2021 which were

and Internal Control

true accurate and complete.Audit Institution. (4)

The Audit Committee

Report of the 2021

thought that the Company's

Annual Deposit and

2021 Annual Financial

Use of the Raised

Accounting Report that was

Funds. (5) Report on

preliminarily approved by

the Implementation of

Grant Thornton Certified

the 2021 Annual

Public Accountants LLP

Internal Audit Plan; (6)

could be submitted to the

2022 Annual Internal

32rd Meeting of the 9th

Audit Plan; (7) Special

Board of Directors for

Report of the Deposit

review.and Use of the Raised

Funds in Q1 2022; and

(8) Report on the

Implementation of the

Internal Audit Plan for

Q1 2022

Mainly the following The following proposals

matters were were adopted by voting at

13 deliberated: (1) Special the meeting: Special Interim

August Interim Report 2022 of Report 2022 of the Deposit

2022 the Deposit and Use of and Use of the Raised Funds

the Raised Funds. (2) and Interim Report 2022 on

Interim Report 2022 on the Implementation of

50Lu Thai Textile Co. Ltd. Annual Report 2022

the Implementation of Internal Audit Plan.Internal Audit Plan.Mainly the following

matters were The following proposals

deliberated at the were adopted by voting at

meeting: (1) Special the meeting: Special Report

17 Report on the Deposit on the Deposit and Use of

October and Use of the Raised the Raised Funds of 2022

2022 Funds of 2022 Third Third Quarter and Report on

Quarter. (2) Report on the Implementation of

the Implementation of Internal Audit Plan of 2022

Internal Audit Plan of Third Quarter.

2022 Third Quarter.

The time arrangement plan

for 2022 annual financial

audit work was unanimously

11 The time arrangement determined at the meeting

for the Company's 2022

Novemb through the negotiation with

annual financial audit

er 2022 the 2022 annual audit work was negotiated.institution Grant Thornton

Certified Public

Accountants LLP.The following proposals

were deliberated and

The main topics of the approved by voting at the

meeting were: meeting:

(1) The Remuneration The Remuneration

Standards and Standards and Appraisal

Appraisal Plan of Lu Plan of Lu Thai Textile Co.Thai Textile Co. Ltd. Ltd. for Senior Management

for Senior Management Personnel and the Proposal

27 April

Personnel. of Lu Thai Textile Co. Ltd.

2022 (2) The Proposal of Lu on the Appraisal Results of

Thai Textile Co. Ltd. Directors and Senior

on the Appraisal Management Personnel in

Results of Directors 2021. Meanwhile the

and Senior submission of the second

Management Personnel proposal to the 32nd

Peng in 2021. Meeting of the 9th Board of

Yanli Liu Directors for deliberation

Remunera was approved.Zibin

tion The following proposals

Zhou 2

Committe were deliberated and

Zhiji and

e The main topics of the approved by voting at the

Qu meeting were: meeting:

Dongmei (1) The Appraisal The Appraisal Report on the

Report on the Personal Personal Performance of the

Performance of the Incentive Personnel of the

Incentive Personnel of 2021 Restricted Share

the 2021 Restricted Incentive Scheme and the

Share Incentive Proposal on the

20 May

Scheme. Achievement of Lifting the

2022 (2) The Proposal on the Restriction Conditions in the

Achievement of Lifting First Restriction Period for

the Restriction the First Grant of the 2021

Conditions in the First Restricted Share Incentive

Restriction Period for Scheme. Meanwhile the

the First Grant of the submission of the second

2021 Restricted Share proposal to the 33rd

Incentive Scheme. Meeting of the 9th Board of

Directors for deliberation

was approved.Liu Zibin The Strategic Planning The Strategic Planning of

Strategy

Xu 27 April of Lu Thai Textile for Lu Thai Textile for 2022-

Committe 1

Zhinan 2022 2022-2026 was 2026 was approved at the

e

Liu reviewed. meeting by poll.

51Lu Thai Textile Co. Ltd. Annual Report 2022

Deming

Xu

Jianlyu

Zheng

Huisheng

Zhang

Zhanqi

Zhang

Keming

Du Lixin

Zhou

Zhiji Qu

Dongmei

Peng

Yanli

Quan

Yuhua

The following proposals

were approved by voting at

The main topics of the the meeting:

meeting were: The Proposal on the

(1) The Proposal on the Election of the Board of

Election of the Board of Directors and the

Directors and the Nomination of the

Nomination of the Candidates for Directors of

Candidates for the Tenth Board of Directors

20 May

Directors of the Tenth and the Proposal on the

2022 Board of Directors. Nomination of the

(2) The Proposal on the Candidates for Independent

Nomination of the Directors of the Tenth Board

Candidates for of Directors. Meanwhile the

Qu Independent Directors submission of the two

Dongmei of the Tenth Board of proposals to the 33rd

Liu Zibin Directors. Meeting of the 9th Board of

Nominati Directors for deliberation

Xu

on was approved.Zhinan 2

Committe The Proposal on the

Zhou

e Nomination of the

Zhiji The main topic of the Candidates for the Chairman

meeting was:

Peng and Vice Chairmans of the

(1) The Proposal on the

Yanli Board of Directors Nomination of the

Members of Special

Candidates for the

Committees President Vice

Chairman and Vice

Presidents Chief

Chairmans of the Board

Accountant Board

9 June of Directors Members

Secretary Securities Affairs

2022 of Special Committees Representative and other

President Vice

Senior Management

Presidents Chief

Personnel was deliberated

Accountant Board

and approved at the

Secretary Securities

meeting. In addition it was

Affairs Representative

submitted to the First

and other Senior

Meeting of the Tenth Board

Management Personnel.of Directors for deliberation

and approval.VIII Performance of Duty by the Supervisory Committee

Indicate by tick mark whether the Supervisory Committee found any risk to the Company during its supervision in the Reporting

Period.□ Yes □ No

52Lu Thai Textile Co. Ltd. Annual Report 2022

The Supervisory Committee raised no objections in the Reporting Period.IX Employees

1. Number Functions and Educational Backgrounds of Employees

Number of in-service employees of the Company as the parent

8608

at the period-end

Number of in-service employees of major subsidiaries at the

14420

period-end

Total number of in-service employees 23028

Total number of paid employees in the Reporting Period 23028

Number of retirees to whom the Company as the parent or its

0

major subsidiaries need to pay retirement pensions

Functions

Function Employees

Production 17149

Sales 518

Technical 4670

Financial 104

Administrative 587

Total 23028

Educational backgrounds

Educational background Employees

Doctor 3

Master 80

Bachelor 1317

College 4523

High school and below 17105

Total 23028

2. Employee Remuneration PolicyThe Company has formulated a remuneration management system with its principle being “payment according to one’s work andmore pay for more work”. Through post evaluation and through researches of Social salary levels carried out as multi-faceted as well

as the formulation of the reasonable salary management system fully demonstrates the internal fairness self-fairness and external

fairness. It has greatly motivated the employees and enhanced the corporate management.

3. Employee Training Plans

Trainings will be carried out according to requirements of the Company’s strategic development planning improvement of

employees’ capability performance management employees’ career planning etc. The annual training plan is determined by

carrying out researches on training needs. And the training courses fall into three major categories i.e. management technical skills

and general knowledge. Through these trainings the Company will improve the knowledge structure of its employees improve their

job skills and increase their comprehensive quality to provide excellent human resources for the long-term sustained and stable

53Lu Thai Textile Co. Ltd. Annual Report 2022

development of the Company.

4. Labor Outsourcing

□ Applicable □ Not applicable

Total man-hours (hour) 495904

Total rewards paid (RMB) 10062747.57

X Profit Distributions (in the Form of Cash and/or Stock)

How the profit distribution policy especially the cash dividend policy was formulated executed or revised in the Reporting Period:

□Applicable □ Not applicable

Indicate by tick mark whether the Company fails to put forward a cash dividend proposal for shareholders despite the facts that the

Company has made profits in the Reporting Period and the profits of the Company as the parent distributable to shareholders are

positive.□Applicable □ Not applicable

Final dividend plan for the Reporting Period

□ Applicable □ Not applicable

Bonus shares for every 10 shares (share) 0

Dividend for every 10 shares (RMB) (tax inclusive) 1

Bonus issue from capital reserves (share/10 shares) 0

Total shares as the basis for the profit distribution proposal 887633151

(share)

Cash dividends (RMB) (tax inclusive) 86631432.30

Cash dividends in other forms (such as share repurchase)

85897953.56

(RMB)

Total cash dividends (including those in other forms) (RMB) 172529385.86

Distributable profit (RMB) 5600420185.06

Total cash dividends (including those in other forms) as % of

100%

total profit distribution

Cash dividend policy

If the Company is in a mature development stage and has plans for any significant expenditure in profit allocation the ratio of

cash dividends in the profit allocation shall be 40% or above.Details about the proposal for profit distribution and converting capital reserve into share capital

Based on 887633151 shares (including shares transferred from convertible bonds for the Reporting Period) on 31 December

2022 the cash allocated per 10 shares is RMB1.00 (including tax). The Company implemented B-share repurchase from 27 July

2022. As at the end of 31 December 2022 a total of 21318828 B shares were repurchased but not cancelled yet which were

treasury shares enjoying no shareholders’ rights such as profit distribution in accordance with relevant regulations. The individual

income tax for A Share shall be subject to related regulations under CS [2015] No. 101 Notice on Certain Question about the

Differentiated Individual Income Tax Policy for Cash Dividend of Listed Companies jointly issued by Ministry of Finance SAT

and CSRC; and that for B Share shall be conversed to HKD based on the central parity rate on interbank exchange market released

by the People’s Bank of China on the following day after shareholder’s meeting (for domestic individual shareholders tax is paid

pursuant to CS [2015] No. 101; for foreign shareholders tax is free pursuant to CSZ (1994) No. 020 regulations; and non-

residential corporate shareholders is entitled to a 10% reduction of enterprise income tax according to related regulations under

Enterprise Income Tax Law of the People’s Republic of China). Since the Company is in the period of transferring convertible

bonds into shares and repurchase of B Share the profit distribution will be conducted based on the total share capital on the equity

registration date (deducting the number of shares repurchased that have not yet been cancelled) for implementing this profit

distribution plan with no change in the amount per share.

54Lu Thai Textile Co. Ltd. Annual Report 2022

XI Equity Incentive Plans Employee Stock Ownership Plans or Other Incentive Measures

for Employees

□ Applicable □ Not applicable

1. Equity Incentive

Deliberation

No. Relevant meeting Overview of execution Disclosure index

time

It deliberated and approved the Proposal on

Granting the Reserved Restricted Shares under the

2021 Incentive Plan to the Incentive Personnel and

Proposal on Repurchase and Cancel Authorized

th but Unlocked Restricted Share of the Incentive The 30 Meeting of

th Personnel not Conforming to the Incentive the 9 Board of Relevant documents

th Condition. The independent directors consented 18 February Directors The 18 published on

1 th independently to relevant matters. The 2022 Meeting of the 9 http://www.cninfo.co on 19

Supervisory Committee verified the list of

Supervisory February 2022

incentive personnel reserved for granting and

Committee

issued its agreeable verification opinions. In the

meantime the Board of Supervisors reviewed and

approved the above two proposals and issued its

written verification opinions. Beijing DHH

(Qingdao) Law Firm issued a legal opinion.st Announcement (No. 2022-The 1 Extraordinary It deliberated and adopted the Proposal on

7 March 012) published on

2 General Meeting of Repurchase and Cancel Authorized but Unlocked

2022 http://www.cninfo.co on 8

2022 Restricted Share of Some Incentive Personnel.

March 2022

As audited and confirmed by Shenzhen Stock

Exchange and the Shenzhen Branch of China

Relevant announcement

Securities Depository and Clearing Corporation

18 March published on

3 - Limited (hereinafter referred to as "China Clear")

2022 http://www.cninfo.co on 18

the registration of granted reserved shares of

March 2022

5838000 under the 2021 restricted share incentive

scheme was completed.As audited and confirmed by Shenzhen Stock

Exchange and the Shenzhen Branch of China

Announcement (No. 2022-

Clear the procedures of repurchasing and

031) published on

4 14 May 2022 - canceling 240000 shares of authorized and

http://www.cninfo.co on 14

unlocked restricted share of the incentive

May 2022

personnel not conforming to the incentive

condition were completed.The Company reviewed and approved the

Proposal on the Achievement of Lifting the

Restriction Conditions in the First Lifting

Restriction Period for the First Grant Portion of

The 33rd Meeting of the 2021 Restricted Share Incentive Scheme. The

the 9th Board of Company’s independent directors expressed their Relevant announcements

Directors The 20th independent opinions on relevant matters. The published on

5 24 May 2022

Meeting of the 9th Board of Supervisors reviewed and approved the http://www.cninfo.co on 25

Supervisory Proposal on the Achievement of Lifting the May 2022

Committee Restriction Conditions in the First Restriction

Period for the First Grant of the 2021 Restricted

Share Incentive Scheme and expressed its written

review opinion. The number of the subjects of

incentive participating in the assessment in the first

55Lu Thai Textile Co. Ltd. Annual Report 2022

restriction period for the first grant of the 2021

restricted share incentive scheme of the Company

were up to 735 among which 733 meet the

conditions to be released and the total amount of

restricted shares that can be released was

9578000. The restricted shares released this time

were listed and traded on 8 June 2022.It issued the Proposal of Indicative Announcement

Announcement (No. 2022-

on the Trading on the Market of Lifting the

041) published on

6 31 May 2022 - Restriction in the First Restriction Period for the

http://www.cninfo.co on 31

First Grant of the 2021 Restricted Share Incentive

May 2022

Scheme.It deliberated and approved the Proposal on

Repurchase and Cancel Authorized but Unlocked

Restricted Share of the Incentive Personnel not

nd Conforming to the Incentive Condition. In

The 2 Meeting of

th addition the Company's independent directors

the 10 Board of Relevant announcements

nd voiced their independent opinions on the relevant

Directors The 2 published on

7 29 June 2022 th matters. The Supervisory Committee deliberated

Meeting of the 10 http://www.cninfo.co on 30

and approved the Proposal on Repurchase and

Supervisory June 2022

Cancel Authorized but Unlocked Restricted Share

Committee

of the Incentive Personnel not Conforming to the

Incentive Condition and issued a written review

opinion. Beijing DHH (Qingdao) Law Firm issued

the legal opinion.The Company reviewed and approved the

Proposal on Repurchase and Cancel Authorized

rd Relevant announcements The 3 Extraordinary but Unlocked Restricted Share of the Incentive

published on

8 15 July 2022 General Meeting of Personnel not Conforming to the Incentive

http://www.cninfo.co on 16

2022 Condition and released the Announcement of

July 2022

Capital Reduction on Repurchase and Cancel

Partial Shares on 16 July 2022.As audited and confirmed by Shenzhen Stock

Exchange and the Shenzhen Branch of China

Announcement (No. 2022-

Clear the procedures of repurchasing and

30 September 081) published on

9 - canceling 308000 shares of authorized and

2022 http://www.cninfo.co on 30

unlocked restricted share of the incentive

September 2022

personnel not conforming to the incentive

condition were completed.Equity incentives for directors supervisors and senior management in the Reporting Period:

□ Applicable □ Not applicable

Unit: share

Exerci

se Numb

Share price er of

Numb The

Share s Share of Numb restric Numb

Marke er of grant

option feasib s exerci er of ted er of

Share Share t price releas price

s le to exerci sed restric shares restric

option option at the ed of

grante exerci sed shares ted newly ted

Office s held s held period shares restric

Name d in se during during shares grante shares

title at the at the -end for ted

the during the the held d held

period period (RMB the shares

Repor the Repor Repor at the during at the

-begin -end /share Repor (RMB

ting Repor ting ting period the period

) ting /share

Period ting Period Period -begin Repor -end

Period )

Period (RMB ting

/share Period

)

Zhang Direct 3000 1200 2000 3800

3.56

Zhanq or 00 00 00 00

56Lu Thai Textile Co. Ltd. Annual Report 2022

i Vice

Presid

ent

Contr

oller

of

Globa

l

Marke

ting

Depar

tment

Direct

or

Board

Secret

ary

Chief

Accou

ntant

Zhang

Contr 2000 8000 1000 2200

Kemi 3.56

oller 00 0 00 00

ng

of

Finan

cial

Mana

geme

nt

Depar

tment

Direct

or

Chief

Engin

eer

Execu

tive

Dean

Du of Lu 2000 8000 1000 2200

3.56

Lixin Thai 00 0 00 00

Engin

eering

Techn

ology

Resea

rch

Institu

te

Senior

Wang mana 3000 1200 1800

Jiabin geme 00 00 00

nt

Senior

Shang

mana 2000 8000 1000 2200

Cheng 3.56

geme 00 0 00 00

gang nt

Yu Senior

2000800010002200

Shouz mana 3.56

0000000

heng geme

57Lu Thai Textile Co. Ltd. Annual Report 2022

nt

Senior

Li mana 2000 8000 1000 2200

3.56

Wenji geme 00 0 00 00

nt

Senior

Guo mana 2000 8000 1000 2200

3.56

Heng geme 00 0 00 00

nt

Senior

Lyu

mana 1500 6000 5000 1400

Wenq 3.56

geme 00 0 0 00

uan nt

Senior

Xu mana 1500 6000 1000 1900

3.56

Feng geme 00 0 00 00

nt

2100840095002210

Total -- 0 0 0 0 -- 0 -- --

0000000000

Appraisal of and incentive for senior management

During the Reporting Period the Company constantly improved the performance evaluation mechanism and made the evaluation

and incentive of the Senior Executives concerned with the Company’s performances and the individual working results. According

to the overall development strategy and the annual operating target of the Company at the period-begin the Company confirms the

annual performance comprehensive indication and the management duty of each Senior Executives and executes the performance

examination and the redemption of the rewards and punishment for the Senior Executives by the Remuneration and Examination

Committee affiliated to the Board of Directors at the year-end. The Company will constantly improve the evaluation and incentive

mechanism that to tightly concern the salary of the Senior Executives with the management level and the operating performance so

that to fully mobilize and inspire the initiative and creativity of them.

2. Implementation of Employee Stock Ownership Plans

□Applicable □ Not applicable

3. Other Incentive Measures for Employees

□ Applicable □ Not applicable

On 18 March 2022 the Company completed the granted registration of the reserved shares of 2021 restricted share incentive

scheme and also granted 4888000 reserved shares of the restricted shares to 334 middle management and core members in

addition to the above directors and senior management.XII Establishment and Execution of the Internal Control System for the Reporting Period

1. Establishment and Execution of the Internal Control System

According to Fundamental Norms for Internal Control of Enterprises Supporting Guidelines for Internal Control of Enterprises and

relevant provisions prescribed by securities regulators for the internal control establishment of listed companies combining the actual

status of the Company's business the Company established the internal control system that covers all stages including production and

management as well as adapts to the Company's management requirements and development needs. It is relatively normative and

complete for which its organization is complete and reasonably designed its implementation is basically effective and there is no

substantial omission so as to ensure that the Company's operation and management is legal and compliant the assets are safe and

the financial reports and related information are true and complete and maintain the fundamental interests of all shareholders of the

Company.

58Lu Thai Textile Co. Ltd. Annual Report 2022

Within Reporting Period relevant systems and procedures were timely streamlined and optimized and the sound operation of risk

management and internal control system was ensured by the Company in line with the change of all business procedures and audit

results without any violation of laws regulations or Articles of Incorporation.

2. Material Internal Control Weaknesses Identified for the Reporting Period

□Yes □ No

XIII Management and Control over Subsidiaries by the Company for the Reporting Period

Integration Countermeasur Settlement Follow-up

Subsidiary Integration plan Problem

progress es taken progress settlement plan

-------

XIV Internal Control Self-Evaluation Report or Independent Auditor’s Report on Internal

Control

1. Internal Control Self-Evaluation Report

Disclosure date of the internal control

12 April 2023

self-evaluation report

For details please refer to the Self-appraisal Report on Internal Control of Lu Thai

Index to the disclosed internal control

Textile Co. Ltd. simultaneously disclosed on www.cninfo.com.cn with the 2022

self-evaluation report

Annual Report of the Company.Evaluated entities’ combined assets as %

89.03%

of consolidated total assets

Evaluated entities’ combined operating

revenue as % of consolidated operating 87.72%

revenue

Identification standards for internal control weaknesses

Weaknesses in internal control over Weaknesses in internal control not

Type

financial reporting related to financial reporting

Great defect: (1) malpractices of the Great defect: (1) seriously violated the

Directors Supervisors and Senior national laws and regulations; (2) the

Executives; (2) the CPA founded the decision-making of the enterprise was

current financial report occurred not scientific that led to the serious

significant misstatement while during the mistakes of itself; (3) outflow of the

implementation process of the internal management personnel or the technician

control could not founded the personnel was serious; (4) frequently

misstatement; (3) the supervision of the appeared the negative news from the

Audit Committee and the internal audit Media; (5) the significant business

institution of the Company on the lacked of systematic control or the

internal control was invalid. (4) other systematic control was invalid; (6) the

defects that may cause the Company to result of the internal control assessment

deviate significantly from its control which was the great defect event had not

Nature standard

objectives. Significant defeat: (1) had not been revised. Significant defeat: (1)

abide by the generally accepted violated the enterprise internal

accounting principles to choose and regulations that caused rather serious

apply the accounting policies; had not losses; (2) significant business lacked of

built up the anti-fraud and significant systematic control; (3) outflow of the

counterbalance mechanism and control rather important personnel was serious;

measures; (2) during the financial report (4) the Media reported the negative news

process there occurred single or multiple that caused rather serious negative

defects which not reached the influence; (5) rather important business

recognition standard of the significant lacked of systematic control or the

defeat but influenced the true and systematic control was invalid; (6) the

accurate target of the financial report. results of the internal control assessment

General defect: other internal control which as the significant defect had not

59Lu Thai Textile Co. Ltd. Annual Report 2022

defect which had not constructed as the been revised. General defect: other

great defeat significant defect. internal control defect which had not

constructed as the great defeat

significant defect.Great defect: misstatement≥0.4% of the

total operating income;

Great defect: losses≥0.4% of the total

misstatement≥0.4% of the total owners’

operating income; losses≥0.4% of the

equities amount; misstatement≥0.3% of

total owners’ equities amount;

the total assets amount. Not insignificant:

losses≥0.3% of the total assets amount.

0.2% of the total operating

Great defect: 0.2% of the total operating

income;≤misstatement ＜ 0.4% of the

income≤losses ＜ 0.4% of the total

total operating income; 0.2% of the total

operating income; 0.2% of the total

owners’ equities amount≤misstatement

Quantitative standard owners’ equities amount ≤losses＜0.4%

＜ 0.4% of the total owners’ equities

of the total owners’ equities amount;

amount; 0.15% of the total assets

0.15% of the total assets amount≤losses

amount≤misstatement＜0.3% of the total

＜ 0.3% of the total assets amount.assets amount. Insignificant:

General defect: losses <0.2% of the total

misstatement < 0.2% of the total

operating income; losses < 0.2% of the

operating income; misstatement < 0.2%

total owners’ equities amount; losses <

of the total owners’ equities amount;

0.15% of the total assets amount.

misstatement < 0.15% of the total assets

amount.Number of material weaknesses in

0

internal control over financial reporting

Number of material weaknesses in

internal control not related to financial 0

reporting

Number of serious weaknesses in

0

internal control over financial reporting

Number of serious weaknesses in

internal control not related to financial 0

reporting

2. Independent Auditor’s Report on Internal Control

□ Applicable □ Not applicable

Opinion paragraph in the independent auditor’s report on internal control

All shareholders of Lu Thai Textile Co. Ltd.:

According to Audit Guidelines for Enterprise Internal Control and the relevant requirements of Auditing Standards for Chinese

Certified Public Accountants we have audited the effectiveness of internal control in the financial report of Lu Thai Textile Co.Ltd. (Hereinafter referred to as "Lu Thai Textile”) by 31 December 2022.I. Responsibilities of Lu Thai Textile for internal control

The Board of Directors of Lu Thai Textile is responsible for establishing improving and implementation the internal controls and

evaluating its effectiveness in accordance with Standard for Enterprise Internal Control Application Guidelines for Enterprise

Internal Control Enterprise Internal Control Audit Guidelines.II. Responsibilities of certified public accountants

It is our responsibility to issue an audit opinion on the effectiveness of internal controls in financial report on the basis of the

implementation of the audit and to disclose significant deficiencies in the internal controls of non-financial reports that have been

noted.III. Inherent limitations of internal control

Internal control has inherent limitations and there is a possibility that misreporting cannot be prevented. In addition because the

change of circumstances may cause the internal control to become inappropriate or the degree of compliance with the control

policies and procedures is reduced it is risky to infer the effectiveness of the future internal control based on the audit results of

the internal control.IV. Audit Opinion on Internal Control in Financial Report

We believe that Lu Thai Textile Co. Ltd. kept effectively internal control on financial reporting in all respects according to

Enterprise Internal Control Basic Specification and the relevant provisions on 31 December 2022.Independent auditor’s report on Disclosed

60Lu Thai Textile Co. Ltd. Annual Report 2022

internal control disclosed or not

Disclosure date 12 April 2023

For details please refer to the Auditor’s Report on Internal Control on

Index to such report disclosed

www.cninfo.com.cn at the same time of disclosing the Company’s 2022 Annual Report.Type of the auditor’s opinion Unmodified unqualified opinion

Material weaknesses in internal

control not related to financial None

reporting

Indicate by tick mark whether any modified opinion is expressed in the independent auditor’s report on the Company’s internal

control.□Yes □ No

Indicate by tick mark whether the independent auditor’s report on the Company’s internal control is consistent with the internal

control self-evaluation report issued by the Company’s Board.□ Yes □No

XV Rectifications of Problems Identified by Self-inspection in the Special Action for Listed

Company Governance

Not applicable.

