Lu Thai Textile Co. Ltd. Annual Report 2021

LU THAI TEXTILE CO. LTD.ANNUAL REPORT 2021

April 2022

1Lu Thai Textile Co. Ltd. Annual Report 2021

Part I Important Notes Table of Contents and Definitions

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

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

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

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

misrepresentations misleading statements or material omissions therein.Liu Zibin the Company’s legal representative Zhang Hongmei the Company’s Chief

Accountant and Zhang Keming the Company’s Financial Manager hereby guarantee that

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

and its summary.The Company is subject to the disclosure requirements for listed companies engaging in

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

Self-regulation of Listed Companies—Industry-specific Information Disclosure.In 2021 the unstable and uncertain global economic situation caused by COVID-19 has

become more prominent. China's foreign trade environment has become more volatile due to

the combination of COVID-19 and other multiple factors. Global industrial and supply chains

have shown their vulnerability amid the pandemic. All unfavorable factors combined such as

the shortage of raw materials and power supply the surging prices of production materials

and ocean freight and the appreciation of RMB have posed great challenges to China's

textile and garment exports. With the support and encouragement of China's effective

prevention and control measures and policies to stabilize the economy and export the textile

and garment industry has overcome many difficulties strengthened the upstream and

downstream coordination of the industrial chain and supply chain seized the opportunities of

the window period of overseas order recovery and order backflow and achieved growth in

exports. With the rise in the COVID-19 vaccination rate the spread of COVID-19 is slowing

down but there are still outbreaks in some areas and the vaccination rates in low-income

countries are still low. Additionally affected by geopolitical factors and high commodity prices

the trade situation in 2022 remains highly uncertain. For details please refer to Part III

Management Discussion and Analysis.The Board has approved a final dividend plan as follows: based on 882341295 shares a cash

dividend of RMB0.70 (tax inclusive) per 10 shares is to be distributed to the shareholders

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

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

shall prevail.

2Lu Thai Textile Co. Ltd. Annual Report 2021

Table of Contents

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

Part II Corporate Information and Key Financial In... 6

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

Part IV Corporate Governance ....................... 39

Part V Environmental and Social Responsibility ..... 82

Part VI Significant Events ......................... 87

Part VII Share Changes and Shareholder Information. 124

Part VIII Preferred Shares ........................ 139

Part IX Bonds ..................................... 140

Part X Financial Statements ....................... 145

3Lu Thai Textile Co. Ltd. Annual Report 2021

Documents Available for Reference

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

Financial Manager;

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

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

4Lu Thai Textile Co. Ltd. Annual Report 2021

Definitions

Term Definition

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

The “Company” “LTTC” “Issuer” or “we”

context otherwise requires

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

Expressed in the Chinese currency of Renminbi expressed in ten thousand

RMB RMB’0000

Renminbi

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

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

The “Reporting Period” or “Current Period” The period from 1 January 2021 to 31 December 2021

5Lu Thai Textile Co. Ltd. Annual Report 2021

Part II Corporate Information and Key Financial Information

I Corporate Information

Stock name LTTC LTTC-B Stock code 000726 200726

Changed stock name (if any) N/A

Stock exchange for stock

Shenzhen Stock Exchange

listing

Company name in Chinese 鲁泰纺织股份有限公司

Abbr. 鲁泰纺织

Company name in English (if

LU THAI TEXTILE CO.，LTDany)

Abbr. (if any) LTTC

Legal representative Liu Zibin

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

Zip code 255086

Past changes of registered

11 Mingbo Road Zibo High-tech Development Zone Shandong Province

address

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

Zip code 255100

Company website www.lttc.com.cn

Email address lttc@lttc.com.cn

II Contact Information

Board Secretary Securities Representative

Name Zhang Keming Zheng Weiyin and Li Kun

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

Address

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

Tel. 0533-5277008 0533-5285166

Fax 0533-5418805 0533-5418805

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

Stock exchange website where this Report is disclosed S ecurities Times Shanghai Securities News China Securities Journal and

6Lu Thai Textile Co. Ltd. Annual Report 2021

Ta Kung Pao (HK)

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

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

IV Change to Company Registered Information

Unified social credit code 91370300613281175K

Change to principal activity of the Company

No change

since going public (if any)

Every change of controlling shareholder since

No change

incorporation (if any)

V Other Information

The independent audit firm hired by the Company:

Name Grant Thornton China

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

Accountants writing signatures He Feng and Cui Xiaoli

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

√ Applicable □ Not applicable

Name of sponsor

Name of sponsor Office address of sponsor Period of constant supervision

representative

Guotai Junan Plaza 768

Guotai Junan Securities Co. Ding Xiaowen and From 1 January 2021 to 31 December

Nanjing West Road Jing’an

Ltd. Wang Wenting 2021

District Shanghai

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

□ Applicable √ Not applicable

VI Key Financial Information

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

2021-over-2020

202120202019

change (%)

Operating revenue (RMB) 5238262348.85 4751222464.14 10.25% 6801381448.94

Net profit attributable to the

listed company’s shareholders 347609693.30 97308593.36 257.22% 952386011.49

(RMB)

7Lu Thai Textile Co. Ltd. Annual Report 2021

Net profit attributable to the

listed company’s shareholders

190492580.4020039094.03850.60%662416013.00

before exceptional gains and

losses (RMB)

Net cash generated from/used in

348137005.48593535922.89-41.35%1086110575.51

operating activities (RMB)

Basic earnings per share

0.390.11254.55%1.11

(RMB/share)

Diluted earnings per share

0.360.11227.27%1.11

(RMB/share)

Weighted average return on

4.44%1.26%3.18%12.96%

equity (%)

Change of 31

December 2021 over

31 December 2021 31 December 2020 31 December 2019

31 December 2020

(%)

Total assets (RMB) 12987221271.63 12129903960.65 7.07% 11885431553.08

Equity attributable to the listed

7983307400.037687577590.723.85%7697135324.92

company’s shareholders (RMB)

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

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

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

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

gains and losses was negative.□ Yes √ No

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

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

Accounting Standards

1. Net Profit and Equity under CAS and IFRS

□ Applicable √ Not applicable

No difference for the Reporting Period.

8Lu Thai Textile Co. Ltd. Annual Report 2021

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

□ Applicable √ Not applicable

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

Unit: RMB

Q1 Q2 Q3 Q4

Operating revenue 993485161.79 1226828489.15 1346367447.24 1671581250.67

Net profit attributable to the

74530850.4078966494.2693666571.98100445776.66

listed company’s shareholders

Net profit attributable to the

listed company’s shareholders

15513465.0738768067.0180690683.4955520364.83

before exceptional gains and

losses

Net cash generated from/used in

-36745428.28219506453.4261907667.37103468312.97

operating activities

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

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

IX Exceptional Gains and Losses

√ Applicable □ Not applicable

Unit: RMB

Item 2021 2020 2019 Note

Gain or loss on disposal of non-current

assets (inclusive of impairment allowance 50868019.96 -3265763.83 -1196233.94

write-offs)

Government subsidies charged to current

profit or loss (exclusive of government

subsidies consistently given in the

58686874.9061358132.1162198864.45

Company’s ordinary course of business at

fixed quotas or amounts as per

governmental policies or standards)

Gain or loss on fair-value changes in

held-for-trading financial assets and

liabilities & income from disposal of 77620424.02 46684051.43 241537682.90

held-for-trading financial assets and

liabilities and available-for-sale financial

9Lu Thai Textile Co. Ltd. Annual Report 2021

assets (exclusive of the effective portion

of hedges that arise in the Company’s

ordinary course of business)

Reversed portions of impairment

allowances for receivables which are 6198745.44

tested individually for impairment

Non-operating income and expense other

-1700653.342373569.56-2857141.21

than the above

Income from disposal of held-for-trading

financial assets financial liabilities and 14162405.95

investments in debt obligations

Less: Income tax effects 28885946.87 24345018.31 14593639.87

Non-controlling interests effects

5670351.215535471.639281939.79

(net of tax)

Total 157117112.90 77269499.33 289969998.49 --

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

□ Applicable √ Not applicable

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

1 on Information Disclosure for Companies Offering Their Securities to the Public—Exceptional Gain/Loss Items:

□ Applicable √ Not applicable

No such cases for the Reporting Period.

10Lu Thai Textile Co. Ltd. Annual Report 2021

Part III Management Discussion and Analysis

I Industry Overview for the Reporting Period

The Company is subject to the disclosure requirements for listed companies engaging in textile and apparel as stated in Guideline No.

3 of the Shenzhen Stock Exchange for Self-regulation of Listed Companies—Industry-specific Information Disclosure.

In 2021 facing the triple pressure of demand contraction supply shock and weakening expectations China's textile industry still

showed a good development trend. According to the data of the China National Textile and Apparel Council the revenue of textile

enterprises above the designated size has increased by 12.3% year on year in 2021; total profits rose by 25.4 % year on year. In terms

of export markets China's textile and apparel exports hit a record high totaling USD315.46 billion up by 8.3% year on year. But the

lack of demand is still imposing pressure on the textile and garment industry. Domestically market demand has not fully recovered

due to the impact of the pandemic. China's per capita spending on clothing accounts for 5.9% of the country's per capita spending in

2021 down 0.3 percentage points over 2019. The growth of online retail sales of apparel goods is significantly lower than the

pre-pandemic level. At abroad uncertainty occurs in China’s textile and clothing export to developed economies affected by factors

such as protectionism and geopolitics. In addition the high price volatility of global commodities has become a significant challenge

to the smooth operation of the industry. There is still no fundamental change in problems of financing channels blockage labor

shortage and expensiveness.II Principal Activity of the Company in the Reporting Period

The Company is subject to the disclosure requirements for listed companies engaging in textile and apparel as stated in Guideline No.

3 of the Shenzhen Stock Exchange for Self-regulation of Listed Companies—Industry-specific Information Disclosure.

Since 2021 the Company has faced various challenges in production and management posed by intertwined disadvantages like

recurrent global pandemic China-US trade friction and rising price of commodities including cotton and coal. In face of challenges

the Company adhered to the "customer-focused" philosophy and continues to promote the strategies of "Improve Quality and

Efficiency" and "Overall Internationalization". Under the premise of implementing pandemic prevention and control the Company

ensures an orderly advance in staff production and life management and operation through expanding the market adjusting the

structure and building capabilities. During the Reporting Period the product order and business performance have gradually

recovered.For the Reporting Period the Company achieved operating revenue of RMB5238 million operating profit of RMB371 million a net

profit attributable to the Company as the parent of RMB348 million and a net profit attributable to the Company as the parent before

exceptional gains and losses of RMB190 million respectively up 10.25% 348.35% 257.22% and 850.60% when compared to last

year.During the Reporting Period the Company has been rated as the "Leader in the Cotton Textile Industry during the 13th Five Year

Plan" by China Cotton Textile Association as the "Top 30 Enterprises in 2021 in the Dyeing and Printing Industry" by China Dyeing

and Printing Association and as the "Top Hundred Companies in 2021 in China’s Garment Industry" and the "Top 50 Business Suit

Companies in China" by China National Garment Association. Besides it has been acclaimed as the "Advanced Enterprise in

Corporate Culture Development in 2020 by Shandong Textile and Apparel Association. The Company has prioritized the following

aspects:

(I) Achieve business goals together as guided by strategies

Confronted by the complicated global economic situation the recurrent pandemic situation and uncertainties of domestic economic

environment the management of the Company promoted measures to fight pandemic and ensure production centered on customers

11Lu Thai Textile Co. Ltd. Annual Report 2021

and focused expanding market adjusting structure and building capabilities. We also tried to achieve increase both in revenue and

profit to keep overseas production and workforce steady and to unceasingly build our market.(II) Promote targeted service and cooperation centered around customers

The Company consistently strengthened the market development with a development direction of becoming a globalized apparel

solution provider with advanced fabrics as our pillar. Based on accurate grasp of market trend and customer demand service upgrade

was comprehensively achieved and win-win cooperation with customers realized; market structure was optimized constantly product

type increased actively domestic market developed vigorously and business of career apparel promoted further; customer relations

and stickiness were built by setting up mechanism of high-level connection and layered communication with strategic customers and

advancing design service and customized development project based on customer demand. Facing complicated and volatile situation

amid the pandemic the Company kept tiding over the current difficulty with customers.We stepped up product innovation applied research of new materials skill and craft and cooperation of R&D among the upstream

and downstream of industrial chain colleges and universities and scientific research institutions. According to the industry trend of

sustainable development and new demand for differentiated products of customers in the post-pandemic era the Company carried out

a series of key skill research and exploration of industrialization of relevant products such as the development of one-way moisture

permeability fabrics and pure-cotton recycled fabrics and R&D of pure-cotton products that are durable non-ironing anti-virus and

anti-microbial. It totally obtained 117 patents throughout the year including 16 invention patents.(III) Continue the process of "Improve Quality and Efficiency" and "Overall Internationalization" and complement links at home

with links abroad for better development

The Company moved forward with its strategy of "Improve Quality and Efficiency" and 'Overall Internationalization" backed by its

product line striving to achieve two-way development in both domestic and foreign market. During the Reporting Period while

managing to meet customers’ differential needs by leveraging domestic and foreign advantages and with finer product specialization

the Company took steps to unleash one after another the vitality of six main product lines of yarn yarn-dyed fabric dyeing fabric

functional fabric knitted fabric and apparel and focused on areas such as quality assurance and upgrading cost reduction shorter

delivery-day and higher efficiency. Efforts have been made to upgrade product lines such as Lulian functional fabric and knitted

fabric and to multiply the product mix so as to provide various options for customers from formal to casual from comfy to stylish.During the Reporting Period the Company has cooperated with Rhino Intelligent Manufacturing a platform launched by Alibaba

and has applied intelligentization in the apparel factory in a comprehensive fashion at the beginning of the cooperation. This enables

a digitalized and information-based apparel factory of higher efficiency and lower operating costs.(IV) Carry forward the corporate culture and improve the brand image.During the Reporting Period the Company continued to uphold the principle of hard-working and deepened its corporate culture.Workers were mobilized to learn the history of the Party and engage in Party-themed activity in celebration of the 100th anniversary

of the founding of the CPC with an aim to lead to the enterprise’s high-quality development supported by high-quality Party building.Various forms of activities were conducted like awarding exemplary and predominant workers skill competition and basketball and

football leagues. Restricted share incentive scheme was carried out for workers to share the fruits of development. Each renovation

and improvement took place in an overall manner fostering an enabling working environment in which all employees were involved

and pulled their wisdom together for business growth.The Company centered on producing mid- to high-end products has been rated as the "Enterprise for Incubation of High-end

Products in Shandong Province" for four consecutive years and was named National Key Talent Project last year. In the meantime

its holding subsidiary Lufeng Co. Ltd. was also named "Enterprise for Incubation of High-end Products in Shandong Province" last

year and was selected as one of the critical projects of the major industry of transforming old growth driver into the new one.III Core Competitiveness Analysis

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

12Lu Thai Textile Co. Ltd. Annual Report 2021

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

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

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

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

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

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

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

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

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

Standard (GOTS) Global Recycle Standard (GRS) and China National Accreditation Service for Conformity Assessment (CNAS)

and realized the internationalization standardization and normalization of the corporate management. In order to make outstanding

achievement in its operating management better improve the Company’s business performance and capabilities the Company has

introduced the GB/T19580 Criteria for Performance Excellence step by step set up the “big quality” system promoted the

management innovation and guaranteed the management quality.

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

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

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

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

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

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

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

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

exploration with model innovation materialize the low-carbon green and sustainable development.IV Core Business Analysis

1. Overview

For the Reporting Period the Company recorded operating revenue of RMB5238 million (a 10.25% year-on-year increase); cost of

sales of RMB4153 million (a 11.1% year-on-year increase) selling expense of RMB120 million (a 4.64% year-on-year decline) and

administrative expense of RMB335 million (a 7.01 % year-on-year decrease); research and development expense of RMB253 million

(a 9.36% year-on-year increase); and net cash generated from operating activities of RMB348 million (a 41.35% year-on-year drop).

2. Revenue and Cost Analysis

(1) Breakdown of Operating Revenue

Unit: RMB

20212020

As % of total As % of total

Change (%)

Operating revenue operating revenue Operating revenue operating revenue

(%)(%)

Total 5238262348.85 100% 4751222464.14 100% 10.25%

13Lu Thai Textile Co. Ltd. Annual Report 2021

By operating division

Textile and apparel 4915654282.18 93.84% 4238645661.96 89.20% 15.97%

Personal

protective 5788794.50 0.11% 184669256.67 3.89% -96.87%

equipment (PPE)

Cotton 1943648.71 0.04% -100.00%

Electricity and

182929779.753.49%182709470.173.85%0.12%

steam

Others 133889492.42 2.56% 143254426.63 3.02% -6.54%

By product category

Fabric products 4033321318.13 77.00% 3371261899.44 70.95% 19.64%

Shirts 882332964.05 16.84% 867383762.52 18.25% 1.72%

PPE 5788794.50 0.11% 184669256.67 3.89% -96.87%

Cotton 1943648.71 0.04% -100.00%

Electricity and

182929779.753.49%182709470.173.85%0.12%

steam

Others 133889492.42 2.56% 143254426.63 3.02% -6.54%

By operating segment

Hong Kong 166071385.74 3.17% 189971723.94 4.00% -12.58%

Japan And South

254482374.294.86%364740573.677.68%-30.23%

Korea

Southeast Asia 1523121466.68 29.08% 1062716851.02 22.37% 43.32%

Europe and

560579079.3010.70%575125583.7212.10%-2.53%

America

Others 306457017.82 5.85% 336434709.67 7.08% -8.91%

Mainland China 2427551025.02 46.34% 2222233022.12 46.77% 9.24%

By sales model

Direct sales 5238262348.85 100.00% 4751222464.14 100.00% 10.25%

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

Operating Revenue or Operating Profit

□ Applicable √ Not applicable

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

√ Yes □ No

Operating division Item Unit 2021 2020 Change (%)

14Lu Thai Textile Co. Ltd. Annual Report 2021

Unit sales 0000 meters 20123.11 16769.7 20.00%

Fabric Output 0000 meters 22271.95 18808.22 18.42%

Inventory 0000 meters 4844.58 4375.76 10.71%

Unit sales 0000 pieces 1443.99 1809.67 -20.21%

Apparel Output 0000 pieces 1444.92 1889.1 -23.51%

Inventory 0000 pieces 171.99 156.09 10.19%

Unit sales 000 KWH 123065.87 149646.34 -17.76%

Electricity Output 000 KWH 424085.59 409893.45 3.46%

Inventory 000 KWH

Unit sales ton 327979.23 339064.67 -3.27%

Steam Output ton 1193199.66 1082057.31 10.27%

Inventory ton

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

□ Applicable √ Not applicable

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

□ Applicable √ Not applicable

(5) Breakdown of Cost of Sales

By operating division and product category

Unit: RMB

20212020

Operating

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

division Cost of sales Cost of sales

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

Textile and 3329872586.Cost of sales 3837905961.39 92.42% 89.08% 15.26%

apparel 97

PPE Cost of sales 3778908.51 0.09% 127124669.03 3.40% -97.03%

Cotton Cost of sales 1560876.66 0.04% -100.00%

Electricity and

Cost of sales 210275788.87 5.06% 161892710.06 4.33% 29.89%

steam

Other Cost of sales 101020417.08 2.43% 117533240.73 3.15% -14.05%

Unit: RMB

20212020

Product

Item As % of total cost As % of total cost Change (%)

category Cost of sales Cost of sales

of sales (%) of sales (%)

15Lu Thai Textile Co. Ltd. Annual Report 2021

Fabric 2670531996.Cost of sales 3153777018.80 75.94% 71.44% 18.10%

products 56

Shirts Cost of sales 684128942.59 16.48% 659340590.41 17.64% 3.76%

PPE Cost of sales 3778908.51 0.09% 127124669.03 3.40% -97.03%

Cotton Cost of sales 1560876.66 0.04% -100.00%

Electricity and

Cost of sales 210275788.87 5.06% 161892710.06 4.33% 29.89%

steam

Other Cost of sales 101020417.08 2.43% 117533240.73 3.15% -14.05%

Note:

Manufacture

Product Period Raw material Labor cost Depreciation Energy Total

expenses

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

Fabric

202047.30%18.05%8.29%16.10%10.26%100.00%

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

Shirts

202054.84%35.16%2.84%1.34%5.82%100.00%

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

√ Yes □ No

During the year the Company established new subsidiaries Hainan Huilin International Holdings Co. Ltd. Libra International

Investment Pte. Ltd. and Zibo Banyang Villa Hotel Co. Ltd.

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

□ Applicable √ Not applicable

(8) Major Customers and Suppliers

Major customers:

Total sales to top five customers (RMB) 856767149.72

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

16.36%

the Reporting Period (%)

Total sales to related parties among top five customers

0.00%

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

Information about top five customers:

Sales revenue contributed

No. Customer for the Reporting Period As % of total sales revenue (%)

(RMB)

Total -- 856767149.72 16.36%

16Lu Thai Textile Co. Ltd. Annual Report 2021

Other information about major customers:

□ Applicable √ Not applicable

Major suppliers:

Total purchases from top five suppliers (RMB) 935235608.03

Total purchases from top five suppliers as % of total

23.95%

purchases of the Reporting Period (%)

Total purchases from related parties among top five

suppliers as % of total purchases of the Reporting 0.00%

Period (%)

Information about top five suppliers:

Purchase in the Reporting

No. Supplier As % of total purchases (%)

Period (RMB)

Total -- 935235608.03 23.95%

Other information about major suppliers:

□ Applicable √ Not applicable

3. Expense

Unit: RMB

2021 2020 Change (%) Reason for any significant change

Selling expense 119883494.68 125717288.31 -4.64%

Administrative

335380025.54360656722.39-7.01%

expense

Increased interest income and

Finance costs 44988908.41 109546654.83 -58.93%

decreased exchange losses

R&D expense 252912911.63 231265031.12 9.36%

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

Garment Services

(1) Capacity

The Company's own capacity

Industry Item 2021 2020

Classification

Total capacity (fabrics) 29360.00 29360.00

(10000 meters)

Fabrics

Rate of capacity utilization 76% 64%

Plants under construction The Company's convertible bond The Company's convertible

17Lu Thai Textile Co. Ltd. Annual Report 2021

fundraising projects: The bond fundraising projects: The

"Functional Fabric Intelligent "Functional Fabric Intelligent

Eco-park Project (Phase I)" with an Eco-park Project (Phase I)" with

annual capacity of 35 million an annual capacity of 35 million

meters of high-grade functional meters of high-grade functional

fabrics and the "Production Line fabrics and the "Production Line

Project of High-grade Printed and Project of High-grade Printed and

Dyed Fabrics" with an annual Dyed Fabrics" with an annual

capacity of 25 million meters of capacity of 25 million meters of

high-grade printed and dyed high-grade printed and dyed

fabrics were in progress. fabrics were in progress.Total capacity (garment) 2030.00 2030.00

(10000 pieces)

Garment

Rate of capacity utilization 70% 80%

Plants under construction

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

Fabrics: The capacity utilization saw improvements due to foreign demand recovery and temporary rise of orders.Garments: Product quantity experienced a year-on-year decrease and the capacity utilization declined following the restrictions on

production in foreign manufacturing bases induced by the COVID-19 pandemic.Overseas capacity: √Yes

Industry Item Domestic Overseas

Classification

Percentage of 83% 17%

capacity

Mainly in Shandong Mainly in Tay Ninh

Fabrics Capacity layout

Province Province Vietnam

Rate of capacity 78% 67%

utilization

Percentage of 47% 53%

capacity

Mainly in T?nh An Giang

Vietnam; Svay Rieng

Mainly in Shandong

Garment Capacity layout Province Cambodia; and

Province

Thilawa Special Economic

Zone Yangon Myanmar

Rate of capacity 81% 54%

utilization

The Company’s expansion plan on developing overseas production capacity

18Lu Thai Textile Co. Ltd. Annual Report 2021

The Company will invest in constructions of production bases in Tay Ninh Province Vietnam to produce woven and knitted fabrics.For now the projects are under preparation.

(2) Sales model and channels

Product sales channels and operation methods

a. Sales model

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

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

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

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

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

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

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

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

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

Gross YoY change in YoY change in

YoY change in

Sales channels Operating revenue Cost of sales profit operating gross profit

cost of sales

margin revenue margin

Online sales 4947854.11 1610250.89 67.46% 263220.57 -73158.43 3.39%

Direct sales 4040320645.05 3155572769.29 21.90% 661297015.92 481167795.85 1.05%

OEM/ODM 870385783.02 680722941.21 21.79% 15448383.73 26938737.00 -1.74%

Total 4915654282.18 3837905961.39 21.92% 677008620.22 508033374.42 0.48%

(3) Franchise and distribution

Franchisees and distributors recorded more than 30% of sales revenue

□ Yes √ No

(4) Online sales

Online sales recorded more than 30% of sales revenue

□ Yes √ No

Self-developed sales platforms

19Lu Thai Textile Co. Ltd. Annual Report 2021

√ Yes □ No

Start of operation 30 March 2009

Number of registered users 140073

Average number of active monthly users (AMU) 5000

Return rate of main brands 3.00%

Return rate of main types 3.00%

Cooperation with third-party sales platforms

√ Yes □ No

Online sales channels opened or closed by the Company

□ Applicable √ Not applicable

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

Not applicable.

(5) Agency operation model

Agency operation model involved

□ Yes √ No

(6) Inventory

Inventory

Year-over-year

Days of

Quantity of Inventory change in

Main products turnover of Reason

inventory age inventory

inventories

balance

Fabrics (10000 Within 1

863824.110.76%

meters) year

Fabrics (10000

1020.48 Over 1 year 10.54%

meters)

Shirts (10000 Within 1

34111.637.76%

pieces) year

Increase in inventory as a result of the

Shirts (10000

13.91 Over 1 year 203.71% restricted customs clearance for

pieces) Sino-Us trade

Reserves for falling prices of inventory

2021.12.31

Item

Carrying amount Falling price reserves or provision for Carrying value

20Lu Thai Textile Co. Ltd. Annual Report 2021

impairment on contract performance cost

Raw materials 928078106.34 17925640.41 910152465.93

Goods in process 611695332.97 2538846.30 609156486.67

Products on hand 939550089.36 143767058.72 795783030.64

Commissioned

30254811.0430254811.04

products

Total 2509578339.71 164231545.43 2345346794.28

Inventory information of retail channels such as franchised stores or distributors:

Not applicable.

(7) Brand building

Production and sales of brand clothing apparel and home textile products

√ Yes □ No

Self-owned brands

Target

Trademark Main product Price zone of Main sales

Brand name Characteristics consumer City levels

name types main products areas

group

Provincial

East China

capital cities

Classic Business South China

LTGRFF LTGRFF Shirts and suits RMB500-3000 and other

business attire people and Southwest

prefecture-level

China

cities

Trademark ownership disputes

□ Applicable √ Not applicable

(8) Others

Engaged in business related to apparel design

□ Yes √ No

Whether the Company held meetings for the placement of orders

□ Yes √ No

5. R&D Investments

√ Applicable □ Not applicable

Names of main Goals of projects Progresses of projects Intended goals Estimated impact

21Lu Thai Textile Co. Ltd. Annual Report 2021

R&D projects on future

development of the

Company

This project is aimed at The outcomes of

This project is

Development of providing a comfortable laboratory-scale

The Company aims at setting expected to improve

one-way moisture dressing experience with experiment are

standards and meeting core competence of

permeability the technology of satisfying followed

customers’ requirements. the Company’s

fabrics one-way moisture by a pilot-scale

products.permeability. experiment.This project is

This project is aimed at

The Company aims at expected to enhance

reusing the waste The Company is still

Development of producing the recycled cotton the Company’s

materials so as to reduce in its early stage of

recycled cotton with a spinnable average fiber brand influence and

the waste of resources the technological

fabrics length and meeting the goal of raise its status in the

and protect the research.industrialization. industry as a

environment.benchmark.This project is aimed at

This project is aimed at This project is

R&D of durable reducing damages to the

producing DP3.5 3A expected to increase

non-iron products human body by viruses The requirements for

antibacterial products enduring the Company’s

with anti-virus and bacteria and industrialization are

50-time washing and resisting financial benefits

and antibacterial producing healthy and met.H1N1 virus with an activity with a huge market

functions safe textiles easy to take

value at no less than 2.0. potential.care of.Details about R&D personnel:

2021 2020 Change (%)

Number of R&D personnel 1535 1604 -4.30%

R&D personnel as % of total

14.00%12.68%1.32%

employees

Educational background of

——————

R&D personnel

Bachelor’s degree 206 190 8.42%

Master’s degree 30 30 0.00%

Age structure of R&D

——————

personnel

Below 30 231 327 -29.36%

30~4010831108-2.26%

40 and beyond 221 169 30.77%

Details about R&D investments:

2021 2020 Change (%)

R&D investments (RMB) 252912911.63 231265031.12 9.36%

22Lu Thai Textile Co. Ltd. Annual Report 2021

R&D investments as % of

4.83%4.87%-0.04%

operating revenue

Capitalized R&D investments

0.000.000.00%

(RMB)

Capitalized R&D investments

as % of total R&D 0.00% 0.00% 0.00%

investments

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

□ Applicable √ Not applicable

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

□ Applicable √ Not applicable

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

□ Applicable √ Not applicable

6. Cash Flows

Unit: RMB

Item 2021 2020 Change (%)

Subtotal of cash generated from

5095876566.674775015226.056.72%

operating activities

Subtotal of cash used in operating

4747739561.194181479303.1613.54%

activities

Net cash generated from/used in

348137005.48593535922.89-41.35%

operating activities

Subtotal of cash generated from

1558983659.21850680343.3483.26%

investing activities

Subtotal of cash used in investing

1530504624.631638855294.04-6.61%

activities

Net cash generated from/used in

28479034.58-788174950.70103.61%

investing activities

Subtotal of cash generated from

1711261939.493622339439.58-52.76%

financing activities

Subtotal of cash used in financing

1507951696.502888674850.63-47.80%

activities

Net cash generated from/used in

203310242.99733664588.95-72.29%

financing activities

Net increase in cash and cash

573476477.42517971388.5510.72%

equivalents

Explanation of why any of the data above varies significantly:

√ Applicable □ Not applicable

Net cash generated from operating activities amounted to RMB348137005.48 during the Reporting Period down 41.35% year on

year primarily driven by the increased payments for goods; net cash generated from investing activities amounted to

RMB28479034.58 during the Reporting Period up 103.61% year on year primarily driven by the disinvestment in wealth

management products upon maturity and the decreased investments in fixed assets; and net cash generated from financing activities

23Lu Thai Textile Co. Ltd. Annual Report 2021

amounted to RMB203310242.99 during the Reporting Period down 72.29% year on year primarily driven by the decreased

borrowings obtained.Reason for any big difference between the net operating cash flow and the net profit for this Reporting Period

□ Applicable √ Not applicable

V Analysis of Non-Core Businesses

√ Applicable □ Not applicable

Unit: RMB

As % of total

Amount Source/Reason Recurrent or not

profit

Return on Income from the disposal of held-for-trading

50449943.70 13.89% Not

investment financial assets

Gain/loss on

Gains on changes in the fair value of

changes in fair 16415304.41 4.52% Not

held-for-trading financial assets

value

Asset impairments -85623858.26 -23.57% Inventory valuation allowances Not

Non-operating

5417119.07 1.49% Income of non-operating compensation etc Not

income

Non-operating Losses on the damage and retirement of

13424054.88 3.69% Not

expense non-current assets donations etc.VI Analysis of Assets and Liabilities

1. Significant Changes in Asset Composition

Unit: RMB

31 December 2021 1 January 2021 Change in Reason for

As % of total As % of total percentage any significant

Amount Amount

assets assets (%) change

Monetary

1999712889.3515.40%1400478034.8111.42%3.98%

assets

Accounts

647277198.514.98%522425219.874.26%0.72%

receivable

Inventories 2345346794.28 18.06% 1988968681.64 16.22% 1.84%

Investment

21362302.030.16%22263668.850.18%-0.02%

property

Long-term

equity 169443106.66 1.30% 138079577.25 1.13% 0.17%

investments

24Lu Thai Textile Co. Ltd. Annual Report 2021

Fixed assets 5561601374.44 42.82% 5637980006.69 45.99% -3.17%

Construction in

237579082.991.83%356273197.492.91%-1.08%

progress

Right-of-use

257019286.151.98%269362245.882.20%-0.22%

assets

Short-term

1011034138.327.78%930871008.197.59%0.19%

borrowings

Contract

204967348.961.58%141339705.621.15%0.43%

liabilities

Long-term

684962473.245.27%495520342.784.04%1.23%

borrowings

Lease liabilities 121357658.41 0.93% 128815114.07 1.05% -0.12%

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

As % of

Control Material

Manage Return the

Sourc Asset value Locatio measures to impairm

Asset ment generated Compan

e (RMB) n protect asset ent risk

model (RMB) y’s

safety (yes/no)

equity

Main

Lu Thai

management

(Hong

Incorp Hong Marketin personnel sent

Kong) 191246511.91 4432903.98 2.29% No

orated Kong g by the

Textile Co.Company as the

Ltd.parent

Main

Lu Thai management

(America) Incorp New Marketin personnel sent

4643034.45 -1527611.59 0.06% No

Textile Co. orated York g by the

Ltd. Company as the

parent

Main

management

Qiming

Incorp Svay Manufact personnel sent

Apparel 157347321.28 275575.09 1.88% No

orated Rieng uring by the

Co. Ltd.Company as the

parent

Vanguard Main

Incorp Rangoo Manufact

Apparel 89438343.06 management -443135.80 1.07% No

orated n uring

Co. Ltd. personnel sent

25Lu Thai Textile Co. Ltd. Annual Report 2021

by the

Company as the

parent

Main

management

Continental

Incorp Tay Manufact personnel sent

Textile Co. 2403192122.53 127900171.61 28.72% No

orated Ninh uring by the

Ltd.Company as the

parent

Main

Anjian management

Lu An

Incorp g Manufact personnel sent

Garments 186984990.96 -6025605.81 2.23% No

orated Vietna uring by the

Co. Ltd.m Company as the

parent

Main

Libra

management

Internation

Incorp Singap Investme personnel sent

al 395142781.79 1441904.47 4.72% No

orated ore nt by the

Investment

Company as the

Pte. Ltd.parent

2. Assets and Liabilities at Fair Value

√ Applicable □ Not applicable

Unit: RMB

Gain/loss

on Cumulative Impairment

Purchas

fair-value fair-value allowance Sold in the

Beginning ed in the Other Ending

Item changes in changes for the Reporting

amount Reportin change amount

the charged to Reporting Period

g Period

Reporting equity Period

Period

Financial

assets

1.

