About This Report

Reporting Entity

The Reporting Entity is "Luthai Textile Co. Ltd." which can be referred to as "We" "the Company" "Luthai" "Luthai

Company" and "Luthai Textile" unless otherwise specified in the main text.Scope of the Report

The time span of this Report is mainly from 1 January to 31 December 2023. In order to maintain the continuity

and comparability of information some content is beyond the aforesaid time span. The information involved is from

the internal data of the Company information submitted by subsidiaries and public information. Unless otherwise

specified all amounts in this Report are expressed in RMB.References

This Report is formulated in line with the China Social Compliance 9000 for Textile & Apparel Industry (CSC9000T)

the Social Responsibility Management System (SA8000) and the core solution of the Standards for Sustainability

Reporting of Global Reporting Initiative (GRI). Also the 2030 Agenda for Sustainable Development (A/RES/70/1) of the

United Nations is referred to.Disclaimer

This Report is released in both Chinese and English. If there is any discrepancy the Chinese version shall prevail.Forward-looking statements included in this Report refer to the statements of the business activities events or

development trends that may happen in the future or will happen soon as predicted or expected by the Company

except for the statements of historical facts. The actual results or development trend may significantly differ from

these forward-looking statements due to variable factors. The Company is not obliged to update or responsible for

updating its forward-looking statements made in this Report before 12/04/2024 unless otherwise required by regulatory

authorities.

1Contents Employee's Rights and Benefits/

Building a Harmonious Workplace Together

Chairman's Statement 04 Health and safety 40

Respect and equality 41

About Us

Training and development 44

Business Operations 06 Benefits and care 47

Development History

08

Product Services/Providing Ace Services

Sustainable Development Strategies and Management

Product innovation 56

Strategies and Implementation 12 Quality control 58

System Certifications and Joining Industry Organisations 13 Customer services and satisfaction 60

Stakeholder Engagement 15

Corporate Governance/Building Excellent Corporate Governance

Environmental Protection/

Business vision 18 Deepen Green and Low-carbon Development

Governance structure 19

Addressing climate change 64

Compliance management 22

Energy management 65

Business ethics 23

Water resources management 66

Innovative development 23

Atmospheric pollutant management 67

Waste management 67

Production and Operations/Responsible Production and Operations

Production safety management 30 Community Participation/

Fire safety management 33 Striving to Be an Excellent Corporate Citizen

Chemical management 34

Support to education 70

Supply chain management 37

Welfare and charity actions 72

Key Performance Indicators 73

GRI Indicator Disclosure Index 76

Reader Feadback 80

2 3Sustainability Report 2023 Chairman's Statement About Us Strategies and Management Corporate Governance Production and Operations Employee's Rights and Benefits Product Services Environmental Protection Community Participation Lu Thai Textile Co. Ltd

Chairman's Statement

Dear friends thank you for your interest in this Report. On behalf of the Board of Directors of Luthai Textile

I would like to express my heartfelt gratitude for your long-term support for the Company!

Luthai Group embarked on the second five-year phase of its 30-year journey in 2023. It was a year

L i u Z i b i n marked by remarkable challenges. Confronted with a more complex and severe external environment

all members of Luthai rallied together with enterprise fortitude courage and persistence. We weathered

Luthai Textile Co.Ltd external pressures surmounted internal obstacles and pushed forward in the face of adversity. Despite

Chairman President significant tests we maintained stable employee teams and achieved smooth progress across all facets

of our work. The second phase of our journey got off to a promising start. Despite the overall challenging

external environment the Company's development remained robust underscoring our resilience and

commitment to sustainable growth. This demonstrates our strong foundation in business management

and the dedication of our united and hardworking employee team positioning the Company for promising

future development.In 2023 with a focus on customer-centricity we enhanced our integrated fabric and clothing service

capabilities to deliver greater value to our customers and society at large. Emphasising production lines

we advanced two key strategies: Improving delivery capabilities and operational efficiency. Placing

business operations at the forefront we bolstered support services to enhance management and

assurance levels.Throughout 2023 we fostered a spirit of resilience cultivated our corporate culture and continuously

honed our capabilities. We launched a project to enrich our corporate culture systematically refining and

upgrading it to gather strength. We accelerated automation and intelligent building enhancing labour

productivity reducing intensity and improving workplace conditions. Additionally we strengthened

human resource management fostering an international talent pool invigorating organisational

dynamics and stabilising our employee teams.Recognising the Company's unique position in stabilising the economy promoting growth and

safeguarding employment and livelihoods we prioritised providing stable work and welfare benefits to

our employees in 2023. We also shared the Company's achievements in enterprise development with

our workforce leveraging our excellent corporate culture. Actively fulfilling our social responsibilities we

improved our environmental governance capabilities driving sustainable development.As we enter 2024 a pivotal year in Luthai Group's second five-year phase of the new 30-year voyage

faith becomes our strongest driving force struggle our most passionate melody and hard work our most

beautiful backdrop. We will set sail once again toward new goals.

2024.4.12

4 5Sustainability Report 2023 Chairman's Statement About Us Strategies and Management Corporate Governance Production and Operations Employee's Rights and Benefits Product Services Environmental Protection Community Participation Lu Thai Textile Co. Ltd

About Us The Company's production and operating results have always been among the top in the national textile industry and it has won honours such as the "National May First Labor Medal" "National Quality Award" the Third "China Industry Award" and the "Single Champion Demonstration

Enterprise in the Manufacturing Industry". Besides in 2023 the Company was also awarded these honours: The "Chinese Textile and Apparel

Brand of 2023 with Competitive Edge" by the China National Textile and Apparel Council the "Enterprise with Outstanding Contribution in

Business Operations Technological Progress" by the China Cotton Textile Association the "Brand Unit with Outstanding Contribution" by the China Council for Brand Development the "2022 Golden Trust and Disclosure Award" by the China Securities Journal and the "Top 100 ESG Golden Bull Awards in the

First National New Cup". In addition the Company was also listed in Yicai the Corporate Social Responsibility Ranking in China and won the

Luthai Textile Co. Ltd. is an A-share and B-share listed company. It is a comprehensive and innovative international textile and apparel group "ESG Innovation Practice Award".with an industrial chain that integrates R&D manufacturing and marketing services. The Company's products are exported to more than 60

countries and regions including the United States the European Union and Japan. It has established strategic partnerships with well-known

domestic and foreign brands and the export market share of medium- and high-end yarn-dyed fabric accounts for more than 18% of the global

market.National May First Labor National Quality Award

Medal

As at the end of 2023

Total assets Net assets Textile fabric that the Company produced in the year

13.43 Billion 9.617 Billion 202 million

Single Champion

the Third Demonstration Enterprise in

RMB RMB meters China Industry Award the Manufacturing Industry

Shirts that the Company produced in the year Operating revenue recorded in the year

20 million 5.961 Billion Enterprise Credit Evaluation 2022 Golden Trust and AAA credit Enterprise Disclosure Award

pieces RMB

Net profit attributable to our shareholders

0.403 Billion Top 100 ESG Golden Bull

Awards in the First National ESG Innovation Practice

New Cup Award

RMB

6 7Sustainability Report 2023 Chairman's Statement About Us Strategies and Management Corporate Governance Production and Operations Employee's Rights and Benefits Product Services Environmental Protection Community Participation Lu Thai Textile Co. Ltd

Development History

19872009

Zibo No. 7 Cotton Mill Luthai's predecessor was 2010 The Luthai Textile and Apparel Engineering Research Institute was

1988 established. Lutai School of Textile and Apparel Shandong University of Technology founded.

was founded. The Company was granted the Second Prize of the State Scientific and

Luthai Textile Company a China-Thailand joint venture Technological Progress Award for its key processing technology of

was incorporated. 1990 ultra-high count pure cotton fabrics and its industrialisation high-flux 2012 films for printing and dyeing wastewater and recycling technology.Luthai Textile Company was opened formally.

1993 A grand ceremony was held because the Phase II project of LuFeng 2013Company Limited was put into production.

Luthai Textile Company was restricted into a joint-stock 1995 The Company won the title "China Advanced Enterprise with an Luthai Milan Office was opened.enterprise with foreign investment and renamed Luthai Excellent Performance Model (2012)". The Company was granted the "National Quality Award".Textile Co. Ltd. It passed the ISO9001 Quality Management System

Certification. 2014 2015

1997

Luthai (America) Textile Co. Ltd. was opened. The Company was recognised as a "Five-starred Chinese Industrial

1998 The Company won the "Global Performance Excellence Award". Enterprise in the Performance of Corporate Social Responsibilities".Luthai became B-share listed.

The Company was granted the Third "China Industry Award". The "set of technologies and equipment for automatic digital cheese Yunjinchuan Clothing Manufacturing Co. Ltd. was acquired.The Company passed the ISO14001 Environmental dyeing" jointly developed based on the "industry-university-research-

Management System Certification. 2016 application" cooperation was granted the First Prize of the State

Ranguang Textile Co. Ltd. was acquired. Scientific and Technological Progress Award.

1999 The unveiling ceremony of the Company's academician

workstation was held in the West District Industrial Park 2017

Beijing Luthai Shirt Co. Ltd. was established. 2000 The Company successfully passed the on-site accreditation of

demonstration enterprises in the textile industry for energy-saving The Company started its new 30-year voyage. A high-level forum on the

Luthai became A-share listed. theme "Gather the Top Wisdom of the Industry Plan Luthai's Future and emission reduction technology application.Beijing Sichuang Apparels Co. Ltd. was opened. Development" was held to plan the development vision for the next

2003 three decades.2018 The Company was recognised as a "National Industrial Design Center"

The Company passed the OHSAS18001 Occupational Health and making it the first enterprise to win this honour in Zibo City.Luthai's operating revenue exceeded RMB10 billion a new start of The water reuse project was completed.Safety Management System Certification 2004 the new 30-year voyage.Zibo Luqun Textile Co. Ltd. was established. 2019

The Zichuan Urban Sewage Treatment Plant invested by the

2005 Company was put into operation.

The Luthai Textile Fabric Museum and the Luthai Development

The Luthai Sports Square was put into use. Museum were opened. The Luthai Industrial Design Summit was held.LuFeng Company Limited was established. 2020 The construction of the Functional Fabric Intelligent Ecological Park 2006 Project began.Luthai issued RMB1.4 billion of convertible bonds. The construction of the Luthai knitting project began and Phase I was

Luthai Group was incorporated. The Phase I project of the Functional Fabric Intelligent Ecological put into production.The Company passed the SA8000 Social Responsibility Park was put into production.

2007 Management System Certification. The project of coloured spun yarns was put into production. 2021

Luthai was recognised as a "Stated-accredited Enterprise 2022 The strategic cooperation project of Luthai Textile and Xiniu Intelligent

Technology Center" by five departments including the National Manufacturing was initiated.Development and Reform Commission and the Ministry of 2008 Luthai Textile was included on the list of the First China Industry

Science and Technology. The Company was recognised as a National Yarn-dyed Carbon Peaking "Leaders" (enterprises). 2023

Fabric Product R&D Base.The Company's patent Preparation Device and Method for Cellulose

Filbe Cheese Online Dyeing Colour Point Yarn won the China Patent

Silver Award

LTTC won the 25th Golden Trust and Disclosure Award for Listed

Companies and the Secretary of the Board of Directors was awarded

the Golden Bull Secretary Award. The Company won the "Top 100 ESG

Golden Bull Awards" in the first National New Cup

Luthai was listed on the 2023 Yicai the Corporate Social Responsibility

Ranking in China and won the "ESG Innovation Practice Award"

8 9Sustainability Report 2023 Chairman's Statement About Us Strategies and Management Corporate Governance Production and Operations Employee's Rights and Benefits Product Services Environmental Protection Community Participation Lu Thai Textile Co. Ltd

Sustainable Development Strategies and Management

Decent Work

A company's sustainable development management shows the responsibility and respect of the company for its Promote sustained inclusive and sustainable economic growth and Economic full and productive employment and decent work for all.customers employees products and future. For many years Luthai Company has kept pace with international and Growth

domestic development trends for years. By vigorously responding to national and industry policies Luthai Company By performing the digital and intelligent transformation of

has demonstrated its sustainable development through actions. production lines Luthai has reduced labour intensity and raised

resource utilisation efficiency.No Poverty Industry

End poverty in all its forms everywhere. Build resilient infrastructure promote inclusive and sustainable Innovation and

industrialisation and foster innovation.The Company actively has paid taxes to the governments Infrastructure

of countries where it operates to promote the economic In 2023 Luthai invested 240Millon in research funds in total.development of the surrounding communities. Additionally it has been granted 485 patents in total including eight

software copyrights. Luthai has organised or participated in the

formulation of 51 national and industry standards.Zero Hunger End hunger achieve food security and improved

Reduced

nutrition and promote sustainable agriculture.Inequality Reduce inequality within and among countries. Peace and

The Company has implemented the policy of local Justice Strong

employment and provided regionally competitive The Company has established plants in overseas developing Institutions

remuneration and benefits. countries and actively created job opportunities to develop

local talents.Ensure healthy lives and promote Sustainable Promote peaceful and inclusive societies for

Good Health

well-being for all at all ages. Cities and

Make cities and human settlements inclusive

sustainable development provide access to justice

Communities safe resilient and sustainable.and Well-being for all and build effective accountable and inclusive

The Company has provided employees with a good and comfortable institutions at all levels.workplace and protected the safety and health of employees. Diverse assistance activities have been conducted in

economically backward villages. Luthai Textile has purchased Luthai Textile includes health safety and environmental

The Company properly prevented and treated occupational diseases. agricultural products from local farmers and donated daily requirements in the bidding invitation requirements for

Besides the Company has established and improved employees' necessities to residents to improve their living conditions. suppliers thus indirectly urging suppliers and contractors

profiles of occupational health and organised annual check-ups to to enhance safety and environmental protection.protect the physical and mental health of employees.Ensure inclusive and Ensure sustainable consumption and

Quality equitable quality education Responsible production patterns.Education Consumption The Company has improved its employee education and and Production Sustainable development reports have been released regularly

Partnerships

training mechanism. In 2023 22850 employees participated and ESG-related information is actively disclosed to enhance for the Goals

in vocational training achieving a 100% vocational training transparency.coverage rate. Meanwhile the Company has updated the requirements

The Company organises activities to support students every for suppliers and implemented stricter standards of duty

fall by providing employees' children with scholarships. It also performance for suppliers. It has worked with suppliers and

donates educational funds to society to cultivate textile talent. contractors to actively perform duties to improve the industrial

chain environment and drive social responsibility practice.Gender Achieve gender equality and empower all Climate

Strengthen the means of implementation and

Equality Action Take urgent action to combat revitalise the Global Partnership for Sustainable women and girls.climate change and its impacts. Development.The principle of gender equality has been observed. The Labor

Union has earnestly protected female employees and improved Luthai Textile has responded to the 2030 "carbon peak" The Company has actively participated in industry

their competence. and 2060 "carbon neutrality" goals by actively carrying organisations and initiatives joined multiple industry

An equal remuneration system has been developed to ensure equal out climate action plans. associations earnestly conducted industry exchanges

pay for equal work between male and female employees. and promoted industry development.Clean Water Life below

and Sanitation Ensure availability and sustainable management of Water Conserve and sustainably use the oceans seas and

water and sanitation for all. marine resources for sustainable development.Production departments have been encouraged to propose

new measures to save water. The Company has increased The Company has proposed new processes reduced the COD value

investment in reclaimed water reuse projects further of printing and dyeing wastewater and protected water resources

promoting recycled use of water resources and providing a and aquatic animals.long-term guarantee for social development.Affordable and

Clean Energy

Ensure access to affordable reliable Life on Protect restore and promote sustainable use of terrestrial ecosystems sustainably

sustainable and modern energy for all. Land manage forests combat desertification and halt and reverse land degradation and

halt biodiversity loss.The Company has conducted the project of rooftop photovoltaic power

generation to contribute to the energy transformation of enterprises and society. Prior to the launch of a new project the Company entrusts environmental assessment agencies to conduct environmental

assessment including the assessment of the influence on local biodiversity.In the meantime it earnestly performs greening governance holds activities on Arbor Day and enhances employees'

awareness of environmental protection.