61Lu Thai Textile Co. Ltd. Annual Report 2022

Part V Environmental and Social Responsibility

I Major Environmental Issues

Indicate by tick mark whether the Company or any of its subsidiaries is a heavily polluting business identified by the

environmental protection authorities of China.□ Yes □No

Policies and industry standards pertaining to environmental protection

During production and operation Lu Thai Textile Co. Ltd. and its holding subsidiaries LuFeng Company Limited and Shandong

Lulian New Materials Co. Ltd. its wholly owned subsidiary Zibo Xinsheng Thermal Power Co. Ltd. are subject to the following

laws and regulations and industry standards related to environmental protection: The Environmental Protection Law of the

People’s Republic of China the Law of the People’s Republic of China on Prevention and Control of Water Pollution the Law of

the People’s Republic of China on the Prevention and Control of Atmospheric Pollution the Law of the People’s Republic of

China on the Prevention and Control of Solid Waste Pollution the Contingency Management Measures for Environmental

Emergencies the Emission Standards of Water Pollutants in Textile Dyeing and Finishing Industry (GB4287-2012) the Standard

for Pollution Control on the Municipal Solid Waste Incineration (GB18485-2014) and the Emission Standard of Air Pollutants of

Thermal Power Plants (DB37/664-2019).Status of environmental protection administrative license

In 2022 the Lu Thai Textile Co. Ltd. Intelligent Technology Upgrading Project of 25 million-meter High-grade Fabric

Production Line the Engineering Technology Research Institute Project the Technology Upgrading Project of High-end Printing

and Dyeing Fabric Finishing Production Process and the Technology Upgrading Project of Regenerated Fibre Production Line

and Colored Spun Yarn Production Line have been put into production.The holding subsidiary Shandong Lulian New Materials Co. Ltd. obtained the Review Opinion on the Environmental Impact

Report on the Functional Fabric Smart Eco-park Project (Phase I) of Shandong Lulian New Materials Co. Ltd. (Zihuanshen

[2019] No. 56) and the phase I of the project has been put into use.The wholly-owned subsidiary Zibo Xinsheng Thermal Power Co. Ltd. obtained the Response of the Environmental Impact Report

of the Shandong Provincial Department of Environmental Protection on the Extension Project of Zibo Xinsheng Thermal Power

(Luhuanjian [2015] No. 241) and the phase II of the expansion project has been completed and been put into production.The regulations for industrial emissions and the particular requirements for controlling pollutant emissions those are associated

with production and operational activities.Discharg

Discharg

Type of Name of Number Distribut e Approve Excessiv

Way of e Total

Name of major major of ion of standard d total e

discharg concentr discharg

polluter pollutant pollutant discharg discharg s discharg discharg

e ation/int e

s s e outlets e outlets impleme e e

ensity

nted

Chief Emissio

COD COD: discharg n COD:

Continu COD≤20e outlet standard 394.839t 1495.08t

Lu Thai and 0mg/L;aof of water ; ；

ous mmonia

Textile Sewage ammoni 2 Huangjia pollutant ammoni ammoni No nitrogen

discharg pu s in a a ≤20mg/

Co. Ltd a Industria textile L nitrogen:

nitrogen:

e l Park ; dyeing 149.51t

nitrogen 7.195t chief and

62Lu Thai Textile Co. Ltd. Annual Report 2022

discharg finishing

e outlet industry

of East GB

Zone 4287-

2012

Emissio

n

standard

COD Chief of water COD： COD is

LuFeng Continu discharg COD≤20 pollutant 195.233t 653.53t

and e outlet 0mg/L;a s in ； ；

Compan ous of mmonia textile

Sewage ammoni 1 ammoni ammoniLuFeng nitrogen dyeing No

y discharg a Compan ≤20mg/ and a

a nitrogen y L finishing nitrogen:

Limited e is 65.3t

nitrogen Limited industry 3.485t

GB

4287-

2012

Emissio

n

standard

Chief of water

COD COD≤20 COD： COD is Shandon discharg pollutant

Continu 0mg/L; 20.773t 175.30t

g Lulian and e outlet s in ammoni ； ；

New ous of textile

Sewage ammoni 1 a ammoni ammoni No Material Lulian dyeing

discharg nitrogen a a

s Co. a New and ≤20mg/ nitrogen: nitrogen

Ltd. e Material finishing

nitrogen L 0.213t is 17.5t s industry

GB

4287-

2012

Emissio

n

SO2： standard Organize

of air

Zibo ≤35mg/

d pollutant

SO2: SO2 is

Xinshen m3、SO2 s of 32.58t 236.13t/

NQx：

g Waste continuo Producti Thermal NQx :10 a NQx :

4 ≤50mg/

Thermal gas NQx on plant Power 0.1t 674.63t/ No

us m3

Power Plant in and PM ： PM:

a PM:

PM Shandon 67.47t/a.Co. Ltd. discharg ≤5mg/m 3.612t g

3

e Province

DB37/6

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

63Lu Thai Textile Co. Ltd. Annual Report 2022

emission pollutants such as waste water and waste gas. Support teams were set up to be responsible for daily operation

maintenance and inspection to guarantee the normal operation of facilities. Both the exhaust emission and waste water discharge

meet the emission standards.The wholly-owned subsidiary Zibo Xinsheng Thermal Power Co. Ltd. (hereinafter referred to as “Xinsheng Thermal Power”)

enforces the “Three Simultaneous” management system for environmental protection in extension project construction in

accordance with the government requirements and adopts the “limestone-gypsum method” to reduce emission concentration of

sulfur dioxide the “Low-nitrogen combustion + SNCR” and “SNCR+SCR method” to reduce emission concentration of nitrogen

oxides and the “electric-bag electrostatic precipitator + wet electrostatic precipitator” to reduce soot emission concentration. The

overall system works well.Emergency plan for environmental incidents

In order to prevent environmental pollution accidents the Company and the holding subsidiary Lufeng Weaving & Dyeing and

Lulian New Materials respectively prepared the Emergency Plan for Environmental Incidents which were filed with Zibo

Environmental Protection Bureau Zichuan Branch. The Plan includes contents such as environmental risk sources identification

and risk assessment prevention and early warning mechanism emergency security and supervision and management.The wholly-owned subsidiary Zibo Xinsheng Thermal Power Co. Ltd. has formulated the “Emergency Plan for EnvironmentalIncidents” and filed it with the ecological and environmental management department. The identification and risk assessment of

environmental risk sources prevention and early warning mechanisms emergency protection and supervision and management

were included in the plan.Environmental self-monitoring program

In accordance with the requirements of the competent environment authorities the Company and the holding subsidiary Lufeng

Weaving & Dyeing and Lulian New Materials observed the requirements of the superior environmental protection department to

install automatic wastewater monitoring facilities and achieve real-time monitoring of wastewater discharge. Besides the

automatic environment monitoring plan was prepared as required by emission permit. In addition they invited a qualified testing

institution to conduct tests on sewage and waste gas based on the frequency of monitoring disclosed the monitoring data in time

and submitted the test reports to the competent environment authorities ensuring the monitoring data is true and valid.The wholly-owned subsidiary Zibo Xinsheng Thermal Power Co. Ltd. has implemented online real-time monitoring of

environmental data in accordance with the requirements of the superior environmental protection department and has achieved

emission standards.Input in environment governance and protection and payment of environmental protection tax

During the Reporting Period the input in environment governance and protection and payment of environmental protection tax for

the Company and the holding subsidiary Lufeng Weaving & Dyeing and Lulian New Materials are RMB65933700 in total

among which RMB64802600 for input in environment governance and protection and RMB1131100 for payment of

environmental protection tax.Measures taken to decrease carbon emission in the Reporting Period and corresponding effects

□ Applicable □ Not applicable

The annual coal consumption for power generation of the wholly-owned subsidiary Xinsheng Thermal Power in 2022 was decline

16.22% compared with 2021 through operation mode adjustment energy conservation improvement and unit efficiency

enhancement.Administrative penalties imposed for environmental issues during the Reporting Period

Influence on

Rectification

Name Reason Case Result production and

measures

operation

64Lu Thai Textile Co. Ltd. Annual Report 2022

N/A N/A N/A N/A N/A N/A

Other environment information that should be disclosed

No

Other related environment protection information

No

The Company shall abide by relevant disclosure requirements of the Self-Regulatory Guidelines of Shenzhen Stock Exchange for

Listed Companies No.3 - Industry Information Disclosure on textile and garment industry.Related environmental accidents information

No

II Social Responsibility

The Company has prepared the Sustainability Report 2022 and for more details please refer to the Sustainability Report 2022

simultaneously disclosed with the Annual Report 2022.III Consolidation and Expansion of Poverty Alleviation Outcomes and Rural Revitalization

Not applicable

65Lu Thai Textile Co. Ltd. Annual Report 2022

Part VI Significant Events

I Fulfillment of Commitments

1. Commitments of the Company’s De Facto Controller Shareholders Related Parties and Acquirers as

well as the Company Itself and Other Entities Fulfilled in the Reporting Period or Ongoing at the Period-

End

□ Applicable □ Not applicable

Date of

Type of Term of

Commitment Promisor Details of commitment commitment Fulfillment

commitment commitment

making

1. Not intervene the

Company’s operation and

management beyond the

authority and not occupy the

Company’s interests. 2.From the issuance date

of this commitment to the

completion of the

implementation of the

Dilution of

Company's public offering of

at sight

A-share convertible corporate

Controllin returns on

Commitment bonds if the CSRC makes

s made in g public From 23 May

other new regulatory

time of IPO shareholde offering A- 23 May 2019 2019 to 8 On-going

or provisions on remedial

refinancing r actual share April 2026

measures for returns and the

controller convertible

commitment and the above

corporate

commitment fails to meet the

bonds

requirements of the CSRC

the company / I promise to

issue supplementary

commitment then in

accordance with the latest

regulations of CSRC. 3.Commitment is made to

fulfill the Company's relevant

remedial measures for returns

66Lu Thai Textile Co. Ltd. Annual Report 2022

and any commitment made

herein by the company / me.If the company / I violate(s)

such commitment and

cause(s) losses to the

Company or investors the

company / I will bear the

compensation responsibility

to the Company or investors

in accordance with the law.

1. Commitment is made

not to transfer benefits to

other units or individuals free

of charge or under unfair

conditions and no other

ways damaging the interests

of the Company will be

taken. 2. I will strictly abide

by the budget management of

the Company and accept the

Dilution of

strict supervision and

at sight

management of the Company

Directors returns on

Commitment to avoid waste or excessive

s made in and senior public From 23 May

consumption. Any position-

time of IPO manageme offering A- 23 May 2019 2019 to 8 On-going

or related consumption

refinancing nt of the share April 2026

behaviors of me will occur

Company convertible

within the scope necessary

corporate

for the performance of my

bonds

duties. 3. Commitment is

made not to use the

Company's assets to engage

in investment and

consumption activities

unrelated to the performance

of duties. 4. Commitment is

made that the remuneration

system developed by the

Board of Directors or the

67Lu Thai Textile Co. Ltd. Annual Report 2022

Remuneration Committee is

linked to the implementation

of the Company's remedial

measures for returns. 5.Commitment is made that the

conditions for exercising the

Equity Incentive Plan to be

issued in the future will be

linked to the implementation

of the Company's remedial

measures for returns. 6. From

the issuance date of this

commitment to the

completion of the

implementation of the

Company's public offering of

A-share convertible corporate

bonds if the CSRC makes

other new regulatory

provisions on remedial

measures for returns and the

commitment and the above

commitment fails to meet the

requirements of the CSRC I

promise to issue

supplementary commitment

then in accordance with the

latest regulations of CSRC. 7.Commitment is made to

fulfill the Company's relevant

remedial measures for returns

and any commitment made

herein by me. If I violate

such commitment and causes

losses to the Company or

investors I will bear the

compensation responsibility

to the Company or investors

68Lu Thai Textile Co. Ltd. Annual Report 2022

in accordance with the law.Executed on

Not

time or not

2. Where there had been an earnings forecast for an asset or project and the Reporting Period was still

within the forecast period explain why the forecast has been reached for the Reporting Period.□Applicable □ Not applicable

II Occupation of the Company’s Capital by the Controlling Shareholder or any of Its

Related Parties for Non-Operating Purposes

□Applicable □ Not applicable

No such cases in the Reporting Period.III Irregularities in the Provision of Guarantees

□Applicable □ Not applicable

No such cases in the Reporting Period.IV Explanations Given by the Board of Directors Regarding the Latest “Modified Opinion”

on the Financial Statements

□Applicable □ Not applicable

V Explanations Given by the Board of Directors the Supervisory Board and the

Independent Directors (if any) Regarding the Independent Auditor's “Modified Opinion”

on the Financial Statements of the Reporting Period

□Applicable □ Not applicable

VI YoY Changes to Accounting Policies Estimates or Correction of Material Accounting

Errors

□Applicable □ Not applicable

No such cases in the Reporting Period.VII YoY Changes to the Scope of the Consolidated Financial Statements

□ Applicable □ Not applicable

The Company incorporated a new subsidiary LTCL and subscribed for Yuanhui Fund during the year.VIII Engagement and Disengagement of Independent Auditor

Current independent auditor:

69Lu Thai Textile Co. Ltd. Annual Report 2022

Name of the domestic independent auditor Grant Thornton China (Special General Partnership)

The Company’s payment to the domestic independent auditor

173.5

(RMB’0000)

How many consecutive years the domestic independent auditor

4

has provided audit service for the Company

Names of the certified public accountants from the domestic

Cui Xiaoli He Feng

independent auditor writing signatures on the auditor’s report

How many consecutive years the certified public accountants

3

have provided audit service for the Company

Indicate by tick mark whether the independent auditor was changed for the Reporting Period.□Yes □ No

Independent auditor financial advisor or sponsor engaged for the audit of internal controls:

□ Applicable □ Not applicable

The Company held the 2021 Annual General Meeting on 20 May 2022 and approved the Proposal on Renewal Engagement of the

2022 Financial Audit and Internal Control Auditor and decided to renew the contract with Grant Thornton China (Special General

Partnership) for 2022 financial audit and internal control affairs and paid RMB1.735 million in total for 2021 financial report audit

and the internal control audit.IX Possibility of Delisting after Disclosure of this Report

□Applicable □ Not applicable

X Insolvency and Reorganization

□Applicable □ Not applicable

No such cases in the Reporting Period.XI Major Legal Matters

□Applicable □ Not applicable

No such cases in the Reporting Period.XII Punishments and Rectifications

□Applicable □ Not applicable

No such cases in the Reporting Period.XIII Credit Quality of the Company as well as Its Controlling Shareholder and Actual

Controller

□Applicable □ Not applicable

XIV Major Related-Party Transactions

1. Continuing Related-Party Transactions

□Applicable □ Not applicable

No such cases in the Reporting Period.

70Lu Thai Textile Co. Ltd. Annual Report 2022

2. Related-Party Transactions Regarding Purchase or Sales of Assets or Equity Interests

□Applicable □ Not applicable

No such cases in the Reporting Period.

3. Related-Party Transactions Regarding Joint Investments in Third Parties

□Applicable □ Not applicable

No such cases in the Reporting Period.

4. Credits and Liabilities with Related Parties

□Applicable □ Not applicable

No such cases in the Reporting Period.

5. Transactions with Related Finance Companies

□Applicable □ Not applicable

The Company did not make deposits in receive loans or credit from and was not involved in any other finance business with any

related finance company or any other related parties.

6. Transactions with Related Parties by Finance Companies Controlled by the Company

□Applicable □ Not applicable

The finance company controlled by the Company did not make deposits receive loans or credit from and was not involved in any

other finance business with any related parties.

7. Other Major Related-Party Transactions

□Applicable □ Not applicable

No such cases in the Reporting Period.XV Major Contracts and Execution thereof

1. Entrustment Contracting and Leases

(1) Entrustment

□Applicable □ Not applicable

No such cases in the Reporting Period.

(2) Contracting

□Applicable □ Not applicable

No such cases in the Reporting Period.

71Lu Thai Textile Co. Ltd. Annual Report 2022

(3) Leases

□Applicable □ Not applicable

No such cases in the Reporting Period.

2. Major Guarantees

□ Applicable □ Not applicable

Unit: RMB'0000

Guarantees provided by the Company as the parent and its subsidiaries for external parties (exclusive of those for subsidiaries)

Disclosu

re date Guarante

Actual

of the Line of Actual Type of Counter- Term of Having e for a

guarante Collatera

Obligor guarante guarante occurren guarante guarante guarante expired related

e l (if any)

e line e ce date e e (if any) e or not party or

amount

announc not

ement

Guarantees provided by the Company for its subsidiaries

Disclosu

re date Guarante

Actual

of the Line of Actual Type of Counter- Term of Having e for a

guarante Collatera

Obligor guarante guarante occurren guarante guarante guarante expired related

e l (if any)

e line e ce date e e (if any) e or not party or

amount

announc not

ement

Three

years

since the

Wholly-

26 24 approval

owned 26465.4 12605.9

August August of the

subsidiar 8 3 No Yes

2022 2022 board of

y

the

Compan

y

Total approved line Total actual amount

for such guarantees of such guarantees in

22983.1812605.93

in the Reporting the Reporting Period

Period (B1) (B2)

Total approved line Total actual balance

for such guarantees of such guarantees at

at the end of the 26465.48 the end of the 12605.93

Reporting Period Reporting Period

(B3) (B4)

72Lu Thai Textile Co. Ltd. Annual Report 2022

Guarantees provided between subsidiaries

Disclosu

re date Guarante

Actual

of the Line of Actual Type of Counter- Term of Having e for a

guarante Collatera

Obligor guarante guarante occurren guarante guarante guarante expired related

e l (if any)

e line e ce date e e (if any) e or not party or

amount

announc not

ement

Total guarantee amount (total of the three kinds of guarantees above)

Total guarantee line Total actual

approved in the guarantee amount in

22983.1812605.93

Reporting Period the Reporting Period

(A1+B1+C1) (A2+B2+C2)

Total actual

Total approved

guarantee balance at

guarantee line at the

26465.48 the end of the 12605.93

end of the Reporting

Reporting Period

Period (A3+B3+C3)

(A4+B4+C4)

Total actual guarantee amount (A4+B4+C4)

1.40%

as % of the Company’s net assets

Of which:

Balance of guarantees provided for

shareholders actual controller and their 0

related parties (D)

Balance of debt guarantees provided directly

or indirectly for obligors with an over 70% 0

debt/asset ratio (E)

Amount by which the total guarantee amount

0

exceeds 50% of the Company’s net assets (F)

Total of the three amounts above (D+E+F) 0

Joint responsibilities possibly borne or

already borne in the Reporting Period for N/A

undue guarantees (if any)

Explanation about external guarantee

N/A

violating established procedure (if any)

Compound guarantees:

N/A

The Company shall abide by relevant disclosure requirements of the Self-Regulatory Guidelines of Shenzhen Stock Exchange for

Listed Companies No.3 - Industry Information Disclosure on textile and garment industry.Whether the Company provides guarantees or financial assistance for dealers

□Yes □ No

73Lu Thai Textile Co. Ltd. Annual Report 2022

3. Cash Entrusted for Wealth Management

(1) Cash Entrusted for Wealth Management

□ Applicable □ Not applicable

Overviews of cash entrusted for wealth management during the Reporting Period

RMB’0000

Overdue amount with

Undue

Specific type Capital resources Amount incurred Overdue amount provision for

Balance

impairment

Brokerage

financial Raised funds 21000 9000 0 0

products

Others Self-owned funds 20000 20000 0 0

Total 41000 29000 0 0

Particulars of entrusted cash management with single significant amount or low security bad liquidity and no capital preservation

□Applicable □ Not applicable

Whether there is the case where the principal cannot be recovered at maturity or other case which may cause impairment for

entrusted asset management

□Applicable □ Not applicable

(2) Entrusted Loans

□Applicable □ Not applicable

No such cases in the Reporting Period.

4. Other Major Contracts

□Applicable □ Not applicable

No such cases in the Reporting Period.XVI Other Significant Events

□ Applicable □ Not applicable

1. The Company's 33rd session of the Ninth Board of Directors the second extraordinary general meeting of 2022 and the first

bondholders' meeting on Lu Thai convertible bonds of 2022 deliberated and adopted the Proposal on Changing the Purpose of

Partial Raised Capital Unused. The aim was to terminate the "Production Line Project of High-grade Printed and Dyed Fabrics"

of its domestic holding subsidiary Lufeng Co. Ltd. and leverage the originally planned to be invested raised capital of RMB250

million for the newly overseas production line project of high-grade fabrics (Phase I). For details see relevant announcements

(No.: 2022-035 2022-036 2022-038 2022-043 and 2022-044) and documents disclosed on 25 May and 10 June 2022 on

www.cninfo.com.cn.

2. The Company held the second session of Tenth Board of Directors and the third extraordinary general meeting of 2022 where it

deliberated and approved the Proposal on Repurchase of the Company's Domestically Listed Foreign Shares (B Share). The capital

scale for repurchase shall not exceed RMB100 million and repurchase price no more than HKD4.80 per share and the repurchase

period shall not exceed 12 months from the date when the Company's Board of Directors deliberates and adopts the share

74Lu Thai Textile Co. Ltd. Annual Report 2022

repurchase scheme. For details see relevant announcements (No.: 2022-053 2022-055 2022-063 2022-064 and 2022-065) and

documents disclosed on 30 June and 16 July 2022 on www.cninfo.com.cn.XVII Significant Events of Subsidiaries

□Applicable □ Not applicable

75Lu Thai Textile Co. Ltd. Annual Report 2022

Part VII Share Changes and Shareholder Information

I Share Changes

1. Share Changes

Unit: share

Before Increase/decrease in the Reporting Period (+/-) After

Shares as

Shares as

dividend

dividend Percentag New converte Percentag

Shares converte Other Subtotal Shares

e (%) issues d from e (%)

d from

capital

profit

reserves

--

I. Restricted 583800

250052372.83%1019534435734206478922.33%

0

shares 5 5

1. Shares

held by State

2. Shares

held by

state-owned

legal person

3. Shares

--

held by other 583800

250052372.83%1019534435734206478922.33%

0

domestic 5 5

investors

Among

which:

Shares held

by domestic

legal person

Shares held

--

by domestic 583800

250052372.83%1019534435734206478922.33%

0

natural 5 5

person

4. Shares

held by other

0

foreign

investors

76Lu Thai Textile Co. Ltd. Annual Report 2022

Among

which:

Shares held 0

by foreign

corporations

Shares held

by foreign 0

natural

person

II.

8573360596492086698525

Unrestricted 97.17% 9649201 97.67% 8 1 9

shares

1. RMB

5612853495192257080456

ordinary 63.61% 9519226 64.31% 2 6 8

shares

2.

Domesticall

2960507129618069

y listed 33.55% 129975 129975 33.37% 6 1

foreign

shares

3. Overseas

listed

0

foreign

shares

4. Other 0

III. Total 88234129 583800 529185 88763315

100.00%-546144100.00%

5061

shares

Reasons for share changes:

□ Applicable □ Not applicable

a) On 18 March 2022 the Company completed the registration of granting 5838000 reserved shares under the 2021 restricted

share incentive scheme at the Shenzhen Branch of China Securities Depository and Clearing Corporation Limited.b) Due to the fact that the Company had issued convertible A-share bonds on 9 April 2020 convertible bonds were converted to

1856 shares in the period from the beginning of 2022 to 31 December 2022.

c) On 8 June 2022 9578000 shares of equity incentive restricted shares were lifted from restriction.d) 548000 shares of equity incentive restricted shares were repurchased and canceled.e) Due to the general election of directors and executives the shares held by former directors or executives will be locked and

adjusted in accordance with relevant regulations on the executive share management.Approval of share changes:

77Lu Thai Textile Co. Ltd. Annual Report 2022

□ Applicable □ Not applicable

a) In accordance with the authorization of the first extraordinary general meeting of 2021 the Company convened the 30th session

of Ninth Board of Directors on 18 February 2022. In the session the Proposal on Granting the Reserved Restricted Shares under

the 2021 Incentive Plan to the Incentive Personnel was deliberated and approved. The Company's independent directors presented

their independent opinions on the preceding proposals believing that the reserved granting conditions had been fulfilled the

qualifications of incentive personnel were legitimate and valid and the specified grant date conforming to relevant regulations.The Board of Supervisors reviewed the list of partial incentive personnel reserved for granting and conveyed its verification

opinions.b) On 18 February 2022 the Proposal on Repurchase and Cancel Authorized but Unlocked Restricted Share of Part of the

Incentive Personnel was deliberated and approved at the 30th session of the Ninth Board of Directors of the Company as 11 of the

incentive personnel of the 2021 restricted share incentive scheme due to resignation or position changes who no longer met the

condition of being incentive personnel. The restricted shares held by the 11 personnel with a total volume of 240000 shares which

were authorized but not lifted from restriction shall be repurchased and canceled by the Company in accordance with the 2021

Restricted Share Incentive Scheme and relevant provisions of laws and regulations. The aforesaid matters were deliberated and

approved at the first extraordinary general meeting of the Company in 2022 that was held on 7 March 2022.c) On 24 May 2022 the Company held the 33rd session of the Ninth Board of Directors and the 20th session of the Ninth Board of

Supervisors and reviewed and approved the Proposal on the Achievement of Lifting the Restriction Conditions in the First Lifting

Restriction Period for the First Grant under the 2021 Restricted Share Incentive Scheme. Also the Company agreed to process the

lifting restriction matters of 9578000 restricted shares held by 733 incentive personnel who fulfilled the restriction conditions in

the first lifting restriction period for the first grant under the 2021 restricted share incentive scheme.d) On 29 June 2022 the Proposal on Repurchase and Cancel Authorized but Unlocked Restricted Share of the Incentive Personnel

not Conforming to the Incentive Condition was deliberated and approved at the second Meeting of the Tenth Board of Directors of

the Company as eight of the incentive personnel of the 2021 restricted share incentive scheme no longer met the condition of

being incentive personnel due to resignation retirement or position changes. The restricted shares held by the eight personnel with

a volume of 308000 shares which were authorized but not lifted from restricted sales shall be repurchased and cancelled by the

Company in accordance with the 2021 Restricted Share Incentive Scheme (hereinafter referred to as the “Incentive Scheme”) of the

Company and relevant provisions of laws and regulation. The aforesaid matters were deliberated and approved at the third

Extraordinary General Meeting of the Company in 2022 that was held on 15 July 2022.Transfer of share ownership:

□ Applicable □ Not applicable

In accordance with the Administrative Measures for Equity Incentive of Listed Companies of the CSRC Shenzhen Stock

Exchange and provisions of relevant rules of Shenzhen Branch of China Securities Depository and Clearing Corporation Limited

the registration of granted reserved shares under the 2021 restricted share incentive scheme was completed on 18 March 2022. The

Company completed the procedures of repurchasing and canceling 240000 shares of restricted share at the Shenzhen Branch of

China Securities Depository and Clearing Corporation Limited on 14 May 2022. The Company completed the procedures of

repurchasing and canceling 308000 shares of restricted share at the Shenzhen Branch of China Securities Depository and Clearing

Corporation Limited on 30 September 2022.Effects of share changes on the basic and diluted earnings per share equity per share attributable to the Company’s ordinary

shareholders and other financial indicators of the prior year and the prior accounting period respectively:

□ Applicable □ Not applicable

See relevant contents of "VI Key Financial Information" under "Part II Corporate Information and Key Financial Information".Other information that the Company considers necessary or is required by the securities regulator to be disclosed:

□Applicable □ Not applicable

78Lu Thai Textile Co. Ltd. Annual Report 2022

2. Changes in Restricted Shares

□ Applicable □ Not applicable

Unit: share

Restricted Restricted Restricted Restricted

Name of the shares shares shares shares Restricted shares relieved

Restricted reasons

shareholders amount at the increased of relieved of amount at the date

period-begin the period the period period-end

The Company shall

Locked public implement the provisions

shares held by on restricted shares by

Liu Zibin 111217 111217

senior directors supervisors and

management senior management within

tenure

The Company shall

Locked public

implement the provisions

shares held by

on restricted shares by

senior

directors supervisors and

Zhang Zhanqi 360225 245000 120000 485225 management and senior management within

Restricted shares

tenure and lift the lock-up

from equity

in batches according to the

incentive

share incentive scheme

The Company shall

Locked public

implement the provisions

shares held by

on restricted shares by

senior

directors supervisors and

Zhang Keming 258275 130000 80000 308275 management and senior management within

Restricted shares

tenure and lift the lock-up

from equity

in batches according to the

incentive

share incentive scheme

The Company shall

Locked public

implement the provisions

shares held by

on restricted shares by

senior

directors supervisors and

Du Lixin 200000 130000 80000 250000 management and

senior management within

Restricted shares

tenure and lift the lock-up

from equity

in batches according to the

incentive

share incentive scheme

The Company shall

Locked public implement the provisions

Zhang shares held by on restricted shares by

5482554825

Shougang senior directors supervisors and

management senior management within

tenure

The Company shall

Locked public implement the provisions

shares held by on restricted shares by

Liu Zilong 7500 7500 senior directors supervisors and

management senior management within

tenure

The Company shall

Locked public implement the provisions

shares held by on restricted shares by

Dong Shibing 3750 3750 senior directors supervisors and

management senior management within

tenure

79Lu Thai Textile Co. Ltd. Annual Report 2022

The Company shall

Locked public

implement the provisions

shares held by

on restricted shares by

senior

directors supervisors and

Wang Jiabin 362775 45000 120000 287775 management and

senior management within

Restricted shares

tenure and lift the lock-up

from equity

in batches according to the

incentive

share incentive scheme

The Company shall

Locked public

implement the provisions

shares held by

on restricted shares by

senior

Shang directors supervisors and

222500 130000 80000 272500 management and

Chenggang senior management within

Restricted shares

tenure and lift the lock-up

from equity

in batches according to the

incentive

share incentive scheme

The Company shall

Locked public

implement the provisions

shares held by

on restricted shares by

senior

directors supervisors and

Yu Shouzheng 262325 130000 80000 312325 management and

senior management within

Restricted shares

tenure and lift the lock-up

from equity

in batches according to the

incentive

share incentive scheme

The Company shall

Locked public

implement the provisions

shares held by

on restricted shares by

senior

directors supervisors and

Li Wenji 207500 130000 80000 257500 management and

senior management within

Restricted shares

tenure and lift the lock-up

from equity

in batches according to the

incentive

share incentive scheme

The Company shall

Locked public

implement the provisions

shares held by

on restricted shares by

senior

directors supervisors and

Guo Heng 200000 130000 80000 250000 management and

senior management within

Restricted shares

tenure and lift the lock-up

from equity

in batches according to the

incentive

share incentive scheme

The Company shall

Locked public

implement the provisions

shares held by

on restricted shares by

senior

directors supervisors and

Lyu Wenquan 150000 60000 60000 150000 management and

senior management within

Restricted shares

tenure and lift the lock-up

from equity

in batches according to the

incentive

share incentive scheme

The Company shall

implement the provisions

on restricted shares by

Restricted shares

directors supervisors and

Xu Feng 150000 100000 60000 190000 from equity

senior management within

incentive

tenure and lift the lock-up

in batches according to the

share incentive scheme

Wang Fangshui 110065 110065 Release of locked The Company shall

80Lu Thai Textile Co. Ltd. Annual Report 2022

public shares held implement the provisions

by senior on restricted shares by

management directors supervisors and

senior management

The Company shall

Release of locked

implement the provisions

public shares held

Qin Guiling 94906 31636 126542 on restricted shares by

by senior

directors supervisors and

management

senior management

The Company shall

implement the provisions

Release of locked on restricted shares by

Zhang public shares held directors supervisors and

369375-156875212500

Hongmei by senior senior management

management repurchase and cancellation

according to the share

incentive scheme

The Company shall

Release of locked

implement the provisions

Zhang public shares held

39112 13038 52150 on restricted shares by

Jianxiang by senior

directors supervisors and

management

senior management

The Company shall

Release of locked

implement the provisions

public shares held

Lyu Yongchen 19012 19012 on restricted shares by

by senior

directors supervisors and

management

senior management

The Company shall

Release of locked

implement the provisions

Wang public shares held

16875 16875 on restricted shares by

Changzhao by senior

directors supervisors and

management

senior management

Other subjects

Restricted shares Lift the lock-up in batches

of restricted

21805000 4520000 8618000 17707000 from equity according to the share

share incentive

incentive incentive scheme

scheme in 2021

Total 25005237 5637799 9995144 20647892 -- --

II. Issuance and Listing of Securities

1. Securities (Exclusive of Preferred Shares) Issued in the Reporting Period

□ Applicable □ Not applicable

Name of

Stock and issue Approved Termination

Issue Issue Listing Disclosure

derivative price amount date for Disclosure index

date amount date date

securities (interest) for listing trading

thereof

Stock

Refer to the announcement

2222

(No.: 2022-013) disclosed on 18 March

LTTC March 3.56 5838000 March 5838000

http://www.cninfo.com.cn/ 2022

20222022

on 18 March 2022.Convertible corporate bonds convertible corporate bonds separately traded and corporate bonds

Other derivative securities

81Lu Thai Textile Co. Ltd. Annual Report 2022

Notes:

In accordance with the authorization of the first extraordinary general meeting of 2021 the Company convened the 30th session

of Ninth Board of Directors on 18 February 2022. In the session the Proposal on Granting the Reserved Restricted Shares under

the 2021 Incentive Plan to the Incentive Personnel was deliberated and approved. Furthermore in line with the Administrative

Measures for Equity Incentive of Listed Companies of the CSRC Shenzhen Stock Exchange and provisions of relevant rules of

Shenzhen Branch of China Securities Depository and Clearing Corporation Limited the registration of granting 5838000 shares

of restricted share to 343 incentive personnel was completed. For details see relevant announcements disclosed on Securities

Times Shanghai Securities News China Securities Journal Ta Kung Pao (HK) and www.cninfo.com.cn.