Held-for-tra

ding

4087303331329804.250008141900520

financial

7.23411.6400.00

assets

(excluding

derivative

26Lu Thai Textile Co. Ltd. Annual Report 2021

financial

assets)

2.

Derivative 16641500. -14914500 1727000

financial 00 .00 .00

assets

Subtotal of

4253718316415304.250008141917790

financial

7.23411.6400.00

assets

55150926.-2010853466307

Others -379267.35

3487.111.88

Total of the 48052276 16415304. 25000814 -201085 2264420

-379267.35

above 3.57 41 1.64 87.11 71.88

Financial

0.000.00

liabilities

Content of other change:

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

□ Yes √ No

3. Restricted Asset Rights as at the Period-End

For details see Part X. VII. 62. Assets with restricted ownership and using right in this Report.VII Investments Made

1. Total Investment Amount

□ Applicable √ Not applicable

2. Major Equity Investments Made in the Reporting Period

□ Applicable √ Not applicable

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

□ Applicable √ Not applicable

4. Financial Investments

(1) Securities Investments

□ Applicable √ Not applicable

27Lu Thai Textile Co. Ltd. Annual Report 2021

No such cases in the Reporting Period.

(2) Investments in Derivative Financial Instruments

√ Applicable □ Not applicable

Unit: RMB'0000

Propo

rtion

Act

of

Rel ual

closin

atio gai

g

nshi Begin Purch Endin n/lo

Initial Sold Impai invest

p Relate ning ased g ss

Type of invest in the rment ment

Opera wit d-party Startin Endin invest in the invest in

derivati ment Repor provis amou

tor h transac g date g date ment Repor ment the

ve amou ting ion (if nt in

the tion amou ting amou Rep

nt Period any) the

Co nt Period nt orti

Comp

mp ng

any’s

any Peri

endin

od

g net

assets

Forward

Com No 26 30

exchang 49

merci n-re 1666 Nove Dece 1298 3689 1666

No e 0 36.al late 97.7 mber mber 05.79 1.91 97.7

settleme 64

bank d 2020 2021

nt

Com No 22 30

Foreign

merci n-re 1446 Octob Dece 6215 8249 1066 3800 415

No exchang 4.54%

al late 46.46 er mber 0 6.46 38.46 8 .36

e option

bank d 2020 2022

Forward

Com No 14

exchang 1

merci n-re 1308 Januar 1308 1308 17.No e April 0 0

al late 1.6 y 1.6 1.6 76

transacti 2021

bank d 2021

ons

53

32441919132428643800

Total -- -- 4.54% 69.

25.7655.7969.9717.768

76

Capital source for derivative

The Company’s own money

investment

Lawsuit (if applicable) N/A

Disclosure date of board of 30 April 2020

28Lu Thai Textile Co. Ltd. Annual Report 2021

directors announcement on

approval of derivative investment 15 June 2021

(if any)

Disclosure date of general meeting

announcement on approval of

derivative investment (if any)

The Company conducted derivatives products transaction in order for hedging. And the

forward settlement hedging was operated by installments with the relevant amount not

more than the planned derivatives products transactions. And all derivatives products

transaction was zero-deposit. Meanwhile the Company had a complete risk control

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

liquidity risk and credit risk operation risk and risk of laws and regulation.

1. Market risk: When the international and domestic economic situations change the

corresponding changes in exchange rates and interest rates may have an adverse impact on

the financial derivative transactions of the Company. Precautions: The Company chooses

financial instruments with simple structures high liquidity and controllable risk and

strictly controls the scale of derivative transactions performing them by stages and in

batches. Means such as extension and balance settlement can be adopted to ensure

contract performance after the contract expires.

2. Liquidity risk and credit risk: Credit risk arises when the Company or counterparties in

transactions couldn’t perform contracts due now to liquidity or other factors that result in

further economic loss. Precautions: The derivative transactions can only be done with

Analysis on risks and control

financial institutions qualified for derivative transactions as authorized by relevant

measures of derivative products

national authorities or financial or foreign exchange authorities in the country or region

held in the Reporting Period

where the Company operates. Derivative transactions with other institutions or individuals

(including but not limited to market

are not allowed so as to control related risk concerning counterparties.risk liquidity risk credit risk

3. Internal risk control: Derivative transactions are highly specialized and complex.

operation risk law risk etc.)

Therefore there is a risk of loss in derivative transactions due to the imperfect internal

control system when business is performed. Precautions: The Company should strictly

implement Management Policy for Investments in Securities and Derivative Transactions

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

authorization management system strengthen professional ethics education and business

training for relevant personnel clarify job responsibilities engage in derivative

transaction business strictly within the scope of authorization and establish a timely

reporting system for abnormal conditions to avoid operational risks.

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

compliance with relevant national laws and regulations. Otherwise signed contracts

commitments and other legal documents may entail compliance risk and regulatory risk in

terms of effectiveness and enforceability. Precautions: The Company should strengthen

the supervision and inspection of the standardization of derivative transactions the

effectiveness of internal control mechanism and the authenticity of information disclosure

to avoid possible legal risks. The Company has fulfilled relevant approval procedures for

its derivative transactions business which is in line with the relevant national laws

29Lu Thai Textile Co. Ltd. Annual Report 2021

regulations the Articles of Association the Management Policy for the Transaction of

Derivatives of Lu Thai the Proposal on the Company's Derivative Transaction Plan

deliberated and adopted at the 13th meeting of the 9th session of the Board of Directors

held on 28 April 2020 and the Proposal on the Company's Derivative Transaction Plan

deliberated and adopted at the 25th meeting of the 9th session of the Board of Directors

held on 11 June 2021 and fulfilled the relevant information disclosure obligations.Changes of market prices or fair 1. As of 31 December 2021 the Company held 5 undue financial derivatives contracts

values in the Reporting Period of totaling USD60 million all of which were forex option contracts.the invested derivatives. And the 2. During 2021 the total amount of all settled financial derivatives of the Company was

analysis on the fair value of the equivalent to USD441.5 million generating gains of RMB53.6976 million among which

derivatives should include the gains of RMB49.3664 million were from the settlement of forward forex settlement

specific use methods and the contracts of USD250 million; gains of RMB4.1536 million were from the settlement of

relevant assumptions and forex option contracts of USD171.5 million; gains of RMB0.1776 million were from the

parameters. settlement of forward forex transactions of USD20 million.Whether significant changes

occurred to the Company’s

accounting policy and specific

No significant changes

accounting principles of derivatives

in the Reporting Period compared

to the previous Reporting Period

Independent directors Zhou Zhiji Pan Ailing Wang Xinyu and Qu Dongmei have issued

the following professional advice on the Company's derivative transaction business: We

believe that the Company's foreign exchange derivative transaction business is performed

Specific opinion from independent on the condition of ensuring normal operations. Transactions using its own funds are

directors on the Company’s beneficial to avoiding the risk of exchange rate fluctuations and are an effective tool to

derivatives investment and risk hedge exchange rate risk. By strengthening internal control implementing stop-loss and

control risk prevention measures the Company can improve its ability to resist exchange rate

fluctuations and improve its management level. The derivative transaction plan proposed

by the Board of Directors is feasible necessary and the risks are manageable. There is no

damage to the interests of the Company and all the shareholders.

5. Use of Funds Raised

√ Applicable □ Not applicable

(1) Overall Use of Funds Raised

√ Applicable □ Not applicable

Unit: RMB’0000

Raisin Total of Cumulati Total of Cumulat Ratio of Total of Purpose Amoun

Total of

Raisin g raised ve raised ive cumulati raised and t of

raised

g year manne capital amount capital amount ve capital direction raised

capital

r used in of raised which of raised amount unused of raised capital

30Lu Thai Textile Co. Ltd. Annual Report 2021

this capital purpose capital which capital unused

period used is which purpose unused for two

changed purpose is years

in the is changed

report changed

period

RMB

1.0397

million

deposited

in the

special

account

for raised

capital;

RMB

618.5909

million

for

purchasin

g

Conve

financial

2020 rtible 138800 13662.54 80162.47 0 0 0.00% 61963.06 0

products

bonds

and

deposit

products

(includin

g the net

income

RMB

33.1994

million

from

interest

income

deducted

handling

charge)

Total -- 138800 13662.54 80162.47 0 0 0.00% 61963.06 -- 0

General use situation of raised capital

(I) Amount of actual raised capital and arrival date

Upon approval by China Securities Regulatory Commission in the document “ZJXK [2020]299” the Company publically issued

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

31Lu Thai Textile Co. Ltd. Annual Report 2021

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

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

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

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

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

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

By December 31 2021 the Company directly invested RMB 801.6247 million in total from the raised capital for its capital

raising projects the unused amount was RMB 619.6306 million (including the net income RMB 33.1994 million from interest

income deducted handling charge) the balance of the special raised capital account at the end of period was RMB 1.0397 million

and the amount of raised capital not redeemed and used for purchasing financial products deposit products from banks was RMB

618.5909 million.

(2) Commitments on Projects with Funds Raised

√ Applicable □ Not applicable

Unit: RMB’0000

Whethe

r the

Date

project

Cumul when Whethe

s are Invest

Total of Total Amoun ative the Whethe r

change ment Benefit

commit invest t invest project r project

Committed d progres realize

ted ment investe ment reached reached feasibil

investment projects (includi s by the d in

invest after d in amount the the ity

and use direction of ng end of this

ment of modific this by the intende expecte change

over raised capital partiall period report

raised ation report end of d d d

y (3) ＝ period

capital (1) period period availab benefit signific

change (2)/(1)

(2) le antly

d

status

project

s)

Committed investment projects

Functional fabric

11341. 47348. 31 May

smart eco-park No 85000 85000 55.70% N/A No

17682023

project (Phase 1)

High-end printing

31

and dyeing fabric 2321.3

No 25000 25000 4008.2 16.03% Octobe N/A No

production line 7

r 2022

project

Supplement working 28805. 100.02

No 28800 28800 N/A No

capital 59 %

Subtotal of -- 13880 13880 13662. 80162. -- -- -- --

32Lu Thai Textile Co. Ltd. Annual Report 2021

committed 0 0 54 47

investment projects

Use direction of over raised capital

N/A

138801388013662.80162.

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

005447

Situation and reasons

that it did not reach

In the Reporting Period due to the impact of the COVID-19 epidemic the capital raising projects

the planned progress

“Functional fabric smart eco-park project (Phase 1)” and “High-end Printing and Dyeing Fabricor expected returnProduction Line Project” delayed in construction progress.(based on specific

projects)

Note for significant

change of project N/A

feasibility

Amount purpose N/A

and use progress of

over raised capital

Change of N/A

implementation site

of capital raising

project

Adjustment of N/A

implementation

mode of capital

raising project

Advance investment Applicable

and displacement of By 30 April 2020 the total amount of displaced capital was RMB 191.4288 million including the

capital raising amount RMB 189.8388 million invested in the project with the self-raised capital of the Company in

project advance and payment of issuing cost RMB 1.59 million with its self-raised capital

Temporary N/A

supplement to

working capital with

unused raised capital

Balance of raised N/A

capital after

implement of project

and relevant reasons

Purpose and use By 31 December 2021 RMB 1.0397 million in the unused raised capital was deposited in the raised

direction of unused capital account and RMB 618.5909 million was used for cash management.

33Lu Thai Textile Co. Ltd. Annual Report 2021

raised capital

Problems existing in

use and information

disclosure of raised None

capital or other

situation

(3) Changes in Projects with Funds Raised

□ Applicable √ Not applicable

No such cases in the Reporting Period.VIII Sale of Major Assets and Equity Interests

1. Sale of Major Assets

□ Applicable √ Not applicable

No such cases in the Reporting Period.

2. Sale of Major Equity Interests

□ Applicable √ Not applicable

IX Major Subsidiaries

√ Applicable □ Not applicable

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

Unit: RMB

Relat

ionsh Pri

ip nci

pal Registered Operating Operating Name with Total assets Net assets Net profit

acti capital revenue profit the

Com vity

pany

Lufen

g

Weavi

Subsi Fab

ng & 706160000 1885678911.54 1249487228.93 1400185935.63 -15836294.87 -7534683.42

diary ric

Dyein

g Co.Ltd.

34Lu Thai Textile Co. Ltd. Annual Report 2021

Shand

ong

Lulia

n

Subsi Fab

New 400000000 998361420.15 288875133.91 44524344.91 -77012952.17 -79511556.10

diary ric

Mater

ials

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

□ Applicable √ Not applicable

Information about major majority- and minority-owned subsidiaries:

Lufeng Weaving & Dyeing Co. Ltd. (hereinafter called “Lufeng Weaving & Dyeing”) is the holding subsidiary of the Company.Registration place: Zibo Shandong; registered capital: RMB706.160 million. The mainly manufacturing and selling textile printing

and dyeing products and the products of clothing and garments and it were authenticated to be high-tech enterprise in October 2014.During the Reporting Period due to the impact of the recurrent COVID-19 epidemic Lufeng Weaving & Dyeing’s export business and

high value-added orders were reduced which had a greater impact on performance. Lufeng Weaving & Dyeing achieved operating

revenue of RMB 1.4 billion up 6.84% year on-year and net profit of RMB -7.5347 million down 134.15% year-on-year.Shandong Lulian New Materials Co. Ltd. (hereinafter referred to as "Lulian New Materials") is the holding subsidiary of the Company.Registration place: Zibo Shandong; registered capital: RMB 400 million. It was established in April 2019 and mainly manufacturing

and selling functional fabrics. During the Reporting Period it is still under construction and production of some products has begun.Lulian New Materials achieved operating revenue of RMB 44.5243 million up 480.97% year on-year due to a low base comparison

and net profit of RMB -79.5116 million down 169.64% year-on-year.X Structured Bodies Controlled by the Company

□ Applicable √ Not applicable

XI Prospects

1. Industry competition and development trend

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

efficiency and other aspects. The COVID-19 epidemic has impacted the economy and trade of various countries since 2020 but the

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

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

policy is implemented in China the textile industry in the post-epidemic era may face structural adjustment and the demand to

yarn-dyed fabric used for shirts will change as diversified products in small batch functionality and leisure orientation.

2. Development strategy of the Company

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

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

series of shirt fabrics of pure cotton and natural fiber cotton and natural fiber as well as cotton and functional fiber. And the newly

developed shirt knitted fabric and elastic fabric are also popular in markets. In order to maintain the outstanding advantages of the

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

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

35Lu Thai Textile Co. Ltd. Annual Report 2021

quality innovation and customer needs and innovates the marketing model with advantages of resources in each channel. High-end

shirt customization services are provided to meet various needs of customers. Furthermore the Company increases investment in

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

protection for sustainable development.

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

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

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

structure and risk prevention mechanism.

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

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

be a global dress solution supplier based on leading fabric.

(3) In the aspect of business administration the Company continually Implements the strategy of “quality and efficiency improvement”

and “comprehensive internationalization” makes more efforts in developing market adjusting structure and improving capacity

strengthens integrated product development (IPD) promotes innovation while meeting market demand and builds up a flexible rapid

response efficient and traceable supply system chain with internal and external resources.

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

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

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

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

4. Capital needs sources and planning

Within the Reporting Period the functional fabric intelligent ecological park project (phase I) of the Company’s holding subsidiary

Lulian New Materials and the high-end printing and dyeing fabrics production line project of Lufeng Weaving & Dyeing were under

construction. Corresponding equipment installation and trial production will be arranged successively and the project fund is from the

raised fund of the A Share convertible bonds issued by the Company.

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

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

impact of the recurrent COVID-19 epidemic the Company will face more challenges. In addition the economic development of China

should be transformed and upgrade therefore the Company will continue to strictly execute coronavirus control measures guarantee

production and safety and further utilize various resources at home and abroad to develop domestic and overseas markets so as to catch

development opportunities after COVID-19 is controlled.

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

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

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

and actively reduces cost and gross profit margin fluctuations arising from price change of raw cotton.

(3) Change of exchange rate: The import and export business takes up a large proportion in the Company’s business. With greater

fluctuations in RMB the exchange rate fluctuations will place a remarkable impact on the Company’s performance. In order to reduce

adverse influence of exchange rate fluctuation the Company has established a risk-neutral philosophy to deal with exchange rate

fluctuations. Based on actual needs arising from production and operation it will take appropriate measures at a proper timing to

avoid the risk of currency fluctuations. Firstly the Company appropriately conducted foreign exchange hedging using forward FX

sales and purchase forward foreign exchange trading and option portfolios to avoid some risks Secondly the Company made

reasonable arrangement on settlement day and currency structure and conclusion of agreements on fixed foreign exchange rate to

avoid exchange rate-related risks. Thirdly the Company adjusted the Renminbi and foreign-currency liabilities structure to prevent

the transaction risks in a proactive manner. Fourthly according to the trends of exchange rates the Company properly adjusted

imports of raw and auxiliary materials to partially offset the influence of exchange rate fluctuations on the Company.

36Lu Thai Textile Co. Ltd. Annual Report 2021

XII Communications with the Investment Community such as Researches Inquiries and

Interviews during the Reporting Period

√ Applicable □ Not applicable

Contents and

Index to main inquiry

Date of visit Place of visit Way of visit Type of visitor Visitor materials

information

provided

Investor Relations

The Management Archive

About basic

31 March Company’s Institution 20210401 disclosed

By phone Institution information of

2021 conference investor on Cninfo by the

the Company

room Company on 1 April

2021

Investor Relations

The Management Archive

About basic

Company’s Institution 20210402 disclosed

1 April 2021 By phone Institution information of

conference investor on Cninfo by the

the Company

room Company on 2 April

2021

Results Briefing

Roadshow

The

Institutional Information

Company’s Annual results

13 April 2021 Other Other and individual 20210413 disclosed

conference briefing

investors on Cninfo by the

room

Company on 14 April

2021

Investor Relations

The Management Archive

About basic

30 August Company’s Institution 20210830 disclosed

By phone Institution information of

2021 conference investor on Cninfo by the

the Company

room Company on 31

August 2021

Investor Relations

The Management Archive

About basic

2 September Company’s Institution 20210904 disclosed

By phone Institution information of

2021 conference investor on Cninfo by the

the Company

room Company on 4

September 2021

The Investor Relations

About basic

29 October Company’s Institution Management Archive

By phone Institution information of

2021 conference investor 20211101 disclosed

the Company

room on Cninfo by the

37Lu Thai Textile Co. Ltd. Annual Report 2021

Company on 1

November 2021

Investor Relations

The Management Archive

About basic

29 December Company’s Institution 2021129 disclosed on

By phone Institution information of

2021 conference investor Cninfo by the

the Company

room Company on 30

December 2021

38Lu Thai Textile Co. Ltd. Annual Report 2021

Part IV Corporate Governance

I General Information of Corporate Governance

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

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

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

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

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

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

Methods for External Investments of Lu Thai Textile Co. Ltd. Management Rules for Authorization of Lu Thai Textile Co. Ltd.

1. Shareholders and Shareholders’ General Meeting

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

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

2. The relationship between the majority shareholders and the Company

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

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

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

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

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

3. The directors and Board of Directors

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

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

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

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

4. Supervisors and Supervisory Committee

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

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

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

duties and supervise the Company’s financial status and the legal execution of duties of the directors president and other senior

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

5. Information disclosure

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

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

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

fairness of information disclosure.

6. Investor relations management

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

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

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

rules for the governance of listed companies.

39Lu Thai Textile Co. Ltd. Annual Report 2021

□ Yes √ No

No such cases in the Reporting Period.II The Company’s Independence from Its Controlling Shareholder and Actual Controller in

Assets Personnel Financial Affairs Organization and Business

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

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

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

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

simultaneously hold any office in any shareholder’s unit.

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

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

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

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

involved in independent operation. The substantial shareholder shall legally execute its rights fulfill corresponding obligations and not

surpass the shareholders meeting to directly or indirectly interfere the Company’s business activities.

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

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

□ Applicable √ Not applicable

IV Annual and Special General Meetings Convened during the Reporting Period

1. General Meeting Convened during the Reporting Period

Investor

Date of the Disclosure

Meeting Type participati Resolutions

meeting date

on ratio

It deliberated and approved: 1. Proposal on 2020

Annual Work Report of the Board of Directors; 2.Proposal on 2020 Annual Work Report of the

Board of Supervisors; 3. Proposal on the

The 2020

Annual Company's 2020 Annual Report and Its Abstracts;

Annual

General 34.24% 20 April 2021 21 April 2021 4. Proposal on the Company's 2020 Annual

General

Meeting Financial Accounting Report; 5. Proposal on the

Meeting

Company’s Profit Distribution Plan for 2020; 6.Proposal on the Renewal of the Company's 2021

Annual Financial Audit and Internal Control Audit

Institution.The 1st Extraordinar 34.50% 13 May 2021 14 May 2021 It deliberated and approved: 1. Proposal on the

40Lu Thai Textile Co. Ltd. Annual Report 2021

Extraordin y General Company's 2021 Restricted Share Incentive

ary Meeting Scheme (Draft) and Its Abstracts; 2. Proposal on

General the Company's Implementation and Appraisal

Meeting Regulations on 2021 Restricted Share Incentive

of 2021 Scheme; 3. Proposal on Submitting the

Authorization for the Board of Directors to Handle

the Company's 2021 Restricted Share Incentive

Scheme to the General Meeting of Shareholders.It deliberated and approved: 1. Proposal on

Amending Relevant Articles of the Foreign

Investment Regulations for Lu Thai Textile Co.The 2nd

Ltd.; 2. Proposal on Amending Relevant Articles

Extraordin

Extraordinar of the Authorization Management System for Lu

ary 13 September 14 September

y General 31.69% Thai Textile Co. Ltd.; 3. Proposal on Preparing

General 2021 2021

Meeting the Remuneration Plan for Directors Supervisors

Meeting

and Officers; 4. Proposal on Repurchase and

of 2021

Cancel Authorized but Unlocked Restricted Share

of the Incentive Personnel not Conforming to the

Incentive Condition.

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

Rights

□ Applicable √ Not applicable

V Directors Supervisors and Senior Management

1. Basic Information

Increas Decrea

Beginn e in se in Other

Ending

Incum ing the the increas Reaso

Office Gende Start End of shareh

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

title r tenure tenure olding

ormer olding ing ing ase change

(share)

(share) Period Period (share)

(share) (share)

Chair

man 10

Liu Incum 6 June 14829 14829

and Male 57 June

Zibin bent 2007 0 0

Presid 2022

ent

Xu Vice Incum 6 May 10

Male 92

Zhinan Chair bent 2004 June

41Lu Thai Textile Co. Ltd. Annual Report 2021

man 2022

Fujiwa

10

ra Direct Incum 7 May

Male 82 June

Hideto or bent 1998

2022

shi

Chen 16 10

Direct Incum

Ruimo Male 78 April June

or bent

u 2000 2022

Zeng 10

Direct Incum 6 June

Fache Male 71 June

or bent 2007

ng 2022

Direct

or

Vice

Contro

Liu 12 10

ller of Incum

Demin Male 32 May June

Global bent

g 2017 2022

Market

ing

Depart

ment

Qin 10

Direct Incum Femal 7 May 12654 12654

Guilin 56 June

or bent e 1998 2 2

g 2022

Direct Grante

Zhang or and 10 d

Incum Femal 6 June 30000 39250

Hong Chief 52 June 92500 restrict

bent e 2016 0 0

mei Accou 2022 ed

ntant shares

Indepe

1010

Zhou ndent Incum

Male 59 March June

Zhiji Direct bent

20192022

or

Indepe

10

Pan ndent Incum Femal 6 June

57 June

Ailing Direct bent e 2016

2022

or

Indepe

10

Wang ndent Incum 6 June

Male 55 June

Xinyu Direct bent 2016

2022

or

42Lu Thai Textile Co. Ltd. Annual Report 2021

Indepe

Qu 10 10

ndent Incum Femal

Dong 53 June June

Direct bent e

mei 2019 2022

or

Chair

man of

18

Zhang the 10

Incum Februa

Shoug Superv Male 52 June 73100 73100

bent ry

ang isory 2022

2018

Comm

ittee

10

Liu Superv Incum 6 June

Male 54 June 10000 10000

Zilong isor bent 2007

2022

Superv

isor

Manag

er of

Dong 10

Logisti Incum 6 June

Shibin Male 53 June 5000 5000

cs bent 2007

g 2022

Manag

ement

Depart

ment

Zhang 10

Couns Incum 6 June

Jianxia Male 54 June 52150 52150 elor bent 2007

2022

ng

Chair

man of

the Grante

Labor 10 d

Wang Incum 6 June 30000 38370

Union Male 59 June 83700 restrict

bent 2007 0 0

Jiabin Securit 2022 ed

y shares

Contro

ller

Vice

Grante

preside

10 d

Zhang nt Incum 6 June 30000 38030

Male 50 June 80300 restrict

Zhanqi Contro bent 2007 0 0

2022 ed

ller of

shares

Global

43Lu Thai Textile Co. Ltd. Annual Report 2021

Market

ing

Depart

ment

Board

Secret

ary

Contro Grante

Zhang ller of 10 d

Incum 6 June 20000 27770

Kemin Financ Male 54 June 77700 restrict

bent 2007 0 0

g ial 2022 ed

Manag shares

ement

Depart

ment

Contro

ller of

Grante

Busine

10 d

Li ss Incum 8 June 20000 21000

Male 55 June 10000 restrict

bent 2016 0 0

Wenji Manag 2022 ed

ement shares

Depart

ment

Assist

ant to

Chair

man of

the Grante

Board 18 10 d

Zhang Incum 20000 20000

Contro Male 37 Januar June restrictbent 0 0

Wei y 2018 2022 ed

ller of

shares

Strateg

y and

Market

Depart

ment

Fujiwa 9

GM of 10

ra Incum Decem

Japan Male 49 June

Matsu bent ber

Office 2022

zaka 2014

44Lu Thai Textile Co. Ltd. Annual Report 2021

Presid

ent

Assist

ant

Contro

Grante

ller of

Yu 10 d

Energy Incum 6 June 20000 28310

Shouz Male 54 June 83100 restrict

and bent 2007 0 0

heng 2022 ed

Enviro

shares

nment

Protect

ion

Depart

ment

Presid

ent

Assist

Grante

ant

Shang 10 d

Contro Incum 6 June 20000 23000

Cheng Male 49 June 30000 restrict

ller of bent 2013 0 0

gang 2022 ed

Garme

shares

nt

Produc

t Line

Chief

Engine

er

Execut

ive

Dean

Grante

of Lu

18 10 d

Du Thai Incum 20000 20000

Male 47 Januar June restrict

bent 0 0

Lixin Engine y 2018 2022 ed

ering shares

Techn

ology

Resear

ch

Institut

e

Guo Contro Incum Male 50 18 10 20000 20000 Grante

45Lu Thai Textile Co. Ltd. Annual Report 2021

Heng ller of bent Januar June 0 0 d

Functi y 2018 2022 restrict

onal ed

Fabric shares

Produc

t Line

Presid

ent

Grante

Assist 14

Fu 10 d

ant Incum Femal Decem 20000 20000

Guann 39 June restrict

Invest bent e ber 0 0

an 2022 ed

ment 2020

shares

Direct

or

26

Wang

Direct Forme 7 May Februa 14675 14675

Fangs Male 61

or r 1998 ry 3 3

hui

2021

Indepe 25

Bi ndent Forme Femal 6 June Februa

55

Xiuli Direct r e 2016 ry

or 2021

Execut

ive

Dean

of Lu

Thai

Wang Engine 29

Forme 6 June

Chang ering Male 48 June 22500 22500 r 2013

2021

zhao Techn

ology

Resear

ch

Institut

e

104125003541

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

635000635

Indicate by tick mark whether any directors or supervisors left or any senior management were disengaged during the Reporting

Period

√ Yes □ No

46Lu Thai Textile Co. Ltd. Annual Report 2021

Bi Xiuli an independent director of the Company due to personal work arrangements resigned as an independent director and a

member of the Strategic Decision-making Committee of the Board of Directors a member of the Nomination Committee and the

Remuneration Committee of the Company on 25 February 2021 and no longer held any post in the Company; Wang Fangshui a

director of the Company due to retirement resigned as a director of the Company and a member of the Strategic Decision-making

Committee of the Board of Directors on 26 February 2021 and no longer held any post in the Company; Wang Changzhao an

Executive Dean of the Company's Engineering Technology Research Institute due to personal reasons resigned as an officer on 29

June 2021 and no longer held any post in the Company.Change of Directors Supervisors and Senior Management

√Applicable □ Not applicable

Type of

Name Office title Date of change Reason for change

change

Wang

Director Left 26 February 2021 Retirement

Fangshui

Bi Xiuli Independent Director Left 25 February 2021 Left for job arrangement

Wang Executive Dean of Lu Thai

Contract

Changzh Engineering Technology Research 29 June 2021 Left for personal reason termination

ao Institute

2. Biographical Information

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

senior management:

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

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

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

of Luthai (Hong Kong) Co. Ltd. the chairman of Shanghai Zhinuo Textile New Materials Co. Ltd. the chairman of Shandong

Lulian New Materials Co. Ltd. the chairman of Shandong Lujia Import and Export Co. Ltd. and the chairman of Hainan Huilin

International Holdings Co. Ltd.

2. Mr. Xu Zhinan: Vice chairman of the Company a Thailander born in 1930. He served as director and GM of Thailand Fiber Cloth

Factory Co. Ltd. director of Thailand Fiber Co. Ltd. director of Thailand Fiber Printing and Co. Ltd. director and deputy GM of

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

3. Mr. Fujiwara Hidetoshi: Director of the Company a Japanese born in 1940. He served as director of Degang Weaving Factory in

Japan director and senior consultant of Luthai Textile Co. Ltd. He currently serves as a director of Luthai Textile Co. Ltd. and a

director of Lufeng Textile Dyeing Co. Ltd.

4. Mr. Chen Ruimou: Director of the Company born in 1944 with a university degree. He served as staff of Jinyuan Co. Ltd staff of

Nissin Shokai Co. Ltd. supervisor and director of Luthai Textile Co. Ltd. And he currently serves as a director of the Company.

5. Mr. Zeng Facheng: Director of the Company a Thailander born in 1951. He is currently the chairman of GOLD MINE

GARMENT CO. LTD. and BLOSSOM GARMENT MANUFACTURING (THAILAND) CO. LTD.; he also is the chairman of the

Thai Shipping and Transportation Association the chairman of the standing committee of the Thai Garment Industry Development

Charity Foundation the executive director of the Thai Chamber of Commerce the Thai industry Director of the Association

47Lu Thai Textile Co. Ltd. Annual Report 2021

Chairman of the Thai Garment Industry Free Trade Association and Director of Luthai.

6. Mr. Liu Deming: Director of the Company vice director of global marketing department born in 1990 with a master degree.

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

director of global marketing department of the Luthai Textile Co. Ltd.

7. Ms. Qin Guiling: Director of the Company born in 1966 with a master degree of business administration. He served as chief of

planning department manager of securities department financial assistant to GM deputy GM and secretary of board of directors of

Luthai Textile Co. Ltd. In addition he currently serves as a director of Luthai.

8. Ms. Zhang Hongmei: Director and chief accountant of the Company born in 1970 with a master degree of business administration.

She is a senior accountant. She served as chief of cost department chief of accounting department and deputy chief accountant of

Luthai Textile Co. Ltd. and currently serves as the director and chief accountant of the Company. He is also a supervisor of

Shanghai Zhinuo Textile New Materials Co. Ltd.

9. Ms. Pan Ailing: Independent director of the Company born in 1965 with a doctor degree of economics; and she serves as a

postdoctor of financial management. She currently serves as a professor at the School of Management of Shandong University a

doctoral supervisor a leader in accounting discipline a director of the Investment and Financing Research Center of Shandong

University a non-practicing member of CICPA a director of the Shandong Institute of Accounting a managing director of the

Shandong Institute of Comparative Management a visiting professor at Soochow University in Taiwan a visiting scholar at the

UCONN and a national candidate for the "New Century Talents Project". In addition she is an outstanding talent of the Ministry of

Education of the People’s Republic of China in the new century and an expert specially posted by the State Council of the People's

Republic of China.

10. Mr. Wang Xinyu: Independent director of the Company born in 1967 with a master's degree. He is in possession of the

certificates of CPA CTA and CPV. He once taught at Jinan Vocational College and successively worked as project manager &

department manager of Shandong Zhengyuan Hexin Accounting Firm and Zhonglei Certified Public Accountants and deputy GM of

Shandong Branch. In addition he currently serves as a senior partner of Reanda Certified Public Accountants LLP Director of

Shandong Branch and independent director of the Company.

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

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

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

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

Shandong Jinheng Consulting Co. Ltd.

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

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

director of the Western Returned Scholars Association a lawyer of Grandall Law Firm (Jinan) and an arbitrator of Jinan Arbitration

Commission. In addition he holds the license of insurance broker in Illinois USA.

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

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

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

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

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

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

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

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

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

16. Mr. Zhang Jianxiang: born in 1968 Counselor of the Company with a master degree of business administration. He served as the

head of the weaving section of Binzhou No.2 Cotton Mill the director of the expansion office the director of the weaving factory

48Lu Thai Textile Co. Ltd. Annual Report 2021

the deputy manager of the production department the manager of the quality management department and the director of the fabric

finishing factory of Luthai Textile Co. Ltd. the deputy director and the executive director of the Luthai Textile and Clothing

Engineering Research Institute Vice President and director of the Functional Fabric Product Line of the Company.

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

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

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

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

18. Mr. Zhang Zhanqi: Vice president of the Company director of global marketing department and GM of LuFeng Company

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

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

19. Mr. Zhang Keming: Secretary of the board of directors of the Company and director of Financial Management Department. Born

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

financial department of the Company.

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

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

21. Mr. Zhang Wei: Assistant to Chairman of the Board director of the strategy and marketing department of the Company born in

1985 with a doctor degree. He served as a researcher of Guotai Junan Securities Co. Ltd. and China Asset Management Co Ltd.

manager of the strategic planning department of the Company; he also serves as the director of Shanghai Zhinuo Textile New

Materials Co. Ltd.

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

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

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

clothing marketing department of Luthai Textile Co. Ltd.

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

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

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

24. Mr. Shang Chenggang: President Assistant and the director of clothing product line of the Company. Born in 1973 he served as

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

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

25. Mr. Du Lixin: Chief engineer of the Company and executive dean of Luthai Institute of Engineering and Technology. Born in

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

weaver's factory director a manager of the weaving department and a deputy manager of the production department of Luthai as

well as GM of Continental Textile Co. Ltd.

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

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

Director of enterprise management department of Luthai.

