LU THAI TEXTILE CO. LTD.INTERIM REPORT 2021
August 2021
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 Zhang Hongmei the Company’s Chief
Accountant and Zhang Keming the Company’s Financial Manager hereby guarantee that
the financial statements carried in this Report are factual accurate and complete.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 under the heading “Risks Facing the Company and Countermeasures” in “Part IIIManagement Discussion and Analysis” of this Report. Securities Times Shanghai Securities
News China Securities Journal Ta Kung Pao (HK) and www.cninfo.com.cn have been
designated by the Company for its information disclosure in 2021. 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 pay attention to investment risks.The Company is subject to the Guideline No. 17 of the Shenzhen Stock Exchange on
Information Disclosure by Industry—for Listed Companies Engaging in Textile and Apparel.In the first half of 2021 COVID-19 has slowed down with the popularization of vaccination.But there are repeated outbreaks in several regions and there is a common problem of lacking
vaccines in low-income countries. The global economy is recovering but is ill-balanced in
regions and industries. The Chinese government has relatively mature experience in
controlling the spread of COVID-19 in the shortest time. The domestic consumer market
witnessed a rapid recovery. However the recovery of companies mainly focusing on exporting
the fabrics of suits and shirts and manufacturing shirts is slow due to the exchange rate
appreciation of RMB on year and the increase in the prices of the raw materials like cottonand textile auxiliaries. For further information see “Part III Management Discussion andAnalysis”.The Company has no interim dividend plan either in the form of cash or stock.This Report and its summary have been prepared in both Chinese and English. Should there
be any discrepancies or misunderstandings between the two versions the Chinese versions
shall prevail.Table of Contents
Part I Important Notes Table of Contents and Defin... 2
Part II Corporate Information and Key Financial In... 6
Part III Management Discussion and Analysis ......... 9
Part IV Corporate Governance ....................... 29
Part V Environmental and Social Responsibility ..... 32
Part VI Significant Events ......................... 37
Part VII Share Changes and Shareholder Information.. 55
Part VIII Preferred Shares ......................... 67
Part IX Bonds ...................................... 68
Part X Financial Statements ........................ 72
Documents Available for Reference
1. The financial statements signed and stamped by the Company’s legal representative Chief Accountant and
Financial Manager;
2. The originals of all the Company’s announcements and documents disclosed to the public during the Reporting
Period on Securities Times Shanghai Securities News China Securities Journal and Ta Kung Pao.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 tens of thousands
RMB RMB’0000
of 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 2021 to 30 June 2021
Part II Corporate Information and Key Financial Information
I Corporate Information
Stock name LTTC LTTC-B Stock code 000726 200726
Changed 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. (if any) 鲁泰纺织
Company name in English (if
LU THAI TEXTILE CO.，LTDany)
Abbr. (if any) LTTC
Legal representative Liu Zibin
II Contact Information
Board Secretary Securities Representative
Name Zhang Keming Zheng Weiyin and Li Kun
No. 81 Songling East Road Zichuan No. 81 Songling East Road Zichuan
Address
District Zibo Shandong P.R.China District Zibo Shandong P.R.China
Tel. 0533-5277008 0533-5285166
Fax 0533-5418805 0533-5418805
Email address zhangkeming@lttc.com.cn wyzheng@lttc.com.cn，likun@lttc.com.cnIII Other Information
1. Contact Information of the Company
Indicate by tick mark whether any change occurred to the registered address office address and their zip codes website address and
email address of the Company in the Reporting Period.□ Applicable √ Not applicable
No change occurred to the said information in the Reporting Period which can be found in the 2020 Annual Report.2. Media for Information Disclosure and Place where this Report is Lodged
Indicate by tick mark whether any change occurred to the information disclosure media and the place for lodging the Company’s
periodic reports in the Reporting Period.□ Applicable √ Not applicable
The newspapers designated by the Company for information disclosure the website designated by the CSRC for disclosing the
Company’s periodic reports and the place for lodging such reports did not change in the Reporting Period. The said information can
be found in the 2020 Annual Report.IV Key Financial Information
Indicate by tick mark whether there is any retrospectively restated datum in the table below.□ Yes √ No
H1 2021 H1 2020 Change (%)
Operating revenue (RMB) 2220313650.94 2286744080.79 -2.91%
Net profit attributable to the listed company’s shareholders
153497344.66 144119579.22 6.51%
(RMB)
Net profit attributable to the listed company’s shareholders
54281532.08 108105593.17 -49.79%
before exceptional gains and losses (RMB)
Net cash generated from/used in operating activities (RMB) 182761025.14 209392265.69 -12.72%
Basic earnings per share (RMB/share) 0.17 0.17 0.00%
Diluted earnings per share (RMB/share) 0.19 0.16 18.75%
Weighted average return on equity (%) 1.97% 1.85% 0.12%
31 December
30 June 2021 Change (%)2020
Total assets (RMB) 12400765912.80 12129903960.65 2.23%
Equity attributable to the listed company’s shareholders (RMB) 7868221583.13 7687577590.72 2.35%
V Accounting Data Differences under China’s Accounting Standards for Business Enterprises
(CAS) and International Financial Reporting Standards (IFRS) and Foreign Accounting
Standards
1. Net Profit and Equity under CAS and IFRS
□ Applicable √ Not applicable
No such differences for the Reporting Period.2. Net Profit and Equity Differences under CAS and Foreign Accounting Standards
□ Applicable √ Not applicable
No such differences for the Reporting Period.VI Exceptional Gains and Losses
√ Applicable □ Not applicable
Unit: RMB
Item Amount Note
Gain or loss on disposal of non-current assets (inclusive of impairment allowance write-offs) 58531388.42
Government subsidies charged to current profit or loss (exclusive of government subsidies given in the
Company’s ordinary course of business at fixed quotas or amounts as per the government’s uniform 19089311.11
standards)
Gain or loss on fair-value changes in trading and derivative financial assets and liabilities & income from
disposal of trading and derivative financial assets and liabilities and investments in other debt obligations 39004803.56
(exclusive of the effective portion of hedges that arise in the Company’s ordinary course of business)
Reversed portions of impairment allowances for receivables and contract assets which are tested individually
5386518.99
for impairment
Non-operating income and expense other than the above -1405920.92
Less: Income tax effects 18018514.02
Non-controlling interests effects (net of tax) 3371774.56
Total 99215812.58 --
Explanation of why the Company reclassifies as recurrent an exceptional gain/loss item defined or listed in the Explanatory
Announcement No. 1 on Information Disclosure for Companies Offering Their Securities to the Public—Exceptional Gain/Loss
Items:
□ Applicable √ Not applicable
No such cases for the Reporting Period.Part III Management Discussion and Analysis
I Principal Activity of the Company in the Reporting Period
The economic environment has been complicated since 2021. The uncertainties in the recovery of the post-pandemic era are a lot
especially when it comes to the situations like the surging in the prices of mass merchandise and the high cost of human resources.The Company is centered on the clients and continues to implement the strategies of “Improve Quality and Efficiency” and “OverallInternationalization”. The Company focuses on expanding the market adjusting the structure and building capabilities to make sure
all programs running smoothly. For the Reporting Period the Company recorded revenue of RMB2220 million an operating profit
of RMB167 million a net profit attributable to the listed company’s shareholders of RMB153 million and a net profit attributable to
the listed company’s shareholders before exceptional gains and losses of RMB54 million down 2.91% down 4.71% up 6.51% and
down 49.79% respectively from the same period of last year. No changes occurred to the Company’s principal operations products or
business models or the primary factors driving the Company’s growth in the Reporting Period.During the Reporting Period the Company has been rated as the leader in the cotton textile industry during the 13th Five Year Plan
by China Cotton Textile Association and as the top 30 enterprises in 2021 in the dyeing and printing industry by China Dyeing and
Printing Association. Besides it has been conferred the Special Contribution Award (2016-2020) in the textile and apparel industry
of Shandong Province and appraised as the advanced enterprise in corporate culture development in 2020 by Shandong Textile and
Apparel Association. The Company has prioritized the following aspects:
(I) The Company has put the customer on the first place optimized the product structure and expanded the market.1. It has built an all-around relationship with its customers so as to stabilize order and production.The Company has established a high-level docking mechanism and a multi-tiered communication mechanism with its strategic
customers. What's more it has advanced the development of front-end design services especially the service that aims at strategic
customers. It has also stepped up the efforts to complete 16 tailored projects including the development of viscose and knitted fabrics.The Company has set up a specialized service group targeted at the strategic and valuable customers. In doing so it can improve the
marketing capability and enhance the capability of defusing and controlling marketing risks. With the above measures the Company
has witnessed an increase in its order and its revenue has also increased.2. The Company has driven the development of business wear and expanded the domestic market of business wear.The Company has constantly adjusted the product structure in domestic market based on its competitive businesses and the situation
of domestic market. Moreover it has kept enhancing the cooperation with strategic customers of domestic market and planned its
business development and the focus of cooperation in the future. During the Reporting Period the profit of the Company's career
apparel in domestic market has seen a significant rise and the career apparel's share in the Company's domestic businesses has also
witnessed an increase.3. The Company has stepped up its efforts to enrich the variety of its products and expanded its market.During the Reporting Period the Company has made endeavors to develop new fabrics like knitted and pants fabrics. Moreover it
has diversified its garment products including yoga pants and T-shirt. Therefore its volume of business and new customers have
increased. What's more it has actively explored new models of business cooperation which includes the cooperation with
e-commerce platforms.(II) The Company now has put an emphasis on its product lines and fully leveraged the strength of its international industrial
distribution.The Company has possessed six product lines including yan yarn-dyed printing and dyeing functional and knitted fabrics and
garment. Although the severe international market situation and the significant price rise of raw materials have had an impact on the
Company it has adjusted the structure of its product lines and explored new operation models. The technology of high-quality and
ironing-free knitted fabrics of shirts developed by the Company has passed the science evaluation and reached the advanced
international level.Faced with the pressure brought by COVID-19 pandemic Lu Thai (Burma) Textile Co. Ltd and Lu Thai (Tan Chau) Textile Co. Ltd
have fully leveraged geographical advantages to cushion the impacts of tariff barrier and Sino-US trade friction. During the
Reporting Period the yarn-dyed factory of Lu Thai (Burma) Textile Co. Ltd has completed the task of taking orders of strategic
customers. Lu Thai (Cambodia) Textile Co. Ltd has seen a reduction in its order due to the impact of the pandemic. Despite that the
Company has made constant endeavors to control and prevent COVID-19 and stressed the building of company staff with a lowest
rate of employee turnover.(III) The Company has taken various measures to stabilize the number of its employees.A stable number of employees is the cornerstone for the Company's development. During the Reporting Period the Company was
pressured by a shortage of employees. Therefore it has implemented the2021 restricted stock incentive plan adjusted its salary
structure and improved staff benefits. In doing so it has stabilized the number of ordinary employees and core technical staff.The Company has always upheld its mission of creating wealth and making contributions to the society. It has practiced the value of
putting people on the first place customers coming first and being honest and seeking win-win outcome. Besides it has kept
improving and extending its industrial chains. So it has gradually become a textile and apparel enterprise that integrates spinning
bleaching weaving and clothing manufacture. It has laid its emphasis on the production of yarn-dyed printing and dyeing and
knitted fabrics for medium-and-high end shirts and the sale of ready-made clothes. The Company has prioritized its comprehensive
management capability R&D capability technology stable product quality and international industrial distribution. What's more it
keeps improving its service stepping up innovation expanding its market and increasing the added-value of its products. At the
moment the Company has formed the fashionable functional and comfortable product lines that focus on natural fiber fabric
multi-component functional fiber fabric and ironing-free fabric. It products lines now have satisfied the diversified and personalized
market demand.The Company now has become a large-scale manufacturer of high-quality yarn-dyed fabric and a first-line shirt manufacturer at the
international level. It has embarked on a green low-carbon scientific and humanistic path of development based on the traditional
textile industry.The Company is subject to the Guideline No. 17 of the Shenzhen Stock Exchange on Information Disclosure by Industry—for Listed
Companies Engaging in Textile and Apparel.2021 is the first year of the new development cycle of the 14th Five-Year Plan. The textile industry still faces a complicated
development situation. The foundation for a sustainable recovery still needs to be consolidated and there are still lots of challenges for
the post-pandemic new development cycle of high quality. Foreign trade enterprises is also faced with problems like the floating of the
exchange rate of RMB the surging prices of the raw materials the increasing difficulty of recruiting and the rising of the cost of human
resources. There is great development pressure for the enterprises. Besides the recovery of performance of the companies focusing on
exporting the fabrics and shirts is slow. According to the statistics from the website for the information of China cotton the exported
textile and apparels of our country reached USD140.09 billion from January to June in 2021 a year-on-year increase of 12%. Among
them the exported textile reached USD68.66 billion a year-on-year decrease of 7.4%; while the exported apparels reached USD71.53
billion a year-on-year increase of 40.3%. Besides according to the analysis of the exports from the China Chamber of Commerce for
Import and Export Textiles from January to June in 2021 the increase in knitted apparels is much higher than that of the woven
garments and export of epidemic-prevention supplies gradually slows down. The European Union market is weak in recovery.Although there is a huge increase in the exports to USA the exports of shirts and suits is still increasing slowly due to the enduring
influence from COVID-19 on the commute of the American consumers.The Company is a textile and garment enterprise group with comprehensive and vertical production capacities integrating spinning
bleaching and dyeing weaving afterfinish and clothing manufacture. Over 50% of the yearn dyed fabric and printed and dyed fabric
used for shirts as well as ready-to-wear garment were sold to more than 60 countries and regions such as the US European Union
and Japan. The Company has established strategic partnership with renowned brand owners at home and abroad.In terms of technology relying on the national enterprise technical center national demonstration base for introducing talents
national post-doctoral scientific research station and Shandong Provincial Engineering Technology Research Center Lu Thai
Engineering Technology Institute has been devoted to research on frontier technology and has strong R&D capabilities in terms of
technological innovation quality improvement and low carbon and energy-saving. The Company has established long-term
cooperation with colleges and universities as well as renowned transnational enterprises such as Donghua University The Hong
Kong Polytechnic University (PolyU) Jiangnan University Qingdao University Huntsman and DowDuPont. It jointed hands with
its partners in R&D of new technologies new materials and new products to achieve alliance between giants and improve
comprehensive capabilities of the Company.As for procurement the Supply Chain Department of the Company carried out direct procurement in domestic and overseas markets
based on market-oriented principles. At present the Company's bulk raw materials are cotton which is purchased from all over the
world based on the market situation. Besides the Company purchased dye auxiliaries from the global market in line with product
features and customer requirements.Regarding production the Company adopted the make-to-order (MTO) strategy. As required by customers in their orders the
Company organized and completed production. The Company was equipped with an entire production system ranging from spinning
to garment processing in which production lines operated in an synergetic and effective way with their respective resource
advantages. Meanwhile upon years of accumulation the Company has developed unique quality control capabilities for the whole
production process. With great independence and flexibility it is able to produce and deliver fast even for small orders.With respect to sales the Company applied the order-based sales model. Each year over 50% of its products were sold to countries
and regions such as Europe the US Japan South Korea Southeast Asia and Hong Kong. With the self-owned trademark "Luthai"
for its fabric sales the Company was able to provide its customers with development and design plans for fashionable and
technological products with environmentally friendly functions. 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.II Core Competitiveness Analysis
1. The Company has a comprehensive vertical industrial chain and internationalized layout. It possesses the whole industrial chain
integrating spinning bleaching and dyeing neatening testing and garment making as well as excellent quality control capabilities
through various links of the production of high-end yarn-dyed fabrics. In order to leverage international resources give play to the
advantage of internationalized industrial distribution and reinforce the leading international status in manufacturing the yarn-dyed
fabrics for shirts the Company has built various production bases in Cambodia Burma and Vietnam etc. and established the design
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 ISO9000 quality management system ISO14000 environmental management
system OHSAS18000 Occupation Health Safety Management System SA8000 Social Responsibility Management System The
Worldwide Responsible Apparel Production Standard (WRAP) Sustainable Textile Production (STeP) Global Organic Textile
Standard (GOTS) Global Recycle Standard (GRS) and China National Accreditation Service for Conformity Assessment (CNAS)
and realized the internationalization standardization and normalization of the corporate management. In order to make outstanding
achievement in its operating management better improve the Company’s business performance and capabilities the Company has
introduced the GB/T19580 Criteria for Performance Excellence step by step set up the “big quality” system promoted the
management innovation and guaranteed the management quality.3. The Company establishes its high-level technical cooperation platform by virtue of strong R&D capability. In fact the Company
always insists on the independent innovation enhances its technical cooperation with various research institutes colleges and
universities strategic clients and important suppliers by relying on various technical platforms including the national enterprise
technical center the national industrial design center the national demonstration base for introducing talents the national
post-doctoral scientific research station and Shandong Provincial Engineering Technology Research Center dedicates itself to the
cutting-edge technical research and gradually transforms from technology research to integrated product development. Besides the
Company will also transform from the overcoming of key technical difficulties to the mastery of technical principles and the
formulation of industrial standards and from the focus on technical innovation to the dynamic integration of new technique
exploration with model innovation materialize the low-carbon green and sustainable development.III Core Business Analysis
See contents under the heading “I Principal Activity of the Company in the Reporting Period”.Year-on-year changes in key financial data:
Unit: RMB
Change
H1 2021 H1 2020 Main reason for change
(%)
Operating revenue 2220313650.94 2286744080.79 -2.91%
Cost of sales 1811241743.20 1683752331.27 7.57%
Reclassification of transport expense and port
Selling expense 48546795.06 81739905.59 -40.61% charges from selling expense to cost of sales of
principal operations
Administrative expense 130118046.40 177893599.47 -26.86%
Finance costs 24222929.28 25207309.68 -3.91%
Income tax expense 22209233.14 27067833.69 -17.95%
R&D investments 131384483.80 123441723.06 6.43%
Net cash generated from/used in
182761025.14 209392265.69 -12.72%
operating activities
Net cash generated from/used in Disinvestment in wealth management instruments
299774945.83 -129138967.68 332.13%
investing activities upon maturity
Net cash generated from/used in
155808685.68 1059376072.72 -85.29% Decrease in borrowings obtained
financing activities
Net increase in cash and cash Decrease in net cash generated from financing
635115592.71 1140089624.57 -44.29%
equivalents activities
Significant changes to the profit structure or sources of the Company in the Reporting Period:
□ Applicable √ Not applicable
No such changes in the Reporting Period.Breakdown of operating revenue:
Unit: RMB
H1 2021 H1 2020
As % of total As % of total
Change (%)
Operating revenue operating revenue Operating revenue operating revenue
(%) (%)
Total 2220313650.94 100% 2286744080.79 100% -2.91%
By operating division
Textile and apparel 2044428570.21 92.08% 2030174545.12 88.78% 0.70%
Personal protective
0.00% 75350026.50 3.30% -100.00%
equipment (PPE)
Cotton 0.00% 1943648.71 0.08% -100.00%
Electricity and steam 112014559.74 5.04% 107378501.63 4.70% 4.32%
Others 63870520.99 2.88% 71897358.83 3.14% -11.16%
By product category
Fabric products 1644786813.50 74.08% 1612566391.94 70.52% 2.00%
Shirts 399641756.71 18.00% 417608153.18 18.26% -4.30%
Personal protective
0.00% 75350026.50 3.30% -100.00%
equipment (PPE)
Cotton 0.00% 1943648.71 0.08% -100.00%
Electricity and steam 112014559.74 5.04% 107378501.63 4.70% 4.32%
Others 63870520.99 2.88% 71897358.83 3.14% -11.16%
By operating segment
Hong Kong 84111107.56 3.79% 116864760.52 5.11% -28.03%
Japan And South
125781396.82 5.67% 200810815.94 8.78% -37.36%
Korea
Southeast Asia 494884594.42 22.29% 598894637.52 26.19% -17.37%
Europe and America 227821017.11 10.26% 299568719.70 13.10% -23.95%
Others 206958205.91 9.32% 216712978.98 9.48% -4.50%
Mainland China 1080757329.12 48.68% 853892168.13 37.34% 26.57%
Operating division product category or operating segment contributing over 10% of operating revenue or operating profit:
□ Applicable √ Not applicable
Any over 30% YoY movements in the data above and why:
√ Applicable □ Not applicable
Operating revenue from Japan And South Korea declined 37.36% year-on-year primarily driven by a decrease in the sales of PPE in
the period.The Company is subject to the Guideline No. 17 of the Shenzhen Stock Exchange on Information Disclosure by Industry—for Listed
Companies Engaging in Textile and Apparel.Unit: RMB
YoY change in YoY change in
Operating Gross profit YoY change in
Cost of sales operating revenue gross profit
revenue margin cost of sales (%)
(%) margin (%)
By operating division
Textile and
2044428570.21 1654539637.21 19.07% 0.70% 11.91% -8.10%
apparel
By product category
Fabric products 1644786813.50 1340924104.11 18.47% 2.00% 14.16% -8.69%
Shirts 399641756.71 313615533.10 21.53% -4.30% 3.20% -5.70%
By operating segment
Southeast Asia 494884594.41 403126563.66 18.54% -17.37% -7.57% -8.63%
Europe and
227821017.11 180224160.17 20.89% -23.95% -16.62% -6.95%
America
Mainland China 1080757329.12 882807479.01 18.32% 26.57% 37.06% -6.25%
Core business data of the prior year restated according to the changed statistical caliber for the Reporting Period:
□ Applicable √ Not applicable
Physical stores of the Company:
□ Yes √ No
New physical stores:
□ Yes √ No
Indicate by tick mark whether the Company discloses its top five franchised stores.□ Yes √ No
IV Other Information Required by Information Disclosure Guide for Companies Engaged in
Textile and Garment Services
1. Capacity
The Company's own capacity
Industry Item H1 2021 H1 2020
Classification
Total capacity (fabrics) 14680.00 14680.00
(10000 meters)
Rate of capacity 66% 73%
Fabrics
utilization
The Company's convertible The Company's convertible
Plants under construction
bond fundraising projects: The bond fundraising projects: The
"Functional Fabric Intelligent "Functional Fabric Intelligent
Eco-park Project (Phase I)" Eco-park Project (Phase I)"
with an annual capacity of 35 with an annual capacity of 35
million meters of high-grade million meters of high-grade
functional fabrics and the functional fabrics and the
"Production Line Project of "Production Line Project of
High-grade Printed and Dyed High-grade Printed and Dyed
Fabrics" with an annual Fabrics" with an annual
capacity of 25 million meters of capacity of 25 million meters of
high-grade printed and dyed high-grade printed and dyed
fabrics were in progress. fabrics were in progress.Total capacity (garment) 1015.00 1015.00
(10000 pieces)
Garment Rate of capacity 60% 87%
utilization
Plants under construction
Year-on-year change in the rate of capacity utilization above 10%
√ Yes □ No
Due to the year-on-year decrease in the output of masks and protective clothing in the apparel product line during the Reporting Period
the utilization rate of apparel production capacity decreased.Overseas capacity
√ Yes □ No
Industry Item Domestic Overseas
Classificati
on
Percentage of 85% 15%
capacity
Mainly in Shandong Mainly in Tay Ninh Province
Fabrics Capacity layout
Province Vietnam
Rate of capacity 64% 82%
utilization
Percentage of 47% 53%
capacity
Mainly in T?nh An Giang Vietnam;
Garment
Mainly in Shandong Svay Rieng Province Cambodia;
Capacity layout
Province and Thilawa Special Economic
Zone Yangon Myanmar
Rate of capacity 71% 51%
utilization
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
YoY change in
Operating Gross profit YoY change in YoY change in
Sales channels Cost of sales gross profit
revenue margin operating revenue cost of sales
margin
Online sales 2975252.11 1014489.67 65.90% 1025500.20 393449.22 -2.25%
Direct sales 1648572884.53 1342517967.29 18.56% 32706583.68 166446819.59 -8.65%
OEM/ODM 392880433.57 311007180.25 20.84% -19478058.79 9238211.31 -6.32%
Total 2044428570.21 1654539637.21 19.07% 14254025.09 176078480.12 -8.10%
Reason for change
3. Selling expense and breakdown thereof
Unit: RMB
Item H1 2021 H1 2020 YoY change Note
Salary 24817866.24 24858302.63 -0.16%
Sales service
5389984.38 4662986.11 15.59%
fee
Publicity
7483834.48 8117611.43 -7.81%
expense
According to the new accounting standards
Transportatio
0.00 18556351.95 -100.00% the transportation fee is adjusted from the
n fee
selling expense to the main business cost
According to the new accounting standards
Port
0.00 5552752.80 -100.00% the port surcharge is adjusted from the selling
surcharge
expense to the main business cost
Mainly due to the decrease in rental fees for
Rental fee 536277.43 2003837.09 -73.24%
overseas offices.Others 5745728.96 9185513.60 -37.45%
Total 43973691.49 72937355.61 -39.71%
4. Franchise and distribution
Franchisees and distributors recorded more than 30% of sales revenue
□ Yes √ No
5. Online sales
Online sales recorded more than 30% of sales revenue
□ Yes √ No
Self-developed sales platforms
√ Yes □ No
Start of operation 30 March 2009
Number of registered users 200000
Average number of active monthly users (AMU) 20000
Return rate of main brands 5.00%
Return rate of main types 5.00%
Cooperation with third-party sales platforms
√ Yes □ No
Online sales channels opened or closed by the Company
√ Applicable □Not applicable
Operation during
Channel Main brand Main product type Channel status Reason for closure Opening time the opening of the
store
biyao.com NARCISU Shirts Normal 22 January 2020
6. Agency operation model
Agency operation model involved
□ Yes √ No
7. Inventory
Inventory
Days of turnover Quantity of Year-over-year change in
Main products Inventory age Reason
of inventories inventory inventory balance
Fabrics (10000
113 3643.61 Within 1 year -21.93%
meters)
Fabrics (10000 Delivery of some fabrics delayed
1437.25 Over 1 year 81.95%
meters) due to COVID-19
Shirts (10000
36 82.46 Within 1 year -28.00%
pieces)
Shirts (10000
15.68 Over 1 year 227.50% Delivery of some shirts delayed
pieces)
Reserves for falling prices of inventory
Item 30 June 2021
Falling price reserves or provision for
Carrying amount Carrying value
impairment on contract performance cost
Raw materials 764584360.28 2547151.31 762037208.97
Goods in process 455835628.95 3599739.14 452235889.81
Products on hand 960560597.77 107230734.35 853329863.42
Commissioned 11882281.00 11882281.00
products
Total 2192862868.00 113377624.80 2079485243.20
8. Brand building
Production and sales of brand clothing apparel and home textile products
√ Yes □ No
Self-owned brands
Target
Trademark Main product Price zone of Main sales
Brand name Characteristics consumer City levels
name types main products areas
group
Provincial
East China
capital cities
Classic Business South China
LTGRFF LTGRFF Shirts and suits RMB500-3000 and other
business attire people and Southwest
prefecture-level
China
cities
Trademark ownership disputes
□ Applicable √ Not applicable
9. Others
Engaged in business related to apparel design
□ Yes √ No
Whether the Company held meetings for the placement of orders
□ Yes √ No
V Analysis of Non-Core Businesses
√ Applicable □ Not applicable
Unit: RMB
Amount As % of total profit Source/Reason Recurrent or not
Return on Investment income from the disposal of
29181508.22 17.62% Not
investment held-for-trading financial assets
Gain/loss on
Gain/loss on changes in fair value of
changes in fair 8034224.66 4.85% Not
held-for-trading financial assets
value
Asset impairments -7035233.41 -4.25% Inventory valuation allowances Not
Non-operating Income of non-operating compensation
1184008.01 0.71% Not
income etc
Non-operating Non-operating donations and
2589928.93 1.56% Not
expense compensations etc.VI Analysis of Assets and Liabilities
1. Significant Changes in Asset Composition
Unit: RMB
30 June 2021 31 December 2020 Change in Reason for any
As % of total As % of total percentage significant
Amount Amount
assets assets (%) change
Monetary assets 2039571421.60 16.45% 1400478034.81 11.55% 4.90%
Accounts
467077027.00 3.77% 522425219.87 4.31% -0.54%
receivable
Inventories 2079485243.20 16.77% 1988968681.64 16.40% 0.37%
Investment
21812985.44 0.18% 22263668.85 0.18% 0.00%
property
Long-term equity
128409211.89 1.04% 138079577.25 1.14% -0.10%
investments
Fixed assets 5643953088.23 45.51% 5661592991.66 46.67% -1.16%
Construction in
293251051.85 2.36% 356273197.49 2.94% -0.58%
progress
Right-of-use
161742107.43 1.30% 1.30%
assets
Short-term
991568008.40 8.00% 930871008.19 7.67% 0.33%
borrowings
Contract
146761705.56 1.18% 141339705.62 1.17% 0.01%
liabilities
Long-term
659734579.14 5.32% 495520342.78 4.09% 1.23%
borrowings
Lease liabilities 32226761.06 0.26% 0.26%
2. Major Assets Overseas
√ Applicable □ Not applicable
Caus Risk of
Operatio Control measures to ensure Earning As % of net
Assets e of Asset scale Location material
n model asset safety position assets
forma impairment
tion or not
Lu Thai
Key management personnel
(Hong Kong) Set-u Hong Sales-ori
214035015.72 assigned by the Company as 2326681.18 2.59% Not
Textile Co. p Kong ented
the parent
Ltd.Lu Thai
Key management personnel
(America) Set-u New Sales-ori
5982889.89 assigned by the Company as -722086.47 0.07% Not
Textile Co. p York ented
the parent
Ltd.Lu Thai
Producti Key management personnel
(Cambodia) Set-u Svay
143785165.56 on-orien assigned by the Company as -3002820.18 1.74% Not
Textile Co. p Rieng
ted the parent
Ltd.Vanguard Producti Key management personnel
Set-u
Apparel Co. 73740844.10 Yangon on-orien assigned by the Company as 367211.32 0.89% Not
p
Ltd. ted the parent
Continental Producti Key management personnel
Set-u Tay
Textile Co. 2510580347.92 on-orien assigned by the Company as 51489617.89 30.39% Not
p Ninh
Ltd. ted the parent
Lu An T?nh An Producti Key management personnel
Set-u
Garments 198150056.51 Giang on-orien assigned by the Company as 1680703.60 2.40% Not
p
Co. Ltd. Vietnam ted the parent
Tianping
Investm Key management personnel
International Set-u Singapor
230074897.57 ent-orien assigned by the Company as 743206.65 2.78% Not
Investment p e
ted the parent
Co. Ltd.3. Assets and Liabilities at Fair Value
√ Applicable □ Not applicable
Unit: RMB
Gain/loss on Impairm
Cumulative
fair-value ent Purchased in the Sold in the
Beginning fair-value
Item changes in the allowanc Reporting Reporting Other change Ending amount
amount changes charged
Reporting e for the Period Period
to equity
Period Reportin
g Period
Financial assets
1.Held-for-tradin
g financial
assets 408730337.23 -1806575.34 299214978.03 451652752.65 254485987.27
(excluding
derivative
financial assets)
2. Derivative
16641500.00 9840800.00 26482300.00
financial assets
Subtotal of
425371837.23 8034224.66 299214978.03 451652752.65 280968287.27
financial assets
Others 55150926.34 -332259.77 -25235757.69 29582908.88
Total of the
480522763.57 8034224.66 -332259.77 299214978.03 451652752.65 -25235757.69 310551196.15
above
Financial
0.00 0.00
liabilities
Content of other change:
Changes in receivables financing.Significant changes to the measurement attributes of the major assets in the Reporting Period:
□ Yes √ No
4. Restricted Asset Rights as at the Period-End
For details see Part X. VII. 61. Assets with restricted ownership and using right in this Report.VII Investments Made
1. Total Investment Amount
□ Applicable √ Not applicable
2. Major Equity Investments Made in the Reporting Period
□ Applicable √ Not applicable
3. Major Non-Equity Investments Ongoing in the Reporting Period
□ Applicable √ Not applicable
4. Financial Investments
(1) Securities Investments
□ Applicable √ Not applicable
No such cases in the Reporting Period.