2. Changes to Total Shares Shareholder Structure and Asset and Liability Structures

□ Applicable □ Not applicable

At the beginning of 2022 the Company possessed 882341295 shares in total (586103154 A shares and 296238141 B shares

inclusive). The Company’s reserved restricted shares under the 2021 incentive plan completed the direct issuance of 5838000

restricted ordinary A shares to the incentive personnel on 18 March 2022. As convertible bonds of Lu Thai were converted to 1856 A

shares cumulatively from 1 January 2022 to 31 December 2022 the repurchasing and canceling 548000 shares of equity incentive

restricted stock was completed. By 31 December 2022 the Company possessed 887633151 shares in total (591395010 A shares

and 296238141 B shares inclusive) which had no significant impact on the Company's assets and liability structure.

3. Existing Staff-Held Shares

□Applicable □ Not applicable

III Shareholders and Actual Controller

1. Total Number of Shareholders and Their Shareholdings

Unit: share

Number of Number of

ordinary preferred

Number of preferred

shareholder shareholder

Number of shareholders with

s at the s with

ordinary resumed voting rights at

51905 month-end 49096 resumed 0 0

shareholder the month-end prior to the

prior to the voting

s disclosure of this Report

disclosure rights (if

(if any) (see note 8)

of this any) (see

Report note 8)

5% or greater shareholders or top 10 shareholders

Increase/de Shares in pledge marked

Total

Shareholdi crease in Unrestricte or frozen

Name of Nature of shares held Restricted

ng the d shares

shareholder shareholder at the shares held

percentage Reporting held Status Shares

period-end

Period

Zibo Domestic

Lucheng non-state-

1403535814035358

Textile owned 15.81% 0 0

Investment legal 3 3

Co. Ltd. person

Tailun Foreign 13.32% 11823240 0 0 11823240

82Lu Thai Textile Co. Ltd. Annual Report 2022

(Thailand) legal 0 0

Textile Co. person

Ltd.Central

State-

Huijin

owned

Assets 2.24% 19884100 0 0 19884100

legal

Manageme

person

nt Co. Ltd.National

Domestic

Social

non-state-

Security

owned 1.49% 13260051 3450000 0 13260051

Fund

legal

Portfolio

person

413

Dacheng

China

Securities

Other 0.59% 5235900 0 0 5235900

Asset

Manageme

nt Plan

GF China

Securities

Asset Other 0.59% 5235900 0 0 5235900

Manageme

nt Plan

ICBC

Credit

Suisse

Innovation

Power Other 0.57% 5100000 1500000 0 5100000

Stock Type

Securities

Investment

Fund

FEDERAT

ED

HERMES

GLOBAL

INVESTM

ENT FD

(CAYMA

N)

MASTER

SPC Foreign

OBOAFTA legal 0.52% 4623374 395587 0 4623374

O person

FEDERAT

ED

HERMES

EMG

ASIA

EQUITY

FD

MASTER

S.P.Harvest

China

Securities

Other 0.50% 4460200 -775700 0 4460200

Asset

Manageme

nt Plan

Yinhua Other 0.49% 4392312 -843588 0 4392312

83Lu Thai Textile Co. Ltd. Annual Report 2022

China

Securities

Asset

Manageme

nt Plan

Strategic investors or

general corporations

becoming top-ten

Naught

shareholders due to

placing of new shares (if

any) (see Note 3)

Zibo Lucheng Textile Investment Co. Ltd. is the largest shareholder of the Company and the actual

Related or acting-in- controller. Tailun (Thailand) Textile Co. Ltd. is the second largest shareholder as well as sponsor of

concert parties among the foreign capital of the Company. All of other shareholders are people holding public A share or

public B share and the Company is not able to confirm whether there is associated relationship or

shareholders above concerted action among other shareholders.Explain if any of the

shareholders above was

involved in

Naught

entrusting/being entrusted

with voting rights or

waiving voting rights

Special account for share

repurchases (if any) As of 31 December 2022 there are 21318828 shares in the special repurchase account of the

Company

among the top 10

shareholders (see note 10)

Top 10 unrestricted shareholders

Shares by type

Name of shareholder Unrestricted shares held at the period-end

Type Shares

RMB

Zibo Lucheng Textile 14035358

140353583 ordinary

Investment Co. Ltd.share 3

Domestical

Tailun (Thailand) Textile ly listed 11823240

118232400

Co. Ltd. foreign 0

shares

RMB

Central Huijin Assets

1988410019884100

Management Co. Ltd. ordinary

share

RMB

National Social Security

13260051 ordinary 13260051 Fund Portfolio 413

share

RMB

Dacheng China Securities

52359005235900

Asset Management Plan ordinary

share

GF China Securities Asset 5235900 RMB 5235900

84Lu Thai Textile Co. Ltd. Annual Report 2022

Management Plan

ordinary

share

ICBC Credit Suisse

RMB

Innovation Power Stock

5100000 ordinary 5100000

Type Securities share

Investment Fund

FEDERATED HERMES

GLOBAL INVESTMENT

FD (CAYMAN) Domestical

MASTER SPC ly listed

46233744623374

OBOAFTAO foreign

FEDERATED HERMES shares

EMG ASIA EQUITY FD

MASTER S.P.RMB

Harvest China Securities

44602004460200

Asset Management Plan ordinary

share

RMB

Yinhua China Securities

43923124392312

Asset Management Plan ordinary

share

Related or acting-in-

concert parties among top

10 unrestricted public Zibo Lucheng Textile Investment Co. Ltd. is the largest shareholder and the actual controller of the

shareholders as well as Company. Tailun (Thailand) Textile Co. Ltd. is the second largest shareholder and the foreign

between top 10 sponsor of the Company. All the other shareholders are holding tradable A-shares or B-shares. And

unrestricted public it is unknown whether there is any related party or acting-in-concert party among them.shareholders and top 10

shareholders

Top 10 ordinary

shareholders involved in

Naught

securities margin trading

(if any) (see note 4)

Indicate by tick mark whether any of the top 10 ordinary shareholders or the top 10 unrestricted ordinary shareholders of the

Company conducted any promissory repo during the Reporting Period.□Yes □ No

No such cases in the Reporting Period.

2. Controlling Shareholder

Nature of the controlling shareholder: Controlled by a natural person

Type of the controlling shareholder: legal person

Legal

Date of Unified social credit

Name of controlling shareholder representative/person in Principal activity

establishment code

charge

Investment on textile

electricity and chemical;

Zibo Lucheng Textile Investment 25 September

Liu Deming 91370303164200391J purchase process and

Co. Ltd. 1998

sale of cotton; retail

service etc.Particulars about shareholding of

controlling shareholders

N/A

controlling and holding shares of

other listed companies during the

85Lu Thai Textile Co. Ltd. Annual Report 2022

Reporting Period

Change of the controlling shareholder in the Reporting Period:

□Applicable □ Not applicable

No such cases in the Reporting Period.

3. Actual Controller and Its Acting-in-Concert Parties

Nature of the actual controller: Domestic natural person

Type of the actual controller: natural person

Whether gain the right of

Relations with the actual

Name of the actual controller Nationality residence in other countries or

controller

regions or not

Liu Zibin In person China No

Concerted action (including

Liu Deming agreement relatives and same China No

control)

Liu Zibin is the Chairman of the Board and President of Lu Thai Textile Co. Ltd. Liu

Professions and titles Deming is the Chairman of the Board and GM of Zibo Lucheng Textile Investment

Co. Ltd.Particulars about listed companies with

shares ever held by the actual controller N/A

over the past 10 years

Change of the actual controller during the Reporting Period:

□Applicable □ Not applicable

No such cases in the Reporting Period.Ownership and control relations between the actual controller and the Company:

Indicate by tick mark whether the actual controller controls the Company via trust or other ways of asset management.□Applicable □ Not applicable

4. Number of Accumulative Pledged Shares held by the Company’s Controlling Shareholder or the

Largest Shareholder as well as Its Acting-in-Concert Parties Accounts for 80% of all shares of the

Company held by Them

□Applicable □ Not applicable

86Lu Thai Textile Co. Ltd. Annual Report 2022

5. Other 10% or Greater Corporate Shareholders

□Applicable □ Not applicable

6. Limitations on Shareholding Decrease by the Company’s Controlling Shareholder Actual Controller

Reorganizer and Other Commitment Makers

□Applicable □ Not applicable

IV Specific Implementation of Share Repurchase during the Reporting Period

Progress on any share repurchase

□ Applicable □ Not applicable

Number of

Shares As % of repurchased shares as

Disclosure Shares

intended to be total a percentage of the

time of the Amount Period Usage repurchased

repurchased share underlying shares

plan (share)

(share) capital covered by the equity

incentive plan (if any)

15 July

16 July 15000000- 1.69%- Not exceeding 2022 to

Cancelled 21318828 0.00%

2022 30000000 3.38% RMB100000000 14 July

2023

Progress on reducing the repurchased shares by means of centralized bidding

□Applicable □ Not applicable

87Lu Thai Textile Co. Ltd. Annual Report 2022

Part VIII Preference Shares

□Applicable □ Not applicable

No preference shares in the Reporting Period.

88Lu Thai Textile Co. Ltd. Annual Report 2022

Part IX Bonds

□ Applicable □ Not applicable

I Enterprise Bonds

□Applicable □ Not applicable

No enterprise bonds in the Reporting Period.II Corporate Bonds

□Applicable □ Not applicable

No corporate bonds in the Reporting Period.III Debt Financing Instruments of Non-financial Enterprises

□Applicable □ Not applicable

No such cases in the Reporting Period.IV Convertible Corporate Bonds

□ Applicable □ Not applicable

1. Previous Adjustments of Conversion Price

On 9 April 2020 the Company publicly issued 14 million A-share convertible corporate bonds (short name: Lu Thai Convertible

Bonds bond code: 127016) on Shenzhen Stock Exchange with an issue price of RMB100 per share and a share conversion price of

RMB9.01 per share. The bonds were listed on Shenzhen Stock Exchange on 13 May 2020. In accordance with related terms of the

“Prospectus for the Public Offering of A-Share Convertible Corporate Bonds of Lu Thai Textile Co. Ltd.” as well as the regulations

of China Securities Regulatory Commission on the public offering of convertible corporate bonds if the Company has any

distribution of share dividends conversion into share capital additional issue of new shares (excluding share capital increase due to

conversion into shares from the convertible corporate bonds issued this time) share allotment and distribution of cash dividends after

the issue of “Lu Thai Convertible Bonds” adjustment shall be made to the share conversion price.On 21 May 2020 the Company held the Annual General Meeting of 2019 where the “Proposal on the Company’s Profit DistributionPlan 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 858121541 shares of share capital on 31 December 2019 as the base. The share registration

date for the Company’s equity distribution of 2019 was 8 July 2020 and the ex-rights and ex-dividend date was 9 July 2020.Therefore the share conversion price of “Lu Thai Convertible Bonds” was adjusted from RMB9.01 per share to RMB8.91 per share

and the new price after the adjustment took effect on and as of 9 July 2020 (the ex-rights and ex-dividend date).On 3 June 2021 the Company completed the registration of first-granted restricted stocks of restricted share incentive scheme at the

Shenzhen Branch of China Securities Depository and Clearing Corporation Limited (China Clear). 7 June 2021 is designated as the

89Lu Thai Textile Co. Ltd. Annual Report 2022

listing date of first-granted restricted stocks of the Company in 2021. The Company grants 750 subjects of incentive 24285000

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 5838000 restricted shares at a price of RMB3.56 per share

accounting for 0.66% of total share capital of the Company. The source of the stock is RMB A-share ordinary shares issued by the

Company to incentive personnel. Therefore the conversion price of Lu Thai convertible bond will be adjusted from RMB8.71 per

share to RMB8.68 per share with the adjusted conversion price coming into force from 22 March 2022.The 2021 annual general meeting convened on 20 May 2022 deliberated and adopted the Company's Proposal on Profit

Appropriation Plan in 2021 which distributes cash of RMB0.70 per ten shares (including tax) with total share capital at the record

date of this distribution scheme as base. The record date of the Company's interest distribution in 2021 was set on 22 June 2022. The

ex-date was set on 23 June 2022. Therefore the conversion price of Lu Thai convertible bond will be adjusted from RMB8.68 per

share to RMB8.61 per share with the adjusted conversion price coming into force from 23 June 2022.

2. Accumulative Conversion

□ Applicable □ Not applicable

Converte

d shares

as % of

total

shares Unconverte

Accumulati Accumulati

Total issued by Unconverted d amount

Abbreviatio Start ve amount ve shares

circulatio Total amount the amount (RMB) as % of

n date converted converted

n (piece) Company total

(RMB) (share)

before the amount

start date

of

conversio

n

14000001400000000.1399852400.

Lu Thai 15 147600.00 16610 0.00% 99.99% 0 00 00

90Lu Thai Textile Co. Ltd. Annual Report 2022

Convertible Octobe

Bonds r 2020

3. Top 10 Convertible Bond Holders

Unit: share

Number of As % of

Amount of convertible

Nature of convertible bonds convertible bonds

No. Name of holders bonds held at the period-

holders held at the period-end held at the period-

end (RMB)

(share) end

Northwest Investment Management Foreign

1 (Hong Kong) Limited - Northwest legal 1349990 134999000.00 9.64%

Feilong Fund Co. Ltd. person

China Construction Bank - E Fund

2 Enhanced Income Bond Securities Other 694212 69421200.00 4.96%

Investment Fund

Fuguo Fumin Fixed Income Pension

3 Product - China Construction Bank Other 674439 67443900.00 4.82%

Corporation

Industrial and Commercial Bank of

China - China Universal

4 Other 481705 48170500.00 3.44% Convertible Bond Securities

Investment Fund

Agricultural Bank of China -

5 Essence Target Income Bond Other 306016 30601600.00 2.19%

Securities Investment Fund

China Merchants Bank Co. Ltd. -

6 Bosera Solid-return Bond Listed Other 290968 29096800.00 2.08%

Open-ended Fund

China Merchants Bank Co. Ltd. -

7 Dongfanghong Juli Bond Securities Other 286911 28691100.00 2.05%

Investment Fund

Shanghai Pudong Development

Bank Co. Ltd. - E Fund Yuxiang

827511227511200.001.97%

Return Bond Securities Investment Other

Bond

Basic Endowment Insurance Fund

9 Other 273171 27317100.00 1.95% (Portfolio 102)

Dajia Assets - Pudong Development

Bank - Dajia Assets Houkun No. 5

1027179027179000.001.94%

Collective Asset Management Other

Product

4. Significant Changes in Profitability Assets Condition and Credit Status of Guarantors

□Applicable □ Not applicable

5. The Company’s Liabilities Credit Changes at the Period-end and Cash Arrangements to Repay Debts

in Future Years

For the relevant indicators please refer to the Part IX Bonds- VIII The Major Accounting Data and the Financial Indicators of the

Recent 2 Years of the Company up the Period-end.The credit rating of the Company's convertible bonds for the Reporting Period is AA+ which has not changed compared with that of

the same period of last year.

91Lu Thai Textile Co. Ltd. Annual Report 2022

V Losses of Scope of Consolidated Financial Statements during the Reporting Period

Exceeding 10% of Net Assets up the Period-end of Last Year

□Applicable □ Not applicable

VI Matured Interest-bearing Debt excluding Bonds up the Period-end

□Applicable □ Not applicable

VII Whether there was any Violation of Rules and Regulations during the Reporting Period

□Yes □ No

VIII The Major Accounting Data and the Financial Indicators of the Recent 2 Years of the

Company up the Period-end

Unit: RMB’0000

Item Period-end The end of last year Increase/decrease

Current ratio 2.99 2.62 14.12%

Asset-liability ratio 29.53% 35.57% -6.04%

Quick ratio 1.86 1.49 24.83%

Reporting Period Same period of last year YoY increase/decrease

Net profit after deducting

79547.4019049.26317.59%

non-recurring profit or loss

Debt/EBITDA ratio 66.20% 28.94% 37.26%

Interest cover (times) 11.25 4.49 150.56%

Cash-to-interest cover (times) 14.43 4.03 258.06%

EBITDA interest coverage

15.949.3969.76%

ratio

Rate of redemption 100.00% 100.00% 0.00%

Interest coverage 100.00% 100.00% 0.00%

92Lu Thai Textile Co. Ltd. Annual Report 2022

Part X Financial Statements

I Independent Auditor’s Report

Type of the independent auditor’s opinion Unmodified unqualified opinion

Date of signing this report 10 April 2023

Name of the independent auditor Grant Thornton China (Special General Partnership)

No. of independent auditor’s report Grant Thornton SZ (2023) No. 371A009261

Name of the certified public accountants He Feng Cui Xiaoli

Text of the Independent Auditor’s Report

To the shareholders of Lu Thai Textile Co. Ltd:

I Opinion

We have audited the financial statements of Lu Thai Textile Co. Ltd. (hereinafter referred to as the “Company”) which comprise the

consolidated and parent company balance sheets as of 31 December 2022 the consolidated and parent company statements of

income cash flows and changes in owners’ equity for the year then ended as well as the notes to the financial statements.In our opinion the financial statements referred to above present fairly in all material respects the consolidated and parent company

financial position of the Company at 31 December 2022 and the consolidated and parent company operating results and cash flows

for the year then ended in conformity with the Chinese Accounting Standards (CAS).II Basis for Opinion

We conducted our audits in accordance with the Audit Standards for Chinese Registered Accountants. Our responsibilities under

those standards are further described in the Auditor’s Responsibilities for Audit of Financial Statements section of our report. We are

independent of the Company in accordance with the China Code of Ethics for Certified Public Accountants and we have fulfilled our

other ethical responsibilities in accordance with the said Code of Ethics. We believe that the audit evidence we have obtained is

sufficient and appropriate to provide a basis for our opinion.III Key Audit Matters

Key audit matters are those matters that in our professional judgment were of most significance in our audit of the financial

statements of the current period. These matters were addressed in the context of our audit of the financial statements as a whole and

in forming our opinion thereon and we do not provide a separate opinion on these matters.(I) Recognition of revenue

For details please refer to the Note III-26 and the Note V-45 of the financial report.

1. Item description

The businesses of Lu Thai Textile Co. Ltd. mainly are production and sales of yarn-dyed fabrics and shirts. The operation revenue of

the Company in 2022 was RMB6938342100 of which export income accounted for over 50%. For the income from domestic sales

the amount of product sales income is recognized when the products are delivered to and confirmed by the purchaser according to the

contract. The income is recognized when the purchaser obtains control of the product. For the income from export sales the amount

of sales income is recognized when products are declared and depart from port according to the contract and the bill of lading is

received. The income is recognized when the purchaser obtains control of the product.

93Lu Thai Textile Co. Ltd. Annual Report 2022

Since income is one of the key performance indicators of Lu Thai Textile Co. Ltd. there is an inherent risk that the management

manipulates income to achieve specific goals or expectations therefore we identify income recognition as a key audit item.

2. Audit response

The audit procedures for revenue recognition mainly include:

(1) Understand and evaluate the design effectiveness of internal control related to revenue recognition and test the effectiveness of

operation;

(2) Through interviewing the management and reviewing the relevant contract terms understand and evaluate whether the income

confirmation accounting policy meets the requirements of the enterprise accounting standards;

(3) Perform analytical procedures on revenue and costs to analyze the rationality of fluctuations in sales volume unit price and gross

profit in each month current year and previous year of the current period;

(4) Check the supporting evidence such as sales contract product delivery order invoice customs declaration shipping order and

signing receipt;

(5) Select samples to verify the balance and transaction amount;

(6) Select samples and conduct spot checks on relevant information such as export sales revenue export tax rebate declaration forms

and China electronic port export data;

(7) Perform a cut-off test on the revenue recognized before and after the balance sheet date and check the product delivery slip

invoice customs declaration shipping bill signing receipt etc. to assess whether the revenue is recognized within the appropriate

period.(II) Inventory falling price reserves

For details please refer to the Note III-12 and the Note V-8 of the financial report.

1. Item description

As of 31 December 2022 the inventory balance of Lu Thai Textile Co. Ltd. was RMB2349784300 and the inventory depreciation

reserve was RMB241934600. The management withdrew the inventory falling price reserves with significant judgments and

estimates and therefore we identify inventory falling price reserves as a key audit item.

2. Audit response

The audit procedures for inventory falling price reserves mainly include:

(1) Understand and evaluate the design effectiveness of the internal control related to the provision of inventory decline price and

test the effectiveness of operation;

(2) Understand and evaluate the appropriateness of the company's inventory depreciation reserve provision policy;

(3) Monitor the inventory and pay attention to the status of the inventory check whether the defective and inventory with long aging

have been identified;

(4) Obtain the inventory age table and conduct an analytical review of the long-age inventory status and turnover;

(5) Check the changes in the inventory depreciation reserves accrued in previous years and evaluate the rationality of the changes in

inventory depreciation reserves;

(6) Obtain the inventory falling price reserves calculation sheet; recheck and evaluate the rationality of major estimations made by

the management during the determination of net realizable value; conduct the recalculation check the selling price after the period

94Lu Thai Textile Co. Ltd. Annual Report 2022

and analyze the rationality of the predicted selling price.(III) Assessment of fair value of financial assets measured at fair value and changes included in current profit or loss

Please refer to Notes to Financial Statements (Note III 10 and Note V 2 11 and 53) for details about relevant information disclosure.

1. Event Description

Up to 31 December 2022 the balance of financial asset measured based on the fair value whose variations were included the current

profit and loss of Lu Thai Textiles was RMB604805200 of which the fair value of financial asset classified into the tier-2 input

value by adopting the observable input value was RMB515725200 and the fair value of financial asset classified into the tier-3

input value by adopting the non-observable input value was RMB89080000. Considering that the financial asset’s fair value

variations had significant impact on the profit and loss of Lu Thai Textiles in 2022 and Lu Thai Textiles adopted the valuation

technique to determine its fair value (usually the valuation technique involves various assumptions and estimations based on

subjective judgment and huge difference in the estimated fair value of financial instrument may be caused by adopting different

valuation techniques or assumptions) we recognized the event as the key audit event.

2. Audit response

Our audit procedures geared to the evaluation of the withdrawal of financial instrument’s fair value mainly include:

(1) Study and evaluate the effectiveness of the designed internal control for the valuation of financial instruments and test the

operational effectiveness;

(2) Assess the professional quality competence and objectiveness of the independent appraiser employed by the Company’s

management; evaluate the rationality of various assumptions applied by the independent appraiser in the evaluation report and the

appropriateness of the financial instrument valuation models;

(3) Assess the rationality and appropriateness of the observable key input value applied during the valuation of the tier-2 fair value;

(4) Recheck the rationality appropriateness and calculation accuracy of the key input value during the fair value assessment for the

tier-3 financial instrument measured based the fair value and involving the management’s major judgment.IV Other Information

The Company’s management is responsible for the other information. The other information comprises all of the information

included in the Company’s 2022 Annual Report other than the financial statements and our auditor’s report thereon.Our opinion on the financial statements does not cover the other information and we do not express any form of assurance conclusion

thereon.In connection with our audit of the financial statements our responsibility is to read the other information and in doing so consider

whether the other information is materially inconsistent with the financial statements or our knowledge obtained in the audit or

otherwise appears to be materially misstated.If based on the work we have performed we conclude that there is a material misstatement of this other information we are required

to report that fact. We have nothing to report in this regard.V Responsibilities of Management and Those Charged with Governance for Financial Statements

The Company’s management (hereinafter referred to as the “Management”) is responsible for the preparation of the financial

statements that give a fair view in accordance with CAS and for designing implementing and maintaining such internal control as

the management determines is necessary to enable the preparation of financial statements that are free from material misstatement

whether due to fraud or error.

95Lu Thai Textile Co. Ltd. Annual Report 2022

In preparing the financial statements the management is responsible for assessing the Company’s ability to continue as a going

concern disclosing as applicable matters related to going concern and using the going concern basis of accounting unless the

management either intends to liquidate the Company or to cease operations or have no realistic alternative but to do so.Those charged with governance are responsible for overseeing the Company’s financial reporting process.VI Auditor’s Responsibilities for Audit of Financial Statements

Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material

misstatement whether due to fraud or error and to issue an auditor’s report that includes our opinion. Reasonable assurance is a high

level of assurance but is not a guarantee that an audit conducted in accordance with CAS will always detect a material misstatement

when it exists. Misstatements can arise from fraud or error and are considered material if individually or in the aggregate they could

reasonably be expected to influence the economic decisions of users taken on the basis of these financial statements.As part of an audit in accordance with CAS we exercise professional judgment and maintain professional skepticism throughout the

audit. We also:

(1) Identify and assess the risks of material misstatement of the financial statements whether due to fraud or error design and

perform audit procedures responsive to those risks and obtain audit evidence that is sufficient and appropriate to provide a basis for

our opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error as

fraud may involve collusion forgery intentional omissions misrepresentations or the override of internal control.

(2) Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the

circumstances.

(3) Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures

made by the management.

(4) Conclude on the appropriateness of the management’s use of the going concern basis of accounting and based on the audit

evidence obtained whether a material uncertainty exists related to events or conditions that may cast significant doubt on the

Company’s ability to continue as a going concern. If we conclude that a material uncertainty exists we are required by CAS to draw

users’ attention in our auditor’s report to the related disclosures in the financial statements or if such disclosures are inadequate we

should modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of our auditor’s report. However

future events or conditions may cause the Company to cease to continue as a going concern.

(5) Evaluate the overall presentation structure and content of the financial statements and whether the financial statements represent

the underlying transactions and events in a manner that achieves fair presentation.

(6) Obtain sufficient appropriate audit evidence regarding the financial information of the entities or business activities within the

Company to express an opinion on the financial statements. We are responsible for the direction supervision and performance of the

Company audit. We remain solely responsible for our audit opinion.We communicate with those charged with governance of the Company regarding the planned scope and timing of the audit and

significant audit findings including any noteworthy deficiencies in internal control that we identify during our audit.We also provide those charged with governance with a statement that we have complied with relevant ethical requirements regarding

independence and communicate with them all relationships and other matters that may reasonably be thought to bear on our

independence and where applicable related safeguards (if applicable).From the matters communicated with those charged with governance we determine those matters that were of most significance in

the audit of the financial statements of the current period and are therefore the key audit matters. We describe these matters in our

auditor’s report unless law or regulation precludes public disclosure about the matter or when in extremely rare circumstances we

96Lu Thai Textile Co. Ltd. Annual Report 2022

determine that a matter should not be communicated in our report because the adverse consequences of doing so would reasonably be

expected to outweigh the public interest benefits of such communication.Grant Thornton China Chinese CPA

(Special General Partnership) (Engagement Partner):

Chinese CPA:

Beijing · China 10 April 2023

II Financial Statements

Currency unit for the financial statements and the notes thereto: RMB

1. Consolidated Balance Sheet

Prepared by Lu Thai Textile Co. Ltd.