27. Ms. Fu Guannan: President Assistant and Investment Director of the Company GM of Beijing Zhishu Management Consulting

Co. Ltd. Born in 1983 with a master degree she served as senior executive director of Investment Banking Department in Guotai

Junan Securities Co. Ltd.Offices held concurrently in shareholding entities:

√Applicable □Not applicable

Remuneration or

Office held in the End of

Name Shareholding entity Start of tenure

shareholding entity tenure allowance from

the shareholding

49Lu Thai Textile Co. Ltd. Annual Report 2021

entity

Zibo Lucheng Textile

Liu Zibin Director 26 February 1999 No

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

Ltd.Zibo Lucheng Textile

Liu Deming Chairman and GM 1 February 2017 No

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

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

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

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

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

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

√Applicable □Not applicable

Remuneration

Office held Start of

Name Other entity End of tenure or allowance

in the entity tenure

from the entity

Lufeng Weaving & Dyeing Co. Ltd. Zibo

Luqun Textile Co. Ltd. Zibo Xinsheng

Thermal Power Co. Ltd. Shanghai Lu

Chairman

Thai Textile Garment Co. Ltd. Lu Thai

of the

(America) Textile Co. Ltd. Lu Thai (HK) 7 December

Liu Zibin Board No

Textile Co. Ltd Shanghai Zhinuo Textile 2015

Director

New Material Co. Ltd Shandong Lulian

GM

New Materials Co. Ltd. Shandong Lujia

Import and Export Co. Ltd. Hainan

Huilin International Holdings Co. Ltd.LuFeng Company Limited Zibo Luqun

Textile Co. Ltd. Shandong Lulian New

21 August

Liu Deming Materials Co. Ltd. Shanghai Zhinuo Director No

2017

Textile New Materials Co. Ltd. Beijing

Zhishu Management Consulting Co. Ltd.Zhang Shanghai Zhinuo Textile New Materials 15 October

Supervisor No

Hongmei Co. Ltd. 2018

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

Zhang Shanghai Lu Thai Textile Garment Co. 30 December

Supervisor No

Jianxiang Ltd. 2010

Continental Textile Co. Ltd. Lu Thai 29 December

Du Lixin Director No

(Vietnam) Textile Co. Ltd. 2015

Zhang Wei Shanghai Zhinuo Textile New Materials Director 15 October No

50Lu Thai Textile Co. Ltd. Annual Report 2021

Co. Ltd. 2018

Zhang Zibo Luqun Textile Co. Ltd. Shandong Director

3 March 2022 No

Keming Lulian New Materials Co. Ltd. Supervisor

Shandong University School of

Pan Ailing Professor 1 July 1986 Yes

Management

Reanda Certified Public Accountants 1 August

Wang Xinyu Head Yes

Shandong Branch 2013

1 October

Zhou Zhiji Shandong Jinheng Consulting Co. Ltd Supervisor Yes

2015

Law School of Shandong Normal

Qu Dongmei Professor 1 July 2003 Yes

University

Zhang Zhanqi LuFeng Company Limited GM 5 July 2014 No

Yu

Zibo Xinsheng Thermal Power Co. Ltd. GM 13 April 2021 No

Shouzheng

28 August

Guo Heng Shandong Lulian New Materials Co. Ltd. GM No

2021

Beijing Zhishu Management Consulting

Fu Guannan GM 9 March 2022 No

Co. Ltd.Explanations

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

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

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

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

□ Applicable √ Not applicable

3. Remuneration of Directors Supervisors and Senior Management

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

management:

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

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

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

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

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

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

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

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

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

51Lu Thai Textile Co. Ltd. Annual Report 2021

ratification after the approval by voting.The number of incumbent directors supervisors and senior executives is 27 among which there are 27 persons actually receiving

remuneration from the Company. Till 31 December 2021 the total amount of annual payment drawn from the Company by directors

supervisors and senior executives is RMB14.1556 million (before tax).Remuneration of directors supervisors and senior management for the Reporting Period

Unit: RMB'0000

Total

Any

before-tax

Gen Incumben remuneration

Name Office title Age remuneration

der t/Former from related

from the

party

Company

Incumben

Liu Zibin Chairman and President Male 57 90.71 No

t

Incumben

Xu Zhinan Vice Chairman Male 92 20.78 No

t

Fujiwara Incumben

Director Male 82 1.06 No

Hidetoshi t

Chen Incumben

Director Male 78 20.78 No

Ruimou t

Zeng Incumben

Director Male 71 1.06 No

Facheng t

Liu Director Vice Controller of Global Incumben

Male 32 57.7 No

Deming Marketing Department t

Qin Fem Incumben

Director 56 69.54 No

Guiling ale t

Zhang Fem Incumben

Director and Chief Accountant 52 77.61 No

Hongmei ale t

Incumben

Zhou Zhiji Independent Director Male 59 5.9 No

t

Fem Incumben

Pan Ailing Independent Director 57 5.9 No

ale t

Wang Incumben

Independent Director Male 55 5.9 No

Xinyu t

Qu Fem Incumben

Independent Director 53 5.9 No

Dongmei ale t

Zhang Incumben

Chairman of the Supervisory Committee Male 52 53.03 No

Shougang t

Incumben

Liu Zilong Supervisor Male 54 59.96 No

t

52Lu Thai Textile Co. Ltd. Annual Report 2021

Dong Supervisor Manager of Logistics Incumben

Male 53 57.98 No

Shibing Management Department t

Zhang Incumben

Counselor Male 54 83.06 No

t

Jianxiang

Wang Chairman of the Labor Union Security Incumben

Male 59 82.34 No

Controller t

Jiabin

Zhang Vice president Controller of Global Incumben

Male 50 80.85 No

Zhanqi Marketing Department t

Zhang Board Secretary Controller of Financial Incumben

Male 54 57.65 No

Keming Management Department t

Controller of Business Management Incumben

Li Wenji Male 55 60.12 No t

Department

Assistant to Chairman of the Board

Incumben

Zhang Wei Controller of Strategy and Market Male 37 92.22 No t

Department

Fujiwara Incumben

GM of Japan Office Male 49 104.73 No

Matsuzaka t

Yu

President Assistant Controller of Energy and Incumben

Shouzhen Male 54 57.54 No

Environment Protection Department t

g

Shang

President Assistant Controller of Garment Incumben

Chenggan Male 49 56.05 No

Product Line t

g

Chief Engineer Executive Dean of Lu Thai Incumben

Du Lixin Male 47 57.28 No

t

Engineering Technology Research Institute

Incumben

Guo Heng Controller of Functional Fabric Product Line Male 50 57.08 No

t

Fu Fem Incumben

President Assistant Investment Director 39 92.83 No

Guannan ale t

Total -- -- -- -- 1415.56 --

VI Performance of Duty by Directors in the Reporting Period

1. Board Meeting Convened during the Reporting Period

Meeting Date of the meeting Disclosure date Meeting resolutions

20th Meeting of the 9th Board It deliberated and approved:

2021-01-132021-01-15

of Directors 1. Proposal on Investing and

53Lu Thai Textile Co. Ltd. Annual Report 2021Establishing “Hainan HuilinInternational Holdings Co.Ltd”; 2. Proposal on

Providing Joint and Several

Liability Guarantee for the

Wholly-owned Subsidiary Lu

An Garments Co. Ltd. of

Obtaining a Comprehensive

Credit Limit of USD10

Million; 3. and Proposal on

Routine Related Transactions.It deliberated and approved:

1. Proposal on 2020 Annual

Work Report of the Board of

Directors; 2. Proposal on

2020 Annual Work Report of

the President; 3. Proposal on

the Company's 2020 Annual

Report and Its Abstracts; 4.Proposal on the Company's

2020 Annual Financial

Accounting; 5. Proposal on

the Company's 2021 Annual

Financial Budget; 6.Proposal on the Company's

2020 Annual Profit

21st Meeting of the 9th Board Distribution Plan; 7.

of Directors 2021-03-29 2021-03-31 Proposal on the Company's

2020 Annual Appraisal

Results of Officers; 8.Proposal on the Company's

2020 Annual Social

Responsibility Report; 9.Proposal on the Company's

2020 Annual Assessment

Report for Internal Control;

10. Proposal on the Renewal

of the Company's 2021

Annual Financial Audit and

Internal Control Audit

Institution; 11. Proposal on

Changing Part of the

Accounting Policies; 12.Proposal on Applying for a

54Lu Thai Textile Co. Ltd. Annual Report 2021

Comprehensive Credit Limit

of RMB200 Million from

China Merchants Bank; 13.Proposal on Providing Joint

and Several Liability

Guarantee for the

Wholly-owned Subsidiary

Continental Textile Co. Ltd.of Obtaining a

Comprehensive Credit Limit

of USD60 Million; 14.Proposal on the Special

Report of the 2020 Annual

Deposit and Use of the

Raised Funds; 15. Proposal

on Investing and Establishing

Zibo Banyang Mountain Villa

Hotel Co. Ltd.; 16. Proposal

on the Delay of the

Production Line Project of

High-grade Printed and Dyed

Fabrics; 17. Proposal on

Holding 2020 Annual

General Meeting.It deliberated and approved:

1. Proposal on the Company's

'2021 Restricted Share

Incentive Scheme (Draft)' and

Its Abstracts; 2. Proposal on

the Company's

'Implementation and

Appraisal Regulations on

2021 Restricted Share

22nd Meeting of the 9th Board

Incentive Scheme'; 3.of Directors 2021-04-12 2021-04-13

Proposal on Submitting the

Authorization for the Board

of Directors to Handle the

Company's 2021 Restricted

Share Incentive Scheme to the

General Meeting of

Shareholders; 4. Proposal on

Holding the 1st

Extraordinary General

Meeting of 2021.

55Lu Thai Textile Co. Ltd. Annual Report 2021

It deliberated and approved:

1. Proposal on the Full Text

23rd Meeting of the 9th Board and Body of the 2021 First

of Directors 2021-04-28 2021-04-30 Quarter Report; 2. Proposal

on the Company's Using Part

of the Idle Raised Funds for

Cash Management.It deliberated and approved:

1. Proposal on Adjusting the

List of the Name and Number

of Incentive Staff of 2021

Restricted Share Incentive

Scheme; 2. Proposal on

Granting Restrictive Stocks to

Incentive Staff for the First

24th Meeting of the 9th Board

2021-05-17 2021-05-18 Time; 3. and Proposal on

of Directors

Providing Guarantee for

Continental Textile Co. Ltd.and Its Subsidiaries of

Obtaining a Comprehensive

Credit Limit of USD20.80

Million from the Ho Chi Minh

City Branch of China Trust

Commercial Bank Co Ltd.It deliberated and approved:

1. Proposal on the Company's

Plan for Derivative

Transaction; 2. Proposal on

Opening a Special Account

for Foreign Exchange

Purchase and Deposit of

25th Meeting of the 9th Board

2021-06-11 2021-06-15 Raised Funds and Signing a

of Directors

Supervision Agreement on

Raised Funds; 3. Proposal on

Amending Relevant Articles

of the 'Articles of

Incorporation' According to

the Authorization of the

General Meeting.It deliberated and approved:

26th Meeting of the 9th Board 1. Proposal on the Company's

2021-08-262021-08-28

of Directors Interim Report 2021 and Its

Abstracts; 2. Proposal on

56Lu Thai Textile Co. Ltd. Annual Report 2021

Using Idle Equity Funds for

Cash Management; 3.Proposal on the Special

Interim Report 2021 of the

Deposit and Use of the

Raised Funds; 4. Proposal on

Amending Relevant Articles

of the ‘Foreign Investment

Regulations for Lu Thai

Textile Co. Ltd.’; 5. Proposal

on Amending Relevant

Articles of the Authorization

Management System for Lu

Thai Textile Co. Ltd.; 6.Proposal on Preparing the

Remuneration Plan for

Directors Supervisors and

Senior Management; 7.Proposal on the Additional

Investment on Hainan Huilin

International Holdings Co.Ltd.; 8. Proposal on

Repurchase and Cancel

Authorized but Unlocked

Restricted Share of the

Incentive Personnel not

Conforming to the Incentive

Condition; 9. Proposal on

Holding the 2nd

Extraordinary General

Meeting of 2021.It deliberated and approved:

27th Meeting of the 9th Board

2021-10-27 2021-10-29 Proposal on the 2021 Third

of Directors

Quarter Report.It deliberated and approved:

1. Proposal on Amending

Relevant Articles of the

'Articles of Incorporation'

28th Meeting of the 9th Board According to the

2021-12-132021-12-14

of Directors Authorization of the General

Meeting; 2. Proposal on

Designedly Providing Pledge

of Deposit of RMB40 Million

to the Holding Subsidiary

57Lu Thai Textile Co. Ltd. Annual Report 2021

Shandong Lulian New

Materials Co. Ltd. for

Opening Letter of Credit

("l/C") for Import Equipment

in Bank of Qingdao Co Ltd.

2. Attendance of Directors at Board Meetings and General Meetings

Attendance of directors at board meetings and general meetings

Total The director

Board

number of Board Board failed to attend

Board meetings

board meetings meetings the two General

meetings attended by

Director meetings the attended director consecutive meetings

attended on way of

director was through a failed to board attended

site telecommuni

eligible to proxy attend meetings

cation

attend (yes/no)

Liu Zibin 9 9 0 0 0 No 3

Xu Zhinan 9 0 9 0 0 No 0

Fujiwara

9 0 9 0 0 No 0

Hidetoshi

Chen Ruimou 9 0 9 0 0 No 0

Zeng Facheng 9 0 9 0 0 No 0

Wang Fangshui 1 1 0 0 0 No 0

Liu Deming 9 9 0 0 0 No 0

Qin Guiling 9 9 0 0 0 No 2

Zhang Hongmei 9 9 0 0 0 No 3

Bi Xiuli 1 0 1 0 0 No 0

Zhou Zhiji 9 1 8 0 0 No 2

Pan Ailing 9 1 8 0 0 No 0

Wang Xinyu 9 1 8 0 0 No 2

Qu Dongmei 9 1 8 0 0 No 0

Why any director failed to attend two consecutive board meetings:

Not applicable.

3. Objections Raised by Directors on Matters of the Company

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

No such cases in the Reporting Period.

58Lu Thai Textile Co. Ltd. Annual Report 2021

4. Other Information about the Performance of Duty by Directors

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

Suggestions from directors adopted or not adopted by the Company

Naught

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

Other

Important Details about

Number of information

Convened opinions and issues with

Committee Members meetings Content about the

date suggestions objections

convened performance

raised (if any)

of duty

The opinions

were as

Mainly the

follows: (1)

Company's

Preparing the

financial

Company's

statements

financial

submitted to

accounting

Grant

statements in

Thornton

accordance

Certified

with the

Public

Company's

Accountants

accounting

LLP for

policies and

Audit preliminary

Wang Xinyu applying

Committee audit were

Zhou Zhiji 7 2021-01-20 accounting

under the reviewed

Qin Guiling policies

Board written

properly it

opinions

carried out

were

accounting

expressed

estimate

and

fully and

communicati

reasonably

on with

which

Leader of

conformed to

annual audit

the New

accountant

Accounting

project was

Standard for

conducted.Business

Enterprises

59Lu Thai Textile Co. Ltd. Annual Report 2021

accounting

system for

enterprises

and the

requirements

of relevant

provisions

issued by the

Ministry of

Finance; (2)

Unit

statements of

the

Company's

financial

statements

that were

included in

the scope of

consolidation

were

complete

while the

statement

consolidation

basis was

accurate; (3)

The financial

statements of

the Company

were

objective

true and

accurate

without any

major

misstatement

or omission;

(4) And due

to the fact

that there

still is a

period of

time from the

60Lu Thai Textile Co. Ltd. Annual Report 2021

day for

review of the

financial

statements to

the day for

audit report

and financial

statement

release the

Financial

Management

Department

of the

Company

was

submitted to

focus on and

cope with

post balance

sheet events

so as to

ensure the

fairness

authenticity

and integrity

of the

financial

statements.The Audit

Committee

thought that

the financial

accounting

statements

could be

submitted to

Annual

Certified

Public

Accountant

for audit

according to

annual audit

plan.

61Lu Thai Textile Co. Ltd. Annual Report 2021

The The opinions

following were as

matters were follows: The

mainly procedure of

audited: (1) financial

The statement

Company's preparation

2020 Annual was

Financial reasonable

Report and

audited by normative as

the the Company

accounting conformed to

firm. (2) the New

Conclusion Accounting

Report on the Standard for

Company's Business

Audit Work Enterprises

for the 2020 and relevant

Annual provisions of

Financial the

Report Company's

2021-03-29

conducted by financial

Grant system

Thornton which fairly

Certified reflected the

Public Company's

Accountants assets

LLP. (3) liabilities

Proposal on shareholders'

the renewal equity and

of Grant operating

Thornton results by 31

Certified December

Public 2020 which

Accountants were true

LLP As the accurate and

Company's complete.

2021 Annual The Audit

Financial Committee

Audit and thought that

Internal the

Control Company's

Audit 2020 Annual

62Lu Thai Textile Co. Ltd. Annual Report 2021

Institution. Financial

(4) Special Accounting

Report of the Report that

2020 Annual was

Deposit and preliminarily

Use of the approved by

Raised Grant

Funds. (5) Thornton

Report on the Certified

Implementati Public

on of the Accountants

2020 Annual LLP could be

Internal submitted to

Audit Plan the 21st

by the Meeting of

Company's the 9th Board

Audit of Directors

Department. for review.Report on The

Implementati following

on of proposals

Internal were adopted

Audit Plan of by voting at

2021 First the meeting:

Quarter and Report on

Special Implementati

Report of on of

Deposit and Internal

2021-04-20 Use of the Audit Plan of

Raised 2021 First

Funds of Quarter and

2021 First Special

Quarter by Report of

the Deposit and

Company's Use of the

Audit Raised

Department Funds of

were 2021 First

deliberated. Quarter.The Proposal The Plan for

on the Derivative

2021-06-08 Company's Transaction

Plan for of Lu Thai

Derivative Textile Co.

63Lu Thai Textile Co. Ltd. Annual Report 2021

Transaction Ltd. was

was mainly audited and

deliberated. the following

opinions

were

expressed:

Facing the

exchange

rate

fluctuation of

RMB against

USD in the

foreign

exchange

market the

Financial

Management

Department

of the

Company

proposed the

Plan for

Derivative

Transaction

which was an

effective tool

to avoid

exchange

rate risk. By

strengthening

internal

control and

implementin

g stop-loss

management

and risk

prevention

measures the

management

level could

be improved

which was

conducive to

giving full

64Lu Thai Textile Co. Ltd. Annual Report 2021

play to the

Company's

competitive

edge. On the

premise of

ensuring

normal

operation

the Company

utilized

equity funds

to carry out

derivative

transactions

which was

conducive to

avoiding the

risk of RMB

exchange

rate

fluctuations

enhancing

the ability to

withstand

exchange

rate

fluctuations

and

operating

level and

giving full

play to the

Company's

competitive

edge without

damaging the

interests of

the Company

and all

shareholders.We think that

the Plan for

Derivative

Transaction

65Lu Thai Textile Co. Ltd. Annual Report 2021

is feasible

necessary

and

risk-controll

able and

agree to

submit the

Plan for

Derivative

Transaction

of Lu Thai

Textile Co.Ltd. to the

25th Meeting

of the 9th

Board of

Directors for

deliberation.The

following

Mainly the

proposals

following

were adopted

matters were

by voting at

deliberated:

the meeting:

(1) Special

Special

Interim

Interim

Report 2021

Report 2021

of the

of the

Deposit and

2021-08-16 Deposit and

Use of the

Use of the

Raised

Raised

Funds. (2)

Funds and

Interim

Interim

Report 2021

Report 2021

on the

on the

Implementati

Implementati

on of Internal

on of

Audit Plan.Internal

Audit Plan.Mainly the The

following following

2021-10-20 matters were proposals

deliberated at were adopted

the meeting: by voting at

66Lu Thai Textile Co. Ltd. Annual Report 2021

(1) Special the meeting:

Report on the Special

Deposit and Report on the

Use of the Deposit and

Raised Funds Use of the

of 2021 Raised

Third Funds of

Quarter. (2) 2021 Third

Report on the Quarter and

Implementati Report on the

on of Internal Implementati

Audit Plan of on of

2021 Third Internal

Quarter. Audit Plan of

2021 Third

Quarter.The time

arrangement

plan for 2021

annual

financial

audit work

was

unanimously

The time

determined

arrangement

at the

for the

meeting

Company's

through the

2021-11-11 2021 annual

negotiation

financial

with the

audit work

2021 annual

was

audit

negotiated.institution

Grant

Thornton

Certified

Public

Accountants

LLP of the

Company.The main The

Liu Zibin

Remuneratio topic of the following

Zhou Zhiji 4 2021-03-29

n Committee meeting was: proposal was

Wang Xinyu

Proposal on deliberated

67Lu Thai Textile Co. Ltd. Annual Report 2021

Pan Ailing 2020 Annual and approved

Appraisal by voting at

Results of the meeting:

the Proposal on

Company's 2020 Annual

Officers. Appraisal

Results of the

Company's

Officers. We

agree to

submit the

above

proposal to

the 21st

Meeting of

the 9th Board

of Directors

of the

Company for

deliberation.The main The

topics of the following

meeting proposals

were: (1) the were

Proposal on deliberated

the and approved

Company's through

2021 on-site

Restricted voting and

Share communicati

Incentive on voting at

Scheme the meeting:

2021-04-11

(Draft) and the Proposal

Its Abstracts. on the

(2) the Company's

Proposal on '2021

the Restricted

Company's Share

Implementati Incentive

on and Scheme

Appraisal (Draft)' and

Regulations Its Abstracts

on 2021 and the

Restricted Proposal on

68Lu Thai Textile Co. Ltd. Annual Report 2021

Share the

Incentive Company's

Scheme. 'Implementat

ion and

Appraisal

Regulations

on 2021

Restricted

Share

Incentive

Scheme'.The

following

proposal was

deliberated

The main and approved

topic of the through

meeting was: on-site

the Proposal voting and

on 2020 communicati

2021-05-13 Annual on voting at

Appraisal the meeting:

Results and the Proposal

Distribution on 2020

Quota of Annual

Risk Funds. Appraisal

Results and

Distribution

Quota of

Risk Funds.The

The main

following

topic of the

proposal was

meeting was:

deliberated

the Proposal

and approved

on Preparing

through

the

on-site

2021-08-16 Remuneratio

voting and

n Plan for

communicati

Directors

on voting at

Supervisors

the meeting:

and Senior

the Proposal

Management

on Preparing.the

69Lu Thai Textile Co. Ltd. Annual Report 2021

Remuneratio

n Plan for

Directors

Supervisors

and Senior

Management.Liu Zibin

Xu Zhinan

Chen The

Ruimou following

Zeng proposal was

Deliberate

Facheng approved by

the Strategic

Fujiwara voting at the

Planning of

Strategy Hidetoshi meeting: the

1 2021-03-29 Lu Thai

Committee Liu Deming Strategic

Textile of

Qin Guiling Planning of

2021 to

Zhang Lu Thai

2025.

Hongmei Textile of

Zhou Zhiji 2021 to

Wang Xinyu 2025.Pan Ailing

Qu Dongmei

Liu Zibin

Xu Zhinan

Nomination

Zhou Zhiji 0

Committee

Wang Xinyu

Pan Ailing

VIII Performance of Duty by the Supervisory Committee

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

Period.□ Yes √ No

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

1. Number Functions and Educational Backgrounds of Employees

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

8807

at the period-end

Number of in-service employees of major subsidiaries at the 13825

70Lu Thai Textile Co. Ltd. Annual Report 2021

period-end

Total number of in-service employees 22632

Total number of paid employees in the Reporting Period 22632

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

0

major subsidiaries need to pay retirement pensions

Functions

Function Employees

Production 16877

Sales 515

Technical 4581

Financial 107

Administrative 552

Total 22632

Educational backgrounds

Educational background Employees

Doctor 5

Master 90

Bachelor 1241

College 4576

High school and below 16720

Total 22632

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

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

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

3. Employee Training Plans

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

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

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

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

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

Company.

71Lu Thai Textile Co. Ltd. Annual Report 2021

4. Labor Outsourcing

√ Applicable □ Not applicable

Total man-hours (hour) 412473

Total rewards paid (RMB) 10614943.76

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

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

□ Applicable √ Not applicable

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

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

positive.□ Applicable √ Not applicable

Final dividend plan for the Reporting Period

√ Applicable □ Not applicable

Bonus shares for every 10 shares (share) 0

Dividend for every 10 shares (RMB) (tax 0.70

inclusive)

Bonus issue from capital reserves (share/10 0

shares)

Total shares as the basis for the profit distribution 882341295

proposal (share)

Cash dividends (RMB) (tax inclusive) 61763890.65

Cash dividends in other forms (such as share

0.00

repurchase) (RMB)

Total cash dividends (including those in other

61763890.65

forms) (RMB)

Distributable profit (RMB) 4887481100.66

Total cash dividends (including those in other

100%

forms) as % of total profit distribution

Cash dividend policy

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

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

Based on 882341295 shares (including shares transferred from convertible bonds for the Reporting Period) on 31 December

2021 the cash allocated per 10 shares is RMB0.70(including tax). The individual income tax for A Share shall be subject to

related regulations under CS [2015] No. 101 Notice on Certain Question about the Differentiated Individual Income Tax Policy

72Lu Thai Textile Co. Ltd. Annual Report 2021

for Cash Dividend of Listed Companies jointly issued by Ministry of Finance SAT and CSRC; and that for B Share shall be

conversed to HKD based on the central parity rate on interbank exchange market released by the People’s Bank of China on the

following day after shareholder’s meeting (for domestic individual shareholders tax is paid pursuant to CS [2015] No. 101; for

foreign shareholders tax is free pursuant to CSZ (1994) No. 020 regulations; and non-residential corporate shareholders is

entitled to a 10% reduction of enterprise income tax according to related regulations under Enterprise Income Tax Law of the

People’s Republic of China). Since the Company is in the period of transferring convertible bonds into shares the profit

distribution will be conducted based on the total share capital on the equity registration date for implementing this profit

distribution plan with no change in the amount per share.XI Equity Incentive Plans Employee Stock Ownership Plans or Other Incentive Measures for

Employees

√ Applicable □ Not applicable

1. Equity Incentive

Relevant

No. Deliberation time Overview of execution Disclosure index

meeting

1 nd12 April 2021 The 22 Deliberated and approved were Proposal on the Company's Announcement of

Meeting of '2021 Restricted Share Incentive Scheme (Draft)' and Its Resolution (No.th

the 9 Abstracts Proposal on the Company's 'Implementation and 2021-024) published

Board of Appraisal Regulations on 2021 Restricted Share Incentive on

Directors Scheme' and Proposal on Submitting the Authorization for http://www.cninfo.co

the Board of Directors to Handle the Company's 2021 on 13 April 2021 and

Restricted Share Incentive Scheme to the General Meeting relevant documents

of Shareholders. The Company's independent directors

expressed their independent opinions on this share

incentive scheme.

2 th12 April 2021 The 13 Deliberated and approved were Proposal on the Company's Announcement of

Meeting of '2021 Restricted Share Incentive Scheme (Draft)' and Its Resolution (No.th

the 9 Abstracts Proposal on the Company's 'Implementation and 2021-025) published

Supervisory Appraisal Regulations on 2021 Restricted Share Incentive on

Committee Scheme' and Proposal on the Verification of the Company's http://www.cninfo.co

Staff List of 2021 Restricted Share Incentive Scheme. on 13 April 2021

3 16 April 2021 to 26 - The Company internally announced the names and -

April 2021 positions on the list of incentive staff. During the publicity

period the Board of Supervisors has not received any

objections related to the planned subjects of the incentive

scheme.

73Lu Thai Textile Co. Ltd. Annual Report 2021

4 8 May 2021 - The Ninth Board of Supervisors issued the Explanation of Relevant documents

the Board of Supervisors on the Review and Publicity of the published on

Staff List of 2021 Restricted Share Incentive Scheme on the http://www.cninfo.co

basis of the list review and publicity. on 8 May 2021

5 13 May 2021 The First Deliberated and approved were Proposal on the Company's Relevant

Extraordina '2021 Restricted Share Incentive Scheme (Draft)' and Its announcements (No.ry General Abstracts Proposal on the Company's 'Implementation and 2021-035 2021-036)

Meeting of Appraisal Regulations on 2021 Restricted Share Incentive published on

2021 Scheme' and Proposal on Submitting the Authorization for http://www.cninfo.co

the Board of Directors to Handle the Company's 2021 on 14 May 2021

Restricted Share Incentive Scheme to the General Meeting

of Shareholders. Self-inspection Report on the Company's

2021 Restricted Share Incentive Plan Insiders and

Incentive Subjects' Trading of the Company's Shares was

disclosed.

6 th17 May 2021 The 24 Deliberated and approved were Proposal on Adjusting the Relevant

Meeting of List of the Name and Number of Incentive Staff of 2021 announcements (No.th

the 9 Restricted Share Incentive Scheme and Proposal on 2021-037 2021-038

Board of Granting Restrictive Stocks to Incentive Staff. The Board of 2021-039 2021-040)

Directors Directors believed that the granting conditions specified in published on

th

the 15 the incentive scheme had been fulfilled and agreed to http://www.cninfo.co

Meeting of designate 17 May 2021 as the granting date. Except for 5 on 18 May 2021

th

the 9 incentive staff who had been no longer qualified for the

Supervisory incentive due to resignation and 47 incentive targets who

Committee had abandoned their subscription of all restricted stocks to

be granted by the Company due to personal reasons the

number of incentive staff obtaining the first-granted

restricted stocks were adjusted from 802 to 750 and the

volume of the first restricted stocks from 25.965 million to

24.285 million shares. The independent directors consented

independently to the matter. They believed that the

qualification of granting incentive staff to some entities are

legal and effective and that the determined granting date

complies with relevant regulations. The Board of

Supervisors reviewed the list of incentive staff as of the

grant date and expressed its verification opinions.

7 7 June 2021 - As audited and confirmed by Shenzhen Stock Exchange Relevant

74Lu Thai Textile Co. Ltd. Annual Report 2021

and the Shenzhen branch of China Securities Depository announcements

and Clearing Corporation Limited the registration of published on

first-granted restricted stocks was completed. http://www.cninfo.co

on 4 June 2021

th

8 26 August 2021 The 26 It deliberated and approved the Proposal on Repurchase Relevant

Meeting of and Cancel Authorized but Unlocked Restricted Share of announcements

th

the 9 the Incentive Personnel not Conforming to the Incentive published on

Board of Condition when agreeing to adjust the restricted share http://www.cninfo.co

Directors repurchase price according to the equity distribution plan on 28 August 2021

th

16 as well as repurchase and cancel authorized but unlocked

Meeting of restricted share of the incentive personnel not conforming

th

the 9 to the incentive condition while the Company's

Supervisory independent directors expressed independent opinions.Committee The Supervisory Committee deliberated and approved the

Proposal on Repurchase and Cancel Authorized but

Unlocked Restricted Share of the Incentive Personnel not

Conforming to the Incentive Condition and expressed its

written review opinions.

9 13 Septermber The Second Deliberate and approve the Proposal on Repurchase and Relevant

2021 Extraordina Cancel Authorized but Unlocked Restricted Share of Part announcements

ry General of the Incentive Personnel. (No.2021-061)

Meeting of published on

2021 http://www.cninfo.co

on 14 September 2021

10 27 November 2021 - As audited and confirmed by Shenzhen Stock Exchange Relevant

and the Shenzhen Branch of China Securities Depository announcements

and Clearing Corporation Limited the procedures of (No.2021-068)

repurchasing and canceling 80000 shares of authorized published on

and unlocked restricted share of the incentive personnel http://www.cninfo.co

not conforming to the incentive condition were completed. on 27 November 2021

Equity incentives for directors supervisors and senior management in the Reporting Period:

√Applicable □Not applicable

Unit: share

Share Share Share Exerc Mark Numb Numb Numb The Numb

Share option s s ise Share et er of er of er of grant er of

option s feasib exerci price option price restric releas restric price restric

Office s held grante le to sed of s held at the ted ed ted of ted

Name

title at the d in exerci durin exerci at the period shares shares shares restric shares

period the se g the sed period -end held for newly ted held

-begin Repor durin Repor shares -end (RMB at the the grante shares at the

ting g the ting durin /share period Repor d (RMB period

75Lu Thai Textile Co. Ltd. Annual Report 2021

Perio Repor Perio g the ) -begin ting durin /share -end

d ting d Repor Perio g the )

Perio ting d Repor

d Perio ting

d Perio

(RMB d

/share

)

Direct

Zhang or and

30003000

Hong Chief 0 3.31 00 00

mei Acco

untant

Zhang Vice

30003000

Zhanq presid 0 3.31 00 00

i ent

Senio

r

Wang 3000 3000

mana 0 3.31 00 00

Jiabin

geme

nt

Board

Secret

ary

Zhang

Senio 2000 2000

Kemi 0 3.31 00 00

r

ng

mana

geme

nt

Senio

Yu r

20002000

Shouz mana 0 3.31 00 00

geme

heng

nt

Senio

Shang r

20002000

Chen mana 0 3.31 00 00

geme

ggang

nt

76Lu Thai Textile Co. Ltd. Annual Report 2021

Senio

r

Li 2000 2000

mana 0 3.31

Wenji 00 00

geme

nt

Senio

r

Zhang 2000 2000

mana 0 3.31

Wei 00 00

geme

nt

Senio

r

Du 2000 2000

mana 0 3.31

0000

Lixin geme

nt

Senio

r

Guo 2000 2000

mana 0 3.31

0000

Heng geme

nt

Senio

Fu r

20002000

Guan mana 0 3.31 00 00

geme

nan

nt

25002500

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

000000

Appraisal of and incentive for senior management

Within Reporting Period the Remuneration Committee of the Board of Directors researched and prepared the Remuneration Plan for

Directors Supervisors and Senior Management of Lu Thai Textile Co. Ltd. in accordance with relevant systems such as Articles of

Incorporation and Working Instructions of Remuneration and Appraisal Committee of the Board of Directors which was

implemented as deliberated and approved through the Company's 2nd Extraordinary General Meeting of 2021 held on 13 September

2021. During the Reporting Period the Company constantly improved the performance evaluation mechanism and made the

evaluation and incentive of the Senior Executives concerned with the Company’s performances and the individual working results.According to the overall development strategy and the annual operating target of the Company at the period-begin the Company

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

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

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

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

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

77Lu Thai Textile Co. Ltd. Annual Report 2021

2. Implementation of Employee Stock Ownership Plans

□ Applicable √ Not applicable

3. Other Incentive Measures for Employees

√Applicable □Not applicable

On 7 June 2021 the Company completed the first-granted registration of restricted share incentive scheme and also granted

21785000 restricted shares to 739 middle management and core members in addition to the above directors and senior management.