10 11Sustainability Report 2023 Chairman's Statement About Us Strategies and Management Corporate Governance Production and Operations Employee's Rights and Benefits Product Services Environmental Protection Community Participation Lu Thai Textile Co. Ltd

Strategies and Implementation System Certifications and Joining Industry Organisations

The development strategy for 2022 to 2026: Lead the industry in green low-carbon and sustainable development. Sustainability-related Certifications

The Company strives to boost the development and profitability of new products especially green and eco-friendly products that are beneficial

to sustainable development. It also develops low-carbon and environmentally-friendly products and promotes energy saving and emission

reduction to improve the level of green development.Chemical recycling

Reduce the overall use of chemicals and the discharge of hazardous chemicals and reuse more than 99% of liquid ammonia.Green and low-carbon management system

Establish a green and low-carbon management system to manage energy and chemicals in a closed-loop manner.Green and low-carbon core technologies

Promote and demonstrate in the industry the packaged technology for automatic cheese dyeing digital color transmission technology WRAP

high-flux films for printing and dyeing wastewater and recycling technology and low-salt and low-water dyeing technology.Green energy use and recovery

Promote the use of green energy such as green photovoltaic power with green energy accounting for 7.7% of the total energy used by the

Company; persevere with the application of the water recycling technology with the water recycling rate reaching approximately 60%;

push ahead with the employment of waste heat recovery technology with a recovery rate of 80% saving 12536 tons of steam every year

and reducing 2902 tons of carbon emissions. HIGG

The Sustainable Development Committee has been established to provide team support for sustainable development.ISO 9001 Quality Management System Organic Content Standard (OCS)

Sustainability Committee ISO14001 Environmental Management System China Environmental Labelling Program (CELP)

ISO45001 Occupational Health and Safety Management System CNAS-accredited lab

ISO10012 Measurement Management System Higg Index (FEM/FSLM)

Strategic Climate campaign

development Supply chain launched to achieve Release of Sustainable products traceability "carbon peak" and sustainability reports SA8000 Social Responsibility Management System Authorized Economic Operator (AEO) Program Certificationgoals "carbon neutrality" goals

Worldwide Responsible Accredited Production (WRAP) EUROPEAN FLAX Standard

Business Social Compliance Initiative (BSCI) U.S. Cotton Trust Protocol (USCTP)

Sustainable Textile Production (STeP) ISO14067 Carbon Footprint of Products - Requirements and Guidelines for

Quantification

OEKO-TEX Standard 100

Product carbon footprint of Shandong Province

Global Recycled Standard (GRS)

Global Organic Textile Standard (GOTS)

12 13Sustainability Report 2023 Chairman's Statement About Us Strategies and Management Corporate Governance Production and Operations Employee's Rights and Benefits Product Services Environmental Protection Community Participation Lu Thai Textile Co. Ltd

Participation in Industry Organisations Stakeholder Engagement

The Company has joined industry organisations and attended multiple industry seminars to contribute to the industry make progress with its Means of

Stakeholders Issues of concern communication Actions of Luthai Textile

peers and create a better future of the Chinese textile industry.Strictly complying with laws and

Operation in regulations

Industry organisations Role of the Company Compliance Supervision and Actively responding to environmental

Safe and green inspection calls and formulating action plans

The China Chamber of Commerce for Import and Export of Textiles (CCCT) A Sixth Vice Chairman Organisation production Visits Helping the poor and improving

Fulfilment of social Material providing people's livelihoods

responsibilities

The China Dyeing and Printing Association (CDPA) A Sixth Vice Chairman Organisation Supporting the public welfareGovernment

The China National Garment Association (CNGA) A Seventh Standing Director Organisation

Improving the product quality

The China Textile Engineering Society (CTES) The 26th Standing Director Organisation Product quality Customer visits management system

Responsible marketing Customer service Improving the customer relationship

Integrity hotline management system

The China National Textile and Apparel Council The Fifth Vice Chairman Organisation Specially Invited Respecting customers' Opening business Conducting the customer satisfaction

opinions operations survey

Customers Visiting customers regularly

The China Textile Enterprise Association (CTEA) The Tenth Vice Chairman Organisation

The Chinese Association for Textile Enterprises Culture Construction The Fifth Vice Chairman Organisation Specially Invited

General Meeting of

Corporate governance Shareholders Compliant operations openness and

The China Research Institute of Enterprise Culture The Vice Chairman Organisation and profitability On-site survey transparency

Honest and compliant Telephone consulting Safeguarding the legitimate rights and

operations Interaction Easy of the interests of shareholders by laws

The China Cotton Textile Association (CCTA) A Sixth Vice Chairman Organisation Competitive edge Shenzhen Stock Exchange

Shareholders and

investors

The China Council for Brand Development (CCBD) The Standing Director Organisation

The China Federation of Industrial Economics (CFIE) The Sixth Member Organisation

A harmonious Supervision by the Helping the poor and joining public community welfare activities

The China Association for Quality (CAQ) Member relationship masses Community donation and landscaping

Contributing to the Visiting communities Promoting employment and

community economy

The China Nonwoven & Industrial Textiles Association (CNITA) The Member Organisation developing local suppliersCommunities and

the public

The Shandong Council for Brand Development The Standing Director Organisation

Respecting human rights Improving the remuneration

The Shandong Textile and Apparel Association (SDTAA) Rotating Chairman Organisation Remuneration and management systemThe Labor Union and the

benefits employee representative Improving employee cultivation and

Career development assembly promotion mechanisms

channels Employee complaint Diverse communication channels

Employees Health and safe Helping for employees in need

production Safety training and inspection

Exchange visits among Continuously improving supplier

senior management management procedures and

personnel strengthening the control of Green and low-carbon operational risks

development Exchange and Strengthening contract management

Honest and compliant cooperation in experience and standardising credible

operations and technology procurement

Value chain Daily communication Sharing experience and technology

partners Exchange through and exchanging needed goods

industry conferences Building industry-university-research

platforms

14 15Sustainability Report 2023 Chairman's Statement About Us Strategies and Management Corporate Governance Production and Operations Employee's Rights and Benefits Product Services Environmental Protection Community Participation Lu Thai Textile Co. Ltd

Corporate Governance/Building

Excellent Corporate Governance

Corporate governance is the core of modern corporate systems and

sound corporate governance is necessary for a competitive enterprise.Luthai continuously establishes and improves governance mechanisms

optimises governance structures and actively implements compliance

management risk control and business ethics development. It also

ensures scientific and effective decision-making and vigorously promotes

technological innovation in order to contribute to fully support the

efficient operations of the Company and achieve high-quality growth.Sustainable Development Goals (SDGs) of the United Nations

Peace and

Justice Strong

Institutions

Partnerships

for the Goals

16 17Sustainability Report 2023 Chairman's Statement About Us Strategies and Management Corporate Governance Production and Operations Employee's Rights and Benefits Product Services Environmental Protection Community Participation Lu Thai Textile Co. Ltd

Business vision Governance structure

Creating wealth contributing to society clothing the world and Organisational structure

Mission

weaving our way to every corner of the globe

The Company continuously improves the basic governance structure composed of the General Meeting of Shareholders the Board of

Directors the Supervisory Committee and the Senior Management whose rights and responsibilities are defined in accordance with the

* Creating wealth and contributing to society: Company Law the Securities Law the Code of Corporate Governance for Listed Companies the Guidelines No.1 of the Shenzhen Stock

The Company has always created value for its customers sought happiness for its employees created wealth for the society Exchange on the Self-regulation of Listed Companies - Standardized Operation of the Companies Listed on the Mainboard and other

and gained benefits for its shareholders. It will realise value while developing the economy and serving the society. It will relevant laws regulations and regulatory documents in order to ensure efficient and standardised operations.also fulfil its responsibility in saving resources protecting the environment and engaging in public welfare. Through these The controlling shareholders strictly abide by relevant securities laws and regulations actively regulate their own corporate governance

efforts it will assist in comprehensive and coordinated development of the material civilisation cultural and ideological ensure the independence of listed companies in terms of business personnel assets institutions and finance and support listed

progress and ecological civilisation and share the fruits of cultivation with all members of the public. companies to give back to investors in various forms. Since its listing the Company has been adhering to cash dividends every year and

has completed the fifth B-share repurchase plan as of now. The Company conducts separate vote counting for the voting results of small-

and medium-sized investors participating in the General Meeting of Shareholders. Since 2020 it has held annual performance briefing

* Clothing the world and weaving our way to every corner of the globe: meetings and timely disclosed communication records with institutional investors fully protecting the right to information and voting

Holding fast to the inheritance and innovation in the textile industry the Company aims to create beautiful life through rights of small- and medium-sized investors.yarn decorate happy life with fabric enrich the world with clothes and contribute to the progress in the textile and garment

civilisation and harmonious development of the society.Organisational Structure of Luthai Textile Co. Ltd.World-class and century-old

Vision General Meeting

textile enterprise of Shareholders

* From the perspective of space:

The Company will seize the development trend in the industry create a world-class high-end brand and tap the development

potential and lead the progress in the industry via technological innovation across the globe.Supervisory Board of

Committee Directors

* From the perspective of time:

The Company will base itself on and go beyond textiles and finally embark on a journey to scientific development featuring

environmental protection low carbon technology and humanity. In this way it will stand out in market competition and

make its undertakings ever-lasting.People foremost policy rigorous scientific attitude client- Strategy Nomination Remuneration Audit Committee

Values Committee Committee Committee

oriented principle and integrity for win-win outcome

* People-foremost policy:

Giving top priority to human resources the Company upholds the philosophy of "respecting people relying on people Chairman

cultivating people and for the people" and respects labour knowledge talent and creation. It advocates for equal

opportunities fair competition and appointment of people by abilities. Besides it cares about and has deep love for its

employees by providing them with a good environment for working living and learning. By doing so the Company shares

the fruits of development with its employees and grows together with its employees.Senior

Management

* Rigorous scientific attitude:

Rigorous responsible and conscientious the Company seeks for ever greater perfection. Modest prudent efficient and

innovative it applies a realistic and pragmatic approach. Moreover it follows the guiding principles of unity and discipline

industry and ambition and commitment to excellence. It also adopts practical and realistic methods makes overall plans

and takes all factors into consideration and gives prominence to the key points to boost institutional regulated and

standardised work and achieve sound stable and sustainable development.Wholly-owned Functional Majority-owned Branch Companies

Production Lines

Subsidiaries Departments Subsidiaries and Offices

* Client-oriented principle:

Focused on customer demands as always the Company endeavours to provide products to the satisfaction of its customers.With customer-oriented production and operation it makes agile response to market changes runs its business in an Development of the Board of Directors

innovative manner provides customers with excellent products and services and dynamically meets personalised demands

of customers to improve customer satisfaction and loyalty.Attaching great importance to board development Luthai Textile continued to improve the board structure and functions gave full

* Integrity for win-win outcome: play to the roles of board committees paid attention to the independence and diversity of composition and actively conducted

training for the directors and the management. By doing so the Company ensured efficient board operation and scientific decision-

The Company aims to establish stable mutually trusted ever-lasting and win-win partnership based on integrity quality and making thereby improving the overall management and operation efficiency. The Company's Board of Directors comprises 12

service. It abides by commercial ethics keeps its word serves customers heartily treats employees sincerely and cooperates directors including four independent directors. A total of 13 meetings of the Board of Directors were held in 2023 with a full

with suppliers earnestly. It unites people improves satisfaction of related parties and achieves win-win cooperation through attendance rate of directors. During the Reporting Period 84 topics were deliberated on covering equity incentives policy revisions

honest operation. regular reporting profit distribution related-party transactions and share repurchases.