31 December 2022

Unit: RMB

Item 31 December 2022 1 January 2022

Current assets:

Monetary assets 2067768253.97 1999712889.35

Held-for-trading financial assets 267695159.48 1727000.00

Notes receivable 168755715.84 227740247.89

Accounts receivable 660427526.19 647277198.51

Accounts receivable financing 11208304.78 34663071.88

Prepayments 95021598.32 54545954.20

Other receivables 89855659.99 74191613.22

Including: Interest receivable

Dividends receivable 18563298.39 47025975.44

Financial assets purchased under resale

agreements

Inventories 2107849708.33 2345346794.28

Contract assets

Assets held for sale

Current portion of non-current assets

Other current assets 76847903.07 55992522.81

97Lu Thai Textile Co. Ltd. Annual Report 2022

Total current assets 5545429829.97 5441197292.14

Non-current assets:

Long-term receivables

Long-term equity investments 184168625.69 169443106.66

Investments in other equity

instruments

Other non-current financial assets 337110000.00 190052000.00

Investment property 20460935.21 21362302.03

Fixed assets 5807847850.67 5561601374.44

Construction in progress 199943501.73 237579082.99

Right-of-use assets 481420505.31 257019286.15

Intangible assets 352889578.06 363130978.14

Development costs

Goodwill 20563803.29 20563803.29

Long-term prepaid expense 2948981.97 672601.04

Deferred income tax assets 155774523.25 138516136.50

Other non-current assets 242539466.88 586083308.25

Total non-current assets 7805667772.06 7546023979.49

Total assets 13351097602.03 12987221271.63

Current liabilities:

Short-term borrowings 518946415.96 1011034138.32

Held-for-trading financial liabilities 4276929.70

Notes payable 55450000.00

Accounts payable 246588463.74 335401371.30

Advances from customers

Contract liabilities 206879672.53 204967348.96

Employee benefits payable 330027159.72 272014296.09

Taxes payable 31483442.06 29457702.72

Other payables 83357296.71 97200565.31

Including: Interest payable

Dividends payable 441113.64 441113.64

Current portion of non-current

307921837.358877404.52

liabilities

Other current liabilities 66889025.17 120434721.81

Total current liabilities 1851820242.94 2079387549.03

Non-current liabilities:

Long-term borrowings 186431096.24 684962473.24

Bonds payable 1438162231.27 1395480652.71

Lease liabilities 98501303.83 121357658.41

Long-term payables

Long-term employee benefits payable 57417997.65 57384062.39

Provisions

98Lu Thai Textile Co. Ltd. Annual Report 2022

Deferred income 159615037.36 188958133.78

Deferred income tax liabilities 151243432.80 92571310.14

Other non-current liabilities

Total non-current liabilities 2091371099.15 2540714290.67

Total liabilities 3943191342.09 4620101839.70

Owners’ equity:

Share capital 887633151.00 882341295.00

Other equity instruments 71383830.75 71384656.84

Including: Preferred shares

Perpetual bonds

Capital reserves 395872135.71 340587387.65

Less: Treasury stock 154396198.73 78908300.00

Other comprehensive income 107628898.09 -36423748.37

Specific reserve

Surplus reserves 1215124336.54 1215124336.54

General reserve

Retained earnings 6490910719.35 5589201772.37

Total equity attributable to owners of the

9014156872.717983307400.03

Company as the parent

Non-controlling interests 393749387.23 383812031.90

Total owners’ equity 9407906259.94 8367119431.93

Total liabilities and owners’ equity 13351097602.03 12987221271.63

Legal representative: Liu Zibin Chief Accountant: Zhang Keming Financial Manager: Zhang Keming

2. Balance Sheet of the Company as the Parent

Unit: RMB

Item 31 December 2022 1 January 2022

Current assets:

Monetary assets 1493189218.38 977713296.25

Held-for-trading financial assets 14782050.00 1286000.00

Derivative financial assets

Notes receivable 99348764.36 132028322.80

Accounts receivable 357917050.71 425711738.27

Accounts receivable financing 4977876.31 29361263.86

Prepayments 52932385.24 31580697.18

Other receivables 1982595534.99 2060180025.87

Including: Interest receivable

Dividends receivable 18563298.39 94525975.44

Inventories 1032571546.29 1230487585.69

99Lu Thai Textile Co. Ltd. Annual Report 2022

Contract assets

Available-for-sale assets

Current portion of non-current assets

Other current assets 12117078.06 205568.38

Total current assets 5050431504.34 4888554498.30

Non-current assets:

Long-term receivables

Long-term equity investments 3069423182.09 2818047993.16

Investments in other equity instruments

Other non-current financial assets 325110000.00 178052000.00

Investment property 68234288.24 65888260.77

Fixed assets 2239204199.53 2305059429.29

Construction in progress 14457725.94 12268416.12

Right-of-use assets 102526417.74 116279075.24

Intangible assets 203872938.32 209970392.83

Development costs

Goodwill

Long-term deferred expenses 1124816.52 672601.04

Deferred income tax assets 70230669.83 56003944.38

Other non-current assets 180305870.74 366112002.79

Total non-current assets 6274490108.95 6128354115.62

Total assets 11324921613.29 11016908613.92

Current liabilities:

Short-term borrowings 73701088.21 615181318.98

Notes payable 213094435.63

Accounts payable 100586843.48 146714973.77

Advances from customers

Contract liabilities 91983662.84 58280121.24

Payroll payable 231917717.02 190277420.32

Taxes payable 9698693.68 15288956.94

Other payables 164914178.73 92914225.42

Including: Interest payable

Dividends payable 441113.64 441113.64

Held-for-sale liabilities

Current portion of non-current

307273908.998605336.67

liabilities

Other current liabilities 42075638.45 64202247.99

Total current liabilities 1235246167.03 1191464601.33

100Lu Thai Textile Co. Ltd. Annual Report 2022

Non-current liabilities:

Long-term borrowings 186431096.24 684962473.24

Bonds payable 1438162231.27 1395480652.71

Lease liabilities 100877929.66 118780465.67

Long-term payables

Long-term payroll payable 57417997.65 57384062.39

Provisions

Deferred income 119562568.94 125360026.35

Deferred income tax liabilities 112945049.91 67488141.18

Other non-current liabilities

Total non-current liabilities 2015396873.67 2449455821.54

Total liabilities 3250643040.70 3640920422.87

Owners’ equity:

Share capital 887633151.00 882341295.00

Other equity instruments 71383830.75 71384656.84

Capital reserves 457252169.95 401967421.89

Less: Treasury stock 154396198.73 78908300.00

Other comprehensive income -30162.34 -293580.24

Specific reserve

Surplus reserves 1212015596.90 1212015596.90

Retained earnings 5600420185.06 4887481100.66

Total owners’ equity 8074278572.59 7375988191.05

Total liabilities and owners’ equity 11324921613.29 11016908613.92

3. Consolidated Income Statement

Unit: RMB

Item 2022 2021

1. Revenue 6938342135.90 5238262348.85

Including: Operating revenue 6938342135.90 5238262348.85

2. Costs and expenses 5884547175.68 4965632056.69

Including: Cost of sales 5154367596.90 4152981075.85

Taxes and surcharges 69467165.08 59485640.58

Selling expense 136929096.72 119883494.68

Administrative expense 396309634.39 335380025.54

Development cost 276424812.26 252912911.63

Finance costs -148951129.67 44988908.41

101Lu Thai Textile Co. Ltd. Annual Report 2022

Including: Interest expense 88644208.75 65526817.38

Interest income 49863731.95 40686077.22

Add: Other income 49142717.20 58686029.71

Return on investment (“-” for loss) 13734073.31 50449943.70

Including: Share of profit or loss of joint

28049040.53-10755175.91

ventures and associates

Income from the derecognition of

financial assets at amortized cost (“-” for

loss)

Exchange gain (“-” for loss)

Net gain on exposure hedges (“-” for

loss)

Gain on changes in fair value (“-” for

169192724.9216415304.41

loss)

Credit impairment loss (“-” for loss) -18134328.11 1590092.00

Asset impairment loss (“-” for loss) -186305963.36 -85623858.26

Asset disposal income (“-” for loss) 912625.90 57175147.62

3. Operating profit (“-” for loss) 1082336810.08 371322951.34

Add: Non-operating income 8056548.73 5417119.07

Less: Non-operating expense 11007935.46 13424054.88

4. Profit before tax (“-” for loss) 1079385423.35 363316015.53

Less: Income tax expense 105623060.81 35993079.51

5. Net profit (“-” for net loss) 973762362.54 327322936.02

5.1 By operating continuity

5.1.1 Net profit from continuing

973762362.54327322936.02

operations (“-” for net loss)

5.1.2 Net profit from discontinued

operations (“-” for net loss)

5.2 By ownership

5.2.1 Net profit attributable to

shareholders of the Company as the 963864819.43 347609693.30

parent

5.2.2 Net profit attributable to non-

9897543.11-20286757.28

controlling interests

6. Other comprehensive income net of

144092458.68-37732671.26

tax

102Lu Thai Textile Co. Ltd. Annual Report 2022

Attributable to owners of the Company

144052646.46-37732671.26

as the parent

6.1 Items that will not be reclassified to

profit or loss

6.1.1 Changes caused by re-

measurements on defined benefit

schemes

6.1.2 Other comprehensive income that

will not be reclassified to profit or loss

under the equity method

6.1.3 Changes in the fair value of

investments in other equity instruments

6.1.4 Changes in the fair value arising

from changes in own credit risk

6.1.5 Other

6.2 Items that will be reclassified to

144052646.46-37732671.26

profit or loss

6.2.1 Other comprehensive income that

will be reclassified to profit or loss under

the equity method

6.2.2 Changes in the fair value of

investments in other debt obligations

6.2.3 Other comprehensive income

arising from the reclassification of

financial assets

6.2.4 Credit impairment allowance for

investments in other debt obligations

6.2.5 Reserve for cash flow hedges

6.2.6 Differences arising from the

translation of foreign currency- 143850902.02 -37716717.19

denominated financial statements

6.2.7 Other 201744.44 -15954.07

Attributable to non-controlling interests 39812.22

7. Total comprehensive income 1117854821.22 289590264.76

Attributable to owners of the Company

1107917465.89309877022.04

as the parent

Attributable to non-controlling interests 9937355.33 -20286757.28

103Lu Thai Textile Co. Ltd. Annual Report 2022

8. Earnings per share

8.1 Basic earnings per share 1.10 0.39

8.2 Diluted earnings per share 0.95 0.36

Where business combinations under common control occurred in the current period the net profit achieved by the acquirees before

the combinations was RMB0.00 with the amount for the same period of last year being RMB0.00.Legal representative: Liu Zibin Chief Accountant: Zhang Keming Financial Manager: Zhang Keming

4. Income Statement of the Company as the Parent

Unit: RMB

Item 2022 2021

1. Operating revenue 4207250282.21 3647402509.21

Less: Cost of sales 3167800915.91 2824451867.80

Taxes and surcharges 48152045.75 39686908.16

Selling expense 98346509.45 85257586.04

Administrative expense 273742666.38 212434986.88

R&D expense 186084341.76 178176401.25

Finance costs -171451099.25 14374893.63

Including: Interest expense 21891357.83 33309727.39

Interest income 34599913.21 33021266.87

Add: Other income 22189971.41 33778765.18

Return on investment (“-” for loss) 149933954.32 298576196.15

Including: Share of profit or loss of joint

28049040.53-10755175.91

ventures and associates

Income from the derecognition of

financial assets at amortized cost (“-” for

loss)

Net gain on exposure hedges (“-” for

loss)

Gain on changes in fair value (“-” for

160554050.0020786304.41

loss)

Credit impairment loss (“-” for loss) -2217796.79 3935670.51

Asset impairment loss (“-” for loss) -81729018.43 -34971247.79

Asset disposal income (“-” for loss) 182029.49 57897322.56

2. Operating profit (“-” for loss) 853488092.21 673022876.47

Add: Non-operating income 6621289.52 4866312.90

Less: Non-operating expense 6748987.44 11591362.60

104Lu Thai Textile Co. Ltd. Annual Report 2022

3. Profit before tax (“-” for loss) 853360394.29 666297826.77

Less: Income tax expense 78265437.44 55229039.28

4. Net profit (“-” for net loss) 775094956.85 611068787.49

4.1 Net profit from continuing

775094956.85611068787.49

operations (“-” for net loss)

4.2 Net profit from discontinued

operations (“-” for net loss)

5. Other comprehensive income net of

263417.90130733.09

tax

5.1 Items that will not be reclassified to

profit or loss

5.1.1 Changes caused by re-

measurements on defined benefit

schemes

5.1.2 Other comprehensive income that

will not be reclassified to profit or loss

under the equity method

5.1.3 Changes in the fair value of

investments in other equity instruments

5.1.4 Changes in the fair value arising

from changes in own credit risk

5.1.5 Other

5.2 Items that will be reclassified to

263417.90130733.09

profit or loss

5.2.1 Other comprehensive income that

will be reclassified to profit or loss under

the equity method

5.2.2 Changes in the fair value of

investments in other debt obligations

5.2.3 Other comprehensive income

arising from the reclassification of

financial assets

5.2.4 Credit impairment allowance for

investments in other debt obligations

5.2.5 Reserve for cash flow hedges

5.2.6 Differences arising from the

translation of foreign currency-

105Lu Thai Textile Co. Ltd. Annual Report 2022

denominated financial statements

5.2.7 Other 263417.90 130733.09

6. Total comprehensive income 775358374.75 611199520.58

7. Earnings per share

7.1 Basic earnings per share 0.88 0.71

7.2 Diluted earnings per share 0.79 0.64

5. Consolidated Cash Flow Statement

Unit: RMB

Item 2022 2021

1. Cash flows from operating activities:

Proceeds from sale of commodities and

7001597756.894877137793.95

rendering of services

Tax rebates 166814030.33 118978037.24

Cash generated from other operating

50207676.7699760735.48

activities

Subtotal of cash generated from

7218619463.985095876566.67

operating activities

Payments for commodities and services 3927652179.15 3075758673.05

Cash paid to and for employees 1548156910.96 1394301069.51

Taxes paid 182308141.79 139250588.74

Cash used in other operating activities 138191457.82 138429229.89

Subtotal of cash used in operating

5796308689.724747739561.19

activities

Net cash generated from/used in

1422310774.26348137005.48

operating activities

2. Cash flows from investing activities:

Proceeds from disinvestment 133323521.50 1318751294.68

Return on investment 34285319.99 41433282.80

Net proceeds from the disposal of fixed

assets intangible assets and other long- 7324525.46 4645043.40

lived assets

Net proceeds from the disposal of

95860000.00

subsidiaries and other business units

Cash generated from other investing

89213325.3398294038.33

activities

106Lu Thai Textile Co. Ltd. Annual Report 2022

Subtotal of cash generated from

264146692.281558983659.21

investing activities

Payments for the acquisition of fixed

assets intangible assets and other long- 503584860.31 430591025.71

lived assets

Payments for investments 359556504.86 760870000.00

Net increase in pledged loans granted

Net payments for the acquisition of

subsidiaries and other business units

Cash used in other investing activities 118661325.53 339043598.92

Subtotal of cash used in investing

981802690.701530504624.63

activities

Net cash generated from/used in

-717655998.4228479034.58

investing activities

3. Cash flows from financing activities:

Capital contributions received 19086927.80 80122550.00

Including: Capital contributions by non-

controlling interests to subsidiaries

Borrowings raised 1326434596.95 1631139389.49

Cash generated from other financing

activities

Subtotal of cash generated from

1345521524.751711261939.49

financing activities

Repayment of borrowings 2118703417.56 1359634451.98

Interest and dividends paid 114018478.84 84499928.33

Including: Dividends paid by

subsidiaries to non-controlling interests

Cash used in other financing activities 107326619.83 63817316.19

Subtotal of cash used in financing

2340048516.231507951696.50

activities

Net cash generated from/used in

-994526991.48203310242.99

financing activities

4. Effect of foreign exchange rates

142762600.91-6449805.63

changes on cash and cash equivalents

5. Net increase in cash and cash

-147109614.73573476477.42

equivalents

Add: Cash and cash equivalents

1970006884.891396530407.47

beginning of the period

107Lu Thai Textile Co. Ltd. Annual Report 2022

6. Cash and cash equivalents end of the

1822897270.161970006884.89

period

6. Cash Flow Statement of the Company as the Parent

Unit: RMB

Item 2022 2021

1. Cash flows from operating activities:

Proceeds from sale of commodities and

4230164898.243312220027.60

rendering of services

Tax rebates 35115485.51 24444047.02

Cash generated from other operating

46602876.0651752143.18

activities

Subtotal of cash generated from

4311883259.813388416217.80

operating activities

Payments for commodities and services 2204442463.82 2128657555.64

Cash paid to and for employees 867417441.71 837615352.93

Taxes paid 124452272.83 83471328.14

Cash used in other operating activities 87964680.84 97694765.19

Subtotal of cash used in operating

3284276859.203147439001.90

activities

Net cash generated from/used in

1027606400.61240977215.90

operating activities

2. Cash flows from investing activities:

Proceeds from disinvestment 473611167.77 587311294.68

Return on investment 186817055.74 255233323.75

Net proceeds from the disposal of fixed

assets intangible assets and other long- 32427869.91 6091843.79

lived assets

Net proceeds from the disposal of

263014351.00

subsidiaries and other business units

Cash generated from other investing

2254482395.37970377365.78

activities

Subtotal of cash generated from

2947338488.792082028179.00

investing activities

Payments for the acquisition of fixed

assets intangible assets and other long- 143565978.32 68414055.96

lived assets

108Lu Thai Textile Co. Ltd. Annual Report 2022

Payments for investments 662467290.00 640977947.65

Net payments for the acquisition of

subsidiaries and other business units

Cash used in other investing activities 2002472544.95 1729113808.44

Subtotal of cash used in investing

2808505813.272438505812.05

activities

Net cash generated from/used in

138832675.52-356477633.05

investing activities

3. Cash flows from financing activities:

Capital contributions received 19086927.80 80122550.00

Borrowings raised 592777524.65 800983356.71

Cash generated from other financing

154870600.0058215720.00

activities

Subtotal of cash generated from

766735052.45939321626.71

financing activities

Repayment of borrowings 1357097218.44 312407315.63

Interest and dividends paid 100075384.31 75954642.88

Cash used in other financing activities 191679488.04 182836702.32

Subtotal of cash used in financing

1648852090.79571198660.83

activities

Net cash generated from/used in

-882117038.34368122965.88

financing activities

4. Effect of foreign exchange rates

21810782.76-3255947.76

changes on cash and cash equivalents

5. Net increase in cash and cash

306132820.55249366600.97

equivalents

Add: Cash and cash equivalents

977713296.25728346695.28

beginning of the period

6. Cash and cash equivalents end of the

1283846116.80977713296.25

period

7. Consolidated Statements of Changes in Owners’ Equity

109Lu Thai Textile Co. Ltd. Annual Report 2022

2022

Unit: RMB

2022

Equity attributable to owners of the Company as the parent

Other equity instruments Other Gene Non- Total

Item Less:

Share Prefer Perpet Capital comprehen Specific Surplus ral Retained Oth controlling owners’

Treasury Subtotal

capital red ual Other reserves sive reserve reserves reser earnings er interests equity

stock

shares bonds income ve

1.

Balances -

88234129713846534058738789083001215124355892017798330743838120383671194

as at the 36423748 5.00 6.84 7.65 .00 36.54 72.37 00.03 1.90 31.93.37

end of the

prior year

Add:

Adjustmen

ts for

changed

accounting

policies

Adjustmen

ts for

correction

s of

previous

errors

110Lu Thai Textile Co. Ltd. Annual Report 2022

Adjustmen

ts for

business

combinati

ons under

common

control

Other

adjustment

s

2.

Balances -

88234129713846534058738789083001215124355892017798330743838120383671194

as at the 36423748 5.00 6.84 7.65 .00 36.54 72.37 00.03 1.90 31.93.37

beginning

of the year

3.

Increase/

decrease

5291856.552847487548789814405264901708946103084949937355.10407868

in the -826.09 00 .06 .73 6.46 .98 72.68 33 28.01

period (“-”

for

decrease)

3.1 Total

14405264963864819110791749937355.11178548

comprehe 6.46 .43 65.89 33 21.22

nsive

111Lu Thai Textile Co. Ltd. Annual Report 2022

income

3.2

Capital

--

increased 5291856. 55284748 75487898

-826.0914912120.14912120.

00.06.73

and 76 76

reduced

by owners

3.2.1

Ordinary

shares

5291856.1374319319035049.19035049.

increased 00 .13 13 13

by

shareholde

rs

3.2.2

Capital

increased

by holders

of other

equity

instrument

s

112Lu Thai Textile Co. Ltd. Annual Report 2022

3.2.3

Share-

based

3997567839975678.39975678.

payments .06 06 06

included

in owners’

equity

--

3.2.41565876.75487898

-826.0973922847.73922847.

87.73

Other 95 95

3.3 Profit - - -

distributio 62155872. 62155872. 62155872.

454545

n

3.3.1

Appropriat

ion to

surplus

reserves

3.3.2

Appropriat

ion to

general

reserve

3.3.3

---

Appropriat

62155872.62155872.62155872.

ion to 45 45 45

owners (or

113Lu Thai Textile Co. Ltd. Annual Report 2022

shareholde

rs)

3.3.4

Other

3.4

Transfers

within

owners’

equity

3.4.1

Increase in

capital (or

share

capital)

from

capital

reserves

3.4.2

Increase in

capital (or

share

capital)

from

surplus

114Lu Thai Textile Co. Ltd. Annual Report 2022

reserves

3.4.3

Loss

offset by

surplus

reserves

3.4.4

Changes

in defined

benefit

pension

schemes

transferred

to retained

earnings

3.4.5

Other

comprehe

nsive

income

transferred

to retained

earnings

115Lu Thai Textile Co. Ltd. Annual Report 2022

3.4.6

Other

3.5

Specific

reserve

3.5.1

5414405414407.95414407.9

Increase in 7.96 6 6

the period

3.5.2---

Used in 541440 5414407.9 5414407.9

7.9666

the period

3.6 Other

4.

Balances

8876331571383833958721315439619107628891215124364909107901415683937493894079062

as at the 1.00 0.75 5.71 8.73 8.09 36.54 19.35 72.71 7.23 59.94

end of the

period

2021

Unit: RMB

2021

Equity attributable to owners of the Company as the parent

Other equity instruments Other Speci Gene Non- Total

Item Less:

Share Preferr Perpet Capital comprehen fic Surplus ral Retained Oth controlling owners’

Treasury Subtotal

capital ed ual Other reserves sive reserv reserves reser earnings er interests equity

stock

shares bonds income e ve

1.858132327138645255912481308922.11540174553468199476875775940409878809167637

116Lu Thai Textile Co. Ltd. Annual Report 2022

2.001.818.01897.798.220.729.189.90

Balances

as at the

end of the

prior year

Add:

Adjustmen

ts for

changed

accounting

policies

Adjustmen

ts for

corrections

of previous

errors

Adjustmen

ts for

business

combinatio

ns under

common

control

Other

adjustment

117Lu Thai Textile Co. Ltd. Annual Report 2022

s

2.

Balances

858132327138645255912481308922.11540174553468199476875775940409878809167637

as at the 2.00 1.81 8.01 89 7.79 8.22 0.72 9.18 9.90

beginning

of the year

3.

Increase/

--

decrease in 24208973 84674899 7890830 61106878.7 242381824. 295729809. 275443052.-1794.973773267120286757.00.640.005153103

the period .26 .28

(“-” for

decrease)

3.1 Total

--

comprehen 347609693. 309877022. 289590264.

3773267120286757

300476

sive .26 .28

income

3.2

Capital

increased 24208973 84674899 7890830 29973777.6 29973777.6

-1794.97.00.640.0077

and

reduced by

owners

3.2.1

Ordinary 24208973 55949334 80158307.2 80158307.2.00.2111

shares

increased

118Lu Thai Textile Co. Ltd. Annual Report 2022

by

shareholde

rs

3.2.2

Capital

increased

by holders

of other

equity

instrument

s

3.2.3

Share-

based

2832578828325788.628325788.6

payments .60 0 0

included in

owners’

equity

--

7890830

3.2.4 Other -1794.97 399776.83 78510318.1 78510318.10.00

44

3.3 Profit - - -

61106878.7

distributio 105227869. 44120990.4 44120990.45

1500

n

3.3.1-

61106878.7

Appropriat 61106878.7 5

5

ion to

119Lu Thai Textile Co. Ltd. Annual Report 2022

surplus

reserves

3.3.2

Appropriat

ion to

general

reserve

3.3.3

Appropriat

---

ion to

44120990.444120990.444120990.4

owners (or 0 0 0

shareholde

rs)

3.3.4

Other

3.4

Transfers

within

owners’

equity

3.4.1

Increase in

capital (or

share

capital)

from

120Lu Thai Textile Co. Ltd. Annual Report 2022

capital

reserves

3.4.2

Increase in

capital (or

share

capital)

from

surplus

reserves

3.4.3

Loss offset

by surplus

reserves

3.4.4

Changes in

defined

benefit

pension

schemes

transferred

to retained

earnings

3.4.5

Other

comprehen

121Lu Thai Textile Co. Ltd. Annual Report 2022

sive

income

transferred

to retained

earnings

3.4.6

Other

3.5

Specific

reserve

3.5.1

Increase in

the period

3.5.2

Used in

the period

3.6 Other

4.

Balances -

88234129713846534058738789083012151243355892017779833074038381203836711943

as at the 36423748 5.00 6.84 7.65 0.00 6.54 2.37 0.03 1.90 1.93.37

end of the

period

8. Statements of Changes in Owners’ Equity of the Company as the Parent

2022

Unit: RMB

122Lu Thai Textile Co. Ltd. Annual Report 2022

2022

Other equity instruments Other Specifi

Item Capital Less: Treasury Retained Othe Total owners’

Share capital Preferre Perpetua comprehensiv c Surplus reserves

Other reserves stock earnings r equity

d shares l bonds e income reserve

1. Balances as

882341295.071384656.8401967421.81212015596.94887481100.67375988191.0

at the end of 78908300.00 -293580.24 0 4 9 0 6 5

the prior year

Add:

Adjustments

for changed

accounting

policies

Adjustments

for corrections

of previous

errors

Other

adjustments

2. Balances as

at the 882341295.0 71384656.8 401967421.8 1212015596.9 4887481100.6 7375988191.0

78908300.00-293580.24

049065

beginning of

the year

3. Increase/

decrease in

5291856.00-826.0955284748.0675487898.73263417.90712939084.40698290381.54

the period (“-”

for decrease)

123Lu Thai Textile Co. Ltd. Annual Report 2022

3.1 Total

comprehensiv 263417.90 775094956.85 775358374.75

e income

3.2 Capital

increased and

5291856.00-826.0955284748.0675487898.73-14912120.76

reduced by

owners

3.2.1 Ordinary

shares

5291856.0013743193.1319035049.13

increased by

shareholders

3.2.2 Capital

increased by

holders of

other equity

instruments

3.2.3 Share-

based

payments

39975678.0639975678.06

included in

owners’

equity

3.2.4 Other -826.09 1565876.87 75487898.73 -73922847.95

3.3 Profit

-62155872.45-62155872.45

distribution

3.3.1

124Lu Thai Textile Co. Ltd. Annual Report 2022

Appropriation

to surplus

reserves

3.3.2

Appropriation

-62155872.45-62155872.45

to owners (or

shareholders)

3.3.3 Other

3.4 Transfers

within

owners’

equity

3.4.1

Increase in

capital (or

share capital)

from capital

reserves

3.4.2

Increase in

capital (or

share capital)

from surplus

reserves

3.4.3 Loss

offset by

125Lu Thai Textile Co. Ltd. Annual Report 2022

surplus

reserves

3.4.4

Changes in

defined

benefit

pension

schemes

transferred to

retained

earnings

3.4.5 Other

comprehensiv

e income

transferred to

retained

earnings

3.4.6 Other

3.5 Specific

reserve

3.5.1

Increase in the

period

3.5.2 Used

in the period

3.6 Other

126Lu Thai Textile Co. Ltd. Annual Report 2022

4. Balances as

887633151.071383830.7457252169.9154396198.71212015596.95600420185.08074278572.5

at the end of -30162.34 0 5 5 3 0 6 9

the period

2021

Unit: RMB

2021

Other equity instruments Less: Other Specifi

Item Capital Retained Othe Total owners’

Share capital Preferre Perpetua Treasury comprehensiv c Surplus reserves

Other reserves earnings r equity

d shares l bonds stock e income reserve

1. Balances as

858132322.071386451.8317292522.21150908718.14381640182.36778935883.2

at the end of -424313.33 0 1 5 5 2 0

the prior year

Add:

Adjustments

for changed

accounting

policies

Adjustments

for corrections

of previous

errors

Other

adjustments

2. Balances as 858132322.0 71386451.8 317292522.2 1150908718.1 4381640182.3 6778935883.2

-424313.33

015520

at the

127Lu Thai Textile Co. Ltd. Annual Report 2022

beginning of

the year

3. Increase/

decrease in 78908300.0

24208973.00-1794.9784674899.64130733.0961106878.75505840918.34597052307.85

0

the period (“-”

for decrease)

3.1 Total

comprehensiv 130733.09 611068787.49 611199520.58

e income

3.2 Capital

increased and 78908300.0

24208973.00-1794.9784674899.6429973777.67

0

reduced by

owners

3.2.1 Ordinary

shares

24208973.0055949334.2180158307.21

increased by

shareholders

3.2.2 Capital

increased by

holders of

other equity

instruments

3.2.3 Share-

based

28325788.6028325788.60

payments

included in

128Lu Thai Textile Co. Ltd. Annual Report 2022

owners’

equity

78908300.0

3.2.4 Other -1794.97 399776.83 -78510318.14 0

3.3 Profit

61106878.75-105227869.15-44120990.40

distribution

3.3.1

Appropriation

61106878.75-61106878.75

to surplus

reserves

3.3.2

Appropriation

-44120990.40-44120990.40

to owners (or

shareholders)

3.3.3 Other

3.4 Transfers

within

owners’

equity

3.4.1

Increase in

capital (or

share capital)

from capital

reserves

3.4.2

Increase in

129Lu Thai Textile Co. Ltd. Annual Report 2022

capital (or

share capital)

from surplus

reserves

3.4.3 Loss

offset by

surplus

reserves

3.4.4

Changes in

defined

benefit

pension

schemes

transferred to

retained

earnings

3.4.5 Other

comprehensiv

e income

transferred to

retained

earnings

3.4.6 Other

3.5 Specific

reserve

130Lu Thai Textile Co. Ltd. Annual Report 2022

3.5.1

Increase in the

period

3.5.2 Used

in the period

3.6 Other

4. Balances as

882341295.071384656.8401967421.878908300.01212015596.94887481100.67375988191.0

at the end of -293580.24 0 4 9 0 0 6 5

the period

131Lu Thai Textile Co. Ltd. Annual Report 2022

III Company Profile

1. Company Profile

Lu Thai Textile Co. Ltd. (hereinafter referred to as the “Company”) is a joint venture invested by Zibo Lucheng Textile Investment

Co. Ltd (originally named Zibo Lucheng Textile Co. Ltd hereinafter referred to as Lucheng Textile) and Thailand Tailun Textile

Co. Ltd. On 3 February 1993 the Company is approved by the former Ministry of Foreign Trade and Economy of the State (1993)

in WJMZEHZ No. 59 to convert into a joint-stock enterprise. Zibo Administration for Industry and Commerce issued the Company

corporate business license with the registration No. of QGLZZZ No. 000066.In July 1997 the Company is approved by the Securities Committee of the Department of the State in the ZWF (1997) No. 47 to

issue 80 million shares of domestically listed foreign share( B-shares) at the price of RMB 1.00 per share. Upon approved by

Shenzhen Stock Exchange with No. (1997) 296 Listing Notice the Company is listed on the Shenzhen Stock Exchange on 19 August

1997 with B-shares stock code of 200726. On 24 November 2000 approved by ZJGSZ [2000] No.199 by CSRC the Company

increased publication of 50 million shares of general share (A-shares) at the book value of RMB 1.00 which are listed on the

Shenzhen Stock Exchange on 25 December 2000 with A-shares stock code of 000726 through approval by Shenzhen Stock

Exchange with No. (2000) 162 Listing Notice.As approved by 2000 Annual General Meeting in May 2001 the Company carried out the distribution plan that 10 shares of capital

public reserve are converted to 3 more shares for each 10 shares.As approved by Resolutions of 2001 Annual General Meeting in June 2002 the Company implemented the distribution plan that 10

shares of capital public reserve are converted 3 more shares for each 10 shares again.As approved by 2002 Annual General Meeting in May 2003 the Company implemented the distribution plan that 10 shares of capital

public reserve are 2 more shares for each 10 shares and inner employees’ shared increased to 40.56 million shares. As examined and

approved by ZJGSZ No. [2000] 199 of CSRC the inner employees’ shares will start circulation 3 years later since listing on the A-

share market. On 25 December 2003 the inner employees’ shares reach 3 years since listing on the A-share stock market and they

set out circulation on 26 December 2003.As approved by the Annual General Meeting 2006 held in June 2007 the Company implemented the plan on converting 10 shares to

all its shareholders with capital reserves for every 10 shares. After capitalization the registered capital of the Company was RMB

844.8648 million.