XII Establishment and Execution of the Internal Control System for the Reporting Period

1. Establishment and Execution of the Internal Control System

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

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

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

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

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

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

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

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

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

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

2. Material Internal Control Weaknesses Identified for the Reporting Period

□ Yes √ No

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

Integration Countermeasur Settlement Follow-up

Subsidiary Integration plan Problem

progress es taken progress settlement plan

-------

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

Control

1. Internal Control Self-Evaluation Report

Disclosure date of the internal control

29 April 2022

self-evaluation report

78Lu Thai Textile Co. Ltd. Annual Report 2021

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

Index to the disclosed internal control

Textile Co. Ltd. simultaneously disclosed on www.cninfo.com.cn with the 2021

self-evaluation report

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

89.33%

of consolidated total assets

Evaluated entities’ combined operating

revenue as % of consolidated operating 91.99%

revenue

Identification standards for internal control weaknesses

Weaknesses in internal control over Weaknesses in internal control not

Type

financial reporting related to financial reporting

Great defect: violated the national laws

and regulations; the decision-making

Great defect: malpractices of the of the enterprise was not scientific that

Directors Supervisors and Senior led to the mistakes of itself; outflow of

Executives; the Company revised the the management personnel or the

published financial report; the CPA technician personnel was serious;

founded the current financial report frequently appeared the negative news

occurred significant misstatement while from the Media; the significant

during the operating process of the internal business lacked of systematic control

control could not founded the or the systematic control was invalid;

misstatement; the supervision of the Audit the result of the internal control

Committee and the internal audit assessment which was the great defect

institution of the Company on the internal event had not been revised. Significant

control was invalid. Significant defeat: had defeat: violated the enterprise internal

not abide by the generally accepted regulations that caused rather serious

Nature standard

accounting principles to choose and apply losses; significant business lacked of

the accounting policies; had not built up systematic control; outflow of the

the anti-fraud and significant rather important personnel was

counterbalance mechanism and control serious; the Media reported the

measures; during the financial report negative news that caused rather

process there occurred single or multiple serious negative influence; rather

defects which not reached the recognition important business lacked of

standard of the significant defeat but systematic control or the systematic

influenced the true and accurate target of control was invalid; the results of the

the financial report. General defect: other internal control assessment which as

internal control defect which had not the significant defect had not been

constructed as the great defeat significant revised. General defect: other internal

defect. control defect which had not

constructed as the great defeat

significant defect.Great defect: misstatement≥2% of the total Great defect: the direct financial losses

Quantitative standard

profits amount; misstatement≥0.3% of the were RMB6 million and above

79Lu Thai Textile Co. Ltd. Annual Report 2021

total assets amount; misstatement≥0.3% of Significant defect: RMB3 million

the total operating income; (including RMB3 million)-RMB6

misstatement≥0.4% of the total owners’ million General defect: RMB0.5

equities amount. Significant defect: 1% of million (including RMB0.5

the total profits amount million)-RMB 3 million

≤misstatement<2% of the total profits

amount; 0.15% of the total assets amount

≤misstatement<0.3% of the total assets

amount; 0.15% of the total operating

amount ≤misstatement<0.3% of the total

operating amount; 0.2% of the total

owners’ equities amount

≤misstatement<0.4% of the total owners’

equities amount. General defect:

misstatement<1% of the total profits

amount; misstatement<0.15% of the total

assets amount; misstatement<0.15% of the

total operating income;

misstatement<0.2% of the total owners’

equities amount.Number of material weaknesses in

0

internal control over financial reporting

Number of material weaknesses in

internal control not related to financial 0

reporting

Number of serious weaknesses in

0

internal control over financial reporting

Number of serious weaknesses in

internal control not related to financial 0

reporting

2. Independent Auditor’s Report on Internal Control

√ Applicable □ Not applicable

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

All shareholders of Lu Thai Textile Co. Ltd.:

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

Certified Public Accountants we have audited the effectiveness of internal control in the financial report of Lu Thai Textile Co.Ltd. (Hereinafter referred to as "Lu Thai Textile”) by 31 December 2021.I. Responsibilities of Lu Thai Textile for internal control

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

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

Internal Control Enterprise Internal Control Audit Guidelines.

80Lu Thai Textile Co. Ltd. Annual Report 2021

II. Responsibilities of certified public accountants

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

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

been noted.III. Inherent limitations of internal control

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

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

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

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

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

Enterprise Internal Control Basic Specification and the relevant provisions on 31 December 2021.Independent auditor’s report on

Disclosed

internal control disclosed or not

Disclosure date 29 April 2022

For details please refer to the Auditor’s Report on Internal Control on www.cninfo.com.cn

Index to such report disclosed

at the same time of disclosing the Company’s 2021 Annual Report.Type of the auditor’s opinion Unmodified unqualified opinion

Material weaknesses in internal

control not related to financial None

reporting

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

control.□ Yes √ No

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

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

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

Company Governance

Not applicable.

81Lu Thai Textile Co. Ltd. Annual Report 2021

Part V Environmental and Social Responsibility

I Major Environmental Issues

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

protection authorities of China.√ Yes □ No

Number Distributi Discharge

Name of Discharge Approved

Name of Way of of on of standards Total Excessive

major concentra total

polluter discharge discharge discharge implemen discharge discharge

pollutants tion discharge

outlets outlets ted

Emission

Chief

standard

discharge

of water

outlet of

pollutants

Huangjia COD≤20 COD： COD:

in textile

Lu Thai COD and Continuo pu 0mg/L;a 345.04t； 1495.08t；

dyeing

Textile ammonia us 2 Industrial mmonia ammonia ammonia No and

Park ; nitrogen≤ nitrogen： nitrogen:

Co. Ltd nitrogen discharge finishing

chief 20mg/L 7.93t 149.51t

industry

discharge

GB

outlet of

East Zone

Emission

standard

of water

Chief pollutants

COD≤20 COD： COD is

discharge in textile

LuFeng COD and Continuo 0mg/L;a 250.75t； 653.53t；

outlet of dyeing

Company ammonia us 1 mmonia ammonia ammonia No LuFeng and

nitrogen≤ nitrogen： nitrogen

Limited nitrogen discharge Company finishing

20mg/L 8.15t is 65.3t

Limited industry

GB

2

SO2： Emission SO2 is

Zibo Organize SO2:

≤35mg/m standard 236.13t/a

Xinsheng SO2 d 39.87t

Productio 3、NQx： of air NQx :

Thermal NQx and continuou 4 NQx : n plant ≤50mg/m pollutants 674.63t/a

No

143.1t

Power PM s 3 PM： of PM:

PM: 5.42t

Co. Ltd. discharge ≤5mg/m3 Thermal 67.47t/a.

82Lu Thai Textile Co. Ltd. Annual Report 2021

Power

Plant in

Shandong

Province

DB37/66

Discharge

into the

COD≤50 Sewage

ecological QCVN40

Continent Beside mg/L;am discharge

pond in ：

al Textile Sewage 1 sewage monia is / No 2011/BT

the park nitrogen≤ 1273400

Co. Ltd. plant NMT

district 1.0mg/L t

after

treatment

Gas

Direct QCVN19

Continent Beside emission

Exhaust discharge ：

al Textile 2 boiler / is 285 / No 2009/BT

gas after million

Co. Ltd. room NMT

treatment m3

Construction of pollution prevention equipment and operation condition

Lu Thai Textile Co. Ltd. (hereinafter referred to as “the Company”) and its majority-owned subsidiary Lufeng Weaving & Dyeing

Co. Ltd. (hereinafter referred to as “Lufeng Weaving & Dyeing”) strictly implement the “Three Simultaneous” management system

for environmental protection in project constructions. The companies are equipped with complete facilities for waste gas and waste

water treatment. Lu Thai Textile Co. Ltd. and its majority-owned subsidiary Lufeng Weaving & Dyeing Co. Ltd. carried out the

waste water treatment system transformation project to improve the treated water quality by systematic and comprehensive reform

further improving the river water quality and local ecological environment. The Company and Lufeng Weaving & Dyeing

centralizedly collected and coped with the dyeing and finishing waste gas so as to greatly reduce the pollutant emission

concentration. Online supporting monitoring facilities were built whose data was uploaded to the government environmental

monitoring system to comprehensively monitor the Company's emission pollutants such as waste water and waste gas. Support

teams were set up to be responsible for daily operation maintenance and inspection to guarantee the normal operation of facilities.Both the exhaust emission and waste water discharge meet the emission standards. In terms of energy saving the Company won the

Ministry of Industry and Information Technology's 2020 Water Efficiency Leader in Key Water-using Enterprises China National

Textile and Apparel Council's 2020 Textile Industry Water-saving Enterprise Award and Benchmarking Unit of Water-Saving in

Shandong Province in 2021 making outstanding contributions to the company's energy-saving development.The wholly-owned subsidiary Zibo Xinsheng Thermal Power Co. Ltd. (hereinafter referred to as “Xinsheng Thermal Power”)

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

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

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

“electric-bag electrostatic precipitator + wet electrostatic precipitator” to reduce soot emission concentration. The overall system

works well.The waste water treatment project of the wholly-owned subsidiary Continental Textile Co. Ltd. (hereinafter referred to as

“Continental Textile”) located in the KCN Phuoc Dong Tay Ninh Vietnam is designed to treat 6500 tons of sewage water daily

83Lu Thai Textile Co. Ltd. Annual Report 2021

among which sewage plan I is designed to treat 3000 tons of sewage water daily and the sewage plant II is designed to treat 3500tons of sewage water daily. Continental Textile adopts a comprehensive treatment process of “pre-materialization + A2Obiochemistry + post-materialization + ozone oxidation+ active sand filtration” for waste water treatment and the treated water

quality is better than the QCVN 40: 2011/BTNMT A-level emission standards stipulated by the Vietnam government. The treated

waste water is all discharged to the ecological pond in the park. Treated water quality analysis for 2021: The COD (mean value) was

48.1 mg/L the chrominance (mean value) was 26 the ammonia nitrogen (mean value) was 0.16 mg/L and the total phosphorus(mean value) was 0.15 mg/L. All the parameters met the A-level emission standards set in the “Regulations on Parameters ofIndustrial Drainage in Vietnam” (QCVN40: 2011/BTNMT). Waste water discharge in the whole year met the standards without

violation. The total amount of waste water discharged in 2021 was 1273400 tons among which the chemical oxygen demand

(COD) was 61.19 tons ammonia nitrogen (NH3-N) was 0.197 tons and total phosphorus (TP) was 0.173 ton. Continental Textile is

equipped with multi-pipe and water film dust-separation devices to process the exhaust gas discharged from boilers. In 2021 all the

equipment was in normal operation and the exhaust gas inspection parameters were lower than the QCVN19: 2009/BTNMT

emission standards set by Vietnam government. In 2021 the total amount of sulfur dioxide emissions was 50.05 tons and the total

amount of nitrogen oxides emissions was 47.5 tons.Project Environmental Impact Assessment and Other Administrative Permission for Environmental ProtectionIn 2021 the “Lu Thai Textile Co. Ltd. Intelligent Technology Upgrading Project of 25 million-meter High-grade Fabric ProductionLine” the “Engineering Technology Research Institute Project” the “Technology Upgrading Project of High-end Printing andDyeing Fabric Finishing Production Process” and the “Technology Upgrading Project of Regenerated Fibre Production Line andColored Spun Yarn Production Line” has completed the acceptance check. The “Lufeng Weaving and Dyeing’s High-end Printingand Dyeing Fabric Production Line Project” of the holding subsidiary Lufeng Weaving and Dyeing Co. Ltd. has been approved andis under construction. The wholly-owned subsidiary Zibo Xinsheng Thermal Power Co. Ltd. obtained the “Response of theEnvironmental Impact Report of the Shandong Provincial Department of Environmental Protection on the Extension Project of ZiboXinsheng Thermal Power” (Luhuanjian [2015] No. 241) the phase II of the expansion project has been completed and been put into

production. The wholly-owned subsidiary Continental Textile’s Spinning Phase I and Dyeing Park Phase I environmental protection

projects have been completed and accepted for confirmation. The spinning phase II and yarn dyeing park Phase II environmental

assessment reports have been approved.Emergency plan for environmental incidents

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

respectively prepared the Emergency Plan for Environmental Incidents which were filed with Zibo Environmental Protection Bureau

Zichuan Branch. The Plan includes contents such as environmental risk sources identification and risk assessment prevention and

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

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

included in the plan.The wholly-owned subsidiary Continental Textile Co. Ltd. has prepared emergency plans for different environmental incidents to

reduce their impacts.Environmental self-monitoring program

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

Weaving & Dyeing observed the requirements of the superior environmental protection department to install automatic wastewater

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

was prepared. In addition they invited a qualified testing institution quarterly to conduct tests on sewage and waste gas according to

the self-monitoring plan duly disclosed the monitoring data to the Shandong Pollution Source Self-monitoring Sharing System and

submitted the test reports to the competent environment authorities ensuring the monitoring data is true and valid.

84Lu Thai Textile Co. Ltd. Annual Report 2021

The wholly-owned subsidiary Zibo Xinsheng Thermal Power Co. Ltd. has implemented online real-time monitoring of

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

emission standards.The wholly-owned subsidiary Continental Textile Co. Ltd. installs automatic sewage sampling and water quality automatic online

monitoring devices real-time automatic sampling and online monitoring of sewage effluent water quality; while the automatic online

waste gas monitoring system was installed to monitor waste gas emission in real-time after debugging. The company invites external

qualified testing institutions to conduct sewage sludge and exhaust gas quarterly Test and submit the test report to the environmental

supervision department.Administrative penalties imposed for environmental issues during the Reporting Period

Influence on

Rectification

Name Reason Case Result production and

measures

operation

------

Other environment information that should be disclosed

No

Measures taken to decrease carbon emission in the Reporting Period and corresponding effects

√ Applicable □ Not applicable

The annual coal consumption for power generation of the wholly-owned subsidiary Xinsheng Thermal Power in 2021 was reduced

from 283g/kWh in 2020 to 262g/kWh through operation mode adjustment energy conservation improvement and unit efficiency

enhancement. At the end of the Reporting Period which was the heating season Xinsheng Thermal Power who independently cut

emission by 13% on the basis of benchmarking the lowest pollutant emission over the years dug deeply into contributing to green

environmental protection and energy conservation and emission reduction.Other related environment protection information

No

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

Listed Companies No.3 - Industry Information Disclosure on textile and garment industry.Environmental protection conformity situation of the Company in the report period

The Company and its majority-owned subsidiary Lufeng Weaving & Dyeing strictly implement the “Three Simultaneous”

management system for environmental protection in project construction. The companies are equipped with complete facilities for

waste gas and waste water treatment wastewater is treated with hydrolysis and acidification technique + AO treatment process and

finally discharged according to GB4287-2012 the Discharge Standard of Water Pollutants for Dyeing and Finishing of Textile

Industry; the boiler exhaust is treated with low nitrogen combustion technology and meets DB37/2374-2018 the Emission Standards

of Air Pollutants for Boilers in Shandong Province. The spray + electrostatic technology is adopted in the waste gas treatment which

meets the requirement in Regional Comprehensive Standards for the Discharge of Air Pollutants DB37/2376-2019 and Volatile

Organic Emission Standard of Shandong Province: Part 7 - Other Industries DB37/2801.7-2019. Temporary storage room of

common solid waste and hazardous waste is constructed in accordance with environmental protection requirements and the

Company signs hazardous waste disposal contracts with third party qualified companies every year to dispose the hazardous waste of

the Company on basis of conformity. The Company strictly observes environmental protection laws and regulations and its projects

have complete formalities and its environmental protection facilities are in normal operation; in 2021 the environmental protection

departments of governments at various levels checked the Company more than 30 times but nonconformity was found.Zibo Xinsheng Thermal Power utilizes neutralization basin to teat acidic and alkali wastewater and reduces pH value to 6-9 after

precipitation and neutralization. The treated wastewater and reverse osmosis water are used as desulfurizing water coal feeding

85Lu Thai Textile Co. Ltd. Annual Report 2021

system rinsing water road sprinkling water and coal yard water. Desulfurizing wastewater is treated with flocculation sedimentation

purification process and the design output of wastewater treatment system is 10m3/h and the water quality after treatment will meet

the requirements of Discharge Standard of Wastewater from Limestone-gypsum Flue Gas Desulfurization System In Fossil Fuel

Power Plant DL/T997-2006 and also meet the wastewater recycling requirement of the plant. The treated wastewater is used for

damping dry dust. The stove ash generating from coal burning and gypsum generating from ultralow emission in Zibo Xinsheng

Thermal Power. are general solid waste the Company signs boiler ash and desulfurized gypsum supply and distribution agreements

with building material factory cement factory for full comprehensive utilization.Intercontinental Textile uses the comprehensive treatment process “pre-materialization +A2O biochemistry + post-materialization +ozone treatment + activated sand filtration” to treat the industrial wastewater of the Company and the relevant equipment has been

properly operated for six years after installation and the discharged wastewater meets the level A discharge standard in the Technical

Specifications of Vietnam on Industrial Wastewater Discharge (QCVN40: 2011/BTNMT). the boiler exhaust of the Company is

treated with heat exchange and temperature reduction dust separation spraying water film dust collection absorption chemical

reaction and etc. Now the equipment has been installed and properly operated for six years. Exhaust discharge meets the discharge

standard of Vietnam “State Technical Specifications on Discharge of Industrial Inorganic Substances and Dust” (Circular

36/2015/TT-BTNMT). Hazardous waste and industrial waste warehouses are built up for separated storage of hazardous waste and

industrial waste in accordance with the Vietnamese regulations Regulations on Administration of Hazardous Waste (Circular

36/2015/TT-BTNMT) and Decision on Administration of Waste (Decree 38/2015/N?-CP) and waste transportation and disposal

contracts are signed with local qualified treatment organizations and relevant treatment records of waste are reported the

environmental protection authority of Vietnam annually.II Social Responsibility

The Company has prepared the Sustainability Report 2021 and for more details please refer to the Sustainability Report 2021

simultaneously disclosed with the Annual Report 2021.III Consolidation and Expansion of Poverty Alleviation Outcomes and Rural Revitalization

Not applicable

86Lu Thai Textile Co. Ltd. Annual Report 2021

Part VI Significant Events

I Fulfillment of Commitments

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

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

Period-End

√ Applicable □ Not applicable

Date of Term of

Type of Details of

Commitment Promisor commitment commitmen Fulfillment

commitment commitment

making t

Commitments made in share reform

Commitments made in acquisition

documents or shareholding

alteration documents

Commitments made in time of asset

restructuring

1. Not

intervene

the

Company’s

operation

Dilution of

and

at sight

managemen

returns on

Controlling t beyond the

public From 23

Commitments made in time of IPO shareholder authority 23 May

offering May 2019 to On-going

or refinancing actual and not 2019

A-share 8 April 2026

controller occupy the

convertible

Company’s

corporate

interests. 2.bonds

From

the issuance

date of this

commitment

to the

87Lu Thai Textile Co. Ltd. Annual Report 2021

completion

of the

implementat

ion of the

Company's

public

offering of

A-share

convertible

corporate

bonds if the

CSRC

makes other

new

regulatory

provisions

on remedial

measures

for returns

and the

commitment

and the

above

commitment

fails to meet

the

requirement

s of the

CSRC the

company / I

promise to

issue

supplementa

ry

commitment

then in

accordance

with the

88Lu Thai Textile Co. Ltd. Annual Report 2021

latest

regulations

of CSRC. 3.Commitmen

t is made to

fulfill the

Company's

relevant

remedial

measures

for returns

and any

commitment

made herein

by the

company /

me. If the

company / I

violate(s)

such

commitment

and cause(s)

losses to the

Company or

investors

the

company / I

will bear the

compensatio

n

responsibilit

y to the

Company or

investors in

accordance

with the law.Directors Dilution of 1. 23 May From 23

On-going

and senior at sight Com 2019 May 2019 to

89Lu Thai Textile Co. Ltd. Annual Report 2021

managemen returns on mitment is 8 April 2026

t of the public made not to

Company offering transfer

A-share benefits to

convertible other units

corporate or

bonds individuals

free of

charge or

under unfair

conditions

and no other

ways

damaging

the interests

of the

Company

will be

taken. 2. I

will strictly

abide by the

budget

managemen

t of the

Company

and accept

the strict

supervision

and

managemen

t of the

Company to

avoid waste

or excessive

consumptio

n. Any

position-rela

ted

90Lu Thai Textile Co. Ltd. Annual Report 2021

consumptio

n behaviors

of me will

occur within

the scope

necessary

for the

performance

of my

duties. 3.Commitmen

t is made not

to use the

Company's

assets to

engage in

investment

and

consumptio

n activities

unrelated to

the

performance

of duties. 4.Commitmen

t is made

that the

remuneratio

n system

developed

by the

Board of

Directors or

the

Remunerati

on

Committee

is linked to

91Lu Thai Textile Co. Ltd. Annual Report 2021

the

implementat

ion of the

Company's

remedial

measures

for returns.

5.

Commitmen

t is made

that the

conditions

for

exercising

the Equity

Incentive

Plan to be

issued in the

future will

be linked to

the

implementat

ion of the

Company's

remedial

measures

for returns.

6. From the

issuance

date of this

commitment

to the

completion

of the

implementat

ion of the

Company's

public

92Lu Thai Textile Co. Ltd. Annual Report 2021

offering of

A-share

convertible

corporate

bonds if the

CSRC

makes other

new

regulatory

provisions

on remedial

measures

for returns

and the

commitment

and the

above

commitment

fails to meet

the

requirement

s of the

CSRC I

promise to

issue

supplementa

ry

commitment

then in

accordance

with the

latest

regulations

of CSRC. 7.Commitmen

t is made to

fulfill the

Company's

93Lu Thai Textile Co. Ltd. Annual Report 2021

relevant

remedial

measures

for returns

and any

commitment

made herein

by me. If I

violate such

commitment

and causes

losses to the

Company or

investors I

will bear the

compensatio

n

responsibilit

y to the

Company or

investors in

accordance

with the law.Equity incentive commitments

Other commitments made to

minority interests

Executed on time or not Not

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

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

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

Parties for Non-Operating Purposes

□ Applicable √ Not applicable

No such cases in the Reporting Period.

94Lu Thai Textile Co. Ltd. Annual Report 2021

III Irregularities in the Provision of Guarantees

□ Applicable √ Not applicable

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

on the Financial Statements

□ Applicable √ Not applicable

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

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

Statements of the Reporting Period

□ Applicable √ Not applicable

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

Errors

□ Applicable √ Not applicable

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

√ Applicable □ Not applicable

During the Reporting Period three subsidiaries were newly established by the Company. They are Hainan Huilin International

Holdings Co. Ltd. Libra International Investment Pet. Ltd. and Zibo Banyang Villa Hotel Co. Ltd.VIII Engagement and Disengagement of Independent Auditor

Current independent auditor:

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

The Company’s payment to the domestic independent auditor

173.5

(RMB’0000)

How many consecutive years the domestic independent auditor

3

has provided audit service for the Company

Names of the certified public accountants from the domestic

Cui Xiaoli He Feng

independent auditor writing signatures on the auditor’s report

How many consecutive years the certified public accountants

2

have provided audit service for the Company

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

95Lu Thai Textile Co. Ltd. Annual Report 2021

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

√ Applicable □ Not applicable

The Company held the 2020 Annual General Meeting on 20 April 2021 and approved the Proposal on Renewal Engagement of the

2021 Financial Audit and Internal Control Auditor and decided to renew the contract with Grant Thornton China (Special General

Partnership) for 2021 financial audit and internal control affairs and paid RMB1.735 million in total for 2020 financial report audit

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

□ Applicable √ Not applicable

X Insolvency and Reorganization

□ Applicable √ Not applicable

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

□ Applicable √ Not applicable

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

□ Applicable √ Not applicable

No such cases in the Reporting Period.XIII Credit Quality of the Company as well as Its Controlling Shareholder and Actual

Controller

□ Applicable √ Not applicable

XIV Major Related-Party Transactions

1. Continuing Related-Party Transactions

□ Applicable √ Not applicable

No such cases in the Reporting Period.

2. Related-Party Transactions Regarding Purchase or Sales of Assets or Equity Interests

□ Applicable √ Not applicable

No such cases in the Reporting Period.

96Lu Thai Textile Co. Ltd. Annual Report 2021

3. Related Transactions Regarding Joint Investments in Third Parties

□ Applicable √ Not applicable

No such cases in the Reporting Period.

4. Credits and Liabilities with Related Parties

□ Applicable √ Not applicable

No such cases in the Reporting Period.

5. Transactions with Related Finance Companies

□ Applicable √ Not applicable

The Company did not make deposits in receive loans or credit from and was not involved in any other finance business with any

related finance company or any other related parties.

6. Transactions with Related Parties by Finance Companies Controlled by the Company

□ Applicable √ Not applicable

The finance company controlled by the Company did not make deposits receive loans or credit from and was not involved in any

other finance business with any related parties.

7. Other Major Related-Party Transactions

□ Applicable √ Not applicable

No such cases in the Reporting Period.XV Major Contracts and Execution thereof

1. Entrustment Contracting and Leases

(1) Entrustment

□ Applicable √ Not applicable

No such cases in the Reporting Period.

(2) Contracting

□ Applicable √ Not applicable

No such cases in the Reporting Period.

(3) Leases

□ Applicable √ Not applicable

97Lu Thai Textile Co. Ltd. Annual Report 2021

No such cases in the Reporting Period.

2. Major guarantees

√ Applicable □ Not applicable

Unit: RMB'0000

Guarantees provided by the Company as the parent and its subsidiaries for external parties (exclusive of those for subsidiaries)

Disclosur

e date of Count Guaran

the Actual Actual er-gu Term of Having tee for a

Line of Type of Collateral

Obligor guarantee occurrenc guarantee arante guarant expired related

guarantee guarantee (if any)

line e date amount e (if ee or not party or

announce any) not

ment

Guarantees provided by the Company for its subsidiaries

Disclosur

e date of Count Guaran

the Actual Actual er-gu Term of Having tee for a

Line of Type of Collateral

Obligor guarantee occurrenc guarantee arante guarant expired related

guarantee guarantee (if any)

line e date amount e (if ee or not party or

announce any) not

ment

Five

years

since

the

Continent 25 20

10201.1 Joint-liab approva

al Textile January January 993.95 No Yes 2

ility l of the

Co. Ltd. 2017 2017

board

of the

Compa

ny

Five

years

Continent 25 20

17533.1 Joint-liab since

al Textile January 8 January

0 No Yes

ility the

Co. Ltd. 2017 2017

approva

l of the

98Lu Thai Textile Co. Ltd. Annual Report 2021

shareho

lders

meeting

of the

Compa

ny

Five

years

since

the

approva

Continent 27 25

26777.9 Joint-liab l of the

al Textile October October 6658.79 No Yes 4

ility shareho

Co. Ltd. 2017 2017

lders

meeting

of the

Compa

ny

Three

years

since

the

Continent 22 20

Joint-liab approva

al Textile August 7013.27 August 2681.92 No Yes

ility l of the

Co. Ltd. 2018 2018

board

of the

Compa

ny

Three

years

since

Continent the

29 March 27 March Joint-liab

al Textile 3825.42 3825.42 approva No Yes

2019 2019 ility

Co. Ltd. l of the

board

of the

Compa

99Lu Thai Textile Co. Ltd. Annual Report 2021

ny

Three

Continent years

al Textile since

Co. Ltd./ the

Lu Thai 17 May 17 May Joint-liab approva

11986.32 8666.16 No Yes

2021 ility

(Tan 2021 l of the

Chau) board

Textile of the

Co. Ltd. Compa

ny

Three

years

since

Lu Thai

the

(Tan 28 27

Joint-liab approva

Chau) Septembe 6375.7 Septembe 0 No Yes

ility l of the

Textile r 2019 r 2019

board

Co. Ltd.of the

Compa

ny

Three

years

since

the

Continent 28 27

10838.6 Joint-liab approva

al Textile Septembe 9 Septembe

0 No Yes

ility l of the

Co. Ltd. r 2019 r 2019

board

of the

Compa

ny

Three

years

Continent 28 27

Joint-liab since

al Textile Septembe 2869.07 Septembe 0 No Yes

ility the

Co. Ltd. r 2019 r 2019

approva

l of the

100Lu Thai Textile Co. Ltd. Annual Report 2021

board

of the

Compa

ny

Three

years

since

the

Continent 28 26

Joint-liab approva

al Textile August 12751.4 August 0 No Yes

ility l of the

Co. Ltd. 2020 2020

board

of the

Compa

ny

Four

years

since

Lu Thai

the

(Tan 15 14

Joint-liab approva

Chau) Decembe 8925.98 Decembe 938.51 No Yes

ility l of the

Textile r 2020 r 2020

board

Co. Ltd.of the

Compa

ny

Three

years

since

Lu Thai

the

(Tan 15 14

Joint-liab approva

Chau) Decembe 3825.42 Decembe 0 No Yes

ility l of the

Textile r 2020 r 2020

board

Co. Ltd.of the

Compa

ny

Lu An 15 13 Two

Joint-liab

Garments January 3187.85 January 112.15 years No Yes

ility

Co. Ltd. 2021 2021 since

101Lu Thai Textile Co. Ltd. Annual Report 2021

the

approva

l of the

board

of the

Compa

ny

One

year

since

Shandong

the

Lulian 14 13

Joint-liab approva

New Decembe 4000 Decembe 3020.72 No Yes

ility

Materials r 2021 r 2022 l of the

Co. Ltd. board

of the

Compa

ny

Total approved line for Total actual amount of

such guarantees in the 19174.17 such guarantees in the 64500.33

Reporting Period (B1) Reporting Period (B2)

Total approved line for Total actual balance of

such guarantees at the such guarantees at the

130111.3626897.62

end of the Reporting end of the Reporting

Period (B3) Period (B4)

Guarantees provided between subsidiaries

Disclosur

e date of Count Guaran

the Actual Actual er-gu Term of Having tee for a

Line of Type of Collateral

Obligor guarantee occurrenc guarantee arante guarant expired related

guarantee guarantee (if any)

line e date amount e (if ee or not party or

announce any) not

ment

Total guarantee amount (total of the three kinds of guarantees above)

Total actual guarantee

Total guarantee line approved

amount in the

in the Reporting Period 19174.17 64500.33

Reporting Period

(A1+B1+C1)

(A2+B2+C2)

102Lu Thai Textile Co. Ltd. Annual Report 2021

Total actual guarantee

Total approved guarantee line

balance at the end of

at the end of the Reporting 130111.36 26897.62

the Reporting Period

Period (A3+B3+C3)

(A4+B4+C4)

Total actual guarantee amount (A4+B4+C4) as

3.37%

% of the Company’s net assets

Of which:

Balance of guarantees provided for shareholders

0

actual controller and their related parties (D)

Balance of debt guarantees provided directly or

indirectly for obligors with an over 70% 0

debt/asset ratio (E)

Amount by which the total guarantee amount

0

exceeds 50% of the Company’s net assets (F)

Total of the three amounts above (D+E+F) 0

Joint responsibilities possibly borne or already

borne in the Reporting Period for undue N/A

guarantees (if any)

Explanation about external guarantee violating

N/A

established procedure (if any)

Compound guarantees:

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

Listed Companies No.3 - Industry Information Disclosure on textile and garment industry.Whether the Company provides guarantees or financial assistance for dealers

□ Yes √ No

3. Cash Entrusted for Wealth Management

(1) Cash Entrusted for Wealth Management

√ Applicable □ Not applicable

Overviews of cash entrusted for wealth management during the Reporting Period

RMB’0000

Overdue amount

Specific type Capital resources Amount incurred Undue Balance Overdue amount with provision for

impairment

Bank financial Raised funds

69954000

103Lu Thai Textile Co. Ltd. Annual Report 2021

products

Bank financial

Self-owned funds 52143 0 0 0

products

Brokerage

Raised funds 5990 0 0 0

financial products

Brokerage

Self-owned funds 3000 0 0 0

financial products

Total 131087 0 0 0

Particulars of entrusted cash management with single significant amount or low security and bad liquidity

√ Applicable □ Not applicable

RMB’0000

Wh

ethe

r Ove

Am Act

ther rvie

ount ual

Am e is w of

of reco

Met ount Wh wea the

actu very

hod with ethe lth item

al of

of Ann Esti dra r go man and

Nam Type Type Res prof prof

pay ual mat wn thro age the

e of of of ourc Initi End Use its its

Am men yiel e imp ugh men relat

the the the e of al ed of or or

ount t d for prof airm stat t ed

trust trust prod fund date Date fund loss loss

dete refer it (if ent or entr inde

ee ee uct s es in es in

rmin ence any) prov proc ust x

Rep Rep

atio isio edur men for

ortin ortin

n n (if es t inqu

g g

any) plan irin

Peri Peri

in g (if

od od

futu any)

re or

not

Co One

Ref

Agri mm -off

Rec er

cult Princ Rais odit repa

202 202 over to

ural Ban ipal- 100 ed y yme 3.50 171. 171. Not

0/07 1/01 y on 0 Yes

00 fund and nt of % 88 88 yet the

Ban k prote /02 /08 sche

s fina prin relat

k of cted dule

ncia cipa ed

Chin

l l ann

104Lu Thai Textile Co. Ltd. Annual Report 2021

deri and

a oun

vati inter

cem

ve ests

ent

asse at

ts mat (No

urity .:

202

51)

disc

lose

d on

Cni

nfo

on

23

Ma

y

202

0

Ref

er

to

One the

-off relat

repa ed

yme

ann

nt of

Rec oun

Qish Princ Rais Cre prin

202 202 over cem

ang Ban ipal- 500 ed dit cipa 3.50 40.7 40.7 Not

0/10 1/01 y on 0 Yes

0 fund asse l % 1 1 yet ent

Ban k prote /16 /14 sche

s ts and (No

k cted dule

inter .:

ests

202

at

mat

51)

urity

disc

lose

d on

Cni

105Lu Thai Textile Co. Ltd. Annual Report 2021

nfo

on

23

Ma

y

202

0

Ref

er

to

the

relat

ed

ann

One

oun

-off

cem

repa

ent

yme

nt of (No

Rec

Qish Princ Rais Cre prin .:

202 202 over

ang Ban ipal- 275 ed dit cipa 3.50 22.6 22.6 Not 202

0/12 1/03 y on 0 Yes

4 fund asse l % 7 7 yet

Ban k prote /10 /11 sche 0-0

s ts and

k cted dule 51)

inter

disc

ests

at lose

mat d on

urity Cni

nfo

on

23

Ma

y

202

0

One

Rec Ref

Qish Princ Rais Cre -off

202 202 over er

ang Ban ipal- 500 ed dit repa 3.50 41.1 41.1 Not

0/12 1/03 y on 0 Yes

0 fund asse % 6 6 yet to

Ban k prote yme/10 /11 sche

s ts nt of the

k cted dule

prin relat

106Lu Thai Textile Co. Ltd. Annual Report 2021

cipa

ed

l

ann

and

oun

inter

ests cem

at ent

mat (No

urity .:

202

51)

disc

lose

d on

Cni

nfo

on

23

Ma

y

202

0

Ref

er

One to

Co

-off the

mm

repa relat

odit

yme

Agri y ed

nt of

cult and Rec ann

Princ Rais prin

ural 202 202 fina over oun

Ban ipal- 100 ed cipa 3.15 68.3 68.3 Not

Ban 0/12 1/03 ncia y on 0 Yes 00 fund l % 9 9 yet cem

k prote /31 /25 l sche

k of s and ent

cted deri dule

Chin inter (No

vati

a ests

ve .:

at

asse 202

mat

ts 0-0

urity

51)

disc

lose

107Lu Thai Textile Co. Ltd. Annual Report 2021

d on

Cni

nfo

on

23

Ma

y

202

0

Ref

er

to

the

relat

ed

ann

One

oun

-off

cem

repa

ent

yme

nt of (No

Rec

Qish Princ Rais Cre prin .:

202 202 over

ang Ban ipal- 250 ed dit cipa 3.70 22.7 22.7 Not 202

1/03 1/06 y on 0 Yes

0 fund asse l % 1 1 yet

Ban k prote /19 /22 sche 0-0

s ts and

k cted dule 51)

inter

disc

ests

at lose

mat d on

urity Cni

nfo

on

23

Ma

y

202

0

Agri Princ Rais 202 202 Co One Rec Ref

Ban 100 3.30 71.6 71.6 Not

ed 1/01 1/04 0 Yes cult ipal- mm -off over00 % 5 5 yet er

k fund /22 /16 odit repa y on

ural prote to

108Lu Thai Textile Co. Ltd. Annual Report 2021

s y yme sche

Ban cted the

and nt of dule

k of relat

fina prin

Chin ed

ncia cipa

a l l ann

deri and oun

vati inter cem

ve ests ent

asse at

(No

ts mat.:

urity

202

51)

disc

lose

d on

Cni

nfo

on

23

Ma

y

202

0

Ref

One er

Co

-off to

mm

repa the

odit

yme

Agri y relat

nt of

cult and Rec ed

Princ Rais prin

ural 202 202 fina over ann

Ban ipal- 100 ed cipa 3.70 Not

Ban 1/03 1/06 ncia 83.2 83.2 y on 0 Yes 00 fund l % yet oun

k prote /30 /25 l sche

k of s and cem

cted deri dule

Chin inter ent

vati

a ests

ve (No

at

asse .:

mat

ts 202

urity

51)

109Lu Thai Textile Co. Ltd. Annual Report 2021

disc

lose

d on

Cni

nfo

on

23

Ma

y

202

0

Ref

er

to

the

relat

ed

ann

One

Co oun

-off

mm cem

repa

odit ent

yme

Agri y

nt of (No

cult and Rec

Princ Rais prin .:

ural 202 202 fina over

Ban ipal- 500 ed cipa 3.70 Not 202

Ban 1/03 1/06 ncia 41.6 41.6 y on 0 Yes 0 fund l % yet

k prote /30 /25 l sche 0-0

k of s and

cted deri dule 51)

Chin inter

vati disc

a ests

ve

at lose

asse

mat d on

ts

urity Cni

nfo

on

23

Ma

y

202

0

Agri Ban Princ 970 Rais 202 202 Co One 3.50 76.3 76.3 Rec

0 Yes Not Ref

110Lu Thai Textile Co. Ltd. Annual Report 2021

0 ed 1/04 1/07 mm -off % 4 4 over yet

cult k ipal- er

fund /27 /23 odit repa y on

ural prote to

s y yme sche

Ban cted the

and nt of dule

k of fina prin relat

Chin ncia cipa ed

a l l ann

deri and oun

vati inter

cem

ve ests

ent

asse at

(No

ts mat

urity .:

202

51)

disc

lose

d on

Cni

nfo

on

23

Ma

y

202

0

Ref

One

er

-off

to

repa

the

Zho yme

relat

ngta nt of

Rec ed

i Princ Rais prin

202 202 over ann

Secu Secu ipal- 150 ed Oth cipa 4.25 Not

1/08 1/10 9.89 9.89 y on 0 Yes oun

ritie rities prote 0 fund er l % yet

/26 /25 sche cem

s cted s and

dule ent

Co. inter

(No

Ltd. ests.:

at

202

mat

urity

33)

111Lu Thai Textile Co. Ltd. Annual Report 2021

disc

lose

d on

Cni

nfo

on

30

Apr

il

202

1

Ref

er

to

the

relat

ed

One ann

-off oun

repa cem

Zho yme ent

ngta nt of (No

Rec

i Princ Rais prin .:

202 202 over

Secu Secu ipal- 150 ed Oth cipa 3.95 13.6 13.6 Not 202

1/08 1/11 y on 0 Yes

ritie rities prote 0 fund er l % 3 3 yet 1-0

/26 /23 sche

s cted s and 33)

dule

Co. inter disc

Ltd. ests lose

at d on

mat Cni

urity nfo

on

30

Apr

il

202

1

Zho One Ref

ngta -off Rec er

Princ Rais

i 202 202 repa over to

Secu ipal- 149 ed Oth 4.25 Not

Secu 1/08 1/10 yme 9.82 9.82 y on 0 Yes the

rities prote 0 fund er % yet

ritie /26 /25 nt of sche relat

cted s

s prin dule ed

Co. cipa ann

112Lu Thai Textile Co. Ltd. Annual Report 2021

Ltd. l oun

and cem

inter ent

ests (No

at .:

mat 202

urity 1-0

33)

disc

lose

d on

Cni

nfo

on

30

Apr

il

202

1

Ref

er

to

the

relat

ed

One

ann

-off

oun

repa

cem

Zho yme

ent

ngta nt of

Rec (No

i Princ Rais prin

202 202 over .:

Secu Secu ipal- 150 ed Oth cipa 3.95 13.6 13.6 Not

1/08 1/11 y on 0 Yes 202

ritie rities prote 0 fund er l % 3 3 yet

/26 /23 sche 1-0

s cted s and

dule 33)

Co. inter

disc

Ltd. ests

lose

at

d on

mat

Cni

urity

nfo

on

30

Apr

il

202

113Lu Thai Textile Co. Ltd. Annual Report 2021

1

Ref

er

to

the

relat

ed

One ann

-off oun

repa cem

yme ent

nt of (No

Self Rec

Qish Princ Cre prin .:

-ow 202 202 over

ang Ban ipal- 300 dit cipa 3.50 24.4 24.4 Not 202

ned 0/10 1/01 y on 0 Yes

prote 0 asse l % 2 2 yet 0-0

Ban k fund /16 /14 sche

cted ts and 59)

k s dule

inter disc

ests lose

at d on

mat Cni

urity nfo

on

14

Aug

ust

202

0

Ref

er

One

to

-off

the

repa

relat

yme

ed

nt of

Self Rec ann

Qish Princ Cre prin

-ow 202 202 over oun

ang Ban ipal- 500 dit cipa 3.50 40.7 40.7 Not

ned 0/11 1/02 y on 0 Yes cem

prote 0 asse l % 1 1 yet

Ban k fund /04 /02 sche ent

cted ts and

k s dule (No

inter.:

ests

202

at

mat

59)

urity

disc

lose

114Lu Thai Textile Co. Ltd. Annual Report 2021

d on

Cni

nfo

on

14

Aug

ust

202

0

Ref

er

to

the

relat

ed

One ann

-off oun

repa cem

yme ent

nt of (No

Self Rec

Qish Princ Cre prin .:

-ow 202 202 over

ang Ban ipal- 500 dit cipa 3.50 40.7 40.7 Not 202

ned 0/11 1/02 y on 0 Yes

prote 0 asse l % 1 1 yet 0-0

Ban k fund /11 /09 sche

cted ts and 59)

k s dule

inter disc

ests lose

at d on

mat Cni

urity nfo

on

14

Aug

ust

202

0

One Ref

-off er

Self repa Rec to

Qish Princ Cre

-ow 202 202 yme over the

ang Ban ipal- 624 dit 3.50 51.4 51.4 Not

ned 0/12 1/03 nt of y on 0 Yes relat

prote 6 asse % 2 2 yet

Ban k fund /10 /11 prin sche ed

cted ts

k s cipa dule ann

l oun

and cem

115Lu Thai Textile Co. Ltd. Annual Report 2021

inter ent

ests (No

at .:

mat 202

urity 0-0

59)

disc

lose

d on

Cni

nfo

on

14

Aug

ust

202

0

Ref

er

to

the

relat

ed

One ann

-off oun

repa cem

yme ent

nt of (No

Self Rec

Qish Princ Cre prin .:

-ow 202 202 over

ang Ban ipal- 300 dit cipa 3.40 10.5 10.5 Not 202

ned 0/12 1/01 y on 0 Yes

prote 0 asse l % 5 5 yet 0-0

Ban k fund /11 /20 sche

cted ts and 59)

k s dule

inter disc

ests lose

at d on

mat Cni

urity nfo

on

14

Aug

ust

202

0

116Lu Thai Textile Co. Ltd. Annual Report 2021

Ref

er

to

the

relat

ed

One ann

Co

-off oun

mm

repa cem

odit

yme ent

y

nt of (No

Ever Self and Rec

Princ prin .:

brig -ow 202 202 fina over

Ban ipal- 500 cipa 2.70 10.6 10.6 Not 202

ht ned 0/12 1/01 ncia y on 0 Yes

k prote 0 l % 1 1 yet 0-0

Ban fund /18 /18 l sche

cted and 59)

k s deri dule

inter disc

vati

ests lose

ve

at d on

asse

mat Cni

ts

urity nfo

on

14

Aug

ust

202

0

Ref

er

One to

-off the

repa relat

yme ed

nt of ann

Self Rec

Qish Princ Cre prin oun

-ow 202 202 over

ang Ban ipal- 260 dit cipa 3.40 Not cem

ned 1/01 1/02 9.82 9.82 y on 0 Yes

prote 0 asse l % yet

Ban k ent fund /07 /19 sche

cted ts and (No

k s dule

inter .:

ests 202

at 0-0

mat 59)

urity disc

lose

d on

117Lu Thai Textile Co. Ltd. Annual Report 2021

Cni

nfo

on

14

Aug

ust

202

0

Ref

er

to

the

relat

ed

One ann

-off oun

repa cem

yme ent

nt of (No

Self Rec

Qish Princ Cre prin .:

-ow 202 202 over

ang Ban ipal- 200 dit cipa 3.40 Not 202

ned 1/01 1/03 6.15 6.15 y on 0 Yes

prote 0 asse l % yet 0-0

Ban k fund /27 /03 sche

cted ts and 59)

k s dule

inter disc

ests lose

at d on

mat Cni

urity nfo

on

14

Aug

ust

202

0

One Ref

-off er

repa to

Self Rec

Qish Princ Cre yme the

-ow 202 202 over

ang Ban ipal- 369 dit nt of 3.50 32.7 32.7 Not relat

ned 1/02 1/05 y on 0 Yes

prote 7 asse prin % 8 8 yet Ban k ed fund /09 /18 sche

cted ts cipa ann

k s dule

l oun

and cem

inter ent

118Lu Thai Textile Co. Ltd. Annual Report 2021

ests (No

at .:

mat 202

urity 0-0

59)

disc

lose

d on

Cni

nfo

on

14

Aug

ust

202

0

Ref

er

to

the

relat

ed

One ann

-off oun

repa cem

yme ent

nt of (No

Self Rec

Qish Princ Cre prin .:

-ow 202 202 over

ang Ban ipal- 700 dit cipa 3.60 81.4 81.4 Not 202

ned 1/02 1/06 y on 0 Yes

prote 0 asse l % 2 2 yet 0-0

Ban k fund /24 /29 sche

cted ts and 59)

k s dule

inter disc

ests lose

at d on

mat Cni

urity nfo

on

14

Aug

ust

202

0

Princ Self 202 202 Cre One Rec Ref

260 3.50 8.23 8.23 0 Yes Qish Ban Not

ipal- -ow 1/02 1/03 dit -off over er

119Lu Thai Textile Co. Ltd. Annual Report 2021

prote 0 ned /24 /31 asse repa % y on yet to

ang k

cted fund ts yme sche the

Ban

s nt of dule relat

k

prin ed

cipa ann

l oun

and cem

inter ent

ests (No

at .:

mat 202

urity 0-0

59)

disc

lose

d on

Cni

nfo

on

14

Aug

ust

202

0

Ref

er

to

One the

-off relat

repa ed

yme ann

nt of oun

Self Rec

Qish Princ Cre prin cem

-ow 202 202 over

ang Ban ipal- 200 dit cipa 3.60 17.8 17.8 Not ent

ned 1/03 1/06 y on 0 Yes

prote 0 asse l % 7 7 yet

Ban k (Nofund /11 /15 sche

cted ts and .:

k s dule

inter 202

ests 0-0

at 59)

mat disc

urity lose

d on

Cni

nfo

120Lu Thai Textile Co. Ltd. Annual Report 2021

on

14

Aug

ust

202

0

Ref

er

to

the

relat

ed

One ann

-off oun

repa cem

yme ent

nt of (No

Self Rec

Qish Princ Cre prin .:

-ow 202 202 over

ang Ban ipal- 500 dit cipa 3.70 45.4 45.4 Not 202

ned 1/03 1/06 y on 0 Yes

prote 0 asse l % 3 3 yet 0-0

Ban k fund /19 /22 sche

cted ts and 59)

k s dule

inter disc

ests lose

at d on

mat Cni

urity nfo

on

14

Aug

ust

202

0

One Ref

-off er

Zho repa to

ngta yme the

Self Rec

i Princ nt of relat

-ow 202 202 over

Secu Secu ipal- 190 Oth prin 2.50 Not ed

ned 1/07 1/08 3.92 3.92 y on 0 Yes

ritie rities prote 0 er cipa % yet ann

fund /02 /02 sche

s cted l oun

s dule

Co. and cem

Ltd. inter ent

ests (No

at .:

121Lu Thai Textile Co. Ltd. Annual Report 2021

mat 202

urity 0-0

59)

disc

lose

d on

Cni

nfo

on

14

Aug

ust

202

0

Ref

er

to

the

relat

ed

One ann

-off oun

repa cem

Zho yme ent

ngta nt of (No

Self Rec

i Princ prin .:

-ow 202 202 over

Secu Secu ipal- 110 Oth cipa 4.35 11.0 11.0 Not 202

ned 1/07 1/09 y on 0 Yes

ritie rities prote 0 er l % 1 1 yet 0-0

fund /02 /28 sche

s cted and 59)

s dule

Co. inter disc

Ltd. ests lose

at d on

mat Cni

urity nfo

on

14

Aug

ust

202

0

131108108

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

0872.332.33

Whether there is the case where the principal cannot be recovered at maturity or other case which may cause impairment for

entrusted asset management

122Lu Thai Textile Co. Ltd. Annual Report 2021

□ Applicable √ Not applicable

(2) Entrusted Loans

□ Applicable √ Not applicable

No such cases in the Reporting Period.

4. Other Major Contracts

□ Applicable √ Not applicable

No such cases in the Reporting Period.XVI Other Significant Events

□ Applicable √ Not applicable

No such cases in the Reporting Period.XVII Significant Events of Subsidiaries

□ Applicable √ Not applicable

123Lu Thai Textile Co. Ltd. Annual Report 2021

Part VII Share Changes and Shareholder Information

I Share Changes

1. Share Changes

Unit: share

Before Increase/decrease in the Reporting Period (+/-) After

Shares

Shares

as

as

dividen

dividen

Percent New d Percent

Shares d Other Subtotal Shares

age (%) issues convert age (%)

convert

ed from

ed from

capital

profit

reserves

11903824285-11831-9403325005

13.87%2.83%

I. Restricted shares 937 000 8700 700 237

1. Shares held by State

2. Shares held by

state-owned legal person

3. Shares held by other 24285 24198 25005

8065370.09%-863002.83%

000700237

domestic investors

Among which: Shares held

by domestic legal person

Shares held by domestic 24285 24198 25005

8065370.09%-863002.83%

000700237

natural person

4. Shares held by other 118232 -11823 -11823

13.78%

40024002400

foreign investors

Among which: Shares held 118232 -11823 -11823

13.78%

40024002400

by foreign corporations

Shares held by

foreign natural person

73909311824211824285733

86.13%97.17%

II. Unrestricted shares 385 673 673 6058

1. RMB ordinary shares 561275 65.41% 10273 10273 56128 63.61%

124Lu Thai Textile Co. Ltd. Annual Report 2021

0695342

2. Domestically listed 177818 118232 118232 29605

20.72%33.55%

3164004000716

foreign shares

3. Overseas listed foreign

shares

4. Other

858132100.00242852420888234100.00

III. Total shares -76027

322%0009731295%

Reasons for share changes:

√ Applicable □ Not applicable

* According to its 2021 restricted share incentive scheme the Company have firstly granted 24285000 restricted ordinary A shares

that were directly issued to the incentive staff on 7 June 2021.* Due to the fact that the Company had issued convertible A-share bonds on 9 April 2020 convertible bonds were converted to

3973 shares in the period from the beginning of 2021 to 31 December 2021.

* 80000 shares of equity incentive restricted stock were repurchased and canceled.* The Company's restricted B shares held by Tailun (Thailand) Textile Co. Ltd. with a volume of 118232400 shares were

amended and registered as tradable B shares on 12 July 2021.* Due to the retirement of directors and the resignation of executives the shares held by former directors or executives will be

unlocked and adjusted in accordance with relevant regulations on the executive share management.Approval of share changes:

√ Applicable □ Not applicable

* On 13 May 2021 the first Extraordinary General Meeting of this year was held in the Company. Deliberated and approved were

Proposal on the Company's '2021 Restricted Share Incentive Scheme (Draft)' and Its Abstracts Proposal on the Company's

'Implementation and Appraisal Regulations on 2021 Restricted Share Incentive Scheme' and Proposal on Submitting the

Authorization for the Board of Directors to Handle the Company's 2021 Restricted Share Incentive Scheme to the General Meeting of

Shareholders. Self-inspection Report on the Company's 2021 Restricted Share Incentive Plan Insiders and Incentive Subjects'

Trading of the Company's Shares was disclosed. On 17 May 2021 the Company convened the 24th Meeting of the 9th Board of

Directors and the 15th Meeting of the 9th Supervisory Committee. Deliberated and approved were Proposal on Adjusting the List of

the Name and Number of Incentive Staff of 2021 Restricted Share Incentive Scheme and Proposal on Granting Restrictive Stocks to

Incentive Staff. The Board of Directors believed that the granting conditions specified in the incentive scheme had been fulfilled and

agreed to designate 17 May 2021 as the granting date. 24285000 restricted shares were effectively granted to 750 incentive staff.* On 26 August 2021 the Proposal on Repurchase and Cancel Authorized but Unlocked Restricted Share of Part of the Incentive

Personnel was deliberated and approved at the 26th Meeting of the 9th Board of Directors of the Company as four of the incentive

personnel of the 2021 restricted share incentive scheme resigned due to personal reasons who no longer met the condition of being

incentive personnel. The restricted shares held by the four personnel with a volume of 80000 shares which were authorized but not

lifted from restricted sales shall be repurchased and canceled by the Company in accordance with the 2021 Restricted Share

Incentive Scheme and relevant provisions of laws and regulations. The aforesaid matters were deliberated and approved at the 2nd

Extraordinary General Meeting of the Company in 2021 that was held on 13 September 2021.* 118232400 shares of non-listed foreign share of the Company held by the shareholder and sponsor of foreign capital Tailun

(Thailand) Textile Co. Ltd. were amended and registered as restricted B shares at Shenzhen Branch of China Securities Depository

and Clearing Corporation Limited on 30 June 2020 whose restricted term was one year and expiration was on 29 June 2021. As

examined and approved by Shenzhen Stock Exchange the Company's restricted B shares held by Tailun (Thailand) Textile Co. Ltd.

125Lu Thai Textile Co. Ltd. Annual Report 2021

with a volume of 118232400 shares were amended and registered as tradable B shares at Shenzhen Branch of China Securities

Depository and Clearing Corporation Limited on 12 July 2021.Transfer of share ownership:

√ Applicable □ Not applicable

On 7 June 2021 the first-granted restricted shares in the Company's 2021 Restricted Share Incentive Scheme were registered as

audited and confirmed by Shenzhen Stock Exchange and the Shenzhen branch of China Securities Depository and Clearing

Corporation Limited. The Company completed the procedures of repurchasing and canceling 80000 shares of restricted share at the

Shenzhen Branch of China Securities Depository and Clearing Corporation Limited on 27 November 2021.Effects of share changes on the basic and diluted earnings per share equity per share attributable to the Company’s ordinary

shareholders and other financial indicators of the prior year and the prior accounting period respectively:

√ Applicable □ Not applicable

See relevant contents of "VI Key Financial Information" under "Part II Corporate Information and Key Financial Information".Other information that the Company considers necessary or is required by the securities regulator to be disclosed:

□ Applicable √ Not applicable

2. Changes in Restricted Shares

√ Applicable □ Not applicable

Unit: share

Restricted Restricted Restricted

Restricted Restricted

Name of the shares amount shares shares amount Restricted

shares relieved shares relieved

shareholders at the increased of at the reasons

of the period date

period-begin the period period-end

Restricted

Tailun (Thailand)

118232400 118232400 0 shares relieved 12 July 2021

Textile Co. Ltd. before the IPO

The Company

shall

implement the

Locked public provisions on

shares held by restricted sale

Liu Zibin 111217 111217

senior by directors

management supervisors and

senior

management

within tenure

Locked public The Company

Wang Fangshui 110065 110065 shares held by shall

senior implement the

126Lu Thai Textile Co. Ltd. Annual Report 2021

management provisions on

restricted sale

by directors

supervisors and

senior

management

The Company

shall

implement the

Locked public provisions on

shares held by restricted sale

Qin Guiling 94906 94906

senior by directors

management supervisors and

senior

management

within tenure

The Company

shall

implement the

provisions on

Locked public

restricted sale

shares held by

by directors

senior

supervisors and

management:

senior

69375 shares;

Zhang Hongmei 69375 300000 369375 management

restricted

within tenure

shares from

and lift the

equity

lock-up in

incentive:

batches

300000 shares

according to

the share

incentive

scheme

Locked public The Company

shares held by shall

Wang Jiabin 62775 300000 362775

senior implement the

management: provisions on

127Lu Thai Textile Co. Ltd. Annual Report 2021

62775 shares; restricted sale

restricted by directors

shares from supervisors and

equity senior

incentive: management

300000 shares within tenure

and lift the

lock-up in

batches

according to

the share

incentive

scheme

The Company

shall

implement the

provisions on

Locked public

restricted sale

shares held by

by directors

senior

supervisors and

management:

senior

62325 shares;

Yu Shouzheng 62325 200000 262325 management

restricted

within tenure

shares from

and lift the

equity

lock-up in

incentive:

batches

200000 shares

according to

the share

incentive

scheme

Locked public The Company

shares held by shall

senior implement the

management: provisions on

Zhang Zhanqi 60225 300000 360225

60225 shares; restricted sale

restricted by directors

shares from supervisors and

equity senior

128Lu Thai Textile Co. Ltd. Annual Report 2021

incentive: management

300000 shares within tenure

and lift the

lock-up in

batches

according to

the share

incentive

scheme

The Company

shall

implement the

provisions on

Locked public

restricted sale

shares held by

by directors

senior

supervisors and

management:

senior

58275 shares;

Zhang Keming 58275 200000 258275 management

restricted

within tenure

shares from

and lift the

equity

lock-up in

incentive:

batches

200000 shares

according to

the share

incentive

scheme

The Company

shall

implement the

Locked public provisions on

shares held by restricted sale

Zhang Shougang 54825 54825

senior by directors

management supervisors and

senior

management

within tenure

Zhang Jianxiang 39112 39112 Locked public The Company

129Lu Thai Textile Co. Ltd. Annual Report 2021

shares held by shall

senior implement the

management provisions on

restricted sale

by directors

supervisors and

senior

management

within tenure

The Company

shall

implement the

Locked public

provisions on

shares held by

Lyu Yongchen 25312 6300 19012 restricted sale

senior

by directors

management

supervisors and

senior

management

The Company

shall

implement the

provisions on

Locked public

restricted sale

shares held by

by directors

senior

supervisors and

management:

senior

Shang 22500 shares;

22500 200000 222500 management

Chenggang restricted

within tenure

shares from

and lift the

equity

lock-up in

incentive:

batches

200000 shares

according to

the share

incentive

scheme

Wang Locked public The Company

1687516875

Changzhao shares held by shall

130Lu Thai Textile Co. Ltd. Annual Report 2021

senior implement the

management provisions on

restricted sale

by directors

supervisors and

senior

management

The Company

shall

implement the

provisions on

Locked public

restricted sale

shares held by

by directors

senior

supervisors and

management:

senior

7500 shares;

Li Wenji 7500 200000 207500 management

restricted

within tenure

shares from

and lift the

equity

lock-up in

incentive:

batches

200000 shares

according to

the share

incentive

scheme

The Company

shall

implement the

Locked public provisions on

shares held by restricted sale

Liu Zilong 7500 7500

senior by directors

management supervisors and

senior

management

within tenure

Locked public The Company

Dong Shibing 3750 3750 shares held by shall

senior implement the

131Lu Thai Textile Co. Ltd. Annual Report 2021

management provisions on

restricted sale

by directors

supervisors and

senior

management

within tenure

Lift the lock-up

Restricted in batches

shares from according to

Du Lixin 200000 200000

equity the share

incentive incentive

scheme

Lift the lock-up

Restricted in batches

shares from according to

Zhang Wei 200000 200000

equity the share

incentive incentive

scheme

Lift the lock-up

Restricted in batches

shares from according to

Fu Guannan 200000 200000

equity the share

incentive incentive

scheme

Lift the lock-up

Restricted in batches

shares from according to

Guo Heng 200000 200000

equity the share

incentive incentive

scheme

Other subjects of Lift the lock-up

first-granted Restricted in batches

incentive of shares from according to

2170500021705000

restricted share equity the share

incentive scheme incentive incentive

in 2021 scheme

132Lu Thai Textile Co. Ltd. Annual Report 2021

Total 119038937 24205000 118238700 25005237 -- --

II. Issuance and Listing of Securities

1. Securities (Exclusive of Preferred Shares) Issued in the Reporting Period

√ Applicable □ Not applicable

Name of

Stock and Approved Terminatio

issue price Issue Listing Disclosure Disclosure

derivative Issue date amount for n date for

(interest) amount date index date

securities listing trading

thereof

Stock

Refer to

the

announcem

ent (No.:

2021-040)

7 June 7 June 4 June

LTTC 3.31 24285000 24285000 disclosed

202120212021

on

http://www.cninfo.co

m.cn/ on 4

June 2021.Convertible corporate bonds convertible corporate bonds separately traded and corporate bonds

Other derivative securities

Notes:

The 2021 Restricted Share Incentive Scheme and relevant proposals were deliberated and approved through the 22nd Meeting of the

9th Supervisory Committee the 13th Meeting of the 9th Board of Supervisors and the 1st Extraordinary General Meeting in 2021.

On 7 June 2021 as audited and confirmed by Shenzhen Stock Exchange and the Shenzhen Branch of China Securities Depository

and Clearing Corporation Limited the registration of granting 24285000 shares of restricted share to 750 incentive personnel was

completed. For details see relevant announcement disclosed on Securities Times Shanghai Securities News China Securities

Journal Ta Kung Pao and the cninfo website (www.cninfo.com.cn).

2. Changes to Total Shares Shareholder Structure and Asset and Liability Structures

√ Applicable □ Not applicable

At the beginning of 2021 the Company possessed 858132322 shares in total (561894181 A shares and 296238141 B shares

inclusive). 24285000 restricted ordinary A shares issued directly to the incentive personnel were firstly granted and completed by

the Company on 7 June 2021. As convertible bonds of Lu Thai were converted to 3973 A shares cumulatively from 1 January 2021

to 31 December 2021 the repurchasing and canceling 80000 shares of equity incentive restricted stock was completed on 27

November 2021. By 31 December 2021 the Company possessed 882341295 shares in total (586103154 A shares and 296238141

133Lu Thai Textile Co. Ltd. Annual Report 2021

B shares inclusive) which had no significant impact on the Company's assets and liability structure.

3. Existing Staff-Held Shares

□ Applicable √ Not applicable

III Shareholders and Actual Controller

1. Total Number of Shareholders and Their Shareholdings

Unit: share

Number of

preferred

Number of shareholders

Number of

ordinary with resumed

preferred

Number of shareholders at voting rights at

shareholders

ordinary 57722 the month-end 55183 0 the month-end 0

with resumed

shareholders prior to the prior to the

voting rights (if

disclosure of disclosure of

any) (see note 8)

this Report this Report (if

any) (see note

8)

5% or greater shareholders or top 10 shareholders

Increas Shares in pledge marked or

Total

e/decre frozen

Shareh shares Restrict Unrestri

ase in

Name of Nature of olding held at ed cted

the

shareholder shareholder percent the shares shares

Reporti Status Shares

age period- held held

ng

end

Period

Zibo Lucheng

Domestic

Textile 14035 140353

non-state-owne 15.91% 0

Investment Co. 3583 583

d legal person

Ltd.Tailun

Foreign legal 11823 118232

(Thailand) 13.40% 0

person 2400 400

Textile Co. Ltd.Central Huijin

Assets State-owned 19884 -43120 19884

2.25%

Management legal person 100 0 100

Co. Ltd.National Social Domestic 1.11% 98100 36000 98100

134Lu Thai Textile Co. Ltd. Annual Report 2021

Security Fund non-state-owne 51 0 51

Portfolio 413 d legal person

Zhong Ou China

Securities Asset 52359 52359

Other 0.59% 0

Management 00 00

Plan

Dacheng China

Securities Asset 52359 52359

Other 0.59% 0

Management 00 00

Plan

Harvest China

Securities Asset 52359 52359

Other 0.59% 0

Management 00 00

Plan

GF China

Securities Asset 52359 52359

Other 0.59% 0

Management 00 00

Plan

Yinhua China

Securities Asset 52359 52359

Other 0.59% 0

Management 00 00

Plan

Domestic 51422 51422 51422

Liao Cuimeng 0.58%

natural person 00 00 00

Strategic investor or general legal

person becoming a top-10 ordinary

Naught

shareholder due to rights issue (if

any) (see note 3)

Zibo Lucheng Textile Investment Co. Ltd. is the largest shareholder of the Company and

Related or acting-in-concert parties the actual controller. All of other shareholders are people holding public A share or public

among the shareholders above B share and the Company is not able to confirm whether there is associated relationship

or concerted action among other shareholders.Above shareholders involved in

Entrusting/being entrusted voting Naught

rights and giving up voting rights

Special account for share

repurchases (if any) among the top Naught

10 shareholders (see note 10)

Top 10 unrestricted shareholders

Name of shareholder Unrestricted shares held at the period-end Shares by type

135Lu Thai Textile Co. Ltd. Annual Report 2021

Type Shares

Zibo Lucheng Textile Investment RMB ordinary

140353583140353583

Co. Ltd. share

Domestically

Tailun (Thailand) Textile Co. Ltd. 118232400 listed foreign 118232400

shares

Central Huijin Assets Management RMB ordinary

1988410019884100

Co. Ltd.share

National Social Security Fund RMB ordinary

98100519810051

Portfolio 413

share

Zhong Ou China Securities Asset RMB ordinary

52359005235900

Management Plan

share

Dacheng China Securities Asset RMB ordinary

52359005235900

Management Plan

share

Harvest China Securities Asset RMB ordinary

52359005235900

Management Plan

share

GF China Securities Asset RMB ordinary

52359005235900

Management Plan

share

Yinhua China Securities Asset RMB ordinary

52359005235900

Management Plan

share

RMB ordinary

Liao Cuimeng 5142200 5142200

share

Related or acting-in-concert parties

Zibo Lucheng Textile Investment Co. Ltd. is the largest shareholder of the Company and

among top 10 unrestricted public

the actual controller. All of other shareholders are people holding public A share or public

shareholders as well as between top

B share and the Company is not able to confirm whether there is associated relationship

10 unrestricted public shareholders

or concerted action among other shareholders.and top 10 shareholders

Top 10 ordinary shareholders

involved in securities margin trading N/A

(if any) (see note 4)

Indicate by tick mark whether any of the top 10 ordinary shareholders or the top 10 unrestricted ordinary shareholders of the

Company conducted any promissory repo during the Reporting Period.□ Yes √ No

No such cases in the Reporting Period.

2. Controlling Shareholder

Nature of the controlling shareholder: Controlled by a natural person

136Lu Thai Textile Co. Ltd. Annual Report 2021

Type of the controlling shareholder: legal person

Legal

Name of controlling Date of Unified social credit

representative/pers Principal activity

shareholder establishment code

on in charge

Investment on textile

electricity and chemical;

Zibo Lucheng Textile

Liu Deming 25 September 1998 91370303164200391J purchase process and

Investment Co. Ltd.sale of cotton; retail

service etc.Particulars about

shareholding of controlling

shareholders controlling

N/A

and holding shares of other

listed companies during the

Reporting Period

Change of the controlling shareholder in the Reporting Period:

□ Applicable √ Not applicable

No such cases in the Reporting Period.

3. Actual Controller and Its Acting-in-Concert Parties

Nature of the actual controller: Domestic natural person

Type of the actual controller: natural person

Relations with the Whether gain the right of residence in other

Name of the actual controller Nationality

actual controller countries or regions or not

Liu Zibin In person China No

Concerted action

(including

Liu Deming agreement China No

relatives and same

control)

Liu Zibin is the Chairman of the Board and President of Lu Thai Textile Co. Ltd. Liu

Professions and titles Deming is the Chairman of the Board and GM of Zibo Lucheng Textile Investment Co.Ltd.Particulars about listed companies

with shares ever held by the actual N/A

controller over the past 10 years

Change of the actual controller during the Reporting Period:

□ Applicable √ Not applicable

No such cases in the Reporting Period.Ownership and control relations between the actual controller and the Company:

137Lu Thai Textile Co. Ltd. Annual Report 2021

Indicate by tick mark whether the actual controller controls the Company via trust or other ways of asset management.□ Applicable √ Not applicable

4. Number of Accumulative Pledged Shares held by the Company’s Controlling Shareholder or the Largest

Shareholder as well as Its Acting-in-Concert Parties Accounts for 80% of all shares of the Company held

by Them

□ Applicable √ Not applicable

5. Other 10% or Greater Corporate Shareholders

□ Applicable √ Not applicable

6. Limitations on Shareholding Decrease by the Company’s Controlling Shareholder Actual Controller

Reorganizer and Other Commitment Makers

□ Applicable √ Not applicable

IV Specific Implementation of Share Repurchase during the Reporting Period

Progress on any share repurchase

□ Applicable √ Not applicable

Progress on reducing the repurchased shares by means of centralized bidding

□ Applicable √ Not applicable

138Lu Thai Textile Co. Ltd. Annual Report 2021

Part VIII Preference Shares

□ Applicable √ Not applicable

No preference shares in the Reporting Period.