18 19Sustainability Report 2023 Chairman's Statement About Us Strategies and Management Corporate Governance Production and Operations Employee's Rights and Benefits Product Services Environmental Protection Community Participation Lu Thai Textile Co. Ltd

Board governance structure Board Diversity

The Board of Directors perform its duties in strict accordance with the Articles of Association and the Rules of Procedure of the Board of Directors. The Company values the diversity of the Board members whose job responsibilities are determined by their professional experience. In 2023

The Board of Directors has established the Strategy Committee the Audit Committee the Nomination Committee and the Remuneration the Board members included three foreign directors accounting for 25% and four female directors accounting for more than 30%.Committee. These special committees make full use of their expertise to make scientific decisions on the Company's development issues.Date of service

Name of Director Gender Age Position(s)

commencement

Liu Zibin Male 59 ChairmanPresident 6 June 2007

Strategic Nomination Remuneration Audit Committee

Committee Committee Committee

Xu Zhinan Male 94 Vice Chairman 6 May 2004

Conduct feasible study Study and formulate the Formulate and review Responsible for the

on the Company's criteria and procedures renumeration policies communication Liu Deming Male 34 Director 12 May 2017

long-term strategic for selection of the and plans formulate and supervision and review

development plans Company's directors and implement assessment of the Company's internal

and major investment senior management and evaluation criteria and external audits

decisions determine the optimise the structures improve the assessment strengthen the Board's

Company's development of the Board of Directors and evaluation system for effective oversight Xu Jianlv Female 48 Director 10 June 2022

plans improve investment and the management the Company's directors of the management

decision-making process and improve corporate and senior management enhance internal control

enhance scientific governance structure. and formulate scientific capabilities and improve

decision-making and effective renumeration internal control policies. Zheng Huisheng Male 36 Director 10 June 2022

improve the quality and management policies.effectiveness of major

investment decision.Director and

Zhang Zhanqi Male 52 Vice President 10 June 2022

Director and Board

Zhang Keming Male 56 Secretary 10 June 2022

General Accountant

Chairman: Liu Zibin Chairman: Qu Dongmei Chairman: Peng Yanli Chairman: Zhou Zhiji

Members: Members: Members: Members:

Du Lixin Male 49 Director* Xu Zhinan Liu * Liu Zibin Xu Zhinan * Liu Zibin Zhou Zhiji * Zhang Keming and 10 June 2022

Deming Xu Jianlv Zhou Zhiji and Peng and Qu Dongmei.Zheng Huisheng Yanli. * Qu Dongmei

Zhang Zhanqi

Zhang Keming Du Zhou Zhiji Male 61 Independent Director 10 March 2019

Lixin Zhou Zhiji Qu

Dongmei Peng Yanli

and Quan Yuhua.Qu Dongmei Female 55 Independent Director 10 June 2019

* In 2023 the * In 2023 no meeting * In 2023 the * In 2023 the Independent Director

Committee held one was held. Committee held two Committee held six Peng Yanli Female 63 10 June 2022

meeting with a full meetings with a full meetings with a full

attendance rate of attendance rate of attendance rate of

the members. the members. the members.Quan Yuhua Female 68 Independent Director 10 June 2022

2021

Committee Name Main duties Functioning of committeeSustainability Report 2023 Chairman's Statement About Us Strategies and Management Corporate Governance Production and Operations Employee's Rights and Benefits Product Services Environmental Protection Community Participation Lu Thai Textile Co. Ltd

Compliance management Business ethics

Adhering to operations with integrity law-abiding principles and compliance Luthai Textile has always emphasised that integrity and law-abiding principles are the The Company attaches great importance to business ethics and strictly complies with laws and regulations of countries where it operates as

foundation of the Company and always abode by the values of "integrity and win-win situation". Under the philosophy of operations with integrity the Company well as the industry recognised code of conduct. It advocates honesty and trustworthiness fair competition anti-corruption openness and

has continued to strengthen the compliance management system improve compliance management policies optimise auditing procedures and implement internal transparency and supervises the business behaviour of partners committed to creating an honest fair clean and harmonious operating

control in order to safeguard healthy sustainable development. environment.Compliance management system

Code of conduct Complaint reporting Anti-corruption

Following the philosophy of operations with integrity the Company has continued to improve the compliance management for employees mechanism and bribery

system strengthened the effect of internal auditing and established the Self-assessment Control Matrix based on the

procedure documents in order to determine the assessment scope and priorities. With all procedures assessed the on-

site testing has identified deficiencies made suggestions for improvement and timely produced the Internal Control Self-

assessment Report to ensure effective internal control assessment.To promote normative and institutionalised business operations the Company considering its realities has formulated The Company continues to strengthen The Company encourages all The Company strictly abides by the

the Regulations on Internal Auditing in accordance with the Internal Auditing Standards and the Basic Norms for Corporate employee behaviour management shareholders to advise and comment anti-corruption and anti-bribery laws

Internal Control promulgated by the Ministry of Finance and the relevant laws and regulations. By doing so it has effectively by strictly requiring employees to act and regulations of countries where

improved the overall management and risk prevention capabilities. on its operation actively improves the in accordance with laws guiding and it operates. It conforms to the anti-

supervising employees to abide by complaint reporting mechanism widens corruption and anti-bribery pledges

rules and regulations and operating in report channels including reporting in the Company and with business

Internal control auditing compliance. Through the promotion via letters phone calls e-mails or in partners and continuously improves

of corporate culture publicity and person and pledges to protect the the supervision mechanism of anti-corruption to ensure the standardised

The Company values the implementation of internal control. Following its 18 guidelines for internal control the Company education training of laws inspection whistleblower's privacy.and supervision of employee behaviours o p e rat i o n o f t h e C o m pa n y. T h e tested and assessed the system development and implementation of the internal control of the Head Office and holding C o m p a n y c o n d u c t s a u d i t s b y

subsidiaries. As a result deficiencies in design and implementation were identified and improved effectively. In 2023 the and other measures the Company urges

employees to raise awareness of ethical relevant policies every year. In 2023 Company assessed the internal control of eight subsidiaries and issued the internal control assessment matrices with an the Company audited the auxiliary

internal control audit coverage of 82.15%. standards and improve their own material procurement and inventory

moral accomplishment to ensure the business and the sales business. The

implementation of integrity values and audit involved the selection of the

ethical behaviour and thereby promote procurement unit price inquiry and

Indicator (Unit) 2021 2022 2023 the healthy development of various comparison bidding and tendering

business. management long-term inventory

Internal control audit coverage (%) 89.33% 89.03% 82.15% processing sales procedures sales

pricing payment and collection and

cash management. As a result no

Note: Internal control assessment coverage is the ratio of the total assets of the assessed entities to the Company's consolidated total assets corruption or fraud was identified.Compliance performance Innovative development

Targets Indicators 2021 2022 2023

Innovation is the major driver of an enterprise's high-quality development. Luthai Textile continues to ramp up spending in scientific and

Senior leaders Quantity of non-conformance events 0 0 0 technological R&D in order to push the intelligent and digital transformation of the Company. Also it seeks strong support for the Company's

Middle-level leaders Quantity of non-conformance events long-term development through the organic integration of information and industrialisation.and related functions 0 0 0

Employees Quantity of non-conformance events 0 0 0 Scientific and technological R&D

Shareholders External audit results Standard Standard Standard

Adhering to the "Four-in-One" innovation philosophy which "lets the enterprise play the major role adopts the customer-

Suppliers Quantity of non-conformance events 0 0 0 oriented approach is underpinned by research institutes and universities and emphasises the alliance with strategic

customers and major suppliers" the Company has formed a three-level R&D innovation team led by Luthai Engineering

Technological Institute focusing on breaking through the professional expertise for production lines and mainly comprising

the quality control teams of the workshops and groups of the plants. By doing so it has continuously enhanced the internal

Information disclosure innovation mechanism developed the scientific and technological innovation platforms deepened the industry-university-

The Company has established and improved the information disclosure research cooperation and laid a solid foundation for the Company's innovation cause.mechanism which received positive feedback from investors:

* Ramping up spending in scientific and technological innovation

* As at the end of 2023 the Company had been rated A for six consecutive years in the information disclosure assessment on the listed

companies on the Mainboard by the Shenzhen Stock Exchange. In 2023 the Company spent RMB240Million on technological R&D developed 72 new products and processes and carried out 170 projects on

technological improvement.* The Company releases its performance results as well as major and temporary announcements to investors of A- and B- shares via

Internet media (cninfo.com) designated by the China Securities Regulatory Commission as well as Securities Times Shanghai Securities As at the end of 2023 the Company had undertaken eight national scientific and technological innovation platforms and five provincial

Journal China Securities Journal and Ta Kung Pao. platforms and received more than 48 rewards concerning national provincial and ministerial scientific and technological progress awards of

which one was the First Prize of National Scientific and Technological Progress Award and three were Second Prize of National Scientific and

* The Company responds in real time to investors' messages and questions via the "Interaction Easy" of the Shenzhen Stock Exchange. In Technological Progress Award. Furthermore it had undertaken 19 scientific and technological plans of provincial and ministerial level received

2023 a total of 69 questions were replied with a response rate of 100%. 485 authorised patents eight software copyrights and host or engaged in the formulation of 51 national and industrial standards.

22 23Sustainability Report 2023 Chairman's Statement About Us Strategies and Management Corporate Governance Production and Operations Employee's Rights and Benefits Product Services Environmental Protection Community Participation Lu Thai Textile Co. Ltd

* Key R&D projects

* Developing scientific and technological R&D platforms

The Company highlights the building and development of scientific and technological innovation platforms establishing core technology

platforms in the major phrases of research design and test to improve core technologies in the whole process.With the help of technological platforms such as the national enterprise technical centre

national demonstration base for talent introduction national yarn-dyed fabric R&D base

Shandong Provincial Engineering Technology Research Center and Shandong Big Data

Industry Innovation Center Luthai Engineering Technological Institute has worked with

production lines for yarn-dyed fabric knitted fabric apparel printing and dyeing and

functional fabric to conduct explorations. It has been dedicated to researching cutting-edge

technologies. As a result they have paved a path based on fabric but transcending traditional "Research on Processing Technology and Application of

Textile garment "Lyocell Fibre Green Manufacturing" projectfabric in scientific and technological innovation quality improvement brand promotion low- Recycled Cotton" project

research platform carbon energy conservation and corporate culture development.Lyocell fabric is prone to fibre formation during printing dyeing With the development of textile circular economy the recycling

and wearing resulting in problems such as light colour "frosting" and reuse of waste textiles has attracted much attention. Various

and pilling during household washing which is a major technical countries have introduced policies to encourage the recycling of

bottleneck for the promotion and application of Lyocell. The Company waste textiles and more and more brand companies have begun to

collaborated with Wuhan Textile University and Qingdao University to require the recyclable and environmentally-friendly textiles. In this

Luthai Engineering Technological Institute has capitalised on the design resources of the address key scientific difficulties related to the building of multi-level project the Company collaborated with Qingdao Hong Da Textile

national industrial design centre the Shandong Provincial industrial design centre an Italian and multi-scale supramolecular structures and the mechanism of Machinery Co. Ltd. and Jiangnan University to develop specialised

designer's workshop for fabric design and the enterprise brand design centre to build a fibre formation in Lyocell fibres as well as the rapid in-situ colouring fabric opening and carding equipment and study the opening

textile and apparel design platform. The platform has integrated textile and garment trendy and high-temperature moisture fixation mechanisms of Lyocell fibres. and carding procedure and process parameters. The Company has

design textile new material design popular fabrics design and garment brand design which Additionally research was also conducted on key technical difficulties achieved pre-consumer recycled cotton with cone-winder waste

represents the major backbone of the enterprise's independent brand building and promotes such as ant-fibre processing technology green manufacturing of 22 to 23 mm and recycled cotton with cutting fabrics of 17 to

Textile garment the Company to take leap from creation to creativity. technology and automation equipment and low-carbon industrial 18 mm meeting the spinning requirements of 20% to 100% for

design platform production based on carbon footprint and water footprint process recycled cotton in 10 to 30 s and 20% to 25% for recycled cotton

management in the dyeing and finishing process of Lyocell fibres. in 30 to 40 s. The developed products have been recognised by

domestic and foreign customers.Luthai owns a complete set of testing devices and equipment for textile materials fabrics * Major cooperation with universities

and garments as well as dyeing and finishing auxiliaries. It is equipped with laboratories that

meet international standards including the constant temperature and humidity laboratory

textile material testing laboratory fabric and garment laboratory and chemical analysis and Donghua University

synthesis laboratory. Also it has an experienced professional testing team that is familiar The Company has established the "National Collaborative Innovation Center of Key Technologies for Textile Industry" with Donghua University

with domestic and overseas standards. As a result Luthai has made every effort to establish

Textile garment testing for research of new fibre material technologies and key technologies for eco-friendly dyeing and finishing. In 2022 the Company participated in an integrated testing and inspection platform in the textile and apparel industry at home and

and experimental the "14th Five-Year Plan" National Key R&D Program led by Donghua University. In July 2023 Academician Yu Jianyong President of Donghua abroad.platforms University visited the Company to provide guidance and fully affirmed the Company's research and innovation work. He also had an exchange

on further cooperation with Donghua University in the future.Protecting intellectual property rights

The Company attaches great importance to the protection of intellectual property rights constantly improves the protection

system of intellectual property rights sets up teams for the protection of intellectual property rights and patents. Moreover it

formulates trademark management standards patent application management procedures stands against the infringement

of trademark rights patent rights and copyrights and continues to improve the holistic operation efficiency in protecting

intellectual property rights. In 2023 the Company obtained 43 authorised patents including 36 invention patents and was

successfully selected as a "National Intellectual Property Advantageous Enterprise" marking that the Company's achievements

in innovation ability R&D ability patent protection and other intellectual property aspects were authoritatively recognised by

the national intellectual property management departments.Industry-university-research cooperations

The Company collaborates with many universities and scientific institutes ranging from the training of basic talents and core

technology R&D. Luthai has explored and established an all-round industry-university-research collaboration mechanism with

many institutes. As at the end of 2023 the Company established a long-term partnership with universities such as Donghua

University Hong Kong Polytechnic University Jiangnan University Qingdao University and Wuhan Textile University. Through

R&D cooperation with leading institutes in new technologies materials and products the Company has improved its R&D

capability.Exchanging with Academician Yu Jianyong

24 25Sustainability Report 2023 Chairman's Statement About Us Strategies and Management Corporate Governance Production and Operations Employee's Rights and Benefits Product Services Environmental Protection Community Participation Lu Thai Textile Co. Ltd

Qingdao University Innovation in production technologies

The Company signed a strategic collaboration agreement with Qingdao University in 2016 to carry out in-depth cooperation with the university

in scientific research talent cultivation and social services thereby contributing to socioeconomic and technological development. Luthai Textile has maintained an open attitude toward technological R&D and kept strengthening the industry-university-

* In terms of scientific research Qingdao University and the Company have jointly established the "Luthai Group--Qingdao University Research research cooperation. It has developed green and low-carbon technologies both independently and through cooperation and has

Center" and the "National Collaborative Innovation Center of Key Technologies for Textile Industry" to be dedicated to the research of continuously optimised the Company's clean production mode. As a result the Company's green and sustainable development

industrial textile and marine biomass fibre. has been constantly boosted. Over the years more than 480 technologies of the Company have been patented. Among them

in 2023 the "Preparation Device and Method for Cellulose Filbe Cheese Online Dyeing Colour Point Yarn" won the China Patent