The Company in accordance with the official reply on approving Lu Thai Textile Co. Ltd. to issue additional shares (ZJXK [2008]

No. 890 document) from CSRC issued the Renminbi common shares (A shares) amounting to 150 million shares on 8 December

2008.

According to the relevant resolution of the 2nd Special Extraordinary General Meeting of 2011 the relevant resolution of the 15th

Meeting of the 6th Board of Directors the Opinion of China Securities Regulatory Commission on the Restricted Share Incentive

Plan of Lu Thai Textile Co. Ltd. (Shang-Shi-Bu-Han [2011] No. 206) the Company applied for a registered capital increment of

RMB 14.09 million which was contributed by restricted share incentive receivers with monetary funds.

132Lu Thai Textile Co. Ltd. Annual Report 2022

In accordance with the resolution of Proposal on Repurchasing and Canceling Partial Restricted Shares already Granted for the

Original Incentive Targets not Reaching the Incentive Conditions made at the 23rd Session of the 6th Board of Directors on 13 August

2012 the Company canceling a total of 60000.00 shares already granted for the original incentive targets not reaching the incentive

conditions.According to the second temporary resolution of Proposal on counter purchase of part of the domestic listed foreign share (B share)

on 25 June 2012 the Company counter purchase domestic listed foreign share (B share) 48837300 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 4257000 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 42000 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 33156200 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 64480800 domestically listed foreign shares (B-shares).There were 10800 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 RMB24285000 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 RMB80000.There were 4000 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

5838000 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 240000 shares authorized to the original incentive personnel who did not conform to the incentive

133Lu Thai Textile Co. Ltd. Annual Report 2022

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 308000 shares authorized to

the original incentive personnel who did not conform to the incentive condition of the Company were repurchased and cancelled.There were 1900 shares of the Company which were converted from the convertible bonds in 2022.As of 31 December 2022 the registered capital of the Company is RMB887633200.The Company’s registered address: No. 61 Luthai Avenue Hi-tech Development Zone Zibo Shandong

The Company’s unified social credit code: 91370300613281175K

The Company’s legal representative: Liu Zibin

The Company establishes the corporate governance structure consisting of the shareholders meeting the Board of Directors and the

Supervisory Committee. At present the Company has set up various departments including the Yarn-dyed Fabric Product Line

Garment Product Line the Clothing Marketing Department the Global Marketing Department the Supply Chain Department Lu

Thai Engineering Technology Institute the Enterprise Management Department the Financial Management Department and the

Strategy and Market Department etc.The scope of business of the Company and its subsidiaries shall include general projects: Fabric textile processing; fabric printing

and dyeing processing; garment manufacturing; the sales of textiles and raw materials; clothing wholesale; clothing retail; Internet

sales (except for the sale of goods requiring a license); the production of Class I medical devices; the production of routine masks

(non-medical); the production of labour protection appliances; software development; technical services development of technology

technology consulting technical exchange technology transfer and technology promotion; the sales of textile special equipment; the

sales of mechanical and electrical equipment; the procurement of primary agricultural products; business training (trainings that

require approval such as educational training and vocational skill training exclusive); housing lease; the lease of non-residential real

estate; the lease of land usage right; the sales of special chemical products (dangerous chemicals exclusive); and the sales of building

materials. It shall also include licensed projects (business activities can be carried out legally and independently with business license

in addition to projects that must be approved by law): Inspection and testing service; catering service; power generation business

power transmission business and power supply (distribution) business. (For projects that must be approved by law the business

activities can only be carried out upon approval by the relevant departments and the specific business projects shall be subject to the

approval document or license of relevant departments)

The Company’s financial statements and Notes thereof have been approved by the 7th Meeting of the 10th Board of Directors held on

10 April 2022.

2. Scope of consolidated financial statements

The Company’s scope of consolidated financial statements was determined based on control.

(1) Subsidiaries included in the consolidated financial statements during the Reporting Period

134Lu Thai Textile Co. Ltd. Annual Report 2022

Registration Shareholding

Company Way

place ratio (%)Lu Thai (Hong Kong) Textile Co. Ltd. (“Lu Thai (HongHong Kong 100 EstablishmentKong)”)Shanghai Lu Thai Textile Garment Co. Ltd. (“Shanghai LuShanghai 100 EstablishmentThai”)

Lufeng Textile Dyeing Co. Ltd. (“Lufeng Textile Dyeing”) Zibo 75 Establishment

Zibo Lu Qun Textile Co. Ltd. (“Lu Qun Textile”) Zibo 100 EstablishmentZibo Xinsheng Thermal Power Co. Ltd. (“Xinsheng Thermal Business combination notZibo 100Power”) under the same controlShanghai Zhinuo Textile New Materials Co. Ltd. (“ShanghaiShanghai 100 EstablishmentZhinuo”)Shandong Lulian New Materials Co. Ltd. (“Lulian NewZibo 75 EstablishmentMaterials”)Shandong Lujia Import and Export Co. Ltd. (“Lujia ImportZibo 100 Establishmentand Export”)Beijing Zhishu Management Consulting Co. Ltd. (“ZhishuBeijing 100 EstablishmentConsulting”)

Lu Thai Vocational Training School Zibo 100 Establishment

Zibo Banyang Villa Hotel Co. Ltd. (“Banyang Villa”) Zibo 100 EstablishmentHainan Huilin International Holdings Co. Ltd. (“HuilinWenchang 100 EstablishmentInternational”)

LIIPL Singapore 100 Establishment

VACL Burma 100 Establishment

Lu Thai (America) Textile Co. Ltd. (“Lu Thai (America)”) America 100 Establishment

Yuanhui Dividend No.2 Private Equity Investment Fund

100 Subscription

(“Yuanhui Fund”)

(2) Changes of consolidated financial statements for the Reporting Period

Company with change Increase or decrease to consolidated statements Reason for change

LTCL Increase Establishment

Yuanhui Fund Increase Subscription

For details please refer to Note VIII. “Changes of Consolidation Scope” and Notes IX. 1.Equities in Subsidiaries”.IV Basis for Preparation of Financial Statements

1. Preparation Basis

This financial statement is prepared in accordance with the accounting standards for business enterprises and the application guide

interpretation and other relevant regulations (hereinafter collectively referred to as “Accounting Standards for Business Enterprises”)

issued by the Ministry of Finance. In addition the Company also disclosed relevant financial information in accordance with the

Regulations on Information Disclosure and Compilation for Companies Public Offering Securities No. 15-General Provisions on

Financial Report (revised in 2014) issued by China Securities Regulatory Commission.The Company's accounting is based on the accrual basis. Except for certain financial instruments this financial statement is

measured on the basis of historical cost. If the asset is impaired the corresponding impairment provision shall be made in accordance

135Lu Thai Textile Co. Ltd. Annual Report 2022

with relevant regulations.

2. Going-concern

The financial statements are presented on the basis of continuing operations.V Significant Accounting Policies and Estimates

Specific accounting policies and accounting estimates indicators:

The Company determines income recognition policy according to its production and operation characteristics and the specific

accounting policies are shown in Note V (25).

1. Statement of Compliance with the Accounting Standards for Business Enterprises

The financial statements prepared by the Company are in compliance with in compliance with the Accounting Standards for Business

Enterprises which factually and completely present the consolidated and the Company’s financial positions as at 31 December 2022

business results and cash flows for 2022 and other relevant information.

2. Fiscal Year

The Company’s fiscal year starts on 1 January and ends on 31 December of every year according to the Gregorian calendar.

3. Operating Cycle

The Company regards 12 months as an operating cycle.

4. Recording Currency

The Company and its domestic subsidiaries adopt RMB as the recording currency. The Company’s overseas subsidiaries confirm to

adopt HK Dollar and US Dollar as the recording currency according their major economic environment of the operating. When

preparing the financial statements for the Reporting Period the Company adopted RMB as the recording currency.

5. Accounting Treatment for Business Combinations under the Common Control and Not under the

Common Control

(1) Business combinations under the same control

For business combinations under the same control the assets and liabilities of the merged party acquired by the merger party in the

merger shall be measured at the carrying value of the merged party in the consolidated financial statement of the final controller on

the combination date. As for the difference between the carrying value of the merger consideration and carrying value of the net

assets obtained in the merger the capital reserve (capital stock premium) shall be adjusted and if the capital reserve (capital stock

premium) is insufficient to offset the retained earnings shall be adjusted.Realize business combination under the same control in steps by transaction several times

In specific financial statements the share of book value of the net assets of the combined party that shall be enjoyed in the combined

financial statements of the final control party on the combination date as calculated according to the shareholding ratio of the

combination date is regarded as the initial investment cost of the investment; the difference between the initial investment cost and

136Lu Thai Textile Co. Ltd. Annual Report 2022

the sum of book value of investment held before combination plus the book value of the consideration newly paid on the combination

date is used for adjusting the capital reserve (capital stock premium) and if the capital reserve is insufficient to offset the retained

earnings shall be adjusted.In the combined financial statements the assets and liabilities of the combined party acquired by the combining party in the

combination shall be measured at the book value of the combined party in the consolidated financial statement of the final controller

on the combination date; the difference between the sum of the book value of investment held before combination plus the book

value newly paid on the combination date and the book value of the net assets acquired in combination is used for adjusting the

capital reserve (capital stock premium) and if the capital reserve (capital stock premium) is insufficient to offset the retained

earnings shall be adjusted. The long-term equity investment held by the combining party before acquiring the control right of the

combined party if relevant gains and losses other comprehensive revenues and changes in other owner’s equity have been confirmed

from the date of acquiring equity and the date when the combining party and the combined party under the final control of the same

party whichever is later to the combination date shall offset the retained earnings at the beginning or current profits and losses in

the period of comparing statements.

(2) Business combinations not under the same control

For a business combination not under the same control the cost of the combination is the assets paid liabilities incurred or assumed

and the fair value of the equity securities issued on the acquisition date to obtain control over the purchased party. On the purchase

date the acquired assets liabilities and contingent liabilities of the purchased party are recognized at fair value.The difference between the merger cost and the fair value of the identifiable net assets of the acquired party acquired in the merger

(the former is greater than the latter) is recognized as goodwill and subsequent measurement is made based on the cost deducting the

accumulated impairment provision; the difference between the merger cost and the fair value of the identifiable net assets of the

acquired party acquired in the merger (the former is less than the latter) shall be recorded into the current profit or loss after the

recheck.Achieve business combination not under the same control step by step through multiple transactions

In specific financial statements the sum of book value of the acquired party's equity investment held before the purchase date and the

investment cost newly paid on the purchase date is regarded as the initial investment cost of the investment. The other comprehensive

income recognized by using the equity method of accounting of the equity investment held before the purchase date is not disposed

on the purchase date and the same basis as the direct disposal of relevant assets or liabilities of the investee is used to conduct

accounting treatment when disposing the investment; the owner's equity recognized as a result of the changes of the other owner's

equity except for the net profit and loss of the investee other comprehensive income and profit distribution shall be transferred to the

current profit and loss during the disposal period when disposing the investment. If the equity investment held before the purchase

date is measured at fair value the accumulative changes in fair value originally included in other comprehensive income shall be

transferred to retained earnings when accounting by cost method.In consolidated financial statements the cost of consolidation is the sum of the consideration paid at the purchase date and the fair

value at the purchase date of the equity already held by the acquired party before the purchase date. For equity of the acquired party

that is already held before the purchase date it shall be re-measured according to the fair value of the equity on the purchase date

and the difference between the fair value and its book value shall be included in the current investment income. If the equity of the

acquired party held before the purchase date involves other comprehensive income and the changes of other owner's equity it shall

be transferred to current income on the purchase date except for other comprehensive income caused by changes in net liabilities or

net assets of the income plan remeasured and reset by the investee.

(3) Treatment of transaction costs in business combinations

Intermediary expenses such as auditing legal services evaluation and consulting and other related management expenses incurred

for the business combination shall be included in the current profit and loss when incurred. The transaction costs of equity securities

or debt securities issued as the merger consideration shall be included in the initial recognition amount of equity securities or debt

securities.

137Lu Thai Textile Co. Ltd. Annual Report 2022

6. Preparation of the Consolidated Financial Statements

(1) Consolidation scope

The consolidation scope of the consolidated financial statements is determined on the basis of control. Control means that the

Company has the power over the invested unit enjoys variable returns by participating in the related activities of the invested unit

and has the ability to use the power over the invested unit to influence the amount of its return. Subsidiaries refer to the entities

controlled by the Company (including enterprises divisible parts of invested entities structured entities etc.).

(2) Preparation method of consolidated financial statements

The consolidated financial statements are prepared by the Company based on the financial statements of the Company and its

subsidiaries and other relevant materials. When preparing the consolidated financial statements the accounting policies and

accounting fiscal of the Company and those of subsidiaries shall be consistent and the large transactions and intercourse balance

among companies shall be offset. Subsidiaries and businesses increased due to business combinations under the same control during

the Reporting Period shall be included into the Company’s combination scope since the date when they are jointly controlled by the

final controller and the operating result and cash flow since then shall be respectively included into the consolidated income

statement and consolidated cash flow statement. As for subsidiaries and businesses increase due to business combinations not under

the same control during the Reporting Period the revenue expenses and profit or those subsidiaries and businesses from the purchase

date to the end of the Reporting Period shall be included into the consolidated income statement and the cash flow thereof shall be

included into the consolidated cash flow statement. The share of shareholders’ equity in subsidiaries not belonging to the Company

shall be regarded as the minority interests and separately listed under the item of shareholders’ equity in the consolidated balance

sheet. The share of current portion of net profit or loss in subsidiaries belonging to minority interests shall presented as the item of

minority interests under the item of net profit in the consolidated income statement. The difference between the losses of subsidiaries

born by not-controlling shareholders and the share of the company’s owners’ equity at the period-beginning the not-controlling

shareholders enjoy (the former is larger than the latter) shall be offset the minority interests.

(3) Purchase of minority shareholders' equity of subsidiaries

As for the difference between the cost of a long-term equity investment newly acquired due to the purchase of the minority shares

and the share of net assets of the subsidiary continuously accounted from the purchase date or combination date the Company shall

enjoy based on the new shareholding ratio and the difference between the disposal price of partial equity investments in the

subsidiary under the premise of remaining the control power and the share of net assets of the subsidiary continuously accounted

from the purchase date or combination date the Company shall enjoy and corresponding to the disposal of long-term equity

investments the capital reserve (capital stock premium) in the consolidated balance sheet shall be adjusted and when the capital

reserve is insufficient to offset the retained earnings shall be adjusted.

(4) Treatment of loss of control over subsidiaries

If the control over the original subsidiary is lost due to the disposal of partial equity investments or other reasons the residual equity

shall be remeasured at the fair value on the date of losing the control power; the balance of the sum of the consideration obtained

from equity disposal and the fair value of residual equity after deducting the sum of the share of the carrying value of net assets in the

original subsidiary continuously accounted from the purchase date the Company shall enjoy based on the original shareholding ratio

and the goodwill shall be recorded into the investment income of the period when the control power is lost. The other comprehensive

income related to the equity investments in the original subsidiary shall be transferred to the current profit or loss when the control

power is lost except for the other comprehensive income arising from changes in net liabilities or net assets due to the remeasurement

of defined benefit plan by the investee.

7. Classification of Joint Arrangements and Accounting Treatment of Joint Operations

Joint arrangement refers to an arrangement under the joint control of two or more participants. The Company's joint arrangements are

divided into joint operations and joint ventures.

138Lu Thai Textile Co. Ltd. Annual Report 2022

(1) Joint operations

A joint operation refers to a joint arrangement whereby the Company enjoys relevant assets of the arrangement and assumes

obligations relevant liabilities of the arrangement.The Company recognizes the following items related to the interest share in joint operation and conducts accounting treatment in

accordance with relevant provisions of the Accounting Standard for Business Enterprises:

A. It recognizes separately held assets and jointly held assets according to the proportion;

B. It recognizes separately assumed liabilities and jointly assumed liabilities according to the proportion;

C. Income from the sale of the proportion of joint operation output is recognized;

D. Income from the sale of the joint operation output is recognized according to the proportion.E. While the separately incurred fee is recognized the incurred fee for joint operation is recognized according to the proportion.

(2) Joint ventures

A joint venture refers to a joint arrangement whereby the Company enjoys the right of the net assets of the arrangement only.Accounting treatment of the investment of a joint venture is conducted by the Company in line with the provisions of relevant equity

method of accounting for long-term equity investment.

8. Confirmation Standard for Cash and Cash Equivalent

The term “cash” refers to cash on hand and deposits that are available for payment at any time. Cash equivalents refer to

investments held by the Company that are short-term highly liquid easily convertible into known amounts of cash and have little

risk of change in value.

9. Foreign Currency Businesses and Translation of Foreign Currency Financial Statements

(1) Foreign currency business

The Company's foreign currency business is translated into the amount of the recording currency at the approximate exchange rate of

the spot exchange rate on the transaction date.On the balance sheet date foreign currency monetary items are translated at the spot exchange rate on the balance sheet date. The

exchange difference arising from the difference between the spot exchange rate on the balance sheet date and the spot exchange rate

at the time of initial recognition or the previous balance sheet date is included in the current profit and loss; for foreign currency non-

monetary items measured at historical cost the translation adopts the spot exchange rate on the day the transaction occurs; for foreign

currency non-monetary items measured at fair value the translation adopts the spot exchange rate on the day when the fair value is

confirmed and the difference between the amount of recording currency and the amount of original recording currency shall be

included into the current profit or loss or other comprehensive income based on the nature of non-monetary items.

(2) Conversion of foreign currency financial statements

When converting the foreign currency financial statements of overseas subsidiaries on the balance sheet date the assets and liabilities

items in the balance sheet shall be converted at the spot exchange rate on the balance sheet date. Other items of shareholders' equity

except for "undistributed profits" shall be converted at the spot exchange rate on the occurrence date.Income and expense items in the income statement shall be converted using the approximate spot exchange rate on the transaction

date.All items in the cash flow statement are converted according to the approximate spot exchange rate on the occurrence date of cash

flow. The impact of exchange rate changes on cash is taken as a reconciling item and the item "impact of exchange rate changes on

cash and cash equivalents" is separately listed in the cash flow statement to reflect.The difference arising from the conversion of financial statements is reflected in the "other comprehensive income" under the

shareholders' equity in the balance sheet.When disposing of the overseas operation and losing control rights the foreign currency statement conversion difference related to

139Lu Thai Textile Co. Ltd. Annual Report 2022

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:

* The contractual rights for collecting the cash flow of the said financial asset are terminated;

* The said financial asset has been transferred and meet the following derecognition conditions for transfer of financial assets.Only when the prevailing obligations of a financial liability are relieved in all or in part may the recognition of the financial liability

be terminated in all or partly. Where the Company (debtor) enters into an agreement with a creditor so as to substitute the existing

financial liabilities by way of any new financial liability and if the contractual stipulations regarding the new financial liability is

substantially different from that regarding the existing financial liability it terminates the recognition of the existing financial

liability and at the same time recognizes the new financial liability.The purchase and sale of financial assets under the normal ways shall be recognized and stopped to be recognized respectively at the

price of transaction date.

(2) Classification and measurement of financial assets

The Company classifies financial assets into the following three categories according to the business mode of managing financial

assets and the contractual cash flow characteristics of financial assets upon initial recognition: financial assets measured at amortized

cost financial assets measured at fair value and whose changes are included in other comprehensive income and financial assets

measured at fair value and whose changes are included in current profit and loss.Financial assets measured at amortized cost

The Company classifies financial assets that meet the following conditions and are not designated to be measured at fair value and

whose changes are included in current profit and loss as financial assets measured at amortized cost:

The Company's business model for managing this financial asset is aimed at collecting contractual cash flow;

The contractual terms of this financial asset stipulate that the cash flow generated on the specific date is only the payment of principal

and interest based on the principal amount outstanding.Such financial assets are measured in amortized cost by the effective interest method after initial recognition. Gains or losses arising

from financial assets measured in amortized cost that are not part of any hedging relationship are included in current profit and loss

when derecognition amortization according to the effective interest method or impairment is recognized.Financial assets measured at fair value and whose changes are included in other comprehensive income

The Company classifies financial assets that meet the following conditions and are not designated to be measured at fair value and

whose changes are included in current profit and loss as financial assets measured at fair value and whose changes are included in

other comprehensive income:

The Company's business model for managing this financial asset is aimed at both collecting the contractual cash flow and selling this

financial asset;

The contractual terms of this financial asset stipulate that the cash flow generated on the specific date is only the payment of principal

and interest based on the principal amount outstanding.Such financial assets are subsequently measured at fair value after initial recognition. Interest impairment losses or gains and

exchange gains and losses calculated by the effective interest method are included in current profit and loss while other gains or

losses are included in other comprehensive income. When the financial asset is derecognized the accumulated gains or losses

previously included in other comprehensive income are transferred out and included in current profit and loss.

140Lu Thai Textile Co. Ltd. Annual Report 2022

Financial assets measured at fair value and whose changes are included in current profit and loss

Except for the above financial assets measured at amortized cost and at fair value with changes included in other comprehensive

income the Company classifies all other financial assets as financial assets measured at fair value with changes included in current

profit and loss. Upon initial recognition in order to eliminate or significantly reduce accounting mismatches the Company

irrevocably designates some financial assets that should have been measured at amortized cost or at fair value and whose changes are

included in other comprehensive income as financial assets measured at fair value and whose changes are included in current profit

and loss.Such financial assets are subsequently measured at fair value after initial recognition and the resulting gains or losses (including

interest and dividend income) are included in current profit and loss unless the financial assets are part of the hedging relationship.The business model of managing financial assets refers to how the Company manages financial assets to generate cash flow. The

business model determines whether the cash flow of the financial assets managed by the Company comes from the collection of

contractual cash flow the sale of financial assets or both. The Company determines the business model for managing financial assets

on the basis of objective facts and specific business objectives decided by key management personnel to manage financial assets.The Company evaluates the contractual cash flow characteristics of financial assets to determine whether the contractual cash flow

generated by the relevant financial assets on the specific date is only the payment of principal and interest based on the principal

amount outstanding. Among them the principal refers to the fair value of financial assets upon initial recognition; interest includes

consideration for the time value of money credit risks related to the principal amount outstanding in the specific period and other

basic lending risks costs and profits. In addition the Company evaluates the contract terms that may lead to changes in the time

distribution or amount of contractual cash flow of financial assets to determine whether they meet the requirements of the above-

mentioned contractual cash flow characteristics.Only when the Company changes the business mode of managing financial assets will all affected related financial assets be

reclassified on the first day of the first reporting period after business model changes otherwise financial assets cannot be reclassified

after initial recognition.Financial assets are measured at fair value upon initial recognition. For financial assets measured at fair value and whose changes are

included in current profit and loss relevant transaction expenses are directly included in current profit and loss; for other types of

financial assets relevant transaction expenses are included in the initial recognition amount. For accounts receivable arising from the

sale of products or the provision of labor services which do not include or do not consider significant financing components the

amount of consideration the Company is expected to be entitled to receive is taken as the initial recognition amount.

(3) Classification and measurement of financial liabilities

The Company's financial liabilities are classified upon initial recognition as: financial liabilities measured at fair value and whose

changes are included in current profit and loss and financial liabilities measured at amortized cost. For financial liabilities that are

not classified as measured at fair value and whose changes are included in current profit and loss relevant transaction costs are

included in the initial recognition amount.Financial liabilities measured at fair value and whose changes are included in current profit and loss

Financial liabilities measured at fair value and whose changes are included in current profit and loss include transactional financial

liabilities and financial liabilities designated as measured at fair value upon initial recognition and whose changes are included in

current profit and loss. Subsequent measurement shall be carried out according to fair value for such financial liabilities. Gains or

losses resulting from changes in fair value and dividends and interest expenses related to such financial liabilities shall be included in

current profit and loss.Financial liabilities measured at amortized cost

Other financial liabilities are subsequently measured at amortized cost by using the effective interest method. Gains or losses

resulting from derecognition or amortization are included in current profit and loss.Distinction between financial liabilities and equity instruments

Financial liabilities refer to liabilities that meet one of the following conditions:

141Lu Thai Textile Co. Ltd. Annual Report 2022

* The contractual obligation to deliver cash or other financial assets to other parties.* The contractual obligation to exchange financial assets or financial liabilities with other parties under potentially unfavorable

conditions.* 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.* Derivative contracts that must be or can be settled with the enterprise's own equity instruments in the future except derivatives

contracts that exchange a fixed amount of cash or other financial assets with a fixed amount of its own equity instruments.Equity instruments refer to contracts that can prove that an enterprise has the residual equity in its assets after deducting all liabilities.If the Company cannot unconditionally avoid performing a contractual obligation by delivering cash or other financial assets the

contractual obligation meets the definition of financial liability.If a financial instrument must be or can be settled with the Company's own equity instruments it is necessary to consider whether the

Company's own equity instruments used to settle the instrument are used as substitutes for cash or other financial assets or to enable

the holder of this instrument to enjoy the residual equity in the assets after deducting all liabilities from the issuer. If it is the former

this instrument is the Company's financial liability; if the latter is the case this instrument is the Company's equity instrument.

(4) Derivative financial instruments and embedded derivatives

The Company's derivative financial instruments include forward foreign exchange contracts structural deposits and exchange option

contracts. Initially the fair value on the date when the derivative transaction contract is signed shall be used for measurement and the

fair value shall be used for subsequent measurement. Derivative financial instruments with positive fair value are recognized as an

asset while those with negative fair value are indeed recognized as a liability. Any gains or losses arising from changes in fair value

that do not conform to the provisions of hedge accounting are directly included in current profit and loss.For hybrid instruments containing embedded derivatives such as the main contract is a financial asset the relevant provisions on

classification of financial assets shall apply to the hybrid instruments as a whole. If the main contract is not a financial asset and the

hybrid instrument is not measured at fair value and its changes are included in current profit and loss for accounting treatment the

embedded derivative instrument has no close relationship with the main contract in terms of economic characteristics and risks and

has the same conditions as the embedded derivative instrument and the separate existing instrument meets the definition of

derivative instrument the embedded derivative instrument shall be separated from the hybrid instrument and treated as a separate

derivative financial instrument. If it is not possible to separately measure embedded derivative instruments at the time of acquisition

or the subsequent balance sheet date the hybrid instruments as a whole are designated as financial assets or financial liabilities

measured at fair value and their changes are included in current profit and loss.