139Lu Thai Textile Co. Ltd. Annual Report 2021

Part IX Bonds

√ Applicable □ Not applicable

I Enterprise Bonds

□ Applicable √ Not applicable

No enterprise bonds in the Reporting Period.II Corporate Bonds

□ Applicable √ Not applicable

No corporate bonds in the Reporting Period.III Debt Financing Instruments of Non-financial Enterprises

□ Applicable √ Not applicable

No such cases in the Reporting Period.IV Convertible Corporate Bonds

√ Applicable □ Not applicable

1. Previous Adjustments of Conversion Price

On 9 April 2020 the Company publicly issued 14 million A-share convertible corporate bonds (short name: Lu Thai Convertible Bonds

bond code: 127016) on Shenzhen Stock Exchange with an issue price of RMB100 per share and a share conversion price of RMB9.01per share. The bonds were listed on Shenzhen Stock Exchange on 13 May 2020. In accordance with related terms of the “Prospectus forthe Public Offering of A-Share Convertible Corporate Bonds of Lu Thai Textile Co. Ltd.” as well as the regulations of China

Securities Regulatory Commission on the public offering of convertible corporate bonds if the Company has any distribution of share

dividends conversion into share capital additional issue of new shares (excluding share capital increase due to conversion into sharesfrom the convertible corporate bonds issued this time) share allotment and distribution of cash dividends after the issue of “Lu ThaiConvertible Bonds” adjustment shall be made to the share conversion price.On 21 May 2020 the Company held the Annual General Meeting of 2019 where the “Proposal on the Company’s Profit DistributionPlan for 2019” was considered and approved. According to the Proposal a cash amount of RMB 1.00 (inclusive of tax) would be

distributed to every 10 shares with the 858121541 shares of share capital on 31 December 2019 as the base. The share registration

date for the Company’s equity distribution of 2019 was 8 July 2020 and the ex-rights and ex-dividend date was 9 July 2020. Therefore

the share conversion price of “Lu Thai Convertible Bonds” was adjusted from RMB9.01 per share to RMB8.91 per share and the new

140Lu Thai Textile Co. Ltd. Annual Report 2021

price after the adjustment took effect on and as of 9 July 2020 (the ex-rights and ex-dividend date).On 3 June 2021 the Company completed the registration of first-granted restricted stocks of restricted share incentive scheme at the

Shenzhen Branch of China Securities Depository and Clearing Corporation Limited (China Clear). 7 June 2021 is designated as the

listing date of first-granted restricted stocks of the Company in 2021. The Company grants 750 subjects of incentive 24285000

restricted shares at a price of RMB3.31 per share accounting for 2.83% of total share capital of the Company. The source of the stock

is RMB A-share ordinary shares issued by the Company to subjects of incentive. Therefore the conversion price of Lu Thai

Convertible Bond will be adjusted from RMB8.91 per share to RMB8.76 per share with the adjusted conversion price coming into

force from 7 June 2021.The 2020 annual general meeting convened on 20 April 2021 deliberated on and adopted the Company's Proposal on Profit

Appropriation Plan in 2020 which distributes cash of RMB0.50 per 10 shares (including tax) with total share capital at the record date

of this distribution scheme as base. The record date of the Company's interest distribution in 2020 is set on 17 June 2021. The ex-date is

set on 18 June 2021. Therefore the conversion price of Lu Thai Convertible Bond will be adjusted from RMB8.76 per share to

RMB8.71 per share with the adjusted conversion price coming into force from 18 June 2021 (the ex-date).

2. Accumulative Conversion

√ Applicable □ Not applicable

Converted

shares as %

of total

Unconverte

Accumulati Accumulati shares Unconverte

Total d amount

Abbreviati Total ve amount ve shares issued by d amount

Start date circulation as % of

on amount converted converted the (RMB)

(piece) total

(RMB) (share) Company

amount

before the

start date of

conversion

Lu Thai

15 October 1400000 1399868

Convertibl 14000000 131400.00 14754 0.00% 99.99% 000.00 600.00

2020

e Bonds

3. Top 10 Convertible Bond Holders

Unit: share

Number of Amount of As % of

convertible bonds convertible bonds convertible bonds

No. Name of holders Nature of holders

held at the held at the held at the

period-end (share) period-end (RMB) period-end

167555167555100.004.83%

ICBC Credit Other

141Lu Thai Textile Co. Ltd. Annual Report 2021

Suisse Tianxiang

Hybrid Pension

Products-Industria

l and Commercial

Bank of China

National Social Domestic

2 Security Fund non-state-owned 665778 66577800.00 4.76%

Portfolio 1005 legal person

Industrial and

Commercial Bank

of China－ China

3 Universal Other 647295 64729500.00 4.62%

Convertible Bond

Securities

Investment Fund

Guosen Securities State-owned legal

456852856852800.004.06%

Co. Ltd. person

National Social Domestic

5 Security Fund non-state-owned 493247 49324700.00 3.52%

Portfolio 1002 legal person

Shanghai Pudong

Development

Bank － E Fund

6 Other 492427 49242700.00 3.52%

Yuxiang Return

Bond Securities

Investment Fund

ICBC Credit

Suisse Ruixi Fixed

7 Benefit Pension Other 456604 45660400.00 3.26%

Product-Bank of

China

Fullgoal Fuyi

Progressive Fixed

Benefit Pension

8 Other 444112 44411200.00 3.17%

Product- Industrial

and Commercial

Bank of China

Agricultural Bank

of China-Essence

9 Other 439291 43929100.00 3.14%

Target Income

Bond Securities

142Lu Thai Textile Co. Ltd. Annual Report 2021

Investment Fund

Genertec

Investment State-owned legal

1043464543464500.003.10%

Management Co. person

Ltd.

4. Significant Changes in Profitability Assets Condition and Credit Status of Guarantors

□ Applicable √ Not applicable

5. The Company’s Liabilities Credit Changes at the Period-end and Cash Arrangements to Repay Debts in

Future Years

For the relevant indicators please refer to the Part IX Bonds- VIII The Major Accounting Data and the Financial Indicators of the

Recent 2 Years of the Company up the Period-end.The credit rating of the Company's convertible bonds for the Reporting Period is AA+ which has not changed compared with that of

the same period of last year.V Losses of Scope of Consolidated Financial Statements during the Reporting Period

Exceeding 10% of Net Assets up the Period-end of Last Year

□ Applicable √ Not applicable

VI Matured Interest-bearing Debt excluding Bonds up the Period-end

□ Applicable √ Not applicable

VII Whether there was any Violation of Rules and Regulations during the Reporting Period

□ Yes √ No

VIII The Major Accounting Data and the Financial Indicators of the Recent 2 Years of the

Company up the Period-end

Unit: RMB’0000

Item Period-end The end of last year Increase/decrease

Current ratio 2.62 2.68 -2.24%

Asset-liability ratio 35.57% 33.29% 2.28%

Quick ratio 1.49 1.62 -8.02%

Reporting Period Same period of last year YoY increase/decrease

143Lu Thai Textile Co. Ltd. Annual Report 2021

Net profit after deducting

19049.262003.91850.60%

non-recurring profit or loss

Debt/EBITDA ratio 28.94% 22.44% 6.50%

Interest cover (times) 4.49 1.84 144.02%

Cash-to-interest cover (times) 4.03 7.37 -45.32%

EBITDA interest coverage

9.397.8120.23%

ratio

Rate of redemption 100.00% 100.00% 0.00%

Interest coverage 100.00% 100.00% 0.00%

144Lu Thai Textile Co. Ltd. Annual Report 2021

Part X Financial Statements

I Independent Auditor’s Report

Type of the independent auditor’s opinion Unmodified unqualified opinion

Date of signing this report 27 April 2022

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

Name of the certified public accountants He Feng Cui Xiaoli

Text of the Independent Auditor’s Report

To the shareholders of Lu Thai Textile Co. Ltd:

I Opinion

We have audited the financial statements of Lu Thai Textile Co. Ltd. (hereinafter referred to as the “Company”) which comprise the

consolidated and parent company balance sheets as of 31 December 2021 the consolidated and parent company statements of

income cash flows and changes in owners’ equity for the year then ended as well as the notes to the financial statements.In our opinion the financial statements referred to above present fairly in all material respects the consolidated and parent company

financial position of the Company at 31 December 2021 and the consolidated and parent company operating results and cash flows

for the year then ended in conformity with the Chinese Accounting Standards (CAS).II Basis for Opinion

We conducted our audits in accordance with the Audit Standards for Chinese Registered Accountants. Our responsibilities under

those standards are further described in the Auditor’s Responsibilities for Audit of Financial Statements section of our report. We are

independent of the Company in accordance with the China Code of Ethics for Certified Public Accountants and we have fulfilled our

other ethical responsibilities in accordance with the said Code of Ethics. We believe that the audit evidence we have obtained is

sufficient and appropriate to provide a basis for our opinion.III Key Audit Matters

Key audit matters are those matters that in our professional judgment were of most significance in our audit of the financial

statements of the current period. These matters were addressed in the context of our audit of the financial statements as a whole and

in forming our opinion thereon and we do not provide a separate opinion on these matters.(I) Recognition of revenue

For details please refer to the Note III-26 and the Note V-44 of the financial report.

1. Item description

The businesses of Lu Thai Textile Co. Ltd. mainly are production and sales of yarn-dyed fabrics and shirts. The operation revenue of

the Company in 2021 was RMB 5238262300 of which export income accounted for over 50%. For the income from domestic

sales the amount of product sales income is recognized when the products are delivered to and confirmed by the purchaser according

to the contract. The income is recognized when the purchaser obtains control of the product. For the income from export sales the

amount of sales income is recognized when products are declared and depart from port according to the contract and the bill of

lading is received. The income is recognized when the purchaser obtains control of the product.

145Lu Thai Textile Co. Ltd. Annual Report 2021

Since income is one of the key performance indicators of Lu Thai Textile Co. Ltd. there is an inherent risk that the management

manipulates income to achieve specific goals or expectations therefore we identify income recognition as a key audit item.

2. Audit response

The audit procedures for revenue recognition mainly include:

(1) Understand and evaluate the design effectiveness of internal control related to revenue recognition and test the effectiveness of

operation;

(2) Through interviewing the management and reviewing the relevant contract terms understand and evaluate whether the income

confirmation accounting policy meets the requirements of the enterprise accounting standards;

(3) Perform analytical procedures on revenue and costs to analyze the rationality of fluctuations in sales volume unit price and gross

profit in each month current year and previous year of the current period;

(4) Check the supporting evidence such as sales contract product delivery order invoice customs declaration shipping order and

signing receipt;

(5) Select samples to verify the balance and transaction amount;

(6) Select samples and conduct spot checks on relevant information such as export sales revenue export tax rebate declaration forms

and China electronic port export data;

(7) Perform a cut-off test on the revenue recognized before and after the balance sheet date and check the product delivery slip

invoice customs declaration shipping bill signing receipt etc. to assess whether the revenue is recognized within the appropriate

period.(II) Inventory falling price reserves

For details please refer to the Note III-12 and the Note V-8 of the financial report.

1. Item description

As of 31 December 2021 the inventory balance of Lu Thai Textile Co. Ltd. was RMB2509578300 and the inventory depreciation

reserve was RMB164231500. The management withdrew the inventory falling price reserves with significant judgments and

estimates and therefore we identify inventory falling price reserves as a key audit item.

2. Audit response

The audit procedures for inventory falling price reserves mainly include:

(1) Understand and evaluate the design effectiveness of the internal control related to the provision of inventory decline price and

test the effectiveness of operation;

(2) Understand and evaluate the appropriateness of the company's inventory depreciation reserve provision policy;

(3) Monitor the inventory and pay attention to the status of the inventory check whether the defective and inventory with long aging

have been identified;

(4) Obtain the inventory age table and conduct an analytical review of the long-age inventory status and turnover;

(5) Check the changes in the inventory depreciation reserves accrued in previous years and evaluate the rationality of the changes in

inventory depreciation reserves;

(6) Obtain the inventory falling price reserves calculation sheet; recheck and evaluate the rationality of major estimations made by

the management during the determination of net realizable value; conduct the recalculation check the selling price after the period

146Lu Thai Textile Co. Ltd. Annual Report 2021

and analyze the rationality of the predicted selling price.(III) Assessment of fair value of financial assets measured at fair value and changes included in current profit or loss

Please refer to Notes to Financial Statements (Note III 10 and Note V 2 13 and 52) for details about relevant information disclosure.

1. Event Description

Up to 31 December 2021 the balance of financial asset measured based on the fair value whose variations were included the current

profit and loss of Lu Thai Textiles was RMB191.779 million of which the fair value of financial asset classified into the tier-2 input

value by adopting the observable input value was RMB1.727 million and the fair value of financial asset classified into the tier-3 input

value by adopting the non-observable input value was RMB190.052 million. Considering that the financial asset’s fair value variations

had significant impact on the profit and loss of Lu Thai Textiles in 2021 and Lu Thai Textiles adopted the valuation technique to

determine its fair value (usually the valuation technique involves various assumptions and estimations based on subjective judgment

and huge difference in the estimated fair value of financial instrument may be caused by adopting different valuation techniques or

assumptions) we recognized the event as the key audit event.

2. Audit response

Our audit procedures geared to the evaluation of the financial instrument’s fair value mainly include:

(1) Study and evaluate the effectiveness of the designed internal control for the valuation of financial instruments and test the

operational effectiveness;

(2) Assess the professional quality competence and objectiveness of the independent appraiser employed by the Company’s

management; evaluate the rationality of various assumptions applied by the independent appraiser in the evaluation report and the

appropriateness of the financial instrument valuation models;

(3) Assess the rationality and appropriateness of the observable key input value applied during the valuation of the tier-2 fair value;

(4) Recheck the rationality appropriateness and calculation accuracy of the key input value during the fair value assessment for the

tier-3 financial instrument measured based the fair value and involving the management’s major judgment.IV Other Information

The Company’s management is responsible for the other information. The other information comprises all of the information included

in the Company’s 2021 Annual Report other than the financial statements and our auditor’s report thereon.Our opinion on the financial statements does not cover the other information and we do not express any form of assurance conclusion

thereon.In connection with our audit of the financial statements our responsibility is to read the other information and in doing so consider

whether the other information is materially inconsistent with the financial statements or our knowledge obtained in the audit or

otherwise appears to be materially misstated.If based on the work we have performed we conclude that there is a material misstatement of this other information we are required to

report that fact. We have nothing to report in this regard.V Responsibilities of Management and Those Charged with Governance for Financial Statements

The Company’s management (hereinafter referred to as the “Management”) is responsible for the preparation of the financial

statements that give a fair view in accordance with CAS and for designing implementing and maintaining such internal control as the

management determines is necessary to enable the preparation of financial statements that are free from material misstatement whether

due to fraud or error.

147Lu Thai Textile Co. Ltd. Annual Report 2021

In preparing the financial statements the management is responsible for assessing the Company’s ability to continue as a going concern

disclosing as applicable matters related to going concern and using the going concern basis of accounting unless the management

either intends to liquidate the Company or to cease operations or have no realistic alternative but to do so.Those charged with governance are responsible for overseeing the Company’s financial reporting process.VI Auditor’s Responsibilities for Audit of Financial Statements

Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement

whether due to fraud or error and to issue an auditor’s report that includes our opinion. Reasonable assurance is a high level of

assurance but is not a guarantee that an audit conducted in accordance with CAS will always detect a material misstatement when it

exists. Misstatements can arise from fraud or error and are considered material if individually or in the aggregate they could

reasonably be expected to influence the economic decisions of users taken on the basis of these financial statements.As part of an audit in accordance with CAS we exercise professional judgment and maintain professional skepticism throughout the

audit. We also:

(1) Identify and assess the risks of material misstatement of the financial statements whether due to fraud or error design and perform

audit procedures responsive to those risks and obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion.The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error as fraud may involve

collusion forgery intentional omissions misrepresentations or the override of internal control.

(2) Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the

circumstances.

(3) Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures

made by the management.

(4) Conclude on the appropriateness of the management’s use of the going concern basis of accounting and based on the audit evidence

obtained whether a material uncertainty exists related to events or conditions that may cast significant doubt on the Company’s ability

to continue as a going concern. If we conclude that a material uncertainty exists we are required by CAS to draw users’ attention in our

auditor’s report to the related disclosures in the financial statements or if such disclosures are inadequate we should modify our

opinion. Our conclusions are based on the audit evidence obtained up to the date of our auditor’s report. However future events or

conditions may cause the Company to cease to continue as a going concern.

(5) Evaluate the overall presentation structure and content of the financial statements and whether the financial statements represent

the underlying transactions and events in a manner that achieves fair presentation.

(6) Obtain sufficient appropriate audit evidence regarding the financial information of the entities or business activities within the

Company to express an opinion on the financial statements. We are responsible for the direction supervision and performance of the

Company audit. We remain solely responsible for our audit opinion.We communicate with those charged with governance of the Company regarding the planned scope and timing of the audit and

significant audit findings including any noteworthy deficiencies in internal control that we identify during our audit.We also provide those charged with governance with a statement that we have complied with relevant ethical requirements regarding

independence and communicate with them all relationships and other matters that may reasonably be thought to bear on our

independence and where applicable related safeguards (if applicable).From the matters communicated with those charged with governance we determine those matters that were of most significance in the

audit of the financial statements of the current period and are therefore the key audit matters. We describe these matters in our auditor’s

report unless law or regulation precludes public disclosure about the matter or when in extremely rare circumstances we determine

148Lu Thai Textile Co. Ltd. Annual Report 2021

that a matter should not be communicated in our report because the adverse consequences of doing so would reasonably be expected to

outweigh the public interest benefits of such communication.Grant Thornton China Chinese CPA

(Special General Partnership) (Engagement Partner):

Chinese CPA:

Beijing · China 27 April 2022

II Financial Statements

Currency unit for the financial statements and the notes thereto: RMB

1. Consolidated Balance Sheet

Prepared by Lu Thai Textile Co. Ltd.

31 December 2021

Unit: RMB

Item 31 December 2021 31 December 2020

Current assets:

Monetary assets 1999712889.35 1400478034.81

Held-for-trading financial assets 1727000.00 268456216.98

Notes receivable 227740247.89 182994110.86

Accounts receivable 647277198.51 522425219.87

Accounts receivable financing 34663071.88 55150926.34

Prepayments 54545954.20 19611775.28

Other receivables 74191613.22 105710818.69

Including: Interest receivable

Dividends receivable 47025975.44 75488652.49

Inventories 2345346794.28 1988968681.64

Contract assets

149Lu Thai Textile Co. Ltd. Annual Report 2021

Held-for-sale assets

Current portion of non-current

45750018.30

assets

Other current assets 55992522.81 433432258.63

Total current assets 5441197292.14 5022978061.40

Non-current assets:

Long-term receivables 41053183.15

Long-term equity investment 169443106.66 138079577.25

Other equity instrument investment

Other non-current financial assets 190052000.00 156915620.25

Investment property 21362302.03 22263668.85

Fixed assets 5561601374.44 5661592991.66

Construction in progress 237579082.99 356273197.49

Right-of-use assets 257019286.15

Intangible assets 363130978.14 373543480.84

Development costs

Goodwill 20563803.29 20563803.29

Long-term deferred expenses 672601.04 118340494.60

Deferred income tax assets 138516136.50 122865841.69

Other non-current assets 586083308.25 95434040.18

Total non-current assets 7546023979.49 7106925899.25

Total assets 12987221271.63 12129903960.65

Current liabilities:

Short-term borrowings 1011034138.32 930871008.19

Held-for-trading financial liabilities

Derivative financial liabilities

Notes payable

Accounts payable 335401371.30 243262473.69

Advances from customers

Contract liabilities 204967348.96 141339705.62

Payroll payable 272014296.09 265648198.38

Taxes payable 29457702.72 36468978.77

Other payables 97200565.31 17587470.79

150Lu Thai Textile Co. Ltd. Annual Report 2021

Including: Interest payable

Dividends payable 441113.64 441113.64

Current portion of non-current

8877404.5243149400.13

liabilities

Other current liabilities 120434721.81 192574674.68

Total current liabilities 2079387549.03 1870901910.25

Non-current liabilities:

Long-term borrowings 684962473.24 495520342.78

Bonds payable 1395480652.71 1350171526.97

Lease liabilities 121357658.41

Long-term payables

Long-term payroll payable 57384062.39 62137656.00

Provisions

Deferred income 188958133.78 173862983.31

Deferred income tax liabilities 92571310.14 85633161.44

Other non-current liabilities

Total non-current liabilities 2540714290.67 2167325670.50

Total liabilities 4620101839.70 4038227580.75

Owners’ equity:

Share capital 882341295.00 858132322.00

Other equity instruments 71384656.84 71386451.81

Capital reserves 340587387.65 255912488.01

Less: Treasury stock 78908300.00

Other comprehensive income -36423748.37 1308922.89

Specific reserve

Surplus reserves 1215124336.54 1154017457.79

General reserve

Retained earnings 5589201772.37 5346819948.22

Total equity attributable to owners of

7983307400.037687577590.72

the Company as the parent

Non-controlling interests 383812031.90 404098789.18

Total owners’ equity 8367119431.93 8091676379.90

Total liabilities and owners’ equity 12987221271.63 12129903960.65

151Lu Thai Textile Co. Ltd. Annual Report 2021

Legal representative: Liu Zibin Chief Accountant: Zhang Hongmei

Financial Manager: Zhang Keming

2. Balance Sheet of the Company as the Parent

Unit: RMB

Item 31 December 2021 31 December 2020

Current assets:

Monetary assets 977713296.25 729437231.33

Held-for-trading financial assets 1286000.00 163636075.34

Derivative financial assets

Notes receivable 132028322.80 108863689.79

Accounts receivable 425711738.27 326166935.10

Accounts receivable financing 29361263.86 48764088.05

Prepayments 31580697.18 13059806.74

Other receivables 2060180025.87 1500882682.19

Including: Interest receivable

Dividends receivable 94525975.44 75488652.49

Inventories 1230487585.69 1097438610.46

Contract assets

Available-for-sale assets

Current portion of non-current

45750018.30

assets

Other current assets 205568.38 247860882.02

Total current assets 4888554498.30 4281860019.32

Non-current assets:

Long-term receivables 41053183.15

Long-term equity investments 2818047993.16 2555150859.13

Investments in other equity

instruments

Other non-current financial assets 178052000.00 144915620.25

Investment property 65888260.77 29734239.22

Fixed assets 2305059429.29 2471686117.72

Construction in progress 12268416.12 48694822.74

152Lu Thai Textile Co. Ltd. Annual Report 2021

Right-of-use assets 116279075.24

Intangible assets 209970392.83 225128308.75

Development costs

Goodwill

Long-term deferred expenses 672601.04 1406347.76

Deferred income tax assets 56003944.38 65729304.26

Other non-current assets 366112002.79 7936745.28

Total non-current assets 6128354115.62 5591435548.26

Total assets 11016908613.92 9873295567.58

Current liabilities:

Short-term borrowings 615181318.98 332466931.13

Held-for-trading financial liabilities

Derivative financial liabilities

Notes payable

Accounts payable 146714973.77 132231596.74

Advances from customers

Contract liabilities 58280121.24 56841289.66

Payroll payable 190277420.32 202694515.93

Taxes payable 15288956.94 21896035.49

Other payables 92914225.42 79668657.80

Including: Interest payable

Dividends payable 441113.64 441113.64

Current portion of non-current

8605336.674000000.00

liabilities

Other current liabilities 64202247.99 166257466.30

Total current liabilities 1191464601.33 996056493.05

Non-current liabilities:

Long-term borrowings 684962473.24 495520342.78

Bonds payable 1395480652.71 1350171526.97

Lease liabilities 118780465.67

Long-term payables

Long-term payroll payable 57384062.39 62137656.00

Provisions

153Lu Thai Textile Co. Ltd. Annual Report 2021

Deferred income 125360026.35 131546549.87

Deferred income tax liabilities 67488141.18 58927115.71

Other non-current liabilities

Total non-current liabilities 2449455821.54 2098303191.33

Total liabilities 3640920422.87 3094359684.38

Owners’ equity:

Share capital 882341295.00 858132322.00

Other equity instruments 71384656.84 71386451.81

Capital reserves 401967421.89 317292522.25

Less: Treasury stock 78908300.00

Other comprehensive income -293580.24 -424313.33

Specific reserve

Surplus reserves 1212015596.90 1150908718.15

Retained earnings 4887481100.66 4381640182.32

Total owners’ equity 7375988191.05 6778935883.20

Total liabilities and owners’ equity 11016908613.92 9873295567.58

3. Consolidated Income Statement

Unit: RMB

Item 2021 2020

1. Revenue 5238262348.85 4751222464.14

Including: Operating revenue 5238262348.85 4751222464.14

2. Costs and expenses 4965632056.69 4631408764.38

Including: Cost of sales 4152981075.85 3737984083.45

Taxes and surcharges 59485640.58 66238984.28

Selling expense 119883494.68 125717288.31

Administrative expense 335380025.54 360656722.39

Development cost 252912911.63 231265031.12

Finance costs 44988908.41 109546654.83

Including: Interest expense 65526817.38 67914115.97

Interest income 40686077.22 25174851.32

Add: Other income 58686029.71 59711274.11

Return on investment (“-” for loss) 50449943.70 145968403.88

Including: Share of profit or loss of joint ventures and -10755175.91 -5146737.73

154Lu Thai Textile Co. Ltd. Annual Report 2021

associates

Income from the derecognition of financial assets at

amortized cost (“-” for loss)

Exchange gain (“-” for loss)

Net gain on exposure hedges (“-” for loss)

Gain on changes in fair value (“-” for loss) 16415304.41 -107002594.56

Credit impairment loss (“-” for loss) 1590092.00 -21892753.70

Asset impairment loss (“-” for loss) -85623858.26 -113460308.96

Asset disposal income (“-” for loss) 57175147.62 -317803.17

3. Operating profit (“-” for loss) 371322951.34 82819917.36

Add: Non-operating income 5417119.07 6466024.36

Less: Non-operating expense 13424054.88 4468911.08

4. Profit before tax (“-” for loss) 363316015.53 84817030.64

Less: Income tax expense 35993079.51 -4273027.75

5. Net profit (“-” for net loss) 327322936.02 89090058.39

5.1 By operating continuity

5.1.1 Net profit from continuing operations (“-” for net

327322936.0289090058.39

loss)

5.1.2 Net profit from discontinued operations (“-” for net

loss)

5.2 By ownership

5.2.1 Net profit attributable to shareholders of the Company as

347609693.3097308593.36

the parent

5.2.2 Net profit attributable to non-controlling interests -20286757.28 -8218534.97

6. Other comprehensive income net of tax -37732671.26 -90369605.96

Attributable to owners of the Company as the parent -37732671.26 -90317648.86

6.1 Items that will not be reclassified to profit or loss

6.1.1 Changes caused by re-measurements on defined benefit

schemes

6.1.2 Other comprehensive income that will not be reclassified

to profit or loss under the equity method

6.1.3 Changes in the fair value of investments in other equity

instruments

6.1.4 Changes in the fair value arising from changes in own

credit risk

155Lu Thai Textile Co. Ltd. Annual Report 2021

6.1.5 Other

6.2 Items that will be reclassified to profit or loss -37732671.26 -90317648.86

6.2.1 Other comprehensive income that will be reclassified to

profit or loss under the equity method

6.2.2 Changes in the fair value of investments in other debt

obligations

6.2.3 Other comprehensive income arising from the

reclassification of financial assets

6.2.4 Credit impairment allowance for investments in other

debt obligations

6.2.5 Reserve for cash flow hedges

6.2.6 Differences arising from the translation of foreign

-37716717.19-90065261.51

currency-denominated financial statements

6.2.7 Other -15954.07 -252387.35

Attributable to non-controlling interests -51957.10

7. Total comprehensive income 289590264.76 -1279547.57

Attributable to owners of the Company as the parent 309877022.04 6990944.50

Attributable to non-controlling interests -20286757.28 -8270492.07

8. Earnings per share

8.1 Basic earnings per share 0.39 0.11

8.2 Diluted earnings per share 0.36 0.11

Where business combinations under common control occurred in the current period the net profit achieved by the acquirees before the

combinations was RMB0.00 with the amount for the same period of last year being RMB0.00.Legal representative: Liu Zibin Chief Accountant: Zhang Hongmei

Financial Manager: Zhang Keming

4. Income Statement of the Company as the Parent

Unit: RMB

Item 2021 2020

1. Operating revenue 3647402509.21 3275667055.94

Less: Cost of sales 2824451867.80 2594772449.08

Taxes and surcharges 39686908.16 43852034.14

Selling expense 85257586.04 90924780.86

Administrative expense 212434986.88 223829705.58

156Lu Thai Textile Co. Ltd. Annual Report 2021

R&D expense 178176401.25 155781784.46

Finance costs 14374893.63 63053311.41

Including: Interest expense 33309727.39 29507836.33

Interest income 33021266.87 12603128.63

Add: Other income 33778765.18 40725385.28

Return on investment (“-” for loss) 298576196.15 438956821.28

Including: Share of profit or loss of joint ventures and

-10755175.91-5146737.73

associates

Income from the derecognition of financial assets at

amortized cost (“-” for loss)

Net gain on exposure hedges (“-” for loss)

Gain on changes in fair value (“-” for loss) 20786304.41 -111822736.20

Credit impairment loss (“-” for loss) 3935670.51 -20099155.46

Asset impairment loss (“-” for loss) -34971247.79 -78930638.97

Asset disposal income (“-” for loss) 57897322.56 -557994.15

2. Operating profit (“-” for loss) 673022876.47 371724672.19

Add: Non-operating income 4866312.90 4554095.15

Less: Non-operating expense 11591362.60 1671120.09

3. Profit before tax (“-” for loss) 666297826.77 374607647.25

Less: Income tax expense 55229039.28 7106585.68

4. Net profit (“-” for net loss) 611068787.49 367501061.57

4.1 Net profit from continuing operations (“-” for net loss) 611068787.49 367501061.57

4.2 Net profit from discontinued operations (“-” for net loss)

5. Other comprehensive income net of tax 130733.09 -424313.33

5.1 Items that will not be reclassified to profit or loss

5.1.1 Changes caused by re-measurements on defined benefit

schemes

5.1.2 Other comprehensive income that will not be

reclassified to profit or loss under the equity method

5.1.3 Changes in the fair value of investments in other equity

instruments

5.1.4 Changes in the fair value arising from changes in own

credit risk

5.1.5 Other

5.2 Items that will be reclassified to profit or loss 130733.09 -424313.33

157Lu Thai Textile Co. Ltd. Annual Report 2021

5.2.1 Other comprehensive income that will be reclassified to

profit or loss under the equity method

5.2.2 Changes in the fair value of investments in other debt

obligations

5.2.3 Other comprehensive income arising from the

reclassification of financial assets

5.2.4 Credit impairment allowance for investments in other

debt obligations

5.2.5 Reserve for cash flow hedges

5.2.6 Differences arising from the translation of foreign

currency-denominated financial statements

5.2.7 Other 130733.09 -424313.33

6. Total comprehensive income 611199520.58 367076748.24

7. Earnings per share

7.1 Basic earnings per share 0.71 0.43

7.2 Diluted earnings per share 0.64 0.41

5. Consolidated Cash Flow Statement

Unit: RMB

Item 2021 2020

1. Cash flows from operating activities:

Proceeds from sale of commodities and rendering of services 4877137793.95 4549188241.18

Tax rebates 118978037.24 106212520.44

Cash generated from other operating activities 99760735.48 119614464.43

Subtotal of cash generated from operating activities 5095876566.67 4775015226.05

Payments for commodities and services 3075758673.05 2382593861.18

Cash paid to and for employees 1394301069.51 1443277224.36

Taxes paid 139250588.74 144996754.22

Cash used in other operating activities 138429229.89 210611463.40

Subtotal of cash used in operating activities 4747739561.19 4181479303.16

Net cash generated from/used in operating activities 348137005.48 593535922.89

2. Cash flows from investing activities:

Proceeds from disinvestment 1318751294.68 460131152.08

Return on investment 41433282.80 149130790.55

Net proceeds from the disposal of fixed assets intangible assets 4645043.40 102560031.90

158Lu Thai Textile Co. Ltd. Annual Report 2021

and other long-lived assets

Net proceeds from the disposal of subsidiaries and other business

95860000.0076625459.68

units

Cash generated from other investing activities 98294038.33 62232909.13

Subtotal of cash generated from investing activities 1558983659.21 850680343.34

Payments for the acquisition of fixed assets intangible assets and

430591025.71580156640.57

other long-lived assets

Payments for investments 760870000.00 1052215000.00

Cash used in other investing activities 339043598.92 6483653.47

Subtotal of cash used in investing activities 1530504624.63 1638855294.04

Net cash generated from/used in investing activities 28479034.58 -788174950.70

3. Cash flows from financing activities:

Capital contributions received 80122550.00 50000000.00

Including: Capital contributions by non-controlling interests to

50000000.00

subsidiaries

Borrowings raised 1631139389.49 3398339439.58

Cash generated from other financing activities 174000000.00

Subtotal of cash generated from financing activities 1711261939.49 3622339439.58

Repayment of borrowings 1359634451.98 2529112565.20

Interest and dividends paid 84499928.33 199362285.43

Including: Dividends paid by subsidiaries to non-controlling

59618853.07

interests

Cash used in other financing activities 63817316.19 160200000.00

Subtotal of cash used in financing activities 1507951696.50 2888674850.63

Net cash generated from/used in financing activities 203310242.99 733664588.95

4. Effect of foreign exchange rates changes on cash and cash

-6449805.63-21054172.59

equivalents

5. Net increase in cash and cash equivalents 573476477.42 517971388.55

Add: Cash and cash equivalents beginning of the period 1396530407.47 878559018.92

6. Cash and cash equivalents end of the period 1970006884.89 1396530407.47

6. Cash Flow Statement of the Company as the Parent

Unit: RMB

Item 2021 2020

1. Cash flows from operating activities:

159Lu Thai Textile Co. Ltd. Annual Report 2021

Proceeds from sale of commodities and rendering of services 3312220027.60 3132082316.96

Tax rebates 24444047.02 37614591.44

Cash generated from other operating activities 51752143.18 77891597.93

Subtotal of cash generated from operating activities 3388416217.80 3247588506.33

Payments for commodities and services 2128657555.64 2217942543.44

Cash paid to and for employees 837615352.93 889963420.68

Taxes paid 83471328.14 79127361.47

Cash used in other operating activities 97694765.19 154885854.59

Subtotal of cash used in operating activities 3147439001.90 3341919180.18

Net cash generated from/used in operating activities 240977215.90 -94330673.85

2. Cash flows from investing activities:

Proceeds from disinvestment 587311294.68 514020256.94

Return on investment 255233323.75 316780237.87

Net proceeds from the disposal of fixed assets intangible assets

6091843.79114941392.08

and other long-lived assets

Net proceeds from the disposal of subsidiaries and other business

263014351.00

units

Cash generated from other investing activities 970377365.78 1484210870.85

Subtotal of cash generated from investing activities 2082028179.00 2429952757.74

Payments for the acquisition of fixed assets intangible assets and

68414055.9670577315.74

other long-lived assets

Payments for investments 640977947.65 955125000.00

Net payments for the acquisition of subsidiaries and other

business units

Cash used in other investing activities 1729113808.44 2085396649.29

Subtotal of cash used in investing activities 2438505812.05 3111098965.03

Net cash generated from/used in investing activities -356477633.05 -681146207.29

3. Cash flows from financing activities:

Capital contributions received 80122550.00

Borrowings raised 800983356.71 2225619549.50

Cash generated from other financing activities 58215720.00 168980600.00

Subtotal of cash generated from financing activities 939321626.71 2394600149.50

Repayment of borrowings 312407315.63 791236980.16

Interest and dividends paid 75954642.88 112547531.31

Cash used in other financing activities 182836702.32 236619700.00

160Lu Thai Textile Co. Ltd. Annual Report 2021

Subtotal of cash used in financing activities 571198660.83 1140404211.47

Net cash generated from/used in financing activities 368122965.88 1254195938.03

4. Effect of foreign exchange rates changes on cash and cash

-3255947.76-9693224.69

equivalents

5. Net increase in cash and cash equivalents 249366600.97 469025832.20

Add: Cash and cash equivalents beginning of the period 728346695.28 259320863.08

6. Cash and cash equivalents end of the period 977713296.25 728346695.28

7. Consolidated Statements of Changes in Owners’ Equity

161Lu Thai Textile Co. Ltd. Annual Report 2021

2021

Unit: RMB

2021

Equity attributable to owners of the Company as the parent

Other equity instruments Other Non-co Total

Item

Less: Retaine

Share Prefer Perpe Capital compre Specific Surplus General

ntrolling owners’

Treasur d Other Subtotal

capital red tual Other reserves hensive reserve reserves reserve

interests equity

y stock earnings

shares bonds income

8581713811540534687687580916

1. Balances as at the 255912 13089 404098

32326451.17457.19948.77590.76379.