* In terms of talent cultivation the Company has set up the "Luthai Scholarship" in the university and the "Luthai International Talent Silver Award achieving zero breakthrough in the national-level patent award honours; the "Weft-knitted Shirt Fabric and Its

Reserve Class". As a result a number of brilliant students from textile universities have been attracted to Luthai and become the backbone Production Process" won the patent gold award by the China National Textile and Apparel Council and the "Spinning Method of

of the Company. Vortex Spun Yarn with Ring Spinning Characteristics and Vortex Spinning" won the high-value patent in Zibo City.* In 2023 the Company collaborated with Qingdao University to conduct research on "Lyocell fibre green manufacturing" and achieved good

results.Preparation Device and Method Weft-knitted Shirt Fabric

for Cellulose Filbe Cheese Online and Its Production

Dyeing Colour Point Yarn Process

Technical Exchange Meeting with Qingdao University

Shandong University of Technology

The Company has cooperated with the Shandong University of Technology in establishing the Luthai School of Textile and Apparel thereby

promoting organic industry-education integration collaborative innovation and integrated industrial-educational development.* The Company has also worked together with the university to establish laboratories and share research apparatus and platforms achieving

research integration in terms of the scientific program development and project application.* A team of part-time teachers including Taishan Scholars senior experts of the Company and excellent technological talent has been built

to achieve the integration of teaching resources of the university and the Company.* The Company has utilised the comprehensive strengths of both sides to introduce more practice and internship opportunities for students.It donates RMB1 million to the university for collaborative talent cultivation every year. Meanwhile the "Luthai Scholarship" has been set

up to encourage students to work hard achieving "joint talent cultivation" between the university and the Company.* In 2023 the Company established a targeted service mechanism with youth teachers from Lutai School of Textile and Apparel Shandong

University of Technology to conduct research on the Company's challenging projects and jointly applied for and built the Engineering

Research Center for the Functional Textile and Ecological Dyeing and Finishing in Zibo.Fancy Wrap Yarn with Dyeing Method for Polyester

Bamboo Knot Effect and Yarn with Halo Dyeing Style

its Spinning Method

In 2023 the Company focused on tackling key areas such as new materials new technologies new processes and new

functions. Luthai aimed to reserve new products in terms of materials functions technologies and processes based on

the development trends market demands overcome current technological and product pain points and implementation

difficulties continuously meet potential customer needs and enhance the Company's market competitiveness.Communication with Teachers from Shandong University of Technology

26 27Sustainability Report 2023 Chairman's Statement About Us Strategies and Management Corporate Governance Production and Operations Employee's Rights and Benefits Product Services Environmental Protection Community Participation Lu Thai Textile Co. Ltd

Production and Operations/

Responsible Production and

Operations

In line with the principles of being responsible to customers employees and

society Luthai implements the philosophy of "responsible production and

operations" improves safety production mechanisms enhances chemical

safety management and regulates supplier behaviours with high standards.The Company is committed to providing customers with reliable products

and employees with a safe workplace minimising social impact during sound

operations safeguarding the rights and interests of stakeholders in multiple

aspects and achieving the long-term stable development of the Company.Sustainable Development Goals(SDGs) of the United Nations

Responsible

Consumption

and Production

28 29Sustainability Report 2023 Chairman's Statement About Us Strategies and Management Corporate Governance Production and Operations Employee's Rights and Benefits Product Services Environmental Protection Community Participation Lu Thai Textile Co. Ltd

In terms of risk hazard inspections the Company's Safety Inspection Office carried out various inspections in 2023 such as special inspection

Production safety management of dust explosion-proof diagnosis of invited safety experts 100-day clearing campaign special inspection of warehouse general inspection

during the holiday and departmental self-inspection and self-correction which identified more than 21000 safety hazards. During the Reporting

Period all risk hazards were eliminated.Production safety involving employees' life safety is the key to the survival and development of the enterprise. Its responsibilities are weightier

than Mount Tai. Luthai insists on the principle of "safety first prevention first and comprehensive management" and implements national local

and industrial policies laws and regulations and standards on safety work. The Company consciously carries out all rules and regulations of

production safety and supervises the implementation.Building of safety management system and mechanism

010203

The Company has

□ The Company has □ The Company has set established the safety

continuously improved up a Safety Production production targets

safety production Committee and an Accident management responsibility

standardisation templates Emergency Rescue Leading system and signed the

conduct internal safety Group around the Safety Responsibility Letter for

standardisation reviews for Inspection Office with a Safety Production Targets Management at all levels.various departments and total number of 68 safety Besides the Company has

supervised and inspected management personnel. broken down the accident

the implementation of control targets by levels

safety standards in various and implemented strict

plants. assessments of personnel

at all levels to ensure the

fulfilment of the safety

production control targets.The Company is conducting an on-site safety hazard inspection

The Company's safety control targets

Eradicate fire risks and personal casualties

in 2023 In terms of safety training the Company carried out the training of the first lesson after the Spring Festival Qingming Festival Mid-Autumn

Festival and National Day and organised a series of special training in 2023 such as 27 training sessions for new employees 73 safety training

Prevent the accidents of major environments sessions for all employees nine training sessions for special operators two training sessions from invited external experts special equipment

and occupational health and safety training and certified safety engineer training. Moreover the Company has implemented the government's special action requirements on

"deep learning deep training wide examination" for safety production and achieved the normalisation of safety training and learning. In

Eliminate grand electromechanical addition the Company has conducted "Safety Production Month" activities with the theme of "everyone values safety and knows how to handle

equipment accidents emergencies" aiming to prevent and defuse major risks eliminate potential safety hazards in a timely manner and effectively curb production

safety incidents and finally create a sound environment for safety production. In the whole year of 2023 the Company conducted more than 100

Avoid traffic accident various safety training sessions with over 13000 trainees.The Company has implemented that the safety facilities in construction must be designed constructed approved and put into production and

use at the same time as the main project to control and prevent safety accidents from the source.Building of safety management system and mechanism

The Company continues to improve the dual prevention system for hierarchical control of production safety risk and investigation and

governance of hazards and persists in risk prevention and early identification. In terms of hierarchical risk control the Company identifies the

risk hazards in operating activities and equipment and facilities in each sector every year classifies the types and consequences of possible

incidents and determines the hierarchy of control and the corresponding accountable person according to the category. In 2023 the Company The Company organises safety training for

identified a total of 269 risk hazards in various production and operating activities. For each risk hazard the Company has formulated specific The Company organises special safety training sessionsmanagement members

risk control measures to prevent and control risks by ways such as standard specification safety training distribution of supplies for labour

conservation and protection on-site supervision and inspection emergency response drills and timely handling of incidents.

30 31Sustainability Report 2023 Chairman's Statement About Us Strategies and Management Corporate Governance Production and Operations Employee's Rights and Benefits Product Services Environmental Protection Community Participation Lu Thai Textile Co. Ltd

"Safety Production Month" activities in various forms

During the "Safety Production Month" campaign in June 2023 the Company has conducted a variety of activities such as publicity board

design special training on safety production inspections on potential safety hazards award-winning essay contests safety photographer

short videos on safety dissemination emergency response drills and cross-talk and sketch parties. All employees who participated in the

activities raised their safety awareness.The Company is conducting an emergency drill

Fire safety management

As a key unit of fire safety the Company implements the working policy of "prevention first with a combination of fire prevention and

firefighting" standardises fire safety management procedures strictly implements fire safety management regulations to effectively prevent fire

accidents and guarantee the implementation of emergency rescue. In addition these measures minimise property damage and personnel injury

caused by fire occurrence and fire rescuing.The Company's Security Office conducts annual planned fire safety knowledge training critical parts protection training and fire drills for each

department and plant to improve the fire safety awareness and accident handling ability of all employees. Each department strictly implements

the Hot Work Management System Fire Inspection System and Electricity Safety Management System. The 5G smart sharing management

platform jointly developed by Luthai and China Mobile integrates security management and fire monitoring functions. Through multi-functional

applications such as intelligent brain engine security monitoring park access smart fire protection and wireless intercom the Company has

comprehensively built an "information sharing intelligent and efficient" security management and fire monitoring integrated control system.This has made safety management three-dimensional emergency support intelligent and emergency response collaborative making the safety

management of the Company's fire and public security more efficient.The Company organised various departments to carry out publicity board design activities with the theme of "everyone

values safety and knows how to handle emergencies" which had created a total of 50 boards.Besides 17 publicity activities on "civilised and safe travel" were conducted. Visible fire monitoring Fire safety hazard inspection Employee training on critical

parts protection

All departments and subsidiaries organised a total of 359 teams to participate in the inspection on potential safety hazards in the 19072 (hours) 2981 (items)

"Inspection Protection and Promotion" activity with a total number of 8079 participants and a total of 4992 identified safety hazards 1998 trainees

and finally selected 74 outstanding teams.The "An Kang Cup" award-winning essay contest received a total of 86 outstanding essays from various departments and ultimately

awarded two first prizes three second prizes five third prizes and five excellent prizes. Firefighting and evacuation drill Test on automatic sprinklers system Major fire safety incident

The Company carried out the "Safe Shooter" activity and collected 154 works of which 19 were selected as excellent works by the

Emergency Management Bureau of Zichuan District. 290 sessions (64 sessions at night) 14348 (points) 0 (times)

A cross-talk and sketch evening party was held with the theme of "everyone values safety and knows how to handle emergencies".Production safety emergency management

The Company has established a sound production safety emergency

management system and actively carried out emergency response

drills to comprehensively improve its capacity for emergency

response and accident rescue. For example it has formulated several

response plans such as Regulations on Emergency Preparedness and

Response Management Emergency Preparedness and Response for

Fire Accidents Emergency Preparedness and Response for Hazardous

Chemicals Leakage Accidents and Emergency Preparedness and

Response for Natural Gas Leakage Accidents. In 2023 the Company

organised each plant to conduct emergency response drills including Fire safety comics

30 special response drills and 166 on-site disposal drills and carried

out a total of 15 "Emergency Rehearsal Training" in the "Safety

Production Month" activities. The Company is conducting an emergency drill

32 33Sustainability Report 2023 Chairman's Statement About Us Strategies and Management Corporate Governance Production and Operations Employee's Rights and Benefits Product Services Environmental Protection Community Participation Lu Thai Textile Co. Ltd

For precursor chemicals and explosive chemicals the Company strictly complies with national regulations

and reports to the public security authorities in a timely manner. The Company establishes a chemical flow

ledger and strictly controls the use to prevent the outflow and illegal use of such chemicals.When each chemical is first purchased in the year a complete MSDS list should be requested from the

supplier and hung at the chemical usage and storage site.Firefighting and evacuation drill

Each user department should establish and improve the safety management system and emergency plans

for hazardous chemicals assign dedicated personnel to be responsible for the management of hazardous

chemicals and clarify responsibilities to individuals.Annual training is conducted for chemical users in each plant explaining the characteristics and hazards of

the chemicals used as well as how to handle and self-rescue after spillage or contact with human eyes or

skin and urging employees to store and use them correctly.The Company is conducting a fire hazard investigation The Company organises "119 Fire Safety Publicity Month" activities

Control of restricted substances

Chemical management

As the international awareness of environmental protection and product safety grows the demand for green production and environment-

friendly products has become a major trend. Luthai an international manufacturing enterprise naturally does not hesitate to keep up with the

Purchase storage and use management times and has established a whole process chemical control mechanism.Source control:

The Company controls the whole process of procurement transportation storage use and disposal of chemicals especially for the purchase According to the requirements of laws and regulations standards instructions and customers' restricted substances list (MRSL) of each country

and use of hazardous chemicals. Moreover the Company has formulated management systems and regulations such as the Safety Management and region the Company has established chemical approval system and Manufacturing Restricted Substances List (MRSL) which is stricter

System for Hazardous Chemicals the Regulations on the Supervision and Inspection of Hazardous Chemicals the Safety Management System than market regulations/standards. When chemicals for production pass the application test the Company will entrust the third-party testing

for the Storage Handling and Use of Liquid Ammonia and the Regulations on the Supervision and Inspection of Major Hazard Installations of organisation to conduct the test on toxic and harmful chemicals. For suppliers with test results in conformity with MRSL they are included in

Liquid Ammonia prompting each operation to be standardised detailed and normalised. the list of qualified suppliers and then can be used for bulk purchase. Meanwhile the Company strengthens the application of efficient and

environment-friendly dyeing auxiliary to eliminate the production of toxic and harmful chemicals from the source.Production process control:

The Company reduces pollution caused by chemical use through measures such as establishing a Chemical Inventory List (CIL) improving the

process to increase the utilisation of chemicals and recycling use of chemicals (e.g. liquid ammonia recovery).Terminal management:

Besides the Company tests the discharged wastewater and sludge for toxic and harmful chemicals according to the wastewater guidelines of

Zero Discharge of Hazardous Chemicals (ZDHC) twice a year to ensure zero discharge of toxic and harmful chemicals.In accordance with the MRSL information in market laws and regulations standards and brands the Company has developed its own

comprehensive MRSL and statement of conformity and requires all suppliers of chemicals for production to sign the statement of conformity to

guarantee that their products meet the restrictive requirements for toxic and harmful chemicals.The Company is conducting an emergency response drill for a

hydrogen peroxide leakage accident

34 35Sustainability Report 2023 Chairman's Statement About Us Strategies and Management Corporate Governance Production and Operations Employee's Rights and Benefits Product Services Environmental Protection Community Participation Lu Thai Textile Co. Ltd

Supply chain management

The Company attaches great importance to the openness and transparency of chemical information and data publicly releasing DETOX data on

discharged wastewater twice a year at the ZDHC GATEWAY and the Institute of Public and Environmental Affairs (IPE) and releasing Pollutant

Release and Transfer Registration System (PRTR) data once a year at IPE. At the same time the Company communicates and interacts with

suppliers customers third-party testing organisations non-governmental organisations and other relevant parties to achieve sustainable Through a new generation of integrated and collaborative platform (ERP system) based on Internet services and technical architecture

improvement of chemicals management. the Company has realised the information flow in the whole process from supplier access to purchase warehousing. This has ensured the

information flow in all processes of the supply chain improved the efficiency of raw material supply and made the purchase process more

standardised and transparent.Supplier management

When selecting suppliers the candidates are required to possess relevant product qualification certification and have manufactured same

or similar products for at least one year with a certain production scale. Priority will be given to suppliers who have obtained authoritative

certifications such as the ISO 9001 Quality Management System Certification the ISO14001 Environmental Management System Certification

the ISO45001 Occupational Health and Safety Management System Certification the SA8000 Social Responsibility Management System