(5) Fair value of financial instruments

See Note V(11) for the method of determining the fair value of financial assets and liabilities.

(6) Impairment of financial assets

The Company conducts impairment accounting treatment for the following items and confirms the loss provision based on the

expected credit losses:

Financial assets measured at amortized cost;

Receivables and creditors' investments measured at fair value and whose changes are included in other comprehensive income;

Contract assets defined in the Accounting Standards for Business Enterprises No. 14-Revenue;

Lease receivables;

Financial guarantee contracts (except those that are measured at fair value and whose changes are included in current profit and loss

the transfer of financial assets does not meet the conditions for derecognition or continue to involve in the transferred financial

assets).Measurement of expected credit loss

Expected credit loss refers to the weighted average of the credit losses of financial instruments weighted by the risk of default. Credit

loss refers to the difference between all contractual cash flows discounted at the original effective interest rate and receivable

142Lu Thai Textile Co. Ltd. Annual Report 2022

according to the contract and all cash flows expected to be collected of the Company i.e. the present value of all cash shortfalls.Considering the reasonable and reliable information about past events current situation and the forecast of future economic situation

the company takes the risk of default as the weight calculates the probability weighted amount of the present value of the difference

between the cash flow receivable from the contract and the cash flow expected to be received and confirms the expected credit loss.The Company separately measures the expected credit losses of financial instruments at different stages. If the credit risk of financial

instruments has not increased significantly since the initial recognition it is in the first stage. The Company measures the loss reserve

according to the expected credit loss in the next 12 months; if the credit risk of financial instruments has increased significantly since

its initial recognition but no credit impairment has occurred it is in the second stage. The Company measures the loss reserve

according to the expected credit loss during the whole duration of this instrument; if the financial instrument has suffered credit

impairment since its initial recognition it is in the third stage. The Company measures the loss reserve according to the expected

credit loss during the whole duration of this instrument.For financial instruments with low credit risk on the balance sheet date the Company assumes that their credit risk has not increased

significantly since the initial recognition and measures the loss reserve according to the expected credit loss in the next 12 months.The expected credit loss during the whole duration refers to the expected credit loss caused by all possible default events during the

whole expected duration of financial instruments. The expected credit loss in the next 12 months refers to the expected credit loss

caused by the possible default events of financial instruments within 12 months (or the expected duration if the expected duration of

financial instruments is less than 12 months) after the balance sheet date which is part of the expected credit loss in the whole

duration.When measuring the expected credit loss the longest term that the Company needs to consider is the longest contract term that the

enterprise faces credit risk (including the option to renew the contract).The Company calculates interest income based on the book balance before deducting impairment provisions and the effective interest

rate for financial instruments in the first and second stages and with low credit risk. The interest income shall be calculated according

to their book balance minus the amortized cost after impairment provision and the effective interest rate for financial instruments in

the third stage.Notes receivable accounts receivable and contract assets

The Company always measures its loss reserves at an amount equivalent to the expected credit loss during the entire duration for

notes receivable contract assets and accounts receivable regardless of whether there is any significant financing component.If a single financial asset cannot be used to evaluate the expected credit loss information at a reasonable cost the Company will

divide the notes receivable and accounts receivable into portfolio on the basis of the credit risk features and calculate the expected

credit loss based on the portfolio. The basis for determining the portfolio is as follows:

A. Notes receivable

Notes receivable portfolio 1: bank acceptance bills with low credit rating and L/C

Notes receivable portfolio 2: commercial acceptance bills

B. Accounts receivable

Accounts receivable portfolio 1: payment not overdue (with credit insurance)

Accounts receivable portfolio 2: payment not overdue (without credit insurance)

Accounts receivable portfolio 3: payment overdue (with credit insurance)

Accounts receivable portfolio 4: payment overdue (without credit insurance)

C. Contract assets

Contract assets portfolio 1: product sales

Contract assets portfolio 2: engineering construction

For notes receivable and contract assets divided into portfolios with reference to historical credit loss experience combined with

current conditions and predictions of future economic conditions the Company has calculated expected credit losses through default

risk exposure and expected credit loss rate for the entire duration.

143Lu Thai Textile Co. Ltd. Annual Report 2022

For accounts receivable divided into portfolios with reference to historical credit loss experience combined with current conditions

and predictions of future economic conditions the Company has prepared a comparison table between the number of aging/overdue

days of accounts receivable and the expected credit loss rate over the entire duration and has calculated the expected credit loss.Other receivables

The Company divides other receivables into several portfolios based on the features of credit risk and calculates the expected credit

losses on the basis of the combination. The basis for determining the portfolio is as follows:

Other receivables portfolio 1: Receivables from related parties within the scope of consolidation

Other receivables portfolio 2: Tax refund receivable

Other receivables portfolio 3: Deposit receivable and security deposit

Other receivables portfolio 4: other receivables

For other receivables that are divided into portfolios the Company calculates the expected credit loss with the default risk exposure

and the expected credit loss rate within the next 12 months or the entire duration.Creditors' investment and other creditors' investment

For creditors' investment and other creditors' investment the Company calculates the expected credit based on the nature of the

investment as well as kinds of types of counterparties and risk exposures the default risk exposure and the expected credit loss rate

within the next 12 months or the entire duration loss.Assessment on significant increase of credit risk

In order to determine the relative changes in the default risk of financial instruments during their expected life and to assess whether

the credit risk of financial instruments has increased significantly since initial recognition the Company compares the default risk of

financial instruments on the balance sheet date with the default risk on the initial recognition date.When determining whether the credit risk has risen greatly since the initial recognition the Company considers reasonable and

reliable information (forward-looking information inclusive) that can be obtained without unnecessary extra costs or efforts. The

information the Company considers shall include:

The debtor fails to pay the principal and interest according to the contract expiration date;

The external or internal credit ratings (if any) of financial instruments which have occurred or are expected deteriorate significantly;

The debtor’s operating results which have occurred or are expected deteriorate significantly;

Existing or expected changes in technology market economy or legal environment will lead to a great adverse effect on the debtor's

ability to repay the Company.Based on the nature of financial instruments the Company assesses whether there is great risk in credit risk on the basis of individual

financial instruments or financial instrument portfolios. During assessment based on financial instrument portfolios the Company

can divide financial instruments on the basis of common credit risk characteristics such as overdue information and credit risk

ratings.In case that the period overdue exceeds 30 days the Company determines that there is a significant increase in the credit risk of

financial instruments.Financial assets with depreciation of credit

The Company assesses on the balance sheet date whether there is any credit impairment to financial assets measured at amortized

cost and creditors' investment measured at fair value and whose changes are included in other comprehensive income. In case of one

or more events that adversely affect the expected future cash flow of a financial asset occur the financial asset will become financial

assets with depreciation of credit. The observable information below can be treated as evidence for credit impairment to financial

assets:

The issuer or debtor is caught in a serious financial difficulty;

The debtor breaches the agreement of contract such as default or overdue payment of interest or principal or other default;

Due to economic or contractual considerations related to the debtor's financial difficulties the Company gives concessions to the

debtor; and the concessions will not be made under any other circumstances;

144Lu Thai Textile Co. Ltd. Annual Report 2022

There lies a great probability of bankruptcy or other financial restructuring for the debtor;

The issuer or debtor is caught in financial difficulties which leads to the disappearance of the active market of the financial asset;

Presentation of expected credit loss provision

The Company remeasures expected credit losses on each balance sheet date to reflect the changes in the credit risk of financial

instruments since initial recognition; the increase or reversal amount of the loss reserve formed there from shall be included in the

current profit and loss as impairment losses or gains. For financial assets measured at amortized cost the loss allowance offsets the

carrying amount of the financial asset listed in the balance sheet; for creditors’ investment that are measured at fair value and its

changes are included in other comprehensive income the Company recognizes its loss reserve in other comprehensive income and

will not offset the carrying amount of the financial asset.Write-offs

In case that the Company fails to reasonably expect the contract cash flow of the financial asset to be recovered in a full or partial

scale the book balance of the financial asset will be written off directly. Such write-downs may constitute the derecognition for

related financial assets. This situation occurs frequently when the Company determines that the debtor does not have any assets or

any source of income to generate sufficient cash flow to repay the amount that will be written off. However in accordance with the

procedures for recovering due payments of the Company the written-off financial assets may still be affected by the execution

activities.In case that the financial asset written off is recovered later it shall be included in the current profit and loss as the reversal of the

impairment loss.

(7) Transfer of financial assets

The transfer of financial assets refers to the transfer or delivery of financial assets to another party (transferee) other than the issuer of

the financial asset.If the Company has transferred almost all the risks and rewards of the ownership of financial assets to the transferee derecognize the

financial asset; if it retains almost all the risks and rewards of the ownership of financial assets the financial asset will not be

derecognized.If the Company has neither transferred nor retained almost all the risks and rewards of the ownership of financial assets it shall be

dealt with in the following situations: if the control of the financial asset is abandoned the confirmation of the financial asset shall be

terminated and the generated assets and liabilities shall be confirmed; If the financial assets are controlled the relevant financial

assets shall be recognized according to the extent of their continued involvement in the transferred financial assets and the relevant

liabilities shall be recognized accordingly.

(8) Offsetting financial assets and financial liabilities

When the Company has a legal right that is currently enforceable to set off the recognized financial assets and financial liabilities

and intends either to settle on a net basis or to realize the financial asset and settle the financial liability simultaneously a financial

asset and a financial liability shall be offset and the net amount is presented in the balance sheet. Except for the above circumstances

financial assets and financial liabilities shall be presented separately in the balance sheet and shall not be offset.

11. Measurement of Fair Value

Fair value refers to the price that market participants can receive from sales of a asset or shall pay for transfer of a liability in the

orderly transaction that occurs on the measurement date.The Company measures related assets or liabilities at fair value assuming that the orderly transaction of selling assets or transferring

liabilities is conducted in the main market of related assets or liabilities; if there is no main market the Company assumes that the

transaction is conducted in the most beneficial market. The main market (or the most favorable market) is the trading market that the

Company can enter on the measurement date. The Company uses the assumptions used by market participants to maximize their

economic benefits when pricing the asset or liability.For financial assets or financial liabilities with active markets the Company uses the quotation in active markets to determine its fair

145Lu Thai Textile Co. Ltd. Annual Report 2022

value. If there is no active market for financial instruments the Company uses valuation techniques to determine its fair value.When measuring non-financial assets at fair value the ability of market participants to best use the asset for generating economic

benefits or the ability to sell the asset to other market participants that can best use the asset to generate economic benefits shall be

considered.The Company adopts valuation techniques that are applicable in the current situation and have sufficient available data and other

information to support it. Priority is given to using relevant observable input values. Only when observable input values are

unavailable or are not feasible to obtain the unobservable input values can be used. For assets and liabilities measured or disclosed at

fair value in the financial statements the fair value hierarchy to which they belong is determined based on the lowest level input

value that is important to the fair value measurement as a whole: the first level input value is the unadjusted quotation of the same

assets or liabilities able to be obtained in an active market on the measurement date; the second level input value is the directly or

indirectly observable input value of the relevant asset or liability except the first level input value; the third level input value is

unobservable input value of related assets or liabilities.On each balance sheet date the Company reassessed the assets and liabilities continuously measured at fair value confirmed in the

financial statements to determine whether there is a transition among levels of fair value measurement.

12. Inventory

(1) Classification

Inventories mainly include raw materials work-in-progress stock products products processed on entrustment and etc.

(2) Valuation method of inventories acquiring and issuing

Inventories shall be measured at actual cost when acquired and the cost of the inventories including the procurement cost processing

cost and other costs. Grey yarn dyed yarn and plus material shall be measured at first-in first-out method when acquired and

delivered; other inventories shall be measured as per the weighted average method

(3) Basis for determining net realizable value of inventories and provision methods for decline in value of inventories

Net realizable value is the estimated selling price in the ordinary course of business less the estimated costs of completion the

estimated costs necessary to make the sale and relevant taxes. Net realizable value is determined on the basis of clear evidence

obtained and takes into consideration the purpose of holding inventories and effect of post balance sheet events.At the balance sheet date inventories are measured at the lower of the cost and net realizable value. If the net realizable value is

below the cost of inventories a provision for decline in value of inventories is made. The provision for inventories decline in value is

determined by the difference of the cost of individual item less its realizable value. After the provision for decline in value of

inventories is made if the circumstances that previously caused inventories to be written down below cost no longer exist so that the

net realizable value of inventories is higher than their cost the original provision for decline in value is reversed and the reversal is

included in profit or loss for the period.

(4) The perpetual inventory system is maintained for stock system.

(5) Amortization method of the low-value consumption goods and packing articles

For the Low-value consumption goods and the packing articles should be amortized by one-off amortization method when

consuming.

13. Long-term Equity Investments

Long-term equity investments include equity investments in subsidiaries joint ventures and associated enterprises. The investee that

the Company is able to exert significant influence is an associated enterprise of the Company.

(1) Determination of initial investment cost

Long-term equity investment that forms a business combination: Long-term equity investment obtained by business combination

under the same control on the merger date based on the book value share of the merged party’s owners’ equity in the final

146Lu Thai Textile Co. Ltd. Annual Report 2022

controller’s consolidated financial statements as investment cost; The long-term equity investment acquired by a business

combination shall be the investment cost of the long-term equity investment according to the cost of the combination.For long-term equity investments obtained by other means: the long-term equity investment obtained by paying cash shall be the

initial investment cost according to the actual purchase price; the long-term equity investment obtained by issuing equity securities

shall be the initial investment cost of the fair value of the equity securities issued.

(2) Subsequent measurement and profit and loss confirmation method

Investment in subsidiaries is accounted for using the cost method unless the investment meets the conditions for holding for sale;

investment in associates and joint ventures is accounted for using the equity method.For long-term equity investments that are accounted for using the cost method in addition to the cash dividends or profits that have

been declared but not yet included in the actual payment or consideration included in the investment the cash dividends or profits

declared by the invested entity are recognized as investment income and recorded into the current profit and loss.For long-term equity investments accounted for using the equity method where the initial investment cost is greater than the fair

value share of the investee’s identifiable net assets at the time of investment the investment cost of the long-term equity investment

is not adjusted; when the initial investment cost is less than the investment the investee ’s If the fair value share of net assets is

identified the book value of the long-term equity investment is adjusted and the difference is included in the current profit and loss

of the investment.When using the equity method of accounting the investment income and other comprehensive income are recognized separately

according to the share of net profit and loss and other comprehensive income realized by the invested unit that should be enjoyed or

shared and the book value of the long-term equity investment is adjusted at the same time; The distribution of profits or cash

dividends should be calculated to reduce the book value of long-term equity investment; the investee's other changes in owner's

equity other than net profit and loss other comprehensive income and profit distribution adjust the book value of long-term equity

investment and Included in capital reserves (other capital reserves). When confirming the share of the investee’s net profit or loss

based on the fair value of the investee’s identifiable assets at the time of investment and in accordance with the Company’s

accounting policies and accounting period the net profit of the investee Confirm after making adjustments.If the additional investment and other reasons can exert significant influence on the investee or exercise joint control but do not

constitute control on the conversion date the sum of the fair value of the original equity plus the additional investment cost will be

used as the initial accounting for the equity method cost of investment. If the original equity is classified as non-trading equity

instrument investment measured at fair value whose changes are included in other comprehensive income the relevant original and

accumulative changes in fair value included in other comprehensive income shall be transferred to retained earnings when accounting

by equity method.If the joint control or significant influence on the invested unit is lost due to the disposal of part of the equity investment etc. the

remaining equity after the disposal shall be changed to the Accounting Standards for Business Enterprises No. 22-Recognition and

Measurement of Financial Instruments is performed and the difference between fair value and book value is included in the current

profit and loss. Other comprehensive income recognized by the original equity investment due to the equity method of accounting

shall be accounted for on the same basis as the investee’s direct disposal of related assets or liabilities when the equity method of

accounting is terminated; changes in other owners ’equity related to the original equity investment Transfer to current profit and loss.If the control of the invested unit is lost due to the disposal of part of the equity investment if the remaining equity after the disposal

can exercise joint control or exert significant influence on the invested unit the equity method is used for accounting and the

remaining equity is treated as When acquiring the equity method is adopted for adjustment; if the remaining equity after disposal

cannot exercise joint control or exert significant influence on the investee the accounting shall be changed according to the relevant

provisions of "Accounting Standards for Business Enterprises No. 22-Recognition and Measurement of Financial Instruments The

difference between the fair value and the book value on the date of loss of control is included in the current profit and loss.If the shareholding ratio of the company decreases due to the capital increase of other investors thereby losing control but being able

to exercise joint control or exert significant influence on the investee the new shareholding ratio shall be used to confirm that the

147Lu Thai Textile Co. Ltd. Annual Report 2022

company should enjoy the capital increase of the investee. The difference between the increase in share and the increase in the share

of net assets and the original book value of the long-term equity investment corresponding to the decrease in the proportion of the

shareholding that should be carried forward are included in the current profit and loss; That is adjustments are made using the equity

method of accounting.The unrealized internal transaction gains and losses that occur between the Company and associates and joint ventures are calculated

according to the shareholding ratio and are attributed to the Company and the investment gains and losses are recognized on the

basis of offset. However the unrealized internal transaction losses incurred by the Company and the investee are the impairment

losses of the transferred assets and shall not be offset.

(3) Determine the basis for joint control and significant influence on the invested unit

Joint control refers to the common control of an arrangement in accordance with the relevant agreement and related activities of the

arrangement must be agreed upon by the parties sharing control rights before they can make decisions. When judging whether there

is joint control first determine whether all participants or a combination of participants collectively control the arrangement and

secondly determine whether the decision-making related activities of the arrangement must be unanimously agreed by the

participants who collectively control the arrangement. If all participants or a Company of participants must act in concert to

determine the relevant activities of an arrangement it is considered that all participants or a Company of participants collectively

control the arrangement; if there is a combination of two or more participants can collectively Controlling an arrangement does not

constitute joint control. When judging whether there is joint control the protective rights enjoyed are not considered.Significant influence means that the investor has the right to participate in the decision-making of the financial and operating policies

of the invested unit but cannot control or jointly control the formulation of these policies with other parties. When determining

whether it can exert significant influence on the invested unit consider that the investor directly or indirectly holds the voting shares

of the invested unit and the current executable potential voting rights held by the investor and other parties are assumed to be

converted into the invested unit After the equity of the company the impact includes the current convertible warrants stock options

and convertible corporate bonds issued by the investee.When the Company directly or indirectly owns more than 20% (including 20%) but less than 50% of the voting shares of the

invested unit it is generally considered to have a significant impact on the invested unit unless there is clear evidence that such

circumstances cannot participate in the production and operation decisions of the invested unit and does not have a significant

impact; when the Company owns less than 20% (excluding) voting rights of the invested unit it generally does not consider it to

have a significant impact on the invested unit unless there is clear evidence that Under these circumstances it can participate in the

production and operation decisions of the invested unit and have a significant impact.

(4) Impairment test method and impairment provision method

For the investments in subsidiaries associates and joint ventures the method of accruing asset impairment is shown in the Note V-20.

14. Investment Property

Measurement model of investment real estate

Costing method measurement

Depreciation or amortization method

The investment real estate refers to the real estate gaining the rent or capital appreciation or both. It includes rented land use right

holding land use right to be transferred after the appreciation and rented building etc.The investment real estate is measured initially according to the cost and withdrawn depreciation or amortization as regulations of

fixed assets or intangible assets.The Company adopts the cost mode to conduct the subsequent measurement on the investment real estate see the Note V-20 for

the method of withdrawing asset impairment provision.The difference between the disposal income of investment real estate sales transfer scrap or damage after deducting its book value

148Lu Thai Textile Co. Ltd. Annual Report 2022

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

50-1020.00-18.00

and others useful life

(3) Recognition Basis Pricing and Depreciation Method of Fixed Asset under Finance Lease

See the Note V-20 for details.

(4) At the end of each year review is carried out by the Company for the service life estimated net

residual value and depreciation method of fixed assets.If there is any difference between the expected service life and the original estimated service life the service life of fixed assets

will be adjusted; if there is any difference between the expected net residual value and the original estimated net residual value the

expected net residual value will be adjusted

(5) Disposal of Fixed Assets

A fixed asset shall be derecognized when it is disposed of or it is expected that no economic benefit can be generated by using or

disposing of it. The amount of the disposal income of sales transfer scrap or damage of the fixed asset after deducting its book

value and related taxes is included in the current profit and loss.

149Lu Thai Textile Co. Ltd. Annual Report 2022

16. Construction in Progress

Construction in process is measured at actual cost. Actual cost comprises construction costs borrowing costs that are eligible for

capitalization before the fixed assets being ready for their intended us and other relevant costs.Construction in process is transferred to fixed assets when the assets are ready for their intended use.See the details of the impairment provision withdrawal method of the construction in progress to Notes V-20.

17. Engineering Materials

Engineering materials of the Company refer to various materials prepared for projects under construction including engineering

materials equipment not yet installed tools and instruments prepared for production etc.The purchased engineering materials will be measured according to the cost. The received engineering materials will be transferred

to the project under construction and the remaining engineering materials after the completion of the project will be stored as

inventory.Please refer to Note V (20) for the method of provision for impairment of assets for engineering materials.In the balance sheet the ending balance of engineering materials is listed in the "project under construction" item.

18. Borrowing Costs

(1) Confirmation principle of Capitalized Borrowing Expense

The borrowing expenses incurred by the Company if can directly belong to acquisition construction or production of assets meeting

capitalization conditions are capitalized and included in relevant asset cost; other borrowing expenses are confirmed as expense

according to its amount at the time of occurrence and included in the current profits and losses. If the borrowing expenses meet the

following conditions capitalization starts:

* Assets 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;

* Borrowing expenses have occurred;

* The 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.

150Lu Thai Textile Co. Ltd. Annual Report 2022

19. Intangible Assets

(1) Pricing Method Useful Life and Impairment Test

The intangible assets of the Company include land use right patent right etc.Intangible assets are initially measured at cost and their service life is analyzed and determined when intangible assets are acquired.If the service life of intangible assets is limited the intangible assets shall be amortized by the method that can reflect the expected

realization method of the economic benefits related to the assets within the expected service life since they are available for use. The

straight-line method shall be used for amortization if no expected realization method can be determined reliably. Intangible assets

with uncertain service life shall not be amortized.The amortization method of intangible assets with limited service life is as follows:

Amortization

Category Service life Note

method

Land use right Stipulated in the land certificate Method of line

Patent use right 10 years Method of line

Software use right 1-3 years Method of line

Brand use right 10 years Method of line

At the end of each year the Company reviews the service life and amortization method of intangible assets with limited service life.If the estimate is different from the previous one the original estimate shall be adjusted and treated as per accounting estimate change.If it is estimated that an intangible asset can no longer bring future economic benefits to the enterprise on the date of balance sheet

this carrying amount of the intangible asset shall be transferred into the current profit and loss.The method of withdrawing impairment on intangible assets was stated in the Note V-20.

(2) Accounting Policy for Internal Research and Development Expenditures

The expenditures for internal research and development projects of an enterprise shall be classified into research expenditures and

development expenditures.The research expenditures shall be recorded into the profit or loss for the current period.The development expenditures can be capitalized only when they satisfy the following conditions simultaneously: * It is feasible

technically to finish intangible assets for use or sale; * It is intended to finish and use or sell the intangible assets; * 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; * 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; * The development

expenditures of the intangible assets can be reliably measured. The development expenditures shall be recorded into profit or loss for

the current period when they don’t satisfy the following conditions.The research and development project of the Company will enter the development stage after meeting the above conditions and the

project is approved and initiated through technical feasibility and economic feasibility study.The capitalized expenditure in the development stage is listed as expenditure for development on the balance sheet and it will be

transferred to intangible assets from the date when the project reaches the intended purpose.

20. Impairment of Long-term Assets

For long term equity investment in subsidiaries associated enterprises and joint ventures investment real estate which follow-up

measurement is carried out by cost pattern fixed assets construction in progress right-of-use assets intangible assets business

reputation etc. (excluding inventory investment property measured at fair value pattern deferred income tax assets financial assets)

151Lu Thai Textile Co. Ltd. Annual Report 2022

the impairment of assets shall be determined according to the following methods:

On the date of the balance sheet determination shall be made to see whether there is any sign of possible impairment of assets. If

there is the Company will estimate its recoverable amount and conduct impairment test. For goodwill intangible assets with

uncertain service life and intangible assets that have not reached the serviceable state due to business merger impairment test shall be

carried out every year regardless of whether there is any sign of impairment.The recoverable amount is determined according to the net amount of the fair value of the asset minus the disposal expenses and the

present value of the expected future cash flow of the asset the higher amount shall be prevail. The Company estimates the

recoverable amount on the basis of a single asset. If it is difficult to estimate the recoverable amount of a single asset the recoverable

amount of the asset group shall be determined based on the asset group to which the asset belongs. The asset group is determined on

the basis of whether the main cash inflow generated by the asset group is independent of the cash inflow of other assets or asset

groups.When the recoverable amount of an asset or asset group is lower than its carrying amount the group will write down its carrying

amount to the recoverable amount and the written down amount will be included in the current profit and loss and the corresponding

asset impairment reserve will be accrued.Regarding the impairment test of business reputation the carrying amount of business reputation formed by business merger shall be

apportioned to the relevant asset group in a reasonable way from the date of purchase. If it is difficult to apportion to the relevant

asset group it shall be apportioned to the relevant combination of asset group. The relevant asset group or combination of asset

groups is the one that can benefit from the synergy effect of business merger and is the one smaller than the reportable segment

determined by the Company.In the impairment test if there is any sign of impairment in the asset group or combination of asset groups related to business

reputation first impairment test shall be carried out on the asset group or combination of asset groups not containing business

reputation to calculate the recoverable amount and recognize the corresponding impairment loss. Then impairment test shall be

carried out on the asset group or combination of asset group containing business reputation to compare the carrying amount with the

recoverable amount. If the recoverable amount is lower than the carrying amount the impairment loss of business reputation shall be

recognized.Once the impairment loss of assets is recognized it will not be reversed in the future accounting period.

21. Long-term Deferred Expenses

The long-term expenses to be amortized incurred by the Company are valued at the actual cost and amortized averagely according

to the expected benefit period. For long-term expenses to be amortized the amortized value that cannot benefit the future

accounting period shall be included in the current profit and loss.

22. Payroll

(1) Accounting Treatment of Short-term Compensation

During the accounting period in which employees provide services the Company recognizes the actual employee wages bonuses

social insurance premiums such as medical insurance premiums industrial injury insurance premiums and maternity insurance

premiums and housing provident funds paid to employees according to the prescribed standards and proportions as liabilities and

included them in the current profit and loss or related asset costs.

152Lu Thai Textile Co. Ltd. Annual Report 2022

(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:

* Service 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.* 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.* 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 * and * into the current profit and loss; item * is included in other comprehensive income and will not be

transferred back to profit or loss in the subsequent accounting period When the defined benefit plan is terminated all the parts

originally included in other comprehensive income are carried forward to undistributed profits within the scope of equity.

(3) Accounting Treatment of the Demission Welfare

The Company relieves the labor relation with the employees before the due date of the labor contacts or puts forward the advice of

providing the compensation for urging the employees volunteered to receive the downsizing and when the Company could not

unilaterally withdraw the demission welfare owning to the relieving plan of the labor relation or the downsizing advice should

confirm the liabilities of the employees’ salary from the demission welfare on the earlier day between the cost confirmed by the

Company and the cost related to the reorganization of the payment of the demission welfare and includes which in the current gains

and losses.Regarding the implementation of internal retirement plan of the employees the economic compensation before the official retirement

date belongs to the dismissal welfare. From the date when the employees stop providing services to the normal retirement date the

wages and social insurance premiums to be paid to the early retired employees shall be included in the current profit and loss at one

time. Financial compensation (such as normal pension) after the official retirement date shall be handled as welfare after separation.

(4) Accounting Treatment of the Welfare of Other Long-term Staffs

Other long-term employee benefits provided by the Company to employees that meet the conditions of defined contribution plans

shall be handled in accordance with the above-mentioned relevant provisions on defined contribution plans. Those in line with the

defined benefit plan shall be handled in accordance with the above-mentioned relevant provisions on the defined benefit plan.

153Lu Thai Textile Co. Ltd. Annual Report 2022

However the part of "changes caused by remeasuring the net liabilities or net assets of the defined benefit plan" in the salary cost

of relevant employees shall be included in the current profit and loss or the relevant asset cost.

23. Provisions

If the obligation related to contingency meets the following conditions at the same time the Company will recognize it as a provision.

(1) The obligation is the current obligation assumed by the Company;

(2) The performance of the obligation is likely to cause an outflow of economic benefits of the Company;

(3) The amount of the obligation can be measured reliably.