(2) Investments in Derivative Financial Instruments
√ Applicable □ Not applicable
Unit: RMB'0000
Re
lat Re
io lat
Proportion
ns ed Imp
of closing
hi -p airm Actual
Purchased investment
p art Type of Initial Beginning Sold in the ent Ending gain/loss in
Operat Starting Ending in the amount in
wi y derivativ investment investment Reporting prov investment the
or date date Reporting the
th tra e amount amount Period ision amount Reporting
Period Company’
the ns (if Period
s ending
Co act any)
net assets
m io
pa n
ny
Forward
No
Comm exchang 26 30
n-r
ercial No e 166697.7 November December 129805.79 36891.91 60267 106430.7 12.88% 2095.02
ela
bank settleme 2020 2021
ted
nt
No
Comm Foreign 22
n-r 27 January
ercial No exchang 118238.46 October 62150 56088.46 18356.71 99881.75 12.09% 195.16
ela 2022
bank e option 2020
ted
Comm No Forward
No 13081.6 14 January 1 April 13081.6 13081.6 17.82
ercial n-r exchang
bank ela e 2021 2021
ted transacti
ons
Total 298017.76 -- -- 191955.79 106061.97 91705.31 206312.45 24.97% 2308
Capital source for
The Company’s own money
derivative investment
Lawsuit (if applicable) N/A
Disclosure date of board
of directors
announcement on 30 April 2020
approval of derivative
investment (if any)
Disclosure date of
general meeting of
shareholders
announcement on
approval of derivative
investment (if any)
The Company conducted derivatives products transaction in order for hedging. And the forward settlement hedging was
operated by installments with the relevant amount not more than the planned derivatives products transactions. And all
derivatives products transaction was zero-deposit. Meanwhile the Company had a complete risk control system for
sufficient analysis and prevention of possible risks such as market risk liquidity risk and credit risk operation risk and
risk of laws and regulation.Analysis on risks and
1. Market risk: when the international and domestic economic situations change the corresponding changes in exchange
control measures of
rates and interest rates may have an adverse impact on the financial derivatives transactions of the Company.derivative products held
Precautionary measures to be taken include: the Company chooses risk-controlled financial derivative tools with simple
in the Reporting Period
structure and good liquidity to carry out the hedging business strictly controls the scale of financial derivatives trading
(including but not
by staged operations and adjusts the strategy according to market changes in a timely manner.limited to market risk
2. Liquidity risk and credit risk: a credit risk arising from failure of the contractually due Company or counterparty in
liquidity risk credit risk
performing the contract due to liquidity or factors other than liquidity. Precautionary measures to be taken include: the
operation risk law risk
Company determines the upper limit of derivatives transaction amounts according to production and operation scale as
etc.)
well as foreign exchange income and conducts operations by stage according to the budget of future collections and
disbursement. The derivative trades are free of guarantee deposit and can still be guaranteed in performance after the
contract expires by means of extension and balance settlement etc. to prevent the Company from credit damages due to
lack of liquidity. The Company selects financial institutions with strong capability and good reputation as a counterparty
and signs standard derivative trading contracts to strictly control credit risk of the counterparty.3. Operation risk:
The derivatives had high specialty and complexity so internal operation procedures staffs and external events would
make the Company to undertake risks during the transaction. Risk control measures: The Company promulgated strict
authorization and approval system and perfect regulatory mechanism fixed the operation procedures and approval
procedures system to conduct derivative products transaction implemented strict authorization and post checks and
balances system meanwhile it improved the overall quality of relevant personnel through strengthening the professional
ethics education and business training for them. Besides it established the System of Reporting the Abnormal Situation
Timely so as to ensure to lower the operation risks to the maximum.4. Risk of laws and regulation:
The Company conducted derivatives products transaction in strict accordance with relevant laws and rules. If there were
no standard operation procedures and strict approval procedures it was easy to cause compliant and regulatory risks
existing in the validity and feasibility of contract commitments and other legal documents signed. Risk control
measures: The Company carefully studied and mastered laws regulations and policies relevant to derivative products
transaction formulated internal control rules for the forward settlement hedging business standardized the operation
procedures. And strengthened the compliant examination on derivative products transaction business. The Company
conducted derivative transaction business according to the relevant approval procedure which was in line with relevant
laws regulations the Company’s Articles of Association the Management Rules for Securities Investments and
Derivative Transaction of Lu Thai Textile Co. Ltd. the Proposal on Plan for Derivative Transaction of Lu Thai Textile
Co. Ltd. approved at the 13th Meeting of the 9th Board of Directors and performed relevant information disclosure
responsibilities.Changes of market
prices or fair values in
1. As of 30 June 2021 the Company held 51 undue financial derivatives contracts totaling USD323.5 million among
the Reporting Period of
which 27 were forward forex settlement contracts totaling USD160 million and 24 were forex option portfolio
the invested derivatives.contracts totaling USD163.5 million.And the analysis on the
2. During H1 2021 the total amount of all due financial derivatives of the Company was equivalent to USD138
fair value of the
million which were all delivered generating gains of RMB23.08 million among which gains of RMB20.9502
derivatives should
million were from the delivery of forward forex settlement contracts of USD90 million; gains of RMB1.9516 million
include the specific use
were from the delivery of forex option contracts of USD28 million; gains of RMB0.1782 million were from the
methods and the relevant
delivery of forward forex transactions of USD20 million.assumptions and
parameters.Whether significant
changes occurred to the
Company’s accounting
No significant changes
policy and specific
accounting principles of
derivatives in the
Reporting Period
compared to the
previous Reporting
Period
The Company’s independent directors Zhou Zhiji Pan Ailing Wang Xinyu and Qu Dongmei expressed the following
professional opinions on the Company’s engagement in the transaction of derivatives: In our opinions the Company
engaged in the transaction of derivatives strictly in accordance with related laws and regulations the Articles of
Specific opinion from Incorporation and the Management Policy of Lu Thai for the Transaction of Derivatives during the Reporting Period
independent directors on which complied with the derivative transaction plan considered and approved by the Board of Directors with the
the Company’s operation process complying with laws and regulations. While ensuring its normal production and operations the
derivatives investment Company may use the transaction of derivatives dominated by forward settlement and sale of foreign exchange as an
and risk control effective instrument to avert exchange rate risks. By strengthening internal control and implementing measures to
prevent losses and risks the risks of derivative transactions are relatively controllable and thus such transactions will
help to improve the Company’s ability to defense against exchange rate fluctuations and will not harm the rights and
interests of the Company and its shareholders.VIII Sale of Major Assets and Equity Interests
1. Sale of Major Assets
□ Applicable √ Not applicable
No such cases in the Reporting Period.2. Sale of Major Equity Interests
□ Applicable √ Not applicable
IX Major Subsidiaries
√ Applicable □ Not applicable
Major fully/majority-owned subsidiaries and those minority-owned subsidiaries with an over 10% effect on the Company’s net profit:
Unit: RMB
Relationsh
Principal Registered Operating
Name ip with the Total assets Net assets Operating profit Net profit
activity capital revenue
Company
Lufeng Weaving
& Dyeing Co. Subsidiary Fabric 706160000 1768740074.66 1231995346.25 528023041.71 -28228901.78 -24919021.98
Ltd.Shandong
Lulian New
Subsidiary Fabric 400000000 1015219351.90 344752715.98 14060457.18 -30800968.43 -23633974.03
Materials Co.Ltd.Subsidiaries obtained or disposed in the Reporting Period:
□ Applicable √ Not applicable
Information about major majority- and minority-owned subsidiaries:
Lufeng Weaving & Dyeing Co. Ltd. (hereinafter called “Lufeng Weaving & Dyeing”) is the holding subsidiary of the Company.Registration place: Zibo Shandong; registered capital: RMB706.160 million. The mainly manufacturing and selling textile printing
and dyeing products and the products of clothing and garments and it were authenticated to be high-tech enterprise in October 2014.During the Reporting Period due to the impact of the COVID-19 epidemic Lufeng Weaving & Dyeing’s export business and high
value-added orders were reduced which had a greater impact on performance. Lufeng Weaving & Dyeing achieved operating revenue
of RMB 528 million down 12.98% year on-year and net profit of RMB -24.919 million down 181.08% 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 is still under construction and some trial products are offline. Lulian New
Materials achieved operating revenue of RMB 14060500 up 1320.35% year on-year due to the small revenue base of the same
period and net profit of RMB-23.634 million down 200.76% year-on-year.X Structured Bodies Controlled by the Company
□ Applicable √ Not applicable
XI Risks Facing the Company and Countermeasures
1. Impact of macro-environment: under the increasing uncertainty risk of the international trade political risk in countries of
investments and the impact of the COVID-19 epidemic the Company will face more challenges. In addition the economic
development of China should be transformed and upgrade therefore the Company will continue to strictly execute coronavirus
control measures guarantee production and safety and further utilize various resources to develop domestic and overseas markets so
as to catch development opportunities after COVID-19 is controlled.2. Price fluctuation of raw materials: cotton is the major production material of the Company and the price of cotton is impacted by
market supply and demand climate policy exchange rate quota and other factors therefore based on the production orders and
import quota the Company seriously considers the information of global raw cotton market properly works out procurement strategy
and actively reduces cost fluctuation arising from price change of raw cotton.3. Change of exchange rate: the Company has a large ratio in import and export business and exchange rate fluctuation will place a
remarkable impact on its performance. In order to reduce adverse influence of exchange rate fluctuation the Company adopted the
following measures: 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 control financial costs. 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.Part IV Corporate Governance
I Annual and Extraordinary General Meeting Convened during the Reporting Period
1. General Meetings Convened during the Reporting Period
Investor
Meeting Type participati Convened date Disclosure date Index to disclosed information
on ratio
Announcement of Resolution (No.2021-029) published on Securities Times
The 2020
Annual General China Securities Journal Shanghai
Annual General 34.24% 20 April 2021 21 April 2021
Meeting Securities News and Hong Kong Ta
Meeting
Kung Pao and http://www.cninfo.co on
21 April 2021
Announcement of Resolution (No.The 1st 2021-035) published on Securities Times
Extraordinary Extraordinary China Securities Journal Shanghai
34.50% 13 May 2021 14 May 2021
General Meeting General Meeting Securities News and Hong Kong Ta
of 2021 Kung Pao and http://www.cninfo.co on
14 May 2021
2. Extraordinary General Meeting Convened at Request of Preference Shareholders with Resumed Voting
Rights
□ Applicable √ Not applicable
II Change of Directors Supervisors and Senior Management
√ Applicable □ Not applicable
Name Office title Type of change Date of change Reason for change
Independent
Bi Xiuli Left 25 February 2021 Left for job arrangement
director
Wang Fangshui Director Left 26 February 2021 Retired
Non-director
Wang Changzhao Left 28 June 2021 Left for personal reason
senior executive
III Interim Dividend Plan
□ Applicable √ Not applicable
The Company has no interim dividend plan either in the form of cash or stock.IV Equity Incentive Plans Employee Stock Ownership Plans or Other Incentive Measures for
Employees
√Applicable □ Not applicable
Deliberation Relevant
No. Overview of execution Disclosure index
time meeting
1 nd12 April 2021 The 22 Deliberated and approved were Proposal on the Company's '2021 Announcement of
Meeting of Restricted Share Incentive Scheme (Draft)' and Its Abstracts Proposal Resolution (No.th
the 9 on the Company's 'Implementation and Appraisal Regulations on 2021 2021-024) published
Board of Restricted Share Incentive Scheme' and Proposal on Submitting the on
Directors Authorization for the Board of Directors to Handle the Company's http://www.cninfo.c
2021 Restricted Share Incentive Scheme to the General Meeting of o on 13 April 2021
Shareholders. The Company's independent directors expressed their and relevant
independent opinions on this share incentive scheme. documents
2 th12 April 2021 The 13 Deliberated and approved were Proposal on the Company's '2021 Announcement of
Meeting of Restricted Share Incentive Scheme (Draft)' and Its Abstracts Proposal Resolution (No.th
the 9 on the Company's 'Implementation and Appraisal Regulations on 2021 2021-025) published
Supervisory Restricted Share Incentive Scheme' and Proposal on the Verification of on
Committee the Company's Staff List of 2021 Restricted Share Incentive Scheme. http://www.cninfo.c
o on 13 April 2021
3 16 April 2021 to - The Company internally announced the names and positions on the list -
26 April 2021 of incentive staff. During the publicity period the Board of Supervisors
has not received any objections related to the planned subjects of the
incentive scheme.4 8 May 2021 - The Ninth Board of Supervisors issued the Explanation of the Board of Relevant documents
Supervisors on the Review and Publicity of the Staff List of 2021 published on
Restricted Share Incentive Scheme on the basis of the list review and http://www.cninfo.c
publicity. o on 8 May 2021
5 13 May 2021 The First Deliberated and approved were Proposal on the Company's '2021 Relevant
Extraordina Restricted Share Incentive Scheme (Draft)' and Its Abstracts Proposal announcements (No.ry General on the Company's 'Implementation and Appraisal Regulations on 2021 2021-035
Meeting of Restricted Share Incentive Scheme' and Proposal on Submitting the 2021-036) published
2021 Authorization for the Board of Directors to Handle the Company's on
2021 Restricted Share Incentive Scheme to the General Meeting of http://www.cninfo.c
Shareholders. Self-inspection Report on the Company's 2021 o on 14 May 2021
Restricted Share Incentive Plan Insiders and Incentive Subjects'
Trading of the Company's Shares was disclosed.6 th17 May 2021 The 24 Deliberated and approved were Proposal on Adjusting the List of the Relevant
Meeting of Name and Number of Incentive Staff of 2021 Restricted Share Incentive announcements (No.th
the 9 Scheme and Proposal on Granting Restrictive Stocks to Incentive Staff. 2021-037
Board of The Board of Directors believed that the granting conditions specified 2021-038
Directors in the incentive scheme had been fulfilled and agreed to designate 17 2021-039
th
the 15 May 2021 as the granting date. Except for 5 incentive staff who had 2021-040) published
Meeting of been no longer qualified for the incentive due to resignation and 47 on
th
the 9 incentive targets who had abandoned their subscription of all restricted http://www.cninfo.c
Supervisory stocks to be granted by the Company due to personal reasons the o on 18 May 2021
Committee number of incentive staff obtaining the first-granted restricted stocks
were adjusted from 802 to 750 and the volume of the first restricted
stocks from 25.965 million to 24.285 million shares. The independent
directors consented independently to the matter. They believed that the
qualification of granting incentive staff to some entities are legal and
effective and that the determined granting date complies with relevant
regulations. The Board of Supervisors reviewed the list of incentive
staff as of the grant date and expressed its verification opinions.7 7 June 2021 - As audited and confirmed by Shenzhen Stock Exchange and the Relevant
Shenzhen branch of China Securities Depository and Clearing announcements
Corporation Limited the registration of first-granted restricted stocks published on
was completed. http://www.cninfo.c
o on 4 June 2021
Part V Environmental and Social Responsibility
I Major Environmental Issues
Indicate by tick mark whether the Company or any of its subsidiaries is a heavily polluting business identified by the environmental
protection authorities of China.√ Yes □ No
Number Distributio Excessi
Name of Approved
Name of Way of of n of Discharge Discharge standards Total ve
major total
polluter discharge discharg discharge concentration implemented discharge dischar
pollutants discharge
e outlets outlets ge
Emission standard of
Huangjiap
water pollutants in
u COD is COD
COD≤120mg/ textile dyeing and
Lu Thai COD and Industrial 154.885t； is1495.08t;
Continuous L; ammonia finishing industry
Textile Co. ammonia 2 Park; ammonia ammonia No
discharge nitrogen≤8mg/ GB 4287-2012
Ltd nitrogen East Zone nitrogen is nitrogen is
L COD: 200mg/L
Industrial 3.885t 149.51t
ammonia nitrogen:
Park
20mg/L
Emission standard of
water pollutants in
COD is COD is
Lufeng COD≤120mg/ textile dyeing and
LuFeng COD and 100.983t； 575.985t;
Continuous chief L; ammonia finishing industry
Company ammonia 1 ammonia ammonia No
discharge discharge nitrogen≤5mg/ GB 4287-2012
Limited nitrogen nitrogen is nitrogen is
outlet L COD: 200mg/L
2.576t 57.6t
ammonia nitrogen:
20mg/L
Emission standard of S O2 is SO2 is
Zibo Production SO2：
air pollutants of 17.304t、 236.13t/a、Xinsheng plant of ≤35mg/m3
SO2 NQx Continuous Thermal Power NQx is NQx is
Thermal 4 Xinsheng NQx： Noand smoke discharge Plant in Shandong 76.847t、 674.63t/a、Power Co. Thermal ≤50mg/m3
Province PM is PM is
Ltd. Power PM: ≤5mg/m3
DB37/664-2019 2.674t. 67.47t/a.Continental Discharge Beside COD≤50mg/L QCVN40:2011/BT Sewage
Sewage 1 / No
Textile Co. into the sewage ; ammonia NMT discharge
Ltd. ecological plant nitrogen≤1.0m is
pond in the g/L 693900t
park district
after
treatment
Direct Gas
Continental Beside
discharge QCVN19:2009/BT emission
Textile Co. Exhaust gas 4 boiler / / No
after NMT is 147
Ltd. room
treatment million m3
Construction of pollution prevention equipment and operation condition
Lu Thai Textile Co. Ltd. (hereinafter referred to as “the Company”) and its majority-owned subsidiary Lufeng Weaving & Dyeing Co.Ltd. (hereinafter referred to as “Lufeng Weaving & Dyeing”) strictly implement the “Three Simultaneous” management system for
environmental protection in project constructions. The companies are equipped with complete facilities for waste gas and waste water
treatment. Lu Thai Textile Co. Ltd. and its majority-owned subsidiary Lufeng Weaving & Dyeing Co. Ltd. carried out the waste water
treatment system transformation project to improve the treated water quality by systematic and comprehensive reform further
improving the river water quality and local ecological environment. 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 Company and Lufeng Weaving & Dyeing collected and treated VOCs waste gas and built online monitoring facilities. After
treatment the content of VOCs decreased to 40 mg/m3 which meets the requirement in Volatile Organic Emission Standard of
Shandong Province: Part 7 - Other Industries DB37/2801.7-2019. The Company and its majority-owned subsidiary Lufeng Weaving
& Dyeing uploaded the emission data of VOCs to the government environmental monitoring system so as to monitor the emission data
of VOCs comprehensively. In terms of energy saving the Company won the Ministry of Industry and Information Technology's 2020
Water Efficiency Leader in Key Water-using Enterprises and China National Textile and Apparel Council's 2020 Textile Industry
Water-saving Enterprise Award making outstanding contributions to the company's energy-saving development.The wholly-owned subsidiary Zibo Xinsheng Thermal Power Co. Ltd. (hereinafter referred to as “Xinsheng Thermal Power”) enforces
the “Three Simultaneous” management system for environmental protection in extension project construction in accordance with the
government requirements and adopts the “limestone-gypsum method” to reduce emission concentration of sulfur dioxide the
“Low-nitrogen combustion + SNCR” and “SNCR+SCR method” to reduce emission concentration of nitrogen oxides and the
“electric-bag electrostatic precipitator + wet electrostatic precipitator” to reduce soot emission concentration. The overall system works
well.The waste water treatment project of the wholly-owned subsidiary Continental Textile Co. Ltd. (hereinafter referred to as
“Continental Textile”) is designed to treat 6500 tons of sewage water daily among which sewage plan I is designed to treat 3000
tons of sewage water daily and the sewage plant II is designed to treat 3500 tons of sewage water daily. Continental Textile adopts acomprehensive treatment process of “pre-materialization + A2O biochemistry + post-materialization + ozone oxidation+ active sandfiltration” for waste water treatment and the treated water quality is better than the QCVN 40: 2011/BTNMT A-level emission
standards stipulated by the Vietnam government. The treated waste water is all discharged to the ecological pond in the park. Treated
water quality analysis for H1 2021: The COD (mean value) was 45.9 mg/L the chrominance (mean value) was 29 the ammonia
nitrogen (mean value) was 0.17 mg/L and the total phosphorus (mean value) was 0.2 mg/L. All the parameters met the A-level
emission standards set in the “Regulations on Parameters of Industrial Drainage in Vietnam” (QCVN40: 2011/BTNMT). Waste
water discharge in the whole year met the standards without violation. The total amount of waste water discharged in H1 2021 was
693900 tons among which the chemical oxygen demand (COD) was 31.84 tons ammonia nitrogen (NH3-N) was 0.11 tons and
total phosphorus (TP) was 0.12 ton. Continental Textile is equipped with multi-pipe and water film dust-separation devices to
process the exhaust gas discharged from boilers. In H1 2021 all the equipment was in normal operation and the exhaust gas
inspection parameters were lower than the QCVN19: 2009/BTNMT emission standards set by Vietnam government. In H1 2021 the
total amount of sulfur dioxide emissions was 26.32 tons and the total amount of nitrogen oxides emissions was 24.97 tons.Project Environmental Impact Assessment and Other Administrative Permission for Environmental ProtectionIn July 2021 the “Lu Thai Textile Co. Ltd. Intelligent Technology Upgrading Project of 25 million-meter High-grade FabricProduction Line” the “Engineering Technology Research Institute Project” the “Technology Upgrading Project of High-endPrinting and Dyeing Fabric Finishing Production Process” and the “Technology Upgrading Project of Regenerated Fibre ProductionLine and Colored Spun Yarn Production Line” has completed the acceptance check. The “Lufeng Weaving and Dyeing’s High-endPrinting and Dyeing Fabric Production Line Project” of the holding subsidiary Lufeng Weaving and Dyeing Co. Ltd. has beenapproved and is under construction. Zibo Xinsheng Thermal Power Co. Ltd. obtained the “Response of the Environmental ImpactReport of the Shandong Provincial Department of Environmental Protection on the Extension Project of Zibo Xinsheng ThermalPower” (Luhuanjian [2015] No. 241) the phase II of the expansion project has been completed. Continental Textile’s Spinning Phase
I and Dyeing Park Phase I environmental protection projects have been completed and accepted for confirmation. The spinning phase
II and yarn dyeing park Phase II environmental assessment reports have been approved.Emergency plan for environmental incidents
Lu Thai Textile Co. Ltd. and its majority-owned subsidiary Lufeng Weaving & Dyeing Co. Ltd. prepared the Emergency Plan for
Environmental Incidents which was filed with Zibo Environmental Protection Bureau Xichuan Branch. The wholly-owned
subsidiary Zibo Xinsheng Thermal Power Co. Ltd. has formulated the “Emergency Plan for Environmental Incidents” and filed it
with the environmental protection management department. The identification and risk assessment of environmental risk sources
prevention and early warning mechanisms emergency protection and supervision and management were included in the plan. The
wholly-owned subsidiary Continental Textile Co. Ltd. has prepared emergency plans for different environmental incidents to reduce
their impacts.Environmental self-monitoring program
Lu Thai Textile Co. Ltd. and its majority-owned subsidiary Lufeng Weaving & Dyeing Co. Ltd. observed the requirements of the
competent environment authorities to establish the following year’s environmental self-test plans in every February. In addition they
invited a qualified testing institution quarterly to conduct tests on sewage and waste gas according to the self-monitoring plan duly
disclosed the monitoring data to the Shandong Pollution Source Self-monitoring Sharing System and submitted the test reports to the
competent environment authorities. The wholly-owned subsidiary Zibo Xinsheng Thermal Power Co. Ltd. has implemented online
real-time monitoring of environmental data in accordance with the requirements of the superior environmental protection department
and has achieved emission standards. The wholly-owned subsidiary Continental Textile Co. Ltd. installs automatic sewage sampling
and water quality automatic online monitoring devices real-time automatic sampling and online monitoring of sewage effluent water
quality; the company invites external qualified testing institutions to conduct sewage sludge and exhaust gas quarterly Test and
submit the test report to the environmental supervision department.Administrative penalties imposed for environmental issues during the Reporting Period
Influence on
Rectification
Name Reason Case Result production and
measures
operation
N/A N/A N/A N/A N/A N/A
Other environment information that should be disclosed
No
Other related environment protection information
No
The Company shall be subject to the disclosure requirements of Industry Information Disclosure Directive No. 17 of Shenzhen Stock
Exchange – Listed Companies Engaged in Business Related to Textiles and Apparels
Environmental protection conformity situation of the Company in the report period
The Company and its majority-owned subsidiary Lufeng Weaving & Dyeing strictly implement the “Three Simultaneous”
management system for environmental protection in project construction. The companies are equipped with complete facilities for
waste gas and waste water treatment wastewater is treated with hydrolysis and acidification technique + AO treatment process and
finally discharged according to GB4287-2012 the Discharge Standard of Water Pollutants for Dyeing and Finishing of Textile
Industry; the boiler exhaust is treated with low nitrogen combustion technology and meets DB37/2374-2018 the Emission Standards
of Air Pollutants for Boilers in Shandong Province. The spray + electrostatic technology is adopted in the VOCs waste gas treatment
which meets the requirement in Volatile Organic Emission Standard of Shandong Province: Part 7 - Other Industries
DB37/2801.7-2019. Temporary storage room of common solid waste and hazardous waste is constructed in accordance with
environmental protection requirements and the Company signs hazardous waste disposal contracts with third party qualified
companies every year to dispose the hazardous waste of the Company on basis of conformity. The Company strictly observes
environmental protection laws and regulations and its projects have complete formalities and its environmental protection facilities
are in normal operation; in 2021 the environmental protection departments of governments at various levels checked the Company
more than 20 times but nonconformity was found.Zibo Xinsheng Thermal Power utilizes neutralization basin to teat acidic and alkali wastewater and reduces pH value to 6-9 after
precipitation and neutralization. The treated wastewater and reverse osmosis water are used as desulfurizing water coal feeding
system rinsing water road sprinkling water and coal yard water. Desulfurizing wastewater is treated with flocculation sedimentation
purification process and the design output of wastewater treatment system is 10m3/h and the water quality after treatment will meet
the requirements of Discharge Standard of Wastewater from Limestone-gypsum Flue Gas Desulfurization System In Fossil Fuel
Power Plant DL/T997-2006 and also meet the wastewater recycling requirement of the plant. The treated wastewater is used for
damping dry dust. The stove ash generating from coal burning and gypsum generating from ultralow emission in Zibo Xinsheng
Thermal Power. are general solid waste the Company signs boiler ash and desulfurized gypsum supply and distribution agreements
with building material factory cement factory for full comprehensive utilization.Intercontinental Textile uses the comprehensive treatment process “pre-materialization +A2O biochemistry + post-materialization +ozone treatment + activated sand filtration” to treat the industrial wastewater of the Company and the relevant equipment has been
properly operated for six years after installation and the discharged wastewater meets the level A discharge standard in the Technical
Specifications of Vietnam on Industrial Wastewater Discharge (QCVN40: 2011/BTNMT). the boiler exhaust of the Company is
treated with heat exchange and temperature reduction dust separation spraying water film dust collection absorption chemical
reaction and etc. Now the equipment has been installed and properly operated for six years. Exhaust discharge meets the discharge
standard of Vietnam “State Technical Specifications on Discharge of Industrial Inorganic Substances and Dust” (Circular
36/2015/TT-BTNMT). Hazardous waste and industrial waste warehouses are built up for separated storage of hazardous waste and
industrial waste in accordance with the Vietnamese regulations Regulations on Administration of Hazardous Waste (Circular
36/2015/TT-BTNMT) and Decision on Administration of Waste (Decree 38/2015/N?-CP) and waste transportation and disposal
contracts are signed with local qualified treatment organizations and relevant treatment records of waste are reported the
environmental protection authority of Vietnam quarterly.II Social Responsibility
During the Reporting Period the company hired 7 people with poverty registration and provided assistance to the impoverished and
disabled people with an expenditure of RMB95000.Part VI Significant Events
I Commitments of the Company’s De Facto Controller Shareholders Related Parties and
Acquirers as well as the Company Itself and Other Entities Fulfilled in the Reporting Period
or Ongoing at the Period-End
√ Applicable □ Not applicable
Date of
Type of commit Term of Fulfillme
Commitment Promisor Details of commitment
commitment ment commitment nt
making
Commitments made in
share reform
Commitments made in
acquisition documents
or shareholding
alteration documents
Commitments made in
time of asset
restructuring
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
Dilution of at the implementation of the Company's
Controlling sight returns on public offering of A-share convertible
Commitments made in From 23
shareholder public offering corporate bonds if the CSRC makes 23 May
time of IPO or May 2019 to On-going
actual A-share other new regulatory provisions on 2019
refinancing 8 April 2026
controller convertible remedial measures for returns and the
corporate bonds commitment and the above commitment
fails to meet the 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 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 strict supervision and
management of the Company to avoid
waste or excessive consumption. Any
position-related consumption behaviors
of me will occur within the scope
Dilution of at
Directors necessary for the performance of my
sight returns on
and senior duties. 3. Commitment is made not to From 23
public offering 23 May
management use the Company's assets to engage in May 2019 to On-going
A-share 2019
of the investment and consumption activities 8 April 2026
convertible
Company unrelated to the performance of duties. 4.corporate bonds
Commitment is made that the
remuneration system developed by the
Board of Directors or the Remuneration
Committee is linked to the
implementation of the Company's
remedial measures for returns. 5.Commitment is made that the conditions
for exercising the Equity Incentive Plan
to be issued in the future will be linked to
the implementation of the Company's
remedial measures for returns. 6. From
the issuance date of this commitment to
the completion of the implementation of
the Company's public offering of
A-share convertible corporate bonds if
the CSRC makes other new regulatory
provisions on remedial measures for
returns and the commitment and the
above commitment fails to meet the
requirements of the CSRC I promise to
issue supplementary commitment then
in accordance with the latest regulations
of CSRC. 7. Commitment is made to
fulfill the Company's relevant remedial
measures for returns and any
commitment made herein by me. If I
violate such commitment and causes
losses to the Company or investors I
will bear the compensation
responsibility to the Company or
investors in accordance with the law.Equity incentive
commitments
Other commitments
made to minority
interests
Executed on time or not Not
II Occupation of the Company’s Capital by the Controlling Shareholder or any of Its Related
Parties for Non-Operating Purposes
□ Applicable √ Not applicable
No such cases in the Reporting Period.III Irregularities in the Provision of Guarantees
□ Applicable √ Not applicable
No such cases in the Reporting Period.IV Engagement and Disengagement of Independent Auditor
Are the interim financial statements audited?
□ Yes √ No
The interim financial statements have not been audited.V Explanations Given by the Board of Directors and the Supervisory Committee Regarding
the Independent Auditor's “Modified Opinion” on the Financial Statements of the Reporting
Period
□ Applicable √ Not applicable
VI Explanations Given by the Board of Directors Regarding the Independent Auditor's
“Modified Opinion” on the Financial Statements of Last Year
□ Applicable √ Not applicable
VII Insolvency and Reorganization
□ Applicable √ Not applicable
No such cases in the Reporting Period.VIII Legal Matters
Significant lawsuits and arbitrations:
□ Applicable √ Not applicable
No such cases in the Reporting Period.Other legal matters:
□ Applicable √ Not applicable
IX Punishments and Rectifications
□ Applicable √ Not applicable
No such cases in the Reporting Period.X Credit Quality of the Company as well as its Controlling Shareholder and De Facto
Controller
□ Applicable √ Not applicable
XI Major Related-Party Transactions
1. Continuing Related-Party Transactions
□ Applicable √ Not applicable
No such cases in the Reporting Period.2. Related-Party Transactions Regarding Purchase or Disposal of Assets or Equity Investments
□ 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. Amounts Due to and from Related Parties
□ Applicable √ Not applicable
No such cases in the Reporting Period.5. Transactions with Related Finance Companies or Finance Companies Controlled by the Company
□ 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 finance company controlled by the Company or any other related parties.6. Other Major Related-Party Transactions
□ Applicable √ Not applicable
No such cases in the Reporting Period.XII Major Contracts and Execution thereof
1. Entrustment Contracting and Leases
(1) Entrustment
□ Applicable √ Not applicable
No such cases in the Reporting Period.(2) Contracting
□ Applicable √ Not applicable
No such cases in the Reporting Period.