Certification and the Green Factory Certification.Additionally the Company conducts on-site audits on suppliers to fully understand their production and quality control processes as well as

fulfilment of their social responsibilities. Only after the products are qualified for use can they be included as qualified suppliers.In terms of routine management the Company signs the Quality Agreement the Code of Conduct for Suppliers and the Environmental

Declarations with suppliers and regularly investigates their basic situation. The Company also conducts semi-annual and annual supplier

assessments according to different raw material suppliers and classifies suppliers based on the assessment results.Procurement management

Data releasing platform In terms of procurement whether to invite bids is determined based on different materials and the annual procurement amount. If bidding is

required the Bidding Office will conduct publication and assessment to select winning bidders. The Procurement Department drafts contracts

based on the bidding documents and the bid documents of the winning bidder and conducts subsequent procurement after being reviewed

by the Legal Affairs Department and approved by the President. For those that do not require bidding the Procurement Department selects

suppliers from the List of Qualified Suppliers conducts price inquiries and comparisons confirms purchasers and proceeds with subsequent

procurement work.For dyeing aids raw cotton and yarn we prioritise products certified by Bluesign GOTS/OCS and GRS. We continue to promote the use of

Management of chemical suppliers Understand relevant laws and Create a list of concerns on Ways to identify harmful

regulations and documents harmful substance chemicals recycled polyester recycled nylon recycled tencel and recycled cotton to improve resource utilisation.Selection of new suppliers Government Chemicals Compliance screening of Material For each batch of products purchased the sampling inspection system is implemented to control the input of unqualified materials from the

Daily evaluation of suppliers Non-governmental organisations Textiles Safety Data Sheet ("MSDS") source.On-site audit of suppliers Customers and brands Wastewater Initial identification of harmful

Input

Approval/removal of qualified suppliers Sludge chemicals according to the type of

management Warehouse management

· Supplier Quality and Safety Assurance auxiliaries

Agreement Third-party testing The Company sets up warehouses for storing and managing corresponding materials such as raw cotton yarn and chemicals. Each batch of

· Declaration of Environmental Conformity Analysis and tracking of testing data incoming materials is first inspected for appearance and sampled by the Quality Control Department. Only after passing the inspection can they

of Chemicals

· Declaration of Environmental Conformity be stored in the warehouse. A material inventory ledger is established for real-time material flow and inventory status in the material requisition

for Raw Materials and Auxiliaries program.Internal control

The internal control evaluation is carried out by the Audit Department of the Company every year so as to timely identify the loopholes and risks

Management of procurement storage use and Process testing and validation Green technology

other aspects of chemicals in the supplier management procedure which lays a solid foundation for the building of a responsible supply chain.Safety Management Process of Textile Chemicals Tap water Substitution of dyeing auxiliary

Provisions for the Management of Departmental Dyeing drainage Reduction of dyeing auxiliary

Production Chemicals Warp sizing drainage Emission reduction The main contents of internal control evaluation include

process Provisions for the Management of Procurement of Organisation of drainage Short process...Sizing Agents Dyestuffs and Auxiliaries

Provisions for the Management of Safety Control for

Warehouse Management Department

Creation of a testing data list Participation in green activities

Luthai reduces the level of pollutants through

Brand customers efficient chemicals management and good

Chemicals process control. Meanwhile the Company works

Output-end Information disclosure through Water quality together with relevant parties such as major

management IPESludge brands in the supply chain suppliers chemical

Product industry and non-governmental organisations to Whether the supplier management information system

reduce the impacts on the environment. Whether a reasonable supplier Whether the suppliers are selected and the supplier elimination system are set up so as

evaluation and access system according to the principle of fair and just to conduct real-time management assessment and

is established to examine the competition and the quality assurance evaluation on the quality price delivery timeliness

authenticity and legitimacy of the agreement is signed with the suppliers supply conditions qualification and reputation

suppliers' qualification and reputation. on the basis of effectively preventing operating status of materials or services provided

the risk of fraud. by suppliers and adjust the selection or retention of

them according to the assessment results.

36 37Sustainability Report 2023 Chairman's Statement About Us Strategies and Management Corporate Governance Production and Operations Employee's Rights and Benefits Product Services Environmental Protection Community Participation Lu Thai Textile Co. Ltd

Employee's Rights and

Benefits/

Building a Harmonious

Workplace To gether

Employees are the driving force and innovation source of

companies. Discovering the potential and stimulating the

ownership spirit of employees is the key to the success

of enterprises. Lu Thai Textile implements a humanistic

culture centred on caring employees meeting their

needs to the greatest extent possible while ensuring that

employees have a healthy and safe workplace. We provide

employees with a platform to show themselves and improve

their abilities consolidate their knowledge and skills

enrich their leisure life and assist employees in solving

difficulties. We truly care for and love our employees.(Sustainable Development Goals (SDGs) of the United Nations

38 39Sustainability Report 2023 Chairman's Statement About Us Strategies and Management Corporate Governance Production and Operations Employee's Rights and Benefits Product Services Environmental Protection Community Participation Lu Thai Textile Co. Ltd

Health and safety Respect and equality

The Company pays high attention to its employees' occupational health and safety so it has established and improved the management system

of occupational health and safety implemented risk control measures and actively inspected and responded to occupational disease hazards Protection of human rights and labourers' rights and interests

so as to ensure that each Lu Thaier's health and safety are free from impairments.The Company has always adhered to the principle of equal and friendly employment. It strictly complies with the laws regulations and

Before going to their posts new employees have requirements of regulatory authorities of the countries where the Company operates and actively supports the international conventions

all undergone pre-job physical examinations including the International Covenant on Economic Social and Cultural Rights and the Elimination of Discrimination in respect of Employment

t o a v o i d p e r s o n n e l w i t h o c c u p a t i o n a l and Occupation so as to build an equal friendly occupational platform for employees.contraindications from working in the relevant The Company believes that talents are the basis for the operation and sustainable development of companies. As to the recruitment and

posts; employees have undergone on-the-job retention of talents the Company adheres to the "all-inclusive" concept accepts all talents and promises not to determine employees'

physical examinations and their work will be salary and rank based on their gender age nationality ethnicity religion colour language domicile place and other personal characteristics

allocated according to the results; and when

leaving their posts employees have undergone The Company conducts emergency rescue drills

unrelated to work. The Company respects the rights of every employee and provides equal and free development space for every employee.post-job occupational physical examinations once or twice a year for relevant departments and

to ensure that employees leave their posts in workshops to ensure timely handling of hazards.healthy condition.T h e C o m p a n y h a s c o n d u c t e d r e g u l a r

occupational health education and training T h e C o m pa n y p o p u l a r i s e s h ea l t h ca re

for employees and established occupational knowledge each month and provides first-

health surveillance archives for employees aid medical kits for employees with first-

realising the standardised management aid medicine supplemented for 270 times on

featuring "one archive for one person". Measures average per month in 2023.taken

T h e C o m p a n y p o s t s w a r n i n g s i g n s a n d T h e C o m p a n y d i s t r i b u t e s h e a t s t r o k e

occupational hazard notif ication cards in prevention drugs in summer for convenient use

prominent positions in the workshop. by employees.The Company regularly maintains and repairs The Company is committed to putting an

occupational hazard protection facilities to In 2023 no any major public health events In interview process the Company actively end to all forced or compulsory labour.ensure their integrity and effectiveness. occurred in the Company. examines identity cards diplomas etc. Employees are free to leave the workplace

to prevent child labourers or underage after completing the work needed to be

workers who have not finished legal done within standard working time. The

co m p u l s o r y e d u c a t i o n f r o m b e i n g declaration system must be implemented

recruited by mistakes. for overtime work to ensure that overtime

Protecting work is a voluntary act of employees.equity

Occupational hazardous factors Countermeasures

A fair competition mechanism is adopted In the course of production and operation

f o r p r o m ot i o n . T h e p e r f o r m a n ce at the request of the local government or third-party institutions the Company

Take airtight ventilating and dedusting measures for cotton blending abilities and potential of employees will actively carries out due diligence on

machines and scutchers in pre-spun process. be considered to select the best ones. human rights protection.Adopt the approach of wet sweeping for the workshop to take away

Dust the dust accumulated on the surface as much as possible

Regularly clean the air duct Safeguarding the rights and interests of employees

Distribute dust masks that conform to international specifications

The Company has established a sophisticated remuneration and welfare system for employees paid basic endowment insurance

medical insurance work injury insurance and unemployment insurance for employees according to laws and provided such

leaves as paid annual leave home leave marriage leave breastfeeding leave and work injury leave for employees according to the

national standards. Lu Thai has also actively unblocked communication channels for employees and established and improved such

Distribute items for heatstroke prevention for high-temperature posts mechanisms as the Trade Union employee representative assembly and employee complaints. The Company has regularly carried out

High temperature and in the workshop employee satisfaction surveys to ensure that employees' aspirations can be timely conveyed to the management and given feedback in

time to reasonably safeguard employees' rights and interests.high humidity Add Auricularia auricula and pig blood curd to workshop meals to

enhance employees' ability to defend against occupational diseases

Adjust the air supply and exhaust volume in the workshop Indicator (Unit) 2021 2022 2023

Employment contract signing rate (%) 100 100 100

Noise and vibration Equip employees with disposable noise-reducing earplugs and replace Social insurance coverage (%) 100 100 100

them regularly

40 41Sustainability Report 2023 Chairman's Statement About Us Strategies and Management Corporate Governance Production and Operations Employee's Rights and Benefits Product Services Environmental Protection Community Participation Lu Thai Textile Co. Ltd

Diversity and Inclusion Democratic management

To ensure that the opinions of employees on the Company's management is fully conveyed and to encourage their participation the

Indicator (Unit) 2021 2022 2023 Company's Labor Union collects employee opinions and suggestions through various channels.Employee diversity * Every year employee representatives are elected through employee elections and the Labor Union regularly holds employee

representative assemblies to promote activities of the Labor Union and communicate with employees

Total number of incumbent employees

22632 23028 22850 * Suggestion boxes are set up in various plants and departments of the Company to collect employees' opinions on the Company's (person) policies management processes and salary benefits. The Labor Union sort out them once a month and provides feedback to the

Total number of male employees Company's senior leadership to discuss improvement plans

(person) 9593 9736 9317

* A chairman reception day is established to communicate face-to-face with employees

Proportion of male employees (%) 42 42 41 * Hotlines and email addresses are set up to encourage employees to actively voice their opinions on the Company's development

Total number of female employees

(person) 13039 13292 13533

Equal pay

Proportion of female Employees (%) 58 58 59 The remuneration system of Lu Thai Textile is divided into working hour remuneration system and piecework remuneration system so that

wages are distributed in a balanced way based on types of work. On the basis of the systems the Company constantly improves employee

Employee age remuneration structure develop promotion mechanisms and promises not to differentiate the treatment for employees in remuneration

and promotion due to elements of non-work ability such as gender religion and ethnicity of employees.Total number of employees aged

under 30 (person) 10520 9866 9671

Proportion of employees aged under Caring for female employees

30(%)474342

Total number of employees aged The Company always pays attention to the rights and development of female employees and always puts special protection for female

above 30 (person) 12112 13162 13179 employees into practice. Therefore the Company has formulated the Management Procedure for Protecting Female Employees carried

Proportion of employees aged above out various publicity education and entertainment activities to promote the physical and mental health development of female

31 (%) 53 57 58 employees enhance their confidence in overcoming the dual pressures of work and life and enable them to maintain a good state in professional competition.

Education background of employees Measures taken:

Bachelor or above (person) 1336 1400 1319 * The Company has refused gender discrimination and recruited females under equal

conditions.Junior college (person) 4576 4523 3726 * The Company has ensured career development of female employees and provided broader

development space for female employees.High school or below (person) 16720 17105 17805 * The Company has established a female employees' committee to assist female employees in solving their difficulties of life and work and safeguarding their rights and interests.* The Company has established a psychological counselling office to facilitate employee

Nationality communication emotional counselling and resolution of work and life difficulties.* In 2023 new training courses for female employees including yoga makeup and floral art

China (%) 56 54 51 were added. The Company organised 17 times of training and learning in total of which four

times were conducted on site and approximately over 3161 learners.* The Company has organised various activities such as expert psychological counselling

Foreign employees (%) 44 46 49 reading writing visits fitness and pastry making to promote the overall quality improvement

of female employees.Employee turnover * The Company has set up lounges for pregnant women to provide a comfortable and

convenient resting environment for pregnant mothers. In 2023 the lounges for pregnant

Total number of new employees (person) 6081 7313 3338 women of the 3rd fabric weaving plant of Lu Thai were rated as "Mom's Cabin" by the municipal labour union while the lounges for pregnant women of the 4th garment plant and

4th fabric weaving plants were rated as "Mom's Cabin" by the district labour union and funds

Employee turnover rate 19% 21% 13% were allocated for purchasing supplies and routine maintenance.* The Company has organised physical examinations for married female employees once a

Employee training year. In 2023 totally 2803 married female employees were organised to undergo physical

examinations with the expenses of physical examinations amounting to more than

Training participants (person) 22632 23028 22850 RMB70000. To meet the further needs of employees experts from the physical examination hospital were specially invited to provide free consultations for employees who had breast

and thyroid abnormalities during the early-stage physical examination.Average training hour (hour) 47 56 56

Training coverage rate (%) 100% 100% 100%

42 43Sustainability Report 2023 Chairman's Statement About Us Strategies and Management Corporate Governance Production and Operations Employee's Rights and Benefits Product Services Environmental Protection Community Participation Lu Thai Textile Co. Ltd

Series of Activities on the International

Mental Consultation Room Women's Day on 8 March Female Employee Training Appraisal and Appointment of Professional Titles

Training for Section Chiefs and Group Leaders

Mom's Cabin Cultural and Recreational Activities Physical Examination for Female Employees

Development of reserve talent pool

Training and development The Company has formulated the "Plan for Recruiting One Thousand Reserve Elites During Five Years" for key post personnel from 2022 to

2026 and formulated Lu Thai Group Three-year Career Planning for Personnel with Degrees of Bachelor and Above and the Management

Measures for Second-level Talent Pool for recruited key post personnel; the Company has achieved the "Determined-post Recruitment

Promotion channel and Oriented Cultivation" of key post personnel. In 2023 totally 402 key post personnel were recruited and totally 148 second-level

talents were reserved for all departments

The Company implements horizontal and vertical dual channel development (job promotion and cross-job promotion) with promotion in

the directions of management line and professional lines (the former is achieved through job changes while the latter is achieved through Excellence

internal professional title appraisal). Targeted training is carried out based on personnel characteristics and personal preferences achieving Plan

multi-dimensional development space for employees. Senior managerial personnel

Research and study

Promotion Plan for Production Promotion Plan for Department Career Planning for Employees engineering

Elite Plan

Frontline Positions Positions

Middle-level

Department management managerial

personnel personnel

Plant management Re-building Over 5 years

personnel engineering System management

Flight Plan

Grass-roots Managing operations

Group leader Reserve talents managerial Performance-oriented

personnel

Incubation 3 to 5 years Cross-department coordination

Reserve talents engineering Department manager

Sub-group leader Set-sail Plan Managing the

department

Excellent employee Onboarding personnel Maximising the

Cultivation 1 to 2 years Company's benefits

engineering

Versatile employee Excellent employee Professional backbone Giving strategic support

Managing others

Considering both

Skilled worker individual and team

Department employee 0 to 1 year Individual's success and

This year's new employee team's success

Frontline employees Self-management

Promotion and development Basic skills training

44 45Sustainability Report 2023 Chairman's Statement About Us Strategies and Management Corporate Governance Production and Operations Employee's Rights and Benefits Product Services Environmental Protection Community Participation Lu Thai Textile Co. Ltd

Talent training 【Case】The Company carries out the activity of

evaluating the excellent

The Company has developed a sophisticated vocational training mechanism and designed a variety of vocational training courses in The Company launched the activity of evaluating the excellent in order to further promote the excellent corporate culture of the

terms of expertise and management. A total of 22850 employees took part in the vocational training in 2023 with a coverage rate of 100%. Company commend outstanding collectives and employees who performed outstandingly in the past year and motivate everyone

to innovate their performance achieve new breakthroughs and make new contributions in the next year. A total of more than 11500

people participated in the evaluation. Through grading evaluation 2822 "advanced producers (workers)" 113 "company models"

10 "model workers" and 43 "advanced collectives" were finally selected and more than RMB3 million of bonuses were awarded.