488.0122.89789.18

end of the prior year 2.00 81 79 22 72 90

Add: Adjustments for

changed accounting

policies

Adjustments for

corrections of

previous errors

Adjustments for

business

combinations under

common control

Other adjustments

8581713811540534687687580916

2. Balances as at the 255912 13089 404098

32326451.17457.19948.77590.76379.

488.0122.89789.18

beginning of the year 2.00 81 79 22 72 90

162Lu Thai Textile Co. Ltd. Annual Report 2021

3. Increase/ decrease 2420

-1798467478908-3773261106242381295729-20286275443

in the period (“-” for 8973.

4.97899.64300.00671.26878.75824.15809.31757.28052.03

00

decrease)

3.1 Total

-37732347609309877-20286289590

comprehensive

671.26693.30022.04757.28264.76

income

3.2 Capital 2420

-17984674789082997329973

increased and 8973.

4.97899.64300.00777.67777.67

00

reduced by owners

3.2.1 Ordinary shares 2420

559498015880158

increased by 8973.

334.21307.21307.21

00

shareholders

3.2.2 Capital

increased by holders

0.00

of other equity

instruments

3.2.3 Share-based

283252832528325

payments included in

788.60788.60788.60

owners’ equity

-17939977678908-78510-78510

3.2.4 Other

4.97.83300.00318.14318.14

--10522

3.3 Profit 61106 -44120 -44120

7869.1

878.75990.40990.40

distribution 5

3.3.161106-61106

878.75878.75

Appropriation to

163Lu Thai Textile Co. Ltd. Annual Report 2021

surplus reserves

3.3.2

Appropriation to

general reserve

3.3.3

Appropriation to -44120 -44120 -44120

990.40990.40990.40

owners (or

shareholders)

3.3.4 Other

3.4 Transfers within

owners’ equity

3.4.1 Increase in

capital (or share

capital) from capital

reserves

3.4.2 Increase in

capital (or share

capital) from surplus

reserves

3.4.3 Loss offset

by surplus reserves

3.4.4 Changes in

defined benefit

pension schemes

transferred to retained

164Lu Thai Textile Co. Ltd. Annual Report 2021

earnings

3.4.5 Other

comprehensive

income transferred to

retained earnings

3.4.6 Other

3.5 Specific reserve

3.5.1 Increase in

the period

3.5.2 Used in the

period

3.6 Other

8823713812151558927983383671

4. Balances as at the 340587 78908 -36423 383812

41294656.24336.01772.07400.19431.

387.65300.00748.37031.90

end of the period 5.00 84 54 37 03 93

2020

Unit: RMB

2020

Equity attributable to owners of the Company as the parent

Other equity instruments

Item Other Non-cont Total

Prefe Less: Retaine

Share Perpe Capital compre Specific Surplus General

rolling owners’

rred Treasur d Other Subtotal

capital tual Other reserves hensive reserve reserves reserve

interests equity

share y stock earnings

bonds income

s

165Lu Thai Textile Co. Ltd. Annual Report 2021

85811117276971

1. Balances as at the 258046 91626 537207 602169 8299304

215467351.35324.

245.42571.753615.12223.52548.44

end of the prior year 1.00 63 92

Add: Adjustments

for changed

accounting policies

Adjustments for

corrections of

previous errors

Adjustments for

business

combinations under

common control

Other adjustments

85811117276971

2. Balances as at the 258046 91626 537207 602169 8299304

215467351.35324.

245.42571.753615.12223.52548.44

beginning of the year 1.00 63 92

3. Increase/ decrease 7138

1078-21337-9031736750-25253-95577-198070-207628

in the period (“-” for 6451.

1.0057.41648.86106.16666.9034.20434.34168.54

81

decrease)

3.1 Total

-9031797308569909-827049-127954

comprehensive

648.8693.3644.502.077.57

income

3.2 Capital 7138

1078-2133769263-746282-536476

increased and 6451.

1.0057.41475.4039.474.07

81

reduced by owners

166Lu Thai Textile Co. Ltd. Annual Report 2021

3.2.1 Ordinary shares

107886234.97015.5000005009701

increased by

1.00484800.005.48

shareholders

3.2.2 Capital

increased by holders

0.00

of other equity

instruments

3.2.3 Share-based

payments included in 0.00

owners’ equity

7138

-2219969166-124628-554617

3.2.4 Other 6451.

91.89459.92239.4779.55

81

3.3 Profit 36750 -12256 -85812 -115171 -200983

106.162260.26154.10702.80856.90

distribution

3.3.1

36750-36750

Appropriation to 0.00

106.16106.16

surplus reserves

3.3.2

Appropriation to

general reserve

3.3.3

Appropriation to -85812 -85812 -115171 -200983

154.10154.10702.80856.90

owners (or

shareholders)

3.3.4 Other

167Lu Thai Textile Co. Ltd. Annual Report 2021

3.4 Transfers

within owners’

equity

3.4.1 Increase in

capital (or share

capital) from capital

reserves

3.4.2 Increase in

capital (or share

capital) from surplus

reserves

3.4.3 Loss offset

by surplus reserves

3.4.4 Changes in

defined benefit

pension schemes

transferred to

retained earnings

3.4.5 Other

comprehensive

income transferred to

retained earnings

3.4.6 Other

3.5 Specific reserve

3.5.1 Increase in

168Lu Thai Textile Co. Ltd. Annual Report 2021

the period

3.5.2 Used in the

period

3.6 Other

858171381154076875

4. Balances as at the 255912 13089 534681 404098 8091676

32326451.17457.77590.

488.0122.899948.22789.18379.90

end of the period 2.00 81 79 72

8. Statements of Changes in Owners’ Equity of the Company as the Parent

2021

Unit: RMB

2021

Other equity instruments Other

Less:

Item Share Capital comprehen Specific Surplus Retained Total owners’

Preferre Perpetua Treasury Other

capital Other reserves sive reserve reserves earnings equity

d shares l bonds stock

income

1. Balances as at the 858132 713864 31729252 -424313.3 1150908 438164 677893588

322.0051.812.253718.150182.323.20

end of the prior year

Add: Adjustments for

changed accounting

policies

Adjustments for

corrections of previous

169Lu Thai Textile Co. Ltd. Annual Report 2021

errors

Other adjustments

2. Balances as at the 858132 713864 31729252 -424313.3 1150908 438164 677893588

322.0051.812.253718.150182.323.20

beginning of the year

3. Increase/ decrease in

242089-1794.9846748997890830061106878505840597052307.

the period (“-” for 130733.09

73.007.64.00.75918.3485

decrease)

3.1 Total

611068611199520.5

comprehensive 130733.09

787.498

income

3.2 Capital increased 242089 -1794.9 84674899 78908300 29973777.6

73.007.64.007

and reduced by owners

3.2.1 Ordinary shares

2420895594933480158307.2

increased by

73.00.211

shareholders

3.2.2 Capital increased

by holders of other

equity instruments

170Lu Thai Textile Co. Ltd. Annual Report 2021

3.2.3 Share-based

2832578828325788.6

payments included in.600

owners’ equity

-1794.978908300-78510318.1

3.2.4 Other 399776.83

7.004

3.3 Profit 61106878 -105227 -44120990.4.75869.150

distribution

3.3.1

61106878-61106

Appropriation to.75878.75

surplus reserves

3.3.2

Appropriation to -44120 -44120990.4

990.400

owners (or

shareholders)

3.3.3 Other

3.4 Transfers within

owners’ equity

3.4.1 Increase in

capital (or share

capital) from capital

reserves

171Lu Thai Textile Co. Ltd. Annual Report 2021

3.4.2 Increase in

capital (or share

capital) from surplus

reserves

3.4.3 Loss offset

by surplus reserves

3.4.4 Changes in

defined benefit

pension schemes

transferred to retained

earnings

3.4.5 Other

comprehensive

income transferred to

retained earnings

3.4.6 Other

3.5 Specific reserve

3.5.1 Increase in

the period

3.5.2 Used in the

period

3.6 Other

172Lu Thai Textile Co. Ltd. Annual Report 2021

4. Balances as at the 882341 713846 40196742 78908300 -293580.2 1212015 488748 737598819

295.0056.841.89.004596.901100.661.05

end of the period

2020

Unit: RMB

2020

Other equity instruments Other

Less:

Item Share Capital comprehe Specific Surplus Retained Total owners’

Preferre Perpetu Treasury Other

capital Other reserves nsive reserve reserves earnings equity

d shares al bonds stock

income

1. Balances as at the 858121 3172062 1114158 41367013 6426187766.

541.0032.47611.9981.0147

end of the prior year

Add: Adjustments for

changed accounting

policies

Adjustments for

corrections of

previous errors

Other adjustments

2. Balances as at the 858121 3172062 1114158 41367013 6426187766.

541.0032.47611.9981.0147

beginning of the year

3. Increase/ decrease

10781.071386-424313.3675010244938801

in the period (“-” for 86289.78 352748116.73

0451.81336.16.31

decrease)

173Lu Thai Textile Co. Ltd. Annual Report 2021

3.1 Total

-424313.367501061

comprehensive 367076748.24

33.57

income

3.2 Capital

10781.071386

increased and 86289.78 71483522.59

0451.81

reduced by owners

3.2.1 Ordinary shares

10781.0

increased by 86234.48 97015.48

0

shareholders

3.2.2 Capital

increased by holders

of other equity

instruments

3.2.3 Share-based

payments included in

owners’ equity

71386

3.2.4 Other 55.30 71386507.11

451.81

3.3 Profit 3675010 -12256226

-85812154.10

6.160.26

distribution

3.3.1

3675010-36750106.

Appropriation to

6.1616

surplus reserves

3.3.2

-85812154.Appropriation to -85812154.10

10

owners (or

174Lu Thai Textile Co. Ltd. Annual Report 2021

shareholders)

3.3.3 Other

3.4 Transfers

within owners’ equity

3.4.1 Increase in

capital (or share

capital) from capital

reserves

3.4.2 Increase in

capital (or share

capital) from surplus

reserves

3.4.3 Loss offset

by surplus reserves

3.4.4 Changes in

defined benefit

pension schemes

transferred to retained

earnings

3.4.5 Other

comprehensive

income transferred to

retained earnings

3.4.6 Other

3.5 Specific reserve

175Lu Thai Textile Co. Ltd. Annual Report 2021

3.5.1 Increase in

the period

3.5.2 Used in the

period

3.6 Other

4. Balances as at the 858132 71386 3172925 -424313. 1150908 43816401 6778935883.

322.00451.8122.2533718.1582.3220

end of the period

176Lu Thai Textile Co. Ltd. Annual Report 2021

III Company Profile

Lu Thai Textile Co. Ltd. (hereinafter referred to as the “Company”) is a joint venture invested by Zibo Lucheng Textile Investment Co.Ltd (originally named Zibo Lucheng Textile Co. Ltd hereinafter referred to as Lucheng Textile) and Thailand Tailun Textile Co. Ltd.On 3 February 1993 the Company is approved by the former Ministry of Foreign Trade and Economy of the State (1993) in

WJMZEHZ No. 59 to convert into a joint-stock enterprise. Zibo Administration for Industry and Commerce issued the Company

corporate business license with the registration No. of QGLZZZ No. 000066.In July 1997 the Company is approved by the Securities Committee of the Department of the State in the ZWF (1997) No. 47 to issue

80 million shares of domestically listed foreign share( B-shares) at the price of RMB 1.00 per share. Upon approved by Shenzhen Stock

Exchange with No. (1997) 296 Listing Notice the Company is listed on the Shenzhen Stock Exchange on 19 August 1997 with

B-shares stock code of 200726. On 24 November 2000 approved by ZJGSZ [2000] No.199 by CSRC the Company increased

publication of 50 million shares of general share (A-shares) at the book value of RMB 1.00 which are listed on the Shenzhen Stock

Exchange on 25 December 2000 with A-shares stock code of 000726 through approval by Shenzhen Stock Exchange with No. (2000)

162 Listing Notice.

As approved by 2000 Annual General Meeting in May 2001 the Company carried out the distribution plan that 10 shares of capital

public reserve are converted to 3 more shares for each 10 shares.As approved by Resolutions of 2001 Annual General Meeting in June 2002 the Company implemented the distribution plan that 10

shares of capital public reserve are converted 3 more shares for each 10 shares again.As approved by 2002 Annual General Meeting in May 2003 the Company implemented the distribution plan that 10 shares of capital

public reserve are 2 more shares for each 10 shares and inner employees’ shared increased to 40.56 million shares. As examined and

approved by ZJGSZ No. [2000] 199 of CSRC the inner employees’ shares will start circulation 3 years later since listing on the

A-share market. On 25 December 2003 the inner employees’ shares reach 3 years since listing on the A-share stock market and they

set out circulation on 26 December 2003.As approved by the Annual General Meeting 2006 held in June 2007 the Company implemented the plan on converting 10 shares to all

its shareholders with capital reserves for every 10 shares. After capitalization the registered capital of the Company was RMB

844.8648 million.

The Company in accordance with the official reply on approving Lu Thai Textile Co. Ltd. to issue additional shares (ZJXK [2008] No.

890 document) from CSRC issued the Renminbi common shares (A shares) amounting to 150 million shares on 8 December 2008.

According to the relevant resolution of the 2nd Special Extraordinary General Meeting of 2011 the relevant resolution of the 15th

Meeting of the 6th Board of Directors the Opinion of China Securities Regulatory Commission on the Restricted Share Incentive Plan

of Lu Thai Textile Co. Ltd. (Shang-Shi-Bu-Han [2011] No. 206) the Company applied for a registered capital increment of RMB

14.09 million which was contributed by restricted share incentive receivers with monetary funds.

In accordance with the resolution of Proposal on Repurchasing and Canceling Partial Restricted Shares already Granted for the Original

Incentive Targets not Reaching the Incentive Conditions made at the 23rd Session of the 6th Board of Directors on 13 August 2012 the

177Lu Thai Textile Co. Ltd. Annual Report 2021

Company canceling a total of 60000.00 shares already granted for the original incentive targets not reaching the incentive conditions.According to the second temporary resolution of Proposal on counter purchase of part of the domestic listed foreign share (B share) on

25 June 2012 the Company counter purchase domestic listed foreign share (B share) 48837300 shares.

According to the Proposal on Repurchase and Cancel Part of Unlocked Restricted Share of the Original Incentive Personnel not

Conforming to the Incentive Condition Proposal on Repurchase and Cancel unlocked Restricted Share in Second Unlocked Period of

all the Incentive Personnel reviewed and approved by the 26th Meeting of the 6th Board of Directors on 27 March 2013 the Company

repurchase and cancel 4257000 shares owned by original people whom to motivate.According to the Proposal on Repurchase and Write-off of Partly of the Original Incentive Targets Not Met with the Incentive

Conditions but Granted Restricted Shares approved on the 11th Meeting of the 7th Board of Directors on 11 June 2014 to execute

repurchase and write-off of the whole granted shares of 42000 shares of the original incentive targets not met with the incentive targets

of the Company.As per the Proposal on Buy-back of Some A- and B-shares considered and approved as a resolution at the 1st special meeting of

shareholders on 5 August 2015 the Company repurchased 33156200 domestically listed foreign shares (B-shares).As per the Proposal on Buy-back of Some B-shares considered and approved as a resolution at the 2nd Extraordinary General Meeting

on 23 March 2018 the Company repurchased 64480800 domestically listed foreign shares (B-shares).There were 10800 shares of the Company which were converted from the convertible bonds in 2020.In line with the resolution of the 1st Extraordinary General Meeting of the Company on 13 May 2021 and the resolution of the 24th

Meeting of the 9th Board of Directors on 17 May 2021 the Company implemented the restricted share incentive scheme and applied

for a registered capital increment of RMB24285000 which was contributed by restricted share incentive receivers with monetary

funds.In conformity with the resolution of the 26th Meeting of the 9th Board of Directors of the Company on 26 August 2021 the Proposal

on Repurchase and Cancel Authorized but Unlocked Restricted Share of the Incentive Personnel not Conforming to the Incentive

Condition the Company applied for a registered capital decrease of RMB80000.There were 4000 shares of the Company which were converted from the convertible bonds in 2021.As of 31 December 2021 the registered capital of the Company was RMB882.3413 million.The Company’s registered address: No. 61 Luthai Avenue Hi-tech Development Zone Zibo Shandong

The Company’s unified social credit code: 91370300613281175K

The Company’s legal representative: Liu Zibin

The Company establishes the corporate governance structure consisting of the shareholders meeting the Board of Directors and the

Supervisory Committee. At present the Company has set up various departments including the Yarn-dyed Fabric Product Line

Garment Product Line the Clothing Marketing Department the Global Marketing Department the Supply Chain Department Lu

Thai Engineering Technology Institute the Enterprise Management Department the Financial Management Department and the

Strategy and Market Department etc.The scope of business of the Company and its subsidiaries shall include general projects: Fabric textile processing; fabric printing

and dyeing processing; garment manufacturing; the sales of textiles and raw materials; clothing wholesale; clothing retail; Internet

178Lu Thai Textile Co. Ltd. Annual Report 2021

sales (except for the sale of goods requiring a license); the production of Class I medical devices; the production of routine masks

(non-medical); the production of labour protection appliances; software development; technical services development of technology

technology consulting technical exchange technology transfer and technology promotion; the sales of textile special equipment; the

sales of mechanical and electrical equipment; the procurement of primary agricultural products; business training (trainings that

require approval such as educational training and vocational skill training exclusive); housing lease; the lease of non-residential real

estate; the lease of land usage right; the sales of special chemical products (dangerous chemicals exclusive); and the sales of building

materials. It shall also include licensed projects (business activities can be carried out legally and independently with business license

in addition to projects that must be approved by law): Inspection and testing service; catering service; power generation business

power transmission business and power supply (distribution) business. (For projects that must be approved by law the business

activities can only be carried out upon approval by the relevant departments and the specific business projects shall be subject to the

approval document or license of relevant departments)

The Company’s financial statements and Notes thereof have been approved by the 32nd Meeting of the 9th Board of Directors held on

27 April 2022.

There were 19 subsidiaries included into the consolidation scope of the Company in 2021 and for the details please refer to Note

VIII. “Changes of Consolidation Scope” and Notes IX. “Equities among Other Entities”.IV Basis for Preparation of Financial Statements

1. Preparation Basis

This financial statement is prepared in accordance with the accounting standards for business enterprises and the application guide

interpretation and other relevant regulations (hereinafter collectively referred to as “Accounting Standards for Business Enterprises”)

issued by the Ministry of Finance. In addition the Company also disclosed relevant financial information in accordance with the

Regulations on Information Disclosure and Compilation for Companies Public Offering Securities No. 15-General Provisions on

Financial Report (revised in 2014) issued by China Securities Regulatory Commission.The Company's accounting is based on the accrual basis. Except for certain financial instruments this financial statement is

measured on the basis of historical cost. If the asset is impaired the corresponding impairment provision shall be made in accordance

with relevant regulations.

2. Going-concern

The financial statements are presented on the basis of continuing operations.V Significant Accounting Policies and Estimates

Specific accounting policies and accounting estimates indicators:

The Company determines income recognition policy according to its production and operation characteristics and the specific

accounting policies are shown in Note V (27).

1. Statement of Compliance with the Accounting Standards for Business Enterprises

The financial statements prepared by the Company are in compliance with in compliance with the Accounting Standards for Business

Enterprises which factually and completely present the consolidated and the Company’s financial positions as at 31 December 2021

business results and cash flows for 2021 and other relevant information.

179Lu Thai Textile Co. Ltd. Annual Report 2021

2. Fiscal Year

The Company’s fiscal year starts on 1 January and ends on 31 December of every year according to the Gregorian calendar.

3. Operating Cycle

The Company regards 12 months as an operating cycle.

4. Recording Currency

The Company and its domestic subsidiaries adopt RMB as the recording currency. The Company’s overseas subsidiaries confirm to

adopt HK Dollar and US Dollar as the recording currency according their major economic environment of the operating. When

preparing the financial statements for the Reporting Period the Company adopted RMB as the recording currency.

5. Accounting Treatment for Business Combinations under the Common Control and Not under the

Common Control

(1) Business combinations under the same control

For business combinations under the same control the assets and liabilities of the merged party acquired by the merger party in the

merger except for adjustments due to different accounting policies shall be measured at the carrying value of the merged party in the

consolidated financial statement of the final controller on the combination date. As for the difference between the carrying value of

the merger consideration and carrying value of the net assets obtained in the merger the capital reserve (capital stock premium) shall

be adjusted and if the capital reserve (capital stock premium) is insufficient to offset the retained earnings shall be adjusted.Realize business combination under the same control in steps by transaction several times

In specific financial statements the share of book value of the net assets of the combined party that shall be enjoyed in the combined

financial statements of the final control party on the combination date as calculated according to the shareholding ratio of the

combination date is regarded as the initial investment cost of the investment; the difference between the initial investment cost and

the sum of book value of investment held before combination plus the book value of the consideration newly paid on the combination

date is used for adjusting the capital reserve (capital stock premium) and if the capital reserve is insufficient to offset the retained

earnings shall be adjusted.In the combined financial statements the assets and liabilities of the combined party acquired by the combining party in the

combination except for adjustments due to different accounting policies shall be measured at the book value of the combined party

in the consolidated financial statement of the final controller on the combination date; the difference between the sum of the book

value of investment held before combination plus the book value newly paid on the combination date and the book value of the net

assets acquired in combination is used for adjusting the capital reserve (capital stock premium) and if the capital reserve (capital

stock premium) is insufficient to offset the retained earnings shall be adjusted. The long-term equity investment held by the

combining party before acquiring the control right of the combined party if relevant gains and losses other comprehensive revenues

and changes in other owner’s equity have been confirmed from the date of acquiring equity and the date when the combining party

and the combined party under the final control of the same party whichever is later to the combination date shall offset the retained

earnings at the beginning or current profits and losses in the period of comparing statements.

(2) Business combinations not under the same control

For a business combination not under the same control the cost of the combination is the assets paid liabilities incurred or assumed

and the fair value of the equity securities issued on the acquisition date to obtain control over the purchased party. On the purchase

date the acquired assets liabilities and contingent liabilities of the purchased party are recognized at fair value.The difference between the merger cost and the fair value of the identifiable net assets of the acquired party acquired in the merger

180Lu Thai Textile Co. Ltd. Annual Report 2021

(the former is greater than the latter) is recognized as goodwill and subsequent measurement is made based on the cost deducting the

accumulated impairment provision; the difference between the merger cost and the fair value of the identifiable net assets of the

acquired party acquired in the merger (the former is less than the latter) shall be recorded into the current profit or loss after the

recheck.Achieve business combination not under the same control step by step through multiple transactions

In specific financial statements the sum of book value of the acquired party's equity investment held before the purchase date and the

investment cost newly paid on the purchase date is regarded as the initial investment cost of the investment. The other comprehensive

income recognized by using the equity method of accounting of the equity investment held before the purchase date is not disposed

on the purchase date and the same basis as the direct disposal of relevant assets or liabilities of the investee is used to conduct

accounting treatment when disposing the investment; the owner's equity recognized as a result of the changes of the other owner's

equity except for the net profit and loss of the investee other comprehensive income and profit distribution shall be transferred to the

current profit and loss during the disposal period when disposing the investment. If the equity investment held before the purchase

date is measured at fair value the accumulative changes in fair value originally included in other comprehensive income shall be

transferred to retained earnings when accounting by cost method.In consolidated financial statements the cost of consolidation is the sum of the consideration paid at the purchase date and the fair

value at the purchase date of the equity already held by the acquired party before the purchase date. For equity of the acquired party

that is already held before the purchase date it shall be re-measured according to the fair value of the equity on the purchase date

and the difference between the fair value and its book value shall be included in the current income. If the equity of the acquired

party held before the purchase date involves other comprehensive income and the changes of other owner's equity it shall be

transferred to current income on the purchase date except for other comprehensive income caused by changes in net liabilities or net

assets of the income plan remeasured and reset by the investee.

(3) Treatment of transaction costs in business combinations

Intermediary expenses such as auditing legal services evaluation and consulting and other related management expenses incurred

for the business combination shall be included in the current profit and loss when incurred. The transaction costs of equity securities

or debt securities issued as the merger consideration shall be included in the initial recognition amount of equity securities or debt

securities.

6. Preparation of the Consolidated Financial Statements

(1) Consolidation scope

The consolidation scope of the consolidated financial statements is determined on the basis of control. Control means that the

Company has the power over the invested unit enjoys variable returns by participating in the related activities of the invested unit

and has the ability to use the power over the invested unit to influence the amount of its return. Subsidiaries refer to the entities

controlled by the Company (including enterprises divisible parts of invested entities structured entities etc.).

(2) Preparation method of consolidated financial statements

The consolidated financial statements are prepared by the Company based on the financial statements of the Company and its

subsidiaries and other relevant materials. When preparing the consolidated financial statements the accounting policies and

accounting fiscal of the Company and those of subsidiaries shall be consistent and the large transactions and intercourse balance

among companies shall be offset. Subsidiaries and businesses increased due to business combinations under the same control during

the Reporting Period shall be included into the Company’s combination scope since the date when they are jointly controlled by the

final controller and the operating result and cash flow since then shall be respectively included into the consolidated income

statement and consolidated cash flow statement. As for subsidiaries and businesses increase due to business combinations not under

the same control during the Reporting Period the revenue expenses and profit or those subsidiaries and businesses from the purchase

date to the end of the Reporting Period shall be included into the consolidated income statement and the cash flow thereof shall be

181Lu Thai Textile Co. Ltd. Annual Report 2021

included into the consolidated cash flow statement. The share of shareholders’ equity in subsidiaries not belonging to the Company

shall be regarded as the minority interests and separately listed under the item of shareholders’ equity in the consolidated balance

sheet. The share of current portion of net profit or loss in subsidiaries belonging to minority interests shall presented as the item of

minority interests under the item of net profit in the consolidated income statement. The difference between the losses of subsidiaries

born by not-controlling shareholders and the share of the company’s owners’ equity at the period-beginning the not-controlling

shareholders enjoy (the former is larger than the latter) shall be offset the minority interests.

(3) Purchase of minority shareholders' equity of subsidiaries

As for the difference between the cost of a long-term equity investment newly acquired due to the purchase of the minority shares

and the share of net assets of the subsidiary continuously accounted from the purchase date or combination date the Company shall

enjoy based on the new shareholding ratio and the difference between the disposal price of partial equity investments in the

subsidiary under the premise of remaining the control power and the share of net assets of the subsidiary continuously accounted

from the purchase date or combination date the Company shall enjoy and corresponding to the disposal of long-term equity

investments the capital reserve (capital stock premium) in the consolidated balance sheet shall be adjusted and when the capital

reserve is insufficient to offset the retained earnings shall be adjusted.

(4) Treatment of loss of control over subsidiaries

If the control over the original subsidiary is lost due to the disposal of partial equity investments or other reasons the residual equity

shall be remeasured at the fair value on the date of losing the control power; the balance of the sum of the consideration obtained

from equity disposal and the fair value of residual equity after deducting the sum of the share of the carrying value of net assets in the

original subsidiary continuously accounted from the purchase date the Company shall enjoy based on the original shareholding ratio

and the goodwill shall be recorded into the investment income of the period when the control power is lost. The other comprehensive

income related to the equity investments in the original subsidiary shall be transferred to the current profit or loss when the control

power is lost except for the other comprehensive income arising from changes in net liabilities or net assets due to the remeasurement

of defined benefit plan by the investee.

7. Classification of Joint Arrangements and Accounting Treatment of Joint Operations

Joint arrangement refers to an arrangement under the joint control of two or more participants. The Company's joint arrangements are

divided into joint operations and joint ventures.

(1) Joint operations

A joint operation refers to a joint arrangement whereby the Company enjoys relevant assets of the arrangement and assumes

obligations relevant liabilities of the arrangement.The Company recognizes the following items related to the interest share in joint operation and conducts accounting treatment in

accordance with relevant provisions of the Accounting Standard for Business Enterprises:

A. It recognizes separately held assets and jointly held assets according to the proportion;

B. It recognizes separately assumed liabilities and jointly assumed liabilities according to the proportion;

C. Income from the sale of the proportion of joint operation output is recognized;

D. Income from the sale of the joint operation output is recognized according to the proportion.E. While the separately incurred fee is recognized the incurred fee for joint operation is recognized according to the proportion.

(2) Joint ventures

A joint venture refers to a joint arrangement whereby the Company enjoys the right of the net assets of the arrangement only.Accounting treatment of the investment of a joint venture is conducted by the Company in line with the provisions of relevant equity

method of accounting for long-term equity investment.

182Lu Thai Textile Co. Ltd. Annual Report 2021

8. Confirmation Standard for Cash and Cash Equivalent

The term “cash” refers to cash on hand and deposits that are available for payment at any time. Cash equivalents refer to investments

held by the Company that are short-term highly liquid easily convertible into known amounts of cash and have little risk of change

in value.

9. Foreign Currency Businesses and Translation of Foreign Currency Financial Statements

(1) Foreign currency business

The Company's foreign currency business is translated into the amount of the recording currency at the spot exchange rate on the

transaction date.On the balance sheet date foreign currency monetary items are translated at the spot exchange rate on the balance sheet date. The

exchange difference arising from the difference between the spot exchange rate on the balance sheet date and the spot exchange rate

at the time of initial recognition or the previous balance sheet date is included in the current profit and loss; for foreign currency

non-monetary items measured at historical cost the translation adopts the spot exchange rate on the day the transaction occurs; for

foreign currency non-monetary items measured at fair value the translation adopts the spot exchange rate on the day when the fair

value is confirmed and the difference between the amount of recording currency and the amount of original recording currency shall

be included into the current profit or loss or other comprehensive income based on the nature of non-monetary items.

(2) Conversion of foreign currency financial statements

When converting the foreign currency financial statements of overseas subsidiaries on the balance sheet date the assets and liabilities

items in the balance sheet shall be converted at the spot exchange rate on the balance sheet date. Other items of shareholders' equity

except for "undistributed profits" shall be converted at the spot exchange rate on the occurrence date.Income and expense items in the income statement shall be converted using the spot exchange rate on the transaction date.All items in the cash flow statement are converted according to the spot exchange rate on the occurrence date of cash flow. The

impact of exchange rate changes on cash is taken as a reconciling item and the item "impact of exchange rate changes on cash and

cash equivalents" is separately listed in the cash flow statement to reflect.The difference arising from the conversion of financial statements is reflected in the "other comprehensive income" under the

shareholders' equity in the balance sheet.When disposing of the overseas operation and losing control rights the foreign currency statement conversion difference related to

the overseas operation shown under the shareholders' equity in the balance sheet shall be transferred to current profit and loss of

disposal in whole or in proportion to the disposal of overseas operation.

10. Financial Instruments

Financial instruments refer to contracts that form one party’s financial assets and form other parties’ financial liabilities or equity

instruments.

(1) Recognition and derecognition of financial instruments

The Company recognizes a financial asset or liability when it becomes a party of the relevant financial instrument contract.Where a financial asset satisfies any of the following requirements the recognition of it is terminated:

* The contractual rights for collecting the cash flow of the said financial asset are terminated;

* The said financial asset has been transferred and meet the following derecognition conditions for transfer of financial assets.Only when the prevailing obligations of a financial liability are relieved in all or in part may the recognition of the financial liability

be terminated in all or partly. Where the Company (debtor) enters into an agreement with a creditor so as to substitute the existing

financial liabilities by way of any new financial liability and if the contractual stipulations regarding the new financial liability is

substantially different from that regarding the existing financial liability it terminates the recognition of the existing financial

183Lu Thai Textile Co. Ltd. Annual Report 2021

liability and at the same time recognizes the new financial liability.The purchase and sale of financial assets under the normal ways shall be recognized and stopped to be recognized respectively at the

price of transaction date.