(3) Leases
□ Applicable √ Not applicable
No such cases in the Reporting Period.2. Major Guarantees
√ Applicable □ Not applicable
Unit: RMB’0000
Guarantees provided by the Company as the parent and its subsidiaries for external parties (exclusive of those for subsidiaries)
Disclosure
Guarantee
date of the Counter-
Actual Actual Collater Having for a
guarantee Line of Type of guarante
Obligor occurrence guarantee al (if Term of guarantee expired related
line guarantee guarantee e (if
date amount any) or not party or
announceme any)
not
nt
Guarantees provided by the Company for its subsidiaries
Disclosure
Guarantee
date of the Counter-
Actual Actual Collater Having for a
guarantee Line of Type of guarante
Obligor occurrence guarantee al (if Term of guarantee expired related
line guarantee guarantee e (if
date amount any) or not party or
announceme any)
not
nt
Five years since
Continental
25 January 20 January the approval of the
Textile Co. 10336.16 1217.26 Joint-liability No Yes
2017 2017 board of the
Ltd.Company
Five years since
Continental the approval of the
25 January 20 January
Textile Co. 17765.28 0 Joint-liability shareholders No Yes
2017 2017
Ltd. meeting of the
Company
Five years since
Continental the approval of the
27 October 25 October
Textile Co. 27132.42 8172.38 Joint-liability shareholders No Yes
2017 2017
Ltd. meeting of the
Company
Three years since
Continental
22 August 20 August the approval of the
Textile Co. 7106.11 6771.15 Joint-liability No Yes
2018 2018 board of the
Ltd.Company
Three years since
Continental
29 March 27 March the approval of the
Textile Co. 3876.06 3876.06 Joint-liability No Yes
2019 2019 board of the
Ltd.Company
Three years since
Lu Thai (Tan 28 27
the approval of the
Chau) Textile September 6460.1 September 1292.02 Joint-liability No Yes
board of the
Co. Ltd. 2019 2019
Company
Three years since
Continental 28 27
the approval of the
Textile Co. September 10982.17 September 0 Joint-liability No Yes
board of the
Ltd. 2019 2019
Company
Three years since
Continental 28 27
the approval of the
Textile Co. September 2907.05 September 0 Joint-liability No Yes
board of the
Ltd. 2019 2019
Company
Three years since
Continental
28 August 26 August the approval of the
Textile Co. 12920.2 3673.61 Joint-liability No Yes
2020 2020 board of the
Ltd.Company
Four years since
Lu Thai (Tan
15 December 14 December the approval of the
Chau) Textile 9044.14 1934 Joint-liability No Yes
2020 2020 board of the
Co. Ltd.Company
Lu Thai (Tan 14 Three years since
15 December
Chau) Textile 3876.06 December 3587.73 Joint-liability the approval of the No Yes2020
Co. Ltd. 2020 board of the
Company
Two years since
Lu An
15 January 13 January the approval of the
Garments Co. 3230.05 2948.4 Joint-liability No Yes
2021 2021 board of the
Ltd.Company
Continental
Textile Co. Three years since
Ltd./ Lu Thai the approval of the
18 May 2021 12144.99 17 May 2021 4394.42 Joint-liability No Yes
(Tan Chau) board of the
Textile Co. Company
Ltd.Total approved line for such Total actual amount of such
guarantees in the Reporting 15375.04 guarantees in the Reporting 36589.3
Period (B1) Period (B2)
Total approved line for such Total actual balance of such
guarantees at the end of the 127780.79 guarantees at the end of the 37867.04
Reporting Period (B3) Reporting Period (B4)
Guarantees provided between subsidiaries
Disclosure
Guarantee
date of the Counter-
Actual Actual Collater Having for a
guarantee Line of Type of guarante
Obligor occurrence guarantee al (if Term of guarantee expired related
line guarantee guarantee e (if
date amount any) or not party or
announceme any)
not
nt
Total guarantee amount (total of the three kinds of guarantees above)
Total actual guarantee
Total guarantee line approved in the
15375.04 amount in the Reporting 36589.3
Reporting Period (A1+B1+C1)
Period (A2+B2+C2)
Total actual guarantee
Total approved guarantee line at the
balance at the end of the
end of the Reporting Period 127780.79 37867.04
Reporting Period
(A3+B3+C3)
(A4+B4+C4)
Total actual guarantee amount (A4+B4+C4) as % of the
4.81%
Company’s net assets
Of which:
Balance of guarantees provided for shareholders actual0
controller and their related parties (D)
Balance of debt guarantees provided directly or indirectly0
for obligors with an over 70% debt/asset ratio (E)
Amount by which the total guarantee amount exceeds0
50% of the Company’s net assets (F)
Total of the three amounts above (D+E+F) 0
Explanation about external guarantee violating established
N/A
procedure (if any)
Compound guarantees:
Whether the Company needs to observe the disclosure requirements stipulated in Shenzhen Stock Exchange Industrial Information
Disclosure Guidelines No.17-Listed Companies Engaging in Businesses in Relation to the Textile Industry
Whether the Company provides guarantees or financial assistance for dealers
□ Yes √ No
3. Cash Entrusted for Wealth Management
√ Applicable □ Not applicable
RMB’0000
Capital Undue Overdue amount with provision for
Specific type Amount incurred Overdue amount
resources Balance impairment
Bank financial
Raised funds 69954 9700 0 0
products
Bank financial Self-owned
52143 0 0 0
products funds
Total 122097 9700 0 0
Particulars of entrusted cash management with single significant amount or low security bad liquidity and no capital preservation
√ Applicable □ Not applicable
RMB’0000
Whether
Amount there is
Actual Whether
of actual Amount wealth
Method of recovery go
Type of Annual Estimate profits withdrawn manage Overview of the item
Name of Type of the Resource Use of payment of profits through
the Amount Initial date Ended Date yield for profit (if or losses impairment ment and the related index
the trustee trustee of funds fund determinat or losses in stator
product reference any) in provision (if entrustm for inquiring (if any)
ion Reporting procedur
Reportin any) ent plan
Period es
g Period in future
or not
One-off
Bank repayment Refer to the related
Agricultura Princip financi of Recovery announcement (No.:
Raised
l Bank of Bank al-prot 10000 2020/07/02 2021/01/08 al principal 3.50% 171.88 171.88 on 0 Yes Not yet 2020-051) disclosed
funds
China ected produc and schedule on Cninfo on 23 May
ts interests at 2020
maturity
One-off
Bank repayment Refer to the related
Princip financi of Recovery announcement (No.:
Qishang Raised
Bank al-prot 5000 2020/10/16 2021/01/14 al principal 3.50% 40.71 40.71 on 0 Yes Not yet 2020-051) disclosed
Bank funds
ected produc and schedule on Cninfo on 23 May
ts interests at 2020
maturity
One-off
Bank repayment Refer to the related
Princip financi of Recovery announcement (No.:
Qishang Raised
Bank al-prot 2754 2020/12/10 2021/03/11 al principal 3.50% 22.67 22.67 on 0 Yes Not yet 2020-051) disclosed
Bank funds
ected produc and schedule on Cninfo on 23 May
ts interests at 2020
maturity
One-off
Bank repayment Refer to the related
Princip financi of Recovery announcement (No.:
Qishang Raised
Bank al-prot 5000 2020/12/10 2021/03/11 al principal 3.50% 41.16 41.16 on 0 Yes Not yet 2020-051) disclosed
Bank funds
ected produc and schedule on Cninfo on 23 May
ts interests at 2020
maturity
One-off
Bank repayment Refer to the related
Agricultura Princip financi of Recovery announcement (No.:
Raised
l Bank of Bank al-prot 10000 2020/12/31 2021/03/25 al principal 3.15% 68.39 68.39 on 0 Yes Not yet 2020-051) disclosed
funds
China ected produc and schedule on Cninfo on 23 May
ts interests at 2020
maturity
Bank One-off Refer to the related
Princip Recovery
Qishang Raised financi repayment announcement (No.:
Bank al-prot 2500 2021/03/19 2021/06/22 3.70% 22.71 22.71 on 0 Yes Not yet
Bank funds al of 2020-051) disclosed
ected schedule
produc principal on Cninfo on 23 May
ts and 2020
interests at
maturity
One-off
Bank repayment Refer to the related
Agricultura Princip financi of Recovery announcement (No.:
Raised
l Bank of Bank al-prot 10000 2021/01/22 2021/04/16 al principal 3.30% 71.65 71.65 on 0 Yes Not yet 2020-051) disclosed
funds
China ected produc and schedule on Cninfo on 23 May
ts interests at 2020
maturity
One-off
Bank repayment Refer to the related
Agricultura Princip financi of Recovery announcement (No.:
Raised
l Bank of Bank al-prot 10000 2021/03/30 2021/06/25 al principal 3.70% 83.2 83.2 on 0 Yes Not yet 2020-051) disclosed
funds
China ected produc and schedule on Cninfo on 23 May
ts interests at 2020
maturity
One-off
Bank repayment Refer to the related
Agricultura Princip financi of Recovery announcement (No.:
Raised
l Bank of Bank al-prot 5000 2021/03/30 2021/06/25 al principal 3.70% 41.6 41.6 on 0 Yes Not yet 2020-051) disclosed
funds
China ected produc and schedule on Cninfo on 23 May
ts interests at 2020
maturity
Agricultura Bank Princip 9700 Raised 2021/04/27 2021/07/23 Bank One-off 3.50% 76.34 0 - 0 Yes Not yet Refer to the related
l Bank of al-prot funds financi repayment announcement (No.:
China ected al of 2020-051) disclosed
produc principal on Cninfo on 23 May
ts and 2020
interests at
maturity
One-off
Bank repayment Refer to the related
Princip financi of Recovery announcement (No.:
Qishang Self-owne
Bank al-prot 3000 2020/10/16 2021/01/14 al principal 3.50% 24.42 24.42 on 0 Yes Not yet 2020-059) disclosed
Bank d funds
ected produc and schedule on Cninfo on 14
ts interests at August 2020
maturity
One-off
Bank repayment Refer to the related
Princip financi of Recovery announcement (No.:
Qishang Self-owne
Bank al-prot 5000 2020/11/04 2021/02/02 al principal 3.50% 40.71 40.71 on 0 Yes Not yet 2020-059) disclosed
Bank d funds
ected produc and schedule on Cninfo on 14
ts interests at August 2020
maturity
Bank One-off Refer to the related
Princip financi repayment Recovery announcement (No.:
Qishang Self-owne
Bank al-prot 5000 2020/11/11 2021/02/09 al of 3.50% 40.71 40.71 on 0 Yes Not yet 2020-059) disclosed
Bank d funds
ected produc principal schedule on Cninfo on 14
ts and August 2020
interests at
maturity
One-off
Bank repayment Refer to the related
Princip financi of Recovery announcement (No.:
Qishang Self-owne
Bank al-prot 6246 2020/12/10 2021/03/11 al principal 3.50% 51.42 51.42 on 0 Yes Not yet 2020-059) disclosed
Bank d funds
ected produc and schedule on Cninfo on 14
ts interests at August 2020
maturity
One-off
Bank repayment Refer to the related
Princip financi of Recovery announcement (No.:
Qishang Self-owne
Bank al-prot 3000 2020/12/11 2021/01/20 al principal 3.40% 10.55 10.55 on 0 Yes Not yet 2020-059) disclosed
Bank d funds
ected produc and schedule on Cninfo on 14
ts interests at August 2020
maturity
One-off
Bank repayment Refer to the related
Princip financi of Recovery announcement (No.:
Qishang Self-owne
Bank al-prot 5000 2020/12/18 2021/01/18 al principal 2.70% 10.61 10.61 on 0 Yes Not yet 2020-059) disclosed
Bank d funds
ected produc and schedule on Cninfo on 14
ts interests at August 2020
maturity
Qishang Princip Self-owne Bank One-off Recovery Refer to the related
Bank 2600 2021/01/07 2021/02/19 3.40% 9.82 9.82 0 Yes Not yet
Bank al-prot d funds financi repayment on announcement (No.:
ected al of schedule 2020-059) disclosed
produc principal on Cninfo on 14
ts and August 2020
interests at
maturity
One-off
Bank repayment Refer to the related
Princip financi of Recovery announcement (No.:
Qishang Self-owne
Bank al-prot 2000 2021/01/27 2021/03/03 al principal 3.40% 6.15 6.15 on 0 Yes Not yet 2020-059) disclosed
Bank d funds
ected produc and schedule on Cninfo on 14
ts interests at August 2020
maturity
One-off
Bank repayment Refer to the related
Princip financi of Recovery announcement (No.:
Qishang Self-owne
Bank al-prot 3697 2021/02/09 2021/05/18 al principal 3.50% 32.78 32.78 on 0 Yes Not yet 2020-059) disclosed
Bank d funds
ected produc and schedule on Cninfo on 14
ts interests at August 2020
maturity
One-off
Bank Refer to the related
repayment
Princip financi Recovery announcement (No.:
Qishang Self-owne of
Bank al-prot 7000 2021/02/24 2021/06/29 al 3.60% 81.42 81.42 on 0 Yes Not yet 2020-059) disclosed
Bank d funds principal
ected produc schedule on Cninfo on 14
and
ts August 2020
interests at
maturity
One-off
Bank repayment Refer to the related
Princip financi of Recovery announcement (No.:
Qishang Self-owne
Bank al-prot 2600 2021/02/24 2021/03/31 al principal 3.50% 8.23 8.23 on 0 Yes Not yet 2020-059) disclosed
Bank d funds
ected produc and schedule on Cninfo on 14
ts interests at August 2020
maturity
One-off
Bank repayment Refer to the related
Princip financi of Recovery announcement (No.:
Qishang Self-owne
Bank al-prot 2000 2021/03/11 2021/06/15 al principal 3.60% 17.87 17.87 on 0 Yes Not yet 2020-059) disclosed
Bank d funds
ected produc and schedule on Cninfo on 14
ts interests at August 2020
maturity
One-off
Bank repayment Refer to the related
Princip financi of Recovery announcement (No.:
Qishang Self-owne
Bank al-prot 5000 2021/03/19 2021/06/22 al principal 3.70% 45.43 45.43 on 0 Yes Not yet 2020-059) disclosed
Bank d funds
ected produc and schedule on Cninfo on 14
ts interests at August 2020
maturity
Total 122097 -- -- -- -- -- -- 1020.43 944.09 -- 0 -- -- --
Whether there is the case where the principal cannot be recovered at maturity or other case which may cause impairment for entrusted asset management
□ Applicable √ Not applicable
4. Continuing Major Contracts
□ Applicable √ Not applicable
5. Other Major Contracts
□ Applicable √ Not applicable
No such cases in the Reporting Period.XIII Other Significant Events
√ Applicable □ Not applicable
As examined and approved by Shenzhen Stock Exchange the Company's restricted B shares held by Tailun (Thailand) Textile Co.Ltd. with a volume of 118232400 shares were lifted from restricted sales on 12 July 2021. For more information please refer to
the announcement disclosed on 9 July 2021 on the cninfo website (http://www.cninfo.com.cn).XIV Significant Events of Subsidiaries
□ Applicable √ Not applicable
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
dividen dividend
Percenta Percentag
Shares New issues d converted Other Subtotal Shares
ge (%) e (%)
convert from capital
ed from reserves
profit
I. Restricted shares 119038937 13.87% 24321013 24321013 143359950 16.25%
1. Shares held by State
2. Shares held by state-owned
legal person
3. Shares held by other
806537 0.09% 24321013 24321013 25127550 2.85%
domestic investors
Among which: Shares held by
domestic legal person
Shares held by domestic
806537 0.09% 24321013 24321013 25127550 2.85%
natural person
4. Shares held by other foreign
118232400 13.78% 118232400 13.40%
investors
Among which: Shares held by
118232400 13.78% 118232400 13.40%
foreign corporations
Shares held by foreign
natural person
II. Unrestricted shares 739093385 86.13% -33413 -33413 739059972 83.75%
1. RMB ordinary shares 561275069 65.41% -20638 -20638 561254431 63.60%
2. Domestically listed foreign
177818316 20.72% -12775 -12775 177805541 20.15%
shares
3. Overseas listed foreign0
shares
4. Other 0
III. Total shares 858132322 100.00% 24287600 24287600 882419922 100.00%
Reasons for share changes:
√ Applicable □ Not applicable
a) According to its 2021 restricted share incentive scheme the Company have firstly granted 24285000 restricted ordinary A shares
that were directly issued to the incentive staff on 7 June 2021.b) Due to the fact that the Company had issued convertible A-share bonds on 9 April 2020 convertible bonds were converted to
2600 shares in the period from the beginning of 2021 to 30 June 2021.c) Due to the retirement of directors and the resignation of executives the shares held by former directors or executives will be
locked and adjusted in accordance with relevant regulations on the executive share management.Approval of share changes:
√ Applicable □ Not applicable
1. On 13 May 2021 the first Extraordinary General Meeting of this year was held in the Company. Deliberated and approved were
Proposal on the Company's '2021 Restricted Share Incentive Scheme (Draft)' and Its Abstracts Proposal on the Company's
'Implementation and Appraisal Regulations on 2021 Restricted Share Incentive Scheme' and Proposal on Submitting the Authorization
for the Board of Directors to Handle the Company's 2021 Restricted Share Incentive Scheme to the General Meeting of Shareholders.Self-inspection Report on the Company's 2021 Restricted Share Incentive Plan Insiders and Incentive Subjects' Trading of the
Company's Shares was disclosed.2. On 17 May 2021 the Company convened the 24th Meeting of the 9th Board of Directors and the 15th Meeting of the 9th Supervisory
Committee. Deliberated and approved were Proposal on Adjusting the List of the Name and Number of Incentive Staff of 2021
Restricted Share Incentive Scheme and Proposal on Granting Restrictive Stocks to Incentive Staff. The Board of Directors believed that
the granting conditions specified in the incentive scheme had been fulfilled and agreed to designate 17 May 2021 as the granting date.24.285 million restricted shares were effectively granted to 750 incentive staff.Transfer of share ownership:
√ Applicable □ Not applicable
On 7 June 2021 the first-granted restricted shares in the Company's 2021 Restricted Share Incentive Scheme were registered as
audited and confirmed by Shenzhen Stock Exchange and the Shenzhen branch of China Securities Depository and Clearing
Corporation Limited.Progress on any share repurchases:
□ Applicable √ Not applicable
Progress on reducing the repurchased shares by means of centralized bidding:
□ Applicable √ Not applicable
Effects of share changes on the basic and diluted earnings per share equity per share attributable to the Company’s ordinary
shareholders and other financial indicators of the prior year and the prior accounting period respectively:
□ Applicable √ Not applicable
Other information that the Company considers necessary or is required by the securities regulator to be disclosed:
□ Applicable √ Not applicable
2. Changes in Restricted Shares
√ Applicable □ Not applicable
Unit: share
Restricted Restricted
Restricted Restricted
shares shares
Name of the shares shares
amount at amount at Restricted reasons Restricted shares relieved date
shareholders relieved of increased of
the the
the period the period
period-begin period-end
Tailun (Thailand) Foreign Pre-IPO restricted
118232400 12 July 2021
Textile Co. Ltd. legal person shares
The Company shall implement the
Locked public
provisions on restricted sale by
Liu Zibin 111217 111217 shares held by
directors supervisors and senior
senior management
management within tenure
The Company shall implement the
Locked public
provisions on restricted sale by
Wang Fangshui 110065 36688 146753 shares held by
directors supervisors and senior
senior management
management
The Company shall implement the
Locked public
provisions on restricted sale by
Qin Guiling 94906 94906 shares held by
directors supervisors and senior
senior management
management within tenure
Locked public
shares held by The Company shall implement the
senior management: provisions on restricted sale by
69375 shares; directors supervisors and senior
Zhang Hongmei 69375 300000 369375
restricted shares management within tenure and lift
from equity the lock-up in batches according to
incentive: 300000 the share incentive scheme
shares
Locked public The Company shall implement the
Wang Jiabin 62775 300000 362775
shares held by provisions on restricted sale by
senior management: directors supervisors and senior
62775 shares; management within tenure and lift
restricted shares the lock-up in batches according to
from equity the share incentive scheme
incentive: 300000
shares
Locked public
shares held by The Company shall implement the
senior management: provisions on restricted sale by
62325 shares; directors supervisors and senior
Yu Shouzheng 62325 200000 262325
restricted shares management within tenure and lift
from equity the lock-up in batches according to
incentive: 200000 the share incentive scheme
shares
Locked public
shares held by The Company shall implement the
senior management: provisions on restricted sale by
60225 shares; directors supervisors and senior
Zhang Zhanqi 60225 300000 360225
restricted shares management within tenure and lift
from equity the lock-up in batches according to
incentive: 300000 the share incentive scheme
shares
Locked public
shares held by The Company shall implement the
senior management: provisions on restricted sale by
58275 shares; directors supervisors and senior
Zhang Keming 58275 200000 258275
restricted shares management within tenure and lift
from equity the lock-up in batches according to
incentive: 200000 the share incentive scheme
shares
The Company shall implement the
Locked public
provisions on restricted sale by
Zhang Shougang 54825 54825 shares held by
directors supervisors and senior
senior management
management within tenure
Locked public The Company shall implement the
Zhang Jianxiang 39112 39112 shares held by provisions on restricted sale by
senior management directors supervisors and senior
management within tenure
The Company shall implement the
Locked public
provisions on restricted sale by
Lyu Yongchen 25312 6300 19012 shares held by
directors supervisors and senior
senior management
management
Locked public
shares held by The Company shall implement the
senior management: provisions on restricted sale by
22500 shares; directors supervisors and senior
Shang Chenggang 22500 200000 222500
restricted shares management within tenure and lift
from equity the lock-up in batches according to
incentive: 200000 the share incentive scheme
shares
The Company shall implement the
Locked public
provisions on restricted sale by
Wang Changzhao 16875 5625 22500 shares held by
directors supervisors and senior
senior management
management
Locked public
shares held by The Company shall implement the
senior management: provisions on restricted sale by
7500 shares; directors supervisors and senior
Li Wenji 7500 200000 207500
restricted shares management within tenure and lift
from equity the lock-up in batches according to
incentive: 200000 the share incentive scheme
shares
The Company shall implement the
Locked public
provisions on restricted sale by
Liu Zilong 7500 7500 shares held by
directors supervisors and senior
senior management
management within tenure
The Company shall implement the
Locked public
provisions on restricted sale by
Dong Shibing 3750 3750 shares held by
directors supervisors and senior
senior management
management within tenure
Restricted shares Lift the lock-up in batches
Du Lixin 200000 200000 from equity according to the share incentive
incentive scheme
Restricted shares Lift the lock-up in batches
Zhang Wei 200000 200000 from equity according to the share incentive
incentive scheme
Restricted shares Lift the lock-up in batches
Fu Guannan 200000 200000 from equity according to the share incentive
incentive scheme
Restricted shares Lift the lock-up in batches
Guo Heng 200000 200000 from equity according to the share incentive
incentive scheme
Other subjects of
first-granted incentive Restricted shares Lift the lock-up in batches
of restricted share 21785000 21785000 from equity according to the share incentive
incentive scheme in incentive scheme2021
Total 119038937 6300 24327313 143359950 -- --
II. Issuance and Listing of Securities
□ Applicable √ Not applicable
III Total Number of Shareholders and Their Shareholdings
Unit: share
Total number of ordinary Total number of preference shareholders with resumed voting
58740 0
shareholders at the period-end rights at the period-end (if any) (see Note 8)
5% or greater ordinary shareholders or the top 10 ordinary shareholders
Increase/d Pledged marked
Sharehol
Total shares ecrease Number of Number of or frozen shares
Nature of ding
Name of shareholder held at the during the restricted non-restricted
shareholder percenta Num
period-end Reporting shares held shares held Status
ge (%) ber
Period
Domestic
Zibo Lucheng Textile
non-state-owned 15.91% 140353583 0 0 140353583
Investment Co. Ltd.legal person
Tailun (Thailand) Textile Co. Foreign legal
13.40% 118232400 0 118232400
Ltd. person
Central Huijin Assets State-owned legal
2.30% 20315300 0 20315300
Management Co. Ltd. person
Bank of Communications-
ICBC Credit Suisse Double 1199985
Other 1.36% 11999859 11999859
Interest Bond Securities 9
Investment Fund
Domestic
National Social Security Fund
non-state-owned 1.09% 9600051 150000 9600051
Portfolio 413
legal person
Zhong Ou Asset
Management-Agricultural
Bank of China-Zhong Ou Other 0.59% 5235900 0 5235900
China Securities Asset
Management Plan
Dacheng Fund-Agricultural
Bank of China- Dacheng
Other 0.59% 5235900 0 5235900
China Securities Asset
Management Plan
Harvest Fund-Agricultural
Bank of China-Harvest China
Other 0.59% 5235900 0 5235900
Securities Asset Management
Plan
GF Fund
Management-Agricultural
Bank of China-GF China Other 0.59% 5235900 0 5235900
Securities Asset Management
Plan
China Asset
Management-Agricultural
Bank of China-China China Other 0.59% 5235900 0 5235900
Securities Asset Management
Plan
Strategic investors or general corporations
becoming top-ten shareholders due to placing of Naught
new shares (if any) (see Note 3)
Related or acting-in-concert parties among the Zibo Lucheng Textile Investment Co. Ltd. is the largest shareholder of the Company
shareholders above and the actual controller. Tailun (Thailand) Textile Co. Ltd. is the second largest
shareholder as well as sponsor of 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 concerted action
among other shareholders.Explain if any of the shareholders above was
involved in entrusting/being entrusted with voting Naught
rights or waiving voting rights
Special account for share repurchases (if any)
Naught
among the top 10 shareholders (see note 11)
Shareholdings of the top ten non-restricted ordinary shareholders
Number of Type of shares
Name of shareholder non-restricted shares
Type Shares
held at the period-end
RMB ordinary
Zibo Lucheng Textile Investment Co. Ltd. 140353583 140353583
share
RMB ordinary
Central Huijin Assets Management Co. Ltd. 20315300 20315300
share
Bank of Communications- ICBC Credit Suisse Double Interest Bond RMB ordinary
11999859 11999859
Securities Investment Fund share
RMB ordinary
National Social Security Fund Portfolio 413 9600051 9600051
share
Zhong Ou Asset Management-Agricultural Bank of China-Zhong Ou RMB ordinary
5235900 5235900
China Securities Asset Management Plan share
Dacheng Fund-Agricultural Bank of China- Dacheng China RMB ordinary
5235900 5235900
Securities Asset Management Plan share
Harvest Fund-Agricultural Bank of China-Harvest China Securities RMB ordinary
5235900 5235900
Asset Management Plan share
GF Fund Management-Agricultural Bank of China-GF China RMB ordinary
5235900 5235900
Securities Asset Management Plan share
China Asset Management-Agricultural Bank of China-China China RMB ordinary
5235900 5235900
Securities Asset Management Plan share
Yinhua Fund-Agricultural Bank of China-Yinhua China Securities RMB ordinary
5235900 5235900
Asset Management Plan share
Zibo Lucheng Textile Investment Co. Ltd. is the largest
Explanation on connected relationship among the top ten shareholders shareholder and the actual controller of the Company. Tailun
of tradable share not subject to trading moratorium as well as among (Thailand) Textile Co. Ltd. is the second largest shareholder and
the top ten shareholders of tradable share not subject to trading the foreign sponsor of the Company. All the other shareholders
moratorium and top ten shareholders or explanation on are holding tradable A-shares or B-shares. And it is unknown
acting-in-concert whether there is any related party or acting-in-concert party
among them.Particular about shareholder participate in the securities lending and
Naught
borrowing business (if any) (note 4)
Indicate by tick mark whether any of the top 10 ordinary shareholders or the top 10 unrestricted ordinary shareholders of the
Company conducted any promissory repo during the Reporting Period.□ Yes √ No
No such cases in the Reporting Period.IV Change in Shareholdings of Directors Supervisors and Senior Management
√ Applicable □ Not applicable
Number of
Number of Number of
Increase in Decrease restricted
Incu granted granted
Beginning the in the Ending shares
mbe restricted restricted
Name Office title shareholdi Current Current shareholdi granted in
nt/fo shares at the shares at the
ng (share) Period Period ng (share) the Current
rmer period-begin period-end
(share) (share) Period
(share) (share)
(share)
Incu
Liu Zibin Chairman and President mbe 148290 148290
nt
Incu
Xu Zhinan Vice Chairman mbe
nt
Incu
Fujiwara
Director mbe
Hidetoshi
nt
Incu
Chen
Director mbe
Ruimou
nt
Incu
Zeng
Director mbe
Facheng
nt
Director Vice Controller Incu
Liu
of Global Marketing mbe
Deming
Department nt
Incu
Qin
Director mbe 126542 126542
Guiling
nt
Incu
Zhang Director and Chief
mbe 92500 300000 392500 300000 300000
Hongmei Accountant
nt
Incu
Zhou Zhiji Independent Director mbe
nt
Incu
Pan Ailing Independent Director mbe
nt
Incu
Wang
Independent Director mbe
Xinyu
nt
Incu
Qu
Independent Director mbe
Dongmei
nt
Incu
Zhang Chairman of the
mbe 73100 73100
Shougang Supervisory Committee
nt
Incu
Liu Zilong Supervisor mbe 10000 10000
nt
Supervisor Manager of Incu
Dong
Logistics Management mbe 5000 5000
Shibing
Department nt
Zhang Vice president Controller Incu
52150 52150
Jianxiang of Functional Fabric mbe
Product Line nt
Incu
Wang Vice president Security
mbe 83700 300000 383700 300000 300000
Jiabin Controller
nt
Vice president Controller Incu
Zhang
of Global Marketing mbe 80300 300000 380300 300000 300000
Zhanqi
Department nt
Board Secretary Incu
Zhang
Controller of Financial mbe 77700 200000 277700 200000 200000
Keming
Management Department nt
Incu
Controller of Business
Li Wenji mbe 10000 200000 210000 200000 200000
Management Department
nt
Incu
Controller of Strategy and
Zhang Wei mbe 200000 200000 200000 200000
Market Department
nt
Incu
Fujiwara
GM of Japan Office mbe
Matsuzaka
nt
Controller of Energy and Incu
Yu
Environment Protection mbe 83100 200000 283100 200000 200000
Shouzheng
Department nt
Shang Incu
Controller of Garment
Chenggan mbe 30000 200000 230000 200000 200000
Product Line
g nt
Chief Engineer Executive
Incu
Dean of Lu Thai
Du Lixin mbe 200000 200000 200000 200000
Engineering Technology
nt
Research Institute
Vice GM of Shandong Incu
Guo Heng Lulian New Materials mbe 200000 200000 200000 200000
Co. Ltd. nt
Incu
Fu
President Assistant mbe 200000 200000 200000 200000
Guannan
nt
Wang For
Director 146753 146753
Fangshui mer
For
Bi Xiuli Independent Director
mer
Executive Dean of Lu
Wang Thai Engineering For
22500 22500
Changzhao Technology Research mer
Institute
Total -- -- 1041635 2500000 0 3541635 0 2500000 2500000
V Change of the Controlling Shareholder or the De Facto Controller
Change of the controlling shareholder in the Reporting Period
□ Applicable √ Not applicable
No such cases in the Reporting Period.Change of the de facto controller in the Reporting Period
□ Applicable √ Not applicable
No such cases in the Reporting Period.Part VIII Preference Shares
□ Applicable √ Not applicable
No preference shares in the Reporting Period.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 May2020. In accordance with related terms of the “Prospectus for the Public Offering of A-Share Convertible CorporateBonds 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’sProfit Distribution Plan for 2019” was considered and approved. According to the Proposal a cash amount of RMB
1.00 (inclusive of tax) would be distributed to every 10 shares with the 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 ThaiConvertible 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 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).2. Accumulative Conversion
√ Applicable □ Not applicable
Converted
shares as % of Unconver
Accumulativ Accumulat total shares ted
Total Unconverted
Abbreviati e amount ive shares issued by the amount
Start date circulation Total amount amount (RMB)
on converted converted Company as % of
(piece)
(RMB) (share) before the total
start date of amount
conversion
Lu Thai
Convertibl 15 October 2020 14000000 1400000000.00 119400.00 13381 0.00% 1399880600.00 99.99%
e Bonds
3. Top 10 Convertible Bond Holders
Unit: share
Nature of Number of Amount of As % of
No. Name of holders
holders convertible bonds convertible bonds convertible
held at the held at the bonds held at
period-end (share) period-end (RMB) the period-end
State-own
1 Guosen Securities Co. Ltd. ed legal 1450930 145093000.00 10.36%
person
ICBC Credit Suisse Tianxiang Hybrid Pension
2 Other 675551 67555100.00 4.83%
Products-Industrial and Commercial Bank of China
China Minsheng Banking Corporation Limited-
3 Essence Sustaining Value-added and Dynamic Asset Other 630004 63000400.00 4.50%
Allocation Mixed Type Securities Investment Fund
Industrial and Commercial Bank of China － China
4 Other 581095 58109500.00 4.15%
Universal Convertible Bond Securities Investment Fund
Shanghai Pudong Development Bank－E Fund Yuxiang
5 Other 542427 54242700.00 3.87%
Return Bond Securities Investment Fund
China Merchants Bank Co. Ltd.- Essence Sustaining
6 Other 505005 50500500.00 3.61%
Profit Increase Mixed Type Securities Investment Fund
7 National Social Security Fund Portfolio 1002 Other 493247 49324700.00 3.52%
State-own
8 Genertec Investment Management Co. Ltd. ed legal 434645 43464500.00 3.10%
person
Fullgoal Fuyi Progressive Fixed Benefit Pension
9 Other 424112 42411200.00 3.03%
Product- Industrial and Commercial Bank of China
10 National Social Security Fund Portfolio 1005 Other 415369 41536900.00 2.97%
4. Significant Changes in Profitability Assets Condition and Credit Status of Guarantors
□ Applicable √ Not applicable
5. The Company’s Liabilities Credit Changes at the Period-end and Cash Arrangements to Repay Debts in
Future Years
For the relevant indicators please refer to the Part IX Bonds- VI The Major Accounting Data and the Financial Indicators of the
Recent 2 Years of the Company up the Period-end.The credit rating of the Company's convertible bonds for the reporting period is AA+ which has not changed compared with that of
the same period of last year.V Losses of Scope of Consolidated Financial Statements during the Reporting Period
Exceeding 10% of Net Assets up the Period-end of Last Year
□ Applicable √ Not applicable
VI The Major Accounting Data and the Financial Indicators of the Recent 2 Years of the
Company up the Period-end
Unit: RMB’0000
Item Period-end The end of last year Increase/decrease
Current ratio 294.37% 268.48% 25.89%
Asset-liability ratio 32.33% 33.29% -0.96%
Quick ratio 176.78% 162.17% 14.61%
Reporting Period Same period of last year YoY increase/decrease
Net profit after deducting
5428.15 10810.56 -49.79%
non-recurring profit or loss
Debt/EBITDA ratio 0.14% 0.14% 0.00%
Interest cover (times) 4.96 4.88 1.64%
Cash-to-interest cover (times) 5.15 5.62 -8.36%
EBITDA interest coverage ratio 10.95 10.66 2.72%
Rate of redemption 100.00% 100.00%
Interest coverage 100.00% 100.00%
Part X Financial Statements
I Independent Auditor’s Report
Are these interim financial statements audited by an independent auditor?
□Yes √ No
They are unaudited by such an auditor.II Financial Statements
Currency unit for the financial statements and the notes thereto: RMB
1. Consolidated Balance Sheet
Prepared by Lu Thai Textile Co. Ltd.30 June 2021
Unit: RMB
Item 30 June 2021 31 December 2020
Current assets:
Monetary assets 2039571421.60 1400478034.81
Held-for-trading financial assets 124052667.02 268456216.98
Derivative financial assets
Notes receivable 222064350.43 182994110.86
Accounts receivable 467077027.00 522425219.87
Accounts receivable financing 29582908.88 55150926.34
Prepayments 58244197.83 19611775.28
Other receivables 79655594.80 105710818.69
Including: Interest receivable
Dividends receivable 47025975.44 75488652.49
Financial assets purchased under resale agreements
Inventories 2079485243.20 1988968681.64
Current portion of non-current assets 46625009.15 45750018.30
Other current assets 59213123.64 433432258.63
Total current assets 5205571543.55 5022978061.40
Non-current assets:
Long-term receivables 41847020.06 41053183.15
Long-term equity investment 128409211.89 138079577.25
Other equity instrument investment
Other non-current financial assets 156915620.25 156915620.25
Investment property 21812985.44 22263668.85
Fixed assets 5643953088.23 5661592991.66
Construction in progress 293251051.85 356273197.49
Right-of-use assets 161742107.43
Intangible assets 368399517.46 373543480.84
Development costs
Goodwill 20563803.29 20563803.29
Long-term deferred expenses 1039474.40 118340494.60
Deferred income tax assets 130640687.96 122865841.69
Other non-current assets 226619800.99 95434040.18
Total non-current assets 7195194369.25 7106925899.25
Total assets 12400765912.80 12129903960.65
Current liabilities:
Short-term borrowings 991568008.40 930871008.19
Held-for-trading financial liabilities
Derivative financial liabilities
Notes payable
Accounts payable 236877923.06 243262473.69
Advances from customers
Contract liabilities 146761705.56 141339705.62
Payroll payable 220896759.48 265648198.38
Taxes payable 33875062.59 36468978.77
Other payables 21013345.96 17587470.79
Including: Interest payable
Dividends payable 441113.64 441113.64
Held-for-sale liabilities
Current portion of non-current liabilities 35776283.56 43149400.13
Other current liabilities 81612744.54 192574674.68
Total current liabilities 1768381833.15 1870901910.25
Non-current liabilities:
Long-term borrowings 659734579.14 495520342.78
Bonds payable 1370297472.37 1350171526.97
Lease liabilities 32226761.06
Long-term payables
Long-term payroll payable 45772995.06 62137656.00
Provisions
Deferred income 176361848.15 173862983.31
Deferred income tax liabilities 85704360.07 85633161.44
Other non-current liabilities
Total non-current liabilities 2370098015.85 2167325670.50
Total liabilities 4138479849.00 4038227580.75
Owners’ equity:
Share capital 882419922.00 858132322.00
Other equity instruments 71385268.76 71386451.81
Capital reserves 317616396.30 255912488.01
Less: Treasury stock
Other comprehensive income -13413764.20 1308922.89
Specific reserve
Surplus reserves 1154017457.79 1154017457.79
General reserve
Retained earnings 5456196302.48 5346819948.22
Total equity attributable to owners of the Company as the parent 7868221583.13 7687577590.72
Non-controlling interests 394064480.67 404098789.18
Total owners’ equity 8262286063.80 8091676379.90
Total liabilities and owners’ equity 12400765912.80 12129903960.65
Legal representative: Liu Zibin Chief Accountant: Zhang Hongmei
Financial Manager: Zhang Keming
2. Balance Sheet of the Company as the Parent
Unit: RMB
Item 30 June 2021 31 December 2020
Current assets:
Monetary assets 1116523734.67 729437231.33
Held-for-trading financial assets 19242000.00 163636075.34
Derivative financial assets
Notes receivable 96970966.74 108863689.79
Accounts receivable 277335192.64 326166935.10
Accounts receivable financing 16349613.80 48764088.05
Prepayments 49110806.94 13059806.74
Other receivables 1947833748.48 1500882682.19
Including: Interest receivable
Dividends receivable 47025975.44 75488652.49
Inventories 1104446945.96 1097438610.46
Contract assets
Available-for-sale assets
Current portion of non-current assets 46625009.15 45750018.30
Other current assets 5310118.06 247860882.02
Total current assets 4679748136.44 4281860019.32
Non-current assets:
Investments in debt obligations
Investments in other debt obligations
Long-term receivables 41847020.06 41053183.15
Long-term equity investments 2781480493.77 2555150859.13
Investments in other equity instruments
Other non-current financial assets 144915620.25 144915620.25
Investment property 59059918.70 29734239.22
Fixed assets 2352046544.08 2471686117.72
Construction in progress 47162095.82 48694822.74
Right-of-use assets 46136458.69
Intangible assets 221756813.90 225128308.75
Development costs
Goodwill
Long-term deferred expenses 1039474.40 1406347.76
Deferred income tax assets 59998125.17 65729304.26
Other non-current assets 10226737.66 7936745.28
Total non-current assets 5765669302.50 5591435548.26
Total assets 10445417438.94 9873295567.58
Current liabilities:
Short-term borrowings 549208356.03 332466931.13
Held-for-trading financial liabilities
Derivative financial liabilities
Notes payable
Accounts payable 180260865.99 132231596.74
Advances from customers
Contract liabilities 66521266.93 56841289.66
Payroll payable 160055528.93 202694515.93
Taxes payable 23093701.53 21896035.49
Other payables 17206697.02 79668657.80
Including: Interest payable
Dividends payable 441113.64 441113.64
Liabilities held for sale
Current portion of non-current liabilities 23244146.50 4000000.00
Other current liabilities 57302889.18 166257466.30
Total current liabilities 1076893452.11 996056493.05
Non-current liabilities:
Long-term borrowings 659734579.14 495520342.78
Bonds payable 1370297472.37 1350171526.97
Lease liabilities 30785894.31
Long-term payables
Long-term payroll payable 45772995.06 62137656.00
Provisions
Deferred income 134130153.39 131546549.87
Deferred income tax liabilities 59591817.72 58927115.71
Other non-current liabilities
Total non-current liabilities 2300312911.99 2098303191.33
Total liabilities 3377206364.10 3094359684.38
Owners’ equity:
Share capital 882419922.00 858132322.00
Other equity instruments 71385268.76 71386451.81
Capital reserves 378996430.54 317292522.25
Less: Treasury stock
Other comprehensive income -163748.92 -424313.33
Specific reserve
Surplus reserves 1150908718.15 1150908718.15
Retained earnings 4584664484.31 4381640182.32
Total owners’ equity 7068211074.84 6778935883.20
Total liabilities and owners’ equity 10445417438.94 9873295567.58
3. Consolidated Income Statement
Unit: RMB
Item H1 2021 H1 2020
1. Revenue 2220313650.94 2286744080.79
Including: Operating revenue 2220313650.94 2286744080.79
2. Costs and expenses 2173672124.61 2127801124.48
Including: Cost of sales 1811241743.20 1683752331.27
Taxes and surcharges 28158126.87 35766255.41
Selling expense 48546795.06 81739905.59
Administrative expense 130118046.40 177893599.47
Development cost 131384483.80 123441723.06
Finance costs 24222929.28 25207309.68
Including: Interest expense 28972821.31 38659705.45
Interest income 14562127.13 13506359.51
Add: Other income 19089311.11 36850705.82
Return on investment (“-” for loss) 29181508.22 150730013.89
Including: Share of profit or loss of joint ventures and associates -1789070.68 -3579523.35
Income from the derecognition of financial assets at amortized
cost (“-” for loss)
Exchange gain (“-” for loss)
Net gain on exposure hedges (“-” for loss)
Gain on changes in fair value (“-” for loss) 8034224.66 -144695954.16
Credit impairment loss (“-” for loss) 12613175.75 -1553716.48
Asset impairment loss (“-” for loss) -7035233.41 -24613079.38
Asset disposal income (“-” for loss) 58531388.42 -353863.18
3. Operating profit (“-” for loss) 167055901.08 175307062.82
Add: Non-operating income 1184008.01 2125819.41
Less: Non-operating expense 2589928.93 2383926.90
4. Profit before tax (“-” for loss) 165649980.16 175048955.33
Less: Income tax expense 22209233.14 27067833.69
5. Net profit (“-” for net loss) 143440747.02 147981121.64
5.1 By operating continuity
5.1.1 Net profit from continuing operations (“-” for net loss) 143440747.02 147981121.64
5.1.2 Net profit from discontinued operations (“-” for net loss)
5.2 By ownership
5.2.1 Net profit attributable to owners of the Company as the parent 153497344.66 144119579.22
5.2.1 Net profit attributable to non-controlling interests -10056597.64 3861542.42
6. Other comprehensive income net of tax -14700397.96 21295310.76
Attributable to owners of the Company as the parent -14722687.09 21295310.76
6.1 Items that will not be reclassified to profit or loss
6.1.1 Changes caused by re-measurements on defined benefit
schemes
6.1.2 Other comprehensive income that will not be reclassified to
profit or loss under the equity method
6.1.3 Changes in the fair value of investments in other equity
instruments
6.1.4 Changes in the fair value arising from changes in own credit
risk
6.1.5 Other
6.2 Items that will be reclassified to profit or loss -14722687.09 21295310.76
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
-365.50
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
-14722321.59 21295310.76
currency-denominated financial statements
6.2.7 Other
Attributable to non-controlling interests 22289.13
7. Total comprehensive income 128740349.06 169276432.40
Attributable to owners of the Company as the parent 138774657.57 165414889.98
Attributable to non-controlling interests -10034308.51 3861542.42
8. Earnings per share
8.1 Basic earnings per share 0.17 0.17
8.2 Diluted earnings per share 0.19 0.16
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 Hongmei
Financial Manager: Zhang Keming
4. Income Statement of the Company as the Parent
Unit: RMB
Item H1 2021 H1 2020
1. Operating revenue 1546770256.74 1524486328.98
Less: Cost of sales 1233607256.57 1181364557.21
Taxes and surcharges 18073275.27 23730341.94
Selling expense 35265127.32 46988183.91
Administrative expense 75940716.94 111338619.84
R&D expense 92384664.97 82599289.44
Finance costs 7127260.14 5664248.42
Including: Interest expense 13954488.83 10420836.93
Interest income 11629881.84 3879751.58
Add: Other income 13305144.20 26850419.74
Return on investment (“-” for loss) 111926435.70 297360063.89
Including: Share of profit or loss of joint ventures and associates -1789070.68 -3579523.35
Income from the derecognition of financial assets at amortized cost (“-” for loss)
Net gain on exposure hedges (“-” for loss)
Gain on changes in fair value (“-” for loss) 5605924.66 -143854551.38
Credit impairment loss (“-” for loss) 11175804.15 1110012.04
Asset impairment loss (“-” for loss) -3411935.03 -20100921.17
Asset disposal income (“-” for loss) 58532217.69 -414285.87
2. Operating profit (“-” for loss) 281505546.90 233751825.47
Add: Non-operating income 972603.08 1982724.35
Less: Non-operating expense 2054627.77 1505277.66
3. Profit before tax (“-” for loss) 280423522.21 234229272.16
Less: Income tax expense 33278229.82 12153281.55
4. Net profit (“-” for net loss) 247145292.39 222075990.61
4.1 Net profit from continuing operations (“-” for net loss) 247145292.39 222075990.61
4.2 Net profit from discontinued operations (“-” for net loss)
5. Other comprehensive income net of tax 260564.41
5.1 Items that will not be reclassified to profit or loss
5.1.1 Changes caused by re-measurements on defined benefit schemes
5.1.2 Other comprehensive income that will not be reclassified to profit or loss
under the equity method
5.1.3 Changes in the fair value of investments in other equity instruments