Indicator (Unit) 2021 2022 2023

Training participants (person) 22632 23028 22850

Average training hour (hour) 47 56 56

Training coverage rate (%) 100% 100% 100%

Benefits and care

Attaching importance to employees' board and lodging conditions

Lu Thai has over 20000 employees with approximately 22% of them dwelling and living in the Company. The Company attaches great

Onboarding training importance to the quality and services of employees' board and lodging and regularly carries out satisfaction surveys of employees' board and lodging each year to constantly improve logistics management and services to strive to provide employees with nutritious

diets and convenient living conditions.Promoting skill development

LuThai's Diet:

Lu Thai Textile actively carries out various skill competitions and encourages its employees to promote their professional and technical

levels through competitions and to define their vocational objectives and orientations; the Company also encourages its employees to * Dishes are standardised in proportioning and making to cure standards and ensure quality of dishes.take vocational qualification examinations to transfer what their have learned into actual output. Lu Thai also constantly facilitates the

development of its employees toward high-grade precision advanced and professional direction and drives the Company to stride * The Company regularly conducts satisfaction surveys in the workshop and collects feedback and suggestions from employees on

toward a learning-oriented skill-oriented and innovation-oriented world-class enterprise. dining to continuously optimise in class meals.* In 2023 the meals amid shift were upgraded by including one fried product per meal to enrich the diets of frontline employees.* The Company compiles a menu according to seasonal changes to ensure a cool taste in summer and hot soup and dishes in

【Case】The Company carried out the thirty-third session of activity of winter. In summer meals amid shift are added with seasonal fruits and mung bean soup to prevent employees from heatstroke

technical demonstration and competition and reduce heat from employees.From April to June 2023 the Company held the thirty-third session of activity of technical demonstration and competition. A total of * The Company pays attention to the innovation of dishes and continuously increases the varieties to improve employee appetite.

51 units and 8970 personnel covering 678 types of work in total took part in the competition. Through the processes of publicity and

mobilisation training and learning post drills and preliminary and final competitions finally there were 30 champions of single skills * In 2023 the focus was on nutritional meal preparation with the goal of "balanced nutrition and balanced diet" while advocating

of departments 3520 winners of technical demonstrations and competitions 661 "excellent versatile workers" and 88 "excellent the health concept of "reducing the consumption of salt oil and sugar while keeping mouth weight and bones healthy".teams" and they have all obtained honour certificates bonus and presents. Technical demonstrations and competitions have * The Company makes itself a provincial-level health enterprise to ensure food safety and provide healthy diets.aroused employees' enthusiasm to learn technologies dig into professions practise skills and work as artisans through training and

learning post drills and skill competition hence achieving the objectives of promoting production safety management benefits * To demonstrate the Company's humanistic care a birthday cake is made and provided for employees free of charge.and development through competitions. * In 2023 employees' satisfaction on board and lodging reached 80.55%.Training and Dilling Technical Demonstrations and Award Ceremony Food Diversity Offering Birthday Cakes

Competition

46 47Sustainability Report 2023 Chairman's Statement About Us Strategies and Management Corporate Governance Production and Operations Employee's Rights and Benefits Product Services Environmental Protection Community Participation Lu Thai Textile Co. Ltd

Relief of employees in difficulties

LuThai's Accommodation:

Implementing the people-foremost policy and caring for employees have always been an important part of the Company's corporate

culture. The grass-roots branches of the Company visit and comfort employees every year go deep into the front line of production and

* Air conditioners and free Wi-Fi are available in all dormitories in the Company understand the living condition of employees through multiple channels. They also take the responsibility of "the first insider" actively find

* Each floor in the apartment is equipped with chess and card room television hall and smoking room out the state of mind of employees and take the initiative in solving their problems. The Company has established a bailout foundation and

distributes assistance funds to employees with family difficulties every year hence helping employees to go through their difficult pass. In

* Each building in the apartment areas is equipped with a fully automatic coin-operated washing machine 2023 the Company's Trade Union relieved 75 employees in difficulty and distributed relief fund of RMB144000.* 24-hour unmanned supermarkets are set up in the apartment areas to provide employees with conditions of convenient

and fast shopping

* The apartments provide the services of cleaning working clothes and articles of bedding free of charge and set up

locations for replacing articles of bedding to achieve that such articles can be replaced whenever they are dirty

* Free drying and storage of bedding are also provided for employees during seasonal changes

* Each park area is equipped with bathing facilities so that employees can have baths conveniently

* 84 disinfectant is sprayed on dormitories and bathrooms every day to ensure a healthy living environment

Distributed Relief Fund Visiting Difficult Employees during New Year

Summer-vacation after-school program

To address the concerns of summer-vacation care for the employee children in 2023 the Company established a summer-vacation after-

school program. From 10 July to 24 August two sessions of the program were carried out and over 200 children of employees participated

in the program. The entire after-school program was divided into four themed weeks: "Clever Mind and Hands Traditional Chinese

Culture Labor Spirit and Safety Protection". The curriculum was diverse combining movement and stillness with learning and practice

allowing children to have more opportunities to interact with society broaden their horizons and experience the joy of labour creation.This also allowed all children to spend a safe happy united and friendly summer vacation in the Company.Employee Apartments Supermarket

Employee assistance and funding

Golden Autumn Scholarship

For many years Lu Thai Group has actively responded to the call of the Party and the state and strongly supported the development of

education. The "Golden Autumn Scholarship " activity is a "family project" that advocates traditional virtues and brings dedication and

love together. It is a "love project" that cares for employees and also a "hope project" that is related to the development of the enterprise

and the emotional attachment of employees. This year 212 children of employees in the group company were admitted to universities

both inside and outside the province and a scholarship of RMB846000 was awarded.Awarding Golden Autumn Scholarship Daily and Report Performances of Summer-vacation After-school Program

48 49Sustainability Report 2023 Chairman's Statement About Us Strategies and Management Corporate Governance Production and Operations Employee's Rights and Benefits Product Services Environmental Protection Community Participation Lu Thai Textile Co. Ltd

【Case】The Twenty-fifth Session of Employee Basketball League

Enriching cultural and recreational life of employees

In September 2023 the Company organised the twenty-fifth session of Employee Basketball League and a total of more than 150

The Company regularly organises various cultural sporting and recreational activities to enrich employees' spare-time life boost referees athletes and employees' representatives took part in the league which was divided into group knockout matches round-robin

employees' mental outlook and lead employees to achieving the balance between work and life hence promoting employees' sense of matches and final matches with 35 matches in three days. Through competitions everyone enhanced their physical fitness honed their

belonging to the enterprise and enhancing the Company's cohesion. spirit of unity hard work and progress enriched their leisure life and enhanced their sense of identification with corporate culture.【Case】The 10th Employee Sports Games

In May 2023 the Company organised the 10th Employee Sports Games which attracted more than 6000 participants. The

competition lasted for two days and involved 30 competitions. In the end the representative teams of Lufeng 1st fabric weaving

plant Lufeng 2nd fabric weaving plant and knitted-fabric production line won the first second and third places in the total team

score respectively. The representative teams of Luqun Textile clothing production line and the Security Department won the

Excellent Organisation Award and the representative team of Zibo School of Technology's Youth Class won the Spiritual Civilisation

Award. A number of athletes participated in competitions in a civilised manner by competing hard and aggressively showcasing the

charm of employees in the new era of Lu Thai; the referees enforced the laws with civility seriousness objectivity and impartiality

embodying their good civilised qualities and professional ethics fully demonstrating the enterprising spirit of the Lu Thaiers and

highlighting the cohesion and centripetal force of the enterprise.The Scene of the Basketball Match

【Case】The Twenty-third Session of Employee Soccer League

In September 2023 the Company organised the twenty-third

session of Employee Soccer League and a total of more than 150

referees athletes and employees' representatives took part in

the league. Ten teams participated in the league which lasted for

six days and consisted of 24 rounds. The matches were divided

into group knockout rounds semi-finals and finals. On the sports

field everyone demonstrated a spirit of tenacious struggle

courage to compete and unity and cooperation in sports actively

contributing to the Company's new 30-year voyage.The Scene of the Sports Games

The Scene of the Football Match

50 51Sustainability Report 2023 Chairman's Statement About Us Strategies and Management Corporate Governance Production and Operations Employee's Rights and Benefits Product Services Environmental Protection Community Participation Lu Thai Textile Co. Ltd

【Case】Swimming Competition 【Case】Series of Cultural and Sports Activities to Celebrate the New Year

On 4 August 2023 Lu Thai Group held a swimming competition themed "Swimming for the Best and Braving the Wind and the Waves" In December 2023 Lu Thai Group held a series of cultural and sports activities themed "Let's Fight and Pursue Dreams Together" to celebrate

in 2023. The competition included events such as the men's 50 m men's 100 m men's 4x50 relay women's 50 m parent-child 50 m the 2024 New Year. The indoor event lasted for three days and included table tennis billiards badminton and chess and card games. More

"landlubber" swimming and parent-child interaction. With various swimming styles everyone competed in the swimming pool and engaged than 450 people participated in the indoor event competition. By participating in various projects everyone improved their physical fitness

in intense water competitions fully showcasing the Lu Thaier's spirit of struggling ahead and pursuing progress. and relaxed themselves physically and mentally injecting new vitality into the Company's development.The Scene of the Swimming Competition

The Scene of Indoor Events

【Case】Electronic Band Tour of LuThai Music Week 【Case】Parent-child Activities and Dual-employee Team Building Activities

From 7 to 12 August 2023 the "Passionate August with Rhythm" Electronic Band Tour of Lu Thai Music Week 2023 was held in various In 2023 the Company held a parent-child activity with the theme of "Embracing the Future Hand in Hand Happily " and a dual-

parks of the Company attracting more than 1000 employees from relevant departments in each park. The Electronic Band Tour had employee team building activity with the theme of "Grateful for You at Dongzhi Festival".diverse song styles and performance forms creating a lively atmosphere and presenting a wonderful and unparalleled audio-visual

feast for everyone.Parent-child Activity

The Scene of the Electronic Band Dual-employee Team Building Activity

52 53Sustainability Report 2023 Chairman's Statement About Us Strategies and Management Corporate Governance Production and Operations Employee's Rights and Benefits Product Services Environmental Protection Community Participation Lu Thai Textile Co. Ltd

Product Services/

Providing Ace Services

In the face of the complex and ever-changing market situation

in 2023 the Company leveraged the driving force of marketing

and called on various departments to collaborate efficiently

with each other actively go global deeply understand

market changes and get an insight into customer needs.With "technology fashion and green" as the new industry

positioning and the goal of "becoming a global apparel

solution provider with cutting-edge fabrics as the core" the

Company continued to do a good job in products and services.Sustainable Development Goals (SDGs) of the United Nations

54 55Sustainability Report 2023 Chairman's Statement About Us Strategies and Management Corporate Governance Production and Operations Employee's Rights and Benefits Product Services Environmental Protection Community Participation Lu Thai Textile Co. Ltd

Product innovation 【Case】Biomass Functional Fabrics

A series of 100% biomass fibre woven fabrics and biomass fibre

The development of the Company for 36 years has always relied on good product development and realisation capabilities and in the future interwoven fabrics developed by the Company such as SOLOTEX

it still needs to rely on products to win the market. Currently customers are increasingly interested in the green and environmentally-friendly SORONA T400 PA56 and PLA has functional characteristics such as

products with differentiated attributes and high performance. We need to adapt to the development trend of the textile industry focus on ecologically and environmentally friendly comfort and elasticity heat

customer needs and do a good job in technological innovation and upgrades. We will continuously carry out product research and development resistance moisture absorption and quick drying antibacterial and

and product upgrades to provide customers with products that meet their needs and are cost-effective. odour resistance UV protection skin friendly comfort. They can be

used as casual shirt fabrics energetic denim fabrics fashionable sports

fabrics jackets windbreakers pants and other fabrics. Not only can they

meet the needs of consumers for high-performance and multi-functional

products but they also meet the requirements of green low-carbon

Raw material innovation: Sustainable exploration development and cooperation in terms of raw and sustainable development. At the same time they can alleviate the

materials; the renewable degradable recyclable and sustainable product series that are featured dependence of the textile industry on petroleum resources and reduce

by the natural fibre and regenerated cellulose fibre series and the bio-based series. the dependence of China's textile industry on foreign countries. They

play an important role in promoting the sustainable development of

China's textile industry enhancing industrial competitiveness and

assist in achieving carbon emission peak and carbon neutrality.Technological innovation: In-depth research into crafts and technologies and the full-process

processing for green production that is water-saving energy-saving and low-emission; active

efforts to keep improving green and environmentally-friendly technology to effectively support and

continuously upgrade products.Product innovation: Continuous exploration of innovative full-life-cycle application solutions for

textile products and continuous introduction of new and environmentally-friendly product series

that are skin-friendly and comfortable elastic easy-to-manage and good for health to the market

by continuous updating multicomponent products such as natural fibre regenerated cellulose

fibre ultra soft texture fibre.【Case】No-dye Fabrics Embracing Nature Healthily and 【Case】SUECELL an Innovative 【Case】Over DYE N+ Possibility of Fabric