(2) Classification and measurement of financial assets

The Company classifies financial assets into the following three categories according to the business mode of managing financial

assets and the contractual cash flow characteristics of financial assets upon initial recognition: financial assets measured at amortized

cost financial assets measured at fair value and whose changes are included in other comprehensive income and financial assets

measured at fair value and whose changes are included in current profit and loss.Financial assets measured at amortized cost

The Company classifies financial assets that meet the following conditions and are not designated to be measured at fair value and

whose changes are included in current profit and loss as financial assets measured at amortized cost:

The Company's business model for managing this financial asset is aimed at collecting contractual cash flow;

The contractual terms of this financial asset stipulate that the cash flow generated on the specific date is only the payment of principal

and interest based on the principal amount outstanding.Such financial assets are measured in amortized cost by the effective interest method after initial recognition. Gains or losses arising

from financial assets measured in amortized cost that are not part of any hedging relationship are included in current profit and loss

when derecognition amortization according to the effective interest method or impairment is recognized.Financial assets measured at fair value and whose changes are included in other comprehensive income

The Company classifies financial assets that meet the following conditions and are not designated to be measured at fair value and

whose changes are included in current profit and loss as financial assets measured at fair value and whose changes are included in

other comprehensive income:

The Company's business model for managing this financial asset is aimed at both collecting the contractual cash flow and selling this

financial asset;

The contractual terms of this financial asset stipulate that the cash flow generated on the specific date is only the payment of principal

and interest based on the principal amount outstanding.Such financial assets are subsequently measured at fair value after initial recognition. Interest impairment losses or gains and

exchange gains and losses calculated by the effective interest method are included in current profit and loss while other gains or

losses are included in other comprehensive income. When the financial asset is derecognized the accumulated gains or losses

previously included in other comprehensive income are transferred out and included in current profit and loss.Financial assets measured at fair value and whose changes are included in current profit and loss

Except for the above financial assets measured at amortized cost and at fair value with changes included in other comprehensive

income the Company classifies all other financial assets as financial assets measured at fair value with changes included in current

profit and loss. Upon initial recognition in order to eliminate or significantly reduce accounting mismatches the Company

irrevocably designates some financial assets that should have been measured at amortized cost or at fair value and whose changes are

included in other comprehensive income as financial assets measured at fair value and whose changes are included in current profit

and loss.Such financial assets are subsequently measured at fair value after initial recognition and the resulting gains or losses (including

interest and dividend income) are included in current profit and loss unless the financial assets are part of the hedging relationship.The business model of managing financial assets refers to how the Company manages financial assets to generate cash flow. The

business model determines whether the cash flow of the financial assets managed by the Company comes from the collection of

contractual cash flow the sale of financial assets or both. The Company determines the business model for managing financial assets

on the basis of objective facts and specific business objectives decided by key management personnel to manage financial assets.The Company evaluates the contractual cash flow characteristics of financial assets to determine whether the contractual cash flow

generated by the relevant financial assets on the specific date is only the payment of principal and interest based on the principal

184Lu Thai Textile Co. Ltd. Annual Report 2021

amount outstanding. Among them the principal refers to the fair value of financial assets upon initial recognition; interest includes

consideration for the time value of money credit risks related to the principal amount outstanding in the specific period and other

basic lending risks costs and profits. In addition the Company evaluates the contract terms that may lead to changes in the time

distribution or amount of contractual cash flow of financial assets to determine whether they meet the requirements of the

above-mentioned contractual cash flow characteristics.Only when the Company changes the business mode of managing financial assets will all affected related financial assets be

reclassified on the first day of the first reporting period after business model changes otherwise financial assets cannot be reclassified

after initial recognition.Financial assets are measured at fair value upon initial recognition. For financial assets measured at fair value and whose changes are

included in current profit and loss relevant transaction expenses are directly included in current profit and loss; for other types of

financial assets relevant transaction expenses are included in the initial recognition amount. For accounts receivable arising from the

sale of products or the provision of labor services which do not include or do not consider significant financing components the

amount of consideration the Company is expected to be entitled to receive is taken as the initial recognition amount.

(3) Classification and measurement of financial liabilities

The Company's financial liabilities are classified upon initial recognition as: financial liabilities measured at fair value and whose

changes are included in current profit and loss and financial liabilities measured at amortized cost. For financial liabilities that are

not classified as measured at fair value and whose changes are included in current profit and loss relevant transaction costs are

included in the initial recognition amount.Financial liabilities measured at fair value and whose changes are included in current profit and loss

Financial liabilities measured at fair value and whose changes are included in current profit and loss include transactional financial

liabilities and financial liabilities designated as measured at fair value upon initial recognition and whose changes are included in

current profit and loss. Subsequent measurement shall be carried out according to fair value for such financial liabilities. Gains or

losses resulting from changes in fair value and dividends and interest expenses related to such financial liabilities shall be included in

current profit and loss.Financial liabilities measured at amortized cost

Other financial liabilities are subsequently measured at amortized cost by using the effective interest method. Gains or losses

resulting from derecognition or amortization are included in current profit and loss.Distinction between financial liabilities and equity instruments

Financial liabilities refer to liabilities that meet one of the following conditions:

* The contractual obligation to deliver cash or other financial assets to other parties.* The contractual obligation to exchange financial assets or financial liabilities with other parties under potentially unfavorable

conditions.* Non-derivative contracts that must be or can be settled with the enterprise's own equity instruments in the future and the

enterprise will deliver a variable number of its own equity instruments according to the contract.* Derivative contracts that must be or can be settled with the enterprise's own equity instruments in the future except derivatives

contracts that exchange a fixed amount of cash or other financial assets with a fixed amount of its own equity instruments.Equity instruments refer to contracts that can prove that an enterprise has the residual equity in its assets after deducting all liabilities.If the Company cannot unconditionally avoid performing a contractual obligation by delivering cash or other financial assets the

contractual obligation meets the definition of financial liability.If a financial instrument must be or can be settled with the Company's own equity instruments it is necessary to consider whether the

Company's own equity instruments used to settle the instrument are used as substitutes for cash or other financial assets or to enable

the holder of this instrument to enjoy the residual equity in the assets after deducting all liabilities from the issuer. If it is the former

this instrument is the Company's financial liability; if the latter is the case this instrument is the Company's equity instrument.

(4) Derivative financial instruments and embedded derivatives

185Lu Thai Textile Co. Ltd. Annual Report 2021

The Company's derivative financial instruments include forward foreign exchange contracts. Initially the fair value on the date when

the derivative transaction contract is signed shall be used for measurement and the fair value shall be used for subsequent

measurement. Derivative financial instruments with positive fair value are recognized as an asset while those with negative fair

value are indeed recognized as a liability. Any gains or losses arising from changes in fair value that do not conform to the provisions

of hedge accounting are directly included in current profit and loss.For hybrid instruments containing embedded derivatives such as the main contract is a financial asset the relevant provisions on

classification of financial assets shall apply to the hybrid instruments as a whole. If the main contract is not a financial asset and the

hybrid instrument is not measured at fair value and its changes are included in current profit and loss for accounting treatment the

embedded derivative instrument has no close relationship with the main contract in terms of economic characteristics and risks and

has the same conditions as the embedded derivative instrument and the separate existing instrument meets the definition of

derivative instrument the embedded derivative instrument shall be separated from the hybrid instrument and treated as a separate

derivative financial instrument. If it is not possible to separately measure embedded derivative instruments at the time of acquisition

or the subsequent balance sheet date the hybrid instruments as a whole are designated as financial assets or financial liabilities

measured at fair value and their changes are included in current profit and loss.

(5) Fair value of financial instruments

See Note V(11) for the method of determining the fair value of financial assets and liabilities.

(6) Impairment of financial assets

The Company conducts impairment accounting treatment for the following items and confirms the loss provision based on the

expected credit losses:

Financial assets measured at amortized cost;

Receivables and creditors' investments measured at fair value and whose changes are included in other comprehensive income;

Contract assets defined in the Accounting Standards for Business Enterprises No. 14-Revenue;

Lease receivables;

Financial guarantee contracts (except those that are measured at fair value and whose changes are included in current profit and loss

the transfer of financial assets does not meet the conditions for derecognition or continue to involve in the transferred financial

assets).Measurement of expected credit loss

Expected credit loss refers to the weighted average of the credit losses of financial instruments weighted by the risk of default. Credit

loss refers to the difference between all contractual cash flows discounted at the original effective interest rate and receivable

according to the contract and all cash flows expected to be collected of the Company i.e. the present value of all cash shortfalls.Considering the reasonable and reliable information about past events current situation and the forecast of future economic situation

the company takes the risk of default as the weight calculates the probability weighted amount of the present value of the difference

between the cash flow receivable from the contract and the cash flow expected to be received and confirms the expected credit loss.The Company separately measures the expected credit losses of financial instruments at different stages. If the credit risk of financial

instruments has not increased significantly since the initial recognition it is in the first stage. The Company measures the loss reserve

according to the expected credit loss in the next 12 months; if the credit risk of financial instruments has increased significantly since

its initial recognition but no credit impairment has occurred it is in the second stage. The Company measures the loss reserve

according to the expected credit loss during the whole duration of this instrument; if the financial instrument has suffered credit

impairment since its initial recognition it is in the third stage. The Company measures the loss reserve according to the expected

credit loss during the whole duration of this instrument.For financial instruments with low credit risk on the balance sheet date the Company assumes that their credit risk has not increased

significantly since the initial recognition and measures the loss reserve according to the expected credit loss in the next 12 months.The expected credit loss during the whole duration refers to the expected credit loss caused by all possible default events during the

whole expected duration of financial instruments. The expected credit loss in the next 12 months refers to the expected credit loss

186Lu Thai Textile Co. Ltd. Annual Report 2021

caused by the possible default events of financial instruments within 12 months (or the expected duration if the expected duration of

financial instruments is less than 12 months) after the balance sheet date which is part of the expected credit loss in the whole

duration.When measuring the expected credit loss the longest term that the Company needs to consider is the longest contract term that the

enterprise faces credit risk (including the option to renew the contract).The Company calculates interest income based on the book balance before deducting impairment provisions and the effective interest

rate for financial instruments in the first and second stages and with low credit risk. The interest income shall be calculated according

to their book balance minus the amortized cost after impairment provision and the effective interest rate for financial instruments in

the third stage.Notes receivable accounts receivable and contract assets

The Company always measures its loss reserves at an amount equivalent to the expected credit loss during the entire duration for

notes receivable contract assets and accounts receivable regardless of whether there is any significant financing component.If a single financial asset cannot be used to evaluate the expected credit loss information at a reasonable cost the Company will

divide the notes receivable and accounts receivable into portfolio on the basis of the credit risk features and calculate the expected

credit loss based on the portfolio. The basis for determining the portfolio is as follows:

A. Notes receivable

Notes receivable portfolio 1: bank acceptance bills and L/C

Notes receivable portfolio 2: commercial acceptance bills

B. Accounts receivable

Accounts receivable portfolio 1: payment not overdue (with credit insurance)

Accounts receivable portfolio 2: payment not overdue (without credit insurance)

Accounts receivable portfolio 3: payment overdue (with credit insurance)

Accounts receivable portfolio 4: payment overdue (without credit insurance)

C. Contract assets

Contract assets portfolio 1: product sales

Contract assets portfolio 2: engineering construction

For notes receivable and contract assets divided into portfolios with reference to historical credit loss experience combined with

current conditions and predictions of future economic conditions the Company has calculated expected credit losses through default

risk exposure and expected credit loss rate for the entire duration.For accounts receivable divided into portfolios with reference to historical credit loss experience combined with current conditions

and predictions of future economic conditions the Company has prepared a comparison table between the number of aging/overdue

days of accounts receivable and the expected credit loss rate over the entire duration and has calculated the expected credit loss.Other receivables

The Company divides other receivables into several portfolios based on the features of credit risk and calculates the expected credit

losses on the basis of the combination. The basis for determining the portfolio is as follows:

Other receivables portfolio 1: Receivables from related parties within the scope of consolidation

Other receivables portfolio 2: Tax refund receivable

Other receivables portfolio 3: Deposit receivable and security deposit

Other receivables portfolio 4: other receivables

For other receivables that are divided into portfolios the Company calculates the expected credit loss with the default risk exposure and

the expected credit loss rate within the next 12 months or the entire duration.Creditors' investment and other creditors' investment

For creditors' investment and other creditors' investment the Company calculates the expected credit based on the nature of the

investment as well as kinds of types of counterparties and risk exposures the default risk exposure and the expected credit loss rate

187Lu Thai Textile Co. Ltd. Annual Report 2021

within the next 12 months or the entire duration loss.Assessment on significant increase of credit risk

In order to determine the relative changes in the default risk of financial instruments during their expected life and to assess whether the

credit risk of financial instruments has increased significantly since initial recognition the Company compares the default risk of

financial instruments on the balance sheet date with the default risk on the initial recognition date.When determining whether the credit risk has risen greatly since the initial recognition the Company considers reasonable and reliable

information (forward-looking information inclusive) that can be obtained without unnecessary extra costs or efforts. The information

the Company considers shall include:

The debtor fails to pay the principal and interest according to the contract expiration date;

The external or internal credit ratings (if any) of financial instruments which have occurred or are expected deteriorate significantly;

The debtor’s operating results which have occurred or are expected deteriorate significantly;

Existing or expected changes in technology market economy or legal environment will lead to a great adverse effect on the debtor's

ability to repay the Company.Based on the nature of financial instruments the Company assesses whether there is great risk in credit risk on the basis of individual

financial instruments or financial instrument portfolios. During assessment based on financial instrument portfolios the Company can

divide financial instruments on the basis of common credit risk characteristics such as overdue information and credit risk ratings.In case that the period overdue exceeds 30 days the Company determines that there is a significant increase in the credit risk of

financial instruments.Financial assets with depreciation of credit

The Company assesses on the balance sheet date whether there is any credit impairment to financial assets measured at amortized cost

and creditors' investment measured at fair value and whose changes are included in other comprehensive income. In case of one or more

events that adversely affect the expected future cash flow of a financial asset occur the financial asset will become financial assets with

depreciation of credit. The observable information below can be treated as evidence for credit impairment to financial assets:

The issuer or debtor is caught in a serious financial difficulty;

The debtor breaches the agreement of contract such as default or overdue payment of interest or principal or other default;

Due to economic or contractual considerations related to the debtor's financial difficulties the Company gives concessions to the debtor;

and the concessions will not be made under any other circumstances;

There lies a great probability of bankruptcy or other financial restructuring for the debtor;

The issuer or debtor is caught in financial difficulties which leads to the disappearance of the active market of the financial asset;

Presentation of expected credit loss provision

The Company remeasures expected credit losses on each balance sheet date to reflect the changes in the credit risk of financial

instruments since initial recognition; the increase or reversal amount of the loss reserve formed there from shall be included in the

current profit and loss as impairment losses or gains. For financial assets measured at amortized cost the loss allowance offsets the

carrying amount of the financial asset listed in the balance sheet; for creditors’ investment that are measured at fair value and its

changes are included in other comprehensive income the Company recognizes its loss reserve in other comprehensive income and will

not offset the carrying amount of the financial asset.Write-offs

In case that the Company fails to reasonably expect the contract cash flow of the financial asset to be recovered in a full or partial scale

the book balance of the financial asset will be written off directly. Such write-downs may constitute the derecognition for related

financial assets. This situation occurs frequently when the Company determines that the debtor does not have any assets or any source

of income to generate sufficient cash flow to repay the amount that will be written off. However in accordance with the procedures for

recovering due payments of the Company the written-off financial assets may still be affected by the execution activities.In case that the financial asset written off is recovered later it shall be included in the current profit and loss as the reversal of the

impairment loss.

188Lu Thai Textile Co. Ltd. Annual Report 2021

(7) Transfer of financial assets

The transfer of financial assets refers to the transfer or delivery of financial assets to another party (transferee) other than the issuer of

the financial asset.If the Company has transferred almost all the risks and rewards of the ownership of financial assets to the transferee derecognize the

financial asset; if it retains almost all the risks and rewards of the ownership of financial assets the financial asset will not be

derecognized.If the Company has neither transferred nor retained almost all the risks and rewards of the ownership of financial assets it shall be dealt

with in the following situations: if the control of the financial asset is abandoned the confirmation of the financial asset shall be

terminated and the generated assets and liabilities shall be confirmed; If the financial assets are controlled the relevant financial assets

shall be recognized according to the extent of their continued involvement in the transferred financial assets and the relevant liabilities

shall be recognized accordingly.

(8) Offsetting financial assets and financial liabilities

When the Company has a legal right that is currently enforceable to set off the recognized financial assets and financial liabilities and

intends either to settle on a net basis or to realize the financial asset and settle the financial liability simultaneously a financial asset and

a financial liability shall be offset and the net amount is presented in the balance sheet. Except for the above circumstances financial

assets and financial liabilities shall be presented separately in the balance sheet and shall not be offset.

11. Measurement of Fair Value

Fair value refers to the price that market participants can receive from sales of a asset or shall pay for transfer of a liability in the orderly

transaction that occurs on the measurement date.The Company measures related assets or liabilities at fair value assuming that the orderly transaction of selling assets or transferring

liabilities is conducted in the main market of related assets or liabilities; if there is no main market the Company assumes that the

transaction is conducted in the most beneficial market. The main market (or the most favorable market) is the trading market that the

Company can enter on the measurement date. The Company uses the assumptions used by market participants to maximize their

economic benefits when pricing the asset or liability.For financial assets or financial liabilities with active markets the Company uses the quotation in active markets to determine its fair

value. If there is no active market for financial instruments the Company uses valuation techniques to determine its fair value.When measuring non-financial assets at fair value the ability of market participants to best use the asset for generating economic

benefits or the ability to sell the asset to other market participants that can best use the asset to generate economic benefits shall be

considered.The Company adopts valuation techniques that are applicable in the current situation and have sufficient available data and other

information to support it. Priority is given to using relevant observable input values. Only when observable input values are unavailable

or are not feasible to obtain the unobservable input values can be used. For assets and liabilities measured or disclosed at fair value in

the financial statements the fair value hierarchy to which they belong is determined based on the lowest level input value that is

important to the fair value measurement as a whole: the first level input value is the unadjusted quotation of the same assets or liabilities

able to be obtained in an active market on the measurement date; the second level input value is the directly or indirectly observable

input value of the relevant asset or liability except the first level input value; the third level input value is unobservable input value of

related assets or liabilities.On each balance sheet date the Company reassessed the assets and liabilities continuously measured at fair value confirmed in the

financial statements to determine whether there is a transition among levels of fair value measurement.

12. Inventory

(1) Classification

189Lu Thai Textile Co. Ltd. Annual Report 2021

Inventories mainly include raw materials work-in-progress stock products materials processed on entrustment and etc.

(2) Valuation method of inventories acquiring and issuing

Inventories shall be measured at actual cost when acquired and the cost of the inventories including the procurement cost processing

cost and other costs. Grey yarn dyed yarn and plus material shall be measured at first-in first-out method when acquired and

delivered; other inventories shall be measured as per the weighted average method

(3) Basis for determining net realizable value of inventories and provision methods for decline in value of inventories

Net realizable value is the estimated selling price in the ordinary course of business less the estimated costs of completion the

estimated costs necessary to make the sale and relevant taxes. Net realizable value is determined on the basis of clear evidence

obtained and takes into consideration the purpose of holding inventories and effect of post balance sheet events.At the balance sheet date inventories are measured at the lower of the cost and net realizable value. If the net realizable value is

below the cost of inventories a provision for decline in value of inventories is made. The provision for inventories decline in value is

determined by the difference of the cost of individual item less its realizable value. After the provision for decline in value of

inventories is made if the circumstances that previously caused inventories to be written down below cost no longer exist so that the

net realizable value of inventories is higher than their cost the original provision for decline in value is reversed and the reversal is

included in profit or loss for the period.

(4) The perpetual inventory system is maintained for stock system.

(5) Amortization method of the low-value consumption goods and packing articles

For the Low-value consumption goods and the packing articles should be amortized by one-off amortization method when

consuming.

13. Contract Costs

Contract cost includes the incremental cost incurred for acquiring contract and contract performance cost.The incremental cost incurred for acquiring contract refers to the cost that will not occur if the Company has not acquired contract (for

example sales commission). If the cost is expected to be recovered the Company regards it as contract acquiring cost and confirms it as

an asset. The expenses incurred by the Company for acquiring contract other than the incremental cost expected to be recovered are

included in the current profits and losses at the time of occurrence.If the cost incurred for performance of contract does not belong to inventory and other scope of other corporate accounting standards

and meets the following conditions the Company will regard it as contract performance cost and confirm it as an asset:

* The cost is directly related to a copy of contract currently acquired or expected to be acquired including direct labor direct materials

manufacture expenses (or similar expenses) cost determined to be undertaken by the customer and other cost incurred due to the

contract;

* The cost increases the resources of the Company that will be used for performance of contract obligations in the future;

* The cost is expected to be recovered.The assets confirmed by the contract acquiring cost and the assets confirmed by the contract performance cost (“assets related tocontract cost”) are amortized according to the same basis as confirmation of goods or service income related to the asset and are

included in the current profits and losses. If the amortization term does not exceed one year it will be included in the current profits and

losses at the time of occurrence.When the book value of an asset related to contract cost is higher than the difference between the following two items the Company

accrues provision for impairment to the excessive part and confirms it as impairment loss:

* The remaining consideration that the Company expects to acquire from transfer of goods or services related to the asset;

* The cost that will occur for transfer of such related goods or services as estimated.The contract performance cost confirmed as asset if amortization term does not exceed one year or a normal business cycle at the time

of initial confirmation is listed in the item of “inventory”; if amortization term exceeds one year or a normal business cycle at the time

190Lu Thai Textile Co. Ltd. Annual Report 2021

of initial confirmation is listed in the item of “other non-current assets”.The contract acquiring cost that is confirmed as asset if amortization term does not exceed one year or a normal business cycle at the

time of initial confirmation is listed in the item of “other current assets”; if amortization term exceeds one year or a normal business

cycle at the time of initial confirmation is listed in the item of “other non-current assets”.

14. Long-term Equity Investments

Long-term equity investments include equity investments in subsidiaries joint ventures and associated enterprises. The investee that

the Company is able to exert significant influence is an associated enterprise of the Company.

(1) Determination of initial investment cost

Long-term equity investment that forms a business combination: Long-term equity investment obtained by business combination

under the same control on the merger date based on the book value share of the merged party’s owners’ equity in the final

controller’s consolidated financial statements as investment cost; The long-term equity investment acquired by a business

combination shall be the investment cost of the long-term equity investment according to the cost of the combination.For long-term equity investments obtained by other means: the long-term equity investment obtained by paying cash shall be the

initial investment cost according to the actual purchase price; the long-term equity investment obtained by issuing equity securities

shall be the initial investment cost of the fair value of the equity securities issued.

(2) Subsequent measurement and profit and loss confirmation method

Investment in subsidiaries is accounted for using the cost method unless the investment meets the conditions for holding for sale;

investment in associates and joint ventures is accounted for using the equity method.For long-term equity investments that are accounted for using the cost method in addition to the cash dividends or profits that have

been declared but not yet included in the actual payment or consideration included in the investment the cash dividends or profits

declared by the invested entity are recognized as investment income and recorded into the current profit and loss.For long-term equity investments accounted for using the equity method where the initial investment cost is greater than the fair

value share of the investee’s identifiable net assets at the time of investment the investment cost of the long-term equity investment

is not adjusted; when the initial investment cost is less than the investment the investee ’s If the fair value share of net assets is

identified the book value of the long-term equity investment is adjusted and the difference is included in the current profit and loss

of the investment.When using the equity method of accounting the investment income and other comprehensive income are recognized separately

according to the share of net profit and loss and other comprehensive income realized by the invested unit that should be enjoyed or

shared and the book value of the long-term equity investment is adjusted at the same time; The distribution of profits or cash

dividends should be calculated to reduce the book value of long-term equity investment; the investee's other changes in owner's

equity other than net profit and loss other comprehensive income and profit distribution adjust the book value of long-term equity

investment and Included in capital reserves (other capital reserves). When confirming the share of the investee’s net profit or loss

based on the fair value of the investee’s identifiable assets at the time of investment and in accordance with the Company’s

accounting policies and accounting period the net profit of the investee Confirm after making adjustments.If the additional investment and other reasons can exert significant influence on the investee or exercise joint control but do not

constitute control on the conversion date the sum of the fair value of the original equity plus the additional investment cost will be

used as the initial accounting for the equity method cost of investment. If the original equity is classified as non-trading equity

instrument investment measured at fair value whose changes are included in other comprehensive income the relevant original and

accumulative changes in fair value included in other comprehensive income shall be transferred to retained earnings when accounting

by equity method.If the joint control or significant influence on the invested unit is lost due to the disposal of part of the equity investment etc. the

remaining equity after the disposal shall be changed to the Accounting Standards for Business Enterprises No. 22-Recognition and

191Lu Thai Textile Co. Ltd. Annual Report 2021

Measurement of Financial Instruments is performed and the difference between fair value and book value is included in the current

profit and loss. Other comprehensive income recognized by the original equity investment due to the equity method of accounting

shall be accounted for on the same basis as the investee’s direct disposal of related assets or liabilities when the equity method of

accounting is terminated; changes in other owners ’equity related to the original equity investment Transfer to current profit and loss.If the control of the invested unit is lost due to the disposal of part of the equity investment if the remaining equity after the disposal

can exercise joint control or exert significant influence on the invested unit the equity method is used for accounting and the

remaining equity is treated as When acquiring the equity method is adopted for adjustment; if the remaining equity after disposal

cannot exercise joint control or exert significant influence on the investee the accounting shall be changed according to the relevant

provisions of "Accounting Standards for Business Enterprises No. 22-Recognition and Measurement of Financial Instruments The

difference between the fair value and the book value on the date of loss of control is included in the current profit and loss.If the shareholding ratio of the company decreases due to the capital increase of other investors thereby losing control but being able

to exercise joint control or exert significant influence on the investee the new shareholding ratio shall be used to confirm that the

company should enjoy the capital increase of the investee. The difference between the increase in share and the increase in the share

of net assets and the original book value of the long-term equity investment corresponding to the decrease in the proportion of the

shareholding that should be carried forward are included in the current profit and loss; That is adjustments are made using the equity

method of accounting.The unrealized internal transaction gains and losses that occur between the Company and associates and joint ventures are calculated

according to the shareholding ratio and are attributed to the Company and the investment gains and losses are recognized on the

basis of offset. However the unrealized internal transaction losses incurred by the Company and the investee are the impairment

losses of the transferred assets and shall not be offset.

(3) Determine the basis for joint control and significant influence on the invested unit

Joint control refers to the common control of an arrangement in accordance with the relevant agreement and related activities of the

arrangement must be agreed upon by the parties sharing control rights before they can make decisions. When judging whether there

is joint control first determine whether all participants or a combination of participants collectively control the arrangement and

secondly determine whether the decision-making related activities of the arrangement must be unanimously agreed by the

participants who collectively control the arrangement. If all participants or a Company of participants must act in concert to

determine the relevant activities of an arrangement it is considered that all participants or a Company of participants collectively

control the arrangement; if there is a combination of two or more participants can collectively Controlling an arrangement does not

constitute joint control. When judging whether there is joint control the protective rights enjoyed are not considered.Significant influence means that the investor has the right to participate in the decision-making of the financial and operating policies

of the invested unit but cannot control or jointly control the formulation of these policies with other parties. When determining

whether it can exert significant influence on the invested unit consider that the investor directly or indirectly holds the voting shares

of the invested unit and the current executable potential voting rights held by the investor and other parties are assumed to be

converted into the invested unit After the equity of the company the impact includes the current convertible warrants stock options

and convertible corporate bonds issued by the investee.When the Company directly or indirectly owns more than 20% (including 20%) but less than 50% of the voting shares of the invested

unit it is generally considered to have a significant impact on the invested unit unless there is clear evidence that such circumstances

cannot participate in the production and operation decisions of the invested unit and does not have a significant impact; when the

Company owns less than 20% (excluding) voting rights of the invested unit it generally does not consider it to have a significant

impact on the invested unit unless there is clear evidence that Under these circumstances it can participate in the production and

operation decisions of the invested unit and have a significant impact.

(4) Impairment test method and impairment provision method

For the investments in subsidiaries associates and joint ventures the method of accruing asset impairment is shown in the Note

V-22.

192Lu Thai Textile Co. Ltd. Annual Report 2021

15. Investment Property

Measurement model of investment real estate

Costing method measurement

Depreciation or amortization method

The investment real estate refers to the real estate gaining the rent or capital appreciation or both. It includes rented land use right

holding land use right to be transferred after the appreciation and rented building etc.The investment real estate is measured initially according to the cost and withdrawn depreciation or amortization as regulations of

fixed assets or intangible assets.The Company adopts the cost mode to conduct the subsequent measurement on the investment real estate see the Note V-22 for the

method of withdrawing asset impairment provision.The difference between the disposal income of investment real estate sales transfer scrap or damage after deducting its book value

and related taxes is included in the current profit and loss.

16. Fixed Assets

(1) Conditions for Recognition

The term “fixed assets” refers to the tangible assets that simultaneously possess the features as follows: (a) they are held for the sake

of producing commodities rendering labor service renting or business management; and (b) their useful life is in excess of one fiscal

year.The fixed assets are only recognized when the relevant economic benefits probably flow in the Company and its cost could be

reliable measured.The fixed assets of the Company are initially measured at the actual cost at the time of acquisition.The subsequent expenditures related to the fixed assets shall be included in the cost of the fixed assets when the economic benefits

related to the fixed assets are likely to flow into the Company and the costs can be measured reliably. The daily repair expenses of

fixed assets that do not meet the conditions of capitalized subsequent expenditures of fixed assets shall be included in the current

profit and loss or the cost of relevant assets according to the beneficiaries when incurred. The book value of the replaced part shall be

terminated.

(2) Test Method of Impairment of Fixed Assets and Method of Impairment Provision

Please refer to Note V-22 for details.

(3) Depreciation Methods

Category of fixed Annual deprecation

Method Useful life Salvage value (%)

assets (%)

Average method of

Housing and building 5-30 0-10 20.00-3.00

useful life

Average method of

Machinery equipments 10-18 0-10 10.00-5.00

useful life

193Lu Thai Textile Co. Ltd. Annual Report 2021

Average method of

Transportation vehicle 5 0-10 20.00-18.00

useful life

Electronic equipments Average method of

50-1020.00-18.00

and others useful life

(4) At the end of each year review is carried out by the Company for the service life estimated net residual

value and depreciation method of fixed assets.If there is any difference between the expected service life and the original estimated service life the service life of fixed assets will

be adjusted; if there is any difference between the expected net residual value and the original estimated net residual value the

expected net residual value will be adjusted.

(5) Disposal of Fixed Assets

A fixed asset shall be derecognized when it is disposed of or it is expected that no economic benefit can be generated by using or

disposing of it. The amount of the disposal income of sales transfer scrap or damage of the fixed asset after deducting its book value

and related taxes is included in the current profit and loss.

17. Construction in Progress

Construction in process is measured at actual cost. Actual cost comprises construction costs borrowing costs that are eligible for

capitalization before the fixed assets being ready for their intended us and other relevant costs.Construction in process is transferred to fixed assets when the assets are ready for their intended use.See the details of the impairment provision withdrawal method of the construction in progress to Notes V-22.

18. Engineering Materials

Engineering materials of the Company refer to various materials prepared for projects under construction including engineering

materials equipment not yet installed tools and instruments prepared for production etc.The purchased engineering materials will be measured according to the cost. The received engineering materials will be transferred

to the project under construction and the remaining engineering materials after the completion of the project will be stored as

inventory.Please refer to Note V (22) for the method of provision for impairment of assets for engineering materials.In the balance sheet the ending balance of engineering materials is listed in the "project under construction" item.

19. Borrowing Costs

(1) Confirmation principle of Capitalized Borrowing Expense

The borrowing expenses incurred by the Company if can directly belong to acquisition construction or production of assets meeting

capitalization conditions are capitalized and included in relevant asset cost; other borrowing expenses are confirmed as expense

according to its amount at the time of occurrence and included in the current profits and losses. If the borrowing expenses meet the

following conditions capitalization starts:

* Assets expenditure has occurred and asset expenditure includes the expenditure occurring in the form of payment in cash

transferring noncash asset or assuming interest bearing debt for acquiring constructing or producing the assets meeting capitalization

194Lu Thai Textile Co. Ltd. Annual Report 2021

conditions;

* Borrowing expenses have occurred;

* The acquisition construction or production activities required for making assets usable or saleable as intended have started.

(2) Capitalization period of borrowing expenses

When the Company acquires constructs or produces assets which meet capitalization conditions and reach the intended usable or

saleable status the borrowing expenses stop capitalization. The borrowing expenses that occur after the assets meeting capitalization

conditions reach the intended usable or saleable status are confirmed as expenses according to its amount at the time of occurrence and

are included in the current profits and losses.If the assets meeting capital conditions generate improper interruption in the course of acquisition construction or production and the

interruption time continuously exceeds three months capitalization of borrowing expenses suspends; the borrowing expenses in the

normal interruption period are continually capitalized.

(3) Capitalization rate of borrowing expenses and calculation method of capitalized amount

The interest expenses of special borrowing actually occurring in the current period minus the interest income of the unused borrowed

capital obtained from depositing in bank or the gain on temporary investment are capitalized; for common borrowing the weighted

average of asset expenditure of the part that the cumulative asset expenditure exceeds special borrowing is multiplied by the

capitalization rate of the occupied common borrowing to determine capitalization amount. Capitalization rate is calculated and

determined according to the weighted average rate of common borrowing.In the period of capitalization the exchange difference of special borrowing in foreign currency is fully capitalized; the exchange

difference of special borrowing in foreign currency is included in the current profits and losses.

20. Right-of-use Assets

(1) Recognition conditions for right-of-use assets

The term "right-of-use assets" refers to the right of the lessee to use the leased assets during the lease term. At the start date of the

lease term. The Company initially measures the right-of-use assets at cost. The cost includes: a) the initial measurement amount of

lease obligations; b) the lease payment amount paid on or prior to the inception of the lease (less the related amount of lease

incentives already enjoyed if any); c) the initial direct cost incurred by the lessee; and d) the anticipated cost of dismantling and

removing the leasehold property restoring the site where the leasehold property is located or bringing the leasehold property back to

the state agreed upon in the lease terms. As the lessee the Company shall recognize and measure the cost of demolition and

restoration in accordance with the Accounting Standards for Business Enterprises No.13 - Contingencies. Subsequent adjustments are

made for any re-measurement of the lease liabilities.

(2) Depreciation method of right-of-use assets

The company uses the straight-line method for depreciation. Where it can be reasonably certain that the Company the lessee can

obtain ownership of the leased assets at the expiry of the lease term the leased assets are depreciated over the residual service life.Where it cannot be reasonably certain that the Company can obtain ownership of the leased assets at the end of the lease term the

leased assets are depreciated at the shorter of the lease term and the residual service life of the leased assets.

(3) Impairment test method and impairment provision method of right-of-use assets

See Note V-22.

21. Intangible Assets

(1) Pricing Method Useful Life and Impairment Test

The intangible assets of the Company include land use right patent right etc.Intangible assets are initially measured at cost and their service life is analyzed and determined when intangible assets are acquired.

195Lu Thai Textile Co. Ltd. Annual Report 2021

If the service life of intangible assets is limited the intangible assets shall be amortized by the method that can reflect the expected

realization method of the economic benefits related to the assets within the expected service life since they are available for use. The

straight-line method shall be used for amortization if no expected realization method can be determined reliably. Intangible assets