5.1.4 Changes in the fair value arising from changes in own credit risk
5.1.5 Other
5.2 Items that will be reclassified to profit or loss 260564.41
5.2.1 Other comprehensive income that will be reclassified to profit or loss under
the equity method
5.2.2 Changes in the fair value of investments in other debt obligations 260564.41
5.2.3 Other comprehensive income arising from the reclassification of financial
assets
5.2.4 Credit impairment allowance for investments in other debt obligations
5.2.5 Reserve for cash flow hedges
5.2.6 Differences arising from the translation of foreign currency-denominated
financial statements
5.2.7 Other
6. Total comprehensive income 247405856.80 222075990.61
7. Earnings per share
7.1 Basic earnings per share 0.28 0.26
7.2 Diluted earnings per share 0.29 0.26
5. Consolidated Cash Flow Statement
Unit: RMB
Item H1 2021 H1 2020
1. Cash flows from operating activities:
Proceeds from sale of commodities and rendering of services 2188519072.50 2349623633.05
Tax rebates 49776817.94 88289716.37
Cash generated from other operating activities 40450105.81 55602212.50
Subtotal of cash generated from operating activities 2278745996.25 2493515561.92
Payments for commodities and services 1226604647.77 1263252180.21
Cash paid to and for employees 720934623.02 818429524.90
Taxes paid 80233114.94 98517829.70
Cash used in other operating activities 68212585.38 103923761.42
Subtotal of cash used in operating activities 2095984971.11 2284123296.23
Net cash generated from/used in operating activities 182761025.14 209392265.69
2. Cash flows from investing activities:
Proceeds from disinvestment 1123970000.00 50131167.06
Return on investment 47849203.51 146015342.75
Net proceeds from the disposal of fixed assets intangible assets and other
710556.50 2828220.00
long-lived assets
Net proceeds from the disposal of subsidiaries and other business units
Cash generated from other investing activities 37938763.04 46094785.79
Subtotal of cash generated from investing activities 1210468523.05 245069515.60
Payments for the acquisition of fixed assets intangible assets and other long-lived
287358483.38 318762103.03
assets
Payments for investments 620970000.00 52215000.00
Net increase in pledged loans granted
Net payments for the acquisition of subsidiaries and other business units
Cash used in other investing activities 2365093.84 3231380.25
Subtotal of cash used in investing activities 910693577.22 374208483.28
Net cash generated from/used in investing activities 299774945.83 -129138967.68
3. Cash flows from financing activities:
Capital contributions received 80383350.00 50000000.00
Including: Capital contributions by non-controlling interests to subsidiaries 50000000.00
Borrowings raised 843468990.63 2152485725.20
Cash generated from other financing activities 174000000.00
Subtotal of cash generated from financing activities 923852340.63 2376485725.20
Repayment of borrowings 692224712.96 1075621432.55
Interest and dividends paid 66479635.99 81488219.93
Including: Dividends paid by subsidiaries to non-controlling interests 50000000.00
Cash used in other financing activities 9339306.00 160000000.00
Subtotal of cash used in financing activities 768043654.95 1317109652.48
Net cash generated from/used in financing activities 155808685.68 1059376072.72
4. Effect of foreign exchange rates changes on cash and cash equivalents -3229063.94 460253.84
5. Net increase in cash and cash equivalents 635115592.71 1140089624.57
Add: Cash and cash equivalents beginning of the period 1396530407.47 878559018.92
6. Cash and cash equivalents end of the period 2031646000.18 2018648643.49
6. Cash Flow Statement of the Company as the Parent
Unit: RMB
Item H1 2021 H1 2020
1. Cash flows from operating activities:
Proceeds from sale of commodities and rendering of services 1577179188.45 1618771452.43
Tax rebates 3977675.63 36161757.59
Cash generated from other operating activities 30694841.32 32417593.75
Subtotal of cash generated from operating activities 1611851705.40 1687350803.77
Payments for commodities and services 803497278.61 1120352074.73
Cash paid to and for employees 440588791.54 497295354.33
Taxes paid 45320520.61 43095322.48
Cash used in other operating activities 52552741.22 70463669.09
Subtotal of cash used in operating activities 1341959331.98 1731206420.63
Net cash generated from/used in operating activities 269892373.42 -43855616.86
2. Cash flows from investing activities:
Proceeds from disinvestment 549430000.00 50131167.06
Return on investment 132956299.26 296015342.75
Net proceeds from the disposal of fixed assets intangible assets and other
804625.93 9912775.89
long-lived assets
Net proceeds from the disposal of subsidiaries and other business units
Cash generated from other investing activities 495197496.03 411047820.90
Subtotal of cash generated from investing activities 1178388421.22 767107106.60
Payments for the acquisition of fixed assets intangible assets and other long-lived 41200695.39 28778618.38
assets
Payments for investments 392970000.00 208165000.00
Net payments for the acquisition of subsidiaries and other business units
Cash used in other investing activities 928911558.44 535327516.63
Subtotal of cash used in investing activities 1363082253.83 772271135.01
Net cash generated from/used in investing activities -184693832.61 -5164028.41
3. Cash flows from financing activities:
Capital contributions received 80383350.00
Borrowings raised 442042271.59 1538788675.65
Cash generated from other financing activities 58215720.00 58280000.00
Subtotal of cash generated from financing activities 580641341.59 1597068675.65
Repayment of borrowings 86522398.76 298208024.53
Interest and dividends paid 60176992.11 16129305.81
Cash used in other financing activities 133919601.16 135072100.00
Subtotal of cash used in financing activities 280618992.03 449409430.34
Net cash generated from/used in financing activities 300022349.56 1147659245.31
4. Effect of foreign exchange rates changes on cash and cash equivalents -1488714.12 -58014.74
5. Net increase in cash and cash equivalents 383732176.25 1098581585.30
Add: Cash and cash equivalents beginning of the period 728346695.28 259320863.08
6. Cash and cash equivalents end of the period 1112078871.53 1357902448.38
7. Consolidated Statements of Changes in Owners’ Equity
H1 2021
Unit: RMB
H1 2021
Equity attributable to owners of the Company as the parent
Other equity
instruments
Less Sp Ge
Pe
: eci ne
Item
Other Ot Non-controlling Total owners’ Pre rp
Trea fic ral
Share capital ferr etu Capital reserves comprehensive Surplus reserves Retained earnings he Subtotal
interests equity
sury res res
ed al Other income r
stoc er er
sha bo
k ve ve
res nd
s
1. Balances as at the end of the prior
858132322.00 71386451.81 255912488.01 1308922.89 1154017457.79 5346819948.22 7687577590.72 404098789.18 8091676379.90
year
Add: Adjustments for changed
accounting policies
Adjustments for corrections of
previous errors
Adjustments for business
combinations under common control
Other adjustments
2. Balances as at the beginning of the
858132322.00 71386451.81 255912488.01 1308922.89 1154017457.79 5346819948.22 7687577590.72 404098789.18 8091676379.90
year
3. Increase/ decrease in the period
24287600.00 -1183.05 61703908.29 -14722687.09 109376354.26 180643992.41 -10034308.51 170609683.90
(“-” for decrease)
3.1 Total comprehensive income -14722687.09 153497344.66 138774657.57 -10034308.51 128740349.06
3.2 Capital increased and reduced
24287600.00 -1183.05 61703908.29 85990325.24 85990325.24
by owners
3.2.1 Ordinary shares increased by
24287600.00 61703908.29 85991508.29 85991508.29
shareholders
3.2.2 Capital increased by holders of
-1183.05 -1183.05 -1183.05
other equity instruments
3.2.3 Share-based payments
included in owners’ equity
3.2.4 Other
3.3 Profit distribution -44120990.40 -44120990.40 -44120990.40
3.3.1 Appropriation to surplus
reserves
3.3.2 Appropriation to general
reserve
3.3.3 Appropriation to owners
-44120990.40 -44120990.40 -44120990.40
(or shareholders)
3.3.4 Other
3.4 Transfers within owners’
equity
3.4.1 Increase in capital (or share
capital) from capital reserves
3.4.2 Increase in capital (or share
capital) from surplus reserves
3.4.3 Loss offset by surplus
reserves
3.4.4 Changes in defined benefit
pension schemes transferred to
retained earnings
3.4.5 Other comprehensive
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 as at the end of the
882419922.00 71385268.76 317616396.30 -13413764.20 1154017457.79 5456196302.48 7868221583.13 394064480.67 8262286063.80
period
H1 2020
Unit: RMB
H1 2020
Equity attributable to owners of the Company as the parent
Other equity Less Sp Ge
instruments : eci ne
Item
Other Ot Non-controlling Total owners’
Pr Pe Trea fic ral
Share capital Capital reserves comprehensive Surplus reserves Retained earnings he Subtotal interests equity
efe rp sury res res
Other income r
rre etu stoc er er
d al k ve ve
sh bo
are nd
s s
1. Balances as at the end of the prior
858121541.00 258046245.42 91626571.75 1117267351.63 5372073615.12 7697135324.92 602169223.52 8299304548.44
year
Add: Adjustments for changed
accounting policies
Adjustments for corrections of
previous errors
Adjustments for business
combinations under common control
Other adjustments
2. Balances as at the beginning of the
858121541.00 258046245.42 91626571.75 1117267351.63 5372073615.12 7697135324.92 602169223.52 8299304548.44
year
3. Increase/ decrease in the period
71391357.42 21295310.76 58307425.12 150994093.30 3861542.42 154855635.72
(“-” for decrease)
3.1 Total comprehensive income 21295310.76 144119579.22 165414889.98 3861542.42 169276432.40
3.2 Capital increased and reduced
71391357.42 71391357.42 50000000.00 121391357.42
by owners
3.2.1 Ordinary shares increased by
50000000.00 50000000.00
shareholders
3.2.2 Capital increased by holders of
71391357.42 71391357.42 71391357.42
other equity instruments
3.2.3 Share-based payments
included in owners’ equity
3.2.4 Other
3.3 Profit distribution -85812154.10 -85812154.10 -50000000.00 -135812154.10
3.3.1 Appropriation to surplus
reserves
3.3.2 Appropriation to general
reserve
3.3.3 Appropriation to owners
-85812154.10 -85812154.10 -50000000.00 -135812154.10
(or shareholders)
3.3.4 Other
3.4 Transfers within owners’
equity
3.4.1 Increase in capital (or share
capital) from capital reserves
3.4.2 Increase in capital (or share
capital) from surplus reserves
3.4.3 Loss offset by surplus
reserves
3.4.4 Changes in defined benefit
pension schemes transferred to
retained earnings
3.4.5 Other comprehensive
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 as at the end of the
858121541.00 71391357.42 258046245.42 112921882.51 1117267351.63 5430381040.24 7848129418.22 606030765.94 8454160184.16
period
8. Statements of Changes in Owners’ Equity of the Company as the Parent
H1 2021
Unit: RMB
H1 2021
Other equity instruments Less: Other
Item Specific Total owners’
Share capital Preferred Perpetual Capital reserves Treasury comprehensive Surplus reserves Retained earnings Other
Other reserve equity
shares bonds stock income
1. Balances as at the end of the
858132322.00 71386451.81 317292522.25 -424313.33 1150908718.15 4381640182.32 6778935883.20
prior year
Add: Adjustments for changed
accounting policies
Adjustments for corrections of
previous errors
Other adjustments
2. Balances as at the beginning of
858132322.00 71386451.81 317292522.25 -424313.33 1150908718.15 4381640182.32 6778935883.20
the year
3. Increase/ decrease in the period
24287600.00 -1183.05 61703908.29 260564.41 203024301.99 289275191.64
(“-” for decrease)
3.1 Total comprehensive
260564.41 247145292.39 247405856.80
income
3.2 Capital increased and
24287600.00 -1183.05 61703908.29 85990325.24
reduced by owners
3.2.1 Ordinary shares increased
24287600.00 61703908.29 85991508.29
by shareholders
3.2.2 Capital increased by holders
-1183.05 -1183.05
of other equity instruments
3.2.3 Share-based payments
included in owners’ equity
3.2.4 Other
3.3 Profit distribution -44120990.40 -44120990.40
3.3.1 Appropriation to surplus
reserves
3.3.2 Appropriation to owners
-44120990.40 -44120990.40
(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 surplus
reserves
3.4.4 Changes in defined
benefit pension schemes
transferred to retained earnings
3.4.5 Other comprehensive
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 as at the end of the
882419922.00 71385268.76 378996430.54 -163748.92 1150908718.15 4584664484.31 7068211074.84
period
H1 2020
Unit: RMB
H1 2020
Other equity instruments Less: Other
Item Specific Total owners’
Share capital Preferred Perpetua Capital reserves Treasury comprehensive Surplus reserves Retained earnings Other
Other reserve equity
shares l bonds stock income
1. Balances as at the end of the
858121541.00 317206232.47 1114158611.99 4136701381.01 6426187766.47
prior year
Add: Adjustments for changed
accounting policies
Adjustments for corrections of
previous errors
Other adjustments
2. Balances as at the beginning of
858121541.00 317206232.47 1114158611.99 4136701381.01 6426187766.47
the year
3. Increase/ decrease in the period
71391357.42 136263836.51 207655193.93
(“-” for decrease)
3.1 Total comprehensive income 222075990.61 222075990.61
3.2 Capital increased and
71391357.42 71391357.42
reduced by owners
3.2.1 Ordinary shares increased by
shareholders
3.2.2 Capital increased by holders
71391357.42 71391357.42
of other equity instruments
3.2.3 Share-based payments
included in owners’ equity
3.2.4 Other
3.3 Profit distribution -85812154.10 -85812154.10
3.3.1 Appropriation to surplus
reserves
3.3.2 Appropriation to owners -85812154.10 -85812154.10
(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 surplus
reserves
3.4.4 Changes in defined
benefit pension schemes
transferred to retained earnings
3.4.5 Other comprehensive
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 as at the end of the 858121541.00 71391357.42 317206232.47 1114158611.99 4272965217.52 6633842960.40
period
III Company Profile
Lu Thai Textile Co. Ltd. (hereinafter referred to as the “Company”) is a joint venture invested by Zibo Lucheng Textile Investment Co.Ltd (originally named Zibo Lucheng Textile Co. Ltd hereinafter referred to as Lucheng Textile) and Thailand Tailun Textile Co. Ltd.On 3 February 1993 the Company is approved by the former Ministry of Foreign Trade and Economy of the State (1993) in
WJMZEHZ No. 59 to convert into a joint-stock enterprise. Zibo Administration for Industry and Commerce issued the Company
corporate business license with the registration No. of QGLZZZ No. 000066.In July 1997 the Company is approved by the Securities Committee of the Department of the State in the ZWF (1997) No. 47 to issue
80 million shares of domestically listed foreign share( B-shares) at the price of RMB 1.00 per share. Upon approved by Shenzhen Stock
Exchange with No. (1997) 296 Listing Notice the Company is listed on the Shenzhen Stock Exchange on 19 August 1997 with
B-shares stock code of 200726. On 24 November 2000 approved by ZJGSZ [2000] No.199 by CSRC the Company increased
publication of 50 million shares of general share (A-shares) at the book value of RMB 1.00 which are listed on the Shenzhen Stock
Exchange on 25 December 2000 with A-shares stock code of 000726 through approval by Shenzhen Stock Exchange with No. (2000)
162 Listing Notice.As approved by 2000 Annual General Meeting in May 2001 the Company carried out the distribution plan that 10 shares of capital
public reserve are converted to 3 more shares for each 10 shares.As approved by Resolutions of 2001 Annual General Meeting in June 2002 the Company implemented the distribution plan that 10
shares of capital public reserve are converted 3 more shares for each 10 shares again.As approved by 2002 Annual General Meeting in May 2003 the Company implemented the distribution plan that 10 shares of capital
public reserve are 2 more shares for each 10 shares and inner employees’ shared increased to 40.56 million shares. As examined and
approved by ZJGSZ No. [2000] 199 of CSRC the inner employees’ shares will start circulation 3 years later since listing on the
A-share market. On 25 December 2003 the inner employees’ shares reach 3 years since listing on the A-share stock market and they
set out circulation on 26 December 2003.As approved by the Annual General Meeting 2006 held in June 2007 the Company implemented the plan on converting 10 shares to all
its shareholders with capital reserves for every 10 shares. After capitalization the registered capital of the Company was RMB
844.8648 million.The Company in accordance with the official reply on approving Lu Thai Textile Co. Ltd. to issue additional shares (ZJXK [2008] No.890 document) from CSRC issued the Renminbi common shares (A shares) amounting to 150 million shares on 8 December 2008.According to the relevant resolution of the 2nd Special Extraordinary General Meeting of 2011 the relevant resolution of the 15th
Meeting of the 6th Board of Directors the Opinion of China Securities Regulatory Commission on the Restricted Share Incentive Plan
of Lu Thai Textile Co. Ltd. (Shang-Shi-Bu-Han [2011] No. 206) the Company applied for a registered capital increment of RMB
14.09 million which was contributed by restricted share incentive receivers with monetary funds.In accordance with the resolution of Proposal on Repurchasing and Canceling Partial Restricted Shares already Granted for the Original
Incentive Targets not Reaching the Incentive Conditions made at the 23rd Session of the 6th Board of Directors on 13 August 2012 the
Company canceling a total of 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).According to the resolution of the Company's first extraordinary general meeting in 2021 and the resolution of the 24th meeting of
the 9th board of directors the Company issues 24285000 restricted shares to 750 subjects of incentive with contribution made by
subjects of restricted share incentive by means of monetary capital.As of 30 June 2021 13400 shares are added to conversion of shares due to the issue of A-share convertible bond by the Company.As of 30 June 2021 the registered capital of the Company was RMB882.4199 million.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 Manufacturing
Center Garment Manufacturing Center 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 (hereinafter referred to as “the Group”) shall include: the design R&D
production and sales of various textiles and garments including yarns fabrics blouses/shirts suits and coats etc.; the textiles and
clothing testing; the production and sales of Class I medical devices; the production and sales of non-medical masks and protective
clothing; the technical development service and consultation based on the e-commerce platform; the processing and sales of
mechanical and electrical products; the procurement of agricultural products; hotel restaurant catering conference and training
services; the lease of self-owned premises and lands; the non-quota license management; the procurement and sales of non-exclusive
goods.The Company’s financial statements and Notes thereof have been approved by the 26th Meeting of the 9th Board of Directors held on
26 August 2021.There were 19 subsidiaries included into the consolidation scope of the Company in H1 2021 and for the details please refer to Note
VIII. “Changes of Consolidation Scope” and Notes IX. “Equities among Other Entities”.IV Basis for Preparation of Financial Statements
1. Preparation Basis
This financial statement is prepared in accordance with the accounting standards for business enterprises and the application guide
interpretation and other relevant regulations (hereinafter collectively referred to as “Accounting Standards for Business Enterprises”)
issued by the Ministry of Finance. In addition the Group 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 Group's accounting is based on the accrual basis. Except for certain financial instruments this financial statement is measured on
the basis of historical cost. If the asset is impaired the corresponding impairment provision shall be made in accordance with relevant
regulations.2. Going-concern
The financial statements are presented on the basis of continuing operations.V Significant Accounting Policies and Estimates
Specific accounting policies and accounting estimates indicators:
Specific accounting policies and accounting estimates indicators:
The Group determines income recognition policy according to its production and operation characteristics and the specific accounting
policies are shown in Note V (26).1. Statement of Compliance with the Accounting Standards for Business Enterprises
The financial statements prepared by the Company are in compliance with in compliance with the Accounting Standards for Business
Enterprises which factually and completely present the consolidated and the Company’s financial positions as at 30 June 2021
business results and cash flows for the January to December of H1 2021 and other relevant information.2. Fiscal Year
The Company’s fiscal year starts on 1 January and ends on 31 December of every year according to the Gregorian calendar.3. Operating Cycle
The Group 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 Group adopted RMB as the recording currency.5. Accounting Treatment for Business Combinations under the Common Control and Not under the
Common Control
(1) Business combinations under the same control
For business combinations under the same control the assets and liabilities of the merged party acquired by the merger party in the
merger except for adjustments due to different accounting policies shall be measured at the carrying value of the merged party in the
consolidated financial statement of the final controller on the combination date. As for the difference between the carrying value of
the merger consideration and carrying value of the net assets obtained in the merger the capital reserve (capital stock premium) shall
be adjusted and if the capital reserve (capital stock premium) is insufficient to offset the retained earnings shall be adjusted.Realize business combination under the same control in steps by transaction several times
In specific financial statements the share of book value of the net assets of the combined party that shall be enjoyed in the combined
financial statements of the final control party on the combination date as calculated according to the shareholding ratio of the
combination date is regarded as the initial investment cost of the investment; the difference between the initial investment cost and
the sum of book value of investment held before combination plus the book value of the consideration newly paid on the combination
date is used for adjusting the capital reserve (capital stock premium) and if the capital reserve is insufficient to offset the retained
earnings shall be adjusted.In the combined financial statements the assets and liabilities of the combined party acquired by the combining party in the
combination except for adjustments due to different accounting policies shall be measured at the book value of the combined party
in the consolidated financial statement of the final controller on the combination date; the difference between the sum of the book
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.
(3) Treatment of transaction costs in business combinations
Intermediary expenses such as auditing legal services evaluation and consulting and other related management expenses incurred
for the business combination shall be included in the current profit and loss when incurred. The transaction costs of equity securities
or debt securities issued as the merger consideration shall be included in the initial recognition amount of equity securities or debt
securities.6. Preparation of the Consolidated Financial Statements
(1) Consolidation scope
The consolidation scope of the consolidated financial statements is determined on the basis of control. Control means that the
Company has the power over the invested unit enjoys variable returns by participating in the related activities of the invested unit
and has the ability to use the power over the invested unit to influence the amount of its return. Subsidiaries refer to the entities
controlled by the Company (including enterprises divisible parts of invested entities structured entities etc.).
(2) Preparation method of consolidated financial statements
The consolidated financial statements are prepared by the Company based on the financial statements of the Company and its
subsidiaries and other relevant materials. When preparing the consolidated financial statements the accounting policies and
accounting fiscal of the Company and those of subsidiaries shall be consistent and the large transactions and intercourse balance
among companies shall be offset. Subsidiaries and businesses increased due to business combinations under the same control during
the Reporting Period shall be included into the Company’s combination scope since the date when they are jointly controlled by the
final controller and the operating result and cash flow since then shall be respectively included into the consolidated income
statement and consolidated cash flow statement. As for subsidiaries and businesses increase due to business combinations not under
the same control during the Reporting Period the revenue expenses and profit or those subsidiaries and businesses from the purchase
date to the end of the Reporting Period shall be included into the consolidated income statement and the cash flow thereof shall be
included into the consolidated cash flow statement. The share of shareholders’ equity in subsidiaries not belonging to the Company
shall be regarded as the minority interests and separately listed under the item of shareholders’ equity in the consolidated balance
sheet. The share of current portion of net profit or loss in subsidiaries belonging to minority interests shall presented as the item of
minority interests under the item of net profit in the consolidated income statement. The difference between the losses of subsidiaries
born by not-controlling shareholders and the share of the company’s owners’ equity at the period-beginning the not-controlling
shareholders enjoy (the former is larger than the latter) shall be offset the minority interests.
(3) Purchase of minority shareholders' equity of subsidiaries
As for the difference between the cost of a long-term equity investment newly acquired due to the purchase of the minority shares
and the share of net assets of the subsidiary continuously accounted from the purchase date or combination date the Company shall
enjoy based on the new shareholding ratio and the difference between the disposal price of partial equity investments in the
subsidiary under the premise of remaining the control power and the share of net assets of the subsidiary continuously accounted
from the purchase date or combination date the Company shall enjoy and corresponding to the disposal of long-term equity
investments the capital reserve (capital stock premium) in the consolidated balance sheet shall be adjusted and when the capital
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. 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 Group that are short-term highly liquid easily convertible into known amounts of cash and have little risk of change in
value.8. Foreign Currency Businesses and Translation of Foreign Currency Financial Statements
(1) Foreign currency business
The Group's foreign currency business is translated into the amount of the recording currency at 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.
(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 current average exchange rate on the transaction date.All items in the cash flow statement are converted according to the current average exchange rate on the occurrence date of cash flow.The impact of exchange rate changes on cash is taken as a reconciling item and the item "impact of exchange rate changes on cash
and cash equivalents" is separately listed in the cash flow statement to reflect.The difference arising from the conversion of financial statements is reflected in the "other comprehensive income" under the
shareholders' equity in the balance sheet.When disposing of the overseas operation and losing control rights the foreign currency statement conversion difference related to
the overseas operation shown under the shareholders' equity in the balance sheet shall be transferred to current profit and loss of
disposal in whole or in proportion to the disposal of overseas operation.9. Financial Instruments
Financial instruments refer to contracts that form one party’s financial assets and form other parties’ financial liabilities or equity
instruments.
(1) Recognition and derecognition of financial instruments
The Company recognizes a financial asset or liability when it becomes a party of the relevant financial instrument contract.Where a financial asset satisfies any of the following requirements the recognition of it is terminated:
① The contractual rights for collecting the cash flow of the said financial asset are terminated;
② The said financial asset has been transferred and meet the following derecognition conditions for transfer of financial assets.Only when the prevailing obligations of a financial liability are relieved in all or in part may the recognition of the financial liability
be terminated in all or partly. Where the Company (debtor) enters into an agreement with a creditor so as to substitute the existing
financial liabilities by way of any new financial liability and if the contractual stipulations regarding the new financial liability is
substantially different from that regarding the existing financial liability it terminates the recognition of the existing financial
liability and at the same time recognizes the new financial liability.The purchase and sale of financial assets under the normal ways shall be recognized and stopped to be recognized respectively at the
price of transaction date.
(2) Classification and measurement of financial assets
The Group 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 Group 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 Group'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 Group 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 Group's business model for managing this financial asset is aimed at both collecting the contractual cash flow and selling this
financial asset;
The contractual terms of this financial asset stipulate that the cash flow generated on the specific date is only the payment of principal
and interest based on the principal amount outstanding.Such financial assets are subsequently measured at fair value after initial recognition. Interest impairment losses or gains and
exchange gains and losses calculated by the effective interest method are included in current profit and loss while other gains or
losses are included in other comprehensive income. When the financial asset is derecognized the accumulated gains or losses
previously included in other comprehensive income are transferred out and included in current profit and loss.Financial assets measured at fair value and whose changes are included in current profit and loss
Except for the above financial assets measured at amortized cost and at fair value with changes included in other comprehensive
income the Group 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 Group 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 Group manages financial assets to generate cash flow. The
business model determines whether the cash flow of the financial assets managed by the Group comes from the collection of
contractual cash flow the sale of financial assets or both. The Group 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 Group 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 Group 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 Group 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 Group is expected to be entitled to receive is taken as the initial recognition amount.
(3) Classification and measurement of financial liabilities
The Group's financial liabilities are classified upon initial recognition as: financial liabilities measured at fair value and whose
changes are included in current profit and loss and financial liabilities measured at amortized cost. For financial liabilities that are
not classified as measured at fair value and whose changes are included in current profit and loss relevant transaction costs are
included in the initial recognition amount.Financial liabilities measured at fair value and whose changes are included in current profit and loss
Financial liabilities measured at fair value and whose changes are included in current profit and loss include transactional financial
liabilities and financial liabilities designated as measured at fair value upon initial recognition and whose changes are included in
current profit and loss. Subsequent measurement shall be carried out according to fair value for such financial liabilities. Gains or
losses resulting from changes in fair value and dividends and interest expenses related to such financial liabilities shall be included in
current profit and loss.Financial liabilities measured at amortized cost
Other financial liabilities are subsequently measured at amortized cost by using the effective interest method. Gains or losses
resulting from derecognition or amortization are included in current profit and loss.Distinction between financial liabilities and equity instruments
Financial liabilities refer to liabilities that meet one of the following conditions:
① The contractual obligation to deliver cash or other financial assets to other parties.② The contractual obligation to exchange financial assets or financial liabilities with other parties under potentially unfavorable
conditions.③ Non-derivative contracts that must be or can be settled with the enterprise's own equity instruments in the future and the
enterprise will deliver a variable number of its own equity instruments according to the contract.④ Derivative contracts that must be or can be settled with the enterprise's own equity instruments in the future except derivatives
contracts that exchange a fixed amount of cash or other financial assets with a fixed amount of its own equity instruments.Equity instruments refer to contracts that can prove that an enterprise has the residual equity in its assets after deducting all liabilities.If the Group 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 Group's own equity instruments it is necessary to consider whether the
Group'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 Group's financial liability; if the latter is the case this instrument is the Group's equity instrument.
(4) Derivative financial instruments and embedded derivatives
The Group's derivative financial instruments include forward foreign exchange contracts. Initially the fair value on the date when the
derivative transaction contract is signed shall be used for measurement and the fair value shall be used for subsequent measurement.Derivative financial instruments with positive fair value are recognized as an asset while those with negative fair value are indeed
recognized as a liability. Any gains or losses arising from changes in fair value that do not conform to the provisions of hedge
accounting are directly included in current profit and loss.For hybrid instruments containing embedded derivatives such as the main contract is a financial asset the relevant provisions on
classification of financial assets shall apply to the hybrid instruments as a whole. If the main contract is not a financial asset and the
hybrid instrument is not measured at fair value and its changes are included in current profit and loss for accounting treatment the
embedded derivative instrument has no close relationship with the main contract in terms of economic characteristics and risks and
has the same conditions as the embedded derivative instrument and the separate existing instrument meets the definition of
derivative instrument the embedded derivative instrument shall be separated from the hybrid instrument and treated as a separate
derivative financial instrument. If it is not possible to separately measure embedded derivative instruments at the time of acquisition
or the subsequent balance sheet date the hybrid instruments as a whole are designated as financial assets or financial liabilities
measured at fair value and their changes are included in current profit and loss.
(5) Fair value of financial instruments
See Note V(10) for the method of determining the fair value of financial assets and liabilities.
(6) Impairment of financial assets
The Group conducts impairment accounting treatment for the following items and confirms the loss provision based on the expected
credit losses:
Financial assets measured at amortized cost;
Receivables and creditors' investments measured at fair value and whose changes are included in other comprehensive income;
Contract assets defined in the Accounting Standards for Business Enterprises No. 14-Revenue;
Lease receivables;
Financial guarantee contracts (except those that are measured at fair value and whose changes are included in current profit and loss
the transfer of financial assets does not meet the conditions for derecognition or continue to involve in the transferred financial
assets).Measurement of expected credit loss
Expected credit loss refers to the weighted average of the credit losses of financial instruments weighted by the risk of default. Credit
loss refers to the difference between all contractual cash flows discounted at the original effective interest rate and receivable
according to the contract and all cash flows expected to be collected of the Group 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 Group 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 Group 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 Group 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 Group 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 Group 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 Group needs to consider is the longest contract term that the
enterprise faces credit risk (including the option to renew the contract).The Group 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.The Group 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 Group will divide
the notes receivable and accounts receivable into portfolio on the basis of the credit risk features and calculate the expected credit
loss based on the portfolio. The basis for determining the portfolio is as follows:
A. Notes receivable
Notes receivable portfolio 1: bank acceptance bills and L/C
Notes receivable portfolio 2: commercial acceptance bills
B. Accounts receivable
Accounts receivable portfolio 1: payment not overdue (with credit insurance)
Accounts receivable portfolio 2: payment not overdue (without credit insurance)
Accounts receivable portfolio 3: payment overdue (with credit insurance)
Accounts receivable portfolio 4: payment overdue (without credit insurance)
C. Contract assets
Contract assets portfolio 1: product sales
Contract assets portfolio 2: engineering construction
For notes receivable and contract assets divided into portfolios with reference to historical credit loss experience combined with
current conditions and predictions of future economic conditions the Group has calculated expected credit losses through default risk
exposure and expected credit loss rate for the entire duration.For accounts receivable divided into portfolios with reference to historical credit loss experience combined with current conditions
and predictions of future economic conditions the Group has prepared a comparison table between the number of 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 Group 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 Group 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.Long-term receivables
The long-term receivables of the Group include finance lease receivables installment accounts receivable from equity transfer and
long-term advance receivables.Based on credit risk characteristics the Group divides long-term receivables into several portfolios calculates expected credit losses
based on the portfolio. The basis for determining the portfolio is as follows:
A. Finance lease receivable portfolio: finance lease receivable
B. Installment accounts receivable from equity transfer: accounts receivable from equity transfer
C. Other long-term receivables: prepaid receivables
For the financial lease receivables the with reference to the historical credit loss experience in combination with the current situation
and the prediction of the future economic situation the Group calculates the expected credit loss with the default risk exposure and the
expected credit loss rate for the entire duration.Others except finance lease receivables are divided into portfolio long-term receivables; the Group calculates expected credit losses
with default risk exposure and 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 Group 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 Group 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 Group considers reasonable and reliable
information (forward-looking information inclusive) that can be obtained without unnecessary extra costs or efforts. The information
the Group 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 Group.Based on the nature of financial instruments the Group 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 Group 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 Group determines that there is a significant increase in the credit risk of financial
instruments.Financial assets with depreciation of credit
The Group 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 Group gives concessions to the debtor;
and the concessions will not be made under any other circumstances;
There lies a great probability of bankruptcy or other financial restructuring for the debtor;
The issuer or debtor is caught in financial difficulties which leads to the disappearance of the active market of the financial asset;
Presentation of expected credit loss provision
The Group 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 Group 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 Group 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 Group 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 Group 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 Group 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 Group 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.10. 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 Group 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 Group 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
Group can enter on the measurement date. The Group 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 Group uses the quotation in active markets to determine its fair value.If there is no active market for financial instruments the Group 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 Group 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 Group 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.11. Inventory
(1) Classification
Inventories mainly include raw materials work-in-progress stock products product 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.12. 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 Group has not acquired contract (for
example sales commission). If the cost is expected to be recovered the Group regards it as contract acquiring cost and confirms it as an
asset. The expenses incurred by the Group 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 Group will regard it as contract performance cost and confirm it as an asset:
①The cost is directly related to a copy of contract currently acquired or expected to be acquired including direct labor direct materials
manufacture expenses (or similar expenses) cost determined to be undertaken by the customer and other cost incurred due to the
contract;
②The cost increases the resources of the Group that will be used for performance of contract obligations in the future;
③The cost is expected to be recovered.The assets confirmed by the contract acquiring cost and the assets confirmed by the contract performance cost (“assets related 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 Group
accrues provision for impairment to the excessive part and confirms it as impairment loss:
①The remaining consideration that the Group expects to acquire from transfer of goods or services related to the asset;
②The cost that will occur for transfer of such related goods or services as estimated.The contract performance cost confirmed as asset if amortization term does not exceed one year or a normal business cycle at the time
of initial confirmation is listed in the item of “inventory”; if amortization term exceeds one year or a normal business cycle at the time
of initial confirmation is listed in the item of “other non-current assets”.The contract acquiring cost that is confirmed as asset if amortization term does not exceed one year or a normal business cycle at the
time of initial confirmation is listed in the item of “other current assets”; if amortization term exceeds one year or a normal business
cycle at the time of initial confirmation is listed in the item of “other non-current assets”.13. Long-term Equity Investments
Long-term equity investments include equity investments in subsidiaries joint ventures and associated enterprises. The investee that
the Group is able to exert significant influence is an associated enterprise of the Group.
(1) Determination of initial investment cost
Long-term equity investment that forms a business combination: Long-term equity investment obtained by business combination
under the same control on the merger date based on the book value share of the merged party’s owners’ equity in the final
controller’s consolidated financial statements as investment cost; The long-term equity investment acquired by a business
combination shall be the investment cost of the long-term equity investment according to the cost of the combination.For long-term equity investments obtained by other means: the long-term equity investment obtained by paying cash shall be the
initial investment cost according to the actual purchase price; the long-term equity investment obtained by issuing equity securities
shall be the initial investment cost of the fair value of the equity securities issued.