Blithely with Green Low-carbon New Tactile Product

and Ecological Textiles

Compared with conventional dyeing methods coloured polyester fibres The concepts of sustainable development such as green low-carbon

and polyamide 6 fibres that are produced with the dope dyeing technology and ecological and environmentally friendly are increasingly recognised The Lyocell fibre transformation is an industrial problem currently faced Cotton (recycled cellulose) fibres after modification can change the

no longer require post dyeing reducing the production cost of fibre- by consumers and low-carbon and sustainable lifestyles are gradually by various fabrics brands. Exploring new application methods and special electrical repulsion between cellulose fibres and anionic groups of

coloured filaments water and energy consumption and carbon emissions. becoming a trend pursued and advocated by society. By using natural tactile sensations of recycled cellulose products has become one of our dyestuff significantly improving the adsorption performance of cotton on

According to incomplete statistics dope dyed fabrics have reduced carbon and recycled materials as well as new ecological and environmentally- development directions. By using existing industrial laundry appliances negatively charged dyes achieving the goal of not using sodium hydroxide

emissions by up to 26% and water consumption by 72% compared to dyed friendly dyeing aids low-carbon processing technology has been overflow dyeing machines and other equipment special alkaline washing to promote dyeing. By combining with ordinary raw materials for surface

fabrics with obvious advantages in energy conservation and emission developed. A series of products have been developed including treatment is carried out using alkali new additives etc. to give the fabric a structure design countless colours can be magically realised achieving fast

reduction which meets the requirements of low-carbon circular economy ecological moisture crosslinking ecological softness ecological delicate and dense velvet feel a soft hand feeling and a unique style. reaction and delivery time. Natural cotton or recycled fibre materials are

development in the textile industry. absorption and discharge and probiotic protection to reduce used realising salt-free and alkali-free dyeing which is energy saving and

production waste emissions and comply with the concept of sustainable environmentally friendly.development bringing more healthy textiles to consumers.

56 57Sustainability Report 2023 Chairman's Statement About Us Strategies and Management Corporate Governance Production and Operations Employee's Rights and Benefits Product Services Environmental Protection Community Participation Lu Thai Textile Co. Ltd

Quality control 1 The Company holds production meetings every day to address any problems

encountered during production

Raw material 2 The Company strengthens the process compliance inspection on each process

The Company adheres to the principle of "quality is the most important preparation and supervises and manages it through sampling and tracking methods

element of enterprise survival and development" and continuously strengthens and control The Company actively communicates with customers and absorbs their valuable

quality control with the purpose of "meeting the needs of customers and room 3 feedback on product quality

the market". The Company's Quality Control Department formulates quality Process

indicators converts customer feedback information into quality requirements control 4 The Company organises professional training for quality management personnel

and accurately controls process quality and result compliance; it refines the Quality room to continuously improve the quality awareness and ability of all staff

quality management assessment mechanism and motivates the improvement assurance

of production quality in each workshop. Product 5 The Company has a CNAS laboratory certified by the state achieving independent pre-control testing of some indicators

group 6 The Company sends 100% of textiles to professional organisations (e.g. ITS SGS

BV Keken) for a safety inspection to make certain that these textiles are in line

Central laboratory with market laws and regulations standards and customers' RSL requirements.In 2023 99.96% of Yarn A and other yarn products that Lu Thai Textile produced passed the pre-storage inspection and the ratio was 99.37%

for yarn-dyed products 96.8% for knitted products and 97.94% for piece-dyed products. Meanwhile the delivery ratio of the functional fabric

products was 92.36% and 100% of the ready-to-wear clothing was able to be delivered.Production Lines Pass rate

Yarn 99.96%

Yarn-dyed fabrics

99.37%

Knitted fabrics

96.8%

Piece-dyed fabrics

97.94%

Functional fabrics

92.36%

Ready-to-wear clothing

100%

58 59Sustainability Report 2023 Chairman's Statement About Us Strategies and Management Corporate Governance Production and Operations Employee's Rights and Benefits Product Services Environmental Protection Community Participation Lu Thai Textile Co. Ltd

Customer services and satisfaction

The Company adheres to a customer-centric approach and comprehensively enhances its customer service capabilities. The

Company convenes communication meetings at any time with customers at their will to learn their demands for products

and their suggestions on the products provided for them. The Company also regularly visits customers to maintain a good Customer satisfaction survey and

relationship. Moreover the Company regularly hosts exhibitions and product promotion showcases as an effective means to

introduce more high-quality products and services of the Company to customers. improvements

At the beginning of every December the Company develops a customer satisfaction

survey plan for this year and designs a survey questionnaire. The questionnaire

includes the methods channels content time period and the content regarding pre-

Constant care sales consultation and information acquisition research and development and design

product quality delivery process and after-sales services and corporate culture. After the

questionnaire design is completed the Strategy and Marketing Department organises

The Company communicates with customers through multiple media such as email the Sales Department and relevant departments to review the content and feasibility

WeChat and phone to learn customers' demands and suggestions. of the survey questionnaire before 15 January of the following year. From January to

18 February of the following year the Sales Department distributes questionnaires

The Company formulates the standard procedure for handling customer complaints and conducts surveys to customers through email fax telephone (which can be used

in time so as to protect the legal rights and interests of customers. in special circumstances) and other forms. The distribution of questionnaires must

The Company convenes video conferences with customers to discuss technical issues cover both strategic and value customers with a distribution ratio of no less than 30%

and problems of quality. for general and potential customers. The Sales Department should organise relevant

departments to summarise organise and analyse the relevant information within ten

The Company regularly visits customers to maintain a good relationship. days of receiving the questionnaire and form a Customer Satisfaction Survey Report.The Company invites customers to visit or participate in new product releases or Based on the results of such a survey the Company analyses the its existing advantages

important events to enhance customer relationships. and disadvantages and formulates targeted improvement measures to meet customers'

expectations as much as possible.

60 61Sustainability Report 2023 Chairman's Statement About Us Strategies and Management Corporate Governance Production and Operations Employee's Rights and Benefits Product Services Environmental Protection Community Participation Lu Thai Textile Co. Ltd

Environmental Protection/

Deepen Green and Low-

carbon Development

With the development of the economy and the advancement of

technology global issues such as resource scarcity and climate

change have become increasingly urgent. Promoting green

and low-carbon development has become a consensus and

action for countries around the world to address resource and

environmental issues and promote sustainable development.As a green pioneer and initiator of the Green Manufacturing

Alliance in the global textile industry Lu Thai has always

adhered to the sustainable development path of "green low-

carbon and environmentally friendly" followed the economic

growth model of "resources - products - renewable resources"

and insisted on the operating principles of "reduction reuse

and recycling". Based on low-carbon and environmentally-

friendly raw materials the Company has promoted the

upgrades of equipment in terms of energy conservation and Sustainable Development Goals (SDGs) of the United Nations

environmentally friendly and achieved the research and

application of green processes assisting the world in achieving

a win-win supply chain ecosystem and sustainable human

development.

62 63Sustainability Report 2023 Chairman's Statement About Us Strategies and Management Corporate Governance Production and Operations Employee's Rights and Benefits Product Services Environmental Protection Community Participation Lu Thai Textile Co. Ltd

Addressing climate change Energy management

Climate change is not only an environmental issue but also a development issue. As a global textile enterprise Lu Thai actively regards The monitoring of major energy-consuming devices and the online

addressing climate change as an important action for sustainable development vigorously promoting energy conservation and carbon monitoring and application of the data of energy consumption

reduction in production and operation and contributing to global climate governance.Automatic data collection and aggregation for major energy-consuming areas

and devices are conducted to achieve a management pattern that is flat and

Photovoltaic Power Generation dynamic. By integrating the ERP system and the financial cost accounting system of the Company a database for energy consumption is established where energy

consumption is seamlessly connected to the product energy consumption cost

As of 2023 system and the annual energy cost budget system. With the seamless connection

timely analysis and summary are conducted to effectively control the Company's

A s of 2023 the Company's instal led solar energy consumption.photovoltaic power generation facilities have

supplied a total of 50.36 MW grid-connected

electricity.Waste heat recycling

Accounting for 13% of the annual electricity

consumption within the total installation scope.According to the heat exchange optimisation theory based on pinch

R e d u c i n g c a r b o n d i o x i d e e m i s s i o n s b y analysis the Company makes use of the proximal heat and establishes

a gradient heat exchange network. The recycling measures for waste

approximately 60000 tons. heat generated by bleaching and dyeing in the wastewater generated

by finishing and of the boiler steam were consecutively implemented

as the waste heat recycling rate has increased to 80% with the

Directories of promoted energy-saving and low-carbon technologies released application of multiple heat pump technologies representing a total

by relevant national ministries and commissions of 12536 tons of steam saved every year.Liquid ammonia recycling

Promotion directory Order in the directory Name of the technology

2 The comprehensive energy-saving technology for maglev centrifugal blowers

Directory of Promoted Green 4 The long-distance heat transmission and supply technology based on a large

Through the separation of oil and ammonia oil and water in the

processing of liquid ammonia the recycling of liquid ammonia is

Technologies(2020) temperature difference using low-grade waste heat realized and the reuse rate is more than 99%.

12 Energy-efficient and low-nitrogen combustion technology

19 In-depth wastewater treatment technology based on the dual-membrane method

Directory of Key Low-carbon

Technologies Promoted by the 5 High-efficiency photovoltaic inverter technology

State (2014)

National Industrial Energy-saving 62 Sludge coupling power generation technology

Technology Recommendation

Directory (2021) 66 The energy-saving and consumption-reducing and waste energy recycling technology for industrial enterprises

List of Applications of Energy- Alkali recovery interconnection renovation

saving Emission-reducing and 3 LED straight tube reflective lights

Low-carbon Technological 6 The heat supply air conditioning water heating heat recovery and heat storage Achievements for Promotion technology with low temperature heat pumps

In order to effectively utilise the waste alkali generated during the mercerisation process the Company connects the alkali recovery device of

S p e c i f i ca l l y t h e p ro m ote d rate o f t h e the dyeing and finishing plant with the sewage station to achieve the recycling and utilisation of alkali. This greatly reduces the use of fresh raw

comprehensive energy-saving technology for alkali in the sewage station reduces the operating costs of alkali recovery and reduces the overflow and waste fees of light alkali saving an

maglev centrifugal blowers exceeded 80%. annual cost of RMB730000.Alkali recovery interconnection adopts Siemens SMART series CPU as the central processor the Beijing Kunlun Tongtai touch screen as the

human-machine interface and Ethernet for communication in the automatic control system with high processing speed and stability. The liquid

level of each area's dilute alkali tank is measured using a magnetic float level gauge which collects data through analogue 4 to 20 mA and digital

signals. Each magnetic float level gauge is designed with analogue quantity and external switch quantity for control and alarm providing dual

protection. To ensure the normal operation of pipeline pressure safety linkage control is achieved through the use of pressure transmitters on/

off valves and pump on/off such as pump valve opening and automatic pump shutdown when the pipeline exceeds the set pressure.

64 65Sustainability Report 2023 Chairman's Statement About Us Strategies and Management Corporate Governance Production and Operations Employee's Rights and Benefits Product Services Environmental Protection Community Participation Lu Thai Textile Co. Ltd

Water resources management Atmospheric pollutant management

Lu Thai Textile actively conducts water resources management and makes more efforts in the recycling of water resources. The Company has

established a long-term mechanism for water conservation formulated plans for unit water consumption and annual conservation assigned The Company actively conducts atmospheric pollutant management to lessen the environmental burden brought by its production and

and implemented water conservation goals to each section and working team and clarified responsibilities for all levels. operation to the society as much as possible. During this Reporting Period in the factory-bound fugitive exhaust gas the concentration of

hydrogen sulphide was 0.005 mg/m3 that of ammonia was 0.08 mg/m3 that of particulate matter was 0.28 mg/m3 that of non-methane

hydrocarbon was 1.3 mg/m3 and that of odour was 13 (dimensionless). This is better than the discharge standard which specifies that the

concentration limit for hydrogen sulphide is 0.06 mg/m3 that for ammonia is 1.5 mg/m3 that for particulate matter is 1.0 mg/m3 that for non-

Water conservation methane hydrocarbon is 2.0 mg/m3 and that for odour is 16 (dimensionless).In 2023 with the Company's own wastewater treatment plant the Group's reclaimed water manufacturing equipment had a design capacity of

20000 tons/day and the use rate of reclaimed water in the Group's major water-consuming plants was as high as more than 50%. This greatly

reduced the consumption of tap water effectively alleviated the shortage of regional water supply and played a significant demonstration role

in the industry.Sewage treatment

The Company has established plant wastewater treatment

stations and municipal wastewater treatment plants. The plant

wastewater treatment stations adopt the biochemical treatment

methods and the quality of the discharged water is below the

concentration limit for indirectly discharged water specified

in the Discharge Standards of Water Pollutants for Dyeing and

Finishing of Textile Industry (GB4287-2012) and compliant

with the requirements in the Announcement on Adjusting the

Implementation Requirements for Some Indicators of GB4287-

2012. The municipal wastewater treatment plant adopts a

technique that integrates "hydrolysis and Orbal oxidation Waste management

ditches" and has a capacity of treating approximately 120000

cubic meters of wastewater every day into water with a quality

that is better than the A standard of Level 1 specified in the

Discharge Standard of Pollutants for Municipal Wastewater

treatment Plant (GB18918-2002). The Company temporarily stores and disposes hazardous waste that it generates in strict compliance with the Directory of National Hazardous Wastes and the Standard for Pollution Control on Hazardous Waste Storage. It manages hazardous waste in different categories separately by

establishing hazardous waste storehouses and corresponding supporting facilities while it hires qualified hazardous waste disposal agencies