The provisions are initially measured in accordance with the optimal estimate of the necessary expenditures for the fulfillment of the

current obligation with factors such as risks uncertainty and the time value of money related to contingencies taken into

consideration comprehensively. Where the time value of money has a significant impact the best estimate is determined by

discounting the relevant future cash outflow. The Company re-checks the book value of the provisions on the balance sheet date and

adjusts the book value to reflect the current best estimate.If all or part of the expenditure required to settle recognized provisions is expected to be compensated by a third party or other parties

the amount of compensation shall be recognized separately as an asset only when it is substantially certain that it will be received.The recognized amount of compensation shall not exceed the book value of the recognized liabilities.

24. Share-based Payments and Equity Instruments

(1) Category of share-based payment

The share-based payments of the Company are divided into equity-settled share payments and cash-settled share payments.

(2) Method of determining the fair value of equity instruments

The Company shall determine the fair value of equity instruments such as options granted in active markets according to the

quotations in active markets. For granted equity instruments such as options without active markets the fair value is determined by

option pricing model. The following factors shall be considered for the selected option pricing model: A. Exercise price of the option;

B. Expiration date of the option; C. Current price of the object shares; D. Expected fluctuation rate of stock price; E. Estimated

dividends of shares; F. Risk-free interest rate within the option term.

(3) Ground for recognizing the optimal estimation of feasible right equity instruments

On each balance sheet date during the waiting period the Company shall make the optimal estimate based on subsequent information

such as the latest change in the number of employees with feasible rights and revise the number of equity instruments for the

estimated feasible rights. On the feasible right date the final estimated number of feasible right equity instruments shall be the same

as the actual number of feasible rights.

(4) Relevant accounting treatment for implementing modifying and terminating share-based payment plan

Equity-settled share-based payments shall be measured at the fair value of the equity instruments granted to employees. Where the

right is exercised immediately after the grant relevant costs or fees shall be included in accordance with the fair value of the equity

instruments on the grant date to accordingly increase the capital reserve. Where the right is exercised upon the completion of the

services during the waiting period or the achievement of the specified result conditions the services obtained in the current period

shall be included in the relevant costs or fees and the capital reserve according to the fair value of the equity instruments on the grant

date based on the optimal estimate of the number of feasible right equity instruments on each balance sheet date during the waiting

period. The recognized related costs or fees and total owner's equity after the feasible right date shall not be adjusted any more.The cash-settled share-based payments shall be measured according to the fair value of liabilities calculated and determined on the

basis of shares or other equity instruments which are assumed by the Company. Where the right is exercised immediately after the

grant the fair value of the liabilities assumed by the Company shall be included in the relevant costs or fees on the grant date so as

to accordingly increase the liabilities. For the cash-settled share-based payments for which the right is exercised upon the completion

154Lu Thai Textile Co. Ltd. Annual Report 2022

of the services during the waiting period or the achievement of the specified result conditions the services obtained in the current

period shall be included in costs or fees and corresponding liabilities according to the fair value amount of liabilities assumed by the

Company based on the optimal estimate of feasible status on each balance sheet date during the waiting period. On each balance

sheet date and settlement date before the relevant liabilities are settled the fair value of the liabilities shall be re-measured and the

changes shall be included in the current profit and loss.When the Company modifies a share-based payment plan if the modification increases the fair value of the equity instruments

granted the increase in the services acquired shall be recognized accordingly according to the increase in the fair value of the equity

instruments; if the modification increases the number of equity instruments granted the fair value of the increased equity instruments

shall be recognized accordingly as the increase in the services acquired. The increase in the fair value of the equity instruments refers

to the difference between the fair values of the equity instruments before and after the modification on the modification date. If the

modification reduces the total fair value of the share-based payment or any other method not conducive to the employees is adopted

to modify the terms and conditions of the share-based payment plan the accounting treatment of the services acquired would

continue as if such change had never occurred unless the Company cancels some or all of the granted equity instruments.During the waiting period if the granted equity instrument is canceled (except for the cancellation due to non-market conditions that

do not meet the feasible conditions) the Company shall treat the canceled equity instrument as an accelerated exercise immediately

include the left amount to be recognized during the waiting period in the current profit and loss and recognize the capital reserve at

the same time. Where the employee or other party can choose to meet the non-feasible right condition but fails during the waiting

period it shall be treated as the cancellation of the granted equity instrument.

25. Revenue

Accounting policies adopted for the recognition and measurement of revenue

(1) General principle

The Company recognizes revenue when it has fulfilled its contract performance obligation in a contract namely when the customer

obtains the control over the related commodity or service.If a contract contains two or more performance obligations the Company allocates transaction price to single performance

obligations on the contract commencement date according to the relative ratio of separate price of goods or services committed by

single performance obligation and income is measured according to the transaction price allocated to single performance obligation.When meeting one of the following conditions the Company belongs to performance of contract performing obligations in a period

or otherwise the Company belongs to performance of contract performing obligations at a point of time:

* While the Company is performing the contract the customer acquires and consumes the economic benefit arising from

performance by the Company.* The customer can control the goods in construction in the course of performance by the Company.* The 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:

* The Company enjoys the current collection right to the goods or services i.e. the customer undertakes current payment obligation

to the goods.

155Lu Thai Textile Co. Ltd. Annual Report 2022

* The Company has transferred the legal ownership of the goods to the customer that is the customer has owned the legal

ownership of the goods.* The Company has transferred the kind of the goods to the customer namely the customer has possessed the good in kind.* The 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.* The customer has accepted the goods or services.* Other indications showing that the customer has acquired the control right to the goods.The Company has transferred goods or services and has the right to collect consideration (and the right depends on factors other than

time elapse) as contract assets and contract asset is accrued impairment on the basis of expected credit loss (refer to Note V 10(6)).The right of the Company unconditionally (only depending on time elapse) charging consideration from the customer is listed as

receivable. The obligation of the Company that shall transfer goods or services to the customer for the consideration that has been or

shall be collected is liability to the contract.The contract assets and contract liabilities under the same contract are listed in net amount. If net amount is debit balance it is listed

in the items “contract asset” or “other non-current asset” according to its fluidity; if net amount is credit balance it is listed in the

items “contract liability” or “other non-current liability” according to its fluidity.

(2) Specific methods

The specific income confirming methods of the Company are following:

For income of domestic products after the Company delivers products to the purchaser according to the provisions of the contract

and the purchaser confirms receipt the purchaser acquires the control right of products and the Company confirms income.For income of exportable products after the Company completes customs declaration of products departure and obtains bill of

lading according to the provisions of the contract the purchaser acquires the control right of products and the Company confirms

income.Differences in accounting policies for revenue recognition due to different business models of the same type of business

26. Contract Costs

Contract cost includes the incremental cost incurred for acquiring contract and contract performance cost.The incremental cost incurred for acquiring contract refers to the cost that will not occur if the Company has not acquired contract

(for example sales commission). If the cost is expected to be recovered the Company regards it as contract acquiring cost and

confirms it as an asset. The expenses incurred by the Company for acquiring contract other than the incremental cost expected to be

recovered are included in the current profits and losses at the time of occurrence.If the cost incurred for performance of contract does not belong to inventory and other scope of other corporate accounting standards

and meets the following conditions the Company will regard it as contract performance cost and confirm it as an asset:

* The cost is directly related to a copy of contract currently acquired or expected to be acquired including direct labor direct

materials manufacture expenses (or similar expenses) cost determined to be undertaken by the customer and other cost incurred due

to the contract;

* The cost increases the resources of the Company that will be used for performance of contract obligations in the future;

* The cost is expected to be recovered.The assets confirmed by the contract acquiring cost and the assets confirmed by the contract performance cost (“assets related tocontract cost”) are amortized according to the same basis as confirmation of goods or service income related to the asset and are

included in the current profits and losses. If the amortization term does not exceed one year it will be included in the current profits

and losses at the time of occurrence.When the book value of an asset related to contract cost is higher than the difference between the following two items the Company

accrues provision for impairment to the excessive part and confirms it as impairment loss:

156Lu Thai Textile Co. Ltd. Annual Report 2022

* The remaining consideration that the Company expects to acquire from transfer of goods or services related to the asset;

* The cost that will occur for transfer of such related goods or services as estimated.The contract performance cost confirmed as asset if amortization term does not exceed one year or a normal business cycle at the

time of initial confirmation is listed in the item of “inventory”; if amortization term exceeds one year or a normal business cycle at

the time of initial confirmation is listed in the item of “other non-current assets”.The contract acquiring cost that is confirmed as asset if amortization term does not exceed one year or a normal business cycle at the

time of initial confirmation is listed in the item of “other current assets”; if amortization term exceeds one year or a normal business

cycle at the time of initial confirmation is listed in the item of “other non-current assets”.

27. Government Grants

Government grants are recognized when they meet the conditions attached to government grants and when they can be received.Government grants for monetary assets shall be measured according to the amount received or receivable. Government grants for

non-monetary assets shall be measured by fair value and they shall be measured by the nominal amount of RMB1 if the fair value

cannot be obtained reliably. Asset related government grants refer to the government grants obtained by the Company for acquisition

and construction or other forms of long-term assets. In addition they are government grants related to income.Regarding the government grants that the government document does not specify the object of subsidy and can form long-term assets

the part of government subsidy corresponding to the asset value shall be regarded as the asset-related government subsidy and the

rest shall be regarded as income-related government subsidy. If it is difficult to distinguish the government subsidy shall be regarded

as the income-related government subsidy.The government grants related to assets shall be recognized as the deferred income which shall be included in the profit and loss in

installment in a reasonable and systematic way within the service life of the relevant assets. Income-related government grants which

are used to compensate the relevant costs or losses incurred shall be included in the current profit and loss. Those used to compensate

the relevant costs or losses in the later period shall be included in the deferred income and shall be included in the current profit and

loss during the recognition period of the relevant costs or losses. The government grants measured according to the nominal amount

shall be directly included in the current profit and loss. The same method is adopted for the same or similar government subsidy

businesses of the Company.Government grants related to daily activities shall be included in other incomes according to the essence of business transactions.Government grants irrelevant to daily activities are included in non-business income.When the recognized government grants need to be returned and are used to offset the carrying value of related assets when initially

recognized the carrying value of the assets shall be adjusted; the book balance of relevant deferred income shall be offset if there is a

balance of relevant deferred income and the excess part shall be included in the current profit and loss. Otherwise it shall be directly

included in the current profit and loss.Regarding the interest subsidy of the policy preferential loan obtained if the Ministry of Finance allocates the interest subsidy to the

loan bank the actual received loan amount shall be taken as the entry value of the loan and the loan cost shall be calculated

according to the loan principal and the policy preferential interest rate. If the Ministry of Finance allocates the interest subsidy

directly to the Company the interest subsidy will offset the borrowing costs.

28. Deferred Income Tax Assets/Deferred Income Tax Liabilities

Income tax includes current income tax and deferred income tax. All shall be included in the current profit and loss as income tax

expense except the adjustment business reputation arising from business merger or the deferred income tax related to the

transactions or events directly included in the owner's equity is included in the owner's equity.Pursuant to the temporary difference between the carrying amount of assets and liabilities on the date of balance sheet and the tax

basis the Company recognizes the deferred income tax by balance sheet liability method.

157Lu Thai Textile Co. Ltd. Annual Report 2022

For all taxable temporary differences related deferred income tax liabilities are recognized unless the taxable temporary differences

are generated in the following transactions:

(1) The initial recognition of business reputation or the initial recognition of assets or liabilities arising from transactions with the

following characteristics: The transaction is not a business merger and does not affect the accounting profit or taxable income when

it occurs;

(2) Regarding the taxable temporary difference related to the investment of subsidiaries joint ventures and associated enterprises the

time of reversal of the temporary difference can be controlled and the temporary difference is unlikely to be reversed in the

foreseeable future.For deductible temporary differences deductible losses and tax credits that can be carried forward in subsequent years the Company

is likely to obtain the future taxable income as the limit to offset the deductible temporary differences deductible losses and tax

credits in which way to recognize the deferred income tax assets arising from the deductible temporary differences deductible losses

and tax credits unless the deductible temporary differences are generated in the following transactions:

(1) The transaction is not a business merger and does not affect the accounting profit nor taxable income when it occurs;

(2) The corresponding deferred income tax assets shall be recognized if the deductible temporary differences related to the

investment of subsidiaries joint ventures and associated enterprises meet the following conditions simultaneously: The temporary

differences are likely to be reversed in the foreseeable future and the taxable income used to deduct the deductible temporary

differences is likely to be obtained in the future.On the date of the balance sheet the income tax assets and deferred income tax liabilities shall be measured by the Company on the

basis of the applicable tax rate during the period when the assets are expected to be recovered or the liabilities are expected to be paid

off and the income tax impact on the expected recovery of assets on the date of the balance sheet or on the method to pay off the

liabilities shall be reflected.The book value of deferred income tax assets shall be reviewed at each balance sheet date. If it is unlikely to obtain sufficient taxable

income to offset against the benefit of the deferred income tax asset the book value of the deferred income tax assets shall be written

down. Any such write-down should be subsequently reversed where it becomes probable that sufficient taxable income will be

available.

29. Lease

(1) Identification of lease

On the start date of the contract the Company assessed as the lessee or the lessor whether the customers in the contract are entitled

to obtain almost all the economic benefits arising from the use of the identified assets during the use period and have the right to

dominate the use of the identified assets during the use period. If a party to the contract transferred the right allowing the control

over the use of one or more assets that have been identified within a certain period in exchange for a consideration such contract

is determined by the Company to be a lease or includes a lease.

(2) As the lessee

On the commencement date of the lease term the Company recognizes the right-of-use assets and lease liabilities for all leases

except for short-term leases and low-value asset leases with simplified treatment.For accounting policies for the right-of-use assets see Note V-30.Lease liabilities are initially measured in line with the lease payments not yet paid on the commencement date of the lease term using

the present value calculated by the interest rate implicit in lease. If the interest rate implicit in lease cannot be determined the

incremental borrowing rate shall be used as the discount rate. Lease payments include: Fixed payment and substantial fixed payment

and the relevant amount after deducting the lease incentive if any; variable lease payments depending on index or ratio; exercise price

158Lu Thai Textile Co. Ltd. Annual Report 2022

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 RMB40000 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

159Lu Thai Textile Co. Ltd. Annual Report 2022

The Company shall recognize the current profit and loss of the rent of the operating lease in each period of the lease term by the

straight-line method. The initial direct costs related to the operating lease shall be capitalized amortized within the lease term on the

same basis as the recognition of rental earning and included in profit or loss for the current period. The received variable lease

payments related to the operating lease that are not included in the lease payments receivable are included in profit or loss for the

current period when they are actually incurred.Lease change

Where an operating lease changes the accounting treatment is conducted for it which is regarded as a new lease from the effective

date of the change and receivables in advance or lease receivables related to lease before change are deemed as the receivables in the

new lease.Where a finance lease changes and meets the following conditions simultaneously the change is regarded as a separate lease by the

Company for accounting treatment: a) The change expands its lease cope by increasing one or multiple use rights of lease assets; and

b) The increased consideration is equivalent to the amount of the separate price for the expanded part of the lease which is adjusted

according to the contract.Where a finance lease changes and is not regarded as a separate lease for accounting treatment the Company treats the changed lease

under the following circumstances: a) If the change comes into force on the commencement date of the lease term the lease will be

clarified as an operating lease while it will be regarded as a new lease for accounting treatment by the Company on the effective date

of the lease change and the net lease investment before the effective date of lease change will be regarded as the book value of lease

assets; and b) If the change comes into force on the commencement date of the lease term the lease will be clarified as a finance

lease the Company will carry out accounting treatment in accordance with the provisions on modification or renegotiation of a

contract of the Accounting Standard for Business Enterprises No. 22 - Recognition and Measurement of Financial Instruments.

30. Right-of-Use Assets

(1) Recognition conditions for right-of-use assets

The term “right-of-use assets” refers to the right of the lessee to use the leased assets during the lease term.At the start date of the lease term the Company initially measures the right-of-use assets at cost. The cost includes: the initial

measurement amount of lease obligations; the lease payment amount paid on or prior to the inception of the lease (less the related

amount of lease incentives already enjoyed if any); the initial direct cost incurred by the lessee; and the anticipated cost of

dismantling and removing the leasehold property restoring the site where the leasehold property is located or bringing the

leasehold property back to the state agreed upon in the lease terms. As the lessee the Company shall recognize and measure the

cost of demolition and restoration in accordance with the Accounting Standards for Business Enterprises No.13 - Contingencies.Subsequent adjustments are made for any re-measurement of the lease liabilities.

(2) Depreciation method of right-of-use assets

The Company uses the straight-line method for depreciation. Where it can be reasonably certain that the Company the lessee can

obtain ownership of the leased assets at the expiry of the lease term the leased assets are depreciated over the residual service life.Where it cannot be reasonably certain that the Company can obtain ownership of the leased assets at the end of the lease term the

leased assets are depreciated at the shorter of the lease term and the residual service life of the leased assets.

(3) Impairment test method and impairment provision method of right-of-use assets See Note V-20.

31. Cost of Safety Production and Maintenance

In accordance with the regulations of the Notice on Issuing the Management Measures for the Provision and Use of Enterprise

Production Safety Costs (C.Z. [2022] No. 136) issued by the Ministry of Finance and the Ministry of Emergency and based on the

above actual annual operating revenue of power generation and supply enterprises the Company adopts the method where the

160Lu Thai Textile Co. Ltd. Annual Report 2022

deduction rate declines when the operating revenue increases to deduct safety production costs according to the following

standards:

Annual actual sales revenue standard Proportion of safety production cost (%)

Not exceeding RMB10 million 3

RMB10 million to RMB100 million 1.5

RMB100 million to RMB1 billion 1

RMB1 billion to RMB5 billion 0.8

Safety production costs and costs for sustaining simple reproduction are included in the cost of relevant production or current loss

and profit when deducted and are simultaneously included in the “specific reserve”.When using the deducted safety production costs and the costs for sustaining simple reproduction in conformity with regulations the

outgoing expenditures shall directly be used to offset the specific reserve; the costs becoming fixed assets shall be aggregated under

“construction in progress” and then be recognized as fixed assets when the safety project is completed and reaches the intended

available status; The aforesaid fixed assets will not be depreciated as accrued in the future period.

32. Repurchase of Shares

Before the shares repurchased by the Company are cancelled or transferred they are managed as treasury shares and all expenditures

for the repurchase of shares are transferred to the cost of treasury shares. Consideration and transaction costs paid in share repurchase

reduce shareholders' equity. When buying back transferring or cancelling shares in the Company no profits or losses are recognized.The transfer of inventory shares shall be credited to the capital reserve on the basis of the difference between the amount actually

received and the carrying amount of the treasury stock. Write off surplus reserves and undistributed profits if capital reserves are

insufficient to offset. Write-off of treasury stocks can reduce shares in par with par value and number of write-out stocks. The capital

reserve is offset based on the difference between book balance and face value of cancelled treasury stocks. Write off surplus reserves

and undistributed profits if capital reserves are insufficient to offset.

33. Restricted Shares

In the equity incentive plan the Company grants restricted stocks to the incentive personnel who firstly subscribe the stocks. If

the unlocking conditions specified in the equity incentive plan are not met the Company will repurchase the stocks at the

previously agreed price. Where the restricted stocks issued to the employees has gone through capital increase procedures such as

registration in accordance with relevant provisions the Company shall on the grant date recognize the share capital and the

capital reserve (share capital premium) in conformity with the subscription payment received from the employees. Meanwhile it

shall recognize the treasury stocks and other payables with respect to repurchase obligations.

34. Material Accounting Judgments and Estimates

The Company evaluates the important accounting estimates and key assumptions adopted on an ongoing basis based on historical

experience and other factors including reasonable expectations of future events. Important accounting estimates and critical

assumptions that have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the

next fiscal year are listed as follows:

Classification of financial assets

The significant judgments involved when the Company determines the classification of financial assets include analysis of business

models and contractual cash flow characteristics. The Company determines the business model for managing financial assets at the

level of the financial asset portfolio taking into account factors such as the approach of evaluating and reporting the performance of

161Lu Thai Textile Co. Ltd. Annual Report 2022

financial assets to key management personnel the risks affecting the performance of financial assets and the manner in which they

are managed and way in which the relevant business management personnel are compensated.The following main judgments exist in assessing whether the contractual cash flows of financial assets are consistent with the basic

lending arrangements:

Whether the time distribution or amount of the principal amount during the duration may change due to early repayment or for other

reasons; whether the interest includes only the time value of money credit risk other basic lending risks and consideration against

costs and profits. For example whether the amount of early repayment reflects only the outstanding principal and interest based on

the outstanding principal as well as reasonable compensation paid for early termination of the contract.Measurement of expected credit losses of accounts receivable

The Company calculates the expected credit loss of accounts receivable using the exposure to default risk of accounts receivable and

the expected credit loss ratio and determines the expected credit loss ratio based on the probability of default and the default loss

ratio. When determining the expected credit loss ratio the Company uses data such as internal historical credit loss experience and

adjusts historical data to take into account current conditions and forward-looking information. When considering forward-looking

information the Company uses indicators such as the risk of economic downturn and changes in the external market environment

technological environment and customer profile. The Company regularly monitors and reviews the assumptions related to the

calculation of expected credit losses.Goodwill impairment

We shall assess whether there is impairment of goodwill at least annually. This requires estimating the use value of the asset group to

which goodwill has been assigned. When estimating the use value the Company shall estimate the future cash flows from the asset

group and select the appropriate discount rate to calculate the present value of future cash flows at the same time.Deferred income tax assets

To the extent that it is probable that sufficient taxable profit will be available to offset the losses the Company recognizes deferred

income tax assets for all unused tax losses. This requires the Company's management to use many judgments to estimate the timing

and amount of future taxable profits taking into account tax planning strategies so as to determine the amount of deferred income

tax assets to be recognized.Determination of fair value of unlisted equity investment

The fair value of unlisted equity investment is the expected future cash flows discounted at the current discount rate for items with

similar terms and risk characteristics. Such valuation requires the Company to estimate expected future cash flows and discount rates

and is therefore subject to uncertainty. Under limited circumstances if the information used to determine fair value is insufficient or

if the range of possible estimates of fair value is wide and the cost represents the best estimate of fair value within that range the cost

may represent its appropriate estimate of fair value within that range of distribution.

35. Changes in Main Accounting Policies and Estimates

(1) Significant Changes in Accounting Policies

□ Applicable □ Not applicable

On 31 December 2021 the Ministry of Finance issued the Interpretation No. 15 of the Accounting Standards for Business Enterprises

(CK [2021] No. 35) which provides for the “accounting treatment for the sale of products or by-products produced by an enterprisebefore the fixed assets reach their intended useable state or during the research and development process” and “judgment on loss-making contracts” effective from 1 January 2022.On 30 November 2022 the Ministry of Finance issued the Interpretation No. 16 of the Accounting Standards for BusinessEnterprises (C.K. [2022] No. 31) which provides for the “accounting treatment of the income tax effects of dividends on financialinstruments classified as equity instruments by the issuer” and “accounting treatment of the revision of share-based payment settledin cash to share-based payment settled in equity by an enterprise” effective on the date of publication.

162Lu Thai Textile Co. Ltd. Annual Report 2022

a) The Interpretation No. 15 of Accounting Standards for Business Enterprises

In December 2021 the Ministry of Finance issued the Interpretation No. 15 of the Accounting Standards for Business Enterprises

(C.K. [2021] No. 35) (hereinafter referred to as the “Interpretation No. 15”).

Interpretation No. 15 provides that if an enterprise sells products or by-products produced before the fixed assets reach their intended

useable state or during the research and development process (hereinafter referred to as “trial sales”) it shall be accounted for

separately in accordance with the provisions of Accounting Standards for Business Enterprises No. 14-Revenue and Accounting

Standards for Business Enterprises No. 1– Inventory.This provision shall be effective from 1 January 2022. The enterprises shall make some retroactive adjustments for their trial sales

that occurred between the beginning of the earliest period presented in the financial statements and 1 January 2022.Interpretation No. 15 provides that in determining a loss-making contract the cost to the enterprise of performing the contract

includes the incremental cost of performing the contract and the apportionment of other costs directly related to the performance of

the contract. The incremental cost of performing the contract includes direct labour direct materials etc.; the apportioned amount of

other costs directly related to the performance of the contract includes the apportioned amount of depreciation of fixed assets used to

perform the contract etc. This provision shall be effective from 1 January 2022. The enterprises shall implement this provision for

contracts not fully performed as at 1 January 2022. Besides the cumulative effect shall adjust retained earnings and other related

financial statement items at the beginning of the year of implementation and shall not adjust comparative financial data of the prior

period.The implementation of the Interpretation No. 15 has not had a significant impact on the financial position and operating results of the

Company.b) The Interpretation No. 16 of Accounting Standards for Business Enterprises

In November 2022 the Ministry of Finance issued the Interpretation No. 16 of the Accounting Standards for Business Enterprises

(C.K. [2022] No. 31) (hereinafter referred to as the “Interpretation No. 16”).

Interpretation No. 16 provides that for financial instruments such as perpetual bonds classified as equity instruments the enterprises

shall recognise the income tax effect related to dividends when recognising dividends payable. For profits allocated from transactions

or events previously giving rise to gains or losses the income tax effect of such dividend shall be included in current profit or loss;

for profits allocated from transactions or events previously recognised in owners’ equity the income tax effect of such dividends

should be included in the owners’ equity item.Interpretation No. 16 provides that if the enterprises modify the terms and conditions in a cash-settled share-based payment

agreement to make it an equity-settled share-based payment at the date of modification the enterprises shall measure the equity-

settled share-based payment at the fair value of the equity instrument granted at that date include the acquired services in capital

reserve and derecognise the liability recognised for the cash-settled share-based payment at the date of modification. And the

difference between the two beings shall be included in the current profit or loss. If the waiting period is extended or shortened as a

consequence of the modification the enterprises shall make some accounting treatment as described above in accordance with the

modified waiting period (without regard to the relevant provisions of the accounting treatment for adverse modifications).The implementation of the Interpretation No. 16 has not had a significant impact on the financial position and operating results of the

Company.

(2) Significant Changes in Accounting Estimates

□Applicable □ Not applicable

163Lu Thai Textile Co. Ltd. Annual Report 2022

VI Taxation

1. Main Taxes and Tax Rate

Category of taxes Tax basis Tax rate

Taxable value-added amount (the taxable amount is calculated by

multiplying the taxable sales by the applicable tax rate and

VAT 13% 9% 6% 5% 3% 0 deducting the input tax allowed to be deducted in the current

period)

Urban maintenance

Turnover tax actually paid 7% 5%

and construction tax

Enterprise income

Income tax payable 0 15% 16.5% 17% 20% 25%

tax

Notes of the disclosure situation of the taxpaying bodies with different enterprises income tax rate

Taxpayer Income tax rate

The Company 15%

Lufeng Weaving & Dyeing 15%

Lulian New Materials 15%

Lu Thai Hong Kong 16.50%

Luqun Textile 25%

Xinsheng Power 25%

Shanghai Lu Thai 20%

Shanghai Zhinuo 20%

Lujia Import & Export 20%

Zhishu Consulting 20%

Lu Thai Vocational Training School 0%

Banyang Villa 20%

Huilin International 15%

LIIPL 17%

VACL 0%

2. Tax Preference

In accordance with the Reply on Filing of the Second Batch of Hi-tech Enterprises of Shandong Province in 2020 with Reference

No. Guo Ke Huo Zi [2021]25 the Company was identified as a hi-tech enterprise and the certificate issuing date was December 8

2020; in accordance with the Notice for Announcing the First Batch of Hi-tech Enterprise Identification List of Shandong Province

in 2020 with reference No. Lu Ke Zi [2020]136 the majority-owned subsidiary Lufeng Weaving & Dyeing was identified as a hi-

tech enterprise and the certificate issuing date was 17 August 2020. In accordance with the Notice for Announcing the First Batch

of Hi-tech Enterprise List of Shandong Province in 2022 the majority-owned subsidiary Lulian New Materials was identified as a

hi-tech enterprise and the certificate issuing date was 12 December 2022. Pursuant to Article 28 of the Law of the PRC on

Enterprise Income Tax and the No. 23 Announcement revised and published by the State Administration of Taxation in 2018

namely Management of Preferential Policy on Corporate Income Tax the Measures for the Administration of the Recognition of

164Lu Thai Textile Co. Ltd. Annual Report 2022

High and New Technological Enterprises (GKFH [2016] No. 195) revised and published by the Ministry of Science and

Technology Ministry of Finance and State Administration of Taxation the Company and the holding subsidiaries Lufeng

Weaving & Dyeing and Lulian New Materials enjoy a corporate income tax rate of 15%.According to Announcement of the State Taxation Administration on Issues Concerning the Implementation of the Inclusive

Income Tax Reduction and Exemption Policy for Small and Low-profit Enterprises (Announcement No. 2 [2019] of the State

Taxation Administration) and Announcement of the State Taxation Administration on Issues Concerning the Implementation of

Preferential Income Tax Policies to Support the Development of Small and Low-profit Enterprises and Individual Businesses

(Announcement No. 8 [2021] of the State Taxation Administration) the portion of annual taxable income of within RMB1 million

of the wholly-owned subsidiaries of the Company including Shanghai Luthai Shanghai Zhinuo Textile New Materials Co. Ltd.Lu Jia Import & Export Co. Ltd. Zhishu Consulting and Zibo Banyang Villa Hotel Co. Ltd. shall be included in taxable income

by reduction of 12.5% based on the enterprise income tax rate of 20%; for the portion exceeding RMB1 million but within RMB3

million it shall be included in taxable income by reduction of 50% based on the enterprise income tax rate of 20%.The wholly-owned subsidiary Lu Thai Vocational Training School Co. Ltd. enjoys the preferential policy for non-profit

organization income exemption from corporate income tax according to Article 26 Item 4 of the Enterprise Income Tax Law of

the People's Republic of China and Article 84 and Article 85 of Regulations for the Implementation of the Enterprise Income Tax

Law of the People's Republic of China and CS (2018) No. 13.Lu Thai (Hong Kong) Textile Co. Ltd. (hereinafter refers as Lu Thai (Hong Kong) Textile) the wholly-owned subsidiary

company of the Company was incorporated in Hong Kong SAR whose profit tax shall be paid at tax rate of 16.5%.The wholly own subsidiary VACL according to the Burma’s Special Economic Zone Law issued by Pyidaungsu Hluttaw VACL

enjoys tax preference on corporate income tax of 7 (7 years tax holiday) + 5 (5 years tax revenues drop by half) + 5 (re-invest the

profits within 1 year and continues to enjoy the half tax revenues 5 years afterwards). After grace period enterprise income tax

rate was of 25%. Year 2022 is the seventh year of tax holiday.The Wholly-owned subsidiary Huilin International which is registered in Hainan Pilot Free Zone and operates the encouraged

industry pays corporate income tax at a reduced tax rate of 15% according to Announcement of the Ministry of Finance and the

State Taxation Administration on the Corporate Income Tax Preferential Policies of Hainan Pilot Free Zone (Announcement

No.31 [2020] of the Ministry of Finance and the State Taxation Administration)

The Wholly-owned subsidiary LIIPL of Huilin International is registered in Singapore and pays the corporate income tax at a rate

of 17%.VII. Notes to Major Items in the Consolidated Financial Statements of the Company

1. Monetary capital

Unit: RMB

Item Ending balance Beginning balance

Cash on hand 2360089.79 3475164.56

Bank deposits 2054133036.04 1994544688.81

Other monetary capital 11275128.14 1693035.98

Total 2067768253.97 1999712889.35

Of which: The total amount deposited

246365368.50124950227.06

overseas

165Lu Thai Textile Co. Ltd. Annual Report 2022

Other notes:

(1) On 31 December 2022 the monetary capital with restricted ownership was RMB1328577.85 which included RMB515460.80

of cash deposit for domestic L/G and USD116750.00 (RMB813117.05) of cash deposit for L/C.