(2) Subsequent measurement and profit and loss confirmation method
Investment in subsidiaries is accounted for using the cost method unless the investment meets the conditions for holding for sale;
investment in associates and joint ventures is accounted for using the equity method.For long-term equity investments that are accounted for using the cost method in addition to the cash dividends or profits that have
been declared but not yet included in the actual payment or consideration included in the investment the cash dividends or profits
declared by the invested entity are recognized as investment income and recorded into the current profit and loss.For long-term equity investments accounted for using the equity method where the initial investment cost is greater than the fair
value share of the investee’s identifiable net assets at the time of investment the investment cost of the long-term equity investment
is not adjusted; when the initial investment cost is less than the investment the investee ’s If the fair value share of net assets is
identified the book value of the long-term equity investment is adjusted and the difference is included in the current profit and loss
of the investment.When using the equity method of accounting the investment income and other comprehensive income are recognized separately
according to the share of net profit and loss and other comprehensive income realized by the invested unit that should be enjoyed or
shared and the book value of the long-term equity investment is adjusted at the same time; The distribution of profits or cash
dividends should be calculated to reduce the book value of long-term equity investment; the investee's other changes in owner's
equity other than net profit and loss other comprehensive income and profit distribution adjust the book value of long-term equity
investment and Included in capital reserves (other capital reserves). When confirming the share of the investee’s net profit or loss
based on the fair value of the investee’s identifiable assets at the time of investment and in accordance with the Group’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. The difference between the fair value of the original equity on
the conversion date and the book value as well as the cumulative changes in fair value originally included in other comprehensive
income are transferred to the current profit and loss accounted for using the equity method.If the joint control or significant influence on the invested unit is lost due to the disposal of part of the equity investment etc. the
remaining equity after the disposal shall be changed to the Accounting Standards for Business Enterprises No. 22-Recognition and
Measurement of Financial Instruments is performed and the difference between fair value and book value is included in the current
profit and loss. Other comprehensive income recognized by the original equity investment due to the equity method of accounting
shall be accounted for on the same basis as the investee’s direct disposal of related assets or liabilities when the equity method of
accounting is terminated; changes in other owners ’equity related to the original equity investment Transfer to current profit and loss.If the control of the invested unit is lost due to the disposal of part of the equity investment if the remaining equity after the disposal
can exercise joint control or exert significant influence on the invested unit the equity method is used for accounting and the
remaining equity is treated as When acquiring the equity method is adopted for adjustment; if the remaining equity after disposal
cannot exercise joint control or exert significant influence on the investee the accounting shall be changed according to the relevant
provisions of "Accounting Standards for Business Enterprises No. 22-Recognition and Measurement of Financial Instruments The
difference between the fair value and the book value on the date of loss of control is included in the current profit and loss.If the shareholding ratio of the company decreases due to the capital increase of other investors thereby losing control but being able
to exercise joint control or exert significant influence on the investee the new shareholding ratio shall be used to confirm that the
company should enjoy the capital increase of the investee. The difference between the increase in share and the increase in the share
of net assets and the original book value of the long-term equity investment corresponding to the decrease in the proportion of the
shareholding that should be carried forward are included in the current profit and loss; That is adjustments are made using the equity
method of accounting.The unrealized internal transaction gains and losses that occur between the Group and associates and joint ventures are calculated
according to the shareholding ratio and are attributed to the Group and the investment gains and losses are recognized on the basis of
offset. However the unrealized internal transaction losses incurred by the Group 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 group of participants must act in concert to determine
the relevant activities of an arrangement it is considered that all participants or a group 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
Group 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-21.14. Investment Property
Measurement model of investment real estate
Costing method measurement
Depreciation or amortization method
The investment real estate refers to the real estate gaining the rent or capital appreciation or both. It includes rented land use right
holding land use right to be transferred after the appreciation and rented building etc.The investment real estate is measured initially according to the cost and withdrawn depreciation or amortization as regulations of
fixed assets or intangible assets.The Company adopts the cost mode to conduct the subsequent measurement on the investment real estate see the Note V-21 for the
method of withdrawing asset impairment provision.The difference between the disposal income of investment real estate sales transfer scrap or damage after deducting its book value
and related taxes is included in the current profit and loss.15. Fixed Assets
(1) Conditions for Recognition
The term “fixed assets” refers to the tangible assets that simultaneously possess the features as follows: (a) they are held for the sake
of producing commodities rendering labor service renting or business management; and (b) their useful life is in excess of one fiscal
year. The fixed assets are only recognized when the relevant economic benefits probably flow in the Company and its cost could be
reliable measured. The fixed assets of the Group are initially measured at the actual cost at the time of acquisition. Please refer to
Note V-21 for the test method of impairment of fixed assets and the method of impairment provision.(2) Depreciation Methods
Category of fixed assets Method Useful life Salvage value Annual deprecation
Average method of
Housing and building 5-30 0-10 20.00-3.00
useful life
Average method of
Machinery equipments 10-18 0-10 10.00-5.00
useful life
Average method of
Transportation vehicle 5 0-10 20.00-18.00
useful life
Electronic equipments Average method of
5 0-10 20.00-18.00
and others useful life
(3) Recognition Basis Pricing and Depreciation Method of Fixed Assets by Finance Lease
When the fixed assets leased by the Group meet one or more of the following criteria it is recognized as fixed assets leased by
financing: ① When the lease term expires the ownership of the leased assets is transferred to the Group. ② The Group has the
option to purchase leased assets and the purchase price concluded is expected to be much lower than the fair value of the leased
assets when the option is exercised so it can be reasonably determined that the Group will exercise this option on the lease start date.③Even if the ownership of the asset is not transferred the lease period accounts for most of the service life of the leased asset. ④
The present value of the Group's minimum lease payment on the lease start date is almost equivalent to the fair value of the leased
asset on the lease start date. ⑤ The leased assets are of a special nature and only the Group can use them without major renovation.The fixed assets leased under financial leases shall be the booked value at the lower of the fair value of the leased assets on the lease
start date and the present value of the minimum lease payment. The minimum lease payment is taken as the book value of long-term
payables and the difference is taken as unrecognized financing expenses. The initial direct costs such as handling fees attorney’s
fees travel expenses and stamp taxes that occurred during the lease negotiation and signing of the lease contract are included in the
value of the leased asset. Unrecognized financing expenses are allocated using the effective interest rate method in each period of the
lease period.Financing leased fixed assets adopts the same policy as its own fixed assets to withdraw depreciation of leased assets. If it can be
reasonably determined that the ownership of the leased asset will be acquired at the end of the lease period depreciation will be
accrued within the useful life of the leased asset; if it cannot be reasonably determined that the ownership of the leased asset can be
acquired at the end of the lease period the depreciation shall be accrued in the shorter period between the lease period and the
residual life of the leased asset.
(4) Other Notes
At the end of each year review is carried out by the Group for the service life estimated net residual value and depreciation method of
fixed assets. If there is any difference between the expected service life and the original estimated service life the service life of fixed
assets will be adjusted; if there is any difference between the expected net residual value and the original estimated net residual value
the expected net residual value will be adjusted.Major repair expenses incurred by the Group in the regular inspection of fixed assets are included in the cost of fixed assets if evidences
show that they meet the recognition conditions of fixed assets and those fail to meet the recognition conditions of fixed assets are
included in the current profit and loss. Fixed assets at intervals of regular major repairs shall be depreciated as accrued.16. Construction in Progress
Construction in process is measured at actual cost. Actual cost comprises construction costs borrowing costs that are eligible for
capitalization before the fixed assets being ready for their intended us and other relevant costs.Construction in process is transferred to fixed assets when the assets are ready for their intended use.See the details of the impairment provision withdrawal method of the construction in progress to Notes V-21.17. Engineering Materials
Engineering materials of the Group 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 (21) for the method of provision for impairment of assets for engineering materials.In the balance sheet the ending balance of engineering materials is listed in the "project under construction" item.18. Borrowing Costs
(1) Confirmation principle of Capitalized Borrowing Expense
The borrowing expenses incurred by the Group if can directly belong to acquisition construction or production of assets meeting
capitalization conditions are capitalized and included in relevant asset cost; other borrowing expenses are confirmed as expense
according to its amount at the time of occurrence and included in the current profits and losses. If the borrowing expenses meet the
following conditions capitalization starts:
①Assets expenditure has occurred and asset expenditure includes the expenditure occurring in the form of payment in cash
transferring noncash asset or assuming interest bearing debt for acquiring constructing or producing the assets meeting capitalization
conditions;
② Borrowing expenses have occurred;
③The acquisition construction or production activities required for making assets usable or saleable as intended have started.
(2) Capitalization period of borrowing expenses
When the Group acquires constructs or produces assets which meet capitalization conditions and reach the intended usable or saleable
status the borrowing expenses stop capitalization. The borrowing expenses that occur after the assets meeting capitalization conditions
reach the intended usable or saleable status are confirmed as expenses according to its amount at the time of occurrence and are
included in the current profits and losses.If the assets meeting capital conditions generate improper interruption in the course of acquisition construction or production and the
interruption time continuously exceeds three months capitalization of borrowing expenses suspends; the borrowing expenses in the
normal interruption period are continually capitalized.
(3) Capitalization rate of borrowing expenses and calculation method of capitalized amount
The interest expenses of special borrowing actually occurring in the current period minus the interest income of the unused borrowed
capital obtained from depositing in bank or the gain on temporary investment are capitalized; for common borrowing the weighted
average of asset expenditure of the part that the cumulative asset expenditure exceeds special borrowing is multiplied by the
capitalization rate of the occupied common borrowing to determine capitalization amount. Capitalization rate is calculated and
determined according to the weighted average rate of common borrowing.In the period of capitalization the exchange difference of special borrowing in foreign currency is fully capitalized; the exchange
difference of special borrowing in foreign currency is included in the current profits and losses.19. Right-of-use Assets
The term "right-of-use assets" refers to the right of the lessee to use the leased assets during the lease term. At the start date of the
lease term. The Company initially measures the right-of-use assets at cost. The cost includes: a) the initial measurement amount of
lease obligations; b) the lease payment amount paid on or prior to the inception of the lease (less the related amount of lease
incentives already enjoyed if any); c) the initial direct cost incurred by the lessee; and d) the anticipated cost of dismantling and
removing the leasehold property restoring the site where the leasehold property is located or bringing the leasehold property back to
the state agreed upon in the lease terms.The Company makes provision for depreciation of right-of-use assets with the composite life method. Where it can be reasonably
certain that the Company will obtain ownership of the leased assets at the expiry of the lease term the leased assets are depreciated
over the expected residual service life; where it cannot be reasonably certain that the Company can obtain ownership of the leased
assets at the end of the lease term the leased assets are depreciated at the shorter of the lease term and the residual service life of the
leased assets.The Company will determine the impairment of right-of-use assets and conduct accounting treatment in accordance with relevant
provisions of the Accounting Standards for Business Enterprises No.8 - Asset Impairment.20. Intangible Assets
(1) Pricing Method Useful Life and Impairment Test
The intangible assets of the Group 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 Group reviews the service life and amortization method of intangible assets with limited service life. If
the estimate is different from the previous one the original estimate shall be adjusted and treated as per accounting estimate change.If it is estimated that an intangible asset can no longer bring future economic benefits to the enterprise on the date of balance sheet
this carrying amount of the intangible asset shall be transferred into the current profit and loss.The method of withdrawing impairment on intangible assets was stated in the Note V-21.
(2) Accounting Policy for Internal Research and Development Expenditures
The expenditures for internal research and development projects of an enterprise shall be classified into research expenditures and
development expenditures.The research expenditures shall be recorded into the profit or loss for the current period.The development expenditures can be capitalized only when they satisfy the following conditions simultaneously: ① It is feasible
technically to finish intangible assets for use or sale; ② It is intended to finish and use or sell the intangible assets; ③ The
usefulness of methods for intangible assets to generate economic benefits shall be proved including being able to prove that there is a
potential market for the products manufactured by applying the intangible assets or there is a potential market for the intangible
assets itself or the intangible assets will be used internally; ④ It is able to finish the development of the intangible assets and able
to use or sell the intangible assets with the support of sufficient technologies financial resources and other resources; ⑤ The
development expenditures of the intangible assets can be reliably measured. The development expenditures shall be recorded into
profit or loss for the current period when they don’t satisfy the following conditions.The research and development project of the Group 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.21. Impairment of Long-term Assets
For long term equity investment in subsidiaries associated enterprises and joint ventures investment real estate which follow-up
measurement is carried out by cost pattern fixed assets project under construction intangible assets business reputation etc.(excluding inventory deferred income tax assets financial assets) the impairment of assets shall be determined according to the
following methods:
On the date of the balance sheet determination shall be made to see whether there is any sign of possible impairment of assets. If there
is the Group 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 Group 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
Group.In the impairment test if there is any sign of impairment in the asset group or combination of asset groups related to business reputation
first impairment test shall be carried out on the asset group or combination of asset groups not containing business reputation to
calculate the recoverable amount and recognize the corresponding impairment loss. Then impairment test shall be carried out on the
asset group or combination of asset group containing business reputation to compare the carrying amount with the recoverable amount.If the recoverable amount is lower than the carrying amount the impairment loss of business reputation shall be recognized.Once the impairment loss of assets is recognized it will not be reversed in the future accounting period.22. Long-term Deferred Expenses
The long-term expenses to be amortized incurred by the Group are valued at the actual cost and amortized averagely according to the
expected benefit period. For long-term expenses to be amortized the amortized value that cannot benefit the future accounting period
shall be included in the current profit and loss.23. Contract liabilities
Refer to Note V. Significant Accounting Policies and Estimates 26. Revenue (1) for details.24. Payroll
(1) Accounting Treatment of Short-term Compensation
During the accounting period in which employees provide services the Group recognizes the actual employee wages bonuses social
insurance premiums such as medical insurance premiums industrial injury insurance premiums and maternity insurance premiums
and housing provident funds paid to employees according to the prescribed standards and proportions as liabilities and included them
in the current profit and loss or related asset costs. If the liability is not expected to be fully paid within twelve months after the end
of the annual reporting period for employees to provide related services and the financial impact is significant the liability will be
measured at the discounted amount.
(2) Accounting Treatment of the Welfare after Departure
The post-employment benefit plan includes a defined contribution plan and a defined benefit plan. Among them the defined
contribution plan refers to the post-employment benefit plan that the enterprise no longer assumes further payment obligations after
the fixed fund has paid a fixed fee; the defined benefit plan refers to the post-employment benefit plan other than the established
contribution plan.Set withdrawal plan
The set contribution plan includes basic pension insurance and unemployment insurance.During the accounting period in which employees provide services the amount of deposit payable calculated according to the set
withdrawal plan is recognized as a liability and included in the current profit and loss or related asset costs.Define a benefit plan
For the defined benefit plan an independent actuary performs an actuarial valuation on the annual balance sheet date and the cost of
providing benefits is determined by the expected cumulative benefit unit method. The employee compensation cost caused by the
Group's defined benefit plan includes the following components:
①Service cost including current service cost past service cost and settlement gains or losses. Among them the current service cost
refers to the increase in the present value of the defined benefit plan obligations caused by the employees providing services in the
current period; the past service cost refers to the defined benefit related to the employee services in the previous period caused by the
modification of the defined benefit plan An increase or decrease in the present value of plan obligations.② The net interest of the net liabilities or net assets of the defined benefit plan including the interest income of the plan assets the
interest expense of the defined benefit plan obligations and the interest affected by the asset ceiling.③ Re-measure the changes caused by the net liabilities or net assets of the defined benefit plan.Unless other accounting standards require or allow employee benefit costs to be included in the cost of assets the Group will include
the above items ① and ② into the current profit and loss; item ③ is included in other comprehensive income and will not be
transferred back to profit or loss in the subsequent accounting period When the defined benefit plan is terminated all the parts
originally included in other comprehensive income are carried forward to undistributed profits within the scope of equity.
(3) Accounting Treatment of the Demission Welfare
The Company relieves the labor relation with the employees before the due date of the labor contacts or puts forward the advice of
providing the compensation for urging the employees volunteered to receive the downsizing and when the Company could not
unilaterally withdraw the demission welfare owning to the relieving plan of the labor relation or the downsizing advice should
confirm the liabilities of the employees’ salary from the demission welfare on the earlier day between the cost confirmed by the
Company and the cost related to the reorganization of the payment of the demission welfare and includes which in the current gains
and losses.Regarding the implementation of internal retirement plan of the employees the economic compensation before the official retirement
date belongs to the dismissal welfare. From the date when the employees stop providing services to the normal retirement date the
wages and social insurance premiums to be paid to the early retired employees shall be included in the current profit and loss at one
time. Financial compensation (such as normal pension) after the official retirement date shall be handled as welfare after separation.
(4) Accounting Treatment of the Welfare of Other Long-term Staffs
Other long-term employee benefits provided by the Group to employees that meet the conditions of defined contribution plans shall
be handled in accordance with the above-mentioned relevant provisions on defined contribution plans. Those in line with the defined
benefit plan shall be handled in accordance with the above-mentioned relevant provisions on the defined benefit plan. However the
part of "changes caused by remeasuring the net liabilities or net assets of the defined benefit plan" in the salary cost of relevant
employees shall be included in the current profit and loss or the relevant asset cost.25. Lease Liabilities
The Company initially measures the lease obligation at the present value of the lease payments outstanding at the commencement
date of the lease term. Lease payments include: a) fixed payment (including substantial fixed payment) and the relevant amount after
deducting the lease incentive if any; b) variable lease payments depending on index or ratio; c) estimated payments due to the
guaranteed residual value provided by the lessee; d) exercise price of the purchased option provided that the lessee reasonably
determines that the option will be exercised; and e) the amount to be paid for the exercise of the lease termination options provided
that the lease term reflects that the lessee will exercise the options to terminate the lease.The Company uses the interest rate implicit in lease as the rate of discount. If the interest rate implicit in lease cannot be reasonably
determined the Company's incremental borrowing rate is used as the rate of discount. The Company calculates the interest expenses
of the lease obligations during each period of the lease term at a fixed periodic interest rate and includes them in financial expenses.The periodic interest rate refers to the rate of discount employed by the Company or the rate of discount after revision.Variable lease payments that are not covered in the measurement of the lease obligations are included in current profit or loss when
actually incurred.When there is a change in the Company's evaluation results of lease renewal options lease termination options or purchase options
the Company will re-measure the lease payment and remeasure the lease obligation using the present value of the changed lease
payment and the revised rate of discount and adjust the book value of right-of-use assets accordingly. Where there is a change in
substantial lease payment estimated payments due to the guaranteed residual value or variable lease payments depending on index
or ratio the Company will re-measure the lease obligation using the present value of the changed lease payment and the original rate
of discount and adjust the book value of right-of-use assets accordingly.26. Revenue
Accounting policies adopted for the recognition and measurement of 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 Group 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 Group belongs to performance of contract performing obligations in a period or
otherwise the Group belongs to performance of contract performing obligations at a point of time:
①While the Group is performing the contract the customer acquires and consumes the economic benefit arising from performance
by the Group.②The customer can control the goods in construction in the course of performance by the Group.③The goods outputted in the course of performance by the Group have irreplaceable purpose and the Group 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 Group confirms income according to the performance progress in such
period. When the performance progress cannot be reasonably determined if the cost that the Group 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 Group will consider the following indications:
①The Group enjoys the current collection right to the goods or services i.e. the customer undertakes current payment obligation to
the goods.②The Group has transferred the legal ownership of the goods to the customer that is the customer has owned the legal ownership of
the goods.③The Group has transferred the kind of the goods to the customer namely the customer has possessed the good in kind.④The Group has transferred the major risks and remuneration on the ownership of the goods i.e. the customer has acquired the
major risks and remuneration on the ownership of the goods.④The customer has accepted the goods or services.⑤Other indications showing that the customer has acquired the control right to the goods.The Group 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 9(6)).The right of the Group unconditionally (only depending on time elapse) charging consideration from the customer is listed as
receivable. The obligation of the Group 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 Group are following:
For income of domestic products after the Group 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 Group confirms income.For income of exportable products after the Group 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 Group confirms income.Differences in accounting policies for revenue recognition due to different business models of the same type of business
Differences in accounting policies for revenue recognition due to different business models of the same type of business
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 Group 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 Group.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
Group 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 Group recognizes the deferred income tax by balance sheet liability method.For all taxable temporary differences related deferred income tax liabilities are recognized unless the taxable temporary differences
are generated in the following transactions:
(1) The initial recognition of business reputation or the initial recognition of assets or liabilities arising from transactions with the
following characteristics: The transaction is not a business merger and does not affect the accounting profit or taxable income when it
occurs;
(2) Regarding the taxable temporary difference related to the investment of subsidiaries joint ventures and associated enterprises the
time of reversal of the temporary difference can be controlled and the temporary difference is unlikely to be reversed in the foreseeable
future.For deductible temporary differences deductible losses and tax credits that can be carried forward in subsequent years the Group 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 Group 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
From the effectiveness date of a contract the Company assesses whether the contract is a lease or includes any lease. If a party to the
contract transfers 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 a lease or includes a lease.1. Accounting treatment with the Company as a lessee
On the commencement date of the lease term the Company recognizes the right-of-use assets and lease liabilities for the lease unless
it is a simplified short-term lease or a low-value asset lease.
(1) Short-term leases and low-value asset leases
A short-term lease refers to a lease that does not include a purchase option and whose lease term does not exceed 12 months. A
low-value asset lease refers to a lease where the value is low and a single leased asset is a new asset.The Company does not recognize the right-of-use assets and lease liabilities for the short-term leases and low-value asset leases. In
each period within the lease term the relevant lease payments are included in cost of the related assets or profit or loss for the current
period on a straight-line basis or according to other systematic and reasonable methods.
(2) The accounting policies of right-of-use assets and lease liabilities refer to the accounting treatment methods detailed in V.19
Right-of-use assets and V.25 Lease liabilities in Section X.2. Accounting treatment with the Company as a lessor
(1) Lease classification
The Company classifies leases into finance leases and operating leases at the inception of leases. A finance lease refers to a lease
where almost all the risks and rewards related to the ownership of the leased asset are substantially transferred regardless of
whether the ownership is eventually transferred or not. All leases other than finance leases are classified as operating leases.
(2) Accounting treatment of finance leases
On the commencement date of the lease term the Company recognizes the finance lease receivables for the finance lease and
derecognizes the leased asset of the finance lease. In the initial measurement of finance lease receivables the sum of the unsecured
residual value and the present value of the lease payments receivable not yet received on the commencement date of the lease term
discounted at the interest rate implicit in lease is the entry value of the finance lease receivables. The Company calculates and
recognizes the interest income in each period within the lease term at a fixed interest rate implicit in the lease. The received variable
lease payments that are not included in the measurement of the net investment in the lease are included in profit or loss for the current
period when they are actually incurred.
(3) Accounting treatment of operating leases
The Company recognizes the lease payments receivable of the operating lease as rental earning in each period within the lease term
on a straight-line basis or according to other systematic and reasonable methods. The initial direct costs related to the operating lease
are 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.30. 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.31. Other Significant Accounting Policies and Estimations
Pursuant to historical experience and other factors and reasonable expectations for future events the Group continuously evaluates
the important accounting estimates and key assumptions adopted. The important accounting estimates and key assumptions that are
likely to cause major adjustment risk to the carrying amount of assets and liabilities in the next fiscal year are listed as follows:
Classification of financial assets
During the recognition of the classification of financial assets by the Group the major judgments involved include the analysis of
business model and contract cash flow characteristics etc.The Group determines the business model for managing financial assets at the level of financial asset portfolio and factors
considered include methods of evaluation and reporting financial asset performance to key management personnel risks affecting
financial asset performance and their management methods and the way in which relevant business management personnel are paid.When assessing whether the contractual cash flow of financial assets is consistent with the basic lending arrangements the Group has
the following main judgments: Whether the principal may change in the time distribution or amount during the duration due to
prepayment and other reasons; whether the interest include only the time value of money credit risk other basic lending risks and
considerations of costs and profits. For example whether the amount of prepayment only reflect the unpaid principal and interest
based on the unpaid principal as well as reasonable compensation due to early termination of the contract.Measurement of expected credit loss of accounts receivable
The Group calculates the expected credit loss of accounts receivable through the default risk exposure and the expected credit loss
rate of accounts receivable and determines the expected credit loss rate based on the default probability and loss given default. When
determining the expected credit loss rate the Group adjusts the historical data by using internal historical credit loss experience and
other data and combining the current situation and forward-looking information. The indicators used by the Group include risks of
economic downturn changes in external market environment technological environment and customer conditions etc. when
considering forward-looking information. The Group regularly monitors and reviews assumptions related to the calculation of
expected credit losses.Impairment of goodwill
The Group assesses whether goodwill is impaired at least annually. This requires estimating the value in use of the asset group to
which goodwill has been allocated. When estimating the value in use the Group needs to estimate the future cash flows from the
asset group and select the appropriate discount rate to calculate the present value of future cash flows.Deferred income tax assets
In a limit providing large possibility of offset losses from sufficient taxable profits the Group shall recognize deferred income tax
assets in line with all unused tax losses which requires management staffs of the Group to estimate the time when future taxable
profits occurs and the amount thereof by applying plenty of judgments and combining tax planning strategies so as to determine the
amount of the recognizable deferred income tax assets.Recognition of fair value of unlisted equity investment
Fair value of unlisted equity investment is the expected future cash flow as discounted according to the current discount rate of the
project with similar articles and risk characteristics. This appraisement requires the Group to estimate the expected future cash flow
and discount rate so it has uncertainty. Under limited circumstances if the information used to determine the fair value is insufficient
or the possible estimated amount of fair value is widely distributed and the cost represents the best estimate of fair value within the
range the cost may represent the appropriate estimate of fair value within the distribution range.32. Changes in Main Accounting Policies and Estimates
(1) Significant Changes in Accounting Policies
√ Applicable □ Not applicable
Contents of changes in accounting policies and reasons thereof Approval procedures Note
On 7 December 2018 the Ministry of Finance revised and issued No.21 The Company held the 21st Refer to Note V. 25 for
the Accounting Standards for Business Enterprises - Leasing Meeting of the 9th Board of details about new
(hereinafter referred to as the New Leasing Standards). Main changes Directors on 29 March 2021 and accounting policies.are: 1. Under the New Lease Standards except for short-term leases decided to implement the said
and low-value asset leases the lessees will no longer distinguish standards since 1 January 2021
finance leases from operating leases. All leases are subject to the same and adjusted related contents of
accounting treatment and the right-of-use assets and lease liabilities accounting policies.must be both recognized; 2. For the right-of-use assets if the lessee
reasonably recognizes that it can obtain the ownership of the leased
assets at the expiration of the lease term the depreciation shall be
accrued within the remaining service life of the leased assets. If it is
impossible to reasonably recognize that the right-of-use of the leased
asset can be obtained at the expiration of the lease term the
depreciation shall be accrued within the lease term or the remaining
service life whichever is shorter. At the same time the lessee shall
recognize whether the right-of-use assets are impaired and account for
the identified impairment losses; 3. For lease liabilities the lessee shall
calculate the interest expense of the lease liabilities in each period of
the lease term and count it into the current profit and loss; 4. In
accordance with the requirements of the New Leasing Standards and
Listing Rules the relevant contents of the leasing business should be
adjusted in the disclosed financial statements. According to the New
Leasing Standards and from 1 January 2021 except for short-term
leases and low-value asset leases whose treatment is chosen to be
simplified the Company will recognize the right-of-use assets and lease
liabilities for all leased assets with the present value of the minimum
lease payment based on the future rent payable and recognize the
depreciation and unrecognized financing expenses respectively. The
information of comparable periods will not be adjusted.Affected items of the balance sheet Unit: RMB
Item 31 December 1 January 2021 Adjusted2020
Right-of-use assets 123826579.05 123826579.05
Long-term prepaid expense 118340494.60 1406347.76 -116934146.84
Current portion of non-current liabilities 43149400.13 43599400.13 450000.00
Lease liabilities 6442432.21 6442432.21
(2) Significant Changes in Accounting Estimates
□ Applicable √ Not applicable
(3) Adjustments to the Financial Statements at the Beginning of the First Execution Year of any New
Standards Governing Leases since 2021
Applicable
Whether need to adjust items of balance sheet at the beginning of the year
√ Yes □ No
Consolidated balance sheet
Unit: RMB
Item 31 December 2020 1 January 2021 Adjusted
Current assets:
Monetary assets 1400478034.81 1400478034.81
Held-for-trading financial assets 268456216.98 268456216.98
Derivative financial assets
Notes receivable 182994110.86 182994110.86
Accounts receivable 522425219.87 522425219.87
Accounts receivable financing 55150926.34 55150926.34
Prepayments 19611775.28 19611775.28
Other receivables 105710818.69 105710818.69
Including: Interest receivable
Dividends receivable 75488652.49 75488652.49
Financial assets purchased under
resale agreements
Inventories 1988968681.64 1988968681.64
Contract assets
Assets held for sale
Current portion of non-current assets 45750018.30 45750018.30
Other current assets 433432258.63 433432258.63
Total current assets 5022978061.40 5022978061.40
Non-current assets:
Investments in other debt obligations
Long-term receivables 41053183.15 41053183.15
Long-term equity investments 138079577.25 138079577.25
Investments in other equity
instruments
Other non-current financial assets 156915620.25 156915620.25
Investment property 22263668.85 22263668.85
Fixed assets 5661592991.66 5661592991.66
Construction in progress 356273197.49 356273197.49
Right-of-use assets 123826579.05 123826579.05
Intangible assets 373543480.84 373543480.84
Development costs
Goodwill 20563803.29 20563803.29
Long-term prepaid expense 118340494.60 1406347.76 -116934146.84
Deferred income tax assets 122865841.69 122865841.69
Other non-current assets 95434040.18 95434040.18
Total non-current assets 7106925899.25 7113818331.46 6892432.21
Total assets 12129903960.65 12136796392.86 6892432.21
Current liabilities:
Short-term borrowings 930871008.19 930871008.19
Derivative financial liabilities
Notes payable
Accounts payable 243262473.69 243262473.69
Advances from customers
Contract liabilities 141339705.62 141339705.62
Employee benefits payable 265648198.38 265648198.38
Taxes payable 36468978.77 36468978.77
Other payables 17587470.79 17587470.79
Including: Interest payable
Dividends payable 441113.64 441113.64
Liabilities directly associated with
assets held for sale
Current portion of non-current
43149400.13 43599400.13 450000.00
liabilities
Other current liabilities 192574674.68 192574674.68
Total current liabilities 1870901910.25 1871351910.25 450000.00
Non-current liabilities:
Insurance contract reserve
Long-term borrowings 495520342.78 495520342.78
Bonds payable 1350171526.97 1350171526.97
Lease liabilities 6442432.21 6442432.21
Long-term payables
Long-term employee benefits payable 62137656.00 62137656.00
Provisions
Deferred income 173862983.31 173862983.31
Deferred income tax liabilities 85633161.44 85633161.44
Other non-current liabilities
Total non-current liabilities 2167325670.50 2173768102.71 6442432.21
Total liabilities 4038227580.75 4045120012.96 6892432.21
Owners’ equity:
Share capital 858132322.00 858132322.00
Other equity instruments 71386451.81 71386451.81
Capital reserves 255912488.01 255912488.01
Less: Treasury stock
Other comprehensive income 1308922.89 1308922.89
Specific reserve
Surplus reserves 1154017457.79 1154017457.79
General reserve
Retained earnings 5346819948.22 5346819948.22
Total equity attributable to owners of the
7687577590.72 7687577590.72
Company as the parent
Non-controlling interests 404098789.18 404098789.18
Total owners’ equity 8091676379.90 8091676379.90
Total liabilities and owners’ equity 12129903960.65 12136796392.86 6892432.21
Note for adjustment
Balance Sheet of the Company as the Parent
Unit: RMB
Item 31 December 2020 1 January 2021 Adjusted
Current assets:
Monetary assets 729437231.33 729437231.33
Held-for-trading financial assets 163636075.34 163636075.34
Derivative financial assets
Notes receivable 108863689.79 108863689.79
Accounts receivable 326166935.10 326166935.10
Accounts receivable financing 48764088.05 48764088.05
Prepayments 13059806.74 13059806.74
Other receivables 1500882682.19 1500882682.19
Including: Interest receivable
Dividends receivable 75488652.49 75488652.49
Inventories 1097438610.46 1097438610.46
Contract assets
Assets held for sale
Current portion of non-current assets 45750018.30 45750018.30
Other current assets 247860882.02 247860882.02
Total current assets 4281860019.32 4281860019.32
Non-current assets:
Investments in debt obligations
Investments in other debt obligations
Long-term receivables 41053183.15 41053183.15
Long-term equity investments 2555150859.13 2555150859.13
Investments in other equity
instruments
Other non-current financial assets 144915620.25 144915620.25
Investment property 29734239.22 29734239.22
Fixed assets 2471686117.72 2471686117.72
Construction in progress 48694822.74 48694822.74
Right-of-use assets 7709598.61 7709598.61
Intangible assets 225128308.75 225128308.75
Development costs
Goodwill
Long-term prepaid expense 1406347.76 1406347.76
Deferred income tax assets 65729304.26 65729304.26
Other non-current assets 7936745.28 7936745.28
Total non-current assets 5591435548.26 5599145146.87 7709598.61
Total assets 9873295567.58 9881005166.19 7709598.61
Current liabilities:
Short-term borrowings 332466931.13 332466931.13
Held-for-trading financial liabilities
Derivative financial liabilities
Notes payable
Accounts payable 132231596.74 132231596.74
Advances from customers
Contract liabilities 56841289.66 56841289.66
Employee benefits payable 202694515.93 202694515.93
Taxes payable 21896035.49 21896035.49
Other payables 79668657.80 79668657.80
Including: Interest payable
Dividends payable 441113.64 441113.64
Liabilities directly associated with
assets held for sale
Current portion of non-current
4000000.00 5139062.02 1139062.02
liabilities
Other current liabilities 166257466.30 166257466.30
Total current liabilities 996056493.05 997195555.07 1139062.02
Non-current liabilities:
Long-term borrowings 495520342.78 495520342.78
Bonds payable 1350171526.97 1350171526.97
Lease liabilities 6570536.59 6570536.59
Long-term payables
Long-term employee benefits payable 62137656.00 62137656.00
Provisions
Deferred income 131546549.87 131546549.87
Deferred income tax liabilities 58927115.71 58927115.71
Other non-current liabilities
Total non-current liabilities 2098303191.33 2104873727.92 6570536.59
Total liabilities 3094359684.38 3102069282.99 7709598.61
Owners’ equity:
Share capital 858132322.00 858132322.00
Other equity instruments 71386451.81 71386451.81
Capital reserves 317292522.25 317292522.25
Less: Treasury stock
Other comprehensive income -424313.33 -424313.33
Specific reserve
Surplus reserves 1150908718.15 1150908718.15
Retained earnings 4381640182.32 4381640182.32
Total owners’ equity 6778935883.20 6778935883.20
Total liabilities and owners’ equity 9873295567.58 9881005166.19 7709598.61
Note for adjustment
(4) Retroactive Adjustments to Comparative Data of Prior Years when First Execution of any New
Standards Governing Leases since 2021
□Applicable √ Not applicable
VI Taxation
1. Main Taxes and Tax Rate
Category of taxes Tax basis Tax rate
VAT Taxable income 13%、9%、6%、5%、3%、0Urban maintenance and Turnover tax payable 7%、5%construction tax
Enterprise income tax Income tax payable 0、6.5%、8.5%、15%、16.5%、17%、20%、25%Notes of the disclosure situation of the taxpaying bodies with different enterprises income tax rate
Taxpayer Income tax rate
The Company 15%
Lufeng Weaving & Dyeing 15%
Lu Thai Hong Kong 16.50%
Luqun Textile 25%
Xinsheng Power 25%
Shanghai Lu Thai 20%
Shanghai Zhinuo 20%
Lulian New Materials 25%
Lujia Import & Export 20%
Zhishu Trading 20%
Lu Thai Cambodia 20%
Vanguard Apparel 0%
Continental Textile 0%
Lu Thai Tan Chau 0%
Lu An Garments 8.5%
Lu Thai America 6.5%
Lu Thai Vocational Training School 0%
Huilin International 15%
Tianping International 17%
Banyang Hills 20%
2. Tax Preference
In accordance with the Reply on Filing of the Second Batch of Hi-tech Enterprises of Shandong Province in 2020 with Reference No.Guo Ke Huo Zi [2021]25 the Company was identified as a hi-tech enterprise and the certificate issuing date was December 8 2020; in
accordance with the Notice for Announcing the First Batch of Hi-tech Enterprise Identification List of Shandong Province in 2020 with
reference No. Lu Ke Zi [2020]136 the majority-owned subsidiary Lufeng Weaving & Dyeing was identified as a hi-tech enterprise
and the certificate issuing date was August 17 2020. Pursuant to Article 28 of the Law of the PRC on Enterprise Income Tax and the No.23 Announcement revised and published by the State Administration of Taxation in 2018 namely Management of Preferential Policy
on Corporate Income Tax the Measures for the Administration of the Recognition of High and New Technological Enterprises (GKFH
[2016] No. 195) revised and published by the Ministry of Science and Technology Ministry of Finance and State Administration of
Taxation the Company and the holding subsidiary Lufeng Weaving & Dyeing enjoy a corporate income tax rate of 15%.Lu Thai (Hong Kong) Textile Co. Ltd. (hereinafter refers as Lu Thai (Hong Kong) Textile) the wholly-owned subsidiary company of
the Company was incorporated in Hong Kong SAR whose profit tax shall be paid at tax rate of 16.5%.The wholly-owned subsidiaries including Shanghai Luthai Shanghai Zhinuo Textile New Materials Co. Ltd. Lu Jia Import &
Export Co. Ltd. Beijing Zhishu Trading Co. Ltd. and Banyang Mountain Villa pay corporate income tax at a tax rate of 20%
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).Based on the provisions of the Tax Law of Kingdom of Cambodia on income tax the business income tax rate of the wholly-owned
subsidiary Lu Thai (Cambodia) Textile Co. Ltd. is 20%.The wholly own subsidiary Vanguard Apparel according to the Burma’s Special Economic Zone Law issued by Pyidaungsu Hluttaw
Vanguard Apparel enjoys tax preference on corporate income tax of 7 (7 years tax holiday) + 5 (5 years tax revenues drop by half) +
5 (re-invest the profits within 1 year and continues to enjoy the half tax revenues 5 years afterwards). After grace period enterprise
income tax rate was of 25%. Year 2021 is the sixth year of tax holiday.The wholly-owned subsidiary Continental Textile shall enjoy the preference of enterprise income tax at 3 years’ starting term + 4
years’ duty-free term + 9 years’ half-tax term according to the investment license issued by Vietnamese Tay Ninh Industrial Zone
Management Committee and it will enter into 2 years’ duty-free term if it is profitable within 3 years’ starting term. Continental
Textile shall enjoy 10% of the preference tax rate within 15 years since the tax year to get the first production and operation income
and the enterprise income tax rate shall be 20% after the preference term ends. Year 2021 is the fourth year of the duty-free term.The wholly-owned subsidiary of Continental Textile Lu Thai Tan Chau shall enjoy the preference of enterprise income tax at 3
years’ starting term + 4 years’ duty-free term + 9 years’ half-tax term according to the investment license issued by Vietnamese Tay
Ninh Investment Planning Office and it will enter into 2 years’ duty-free term if it is profitable within 3 years’ starting term. The
Company shall enjoy 10% of the preference tax rate within 15 years since the tax year to get the first production and operation
income and the enterprise income tax rate shall be 20% after the preference term ends.The wholly-owned subsidiary Lu An Garments Co. Ltd. shall enjoy the preference of enterprise income tax at 3 years’ starting term
+ 2 years’ duty-free term + 4 years’ half-tax term according to the investment license issued by Vietnamese Anjiang Province
Economic Zone Management Committee and it will enter into duty-free term if the profitability is realized at any year within 3 years’
starting term. The Company shall enjoy 17% of the preference tax rate within 10 years since the tax year to get the first production
and operation income and the enterprise income tax rate shall be 20% after the preference term ends. Year 2021 is the first year of
the halving collection period.Lu Thai America the wholly-owned subsidiary of the Company registered in New York America was imposed the federal
enterprise income tax at fixed tax rate of 21% and imposed the New York Enterprise income tax at the fixed tax rate of 6.5%.The wholly-owned subsidiary Lu Thai Vocational Training School Co. Ltd. enjoys the preferential policy for non-profit organization
income exemption from corporate income tax according to Article 26 Item 4 of the Enterprise Income Tax Law of the People's
Republic of China and Article 84 and Article 85 of Regulations for the Implementation of the Enterprise Income Tax Law of the
People's Republic of China and CS (2018) No. 13.The Wholly-owned subsidiary Huilin International which is registered in Hainan Pilot Free Zone and operates the encouraged
industry pays corporate income tax at a reduced tax rate of 15% according to Announcement of the Ministry of Finance and the
State Taxation Administration on the Corporate Income Tax Preferential Policies of Hainan Pilot Free Zone (Announcement No.31
[2020] of the Ministry of Finance and the State Taxation Administration)
The Wholly-owned subsidiary Tianping International of Huilin International is registered in Singapore and pays the corporate income
tax at a rate of 17%.VII. Notes to Main Items of Consolidated Financial Statements
1. Monetary Assets
Unit: RMB
Item Ending balance Beginning balance
Cash on hand 6722270.36 7009891.16
Bank deposits 2029384057.40 1390809492.44
Other monetary funds 3465093.84 2658651.21
Total 2039571421.60 1400478034.81
Of which: total amount deposited
128893283.41 131075580.22
overseas
Other notes:
(1) On 30 June 2021 the monetary assets with restricted ownership of the Company were of RMB3465093.84 which was the cash
deposit for L/G of USD195831.93 (equivalent to RMB1265093.84) for the Company's subsidiary Continental Textile and the
forward settlement of exchange guarantee deposit of RMB2.2 million for the subsidiary Lulian New Materials.