By analysing the consumption of production and domestic water in the

Water footprint tracking to transfer hazardous waste and prohibits the appropriation of hazardous waste. The main hazardous waste generated in the production and Company Lu Thai develops a water-saving plan to control water use and operation of the Company includes waste oil waste oil barrels waste paint buckets waste detergent barrels lining bags contaminated by

waste. chemical dyes waste lead-acid batteries laboratory waste liquid etc.; the main non-hazardous wastes brought by the production and operation

is the sludge.Disposing of 41 tons of hazardous waste Disposing of 12462 tons

of non-hazardous waste

66 67Sustainability Report 2023 Chairman's Statement About Us Strategies and Management Corporate Governance Production and Operations Employee's Rights and Benefits Product Services Environmental Protection Community Participation Lu Thai Textile Co. Ltd

Community Participation/

Striving to Be an Excellent

Corporate Citizen

In the face of a complex and severe external environment

Lu Thai assesses the situation makes unified decisions

and overcomes difficulties. The Company adheres to the

mission of "creating wealth and contributing to society"

assists the national education and community public welfare

undertakings and provides strong impetus for local economic

development.In 2023 Lu Thai actively participated in the centenarian

condolence campaign assistance for the disable in Handou

Home donations for the Provincial Elderly Cadre Activity

Centre and student assistance for Qingdao University

and Inner Mongolia University of Technology with a total

investment of RMB2.9 million.Sustainable Development Goals (SDGs) of the United Nations

68 69Sustainability Report 2023 Chairman's Statement About Us Strategies and Management Corporate Governance Production and Operations Employee's Rights and Benefits Product Services Environmental Protection Community Participation Lu Thai Textile Co. Ltd

Support to education Case "Lu Thai Textile Scholarship" Granting Ceremony at Inner Mongolia University of Technology

Over the years Lu Thai has established cooperative relationships with multiple universities to jointly cultivate talents. The Company has In October 2023 the 2023 "Lu Thai Textile Scholarship" Granting Ceremony of Inner Mongolia University of Technology was held at Inner

established education funds to support batches of outstanding impoverished students to complete their studies; it has carried out practical Mongolia University of Technology. The Company granted scholarships to the awarded students inspiring outstanding students to study

projects to create employment opportunities for graduates year after year. hard work hard and strive for progress consolidating university-enterprise cooperation and jointly cultivating talents.LuThai Group signs a contract with Qingdao University's "Teaching and Learning Assistance"

Case

Million Award Fund

On 13 May 2023 the signing ceremony between Lu Thai Group and Qingdao University on Million Award Fund for Teaching and

Learning as well as the unveiling ceremony of Shandong Modern Textile Industry College was held at Qingdao University. The

Company expected that this in-depth cooperation between the university and the enterprise can effectively motivate the university

teachers to study teaching diligently do a good job in scientific research and cultivate talents for the country and the textile industry.At the same time the Company also expected that young students from Qingdao University can choose to devote themselves to the

pursuing the dream of building a national textile power after graduation based on their solid learning and practice in the textile major

in the university.Granting Ceremony

Case Research in Lu Thai by Peking University's School of International Studies

In June 2023 a group of 13 people from the School of

International Studies at Peking University visited the

Company to conduct “Spark Plan” research. The

Company's chairman directors and others accompanied the

visit and had a discussion.On the meeting the Deputy Secretary of the Party Committee

of the School of International Studies at Peking University and

the Chairman of the Company signed an agreement to jointly

build an ideological and political practice education base. Lu

Thai and Peking University's School of International Studies

have jointly built an education base which will promote the

mutual promotion and integration of ideological and political

practice courses with corporate culture and provide high-

quality educational resources and practical opportunities for

outstanding students.Visit and Meeting

Donation Ceremony

70 71Sustainability Report 2023 Chairman's Statement About Us Strategies and Management Corporate Governance Production and Operations Employee's Rights and Benefits Product Services Environmental Protection Community Participation Lu Thai Textile Co. Ltd

Welfare and charity actions Key Performance Indicators

The Company has always adhered to its original mission actively participated in public welfare and charity activities and continuously donated

to public welfare and charity projects to share the achievements of enterprise development with society through practical actions.Economic performance

Case Protecting Ancient Villages * Claiming Ancient Famous Trees

Indicator (Unit) 2021 2022 2023

In the activity of protecting ancient villages and claiming famous trees in Zibo City Lu Thai Company earnestly practiced the concept of "lucid Operating revenue (RMB100000000) 52.38 68.01 69.4378.51 51.9652.38

waters and lush mountains are invaluable assets" and actively bode to adopt a millennium-aged tassel tree contributing to the protection of

precious natural resources and cultural heritage. Payments to contractors and service providers

(RMB100000000) 2.49 3.18 4.72

Total employee remuneration (including

compensation and benefits) (RMB100000000) 14.41 16.90 16.1449.27 15.4914.41

Case Donating Money to Handou Home Payments to capital providers (RMB100000000) 1.4 1.66 1.85

Payments to the government (RMB100000000) 3.27 6.5 5.073.69 3.72 3.27

In April 2023 the Company donated RMB100000 to the Han Dou Home Help Centre for the

item purchase and daily maintenance of Han Dou Home. The Han Dou Home Help Centre Retained economic value (RMB100000000) 2.66 9.12 3.10

expressed its gratitude and awarded the Company a banner.Environmental performance

Donated Banner Data related to wastewater and sewage

Indicator (Unit) 2021 2022 2023

COD (Chemical Oxygen Demand) in discharged

wastewater (ton) 345 395 283

Ammonia nitrogen content in discharged

wastewater (ton) 8 7 3

Case Chairman Liu Zibing visits the senile elderly at Double Ninth Festival

Industrial wastewater discharge (10000 cubic

meters) 353 387 311

The Double Ninth Festival is set to show respect to the elderly. On the eve of the Double Ninth Festival every year Liu Zibin Chairman and

President of the Company visits and comforts the elderly in the entire region providing them with condolence money and warmly inquiring

about their physical condition clothing food housing and transportation. He carefully listens to the voices of the elderly and reminds their

children and relatives to take good care of them so that they can maintain an optimistic and comfortable attitude. Air pollutant emissions

Indicator (Unit) 2021 2022 2023

Hazardous waste generation (ton) 1 3 1

Non-hazardous waste generation (sludge) (ton) 6 6 3

Waste discharge

Indicator (Unit) 2021 2022 2023

Hazardous waste generation (ton) 44 79 41

Non-hazardous waste generation (sludge) (ton) 15083 14320 12462

Chairman Liu Zibing visited the senile elderly

72 73Sustainability Report 2023 Chairman's Statement About Us Strategies and Management Corporate Governance Production and Operations Employee's Rights and Benefits Product Services Environmental Protection Community Participation Lu Thai Textile Co. Ltd

Greenhouse gas emissions

Indicator (Unit) 2021 2022 2023 Indicator (Unit) 2021 2022 2023

Mobile sources emissions (tons of carbon dioxide 861 808 778

equivalent) Employee age

Stationary source emissions (tons of carbon dioxide 12700 12771 10520

equivalent) Total number of employees aged under 30 (person) 10520 9866 9671

Category 1 emissions (tons of carbon dioxide 13561 13579 11298

equivalent) Proportion of employees aged under 31 (%) 47 43 42

Consumption of purchased power (tons of carbon

dioxide equivalent) 424671 375819 331445 Total number of employees aged above 30 (person) 12112 13162 13179

Consumption of purchased heat (tons of carbon

dioxide equivalent) 150501 145314 121992 Proportion of employees aged above 31 (%) 53 57 58

Category II emissions (tons of carbon dioxide

equivalent) 575172 521133 453437 Education background of employees

Total (tons of carbon dioxide equivalent) 588733 534712 464735 Bachelor or above (person) 1336 1400 1319

Junior college (person) 4576 4523 3726

Energy consumption density

High school or below (person) 16720 17105 17805

Indicator (Unit) 2021 2022 2023

Nationality

Greenhouse gas emission density (tons of carbon

dioxide equivalent per million revenue) 115.5 79.7 51.09 China (%) 56 54 51

Total energy emission density (tons of standard coal 19.1 13.5 13.08

per million revenue) Foreign employees (%) 44 46 49

Human resources

Employee Turnover

Protection of employee rights and interests

Indicator (Unit) 2021 2022 2023

Indicator (Unit) 2021 2022 2023

Total number of new employees (person) 6081 7313 3338

Employment contract signing rate (%) 100 100 100

Social insurance coverage (%) 100 100 100 Employee turnover rate 19% 21% 13%

Number of female employees with parental leave

during the year (person) 695 317 227

Number of male employees with parental leave

during the year (person) 113 103 69

Employee training

Indicator (Unit) 2021 2022 2023

Employee diversity

Training participants (person) 22632 23028 22850

Indicator (Unit) 2021 2022 2023

Average training hour (hour) 47 56 56

Employee diversity

Training coverage rate (%) 100% 100% 100%

Total number of incumbent employees (person) 22632 23028 22850

Total number of male employees (person) 9593 9736 9317

Proportion of male employees (%) 42 42 41

Total number of female employees (person) 13039 13292 13533

Proportion of female Employees (%) 58 58 59

74 75Sustainability Report 2023 Chairman's Statement About Us Strategies and Management Corporate Governance Production and Operations Employee's Rights and Benefits Product Services Environmental Protection Community Participation Lu Thai Textile Co. Ltd

GRI Indicator Disclosure Index GRI reference Indicator description Page number

3-3 Management of substantive issues 28-67

GRI reference Indicator description Page number 203-1 Infrastructure investments and services supported 28-67

GRI 1 Foundation 1 203-2 Significant indirect economic impacts 28-29，54-55，62-63

GRI 2 General Disclosures GRI 204: Procurement Practices

Organisational profile 3-3 Management of substantive issues 37

2-1 Organisational details 6 GRI 205: Anti-corruption

2-2 Entities included in the organisation's sustainable development report 1 3-3 Management of substantive issues 22-23

Communication and training about anti-corruption policies and

2-3 Reporting Period frequency and contact point 1 205-2 procedures 23

2-6 Activities value chain and other business relationships 6-7 GRI 206: Anti-competitive Behavior

2-7 Employees 15，40-53 3-3 Management of substantive issues 18，23，37

2-9 Governance structure and composition 19-21 Environmental

2-10 Nomination and selection of the highest governance body 19-21 GRI 301: Materials

2-11 Chair of the highest governance body 20 3-3 Management of substantive issues 65-66

2-14 Role of the highest governance body in sustainable development report 19-21 GRI 302: Energy

2-17 Collective knowledge of the highest governance body 19-21 3-3 Management of substantive issues 62-63

2-19 Remuneration policies 43 302-3 Energy intensity 66 73-74

2-22 Statement on sustainable development strategy 12 GRI 303: Water Resources and Wastewater

2-23 Policy commitments 12 3-3 Management of substantive issues 62-63

2-24 Embedding policy commitments 19-21 303-1 Interactions with water as a shared resource 66

2-26 Mechanisms for seeking advice and raising concerns 14-15 303-2 Management of water discharge-related impacts 66

2-29 Approach to stakeholder engagement 14-21 303-4 Water discharge 66

Substantive Issues GRI 305: Emissions

Economy 3-3 Management of substantive issues 62-63

GRI 201: Economic Performance 305-1 Direct (Scope 1) GHG emissions 74

3-3 Management of substantive issues 73-75 305-2 Energy indirect (Scope 2) GHG emissions 74

201-1 Direct economic value generated and distributed 73-75 305-4 GHG emissions intensity 74

201-2 Financial implications and other risks and opportunities due to climate change 64，67，74 305-5 Reduction of GHG emissions 74

305-7 Nitrogen oxides (NOX) sulfur oxides (SOX) and other significant GRI 203: Indirect Economic Impacts air emissions 59 65 73

76 77Sustainability Report 2023 Chairman's Statement About Us Strategies and Management Corporate Governance Production and Operations Employee's Rights and Benefits Product Services Environmental Protection Community Participation Lu Thai Textile Co. Ltd

GRI reference Indicator description Page number GRI reference Indicator description Page number

GRI 306: Waste GRI 406: Non-discrimination

3-3 Management of substantive issues 62-63 3-3 Management of substantive issues 41，43

306-3 Composition of waste generated 67 GRI 407: Freedom of Association and Collective Bargaining

GRI 308: Supplier Environmental Assessment 3-3 Management of substantive issues 13

3-3 Management of substantive issues 62-63 GRI 408: Child Labor

Social 3-3 Management of substantive issues 41

GRI 401: Employment GRI 409: Forced or Compulsory Labor

3-3 Management of substantive issues 38-39 3-3 Management of substantive issues 41

401-1 New employee hires and employee turnover 42 GRI 411: Rights of Indigenous Peoples

Benefits provided to full-time employees that are not provided to

401-2 temporary or part-time employees 41 3-3 Management of substantive issues 13，41

401-3 Parental leave 41，74 GRI 413: Local Communities

GRI 403: Occupational Health and Safety 28-29 3-3 Management of substantive issues 68-69

3-3 Management of substantive issues 30，40 413-1 Operations with local community engagement impact assessments and development programs 70-72

403-1 Occupational health and safety management system 30 GRI 414: Supplier Social Assessment

403-2 Hazard identification risk assessment and incident investigation 40 3-3 Management of substantive issues 11

403-3 Occupational health services 31-33 GRI 415: Public Policy

403-5 Worker training on occupational health and safety 40 3-3 Management of substantive issues 11，15

403-6 Promotion of worker health 30-36 GRI 416: Customer Health and Safety

403-7 Prevention and mitigation of occupational health and safety impacts directly linked by business relationships 30-36 3-3 Management of substantive issues 35-37，56-59

403-8 Workers covered by an occupational health and safety management system 40

403-10 Work-related ill health

GRI 404: Training and Education 38-39

3-3 Management of substantive issues 46，57

404-1 Average hours of training per year per employee 46，57

404-2 Programs for upgrading employee skills and transition assistance programs

GRI 405: Diversity and Equal Opportunities

3-3 Management of substantive issues 19-21，41-42，74

405-1 Diversity of governance bodies and employees 19-21，42，74

78 79Sustainability Report 2023 Chairman's Statement About Us Strategies and Management Corporate Governance Production and Operations Employee's Rights and Benefits Product Services Environmental Protection Community Participation Lu Thai Textile Co. Ltd

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Luthai Textile Co.Ltd

Address: No.81 Songling East Road Zichuan District Zibo City Shandong Province

Telephone: 0533-5188888

http://www.lttc.com.cn

8081