(2) The interest receivable in bank deposits was RMB9206657.38.

2. Trading financial assets

Unit: RMB

Item Ending balance Beginning balance

Financial assets at fair value through profit or loss 267695159.48 1727000.00

Of which:

Debt instrument investment 239522650.65

Derivative financial assets 28172508.83 1727000.00

Of which:

Total 267695159.48 1727000.00

3. Notes Receivable

(1) Notes Receivable Listed by Category

Unit: RMB

Item Ending balance Beginning balance

Bank acceptance bill 95123874.32 129359621.79

Commercial acceptance bill 121492.55

L/C 73631841.52 98259133.55

Total 168755715.84 227740247.89

Unit: RMB

Ending balance Beginning balance

Carrying amount Bad debt provision Carrying amount Bad debt provision

Categor

Withdra

y Carrying

Withdra Carrying

Proporti wal value Proporti wal Amount Amount Amount Amount value

on proporti on proporti

on on

Of

which:

Notes

receivab

le of bad

debt

168755168755227746227740

provisio 100.00% 100.00% 6394.34

n 715.84 715.84 642.23 247.89

withdra

wn by

groups

Of

which:

Commer

cial 127886. 121492.

0.06%6394.345.00%

acceptan 89 55

ce bill

Bank

acceptan 168755 168755 227618 227618

100.00%99.94%

ce bill 715.84 715.84 755.34 755.34

with low

166Lu Thai Textile Co. Ltd. Annual Report 2022

credit

rating

and L/C

168755168755227746227740

Total 100.00% 100.00% 6394.34

715.84715.84642.23247.89

If the bad debt provision for notes receivable was withdrawn in accordance with the general model of expected credit losses

information related to bad debt provision shall be disclosed by reference to the disclosure method of other receivables:

□Applicable □ Not applicable

(2) Bad debt provision withdrawn reversed or collected during the Reporting Period

Bad debt provision withdrawn in the Reporting Period:

Unit: RMB

Changes in the reporting period

Beginning

Category Reversal or Ending balance

balance Withdrawal Write-off Other

recovery

Commercial

6394.34-6394.340.00

acceptance bill

Total 6394.34 -6394.34 0.00 0.00 0.00 0.00

Of which significant amount of reversal or recovery bad debt provision in the Reporting Period:

□Applicable □ Not applicable

4. Accounts receivable

(1) Accounts receivable classified by category

Unit: RMB

Ending balance Beginning balance

Carrying amount Bad debt provision Carrying amount Bad debt provision

Categor Withdra Withdra

Carrying Carrying

y Proporti wal Proporti wal

Amount Amount value Amount Amount value

on proporti on proporti

on on

Account

s

receivab

le of bad

debt 513750 513750 217997 217997

0.71%100.00%0.31%100.00%

provisio 0.44 0.44 0.77 0.77

n

separatel

y

accrued

Of

which:

Account

s

receivab

le of bad

debt 716765 563381 660427 692042 447649 647277

99.29%7.86%99.69%6.47%

provisio 668.96 42.77 526.19 157.38 58.87 198.51

n

withdra

wn by

groups

Of

which:

Group 1: 166814 23.11% 175155 1.05% 165062 994844 14.33% 104458 1.05% 984399

167Lu Thai Textile Co. Ltd. Annual Report 2022

Undue 345.91 0.62 795.29 89.32 7.17 02.15

accounts

(credit

insuranc

e

insured)

Group 2:

Undue

accounts

395429197714375658508102254051482696

(no 54.78% 5.00% 73.19% 5.00%

credit 681.72 84.04 197.68 078.32 03.98 974.34

insuranc

e)

Group 3:

Overdue

accounts

739967116174623792209322223975186925

(credit 10.25% 15.70% 3.02% 10.70%

insuranc 51.59 89.99 61.60 98.93 5.99 42.94

e

insured)

Group 4:

Overdue

accounts

805248231976573272635232160755474477

(no 11.15% 28.81% 9.15% 25.31%

credit 89.74 18.12 71.62 90.81 11.73 79.08

insuranc

e)

721903614756660427694222469449647277

Total 100.00% 8.52% 100.00% 6.76%

169.4043.21526.19128.1529.64198.51

Bad debt provision separately accrued: Y2022

Unit: RMB

Ending balance

Name

Carrying amount Bad debt provision Withdrawal proportion Provision reason

Customer filed for

Customer 1 2705609.83 2705609.83 100.00%

bankruptcy protection

Customer financial

Customer 2 1986544.97 1986544.97 100.00%

difficulties

Customer filed for

Customer 3 281353.47 281353.47 100.00%

bankruptcy protection

Customer financial

Customer 4 90959.35 90959.35 100.00%

difficulties

Customer financial

Customer 5 73032.82 73032.82 100.00%

difficulties

Total 5137500.44 5137500.44

Bad debt provision separately accrued: Y2021

Ending balance

Name Withdrawal

Carrying amount Bad debt provision Provision reason

proportion

Customer filed for bankruptcy

Customer 1 1347066.83 1347066.83 100.00%

protection

Customer filed for bankruptcy

Customer 2 273384.76 273384.76 100.00%

protection

Customer financial difficulties or

Other customer 559519.18 559519.18 100.00%

filed for bankruptcy protection

Total 2179970.77 2179970.77

168Lu Thai Textile Co. Ltd. Annual Report 2022

Bad debt provision withdrawn by groups: Y2022

Unit: RMB

Ending balance

Name Withdrawal

Carrying amount Bad debt provision

proportion

Group 1: Undue accounts (credit insurance

166814345.911751550.621.05%

insured)

Group 2: Undue accounts (no credit insurance) 395429681.72 19771484.04 5.00%

Group 3: Overdue accounts (credit insurance

73996751.5911617489.9915.70%

insured)

Group 4: Overdue accounts (no credit

80524889.7423197618.1228.81%

insurance)

Total 716765668.96 56338142.77

Notes:

Bad debt provision withdrawn by groups: Y2021

Unit: RMB

Ending balance

Name Withdrawal

Carrying amount Bad debt provision

proportion

Group 1: Undue accounts (credit insurance

99484489.321044587.171.05%

insured)

Group 2: Undue accounts (no credit insurance) 508102078.32 25405103.98 5.00%

Group 3: Overdue accounts (credit insurance

20932298.932239755.9910.70%

insured)

Group 4: Overdue accounts (no credit

63523290.8116075511.7325.31%

insurance)

Total 692042157.38 44764958.87

Notes:

Please refer to the relevant information of disclosure of bad debt provision of other accounts receivable if adopting the general

mode of expected credit loss to withdraw bad debt provision of accounts receivable.□Applicable □ Not applicable

Disclosure by aging

Unit: RMB

Aging Carrying amount

Within 1 year (including 1 year) 710248142.12

1 to 2 years 1413758.76

2 to 3 years 3516929.18

Over 3 years 6724339.34

3 to 4 years 6330795.56

4 to 5 years 391883.77

Over 5 years 1660.01

Total 721903169.40

(2) Bad debt provision withdrawn reversed or collected during the Reporting Period

Bad debt provision withdrawn in the Reporting Period:

Unit: RMB

Category Beginning balance Changes in the reporting period Ending balance

169Lu Thai Textile Co. Ltd. Annual Report 2022

Reversal or

Withdrawal Write-off Other

recovery

Bad debt

46944929.6417054611.682523898.1161475643.21

provision

Total 46944929.64 17054611.68 2523898.11 61475643.21

(3) Particulars of the actual verification of accounts receivable during the Reporting Period

Item Amount

Accounts receivable actually verified 2523898.11

(4) Top 5 of accounts receivable of ending balance collected by arrears party

Unit: RMB

Proportion to total ending balance of Ending balance of bad

Name of Entity Ending balance

accounts receivable debt provision

Aggregate amount of top 5 of

accounts receivable of ending 156993472.47 21.75% 9470319.30

balance collected by arrears party

Total 156993472.47 21.75%

5. Accounts receivable financing

Unit: RMB

Item Ending balance Beginning balance

Notes receivable 11300942.26 35042339.23

Less: Other comprehensive income -

-92637.48-379267.35

changes in fair value

Total 11208304.78 34663071.88

Changes in accounts receivable financing and fair value in the Reporting Period

□Applicable □ Not applicable

Please refer to the relevant information of disclosure of bad debt provision of other accounts receivable if adopting the general

mode of expected credit loss to withdraw bad debt provision of accounts receivable financing.□Applicable □ Not applicable

Other notes:

There was no bank acceptance bill for which bad debt provision accrued separately in the Company. On 31 December 2022 the

Company believed that there was no significant credit risk in the bank acceptance bill held by the Company and no significant

loss caused by bank defaults.

(1) Notes receivable endorsed by the Company or discounted and not due on the balance sheet date at the period-end

Category Derecognized amount at the Non-derecognized amount at the

period-end period-end

Bank acceptance bill 470254140.70

Trade acceptance bill

Total 470254140.70

The bank acceptance bill used for discount is accepted by a bank with high credit grade the credit risk and deferred payment risk

are low and the interest rate risk related to the bill has been transferred to the bank. It can be judged that the main risk and reward

on the ownership of the bill have been transferred so the bank acceptance bill was derecognized at the period-end.

170Lu Thai Textile Co. Ltd. Annual Report 2022

6. Prepayment

(1) List by aging analysis

Unit: RMB

Ending balance Beginning balance

Aging

Amount Proportion Amount Proportion

Within 1 year 94608438.10 99.57% 54395566.77 99.73%

1 to 2 years 411030.94 0.43% 80046.79 0.15%

2 to 3 years 2129.28 0.00% 57065.73 0.10%

Over 3 years 13274.91 0.02%

Total 95021598.32 54545954.20

(2) Top 5 of the ending balance of the prepayment collected according to the prepayment target

The advances to suppliers from the top five of prepaid parties classified based on the ending balance totals RMB53221240.22 in

the current period accounting for 56.01% of the total ending balance of the advances to suppliers.

7. Other receivables

Unit: RMB

Item Ending balance Beginning balance

Dividends receivable 18563298.39 47025975.44

Other receivables 71292361.60 27165637.78

Total 89855659.99 74191613.22

(1) Dividends receivable

1) Category of dividends receivable

Unit: RMB

Item (or Investee) Ending balance Beginning balance

Sanchang Fengshou Cotton Industry Co. Ltd. (hereinafter referred to as

19540314.1049501026.78

"Fengshou Cotton")

Less: Bad debt provision -977015.71 -2475051.34

Total 18563298.39 47025975.44

2) Significant dividends receivable aging over 1 year

Unit: RMB

Whether occurred impairment and

Item (or investee) Ending balance Aging Reason

its judgment basis

Collect in accordance with agreed

Fengshou Cotton 19540314.10 2-3 年 Not past due

dividend payment plan

Total 19540314.10

171Lu Thai Textile Co. Ltd. Annual Report 2022

3) Withdrawal of bad debt provision

□ Applicable □ Not applicable

Unit: RMB

First stage Second stage Third stage

Expected loss in the duration Expected loss in the

Bad debt provision Expected credit loss of Total

(credit impairment not duration (credit impairment

the next 12 months

occurred) occurred)

Balance of 1 January

2475051.342475051.34

2022

Balance of 1 January

2022 in the Reporting

Period

Withdrawal of the current -

-1498035.63

period 1498035.63

Balance of 31 December

977015.71977015.71

2022

Changes of carrying amount with significant amount changed of loss provision in the current period

□Applicable □ Not applicable

Other notes:

The Company did not have dividends receivable in the second and third stages at the Period-end.

(2) Other receivables

1) Other receivables classified by category

Unit: RMB

Nature Ending carrying amount Beginning carrying amount

Export rebates 14027493.50 1384112.79

VAT to be returned 8307493.84 8486685.52

Payment on behalf 11897474.75 11917827.00

Guarantee deposit and cash deposit 4220014.58 6586697.20

Borrowings and petty cash 1543080.24 1051186.48

Other 36256599.70 402457.40

Total 76252156.61 29828966.39

2) Withdrawal of bad debt provision

Unit: RMB

First stage Second stage Third stage

Bad debt provision Expected credit Expected loss in the duration Expected loss in the Total

loss of the next (credit impairment not duration (credit

12 months occurred) impairment occurred)

Balance of 1 January 2022 1357763.63 1305564.98 2663328.61

Balance of 1 January 2022 in

the Reporting Period

——Transfer to the second

-17221.8017221.80

stage

Withdrawal of the current

2628878.20-44731.802584146.40

period

172Lu Thai Textile Co. Ltd. Annual Report 2022

Verification of the current

287680.00287680.00

period

Balance of 31 December 2022 3681740.03 1278054.98 4959795.01

Changes of carrying amount with significant amount changed of loss provision in the current period

□Applicable □ Not applicable

Disclosure by aging

Unit: RMB

Aging Carrying amount

Within 1 year (including 1 year) 70961586.97

1 to 2 years 1080590.18

2 to 3 years 678244.85

Over 3 years 3531734.61

3 to 4 years 131544.46

4 to 5 years 101101.14

Over 5 years 3299089.01

Total 76252156.61

3) Bad debt provision withdrawn reversed or collected during the Reporting Period

Bad debt provision withdrawn in the Reporting Period:

Unit: RMB

Changes in the Reporting Period

Revers

Beginning Ending

Category al or

balance Withdrawal Write-off Other balance

recover

y

Expected credit loss in the

next 12 months in the first 1357763.63 2628878.20 287680.00 -17221.80 3681740.03

stage

Expected loss in the duration

(credit impairment not 1305564.98 -44731.80 17221.80 1278054.98

occurred) in the second stage

Expected loss in the duration

(credit impairment occurred)

in the third stage

Total 2663328.61 2584146.40 287680.00 0.00 4959795.01

4) Top 5 of the ending balance of the other receivables collected according to the arrears party

Unit: RMB

Proportion to

ending balance of Ending balance of

Name of entity Nature Ending balance Aging

total other bad debt provision

receivables

Customer 1 Other receivables 35104900.00 Within 1 year 46.04% 1755245.00

Customer 2 Export rebates 14027493.50 Within 1 year 18.40% 701374.67

Customer 3 Input VAT 8307493.84 Within 1 year 10.90% 415374.69

Customer 4 Advance payments 6163773.43 Within 1 year 8.08% 308188.67

173Lu Thai Textile Co. Ltd. Annual Report 2022

Customer 5 Advance payments 1528172.14 Within 1 year 2.00% 76408.61

Total 65131832.91 85.42% 3256591.64

8. Inventory

Whether the Company needs to comply with the disclosure requirements for real estate industry

Not

(1) Category of inventory

Unit: RMB

Ending balance Beginning balance

Falling price Falling price

reserves of reserves of

inventory or inventory or

Item Carrying depreciation Carrying Carrying depreciation Carrying

amount reserves of amount amount reserves of amount

contract contract

performance performance

cost cost

Raw materials 964638749.13 47996904.87 916641844.26 928078106.34 17925640.41 910152465.93

Goods in

502282021.1012926711.64489355309.46611695332.972538846.30609156486.67

process

Inventory

869338282.54181010948.47688327334.07939550089.36143767058.72795783030.64

goods

Assigned

processing 13525220.54 13525220.54 30254811.04 30254811.04

products

2349784273.2107849708.2509578339.2345346794.

Total 241934564.98 164231545.43

31337128

(2) Falling price reserves of inventory and depreciation reserves of contract performance cost

Unit: RMB

Decreased amount of the

Increased amount of the period

period

Item Beginning balance Ending balance

Reverse or write-

Withdrawal Other Other

off

Raw materials 17925640.41 32518053.20 2446788.74 47996904.87

Goods in

2538846.3012926711.642538846.3012926711.64

process

Inventory

143767058.72130589313.3493345423.59181010948.47

goods

Total 164231545.43 176034078.18 98331058.63 241934564.98

9. Other current assets

Unit: RMB

Item Ending balance Beginning balance

Input tax 9813869.63 53076859.19

Prepaid income tax 14983737.42 2589285.09

Other prepaid taxes 432344.55 126618.09

Convertible bond fractional share funds 199689.59 199760.44

174Lu Thai Textile Co. Ltd. Annual Report 2022

Refundable deposits 51418261.88

Total 76847903.07 55992522.81

10. Long-term equity investment

Unit: RMB

Increase/decrease

Gains

Cash Ending

and Adjustme Chan Withdr

Beginning bonus Ending balance

Additi losses nt of ges awal of

balance Reduced or balance of

Investee onal recognize other of impair Oth

(carrying investme profits (carrying depreci

invest d under comprehe other ment er

value) nt announ value) ation

ment the nsive equit provisi

ced to reserve

equity income y on

issue

method

I. Joint ventures

II. Associated enterprises

Ningbo

Meishan

Bonded

Port

Area

Haohon

g Equity

Investm

ent

-

Partners 6765762 6054774

710987

hip 6.65 9.28

(L.P.) 7.37

(hereina

fter

referred

to as

"Haoho

ng

Investm

ent")

Haohon

g Equity

Investm

ent

Partners

hip

(L.P.)

10178541332353515891236208

(hereina

fter 80.01 21.50 17.90 76.41

referred

to as

"Haoho

ng

Investm

ent")

16944311332352804901841686

Subtotal

06.6621.5040.5325.69

16944311332352804901841686

Total

06.6621.5040.5325.69

11. Other non-current financial assets

Unit: RMB

175Lu Thai Textile Co. Ltd. Annual Report 2022

Item Ending balance Beginning balance

Equity instrument investment 325110000.00 178052000.00

Financial assets designated to be measured at fair value with

12000000.0012000000.00

the changes in fair value included in current profits and losses

Total 337110000.00 190052000.00

12. Investment property

(1) Investment property adopting the cost measurement mode

□ Applicable □ Not applicable

Unit: RMB

Houses and Construction in

Item Land use right Total

buildings progress

I. Original carrying value

1. Beginning balance 33577852.12 33577852.12

2. Increased amount of the period

(1) Outsourcing

(2) Transfer from inventories/fixed

assets/construction in progress

(3) Enterprise combination increase

3. Decreased amount of the period

(1) Disposal

(2) Other transfer

4. Ending balance 33577852.12 33577852.12

II. Accumulative depreciation and accumulative

amortization

1. Beginning balance 12215550.09 12215550.09

2. Increased amount of the period 901366.82 901366.82

(1) Withdrawal or amortization 901366.82 901366.82

3. Decreased amount of the period

(1) Disposal

(2) Other transfer

4. Ending balance 13116916.91 13116916.91

III. Depreciation reserves

1. Beginning balance

2. Increased amount of the period

(1) Withdrawal

3. Decreased amount of the period

(1) Disposal

(2) Other transfer

4. Ending balance

IV. Carrying value

176Lu Thai Textile Co. Ltd. Annual Report 2022

1. Ending carrying value 20460935.21 20460935.21

2. Beginning carrying value 21362302.03 21362302.03

13. Fixed assets

Unit: RMB

Item Ending balance Beginning balance

Fixed assets 5807847850.67 5559649164.65

Proceeds from disposal of fixed assets 1952209.79

Total 5807847850.67 5561601374.44

(1) List of fixed assets

Unit: RMB

Electronic

Houses and Machinery Transportation

Item equipment and Total

buildings equipment equipment

others

I. Original carrying

value

1. Beginning

3400996650.737004146023.5548665620.78130151497.4210583959792.48

balance

2. Increased amount

256094212.15488642816.675400253.529244294.31759381576.65

of the period

(1) Purchase 349619953.56 4514061.92 6678265.02 360812280.50

(2) Transfer from

construction in 179980745.18 30548432.39 2016684.27 212545861.84

progress

(3) Enterprise

combination increase

(4) Other increase 76113466.97 108474430.72 886191.60 549345.02 186023434.31

3. Decreased amount

4988969.6765565057.73724717.485656898.8576935643.73

of the period

(1) Disposal or

4988969.6765565057.73724717.485656898.8576935643.73

scrap

4. Ending balance 3652101893.21 7427223782.49 53341156.82 133738892.88 11266405725.40

II. Accumulative

depreciation

1. Beginning

1090800777.053758383265.7835811352.62106782812.914991778208.36

balance

2. Increased amount

131502052.40343566952.944856466.2112507936.51492433408.06

of the period

(1) Withdrawal 120881174.92 314355872.70 4271054.26 12080568.31 451588670.19

(2) Other increase 10620877.48 29211080.24 585411.95 427368.20 40844737.87

3. Decreased amount

4490072.7153401293.06673438.625217361.5063782165.89

of the period

(1) Disposal or

4490072.7153401293.06673438.625217361.5063782165.89

scrap

4. Ending balance 1217812756.74 4048548925.66 39994380.21 114073387.92 5420429450.53

III. Depreciation

reserves

1. Beginning

429416.1632029934.705671.3067397.3132532419.47

balance

2. Increased amount

10271485.18400.0010271885.18

of the period

(1) Withdrawal 10271485.18 400.00 10271885.18

177Lu Thai Textile Co. Ltd. Annual Report 2022

3. Decreased amount

4670214.955665.504675880.45

of the period

(1) Disposal or

4670214.955665.504675880.45

scrap

4. Ending balance 429416.16 37631204.93 5671.30 62131.81 38128424.20

IV. Carrying value

1. Ending carrying

2433859720.313341043651.9013341105.3119603373.155807847850.67

value

2. Beginning

2309766457.523213732823.0712848596.8623301287.205559649164.65

carrying value

(2) Fixed assets leased out by operation lease

Unit: RMB

Item Ending carrying value

Houses and buildings 3936060.52

(3) Fixed assets failed to accomplish certification of property

Unit: RMB

Item Carrying amount Reason of certificate of titles have not yet been obtained

Lufeng weaving dye gray Under the relevant certificate procedures of acceptance measurement

10410130.08

yarn warehouse examination by the real estate trading center and other departments

Lulian New Materials yarn

8466234.48 Ditto

warehouse

Lulian New Materials

84807194.89 Ditto

fabric inspection workshop

(4) Disposal of fixed assets

Unit: RMB

Item Ending balance Beginning balance

Boiler and ancillary equipment 0.00 1952209.79

Total 1952209.79

14. Construction in Progress

Unit: RMB

Item Ending balance Beginning balance

Construction in progress 162197188.04 157651325.17

Engineering materials 37746313.69 79927757.82

Total 199943501.73 237579082.99

(1) List of Construction in Progress

Unit: RMB

Ending balance Beginning balance

Item

Carrying Depreciation Carrying value Carrying Depreciation Carrying value

178Lu Thai Textile Co. Ltd. Annual Report 2022

amount reserves amount reserves

Reform project of

Xinsheng Thermal 18548362.41 18548362.41 33040260.81 33040260.81

Power

Functional Fabric

Intelligent Ecological 84984974.35 84984974.35

Park Project (Phase I)

High-grade fabric

110653801.46110653801.46

product line project (I)

Garment extension

376701.86376701.86

project

Other sporadic

32995024.1732995024.1739249388.1539249388.15

projects

Total 162197188.04 162197188.04 157651325.17 157651325.17

(2) Changes in significant construction in progress during the Reporting Period

Unit: RMB

Includi

Propor

ng:

tion of Capital

Accum Amou

accum ization

ulated nt of

Increas Transf Other ulated rate of

Beginn amoun capital

ed erred decrea Ending invest Job interes Capital

ing t of ized

Item Budget amoun in sed balanc ment schedu ts for resour

balanc interes interes

t of the fixed amoun e in le the ces

e t ts for

period assets t constr reporti

capital the

uctions ng

ization reporti

to period

ng

budget

period

Refor

m

project

of 30000 33040 15262 29754 18548

62.00

Xinshe 000.0 260.8 396.4 294.8 362.4 70.00 Other

%

ng 0 1 8 8 1

Therm

al

Power

Functi

onal

Fabric

Intellig

ent 21721 84984 38622 12360 14445 Public

140.007702

Ecolog 1000. 974.3 983.8 7958. 97.00 118.7 3.68% offerin

%801.85

ical 00 5 3 18 6 g fund

Park

Project

(Phase

I)

High-

grade

fabric 25180 11065 11065 Public

43.94

produc 0800. 3801. 3801. 43.94 offerin

%

t line 00 46 46 g fund

project

(I)

Garme 32580 37670 31091 31467 95.00 100.00 Other

179Lu Thai Textile Co. Ltd. Annual Report 2022

nt 000.0 1.86 025.2 727.1 %

extensi 0 9 5

on

project

Other

sporad 39249 21461 27715 32995

ic 388.1 517.6 881.6 024.1 Other

project 5 5 3 7

s

531591576521709212541621914445

7702

Total 1800. 1325. 1724. 5861. 7188. 118.7

801.85

00177184046

(3) Engineering materials

Unit: RMB

Ending balance Beginning balance

Item Depreciation Depreciati

Carrying amount Carrying value Carrying amount Carrying value

reserve on reserve

Special

37746313.6937746313.6979927757.8279927757.82

equipment

Total 37746313.69 37746313.69 79927757.82 79927757.82

15. Right-of-use assets

Unit: RMB

Item Houses and buildings Land use right Total

I. Original carrying value

1. Beginning balance 72736899.29 202823352.74 275560252.03

2. Increased amount of the

1759797.64243114051.24244873848.88

period

(1) Rent 1228493.27 229640412.38 230868905.65

(2) Lease liabilities

402241.59402241.59

adjustment

(3) Other increase 129062.78 13473638.86 13602701.64

3. Decreased amount of the

424514.97424514.97

period

(1) Sublease is a financial

lease

(2) Transfer or hold for sale

(3) Expiration 424514.97 424514.97

(4) Other decreases

4. Ending balance 74496696.93 445512889.01 520009585.94

II. Accumulative depreciation

1. Beginning balance 11227086.37 7313879.51 18540965.88

2. Increased amount of the

11066530.879406098.8520472629.72

period

(1) Withdrawal 10987813.58 9031453.21 20019266.79

(2) Other increases 78717.29 374645.64 453362.93

3. Decreased amount of the

424514.97424514.97

period

180Lu Thai Textile Co. Ltd. Annual Report 2022

(1) Disposal

(2) Expiration 424514.97 424514.97

4. Ending balance 22293617.24 16295463.39 38589080.63

III. Depreciation reserves

1. Beginning balance

2. Increased amount of the

period

(1) Withdrawal

3. Decreased amount of the

period

(1) Disposal

4. Ending balance

IV. Carrying value

1. Ending carrying value 52203079.69 429217425.62 481420505.31

2. Beginning carrying value 61509812.92 195509473.23 257019286.15

16. Intangible assets

(1) List of intangible assets

Unit: RMB

Non-patent

Item Land use right Patent right Software use right Total

technology

I. Original

carrying value

1. Beginning

470338494.00409550.002131387.36472879431.36

balance

2. Increased

amount of the 505899.97 505899.97

period

(1)

492893.82492893.82