(2) The interest receivable in bank deposits was RMB4460327.58.
2. Trading Financial Assets
Unit: RMB
Item Ending balance Beginning balance
Financial assets at fair value through profit or loss 124052667.02 268456216.98
Of which:
Debt instrument investment 97570367.02 251814716.98
Derivative financial assets 26482300.00 16641500.00
Of which:
Total 124052667.02 268456216.98
3. Notes Receivable
(1) Notes Receivable Listed by Category
Unit: RMB
Item Ending balance Beginning balance
Bank acceptance bill 148033617.59 141168447.70
L/C 74030732.84 41825663.16
Total 222064350.43 182994110.86
Please refer to the relevant information of disclosure of bad debt provision of other accounts receivable if adopting the general mode
of expected credit loss to withdraw bad debt provision of notes receivable.□ Applicable √ Not applicable
(2) Notes Receivable Pledged by the Company at the Period-end
Unit: RMB
Item Ending pledged amount
Bank acceptance bill 26300299.48
Total 26300299.48
(3) Notes Receivable which Had Endorsed by the Company or Had Discounted and Had not Due on the
Balance Sheet Date at the Period-end
Unit: RMB
Amount of recognition termination at the Amount of not terminated recognition at
Item
period-end the period-end
Bank acceptance bill 99033886.64
Total 99033886.64
4. Accounts Receivable
(1) Listed by Category
Unit: RMB
Ending balance Beginning balance
Carrying amount Bad debt provision Carrying amount Bad debt provision
Category Carrying
Withdrawal Carrying value Withdrawal
Amount Proportion Amount Amount Proportion Amount value
proportion proportion
Accounts
2992197.22 0.60% 2992197.22 100.00% 8378716.21 1.48% 8378716.21 100.00%
receivable
withdrawal
of Bad debt
provision
separately
accrued
Of which:
Accounts
receivable
withdrawal 522425219
495662642.77 99.40% 28585615.77 5.77% 467077027.00 558478267.74 98.52% 36053047.87 6.46%
of bad debt .87
provision of
by group
Of which:
Undue
accounts165244230
(credit 184474315.78 36.99% 1936980.30 1.05% 182537335.48 166997706.03 29.46% 1753475.92 1.05%.11
insurance
insured)
Undue
accounts (no 256499722
219274795.15 43.97% 10963739.77 5.00% 208311055.38 269999707.80 47.63% 13499985.39 5.00%
credit .41
insurance)
Overdue
accounts
41537722.(credit 45619371.98 9.15% 4881272.80 10.70% 40738099.18 46514806.33 8.21% 4977084.28 10.70%05
insurance
insured)
Overdue
accounts (no 59143545.46294159.86 9.28% 10803622.91 23.34% 35490536.95 74966047.58 13.22% 15822502.28 21.11%
credit 30
insurance)522425219
Total 498654839.99 100.00% 31577812.99 6.33% 467077027.00 566856983.95 100.00% 44431764.08 7.84%.87
Bad debt provision separately accrued:
Unit: RMB
Ending balance
Name Withdrawal
Carrying amount Bad debt provision Reason for withdraw
proportion
Customer's application for
Customer 1 1853150.81 1853150.81 100.00%
bankruptcy protection
Customer's application for
Customer 2 141974.46 141974.46 100.00%
bankruptcy protection
Customer in financial difficulty
Other customers 997071.95 997071.95 100.00%
or application for bankruptcy
Total 2992197.22 2992197.22 -- --
Withdrawal of bad debt provision by group:
Unit: RMB
Ending balance
Name
Carrying amount Bad debt provision Withdrawal proportion
Group 1: Undue accounts (credit insurance
184474315.78 1936980.30 1.05%
insured)
Group 2: Undue accounts (no credit
219274795.15 10963739.77 5.00%
insurance)
Group 3: Overdue accounts (credit
45619371.98 4881272.80 10.70%
insurance insured)
Group 4: Overdue accounts (no credit
46294159.86 10803622.91 23.34%
insurance)
Total 495662642.77 28585615.77 --
Please refer to the relevant information of disclosure of bad debt provision of other accounts receivable if adopting the general mode
of expected credit loss to withdraw bad debt provision of accounts receivable.√ Applicable □ Not applicable
Disclosure by aging
Unit: RMB
Aging Ending balance
Within 1 year (including 1 year) 480702865.14
1 to 2 years 15122802.42
2 to 3 years 2028588.53
Over 3 years 800583.90
3 to 4 years 508337.83
4 to 5 years 292246.07
Total 498654839.99
(2) Bad Debt Provision Withdrawal Reversed or Recovered in the Reporting Period
Withdrawal of bad debt provision:
Unit: RMB
Category Beginning Changes in the Reporting Period Ending balance
balance Reversal or
Withdrawal Verification Others
recovery
Bad debt provision
8378716.21 -5386518.99 2992197.22
separately accrued
Withdrawal of bad
debt provision by 36053047.87 -6027858.17 1439573.93 28585615.77
group
Total 44431764.08 -11414377.16 0.00 1439573.93 0.00 31577812.99
(3) Accounts Receivable Written-off in Current Period
Unit: RMB
Item Written-off amount
Written-off accounts receivable 1439573.93
(4) Top 5 of the Ending Balance of the Accounts Receivable Collected according to Arrears Party
Unit: RMB
Proportion to total ending balance Ending balance of bad debt
Name of the entity Ending balance
of accounts receivable provision
Customer A 49754813.30 9.98% 2625045.16
Customer B 21404979.77 4.29% 629981.92
Customer C 20910062.08 4.19% 489997.30
Customer D 20133981.14 4.04% 750699.18
Customer E 18434346.13 3.70% 921717.31
Total 130638182.42 26.20%
5. Accounts Receivable Financing
Unit: RMB
Item Ending balance Beginning balance
Notes receivable 29915168.65 55508978.63
Less: Other comprehensive income-fair
-332259.77 -358052.29
value change
Total 29582908.88 55150926.34
The changes of accounts receivable financing in the Reporting Period and the changes in fair value
□ Applicable √ Not applicable
Please refer to the relevant information of disclosure of bad debt provision of other accounts receivable if adopting the general mode
of expected credit loss to withdraw bad debt provision of accounts receivable financing.□ Applicable √ Not applicable
6. Prepayment
(1) Prepayment Listed by Aging Analysis
Unit: RMB
Ending balance Beginning balance
Aging
Amount Proportion Amount Proportion
Within 1 year 57925483.91 99.45% 19462310.59 99.24%
1 to 2 years 258245.74 0.44% 113434.12 0.58%
2 to 3 years 60468.18 0.10% 36030.57 0.18%
Over 3 years 0.00%
Total 58244197.83 -- 19611775.28 --
(2) Top 5 Prepayment in Ending Balance Collected according to the Prepayment Target
The total top 5 prepayment in ending balance collected according to the prepayment target for the Company was RMB36618076.25
accounting for 62.87% of total ending balance of prepayment.7. Other Accounts Receivable
Unit: RMB
Item Ending balance Beginning balance
Dividend receivable 47025975.44 75488652.49
Other receivables 32629619.36 30222166.20
Total 79655594.80 105710818.69
(1) Dividend receivable
1) Dividend receivable classification
Unit: RMB
Project (or investee) Ending balance Beginning balance
Fengshou Cotton Industry 47025975.44 75488652.49
Total 47025975.44 75488652.49
2) Withdrawal of Bad Debt Provision
√ Applicable □ Not applicable
Unit: RMB
First stage Second stage Third stage
Expected loss in the
Expected loss in the
Bad debt provision Expected credit loss of duration (credit Total
duration (credit
the next 12 months impairment not
impairment occurred)
occurred)
Balance of 1 January 2021 3973086.97 3973086.97
Balance of 1 January 2021 in the
—— —— —— ——
Current Period
Withdrawal of the Current Period -1498035.63 -1498035.63
Balance of 30 June 2021 2475051.34 2475051.34
Changes of carrying amount with significant amount changed of loss provision in the Current Period
□ Applicable √ Not applicable
(2) Other Accounts Receivable
1) Other Receivables Classified by Account Nature
Unit: RMB
Nature Ending carrying amount Beginning carrying amount
Export rebates 5953237.24
VAT to be returned 9103166.26 9341623.77
Payment on behalf 10713131.84 13868814.75
Guarantee deposit and cash deposit 7964983.22 5163865.78
Borrowings and petty cash 1237930.25 4483805.85
Others 723261.84 218743.34
Total 35695710.65 33076853.49
2) Withdrawal of Bad Debt Provision
Unit: RMB
First stage Second stage Third stage
Expected loss in the Expected loss in the
Bad debt provision Expected credit loss of Total
duration (credit duration (credit
the next 12 months
impairment not occurred) impairment occurred)
Balance of 1 January 2021 1516853.79 1337833.50 2854687.29
Balance of 1 January 2021 in the
—— —— —— ——
Current Period
Withdrawal of the Current Period 121764.14 89639.86 211404.00
Balance of 30 June 2021 1638617.93 1427473.36 3066091.29
Changes of carrying amount with significant amount changed of loss provision in the Current Period
□ Applicable √ Not applicable
Disclosure by aging
Unit: RMB
Aging Ending balance
Within 1 year (including 1 year) 28209647.65
1 to 2 years 2433419.56
2 to 3 years 308266.30
Over 3 years 4744377.14
3 to 4 years 225759.46
Over 5 years 4518617.68
Total 35695710.65
3) Bad Debt Provision Withdrawn Reversed or Recovered in the Reporting Period
Withdrawal of bad debt provision:
Unit: RMB
Changes in the Reporting Period
Beginning Ending
Category Reversal or
balance Withdrawal Verification Others balance
recovery
Expected credit loss of the next 12
1516853.79 121764.14 1638617.93
months at the first stage
Expected loss in the duration (credit
impairment not occurred) at the 1337833.50 89639.86 1427473.36
second stage
Expected loss in the duration (credit
impairment occurred) at the third 0.00
stage
Total 2854687.29 211404.00 0.00 0.00 0.00 3066091.29
4) Top 5 Other Accounts Receivable in Ending Balance Collected according to the Arrears Party
Unit: RMB
Proportion to total Ending
Ending
Name of the entity Nature Aging ending balance of balance of
balance
other receivables bad debt
provision
VAT receivable to be returned of
Input VAT 4670292.99 Within 1 year 13.08% 233514.65
Lu Thai (Cambodia)
Withholding and remitting of
Advance money 4571053.09 Within 1 year 12.81% 228552.65
personal endowment insurance
VAT receivable to be returned of
Input VAT 4432873.27 Within 1 year 12.42% 221643.66
Lu Thai Tan Chau
Migrant workers’ wage
Migrant workers’ wage margin in 1 to 2 years
margin of infrastructural 1955703.00 5.48% 954969.77
Zichuan District of Zibo over 3 years
project
Withholding and remitting of
Advance money 1177266.67 Within 1 year 3.30% 58863.33
personal housing provident fund
Total -- 16807189.02 -- 47.08% 1697544.06
8. Inventory
Whether the Company needs to comply with the disclosure requirements for real estate industry
No
(1) Category of Inventory
Unit: RMB
Ending balance Beginning balance
Depreciation Depreciation
reserves of reserves of
inventories or inventories or
Item impairment impairment
Carrying amount Carrying value Carrying amount Carrying value
provision for provision for
contract contract
performance performance
costs costs
Raw material 764584360.28 2547151.31 762037208.97 849455158.83 2547151.31 846908007.52
Goods in process 455835628.95 3599739.14 452235889.81 393404083.58 5437464.35 387966619.23
Inventory goods 960560597.77 107230734.35 853329863.42 877507714.63 136403191.01 741104523.62
Assigned
processing 11882281.00 11882281.00 12989531.27 12989531.27
products
Goods in transit
Total 2192862868.00 113377624.80 2079485243.20 2133356488.31 144387806.67 1988968681.64
(2) Falling Price Reserves of Inventory and Impairment Provision for Contract Performance Costs
Unit: RMB
Increased amount Decrease
Beginning
Item Reversal or Ending balance
balance Withdrawal Others Others
write-off
Raw material 2547151.31 2547151.31
Goods in process 5437464.35 1837725.21 3599739.14
Inventory goods 136403191.01 7035233.41 36207690.07 107230734.35
Total 144387806.67 7035233.41 0.00 38045415.28 113377624.80
9. Non-current Assets due within 1 Year
Unit: RMB
Item Ending balance Beginning balance
Long-term accounts receivable matured
46625009.15 45750018.30
within 1 Year
Total 46625009.15 45750018.30
10. Other Current Assets
Unit: RMB
Item Ending balance Beginning balance
Other tax 53044329.41 69924309.37
Prepaid income tax 5844322.05 8268591.39
Prepaid other taxes 3161080.82
Short-term investment in debt obligations 351379736.36
Convertible broken lot fund 199801.66 199858.61
Short-term unamortized expenses 124670.52 498682.08
Total 59213123.64 433432258.63
11. Long-term Receivables
(1) List of Long-term Receivables
Unit: RMB
Ending balance Beginning balance Interval
Item of
Carrying Bad debt Carrying value Carrying Bad debt Carrying value
discount
amount provision amount provision rate
Equity transfer
93128451.80 4656422.59 88472029.21 91371791.00 4568589.55 86803201.45 3.85%
account receivable
Less: Long-term
accounts receivable
-49078957.00 -2453947.85 -46625009.15 -48157914.00 -2407895.70 -45750018.30
matured within 1
Year
Total 44049494.80 2202474.74 41847020.06 43213877.00 2160693.85 41053183.15 --
Impairment of bad debt provision
Unit: RMB
First stage Second stage Third stage
Expected loss in the Expected loss in the
Bad debt provision Expected credit loss of Total
duration (credit duration (credit
the next 12 months
impairment not occurred) impairment occurred)
Balance of 1 January 2021 4568589.55 4568589.55
Balance of 1 January 2021 in the
—— —— —— ——
Current Period
Withdrawal of the Current Period 87833.04 87833.04
Balance of 30 June 2021 4656422.59 4656422.59
Changes of carrying amount with significant amount changed of loss provision in the Current Period
□ Applicable √ Not applicable
12. Long-term Equity Investment
Unit: RMB
Increase/decrease
Gains and Ending Ending
Beginning Adjustment Cash bonus or
losses Changes Withdrawal of balance balance of
Investee balance Additional Reduced of other profits
recognized of other impairment Others (carrying depreciati
(carrying value) investment investment comprehensi announced to
under the equity provision value) on reserve
ve income issue
equity method
I. Joint ventures
II. Associated enterprises
Ningbo Mei
shan
Bonded Port
88329922.16 -3493810.90 -7881294.68 76954816.58
Area
Haohong
Equity
Investment
Partnership
(L.P)
(hereinafter
referred to
as“HaohongInvestment”
)
Ningbo
Haoying
Equity
Investment
Partnership
(L.P) 49749655.09 1704740.22 51454395.31
(hereinafter
referred toas “HaoyingInvestment”
)
128409211.8
Subtotal 138079577.25 -1789070.68 -7881294.689
128409211.8
Total 138079577.25 -1789070.68 -7881294.689
13. Other Non-current Financial Assets
Unit: RMB
Item Ending balance Beginning balance
Debt instrument investment
Equity instrument investment 144915620.25 144915620.25
Financial assets assigned measured by fair value and the
12000000.00 12000000.00
changes be included in the current gains and losses
Others
Total 156915620.25 156915620.25
14. Investment Property
(1) Investment Property Adopted the Cost Measurement Mode
√ Applicable □ Not applicable
Unit: RMB
Construction in
Item Houses and buildings Land use right Total
progress
I. Original carrying value
1. Beginning balance 33577852.12 33577852.12
2. Increased amount of the period
(1) Outsourcing
(2)Transfer from inventory/fixed
assets/construction in progress
(3) Business 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 11314183.27 11314183.27
2. Increased amount of the period 450683.41 450683.41
(1) Withdrawal or amortization 450683.41 450683.41
(2) Fixed asset carried down
3. Decreased amount of the period
(1) Disposal
(2) Other transfer
4. Ending balance 11764866.68 11764866.68
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
1. Ending carrying value 21812985.44 21812985.44
2. Beginning carrying value 22263668.85 22263668.85
(2) Investment Property Adopted the Fair Value Measurement Mode
□ Applicable √ Not applicable
15. Fixed Assets
Unit: RMB
Item Ending balance Beginning balance
Fixed assets 5643953088.23 5623635171.21
Liquidation of PP&E 37957820.45
Total 5643953088.23 5661592991.66
(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 balance 3323791573.68 6830302709.90 53794437.30 129442986.01 10337331706.89
2. Increased amount of the
66081159.49 187303985.59 1189933.60 1950216.91 256525295.59
period
(1) Purchase 0.00 160310856.01 1189933.60 1950216.91 163451006.52
(2) Transfer from
66081159.49 26993129.58 93074289.07
construction in progress
(3) Business combination
0.00
increase
3. Decreased amount of the
19706138.23 45301134.11 3617936.53 300556.19 68925765.05
period
(1) Disposal or scrap 0.00 28099110.57 3524589.05 209363.99 31833063.61
(2) Transfer from
11406001.81 11406001.81
construction in progress
(3) Transfer from
investment properties
(4) Other decrease 8300136.42 17202023.54 93347.48 91192.20 25686699.63
4. Ending balance 3370166594.94 6972305561.38 51366434.37 131092646.73 10524931237.43
II. Accumulative depreciation
1. Beginning balance 995997040.59 3533778199.66 36975373.50 97668147.56 4664418761.31
2. Increased amount of the
54655598.94 154272433.72 2321511.20 6572927.13 217822470.98
period
(1) Withdrawal 54655598.94 154272433.72 2321511.20 6572927.13 217822470.98
3. Decreased amount of the
10175582.39 33114440.52 2922681.83 274179.76 46486884.50
period
(1) Disposal or scrap 0.00 22472010.07 2693461.74 236411.45 25401883.26
(2) Transfer from
9101573.57 9101573.57
construction in progress
(3) Transfer from investment
properties
(4) Other decrease 1074008.82 10642430.45 229220.09 37768.32 11983427.67
4. Ending balance 1040477057.14 3654936192.85 36374202.87 103966894.93 4835754347.79
III. Depreciation reserves
1. Beginning balance 1574730.45 47619177.12 5671.30 78195.50 49277774.37
2. Increased amount of the
period
(1) Withdrawal
3. Decreased amount of the
4045259.29 8713.67 4053972.96
period
(1) Disposal or scrap 4045259.29 8713.67 4053972.96
4. Ending balance 1574730.45 43573917.83 5671.30 69481.83 45223801.41
IV. Carrying value
1. Ending carrying value 2328114807.35 3273795450.70 14986560.20 27056269.98 5643953088.23
2. Beginning carrying value 2326219802.64 3248905333.12 16813392.50 31696642.95 5623635171.21
(2) Fixed Assets Leased out by Operation Lease
Unit: RMB
Item Ending carrying value
Houses and buildings 3846450.11
(3) Fixed Assets Failed to Accomplish Certification of Property
Unit: RMB
Item Carrying value Reason
Lufeng weaving dye gray yarn Under the relevant certificate procedures of acceptance measurement
11081816.28
warehouse examination by the real estate trading center and other departments
Lulian New Materials
47492809.01 The project is under relevant the procedures of acceptance
Winding and Dyeing Plant
Lulian New Materials Sizing
12099824.78 The project is under relevant the procedures of acceptance
Plant
Lulian New Materials Dyeing
45866874.19 The project is under relevant the procedures of acceptance
Plant
Lulian New Materials
22557227.04 The project is under relevant the procedures of acceptance
Powerhouse
(4) Liquidation of PP&E
Unit: RMB
Item Ending balance Beginning balance
Houses and buildings of Zhangdian
0.00 37957820.45
Industrial Park
Total 37957820.45
16. Construction in Progress
Unit: RMB
Item Ending balance Beginning balance
Construction in progress 202862768.01 201339271.24
Engineering materials 90388283.84 154933926.25
Total 293251051.85 356273197.49
(1) Construction in Progress
Unit: RMB
Ending balance Beginning balance
Item Carrying Depreciation Carrying Depreciation
Carrying value Carrying value
amount reserve amount reserve
Reform project of Xinsheng
26446596.90 26446596.90 15024257.20 15024257.20
Thermal Power
Expansion project of Xinsheng
525648.44 525648.44 24901015.93 24901015.93
Thermal Power (Phase II)
Dormitory project of Lu Thai
22880424.95 22880424.95 19083725.35 19083725.35
(Vietnam)
Spinning project of Lu Thai Tan
7502855.24 7502855.24 5296923.55 5296923.55
Chau
Functional Fabric Intelligent
85584978.56 85584978.56 95803812.78 95803812.78
Ecological Park Project Phase I
Other retails projects 59922263.92 59922263.92 41229536.43 41229536.43
Total 202862768.01 0.00 202862768.01 201339271.24 0.00 201339271.24
(2) Changes in Significant Construction in Progress during the Reporting Period
Unit: RMB
Of which:
Capitalizat
Proportion of amount of
Accumulated ion rate of
Transferred Other accumulated capitalized
Beginning Increased Ending Job amount of interests Capital
Item Budget in fixed decreased investment in interests
balance amount balance schedule interest for the resources
assets amount constructions for the
capitalization Reporting
to budget Reporting
Period
Period
Reform
project of
42170000 15024257 11423363. 26446596
Xinsheng 1023.50 63.00% 63.00% Others.00 .20 20 .90
Thermal
Power
Expansion
project of
Xinsheng 11069000 24901015 1656055. 26031422
525648.44 115.00% 99.00% Others
Thermal 0.00 .93 03 .52
Power
(Phase II)
Dormitory
project of 21626200 19083725 4021012. 22880424
224312.93 105.80% 95.00% Others
Lu Thai .00 .35 53 .95
(Vietnam)
Spinning
project of 15347000 5296923. 2264200. 7502855.58268.47 93.98% 93.98% Others
Lu Thai 0.00 55 16 24
Tan Chau
Functional
Fabric
Raised
Intelligent
21721100 95803812 56205173 66424008 85584978 25327491.9 1029929 through
Ecological 112.84% 90.00% 3.68%
0.00 .78 .88 .10 .56 0 2.35 equity
Park
offering
Project
Phase I
Other
41229536 19324550 59922263
retails 617834.95 13987.65 Others.43 .09 .92
projects
54516720 20133927 94894354 93074289 20286276 25327491.9 1029929
Total 296569.05 -- -- --
0.00 1.24 .89 .07 8.01 0 2.35
(3) Engineering Materials
Unit: RMB
Ending balance Beginning balance
Item Depreciation Carrying Depreciation
Carrying amount Carrying value Carrying value
reserve amount reserve
Special materials
Special equipment 90388283.84 90388283.84 154933926.25 154933926.25
Total 90388283.84 90388283.84 154933926.25 154933926.25
17. Right-of-use Assets
Unit: RMB
Item Houses and buildings Land use right Total
1. Beginning balance 6892432.21 135556075.48 142448507.69
2. Increased amount of the
49016057.44 49016057.44
period
4. Ending balance 55908489.65 135556075.48 191464565.13
1. Beginning balance 18621928.64 18621928.64
2. Increased amount of the
8543697.88 2556831.18 11100529.06
period
(1) Withdrawal 8543697.88 2556831.18 11100529.06
4. Ending balance 8543697.88 21178759.82 29722457.70
1. Ending carrying value 47364791.77 114377315.66 161742107.43
2. Beginning carrying value 6892432.21 116934146.84 123826579.05
18. Intangible Assets
(1) List of Intangible Assets
Unit: RMB
Non-patent Software use Brand use
Item Land use right Patent right Total
technologies rights rights
I. Original carrying value
1. Beginning balance 470338494.00 3627343.66 473965837.66
2. Increased amount of the period 409550.00 70796.46 480346.46
(1) Purchase 409550.00 70796.46 480346.46
(2) Internal R&D
(3) Business combination
increase
3. Decreased amount of the period 1268358.23 1268358.23
(1) Disposal
(2) Invalid and recognition
1268358.23 1268358.23
terminated portion
4. Ending balance 470338494.00 409550.00 2429781.89 473177825.89
II. Accumulated amortization
1. Beginning balance 98250066.12 2172290.70 100422356.82
2. Increased amount of the period 5049404.16 10238.76 564666.92 5624309.84
(1) Withdrawal 5049404.16 10238.76 564666.92 5624309.84
3. Decreased amount of the period 1268358.23 1268358.23
(1) Disposal
(2) Invalid and recognition
1268358.23
terminated portion
4. Ending balance 103299470.28 10238.76 1468599.39 104778308.43
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 367039023.72 399311.24 961182.50 368399517.46
2. Beginning carrying value 372088427.88 1455052.96 373543480.84
The proportion of intangible assets formed from the internal R&D of the Company at the Period-end to the ending balance of
intangible assets was 0.00%.19. Development Costs
Unit: RMB
Increased amount Decrease
Beginning
Item Internal Recognized as Transferred into the Ending balance
balance Others
development costs intangible assets current profit or loss
R&D of
131384483.80 131384483.80
products
Total 131384483.80 131384483.80
20. Goodwill
(1) Original Carrying Value of Goodwill
Unit: RMB
Name of the Increase Decrease
invested units or Beginning Formed by
Ending balance
events generating balance business Disposal
goodwill combination
Xinsheng Power 20563803.29 20563803.29
Total 20563803.29 20563803.29
21. Long-term Prepaid Expense
Unit: RMB
Amortization Other decreased
Item Beginning balance Increased amount Ending balance
amount of the period amount
Decoration fee 1406347.76 366873.36 1039474.40
Total 1406347.76 366873.36 1039474.40
22. Deferred Income Tax Assets/Deferred Income Tax Liabilities
(1) Deferred Income Tax Assets Had Not Been Off-set
Unit: RMB
Ending balance Beginning balance
Deductible
Item Deferred income tax Deductible temporary Deferred income
temporary
assets difference tax assets
difference
Provision for impairment of assets 185234407.19 30515460.15 232609684.18 37624855.86
Internal unrealized profit 123127144.30 18792107.51 109437547.23 17073399.27
Deductible losses 140626688.41 28643183.03 80123710.98 16776355.64
One-time listed decoration expenses 93446.60 23361.65 93446.60 23361.65
Payroll payable 118015305.73 17802836.17 118015305.73 17802836.18
Deferred income 176361848.15 27601608.50 173862983.31 27188106.81
Contract liabilities 20153015.55 5038253.88 16596721.35 4149180.34
Changes in fair value of other non-current
14493587.33 2174038.10 14493587.33 2174038.10
financial assets
The changes of accounts receivable
332259.77 49838.97 358052.29 53707.84
financing in fair value
Total 778437703.03 130640687.96 745591039.00 122865841.69
(2) Deferred Income Tax Liabilities Had Not Been Off-set
Unit: RMB
Ending balance Beginning balance
Item Taxable temporary Deferred income tax Taxable temporary Deferred income
difference liabilities difference tax liabilities
Depreciation of fixed assets 413309189.57 66575988.87 417366245.56 67382126.00
Internal unrealized profit 0.00 0.00
Changes in fair value of trading financial
25479700.00 3821955.00 18456216.98 2768432.55
assets
Changes in fair value of other non-current
102042774.64 15306416.20 102042774.64 15306416.20
financial assets
Interest payable of investment in debt
0.00 0.00 1174577.93 176186.69
obligations
Total 540831664.21 85704360.07 539039815.11 85633161.44
(3) Deferred Income Tax Assets or Liabilities Had Been Off-set Listed in Net Amount
Unit: RMB
Ending off-set amount of Ending balance of Beginning off-set amount Beginning balance of
Item deferred income tax deferred income tax of deferred income tax deferred income tax
assets and liabilities assets and liabilities assets and liabilities assets and liabilities
Deferred income tax
130640687.96 122865841.69
assets
Deferred income tax
85704360.07 85633161.44
liabilities
(4) List of Unrecognized Deferred Income Tax Assets
Unit: RMB
Item Ending balance Beginning balance
Deductible temporary difference 15142397.23 16884024.75
Deductible losses 1141584.49 586187.49
Total 16283981.72 17470212.24
(5) Deductible Losses of Unrecognized Deferred Income Tax Assets will Due in the Following Years
Unit: RMB
Years Ending amount Beginning amount Remarks
2024 1344.62 1344.62
2025 584842.87 584842.87
2026 555397.00
Total 1141584.49 586187.49 --
23. Other Non-current Assets
Unit: RMB
Ending balance Beginning balance
Item Carrying Depreciation Depreciation
Carrying value Carrying amount Carrying value
amount reserve reserve
Prepayment for land transfer
214636813.33 214636813.33 86515839.05 86515839.05
fee
Prepayment for equipment 11982987.66 11982987.66 6195947.23 6195947.23
Land occupancy right to be
2722253.90 2722253.90
recaptured by government
Total 226619800.99 226619800.99 95434040.18 95434040.18
24. Short-term Borrowings
(1) Category of Short-term Borrowings
Unit: RMB
Item Ending balance Beginning balance
Pledged loan 26300299.48 11763977.73
Guarantee loan 365786529.41 550258596.41
Credit loan 599481179.51 368848434.05
Total 991568008.40 930871008.19
Notes of the category for short-term loans:
(1) The ending pledged loan was the short-term debt formed by the discounted and undue bill receivable under derecognition at the
period-end. Ending guarantee loan was the guarantee provided for the bank loan of the subsidiary Lu An Garments Continental
Textile and Lu Thai Tan Chau by the Company. Refer to Note XIII-2 for details.
(2) The short-term borrowings include interest payable of RMB684557.35.
25. Accounts Payable
(1) List of Accounts Payable
Unit: RMB
Item Ending balance Beginning balance
Payment for goods 130187266.79 137003680.16
Engineering equipment 86974225.85 80349348.21
Others 19716430.42 25909445.32
Total 236877923.06 243262473.69
26. Contract Liabilities
Unit: RMB
Item Ending balance Beginning balance
Advance from sales 155640862.94 152333217.97
Less: contract liability recorded in other
-8879157.38 -10993512.35
current liabilities
Total 146761705.56 141339705.62
27. Payroll Payable
(1) List of Payroll Payable
Unit: RMB
Item Beginning balance Increase Decrease Ending balance
I. Short-term salary 265648198.38 629293111.93 674156079.00 220785231.31
II. Post-employment
benefit-defined contribution 70180846.15 70069317.98 111528.17
plans
III. Termination Benefits 1605779.70 1605779.70 0.00
Total 265648198.38 701079737.78 745831176.68 220896759.48
(2) List of Short-term Salary
Unit: RMB
Item Beginning balance Increase Decrease Ending balance
1. Salary bonus allowance
202510898.31 552467184.66 601220509.36 153757573.61
subsidy
2. Employee welfare 0.00 24585541.59 24585541.59 0.00
3. Social insurance 24203.32 34238381.89 34242079.95 20505.26
Of which: Medical
17079.14 30884737.04 30883997.75 17818.43
insurance premiums
Work-related injury
6854.60 3349949.14 3354429.37 2374.37
insurance
Maternity insurance 269.58 3695.71 3652.83 312.46
4. Housing fund 0.00 7354686.30 7354686.30 0.00
5. Labor union budget and
63113096.75 10647317.49 6753261.80 67007152.44
employee education budget
Total 265648198.38 629293111.93 674156079.00 220785231.31
(3) List of Defined Contribution Plans
Unit: RMB
Item Beginning balance Increase Decrease Ending balance
1. Basic pension benefits 66914679.12 66808587.72 106091.40
2. Unemployment
3266167.03 3260730.26 5436.77
insurance
Total 70180846.15 70069317.98 111528.17
Other notes:
The Company in line with the requirement participates in the endowment insurance unemployment insurance plans and so on.Under these plans the Company makes monthly contributions to these plans at 16% and 0.7% of the social security contribution
base respectively. No further payment obligations will be incurred by the Company beyond the above monthly contribution fees.Except the monthly payment the Company no longer shoulder the further payment obligation the relevant expense occurred was
recorded into current profits and losses or related assets costs.28. Taxes Payable
Unit: RMB
Item Ending balance Beginning balance
VAT 1362271.48 12077311.75
Corporate income tax 21928042.67 11531626.63
Personal income tax 439454.95 422663.35
Urban maintenance and construction tax 1147267.34 3390064.57
Stamp duty 245290.70 441946.14
Property tax 4986586.13 4868121.51
Land use tax 2558614.55 900240.84
Education Surcharge 334750.91 1338871.23
Local education surcharge 502126.36 876371.30
Local water conservancy facility
218962.12
construction fund
Resources tax 153036.00 70554.00
Environmental protection tax 217621.50 332245.33
Total 33875062.59 36468978.77
29. Other Payables
Unit: RMB
Item Ending balance Beginning balance
Dividends payable 441113.64 441113.64
Other payables 20572232.32 17146357.15
Total 21013345.96 17587470.79
(1) Dividends Payable
Unit: RMB
Item Ending balance Beginning balance
Dividends payable to individual
441113.64 441113.64
shareholders
Total 441113.64 441113.64
Other notes: including significant dividends payable unpaid for over one year the unpaid reason shall be disclosed:
Cash dividend of previous year not received by individual shareholders
(2) Other Payables
1) Other Payables Listed by Nature of Account
Unit: RMB
Item Ending balance Beginning balance
Deposits and cash deposits etc. 4620531.70 5571490.73
Collecting payment on behalf of others 419786.08 1266624.26
Intercourse funds 73371.05
Others 15531914.54 10234871.11
Total 20572232.32 17146357.15
30. Current Portion of Non-current Liabilities
Unit: RMB
Item Ending balance Beginning balance
Current portion of long-term borrowings 20420200.26 43149400.13
Lease obligation matured within 1 Year 15356083.30 450000.00
Total 35776283.56 43599400.13
31. Other Current Liabilities
Unit: RMB
Item Ending balance Beginning balance
Tax to be charged off 8879157.38 10993512.35
Demolition compensation received 95751465.00
Endorsed undue bill under
72733587.16 85829697.33
non-derecognition
Total 81612744.54 192574674.68
32. Long-term Borrowings
(1) Category of Long-term Borrowings
Unit: RMB
Item Ending balance Beginning balance
Guarantee loan 12920200.26 39149400.13
Credit loan 667234579.14 499520342.78
Less: current portion of long-term
-20420200.26 -43149400.13
borrowings
Total 659734579.14 495520342.78
Note to the category of long-term borrowings:
(1) The guarantee loan was the guarantee provided for the bank loan of the subsidiary Lu Thai Tan Chau by the Company. Refer to
Note XIII-2 for details.
(2) The long-term borrowings term borrowings include interest payable of RMB604579.14.
Other notes including interest rate range
Item Ending balance Interest rate Beginning balance Interest rate
range (%) range (%)
Guarantee loan 12920200.26 2.10-2.20 39149400.13 2.89-3.10
Credit loan 667234579.14 3.06-3.65 499520342.78 3.06-3.50
33. Bonds Payable
(1) Bonds Payable
Unit: RMB
Item Ending balance Beginning balance
Convertible corporate bonds 1370297472.37 1350171526.97
Total 1370297472.37 1350171526.97
(2) Changes of Bonds Payable (Excluding Other Financial Instruments Divided as Financial Liabilities such
as Preferred Shares and Perpetual Bonds)
Unit: RMB
Amortizat
Issued in ion of Repaid in
Interest Current
Bond Issue Beginnin the premium the Ending
Name Par value Issue date accrued at shares
duration amount g balance Reporting and Reporting balance
par value converted
Period depreciati Period
on
LuThai
Convertib 1400000 9 April 1400000 1350171 3037640 2131116 4199661 1370297
6 23200.00
le Bond 000.00 2020 000.00 526.97 .29 6.41 .30 472.37127016
Total -- -- --
(3) Convertible Conditions and Time for Convertible Corporate Bonds
According to the Approval of the Public Issue of Convertible Corporate Bonds of Lu Thai Textile Co. Ltd. (ZJXK [2020] No.299) of the China Securities Regulatory Commission the Company issued 14 million convertible bonds with a face value of
RMB100 each for a total issue amount of RMB1.4 billion with a maturity of 6 years i.e. from 9 April 2020 to 8 April 2026.The coupon rates of the convertible bonds issued by the Company are 0.3% 0.6% 1% 1.5% 1.8% and 2% in the following
order from the first stage to the sixth stage with interest payable annually. The conversion period shall commence from (and include)
the first trading day on 15 October 2020 six months after the date of issue and shall end on (and include) the trading day prior to the
maturity date of the convertible bonds (8 April 2026). Holders may apply for conversion during the conversion period.The initial conversion price of the convertible corporate bonds was RMB9.01 per share at the time of issuance and the initial
conversion price was adjusted accordingly to RMB8.91 per share from 9 July 2020 after the implementation of the Company's
proposal to distribute a cash dividend of RMB85812154.10 per share (RMB1 per 10 shares in cash) for 2019 on 8 July 2020.On 3 June 2021 the Company completed the registration of first-granted restricted stocks of restricted share incentive scheme at
the Shenzhen Branch of China Securities Depository and Clearing Corporation Limited (China Clear). 7 June 2021 is designated as the
listing date of first-granted restricted stocks of the Company in 2021. The Company grants 750 subjects of incentive 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).34. Lease Obligation
Unit: RMB
Item Ending balance Beginning balance
Lease liabilities 32226761.06 6442432.21
Total 32226761.06 6442432.21
35. Long-term Payroll Payable
(1) List of Long-term Payroll Payable
Unit: RMB
Item Ending balance Beginning balance
III. Other long-term welfare 45772995.06 62137656.00
Total 45772995.06 62137656.00
36. Deferred Income
Unit: RMB
Reason for
Item Beginning balance Increase Decrease Ending balance
formation
Government Government
173862983.31 6736300.00 4237435.16 176361848.15
subsidies subsidies
Unrealized financing
incomes
Total 173862983.31 6736300.00 4237435.16 176361848.15 --
Item involving government grants:
Refer to Note VII-63 Government Grants for the government grants included in the deferred income
37. Share Capital
Unit: RMB
Increase/decrease (+/-)
Beginning
New shares Bonus issue Ending balance
balance Bonus shares Others Subtotal
issued from profit
The sum of
858132322.00 24285000.00 2600.00 24287600.00 882419922.00
shares
Other notes:
During the period the Company issued 24285000.00 restricted shares from equity incentive and 2600.00 shares converted from
convertible bonds.38. Other Equity Instruments
(1) Basic Information about Other Outstanding Financial Instruments such as Preferred Shares and
Perpetual Bonds at the Period-end
On 9 April 2020 the Company publicly issued 14 million A-share convertible corporate bonds (short name: Luthai Convertible
Bonds bond code: 127016) on Shenzhen Stock Exchange with an issue price of RMB100 per share. The bonds were listed on Shenzhen
Stock Exchange on 13 May 2020.
(2) Changes of Outstanding Financial Instruments such as Preferred Shares and Perpetual Bonds at the
Period-end
Unit: RMB
Outstanding Period-beginning Increase Decrease Period-end
financial Carrying
Number Carrying value Number Carrying value Number Number Carrying value
instruments value
Convertible
bonds to 71386451.81 1183.05 71385268.76
equity
Total 71386451.81 1183.05 71385268.76
Changes of other equity instruments in the Reporting Period reasons thereof and basis of related accounting treatment:
The decrease in other equity instruments for the period is due to the convertible debt-for-equity swap.39. Capital Reserves
Unit: RMB
Item Beginning balance Increase Decrease Ending balance
Capital premium
197695880.68 56119250.83 253815131.51
(premium on stock)
Other capital reserves 58216607.33 5584657.46 63801264.79
Total 255912488.01 61703908.29 317616396.30
Other notes including a description of the increase or decrease in the current period and the reasons for the change:
(1) Capital premium increased by RMB56119250.83 during the year mainly due to the capital premium arising from the capital
increase under the Restricted Share Incentive Scheme.
(2) Other capital reserve increased by RMB5584657.46 in the year mainly due to the expense recognized for equity-settled share
payments under the Restricted Share Incentive Scheme.40. Other Comprehensive Income
Unit: RMB
Amount of the current period
Less: recorded
Less: recorded in in other
other comprehensive
Attributable to
comprehensive income in prior Less: Attributable to
Beginning Income before owners of the Ending
Item income in prior period and Income non-controlling
balance taxation in the Company as balance
period and transferred in tax interests after
Current Period the parent after
transferred in profit retained expense tax
tax
or loss in the earnings in the
Current Period Current
Period
II. Other comprehensive income
1308922.8 -14696529.0 3868.8
that may subsequently be 0.00 0.00 -14722687.09 22289.13 -13413764.20
9 7 9
reclassified to profit or loss
Differences arising from
translation of foreign 1561310.2 -14722321.5
-14722321.59 -13161011.35
currency-denominated financial 4 9
statements
The changes of accounts 3868.8
-252387.35 25792.52 -365.50 22289.13 -252752.85
receivable financing in fair value 9
Total of other comprehensive 1308922.8 -14696529.0 3868.8
-14722687.09 22289.13 -13413764.20
income 9 7 9
41. Surplus Reserves
Unit: RMB
Item Beginning balance Increase Decrease Ending balance
Statutory surplus
1150675885.21 1150675885.21
reserves
Discretional surplus
3341572.58 3341572.58
reserves
Total 1154017457.79 1154017457.79
42. Retained Profits
Unit: RMB
Item Reporting Period Same period of last year
Beginning balance of retained profits before
5346819948.22 5372073615.12
adjustments
Beginning balance of retained profits after
5346819948.22 5372073615.12
adjustments
Add: Net profit attributable to owners of the
153497344.66 144119579.22
Company as the parent
Dividend of ordinary shares payable 44120990.40 85812154.10
Ending retained profits 5456196302.48 5430381040.24
List of adjustment of beginning retained profits:
1) RMB0.00 beginning retained profits was affected by retrospective adjustment conducted according to the Accounting Standards
for Business Enterprises and relevant new regulations.2) RMB0.00 beginning retained profits was affected by changes in accounting policies.3) RMB0.00 beginning retained profits was affected by correction of significant accounting errors.4) RMB0.00 beginning retained profits was affected by changes in combination scope arising from same control.5) RMB0.00 beginning retained profits was affected totally by other adjustments.43. Operating Revenue and Cost of Sales
Unit: RMB
Amount of the current period Amount of the previous period
Item
Revenue Cost Revenue Cost
Main operations 2156443129.95 1763955459.16 2222332890.30 1634158882.29
Other operations 63870520.99 47286284.04 64411190.49 49593448.98
Total 2220313650.94 1811241743.20 2286744080.79 1683752331.27
Information about performance obligations:
None
Information in relation to the transaction price apportioned to the residual contract performance obligation:
As at the end of the Reporting Period the revenue amount corresponding to the contract performance obligation yet to be fulfilled or
yet to be completed under a signed contract is RMB0.00 including RMB0.00 expected to be recognized as revenue in the year
RMB0.00 expected to be recognized as revenue in the year and RMB0.00 expected to be recognized as revenue in the year.44. Taxes and Surtaxes
Unit: RMB
Item Amount of the current period Amount of the previous period
Urban maintenance and construction tax 6283128.18 7630680.55
Education Surcharge 2695603.21 3402460.99
Resources tax 236902.00 262578.00
Property tax 10055281.39 10624279.89
Land use tax 5120956.62 8760353.77
Vehicle and vessel usage tax 49025.98 75368.72
Stamp duty 1427573.40 1668370.50
Local education surcharge 1797068.80 2268305.20
Local water conservancy facility
-102200.92 541123.15
construction fund
Environmental protection tax 594788.21 532734.64
Total 28158126.87 35766255.41
45. Selling Expense
Unit: RMB
Item Amount of the current period Amount of the previous period
Salary 24817866.24 24858302.63
Carriage charges 18556351.95
Advertising expense 185949.36 218938.82
Port surcharge 5552752.80
Depreciation charge 2919396.85 3364600.96
Travel expense 695266.26 963154.55
Rental charges 536277.43 2003837.09
Sales service fee 5389984.38 4662986.11
Publicity expenses 7483834.48 8117611.43
Expense for repairmen and loss 2666451.20 7115057.20
Others 3851768.86 6326312.05
Total 48546795.06 81739905.59
46. Administrative Expense
Unit: RMB
Item Amount of the current period Amount of the previous period
Salary 34322960.21 67681094.74
Depreciation charge 13936331.40 17659534.12
Warehouse funding 17942419.24 20442304.85
Travel expense 12190687.06 12025932.80
Rental charges 6505177.01 6948195.24
Labor-union expenditure 5802625.03 5915433.42
Employee education budget 4210543.12 4188129.15
Amortization of intangible assets 6143216.69 6766430.80
Carriage charges 3094038.89 3500431.81
Others 25970047.75 32766112.54
Total 130118046.40 177893599.47
47. R&D Expense
Unit: RMB
Item Amount of the current period Amount of the previous period
Labor cost 77616982.58 63175350.86
Material expense 36220227.08 43001450.30
Depreciation charge 6279523.70 6678502.09
Others 11267750.44 10586419.81
Total 131384483.80 123441723.06
48. Finance Costs
Unit: RMB
Item Amount of the current period Amount of the previous period
Interest expense 39272113.66 43752260.50
Less: Interest income 14562127.13 13506359.51
Less: Capitalized interest 10299292.35 5092555.05
Foreign exchange gains or losses 5910962.13 -3962751.87
Less: Capitalized foreign exchange gains
or losses
Others 3901272.97 4016715.61
Total 24222929.28 25207309.68
49. Other Income
Unit: RMB
Sources Amount of the current period Amount of the previous period
Government subsidies 19089311.11 36850705.82
Total 19089311.11 36850705.82
50. Investment Income
Unit: RMB
Item Amount of the current period Amount of the previous period
Long-term equity investment income
-1789070.68 -3579523.35
accounted by equity method
Investment income from disposal of trading
24904879.52 154309537.24
financial assets
Interest income earned on investment in debt
6065699.38
obligations during the holding period
Total 29181508.22 150730013.89
Other notes:
The investment income generated from wealth management during the Reporting Period was RMB7890621.85.51. Gain on Changes in Fair Value
Unit: RMB
Sources Amount of the current period Amount of the previous period
Trading financial assets 8034224.66 -143854551.38
Trading financial liabilities -841402.78
Total 8034224.66 -144695954.16
Other notes:
The fair value change gain or loss arising from wealth management during the reporting period was: -RMB1806575.34
52. Credit Impairment Loss
Unit: RMB
Item Amount of the current period Amount of the previous period
Bad debt loss of other receivables -211404.00 567920.22
Bad debt loss of long-term receivables -87833.04 396960.83
Bad debt loss of accounts receivable("-" indicates
11414377.16 -2518597.53
loss)
Bad debt loss of dividend receivable ("-" indicates
1498035.63
loss)
Total 12613175.75 -1553716.48
53. Asset Impairment Loss
Unit: RMB
Item Amount of the current period Amount of the previous period
II. Inventory falling price loss and impairment
-7035233.41 -24613079.38
provision for contract performance costs
Total -7035233.41 -24613079.38
54. Asset Disposal Income
Unit: RMB
Sources Amount of the current period Amount of the previous period
Fixed asset disposal income (“-” for loss) 39092642.32 -405636.42
Intangible asset disposal income (“-” for loss) 19438746.10 51773.24
Total 58531388.42 -353863.18
55. Non-operating Income
Unit: RMB
Amount of the current Amount of the previous Amount recorded in the current
Item
period period non-recurring profit or loss
Others 1184008.01 2125819.41
Total 1184008.01 2125819.41
56. Non-operating Expense
Unit: RMB
Amount recorded in the current
Item Amount of the current period Amount of the previous period
non-recurring profit or loss
Donation 2012051.62 1000000.00
Losses from damage and scrap
0.00 149918.89
of non-current assets
Others 577877.31 1234008.01
Total 2589928.93 2383926.90
57. Income Tax Expense
(1) List of Income Tax Expense
Unit: RMB
Item Amount of the current period Amount of the previous period
Current income tax expense 29081920.36 26171457.60
Deferred income tax expense -6872687.22 896376.09
Total 22209233.14 27067833.69
(2) Adjustment Process of Accounting Profit and Income Tax Expense
Unit: RMB
Item Amount of the current period
Profit before taxation 165649980.16
Current income tax expense accounted at statutory/applicable tax rate 24847497.02
Influence of applying different tax rates by subsidiaries -600686.48
Influence of income tax before adjustment -2324613.80
Effect of deductible temporary differences or deductible losses on deferred income
555397.00
tax assets not recognized in the period
Profit/loss of associated enterprises and joint ventures accounted by equity method -268360.60
Income tax expense 22209233.14
58. Other Comprehensive Income
Refer to Note VII-40 for details.59. Cash Flow Statement
(1) Cash Generated from Other Operating Activities
Unit: RMB
Item Amount of the current period Amount of the previous period
Government subsidies 21588175.95 42760333.79
Claim income 356171.92 657147.73
Recovery of employee borrowings petty
12429591.08 7829609.00
cash and deposit
Collection for employees 2413849.33 1507827.48
Others 3662317.53 2847294.50
Total 40450105.81 55602212.50
(2) Cash Used in Other Operating Activities
Unit: RMB
Item Amount of the current period Amount of the previous period
Freight and miscellaneous charges 25102769.53
Rental charges 2387330.09 11393199.71
Advertising expense 605033.82 1074493.45
Business travel charges 15478544.40 14492835.30
Insurance 2585281.80 2130902.85
Audit advisory announcement fee 6023522.11 9146615.17
Decoration & repair expenses 394368.44 1368170.04
Donation 2433466.47 1000000.00
Pre-payment 858305.97 1750359.55
Payment of employee borrowings petty
15018936.57 6298914.86
cash and deposit
Others 22427795.71 30165500.96
Total 68212585.38 103923761.42
(3) Cash Generated from Other Investing Activities
Unit: RMB
Item Amount of the current period Amount of the previous period
Interest income 14858805.99 8467672.27
Income from forward foreign exchange 23079957.05 8657194.49
Cash deposit of L/C for purchasing
28969919.03
equipment
Total 37938763.04 46094785.79
(4) Cash Used in Other Investing Activities
Unit: RMB
Item Amount of the current period Amount of the previous period
Forward settlement exchange loss 363000.00
Pay margin 2365093.84 2868380.25
Total 2365093.84 3231380.25
(5) Cash Generated from Other Financing Activities
Unit: RMB
Item Amount of the current period Amount of the previous period
Return of loan guarantees 14000000.00
Recovery of intercourse accounts 160000000.00
Total 174000000.00
(6) Cash Used in Other Financing Activities
Unit: RMB
Item Amount of the current period Amount of the previous period
Pay right-of-use assets accounts 9339306.00
Payment for intercourse accounts 160000000.00
Total 9339306.00 160000000.00
60. Supplemental Information for Cash Flow Statement
(1) Supplemental Information for Cash Flow Statement
Unit: RMB
Same period of last
Supplemental information Reporting Period
year
1. Reconciliation of net profit to net cash flows generated from operating activities -- --
Net profit 143440747.02 147981121.64
Add: Provision for impairment of assets -5577942.34 26166795.86
Depreciation of fixed assets oil-gas assets and productive living assets 218273154.39 242090445.82
Depreciation of right-of-use assets 11100529.06
Amortization of intangible assets 5624309.84 8510785.39
Amortization of long-term prepaid expenses 366873.36 2182757.76
Losses from disposal of fixed assets intangible assets and other long-lived
-58531388.42 353863.18
assets (gains: negative)
Losses from scrap of fixed assets (gains: negative) 0.00 149918.89
Losses from changes in fair value (gains: negative) -8034224.66 143854551.38
Finance costs (gains: negative) 20321656.31 21190594.07
Investment loss (gains: negative) -29181508.22 -150730013.89
Decrease in deferred income tax assets (gains: negative) -7774846.27 1633759.08
Increase in deferred income tax liabilities (“-” means decrease) 71198.63 21903691.90
Decrease in inventory (gains: negative) -59506379.69 -169000792.88
Decrease in accounts receivable generated from operating activities (gains:
13448642.14 188207459.72
negative)
Increase in accounts payable used in operating activities (decrease:
-61279796.01 -275102672.23
negative)
Others
Net cash generated from/used in operating activities 182761025.14 209392265.69
2. Significant investing and financing activities without involvement of cash receipts
-- --
and payments
Conversion of debt to capital
Convertible corporate bonds matured within 1 Year
Fixed asset under finance lease
3. Net increase/decrease of cash and cash equivalent: -- --
Ending balance of cash 2031646000.18 2018648643.49
Less: beginning balance of cash 1396530407.47 878559018.92
Add：Ending balance of cash equivalentsLess: Opening balance of cash equivalents
Net increase in cash and cash equivalents 635115592.71 1140089624.57
(2) Cash and Cash Equivalents
Unit: RMB
Item Ending balance Beginning balance
I. Cash 2031646000.18 1396530407.47
Including: Cash on hand 6722270.36 7009891.16
Bank deposit on demand 2024923729.82 1389520516.31
III. Ending balance of cash and cash
2031646000.18 1396530407.47
equivalents
61. Assets with Restricted Ownership or Right to Use
Unit: RMB
Item Ending carrying value Reason for restriction
Monetary assets 3465093.84 Cash deposit for L/G and L/C
Endorsement or discounting of not
Notes receivable 99033886.64
terminated recognition
Total 102498980.48 --
62. Foreign Currency Monetary Items
(1) Foreign Currency Monetary Items
Unit: RMB
Ending foreign currency Ending balance converted to
Item Exchange rate
balance RMB
Monetary assets -- --
Of which: USD 32313460.50 6.4601 208748186.16
EUR 847803.58 7.6862 6516387.88
HKD 3500100.13 0.8321 2912433.32
JPY 22594809.00 0.0584 1319536.85
GBP 1957.18 8.9410 17499.15
CHF 1137.82 7.0134 7979.99
SEK
VND 51095214217.71 0.00028 14306659.98
MMK 190441987.96 0.0040 761767.95
KHR 105399264.00 0.0016 168638.82
Notes receivable
Of which: USD 11412766.57 6.4601 73727613.32
Accounts receivable -- --
Of which: USD 49859930.84 6.4601 322100139.23
EUR 384979.93 7.6862 2959032.74
HKD
VND 36565303815.00 0.00028 10238285.07
Other receivables
Of which: USD 838067.45 6.4601 5413999.53
JPY 1395040.00 0.0584 81470.34
HKD 1775449.00 0.8321 1477351.11
VND 18374290779.94 0.00028 5144801.42
GBP 7250.00 8.9410 64822.25
Accounts payable
Of which: USD 5887933.57 6.4601 38036639.66
EUR 718514.67 7.6862 5522647.46
JPY 15482648.00 0.0584 904186.64
VND 25644036076.00 0.00028 7180330.10
MMK 39811940.00 0.00400 159247.76
Other payables
Of which: USD 98823.05 6.4601 638406.79
VND 1108493475.00 0.000280 310378.17
MMK 1000000.00 0.0040 4000.00
Short-term borrowings
Of which: USD 148082726.55 6.4601 956629221.79
VND 28356504353.00 0.00028 7939821.22
Current portion of long-term
borrowings
Of which: USD 2000000.04 6.4601 12920200.26
Long-term borrowings -- --
Of which: USD
EUR
HKD
(2) Notes to Overseas Entities Including: for Significant Oversea Entities Main Operating Place Recording
Currency and Selection Basis Shall Be Disclosed; if there Are Changes in Recording Currency Relevant
Reasons Shall Be Disclosed.√ Applicable □ Not applicable
The operating places of Company’s subsidiaries Lu Thai (Hong Kong) Lu Thai (Cambodia) Vanguard Apparel Lu Thai
(America) Continental Textile Lu An Garments and the sub-subsidiary Lu Thai Tan Chau and Libra International were Hong Kong
Cambodia Burma America Vietnam Vietnam Vietnam Singapore and the recording currency was HKD for Lu Thai (Hong
Kong) USD for other overseas companies.63. Government Grants
(1) Basic Information on Government Grants
Unit: RMB
Amount recorded in the
Category Amount Listed items
current profit or loss
Subsidy funds for high-grade fabric production line intelligent
5000000.00 Deferred income
technology transformation project
Subsidy funds for the construction of infrastructure facilities 400000.00 Deferred income
Subsidy accounts for investment in technological renovation
1069000.00 Deferred income
equipment
Subsidy funds for technological renovation project 267300.00 Deferred income
Rebate of surcharges for withholding taxes 239800.14 Other income 239800.14
Fund for providing generous support to local enterprises and
4300000.00 Other income 4300000.00
fund for providing generous support of current period
Subsidy accounts for van phase-out 25600.00 Other income 25600.00
Additional deduction amount 21100.26 Other income 21100.26
VAT deduction of GTS equipment 720.00 Other income 720.00
VAT deduction of GTS equipment technical service charge 1820.00 Other income 1820.00
Subsidies for work-based training for enterprises in difficulty 300000.00 Other income 300000.00
VAT deduction of enterprises recruiting employee with poverty
2600.00 Other income 2600.00
registration
Urban construction tax deduction of enterprises recruiting key
25150.00 Other income 25150.00
group personnel
VAT deduction of enterprises recruiting key group personnel 31350.00 Other income 31350.00
Talent supporting expenditure 50000.00 Other income 50000.00
Provincial incentive fund for innovation platform 200000.00 Other income 200000.00
Tax return 54742.26 Other income 54742.26
Foreign trade premium stand subsidy 2400.00 Other income 2400.00
Subsidies for work-based training 3482358.04 Other income 3482358.04
VAT reduction and exemption 7445.25 Other income 7445.25
Subsidy for exhibition halls 3600000.00 Other income 3600000.00
Subsidy for occupational training 2506790.00 Other income 2506790.00
Total 21588175.95 14851875.95
(2) Return of Government Grants
□ Applicable √ Not applicable
Other notes:
VIII. Change of Consolidation Scope
1. Disposal of Subsidiaries
Whether there was a single disposal of an investment in a subsidiary that resulted in a loss of control
□ Y √ N
Whether there was a step-by-step disposal of investment in a subsidiary through multiple transactions and loss of control during the
period
□ Y √ N
2. Change in Consolidation Scope for Other Reasons
Describe other changes in the consolidation scope (e.g. new subsidiaries liquidation of subsidiaries etc.) and relevant situations:
During the year the Company established new subsidiaries Hainan Huilin International Holdings Co. Ltd. and Zibo Banyang
MountainVilla Hotel Co. Ltd and a new sub-subsidiary Libra International Investment Pet. Ltd.IX. Equity in Other Entities
1. Equity in Subsidiary
(1) Subsidiaries
Main Holding percentage (%)
Registration
Name operating Nature of business Way of gaining
place Directly Indirectly
place
Luthai (Hong Kong) Hong Kong Hong Kong Wholesale and retail industry 100.00% Set-up
Shanghai Luthai Shanghai Shanghai Wholesale and retail industry 100.00% Set-up
Lufeng Weaving &
Zibo Zibo Manufacturing industry 75.00% Set-up
Dyeing
Luqun Textile Zibo Zibo Manufacturing industry 100.00% Set-up
Business combination not
Xinsheng Power Zibo Zibo Manufacturing industry 100.00%
under the same control
Technology development
Shanghai Zhinuo Shanghai Shanghai technical consultancy and transfer 100.00% Set-up
of technologies
Lulian New Materials Zibo Zibo Manufacturing industry 75.00% Set-up
Lujia Import & Export Zibo Zibo Import and export trade 100.00% Set-up
Lu Thai Occupational
Zibo Zibo Skill training 100.00% Set-up
Training School
Beijing Zhishu
Beijing Beijing Wholesale and retail industry 100.00% Set-up
Trading
Lu Thai (Cambodia) Cambodia Cambodia Manufacturing industry 100.00% Set-up
Vanguard Apparel Burma Burma Manufacturing industry 100.00% Set-up
Lu Thai (America) America America Wholesale and retail industry 100.00% Set-up
Continental Textile Vietnam Vietnam Manufacturing industry 100.00% Set-up
Lu Thai Tan Chau
Vietnam Vietnam Manufacturing industry 100.00% Set-up
(sub-subsidiary)
Lu An Garments Vietnam Vietnam Manufacturing industry 100.00% Set-up
Huilin International Wenchang Wenchang Modern service industry 100.00% Set-up
Libra International Wholesale textiles and leather
Singapore Singapore 100.00% Set-up
(sub-subsidiary) holding company
Banyang Mountain
Zibo Zibo Catering 100.00% Set-up
Villa
(2) Significant Non-wholly-owned Subsidiary
Unit: RMB
Shareholding proportion The profit or loss Declaring dividends Balance of
Name of non-controlling attributable to the distributed to non-controlling interests
interests non-controlling interests non-controlling interests at the period-end
Lufeng Weaving &
25.00% -4472568.73 307529547.95
Dyeing
Lulian New Materials 25.00% -5561739.78 86534932.72
(3) The Main Financial Information of Significant Not Wholly-owned Subsidiary
Unit: RMB
Ending balance Beginning balance
Name Current Non-current Total Current Non-current Total Current Non-current Total Current Non-current Total
assets assets assets liabilities liability liabilities assets assets assets liabilities liability liabilities
Lufeng
1001709 767030504 176874 4914409 45303735. 5367447 900603 765771111. 166637 3655674 43982357. 4095498
Weaving
569.68 .98 0074.66 92.94 47 28.41 950.86 19 5062.05 92.89 41 50.30
& Dyeing
Lulian 5227257 492493585 101521 6673102 3156415.3 6704666 508510 414671978 923182 5516390 3156415.3 5547954
New 66.65 .25 9351.90 20.56 6 35.92 155.05 .33 133.38 28.01 6 43.37
Materials
Unit: RMB
Amount of the current period Amount of the previous period
Total Cash flows Total Cash flows
Name Operating Operating
Net profit comprehensive from operating Net profit comprehensive from operating
revenue revenue
income activities income activities
Lufeng
Weaving & 528023041.71 -24919021.98 -24829865.50 -25430786.43 606784342.44 30732000.50 30732000.50 -27139185.20
Dyeing
Lulian New
14060457.18 -23633974.03 -23633974.03 -20179784.39 989929.41 -7858066.26 -7858066.26 -31971995.02
Materials
2. Equity in Joint Ventures or Associated Enterprises
(1) Significant Joint Ventures or Associated Enterprises
Holding percentage (%) Accounting
treatment of the
Main operating Nature of investment to
Name Registration place
place business Directly Indirectly joint venture or
associated
enterprise
Haohong Equity
Ningbo Ningbo 33.33% Equity method
Investment investment
Haoying Equity
Ningbo Ningbo 47.62% Equity method
Investment investment
(2) Main Financial Information of Significant Associated Enterprises
Unit: RMB
Closing balance/amount of the current Opening balance/amount of the previous
period period
Haohong Investment Haohong Investment
Current assets 234293702.92 265506727.38
Total assets 234293702.92 265506727.38
Current liabilities 3433167.13 517461.99
Total liabilities 3433167.13 517461.99
Equity attributable to shareholders of the
230860535.79 264989265.39
Company as the parent
Net assets shares calculated at the
76954816.58 88329922.16
shareholding proportion
Carrying value of investment to associated
76954816.58 88329922.16
enterprises
Net profit -10484845.56 -13549861.17
Total comprehensive income -10484845.56 -13549861.17
X. Risks Associated with Financial Instruments
The Group’s major financial instruments include the monetary assets notes receivable accounts receivables accounts
receivable financing other receivables other current assets trading financial assets debt investment other non-current financial
assets long-term receivables notes payable accounts payable other payables the short-term borrowings trading financial liabilities
Current Portion of Non-current Liabilities and long-term borrowings. Details of various financial instruments are disclosed in
relevant Notes. Possible risks related to these financial instruments and various risk management policies implemented to reduce
these risks are described as follows. The Group’s management has controlled and monitored these risk exposures in order to control
the above-mentioned risks within the limited scope.1. Risk management objectives and policies
The Group has conducted the risk management to achieve an appropriate balance between the risk and the income and to
minimize the adverse influence of financial risks on the Group’s financial performance. According to such risk management
objective the Company has formulated corresponding risk management policy to recognize and analyze possible risks encountered
by the Group set the appropriate acceptable risk level and designed corresponding internal control procedures to monitor the Group’s
risk level. Meanwhile the Group will regularly review these risk management policies and relevant internal control system so as to
cater for the market or respond to any change in the Group’s business operations. Accordingly the Group’s internal audit department
will also regularly or randomly check whether the internal control system is implemented in conformity with relevant risk
management policies.The major risks caused by financial instruments of the Group are credit risk liquidity risk and market risk (including foreign
exchange risk and interest rate risk).The Board of Directors shall be responsible for planning and establishing the risk management framework for the Group
determining the Group’s risk management policies and relevant guidelines and monitoring the implementation of various risk
management measures. However the Company has established corresponding risk management policies to recognize and analyze
possible risks encountered by the Group. Besides various risks are specified in these risk management policies including the credit
risk the liquidity risk and the market risk management etc.. On a regular basis the Group will evaluate the specific marketing
environment and various changes in the Group’s business operations so as to determine whether any risk management policy and
system need be updated.
(1) Credit risk
Credit Risk means that the Group will suffer any financial losses due to the counter party’s failure in fulfilling the contract
obligations.The Group shall manage the credit risk based on the specific Group Classification and the credit risk mainly arises from bank
deposit notes receivable accounts receivable other receivables and long-term accounts receivable etc.The Group’s bank deposits are mainly saved in state-owned banks and other large and medium-sized listed banks. The Group’s
bank deposits are expected not to suffer any major credit risks.For notes receivable accounts receivable other accounts receivable and long-term accounts receivable the Group has
established relevant policies to control the credit risk exposure. According to the client’s financial status credit record and other
factors (including the current market condition) the Group will evaluate the client’s credit qualification and set corresponding credit
period. In addition the Group will regularly monitor the client’s credit record. For clients with poor credit records the Group will
issue the written Reminder Notice shorten the credit period or cancel the credit period to guarantee the Group’s overall credit risk
under control.The hugest credit risk exposure borne by the Group is the book value of each financial asset reflected in the balance sheet. The
Group is also exposed to credit risk due to the provision of financial guarantees as disclosed in Note XI-2.In terms of accounts receivable the top 5 customers in accounts receivable were accounted for 26.20% of the total amount of
accounts receivable of the Group (29.49% in 2020). In terms of other receivables the top 5 of the ending balance according to the
arrears party was accounted for 47.08% of the total amount of other receivables of the Group (59.79% in 2020).Investment in debt obligations
The Group supervised the changes of credit risk through tracking the published external credit ratings. In order to make sure
whether the credit rating was the latest and whether the credit risk has increased obviously of evaluation report date but not been
reflected in the published external ratings the Group has supplemented through examining the changes of bond yield and the
available news and supervision information.On the balance sheet date the carrying value of investment in debt obligations of the Group are listed as follows according to
report items (Unit: RMB’0000).Item 30 June 2021 31 December 2020 31 December 2019
Trading financial assets 9757.04 25181.47 5235.61
Other current assets - 35137.97
Total 9757.04 60319.44 5235.61
(2) Liquidity risk
Liquidity Risk refers to the risk of capital shortage encountered by the Group during the cash payment or the settlement of other
financial assets.During the management of liquidity risk the Group shall reserve and monitor corresponding cash and cash equivalent deemed
sufficient by the management so as to meet the Group’s operational requirements and mitigate the impact caused by the cash flow
fluctuation. The Group’s management will monitor the use of bank loans and guarantee the fulfillment of loan agreement.Meanwhile major financial institutions shall promise to provide the Group with sufficient reserve funds in order to satisfy the
short-term and long-term fund demand. The Group shall raise its working capital based on the capital generated from business
operations and bank loans.
(3) Market risk
The financial instrument’s market risk refers to the fluctuation risk of fair value of financial instrument or future cash flow
caused by the changes of market price including the interest rate risk and the exchange rate risk.Interest rate risk
Interest rate risk refers to the risk of fluctuations in the fair value or future cash flows of financial instruments arising from
changes in market interest rates. The interest rate can derive from the recognized interest-bearing financial instruments and
unrecognized financial instruments (including certain loan commitment).The Group's interest rate risk mainly arises from the bank loan and bonds payable. Financial liabilities based on the floating
interest rate will cause the cash flow interest rate risk to the Group and financial liabilities based on the fixed interest rate the fair
value interest rate risk.However the Group has paid close attention the impact of interest rate fluctuations on the Group’s interest rate risk. At present
the Group has not taken any interest rate hedging measures. The rise of interest rate will increase the cost of newly-added
interest-bearing debts and the interest cost of the Group’s unsettled interest-bearing debts based on the floating interest rate and
cause major adverse influence on the Group’s financial performance. The management will timely make corresponding adjustment
according to the latest market situation and corresponding interest rate swap will be arranged to reduce the interest rate risk.The Group holds interest-bearing financial liabilities as follows (Unit: RMB’0000):
Item 30 June 2021 31 December 2020
Fixed-interest financial liability
Including: short-term borrowings 90396.77 34385.82
Current portion of long-term 150.00 400.00
borrowings
Long-term borrowings 29800.00 20000.00
Bonds payables 137029.75 135017.15
Total 257376.52 189802.97
Floating rate financial liability
Including: short-term borrowings 8691.57 58452.36
Current portion of long-term 1892.02 3914.94
borrowings
Long-term borrowings 36113.00 29500.00
Total 46696.59 91869.30
On 30 June 2020 if the lending rate calculated at floating interest rate up or down 100 basis points with other variables
unchanged the net profit and shareholders’ equity will be decreased or increased about RMB4669700.Foreign exchange risk
Foreign exchange risk is referred to the fluctuation risk of fair value of financial instruments or future cash flows resulted from
the change of foreign exchange rate. The foreign exchange rate was originated from the financial instruments denominated in foreign
currencies other than the recording currency.On 30 June 2020 the amount of foreign currency financial assets and foreign currency financial liabilities converted to renminbi
is as follows (Unit: RMB’0000):
Item Foreign currency liabilities Foreign currency assets
Ending balance Beginning balance Ending balance Beginning balance
USD 100822.45 100434.65 60998.99 54643.66
EUR 552.26 136.74 947.54 894.96
JPY 90.42 195.50 140.10 64.20
HKD 29.49 438.98 328.79
GBP 0.00 8.23 8.19
CHF 24.32 0.80 5.18
SEK 0.00 0.00 0.06
VND 1543.05 1583.90 2968.97 3110.91
MMK 16.32 28.21 76.18 30.99
KHR 0.00 16.86 46.39
Total 103024.50 102432.81 65596.65 59133.34
However the Group has paid close attention the impact of exchange rate fluctuations on the Group’s exchange rate risk. As at
the end of each reporting period for the Group's monetary capital bills receivable accounts receivable accounts payable short-term
borrowings and long-term borrowings denominated in foreign currencies the impact on the Group's shareholders' equity and net
profit assuming a 10% appreciation or depreciation of RMB against foreign currencies while other factors remain unchanged would
be as follows (Unit: RMB’0000):
Exchange rate Reporting Period Same Period Last Year
fluctuations Impact on profit Impact on shareholders' equity Impact on profit Impact on shareholders'
equity
10% 3742.78 3742.78 4711.60 4711.60
appreciation
against RMB
10% -3742.78 -3742.78 -4711.60 -4711.60
depreciation
against RMB
2. Capital management
The objectives of capital management policies of the Group are to ensure the continuous operation of the Group so as to provide
return to shareholders and benefit other stakeholders as well as to reduce capital cost by maintaining the optimal capital structure.In order to maintain or adjust capital structure the Group might adjust financing method and the dividends paid to shareholders
return capital to shareholders issue new shares and other equity instrument or sell assets to reduce debts.The Group supervised the capital structure based on the asset-liability ratio (namely total liabilities divide total assets). On 31
December 2020 the asset-liability ratio was 33.29% of the Group (30.17% on 31 December 2019).XI. Disclosure of Fair Value
1. Ending Fair Value of Assets and Liabilities at Fair Value
Unit: RMB
Ending fair value
Fair value Fair value Fair value
Item
measurement measurement measurement Total
items at level 1 items at level 2 items at level 3
I. Consistent fair value measurement -- -- -- --
(I) Trading Financial Assets 124052667.02 124052667.02
1. Financial assets measured at fair value through profit
97570367.02 97570367.02
and loss for the current period
(3) Derivative financial assets 26482300.00 26482300.00
(II) Accounts receivable financing 29582908.88 29582908.88
(III) Other non-current financial assets 156915620.25 156915620.25
The total amount of assets consistently measured at fair
124052667.02 186498529.13 310551196.15
value
II. Inconsistent fair value measurement -- -- -- --
2. Continuous and Non-continuous Level 2 Fair Value Measurement Items Valuation Techniques Used
and the Qualitative and Quantitative Information of Important Parameters
For bank WM products the Company determines their fair value based on the expected rate of return as agreed in the contract.For forward settlements of exchanges the Company determines their fair value based on bank forward foreign exchange
quotations at the end of the period.3. Valuation Technique Adopted and Nature and Amount Determination of Important Parameters for
Consistent and Inconsistent Fair Value Measurement Items at Level 3
For the unlisted equity investment the Company adopts the comparable listed company comparison method and the
non-observable input value of the comparable listed company comparison method includes the liquidity discount.The Company values its holdings of unlisted and outstanding domestic shares of companies listed on the Hong Kong Stock
Exchange on the basis of quoted prices for Hong Kong shares and taking into account factors such as unlisted and outstanding cases.The investment into Shandong Hongqiao Thermoelectric Co. Ltd. made by Luqun Textile (the Company’s subsidiary) is
expected to be held in the long run for obtaining the discount on power purchase. As no revenue distribution right is vested in the
investment the invested unit’s operating profit and loss are not shared or borne and the equity transfer is not proposed the Company
regards it as the financial asset which shall be measured based on the fair value and whose variations are included in the current
profit and loss and the investment cost is deemed as the fair value of the financial asset.For accounts receivables financing at fair value and the changes included in other comprehensive income its fair value shall be
determined by the discount cash flow method.4. Fair Value of Financial Assets and Liabilities Not Measured at Fair Value
The financial assets and financial liabilities measured at amortized cost mainly include: monetary assets notes receivable
accounts receivable other receivables long-term receivables short-term borrowings notes payable accounts payables other
payables current portion of long-term borrowings and long-term borrowings etc.XII. Related Party and Related-party Transactions
1. Information Related to the Company as the Parent of the Company
Proportion of share Proportion of voting
held by the rights owned by the
Name Registration place Nature of business Registered capital Company as the Company as the
parent against the parent against the
Company (%) Company (%)
Textile chemistry
Lucheng Textile Zibo RMB63.26 million 15.91% 15.91%
and investment
Notes: information on the Company as the parent
The final controllers of the Company are Mr. Liu Zibin and Mr. Liu Deming.2. Subsidiaries of the Company
Refer to Note IX-1.3. Information on the Joint Ventures and Associated Enterprises of the Company
Refer to Note IX-2.4. Information on Other Related Parties
Name Relationship with the Company
Zibo Limin Purified Water Co. Ltd. (hereinafter called Limin
Wholly-owned subsidiary of the Company as the parent
Purified Water)
Zibo Luqun Land Co. Ltd (hereinafter called Luqun Land) Wholly-owned subsidiary of the Company as the parent
Zibo Lurui Fine Chemical Co. Ltd. (hereinafter referred to as
Majority-owned subsidiary of the Company as the parent
Lurui Chemical)
Zibo Lujia Property Management Co. Ltd. (hereinafter referred
Wholly-owned subsidiary of the Company as the parent
to as Lujia Property)
Hong Kong Tung Hoi International Company Limited
Wholly-owned subsidiary of the Company as the parent
(hereinafter called Tung Hoi International)
Zibo Chengshun Hosiery Co. Ltd. (hereinafter referred to as
Wholly-owned subsidiary of the Company as the parent
Chengshun Hosiery)
Zibo Chengshun Economic and Trade Co. Ltd. (hereinafter
Wholly-owned subsidiary of the Company as the parent
referred to as Chengshun Economic and Trade)
Chengshun Petrochemical (Zhejiang Zhoushan) Co. Ltd.Wholly-owned subsidiary of the Company as the parent
(hereinafter referred to as Chengshun Petrochemical)
Zibo Lucheng Petrochemical Sales Co. Ltd. (hereinafter referred
Wholly-owned subsidiary of the Company as the parent
to as Lucheng Petrochemical)
Shanghai Hengjiu Textile New Materials Co. Ltd. (hereinafter
Wholly-owned subsidiary of the Company as the parent
referred to as Hengjiu Textile)
Unikorn Nonwovens Co. Ltd. (hereinafter referred to as the Wholly-owned subsidiary of wholly-owned subsidiary of the
Unikorn Nonwovens) Company as the parent
Zibo Lumei Economic and Trade Co. Ltd. (hereinafter referred
Wholly-owned subsidiary of the Company as the parent
to as Lumei Economic and Trade)
5. List of Related-party Transactions
(1) Information on Acquisition of Goods and Reception of Labor Service
Information on acquisition of goods and reception of labor service
Unit: RMB
Amount of the The approval trade Whether exceed Amount of the
Related party Content
current period credit trade credit or not previous period
Limin Purified Recycled water sewage treatment
12211050.25 14653260.00 No 9822323.88
Water materials
Lurui Fine
Auxiliaries 40620712.88 48744856.00 No 36593447.10
Chemical
Chengshun Welfares such as socks paper cores
4379850.31 5255820.00 No 3909785.92
Hosiery and hose processing fee
Chengshun
Economic and Supermarket retail 577791.56 693350.00 No 1796605.97
Trade
Lucheng
Oils 1524662.66 1829595.00 No 844180.74
Petrochemical
Chengshun
Gas 18133501.78 21760202.00 No 16749727.55
Petrochemical
Unikorn
Mask 700367.23 0.00 No 6187.61
Nonwovens
Information of sales of goods and provision of labor service
Unit: RMB
Amount of the Amount of the previous
Related party Content
current period period
Sales of materials electricity running water
Lucheng Textile 5797.88
draught water gas etc.Chengshun Hosiery Materials electricity running water heating steam 133071.57 64659.60
Chengshun Hosiery Sales of grey yarn etc. 353219.89 186772.14
Chengshun Economic and
Materials electricity running water 47784.20 98220.46
Trade
Lucheng Petrochemical Electricity materials 7857.02 11892.89
Limin Purified Water Sales of materials garment electricity etc. 1572783.76 750467.47
Sales of garment fabrics yarns water & electricity
Lurui Fine Chemical 6731.29 27177.52
lunch components and materials
Lujia Property Sales of materials and recycled water 71945.34 95382.35
Unikorn Nonwovens Fabrics materials isolation gowns etc. 1012527.84 2563.14
Luqun Property Materials 463.68
Luqun Property Heating utilities 1720174.32
(2) Information on Related-party Lease
The Company was lessor:
Unit: RMB
The lease income confirmed in The lease income confirmed in
Name of lessee Category of leased assets
the Reporting Period the same period of last year
Chengshun Economic and
Houses and buildings 36108.00 36108.00
Trade
Lurui Fine Chemical Houses and buildings 4091.82
The Company was lessee:
Unit: RMB
The lease fee confirmed in the The lease fee confirmed in the
Name of lessor Category of leased assets
Reporting Period same period of last year
Lucheng Textile Rent of land 1807428.60 1807428.60
Lucheng Textile Rent of gas station 116571.42 116571.42
Lucheng Textile Rent of buildings 5511114.30 5511114.30
Luqun Property Rent of land and buildings 985714.26 985714.26
6. Accounts Receivable and Payable of Related Party
(1) Accounts Payable
Unit: RMB
Item Related party Ending carrying amount Beginning carrying amount
Chengshun Economic and
Accounts payable 7720.00
Trade
Accounts payable Lurui Fine Chemical 5282060.12 988293.00
Contract liabilities Luqun Property 649676.55
XIII. Commitments and Contingency
1. Significant Commitments
Significant commitments on balance sheet date
Commitments signed but has not been 30 June 2021 31 December 2020
recognized in financial statements
Commitment on constructing and purchasing 8808.60 9864.22
long-lived assets (RMB’0000)
2. Contingency
(1) Significant Contingency on Balance Sheet Date
(1) Contingent liabilities formed by the debt guarantee provided to other entities and the financial impact
As of 30 June 2020 the Group provided guarantee to loans of the following entities:
Name Item Currency Foreign currency Amount converted Start date Maturity Remarks
amount to RMB date
I. Subsidiary
Lu An Garments Short-term USD 714302.04 4614462.61 2021/3/17 2021/7/15
borrowings
Lu An Garments Short-term USD 4939.95 31912.57 2021/4/6 2021/8/4
borrowings
Lu An Garments Short-term USD 60414.16 390281.52 2021/4/19 2021/8/2
borrowings
Lu An Garments Short-term USD 953901.25 6162297.46 2021/4/19 2021/8/17
borrowings
Lu An Garments Short-term USD 3905.04 25226.95 2021/5/5 2021/9/2
borrowings
Lu An Garments Short-term USD 20160.02 130235.75 2021/5/13 2021/9/5
borrowings
Lu An Garments Short-term USD 42761.73 276245.05 2021/5/13 2021/8/23
borrowings
Lu An Garments Short-term USD 58865.00 380273.79 2021/6/7 2021/10/5
borrowings
Lu An Garments Short-term USD 84611.55 546599.07 2021/6/15 2021/10/13
borrowings
Lu An Garments Short-term USD 2620155.68 16926467.70 2021/6/23 2021/10/21
borrowings
Continental Textile S hort-term Dong 12909486897.00 3621079.34 2021/6/18 2021/12/15
borrowings
Continental Textile S hort-term Dong 4785104304.00 1342210.00 2021/6/25 2021/12/22
borrowings
Continental Textile S hort-term Dong 10661913152.00 2990640.44 2021/6/28 2021/12/25
borrowings
Continental Textile S hort-term USD 653020.30 4218576.44 2021/6/17 2021/12/14
borrowings
Continental Textile S hort-term USD 1393849.60 9004407.80 2021/2/2 2021/8/2
borrowings
Continental Textile S hort-term USD 1410884.88 9114457.41 2021/2/22 2021/8/21
borrowings
Continental Textile S hort-term USD 201971.81 1304758.09 2021/2/22 2021/8/21
borrowings
Continental Textile S hort-term USD 727576.73 4700218.43 2021/3/12 2021/9/8
borrowings
Continental Textile S hort-term USD 318134.58 2055181.20 2021/3/18 2021/9/14
borrowings
Continental Textile S hort-term USD 1288280.40 8322420.21 2021/3/24 2021/9/20
borrowings
Continental Textile S hort-term USD 1454676.96 9397358.63 2021/3/24 2021/9/20
borrowings
Continental Textile S hort-term USD 177046.16 1143735.90 2021/3/30 2021/9/26
borrowings
Continental Textile S hort-term USD 169061.05 1092151.29 2021/4/9 2021/10/6
borrowings
Continental Textile S hort-term USD 589075.05 3805483.73 2021/4/12 2021/10/9
borrowings
Continental Textile S hort-term USD 1121899.02 7247579.86 2021/4/27 2021/10/24
borrowings
Continental Textile S hort-term USD 1571097.84 10149449.17 2021/5/5 2021/11/1
borrowings
Continental Textile S hort-term USD 256132.35 1654640.59 2021/5/14 2021/11/10
borrowings
Continental Textile S hort-term USD 984465.10 6359742.99 2021/5/21 2021/11/17
borrowings
Continental Textile S hort-term USD 986391.14 6372185.40 2021/5/24 2021/11/20
borrowings
Continental Textile S hort-term USD 851049.33 5497863.78 2021/1/4 2021/7/6
borrowings
Continental Textile S hort-term USD 421140.16 2720607.55 2021/1/7 2021/7/7
borrowings
Continental Textile S hort-term USD 1022627.20 6606273.97 2021/1/13 2021/7/12
borrowings
Continental Textile S hort-term USD 546556.29 3530808.29 2021/1/20 2021/7/20
borrowings
Continental Textile S hort-term USD 175452.15 1133438.43 2021/1/25 2021/7/26
borrowings
Continental Textile S hort-term USD 1161176.91 7501318.96 2021/1/29 2021/7/28
borrowings
Continental Textile S hort-term USD 437435.84 2825879.27 2021/2/2 2021/8/2
borrowings
Continental Textile S hort-term USD 913778.76 5903102.17 2021/2/4 2021/8/4
borrowings
Continental Textile S hort-term USD 640883.11 4140168.98 2021/2/5 2021/8/5
borrowings
Continental Textile S hort-term USD 176163.31 1138032.60 2021/2/22 2021/8/21
borrowings
Continental Textile S hort-term USD 344794.48 2227406.82 2021/2/26 2021/8/25
borrowings
Continental Textile S hort-term USD 1024035.70 6615373.03 2021/3/2 2021/8/29
borrowings
Continental Textile S hort-term USD 868939.55 5613436.39 2021/3/5 2021/9/7
borrowings
Continental Textile S hort-term USD 660424.22 4266406.50 2021/3/12 2021/9/9
borrowings
Continental Textile S hort-term USD 454648.83 2937076.91 2021/3/24 2021/9/21
borrowings
Continental Textile S hort-term USD 975921.65 6304551.45 2021/4/5 2021/10/4
borrowings
Continental Textile S hort-term USD 503438.57 3252263.51 2021/4/14 2021/10/12
borrowings
Continental Textile S hort-term USD 398717.39 2575754.21 2021/4/26 2021/10/23
borrowings
Continental Textile S hort-term USD 1596146.23 10311264.26 2021/5/14 2021/11/10
borrowings
Continental Textile S hort-term USD 475640.00 3072681.96 2021/5/26 2021/11/22
borrowings
Continental Textile S hort-term USD 1147024.51 7409893.04 2021/6/3 2021/12/1
borrowings
Continental Textile S hort-term USD 1685518.72 10888619.47 2021/6/10 2021/12/7
borrowings
Continental Textile S hort-term USD 1563272.91 10098899.33 2021/3/26 2021/9/26
borrowings
Continental Textile S hort-term USD 635530.49 4105590.52 2021/4/6 2021/10/6
borrowings
Continental Textile S hort-term USD 401823.00 2595816.76 2021/4/22 2021/10/22
borrowings
Continental Textile S hort-term USD 182549.00 1179284.79 2021/4/26 2021/10/26
borrowings
Continental Textile S hort-term USD 317392.00 2050384.06 2021/4/27 2021/10/27
borrowings
Continental Textile S hort-term USD 1196240.00 7727830.03 2021/5/6 2021/11/6
borrowings
Continental Textile S hort-term USD 566674.00 3660770.71 2021/5/14 2021/11/14
borrowings
Continental Textile S hort-term USD 291763.00 1884818.16 2021/5/19 2021/11/19
borrowings
Continental Textile S hort-term USD 193134.00 1247664.95 2021/5/24 2021/11/24
borrowings
Continental Textile S hort-term USD 338249.00 2185122.36 2021/6/1 2021/12/1
borrowings
Lu Thai Tan Chau Long-term USD 48960.00 316286.50 2019/9/30 2021/8/30
borrowings
Lu Thai Tan Chau Long-term USD 487200.00 3147360.72 2019/9/30 2021/8/30
borrowings
Lu Thai Tan Chau Long-term USD 57059.28 368608.65 2019/10/3 2021/8/30
borrowings
Lu Thai Tan Chau Long-term USD 32130.00 207563.01 2019/10/3 2021/8/30
borrowings
Lu Thai Tan Chau Long-term USD 38851.20 250982.64 2019/10/7 2021/8/30
borrowings
Lu Thai Tan Chau Long-term USD 10368.00 66978.32 2019/10/11 2021/8/30
borrowings
Lu Thai Tan Chau Long-term USD 34344.00 221865.67 2019/10/17 2021/8/30
borrowings
Lu Thai Tan Chau Long-term USD 37960.59 245229.21 2019/10/21 2021/8/30
borrowings
Lu Thai Tan Chau Long-term USD 9606.00 62055.72 2019/10/21 2021/8/30
borrowings
Lu Thai Tan Chau Long-term USD 1512.00 9767.67 2019/10/21 2021/8/30
borrowings
Lu Thai Tan Chau Long-term USD 20804.81 134401.15 2019/11/7 2021/8/30
borrowings
Lu Thai Tan Chau Long-term USD 21931.35 141678.71 2019/11/7 2021/8/30
borrowings
Lu Thai Tan Chau Long-term USD 501509.79 3239803.40 2019/11/20 2021/8/30
borrowings
Lu Thai Tan Chau Long-term USD 92243.52 595902.36 2019/11/20 2021/8/30
borrowings
Lu Thai Tan Chau Long-term USD 25704.00 166050.41 2019/12/4 2021/8/30
borrowings
Lu Thai Tan Chau Long-term USD 517790.65 3344979.39 2019/12/5 2021/8/30
borrowings
Lu Thai Tan Chau Long-term USD 62024.85 400686.73 2019/12/17 2021/8/30
borrowings
Lu Thai Tan Chau Short-term USD 936460.30 6049627.18 2021/1/22 2021/7/21
borrowings
Lu Thai Tan Chau Short-term USD 897364.54 5797064.66 2021/2/24 2021/8/23
borrowings
Lu Thai Tan Chau Short-term USD 1045799.47 6755969.16 2021/3/8 2021/9/4
borrowings
Lu Thai Tan Chau Short-term USD 114145.22 737389.54 2021/4/16 2021/10/13
borrowings
Lu Thai Tan Chau Short-term USD 895937.36 5787844.94 2021/5/4 2021/10/31
borrowings
Lu Thai Tan Chau Short-term USD 583654.12 3770463.98 2021/5/7 2021/11/3
borrowings
Lu Thai Tan Chau Short-term USD 893376.10 5771298.94 2021/5/17 2021/11/13
borrowings
Lu Thai Tan Chau Short-term USD 984576.97 6360465.68 2021/5/21 2021/11/17
borrowings
Lu Thai Tan Chau Short-term USD 985252.70 6364830.97 2021/5/24 2021/11/20
borrowings
Lu Thai Tan Chau Short-term USD 1210880.67 7822410.22 2021/5/26 2021/11/22
borrowings
Lu Thai Tan Chau Short-term USD 836466.56 5403657.62 2020/7/24 2021/7/19
borrowings
Lu Thai Tan Chau Short-term USD 805709.04 5204960.97 2020/8/4 2021/7/30
borrowings
Lu Thai Tan Chau Short-term USD 286614.00 1851555.10 2021/3/23 2021/9/19
borrowings
Lu Thai Tan Chau Short-term USD 48977.00 316396.32 2021/3/24 2021/9/20
borrowings
Lu Thai Tan Chau Short-term USD 165231.00 1067408.78 2021/3/30 2021/9/26
borrowings
Lu Thai Tan Chau Short-term USD 301075.00 1944974.61 2021/4/2 2021/9/29
borrowings
Lu Thai Tan Chau Short-term USD 375775.00 2427544.08 2021/4/23 2021/10/20
borrowings
Lu Thai Tan Chau Short-term USD 55982.00 361649.32 2021/4/26 2021/10/23
borrowings
Lu Thai Tan Chau Short-term USD 180333.00 1164969.21 2021/4/28 2021/10/25
borrowings
Lu Thai Tan Chau Short-term USD 381887.00 2467028.21 2021/5/6 2021/11/2
borrowings
Lu Thai Tan Chau Short-term USD 145587.00 940506.58 2021/5/18 2021/10/29
borrowings
Lu Thai Tan Chau Short-term USD 62268.00 402257.51 2021/5/24 2021/10/29
borrowings
Lu Thai Tan Chau Short-term USD 189015.00 1221055.80 2021/5/26 2021/10/29
borrowings
Lu Thai Tan Chau Short-term USD 187250.00 1209653.73 2021/5/31 2021/10/29
borrowings
Lu Thai Tan Chau Short-term USD 370326.00 2392342.99 2021/6/3 2021/11/30
borrowings
Lu Thai Tan Chau Short-term USD 1764984.00 11401973.14 2021/6/8 2021/11/30
borrowings
Lu Thai Tan Chau Short-term USD 393507.00 2542094.57 2021/6/21 2021/12/18
borrowings
Lu Thai Tan Chau Short-term USD 63928.00 412981.27 2021/6/23 2021/12/20
borrowings
Lu Thai Tan Chau Short-term USD 187484.00 1211165.39 2021/6/30 2021/12/27
borrowings
Total 378670423.34
(2) As at 30 June 2021 the Group provided guarantee to guarantees of the following entities:
Name Item Currency Amount Start date Maturity Remarks
date
I. Subsidiary
Lulian New Guarantee RMB 5200000.00 2020/12/3 2022/7/20
Materials
Lulian New Guarantee RMB 770000.00 2020/6/18 2021/7/30
Materials
Lulian New Guarantee RMB 4000000.00 2020/10/9 2021/11/30
Materials
Lulian New Guarantee RMB 7500000.00 2020/3/19 2021/7/10
Materials
Lulian New Guarantee RMB 3500000.00 11 December 2022/7/20
Materials 2020
Lulian New Guarantee RMB 18000000.00 2020/2/28 2021/9/19
Materials
Lulian New Guarantee RMB 400000.00 2021/6/16 2022/7/10
Materials
Lulian New Guarantee RMB 22500000.00 2021/4/15 2022/6/20
Materials
Lulian New Guarantee RMB 3800000.00 2021/4/15 2022/6/20
Materials
Lulian New Guarantee RMB 2800000.00 2021/4/6 2022/4/24
Materials
Total 68470000.00
As at 30 June 2021 the Group has no other disclosable contingencies.
(2) Explanation shall be given even if there is no significant contingency for the Company to disclose
There was no significant contingency in the Company to disclose.XIV. Notes of Main Items in the Financial Statements of the Company as the Parent
1. Accounts Receivable
(1) Listed by Category
Unit: RMB
Ending balance Beginning balance
Carrying amount Bad debt provision Carrying amount Bad debt provision
Category Carrying Carrying
Withdrawal Withdrawal
Amount Proportion Amount value Amount Proportion Amount value
proportion proportion
Accounts receivable
withdrawal of Bad debt 1698109. 1698109. 5730132. 5730132.0.57% 100.00% 1.60% 100.00%
provision separately 45 45 44 44
accrued
Of which:
Accounts receivable
2964411 1910598 277335 35266640 26499466 326166935
withdrawal of bad debt 99.43% 6.45% 98.40% 7.51%
82.12 9.48 192.64 1.84 .74 .10
provision of by group
Of which:
Undue accounts (credit 3112189 326779.9 3079511 29328670 29020719.10.44% 1.05% 8.18% 307951.04 1.05%
insurance insured) 7.77 3 7.84 .49 45
Undue accounts (no 2214632 1107316 210390 24201794 12100897 229917050
74.28% 5.00% 67.53% 5.00%
credit insurance) 35.63 1.78 073.85 7.74 .39 .35
Overdue accounts
1819146 1946486. 162449 23520765 2516721. 21004043.(credit insurance 6.10% 10.70% 6.56% 10.70%
4.49 70 77.79 .79 94 85
insured)
Overdue accounts (no 2566458 5759561. 199050 57799017 11573896 46225121.8.61% 22.44% 16.13% 20.02%
credit insurance) 4.23 07 23.16 .82 .37 45
2981392 2080409 277335 35839653 32229599 326166935
Total 100.00% 6.98% 100.00% 8.99%
91.57 8.93 192.64 4.28 .18 .10
Bad debt provision separately accrued:
Unit: RMB
Ending balance
Name Withdrawal
Carrying amount Bad debt provision Reason for withdraw
proportion
Customer's application for
Customer 1 1461552.02 1461552.02 100.00%
bankruptcy protection
Customer in financial difficulty or
Other customers 236557.43 236557.43 100.00%
application for bankruptcy
Total 1698109.45 1698109.45 -- --
Withdrawal of bad debt provision by group:
Unit: RMB
Ending balance
Name
Carrying amount Bad debt provision Withdrawal proportion
Group 1: Undue accounts (credit insurance
31121897.77 326779.93 1.05%
insured)
Group 2: Undue accounts (no credit
221463235.63 11073161.78 5.00%
insurance)
Group 3: Overdue accounts (credit insurance
18191464.49 1946486.70 10.70%
insured)
Group 4: Overdue accounts (no credit
25664584.23 5759561.07 22.44%
insurance)
Total 296441182.12 19105989.48 --
Please refer to the relevant information of disclosure of bad debt provision of other accounts receivable if adopting the general mode
of expected credit loss to withdraw bad debt provision of accounts receivable.√ Applicable □ Not applicable
Disclosure by aging
Unit: RMB
Aging Ending balance
Within 1 year (including 1 year) 288775529.55
1 to 2 years 7724521.88
2 to 3 years 1013779.67
Over 3 years 625460.47
3 to 4 years 333214.40
4 to 5 years 292246.07
Over 5 years 0.00
Total 298139291.57
(2) Bad Debt Provision Withdrawal Reversed or Recovered in the Reporting Period
Withdrawal of bad debt provision:
Unit: RMB
Changes in the Reporting Period
Beginning
Category Reversal or Ending balance
balance Withdrawal Verification Others
recovery
Bad debt
32229599.18 -11425305.79 194.46 20804098.93
provision
Total 32229599.18 -11425305.79 194.46 20804098.93
(3) Accounts Receivable Written-off in Current Period
Unit: RMB
Item Written-off amount
Written-off accounts receivable 194.46
(3) Top 5 of the Ending Balance of the Accounts Receivable Collected according to Arrears Party
Unit: RMB
Proportion to total ending balance of Ending balance of bad debt
Name of the entity Ending balance
accounts receivable provision
Customer A 37241795.80 12.49% 2312284.80
Customer B 29821557.16 10.00% 1491077.86
Customer C 18008824.61 6.04% 900441.23
Customer D 13349879.08 4.48% 675829.07
Customer E 12440845.08 4.17% 325039.49
Total 110862901.73 37.18%
2. Notes Receivable
Types of notes 30 June 2021 31 December 2020
Carrying amount Bad debt Carrying value Carrying amount Bad debt Carrying value
provision provision
Bank’s 66008730.01 66008730.01 75987373.12 75987373.12
acceptance bill
L/C 30962236.73 30962236.73 32876316.67 32876316.67
Total 96970966.74 96970966.74 108863689.79 108863689.79
Notes: The Company believed that there was no significant credit risk in the bank acceptance bill and letter of credit held by the
Company and no significant loss caused by bank defaults.
(1) The Company had no pledged notes receivable at the end of the period.
(2) The Company had notes receivable endorsed or discounted but not yet due at the end of the period.
Category Amount of recognition Amount of not
termination at the terminated recognition
period-end at the period-end
Bank acceptance 51200093.47
bill
Commercial
acceptance bill
Total 51200093.47
Bank acceptances used for endorsement and discounting that are accepted by a higher-rated bank have minimal credit risk and
deferred payment risk and the interest rate risk associated with the note has been transferred to the bank so that the primary risks and
rewards of ownership can be judged to have been transferred and therefore derecognized. For those accepted by a bank with a low
credit rating endorsement and discounting do not affect recourse and the credit risk and deferred payment risk associated with the
notes remain untransferred and are therefore not derecognized.
(3) Bad Debt Provision Withdrawal Reversed or Recovered in the Reporting Period
3. Other Accounts Receivable
Unit: RMB
Item Ending balance Beginning balance
Dividend receivable 47025975.44 75488652.49
Other receivables 1900807773.04 1425394029.70
Total 1947833748.48 1500882682.19
(1) Dividend Receivable
1) Dividend Receivable Classification
Unit: RMB
Project (or investee) Ending balance Beginning balance
Fengshou Cotton Industry 49501026.78 79461739.46
Less: bad debt provision -2475051.34 -3973086.97
Total 47025975.44 75488652.49
2) Withdrawal of Bad Debt Provision
√ Applicable □ Not applicable
Unit: RMB
First stage Second stage Third stage
Expected credit loss Expected loss in the Expected loss in the
Bad debt provision Total
of the next 12 duration (credit duration (credit
months impairment not occurred) impairment occurred)
Balance of 1 January 2021 3973086.97 3973086.97
Balance of 1 January 2021 in the
—— —— —— ——
Current Period
Withdrawal of the Current Period -1498035.63 -1498035.63
Balance of 30 June 2021 2475051.34 2475051.34
Changes of carrying amount with significant amount changed of loss provision in the Current Period
□ Applicable √ Not applicable
(2) Other Accounts Receivable
1) Other Receivables Classified by Account Nature
Unit: RMB
Nature Ending carrying amount Beginning carrying amount
Intercourse funds 1891140077.72 1415868182.84
Export rebates 2322437.75
Payment on behalf 9058714.25 11567504.63
Guarantee deposit and cash deposit 4423315.99 3119958.81
Borrowings and petty cash 1034990.72 859406.80
Others 607027.84 98063.62
Total 1908586564.27 1431513116.70
2) Withdrawal of Bad Debt Provision
Unit: RMB
First stage Second stage Third stage
Expected credit loss Expected loss in the Expected loss in the
Bad debt provision Total
of the next 12 duration (credit duration (credit
months impairment not occurred) impairment occurred)
Balance of 1 January 2021 4905594.37 1213492.63 6119087.00
Balance of 1 January 2021 in the
—— —— —— ——
Current Period
Withdrawal of the Current Period 1499487.78 160216.44 1659704.23
Balance of 30 June 2021 6405082.15 1373709.07 7778791.23
Changes of carrying amount with significant amount changed of loss provision in the Current Period
□ Applicable √ Not applicable
Disclosure by aging
Unit: RMB
Aging Ending balance
Within 1 year (including 1 year) 1903711498.55
1 to 2 years 1462197.25
2 to 3 years 178000.00
Over 3 years 3234868.47
3 to 4 years 225759.46
Over 5 years 3009109.01
Total 1908586564.27
3) Top 5 of the Ending Balance of Other Receivables Collected according to the Arrears Party
Unit: RMB
Proportion to ending
Ending balance of
Name of the entity Nature Ending balance Aging balance of total other
bad debt provision
receivables%
Continental Textile . Intercourse funds 746141550.00 Within 1 year 39.09% 2238424.65
Lulian New Materials Intercourse funds 628006001.54 Within 1 year 32.90% 1884018.00
Lufeng Weaving &
Intercourse funds 254179136.19 Within 1 year 13.32% 762537.41
Dyeing
Lu Thai Tan Chau Intercourse funds 172484670.00 Within 1 year 9.04% 517454.01
Lu An Garments Intercourse funds 88826375.00 Within 1 year 4.65% 266479.13
Total -- 1889637732.73 -- 99.01% 5668913.20
4. Long-term Equity Investment
Unit: RMB
Ending balance Beginning balance
Item Depreciation Depreciatio
Carrying amount Carrying value Carrying amount Carrying value
reserve n reserve
Investment to
2653071281.88 0.00 2653071281.88 2417071281.88 2417071281.88
subsidiaries
Investment to joint
ventures and associated 128409211.89 128409211.89 138079577.25 138079577.25
enterprises
Total 2781480493.77 2781480493.77 2555150859.13 2555150859.13
(1) Investment to Subsidiaries
Unit: RMB
Increase/decrease Ending
Beginning balance Withdrawal of Ending balance balance of
Investee Additional Reduced
(carrying value) impairment Others (carrying value) depreciation
investment investment
provision reserve
Xinsheng Power 176340737.93 176340737.93
Lufeng Weaving
529620000.00 529620000.00
& Dyeing
Luqun Textile 171784550.00 171784550.00
Luthai (Hong
128771800.00 128771800.00
Kong)
Shanghai Luthai 20000000.00 20000000.00
Lu Thai
108242335.38 108242335.38
(Cambodia)
Lu Thai
10209050.00 10209050.00
(America)
Vanguard
62337238.57 62337238.57
Apparel
Continental
834936510.00 834936510.00
Textile
Lu An Garments 64229060.00 64229060.00
Lulian New
300000000.00 300000000.00
Materials
Lujia Import &
10000000.00 10000000.00
Export
Lu Thai
Occupational 100000.00 100000.00
Training School
Beijing Zhishu
500000.00 500000.00 1000000.00
Trading
Hainan Huilin 232000000.00 232000000.00
Banyang Villa
3500000.00 3500000.00
Hotel
Total 2417071281.88 236000000.00 2653071281.88 0.00
(2) Investment to Joint Ventures and Associated Enterprises
Unit: RMB
Increase/decrease
Gains and Adjust
Ending Ending
losses ment of Cash bonus Withdrawal
Beginning balance Changes balance balance of
Investee Additional Reduced recognized other or profits of
(carrying value) of other Others (carrying depreciation
investment investment under the compre announced impairment
equity value) reserve
equity hensive to issue provision
method income
I. Joint ventures
II. Associated enterprises
Haohong -3493810 -7881294.6 7695481
88329922.16 0.00 0.00
Investment .90 8 6.58
Haoying 1704740. 5145439
49749655.09 0.00 0.00
Investment 22 5.31
-1789070 -7881294.6 1284092
Subtotal 138079577.25.68 8 11.89
-1789070 -7881294.6 1284092
Total 138079577.25.68 8 11.89
5. Operating Revenue and Cost of Sales
Unit: RMB
Amount of the current period Amount of the previous period
Item
Revenue Cost Revenue Cost
Main operations 1454435324.82 1148081216.40 1433647769.93 1095226641.53
Other operations 92334931.92 85526040.17 90838559.05 86137915.68
Total 1546770256.74 1233607256.57 1524486328.98 1181364557.21
Information about performance obligations:
None
Information in relation to the transaction price apportioned to the residual contract performance obligation:
As at the end of the Reporting Period the revenue amount corresponding to the contract performance obligation yet to be
fulfilled or yet to be completed under a signed contract is RMB0.00 including RMB0.00 expected to be recognized as revenue in the
year RMB0.00 expected to be recognized as revenue in the year and RMB0.00 expected to be recognized as revenue in the year.6、Investment IncomeUnit: RMB
Item Amount of the current period Amount of the previous period
Long-term equity investment income
94015922.61 150000000.00
accounted by cost method
Long-term equity investment income
-1789070.68 -3579523.35
accounted by equity method
Investment income from disposal of trading
17298322.47 150939587.24
financial assets
Interest income earned on investment in debt
2401261.30
obligations during the holding period
Total 111926435.70 297360063.89
XV. Supplementary Materials
1. Items and Amounts of Non-recurring Profit or Loss
√ Applicable □ Not applicable
Unit: RMB
Item Amount Note
Gains/losses from the disposal of non-current assets 58531388.42
Government grants recognized in the current period except for those acquired in the ordinary
course of business or granted at certain quotas or amounts according to the government’s unified 19089311.11
standards
Gain/loss from change of fair value of trading financial assets and liabilities and derivative
39004803.56
financial assets and liabilities and investment gains from disposal of trading financial assets and
liabilities and derivative financial assets and liabilities and investment in other debt obligations
other than valid hedging related to the Company’s common businesses
Reversal of provision for impairment test of receivables and contract assets impairment 5386518.99
Other non-operating income and expense other than the above -1405920.92
Less: Income tax effects 18018514.02
Non-controlling interests effects 3371774.56
Total 99215812.58 --
Reasons for the case that the Company defined non-recurring profit and loss items in accordance with Explanatory Notice of
Information Disclosure by Companies Offering Securities to the Public No. 1- Non-recurring Profit and Loss Items and the case that
the Company defined the non-recurring profit and loss items listed in Explanatory Notice of Information Disclosure by Companies
Offering Securities to the Public No. 1- Non-recurring Profit and Loss Items as recurring profit and loss items shall be specified.□ Applicable √ Not applicable
2. Return on Equity and Earnings Per Share
Weighted average ROE EPS (Yuan/share)
Profit as of Reporting Period
(%) EPS-basic EPS-diluted
Net profit attributable to ordinary shareholders of the
1.97% 0.17 0.19
Company
Net profit attributable to ordinary shareholders of the
0.70% 0.06 0.08
Company after deduction of non-recurring profit or loss
3. Accounting Data Differences under PRC GAAP and Those under IFRSs
(1) Differences between disclosed net profits and net assets in financial report in accordance with
International Accounting Standards and Chinese Accounting Standards.□ Applicable √ Not applicable
(2) Differences between disclosed net profits and net assets in financial report in accordance with Domestic
Accounting Standards and Chinese Accounting Standards.□ Applicable √ Not applicable
4. Other
Chairman of the Board: Liu Zibin
Lu Thai Textile Co. Ltd.28 August 2021
沪公网安备31011802005267号
